-----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, TLv2SLDz1llWPXvbvbT+SIxl1WSuGZJQmmZVoak7/ZS4R4Cp5t8co+3dh4IrjYTK Z/8eKhfYvqf2rgEpXXJF2g== 0000041980-00-000007.txt : 20010123 0000041980-00-000007.hdr.sgml : 20010123 ACCESSION NUMBER: 0000041980-00-000007 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001229 DATE AS OF CHANGE: 20010109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GODDARD INDUSTRIES INC CENTRAL INDEX KEY: 0000041980 STANDARD INDUSTRIAL CLASSIFICATION: 3490 IRS NUMBER: 042268165 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-02052 FILM NUMBER: 1500009 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 10-K 1 0001.txt - - - - - - - - - - - - - - - - - - - - 34 - SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB (Mark One) [X] Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Fiscal Year Ended September 30, 2000 or [ ] Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition Period from to Commission File Number 0-2052 GODDARD INDUSTRIES, INC. (Name of Small Business Issuer as Specified in Its Charter) Massachusetts 04-2268165 (State or Other Juris- (I.R.S. Employer diction of Incorporation Identification No.)- or Organization) 705 Plantation Street, Worcester, Massachusetts 01605 (Address of Principal Executive Offices) (Zip Code) Issuer's Telephone Number, Including Area Code: (508) 852- 2435 Securities registered under Section 12(b) of the Act: Title of Each Class Name of Each Exchange On Which Registered None N/A Securities registered under Section 12(g) of the Exchange Act: Common Stock $.01 par value (Title of class) Check whether the issuer: (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 Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and if no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB [ X ] The registrant's net revenues for its most recent fiscal year are $3,812,737. The aggregate market value of the registrant's Common Stock, par value $.01 per share, held by non-affiliates of the registrant at December 26, 2000 was approximately $1,267,391, based on the mean of the high and low sale prices on that date as reported by the OTC Bulletin Board. As of December 26, 2000, there were outstanding 2,147,271 shares of Common Stock, par value $.01 per share. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant's Proxy Statement involving the election of directors, which is expected to be filed within 120 days after the end of the registrant's fiscal year, are incorporated by reference in Part III of this Report. Transitional Small Business Disclosure Format: Yes No X PART I ITEM 1. Business. General. Goddard Industries, Inc. (which together with its wholly owned subsidiaries is hereinafter referred to as the "Company") is engaged primarily in the design, manufacture, distribution and sale of valves for industrial and commercial use. The Company is a Massachusetts corporation organized in 1959. Its executive offices are located at 705 Plantation Street, Worcester, Massachusetts 01605. The Company's Goddard Valve Corporation subsidiary (Goddard Valve) designs, manufactures and sells cryogenic gate, globe and check valves and control devices required for the handling of liquefied oxygen, nitrogen, liquefied natural gas, and other liquefied gases. Additionally, the Company has developed a manifold system to allow addition of controls to a cryogenic tank as a single unit. The principal markets for Goddard Valve's cryogenic products historically have been air separation companies and manufacturers of cryogenic tanks and transport trailers. In more recent years, markets for special cryogenic valves have developed for use on tanks required by the semi-conductor manufacturing and medical technology industries. Goddard Valve distributes its cryogenic valves domestically through independent sales representatives, as well as selling directly to customers in the U.S., Canada, Europe and Asia. Two years ago, the Company's Board of Directors approved a strategic growth plan which would focus the Company's resources on its strengths in valve technology and manufacturing, particularly in cryogenic valves. The plan called for disposition of all non-manufacturing assets and investment in product lines and businesses which would expand the Company's position in the cryogenic and industrial valve markets throughout the world. As the first step in this process, the Company sold its plumbing supplies distribution business (Webstone Company, Inc.) in July 1999 for approximately $1,789,000 to a related party. See note 15 to the financial statements. At the same time, the Company began to actively search for acquisition candidates which fit its new strategy. The first acquisition was completed on November 1, 2000 with the purchase of the assets of Mack Valves Pty Ltd (Mack Valves) of Melbourne, Australia. Completed after the end of the fiscal year 2000, this acquisition is expected to have a significant impact on the Company's business in the future. Mack Valves is located in Melbourne, Australia, and has sales offices in Queensland, New South Wales, Western Australia, and South Australia, with distributors throughout Southeast Asia. Mack Valves produces a range of cryogenic valves, and a range of water, steam, fire service, and industrial valves. Their cryogenic valve line is largely complementary to that of Goddard Valve. Management believes that Mack Valves has a dominant share of the Australian market for its full range of products and a significant position in Southeast Asia. See Note 16 to the financial statements for further information on the acquisition of Mack Valves. (Except as the context otherwise indicates, references in this Form 10-KSB to the "Company" for periods prior to November 1, 2000 do not include Mack Valves.) Sources of Supply. Raw materials for Goddard Valve and Mack Valves consist of stainless steel, aluminum, bronze and cast iron castings and bar stock, which are available from a variety of regular and competitive suppliers. The Company does not anticipate difficulty in obtaining sufficient raw materials for that business. Dependence upon Principal Customers. During fiscal 2000 Goddard Valve sold a substantial amount of its products to two customers which are users or manufacturers of cryogenic vessels. One customer accounted for 24% of its cryogenic valve business, up from 8% in fiscal 1999, and a second customer for 20% of its cryogenic business, down from 23% in fiscal 1999. Management believes that these shifts are representative of changes to the industrial gas industry, as industrial gas companies and equipment suppliers re-evaluate their sourcing policies, increasingly searching for low cost