-----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, SV1uwCcH6Ebb67OGv1c9BiMYhrHYFRQsjpTdfcim5rMBppVQI5nSLvsCi6ozToTl agW/RrYN2ByF26CtaCwMcA== 0000914039-98-000321.txt : 19980814 0000914039-98-000321.hdr.sgml : 19980814 ACCESSION NUMBER: 0000914039-98-000321 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 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: 98684879 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, 1998 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 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, 1998 COMMON STOCK, PAR VALUE $1 23,033,879 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 and six-month periods ended June 30, 1998 and 1997. (b) Exhibit 99b - Condensed Statement of Financial Position as of June 30, 1998, December 31, 1997, and June 30, 1997. (c) Exhibit 99c - Condensed Statement of Cash Flows for the six-month periods ended June 30, 1998 and 1997. (d) Exhibit 99d - Statement of Comprehensive Income for the three and six-month periods ended June 30, 1998 and 1997. (e) Exhibit 99e - Net Sales by Market for the three and six-month periods ended June 30, 1998 and 1997. (f) Exhibit 99f - Notes to Consolidated Financial Statements. The unaudited financial data included herein as of June 30, 1998 and 1997, and for the three and six-month periods then ended, have been reviewed by the registrant's independent public accountants, PricewaterhouseCoopers LLP, 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 record second quarter 1998 net income of $16.4 million, or $.70 per share on a diluted basis, compared with $16 million, or $.69 per share diluted for the second quarter of 1997. Net income increased 3% while both diluted and basic earnings per share increased 1% compared with the second quarter of 1997. Sales for the second quarter of 1998 were a record $302.6 million, a 3% increase compared with sales of $293.2 million in the second quarter of 1997. A 4% increase in unit volume and a 2% increase due to acquisitions were partially offset by a 2% unfavorable effect of currency translation rates and price decreases averaging 1%. 3 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Analysis of Operations, continued Sales for the six-month period ended June 30, 1998 increased $27 million, or 5%, to a record $592.5 million compared with sales of $565.5 million in 1997. A 5% increase in unit volume and a 3% increase due to acquisitions were partially offset by a 2% unfavorable effect of currency translation rates and price decreases averaging 1%. Earnings for the first six months of 1998 were a record $30.6 million, or $1.31 per share on a diluted basis, compared with $28.9 million, or $1.23 per share diluted, for the first six months of 1997. This represents a 6% increase in net income and basic earnings per share and a 7% increase in diluted earnings per share. Products with strong performance in the second quarter and first six months of 1998 include aerospace adhesives and coatings, food and specialty can coatings serving international markets, and sales of products at Life Technologies, Inc. Sales of nonwoven materials serving the food packaging market were stronger in the second quarter of 1998 compared with the second quarter of 1997, and sales of magnetic materials were stronger for the first six months of 1998 compared with last year. Sales of electronic encapsulation materials were weaker in the second quarter of 1998 compared with the second quarter of 1997. Additionally, printed wiring board products serving the electronics market had weaker performance in both the second quarter and first six months of 1998. Sales of beer and beverage can coatings serving international markets showed improvement over the first quarter of 1998 but were still below 1997 levels. Consolidated gross margin of 36.6% in the second quarter of 1998, stated as a percentage of sales, increased .5 percentage points compared with 36.1% for the second quarter of 1997. Gross margin of 36.5% for the first six months of 1998 increased .6 percentage points compared with 35.9% for the same period last year. These improvements came from wholly owned Dexter operations, primarily due to volume increases and productivity improvements. Marketing and administrative costs increased $2.9 million, or 5%, in the second quarter of 1998 and $7.9 million, or 7%, for the first six months of 1998 compared with the same periods in 1997. These increases were principally due to increased costs at Life Technologies, Inc. and marketing and administrative costs associated with businesses acquired in the fourth quarter of 1997. Other income for the first six months of 1998 of $4.7 million decreased $2.3 million, or 33%, compared with the first six months of 1997, primarily due to lower equity income resulting from the divestiture of D & S Plastics International, which was effective April 1, 1997, and lower interest income. The impact of lower other income for the first six months of 1998 was partially offset by lower interest expense and a lower effective tax rate of 35% in 1998 compared with 36% in 1997. 