-----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, D5VNzXihz1Rj1zX4A6+/BsHeDxBPkR9/3OlB5cYCxVBG9WMa7eLjIkGlUqfLmC+i Wq1ohK5aSG0Mnt5irRo0fQ== 0000914039-97-000335.txt : 19971110 0000914039-97-000335.hdr.sgml : 19971110 ACCESSION NUMBER: 0000914039-97-000335 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971107 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: SEC FILE NUMBER: 001-05542 FILM NUMBER: 97709640 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 September 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 October 31, 1997 COMMON STOCK, PAR VALUE $1 23,162,255 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, 1997 and 1996. (b) Exhibit 99b -- Condensed Statement of Financial Position as of September 30, 1997, December 31, 1996, and September 30, 1996. (c) Exhibit 99c -- Condensed Statement of Cash Flows for the nine months ended September 30, 1997 and 1996. (d) Exhibit 99d -- Net Sales by Market for the three months and nine months ended September 30, 1997 and 1996. (e) Exhibit 99e -- Notes to Consolidated Financial Statements. The unaudited financial data included herein as of September 30, 1997 and 1996, 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 Analysis of Operations The Company reported that earnings per share increased 24% to $.62 per share from $.50 per share in the third quarter of 1996 on a sales increase of 6%. Earnings increased 21% to a third quarter record of $14.2 million from $11.7 million in the same period last year. Sales of $286.9 million were a third quarter record and increased 6% compared with sales of $269.5 million in the third quarter last year. A strong 8% increase in unit volume and a 2% increase due to acquisitions were partially offset by a 4% unfavorable effect of currency translation rates. Sales for the nine-month period ended September 30, 1997, were $852.4 million, a 2% increase compared with sales of $832.4 million for the same period last year. An increase in unit volume of 6% was partially offset by a 3% unfavorable effect of currency translation rates and a 1% decrease due to the net effect of acquisitions and divestitures. 3 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Earnings for the nine-month period of 1997 were a record $43.1 million, or $1.87 per share. This represents a 19% increase in earnings from operations and a 22% increase in earnings per share from operations compared with the results from operations for the same period last year of $36.3 million, or $1.53 per share. Total net income for the nine months ended September 30, 1996, of $37.3 million, or $1.57 per share, included a $.04 per share gain from the disposal of product lines. Products with strong performance in the third quarter and nine months ended September 30, 1997 include aerospace adhesive materials, electronic encapsulation materials, nonwoven materials serving the European food market, and sales of products at Life Technologies, Inc. Products with weaker performance for the quarter and year-to-date include food and beverage can coatings serving international markets and medical nonwoven materials in the domestic market. Consolidated gross margin of 36.3% of net sales in the third quarter of 1997 improved 2.0 percentage points from 34.3% in the same period last year. This 2.0 percentage point improvement resulted from strong volume, favorable product mix, and productivity improvements at both wholly owned Dexter businesses and at Life Technologies, Inc. Gross margin on a year-to-date basis was 36%, a 1.7 percentage point improvement over the same period last year. Marketing and administrative costs increased $4.9 million, or 9%, in the third quarter, principally due to costs associated with recently acquired businesses and increased costs at Life Technologies, Inc. On a year-to-date basis, marketing and administrative costs increased 5%, mostly due to Life Technologies, Inc. Other income for the third quarter of 1997 decreased $.8 million, or 26%, due to lower total equity income resulting from the divestiture of D & S Plastics International, which was effective April 1, 1997. 4 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Analysis of Financial Condition Other assets as of September 30, 1997 were $49.1 million, a decrease of $38.1 million and $34.5 million compared with December 31, 1996 and September 30, 1996, respectively. These decreases were primarily due to the divestiture of the Company's 50% equity interest in D & S Plastics International, which was effective April 1, 1997. Current installments of long-term debt as of September 30, 1997 were $31.6 million, an increase of $19.3 million and $18.9 million compared with December 31, 1996 and September 30, 1996, respectively. These increases principally relate to the Company's 9.25% sinking fund debentures and are due to a prepayment of $15 million which will occur in November 1997 and a prepayment of $5 million to be made in December 1997. Long-term debt of $168.5 million as of September 30, 1997 decreased $41.5 million and $40.4 million compared with December 31, 1996 and September 30, 1996, respectively. These decreases were primarily due to the abovementioned reclasses to current installments of long-term debt and a $15 million prepayment in August 1997 of the Company's 9.25% sinking fund debentures. Treasury stock as of September 30, 1997 was $52.5 million, an increase of $16.8 million compared with $35.7 million at December 31, 1996 and an increase of $21.5 million compared with $31 million at September 30, 1996. In 1997, the Company purchased 671,200 shares of its outstanding common stock at an average price of $30.54 per share. In the fourth quarter 1996, the Company purchased 160,400 shares of its outstanding common stock at an average of $32.54 per share. 