SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON D.C. 20549

                                  FORM 10-K

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

For the Six-Month Period Ended November 30, 1997 Commission File No. 0-5131

                      ART'S-WAY MANUFACTURING CO., INC.

                  DELAWARE                          42-0920725
       ____________________________         __________________________
          State of Incorporation          I.R.S. Employee Identification No.

            Armstrong, Iowa                              50514
        
  Address of principal executive offices                Zip Code


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

   Securities registered pursuant to Section 12(b) of the Act:  None

   Securities registered pursuant to Section 12(g) of the Act

                   Common stock $.01 par value

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 for the past 90 days.  Yes  X      No  

Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K is not contained herein, and will not be 
contained, to the best of registrant's knowledge, in definitive proxy 
or informational statements incorporated by reference in Part III of 
this Form 10-K or any amendment to this form 10-K.  [ ]

Aggregate market value of the voting stock held by non-affiliates of 
the Registrant on February 10, 1998:  $8,895,608

Number of common shares outstanding on February 13, 1998: 1,245,931.

DOCUMENTS INCORPORATED BY REFERENCE:  None

                        Art's-Way Manufacturing Co., Inc.
                              Index to Annual Report
                                  on Form 10-K

                                                                    Page
Part I

     Item 1 - Description of Business                             3 thru 4

     Item 2 - Properties                                             5

     Item 3 - Legal Proceedings                                      5

     Item 4 - Submission of Matters to a Vote of Security Holders    5

Part II

     Item 5 - Market for the Registrant's Common Stock and 
              Related Security Holder Matters                        6

     Item 6 - Selected Financial Statement Data                    6 & 7

     Item 7 - Management's Discussion and Analysis of 
              Financial Condition and Results of Operations      7 thru 10
             
     Item 7A -Quantitative and Qualitative Disclosures 
              About Market Risk                                     10

     Item 8 - Consolidated Financial Statements and 
              Supplemental Data                                     10

     Item 9 - Changes in and Disagreements with Accountants on
              Accounting and Financial Disclosure                   10

Part III

     Item 10- Directors and Executive Officers of the Registant     11

     Item 11- Executive Compensation                                12

     Item 12- Security Ownership of Certain Beneficial Owners
              and Management                                        13

     Item 13- Certain Relationships and Related Transactions        14

Part IV

     Item 14- Exhibits, Financial Statement Schedules and
              Reports on Form 8-K                                   15  


Note:  This Form 10(k) is being filed as a result of a change in the 
Company's fiscal year from May 31 to November 30, effective November 30,
1997.

                                  PART I

Item 1. Description of Business	

	(a)   General Development of Business

	Art's-Way Manufacturing Co., Inc. (the "Company" or "Art's-Way")
 began operations as a farm equipment manufacturer in 1956.  Its
 manufacturing plant is located in Armstrong, Iowa.

	During the past five years, the business of the Company ha
 remained substantially the same.

	(b)   Financial Information About Industry Segments

	In accordance with generally accepted accounting principles, 
 Art's-Way has only one industry segment, metal fabrication.

	(c)   Narrative Description of Business

	The Company manufactures specialized farm machinery under its own
 and private labels.

	Equipment manufactured by the Company under its own label includes:
 portable and stationary animal feed processing equipment and related
 attachments used to mill and mix feed grains into custom animal
	feed rations; a high bulk mixing wagon to mix animal feeds 
 containing silage, hay and grain; a line of mowers, cutters and 
 stalk shredders; minimum till seed bed preparation equipment; sugar
 beet and potato harvesting equipment; and a line of land management
 equipment.

	Research and development efforts have been put forth in the 
 development of the Company's product lines, both in the development
 of new products and the upgrading of existing lines. The expenditures
	should result in increased future sales.

	Private label manufacturing of farm equipment accounted for 8%, 20%,
 22% and 18% of total sales for the six-month period ended November
 30, 1997 and each of the years ended May 31, 1997, 1996 and 1995,
 respectively. The Company expects private label manufacturing for
 the next twelve months to be approximately 25% of sales.

	Art's-Way labeled products are sold through farm equipment dealers
 throughout the United States. There is no contractual relationship
 with these dealers to distribute our products and dealers may sell
 a competitor's product line but are discouraged from doing so.

	Raw materials are acquired from domestic sources and normally are
 readily available.

	The Company maintains patents and manufacturing rights on several 
 of its products covering unique aspects of design and has trademarks
 covering product identification.  Royalties are paid by the Company
 for use of certain manufacturing rights.  The validity of its patents
 has not been judicially determined and no assurance can be given as 
 to the extent of the protection which the patents afford. In the
 opinion of the Company, its patents, trademarks and licenses are of
 value in securing and retaining business. The Company currently has
 six patents which expire in various years beginning in 1998 through
 2012.

	The Company's agricultural products are seasonal; however, with 
 recent additional product purchases and the development of mowers,
 cutters, shredders, beet and potato harvesting machinery, coupled
 with private labeled products, the impact of seasonality has been
 decreased because the peak periods occur at different times. In 
 common with other manufacturers in the farm equipment industry,
 the Company's business is affected by factors peculiar to the farm
 equipment field. Items such as fluctuations in farm income resulting
 from crop damage caused by weather and insects, by government farm
 programs, and by other unpredictable variables such as interest 
 rates.

	The farm equipment industry has a history of carrying significant
 inventory at dealers locations. The Company's beet, shredder and 
 potato product lines are sold with extended terms, however, the 
	remainder of the product lines are normally sold with 30 day terms.

	The Company has a supplier agreement with Case Corporation.  Under
 the agreement the Company has agreed to supply Case's requirements
 for certain feed processing, tillage equipment and service parts 
	under Case's label. The agreement has no minimum requirements and
 can be cancelled upon certain conditions. For the six-month period
 ended November 30, 1997 and each of the years ended May 31, 1997,
 1996 and 1995 sales to Case aggregated approximately 5%,10%, 15% 
 and 15% of total sales, respectively.

	The backlog of orders on January 28, 1998 was approximately 
 $7,000,000 compared to approximately $2,000,000 a year ago.  The
 increase is primarily tillage equipment for Case Corporation. 
 The balance of the order backlog consists of various Company branded
 products. The order backlog is expected to be shipped during the
 current fiscal year.

	The Company currently does no business with any local, state or 
 federal government agencies.

	The feed processing products, including private labeled units, 
 compete with similar products of many other manufacturers. There
 are estimated to be more than 20 competitors producing similar
 products and total market statistics are not available. The 
 Company's products are competitively priced with greater diversity 
 than most competitor product lines.  Beet harvesting equipment is
 manufactured by 4 companies which have a significant impact on the
 market.  The Company's share of this market is estimated to be 
 about 55%.  Other products such as mowers, cutters and shredders
 are manufactured by approximately 25 other companies with total
 market statistics unavailable; however, the Company believes its
 products are competitively priced and their quality and performance
 are above average in a market where price, product performance and 
 quality are principal elements.

	The Company is engaged in experimental work on a continual basis
 to improve the present products and create new products. Research
 costs were primarily expended on a new line of feed processing
	products and continuous development of beet harvesting equipment.
 All research costs are expensed as incurred. Such costs approximated
 $193,000 for the six months ended November 30, 1997, and $301,000,
 $224,000 and $239,000 for the years ended May 31, 1997, May 31, 1996
 and May 31, 1995, respectively. (See also Note 1 to the Consolidated
 Financial Statements).

