ART'S-WAY MANUFACTURING CO., INC.
ARMSTRONG, IOWA 50514-0288
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On October 11, 1996
To: The Shareholders of
ART'S-WAY MANUFACTURING CO., INC.
Notice is hereby given that the Annual Meeting of Shareholders of
Art's-Way Manufacturing Co., Inc., a Delaware corporation
(the "Company") will be held at One Pacific Place, Suite 800,
1125 South 103 Street, Omaha, Nebraska 68124 on Friday,
October 11, 1996, at 10:00 A.M. Central Daylight Savings Time,
for the following purposes:
(1) To elect seven (7) directors to serve until the next Annual
Meeting of Shareholders or until such time as their
successors are elected and qualified;
(2) To consider and vote upon a proposal to ratify the
appointment of KPMG Peat Marwick as independent public
accountants of the Company for the year ending May 31,
1997; and
(3) To transact such other business as may properly come before
the meeting.
NOTE: The Board of Directors is not aware of any other
business to come before the Meeting.
Any action may be taken on any one of the foregoing proposals at
the Meeting on the date specified above, or on any date or dates
to which the Meeting may be adjourned. The Board of Directors of
the Company has fixed the close of business on September 6, 1996
as the record date for determining the shareholders of the Company
entitled to notice of and to vote at the Meeting and any
adjournments thereof, and only shareholders of record at such
time will be entitled to such notice and to vote. The stock
transfer books of the Company will not be closed.
You are requested to fill in and sign the enclosed form of proxy
which is solicited by the Board of Directors and to mail it
promptly in the enclosed envelope. The proxy will not be
used if you attend and vote at the Meeting in person.
By Order of the Board of Directors
William T Green,
Secretary
Armstrong, Iowa
September 11, 1996
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE YOUR CORPORATION
THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A
QUORUM. AN ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF
ART'S-WAY MANUFACTURING CO., INC.
ARMSTRONG, IOWA 50514-0288
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Art's-Way
Manufacturing Co.,Inc., a Delaware Corporation (the (Company),
for use at the Annual Meeting of Shareholders (the (Meeting) to
be held at One Pacific Place, Suite 800, 1125 South 103 Street,
Omaha, Nebraska, 68124, on Friday,October 11, 1996 at 10:00 A.M.
Central Daylight Savings Time and at any and all adjournments
thereof. Shareholders of record at the close of business on
September 6, 1996 are entitled to notice of and to vote
at the Meeting.
PROXIES
Proxies are being solicited by the Board of Directors of the
Company. Proxies so given may be revoked at any time prior to
the Annual Meeting. No special form of revocation is required
and it need not be in writing. Proxies will be solicited by mail
and the expense of the solicitation of such proxies will be borne
by the Company. In addition to the solicitation by use of the
mails, directors, officers and/or executive and administrative
employees of the Company may solicit the return of proxies by
mail, telephone or in person, without extra compensation.
The Company has retained the American Stock Transfer and
Trust Company, New York, New York, to assist in solicitation
of proxies at a cost of approximately $1,800. The approximate
date on which notice of the meeting, this Proxy Statement and
form of proxy are first being sent to shareholders is
September 11, 1996.
VOTING SECURITIES
As of the close of business on September 6, 1996, the record
date for the Annual Meeting, the outstanding voting securities
consisted of 1,231,631 shares of Common Stock, each of which is
entitled to one vote.
VOTING SECURITIES AND OWNERSHIP BY CERTAIN BENEFICIAL OWNERS
The following table sets forth the names of the persons known
to the Company who beneficially own more than 5% of the issued
and outstanding shares of Common Stock of the Company as of
September 6, 1996, the record date for the meeting:
Name and Address Type of Number of Percent
Ownership Shares of Outstanding
Arthur Luscombe Of record and
RR beneficially 126,325 10.26%
Dolliver, Iowa 50531
Wellington Management Company
75 State Street Beneficially 93,000(1) 7.55%
Boston, Massachusetts 02109
Quest Advisory Corp. & Quest Advisory Co.
