SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended January 1, 2000
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from _______________ to
________________
Commission File No. 0-2052
GODDARD INDUSTRIES, INC.
(Exact name of registrant as specified in its
charter)
Massachusetts 04-2268165
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
705 Plantation Street, Worcester, Massachusetts
01605
(Address of principal executive office) (Zip
Code)
Registrant's telephone number, including area code (508)852-
2435
Check whether the registrant (1) filed all reports required
to be
filed by Section 13 or 15 (d) of the 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
State the number of shares outstanding of each of the
issuer's
classes of common stock, as of the latest practicable date.
Title of Each Class of Number of Shares
Outstanding
Common Stock Outstanding at January 1, 2000
Common Stock, $.01 par value 2,131,531
Transitional Small Business Disclosure Format
Yes ___ No __X__
GODDARD INDUSTRIES, INC.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
PAGE
Item 1 Financial Statements
Consolidated Balance Sheet - January 1, 2000
and October 2, 1999
3
Consolidated Statement of Income - Three Months Ended
January 1, 2000 and January 2, 1999
4
Consolidated Statement of Cash Flows - Three Months
Ended
January 1, 2000 and January 2, 1999
5
Notes to Consolidated Financial Statements
7
Item 2 Management Discussion and Analysis
10
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K
11
-2-
GODDARD INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS January 1,
October 2,
2000
1999
(UNAUDITED)
(AUDITED)
CURRENT ASSETS:
Cash and cash equivalents $1,582,888
$1,773,389
Accounts receivable, net of allowances 602,544
478,941
Refundable taxes on income -
33,708
Inventories 2,101,450
1,924,507
Prepaid expenses and taxes 59,614
49,550
Deferred income taxes 83,400
87,000
TOTAL CURRENT ASSETS 4,429,896
4,347,095
PROPERTY, PLANT AND EQUIPMENT,
at cost 4,485,544
4,438,959
Less - Accumulated depreciation -3,066,707
- -3,005,849
1,418,837
1,433,110
OTHER ASSETS:
Investment 250,000
250,000
Deferred income taxes - long term 89,600
92,000
TOTAL OTHER ASSETS 339,600
342,000
TOTAL ASSETS $6,188,333
$6,122,205
LIABILITIES AND SHAREHOLDERS'EQUITY
CURRENT LIABILITIES:
Current maturities of
capital lease obligations $ 91,000
$ 96,000
Accounts payable 153,799
75,380
Accrued expenses 230,268
291,336
Deferred compensation 69,000
69,000
TOTAL CURRENT LIABILITIES 544,067
531,716
CAPITAL LEASE OBLIGATIONS 14,275
44,222
DEFERRED COMPENSATION 471,683
476,791
SHAREHOLDERS' EQUITY:
Common stock - par value $.01 per share,
Authorized 3,000,000 shares, issued
and outstanding 2,131,531 shares 21,315
21,315
Additional paid-in capital 480,713
480,713
Retained earnings 4,656,280
4,567,448
TOTAL SHAREHOLDERS'EQUITY 5,158,308
5,069,476
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $6,188,333
$6,122,205
-3-
GODDARD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE
MONTHS ENDED
January 1,
January 2,
2000
1999
NET SALES $ 969,538
$ 1,434,462
COST OF SALES 584,392
878,056
GROSS PROFIT 385,146
556,406
SELLING AND ADMINISTRATIVE EXPENSES 303,143
317,670
OPERATING PROFIT 82,003
238,736
OTHER INCOME (EXPENSE):
Interest expense -12,618
- -6,572
Other income, net 82,147
13,569
TOTAL OTHER INCOME (EXPENSE) 69,529
6,997
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 151,532
245,733
Provision for income taxes 62,700
100,900
INCOME FROM CONTINUING
OPERATIONS 88,832
144,833
INCOME FROM DISCONTINUED
OPERATIONS, NET OF TAX -
17,085
NET INCOME $ 88,832
$161,918
EARNINGS PER SHARE:
Continuing operations:
Basic $ 0.04
$ 0.07
Diluted $ 0.04
$ 0.07
Net Income:
Basic $ 0.04
$ 0.08
Diluted $ 0.04
$ 0.08
-4-
