-----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, KXAF1LoKDzN7XfIlp7M7zljyJ12roAkr/2zol7Aq3IokWuTdURPD5xS88auXhZIP NQigD4j4hJk16HMPmhsfNQ== 0000041980-97-000009.txt : 19970912 0000041980-97-000009.hdr.sgml : 19970912 ACCESSION NUMBER: 0000041980-97-000009 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19970903 SROS: NASD 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/A SEC ACT: SEC FILE NUMBER: 000-02052 FILM NUMBER: 97674920 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/A 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 June 30, 1997 __ 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 June 30, 1997 Common Stock, $.01 par value 2,124,369 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 - June 30, 1997 and September 28, 1996 3 Consolidated Statement of Income - Nine Months Ended June 30, 1997 and June 30, 1996 4 Consolidated Statement of Cash Flows - Nine Months Ended June 30, 1997 and June 30, 1996 5 Notes to Consolidated Financial Statements 6 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II - OTHER INFORMATION Item 6 Exhibits and Reports on Form 8-K 11 -2- GODDARD INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET June 30, September 28, 1997 1996 (UNAUDITED) AUDITED ASSETS (ALL PLEDGED, NOTE 4) CURRENT ASSETS: Cash $ 92,751 $ 65,951 Accounts receivable, net of allowances 1,169,866 1,154,871 Miscellaneous receivable (Note 6) 0 785,000 Inventories (Note 3) 3,550,442 3,312,449 Prepaid expenses and taxes 69,730 33,809 Deferred income taxes (Note 5) 85,500 82,000 TOTAL CURRENT ASSETS 4,968,289 5,434,080 PROPERTY, PLANT AND EQUIPMENT, at cost 3,963,125 3,641,818 Less - Accumulated depreciation -2,767,822 -2,589,252 1,195,303 1,052,566 OTHER ASSETS: Excess of cost of investment in subsidiaries over equity in net assets acquired 15,563 18,380 Deferred income taxes (Note 5) 187,000 167,000 Total other assets 202,563 185,380 TOTAL ASSETS $ 6,366,155 $6,672,026 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt (Note 4) $ 121,900 $ 51,000 Accounts payable 237,708 317,321 Accrued expenses 372,509 399,861 Accrued environmental costs (Note 6) 45,000 795,000 Income taxes payable 28,260 191,771 TOTAL CURRENT LIABILITIES 805,377 1,754,953 LONG-TERM DEBT, net of current maturities (Note 4) 920,946 1,026,398 DEFERRED COMPENSATION 551,000 551,000 SHAREHOLDERS' EQUITY: Common stock - par value $.01 per share, authorized 3,000,000 shares, issued and outstanding 2,124,369 shares (2,040,129 shares at September 28, 1996). 21,243 20,401 Additional paid-in capital 424,531 399,353 Retained earnings 3,643,058 2,919,921 TOTAL SHAREHOLDERS'EQUITY 4,088,832 3,339,675 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,366,155 $6,672,026 -3- GODDARD INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
JUNE 30, 1997 JUNE 30, 1996 FOR THE THREE FOR THE NINE FOR THE THREE FOR THE NINE MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED NET SALES $2,277,240 $8,139,492 $2,118.487 $5,965,745 COST OF SALES 1,511,003 5,358,005 1,426,342 4,023,784 GROSS PROFIT 766,237 2,781,487 692,145 1,941,961 SELLING AND ADMINISTRATIVE EXPENSES 485,827 1,526,087 421,412 1,235,400 INCOME FROM OPERATIONS 280,410 1,255,400 270,733 706,561 OTHER INCOME (EXPENSE): Interest expense -21,136 -64,363 -24,733 -78,705 Other income, net 9,198 25,701 7,471 24,728 TOTAL OTHER INCOME (EXPENSE) -11,938 -38,662 -17,262 -53,977 INCOME BEFORE INCOME TAXES 268,472 1,216,738 253,471 652,584 PROVISION FOR INCOME TAXES 107,000 493,600 105,600 270,400 NET INCOME $161,472 $723,138 $147,871 $382,184 EARNINGS PER SHARE (Note 7) Primary $ 0.08 $ 0.36 $ 0.07 $ 0.19
-4- GODDARD INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED JUNE 30, 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $723,138 $382,184 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 181,386 150,745 Deferred income taxes -23,500 -21,000 Changes in assets and liabilities: Accounts receivable -14,995 -108,054 Miscellaneous receivable 785,000 0 Inventories -237,993 -214,710 Prepaid expenses and other -35,921 -14,879 Accounts payable -79,613 203,874 Accrued expenses -27,352 78,549 Accrued environmental -750,000 0 Income taxes payable -163,511 -190,111 Deferred compensation 0 28,500 Total Adjustments -366,499 -87,086 NET CASH PROVIDED BY OPERATING ACTIVITIES 356,838 295,098 CASH FLOWS FROM INVESTING ACTIVITIES: Property,plant and equipment additions -105,476 -115,550 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 26,020 2,907 Increase in long-term debt 2,534,000 2,108,000 Repayments of long-term debt -2,784,381 -2,224,191 NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES -224,361 -113,284 NET INCREASE