<PAGE> 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, 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
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(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, 1996
- -------------------------- -----------------------------
COMMON STOCK, PAR VALUE $1 23,893,187 SHARES
- -------------------------- -----------------------------
<PAGE> 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, 1996 and 1995.
(b) Exhibit 99b - Condensed Statement of Financial Position
as of March 31, 1996, December 31, 1995, and March 31,
1995.
(c) Exhibit 99c - Condensed Statement of Cash Flows for the
three months ended March 31, 1996 and 1995.
(d) Exhibit 99d - Net Sales by Market for the three months
ended March 31, 1996 and 1995.
(e) Exhibit 99e - Notes to Consolidated Financial
Statements.
The unaudited financial data included herein as of March 31,
1996 and 1995, 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 that net income for the first quarter of
1996 was $11.1 million, or $.46 per share, compared with $10.5
million, or $.43 per share, for the first quarter of 1995.
Earnings increased 7% in the first quarter on a 4% increase in
sales.
Compared to the first quarter of 1995, the net effect of higher
selling prices and higher raw material costs yielded a favorable
impact of approximately $.03 per share. The effect of currency
exchange rates, versus the first quarter of 1995, had an
unfavorable impact of $.01 per share.
Sales for the first quarter of 1996 were $277.2 million, a 4%
increase over sales of $266.8 million, in the first quarter of
1995. The increase was due to a 2% gain in unit volume and
selling price increases averaging 2%.
Consolidated gross margin of 34.2% of net sales in the first
quarter of 1996 improved by 2.1 percentage points from 32.1% in
the first quarter of 1995. Higher gross margin at Life
Technologies, Inc. and selling price increases at Dexter
operations, more than offset the significant effects of 1995 raw
material cost increases which continued to impact the first
quarter of 1996.
<PAGE> 3
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations, continued
Marketing and administrative cost increased $5.8 million, or
12%, principally due to increased marketing expense at Life
Technologies, Inc., which included consolidation of results from
the 1995 acquisition of a controlling interest in their Japanese
subsidiary.
Other income was $2.2 million for the first quarter of 1996, a
decrease of $.9 million, or 28%, from the first quarter of 1995.
The majority of the decrease is due to the expiration of certain
noncompete agreements.
Products with strong sales performance in the first quarter of
1996 include printed wiring board and liquid encapsulation
materials serving the electronics market, magnetic materials,
food and beverage can coatings serving the European market, and
sales of products at Life Technologies, Inc. Products with
weaker performance include domestic nonwoven medical materials,
food and beverage can coatings serving the domestic and Japanese
markets, and acoustic materials serving the automotive market
which was negatively affected by the recent automotive strike.
In April 1996, the company announced that the Board of Directors
authorized an additional repurchase of up to one million shares
of the company's common stock.
<PAGE> 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 25, 1996, where the following actions were taken:
(a) The election of two new members to the Board of Directors of Ms.
Henrietta Holsman Fore, Chairman and Chief Executive Officer of Holsman
International and, Chairman and President of Stockton Wire Products;
and Mr. Edgar G. Hotard, President of Praxair, Inc., and the re-
election to the Board of Directors of Mr. Bernard M. Fox, Chairman,
President and Chief Executive Officer of Northeast Utilities; Mr. K.
Grahame Walker, Chairman, President and Chief Executive Officer of
The Dexter Corporation; and George M. Whitesides, Ph.D., Professor of
Chemistry at Harvard University.
The votes for each director were as follows:
<TABLE>
<CAPTION>
Director For Withheld
- -------- --- --------
<S> <C> <C>
Ms. Henrietta Holsman Fore 19,314,161 819,358
Mr. Bernard M. Fox 19,318,536 814,983
Mr. Edgar G. Hotard 19,327,545 805,974
Mr. K. Grahame Walker 19,304,313 829,206
George M. Whitesides, Ph.D. 19,319,031 814,488
</TABLE>
In addition, the following directors continue in office for the terms
expiring as indicated: Mr. Robert M. Furek (1998), Ms. Martha Clark
Goss (1998), Glen L. Urban, Ph.D. (1998), Mr. Charles H. Curl (1997),
Mr. Peter G. Kelly (1997), and Mr. Jean-Francois Saglio (1997).
