-----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, JXDt/g04sgweQeWQVtYoxuIiTDnH2WDwZggrvie8vXuT0sCWvCR+MaeCEmGTDoEz 71Ibj+bmihXgHCwOjdZX/A== 0000914039-00-000219.txt : 20000508 0000914039-00-000219.hdr.sgml : 20000508 ACCESSION NUMBER: 0000914039-00-000219 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000505 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: SEC FILE NUMBER: 001-05542 FILM NUMBER: 619842 BUSINESS ADDRESS: STREET 1: ONE ELM ST CITY: WINDSOR LOCKS STATE: CT ZIP: 06096 BUSINESS PHONE: 8602927675 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, DC 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 March 31, 2000 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 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 April 28, 2000 COMMON STOCK, PAR VALUE $1 23,107,622 SHARES 2 PART I FINANCIAL INFORMATION Item 1 - Financial Statements Reference is made to the following condensed consolidated financial statements, which are incorporated herein by reference: (a) Exhibit 99a - Condensed Statement of Income for the three months ended March 31, 2000 and 1999. (b) Exhibit 99b - Condensed Statement of Financial Position as of March 31, 2000, December 31, 1999, and March 31, 1999. (c) Exhibit 99c - Condensed Statement of Cash Flows for the three months ended March 31, 2000 and 1999. (d) Exhibit 99d - Condensed Statement of Comprehensive Income for the three months ended March 31, 2000 and 1999. (e) Exhibit 99e - Net Sales and Operating Income by Segment for the three months ended March 31, 2000 and 1999. (f) Exhibit 99f - Notes to Condensed Consolidated Financial Statements. The unaudited financial data included herein as of March 31, 2000 and 1999, and for the three-month periods then ended, have been reviewed by the registrant's independent public accountants, PricewaterhouseCoopers LLP, and their report is attached. This report is not a report within the meaning of Section 7 and 11 of the Securities Act of 1933 and the independent accountants' liability under Section 11 does not extend to it. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Analysis of Operations The Company reported first quarter 2000 net income of $12.4 million, or $.54 per share on a diluted basis. This is a 20% increase over comparable earnings from operations of $10.4 million, or $.45 per share diluted, excluding the gain on divestiture of product lines, in the first quarter of 1999. First quarter 2000 earnings were reduced by the negative impact of $.03 per share for costs associated with an unsolicited merger proposal and proxy contest and by $.01 per share due to the net negative effect of divestitures and acquisitions. Lower noncash amortization charges, 3 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Analysis of Operations, continued associated with Dexter's increased ownership of Life Technologies, Inc., favorably impacted the first quarter 2000 earnings by $.05 per share compared with the first quarter of 1999. In the first quarter of 1999, Dexter sold its Packaging Coatings business, including Dexter SAS, its French industrial coatings subsidiary, and its 40% interest in AKZO Dexter Aerospace Finishes VoF resulting in a gain of $2.53 per share. Including the gain, net income for the first quarter of 1999 was $68.8 million, or $2.98 per share diluted. Sales in the first quarter of 2000 were $261.8 million, a decrease of 6%, compared with sales of $279.9 million in the first quarter of 1999. Strong volume increases of 10% were more than offset by a 15% decrease due to the net effect of divestitures and acquisitions and a 1% negative effect from currency translation rates. Average selling prices remained largely unchanged. Sales in the Life Sciences segment increased $9.2 million, or 9%, in the first quarter of 2000 compared with the same period last year principally due to sales of products other than fetal bovine serum. Sales in the Nonwovens segment increased $6.4 million, or 9%, in the first quarter of 2000 compared with the first quarter of 1999 primarily due to stronger sales of wet wipes. Sales of ongoing businesses in the Specialty Polymers segment increased $9.0 million, or 13%, in the first quarter of 2000 compared with the same period last year primarily due to stronger sales of electronic encapsulation materials and magnetic products. Consolidated gross margin of 39.2% for the first quarter of 2000, stated as a percentage of sales, increased 2.1 percentage points from 37.1% in the first quarter of 1999. This improvement was principally the result of increased volume, lower amortization cost, and the divestiture of the lower gross margin