<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 30, 1998
Commission file number: 0-14275
EDAC TECHNOLOGIES CORPORATION
-----------------------------
(Exact Name of Registrant as Specified in its Charter)
Wisconsin
------------------------------------------------
(State or Other Jurisdiction of Incorporation)
0-14275 39-1515599
------------- ----------------
(Commission File (I.R.S. Employer
Number) Identification No.)
1806 New Britain Avenue
Farmington, Connecticut 06032
- ------------------------- ---------
(Address of Principal (Zip Code)
Executive Offices)
(860) 677-2603
--------------
(Registrant's telephone number, including area code)
<PAGE> 2
Item 7. Financial Statements, Pro Forma Information and Exhibits.
(a) Financial Statements of Business Acquired.
Apex Machine Tool Company, Inc. audited financial statements as
of and for the year ended December 31, 1996.
Report of Independent Accountants
Balance Sheet
Statement of Income and Retained Earnings
Statement of Cash Flows
Notes to Financial Statements
Apex Machine Tool Company, Inc. audited financial statements as
of and for the year ended December 31, 1997.
Report of Independent Accountants
Balance Sheet
Statement of Income and Retained Earnings
Statement of Cash Flows
Notes to Financial Statements
Apex Machine Tool Company, Inc. audited financial statements as
of and for the six months ended June 30, 1998.
Report of Independent Accountants
Balance Sheet
Statement of Income and Retained Earnings
Statement of Cash Flows
Notes to Financial Statements
(b) Pro Forma Financial Information.
<PAGE> 3
The Consolidated Balance Sheet for Edac Technologies
Corporation, including the effect of the acquisition of Apex
Machine Tool Company, Inc., is incorporated herein by reference
to Edac's Form 10-Q for the quarter ended July 4, 1998.
Pro Forma Consolidated Income Statement for Edac Technologies
Corporation and Apex Machine Tool Company, Inc. for the year
ended December 31, 1997 (unaudited).
Pro Forma Consolidated Income Statements for Edac Technologies
Corporation and Apex Machine Tool Company, Inc. for the six
months ended July 4, 1998 (unaudited).
Notes to Pro Forma Consolidated Financial Statements
(unaudited).
(c) Exhibits.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Bennett & Katz LLC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Edac
Technologies Corporation has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
EDAC TECHNOLOGIES CORPORATION
Date: September 14, 1998
By /s/ Ronald G. Popolizio
----------------------------
Ronald G. Popolizio, Chief Financial
Officer and duly authorized officer
<PAGE> 4
APEX MACHINE TOOL COMPANY, INC.
FINANCIAL STATEMENTS
AS OF JUNE 29, 1998
TOGETHER WITH
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE> 5
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Board of Directors of
Apex Machine Tool Company, Inc.:
We have audited the accompanying balance sheet of Apex Machine Tool Company,
Inc. (a Connecticut corporation) as of June 29, 1998, and the related statements
of operations and retained earnings and cash flows for the period January 1,
1998 through June 29, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Apex Machine Tool Company, Inc.
as of June 29, 1998, and the results of its operations and its cash flows for
the period January 1, 1998 through June 29, 1998 in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
Hartford, Connecticut
August 24, 1998
<PAGE> 6
APEX MACHINE TOOL COMPANY, INC.
BALANCE SHEET
JUNE 29, 1998
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
CURRENT ASSETS:
Cash $ 259,597
Accounts receivable 2,621,143
Inventories 1,473,293
Prepaid expenses and other 34,471
----------
Total current assets 4,388,504
----------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Machinery and equipment 6,236,798
Leasehold improvements 1,748,262
Furniture, fixtures and office equipment 1,499,782
Vehicles 223,960
----------
9,708,802
Less - accumulated depreciation and
amortization 5,685,032
----------
4,023,770
----------
$8,412,274
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accrued shareholder and employee bonuses $1,633,937
Accounts payable 639,970
Accrued expenses 730,041
Customer deposits 588,473
Current portion of deferred grant income 16,667
----------
Total current liabilities 3,609,088
----------
DEFERRED GRANT INCOME 125,000
----------
DEFERRED TAXES 87,000
----------
COMMITMENTS AND CONTINGENCIES (Note 5)
STOCKHOLDERS' EQUITY:
Common stock, $10 par value per share;
102,000 shares authorized; 100,368
shares issued and outstanding 1,003,680
Retained earnings 3,587,506
----------
4,591,186
----------
$8,412,274
==========
</TABLE>
The accompanying notes are an integral part
of this financial statement.
<PAGE> 7
APEX MACHINE TOOL COMPANY, INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
FOR THE PERIOD JANUARY 1, 1998 THROUGH JUNE 29, 1998
<TABLE>
<CAPTION>
<S> <C>
NET SALES $11,098,827
COST OF SALES 8,176,451
-----------
Gross profit 2,922,376
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,177,096
-----------
OTHER INCOME (EXPENSE):
Bonuses to officers (1,500,000)
Gain on sale of equipment 86,733
Other expense (234,985)
-----------
Income from operations 97,028
INTEREST EXPENSE, net (40,972)
-----------
Income before benefit from income taxes 56,056
BENEFIT FROM INCOME TAXES 42,661
-----------
Net income 98,717
RETAINED EARNINGS, beginning of period 3,488,789
-----------
RETAINED EARNINGS, end of period $ 3,587,506
===========
</TABLE>
The accompanying notes are an integral
part of this financial statement.
