<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 September 30, 1999
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 October 29, 1999
- -------------------------- -------------------------------
COMMON STOCK, PAR VALUE $1 23,042,276 SHARES
- -------------------------- ---------------------------------
<PAGE> 2
PART I
FINANCIAL INFORMATION
Item 1 - Financial Statements
- ------ --------------------
Reference is made to the following condensed consolidated financial
statements, which are incorporated herein by reference:
(a) Exhibit 99a - Condensed Statement of Income for the three and
nine-month periods ended September 30, 1999 and 1998.
(b) Exhibit 99b - Condensed Statement of Financial Position as of
September 30, 1999, December 31, 1998, and September 30, 1998.
(c) Exhibit 99c - Condensed Statement of Cash Flows for the nine-month
periods ended September 30, 1999 and 1998.
(d) Exhibit 99d - Condensed Statement of Comprehensive Income for the
three and nine-month periods ended September 30, 1999 and 1998.
(e) Exhibit 99e - Net Sales and Operating Income by Segment for the
three and nine-month periods ended September 30, 1999 and 1998.
(f) Exhibit 99f - Notes to Condensed Consolidated Financial
Statements.
The unaudited financial data included herein as of September 30, 1999
and 1998, and for the three and nine-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 third quarter 1999 earnings from operations, excluding
restructuring costs, of $12.6 million, or $.55 per share on a diluted basis.
This includes the negative impact of $.01 per share from two nonrecurring events
in the third quarter at Life Technologies, Inc. In the third quarter of 1998,
earnings from operations were $14.2 million, or $.61 per share diluted. Dexter's
increased ownership of Life Technologies, Inc. created noncash amortization
charges which, together with the net impact of divestitures and acquisitions,
reduced third quarter 1999 earnings by $.10 per share.
During the third quarter, Dexter announced restructuring activities in its
Specialty Polymers and Nonwovens segments. These include a plant closure and
other business realignments that will result in the elimination of approximately
60 full-time positions. Including the restructuring charge of $2.4 million, or
$.07 per share, total earnings for the third quarter of 1999 were $11 million,
or $.48 per share diluted.
<PAGE> 3
Item 2 - Management's Discussion and Analysis of Financial
- -------- -------------------------------------------------
Condition and Results of Operations, continued
----------------------------------------------
Analysis of Operations, continued
- -----------------------
The third quarter results included a pretax charge of $3.9 million, or $.08 per
share, representing a voluntary refund Life Technologies, Inc. has offered to
the Department of Veterans Affairs (VA) related to its supply contract with the
VA. Also included in the third quarter results was the effect of a favorable
income tax settlement between Life Technologies, Inc. and the Internal Revenue
Service which resulted in a reduction in income tax expense of $2.3 million, or
$.07 per share. The net effect of these two items incurred by Life Technologies,
Inc. reduced Dexter's third quarter 1999 earnings from operations by $.01 per
share.
Sales in the third quarter of 1999 were $250.3 million, a decrease of 12%,
compared with sales of $283.4 million in the third quarter of 1998. Volume
increases of 8% were more than offset by a 19% decrease due to the net effect of
divestitures and acquisitions and price decreases averaging 1%.
Sales for the first nine months of 1999 were $786.3 million, a 10% decrease
compared with sales of $875.9 million for the same period last year. Volume
increases of 5% were more than offset by a 14% decrease due to the net effect of
divestitures and acquisitions and price decreases averaging 1%.
Earnings from operations, excluding restructuring costs, for the first nine
months of 1999 were $36.7 million, or $1.59 per share on a diluted basis,
compared with $44.8 million, or $1.92 per share diluted for the same period last
year. Dexter's increased ownership of Life Technologies, Inc. created noncash
amortization charges which, together with the net impact of divestitures and
acquisitions, reduced earnings of the first nine months of 1999 by $.33 per
share. Earnings from operations include a net unfavorable $.01 per share impact
due to the two nonrecurring events at Life Technologies, Inc. in the third
quarter of 1999. Including the gain from divestiture of product lines of $2.54
per share that occurred in the first quarter of 1999 and the charge for
restructuring activities in the third quarter of 1999 of $.07 per share, total
earnings for the first nine months of 1999 were $93.6 million, or $4.06 per
share diluted, compared with $44.8 million, or the $1.92 per share diluted for
the same period last year.
Sales in the Life Sciences segment increased $12.7 million, or 14%, in the third
quarter of 1999 and $32.2 million, or 12%, for the first nine months of 1999
compared with the same periods last year principally due to sales of products
other than fetal bovine serum.
Sales in the Nonwovens segment increased $3.4 million, or 5%, in the third
quarter of 1999 compared with the third quarter of 1998 primarily due to
stronger sales of medical and specialty products. Sales for the first nine
months of 1999 in the Nonwovens segment increased $7.2 million, or 4%, compared
with the first nine months of 1998 due to stronger sales of wet wipes, medical
and specialty products and despite lower pricing for food packaging products.
Sales of ongoing businesses in the Specialty Polymers segment increased $5.3
million, or 7%, in the third quarter of 1999 compared to the same period last
year. This increase was principally due to stronger sales of electronic
encapsulation materials. Sales for the first nine months of 1999 were comparable
to last year. Stronger sales of electronic encapsulation materials and specialty
coatings were offset by weaker sales of printed wiring board products and
magnetic materials.
