##### Table of Contents



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 July 4, 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
   (Registrants
telephone number, including area code)
 þ o
 þ o
  o o o þ
 o þ




---



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 PROCEDURESITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 6. EXHIBITSSIGNATURESEXHIBIT INDEXEX-31.1EX-31.2EX-32.1    Table of Contents  
  
  
 July 4,
    
    
    January 3,2009
    
    
    2009(Unaudited)
    
    
    (Audited)ASSETSCURRENT ASSETS:Cash
    
    $
    308,484
    
    
    $
    1,311,092Trade accounts receivable, (net
of allowance for doubtful accounts
of $277,597 as of July 4, 2009 and
$186,000 on January 3, 2009)
    
    
    13,059,271
    
    
    
    7,931,550Inventories, net
    
    
    18,191,098
    
    
    
    7,961,788Prepaid expenses and other current
assets
    
    
    383,066
    
    
    
    107,333Refundable income taxes
    
    
    111,883
    
    
    
    686,708Deferred income taxes
    
    
    918,567
    
    
    
    983,298TOTAL CURRENT ASSETS
    
    
    32,972,369
    
    
    
    18,981,769PROPERTY, PLANT, AND EQUIPMENT
    
    
    47,640,684
    
    
    
    35,347,124less-accumulated depreciation
    
    
    24,861,164
    
    
    
    23,992,87822,779,520
    
    
    
    11,354,246DEFERRED INCOME TAXES
    
    
    
    
    
    
    105,971OTHER ASSETS:Deposits on equipment
    
    
    2,089,800
    
    
    
    981,300Other
    
    
    217,882
    
    
    
    40,338TOTAL ASSETS
    
    $
    58,059,571
    
    
    $
    31,463,624
  2




---



##### Table of Contents



July 4,
    
    
    January 3,2009
    
    
    2009(Unaudited)
    
    
    (Audited)LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Lines of credit
    
    $
    3,258,490
    
    
    $
    1,674,990Current portion of long-term debt
    
    
    2,434,928
    
    
    
    2,376,018Trade accounts payable
    
    
    6,433,669
    
    
    
    3,485,192Accrued employee compensation
and amounts withheld
    
    
    1,586,690
    
    
    
    1,112,006Other accrued expenses
    
    
    1,526,851
    
    
    
    361,252Customer advances
    
    
    438,530
    
    
    
    261,643TOTAL CURRENT LIABILITIES
    
    
    15,679,158
    
    
    
    9,271,101LONG-TERM DEBT,less current portion
    
    
    13,042,605
    
    
    
    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: 4,837,803
on July 4, 2009 and 4,825,303 on
January 3, 2009
    
    
    12,095
    
    
    
    12,063Additional paid-in capital
    
    
    11,063,241
    
    
    
    10,934,736Retained earnings
    
    
    14,591,177
    
    
    
    7,158,60025,666,513
    
    
    
    18,105,399Less: accumulated other
comprehensive loss
    
    
    2,438,806
    
    
    
    2,438,806TOTAL SHAREHOLDERS EQUITY
    
    
    23,227,707
    
    
    
    15,666,593TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY
    
    $
    58,059,571
    
    
    $
    31,463,624
  3




---



##### Table of Contents



For the three months ended
    
    
    For the six months endedJuly 4,
    
    
    June 28,
    
    
    July 4,
    
    
    June 28,2009
    
    
    2008
    
    
    2009
    
    
    2008Sales
    
    $
    13,628,817
    
    
    $
    10,849,161
    
    
    $
    23,212,592
    
    
    $
    22,030,264Cost of sales
    
    
    11,933,020
    
    
    
    9,019,185
    
    
    
    20,436,359
    
    
    
    18,114,279Gross profit
    
    
    1,695,797
    
    
    
    1,829,976
    
    
    
    2,776,233
    
    
    
    3,915,985Selling, general and
administrative expenses
    
    
    1,180,605
    
    
    
    864,244
    
    
    
    2,041,861
    
    
    
    1,833,364Income from operations
    
    
    515,192
    
    
    
    965,732
    
    
    
    734,372
    
    
    
    2,082,621Non-operating income
(expense):Interest expense
    
    
    (190,583
    )
    
    
    (155,048
    )
    
    
    (330,425
    )
    
    
    (319,625
    )Other
    
    
    11,739,578
    
    
    
    9,374
    
    
    
    11,746,453
    
    
    
    53,929Income before
income taxes
    
    
    12,064,187
    
    
    
    820,058
    
    
    
    12,150,400
    
    
    
    1,816,925Provision for
income taxes
    
    
    4,688,024
    
    
    