	The Company is subject to various federal, state and local laws and
 regulations pertaining to environmental protection and the discharge
 of materials into the environment. The Company does not	anticipate
 that future expenses or capital expenditures relating to compliance
 with such regulations will be material.

	During the six month period ended November 30, 1997, the Company
 had peak employment of 211 full-time employees. Of this total 163
 were factory and production employees, 15 were engineers and 
	engineering draftsman, 18 were administrative employees and 15 were
 in sales and sales management. Because of the seasonal nature of the
 Company's business, the number of employees fluctuates.

	The Company's employees are not unionized. There has been no work
 stoppage in the Company's history and no stoppage is, or has been,
 threatened.  The Company believes its relationship with its employees
 is good.

	(d)   Financial Information about Foreign and Domestic Operation 
        and Export Sales

	The Company has no foreign operations; its export sales, primarily
 to Canada, accounted for less than 1% of sales and less than 1% 
 of operating income (loss) in the six-month period ended November 
 30, 1997 and each of the years May 31, 1997, 1996 and 1995.

Item 2.  Properties

	The existing executive offices, production and warehousing 
 facilities of Art's-Way are built of hollow clay block/concrete 
 and contain approximately 240,000 square feet of usable space.
 Most of these facilities have been constructed since 1965 and
 are in good condition. The Company owns approximately 140 
	acres of land west of Armstrong, Iowa, which includes the factory
 and inventory storage space.  The Company currently leases excess
 land to third parties for farming.

Item 3.  Legal Proceedings

	Various legal actions and claims are pending against the Company
 consisting of ordinary routine litigation incidental to the 
 business.  In the opinion of management and outside counsel,
 appropriate provisions have been made in the accompanying 
 consolidated financial statements for all pending legal	actions
 and other claims.  (See also Note 9 to Consolidated Financial
 Statements.)

Item 4.  Submission of Matters to a Vote of Security Holders

	Not Applicable.


                              PART II

Item 5.  Market for the Registrant's Common Stock and Related Security
Holder Matters

(a)   Price Range of Common Stock

                               Per Share Common Stock Bid Prices by Quarter
                                                 Period Ended
                              Six-Months Ended   Year Ended   Year Ended
                              November 30, 1997  May 31, 1997  May 31, 1996
                              High         Low   High    Low   High     Low
       First Quarter                             5 1/2  4 1/2  6 5/8     5
       Second Quarter                            5 1/2  4 1/4  5 3/4     5
       Third Quarter          8 1/2      6 1/4   6 1/4  4 3/4  5 3/8  4 1/4
       Fourth Quarter        13 1/2      7 3/4   6 3/4    6    5 1/4  4 1/4

The Common Stock is traded in the over-the-counter market and the range of
closing bid prices shown above is as reported by NASDAQ.  The quotations
shown reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions.

(b)   Approximate Number of Equity Security Holders

                                  Approximate number of
          Title of Class     Record Holders as of February 16,1998
        Common Stock, $.01 
            Par Value                        268

(c)   Dividend Policy

Holders of Common Stock of the Company are entitled to a pro rata share of
any dividends as may be declared from time to time from funds available and
to share pro rata in any such distributions available for holders of
Common Stock upon liquidation of the Company. The Company has not paid a 
dividend during the past five years.

Item 6.  Selected Financial Statement Data 

The following tables set forth certain information concerning the Income 
Statements and Balance Sheets of the Company and should be read in 
conjunction with the Consolidated Financial Statements and the 	notes
thereto appearing elsewhere in this Report.

(a)   Selected Income Statement Data (In Thousands of Dollars, 
      Except Per Share Amounts)

                   Six Months     Year     Year    Year   Year    Year
                     Ended       Ended     Ended   Ended  Ended   Ended
                   November 30,  May 31    May 31  May 31 May 28  May 29
                     1997         1997      1996    1995   1994    1993
  Net Sales        $11,137      $16,440  $13,830  $20,298 $20,473 $20,308
  Net Income (Loss)$   491      $    80  $  (772) $(1,058)$   623 $   356
  Income (Loss) 
   Per Share (1)   $   .39      $   .07  $  (.72) $  (.99)$   .58 $   .34

(1)   Based on weighted average number of shares outstanding of 1,244,620 
for the six months ended November 30, 1997 and 1,197,452, 1,077,359, 
1,070,391, 1,064,898, 1,054,559 for the years ended May 31, 1997, 
May 31, 1996, May 31, 1995, May 31, 1994 and May 31, 1993.


(a)   Selected Balance Sheet  Data (In Thousands of Dollars, Except Per 
      Share Amounts)
                   November 30,  May 31    May 31  May 31 May 28  May 29
                     1997         1997      1996    1995   1994    1993
          
  Total Assets      $15,322      $15,214   $11,886 $14,903 $17,261 $14,866
  Long-Term Debt    $ 1,935      $ 2,170   $ 1,846 $ 1,573 $ 2,173 $ 2,723
  Dividends Per 
     Share          $   .00      $   .00   $  .00  $   .00 $   .00 $   .00

Item 7.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations

The following discussion and analysis of financial condition and results of
operations of the Company and its subsidiary is based on the Consolidated
Financial Statements and the notes thereto included herein.

(a) and (b)   Liquidity and Capital Resources

Six-months ended November 30, 1997

For the six-months ended November 30, 1997, the Company's main source of
funds resulted from net	income plus depreciation. This source was offset 
by an increase in inventories and a decrease in customer deposits. The
inventory increase results from a higher production load at November 30,
1997 due primarily from Case tillage equipment. Customer deposits are 
from down payments on beet equipment. This equipment was shipped during
the six-month period, consequently the decrease in customer deposits.

Comparison of year ended May 31, 1997 with May 31, 1996

In fiscal year 1997, the Company used $277,000 of cash from operations 
compared to generating 	$1,199,000 cash from operations in fiscal year
1996. The decrease in cash from operations in fiscal year 1997 reflects
an increase in inventories and receivables, offset in part by increased
net income and payables.

In fiscal year 1997, major capital expenditures included two acquisitions.
The first acquisition was a line of potato farming equipment and associated
service parts. The second acquisition was a line of grain wagons and 
associated service parts.  The acquisitions, which included fixed assets
and inventory, were financed by the issuance of 145,000 shares of Art's-Way
common stock, loans from the State of Iowa and local sources obtained 
through the State of Iowa Community Development Block Grant program and
borrowings under the Company's short term line of credit.

Comparison of year ended May 31, 1996 with May 31, 1995

Cash provided by operations was used to reduce bank debt. There were no
major capital expenditures during the 1996 fiscal year.  Cash generated
from reductions in inventory and accounts receivable was used to reduce
trade accounts payable.

The reduction in inventory and accounts receivable reflects the lower level
of sales in the 1996 fiscal year as compared to the fiscal year 1995. 
The Company continues its emphasis on inventory reductions.

Capital Resources

In August 1995, the Company refinanced its existing senior indebtedness
with a new bank.  This new agreement provides for a revolving credit 
facility of up to $6,200,000 for operating needs based on a percentage
of the Company's accounts receivable and inventory and allows within the
revolving credit facility for the issuance of Letters of Credit in an 
aggregate amount not exceeding $300,000.  The interest on this credit
facility is one and one-half percent per annum in excess of the bank's
referenced rate and two percent on the Letter of Credit sub-facility
(10% and 10.5% respectively at November 30, 1997). Management believes 
this credit line will allow the Company to facilitate new product growth
and provide for ongoing working capital needs. Future capital needs of 
the Company will be met by cash from operations and additional borrowing.