1414 Avenue of the Americas Beneficially 70,800(2) 5.75%
New York, New York 10019
J. Ward McConnell, Jr.
P.O. Box 6246 Beneficially 145,000 11.77%
Kinston, North Carolina 28501
James L. Koley Of record and 71,000(3) 5.76%
1125 South 103 Street beneficially
Omaha, Nebraska 68124
(1)Included in the shares reported, 55,000 shares with respect to
which WTC-CIF Emerging Companies, an investment advisory client
of Wellington Management Company, is also deemed to be
beneficial owner.
(2)These shares are the total of a group filing on Schedule 13G by
Quest Advisory Corp., Quest Advisory Co. and Charles M. Royce.
Mr. Royce disclaims beneficial ownership of the 70,800 shares
held by Quest Advisory Corp. and Quest Advisory Co.
(3)Includes 5,000 shares which Mr. Koley is entitled to purchase
under the Director Stock Option Plan(1991).
VOTING SECURITIES OWNED BY
EXECUTIVE OFFICERS AND DIRECTORS
The following table shows certain information with respect to
the Company's common stock beneficially owned by directors and
executive officers as of September 6, 1996. The shares shown as
beneficially owned include shares which executive officers and
directors are entitled to acquire pursuant to outstanding stock
options exercisable within sixty days of September 6, 1996.
Name Type of Beneficial Numberof Percent
Ownership Shares ofClass
James L. Koley of record and Beneficially 71,000.(1) 5.76%
George A. Cavanaugh,Jr.of record and Beneficially 5,500.(1) *
Donald A. Cimpl of record and Beneficially 35,000.(1) 2.84%
Herbert H. Davis, Jr. of record and Beneficially 39,000.(1) 3.17%
Douglas McClellan of record and Beneficially 20,500.(1) 1.66%
J. Ward McConnell, Jr. of record and Beneficially145,000. 11.77%
J. David Pitt of record and Beneficially 5,263.(2) *
William T. Green of record and Beneficially 18,797.(3) 1.53%
Directors and Executiveof record and Beneficially340,060. 27.61%
Officers as a Group (8 persons)
* Less than 1%
(1)Includes 5,000 shares which can be purchased by each individual
pursuant to stock options.
(2)Includes 5,263 shares which can be purchased pursuant to stock
options.
(3)Includes 12,250 shares which can be purchased pursuant to stock
options.
BOARD OF DIRECTORS AND ELECTION
Nominees to the Board of Directors
The Board of Directors of the Company is presently composed of
seven (7) directors. At this Annual Meeting of Shareholders
seven (7) directors are to be elected to hold office until the
1997 annual meeting of Shareholders or until the successor
of each shall be elected and qualified. All of the nominees
named herein are presently serving as members of the Board of
Directors. Management has no reason to believe that any of those
named below will be unable to unwilling to serve. If for any
reason any nominee named is unable to serve, the shares
represented by all valid proxies will be voted for the election
of a substitiute nominee recommended by the Board of Directors
or the Board of Directors may reduce the size of the Board.
Nominees receiving the highest number of affirmative votes
cast, up to the number of directors to be elected, will be
elected as directors. The proxy holders will vote the proxies
for the below seven nominees.
The name of each nominee, his age, the year in which he was
first elected a director, his principal occupation or occupations
for the past five years and positions (other than director) with
the Company are as follows:
JAMES L. KOLEY, age 66, Omaha, Nebraska. Chairman of the Board of
Directors since 1987 and Member of the Executive Committee and
Compensation and Stock Option Committee. Chairman of the Board of
the law firm of Koley, Jessen, Daubman & Rupiper, P.C., Omaha,
Nebraska since February 1988. Director of Dover Corporation,
New York, New York. Mr. Koley has been a director since 1976.
