<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 March 31, 2000
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 April 28, 2000
COMMON STOCK, PAR VALUE $1 23,107,622 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
months ended March 31, 2000 and 1999.
(b) Exhibit 99b - Condensed Statement of Financial Position as of
March 31, 2000, December 31, 1999, and March 31, 1999.
(c) Exhibit 99c - Condensed Statement of Cash Flows for the three
months ended March 31, 2000 and 1999.
(d) Exhibit 99d - Condensed Statement of Comprehensive Income for
the three months ended March 31, 2000 and 1999.
(e) Exhibit 99e - Net Sales and Operating Income by Segment for the
three months ended March 31, 2000 and 1999.
(f) Exhibit 99f - Notes to Condensed Consolidated Financial
Statements.
The unaudited financial data included herein as of March 31, 2000
and 1999, and for the three-month periods then ended, have been
reviewed by the registrant's independent public accountants,
PricewaterhouseCoopers LLP, and their report is attached. This report
is not a report within the meaning of Section 7 and 11 of the
Securities Act of 1933 and the independent accountants' liability
under Section 11 does not extend to it.
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Analysis of Operations
The Company reported first quarter 2000 net income of $12.4 million, or $.54 per
share on a diluted basis. This is a 20% increase over comparable earnings from
operations of $10.4 million, or $.45 per share diluted, excluding the gain on
divestiture of product lines, in the first quarter of 1999. First quarter 2000
earnings were reduced by the negative impact of $.03 per share for costs
associated with an unsolicited merger proposal and proxy contest and by $.01 per
share due to the net negative effect of divestitures and acquisitions. Lower
noncash amortization charges,
<PAGE> 3
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Analysis of Operations, continued
associated with Dexter's increased ownership of Life Technologies, Inc.,
favorably impacted the first quarter 2000 earnings by $.05 per share compared
with the first quarter of 1999.
In the first quarter of 1999, Dexter sold its Packaging Coatings business,
including Dexter SAS, its French industrial coatings subsidiary, and its 40%
interest in AKZO Dexter Aerospace Finishes VoF resulting in a gain of $2.53 per
share. Including the gain, net income for the first quarter of 1999 was $68.8
million, or $2.98 per share diluted.
Sales in the first quarter of 2000 were $261.8 million, a decrease of 6%,
compared with sales of $279.9 million in the first quarter of 1999. Strong
volume increases of 10% were more than offset by a 15% decrease due to the net
effect of divestitures and acquisitions and a 1% negative effect from currency
translation rates. Average selling prices remained largely unchanged.
Sales in the Life Sciences segment increased $9.2 million, or 9%, in the first
quarter of 2000 compared with the same period last year principally due to sales
of products other than fetal bovine serum.
Sales in the Nonwovens segment increased $6.4 million, or 9%, in the first
quarter of 2000 compared with the first quarter of 1999 primarily due to
stronger sales of wet wipes.
Sales of ongoing businesses in the Specialty Polymers segment increased $9.0
million, or 13%, in the first quarter of 2000 compared with the same period last
year primarily due to stronger sales of electronic encapsulation materials and
magnetic products.
Consolidated gross margin of 39.2% for the first quarter of 2000, stated as a
percentage of sales, increased 2.1 percentage points from 37.1% in the first
quarter of 1999. This improvement was principally the result of increased
volume, lower amortization cost, and the divestiture of the lower gross margin
Packaging Coatings business in the first quarter of 1999.
Marketing and administrative costs in the first quarter of 2000 were comparable
to the same period last year. Increased marketing and administrative costs at
Life Technologies, Inc. and increased corporate expenses relating to costs
associated with the unsolicited merger proposal and proxy contest were offset by
lower expenses resulting from the divestitures in 1999.
Research and development expense decreased $1.9 million, or 14%, in the first
quarter of 2000 compared with the first quarter of 1999 primarily due to the
divestiture of the Packaging Coatings business.
Other income of $2.8 million in the first quarter of 2000 increased $0.6
million, or 30%, compared with the first quarter of 1999. This increase was
primarily due to higher income from noncompetition agreements resulting from
divestitures.
