[x]
|
Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For the quarterly period ended August 31, 2011
|
[ ]
|
Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For the transition period from ______ to ______
|
DELAWARE
|
42-0920725
|
(State or other jurisdiction of incorporation or
organization)
|
(I.R.S. Employer Identification No.)
|
5556 Highway 9
Armstrong, Iowa 50514
|
(Address of principal executive offices)
|
Large Accelerated filer o | Accelerated filer o |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company x |
Page No. | |||
PART I – FINANCIAL INFORMATION | 1 | ||
Item 1. | Financial Statements | 1 | |
Condensed Consolidated Balance Sheets
August 31, 2011 and November 30, 2010
|
1 | ||
Condensed Consolidated Statements of Operations
Three-month and nine-month periods ended August 31, 2011 and August 31, 2010
|
2 | ||
Condensed Consolidated Statements of Cash Flows
Nine-month periods ended August 31, 2011 and August 31, 2010
|
3 | ||
Notes to Condensed Consolidated Financial Statements | 4 | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 13 | |
Item 4. | Controls and Procedures | 16 | |
PART II – OTHER INFORMATION | 17 | ||
Item 1. | Legal Proceedings | 17 | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 17 | |
Item 3. | Defaults Upon Senior Securities | 17 | |
Item 4. | (Removed and Reserved) | 17 | |
Item 5. | Other Information | 17 | |
Item 6. | Exhibits | 17 | |
SIGNATURES | 18 | ||
Exhibit Index | 19 |
ART’S-WAY MANUFACTURING CO., INC.
|
||||||||
Condensed Consolidated Balance Sheets
|
||||||||
(Unaudited)
|
||||||||
Assets
|
August 31,
2011
|
November 30,
2010
|
||||||
Current assets:
|
||||||||
Cash | $ | 213,893 | $ | 317,103 | ||||
Accounts receivable-customers, net of allowance for doubtful
accounts of $67,081 and $114,834 in 2011 and 2010, respectively
|
3,345,467 | 2,493,624 | ||||||
Inventories, net
|
13,136,600 | 13,795,816 | ||||||
Deferred taxes
|
877,113 | 821,000 | ||||||
Cost and Profit in Excess of Billings
|
- | 256,739 | ||||||
Other current assets
|
297,962 | 245,774 | ||||||
Total current assets
|
17,871,035 | 17,930,056 | ||||||
Property, plant, and equipment, net
|
8,278,901 | 8,038,733 | ||||||
Assets held for lease, net
|
472,095 | 313,773 | ||||||
Covenant not to Compete, net
|
75,000 | 120,000 | ||||||
Goodwill
|
375,000 | 375,000 | ||||||
Total assets
|
$ | 27,072,031 | $ | 26,777,562 | ||||
Liabilities and Stockholders’ Equity
|
||||||||
Current liabilities:
|
||||||||
Notes payable to bank
|
$ | 2,475,387 | $ | 2,084,000 | ||||
Current portion of term debt
|
638,528 | 615,294 | ||||||
Accounts payable
|
698,745 | 1,008,688 | ||||||
Customer deposits
|
285,767 | 440,888 | ||||||
Billings in Excess of Cost and Profit
|
340,481 | 41,571 | ||||||
Accrued expenses
|
1,320,566 | 1,381,098 | ||||||
Income taxes payable
|
55,540 | 594,816 | ||||||
Total current liabilities
|
5,815,014 | 6,166,355 | ||||||
Long-term liabilities
|
||||||||
Deferred taxes
|
739,425 | 568,000 | ||||||
Term debt, excluding current portion
|
5,976,073 | 6,452,750 | ||||||
Total liabilities
|
12,530,512 | 13,187,105 | ||||||
Stockholders’ equity:
|
||||||||
Common stock – $0.01 par value. Authorized 5,000,000 shares;
issued and outstanding 4,023,852 and 4,008,352 shares in 2011 and 2010
|
40,238 | 40,084 | ||||||
Additional paid-in capital
|
2,453,574 | 2,328,668 | ||||||
Retained earnings
|
12,047,707 | 11,221,705 | ||||||
Total stockholders’ equity
|
14,541,519 | 13,590,457 | ||||||
Total liabilities and stockholders’ equity
|
$ | 27,072,031 | $ | 26,777,562 |
ART’S-WAY MANUFACTURING CO., INC.
|
||||||||||||||||
Condensed Consolidated Statements of Operations
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
August 31, 2011
|
August 31, 2010
|
August 31, 2011
|
August 31, 2010
|
|||||||||||||
Net sales
|
$ | 9,252,063 | $ | 10,581,783 | $ | 21,761,551 | $ | 22,909,802 | ||||||||
Cost of goods sold
|
6,544,644 | 8,004,666 | $ | 16,622,309 | $ | 17,437,158 | ||||||||||
Gross profit
|
2,707,419 | 2,577,117 | 5,139,242 | 5,472,644 | ||||||||||||
Expenses:
|
||||||||||||||||
Engineering
|
91,840 | 102,042 | $ | 330,482 | $ | 309,342 | ||||||||||
Selling | 447,103 | 549,959 | $ | 1,320,115 | $ | 1,476,102 | ||||||||||
General and administrative
|
730,569 | 654,234 | $ | 2,161,519 | $ | 2,081,037 | ||||||||||
Total expenses
|
1,269,512 | 1,306,235 | 3,812,116 | 3,866,481 | ||||||||||||
Income from operations
|
1,437,907 | 1,270,882 | 1,327,126 | 1,606,163 | ||||||||||||
Other income (expense):
|
||||||||||||||||
Interest expense
|
(120,202 | ) | (121,085 | ) | $ | (321,910 | ) | $ | (310,879 | ) | ||||||
Other | 46,523 | 16,908 | $ | 77,821 | $ | 68,869 | ||||||||||
Total other income (loss)
|
(73,679 | ) | (104,177 | ) | (244,089 | ) | (242,010 | ) | ||||||||
Income before income taxes
|
1,364,228 | 1,166,705 | 1,083,037 | 1,364,153 | ||||||||||||
Income tax expense
|
344,392 | 414,903 | $ | 257,035 | $ | 477,446 | ||||||||||
Net income
|
$ | 1,019,836 | $ | 751,802 | $ | 826,002 | $ | 886,707 | ||||||||
Net income per share:
|
||||||||||||||||
Basic | 0.25 | 0.19 | 0.21 | 0.22 | ||||||||||||
Diluted | 0.25 | 0.19 | 0.20 | 0.22 |
ART’S-WAY MANUFACTURING CO., INC.
