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DEXTER ADDRESSES NEW YORK SOCIETY OF SECURITY ANALYSTS CEO SPEAKS TO NEAR AND LONG-TERM FUTURE

 WINDSOR LOCKS, Conn., Feb. 17 /PRNewswire/ -- The Dexter Corporation (NYSE: DEX), a leading global supplier of specialty materials, announced that K. Grahame Walker, president and chief executive officer, is today addressing the New York Society of Security Analysts in New York City.
 The following is the text of his remarks.
 The Dexter Corporation is now strategically positioned to capture the wealth of opportunities that exist for us.
 Evidence of that truth is partly to be found in the 57 percent growth of operating earnings for the fourth quarter of 1992 versus the same quarter of 1991 and, more meaningfully, in the 22 percent growth of operating earnings for the year as a whole.
 With little help from the economy, and with no clear expectation for any economic improvement of substance, almost all of our ongoing businesses will grow this year. Most importantly, their earnings are expected to grow at a faster rate than sales and, in the longer term, we fully expect annual earnings to keep on growing. Certainly, the stronger dollar and real economic problems in Europe will make our expectations more difficult to achieve in the shorter term and will retard the growth rate for which we have prepared. Nevertheless, Dexter has gathered a momentum of improvement which, on an annual basis, provides sound reasons to be cautiously confident in the continuity of steady earnings growth.
 I will return to this theme later, but first let me give you a profile of The Dexter Corporation.
 Dexter is an environmentally pro-active specialty materials company focused on defined growth segments of strategic global markets to which it responds with products based on proprietary core technologies supported by world class manufacturing and superior service to each customer.
 Although that definition contains ten important messages, I would like to emphasize the three highlighted phrases.
 First: Specialty is the name of our game. That means customized products: high added value: few competitors: niche markets: strong customer relationships: and high barriers to entry by new competitors.
 Second: We are focused on five strategic global markets. They are: Aerospace, Automotive, Electronics, Food Packaging and Medical.
 In reality, we are focused on carefully defined growth segments of those markets. For example, Automotive might be considered a poorly chosen market to serve but consider this:
 -- Our acoustical sealants and barrier business, currently dedicated to the North American automobile market, grew 21 percent last year.
 -- Our automotive specialty plastics business grew 24 percent last year.
 -- We expect strong growth again this year, based on product performance, quality and service.
 -- Automotive is an excellent and growing market for numerous electronic materials.
 -- The use of specialty nonwovens in automotive headliner assemblies is a new business with great promise.
 The key, therefore, is selection of the right segments to serve.
 Third: Proprietary technology is the lifeblood of the business. Proprietary means protected, either by patent or by trade secret, to yield higher margins or preferred supplier status or both. Proprietary technology is the principal strategy employed to differentiate Dexter from the competition. It is vitally and fundamentally important to our purpose. It creates the Dexter difference.
 Dexter has five core technologies. They are: Compounding technology, surface technology, Structural technology, Nonwovens technology and, at Life Technologies Inc., Biotechnology.
 Several operations employ more than one technology. The consequent opportunity to share resources and experience is, therefore, a tangible benefit providing frequent competitive advantage.
 Focused on these five strategic markets and employing these five core technologies are six principal and decentralized operating divisions, plus D & S Plastics International (a major joint venture) and Life Technologies Incorporated (a 55 percent owned subsidiary).
 This group of eight self-standing entities represents:
 -- Four major and very strong businesses with continuous earnings growth potential.
 -- Three highly attractive businesses, each with excellent opportunities for earnings growth in both the short and medium terms.
 -- One very exciting potential contributor in the longer term.
 The four major and very strong businesses are:
 Dexter Nonwovens Division which is the world's largest producer of wet-laid nonwoven materials with manufacturing operations in Connecticut, Scotland and Sweden. The division serves segments of the food packaging market with tea bag paper, coffee pouch paper and meat casing material. It serves the medical market with disposable fabrics for operating theater use and has a new business in wet wipe materials, which is expected to generate strong growth this year beginning in the second quarter.
