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 July 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 July 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 - July 1, 2000
and October 2, 1999
3
Consolidated Statement of Income - Nine Months Ended
July 1, 2000 and July 3, 1999
4
Consolidated Statement of Cash Flows - Nine Months
Ended
July 1, 2000 and July 3, 1999
5
Notes to Consolidated Financial Statements
6
Item 2 Management Discussion and Analysis
11
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K
13
-2-
GODDARD INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS July 1,
October 2,
2000
1999
(UNAUDITED)
(AUDITED)
CURRENT ASSETS:
Cash and cash equivalents $1,658,721
$1,773,389
Accounts receivable, net of allowances 542,451
478,941
Refundable taxes on income 17,742
33,708
Inventories 2,182,787
1,924,507
Prepaid expenses and taxes 45,832
49,550
Deferred income taxes 83,600
87,000
TOTAL CURRENT ASSETS 4,531,133
4,347,095
PROPERTY, PLANT AND EQUIPMENT,
at cost 4,525,246
4,438,959
Less - Accumulated depreciation -3,170,436
- -3,005,849
1,354,810
1,433,110
OTHER ASSETS:
Investment 250,000
250,000
Deferred charges 29,374
- -
Deferred income taxes - long term 93,700
92,000
TOTAL OTHER ASSETS 373,074
342,000
TOTAL ASSETS $6,259,017
$6,122,205
LIABILITIES AND SHAREHOLDERS'EQUITY
CURRENT LIABILITIES:
Current maturities of
long-term debt $ 60,650
$ 96,000
Accounts payable 123,642
75,380
Accrued expenses 173,740
291,336
Income taxes payable 24,476
- -
Deferred compensation 69,000
69,000
TOTAL CURRENT LIABILITIES 451,508
531,716
CAPITAL LEASE OBLIGATIONS -
44,222
DEFERRED COMPENSATION 454,431
476,791
SHAREHOLDERS' EQUITY:
Common stock - par value $.01
Per share; authorized 3,000,000
Shares, issued and outstanding
2,134,431 shares at July 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 4,848,336
4,567,448
TOTAL SHAREHOLDERS'EQUITY 5,353,078
5,069,476
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 6,259,017
$6,122,205
-3-
GODDARD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
July 1, 2000 July 3,
1999
For The Three For The Nine For The Three
For The Nine
Months Ended Months Ended Months Ended
Months Ended
NET SALES $ 975,492 $2,961,875 $1,109,346
$3,879,161
COST OF SALES 584,277 1,779,450 703,338
2,396,019
GROSS PROFIT 391,215 1,182,425 406,008
1,483,142
SELLING AND ADMINISTRATIVE
EXPENSES 287,067 894,921 301,371
922,352
INCOME FROM
OPERATIONS 104,148 287,504 104,637
560,790
OTHER INCOME
(EXPENSE):
Interest expense -11,095 -35,493 -18,169
- -40,681
Other income, net 75,885 224,477 13,378
39,466
TOTAL OTHER
INCOME (EXPENSE) 64,790 188,984 -4,791
- -1,215
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 168,938 476,488 99,846
559,575
PROVISION FOR
INCOME TAXES
Current 76,500 193,900 49,300
248,200
Deferred -7,000 1,700 -3,900
- -12,700
Total income
Taxes 69,500 195,600 45,400
235,500
INCOME FROM CONTINUING
OPERATIONS $ 99,438 $280,888 $ 54,446
$324,075
DISCONTINUED OPERATIONS:
INCOME (LOSS) FROM
OPERATIONS, NET OF
TAX -32,583
30,294
LOSS ON DISPOSAL,
NET OF TAX - - -408,861
- -408,861
NET INCOME $ 99,438 $280,888 $-386,998
$ -54,492
EARNINGS PER SHARE:
Continuing
Operations
Basic $ 0.05 $ 0.13 $ 0.03
$ 0.15
Diluted $ 0.05 $ 0.13 $ 0.03
$ 0.15
Net Income:
Basic $ 0.05 $ 0.13 $ -0.18
