SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
AMENDMENT TO APPLICATION OR REPORT
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended December 30, 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 December 30, 2000
Common Stock, $.01 par value 2,157,271
Transitional Small Business Disclosure Format
Yes ___ No __X__
EXPLANATORY NOTE
This amendment is filed to amend Part I items 1 and 2 with respect to the method
of accounting for the foreign currency contract described in Note 9 entered into
by the Company in September 2000 in connection with its anticipated November 1,
2000 purchase of the assets of a foreign company as described in Note 8
"Acquired Business." The contract fixed the expected purchase price in US
dollars, in order to avoid speculating in a foreign currency. The Company's 10-
QSB for the three months ended December 30, 2000 is hereby amended to comply
with requirements to account for this contract as a speculative position, and to
record the change in value of the contract in the earnings of the three month
period, and other adjustments related to the acquisition.
GODDARD INDUSTRIES, INC.
TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheet - December 30, 2000
and September 30, 2000 3
Consolidated Statement of Operations - Three Months Ended
December 30, 2000 and January 2, 1999 4
Consolidated Statement of Cash Flows - Three Months Ended
December 30, 2000 and January 2, 1999 5
Notes to Consolidated Financial Statements 7
Item 2 Management Discussion and Analysis 12
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 13
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GODDARD INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
December 30, 2000 September 30, 2000
ASSETS Unaudited Audited
CURRENT ASSETS:
Cash and cash equivalents $1,208,186 $1,630,711
Accounts receivable, net of allowances 1,175,626 466,076
Inventories 3,053,058 2,046,476
Refundable taxes on income 91,763 91,763
Prepaid expenses and taxes 74,368 46,920
Deferred income taxes 94,000 116,000
TOTAL CURRENT ASSETS 5,697,001 4,397,946
PROPERTY, PLANT AND EQUIPMENT,
at cost 5,243,000 4,569,201
Less - Accumulated depreciation (3,296,587) (3,216,815)
1,946,413 1,352,386
OTHER ASSETS:
Deferred charges 33,499 150,761
Deferred income taxes - long term 128,868 73,000
Investment 250,000 250,000
Deferred financing charges 61,238 0
Goodwill 2,417,453 0
TOTAL OTHER ASSETS 2,891,058 473,761
TOTAL ASSETS $10,534,472 $6,224,093
LIABILITIES AND SHAREHOLDERS'EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $374,935 $44,572
Accounts payable 580,340 150,040
Accrued expenses 411,806 273,819
Taxes payable (48,000) 0
Deferred compensation 71,280 71,280
TOTAL CURRENT LIABILITIES 1,390,361 539,711
LONG-TERM DEBT 3,429,583 0
LONG-SERVICE LEAVE 22,240 0
DEFERRED COMPENSATION 440,801 446,290
SHAREHOLDERS' EQUITY:
Common stock - par value $.01 Per share; shares
authorized 3,000,000 Shares, issued and outstanding
2,157,271 shares at December 30, 2000 and
2,142,271 shares at September 30, 2000 21,573 21,423
Additional paid-in capital 495,748 488,398
Accumulated other comprehensive income 80,386 0
Retained earnings 4,653,780 4,728,271
TOTAL SHAREHOLDERS'EQUITY 5,251,487 5,238,092
TOTAL LIABILITIES AND SHAREHOLDERS'EQUITY $10,534,472 $6,224,093
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GODDARD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three For the Three
Months Ended Months Ended
December 30, 2000 January 1,2000
NET SALES $1,394,873 $969,538
COST OF SALES 833,959 560,166
GROSS PROFIT 560,914 409,372
SELLING AND ADMINISTRATIVE
EXPENSES 575,092 327,369
INCOME (LOSS) FROM OPERATIONS (14,178) 82,003
OTHER INCOME (EXPENSE):
Interest expense (71,031) (12,618)
Other income, net 44,773 82,147
Loss on foreign exchange contract (75,200) -
TOTAL OTHER INCOME (EXPENSE) (101,458) 69,529
INCOME (LOSS) BEFORE TAXES (115,636) 151,532
PROVISION FOR (BENEFIT FROM)
INCOME TAXES (41,148) 62,700