The agreement also provides for a term loan in the principal amount of
$2,130,000.  The principal amount is repayable in monthly installments
of $35,500 for twenty-four months with the final payment due at the twenty
fourth month unless the revolving credit facility is renewed. In the event 
that the term 	of the revolving credit facility is subsequently extended,
the term loan shall continue to amortize based upon the payment schedule 
outlined above.  The interest rate on this credit facility is one and 
one-half percent in excess of the bank's reference rate.

All loans, advances and other obligations, liabilities and indebtedness 
of the Company are secured by all present and future assets.

The Company's current ratio during the three preceding fiscal years and 
its working capital are as shown in the following table:

                   November 30,   May 31,     May 31,    May 31, 
                       1997        1997        1996       1995
Current Assets     $12,486,599  $12,210,992 $9,578,494 $12,040,740
Current Liabilities$ 6,621,214  $ 6,821,525 $4,593,848 $ 7,309,511
Working Capital    $ 5,865,385  $ 5,389,467 $4,984,646 $ 4,731,299

Current Ratio           1.9          1.8        1.9         1.6

The Company believes its liquidity, capital resources, and borrowing 
capacity are adequate for its current and intended operations.

(c)   Results of Operations

Six-months ended November 30, 1997

Sales increased due mainly to strength in sugar beet harvesting equipment
and related service parts. Other strong areas included corn stalk shredders,
where the Company enjoyed its best season since 1994, the SupRaMix vertical
feed mixer and our traditional grinder mixer products. Two areas of weakness
in sales were the termination of our OEM contract to make frames for a local
fiberglass body manufacturer and our deliberate scaling back of Logan potato
equipment production in view of a dramatic downturn in potato prices and 
customer demand.

Gross profits increased due to improved production efficiencies, a product
mix of higher margin products and improved purchasing of raw materials. 
Warranty expenses were impacted adversely by $160,000 due to unanticipated
problems with our new model beet harvester. The Company encountered learning
curve expenses associated with the new tillage production for Case.

Operating expenses are up as the Company added staff in engineering and 
sales to support our new product lines and to enhance our position in the
beet and feed processing business and due to the reinstatement of the 
Company's contribution to the employee 40l(k) retirement plan.

Interest costs were up as the higher sales volumes required higher 
working capital requirements.

Comparison of year ended May 31, 1997 with May 31, 1996

Sales revenues for FY 1997 rose 19% due to the acquisitions described
above and returning strength in other areas of our existing business.
Sales from the acquisitions exceeded $2,000,000, the feed processing 
business was up 22%, and sales gains were made in our land maintenance
line.  Sales declined in the sugar beet equipment line as we deliberately
delayed production beyond May 31, 1997 to minimize working capital, make
manufacturing room for our new products, and to allow more time for the
development of new features.

Gross profit for FY 1997 rose 46% on the higher sales volume, however 
fiscal year 1996 gross profit was impacted by a $350,000 inventory
write-down. The ratio of cost of goods sold to net sales improved to
73.4% from last year's 78.4% (75.9% prior to the write-down). This
improvement in FY 1997 resulted from lower raw material costs and reduced
warranty expense.

Operating expenses were 7% higher than FY 1996. The two acquisitions
accounted for most of the increase, which included amortization of purchase
costs and additional employees to support the acquisitions. In addition, 
the Company strengthened our beet equipment resources in the engineering
area.  The 10% wage reduction implemented in June 1995 was progressively
restored which further increased operating expenses. The ratio of expenses
to sales fell from 25.7% in FY 1996 to 23.1% in FY 1997.

Interest expense was 29% lower in FY 1997 when compared to FY 1996. Improved
manufacturing flow reduced working capital requirements throughout the year.


Comparison of year ended May 31, 1996 with May 31, 1995

Sales for FY 1996 were down $6,468,000 from FY 1995 sales. This 32%
reduction in sales was in the company's two major areas of business-sugar
beet equipment and feed processing equipment. Sales of sugar beet equipment
fell 48% as the Company adjusted dealer inventories from a wholesale sales
push in 1995. Feed processing sales were off 36% due to extremely high cost
of feed, primarily corn, which severely crimped the Company's customers' 
ability to purchase new machines.  Sales of the	Company's other products,
including service parts declined a more modest 10%.

Gross profit for FY 1996 fell 30% on the lower sales volume, including a
$350,000 inventory market write-down taken in the fourth quarter. Without
this write-down, gross profit would have been down approximately 23%.
The percent of cost of goods sold to net sales declined to 76.9% from 77.5%
in FY 1995, including the impact of the inventory write-down. Before the 
inventory write-down the percent of cost of goods sold was 74.3%. The
improvement came about through significant improvements in manufacturing
efficiencies and purchasing.

Operating expenses were reduced almost 34% from FY 1995.  With the 
completion of the major new product initiative undertaken in FY 1994 
and FY 1995, engineering expenses were scaled back significantly, 
particularly in the area of prototype expense.  Other major cut-backs 
occurred in all areas of the Company, resulting in the number of indirect
and salaried employees at May 31, 1996 to be 73 vs 105 for the prior year.
Operating expenses as a percent of net sales were 27% and 28% in FY 1996
and FY 1995.  The reduction in expenses and improvement in the cost of goods
sold percent has enabled the loss from operations to be reduced 48% from
FY 1995.

Interest expense fell 18% from FY 1995, as production schedules, inventories
and accounts receivable were reduced. Other expenses were up significantly
due to fees associated with the new loan agreement.  

The effective income tax rate was (32.4%) for fiscal year 1996 compared
to (35.7%) for fiscal year 1995. Changes in the rate are due almost 
entirely to research and development credits.

Utilization of Deferred Tax Assets

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized.  The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible.

Based upon the reversal of deferred tax liabilities and projected future
taxable income, management believes it is more likely than not the Company
will realize the benefits of these deductible differences at November 30,
1997.  See also Note 8 to the Consolidated Financial Statements.

Year 2000 Issues

Many computer systems and software programs, including several used by the
Company require modification and conversion to allow data code fields to 
accept dates beginning with the year 2000.  Major system failures or 
erroneous calculations can result if computer systems are not year 2000
compliant. The Company is currently assessing its year 2000 issues, and 
is being advised by a substantial majority of its vendors and suppliers
that certain of their products are year 2000 compliant or can be upgraded
or will not be affected by the year 2000 problem. The Company's business
could be materially adversely affected if the Company's computer-based 
systems are not year 2000 compliant in a timely manner, the Company incurs
significant additional expenses pursuing year 2000 compliant products, the
Company's vendors do not provide in a timely manner year 2000 compliant
products, or the Company is subject to warranty or other claims by the
Company's clients related to product failures caused by the year 2000 
problem.

Recently Issued Accounting Pronouncements

In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings Per Share, which revises the calculation and presentation
provisions of Accounting Principle Board Opinion No. 15 and related
interpretations.  Statement No. 128 is effective for the fiscal year 1998.
The Company believes the adoption of Statement No. 128 will not have a 
significant effect on its reported earnings per share.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable

Item 8.  Consolidated Financial Statements and Supplemental Data

Consolidated Financial Statements and Supplemental Data for the six-month
period ended November 30, 1997 and for each of the years ended May 31, 1997,
1996, and 1995 are presented in a separate section of this Report following
Part IV.

Item 9.  Changes in and Disagreements with Accountants on Accounting 
and Financial Disclosure.

Not Applicable.

