-----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, AEcuvL+L857u0Hf4Eak8P0rfTWBretzjhg8M9+MPJH0qub/AR5oNinzRWBx3v8xJ G4vASckx2nQ8wtDT0zDuXA== 0000914039-96-000355.txt : 19961113 0000914039-96-000355.hdr.sgml : 19961113 ACCESSION NUMBER: 0000914039-96-000355 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 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: 96657955 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 September 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 October 31, 1996 COMMON STOCK, PAR VALUE $1 23,792,186 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 nine months ended September 30, 1996 and 1995. (b) Exhibit 99b - Condensed Statement of Financial Position as of September 30, 1996, December 31, 1995, and September 30, 1995. (c) Exhibit 99c - Condensed Statement of Cash Flows for the nine months ended September 30, 1996 and 1995. (d) Exhibit 99d - Net Sales by Market for the three months and nine months ended September 30, 1996 and 1995. (e) Exhibit 99e - Notes to Consolidated Financial Statements. The unaudited financial data included herein as of September 30, 1996 and 1995, and for the three and nine 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 third quarter of 1996 increased 25% to a record $11.7 million from earnings of $9.4 million in the third quarter of 1995. Earnings per share increased 28% to $.50 per share from $.39 per share in the third quarter of 1995 on sales which were essentially even with last year. Compared with the third quarter of 1995, the increase in earnings per share includes the favorable impact of approximately $.16 per share from the net effect of lower raw material costs and selling price increases. This was somewhat offset by a $.01 per share unfavorable effect of currency exchange rates and $.01 per share unfavorable effect from a higher effective tax rate compared with the third quarter of 1995, and a less favorable sales mix. Sales for the third quarter of 1996 were $269.5 million compared with sales of $268.5 million in the third quarter of 1995. A 4% increase in unit volume was offset by a 3% decrease due to net acquisition and divestiture activity and a 1% decrease due to the effect of lower currency translation rates on international sales. Sales for the nine-month period ended September 30, 1996, were $832.4 million, a 2% increase compared with sales of $818.3 million for the same period last year. This increase includes a 3% increase due to unit volume, selling price increases averaging 1%, a 1% 3 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations, continued decrease due to the effect of lower currency translation rates on international sales, and a 1% decrease due to the net effect of acquisitions and divestitures. Earnings for the nine-month period of 1996, excluding the net gain from the second quarter 1996 disposal of product lines, were a record $36.4 million, or $1.53 per share. This represents a 14% increase in earnings and 17% increase in earnings per share, compared with results for the first nine months of 1995 of $31.8 million, or $1.31 per share. This 17% increase in earnings per share includes the favorable net effect of selling price increases and lower raw material costs of approximately $.34 per share compared with the nine-month period last year. This was somewhat offset by the effect of unfavorable currency exchange rates of $.04 per share due to the strengthening of the U.S. dollar against international currencies and an unfavorable product mix. Total earnings for the nine-month period, including the gain on divested product lines of $.04 per share, were $37.3 million, or $1.57 per share. Products with strong sales in the third quarter and first nine months of 1996 include aerospace materials, magnetic materials, and products at Life Technologies, Inc. Products with weaker performance in the third quarter and first nine months compared with last year include electronic packaging products for the semiconductor industry and food and beverage can coatings serving the international markets. Consolidated gross margin of 34.3% of net sales in the third quarter of 1996 improved 2.8 percentage points from 31.5% in the third quarter of 1995. Approximately three-quarters of this improvement was from Dexter operations, primarily resulting from lower raw material costs compared with the third quarter last year. The remaining improvement was attributable to increased gross margin on fetal bovine serum and higher gross margin on sales of product in Japan at Life Technologies, Inc. On a year-to-date basis, consolidated gross margin improved 2.5 percentage points compared with 1995, approximately half of this improvement was from Dexter operations resulting from the net favorable impact of selling price increases and raw material cost decreases. Marketing and administrative cost increased $2.8 million, or 5%, for the third quarter of 1996 and $13.1 million, or 8%, for the first nine months of 1996. This increase in each period was principally due to increased marketing and administrative expenses 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 $3.2 million for the third quarter of 1996, an increase of $.9 million, or 40% from the third quarter of 1995. This increase is primarily due to higher net equity income from companies owned 50% or less. 4 PART II OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K (a) Exhibit 4 - Rights Agreement dated August 23, 1996 between the registrant and ChaseMellon Shareholders Service L.L.C. was filed as Exhibit 4 to Form 8-K, which was filed with the Securities and Exchange Commission on September 9, 1996, and is hereby incorporated herein by reference. 