<PAGE> 4
Item 2 - Management's Discussion and Analysis of Financial
- -------- -------------------------------------------------
Condition and Results of Operations, continued
----------------------------------------------
Analysis of Operations, continued
- ---------------------------------
Consolidated gross margin of 39.7% for the third quarter of 1999, stated as a
percentage of sales, increased 2.9 percentage points from 36.8% in the third
quarter of 1998. Excluding charges incurred in the third quarter of 1999
relating to Dexter's increased ownership in Life Technologies, Inc., which
unfavorably impacted gross margin by 0.5 percentage points, gross margin
improved 3.4 percentage points. Gross margin of 38.8% for the first nine months
of 1999 increased 2.2 percentage points compared with 36.6% for the same period
last year. Excluding the charges incurred in the first nine months of 1999
relating to Dexter's increased ownership in Life Technologies, Inc., which
unfavorably impacted gross margin by 0.9 percentage points, gross margin
improved 3.1 percentage points. These improvements were the result of increased
volume, a favorable product mix at Life Technologies, Inc. and divestiture of
the lower gross margin Packaging Coatings business in the first quarter of 1999.
Marketing and administrative costs increased $1.5 million, or 2%, in the third
quarter of 1999, and $3.9 million, or 2%, for the first nine months of 1999
compared with the same periods in 1998. The principal reasons were increased
costs at Life Technologies, Inc. and corporate expenses which compared adversely
with a favorable position last year. These increases were partially offset by
reduced expense resulting from the Packaging Coatings divestiture in the first
quarter of 1999.
Research and development expense decreased $2.2 million, or 16%, in the third
quarter of 1999 and $4.5 million, or 11%, for the first nine months of 1999
compared with the same periods in 1998. These decreases were entirely due to the
divestiture of Packaging Coatings in the first quarter of 1999.
Interest expense of $16 million for the first nine months of 1999 increased $2.7
million, or 21%, compared with the first nine months of 1998. The increase was
primarily due to higher average borrowings in the first quarter of 1999
following the acquisition of an additional 22% ownership in Life Technologies,
Inc. in December 1998. These borrowings were repaid at the beginning of March
1999 with proceeds received from the divestiture of the Packaging Coatings
business.
The effective tax rate was 19.4% in the third quarter of 1999 and 33.9% on a
year-to-date basis compared with 35% in each of the comparable periods in 1998.
These decreases were primarily the result of Life Technologies, Inc. reaching a
favorable income tax settlement in the third quarter of 1999. Excluding this
one-time adjustment, the effective tax rate was 33% in the third quarter of 1999
and 35.4% for the nine month period.
Minority interest expense decreased $1.3 million, or 30%, in the third quarter
of 1999 and $3.1 million, or 25%, for the first nine months of 1999 compared
with the same periods in 1998. These decreases were principally due to Dexter
increasing its ownership of Life Technologies, Inc. to 71% effective in December
1998.
<PAGE> 5
Item 2 - Management's Discussion and Analysis of Financial
- -------- -------------------------------------------------
Condition and Results of Operations, continued
----------------------------------------------
Analysis of Financial Condition
- -------------------------------
Accounts receivable as of September 30, 1999 were $184 million, a decrease of
$19.9 million and $21.5 million, respectively, compared with $203.9 million at
December 31, 1998 and $205.5 million at September 30, 1998. Accounts receivable
decreased $44.7 million due to the divestiture of the Packaging Coatings
business in the first quarter of 1999, partially offset by increased receivables
from continuing operations.
Prepaid and deferred expenses as of September 30, 1999 were $23.6 million, a
decrease of $5.8 million compared with $29.4 million at September 30, 1998. This
decrease was primarily due to the divestiture of the Packaging Coatings business
and decreased deferred tax assets.
Property, plant, and equipment as of September 30, 1999 was $336.6 million, a
decrease of $23.9 million, compared with $360.5 million at December 31, 1998 and
September 30, 1998. This decrease was primarily attributable to the divestiture
of the Packaging Coatings business partially offset by capital expenditures, net
of depreciation.
Excess of cost over net assets of businesses acquired (excess acquisition cost)
as of September 30, 1999 was $121.4 million, an increase of $26.6 million,
compared with $94.8 million as of September 30, 1998. This increase was
primarily due to an increase of $63.4 million attributable to Dexter acquiring
an additional 22% ownership of LTI in December 1998, partially offset by a
decrease of $30.8 million resulting from the divestiture of the Packaging
Coatings business and amortization charges of $7.9 million. Excess acquisition
cost at September 30, 1999 decreased $35.6 million from $157 million at December
31, 1998 primarily due to the divestiture of the Packaging Coatings business and
amortization charges of $6.4 million.
Patents, technology, trademarks, and covenants as of September 30, 1999 were
$115.8 million, an increase of $88.1 million, compared with $27.7 million as of
September 30, 1998. This increase was primarily due to an increase of $91.5
million attributable to Dexter's increased ownership of LTI partially offset by
amortization charges of $4.8 million.
Other assets were $54.8 million as of September 30, 1999, an increase of $8
million, compared with $46.8 million as of September 30, 1998. This increase was
primarily due to increases in long-term deferred tax assets and expenditures for
computer software, net of amortization, partially offset by a decrease in
investments in affiliates due to the divestiture of the Company's 40% interest
in Akzo Dexter Aerospace Finishes VoF in the first quarter of 1999.
Accounts payable of $64.6 million as of September 30, 1999, decreased $27.1
million and $29.8 million, respectively, compared with $91.7 million at December
31, 1998 and $94.4 million at September 30, 1998. These decreases were primarily
due to the divestiture of the Packaging Coatings business.
