-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SKKtY1W/0Ce4pAyzJ37/nJ1+Xc8suPMq8B9IOJsecltaPvyjwAi4Vgu5w8oS1dJD cFs5FIj9bktbETR+qHsp2A== 0000914039-96-000228.txt : 19960805 0000914039-96-000228.hdr.sgml : 19960805 ACCESSION NUMBER: 0000914039-96-000228 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960802 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEXTER CORP CENTRAL INDEX KEY: 0000028582 STANDARD INDUSTRIAL CLASSIFICATION: PAINTS, VARNISHES, LACQUERS, ENAMELS & ALLIED PRODUCTS [2851] IRS NUMBER: 060321410 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05542 FILM NUMBER: 96603029 BUSINESS ADDRESS: STREET 1: ONE ELM ST CITY: WINDSOR LOCKS STATE: CT ZIP: 06096 BUSINESS PHONE: 2036279051 MAIL ADDRESS: STREET 1: ONE ELM ST CITY: WINDSOR LOCKS STATE: CT ZIP: 06096 10-Q 1 FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________ to_________________________ Commission file number 1-5542 THE DEXTER CORPORATION (Exact name of registrant as specified in its charter) CONNECTICUT 06-0321410 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ONE ELM STREET, WINDSOR LOCKS, CONNECTICUT 06096 (Address of principal executive offices) (Zip Code) (860) 292-7675 (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes..X..... No....... Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. CLASS Outstanding at July 31, 1996 COMMON STOCK, PAR VALUE $1 23,746,655 SHARES 2 PART I FINANCIAL INFORMATION Item 1 - Financial Statements Reference is made to the following consolidated financial statements which are incorporated herein by reference: (a) Exhibit 99a - Condensed Statement of Income for the three months and six months ended June 30, 1996 and 1995. (b) Exhibit 99b - Condensed Statement of Financial Position as of June 30, 1996, December 31, 1995, and June 30, 1995. (c) Exhibit 99c - Condensed Statement of Cash Flows for the six months ended June 30, 1996 and 1995. (d) Exhibit 99d - Net Sales by Market for the three months and six months ended June 30, 1996 and 1995. (e) Exhibit 99e - Notes to Consolidated Financial Statements. The unaudited financial data included herein as of June 30, 1996 and 1995, and for the three and six month periods then ended, have been reviewed by the registrant's independent public accountants, Coopers & Lybrand L.L.P., and their report is attached. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations The Company reported that earnings for the second quarter of 1996, excluding the effects from the disposal of product lines, were a record $13.4 million, or $.57 per share, compared with $12.0 million, or $.49 per share, for the second quarter of 1995. The $.57 per share from operations in 1996 represents a 16% increase in earnings over the second quarter of 1995 on a 1% increase in sales. The net effect of product line disposals was a gain of $.04 per share in the second quarter of 1996. This gain was due to the receipt, during the quarter, of proceeds from a note related to the sale of Life Technologies' molecular diagnostic product line in 1990. The net effect of the sale of Dexter's acoustic materials business and a small powder coatings business in the second quarter had a slightly positive impact on earnings. Total net income for the second quarter was $14.4 million, or $.61 per share. Compared with the second quarter of 1995, the increase in earnings includes selling price increases and lower raw material costs which yielded a favorable impact of approximately $.15 per share. This was somewhat offset by a less favorable sales mix of Dexter products. Additionally, the unfavorable effect of currency exchange rates, versus the second quarter of 1995, reduced earnings by $.02 per share in the second quarter of 1996. Sales for the second quarter of 1996 were a record $285.7 million, a 1% increase compared with sales of $283.0 million in the second quarter of 1995. This sales increase includes a 2% 3 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations, continued increase due to unit volume, an average selling price increase of 1%, and a decrease due to the effect of lower currency translation rates