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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 September 29, 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
    
    (I.R.S. employerincorporation or organization)
    
    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 6. EXHIBITSSIGNATURESEXHIBIT INDEXCertification of Chief Executive OfficerCertification of Chief Financial OfficerCertification of CEO and CFO    Table of Contents  
  
  
 September 29,
    
    
    December 30,2007
    
    
    2006(Unaudited)
    
    
    (Audited)ASSETSCURRENT ASSETS:Cash
    
    $
    2,750,300
    
    
    $
    925,197Trade accounts receivable, (net
of allowance for doubtful accounts
of $110,000 as of September 29, 2007
and December 30, 2006)
    
    
    7,752,080
    
    
    
    7,331,226Inventories, net
    
    
    7,668,798
    
    
    
    8,234,866Prepaid expenses and other
    
    
    147,302
    
    
    
    56,438Refundable income taxes
    
    
    
    
    
    
    140,650Deferred income taxes
    
    
    211,394
    
    
    
    211,394TOTAL CURRENT ASSETS
    
    
    18,529,874
    
    
    
    16,899,771PROPERTY, PLANT, AND EQUIPMENT
    
    
    32,952,486
    
    
    
    30,646,744less-accumulated depreciation
    
    
    22,013,938
    
    
    
    20,315,93810,938,548
    
    
    
    10,330,806DEFERRED INCOME TAXES
    
    
    561,786
    
    
    
    1,248,786OTHER ASSETS, net
    
    
    68,874
    
    
    
    86,001TOTAL ASSETS
    
    $
    30,099,082
    
    
    $
    28,565,364
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September 29,
    
    
    December 30,2007
    
    
    2006(Unaudited)
    
    
    (Audited)LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Revolving line of credit
    
    $
    
    
    
    $
    1,000,000Current portion of long-term debt
    
    
    2,254,095
    
    
    
    1,895,436Trade accounts payable
    
    
    4,408,010
    
    
    
    4,806,090Accrued employee compensation
and amounts withheld
    
    
    1,827,462
    
    
    
    1,511,820Other accrued expenses
    
    
    246,214
    
    
    
    355,415Customer advances
    
    
    131,689
    
    
    
    120,767TOTAL CURRENT LIABILITIES
    
    
    8,867,470
    
    
    
    9,689,528LONG-TERM DEBT,
less current portion
    
    
    7,786,004
    
    
    
    8,081,720OTHER LONG-TERM LIABILITIES
    
    
    163,981
    
    
    
    163,981SHAREHOLDERS EQUITY:Common stock, par value $.0025 per
share; 10,000,000 shares authorized;
issued  4,613,103 on September
29, 2007 and 4,526,437 on
December 30, 2006
    
    
    11,533
    
    
    
    11,316Additional paid-in capital
    
    
    9,716,672
    
    
    
    9,530,688Retained earnings
    
    
    5,036,463
    
    
    
    2,571,17214,764,668
    
    
    
    12,113,176Less: accumulated other
comprehensive loss
    
    
    1,483,041
    
    
    
    1,483,041TOTAL SHAREHOLDERS EQUITY
    
    
    13,281,627
    
    
    
    10,630,135TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY
    
    $
    30,099,082
    
    
    $
    28,565,364
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For the three months ended
    
    
    For the nine months ended_Sept 29,
    
    
    Sept 30,
    
    
    Sept 29,
    
    
    Sept 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Sales
    
    $
    12,525,403
    
    
    $
    8,178,356
    
    
    $
    37,308,102
    
    
    $
    27,354,709Cost of sales
    
    
    10,012,338
    
    
    
    7,071,446
    
    
    
    30,001,252
    
    
    
    22,858,403Gross profit
    
    
    2,513,065
    
    
    
    1,106,910
    
    
    
    7,306,850
    
    
    
    4,496,306Selling, general and
administrative expenses
    
    
    980,308
    
    
    
    681,405
    
    
    
    2,877,958
    
    
    
    _2,665,548Income from operations
    
    
    1,532,757
    
    
    
    425,505
    
    
    
    4,428,892
    
    
    
    1,830,758Non-operating income
(expense):Interest expense
    
    
    (179,324
    )
    
    
    (167,069
    )
    
    
    (543,813
    )
    
    
    (485,544
    )Other
    
    
    18,897
    
    
    
    17,619
    
    
    
    29,212
    
    
    
    73,641Income before
income taxes
    
    
    1,372,330
    
    
    
    276,055
    
    
    
    3,914,291
    
    
    
