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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 June 30, 2007
 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 
incorporation or organization)
    
    (I.R.S. employer
Identification No.)
 1806 New Britain Avenue, Farmington, CT 06032
 (860) 677-2603
 þ o
  o o þ
 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 PROCEDURESITEM 4T. CONTROLS AND PROCEDURESPART II  OTHER INFORMATIONITEM 1A. RISK FACTORSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 6. EXHIBITSSIGNATURESEXHIBIT INDEXCertification of Chief Executive OfficerCertification of Chief Financial OfficerCertification of CEO and CFO    Table of Contents  
  
  
 June 30,
    
    
    December 30,2007
    
    
    2006(Unaudited)
    
    
    (Audited)ASSETSCURRENT ASSETS:Cash
    
    $
    1,295,643
    
    
    $
    925,197Trade accounts receivable, (net
of allowance for doubtful accounts
of $110,000 as of June 30, 2007
and December 30, 2006)
    
    
    7,101,595
    
    
    
    7,331,226Inventories, net
    
    
    7,993,124
    
    
    
    8,234,866Prepaid expenses and other
    
    
    108,527
    
    
    
    56,438Refundable income taxes
    
    
    140,650
    
    
    
    140,650Deferred income taxes
    
    
    211,394
    
    
    
    211,394TOTAL CURRENT ASSETS
    
    
    16,850,933
    
    
    
    16,899,771PROPERTY, PLANT, AND EQUIPMENT
    
    
    31,785,360
    
    
    
    30,646,744less-accumulated depreciation
    
    
    21,448,938
    
    
    
    20,315,93810,336,422
    
    
    
    10,330,806DEFERRED INCOME TAXES
    
    
    802,786
    
    
    
    1,248,786OTHER ASSETS
    
    
    74,583
    
    
    
    86,001TOTAL ASSETS
    
    $
    28,064,724
    
    
    $
    28,565,364
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June 30,
    
    
    December 30,2007
    
    
    2006(Unaudited)
    
    
    (Audited)LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Equipment line of credit
    
    $
    756,340
    
    
    $
    Revolving line of credit
    
    
    
    
    
    
    1,000,000Current portion of long-term debt
    
    
    1,959,503
    
    
    
    1,895,436Trade accounts payable
    
    
    3,586,054
    
    
    
    4,806,090Accrued employee compensation
and amounts withheld
    
    
    1,697,205
    
    
    
    1,511,820Other accrued expenses
    
    
    328,084
    
    
    
    355,415Customer advances
    
    
    116,552
    
    
    
    120,767TOTAL CURRENT LIABILITIES
    
    
    8,443,738
    
    
    
    9,689,528LONG-TERM DEBT,less current portion
    
    
    7,083,514
    
    
    
    8,081,720OTHER LONG-TERM LIABILITIES
    
    
    163,981
    
    
    
    163,981SHAREHOLDERS EQUITY:Common stock, par value $.0025 per
share; 10,000,000 shares authorized;
issued  4,583,103 on June
30, 2007 and 4,526,437 on
December 30, 2006
    
    
    11,458
    
    
    
    11,316Additional paid-in capital
    
    
    9,672,941
    
    
    
    9,530,688Retained earnings
    
    
    4,172,133
    
    
    
    2,571,17213,856,532
    
    
    
    12,113,176Less: accumulated other
comprehensive loss
    
    
    1,483,041
    
    
    
    1,483,041TOTAL SHAREHOLDERS EQUITY
    
    
    12,373,491
    
    
    
    10,630,135TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY
    
    $
    28,064,724
    
    
    $
    28,565,364
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For the three months ended
    
    
    For the six months endedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    
    2006Sales
    
    $
    12,467,061
    
    
    $
    9,580,774
    
    
    $
    24,782,699
    
    
    $
    19,176,353Cost of sales
    
    
    10,020,820
    
    
    
    7,816,023
    
    
    
    19,988,914
    
    
    
    15,786,957Gross profit
    
    
    2,446,241
    
    
    
    1,764,751
    
    
    
    4,793,785
    
    
    
    3,389,396Selling, general and
administrative expenses
    
    
    980,025
    
    
    
    970,278
    
    
    
    1,897,650
    
    
    
    1,984,143Income from operations
    
    
    1,466,216
    
    
    
    794,473
    
    
    
    2,896,135
    
    
    
    1,405,253Non-operating income
(expense):Interest expense
    
    
    (170,053
    )
    
    
    (165,076
    )
    
    
    (364,489
    )
    
    
    (318,475
    )Other
    
    
    5,520
    
    
    
    41,634
    
    
    
    10,315
    
    
    
