EX-99 4 ex99.txt EX-99 1 EXHIBIT 99a DEXTER CORPORATION
CONDENSED STATEMENT OF INCOME ------------------------------------------------------------------------------------------------------------------------------------ Three Months Ended June 30 Six Months Ended June 30 In thousands of dollars ------------------------------------ --------------------------------- (except per share amounts) 2000 1999 Change 2000 1999 Change ------------------------------------------------------------------------------------------------------------------------------------ REVENUES Net sales $268,231 $256,062 + 5% $530,007 $535,989 - 1% Other income 2,807 2,396 + 17% 5,570 4,523 + 23% -------- -------- -------- -------- 271,038 258,458 + 5% 535,577 540,512 - 1% EXPENSES Cost of sales 161,457 153,794 + 5% 320,705 329,943 - 3% Marketing and administrative 62,772 62,207 + 1% 125,894 126,395 Research and development 13,022 12,293 + 6% 25,021 26,179 - 4% Interest 5,870 4,700 + 25% 11,252 11,086 + 1% Gain on divestiture of product lines (7,002) (7,002) (91,361) - 92% Unsolicited merger proposal and proxy contest costs 3,967 5,112 -------- -------- -------- -------- INCOME BEFORE TAXES 30,952 25,464 + 22% 54,595 138,270 - 61% Income taxes 10,523 8,697 + 21% 18,562 49,308 - 62% -------- -------- -------- -------- INCOME BEFORE MINORITY INTERESTS 20,429 16,767 + 22% 36,033 88,962 - 59% Minority interests 3,002 3,022 - 1% 6,206 6,383 - 3% -------- -------- -------- -------- NET INCOME $17,427 $13,745 + 27% $29,827 $82,579 - 64% ======== ======== ======== ======== NET INCOME PER SHARE - BASIC $0.76 $0.60 + 27% $1.30 $3.61 - 64% NET INCOME PER SHARE - DILUTED $0.75 $0.60 + 25% $1.29 $3.58 - 64% DIVIDENDS DECLARED PER SHARE $0.26 $0.26 $0.52 $0.52 AVERAGE SHARES OUTSTANDING (000) - BASIC 22,894 22,769 + 1% 22,858 22,884 AVERAGE SHARES OUTSTANDING (000) - DILUTED 23,173 22,946 + 1% 23,095 23,030
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 June 30 December 31 June 30 (except per share amounts) 2000 1999 1999 ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Cash and short-term securities $ 113,418 $ 86,850 $ 87,849 Accounts receivable, net 191,396 181,726 176,207 Inventories Materials and supplies 53,707 56,451 53,397 In process and finished 130,821 122,551 125,666 LIFO reserve (15,992) (15,507) (15,258) ----------- ----------- ----------- 168,536 163,495 163,805 Prepaid and deferred expenses 40,334 32,483 24,224 ----------- ----------- ----------- Total current assets 513,684 464,554 452,085 Property, plant and equipment, at cost, net 325,063 328,146 331,870 Excess of cost over net assets of businesses acquired 134,147 112,191 122,753 Patents, technology, trademarks, and covenants 122,853 113,800 117,312 Other assets 57,243 55,437 54,596 ----------- ----------- ----------- $ 1,152,990 $ 1,074,128 $ 1,078,616 =========== =========== =========== LIABILITIES & SHAREHOLDERS' EQUITY Short-term debt $ 14,026 $ 8,578 $ 35,943 Accounts payable 68,165 68,494 69,266 Dividends payable 5,956 5,929 5,926 Accrued liabilities and taxes 110,867 105,996 116,728 Current installments of long-term debt 20,573 10,670 17,319 ----------- ----------- ----------- Total current liabilities 219,587 199,667 245,182 Long-term debt 271,282 218,132 199,784 Deferred items 39,009 42,095 40,675 Long-term deferred income taxes 51,864 47,413 45,484 Long-term environmental reserves 11,183 11,668 12,834 Minority interests 86,068 92,517 86,748 Shareholders' equity Common stock and paid-in capital 40,502 41,173 40,125 Retained earnings 519,745 501,813 488,750 Treasury stock (55,812) (59,385) (59,167) Accumulated other comprehensive loss (30,438) (20,965) (21,799) ----------- ----------- ----------- Total shareholders' equity 473,997 462,636 447,909 ----------- ----------- ----------- $ 1,152,990 $ 1,074,128 $ 1,078,616 =========== =========== =========== EQUITY PER SHARE $ 20.69 $ 20.29 $ 19.65
