-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NFEBoogaXVQUNk/Z0dWA1c0sOrKjX2eoMW7TOQA6ygkBk/fqTcRq7M1IGIX533M/ fYRxqM0CNkwu9e+Fa4zuvA== 0000041980-99-000003.txt : 19990519 0000041980-99-000003.hdr.sgml : 19990519 ACCESSION NUMBER: 0000041980-99-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990403 FILED AS OF DATE: 19990518 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GODDARD INDUSTRIES INC CENTRAL INDEX KEY: 0000041980 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 042268165 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-02052 FILM NUMBER: 99629645 BUSINESS ADDRESS: STREET 1: 705 PLANTATION ST CITY: WORCESTER STATE: MA ZIP: 01605 BUSINESS PHONE: 5088522435 MAIL ADDRESS: STREET 1: P O BOX 165 CITY: WORCESTER STATE: MA ZIP: 01613-0765 10QSB 1 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 3, 1999 __ 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 3, 1999 Common Stock, $.01 par value 2,130,766 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 3, 1999 and October 3, 1998 3 Consolidated Statement of Income - Six Months Ended April 3, 1999 and March 31, 1998 4 Consolidated Statement of Cash Flows - Six Months Ended April 3, 1999 and March 31, 1998 5 Notes to Consolidated Financial Statements 6 Item 2 Management Discussion and Analysis 10 PART II - OTHER INFORMATION Item 6 Exhibits and Reports on Form 8-K 12 -2- GODDARD INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS April 3, October 3, 1999 1998 (UNAUDITED) AUDITED ASSETS (ALL PLEDGED, NOTE 4) CURRENT ASSETS: Cash $ 115,185 $ 283,473 Accounts receivable, net of allowances 1,145,868 1,174,946 Inventories (Note 3) 3,489,287 3,410,767 Prepaid expenses 45,822 27,184 Refundable taxes on income 16,542 92,723 Deferred income taxes (Note 5) 115,800 111,000 TOTAL CURRENT ASSETS 4,928,504 5,100,093 PROPERTY, PLANT AND EQUIPMENT, at cost 4,775,452 4,694,485 Less - Accumulated depreciation -3,212,691 - -3,079,727 1,562,761 1,614,758 OTHER ASSETS: Excess of cost of investment in subsidiaries over equity in net assets acquired 8,990 10,868 Deferred income taxes - long term(Note 5)135,000 131,000 TOTAL OTHER ASSETS 143,990 141,868 TOTAL ASSETS $6,635,255 $6,856,719 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt (Note 4) $ 152,300 $ 184,000 Accounts payable 323,378 289,775 Accrued expenses 205,969 457,406 Accrued environmental costs (Note 6) - 4,648 Deferred compensation 60,000 42,500 TOTAL CURRENT LIABILITIES 741,647 978,329 LONG-TERM DEBT, net of current maturities (Note 4) 76,354 377,515 DEFERRED COMPENSATION 491,000 508,500 SHAREHOLDERS' EQUITY: Common stock - par value $.01 per share, authorized 3,000,000 shares, issued and outstanding 2,130,766 shares (2,129,982 shares at October 3, 1998) 21,308 21,299 Additional paid-in capital 479,286 477,923 Retained earnings 4,825,660 4,493,153 TOTAL SHAREHOLDERS'EQUITY 5,326,254 4,992,375 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,635,255 $6,856,719 -3- GODDARD INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) April 3, 1999 March 31, 1998 For The Three For the Six For The Three For The Six Months Ended Months Ended Months Ended Months Ended NET SALES $2,439,288 $4,831,459 $2,369,983 $4,899,247 COST OF SALES 1,544,905 3,064,627 1,513.248 3,317,320 GROSS PROFIT 894,383 1,766,832 856,735 1,761,927 SELLING AND ADMINISTRATIVE ADMINISTRATIVE EXPENSES 592,174 1,186,407 581,526 1,144,503 INCOME FROM OPERATIONS 302,209 580,425 275,209 617,424 OTHER INCOME (EXPENSE): Interest expense -16,662 -24,567 -27,088 - -44,892 Other income, net 4,742 8,749 6,367 14,652 TOTAL OTHER INCOME (EXPENSE) -11,920 -15,818 -20,721 - -30,240 INCOME BEFORE INCOME TAXES 290,289 564,607 254,488 587,184 PROVISION FOR INCOME TAXES 119,700 232,100 105,200 241,200 NET INCOME (loss) $170,589 $332,507 $149,288 $345,984 EARNINGS PER SHARE (Note 7) Basic $0.08 $0.16 $0.07 $0.16 Diluted $0.08 $0.16 $0.07 $0.16 -4- GODDARD INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED April 3, March 31, 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $332,507 $345,984 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 134,842 121,884 Deferred income taxes -8,800 - -6,300 Changes in assets and liabilities: Accounts receivable 29,078 128,328 Refundable taxes on income 76,181 - - Inventories -78,520 - -225,822 Prepaid expenses and other -18,638 - -32,586 Accounts payable 33,603 176,199 Accrued expenses -251,437 - -175,469 Accrued environmental liability -4,648 - -19,238 Income taxes payable - - -30,875 Total Adjustments -88,339 - -63,879 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 244,168 282,105 CASH FLOWS FROM INVESTING ACTIVITIES: Property,plant and equipment additions -80,967 - -192,136 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common shares 1,372 2,372 Payment of Dividends - - -63,859 Increase in long-term debt 880,000 1,776,000 Repayments of long-term debt -1,212,861 - -1,726,305 NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES -331,489 - -11,792 NET INCREASE (DECREASE) IN CASH -168,288 78,177 CASH AND EQUIVALENTS - BEGINNING 283,473 82,943 CASH AND EQUIVALENTS - ENDING $115,185 $161,120 CASH PAID DURING THE PERIOD: Interest $ 24,528 $ 42,913 Income taxes $165,000 $278,375 -5- GODDARD INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 3, 1999 (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 3, 1998 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: April 3, October 3, 1999 1998 Finished goods $2,926,178 $2,847,658 Work in process 139,945 139,945 Raw materials 423,164 423,164 $3,489,287 $3,410,767 The following factors were taken into consideration in determining inventory values: Goddard Valve Corp. - April 3, 1999 - $2,062,578. (estimated) and October 3, 1998 - $2,066,224. Interim inventories were valued by management using the gross profit method. Webstone Company, Inc. - April 3, 1999 - $1,426,709. (estimated) and October 3, 1998 - $1,344,543. Interim inventory was valued by management using the gross profit method. Total inventory is comprised of finished goods. NOTE 4. LONG-TERM DEBT The Company has available a revolving line of credit totaling $1,750,000 bearing interest at the greater of (i) prime plus 1/4% or (ii) the Federal Funds Effective Rate plus 1 1/4% per annum. On April 3, 1999 the effective interest rate was 8.25%. The agreement expires March 31, 2001 and is secured by all property and assets. Advances are restricted by certain limitations on eligible receivables and inventories. continued -6- LONG-TERM OBLIGATIONS (continued) The credit agreement contains a number of covenants, the most restrictive of which relate to working capital, tangible net worth, and profitability levels, and restrict payment of cash dividends to 10% of the immediately preceding year's net income before taxes. At April 3, 1999 long-term obligations consisted of the following: LONG-TERM CURRENT Capital lease obligations for machinery, payable in monthly installments of $12,080, through 2000, with imputed interest rate of approximately 8.5% $ 76,354 $152,300 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 3, October 3, 1999 1998 Deferred tax asset Deferred compensation $ 220,400 $ 220,400 Inventory valuation 69,400 68,600 Accrued salaries 9,300 9,300 Environmental matters 1,900 1,900 Bad debts 18,100 14,100 319,100 314,300 Depreciation 68,300 72,300 $ 250,800 $ 242,000 Management does not believe that any valuation allowance is necessary. -7- NOTE 6. ENVIRONMENTAL MATTER The results of a site assessment at the Company's headquarters in 1987 revealed that there may have been a release or threat of release of oil or hazardous materials 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). In 1995, the Company received a Tier 1 Transition Classification and Permit Statement Cover Letter designating the site as a Tier 1C Site under the Massachusetts Contingency Plan. Those response actions culminated in the filing of a Class "C" Response Action Outcome Statement with the DEP in September 1998. Based upon the information presently available, periodic monitoring is required, the cost of which is not expected to be significant. NOTE 7. EARNING PER SHARE: The following data show the amounts used in computing earnings per share (EPS) and the effects on income and the weighted average number of shares of dilutive potential common stock. Six Months ended April 3, 1999 Income Common Shares EPS Basic EPS: Income available to common shareholders $332,507 2,129,999 $0.16 Dilutive effect of potential common Stock: Stock options - 12,588 Diluted EPS: Income available to common shareholders after assumed exercise of dilutive securities $332,507 2,142,587 $0.16 Six Months ended March 31, 1998 Income Common Shares EPS Basic EPS: Income available to common shareholders $345,984 2,127,641 $0.16 Dilutive effect of potential common Stock: Stock options - 43,546 Diluted EPS: Income available to common shareholders after assumed exercise of dilutive securities $345,984 2,171,187 $0.16 -8- NOTE 7. EARNING PER SHARE: (continued) Quarter ended April 3, 1999 Income Common Shares EPS Basic EPS: Income available to common shareholders $170,589 2,130,008 $0.08 Dilutive effect of potential common Stock: Stock options - 15,821 Diluted EPS: Income available to common shareholders after assumed exercise of dilutive securities $170,589 2,145,829 $0.08 Quarter ended March 31, 1998 Income Common