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<SEC-DOCUMENT>0000007623-03-000006.txt : 20030414
<SEC-HEADER>0000007623-03-000006.hdr.sgml : 20030414
<ACCEPTANCE-DATETIME>20030414145420
ACCESSION NUMBER:		0000007623-03-000006
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20030228
FILED AS OF DATE:		20030414

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ARTS WAY MANUFACTURING CO INC
		CENTRAL INDEX KEY:			0000007623
		STANDARD INDUSTRIAL CLASSIFICATION:	FARM MACHINERY & EQUIPMENT [3523]
		IRS NUMBER:				420920725
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0531

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-05131
		FILM NUMBER:		03648465

	BUSINESS ADDRESS:	
		STREET 1:		P O BOX 288
		CITY:			ARMSTRONG
		STATE:			IA
		ZIP:			50514
		BUSINESS PHONE:		7128643131

	MAIL ADDRESS:	
		STREET 1:		P O BOX 288
		CITY:			ARMSTRONG
		STATE:			IA
		ZIP:			50514
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>feb10qfx.txt
<TEXT>


                   SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, D.C.   20549


                                 FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the Quarter Ended February 28, 2003        Commission File No. 0-5131

                    ART'S-WAY MANUFACTURING CO., INC.
         (Exact name of registrant as specified in its charter)



           DELAWARE                              42-0920725
     State of Incorporation          I.R.S. Employer Identification No.




    Hwy 9 West, Armstrong, Iowa                      50514
  Address of principal executive offices            Zip Code

 Registrant's telephone number, including area code: (712) 864-3131



Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to
such filing requirements for the past 90 days.  Yes  X  No __

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2).
Yes  __  No  X

Number of common shares outstanding as of March 21, 2003:  1,938,176


                  ART'S-WAY MANUFACTURING CO., INC.

                  CONDENSED STATEMENT OF OPERATIONS

                              (Unaudited)

                                                 Three Months Ended
                                              February 28,   November 30,
                                                  2003           2002



Net Sales                                    $ 2,508,877     $ 2,641,892
Cost of goods sold                             1,870,449       2,071,292
  Gross Profit                                   638,428         570,600

Expense
  Engineering                                     18,923          14,879
  Selling                                        128,193         128,296
  General and administravtive                    352,428         401,226
    Total expenses                               499,544         544,401


      Income from operations                     138,884          26,199


Other expenses:
  Interest expense                                17,979          60,589
  Other                                            6,065          14,111
    Total other expenses                          24,044          74,700

      Income (loss) before income taxes          114,840         (48,501)


Income tax expense                                 2,031            -

     Net Income (loss)                       $   112,809     $   (48,501)

Net income (loss) per share:
   Basic                                     $      0.06     $     (0.03)
   Diluted

Common shares and equivalent outstanding:
   Basic                                       1,938,176       1,411,954
   Diluted                                     1,947,272       1,411,954

See accompanying notes to financial statements.


                     ART'S-WAY MANUFACTURING CO., INC.

                        CONDENSED BALANCE SHEETS

                               (Unaudited)

                                              February 28,   November 30,
                                                  2003           2002
              ASSETS
Current Assets
Cash                                         $     76,396   $    75,358
Accounts receivable-customers,
net of allowance for doubtful accounts
of $54,500 and $50,000 in February and
November,respectively                           1,651,416       592,945
Inventories                                     3,567,581     3,576,707
Other current assets                              115,613        95,385
   Total current assets                         5,411,006     4,340,395

Property, plant and equipment, at cost         10,725,972    10,725,972
Less accumalated depreciation                   9,821,130     9,751,260
   Net property, plant and equipment              904,842       974,712


Inventories, noncurrent                           430,509       430,509
Other assets                                      175,849       175,849
   Total Assets                               $ 6,922,206  $  5,921,465



    LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable to bank                         $   172,818   $   319,222
Current portion of long-term debt                 356,669       356,669
Accounts payable                                  661,198       523,492
Customer deposits                               1,086,408       249,756
Accrued expenses                                  780,210       630,972
  Total current liabilities                     3,057,303     2,080,111

Long-term liabilities                             187,204       187,204
Long-term debt, excluding current portion         431,570       520,830
  Total liabilities                            $ 3,676,077  $ 2,788,145

Stockholders' Equity
Common stock - $.01 par value.  Authorized
5,000,000 shares; issued 1,938,176 shares
in February and in November                       19,382         19,382
Additional paid-in capital                     1,634,954      1,634,954
Retained earnings                              1,591,793      1,478,984
  Total stockholders' equity                   3,246,129      3,133,320

    Total liabilities and stockholders'
    equity                                   $ 6,922,206    $ 5,921,465

See accompanying notes to financial statements.

                     ART'S-WAY MANUFACTURING CO., INC.

