8-K 1 form8k.txt FORM 8-K 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.