<PAGE> 4
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Analysis of Operations, continued
Interest expense of $5.4 million for the first quarter of 2000 decreased $1.0
million, or 16%, compared with $6.4 million in the first quarter of 1999. This
decrease was primarily due to higher average borrowings in the first quarter of
1999 resulting from the acquisition of an additional 22% ownership of 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 in the first quarter of 2000 was 34% compared with 36% in
the first quarter of 1999.
Analysis of Financial Condition
Accounts receivable as of March 31, 2000 were $194 million, an increase of $22.5
million compared with $171.5 million at March 31, 1999. This increase was
primarily due to increased sales of ongoing businesses of $23.8 million in the
first quarter of 2000 compared with the same period last year.
Excess of cost over net assets of businesses acquired (excess acquisition cost)
as of March 31, 2000 was $136.6 million, an increase of $24.4 million and $14.4
million, respectively, compared with $112.2 million at December 31, 1999 and
$122.2 million at March 31, 1999. The increase from December 31, 1999 was
primarily due to Dexter acquiring additional shares of Life Technologies, Inc.
(LTI) since year-end 1999. The increase from March 31, 1999 was primarily
related to Dexter's increased ownership of LTI, partially offset by a decrease
attributable to the divestiture of the printed wiring board product line in
November 1999, and amortization charges.
Patents, technology, trademarks, and covenants as of March 31, 2000 were $124.2
million, an increase of $10.4 million, compared with $113.8 million as of
December 31, 1999. This increase was primarily due to Dexter's increased
ownership of LTI.
Accounts payable of $69.5 million as of March 31, 2000, decreased $7.7 million
compared with $77.2 million at March 31, 1999. This decrease was primarily due
to the divestiture of the printed wiring board product line.
Accrued liabilities and taxes as of March 31, 2000 were $107.7 million, a
decrease of $24.7 million compared with $132.4 million at March 31, 1999. This
decrease was primarily due to payments of accrued taxes related to the sale of
the Packaging Coatings business.
Total debt (long-term, current installments, and short-term) was $301.2 million
as of March 31, 2000, an increase of $63.8 million and $49.2 million,
respectively, compared with $237.4 million at December 31, 1999 and $252 million
at March 31, 1999. These increases were primarily due to borrowings related to
the acquisition of additional shares of LTI.
<PAGE> 5
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations, continued
Analysis of Financial Condition (continued)
Long-term deferred income taxes were $51.6 million as of March 31, 2000, an
increase of $4.2 million and $6.2 million, respectively, compared with $47.4
million at December 31, 1999 and $45.4 million at March 31, 1999. These
increases were primarily due to increased deferred income taxes related to
Dexter's increased ownership of LTI.
Minority interests of $83.9 million as of March 31, 2000 decreased $8.6 million
compared with $92.5 million as of December 31, 1999. This decrease was primarily
due to Dexter's increased ownership of LTI. Since year-end 1999, Dexter's
ownership of LTI has increased to approximately 75%.
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 $5.9 million and financing activities of $60.5
million exceeded the cash needed for investments of $58.6 million, thereby
increasing cash for the first three months of 2000 by $7.8 million.
Net income, after adjustments for depreciation, amortization, income taxes not
due, and minority interests were the principal source of cash from operations in
2000 totaling $40.5 million. Working capital increases of $33.3 million were the
principal use of cash from operations.
Investment activity for the first three months of 2000 included cash
expenditures for acquisitions of $47.1 million primarily related to Dexter
purchasing additional shares of LTI in 2000, and capital expenditures of $10.4
million.
Financing activities for the first three months of 1999 included new long-term
and short-term debt, net, of $64.8 million, which was primarily used to fund
investments including additional shares of LTI, and dividend payments of $5.9
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.
Forward-Looking Statements
Any statements in this report that are not historical facts are "forward-looking
statements" as that term is defined under 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. These and other risks are detailed in the Company's filings
with the Securities and Exchange Commission.
<PAGE> 6
PART II
OTHER INFORMATION
Item 5 - Other Information
Effective in April 2000, Ms. Rosanne S. Potter was appointed Vice
President-Treasurer of the Company. Prior to her appointment, Ms.
Potter was Treasurer of the Company.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
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 - First Quarter 2000 Financial Statements and
Notes
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which this
report was filed.