    1,418,855Provision for
income taxes
    
    
    508,000
    
    
    
    105,000
    
    
    
    1,449,000
    
    
    
    541,000Net income
    
    $
    864,330
    
    
    $
    171,055
    
    
    $
    2,465,291
    
    
    $
    877,855Income per share data (Note A):Basic
    
    $
    0.19
    
    
    $
    0.04
    
    
    $
    0.54
    
    
    $
    0.19Diluted
    
    $
    0.17
    
    
    $
    0.04
    
    
    $
    0.50
    
    
    $
    0.18
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For the nine months endedSept. 29,
    
    
    Sept. 30,2007
    
    
    2006Operating Activities:Net income
    
    $
    2,465,291
    
    
    $
    877,855Adjustments to reconcile net income
to net cash provided by
operating activities:Depreciation and amortization
    
    
    1,715,127
    
    
    
    1,514,127Deferred income taxes
    
    
    687,000
    
    
    
    92,000Gain on sale of property,
plant & equipment
    
    
    
    
    
    
    (25,540
    )Stock compensation expense
pursuant to stock options
    
    
    41,418
    
    
    
    27,587Excess tax benefit from
share-based compensation
    
    
    (150,400
    )
    
    
    (4,000
    )Changes in working capital items
    
    
    14,283
    
    
    
    (262,282
    )Net cash provided by
operating activities
    
    
    4,772,719
    
    
    
    2,219,747Investing Activities:Additions to property, plant
and equipment
    
    
    (2,305,742
    )
    
    
    (3,101,837
    )Proceeds from sale of property,
plant and equipment
    
    
    
    
    
    
    50,400Net cash used in investing
activities
    
    
    (2,305,742
    )
    
    
    (3,051,437
    )Financing Activities:Decrease in line
of credit
    
    
    (1,000,000
    )
    
    
    Repayments of long-term debt
    
    
    (1,452,597
    )
    
    
    (1,133,141
    )Borrowing on long-term debt
    
    
    1,515,540
    
    
    
    1,270,389Deferred loan fees
    
    
    
    
    
    
    (1,750
    )Proceeds from exercise of options
and issuance of common stock
    
    
    144,783
    
    
    
    10,158Excess tax benefit from
share-based compensation
    
    
    150,400
    
    
    
    4,000Net cash (used in) provided
by financing activities
    
    
    (641,874
    )
    
    
    149,656Increase (decrease) in cash
    
    
    1,825,103
    
    
    
    (682,034
    )Cash at beginning of period
    
    
    925,197
    
    
    
    2,468,964Cash at end of period
    
    $
    2,750,300
    
    
    $
    1,786,930Supplemental Disclosure of
Cash Flow Information:Interest paid
    
    $
    543,813
    
    
    $
    485,544Income taxes paid
    
    
    916,648
    
    
    
    446,025
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September 29,
    
    
    December 30,2007
    
    
    2006Raw materials
    
    $
    1,303,906
    
    
    $
    1,972,871Work-in-progress
    
    
    5,774,877
    
    
    
    5,636,354Finished goods
    
    
    1,238,321
    
    
    
    1,271,2088,317,104
    
    
    
    8,880,433Reserve for excess
and obsolete
    
    
    (648,306
    )
    
    
    (645,567
    )Inventories, net
    
    $
    7,668,798
    
    
    $
    8,234,866
  For the three months ended
    
    For the nine months endedSept. 29,
    
    Sept. 30,
    
    Sept. 29,
    
    Sept. 30,2007
    
    2006
    
    2007
    
    2006Basic:Average common
shares outstanding
    
    
    4,605,603
    
    
    
    4,518,437
    
    
    
    4,571,936
    
    
    
    4,513,354Diluted:Dilutive effect of
stock options
    
    
    348,367
    
    
    
    266,020
    
    
    
    337,494
    
    
    
    277,851Average common
shares diluted
    
    
    4,953,970
    
    
    
    4,784,457
    
    
    
    4,909,430
    
    
    
    4,791,205Options excluded
since anti-dilutive
    
    
    
    
    
    
    92,000
    
    
    
    
    
    
    
    92,000
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September 29,
    
    
    December 30,2007
    
    
    2006Revolving line of credit
    
    $
    
    
    
    $
    1,000,000Term notes
    
    
    6,294,359
    
    
    
    5,970,644Mortgage loans
    
    
    3,168,493
    
    
    
    3,257,660Equipment note payable
    
    
    4,751
    
    
    
    9,806Capital lease obligations
    
    
    572,496
    
    
    
    739,04610,040,099
    
    
    
