UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| | For the fiscal year ended December 31, 2011 |
| 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
(Exact Name of Registrant as Specified in Its Charter)
| Wisconsin | | 39-1515599 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
1806 New Britain Avenue, Farmington, Connecticut 06032
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (860) 677-2603
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | | Name of Each Exchange on Which Registered |
N/A | | |
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.0025 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):
Large accelerated filer o Accelerated filer o
Non-accelerated filer o Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
As of July 2, 2011, the aggregate market value of the registrant’s Common Stock (based upon the $4.864 closing price on that date on the NASDAQ Capital Market) held by nonaffiliates (excludes shares reported as beneficially owned by directors and officers - does not constitute an admission as to affiliate status) was approximately $19,543,795
As of March 8, 2012, there were 5,087,368 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
| | | | Part of Form 10-K | |
| | | | Into Which Portions of | |
| | DOCUMENT | | Document are Incorporated | |
| | | | | |
| | Annual Report to Shareholders for the | | Part II | |
| | fiscal year ended December 31, 2011 | | | |
| | | | | |
| | Proxy Statement relating to the | | Part III | |
| | 2012 Annual Meeting of Shareholders | | | |
All statements other than historical statements contained in this Annual Report on Form 10-K or deemed to be contained herein due to incorporation by reference to a different document constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Without limitation, these forward looking statements include statements regarding the Company’s business strategy and plans, statements about the adequacy of the Company’s working capital and other financial resources, statements about the Company’s bank agreements, statements about the Company’s backlog, statements about the Company’s actions to improve operating performance, and other statements herein that are not of a historical nature. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and other factors, many of which are outside of the Company’s control, that could cause actual results to differ materially from such statements. These include, but are not limited to, factors which could affect demand for the Company’s products and services such
as general economic conditions and economic conditions in the aerospace industry and the other industries in which the Company competes; competition from the Company’s competitors; the Company’s ability to reduce costs; the Company’s ability to effectively use business-to-business tools on the Internet to improve operating results; and the adequacy of the Company’s revolving credit facility and other sources of capital. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
PART I
General
The accompanying consolidated financial statements include EDAC Technologies Corporation (“We”, “Us”, “EDAC” or the “Company”) and its wholly-owned subsidiaries, Gros-Ite Industries and Apex Machine Tool Company, Inc. EDAC was incorporated in Wisconsin in 1985. We provide complete design, manufacture and service meeting the precision requirements of some of the most exacting customers in the world for tooling, fixtures, molds, jet engine components and machine spindles. The Company and its subsidiaries operate as two business segments.
On May 27, 2009, the Company acquired substantially all of the assets and certain liabilities of MTU Aero Engines North America, Inc.’s Manufacturing Business Unit (“AENA”), which manufactures rotating components such as disks, rings and shafts for the aerospace industry. This business is hereinafter referred to as “AERO”.
On May 14, 2010, the Company acquired certain assets of Accura Technics, LLC (“Accura”). The $300,000 purchase price of Accura has been allocated as follows: accounts receivable $19,000, inventories $118,000 and machinery and equipment $163,000.
Products
EDAC AERO produces low pressure turbine cases, hubs, rings, disks and other complex, close tolerance components for all major aircraft engine and ground turbine manufacturers. This product line specializes in turnings and 4 and 5 axis milling of difficult-to-machine alloys such as waspalloy, hastalloy, inconnel, titanium, high nickel alloys, aluminum and stainless steels. Its products also include rotating components, such as disks, rings and shafts. Precision assembly services include assembly of jet engine sync rings, aircraft welding and riveting, post-assembly machining and sutton barrel finishing. EDAC AERO also includes the business of Aero Engine Component Repair, which is engaged in precision machining for the maintenance and repair of selected components in the aircraft engine industry. Geographic markets include the U.S., Canada, Mexico, Europe and Asia, although most of this product line’s sales come from the United States.
The Company serves industrial customers through its Apex Machine Tool and Machinery product lines.
Apex Machine Tool designs and manufactures highly sophisticated fixtures, precision gauges, close tolerance plastic injection molds and precision component molds for composite parts and specialized machinery. A unique combination of highly skilled toolmakers and machinists and leading edge technology has enabled Apex to provide exacting quality to customers who require tolerances to +/- .0001 inches. Geographic markets include the U.S., Canada and Europe, although almost all sales come from the United States.
EDAC Machinery designs, manufactures and repairs all types of precision rolling element bearing spindles including hydrostatic and other precision rotary devices. Custom spindles are completely assembled in a Class 10,000 Clean Room and are built to suit any manufacturing application up to 100 horsepower and speeds in excess of 100,000 revolutions per minute. Machinery’s repair service can recondition all brands of precision rolling element spindles, domestic or foreign. The Company also
manufactures and services precision grinders as a part of its Machinery product line. The Machinery product line serves a variety of customers: machine tool manufacturers, special machine tool builders and integrators, industrial end-users, and powertrain machinery manufacturers and end-users. Geographic markets include the U.S., Canada, Mexico, Europe and Asia, although sales come primarily from the United States.
