-----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, DxGJuMyfX8DNR+2dkbIdP4SvQpqZglFhXPb4UfA2Ra8mcsuvP4bvkx3xO04npyyP r+eqKqSPKk7b5fH1x1dvxQ== 0000914039-97-000163.txt : 19970513 0000914039-97-000163.hdr.sgml : 19970513 ACCESSION NUMBER: 0000914039-97-000163 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970512 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: 97600868 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 March 31, 1997 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 April 30, 1997 - -------------------------- ----------------------------- COMMON STOCK, PAR VALUE $1 23,032,526 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 ended March 31, 1997 and 1996. (b) Exhibit 99b - Condensed Statement of Financial Position as of March 31, 1997, December 31, 1996, and March 31, 1996. (c) Exhibit 99c - Condensed Statement of Cash Flows for the three months ended March 31, 1997 and 1996. (d) Exhibit 99d - Net Sales by Market for the three months ended March 31, 1997 and 1996. (e) Exhibit 99e - Notes to Consolidated Financial Statements. The unaudited financial data included herein as of March 31, 1997 and 1996, and for the three-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 record first quarter earnings of $12.9 million, or $.55 per share, compared with $11.1 million, or $.46 per share, for the first quarter of 1996. Net income increased 15% while earnings per share improved 20% in the first quarter. Sales for the first quarter of 1997 were $272.3 million, a 2% decrease compared with sales of $277.2 million, in the first quarter of 1996. A 3% gain in unit volume was more than offset by a 2% decrease due to net effect of acquisitions and divestitures, a 2% unfavorable effect of currency exchange rates, and price decreases averaging 1%. Products with strong performance in the first quarter include aerospace adhesive materials, liquid encapsulant materials serving the electronics market, medical nonwoven material, and sales of products at Life Technologies, Inc. other than fetal bovine serum. Products with weaker performance include magnetic materials, beverage can coatings serving the international markets, and fetal bovine serum. Other income was $4.2 million for the first quarter of 1997, an increase of $2.0 million over the first quarter of 1996. This increase is primarily due to higher equity income from companies owned 50% or less, principally D & S Plastics International in addition to higher royalty income at Life Technologies, Inc. 3 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Consolidated gross margin of 35.6% of net sales in the first quarter of 1997 improved by 1.4 percentage points from 34.2% in the first quarter of 1996. This increase is primarily attributable to higher gross margins at Life Technologies, Inc., and the net favorable effect of lower raw material costs offset by lower selling prices at wholly owned Dexter businesses. Marketing and administrative costs and R&D expense increased in the first quarter of 1997 due to increased cost at Life Technologies, Inc. Effective April 1, 1997, the Company completed the divestiture of its 50% interest of D & S Plastics International, an equally owned joint venture between The Dexter Corporation and the Solvay Group to Solvay America, Inc. of Houston, Texas. D & S Plastics is the largest North American supplier of elastomer modified thermoplastic olefins (TPO) to the automotive industry and a recognized leader in TPO applications engineering. 4 PART II OTHER INFORMATION Item 4 - Submission of Matters to a Vote of Security Holders The annual meeting of the shareholders of the Company was held on April 24, 1997, where the following actions were taken: (a) The re-election to the Board of Directors of Mr. Charles H. Curl, president of Curl & Associates; Peter G. Kelly, Esq., chairman of Updike, Kelly & Spellacy, P.C.; and Mr. Jean-Francois Saglio, president of the French National Institute for the Environment and president of ERSO. The votes for each director were as follows:
Director For Withheld -------- --- -------- Charles H. Curl 18,859,072 2,705,870 Peter G. Kelly 18,762,561 2,802,381 Jean-Francois Saglio 19,184,828 2,380,114
In addition, the following directors continue in office for the terms expiring as indicated: Mr. Robert M. Furek (1998), Mrs. Martha Clark Goss (1998), Mr. Edgar G. Hotard (1998), Glen L. Urban, Ph.D. (1998), Ms. Henrietta Holsman Fore (1999), Mr. Bernard M. Fox (1999), Mr. K. Grahame Walker (1999), and George M. Whitesides, Ph.D. (1999). (b) The selection of Coopers & Lybrand L.L.P. as auditors of the Company for the year 1997 was ratified. The votes for selection of Coopers & Lybrand L.L.P. were as follows:
For Against Abstain --- ------- ------- 21,502,368 22,429 40,145
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' Report Exhibit 27 of Part 1 - Financial Data Schedule Exhibit 99 of Part 1 - First Quarter 1997 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 May 9, 1997 /s/ Kathleen Burdett ----------------------------- -------------------------------- Kathleen Burdett Vice President and Chief Financial Officer (Principal Financial Officer) Date May 9, 1997 /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 First Quarter 1997 Financial Statements and Notes EX-15 2 EXHIBIT 15 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 April 10, 1997, on our review of the interim financial information of The Dexter Corporation as of March 31, 1997 and 1996, and for the three 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 May 9, 1997 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-31-1997 MAR-31-1997 62,120 0 187,389 5,652 155,980 444,594 675,255 342,935 946,752 226,410 208,339 0 0 24,984 331,225 946,752 272,260 276,484 175,302 175,302 0 0 4,809 25,982 9,353 12,872 0 0 0 12,872 .55 0
EX-99 4 EXHIBIT 99 1 EXHIBIT 99a THE DEXTER CORPORATION CONDENSED STATEMENT OF INCOME - --------------------------------------------------------------------------------
Three Months Ended March 31 In thousands of dollars -------------------------------------- (except per share amounts) 1997 1996 Change - -------------------------------------------------------------------------------- REVENUES Net sales $272,260 $277,227 - 2% Other income 4,224 2,175 +94% -------- -------- 276,484 279,402 - 1% EXPENSES Cost of sales 175,302 182,525 - 4% Marketing and administrative 57,050 56,237 + 1% Research and development 13,341 12,843 + 4% Interest 4,809 5,366 -10% -------- -------- INCOME BEFORE TAXES 25,982 22,431 +16% Income taxes 9,353 7,963 +17% -------- -------- INCOME BEFORE MINORITY INTERESTS 16,629 14,468 +15% Minority interests 3,757 3,320 +13% -------- -------- NET INCOME $ 12,872 $ 11,148 +15% ======== ======== NET INCOME PER SHARE $ 0.55 $ 0.46 +20% DIVIDENDS DECLARED PER SHARE $ 0.24 $ 0.22 + 9% AVERAGE SHARES OUTSTANDING (000) 23,275 23,999 - 3%
- ------------------------------------------------------------------------------- See accompanying notes to the consolidated financial statements. 2 EXHIBIT 99b THE DEXTER CORPORATION CONDENSED STATEMENT OF FINANCIAL POSITION - --------------------------------------------------------------------------------
In thousands of dollars MARCH 31 December 31 March 31 (except per share amounts) 1997 1996 1996 - --------------------------------------------------------------------------------------------- ASSETS Cash and short-term securities $ 62,120 $ 103,420 $ 57,222 Accounts receivable, net 192,099 178,093 209,415 Inventories Materials and supplies 58,662 58,290 58,057 In process and finished 116,721 110,457 128,152 LIFO reserve (19,403) (19,836) (23,886) --------- --------- -------- 155,980 148,911 162,323 Prepaid and deferred expenses 34,395 29,987 35,045 --------- --------- -------- Total current assets 444,594 460,411 464,005 Property, plant and equipment, at cost, net 332,320 334,266 324,478 Excess of cost over net assets of businesses acquired 80,366 71,906 79,744 Other assets 89,472 87,221 76,753 --------- --------- -------- $ 946,752 $ 953,804 $944,980 ========= ========= ======== LIABILITIES & SHAREHOLDERS' EQUITY Short-term debt $ 5,500 $ 5,111 $ 25,119 Current installments of long-term debt 11,914 12,297 13,053 Accounts payable 97,904 91,855 90,792 Accrued liabilities and taxes 103,416 101,691 89,850 Current environmental reserves 2,117 1,358 1,364 Dividends payable 5,559 5,170 5,256 --------- --------- -------- Total current liabilities 226,410 217,482 225,434 Long-term debt 208,339 209,952 214,874 Deferred items 49,900 46,874 48,184 Long-term environmental reserves 14,278 14,978 15,480 Minority interests 91,616 90,403 79,204 Shareholders' equity Common stock and paid-in capital 36,925 36,495 35,172 Retained earnings 382,788 375,480 353,436 Currency translation effects (16,791) (2,187) (2,222) Treasury stock (46,713) (35,673) (24,582) --------- --------- -------- Total shareholders' equity 356,209 374,115 361,804 --------- --------- -------- $ 946,752 $ 953,804 $944,980 ========= ========= ======== EQUITY PER SHARE $ 15.41 $ 15.94 $ 15.19