GODDARD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended
(UNAUDITED)
January 1,
January 2,
2000
1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 88,832
$161,918
Adjustments to reconcile net income to
net cash provided by operating
activities:
Income from discontinued operations -
- -17,085
INCOME FROM CONTINUING OPERATIONS 88,832
144,833
Depreciation and amortization 60,858
63,209
Deferred income taxes 6,000
- -4,400
Changes in assets and liabilities: -
- -
Accounts receivable -123,603
- -37,111
Refundable taxes on income 11,700
90,582
Inventories -176,943
- -55,243
Prepaid expenses and other 11,944
8,451
Accounts payable 78,419
24,004
Accrued expenses -61,068
- -137,246
Accrued environmental -
- -4,648
Deferred compensation -5,108
- -
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES -108,969
92,431
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in former subsidiary -
- -117,634
Property, plant and equipment additions -46,585
- -48,291
NET CASH USED IN INVESTING ACTIVITIES -46,585
- -165,925
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt -34,947
- -46,922
NET INCREASE (DECREASE) IN CASH -190,501
- -120,416
CASH AND EQUIVALENTS - BEGINNING 1,773,389
149,756
CASH AND EQUIVALENTS - ENDING $1,582,888
$29,340
Supplemental Disclosures of Cash Flow
Information
CASH PAID DURING THE PERIOD:
Interest $ 12,618
$ 19,176
Income taxes $ 15,000
$125,000
-5-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
January 1, 2000
(UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Reference is made to the financial statements included in
the Annual Report for the year ended October 2, 1999 for
a
summary of significant accounting policies and other
disclosures.
As a result of the sale of Webstone Company, Inc.
(Webstone) (see
Note 8), all 1999 financial statements have been restated
to reflect Webstones' discontinued operations.
NOTE 2. BASIS OF PRESENTATION:
The information shown in the consolidated financial
statements reflects all adjustments which are, in the
opinion of management, necessary for a fair presentation
of the results for the interim period.
NOTE 3. INVENTORIES:
Consolidated inventories are comprised of:
January 1,
October 2,
2000
1999
Finished goods $1,784,438
$1,607,495
Work in process 30,646
30,646
Raw materials 286,366
286,366
$2,101,450
$1,924,507
NOTE 4. LONG-TERM OBLIGATIONS
At January 1, 2000 capital lease obligations consisted of
the following:
LONG-TERM
CURRENT
Capital lease obligations for machinery,
payable in monthly installments through
2001, with imputed interest rate of
approximately 8.5% $ 14,275 $
91,000
-6-
NOTE 5. INCOME TAXES:
The tax effects of the principal temporary differences
giving
rise to the net current and non-current deferred tax
assets are
as follows:
January 1,
October 2,
2000
1999
Deferred tax asset
Deferred compensation $ 216,300 $
218,300
Capital loss carryforward 167,700
167,700
Inventory valuation 46,200
45,800
Accrued salaries 6,000
6,000
Bad debts 7,200
7,200
443,400
445,000
Depreciation -102,700
- -98,300
340,700
346,700
Less valuation allowance -167,700
- -167,700
$173,000
$179,000
Management has established a valuation allowance against
the
deferred tax asset attributable to the capital loss
carryforward.
NOTE 6. ENVIRONMENTAL MATTER
Environmental Matters:
In 1998, the Company filed a Class "C" Response Action
Outcome Statement with the Massachusetts Department of
Environmental Protection regarding its facility in
Worcester,
Massachusetts. Based upon the information presently
available,
periodic monitoring is required.
-7-
NOTE 7. EARNING PER SHARE:
The following data show the amounts used in computing
earnings per share
(EPS) from continuing operations and the effects on income
and the
weighted average number of shares of dilutive potential
common stock.