EDAC is AS9100:2004 and ISO 14001:2004 Certified. EDAC Machinery is AS9100:2008 Certified.
We currently offer design and manufacturing services for a wide range of industries in areas such as special tooling, equipment and gauges, and components used in the manufacture, assembly and inspection of jet engines. We also specialize in the design and repair of precision spindles. Spindles are an integral part of numerous machine tools which are found in virtually any type of manufacturing environment. We have introduced new spindle proprietary products for the woodworking and automotive markets, and in July 2003, we entered into an exclusive worldwide licensing agreement to develop, design, manufacture and market a patented hydrostatic spindle product line.
We maintain manufacturing facilities with computerized, numerically controlled machining centers, and grinding, welding, painting and assembly capabilities. Products manufactured by us include precision rings, and other components for jet engines, industrial spindles and specialized machinery designed by us or others and other assemblies requiring close tolerances.
Patents and Trademarks
We currently hold no patents or registered trademarks, tradenames or similar intellectual property. We believe that the nature of our business presently does not require the development of patentable products or registered tradenames or trademarks.
Marketing and Competition
The Company developed its high skill level by serving the aerospace industry for over 50 years. For the fiscal year ended December 31, 2011, sales to United Technologies Corporation amounted to approximately 34% of our sales. We provide a range of components, tooling, fixtures and design services for this aerospace company. Although we have expanded our commitment to serving the manufacturing needs of a broad base of industrial customers, the loss of this customer, or a significant decrease in the amount of business we do with this customer, could have a material adverse effect on our business.
The competition for design, manufacturing and service in precision machining and machine tools consists of independent firms, many of which are smaller than we are. We believe that this allows us to bring a broader spectrum of support to our customers who are consistently looking for ways to consolidate their vendor base. We also compete against the in-house manufacturing and service capabilities of our larger customers. We believe that the trend by large manufacturers to outsource activities that are outside their core competency is an opportunity for us.
The market for our products and precision machining capabilities continues to change with the development of more sophisticated use of business-to-business tools on the internet. We are actively involved in securing new business leads on the internet and have participated in internet auctions and research for quoting opportunities.
We believe that we have a distinct competitive advantage through our ability to provide high quality, high precision, quick turnaround support to customers from design to delivery. Our experience
and reputation in the demanding aerospace business provides an extra level of expertise in meeting our customers’ requirements. We believe our commitment to continuous improvement and the latest technology will generate the productivity improvements required to respond to the increasing price pressure of the competitive marketplace in which we operate.
Backlog
Our backlog as of December 31, 2011, was approximately $252,100,000 compared to $138,300,000 as of January 1, 2011. The increase is primarily due to increased orders in all product lines. Backlog consists of accepted purchase orders that are cancelable or may be rescheduled by the customer without penalty, except for payment of costs incurred, and may involve delivery times that extend over periods as long as four years. We presently expect to complete approximately $71,000,000 of our December 31, 2011 backlog during the 2012 fiscal year.
We maintain a website with the address www.edactechnologies.com. We are not including the information contained on our website as part of, or incorporating it by reference into, this Annual Report on Form 10-K.
Employees
As of March 1, 2012, we had approximately 390 employees.
Our business, operating results, financial condition and cash flows can be impacted by a number of factors, including but not limited to those set forth below, any one of which could cause our actual results to vary materially from recent results.
For a discussion of other matters which may affect our financial condition, results of operations or cash flows, see the further discussions in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2011 Annual Report.
We depend on revenues from a small number of significant customers. Any loss, cancellation, reduction or delay in purchases by these customers could harm our business.
Our largest customer accounted for 34% of our sales during fiscal 2011. Our success will depend on our continued ability to develop and manage relationships with this and other significant customers. Some of our customers could in the future shift some or all of their purchases from us to our competitors, or to other sources, or bring such business in-house. The loss of one or more of our largest customers, a significant reduction or delay in sales to one or more of these customers, an inability to successfully develop relationships with new customers, or future price concessions we could make to retain customers could significantly reduce our sales and profitability.
Our financial performance is dependent on the conditions of the aerospace industry.
Sales to our aerospace customers, which generated 79% of our total sales in 2011, are directly tied to the economic conditions in the commercial aviation and defense industries. The aviation industry is cyclical, and capital spending by airlines and aircraft manufacturers may be influenced by a wide variety of factors including current and predicted traffic levels, load factors, aircraft fuel pricing, labor issues, competition, the retirement of older aircraft, regulatory changes, terrorism and related safety concerns,
general economic conditions, worldwide airline profits and backlog levels. Also, since a significant portion of the backlog for commercial customers is scheduled for delivery beyond 2012, changes in economic conditions may cause customers to request that firm orders be rescheduled or canceled. A reduction in capital spending in the aviation or defense industries could have a significant effect on the sales of our EDAC Aero and Apex Machine Tool product lines, which could have an adverse effect on our financial performance or results of operations.
