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file | filename |
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EX-13 - EX-13 - EDAC TECHNOLOGIES CORP | c56787exv13.htm |
EX-21 - EX-21 - EDAC TECHNOLOGIES CORP | c56787exv21.htm |
EX-32.1 - EX-32.1 - EDAC TECHNOLOGIES CORP | c56787exv32w1.htm |
EX-31.2 - EX-31.2 - EDAC TECHNOLOGIES CORP | c56787exv31w2.htm |
EX-23.1 - EX-23.1 - EDAC TECHNOLOGIES CORP | c56787exv23w1.htm |
EX-31.1 - EX-31.1 - EDAC TECHNOLOGIES CORP | c56787exv31w1.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended January 2, 2010
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) |
Registrants 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 | N/A | |
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.0025 par value
(Title of class)
(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 þ.
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 þ.
Yes o No þ.
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 þ 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 o 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 registrants 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 (Do not check if a smaller reporting company) |
Smaller reporting company þ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes o No þ
As of July 4, 2009, the aggregate market value of the registrants Common Stock (based upon the
$3.64 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 $14,224,174.
As of March 5, 2010, there were 4,840,803 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 fiscal year ended January 2, 2010 |
Part II | |
Proxy Statement relating to the 2010 Annual Meeting of Shareholders |
Part III |
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
Companys business strategy and plans, statements about the adequacy of the Companys working
capital and other financial resources, statements about the Companys bank agreements, statements
about the Companys backlog, statements about the Companys 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 Companys 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 Companys 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 Companys competitors; the Companys
ability to reduce costs; the Companys ability to effectively use business-to-business tools on the
Internet to improve operating results; and the adequacy of the Companys 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.
TABLE OF CONTENTS
Table of Contents
PART I
Item 1. Business.
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 one business segment.
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. The acquisition was accounted for under the purchase method
of accounting with the assets and liabilities acquired recorded at their fair values at the date
of acquisition. The results of operations of the acquired business have been included in the
Condensed Consolidated Statements of Operations beginning as of the effective date of the
acquisition.
The $9.5 million purchase price of AERO has been allocated entirely to the working capital
acquired. In accordance with ASC 805.30, Business Combinations the acquisition was determined
to be a bargain purchase. The excess value consisting entirely of fixed assets was determined
based on independent appraisals and resulted in a net gain of $11,904,000, after acquisition
related expenses of $257,000. Fair values as currently estimated are as follows (in thousands):
Accounts receivable |
$ | 4,274 | ||
Inventories |
8,980 | |||
Prepaid expenses |
169 | |||
Property, plant and equipment |
11,893 | |||
Accounts payable and accrued expenses |
(3,655 | ) | ||
$ | 21,661 | |||
On August 10, 2009, the Company acquired substantially all of the assets of Service Network
Incorporated, a manufacturer and rebuilder of precision grinders. This business is hereinafter
referred to as SNI. The $775,000 purchase price of SNI has been allocated as follows (in
thousands): Accounts receivable $215, inventory $279, prepaid expenses $9 and machinery and
equipment $272.
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, acquired in
December 2007, 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 lines sales come from the United States.
The Company serves industrial customers through its Apex Machine Tool and Gros-Ite Spindles 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.
Gros-Ite Spindles
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. Gros-Ite Spindles repair service can recondition all
brands of precision rolling element spindles, domestic or foreign. With the acquisition of (SNI),
the Company added the manufacture and service of precision grinders to its spindle product
line. The spindle 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 almost
all sales come from the United States.
EDAC is AS9100:2004 and ISO 14001:2004 Certified. Gros-Ite Spindle is AS9100:2008 Certified.
2
Table of Contents
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 January 2, 2010, sales to United Technologies Corporation amounted
to approximately 41% of our net 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 January 2, 2010, was approximately $125,900,000 compared to $52,400,000 as
of January 3, 2009. The increase is primarily due to our acquisition of AERO. 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 three years. We presently expect to complete approximately
$54,000,000 of our January 2,
2010 backlog during the 2010 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.
3
Table of Contents
Employees
As
of March 5, 2010, we had approximately 345 employees.
Item 1A. Risk factors.
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 Managements Discussion and Analysis of
Financial Condition and Results of Operations in our 2009 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 41% of our net sales during fiscal 2009. 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 77 percent of our revenues in 2009, 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 2010, 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 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
4
Table of Contents
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.
