SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
--------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period _____________ to _______________
Commission file number: 0-14275
-------
Edac Technologies Corporation
-----------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-1515599
--------- ----------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
1790 New Britain Avenue, Farmington, CT 06032
-----------------------------------------------
(Address of principal executive offices)
(860) 677-2603
--------------
(Registrant's telephone number, including area code)
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 ____
---
APPLICABLE ONLY TO CORPORATE ISSUERS:
On November 11, 1996 there were outstanding 3,732,207 shares of the
Registrant's Common Stock, $0.0025 par value per share.
EDAC TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended
September 30 September 30
-------------------------- ----------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------------
Sales $6,775,601 $6,273,982 $22,831,305 $19,932,686
Cost of sales 5,972,195 5,554,174 20,222,420 17,641,417
---------- ---------- ----------- -----------
803,406 719,808 2,608,885 2,291,269
Selling, general and
and administrative
expenses 679,606 615,203 1,998,476 1,874,179
INCOME FROM OPERATIONS 123,800 104,605 610,409 417,090
Non-operating income
(expense):
Interest expense (195,867) (176,402) (609,863) (431,926)
Other 20,422 25,567 29,132 34,496
---------- ---------- ----------- -----------
(175,445) (150,835) (580,731) (397,430)
INCOME (LOSS) BEFORE
INCOME TAXES (51,645) (46,230) 29,678 19,660
Income tax expense
(benefit) 0 0 0 4,900
---------- ---------- ----------- -----------
NET INCOME (LOSS) $ (51,645) $ (46,230) $ 29,678 $ 14,760
========== ========== =========== ===========
Weighted average number
of shares of common
shares and equivalent
shares outstanding 3,780,525 3,787,023 3,778,214 3,780,145
Net income (loss)
per share $ (0.01) $ (0.01) $ 0.01 $ 0.00
========== ========== =========== ===========
The accompanying notes are an integral part of these financial statements.
PART 1 FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
EDAC TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30 December 31
1996 1995
(Unaudited) (Note)
------------- -------------
ASSETS
- ------
CURRENT ASSETS:
Cash $ 187,024 $ 158,077
Trade accounts receivable 2,656,828 1,650,840
Refundable income taxes 22,877 106,000
Inventories
Finished goods 1,041,699 935,825
Work in process and raw materials 7,047,094 10,344,212
Prepaid expenses and other 111,921 103,197
Deferred income taxes 917,000 917,000
----------- -----------
TOTAL CURRENT ASSETS 11,984,443 14,215,151
PROPERTY, PLANT, AND EQUIPMENT 13,032,097 12,733,254
less-accumulated depreciation 7,436,747 6,850,794
----------- -----------
5,595,350 5,882,460
OTHER ASSETS 248,863 254,519
----------- -----------
$17,828,656 $20,352,130
=========== ===========
Note: The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date.
The accompanying notes are an integral part of these financial statements.
EDAC TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30 December 31
1996 1995
(Unaudited) (Note)
------------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Revolving line of credit $ 3,418,916 $ 4,651,484
Current portion of long-term debt 4,506,954 387,366
Trade accounts payable 1,716,324 2,730,256
Employee compensation and
amounts withheld 577,414 613,815
Accrued expenses 711,509 783,561
----------- -----------
TOTAL CURRENT LIABILITIES 10,931,117 9,166,482
LONG-TERM DEBT,
less current portion 500,525 4,919,019
OTHER LIABILITIES 18,000 18,000
DEFERRED INCOME TAXES 917,000 917,000
SHAREHOLDERS' EQUITY:
Common stock, par value $.0025 per
share; 10,000,000 shares authorized;
issued and outstanding--3,728,873
in 1996 and 3,653,540 in 1995 9,322 9,134
Additional paid-in-capital 8,635,338 8,593,152
Accumulated deficit (2,968,757) (2,998,435)
----------- -----------
5,675,903 5,603,851
Less guaranty of Employee Stock
Ownership Plan debt (213,889) (272,222)
----------- -----------
5,462,014 5,331,629
$17,828,656 $20,352,130
=========== ==========
Note: The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date.
The accompanying notes are an integral part of these financial statements.
