<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11 - K
[x] Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of
1934 for the fiscal year ended DECEMBER 31, 1998
or
[ ] Transition Report Pursuant to Section 15(d) of the Securities Exchange Act
of 1934 for the transition period from ____________ to_____________
Commission file number 1 - 5542
DEXTER MAGNETIC'S EMPLOYEE
RETIREMENT INCOME TRUST PLAN
(Full title of plan)
Dexter Corporation
One Elm Street
Windsor Locks, CT 06096
(Name of issuer of the securities held pursuant to the plan
and address of its principal executive office)
REQUIRED INFORMATION
The Dexter Magnetic's Employee Retirement Income Trust Plan ('Plan') is subject
to the Employee Retirement Income Security Act of 1974 ('ERISA'). Therefore,
attached hereto, in lieu of the requirements of Items 1 - 3 of Form 11 - K, are
the financial statements and supplemental schedule of the Plan for the two
fiscal years ended December 31, 1998 and 1997, which have been prepared in
accordance with the financial reporting requirements of ERISA.
EXHIBIT
<TABLE>
<CAPTION>
Designation Description Method of Filing
- ----------- ----------- ----------------
<S> <C> <C>
Exhibit 23 Consent of PricewaterhouseCoopers LLP, Filed with this report
Independent Public Accountants
</TABLE>
<PAGE> 2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Dexter
Corporation, the plan administrator of The Dexter MERIT Plan, has duly caused
this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
THE DEXTER MAGNETIC'S EMPLOYEE
RETIREMENT INCOME TRUST PLAN
Date: June 29, 1999 /s/ Lawrence D. McClure
---------------- ---------------------------------
Lawrence D. McClure
Dexter Corporation
Plan Administrator
<PAGE> 3
DEXTER MAGNETIC'S
EMPLOYEE
RETIREMENT INCOME
TRUST PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
<PAGE> 4
DEXTER MAGNETIC'S EMPLOYEE RETIREMENT INCOME TRUST PLAN
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants 1
Financial Statements
Statement of Net Assets Available for Benefits at December 31, 1998
and 1997 3
Statement of Changes in Net Assets Available for Benefits for the
years ended December 31, 1998 and 1997 4
Notes to Financial Statements 5
Supplemental Schedules
Line 27(e) - Schedule of Nonexempt Transactions
for the year ended December 31, 1998 16
</TABLE>
<PAGE> 5
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Plan Administrator of the
Dexter Magnetic's Employee Retirement Income Trust Plan
We have audited the accompanying statement of net assets available for plan
benefits of Dexter Magnetic's Employee Retirement Income Trust Plan (the "Plan")
at December 31, 1998 and 1997, and the related statement of changes in net
assets available for plan benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
Except as explained in the following paragraph, we conducted our audits in
accordance with generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
As permitted by 29 CFR 2520.103-8 of the Department of Labor's Rule and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, investment assets held by Fleet National Bank, the trustee
of the Plan assets during 1997, and transactions in those assets were excluded
from the scope of our audit of the Plan's financial statements at and for the
year ended December 31, 1997, except for comparing the information provided by
the trustee, which is summarized in Note 7, with the related information
included in the financial statements.
Because of the significance of the information that we did not audit, we are
unable to, and do not, express an opinion on the Plan's financial statements at
December 31, 1997 and for the year then ended. The form and content of the
information included in the 1997 financial statements, other than that derived
from the information certified by the trustee, have been audited by us and, in
our opinion, are presented in compliance with the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974.
<PAGE> 6
In our opinion, the 1998 financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of the Plan at
December 31, 1998, and changes in its net assets available for benefits for the
year then ended in conformity with generally accepted accounting principles.