    287,000
    
    
    
    4,717,824
    
    
    
    654,000Net income
    
    $
    7,376,163
    
    
    $
    533,058
    
    
    $
    7,432,576
    
    
    $
    1,162,925Income per share data (Note A):Basic
    
    $
    1.53
    
    
    $
    0.11
    
    
    $
    1.54
    
    
    $
    0.25Diluted
    
    $
    1.50
    
    
    $
    0.11
    
    
    $
    1.52
    
    
    $
    0.23
  4




---



##### Table of Contents



For the six months endedJuly 4,
    
    
    June 28,2009
    
    
    2008Operating Activities:Net income
    
    $
    7,432,576
    
    
    $
    1,162,925Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:Depreciation and amortization
    
    
    903,982
    
    
    
    1,032,418Deferred income taxes
    
    
    4,582,570
    
    
    
    44,000Gain on acquisition of business
    
    
    (11,738,591
    )
    
    
    Gain on sale of property,
plant & equipment
    
    
    (5,500
    )
    
    
    (21,850
    )Stock compensation expense
pursuant to stock options
    
    
    110,562
    
    
    
    111,498Excess tax benefit from
share-based compensation
    
    
    
    
    
    
    (81,836
    )Changes in working capital items
    
    
    (946,249
    )
    
    
    (1,992,146
    )Net cash provided by
operating activities
    
    
    339,350
    
    
    
    255,009Investing Activities:Additions to property, plant
and equipment
    
    
    (425,288
    )
    
    
    (318,787
    )Equipment deposits
    
    
    (1,108,500
    )
    
    
    (384,620
    )Acquisition of business
    
    
    (9,500,000
    )
    
    
    Proceeds from sale of property,
plant and equipment
    
    
    5,500
    
    
    
    21,850Deferred financing costs
    
    
    (188,963
    )
    
    
    Net cash used in investing
activities
    
    
    (11,217,251
    )
    
    
    (681,557
    )Financing Activities:Increase in lines of credit
    
    
    1,583,500
    
    
    
    903,740Repayments of long-term debt
    
    
    (1,226,182
    )
    
    
    (1,125,522
    )Issuance of long-term debt
    
    
    9,500,000
    
    
    
    Proceeds from exercise of options
and issuance of common stock
    
    
    17,975
    
    
    
    47,354Excess tax benefit from
share-based compensation
    
    
    
    
    
    
    81,836Net cash provided by (used in)
financing activities
    
    
    9,875,293
    
    
    
    (92,592
    )Decrease in cash
    
    
    (1,002,608
    )
    
    
    (519,140
    )Cash at beginning of period
    
    
    1,311,092
    
    
    
    3,286,203Cash at end of period
    
    $
    308,484
    
    
    $
    2,767,063Supplemental Disclosure ofCash Flow Information:Interest paid
    
    $
    320,035
    
    
    $
    319,625Income taxes paid (refunded)
    
    
    (511,000
    )
    
    
    456,000
  5




---



##### Table of Contents



ACQUISITION
   Accounts receivable
    
    $
    4,274Inventories
    
    
    8,980Prepaid
expenses
    
    
    169Property, plant and equipment
    
    
    11,893Accounts payable and accrued expenses
    
    
    (3,941
    )$
    21,375
  For the Six Months EndedJune 28, 2008
    
    July 4, 2009Sales
    
    $
    31,613
    
    
    $
    31,879Net income
    
    
    (2,534
    )
    
    
    561Basic income per share
    
    $
    (0.54
    )
    
    $
    0.12Diluted income per share
    
    $
    (0.51
    )
    
    $
    0.11
 BASIS OF PRESENTATION
  6




---



##### Table of Contents



July 4,
    
    
    January 3,2009
    
    
    2009Raw materials
    
    $
    2,649,534
    
    
    $
    1,449,789Work-in-progress
    
    
    13,670,761
    
    
    
    5,789,839Finished goods
    
    
    2,709,105
    
    
    
    1,366,56219,029,400
    
    
    
    8,606,190Reserve for excess
and obsolete
    
    
    (838,302
    )
    
    
    (644,402
    )Inventories, net
    
    $
    18,191,098
    
    
    $
    7,961,788
  For the three months ended
    
    For the six months endedJuly 4,
    
    June 28,
    
    July 4,
    
    June 28,2009
    
    2008
    
    2009
    
    2008Basic:Average common
shares outstanding
    
    
    4,829,678
    
    
    
    4,666,970
    
    
    
    4,827,803
    
    
    
    4,658,946Diluted:Dilutive effect of
stock options
    
    
    89,033
    
    
    
    289,769
    
    
    