on international sales of 2% in the second quarter of 1996. Sales for the six months ended June 30, 1996, were $562.9 million, a 2% increase compared with sales of $549.8 million for the same period last year. This increase includes a 2% increase due to unit volume, selling price increases averaging 1%, and a 1% decrease due to the effects of lower currency translation rates on international sales. Earnings for the first six months of 1996, excluding the effects of disposal of product lines, were $24.6 million, or $1.03 per share. This represents a 10% increase in earnings and a 12% increase in earnings per share, compared with results for the first half of 1995 of $22.4 million, or $.92 per share. This 12% increase in earnings per share includes the favorable net effect of selling price increases and lower raw material costs of approximately $.18 per share versus the same period last year. In addition, there was a $.01 per share increase in earnings due to a reduction of the effective tax rate for 1996 to 35.5% versus the rate of 36% used for the first six months of 1995. These favorable items were somewhat offset by the effect of unfavorable currency exchange rates of $.03 per share due to the strengthening of the U.S. dollar against international currencies and an unfavorable product mix. Total earnings for the first six months, including the gain on divested product lines, were $25.5 million, or $1.07 per share. Products with strong sales in the second quarter and first six months of 1996 include aerospace adhesives and products at Life Technologies, Inc. Products with weaker performance in the second quarter include electronic packaging products and food and beverage can coatings serving the European and domestic markets. Consolidated gross margin of 34.3% of net sales in the second quarter of 1996 improved by 2.5 percentage points from 31.8% in the second quarter of 1995. Slightly less than half of this improvement was from Dexter operations, primarily resulting from the net effect of selling price increases and lower raw material costs versus the same period last year, with the remaining improvement attributable to Life Technologies, Inc. Marketing and administrative cost increased $4.4 million, or 9%, for the second quarter and $10.3 million, or 10%, for the six-month period, principally due to increased marketing and administrative expense at Life Technologies, Inc., which included the consolidation of results from the 1995 acquisition of a controlling interest in their Japanese subsidiary. Other income was $5.2 million for the first six months of 1996, a decrease of $.7 million, or 12%, from the same period last year. The decrease was primarily due to the expiration of certain noncompete agreements. Higher net equity income from companies owned 50% or less partially offset this decrease. During the quarter, the company completed its previously announced one million share repurchase of the company's stock. Short-term debt associated with this repurchase program was repaid with the proceeds from Dexter's second quarter divestitures. 4 PART II OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K (a) Exhibit 15 of Part 1 - Letter to Securities and Exchange Commission re: Incorporation of Accountants' Reports Exhibit 27 of Part 1 - Financial Data Schedule Exhibit 99 of Part 1 - Second Quarter 1996 Financial Statements and Notes (b) No reports on Form 8-K were filed during the quarter for which this report was filed. 5 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. THE DEXTER CORPORATION Date August 2, 1996 /s/ Kathleen Burdett ------------------------------ Kathleen Burdett Vice President and Chief Financial Officer (Principal Financial Officer) Date August 2, 1996 /s/ George Collin ------------------------------ George Collin Controller (Principal Accounting Officer) 6 INDEX TO EXHIBITS Exhibit No. 15 Letter to Securities and Exchange Commission re: Incorporation of Accountants' Report 27 Financial Data Schedule 99 Second Quarter 1996 Financial Statements and Notes EX-15 2 LETTER RE: INCORPORATION OF ACCOUNTANTS' REPORT 1 Exhibit 15 Securities and Exchange Commission 450 5th Street, N.W. Judiciary Plaza Washington, D.C. 20549 We are aware that our report dated July 16, 1996, on our review of the interim financial information of The Dexter Corporation as of June 30, 1996 and 1995, and for the three and six month periods then ended, and included in this Form 10-Q is incorporated by reference in the company's registration statements on Form S-8, Registration Nos. 2-63959, 33-27597, 33-53307, 33-53309, 333-02985, and 333-04081. Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not be considered a part of the registration statements prepared or certified by us within the meaning of Sections 7 and 11 of that Act. /s/ Coopers & Lybrand L.L.P. COOPERS & LYBRAND L.L.P. Springfield, Massachusetts August 1, 1996 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED STATEMENT OF FINANCIAL POSITION AND CONDENSED STATEMENT OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JUN-30-1996 75,058 0 187,050 5,811 147,899 458,578 635,561 323,683 926,305 211,072 208,660 0 0 24,984 334,941 926,305 562,928 568,125 370,281 370,281 0 0 10,742 51,409 18,250 25,541 0 0 0 25,541 1.07 0
EX-99 4 FINANCIAL STATEMENTS AND NOTES 1 EXHIBIT 99a THE DEXTER CORPORATION CONDENSED STATEMENT OF INCOME
------------------------------------------------------------------------------------------------------------------- In thousands of dollars Three Months Ended June 30 ----------------------------------------------------------------------- (except per share amounts) 1996 1995 Change ------------------------------------------------------------------------------------------------------------------- REVENUES Net sales $ 285,701 $ 282,991 + 1% Other income 3,022 2,899 + 4% --------------------- ------------------- 288,723 285,890 + 1% EXPENSES Cost of sales 187,756 193,100 - 3% Marketing and administrative 56,157 51,719 + 9% Research and development 13,175 12,825 + 3% Interest 5,376 5,196 + 3% Gain on divestiture of product lines (2,719) --------------------- ------------------- INCOME BEFORE TAXES 28,978 23,050 +26% Income taxes 10,287 8,298 +24% --------------------- ------------------- INCOME BEFORE MINORITY INTERESTS 18,691 14,752 +27% Minority interests 4,298 2,794 +54% --------------------- ------------------- NET INCOME $ 14,393 $ 11,958 +20% ===================== =================== NET INCOME PER SHARE $0.61 $0.49 +24% DIVIDENDS DECLARED PER SHARE $0.22 $0.22 AVERAGE SHARES OUTSTANDING (000) 23,657 24,376 - 3% -------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------- In thousands of dollars Six Months Ended June 30 --------------------------------------------------------------------- (except per share amounts) 1996 1995 Change ----------------------------------------------------------------------------------------------------------------- REVENUES Net sales $ 562,928 $ 549,784 + 2% Other income 5,197 5,938 - 12% ------------------- ----------------- 568,125 555,722 + 2% EXPENSES Cost of sales 370,281 374,229 - 1% Marketing and administrative 112,394 102,137 + 10% Research and development 26,018 25,355 + 3% Interest 10,742 10,359 + 4% Gain on divestiture of product lines (2,719) ------------------- ----------------- INCOME BEFORE TAXES 51,409 43,642 +18% Income taxes 18,250 15,711 +16% ------------------- ----------------- INCOME BEFORE MINORITY INTERESTS 33,159 27,931 +19% Minority interests 7,618 5,511 +38% ------------------- ----------------- NET INCOME $ 25,541 $ 22,420 +14% =================== ================= NET INCOME PER SHARE $1.07 $0.92 +16% DIVIDENDS DECLARED PER SHARE $0.44 $0.44 AVERAGE SHARES OUTSTANDING (000) 23,828 24,364 - 2% ------------------------------------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements. 2 EXHIBIT 99b THE DEXTER CORPORATION CONDENSED STATEMENT OF FINANCIAL POSITION
