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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 2, 2010
 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
    
    (I.R.S. employerincorporation or organization)
    
    Identification No.)
 1806 New Britain Avenue, Farmington, CT 06032
 (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(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 2,
    
    
    January 2,2010
    
    
    2010(in thousands)
    
    (Unaudited)
    
    
    (Audited)ASSETSCURRENT ASSETS:Cash
    
    $
    1,051
    
    
    $
    1,100Accounts receivable (net of allowance
for doubtful accounts of $113 as of
October 2, 2010 and $249 as of
January 2, 2010)
    
    
    15,506
    
    
    
    10,862Inventories, net
    
    
    20,760
    
    
    
    19,990Prepaid expenses and other current
assets
    
    
    300
    
    
    
    306Refundable income taxes
    
    
    32
    
    
    
    112Deferred income taxes
    
    
    1,098
    
    
    
    1,098Equipment held for sale
    
    
    43
    
    
    
    Total current assets
    
    
    38,790
    
    
    
    33,468PROPERTY, PLANT AND EQUIPMENT, at cost
    
    
    50,141
    
    
    
    48,431Less: accumulated depreciation
    
    
    27,946
    
    
    
    25,97422,195
    
    
    
    22,457OTHER ASSETS
    
    
    167
    
    
    
    202TOTAL ASSETS
    
    $
    61,152
    
    
    $
    56,127
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October 2,
    
    
    January 2,2010
    
    
    2010(in thousands)
    
    (Unaudited)
    
    
    (Audited)LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Lines of credit
    
    $
    4,100
    
    
    $
    1,591Current portion of long-term debt
    
    
    4,502
    
    
    
    1,833Trade accounts payable
    
    
    7,536
    
    
    
    6,828Employee compensation and amounts
withheld
    
    
    1,698
    
    
    
    1,185Accrued expenses
    
    
    1,751
    
    
    
    1,819Customer advances
    
    
    677
    
    
    
    1,028Total current liabilities
    
    
    20,264
    
    
    
    14,284LONG-TERM DEBT, less current portion
    
    
    10,273
    
    
    
    12,154PENSION LIABILITIES
    
    
    1,448
    
    
    
    1,448DEFERRED INCOME TAXES
    
    
    4,423
    
    
    
    4,475SHAREHOLDERS EQUITY:Common stock, par value $.0025 per
share; issued and outstanding:4,869,469 on October 2, 2010 and
4,840,803 on January 2, 2010
    
    
    12
    
    
    
    12Additional paid-in capital
    
    
    11,583
    
    
    
    11,225Retained earnings
    
    
    15,573
    
    
    
    14,78527,168
    
    
    
    26,022Less: accumulated other comprehensive loss
    
    
    2,424
    
    
    
    2,256Total shareholders equity
    
    
    24,744
    
    
    
    23,766TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY
    
    $
    61,152
    
    
    $
    56,127
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For the three months ended
    
    
    For the nine months endedOctober 2,
    
    
    October 3,
    
    
    October 2,
    
    
    October 3,(in thousands except per share amounts)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Sales
    
    $
    18,528
    
    
    $
    15,132
    
    
    $
    55,156
    
    
    $
    38,345Cost of Sales
    
    
    16,760
    
    
    
    13,370
    
    
    
    48,989
    
    
    
    33,807Gross Profit
    
    
    1,768
    
    
    
    1,762
    
    
    
    6,167
    
    
    
    4,538Selling, General and Administrative Expenses
    
    
    1,393
    
    
    
    1,306
    
    
    
    4,653
    
    
    
    3,348Income from Operations
    
    
    375
    
    
    
    456
    
    
    
    1,514
    
    
    
    1,190Non-Operating Income (Expense):Interest Expense
    
    
    (259
    )
    
    
    (262
    )
    
    
    (711
    )
    
    
    (593
    )Other (Note A)
    
    
    2
    
    
    
    (74
    )
    
    
    362
    
    
    
    11,673Income before Provision For Income Taxes
    
    
    118
    
    
    
    120
    
    
    
    1,165
    
    
    
    12,270Provision for Income Taxes
    
    
    34
    
    
    
    40
    
    
    
    377
    
    
    