<PAGE> 7
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 May 5, 2000 /s/ Kathleen Burdett
----------- ------------------------------------
Kathleen Burdett
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date May 5, 2000 /s/ Dale J. Ribaudo
----------- ------------------------------------
Dale J. Ribaudo
Vice President and Controller
(Principal Accounting Officer)
<PAGE> 8
INDEX TO EXHIBITS
Exhibit No.
15 Letter to Securities and Exchange Commission re: Incorporation of
Accountants' Report
27 Financial Data Schedule
99 First Quarter 2000 Financial Statements and Notes
<PAGE> 1
Exhibit 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Commissioners:
We are aware that our report dated April 13, 2000 on our review of the interim
financial information of Dexter Corporation (the "Company") as of and for the
periods ended March 31, 2000 and 1999, and included in the Company's quarterly
report on Form 10-Q for the quarter ended March 31, 2000 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.
Very truly yours,
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Hartford, Connecticut
May 5, 2000
<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> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 94,162
<SECURITIES> 0
<RECEIVABLES> 184,318
<ALLOWANCES> 5,233
<INVENTORY> 170,266
<CURRENT-ASSETS> 495,969
<PP&E> 689,354
<DEPRECIATION> 362,157
<TOTAL-ASSETS> 1,140,135
<CURRENT-LIABILITIES> 252,231
<BONDS> 232,050
0
0
<COMMON> 24,984
<OTHER-SE> 442,692
<TOTAL-LIABILITY-AND-EQUITY> 1,140,135
<SALES> 261,776
<TOTAL-REVENUES> 264,539
<CGS> 159,248
<TOTAL-COSTS> 159,248
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,382
<INCOME-PRETAX> 23,643
<INCOME-TAX> 8,039
<INCOME-CONTINUING> 12,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,400
<EPS-BASIC> .54
<EPS-DILUTED> .54
</TABLE>
<PAGE> 1
EXHIBIT 99a
DEXTER CORPORATION
CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
In thousands of dollars Three Months Ended March 31
-------------------------------------
(except per share amounts) 2000 1999 Change
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Net sales $ 261,776 $ 279,927 - 6%
Other income 2,763 2,127 + 30%
--------- ---------
264,539 282,054 - 6%
EXPENSES
Cost of sales 159,248 176,149 - 10%
Marketing and administrative 64,267 64,188
Research and development 11,999 13,886 - 14%
Interest 5,382 6,386 - 16%
Gain on divestiture of product lines (91,361)
--------- ---------
INCOME BEFORE TAXES 23,643 112,806 - 79%
Income taxes 8,039 40,611 - 80%
--------- ---------
INCOME BEFORE MINORITY INTERESTS 15,604 72,195 - 78%
Minority interests 3,204 3,361 - 5%
--------- ---------
NET INCOME $ 12,400 $ 68,834 - 82%
========= =========
NET INCOME PER SHARE - BASIC $ 0.54 $ 2.99 - 82%
NET INCOME PER SHARE - DILUTED $ 0.54 $ 2.98 - 82%
DIVIDENDS DECLARED PER SHARE $ 0.26 $ 0.26
AVERAGE SHARES OUTSTANDING (000) - BASIC 22,822 22,999 - 1%
AVERAGE SHARES OUTSTANDING (000) - DILUTED 23,024 23,125
- ---------------------------------------------------------------------------------------------
</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 MARCH 31 December 31 March 31
-----------------------------------------
(except per share amounts) 2000 1999 1999
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and short-term securities $ 94,162 $ 86,850 $ 126,414
Accounts receivable, net 193,992 181,726 171,536
Inventories
Materials and supplies 55,381 56,451 54,828
In process and finished 130,762 122,551 121,157
LIFO reserve (15,877) (15,507) (14,970)
----------- ----------- -----------
170,266 163,495 161,015
Prepaid and deferred expenses 37,549 32,483 25,661
----------- ----------- -----------
Total current assets 495,969 464,554 484,626
Property, plant and equipment, at cost, net 327,197 328,146 321,029
Excess of cost over net assets of businesses acquired 136,647 112,191 122,193
Patents, technology, trademarks, and covenants 124,218 113,800 115,556
Other assets 56,104 55,437 53,516
----------- ----------- -----------
$ 1,140,135 $ 1,074,128 $ 1,096,920
=========== =========== ===========