(b) The adoption of The Dexter Corporation's 1996 Non-Employee Directors'
Stock Plan was approved.
The votes for the approval of The Dexter Corporation's 1996
Non-Employee Director's Stock Plan were as follows:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
18,457,216 1,472,328 203,975
</TABLE>
(c) The adoption of The Dexter Corporation's Senior Management Executive
Incentive Plan was approved.
The votes for the approval of the Dexter Corporation's Senior
Management Executive Incentive Plan were as follows:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
18,546,887 988,522 598,110
</TABLE>
<PAGE> 5
Item 4 - Submission of Matters to a Vote of Security Holders, continued
(d) The selection of Coopers & Lybrand L.L.P. as auditors of the
company for the year 1996 was ratified.
The votes for selection of Coopers & Lybrand L.L.P. were as
follows:
For Against Abstain
--- ------- -------
20,060,297 27,032 46,190
(e) The shareholder proposal that the Board of Directors adopt a
policy concerning severance agreements with officers and
directors of the company was rejected. The Board of Directors
had recommended that this proposal be rejected.
The votes for this shareholder proposal were as follows:
For Against Abstain Broker Nonvotes
--- ------- ------- ---------------
8,239,946 9,563,683 990,151 1,339,739
Item 5 - Other Information
Effective in April 1996, R. Barry Gettins, Ph.D. was appointed
Senior Vice President -- Operations Development and David G.
Gordon was appointed a Vice President of the company and Senior
Division President of the Dexter Nonwovens Division.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibit 10L -- The Dexter Corporation's 1996 Non-Employee
Directors' Stock Plan
Exhibit 10M -- The Dexter Corporation's Senior Management
Executive Incentive Plan
Exhibit 15 of Part 1 -- Letter to Securities and Exchange
Commission re: Incorporation of Accountants' Reports
Exhibit 27 of Part 1 -- Financial Data Schedule
Exhibit 99 of Part 1 -- First Quarter 1996 Financial Statements
and Notes
(b) No reports on Form 8-K were filed during the quarter for which
this report was filed.
<PAGE> 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
May 9, 1996 /s/ Kathleen Burdett
Date _____________________ -----------------------------
Kathleen Burdett
Vice President and
Chief Financial Officer
(Principal Financial Officer)
May 9, 1996 /s/ George Collin
Date _____________________ ------------------------------
George Collin
Controller
(Principal Accounting Officer)
<PAGE> 7
INDEX TO EXHIBITS
Exhibit No.
10L The Dexter Corporation's 1996 Non-Employee Directors' Stock Plan
10M The Dexter Corporation's Senior Management Executive Incentive Plan
15 Letter to Securities and Exchange Commission re: Incorporation of
Accountants' Report
27 Financial Data Schedule
99 First Quarter 1996 Financial Statements and Notes
<PAGE> 1
Exhibit 10L
THE DEXTER CORPORATION
1996 NON-EMPLOYEE DIRECTORS' STOCK PLAN
1. Purpose.
The purpose of The Dexter Corporation 1996 Non-Employee Directors'
Stock Plan is to advance the interests of the Company and its stockholders by
enabling members of the Board who are not employees of the Company or any of its
subsidiaries to receive shares of the Company's Common Stock in lieu of all or a
portion of the annual cash retainer fee they receive for services on the Board.
2. Definitions.
(a) "Board" means the Board of Directors of the Company.
(b) "Change of Control" means the occurrence of any of the
following events:
(i) The Company is merged, consolidated or reorganized into or
with another corporation or other legal person, and as a
result of such merger, consolidation or reorganization less
than a majority of the combined voting power of the then
outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate
by the holders of voting stock of the Company immediately
prior to such transaction;
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to another corporation or
other legal person, and as a result of such sale or transfer
less than a majority of the combined voting power of the then
outstanding securities of such corporation or person
immediately after such sale or transfer is held in the
aggregate by the holders of voting stock of the Company
immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule
14D-1(or any successor schedule, form or report), each as
promulgated pursuant to the Exchange Act, disclosing that any
person has become the beneficial owner of securities
representing 19% of the voting stock of the Company; or
(iv) If, during any period of two consecutive years,
individuals who at the beginning of any such period constitute
the directors of the Company cease for any reason to
constitute at least a majority thereof.
