<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] Annual Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [Fee Required]
For the fiscal year ended May 31, 1995
----------------------------------------
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [No Fee Required]
For the transition period from to
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Commission File Number 0-10571
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TOP AIR MANUFACTURING, INC.
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(Exact name of registrant as specified in its charter)
Iowa 42-1155462
- ------------------------------- ----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organiza- Identification No.)
tion)
406 Highway 20, Parkersburg, Iowa 50665
- ----------------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (319) 346-1788
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Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No Par Value
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(Title of class)
Check whether the registrant (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
X Yes No
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Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and will not be
contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-KSB or any amendment to this Form 10-KSB. /-/
The Registrant's revenues for the fiscal year ended May 31, 1995
were $6,215,866.
The aggregate market value of the voting stock held by
non-affiliates is $2,246,174 as of August 21, 1995. (The
exclusion from such amount of the market value of the shares owned
by any person shall not be deemed an admission by the registrant
that such person is an affiliate of the registrant.)
APPLICABLE ONLY TO CORPORATE REGISTRANTS
----------------------------------------
The number of shares outstanding of each of the Registrant's
classes of common stock as of August 21, 1995 is as follows:
Class Number of Shares
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Common, no par value 4,012,099
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Part III: Portions of the definitive proxy statement of the
Registrant for the Registrant's 1995 annual meeting of
shareholders, which definitive proxy statement will be
filed with the Securities and Exchange Commission not
later than September 28, 1995 (120 days after the end of
the Company's most recently completed fiscal year), are
incorporated by reference into Items 9, 10, 11 and 12
hereof.
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PART I
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Item 1 - Description of Business
General
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Top Air Manufacturing, Inc. (hereinafter referred to as "Top
Air" or the "Company") was incorporated under the laws of the
State of Iowa in 1981. Top Air is engaged in the business of
manufacturing several products used primarily in agricultural
operations, including several types of agricultural sprayers,
the Auger Dolly, an apparatus used to facilitate the
relocation of grain augers, the Straw Command, an attachment
for combines that enhances the even spreading of straw and
other harvest byproducts, and a line of sprayer replacement
parts.
Recent Development
- ------------------
On June 26, 1995, the Company completed its purchase of
substantially all of the assets of Clay Equipment Corporation
("Clay Equipment") in exchange for 837,666 shares of the
Company's no par value common stock and the assumption by the
Company of certain liabilities of Clay Equipment.
Clay Equipment, which was incorporated under the laws of the
State of Iowa in 1900, had been engaged in the business of the
design, manufacture and sale of agricultural products,
including a line of agricultural spreaders sold under the name
of "Better Built" at a facility located in Cedar Falls, Iowa.
See "Item 2 - Description of Property," below.
At December 31, 1994, Clay Equipment had total assets of
approximately $3.1 million and generated sales of
approximately $7.8 million in 1994.
Business of Issuer
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Principal Products and Markets
------------------------------
Sprayers. The Company currently manufactures several types of
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agricultural sprayers including skid mount, two-wheel models,
three-wheel models, saddle tank models, home lawn models,
trailer sprayers, tandem wheel sprayers, T-Tank Sprayers,
Master Link sprayers, Terrain Master sprayers and models which
can be mounted in the bed of a pickup truck. The sprayers are
sold in sizes ranging from a 14 to 1,100 gallon capacity. The
Company also offers various accessories for the sprayers
including several models of folding and self-leveling booms in
various lengths and designs.
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The sprayers are used primarily for farming activities. They
can be pulled directly by a tractor or they can be hooked to
a disc so that their combined functions allow the farmer to
eliminate one trip over the ground. The sprayers are used for
spraying jobs of all types, including the spraying of
chemicals, fertilizers, insecticides and weed killers. They
are used by farmers and commercial sprayers primarily for row
crops, but can also be used on other crops, golf courses,
cemeteries, etc. The wheels may be adjusted to compensate for
difficult row crop widths. Trees and shrubs may be sprayed by
a hand gun attachment to the sprayers.
Auger Dolly. Grain augers are generally used by farmers or
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grain elevator operators to fill or empty grain storage
facilities. Without use of the Auger Dolly, the augers are
difficult to transport to a new location. Several individuals
may be required to lift and move them. The Auger Dolly is
designed to lift the end of the auger which enables one or two
individuals to more easily move the grain auger to a new
location.
There are two models of Auger Dollies: a standard model and
an economy model. At the present time, the Company is
manufacturing eight models of collars for the Auger Dolly, the
device by which the auger dolly is attached to the grain
auger.
Straw Command. The Straw Command is attached to the rear of
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a combine to allow straw and harvest trash to be spread evenly
over the field, resulting in a better soil bed for spring
planting and helping to prevent wind and water erosion.
Sprayer Parts. The Company stocks a full line of repair and
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replacement parts to fit all popular models of sprayers. The
Company distributes these parts to retailers and utilizes them
in its own manufacturing processes. The Company has actively
promoted these sprayer parts and has established itself as a
major supplier in the replacement parts market.
Other Products. The Company also custom manufactures products
--------------
for other firms on a contract basis. Traditionally, these
have been limited production runs of new designs.
Method of Distribution
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The Company has six salesmen and five manufacturers'
representatives calling upon dealers and distributors in
twelve states. Efforts are on going to continue expanding its
sales territory into additional states and to further enhance
market penetration in the current marketing areas. The
Company is selling its products primarily to implement
dealers, farm supply stores and feed stores located primarily
in lesser populated agricultural areas for resale to farmers,
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tradesmen and to the general public for commercial and
individual use.
Seasonal Factors
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The sale of sprayers, sprayer parts and sprayer booms is
seasonal with approximately 80% of its sprayer sales being
made from December 1 through May 31 of each year. A large
percentage of Auger Dollies and Straw Command units are sold
during the summer and early fall months in anticipation of the
harvesting season.
Competitive Conditions
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The Company competes with a large number of other agricultural
equipment manufacturers and suppliers who distribute sprayers
and sprayer parts. The Company's products, however, are
considered sufficiently different so that the Company can
establish and maintain a market for its products. In
addition, the Company offers a full line of sprayer products
that add to the Company's ability to penetrate the market.
The Company sells sprayers and fall harvest products on a
dated billing program. Under this program, finance charges
are suspended until May 10 for sprayers, and October 10 for
harvest products to allow the Company's dealers an incentive
to stock larger quantities of products without the necessity
to commit financial resources several months in advance. This
also allows the Company to plan its production on a more
convenient basis.
Major Customers
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The Customer base is sufficiently broad that no customer
accounts for 10% or more of the Company's sales.
Backlog Orders
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The Company had no material sales backlog as of May 31, 1995
or May 31, 1994. Because of the seasonality of the business
of the Company, the Company would normally have little or no
sales backlog at the end of its fiscal year. See "Seasonal
Factors."
Source and Availability of Raw Materials
- ----------------------------------------
The Company currently manufactures the frames for the sprayers
but the remaining component parts are purchased for assembly
in the Company's plant. The Company purchases its raw
materials from a number of suppliers. The Company has had no
difficulty in obtaining component parts and does not
anticipate any difficulty in obtaining sufficient component
parts and raw materials as production increases.
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Patents and Trademarks
- ----------------------
The Company has received a design patent on the three-wheel
sprayer, the master-link sprayer and the self-leveling boom,
and has trademark registrations for Top-Air(R) and E-Z Boy(R).
With its acquisition of Clay Equipment, the company now sells
a line of agricultural spreaders under the registered trade
name of "Better Built." While the Company believes that its
patents and trademarks have significant value, the Company is
not dependent upon patents, trademarks, service marks or
copyrights.
Product Warranty
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The Company has warranted the sprayers, sprayer booms, Straw
Commands, Auger Dollies and other products manufactured by the
Company to be free from defects in material and workmanship
under normal use and service for a period of twenty-four
months after date of purchase. The Company carries product
liability insurance.
Environmental Compliance
- ------------------------
The Company believes that it is presently in substantial
compliance with all existing applicable environmental laws and
does not anticipate that such compliance will have a material
effect on its future capital expenditures, earnings or
competitive position.
Employees
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On May 31, 1995, the Company's plant and executive offices
employed forty-six people on a full-time basis. Of this
number, five are executive officers and the remainder are
sales representatives, production workers, secretaries and
truckers. None of the Company's employees are currently
covered under collective bargaining agreements. Following the
acquisition of Clay Equipment, substantially all of Clay
Equipment's 63 full-time employees became full-time employees
of the Company. Clay Equipment's production workers were
covered under a collective bargaining agreement with Local
1728 of the IAMAW (the "Union"), and the Company has agreed to
recognize the Union as the exclusive bargaining agent for
those former Clay Equipment employees.
Research and Development
- ------------------------
Research and development costs incurred for the years ended
May 31, 1995, 1994 and 1993 were $173,791, $150,242 and
$90,846, respectively. Research and development activities
consist primarily of wages paid for the design and testing of
new equipment and improvements to existing equipment.