|
||||||||
Condensed Consolidated Statements of Cash Flows
|
||||||||
(Unaudited)
|
||||||||
Nine Months Ended
|
||||||||
August 31, 2011
|
August 31, 2010
|
|||||||
Cash flows from operations:
|
||||||||
Net income | $ | 826,002 | $ | 886,707 | ||||
Adjustments to reconcile net income to
net cash provided by operating activities:
|
||||||||
Stock based compensation
|
58,311 | 19,978 | ||||||
Depreciation expense
|
560,931 | 491,973 | ||||||
Amortization expense
|
45,000 | 45,000 | ||||||
Deferred income taxes
|
115,312 | 35,000 | ||||||
Changes in assets and liabilities, net of Roda acquisiton in 2010:
|
||||||||
(Increase) decrease in:
|
||||||||
Accounts receivable
|
(851,843 | ) | (778,985 | ) | ||||
Inventories
|
659,216 | (418,009 | ) | |||||
Other current assets
|
(52,189 | ) | 735,981 | |||||
Increase (decrease) in:
|
||||||||
Accounts payable
|
(309,943 | ) | 623,567 | |||||
Contracts in progress, net
|
555,649 | 103,669 | ||||||
Customer deposits
|
(155,121 | ) | 248,757 | |||||
Income taxes payable
|
(539,276 | ) | 126,630 | |||||
Accrued expenses
|
(60,532 | ) | 817,654 | |||||
Net cash provided by operating activities
|
851,518 | 2,937,922 | ||||||
Cash flows from investing activities:
|
||||||||
Purchases of property, plant, and equipment
|
(730,326 | ) | (1,921,608 | ) | ||||
Net change in asset held for lease
|
(229,095 | ) | - | |||||
Purchase of assets of Roda
|
- | (1,179,001 | ) | |||||
Purchase of assets of M&W
|
- | (453,161 | ) | |||||
Net cash (used in) investing activities
|
(959,421 | ) | (3,553,770 | ) | ||||
Cash flows from financing activities:
|
||||||||
Net change in line of credit
|
391,387 | (166,892 | ) | |||||
Payments of notes payable to bank
|
(453,443 | ) | (367,369 | ) | ||||
Proceeds from term debt
|
- | 1,300,000 | ||||||
Proceeds from the exercise of stock options
|
66,749 | 7,503 | ||||||
Net cash provided by financing activities
|
4,693 | 773,242 | ||||||
Net (increase) decrease in cash
|
(103,210 | ) | 157,394 | |||||
Cash at beginning of period
|
317,103 | 387,218 | ||||||
Cash at end of period
|
$ | 213,893 | $ | 544,612 | ||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid/(received) during the period for:
|
||||||||
Interest | $ | 321,921 | $ | 301,980 | ||||
Income taxes | 665,203 | 315,063 |
(1)
|
Description of the Company
|
(2)
|
Summary of Significant Account Policies
|
(3)
|
Net Income Per Share of Common Stock
|
For the three months ended
|
||||||||
August 31,
2011
|
August 31,
2010
|
|||||||
Basic:
|
||||||||
Numerator, net income
|
$ | 1,019,836 | $ | 751,802 | ||||
Denominator: Average number
|
||||||||
of common shares outstanding
|
4,019,874 | 3,992,182 | ||||||
Basic earnings per common share
|
$ | 0.25 | $ | 0.19 | ||||
Diluted:
|
||||||||
Numerator, net income
|
$ | 1,019,836 | $ | 751,802 | ||||
Denominator: Average number
|
||||||||
of common shares outstanding
|
4,019,874 | 3,992,182 | ||||||
Effect of dilutive stock options
|
22,261 | 11,584 | ||||||
4,042,135 | 4,003,766 | |||||||
Diluted earnings per common share
|
$ | 0.25 | $ | 0.19 |
For the nine months ended
|
||||||||
August 31,
2011
|
August 31,
2010
|
|||||||
Basic:
|
||||||||
Numerator, net income
|
$ | 826,002 | $ | 886,707 | ||||
Denominator: Average number
|
||||||||
of common shares outstanding
|
4,016,039 | 3,991,381 | ||||||
Basic earnings per common share
|
$ | 0.21 | $ | 0.22 | ||||
Diluted:
|
||||||||
Numerator, net income
|
$ | 826,002 | $ | 886,707 | ||||
Denominator: Average number of common
|
||||||||
shares outstanding
|
4,016,039 | 3,991,381 | ||||||
Effect of dilutive stock options
|
33,667 | 9,482 | ||||||
4,049,706 | 4,000,863 | |||||||
Diluted earnings per common share
|
$ | 0.20 | $ | 0.22 |
(4)
|
Stock Based Compensation
|
(5)
|
Inventory
|
August 31,
2011
|
November 30,
2010
|
|||||||
Raw materials
|
$ | 8,287,096 | $ | 8,269,852 | ||||
Work in process
|
258,572 | 776,083 | ||||||
Finished goods
|
6,925,513 | 6,565,964 | ||||||
$ | 15,471,181 | $ | 15,611,899 | |||||
Less: Reserves
|
(2,334,581 | ) | (1,816,083 | ) | ||||
$ | 13,136,600 | $ | 13,795,816 |
(6)
|
Accrued Expenses
|
August 31,
2011
|
November 30,
2010
|
|||||||
Salaries, wages, and commissions
|
$ | 525,220 | $ | 661,200 | ||||
Accrued warranty expense
|
250,783 | 180,549 | ||||||