Additionally, during a downturn in the cyclical aviation industry, there is substantial pressure on suppliers like us from original equipment manufacturers (“OEMs”) in the aerospace industry to reduce prices on new orders. We attempt to manage such downward pricing pressure, while trying to preserve our business relationships with our customers, by seeking to reduce our production costs through various measures, including purchasing raw materials and components at lower prices and implementing cost reduction strategies. If we were unable to offset OEM price reductions, our profitability and cash flows could be adversely affected.
Further, the consolidation and combination of defense or other manufacturers may eliminate customers from the industry and/or put downward pricing pressures on sales of component parts. For example, the consolidation that has occurred in the defense industry in recent years has significantly reduced the overall number of defense contractors in the industry. In addition, if one of our customers is acquired or merged with another entity, the new entity may discontinue using us as a supplier because of an existing business relationship of the acquiring company or because it may be more efficient to consolidate certain suppliers within the newly formed enterprise. The significance of the impact that such consolidation may have on our business is difficult to predict because we do not know when or if one or more of our customers will engage in merger or acquisition activity. However, if such activity involved our material customers it could materially impact our revenues and profitability.
The aerospace industry is highly competitive, and this competition could reduce our profitability or limit our ability to grow.
The aerospace industry is highly competitive. We compete with many U.S. and non-U.S. companies as well as the in-house manufacturing and service capabilities of large manufacturers, some of which may benefit from lower labor costs than ours. We compete primarily based on product qualifications, service and price. Certain competitors are larger than we are or are subsidiaries of larger entities and may be better able to manage costs than us or may have greater financial resources than we have. Due to the competitiveness in the aerospace industry, we may not be able to increase prices for our products to cover increases in our costs, or we may face pressure to reduce prices, which could materially reduce our revenues, gross margin and profitability. Competitive factors, including changes in market penetration, increased price competition and the introduction of new products and technology by existing and new competitors could result in a material reduction in our revenues and profitability.
We may not realize all of the sales expected from our existing EDAC Aero backlog.
There is an ongoing risk that aerospace orders may be cancelled or rescheduled due to fluctuations in our customers’ business needs and market conditions. We consider backlog to be firm customer orders for future delivery. Certain of our customers have the right to terminate, reduce or defer firm orders that we have in backlog. If a customer terminates or reduces firm orders, we are able to invoice for work performed, but our future sales would be adversely affected.
Also, the realization of sales from new and existing programs of all of our customers is inherently subject to a number of important risks and uncertainties, including whether our customers will execute the launch of product programs on time, or at all, and the number of units that our customers will actually produce.
We maintain a frozen defined benefit pension plan.
Declines in the stock market and prevailing interest rates could cause an increase in our pension benefit expenses in the future and result in reductions in our pension fund asset values and increases in our pension benefit obligations. These changes could cause a reduction in our net worth and may require us to make higher cash contributions to our pension plan in the future.
Any product liability claims in excess of insurance could adversely affect our financial condition.
There are potential product liability risks that are inherent in the design, manufacture and sale of certain of our products. While we believe that our liability insurance is adequate to protect us from these liabilities, our insurance may not cover all liabilities. Any material liability not covered by insurance could have a material adverse effect on our financial condition, results of operations and cash flows.
We depend heavily on our senior management and other key personnel, the loss of whom could materially affect our financial performance and prospects.
Our business is managed by a small number of key executive officers, including Dominick A. Pagano and Glenn L. Purple. Our future success will depend on, among other things, our ability to keep the services of these executives and to hire other highly qualified employees at all levels. We compete with other potential employers for employees, and we may not be successful in hiring and retaining executives and other skilled employees that we need. Our ability to successfully execute our business strategy, market and develop our products and serve our customers could be adversely affected by a shortage of available skilled employees or executives.
We face costs and risks associated with maintaining effective internal control over financial reporting.
Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”) requires our management to include in our annual reports on Form 10-K, their report on the operating effectiveness of the Company’s internal controls over financial reporting. The process of maintaining and evaluating the effectiveness of our internal control over financial reporting requires us to incur expense and to devote resources on an on-going basis.
In the event that our management determines that our internal control over financial reporting is not effective as defined under Section 404, we could be subject to regulatory scrutiny and a loss of confidence among our current and potential shareholders and customers in our financial reporting and disclosure, which could adversely affect our business.
Item 1B. Unresolved Staff Comments.
None.