                             PART III

Item 10.   Directors and Executive Officers

Directors

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 77, 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. 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 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 50, 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.

Executive Officers

J. David Pitt, age 50, 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 55, 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.

Item 11.  Executive Compensation

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*  $60,000    $65,000                     -
  President           1997  $120,000       -            -         20,000
                      1996  $ 22,302       -            -         21,052

*For the six-month period ended November 30, 1997.

Option Exercises and Fiscal Year-End Values

The following table sets forth the aggregated option exercises and year-end
option value 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               Underlying
                                  Unexercised             Unexercised
                               Options at 11/30/97        In-the-Money
                                                       Options at 11/30/97
         Shares      Value
        Acquired on Realized Exercisable Unexercisable Exercisable Unexercisable
        Exercise (#)  ($)       (#)           (#)          ($)         ($)
           -           -       15,526       25,526       86,084      139,834
J. David Pitt
President


Compensation of Directors

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.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

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 February 17, 1998.

Name and Address             Type of       Number       Percent of
                            Ownership     of Shares    Outstanding

Arthur Luscombe             Of Record      126,325        10.14%
 RR                     and beneficially
 Dolliver, Iowa 50531

Franklin Resources, Inc.    Beneficially    82,500         6.62%
 777 Mariners Island Blvd.
 San Mateo, California 94404

Royce & Associates, Inc.    Beneficially    94,000 (1)     7.54%
 1414 Avenue of the Americas
 New York, New York 10019

J. Ward McConnell, Jr.      Beneficially   136,450 (2)    10.95%
 P.O. Box 6246
 Kinston, North Carolina 28501

James L. Koley              Of Record        76,000 (3)     6.10%
 1125 South 103 Street   and beneficially
 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 94,000 shares held by Royce & Associates, Inc.
(2) Includes 1,250 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 February 17, 1998. The shares shown as beneficially
owned include shares which executive officers and directors are 
entitled to acquire pursuant to outstanding stock options.

    Name                 Type of Beneficial        Number of     Percent of
                              Ownership             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 136,450 (2)    10.95%
J. David Pitt            of record and Beneficially  17,729 (3)     1.42%
William T. Green         of record and Beneficially  15,375 (4)     1.23%
Directors and Executive 
 Officers as a Group 
 (8 persons)             of record and Beneficially 373,304        29.96%

* Less than 1%
(1) Includes 5,000 shares which can be purchased by each individual 
    pursuant to stock options.
(2) Includes 1,250 shares which can be purchased pursuant to stock 
    options
(3) Includes 15,526 shares which can be purchased pursuant to stock 
    options and 1,703 shares which is the allocable portion of the 
    shares in the Company's 401(k) Plan.
(4) Includes 15,375 shares which can be purchased pursuant to stock options.

Item 13.  Certain Relationships and Related Transactions

	  Not Applicable

                                 PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K:

  (a)   Index to Financial Statements and Schedules

See index to financial statements and supporting schedules on page F-2.

  (b)   Reports on Form 8-K

No current Reports on Form 8-K have been filed during the last fiscal 
quarter of the period covered by this Report.

  (c)   Index to Exhibits

Any exhibits filed with Securities and Exchange Commission will be 
supplied upon written request of William T. Green, Vice President,
Finance, Art's-Way Manufacturing Co., Inc., Highway 9 West,
Armstrong, Iowa 50514.  A charge will be made to cover copying costs.
See Exhibit Index below.


                     Exhibits Required to be Filed

  Number                         Exhibit Description

    2          Agreement and Plan of Merger for Reincorporation of 
               Company in Delaware. Incorporated by reference to 
               Exhibit 2 of Annual Report on Form 10-K for the year 
               ended May 27, 1989.

    3          Certificate of Incorporation and By-laws for Art's-Way 
               Manufacturing Co., Inc.  Incorporated by reference to 
               Exhibit 3 of Annual Report on Form 10-K for the year 
               ended May 27, 1989.

   10          Incorporated by reference are the Material Contracts 
               filed as Exhibit 10 of the Annual Report on Form 10-K 
               for the fiscal year ended May 30, 1981.

   10.1        Art's-Way Manufacturing Co., Inc. 401 (k) Savings Plan.
               Incorporated by reference to Exhibit 28 (a) to the 
               Art's-Way Manufacturing Co., Inc.  Registration Statement 
               on Form S-8 filed on October 23, 1992.

   10.2        Art's-Way Manufacturing Co., Inc. Employee Stock Option 
               Plan (1991).  Incorporated by reference to Exhibit "A" 
               to Proxy Statement for Annual Meeting of Stockholders 
               held on October 15, 1991.

   10.3        Art's-Way Manufacturing Co., Inc. Director Stock Option 
               Plan (1991).  Incorporated by reference to Exhibit "B" 
               to Proxy Statement for Annual Meeting of Stockholders 
               held on October 15, 1991.

   10.4        Asset Purchase Agreement between the Company and J. Ward 
               McConnell, Jr., and  Logan Harvesters, Inc.  Incorporated
               by reference to Current Report on Form 8-K dated September 
               6, 1996.


                         INDEPENDENT AUDITORS' REPORT


The Board of Directors
Art's-Way Manufacturing Co., Inc.:


We have audited the accompanying consolidated financial statements of 
Art's-Way Manufacturing Co., Inc. and subsidiary as listed in the 
accompanying index. In connection with our audits of the consolidated
financial statements, we have also audited the financial statement 
schedule as listed in the accompanying index.  These consolidated 
financial statements and financial statement schedule are the 
responsibility of the Company's management.  Our responsibility is to
express an opinion on these consolidated financial statements and 
financial statement schedule bases on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of 
Art's-Way Manufacturing Co., Inc. and subsidiary at November 30, 1997
and May 31, 1997 and the results of their operations and their cash 
flows for the six-month period ended November 30, 1997 and each of the
years ended May 31, 1997, 1996 and 1995, in conformity with generally
accepted accounting principles.  Also in our opinion, the related 
financial statement schedule, when considered in relation to the 
consolidated financial statements taken as a whole, present fairly, 
in all material respects, the information set forth therein.


                            			KPMG PEAT MARWICK LLP

Omaha, Nebraska
January 9, 1998


                       ART'S-WAY MANUFACTURING CO., INC.

                 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                     AND FINANCIAL STATEMENT SCHEDULE


CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Operations -
    Six months ended November 30, 1997
   	and years ended May 31, 1997, 1996 and 1995...............     F-3

Consolidated Balance Sheets -
    November 30, 1997 and May 31, 1997........................   F4 - F-5

Consolidated Statements of Stockholders' Equity - 
    Six months ended November 30, 1997
   	and years ended May 31, 1997, 1996 and 1995...............     F-6

Consolidated Statement of Cash Flows - 
    Six months ended November 30, 1997
   	and years ended May 31, 1997, 1996 and 1995................    F-7

Notes to Consolidated Financial Statements - 
    Six months ended November 30, 1997
   	and years ended May 31, 1997, 1996 and 1995................ F-8 - F-16


SCHEDULE SUPPORTING CONSOLIDATED
	FINANCIAL STATEMENTS

    Schedule VII  -  Valuation and Qualifying Accounts.........    S-1


All other schedules have been omitted as the required information is not
applicable or the information is included in the consolidated financial
statements or related notes.


