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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedSeptember 27, 2008
 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: 0 -14275
 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
  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  
 
 
 
 September 27,
    
    
    December 29,2008
    
    
    2007(Unaudited)
    
    
    (Audited)ASSETSCURRENT ASSETS:Cash
    
    $
    2,011,935
    
    
    $
    3,286,203Trade accounts receivable, (net
of allowance for doubtful accounts
of $186,000 as of September 27, 2008
and December 29, 2007)
    
    
    8,035,291
    
    
    
    7,638,573Inventories, net
    
    
    9,648,975
    
    
    
    6,598,111Prepaid expenses and other
    
    
    143,905
    
    
    
    51,339Refundable income taxes
    
    
    
    
    
    
    284,577Deferred income taxes
    
    
    880,124
    
    
    
    933,124TOTAL CURRENT ASSETS
    
    
    20,720,230
    
    
    
    18,791,927PROPERTY, PLANT, AND EQUIPMENT
    
    
    35,192,245
    
    
    
    34,869,219less-accumulated depreciation
    
    
    23,665,109
    
    
    
    22,390,41711,527,136
    
    
    
    12,478,802OTHER ASSETS:Deposits on equipment
    
    
    749,250
    
    
    
    Other
    
    
    474,924
    
    
    
    492,051TOTAL ASSETS
    
    $
    33,471,540
    
    
    $
    31,762,780
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September 27,
    
    
    December 29,2008
    
    
    2007(Unaudited)
    
    
    (Audited)LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Equipment line of credit
    
    $
    1,365,590
    
    
    $
    Current portion of long-term debt
    
    
    2,350,876
    
    
    
    2,285,704Trade accounts payable
    
    
    4,342,755
    
    
    
    4,021,827Accrued employee compensation
and amounts withheld
    
    
    1,484,161
    
    
    
    1,800,390Other accrued expenses
    
    
    226,508
    
    
    
    395,950Customer advances
    
    
    891,827
    
    
    
    424,439TOTAL CURRENT LIABILITIES
    
    
    10,661,717
    
    
    
    8,928,310LONG-TERM DEBT,less current portion
    
    
    5,434,412
    
    
    
    7,204,769DEFERRED INCOME TAXES
    
    
    448,660
    
    
    
    448,660SHAREHOLDERS EQUITY:Common stock, $.0025 par value;
issued and outstanding: 4,825,303
on September 27, 2008 and
4,636,303 on December 29, 2007
    
    
    12,063
    
    
    
    11,591Additional paid-in capital
    
    
    10,573,271
    
    
    
    10,245,877Retained earnings
    
    
    7,438,086
    
    
    
    6,020,24218,023,420
    
    
    
    16,277,710Less: accumulated other
comprehensive loss
    
    
    1,096,669
    
    
    
    1,096,669TOTAL SHAREHOLDERS EQUITY
    
    
    16,926,751
    
    
    
    15,181,041TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY
    
    $
    33,471,540
    
    
    $
    31,762,780
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For the three months ended
    
    
    For the nine months ended_Sept 27,
    
    
    Sept 29,
    
    
    Sept 27,
    
    
    Sept 29,2008
    
    
    2007
    
    
    2008
    
    
    2007Sales
    
    $
    10,547,124
    
    
    $
    12,525,403
    
    
    $
    32,577,388
    
    
    $
    37,308,102Cost of sales
    
    
    9,161,877
    
    
    
    10,012,338
    
    
    
    27,276,156
    
    
    
    30,001,252Gross profit
    
    
    1,385,247
    
    
    
    2,513,065
    
    
    
    5,301,232
    
    
    
    7,306,850Selling, general and
administrative expenses
    
    
    842,868
    
    
    
    980,308
    
    
    
    2,676,232
    
    
    
    2,877,958Income from operations
    
    
    542,379
    
    
    
    1,532,757
    
    
    
    2,625,000
    
    
    
    4,428,892Non-operating income
(expense):Interest expense
    
    
    (158,885
    )
    
    
    (179,324
    )
    
    
    (478,510
    )
    
    
    (543,813
    )Other
    
    
    8,425
    
    
    
    18,897
    
    
    
    62,354
    
    
    
    29,212Income before
income taxes
    
    
    391,919
    
    
    
    1,372,330
    
    
    
    2,208,844
    
    
    
    3,914,291Provision for
income taxes
    
    
    137,000
    
    
    
    508,000
    
    
    
    791,000
    
    
    