    64,381
    
    
    
    311,364Average common
shares diluted
    
    
    4,918,711
    
    
    
    4,956,739
    
    
    
    4,892,184
    
    
    
    4,970,310Options excluded
since anti-dilutive
    
    
    297,334
    
    
    
    188,500
    
    
    
    347,334
    
    
    
    188,500
  7




---



##### Table of Contents



NEW PRONOUNCEMENTS
 Fair Value Measurements
     July 4,
    
    
    January 3,2009
    
    
    2009Lines of credit
    
    $
    3,258,490
    
    
    $
    1,674,990Term notes
    
    
    9,720,356
    
    
    
    3,914,765Mortgage loans
    
    
    5,576,298
    
    
    
    3,010,677Capital lease obligations
    
    
    180,879
    
    
    
    278,27318,736,023
    
    
    
    8,878,705Less  revolving line of credit
    
    
    475,000
    
    
    
    Less  equipment line of credit
    
    
    2,783,490
    
    
    
    1,674,990Less  current portion of long-term debt
    
    
    2,434,928
    
    
    
    2,376,018$
    13,042,605
    
    
    $
    4,827,697
   8




---



##### Table of Contents



For the three months ended
    
    
    For the six months endedJuly 4,
    
    
    June 28,
    
    
    July 4,
    
    
    June 28,2009
    
    
    2008
    
    
    2009
    
    
    2008Components of net periodic benefit cost:Interest cost
    
    $
    82
    
    
    $
    91
    
    
    $
    164
    
    
    $
    182Expected return on plan assets
    
    
    (62
    )
    
    
    (93
    )
    
    
    (124
    )
    
    
    (186
    )Amortization of actuarial loss
    
    
    33
    
    
    
    2
    
    
    
    66
    
    
    
    4Net periodic pension expense
    
    $
    53
    
    
    $
    0
    
    
    $
    106
    
    
    $
    0
    For the three months ended
    
    
    For the six months endedJuly 4,
    
    
    June 28,
    
    
    July 4,
    
    
    June 28,2009
    
    
    2008
    
    
    2009
    
    
    2008Current provision
    
    $
    73
    
    
    $
    268
    
    
    $
    93
    
    
    $
    610Deferred provision
    
    
    4,615
    
    
    
    19
    
    
    
    4,625
    
    
    
    44Total provision
    
    $
    4,688
    
    
    $
    287
    
    
    $
    4,718
    
    
    $
    654
    9




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Sales.
  For the three months endedJuly 4,
    
    
    June 28,Product Line
    
    2009
    
    
    2008
    
    
    ChangePrecision Aerospace
    
    $
    8,190
    
    
    $
    5,471
    
    
    $
    2,719Apex Machine Tool
    
    
    4,721
    
    
    
    4,242
    
    
    
    479Gros-Ite Spindles
    
    
    718
    
    
    
    1,136
    
    
    
    (418
    )Total
    
    $
    13,629
    
    
    $
    10,849
    
    
    $
    2,780
 For the six months endedJuly 4,
    
    
    June 28,Product Line
    
    2009
    
    
    2008
    
    
    ChangePrecision Aerospace
    
    $
    13,377
    
    
    $
    10,754
    
    
    $
    2,623Apex Machine Tool
    
    
    8,572
    
    
    
    9,288
    
    
    
    (716
    )Gros-Ite Spindles
    
    
    1,264
    
    
    
    1,988
    
    
    
    (724
    )Total
    
    $
    23,213
    
    
    $
    22,030
    
    
    $
    1,183
    10




---



##### Table of Contents



For the three months ended
    
    
    For the six months endedJuly 4,
    
    
    June 28,
    
    
    July 4,
    
    
    June 28,2009
    
    
    2008
    
    
    2009
    
    
    2008Aerospace customers
    
    $
    8,692
    
    
    $
    7,742
    
    
    $
    18,008
    
    
    $
    16,187Non-aerospace customers
    
    
    4,937
    
    
    
    3,107
    
    
    
    5,205
    
    
    
    5,843$
    13,629
    
    
    $
    10,849
    
    
    $
    23,213
    
    
    $
    22,030
 th
 Cost of Sales.
 Selling, General & Administrative Expenses.
 Interest
Expense.
 11




---



##### Table of Contents



Other
Income.
 Income Taxes.
  Six Months EndedJuly 4,
    
    
    June 28,2009
    
    
    2008Net cash
flows provided by operating activities:
    
    $
    339,000
    
    
    $
    255,000
   Six Months EndedJuly 4,
    
    
    June 28,2009
    
    
    2008Net cash
flows used in investing activities:
    