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Item 2 - Description of Property
The Company owns eight acres of land in Parkersburg, Iowa. The
facilities located on this land consist of a building containing
the executive offices (approximately 1,600 square feet), assembling
area (approximately 2,400 square feet) and manufacturing area
(approximately 10,000 square feet). Clay Equipment owned a
manufacturing facility located in Cedar Falls, Iowa (the "City"),
consisting of a building containing the executive offices,
assembling and manufacturing areas of approximately 120,000 square
feet. In July, 1995 the City purchased the former Clay Equipment
facility through its power of eminent domain for a purchase price
of $631,500, which amount was included in the assets acquired by
the Company (subject to the holdback therefrom for a period of up
to two years of $131,500 in an interest bearing escrow account to
secure environmental obligations, if any). The Company will occupy
the former Clay Equipment Facility pending relocation of both of
its current manufacturing facilities discussed below. The Company
currently intends to sell its Parkersburg property facility
following such relocation. It is expected that any gain or loss on
such sale will not be material.
Under a program to aid flood distress businesses, the City is
constructing a new 85,000 square foot facility (the "New Facility")
on nine acres of land located in an industrial park in the City,
and upon completion of the New Facility (expected to occur in the
Spring of 1996), both of the Company's current manufacturing
facilities will be relocated to the New Facility. The City will
lease the New Facility to the Company (as assignee of Clay
Equipment) pursuant to a lease for an initial term of 10 years with
a 5-year renewal option on the part of the City, as lessor. The
Company will have an option to buy the New Facility for $1.2
million at the end of the lease term. Construction of the New
Facility will be financed jointly by the Federal Economic
Development Administration and the City. See "Management's
Discussion and Analysis or Plan of Operation - Capital Resources."
The Company also owns a warehouse in Parkersburg (containing
approximately 8,700 square feet) which was purchased from a former
officer for $80,000 on December 20, 1988. A portion of the
purchase price is being amortized annually through January, 1997.
The Company believes its facilities are adequately insured.
Item 3 - Legal Proceedings
There are no material legal proceedings pending to which the
Company is a party or of which any of its property is the subject.
No proceedings were terminated during the fourth quarter of the
fiscal year covered by this Report.
Item 4 - Submission of Matters to a Vote of Security Holders
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There were no matters submitted to a vote of security holders
during the fourth quarter of the fiscal year covered by this
Report.
<TABLE>
Item 4A - Executive Officers of the Registrant
<CAPTION>
Name Age Title
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<S> <C> <C>
Steven R. Lind 33 President and Chief Executive Officer
James R. Harken 40 Vice President - Operations
Scott L. Wildeboer 35 Vice President - Manufacturing
Kenneth R. Wagahoff 62 Vice President - Marketing
Steven F. Bahlmann 37 Secretary and Treasurer
</TABLE>
Set forth below are descriptions of the backgrounds of the
executive officers of the Company and their principal occupations
for at least the past five years:
Mr. Lind has served as President of the Company since November 1992
and was appointed Chief Executive Officer in July 1993. He also
has served as a Director of the Company since 1993. Mr. Lind
served as Chief Financial Officer of the Company from May 1990 to
November 1992 and Controller of the Company from August, 1988 to
May, 1990.
Mr. Harken has served as Vice President - Operations since
September 1982.
Mr. Wildeboer has served as Vice President - Manufacturing since
January 1990. From 1983 to 1990 Mr. Wildeboer served as plant
supervisor of the Company.
Mr. Wagahoff has served as Vice President - Marketing since
November 1992. From 1986 to 1992 Mr. Wagahoff served as sales
manager of the Company.
Mr. Bahlmann has served as Secretary and Treasurer since October
1993 and as Controller since January 1993. He had served as a
Staff Accountant with McGladrey & Pullen, LLP, certified public
accountants, from 1987 to 1993.
PART II
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Item 5 - Market for Common Equity
and Related Stockholder Matters
Market Information
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The Company's common stock is currently quoted on the Bulletin
Board of the National Association of Securities Dealers (NASD)
under the symbol TOPM. Prior to April 13, 1995, the Company's
common stock was quoted on the NASD Automated Quotation Small-
Cap Market System. The Top Air Common Stock was delisted from
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<PAGE> 9
quotation on the NASDAQ Small-Cap Market in April for failure
to maintain a certain minimum bid price of the stock. The
Company's common stock was approved for relisting on the
NASDAQ Small Cap Market effective August 14, 1995.
The table below lists the high and low bid prices for
each quarterly period during the two-year period ended
May 31, 1995. The high and low bid prices from June 1,
1993 through April 12, 1995, during which time the
Company's common stock was quoted on by the NASDAQ Small
Cap Market, were provided by the NASDAQ Small Cap Market,
and the high and low bid prices from April 13, 1995,
through the end of the fourth fiscal quarter of 1995 were
provided by the Company's market makers.
<TABLE>
<CAPTION>
Bid Price Range
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Fiscal 1995 Fiscal 1994
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High Low High Low
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<S> <C> <C> <C> <C>
1st Quarter $1.0000 $0.6875 $1.2500 $0.8125
2nd Quarter 1.3750 0.7500 0.8125 0.6250
3rd Quarter 0.8125 0.5625 1.0625 0.6250
4th Quarter 1.0000 0.6250 1.1250 0.8750
</TABLE>
These quotations reflect interdealer prices, without retail
markup, markdown or commission and may not necessarily
represent actual transactions.
Stockholders
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As of May 31, 1995 the Company had approximately 400 holders
of record of the Company's common stock. Shares of common
stock were distributed to approximately 100 additional
shareholders in connection with the Company's acquisition of
Clay Equipment.
Dividends
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The holders of common shares are entitled to receive dividends
when and as declared by the Board of Directors. The Company
has never paid a cash dividend. It intends to retain any
earnings to finance the development of its business and,
accordingly, does not anticipate payment of any cash dividends
in the foreseeable future.
Item 6 - Management's Discussion
and Analysis or Plan of Operation
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Results of Operations
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Fiscal 1995 Compared to Fiscal 1994
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Net sales increased $661,684, or 11.9%, to $6,215,866 in
fiscal 1995 from $5,554,182 in fiscal 1994.
Approximately $77,000, or 11.6%, of this increase was the
result of increases in the sale prices charged by the
Company. The remaining increase was primarily a result
of a combination of increased marketing efforts,
acceptance of the new T-Tank sprayers and an overall
favorable agricultural economy. Sales of sprayers
increased $650,346, or 18.4%, and replacement parts
increased $11,338, or 0.6%. With continued development
of new products and the acquisition of Clay Equipment,
the Company will be able to expand its product line and
enter new markets.
Cost of goods sold increased 8.5% to $4,042,058 in fiscal
1995 from $3,725,139 in fiscal 1994. However, cost of
goods sold as a percentage of net sales decreased to
65.0% in fiscal 1995 from 67.1% in fiscal 1994. The
decreased percentage was primarily a result of three
factors. First, the Company was able to raise selling
prices, which more than offset increased input prices.
Secondly, as mentioned above, a greater percentage of
sprayers were sold, as opposed to replacement parts
during the past year. Sprayers normally carry a higher
profit margin than replacement parts. Finally, the fixed
costs included in cost of goods sold were spread over a
substantially higher volume of sales.
Operating expenses increased $102,501 or 7.5% to
$1,473,928 (or 23.7% of net sales) in fiscal 1995 from
$1,371,427 (or 24.7% of net sales) in fiscal 1994. The
increase resulted from expected increases in variable
expenses coupled with planned increases in selling
expenses and research and development expenses which
enabled the Company to expand the product line and sales.
Interest expense increased $39,152 or 63.7% to $100,584
(or 1.6% of net sales) in fiscal 1995 from $61,432 (or
1.1% of net sales) in fiscal 1994. The increase was a
result of higher interest rates coupled with an increase
in the average balance outstanding under the Company's
line of credit.
The Company's effective income tax rate decreased to
38.9% of income before taxes in fiscal 1995 from 39.5% in
fiscal 1994.
Net income for fiscal 1995 was $371,012 or 6.0% of net
sales, an increase of $127,502 (or 52.4%) from fiscal
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1994 net income of $243,510, or 4.4% of fiscal 1994 net
sales.
Fiscal 1994 Compared to Fiscal 1993
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Net sales increased $697,275, or 14.4%, to $5,554,182 in
fiscal 1994 from $4,856,907 in fiscal 1993. Approximately
$118,000, or 16.9%, of this increase was the result of
increases in the sale prices charged by the Company. The
remaining increase was primarily a result of a combination of
successful sales of new products introduced, increased
marketing efforts and an overall favorable agricultural
economy. Sales of sprayers increased $642,528 or 21.8% and
replacement parts increased $54,747 or 2.9%. The Company is
continuing to develop new products and to modify existing
products to meet the demands of the spraying industry.
Cost of goods sold increased 7.6% to $3,725,139 in fiscal 1994
from $3,461,556 in fiscal 1993. However, cost of goods sold
as a percentage of net sales decreased to 67.1% in fiscal 1994
from 71.3% in fiscal 1993. The decreased percentage was a
result of three primary factors. First, the Company was able
to raise selling prices, which more than offset increased
input prices. Secondly, as mentioned above, a greater
percentage of sprayers were sold, as opposed to replacement
parts, during the past year. Sprayers normally carry a higher
profit margin than replacement parts. Finally, the fixed
costs included in cost of goods sold were spread over a
substantially higher volume of sales.