4 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Analysis of Financial Condition Excess acquisition cost as of June 30, 1998 was $93.8 million, an increase of $17.5 million, compared with $76.3 million as of June 30, 1997. This increase was primarily due to an increase of $24.7 million related to the impact of businesses acquired in the fourth quarter of 1997, which was partially offset by $6.6 million of amortized costs. Other assets as of June 30, 1998 were $74.4 million, an increase of $24.5 million, compared with $49.9 million as of June 30, 1997. This increase was primarily due to an increase of $23.1 million for patents, technology, formulas, and covenants related to businesses acquired in the fourth quarter of 1997. 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 - Second Quarter 1998 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. DEXTER CORPORATION (Registrant) Date August 13, 1998 /s/ Kathleen Burdett --------------- ----------------------------- Kathleen Burdett Vice President and Chief Financial Officer (Principal Financial Officer) Date August 13, 1998 /s/ Glenn E. Tynan --------------- ----------------------------- Glenn E. Tynan Controller (Principal Accounting Officer) 7 INDEX TO EXHIBITS Exhibit No. 15 Letter to Securities and Exchange Commission re: Incorporation of Accountants' Report 27 Financial Data Schedule 99 Second Quarter 1998 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 15, 1998 on our review of the interim financial information of Dexter Corporation as of June 30, 1998 and 1997 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, 333-04081, and 333-42663. 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/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Springfield, Massachusetts August 13, 1998 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 6-MOS DEC-31-1998 JUN-30-1998 70,256 0 207,530 6,777 167,054 477,670 739,381 383,049 1,002,210 244,586 179,764 0 0 24,984 368,819 1,002,210 592,528 597,198 376,377 376,377 0 0 8,679 59,743 20,910 30,647 0 0 0 30,647 1.33 1.31
EX-99 4 EXHIBIT 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) 1998 1997 Change 1998 1997 Change - ------------------------------------------------------------------------------------------------------------------------------ REVENUES Net sales $ 302,613 $ 293,225 + 3% $ 592,528 $ 565,485 + 5% Other income 2,384 2,702 - 12% 4,670 6,926 - 33% --------- --------- --------- --------- 304,997 295,927 + 3% 597,198 572,411 + 4% EXPENSES Cost of sales 191,813 187,240 + 2% 376,377 362,542 + 4% Marketing and administrative 61,889 58,999 + 5% 123,933 116,049 + 7% Research and development 14,390 13,716 + 5% 28,466 27,057 + 5% Interest 4,371 5,489 - 20% 8,679 10,298 - 16% --------- --------- --------- --------- INCOME BEFORE TAXES 32,534 30,483 + 7% 59,743 56,465 + 6% Income taxes 11,387 10,975 + 4% 20,910 20,328 + 3% --------- --------- --------- --------- INCOME BEFORE MINORITY INTERESTS 21,147 19,508 + 8% 38,833 36,137 + 7% Minority interests 4,730 3,511 + 35% 8,186 7,268 + 13% --------- --------- --------- --------- NET INCOME $ 16,417 $ 15,997 + 3% $ 30,647 $ 28,869 + 6% ========= ========= ========= ========= NET INCOME PER SHARE - BASIC $ 0.71 $ 0.70 + 1% $ 1.33 $ 1.25 + 6% NET INCOME PER SHARE - DILUTED $ 0.70 $ 0.69 + 1% $ 1.31 $ 1.23 + 7% DIVIDENDS DECLARED PER SHARE $ 0.26 $ 0.24 + 8% $ 0.50 $ 0.48 + 4% AVERAGE SHARES OUTSTANDING (000) - BASIC 23,012 22,924 22,979 23,099 - 1% AVERAGE SHARES OUTSTANDING (000) - DILUTED 23,258 23,074 + 1% 23,231 23,246 - ------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements. Amounts are unaudited. 2 EXHIBIT 99b DEXTER CORPORATION CONDENSED STATEMENT OF FINANCIAL POSITION
- --------------------------------------------------------------------------------------------------- JUNE 30 December 31 June 30 In thousands of dollars ------------------------------------------------- (except per share amounts) 1998 1997 1997 - --------------------------------------------------------------------------------------------------- ASSETS Cash and short-term securities $ 70,256 $ 68,306 $ 100,529 Accounts receivable, net 212,129 185,257 207,166 Inventories Materials and supplies 64,160 61,233 58,394 In process and finished 121,223 117,467 117,274 LIFO reserve (18,329) (18,799) (18,833) ----------- ----------- ----------- 167,054 159,901 156,835 Prepaid and deferred expenses 28,231 26,988 32,570 ----------- ----------- ----------- Total current assets 477,670 440,452 497,100 Property, plant and equipment, at cost, net 356,332 348,172 336,528 Excess of cost over net assets of businesses acquired 93,818 97,507 76,305 Other assets 74,390 75,645 49,914 ----------- ----------- ----------- $ 1,002,210 $ 961,776 $ 959,847 =========== =========== =========== LIABILITIES & SHAREHOLDERS' EQUITY Short-term debt $ 34,189 $ 35,361 $ 10,610 Current installments of long-term debt 12,914 13,340 26,578 Accounts payable 98,374 91,155 98,147 Accrued liabilities and taxes 