    $
    11,217,000
    
    
    $
    682,000
   Six Months EndedJuly 4,
    
    
    June 28,2009
    
    
    2008Net cash
flows provided by (used in) financing activities:
    
    $
    9,875,000
    
    
    $
    (93,000
    )
 12




---



##### Table of Contents



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
    13




---



##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  14




---



##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of disclosure and procedures
  Changes in internal control over financial reporting
   
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 1)
    
    The following directors were elected at the meeting:
 Votes
    
    
    VotesDirector
    
    Cast For
    
    
    WithheldJoseph Lebel
    
    
    3,554,822
    
    
    
    178,602Dominick A. Pagano
    
    
    3,608,616
    
    
    
    124,808Stephen J. Raffay
    
    
    3,561,763
    
    
    
    171,661Ross C. Towne
    
    
    3,563,295
    
    
    
    170,129Daniel C. Tracy
    
    
    3,607,574
    
    
    
    125,850John A. Rolls
    
    
    3,611,748
    
    
    
    121,676
 2)
    
    The appointment of CCR LLP as auditors for the Company for the fiscal year ending January 2,
2010 was ratified with a vote of 3,625,774 for 79,824 against and 27,826 abstained.
 
 ITEM 6. EXHIBITS
 2.1*
    
    Asset Purchase Agreement, dated as of May 18, 2009, by and between EDAC and MTU Aero Engines
North America, Inc.
 16




---



##### Table of Contents



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.10.1
     *
    
    Credit Agreement, dated as of May 27, 2009, by and among EDAC, Gros-Ite, Apex and TD Bank,
N.A.10.2
     *
    
    Security Agreement, dated as of May 27, 2009, by and between EDAC, Gros-Ite, Apex and TD
Bank, N.A.10.3
    *
    
    Term Note, dated as of May 27, 2009, by and among EDAC, Gros-Ite, Apex and TD Bank, N.A.10.4
    *
    
    Revolving Credit Note, dated as of May 27, 2009, by and among EDAC, Gros-Ite, Apex and TD
Bank, N.A.10.5
    *
    
    Mortgage Note, dated as of May 27, 2009, by and among EDAC, Gros-Ite, Apex and TD Bank, N.A.10.6
     *
    
    Open-End Mortgage Deed and Security Agreement, dated as of May 27, 2009, by and between EDAC
and TD Bank N.A.10.7
    *
    
    Environmental Indemnity Agreement, dated as of May 27, 2009, by and between EDAC, Gros-Ite,
Apex and TD Bank, N.A.10.8
    *
    
    Secured Promissory Note, dated as of May 27, 2009, by EDAC in favor of MTU Aero Engines
North America, Inc.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 17




---



##### Table of Contents



EDAC TECHNOLOGIES CORPORATION  By
    /s/ Glenn L. PurpleGlenn L. Purple, Chief FinancialOfficer and duly authorized officer 18




---



##### Table of Contents



NUMBER
    
    DESCRIPTION2.1
    
    Asset Purchase Agreement, dated as of May 18, 2009, by and between EDAC and MTU Aero Engines
North America, Inc. (4)3.1
    
    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)10.1
    
    Credit Agreement, dated as of May 27, 2009, by and among EDAC, Gros-Ite, Apex and TD Bank,
N.A. (4)10.2
    
    Security Agreement, dated as of May 27, 2009, by and between EDAC, Gros-Ite, Apex and TD
Bank, N.A. (4)10.3
    
    Term Note, dated as of May 27, 2009, by and among EDAC, Gros-Ite, Apex and TD Bank, N.A. (4)10.4
    
    Revolving Credit Note, dated as of May 27, 2009, by and among EDAC, Gros-Ite, Apex and TD
Bank, N.A. (4)10.5
    
    Mortgage Note, dated as of May 27, 2009, by and among EDAC, Gros-Ite, Apex and TD Bank, N.A.
(4)10.6
    
    Open-End Mortgage Deed and Security Agreement, dated as of May 27, 2009, by and between EDAC
and TD Bank N.A. (4)10.7
    
    Environmental Indemnity Agreement, dated as of May 27, 2009, by and between EDAC, Gros-Ite,
Apex and TD Bank, N.A. (4)10.8
    
    Secured Promissory Note, dated as of May 27, 2009, by EDAC in favor of MTU Aero Engines North
America, Inc. (4)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.
 18




---



##### Table of Contents



(3)
    
    Exhibit incorporated by reference to the Companys Report
on Form 8-K dated February 19, 2002.(4)
    
    Exhibit incorporated by reference to the Companys Report on Form 8-K dated May 27, 2009*
    
    Filed herewith. 19