(c) "Committee" means the Compensation and Organization Committee of
the Board.
(d) "Common Stock" means the Common Stock of the Company, par value
$1.00 per share.
(e) "Company" means The Dexter Corporation, its successors and assigns.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(g) "Fair Market Value" means the closing price of Common Stock
reported for the New York Stock Exchange on the last trading day preceding the
relevant payment date.
(h) "Retainer" means the annual cash retainer fee payable to a director
for his or her services on the Board.
(i) "Non-Employee Director" means a member of the Board who is not an
employee of the Company or any of its subsidiaries.
<PAGE> 2
Exhibit 10L, continued
(j) "Plan" means this 1996 Non-Employee Directors' Stock Plan.
3. Eligible Participants.
Each Non-Employee Director shall be eligible to participate in the
Plan.
4. Administration.
The Plan shall be administered by the Committee. The Committee shall,
subject to the provisions of the Plan, have the power to construe the Plan, to
determine all questions arising thereunder and to adopt and amend such rules and
regulations for the administration of the Plan as it may deem desirable. Any
decisions of the Committee in the administration of the Plan, as described
herein, shall be final and conclusive. The Committee may authorize any one or
more of its members or any officer of the Company to execute and deliver
documents on behalf of the Committee.
5. Election to Receive Common Stock.
Each Non-Employee Director shall have the right to elect, on forms
provided by the Company, to receive all or a portion of the Retainer in the form
of shares of Common Stock. Any part of the Retainer elected to be paid in shares
of Common Stock shall be payable in one installment on the date of the Company's
annual meeting of shareholders, provided, however, that in 1996 such payment
shall be made on June 30, 1996. The number of shares of Common Stock to be
issued at the time of payment shall be determined by dividing the amount elected
to be taken in the form of shares of Common Stock by the Fair Market Value of
such shares. Such election shall be made annually for the following calendar
year, shall be irrevocable, and must be received by the Committee at least six
months prior to the date on which the Common Stock is to be issued. Except as
otherwise provided in Section 6 hereof, shares of Common Stock issued under this
Section 5 shall be unrestricted and freely transferable.
6. Restriction on Shares.
The shares of Common Stock issued under Section 5 hereof shall, at the
election of the Non-Employee Director (which election must be in writing and
shall be delivered to the Secretary of the Company no later than the last
business day of the calendar year prior to the year for which the election is to
be effective), be restricted and may not be sold, hypothecated or transferred
(including, without limitation, transfer by gift or donation) except that such
restrictions shall lapse upon:
(a) Death of the Non-Employee Director;
(b) Disability of the Non-Employee Director preventing continued
service on the Board;
(c) Retirement of the Non-Employee Director from service as a director
of the Company in accordance with the policy on retirement of directors then in
effect;
(d) Termination of services as a director with the consent of a
majority of the members of the Board other than the Non-Employee Director; or
(e) A Change of Control, as defined in Section 2(b).
If a Non-Employee Director ceases to be a director of the Company for any other
reason, the shares of Common Stock issued to such Non-Employee Director subject
to this Section 6 shall be forfeited and revert to the Company.
The certificates for shares of Common Stock which are subject to this
Section 6 shall be held by the Company until lapse of restrictions as provided
in this Section 6, provided, however, the Non-Employee Director shall be
entitled to all voting, dividend and distribution rights for such shares.
<PAGE> 3
Exhibit 10L, continued
7. Number of Shares of Common Stock Issuable Under the Plan.
The maximum number of shares of Common Stock that may be issued under
the Plan shall be 50,000. Either authorized and unissued shares of Common Stock
or treasury shares may be delivered pursuant to the Plan.
In the event of any merger, consolidation, recapitalization,
reclassification, stock dividend, distribution of property, special cash
dividend or other change in corporate structure affecting the shares of Common
Stock, adjustments shall be made by the Committee to prevent dilution or
enlargement of rights in the number and class of shares granted or authorized to
be granted hereunder.
8. Amendment.
The Board may at any time amend the Plan, or any provision thereof,
except that approval of the shareholders of the Company shall be required for
any amendment for which such approval is necessary to comply with Rule 16b-3
under the Exchange Act or any other applicable law, regulation, or listing
requirement, or to qualify for an exemption or characterization that is deemed
desirable by the Committee. No amendment of the Plan shall materially and
adversely affect any right of any Non-Employee Director with respect to any
shares of Common Stock theretofore issued without such Non-Employee Director's
written consent.