GEORGE A. CAVANAUGH, JR., age 75, Ocala, Florida. Retired since
1981; formerly President of Cavanaugh & Associates, Inc.,
Manufacturers Representative, Southfield, Michigan. Chairman
of the Compensation and Stock Option Committee and member
of the Audit Committee. Mr. Cavanaugh has been a director
since 1972.
DONALD A. CIMPL, age 64, Omaha, Nebraska. Business consultant
since 1989. For more than five years prior to that time, partner
with Coopers and Lybrand. Chairman of the Audit Committee and
member of the Executive Committee. Mr. Cimpl has been a director
since 1990.
HERBERT H. DAVIS, JR., age 72, Omaha, Nebraska. Owner of Miracle
Hills Golf and Tennis Center, Omaha, Nebraska since 1987. For more
than five years prior to that time, Chairman of the Board,
Kirkpatrick, Pettis, Smith, Polian, Inc., Investment Bankers,
Omaha, Nebraska. Chairman of the Executive Committee and
Members of the Audit Committee. Mr. Davis has been a director
since 1970.
DOUGLAS McCLELLAN, age 46, Clarence, New York. President of
Filtration Unlimited, Akron, New York, where he has held
various positions for more than five years. Member of the
Compensation and Stock Option Committee and Audit Committee.
Mr. McClellan has been a director since 1987.
J. DAVID PITT, age 48, Armstrong, Iowa. Joined the Company
and was elected President on March 26, 1996. For more than
five years prior to that time, President and General Manager
of Massey-Ferguson, Inc., Des Moines, Iowa. Mr. Pitt was
elected a director on September 3, 1996.
J. WARD MCCONNELL, Jr., age 65, Kinston, North Carolina.
Private investor for more than five years. Mr. McConnell
was elected as a Director on September 3, 1996 pursuant to
the provisions of an Asset Purchase Agreement dated August 30,
1996. See Certain Business Relationships and Related Transactions
below for additional details. The Asset Purchase Agreement requires
that management of the Company nominate Mr. McConnell for election
as a Director at the 1996 Annual Meeting of Shareholders.
Meetings of the Board of Directors and Committees
The principal functions of the Executive Committee are to advise
and consult with the Board of Directors on matters considered
appropriate by the Executive Committee and, subject to specified
limitations, to consider and act upon matters for the Board of
Directors when the Board may be unable to consider and act on
such matters as a whole. The Executive Committee had no meetings
in the last fiscal year.
The Audit Committee's principal functions are to evaluate and
review financial procedures, controls and reporting. The Audit
Committee had two meetings in the last fiscal year.
The Compensation and Stock Option Committee has the responsibility
to review and advise management on broad compensation policies
such as salary ranges and incentive programs. The Committee also
administers the Incentive Stock Option Plans and grants options
pursuant to the Plans. Furthermore the Committee has the
responsibility to approve and recommend to the Board of Directors
base salaries, salary increases and other benefits for elected
officers. The Compensation and Stock Option Committee had one
meeting in the last fiscal year.
The Company has no Nominating Committee.
The Board of Directors held six meetings in the last fiscal year.
Each director attended 100% of the meetings of the Board and the
Board Committees of which he was a member.
Each director, other than the Chairman of the Board, who is not
an employee of the Company or a subsidiary, receives $4,500 per
year plus $900 for attendance at each of the meetings of the Board
as well as $788 for attendance at each meeting of a standing
committee on which he serves. The Chairman of a standing committee
receives $1,035 for each meeting attended.
The Chairman of the Board receives $46,800 per year and is
eligible for a discretionary bonus. See also Certain Business
Relationships and Related Transactions.
EXECUTIVE OFFICERS OF THE COMPANY
J. David Pitt, age 48, President. Mr. Pitt joined and was elected
President of the Company on March 26, 1996 and appointed to the
Board of Directors on September 3, 1996. From 1987 to 1996 he
was President and General Manager of Massey-Ferguson, Inc.,
Des Moines, Iowa.