The following table describes the location and general character of our principal plants and other materially important physical properties.
| | | Square | | Owned or | | Principal |
| Address | | Feet | | Leased | | Activity |
| | | | | | | |
| 1790 New Britain Ave. | | 47,000 | | Owned | | Manufacturing |
| Farmington, CT. 06032 | | | | (1) | | Design engineering services |
| | | | | | | |
| 1798 New Britain Ave. | | 20,800 | | Owned | | Design and manufacture |
| Farmington, CT. 06032 | | | | (1) | | of spindles |
| | | | | | | |
| 1806 New Britain Ave. | | 19,200 | | Owned | | Manufacturing |
| Farmington, CT. 06032 | | | | (1) | | Corporate offices |
| | | | | | | |
| 21 Spring Lane | | 44,000 | | Owned | | Manufacturing |
| Farmington, CT. 06032 | | | | (1) | | Warehouse |
| | | | | | | |
| 35 Holland Dr. | | 14,400 | | Owned | | Repair |
| Newington, CT 06111 | | | | | | |
| | | | | | | |
| 275 Richard Street | | 75,000 | | Owned | | Manufacturing |
| Newington, CT 06111 | | | | (1) | | |
| | | | | | | |
| 36 Sword Street | | 18,300 | | Leased | | Manufacturing |
| Auburn, MA 01501 | | | | | | |
| | | | | | | |
| (1) Property subject to mortgage securing certain corporate indebtedness. |
Item 3. Legal Proceedings.
We are not a party to any material pending legal proceedings.
PART II
Item 5. Market for Registrant's Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities.
Information in response to this item is incorporated herein by reference to "Market Information" on pages 4 through 5 of our 2011 Annual Report to Shareholders. The information required by Item 5 with respect to securities authorized for issuance under equity compensation plans is set forth in Part III, Item 12 of this Form 10-K.
Item 6. Selected Financial Data.
Information in response to this item is incorporated herein by reference to "Selected Financial Information" on page 6 of our 2011 Annual Report to Shareholders.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Information in response to this item is incorporated herein by reference to "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 7 through 12 of our 2011 Annual Report to Shareholders.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk.
Not required under Regulation S-K for “smaller reporting companies”
Item 8. Financial Statements and Supplementary Data.
Information in response to this item is incorporated herein by reference to pages 13 through 34 of our 2011 Annual Report to Shareholders.
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.
None
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures.
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended, the Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, evaluated the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2011. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based on this evaluation, the Company’s management concluded that the Company’s disclosure controls and procedures are functioning in an effective manner in that they provide reasonable assurance that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms and that it is accumulated and communicated to our management, including the Company’s Chief Executive Officer, and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting.
There has been no change in the Company’s internal control over financial reporting during the Company’s fiscal year ended December 31, 2011 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Report of Management on Internal Control Over Financial Reporting.
The management of EDAC is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has assessed the effectiveness of EDAC’s internal control over financial reporting as of December 31, 2011. In making its assessment, management has utilized the criteria set forth by the Committee of Sponsoring Organizations (COSO) of the Treadway
Commission in Internal Control-Internal Framework. Management concluded that based on its assessment, EDAC maintained effective internal control over financial reporting as of December 31, 2011.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
Item 9B. Other Information.
None
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Information in response to this item is incorporated herein by reference to "Election of Directors" and “Section 16(a) Beneficial Ownership Reporting Compliance” in our definitive Proxy Statement for our 2012 Annual Meeting of Shareholders (“EDAC’s 2012 Proxy Statement”), which will be filed within 120 days after the end of our fiscal year ended December 31, 2011.
We have adopted a written code of ethics that applies to all of our employees and directors, including but not limited to, our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of our code of ethics is publicly available at our website at www.edactechnologies.com/investor/ and is also available without charge by writing to: Glenn L. Purple, Secretary, EDAC Technologies Corporation, 1806 New Britain Avenue, Farmington, Connecticut 06032.
Item 11. Executive Compensation.
Information in response to this item is incorporated herein by reference to "Executive Compensation" in EDAC’s 2012 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.
Information in response to this item is incorporated herein by reference to "Security Ownership" in EDAC’s 2012 Proxy Statement.
The following table sets forth certain information regarding our equity compensation plans as of December 31, 2011.
EQUITY COMPENSATION PLAN INFORMATION
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
| Equity compensation plans approved by security holders (1) | 471,388(3) | $3.62 | 202,547(5) |
| Equity compensation plans not approved by security holders (2) | 307,834(4) | $6.48 | 21,266(6) |
| Total | 779,222 | $4.75 | 223,813 |
(1) Consists of the 2008 Equity Incentive Plan (the “2008 Plan”), and the 2011 Equity Incentive Plan (the “2011 Plan”), (together, the “Plans”). The Plans provide for the grant of incentive stock options, as defined under Section 422 of the Internal Revenue Code of 1986, as amended, to employees and nonqualified stock options to employees and directors. The Plans are administered by the Compensation Committee of the Company’s Board of Directors. Options are generally granted for a term of five or ten years. The exercise price of options granted under the Plans must not be less than the fair market value of the Company’s common stock on the date of grant. The 2008 Plan and the 2011 Plan provide for the issuance of up to 500,000 and 250,000 shares of common stock, respectively, upon the exercise of options granted under such plans.