    56,022Income before
income taxes
    
    
    1,301,683
    
    
    
    671,031
    
    
    
    2,541,961
    
    
    
    1,142,800Provision for
income taxes
    
    
    482,000
    
    
    
    257,000
    
    
    
    941,000
    
    
    
    436,000Net income
    
    $
    819,683
    
    
    $
    414,031
    
    
    $
    1,600,961
    
    
    $
    706,800Income per share data (Note A):Basic
    
    $
    0.18
    
    
    $
    0. 09
    
    
    $
    0.35
    
    
    $
    0. 16Diluted
    
    $
    0.17
    
    
    $
    0. 09
    
    
    $
    0.33
    
    
    $
    0. 15
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For the six months endedJune 30,
    
    
    July 1,2007
    
    
    2006Operating Activities:Net income
    
    $
    1,600,961
    
    
    $
    706,800Adjustments to reconcile net income
to net cash provided by
operating activities:Depreciation and amortization
    
    
    1,144,418
    
    
    
    1,019,688Deferred income taxes
    
    
    446,000
    
    
    
    74,000Gain on sale of property,
plant & equipment
    
    
    
    
    
    
    (25,540
    )Stock compensation expense
Pursuant to stock options
    
    
    27,612
    
    
    
    18,401Excess tax benefit from
share-based compensation
    
    
    (62,000
    )
    
    
    (4,000
    )Changes in working capital items
    
    
    (646,913
    )
    
    
    (1,204,660
    )Net cash provided by
operating activities
    
    
    2,510,078
    
    
    
    584,689Investing Activities:Additions to property, plant
and equipment
    
    
    (1,138,616
    )
    
    
    (1,900,889
    )Proceeds from sale of property,
plant and equipment
    
    
    
    
    
    
    50,400Net cash used in investing
activities
    
    
    (1,138,616
    )
    
    
    (1,850,489
    )Financing Activities:Decrease in lines
of credit, net
    
    
    (243,660
    )
    
    
    Repayments of long-term debt
    
    
    (934,139
    )
    
    
    (737,841
    )Borrowing on long-term debt
    
    
    
    
    
    
    818,877Proceeds from exercise of options
and issuance of common stock
    
    
    114,783
    
    
    
    10,158Excess tax benefit from
share-based compensation
    
    
    62,000
    
    
    
    4,000Net cash (used in) provided
by financing activities
    
    
    (1,001,016
    )
    
    
    95,194Increase (decrease) in cash
    
    
    370,446
    
    
    
    (1,170,606
    )Cash at beginning of period
    
    
    925,197
    
    
    
    2,468,964Cash at end of period
    
    $
    1,295,643
    
    
    $
    1,298,358Supplemental Disclosure of
Cash Flow Information:Interest paid
    
    $
    364,489
    
    
    $
    318,475Income taxes paid
    
    
    515,973
    
    
    
    316,025
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S-X
  June 30,
    
    
    December 30,2007
    
    
    2006Raw materials
    
    $
    1,088,219
    
    
    $
    1,972,871Work-in-progress
    
    
    6,097,629
    
    
    
    5,636,354Finished goods
    
    
    1,455,582
    
    
    
    1,271,2088,641,430
    
    
    
    8,880,433Reserve for excess
and obsolete
    
    
    (648,306
    )
    
    
    (645,567
    )Inventories, net
    
    $
    7,993,124
    
    
    $
    8,234,866
  For the three months ended
    
    
    For the six months endedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    
    2006Basic:Average common
shares outstanding
    
    
    4,571,853
    
    
    
    4,515,104
    
    
    
    4,554,294
    
    
    
    4,511,175Diluted:Dilutive effect of
stock options
    
    
    349,019
    
    
    
    285,792
    
    
    
    331,449
    
    
    
    284,934Average common
shares diluted
    
    
    4,920,872
    
    
    
    4,800,896
    
    
    
    4,885,743
    
    
    
    4,796,109Options excluded
since anti-dilutive
    
    
    
    
    
    
    37,000
    
    
    
    32,000
    
    
    
    47,000
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NOTE B
 FINANCING ARRANGEMENTS
  June 30,
    
    
    December 30,2007
    
    
    2006Equipment line of credit
    
    $
    756,340
    
    
    $
    Revolving line of credit
    
    
    
    
    
    
    1,000,000Term notes
    
    
    5,209,303
    
    
    
    5,970,644Mortgage loans
    
    
    3,198,121
    
    
    
    3,257,660Equipment note payable
    
    
    6,469
    
    
    
    9,806Capital lease obligations
    
    
    629,124
    
    
    
    739,0469,799,357
    
    
    