- -------------------------------------------------------------------------------- See accompanying notes to the consolidated financial statements. 3 EXHIBIT 99c THE DEXTER CORPORATION CONDENSED STATEMENT OF CASH FLOWS - --------------------------------------------------------------------------------
Three Months Ended March 31 ---------------------------- In thousands of dollars 1997 1996 - -------------------------------------------------------------------------------------- OPERATIONS Net income $ 12,872 $ 11,148 Noncash items Depreciation and amortization 10,993 11,438 Income taxes not due 5,379 7,620 Minority interests 3,757 3,320 LIFO inventory credit (433) (823) Equity in net income of affiliates (2,351) (638) Other 402 1,344 Operating working capital increase (26,756) (18,849) --------- -------- 3,863 14,560 --------- -------- INVESTMENTS Property, plant and equipment (11,629) (10,116) Acquisitions (17,002) (7,203) Joint ventures (449) 227 Proceeds from exercise of LTI stock options 615 679 Other 2,066 (503) --------- -------- (26,399) (16,916) --------- -------- FINANCING Long-term debt (705) (914) Short-term debt, net 605 11,546 Dividends paid (5,175) (5,351) LTI dividends paid to minority interest shareholders (428) (351) Purchase of treasury stock (11,317) (10,279) Other 13 (256) --------- -------- (17,007) (5,605) --------- -------- DECREASE IN CASH AND SHORT-TERM SECURITIES $ (39,543) $ (7,961) ========= ======== RECONCILIATION OF DECREASE IN CASH AND SHORT-TERM SECURITIES Cash and short-term securities at beginning of period $ 103,420 $ 65,542 Cash and short-term securities at end of period 62,120 57,222 --------- -------- Decrease in cash and short-term securities per Statement of Financial Position (41,300) (8,320) Currency translation effects 1,757 359 --------- -------- $ (39,543) $ (7,961) ========= ======== INTEREST PAID $ 3,715 $ 4,216 TAXES PAID $ 3,974 $ 343
- -------------------------------------------------------------------------------- See accompanying notes to the consolidated financial statements. 4 EXHIBIT 99d THE DEXTER CORPORATION NET SALES BY MARKET
- ----------------------------------------------------------------------------- Three Months Ended March 31 ----------------------------------------- In thousands of dollars 1997 1996 Change - ----------------------------------------------------------------------------- AEROSPACE $ 13,471 $ 12,027 +12% ELECTRONICS 49,831 49,456 + 1% FOOD PACKAGING (1) 64,824 67,381 - 4% MEDICAL 105,403 98,750 + 7% OTHER (2) 38,731 49,613 -22% -------- -------- CONSOLIDATED $272,260 $277,227 - 2% ======== ========
- -------------------------------------------------------------------------------- (1) The effect of businesses acquired increased net sales to the Food Packaging market by $2.6 million, or 4%. (2) The effect of businesses divested decreased net sales in the "Other" category by $9.1 million, or 18%. 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 material dilutive effect would result from the inclusion of these items. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings per Share (the "Statement"), which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. The impact is not expected to change the earnings per share for the first quarter ended March 31, 1997 and March 31, 1996. The impact of the Statement on the calculation of diluted earnings per share for these quarters is not expected to be material. Note 3 - 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) 1997 1996 1996 - ------------------------------ --------- ------------ --------- Common stock $24,984 $24,984 $24,984 Paid-in capital 14,714 14,669 12,510 Unrealized losses on investments (174) (174) (300) Unearned compensation on restricted stock (2,395) (2,780) (1,549) Pension liability adjustment (204) (204) (473) ------- ------- ------- $36,925 $36,495 $35,172 ======= ======= =======
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 March 31, 1997 and 1996, and the related condensed statements of 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 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, 1996, 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 4, 1997, we expressed an opinion which included an explanatory paragraph regarding the adoption of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and SFAS No. 123, "Accounting for Stock-Based Compensation" on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed statement of financial position as of December 31, 1996, 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 April 10, 1997 -----END PRIVACY-ENHANCED MESSAGE-----