See accompanying notes to the condensed consolidated financial statements. Amounts as of June 30, 2000 and June 30, 1999 are unaudited. 3 EXHIBIT 99c DEXTER CORPORATION
CONDENSED STATEMENT OF CASH FLOWS -------------------------------------------------------------------------------------- Six Months Ended June 30 ------------------------ In thousands of dollars 2000 1999 -------------------------------------------------------------------------------------- OPERATIONS Net income $ 29,827 $ 82,579 Noncash items Depreciation 18,479 18,799 Amortization 8,359 11,522 Gain on divestiture of product lines (7,002) (91,361) Unsolicited merger proposal and proxy contest costs 5,112 Income taxes not due 6,743 19,687 Minority interests 6,206 6,383 LIFO inventory charge / (credit) 485 (61) Other (5,961) (1,137) Operating working capital increase (22,706) (40,745) --------- --------- 39,542 5,666 --------- --------- INVESTMENTS Property, plant and equipment (22,721) (34,678) Acquisitions (47,667) (13,481) Divestitures 228,916 Proceeds from exercise of LTI stock options 1,768 1,625 Other (2,924) (723) --------- --------- (71,544) 181,659 --------- --------- FINANCING Long-term debt, net 64,756 (182,576) Short-term debt, net 5,380 (3,915) Dividends paid (11,868) (11,966) Purchase of treasury stock (10,126) Other 1,706 575 --------- --------- 59,974 (208,008) --------- --------- INCREASE (DECREASE) IN CASH AND SHORT-TERM SECURITIES $ 27,972 $ (20,683) ========= ========= RECONCILIATION OF INCREASE (DECREASE) 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 113,418 87,849 --------- --------- Increase (Decrease) in cash and short-term securities per Statement of Financial Position 26,568 (23,200) Currency translation effects 1,404 2,517 --------- --------- $ 27,972 $ (20,683) ========= =========
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 June 30 Six Months Ended June 30 ------------------------------- ---------------------------------- In thousands of dollars 2000 1999 Change 2000 1999 Change ------------------------------------------------------------------------------------------------------------------------------------ Net Income $ 17,427 $ 13,745 + 27% $ 29,827 $ 82,579 - 64% -------- -------- -------- -------- Other Comprehensive Income (Loss), net of tax Currency translation effects (5,933) (3,600) + 65% (9,285) (3,178) + 192% Unrealized losses on investments (177) (168) + 5% (188) (353) - 47% -------- -------- -------- -------- Other Comprehensive Income (Loss) (6,110) (3,768) + 62% (9,473) (3,531) + 168% -------- -------- -------- -------- Comprehensive Income $ 11,317 $ 9,977 + 13% $ 20,354 $ 79,048 - 74% ======== ======== ======== ========
See accompanying notes to the condensed consolidated financial statements. Amounts are unaudited. 5 EXHIBIT 99e DEXTER CORPORATION
NET SALES BY SEGMENT ----------------------------------------------------------------------------------------------------------------------------------- Three Months Ended June 30 Six Months Ended June 30 ---------------------------------- ------------------------------------ In thousands of dollars 2000 1999 Change 2000 1999 Change ----------------------------------------------------------------------------------------------------------------------------------- Life Sciences (a) $110,143 $99,814 + 10% $218,907 $199,351 + 10% Nonwovens 74,047 74,106 149,788 143,496 + 4% Specialty Polymers (b) 84,041 82,142 + 2% 161,312 193,142 - 16% -------- -------- -------- -------- Consolidated $268,231 $256,062 + 5% $530,007 $535,989 - 1% ======== ======== ======== ========
(a) The effect of businesses acquired increased net sales in the Life Sciences segment by $0.9 million, or 1% for the quarter, and $1.7 million, or 1%, year-to-date. (b) The effect of businesses divested decreased net sales in the Specialty Polymers segment by $9.6 million, or 12%, for the quarter, and $52.3 million, or 27%, year-to-date.
