ART'S-WAY MANUFACTURING CO., INC.
ARMSTRONG, IOWA 50514-0288
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On April 15, 1999
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 Thursday, April 15, 1999, 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 LLP as independent public accountants of
the Company for the year ending November 30, 1999, 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 March 4, 1999 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
March 11, 1999
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 Thursday, April 15, 1999
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 March 4, 1999
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 March 11, 1999.
VOTING SECURITIES
As of the close of business on March 4, 1999, 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 March 4, 1999, the record date
for the meeting:
Type of Number of Percent of
Name and Address Ownership Shares Outstanding
Franklin Resources, Inc. Beneficially 82,500 6.62%
777 Mariners Island Blvd.
San Mateo, California 94404
Royce & Associates, Inc. Beneficially 124,000 (1) 9.95%
1414 Avenue of the Americas
New York, New York 10019
J. Ward McConnell, Jr. Beneficially 137,700 (2) 11.05%
P.O. Box 6246
Kinston, North Carolina 28501
James L. Koley Of record and
1125 South 103 Street beneficially 76,000 (3) 6.10%
Omaha, Nebraska 68124
(1) These shares are the total of a group filing on Schedule 13G by Royce
& Associates, Inc. and Charles M. Royce. Mr. Royce disclaims beneficial
ownership of the 124,000 shares held by Royce & Asociates, Inc.
(2) Includes 2,500 shares which Mr. McConnell, Jr. is entitled to purchase
under the Director Stock Option Plan(1991).
(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
March 4, 1999. The shares shown as beneficially owned include shares which
executive officers and directors are entitled to acquire pursuant to out-
standing stock options exercisable within sixty days of March 4, 1999.
Name Type of Beneficial Ownership Number of Percent of
Shares 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 137,700 (2) 11.05%
J. David Pitt of record and Beneficially 41,031 (3) 3.29%
William T. Green of record and Beneficially 18,500 (4) 1.48%
Directors and Executive
Officers as a Group
(8 persons) of record and Beneficially 389,931 31.30%
* Less than 1%
(1) Includes 5,000 shares which can be purchased by each individual
pursuant to stock options.
(2) Includes 2,500 shares which can be purchased pursuant to stock options
(3) Includes 36,051 shares which can be purchased pursuant to stock options
and 4,480 shares which is the allocable portion of the shares in the
Company's 401(k) Plan.
(4) Includes 18,500 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 2000 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 68, 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 78, 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 66, 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 74, Omaha, Nebraska. Vice Chairman of the Board,
Chairman of the Executive Committee and Member of the Audit Committee.
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. Director of KPM Funds, Inc., Omaha, Nebraska. Mr. Davis
was first elected as a director in 1970.
DOUGLAS McCLELLAN, age 48, 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 51, 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 67, 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 recommends
selection of the independent public accountants. 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 $36,000 per year and is eligible
for a discretionary bonus.
EXECUTIVE OFFICERS OF THE COMPANY
J. David Pitt, age 51, 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 56, 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 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 1998 fiscal year, Mr. Pitt
was granted options to acquire 10,526 shares of Art's-Way common stock
at $9.50 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 $100,000.
Long Term
Compensation
Annual Compensation Awards
Name and
Principal
Position Year Salary ($) Bonus ($) All Other Options
Compensation
J. David Pitt, 1998 $160,000 - - 10,526
President 1997* $ 60,000 $65,000 - -
1997 $120,000 - - 20,000
1996 $ 22,302 - - 21,052
*For the six-month period ended November 30, 1997
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 10,526 100.00 % $9.50 1-03-08 $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 Company's Common Stock.
Option Exercises and Fiscal Year-End Values
The following table sets forth the exercise 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 $100,000.
Number of Securities Value of Securities
Underlying Unexercised Underlying Unexercised
Options at 11/30/98 In-the-Money
Options at 11/30/98
Shares Value
Acquired on Realized Exercisable Unexercisable Exercisable Unexercisable
Exercise (#) ($) (#) (#) ($) ($)
J. David Pitt
President
- - 28,420 23,158 16,975 -
The Company has a 401(k) Savings Plan (the "Plan") which covers sub-
stantially 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 20% per year after one year of employment until 100% vested
after 6 years. The Company's contributions to the Plan were $170,000
in 1998, $54,000 for the six months ended November 30, 1997, $0 in 1997
and 1996. 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
13,348 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 38,219 common shares available for grant, 55,281 options
outstanding and 36,572 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 15,000 common
shares available for grant, 30,000 options outstanding, and 27,500 options
exercisable.
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)
Nov 93 Nov 94 Nov 95 Nov 96 Nov 97 Nov 98
Art's-Way
Mfg. Co., Inc.
(ARTW) 100 80 49 46 98 57
NASDAQ Stock
Mrkt.-US Index
(INAS) 100 100 143 175 218 267
S & P Mfg.
(Div Ind) Index
(IMNV) 100 102 150 211 248 280
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, acting on the recommendation of the Audit Committee,
has designated KPMG Peat Marwick LLP as independent public accountants of the
Company for the fiscal year ending November 30, 1999. KPMG Peat Marwick LLP
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 LLP 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 LLP 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 LLP
as the independent public accountants of the Company.
SHAREHOLDER PROPOSALS
Any proposals of shareholders that are intended to be presented at
the Company's 2000 Annual Meeting of Shareholders must be received at
the Company's principal offices no later than December 12, 1999 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 November 30, 1998, 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 1998 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.