Operating expenses increased $98,673, or 7.8%, to $1,371,427
(or 24.7% of net sales) in fiscal 1994 from $1,272,754 (or
26.2% of net sales) in fiscal 1993. The increase resulted
from expected increases in variable expenses coupled with
planned increases in selling expenses and research and
development expenses which enabled the Company to expand the
product line and sales. The Company is continuing to add
sales personnel, as necessary, to open up new sales
territories.
Interest expense decreased $4,653, or 7.0%, to $61,432 (or
1.1% of net sales) in fiscal 1994 from $66,085 (or 1.4% of net
sales) in fiscal 1993. Such decrease in interest expense
resulted principally from a reduction in the average balance
outstanding under the Company's line of credit.
The Company's effective income tax rate increased to 39.5% of
income before taxes in fiscal 1994 from 20.0% in fiscal 1993.
Net income for fiscal 1994 was $243,510, or 4.4% of net sales,
an increase of $186,966 (or 331%) from the fiscal 1993 net
income of $56,544, or 1.2% of fiscal 1993 net sales.
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Liquidity
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The Company generated cash flow from operating activities
during fiscal 1995 of $129,628 which decreased from the cash
generated in fiscal 1994 of $504,670. The decrease in cash
flow was primarily due to increases in inventories and trade
receivables, offset by a general increase in current
liabilities and an increase in net income. The fiscal 1994
cash generated decreased from the cash generated in fiscal
1993 by $51,661. The fiscal 1994 decrease was primarily due
to a general increase in current assets offset by a general
increase in current liabilities and an increase in the net
income.
Investing activities produced a negative cash flow during
fiscal 1995 of $304,554 which increased over the negative cash
flow in fiscal 1994 of $245,104 which had increased from the
negative cash flow in fiscal 1993 of $90,740. The changes in
both years were primarily a result of increased fixed asset
purchases.
Financing activities generated a positive cash flow of
$149,433 for fiscal 1995 which increased cash flow compared to
the negative cash flows of $35,336 and $300,929 from fiscal
1994 and 1993, respectively. The increase in fiscal 1995 was
primarily a result of increased net long-term borrowings and
the decrease in fiscal 1994 was primarily a result of
increased net short-term borrowings.
The Company intends to use cash generated from operations and
short-term bank loans to fund fiscal 1996 cash requirements.
As of May 31, 1995, the Company had a $3,000,000 line of
credit, from a bank pursuant to a credit and security
agreement originally dated October 3, 1994 which expires
October 1, 1995, and bears interest at the prime rate (9.00%,
as of May 31, 1995). As of May 31, 1995, there was no
indebtedness outstanding under the Company's line of credit.
The Company has working capital requirements due primarily to
the need to maintain inventories and to finance accounts
receivable. The Company believes it has access to sufficient
working capital for its present and immediately foreseeable
working capital requirements. The Company anticipates that it
will be borrowing funds seasonally, as the need arises.
The Company's working capital increased to $2,316,516 in
fiscal 1995 from $1,965,918 in fiscal 1994 and $1,868,934 in
fiscal 1993. The current ratio decreased to 3.26:1 in fiscal
1995 from 3.29:1 in fiscal 1994 and 5.40.4:1 in fiscal 1993.
The overall working capital increase is primarily due to trade
receivables, inventories and accounts payable increasing
without a proportional increase in short-term borrowing
necessary to finance them.
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In connection with its acquisition of substantially all of the
assets of Clay Equipment, the Company entered into new credit
arrangements with a banking institution to refinance the then
existing debt of both the Company and Clay Equipment by means
of a term loan in the amount $1.5 million (the "Term Loan"),
a bridge loan in the amount of up to $0.5 million (the "Bridge
Loan"), of which $0.4 million was utilized, and a new $3.0
million revolving line of credit (the "Revolver") to fund
working capital requirements. Interest on the Term Loan and
the Bridge Loan accrues at a fluctuating rate equal at all
times to one-half percent over the Bank's base rate (which
base rate, as of the closing date was 9.0%) and interest on
the from time-to-time outstanding principal balance of the
Revolver accrues at a fluctuating rate equal at all times to
the Bank's base rate. Subject to certain requirements that
the outstanding principal be reduced by a percentage of cash
flow, the Term Loan is due June 26, 2000, and the Bridge Loan
requires that the principal be repaid in two installments, one
due May 31, 1996, and one due May 31, 1997. The Loan
Agreement contains customary provisions that certain financial
criteria be met and requires that all proceeds from the sale
of the former Clay Equipment facility and from the sale of the
Company's present facility be applied to repay principal
amounts due under the Bridge Loan, with any excess to be
applied in reduction of the Term Loan. The Bridge Loan was
repaid in full on July 7, 1995. The Term Loan and the
Revolver are secured by all of the assets of the Company,
which include the assets acquired by the Company from Clay
Equipment.
Capital Resources
- -----------------
Until its acquisition of substantially all of the assets of
Clay Equipment, the Company had experienced minor changes in
capital assets during the four year period that ended May 31,
1995. As indicated above, the consideration for such former
Clay Equipment assets consisted primarily of its shares of the
Company's common stock. The New Facility is being constructed
by the City, to be leased by the City to the Company (as
assignee of Clay Equipment) under a lease for an initial term
of 10 years (with a renewable five year option on the part of
the City, as lessor) at an annual rental of $200,664 (which
includes real estate and personal property taxes), and Top Air
will be responsible for the payment of all utilities,
insurance and maintenance. The relocation costs of the former
Clay Equipment Facility will be borne by the City and the
Federal Economic Development Authority. The cost of
relocating the Company's Parkersburg facility, which is not
expected to be material, will be provided from internally
generated funds. The Company will have an option to buy the
New Facility for $1.3 million at the end of the lease term.
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<PAGE> 14
Effects of Inflation
- --------------------
Inflation and changing prices have had a minor effect on the
Company's cost of sales and operating expenses. The Company
had minor price increases during fiscal 1995 and fiscal 1994
as disclosed above.
Item 7 - Financial Statements
The following financial statements of the Company are included in
this report.
1. FINANCIAL STATEMENTS
Independent Auditor's report
Balance sheets, May 31, 1995
and 1994
Statements of income, years
ended May 31, 1995, 1994,
and 1993
Statements of stockholders'
equity, years ended May 31,
1995, 1994 and 1993
Statements of cash flows, years
ended May 31, 1995, 1994
and 1993
Notes to financial statements
Item 8 - Changes In and Disagreements with Accountants
On Accounting and Financial Disclosure
During the Company's two most recent fiscal years, the Company's
principal independent accountant has not resigned, declined to
stand for re-election or been dismissed. Since the beginning of
such period to the date hereof, there have been no disagreements on
accounting and financial disclosure with the Company's independent
public accountants.
PART III
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Items 9, 10, 11 and 12
The information called for by Items 9, 10, 11 and 12 is
incorporated by reference to the definitive proxy statement for the
1995 Annual Meeting of Shareholders of the Company (which involves
the election of Directors), which will be filed with the Commission
not later than September 28, 1995 (120 days after the end of the
Company's most recently completed fiscal year).
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<TABLE>
Item 13 - Exhibits and Reports on Form 8-K
(a) Exhibits
--------
<CAPTION>
Exhibit
Number Description
- ------- -----------
<C> <S>
<F*>3(a) Amended and restated Articles of Incorporation of
the Registrant, filed as Exhibit 3(c) to the
Company's Annual Report on Form 10-K for fiscal
year 1991 (the "1991 Form 10-K").
<F*>3(b) Amended and Restated By-laws of the Registrant,
filed as Exhibit 3(d) to the 1991 Form 10-K.
<F*>3(c) Amendments to the Amended and Restated By-laws,
effective October 21, 1992, filed as Exhibit 3(c)
to the Company's Annual Report on Form 10-KSB for
fiscal year 1993 (the "1993 Form 10-KSB).
<F*>9 Amended and Restated Voting Trust Agreement by and
among Robert J. Freeman and Dennis W. Dudley and
their successors, dated September 15, 1992, filed
as Exhibit 9 to the 1993 Form 10-KSB.
<F*>10(a) Land contract between the Company and Wayne C.
Dudley dated December 20, 1988, filed as Exhibit D
to the Company's Annual Report on Form 10-K for
fiscal year 1989 (the "1989 Form 10-K").
<F*>10(b) Promissory note dated January 1, 1991, between the
Company and Wayne C. Dudley (the "Dudley Note"),
filed as Exhibit 10(b) to the 1991 Form 10-K.
<F*>10(c) Letter amendment, dated August 5, 1994, to the
Dudley Note, filed as Exhibit 10(c) to the
Company's Annual Report on Form 10-K for fiscal
year 1994 (the "1994 Form 10-KSB").
<F*>10(d) 1993 Stock Option Plan adopted by the Board of
Directors November 6, 1992, filed as Exhibit 10(c)
to the Company's 1993 Form 10-KSB.
-15-
<PAGE> 16
<CAPTION>
Exhibit
Number Description
- ------- -----------
<C> <S>
<F*>10(e) Summary Plan description for 401(k) plan adopted by
the Board of Directors on October 22, 1991, filed
as Exhibit 28(b) to the Company's Annual Report on
Form 10-K for fiscal year 1992 (the "1992 Form 10-
K").