NET INCOME (LOSS) ($74,488) $88,832
EARNINGS PER SHARE:
Net Income:
Basic ($0.03) $0.04
Diluted N/A $0.04
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GODDARD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Three Months Ended
December 30, 2000 January 1, 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) (74,488) 88,832
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 92,080 60,858
Deferred income taxes 12,100 6,000
Changes in assets and liabilities:
Accounts receivable (133,701) (123,603)
Inventories (28,037) (176,943)
Prepaid expenses and other (19,110) 11,944
Accounts payable 263,547 78,419
Accrued expenses (124,313) (61,068)
Income taxes receivable/payable (48,000) 11,700
Deferred compensation (13,488) (5,108)
NET CASH USED IN OPERATING
ACTIVITIES (73,410) (108,969)
CASH FLOWS FROM INVESTING ACTIVITIES:
Deferred charges 117,262 0
Property, plant and equipment (26,621) (46,585)
additions
Proceeds from sale of equipment 12,173 0
Investment in net assets of
subsidiary, net of cash (4,100,070) 0
NET CASH USED IN INVESTING
ACTIVITIES (3,997,256) (46,585)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long term debt 3,702,600 0
Repayments of long term debt (55,532) (34,947)
Financing Fees Deferred (61,231) 0
Issuance of common stock 7,500 0
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 3,593,337 (34,947)
EFFECT OF EXCHANGE RATE CHANGES ON 54,804 0
CASH
NET INCREASE (DECREASE) IN CASH (422,525) (190,501)
CASH AND EQUIVALENTS - BEGINNING 1,630,711 1,773,389
CASH AND EQUIVALENTS - ENDING $1,208,186 $1,582,888
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Supplemental Disclosures of Cash Flow Information
CASH PAID DURING THE PERIOD:
Interest $71,300 $12,618
Income taxes $0 $15,000
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GODDARD INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
December 30, 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 September 30, 2000 for a
summary of significant accounting policies and other
disclosures.
Foreign Currency Translation:
The assets and liabilities of Mack are translated into U.S.
dollars at the rates of exchange in effect at the balance sheet
dates, and revenues and expenses are translated at the average rates
for the year. Adjustments resulting from these translation are
included in Accumulated Other Comprehensive Income.
Amortization of Deferred Finance Fees:
Deferred finance fees are being amortized on the straight-line method over
the five to ten year lives of the related debt.
Amortization of Goodwill:
Goodwill, which represents the excess of the purchase price over the fair
value of assets purchased, together with transaction costs associated with
the acquisition, is being amortized on a straight line basis over thirty
years.
Derivatives:
Effective October 1, 2000, the Company adopted SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities. SFAS No. 133 requires the
Company to record all derivatives on the balance sheet at fair value. The
Company generally does not have any derivative instruments and generally
does not engage in any hedging activities. Consequently, the adoption of
SFAS No. 133 does not have a material impact on the Company.
NOTE 2. BASIS OF PRESENTATION:
The accompanying financial statements include the accounts of
Goddard Industries, Inc. (Industries) and its wholly-owned
subsidiaries, Goddard Valve Corporation (Goddard Valve), Goddard
Management Corporation (Management), and Mack Valves Pty Ltd (Mack)
acquired on November 1, 2000, (collectively Company). The results of
Mack operations are reported for the period beginning with the date
of its acquisition on November 1, 2000. All material intercompany
transactions have been eliminated.
The information shown in the consolidated financial
statements reflects all adjustments that are, in the
opinion of management, necessary for a fair presentation
of the results for the interim period.
