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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended October 3, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from _____________ to _______________
 Commission file number: 001-33507
 EDAC Technologies Corporation
  Wisconsin
    
    39-1515599(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. employer
Identification No.)
 1806 New Britain Avenue, Farmington, CT 06032
 (860) 677-2603
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   o
    
    Smaller reporting companyþ(Do not check if a smaller reporting company)
 o þ




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TABLE OF CONTENTS  PART I FINANCIAL INFORMATIONITEM 1 FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II OTHER INFORMATIONITEM 6. EXHIBITSSIGNATURESEXHIBIT INDEXEX-31.1EX-31.2EX-32.1    Table of Contents  
  
  
 October 3,
    
    
    January 3,2009
    
    
    2009(Unaudited)
    
    
    (Audited)ASSETSCURRENT ASSETS:Cash
    
    $
    851,475
    
    
    $
    1,311,092Trade accounts receivable, (net
of allowance for doubtful accounts
of $271,000, as of October 3, 2009
and $186,000, as of January 3, 2009)
    
    
    11,380,063
    
    
    
    7,931,550Inventories, net
    
    
    20,406,862
    
    
    
    7,961,788Prepaid expenses and other
    
    
    357,049
    
    
    
    107,333Refundable income taxes
    
    
    
    
    
    
    686,708Deferred income taxes
    
    
    918,567
    
    
    
    983,298TOTAL CURRENT ASSETS
    
    
    33,914,016
    
    
    
    18,981,769PROPERTY, PLANT, AND EQUIPMENT
    
    
    48,359,259
    
    
    
    35,347,124less-accumulated depreciation
    
    
    25,498,519
    
    
    
    23,992,87822,860,740
    
    
    
    11,354,246DEFERRED INCOME TAXES
    
    
    
    
    
    
    105,971OTHER ASSETS:Deposits on equipment
    
    
    
    
    
    
    981,300Other
    
    
    228,921
    
    
    
    40,338TOTAL ASSETS
    
    $
    57,003,677
    
    
    $
    31,463,624
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October 3,
    
    
    January 3,2009
    
    
    2009(Unaudited)
    
    
    (Audited)LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Lines of credit
    
    $
    1,891,190
    
    
    $
    1,674,990Current portion of long-term debt
    
    
    2,135,023
    
    
    
    2,376,018Trade accounts payable
    
    
    7,274,442
    
    
    
    3,485,192Accrued employee compensation
and amounts withheld
    
    
    1,726,089
    
    
    
    1,112,006Other accrued expenses
    
    
    1,216,434
    
    
    
    361,252Customer advances
    
    
    685,901
    
    
    
    261,643TOTAL CURRENT LIABILITIES
    
    
    14,929,079
    
    
    
    9,271,101LONG-TERM DEBT, less current portion
    
    
    12,600,592
    
    
    
    4,827,697OTHER LIABILITIES
    
    
    1,698,233
    
    
    
    1,698,233DEFERRED INCOME TAXES
    
    
    4,411,868
    
    
    
    SHAREHOLDERS EQUITY:Common stock, $.0025 par value;
issued and outstanding: 4,837,303
on October 3, 2009 and
4,825,303 on January 3, 2008
    
    
    12,095
    
    
    
    12,063Additional paid-in capital
    
    
    11,118,990
    
    
    
    10,934,736Retained earnings
    
    
    14,671,626
    
    
    
    7,158,60025,802,711
    
    
    
    18,105,399Less: accumulated other
comprehensive loss
    
    
    2,438,806
    
    
    
    2,438,806TOTAL SHAREHOLDERS EQUITY
    
    
    23,363,905
    
    
    
    15,666,593TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY
    
    $
    57,003,677
    
    
    $
    31,463,624
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For the three months ended
    
    
    For the nine months endedOct 3,
    
    
    Sept 27,
    
    
    Oct 3,
    
    
    Sept 27,2009
    
    
    2008
    
    
    2009
    
    
    2008Sales
    
    $
    15,132,120
    
    
    $
    10,547,124
    
    
    $
    38,344,712
    
    
    $
    32,577,388Cost of sales
    
    
    13,370,287
    
    
    