                       ART'S-WAY MANUFACTURING CO., INC.
                               AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF OPERATIONS


     		          SIX MONTHS
		                 ENDED	 	                YEARS ENDED
		              November 30,     May 31,     May 31,     May 31,
		                  1997	         1997	       1996	       1995

NET SALES	       $ 11,137,092	$16,440,194 $13,830,471 $20,298,140
COST OF GOODS SOLD  7,783,751  12,075,488  10,492,375  15,972,492
INVENTORY MARKET 
  WRITE-DOWN	           -	         -         	350,000      -	
	
GROSS PROFIT        3,353,341   4,364,706   2,988,096   4,325,648

EXPENSES:
 Engineering		        269,473     353,814     278,426     551,739
 Selling	             759,787   1,372,910   1,495,415   2,201,531
 General and 
   administrative	  1,192,045   2,068,615   1,781,417   2,663,361 
     Total expenses 2,221,305   3,795,339   3,555,258   5,416,631

INCOME (LOSS)
  FROM OPERATIONS   1,132,036     569,367    (567,162) (1,090,983)

OTHER INCOME (DEDUCTIONS):	
 Interest expense	   (264,939)   (327,089)   (459,066)   (558,321)
 Other               (111,268)   (117,033)   (115,750)      4,215
  Net deductions     (376,207)   (444,122)   (574,816)   (554,106)

INCOME (LOSS) BEFORE
  INCOME TAXES        755,829     125,245  (1,141,978) (1,645,089)

INCOME TAX  EXPENSE
 (BENEFIT) (Note 8)   265,140      45,222    (370,051)   (586,601)

NET INCOME (LOSS)   $ 490,689    $ 80,023   $(771,927)$(1,058,488)

NET INCOME (LOSS) 
  PER SHARE	            $0.39       $0.07     ($0.72)	     ($0.99)

See accompanying notes to consolidated financial statements.	
															

                         ART'S-WAY MANUFACTURING CO., INC.													
                                AND SUBSIDIARY													
                           CONSOLIDATED BALANCE SHEETS							 	 					
 													
		                                          November 30,	  May 31,
ASSETS		                                       1997		       1997	
													
CURRENT ASSETS:	
 Cash and cash equivalents (Note 1)	       $    8,692 	 $    25,297
 Accounts receivable-customers,
    net of allowance for doubtful accounts
    of $31,000 and $25,000
    in November and May,
    respectively (Notes 5 and 9)           	3,005,837 	   2,943,404
 Inventories (Notes 2 and 5)		              8,754,469     8,437,569
 Deferred income taxes (Note 8)		             464,426       644,053
 Income tax receivable	                        99,000         -	
 Other current assets                         154,175       160,669
						
     Total current assets                  12,486,599    12,210,992
						
 						
PROPERTY, PLANT AND EQUIPMENT,
 at cost (Notes 3 and 5)	                 10,323,374      10,340,107
   Less accumulated depreciation	          7,488,142       7,337,110

   Net property, plant and equipment	      2,835,232       3,002,997

        TOTAL	                           $15,321,831     $15,213,989

See accompanying notes to consolidated financial statements.						
													
															
           		                             November 30,       May 31,	
LIABILITIES AND STOCKHOLDERS' EQUITY	       	1997		           1997
															
CURRENT LIABILITIES:															
  Notes payable to bank (Note 5)	        $ 3,172,296       $ 2,652,433
  Current portion of long-term debt
   (Note 5)                                  483,157           462,146
  Accounts payable	                        2,069,584         2,130,946
  Customer deposits	                         106,793           810,780
  Accrued expenses (Note 4)                  789,384           765,220

    Total current liabilities	             6,621,214         6,821,525
															
LONG-TERM DEBT, excluding current 
    portion (Note 5)	                      1,451,794         1,707,854
															
DEFERRED INCOME TAXES (Note 8)               115,129            94,101
															
         Total liabilities                 8,188,137         8,623,480
															
STOCKHOLDERS' EQUITY:
  Common stock - $.01 par value.
  Authorized 5,000,000 shares;
  issued 1,340,778 shares                     13,408            13,408
  Additional paid-in capital               1,618,453         1,637,887
  Retained earnings                        6,411,582         5,920,893
 		                                        8,043,443         7,572,188
  Less cost of common shares in
  treasury of 94,847 in November
  and 102,347 in May                         909,749           981,679				
															
      Total stockholders' equity	          7,133,694         6,590,509			

CONTINGENCIES (Note 9)

      TOTAL	                             $15,321,831       $15,213,989
															
															
	
                        ART'S-WAY MANUFACTURING CO., INC.
                                 AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 SIX MONTHS ENDED NOVEMBER 30, 1997 AND YEARS ENDED MAY 31, 1997, 1996 AND 1995
									 								
                   					            Additional
	             Number of   Stated/  Paid-In   Retained    Treasury
	               Shares  Par Value Capital   Earnings     Stock      Total
BALANCE, MAY 29, 1994
              1,066,831 $ 13,408 $2,374,575 $7,671,285 $(2,627,341)$7,431,927
 Net loss	         -        -	       	 -    (1,058,488)      	-    (1,058,488)
 Common treasury
 shares issued    6,100     -	      (17,786)     -          58,503     40,717
BALANCE, MAY 28,1995
              1,072,931   13,408  2,356,789  6,612,797  (2,568,838)  6,414,156
 Net loss	         -		      -	                (771,927)      -        (771,927)	
 Common treasury shares issued
                 13,700     -	      (61,700)      -	       131,393      69,693
BALANCE, MAY 31,1996
              1,086,631   13,408  2,295,089  5,840,870  (2,437,445)  5,711,922
 Net income                   -			             	  80,023       -        	 80,023
 Common treasury shares issued	
                151,800     -	     (657,202)      -	      1,455,766     798,564
BALANCE, MAY 31,1997
              1,238,431   13,408  1,637,887  5,920,893     (981,679)  6,590,509
 Net income	                  -	        	-	      490,689         -     	490,689
 Common treasury shares issued
                  7,500      -	     (19,434)      -          71,930      52,496
BALANCE, NOVEMBER 30, 1997
              1,245,931  $13,408 $1,618,453 $6,411,582   $ (909,749) $7,133,694


See accompanying notes to consolidated financial statements.
						
                          ART'S-WAY MANUFACTURING CO., INC.
                                    AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF CASH FLOWS

                   			           SIX MONTHS
			                                ENDED	              YEARS ENDED
			                               Nov. 30     May 31,    May 31,     May 31,
                                    1997        1997       1996        1995
CASH FLOWS FROM OPERATIONS:
  Net income (loss)              $ 490,689   $ 80,023  $(771,927) $(1,058,488)
  Adjustments to reconcile net
  income (loss) to net cash provided
Depreciation and amortization	     280,700    586,152    572,109      621,809
Changes in assets and liabilities:
(Increase) decrease in:
 Accounts receivable               (62,433)  (479,163)   946,384      517,249
 Inventories	                     (316,900)(2,236,826) 1,227,500    1,790,429
 Other current assets                6,494    (73,194)   (46,343)     185,215
Increase (decrease) in:
 Accounts payable	                 (61,362) 1,624,034  (1,427,404)   (810,196)
 Customer deposits	               (703,987)   438,979     276,187    (267,749)
 Accrued expenses                   24,164   (242,106)    127,745    (155,982)
 Income taxes, net                 101,655     24,532     294,471    (783,112)

Net cash provided (used)
by operating activities           (240,980)  (277,569)  1,198,722      39,175

