UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): October 7, 2003
Dynamic Materials Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-8328 84-0608431
(Commission File Number) (I.R.S. Employer
Identification Number)
(303) 655-5700
(Registrant's Telephone Number, Including Area Code)
5405 Spine Road, Boulder, Colorado 80301
(Address of Principal Executive Offices) (Zip Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Items 1, 3 through 6 and 8 through 12 are inapplicable and have been omitted.
Item 2. Acquisition or Disposition of Assets
Dynamic Materials Corporation, ("DMC"), announced on October 8, 2003
that it has completed the sale of its Precision Machined Products Division
("PMP") to Silvertip, L.L.C. ("Silvertip"). PMP is a contract machining shop
specializing in high precision, high quality, complex machined parts used in the
aerospace, satellite, medical equipment and high technology industries.
Pursuant to an Asset Purchase Agreement between DMC and Silvertip
dated October 7, 2003, DMC sold the assets that constitute PMP for a sales price
of $580,000. The sales price is being financed by DMC through the issuance of a
promissory note payable over a 2-1/2 year period.
The sales price was determined pursuant to arms-length negotiations
between DMC and Silvertip. Silvertip is a private company unaffiliated with DMC
and is a majority owned subsidiary of Mistequay Group. Ltd., Saginaw, Michigan.
Copies of the Asset Purchase Agreement and of a press release relating
to the disposition are attached as exhibits hereto and are incorporated by
reference herein.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
DYNAMIC MATERIALS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma condensed consolidated balance sheet as of June 30, 2003
gives effect to the sale of PMP as if it had occurred on June 30, 2003. The
unaudited pro forma condensed consolidated statements of operations for the six
months ended June 30, 2003 and the fiscal year ended December 31, 2003 give
effect to the sale of PMP as if it had occurred at the beginning of each of the
periods presented.
Pro forma financial statements require the presentation of earnings from
continuing operations after income tax but before discontinued operations,
extraordinary items, and cumulative effect of a change in accounting principle.
Therefore, the cumulative effect of a change in accounting principle of
$2,318,108, net of taxes, related to goodwill impairment under SFAS 142 included
in the historical consolidated statement of operations for the fiscal year ended
December 31, 2002 has been omitted.
The unaudited pro forma condensed consolidated financial information has been
prepared and should be read in conjunction with the historical consolidated
financial statements and related notes thereto of DMC, the "Management's
Discussion and Analysis of Financial Condition and
Results of Operations" included in DMC's Annual Report on Form 10-K for the
fiscal year ended December 31, 2002 and DMC's Quarterly Report on Form 10-Q as
of June 30, 2003 filed with the Securities and Exchange Commission ("SEC").
Unaudited pro forma condensed financial information is presented for
illustrative purposes only and is not necessarily indicative of the results that
actually would have been realized had the assets been sold during these periods.
Additionally, the future consolidated financial position and results of
operations will differ, perhaps significantly, from the pro forma amounts
reflected herein because of a variety of factors, including access to additional
information and changes in values not currently identified due to post-closing
adjustments and reconciliation, which could result in adjustment to, among other
items, the ultimate loss in connection with the sale of PMP.
To the extent that this pro forma financial information is forward looking, it
is made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The forward-looking statements reflect
assumptions and involve a number of risks and uncertainties, which may be beyond
the Company's control, including the risks detailed from time to time in
DMC's SEC reports, including the report on Form 10-K for the fiscal year ended
December 31, 2002.
DYNAMIC MATERIALS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2003
Dynamic Pro Forma Pro Forma
Materials Sale of PMP(1) Adjustments Balance
ASSETS
CURRENT ASSETS:
Cash and cash equivelents $ 1,253,070 $ - $ - $ 1,253,070
Accounts receivable 7,421,211 - - 7,421,211
Inventories 7,985,918 (275,198) - 7,710,720
Prepaid expense and other 1,103,395 (12,181) - 1,091,214
Current deferred tax asset 315,500 - - 315,500
----------- ---------- ------------- -----------
Total current assets 18,079,094 (287,379) - 17,791,715
PROPERTY, PLANT AND EQUIPMENT, net 15,633,239 (1,431,187) - 14,202,052
RESTRICTED CASH AND
SHORT TERM INVESTMENTS 191,202 - - 191,202
GOODWILL, net 847,076 - - 847,076
INTANGIBLE ASSETS, net 78,168 - - 78,168
OTHER ASSETS 261,222 - - 261,222
NOTE RECEIVABLE - - 580,000 2 580,000
ASSETS SOLD - 1,718,566 (1,718,566) -
----------- ---------- ------------ -----------
TOTAL ASSETS $35,090,001 $ - $ (1,138,566) $33,951,435
=========== ========== ============= ===========
See the accompanying Notes to Unaudited Pro Forma Condensed Financial Statements
DYNAMIC MATERIALS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2003
Dynamic Pro Forma Pro Forma
Materials Sale of PMP(1) Adjustments Balance