    9,161,877
    
    
    
    33,806,646
    
    
    
    27,276,156Gross profit
    
    
    1,761,833
    
    
    
    1,385,247
    
    
    
    4,538,066
    
    
    
    5,301,232Selling, general and
administrative expenses
    
    
    1,305,763
    
    
    
    842,868
    
    
    
    3,347,624
    
    
    
    2,676,232Income from operations
    
    
    456,070
    
    
    
    542,379
    
    
    
    1,190,442
    
    
    
    2,625,000Non-operating income
(expense):Interest expense
    
    
    (262,388
    )
    
    
    (158,885
    )
    
    
    (592,813
    )
    
    
    (478,510
    )Other
    
    
    (73,431
    )
    
    
    8,425
    
    
    
    11,673,022
    
    
    
    62,354Income before
income taxes
    
    
    120,251
    
    
    
    391,919
    
    
    
    12,270,651
    
    
    
    2,208,844Provision for
income taxes
    
    
    39,803
    
    
    
    137,000
    
    
    
    4,757,627
    
    
    
    791,000Net income
    
    $
    80,448
    
    
    $
    254,919
    
    
    $
    7,513,024
    
    
    $
    1,417,844Income per share data (Note A):Basic
    
    $
    0.02
    
    
    $
    0.05
    
    
    $
    1.56
    
    
    $
    0.30Diluted
    
    $
    0.02
    
    
    $
    0.05
    
    
    $
    1.53
    
    
    $
    0.28
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For the nine months endedOctober 3,
    
    
    September 27,2009
    
    
    2008Operating Activities:Net income
    
    $
    7,513,024
    
    
    $
    1,417,844Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:Depreciation and amortization
    
    
    1,547,046
    
    
    
    1,539,627Deferred income taxes
    
    
    4,582,570
    
    
    
    53,000Gain on acquisition of business
    
    
    (11,874,591
    )Gain on sale of property,
plant & equipment
    
    
    (30,500
    )
    
    
    (21,850
    )Stock compensation expense
pursuant to stock options
    
    
    166,311
    
    
    
    167,247Excess tax benefit from
share-based compensation
    
    
    
    
    
    
    (309,150
    )Changes in working capital items
    
    
    211,221
    
    
    
    (2,952,926
    )Net cash provided by (used in)
operating activities
    
    
    2,115,081
    
    
    
    (106,208
    )Investing Activities:Additions to property, plant
and equipment
    
    
    (871,863
    )
    
    
    (570,834
    )Equipment deposits
    
    
    981,300
    
    
    
    (749,250
    )Acquisition of business
    
    
    (10,275,000
    )Proceeds from sale of property,
plant and equipment
    
    
    30,500
    
    
    
    21,850Deferred financing costs
    
    
    (205,710
    )Net cash used in investing
activities
    
    
    (10,340,773
    )
    
    
    (1,298,234
    )Financing Activities:Increase in lines of credit, net
    
    
    216,200
    
    
    
    1,365,590Repayments of long-term debt
    
    
    (1,968,100
    )
    
    
    (1,705,185
    )Borrowing on long-term debt
    
    
    9,500,000
    
    
    
    Proceeds from exercise of options
and issuance of common stock
    
    
    17,975
    
    
    
    160,619Excess tax benefit from
share-based compensation
    
    
    
    
    
    
    309,150Net cash provided by (used in)
financing activities
    
    
    7,766,075
    
    
    
    130,174Decrease in cash
    
    
    (459,617
    )
    
    
    (1,274,268
    )Cash at beginning of period
    
    
    1,311,092
    
    
    
    3,286,203Cash at end of period
    
    $
    851,475
    
    
    $
    2,011,935Supplemental Disclosure of Cash Flow Information:Interest paid
    
    $
    585,945
    
    
    $
    478,511Income taxes paid (refunded)
    
    
    (361,000
    )
    
    
    526,000
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ACQUISITION
   Accounts receivable
    
    $
    4,274Inventories
    
    
    8,980Prepaid expenses
    
    
    169Property, plant and equipment
    
    
    11,893Accounts payable and accrued expenses
    
    
    (3,941
    )$
    21,375
  
    
    Accounts receivable were reviewed and valued based on accounts deemed collectible.
    
