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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 July 3, 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  
  
  
 July 3,
    
    
    January 2,2010
    
    
    2010(in thousands)
    
    (Unaudited)
    
    
    (Audited)ASSETSCURRENT ASSETS:Cash
    
    $
    661
    
    
    $
    1,100Accounts receivable (net of allowance for
for doubtful accounts of $136 as of
July 3, 2010 and $249 as of
January 2, 2010)
    
    
    13,782
    
    
    
    10,862Inventories, net
    
    
    21,206
    
    
    
    19,990Prepaid expenses and other current
assets
    
    
    356
    
    
    
    306Refundable income taxes
    
    
    112
    
    
    
    112Deferred income taxes
    
    
    1,098
    
    
    
    1,098Total current assets
    
    
    37,215
    
    
    
    33,468PROPERTY, PLANT AND EQUIPMENT, at cost
    
    
    49,727
    
    
    
    48,431Less: accumulated depreciation
    
    
    27,279
    
    
    
    25,97422,448
    
    
    
    22,457OTHER ASSETS
    
    
    178
    
    
    
    202TOTAL ASSETS
    
    $
    59,841
    
    
    $
    56,127
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July 3,
    
    
    January 2,2010
    
    
    2010(in thousands)
    
    (Unaudited)
    
    
    (Audited)LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Lines of credit
    
    $
    2,450
    
    
    $
    1,591Current portion of long-term debt
    
    
    2,071
    
    
    
    1,833Trade accounts payable
    
    
    7,642
    
    
    
    6,828Employee compensation and amounts
withheld
    
    
    1,307
    
    
    
    1,185Accrued expenses
    
    
    2,038
    
    
    
    1,819Customer advances
    
    
    583
    
    
    
    1,028Total current liabilities
    
    
    16,091
    
    
    
    14,284LONG-TERM DEBT, less current portion
    
    
    13,211
    
    
    
    12,154PENSION LIABILITIES
    
    
    1,448
    
    
    
    1,448DEFERRED INCOME TAXES
    
    
    4,483
    
    
    
    4,475SHAREHOLDERS EQUITY:Common stock, par value $.0025 per
share; issued and outstanding:4,869,469 on July 3, 2010 and
4,840,803 on January 2, 2010
    
    
    12
    
    
    
    12Additional paid-in capital
    
    
    11,475
    
    
    
    11,225Retained earnings
    
    
    15,489
    
    
    
    14,78526,976
    
    
    
    26,022Less: accumulated other comprehensive loss
    
    
    2,368
    
    
    
    2,256Total shareholders equity
    
    
    24,608
    
    
    
    23,766TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY
    
    $
    59,841
    
    
    $
    56,127
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For the three months ended
    
    
    For the six months endedJuly 3,
    
    
    July 4,
    
    
    July 3,
    
    
    July 4,(in thousands except per share amounts)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Sales
    
    $
    18,841
    
    
    $
    13,629
    
    
    $
    36,628
    
    
    $
    23,213Cost of Sales
    
    
    16,583
    
    
    
    11,933
    
    
    
    32,229
    
    
    
    20,436Gross Profit
    
    
    2,258
    
    
    
    1,696
    
    
    
    4,399
    
    
    
    2,776Selling, General and Administrative Expenses
    
    
    1,529
    
    
    
    1,181
    
    
    
    3,260
    
    
    
    2,042Income from Operations
    
    
    729
    
    
    
    515
    
    
    
    1,139
    
    
    
    734Non-Operating Income (Expense):Interest Expense
    
    
    (226
    )
    
    
    (191
    )
    
    
    (452
    )
    
    
    (330
    )Other
    
    
    
    
    
    
    11,740
    
    
    
    360
    
    
    
    11,746Income before Provision For Income Taxes
    
    
    503
    
    
    
    12,064
    
    
    
    1,047
    
    
    
    12,150Provision for Income Taxes
    
    
    158
    
    
    
    4,688
    
    
    
    343
    
    
    