Packaging Coatings business in the first quarter of 1999. Marketing and administrative costs in the first quarter of 2000 were comparable to the same period last year. Increased marketing and administrative costs at Life Technologies, Inc. and increased corporate expenses relating to costs associated with the unsolicited merger proposal and proxy contest were offset by lower expenses resulting from the divestitures in 1999. Research and development expense decreased $1.9 million, or 14%, in the first quarter of 2000 compared with the first quarter of 1999 primarily due to the divestiture of the Packaging Coatings business. Other income of $2.8 million in the first quarter of 2000 increased $0.6 million, or 30%, compared with the first quarter of 1999. This increase was primarily due to higher income from noncompetition agreements resulting from divestitures. 4 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Analysis of Operations, continued Interest expense of $5.4 million for the first quarter of 2000 decreased $1.0 million, or 16%, compared with $6.4 million in the first quarter of 1999. This decrease was primarily due to higher average borrowings in the first quarter of 1999 resulting from the acquisition of an additional 22% ownership of Life Technologies, Inc. in December 1998. These borrowings were repaid at the beginning of March 1999 with proceeds received from the divestiture of the Packaging Coatings business. The effective tax rate in the first quarter of 2000 was 34% compared with 36% in the first quarter of 1999. Analysis of Financial Condition Accounts receivable as of March 31, 2000 were $194 million, an increase of $22.5 million compared with $171.5 million at March 31, 1999. This increase was primarily due to increased sales of ongoing businesses of $23.8 million in the first quarter of 2000 compared with the same period last year. Excess of cost over net assets of businesses acquired (excess acquisition cost) as of March 31, 2000 was $136.6 million, an increase of $24.4 million and $14.4 million, respectively, compared with $112.2 million at December 31, 1999 and $122.2 million at March 31, 1999. The increase from December 31, 1999 was primarily due to Dexter acquiring additional shares of Life Technologies, Inc. (LTI) since year-end 1999. The increase from March 31, 1999 was primarily related to Dexter's increased ownership of LTI, partially offset by a decrease attributable to the divestiture of the printed wiring board product line in November 1999, and amortization charges. Patents, technology, trademarks, and covenants as of March 31, 2000 were $124.2 million, an increase of $10.4 million, compared with $113.8 million as of December 31, 1999. This increase was primarily due to Dexter's increased ownership of LTI. Accounts payable of $69.5 million as of March 31, 2000, decreased $7.7 million compared with $77.2 million at March 31, 1999. This decrease was primarily due to the divestiture of the printed wiring board product line. Accrued liabilities and taxes as of March 31, 2000 were $107.7 million, a decrease of $24.7 million compared with $132.4 million at March 31, 1999. This decrease was primarily due to payments of accrued taxes related to the sale of the Packaging Coatings business. Total debt (long-term, current installments, and short-term) was $301.2 million as of March 31, 2000, an increase of $63.8 million and $49.2 million, respectively, compared with $237.4 million at December 31, 1999 and $252 million at March 31, 1999. These increases were primarily due to borrowings related to the acquisition of additional shares of LTI. 5 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Analysis of Financial Condition (continued) Long-term deferred income taxes were $51.6 million as of March 31, 2000, an increase of $4.2 million and $6.2 million, respectively, compared with $47.4 million at December 31, 1999 and $45.4 million at March 31, 1999. These increases were primarily due to increased deferred income taxes related to Dexter's increased ownership of LTI. Minority interests of $83.9 million as of March 31, 2000 decreased $8.6 million compared with $92.5 million as of December 31, 1999. This decrease was primarily due to Dexter's increased ownership of LTI. Since year-end 1999, Dexter's ownership of LTI has increased to approximately 75%. Liquidity and Capital Resources The Company's liquidity is strong and ample lines of credit are available to the Company and its subsidiaries. As shown in the Condensed Statement of Cash Flows, cash provided from operations of $5.9 million and financing activities of $60.5 million exceeded the cash needed for