5 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 -- Third Quarter 1997 Financial Statements and Notes (b) No reports on Form 8-K were filed during the quarter for which this report was filed. 6 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 (Registrant) November 7, 1997 /s/ Kathleen Burdett Date___________________________ ___________________________________ Kathleen Burdett Vice President and Chief Financial Officer (Principal Financial Officer) 7 INDEX TO EXHIBITS Exhibit No. 15 Letter to Securities and Exchange Commission re: Incorporation of Accountants' Report 27 Financial Data Schedule 99 Third 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 October 15, 1997, on our review of the interim financial information of The Dexter Corporation as of September 30, 1997 and 1996, 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, 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 9-MOS DEC-31-1997 SEP-30-1997 86,501 0 196,585 5,966 160,851 483,245 701,220 357,919 952,037 249,409 168,459 0 0 24,984 342,652 952,037 852,413 861,688 545,300 545,300 0 0 15,585 84,557 30,441 43,112 0 0 0 43,112 1.87 0
EX-99 4 EXHIBIT 99 1 EXHIBIT 99a CONDENSED STATEMENT OF INCOME THE DEXTER CORPORATION
- --------------------------------------------------------------------------------------------------- Three Months Ended September 30 Nine Months Ended September 30 In thousands of dollars ------------------------------- ------------------------------ (except per share amounts) 1997 1996 Change 1997 1996 Change - --------------------------------------------------------------------------------------------------- REVENUES Net sales $286,928 $269,493 + 6% $852,413 $832,421 + 2% Other income 2,349 3,182 -26% 9,275 8,379 +11% -------- -------- -------- -------- 289,277 272,675 + 6% 861,688 840,800 + 2% EXPENSES Cost of sales 182,758 176,997 + 3% 545,300 547,278 Marketing and administrative 59,698 54,755 + 9% 175,747 167,149 + 5% Research and development 13,442 12,470 + 8% 40,499 38,488 + 5% Interest 5,287 4,929 + 7% 15,585 15,671 - 1% Gain on divestiture of product lines (2,719) -------- -------- -------- -------- INCOME BEFORE TAXES 28,092 23,524 +19% 84,557 74,933 +13% Income taxes 10,113 8,351 +21% 30,441 26,601 +14% -------- -------- -------- -------- INCOME BEFORE MINORITY INTERESTS 17,979 15,173 +18% 54,116 48,332 +12% Minority interests 3,736 3,432 + 9% 11,004 11,050 -------- -------- -------- -------- NET INCOME $ 14,243 $ 11,741 +21% $ 43,112 $ 37,282 +16% ======== ======== ======== ======== NET INCOME PER SHARE $0.62 $0.50 +24% $1.87 $1.57 +19% DIVIDENDS DECLARED PER SHARE $0.24 $0.22 + 9% $0.72 $0.66 + 9% AVERAGE SHARES OUTSTANDING (000) 22,914 23,545 - 3% 23,037 23,733 - 3% - ---------------------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements. Amounts are unaudited. 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) ------------------------------------------- 1997 1996 1996 - ---------------------------------------------------------------------------------------- ASSETS Cash and short-term securities $ 86,501 $103,420 $ 82,356 Accounts receivable, net 203,265 178,093 200,546 Inventories Materials and supplies 59,860 58,290 57,085 In process and finished 119,622 110,457 107,177 LIFO reserve (18,631) (19,836) (21,231) -------- -------- -------- 160,851 148,911 143,031 Prepaid and deferred expenses 32,628 29,987 31,882 -------- -------- -------- Total current assets 483,245 460,411 457,815 Property, plant and equipment, at cost, net 343,301 334,266 321,912 Excess of cost over net assets of business acquired 76,373 71,906 74,805 Other assets 49,118 87,221 83,575 -------- -------- -------- $952,037 $953,804 $938,107 ======== ======== ======== LIABILITIES & SHAREHOLDERS' EQUITY Short-term debt $ 3,705 $ 5,111 $ 5,501 Current installments of long-term debt 31,553 12,297 12,649 Accounts payable 98,045 91,855 81,568 Accrued liabilities and taxes 108,381 101,691 104,089 Current environmental reserves 2,223 1,358 1,207 Dividends payable 5,502 5,170 5,183 -------- -------- -------- Total current liabilities 249,409 217,482 210,197 Long-term debt 168,459 209,952 208,839 Deferred items 51,394 46,874 48,316 Long-term environmental reserves 14,154 14,978 15,219 Minority interests 100,985 90,403 85,759 Shareholders' equity Common stock and paid-in capital 36,893 36,495 34,768 Retained earnings 402,034 375,480 369,212 Currency translation effects (18,767) (2,187) (3,185) Treasury stock (52,524) (35,673) (31,018) -------- -------- -------- Total shareholders' equity 367,636 374,115 369,777 -------- -------- -------- $952,037 $953,804 $938,107 ======== ======== ======== EQUITY PER SHARE $16.04 $15.94 $15.69 - ----------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements. Amounts as of September 30, 1997 and September 30, 1996 are unaudited. 3 EXHIBIT 99c THE DEXTER CORPORATION