IN CASH 26,600 66,264 CASH - BEGINNING 65,951 74,937 CASH - ENDING 92,751 $141,201 CASH PAID DURING THE PERIOD Interest $ 64,363 $ 79,370 Income taxes $680,611 $481,511 -5- GODDARD INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1997 (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 28, 1996 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: June 30, September 28, 1997 1996 Finished goods $3,241,891 $3,003,898 Work in process 21,687 21,687 Raw materials 286,864 286,864 $3,550,442 $3,312,449 The following factors were taken into consideration in determining inventory values: Goddard Valve Corp. - June 30, 1997 - $1,818,629 (estimated) and September 28, 1996 - $1,657,426. Interim inventories were valued by management using the gross profit method. Webstone Company, Inc. - June 30, 1997 - $1,731,813 (estimated) and September 28, 1996 - $1,655,023. 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 3/4% or (ii) the Federal Funds Effective Rate plus 1 1/4% per annum. On March 31, 1997 the effective interest rate was 9.0%. The agreement expires March 31, 1999 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 June 30, 1997 long-term obligations consisted of the following: LONG-TERM CURRENT Revolving line of credit $728,503 $ - Capital lease obligation for machinery, payable in monthly installments of $5,274, through July 1, 1999, with imputed interest rate of 8.936% and monthly installments of $6,807, through March 1, 2,000, with imputed interest rate of 8.441%. 192,443 121,900 $920,946 $121,900 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: June 30, September 28, 1997 1996 Deferred tax asset Deferred compensation $ 220,400 $ 220,400 Inventory valuation 61,400 60,800 Accrued salaries 6,200 6,200 Accrued environmental 18,000 4,000 Bad debts 13,900 11,000 319,900 302,400 Depreciation 47,400 53,400 $ 272,500 $ 249,000 Management does not believe that any valuation allowance is necessary. -7- NOTE 6 ENVIRONMENT MATTERS The Company has been a party to the following environmental matters: DEP Matter: An environmental assessment of the Corporate headquarters in connection with a proposed bank financing 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. The Company notified the Massachusetts Department of Environmental Protection (DEP). In 1995 the site was designated as a Tier 1C Site under the Massachusetts Contingency Plan and the Company must complete a further site investigation by November 1997. One of the Company's insurance carriers has paid the Company $70,000 to be used as the Company determines in defense of the DEP proceeding in exchange for a release of any further claim with respect to this matter. In addition, environmental engineers employed by the Company estimate that the required remediation costs will be a minimum of $45,000. Shrewsbury matter: The Shrewsbury environmental litigation was settled in January, 1997 and the effects of that settlement reflected in the financial statements for the year ended September 28, 1996. In the accompanying financial statements, the miscellaneous receivable represents amounts due from insurance carriers with respect to environmental matters and accrued environmental costs represents amounts due the Town of Shrewsbury and the minimum estimated remediation costs related to the DEP matter. NOTE 7 COMMON STOCK: Primary earnings per share are computed on a weighted average number of shares outstanding. Fully diluted earnings per share are not presented because the effect of the exercise of the stock options would not be dilutive. NOTE 8 COMMITMENTS: During June 1996 the Company entered into a commitment to construct an addition to its manufacturing and warehouse facility in Worcester, Massachusetts. The total construction costs are expected to be approximately $270,000 which will be financed out of the Company's line of credit facility with BankBoston. -8- PART I - FINANCIAL INFORMATION Item 2 - Management's Discussion and Analysis of Financial Condition RESULTS OF OPERATIONS FISCAL QUARTER ENDED JUNE 30, 1997 COMPARED TO FISCAL QUARTER ENDED JUNE 30, 1996 For the quarter ended June 30, 1997, consolidated sales were $2,277,000, a 7.5% increase over the same quarter of fiscal 1996. However, as noted last quarter, the stron growth in the level of new orders over the last couple of years appears to have leveled off, which management believes is a reflection of a temporary slow-down in the cryogenic industry. New Product lines were added to both divisions during the last quarter and two additional new products are expected to be added to the product line by the end of the fiscal year. Management anticipates that