1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
---------------------- ----------------------
Commission file number 1-5542
THE DEXTER CORPORATION
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-0321410
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE ELM STREET, WINDSOR LOCKS, CONNECTICUT 06096
(Address of principal executive offices) (Zip Code)
(203) 627-9051
(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, 1995
- -------------------------- -----------------------------
COMMON STOCK, PAR VALUE $1 24,437,980 SHARES
- -------------------------- -----------------------------
2
PART I
FINANCIAL INFORMATION
Item 1-Financial Statements
Reference is made to the following consolidated financial statements
which are incorporated herein by reference:
(a) Exhibit 99a - Condensed Statement of Income for the three months
ended March 31, 1995 and 1994.
(b) Exhibit 99b - Condensed Statement of Financial Position as of March
31, 1995, December 31, 1994, and March 31, 1994.
(c) Exhibit 99c - Condensed Statement of Cash Flows for the three
months ended March 31, 1995 and 1994.
(d) Exhibit 99d - Net Sales by Market for the three months ended March
31, 1995 and 1994.
(e) Exhibit 99e - Notes to Consolidated Financial Statements.
The unaudited financial data included herein as of March 31, 1995 and
1994, and the three-month periods then ended, have been reviewed by the
registrant's independent public accountants, Coopers & Lybrand L.L.P.,
and their report is attached.
Item 2-Management's Discussion and Analysis of
Financial Condition and Results of Operations
The company reported that net income for the first quarter of
1995 was $10.5 million, or $.43 per share, compared with $9.3
million, or $.38 per share for the first quarter of 1994.
Earnings increased 13% in the first quarter of 1995 despite an
average raw material cost increase of over 5% from the first
quarter last year, which was partially offset by selling price
increases. The effect of changes in currency exchange rates,
versus the first quarter of 1994, increased earnings by $.02 per
share.
Sales for the first quarter of 1995 were a record $266.8 million,
a 14% increase over sales of $233.5 million in the first quarter
of 1994. This 14% increase includes a 9% increase due to unit
volume, a 4% increase due to the effect of higher currency
translation rates on international sales, and price increases
averaging 1%.
Products with strong sales performance in the first quarter of 1995
include acoustic materials serving the automotive market,
electronic encapsulation materials, magnetic materials, food and
beverage can coatings, nonwoven products serving the international
markets, and sales of products at Life Technologies, Inc.
Consolidated gross margin of 32.1% for the first quarter of 1995,
stated as a percentage of sales, decreased by 1.4 percentage points
from 33.5% in the first quarter of 1994. Significant increases in
the cost of commodity raw materials more than accounted for the
decrease in gross
3
Item 2 -Management's Discussion and Analysis of Financial
Condition and Results of Operations, continued
margin. Partially offsetting these cost increases were the favorable
effects of selling price increases, improvement in manufacturing
productivity, and higher gross margins at Life Technologies, Inc. The
first quarter 1995 gross margin of 32.1% was up .6 percentage points
from the fourth quarter of last year. This improvement was mainly due to
a rebound in margin at Life Technologies, Inc. whose deterioration of
margin in 1994 was the principal cause of last year's decline in
consolidated gross margin.
Marketing and administrative cost decreased to 18.9% of sales in the
first quarter compared with 19.7% of sales in the same period last year.
This percent of sales decrease still yielded a $4.3 million, or 9%,
increase in spending which reflects increased marketing efforts at Life
Technologies, Inc.
4
PART II
OTHER INFORMATION
Item 1-Legal Proceedings
On September 16, 1987, employees of American National Can Company were
allegedly exposed to an emission of ethyl acrylate from the Packaging
Products division's adjacent plant in Birmingham, Alabama. The alleged
incident is believed to involve only episodic exposure to a low level and
concentration of the chemical, resulting in minor respiratory irritation.
