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, 1996
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)
(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 30, 1996
- -------------------------- -----------------------------
COMMON STOCK, PAR VALUE $1 23,893,187 SHARES
- -------------------------- -----------------------------
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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, 1996 and 1995.
(b) Exhibit 99b - Condensed Statement of Financial Position
as of March 31, 1996, December 31, 1995, and March 31,
1995.
(c) Exhibit 99c - Condensed Statement of Cash Flows for the
three months ended March 31, 1996 and 1995.
(d) Exhibit 99d - Net Sales by Market for the three months
ended March 31, 1996 and 1995.
(e) Exhibit 99e - Notes to Consolidated Financial
Statements.
The unaudited financial data included herein as of March 31,
1996 and 1995, and for 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
1996 was $11.1 million, or $.46 per share, compared with $10.5
million, or $.43 per share, for the first quarter of 1995.
Earnings increased 7% in the first quarter on a 4% increase in
sales.
Compared to the first quarter of 1995, the net effect of higher
selling prices and higher raw material costs yielded a favorable
impact of approximately $.03 per share. The effect of currency
exchange rates, versus the first quarter of 1995, had an
unfavorable impact of $.01 per share.
Sales for the first quarter of 1996 were $277.2 million, a 4%
increase over sales of $266.8 million, in the first quarter of
1995. The increase was due to a 2% gain in unit volume and
selling price increases averaging 2%.
Consolidated gross margin of 34.2% of net sales in the first
quarter of 1996 improved by 2.1 percentage points from 32.1% in
the first quarter of 1995. Higher gross margin at Life
Technologies, Inc. and selling price increases at Dexter
operations, more than offset the significant effects of 1995 raw
material cost increases which continued to impact the first
quarter of 1996.
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Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations, continued
Marketing and administrative cost increased $5.8 million, or
12%, principally due to increased marketing expense at Life
Technologies, Inc., which included consolidation of results from
the 1995 acquisition of a controlling interest in their Japanese
subsidiary.
Other income was $2.2 million for the first quarter of 1996, a
decrease of $.9 million, or 28%, from the first quarter of 1995.
The majority of the decrease is due to the expiration of certain
noncompete agreements.
Products with strong sales performance in the first quarter of
1996 include printed wiring board and liquid encapsulation
materials serving the electronics market, magnetic materials,
food and beverage can coatings serving the European market, and
sales of products at Life Technologies, Inc. Products with
weaker performance include domestic nonwoven medical materials,
food and beverage can coatings serving the domestic and Japanese
markets, and acoustic materials serving the automotive market
which was negatively affected by the recent automotive strike.
In April 1996, the company announced that the Board of Directors
authorized an additional repurchase of up to one million shares
of the company's common stock.
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PART II
OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
The annual meeting of the shareholders of the company was held on
April 25, 1996, where the following actions were taken:
(a) The election of two new members to the Board of Directors of Ms.
Henrietta Holsman Fore, Chairman and Chief Executive Officer of Holsman
International and, Chairman and President of Stockton Wire Products;
and Mr. Edgar G. Hotard, President of Praxair, Inc., and the re-
election to the Board of Directors of Mr. Bernard M. Fox, Chairman,
President and Chief Executive Officer of Northeast Utilities; Mr. K.
Grahame Walker, Chairman, President and Chief Executive Officer of
The Dexter Corporation; and George M. Whitesides, Ph.D., Professor of
Chemistry at Harvard University.
The votes for each director were as follows:
Director For Withheld
- -------- --- --------
Ms. Henrietta Holsman Fore 19,314,161 819,358
Mr. Bernard M. Fox 19,318,536 814,983
Mr. Edgar G. Hotard 19,327,545 805,974
Mr. K. Grahame Walker 19,304,313 829,206
George M. Whitesides, Ph.D. 19,319,031 814,488
In addition, the following directors continue in office for the terms
expiring as indicated: Mr. Robert M. Furek (1998), Ms. Martha Clark
Goss (1998), Glen L. Urban, Ph.D. (1998), Mr. Charles H. Curl (1997),
Mr. Peter G. Kelly (1997), and Mr. Jean-Francois Saglio (1997).
(b) The adoption of The Dexter Corporation's 1996 Non-Employee Directors'
Stock Plan was approved.
The votes for the approval of The Dexter Corporation's 1996
Non-Employee Director's Stock Plan were as follows:
For Against Abstain
--- ------- -------
18,457,216 1,472,328 203,975
(c) The adoption of The Dexter Corporation's Senior Management Executive
Incentive Plan was approved.
The votes for the approval of the Dexter Corporation's Senior
Management Executive Incentive Plan were as follows:
For Against Abstain
--- ------- -------
18,546,887 988,522 598,110
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Item 4 - Submission of Matters to a Vote of Security Holders, continued
(d) The selection of Coopers & Lybrand L.L.P. as auditors of the
company for the year 1996 was ratified.
The votes for selection of Coopers & Lybrand L.L.P. were as
follows:
For Against Abstain
--- ------- -------
20,060,297 27,032 46,190
(e) 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
--- ------- ------- ---------------
8,239,946 9,563,683 990,151 1,339,739
Item 5 - Other Information
Effective in April 1996, R. Barry Gettins, Ph.D. was appointed
Senior Vice President -- Operations Development and David G.
Gordon was appointed a Vice President of the company and Senior
Division President of the Dexter Nonwovens Division.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibit 10L -- The Dexter Corporation's 1996 Non-Employee
Directors' Stock Plan
Exhibit 10M -- The Dexter Corporation's Senior Management
Executive Incentive Plan
Exhibit 15 of Part 1 -- Letter to Securities and Exchange
Commission re: Incorporation of Accountants' Reports
Exhibit 27 of Part 1 -- Financial Data Schedule
Exhibit 99 of Part 1 -- First Quarter 1996 Financial Statements
and Notes
(b) No reports on Form 8-K were filed during the quarter for which
this report was filed.
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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
May 9, 1996 /s/ Kathleen Burdett
Date _____________________ -----------------------------
Kathleen Burdett
Vice President and
Chief Financial Officer
(Principal Financial Officer)
May 9, 1996 /s/ George Collin
Date _____________________ ------------------------------
George Collin
Controller
(Principal Accounting Officer)
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INDEX TO EXHIBITS
Exhibit No.
10L The Dexter Corporation's 1996 Non-Employee Directors' Stock Plan
10M The Dexter Corporation's Senior Management Executive Incentive Plan
15 Letter to Securities and Exchange Commission re: Incorporation of
Accountants' Report
27 Financial Data Schedule
99 First Quarter 1996 Financial Statements and Notes