suppliers who have the ability to provide products on a global basis. Despite the decline in its sales in recent years, management believes that Goddard Valve is well positioned to improve its position in the industrial gas industry as a result of its strategy of product and geographic expansion. However, any loss or significant decrease in business from its principal customers would have a materially adverse effect on the business of the Company. Backlog. The dollar amount of backlog of orders believed to be firm for Goddard Valve was approximately $329,000 as of the end of the 2000 fiscal year, compared with approximately $230,000 as of the end of the 1999 fiscal year and $886,000 at the end of fiscal 1998. The higher level of backlog at the end of fiscal 2000 reflects a moderate buildup in orders with delivery dates beyond the end of the fiscal year when compared with the end of fiscal 1999. No part of the backlog is seasonal. Backlog varies according to business conditions within the industry, and all backlog is expected to be shipped within the current fiscal year. Competition. All aspects of the Company's business are highly competitive. The Company believes there are between six and eight principal competitors in the cryogenic valve business. Goddard Valve competes on the basis of product performance, dependability, and price. In the last year, foreign competitors have been more aggressive in pursuing business in the United States. The Company believes that Goddard Valve's competitive position within that industry is strong, although there can be no assurance that that situation will continue. Research and Development. During fiscal year 2000, the Company spent approximately $296,000 or 8% of sales, and had six employees working full or part time on Company-sponsored research and development of cryogenic valves. These R & D expenditures were made on new products and refreshment of existing products. Management believes that continued expenditure in R & D is vital to the Company's future and has elected to continue R & D projects despite the decline in revenues. During the previous year the Company spent approximately $255,000 or 5% of sales for research and development. (The increase over years prior to 1998 is due in part to a change in the method of accounting for overhead.) The Company has obtained a number of patents and has additional patent applications pending with respect to certain of the products of Goddard Valve. There can be no assurance that any of the pending patent applications will be granted or that existing patents will be enforceable. While the Company believes the patents have value, it believes that the success of Goddard Valve depends more upon the technical competence and manufacturing skills of its employees than upon patents. Employees. As of December 20, 2000, the Company had a total of 99 employees, all of whom were full time employees of the Company. This includes 68 employees added through the acquisition of Mack Valves on November 1, 2000. ITEM 2. Properties. The Company's executive offices and the business of Goddard Valve are located at 705 Plantation Street, Worcester, Massachusetts in a one-story building owned by Goddard Valve Corporation on a main thoroughfare. The building has approximately 37,000 square feet: a 27,000 square foot masonry structure erected in 1961 and a 10,000 square foot steel structure added in 1997. The Company leases approximately 15,000 square feet to Webstone Company, Inc., pursuant to a lease with terms that were negotiated on an arms-length basis. The Company believes that the facility is adequate to meet Company needs for the foreseeable future. The Company believes that its existing facilities and equipment are well maintained and in good operating condition. Subsequent to the end of the fiscal year, the Company leased 33,000 square feet of space in Melbourne, Australia, which houses the headquarters and manufacturing facilities of Mack Valves. In addition, its four sales offices are also leased. ITEM 3. Legal Proceedings. In 1995 the Massachusetts Department of Environmental Protection ("DEP") designated the Company's facility at 705 Plantation Street, Worcester as a Tier 1C Site under the Massachusetts Contingency Plan as a result of a prior release of hazardous materials on the site. The Company was required to conduct response actions required under the Massachusetts Contingency Plan. These 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, no further corrective response actions are required; however, the Company must continue to monitor the site and file reports of the monitoring results with the DEP. ITEM 4. Submission of Matters to a Vote of Security Holders. No matters were submitted to the stockholders of the Company during the fourth quarter of the 2000 fiscal year. PART II ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters. The Company's Common Stock is traded in the over-the- counter market on the OTC Bulletin Board. As of December 26, 2000, there were approximately 547 holders of the Company's Common Stock. The quarterly high and low bid prices of the Company's Common Stock for the two fiscal years ending October 2, 1999 and September 30, 2000 are set forth below. Prices are based upon quotations from the OTC Bulletin Board. FISCAL 1999 BID PRICES High Low Quarter Ending1/2/99 $2.625 $1.375 4/3/99 $2.625 $2.00 7/3/99 $2.25 $2.00 10/2/99 $2.25 $1.375 FISCAL 2000 BID PRICES High Low Quarter Ending 1/1/00 $1.875 $1.375 4/1/00 $2.375 $1.438 7/1/00 $2.50 $1.438 9/30/00 $1.938 $1.125 The preceding bid prices reflect interdealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. The Company has paid stock dividends from time to time in the past and paid a single cash dividend of $.03/share in February, 1998. ITEM 6. Management's Discussion and Analysis or Plan of Operation. Results of Operations - 2000 Compared to 1999 Net sales from continuing operations for the fiscal year ended September 30, 2000 were $3,813,000 with net income from continuing operations of $187,000 or $.09 per share. Net sales from continuing operations for the fiscal year ended October 2, 1999 were $4,976,000, with net income from continuing operations of $463,000 or $.21 per share. There were no discontinued operations or extraordinary items in fiscal year 2000; however, for the fiscal year ended October 2, 1999, net income from discontinued operations was $30,000 or $.01 per share and the sale of Webstone Company, Inc. ("Webstone") resulted in a book loss of $419,000, or $.19 per share. As a result, the consolidated net income for the fiscal year 2000 was $187,000 or $.09 per share compared with $74,000 or $.03 per share per