SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 [Fee Required] for the Fiscal Year Ended September 30, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required] for the Transition Period from
_________________________ to ___________________________
Commission File Number 0-2052
GODDARD INDUSTRIES, INC.
------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2268165
(State or other juris- (I.R.S. Employer Identifi-
diction of incorporation cation No.)
or organization)
705 Plantation Street, Worcester, Massachusetts 01605
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (508) 852-2435
Securities registered under Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class On Which Registered
None N/A
Securities registered under Section 12(g) of the Act:
Common Stock $.01 par value
(Title of class)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
---- ----
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and if no disclosure will be contained,
to the best of the registrant's
<PAGE>
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form
10-KSB [X]
The registrant's revenues for its most recent fiscal year are $6,770,841.
The aggregate market value of the registrant's Common Stock, par value $.01 per
share, held by non-affiliates of the registrant at December 15, 1995 was
approximately $1,195,395, based on the mean of the bid and asked prices on that
date as reported by the National Quotation Bureau, Inc.
As of December 15, 1995, there were outstanding 2,032,804 shares of Common
Stock, par value $.01 per share.
Transitional Small Business Disclosure Format:
Yes No X
---- ----
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for the
registrant's 1996 annual meeting involving the election of directors (the
"Definitive Proxy Statement"), which is expected to be filed with the Commission
within 120 days after the end of the registrant's fiscal year, are incorporated
by reference in Part III of this Report.
<PAGE>
PART I
ITEM 1. BUSINESS.
General.
Goddard Industries, Inc. (which together with its wholly-owned
subsidiaries is hereinafter referred to as the "Company") is primarily engaged
in the manufacture, distribution and sale of cryogenic valves for industrial and
commercial use and in the distribution of plumbing goods, valves and fittings
for residential and commercial use.
The Company's Goddard Valve subsidiary designs, manufactures and sells
cryogenic gate, globe and check valves and control devices required for the
handling of liquefied natural gas, liquid oxygen and other liquefied gases. The
principal markets for Goddard Valve's cryogenic valves are public utility
companies involved with liquefied natural gas and manufacturers of cryogenic
tanks and transport trailers. In recent years, markets for special cryogenic
valves have developed for use on tanks required by the semi-conductor
manufacturing and medical technology industries. Goddard Valve's cryogenic
valves are distributed domestically both by direct sales to customers and
through independent sales representatives. Goddard Valve also makes direct sales
of the valves to customers in Canada, Europe and Asian countries.
The Company's Webstone subsidiary is an importer of brass, stainless
steel and plastic plumbing products, as well as valves for the gas industry, all
of which are manufactured and packaged to Webstone's specifications in the Far
East and in Europe, and marketed under the Webstone name nationally through
sales representatives and in Canada through distributors. In addition, Webstone
also manufactures and distributes nationally certain domestic plumbing products,
some of which have been designed by the Goddard Valve subsidiary. The principal
markets for Webstone's plumbing products are plumbing supply and hardware
wholesalers who redistribute products to plumbers and contractors involved in
new construction or home alterations, and to retail hardware outlets.
The Company is a Massachusetts corporation organized in 1959. Its
executive offices are located at 705 Plantation Street, Worcester, Massachusetts
01605.
Sources of Supply; Foreign Suppliers.
Raw materials for the Goddard Valve business consist of stainless
steel, aluminum and bronze castings and bar stock, which are available from a
variety of regular and competitive suppliers. The Company does not anticipate
difficulty in obtaining sufficient raw materials for that business.
Webstone purchases substantially all of the products for its plumbing
supply business from a variety of sources in foreign countries. Webstone's name
is stamped or cast into the part as well as its brand name being included in the
packaging. These foreign operations involve hazards shared by most enterprises
doing business in foreign countries, such as political risks, currency controls
and fluctuations, tariffs and import controls. To date, Webstone has not been
<PAGE>
adversely affected by these matters. Webstone has alternative sources of supply
in each country and does not anticipate problems in maintaining adequate sources
of supply.
Principal Customers.
Two customers each accounted for more than 10% of Goddard Valve's
cryogenic valve revenues (27% and 11%, respectively) in fiscal 1995. The loss of
either of these customers could have a materially adverse effect on the business
of the Company. No single customer accounts for 10% of the revenues of the
Webstone plumbing supply subsidiary.
Backlog.
The dollar amount of backlog of orders believed to be firm for the
Company's cryogenic valve subsidiary was approximately $776,000 as of the end of
the 1995 fiscal year, as compared with approximately $407,000 at the end of the
preceding fiscal year. The dollar amount of orders believed to be firm in the
Company's plumbing supply subsidiary as of the end of the fiscal year was
approximately $98,000, as compared with approximately $84,000 as of the end of
the preceding fiscal year.
No part of the backlog of either business is seasonal, and all is
expected to be shipped within the current fiscal year. Backlog varies according
to business conditions within the industry for both businesses.
Competition.
All aspects of the Company's business are highly competitive. The
Company believes there are between four and six principal competitors in its
cryogenic valve business. The Company does not believe that there have been any
changes in the competitive conditions in the cryogenic valve industry or in the
competitive position of Goddard Valve in that industry during the past fiscal
year. Goddard Valve competes on the basis of product performance and
dependability.
The Company believes there are approximately eight to ten other major
importers of foreign plumbing supplies which distribute nationally and which
compete with the Company's plumbing supply subsidiary. The Company does not
believe that there have been any changes in competitive conditions in the
plumbing supply business or in the competitive position of Webstone in that
industry during the past fiscal year. Webstone competes on the basis of price
and delivery.
Research and Development.
During the last fiscal year, the Company spent approximately $138,000
and had seven employees working full or part time on Company-sponsored research
and development, all of which was spent on cryogenic valve development. During
the previous year the Company spent approximately $115,000 for research and
development. This increase reflected the effort on development of valves for the
cryogenic business.
<PAGE>
The Company has obtained a number of patents and has additional patent
applications pending with respect to certain of the products of its cryogenic
valve subsidiary. There can be no assurance that any of the pending patent
applications will be granted or that existing patents will be enforceable. While
the Company believes the patents have value, it believes that the success of the
cryogenic valve subsidiary depends more upon the technical competence and
manufacturing skills of its employees than upon patents.
Employees.
The Company employs approximately 38 people, of whom 33 are full-time.
Executive Officers of the Company.