9. Termination.
The Plan shall terminate upon the earlier of the following dates or
events to occur: (a) upon the adoption of a resolution of the Board terminating
the Plan; or (b) ten years from the date the Plan is initially approved and
adopted by the stockholders of the Company in accordance with Section 11 hereof.
No termination of the Plan shall materially and adversely affect any right of
any Non-Employee Director with respect to any shares of Common Stock theretofore
issued without such Non-Employee Director's written consent.
10. Miscellaneous Provisions.
(a) Neither the Plan nor any action taken hereunder shall be construed
as giving any Non-Employee Director any right to be retained in the service of
the Company.
(b) A Non-Employee Director's rights and interest under the Plan may
not be assigned or transferred, hypothecated or encumbered in whole or in part
either directly or by operation of law or otherwise (except in the event of a
Non-Employee Director's death, by will or the laws of descent and distribution).
(c) As a condition to issuing the shares of Common Stock hereunder, the
Committee may require a Non-Employee Director to pay to the Company such sum as
may be necessary to discharge any obligation of the Company with respect to
taxes, assessments or other governmental charges imposed on property or income
received by such Non-Employee Director pursuant to the Plan. In accordance with
rules and procedures established by the Committee and in the discretion of the
Committee, such payment may be in the form of cash or property, or may be
effected by delivery of a lesser number of shares.
(d) The expenses of the Plan shall be borne by the Company.
(e) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the issuance of shares hereunder.
(f) The Company shall not be required to issue fractions of shares.
Whenever under the terms of the Plan a fractional share would be required to be
issued, the Non-Employee Director shall be paid in cash for such fractional
share based upon the same Fair Market Value which was used to determine the
number of shares to be issued on the relevant payment date.
(g) The provisions of the Plan shall be governed by and construed in
<PAGE> 4
Exhibit 10L, continued
accordance with the laws of the State of Connecticut.
11. Stockholder Approval.
This Plan shall be subject to approval by a vote of the stockholders of
the Company at the 1996 annual meeting of shareholders.
12. Effective Date.
This Plan shall be effective as of the date that it is approved by the
Board.
<PAGE> 1
Exhibit 10M
THE DEXTER CORPORATION
SENIOR MANAGEMENT EXECUTIVE INCENTIVE PLAN
1. Purpose.
The purpose of The Dexter Corporation Senior Management Executive
Incentive Plan is to enhance the ability of the Company to attract, motivate,
reward and retain executive officers and to align their interests with those of
the Company's stockholders by providing additional cash compensation to
designated executive officers of the Company based on the achievement of
objective performance targets.
2. Definitions.
(a) "Award" shall mean an incentive award earned by a Participant under
the Plan for a Performance Period.
(b) "Base Salary" for a Performance Period shall mean the Participant's
base salary during such Performance Period. Base salary does not include Awards
under the Plan, long-term incentive awards, imputed income from such programs as
executive life insurance, or nonrecurring items such as moving expenses, and is
based on salary earnings before reductions for such items as contributions under
Section 401(k) of the Internal Revenue Code of 1986, as amended.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Committee" shall mean the Compensation and Organization Committee
of the Board.
(e) "Company" shall mean The Dexter Corporation, its successors and
assigns.
(f) "Disability" shall mean permanent disability, as provided in the
Company's long-term disability plan.
(g) "Division" shall mean a division of the Company as may be
designated by the Committee.
(h) "Division Contribution" for any Performance Period shall mean net
income for such period, before acquisition charges, interest expense, LIFO gain
or loss, other nonoperating charges, taxes on income and minority interest
income, all as reflected in the Company's internal financial statements for such
Performance Period.
<PAGE> 2
Exhibit 10M, continued
(i) "Earnings Per Share" for any Performance Period shall mean the
consolidated net income of the Company for such period, before extraordinary or
unusual items (e.g. charges for divestiture and restructuring activities) and
the cumulative effect of any change in accounting principles, divided by the
weighted average number of shares of the Company's common stock.
(j) "Participant", for any Performance Period, shall mean an executive
officer selected by the Committee to participate in the Plan for such
Performance Period.
