1
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 June 30, 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
Edac Technologies Corporation
(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.)
1790 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 August 12, 1997 there were outstanding 3,828,875 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 Six Months Ended
June 30 June 30
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1997 1996 1997 1996
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Sales $ 9,297,395 $ 8,041,730 $18,851,721 $16,055,704
Cost of sales 8,158,150 7,113,285 16,607,196 14,250,225
----------- ----------- ----------- -----------
1,139,245 928,445 2,244,525 1,805,479
Selling, general and
and administrative
expenses 707,178 702,598 1,370,652 1,318,870
INCOME FROM OPERATIONS 432,067 225,847 873,873 486,609
Non-operating income
(expense):
Interest expense (169,868) (205,971) (375,643) (413,996)
Other 219 3,299 20,149 8,710
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(169,649) (202,672) (355,494) (405,286)
INCOME BEFORE
INCOME TAXES 262,418 23,175 518,379 81,323
Provision for
income taxes 0 0 0 0
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NET INCOME $ 262,418 $ 23,175 $ 518,379 $ 81,323
=========== =========== =========== ===========
Weighted average number
of shares of common
shares and equivalent
shares outstanding 3,958,634 3,792,911 3,963,527 3,790,013
Earnings per share $ 0.07 $ 0.01 $ 0.13 $ 0.02
=========== =========== =========== ===========
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
June 30 December 31
1997 1996
(Unaudited) (Note)
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ASSETS
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CURRENT ASSETS:
Cash $ 68,736 $ 195,382
Trade accounts receivable 3,797,100 3,407,924
Inventories 8,838,166 9,562,958
Prepaid expenses and other 352,876 351,109
Deferred income taxes 540,877 540,877
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TOTAL CURRENT ASSET 13,597,755 14,058,250
PROPERTY, PLANT, AND EQUIPMENT 13,673,848 13,043,442
less-accumulated depreciation 7,864,671 7,570,308
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5,809,177 5,473,134
OTHER ASSETS 522,893 386,325
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$ 19,929,825 $ 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
June 30 December 31
1997 1996
(Unaudited) (Note)
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES:
Revolving line of credit $ 3,386,812 $ 3,794,571
Current portion of long-term debt 824,145 402,267
Trade accounts payable 3,114,433 3,616,599
Employee compensation and
amounts withheld 766,087 737,827
Accrued expenses 872,267 850,532
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TOTAL CURRENT LIABILITIES 8,963,744 9,401,796
LONG-TERM DEBT,
less current portion 4,388,489 4,509,991
OTHER LIABILITIES 12,000 12,000
DEFERRED INCOME TAXES 507,277 521,000
SHAREHOLDERS' EQUITY:
Common stock, par value $.0025 per
share; 10,000,000 shares authorized;
issued and outstanding--3,803,875
in 1997 and 3,672,040 in 1996 9,510 9,385
Additional paid-in-capital 8,677,340 8,649,340
Accumulated deficit (2,472,979) (2,991,358)
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6,213,871 5,667,367
Less deferred ESOP compensation
expense (155,556) (194,445)
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6,058,315 5,472,922
$ 19,929,825 $ 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)
Six Months Ended
June 30
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1997 1996
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Operating Activities:
Net income $ 518,379 $ 81,323
Depreciation and amortization 485,135 434,294
Changes in working capital items (118,322) 920,230
Other (13,723) -
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Net cash provided by
operating activities 871,469 1,435,847
Investing Activities:
Additions to property, plant
and equipment (783,484) (184,858)
Proceeds from sales of property
plant and equipment 6,441 -
Other (141,814) -
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Net cash used in investing
activities (918,857) (184,858)
Financing Activities:
Increase (decrease) in revolving
line of credit 133,394 (1,126,062)
Payment of equipment lines (541,153) -
Issuance of long term debt 541,153 -
Payments of long term debt (240,777) (195,637)
Proceeds from exercise of options
for common stock 28,125 10,406
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Net cash used in
investing activities (79,258) (1,311,293)
Decrease in cash (126,646) (60,304)
Cash at the beginning of year 195,382 158,077
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Cash at end of period $ 68,736 $ 97,773
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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)
JUNE 30, 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 six month period ending June 30, 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 increased $1,255,665 or 15.6% for the three months
and $2,796,017 or 17.4% for the six months ended June 30, 1997 compared to the
comparable periods of 1996. These increases are mainly due to significant
increases in Large Turning and Precision Engineered Components over the prior
year. Sales for the six months ended June 30, 1997 are in line with the
Company's forecast. The Company expects to achieve the yearly forecast of
$36,000,000 for the twelve months ended December 31, 1997.
Cost of Sales. Cost of sales as a percent of total sales for the three and
six month periods ended June 30, 1997 were 87.7% and 88.1% compared to 88.5%
and 88.8% for the comparable three and six month periods ended June 30, 1996.
The reduction for the three and six month periods is due to the higher
absorption of fixed overhead expenses resulting from the significant increase
in sales.
Selling, General & Administrative. Selling, general and administrative
costs increased $51,782 or 3.9% for the six month period ended June 30, 1997.
The increase is due primarily to increases in personnel costs and professional
fees.
Interest. Interest expense for the six months ended June 30, 1997 was
$375,643, a decrease of $38,353 from the comparable period of 1996. The
decrease is due primarily to lower interest rates charged in 1997 than in 1996
by the Company's bank. (Reference the Company's 1996 Annual Report).
Liquidity and Capital Expenditures. The Company is proceeding on its plan for
capital aquisitions for 1997 of $4,400.000. Through the second quarter
expenditures of $783,484 were made and an additional $133,422 was placed on
deposit for machinery. As of June 30, 1997 these capital expenditures and
deposits were funded out of operations, resulting in working capital decreasing
by $22,443 since December 31, 1996. In accordance with the Company's credit
agreement with its bank dated March 27, 1997, the Company's bank advanced funds
in the third quarter on the Company's equipment line of credit for previously
paid, qualified equipment purchases thereby restoring working capital.
(Reference the Company's 1996 Annual Report).
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
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
August 13, 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
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11 Statement Regarding Computation of
Per Share Earnings
27 Financial Data Schedule