(2) Consists of the following equity compensation plans: the 2000 Employee Stock Option Plan (the “2000 Plan”) and the 2000-B Employee Stock Option Plan (the “2000-B Plan”), (together, the “Plans”). Each of the Plans provide for the grant of stock options to any director, officer or employee of the Company or any of its subsidiaries. The 2000 Plan also provides for the grant of stock options to consultants of the Company and its subsidiaries. Each of the Plans is administered by the Compensation Committee of the Company’s Board of Directors. Options are generally granted for a term of five or ten years. The exercise price of options granted under each of the Plans must not be less than the fair market value of the Company’s common stock on the date of grant. The 2000 Plan and the 2000-B Plan each provide for the issuance of up to 300,000 and 500,000 shares of common stock, respectively, upon the exercise of options granted under such plans.
| (3) | Consists of outstanding options to purchase 413,388 shares under the 2008 Plan and 58,000 shares under the 2011 Plan |
| (4) | Consists of outstanding options to purchase 110,167 shares under the 2000 Plan and 197,667 shares under the 2000-B Plan. |
| (5) | Consists of 35,547 shares issuable under the 2008 Plan and 167,000 shares issuable under the 2011 Plan. |
| (6) | Includes 20,500 shares issuable under the 2000 Plan and 766 shares issuable under the 2000-B Plan. |
Item 13. Certain Relationships and Related Transactions and Director Independence.
There are no related party transactions to report. The information required by Item 13 with respect to Director Independence is incorporated herein by reference to “Board and Committee Meetings and Related Matters” in EDAC’s 2012 Proxy Statement.
Item 14. Principal Accounting Fees and Services.
Information in response to this item is incorporated herein by reference to "Fees of Independent Auditors" in EDAC’s 2012 Proxy Statement.
PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a) Documents filed as a part of this report:
1. Financial Statements.
The financial statements required to be filed by Item 8 hereof have been incorporated by reference to our 2011 Annual Report to Shareholders and consist of the following:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets—As of December 31, 2011 and January 1, 2011.
Consolidated Statements of Income—Fiscal Years
Ended December 31, 2011 and January 1, 2011.
Consolidated Statements of Cash Flows-Fiscal Years
Ended December 31, 2011 and January 1, 2011.
Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income
(Loss)-Fiscal Years Ended December 31, 2011 and January 1, 2011.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedule.
The following financial statement schedule of EDAC is required to be filed by Item 8 hereof and paragraph (c) below:
Report of Independent Registered Public Accounting Firm on Financial Statement Schedule
Schedule II: Valuation and qualifying accounts
All other schedules for which provisions are made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
3. Exhibits
(b) Exhibits
See Exhibit Index included as the last part of this report on Form 10-K, which Index is incorporated herein by this reference.
(c) Financial Statement Schedules
Refer to Item 14(a) above for listing of financial statement schedules.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
EDAC Technologies Corporation
We have audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) the consolidated financial statements of EDAC Technologies Corporation and subsidiaries (the “Company”) referred to in our report dated March 8, 2012, which is included in the Annual Report and incorporated by reference in Part II of this form. Our audits of the basic consolidated financial statements included the financial statement schedule listed in the index appearing under Item 15(a)(2), which is the responsibility of the Company’s management. In our opinion, this financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. The financial statement schedule of the Company as of January 1, 2011 and for the year ended January 1, 2011 was audited by CCR LLP. We have since succeeded to the practice of such firm.