share last year. Orders received during fiscal year 2000 amounted to $3,996,000, down 8% from orders received in fiscal year 1999. Management believes that this decline is in step with continued declines in demand for valves and equipment within the industrial gas industry. Gross profit margins from continuing operations for fiscal 2000 declined slightly to 39% from 41% in fiscal 1999 as a result of lower volumes. Selling and administrative expenses increased as a percentage of revenue to 36% during fiscal 2000, compared to 26% during fiscal 1999. The increase in selling and administrative expenses as a percentage of revenues was due in part to the lower volume of sales and in part to higher costs of Research and Development, which increased to $296,000 or 8% of sales in fiscal 2000 from $255,000 or 5% of sales in fiscal 1999. These R & D expenditures were made on new products and refreshment of its existing products. Management believes that continued expenditure in R & D is vital to the Company's future, and it has elected to continue R&D projects despite the decline in revenues. Results of Operations - 1999 Compared to 1998 Net sales from continuing operations for the fiscal year ended October 2, 1999 were $4,976,000, with net income from continuing operations of $463,000 or $.21 per share. This compared with net sales of $5,838,000 and net income of $786,000 or $.37 per share from continuing operations for the prior year. Net income from discontinued operations was $30,000 or $.01 per share in 1999 compared with a net loss of $39,000 or $.02 per share in the prior year. The sale of Webstone resulted in a book loss of $419,000, or $.19 per share. As a result, the consolidated net income for the fiscal year was $74,000 or $.03 per share, compared with $747,000 or $.35 per share in the prior year. The downward trend in orders received year-to-year from cryogenic valve operations continued throughout the year. Orders received from cryogenic valve operations in the year ended October 2, 1999 were $4,351,000 compared with $5,887,000 in fiscal year 1998. Goddard Valve's two largest customers accounted for two thirds of this decline. Management believes that those reductions are representative of reductions in spending by those customers and the remainder of the industry, and do not reflect losses in the Company's market share. Few new air separation plants are being constructed anywhere in the world, reflecting continued stagnation in new plant and equipment spending in air separation plants in Asia, coupled with extra capacity in the industry created during the 1996-1997 expansion. Gross profit margins from continuing operations for fiscal 1999 declined slightly to 41% from 44% in fiscal 1998 as a result of lower volumes. Selling and administrative expenses from continuing operations increased as a percentage of revenue to 26% during fiscal 1999, compared to 22% during fiscal 1998. The increase in selling and administrative expenses as a percentage of revenues was due in part to the lower volume as well as costs associated with the transition in the position of President and Chief Executive Officer in the first quarter of the fiscal year. Liquidity and Capital Resources Historically, the Company has funded operations through earnings and bank borrowings. On September 30, 2000, the Company had no long-term debt, and $45,000 of current maturities of capital lease obligations. On November 1, 2000, the company borrowed $3,668,000 to finance the acquisition of Mack Valves Pty Ltd. The Company believes that its working capital and cash position provide sufficient liquidity to handle the normal working capital and debt service requirements of its business. The Company's results of operations have not been materially effected by seasonality. Forward Looking Information Information in this Form 10-KSB 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. ITEM 7. Financial Statements. The financial statements and supplementary data are listed under Part III, Item 13 in this report. ITEM 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. There have not been any changes in the Company's auditors in more than two fiscal years. PART III ITEM 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act. Information required by this Item 9 is hereby incorporated in part by reference to the Company's definitive Proxy Statement which is expected to be filed by the Company within 120 days after the close of its fiscal year. Executive Officers of the Company The executive officers of the Company who are neither directors of the Company nor nominees for director are as follows: Name Age Position Executive Office Since Donald R. Nelson 65 Vice President of the 1973 Company The term of office for all officers is from one annual meeting of the Board of Directors to the next, subject to the right of the Board of Directors to remove an officer at any time, and subject to the provisions of the Employment Agreement of the Chief Executive Officer, Mr. Salvatore J. Vinciguerra. Mr. Nelson has been employed by the Company in the above- described capacity for more than five years. ITEM 10. Executive Compensation. Information required by this Item 10 is hereby incorporated by reference to the Company's definitive Proxy Statement which is expected to be filed by the Company within 120 days after the close of its fiscal year. ITEM 11. Security Ownership of Certain Beneficial Owners and Management. Information required by this Item 11 is hereby incorporated in part by reference to the Company's definitive Proxy Statement which is expected to be filed by the Company within 120 days after the close of its fiscal year. ITEM 12. Certain Relationships and Related Transactions. Information required by this Item 12 is hereby incorporated in part by reference to the Company's definitive Proxy Statement which is expected to be filed by the Company within 120 days after the close of its fiscal year. ITEM 13. Exhibits and Reports on Form 8-K. (a)(1) Financial Statements. 1. Report of Greenberg, Rosenblatt, Kull & Bitsoli, P.C. dated November 13, 2000. (See page 14 hereof.) 2. Consolidated Balance Sheet as of September 30, 2000 and October 2, 1999. (See page 16 hereof.) 3. Consolidated Statement of Income for the fifty- two weeks ended September 30, 2000, the fifty- two weeks ended October 2, 1999, and the fifty- three weeks ended October 3, 1998. (See page 17 hereof.) 4. Consolidated Statement of Stockholders' Equity for the fifty-two weeks ended September 30, 2000, the fifty-two weeks ended October 2, 1999, and the fifty-three weeks ended October 3, 1998. (See page 18 hereof.) 