investments of $58.6 million, thereby increasing cash for the first three months of 2000 by $7.8 million. Net income, after adjustments for depreciation, amortization, income taxes not due, and minority interests were the principal source of cash from operations in 2000 totaling $40.5 million. Working capital increases of $33.3 million were the principal use of cash from operations. Investment activity for the first three months of 2000 included cash expenditures for acquisitions of $47.1 million primarily related to Dexter purchasing additional shares of LTI in 2000, and capital expenditures of $10.4 million. Financing activities for the first three months of 1999 included new long-term and short-term debt, net, of $64.8 million, which was primarily used to fund investments including additional shares of LTI, and dividend payments of $5.9 million. The Company plans to meet its future working capital and capital expenditure needs with funds provided from operations, the reduction of short-term securities and, as needed, short-term and long-term borrowings. Forward-Looking Statements Any statements in this report that are not historical facts are "forward-looking statements" as that term is defined under Federal Securities Laws. Forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those stated in such statements. These and other risks are detailed in the Company's filings with the Securities and Exchange Commission. 6 PART II OTHER INFORMATION Item 5 - Other Information Effective in April 2000, Ms. Rosanne S. Potter was appointed Vice President-Treasurer of the Company. Prior to her appointment, Ms. Potter was Treasurer of the Company. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 15 of Part 1 - Letter to Securities and Exchange Commission re: Incorporation of Accountants' Report Exhibit 27 of Part 1 - Financial Data Schedule Exhibit 99 of Part 1 - First Quarter 2000 Financial Statements and Notes (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter for which this report was filed. 7 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. DEXTER CORPORATION (Registrant) Date May 5, 2000 /s/ Kathleen Burdett ----------- ------------------------------------ Kathleen Burdett Vice President and Chief Financial Officer (Principal Financial Officer) Date May 5, 2000 /s/ Dale J. Ribaudo ----------- ------------------------------------ Dale J. Ribaudo Vice President and Controller (Principal Accounting Officer) 8 INDEX TO EXHIBITS Exhibit No. 15 Letter to Securities and Exchange Commission re: Incorporation of Accountants' Report 27 Financial Data Schedule 99 First Quarter 2000 Financial Statements and Notes EX-15 2 EXHIBIT 15 1 Exhibit 15 Securities and Exchange Commission 450 Fifth Street, N.W. Judiciary Plaza Washington, D.C. 20549 Commissioners: We are aware that our report dated April 13, 2000 on our review of the interim financial information of Dexter Corporation (the "Company") as of and for the periods ended March 31, 2000 and 1999, and included in the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2000 is incorporated by reference in its Registration Statements on Form S-8, Registration Nos. 2-63959, 33-27597, 33-53307, 33-53309, 333-02985, 333-04081, 333-42663 and 333-76873. Very truly yours, /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Hartford, Connecticut May 5, 2000 EX-27 3 EXHIBIT 27
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 3-MOS DEC-31-2000 MAR-31-2000 94,162 0 184,318 5,233 170,266 495,969 689,354 362,157 1,140,135 252,231 232,050 0 0 24,984 442,692 1,140,135 261,776 264,539 159,248 159,248 0 0 5,382 23,643 8,039 12,400 0 0 0 12,400 .54 .54
EX-99 4 EXHIBIT 99 1 EXHIBIT 99a DEXTER CORPORATION CONDENSED STATEMENT OF INCOME
- --------------------------------------------------------------------------------------------- In thousands of dollars Three Months Ended March 31 ------------------------------------- (except per share amounts) 2000 1999 Change - --------------------------------------------------------------------------------------------- REVENUES Net sales $ 261,776 $ 279,927 - 6% Other income 2,763 2,127 + 30% --------- --------- 264,539 282,054 - 6% EXPENSES Cost of sales 159,248 176,149 - 10% Marketing and administrative 64,267 64,188 Research and development 11,999 13,886 - 14% Interest 5,382 6,386 - 16% Gain on divestiture of product lines (91,361) --------- --------- INCOME BEFORE TAXES 23,643 112,806 - 79% Income taxes 8,039 40,611 - 80% --------- --------- INCOME BEFORE MINORITY INTERESTS 15,604 72,195 - 78% Minority interests 3,204 3,361 - 5% --------- --------- NET INCOME $ 12,400 $ 68,834 - 82% ========= ========= NET INCOME PER SHARE - BASIC $ 0.54 $ 2.99 - 82% NET INCOME PER SHARE - DILUTED $ 0.54 $ 2.98 - 82% DIVIDENDS DECLARED PER SHARE $ 0.26 $ 0.26 AVERAGE SHARES OUTSTANDING (000) - BASIC 22,822 22,999 - 1% AVERAGE SHARES OUTSTANDING (000) - DILUTED 23,024 23,125 - ---------------------------------------------------------------------------------------------