    A physical inventory was taken. Raw material was valued at replacement cost.
Work-in-process and finished goods were valued at selling price less cost to complete,
selling costs and reasonable manufacturers profit.
    
    Property, plant and equipment were appraised.
    
    Accounts payable and accrued expenses were valued at current value based on amounts
expected to be paid to settle the obligation.
   For the Nine Months EndedSept. 27,
    
    
    October 3,2008
    
    
    2009Sales
    
    $
    47,481
    
    
    $
    46,997Net income
    
    
    (1,230
    )
    
    
    642Basic income per share
    
    $
    (0.26
    )
    
    $
    0.13Diluted income per share
    
    $
    (0.24
    )
    
    $
    0.13
 6




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BASIS OF PRESENTATION
 Regulation S-X.
  October 3,
    
    
    January 3,2009
    
    
    2009Raw materials
    
    $
    2,428,415
    
    
    $
    1,449,789Work-in-progress
    
    
    16,458,663
    
    
    
    5,789,839Finished goods
    
    
    2,336,250
    
    
    
    1,366,56221,223,328
    
    
    
    8,606,190Reserve for excess and obsolete
    
    
    (816,466
    )
    
    
    (644,402
    )Inventories, net
    
    $
    20,406,862
    
    
    $
    7,961,788
  For the three months ended
    
    For the nine months endedOctober 3,
    
    Sept. 27,
    
    October 3,
    
    Sept. 27,2009
    
    2008
    
    2009
    
    2008Basic: Average common
shares outstanding
    
    
    4,837,803
    
    
    
    4,746,137
    
    
    
    4,830,803
    
    
    
    4,693,020Diluted: Dilutive effect of
stock options
    
    
    172,858
    
    
    
    393,785
    
    
    
    84,244
    
    
    
    459,719Average common
shares diluted
    
    
    5,010,661
    
    
    
    5,139,922
    
    
    
    4,915,047
    
    
    
    5,152,739Options excluded
since anti-dilutive
    
    
    183,500
    
    
    
    198,500
    
    
    
    297,334
    
    
    
    188,500
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NEW PRONOUNCEMENTS
    8




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October 3,
    
    
    January 3,2009
    
    
    2009Lines of credit
    
    $
    1,891,190
    
    
    $
    1,674,990Term notes
    
    
    9,072,759
    
    
    
    3,914,765Mortgage loans
    
    
    5,525,999
    
    
    
    3,010,677Capital lease obligations
    
    
    136,857
    
    
    
    278,27316,626,805
    
    
    
    8,878,705Less  revolving line of credit
    
    
    500,000
    
    
    
    Less  equipment line of credit
    
    
    1,391,190
    
    
    
    1,674,990Less  current portion of long-term debt
    
    
    2,135,023
    
    
    
    2,376,018$
    12,600,592
    
    
    $
    4,827,697
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For the three months ended
    
    
    For the nine months endedOct. 3,
    
    
    Sept. 27,
    
    
    Oct. 3,
    
    
    Sept. 27,2009
    
    
    2008
    
    
    2009
    
    
    2008Components of net periodic benefit cost:Interest cost
    
    $
    82
    
    
    $
    91
    
    
    $
    246
    
    
    $
    273Expected return on plan assets
    
    
    (62
    )
    
    
    (93
    )
    
    
    (186
    )
    
    
    (279
    )Amortization of actuarial loss
    
    
    33
    
    
    
    2
    
    
    
    99
    
    
    
    6Net periodic pension expense
    
    $
    53
    
    
    $
    0
    
    
    $
    159
    
    
    $
    0
 10




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For the three months ended
    
    
    For the nine months endedOct. 3,
    
    
    Sept. 27,
    
    
    Oct. 3,
    
    
    Sept. 27,2009
    
    
    2008
    
    
    2009
    
    
    2008Current provision
    
    $
    40
    
    
    $
    128
    
    
    $
    133
    
    
    $
    738Deferred provision
    
    
    
    
    
    
    9
    
    
    
    4,625
    
    
    