5. Consolidated Statement of Cash Flows for the for the fifty-two weeks ended September 30, 2000, the fifty-two weeks ended October 2, 1999, and the fifty-three weeks ended October 3, 1998. (See page 19 hereof.) 6. Notes to the Consolidated Financial Statements. (See pages 20-32 hereof.) (a)(2) Exhibits. (3) Articles of Incorporation and By-Laws: (a)(1) Restated Articles of Organization, dated March 31, 1971. (Filed as Exhibit 3 to the Company's Form 10-K for the fiscal year ended September 28, 1985.)* (a)(2) Articles of Amendment to Restated Articles of Organization, dated June 1, 1972. (Filed as Exhibit 3 to the Company's Form 10-K for the fiscal year ended September 28, 1985.)* (a)(3) Articles of Amendment to Restated Articles of Organization, dated October 11, 1985. (Filed as Exhibit 3 to the Company's Form 10-K for the fiscal year ended September 28, 1985.)* (a)(4) Articles of Amendment to Restated Articles of Organization dated March 13, 1987. (Filed as Exhibit 3 to the Company's Form 10-Q for the quarter ended March 28, 1987.)* (b)(1) By-Laws (filed as Exhibit 19 to the Company's Form 10-Q for the quarter ended March 31, 1984.)* (b)(2) By-Law Amendment dated as of September 28, 1990. (Filed as Exhibit 3(b)(2) to the Company's Form 10-K for the fiscal year ended September 29, 1990.)* (4) Instruments Defining the Rights of Security Holders: (a) Specimen certificate of common stock. (Filed as Exhibit 4(a) of Registration Statement on Form S-1 Registration No. 2-16854 of Reva Enterprises, Inc., now Goddard Industries, Inc.)* (10) Material Contracts: (a) Adoption Agreement (Non-Standardized Code 401(k) Profit Sharing Plan) dated July 31, 1991, together with related Defined Contribution Prototype Plan and Trust Agreement. (Filed as Exhibit 10(h) to the Company's Form 10-K for the fiscal year ended September 28, 1991.)* (b) Employee Stock Purchase Plan dated December 9, 1993. (Filed as Exhibit 10(h) to the Company's Form 10-KSB for the fiscal year ended October 1, 1994.)* (c) Employment Agreement between the Company and Salvatore J. Vinciguerra dated October 19, 1998. (Filed as Exhibit 10(h) to the Company's Form 10-KSB for the fiscal year ended October 3, 1998.)* (d) 1998 Equity Incentive Plan. (Filed as Exhibit 10(i) to the Company's Form 10-KSB for the fiscal year ended October 3, 1998.)*. (e) Form of Sale of Business Agreement. (Filed as Exhibit 1 to the Company's Form 8-K filed on November 15, 2000.)* (11) Statement Re Computation of Per Share Earnings. The Statement Re Computation of Per Share Earnings is set forth in Note 13 to the Company's Consolidated Financial Statements. (21) Subsidiaries of the Registrant. (Filed as Exhibit 22 to the Company's Form 10-K for the fiscal year ended September 30, 1989.)* (27) Financial Data Schedule. *Not filed herewith. In accordance with Rule 12b-23 under the Securities Exchange Act of 1934, as amended, reference is made to the documents previously filed with the Commission. (b) Reports on Form 8-K The Company filed a Current Report on Form 8-K on November 15, 2000 related to the acquisition of Mack Valves Pty Ltd of Melbourne, Australia. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GODDARD INDUSTRIES, INC. Dated: December 28, 2000 By:/s/Salvatore J. Vinciguerra Salvatore J. Vinciguerra President In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. SIGNATURE TITLE DATE /s/Salvatore J. Vinciguerra Principal Executive December 28, 2000 Salvatore J. Vinciguerra Officer /s/Kenneth Heyman Principal Financial December 26, 2000 Kenneth Heyman and Accounting Officer /s/Saul I. Reck Chairman of the Board December 24, 2000 Saul I. Reck of Directors /s/Jacky Knopp, Jr. Director December 21, 2000 Jacky Knopp, Jr. /s/Robert E. Humphryes Director December 22, 2000 Robert E. Humphreys /s/Lyle E. Wimmergren Director December 24, 2000 Lyle E. Wimmergren GODDARD INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND OCTOBER 2, 1999 Independent Auditors' Report The Shareholders and Board of Directors Goddard Industries, Inc. and Subsidiaries Worcester, Massachusetts We have audited the accompanying consolidated balance sheets of Goddard Industries, Inc. and Subsidiaries as of September 30, 2000 and October 2, 1999 and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended September 30, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As explained in Note 16, subsequent to September 30, 2000 the Company acquired substantially all the net assets of Mack Values Pty Ltd. in a business combination accounted for as a purchase. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Goddard Industries, Inc. and Subsidiaries as of September 30, 2000 and October 2, 1999 and the consolidated results of their operations and cash flows for each of the three years in the period ended September 30, 2000, in conformity with generally accepted accounting principles. /s/GREENBERG, ROSENBLATT, KULL & BITSOLI, P.C. Worcester, Massachusetts November 13, 2000 GODDARD INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2000 AND OCTOBER 2, 1999 ASSETS 2000 1999 Current assets: Cash and cash equivalents $1,630,711 $1,773,389 Accounts receivable (less allowance For doubtful accounts of $20,300 in 2000 and $17,900 ion 1999) 466,076 478,941 Inventories 2,046,476 1,924,507 Refundable income taxes 91,763 33,708 Prepaid expenses 46,920 49,550 Deferred income taxes 98,000 87,000 Total current assets 4,379,946 4,347,095 Property, plant and equipment 1,352,386 1,433,110 Other assets: Deferred charges 150,761 - - - - - - - - - - - - - - - - - - - - Deferred income taxes 73,000 92,000 Investment 250,000 250,000 Total other assets 473,761 342,000 Total assets $6,206,093 $6,122,205 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of capital lease obligations $ 44,572 $ 96,000 Accounts payable 150,040 75,380 Accrued expenses 229,419 291,336 Deferred compensation 71,280 69,000 Total current liabilities 495,311 531,716 Capital lease obligations - 44,222 Deferred compensation 446,290 476,791 Shareholders' equity: Common stock - par value $.01 per share, authorized 3,000,000 shares, issued and outstanding 2,142,271 shares in 2000 and 2,131,531 shares in 1999 21,423 21,315 Additional paid-in capital 488,398 480,713 Retained earnings 4,754,671 4,567,448 Total shareholders' equity 5,264,492 5,069,476 Total liabilities and Shareholders' equity $6,206,093 $6,122,205 GODDARD INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED SEPTEMBER 30, 2000, OCTOBER 2, 1999 AND OCTOBER 3, 1998 2000 1999 1998 Sales $3,812,737 $4,976,104 $5,838,295 Cost of sales 2,343,730 2,936,251 3,295,665 Gross Profit 1,469,007 2,039,853 2,542,630 Selling and Administrative expenses 1,355,128 1,313,644 1,266,974 Operating profit 113,879 726,209 1,275,656 Other