<PAGE> 8
APEX MACHINE TOOL COMPANY, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD JANUARY 1, 1998 THROUGH JUNE 29, 1998
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 98,717
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 302,796
Amortization of grant income (8,333)
Deferred income taxes (42,661)
Net gain on sale of equipment (86,733)
Change in operating assets and liabilities:
Accounts receivable 1,316,575
Inventories 54,668
Prepaid expenses and other 2,687
Accounts payable 76,562
Accrued expenses 814,593
Customer deposits 514,353
-----------
Net cash provided by operating activities 3,043,224
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property, plant and equipment (323,378)
Net proceeds from sale of equipment 128,200
-----------
Net cash used for investing activities (195,178)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of notes payable to stockholders (1,470,748)
Net repayments under revolving line-of-credit (1,125,000)
-----------
Net cash used for financing activities (2,595,748)
-----------
INCREASE IN CASH 252,298
CASH, beginning of period 7,299
-----------
CASH, end of period $ 259,597
===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 46,044
Income taxes $ -
</TABLE>
The accompanying notes are an integral
part of this financial statement.
<PAGE> 9
APEX MACHINE TOOL COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 29, 1998
1. Significant Accounting Policies:
Operations -
Apex Machine Tool Company, Inc. (the Company) is a metal working job shop
that manufactures close tolerance, high-precision gages, fixtures, dies,
form molds, composite molds and plastic injection molds for the aerospace
and defense markets, as well as the healthcare industry and general
commercial markets. The Company has the capability to both design and
build its entire line of products. The Company's products are sold through
its manufacturing plant in Farmington, Connecticut and through independent
sales representatives.
The Company was acquired by EDAC Technologies Corporation on June 29,
1998. The financial statements presented represent the Company's financial
position preceding the sale.
Inventories -
The Company values inventories at the lower of cost using the first-in,
first-out (FIFO) method or market.
Property, plant and equipment -
Property, plant and equipment are depreciated or amortized using the
straight-line method over the estimated useful lives of the assets as
follows:
Years
Machinery and equipment 12
Leasehold improvements 31
Furniture, fixtures and office equipment 5-12
Vehicles 5
The Company accounts for property, plant and equipment under Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets" (SFAS 121). This statement requires a company to review
long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. There is no impact on the Company's results of operations or
financial position as a result of this statement.
Customer deposits -
Customer deposits represent progress payments received from customers.
<PAGE> 10
-2-
Use of estimates -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
2. Financing Arrangements:
The Company had a $2.25 million line-of-credit with interest at the bank's
Prime Rate (8.5% at June 29, 1998) which was repaid and canceled by the
Company during the period January 1, 1998 through June 29, 1998. This
line-of-credit was collateralized by all assets of the Company and
guaranteed by the stockholders.
The Company also had loans payable to stockholders with interest at 7%
which were repaid during the period January 1, 1998 through June 29, 1998.
3. Income Taxes:
The Company has elected, for Federal income tax purposes, to be treated as
an S Corporation. Under this election, the taxable income or losses of the
Company are included in the individual tax returns of the stockholders.
The Company is responsible for state income taxes.
The Company accounts for income taxes under Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." Under
SFAS No. 109, deferred tax assets or liabilities are computed based on the
difference between the financial statement and income tax bases of assets
and liabilities using the enacted marginal tax rate. Deferred income tax
expenses or benefits are based on the changes in the deferred tax assets
and liabilities from period to period.
The tax effect of temporary differences giving rise to the Company's
deferred tax liability at June 29, 1998 are attributable to book
depreciation compared to tax depreciation. The benefit from income taxes
for the period ended June 29, 1998 is primarily attributable to a change
in state income tax rates applied to S Corporations in Connecticut.
4. Profit-Sharing and Retirement Plan:
The Company established the Apex Machine Tool Company, Inc. Profit-Sharing
and Retirement Plan (the Plan), covering substantially all employees who
have completed more than one year of service. Profit sharing contributions
are made to the plan at the discretion of the Company's Board of
Directors. The Plan also allows employees to contribute tax deferred
salary deductions into the Plan under Section 401(k) of the Internal
Revenue Code subject to certain limitations as defined in the Plan.
Matching contributions are made by the Company at a rate of 20% of
employees' contributions. The Company declared
<PAGE> 11
-3-
discretionary profit sharing contributions and made matching contributions
of approximately $60,000 and $57,000 to the Plan, respectively for the
period from January 1, 1998 through June 29, 1998.
5. Commitments and Contingencies:
Lease commitments -
The Company has an operating lease agreement for certain equipment. The
following is a schedule of future minimum rental payments required under
the lease agreement as of June 29, 1998:
Year Ending
June 29,
-------
1999 $ 33,762
2000 80,496
2001 80,496
2002 80,496
2003 60,372
Contingencies -
Under the terms of an agreement executed May 3, 1995 with the State of
Connecticut, the Company obtained a tax free grant in the amount of
$200,000, which is secured by a first lien on various equipment and a
second lien on the remainder of the Company's assets. The direct financial
assistance package requires the Company to maintain its operations in
Connecticut through May 3, 2005 and maintain certain employment levels. In
the event of a default in the conditions, the Company is required to
immediately repay the $200,000 grant plus interest at the rate of 7.5
percent per annum from the date of the first grant payment. The grant is
personally guaranteed by the Company's stockholders.