LIABILITIES & SHAREHOLDERS' EQUITY
Short-term debt $ 48,518 $ 8,578 $ 71,035
Accounts payable 69,475 68,494 77,205
Dividends payable 5,939 5,929 5,972
Accrued liabilities and taxes 107,678 105,996 132,449
Current installments of long-term debt 20,621 10,670 16,966
----------- ----------- -----------
Total current liabilities 252,231 199,667 303,627
Long-term debt 232,050 218,132 163,976
Deferred items 41,373 42,095 42,334
Long-term deferred income taxes 51,625 47,413 45,427
Long-term environmental reserves 11,271 11,668 13,364
Minority interests 83,909 92,517 85,012
Shareholders' equity
Common stock and paid-in capital 42,569 41,173 40,803
Retained earnings 508,274 501,813 480,936
Treasury stock (58,839) (59,385) (60,528)
Accumulated other comprehensive loss (24,328) (20,965) (18,031)
----------- ----------- -----------
Total shareholders' equity 467,676 462,636 443,180
----------- ----------- -----------
$ 1,140,135 $ 1,074,128 $ 1,096,920
=========== =========== ===========
EQUITY PER SHARE $ 20.46 $ 20.29 $ 19.48
- -------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
Amounts as of March 31, 2000 and March 31, 1999 are unaudited.
<PAGE> 3
EXHIBIT 99c
DEXTER CORPORATION
CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Three Months Ended March 31
---------------------------
In thousands of dollars 2000 1999
- ----------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net income $ 12,400 $ 68,834
Noncash items
Depreciation 9,190 9,549
Amortization 4,156 6,558
Gain on divestiture of product lines (91,361)
Income taxes not due 11,562 35,524
Minority interests 3,204 3,361
LIFO inventory charge / (credit) 370 (350)
Other (1,742) (173)
Operating working capital increase (33,273) (28,681)
--------- ---------
5,867 3,261
--------- ---------
INVESTMENTS
Property, plant and equipment (10,446) (17,016)
Acquisitions (47,090) (1,514)
Divestitures 228,716
Proceeds from exercise of LTI stock options 948 1,593
Other (1,965) 794
--------- ---------
(58,553) 212,573
--------- ---------
FINANCING
Long-term debt, net 24,874 (216,000)
Short-term debt, net 39,967 31,305
Dividends paid (5,929) (5,989)
Purchase of treasury stock (7,154)
Other 1,588 (675)
--------- ---------
60,500 (198,513)
--------- ---------
INCREASE IN CASH AND SHORT-TERM SECURITIES $ 7,814 $ 17,321
========= =========
RECONCILIATION OF INCREASE IN CASH AND
SHORT-TERM SECURITIES
Cash and short-term securities at beginning of period $ 86,850 $ 111,049
Cash and short-term securities at end of period 94,162 126,414
--------- ---------
Increase in cash and short-term securities
per Statement of Financial Position 7,312 15,365
Currency translation effects 502 1,956
--------- ---------
$ 7,814 $ 17,321
========= =========
- ----------------------------------------------------------------------------------
</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 March 31
------------------------------
In thousands of dollars 2000 1999 Change
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
NET INCOME $ 12,400 $ 68,834 - 82%
-------- --------
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Currency translation effects (a) (3,352) 422
Unrealized losses on investments (11) (185) - 94%
-------- --------
OTHER COMPREHENSIVE INCOME (LOSS) (3,363) 237
-------- --------
COMPREHENSIVE INCOME $ 9,037 $ 69,071 - 87%
======== ========
</TABLE>
(a) 1999 net of $8.6 million currency translation losses included in net income
related to divestitures.
- --------------------------------------------------------------------------------
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 March 31
------------------------------------
In thousands of dollars 2000 1999 Change
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
LIFE SCIENCES (a) $108,764 $ 99,537 + 9%
NONWOVENS 75,741 69,390 + 9%
SPECIALTY POLYMERS (b) 77,271 111,000 - 30%
-------- --------
CONSOLIDATED $261,776 $279,927 - 6%
======== ========
</TABLE>
(a) The effect of businesses acquired increased net sales in the Life Sciences
segment by $0.8 million, or 1%.