CONDENSED STATEMENT OF CASH FLOWS - ----------------------------------------------------------------------------------------- Nine Months Ended September 30 ------------------------------ In thousands of dollars 1997 1996 - ----------------------------------------------------------------------------------------- OPERATIONS Net income $ 43,112 $ 37,282 Noncash items Depreciation and amortization 33,955 33,537 Gain on divestiture of product lines (2,719) Income taxes not due 1,453 10,839 Minority interests 11,004 11,050 LIFO inventory credit (1,205) (3,478) Equity in net income of affiliates (3,520) (3,196) Other 674 3,658 Operating working capital increase (27,508) (2,886) --------- -------- 57,965 84,087 --------- -------- INVESTMENTS Property, plant and equipment (45,092) (38,455) Acquisitions (20,661) (16,198) Divestitures 41,539 34,913 Joint ventures 2,102 4,047 Proceeds from exercise of LTI stock options 3,164 1,736 Other 3,258 (3,853) --------- -------- (15,690) (17,810) --------- -------- FINANCING Long-term debt (21,197) (6,576) Short-term debt, net (1,256) (8,035) Dividends paid (16,226) (15,782) LTI dividends paid to minority interest shareholders (1,307) (1,133) Purchase of treasury stock (20,517) (21,434) Other 3,069 3,718 --------- -------- (57,434) (49,242) --------- -------- (DECREASE) INCREASE IN CASH AND SHORT-TERM SECURITIES $ (15,159) $ 17,035 ========= ======== 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 86,501 82,356 --------- -------- (Decrease) Increase in cash and short-term securities per Statement of Financial Position (16,919) 16,814 Currency translation effects 1,760 221 --------- -------- $ (15,159) $ 17,035 ========= ======== INTEREST PAID $ 14,178 $ 16,338 TAXES PAID $ 28,988 $ 15,762 - ----------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements. Amounts are unaudited. 4 EXHIBIT 99d
NET SALES BY MARKET THE DEXTER CORPORATION - ---------------------------------------------------------------------------------------------------------------------- Three Months Ended September 30 Nine Months Ended September 30 -------------------------------------- ----------------------------------------- In thousands of dollars 1997 1996 Change 1997 1996 Change - ---------------------------------------------------------------------------------------------------------------------- AEROSPACE $ 15,906 $ 13,102 + 21% $ 45,090 $ 37,635 + 20% ELECTRONICS 55,577 47,136 + 18% 159,426 144,614 + 10% FOOD PACKAGING (1) 70,522 68,276 + 3% 207,800 205,781 + 1% MEDICAL 106,031 102,111 + 4% 320,597 303,396 + 6% OTHER (2) 38,892 38,868 119,500 140,995 - 15% ---------- ----------- ----------- --------- CONSOLIDATED $ 286,928 $ 269,493 + 6% $ 852,413 $ 832,421 + 2% ========== =========== =========== ========= - -----------------------------------------------------------------------------------------------------------------------
(1) The effect of businesses acquired increased net sales to the Food Packaging market by $5.1 million, or 8%, for the quarter, and $12.9 million, or 6%, year-to-date. (2) The effect of businesses divested decreased net sales in the "Other" category by $19.3 million, or 14%, year-to-date. Amounts are unaudited. 5 Exhibit 99e The Dexter Corporation Notes to Consolidated Financial Statements Note 1 -- In the opinion of the 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 the 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. Note 3 -- 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 nine month periods ended September 30, 1997 and 1996 is not expected to be material. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income and Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information (the "Statements"), which become effective for financial statements for periods beginning after December 15, 1997. The Company is currently evaluating the impact of these Statements on its financial reporting practices. Note 4 -- 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) 1997 1996 1996 - ------------------------------ -------- -------- -------- Common stock $ 24,984 $ 24,984 $ 24,984 Paid-in capital 17,111 14,669 13,938 Unrealized losses on investments (427) (174) (350) Unearned compensation on restricted stock (4,571) (2,780) (3,331) Pension liability adjustment (204) (204) (473) -------- -------- -------- $ 36,893 $ 36,495 $ 34,768 ======== ======== ========
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, 1997 and 1996, and the related condensed statement of income for the three and nine month periods then ended, and 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, 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 October 15, 1997 -----END PRIVACY-ENHANCED MESSAGE-----