Our audit of the Plan's financial statements at December 31, 1998 and for the
year then ended was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedule of nonexempt transactions
for the year ended December 31, 1998 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements, but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements for
the year ended December 31, 1998, and, in our opinion, is fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
June 8, 1999
Springfield, Massachusetts
-2-
<PAGE> 7
DEXTER MAGNETIC'S EMPLOYEE RETIREMENT INCOME TRUST PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
ASSETS
Investment in Master Trust, at fair value $33,967,216 $26,737,914
Loans to participants -- 357,847
Contributions receivable
Employer 1,069,849 1,496,474
Other -- 10,347
----------- -----------
Total assets 35,037,065 28,602,582
Accrued administrative expenses -- 17,985
----------- -----------
Net assets available for benefits $35,037,065 $28,584,597
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE> 8
DEXTER MAGNETIC'S EMPLOYEE RETIREMENT INCOME TRUST PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Additions to net assets attributed to
Contributions
Employer $ 1,069,849 $ 1,496,474
Employee 355,021 --
Interest and dividend income -- 25,648
Net appreciation of the master trusts 6,073,130 4,972,952
----------- -----------
7,498,000 6,495,074
----------- -----------
Deductions from net assets attributed to
Benefits paid directly to participants or
their beneficiaries 979,885 2,067,528
Administrative expenses 65,635 107,125
Other 12 --
----------- -----------
1,045,532 2,174,653
----------- -----------
Net increase 6,452,468 4,320,421
Net assets available for benefits, beginning of year 28,584,597 24,264,176
----------- -----------
Net assets available for benefits, end of year $35,037,065 $28,584,597
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 9
DEXTER MAGNETIC'S EMPLOYEE RETIREMENT INCOME TRUST PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------------------
1. DESCRIPTION OF PLAN AND NATURE OF OPERATIONS
The following is a general description of Dexter Magnetic's Employee
Retirement Income Trust Plan (the Plan). Participants should refer to the
Plan document for a more complete description of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan covering all full-time employees of
Dexter Magnetic Technologies, Inc. Formerly, the Permag Corporation's Plan
was the Permag Employees Retirement Trust and has now been restated effective
as of January 1, 1998 to be Dexter Magnetic's Employee Retirement Income
Trust Plan, maintained for the benefit of eligible employees of Dexter
Magnetic Technologies, Inc. It is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA) and is intended to meet the
requirements of Section 401(a), 401(k), and 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code".) The Plan was amended and restated as
of October 1, 1998 to allow for amended plan provisions and additional
investment options.
PLAN ADMINISTRATOR
Dexter Corporation (the Company) is the administrator of the Plan. Among the
responsibilities of the Company as administrator are to calculate employer
contributions, to determine financial hardship for participant withdrawals
and to make such rules and regulations as it maybe deem necessary to carry
out the provisions of the Plan. All administrative fees are paid from the
assets of the Plan.
ELIGIBILITY
Each eligible employee becomes a participant in the Plan on the first day of
the month following the date the employee completes one year of eligibility
service; however, with respect to pre-tax and voluntary after tax
contributions, an eligible employee shall be deemed to be a participant on
the first day of the month immediately following enrollment in the Plan.
Enrollment is permitted at any time following a participant's date of hire.
CONTRIBUTIONS
The Company contribution to the Plan each plan year varies according to
profits (generally, 7-10% of the Plan's eligible earnings). The contribution
by the Company is remitted annually to the trustee. Payment is usually made
on or before the due date of the Company's federal income tax return,
including extensions thereof.
Participants may make elective contributions to the Plan either on a pre-tax
or after-tax basis; however, total after-tax participant contributions are
limited to up to 15% of a participant's compensation during plan year.
Participant contributions are also subject to certain requirements, including
Sections 401(k), 401(m), 402(g) and 415(d) of the Code.
PARTICIPANT'S ACCOUNTS
Each participant's share of the allocation of the Company's contribution and
forfeitures of nonvested interest of former participants is allocated to his
or her account based on the individual's compensation paid during the plan
year. However, participants who do not have at least 1,000 hours of service
during such plan year or who are not employed by the Company on the last day
of the plan year are generally ineligible to share in the allocation.