See accompanying notes to the condensed consolidated financial statements. Amounts are unaudited. 2 EXHIBIT 99b DEXTER CORPORATION CONDENSED STATEMENT OF FINANCIAL POSITION
- ------------------------------------------------------------------------------------------------- In thousands of dollars MARCH 31 December 31 March 31 ----------------------------------------- (except per share amounts) 2000 1999 1999 - ------------------------------------------------------------------------------------------------- ASSETS Cash and short-term securities $ 94,162 $ 86,850 $ 126,414 Accounts receivable, net 193,992 181,726 171,536 Inventories Materials and supplies 55,381 56,451 54,828 In process and finished 130,762 122,551 121,157 LIFO reserve (15,877) (15,507) (14,970) ----------- ----------- ----------- 170,266 163,495 161,015 Prepaid and deferred expenses 37,549 32,483 25,661 ----------- ----------- ----------- Total current assets 495,969 464,554 484,626 Property, plant and equipment, at cost, net 327,197 328,146 321,029 Excess of cost over net assets of businesses acquired 136,647 112,191 122,193 Patents, technology, trademarks, and covenants 124,218 113,800 115,556 Other assets 56,104 55,437 53,516 ----------- ----------- ----------- $ 1,140,135 $ 1,074,128 $ 1,096,920 =========== =========== =========== LIABILITIES & SHAREHOLDERS' EQUITY Short-term debt $ 48,518 $ 8,578 $ 71,035 Accounts payable 69,475 68,494 77,205 Dividends payable 5,939 5,929 5,972 Accrued liabilities and taxes 107,678 105,996 132,449 Current installments of long-term debt 20,621 10,670 16,966 ----------- ----------- ----------- Total current liabilities 252,231 199,667 303,627 Long-term debt 232,050 218,132 163,976 Deferred items 41,373 42,095 42,334 Long-term deferred income taxes 51,625 47,413 45,427 Long-term environmental reserves 11,271 11,668 13,364 Minority interests 83,909 92,517 85,012 Shareholders' equity Common stock and paid-in capital 42,569 41,173 40,803 Retained earnings 508,274 501,813 480,936 Treasury stock (58,839) (59,385) (60,528) Accumulated other comprehensive loss (24,328) (20,965) (18,031) ----------- ----------- ----------- Total shareholders' equity 467,676 462,636 443,180 ----------- ----------- ----------- $ 1,140,135 $ 1,074,128 $ 1,096,920 =========== =========== =========== EQUITY PER SHARE $ 20.46 $ 20.29 $ 19.48 - -------------------------------------------------------------------------------------------------
See accompanying notes to the condensed consolidated financial statements. Amounts as of March 31, 2000 and March 31, 1999 are unaudited. 3 EXHIBIT 99c DEXTER CORPORATION CONDENSED STATEMENT OF CASH FLOWS
- ---------------------------------------------------------------------------------- Three Months Ended March 31 --------------------------- In thousands of dollars 2000 1999 - ---------------------------------------------------------------------------------- OPERATIONS Net income $ 12,400 $ 68,834 Noncash items Depreciation 9,190 9,549 Amortization 4,156 6,558 Gain on divestiture of product lines (91,361) Income taxes not due 11,562 35,524 Minority interests 3,204 3,361 LIFO inventory charge / (credit) 370 (350) Other (1,742) (173) Operating working capital increase (33,273) (28,681) --------- --------- 5,867 3,261 --------- --------- INVESTMENTS Property, plant and equipment (10,446) (17,016) Acquisitions (47,090) (1,514) Divestitures 228,716 Proceeds from exercise of LTI stock options 948 1,593 Other (1,965) 794 --------- --------- (58,553) 212,573 --------- --------- FINANCING Long-term debt, net 24,874 (216,000) Short-term debt, net 39,967 31,305 Dividends paid (5,929) (5,989) Purchase of treasury stock (7,154) Other 1,588 (675) --------- --------- 60,500 (198,513) --------- --------- INCREASE IN CASH AND SHORT-TERM SECURITIES $ 7,814 $ 17,321 ========= ========= RECONCILIATION OF INCREASE IN CASH AND SHORT-TERM SECURITIES Cash and short-term securities at beginning of period $ 86,850 $ 111,049 Cash and short-term securities at end of period 94,162 126,414 --------- --------- Increase in cash and short-term securities per Statement of Financial Position 7,312 15,365 Currency translation effects 502 1,956 --------- --------- $ 7,814 $ 17,321 ========= ========= - ----------------------------------------------------------------------------------