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,606,907 $ - $ - $ 3,606,907
Accrued expenses 2,841,873 - 88,000 4 2,929,873
Current maturities of long-term debt 2,133,666 - - 2,133,666
------------ ---------- ------------ ------------
Total current liabilities 8,582,446 - 88,000 8,670,446
LONG-TERM DEBT 9,409,622 - - 9,409,622
NET DEFERRED TAX LIABILITIES 441,991 - - 441,991
DEFERRED GAIN ON SWAP
TERMINATION 42,562 - - 42,562
OTHER LONG-TERM OBLIGATIONS 97,676 - - 97,676
------------ ---------- ------------ ------------
Total liabilities 18,574,297 - 88,000 18,662,297
STOCKHOLDERS' EQUITY
Common stock 253,648 - - 253,648
Additional paid-in capital 12,395,588 - - 12,395,588
Retained earnings 3,312,140 - (1,226,566) 3 2,085,574
Other cumulative comprehensive income 554,328 - - 554,328
------------ ---------- ------------ ------------
Total stockholder's equity 16,515,704 - (1,226,566) 15,289,138
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 35,090,001 $ - $ (1,138,566) $ 33,951,435
============ ========== ============ ============
See the accompanying Notes to Unaudited Pro Forma Condensed Financial Statements
DYNAMIC MATERIALS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
Dynamic Pro Forma Pro Forma
Materials Sale of PMP(1) Adjustments Results
NET SALES $ 20,996,841 $ (1,091,772) $ - $ 19,905,069
COST OF PRODUCTS SOLD 16,283,738 (1,360,026) - 14,923,712
------------ ------------ ------------ ------------
Gross profit 4,713,103 268,254 - 4,981,357
EXPENSES:
General and administrative 2,033,813 (77,267) - 1,956,546
Selling expense 1,501,499 - - 1,501,499
------------ ------------ ------------ ------------
3,535,312 (77,267) - 3,458,045
------------ ------------ ------------ ------------
INCOME FROM OPERATIONS 1,177,791 345,521 - 1,523,312
Other expense, net 38 - - 38
Interest expense (275,012) - - (275,012)
Interest income 1,628 - - 1,628
------------ ------------ ------------ ------------
Income before income taxes 904,445 345,521 - 1,249,966
INCOME TAX PROVISION (355,332) - (134,753) 5 (490,085)
------------ ------------ ------------ ------------
NET INCOME $ 549,113 $ 345,521 $ (134,753) $ 759,881
============ ============ ============ ============
NET INCOME PER SHARE - BASIC $ 0.11 $ 0.15
============ ============
NET INCOME PER SHARE - DILUTED $ 0.11 $ 0.15
============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING:
BASIC 5,061,390 5,061,390
============ ============
DILUTED 5,078,785 5,078,785
============ ============
See the accompanying Notes to Unaudited Pro Forma Condensed Financial Statements
DYNAMIC MATERIALS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2002
Dynamic Pro Forma Pro Forma
Materials Sale of PMP(1) Adjustments Results
NET SALES $ 45,657,569 $ (1,771,673) $ - $ 43,885,896
COST OF PRODUCTS SOLD 34,191,224 (2,269,792) - 31,921,432
------------ ------------ ------------ --------------
Gross profit 11,466,345 498,119 - 11,964,464
EXPENSES:
General and administrative 4,090,103 (342,310) - 3,747,793
Selling expense 2,537,486 (29,158) - 2,508,328
------------ ------------ ------------ --------------
6,627,589 (371,468) - 6,256,121
------------ ------------ ------------ --------------
INCOME FROM OPERATIONS 4,838,756 869,587 - 5,708,343
Other income (expense), net (52,037) (388) - (52,425)
Interest expense (693,230) - - (693,230)
Interest income 4,101 - - 4,101
------------ ------------ ------------ --------------
Income before income taxes and cumulative
effect of a change in accounting priniple 4,097,590 869,199 - 4,966,789
INCOME TAX PROVISION (1,609,353) - (338,988) 5 (1,948,341)
------------ ------------ ------------ --------------
INCOME BEFORE CUMULATIVE EFFECT OF A
CHANGE IN ACCOUNTING PRINCIPLE $ 2,488,237 $ 869,199 $ (338,988) $ 3,018,448
============ ============ ============ ==============
INCOME PER SHARE - BASIC:
Income before cumulative effect of a change
in accounting principle $ 0.49 $ 0.60
============ ======
INCOME PER SHARE - DILUTED:
Income before cumulative effect of a change
in accounting principle $ 0.49 $ 0.59
============ ======
WEIGHTED AVERAGE SHARES
OUTSTANDING:
BASIC 5,042,382 5,042,382
DILUTED 5,087,051 5,087,051
See the accompanying Notes to Unaudited Pro Forma Condensed Financial Statements
DYNAMIC MATERIALS CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Represents the elimination of the PMP assets sold and the elimination of
the PMP operating results.
2. Represents the promissory note received as total consideration for the sale
of the PMP assets.
3. Represents the estimated pretax loss had the sale of PMP occurred on June
30, 2003.
4. This amount reflects the estimated costs associated with the sales
transaction.
5. Represents a tax adjustment to reverse the tax benefit associated with
PMP's operating loss.
(c) Exhibits
10.1 Asset Purchase Agreement for Precision Machined Products between
Dynamic Materials Corporation and Silvertip, L.L.C. dated October
7, 2003.
99.1 Press Release dated October 8, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DYNAMIC MATERIALS CORPORATION
By: /s/ Richard A. Santa
------------------------
Name: Richard A. Santa
Title: Vice President and Chief Financial
Officer
Dated: October 22, 2003
INDEX TO EXHIBITS
Number Description
10.1 Asset Purchase Agreement for Precision Machined Products between
Dynamic Materials Corporation and Silvertip, L.L.C. dated October 7,
2003.
99.1 Press Release dated October 8, 2003.