    53Total provision
    
    $
    40
    
    
    $
    137
    
    
    $
    4,758
    
    
    $
    791
  
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Sales.
  For the three months endedOct. 3,
    
    
    Sept. 27,Product Line
    
    2009
    
    
    2008
    
    
    ChangePrecision Aerospace
    
    $
    11,174
    
    
    $
    5,536
    
    
    $
    5,638Apex Machine Tool
    
    
    3,368
    
    
    
    4,019
    
    
    
    (651
    )Gros-Ite Spindles
    
    
    590
    
    
    
    992
    
    
    
    (402
    )Total
    
    $
    15,132
    
    
    $
    10,547
    
    
    $
    4,585
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For the nine months endedOct. 3,
    
    
    Sept. 27,Product Line
    
    2009
    
    
    2008
    
    
    ChangePrecision Aerospace
    
    $
    24,551
    
    
    $
    16,290
    
    
    $
    8,261Apex Machine Tool
    
    
    11,940
    
    
    
    13,307
    
    
    
    (1,367
    )Gros-Ite Spindles
    
    
    1,854
    
    
    
    2,980
    
    
    
    (1,126
    )Total
    
    $
    38,345
    
    
    $
    32,577
    
    
    $
    5,768
 th
     For the three months ended
    
    
    For the nine months endedOct. 3,
    
    
    Sept. 27,
    
    
    Oct. 3,
    
    
    Sept. 27,2009
    
    
    2008
    
    
    2009
    
    
    2008Aerospace customers
    
    $
    10,728
    
    
    $
    7,248
    
    
    $
    28,736
    
    
    $
    23,435Non-aerospace customers
    
    
    4,404
    
    
    
    3,299
    
    
    
    9,609
    
    
    
    9,142$
    15,132
    
    
    $
    10,547
    
    
    $
    38,345
    
    
    $
    32,577
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Cost of Sales.
 Selling, General & Administrative Expenses.
 Interest Expense.
 Other Income.
 Income Taxes.
 Liquidity and Capital Resources.
  Nine Months EndedOct. 3,
    
    Sept. 27,2009
    
    2008Net cash flows provided by (used in)
operating activities:
    
    $
    2,115,000
    
    
    $
    (106,000
    )
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Nine Months EndedOct. 3,
    
    Sept. 27,2009
    
    2008Net cash flows used in
investing activities:
    
    $
    (10,341,000
    )
    
    $
    (1,298,000
    )
   Nine Months EndedOct. 3,
    
    Sept. 27,2009
    
    2008Net cash flows provided by (used in)
financing activities:
    
    $
    7,766,000
    
    
    $
    (642,000
    )
    14




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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
      15




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of disclosure and procedures
  Changes in internal control over financial reporting
  16




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ITEM 6. EXHIBITS
 3.1*
    
    EDACs Amended and Restated Articles of Incorporation3.2*
    
    Articles of Amendment to EDACs Amended and Restated Articles of Incorporation.3.3*
    
    EDACs Amended and Restated By-laws .31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as amended.31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as amended.32.1
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to
Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended.
 
 *
    
    Incorporated by reference 
   EDAC TECHNOLOGIES CORPORATIONOctober 30, 2009
    By /s/ Glenn L. PurpleGlenn L. Purple, Chief FinancialOfficer and duly authorized officer 17




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NUMBER
    
    DESCRIPTION3.1
    
    EDACs Amended and Restated Articles of Incorporation (1)3.2
    
    Articles of Amendment to EDACs Amended and Restated Articles of Incorporation. (2)3.3
    
    EDACs Amended and Restated By-laws (3)31.1*
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as amended.31.2*
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as amended.32.1*
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to
Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended.
 
 (1)
    
    Exhibit incorporated by reference to the Companys registration
statement on Form S-1 dated August 6, 1985, commission file
No. 2-99491, Amendment No. 1.(2)
    
    Exhibit incorporated by reference to the Companys Report
on Form 10-Q dated July 30, 2008.(3)
    
    Exhibit incorporated by reference to the Companys Report
on Form 8-K dated February 19, 2002.*
    
    Filed herewith. 18