(k) "Performance Criteria" shall mean (i) Earnings Per Share, (ii)
Return on Equity, (iii) Revenues, (iv) Division Contribution, or (v) any
combination of the foregoing.
(l) "Performance Period" shall mean the fiscal year of the Company or
any other period designated by the Committee with respect to which an Award is
earned.
(m) "Performance Target" shall mean a financial target for a
Performance Period which is expressed in one or more Performance Criteria and
upon the attainment of which a Participant earns an Award. Performance Targets
may be in respect of the performance of the Company and its Subsidiaries (which
may be on a consolidated basis), a Division, a region or any combination of the
foregoing. Performance Targets may be absolute or relative and may be expressed
in terms of a progression within a specified range.
(n) "Plan" shall mean this Senior Management Executive Incentive Plan,
as from time to time amended and in effect.
(o) "Retirement" shall mean retirement at age 65 or early retirement
with the prior written approval of the Company.
(p) "Return on Equity" for any Performance Period shall mean
consolidated net income of the Company for such period, before extraordinary or
unusual items (e.g. charges for divestiture and restructuring activities) and
the cumulative effect of any change in accounting principles, divided by average
shareholder equity.
(q) "Revenues" for any Performance Period shall mean (i) in respect of
the Company, the consolidated net sales of the Company for such period, and (ii)
in respect of a Division, the net sales of said Division for such period.
(r) "Subsidiary" shall mean a corporation defined in Section 424(f) of
the Internal Revenue Code of 1986, as amended, with the Company being treated as
the employer corporation for purposes of this definition.
(s) "Target Award Percentage" for a Participant with respect to any
Performance Period shall mean the percentage of the Participant's Base Salary
that the Participant
-2-
<PAGE> 3
Exhibit 10M, continued
would earn as an Award for that Performance Period determined based upon the
attainment of a Performance Target applicable to such Participant.
3. Eligibility.
Participation in the Plan for a Performance Period shall be limited to
those executive officers who, because of their significant impact on the current
and future success of the Company, the Committee selects, in accordance with
Section 5 of this Plan, to participate in the Plan for that Performance Period.
To be eligible to receive an Award for any Performance Period a
Participant must be actively employed by the Company on each day of the
Performance Period.
4. Administration.
The administration of the Plan shall be consistent with the purpose and
the terms of the Plan. The Plan shall be administered by the Committee. Each
member of the Committee shall be an "outside director" within the meaning of
Section 162(m) of the Internal Revenue Code and the regulations promulgated
thereunder. The Committee shall have full authority to establish the rules and
regulations relating to the Plan, to interpret the Plan and those rules and
regulations, to select Participants in the Plan, to determine the Performance
Periods, Performance Targets and Target Award Percentages applicable to each
Participant and the amount of compensation payable to each Participant upon the
achievement of such targets, to approve all the Awards, to decide the facts in
any case arising under the Plan and to make all other determinations and to take
all other actions necessary or appropriate for the proper administration of the
Plan, including the delegation of such authority or power, where appropriate;
provided, however, that the Committee shall not be authorized to increase the
amount of the Award that would otherwise be payable pursuant to the terms of the
Plan. The Committee's administration of the Plan, including all such rules and
regulations, interpretations, selections, determinations, approvals, decisions,
delegations, amendments, terminations and other actions, shall be final and
binding on the Company and the Subsidiaries, and the Participants and their
respective beneficiaries.
5. Determination of Awards.
For each Performance Period, the Committee shall designate and
establish the executive officers, if any, who shall be Participants during that
Performance Period and the Performance Targets and Target Award Percentages for
each Participant, in each case, before the expiration of 25% of the relevant
Performance Period, but no later than 90 days after the commencement of such
Performance Period. The Performance Targets shall be based on one or more
Performance Criteria. The Committee shall prepare schedules with respect to each
Performance Period, which will be treated as part of the Plan for that
Performance Period, setting forth (a) the Participants, (b) Participant Target
Award
-3-
<PAGE> 4
Exhibit 10M, continued
Percentage and (c) Participant Performance Targets, in each case, for that
Performance Period. The Committee shall notify each Participant of his or her
Target Award Percentage and Performance Target for the Performance Period.
The amount of a Participant Award is equal to the product of his or her
Target Award Percentage and his or her Base Salary.