EDAC TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30
--------------------------------
1996 1995
------------ ------------
Operating Activities:
Net income $ 29,678 $ 14,760
Depreciation and amortization 651,441 812,086
Changes in working capital items 1,137,271 (1,841,560)
Other (9,000) (8,488)
----------- -----------
Net cash provided by (used in)
operating activities 1,809,390 (1,023,202)
Investing Activities:
Additions to property, plant
and equipment (313,843) (2,914,604)
Proceeds from sales of property
plant and equipment 22,500 188,155
Other - 146,058
----------- -----------
Net cash used in investing
activities (291,343) (2,580,391)
Financing Activities:
Increase (decrease) in revolving
line of credit (1,232,568) 2,462,386
Payments of long term debt (298,906) (182,633)
Advance on construction loan - 915,411
Issuance of long-term debt - 461,846
Proceeds from exercise of options
for common stock 42,374 25,312
----------- -----------
Net cash provided by (used in)
investing activities (1,489,100) 3,682,322
Increase in cash 28,947 78,729
Cash at the beginning of year 158,077 86,260
----------- -----------
Cash at end of period $ 187,024 $ 164,989
=========== ===========
The accompanying notes are an integral part of these financial statements.
EDAC TECHNOLOGIES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1996
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals and adjustments to previously established loss
provisions) considered necessary for a fair presentation have been included.
Operating results for the nine month period ending September 30, 1996 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1996. For further information, refer to the financial statements
and footnotes thereto included in the Company's annual report on Form 10-K for
the year ended December 31, 1995.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
- ---------------------------------------------
Sales. The Company's sales increased $501,619 or 8.0% for the three months and
- ------
$2,898,619 or 14.5% for the nine months ended September 30, 1996 compared to the
comparable periods of 1995. These increases are mainly due to significant
increases in large turning, spindle and design sales over the prior year.
Cost of Sales. Cost of sales as a percent of total sales for the three and nine
- --------------
month periods ended September 30, 1996 were 88.1% and 88.6% compared to 88.6%
and 88.5% for the comparable three and nine month periods ended September 30,
1995. This reduction for the three months is due to the higher absorption of
fixed overhead expenses resulting from the significant increase in sales. The
slight increase in the nine month percentage is due to an increase in the
Company's accrual for loss jobs in the first quarter.
Selling, General & Administrative. Selling, general and administrative costs
- ----------------------------------
increased $124,297 or 6.6% for the nine month period ended September 30, 1996
compared to the comparable period in 1995. The increase is due primarily to
increased personnel cost offset somewhat by reduced travel expenses.
Interest. Interest expense for the nine months ended September 30, 1996 was
- ---------
$609,863, an increase of $177,937 from the comparable period of 1995. The higher
interest cost is due to borrowings made during the latter part 1995 for the
construction of the Company's new building and for the purchase of additional
machinery. Additionally, interest rates charged by the Company's bank are higher
in 1996 than they were in 1995. (Reference the Company's 1995 Annual Report).
Liquidity and Capital Expenditures. The Company's Revolving Loan and Security
- -----------------------------------
Agreement (The Agreement) provides for a five-year term note in the amount of
$1,000,000 ($950,000 at September 30, 1996) and a five-year term note in the
amount of $4,000,000 ($3,418,303 at September 30, 1996). Because the Agreement
matures on March 31, 1997, the Company has, in accordance with generally
accepted accounting principles, classified the notes under this agreement as
current obligations. The Company intends and believes it has the ability to
refinance these obligations on a long term basis and has commenced discussions
with its current bank and with other financial sources to do so. Because of this
classification, working capital has decreased by $3,995,343 since December 31,
1995. Capital expenditures of $313,843 for the nine months ended September 30,
1996 were funded out of operating activities.
Management believes that the funds generated from operations and its credit
facilities will be sufficient to meet the Company's cash requirements for 1996.
PART 11 -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(11) Statement re: computation of earnings per share
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements 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
November 11, 1996 By /s/ Glenn L. Purple
--------------------------------
Glenn L. Purple,
Chief Financial Officer and duly
authorized officer
EXHIBIT INDEX
Page Number
in Sequential
NUMBER DESCRIPTION Numbering System
- ------ ----------- ----------------
11 Statement Regarding Computation of
Per Share Earnings
27 Financial Data Schedule