In thousands of dollars June 30 December 31 June 30 (except per share amounts) 1996 1995 1995 ---------- ----------- ----------- Assets Cash and short-term securities $ 75,058 $ 65,542 $ 49,491 Accounts receivable, net 202,586 201,389 202,565 Inventories Materials and supplies 58,761 60,099 64,165 In process and finished 111,640 121,644 115,935 LIFO reserve (22,502) (24,709) (23,632) ---------- --------- ----------- 147,899 157,034 156,468 Prepaid and deferred expenses 33,035 32,756 30,134 ---------- --------- ----------- Total current assets 458,578 456,721 438,658 Property, plant and equipment, at cost, net 311,878 325,203 328,935 Excess of cost over net assets of businesses acquired 73,433 74,102 75,652 Other assets 82,416 78,135 84,982 ---------- --------- ----------- $ 926,305 $ 934,161 $ 928,227 ========== ========= =========== Liabilities & Shareholders' Equity Short-term debt $ 3,979 $ 13,598 $ 4,788 Current installments of long-term debt 17,903 13,648 9,307 Accounts payable 83,376 92,447 91,989 Accrued liabilities and taxes 99,371 81,659 88,237 Current environmental reserves 1,268 1,395 1,494 Dividends payable 5,175 5,351 5,363 ---------- --------- ----------- Total current liabilities 211,072 208,098 201,178 Long-term debt 208,660 215,839 222,273 Deferred items 47,876 48,492 48,642 Long-term environmental reserves 15,361 15,745 17,932 Minority interests 83,411 76,372 69,268 Shareholders' equity Common stock and paid-in capital 34,169 35,116 34,150 Retained earnings 362,654 347,544 340,101 Currency translation effects (5,206) 1,614 4,585 Treasury stock (31,692) (14,659) (9,902) ---------- --------- ----------- Total shareholders' equity 359,925 369,615 368,934 ---------- --------- ----------- $ 926,305 $ 934,161 $ 928,227 ========== ========= =========== Equity per Share $15.30 $15.26 $15.13 - ------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements. 3 EXHIBIT 99c THE DEXTER CORPORATION CONDENSED STATEMENT OF CASH FLOWS
- ------------------------------------------------------------------------------------- Six Months Ended June 30 -------------------------- In thousands of dollars 1996 1995 - ------------------------------------------------------------------------------------- OPERATIONS Net income $ 25,541 $ 22,420 Noncash items Depreciation and amortization 22,903 22,568 Gain on divestiture of product lines (2,719) Income taxes not due 10,250 4,721 Minority interests 7,618 5,511 LIFO inventory (credit) charge (2,207) 804 Equity in net income of affiliates (2,076) (1,286) Other 3,367 (135) Operating working capital increase (12,182) (39,005) -------- -------- 50,495 15,598 -------- -------- INVESTMENTS Property, plant and equipment (22,942) (14,473) Acquisitions (12,332) Divestitures 34,913 Joint ventures 3,246 (2,156) Notes receivable 3,000 Proceeds from exercise of LTI stock options 1,250 862 Other (3,656) 1,714 -------- -------- 479 (11,053) -------- -------- FINANCING Long-term debt (1,344) (650) Short-term debt, net (9,570) 982 Dividends paid (10,607) (10,714) LTI dividends paid to minority interest shareholders (709) (683) Purchase of treasury stock (21,434) Other 2,645 (231) -------- -------- (41,019) (11,296) -------- -------- INCREASE (DECREASE) IN CASH AND SHORT-TERM SECURITIES $ 9,955 $ (6,751) ======== ======== RECONCILIATION OF INCREASE (DECREASE) IN CASH AND SHORT-TERM SECURITIES Cash and short-term securities at beginning of period $ 65,542 $ 55,012 Cash and short-term securities at end of period 75,058 49,491 -------- -------- Increase (Decrease) in cash and short-term securities per Statement of Financial Position 9,516 (5,521) Currency translation effects 439 (1,230) -------- -------- $ 9,955 $ (6,751) ======== ======== INTEREST PAID $ 10,741 $ 10,357 ======== ======== TAXES PAID $ 8,000 $ 10,990 ======== ======== - -------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements. 4 EXHIBIT 99d THE DEXTER CORPORATION NET SALES BY MARKET