Other
|
544,563 | 539,349 | ||||||
$ | 1,320,566 | $ | 1,381,098 |
(7)
|
Product Warranty
|
For the three months ended
|
||||||||
August 31,
2011
|
August 31,
2010
|
|||||||
Balance, beginning
|
$ | 199,395 | $ | 148,412 | ||||
Settlements made in cash or in-kind
|
(123,457 | ) | (51,842 | ) | ||||
Warranties issued
|
174,844 | 218,180 | ||||||
Balance, ending
|
$ | 250,783 | $ | 314,750 | ||||
For the nine months ended
|
||||||||
August 31,
2011
|
August 31,
2010
|
|||||||
Balance, beginning
|
$ | 180,549 | $ | 96,370 | ||||
Settlements made in cash or in-kind
|
(315,621 | ) | (237,516 | ) | ||||
Warranties issued
|
385,856 | 455,896 | ||||||
Balance, ending
|
$ | 250,784 | $ | 314,750 |
(8)
|
Loan and Credit Agreements
|
August 31,
2011
|
November 30,
2010
|
|||||||
West Bank loan payable in monthly installments of
$42,500 including interest at 5.75%, due May 1, 2013
|
2,889,843 | $ | 3,140,229 | |||||
West Bank loan payable in monthly installments of
$11,000 including interest at 5.75%, due May 1, 2013
|
1,118,956 | 1,167,970 | ||||||
West Bank loan payable in monthly installments of
$12,550 including interest at 5.75%, due May 1, 2013
|
1,272,547 | 1,328,642 | ||||||
Iowa Finance Authority loan payable in monthly
installments of $12,892 including interest at 3.5%,
due June 1, 2020
|
1,171,422 | 1,255,120 | ||||||
IDED loan payable in monthly installments of $1,583
including interest at 0%, due July 1, 2014.
|
53,833 | 68,083 | ||||||
IDED loan payable in monthly installments of $0
including interest at 0%, due July 1, 2014
|
95,000 | 95,000 | ||||||
West Union Community Development Corporation
loan payable in annual installments of $4,333 including
interest at 0% due September 1, 2013
|
13,000 | 13,000 | ||||||
Total term debt
|
6,614,601 | 7,068,044 | ||||||
Less current portion of term debt
|
638,528 | 615,294 | ||||||
Term debt, excluding current portion
|
5,976,073 | $ | 6,452,750 |
(9)
|
Recently Issued Accounting Pronouncements
|
(10)
|
Equity Incentive Plan
|
(11)
|
2010 Acquisitions
|
(12)
|
Disclosures About the Fair Value of Financial Instruments
|
(13)
|
Related Party Transactions
|
(14)
|
Segment Information
|
Agricultural
Products
|
Pressurized
Vessels
|
Modular
Buildings
|
Consolidated
|
|
Revenue from external customers
|
$7,771,000
|
$403,000
|
$1,078,000
|
$9,252,000
|
Income from operations
|
1,358,000
|
(11,000)
|
91,000
|
1,438,000
|
Income before tax
|
1,351,000
|
(65,000)
|
78,000
|
1,364,000
|
Total Assets
|
20,527,000
|
2,843,000
|
3,658,000
|
27,028,000
|
Capital expenditures
|
207,000
|
2,000
|
87,000
|
296,000
|
Depreciation & Amortization
|
123,000
|
26,000
|
54,000
|
203,000
|
Agricultural
Products
|
Pressurized
Vessels
|
Modular
Buildings
|
Consolidated
|
|
Revenue from external customers
|
$7,725,000
|
$502,000
|
$2,355,000
|
$10,582,000
|
Income from operations
|
1,092,000
|
(116,000)
|
295,000
|
1,271,000
|
Income before tax
|
1,062,000
|
(171,000)
|
276,000
|
1,167,000
|
Total Assets
|
20,367,000
|
3,139,000
|
3,997,000
|
27,503,000
|
Capital expenditures
|
101,000
|
21,000
|
9,000
|
131,000
|
Depreciation & Amortization
|
135,000
|
27,000
|
26,000
|
188,000
|
Agricultural
Products
|
Pressurized
Vessels
|
Modular
Buildings
|
Consolidated
|
|
Revenue from external customers
|
$18,091,000
|
$1,368,000
|
$2,302,000
|
$21,761,000
|
Income from operations
|
1,830,000
|
(332,000)
|
(171,000)
|
1,327,000
|
Income before tax
|
1,804,000
|
(500,000)
|
(221,000)
|
1,083,000
|
Total Assets
|
20,527,000
|
2,843,000
|
3,658,000
|
27,028,000
|
Capital expenditures
|
473,000
|
89,000
|
397,000
|
959,000
|
Depreciation & Amortization
|
375,000
|
78,000
|
152,000
|
605,000
|
Agricultural
Products
|
Pressurized
Vessels
|
Modular
Buildings
|
Consolidated
|
|
Revenue from external customers
|
$15,927,000
|
$1,245,000
|
$5,738,000
|
$22,910,000
|
Income from operations
|
1,287,000
|
(344,000)
|
663,000
|
1,606,000
|
Income before tax
|
1,271,000
|
(514,000)
|
607,000
|
1,364,000
|
Total Assets
|
20,367,0000
|
3,139,000
|
3,997,000
|
27,503,000
|
Capital expenditures
|
1,839,000
|
37,000
|
46,000
|
1,922,000
|
Depreciation & Amortization
|
382,000
|
79,000
|
76,000
|
537,000
|
(15)
|
Income Tax Provision
|
(16)
|
Subsequent Event
|
ART’S-WAY MANUFACTURING CO., INC.