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NOTE 3. INVENTORIES:
Consolidated inventories are comprised of:
December 30, September 30,
2000 2000
Finished goods $2,277,506 $1,811,356
Work in process 463,905 21,329
Raw materials 311,647 213,791
$3,053,058 $2,046,476
NOTE 4. LONG-TERM DEBT:
At December 30, 2000 Long-term debt consisted of the following:
LONG-TERM CURRENT
Note payable, Fleet National Bank, due in monthly
installments of approximately $17,000 plus interest at the
bank's prime rate plus 0.50% through
October, 2005. $766,667 $200,000
Revolving line of credit, Fleet National Bank, bearing
interest at the bank's prime rate plus 0.25%,
due in February 2003. 1,100,000 -
Note payable, National Australia Bank, due in
quarterly installments of approximately A$71,000
($40,000) including interest at 8.85% through
November 2005 (Denominated in AUD). 552,912 114,288
Revolving line of credit, National Australia Bank,
current rate of 8.55% through October 2005.
Commencing November 1, 2005 quarterly payments
of principal plus interest in amounts sufficient
to amortize the then outstanding balance by
October 31, 2010. Interest may not exceed 9.55%
for the life of the loan.
(Denominated in AUD). 1,000,800 -
Capital lease obligations for machinery, with interest
imputed at the rate of approximately 8.5% - 28,151
Capital lease obligations for machinery.
(Denominated in AUD). 9,204 32,496
3,429,583 $374,935
All of the above bank debt is secured by substantially all assets of the
Company.
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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:
December 30, September 30,
2000 2000
Deferred tax asset
Deferred compensation $ 207,000 $ 207,000
Capital loss carry forward 167,700 167,700
Inventory valuation 51,200 51,200
Loss on foreign currency contract - 18,000
Accrued salaries and long service leave 102,020 7,500
Bad debts 8,100 8,100
Net operation loss carry forward 5,900 -
Other 4,448 -
Gross deferred tax 546,368 459,500
Deferred tax liabilities
Depreciation 102,800 102,800
Currency translation 53,000 -
Gross deferred tax liability 155,800 102,800
390,568 356,700
Less valuation allowance (167,700) (167,700)
$ 222,868 $ 189,000
Management has established a valuation allowance against the
deferred tax asset attributable to the capital loss carry forward.
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,
no action other than periodic monitoring is required.
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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 December 30, 2000
Loss Common Shares EPS
Basic EPS:
Income available to common
shareholders ($74,488) 2,145,238 ($.03)
Diluted EPS are not applicable for a period in which a loss is reported.
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
NOTE 8. ACQUIRED BUSINESS:
On November 1, 2000, the Company acquired substantially all of the assets
of Mack Valves Pty. Ltd. (Mack) of Melbourne, Australia for a purchase
price of $3,614,900. The acquisition was financed through secured credit
facilities furnished by Fleet National Bank and National Australia Bank
Limited, totaling approximately $3,668,100. The Company acquired net assets
valued at $1,359,500. The excess of purchase price plus transaction costs
over the fair value of the assets acquired (Goodwill) was approximately
$2,772,600 and is being amortized on a straight-line basis over 30 years. In
addition, contingent consideration of approximately $418,000 in cash and
$221,000 in non-qualified stock options will be required if Mack achieves
various sales levels during the forthcoming five years. Such payments, if any,
will be added to Goodwill and amortized over its remaining life.
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Note 9. FOREIGN CURRENCY TRANSACTION:
In connection with the transaction described in Note 8, the company
entered into a foreign currency exchange contract to acquire A$4,000,000,
to fix the amount of its future investment in US dollars. Losses resulting
from currency fluctuations approximated $75,000 (pre-tax) during the 3 months
ended December 30, 2000 and were attributable to the decline in the value of
the Australian dollar in relation to the U.S. dollar. All losses associated
with this contract have been recognized in current earnings.
NOTE 10. SEGMENT INFORMATION:
The company conducts operations through two business
segments, Goddard Valve and Mack, that are established
along the geographic lines of the Western Hemisphere and
Asia/Pacific, respectively.
Summarized segment financial information for the three
months ended December 30, 2000 is as follows:
Goddard Valve Mack Total
(two months)
Sales to external
Customers $795,501 $599,372 $1,394,873
Operating profit
(loss) (52,380) 38,202 (14,178)
Long-lived
Assets 1,319,894 626,519 1,946,413
Total assets $6,081,363 $4,453,109 $10,534,472
For the three months ended January 1, 2000, the company
conducted its operations through only one segment.