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and
 equipment                        (151,134)(1,300,788)    (19,568)   (216,531)
Proceeds from sale of property,
 plant and equipment - net	         38,199     18,953       2,140      15,786
Net cash used in investing
 activities	                      (112,935)(1,281,835)    (17,428)   (200,745)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (payments of)
 notes payable to bank	            519,863    370,624  (1,518,191)    700,000
Proceeds from long-term debt          -       750,000   2,130,000        -	
Principal payments on 
 long-term debt                   (235,049)  (426,000) (1,857,334)   (600,000)
Proceeds from issuance of common
 stock from treasury	               52,496    798,564      69,693      40,717
Net cash provided by (used in) 
 financing activities	             337,310  1,493,188  (1,175,832)    140,717

Net increase (decrease) in cash 
and cash equivalents	              (16,605)   (66,216)      5,462     (20,853)
Cash and cash equivalents at
 beginning of period                25,297     91,513      86,051     106,904
Cash and cash equivalents at
 end of period	                 $    8,692  $  25,297   $  91,513   $  86,051

Supplemental disclosures of cash						
 flow information:
Cash paid during the period for:
 Interest	                      $  264,939  $ 333,108   $ 490,876   $  514,376
 Income taxes	                     162,985     22,267       6,992      196,511

See accompanying notes to consolidated financial statements.

     																		ART'S-WAY MANUFACTURING CO., INC.
                               AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

	CONSOLIDATION

	The consolidated financial statements include the accounts of
 Art's-Way Manufacturing Co., Inc. ("Company" or "Art's-Way")
 and its subsidiary, A-W Transportation Co.  All material 
 intercompany balances and transactions have been eliminated in 
 consolidation. As of August 4, 1995, A-W Transportation Co. was
 administratively dissolved.

	CHANGE IN YEAR END

	The Company changed its fiscal year end to November 30 in order 
 to coincide with seasonality of the agriculture industry.  As a
 result, the accompanying financial statements include the six-month
 transition period ended November 30, 1997, and comparative unaudited
 financial information for the six-months ended November 30, 1997 is
 presented in note 13.

	INVENTORIES

	Inventories are stated at the lower of cost or market, and cost is
 determined using the first-in, first-out (FIFO) method or market.

 PROPERTY, PLANT AND EQUIPMENT

	Property, plant and equipment is recorded at cost.  Depreciation of
 plant and equipment is provided using the straight-line method, 
 based on estimated useful lives of the assets which range from three
 to thirty-three years.

	CASH EQUIVALENTS 

	For purposes of the consolidated statements of cash flows, the 
 Company considers all highly liquid investments purchased with a
 maturity of three months or less to be cash equivalents.

	INCOME TAXES

	Income taxes are accounted for under the asset and liability method.
 Deferred tax assets and liabilities are recognized for the estimated
 future tax consequences attributable to differences between the 
	financial statement carrying amounts of existing assets and 
 liabilities and their respective tax bases and operating losses. 
 Deferred tax assets and liabilities are measured using enacted tax 
 rates in effect for the year in which those temporary differences
 are expected to be recovered or settled. The effect on deferred tax
 assets and liabilities of a change in tax rates is recognized in 
 income in the period that includes the enactment date.

	RESEARCH AND DEVELOPMENT
	Research and development costs are expensed when incurred.  Such 
 costs approximated $193,000 for	the six months ended November 30,
 1997, and $301,000, $224,000 and $239,000 for the years ended 
	May 31, 1997, May 31, 1996 and May 31, 1995, respectively.


1.,	Continued

	INCOME (LOSS) PER SHARE

	Income (loss) per common share is based on the weighted average 
 number of shares outstanding and equivalent common shares from 
 dilutive stock options of 1,244,620 shares for the six months 
 ended November 30, 1997, 1,197,452, 1,077,359 and 1,070,391 shares
 for the years ended May 31, 1997, May 31, 1996 and May 31, 1995,
 respectively. The difference between primary and fully diluted 
 income (loss) per share is not material.  In February 1997, the
 Financial Accounting Standards Board issued Statement No. 128, 
 "Earnings Per Share" which revises the calculation and presentation
 provisions of Accounting Principles Board Opinion 15 and related 
 interpretations.  Statement No. 128 is effective for the Company's 
 periods ending after December 15, 1997(the Company's quarter ended
 February 28, 1998). Retroactive application will be required. 
 The Company believes the adoption of Statement No. 128 will not 
 have significant effect on its reported earnings per share.

	USE OF ESTIMATES

	Management of the Company has made a number of estimates and 
 assumptions relating to the reporting of assets and liabilities
 and the disclosure of contingent assets and liabilities to prepare
 these consolidated financial statements in conformity with 
 generally accepted accounting principles. Actual results could 
 differ from those estimates.

2.	INVENTORIES

        Major classes of inventory are:

                                           November 30,      May 31, 
                                              1997            1997
          Raw materials                    $1,593,469      $1,691,733
          Work in process                   3,340,641       3,891,197
          Finished goods                    3,916,359       3,014,639
          Inventory market write-down         (96,000)       (160,000)
             Total                         $8,754,469      $8,437,569

3.	PROPERTY, PLANT AND EQUIPMENT

        Major classes of property, plant 
         and equipment, at cost, are:      November 30,      May 31, 
                                             1997             1997
        Land                               $  180,909     $  180,909
        Buildings and improvements          2,615,573      2,601,250
        Manufacturing machinery and
         equipment                          7,257,729      7,288,785
        Trucks and automobiles                148,817        148,817
        Furniture and fixtures                120,346        120,346
           Total                         $ 10,323,374   $ 10,340,107

4.	ACCRUED EXPENSES

        Major components of accrued expenses are:
                                          November 30,      May 31, 
                                              1997           1997
        Salaries, wages and commissions   $  285,806      $ 303,388
        Provision for pending claims           9,255         40,000
        Other                                453,751        421,832
            Total                         $  789,384      $ 765,220

5.	LOAN AND CREDIT AGREEMENTS

	Line of Credit

	In August 1995, the Company refinanced its existing senior 
 indebtedness with a new bank. This new agreement provides for a
 revolving credit facility of up to $6,200,000 for operating needs
 based on a percentage of the Company's accounts receivable and 
 inventory and allows within the revolving credit facility for 
 the issuance of letters of credit in an aggregate amount not 
 exceeding $300,000. The interest on this credit facility is one 
 and one-half percent per annum in excess of the bank's referenced
 rate (10.00% at November 30, 1997) and two percent on the letter
 of credit sub-facility (10.50% at November 30, 1997).

	At November 30, 1997,  borrowings under the revolving line of credit
 were $3,172,296 and the bank had issued $100,000 in letters of 
 credit which guaranteed obligations carried on the consolidated
 balance sheet.

	The agreement also provides for a term loan in the principal amount
 of $2,130,000. The principal amount is repayable in monthly 
 installments of $35,500 with the final payment due August 1998 
 unless the revolving credit facility is renewed. In the event that
 the term of the revolving credit facility is subsequently extended,
 the term loan shall continue to amortize based upon the payment 
 schedule outlined above. The Company and the bank expect to extend
 the current agreement before the current facility expires.

	All loans, advances and other obligations, liabilities and 
 indebtedness of the Company are secured by all present and 
 future assets.

	Unused borrowings under the revolving line of credit were $206,378
 at November 30, 1997. The Company pays an unused line fee equal to
 three-eighths of one percent of the unused portion of the revolving
 loan facility.