Shares EPS Basic EPS: Income available to common shareholders $149,288 2,128,655 $0.07 Dilutive effect of potential common Stock: Stock options - 43,546 Diluted EPS: Income available to common shareholders after assumed exercise of dilutive securities $149,288 2,172,201 $0.07 -9- PART I - FINANCIAL INFORMATION Item 2 - MANAGEMENT DISCUSSION AND ANALYSIS Sales improved by 3% and income by 14% for the three months ended April 3, 1999 when compared with the same quarter last year. Consolidated net sales for this second quarter were $2,439,300 with net income of $170,600, or $.08 per share, compared with last year's net sales of $2,370,000 and net income of $149,300, or $.07 per share. During this period, net sales at the Webstone division increased by 17% while Valve division net sales decreased by 6% when compared to last year. Improvements in net income were the result of higher gross margins year over year, with only slight increases in selling and administrative expenses. For the six months ended April 3, 1999, net sales were $4,831,400 with net income of $332,500, or $.16 per share, compared with net sales of $4,899,200 and net income of $346,000, or $.16 per share, for the same period in fiscal 1998. The drop in sales for the six months of 1.4% was the combined net result of an increase at the Webstone division of 11% and a decline for the Valve division of 9%. Sale improvements at Webstone reflect the success of the Outback retail operation begun in March of last year. Increases in sales at Outback offset declines in sales at the wholesaling operation year over year. The sales declines experienced at the Valve division for the last six to eight quarters have now begun to moderate. There have been signs that the bottom of the decline in the industrial gas business may have been reached. Many indicators are currently pointing to improvements in Asian economies and the semiconductor industry, both of which have been important contributors to declines in air separation plant projects. Despite these promising signs, it was necessary to reduce the Valve division work force during the quarter to bring expenses in line with a lower level of sales. During this quarter, the Valve division made important improvements in its engineering capabilities by fully upgrading the Company's computer CAD systems to state of the art computers, and contracting to implement an advanced 3D solids modeling package, Pro Engineer. These improvements are expected to improve lead times for new product introduction and customer designs, as well as to reduce the cost of maintaining critical manufacturing and engineering documentation. Liquidity remains strong, as operations generated close to $250,000. Long-term debt was further reduced by $300,000 in the first six months of this year, and although availability under the line of credit remains, the Company has not drawn upon it within this year. Long term obligations are primarily leases against capital equipment. During March of 1999, preparations to be Y2K compliant were completed at the Valve division. All systems, computers, and other electronic equipment have been tested and are deemed satisfactory to pass into the new millennium. - 10 - Item 2 - MANAGEMENT DISCUSSION AND ANALYSIS (continued) The Company's Webstone Division will be converting to a Year 2000 compliant hardware and software package rather than upgrading its existing software. The Company has selected a software system which will be implemented by the fourth quarter of fiscal 1999. As a contingency plan for converting to the new system, the Webstone Division's purchasing system, the only system that uses dates more than one month into the future, can be upgraded in a matter of weeks. The Company's results of operatings have not been materially effected by seasonablity. FORWARD LOOKING INFORMATION Information contained in this Form 10-QSB contains 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. - 11 - 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 April 3, 1999. -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 17, 1999 GODDARD INDUSTRIES, INC. By:/s/Salvatore J. Vinciguerra -------------------------------- - --- Salvatore J. Vinciguerra, President EX-27 2
5 3-MOS 6-MOS OCT-02-1999 OCT-02-1999 APR-03-1999 APR-03-1999 0 115,185 0 0 0 1,189,768 0 43,900 0 3,489,287 0 4,928,504 0 4,775,452 0 3,212,691 0 6,635,255 0 741,647 0 0 0 0 0 0 0 21,308 0 5,304,946 0 6,635,255 2,439,288 4,831,459 2,439,288 4,831,459 1,544,905 3,064,627 592,174 1,186,407 0 0 3,000 6,000 16,662 25,567 290,289 564,607 119,700 232,100 0 0 0 0 0 0 0 0 170,589 332,507 .08 .16 .08 .16
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