    4,757Net Income
    
    $
    84
    
    
    $
    80
    
    
    $
    788
    
    
    $
    7,513Income per share data (Note A):Basic Income Per Common Share
    
    $
    0.02
    
    
    $
    0.02
    
    
    $
    0.16
    
    
    $
    1.56Diluted Income Per Common Share
    
    $
    0.02
    
    
    $
    0.02
    
    
    $
    0.16
    
    
    $
    1.53
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For the nine months endedOctober 2,
    
    
    October 3,(in thousands)
    
    2010
    
    
    2009Operating Activities:Net income
    
    $
    788
    
    
    $
    7,513Adjustments to reconcile net income
to net cash (used in) provided by operating activities:Depreciation and amortization
    
    
    2,008
    
    
    
    1,547Deferred income taxes
    
    
    (52
    )
    
    
    4,583Gain on acquisition of business
    
    
    (350
    )
    
    
    (11,874
    )Gain on sale of property, plant and equipment
    
    
    
    
    
    
    (31
    )Compensation expense pursuant to stock options
    
    
    324
    
    
    
    166Excess tax benefit from share-based compensation
    
    
    (42
    )
    
    
    Changes in working capital items
    
    
    (4,557
    )
    
    
    211Net cash (used in) provided by
operating activities
    
    
    (1,881
    )
    
    
    2,115Investing Activities:Additions to property, plant and equipment
    
    
    (1,241
    )
    
    
    (872
    )Equipment deposits
    
    
    
    
    
    
    981Acquisition of business
    
    
    (300
    )
    
    
    (10,275
    )Proceeds from sales of property, plant and equipment
    
    
    
    
    
    
    31Deferred financing costs
    
    
    
    
    
    
    (206
    )Net cash used in investing activities
    
    
    (1,541
    )
    
    
    (10,341
    )Financing Activities:Increase in lines of credit
    
    
    2,509
    
    
    
    216Repayments of long-term debt
    
    
    (1,455
    )
    
    
    (1,968
    )Issuance of long-term debt
    
    
    2,243
    
    
    
    9,500Proceeds from exercise of stock options
    
    
    34
    
    
    
    18Excess tax benefit from share-based compensation
    
    
    42
    
    
    
    Net cash provided by financing activities
    
    
    3,373
    
    
    
    7,766Decrease in cash
    
    
    (49
    )
    
    
    (460
    )Cash at beginning of period
    
    
    1,100
    
    
    
    1,311Cash at end of period
    
    $
    1,051
    
    
    $
    851Supplemental Disclosure of
Cash Flow Information:Interest paid
    
    $
    711
    
    
    $
    586Income taxes paid (refunded)
    
    
    600
    
    
    
    (361
    )
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(in thousands except per share amounts)
  ACQUISITION
   Nine Months EndedOctober 3, 2009Sales
    
    $
    46,997Net income
    
    $
    642Basic income per share
    
    $
    0.13Diluted income per share
    
    $
    0.13
  BASIS OF PRESENTATION
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October 2, 2010
    
    
    January 2, 2010Raw materials
    
    $
    3,261
    
    
    $
    2,519Work-in-progress
    
    
    15,754
    
    
    
    15,890Finished goods
    
    
    2,182
    
    
    
    2,23621,197
    
    
    
    20,645Less: reserve for
excess and obsolete
    
    
    (437
    )
    
    
    (655
    )Inventories, net
    
    $
    20,760
    
    
    $
    19,990
  For the three months ended

    
    For the nine months endedOctober 2,

    
    October 3,

    
    October 2,

    
    October 3,2010

    
    2009

    
    2010

    
    2009Basic:Weighted average common
shares outstanding
    
    
    4,869
    
    
    
    4,838
    
    
    
    4,856
    
    
    
    4,831Diluted:Dilutive effect of
stock options
    
    
    186
    
    
    
    173
    
    
    
    176
    
    
    
    84Weighted average
shares diluted
    
    
    5,055
    
    
    
    5,011
    
    
    
    5,032
    
    
    
    4,915Options excluded since antidilutive
    
    
    182
    
    
    
    184
    
    
    
    182
    
    
    
    297
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October 2, 2010
    
    
    January 2, 2010Lines of credit
    
    $
    4,100
    
    
    $
    1,591Term notes
    
    
    9,460
    
    
    
    8,420Mortgage loans
    
    
    5,315
    
    
    