<PAGE> 6
Item 2 - Management's Discussion and Analysis of Financial
- -------- -------------------------------------------------
Condition and Results of Operations, continued
----------------------------------------------
Analysis of Financial Condition, continued
- ------------------------------------------
Long-term debt was $211.9 million as of September 30, 1999, a decrease of $170.3
million, compared with $382.2 million as of December 31, 1998. This decrease was
primarily due to the repayment of long-term borrowings, related to the increased
ownership of LTI, with proceeds received from the divestiture of the Packaging
Coatings business. Long-term debt at September 30, 1999 increased by $29.4
million compared with $182.5 million as of September 30, 1998. Included in this
increase was $3.5 million of debt related to LTI's acquisition of a process
chromatography and research products business, combined with additional
borrowings used to fund partial payment of the taxes on the gain on the sale of
the Packaging Coatings business.
Deferred items were $39.7 million as of September 30, 1999, an increase of $3.5
million and $5.2 million, respectively, compared with $36.2 million as of
December 31, 1998 and $34.5 million as of September 30, 1998. These increases
were primarily due to a non-compete agreement associated with the divestiture of
the Packaging Coatings business partially offset by decreased pension and
postretirement liabilities.
Long-term deferred income taxes were $44.6 million as of September 30, 1999, an
increase of $22.5 million, compared with $22.1 million as of September 30, 1998.
This increase was primarily due to increased deferred income taxes related to
the increased ownership of LTI, partially offset by decreased deferred income
taxes due to the divestiture of the Packaging Coatings business. Long-term
deferred income taxes at September 30, 1999 decreased $8.9 million from $53.5
million at December 31, 1998, primarily due to the divestiture of the Packaging
Coatings business.
Minority interests of $89.8 million as of September 30, 1999 decreased $31.6
million compared with $121.4 million as of September 30, 1998. This decrease was
primarily due to Dexter's increased ownership of LTI. Dexter's ownership in LTI
increased to approximately 71% in December 1998 from approximately 52% at
September 30, 1998.
Liquidity and Capital Resources
- -------------------------------
The Company's liquidity is strong and ample lines of credit are available to the
Company and its subsidiaries. As shown in the Condensed Statement of Cash Flows,
cash provided from operations of $9.3 million and investment activities of
$159.3 million were exceeded by the cash needed for financing activities of
$195.8 million, thereby decreasing cash for the first nine months of 1999 by
$27.2 million.
Operating activities for the first nine months of 1999 provided $9.3 million in
cash. Net income, after adjustments for the pretax gain on the divestiture of
the Packaging Coatings business, depreciation, amortization, and minority
interests were the principal source of cash from operations in 1999. Working
capital increases were the principal use of cash from operations.
<PAGE> 7
Item 2 - Management's Discussion and Analysis of Financial
- -------- -------------------------------------------------
Condition and Results of Operations, continued
----------------------------------------------
Liquidity and Capital Resources, continued
- ------------------------------------------
Investment activity for the first nine months of 1999 included cash received
from divestitures of $226.4 million, primarily related to the divestiture of the
Packaging Coatings business, including Dexter SAS. Also included in investment
activity during the first nine months of 1999 were capital expenditures of $46.7
million, and cash expenditures for acquisitions of $13.9 million primarily
related to LTI's acquisition of a process chromatography and research products
business.
Financing activities for the first nine months of 1999 included cash outflows
principally used for the repayment of long-term debt of $170.4 million, which
was primarily related to the increased ownership of LTI, the purchase of 344,500
shares of the Company's outstanding common stock for $10.1 million, and dividend
payments of $17.9 million.
The Company plans to meet its future working capital and capital expenditure
needs with funds provided from operations, the reduction of short-term
securities and, as needed, short-term and long-term borrowings.
Impact of the Year 2000
- -----------------------
General
- -------
The year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. Any of the
Company's systems, equipment, or hardware that have date-sensitive software or
embedded chips may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in a system failure or miscalculations causing
disruption of operations, including, among other things, a temporary inability
to properly manufacture products, process transactions, send invoices, or engage
in similar normal business activities.
Based on its initial assessments, the Company had determined that it would be
required to modify or replace portions of its equipment, hardware, and software
so that affected systems will properly utilize dates beyond December 31, 1999.
The Company presently believes that, with modifications and replacement of
existing equipment, hardware, and software, the year 2000 issue will be
mitigated.
Project Plan & Status
- ---------------------
The Company's plan to resolve the year 2000 issue is being implemented by each
of the Company's businesses and involves five phases: inventory; risk
assessment, prioritization, and ownership assignment; compliance research;
remediation; and testing. The inventory phase and the risk assessment,
prioritization, and ownership assignment phase, which were performed
concurrently, are complete. The compliance research phase is also complete. The
remediation and testing phases are substantially complete. Although the
Company's year 2000 plan is being completed on a business by business basis, it
is estimated that the remediation phase is approximately 95% complete, and the
testing phase is approximately 80% to 90% complete.
<PAGE> 8
Item 2 - Management's Discussion and Analysis of Financial
- -------- -------------------------------------------------
Condition and Results of Operations, continued
----------------------------------------------
Impact of the Year 2000, continued
- ----------------------------------
The Company's year 2000 inventory of potentially affected items is segregated
into four categories: business applications (developed software, customized
extensions to purchased software and system interfaces), tools and platforms
(purchased commercial products, both hardware and software), intelligent devices
(manufacturing, laboratory, office, and facilities equipment), and external
business partners (suppliers, customers, and other service providers). Business
applications and tools and platforms are considered information technology
("IT") systems while intelligent devices and external business partners are
considered non-IT systems.
