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 April 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 April 1, 2000
Common Stock, $.01 par value 2,134,431
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 - April 1, 2000
and October 2, 1999
3
Consolidated Statement of Income - Six Months Ended
April 1, 2000 and April 3, 1999
4
Consolidated Statement of Cash Flows - Six Months Ended
April 1, 2000 and April 3, 1999
5
Notes to Consolidated Financial Statements
6
Item 2 Management Discussion and Analysis
11
PART II - OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security
Holders 12
Item 6 Exhibits and Reports on Form 8-K
12
-2-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 1,
October 2,
2000
1999
(UNAUDITED)
AUDITED
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $1,709,174
$1,773,389
Accounts receivable, net of allowances 507,480
478,941
Refundable taxes on income 19,766
33,708
Inventories 2,151,526
1,924,507
Prepaid expenses and taxes 58,430
49,550
Deferred income taxes 83,400
87,000
TOTAL CURRENT ASSETS 4,529,776
4,347,095
PROPERTY, PLANT AND EQUIPMENT,
at cost 4,505,245
4,438,959
Less - Accumulated depreciation 3,127,565
- -3,005,849
1,377,680
1,433,110
OTHER ASSETS:
Investment 250,000
250,000
Deferred income taxes - long term 86,900
92,000
TOTAL OTHER ASSETS 336,900
342,000
TOTAL ASSETS $6,244,356
$6,122,205
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of
capital lease obligations $ 70,700
$ 96,000
Accounts payable 219,247
75,380
Accrued expenses 166,232
291,336
Deferred compensation 69,000
69,000
TOTAL CURRENT LIABILITIES 525,179
531,716
CAPITAL LEASE OBLIGATIONS 5,691
44,222
DEFERRED COMPENSATION 459,846
476,791
SHAREHOLDERS' EQUITY:
Common stock - par value $.01 per share,
authorized 3,000,000 shares, issued
and outstanding 2,134,431 shares
at April 1, 2000 and 2,131,531 shares
at October 2, 1999 21,344
21,315
Additional paid-in capital 483,398
480,713
Retained earnings 4,748,898
4,567,448
TOTAL SHAREHOLDERS'EQUITY 5,253,640
5,069,476
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $6,244,356
$6,122,205
-3-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
April 1, 2000 April 3,
1999
For The Three For the Six For The Three
For The Six
Months Ended Months Ended Months Ended
Months Ended
NET SALES $1,016,845 $1,986,383 $1,335,353
$2,769,815
COST OF SALES 610,781 1,195,173 814,625
1,692,681
GROSS PROFIT 406,064 791,210 520,728
1,077,134
SELLING AND
ADMINISTRATIVE
EXPENSES 304,711 607,854 303,311
620,981
INCOME FROM
OPERATIONS 101,353 183,356 217,417
456,153
OTHER INCOME (EXPENSE):
Interest expense -11,780 -24,398 -15,940
- -22,512
Other income, net 66,445 148,592 12,519
26,088
TOTAL OTHER
INCOME (EXPENSE) 54,665 124,194 -3,421
3,576
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 156,018 307,550 213,996
459,729
PROVISION FOR INCOME TAXES
Current 54,700 117,400 98,000
198,900
Deferred 8,700 8,700 -8,800
- -8,800
Total income taxes
(benefit) 63,400 126,100 89,200
190,100
INCOME FROM CONTINUING
OPERATIONS 92,618 181,450 124,796
269,629
INCOME FROM DISCONTINUED
OPERATIONS, NET OF TAX - - 45,792
62,877
NET INCOME $ 92,618 $181,450 $170,588
$332,506
EARNINGS PER SHARE
Continuing operations:
Basic $ 0.04 $ 0.09 $ 0.06
$ 0.13
Diluted $ 0.04 $ 0.08 $ 0.06
$ 0.13
Net Income:
Basic $ 0.04 $ 0.09 $ 0.08
$ 0.16
Diluted $ 0.04 $ 0.08 $ 0.08
$ 0.16
-4-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX
MONTHS ENDED
April 1,
April 3,
2000
1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $181,450
$332,506
Adjustments to reconcile net income to
net cash provided by operating
activities:
Income from discontinued operations -
- -62,877
Income from continuing operations 181,450
269,629
Depreciation and amortization 121,716
121,716
Deferred income taxes 8,700
- -8,800
Changes in assets and liabilities:
Accounts receivable -28,539
101,369
Refundable taxes on income 13,942
75,281
Inventories -227,019
3,646
Prepaid expenses and other -8,880
- -16,651
Accounts payable 143,867
52,417
Accrued expenses -125,104
- -206,845
Accrued environmental -
- -4,648
Deferred compensation -16,945
- -
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 63,188
387,114