<F**>10(f) Promissory note dated October 3, 1994, between the
Company and Norwest Bank Iowa, N.A.
<F**>10(g) Variable balance promissory note dated October 3,
1994, between the Company and Norwest Bank Iowa,
N.A.
<F**>10(h) Credit and Security Agreement originally dated
October 3, 1994 between the Company and Norwest
Bank Iowa, N.A.
<F**>11 Statement re computation of per share earnings.
<F**>23 Consent of accountants.
- --------------------
<FN>
<F*> Incorporated by reference to the indicated documents or parts
thereof, previously filed with the Commission.
<F**> Filed herewith.
</TABLE>
(b) Reports on Form 8-K
-------------------
A report on Form 8-K was filed with the Securities and
Exchange commission dated April 11, 1995. The Company
reported that it had entered into a definitive agreement with
Clay Equipment Corporation to acquire substantially all of the
assets of Clay Equipment in exchange for 750,000 shares of
Company stock and the assumption of certain liabilities of
Clay Equipment. The Company also reported on the action taken
by the Nasdaq Listing Qualifications Committee to delete the
Company's common stock from quotation on the Nasdaq Small-Cap
Market and that pending the results of the Company's appeal of
such action, the Company's common stock would be quoted on the
Nasdaq OTC Bulletin Board. See "Item 5 - Market for Common
Equity and Related Stockholder Matters."
-16-
<PAGE> 17
<TABLE>
INDEX TO FINANCIAL STATEMENTS
-----------------------------
<CAPTION>
Description Page
- ----------- ----
<S> <C>
Independent Auditor's report . . . . . . . . . . . . . F-1
Balance sheets, May 31, 1995 and 1994. . . . . . . . . F-2 and F-3
Statements of income, years ended May 31,
1995, 1994, and 1993 . . . . . . . . . . . . . . . . F-4
Statements of stockholders' equity,
years ended May 31, 1995, 1994 and 1993. . . . . . . F-5
Statements of cash flows, years ended
May 31, 1995, 1994 and 1993. . . . . . . . . . . . . F-6 and F-7
Notes to financial statements. . . . . . . . . . . . . F-8 to F-13
</TABLE>
<PAGE> 18
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Top Air Manufacturing, Inc.
Parkersburg, Iowa
We have audited the accompanying balance sheets of Top Air Manufacturing, Inc.
as of May 31, 1995 and 1994, and the related statements of income,
stockholders' equity, and cash flows for the years ended May 31, 1995, 1994
and 1993. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Top Air Manufacturing, Inc.
as of May 31, 1995 and 1994, and the results of its operations and its cash
flows for the years ended May 31, 1995, 1994 and 1993 in conformity with
generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
Waterloo, Iowa
July 5, 1995
F-1
<PAGE> 19
TOP AIR MANUFACTURING, INC.
<TABLE>
BALANCE SHEETS
MAY 31, 1995 AND 1994
<CAPTION>
ASSETS (NOTE 3) 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 414,748 $ 440,241
Trade receivables, less allowance for doubtful
accounts 1995 $59,000; 1994 $47,000 1,276,544 1,069,360
Current portion of long-term notes receivable (Note 4) 15,690 26,271
Inventories (Note 2) 1,553,830 1,218,985
Prepaid expenses 52,959 49,153
Deferred income taxes (Note 5) 28,000 20,500
----------------------------------
TOTAL CURRENT ASSETS 3,341,771 2,824,510
----------------------------------
Long-Term Receivables and Other Assets
Notes receivable, net of current portion (Note 4) 54,711 67,401
Other assets (Note 10) 73,734 1,144
----------------------------------
128,445 68,545
----------------------------------
Property and Equipment
Land and improvements 74,750 72,740
Buildings 454,933 450,075
Machinery and equipment 559,049 509,568
Transportation equipment 361,444 274,642
Office equipment 159,901 132,101
----------------------------------
1,610,077 1,439,126
Less accumulated depreciation 831,371 773,595
----------------------------------
778,706 665,531
----------------------------------
$ 4,248,922 $ 3,558,586
==================================
See Notes to Financial Statements.
F-2
<PAGE> 20
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Liabilities
Current maturities of long-term debt (Note 3) $ 69,385 $ 35,813
Accounts payable 435,172 398,595
Accrued salaries and bonuses, including amounts
due to officers 1995 $75,878; 1994 $71,570 156,913 134,047
Accrued commissions payable 126,715 104,122
Other accrued expenses, including amounts due to
officers and related party 1995 $6,948; 1994 $6,827 47,008 47,381
Income taxes payable (Note 5) 190,062 138,634
----------------------------------
TOTAL CURRENT LIABILITIES 1,025,255 858,592
----------------------------------
Long-Term Debt (Note 3) 270,207 154,544
----------------------------------
Deferred Income Taxes (Note 5) 79,000 42,200
----------------------------------
Commitments (Notes 6 and 10)
Stockholders' Equity (Note 3)
Capital stock, common, no par value; stated value $.0625
per share; authorized 20,000,000 shares; issued 1995
3,174,433 shares; 1994 3,174,100 shares (Note 6) 198,402 198,381
Additional paid-in capital 840,877 840,700
Retained earnings 1,835,181 1,464,169
----------------------------------
2,874,460 2,503,250
----------------------------------
$ 4,248,922 $ 3,558,586
==================================
See Notes to Financial Statements.
</TABLE>
F-3
<PAGE> 21
TOP AIR MANUFACTURING, INC.
<TABLE>
STATEMENTS OF INCOME
YEARS ENDED MAY 31, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 6,215,866 $ 5,554,182 $ 4,856,907
Cost of goods sold 4,042,058 3,725,139 3,461,556
-------------------------------------------
GROSS PROFIT 2,173,808 1,829,043 1,395,351
-------------------------------------------
Operating expenses:
Selling 869,373 772,980 728,291
Provision for doubtful accounts 11,039 9,156 11,035
Other general and administrative, including
amounts paid to related parties 1995 $48,000;
1994 $45,500; 1993 $35,000 (Note 7) 593,516 589,291 533,428
-------------------------------------------
1,473,928 1,371,427 1,272,754
-------------------------------------------
OPERATING INCOME 699,880 457,616 122,597
-------------------------------------------
Financial income (expense):
Interest income, including amounts
from stockholders 1995 none;
1994 $1,040; 1994 $5,106 8,281 6,507 14,034
Interest expense, including amounts paid to
related party and former officer 1995 $1,710;
1994 $2,403; 1993 $3,108 (Note 3) (100,584) (61,432) (66,085)
-------------------------------------------
(92,303) (54,925) (52,051)
-------------------------------------------
INCOME BEFORE INCOME TAXES 607,577 402,691 70,546
Federal and state income taxes (Note 5) 236,565 159,181 14,002
-------------------------------------------
NET INCOME $ 371,012 $ 243,510 $ 56,544
===========================================
Earnings per common and common
equivalent share (Note 9) $ 0.12 $ 0.08 $ 0.02
===========================================
See Notes to Financial Statements.
</TABLE>
F-4
<PAGE> 22
TOP AIR MANUFACTURING, INC.
<TABLE>
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED MAY 31, 1995, 1994 AND 1993
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Capital Additional
Stock, Paid-In Retained
Issued Capital Earnings Total
---------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, May 31, 1992 $ 198,381 $ 840,700 $ 1,164,115 $ 2,203,196
Net income - - 56,544 56,544
---------------------------------------------------------
Balance, May 31, 1993 198,381 840,700 1,220,659 2,259,740
Net income - - 243,510 243,510
---------------------------------------------------------
Balance, May 31, 1994 198,381 840,700 1,464,169 2,503,250
Net income - - 371,012 371,012
Issuance of 333 shares of
common stock upon the
exercise of options 21 177 - 198
---------------------------------------------------------
Balance, May 31, 1995 $ 198,402 $ 840,877 $ 1,835,181 $ 2,874,460
=========================================================
See Notes to Financial Statements.
</TABLE>
F-5
<PAGE> 23
TOP AIR MANUFACTURING, INC.
<TABLE>
STATEMENTS OF CASH FLOWS
YEARS ENDED MAY 31, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income $ 371,012 $ 243,510 $ 56,544
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 159,379 135,220 128,733
Amortization 112 112 112
Deferred income taxes 29,300 (5,100) (4,150)
(Gain) on sale of equipment (17,431) (11,466) (4,684)
Change in assets and liabilities:
(Increase) decrease in:
Trade receivables (207,184) (187,778) 259,716
Inventories (334,845) (105,636) 58,629
Prepaid expenses (3,806) 212 31,035
Increase (decrease) in:
Accounts payable and accrued expenses 81,663 300,470 52,342
Income taxes payable 51,428 135,126 (21,946)
----------------------------------------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 129,628 504,670 556,331
----------------------------------------------
Cash Flows From Investing Activities
Proceeds from sale of equipment 70,050 41,093 16,575
Purchase of property and equipment (325,173) (264,197) (123,929)
Payments received on long-term
notes receivable 23,271 28,000 16,614
Increase in intangible and other assets (72,702) (50,000) -
----------------------------------------------
NET CASH (USED IN)
INVESTING ACTIVITIES (304,554) (245,104) (90,740)
----------------------------------------------
Cash Flows from Financing Activities
Proceeds from short-term borrowings 3,310,000 2,915,000 3,075,000
Principal payments on short-term borrowings (3,310,000) (2,915,000) (3,329,000)
Proceeds from long-term borrowings 360,000 - -
Principal payments on long-term borrowings (210,765) (35,336) (46,929)
Proceeds from issuance of common stock
1995 333 shares; 1994 and 1993 none 198 - -
----------------------------------------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 149,433 (35,336) (300,929)
----------------------------------------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (25,493) 224,230 164,662
Cash and Cash Equivalents
Beginning 440,241 216,011 51,349
----------------------------------------------
Ending $ 414,748 $ 440,241 $ 216,011
==============================================
F-6
<PAGE> 24
<CAPTION>
TOP AIR MANUFACTURING, INC.
STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED MAY 31, 1995, 1994 AND 1993
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Supplemental Disclosures of Cash Flow
Information
Cash payments for:
Interest $ 99,341 $ 61,750 $ 69,761
==============================================
Income Taxes $ 155,837 $ 29,155 $ 40,098
==============================================
Supplemental Schedule of Noncash Investing
and Financing Activities
Long-term note receivable received in
payment for sale of intangible asset (Note 4) $ 50,000
==============
See Notes to Financial Statements.
</TABLE>
F-7
<PAGE> 25
TOP AIR MANUFACTURING, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of business: The Company's operations consist of the design,
- -------------------
manufacture and sale of agricultural equipment and sprayer repair and
replacement parts to dealers located primarily in twelve midwestern states on
credit terms that the Company establishes for individual customers.
Significant accounting policies:
- --------------------------------
Revenue recognition: Sales of all products are recognized as goods are
--------------------
shipped.
Cash and cash equivalents: For purposes of reporting cash flows, the
--------------------------
Company considers all money market funds and savings accounts to be cash
equivalents.
Inventories: Inventories are valued at the lower of cost (first-in,
------------
first-out method) or market.
Property and equipment and depreciation: Property and equipment is carried
----------------------------------------
at cost. Depreciation on property and equipment is computed by the straight-
line method over the estimated useful lives of the assets.
Income taxes: Deferred taxes are provided on a liability method whereby
-------------
deferred tax assets are recognized for deductible temporary differences
and operating loss carryforwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are
the differences between the reported amounts of assets and liabilities and
their tax bases. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment.
Research and development: Research and development costs are charged to
-------------------------
operations as they are incurred.
NOTE 2. COMPOSITION OF INVENTORIES
<TABLE>
Inventories at May 31, 1995 and 1994 consisted of the following:
<CAPTION>
1995 1994
-----------------------------
<S> <C> <C>
Raw materials $ 47,053 $ 31,491
Work in process 36,095 40,720
Finished goods 1,470,682 1,146,774
-----------------------------
$ 1,553,830 $ 1,218,985
=============================
</TABLE>
F-8
<PAGE> 26
TOP AIR MANUFACTURING, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 3. PLEDGED ASSETS AND RELATED DEBT
The Company has a line of credit agreement with a bank which expires October
1, 1995, under which they may borrow up to $3,000,000 in current notes
payable based on a percentage of inventory and trade receivables. Based on
the levels of inventory and trade receivables, approximately $1,855,000 could
be borrowed under this agreement at May 31, 1995. The interest rate on
advances under this agreement is the bank's prime rate (effective rate of 9%
at May 31, 1995). There were no amounts borrowed on the line of credit as of
May 31, 1995 and 1994. <Fa>
<TABLE>
Long-term debt at May 31, 1995 and 1994 consisted of the following:
<CAPTION>
Amount Owed
-----------------------------
1995 1994
-----------------------------
<S> <C> <C>
Note payable, bank, due in monthly installments of $7,375,
including interest at 8.75%, through October 3, 1999. <Fa> $ 326,592 $ -
Contract payable, stockholder and former officer, due in annual
installments of $7,000, plus interest at 10%, through January 1,
1997, collateralized by a warehouse with a depreciated cost
at May 31, 1995 of $68,421. 13,000 20,000
Note payable, bank, due in monthly installments of $3,450,
including interest at .75% over the bank's prime rate. <Fa> - 170,357
-----------------------------
339,592 20,000
Less current maturities 69,385 35,813
-----------------------------
$ 270,207 $ (15,813)
=============================
<FN>
<Fa> These borrowings are collateralized by substantially all of the assets of
the Company except land and buildings. The agreements contain various
restrictive covenants including, among others, ones which require the Company
to maintain certain amounts of working capital and equity and financial
ratios. All covenants have been complied with at May 31, 1995.
</TABLE>
<TABLE>
The following is a schedule by years of the maturities of the long-term debt
as of May 31, 1995:
<CAPTION>
Year ending May 31:
<S> <C>
1996 $ 69,385
1997 74,069
1998 74,270
1999 81,035
2000 40,833
------------
$ 339,592
============
</TABLE>
F-9
<PAGE> 27
TOP AIR MANUFACTURING, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 4. NOTE RECEIVABLE
<TABLE>
Notes receivable as of May 31, 1995 consist of the following:
<S> <C>
8% note, to be received $3,310 quarterly, including interest, through
November 1997. $ 29,729
Stockholder, noninterest bearing, to be received three payments of $1,500
a year through January 2004. 40,672
----------
70,401
Less current portion 15,690
----------
$ 54,711
==========
</TABLE>
NOTE 5. INCOME TAXES
<TABLE>
Net deferred tax liabilities consist of the following components as of May 31,
1995 and 1994:
<CAPTION>
1995 1994
-----------------------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts $ 20,975 $ 16,450
Inventory allowances 6,500 3,525
Warranty reserve 525 525
-----------------------
28,000 20,500
Deferred tax liabilities, equipment 79,000 42,200
-----------------------
$ 51,000 $ 21,700
=======================
</TABLE>
<TABLE>
The deferred tax amounts mentioned above have been classified on the
accompanying balance sheets as of May 31, 1995 and 1994 as follows:
<CAPTION>
1995 1994
-----------------------
<S> <C> <C>
Current assets $(28,000) $(20,500)
Noncurrent liabilities 79,000 42,200
-----------------------
$ 51,000 $ 21,700
=======================
</TABLE>
<TABLE>
Income tax expense is made up of the following components:
<CAPTION>
Year Ended May 31,
-------------------------------------
1995 1994 1993
-------------------------------------
<S> <C> <C> <C>
Current tax expense:
Federal $ 185,500 $ 150,237 $ 15,000
State 21,765 14,044 3,152
-------------------------------------
207,265 164,281 18,152
Deferred tax expense (credit) 29,300 (5,100) (4,150)
-------------------------------------
$ 236,565 $ 159,181 $ 14,002
=====================================
</TABLE>
F-10
<PAGE> 28
TOP AIR MANUFACTURING, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
<TABLE>
Total reported tax expense applicable to the Company's operations varies from
the amount that would have resulted by applying the federal income tax rate
(1995 and 1994 35%, 1993 34%) to income before income taxes for the following
reasons:
<CAPTION>
Year Ended May 31,
-------------------------------------
1995 1994 1993
-------------------------------------
<S> <C> <C> <C>
Income tax expense at statutory federal
income tax rate $ 212,652 $ 140,942 $ 20,926
State tax expense, net of federal
income tax benefit 14,147 9,129 2,554
Benefit of income taxed at lower rates (6,076) (3,350) (10,540)
Other 15,842 12,460 1,062
-------------------------------------
$ 236,565 $ 159,181 $ 14,002
=====================================
</TABLE>
NOTE 6. STOCK OPTION PLANS
The Company has a stock option plan adopted in 1993 which provides for the
issuance of a maximum of 250,000 shares of common stock to officers, directors
and key employees at a price per share of not less than 100% of the market
price at the date of grant. The options granted under this plan become
exercisable over three years.
The Company had an incentive stock option plan adopted in 1983 which expired
during the year ended May 31, 1993, which provided for the issuance of a
maximum of 500,000 shares of common stock to officers and key employees at a
price per share of not less than 100% of the market price at the date of
grant.
<TABLE>
The following table summarizes the options to purchase shares of the Company's
common stock:
<CAPTION>
Stock Options
------------------------------------------------
Outstanding Exercisable Price Range
------------------------------------------------
<S> <C> <C> <C>
Balance at May 31, 1993 53,950 14,950 $.6250 - $.8125
Granted 41,000 - $.8438
Became exercisable - 12,665 $.5938
Exercised - -
Cancelled (13,950) (12,950) $.6250 - $.8125
------------------------------------------------
Balance at May 31, 1994 81,000 14,665 $.5938 - $.8438
Granted 59,500 - $.7500 - $1.000
Became exercisable - 25,664 $.5938 - $.8438
Exercised (333) (333) $.5938
Cancelled (3,000) (1,333) $.5938 - $.8438
------------------------------------------------
Balance at May 31, 1995 137,167 38,663 $.5938 $1.000
================================================
</TABLE>
F-11
<PAGE> 29
TOP AIR MANUFACTURING, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 7. RESEARCH AND DEVELOPMENT
Research and development costs included in the statements of income as part of
other general and administrative expenses totaled $173,791, $150,242 and
$90,846 for the years ended May 31, 1995, 1994 and 1993, respectively.