The executive officers of the company are as follows:
<TABLE>
<CAPTION>
Name Age Position Officer Since
<S> <C> <C> <C>
Saul I. Reck 77 Chairman of the Board, 1959
President and Treasurer
Donald R. Nelson 60 Vice President 1973
</TABLE>
The term of office for all officers is from one annual meeting of the
Board of Directors to the next, subject to the right of the Board of Directors
to remove an officer at any time, and subject to the provisions of Mr. Reck's
Employment Agreement described under item 10 below.
Saul I. Reck and Donald R. Nelson have been employed by the Company in
the above-described capacities for more than five years.
ITEM 2. PROPERTIES.
The Company's executive offices and the business of both the cryogenic
valve subsidiary and the plumbing products subsidiary are located at 703-705
Plantation Street, Worcester, Massachusetts in a building on a main thoroughfare
owned by Goddard Valve. The building is a one-story masonry building erected in
1961, containing 27,000 square feet. The building is deemed suitable and
adequate for the foreseeable needs of both businesses.
The Company believes that its existing facilities and equipment are
well maintained and in good operating condition.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
As required by law, the Company notified what is now the Massachusetts
Department of Environmental Protection ("DEP") of the fact that an environmental
site assessment performed at its facility at 705 Plantation Street, Worcester in
1987 in connection with a proposed bank financing revealed that there may have
been a release or threat of release of oil or hazardous materials. In response,
DEP issued a Notice of Responsibility to the Company on March 30, 1989,
designating the site as a disposal site under the Massachusetts Oil and
Hazardous Material Release, Prevention and Response Act (popularly known as
Chapter 21E). The DEP subsequently identified the Company's facility as a
priority disposal site on May 18, 1990 and in May, 1991, the Company submitted a
Phase One Limited Site Investigation report to DEP. The site has been designated
as a Tier 1C Site under the Massachusetts Contingency Plan. Further site
investigation is required.
Separately, on November 19, 1990, the Town of Shrewsbury commenced a
lawsuit against the Company and Neles-Jamesbury, Inc. in Massachusetts Superior
Court, alleging that they had caused Shrewsbury to incur response costs for
assessment, containment and removal of oil and hazardous materials in relation
to the town's Home Farm water wells. Shrewsbury sought damages for environmental
response costs (now alleged to exceed $6.5 million) and injunctive relief. The
Company filed an answer generally denying the allegations. The Company joined as
third-party defendants in the Shrewsbury action eight other businesses located
in the same industrial park area as the Company and Neles-Jamesbury. The
businesses joined as third-party defendants were those which the Company could
identify as ones likely to have used and released volatile organic compounds
(the types of compounds detected in the Town of Shrewsbury's Home Farm wells) in
their business. All of the defendants joined in motions for summary judgment
during 1992-93, which resulted in dismissal of some but not all counts of
Shrewsbury's complaint. Shrewsbury's remaining claims as well as contribution
claims between the defendants are scheduled for trial in June, 1996.
The Company gave notice to its comprehensive general liability
insurance carriers of the DEP claim and the Shrewsbury litigation and asked the
carriers to defend and indemnify the Company against the claims. One of the
carriers, St. Paul Fire and Marine Insurance Co., assumed primary responsibility
for the defense of the litigation while reserving its right to contest coverage,
and reimbursed the Company for certain defense costs already incurred with
respect to the Shrewsbury litigation and the DEP claim. Two other carriers each
contribute 15% toward the payment of defense costs. On June 5, 1992, St. Paul
filed suit in the Federal District Court of Massachusetts for a declaratory
judgment that it has no duty to defend or indemnify the Company under its
liability policies. That suit has been dismissed without prejudice pending
disposition of the Town of Shrewsbury litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to the stockholders of the Company during the
fourth quarter of the 1995 fiscal year.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is traded in the over-the-counter market in
the "pink sheets". As of December 15, 1995, there were 928 holders of the
Company's Common Stock. The quarterly high and low bid prices of the Company's
Common Stock for the two fiscal years ending October 1, 1994 and September 30,
1995 are set forth below. Prices are based upon quotations from the National
Quotation Bureau, Inc.
---------------------------------
FISCAL 1994 BID PRICES
High Low
Quarter Ending: 12/31/93 $.250 $.125
3/31/94 $.250 $.125
6/30/94 $.250 $.125
10/1/94 $.312 $.125
FISCAL 1995 BID PRICES
High Low
Quarter Ending: 12/31/94 $.310 $.250
3/31/95 $.310 $.180
6/30/95 $.250 $.220
9/30/95 $.625 $.250
The Company has never declared a cash dividend, although it has
declared stock dividends from time to time.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Results of Operations - 1995 Compared to 1994
Consolidated sales for fiscal 1995 were a record $6,771,000, a 34.8%
increase compared to 1994 sales of $5,024,000. The sales increase was shared by
both the Valve and Webstone divisions, both of which met their early sales
forecasts for fiscal 1995. Sales increases in the Valve division reflected an
increased level of orders for more sophisticated, higher priced products. Sales
increases in the Webstone division reflected increased orders from geographic
areas not previously serviced and the replacement of some less productive sales
representatives with new, more productive ones. At the end of the fiscal year
the order backlog was higher in both divisions compared to the previous year.
<PAGE>
Gross profit margins improved from 33.8% to 35.8%, reflecting
efficiencies gained from increased volume and larger average order sizes in the
Goddard division. Sales and administrative expenses declined as a percentage of
sales from 28.7% to 23.8%, reflecting efficiencies gained from larger volume as
well as certain operating efficiencies achieved.
Interest expense increased by $60,000 as a result of an increase in
interest rates and larger borrowings throughout the year to support increased
inventory needs.
As a result of the foregoing, consolidated net income for the year was
a record $430,000 ($.21 per share). This represents a 350% increase over fiscal
1994.
Results of Operations - 1994 Compared to 1993
Consolidated sales for fiscal 1994 were $5,024,000 compared to
$5,374,000 for the previous year, a decline of 6.5%. Sales in the Industrial
Valve division decreased from $3,231,000 in 1993 to $2,774,000 in 1994 due to a
prolonged slow period in the cryogenic industry. Sales in the Webstone division,
however, increased slightly over 1993. Sales for both divisions have improved
since the Summer of 1994 and backlog in both divisions at the end of fiscal 1994
was above the previous year's level.
Consolidated gross profit margins for 1994 were down 2% compared to
fiscal 1993 as a result of increased cost of materials and a change in product
mix. Sales and administrative expenses were nearly unchanged.