-5-
<PAGE> 10
DEXTER MAGNETIC'S EMPLOYEE RETIREMENT INCOME TRUST PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------------------
At any time, a participant may direct the Plan's trustees to invest the value
of his or her account and future contributions in Spartan U.S. Equity Index
Fund, Managed Income Portfolio (MIP) II, Dexter Corporation Stock Fund, Small
Cap Selector, Diversified International Fund, Puritan Fund, Equity-Income
Fund, Blue Chip Growth Fund, Aggressive Growth Fund, and PIMCO Total Return
Fund.
Daily the yield (interest, dividends and net realized and unrealized gains
and losses) on investments is allocated to each participant's account in
accordance with the ratio of the value of a participant's account to the
value of fund(s).
VESTING
The Company's portion of a participant's account shall become fully vested
upon (a) attaining the age of 65, (b) death, (c) termination of employment
due to permanent disability, (d) completion of four years of vesting service
(three years for employees hired prior to January 1, 1998), or (e)
discontinuance of contributions by the Company or partial or complete
termination of the Plan. Employee elective pre-tax and after-tax
contributions are immediately fully vested.
If a participant separates from the Company before becoming fully vested,
nonvested matching contributions will be forfeited. These forfeitures will be
applied toward Company contributions.
PAYMENT OF BENEFITS
Each participant is eligible to receive payment of his or her account upon
normal retirement, age 55, or deferred retirement. There are also provisions
for distributions upon a participant's early retirement, late retirement,
termination of employment, death benefits, or disability.
Each participant may elect distribution of his or her account in a single
lump sum or a payment each year in periodic cash installments, of an amount
equal to 10% a year over a ten year period. However, all amounts credited to
a participant's account on or after July 1, 1992 shall be paid in the form of
a single lump sum, and the installment option shall not be available. Once a
participant attains age 70-1/2, however, the participant must take
substantially equal installments over a period not to exceed the
participant's life expectancy.
Any portion of a participant's account which is vested in Dexter Corporation
common stock may be received, when eligible, in whole shares of stock (with
any fractional shares in cash), in cash, or in some combination of shares of
stock and cash as elected by the participant.
WITHDRAWALS AND LOANS
A participant may withdraw all or any portion of his or her account balance
resulting only from his or her contributions (exclusive of earnings in
pre-tax contributions). Additionally, a participant may request to withdraw
up to 50% for his or her Company contributions once fully vested. Withdrawals
are subject to participant's proof of hardship due to an immediate and heavy
financial need as further provided in the Plan. The determination of
financial hardship and the amount withdrawn shall be made by the Plan
Administrator in accordance with nondiscrimination standards applied
uniformly to all participants similarly situated.
-6-
<PAGE> 11
DEXTER MAGNETIC'S EMPLOYEE RETIREMENT INCOME TRUST PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------------------
Participants may also obtain loans from the Plan. A participant may have no
more than two loans outstanding at any time. The total of all loans
outstanding generally shall not exceed the lesser of 50% of the participant's
vested interest in his or her account or $50,000. Interest is charged on the
outstanding loan balance at a rate in accordance with the loan policy and
subject to uniform and nondiscriminatory rules as established by the Plan
Administrator.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The financial statements have been prepared on the accrual basis of
accounting. The preparation of financial statements in conformity with
generally accepted accounting principles requires the Plan Administrator to
make estimates and assumptions that affect the reported amount of net assets
available for benefits at the date of the financial statements and the
reported amounts of additions to and deductions from net assets available for
benefits during the reporting period. Actual results could differ from those
estimates.