NOTE 8. EMPLOYEE BENEFIT PLAN
The Company has a 401(k) defined contribution plan covering substantially all
employees. The plan provides for a matching employer contribution based on
the employee's contributions up to 10% of compensation. Additional
discretionary contributions to the plan may also be made. Employer
contributions for the years ended May 31, 1995, 1994 and 1993 were $21,620,
$15,519 and $15,221, respectively.
NOTE 9. EARNINGS PER COMMON AND COMMON EQUIVALENT SHARES
Earnings per common and common equivalent shares, assuming no dilution, have
been computed on the weighted average number of common shares outstanding
during the period using the treasury stock method of accounting for the
dilutive common equivalent shares discussed in Note 6. The weighted average
number of shares of common stock outstanding for the years ended May 31, 1995,
1994 and 1993 were 3,204,285, 3,195,054 and 3,177,614, respectively.
Earnings per common and common equivalent shares, assuming full dilution, for
the years ended May 31, 1995, 1994 and 1993 are the same as the earnings per
common and common equivalent shares, assuming no dilution.
NOTE 10. SUBSEQUENT EVENT AND ACQUISITION
On June 26, 1995 the Company acquired certain assets of Clay Equipment
Corporation ("Clay") of Cedar Falls, Iowa in exchange for the assumption of
approximately $2,500,000 of liabilities and 837,666 shares of the Company's
no par value common stock with a value of approximately $628,000. Clay
designs, manufacturers, and distributes livestock equipment and other
agricultural related products, primarily manure spreader wagons and milking
equipment. The Company has plans to move the combined operations to Cedar
Falls, Iowa where the Company has entered into a 15 year lease for a 85,000
square foot building to be constructed by the City of Cedar Falls, Iowa. The
lease will require monthly payments of $16,722, plus insurance, utilities,
and other expenses with an option to purchase at the end of the lease for
$1,285,955 plus all reasonable costs and expenses incurred by the lessor for
the sale. The classification of the lease has not yet been determined by the
Company.
F-12
<PAGE> 30
TOP AIR MANUFACTURING, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
The acquisition will be accounted for by the purchase method. Costs incurred
through May 31, 1995 of approximately $73,000 which are directly associated
with the acquisition have been classified as other assets on the balance sheet
as of May 31, 1995. Subsequent to year end, the Company refinanced the debt
of Clay with the Company's primary lender. The financing agreement is made up
of two long-term debt agreements bearing interest at 0.5% over the bank's
prime rate (effective rate of 9.5% at July 5, 1995), collateralized by
substantially all assets of the Company, terms are as follows:
<TABLE>
<S> <C>
Note payable, requiring monthly payments of $19,410 through June 2000 at which
time outstanding balance is due. $ 1,500,000
Note payable, requiring monthly payments of interest only and annual principal
payments of $250,000 through May 1997. 400,000
-------------
$ 1,900,000
=============
</TABLE>
F-13
<PAGE> 31
SIGNATURES
----------
In accordance with Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized:
(Registrant) Top Air Manufacturing, Inc.
--------------------------------------------------------
By (Signature and Title) /s/ Steven R. Lind
---------------------------------------------
Steven R. Lind, Principal Executive
Officer
/s/ Steven F. Bahlmann
---------------------------------------------
Steven F. Bahlmann, Principal Financial
Officer
Date: August 22, 1995
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
By: /s/ Wayne C. Dudley By:
---------------------------- -------------------------------
Wayne C. Dudley, Director Franklin A. Jacobs,
Director
Date: August 22, 1995 Date: August , 1995
---
By: /s/ Dennis W. Dudley By: /s/ S. Lee Kling
---------------------------- -------------------------------
Dennis W. Dudley, Director S. Lee Kling, Director
Date: August 22, 1995 Date: August 22, 1995
By: By:
---------------------------- -------------------------------
Robert J. Freeman, Director Sanford W. Weiss, Director
Date: August , 1995 Date: August , 1995
--- ---
By: /s/ Steven R. Lind
----------------------------
Steven R. Lind, Director
Date: August 22, 1995
<PAGE> 32
<TABLE>
INDEX TO EXHIBITS
<CAPTION>
Exhibit
Number Description
- ------ -----------
<C> <S>
<F*>3(a) Amended and restated Articles of Incorporation
of the Registrant, filed as Exhibit 3(c) to the
Company's Annual Report on Form 10-K for fiscal
year 1991 (the "1991 Form 10-K").
<F*>3(b) Amended and Restated By-laws of the Registrant,
filed as Exhibit 3(d) to the 1991 Form 10-K.
<F*>3(c) Amendments to the Amended and Restated By-laws,
effective October 21, 1992, filed as Exhibit
3(c) to the Company's Annual Report on Form
10-KSB for fiscal year 1993 (the "1993
Form 10-KSB).
<F*>9 Amended and Restated Voting Trust Agreement by
and among Robert J. Freeman and Dennis W. Dudley
and their successors, dated September 15, 1992,
filed as Exhibit 9 to the 1993 Form 10-KSB.
<F*>10(a) Land contract between the Company and
Wayne C. Dudley dated December 20, 1988,
filed as Exhibit D to the Company's Annual
Report on Form 10-K for fiscal year 1989
(the "1989 Form 10-K").
<F*>10(b) Promissory note dated January 1, 1991,
between the Company and Wayne C. Dudley
(the "Dudley Note"), filed as Exhibit 10(b)
to the 1991 Form 10-K.
<F*>10(c) Letter amendment, dated August 5, 1994,
to the Dudley Note, filed as Exhibit 10(c)
to the Company's Annual Report on Form 10-K
for fiscal year 1994 (the "1994 Form 10-KSB").
<F*>10(d) 1993 Stock Option Plan adopted by the Board
of Directors November 6, 1992, filed as
Exhibit 10(c) to the 1993 Form 10-KSB.
<F*>10(e) Summary Plan description for 401(k) plan
adopted by the Board of directors on
October 22, 1991, filed as Exhibit 28(b)
to the Company's Annual Report on Form
10-K for fiscal year 1992 (the "1992
Form 10-K").
<F**>10(f) Promissory note dated October 3, 1994,
between the Company and Norwest Bank Iowa, N.A.
<PAGE> 33
<CAPTION>
Exhibit
Number Description
- ------ -----------
<C> <S>
<F**>10(g) Variable balance promissory note dated
October 3, 1994, between the Company and Norwest
Bank Iowa, N.A.
<F**>10(h) Credit and Security Agreement originally
dated October 3, 1994, between the
Company and Norwest Bank Iowa, N.A.
<F**>11 Statement re computation of per share earnings.
<F**>23 Consent of accountants .
- ------------------------
<FN>
<F*> Incorporated by reference to the indicated documents or
parts thereof, previously filed with the Commission.
<F**> Filed herewith.
</TABLE>
<PAGE> 1
TOP AIR MANUFACTURING, INC.
EXHIBIT 10(f)
PROMISSORY NOTE
<PAGE> 2
- -------------------------------------------------------------------------------
NORWEST BANKS Installment Promissory Note
Commercial - No Disclosures
- -------------------------------------------------------------------------------
Name Date
Top Air Manufacturing, Inc. 10-3-94
- -------------------------------------------------------------------------------
Dollars($) 360,000.00
---------------------------------------
For value received, the undersigned ( if more than one, jointly and severally)
promise(s) to pay to the order of
Due Date 10-3-99
---------------------------------------
Note Number 302921
---------------------------------------
Norwest Bank Iowa, National Association (the Bank) at
302 Main St., Cedar Falls, Ia. 50613
Division 002,0019011
---------------------------------------
Initial Rate 8.75
---------------------------------------
or any other place designated at any time by the holder hereof, in lawful money
of the United States of America, the principal sum of
Collateral Code 301
---------------------------------------
Disbursement
---------------------------------------
THREE HUNDRED SIXTY THOUSAND AND NO/100---------- Dollars ($360,000.00)
- ------------------------------------------------------- -----------
together with the interest (calculated on the basis of actual days elapsed in
a 365 day year) on the unpaid balance hereof until this Note is fully paid, at
---
the following rate:
/-/ an annual rate of 8.75% (herein the "Note Rate");
----
/ / an annual rate equal to % in excess of the Base Rate from time to
------
time in effect, each change in the interest rate hereon to become effective
on the day corresponding change in the Base Rate becomes effective (the
resulting rate is herein referred to as the "Note Rate");
/ / an annual rate which, for any particular month, shall be % in
------
excess of the Base Rate in effect on the day of the immediately
--------
preceding month (the resulting rate is herein referred to as the
"Note Rate");
/ / an annual rate
------------------------------------------------------
provided that, if this note has a variable rate of interest, the annual rate (i)
shall at no time be less than %, (ii) shall at no time exceed an annual
------
rate if one be specified, / / of % / / that is % above the
------ ------
discount rate on 90-day commercial paper in effect from time to time at the
Federal Reserve Bank of and (iii) if the Bank is located in the State
---------
of Minnesota and the original principal amount of this Note is less than
$100,000, or if the Bank is located in the State of North Dakota, shall be the
same rate after the due date hereof (whether it be the stated maturity date or
such earlier date by reason of acceleration or demand for payment) as was in
effect on such due date. Unless clause (iii) above applies, the unpaid
principal and interest due on this Note at maturity date or such earlier date
by reason of acceleration or demand for payment) shall bear interest until paid
at the rate of % in excess of the Note Rate.