Interest expense was 12% higher for fiscal 1994 as a result of several
rate increases and larger borrowings required to support higher inventory
levels.
Net earnings of $118,000 ($.06 per share) for fiscal 1994 were 46% less
than the $221,000 ($.11 per share) reported for fiscal 1993 as a result of lower
revenues and gross margins and higher interest expense.
Liquidity and Capital Resources
During fiscal 1995, the major sources of cash were net income
($430,000), depreciation ($206,000), and increases in income taxes payable
($223,000) and accrued expenses ($99,000). Principal uses of cash were
additional investment in inventories ($333,000), increased accounts receivable
($235,000) and decreased accounts payable ($69,000). As a result, the operations
of the Company produced $406,000 of cash.
The Company invested $132,000 in machinery and equipment, repaid
$163,000 of term debt, and reduced the balance of the line of credit by $99,000.
The Company presently maintains a line of credit of $1,750,000 with The
First National Bank of Boston collateralized by substantially all of the assets
of the Company. On September 30, 1995, approximately $1,057,500 had been drawn
under that line of credit. The Company
<PAGE>
believes that the line of credit provides sufficient liquidity to handle the
normal working capital requirements of its present business.
The Company borrows funds for periods of up to five years for the
purchase of new machinery and meets the required amortization and interest
payments from its current working capital. The Company believes that its future
capital requirements for equipment can be met from the cash flow from
operations, bank borrowings and other available sources.
As more fully described under Item 3 and in Note 7 to the financial
statements, the Company is a party to two lawsuits and an administrative
proceeding relating to environmental matters. At the present time, because of
the numerous uncertainties which surround the litigation and administrative
proceedings (including without limitation the origin of the alleged
contamination, the scope and cost of any required remediation, the ability to
obtain reimbursement from third parties who may have caused the alleged
contamination, and the extent of insurance coverage which may be available), it
is not possible to estimate the amount of loss, if any, the Company may incur
with respect to these matters. However, it is likely that the insurer's decision
to contest coverage will in the near term increase the costs of defending these
various proceedings which the Company has to bear directly. Further, in the
longer term, if the Company does not prevail either in its defense of the
proceedings or in its third-party claims for contribution or coverage, the
adverse resolution of the DEP or Shrewsbury proceedings could have a material
adverse effect on the results of operations and on the Company's financial
resources.
The Company's results of operations have not been materially affected
by seasonality.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and supplementary data are listed under Part
III, Item 13 in this report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.
There have not been any changes in the Company's auditors in more than
two fiscal years.
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
Certain information concerning executive officers of the Company is
included in Part I of this Annual Report on Form 10-KSB under the heading
"Executive Officers of the Company."
Certain information concerning the directors and executive officers of
the Company required by this Item 9 is hereby incorporated by reference from the
information contained under the heading "Election of Directors" in the
Definitive Proxy Statement.
ITEM 10. EXECUTIVE COMPENSATION.
Information concerning executive compensation required by this Item 10
is hereby incorporated by reference to the information contained under the
heading "Election of Directors - Executive Compensation" in the Definitive Proxy
Statement.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information concerning security ownership of certain beneficial owners
and management required by this Item 11 is hereby incorporated by reference to
the information contained under the heading "Election of Directors - Information
As To Officers, Directors and Beneficial Owners" in the Definitive Proxy
Statement.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a)(1) Financial Statements.
1. Report of Greenberg, Rosenblatt, Kull & Bitsoli,
P.C. dated November 10, 1995. (See page 17 hereof.)
2. Consolidated Balance Sheet as of September 30, 1995
and October 1, 1994. (See page 18 hereof.)
3. Consolidated Statement of Income for the fifty-two
weeks ended September 30, 1995, fifty-two weeks
ended October 1, 1994 and fifty-two weeks ended
October 2, 1993. (See page 19 hereof.)
4. Consolidated Statement of Stockholders' Equity for
the fifty-two weeks ended September 30, 1995,
fifty-two weeks ended October 1, 1994 and fifty-two
weeks ended October 2, 1993. (See page 20 hereof.)
5. Consolidated Statement of Cash Flows for the
fifty-two weeks ended September 30, 1995, fifty-two
weeks ended October 1, 1994, and the fifty-two weeks
ended October 2, 1993. (See page 21 hereof.)
6. Notes to the Consolidated Financial Statements. (See
pages 22-31 hereof.)
<PAGE>
(a)(2) Exhibits.
(3) Articles of Incorporation and By-Laws:
(a) Articles of Organization. (Filed as Exhibit 3 to the
Company's Registration Statement on Form S-1
(Registration No. 2-16854 of Reva Enterprises, Inc.,
now Goddard Industries, Inc.))*
Articles of Amendment to the Articles of
Organization, dated December 14, 1962. (Filed as
Exhibit 3 to the Company's Form 10-K for the fiscal
year ended September 28, 1985.)*
Articles of Merger and Consolidation, dated July 29,
1968. (Filed as Exhibit 3 to the Company's Form 10-K
for the fiscal year ended September 28, 1985.)*
Restated Articles of Organization, dated March 31,
1971. (Filed as Exhibit 3 to the Company's Form 10-K
for the fiscal year ended September 28, 1985.)*
Articles of Amendment to Restated Articles of
Organization, dated June 1, 1972. (Filed as Exhibit 3
to the Company's Form 10-K for the fiscal year ended
September 28, 1985.)*
Articles of Amendment to Restated Articles of
Organization, dated October 11, 1985. (Filed as
Exhibit 3 to the Company's Form 10-K for the fiscal
year ended September 28, 1985.)*
Articles of Amendment to Restated Articles of
Organization dated March 13, 1987. (Filed as Exhibit
3 to the Company's Form 10-Q for the quarter ended
March 28, 1987.)*
(b)(1) By-Laws (filed as Exhibit 19 to the Company's Form
10-Q for the quarter ended March 31, 1984.)*
(b)(2) By-Law Amendment dated as of September 28, 1990.