                     CONDENSED STATEMENTS OF CASH FLOWS

                            (Unaudited)
                                                   Three Months Ended
                                               February 28,    February 28,
                                                   2003           2002
CASH FLOW FROM OPERATIONS:
Net income (loss)                              $   112,809      $  (48,501)
Adjustment to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization                       69,870          60,953
Changes in working capital components:
(Increase) decrease in:
Accounts receivable                             (1,058,471)       (442,614)
Inventories                                          9,126         458,670
Other current assets                               (20,228)          6,770
Increase (decrease) in:
Accounts payable                                   137,706        (146,641)
Customer deposits                                  836,652         560,748
Accrued expenses                                   149,238          56,200
Net cash provided by operating activities          236,702         505,585

CASH FLOW FROM INVESTING ACTIVITIES:                  0               0



CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (payments of) notes payable
to bank                                          (146,404)     (1,079,545)
Principal payments on term debt                   (89,260)        (89,191)
Proceeds from issuance of common stock from
treasury                                             0             53,253
Proceeds from issuance of common stock               0            746,747
Net cash used in financing activities            (235,664)       (368,736)

Net increase in cash                                1,038         136,849

Cash at beginning of period                        75,358           4,375
Cash at end of period                          $   76,396      $  141,224

Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest                                        $  17,979      $   64,033
Income taxes                                        3,301           4,032

See accompanying notes to financial statements.


                   ART'S-WAY MANUFACTURING CO., INC.

                 NOTES TO CONDENSED FINANCIAL STATEMENTS

                             (Unaudited)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement Presentation

The financial statements are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the
financial position and operating results for the interim periods.
The financial statements should be read in conjunction with the
financial statements and notes thereto contained in the Company's
Annual Report on Form 10-K for the year ended November 30, 2002.
The results of operations for the first quarter ended February 28,
2003 are not necessarily indicative of the results for the fiscal
year ending November 30, 2003.

2.  INCOME (LOSS) PER SHARE

Basic net income (loss) per common share is computed on the basis of
weighted average number of common shares outstanding.  Diluted net
income (loss) per share has been computed on the basis of weighted
average number of common shares outstanding plus equivalent shares
assuming exercise of stock options.

The difference in shares utilized in calculating basic and diluted net
income (loss) per share represents the number of shares issued under
the Company's stock option plans less shares assumed to be purchased
with proceeds from the exercise of the stock options.  Due to the net
loss for the quarter ended February 28, 2002, the anti-dilutive effect
of the Company's stock option plans is not included in the calculation
of diluted loss per share for that period.  The reconciling item
between the shares used in the computation of basic and diluted
earnings per share for the first quarter ended February 28, 2003 is
9,096 equivalent shares for the effect of dilutive stock options.


3.  INVENTORIES

Major classes of inventory are:           February 28,   November 30,
                                              2003           2002

     Raw material                        $   906,731      $ 1,065,166

     Work-in-process                       1,401,327        1,209,007

     Finished goods                        1,690,032        1,733,043

          Total                          $ 3,998,090      $ 4,007,216

     Less inventories classified
     as noncurrent                           430,509          430,509

          Inventories, current            $3,567,581       $3,576,707


4.  ACCRUED EXPENSES

    Major components of accrued          February 28,     November 30,
    expenses are:                            2003             2002

    Salaries, wages and commissions       $ 298,414        $ 294,220

    Accrued warranty expense                 55,612           60,232

    Other                                   426,184          276,520

      Total                               $ 780,210        $ 630,972


5.  LOAN AND CREDIT AGREEMENTS

    Line of Credit

    The Company has a credit agreement with a lending institution
    (lender) that provides for a revolving line of credit (credit
    facility) and a term loan and expires December 1, 2003. The
    credit facility allows for borrowings up to $4,500,000, subject
    to borrowing base percentages on the Company's accounts receivable
    and inventory, and allowing for letters of credit for $100,000.
    At February 28, 2003, the Company has borrowed $172,818 and has
    $100,000 in outstanding letters of credit.  At November 30, 2002,
    the Company had borrowed $319,222 and had $100,000 in outstanding
    letters of credit.  At February 28, 2003 and November 30, 2002,
    $1,741,000 and $1,038,000 were available for borrowings,
    respectively.  The interest rate is based on the lender's referenced
    rate and is variable based upon certain performance objectives.
    Under the terms of the agreement, the Company will not pay more than
    4% over the reference rate, nor less than the reference rate during
    the term of the agreement.  The outstanding borrowings bear interest
    at 8.25% at February 28, 2003.

    The term loan was for an original principal amount of $1,991,000. The
    principal amount is repayable in monthly installments of $23,700 with
    the remaining balance due on December 1, 2003.