William T. Green, age 54, Executive Vice President, Finance and
Administration, Secretary and Treasurer. Mr. Green was appointed
Executive Vice President, Finance and Administration, Secretary
& Treasurer on April 7, 1995. Prior to April 7, 1995 Mr. Green
served as Controller for the Company for more than five years.
EXECUTIVE COMPENSATION
Compensation and Stock Option Committee Report on Executive
Compensation
The Compensation and Stock Option Committee of the Board is
composed of three independent, non-employee Directors and has
the responsibilities as described on page 4 of this Proxy
Statement.
The Committee has furnished the following report:
The compensation philosophy of the Company is to provide a
compensation package to executives that will, with base salary,
incentive compensation and stock options, maximize long-term
stockholder value.
The Company's policy is to pay base salaries that are at, or near,
the average for similar companies. Salary increases are considered
annually and are based on current salary and the individual
performance during the past year. The Committee recommends to
the Board salary increases for all executive officers including
that of the President, J. David Pitt, and the Executive Vice
President Finance and Administration, Secretary and Treasurer,
William T. Green.
The incentive compensation plan for executive officers is a
performance driven bonus plan to promote the objectives of the
Company. Profitability is the underlying factor in the
determination of the annual bonus plan. Each year the
Compensation and Stock Option Committee recommends to the
Board the specific bonus plan for executive officers.
Stock options are the third part of the overall compensation
package for executive officers and are awarded to provide
long term incentives. The Compensation and Stock Option
Committee recommends all stock option grants to the Board
for approval. The option price for shares of Art's-Way
common stock awarded to executive officers under the
Company's Stock Option Plan is 100% of the fair market
value of the shares at date of grant, with 25% exercisable
at date of grant and an additional 25% after one, two
and three years on a cumulative basis. During the 1996
fiscal year, Mr. Pitt was granted options to acquire
21,052 shares of Art's-Way common stock at $4.75
per share, Mr. Garner was granted options to acquire 9,711 shares
of Art's-Way common stock at $6.00 per share and Mr. Green was
granted options to acquire 4,800 shares of Art's-Way common stock
at $6.00 per share.
George A. Cavanaugh, Jr., Chairman
James L. Koley
Douglas McClellan
Summary Compensation Table
The following table sets forth the aggregate cash and cash
equivalent forms of remuneration accrued by the Company and
its subsidiaries to, or for, the benefit of (i) the Chief
Executive Officer and (ii) the four most highly compensated
executive officers,other than the CEO, whose remuneration
exceeded $100,000. Including the CEO, no executive officers
remuneration exceeded $100,000.
Annual Compensation Long Term
Compensation
Awards
Name and
Principal Position Year Salary($) Bonus($) All Other
Compensation(1) Options
*William S. Garner,1996 $32,322 - - 9,711
President 1995 $80,141 12,000 $3,401 9,955
1994 $72,860 12,256 $3,216 8,333
J. David Pitt, 1996 $22,302 - - 21,052
President
* William S. Garner resigned his position as President on
October 13, 1995.
(1)This amount includes matching contributions for the Company's
401(k) Savings Plan.
Option Grants in Last Fiscal Year
The following table sets forth the grants of stock options
made during the last year to (i) the Chief Executive Officer
and (ii) the four most highly compensated executive officers,
other than the CEO, whose remuneration exceeded $100,000.
Including the CEO, no executive officers remuneration exceeded
$100,000.
Individual Grants Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
for Option Term(1)
Name Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Exp.
Granted(#) Fiscal Year ($/Sh) Date 5% ($) 10%($)
*William S. 9,711 27.31 % $6.00 6-01-05 $94,909 $151,127
Garner President
J. David Pitt 21,052 59.20 % $4.75 6-26-06$162,188 $259,372
President
*William S. Garner resigned his position as President on
October 13, 1995.
1)The dollar amounts in these columns are the result of
calculations at the 5% and 10% rates set by the SEC
and are not intended to forecast future appreciation
of the Companys Common Stock.