 Last year, earnings increased each quarter and set a new record. Other than the new wet wipe products, only modest overall sales growth is expected in 1993, but division earnings should strengthen to provide yet another new record. The greater part of that gain will come from European medical fabrics, now fully transitioned to manufacture in Sweden. However, substantial productivity gains and cost reduction activity already in place at all plants will make important earnings contributions.
 Dexter Packaging Products Division has three facilities in USA, two in Europe, two in Asia and three minority positions in joint ventures elsewhere in the world. The division serves the global food packaging market with high performance specialty coatings, primarily for two-piece beer, beverage and food cans. Strong in Europe and Asia, the business was softer last year in USA and is No. 3 for its served segments on a worldwide basis.
 This year we expect a strengthening of the domestic business based on full implementation of an important new contract and commercialization of new products. Conversely, European and Asian markets have recently softened due to a combination of excessive inventories and the general economy in those regions. Nevertheless, the slightly longer term outlook remains firm, in preparation for which Dexter has made important investments in both areas.
 Dexter Electronic Materials Division has five plants in USA, which will be reduced to four this year, plus one in Europe and one in Asia. The division supplies encapsulation materials to the worldwide electronic components industry, and specialty formulated process chemicals and coatings used in the manufacture of printed wiring boards. This division captured new business in Asia and Russia last year and demonstrated the greatest divisional growth of sales and earnings despite a flat market. Dexter Electronic Materials Division is now the domestic market leader for all of its served segments except for one, where it is No. 3. Excellent new business opportunities in Europe for printed wiring board materials have been identified and these are expected to be converted into new growth this year.
 Life Technologies, Inc., a public company traded over the counter, has three facilities in USA, two in Europe, one in New Zealand and a joint venture in Japan. Life Tech serves the research and industrial biotechnology markets worldwide, is the market leader in most of its served segments and demonstrated a strong 22 percent operating earnings growth last year with similar expectations for 1993.
 These four strong businesses provide over 80 percent of the corporation's current earnings.
 The three attractive growth opportunities are:
 -- Dexter Aerospace Materials Division has three facilities in USA, one in Europe for coatings and one European licensee for adhesives. Domestic facilities will be reduced to two by 1994. The adhesives business registered record sales and earnings in 1992 but coatings softened with the demise of some airlines and cut-backs at others. While the Aerospace market outlook is not good for the next two years, both businesses have clear niche opportunities for growth based on recently approved new products and greater market penetration. Both are presently No. 2 in their worldwide markets. The coatings business is No. 1 domestically and consummation of the proposed, and recently announced, alliance with Akzo will make it No. 1 worldwide.
 -- Dexter Automotive Materials Division is a purely domestic operation today with five facilities, which will be reduced to four this quarter. The adhesives and coatings business is small but has the technology and resources to develop strong growth this year and new business has started that process. I have already mentioned the 21 percent growth last year for acoustical sealants and our expectations for continued growth this year. However, the real opportunity and priority for that business is substantial profitability improvement, which we shall unquestionably achieve in 1993, while remaining No. 1 in the served market segment.
 -- Dexter Magnetic Materials Division has an embryo operation in Europe but is primarily a domestic operation with nine facilities around the country. These will be consolidated into just four new or improved facilities by June 1993 which will cut costs and working capital while actually improving customer responsiveness. This is one of Dexter's more profitable businesses, is far and away the market leader and while it suffered a setback during the recession, new products and market development activity have already begun to renew growth this year.
 Our exciting longer term contributor is D & S Plastics International, the market leader in North America for specialty plastic compounds based on olefin technology used for an increasing number of external and internal automotive parts. Owing to the technology and custom compounding expertise D & S provides, plus the fact that the chemistry is based on the lowest cost polymer known to man, the horizons for this enterprise have grown dramatically and the business is growing likewise. It operates from state-of-the-art facilities in Texas and Michigan and is expected to be profitable in 1994.
 I strongly believe this combination of businesses provides Dexter with an excellent mix in terms of both current strength and future growth opportunity.
 Indeed, I referred earlier to Dexter's growth momentum, a critical mass that will pick up speed as a result of two principal achievements. First, we have successfully entered the final phase of our major restructuring process and, second, we are running our restructured businesses more effectively and more efficiently.
