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): July 3, 2001
Dynamic Materials Corporation
(Exact name of registrant as specified in its charter)
Delaware 0-8328 84-0608431
(State or other (Commission file (IRS Employer
jurisdiction number) Identification No.)
of incorporation)
5405 Spine Road, Boulder, Colorado 80301
(Address of principal executive offices) (ZIP Code)
(303) 655-5700
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
DMC filed a current report on Form 8-K on July 16, 2001 to announce the Stock
Purchase Agreement. DMC is filing this Amendment No. 1 on Form 8-K/A to Form 8-K
to include financial statements and pro forma financial information required by
Item 7 of Form 8-K.
(a) Financial Statements of Nitro Metall and Nobelclad:
Report of Independent Public Accountants for Combined Financial
Statements F-1
Report of Independent Accountant for Nitro Metall F-2
Balance Sheet as of December 31, 2000 F-3
Statement of Income for the Year Ended December 31, 2000 F-4
Statement of Changes in Combined Equity Attributable to the Group for F-5
the year ended December 31, 2000
Statement of Cash Flows for the Year Ended December 31, 2000 F-6
Notes to Combined Financial Statements F-7
(b) Pro Forma Financial Information:
1. Unaudited Pro Forma Financial Information F-13
2. Unaudited Pro Forma Condensed Balance Sheet as of March 31, 2001 F-14
3. Unaudited Pro Forma Condensed Statement of Operations for the F-16
three months ended March 31, 2001
4. Unaudited Pro Forma Condensed Statement of Operations for
the year ended December 31, 2000 F-17
5. Notes to unaudited Pro Forma Condensed Financial Statements F-18
Report of Independent Public AccountantS
To Dynamic Materials Corporation:
We have audited the accompanying combined balance sheet of Nobelclad Europe SA
and Nitro Metall AB as of December 31, 2000, and the related combined statements
of income, cash flows and changes in combined equity for the year then ended.
The accompanying combined financial statements as of and for the year ended
December 31, 2000, have been prepared from the separate financial statements of
Nobelclad Europe SA, a company registered in France, and Nitro Metall AB, a
company registered in Sweden (the "Group"). We did not audit the financial
statements of Nitro Metall AB, which statements reflect total net assets and
total revenues of 17.4 % and 18.5 %, respectively, of the related combined
totals. Those statements were audited by other auditors whose report has been
furnished to us, and our opinion, insofar as it relates to the amounts included
for that entity, is based solely on the report of the other auditor. These
combined financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with the auditing standards generally
accepted in the United States of America. 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 and the report of
other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audit and the report of other auditors, the
combined financial statements referred to above present fairly, in all material
respects, the financial position of the Group as of December 31, 2000, and the
results of its operations and its cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Barbier Frinault & Autres
Arthur Andersen
Paris, France
July 23, 2001.
- F-1 -
REPORT OF INDEPENDENT ACCOUNTANT
To Nobelclad Europe SA:
I have audited the balance sheet of Nitro Metall AB (the "Company"), a Swedish
corporation as of December 31, 2000, and the related statements of income and
comprehensive income, change in net assets and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with auditing standards generally accepted in
the United States. Those standards require that I 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. I believe that my audit provides a reasonable basis for my
opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Company as of December 31, 2000
and the results of its operations and its cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States.
Nora, Sweden
July 20, 2001
//s// Hans Andreassons Revisionsbyra
Hans Andreassons, partner
- F-2 -
NOBELCLAD EUROPE SA AND NITRO METALL AB
COMBINED BALANCE SHEET
DECEMBER 31, 2000
(In Thousands of US Dollars)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 114
Accounts receivable, net 2,821
Inventories, net 2,380
Prepaid expenses and other current assets 278
Deferred tax assets 10
-------
Total current assets 5,603
PROPERTY, PLANT AND EQUIPMENT, at cost 5,108
Less accumulated depreciation (2,891)
-------
Property, plant and equipment, net 2,217
OTHER ASSETS 1
-------
Total assets $ 7,821
=======
LIABILITIES AND EQUITY ATTRIBUTABLE TO THE GROUP
CURRENT LIABILITIES
Accounts payable $ 1,937
Accrued expenses 599
Short-term debt 493
-------
Total current liabilities 3,029
-------
PROVISION FOR BENEFIT OBLIGATION 27
DEFERRED TAX LIABILITIES 144
-------
Total liabilities 3,200
-------
COMMITMENTS AND CONTINGENCIES (Notes 5 and 8)
EQUITY ATTRIBUTABLE TO THE GROUP (Note 2) 4,621
-------
TOTAL LIABILITIES AND EQUITY ATTRIBUTABLE TO THE GROUP $ 7,821
=======
The accompanying notes to financial statements are
an integral part of this balance sheet.