OPERATING INCOME BY SEGMENT ----------------------------------------------------------------------------------------------------------------------------------- Three Months Ended June 30 Six Months Ended June 30 -------------------------------- -------------------------------------- In thousands of dollars 2000 1999 Change 2000 1999 Change ----------------------------------------------------------------------------------------------------------------------------------- Life Sciences (a) $15,010 $12,893 + 16% $30,780 $26,718 + 15% Nonwovens 8,316 9,536 - 13% 16,684 18,241 - 9% Specialty Polymers (b) 18,507 10,229 + 81% 27,602 110,971 - 75% ------- ------- ------- -------- Consolidated Operating Income 41,833 32,658 + 28% 75,066 155,930 - 52% Other Income, net 3,946 2,225 + 77% 6,322 3,161 + 100% Interest Expense (5,870) (4,700) + 25% (11,252) (11,086) + 1% General Corporate Expense (c) (8,957) (4,719) + 90% (15,541) (9,735) + 60% ------- ------- ------- -------- Consolidated Income before Taxes $30,952 $25,464 + 22% $54,595 $138,270 - 61% ======= ======= ======= ========
(a) Life Sciences operating income includes amortization charges associated with Dexter's increased ownership in LTI of $1.6 million for the quarter, and $3.1 million, year-to-date in 2000, and $2.0 million for the quarter, and $5.5 million year-to-date in 1999. (b) Specialty Polymers 2000 operating income for the quarter and year-to-date includes a gain of $7.0 million that reflects adjustments to gains incurred on divestiture of product lines in 1999. Specialty Polymers 1999 operating income year-to-date 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 $0.7 million for the quarter, and $3.0 million year-to-date. (c) 2000 General Corporate Expense includes unsolicited merger proposal and proxy contest costs of $4.0 million for the quarter, and $5.1 million, year-to-date including $0.9 million for the quarter and year-to-date at LTI. 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 and six-month periods ended June 30, 2000 and 1999:
Three Months ended Six Months ended Amounts in thousands June 30 June 30 -------------------------- ---------------------------- (except per share data) 2000 1999 2000 1999 ------------------------------------------------------------------------------------------------------------------- EARNINGS PER SHARE - BASIC: Net income $17,427 $13,745 $29,827 $82,579 Weighted average shares outstanding 22,894 22,769 22,858 22,884 Earnings per share - basic $.76 $.60 $1.30 $3.61 EARNINGS PER SHARE - DILUTED: Net income $17,427 $13,745 $29,827 $82,579 Effect of subsidiary dilutive options on net income (68) (19) (138) (39) ---------- ---------- ---------- ---------- $17,359 $13,726 $29,689 $82,540 ========== ========== ========== ========== Weighted average shares outstanding 22,894 22,769 22,858 22,884 Weighted average effect of common stock equivalents 279 177 237 146 ---------- ---------- ---------- ---------- 23,173 22,946 23,095 23,030 ========== ========== ========== ========== Earnings per share - diluted $.75 $.60 $1.29 $3.58
7 Exhibit 99f Dexter Corporation Notes to Condensed Consolidated Financial Statements (continued) Note 3 - In June 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 JUNE 30, December 31, June 30, (in thousands of dollars) 2000 1999 1999 ------------------------------- -------- ------- -------- Common stock $24,984 $24,984 $24,984 Paid-in capital 22,778 18,613 18,634 Unearned compensation on restricted stock (7,260) (2,424) (3,493) ------- ------- ------- $40,502 $41,173 $40,125 ======= ======= =======
Note 5 - The following are included as components of Accumulated Other Comprehensive Loss:
ACCUMULATED OTHER COMPREHENSIVE JUNE 30, December 31, June 30, LOSS (in thousands of dollars) 2000 1999 1999 ------------------------------- -------- ------------ -------- Currency translation effects $(30,256) $(20,971) $(21,035) Unrealized (losses)/gains on investments (171) 17 (743) Minimum pension liability adjustment (11) (11) (21) -------- -------- -------- $(30,438) $(20,965) $(21,799) ======== ======== ========
Note 6 - General corporate assets at June 30, 2000 were $340.6 million, an increase of $78.1 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 and higher levels of cash and short-term securities. 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 June 30, 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 June 30, 2000 and 1999, and the related condensed statements of income and comprehensive income for each of the three and six-month periods then ended, 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 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 July 18, 2000