 Over the last three years we have carefully restructured the corporation so that its operating businesses are focused on five strategic global markets, each of which contain growth segments suited to Dexter's five core technologies. We have put away the product oriented portfolio management policies of the past two decades to create a unified cohesive market oriented corporation with common and clearly communicated objectives, strategies and goals.
 This restructuring has made the track record since 1989 difficult to follow and understand.
 For example, the restructuring process to date has involved 20 completed or announced transactions, excluding the acquisition of Vernicolor A.G. of Switzerland, announced this week. Cumulatively, these 20 transactions acquired sales of about $122 million at the time of completion and divested sales of about $172 million. We created, therefore, a net reduction of about $50 million of sales since the beginning of 1990 - and that does not include the D & S Plastics 50:50 joint venture with Solvay which alone reduced reported sales by $42MM at that time. Consequently, the growth of total net sales for 1990 through 1992 has no overt meaning - and, since the story is not yet entirely over, the same consideration will apply to reported sales for 1993.
 The hidden message, however, is that the sales growth of ongoing businesses since the base year of 1989, a period of severe recession, has averaged 7 percent per annum. This certainly meets our minimum goal of twice GNP plus inflation. Nevertheless, the entire process has been something of a balancing act in order to maintain a progressive sales picture.
 In that context, and as we enter the final stage of restructuring, we are enthused by the highly strategic, proposed transaction with Akzo of The Netherlands. The intent is for Dexter to acquire Akzo's Aerospace Coatings business in the Americas, to establish a joint venture in Aerospace Coatings for the rest of the world and to divest to Akzo our non-strategic Coil Coating business in USA. Since our joint venture interest will not be consolidated into corporate results, the transaction will drop reported net sales by about $11 million. On the other hand, when the transition is complete, our earnings should be improved. In addition, our global market position and consequent earnings growth potential will be strengthened. The entire transaction is presently expected to close by the end of this quarter.
 One further and equally significant transaction is expected to close within the quarter. This is the acquisition of Vernicolor located in Gruningen, near Zurich in Switzerland. As a well established leader in the European food can coatings business, the addition of Vernicolor is more than a sound strategic move that places Dexter in new segments of an important market. It is also a potentially valuable source for synergistic opportunity. Vernicolor will bring new, additional and proprietary technology which Dexter's global presence will be able to place in American and Asian markets, while continued strong and profitable growth in Europe appears assured.
 The execution of these two transactions will essentially complete the restructuring of the corporation.
 The operating earnings record over the same three-year restructuring period has even less relevance than the sales record, particularly since we acquired three companies losing money at the time of acquisition while we sold several soundly profitable businesses that just did not fit our strategic profile for the '90s. We also had to absorb significant restructuring costs. The losers are all profitable today. Two of them, which are now consolidated, were not strong contributors last year in spite of dramatic sales growth, but they will be in 1993.
 Indeed, we are more concerned with the future growth of earnings than with anything else and while the completed transactions have created a net reduction in pretax income of $6 million or 15 cents per share without counting in the restructuring expense, we have ended up with a set of highly strategic businesses, all of which have excellent opportunities for immediate earnings growth.
 Owing to the timing of completion of the final restructuring phase, first quarter earnings comparisons will not illustrate the real improvements taking place. In the quarter we must first achieve from ongoing businesses an operating earnings growth of $1.4 million, or 4 cents per share, to compensate for those divestitures that took place since the first quarter of last year as there were no acquisitions during that period. Divestitures included the profitable Water Management and Plastisols businesses.
 To reemphasize the point, we need 12 percent earnings growth from ongoing businesses in the first quarter just to stay even. In addition, the strengthened dollar compared to one year ago has impacted earnings by a further 4 cents per share for the quarter. The combined impact of 8 cents per share means that we will need 28 percent earnings growth from ongoing businesses to stay even with the first quarter of last year. Needless to say, that will be more than difficult to achieve.