/s/ Grant Thornton LLP
Glastonbury, Connecticut
March 8, 2012
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
EDAC TECHNOLOGIES AND SUBSIDIARIES
| COL. A | COL. B | COL. | C | COL. D | | COL. E |
| | | ADDITIONS | | | |
| | Balance at Beginning | Charged to Costs | Charged to Other | Deductions | | Balance at End |
| DESCRIPTION | of Year | and Expenses | Accounts-Describe | Describe | | of Year |
| | | | | | | |
| YEAR ENDED DECEMBER 31, 2011: | | | | | |
| Reserves and allowances deducted | | | | | |
| from asset accounts: | | | | | | |
| | | | | | �� | |
| Allowance for | | | | | | |
| doubtful accounts receivable | $121,389 | $169,571 | $0 | (1) | $7,126 | $283,834 |
| | | | | | | |
| YEAR ENDED JANUARY 1, 2011: | | | | | | |
| Reserves and allowances deducted | | | | | |
| from asset accounts: | | | | | | |
| | | | | | | |
| Allowance for | | | | | | |
| doubtful accounts receivable | 248,994 | 70,649 | 0 | (1) | 198,254 | 121,389 |
| | | | | | | |
| | | | | | | |
| (1) Write-off of specific accounts receivable. | | | | | |
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
EDAC TECHNOLOGIES CORPORATION
By: /s/Dominick A. Pagano
Dominick A. Pagano
President and Chief Executive Officer
Date: March 8, 2012
Each person whose signature appears below hereby appoints Dominick A. Pagano and Glenn L. Purple, and each of them individually, his true and lawful attorney-in-fact, with power to act with or without the other and with full power of substitution and resubstitution, in any and all capacities, to sign any and all amendments to the Form 10-K and file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitutes, may lawfully cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signatures | | Title | | Date |
| | | | | |
| /s/ Dominick A. Pagano | | President, Chief Executive | | March 8, 2012 |
| Dominick A. Pagano | | Officer and Director | | |
| | | (Principal Executive Officer) | | |
| | | | | |
| /s/ Glenn L. Purple | | Chief Financial Officer, Vice | | March 8, 2012 |
| Glenn L. Purple | | President-Finance and Secretary | | |
| | | (Principal Financial and Accounting Officer) | | |
| | | | | |
| /s/ Lee K. Barba | | Director | | March 8, 2012 |
| Lee K. Barba | | | | |
| | | | | |
| /s/Joseph P. Lebel | | Director | | March 8, 2012 |
| Joseph P. Lebel | | | | |
| | | | | |
| /s/John A. Rolls | | Director | | March 8, 2012 |
| John A. Rolls | | | | |
| | | | | |
| /s/Christopher R. Sansone | | Director | | March 8, 2012 |
Christopher R. Sansone | | | | |
| | | | | |
| /s/Daniel C. Tracy | | Director, Chairman of the Board | | March 8, 2012 |
Daniel C. Tracy | | | | |
EXHIBIT INDEX
| | Exhibit | | | Sequential | |
| | Number | | | Page Number | |
| | | | | | |
| | 2.1 | | Asset Purchase Agreement, dated May 18, 2009, by and between | (14) | |
| | | | EDAC and MTU Aero Engines North America, Inc. | | |
| | | | | | |
| | 3.1 | | EDAC's Amended and Restated Articles of Incorporation | (1) | |
| | | | | | |
| | 3.2 | | Articles of Amendment to EDAC's Amended and Restated | (13) | |
| | | | Articles of Incorporation | | |
| | | | | | |
| | 3.3 | | EDAC’s Amended and Restated By-Laws | (4) | |
| | | | | | |
| | 4.1 | | EDAC’s Amended and Restated Articles of Incorporation | (1) | |
| | | | | | |
| | 4.2 | | Articles of Amendment to EDAC's Amended and Restated | (13) | |
| | | | Articles of Incorporation | | |
| | | | | | |
| | 4.3 | | Sections of EDAC’s By-Laws | (4) | |
| | | | | | |
| | 10.1 | | Gros-Ite division Pension Plan | (1) | |
| | | | | | |
| | 10.2 | | EDAC Technologies Corporation 2000 Stock Option Plan | (2) | |
| | | | | | |
| | 10.3 | | EDAC Technologies Corporation 2000-B Stock Option Plan | (2) | |
| | | | | | |
| | 10.4 | | Loan Agreement dated February 5, 2001 by and between | (3) | |
| | | | Farmington Savings Bank and EDAC. | | |
| | | | | | |
| | 10.5 | | Commercial Mortgage Note dated February 5, 2001 by | (3) | |
| | | | and between Farmington Savings Bank and EDAC. | | |
| | | | | | |
| | 10.6 | | Open-End Mortgage Deed and Security Agreement dated | (3) | |
| | | | February 5, 2001 by and between Farmington Savings Bank and EDAC. | | |
| | | | | | |
| | 10.7 | | Environmental Indemnification Agreement dated February 5, | (3) | |
| | | | 2001 by and between Farmington Savings Bank and EDAC. | | |
| | | | | | |
| | 10.8 | | Form of Agreements regarding Indemnification between | (5) | |