    1,449,000Net income
    
    $
    254,919
    
    
    $
    864,330
    
    
    $
    1,417,844
    
    
    $
    2,465,291Income per
share data (Note A):Basic
    
    $
    0.05
    
    
    $
    0.19
    
    
    $
    0.30
    
    
    $
    0.54Diluted
    
    $
    0.05
    
    
    $
    0.17
    
    
    $
    0.28
    
    
    $
    0.50
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For the nine months endedSeptember 27,
    
    
    September 29,2008
    
    
    2007Operating Activities:Net income
    
    $
    1,417,844
    
    
    $
    2,465,291Adjustments to reconcile net income
to net cash provided by
operating activities:Depreciation and amortization
    
    
    1,539,627
    
    
    
    1,715,127Deferred income taxes
    
    
    53,000
    
    
    
    687,000Gain on sale of property,
plant & equipment
    
    
    (21,850
    )
    
    
    Stock compensation expense
pursuant to stock options
    
    
    167,247
    
    
    
    41,418Excess tax benefit from
share-based compensation
    
    
    (309,150
    )
    
    
    (150,400
    )Changes in working capital items
    
    
    (2,952,926
    )
    
    
    14,283Net cash (used in) provided by
operating activities
    
    
    (106,208
    )
    
    
    4,772,719Investing Activities:Additions to property, plant
and equipment
    
    
    (570,834
    )
    
    
    (2,305,742
    )Equipment deposits
    
    
    (749,250
    )
    
    
    Proceeds from sale of property,
plant and equipment
    
    
    21,850
    
    
    
    Net cash used in investing
activities
    
    
    (1,298,234
    )
    
    
    (2,305,742
    )Financing Activities:Increase (decrease) in lines
of credit, net
    
    
    1,365,590
    
    
    
    (1,000,000
    )Repayments of long-term debt
    
    
    (1,705,185
    )
    
    
    (1,452,597
    )Borrowing on long-term debt
    
    
    
    
    
    
    1,515,540Proceeds from exercise of options
and issuance of common stock
    
    
    160,619
    
    
    
    144,783Excess tax benefit from
share-based compensation
    
    
    309,150
    
    
    
    150,400Net cash provided by (used in)
financing activities
    
    
    130,174
    
    
    
    (641,874
    )(Decrease) increase in cash
    
    
    (1,274,268
    )
    
    
    1,825,103Cash at beginning of period
    
    
    3,286,203
    
    
    
    925,197Cash at end of period
    
    $
    2,011,935
    
    
    $
    2,750,300Supplemental Disclosure of
Cash Flow Information:Interest paid
    
    $
    478,511
    
    
    $
    543,813Income taxes paid
    
    
    526,000
    
    
    
    916,648
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September 27,
    
    
    December 29,2008
    
    
    2007Raw materials
    
    $
    1,084,615
    
    
    $
    1,530,440Work-in-progress
    
    
    7,680,032
    
    
    
    4,635,437Finished goods
    
    
    1,526,956
    
    
    
    1,110,95710,291,603
    
    
    
    7,276,834Reserve for excess
and obsolete
    
    
    (642,628
    )
    
    
    (678,723
    )Inventories, net
    
    $
    9,648,975
    
    
    $
    6,598,111
  For the three months ended
    
    
    For the nine months endedSept. 27,
    
    
    Sept. 29,
    
    
    Sept. 27,
    
    
    Sept. 29,2008
    
    
    2007
    
    
    2008
    
    
    2007Basic:Average common shares outstanding
    
    
    4,746,137
    
    
    
    4,605,603
    
    
    
    4,693,020
    
    
    
    4,571,936Diluted:Dilutive effect of stock options
    
    
    393,785
    
    
    
    348,367
    
    
    
    459,719
    
    
    
    337,494Average common shares diluted
    
    
    5,139,922
    
    
    
    4,953,970
    
    
    
    5,152,739
    
    
    
    4,909,430Options excluded since anti-dilutive
    
    
    198,500
    
    
    
    
    
    
    
    188,500
    
    
    
    
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NOTE B  FINANCING ARRANGEMENTS
  September 27,
    
    
    December 29,2008
    
    
    2007Term notes
    
    $
    4,406,977
    
    
    $
    5,834,479Mortgage loans
    
    
    3,043,153
    
    
    
    3,138,313Equipment note payable
    
    
    
    
    
    
    2,999Capital lease obligations
    
    
    335,158
    
    
    