Concerning IT systems, two of the Company's businesses have replaced the
majority of their applications with year 2000 compliant versions of new
enterprise resource planning ("ERP") software. Remaining legacy systems for
these businesses that were not replaced by the ERP systems have been made year
2000 compliant or replaced. Another business has remediated (i.e., made year
2000 compliant) their existing core business systems and has replaced some
portions of their software with year 2000 compliant software. The remaining
business has upgraded its core business applications to a year 2000 compliant
version and has tested these applications to validate year 2000 compliancy.
With respect to non-IT systems, the Company has dedicated resources to assist
its businesses with identifying potentially affected intelligent devices and has
used an outside firm that has a proprietary year 2000 compliance status database
to assist in the compliance research for these devices. Determination of
compliance status, remediation, and testing of these devices includes reliance,
in some cases, on equipment manufacturer's compliance certification.
The external business partners category includes identifying and prioritizing
critical suppliers and customers and communicating with them about their plans
and progress in addressing the year 2000 problem. The Company has established a
questionnaire to be used by the businesses for obtaining this information from
key business partners. To date, the Company is not aware of any problems that
would materially impact results of operations, liquidity, or capital resources.
However, the Company has no means of insuring that these parties will be year
2000 ready and the inability of these parties to successfully complete their
year 2000 compliance program could impact the Company. For key business
partners, the initial assessments are evaluated and, as deemed necessary,
follow-up assessments are made. We expect this process to be ongoing throughout
the remainder of 1999.
The Company has formed contingency and business continuation plans for each
business to address potential year 2000 exposures. Further development and
refinement of these plans will be ongoing throughout the remainder of 1999.
Costs
- -----
The Company utilizes both internal and external resources to repair or replace,
test, and implement the software and operating equipment for year 2000
modifications. The total cost of the year 2000 project is estimated at between
$6 and $7 million and is being funded through operating cash flows. To date, the
Company has incurred approximately $5.0 million (approximately 60% expensed and
40% capitalized) related to all phases of the year 2000 project. The remaining
project costs are attributable to either repair or replacement of equipment,
hardware, and software and will be expensed as incurred or capitalized, as
appropriate.
<PAGE> 9
Item 2 - Management's Discussion and Analysis of Financial
- -------- -------------------------------------------------
Condition and Results of Operations, continued
----------------------------------------------
Impact of the Year 2000, continued
- ----------------------------------
Risks
- -----
The failure to remediate a material year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations, including the ability to produce or deliver products to customers.
Such failures could materially or adversely affect the Company's results of
operations, liquidity, and financial condition. Due to the general uncertainty
inherent in the year 2000 problem, the Company is unable to determine with
certainty at this time whether the consequences of year 2000 failures will have
a material impact on the Company. The Company's year 2000 plan is expected to
significantly reduce the Company's level of uncertainty about the year 2000
problem. The Company believes that by completing its year 2000 plan in a timely
manner, the possibility of significant interruptions of normal operations should
be reduced.
The Company plans to complete the year 2000 project are based on management's
best estimates, which were derived utilizing numerous assumptions of future
events including, but not limited to, the continued availability of certain
resources and other factors. Estimates of the status of completion and the
expected completion dates are based on tasks completed to date compared to all
required tasks. However, there can be no guarantee that expected completion
dates will be met, and actual results could differ materially from those
forecasted. Specific factors that might cause such material differences include,
but are not limited to, the availability and cost of personnel trained in
certain areas, the ability to locate and correct all relevant equipment, devices
and computer codes, and similar uncertainties.
Item 3 - Quantitative and Qualitative Disclosures about Market Risk
- ------ ----------------------------------------------------------
In the first quarter of 1999, the Company sold its Packaging Coatings business,
including Dexter SAS, its French industrial coatings subsidiary. As a result,
the Company no longer has any foreign currency exposures relating to foreign
operations of the Packaging Coatings business. Therefore, in March 1999, the
Company redenominated its Swiss franc 29.9 million floating rate long-term
borrowing due in 2003 into a Euro 18.7 million floating rate long-term borrowing
with terms and conditions which exactly mirror the original Swiss franc debt.
The redenomination was effected to hedge certain of the Company's remaining net
asset investments in foreign operations. The Company also terminated the
interest rate exchange agreement applicable to the Swiss franc debt and entered
into a new interest rate swap agreement expiring in 2003 to limit exposures to
interest rate volatility on the Euro 18.7 million floating rate promissory note.
The swap resulted in a fixed annual rate of 3.975%.
The Company's currency exposures vary but, as of September 30, 1999, are
primarily concentrated in the Euro, British Pound Sterling, Swedish Krona, and
Japanese Yen.
<PAGE> 10
Forward Looking Statements
- --------------------------
Any statements in this report that are not historical facts are "forward-looking
statements" as that term is defined under the Federal Securities Laws.
Forward-looking statements are subject to risks, uncertainties and other
factors, which could cause actual results to differ materially from those stated
in such statements. Such risks, uncertainties and factors include, but are not
limited to, the possibility of adverse rulings by, or adverse developments in
negotiations with, the government, risks pertaining to the year 2000 issue, as
well as other risks detailed in the Company's filings with the Securities and
Exchange Commission.