 As the year unfolds, however, the earnings growth benefit of the entire restructuring process should become plain - although the prospect of the dollar remaining strong against many foreign currencies, and particularly the pound sterling, appears reasonable. Nevertheless, let me at this point be equally plain that we continue to expect reasonably good growth of earnings for 1993 as a whole, despite the dollar.
 In that context, I would additionally stress that over the last three years Dexter has effected change far beyond restructuring. Numerous changes that affect not only what businesses we are running but how we run them have been implemented and we are reaping the benefits on a compound basis. Today, with our focus clearly on competitive advantage and cost reduction to sustain earnings growth, we have seven operating imperatives:
 Maximize responsiveness to customers.
 -- Invest in proprietary technology.
 -- Reduce manufacturing overhead.
 -- Attain world class manufacturing performance.
 -- Create environmentally pro-active programs.
 -- Leverage the resources of a unified corporation.
 -- Emphasize employee training and involvement.
 Dexter is, therefore, well on its way to realizing completion of a major strategic transition:
 -- From portfolio management to strategic management.
 -- From product oriented to market oriented and technology driven.
 -- From isolated operations to a unified corporation.
 -- From horse trading to a company that knows where it is going.
 -- From investment thrift to operating cost effectiveness.
 -- From an hierarchical structure to flat management teams - and all without sacrificing the important principles of decentralization with the benefits that brings to customer responsiveness.
 Tangible results from this managed changed are many. Notably, Dexter last year:
 -- Increased market share for many businesses.
 -- Gained new geographic penetration for several businesses.
 -- Introduced numerous successful new products with more due for introduction this year.
 -- Ran every one of its worldwide operations more effectively.
 -- Made a good start to a three-year plan designed to reduce manufacturing overhead cost by 20 percent in terms of percent of net sales.
 What, then, do we expect for the future?
 -- First, we expect to strengthen our proprietary technology position which is fundamentally important to our competitive advantage and gross margins. We will increase funding of technology and pay for it by reducing other expenses, all expressed as a percent of net sales.
 -- Second, we expect continued growth primarily based on new products, market share gains and geographic penetration. A higher added value product mix, product performance, quality and customer responsiveness will also contribute to the expected growth. We expect no help from the worldwide economy and price increases will be minimal but raw material costs are expected to be fairly stable.
 -- Thirdly, and most importantly, we expect improved profitability. Examples of how this will be achieved include the completed transition of our European medical nonwovens products to the Swedish mill, a major improvement in the operation of our Kansas City Automotive Acoustical Sealants plant, a strengthening of the domestic Packaging Products business, the emphasis we are placing on reduced cycle times and waste elimination, reduced losses at D & S Plastics and, by no means least, the imperative for a 20 percent reduction in manufacturing overhead (expressed as a percent of net sales) by 1/1/95 using 1991 figures as the base.
 To ensure this overhead cost reduction occurs, we have adopted the clear principle that any position that does not add value must be eliminated and head count has already been reduced. Additionally, we expect to close nine plants over the next 12-18 months with the clear objective of improving efficiency and reducing overhead cost. It is also fair to observe that raising sales while holding overhead constant is a perfectly acceptable way to reduce overhead as a percent of sales.
 Finally, we have, of course, to absorb the accounting change dictated by FASB 106. We will take this as a onetime charge to earnings in the first quarter of this year. The estimated impact is $25 million pretax or $15 million after tax. At the same time we will take into account the effects of FASB 109 and 112. The effect of the latter is negligible but FASB 109 will provide a onetime $7 million after tax benefit. The combined effect of these accounting changes is, therefore, a net charge of $8 million after tax or 33 cents per share.
 There are many tasks to complete in 1993 and several areas of concern, not the least of which is the impact of exchange rates, but there are also many opportunities. Putting aside the effect of FASB directives, a more strategically positioned and leaner Dexter looks forward with vigor to converting those opportunities into continued growth of earnings by its restructured and market focused operations.
 -0- 2/17/93
 /CONTACT: Bruce H. Beatt for Dexter, 203-292-7601/
 (DEX)


CO: Dexter Corporation ST: Connecticut IN: SU:

LR -- NY088 -- 7395 02/17/93 14:03 EST
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