    10,977,156Less  revolving line of credit
    
    
    
    
    
    
    1,000,000Less  current portion of long-term debt
    
    
    2,254,095
    
    
    
    1,895,436$
    7,786,004
    
    
    $
    8,081,720
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For the three months ended
    
    
    For the nine months endedSept. 29,
    
    
    Sept. 30,
    
    
    Sept. 29,
    
    
    Sept. 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Components of net periodic benefit cost:Interest cost
    
    $
    88
    
    
    $
    85
    
    
    $
    263
    
    
    $
    255Expected return on plan assets
    
    
    (90
    )
    
    
    (81
    )
    
    
    (268
    )
    
    
    (243
    )Amortization of actuarial loss
    
    
    10
    
    
    
    28
    
    
    
    30
    
    
    
    84Net periodic pension expense
    
    $
    8
    
    
    $
    32
    
    
    $
    25
    
    
    $
    96
    For the three months ended
    
    
    For the nine months endedSept. 29,
    
    
    Sept. 30,
    
    
    Sept. 29,
    
    
    Sept. 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Current provision
    
    $
    267
    
    
    $
    87
    
    
    $
    762
    
    
    $
    449Deferred provision
    
    
    241
    
    
    
    18
    
    
    
    687
    
    
    
    92Total provision
    
    $
    508
    
    
    $
    105
    
    
    $
    1,449
    
    
    $
    541
  
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Sales.
  For the three months ended
    
    
    For the nine months endedSept. 29,
    
    
    Sept. 30,
    
    
    Sept. 29,
    
    
    Sept. 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Aerospace customers
    
    $
    8,984
    
    
    $
    4,716
    
    
    $
    27,496
    
    
    $
    16,734Non-aerospace customers
    
    
    3,541
    
    
    
    3,462
    
    
    
    9,812
    
    
    
    10,621$
    12,525
    
    
    $
    8,178
    
    
    $
    37,308
    
    
    $
    27,355
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For the Three Months EndedSept. 29,
    
    
    Sept. 30,Product Line
    
    2007
    
    
    2006
    
    
    ChangePrecision Aerospace
    
    $
    6,867
    
    
    $
    3,617
    
    
    $
    3,250Apex Machine Tool
    
    
    4,714
    
    
    
    3,565
    
    
    
    1,149Gros-Ite Spindles
    
    
    944
    
    
    
    996
    
    
    
    (52
    )Total
    
    $
    12,525
    
    
    $
    8,178
    
    
    $
    4,347
 For the Nine Months EndedSept. 29,
    
    
    Sept. 30,Product Line
    
    2007
    
    
    2006
    
    
    ChangePrecision Aerospace
    
    $
    19,844
    
    
    $
    10,941
    
    
    $
    8,903Apex Machine Tool
    
    
    14,603
    
    
    
    13,132
    
    
    
    1,471Gros-Ite Spindles
    
    
    2,861
    
    
    
    3,282
    
    
    
    (421
    )Total
    
    $
    37,308
    
    
    $
    27,355
    
    
    $
    9,953
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Cost of Sales.
 Selling, General & Administrative Expenses.
  Interest Expense.
 Income Taxes.
 11




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Liquidity and Capital Resources.
  Nine Months EndedSeptember 29,
    
    September 30,2007
    
    2006Net cash flows provided by operating
activities:
    
    $
    4,773,000
    
    
    $
    2,220,000
   Nine Months EndedSeptember 29,
    
    September 30,2007
    
    2006Net cash flows used in investing activities:
    
    $
    2,306,000
    
    
    $
    3,051,000
   Nine Months EndedSeptember 29,
    
    September 30,2007
    
    2006Net cash flows (used in) provided
by financing activities:
    
    $
    (642,000
    )
    
    $
    150,000
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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
  
  3.1*
    
    EDACs Amended and Restated Articles of Incorporation3.2*
    
    EDACs Amended and Restated By-laws10.1*
    
    Term Note dated as of July 18, 2007 by and among EDAC,
Apex Machine Tool Company, Inc., Gros-Ite Industries,
Inc. and TD Banknorth, N.A.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.
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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 CORPORATIONOctober 31, 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)10.1
    
    Term Note dated as of July 18, 2007 by and among EDAC, (3) Apex Machine Tool
Company, Inc., Gros-Ite Industries,
Inc. and TD Banknorth, N.A.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.(3)
    
    Exhibit incorporated by reference to the Companys Report
on Form 8-K dated July 18, 2007.
 *
    
    Filed herewith. 17