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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 March 31, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period to
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Commission file number: 0-14275
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Edac Technologies Corporation
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(Exact name of registrant as specified in its charter)
Wisconsin 39-1515599
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
1806 New Britain Avenue, Farmington, CT 06032
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(Address of principal executive offices)
(860) 677-2603
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(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
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APPLICABLE ONLY TO CORPORATE ISSUERS:
On May 8, 1997 there were outstanding 3,778,875 shares of the Registrant's
Common Stock, $0.0025 par value per share.
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EDAC TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended
March 31
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1997 1996
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Sales $ 9,554,326 $ 8,013,974
Cost of sales 8,449,046 7,136,940
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1,105,280 877,034
Selling, general and
administrative expenses 663,474 616,272
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INCOME FROM OPERATIONS 441,806 260,762
Non-operating income
(expense):
Interest expense (205,775) (208,025)
Other 19,930 5,411
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(185,845) (202,614)
INCOME BEFORE INCOME TAXES 255,961 58,148
Provision for income taxes - -
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NET INCOME $ 255,961 $ 58,148
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Weighted average number of
common shares and equivalent
shares outstanding 3,901,124 3,773,256
Earnings per share $ 0.07 $ 0.02
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The accompanying notes are an integral part of these financial statements.
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PART 1 FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
EDAC TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31 December 31
1997 1996
(Unaudited) (Note)
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ASSETS
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CURRENT ASSETS:
Cash $ 43,703 $ 195,382
Trade accounts receivable 3,386,843 3,407,924
Inventories 8,748,181 9,562,958
Prepaid expenses and other 363,108 351,109
Deferred income taxes 540,877 540,877
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TOTAL CURRENT ASSETS 13,082,712 14,058,250
PROPERTY, PLANT, AND EQUIPMENT 13,252,818 13,043,442
less-accumulated depreciation 7,790,808 7,570,308
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5,462,010 5,473,134
OTHER ASSETS 392,094 386,325
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$18,936,816 $19,917,709
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Note: The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date.
The accompanying notes are an integral part of these financial statements.
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EDAC TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31 December 31
1997 1996
(Unaudited) (Note)
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES:
Revolving line of credit $ 2,303,736 $ 3,794,571
Current portion of long-term debt 846,097 402,267
Trade accounts payable 3,358,304 3,616,599
Employee compensation and
amounts withheld 673,310 737,827
Accrued expenses 955,969 850,532
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TOTAL CURRENT LIABILITIES 8,137,416 9,401,796
LONG-TERM DEBT,
less current portion 4,504,010 4,509,991
OTHER LIABILITIES 12,000 12,000
DEFERRED INCOME TAXES 521,000 521,000
SHAREHOLDERS' EQUITY:
Common stock, par value $.0025 per
share; 10,000,000 shares authorized;
issued and outstanding--3,778,875
in 1997 and 3,753,875 in 1996 9,447 9,385
Additional paid-in-capital 8,663,340 8,649,340
Accumulated deficit (2,735,397) (2,991,358)
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5,937,390 5,667,367
Less deferred ESOP compensation
expense (175,000) (194,445)
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5,762,390 5,472,922
$ 18,936,816 $ 19,917,709
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Note: The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date.
The accompanying notes are an integral part of these financial statements.
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EDAC TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31
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1997 1996
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Operating Activities:
Net income $ 255,961 $ 58,148
Depreciation and amortization 242,568 217,151
Changes in working capital items 606,484 (66,163)
Other - -
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Net cash provided by
operating activities 1,105,013 209,136
Investing Activities:
Additions to property, plant
and equipment (209,376) (32,185)
Other (8,392) -
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Net cash used in investing
activities (217,768) (32,185)
Financing Activities:
Decrease in revolving
line of credit (949,682) (165,736)
Payment of equipment lines (541,153) -
Issuance of long term debt 541,153 -
Payments of long term debt (103,304) (93,590)
Proceeds from exercise of options
for common stock 14,062 -
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Net cash used in
financing activities (1,038,924) (259,326)
Decrease in cash (151,679) (82,375)
Cash at the beginning of year 195,382 158,077
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Cash at end of period $ 43,703 $ 75,702
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The accompanying notes are an integral part of these financial statements.
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EDAC TECHNOLOGIES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
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 three month period ending March 31, 1997 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997. 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, 1996.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Sales. The Company's sales in the first quarter of 1997 increased $1,540,352 or
19.2% compared to the first quarter of 1996. This increase is due mainly to
sales from the Precision Components and Engineered Solutions divisions
increasing significantly over the corresponding quarter of 1996.
Cost of Sales. Cost of sales as a percentage of sales decreased by 0.7% of
sales compared to the first quarter of 1996. This is due to the effect of
spreading fixed overhead over higher production levels.
Selling, General & Administrative. Selling, general and administrative costs
increased by $47,202 or 7.7% for the first quarter of 1997 compared to the
first quarter of 1996. This is due to higher travel and professional expense.
Interest. Interest expense increased by $2,250 or 1.1% for the first quarter of
1997 compared to the first quarter of 1996 due to higher interest rates offset
by lower borrowing levels. Interest rates for the Company were reduced by the
Company's bank effective March 27, 1997. (Reference the Company's 1996 Annual
Report)
Liquidity and Capital Expenditures. Working capital as of March 31, 1997 has
increased by $289,000 since December 31, 1996. Capital expenditures of
$209,396 has been 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 1997.
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PART 11 -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Ninth Amendment to Revolving loan, Term Loan, Equipment Loan
and Security Agreement, Modification of Notes and Reaffirmation
of Guarantees
10.2 Amended and Restated Revolving Promissory Note
10.3 Equipment Promissory Note III
10.4 Amended and Restated Promissory Note
10.5 Eighth Modification Agreement to Open-End Mortgage Deed
10.6 Third Modification of Construction to Permanent Loan Promissory
Note and Open-End Construction to Permanent Mortgage Deed
11 Statement re: computation of earnings per share
27 Financial Data Schedule
(b) Reports on Form 8-K
None
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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
May 8, 1997 By /s/ Ronald G. Popolizio
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Ronald G. Popolizio, Chief Financial
Officer and duly authorized officer
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EXHIBIT INDEX
Page Number
in Sequential
NUMBER DESCRIPTION Numbering System
10.1 Ninth Amendment to Revolving loan, Term
Loan, Equipment Loan and Security Agreement,
Modification of Notes and Reaffirmation of
Guarantees
10.2 Amended and Restated Revolving Promissory Note
10.3 Equipment Promissory Note III
10.4 Amended and Restated Promissory Note
10.5 Eighth Modification Agreement to Open-End Mortgage Deed
10.6 Third Modification of Construction to Permanent
Loan Promissory Note and Open-End Construction
to Permanent Mortgage Deed
11 Statement Regarding Computation of Per Share Earnings
27 Financial Data Schedule