(Filed as Exhibit 3(b)(2) to the Company's Form 10-K
for the fiscal year ended September 29, 1990.)*
(4) Instruments Defining the Rights of Security Holders:
(a) Specimen certificate of common stock. (Filed as
Exhibit 4(a) of Registration Statement on Form S-1
Registration No. 2-16854 of Reva Enterprises, Inc.,
now Goddard Industries, Inc.))*
<PAGE>
(10) Material Contracts:
(a) Consolidating Revolving and Term Credit and Security
Agreement dated as of January 3, 1991 among
subsidiaries of the Company and the First National
Bank of Boston (the "Bank"). (Filed as Exhibit 10(h)
to the Company's Form 10-Q for the quarter ended
March 31, 1991.)*
(b) $1,600,000 revolving loan note and $383,124 term loan
note, both dated January 3, 1991 from subsidiaries of
the Company to the Bank. (Filed as Exhibit 10(i) to
the Company's Form 10-Q for the quarter ended March
31, 1991.)*
(c) Unlimited guaranty to the Bank by the Company of the
obligations of the subsidiaries to the Bank. (Filed
as Exhibit 10(v) to the Company's Form 10-Q for the
quarter ended March 31, 1991.)*
(d) Letter agreement between the Company's subsidiaries
and the Bank dated April 27, 1992 modifying banking
arrangements. (Filed as Exhibit (10) to the company's
Form 10-Q for the quarter ended June 30, 1992.)*
(e) Amended and Restated Employment Agreement between the
Company and Saul I. Reck effective as of October 1,
1991 and executed May 1, 1992. (Filed as Exhibit
10(c) to the Company's Form 10-Q for the quarter
ended June 30, 1992.)*
(f) Restated Non-Qualified Stock Option Agreement between
the Company and Saul I. Reck. (Filed as Exhibit 10(d)
to the Company's Form 10-K for the fiscal year ended
September 30, 1989.)*
(g) Adoption Agreement (Non-Standardized Code ss.401(k)
Profit Sharing Plan) dated July 31, 1991, together
with related Defined Contribution Prototype Plan and
Trust Agreement. (Filed as Exhibit 10(h) to the
Company's Form 10-K for the fiscal year ended
September 28, 1991.)*
(h) Employee Stock Purchase Plan dated December 9, 1993.
(Filed as Exhibit 10(h) to the Company's Form 10-KSB
for the fiscal year ended October 1, 1994.)*
(11) Statement Re Computation of Per Share Earnings. The Statement
Re Computation of Per Share Earnings is set forth in Note 12
to the Company's Consolidated Financial Statements.
(21) Subsidiaries of the Registrant. (Filed as Exhibit 22 to the
Company's Form 10-K for the fiscal year ended September 30,
1989.)*
(27) Financial Statement Schedule.
<PAGE>
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the last
quarter of its fiscal year ended September 30, 1995.
- ----------------------
*Not filed herewith. In accordance with Rule 12b-23 under the Securities
Exchange Act of 1934, as amended, reference is made to the documents previously
filed with the Commission.
<PAGE>
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.
GODDARD INDUSTRIES, INC.
Dated: December 27, 1995 By: /s/ Saul I. Reck
-------------------
Saul I. Reck, President
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Saul I. Reck Director, Principal Executive Officer, December 27, 1995
- ------------------
Saul I. Reck Principal Financing Officer and Principal
Accounting Officer
/s/ Benjamin Dubin Director December 28, 1995
- --------------------
Benjamin Dubin
/s/ Jacky Knopp, Jr. Director December 28, 1995
- ----------------------
Jacky Knopp, Jr.
Director December ___, 1995
Lyle Wimmergren
</TABLE>
<PAGE>
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND OCTOBER 1, 1994
<PAGE>
Independent Auditors' Report
The Shareholders and Board of Directors
Goddard Industries, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Goddard
Industries, Inc. and Subsidiaries as of September 30, 1995 and October 1, 1994,
and the related consolidated statements of income, shareholders' equity and cash
flows for each of the three years in the period ended September 30, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based 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 consolidated financial position of Goddard
Industries, Inc. and Subsidiaries as of September 30, 1995 and October 1, 1994
and the consolidated results of their operations and cash flows for each of the
three years in the period ended September 30, 1995, in conformity with generally
accepted accounting principles.
As discussed in Note 7 to the consolidated financial statements, the Company has
been named as a potentially responsible party in two environmental matters, the
outcomes of which cannot be predicted at this time. Accordingly, no provision
for any liability that may result upon adjudication has been made in the
accompanying consolidated financial statements.
/s/GREENBERG, ROSENBLATT, KULL & BITSOLI, P.C.
Worcester, Massachusetts
November 10, 1995
<PAGE>
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND OCTOBER 1, 1994
<TABLE>
<CAPTION>
ASSETS 1995 1994
------ ---- ----
(All pledged, Note 4)
<S> <C> <C>
Current assets:
Cash $ 74,937 $ 62,634
Accounts receivable (less allowance for doubtful
accounts of $28,600 in 1995 and $24,000 in 1994) 973,477 750,205
Inventories (Note 2) 2,911,234 2,578,217
Prepaid expenses 23,018 75,116
Deferred income taxes (Note 6) 56,000 60,000
----------- -----------
Total current assets 4,038,666 3,526,172
----------- -----------
Property, plant and equipment, net (Note 3) 950,734 1,020,968
----------- ---------
Other assets:
Excess of cost of investment in subsidiaries over
equity in net assets acquired (less accumulated
amortization of $118,149 in 1995 and $114,392 in 1994) 22,136 25,893
Deferred income taxes (Note 6) 139,000 118,000
---------- ----------
Total other assets 161,136 143,893
---------- ----------
Total assets $ 5,150,536 $ 4,691,033
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt (Note 4) $ 109,191 $ 203,807
Accounts payable 305,655 374,423
Accrued expenses 256,631 157,147
Income taxes payable 222,626 -
--------- ---------
Total current liabilities 894,103 735,377
--------- ---------
Long-term debt (Note 4) 1,092,503 1,259,814
--------- ---------
Deferred compensation (Note 7) 513,000 475,000
--------- ---------
Commitments and contingencies (Note 7)
Shareholders' equity: (Notes 5 and 11)
Common stock - par value $.0l per share;
authorized 3,000,000 shares, issued and
outstanding 2,032,804 shares in 1995 and 1994 20,328 20,328
Additional paid-in capital 395,763 395,763
Retained earnings (Note 4) 2,234,839 1,804,751
--------- ---------
Total shareholders' equity 2,650,930 2,220,842
--------- ---------
Total liabilities and shareholders' equity $ 5,150,536 $ 4,691,033
----------- -----------