The Company is involved in litigation with respect to certain matters and
is subject to other claims that arise in the normal course of business. In
the opinion of management, none of these matters is expected to have a
material adverse affect on the Company's operating results or financial
position.
6. Major Customers:
For the period January 1, 1998 through June 29, 1998, sales to the
Company's major customers and the applicable account receivables due from
these customers at June 29, 1998 are as follows:
Percent of Sales Accounts Receivable
---------------- -------------------
United Technologies
Corporation 29% 20%
The Gillette Company 25% 14%
Nypro, Inc. 14% 33%
General Electric Company 12% 21%
<PAGE> 12
APEX MACHINE TOOL COMPANY, INC.
(AN "S" CORPORATION)
REPORT ON AUDIT OF
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
<PAGE> 13
CONTENTS
<TABLE>
Page
<S> <C>
REPORT OF INDEPENDENT ACCOUNTANTS...................................................... 1
FINANCIAL STATEMENTS:
Balance Sheet....................................................................... 2
Statement of Income and Retained Earnings........................................... 3
Statement of Cash Flows............................................................. 4
Notes of Financial Statements....................................................... 5 - 10
</TABLE>
<PAGE> 14
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
April 24, 1998
Board of Directors
Apex Machine Tool Company, Inc.
Farmington, Connecticut
We have audited the accompanying balance sheet of Apex Machine Tool Company,
Inc. (an "S" Corporation) as of December 31, 1997, and the related statements of
income and retained earnings, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Apex Machine Tool Company, Inc.
as of December 31, 1997, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
/s/ Bennett & Katz, LLC
Certified Public Accountants
<PAGE> 15
APEX MACHINE TOOL COMPANY, INC.
(AN "S" CORPORATION)
BALANCE SHEET
DECEMBER 31, 1997
ASSETS (NOTES 4 AND 10)
-----------------------
<TABLE>
<CAPTION>
<S> <C>
CURRENT ASSETS:
Cash (Note 2) $ 7,299
Accounts receivable (Note 1) 3,937,718
Inventories (Note 1) 1,527,961
Other current assets 37,158
-----------
TOTAL CURRENT ASSETS 5,510,136
NET PROPERTY AND EQUIPMENT (Notes 1 and 3) 4,044,655
-----------
$ 9,554,791
===========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
<S> <C>
CURRENT LIABILITIES:
Short-term debt (Note 4) $ 1,125,000
Accounts payable 563,408
Payroll taxes payable 731,849
Accrued payroll, bonuses and vacation 499,521
Accrued contribution - retirement plans (Note 9) 202,386
Other accrued expenses (Note 10) 115,629
Customer deposits 74,120
Loans payable - stockholders (Note 5) 1,470,748
Current portion of deferred grant income (Notes 1 and 10) 16,667
-----------
TOTAL CURRENT LIABILITIES 4,799,328
DEFERRED GRANT INCOME (Notes 1 and 10) 133,333
DEFERRED STATE INCOME TAX (Notes 1 and 6) 129,661
CONTINGENCY (Note 10)
STOCKHOLDERS' EQUITY:
Common stock, par value $10 per share, authorized 102,000 shares,
issued and outstanding 100,368 shares 1,003,680
Retained earnings 3,488,789
-----------
4,492,469
$ 9,554,791
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 2 -
<PAGE> 16
APEX MACHINE TOOL COMPANY, INC.
(AN "S" CORPORATION)
STATEMENT OF INCOME AND RETAINED EARNINGS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
NET SALES (Notes 1 and 8) $ 20,093,515
COST OF SALES 14,240,524
------------
GROSS PROFIT 5,852,991
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,119,077
------------
INCOME FROM OPERATIONS 3,733,914
OTHER INCOME (EXPENSE):
Stockholder bonuses (3,449,000)
Interest expense (85,849)
Other income (Note 1) 101,824
------------
(3,433,025)
------------
INCOME BEFORE STATE INCOME TAX 300,889
PROVISION FOR STATE INCOME TAX (Notes 1 and 6) 49,978
------------
NET INCOME 250,911
RETAINED EARNINGS:
Beginning of year 3,237,878
------------
End of year $ 3,488,789
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 3 -
<PAGE> 17
APEX MACHINE TOOL COMPANY, INC.