Three months ended
January 1, 2000
Income Common
Shares EPS
Basic EPS:
Income available to common
shareholders $ 88,832
2,131,531 $0.04
Dilutive effect of potential common
Stock:
Stock options -
10,195
Diluted EPS:
Income available to common
shareholders after assuming
exercise of dilutive securities $ 88,832
2,141,726 $0.04
Three months ended
January 2, 1999
Income Common
Shares EPS
Basic EPS:
Income available to common
shareholders $144,833
2,126,649 $0.07
Dilutive effect of potential common
Stock:
Stock options -
12,588
Diluted EPS:
Income available to common
shareholders after assuming
exercise of dilutive securities $144,833
2,139,237 $0.07
Per share amounts attributable to discontinued operations,
net of tax, are as follows:
January 1,
January 2,
2000
1999
Basic $ -
$ 0.01
Diluted $ -
$ 0.01
-8-
NOTE 8. DISCONTINUED OPERATIONS:
On July 1, 1999 the Board of Directors of Goddard Valve
Corporation approved the sale of Webstone Company, Inc.
(Webstone), its wholly-owned subsidiary, to Michael E.
Reck, President of Webstone since 1996. The sale was
consummated on July 2, 1999.
Webstone's discontinued operations for the three months
ended January 2, 1999 are as follows:
SALES $ 957,709
COST OF SALES 641,666
GROSS PROFIT 316,043
SELLING AND ADMINISTRATIVE
Expenses 286,313
INCOME FROM
operations 29,730
OTHER INCOME (EXPENSE):
Interest expense -1,333
Other income, net 188
TOTAL OTHER EXPENSE -1,145
INCOME BEFORE INCOME TAXES 28,585
PROVISION FOR INCOME TAXES 11,500
NET INCOME $17,085
-9-
PART I - FINANCIAL INFORMATION
Item 2 - MANAGEMENT DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net sales for the quarter ended January 1, 2000 were
$970,000 with net income from continuing operations of
$89,000, or $.04 per share. This compared with net sales of
$1,434,000 and net income from continuing operations of
$145,000, or $.07 per share, for the same period last year.
During the quarter ended January 2, 1999, the Company had
income from discontinued operations of $17,000, or $.01 per
share.
New orders received in the quarter ended January 1, 2000
were $1,166,000, slightly below new orders received of
$1,221,000 in the same period last year, but 38% higher than
orders received in the fourth quarter of fiscal 1999, ended
October 2, 1999. The low level of orders received in the
fourth quarter was in part responsible for low sales volume
in the first quarter ended January 1, 2000. Backlog at
January 1, 2000 was $411,000, down from $662,000 reported
one year ago, but up from $230,000 at October 2, 1999.
The downward trend in orders year-to-year improved from the
fourth quarter of last year, although there is no certainty
that the year-to- year improvement will continue. Quoting
activity is improving, but demand for new separation plants
has not yet become significant enough to signal an industry
turnaround.
Profitability was lower but continued strong despite the
significant decline in revenues. Gross profit margins
improved to 39.7% from 38.8% in the prior year, while
selling general and administrative expenses declined by
approximately $15,000.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has funded operations through
earnings and bank borrowings. However, the sale of the
Webstone business has enhanced the Company's balance sheet
and provides it with additional liquidity. At January 1,
2000 the Company had no long term debt except equipment
leases of $105,000 (of which $91,000 is current) and had
$1,583,000 in cash and cash equivalents. The Company's line
of credit with BankBoston has been temporarily discontinued
pending specific requirements for additional capital.
During the quarter ended January 1, 2000, operating
activities used $109,000 of cash largely to finance higher
accounts receivable and inventories. During the same period
last year, operating activities generated $92,000 of cash.
The Company believes that its working capital and cash
position provide sufficient liquidity to handle the normal
working capital requirements of its business.
-10-
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Statement Re: Computation of Per
Share Earnings. The information
set forth in Note 7 to the
Financial Statements found in PART
I hereof is hereby incorporated.
(27) Financial Data Schedule
(b) The Company did not file any reports on Form 8-K
during the quarter ended January 1, 2000.
-11-
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of
1934, the Registrant has duly caused the Report to be signed
on its
behalf by the undersigned thereunto duly authorized.
Dated as of February 15, 2000
GODDARD INDUSTRIES, INC.
By:/s/Salvatore J. Vinciguerra
--------------------------------
- ---
Salvatore J. Vinciguerra,
President,
Chief Executive Officer
and Chief Financial Officer
-12-
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