| | | | EDAC and each of its directors and executive officers. | | |
| | | | | | |
| | 10.9 | | Note and Mortgage Modification Agreement by and between | (6) | |
| | | | EDAC and Farmington Savings Bank dated October 15, 2003 | | |
| | | | | | |
| | 10.10 | | Loan Agreement by and between EDAC, Apex and Banknorth | (7) | |
| | | | N.A. dated March 5, 2004. | | |
| | | | | | |
| | 10.11 | | Term Note by and between EDAC, Apex and Banknorth N.A | (7) | |
| | | | dated March 5, 2004. | | |
| | | | | | |
| | 10.12 | | Open-End Mortgage, Commercial Mortgage, Security | (7) | |
| | | | Agreement and Assignment of Leases and Rents by and | | |
| | | | between Banknorth N.A and EDAC dated March 5, 2004. | | |
| | | | | | |
| | 10.13 | | Open-End Mortgage, Commercial Mortgage, Security | (7) | |
| | | | Agreement and Assignment of Leases and Rents by and | | |
| | | | between Apex and Banknorth N.A dated March 5, 2004. | | |
| | | | | | |
| | 10.14 | | Hazardous Substance Certificate and Indemnification | (7) | |
| | | | Agreement by and between EDAC, Apex and Banknorth N.A. | | |
| | | | dated March 5, 2004. | | |
| | | | | | |
| | 10.15 | | Commercial Security Agreement dated as of December | (8) | |
| | | | 28, 2005 by and among EDAC, Apex Machine Tool Company, | | |
| | | | Inc., Gros-Ite Industries, Inc. and TD Banknorth, N.A. | | |
| | | | | | |
| | 10.16 | | Promissory Note dated as of April 4, 2006 by | (9) | |
| | | | and among EDAC, Apex Machine Tool Company, Inc., | | |
| | | | Gros-Ite Industries, Inc. and TD Banknorth, N.A. | | |
| | | | | | |
| | 10.17 | | Amended and Restated Employment Agreement dated as | (10) | |
| | | | of February 12, 2007 between EDAC and Dominick Pagano | | |
| | | | | | |
| | 10.18 | | Employment Agreement dated as of February 12, 2007 | (10) | |
| | | | between EDAC and Glenn L. Purple | | |
| | | | | | |
| | 10.19 | | Change in Terms Agreement dated July 26, 2006, | (12) | |
| | | | changing the Equipment Loan Note by and between | | |
| | | | EDAC and TD Banknorth, N.A. | | |
| | | | | | |
| | 10.20 | | Term Note dated as of October 27, 2006 by | (11) | |
| | | | and among EDAC, Apex Machine Tool Company, Inc., | | |
| | | | Gros-Ite Industries, Inc. and TD Banknorth, N.A. | | |
| | | | | | |
| | 10.21 | | Term Note dated as of July 18, 2007 by and among | (12) | |
| | | | EDAC, Apex Machine Tool Company, Inc. Gros-Ite | | |
| | | | Industries, Inc. and TD Banknorth, N.A. | | |
| | | | | | |
| | 10.22 | | EDAC Technologies Corporation 2008 Equity Incentive Plan | (13) | |
| | | | | | |
| | 10.23 | | Credit Agreement , dated as of May 27, 2009, by and among EDAC, | (14) | |
| | | | Gros-Ite, Apex and TD Bank, N.A. | | |
| | | | | | |
| | 10.24 | | Security Agreement, dated as of May 27, 2009, by and between EDAC, | (14) | |
| | | | Gros-Ite, Apex and TD Bank, N.A. | | |
| | | | | | |
| | 10.25 | | Term Note, dated as of May 27, 2009, by and among EDAC, Gros-Ite, | (14) | |
| | | | Apex and TD Bank, N.A. | | |
| | | | | | |
| | 10.26 | | Revolving Credit Note, dated as of May 27, 2009, by and among | (14) | |
| | | | by and among EDAC, Gros-Ite, Apex and TD Bank, N.A. | | |
| | | | | | |
| | 10.27 | | Mortgage Note, dated as of May 27, 2009, by and among EDAC, Gros-Ite, | (14) | |
| | | | Apex and TD Bank, N.A. | | |
| | | | | | |
| | 10.28 | | Open-End Mortgage Deed and Security Agreement, dated as of | (14) | |
| | | | May 27, 2009, by and between EDAC and TD Bank N.A. | | |
| | | | | | |
| | 10.29 | | Environmental Indemnity Agreement, dated as of May 27, 2009, by and | (14) | |
| | | | between EDAC, Gros-Ite, Apex and TD Bank, N.A. | | |
| | | | | | |
| | 10.30 | | Secured Promissory Note, dated as of May 27, 2009, by EDAC in | (14) | |
| | | | favor of MTU Aero Engines North America, Inc. | | |
| | | | | | |
| | 10.31 | | Amended and Restated Employment Agreement dated as | (15) | |
| | | | of January 14, 2010 between EDAC and Dominick Pagano | | |
| | | | | | |
| | 10.32 | | EDAC Technologies Corporation 2011 Equity Incentive Plan | (16) | |
| | | | | | |
| | 10.33 | | Third Amendment to Credit Agreement and Modification of Mortgage, | (17) | |
| | | | dated as of July 27, 2011, by and among EDAC, Gros-Ite, Apex and | | |
| | | | TD Bank, N.A. | | |
| | | | | | |
| | 10.34 | | Second Amended and Restated Revolving Credit Note as of July 27, 2011 | (17) | |