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Table of Contents
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
Companys internal controls over financial reporting. Under the latest guidance, CCR LLP, our
independent registered public accounting firm, will be required to attest to the effectiveness of
our internal control over financial reporting beginning with the year ending January 1, 2011. 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 or our independent registered public accounting firm
determine 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.
Item 2. Properties.
The following table describes the location and general character of our principal plants and
other materially important physical properties. The property at 275 Richard Street was acquired as
a part of the AERO acquisition. The properties at 1790 and 1798 New Britain Avenue were renovated
in 1997 to improve production, increase capacity and improve the appearance of both the interior
and exterior. A portion of the facility at 21 Spring Lane that had previously been used as
warehouse space, was reconditioned in the first quarter of 2006 and is currently being used as
manufacturing area.
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 manufac- | |||||||||
Farmington, CT. 06032 |
(1 | ) | ture of spindles | |||||||||
1806 New Britain Ave. |
19,200 | Owned | Manufacturing | |||||||||
Farmington, CT. 06032 |
(1 | ) | Corporate offices |
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Square | Owned or | Principal | ||||||||||
Address | Feet | Leased | Activity | |||||||||
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 |
44,000 | Owned | Manufacturing | |||||||||
Newington, CT 06111 |
(1 | ) |
(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 Registrants 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 2009 Annual Report to Shareholders. The information
required by Item 4 with respect to securities authorized for issuance under equity compensation
plans is set forth in Part III, Item 11 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 2009 Annual Report to Shareholders.
Item 7.
Managements Discussion and Analysis of Financial Condition
and Results of Operations.
Information in response to this item is incorporated herein by reference to Managements
Discussion and Analysis of Financial Condition and Results of Operations on pages 7 through 13 of
our 2009 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 14 through
35 of our 2009 Annual Report to Shareholders.
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure.
None
Item 9A(T). Controls and Procedures.
7
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Disclosure Controls and Procedures.
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended, the
Companys management, with the participation of the Chief Executive Officer and Chief Financial
Officer of the Company, evaluated the effectiveness of the Companys disclosure controls and
procedures as of January 2, 2010. 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 Companys management concluded that the Companys
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 Companys 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 Companys internal control over financial reporting during the
Companys fiscal year ended January 2, 2010 that has materially affected, or is reasonably likely
to materially affect, the Companys 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 EDACs internal control over financial reporting as of
January 2, 2010. 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 January 2, 2010.
This annual report does not include an attestation report of the Companys registered public
accounting firm regarding internal control over financial reporting. Managements report was not
subject to attestation by the Companys registered public accounting firm pursuant to temporary
rules of the Securities and Exchange Commission that permit the Company to provide only
managements report in this annual report.
Item 9B. Other Information.
From November 2005 to March 2, 2010, Mr. Luciano M. Melluzzo served as the Companys Vice
President and Chief Operating Officer. Effective March 2, 2010, Mr. Melluzzo became the Companys
Vice President-Business development and is no longer an executive officer of the Company.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
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Table of Contents
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 2010 Annual Meeting of Shareholders (EDACs 2010 Proxy Statement), which will
be filed within 120 days after the end of our fiscal year ended January 2, 2010.
We have adopted a written code of ethics that applies to all of our employees, 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 EDACs 2010 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 EDACs 2010 Proxy Statement.
The following table sets forth certain information regarding our equity compensation plans as
of January 2, 2010.
EQUITY COMPENSATION PLAN INFORMATION
Number of | ||||||||||||
securities | ||||||||||||
remaining available | ||||||||||||
Number of | for future issuance | |||||||||||
securities to be | under equity | |||||||||||
issued upon | Weighted-average | compensation plans | ||||||||||
exercise of | exercise price of | (excluding | ||||||||||
outstanding | outstanding | securities | ||||||||||
options, warrants | options, warrants | reflected in column | ||||||||||
Plan category | and rights | and rights | (a)) | |||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation
plans approved by
security holders
(1) |
442,000 | $ | 3.18 | 58,000 | ||||||||
Equity compensation
plans not approved
by security holders
(2) |
432,334 | (3) | $ | 5.41 | 21,266 | (4) | ||||||
Total |
874,334 | $ | 4.28 | 79,266 | ||||||||
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(1) | Consists of the 2008 Equity Incentive Plan. The Plan provides 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 Plan is administered by the Compensation Committee of the Companys Board of Directors. Options are generally granted for a term of five or ten years. The exercise price of options granted under the Plan must not be less than the fair market value of the Companys common stock on the date of grant. | |
(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), (collectively, 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 Companys 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 Companys 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 200,000 shares under the 2000 Plan and 232,334 shares under the 2000-B Plan. | |
(4) | Includes 10,500 shares issuable under the 2000 Plan and 10,766 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 EDACs 2010 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 EDACs 2010 Proxy Statement.
PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a) Documents filed as a part of this report:
1. | Financial Statements. |
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The financial statements required to be filed by Item 7 hereof have been incorporated by
reference to our 2009 Annual Report to Shareholders and consist of the following:
Report of Independent Registered Public Accounting Firm
Consolidated Balance SheetsAs of January 2, 2010 and January 3, 2009.
Consolidated Statements of IncomeFiscal Years
Ended January 2, 2010 and January 3, 2009.
Consolidated Statements of Cash Flows-Fiscal Years
Ended January 2, 2010 and January 3, 2009.
Consolidated Statements of Changes in Shareholders Equity and Comprehensive Income
(Loss)-Fiscal Years Ended January 2, 2010 and January 3, 2009.
Notes to Consolidated Financial Statements.
2. | Financial Statement Schedule. |
The following financial statement schedule of EDAC is required to be filed by Item 7 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.
11
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
FINANCIAL STATEMENT SCHEDULE
FINANCIAL STATEMENT SCHEDULE
To the Shareholders and Board of Directors of
EDAC Technologies Corporation
EDAC Technologies Corporation
We have audited the consolidated financial statements of EDAC Technologies Corporation and subsidiaries
(the Company) as of January 2, 2010 and January 3, 2009, and for the years then ended, and have issued our report thereon
dated March 4, 2010, such consolidated financial statements and report are included in the Companys annual report to shareholders
for the fiscal year ended January 2, 2010 and are included herein. Our audits also included the financial statement schedule of the
Company listed in item 15. This financial statement schedule is the responsibility of the Companys management. Our responsibility
is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the
basic consolidated financial statements as of January 2, 2010 and January 3, 2009, and for the years then ended, taken as a whole,
presents fairly, in all material respects, the information set forth therein.
/s/ CCR LLP | ||||
Glastonbury, Connecticut
March 4, 2010
March 4, 2010
12
Table of Contents
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
EDAC TECHNOLOGIES CORPORATION AND SUBSIDIARIES
EDAC TECHNOLOGIES CORPORATION 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 JANUARY 2, 2010: |
||||||||||||||||||||
Reserves and allowances deducted
from asset accounts: |
||||||||||||||||||||
Allowance for
doubtful accounts receivable |
$ | 186,000 | $ | 159,553 | $ | 0 | (1) | $96,559 | $ | 248,994 | ||||||||||
Allowance for excess and obsolete
inventories |
644,402 | 16,670 | 0 | (2) | 5,747 | 655,325 | ||||||||||||||
YEAR ENDED JANUARY 3, 2009: |
||||||||||||||||||||
Reserves and allowances deducted
from asset accounts: |
||||||||||||||||||||
Allowance for
doubtful accounts receivable |
186,000 | 16,767 | 0 | (1) | 16,767 | 186,000 | ||||||||||||||
Allowance for excess and obsolete
inventories |
678,723 | 83,213 | 0 | (2) | 117,534 | 644,402 |
(1) | Write-off of specific accounts receivable. | |
(2) | Disposition of inventory reserved against. |
13
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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, 2010
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, 2010 | |||
Dominick A. Pagano
|
Officer and Director | |||||
(Principal Executive Officer) | ||||||
/s/ | Glenn L. Purple
|
Chief Financial Officer, Vice | March 8, 2010 | |||
Glenn L. Purple
|
President-Finance and Secretary | |||||
(Principal Financial and Accounting | ||||||
Officer) | ||||||
/s/ | Lee K. Barba
|
Director | March 8, 2010 | |||