- F-3 -
NOBELCLAD EUROPE SA AND NITRO METALL AB
COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2000
(In Thousands of US Dollars)
NET SALES $10,608
COST OF PRODUCTS SOLD (7,949)
-------
Gross profit 2,659
OPERATING EXPENSES (2,218)
-------
Income from operations 441
INTEREST EXPENSE (6)
OTHER EXPENSE (3)
-------
Income before income taxes 432
INCOME TAX EXPENSE (152)
-------
Net income $ 280
=======
The accompanying notes to financial statements
are an integral part of this statement.
- F-4 -
NOBELCLAD EUROPE SA AND NITRO METALL AB
STATEMENT OF CHANGES IN COMBINED EQUITY
ATTRIBUTABLE TO THE GROUP
FOR THE YEAR ENDED DECEMBER 31, 2000
(In Thousands of US Dollars)
Beginning of the period $5,052
Net income 280
Dividends (329)
Translation adjustment (382)
------
End of the period $4,621
======
The accompanying notes to financial statements are an
integral part of this statement.
- F-5 -
NOBELCLAD EUROPE SA AND NITRO METALL AB
COMBINED STATEMENT OF CASH FLOW
FOR THE YEAR ENDED DECEMBER 31, 2000
(In Thousands of US Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 280
Adjustments to reconcile net income to net cash flows
from operating activities-
Depreciation and amortization 306
Net change in assets and liabilities 340
-----
Net cash flows from operating activities 926
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (310)
-----
Net cash flows from investing activities (310)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (329)
Payment on short-term debt (506)
-----
Net cash flows from financing activities (835)
-----
EFFECTS OF EXCHANGE RATES ON CASH (10)
-----
DECREASE IN CASH AND CASH EQUIVALENTS (229)
CASH AND CASH EQUIVALENTS, beginning of the period 343
-----
CASH AND CASH EQUIVALENTS, end of the period $ 114
=====
The accompanying notes to financial statements
are an integral part of this statement.
- F-6 -
NOBELCLAD EUROPE SA AND NITRO METALL AB
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
1. ORGANIZATION AND BUSINESS:
Nobelclad and Nitro Metall (together, the "Group") is the combination of the
explosive metalworking subsidiaries and operations of Nobel Explosifs France SA
("NEF"). Nobelclad, a wholly owned subsidiary of NEF until July 3, 2001 when NEF
sold its ownership interest in Nobelclad to DMC, operates in France and Nitro
Metall, a wholly owned subsidiary of NEF until June 28, 2001 when NEF sold its
ownership interest in Nitro Metall to Nobelclad, operates in Sweden. Each entity
was a separate legal entity as of December 31, 2000. The combined financial
statements are derived from the stand-alone financial statements of these legal
entities.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The combined financial statements of the Group have been prepared in accordance
with accounting principles generally accepted in the United States of America.
All significant intercompany balances and transactions have been eliminated.
All amounts presented herein are in thousands of US dollars unless otherwise
noted.
These combined financial statements have been prepared as follows:
Regarding Nobelclad, the financial statements included in the combination
have been prepared by adding the financial statements of Nobelclad from its
inception (July 1, 2000) to December 31, 2000 to the carve-out financial
statements of Nobelclad for the period January 1, 2000 to June 30, 2000,
during which time the existing Nobelclad operated as a division of NEF.
The Nitro Metall financial statements as of and for the year ended December
31, 2000 included in the combined financial statements have been prepared
by its management.
Concentration of Credit Risk
Financial instruments, which potentially subject the Group to concentrations of
credit risk, consist primarily of temporary cash investments in money market
funds and trade receivables. The Group places its temporary cash investments
with high credit quality financial institutions in accordance with its
investment policy as approved by its board of directors. Trade receivables
result from contracts with various customers. The Group generally does not
require collateral or other security from these customers, but performs ongoing
credit evaluations of its customers and maintains reserves for potential credit
losses.
