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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, 1997
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 October 31, 1997
COMMON STOCK, PAR VALUE $1 23,162,255 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 and nine months ended September 30, 1997 and 1996.
(b) Exhibit 99b -- Condensed Statement of Financial Position as of
September 30, 1997, December 31, 1996, and September 30, 1996.
(c) Exhibit 99c -- Condensed Statement of Cash Flows for the nine
months ended September 30, 1997 and 1996.
(d) Exhibit 99d -- Net Sales by Market for the three months and
nine months ended September 30, 1997 and 1996.
(e) Exhibit 99e -- Notes to Consolidated Financial Statements.
The unaudited financial data included herein as of September 30,
1997 and 1996, and for the three and nine 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
Analysis of Operations
The Company reported that earnings per share increased 24% to $.62 per share
from $.50 per share in the third quarter of 1996 on a sales increase of 6%.
Earnings increased 21% to a third quarter record of $14.2 million from $11.7
million in the same period last year.
Sales of $286.9 million were a third quarter record and increased 6% compared
with sales of $269.5 million in the third quarter last year. A strong 8%
increase in unit volume and a 2% increase due to acquisitions were partially
offset by a 4% unfavorable effect of currency translation rates.
Sales for the nine-month period ended September 30, 1997, were $852.4 million, a
2% increase compared with sales of $832.4 million for the same period last year.
An increase in unit volume of 6% was partially offset by a 3% unfavorable effect
of currency translation rates and a 1% decrease due to the net effect of
acquisitions and divestitures.
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Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued
Earnings for the nine-month period of 1997 were a record $43.1 million, or $1.87
per share. This represents a 19% increase in earnings from operations and a 22%
increase in earnings per share from operations compared with the results from
operations for the same period last year of $36.3 million, or $1.53 per share.
Total net income for the nine months ended September 30, 1996, of $37.3 million,
or $1.57 per share, included a $.04 per share gain from the disposal of product
lines.
Products with strong performance in the third quarter and nine months ended
September 30, 1997 include aerospace adhesive materials, electronic
encapsulation materials, nonwoven materials serving the European food market,
and sales of products at Life Technologies, Inc. Products with weaker
performance for the quarter and year-to-date include food and beverage can
coatings serving international markets and medical nonwoven materials in the
domestic market.
Consolidated gross margin of 36.3% of net sales in the third quarter of 1997
improved 2.0 percentage points from 34.3% in the same period last year. This 2.0
percentage point improvement resulted from strong volume, favorable product mix,
and productivity improvements at both wholly owned Dexter businesses and at Life
Technologies, Inc. Gross margin on a year-to-date basis was 36%, a 1.7
percentage point improvement over the same period last year.
Marketing and administrative costs increased $4.9 million, or 9%, in the third
quarter, principally due to costs associated with recently acquired businesses
and increased costs at Life Technologies, Inc. On a year-to-date basis,
marketing and administrative costs increased 5%, mostly due to Life
Technologies, Inc.
Other income for the third quarter of 1997 decreased $.8 million, or 26%, due to
lower total equity income resulting from the divestiture of D & S Plastics
International, which was effective April 1, 1997.
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Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued
Analysis of Financial Condition
Other assets as of September 30, 1997 were $49.1 million, a decrease of $38.1
million and $34.5 million compared with December 31, 1996 and September 30,
1996, respectively. These decreases were primarily due to the divestiture of the
Company's 50% equity interest in D & S Plastics International, which was
effective April 1, 1997.
Current installments of long-term debt as of September 30, 1997 were $31.6
million, an increase of $19.3 million and $18.9 million compared with December
31, 1996 and September 30, 1996, respectively. These increases principally
relate to the Company's 9.25% sinking fund debentures and are due to a
prepayment of $15 million which will occur in November 1997 and a prepayment of
$5 million to be made in December 1997. Long-term debt of $168.5 million as of
September 30, 1997 decreased $41.5 million and $40.4 million compared with
December 31, 1996 and September 30, 1996, respectively. These decreases were
primarily due to the abovementioned reclasses to current installments of
long-term debt and a $15 million prepayment in August 1997 of the Company's
9.25% sinking fund debentures.
Treasury stock as of September 30, 1997 was $52.5 million, an increase of $16.8
million compared with $35.7 million at December 31, 1996 and an increase of
$21.5 million compared with $31 million at September 30, 1996. In 1997, the
Company purchased 671,200 shares of its outstanding common stock at an average
price of $30.54 per share. In the fourth quarter 1996, the Company purchased
160,400 shares of its outstanding common stock at an average of $32.54 per
share.
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PART II
OTHER INFORMATION
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 -- Third Quarter 1997 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
(Registrant)
November 7, 1997 /s/ Kathleen Burdett
Date___________________________ ___________________________________
Kathleen Burdett
Vice President and
Chief Financial Officer
(Principal Financial Officer)
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INDEX TO EXHIBITS
Exhibit No.
15 Letter to Securities and Exchange Commission re: Incorporation
of Accountants' Report
27 Financial Data Schedule
99 Third Quarter 1997 Financial Statements and Notes