    4,718Net Income
    
    $
    345
    
    
    $
    7,376
    
    
    $
    704
    
    
    $
    7,432Income per share data (Note A):Basic Income Per Common Share
    
    $
    0.07
    
    
    $
    1.53
    
    
    $
    0.15
    
    
    $
    1.54Diluted Income Per Common Share
    
    $
    0.07
    
    
    $
    1.50
    
    
    $
    0.14
    
    
    $
    1.52
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For the six months endedJuly 3,
    
    
    July 4,(in thousands)
    
    2010
    
    
    2009Operating Activities:Net income
    
    $
    704
    
    
    $
    7,433Adjustments to reconcile net income
to net cash (used in) provided by operating activities:Depreciation and amortization
    
    
    1,329
    
    
    
    904Deferred income taxes
    
    
    8
    
    
    
    4,583Gain on acquisition of business
    
    
    (350
    )
    
    
    (11,739
    )Gain on sale of property, plant and equipment
    
    
    
    
    
    
    (6
    )Compensation expense pursuant to stock options
    
    
    216
    
    
    
    110Excess tax benefit from share-based compensation
    
    
    (42
    )
    
    
    Changes in working capital items
    
    
    (3,451
    )
    
    
    (946
    )Net cash (used in) provided by
operating activities
    
    
    (1,586
    )
    
    
    339Investing Activities:Additions to property, plant and equipment
    
    
    (783
    )
    
    
    (425
    )Equipment deposits
    
    
    
    
    
    
    (1,109
    )Acquisition of business
    
    
    (300
    )
    
    
    (9,500
    )Proceeds from sales of property, plant and equipment
    
    
    
    
    
    
    6Deferred financing costs
    
    
    
    
    
    
    (189
    )Net cash used in investing activities
    
    
    (1,083
    )
    
    
    (11,217
    )Financing Activities:Increase in lines of credit
    
    
    859
    
    
    
    1,583Repayments of long-term debt
    
    
    (948
    )
    
    
    (1,226
    )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
    
    
    2,230
    
    
    
    9,875Decrease in cash
    
    
    (439
    )
    
    
    (1,003
    )Cash at beginning of period
    
    
    1,100
    
    
    
    1,311Cash at end of period
    
    $
    661
    
    
    $
    308Supplemental Disclosure of
Cash Flow Information:Interest paid
    
    $
    452
    
    
    $
    320Income taxes paid (refunded)
    
    
    225
    
    
    
    (511
    )
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ACQUISITION
   Six Months EndedSales
    
    $
    31,879Net income
    
    $
    561Basic income per share
    
    $
    0.12Diluted income per share
    
    $
    0.11
  BASIS OF PRESENTATION
 Regulation S-X.
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July 3, 2010
    
    
    January 2, 2010Raw materials
    
    $
    3,502
    
    
    $
    2,519Work-in-progress
    
    
    15,718
    
    
    
    15,891Finished goods
    
    
    2,641
    
    
    
    2,23521,861
    
    
    
    20,645Less: reserve for excess and obsolete
    
    
    (655
    )
    
    
    (655
    )Inventories, net
    
    $
    21,206
    
    
    $
    19,990
  For the three months ended
    
    For the six months endedJuly 3,
    
    July 4,
    
    July 3,
    
    July 4,2010
    
    2009
    
    2010
    
    2009Basic:Weighted average common
shares outstanding
    
    
    4,857
    
    
    
    4,830
    
    
    
    4,850
    
    
    
    4,828Diluted:Dilutive effect of
stock options
    
    
    245
    
    
    
    89
    
    
    
    179
    
    
    
    64Weighted average
shares diluted
    
    
    5,102
    
    
    
    4,919
    
    
    
    5,029
    
    
    
    4,892Options excluded since
antidilutive
    
    
    179
    
    
    
    297
    
    
    
    179
    
    
    
    347
  Sales of Financial Assets
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Consolidation of Variable Interest
Entities
  8




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July 3, 2010
    
    
    January 2, 2010Lines of credit
    
    $
    2,450
    
    
    $
    1,591Term notes
    
    
    9,913
    
    
    
    8,420Mortgage loans
    
    
    5,369
    
    
    