    All loans, advances and other obligations, liabilities and
    indebtedness of the Company are secured by all present and future
    assets.  The Company pays an unused line fee equal to three-eighths of
    1% of the unused portion of the revolving line of credit.  The
    Company's cash account has been restricted by the lender, such that
    any available cash is used to pay down on the credit facility.

    During 1999, the Company was notified by its lender that the Company
    does not fit the lender's customer profile and was requested to
    relocate its financing needs.

    At November 30, 2000 and 1999, the Company was in default of a loan
    covenant, the fixed maturity coverage ratio, of their credit facility
    and term loan. The lender notified the Company that the current loan
    agreement provided that the lender may, as a result of any event of
    default, accelerate the payment of all obligations. As a result, all
    term borrowings associated with this lender had been classified as
    current.  The lender did not call for the acceleration of the payment
    of all obligations, but retained the right to do so at any time.

    The initial term of the loan agreement ended on August 31, 2000.  In
    a letter dated May 26, 2000, the Company was notified that the lender
    did not intend to extend the term of the loan agreement beyond the
    termination date.  Therefore, all of the obligations outstanding under
    the credit agreement and term loan amounting to $4,383,825 at August
    31, 2000 were due and payable on August 31, 2000.

    During the period between August 31, 2000 and August 31, 2001, the
    loan agreement was amended several times to provide for extensions of
    various lengths from 30 days to 90 days.  On September 1, 2001, the
    lender sold the loan to another lending institution (new lender).
    Under this arrangement, the Company continued to operate under the
    same terms as existed prior to the sale.  The new lender granted an
    extension from September 1, 2001 through November 15, 2001.  On
    February 25, 2003, the lender granted forbearance and waived its right
    to demand payment because of existing covenant defaults until December
    1, 2003.  Therefore, the portion of the term loan not due until
    December 1, 2003 has been classified as long-term debt in the
    accompanying balance sheet.

    Management believes alternative long-term financing can be obtained
    from different lenders on acceptable terms and that the Company will
    be able to meet its obligations under a new credit agreement when
    completed.

    A summary of the Company's term debt is as follows:



                                            February 28,      November 30,
                                                2003              2002

Installment term debt payable in monthly
installments of $23,700, plus interest
at four percent over the bank's national
money market rate (8.25%), due on demand,
secured (a)                                  $ 534,271         $ 605,371

State of Iowa Community Development
Block Grant promissory notes at zero
percent interest, maturity 2006, with
quarterly principal payments of $11,111       155,556            166,667

State of Iowa Community Development
Block Grant local participation
promissory notes at 4% interest,
maturity 2006, with quarterly payments
of $7,007                                      98,412           105,461

       Total term debt                        788,239           877,499

Less current portion of term debt             356,669           356,669

      Term debt, excluding current portion  $ 431,570         $ 520,830

(a)All borrowings under the installment term loan payable are secured by
the cash, accounts receivable, inventories, and property, plant, and
equipment of the Company.  The agreement required the Company to maintain
specified ratios, as defined, of debt-to-tangible net worth and net cash
income to current maturities, and restricted the Company from issuing any
dividends.

6.   RELATED PARTY TRANSACTION

In February 2002, the Company sold common stock to an existing
shareholder, Mr. J. Ward McConnell, Jr., at estimated fair value.
Proceeds from the sale of the stock were $800,000.  Mr. McConnell
has agreed that without prior approval of the Board of Directors,
excluding himself and his son, he will not acquire as much as fifty
percent (50%) of the Company's common stock and will not take the
Company private.  Immediately after the transaction, Mr. McConnell
was elected as Chairman of the Board of Directors of the Company.
His son, Marc McConnell, is also a Board Member.


                                   Item 2

             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS

(a)  Liquidity and Capital Resources

The Company's main source of funds for the quarter ended February 28, 2003
were payments received from customers for advance payments on sugar beet
equipment to be delivered in the second and third quarter.  These sources
were offset by an increase in accounts receivable and payments on the
Company's note payable and term debt.  The increase in accounts receivable
results from the high level of OEM sales in February 2003 which are sold
on 30 day terms.

The positive cash flow from operations of $236,702 was used to reduce bank
notes by $235,664.  As of February 28, 2003, the Company had no material
commitments for capital expenditures.

See footnote 5 of the notes to the condensed financial statements for a
discussion of the Company's credit facility.

The Company is mindful of the necessity to continue to control its costs,
as it intends to finance its working capital and pay down its debt through
cash from operations.

(b)  Results of Operations

Overall sales for the first quarter of fiscal 2003 were approximately
$2,509,000, or 5% lower than last year's first quarter sales of
approximately $2,642,000. Sales of Art's-Way products were 21% lower and
OEM sales were 12% higher than one year ago.  OEM sales included products
for two original equipment manufacturers. The reduction in sales reflects
the continuing weakness in the farm economy.

Gross profit, as a percent of sales, was 25% for the quarter ended
February 28, 2003, as compared to 22% for the same period in 2002.