<PAGE> 11
PART II
OTHER INFORMATION
Item 5 - Other Information
- ------ -----------------
Effective September 1, 1999, Mr. David G. Gordon was appointed
President and Chief Operating Officer of Dexter Corporation. Prior
to his appointment, Mr. Gordon served as a Corporate Vice President
and President of Dexter Nonwoven Materials.
Effective September 1, 1999, Mr. A. Duncan Middleton was appointed a
Corporate Vice President and President of Dexter Nonwoven Materials.
Prior to his appointment, Mr. Middleton was Senior Vice President,
European Operations of Dexter Nonwoven Materials.
In October 1999, Dexter announced that, consistent with the Company's
previously announced divestiture plans, it had signed a definitive
agreement to sell its printed wiring board business to Cookson Group plc
for a total cash consideration of $33 million. The sale is subject to
regulatory approval which is expected to be granted by the end of
November 1999.
Item 6 -Exhibits and Reports on Form 8-K
- ------ --------------------------------
(a) Exhibits
Exhibit 4A(1) - Amendment to Rights Agreement, dated as of August 23,
1996, between the registrant and ChaseMellon Shareholders Services,
L.L.C. dated as of October 4, 1999, was filed as Exhibit 4 to Form 8-K
(File No. 1-5542), which was filed with the Securities Exchange
Commission on October 13, 1999, and is hereby incorporated herein by
reference.
Exhibit 15 of Part 1 - Letter to Securities and Exchange Commission
re: Incorporation of Accountants' Report
Exhibit 27 of Part 1 - Financial Data Schedule
Exhibit 99 of Part 1 - Third Quarter 1999 Financial Statements and
Notes
(b) Reports on Form 8-K
On October 13, 1999, a report on Form 8-K (File No. 1-5542) was filed
for Item 5, Other Events, pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934.
<PAGE> 12
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 November 5, 1999 /s/ Kathleen Burdett
.............................. ................................
Kathleen Burdett
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date November 5, 1999 /s/ Dale J. Ribaudo
............................. ................................
Dale J. Ribaudo
Vice President and Controller
(Principal Accounting Officer)
<PAGE> 13
INDEX TO EXHIBITS
Exhibit No.
4A(1) Amendment to Rights Agreement, dated as of August 23, 1996, between
the registrant and ChaseMellon Shareholder Services, L.L.C. dated as
of October 4, 1999, was filed as Exhibit 4 to Form 8-K (File No.
1-5542), which was filed with the Securities and Exchange Commission
on October 13, 1999, and is hereby incorporated herein by reference.
15 Letter to Securities and Exchange Commission re: Incorporation
of Accountants' Report
27 Financial Data Schedule
99 Third Quarter 1999 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 October 13, 1999 on our review of the interim
financial information of Dexter Corporation (the "Company") as of and for the
period ended September 30, 1999, and included in the Company's quarterly report
on Form 10-Q for the quarter then ended is incorporated by reference in its
registration statements on Form S-8, Registration Nos. 2-63959, 33-27597,
33-53307, 33-53309, 333-02985, 333-04081, 333-42663 and 333-76873. 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
November 5, 1999
<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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 81,734
<SECURITIES> 0
<RECEIVABLES> 170,861
<ALLOWANCES> 5,205
<INVENTORY> 165,229
<CURRENT-ASSETS> 454,558
<PP&E> 694,020
<DEPRECIATION> 357,413
<TOTAL-ASSETS> 1,083,185
<CURRENT-LIABILITIES> 228,067
<BONDS> 211,949
0
0
<COMMON> 24,984
<OTHER-SE> 431,342
<TOTAL-LIABILITY-AND-EQUITY> 1,083,185
<SALES> 786,280
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<CGS> 480,892
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<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 15,950
<INCOME-PRETAX> 155,581
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</TABLE>
<PAGE> 1
EXHIBIT 99a
DEXTER CORPORATION
CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
In thousands of dollars ---------------------------- ----------------------------
(except per share amounts) 1999 1998 Change 1999 1998 Change
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Net Sales $250,291 $283,357 - 12% $786,280 $875,885 - 10%
Other income 2,179 2,528 - 14% 6,702 7,198 - 7%
-------- -------- -------- --------
252,470 285,885 - 12% 792,982 883,083 - 10%
Expenses
Cost of sales 150,949 179,220 - 16% 480,892 555,597 - 13%
Marketing and administrative 61,470 60,015 + 2% 187,865 183,948 + 2%
Research and development 11,576 13,808 - 16% 37,755 42,274 - 11%
Interest 4,864 4,534 + 7% 15,950 13,213 + 21%
Provision for contract settlement 3,870 3,870
Charge for restructuring businesses 2,430 2,430
Gain on divestiture of product lines (91,361)
-------- -------- -------- --------
Income before Taxes 17,311 28,308 - 39% 155,581 88,051 + 77%
Income taxes 3,365 9,908 - 66% 52,673 30,818 + 71%
-------- -------- -------- --------
Income before Minority Interests 13,946 18,400 - 24% 102,908 57,233 + 80%
Minority interests 2,960 4,222 - 30% 9,343 12,408 - 25%
-------- -------- -------- --------
Net income $ 10,986 $14,178 - 23% $93,565 $44,825 + 109%
======== ======== ======== ========
Net Income per Share - basic $0.48 $0.62 - 23% $4.09 $1.95 + 110%
Net Income per Share - diluted $0.48 $0.61 - 21% $4.06 $1.92 + 111%
Dividends Declared per Share $0.26 $0.26 $0.78 $0.76 + 3%
Average Shares Outstanding (000) - basic 22,800 23,034 - 1% 22,856 22,998 - 1%
Average Shares Outstanding (000) - diluted 22,983 23,130 - 1% 23,014 23,204 - 1%
- --------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
Amounts are unaudited.