91,158 89,076 105,081 Current environmental reserves 1,962 2,099 2,102 Dividends payable 5,989 5,505 5,493 ----------- ----------- ----------- Total current liabilities 244,586 236,536 248,011 Long-term debt 179,764 180,030 188,807 Deferred items 55,690 54,197 50,460 Long-term environmental reserves 13,609 13,726 14,220 Minority interests 114,758 104,426 97,678 Shareholders' equity Common stock and paid-in capital 37,699 38,158 36,617 Retained earnings 428,994 409,844 393,293 Treasury stock (49,629) (52,216) (53,248) Accumulated other comprehensive income (23,261) (22,925) (15,991) ----------- ----------- ----------- Total shareholders' equity 393,803 372,861 360,671 ----------- ----------- ----------- $ 1,002,210 $ 961,776 $ 959,847 =========== =========== =========== EQUITY PER SHARE $ 17.10 $ 16.26 $ 15.75 - ---------------------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements. Amounts as of June 30, 1998 and June 30, 1997 are unaudited. 3 EXHIBIT 99c DEXTER CORPORATION CONDENSED STATEMENT OF CASH FLOWS
- -------------------------------------------------------------------------------------- Six Months Ended June 30 -------------------------- In thousands of dollars 1998 1997 - -------------------------------------------------------------------------------------- OPERATIONS Net income $ 30,647 $ 28,869 Noncash items Depreciation and amortization 26,035 22,585 Income taxes not due 6,375 803 Minority interests 8,186 7,268 LIFO inventory credit (470) (1,003) Equity in net income of affiliates (1,336) (2,997) Other 417 (74) Operating working capital increase (30,670) (27,310) --------- --------- 39,184 28,141 --------- --------- INVESTMENTS Property, plant and equipment (34,247) (27,380) Acquisitions (1,047) (19,175) Divestitures 41,578 Joint ventures 2,020 1,468 Proceeds from exercise of LTI stock options 3,168 2,434 Other 13 2,173 --------- --------- (30,093) 1,098 --------- --------- FINANCING Long-term debt, net 5,193 (6,160) Short-term debt, net (1,059) 5,512 Dividends paid (11,013) (10,733) LTI dividends paid to minority interest shareholders (1,136) (870) Purchase of treasury stock (20,517) Other 1,117 1,663 --------- --------- (6,898) (31,105) --------- --------- INCREASE (DECREASE) IN CASH AND SHORT-TERM SECURITIES $ 2,193 $ (1,866) ========= ========= RECONCILIATION OF INCREASE (DECREASE) IN CASH AND SHORT-TERM SECURITIES Cash and short-term securities at beginning of period $ 68,306 $ 103,420 Cash and short-term securities at end of period 70,256 100,529 --------- --------- Increase (Decrease) in cash and short-term securities per Statement of Financial Position 1,950 (2,891) Currency translation effects 243 1,025 --------- --------- $ 2,193 $ (1,866) ========= =========
Property, plant and equipment for the six months ended June 30, 1998 includes $4,635 related to the exercise of an option to purchase land under a capital lease by Life Technologies, Inc. - -------------------------------------------------------------------------------- See accompanying notes to the consolidated financial statements. Amounts are unaudited. 4 EXHIBIT 99d DEXTER CORPORATION STATEMENT OF COMPREHENSIVE INCOME
- ------------------------------------------------------------------------------------------------------------ Three Months Ended June 30 Six Months Ended June 30 -------------------------- ------------------------ In thousands of dollars 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------ NET INCOME $ 16,417 $ 15,997 $ 30,647 $ 28,869 -------- -------- -------- -------- OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX Currency translation effects (389) 1,379 (142) (13,225) Unrealized losses on investments (156) (201) (194) (201) -------- -------- -------- -------- OTHER COMPREHENSIVE INCOME (LOSS) (545) 1,178 (336) (13,426) -------- -------- -------- -------- COMPREHENSIVE INCOME $ 15,872 $ 17,175 $ 30,311 $ 15,443 ======== ======== ======== ======== - ------------------------------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements. Amounts are unaudited. 5 EXHIBIT 99e DEXTER CORPORATION NET SALES BY MARKET
- -------------------------------------------------------------------------------------------------------------- Three Months Ended June 30 Six Months Ended June 30 --------------------------------- -------------------------------------- In thousands of dollars 1998 1997 Change 1998 1997 Change - -------------------------------------------------------------------------------------------------------------- AEROSPACE $ 18,324 $ 15,713 + 17% $ 35,380 $ 29,184 + 21% ELECTRONICS (1) 50,632 54,018 - 6% 105,705 103,849 + 2% FOOD PACKAGING (2) 74,661 72,454 + 3% 140,496 137,278 + 2% MEDICAL 118,143 109,822 + 8% 231,055 215,225 + 7% OTHER 40,853 41,218 - 1% 79,892 79,949 --------- --------- --------- --------- CONSOLIDATED $ 302,613 $ 293,225 + 3% $ 592,528 $ 565,485 + 5% ========= ========= ========= ========= - --------------------------------------------------------------------------------------------------------------