- ----------------------------------------------------------------------------------------------------------- Three Months Ended June 30 -------------------------------------------------------------------- In thousands of dollars 1996 1995 Change - ----------------------------------------------------------------------------------------------------------- AEROSPACE $ 12,506 $ 11,403 +10% ELECTRONICS 48,022 48,148 FOOD PACKAGING (1) 70,124 74,958 - 6% MEDICAL (2) 102,535 94,318 + 9% OTHER (3) (4) 52,514 54,164 - 3% ------------------- ------------------ CONSOLIDATED $ 285,701 $ 282,991 + 1% =================== ================== - --------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------- Six Months Ended June 30 ----------------------------------------------------------------------- In thousands of dollars 1996 1995 Change - -------------------------------------------------------------------------------------------------------------- AEROSPACE $ 24,533 $ 23,307 + 5% ELECTRONICS 97,478 93,179 + 5% FOOD PACKAGING (1) 137,505 144,824 - 5% MEDICAL (2) 201,285 181,588 +11% OTHER (3) (4) 102,127 106,886 - 4% -------------------- ------------------ CONSOLIDATED $ 562,928 $ 549,784 + 2% ==================== ================== - --------------------------------------------------------------------------------------------------------------
(1) The effect of businesses acquired increased net sales to the Food Packaging market by $0.7 million, or 1%, for the quarter. (2) The effect of businesses acquired increased net sales to the Medical market by $3.8 million, or 4%, for the quarter, and $7.5 million, or 4%, year-to-date. (3) The effect of businesses divested decreased net sales in the "Other" category by $3.5 million, or 7%, for the quarter, and $6.5 million, or 6%, year-to-date. (4) Sales previously classified in the Automotive market are now included in the "Other" category. 5 Exhibit 99e The Dexter Corporation Notes to Consolidated Financial Statements Note 1 - In the opinion of company's management, the unaudited financial statements reflect adjustments of a normal recurring nature which are necessary to present a fair statement of the results for the interim periods. The notes to the consolidated financial statements including management's discussion in Part 1, Item 2 of this Form 10-Q are incorporated as part of these consolidated financial statements. The year-end condensed balance sheet data was derived from audited financial statements. Note 2 - Net income per share figures in the consolidated Condensed Statement of Income are based on the weighted average number of shares outstanding as indicated for each period. No effect has been given to stock options or restricted stock awards outstanding as no dilutive effect would result from the inclusion of these items. Note 3 - The following are included as components of Common Stock and Paid-in Capital.
COMMON STOCK & PAID-IN CAPITAL JUNE 30, DECEMBER 31, JUNE 30, (IN THOUSANDS OF DOLLARS) 1996 1995 1995 - ------------------------------ --------- ------------ -------- Common stock $ 24,984 $ 24,984 $ 24,984 Paid-in capital 13,761 12,316 12,251 Unrealized losses on investments (490) (128) (549) Unearned compensation on restricted stock (3,613) (1,583) (2,536) Pension liability adjustment (473) (473) -------- -------- -------- $ 34,169 $ 35,116 $ 34,150 ======== ======== ========
6 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Board of Directors of The Dexter Corporation We have reviewed the accompanying condensed statement of financial position of The Dexter Corporation as of June 30, 1996 and 1995, and the related condensed statement of income for the three and six month periods ended June 30, 1996 and 1995, and the condensed statement of cash flows for the six month periods then ended. These financial statements are the responsibility of the company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated statement of financial position of The Dexter Corporation as of December 31, 1995, and the related consolidated statements of income, cash flows, and changes in shareholders' equity for the year then ended (not presented herein); and in our report dated February 1, 1996, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed statement of financial position as of December 31, 1995, is fairly stated, in all material respects, in relation to the consolidated statement of financial position from which it has been derived. /s/ Coopers & Lybrand L.L.P. COOPERS & LYBRAND L.L.P. Springfield, Massachusetts July 16, 1996 -----END PRIVACY-ENHANCED MESSAGE-----