Lee K. Barba |
||||||
/s/ | Joseph P. Lebel
|
Director | March 8, 2010 | |||
Joseph P. Lebel |
14
Table of Contents
Signatures | Title | Date | ||||
/s/ | Stephen J. Raffay
|
Director | March 8, 2010 | |||
Stephen J. Raffay |
||||||
/s/ | John A. Rolls
|
Director | March 8, 2010 | |||
John A. Rolls |
||||||
/s/ | Ross C. Towne
|
Director | March 8, 2010 | |||
Ross C. Towne |
||||||
/s/ | Daniel C. Tracy
|
Director, Chairman of the Board | March 8, 2010 | |||
Daniel C. Tracy |
15
Table of Contents
EXHIBIT INDEX
Exhibit | Sequential | |||||
Number | Page Number | |||||
2.1
|
Asset Purchase Agreement, dated May 18, 2009, by and between EDAC and MTU Aero Engines North America, Inc. | (14 | ) | |||
3.1
|
EDACs Amended and Restated Articles of Incorporation | (1 | ) | |||
3.2
|
Articles of Amendment to EDACs Amended and Restated Articles of Incorporation | (13 | ) | |||
3.3
|
EDACs Amended and Restated By-Laws | (4 | ) | |||
4.1
|
EDACs Amended and Restated Articles of Incorporation | (1 | ) | |||
4.2
|
Articles of Amendment to EDACs Amended and Restated Articles of Incorporation | (13 | ) | |||
4.3
|
Sections of EDACs 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 Farmington Savings Bank and EDAC. | (3 | ) | |||
10.5
|
Commercial Mortgage Note dated February 5, 2001 by and between Farmington Savings Bank and EDAC. | (3 | ) | |||
10.6
|
Open-End Mortgage Deed and Security Agreement dated February 5, 2001 by and between Farmington Savings Bank and EDAC. | (3 | ) | |||
10.7
|
Environmental Indemnification Agreement dated February 5, 2001 by and between Farmington Savings Bank and EDAC. | (3 | ) | |||
10.8
|
Form of Agreements regarding Indemnification between EDAC and each of its directors and executive officers. | (5 | ) | |||
10.9
|
Note and Mortgage Modification Agreement by and between EDAC and Farmington Savings Bank dated October 15, 2003 | (6 | ) | |||
10.10
|
Loan Agreement by and between EDAC, Apex and Banknorth N.A. dated March 5, 2004. | (7 | ) | |||
10.11
|
Term Note by and between EDAC, Apex and Banknorth N.A dated March 5, 2004. | (7 | ) |
Table of Contents
Exhibit | Sequential | |||||
Number | Page Number | |||||
10.12
|
Open-End Mortgage, Commercial Mortgage, Security Agreement and Assignment of Leases and Rents by and between Banknorth N.A and EDAC dated March 5, 2004. | (7 | ) | |||
10.13
|
Open-End Mortgage, Commercial Mortgage, Security Agreement and Assignment of Leases and Rents by and between Apex and Banknorth N.A dated March 5, 2004. | (7 | ) | |||
10.14
|
Hazardous Substance Certificate and Indemnification Agreement by and between EDAC, Apex and Banknorth N.A. dated March 5, 2004. | (7 | ) | |||
10.15
|
Promissory Note dated as of December 28, 2005 by and among EDAC, Apex Machine Tool Company, Inc., Gros-Ite Industries, Inc. and Banknorth, N.A. | (8 | ) | |||
10.16
|
Commercial Security Agreement dated as of December 28, 2005 by and among EDAC, Apex Machine Tool Company, Inc., Gros-Ite Industries, Inc. and TD Banknorth, N.A. | (8 | ) | |||
10.17
|
Promissory Note dated as of April 4, 2006 by and among EDAC, Apex Machine Tool Company, Inc., Gros-Ite Industries, Inc. and TD Banknorth, N.A. | (9 | ) | |||
10.18
|
Amended and Restated Employment Agreement dated as of February 12, 2007 between EDAC and Dominick Pagano | (10 | ) | |||
10.19
|
Employment Agreement dated as of February 12, 2007 between EDAC and Luciano M. Melluzzo | (10 | ) | |||
10.20
|
Employment Agreement dated as of February 12, 2007 between EDAC and Glenn L. Purple | (10 | ) | |||
10.21
|
Change in Terms Agreement dated July 26, 2006, changing the Equipment Loan Note by and between EDAC and TD Banknorth, N.A. | (12 | ) | |||
10.22
|