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements
<PAGE>
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 30, 1995
OCTOBER 1, 1994 AND OCTOBER 2, 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Sales $ 6,770,841 $ 5,023,858 $ 5,374,302
Cost of sales (Note 8) 4,343,329 3,326,064 3,451,571
----------- ----------- -----------
Gross profit 2,427,512 1,697,794 1,922,731
Selling and administrative expenses
(Notes 9 and 10) 1,614,656 1,443,436 1,442,861
----------- ----------- -----------
Operating profit 812,856 254,358 479,870
----------- ----------- -----------
Other income (expense):
Interest expense (151,009) (91,491) (81,469)
Other income 47,241 24,273 14,231
----------- ----------- -----------
Total other income (expense) (103,768) (67,218) (67,238)
----------- ----------- -----------
Income before income taxes and cumulative
effect of change in accounting principle 709,088 187,140 412,632
----------- ----------- -----------
Income taxes (benefit): (Note 6)
Current 296,000 85,000 219,000
Deferred (17,000) (16,000) (61,000)
----------- ----------- -----------
Total income taxes 279,000 69,000 158,000
----------- ----------- -----------
Income before cumulative effect of
change in accounting principle 430,088 118,140 254,632
Cumulative effect of change in
accounting principle (Note 6) - - (33,900)
----------- ----------- -----------
Net income $ 430,088 $ 118,140 $ 220,732
------------ ----------- -----------
Earnings per share: (Note 12)
Net income before cumulative effect
of change in accounting principle $ .21 $ .06 $ .13
Cumulative effect of change
in accounting principle - - (.02)
---- ---- ----
Net income $ .21 $ .06 $ .11
----- ----- -----
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements
<PAGE>
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1995
OCTOBER 1, 1994 AND OCTOBER 2, 1993
<TABLE>
<CAPTION>
Shares Additional
of common Common paid-in Retained
stock stock capital earnings Total
<S> <C> <C> <C> <C> <C>
Balance at
October 3, 1992 2,027,951 $ 20,279 $ 393,945 $ 1,465,879 $ 1,880,103
Net income - - - 220,732 220,732
Stock issued under
employee stock
purchase plan (Note 11) 2,747 28 917 - 945
--------- -------- ---------- ---------- ----------
Balance at
October 2, 1993 2,030,698 20,307 394,862 1,686,611 2,101,780
Net income - - - 118,140 118,140
Stock issued under
employee stock
purchase plan (Note 11) 2,106 21 901 - 922
--------- -------- ---------- ---------- ----------
Balance at
October 1, 1994 2,032,804 20,328 395,763 1,804,751 2,220,842
Net income 430,088 430,088
--------- ------- -------- ---------- ----------
Balance at
September 30, 1995 2,032,804 $ 20,328 $ 395,763 $ 2,234,839 $ 2,650,930
--------- -------- --------- ----------- -----------
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements
<PAGE>
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1995
OCTOBER 1, 1994 AND OCTOBER 2, 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Operating activities:
Net income $ 430,088 $ 118,140 $ 220,732
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 205,708 197,200 179,684
Provision for losses on accounts receivable 12,000 15,621 15,600
Changes in assets and liabilities:
Accounts receivable (235,272) (99,859) (86,945)
Inventories (333,017) (663,121) 32,767
Prepaid expenses and other 52,098 (53,784) 11,760
Accounts payable (68,768) 265,817 (39,420)
Accrued expenses 99,484 (48,962) 7,801
Income taxes payable 222,626 (27,214) (55,013)
Deferred income taxes (17,000) (16,000) (27,100)
Deferred compensation 38,000 68,106 103,867
---------- ---------- ----------
Net cash provided by (used in)
operating activities 405,947 (244,056) 363,733
---------- ---------- ----------
Investing activities:
Property, plant and equipment additions (131,717) (133,364) (147,297)
---------- ---------- ----------
Financing activities:
Proceeds from long-term debt 1,909,000 1,740,003 1,703,821
Repayments of long-term debt (2,170,927) (1,420,459) (1,866,068)
Issuance of common stock - 922 945
----------- ----------- ----------
Net cash provided by (used in)
financing activities (261,927) 320,466 (161,302)
----------- ----------- ---------
Net increase (decrease) in cash 12,303 (56,954) 55,134
Cash - beginning 62,634 119,588 64,454
----------- ----------- ----------
Cash - ending $ 74,937 $ 62,634 $ 119,588
----------- --------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year:
Interest $ 150,069 $ 83,543 $ 84,344
--------- --------- ---------
Income taxes $ 46,945 $ 164,980 $ 284,519
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements
<PAGE>
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, OCTOBER 1, 1994 AND OCTOBER 2, 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation:
The consolidated financial statements include the
accounts of Goddard Industries, Inc. and its
wholly-owned subsidiaries. All material intercompany
transactions have been eliminated.
Fiscal Year:
The Company's fiscal year ends on the Saturday nearest
to September 30. The years ended September 30, 1995,
October 1, 1994 and October 2, 1993 each contain 52
weeks.
Inventories:
Inventories are valued at the lower of cost or market.
Cost is determined by the first-in, first-out method.
Property, Plant and Equipment:
Property, plant and equipment are carried at cost and
depreciated using the straight-line method over the
following estimated useful lives:
<TABLE>
<CAPTION>
YEARS
<S> <C>
Building and improvements 10 - 35
Machinery, equipment and tools 3 - 10
Office equipment and fixtures 5 - 10
</TABLE>
Intangible Assets:
The excess of cost of investment in subsidiaries over
equity in net assets acquired is being amortized on a
straight-line basis over 40 years.
Advertising:
Advertising costs are expensed when incurred.
Income Taxes:
The Company adopted Financial Accounting Standard 109,
"Accounting for Income Taxes", effective October 4, 1992
(Note 6).
Taxes are provided for items entering into the
determination of net income for financial reporting
purposes, irrespective of when such items are reported
for income tax purposes. Accordingly, deferred income
taxes have been provided for all temporary differences.
Tax credits are accounted for on the flow-through
method, whereby credits earned during the year are used
to reduce the current income tax provision.
Forward Exchange Contracts:
The Company periodically enters into forward exchange
contracts in foreign currencies to hedge against
anticipated foreign currency commitments with respect to
inventory purchases. The gains or losses on these
contracts are included as part of the inventory costs.