income (expense): Interest expense -46,959 -56,464 - - - - - - - - - - - - - - - - - - - -24,621 Other income 235,303 102,432 69,774 Total other income 188,344 45,968 45,153 Income from continuing operations before income taxes 302,223 772,177 1,320,809 Income taxes: Current 107,000 283,000 480,000 Deferred 8,000 26,000 55,000 Total income taxes 115,000 309,000 535,000 Income from continuing operations 187,223 463,177 785,809 Discontinued operations: Income (loss) from operations, net of tax - 30,295 - - - - - - - - - - - - - - - - - - - -39,049 Loss on disposal, net of tax - -419,177 - - - - - - - - - - - - - - - - - - - - Loss from discontinued Operations - -388,882 - - - - - - - - - - - - - - - - - - - -39,049 Net income $187,223 $ 74,295 $746,760 Earnings per share: Continuing operations: Basic $ 0.09 $ 0.22 $ 0.37 Diluted $ 0.09 $ 0.21 $ 0.37 Net Income: Basic $ 0.09 $ 0.03 $ 0.35 Diluted $ 0.09 $ 0.03 $ 0.35 GODDARD INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY YEARS ENDED SEPTEMBER 30, 2000, OCTOBER 2, 1999 AND OCTOBER 3, 1998 Shares Additional Of common Common paid-in Retained Stock stock capital earnings Total Balance at September 27, 1997 2,126,649 $ 21,266 $ 471,511 $ 3,810,253 $ 4,303,030 Net income - - - 746,760 746,760 Dividends paid ($.03 per share) -63,860 - - - - - - - - - - - - - - - - - - - -63,860 Stock options Exercised 2,000 20 3,680 - 3,700 Stock issued under Employee stock Purchase plan 1,333 13 2,732 - 2,745 Balance at October 3, 1998 2,129,982 21,299 477,923 4,493,153 4,992,375 Net income - - - 74,295 74,295 Stock issued under employee stock purchase plan 1,549 16 2,790 - 2,806 Balance at October 2, 1999 2,131,531 21,315 480,713 4,567,448 5,069,476 Net income - - - 187,223 187,223 Stock options exercised 8,000 80 3,920 - 4,000 Stock issued under employee stock purchase plan 2,740 28 3,765 - 3,793 Balance at September 30, 2000 2,142,271 $ 21,423 $488,398 $4,754,671 $5,264,492 GODDARD INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW YEARS ENDED SEPTEMBER 30, 2000, OCTOBER 2, 1999, AND OCTOBER 3, 1998 2000 1999 1998 Operating activities: Net income $187,223 $74,295 $746,760 Adjustments to reconcile net income to net cash provided by operating activities: Income (loss) from discontinued Operations - -30,295 39,049 Loss on disposition of business - 419,177 - - - - - - - - - - - - - - - - - - - - Income from continuing operations 187,223 463,177 785,809 Depreciation and amortization 230,951 237,683 239,398 Provision for losses on accounts Receivable 2,400 2,400 - - - - - - - - - - - - - - - - - - - -1,374 Changes in assets and liabilities: Accounts receivable 10,465 45,943 142,428 Inventories -121,969 141,717 - - - - - - - - - - - - - - - - - - - -99,571 Refundable income taxes -58,055 59,015 - - - - - - - - - - - - - - - - - - - -92,723 Prepaid expenses 2,630 -27,483 5,489 Accounts payable 74,660 -47,001 - - - - - - - - - - - - - - - - - - - -118,384 Accrued expenses -61,917 -42,118 - - - - - - - - - - - - - - - - - - - -74,168 Income taxes payable - - - - - - - - - - - - - - - - - - - - - -52,660 Deferred income taxes 8,000 26,000 56,000 Deferred compensation -28,221 -5,209 - - - - - - - - - - - - - - - - - - - - Net cash provided by operating activities: 246,167 854,124 790,244 Investing activities: Property, plant and equipment Additions -150,227 -114,761 - - - - - - - - - - - - - - - - - - - -224,867 Deferred charges -150,761 - - - - - - - - - - - - - - - - - - - - - Net proceeds from disposition Of business - 1,539,324 - - - - - - - - - - - - - - - - - - - - Investment in former subsidiary - -474,567 - - - - - - - - - - - - - - - - - - - -304,405 Net cash provided by (used in) investing activities -300,988 949,996 - - - - - - - - - - - - - - - - - - - -529,272 Financing activities: Repayments of long-term debt -95,650 -183,293 - - - - - - - - - - - - - - - - - - - -143,153 Issuance of common stock 7,793 2,806 48,603 Cash dividends paid - - - - - - - - - - - - - - - - - - - - - -63,860 Net cash used in financing activities -87,857 -180,487 - - - - - - - - - - - - - - - - - - - -158,410 Net increase (decrease) in cash -142,678 1,623,633 102,562 Cash and cash equivalents - beginning 1,773,389 149,756 47,194 Cash and cash equivalents - ending $1,630,711 $1,773,389 $ 149,756 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the year: Interest $ 46,959 $ 58,538 $ 90,413 Income taxes $ 180,000 $ 282,500 $ 558,525 GODDARD INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000, OCTOBER 2, 1999 AND OCTOBER 3, 1998 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation: The consolidated financial statements include the accounts of Goddard Industries, Inc., its wholly-owned subsidiaries Goddard Valve Corporation (Valve) and Goddard Management Corporation, incorporated on July 28, 1999, and Valve's wholly-owned subsidiary, Webstone Company, Inc. (Webstone), collectively (Company). On July 2, 1999, Webstone was sold (Note 15). All material intercompany transactions have been eliminated. Fiscal Year: The Company's fiscal year ends on the Saturday nearest to September 30. The years ended September 30, 2000 and October 2, 1999 each contain 52 weeks while the year ended October 3, 1998 contains 53 weeks. Cash and Cash Equivalents: The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company's cash and cash equivalents are on deposit with financial institutions. At times, such deposits are in excess of Federal Deposit Insurance Corporation (FDIC) insurance limits. Inventories: Inventories are valued at the lower of cost or market. Cost is determined by the first-in, first-out method. Property, Plant and Equipment: Property, plant and equipment are carried at cost and depreciated using the straight-line method over the following estimated useful lives: YEARS Building and improvements 10 - 35 Machinery, equipment and tools 3 - 10 Office equipment and fixtures 5 - 10 Advertising: Advertising costs are expensed when incurred. Income Taxes: Taxes are provided for items entering into the determination of net income for financial reporting purposes, irrespective of when such items are reported for income tax purposes. Accordingly, deferred income taxes have been provided for all temporary differences. Tax credits are accounted for on the flow-through method, whereby credits earned during the year are used to reduce the current income tax provision. (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Although these estimates are based on management's knowledge of current events and actions to be undertaken in the future, they may differ from actual results. Revenue Recognition: The Company recognizes revenue when goods are shipped from its