- F-7 -
Such losses have historically been within management's expectations.
Foreign Currency Translation Risk
Financial statements of Nobelclad and Nitro Metall are translated into U.S.
dollars using December 31, 2000 rates, except that revenues, costs and expenses
are translated at average exchange rates during the reporting period. Net
exchange gains or losses resulting from the translation of foreign financial
statements and the effect of exchange rate changes on intercompany transactions
of a long-term investment nature are accumulated and credited or charged
directly to a separate component of stockholders' equity. Changes in cumulative
translation adjustments are included in other comprehensive income.
Fair Value of Financial Instruments
The carrying values of cash and cash equivalents, accounts receivable, accounts
payable and accrued liabilities approximate their fair values due to the
relatively short periods to maturity of the instruments.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
All highly liquid investments with insignificant interest rate risk and
purchased with an original maturity of three months or less are considered cash
equivalents.
Cash equivalents and investments, all classified as trading, include marketable
securities which are principally short-term monetary instruments. The costs
associated with such securities approximate fair value.
Accounts Receivable
Accounts receivable consists of amounts billed to customers (trade receivables)
for which payments have not yet been received. The carrying value of accounts
receivable is estimated to approximate fair value.
Accounts receivable are stated net of an allowance for uncollectible accounts of
which there was none as of December 31, 2000.
Inventories
Inventories are valued at the lower of cost (average cost method for Nobelclad
and first-in first-out for Nitro Metall) or realizable value. Cost is primarily
calculated from material, labor, subcontract costs and factory overhead.
- F-8 -
Inventories consist of the following at December 31, 2000:
Raw materials $1,350
Work in process 852
Supplies 178
-------
$2,380
=======
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Additions, improvements and
betterments are capitalized when incurred. Maintenance and repairs are charged
to operations as the costs are incurred. Depreciation is computed using the
straight-line method, over the following useful lives:
Building and improvements 10-20 years
Manufacturing equipment and tooling 7-10 years
Furniture, fixtures and computer equipment 3-7 years
Other 5-10 years
Property, plant and equipment consist of the following at December 31, 2000:
Land $ 176
Building and improvements 2,727
Manufacturing equipment and tooling 1,676
Furniture, fixtures and computer equipment 194
Other 335
-------
Total $5,108
=======
Intangible Assets
Nobelclad holds a patent (process patent related to the metalworking explosion
business and metallic products produced by various explosive processes) acquired
in 1968 which has been fully depreciated over a useful life of 15 years. The net
book value is zero as of December 31, 2000.
Asset Impairments
The Group reviews its long-lived assets and certain identifiable intangibles to
be held and used by the Group for impairment whenever events or changes in
circumstances indicate their carrying amount may not be recoverable. In so
doing, the Group estimates the future net cash flows expected to result from the
use of the asset and its eventual disposition. If the sum of the expected future
net cash flows (undiscounted and without interest charges) is less than the
carrying amount of the asset an impairment loss is recognized to reduce the
asset to its estimated fair value. Otherwise, an impairment loss is not
recognized. Long-lived assets and certain identifiable intangibles to be
disposed of, if any, are reported at the lower of carrying amount or fair value
less cost to sell.
- F-9 -
Retirement and Stock-Based Compensation Plans
In accordance with the laws and practices of each country where a division is
located, the Group participates in employee benefit plans by offering various
retirement benefits. In certain countries, the Group also provides for special
termination benefits. The Group accrues its retirement compensation plan in
accordance with Statement of Financial Accounting Standards No. 87.
Revenue Recognition
The Group's contracts with its customers generally require the production and
delivery of multiple units or products. The Group records revenue from its
contracts using the completed contract method as products are completed and
shipped to the customer. If, as a contract proceeds toward completion, projected
total cost on an individual contract indicates a potential loss, the Group
provides currently for such anticipated loss.
Net (Loss) Income Per Share
The above financial statements have been prepared for the sole purpose of the
Nitro Metall/Nobelclad acquisition by DMC and the effects of the acquired
companies have been prepared using a "net assets combination" presentation.