<PAGE>
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, OCTOBER 1, 1994 AND OCTOBER 2, 1993
(2) INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Finished goods $ 2,705,283 $ 2,472,797
Work in process 11,003 12,596
Raw material 194,948 92,824
------- ------
$ 2,911,234 $ 2,578,217
----------- -----------
</TABLE>
(3) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Land $ 12,865 $ 12,865
Building and improvements 651,344 633,322
Machinery, equipment and tools 2,543,826 2,443,673
Office equipment and fixtures 127,966 119,933
------- -------
3,336,001 3,209,793
Accumulated depreciation (2,385,267) (2,188,825)
----------- -----------
$ 950,734 $ 1,020,968
----------- ------------
</TABLE>
Depreciation expense charged to income was $201,952, $193,443 and $175,927
in 1995, 1994 and 1993, respectively.
<PAGE>
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, OCTOBER 1, 1994 AND OCTOBER 2, 1993
(4) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Revolving line of credit of $1,750,000 of which a maximum
of $300,000 may be used for letters of credit, due to
expire March 31, 1997. Advances are limited by a formula
applied to eligible receivables and inventory and are
secured by all assets of the Company. The agreement
carries interest at the bank's prime rate plus 3/4% and
provides for a commitment fee of 1/2% of any unused balance. $ 1,057,503 $ 1,156,503
Term note due 1996, payments of $5,880 per
month plus interest at 7%, secured by
all assets. 35,360 105,920
Capital lease obligations, payments of $2,677
and $5,778 per month including interest at
8% and 7%, respectively, due in 1996. 73,831 166,198
Notes due 1997, unsecured, interest payable
monthly at 10%, due to related parties. 35,000 35,000
------ ------
1,201,694 1,463,621
Current maturities 109,191 203,807
------- -------
$ 1,092,503 $ 1,259,814
----------- -----------
</TABLE>
Minimum estimated principal payments are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 109,191
1997 1,092,503
-----------
$ 1,201,694
-----------
</TABLE>
Under the revolving line of credit and term note agreements,
the Company is subject to a number of covenants, the most
restrictive of which relate to maintenance of minimum working
capital, tangible net worth and profitability levels. These
agreements also restrict payment of cash dividends to 10% of
the immediately preceding year's net income which represents
unrestricted consolidated retained earnings.
The Company entered into the above referenced lease agreements
for certain machinery and equipment. Assets directly financed
through leases totaling $248,625 ($61,446 in 1994 and $187,179
in 1993) are included in property, plant and equipment.
Amortization of these assets totalling $24,864 in 1995,
$21,280 in 1994 and $6,140 in 1993, is included in
depreciation expense and accumulated depreciation.
<PAGE>
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, OCTOBER 1, 1994 AND OCTOBER 2, 1993
(5) COMMON STOCK OPTIONS
There is a nonqualified option outstanding for 75,000 shares
exercisable through December 1999.
<TABLE>
<CAPTION>
Nonqualified Options Outstanding
-------------------------------- Number
0ption Price of Shares
Number ------------ Currently
of shares Per Share Total Exercisable
--------- --------- ----- -----------
<S> <C> <C> <C> <C>
Balance, September 30, 1995
and October 1, 1994 75,000 $.25 $ 18,750 75,000
------- ----- -------- -------
</TABLE>
(6) INCOME TAXES
The following is a reconciliation of income tax expense
computed at the Federal statutory income tax rate to the
provision for income taxes:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Federal income taxes at
the statutory rate $ 241,000 $ 66,500 $ 140,000
State income taxes net of
federal income tax benefit 44,000 9,200 26,000
Surtax exemption - (10,100) -
Nondeductible expenses 4,900 3,400
Other (10,900) ______ (8,000)
-------- -------
Income taxes $ 279,000 $ 69,000 $ 158,000
--------- -------- ---------
</TABLE>
The provision for income taxes is summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $ 227,000 $ 62,500 $ 165,000
State 69,000 22,500 54,000
------ ------ ------
296,000 85,000 219,000
------- ------ -------
Deferred:
Federal (12,800) (12,300) (46,000)
State (4,200) (3,700) (15,000)
------- ------- --------
(17,000) (16,000) (61,000)
-------- -------- --------
$ 279,000 $ 69,000 $ 158,000
--------- -------- ---------
</TABLE>
<PAGE>
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, OCTOBER 1, 1994 AND OCTOBER 2, 1993
(6) INCOME TAXES (Continued)
Effective October 4, 1992, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes". The cumulative effect of this accounting change on
years prior to 1993 was a $33,900 reduction in the Company's
deferred tax benefit as of October 3, 1992. The reduction
resulted in a decrease in net income for the year ended
October 2, 1993 of $33,900 or $.02 per share. The effect of
the change on Year-To-Date net income, excluding the
cumulative effect upon adoption, was not material.
The tax effects of the principal temporary differences giving
rise to the net current and noncurrent deferred tax assets
totaling $195,000 at September 30, 1995 and $178,000 at
October 1, 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Deferred tax assets:
Deferred compensation $ 205,200 $ 190,000
Inventory valuation 39,000 35,000
Accrued salaries 5,800 11,000
Bad debts 11,000 10,000
------ ------
Total gross deferred tax assets 261,000 246,000
Deferred tax liabilities:
Depreciation 66,000 68,000
------ ------
Net deferred income tax assets $ 195,000 $ 178,000
--------- ---------
</TABLE>
Management does not believe that any valuation allowance is necessary.
(7) COMMITMENTS AND CONTINGENCIES
Environmental Contingencies:
In 1990, the Town of Shrewsbury, Massachusetts commenced
a lawsuit in Massachusetts Superior Court against the
Company and another Corporation, Neles-Jamesbury,
alleging that they had caused the Town to incur response
costs for assessment, containment and removal of oil and
hazardous materials in relation to the Town's Home Farm
wells. The Town is currently seeking approximately $7
million in damages. The Company intends to defend itself
vigorously against this claim and has joined, as third
party defendants, several other businesses which could
be identified as likely to have used the types of
compounds detected as contaminating the Town's wells.
Motions for summary judgement were made during 1992 and
1993 resulting in dismissal of some, but not all, of the
Shrewsbury complaint. In September 1995, the court
issued an order providing for a single, unified trial of
all claims related to this matter. Discovery between the
Company and the Town of Shrewsbury, with the exception
of expert discovery, is complete. Discovery between the
Company, Neles-Jamesbury, and the third party defendants
is ongoing. All discovery is to be completed by May 1,
1996 and the trial is scheduled to begin on June 3,
1996. The Company and legal counsel are unable to form
an opinion regarding the outcome of this matter.
Consequently, no loss provision with respect to this
lawsuit has been recorded.