|
||
Date: October 14, 2011
|
|
By: /s/ Carrie L. Majeski
|
Carrie L. Majeski
|
||
President, Chief Executive Officer and
Principal Financial Officer
|
Exhibit No.
|
Description
|
|
31.1
|
Certificate pursuant to 17 CFR 13a-14(a) – filed herewith
|
|
32.1
|
Certificate pursuant to 18 U.S.C. Section 1350 – filed herewith
|
|
101*
|
The following materials from this report, formatted in XBRL (Extensible Business Reporting Language), are filed herewith: (i) condensed consolidated balance sheets, (ii) condensed consolidated statement of operations, (iii) condensed consolidated statements of cash flows, and (iv) the notes to the condensed financial statements. | |
*
|
Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed part of a registration statement, prospectus or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filings. |
1.
|
I have reviewed this quarterly report on Form 10-Q of Art’s-Way Manufacturing Co., Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for, the periods presented in this report;
|
4.
|
I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Carrie L. Majeski
Carrie L. Majeski, President, Chief
Executive Officer and Chief Financial
Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Carrie L. Majeski
Carrie L. Majeski, President, Chief
Executive Officer and Chief Financial
Officer
|
Condensed Consolidated Balance Sheets (Parentheticals) (USD $) | Aug. 31, 2011 | Nov. 30, 2010 |
---|---|---|
Allowance for Doubtful Accounts (in Dollars) | $ 67,081 | $ 114,834 |
Common stock – par value. (in Dollars per share) | $ 0.01 | $ 0.01 |
Common stock – authorized shares | 5,000,000 | 5,000,000 |
Common stock – issued shares | 4,023,852 | 4,008,352 |
Common stock – outstanding shares | 4,023,852 | 4,008,352 |
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2011 | Aug. 31, 2010 | Aug. 31, 2011 | Aug. 31, 2010 | |
Net sales | $ 9,252,063 | $ 10,581,783 | $ 21,761,551 | $ 22,909,802 |
Cost of goods sold | 6,544,644 | 8,004,666 | 16,622,309 | 17,437,158 |
Gross profit | 2,707,419 | 2,577,117 | 5,139,242 | 5,472,644 |
Expenses: | ||||
Engineering | 91,840 | 102,042 | 330,482 | 309,342 |
Selling | 447,103 | 549,959 | 1,320,115 | 1,476,102 |
General and administrative | 730,569 | 654,234 | 2,161,519 | 2,081,037 |
Total expenses | 1,269,512 | 1,306,235 | 3,812,116 | 3,866,481 |
Income from operations | 1,437,907 | 1,270,882 | 1,327,126 | 1,606,163 |
Other income (expense): | ||||
Interest expense | (120,202) | (121,085) | (321,910) | (310,879) |
Other | 46,523 | 16,908 | 77,821 | 68,869 |
Total other income (loss) | (73,679) | (104,177) | (244,089) | (242,010) |
Income before income taxes | 1,364,228 | 1,166,705 | 1,083,037 | 1,364,153 |
Income tax expense | 344,392 | 414,903 | 257,035 | 477,446 |
Net income | $ 1,019,836 | $ 751,802 | $ 826,002 | $ 886,707 |
Net income per share: | ||||
Basic (in Dollars per share) | $ 0.25 | $ 0.19 | $ 0.21 | $ 0.22 |
Diluted (in Dollars per share) | $ 0.25 | $ 0.19 | $ 0.20 | $ 0.22 |
Document And Entity Information | 9 Months Ended |
---|---|
Aug. 31, 2011 | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | ARTS WAY MANUFACTURING CO INC |
Document Type | 10-Q |
Current Fiscal Year End Date | --11-30 |
Entity Common Stock, Shares Outstanding | 4,023,852 |
Amendment Flag | false |
Entity Central Index Key | 0000007623 |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Filer Category | Smaller Reporting Company |
Entity Well-known Seasoned Issuer | No |
Document Period End Date | Aug. 31, 2011 |
Document Fiscal Year Focus | 2011 |
Document Fiscal Period Focus | Q3 |
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Note 7 - Product Warranty | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranty Disclosure [Text Block] |
The
Company offers warranties of various lengths to its customers
depending on the specific product and terms of the customer
purchase agreement. The average length of the
warranty period is one year from the date of
purchase. The Company’s warranties require
it to repair or replace defective products during the
warranty period at no cost to the customer. The
Company records a liability for estimated costs that may be
incurred under its warranties. The costs are
estimated based on historical experience and any specific
warranty issues that have been
identified. Although historical warranty costs
have been within expectations, there can be no assurance that
future warranty costs will not exceed historical
amounts. The Company periodically assesses the
adequacy of its recorded warranty liability and adjusts the
balance as necessary. The accrued warranty balance
is included in accrued expenses as shown in note 6.
Changes
in the Company’s product warranty liability for the
three and nine months ended August 31, 2011 and 2010 are as
follows:
|
Note 12 - Disclosures About the Fair Value of Financial Instruments | 9 Months Ended | ||
---|---|---|---|
Aug. 31, 2011 | |||
Fair Value Disclosures [Text Block] |
The
fair value of a financial instrument is defined as the amount
at which the instrument could be exchanged in a current
transaction between willing parties. At August 31,
2011, and November 30, 2010, the carrying amount
approximated fair value for cash, accounts receivable,
accounts payable, notes payable to bank, and other current
and long-term liabilities. The carrying amounts
approximate fair value because of the short maturity of these
instruments. The fair value of the Company’s
installment term loans payable also approximate recorded
value because the interest rates charged under the loan terms
are not substantially different than current interest
rates.
|
Note 3 - Net Income (Loss) Per Share of Common Stock | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] |
Basic
net income per common share has been computed on the basis of
the weighted average number of common shares
outstanding. Diluted net income per share has been
computed on the basis of the weighted average number of
common shares outstanding plus equivalent shares assuming
exercise of stock options.