5.,	Continued

	Long-term Debt

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

                                          November 30,     May 31, 
                                             1997           1997
        Installment promissory note dated
        August 31, 1995, in the original 
        principal sum of $2,130,000, payable
        in monthly installments of $35,500
        plus interest at one and one-half 
        percent over the bank's national
        money market rate, secured (a)    $ 1,207,000     $ 1,420,000

        State of Iowa Community Development
        Block Grant promissory notes at 
        zero percent interest, maturity 
        2006 with quarterly principal
        payments to begin October 1997 (b)    488,889         500,000

        State of Iowa Community Development
        Block Grant local participation 
        promissory notes at 4% interest, 
        maturity 2006. Interest is payable
        quarterly beginning in November 1996
        and principal payments begin in 
        November 1997                         239,062          250,000


                Total long-term debt        1,934,951        2,170,000

       Less current portion of 
         long-term debt                       483,157          462,146


                Long-term debt, excluding
                 current portion          $ 1,451,794      $ 1,707,854

 (a)  The installment promissory note payable bears interest at one 
      and one-half percent over the bank's referenced rate (10% at 
      November 30 and May 31, 1997).

      All borrowings under the installment note payable are secured by 
      the cash, accounts receivable, inventories and property, plant and
      equipment of the Company. The agreement requires the Company to 
      maintain minimum levels of tangible net worth and specified ratios,
      as defined, of debt-to-tangible net worth and net cash income to 
      current maturities.  The Company was in compliance with, or has 
      obtained waivers for, all applicable covenants.  Retained earnings
      of $6,343,261 are restricted and are not 	available for the payment
      of dividends.

 (b)  $100,000 of this debt will be forgiven upon the satisfactory
      completion of certain performance target obligations at the contract
      expiration date of June 30, 1998 and the first year anniversary of
      this date, June 30, 1999.

      A summary of the minimum maturities of long-term debt follows:

                               Year           Amount
                               1998          $483,157
                               1999          $501,462
                               2000          $430,701
                               2001           $75,023
                               2002           $72,474
                            Thereafter       $372,134

6.    EMPLOYEE BENEFIT PLANS

 The Company sponsors a defined contribution 401(k) savings plan 
 which covers substantially all full-time employees who must meet
 eligibility requirements.  Participating employees may contribute
 as salary	reductions a minimum of 4% of their compensation up to
 the limit prescribed by the Internal Revenue Code. The Company may
 make matching contributions at a discretionary percent upon the
 approval from the Board of Directors. Company contributions 
 approximated $54,000 for the six months ended November 30, 1997,
 $0 for each of the years ended May 31, 1997 and 1996 and $165,000
 for the year ended May 31, 1995.

7.	STOCK OPTION PLANS

	Under the 1991 Employee Option Plan, 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 granted may be either nonqualified
 or incentive stock options. The option price, vesting period and
 term are set by the Compensation Committee of the Board of Directors
 of the Company. Options for an aggregate of 100,000 shares of common
 stock may be 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 25%
 on the first, second and third anniversary date of the grant on a 
 cumulative basis. At November 30, 1997, the Company had 
 approximately 49,000 shares available for issuance pursuant to 
 subsequent grants.

	Under the 1991 Director Option Plan, options may be granted to 
 nonemployee directors at a price not less than fair market value
 at the date the options are granted. Nonemployee directors who have
 served for at least one year are automatically granted options to
 purchase 5,000 common shares. Options granted are nonqualified stock
 options. The option price, vesting period and term are set by the
	Compensation Committee of the Board of Directors of the Company.
 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 25% on
 the first, second and third anniversary date of the grant on a
 cumulative basis. At November 30, 1997, the Company had 
 approximately 15,000 shares available for issuance pursuant to
 subsequent grants.

	A summary of changes in the stock option plans is as follows:

                                    November 30, May 31, May 31, May 31,
                                       1995       1995     1995   1995 
       Options outstanding at         
        beginning of period          87,552      78,763   77,988 109,685

       Granted                        5,000      20,000   35,563  34,294

       Exercised                       -           -        -     (2,000)

      Canceled or other disposition    -        (11,211) (34,788)(63,991)

      Options outstanding at 
       end of period                 92,552      87,552   78,763  77,988

      Options price range 
       for the period                $4.750      $4.750   $4.750  $6.750
                                       to           to      to      to
                                     10.375      $10.375  $11.125 $11.125

      Options exercisable at end
        of period                    60,151       57,701   48,115  56,662

At November 30, 1997, the weighted-average remaining contractual life of
options outstanding was 6.7 years and the weighted average exercise price
was $6.87.

7.,  Continued

The Company accounts for stock options in accordance with the 
provisions of the Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations.
As such, compensation expense would be recorded on the date of grant
only if the current market priceof the underlying stock exceeded the
exercise price. Accordingly, the Company has not recognized 
compensation expense for its options granted in the six-month period
ended November 30, 1997 and each of the years ended May 31, 1995, 1996
and 1997.  In 1997, the Company adopted Financial Accounting Standards
Board (FASB) Statement No. 123, Accounting for Stock-Based Compensation,
which permits entities to recognize as expense over the vesting period
the fair value of all stock-based awards on the date of grant. FASB 
Statement No. 123 also allows entities to continue to apply the 
provisions of APB Opinion No. 25 and provide pro forma net income and
income per share disclosure for employee stock option grants made in
1996 and future years as if the fair-value-based method defined in
FASB Statement No. 123 had been applied. The Company has elected to
continue to apply the provisions of APB Opinion No. 25 and provide
the pro forma disclosure provisions of FASB Statement No. 123.

The per share weighted-average fair value of stock options granted
during the six-month period ended November 30, 1997 and each of the
years ended May 31, 1997 and May 31, 1996 was $6.874, $7.179 and
$6.799, respectively, on the date of grant using the Black Scholes
option-pricing model with 	the following weighted-average assumptions:
November 30, 1997- expected dividend yield 0.0%, risk-free interest
rate of 5.86%, expected volatility factor of 36.87%, and an expected
life of 10 years; May 31,1997 - expected dividend yield 0.0%, risk-free
interest rate of 6.75%, expected volatility factor of 36.70%, and an 
expected life of 10 years; May 31, 1996 - expected dividend yield 0.0%,
risk-free interest	rate of 6.74%, expected volatility factor of 38.50%,
and an expected life of 10 years.

Since the Company applies APB Opinion No. 25 in accounting for its 
plans, no compensation cost has been recognized for its stock options
in the consolidated financial statements. Had the Company recorded
compensation cost based on the fair value at the grant date for its
stock options under FASB Statement No. 123, the Company's net income
(loss) and income (loss) per share would have been	reduced to the
pro forma amounts indicated below:

                             					November 30    May 31,   May 31,
					                                1997	       	1997      1996

     Net income (loss)	As reported	 $490,689      $80,023	$(771,927)
                    			Pro forma	   $464,005      $52,803	$(797,380)

     Primary income 
      (loss)	          As reported	     $.39	        $.07	    $(.72)
      per share	      	Pro forma	       $.37         $.04	    $(.73)

8.   INCOME TAXES

Total income tax expense (benefit) for the six-month period ended 
November 30, 1997 and for each of the years ended May 31, 1997, 1996,
and 1995 consists of the following:

                           November 30,   May 31,  May 31,  May 31, 
                             1995          1995      1995    1995
           Current:
            Federal        $ 64,485      $ 9,453    $ -    $(772,792)
            State              -          11,237     4,220   (18,536)
                             64,485       20,690     4,220  (791,328)

           Deferred:
            Federal         200,655       33,544  (320,210)  198,227
            State              -          (9,012)  (54,061)    6,500
                            200,655       24,532  (374,271)  204,727