<PAGE>
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, OCTOBER 1, 1994 AND OCTOBER 2, 1993
(7) COMMITMENTS AND CONTINGENCIES (Continued)
Environmental Contingencies: (continued)
In connection with a proposed bank financing in 1987,
the Company retained an environmental engineering firm
to perform a site assessment at its corporate
headquarters. The results of that assessment revealed
that the groundwater is contaminated and that an
off-site source may be introducing the contaminants. As
required by law, the Company notified the Massachusetts
Department of Environmental Protection (DEP). The DEP
has issued a Notice of Responsibility designating the
site as a priority disposal site. A Phase One Limited
Site Investigation report has been submitted to the DEP.
In November 1995, the Company received a Tier I
Transition Classification and Permit Statement Cover
Letter designating the site as a Tier IC Site under the
Massachusetts Contingency Plan. Under DEP regulations,
the Company must complete further site investigation by
November 1997. Until that investigation is completed, it
is not possible to ascertain the cost, if any, of
remediation or whether the Company will be able to
obtain reimbursement for such costs from any third party
causing the contamination or any insurance carrier.
Accordingly, the Company has not recorded any provision
for loss with respect to this DEP matter.
Several of the Company's insurers are participating in
the Company's defense in both the DEP matter and the
Town of Shrewsbury litigation under a reservation of
rights. The Company's principal insurer has also filed a
suit for a declaratory judgement that they have no duty
to defend or indemnify the Company. This action is
currently stayed.
In the event that the Company does not prevail, these
matters could have a material adverse impact on the
Company's financial condition.
Employment Agreements:
The Company extended, on a year to year basis, the
employment agreement with its President and Chairman of
the Board. In connection with this contract, the President
is entitled to incentive compensation equal to 10% of
pretax earnings exceeding $200,000. Upon his retirement,
the Company must pay an annuity which is being amortized
over the period of the employment contract. Accordingly,
$38,000, $68,106 and $103,867 has been charged to
operations in 1995, 1994 and 1993, respectively.
The Company has employment agreements with certain
executive officers and directors that become operative
only upon a change in control of the Company without the
approval of the Board of Directors. Compensation which
might be payable under these agreements has not been
reflected in the consolidated financial statements of the
Company as of September 30, 1995, since a change in
control, as defined, has not occurred.
Other Commitments:
At September 30, 1995 and October 1, 1994, the Company
had approximately $118,000 and $137,000 in letters of
credit outstanding.
<PAGE>
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, OCTOBER 1, 1994 AND OCTOBER 2, 1993
(8) RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to operations in 1995,
1994 and 1993 were approximately $138,000, $115,000 and
$74,000, respectively.
(9) ADVERTISING COSTS
Advertising costs charged to operations in 1995, 1994 and 1993
were approximately $47,000, $40,000 and $46,000, respectively.
(10) PROFIT SHARING PLAN
The Company has a profit sharing plan covering substantially
all employees. The Company's contribution is determined
annually by the Board of Directors. The amount approved for
1995, 1994 and 1993 was $30,000, $24,000 and $25,000,
respectively.
(11) EMPLOYEE STOCK PURCHASE PLAN
The Company has a qualified employee stock purchase plan
covering all employees except officers and directors.
Employees participating in the plan are granted options
semi-annually to purchase common stock of the Company. The
number of full shares available for purchase is a function
of the employee's accumulated payroll deductions at the end
of each six month interval. The option price is the lesser
of 85% of the fair market value of the Company's common
stock on the first day of the payment period or 85% of the
fair market value of the Company's common stock on the last
day of the payment period. As of September 30, 1995, October
1, 1994 and October 2, 1993 there were no options
outstanding under the plan.
(12) EARNINGS PER SHARE
Primary earnings per share are computed on a weighted
average number of shares outstanding. Fully diluted earnings
per share are not presented because the effect of the
exercise of the stock options would not be dilutive.
<PAGE>
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, OCTOBER 1, 1994 AND OCTOBER 2, 1993
(13) INDUSTRY SEGMENT INFORMATION
The Company produces and sells cryogenic valves (industrial
valves) and imports and distributes plumbing supplies for
use in households, industry and agriculture (plumbing
supplies).
The financial information relating to foreign and export
sales is not presented as those items are not material.
Summarized segment financial information for the years ended
September 30, 1995, October 1, 1994 and October 2, 1993 is
as follows:
<TABLE>
<CAPTION>
For the year ended Industrial Plumbing
September 30, 1995 Valves Supplies Consolidated
------ -------- ------------
<S> <C> <C> <C>
Sales to unaffiliated customers $ 3,738,962 $ 3,031,879 $ 6,770,841
----------- ----------- -----------
Operating profit $669,752 $143,104 $812,856
-------- --------
Interest expense (151,009)
Other income, net 47,241
------
Income before income taxes $709,088
--------
Assets at September 30, 1995 $ 2,840,762 $ 2,309,774 $ 5,150,536
----------- ----------- -----------
Depreciation expense $192,862 $9,090 $201,952
-------- ------ --------
Acquisition of property,
plant and equipment $123,777 $7,940 $131,717
-------- ------ --------
</TABLE>
<PAGE>
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, OCTOBER 1, 1994 AND OCTOBER 2, 1993
(13) INDUSTRY SEGMENT INFORMATION (Continued)
<TABLE>
<CAPTION>
For the year ended Industrial Plumbing
October 1, 1994 Valves Supplies Consolidated
------ -------- ------------
<S> <C> <C> <C>
Sales to unaffiliated customers $ 2,774,434 $ 2,249,424 $ 5,023,858
----------- ----------- -----------
Operating profit $213,402 $40,956 $254,358
-------- -------
Interest expense (91,491)
Other income, net 24,273
------