RISKS AND UNCERTAINTIES
The plan provides for investment options in various funds of a master trust
which hold any combination of stocks, bonds, fixed income, and other
investment securities. Investment securities are exposed to interest rate,
market, credit and other risks. Due to the uncertainty related to changes in
these factors, it is at least reasonably possible that changes in the value
of investments in the near term could materially affect participants' account
balances and the amounts reported in the statement of net assets available
for benefits and the statement of changes in net assets available for
benefits.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
INVESTMENT VALUATION
All assets are valued as of the last business day of the year according to
the following methods:
INVESTMENT IN MASTER TRUST
Fleet National Bank held certain assets of the Plan and other employee
benefit plans of Dexter Corporation, the Parent of the Company, in a Master
Trust (the "Fleet Master Trust") through July 31, 1998. On August 1, 1998,
the Fleet Master Trust assets for all defined contribution plans were
transferred to Fidelity Management Trust Company ("Fidelity Master Trust".)
The allocable portion of the assets and related income of the master trusts
are included in these financial statements.
Approximately fifteen percent of the assets of the Fidelity Master Trust are
owned by the Trust at December 31, 1998 (approximately ten percent by the
Fleet Master Trust at December 31, 1997). In addition to Fleet and Fidelity,
other managers act as investment advisors for certain of the combined assets
of the master trusts.
The investment in the master trusts consists of holdings in pooled funds and
are valued at fair value as noted below for each type of investment. A unit
value for each fund was determined by dividing the outstanding units into the
market value of the fund. The unit values were utilized to allocate
investment income and the assets to individual participant's accounts.
-7-
<PAGE> 12
DEXTER MAGNETIC'S EMPLOYEE RETIREMENT INCOME TRUST PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------------------
At December 31, 1998 and 1997, investments contained in pooled funds were
valued according to the following methods:
COMMON STOCK
If listed on a major exchange or traded over-the-counter, the Trust uses
the closing price for that exchange. If the stock is traded on more than
one exchange, the closing composite price is used.
CORPORATE BONDS
Corporate bonds are stated at values determined on the basis of matrix
prices received from a third-party broker.
GOVERNMENT SECURITIES
The Trust accounting reflects dealer market value quotes at the last
business day of the month.
SHORT-TERM OBLIGATIONS
Short-term instruments are valued at cost which approximates fair value.
PARTICIPANT LOANS
Participant loans are stated at the unpaid principal balance.
MUTUAL FUNDS
The fund's net asset value per share is the value of a single share.
Fidelity normally calculates the fund's net assets value per share as of
the close of business of the New York Stock Exchange.
MANAGED INCOME PORTFOLIO (MIP) II
The value of each share is determined on a daily basis by subtracting
total liabilities from the total value of the assets, including accrued
income, and dividing the amount remaining by the number of outstanding
units on each valuation date. Portfolio assets are valued at fair value as
determined in good faith by Fidelity.
OTHER
The Fleet Master Trust recorded purchases and sales of securities on a
settlement date basis. Gain or loss on sales of securities were based on
average cost. Dividend income was recorded on the ex-dividend date. The
Fidelity Master Trust values transactions daily on a trade date basis. Income
from other investments is recorded as earned on the accrual basis.
The net appreciation in the fair value of investments is presented in the
statement of changes in net assets available for benefits under the caption
"net appreciation of the master trusts." This amount includes the realized
gains and losses, the unrealized appreciation/depreciation on those
investments, and dividend and interest income earned.
3. TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated July 7, 1994 that the Plan as amended through June 3, 1994 is
designated in accordance with the applicable sections of the Internal Revenue
Code. The Plan has been amended since receiving the determination letter. The
Plan Administrator and the Plan's tax counsel believe that the Plan is
currently designed and being operated in compliance with the applicable
requirements of the Internal Revenue Code.
-8-
<PAGE> 13
DEXTER MAGNETIC'S EMPLOYEE RETIREMENT INCOME TRUST PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------------------
4. PLAN TERMINATION
The Company reserves the right by resolution of its Board of Directors to
amend or modify the Plan at any time and for any reason, and also reserves
the right by resolution to terminate the Plan at any time for any reason but
no such action shall permit any part of the assets of the fund to be used
for, or diverted to, purposes other than for the exclusive benefit of
participants, retired participants or beneficiaries, or to revert to the
Company prior to satisfaction of all the liabilities under the Plan; nor
shall such action, except to the extent required to permit the Plan to meet
the requirements of the Internal Revenue Code or of any governmental
authority, affect adversely, in any way, rights therefore acquired by the
participants.