(AN "S" CORPORATION)
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 250,911
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation 609,941
Amortization of grant income (16,667)
Gain on sale of equipment (28,163)
Deferred state income tax 49,978
Changes in assets and liabilities:
Increase in accounts receivable (1,615,541)
Increase in inventories (42,111)
Increase in other current assets (11,517)
Decrease in technical overdraft (318,204)
Increase in accounts payable 204,732
Increase in payroll taxes payable 717,476
Increase in accrued payroll, bonuses and vacation 61,669
Increase in accrued contribution - retirement plans 39,881
Increase in other accrued expenses 36,816
Decrease in customer deposits (398,744)
----------
NET CASH USED IN OPERATING ACTIVITIES (459,543)
----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (664,676)
Proceeds from sale of equipment 33,900
----------
NET CASH USED IN INVESTING ACTIVITIES (630,776)
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (777,846)
Proceeds from short-term debt 7,505,000
Repayments of short-term debt (6,925,000)
Proceeds from loans payable - stockholders 1,470,748
Repayments of loans payable - stockholders (180,389)
----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,092,513
----------
NET INCREASE IN CASH 2,194
CASH, BEGINNING OF YEAR 5,105
----------
CASH, END OF YEAR $ 7,299
==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 86,396
==========
State income taxes $ -
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 4 -
<PAGE> 18
APEX MACHINE TOOL COMPANY, INC.
(AN "S" CORPORATION)
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BUSINESS OF THE COMPANY:
Apex Machine Tool Company, Inc. (the Company) is a metal working job
shop that manufactures close tolerance, high-precision gages, fixtures,
dies, form molds, composite molds and plastic injection molds for the
aerospace and defense markets, as well as the healthcare industry and
general commercial markets. The Company has the capability to design and
build its entire line of products. The Company's products are sold
through its manufacturing plant in Farmington, Connecticut and through
independent sales representatives.
The Company grants credit to customers throughout the United States and
Canada, consequently the Company's ability to collect amounts due from
customers is affected by economic fluctuations. In addition, a large
percentage of the Company's business is generated from the defense and
aerospace industries. Accordingly, the Company's operating results could
be impacted by trends in these industries.
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
INVENTORY VALUATION:
The Company's work-in-process inventories are stated at the lower of
cost or market, with cost determined on the average cost basis.
PROPERTY, EQUIPMENT AND DEPRECIATION:
Property and equipment are carried at cost. When assets are retired or
sold, the cost and related accumulated depreciation are eliminated from
the Company's accounting records and any gain or loss is reflected in
earnings. Maintenance and repairs are charged to expense as incurred.
Depreciation is computed on the straight-line method over the estimated
useful lives of the assets which range from five to twelve years for
furniture, vehicles and equipment, and thirty-one years for real
property.
- 5 -
<PAGE> 19
APEX MACHINE TOOL COMPANY, INC.
(AN "S" CORPORATION)
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
INCOME TAXES:
The Company has elected to be taxed as an "S" Corporation under
applicable sections of the Internal Revenue Code. Accordingly, all
federal income tax attributes pass through to the individual
stockholders.
Deferred income taxes are recognized for the future tax consequences of
differences between the tax basis of assets and liabilities and their
financial reporting amounts at each year end based on enacted tax laws
and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances
are established when necessary to reduce deferred tax assets to the
amount expected to be realized. Income tax expense represents the tax
payable for the year as adjusted by the change during the year in
deferred tax assets and liabilities.
GRANT INCOME:
The Company received a $200,000 grant from the State of Connecticut
which is being amortized into income over a period of twelve years (see
Note 10). The yearly income recognized is included in other income on
the Statement of Income and Retained Earnings.
NOTE 2 - CASH:
The Company maintains its cash at financial institutions where the
balances are insured by the Federal Deposit Insurance Corporation up to
$100,000. Balances at times exceed this limit.
NOTE 3 - NET PROPERTY AND EQUIPMENT:
<TABLE>
Net property and equipment consists of the following:
<S> <C>
Machinery and equipment $ 6,290,432
Furniture, fixtures and office equipment 1,467,526
Vehicles 382,581
Leasehold improvements 1,748,262
-----------
9,888,801
Less accumulated depreciation 5,844,146
-----------
$ 4,044,655
===========
</TABLE>
- 6 -
<PAGE> 20
APEX MACHINE TOOL COMPANY, INC.
(AN "S" CORPORATION)
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
NOTE 4 - SHORT-TERM DEBT:
On May 1, 1997 the Company refinanced its $2.25 million line of credit
with a bank through May 1, 1999. At the Company's discretion, interest
is charged at a variable rate equal to the prime rate as published in
the Wall Street Journal or at a fixed interest rate equal to the Libor
rate plus 150 basis points for 30, 60 or 90 days. The line of credit,
which is secured by all Company assets and guaranteed by the
stockholders, is subject to various financial covenants and is limited
based on levels of accounts receivable and inventories. The outstanding
balance at December 31, 1997 bears interest at the Wall Street Journal's
prime rate at that date of 8.5 percent.
NOTE 5 - LOANS PAYABLE - STOCKHOLDERS:
<TABLE>
<S> <C>
Loans payable - stockholders consists of the following:
Working capital advances with interest payable at
the rate of seven percent per annum. Repayment is
subordinated to the line of credit (Note 4).
Total interest paid to the stockholders during
1997 was $3,425.
$ 743,475
On December 31, 1997, the stockholders assumed the outstanding
balance of a bank mortgage in exchange for a 7 percent short-term
note from the Company. The original note of $1.1 million was used
to finance leasehold improvements at the Company's facility and
was secured by a mortgage on the
building. 727,273
-----------
$ 1,470,748
-----------
NOTE 6 - PROVISION FOR STATE INCOME TAX:
The provision for state income tax expense is comprised of the
following:
Current
$ -
-----------
Deferred:
Attributable to decrease in net operating loss 10,794
Attributable to tax rate change 46,682
Attributable to other timing differences (7,498)
-----------
49,978
-----------
$ 49,978
===========
</TABLE>
- 7 -
<PAGE> 21
APEX MACHINE TOOL COMPANY, INC.