Term Note dated as of October 27, 2006 by and among EDAC, Apex Machine Tool Company, Inc., Gros-Ite Industries, Inc. and TD Banknorth, N.A. | (11 | ) | |||
10.23
|
Term Note dated as of July 18, 2007 by and among EDAC, Apex Machine Tool Company, Inc. Gros-Ite Industries, Inc. and TD Banknorth, N.A. | (12 | ) | |||
10.24
|
EDAC Technologies Corporation 2008 Equity Incentive Plan | (13 | ) | |||
10.25
|
Credit Agreement , dated as of May 27, 2009, by and among EDAC, Gros-Ite, Apex and TD Bank, N.A. | (14 | ) |
Table of Contents
Exhibit | Sequential | |||||
Number | Page Number | |||||
10.26
|
Security Agreement, dated as of May 27, 2009, by and between EDAC, Gros-Ite, Apex and TD Bank, N.A. | (14 | ) | |||
10.27
|
Term Note, dated as of May 27, 2009, by and among EDAC, Gros-Ite, Apex and TD Bank, N.A. | (14 | ) | |||
10.28
|
Revolving Credit Note, dated as of May 27, 2009, by and among by and among EDAC, Gros-Ite, Apex and TD Bank, N.A. | (14 | ) | |||
10.29
|
Mortgage Note, dated as of May 27, 2009, by and among EDAC, Gros-Ite, Apex and TD Bank, N.A. | (14 | ) | |||
10.30
|
Open-End Mortgage Deed and Security Agreement, dated as of May 27, 2009, by and between EDAC and TD Bank N.A. | (14 | ) | |||
10.31
|
Environmental Indemnity Agreement, dated as of May 27, 2009, by and between EDAC, Gros-Ite, Apex and TD Bank, N.A. | (14 | ) | |||
10.32
|
Secured Promissory Note, dated as of May 27, 2009, by EDAC in favor of MTU Aero Engines North America, Inc. | (14 | ) | |||
10.33
|
Amended and Restated Employment Agreement dated as of January 14, 2010 between EDAC and Dominick Pagano | (15 | ) | |||
11
|
Earnings per share information has been incorporated by reference to EDACs 2009 Annual Report to Shareholders | |||||
13*
|
EDACs 2009 Annual Report to Shareholders | |||||
14
|
EDAC Technologies Corporation Code of Ethics | (6 | ) | |||
21*
|
Subsidiaries | |||||
23.1*
|
Consent of CCR 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. |
(1)
|
Exhibit incorporated by reference to the Companys registration statement on Form S-1 dated August 6, 1985, commission File No. 2-99491, Amendment No. 1. |
Table of Contents
(2)
|
Exhibit incorporated by reference to the Companys Annual Report on Form 10-K for the year ended December 30, 2000. | |
(3)
|
Exhibit incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarter ended March 31, 2001. | |
(4)
|
Exhibit incorporated by reference to the Companys Current Report on Form 8-K dated February 19, 2002. | |
(5)
|
Exhibit incorporated by reference to the Companys Quarterly Report on Form 10-Q dated June 30, 2002. | |
(6)
|
Exhibit incorporated by reference to the Companys Annual Report on Form 10-K for the year ended January 3, 2004. | |
(7)
|
Exhibit incorporated by reference to the Companys Quarterly Report on Form 10-Q dated April 3, 2004. | |
(8)
|
Exhibit incorporated by reference to the Companys Current Report on Form 8-K dated December 29, 2005. | |
(9)
|
Exhibit incorporated by reference to the Companys Current Report on Form 8-K dated April 5, 2006. | |
(10)
|
Exhibit incorporated by reference to the Companys Current Report on Form 8-K dated February 16, 2007. | |
(11)
|
Exhibit incorporated by reference to the Companys Annual Report on Form 10-K for the year ended December 30, 2006. | |
(12)
|
Exhibit incorporated by reference to the Companys Quarterly Report on Form 10-Q dated September 29, 2007. | |
(13)
|
Exhibit incorporated by reference to the Companys Quarterly Report on Form 10-Q dated June 28, 2008. | |
(14)
|
Exhibit incorporated by reference to the Companys Report on Form 8-K dated May 27, 2009. | |
(15)
|
Exhibit incorporated by reference to the Companys Report on Form 8-K dated January 14, 2010. |
* | Filed herewith |