(b) The effect of businesses divested decreased net sales in the Specialty
Polymers segment by $42.7 million, or 38%.
- --------------------------------------------------------------------------------
OPERATING INCOME BY SEGMENT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Three Months Ended March 31
----------------------------------
In thousands of dollars 2000 1999 Change
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
LIFE SCIENCES (a) $ 15,770 $ 13,825 + 14%
NONWOVENS 8,328 8,705 - 4%
SPECIALTY POLYMERS (b) 9,025 100,742 - 91%
--------- ---------
CONSOLIDATED OPERATING INCOME 33,123 123,272 - 73%
OTHER INCOME, NET 2,376 936 + 154%
INTEREST EXPENSE (5,382) (6,386) - 16%
GENERAL CORPORATE EXPENSE (6,474) (5,016) + 29%
--------- ---------
CONSOLIDATED INCOME BEFORE TAXES $ 23,643 $ 112,806 - 79%
========= =========
</TABLE>
(a) Life Sciences operating income includes amortization charges associated
with Dexter's increased ownership in LTI of $1.5 million and $3.5 million
in 2000 and 1999, respectively.
(b) Specialty Polymers 1999 operating income includes the gain on the
divestiture of product lines of $91.4 million. The effect of businesses
divested decreased operating income in the Specialty Polymers segment by
$2.5 million.
- --------------------------------------------------------------------------------
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-month periods
ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
Three Months ended
Amounts in thousands March 31
--------------------------
(except per share data) 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
EARNINGS PER SHARE - BASIC:
Net income $ 12,400 $ 68,834
Weighted average shares
outstanding 22,822 22,999
Earnings per share - basic $ .54 $ 2.99
EARNINGS PER SHARE - DILUTED:
Net income $ 12,400 $ 68,834
Effect of subsidiary dilutive
options on net income (69) (21)
-------- --------
$ 12,331 $ 68,813
======== ========
Weighted average shares
outstanding 22,822 22,999
Weighted average effect of
common stock equivalents 202 126
-------- --------
23,024 23,125
======== ========
Earnings per share - diluted $ .54 $ 2.98
- --------------------------------------------------------------------------------
</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 MARCH 31, December 31, March 31,
(in thousands of dollars) 2000 1999 1999
- ----------------------------------- -------- -------- --------
<S> <C> <C> <C>
Common stock $ 24,984 $ 24,984 $ 24,984
Paid-in capital 19,961 18,613 17,565
Unearned compensation on
restricted stock (2,376) (2,424) (1,746)
-------- -------- --------
$ 42,569 $ 41,173 $ 40,803
======== ======== ========
</TABLE>
Note 5 - The following are included as components of Accumulated Other
Comprehensive Loss:
<TABLE>
<CAPTION>
ACCUMULATED OTHER COMPREHENSIVE MARCH 31, December 31, March 31,
LOSS (in thousands of dollars) 2000 1999 1999
- ---------------------------------------- -------- -------- --------
<S> <C> <C> <C>
Currency translation effects $(24,323) $(20,971) $(17,435)
Unrealized gains/(losses) on investments 6 17 (575)
Minimum pension liability adjustment (11) (11) (21)
-------- -------- --------
$(24,328) $(20,965) $(18,031)
======== ======== ========
</TABLE>
Note 6 - General corporate assets at March 31, 2000 were $320.8 million, an
increase of $58.3 million, compared with $262.5 million at December
31, 1999. This increase was primarily due to Dexter's increased
ownership of LTI since year-end 1999.
<PAGE> 8
Exhibit 99f
Dexter Corporation
Notes to Condensed Consolidated Financial Statements (continued)
Note 7 - 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 March 31,
2000, $0.3 million of current and $4.9 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. 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 material 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> 9
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Dexter Corporation
We have reviewed the accompanying condensed statement of financial position of
Dexter Corporation as of March 31, 2000 and 1999, and the related condensed
statements of income, comprehensive income, and cash flows for the three-month
periods then ended. These financial statements are the responsibility of the
company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted 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, 1999, 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 28, 2000, 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, 1999 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
Hartford, Connecticut
April 13, 2000