Notwithstanding anything contained in this Plan to the contrary, the
Committee in its sole discretion may reduce any Award to any Participant to any
amount, including zero, prior to the written certification of the Committee of
the amount of such Award.
As a condition to the right of a Participant to receive an Award, the
Committee shall first certify, in writing, that the Award has been determined in
accordance with the provisions of the Plan.
The maximum amount of Awards that any participant may receive with
respect to any fiscal year of the Company during which the Plan is in effect is
$1 million.
6. Changes to the Target.
The Committee may change the Performance Targets to reflect a change in
corporate capitalization, a corporate transaction, such as a merger,
consolidation, separation, reorganization or partial or complete liquidation, or
the occurrence of unexpected events, such as an acquisition or disposition,
product liability judgment or such others as the Committee may determine prior
to the expiration of 25% of the relevant Performance Period, but no later than
90 days after the commencement of such Performance Period.
7. Payment of Awards.
As soon as practicable after the close of a Performance Period, the
Committee shall review and approve each Participant Award. Subject to the
provisions of Section 8 of the Plan, each Award shall be paid in a single lump
sum cash payment as soon as practicable after the close of the Performance
Period, but no later than 120 days after the close of the Performance Period.
The Committee shall certify in writing prior to payment of any Award that the
relevant Performance Targets were satisfied.
8. Designation of Beneficiary.
A Participant may designate a beneficiary or beneficiaries who, in the
event of the Participant's death prior to full payment of any Award hereunder,
shall receive payment of any Award due under the Plan. Such designation shall be
made by the Participant on a form prescribed by the Committee. The Participant
may, at any time, change or revoke
-4-
<PAGE> 5
Exhibit 10M, continued
such designation. A beneficiary designation, or revocation of a prior
beneficiary will be effective only if it is made in writing on a form provided
by the Company, signed by the Participant and received by the Secretary of the
Company. If the Participant does not designate a beneficiary or the beneficiary
dies prior to receiving any payment of an Award, Awards payable under the Plan
shall be paid to the Participant's estate.
9. Amendments.
The Committee may at any time amend (in whole or in part) this Plan. No
such amendment which adversely affects any Participant rights to or interest in
an Award earned prior to the date of the amendment shall be effective unless the
Participant shall have agreed thereto. All Awards are intended not to be subject
to the deduction limitation of Section 162(m) of the Internal Revenue Code of
1986 and the regulations promulgated thereunder. The Committee shall not be
entitled to exercise any discretion otherwise authorized hereunder with respect
to Awards if the ability to exercise such discretion or the exercise of such
discretion itself would cause the compensation attributable to such Awards to be
subject to such deduction limitation.
10. Termination.
The Committee may terminate this Plan (in whole or in part) at any
time. In the case of such termination, the following provisions of this Section
10 shall apply notwithstanding any other provisions of the Plan to the contrary:
(a) The Committee shall promulgate administrative rules applicable to
Plan termination, pursuant to which each affected Participant shall receive,
with respect to each Performance Period which has commenced on or prior to the
effective date of the Plan termination (the "Termination Date") and for which
the Award has not yet been paid, an amount equal to the amount his or her Award
would have been had the Plan not been terminated (prorated for the Performance
Period in which the Termination Date occurred), subject to reduction in the
discretion of the Committee.
(b) Each Award payable under this Section 10 shall be paid at such time
as the Committee shall determine.
11. Miscellaneous Provisions.
(a) This Plan is not a contract between the Company and the executive
officers or the Participants. Neither the establishment of this Plan, nor any
action taken hereunder, shall be construed as giving any individual any right to
be a Participant, receive an Award or be retained in the employ of the Company.
The Company is under no obligation to continue the Plan.
-5-
<PAGE> 6
Exhibit 10M, continued
(b) A Participant's right and interest under the Plan may not be
assigned or transferred, except as provided in Section 8 of the Plan, and any
attempted assignment or transfer shall be null and void and shall extinguish, in
the Company's sole discretion, the Company's obligation under the Plan to pay
Awards with respect to the Participant.
(c) The Plan shall be unfunded. The Plan shall not be required to
establish any special or separate fund, or to make any other segregation of
assets, to assure payment of Awards.
