<PAGE> 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.
<TABLE>
<CAPTION>
CLASS Outstanding at July 31, 1998
<S> <C>
COMMON STOCK, PAR VALUE $1 23,033,879 SHARES
</TABLE>
<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 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%.
<PAGE> 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.
<PAGE> 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.
<PAGE> 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.
<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.
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)
<PAGE> 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
<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 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
<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> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 70,256
<SECURITIES> 0
<RECEIVABLES> 207,530
<ALLOWANCES> 6,777
<INVENTORY> 167,054
<CURRENT-ASSETS> 477,670
<PP&E> 739,381
<DEPRECIATION> 383,049
<TOTAL-ASSETS> 1,002,210
<CURRENT-LIABILITIES> 244,586
<BONDS> 179,764
0
0
<COMMON> 24,984
<OTHER-SE> 368,819
<TOTAL-LIABILITY-AND-EQUITY> 1,002,210
<SALES> 592,528
<TOTAL-REVENUES> 597,198
<CGS> 376,377
<TOTAL-COSTS> 376,377
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,679
<INCOME-PRETAX> 59,743
<INCOME-TAX> 20,910
<INCOME-CONTINUING> 30,647
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,647
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.31
</TABLE>
<PAGE> 1
EXHIBIT 99a
DEXTER CORPORATION
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C> <C>
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
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
Amounts are unaudited.
<PAGE> 2
EXHIBIT 99b
DEXTER CORPORATION
CONDENSED STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
JUNE 30 December 31 June 30
In thousands of dollars -------------------------------------------------
(except per share amounts) 1998 1997 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
- ---------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
Amounts as of June 30, 1998 and June 30, 1997 are unaudited.
<PAGE> 3
EXHIBIT 99c
DEXTER CORPORATION
CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Six Months Ended June 30
--------------------------
In thousands of dollars 1998 1997
- --------------------------------------------------------------------------------------
<S> <C> <C>
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)
========= =========
</TABLE>
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.
<PAGE> 4
EXHIBIT 99d
DEXTER CORPORATION
STATEMENT OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Three Months Ended June 30 Six Months Ended June 30
-------------------------- ------------------------
In thousands of dollars 1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
Amounts are unaudited.
<PAGE> 5
EXHIBIT 99e
DEXTER CORPORATION
NET SALES BY MARKET
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Three Months Ended June 30 Six Months Ended June 30
--------------------------------- --------------------------------------
In thousands of dollars 1998 1997 Change 1998 1997 Change
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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%
========= ========= ========= =========
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(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.
<PAGE> 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:
<TABLE>
<CAPTION>
Three Months ended June 30 Six Months ended June 30
Amounts in thousands -------------------------- -------------------------
(except per share data) 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
</TABLE>
<PAGE> 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.
<TABLE>
<CAPTION>
COMMON STOCK & PAID-IN CAPITAL JUNE 30, DECEMBER 31, JUNE 30,
(IN THOUSANDS OF DOLLARS) 1998 1997 1997
- ------------------------------ ---------- ---------- ----------
<S> <C> <C> <C>
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
========== ========== ==========
</TABLE>
Note 5 - The following are included as components of Accumulated Other
Comprehensive Income.
<TABLE>
<CAPTION>
ACCUMULATED OTHER COMPREHENSIVE JUNE 30, DECEMBER 31, JUNE 30,
INCOME (IN THOUSANDS OF DOLLARS) 1998 1997 1997
- -------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
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)
=========== =========== ===========
</TABLE>
<PAGE> 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.
<PAGE> 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