------
As used herein, "Base Rate" means the rate of interest established by
Norwest Bank Iowa, National Association from time to time as its "base" or
- ---------------------------------------
"prime" rate.
The under signed promises to pay the principal and interest hereof as follows:
/-/ Principal and interest shall be paid together in 59 consecutive monthly
--
installments of $7,375.00 each, beginning, 11-10-94 ,19 , and on the same day
-------- -------- --
of each month thereafter until 9-10-99, 19 , plus irregular installments as
------- --
follows: $ on , 19 ; $ on
--------------- ---------------- -- -------------
, 19 ; and $ on , 19 . On 10-3-99,
- ---------- -- -------------- ----------------- -- -------
19 , the entire unpaid and accrued and unpaid interest hereon shall become
--
due and payable. Each such installment, when paid, shall be applied first
in payment of interest, as billed, and the balance thereof shall be applied
in reduction of principal.
/ / Principal only shall be paid as follows:
/ / in consecutive monthly installments of $ each,
-------------- ----------
beginning , 19 , and on the same day of each month thereafter
------------ --
until , 19 , plus a final payment on , 19 ,
---------------- -- ------------ --
when the entire unpaid principal shall become due and payable;
/ / $ on , 19 ; $ on , 19 ;
--------- ------------ -- --------- ------------ --
$ on , 19 ; $ on , 19 ;
--------- ------------ -- --------- ------------ --
$ on , 19 ; $ on , 19 ;
--------- ------------ -- --------- ------------ --
and in addition, interest is payable ,
----------------------------------------
beginning , 19 .
---------------------- --
The undersigned may, at any time and from time to time, prepay the principal
amount outstanding in whole or in part, without penalty or premium. Any partial
prepayment shall be applied against the principal portion of the installments
due hereunder in inverse order of maturity.
/-/ Each time any installment of principal or interest hereunder is not paid
when due or within 90 days thereafter, the undersigned agrees to pay a late
------
charge of $ * upon demand by the Bank. *5% in excess of note
-------------------
rate on remaining principal balance.
If any installment of principal and/or interest hereunder is not paid when due,
or if any other indebtedness of the undersigned to the Bank is not paid when
due, or if any event of default shall occur under any mortgage, security
agreement or other instrument securing this Note, or if a garnishment summons
or a writ of attachment is issued against or served upon the Bank for the
attachment of any property of the undersigned in the Bank's possession or any
indebtedness owing to the undersigned, or if the holder hereof shall at any time
in good faith believe that the prospect of due and punctual payment of this Note
is impaired, then, in any such event, the holder hereof may, at its option,
declare this Note to be immediately due and payable and thereupon this Note
shall be immediately due and payable, together with all unpaid
<PAGE> 3
interest accrued hereon, without notice or demand. Upon the occurrence of an
event of default, the Bank shall also have the right to set off the
indebtedness evidenced by this Note against any indebtedness of Bank to the
undersigned. This Note shall also become automatically due and payable
(including unpaid interest accrued thereon) without notice or demand should the
undersigned die (an individual) or should a petition be filed by or against the
undersigned under the United States Bankruptcy Code.
Unless prohibited by law, the undersigned agree(s) to pay all costs of
collection, including reasonable attorney's fees and legal expenses, incurred
by the holder hereof in the event this Note is not duly paid. The holder hereof
may change any terms of payment of this Note, including extensions of time and
renewals, and release any security for, or any party to, this Note without
notifying or releasing any accommodation maker, endorser or guarantor from
liability on this Note. Presentment or other demand for payment, notice of
dishonor and protest are hereby waived by the undersigned and each endorser or
guarantor. The undersigned agree(s) that each provision whose box is checked
is part of this Note and that this Note may not be changed orally, but only by
an agreement in writing and signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought. This Note shall be
governed by the substantive laws of the state named as part of the Bank's
address above.
/-/ This Note is secured. / / This Note is unsecured.
- -------------------------------------------------------------------------------
Purpose of Loan
purchase of equipment and machinery Top Air Manufacturing, Inc.
- -------------------------------------------------------------------------------
Address Signature
406 Highway 20, Parkersburg, IA 50665 X /s/ Steven R. Lind
- -------------------------------------------------------------------------------
City, State and ZIP Signature By: Steven R. Lind, President
X
- -------------------------------------------------------------------------------
<PAGE> 1
TOP AIR MANUFACTURING, INC.
EXHIBIT 10(g)
VARIABLE BALANCE PROMISSORY NOTE
<PAGE> 2
===============================================================================
NORWEST BANKS Commercial Note
002,0019011,001,302920
- -------------------------------------------------------------------------------
Name Date
Top Air Manufacturing, Inc. 10-3-94
- -------------------------------------------------------------------------------
Choose one of the following
/ / On demand; or
/-/ On 10-1-95 , 19 ; or
---------------------------------- --------
/ /
-------------------------------------------------------
for value received, the undersigned (if more than one,
jointly and severally) promise(s) to pay to the order
of (the "Bank") at
after date,
Norwest Bank Iowa, National Association
302 Main St., Cedar Falls, IA 50613
or at any other place designated at any time by the holder hereof, in lawful
money of the United States of America, the principal sum of
THREE MILLION AND NO/100-----------------------------------------------
- -------------------------------------------------------------------------------
- ------------------------------------------ Dollars ($3,000,000.00), or so much
- ------------------------------------------ ------------
thereof as is disbursed and remains outstanding hereunder on the due date
hereof, as shown by the Bank's liability record or on the reverse side hereof,
as the case may be, together with interest (calculated on the basis of actual
days elapsed in a 365 day year) on the unpaid balance hereof from the date
-------
hereof until this Note is fully paid, at the following rate:
/ / an annual rate of % (herein the "Note
------------------------------
Rate").
/-/ an annual rate equal to 0.00 % above the Base Rate from time to time
--------
in effect, each change in the interest rate hereon to become effective on the
day the corresponding change in the Base Rate becomes effective (the resulting
rate is herein referred to as the "Note Rate").
/ / an annual rate which, for any particular month, shall be %
-------------
above the Base Rate in effect on the day of the immediately
--------------
preceding month (the resulting rate is herein referred to as the "Note Rate").
/ / an annual rate
---------------------------------------------------------
- -------------------------------------------------------------------------------
(herein the "Note Rate").
- ----------------------------------
The unpaid balance and interest due on this Note at maturity (whether this Note
matures by demand, acceleration, or the lapse of time) shall bear interest until
paid at the rate of 5 % in excess of the Note Rate.
------
As used herein, "Base Rate" means the rate of interest established by: /-/
Norwest Bank Iowa, National Association from time to time as its "base" or
- ----------------------------------------
"prime" rate; / /
------------------------------------------------------------.
- --------------------------------------------------------------------------
If this / / is checked, and this Note has a variable rate of interest, the Note
Rate shall never be less than %.
--------
/ / Interest shall be payable at maturity.
/-/ Interest shall be payable monthly on first commencing 11-1-94
---------------------- ------------
and also on demand.
If interest hereon is not paid when due, or if any other indebtedness of the
undersigned to the Bank is not paid when due, or if a garnishment summons a writ
of attachment is issued against or served upon the Bank for the attachment of
any property of the undersigned in the Bank's possession or any indebtedness
owing to the undersigned, or if the holder hereof shall at any time in good
faith believe that the prospect of due and punctual payment of this Note is
impaired, then, in any such event, the holder hereof may, at its option, declare
this Note to be immediately due and payable and thereupon this Note shall be
immediately due and payable, together with all unpaid interest accrued hereon,
without notice or demand; provided, however, that if this Note is payable on
demand, nothing herein contained shall preclude or limit the holder hereof from
demanding payment of this Note at any time and for any reason, without notice.
If this Note is not paid when due (whether at maturity or upon acceleration or
demand), the Bank shall also have the right to set off the indebtedness
evidenced by this Note against any indebtedness of Bank to the undersigned.
This Note shall also become automatically due and payable (including unpaid
interest accrued thereon) without notice or demand should the undersigned die
(an individual) or should a petition be filed by or against the undersigned
under the United States Bankruptcy Code.
Unless prohibited by law, the undersigned agree(s) to pay all costs of
collection, including reasonable attorneys' fees and legal expenses, incurred
by the holder hereof in the event this Note is not duly paid. The holder hereof
may at any time renew this Note or extend its maturity date for any period and
release any security for, or any party to, this Note, all without notice to or
consent of and without releasing any accommodation maker, endorser or guarantor
from liability on this Note. Presentment or other demand for payment, notice
of dishonor and protest are hereby waived by the undersigned and each endorser
and guarantor. The undersigned agree(s) that each provision whose
<PAGE> 3
box is checked is part of this Note. This Note shall be governed by the
substantive laws of the State named as part of the Bank's address above.