Basic
and diluted earnings per common share have been computed
based on the following as of August 31, 2011 and August 31,
2010:
|
Note 9 - Recently Issued Accounting Pronouncements | 9 Months Ended | ||
---|---|---|---|
Aug. 31, 2011 | |||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] |
Fair
Value Measurements
In
September 2006, the Financial Accounting Standards Board
(“FASB”) issued a statement that defines fair
value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands
disclosure about fair value measurements. The
statement does not require any new fair value measurements,
but for some entities, the application of the statement will
change current practice. This statement was
adopted by the Company without a material impact on the
financial statements. In January 2010, the FASB
issued an update to amend existing disclosure
requirements. The update requires new disclosures
for significant transfers between Levels 1 and 2 in the fair
value hierarchy and separate disclosures for purchases,
sales, issuances, and settlements in the reconciliation of
activity for Level 3 fair value measurements. This
update also clarifies the existing fair value disclosures
regarding the level of disaggregation and the valuation
techniques and inputs used to measure fair
value. The update is effective for interim and
annual periods beginning after December 15, 2009, except for
the disclosures on purchases, sales, issuances, and
settlements in the roll forward of activity for Level 3 fair
value measurements. Those disclosures are
effective for interim and annual periods beginning after
December 15, 2010. The Company has determined that
there was no significant impact to the financial statements
as a result of the adoption of these standards.
Goodwill
Impairment Testing
In
December 2010, the FASB issued standards on testing goodwill
and other intangible assets impairment which is a two-step
test. When a goodwill impairment test is performed (either on
an annual or interim basis), an entity must assess whether
the carrying amount of a reporting unit exceeds its fair
value (Step 1). If it does, an entity must perform an
additional test to determine whether goodwill has been
impaired and to calculate the amount of that impairment (Step
2). The objective of this Update is to address questions
about entities with reporting units with zero or negative
carrying amounts because some entities concluded that Step 1
of the test is passed in those circumstances because the fair
value of their reporting unit will generally be greater than
zero. The amendment will affect all entities that
have recognized goodwill and have one or more reporting units
whose carrying amount for purposes of performing Step 1 of
the goodwill impairment test is zero or
negative. The amendments in this Update are
effective for fiscal years, and interim periods within those
years, beginning after December 15, 2010, with no early
adoption permitted. The Company has a year end of
November 30th
and this standard is not yet adopted. We do not
expect the adoption of this standard to have a material
impact on our consolidated financial statements.
In
September 2011, the FASB issued standards to address concerns
about the cost and complexity of performing the first step of
the two-step goodwill impairment test required under Topic
350, Intangibles-Goodwill and Other. The objective of this
Update is to simplify how entities, both public and
nonpublic, test goodwill for impairment. The amendments in
the Update permit an entity to first assess qualitative
factors to determine whether it is more likely than not that
the fair value of a reporting unit is less than its carrying
amount as a basis for determining whether it is necessary to
perform the two-step goodwill impairment test described in
Topic 350. The more-likely-than-not threshold is defined as
having a likelihood of more than 50 percent. Under the
amendments in this Update, an entity is not required to
calculate the fair value of a reporting unit unless the
entity determines that it is more likely than not that its
fair value is less than its carrying amount. We do not expect
the adoption of this standard to have a material impact on
our consolidated financial statements.
Disclosure
of Supplementary Pro Forma Information for Business
Combinations
In
December 2010, the FASB issued standards which state that if
a public entity presents comparative financial statements,
the entity should disclose revenue and earnings of the
combined entity as though the business combination(s) that
occurred during the current year had occurred as of the
beginning of the comparable prior annual reporting
period. The amendments in this Update clarify the
acquisition date that should be used for reporting the pro
forma financial information disclosures when comparative
financial statements are presented. The amendments also
improve the usefulness of the pro forma revenue and earnings
disclosures by requiring a description of the nature and
amount of material, nonrecurring pro forma adjustments that
are directly attributable to the business
combination(s). The amendments in this Update are
effective prospectively for business combinations for which
the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December
15, 2010. The Company has a year end of November
30th
and this standard is not yet adopted. We do not
expect the adoption of this standard to have a material
impact on our consolidated financial statements.
Fair
Value Measurement Update
In
May 2011, the FASB issued ASU No. 2011-04, “Amendments
to Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and IFRSs” that amends the
wording used to describe many of the requirements in U.S.
GAAP for measuring fair value and disclosing information
about fair value measurements. The amendments in this update
achieve the objective of developing common fair value
measurement and disclosure requirements, as well as improving
consistency and understandability. Some of the requirements
clarify the FASB’s intent about the application of
existing fair value measurement requirements while other
amendments change a particular principle or requirement for
measuring fair value or for disclosing information about fair
value measurements. The amendments in this ASU are effective
prospectively for interim and annual periods beginning after
December 15, 2011, with no early adoption permitted. We do
not expect the adoption of this standard to have a material
impact on our consolidated financial statements.
Comprehensive
Income
In
June 2011, the FASB issued ASU NO. 2011-05,
“Presentation of Comprehensive Income” that
improves the comparability, consistency, and transparency of
financial reporting and increases the prominence of items
reported in other comprehensive income by eliminating the
option to present components of other comprehensive income as
part of the statements of changes in stockholders’
equity. The amendments in this standard require that all
non-owner changes in stockholders’ equity be presented
either in a single continuous statement of comprehensive
income or in two separate but consecutive statements. Under
either method, adjustments must be displayed for items that
are reclassified from other comprehensive income
(“OCI”) to net income, in both net income and
OCI. The standard does not change the current option for
presenting components of OCI gross or net of the effect of
income taxes, provided that such tax effects are presented in
the statement in which OCI is presented or disclosed in the
notes to the financial statements. Additionally, the standard
does not affect the calculation or reporting of earnings per
share. For public entities, the amendments in this ASU are
effective for fiscal years, and interim periods within those
years, beginning after December 15, 2011 and are to be
applied retrospectively, with early adoption permitted. We do
not expect the adoption of this standard to have a material
impact on our consolidated financial statements.
|
Note 14 - Segment Information | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Disclosure [Text Block] |
There
are three reportable segments: agricultural products,
pressurized vessels and modular buildings. The
agricultural products segment fabricates and sells farming
products as well as replacement parts for these products in
the United States and worldwide. The pressurized
vessel segment produces pressurized tanks. The
modular building segment produces modular buildings for
animal containment and various laboratory uses.