Option Exercises and Fiscal Year-End Values
The following table sets forth the grants of stock options made
during the last year to (i) the Chief Executive Officer and (ii)
the four most highly compensated executive officers, other than
the CEO, whose remuneration exceeded $100,000. Including the CEO,
no executive officers remuneration exceeded $100,000.
Number of Securities Value of Securities
Underlying Unexercised Underlying Unexercised In
Options at 5/31/96 the-Money Options at 5/31/96
Shares Value
Acquired on Realized Exercis- Unexercis- Exercis- Unexercis-
able able able able
Exercise (#) ($) (#) (#) ($) ($)
*William S.
Garner - - - - - -
President
J. David
Pitt - - 5,263 15,789 - -
President
*William S. Garner resigned his position as President on
October 13, 1995.
The Company has a 401(k) Savings Plan (the Plan) which covers
substantially all full-time employees. Participating employees
contribute to the Plan through salary reductions. The Company
contributes a discretionary percentage of the Plan Participant's
salary deferrals. The assets of the Plan are managed by the
Principal Financial Group, Des Moines, Iowa. Vesting of
participants is as follows, 20% per year after one year of
employment until 100% vested after 6 years. The Company's
contributions to the Plan were $0 in 1996, $165,000 in 1995,
and $178,000 in 1994. No amounts were paid or distributed
to the individuals named in the above table pursuant to the Plan.
Description of Stock Options Plans
The Company has adopted three stock option plans, the Incentive
Stock Option Plan (1986), the Employee Stock Option Plan (1991)
and the Director Stock Option Plan (1991).
Under the Incentive Stock Option Plan (1986), stock options may
be granted to key employees to purchase shares of common stock
of the Company at a price not less than its fair market value
at the date the options are granted. Each option will be for a
period of ten years and may be exercised at a rate of 25% at the
date of grant and an additional 25% after one, two and three years
on a cumulative basis. Options for a maximum of 125,000 common
shares may be granted under the Plan. There are 17,797 options
outstanding, and 4,449 options exercisable. There are no options
available for grant as this plan expired April 1, 1996.
Under the Employee Stock Option Plan (1991), Incentive Stock
Options and Non-qualified Stock Options may be granted to key
employees to purchase shares of common stock of the Company
at a price not less than its fair market value at the date
the options are granted. Options for an aggregate of 100,000
common shares may be granted under the Plan. The Company's
Compensation and Stock Option Committee will administer
the Plan and determine the number of shares to be subject
to each option, the type of option, the durationof each
option, the exercise price under each option, the time or
times within which all or portions of each option may be
exercised and whether cash, Company common stock or other
property may be accepted in full or partial payment upon
exercise of a stock option. There are 68,745 common shares
available for grant, 24,755 options outstanding and 14,138
options exercisable.
Under the Director Stock Option Plan (1991), options may be
granted to non-employee directors at a price not less than
fair market value at the date the options are granted.
Non-employee directors who have served for at least one year
are automatically granted options to purchase 5,000 common
shares. Options for an aggregate of 45,000 common shares
may be granted under the Plan. Each option will be for a
period of ten years and may be exercised at a rate of 25%
at the date of grant and an additional 25% after one, two
and three years on a cumulative basis. There are 20,000
common shares available for grant, 25,000 options
outstanding, and 25,000 options exercisable.
CERTAIN BUSINESS RELATIONSHIPS AND RELATED TRANSACTIONS
The law firm of Koley, Jessen, Daubman & Rupiper, P.C. served
as general counsel for the Company from January 1, 1989
through April 4, 1996. James L. Koley, Chairman of the Board
of the Company, also serves as Chairman of the Board of said
law firm. Fees paid to the firm in the Company's last fiscal
year have not exceeded five percent of the Firms gross
revenues during its most recent fiscal year.