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 - Third Quarter 1996 Financial Statements and Notes (b) On September 9,1996, the registrant filed a Form 8-K covering a new rights agreement with ChaseMellon Shareholders Services L.L.C.. 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 November 12, 1996 /s/ Kathleen Burdett Date........................... ................................... Kathleen Burdett Vice President and Chief Financial Officer (Principal Financial Officer) November 12, 1996 /s/ George Collin Date........................... ................................. 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 Third Quarter 1996 Financial Statements and Notes EX-15 2 LETTER RE: INDEPENDANT 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 October 10, 1996, on our review of the interim financial information of The Dexter Corporation as of September 30, 1996 and 1995, and for the three and nine 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 November 7, 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 9-MOS DEC-31-1996 SEP-30-1996 82,356 0 189,515 5,489 143,031 457,815 655,272 333,360 938,107 210,197 208,839 0 0 24,984 344,793 938,107 832,421 840,800 547,278 547,278 0 0 15,671 74,933 26,601 37,282 0 0 0 37,282 1.57 0
EX-99 4 THIRD QUARTER 1996 FINANCIAL STATEMENTS 1 Exhibit 99a CONDENSED STATEMENT OF INCOME THE DEXTER CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------ In thousands of dollars Three Months Ended September 30 Nine Months Ended September 30 ---------------------------------------- ----------------------------------- (except per share amounts) 1996 1995 Change 1996 1995 Change - ------------------------------------------------------------------------------------------------------------------------------------ REVENUES Net sales $ 269,493 $ 268,467 $ 832,421 $ 818,251 + 2% Other income 3,182 2,272 +40% 8,379 8,210 + 2% --------- --------- --------- --------- 272,675 270,739 +1% 840,800 826,461 + 2% EXPENSES Cost of sales 176,997 183,910 - 4% 547,278 558,139 - 2% Marketing and administrative 54,755 51,950 + 5% 167,149 154,087 + 8% Research and development 12,470 11,931 + 5% 38,488 37,286 + 3% Interest 4,929 5,203 - 5% 15,671 15,562 + 1% Gain on divestiture of product lines (2,719) --------- --------- --------- --------- INCOME BEFORE TAXES 23,524 17,745 +33% 74,933 61,387 +22% Income taxes 8,351 6,081 +37% 26,601 21,792 +22% --------- --------- --------- --------- INCOME BEFORE MINORITY INTERESTS 15,173 11,664 +30% 48,332 39,595 +22% Minority interests 3,432 2,265 +52% 11,050 7,776 +42% --------- --------- --------- --------- NET INCOME $ 11,741 $ 9,399 +25% $ 37,282 $ 31,819 +17% ========= ========= ========= ========= NET INCOME PER SHARE $ 0.50 $ 0.39 +28% $ 1.57 $ 1.31 +20% DIVIDENDS DECLARED PER SHARE $ 0.22 $ 0.22 $ 0.66 $ 0.66 AVERAGE SHARES OUTSTANDING (000) 23,545 24,377 - 3% 23,733 24,369 - 3% - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements. 2 EXHIBIT 99b THE DEXTER CORPORATION CONDENSED STATEMENT OF FINANCIAL POSITION
- --------------------------------------------------------------------------------------------- In thousands of dollars SEPTEMBER 30 December 31 September 30 (except per share amounts) ------------------------------------------------ 1996 1995 1995 - --------------------------------------------------------------------------------------------- ASSETS Cash and short-term securities $ 82,356 $ 65,542 $ 61,551 Accounts receivable, net 200,546 201,389 206,793 Inventories Materials and supplies 57,085 60,099 61,722 In process and finished 107,177 121,644 120,456 LIFO reserve (21,231) (24,709) (24,669) --------- --------- --------- 143,031 157,034 157,509 Prepaid and deferred expenses 31,882 32,756 29,955 --------- --------- --------- Total current assets 457,815 456,721 455,808 Property, plant and equipment, at cost, net 321,912 325,203 324,751 Excess of cost over net assets of businesses acquired 74,805 74,102 74,841 Other assets 83,575 78,135 78,525 --------- --------- --------- $ 938,107 $ 934,161 $ 933,925 ========= ========= ========= LIABILITIES & SHAREHOLDERS' EQUITY Short-term debt $ 5,501 $ 13,598 $ 8,917 Current installments of long-term debt 12,649 13,648 9,298 Accounts payable 81,568 92,447 86,992 Accrued liabilities and taxes 104,089 81,659 90,203 Current environmental reserves 1,207 1,395 1,654 Dividends payable 5,183 5,351 5,363 --------- --------- --------- Total current liabilities 210,197 208,098 202,427 Long-term debt 208,839 215,839 224,017 Deferred items 48,316 48,492 48,261 Long-term environmental reserves 15,219 15,745 15,798 Minority interests 85,759 76,372 73,186 Shareholders' equity Common stock and paid-in capital 34,768 35,116 34,635 Retained earnings 369,212 347,544 344,136 Currency translation effects (3,185) 1,614 1,263 Treasury stock (31,018) (14,659) (9,798) --------- --------- --------- Total shareholders' equity 369,777 369,615 370,236 --------- --------- --------- $ 938,107 $ 934,161 $ 933,925 ========= ========= ========= EQUITY PER SHARE $ 15.69 $ 15.26 $ 15.19 - ---------------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements. 3 EXHIBIT 99c THE DEXTER CORPORATION