See accompanying notes to the condensed consolidated financial statements. Amounts are unaudited. 4 EXHIBIT 99d DEXTER CORPORATION CONDENSED STATEMENT OF COMPREHENSIVE INCOME
- -------------------------------------------------------------------------------- Three Months Ended March 31 ------------------------------ In thousands of dollars 2000 1999 Change - -------------------------------------------------------------------------------- NET INCOME $ 12,400 $ 68,834 - 82% -------- -------- OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX Currency translation effects (a) (3,352) 422 Unrealized losses on investments (11) (185) - 94% -------- -------- OTHER COMPREHENSIVE INCOME (LOSS) (3,363) 237 -------- -------- COMPREHENSIVE INCOME $ 9,037 $ 69,071 - 87% ======== ========
(a) 1999 net of $8.6 million currency translation losses included in net income related to divestitures. - -------------------------------------------------------------------------------- See accompanying notes to the condensed consolidated financial statements. Amounts are unaudited. 5 EXHIBIT 99e DEXTER CORPORATION NET SALES BY SEGMENT
- -------------------------------------------------------------------------------- Three Months Ended March 31 ------------------------------------ In thousands of dollars 2000 1999 Change - -------------------------------------------------------------------------------- LIFE SCIENCES (a) $108,764 $ 99,537 + 9% NONWOVENS 75,741 69,390 + 9% SPECIALTY POLYMERS (b) 77,271 111,000 - 30% -------- -------- CONSOLIDATED $261,776 $279,927 - 6% ======== ========
(a) The effect of businesses acquired increased net sales in the Life Sciences segment by $0.8 million, or 1%. (b) The effect of businesses divested decreased net sales in the Specialty Polymers segment by $42.7 million, or 38%. - -------------------------------------------------------------------------------- OPERATING INCOME BY SEGMENT
- -------------------------------------------------------------------------------- Three Months Ended March 31 ---------------------------------- In thousands of dollars 2000 1999 Change - -------------------------------------------------------------------------------- LIFE SCIENCES (a) $ 15,770 $ 13,825 + 14% NONWOVENS 8,328 8,705 - 4% SPECIALTY POLYMERS (b) 9,025 100,742 - 91% --------- --------- CONSOLIDATED OPERATING INCOME 33,123 123,272 - 73% OTHER INCOME, NET 2,376 936 + 154% INTEREST EXPENSE (5,382) (6,386) - 16% GENERAL CORPORATE EXPENSE (6,474) (5,016) + 29% --------- --------- CONSOLIDATED INCOME BEFORE TAXES $ 23,643 $ 112,806 - 79% ========= =========
(a) Life Sciences operating income includes amortization charges associated with Dexter's increased ownership in LTI of $1.5 million and $3.5 million in 2000 and 1999, respectively. (b) Specialty Polymers 1999 operating income includes the gain on the divestiture of product lines of $91.4 million. The effect of businesses divested decreased operating income in the Specialty Polymers segment by $2.5 million. - -------------------------------------------------------------------------------- Amounts are unaudited. 6 Exhibit 99f Dexter Corporation Notes to Condensed Consolidated Financial Statements Note 1 - In the opinion of the Company's management, the unaudited condensed consolidated financial statements reflect adjustments of a normal recurring nature which are necessary to present fairly the results for the interim periods. The notes to the condensed consolidated financial statements, including management's discussion in Part 1, Item 2 of this Form 10-Q, are incorporated as part of these condensed consolidated financial statements. The year-end condensed balance sheet data was derived from the audited financial statements. Note 2 - Presented below is the reconciliation between basic earnings per share and diluted earnings per share for the three-month periods ended March 31, 2000 and 1999:
Three Months ended Amounts in thousands March 31 -------------------------- (except per share data) 2000 1999 - -------------------------------------------------------------------------------- EARNINGS PER SHARE - BASIC: Net income $ 12,400 $ 68,834 Weighted average shares outstanding 22,822 22,999 Earnings per share - basic $ .54 $ 2.99 EARNINGS PER SHARE - DILUTED: Net income $ 12,400 $ 68,834 Effect of subsidiary dilutive options on net income (69) (21) -------- -------- $ 12,331 $ 68,813 ======== ======== Weighted average shares outstanding 22,822 22,999 Weighted average effect of common stock equivalents 202 126 -------- -------- 23,024 23,125 ======== ======== Earnings per share - diluted $ .54 $ 2.98 - --------------------------------------------------------------------------------