Operating expenses in the first quarter 2003 decreased $45,000 from 2002.
This decrease is primarily due to changing the health insurance plan
offered to the employees.   As a percent of sales, operating expenses
were 20% and 21% for the three months ended February 28, 2003 and 2002,
respectively.

Other expenses decreased by $51,000 from the previous year.  Reduction
in bank borrowings combined with lower interest rates and reduced
volume in our financed accounts receivable resulted in this reduction.

The order backlog as of February 28, 2003 is $2,916,000, compared to
$2,292,000 one year ago.  These orders primarily will be delivered
in the second and third quarter of the current fiscal year.  The
current year backlog includes $1,187,000 in orders for beet equipment
compared to $771,000 last year at this time. OEM backlog is $731,000
to be shipped in the second and third quarter.

(c)  Critical Accounting Policies

The Company's critical accounting policies involving the more significant
judgments and assumptions used in the preparation of the financial
statements as of February 28, 2003, have remained unchanged from November
30, 2002.  These policies involve revenue recognition, inventory valuation
and income taxes.  Disclosure of these critical accounting policies is
incorporated by reference under Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operation" in the Company's
Annual report on Form 10-K for the year ended November 30, 2002.


                                  Item 3

                   QUANTITATIVE AND QUALITATIVE DISCLOSURES
                             ABOUT MARKET RISKS

The Company does not have any additional market risk exposure other than
what was outlined in the November 30, 2002, 10-K filing.


                                   Item 4

                   DISCLOSURE CONTROLS AND PROCEDURES

Within 90 days of the filing date of this quarterly report, the Company's
Chief Executive Officer and Finance Manager have evaluated the
effectiveness of the design and operation of the Company's disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14(c) and
15(d)-14(c)) and, based on their evaluation, have concluded that the
disclosure controls and procedures are effective.  There were no
significant changes in the Company's internal controls or in other factors
that could significantly affect these controls subsequent to the date of
their evaluation, including any corrective action with regard to
significant deficiencies and material weaknesses.

                         Part II - Other Information

ITEM 1. LITIGATION AND CONTINGENCIES

Various legal actions and claims are pending against the Company.  In
the opinion of management, adequate provisions have been made in the
accompanying financial statements for all pending legal actions and other
claims.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

   (a)    Exhibits:

          10.6      Forbearance Agreement
          99.1      Certification of Financial Statements

  (b)    Reports on Form 8-K:

         None



                                SIGNATURES




Pursuant to the requirements 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.

                    ART'S-WAY MANUFACTURING CO., INC.



Date   April 14, 2003               By:  /s/John C. Breitung
                                           (John C. Breitung, President)




                                    By:  /s/Seth LaBore
Date   April 14, 2003                    (Seth LaBore, Finance Manager)


                               CERTIFICATIONS

I, John C. Breitung, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Art's-Way
Manufacturing Co., Inc.;

2.  Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quartely report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:

a)  designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;

b)  evaluated the effectiveness of the registrant's disclosure controls
and rocedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and

c)  presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5.  The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a)  all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b)  any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and

6.  The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.

Date:    April 14, 2003
								/s/  John C. Breitung
								 President and Chief
                                                 Executive Officer


OM504759.1

                                CERTIFICATIONS

I, Seth F. La Bore, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Art's-Way
Manufacturing Co., Inc.;

2.  Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quartely report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:

a)  designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;

b)  evaluated the effectiveness of the registrant's disclosure controls
and rocedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and

c)  presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5.  The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a)  all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b)  any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and

6.  The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.


Date:    April 14, 2003
								/s/  Seth F. LaBore
                                                     Finance Manager

OM504760.1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>forebear.txt
<TEXT>
Exhibit 10.6


                      FORBEARANCE AGREEMENT AND FIFTEENTH
                    AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS FORBEARANCE AGREEMENT AND FIFTEENTH  AMENDMENT TO LOAN AND
SECURITY AGREEMENT (this "agreement"), dated as of January 31,
2003 is made by and between  ART'S-WAY MANUFACTURING CO., INC.,  a
Delaware corporation ("Borrower"), and UPS CAPITAL CORPORATION, a Delaware
corporation ("UPSC" or "Lender"), as successor-in-interest to BANK OF
AMERICA, NATIONAL ASSOCIATION, a national banking association, the
successor to Bank of America National Trust & Savings Association
("BofA").