CONDENSED STATEMENT OF CASH FLOWS - ------------------------------------------------------------------------------------------ Nine Months Ended September 30 -------------------------------- In thousands of dollars 1996 1995 - ------------------------------------------------------------------------------------------ OPERATIONS Net income $ 37,282 $ 31,819 Noncash items Depreciation and amortization 33,537 33,123 Gain on divestiture of product lines (2,719) Income taxes not due 10,839 3,594 Minority interests 11,050 7,776 LIFO inventory (credit) charge (3,478) 1,841 Equity in net income of affiliates (3,196) (1,541) Other 3,658 (1,230) Operating working capital increase (2,886) (39,507) -------- -------- 84,087 35,875 -------- -------- INVESTMENTS Property, plant and equipment (38,455) (21,199) Acquisitions (16,198) (424) Divestitures 34,913 Joint ventures 4,047 (2,942) Notes receivable 200 3,150 Proceeds from exercise of LTI stock options 1,736 2,299 Other (4,053) 1,329 -------- -------- (17,810) (17,787) -------- -------- FINANCING Long-term debt (6,576) (656) Short-term debt, net (8,035) 4,116 Dividends paid (15,782) (16,078) LTI dividends paid to minority interest shareholders (1,133) (1,026) Purchase of treasury stock (21,434) Other 3,718 (178) -------- -------- (49,242) (13,822) -------- -------- INCREASE IN CASH AND SHORT-TERM SECURITIES $ 17,035 $ 4,266 ======== ======== RECONCILIATION OF INCREASE 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 82,356 61,551 -------- -------- Increase in cash and short-term securities per Statement of Financial Position 16,814 6,539 Currency translation effects 221 (139) Cash included from consolidation of a subsidiary which became majority-owned in 1995 (2,134) -------- -------- $ 17,035 $ 4,266 ======== ======== INTEREST PAID $ 16,338 $ 12,568 ======== ======== TAXES PAID $ 15,762 $ 18,198 ======== ======== - ------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements. 4 EXHIBIT 99d
NET SALES BY MARKET THE DEXTER CORPORATION - ---------------------------------------------------------------------------------------------------------------------------------- Three Months Ended September 30 Nine Months Ended September 30 --------------------------------------- --------------------------------------------- In thousands of dollars 1996 1995 Change 1996 1995 Change - ---------------------------------------------------------------------------------------------------------------------------------- AEROSPACE $ 13,102 $ 10,776 +22% $ 37,635 $ 34,083 +10% ELECTRONICS 47,136 47,905 - 2% 144,614 141,084 + 3% FOOD PACKAGING (1) 68,276 69,898 - 2% 205,781 214,722 - 4% MEDICAL (2) 102,111 90,516 +13% 303,396 272,104 +12% OTHER (3) (4) 38,868 49,372 -21% 140,995 156,258 -10% -------- -------- ---------- --------- CONSOLIDATED $269,493 $268,467 $ 832,421 $818,251 + 2% ======== ======== ========== ========= - -----------------------------------------------------------------------------------------------------------------------------------
(1) The effect of businesses acquired increased net sales to the Food Packaging market by $0.7 million, or 1%, for the quarter, and $1.4 million, or 1%, year-to-date. (2) The effect of businesses acquired increased net sales to the Medical market by $2.0 million, or 2%, for the quarter, and $9.5 million, or 3%, year-to-date. (3) The effect of businesses divested decreased net sales in the "Other" category by $10.8 million, or 22%, for the quarter, and $17.3 million, or 11%, 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 SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, (IN THOUSANDS OF DOLLARS) 1996 1995 1995 - ------------------------------ ------------- ------------ ------------- Common stock $24,984 $24,984 $24,984 Paid-in capital 13,938 12,316 12,443 Unrealized losses on investments (350) (128) (247) Unearned compensation on restricted stock (3,331) (1,583) (2,545) Pension liability adjustment (473) (473) --------- --------- --------- $34,768 $35,116 $34,635 ======= ======= =======
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 September 30, 1996 and 1995, and the related condensed statement of income for the three and nine month periods ended September 30, 1996 and 1995, and the condensed statement of cash flows for the nine 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 October 10, 1996 -----END PRIVACY-ENHANCED MESSAGE-----