The
accounting policies applied to determine the segment
information are the same as those described in the summary of
significant accounting policies. Management
evaluates the performance of each segment based on profit or
loss from operations before income taxes, exclusive of
nonrecurring gains and losses.
Approximate
financial information with respect to the reportable segments
is as follows.
Three
Months Ended August 31, 2011
Three
Months Ended August 31, 2010
Nine
Months Ended August 31, 2011
Nine
Months Ended August 31, 2010
|
Note 10 - Equity Incentive and Stock Option Plans | 9 Months Ended | ||
---|---|---|---|
Aug. 31, 2011 | |||
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block] |
On
January 27, 2011, the Board of Directors of the Company
authorized and approved the Art’s-Way Manufacturing
Co., Inc. 2011 Equity Incentive Plan (the “2011
Plan”), subject to approval by the stockholders on or
before January 27, 2012. The 2011 Plan was
approved by the stockholders on April 28, 2011. It
replaced the Employee Stock Option Plan and the
Directors’ Stock Option Plan (collectively, the
“Prior Plans”), and no further stock options will
be awarded under the Prior Plans. Awards to
directors and executive officers under the 2011 Plan will be
governed by the forms of agreement approved by the Board of
Directors.
The
2011 Plan permits the plan administrator to award
nonqualified stock options, incentive stock options,
restricted stock awards, restricted stock units, performance
awards, and stock appreciation rights to employees (including
officers), directors, and consultants. The Board
of Directors has approved a director compensation policy
pursuant to which non-employee directors are automatically
granted non-qualified stock options to purchase 2,000 shares
of common stock annually or initially upon their election to
the Board, which are fully vested.
Stock
options granted prior to January 27, 2011 are governed by the
applicable Prior Plan and the forms of agreement adopted
thereunder.
|
Note 8 - Loan and Credit Agreements | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Text Block] |
The
Company has a $6,000,000 revolving line of credit with West
Bank (the “Line of Credit”) which was scheduled
to mature on April 30, 2011. Effective March 31,
2011, the Company renewed the Line of Credit and extended
the maturity date to April 30, 2012. The Line of
Credit is renewable annually with advances funding the
Company’s working capital and letter of credit
needs. The interest rate is West Bank’s
prime interest rate, adjusted daily, with a minimum rate of
4.00%. As of August 31, 2011, the interest rate
was the minimum of 4.0%. Monthly interest-only payments are
required and the unpaid principal is due on the maturity
date. As of August 31, 2011 and November 30,
2010, the Company had borrowed $2,475,387 and
$2,084,000, respectively, against the Line of
Credit. The available amounts remaining on the
Line of Credit were $3,524,613 and $3,916,000 on
August 31, 2011 and November 30, 2010,
respectively. The borrowing base limits advances
from the Line of Credit to 60% of accounts receivable less
than 90 days, 60% of finished goods inventory, 50% of raw
material inventory and work-in-process inventory, plus 40%
of Net Book Value of Fixed Assets as calculated at each
month-end. The Company’s obligations under
the Line of Credit are evidenced by a Business Loan
Agreement effective March 31, 2011 (the “Business
Loan Agreement”), a Change in Terms Agreement
effective March 31, 2011, and certain other ancillary
documents.
On
June 7, 2007, the Company obtained a term loan from West
Bank in the amount of $4,100,000. The loan,
which had an outstanding principal balance of
$2,889,843 as of August 31, 2011, matures on May 1,
2013 and bears fixed interest at 5.75%. Monthly
principal and interest payments in the amount of $42,500
are required, with a final payment of principal and accrued
interest in the amount of $2,300,391 due on May 1,
2013.
The
Company obtained two additional loans from West Bank in
2007 for the purpose of financing the construction of the
Company’s new facilities in Monona and
Dubuque. On October 9, 2007, the Company
obtained a loan for $1,330,000, which has a maturity date
of May 1, 2013 and bears interest at a fixed interest rate
of 5.75%. Monthly payments of $11,000 are
required for principal and interest, with a final payment
of accrued interest and principal in the amount of
$1,005,905 due on May 1, 2013. On August 31,
2011, the outstanding principal balance on this loan was
$1,118,956.
On
November 30, 2007, the Company obtained a $1,500,000
construction loan to finance construction of the Dubuque,
Iowa facility, which has a maturity date of May 1, 2013 and
bears interest at a fixed interest rate of
5.75%. Payments of $12,550 are due monthly for
principal and interest, with a final accrued interest and
principal payment in the amount of $1,144,539 due on May 1,
2013. On August 31, 2011 the outstanding
principal balance on this loan was $1,272,547.
Each
of the Company’s loans from West Bank are governed by
the Business Loan Agreement, which requires the Company to
comply with certain financial and reporting covenants. The
Company must provide monthly internally prepared financial
reports, year-end audited financial statements, annual
compliance certificates, and notice upon certain events, such
as a change in executive or management
personnel. The Company must maintain a minimum
debt service coverage ratio of 1.5, a maximum debt to
tangible net worth ratio of 1.25, and a minimum tangible net
worth of $12,000,000, each as measured at the Company’s
fiscal year-end. Further, the Company must obtain West
Bank’s prior written consent for any investment in,
acquisition of, or guaranty relating to another business or
entity. The loans are secured by a first position security
interest on the assets of the Company and its subsidiaries,
including but not limited to, inventories, accounts
receivable, machinery, equipment and real estate, in
accordance with the Business Loan Agreement and Commercial
Guaranties executed by the Company’s subsidiaries. The
Company and its subsidiaries were also required to execute
Agreements to Provide Insurance that set forth the insurance
requirements for the collateral.