<PAGE> 2
EXHIBIT 99b
DEXTER CORPORATION
CONDENSED STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
In thousands of dollars SEPTEMBER 30 December 31 September 30
---------------------------------------------------
(except per share amounts) 1999 1998 1998
- -------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Cash and short-term securities $ 81,734 $ 111,049 $ 89,066
Accounts receivable, net 184,013 203,872 205,515
Inventories
Materials and supplies 54,622 65,180 66,367
In process and finished 126,179 129,175 127,917
LIFO reserve (15,572) (17,388) (17,625)
----------- ----------- -----------
165,229 176,967 176,659
Prepaid and deferred expenses 23,582 25,642 29,428
----------- ----------- -----------
Total current assets 454,558 517,530 500,668
Property, plant and equipment, at cost, net 336,607 360,456 360,536
Excess of cost over net assets of
businesses acquired 121,408 156,989 94,766
Patents, technology, trademarks, and covenants 115,844 118,152 27,707
Other assets 54,768 55,241 46,759
----------- ----------- -----------
$ 1,083,185 $ 1,208,368 $ 1,030,436
=========== =========== ===========
LIABILITIES & SHAREHOLDERS' EQUITY
Short-term debt $ 42,405 $ 39,810 $ 37,804
Accounts payable 64,620 91,718 94,385
Dividends payable 5,928 5,989 5,989
Accrued liabilities and taxes 97,101 95,427 97,426
Current installments of long-term debt 18,013 17,230 12,805
----------- ----------- -----------
Total current liabilities 228,067 250,174 248,409
Long-term debt 211,949 382,163 182,519
Deferred items 39,654 36,160 34,511
Long-term deferred income taxes 44,634 53,481 22,081
Long-term environmental reserves 12,773 13,501 13,649
Minority interests 89,782 84,340 121,357
Shareholders' equity
Common stock and paid-in capital 40,410 40,255 37,686
Retained earnings 493,807 418,074 437,183
Treasury stock (59,076) (51,512) (49,749)
Accumulated other comprehensive income (18,815) (18,268) (17,210)
----------- ----------- -----------
Total shareholders' equity 456,326 388,549 407,910
----------- ----------- -----------
$ 1,083,185 $ 1,208,368 $ 1,030,436
=========== =========== ===========
EQUITY PER SHARE $ 20.01 $ 16.86 $ 17.71
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
Amounts as of September 30, 1999 and September 30, 1998 are unaudited.
<PAGE> 3
EXHIBIT 99c
DEXTER CORPORATION
CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Nine Months Ended September 30
------------------------------
In thousands of dollars 1999 1998
- -----------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net income $ 93,565 $ 44,825
Noncash items
Depreciation 27,603 29,850
Amortization 15,777 8,781
Gain on divestiture of product lines (91,361)
Charge for restructuring businesses 2,430
Income taxes (paid) / not due (1,087) 7,480
Minority interests 9,343 12,408
LIFO inventory charge / (credit) 253 (1,174)
Equity in net income of affiliates (394) (2,156)
Other (1,131) 1,423
Operating working capital increase (45,680) (32,885)
--------- ---------
9,318 68,552
--------- ---------
INVESTMENTS
Property, plant and equipment (46,734) (44,056)
Acquisitions (13,880) (1,781)
Divestitures 226,353
Proceeds from exercise of LTI stock options 1,638 5,230
Other (8,107) 2,024
--------- ---------
159,270 (38,583)
--------- ---------
FINANCING
Long-term debt, net (170,437) 4,992
Short-term debt, net 2,398 2,512
Dividends paid (17,893) (17,002)
LTI dividends paid to minority interest shareholders (1,346) (1,703)
Purchase of treasury stock (10,126)
Other 1,621 984
--------- ---------
(195,783) (10,217)
--------- ---------
(DECREASE) INCREASE IN CASH AND SHORT-TERM $ (27,195) $ 19,752
SECURITIES ========= =========
RECONCILIATION OF (DECREASE) INCREASE IN CASH AND
SHORT-TERM SECURITIES
Cash and short-term securities at beginning of period $ 111,049 $ 68,306
Cash and short-term securities at end of period 81,734 89,066
(Decrease) Increase in cash and short-term securities --------- ---------
per Statement of Financial Position (29,315) 20,760
Currency translation effects 2,120 (1,008)
--------- ---------
$ (27,195) $ 19,752
========= =========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
Amounts are unaudited.
<PAGE> 4
EXHIBIT 99d
DEXTER CORPORATION
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Three Months Ended September 30 Nine Months Ended September 30
------------------------------- ------------------------------
In thousands of dollars 1999 1998 Change 1999 1998 Change
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET INCOME $ 10,986 $ 14,178 - 23% $ 93,565 $44,825 + 109%
-------- -------- -------- -------
OTHER COMPREHENSIVE INCOME (LOSS),
NET OF TAX
Currency translation effects 3,035 5,946 - 49% (143) 5,804
Unrealized (losses) gains on investments (51) 105 (404) (89)
-------- -------- -------- -------
OTHER COMPREHENSIVE INCOME (LOSS) 2,984 6,051 - 51% (547) 5,715
-------- -------- -------- -------
COMPREHENSIVE INCOME $ 13,970 $ 20,229 - 31% $ 93,018 $50,540 + 84%
======== ========= ======== =======
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
Amounts are unaudited.