(AN "S" CORPORATION)
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
NOTE 6 - PROVISION FOR STATE INCOME TAX (CONTINUED):
Deferred state income taxes arise from timing differences in the
treatment of income and expense items between financial accounting and
tax purposes. The Company uses different depreciation methods and a
different method of recognizing the benefit of operating loss and credit
carryforwards for financial accounting and tax purposes. Deferred taxes
are classified as current or non-current depending on the classification
of the assets and liabilities to which they relate. Deferred taxes
arising from timing differences that are not related to an asset or
liability are classified as current or non-current depending on the
periods in which the timing differences are expected to reverse.
Based on events that occurred subsequent to December 31, 1997,
depreciation differences are expected to reverse in 1998 (see Note 12).
As Connecticut income tax rates decrease through the tax year 2000 and
the taxation of "S" corporations is phased out through the year 2001,
the tax depreciation in excess of book depreciation is expected to be
recorded as income in a tax year when the tax rate is higher than
previously anticipated. The effect of this change is an increase in
deferred state income tax, which is being recognized during the current
year. This results in an effective income tax rate that is higher than
would be expected if the state statutory rate were applied. The net
deferred state income tax liability is entirely related to the excess of
depreciation expense for tax reporting purposes over the amount deducted
for financial reporting purposes.
NOTE 7 - OPERATING LEASE/RELATED PARTY TRANSACTIONS:
On January 1, 1994 the Company entered into a five-year lease agreement
for a 44,000 square foot building in Farmington, Connecticut owned by
the Company's stockholders. The lease required monthly payments of
$25,767 during 1997, and increases at a rate equal to the consumer price
index through December 31, 1998. The minimum future rental payments
relating to this lease for the year ended December 31, 1998 are
$309,209.
In addition, the Company paid $24,000 during 1997 to rent storage space
on a month-to-month basis in another building located in Farmington,
Connecticut also owned by the Company's stockholders.
- 8 -
<PAGE> 22
APEX MACHINE TOOL COMPANY, INC.
(AN "S" CORPORATION)
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
NOTE 8 - MAJOR CUSTOMERS:
The Company's sales to major customers are as follows:
PERCENT OF TOTAL SALES
----------------------
The Gillette Company 29.3%
United Technologies, Inc. 25.2
General Electric Company 16.1
------
70.6%
======
NOTE 9 - RETIREMENT PLANS:
The Company maintains a noncontributory qualified profit-sharing plan
covering substantially all employees. Determination of the amount of the
Company's contribution to the plan is made annually by the Board of
Directors and accrued at such time. A $160,000 contribution was accrued
for 1997.
The Company also maintains a "Section 401K" plan covering substantially
all employees, whereby employees may elect to contribute a portion of
their wages on a pre-tax basis, and the Company may, at its management's
discretion, match a certain percentage of employee contributions. A
$42,386 matching contribution was accrued for 1997.
NOTE 10 - COMMITMENTS AND CONTINGENCIES:
Under the terms of an agreement executed May 4, 1996 with the State of
Connecticut, the Company obtained a tax free grant in the amount of
$200,000, which is secured by a first lien on various equipment and a
second lien on the remainder of the Company's assets. The direct
financial assistance package requires the Company to maintain its
operations in Connecticut through May 3, 2005 and maintain certain
employment levels. In the event of a default in the conditions, the
Company is required to immediately repay the $200,000 grant plus
interest at the rate of 7.5 percent per annum from the date of the first
grant payment. The grant is personally guaranteed by the Company's
stockholders.
The Company self-insures its employees' health care up to a maximum of
$45,000 per year per person. At December 31, 1997 the Company has
accrued $54,092 for unpaid claims.
- 9 -
<PAGE> 23
APEX MACHINE TOOL COMPANY, INC.
(AN "S" CORPORATION)
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
NOTE 11 - SUBSEQUENT EVENT:
During February 1998 the Company accepted a letter of intent from a
publicly traded entity to purchase substantially all of its tangible and
intangible assets and assume most of its liabilities. The agreement is
subject to certain contingencies and provides for the acquirer to enter
into a consulting agreement with a stockholder and to purchase from the
stockholders the Company's operating facility and other real estate. A
tentative closing date of June 30, 1998 has been agreed upon.