Therefore calculation of a net (loss) income per share is not relevant.
Income Taxes
The Group recognizes deferred tax assets and liabilities for the expected future
income tax consequences based on enacted tax laws of temporary differences
between the financial reporting and tax bases of assets and liabilities. The
Group recognizes deferred tax assets for the expected future effects of all
deductible temporary differences. Deferred tax assets are then reduced, if
deemed necessary, by a valuation allowance for the amount of any tax benefits
which, more likely than not based on current circumstances, are not expected to
be realized (see Note 4).
New Accounting Principles
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"), which requires that companies recognize all
derivatives as either assets or liabilities in the balance sheet at fair value.
Under SFAS 133, accounting for changes in fair value of a derivative depends on
its intended use and designation. Effective January 1, 2001, the Group adopted
SFAS 133. Adoption of SFAS 133 is not anticipated to have an impact on the
Group's results of operations or financial condition as the Group does not use
derivative financial instruments.
In December 1999, the staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101 ("SAB 101") "Views on Selected Revenue
Recognition Issues" which provides the staff's views in applying generally
accepted accounting principles to selected revenue recognition issues. The Group
was required to implement SAB 101 during the year ended December 31, 2000. The
Group implemented SAB 101 with no impact.
- F-10 -
3. SHORT-TERM DEBT:
Short-term debt consists of the following as of December 31, 2000 :
Line of credit (NEF) $493
-----
Total $493
=====
This line of credit is a non interest-bearing loan with NEF, a related party,
and is due on demand. In January 2001, Nobelclad secured a loan of French Francs
9.5 million ($1.3 million) with a third party bank in order to acquire the
outstanding shares of Nitro Metall. Both the line of credit and the new bank
loan are unsecured.
4. INCOME TAXES:
The components of the (benefit) provision for income taxes for the year ended
December 31, 2000 are as follows:
Current $145
Deferred 7
----
Income tax expense $152
====
The Group's deferred tax assets and liabilities at December 31, 2000 consist of
the following:
Retirement indemnity - Nobelclad $ 10
----
Total deferred tax assets $ 10
=====
Untaxed reserves - Nitro Metall $144
-----
Total deferred tax liabilities $144
=====
5. POST-RETIREMENT BENEFITS:
The accrued benefit obligation for post-retirement benefit can be described as
follows:
Benefit obligation at beginning of year (01/01/00) $22
Service cost 4
Interest cost 1
---
Benefit obligation at end of year (12/31/00) $27
===
- F-11 -
6. TRANSACTIONS WITH RELATED PARTIES:
Breakdown of sales with other related parties
Transactions with related parties were conducted on the same basis as they would
have been with unrelated parties. During the year ended December 31, 2000, the
Group recorded $42 in sales to DMC for which a $42 receivable was outstanding as
of December 31, 2000.
7. BUSINESS SEGMENTS:
All of the Group's sales are shipped from domestic locations and all of the
Group's assets are located within France and Sweden. The Group operates in one
single reportable segment of business. The following table provides Group's net
sales based on the geographic location of the customer:
Europe $ 8,210
North America 2,014
Latin America 15
Asia 276
Other 92
--------
$10,608
========
The following table provides Group net sales and net assets by legal entity:
Nobelclad Nitro Metall Combined
------------- ---------------- ------------
Net revenues for year ended December 31, 2000 $8,644 $1,964 $10,608
Net assets as of December 31, 2000 $3,794 $ 829 $ 4,621
8. SUBSEQUENT EVENT:
In June 2001, Nitro Metall was acquired by Nobelclad for French Franc 10 million
(approximately $1,350). Such acquisition was financed by a French Franc 9.5
million loan (approximately $1,283) provided by BNP Paribas, a French bank. The
loan has a seven-year maturity, with required annual principal payments of
French Franc 1.9 million beginning on the third anniversary date and on each
annual anniversary date thereafter.
- F-12 -
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information for the three months
ended March 31, 2001 and for the year ended December 31, 2000, have been
provided to show what our businesses might have looked like had they been
combined since January 1, 2000. The following pro forma balance sheet shows what
DMC would have looked like if we had completed the transaction as of March 31,
2001. We derived this information from our financial statements and the combined
financial statements of Nobelclad and Nitro Metall, in addition to certain
assumptions and adjustments in the accompanying notes to the pro forma
information. The information should be read together with our historical
financial statements and Nobelclad and Nitro Metall's historical combined
financial statements, and the related footnotes to these financial statements.