In the event of full or partial termination of the Plan or the permanent
discontinuance of contributions, a distribution of one hundred percent of
each participant's share will be made. Distribution may be made, as feasible,
to another qualified plan or to an individual retirement account.
5. RECLASSIFICATION
Certain 1997 amounts have been reclassified to conform with the current year
presentation.
-9-
<PAGE> 14
DEXTER MAGNETIC'S EMPLOYEE RETIREMENT INCOME TRUST PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------------------
6. INVESTMENT CONTRACTS WITH INSURANCE COMPANIES
VALUATION
The MIP II fund of the Fidelity Master Trust, in which the Plan participates,
invests in five guaranteed investment contracts (GICs) with insurance
companies in 1998 (five in the Fleet Master Trust Fixed Income Fund in 1997).
Also included in the MIP II Blend fund is the SEI Stable Asset Fund which is
a commingled fund consisting of GICs and other investments. These GICs and
the SEI Stable Asset Fund are fully benefit-responsive and are included in
the Fidelity Master Trust at contract value plus accrued interest. The fair
values of the individual contracts have been determined based on market
interest rates for interest rate swap agreements of comparable duration for
the year ended December 31, 1998 and 1997 and are presented below:
<TABLE>
<CAPTION>
1998
- -----------------------------------------------------------------------------------------------------------
Contract Value
Maturity Crediting Including Fair
Issuer Date Interest Rate Accrued Interest Value
<S> <C> <C> <C> <C>
John Hancock Mutual Life Insurance Company 12/15/99 7.50% $ 6,900,854 $ 7,037,358
John Hancock Mutual Life Insurance Company 06/15/99 8.25 3,432,078 3,473,941
Metropolitan Life Insurance Company 06/15/01 6.70 3,316,202 3,316,203
New York Life Insurance and Annuity Corporation 12/15/99 6.35 5,654,207 5,750,004
SEI Stable Asset Fund 03/13/99 6.16 25,437,398 25,437,389
Fidelity IPL N/A 5.62 16,514,080 16,514,080
----------- -----------
Total $61,254,819 $61,528,975
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
1997
- -----------------------------------------------------------------------------------------------------------
Contract Value
Maturity Crediting Including Fair
Issuer Date Interest Rate Accrued Interest Value
<S> <C> <C> <C> <C>
John Hancock Mutual Life Insurance Company 12/15/99 7.50% $ 6,419,400 $ 6,596,663
John Hancock Mutual Life Insurance Company 12/15/98 8.25 6,339,647 6,503,876
Metropolitan Life Insurance Company 06/15/01 6.70 3,107,969 3,170,729
New York Life Insurance and Annuity Corporation 09/15/98 7.00 4,108,467 4,136,796
New York Life Insurance and Annuity Corporation 02/15/00 6.35 5,316,603 5,354,718
SEI Stable Asset Fund Various Various 24,627,703 24,505,061
----------- -----------
Total $49,919,789 50,267,843
=========== ==========
</TABLE>
CONCENTRATION OF CREDIT RISK
Of the guaranteed investment contracts included in the MIP II fund, two
(three in the fixed income fund in 1997), which were held with two individual
insurance companies at December 31, 1998 and 1997 represent concentrations of
credit risk. The total contract values held with each company are
approximately $6.9 million and $16.5 million, respectively ($6.4 million,
$6.3 million and $5.3 million, respectively at December 31, 1997), and
represent 11.1% and 26.5%, respectively, (12.7%, 12.5% and 10.5%,
respectively, at December 31, 1997), of the total fair value of the MIP II
fund (fixed income fund in 1997). The SEI Stable Asset Fund has a contract
value, including accrued interest, of approximately $25.4 million ($24.6
million in 1997) and represents 40.8% (48.6% in 1997) of the total fair value
of the MIP II fund (fixed income fund in 1997).
