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 September 30, 1997
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 October 31, 1997 there were outstanding 3,833,875 shares of the
Registrant's Common Stock, $0.0025 par value per share.
2
EDAC TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended
September 30 September 30
--------------------------------------------- -------------------------------------
1997 1996 1997 1996
--------------------------------------------- -------------------------------------
Sales $ 9,402,761 $ 6,775,601 $ 28,254,482 $ 22,831,305
Cost of sales 7,867,770 5,972,195 24,474,966 20,222,420
----------- ----------- ------------ -------------
1,534,991 803,406 3,779,516 2,608,885
Selling, general and
and administrative
expenses 860,388 679,606 2,231,040 1,998,476
INCOME FROM OPERATIONS 674,603 123,800 1,548,476 610,409
Non-operating income
(expense):
Interest expense (185,965) (195,867) (561,608) (609,863)
Other 23,063 20,422 43,212 29,132
----------- ----------- ------------ -------------
(162,902) (175,445) (518,396) (580,731)
INCOME (LOSS) BEFORE
INCOME TAXES 511,701 (51,645) 1,030,080 29,678
Provision for
income taxes 0 0 0 0
----------- ----------- ------------ -------------
NET INCOME (LOSS) $ 511,701 $ (51,645) $ 1,030,080 $ 29,678
=========== =========== ============ =============
Weighted average number
of shares of common
shares and equivalent
shares outstanding 4,000,875 3,780,525 3,974,976 3,778,214
Earnings (loss)
per share $ 0.13 $ (0.01) $ 0.26 $ 0.01
=========== =========== ============ =============
The accompanying notes are an integral part of these financial statements.
3
PART 1 FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
EDAC TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30 December 31
1997 1996
(Unaudited) (Note)
---------------- ----------------
ASSETS
CURRENT ASSETS:
Cash $ 96,120 $ 195,382
Trade accounts receivable 3,427,903 3,407,924
Inventories 10,050,166 9,562,958
Prepaid expenses and other 374,281 351,109
Deferred income taxes 540,877 540,877
----------- -------------
TOTAL CURRENT ASSET 14,489,347 14,058,250
PROPERTY, PLANT, AND EQUIPMENT 14,585,655 13,043,442
less-accumulated depreciation 7,511,172 7,570,308
----------- -------------
7,074,483 5,473,134
OTHER ASSETS 542,043 386,325
----------- -------------
$22,105,873 $ 19,917,709
=========== =============
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.
4
EDAC TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30 December 31
1997 1996
(Unaudited) (Note)
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving line of credit $ 3,788,582 $ 3,794,571
Current portion of long-term debt 812,335 402,267
Trade accounts payable 3,485,716 3,616,599
Employee compensation and
amounts withheld 973,141 737,827
Accrued expenses 959,899 850,532
------------ ------------
TOTAL CURRENT LIABILITIES 10,019,673 9,401,796
LONG-TERM DEBT,
less current portion 4,957,018 4,509,991
OTHER LIABILITIES 12,000 12,000
DEFERRED INCOME TAXES 507,408 521,000
SHAREHOLDERS' EQUITY:
Common stock, par value $.0025 per
share; 10,000,000 shares authorized;
issued and outstanding--3,833,875
in 1997 and 3,753,875 in 1996 9,585 9,385
Additional paid-in-capital 8,697,578 8,649,340
Accumulated deficit (1,961,278) (2,991,358)
------------ ------------
6,745,885 5,667,367
Less deferred ESOP compensation
expense (136,111) (194,445)
------------ ------------
6,609,774 5,472,922
$ 22,105,873 $ 19,917,709
============ ============
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.