To date, approximately $38,000 in medical expenses is believed to have
been incurred by the injured American National Can employees, as well as
some lost production time. In July of 1989, an action was commenced in
the Circuit Court for the Judicial District of Jefferson County, Alabama,
by thirty-three employees of American National Can against the Company,
Rohm and Haas Company, Liberty Mutual Insurance Company and certain other
defendants, including certain employees of the Company's Packaging
Products division. The suit alleged that the plaintiffs were exposed to
an emission of ethyl acrylate from the Company's Packaging Products
division's plant in Birmingham, Alabama, and suffered injury as a
consequence thereof. The complaint sought $10 million in damages from the
defendants. Dexter's insurance carrier was placed on notice and agreed to
provide the Company with a defense pursuant to the terms and conditions
of their policy. The litigation was settled in February 1995 and all
claims against the Company have been dismissed. The litigation and
settlement did not have a material adverse effect on the Company's
financial condition or results of operations.
Item 4-Submission of Matters to a Vote of Security Holders
The annual meeting of the shareholders of the company was held on April
27, 1995, where the following actions were taken:
(a) The re-election to the Board of Directors of Mr. Robert M. Furek,
President and Chief Executive Officer of Heublein, Inc.; Ms. Martha Clark
Goss, Senior Vice President, Enterprise Integrated Control of The
Prudential Insurance Company of America; and Glen L. Urban, Ph.D., Dean
of Alfred P. Sloan School of Management at the Massachusetts Institute of
Technology.
The votes for each director were as follows:
Director For Withheld
-------- --- ---------
Mr. Robert M. Furek 20,548,288 1,679,961
Ms. Martha Clark Goss 22,119,921 108,328
Glen L. Urban, Ph.D. 20,548,987 1,679,262
In addition, the following directors continue in office for the terms
expiring as indicated: Mr. Charles H. Curl (1997), Mr. Peter G. Kelly
(1997), Mr. Jean-Francois Saglio (1997), Mr. Bernard M. Fox (1996), Mr.
K. Grahame Walker (1996), and George M. Whitesides, Ph.D. (1996).
5
Item 4-Submission of Matters to a Vote of Security Holders, continued
(b) The selection of Coopers & Lybrand L.L.P. as auditors of the company
for the year 1995 was ratified.
The votes for selection of Coopers & Lybrand L.L.P. were as follows:
For Against Abstain
--- ------- -------
22,144,260 54,811 29,178
(c) The shareholder proposal that the Board of Directors adopt
a policy concerning severance agreements with officers and directors of
the company was rejected. The Board of Directors had recommended that
this proposal be rejected.
The votes for this shareholder proposal were as follows:
For Against Abstain Broker Nonvotes
--- ------- ------- ---------------
8,184,096 12,265,460 523,848 1,254,845
Item 5-Other Information
(a) Mr. Robert E. McGill, III, whose term as director expired on April 27,
1995, did not stand for re-election. Mr. McGill served the company for
nearly 20 years, most recently as Executive Vice President, Finance and
Administration from 1989 to December 1994, when he retired.
Item 6-Exhibits and Reports on Form 8-K
(a) Exhibit 15 of Part 1- Letter to Securities and Exchange Commission re:
Incorporation of Accountants' Report
Exhibit 27 of Part 1 - Financial Data Schedule
Exhibit 99 of Part 1 - First Quarter 1995 Financial Statements and Notes
(b) No reports on Form 8-K were filed during the quarter for which this
report is filed.
6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE DEXTER CORPORATION
Date May 11, 1995 /s/ Kathleen Burdett
------------------ ------------------------------
Kathleen Burdett
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date May 11, 1995 /s/ George Collin
------------------ ------------------------------
George Collin
Controller
(Principal Accounting Officer)
7
INDEX TO EXHIBITS
Exhibit No.
15 Letter to Securities and Exchange Commission re: Incorporation of
Accountants' Report.
27 Financial Data Schedule.
99 First Quarter 1995 Financial Statements and Notes.