-10-
<PAGE> 15
DEXTER MAGNETIC'S EMPLOYEE RETIREMENT INCOME TRUST PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------------------
7. MASTER TRUST
Investments and net appreciation from master trusts for The Dexter
Corporation Master Trusts and the Plan's allocable portion at December 31,
1998 and 1997 and for the years then ended are as follows:
<TABLE>
<CAPTION>
Investment in Master Trust
-------------------------------------------------------
December 31, 1998
-------------------------------------------------------
Plan's Share of
Fidelity Master Trust Fidelity Master Trust
--------------------------- -------------------------
Fair Value Cost Fair Value Cost
<S> <C> <C> <C> <C>
Spartan U.S. Equity Index fund $144,559,480 $136,435,450 $22,672,468 $21,416,650
MIP II 62,349,051 62,349,051 10,325,758 10,325,758
Dexter Corporation Stock fund 2,224,784 1,907,087 17,404 15,985
Participant Loan fund 4,374,338 4,374,338 792,047 792,047
Small Cap Selector 5,525,948 5,353,926 115,886 110,293
Diversified International fund 2,426,685 2,519,856 22,504 23,042
Puritan fund 1,539,278 1,451,542 137 131
Equity - Income fund 886,202 844,886 137 132
Blue Chip Growth fund 5,502,563 4,769,996 12,494 10,946
Aggressive Growth fund 2,179,539 1,908,378 6,266 5,339
PIMCO Total Return fund 2,479,245 2,548,929 2,115 2,193
------------ ------------ ----------- -----------
$234,047,113 $224,463,439 $33,967,216 $32,702,516
============ ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Net Appreciation From Master Trusts
-----------------------------------------------
For the Year Ended December 31, 1998
-----------------------------------------------
Fleet Fidelity Plan's Share of
Master Trust Master Trust master trusts
<S> <C> <C> <C>
Spartan U.S. Equity Index fund $ 30,494,147 $ 13,458,797 $ 5,357,697
MIP II 2,439,406 1,794,340 668,082
Dexter Corporation Stock fund (2,565,897) 203,524 (834)
Participant Loan fund 160,191 156,919 41,392
Pension Bond Fund 2,142,956 --
Pension Fixed Fund 538 --
Small Cap Selector 267,638 (25,919) 3,620
Diversified International fund 947,107 (92,647) 302
Puritan fund 155,327 7
Equity - Income fund 68,932 7
Blue Chip Growth fund 770,395 1,548
Aggressive Growth fund 387,852 1,295
PIMCO Total Return fund 15,179 14
------------ ------------ -----------
$ 33,886,086 $ 16,892,699 $ 6,073,130
============ ============ ===========
</TABLE>
-11-
<PAGE> 16
DEXTER MAGNETIC'S EMPLOYEE RETIREMENT INCOME TRUST PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT IN FLEET MASTER TRUST
------------------------------------------------------
December 31, 1997
------------------------------------------------------
Plan's Share of
Fleet Master Trust Fleet Master Trust
--------------------------- ------------------------
Fair Value Cost Fair Value Cost
<S> <C> <C> <C> <C>
Equity fund $151,553,887 $109,123,219 $18,235,229 $13,129,897
Fixed income fund 50,692,638 50,692,638
Dexter stock fund 9,255,185 6,240,802
Participant loan fund 3,092,826 3,092,826
Money market fund 1997 (safety of
principal fund 1996) 2,610,032 2,610,032 1,264,032 1,264,032
Pension bond fund 21,952,225 21,678,206
Pension fixed fund 9,554 9,554
Permag bond fund 7,238,653 7,154,946 7,238,653 7,154,946
Small capital stock fund 4,849,734 4,699,045
International stock fund 6,567,574 6,993,935
------------ ------------ ----------- -----------
$257,822,308 $212,295,203 $26,737,914 $21,548,875
------------ ------------ ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
NET APPRECIATION FROM
FLEET MASTER TRUST
--------------------------------
FOR THE YEAR ENDED
DECEMBER 31, 1997
--------------------------------
PLAN'S SHARE OF
MASTER TRUST MASTER TRUST