RECITALS
A.  Borrower and BofA entered into that certain Loan and Security Agreement,
dated as of August 31, 1995 (the "Orginal Loan Agreement"), as amended
by the First Amendment to Loan and Security Agreement dated as of
April 12, 1996 (the"First Amendment"); as further amended by the
Waiver and Second Amendment to Loan and Security Agreement dated as
of August 30, 1996 (the "Second Amendment"); as further amended by the
Waiver and Third Amendment to Loan and Security dated as of July 14, 1997
(the Third Amendment"); as further amended by the Waiver and Fourth
Amendment to Loan and Security Agreement dated as of April 23, 1998
(the"Fourth Amendment"); as further amended by the Waiver and Fifth
Amendment dated as of February 24,1999 (the "Fifth Amendment");
as further amended by the Waiver and Sixth Amendment to Loan and
Security Agreement dated as of May 31, 1999 (the"Sixth Amendment"); as
further amended by the Forbearance Ageement and Seventh Amendment to
Loan and Security Agreement dated of August 31, 2000 (the "Seventh
Amendment"); as further amended by the Forbearance Agreement and
Eight Amendment to Loan and Security Agreement dated as of
August 31, 2000 (the"Eighth Amendment")' as further amended
by the Forbearance Agreement and Ninth Amendment to Loan and
Security Agreement dated as of Janaury 15, 2000 (the "Ninth
Amendment"); as further amended by the Forbearance Agreement and
Tenth Amendment to Loan and Security Agreement dated
as of Februay 15, 2001 (the "Tenth Amendment"); as further amended
by the Forbearance and Eleventh Amendment to Loan and Security
Agreement dated as of April 15, 2001; as further amended by
the Forbearance Agreement and Twelfth Amendement to Loan
and Security Agreement dated as of June 15, 2001 (the
"Twelfth Amendement"); as further amended by the Forbearance
Agreement and Wavier to Loan and Security Agreement, dated as
July 13, 2001 (the "Thirteenth Amendment"); and as futher
amended by the Forbearance Agreement and Waiver to Loan and
Security Agreement, dated as of September 15, 2001 (the
"Fourteenth Amendment") (the Original Loan Agreement,
as amended by the First Amendment through the Fourteenth Amendment,
is referred to herein as the "Loan Agreement"), pursuant to which
BofA agreed, among other things , to make loans and other
financial accommodations to Borrower (collectively, the "Loans"),
subject to the terms and conditions set forth in the Loan
Agreement.

   B.   Effective on August 31, 2001, B of A assigned to UPSC the
entire right, title and interest of BofA in and to the Loans under the
Loan Agreement.

  C.   Borrower has acknowledged to Lender that Borrower has breached
certain provisions of the Loan Agreement (the "Forbearance
Events of Default", as that term is hereinafter defined) and that
the breach constitutes an Event of Default under the Loan
Agreement.

   D.   Borrower has requested that Lender forbear from exercising its
rights and remedies under the Loan Agreement, which Lender has agreed
to do subject however, to the terms and conditions of this Agreement,
including, without limitation, the amendment to  the Loan
Agreement set forth herein.

   NOW, THEREFORE, in consideration of the premises, and in order
to induce Lender to amend the Loan Agreement pursant to the terms
hereof, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby achnowledged, the parties
hereto hereby agree as follows:

1. Definitions. Unless otherwise defined herein, all capitalized terms
and phrases used in this Agreement shall have the same meaning as are
specifically set forth in the Loan Agreement.

2. Forbearance Event of Default. As of May 31, 1999, an Event of Default (the
"Initial Forbearance Event of Default") occurred under the Loan Agreement;
namely the Fixed Maturity Coverage ratio of 1.0 to 1.0 was not maintained
in violation of the provisions of Section 9.26 of the Loan Agreement. Notice
of this Forbearance Event of Default was provided to Borrower pursuant to
various letters from BofA dated August 19, 1999, September 15, 1999,
October 20, 1999, and April 28, 2000. In addition, another Event of Default
(the "Second Forbearance Event of Default"; the Initial Forbearance Event
of Default and the Second Forbearance Event of Default are collectively
referred to herein as the "Forbearance Events of Default") occurred as of
May 31, 2001 in that Borrower again failed to comply with the Fixed Maturity
Coverage ratio of 1.0 to 1.0 as required by the terms of the Loan
Agreement. Borrower hereby acknowledges the occurrence and continuance
of the Forbearance Events of Default.