5
EDAC TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30
--------------------------------
1997 1996
------------- --------------
Operating Activities:
Net income $ 1,030,080 $ 29,678
Depreciation and amortization 736,703 651,441
Changes in working capital items (316,561) 1,137,271
Other (22,549) (9,000)
------------ -----------
Net cash provided by
operating activities 1,427,673 1,809,390
Investing Activities:
Additions to property, plant
and equipment (2,327,423) (313,843)
Proceeds from sales of property
plant and equipment 64,541 22,500
Other (163,597) -
------------ -----------
Net cash used in investing
activities (2,426,479) (291,343)
Financing Activities:
Increase (decrease)in revolving
line of credit 535,164 (1,232,568)
Payment of equipment lines (541,153) -
Issuance of long term debt 1,243,153 -
Payments of long term debt (386,058) (298,906)
Proceeds from exercise of options
for common stock 48,438 42,374
------------ -----------
Net cash provided by (used in)
investing activities 899,544 (1,489,100)
(Decrease) increase in cash (99,262) 28,947
Cash at the beginning of year 195,382 158,077
------------ -----------
Cash at end of period $ 96,120 $ 187,024
============ ===========
The accompanying notes are an integral part of these financial statements.
6
EDAC TECHNOLOGIES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 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 nine month period ending September
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 $2,627,160 or 38.8% for the three months
and $5,423,177 or 23.8% for the nine months ended September 30, 1997 compared
to the comparable periods of 1996. The Company intends to take advantage of
the continued strong aerospace market. Sales for the nine months ended
September 30, 1997 exceeded the Company's forecast. The Company expects to
exceed the yearly forecast of $36,000,000.
Cost of Sales. Cost of sales as a percent of total sales for the three and nine
month periods ended September 30, 1997 were 83.7% and 86.6% compared to 88.1%
and 88.6% for the comparable three and nine month periods ended September 30,
1996. The reduction for the three and nine month periods is due to continuous
improvement developed by lean manufacturing techniques.
Selling, General & Administrative. Selling, general and administrative costs
increased $232,564 or 11.6% for the nine month period ended September 30, 1997.
The increase is due primarily to increases in personnel costs and selling
expenses associated with increased revenues.
Interest. Interest expense for the nine months ended September 30, 1997 was
$561,608, a decrease of $48,255 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 acquisitions for 1997 of $4,400.000. Through the third quarter
expenditures of $2,327,423 were made and an additional $113,095 was placed on
deposit for machinery. As of September 30, 1997 these capital expenditures and
deposits were funded out of operations and an advance on the Company's
equipment line of credit of $702,000, resulting in a working capital decrease
of $186,780 since December 31, 1996. (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
November 4, 1997 By /s/ Ronald G. Popolizio
----------------------------
Ronald G. Popolizio, Chief Financial
Officer and duly authorized officer
10
EXHIBIT INDEX
Page Number
in Sequential
NUMBER DESCRIPTION Numbering System
------ ----------- --------- ------
11 Statement Regarding Computation of
Per Share Earnings
27 Financial Data Schedule
11
(11)--STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
EDAC TECHNOLOGIES CORPORATION
Three Months Ended Nine Months Ended
September 30 September 30
--------------------------- -------------------------
1997 1996 1997 1996
----------- ----------- ----------- ----------
Primary:
Average shares outstanding 3,832,208 3,711,040 3,796,653 3,677,207
Net effect of dilutive
stock options based on
the treasury stock method
using average market price 149,693 69,485 143,536 101,007
------------ ----------- ----------- -----------
TOTALS 3,981,901 3,780,525 3,940,189 3,778,214
============ =========== =========== ===========
Net income (loss) $ 511,701 $ (51,645) $ 1,030,080 $ 29,678
============ =========== =========== ===========
Net income (loss)
per share $ 0.13 $ (0.01) $ 0.26 $ 0.01
============ =========== =========== ===========
Fully diluted:
Average shares outstanding 3,832,208 3,711,040 3,796,653 3,677,207
Net effect of dilutive
stock options based on
the treasury stock method
using quarter end market
price if higher than
average market price 168,667 66,522 178,323 84,405
------------ ----------- ----------- -----------
TOTALS 4,000,875 3,777,562 3,974,976 3,761,612
============ =========== =========== ===========
Net income (loss) $ 511,701 $ (51,645) $ 1,030,080 $ 29,678
============ =========== =========== ===========
Net income (loss)
per share $ 0.13 $ (0.01) $ 0.26 $ 0.01
============ =========== =========== ===========