SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 2000
Commission file number 0-5131
Art's Way Manufacturing Co., Inc. 401(k) Savings Plan
(Full title of the plan)
Art's Way Manufacturing Co., Inc.
(Issuer of securities)
P.O. Box 288, Armstrong. IA 50514
(Address of principal executive office)
Required Information
Enclosed are the plan financial statements and schedules as of May 31, 2000
and 1999 and for each of the years in the three year period ended
May 31, 2000 prepared in accordance with financial reporting requirements
of ERISA.
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
11/30/00 Art's-Way Manufacturing Co., Inc. 401 (k) Savings Plan
(Date) (Name of Plan)
/s/ William T. Green
President
ART'S-WAY MANUFACTURING CO., INC. SAVINGS PLAN
Financial Statements and Supplemental Schedule
May 31, 000 and 1999
(With Independent Auditors' Report Thereon)
ART'S-WAY MANUFACTURING CO., INC.
SAVINGS PLAN
Table of Contents
Page
Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for
Benefits with Fund Information 3
Notes to Financial Statements 4
Supplemental Schedule:
Assets Held for Investment Purposes 9
Independent Auditors' Report
Plan Administrator of Art's-Way
Manufacturing Co., Inc. Savings Plan:
We have audited the financial statements of Art's-Way Manufacturing
Co., Inc. Savings Plan as of May 31, 2000 and 1999, and for
the years ended mAY 31, 2000, 1999 and 1998, as listed in the
accompanying table of contents. These financial statements are
the responsibility of the Plan's Management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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 net assets available for benefits
of Art's-Way Manufacturing Co., Inc. Savings Plan as of May 31, 2000 and
1999 and the changes in net assets available for benefits for
the years ended May 31, 2000, 1999 and 1998 in conformity with
accounting principles generally accepted in the United States of
America.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedule
of assets held for investment purposes is presented for the purpose
of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974.
The supplemental schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
KPMG LLP
November 16, 2000
ART'S-WAY MANUFACTURING CO., INC.
SAVINGS PLAN
Statements of Net Assets Available for Benefits
May 31, 2000 and 1999
2000 1999
Assets:
Investments:
Principal Life Insurance Company -
deposit contract,
at contract value (cost: 2000, $2,607,591;
1999, $2,990,836) $2,607,591 2,990,836
At fair value:
Money Market Fund (cost: 2000, $49,422;
1999, $186,713) 52,606 194,665
Small Company Blend Fund
(cost: 2000, $57,816; 1999, $96,811) 60,253 89,988
International Stock Fund
(cost: 2000, $19,465; 1999, $22,874) 21,542 23,356
Art's-Way Common Stock Fund (cost: 2000,
$217,967; 1999, $207,868) 119,551 118,395
Shares of registered investment companies:
Washington Mutual Investment Fund
(cost: 2000, $2,153,725; 1999, $2,215,995) 2,753,010 3,449,532
Income Fund of America (cost: 2000, $1,196,361;
1999, $1,256,115) 1,191,451 1,426,875
U. S. Government Fund (cost: 2000, $149,231;
1999, $191,596) 140,841 186,523
Participant loans, at unpaid balance 190,233 217,798
Total investments 7,137,078 8,697,968
Employee conributions receivable 1,511 3,340
Net assets available for benefits $7,138,589 8,701,308
See accompanying notes to financial statements.
ART'S-WAY MANUFACTURING CO., INC.
SAVINGS PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended May 31, 2000 and 1999
2000 1999 1998
Additions to net assets
attributed to:
Investment income (loss):
Net appreciation (depreciation)
in fair value of
investments $ (361,937) 251,956 1,141,788
Interest income 169,266 226,454 283,768
Dividend income 210,109 139,633 113,287
Net investment income 17,438 618,043 1,538,843
Contributions:
Employer - 113,988 131,691
Employee 209,257 263,203 296,755
Total contributions 209,257 377,191 428,446
Total additions 226,695 995,234 1,967,289
Deductions from net
assets attributed to:
Administrative
expenses 53,199 2,627 2,499
Benefits paid to
participants 1,736,215 1,852,839 203,019
Total deductions 1,789,414 1,855,466 205,518
Net increase (decrease) (1,562,719) (860,232) 1,761,771
Net assets available for
benefits:
Beginning of year 8,701,308 9,561,540 7,799,769
End of year $ 7,138,589 8,701,308 9,561,540
See accompanying notes to financial statements
ART'S-WAY MANUFACTURING CO., INC.