3. Forbearance. Lender previously agreed to forbear from exercising
any rights and remedies under the Loan Agreement and applicable law
because of the Forbearance Events of Default for a limited time period,
expiring November 15, 2001, on the terms set forth in the Fourteenth
Amendment. By subsequent letter agreement, Lender agreed to extend such
forbearance through January 31, 2003. In accordance with the terms
hereof, Lender agrees that, notwithstanding the occurrence of the
Forbearance Events of Default and until the expiration of the "Forbearance
Period" (as hereinafter defined), Lender will temporarily forbear
from exercising any rights and remedies under the Loan Documents and
applicable law and Lender will continue to make loans to Borrower in
accordance with and subject to the terms and conditions of the Loan
Agreement, as modified and amended by the terms of this Agreement,
as though the Forbearance Event of Defaults had not occurred and
did not exist, provided however that in addition to and not in
derogation of any of Lender's other rights under the Loan Agreement,
Lender hereby specifically reserves the right to unilaterally and
in Lender's sole and absolute discretion, impose additional reserves
and to reduce the Eligible Inventory Sublimit and other sublimits
under the Loan Agreement from time to time. As consideration for
Lender's entering into this Agreement and to induce Lender to waive
the effect of the Forbearance Events of Default on a temporary basis
as set forth herein, Borrower acknowledges and agrees that Lender
may take the actions described in the preceding sentence without
approval from or notice to Borrower and even if the actions so taken
by Lender would otherwise be deemed to be commercially unreasonable,
economically burdensome or detrimental to Borrower. Borrower hereby
consents to any such action or actions on the part of Lender and
irrevocably waives any and all rights that Borrower possesses to
object to any such action or actions. Upon termination of the
Forbearance Period, Lender's agreement to forbear hereunder shall
be null and void and Lender shall be free to exercise its rights
and remedies under the Loan Agreement and other Loan Documents
and applicable law, immediately and without further notice. As
used herein, the term "Forbearance Period" means the period beginning
on the date hereof and continuing through December 1, 2003 or any
earlier date on which Lender terminates its forbearance hereunder
as provided in the following sentence. Lender may terminate its
forbearance hereunder prior to December 1, 2003 and exercise its
rights and remedies under the Loan Agreement, the other Loan Document
and at law if it determines that any of the following events has
occurred: (i) any Event of Default, other than the Forbearance
Events of Default (and other than a default under any financial
covenant set forth in the Loan Agreement), under the Loan Agreement
or any of the other Loan Documents; (ii) a "Material Adverse
Change" (as that term is hereinafter defined); or (iii) the failure
of Borrower to perform, comply with and observe each and every
covenant, warranty, duty and obligation of Borrower hereunder.
As used herein, the term "Material Adverse Change" means any
material adverse change from and after the date hereof in (a)
the financial condition, credit, business, prospects, properties
or operations of the Borrower,(b) the ability of the Borrower
to perform its obligations under the Loan Agreement and the Loan
Documents to which it is a party on a timely basis other than
with respect to the Forbearance Events of Default, or (c) the
value of the Collateral.

4. Amendments to Loan Agreement

4.1 Section 1.1 Definitions. Section 1.1 of the Loan Agreement is
hereby amended by deleting therefrom the definitions of "Revolving
Loan Facility" and "Total Revolving Loan Facility" and inserting
the following definitions in lieu thereof.

"Revolving Loan Facility" means $2,000,000.

"Total Revolving Loan Facility" means,  as of any date of
determination thereof, the lesser at such point in time of:
(a) the amount of the Revolving Loan Facility and (b) the sum
of (i) an amount equal to seventy-two percent (72%) of the Net
Amount of Eligible Accounts; provided that the aggregate amount
of the Loans made against that portion of Eligible Accounts
consisting of Accounts with stated terms greater than net thirty
(30) days shall be limited to $250,000, and (ii) the lesser of
(A) $1,500,000, and (B) the amount of Eligible Inventory (determine
on a first-in-first-out basis) calculated at the lesser of cost
or market; provided, that the applicable advance rates against
portions of Eligible Inventory shall not exceed the respective
percentages set forth below:

TYPE OF ELIGIBLE INVENTORY                ADVANCE RATE
Work in Process                                 0%
Manufactured Parts                              0%
Purchased Parts                                 0%
Raw Materials                                  50%
Standard Parts                                 50%
Service Parts                                  50%
Finished Goods                                 60%

4.2 Section 2.1 Total Facility. For all purposes of the Loan
Agreement the "Total Facility" shall mean, at any time, the
maximum amount of the revolving line of credit made available
to Borrower pursuant thereto, as reduced hereby, i.e.
$2,000,000, plus the outstanding principal balance of the
Term Loan at such time.

4.3 Section 12.1 Term and Termination. Section 12.1 of the
Loan Agreement is hereby deleted and the following is
substituted in lieu thereof:

12.1 Term and Termination. This agreement shall terminate
on December 1, 2003. The Borrower may also terminate this
Agreement at any time during its term if: (a) it gives the
Lender ten (10) days prior written notice of termination by
registered or certified mail; and (b) it pays and performs
all Obligations prior to the effective date of termination.
The Lender may also terminate this Agreement without notice
in accordance with the provisions of paragraph 3 of that
certain Forbearance Agreement and Fifteenth Amendment to
Loan and Security Agreement, dated as of January 31, 2003,
between the Borrower and the Lender. Upon the effective date
of termination of this Agreement for any reason whatsoever,
all Obligations shall become immediately due and payable.
Notwithstanding the termination of this Agreement, until all
Obligations are paid and performed in full, the Lender shall
retain all of its rights and remedies hereunder (including,
without limitation, the Security Interest in and all rights
and remedies with respect to all then existing and after-
acquired Collateral)."