If
the Company or either of its subsidiaries (as guarantors)
commits an event of default under the Business Loan Agreement
and fails or is unable to cure that default, the interest
rate on the Line of Credit would increase by 2.0%. In
addition, West Bank may cease advances under the Line of
Credit and has the option of causing all outstanding
indebtedness to become immediately due and payable. Events of
default include, without limitation: (i) becoming insolvent
or subject to bankruptcy proceedings; (ii) defaulting on any
obligations to West Bank; (iii) defaulting on any obligations
to third parties that would materially affect the ability to
perform obligations owed to West Bank; (iv) suffering a
material adverse change in financial condition or the value
of any collateral; (v) experiencing a change in ownership of
twenty-five percent or more of outstanding common stock; and
(vi) making false statements to West Bank.
The
Company was in compliance with all covenants under the
Business Loan Agreement as measured on November 30,
2010. Although compliance with the financial ratio
covenants is measured only on an annual basis, the Company
internally evaluates such ratios on a quarterly
basis. As of August 31, 2011, the Company was in
compliance with all financial ratio covenants under the
Business Loan Agreement. The next measurement date
is November 30, 2011.
On
June 1, 2009, Art’s-Way Scientific received funds from
two $95,000 promissory notes in connection with an agreement
signed August 7, 2007 between Art’s-Way Scientific and
the Iowa Department of Economic Development. The
first $95,000 promissory note is a 0% interest loan requiring
60 monthly payments of $1,583.33, with a final payment due
July 1, 2014. The outstanding principal balance on
this note was $53,833 as of August 31, 2011. The second
$95,000 promissory note, which had an outstanding principal
balance of $95,000 as of August 31, 2011, is a forgivable
loan subject to certain contract
obligations. These obligations include maintaining
Art’s-Way Scientific’s principal place of
business in Iowa, complying with certain tax and insurance
requirements, and creating 16 full-time positions and
retaining 21 full-time positions in Iowa, which must be
maintained for a two-year period. Art’s-Way
Manufacturing Co., Inc. has provided a guarantee in
connection with these loans to Art’s-Way
Scientific.
On
May 1, 2010, the Company obtained a loan to finance the
purchase of an additional facility located in West Union,
Iowa to be used as a distribution center, warehouse
facility, and manufacturing plant for certain products
under the Art’s-Way brand. The funds for this loan
were made available by the Iowa Finance Authority by the
issuance of tax exempt bonds. This loan had an
original principal amount of $1,300,000 and bears fixed
interest at 3.5%. The payments required on this loan began
July 1, 2010 and will continue until June 1, 2020. The
terms of the loan require monthly payments of $12,891.68
for principal and interest. As of August 31, 2011, the
outstanding principal balance on this loan was
$1,171,422.
This
loan from the Iowa Finance Authority, which has been assigned
to The First National Bank of West Union, is governed by a
Manufacturing Facility Revenue Note dated May 28, 2010 and a
Loan Agreement dated May 1, 2010 (“the IFA Loan
Agreement”), which requires the Company to provide
quarterly internally prepared financial reports and year-end
audited financial statements and to maintain a minimum debt
service coverage ratio of 1.5, which is measured at November
30 of each year. Among other covenants, the IFA
Loan Agreement also requires the Company to maintain proper
insurance on, and maintain in good repair, the West Union
Facility, and continue to conduct business and remain duly
qualified to do business in the State of Iowa. The
loan is secured by a mortgage on the Company’s West
Union Facility, pursuant to a Mortgage, Security Agreement,
Assignment of Leases and Rents and Fixture Financing
Statement dated May 1, 2010 between the Company and The First
National Bank of West Union (the “West Union
Mortgage”).
If
the Company fails to make a required payment or perform any
other covenant under the IFA Loan Agreement or the West Union
Mortgage, becomes subject to bankruptcy or insolvency
proceedings, defaults in payment on any of our other loan
obligations in excess of $100,000, or if there is a
determination that any of the Company’s representations
made in the IFA Loan Agreement or related documents are
materially false, the Company will be deemed to have
committed an event of default under the IFA Loan
Agreement. If the Company does not cure the event
of default within the time specified by the IFA Loan
Agreement, the lender may cause the entire amount of the loan
to be immediately due and payable and take any other action
that it is permitted to take at law or in equity to enforce
the Company’s performance.
On
September 15, 2010, the company obtained a zero-interest loan
from the West Union Community Development Corporation in the
amount of $13,000. Annual principal payments of
$4,333.33 are due September 1 of 2011, 2012, and 2013.
A
summary of the Company’s term debt is as
follows:
|
Note 1 - Description of the Company | 9 Months Ended | ||
---|---|---|---|
Aug. 31, 2011 | |||
Nature of Operations [Text Block] |
Unless
otherwise specified, as used in this Quarterly Report on Form
10-Q, the terms “we,” “us,”
“our,” “Art’s-Way,” and the
“Company,” refer to Art’s-Way Manufacturing
Co., Inc., a Delaware corporation headquartered in Armstrong,
Iowa, and its wholly-owned subsidiaries.
We
began operations as a farm equipment manufacturer in
1956. Since that time, we have become a major
worldwide manufacturer of agricultural
equipment. Our principal manufacturing plant is
located in Armstrong, Iowa.
We
have organized our business into three operating segments.