<PAGE> 5
Exhibit 99e
Dexter Corporation
Net Sales by Segment
<TABLE>
<CAPTION>
Three Months Ended September 30 Nine Months Ended September 30
-------------------------------------- ------------------------------
In thousands of dollars 1999 1998 Change 1999 1998 Change
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Life Sciences (a) $ 101,797 $ 89,084 + 14% $ 301,148 $ 268,983 +12%
Nonwovens 69,037 65,628 + 5% 212,533 205,319 + 4%
Specialty Polymers (b) 79,457 128,645 - 38% 272,599 401,583 -32%
------ ------- ------- -------
Consolidated $ 250,291 $283,357 - 12% $ 786,280 $ 875,885 -10%
========= ======== ========= =========
</TABLE>
(a) The effect of businesses acquired increased net sales in the Life Sciences
segment by $1.3 million, or 1% for the quarter, and $2.1 million, or 1%,
year-to-date.
(b) The effect of businesses divested decreased net sales in the Specialty
Polymers segment by $54.5 million, or 42%, for the quarter, and $129.1 million,
or 32%, year-to-date.
Operating Income by Segment
<TABLE>
<CAPTION>
Three Months Ended September 30 Nine Months Ended September 30
------------------------------- ------------------------------
In thousands of dollars 1999 1998 Change 1999 1998 Change
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Life Sciences (a) $ 9,639 $ 13,319 - 28% $ 36,357 $ 41,483 - 12%
Nonwovens (b) 8,225 8,995 - 9% 26,466 29,458 - 10%
Specialty Polymers (c) 6,604 11,952 - 45% 117,575 37,101 + 217%
--------- --------- -------- ---------
Consolidated Operating Income 24,468 34,266 - 29% 180,398 108,042 + 67%
Other Income, net 2,080 1,717 + 21% 5,241 4,352 + 20%
Interest Expense (4,864) (4,534) + 7% (15,950) (13,213) + 21%
General Corporate Expense (4,373) (3,141) + 39% (14,108) (11,130) + 27%
--------- --------- -------- ---------
Consolidated Income before Taxes $ 17,311 $ 28,308 - 39% $155,581 $ 88,051 + 77%
========= ========= ======== =========
</TABLE>
(a) Life Sciences operating income includes $1.3 million of amortization charges
for the quarter, and $6.8 million, year-to-date associated with Dexter's
increased ownership in LTI. Life Sciences operating income includes a $3.9
million charge for the quarter and year-to-date related to the provision for
contract settlement at LTI.
(b) Nonwovens operating income for the quarter and year-to-date includes a $0.8
million restructuring charge.
(c) The gain on the divestiture of product lines increased operating income in
the Specialty Polymers segment by $91.4 million year-to-date. The effect of
businesses divested decreased operating income in the Specialty Polymers segment
by $4.2 million for the quarter and $8.1 million, year-to-date. Specialty
Polymers operating income for the quarter and year-to-date includes a $1.6
million restructuring charge.
- --------------------------------------------------------------------------------
Amounts are unaudited.
<PAGE> 6
Exhibit 99f
Dexter Corporation
Notes to Condensed Consolidated Financial Statements
Note 1 - In the opinion of the Company's management, the unaudited
condensed consolidated 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
condensed consolidated financial statements, including
management's discussion in Part 1, Item 2 of this Form 10-Q, are
incorporated as part of these condensed 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
nine-month periods ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
Three Months ended Nine Months ended
Amounts in thousands September 30 September 30
(except per share data) 1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EARNINGS PER SHARE - BASIC:
Net income $ 10,986 $ 14,178 $ 93,565 $ 44,825
Weighted average shares
outstanding 22,800 23,034 22,856 22,998
Earnings per share - basic $ .48 $ .62 $ 4.09 $ 1.95
EARNINGS PER SHARE - DILUTED:
Net income $ 10,986 $ 14,178 $ 93,565 $ 44,825
Effect of subsidiary dilutive
options on net income (25) (102) (64) (320)
-------- -------- -------- --------
$ 10,961 $ 14,076 $ 93,501 $ 44,505
======== ======== ======== ========
Weighted average shares
outstanding 22,800 23,034 22,856 22,998
Weighted average effect of
common stock equivalents 183 96 158 206
-------- -------- -------- --------
22,983 23,130 23,014 23,204
======== ======== ======== ========
Earnings per share - diluted $ .48 $ .61 $ 4.06 $ 1.92
</TABLE>
<PAGE> 7
Exhibit 99f
Dexter Corporation
Notes to Condensed Consolidated Financial Statements (continued)
Note 3 - In September 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS) No.
133, Accounting for Derivative Instruments and Hedging
Activities. As issued, this statement is effective for all fiscal
quarters of all fiscal years beginning after June 15, 1999. In
June 1999, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 137,
Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133. This
statement amends Statement No. 133 to be effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. The
Company is currently evaluating the impact of SFAS No. 133.