$ -0.03
Diluted $ 0.05 $ 0.13 $ -0.18
$ -0.03
-4-
GODDARD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Nine Months Ended
July 1,
July 3,
2000
1999
NET INCOME $ 280,888
$-54,492
Adjustments to reconcile net income to net
cash provided by operating activities:
(Income) from discontinued operations -
- -30,294
Loss on disposition of business -
408,861
Income from continuing operations $ 280,888
$324,075
Depreciation and amortization 184,572
188,261
Deferred income taxes 1,700
- -49,700
Changes in assets and liabilities:
Accounts receivable -63,510
- -16,630
Refundable taxes on income 40,442
- -13,719
Inventories -258,280
86,758
Prepaid expenses and other 3,718
770
Accounts payable 48,262
- -41,418
Accrued expenses -117,596
73,026
Accrued environmental -
- -4,648
Deferred compensation -22,360
- -192
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 97,836
546,583
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from disposition of business -
1,152,930
Deferred charges -29,374
- -
Property, plant and equipment additions -106,272
- -98,013
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES -135,646
1,054,0917
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long term debt -79,572
- -143,839
Issuance of common stock 2,714
1,372
NET CASH USED IN FINANCING ACTIVITIES -76,858
- -142,467
NET INCREASE (DECREASE) IN CASH -114,668
1,459,033
CASH AND EQUIVALENTS - BEGINNING 1,773,389
149,756
CASH AND EQUIVALENTS - ENDING $ 1,658,721
$1,608,789
Supplemental Disclosures of Cash Flow Information
CASH PAID DURING THE PERIOD:
Interest $ 35,493
$ 24,528
Income taxes $ 165,000
$165,000
-5-
GODDARD INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
July 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.
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:
July 1,
October 2,
2000
1999
Finished goods $1,865,775
$1,607,495
Work in process 30,646
30,646
Raw materials 286,366
286,366
$2,182,787
$1,924,507
NOTE 4. LONG-TERM DEBT
At July 1, 2000 the capital lease obligation consisted of
the following:
LONG-TERM
CURRENT
Capital lease obligation for machinery,
payable in monthly installments through
2001, with imputed interest rate of
approximately 8.5% $ - $
60,650
-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:
July 1,
October 2,
2000
1999
Deferred tax asset
Deferred compensation $ 209,400 $
218,300
Capital loss carryforward 167,700
167,700
Inventory valuation 46,400
45,800
Accrued salaries 6,000
6,000
Bad debts 7,200
7,200
436,700
445,000
Depreciation -91,700
- -98,300
345,000
346,700
Less valuation allowance -167,700
- -167,700
$177,300
$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
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 are as follows:
For The Three
For The Nine
Months Ended
Months Ended
July 1, 2000
July 1, 2000
SALES $ 956,338
$3,017,982
COST OF SALES 651,044
2,022,990
GROSS PROFIT 305,294
994,992
SELLING AND ADMINISTRATIVE
Expenses 359,068
943,994
INCOME FROM
operations -53,774
50,998
OTHER INCOME (EXPENSE):
Interest expense -19
- -2,075
Other income, net -490
1,671
TOTAL OTHER EXPENSE -509
- -404
INCOME BEFORE INCOME TAXES -54,283
50,594
PROVISION FOR INCOME TAXES -21,700
20,300
NET INCOME $-32,583
$30,294
-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.