<PAGE> 24
APEX MACHINE TOOL COMPANY, INC.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996
TOGETHER WITH
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE> 25
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Board of Directors of
Apex Machine Tool Company, Inc.:
We have audited the accompanying balance sheet of Apex Machine Tool Company,
Inc. (a Connecticut corporation) as of December 31, 1996, and the related
statements of operations and retained earnings and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Apex Machine Tool Company, Inc.
as of December 31, 1996, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
Hartford, Connecticut
August 24, 1998
<PAGE> 26
APEX MACHINE TOOL COMPANY, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1996
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS:
Cash $ 15,001
Accounts receivable 2,322,177
Inventories 1,485,850
Prepaid expenses and other 25,641
Deferred state income taxes 7,088
----------
Total current assets 3,855,757
----------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Machinery and equipment 6,348,453
Leasehold improvements 1,748,261
Furniture, fixtures and office equipment 844,421
Vehicles 378,832
----------
9,319,967
Less - accumulated depreciation and
amortization 5,324,310
----------
3,995,657
----------
$7,851,414
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 46,613
Line-of-credit 873,100
Accounts payable 358,676
Accrued expenses 693,543
Customer deposits 472,864
Current portion of deferred grant income 16,667
----------
Total current liabilities 2,461,463
----------
LONG-TERM DEBT 731,233
----------
NOTES PAYABLE TO STOCKHOLDERS 180,389
----------
DEFERRED GRANT INCOME 150,000
----------
DEFERRED STATE INCOME TAXES 86,771
----------
COMMITMENTS AND CONTINGENCIES (Note 5)
STOCKHOLDERS' EQUITY:
Common stock, $10 par value per share;
102,000 shares authorized; 100,368
shares issued and outstanding 1,003,680
Retained earnings 3,237,878
----------
4,241,558
----------
$7,851,414
==========
</TABLE>
The accompanying notes are an integral
part of this financial statement.
<PAGE> 27
APEX MACHINE TOOL COMPANY, INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
NET SALES $15,394,312
COST OF SALES 12,275,429
-----------
Gross profit 3,118,883
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (2,199,624)
OTHER INCOME (EXPENSE):
Bonuses to officers (935,000)
Gain on sale of equipment 155,066
Other (79,386)
-----------
Income from operations 59,939
INTEREST EXPENSE, net (126,740)
-----------
Loss before provision for income taxes (66,801)
BENEFIT FROM INCOME TAXES 90,063
-----------
Net income 23,262
RETAINED EARNINGS, beginning of year 3,214,616
-----------
RETAINED EARNINGS, end of year $ 3,237,878
===========
</TABLE>
The accompanying notes are an integral
part of this financial statement.
<PAGE> 28
APEX MACHINE TOOL COMPANY, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net loss $ 23,262
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 616,858
Amortization of grant income (16,667)
Deferred income taxes (90,445)
Gain on sale of equipment (155,066)
Change in operating assets and liabilities:
Accounts receivable 925,305
Inventories (129,084)
Prepaid expenses and other 8,965
Accounts payable (315,825)
Accrued expenses 136,218
Customer deposits 265,346
-----------
Net cash provided by operating activities 1,268,867
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property, plant and equipment (386,328)
Net proceeds from sale of equipment 266,880
-----------
Net cash used for investing activities (119,448)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments under line-of-credit (109,836)
Repayments of long-term debt (38,112)
Repayments of notes payable to stockholders (1,000,000)
-----------
Net cash used for financing activities (1,147,948)
-----------
INCREASE IN CASH 1,471
CASH, beginning of year 13,530
-----------
CASH, end of year $ 15,001
===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $ 132,353
Income taxes $ -
</TABLE>
The accompanying notes are an integral
part of this financial statement.
<PAGE> 29
APEX MACHINE TOOL COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. Significant Accounting Policies:
Operations -
Apex Machine Tool Company, Inc. (the Company) is a metal working job shop
that manufactures close tolerance, high-precision gages, fixtures, dies,
form molds, composite molds and plastic injection molds for the aerospace
and defense markets, as well as the healthcare industry and general
commercial markets. The Company has the capability to both design and
build its entire line of products. The Company's products are sold
through its manufacturing plant in Farmington, Connecticut and through
independent sales representatives.
Inventories -
The Company values inventories at the lower of cost using first-in,
first-out (FIFO) method or market.
Property, plant and equipment -
Property, plant and equipment are depreciated or amortized using the
straight-line method over the estimated useful lives of the assets as
follows:
Years
-----
Machinery and equipment 12
Leasehold improvements 31
Furniture, fixtures and office equipment 5-12
Vehicles 5
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets" (SFAS 121). SFAS 121 requires a company
to review long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company's adoption of this standard, effective January
1, 1996, had no impact on the Company's results of operations or
financial position.
Customer deposits -
Customer deposits represent progress payments received from customers.
- 2 -
<PAGE> 30
Use of estimates -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
2. Financing Arrangements:
The Company has a note payable of $777,846 as of December 31, 1996 due
in monthly installments of $8,769 including interest at 7.64% with the
remaining balance due in December 2007. This note is collateralized by
the building the Company leases from the stockholders and is guaranteed
by the stockholders.
The Company has notes payable to stockholders which represent working
capital advances. Interest is payable at 7% and there are no formal
repayment terms. As of December 31, 1996, $180,389 is outstanding under
these notes. The notes are subordinated to the Company's notes payable
to bank described above and line-of-credit described below.
The Company has a revolving line-of-credit with a borrowing base limited
to an amount which is the lesser of $2.25 million or an amount
determined by a formula based on percentages of the Company's
receivables and inventory. As of December 31, 1996, the revolving
line-of-credit had a balance of $873,100 with interest at the bank's
prime rate (8.25% at December 31, 1996). The unused availability on the
line at December 31, 1996 was $1,376,900. The line-of-credit is secured
by all the Company's assets and guaranteed by the stockholders.