facilities. Reclassifications: Certain amounts in the 1999 and 1998 financial statements have been reclassified to conform with the 2000 presentation with no effect on previously reported net income or retained earnings. (2) INVENTORIES Inventories are comprised of the following: 2000 1999 Finished goods $ 1,811,356 $ 1,607,495 Work in process 21,329 30,646 Raw materials 213,791 286,366 $ 2,046,476 $ 1,924,507 (3) PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consists of the following: 2000 1999 Land $ 12,865 12,865 Building and improvements 927,813 913,643 Machinery, equipment and tools 3,462,252 3,363,935 Office equipment and fixtures 166,271 148,516 4,569,201 4,438,959 Accumulated depreciation (3,216,815) (3,005,849) $ 1,352,386 $ 1,433,110 Depreciation expense charged to income was approximately $231,000, $238,000, and $239,000 in 2000, 1999, and 1998, respectively. (4) CAPITAL LEASE OBLIGATIONS The Company is obligated under the following capital lease obligations for machinery and equipment: 2000 1999 Capital lease obligation, payments of $5,750 per month including interest at 8.5%, due in 2001. $ 44,572 $ 106,893 Capital lease obligation, payments of $6,807 per month included interest at 8.5%, due in 2000. - 33,329 44,572 140,222 Current maturities 44,572 96,000 $ - $ 44,222 Future minimum lease payments total $46,000 of which $1,428 represents interest. Assets directly financed through leases totaled $182,000 for 1998 and are included in property, plant and equipment. Amortization of these assets totaling $56,000 in 2000 and $47,000 in 1999 and 1998 is included in depreciation expense and accumulated depreciation. The net book value of the assets under capital leases at the end of 2000 and 1999 was approximately $368,000 and $425,000, respectively. (5) COMMON STOCK OPTIONS During the year ended September 30, 2000, the Company granted qualified options for 361,500 shares, including 50,000 shares to its President, under the 1998 Equity Incentive Plan, and non-qualified options for 5,000 shares to each non-employee director (20,000 in total). In October 1998, the Company granted qualified options for 200,000 shares to its President under the 1998 Equity Incentive Plan. This Plan provides for the grant of options for a maximum of 600,000 shares. In March 1998, the Company granted non-qualified options for 5,000 shares to each non-employee director and in varying amounts to certain employees, for an aggregate of 41,000 shares of common stock. The exercise price of each option equals the market price of the Company's stock on the date of grant and the option's maximum term is five years. (5) COMMON STOCK OPTIONS (Continued) The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: 2000 1999 1998 Dividend yield None None None Expected volatility 77.52% 75.18% 74.01% Risk-free interest rate 6.43% 6.43% 4.79% Expected lives 10 years 10 years 5 years A summary of the status of the Company's outstanding options as of September 30, 2000, October 2, 1999, and October 3, 1998 and the changes during the years ending on those dates are presented below: September 30, 2000 October 2, 1999 October 3, 1998 Weighted Weighted Weighted average average average exercise exercise exercise Shares price Shares price Shares price Outstanding at beginning of year: 303,000 $ 1.75 103,000 $ 1.97 64,000 $ 1.34 Granted 381,500 1.51 200,000 1.63 41,000 2.88 Exercised -8,000 0.50 - - -2,000 0.50 Expired or Cancelled-18,000 2.32 - - - - Outstanding at end of year 658,500 $ 1.61 303,000 $ 1.75 103,000 $ 1.97 Options exercisable At year-end 157,000 103,000 103,000 Weighted average fair value of options granted during the year $ 1.33 $ 1.35 $ 1.84 (5) COMMON STOCK OPTIONS (Continued) The following summarizes information about fixed stock options outstanding at September 30, 2000: Weighted average remaining Weighted Weighted Number contractural average Number average Exercise outstanding life exercise exercisable exercise price at 9/30/00 in years price at 9/30/00 price $ 0.50 15,000 .25 $ 0.50 15,000 $ 0.50 $1.88 29,000 1.50 $ 1.88 29,000 $ 1.88 $2.88 33,000 2.50 $ 2.88 33,000 $ 2.88 $1.63 200,000 8.00 $ 1.63 50,000 $ 1.63 $1.38 141,500 9.25 $ 1.38 20,000 $ 1.38 $2.00 50,000 9.50 $ 2.00 - $ 2.00 $1.75 90,000 9.75 $ 1.75 - $ 1.75 $1.25 100,000 9.75 $ 1.25 10,000 $ 1.25 658,500 157,000 The Company applies APB Opinion 25 in accounting for employee stock options. Accordingly, no compensation cost has been recognized. Had compensation costs been determined on the basis of FASB Statement 123 in 2000, 1999, and 1998, net income from continuing operations would have been reduced to $96,014, $422,677, and $740,545, respectively, which would have decreased basic earnings per share by $.05 in 2000 and $.02 in 1999 and 1998. Diluted earnings per share would have been decreased by $.05 in 2000, $.01 in 1999 and $.02 in 1998. (6) FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts reflected in the consolidated balance sheets for cash, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short maturities of these instruments. The investment is carried at cost, which approximates fair value. The carrying value of capital lease obligations approximates fair value since the rates and terms of these instruments are substantially equivalent to those the Company would offer or obtain at the balance sheet date. (7) INCOME TAXES The following is a reconciliation of income tax expense computed at the Federal statutory income tax rate to the provision for income taxes: 2000 1999 1998 Federal income taxes at statutory rate $ 102,800 $ 262,500 $ 449,100 State income taxes net of federal income tax benefit 18,900 48,400 82,800 Nondeductible expenses -8,900 300 2,800 Other 2,200 -2,200 300 Income taxes $ 115,000 $ 309,000 $ 535,000 The provision for income taxes is summarized as follows: 2000 1999 1998 Current: Federal $ 79,000 $ 215,000 $ 367,000 State 28,000 68,000 113,000 107,000 283,000 480,000 Deferred: Federal 6,000 20,000 42,000 State 2,000 6,000 13,000 8,000 26,000 55,000 $115,000 $ 309,000 $ 535,000 (7) INCOME TAXES (Continued) The tax effects of the principal temporary differences giving rise to the net current and noncurrent deferred tax assets totaling $171,000 in 2000 and $179,000 at October 2, 1999 are as follows: 2000 1999 Deferred tax assets: Deferred compensation $ 207,000 $ 218,300 Capital loss carryforward 167,700 167,700 Inventory valuation 51,200 45,800 Accrued salaries 7,500 6,000 Bad debts 8,100 7,200 Total gross deferred tax assets 441,500 445,000 Deferred tax liabilities: Depreciation 102,800 98,300 338,700 346,700 Valuation allowance -167,700 - 167,700 $ 171,000 $ 179,000 Management has established a valuation