    5,475Capital lease obligations
    
    
    
    
    
    
    9217,732
    
    
    
    15,578Less  equipment line of credit
    
    
    
    
    
    
    1,391Less  revolving line of credit
    
    
    2,450
    
    
    
    200Less  current portion of
long-term debt
    
    
    2,071
    
    
    
    1,833$
    13,211
    
    
    $
    12,154
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For the three months ended
    
    
    For the six months endedJuly 3,
    
    
    July 4,
    
    
    July 3,
    
    
    July 4,2010
    
    
    2009
    
    
    2010
    
    
    2009Components of net periodic benefit cost:Interest cost
    
    $
    79
    
    
    $
    82
    
    
    $
    158
    
    
    $
    164Expected return on plan assets
    
    
    (71
    )
    
    
    (62
    )
    
    
    (142
    )
    
    
    (124
    )Amortization of acturial loss
    
    
    30
    
    
    
    33
    
    
    
    60
    
    
    
    66Net periodic pension expense
    
    $
    38
    
    
    $
    53
    
    
    $
    76
    
    
    $
    106
    For the three months ended
    
    
    For the six months endedJuly 3,
    
    
    July 4,
    
    
    July 3,
    
    
    July 4,2010
    
    
    2009
    
    
    2010
    
    
    2009Current provision
    
    $
    195
    
    
    $
    73
    
    
    $
    277
    
    
    $
    93Deferred
    
    
    (37
    )
    
    
    4,615
    
    
    
    66
    
    
    
    4,625Total provision
    
    $
    158
    
    
    $
    4,688
    
    
    $
    343
    
    
    $
    4,718
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Sales.
  For the three months endedJuly 3,
    
    
    July 4,Product Line
    
    2010
    
    
    2009
    
    
    ChangeEDAC Aero
    
    $
    12,584
    
    
    $
    8,190
    
    
    $
    4,394Apex Machine Tool
    
    
    4,843
    
    
    
    4,721
    
    
    
    122EDAC Machinery
    
    
    1,414
    
    
    
    718
    
    
    
    696Total
    
    $
    18,841
    
    
    $
    13,629
    
    
    $
    5,212
 For the six months endedJuly 3,
    
    
    July 4,Product Line
    
    2010
    
    
    2009
    
    
    ChangeEDAC Aero
    
    $
    25,138
    
    
    $
    13,377
    
    
    $
    11,761Apex Machine Tool
    
    
    8,830
    
    
    
    8,572
    
    
    
    258EDAC Machinery
    
    
    2,660
    
    
    
    1,264
    
    
    
    1,396Total
    
    $
    36,628
    
    
    $
    23,213
    
    
    $
    13,415
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Three months ended
    
    
    Six months endedJuly 3,
    
    
    July 4,
    
    
    July 3,
    
    
    July 4,2010
    
    
    2009
    
    
    2010
    
    
    2009Aerospace customers
    
    $
    14,946
    
    
    $
    8,692
    
    
    $
    28,543
    
    
    $
    18,008Other
    
    
    3,895
    
    
    
    4,937
    
    
    
    8,085
    
    
    
    5,205Total
    
    $
    18,841
    
    
    $
    13,629
    
    
    $
    36,628
    
    
    $
    23,213
   Cost of Sales.
 12




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Selling, General & Administrative Expenses.
 Interest Expense.
 Other Income.
 Income Taxes.
 Liquidity and Capital Resources.
  Six Months EndedJuly 3,
    
    July 4,2010
    
    2009Net cash flows (used in) provided by
operating activities:
    
    
    ($1,586
    )
    
    $
    339
  13




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Six Months EndedJuly 3,
    
    July 4,2010
    
    2009Net cash flows used in
investing activities:
    
    $
    1,083
    
    
    $
    11,217
   Six Months EndedJuly 3,
    
    July 4,2010
    
    2009Net cash flows provided by
financing activities:
    
    $
    2,230
    
    
    $
    9,875
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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
  
  
 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 16




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EDAC TECHNOLOGIES CORPORATIONJuly 29, 2010
    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