Maturities of long-term debt for each of the succeeding five years are
as follows:
<TABLE>
<CAPTION>
Year Ending
December 31,
<S> <C>
1997 $ 46,613
1998 52,023
1999 55,246
2000 59,618
2001 64,336
Thereafter 500,010
--------
$777,846
========
</TABLE>
- 3 -
<PAGE> 31
3. Income Taxes:
The Company has elected, for Federal income tax purposes, to be treated
as an S Corporation. Under this election, the taxable income or losses
of the Company are included in the individual tax returns of the
stockholders. The Company is responsible for state tax liabilities.
The Company accounts for income taxes under Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
Under SFAS No. 109, deferred tax assets or liabilities are computed
based on the difference between the financial statement and income tax
bases of assets and liabilities using the enacted marginal tax rate.
Deferred income tax expenses or benefits are based on the changes in the
deferred tax assets and liabilities from period to period.
The tax effect of temporary differences giving rise to the Company's
deferred tax asset and liability at December 31, 1996 are attributable
to book depreciation compared to tax depreciation, tax credits and
operating loss carryforwards. As of December 31, 1996, the Company has
operating loss carryforwards for state purposes of approximately
$124,000 expiring through 1999.
The benefit from income taxes for the year ended December 31, 1996 is
primarily attributable to the reversal of a valuation allowance against
the deferred tax asset since the Company now expects to realize these
assets through future earnings.
4. Profit-Sharing and Retirement Plan:
The Company established the Apex Machine Tool Company, Inc.
Profit-Sharing and Retirement Plan (the Plan), covering substantially
all employees who have completed more than one year of service. Profit
sharing contributions are made to the plan at the discretion of the
Company's Board of Directors. The Plan also allows employees to
contribute tax deferred salary deductions into the Plan under Section
401(k) of the Internal Revenue Code subject to certain limitations as
defined in the Plan. Matching contributions are made by the Company at a
rate of 20% of employees' contributions. The Company declared
discretionary profit sharing contributions and made matching
contributions of approximately $80,000 and $26,000 to the Plan,
respectively for the year ended December 31, 1996.
- 4 -
<PAGE> 32
5. Commitments and Contingencies:
Lease commitments -
The Company has an operating lease agreement for a building in
Farmington, Connecticut. The Company leases the building from the
stockholders. The following is a schedule of future minimum rental
payments required under the lease agreement as of December 31, 1996:
<TABLE>
<CAPTION>
Year Ending
December 31,
------------
<S> <C>
1997 $299,593
1998 299,593
</TABLE>
Contingencies -
Under the terms of an agreement executed May 3, 1995 with the State of
Connecticut, the Company obtained a tax free grant in the amount of
$200,000, which is secured by a first lien on various equipment and a
second lien on the remainder of the Company's assets. The direct
financial assistance package requires the Company to maintain its
operations in Connecticut through May 3, 2005 and maintain certain
employment levels. In the event of a default in the conditions, the
Company is required to immediately repay the $200,000 grant plus
interest at the rate of 7.5 percent per annum from the date of the first
grant payment. The grant is personally guaranteed by the Company's
stockholders.
The Company is involved in litigation with respect to certain matters
and is subject to other claims that arise in the normal course of
business. In the opinion of management, none of these matters is
expected to have a material adverse affect on the Company's operating
results or financial position.
6. Major Customers:
For the year ended December 31, 1996, sales to the Company's major
customers and the applicable account receivables due from these
customers at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Percent of Sales Accounts Receivable
---------------- -------------------
<S> <C> <C>
United Technologies
Corporation 39% 39%
The Gillette Company 11% 9%
General Electric
Company 6% 18%
</TABLE>
- 5 -
<PAGE> 33
PRO FORMA STATEMENTS
On June 30, 1998, Apex Acquisition Corporation, a Connecticut corporation ("Apex
Acquisition"), which is a newly formed, wholly-owned subsidiary of Edac
Technologies Corporation, consummated the acquisition of substantially all of
the assets and certain liabilities of Apex Machine Tool Company, Inc., a
Connecticut corporation ("Apex"), pursuant to the terms of an Asset Purchase
Agreement dated as of May 13, 1998 by and among Edac, Apex Acquisition Corp., a
Wisconsin corporation (which subsequently assigned its rights under the Asset
Purchase Agreement to Apex Acquisition), Apex, Gerald S. Biondi, James G. Biondi
and Michael Biondi. Upon completion of the acquisition, Apex Acquisition
Corporation changed its name to Apex Machine Tool Company, Inc.
Pursuant to the Asset Purchase Agreement, Apex Acquisition paid $17,138,000 in
cash for substantially all of the assets and certain liabilities of Apex. In
addition, Apex Acquisition purchased certain real estate located at 17 and 21
Spring Lane in Farmington, Connecticut, from the shareholders of Apex for
approximately $2.7 million payable pursuant to a promissory note (the "Note").
The Note bears interest at the rate of 10.12% per annum with interest payable
monthly and principal payable in full on January 1, 2000. In addition, Apex
Acquisition agreed to purchase certain real estate located at 55 Spring Lane in
Farmington, Connecticut, from the Apex shareholders if certain pre-closing
conditions are satisfied. If the closing conditions are satisfied, the purchase
price for the 55 Spring lane property will be approximately $1.1 million. As
required by the purchase agreements, Edac guaranteed all the obligations of Apex
Acquisition under the real estate purchase agreement and the Asset Purchase
Agreement, including, but not limited to, payment of the Note.