The companies may have performed differently had they always been combined. You
should not rely on the unaudited pro forma financial information as being
indicative of the historical results that we would have had or the future
results that DMC will experience after the transaction.
- F-13 -
DYNAMIC MATERIALS CORPORATION
UNAUDITED PRO FORMA BALANCE SHEET
AS OF MARCH 31, 2001
(In thousands)
Dynamic Nobelclad and Pro Forma Pro Forma
ASSETS Materials Corp (1) Nitro Metall (1) Adjustments Results
- -----------------------------------------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ - $ 435 $ - $ 435
Accounts Receivable, net
of allowance for doubtful
accounts 4,517 2,837 - 7,354
Inventories 4,394 2,319 - 6,713
Prepaid expenses and other 393 147 - 540
Deferred tax assets - 9 - 9
-------- ------- --------- --------
Total current assets 9,304 5,747 - 15,051
PROPERTY, PLANT
AND EQUIPMENT 17,988 5,025 - 23,013
Less- Accumulated depreciation (4,834) (2,866) - (7,700)
-------- ------- --------- --------
Property, plant and equipment, net 13,154 2,159 - 15,313
RESTRICTED CASH AND
INVESTMENTS 179 - - 179
INTANGIBLE ASSETS, net of
accumulated amortization 4,916 - - 4,916
OTHER ASSETS 303 1 - 304
-------- ------- --------- --------
TOTAL ASSETS $ 27,856 $ 7,907 $ - $35,763
======== ======= ========= ========
The accompanying notes to unaudited pro forma condensed financial
statements are an integral part of this statement.
- F-14 -
DYNAMIC MATERIALS CORPORATION
UNAUDITED PRO FORMA BALANCE SHEET
(continued)
AS OF MARCH 31, 2001
(In thousands)
Dynamic Nobelclad and Pro Forma Pro Forma
LIABILITIES AND Materials Corp (1) Nitro Metall (1) Adjustments Results
STOCKHOLDERS' EQUITY
- --------------------------------------- ----------------------- --------------------- ---------------- ----------------
CURRENT LIABILITIES:
Bank overdraft $ 98 $ - $ - $ 98
Accounts payable 2,059 1,411 - 3,470
Accrued expenses 1,131 768 - 1,899
Current maturities on
long-term debt 4,795 793 - 5,588
-
-------- -------- --------- --------
Total current liabilities 8,083 2,972 - 11,055
LONG-TERM DEBT 6,285 - 4,000 (2) 11,559
1,274 (3)
DEFERRED GAIN 74 - - 74
DEFERRED TAX LIABILITIES - 135 - 135
-------- -------- --------- --------
Total liabilities 14,442 3,107 5,274 22,823
STOCKHOLDERS' EQUITY 13,414 4,800 (5,274) (4) 12,940
-------- -------- --------- --------
TOTAL LIABILITIES AND
TOCKHOLDERS' EQUITY $27,856 $7,907 $ - $ 35,763
======== ======== ========= ========
The accompanying notes to unaudited pro forma condensed financial
statements are an integral part of this statement.
- F-15 -
DYNAMIC MATERIALS CORPORATION
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2001
(In thousands)
Dynamic Nobelclad and Pro Forma Pro Forma
Materials Corp (1) Nitro Metall (1) Adjustments Results
- ----------------------------------------------------------------------------------------------------------------------------
NET SALES $ 6,938 $ 2,579 $ - $ 9,517
COST OF PRODUCTS SOLD 5,544 1,782 - 7,326
Gross profit 1,394 797 - 2,191
COSTS AND EXPENSES 1,119 442 - 1,561
-------- -------- -------- --------
INCOME FROM OPERATIONS 275 355 - 630
Other income (expense) - (5) - (5)
Interest expense, net (165) (9) (86) (5) (277)
(17) (6)
-------- -------- -------- --------
Income before income
tax provision 110 341 (103) 348
INCOME TAX (PROVISION)
BENEFIT - (107) 5 (7) (102)
-------- -------- --------- --------
NET INCOME $ 110 $ 234 $ (98) $ 246
======== ======== ========= ========
EARNINGS PER SHARE -
BASIC and DILUTED $ 0.02 $ 0.05
======== ========
WEIGHTED AVERAGE
SHARES OUTSTANDING:
BASIC and DILUTED 4,990,331 4,990,331
========= =========
The accompanying notes to unaudited pro forma condensed financial
statements are an integral part of this statement.