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PART I - FINANCIAL INFORMATION
Item 2 - MANAGEMENT DISCUSSION AND ANALYSIS
ACQUISITION OF MACK VALVES PTY LTD
On November 1, 2000, the Company acquired substantially all the assets of Mack
Valves Pty Ltd of Melbourne, Australia for a price of approximately
$3,614,900. In its last full year of operations prior to the acquisition, the
revenues of Mack Valve were approximately $4,407,000. (Details of the
transaction can be found in Note 8 to the financial statements.)
Only two months of Mack Valves' results are included in the Consolidated
performance reported herein, whereas the results for this year's first quarter
include a full three months of Goddard Valve Corporation, the Company's US
subsidiary. The results of last year's first quarter contain only the results
of Goddard Valve Corporation, since Mack Valves had not yet been acquired.
RESULTS OF OPERATIONS
Net sales for the quarter ended December 30, 2000 were $1,395,000 with a net
loss $74,000, or $.03 per share. This compared with net sales of $970,000 and
net income of $89,000, or $.04 per share, for the same period last year. Results
for the quarter ended December 30, 2000 include a net loss of $44,000 ($75,000
pretax),or $.02 per share from a foreign currency contract entered into by the
Company in September 2000 in connection with its anticipated November 1, 2000
purchase of the assets of Mack Valves Pty Ltd as described in Note 8 "Acquired
Business."
New orders received in the quarter ended December 30, 2000 were 33% higher
than for the same period last year, with the increase substantially because of
the addition of Mack Valves. Goddard Valve's orders were 28% lower than the
same quarter last year, but were 8% higher than the fourth quarter of 2000.
Management believes that Goddard Valve's order intake continues to reflect the
industry's low level of equipment order placement, but the increase over the
most recent quarter is a promising sign. In addition, during the last year,
Goddard Valve concluded contracts with two major industrial gas companies to
supply selected valves on a global basis and has been selected to supply a
third with a broad range of valves in the North American markets. New orders
in the first quarter reflect only small amounts of orders from these
contracts.
At December 30, 2000, the backlog of orders was 43% higher than at the end of
last year's first quarter. The substantial increase is largely because of the
addition of the Mack Valve backlog, since Goddard Valve's backlog experienced
a decline of 11%.
The loss in the first three months of the year compared to last year's profit
was a result of a combination of factors including a lower gross profit rate,
SG&A expenses which were a higher percent of sales than last year, and the
beginning of interest costs and goodwill amortization resulting from the Mack
Valves acquisition. The lower gross profit rate was primarily the result of
Goddard Valve's higher overhead due to lower volume. SG&A costs are higher at
Goddard Valve versus last year because of higher sales management, financial
management and Research and Development Costs.
-12-
LIQUIDITY AND CAPITAL RESOURCES
The acquisition of Mack Valves was financed through secured credit facilities
amounting to approximately $3,668,100 furnished by Fleet National Bank and
National Australia Bank Limited. At December 30, 2000, long term debt equaled
$3,444,100. The Company believes that it has sufficient liquidity generated
from operations to handle normal working capital and debt service requirements
of the business.
FORWARD LOOKING INFORMATION
Information in this report 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", "is a promising
sign", 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 that
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 to adequately integrate the operations of new acquisitions, 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 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.
(b) On November 15, 2000 the Company filed a Form 8-K
regarding its November 1, 2000 purchase of
substantially all of the assets of Mack Valves,
Pty Ltd. On January 12, 2001 the Company filed a
Form 8-K/A to provide financial information
regarding the same transaction.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of1934, the Registrant has duly caused this amendment to a report to be
signed on its behalf by the undersigned thereunto duly authorized.
Dated as of May 21, 2001
GODDARD INDUSTRIES, INC.
By:/s/Salvatore J. Vinciguerra
--------------------------------
Salvatore J. Vinciguerra
President,
Chief Executive Officer
and Chief Financial Officer
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