these new products will add new customers and increase revenues in the final quarter of the current fiscal year as well as in subsequent years, although there can be no assurance that that will occur. Gross profits as a percentage of sales increased from 32.6% in the third quarter of fiscal 1996 to 33.6% in the most recent quarter, reflecting a change of product mix. Selling and administrative expenses as a percentage of sales increased from 19.8% in the corresponding quarter last year to 21.3% in the most recent quarter as a result of the appointment of additional sales representatives, while interest costs were slightly lower in the most recent quarter than in the corresponding quarter in 1996. Earnings for the period of $161,500 ($.08 per share) were a 9.1% increase above the $147,900 ($.07 per share) earnings in the third quarter of fiscal 1996. NINE MONTH PERIOD ENDED JUNE 30, 1997 COMPARED TO NINE MONTH PERIOD ENDED JUNE 30, 1996 For the nine months ended June 30, 1997, consolidated sales were $8,139,000 compared to sales of $5,966,000 for 1996, a 36.4% increase. Goddard Valve's sales for the nine month period were up by 62.7% because of a heavy backlog of orders from new product lines and an increasingly larger market share for our cryogenic valves. Still to be completed within the fiscal year are two new products that will add further sales for this year and further growth for the years ahead. Our Webstone Division sales were just slightly higher than the nine month period for 1996. Selling and Administrative expenses as a percentage of sales for the nine month period were reduced slightly, while gross profit margins for the period were 33.6%, somewhat higher than the 32.7% reported for 1996. Gross profit margins vary slightly for each quarter because of product mix changes for that quarter. Inventory levels have increased only 7.2% since the June 1996 quarter to keep up with the 36.4% increase in sales. Net earnings for the first three quarters were $723,000 ($.36 per/share) compared to $382,200 ($.19 per share) for 1996. -9- LIQUIDITY AND CAPITAL RESOURCES Historically, the Company has funded operations primarily through earnings and bank borrowings. At June 30, 1997, the Company had net working capital of approximately $4,163,000, including approximately $93,000 in cash. The Company has a line of credit of $1,750,000 from BankBoston which expires March 30, 1999 and which is collateralized by substantially all of the assets of the Company. At June 30, 1997, approximately $728,500 has been drawn under this line of credit. The Company believes that its working capital and cash position, together with this line of credit, provide sufficient liquidity to handle the normal working capital requirements of its present business. During the nine months ended June 30, 1997, operating activities of the Company provided $357,000 of cash. Cash was generated principally from earnings ($723,000) and depreciation and amortization ($181,000). The principal uses of cash were increases in inventories $238,000), reductions in income taxes liabilities ($164,000) and a decrease in accounts payable ($80,000). The Company borrows funds for periods of up to five years for the purchase of new machinery and meets the required amortization and interest payments from its current working capital. The Company is in the process of adding an additional 10,000 square feet of manufacturing and warehouse space to the rear of its existing building in Worcester. Its lending bank has agreed to allow it to finance the addition using moneys available under the existing line of credit. The Company believes that the remaining amounts available under its line of credit after that borrowing, plus cash flow from operations and other available sources, should provide sufficient liquidity to handle the normal working capital requirements of its present business. Inflation has not been a factor in the Company's business for the last several years, although there can be no assurance that this will continue to be the case. The Company's results of operations have not been materially affected by seasonality. -10- PART II - OTHER INFORMATION Item 1 - Legal Proceedings There have been no further developments in the DEP environmental proceeding from those described in the Company's Form 10-KSB for the year ended September 28, 1996. 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 June 30, 1997. -11- 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 , 1997 GODDARD INDUSTRIES, INC. by/s/Saul I. Reck Saul I. Reck, President Chief Executive Officer and Principal Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----