Nine Months Ended
July 1, 2000
Income Common
Shares EPS
Basic EPS:
Income available to common
shareholders $280,888
2,132,667 $0.13
Dilutive effect of potential common
Stock:
Stock options -
12,576
Diluted EPS:
Income available to common
shareholders after assuming
exercise of dilutive securities $280,888
2,145,243 $0.13
Three Months Ended
July 1, 2000
Income Common
Shares EPS
Basic EPS:
Income available to common
shareholders $ 99,438
2,133,532 $0.05
Dilutive effect of potential common
Stock:
Stock options -
13,286
Diluted EPS:
Income available to common
shareholders after assuming
exercise of dilutive securities $ 99,438
2,146,818 $0.05
-9-
Nine Months Ended
July 3, 1999
Income Common
Shares EPS
Basic EPS:
Income available to common
shareholders $324,075
2,130,255 $0.15
Dilutive effect of potential common
Stock:
Stock options -
11,812
Diluted EPS:
Income available to common
shareholders after assuming
exercise of dilutive securities $324,075
2,142,067 $0.15
Three Months Ended
July 3, 1999
Income Common
Shares EPS
Basic EPS:
Income available to common
shareholders $ 54,446
2,130,766 $0.03
Dilutive effect of potential common
Stock:
Stock options -
14,633
Diluted EPS:
Income available to common
shareholders after assuming
exercise of dilutive securities $ 54,446
2,145,399 $0.03
Per share amounts attributable to discontinued operations,
net of tax, are as follows:
For The Three
For the Nine
Months
Months
Ended July 3
Ended July 3,
1999 1999
Basic $ -0.21 $
- -0.18
Diluted $ -0.21 $
- -0.18
-10-
Item 2 Management Discussion and Analysis
Results of Operations
Net sales from continuing operations for the quarter ended
July 1, 2000 were $975,000, with net income from continuing
operations of $99,000, or $.05 per share. This compared
with net sales of $1,109,000 and net income of $54,000, or
$.03 per share, from continuing operations for the same
quarter of fiscal 1999. There were no extraordinary gains or
losses in the three month period ending July 1, 2000.
However, in last year's third quarter, net sales from
discontinued operations were $956,000, with a net loss from
discontinued operations of $33,000, or $.02 per share. The
sale of the Webstone plumbing supplies division on July 3,
1999 resulted in a book loss of $409,000, or $.19 per share.
As a result, consolidated net loss for the third quarter of
fiscal 1999 from continuing operations, discontinued
operations, and loss on the sale of Webstone was $387,000,
or $.18 per share.
Net sales from continuing operations for the nine months
ended July 1, 2000 were $2,962,000, with net income from
continuing operations of $281,000, or $.13 per share. This
compared with net sales of $3,879,000 and net income of
$324,000, or $.15 per share, from continuing operations for
the same period of fiscal 1999. There were no extraordinary
gains or losses in the nine month period ending July 1,
2000. However, net sales from discontinued operations for
the nine months ended July 3, 1999 were $3,018,000, with net
income from discontinued operations of $30,000, or $.01 per
share. The consolidated net loss for the nine months ended
July 3, 1999 from continuing operations, discontinued
operations, and loss on sale of Webstone was $55,000, or
$.03 per share.
New orders in the third quarter of this year were 17% higher
than the same period one year ago, reversing the year-to-
year decline that has been experienced in the last few
quarters. Bookings in the first and second quarters of this
year were lower by 5% and 29%, respectively, compared with
last year's comparable quarters. Accelerated bookings of the
company's manifold system, coupled with a surge in the bulk
storage tank refurbishment market, have led the improvement
over last year. Bookings for the nine months were 7% lower
than for the nine months one year ago.
Gross profit margins from continuing operations for the
third quarter of fiscal 2000 improved to 40.1% from 36.6% in
the corresponding quarter of fiscal 1999. For the first nine
months of fiscal 2000, gross profit margins from continuing
operations improved to 39.9% from 38.2% in the corresponding
period of fiscal 1998. The improvements in gross profits are
the result of changes in product mix, which have so far
overcome increasing pressure for lower prices.
LIQUIDITY AND CAPITAL RESOURCES
At July 1, 2000, the company had $1,659,000 in cash and cash
equivalents, and no long term debt. Cash reserves are
invested in short-term instruments. The Company's line of
credit with FleetBoston 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.
-11-
FORWARD LOOKING INFORMATION
Information contained in this Form 10-QSB may contain
certain "forward looking statements" within the meaning of
the Private Securities 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.
-12-
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 July 1, 2000.
-13-
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 August 9, 2000
GODDARD INDUSTRIES, INC.
By:/s/Salvatore J. Vinciguerra
--------------------------------
- ---
Salvatore J. Vinciguerra,
President
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