<S> <C> <C>
Equity fund $ 34,850,215 $4,236,274
Fixed income fund 3,452,216
Dexter Corporation stock fund 2,580,658
Participant loan fund 222,688
Money market fund 1997 133,963 77,982
Pension bond fund 2,025,291
Pension fixed fund 529
Permag bond fund 658,696 658,696
Small capital stock fund 595,134
International stock fund (122,116)
------------ ----------
$ 44,397,274 $4,972,952
============ ==========
</TABLE>
INFORMATION CERTIFIED BY TRUSTEE
The Plan Administrator had elected the method of compliance permitted by 29
CFR 2520.103-8 of the Department of Labor's Rules and Regulations for
Reporting and Disclosure under ERISA for the plan year ended December 31,
1997. Accordingly, Fleet National Bank, the trustee of the Plan assets,
certified to the Plan Administrator the completeness and accuracy of the fair
value of investments and investment transactions of the Master Trust as of
and for the year ended December 31, 1997, and investments in the Master Trust
included in the Statement of Net Assets Available for Benefits, net
appreciation of the Master Trust included in the Statement of Changes in Net
Assets Available for Plan Benefits, and the information contained in Notes 2,
7 and 8 concerning accounting policies and investments.
-12-
<PAGE> 17
DEXTER MAGNETIC'S EMPLOYEE RETIREMENT INCOME TRUST PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------------------
At December 31, 1998, 275 employees were participating in the Plan.
Approximate participation by fund as follows:
<TABLE>
<CAPTION>
NUMBER OF
PARTICIPANTS
<S> <C>
U.S. Equity Index fund 243
MIP II Blend fund 268
Dexter Corporation stock fund 31
Participant loan fund 62
Select small cap pool fund 73
Diversified International fund 32
Puritan fund 10
Equity-Income Growth fund 4
Blue Chip Growth fund 37
Emerging Growth fund 27
PIMCO Total Return fund 15
</TABLE>
-13-
<PAGE> 18
DEXTER MAGNETIC'S EMPLOYEE RETIREMENT INCOME TRUST PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
- -------------------------------------------------------------------------------
8. AMOUNTS ALLOCABLE TO EACH SEPARATE INVESTMENT FUND
The changes in net assets available for plan benefits of the various funds
for the year ended December 31, 1998 are as follows:
<TABLE>
<CAPTION>
SPARTAN
U. S. Equity Dexter Small Cap
Index MIP II Puritan Participant Corporation Selector
Fund Fund Loan Fund Stock Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to
Contributions
Employer $ 635,845 $ 225,796 $5,048 $ -- $11,139 $101,853
Employee 184,255 41,096 142 -- 16,154 90,140
Net appreciation of the master trusts 5,357,697 668,082 7 41,392 (834) 3,620
----------- ---------- ------ -------- ------- --------
6,177,797 934,974 5,197 41,392 26,459 195,613
Deductions from net assets attributed to
Benefits paid directly to participants
or their beneficiaries 471,560 508,325 -- -- -- --
Administrative expenses 65,244 375 -- -- 2 12
----------- ---------- ------ -------- ------- --------
536,804 508,700 -- -- 2 12
Net transfers (825,978) 364,883 -- 422,823 791 20,965
----------- ---------- ------ -------- ------- --------
Net addition (deduction) 4,815,015 791,157 5,197 464,215 27,248 216,566
Net assets available for benefits,
beginning of year 19,521,390 8,705,360 -- 357,847 -- --
----------- ---------- ------ -------- ------- --------
Net assets available for benefits,
end of year $24,336,405 $9,496,517 $5,197 $822,062 $27,248 $216,566
=========== ========== ====== ======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
Diversified Blue Chip Aggressive PIMCO
International Equity- Growth Growth Total
Fund Income Fund Fund Fund Return Fund Total
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to
