ART'S-WAY MANUFACTURING CO., INC.
ARMSTRONG, IOWA 50514-0288
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On October 17, 1997
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 17, 1997, 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 six months ending November 30, 1997 and for
the year ending November 30, 1998; 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 August 29, 1997 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 5, 1997
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 ArtOs-Way Manufacturing Co., Inc.,
a Delaware Corporation (the OCompanyO), 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 17, 1997
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 August 29, 1997
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 August 29, 1997.
VOTING SECURITIES
As of the close of business on August 29, 1997, the record date for the
Annual Meeting, the outstanding voting securities consisted of 1,245,931
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 August 29, 1997, the record
date for the meeting:
Name and Address Type of Number Percent of
Ownership of Shares Outstanding
Arthur Luscombe Of record and
RR beneficially 126,325 10.14%
Dolliver, Iowa 50531
Franklin Resources, Inc. Beneficially 82,500 6.62%
777 Mariners Island Blvd.
San Mateo, California 94404
Quest Advisory Corp. & Beneficially 70,800(1) 5.68%
Quest Advisory Co.
1414 Avenue of the Americas
New York, New York 10019
Ward McConnell, Jr. Beneficially 147,500 11.84%
P.O. Box 6246
Kinston, North Carolina 28501
James L. Koley Of record and 76,000(2) 6.10%
1125 South 103 Street beneficially
Omaha, Nebraska 68124
(1)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.
(2)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 August 29, 1997. 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 August 29, 1997.
Name Type of Beneficial Number of Shares Percent
Ownership of Class
James L. Koley of record and Beneficially 76,000.(1) 6.10%
George A. Cavanaugh, Jr. of record and Beneficially 5,500.(1) *
Donald A. Cimpl of record and Beneficially 42,500.(1) 3.41%
Herbert H. Davis, Jr. of record and Beneficially 48,200.(1) 3.87%
Douglas McClellan of record and Beneficially 20,500.(1) 1.65%
J. Ward McConnell, Jr. of record and Beneficially 147,500. 11.84%
J. David Pitt of record and Beneficially 16,660.(2) 1.34%
William T. Green of record and Beneficially 21,922.(3) 1.76%
Directors and Executive
Officers as a Group
(8 persons) of record and Beneficially 378,782. 30.40%
*Less than 1%
(1)Includes 5,000 shares which can be purchased by each individual pursuant
to stock options.
(2)Includes 15,526 shares which can be purchased pursuant to stock options
and 1,134 shares which is the allocable portion of the shares in the
Company's 401(k) Plan.
(3)Includes 15,375 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 1999 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 or 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 substitute 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 67, 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 76, 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 65, 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 73, 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 Member of the Audit Committee. Director of
KPM Funds, Inc., Omaha, Nebraska. Mr. Davis was first elected as a
director in 1970.
DOUGLAS McCLELLAN, age 47, 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 49, 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 in 1996.
J. WARD MCCONNELL, Jr., age 66, Kinston, North Carolina. Private investor
for more than five years. Mr. McConnell was elected a director in 1996.
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 four 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 49, 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 shareholder 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 CompanyOs 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 1997 fiscal year, Mr. Pitt
was granted options to acquire 20,000 shares of Art's-Way common stock at
$5.00 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 $100,000.
Long Term
Compensation
Annual Compensation Awards
Name and All Other
Principal Position Year Salary($) Bonus($) Compensation Options
J. David Pitt, 1997 $120,000 - - 20,000
President 1996 $ 22,302 - - 21,052
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 $100,000.
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term(1)
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Granted (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
J. David Pitt 20,000 100.00 % $5.00 1-03-07 $162,889 $259,374
President
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 CompanyOs 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 $100,000.
Number of Securities Value of Securities
Underlying Unexercised Underlying Unexercised
Options at 5/31/97 In-the-Money Options
at 5/31/97
Shares Value
Acquired on Realized Exercisable Unexer- Exercisable Unexer-
cisable cisable
Exercise (#) ($) (#) (#) ($) ($)
J. David Pitt
President - - 15,526 25,526 23,980 37,730
The Company has a 401(k) Savings Plan (the OPlanO) 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 ParticipantOs salary deferrals.
The assets of the Plan are managed by the Principal Financial Group,
Des Moines, Iowa. Vesting of participants is 20% per year after one
year of employment until 100% vested after 6 years. The Company's
contributions to the Plan were $0 in 1997, $0 in 1996, and $165,000
in 1995. 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 8,899 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 duration of 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 48,845 common shares available for grant, 44,755 options
outstanding and 25,002 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
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. The total
purchase price was approximately $2,750,000. The Company issued
Mr. McConnell 145,000 shares of the Company's common stock with
the balance of the purchase price paid in cash. 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 ArtOs-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
May-92 May-93 May-94 May-95 May-96 May-97
Art's-Way Mfg. Co., Inc. ARTW 100 121 143 79 64 86
NASDAQ Stock Mrkt.
- -US Index INAS 100 120 127 151 219 246
S & P Mfg. (Div Ind)
Index IMNV 100 112 127 159 212 296
CHANGE IN FISCAL YEAR
The Board of Directors has voted to change the Fiscal Year of the
Company from May 31 to November 30. This change reflects the Company's
increasing commitment to seasonal equipment. As such it is more useful
to summarize the annual results after each year's harvest activity.
Accordingly, the next annual meeting will be held in April 1999 for
the year ending November 30, 1998.
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 six months ending November 30, 1997
and the fiscal year ending November 30, 1998. The two separate audits
are required because of the change in Fiscal Year described above.
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.
SHAREHOLDER PROPOSALS
Any proposals of shareholders that are intended to be presented at the
Company's 1999 Annual Meeting of Shareholders must be received at the
Company's principal offices no later than December 12, 1998 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.
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, 1997,
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 1997 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.