SAVINGS PLAN
Notes to Financial Statements
May 31, 2000 and 1999
(1) Significant Accounting Policies
(a) Nature of Operations
Art's-Way Manufacturing Co., Inc. (the Company) is a manufacturer of
specialized farm machinery and equipment which it markets under
its own and private labels.
(b) Basis of Presentation
The accompanying financial statements of the Art's-Way Manufacturing Co.,
Inc. Savings Plan (the Plan) have been prepared on the accrual basis of
accounting and present the net assets available for benefits and changes
in those net assets in accordance with generally accepted accounting
principles.
(c) Investment Valuation and Income Recognition
Investments in securities (funds) are stated at fair value.
Shares of registered investment companies are valued at quoted market
prices, which represent the net asset value of shares held by the
Plan at year-end. The Company stock is valued at its quoted market
price. Participant loans are valued at cost, which approximates
fair value.
Purchase and sale of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
(d) Administrative Expenses
Substantially all of the administrative fees and expenses of the Plan are
paid by forfeitures of participants' accounts.
(e) Payment of Benefits
Benefits are recorded when paid.
(f) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
changes therein and disclosure of contingent assets and liabilities.
Actual results could differ from those estimates.
(g) Tax Status
The Internal Revenue Service has determined and informed the Company that the
Plan and related trust are designed in accordance with applicable sections
of the Internal Revenue Code (IRC). The Plan has been amended since receiving
the determination letter. However, the Plan Administrator believes that the
Plan is designed and is currently being operated in compliance with the
applicable requirements of the IRC.
(2) Plan Description
The following is a summary of the Plan. The more significant Plan provisions
are addressed below. Participants should refer to the Plan Agreement for
a more complete description of the Plan's provisions.
(a) General
The Plan is a defined contribution retirement plan sponsored and
administered by the Company for its employees. Management believes the
Plan is in compliance with the requirements of the Employee Retirement
Income Security Act of 1974 (ERISA). Under terms of the Plan, an
employee becomes eligible to participate after receiving credit for
six months of service, as defined.
(b) Participant Contributions
Upon enrollment in the Plan, a participant may direct employee contributions
in any of the eight investment options. A participant may make deductible
contributions of not less than 4% under a salary deferral agreement.
The Plan also provides for rollovers of lump-sum distributions
by participants from certain individual retirement accounts or a qualified
401(k) plan.
(c) Employer Contributions
The employer may make matching contributions at a discretionary percent
and, at its sole discretion, may make discretionary contributions.
The employer did not make any contributions during the Plan year
ended May 31, 2000.
When the employer makes a matching contribution, it is added to the
accounts of those participants who have made contributions for
the year, as noted above. The matching contribution under the Plan
shall be equal to a discretionary percentage of the participant's salary
reductions as determined by the employer.
The employer's discretionary contribution is shared by all Plan members,
whether or not they have made contributions, based on the
member's compensation compared to all participants' combined compensation
and years of service.
(d) Participant Accounts
Each participant's account is credited with the participant's contributions,
the Company's matching contributions and an allocation of the Plan's net
increase in net assets available for benefits corresponding to the
participant's investment elections. Allocations are based on participant
account balances, as defined. The benefit to which a participant is entitled
is the benefit that can be provided from the participant's vested
account. Forfeitures are used to pay a portion of the administrative
expenses of the Plan.
Plan participants select investment options for their contributions.
Participants may change their investment options at any time and
may invest in any combination of investment options.