    514,6827,785,288
    
    
    
    9,490,473Less  current portion of long-term debt
    
    
    2,350,876
    
    
    
    2,285,704$
    5,434,412
    
    
    $
    7,204,769
    NOTE C  DEFINED BENEFIT PENSION PLAN
  For the three months ended
    
    
    For the nine months endedSept. 27,
    
    
    Sept. 29,
    
    
    Sept. 27,
    
    
    Sept. 29,2008
    
    
    2007
    
    
    2008
    
    
    2007Components of net periodic benefit cost:Interest cost
    
    $
    91
    
    
    $
    88
    
    
    $
    273
    
    
    $
    263Expected return on plan assets
    
    
    (93
    )
    
    
    (90
    )
    
    
    (279
    )
    
    
    (268
    )Amortization of actuarial loss
    
    
    2
    
    
    
    10
    
    
    
    6
    
    
    
    30Net periodic pension expense
    
    $
    0
    
    
    $
    8
    
    
    $
    0
    
    
    $
    25
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NOTE D  INCOME TAXES
  For the three months ended
    
    
    For the nine months endedSept. 27,
    
    
    Sept. 29,
    
    
    Sept. 27,
    
    
    Sept. 29,2008
    
    
    2007
    
    
    2008
    
    
    2007Current provision
    
    $
    128
    
    
    $
    267
    
    
    $
    738
    
    
    $
    762Deferred provision
    
    
    9
    
    
    
    241
    
    
    
    53
    
    
    
    687Total provision
    
    $
    137
    
    
    $
    508
    
    
    $
    791
    
    
    $
    1,449
   NOTE E  SHAREHOLDERS EQUITY
   
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Sales.
  9




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For the three months endedSept. 27,
    
    
    Sept. 29,Product Line
    
    2008
    
    
    2007
    
    
    ChangePrecision Aerospace
    
    $
    5,536
    
    
    $
    6,867
    
    
    $
    (1,331
    )Apex Machine Tool
    
    
    4,019
    
    
    
    4,714
    
    
    
    (695
    )Gros-Ite Spindles
    
    
    992
    
    
    
    944
    
    
    
    48Total
    
    $
    10,547
    
    
    $
    12,525
    
    
    $
    (1,978
    )
 For the nine months endedSept. 27,
    
    
    Sept. 29,Product Line
    
    2008
    
    
    2007
    
    
    ChangePrecision Aerospace
    
    $
    16,290
    
    
    $
    19,844
    
    
    $
    (3,554
    )Apex Machine Tool
    
    
    13,307
    
    
    
    14,603
    
    
    
    (1,296
    )Gros-Ite Spindles
    
    
    2,980
    
    
    
    2,861
    
    
    
    119Total
    
    $
    32,577
    
    
    $
    37,308
    
    
    $
    (4,731
    )
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For the three months ended
    
    
    For the nine months endedSept. 27,
    
    
    Sept. 29,
    
    
    Sept. 27,
    
    
    Sept. 29,2008
    
    
    2007
    
    
    2008
    
    
    2007Aerospace customers
    
    $
    7,248
    
    
    $
    8,984
    
    
    $
    23,435
    
    
    $
    27,496Non-aerospace customers
    
    
    3,299
    
    
    
    3,541
    
    
    
    9,142
    
    
    
    9,812$
    10,547
    
    
    $
    12,525
    
    
    $
    32,577
    
    
    $
    37,308
  Cost of Sales.
 Selling, General & Administrative Expenses.
 Interest Expense.
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Income Taxes.
 Liquidity and Capital Resources.
  Nine Months EndedSept. 27,
    
    Sept. 29,2008
    
    2007Net cash flows (used in) provided by
operating activities:
    
    $
    (106,000
    )
    
    $
    4,773,000
   Nine Months EndedSept. 27,
    
    Sept. 29,2008
    
    2007Net cash flows used in investing activities:
    
    $
    (1,298,000
    )
    
    $
    (2,306,000
    )
   Nine Months EndedSept. 27,
    
    Sept. 29,2008
    
    2007Net cash flows provided by (used in)
financing activities:
    
    $
    130,000
    
    
    $
    (642,000
    )
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
   13




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14




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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 15




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EDAC TECHNOLOGIES CORPORATIONOctober 30, 2008
    
    By
    
    /s/ Glenn L. PurpleGlenn L. Purple, Chief FinancialOfficer and duly authorized officer
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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. 17