5. Agreements with Respect to Loans. Lender agrees to
continue to make Revolving Loans to Borrower subject to
all of the other provisions of the Loan Agreement during the
Forbearance Period and subject to the rights Borrower has
granted Lender in the Loan Agreement in general and in
paragraph 3 in particular relating to the establishment
of reserves and the reduction of inventory and other sublimits,
provided that notwithstanding anything implied or expressed
to the contrary in the Loan Agreement as a result of the
Forbearance Events of Default:

(a) Lender shall have no obligation to issue Letters of Credit
pursuant to Section 2.3(c), provided however, that if Lender
chooses to issue any Letters of Credit or if any Letters of
Credit are outstanding, the Letter of Credit Fee shall be equal
to four percent (4%) per annum of the undrawn face amount of
each such Letter of Credit as contemplated in the definition of
Default Rate. Except for the change in the amount of the
Letter of Credit fee, the provisions of Section 3.6 of the Loan
Agreement shall remain in full force and effect with respect
to any Letter of Credit issues by Lender;

(b) Lender intends to conduct audits of Borrower at regular
intervals of approximately every sixty (60) days at Borrower's
cost pursuant to Lender's rights under Section 16.9 of the Loan
Agreement;

(c) Lender shall make no new Capital Expenditure Loan pursuant
to Lender's rights under Section 10.2 of the Loan Agreement; and

(d) Lender shall not make any LIBOR Rate Loans or convert any
Loans into LIBOR Rate Loans pursuant to Lender's rights under
Sections 3.3(a)(ii) and 3.3(h) of the Loan Agreement.

6. No Waiver of Forbearance Event of Default. Nothing in this
Agreement shall be deemed to waive the Forbearance Events of
Default, any other Event of Default, or, except as expressly
provided herein, limit or impair Lender's rights or remedies
under the Loan Agreement, the Loan Documents, or applicable law,
all of which are hereby expressly reserved.

7. Release of Lender. Borrower hereby agrees and acknowledges
that (a) Lender has performed all obligations and duties owed
to Borrower as of the date hereof; and (b) in consideration of
Lender's forbearance and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
Borrower fully and forever remises, releases and discharges and
does hereby fully and forever remise, release and discharge
Lender and each of its subsidiary and affiliated corporations,
and each and all of its or their respective directors, officers,
employees, attorneys, accountants, consultants, and other
agents, of and from all manner of actions, cause and causes of
action, expenses, losses, damages, judgments, executions, claims
and demands of whatsoever kind or nature, of law or in equity,
whether known or unknown, arising out of or relating in any
manner, cause or thing whatsoever, which Borrower may have had,
or now has, or which the Borrower hereafter can, shall or may
have, for or by reason of any manner, cause or thing whatsoever,
whenever arising, to and including the date of this Agreement,
whether in respect of BofA, in respect of Lender, or otherwise.

8. Event of Default. Borrower hereby acknowledges and agrees
that a breach by Borrower of any term, provision, covenant or
condition herein set forth or herein required of Borrower to
be kept or performed, shall constitute an Event of Default
under the Loan Documents.

9. Acknowledgments of Borrower. Borrower hereby acknowledges
and agrees that: (a) Borrower has no defense, offset or counter-
claim with respect to the payment of any sum owed to Lender, or
with respect to the performance or observance of any warranty
or covenant contained in the Loan Agreement or any other Loan
Document; (b) Lender has performed all obligations and duties
owed to Borrower through the date hereof; (c) there is owing
by Borrower on the date hereof in respect of the Loans, an
aggregate unpaid principal balance of $750,330.57, including
(A) $216,059.88 in respect of the Revolving Loans, (B) $534,270.69,
in respect of the Term Loan, and (C) $100,000, in respect of
Letters of Credit, plus, in each case, accrued interest and fees;
and (d) the Loans shall continue to bear interest until paid in
full at the Default Rate, which is equal to Reference Rate plus
four percent (4%) per annum.

10. Representations and Warranties of Borrower. To induce Lender
to amend the Loan Agreement and to consider making future Loans
thereunder, Borrower represents and warrants to Lender that:

10.1 Compliance with Loan Agreement. On the date hereof and other
than with respect to the Forbearance Events of Default, Borrower
is in compliance with all of the terms and provisions set forth
in the Loan Agreement (as modified by this Agreement) and no
other Default or Event of Default has occurred and is continuing.

10.2 Representations and Warranties under the Loan Agreement.
On the date hereof and other than with respect to the Forbearance
Event of Default, the representations and warranties set forth
in Section 8 of the Loan Agreement are true and correct with the
same effect as though such representations and warranties had
been made on the date hereof, except to the extent that such
representations and warranties expressly relate to an earlier date.

