-----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, KrckZwn0q8sNh9BLDEJcwOmAjTXEbzj5k1UWj4dLw+I2RkfMTjtYKbwM6OOWCosS ZEyTQ1iaoYXyWW5RmlxVKA== 0000914039-97-000256.txt : 19970804 0000914039-97-000256.hdr.sgml : 19970804 ACCESSION NUMBER: 0000914039-97-000256 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970801 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: 97650114 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, 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 June 30, 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 July 31, 1997 - -------------------------- ---------------------------- COMMON STOCK, PAR VALUE $1 23,140,476 SHARES - -------------------------- ---------------------------- 2 PART I FINANCIAL INFORMATION Item 1 - Financial Statements Reference is made to the following consolidated financial statements which are incorporated herein by reference: (a) Exhibit 99a - Condensed Statement of Income for the three months and six months ended June 30, 1997 and 1996. (b) Exhibit 99b - Condensed Statement of Financial Position as of June 30, 1997, December 31, 1996, and June 30, 1996. (c) Exhibit 99c - Condensed Statement of Cash Flows for the six months ended June 30, 1997 and 1996. (d) Exhibit 99d - Net Sales by Market for the three months and six months ended June 30, 1997 and 1996. (e) Exhibit 99e - Notes to Consolidated Financial Statements. The unaudited financial data included herein as of June 30, 1997 and 1996, and for the three and six month periods then ended, have been reviewed by the registrant's independent public accountants, Coopers & Lybrand L.L.P., and their report is attached. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations The Company reported that earnings from operations for the second quarter of 1997 were an all time record of $16 million, or $.70 per share. This represents a 23% increase over the comparable earnings per share from operations of $.57 in the same period of 1996. Total net income for the second quarter of 1996 of $14.4 million, or $.61 per share, included a one-time $1 million, or $.04 per share, gain from the disposal of product lines. Sales for the second quarter of 1997 were a record $293.2 million, a 3% increase compared with sales of $285.7 million in the second quarter last year. A strong 8% gain in unit volume was partially offset by a 3% unfavorable effect of currency translation rates and a 2% decrease due to the net effect of acquisitions and divestitures. Sales for the first six months of 1997 were flat compared to prior year at $565.5 million. An increase in unit volume of 5% was offset by a 2% decrease due to the net effect of acquisitions and divestitures, unfavorable effect of currency translation rates of 2%, and price decreases averaging 1%. 3 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Earnings for the first six months of 1997 were a record $28.9 million, or $1.25 per share. This represents an 18% increase in earnings and a 21% increase in earnings per share from operations compared with the results from operations for the first half of 1996 of $24.6 million, or $1.03 per share. Total net income for the six months of 1996 of $25.5 million, or $1.07 per share, included a $.04 per share gain from the disposal of product lines. Products with a particularly strong performance in the second quarter and first six months of 1997 include aerospace adhesive materials, electronic encapsulation materials, and products at Life Technologies, Inc. Although beverage can coatings serving the international markets were weaker compared to the same periods last year, these products have demonstrated a strong trend of improvement through the second quarter. Consolidated gross margin of 36.1% of net sales in the second quarter of 1997 was the best quarterly gross margin since 1990. The 1.8 percentage point improvement from 34.3% in the second quarter of 1996 was the combined result of favorable product mix, strong volume, and productivity improvements at wholly owned Dexter businesses as well as at Life Technologies, Inc. Gross margin on a six-month basis was similarly improved at 35.9%, a 1.7 percentage point increase over the same period last year. Marketing and administrative costs and R&D expense increased in the second quarter and first six months primarily due to increased cost at Life Technologies, Inc. Other income for the first six months of 1997 was $6.9 million, a 33% increase over the same period last year. This was principally due to higher equity income in the first quarter of 1997 from D & S Plastics International, which was divested effective April 1, 1997, and higher royalty income at Life Technologies, Inc. 4 PART II OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K (a) Exhibit 15 of Part 1 - Letter to Securities and Exchange Commission re: Incorporation of Accountants' Report Exhibit 27 of Part 1 - Financial Data Schedule Exhibit 99 of Part 1 - Second 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 August 1, 1997 /s/ Kathleen Burdett Date ------------------------ --------------------------- Kathleen Burdett Vice President and Chief Financial Officer (Principal Financial Officer) August 1, 1997 /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 Second 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 July 16, 1997, on our review of the interim financial information of The Dexter Corporation as of June 30, 1997 and 1996, and for the three and six month periods then ended, and included in this Form 10-Q is incorporated by reference in the company's registration statements on Form S-8, Registration Nos. 2-63959, 33-27597, 33-53307, 33-53309, 333-02985, and 333-04081. Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not be considered a part of the registration statements prepared or certified by us within the meaning of Sections 7 and 11 of that Act. /s/ Coopers & Lybrand L.L.P. COOPERS & LYBRAND L.L.P. Springfield, Massachusetts August 1, 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. 6-MOS DEC-31-1997 JUN-30-1997 100,529 0 200,504 5,876 156,835 497,100 686,772 350,244 959,847 248,011 188,807 0 0 24,984 335,687 959,847 565,485 572,411 362,542 362,542 0 0 10,298 56,465 20,328 28,869 0 0 0 28,869 1.25 0
EX-99 4 EXHIBIT 99 1 EXHIBIT 99A THE DEXTER CORPORATION CONDENSED STATEMENT OF INCOME
Three Months Ended June 30 Six Months Ended June 30 In thousands of dollars ------------------------------------- ------------------------------------ (except per share amounts) 1997 1996 Change 1997 1996 Change - -------------------------------------------------------------------------------------------------------------------- REVENUES Net sales $ 293,225 $ 285,701 + 3% $565,485 $562,928 Other income 2,702 3,022 - 11% 6,926 5,197 + 33% --------- --------- -------- -------- 295,927 288,723 + 2% 572,411 568,125 + 1% EXPENSES Cost of sales 187,240 187,756 362,542 370,281 - 2% Marketing and administrative 58,999 56,157 + 5% 116,049 112,394 + 3% Research and development 13,716 13,175 + 4% 27,057 26,018 + 4% Interest 5,489 5,376 + 2% 10,298 10,742 - 4% Gain on divestiture of product lines (2,719) (2,719) --------- --------- -------- -------- INCOME BEFORE TAXES 30,483 28,978 + 5% 56,465 51,409 + 10% Income taxes 10,975 10,287 + 7% 20,328 18,250 + 11% --------- --------- -------- -------- INCOME BEFORE MINORITY INTERESTS 19,508 18,691 + 4% 36,137 33,159 + 9% Minority interests 3,511 4,298 - 18% 7,268 7,618 - 5% --------- --------- -------- -------- NET INCOME $ 15,997 $ 14,393 + 11% $ 28,869 $ 25,541 + 13% ========= ========= ======== ======== NET INCOME PER SHARE $ 0.70 $ 0.61 + 15% $ 1.25 $ 1.07 + 17% DIVIDENDS DECLARED PER SHARE $ 0.24 $ 0.22 + 9% $ 0.48 $ 0.44 + 9% AVERAGE SHARES OUTSTANDING (000) 22,924 23,657 - 3% 23,099 23,828 - 3% - --------------------------------------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements. 2 EXHIBIT 99B THE DEXTER CORPORATION CONDENSED STATEMENT OF FINANCIAL POSITION
June 30 December 31 June 30 In thousands of dollars ----------------------------------------- (except per share amounts) 1997 1996 1996 - ---------------------------------------------------------------------------------------- ASSETS Cash and short-term securities $ 100,529 $ 103,420 $ 75,058 Accounts receivable, net 207,166 178,093 202,586 Inventories Materials and supplies 58,394 58,290 58,761 In process and finished 117,274 110,457 111,640 LIFO reserve (18,833) (19,836) (22,502) --------- --------- --------- 156,835 148,911 147,899 Prepaid and deferred expenses 32,570 29,987 33,035 --------- --------- --------- Total current assets 497,100 460,411 458,578 Property, plant and equipment, at cost, net 336,528 334,266 311,878 Excess of cost over net assets of businesses acquired 76,305 71,906 73,433 Other assets 49,914 87,221 82,416 --------- --------- --------- $ 959,847 $ 953,804 $ 926,305 ========= ========= ========= LIABILITIES & SHAREHOLDERS' EQUITY Short-term debt $ 10,610 $ 5,111 $ 3,979 Current installments of long-term debt 26,578 12,297 17,903 Accounts payable 98,147 91,855 83,376 Accrued liabilities and taxes 105,081 101,691 99,371 Current environmental reserves 2,102 1,358 1,268 Dividends payable 5,493 5,170 5,175 --------- --------- --------- Total current liabilities 248,011 217,482 211,072 Long-term debt 188,807 209,952 208,660 Deferred items 50,460 46,874 47,876 Long-term environmental reserves 14,220 14,978 15,361 Minority interests 97,678 90,403 83,411 Shareholders' equity Common stock and paid-in capital 36,038 36,495 34,169 Retained earnings 393,293 375,480 362,654 Currency translation effects (15,412) (2,187) (5,206) Treasury stock (53,248) (35,673) (31,692) --------- --------- --------- Total shareholders' equity 360,671 374,115 359,925 --------- --------- --------- $ 959,847 $ 953,804 $ 926,305 ========= ========= ========= EQUITY PER SHARE $ 15.75 $ 15.94 $ 15.30 - ----------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements. 3 EXHIBIT 99C THE DEXTER CORPORATION CONDENSED STATEMENT OF CASH FLOWS