- F-16 -
DYNAMIC MATERIALS CORPORATION
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2000
(In thousands)
Dynamic Nobelclad and Pro Forma Pro Forma
Materials Corp (1) Nitro Metall (1) Adjustments Results
- -------------------------------------------------------------------------------------------------------------------------
NET SALES $ 27,863 $ 10,608 $ - $ 38,471
COST OF PRODUCTS SOLD 23,823 7,949 - 31,772
-------- ------- ---------- --------
Gross profit 4,040 2,659 - 6,699
COSTS AND EXPENSES 5,106 2,218 - 7,324
-------- ------- ---------- --------
(LOSS) INCOME FROM
OPERATIONS (1,066) 441 - (625)
-------- ------- ---------- --------
Other income (expense) 198 (3) - 195
Interest expense, net (1,062) (6) (370) (5) (1,510)
(72) (6)
-------- ------- ---------- --------
(Loss) income before
income tax provision (1,930) 432 (442) (1,940)
-------- ------- ---------- --------
INCOME TAX (PROVISION)
BENEFIT - (152) 25 (7) (127)
-------- ------- ---------- --------
NET (LOSS) INCOME BEFORE
EXTRAORDINARY ITEM (1,930) 280 (417) (2,067)
EXTRAORDINARY ITEM -
LOSS FROM EARLY
EXTINGUISHMENT OF DEBT (80) - - (80)
-------- ------- ---------- --------
NET (LOSS) INCOME $ (2,010) $ 280 $ (417) $ (2,147)
======== ======= ========== =======
NET (LOSS) INCOME PER
SHARE - BASIC AND DILUTED
Net loss before
extraordinary item $ (0.48) $ (0.52)
Extraordinary item (0.02) (0.02)
-------- --------
Net loss $ (0.50) $ (0.54)
======== =======
WEIGHTED AVERAGE SHARES
OUTSTANDING:
BASIC and DILUTED 4,004,873 4,004,873
========= =========
The accompanying notes to unaudited pro forma condensed financial
statements are an integral part of this statement.
- F-17 -
DYNAMIC MATERIALS CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
(1) Represents the financial position and historical results of operations of
the respective companies.
(2) Represents the term loan from SNPE, Inc. used by DMC to finance the
acquisition of Nobelclad Europe S.A.
(3) Represents a loan from a bank to Nobelclad in the amount of 9,500,000
French Francs (converted at the exchange rate in effect at the balance
sheet date) that was used to finance the acquisition of Nitro Metall by
Nobelclad.
(4) Represents the net decrease to stockholders' equity as follows
(in thousands):
Elimination of historical equity attributable to
Nobelclad and Nitro Metall $(4,800)
Additional debit to equity as a result of accounting for
transaction as a reorganization of entities
under common control (474)
---------
$(5,274)
(5) Represents the interest on DMC's term loan with SNPE, Inc. The loan bears
interest at the Federal Funds Rate plus 3 percentage points. An average
rate in effect during the periods presented was used for purposes of
calculating the pro forma interest expense.
(6) Represents the interest on the 9,500,000 French Franc loan used by
Nobelclad to finance the acquisition of Nitro Metall. The loan bears
interest at the Euribor rate plus 0.6 percentage points (including the
commitment fee). An average rate in effect for the periods presented was
used for purposes of calculating the pro forma interest expense. An average
exchange rate for the periods presented was used to convert the pro forma
interest expense from French Francs to U.S. Dollars.
(7) Represents the tax benefit resulting from the pro forma adjustments.
(8) The Pro Forma Condensed Statement of Operations for the three months ended
March 31, 2001 and the twelve months ended December 31, 2000 do not include
adjustments for legal and accounting expenses associated with the
acquisition. These expenses are estimated to be approximately $50,000.00.
- F-18 -