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in former subsidiary -
- -306,728
Property,plant and equipment additions -66,286
- -67,683
NET CASH USED IN FINANCING ACTIVITIES -66,286
- -374,411
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long term debt -63,831
- -93,488
NET INCREASE (DECREASE) IN CASH -66,929
- -80,785
CASH AND EQUIVALENTS - BEGINNING 1,773,389
149,756
CASH AND EQUIVALENTS - ENDING $1,706,460
$ 68,971
Supplemental Disclosures of Cash
Flow Information
CASH PAID DURING THE PERIOD:
Interest $ 24,398
$ 24,528
Income taxes $ 115,000
$165,000
-5-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
April 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 7), 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:
April 1,
October 2,
2000
1999
Finished goods $1,834,514
$1,607,495
Work in process 30,646
30,646
Raw materials 286,366
286,366
$2,151,526
$1,924,507
NOTE 4. LONG-TERM DEBT
At April 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% $ 5,691
$70,700
-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:
April 1,
October 2,
2000
1999
Deferred tax asset
Deferred compensation $ 213,600 $
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
440,700
445,000
Depreciation -102,700
- -98,300
$ 338,000 $
346,700
Less valuation allowance -167,700
- -167,700
$ 170,300 $
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 Discontinued Operations
On July 1, 1999 the Board of Directors of Goddard Valve
Corp.
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 are as follows:
For the three
For the six
months ended
months ended
April 3, 1999
April 3, 1999
Sales $1,103,935
$2,061,644
Cost of Sales 730,280
1,371,946
Gross Profit 373,655
689,698
Selling and administrative expenses 298,613
584,926
Income from operations 75,042
104,772
Other income (expense):
Interest expense -723
- -2,056
Other income, net 1,973
2,161
Total other expense 1,250
105
Income before income taxes 76,292
104,877
Provision for income taxes 30,500
42,000
Net income $ 45,792
$ 62,877
-8-
NOTE 8. 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.
Six Months ended
April 1, 2000
Income Common
Shares EPS
Basic EPS:
Income available to common
shareholders $181,450
2,131,531 $0.09
Dilutive effect of potential common
stock:
Stock options -
13,475
Diluted EPS:
Income available to common
shareholders after assuming
exercise of dilutive securities $181,450
2,145,006 $0.08
Three Months ended
April 1, 2000
Income Common
Shares EPS
Basic EPS:
Income available to common
shareholders $ 92,618
2,126,649 $0.04
Dilutive effect of potential common
stock:
Stock options -
19,185
Diluted EPS:
Income available to common
shareholders after assuming
exercise of dilutive securities $ 92,618
2,145,834 $0.04
-9-
NOTE 8. EARNING PER SHARE: (continued)
Six months ended
April 3, 1999
Income Common
Shares EPS
Basic EPS:
Income available to common
shareholders $269,629
2,131,531 $0.13
Dilutive effect of potential common
stock:
Stock options
13,475
Diluted EPS:
Income available to common
shareholders after assuming
exercise of dilutive securities $269,629
2,145,006 $0.13
Three months ended
April 3, 1999
Income Common
Shares EPS
Basic EPS:
Income available to common
shareholders $124,796
2,126,649 $0.06
Dilutive effect of potential common
stock:
Stock options -
19,185
Diluted EPS:
Income available to common
shareholders after assuming
exercise of dilutive securities $124,796
2,145,834 $0.06
Per share amounts attributable to discontinued operations,
net of tax,
are as follows:
For the six
For the three
months ended
months ended
April 3, 1999
April 3, 1999
Basic $ 0.03
$ 0.02
Diluted $ 0.03
$ 0.02
-10-
PART I - FINANCIAL INFORMATION
Item 2 - MANAGEMENT DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net sales for the second quarter ended April 1, 2000 were
$1,017,000 with net income from continuing operations of
$93,000, or basic earnings of $.04 per share. This compared
with net sales of $1,335,000 and net income from continuing
operations of $125,000, or basic earnings of $.06 per share,
for the same period last year. During last year's second
quarter ended April 3, 1999, the Company had income from
discontinued operations of $46,000, or $.02 per share.