On August 30, 1996, the Company completed the acquisition of
manufacturing and distributing potato farming equipment
comprising the "Logan" product line from J. Ward McConnell, Jr.
and Logan Harvesters, Inc., a corporation controlled by
Mr. McConnell, pursuant to an Asset Purchase Agreement
(the "Agreement") dated August 30, 1996. For the assets
comprising the Logan product line, the Company issued to
Mr. McConnell 145,000 shares of the Company's common stock,
cash in the amount of $250,000 and a promissory note to cover
the value of the inventories to be acquired which value is to
be finally determined by October 15, 1996. The additional
consideration for the raw material and work in process
inventories is expected to be approximately $400,000.
The consideration for the finished goods inventory will
be determined by October 15, 1996. The purchase price for
the Logan product line was established between Mr. McConnell
and management of the Company and approved by the Board of
Directors. Management believes the price to be appropriate
given the discounted value of the anticipated earnings stream
from the Logan product line together with the manufacturing
and other synergies anticipated from the additional production.
Mr. McConnell acquired a portion of the assets comprising
the Logan line on March 1, 1996 from a closed business.
Mr. McConnell's initial cash investment for the assets plus
his initial required commitment of operating capital was
approximately $650,000.
PERFORMANCE GRAPH
The graph below compares the yearly percentage change in the
cumulative total stockholder return for Art's-Way
Manufacturing Co., Inc. Common Stock compared with the
NASDAQ Stock Market-U.S. Index, and the S&P Manufacturing
(Diversified Industries) Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
(Graph available on request)
May-91 May-92 May-93 May-94 May-95 May-96
Art's-Way Mfg.
Co., Inc. ARTW 100 70 85 100 55 45
NASDAQStockMrkt. 100 117 141 149 177 257
- -US Index INAS
S & P Mfg. 100 98 110 124 155 208
(Div Ind) Index IMNV
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, acting on the recommendation of the
Audit Committee, has designated KPMG Peat Marwick as independent
public accountants of the Company for the current fiscal year
ending May 31, 1997. KPMG Peat Marwick have been the
independent public accountants of the Company since June 1, 1980.
The firm has advised the Company that it has no relationship
to the Company except that of independent public accountants.
A representative of KPMG Peat Marwick will be present at the
Annual Meeting of Shareholders to respond to appropriate
questions regarding preparation of the financial statements.
The Board of Directors recommends that shareholders vote
FOR the ratification of the selection of KPMG Peat Marwick
as independent public accountants.
Vote Required for Ratification
The affirmative vote of a majority of the shares represented
at the meeting is required to ratify the appointment of
KPMG Peat Marwick as the independent public accountants
of the Company.
STOCKHOLDER PROPOSALS
Any proposals of stockholders that are intended to be presented
at the Company's 1997 Annual Meeting of Shareholders must be
received at the Company's principal offices no later than
May 12, 1997 in order to be included in the proxy statement
and on the form of proxy which will be solicited by the
Board of Directors in connection with that meeting.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE
ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's executive officers and directors to file initial
reports of ownership and reports in changes of ownership
with the Securities and Exchange Commission (SEC). Executive
officers and directors are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms
they file. Based solely on a review of the copies of such
forms furnished to the Company, the Company believes all
persons subject to these reporting requirements filed the
required reports on a timely basis except late filings of
a Form 5 for J. David Pitt as a result of a stock option grant
and a Form 3 for William T. Green as a result of a stock option
grant.
OTHER MATTERS
Management knows of no other matters which may be brought
before the meeting. If any other matters are presented
at the meeting on which a vote may properly be taken,
the persons named in the enclosed proxy will vote thereon
in accordance with their best judgment.
FINANCIAL STATEMENTS
Financial statements of the Company are included in the Annual
Report to Shareholders for the fifty-two weeks ended May 31, 1996,
which report is mailed herewith to all stockholders entitled to
vote at the meeting. The Annual Report is not part of the
soliciting material.
A copy of the Company's 1996 10-K Report is available without
charge upon written request of William T. Green, Secretary,
Art's-Way Manufacturing Co., Inc., P.O. Box 288, Armstrong,
Iowa 50514-0288.