(e) Vesting
Participants' contributions are immediately vested. Vesting in
the remainder of their accounts is based on credited years of service,
as defined. A participant is 100% vested after six credited years of
service.
(f) Participant Loans
The Plan allows employees who have at least six months of service to borrow
a minimum of $1,000 and up to a maximum equal to the lesser of $50,000 or
50% of their vested account balance. Loans bear interest at a percentage
equal to the Sponsor's revolving credit facility plus 1% (8.75% to 10%
at May 31, 2000), and are valued at the unpaid balance which approximates
fair market value. Loans are secured by the participant's account balance
and are scheduled for repayment by payroll deduction from one to five years.
(g) Payment of Benefits
During an employees' active career with the Company, part or all of a
participant's contributions and fund earnings may be withdrawn due to
hardship and based on Plan limitations. Such hardship withdrawals
are permitted when conditions as specified by the Plan are met and
are subject to limits allowed by law.
Upon termination, disability, retirement or death, all amounts attributed
to a participant's account may be withdrawn. The accumulated balances
are generally distributed in the form of a lump-sum settlement unless
an election for installment payments has been made by the employee
prior to retirement or death.
(3) Investment Contract With Insurance Company
The Plan entered into a fully benefit-responsive investment contract
with Principal Mutual Life Insurance Company (Sponsor). The Sponsor
maintains the contributions in a pooled account. The account is
credited with earnings based on rates established annually by the
Sponsor. The contract is included in the financial statements at
contract value as reported to the Plan by the Sponsor. Contract
value represents contributions made under the contract, plus earnings,
less Plan withdrawals and administrative expenses. Participants
may ordinarily direct the withdrawal or transfer of all or a
portion of their investment at contract value.
There are no reserves against contract value for credit risk of
the contract issuer or otherwise. The average yield and crediting
interest rates were approximately 6.85% and 5.75% for 2000 and
1999, respectively. The crediting interest rate is based on a
formula agreed upon with the issuer. Such interest rates are
reviewed on a daily basis for resetting.
(4) Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA. In the event
of Plan termination, participants will become 100% vested in their accounts.
(5) Investments
In September 1999, the American Institute of Certified Public Accountants
issued Statement of Position 99-3, Accounting for and Reporting of
Certain Defined Contribution Plan Investments and Other Disclosure
Matters (SOP 99-3). The Plan adopted SOP 99-3 during the Plan year
ending May 31, 2000. Accordingly, information previously required
to be disclosed about participant-directed fund investment programs
is not presented in the Plan's 2000 financial statements. The Plan's
1999 and 1998 financial statements have been reclassified to conform
with the current year's presentation.
The following table represents the fair value of individual investments
which exceed 5% of the Plan's net assets:
Name of issuer
and title of issue 2000 1999
Investment at contract value -
Principal Mutual Life Insurance
Company - deposit contract $2,607,591 $2,990,836
Investments at fair value,
as determined by quoted
market prices:
Washington Mutual
Investment Fund 2,753,010 3,449,532
Income Fund of America 1,191,451 1,426,875
During 2000 and 1999, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year)
depreciated in value by $361,937 and appreciated in value by $251,956,
respectively, as follows:
2000 1999
Investment at contract value -
Insurance deposit contract $ (29,792) $ (4,393)
Investments at fair value as
determined by quoted
market prices:
Shares of registered investment companies (334,359) 389,123
Investment funds-pooled separate accounts 29,110 (14,494)
Art's-Way Common Stock Fund (26,896) (118,280)
(332,145) 256,349
Net change in fair value $ (361,937) 251,956
Principal Mutual Life Insurance
Company - deposit contract $2,607,591
Money Market Fund 52,606
Small Company Blend Fund 60,253
International Stock Fund 21,542
American Funds Groups:
Washington Mutual Investment Fund 2,753,010
Income Fund of America 1,191,451
U.S. Government Fund 140,841
Art's-Way Common Stock Fund* 119,551
Participant loans (8.75% to 10.0%) 190,233
$ 7,137,078
* Party in interest
See accompanying independent auditors' report.