10.3 Corporate Authority. Borrower has full power and authority to
consummate this Agreement, and to make the borrowings under the
Loan and has full power and authority to incur and perform the
obligations provided for under the Loan Agreement and this Agreement,
all of which have been duly authorized by all proper and necessary
corporate action. No consent or approval of stockholders or of
any public authority or regulatory body which has not been obtained
is required as a condition to the validity or enforceability of
this Agreement.

10.4 Agreement as Binding Agreement. This Agreement and the Loan
Agreement (as modified by this Agreement) constitute the valid
and legally binding obligations of Borrower fully enforceable
against Borrower in accordance with their respective terms.

10.5 No Conflicting Agreements. The execution and performance by
Borrower of this Agreement, and the borrowing by Borrower under
the Loan will not, (i) to the best knowledge of Borrower, violate
any provision of law, any order of any court or other agency of
government, or the Articles of Incorporation or Bylaws of Borrower;
or (ii) violate any indenture, contract, agreement or other
instrument to which Borrower is a party, or by which any of its
property is bound, or be in conflict with, result in a breach of
or constitute (with due notice and or lapse of time) a default
under, any such indenture, contract, agreement or other instrument;
or (iii) result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the property
or assets of Borrower, other than in favor of Lender.

11. Effectiveness of this Agreement. The agreements set forth
above shall become effective as of the date of the execution of
this Agreement. Lender shall receive all of the following, each
duly executed and dated the date hereof, in form and substance
satisfactory to the Lender: (a) this Agreement; and (b) such
other instruments, documents, waivers and consents as Lender
reasonably may request.

12. Effect on Loan Agreement. Except as specifically amended
hereby, the terms and provisions of the Loan Agreement are in
all other respects ratified and confirmed and remain in full
force and effect. All references to the Loan Agreement in any
document, instrument or agreement executed in connection with
the Loan Agreement shall be deemed to refer to the Loan Agreement
as qualified hereby.

13. Forbearance Fee: Lender's Fees and Expenses. Borrower shall
pay to Lender on the date hereof a fee in the amount of $10,000
in consideration of Lender's extension of its previous forbearance
pursuant to this Agreement. Borrower hereby agrees to pay all
reasonable out-of-pocket expenses incurred by Lender in
connection with the preparation, negotiation and consummation
of this Agreement, and all other documents related hereto
(whether or not any borrowing under the Loan Agreement as
amended shall be consummated), including, without limitation,
(i) the reasonable fees and expenses of Lender's counsel
(including the allocated cost and expense of in-house counsel),
and any filing fees and recordation tax required in connection
with the filing of any documents necessary to consummate the
provisions of this Agreement, (ii) the costs and expenses of
Lender or its counsel incurred conducting searches of the
public records to ascertain whether any Liens not constituting
Permitted Liens exist; and (iii) the costs and expenses of
Lender incurred prior to or subsequent to the Closing Date
in conducting field examinations and Collateral evaluations,
including the costs of obtaining updated appraisals of
property, plant and equipment of Borrower.

14. Successors. This Agreement shall be binding upon and inure
to the benefit of Borrower, Lender and their respective
successors and assigns.

15. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of
Illinois, without regard to the conflict of laws principles
thereof.

16. Venue and Waiver of Jury Trial. The provisions of
Section 16.4 and 16.5 of the Loan Agreement are incorporated
herein and made a part hereof and shall govern and apply
to this Agreement as if set forth in full herein.

17. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed
original and all of which taken together shall constitute
one and the same document.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above
written.

ART'S-WAY MANUFACTURING CO., INC.
By:  /s/ John C. Breitung
Name:    John C. Breitung
Title:   Chief Executive Officer

UPS CAPITAL CORPORATION
the successor to Bank of America National Assocation
By:  /s/  Don Whitehead
Name:     Don Whitehead
Title:    Managing Director, Portfolio


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1 CHARTER
<SEQUENCE>3
<FILENAME>ex991fx.txt
<TEXT>



Exhibit 99.1

                     CERTIFICATION OF FINANCIAL STATEMENTS

Pursuant to 18 U.S.C. 63   1350, the President and Chief Executive Officer
and the Finance Manager of Art's-Way Manufacturing Co., Inc. (the "Company"),
herebycertify that this Form 10-Q and the financial statements thereto fully
comply with the requirements of Sections 13(a) and 15(d) of the Securities
Exchange Act of 1934, and the information contained in the Form 10-Q and
the financial statements thereto fairly present, in all material respects,
the financial condition and results of operations of the Company.


By:   /s/  John C. Breitung      	  By:   /s/  Seth F. LaBore
Name:   John C. Breitung		  Name:  Seth F. LaBore
President and Chief                   Finance Manger
Executive Officer			        April 14, 2003
April 14, 2003

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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