| | | | made by EDAC, Gros-Ite and Apex in favor of TD Bank, N.A. | | |
| | | | | | |
| | 10.35 | | Third Term Note, dated as of July 27, 2011, made by EDAC, Gros-Ite | (17) | |
| | | | and Apex in favor of TD Bank, N.A. | | |
| | | | | | |
| | 10.36 | | Fixed Asset Note, dated July 27, 2011, made by EDAC, Gros-Ite and | (17) | |
| | | | Apex in favor of TD Bank, N.A. | | |
| | | | | | |
| | 11 | | Earnings per share information has been incorporated by | | |
| | | | reference to EDAC’s 2011 Annual Report to Shareholders | | |
| | | | | | |
| | 13* | | EDAC’s 2011 Annual Report to Shareholders | | |
| | | | | | |
| | 14 | | EDAC Technologies Corporation Code of Ethics | (6) | |
| | | | | | |
| | 16 | | Change in Certifying Accountant | (18) | |
| | | | | | |
| | 21* | | Subsidiaries | | |
| | | | | | |
| | 23.1* | | Consent of Grant Thornton LLP | | |
| | | | | | |
| | 31.1* | | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities | | |
| | | | Exchange Act of 1934, as amended. | | |
| | | | | | |
| | 31.2* | | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of 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. | | |
| | | | | | |
| | 101.INS** | | XBRL Instance Document | | |
| | | | | | |
| | 101.SCH** | | XBRL Taxonomy Extension Schema | | |
| | | | | | |
| | 101.CAL** | | XBRL Taxonomy Extension Calculation Linkbase | | |
| | | | | | |
| | 101.DEF** | | XBRL Taxonomy Extension Definition Linkbase | | |
| | | | | | |
| | 101.LAB** | | XBRL Taxonomy Extension Label Linkbase | | |
| | | | | | |
| | 101.PRE** | | XBRL Taxonomy Extension Presentation Linkbase | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | (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 Annual | | |
| | | | Report on Form 10-K for the year ended December 30, 2000. | | |
| | | | | | |
| | (3) | | Exhibit incorporated by reference to the Company’s Quarterly | | |
| | | | Report on Form 10-Q for the quarter ended March 31, 2001. | | |
| | | | | | |
| | (4) | | Exhibit incorporated by reference to the Company’s Current | | |
| | | | Report on Form 8-K dated February 19, 2002. | | |
| | | | | | |
| | (5) | | Exhibit incorporated by reference to the Company’s Quarterly | | |
| | | | Report on Form 10-Q dated June 30, 2002. | | |
| | | | | | |
| | (6) | | Exhibit incorporated by reference to the Company’s Annual | | |
| | | | Report on Form 10-K for the year ended January 3, 2004. | | |
| | | | | | |
| | (7) | | Exhibit incorporated by reference to the Company’s Quarterly | | |
| | | | Report on Form 10-Q dated April 3, 2004. | | |
| | | | | | |
| | (8) | | Exhibit incorporated by reference to the Company’s Current | | |
| | | | Report on Form 8-K dated December 29, 2005. | | |
| | | | | | |
| | (9) | | Exhibit incorporated by reference to the Company’s Current | | |
| | | | Report on Form 8-K dated April 5, 2006. | | |
| | | | | | |
| | (10) | | Exhibit incorporated by reference to the Company’s Current | | |
| | | | Report on Form 8-K dated February 16, 2007. | | |
| | | | | | |
| | (11) | | Exhibit incorporated by reference to the Company’s Annual | | |
| | | | Report on Form 10-K for the year ended December 30, 2006. | | |
| | | | | | |
| | (12) | | Exhibit incorporated by reference to the Company’s Quarterly | | |
| | | | Report on Form 10-Q dated September 29, 2007. | | |
| | | | | | |
| | (13) | | Exhibit incorporated by reference to the Company’s | | |
| | | | registration statement on Form S-8 dated August 1, 2008. | | |
| | | | | | |
| | (14) | | Exhibit incorporated by reference to the Company’s Current | | |
| | | | Report on Form 8-K dated May 27, 2009. | | |
| | | | | | |
| | (15) | | Exhibit incorporated by reference to the Company’s Current | | |
| | | | Report on Form 8-K dated January 14, 2010. | | |
| | | | | | |
| | (16) | | Exhibit incorporated by reference to the Company’s | | |
| | | | registration statement on Form S-8 dated July 22, 2011. | | |
| | | | | | |
| | (17) | | Exhibit incorporated by reference to the Company’s Current | | |
| | | | Report on Form 8-K dated July 27, 2011. | | |
| | | | | | |
| | (18) | | Exhibit incorporated by reference to the Company’s Current | | |
| | | | Report on Form 8-K dated November 30, 2011. | | |
| | | | | | |
| | | | | | |
| | | * Filed herewith | |
| | | | | | |
| | | ** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability. |