allowance in connection with the deferred tax asset related to the capital loss carryforward. (8) COMMITMENTS AND CONTINGENCIES Employment Agreements: In October 1998, the Board of Directors entered into an employment agreement with the Company's President requiring minimum annual payments of $140,000. The Company has a non-qualified, unfunded deferred compensation plan for the Chairman of the Board providing for payments, in the form of a joint and survivor annuity, of $60,000 for his life and, upon his death $30,000 to his spouse for her life. The payments will be adjusted annually for increases in the Consumer Price Index (CPI) since 1993 with a lump-sum payment due annually within forty-five days of the fiscal year end. As of September 30, 2000, the deferred compensation liability represents the actuarial present value of this obligation based upon the following assumptions. Interest rate 7.25% Annual increases in the CPI 3.00% Post-retirement mortality 1983 Group Annuity Table The Company has employment agreements with certain key executive officers and directors that become operative only upon a change in control of the Company without the approval of the Board of Directors. Compensation which might be payable under these agreements has not been reflected in the consolidated financial statements of the Company as of September 30, 2000, since a change in control, as defined, has not occurred. (8) COMMITMENTS AND CONTINGENCIES (Continued) 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. (9) RESEARCH AND DEVELOPMENT COSTS Research and development costs charged to operations in 2000, 1999, and 1998 were approximately $296,000, 255,000, and $196,000, respectively. (10) ADVERTISING COSTS Advertising costs charged to operations in 2000, 1999, and 1998 were approximately $29,000, $8,000, and $6,000, respectively. (11) PROFIT SHARING PLAN The Company has a profit sharing plan covering substantially all employees. The Company's profit sharing contribution is determined annually by the Board of Directors. Incorporated into the plan are the provisions of Section 401(k) of the Internal Revenue Code, which allows employees to contribute to their accounts on a pretax basis. The Company matches employee contributions up to a maximum of 25% of each employee's contribution. Total contributions by the Company amounted to approximately $49,000, $ 53,000, and $59,000 in 2000, 1999, and 1998, respectively. (12) EMPLOYEE STOCK PURCHASE PLAN The Company has a qualified employee stock purchase plan covering all employees except officers and directors. Employees participating in the plan are granted options semi-annually to purchase common stock of the Company. The number of full shares available for purchase is a function of the employee's accumulated payroll deductions at the end of each six-month interval. The option price is the lesser of 85% of the fair value of the Company's common stock on the first day of the payment period or 85% of the fair value of the Company's common stock on the last day of the payment period. As of September 30, 2000, October 2, 1999, and October 3, 1998, there were no options outstanding under the plan. (13) EARNINGS PER SHARE The following data show the amounts used in computing earnings per share from continuing operations and the effects on income and the weighted average number of shares of dilutive potential common stock. Year ended September 30, 2000 Net Common Income Shares EPS Basic EPS: Income available to common shareholders $187,223 2,133,709 $0.09 Dilutive effect of potential common Stock options - 33,792 Diluted EPS: Income available to common shareholders after assuming exercise of dilutive securities $187,223 2,167,501 $0.09 Year ended October 2, 1999 Net Common Income Shares EPS Basic EPS: Income available to common shareholders $463,177 2,130,385 $0.22 Dilutive effect of potential common Stock options - 30,733 Diluted EPS: Income available to common shareholders after assuming exercise of dilutive securities $463,177 2,161,118 $0.21 Year ended October 3, 1998 Net Common Income Shares EPS Basic EPS: Income available to common shareholders $785,809 2,128,414 $0.37 Dilutive effect of potential common Stock options - 20,445 Diluted EPS: Income available to common shareholders after assuming exercise of dilutive securities $785,809 2,148,859 $0.37 (13) EARNINGS PER SHARE (Continued) Per share amounts attributable to discontinued operations and the loss on disposal, net of tax, are as follows: 2000 1999 1998 Earnings (loss) per share: Basic Discontinued operations $ - $ 0.01 $ - - - - - - - - - - - - - - - - - - - -0.02 Loss on disposal $ - $-0.20 - - - - - - - - - - - - - - - - - - - - Diluted Discontinued operations $ - $ 0.01 $ - - - - - - - - - - - - - - - - - - - -0.02 Loss on disposal $ - $-0.19 - - - - - - - - - - - - - - - - - - - - Options for 643,500 and 80,000 common shares in 2000 and 1999, respectively, were not included in computing diluted earnings per share because their effects are antidilutive. (14) MAJOR CUSTOMERS The Company sells a majority of its products to a limited number of customers, predominantly manufacturers of cryogenic vessels. Sales, in thousands of dollars, to individual customers constituting 10% or more of total sales were as follows: 2000 1999 1998 Customer A $ 929 24% $ 382 8% $ 608 10% Customer B $ 772 20% 1,149 23% 1,724 30% (15) 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. The selling price of $1,789,324 was received in the form of $1,389,324 of cash, $250,000 of preferred stock in the Webstone Company, Inc., and a non-interest bearing loan of $150,000 due within 90 days of closing. Webstone's results are reported as a discontinued operation in the consolidated financial statements for all periods presented. The assets and liabilities of Webstone have been reported in the consolidated balance sheet as net assets of discontinued operations and are included in other assets. Webstone's discontinued operations are presented as follows: For the nine For the months ended year ended July 2, 1999 October 3, 1998 Sales $3,017,982 $3,893,947 Cost of sales 2,022,990 2,747,238 Gross profit 994,992 1,146,709 Selling and administrative expenses 943,994 1,146,862 Income (loss) from operations 50,998 - - - - - - - - - - - - - - - - - - - -153 Other income (expense): Interest expense -2,074 - - - - - - - - - - - - - - - - - - - -61,581 Other income, net 1,671 1,685 Total other expense -403 - - - - - - - - - - - - - - - - - - - -59,896 Income (loss) before income taxes (benefit) 50,595 - - - - - - - - - - - - - - - - - - - -60,049 Provision for (benefit from) income taxes 20,300 - - - - - - - - - - - - - - - - - - - -21,000 Net income (loss) $ 30,295 $ - - - - - - - - - - - - - - - - - - - -39,049 (15) DISCONTINUED OPERATIONS (Continued) Webstone's balance sheet as of October 3, 1998 is summarized as follows: ASSETS Current assets: Cash $ 133,717 Accounts receivable, net of allowance 647,662 Inventories 1,344,543 Prepaid expenses 5,116 Deferred income taxes 37,000 Total current assets 2,168,038 Property, plant and equipment 58,726 Other assets 10,869 Total assets: $ 2,237,633 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 167,394 Accrued expenses 128,600 Total current liabilities 295,994 Long-term debt 238,000 Shareholders' equity 1,703,639 Total liabilities and shareholders' equity $ 2,237,633 (16) SUBSEQUENT EVENT 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 $3,617,600 (A$6,921,000). 