    10,977,156Less  equipment line of credit
    
    
    756,340
    
    
    
    Less  revolving line of credit
    
    
    
    
    
    
    1,000,000Less  current portion of
long-term debt
    
    
    1,959,503
    
    
    
    1,895,436$
    7,083,514
    
    
    $
    8,081,720
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NOTE C
 DEFINED BENEFIT PENSION PLAN
  For the three months ended
    
    
    For the six months endedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    
    2006Components of net periodic benefit cost:Interest cost
    
    $
    88
    
    
    $
    85
    
    
    $
    176
    
    
    $
    170Expected return on plan assets
    
    
    (90
    )
    
    
    (81
    )
    
    
    (180
    )
    
    
    (162
    )Amortization of actuarial loss
    
    
    10
    
    
    
    28
    
    
    
    20
    
    
    
    56Net periodic pension expense
    
    $
    8
    
    
    $
    32
    
    
    $
    16
    
    
    $
    64
  NOTE D
 INCOME TAXES
  For the three months ended
    
    
    For the six months endedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    
    2006Current provision
    
    $
    262
    
    
    $
    213
    
    
    $
    495
    
    
    $
    362Deferred provision
    
    
    220
    
    
    
    44
    
    
    
    446
    
    
    
    74Total provision
    
    $
    482
    
    
    $
    257
    
    
    $
    941
    
    
    $
    436
  
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Sales.
  For the three months ended
    
    
    For the six months endedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    
    2006Aerospace customers
    
    $
    9,332
    
    
    $
    6,148
    
    
    $
    18,512
    
    
    $
    12,018Non-aerospace customers
    
    
    3,135
    
    
    
    3,433
    
    
    
    6,271
    
    
    
    7,158$
    12,467
    
    
    $
    9,581
    
    
    $
    24,783
    
    
    $
    19,176
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For the Three Months EndedJune 30,
    
    
    July 1,Product Line
    
    2007
    
    
    2006
    
    
    ChangePrecision Aerospace
    
    $
    6,610
    
    
    $
    3,709
    
    
    $
    2,901Apex Machine Tool
    
    
    4,789
    
    
    
    4,724
    
    
    
    65Gros-Ite Spindles
    
    
    1,068
    
    
    
    1,148
    
    
    
    (80
    )Total
    
    $
    12,467
    
    
    $
    9,581
    
    
    $
    2,886
 For the Six Months EndedJune 30,
    
    
    July 1,Product Line
    
    2007
    
    
    2006
    
    
    ChangePrecision Aerospace
    
    $
    12,977
    
    
    $
    7,324
    
    
    $
    5,653Apex Machine Tool
    
    
    9,889
    
    
    
    9,566
    
    
    
    323Gros-Ite Spindles
    
    
    1,917
    
    
    
    2,286
    
    
    
    (369
    )Total
    
    $
    24,783
    
    
    $
    19,176
    
    
    $
    5,607
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Cost of Sales.
 Selling, General & Administrative Expenses.
  Interest Expense.
 Income Taxes.
 11




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Liquidity and Capital Resources.
  Six Months EndedJune 30,
    
    July 1,2007
    
    2006Net cash flows provided by operating
activities:
    
    $
    2,510,000
    
    
    $
    585,000
   Six Months EndedJune 30,
    
    July 1,2007
    
    2006Net cash flows used in investing activities:
    
    $
    1,139,000
    
    
    $
    1,851,000
   Six Months EndedJune 30,
    
    July 1,2007
    
    2006Net cash flows (used in) provided
by financing activities:
    
    
    ($1,001,000
    )
    
    $
    95,000
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
      13




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    14




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ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of disclosure and procedures
  
 ITEM 4T. CONTROLS AND PROCEDURES
 Changes in internal control over financial reporting
  
  
 ITEM 1A. RISK FACTORS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Votes
    
    VotesDirector
    
    Cast For
    
    WithheldJoseph Lebel
    
    
    3,458,959
    
    
    
    811,970Dominick A. Pagano
    
    
    3,455,635
    
    
    
    815,294Stephen J. Raffay
    
    
    3,460,059
    
    
    
    810,870Ross C. Towne
    
    
    3,457,629
    
    
    
    813,300Daniel C. Tracy
    
    
    3,458,459
    
    
    
    812,470
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3.1*
    
    EDACs Amended and Restated Articles of Incorporation3.2*
    
    EDACs Amended and Restated By-laws31.1
    
    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 CORPORATIONAugust 1, 2007
    
    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
    
    EDACs Amended and Restated By-laws (2)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 8-K dated February 19, 2002.
 *
    
    Filed herewith. 17