Income before income taxes $187,140
--------
Assets at October 1, 1994 $ 2,590,475 $ 2,100,558 $4,691,033
----------- ----------- ----------
Depreciation expense $181,461 $11,982 $193,443
-------- ------- --------
Acquisition of property,
plant and equipment $191,838 $2,972 $194,810
-------- ------ --------
</TABLE>
<TABLE>
<CAPTION>
For the year ended Industrial Plumbing
October 2, 1993 Valves Supplies Consolidated
------ -------- ------------
<S> <C> <C> <C>
Sales to unaffiliated customers $ 3,231,498 $ 2,142,804 $ 5,374,302
----------- ----------- -----------
Operating profit $476,164 $3,706 $479,870
-------- ------
Interest expense (81,469)
Other income, net 14,231
------
Income before income taxes $412,632
--------
Assets at October 2, 1993 $ 2,579,782 $ 1,353,452 $3,933,234
----------- ----------- ----------
Depreciation expense $164,036 $11,891 $175,927
-------- ------- --------
Acquisition of property,
plant and equipment $327,532 $6,944 $334,476
-------- --------- --------
</TABLE>
<PAGE>
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, OCTOBER 1, 1994 AND OCTOBER 2, 1993
(13) INDUSTRY SEGMENT INFORMATION (Continued)
The industrial valve segment of the Company sells a majority
of its products to a limited number of customers,
predominantly manufacturers of cryogenic vessels. Sales, in
thousands of dollars, to individual customers constituting
10% or more of total sales of the industrial valve segment
were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Customer A $ 1,025 27% $ 491 18% $ 517 16%
Customer B 426 11 325 12 371 11
Customer C - - 313 11 - -
- - --- -- - -
$ 1,451 38% $ 1,129 41% $ 888 27%
------- --- ------- --- ----- ---
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER PAGE
<S> <C>
(3) Articles of Incorporation and By-Laws:
(a) Articles of Organization. (Filed as Exhibit 3 to the
Company's Registration Statement on Form S-1
(Registration No. 2-16854 of Reva Enterprises, Inc.,
now Goddard Industries, Inc.))*
Articles of Amendment to the Articles of
Organization, dated December 14, 1962. (Filed as
Exhibit 3 to the Company's Form 10-K for the fiscal
year ended September 28, 1985.)*
Articles of Merger and Consolidation, dated July 29,
1968. (Filed as Exhibit 3 to the Company's Form 10-K
for the fiscal year ended September 28, 1985.)*
Restated Articles of Organization, dated March 31,
1971. (Filed as Exhibit 3 to the Company's Form 10-K
for the fiscal year ended September 28, 1985.)*
Articles of Amendment to Restated Articles of
Organization, dated June 1, 1972. (Filed as Exhibit 3
to the Company's Form 10-K for the fiscal year ended
September 28, 1985.)*
Articles of Amendment to Restated Articles of
Organization, dated October 11, 1985. (Filed as
Exhibit 3 to the Company's Form 10-K for the fiscal
year ended September 28, 1985.)*
Articles of Amendment to Restated Articles of
Organization dated March 13, 1987. (Filed as Exhibit
3 to the Company's Form 10-Q for the quarter ended
March 28, 1987.)*
(b)(1) By-Laws (filed as Exhibit 19 to the Company's Form
10-Q for the quarter ended March 31, 1984.)*
(b)(2) By-Law Amendment dated as of September 28, 1990.
(Filed as Exhibit 3(b)(2) to the Company's Form 10-K
for the fiscal year ended September 29, 1990.)*
(4) Instruments Defining the Rights of Security Holders:
<PAGE>
(a) Specimen certificate of common stock. (Filed as
Exhibit 4(a) of Registration Statement on Form S-1
Registration No. 2-16854 of Reva Enterprises, Inc.,
now Goddard Industries, Inc.))*
(10) Material Contracts:
(a) Consolidating Revolving and Term Credit and Security
Agreement dated as of January 3, 1991 among
subsidiaries of the Company and the First National
Bank of Boston (the "Bank"). (Filed as Exhibit 10(h)
to the Company's Form 10-Q for the quarter ended
March 31, 1991.)*
(b) $1,600,000 revolving loan note and $383,124 term loan
note, both dated January 3, 1991 from subsidiaries of
the Company to the Bank. (Filed as Exhibit 10(i) to
the Company's Form 10-Q for the quarter ended March
31, 1991.)*
(c) Unlimited guaranty to the Bank by the Company of the
obligations of the subsidiaries to the Bank. (Filed
as Exhibit 10(v) to the Company's Form 10-Q for the
quarter ended March 31, 1991.)*
(d) Letter agreement between the Company's subsidiaries
and the Bank dated April 27, 1992 modifying banking
arrangements. (Filed as Exhibit (10) to the company's
Form 10-Q for the quarter ended June 30, 1992.)*
(e) Amended and Restated Employment Agreement between the
Company and Saul I. Reck effective as of October 1,
1991 and executed May 1, 1992. (Filed as Exhibit
10(c) to the Company's Form 10-Q for the quarter
ended June 30, 1992.)*
(f) Restated Non-Qualified Stock Option Agreement between
the Company and Saul I. Reck. (Filed as Exhibit 10(d)
to the Company's Form 10-K for the fiscal year ended
September 30, 1989.)*
(g) Adoption Agreement (Non-Standardized Code ss.401(k)
Profit Sharing Plan) dated July 31, 1991, together
with related Defined Contribution Prototype Plan and
Trust Agreement. (Filed as Exhibit 10(h) to the
Company's Form 10-K for the fiscal year ended
September 28, 1991.)*
<PAGE>
(h) Employee Stock Purchase Plan dated December 9, 1993.
(Filed as Exhibit 10(h) to the Company's Form 10-KSB
for the fiscal year ended October 1, 1994.)*
(11) Statement Re Computation of Per Share Earnings. The Statement
Re Computation of Per Share Earnings is set forth in Note 12
to the Company's Consolidated Financial Statements.
(21) Subsidiaries of the Registrant. (Filed as Exhibit 22 to the
Company's Form 10-K for the fiscal year ended September 30,
1989.)*
(27) Financial Statement Schedule. 35
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-KSB
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<CASH> 74,937
<SECURITIES> 0
<RECEIVABLES> 1,002,077
<ALLOWANCES> 28,600
<INVENTORY> 2,911,234
<CURRENT-ASSETS> 4,038,666
<PP&E> 3,336,001
<DEPRECIATION> 2,385,267
<TOTAL-ASSETS> 5,150,536
<CURRENT-LIABILITIES> 894,103
<BONDS> 1,092,503
<COMMON> 20,328
0
0
<OTHER-SE> 2,630,602
<TOTAL-LIABILITY-AND-EQUITY> 5,150,536
<SALES> 6,770,841
<TOTAL-REVENUES> 6,770,841
<CGS> 4,343,329
<TOTAL-COSTS> 5,957,985
<OTHER-EXPENSES> 103,768
<LOSS-PROVISION> 12,000
<INTEREST-EXPENSE> 151,009
<INCOME-PRETAX> 709,088
<INCOME-TAX> 279,000
<INCOME-CONTINUING> 430,088
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 430,088
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
</TABLE>