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 $1,362,200 (A$2,606,000). The excess of purchase price over fair value of the assets (Goodwill) was approximately $2,255,400 and will be amortized on a straight-line basis over 30 years. The final purchase price will be adjusted based upon Mack's audited balance sheet at October 31, 2000. Any difference from the calculated November 1, 2000 purchase price, together with transaction costs associated with acquiring Mack (estimated to be approximately $540,000), will be combined with Goodwill. In addition, contingent consideration of approximately $418,000 (A$800,000) in cash and $221,000 (A$422,500) 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. Assuming the acquisition had occurred on October 3, 1999, the company's net sales, net income, basic and diluted earnings per share would have been approximately $8,220,000, $128,000, $.06 and $.06, respectively, after calculating charges for amortization of goodwill and interest costs related to the acquisition totaling approximately $477,000 ($.22 and $.22 per basic and diluted share). In connection with this transaction the company entered into a foreign currency forward contract to acquire A$4,000,000 to hedge the amount of its future investment. Losses due to foreign currency fluctuations approximated $44,400 at September 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 deferred and will be included in Goodwill. As of November 1, 2000 the value of the Australian dollar had declined approximately 4.3% in relation to the U.S. dollar. Additional losses in connection with this foreign currency forward contract totaling $93,600 will be charged to Goodwill associated with the acquisition. EXHIBIT INDEX Exhibit Number Number (a)(1) Financial Statements. 1. Report of Greenberg, Rosenblatt, Kull & Bitsoli, P.C. dated November 13, 2000. (See page 14 hereof.) 2. Consolidated Balance Sheet as of September 30, 2000 and October 2, 1999. (See page 16 hereof.) 3. Consolidated Statement of Income for the fifty- two weeks ended September 30, 2000, the fifty- two weeks ended October 2, 1999, and the fifty- three weeks ended October 3, 1998. (See page 17 hereof.) 4. Consolidated Statement of Stockholders' Equity for the fifty-two weeks ended September 30, 2000, the fifty-two weeks ended October 2, 1999, and the fifty-three weeks ended October 3, 1998. (See page 18 hereof.) 5. Consolidated Statement of Cash Flows for the for the fifty-two weeks ended September 30, 2000, the fifty-two weeks ended October 2, 1999, and the fifty-three weeks ended October 3, 1998. (See page 19 hereof.) 6. Notes to the Consolidated Financial Statements. (See pages 20-32 hereof.) (a)(2) Exhibits. (3) Articles of Incorporation and By-Laws: (a)(1) Restated Articles of Organization, dated March 31, 1971. (Filed as Exhibit 3 to the Company's Form 10-K for the fiscal year ended September 28, 1985.)* (a)(2) Articles of Amendment to Restated Articles of Organization, dated June 1, 1972. (Filed as Exhibit 3 to the Company's Form 10-K for the fiscal year ended September 28, 1985.)* (a)(3) Articles of Amendment to Restated Articles of Organization, dated October 11, 1985. (Filed as Exhibit 3 to the Company's Form 10-K for the fiscal year ended September 28, 1985.)* (a)(4) Articles of Amendment to Restated Articles of Organization dated March 13, 1987. (Filed as Exhibit 3 to the Company's Form 10-Q for the quarter ended March 28, 1987.)* (b)(1) By-Laws (filed as Exhibit 19 to the Company's Form 10-Q for the quarter ended March 31, 1984.)* (b)(2) By-Law Amendment dated as of September 28, 1990. (Filed as Exhibit 3(b)(2) to the Company's Form 10-K for the fiscal year ended September 29, 1990.)* (4) Instruments Defining the Rights of Security Holders: (a) Specimen certificate of common stock. (Filed as Exhibit 4(a) of Registration Statement on Form S-1 Registration No. 2-16854 of Reva Enterprises, Inc., now Goddard Industries, Inc.))* (10) Material Contracts: (a) Adoption Agreement (Non-Standardized Code 401(k) Profit Sharing Plan) dated July 31, 1991, together with related Defined Contribution Prototype Plan and Trust Agreement. (Filed as Exhibit 10(h) to the Company's Form 10-K for the fiscal year ended September 28, 1991.)* (b) Employee Stock Purchase Plan dated December 9, 1993. (Filed as Exhibit 10(h) to the Company's Form 10-KSB for the fiscal year ended October 1, 1994.)* (c) Employment Agreement between the Company and Salvatore J. Vinciguerra dated October 19, 1998. (Filed as Exhibit 10(h) to the Company's Form 10-KSB for the fiscal year ended October 3, 1998.)* (d) 1998 Equity Incentive Plan. (Filed as Exhibit 10(i) to the Company's Form 10-KSB for the fiscal year ended October 3, 1998.)*. (e) Form of Sale of Business Agreement. (Filed as Exhibit 1 to the Company's Form 8-K filed on November 15, 2000.)* (11) Statement Re Computation of Per Share Earnings. The Statement Re Computation of Per Share Earnings is set forth in Note 13 to the Company's Consolidated Financial Statements. (21) Subsidiaries of the Registrant. (Filed as Exhibit 22 to the Company's Form 10-K for the fiscal year ended September 30, 1989.)* (27) Financial Data Schedule. EX-27 2 0002.txt
5 YEAR YEAR YEAR SEP-30-2000 OCT-2-1999 OCT-3-1998 SEP-30-2000 OCT-2-1999 OCT-3-1999 1,630,711 1,773,389 0 0 0 0 466,076 478,941 0 20,321 17,921 0 2,046,476 1,924,507 0 4,379,946 4,347,095 0 4,569,201 4,438,959 0 3,216,815 3,005,849 0 6,206,093 6,122,205 0 495,311 531,716 0 0 0 0 0 0 0 0 0 0 21,423 21,315 0 0 0 0 6,206,093 6,122,205 0 3,812,737 4,976,104 5,838,295 3,812,737 4,976,104 5,838,295 2,343,730 2,936,251 3,295,665 1,355,128 1,313,644 1,266,974 0 0 0 0 0 0 46,959 56,464 24,621 302,223 772,177 1,320,809 115,000 309,000 535,000 187,223 463,177 785,809 0 (388,882) (39,049) 0 0 0 0 0 0 187,223 74,295 746,760 0.09 0.03 0.35 0.09 0.03 0.35
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