(d) The Company shall have the right to deduct from Awards paid any
taxes or other amounts required by law to be withheld.
(e) Nothing contained in the Plan shall limit or affect in any manner
or degree the normal and usual powers of management exercised by the officers
and the Board or committees thereof to change the duties or the character of
employment of any employee (including any executive officer) of the Company or
to remove the individual from the employment of the Company at any time, all of
which rights and powers are expressly reserved.
(f) The Plan and all rights hereunder shall be construed in accordance
with and governed by the laws of the State of Connecticut.
12. Stockholder Approval.
This Plan shall be subject to approval by a vote of the stockholders of
the Company at the 1996 Annual Meeting, and such stockholder approval shall be a
condition to the right of a Participant to receive any benefits hereunder.
13. Effective Date.
This Plan shall be effective as of the date that it is approved by the
Board.
-6-
<PAGE> 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 11, 1996, on our review of the interim
financial information of The Dexter Corporation as of March 31, 1996 and 1995,
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, and 333-02985.
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 8, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 57,222
<SECURITIES> 0
<RECEIVABLES> 189,535
<ALLOWANCES> 5,612
<INVENTORY> 162,323
<CURRENT-ASSETS> 464,005
<PP&E> 649,626
<DEPRECIATION> 325,148
<TOTAL-ASSETS> 944,980
<CURRENT-LIABILITIES> 225,434
<BONDS> 214,874
0
0
<COMMON> 24,984
<OTHER-SE> 336,820
<TOTAL-LIABILITY-AND-EQUITY> 944,980
<SALES> 277,227
<TOTAL-REVENUES> 279,402
<CGS> 182,525
<TOTAL-COSTS> 182,525
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,366
<INCOME-PRETAX> 22,431
<INCOME-TAX> 7,963
<INCOME-CONTINUING> 11,148
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,148
<EPS-PRIMARY> .46
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99a
THE DEXTER CORPORATION
CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
In thousands of dollars Three Months Ended March 31
-------------------------------------------------------------
(except per share amounts) 1996 1995 Change
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Net sales $ 277,227 $ 266,793 + 4%
Other income 2,175 3,039 - 28%
------------- ---------------
279,402 269,832 + 4%
EXPENSES
Cost of sales 182,525 181,129 + 1%
Marketing and administrative 56,237 50,418 + 12%
Research and development 12,843 12,530 + 2%
Interest 5,366 5,163 + 4%
------------- ---------------
INCOME BEFORE TAXES 22,431 20,592 + 9%
Income taxes 7,963 7,413 + 7%
------------- ---------------
INCOME BEFORE MINORITY INTERESTS 14,468 13,179 + 10%
Minority interests 3,320 2,717 + 22%
------------- ---------------
NET INCOME $ 11,148 $ 10,462 + 7%
============= ===============
NET INCOME PER SHARE $0.46 $0.43 + 7%
DIVIDENDS DECLARED PER SHARE $0.22 $0.22
AVERAGE SHARES OUTSTANDING (000) 23,999 24,352 - 1%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE> 2
EXHIBIT 99b
THE DEXTER CORPORATION
CONDENSED STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
In thousands of dollars March 31 December 31 March 31
----------------------------------------------
(except per share amounts) 1996 1995 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and short-term securities $ 57,222 $ 65,542 $ 46,320
Accounts receivable, net 209,415 201,389 189,276
Inventories
Materials and supplies 58,057 60,099 60,971
In process and finished 128,152 121,644 117,505
LIFO reserve (23,886) (24,709) (23,114)
--------- --------- ---------
162,323 157,034 155,362
Prepaid and deferred expenses 35,045 32,756 28,730
--------- --------- ---------
Total current assets 464,005 456,721 419,688
Property, plant and equipment, at cost, net 324,478 325,203 331,753
Excess of cost over net assets of
businesses acquired 79,744 74,102 75,822
Other assets 76,753 78,135 85,406
--------- --------- ---------
$ 944,980 $ 934,161 $ 912,669
========= ========= =========
LIABILITIES & SHAREHOLDERS' EQUITY
Short-term debt $ 25,119 $ 13,598 $ 6,678
Current installments of long-term debt 13,053 13,648 4,266