                         $  265,140      $45,222 $(370,051)$(586,601)

     The reconciliation of the statutory Federal income tax rate and the
     effective tax rate are as follows:

                         November 30,   May 31,   May 31,  May 31, 
                              1995       1995     1995      1995
     Statutory Federal 
      income tax rate        34.0%       34.0%    (34.0%)  (34.0%)
     Increase(decrease)dueto:
      State income taxes, 
      net of Federal income
      tax benefit               -         1.1      (2.9)    (1.5)
     Research and development
      credit                  (1.3)        -         -      (1.6)
     Other-net                 2.4        1.0       4.5      1.4
                              35.1%      36.1%    (32.4%)  (35.7%)

    Tax effects of temporary differences that give rise to significant
    portions of the deferred tax assets and deferred tax liability at
    November 30, 1997 and May 31, 1997, 1996 and 1995 are presented
    below:

                       November 30,  May 31,  May 31,  May 31, 
                           1995       1995     1995     1995
    Deferred tax assets:
     Net operating loss 
      carryforward      $   -       $ 56,122  $134,187 $ 96,232
     Tax credits          16,034      35,552      -      26,354
    Accrued expenses not
     deducted until paid  50,053      95,419   138,530   44,738
    Inventory 
     capitalization      302,945     274,067   191,106  226,715
    Asset reserves        95,394     182,893   260,313   10,395
    Other                   -           -       10,386     1,513

    Total deferred 
     tax assets          464,426     644,053    734,522  405,947

    Deferred tax 
     liability
    Depreciation         115,129      94,101    160,038  205,734

    Net deferred 
     tax assets         $349,297    $549,952   $574,484  $200,213

8., Continued

There was no valuation allowance for deferred tax assets at 
November 30, 1997 and May 31, 1997, 1996 and 1995. In assessing
the realizability of deferred tax assets, management considers 
whether it is more likely than not that some portion or all of 
the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation
of future taxable income during the periods in which those temporary
differences become deductible.

Based upon the reversal of deferred tax liabilities and projected
future taxable income, management believes it is more likely than
not the Company will realize the benefits of these deductible
differences at November 30, 1997.

The Company has available approximately $16,000 of Iowa Jobs Tax
Credits which will expire in the year 2007 and 2008.

9.  LITIGATION AND CONTINGENCIES
	
Various legal actions and claims are pending against the Company.
In the opinion of management and outside counsel, appropriate
provisions have been made in the accompanying consolidated 
financial statements for all pending legal actions and other claims.
The Company has entered into agreements whereby it can sell accounts
receivable to financial institutions. One agreement provides for the
Company to pay monthly interest on the face amount of each invoice at
a rate of 3.25% over the prime rate from the date of the invoice for
180 days, or the date of customer payment, whichever occurs first. 
Under the terms of the second agreement, the financial institution 
purchases the accounts receivable at 95.5% of invoice value.  Under
the agreements, the financial institutions, in effect, purchase such
accounts receivable with recourse in the event the customer returns
the equipment. At November 30, 1997, receivables relating to these
agreements, for which the Company had a contingent liability, 
approximated $944,000.

10. ACQUISITIONS

On August 30, 1996, the Company acquired certain fixed assets and
inventories from Logan Harvesters, Inc. relating to the manufacture
and distribution of potato farm equipment.  The total purchase price
was approximately $2,750,000. The Company issued 145,000 shares of
the Company's common stock, with the balance of the purchase price
in cash.  Annual revenues from the potato equipment product line
are expected to be approximately $5,000,000.

On September 23, 1996, the Company acquired certain fixed assets 
and inventories from DMI, Inc. relating to the manufacture and 
distribution of grain wagons.  The total cash purchase price was
approximately $290,000.  Annual revenues from the grain wagon product
line are expected to be approximately $1,000,000.

11. INDUSTRY SEGMENT INFORMATION

The Company is primarily engaged in metal fabrication and the sale
of its products in the agricultural sector of the economy. Major
products include animal feed processing products, sugar beet and
potato products, and land maintenance products.

The Company's sales to one major original equipment manufacturer 
were $609,554 for the six-month period ended November 30, 1997 and
$1,581,553, $2,119,020 and $3,101,120 for each of the years 
ended May 31, 1997, 1996 and 1995, respectively. Accounts receivable
from this customer are unsecured.  Accounts receivable from this 
customer were $209,805 at November 30, 1997 and $94,986, $54,637 and
$269,086 at May 31, 1997, 1996 and 1995, respectively of the accounts
receivable balance.

12. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

FASB Statement No. 107, Disclosures about Fair Value of Financial
Instruments, defines fair value of a financial instrument at the
amount at which the instrument could be exchanged in a current
transaction between willing parties.  At November 30, 1997 and 
May 31, 1997, the carrying amount approximates fair value for cash
and cash equivalents, accounts receivable, accounts payable, notes
payable to bank, long-term debt and other current liabilities.

The carrying amount of cash and cash equivalents, accounts receivable,
accounts payable, notes payable to bank and accrued expenses 
approximates fair value because of the short maturity of these 
instruments. The fair values of each of the Company's long-term debt
instruments also approximate fair value because the interest rate 
is variable as it is tied to the bank's national money market rate.

13. TRANSITION PERIOD REPORTING REQUIREMENT

As required by the change in year end explained in footnote 1, 
the Company's unaudited financial information for the six-month
period ended November 30, 1996 is as follows.


                     						 Unaudited
	                     					November 30,
						                        1996

	Net Sales		                $7,275,685
	Gross Profit		              1,741,649
	Income Tax Benefit	            64,107
	Net Loss			                $  119,056
	Loss Per Share         				$      .10


                                Signatures

Pursuant to the requirements of Section 13 or 15(d) 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 on 
February 25,1998

ART'S-WAY MANUFACTURING CO., INC.


By: __________________________________       By: _______________________
     J. David Pitt                                   William T. Green
       President                                   Chief Financial Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
Registrant and in the capacities and on the dates indicated.

______________________________                           February 25,1998
     James L. Koley             Chairman of the Board         Date
                                     and Director

______________________________                           February 25,1998
      J. David Pitt            President and Director         Date

______________________________                           February 25,1998
  George A. Cavanaugh, Jr.          Director                  Date

______________________________                           February 25,1998
    Donald A. Cimpl                 Director                  Date

______________________________                           February 25,1998
   Herbert H. Davis, Jr.            Director                  Date

______________________________                           February 25,1998
    Douglas McClellan               Director                  Date

_____________________________                            February 25,1998
 J. Ward McConnell, Jr.             Director                  Date


ART'S-WAY MANUFACTURING CO., INC.	                       		Schedule VII
AND SUBSIDIARY						
VALUATION AND QUALIFYING ACCOUNTS						
 						
						
						
	                      Allowance for Doubtful Accounts					
						
						
Balance, May 29, 1995				                             	$	27,000 
						
Additions:						
    Charged to Operating Expenses    	12,000			
						
Deduct:						
    Accounts Charged Off            		12,025			 
						
Balance, May 31, 1996				                             	$	26,975 
						
Additions:						
    Charged to Operating Expenses     	2,834			
						
Deduct:						
    Accounts Charged Off             		4,809			 
						
Balance, May 31, 1997		                              		$	25,000 

Additions:						
    Charged to Operating Expenses     	6,000 			
						
Deduct:						
    Accounts Charged Off		               -			
						
Balance, November 30, 1997	                         			$	31,000