Note 4 - The following are included as components of Common Stock and
Paid-in Capital:
<TABLE>
<CAPTION>
COMMON STOCK & PAID-IN CAPITAL SEPTEMBER 30, December 31, September 30,
(in thousands of dollars) 1999 1998 1998
- ------------------------- -------- -------- --------
<S> <C> <C> <C>
Common stock $ 24,984 $ 24,984 $ 24,984
Paid-in capital 18,358 17,689 15,228
Unearned compensation on
restricted stock (2,932) (2,418) (2,526)
-------- -------- --------
$ 40,410 $ 40,255 $ 37,686
======== ======== ========
</TABLE>
Note 5 - The following are included as components of Accumulated Other
Comprehensive Income:
<TABLE>
<CAPTION>
ACCUMULATED OTHER COMPREHENSIVE SEPTEMBER 30, December 31, September 30,
INCOME (in thousands of dollars) 1999 1998 1998
- ------------------------------------ -------- -------- --------
<S> <C> <C> <C>
Currency translation effects ($18,000) ($17,857) ($16,671)
Unrealized losses on investments (794) (390) (515)
Minimum pension liability adjustment (21) (21) (24)
-------- -------- --------
($18,815) ($18,268) ($17,210)
======== ======== ========
</TABLE>
Note 6 - Presented below is a reconciliation of currency translation
effects, included in the Statement of Comprehensive Income, for
reclassification adjustments due to divestitures:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
(in thousands of dollars) SEPTEMBER 30, 1999 SEPTEMBER 30, 1999
- ------------------------- -------------------- -------------------
<S> <C> <C>
Currency translation effects $ 3,035 $ (8,717)
Plus: Reclassification adjustments
for losses included in net
income due to divestitures 8,574
-------- ------------
Net currency translation effects $ 3,035 $ (143)
======== ============
</TABLE>
<PAGE> 8
Exhibit 99f
Dexter Corporation
Notes to Condensed Consolidated Financial Statements (continued)
Note 7 - In August 1998, the Company entered into a purchase and sale
agreement to sell certain assets and stock of its Packaging
Coatings business and Dexter SAS to The Valspar Corporation. The
sale of these businesses was subject to regulatory approval and
customary closing conditions. This transaction was completed in
February 1999 with total proceeds of $221.9 million.
In January 1999, the Company divested its 40% interest in Akzo
Dexter Aerospace Finishes VoF, a joint venture between the
Company and Akzo Nobel NV, to Akzo Nobel NV for approximately
book value.
Note 8 - In December 1998, Dexter acquired an additional 22% ownership of
LTI. As a result of the acquisition, Dexter owns an aggregate of
approximately 71% of the total number of issued and outstanding
shares of LTI.
The following unaudited pro forma information presents the
results of operations of the Company as if the acquisition had
taken place on January 1, 1998.
<TABLE>
<CAPTION>
In Thousands of Dollars Three Months Ended Nine Months Ended
(except per share amounts) September 30, 1998 September 30, 1998
-------------------------- ------------------ ------------------
<S> <C> <C> <C>
Net Sales $ 283,357 $ 875,885
Net Income $ 12,797 $ 38,859
Net Income Per Share - diluted $ .55 $ 1.67
</TABLE>
These unaudited pro forma results have been prepared for
comparative purposes only and include certain adjustments, such
as the charges for acquired-in-process research and development
and transaction costs, additional amortization expense, and
increased interest expense on acquisition debt. They do not
purport to be indicative of the results of operations which
actually would have resulted had the acquisition occurred on the
date indicated, or which may result in the future.
Note 9 - Assets in the Specialty Polymers segment at September 30, 1999
were $262.1 million, a decrease of $155.9 million, compared with
$418 million at December 31, 1998. This decrease was primarily
due to the divestiture of the Packaging Coatings business,
including Dexter SAS, in February 1999.
Assets in the Life Sciences segment at September 30, 1999 were
$347.1 million, an increase of $49.6 million, compared with
$297.5 million at December 31, 1998. This increase was primarily
due to the acquisition by LTI of a process chromatography and
research products business in May 1999, and capital expenditures,
net of depreciation.
<PAGE> 9
Exhibit 99f
Dexter Corporation
Notes to Condensed Consolidated Financial Statements (continued)
Note 10 - The Company and its subsidiaries are subject to potential
liability under government regulations, contractual and other
matters, and various claims and legal actions which are pending
or may be asserted. These matters arise in the ordinary course
and conduct of the business of the Company and its subsidiaries
and some are expected to be covered, at least in part, by
insurance. At September 30, 1999, $0.4 million of current and $5
million of long-term receivables from third party insurance
companies are included as assets of the Company. Equal and
offsetting payables to third parties are included as liabilities
of the Company.
In September 1999, LTI submitted a report in connection with a
voluntary disclosure to the Department of Veteran Affairs ("VA")
regarding matters involving the management of LTI's Federal
Supply Schedule contract with the VA that has been in effect
since April 1992. As part of the disclosure LTI has offered to
provide a refund to the government in the amount of $3.9 million.
LTI has recorded this amount in September 1999. There can be no
assurance that the government will agree with LTI's assessment of
this matter or accept LTI's offered refund amount. Consequently,
it is possible the final resolution of this matter could
materially differ from LTI's offer and could have a material
adverse effect on the Company's financial position, operating
results or cash flows when resolved in a future reporting period.
While the outcome of all of the pending and potential claims and
legal actions against the Company and its subsidiaries cannot be
forecast with certainty, management believes that, with the
possible exception of the potential liability of LTI described
above, such matters should not result in any liability which
would have a material adverse effect on the Company's financial
position, results of operations, or cash flows.
<PAGE> 10
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 September 30, 1999 and 1998, and the related condensed
statements of income and comprehensive income for each of the three-month and
nine-month periods then ended, and the condensed statement of cash flows for the
nine-month periods then ended. These financial statements are the responsibility
of the company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed interim 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, 1998, 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 9, 1999, 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, 1998 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
October 13, 1999