7 Exhibit 99f Dexter Corporation Notes to Condensed Consolidated Financial Statements (continued) Note 3 - In September 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities. As issued, this statement is effective for all fiscal quarters of all fiscal years beginning after June 15, 1999. In June 1999, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133. This statement amends Statement No. 133 to be effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. The Company is currently evaluating the impact of SFAS No. 133. Note 4 - The following are included as components of Common Stock and Paid-in Capital:
COMMON STOCK & PAID-IN CAPITAL MARCH 31, December 31, March 31, (in thousands of dollars) 2000 1999 1999 - ----------------------------------- -------- -------- -------- Common stock $ 24,984 $ 24,984 $ 24,984 Paid-in capital 19,961 18,613 17,565 Unearned compensation on restricted stock (2,376) (2,424) (1,746) -------- -------- -------- $ 42,569 $ 41,173 $ 40,803 ======== ======== ========
Note 5 - The following are included as components of Accumulated Other Comprehensive Loss:
ACCUMULATED OTHER COMPREHENSIVE MARCH 31, December 31, March 31, LOSS (in thousands of dollars) 2000 1999 1999 - ---------------------------------------- -------- -------- -------- Currency translation effects $(24,323) $(20,971) $(17,435) Unrealized gains/(losses) on investments 6 17 (575) Minimum pension liability adjustment (11) (11) (21) -------- -------- -------- $(24,328) $(20,965) $(18,031) ======== ======== ========
Note 6 - General corporate assets at March 31, 2000 were $320.8 million, an increase of $58.3 million, compared with $262.5 million at December 31, 1999. This increase was primarily due to Dexter's increased ownership of LTI since year-end 1999. 8 Exhibit 99f Dexter Corporation Notes to Condensed Consolidated Financial Statements (continued) Note 7 - The Company and its subsidiaries are subject to potential liability under government regulations, contractual and other matters, and various claims and legal actions which are pending or may be asserted. These matters arise in the ordinary course and conduct of the business of the Company and its subsidiaries and some are expected to be covered, at least in part, by insurance. At March 31, 2000, $0.3 million of current and $4.9 million of long-term receivables from third party insurance companies are included as assets of the Company. Equal and offsetting payables to third parties are included as liabilities of the Company. In September 1999, LTI submitted a report in connection with a voluntary disclosure to the Department of Veteran Affairs ("VA") regarding matters involving the management of LTI's Federal Supply Schedule contract with the VA that has been in effect since April 1992. As part of the disclosure, LTI has offered to provide a refund to the government in the amount of $3.9 million. There can be no assurance that the government will agree with LTI's assessment of this matter or accept LTI's offered refund amount. Consequently, it is possible the final resolution of this matter could materially differ from LTI's offer and could have material effect on the Company's financial position, operating results or cash flows when resolved in a future reporting period. While the outcome of all of the pending and potential claims and legal actions against the Company and its subsidiaries cannot be forecast with certainty, management believes that, with the possible exception of the potential liability of LTI described above, such matters should not result in any liability which would have a material adverse effect on the Company's financial position, results of operations, or cash flows. 9 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Board of Directors of Dexter Corporation We have reviewed the accompanying condensed statement of financial position of Dexter Corporation as of March 31, 2000 and 1999, and the related condensed statements of income, comprehensive income, and cash flows for the three-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 condensed interim 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 Dexter Corporation as of December 31, 1999, 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 28, 2000, 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, 1999 is fairly stated, in all material respects, in relation to the consolidated statement of financial position from which it has been derived. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Hartford, Connecticut April 13, 2000 -----END PRIVACY-ENHANCED MESSAGE-----