/-/ This Note is secured. /-/ This Note evidences indebtedness
under a revolving credit facility.
/ / This Note is unsecured.
- -------------------------------------------------------------------------------
Purpose of Loan
To fund inventory and accounts receivable
- -------------------------------------------------------------------------------
Top Air Manufacturing, Inc.
- -------------------------------------------------------------------------------
Address Signature
406 Highway 20, Parkersburg, IA 50665 X /s/ Steven R. Lind
- -------------------------------------------------------------------------------
City, State and ZIP Signature By: Steven R. Lind, President
X
- -------------------------------------------------------------------------------
<PAGE> 1
TOP AIR MANUFACTURING, INC.
EXHIBIT 10(h)
CREDIT AND SECURITY AGREEMENT
<PAGE> 2
===============================================================================
NORWEST BANKS Security
Agreement
002,0019011
- -------------------------------------------------------------------------------
DATE 10-3-94 19
--------------------------------- ---
- -------------------------------------------------------------------------------
DEBTOR Top Air Manufacturing, Inc.
- -------------------------------------------------------------------------------
BUSINESS OR 406 Highway 20
RESIDENCE ADDRESS
- -------------------------------------------------------------------------------
CITY, STATE & ZIP Parkersburg, Ia. 50665
CODE
- -------------------------------------------------------------------------------
SECURED PARTY Norwest Bank Iowa,
National Association
- -------------------------------------------------------------------------------
ADDRESS 302 Main St.
- -------------------------------------------------------------------------------
CITY, STATE Cedar Falls, Ia. 50613
& ZIP CODE
- -------------------------------------------------------------------------------
1. SECURITY INTEREST AND COLLATERAL. To secure the payment and performance of
each and every debt, liability and obligation of every type and description
which Debtor may now or at any time hereafter owe to Secured Party (whether such
debt, liability or obligation now exists or is hereafter created or incurred,
whether it is currently contemplated by the Debtor and Secured Party, whether
any documents evidencing it refer to this Security Agreement, whether it arises
with or without any documents (e.g., obligations to Secured Party created by
checking overdrafts), and whether it is or may be direct or indirect, due or to
become due, absolute or contingent, primary or secondary, liquidated or
unliquidated, or joint, several or joint and several; all such debts,
liabilities and obligations being herein collectively referred to as the
"Obligations"). Debtor hereby grants Secured Party a security interest (herein
called the "Security Interest") in the following property (herein called the
"Collateral") (check applicable boxes and complete information):
(a) INVENTORY
/-/ All inventory of Debtor, whether now owned or hereafter acquired and
wherever located;
(b) EQUIPMENT, FARM PRODUCTS AND CONSUMER GOODS:
/-/ All equipment of Debtor, whether now owned or hereafter acquired,
including but not limited to all present and future machinery, vehicles,
furniture, fixtures, manufacturing equipment, farm machinery and equipment, shop
equipment, office and record keeping equipment, parts and tools, and the goods
described in any equipment schedule or list herewith or hereafter furnished to
Secured Party by Debtor (but no such schedule or list need be furnished in order
for the security interest granted herein to be valid as to all of Debtor's
equipment).
/ / All farm products of Debtor, whether now owned or hereafter acquired,
including but not limited to (i) all poultry and livestock and their young,
products thereof and produce thereof, (ii) all crops, whether annual or
perennial, and the products thereof, and (iii) all feed, seed, fertilizer,
medicines and other supplies used or produced by Debtor in farming operations,
and (iv) any crop insurance payments and any government farm support payments,
including any diversion or deficiency payments. The real estate concerned with
the above described crops growing or to be grown is:
--------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
and the name of the record owner is:
------------------------------------------
(c) ACCOUNTS AND OTHER RIGHTS TO PAYMENT:
/-/ Each and every right of Debtor to the payment of money, whether such
right to payment now exists or hereafter arises, whether such right to payment
arises out of a sale, lease or other disposition of goods or other property by
Debtor, out of a rendering of services by Debtor, out of the overpayment of
taxes or other liabilities of Debtor, or otherwise arises under any contract or
agreement, whether such right to payment is or is not already earned by
performance, and howsoever such right to payment may be evidenced, together with
all other rights and interests (including all liens and security interests)
which Debtor may at any time have by law or agreement against any account debtor
or other obligor obligated to make any such payment or against any of the
property of such account debtor or other obligor; all including but not limited
to all present and future debt instruments, chattel papers, accounts, loans and
obligations receivable and tax refunds.
/ /
--------------------------------------------------------------------
--------------------------------------------------------------------
(d) GENERAL INTANGIBLES:
/-/ All general intangibles of Debtor, whether now owned or hereafter
acquired, including, but not limited to, applications for patents, patents,
copyrights, trademarks, trade secrets, good will, trade names, customers'
lists, permits and franchises, and the right to use Debtor's name.
together with all substitutions and replacements for and products of any of the
foregoing property not constituting consumer goods and together with proceeds
of any and all of the foregoing property and, in the case of all tangible
Collateral, together with all accessions and, except in the case of consumer
goods, together with (i) all accessories, attachments, parts, equipment and
repairs now or hereafter attached or affixed to or used in connection with any
such goods, and (ii) all warehouse receipts, bills of lading and other
documents of title now or hereafter covering such goods.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Debtor represents, warrants
and agrees that:
(a) Debtor is / / an individual, / / a partnership, /-/ a corporation and,
if Debtor is an individual, the Debtor's residence is at the address of Debtor
shown at the beginning of this Agreement.
(b) The Collateral will be used primarily for / / personal, family or
household purposes; / / farming operations; /-/ business purposes.
<PAGE> 3
(c) / / if any part of all of the tangible Collateral will become so related
to particular real estate as to become a fixture, the real estate concerned is:
- -------------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
and the name of the record owner is:
------------------------------------------
(d) Debtor's chief executive office is located at
--------------------------
or, if left blank, at the address of Debtor shown at the beginning of
this Agreement.
THE AGREEMENT CONTAINS ADDITIONAL PROVISIONS SET FORTH ON THE REVERSE SIDE
HEREOF, ALL OF WHICH ARE MADE A PART HEREOF:
Norwest Bank Iowa, National Association Top Air Manufacturing, Inc.
- ------------------------------------------- ----------------------------------
Secured Party's Name Debtor's Name
By: /s/ Cathy A. Rottinghaus, AVP By: /s/ Steven R. Lind
------------------------------------- -----------------------------
Cathy A. Rottinghaus, AVP Steven R. Lind, President
Title: Title:
----------------------------------- ---------------------------
By:
-----------------------------
Title:
---------------------------
<PAGE> 1
<TABLE>
TOP AIR MANUFACTURING, INC.
EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
<CAPTION>
Year Ended May 31,
----------------------------------------
1995 1994 1993
----------------------------------------
<S> <C> <C> <C>
Computation of weighted average number
of common shares outstanding and
common equivalent shares:
Common shares outstanding at the
beginning of the period 3,174,100 3,174,100 3,174,100
Weighted average number of shares
issued during the period 295 -- --
Weighted average of the common
equivalent shares attributable
to stock options granted, computed
under the treasury stock method<F#> 29,890 20,954 3,514
--------- --------- ---------
Weighted average number of common
and common equivalent shares 3,204,285 3,195,054 3,177,614
--------- --------- ---------
Net Income $ 371,012 $ 243,510 $ 56,544
========= ========= =========
Earnings per common and common
equivalent share $ .12 $ .08 $ .02
========== ========== ==========
<FN>
<F#> Some stock options have not been included because they are anti-
dilutive.
</TABLE>
<PAGE> 1
TOP AIR MANUFACTURING, INC.
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
<PAGE> 2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference into the
registration statement of Top Air Manufacturing, Inc. on Form S-8
(Registration No 33-74378) of our report dated July 5, 1995 with
respect to the financial statements of Top Air Manufacturing,
Inc. included in its Annual Report on Form 10-KSB for the
fiscal year ended May 31, 1995.
/s/ McGladrey & Pullen, LLP
Waterloo, Iowa
August 22, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TOP AIR MANUFACTURING, INC. ANNUAL REPORT ON FORM 10-KSB FOR THE PERIOD
ENDED MAY 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH REPORT.
</LEGEND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1994
<PERIOD-END> MAY-31-1995
<CASH> 414,748
<SECURITIES> 0
<RECEIVABLES> 1,346,945
<ALLOWANCES> 59,000
<INVENTORY> 1,553,830
<CURRENT-ASSETS> 3,341,771
<PP&E> 1,610,077
<DEPRECIATION> 831,371
<TOTAL-ASSETS> 4,248,922
<CURRENT-LIABILITIES> 1,025,255
<BONDS> 270,207
<COMMON> 198,402
0
0
<OTHER-SE> 2,676,058
<TOTAL-LIABILITY-AND-EQUITY> 4,248,922
<SALES> 6,215,866
<TOTAL-REVENUES> 6,224,147
<CGS> 4,042,058
<TOTAL-COSTS> 5,515,986
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 11,039
<INTEREST-EXPENSE> 100,584
<INCOME-PRETAX> 607,577
<INCOME-TAX> 236,565
<INCOME-CONTINUING> 371,012
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 371,012
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