Management separately evaluates the financial results of each
segment because each is a strategic business unit offering
different products and requiring different technology and
marketing strategies. Art’s-Way
Manufacturing Co., Inc. manufactures farm equipment under its
own and private labels. Art’s-Way
Manufacturing Co., Inc. has two wholly-owned operating
subsidiaries. Art’s-Way Vessels, Inc.
(“Art’s-Way Vessels”) manufactures pressure
vessels and Art’s-Way Scientific, Inc.
(“Art’s-Way Scientific”) manufactures
modular buildings for various uses, commonly animal
containment and research laboratories. For detailed financial
information relating to segment reporting, see Note 14,
“Segment Information.”
|
Note 4 - Stock Based Compensation | 9 Months Ended | ||
---|---|---|---|
Aug. 31, 2011 | |||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] |
Stock-based
compensation expense reflects the fair value of stock-based
awards measured at the grant date and recognized over the
relevant vesting period. We estimate the fair
value of each stock-based award on the measurement date using
the Black-Scholes option valuation model which incorporates
assumptions as to stock price volatility, the expected life
of the options, risk-free interest rate, and dividend
yield.
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Note 5 - Inventory | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Text Block] |
Major
classes of inventory are:
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Note 13 - Related Party Transactions | 3 Months Ended | ||
---|---|---|---|
Feb. 28, 2011 | |||
Related Party Transactions Disclosure [Text Block] |
The
financial statements of Art’s-Way Manufacturing, Inc.
include a sale by our Vessels division to Adamson Global
Technology in the amount of $17,000 and $250,000 during the
nine months ended August 31, 2011 and 2010,
respectively. Adamson Global Technology is
wholly-owned and operated by J. Ward McConnell, Jr., the
Executive Chairman of the Board of Directors.
|
Note 6 - Accrued Expenses | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 31, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities Disclosure [Text Block] |
Major
components of accrued expenses are:
|
Note 16 - Subsequent Event | 9 Months Ended | ||
---|---|---|---|
Aug. 31, 2011 | |||
Subsequent Events [Text Block] |
Management
evaluated all activity of the Company and concluded that no
subsequent events have occurred that would require
recognition in the consolidated financial statements or
disclosure in the notes to the consolidated financial
statements.
|
Note 2 - Summary of Significant Account Policies | 9 Months Ended | ||
---|---|---|---|
Aug. 31, 2011 | |||
Significant Accounting Policies [Text Block] |
Statement
Presentation
The
foregoing condensed consolidated financial statements of the
Company are unaudited and reflect all adjustments (consisting
only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of
the financial position and operating results for the interim
periods. The financial statements should be read
in conjunction with the financial statements and notes
thereto contained in the Company’s Annual Report on
Form 10-K for the fiscal year ended November 30,
2010. The results of operations for the three and
nine months ended August 31, 2011 are not necessarily
indicative of the results for the fiscal year ending November
30, 2011.
|
Note 11 - 2010 Acquisitions | 9 Months Ended | ||
---|---|---|---|
Aug. 31, 2011 | |||
Schedule of Business Acquisitions, by Acquisition [Table Text Block] |
Effective
January 19, 2010, the Company acquired certain assets related
to the manure spreader product line of Roda Mfg.,
Inc. The acquisition-date fair value of the total
consideration transferred was approximately
$1,159,000. The operating results of the acquired
business are reflected in the Company’s consolidated
statement of operations from the acquisition date
forward. The amount of revenue attributable to the
Roda Mfg. product line was $273,000 and $834,000 for the
quarter and the nine month period ended August 31,
2011. The amount of revenue from all product lines
for the combined entity as of the period ended August 31,
2011 was $21,761,551 compared with $22,909,802 as of
August 31, 2010. The amounts of expenses for the
individual product lines are not separately identifiable as
the production and related accounting are integrated. Prior
information is not available for the product
line. The acquisition was made to continue the
Company’s growth strategy and diversify its product
offerings inside the agricultural industry. The
purchase price was determined based on an arms-length
negotiated value. The transaction is being
accounted for under the acquisition method of accounting,
with the purchase price allocated to the individual assets
acquired.
In
addition, effective June 11, 2010, the Company acquired
certain assets related to the baler product line of M&W,
a subsidiary of the Alamo Group. The acquisition-date fair
value of the total consideration transferred was
approximately $427,000. The operating results of
the acquired business are reflected in the Company’s
consolidated statement of operations from the acquisition
date forward. The amount of revenue attributable
to the M&W baler product line was $129,000 and $195,000
for the quarter and nine month period ended August
31, 2011. The amount of revenue for the combined
entity as of period ended August 31, 2011 was
$21,761,551 compared with $22,909,802 as of August
31, 2010. The amounts of expenses for individual
product lines are not separately identifiable as the
production and related accounting are
integrated. Prior information is not available for
the product line. The acquisition was made to
continue the Company’s growth strategy and diversify
its product offerings inside the agricultural
industry. The purchase price was determined based
on an arms-length negotiated value. The
transaction is being accounted for under the acquisition
method of accounting, with the purchase price allocated to
the individual assets acquired.
|
Note 15 - Income Tax Provision | 9 Months Ended | ||
---|---|---|---|
Aug. 31, 2011 | |||
Income Tax Disclosure [Text Block] |
During
the quarter ended August 31, 2011 we completed our fiscal
year ending November 30, 2010 tax filings for both Federal
and State Taxing Authorities. We calculated a tax
provision reduction for the year ending November 30,
2010. The tax provision reduction was recognized during
the quarter ended August 31, 2011 and brought our effective
tax rate down during the quarter and year to date ending
August 31, 2011, to 25.2% and 23.7%, respectively. The
tax provision effective tax rate for the comparative quarter
and year to date ending August 31, 2010 was 35.6% and 35.0%,
respectively. The tax provision benefit was due to
taking advantage of additional tax deductions and credits for
the fiscal year ended November 30, 2010.
|