Accounts payable 90,792 92,447 89,940
Accrued liabilities and taxes 89,850 81,659 87,742
Current environmental reserves 1,364 1,395 2,354
Dividends payable 5,256 5,351 5,358
--------- --------- ---------
Total current liabilities 225,434 208,098 196,338
Long-term debt 214,874 215,839 226,925
Deferred items 48,184 48,492 48,013
Long-term environmental reserves 15,480 15,745 17,484
Minority interests 79,204 76,372 65,689
Shareholders' equity
Common stock and paid-in capital 35,172 35,116 35,239
Retained earnings 353,436 347,544 333,505
Currency translation effects (2,222) 1,614 1,092
Treasury stock (24,582) (14,659) (11,616)
--------- --------- ---------
Total shareholders' equity 361,804 369,615 358,220
--------- --------- ---------
$ 944,980 $ 934,161 $ 912,669
========= ========= =========
EQUITY PER SHARE $ 15.19 $ 15.26 $ 14.70
- -----------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE> 3
EXHIBIT 99c
THE DEXTER CORPORATION
CONDENSED STATEMENT OF CASH FLOWS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
1996 1995
In thousands of dollars
- -------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net income $ 11,148 $ 10,462
Noncash items
Depreciation and amortization 11,438 11,065
Income taxes not due 7,620 4,288
Minority interests 3,320 2,717
LIFO inventory (credit) charge (823) 286
Equity in net income of affiliates (638) (764)
Other 1,344 147
Operating working capital increase (18,849) (27,454)
-------- --------
14,560 747
-------- --------
INVESTMENTS
Property, plant and equipment (10,116) (8,372)
Acquisitions (7,203)
Joint ventures 227 (1,597)
Notes receivable 3,000
Proceeds from exercise of LTI stock options 679 382
Other (503) (48)
-------- --------
(16,916) (6,635)
-------- --------
FINANCING
Long-term debt (914) (450)
Short-term debt, net 11,546 2,872
Dividends paid (5,351) (5,357)
LTI dividends paid to minority interest
shareholders (351) (341)
Purchase of treasury stock (10,279)
Other (256) (371)
-------- --------
(5,605) (3,647)
-------- --------
DECREASE IN CASH AND SHORT-TERM SECURITIES $ (7,961) $ (9,535)
======== ========
RECONCILIATION OF DECREASE 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 57,222 46,320
-------- --------
Decrease in cash and short-term securities
per Statement of Financial Position (8,320) (8,692)
Currency translation effects 359 (843)
-------- --------
$ (7,961) $ (9,535)
======== ========
INTEREST PAID $ 4,216 $ 3,980
======== ========
TAXES PAID $ 343 $ 3,125
======== ========
- -------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE> 4
EXHIBIT 99d
THE DEXTER CORPORATION
NET SALES BY MARKET
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Three Months Ended March 31
-------------------------------------------------------
In thousands of dollars 1996 1995 Change
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AEROSPACE $ 12,348 $ 11,904 + 4%
ELECTRONICS 49,456 45,031 + 10%
FOOD PACKAGING 67,381 69,866 - 4%
MEDICAL (1) 98,750 87,270 + 13%
OTHER (2) (3) 49,292 52,722 - 7%
------------ ------------
CONSOLIDATED $ 277,227 $ 266,793 + 4%
============ ============
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The effect of businesses acquired increased net sales to the Medical
market by $3.7 million, or 4%.
(2) The effect of businesses divested decreased net sales in the "Other"
category by $3 million, or 6%.
(3) Sales previously classified in the Automotive market are now included in
the "Other" category.
<PAGE> 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.
<TABLE>
<CAPTION>
COMMON STOCK & PAID-IN CAPITAL MARCH 31, DECEMBER 31, MARCH 31,
(IN THOUSANDS OF DOLLARS) 1996 1995 1995
- ------------------------------ --------- ------------ ---------
<S> <C> <C> <C>
Common stock $24,984 $24,984 $24,984
Paid-in capital 12,510 12,316 12,061
Unrealized losses on investments (300) (128) (910)
Unearned compensation on
restricted stock (1,549) (1,583) (896)
Pension liability adjustment (473) (473)
-------- ---------- ---------
$35,172 $35,116 $35,239
======== ========= =========
</TABLE>
<PAGE> 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, 1996 and 1995, 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 audited 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
April 11, 1996