The following pro forma unaudited consolidated financial statements should be
read in conjunction with Edac's historical consolidated financial statements and
the notes thereto, included in the Company's annual report on Form 10-K for the
year ended December 31, 1997 and Form 10-Q for the quarter ended July 4, 1998.
The accompanying pro forma unaudited consolidated statements of operations are
not necessarily indicative of the combined operating results as they may be in
the future or as they might have been for the period indicated had the
acquisition of Apex been consummated at the beginning of the respective
periods. The results of operations for the six month period ended July 4, 1998,
should not necessarily be taken as indicative of the results of operations that
may be expected for the entire 1998 year.
- 6 -
<PAGE> 34
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31, 1997
----------------------------
Edac Technologies Apex Machine Tool Pro Forma Pro Forma
Corporation Company, Inc. Adjustments Consolidated
----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Sales $ 38,229,389 $ 20,093,515 $ 58,322,904
Cost of sales 32,287,962 14,240,524 (1) (493,000) 46,035,486
------------ ------------ ------------ ------------
5,941,427 5,852,991 493,000 12,287,418
Selling, general and administrative 3,540,278 2,119,077 (2) 270,000 5,929,355
Non-operating income (expense):
Stockholder bonuses -- (3,449,000) (2) 3,449,000 --
Interest expense (765,200) (85,849) (3)(1,510,000) (2,361,049)
Other 81,199 101,824 -- 183,023
------------ ------------ ------------- ------------
INCOME BEFORE INCOME TAXES 1,717,148 300,889 2,162,000 4,180,037
Provision for income taxes 21,000 49,978 (4)935,000 1,005,978
------------ ------------ ------------ ------------
$ 1,696,148 $ 250,911 $ 1,227,000 $ 3,174,059
============ ============ ============ ============
Weighted average
shares outstanding - basic 4,186,617 4,186,617
Basic earnings per common share $ 0.41 $ 0.76
Weighted average
shares outstanding - diluted 4,378,146 4,378,146
Diluted earnings per common share $ 0.39 $ 0.72
</TABLE>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
<PAGE> 35
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Six Months Ended 7/4/98
-----------------------
Edac Technologies Apex Machine Tool Pro Forma Pro Forma
Corporation Company, Inc. Adjustments Consolidated
----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Sales $ 23,332,014 $ 11,098,827 $ 34,430,841
Cost of sales 18,650,179 8,176,451 (1) (247,000) 26,579,630
------------ ------------ ------------ ------------
4,681,835 2,922,376 247,000 7,851,211
Selling, general and administrative 2,262,442 1,177,096 (2) 138,000 3,577,538
Non-operating income (expense):
Stockholder bonuses (1,500,000) (2) 1,500,000 --
Interest expense (504,351) (40,972) (3) (757,000) (1,302,323)
Other 28,613 (148,252) -- (119,639)
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 1,943,655 56,056 852,000 2,851,711
Provision for income taxes (benefit) 621,000 (42,661) (4) 407,000 985,339
------------ ------------ ------------ ------------
$ 1,322,655 $ 98,717 $ 445,000 $ 1,866,372
============ ============ ============ ============
Weighted average
shares outstanding - basic 4,225,925 4,225,925
Basic earnings per common share $ 0.31 $ 0.44
Weighted average
shares outstanding - diluted 4,511,967 4,511,967
Diluted earnings per common share $ 0.29 $ 0.41
</TABLE>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
<PAGE> 36
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1) Eliminates building lease expense.
Reflects depreciation expense on buildings (25 years) acquired which were
previously leased.
Reflects depreciation expense on write-up of equipment.
2) Adjusts owner and new general manager compensation.
Records amortization of goodwill using the straight-line method over 40
years.
Records amortization of deferred loan charges.
Records amortization of not to compete cost.
3) Reflects interest cost on acquisition debt.
4) Reflects impact on income tax expense.
<PAGE> 1
EXHIBIT 23-1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference of our reports dated August 24, 1998 on the Apex Machine Tool Company,
Inc.'s financial statements for the year ended December 31, 1996 and the period
ended June 29, 1998 and to all references to our Firm in the following
Registration Statements on Form S-8 of Edac Technologies Corporation: 1991 Stock
Option Plan (File #33-48505), 1996 Stock Option Plan (File #333-24857) and the
Robert Whitty Stock Option Plan (File #333-18109).
/s/Arthur Andersen LLP
Hartford, Connecticut
September 11, 1998
<PAGE> 1
EXHIBIT 23-2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated April 24, 1998 on the Apex Machine Tool Company,
Inc.'s financial statements for the year ended December 31, 1997 and to all
references to our Firm in the following Registration Statements on Form S-8 of
Edac Technologies Corporation: 1991 Stock Option Plan (File #33-48505), 1996
Stock Option Plan (File #333-24857) and the Robert Whitty Stock Option Plan
(File #333-18109).
/s/Bennett & Katz, LLC
West Hartford, Connecticut
September 11, 1998