Six Months Ended June 30 -------------------------- In thousands of dollars 1997 1996 - ----------------------------------------------------------------------------------- OPERATIONS Net income $ 28,869 $ 25,541 Noncash items Depreciation and amortization 22,585 22,903 Gain on divestiture of product lines (2,719) Income taxes not due 803 10,250 Minority interests 7,268 7,618 LIFO inventory credit (1,003) (2,207) Equity in net income of affiliates (2,997) (2,076) Other (74) 3,367 Operating working capital increase (27,310) (12,182) --------- -------- 28,141 50,495 --------- -------- INVESTMENTS Property, plant and equipment (27,380) (22,942) Acquisitions (19,175) (12,332) Divestitures 41,578 34,913 Joint ventures 1,468 3,246 Proceeds from exercise of LTI stock options 2,434 1,250 Other 2,173 (3,656) --------- -------- 1,098 479 --------- -------- FINANCING Long-term debt (6,160) (1,344) Short-term debt, net 5,512 (9,570) Dividends paid (10,733) (10,607) LTI dividends paid to minority interest shareholders (870) (709) Purchase of treasury stock (20,517) (21,434) Other 1,663 2,645 --------- -------- (31,105) (41,019) --------- -------- (DECREASE) INCREASE IN CASH AND SHORT-TERM SECURITIES $ (1,866) $ 9,955 ========= ======== RECONCILIATION OF (DECREASE) INCREASE 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 100,529 75,058 --------- -------- (Decrease) Increase in cash and short-term securities per Statement of Financial Position (2,891) 9,516 Currency translation effects 1,025 439 --------- -------- $ (1,866) $ 9,955 ========= ======== INTEREST PAID $ 9,679 $ 10,741 TAXES PAID $ 19,525 $ 8,000
- -------------------------------------------------------------------------------- See accompanying notes to the consolidated financial statements. 4 EXHIBIT 99D THE DEXTER CORPORATION NET SALES BY MARKET
Three Months Ended June 30 Six Months Ended June 30 ------------------------------- --------------------------------- In thousands of dollars 1997 1996 Change 1997 1996 Change - ------------------------------------------------------------------------------------------------ AEROSPACE $ 15,713 $ 12,506 +26% $ 29,184 $ 24,533 +19% ELECTRONICS 54,018 48,022 +12% 103,849 97,478 + 7% FOOD PACKAGING (1) 72,454 70,124 + 3% 137,278 137,505 MEDICAL 109,163 102,535 + 6% 214,566 201,285 + 7% OTHER (2) 41,877 52,514 -20% 80,608 102,127 -21% -------- -------- -------- -------- CONSOLIDATED $293,225 $285,701 + 3% $565,485 $562,928 ======== ======== ======== ========
- -------------------------------------------------------------------------------- (1) The effect of businesses acquired increased net sales to the Food Packaging market by $5.1 million, or 7%, for the quarter, and $7.8 million, or 6%, year-to-date. (2) The effect of businesses divested decreased net sales in the "Other" category by $10.2 million, or 19%, for the quarter, and $19.3 million, or 19%, year-to-date. 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 of the Statement on the calculation of earnings per share amounts for the three and six month periods ended June 30, 1997 and 1996 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 JUNE 30, DECEMBER 31, JUNE 30, (IN THOUSANDS OF DOLLARS) 1997 1996 1996 - ------------------------------ -------- ------------ -------- Common stock $ 24,984 $ 24,984 $ 24,984 Paid-in capital 16,142 14,669 13,761 Unrealized losses on investments (375) (174) (490) Unearned compensation on restricted stock (4,509) (2,780) (3,613) Pension liability adjustment (204) (204) (473) -------- -------- -------- $ 36,038 $ 36,495 $ 34,169 ======== ======== ========
6 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Board of Directors of The Dexter Corporation We have reviewed the accompanying condensed statement of financial position of The Dexter Corporation as of June 30, 1997 and 1996, and the related condensed statement of income for the three and six month periods then ended, and condensed statement of cash flows for the six month period 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 July 16, 1997 -----END PRIVACY-ENHANCED MESSAGE-----