Net sales for the six months ended April 1, 2000 were
$1,986,000 with net income from continuing operations of
$181,000, or basic earnings of $.09 per share. This
compared with net sales of $2,770,000 and net income from
continuing operations of $270,000, or basic earnings of $.13
per share, for the same period last year. During the six
months ended April 3, 1999, the Company had income from
discontinued operations of $63,000, or $.03 per share.
New orders received in the three months and six months ended
April 1, 2000 were 29% and 18% lower than for the same
periods last year, respectively. Backlog at April 1, 2000
was $340,000, down from $688,000 one year ago. The
underlying order rate and net sales for both the three
months and six months continue at a low level, reflecting
the continuing trend in construction projects and equipment
supply in the air separation industry. Planning for new
construction projects appears to be increasing, but we have
not yet seen these plans convert to orders for valves.
Gross margins for the quarter and six months improved from
39% to 40%, respectively, while SG&A remained relatively
flat for both the quarter and six months. Lower operating
profits were entirely the result of lower sales.
LIQUIDITY AND CAPITAL RESOURCES
At April 1, 2000, the company had $1,709,000 in cash and
cash equivalents, no long term debt, and long-term capital
lease obligations of only $6,000. Cash reserves are invested
in short-term instruments. The Company's line of credit with
Fleet Boston has been temporarily discontinued pending
specific requirements for additional capital. However, the
Company believes that its working capital and cash position
provide sufficient liquidity to handle the normal working
capital requirements of its business.
FORWARD LOOKING INFORMATION
Information contained in this Form 10-QSB contains
certain "forward looking statements" within the meaning of
the Private Securities
-11-
Litigation Reform Act of 1995, that address such matters as
new product introductions and projected future sales. These
statements can be identified by the use of forward looking
terminology such as "expect", "anticipate", "believe",
"intend", "estimate" or other comparable terminology. All
forward looking statements involve risks and uncertainties,
and actual results could differ materially from those set
forth in the forward looking statements. Some of the
principal factors which could affect the Company's future
operations include the loss of or decline in level of orders
from major customers, delays in
introducing new products, the failure of the market to
accept new products, changes in general economic conditions
and conditions in major customer industries such as the
industrial gas business.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
The Company held a Special Meeting in Lieu of the
Annual Meeting of Stockholders on March 17, 2000. At the
meeting, the stockholders approved (a) the election of one
Class 1 director to serve until 2003 and until his successor
is duly elected and qualified, and (b) an amendment to the
Company's 1998 Equity Incentive Plan to increase the number
of shares available for issuance to 600,000 shares from
300,000 shares.
a) Election of Directors:
Nominee For Against, Withheld or
Abstained (Including
Broker Non-Votes)
Saul I. Reck 1,157,657 8,355
b) Amendment to the Company's 1998 Equity Incentive Plan:
For Against or
Abstentions and
Withheld
Broker Non-Votes
Approval 1,127,354 30,843 7,815
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 April 1, 2000.
-12-
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 May 15, 2000
GODDARD INDUSTRIES, INC.
By:/s/Salvatore J. Vinciguerra
--------------------------------
- ---
Salvatore J. Vinciguerra,
President
-13-
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<FISCAL-YEAR-END> SEP-30-2000 SEP-30-2000
<PERIOD-END> APR-01-2000 APR-01-2000
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<SECURITIES> 0 0
<RECEIVABLES> 0 526,601
<ALLOWANCES> 0 19,121
<INVENTORY> 0 2,151,526
<CURRENT-ASSETS> 0 4,519,010
<PP&E> 0 4,505,245
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<CURRENT-LIABILITIES> 0 525,179
<BONDS> 0 0
0 0
0 0
<COMMON> 0 21,344
<OTHER-SE> 0 0
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<SALES> 1,016,845 1,986,383
<TOTAL-REVENUES> 1,016,845 1,986,383
<CGS> 610,781 1,195,173
<TOTAL-COSTS> 304,711 607,854
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<INCOME-PRETAX> 156,018 307,550
<INCOME-TAX> 63,400 126,100
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<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
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