    5,475Capital lease obligations
    
    
    
    
    
    
    9218,875
    
    
    
    15,578Less  equipment line of credit
    
    
    
    
    
    
    1,391Less  revolving line of credit
    
    
    4,100
    
    
    
    200Less  current portion of long-term debt
    
    
    4,502
    
    
    
    1,833$
    10,273
    
    
    $
    12,154
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For the three months ended
    
    
    For the nine months endedOctober 2,
    
    
    October 3,
    
    
    October 2,
    
    
    October 3,2010
    
    
    2009
    
    
    2010
    
    
    2009Components of net periodic benefit cost:Interest cost
    
    $
    79
    
    
    $
    82
    
    
    $
    237
    
    
    $
    246Expected return on plan assets
    
    
    (71
    )
    
    
    (62
    )
    
    
    (213
    )
    
    
    (186
    )Amortization of acturial loss
    
    
    30
    
    
    
    33
    
    
    
    90
    
    
    
    99Net periodic pension expense
    
    $
    38
    
    
    $
    53
    
    
    $
    114
    
    
    $
    159
    For the three months ended
    
    
    For the nine months endedOctober 2,
    
    
    October 3,
    
    
    October 2,
    
    
    October 3,2010
    
    
    2009
    
    
    2010
    
    
    2009Current provision
    
    $
    65
    
    
    $
    40
    
    
    $
    342
    
    
    $
    132Deferred provision (benefit)
    
    
    (31
    )
    
    
    
    
    
    
    35
    
    
    
    4,625Total provision
    
    $
    34
    
    
    $
    40
    
    
    $
    377
    
    
    $
    4,757
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Sales.
  For the three months endedOctober 2,
    
    
    October 3,Product Line
    
    2010
    
    
    2009
    
    
    ChangeEDAC Aero
    
    $
    13,362
    
    
    $
    11,174
    
    
    $
    2,188Apex Machine Tool
    
    
    3,947
    
    
    
    3,368
    
    
    
    579EDAC Machinery
    
    
    1,219
    
    
    
    590
    
    
    
    629Total
    
    $
    18,528
    
    
    $
    15,132
    
    
    $
    3,396
 For the nine months endedOctober 2,
    
    
    October 3,Product Line
    
    2010
    
    
    2009
    
    
    ChangeEDAC Aero
    
    $
    38,500
    
    
    $
    24,551
    
    
    $
    13,949Apex Machine Tool
    
    
    12,777
    
    
    
    11,940
    
    
    
    837EDAC Machinery
    
    
    3,879
    
    
    
    1,854
    
    
    
    2,025Total
    
    $
    55,156
    
    
    $
    38,345
    
    
    $
    16,811
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Three months ended
    
    
    Nine months endedOctober 2,
    
    
    October 3,
    
    
    October 2,
    
    
    October 3,2010
    
    
    2009
    
    
    2010
    
    
    2009Aerospace customers
    
    $
    14,889
    
    
    $
    10,728
    
    
    $
    43,433
    
    
    $
    28,736Other
    
    
    3,639
    
    
    
    4,404
    
    
    
    11,723
    
    
    
    9,609Total
    
    $
    18,528
    
    
    $
    15,132
    
    
    $
    55,156
    
    
    $
    38,345
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Cost of Sales.
   Selling, General & Administrative Expenses.
 Interest Expense.
 Other Income.
 Income Taxes.
 13




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Liquidity and Capital Resources.
  Nine Months EndedOctober 2,
    
    October 3,2010
    
    2009Net cash flows (used in) provided by
operating activities:
    
    
    ($1,881
    )
    
    $
    2,115
    Nine Months EndedOctober 2,
    
    October 3,2010
    
    2009Net cash flows used in
investing activities:
    
    
    ($1,541
    )
    
    
    ($10,341
    )
   Nine Months EndedOctober 2,
    
    October 3,2010
    
    2009Net cash flows provided by
financing activities:
    
    $
    3,373
    
    
    $
    7,766
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
    15




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16




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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
  
  
 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 17




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EDAC TECHNOLOGIES CORPORATIONOctober 25, 2010
    By

/s/ Glenn L. PurpleGlenn L. Purple, Chief FinancialOfficer and duly authorized officer 18




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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. 19