Contributions
Employer $21,681 $2,226 $36,453 $20,506 $ 9,302 $ 1,069,849
Employee 19,139 142 2,389 954 610 355,021
Net appreciation of the master trusts 302 7 1,548 1,295 14 6,073,130
------- ------ ------- ------- ------- -----------
41,122 2,375 40,390 22,755 9,926 7,498,000
Deductions from net assets attributed to
Benefits paid directly to participants
or their beneficiaries -- -- -- -- -- 979,885
Administrative expenses 2 -- -- -- -- 65,635
------- ------ ------- ------- ------- -----------
2 -- -- -- -- 1,045,520
Net transfers 2,118 -- 8,752 4,095 1,539 (12)
------- ------ ------- ------- ------- -----------
Net addition (deduction) 43,238 2,375 49,142 26,850 11,465 6,452,468
Net assets available for benefits,
beginning of year -- -- -- -- -- 28,584,597
------- ------ ------- ------- ------- -----------
Net assets available for benefits,
end of year $43,238 $2,375 $49,142 $26,850 $11,465 $35,037,065
======= ====== ======= ======= ======= ===========
</TABLE>
-14-
<PAGE> 19
DEXTER MAGNETIC'S EMPLOYEE RETIREMENT INCOME TRUST PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
- -------------------------------------------------------------------------------
8. AMOUNTS ALLOCABLE TO EACH SEPARATE INVESTMENT FUND, CONTINUED
The changes in net assets available for plan benefits of the various funds
for the year ended December 31, 1997 are as follows:
<TABLE>
<CAPTION>
MONEY
Permag Market
Equity Fund Bond Fund Fund Loan Fund Total
<S> <C> <C> <C> <C> <C>
Interest and dividend income $ 25,648 $ 25,648
Employer contributions $ 1,047,532 $ 448,942 1,496,474
Net appreciation from Master Trust 4,236,274 658,696 $ 77,982 4,972,952
----------- ---------- ---------- -------- -----------
Total additions 5,283,806 1,107,638 77,982 25,648 6,495,074
Deductions from net assets attributed to
Participants distributions 1,456,133 590,194 21,201 2,067,528
Administrative expenses 106,275 850 107,125
----------- ---------- ---------- -------- -----------
Total deductions 1,562,408 591,044 21,201 2,174,653
----------- ---------- ---------- -------- -----------
Net transfers (407,898) 426,612 (18,714)
----------- ---------- ---------- -------- -----------
Net increase (decrease) 3,313,500 1,107,638 (86,450) (14,267) 4,320,421
Net assets available for plan benefits,
beginning of year 16,207,890 6,333,890 1,350,282 372,114 24,264,176
----------- ---------- ---------- -------- -----------
Net assets available for plan benefits,
end of year $19,521,390 $7,441,528 $1,263,832 $357,847 $28,584,597
=========== ========== ========== ======== ===========
</TABLE>
-15-
<PAGE> 20
DEXTER MAGNETIC'S EMPLOYEE RETIREMENT INCOME TRUST PLAN
LINE 27e--SCHEDULE OF NONEXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Expenses Incurred Current Net
Identity of Relationship of Purchase Selling Lease in Connection Cost of Value of Gain
Party Involved to Plan Transaction Price Price Rental with Transaction Asset Asset (Loss)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dexter Corporation Administrator Remittance of $13,809
Employee
Contributions
</TABLE>
-16-
<PAGE> 21
Exhibit Index
Exhibit 23 - Consent of PricewaterhouseCoopers LLP, Independent Public
Accountants
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Dexter Corporation on Form S-8 (File No. 333-42663) of our report dated June 8,
1999, on our audits of the financial statements of the Dexter Magnetic's
Employee Retirement Income Trust Plan as of December 31, 1998 and 1997 and for
the years then ended, which report is included in this Form 11-K for the year
ended December 31, 1998.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Springfield, Massachusetts
June 29, 1999