(1) The effect of businesses acquired increased net sales to the Electronics market by $1.9 million, or 3%, for the quarter, and $3.9 million, or 4%, year-to-date. (2) The effect of businesses acquired increased net sales to the Food Packaging market by $3.6 million, or 5%, for the quarter, and $9.9 million or 7%, year-to-date. Amounts are unaudited. 6 Exhibit 99f 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 fairly 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 - 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, 1998 and 1997:
Three Months ended June 30 Six Months ended June 30 Amounts in thousands -------------------------- ------------------------- (except per share data) 1998 1997 1998 1997 - ----------------------------------------------------------------------------------------------------------------- Earnings per share - basic: Net income $ 16,417 $ 15,997 $ 30,647 $ 28,869 Weighted average shares outstanding 23,012 22,924 22,979 23,099 Earnings per share - basic $.71 $.70 $1.33 $1.25 Earnings per share - diluted: Net income $ 16,417 $ 15,997 $ 30,647 $ 28,869 Effect of subsidiary dilutive options on net income (111) (139) (220) (286) --------- ---------- ---------- ---------- $ 16,306 $ 15,858 $ 30,427 $ 28,583 ========= ========== ========== ========== Weighted average shares outstanding 23,012 22,924 22,979 23,099 Weighted average effect of common stock equivalents 246 150 252 147 --------- ---------- ---------- ---------- 23,258 23,074 23,231 23,246 ========= ========== ========== ========== Earnings per share - diluted $ .70 $ .69 $ 1.31 $ 1.23
7 Exhibit 99f Dexter Corporation Notes to Consolidated Financial Statements (continued) Note 3 - In February 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 132, Employers' Disclosures About Pensions and Other Postretirement Benefits, which becomes effective for financial statements for fiscal years beginning after December 15, 1997. The Company is currently evaluating the impact of SFAS No. 132 on its financial reporting practices. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities. The statement is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. The Company is currently evaluating the impact of SFAS No. 133 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 JUNE 30, DECEMBER 31, JUNE 30, (IN THOUSANDS OF DOLLARS) 1998 1997 1997 - ------------------------------ ---------- ---------- ---------- Common stock $ 24,984 $ 24,984 $ 24,984 Paid-in capital 16,570 17,482 16,142 Unearned compensation on restricted stock (3,855) (4,308) (4,509) ---------- ---------- ---------- $ 37,699 $ 38,158 $ 36,617 ========== ========== ==========
Note 5 - The following are included as components of Accumulated Other Comprehensive Income.
ACCUMULATED OTHER COMPREHENSIVE JUNE 30, DECEMBER 31, JUNE 30, INCOME (IN THOUSANDS OF DOLLARS) 1998 1997 1997 - -------------------------------- ----------- ----------- ----------- Currency translation effects ($22,617) ($22,475) ($15,412) Unrealized losses on investments (620) (426) (375) Pension liability adjustment (24) (24) (204) ----------- ----------- ----------- ($23,261) ($22,925) ($15,991) =========== =========== ===========
8 Exhibit 99f Dexter Corporation Notes to Consolidated Financial Statements (continued) Note 6 - On July 7, 1998, the Company announced plans to acquire the remaining 48% equity in Life Technologies, Inc., a 52% Dexter-owned subsidiary and the divestiture of its Packaging Coatings business including Dexter S.A.S., its French coatings subsidiary. Dexter has proposed to the Life Technologies' Board of Directors that it acquire the approximately 11.3 million shares of Life Technologies it does not currently own at a price of $37 per share in cash, or approximately $420 million, net, excluding payment for exercisable stock options. The acquisition of the publicly owned shares of Life Technologies offers its shareholders an 18% premium over the July 6, 1998 closing price. The offer will be financed through Dexter's available cash and a committed credit facility arranged by First Chicago Capital Markets, Inc. The proposal is subject to the approval of Life Technologies' Board of Directors. Life Technologies' Board of Directors has formed a special independent committee to consider the proposal. The planned divestiture of Dexter's Packaging Coatings unit - a business that has a range of products serving the beer, beverage and food can, aerosol and tube markets - will involve Packaging Coatings and Dexter S.A.S., which had combined 1997 sales of $208 million. 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, 1998 and 1997, and the related condensed statements of income and comprehensive income for 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 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, 1997 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 3, 1998, 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, 1997 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 Springfield, Massachusetts July 15, 1998 -----END PRIVACY-ENHANCED MESSAGE-----