Total pages included - 12
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 1994
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 1-4347
ROGERS CORPORATION
(Exact name of Registrant as specified in its charter)
Massachusetts 06-0513860
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
One Technology Drive, Rogers, Connecticut 06263
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 774-9605
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
The number of shares outstanding of the Registrant's classes of common
stock as of October 30, 1994:
Capital Stock, $1 Par Value--3,516,995 shares
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[PAGE]
ROGERS CORPORATION AND SUBSIDIARIES
FORM 10-Q
October 2, 1994
INDEX
Page No.
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Consolidated Statements of Income--
Three Months and Nine Months Ended October 2, 1994
and October 3, 1993 3
Consolidated Balance Sheets--
October 2, 1994 and January 2, 1994 4-5
Consolidated Statements of Cash Flows--
Nine Months Ended October 2, 1994 and
October 3, 1993 6
Supplementary Notes 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-10
PART II--OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
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<TABLE>
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except for Per Share Amounts)
<CAPTION>
Three Months Ended: Nine Months Ended:
----------------------------------------------------------
October 2, October 3, October 2, October 3,
1994 1993 1994 1993
----------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $ 32,605 $ 30,312 $ 101,605 $ 94,030
Cost of Sales 23,451 21,821 73,658 67,694
Selling and Administrative Expenses 4,714 4,954 14,967 14,695
Research and Development Expenses 1,724 1,706 5,037 5,114
----------------------------------------------------------
Total Costs and Expenses 29,889 28,481 93,662 87,503
----------------------------------------------------------
Operating Income 2,716 1,831 7,943 6,527
Other Income less Other Charges 310 498 655 643
Interest Expense, Net 137 593 857 2,140
----------------------------------------------------------
Income Before Income Taxes 2,889 1,736 7,741 5,030
Income Taxes Expense:
Federal and Foreign 158 24 279 64
State 35 -- 108 1
----------------------------------------------------------
Net Income $ 2,696 $ 1,712 $ 7,354 $ 4,965
==========================================================
Net Income Per Share:
Primary $ .73 $ .53 $ 2.10 $ 1.57
==========================================================
Fully Diluted $ .73 $ .53 $ 2.09 $ 1.54
==========================================================
Average Shares Outstanding:
Primary 3,685,842 3,210,166 3,499,429 3,154,951
==========================================================
Fully Diluted 3,694,513 3,236,623 3,524,305 3,233,233
==========================================================
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
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[PAGE]
ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in Thousands)
October 2, 1994 January 2, 1994
---------------- ---------------
Current Assets:
Cash and Cash Equivalents $ 7,786 $ 4,533
Accounts Receivable 19,241 15,008
Inventories:
Raw Materials 4,247 3,432
In-Process and Finished 4,780 5,404
Less LIFO Reserve (808) (808)
----------- ----------
Total Inventories 8,219 8,028
Current Deferred Income Taxes 1,918 1,820
Net Assets Held for Sale (Note D) 6,785 6,785
Prepaid Expenses 414 668
----------- ----------
Total Current Assets 44,363 36,842
----------- ----------
Property, Plant and Equipment, Net of
Accumulated Depreciation of
$59,831 and $54,271 33,626 36,807
Investments in Unconsolidated Joint
Ventures 3,610 3,051
Intangible Pension Asset 3,295 3,295
Other Assets 1,670 1,842
----------- ----------
Total Assets $ 86,564 $ 81,837
=========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
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[PAGE]
ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND SHAREHOLDERS' EQUITY
(Dollars in Thousands)
October 2, 1994 January 2, 1994
---------------- ---------------
Current Liabilities:
Accounts Payable $ 7,660 $ 7,679
Current Maturities of Long-Term Debt 1,225 3,140
Accrued Employee Benefits and
Compensation 5,302 5,296
Accrued Cost Reduction Charge 1,344 2,222
Other Accrued Liabilities 4,621 3,800
Taxes, Other than Federal and
Foreign Income 1,020 1,546
---------- ----------
Total Current Liabilities 21,172 23,683
Long-Term Debt, less Current Maturities 6,675 14,190
Noncurrent Deferred Income Taxes 2,271 2,055
Noncurrent Pension Liability 5,660 5,660
Noncurrent Retiree Health Care and Life
Insurance Benefits 6,122 6,122
Other Long-Term Liabilities 2,526 2,236
Shareholders' Equity:
Capital Stock, $1 Par Value:
Authorized Shares 25,000,000; Issued
and Outstanding Shares 3,515,320
and 3,222,461 3,515 3,222
Additional Paid-In Capital 28,432 22,558
Equity Translation Adjustment 1,920 1,193
Retained Earnings 8,271 918
--------- ---------
Total Shareholders' Equity 42,138 27,891
--------- ---------
Total Liabilities and
Shareholders' Equity $ 86,564 $ 81,837
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
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<TABLE>
ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<CAPTION>
Nine Months Ended:
---------------------------
October 2, October 3,
1994 1993
---------------------------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net Income $ 7,354 $ 4,965
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
Depreciation and Amortization 5,000 5,576
Equity in Undistributed (Income) Loss of Unconsolidated
Joint Ventures - Net 28 (484)
Gain (Loss) on Disposition of Property, Plant & Equipment 30 (5)
Other - Net (449) 230
Changes in Operating Assets and Liabilities Excluding
Effects of Acquisition and Disposition of Assets:
Accounts Receivable (3,941) (2,795)
Accounts Receivable from Unconsolidated Joint Ventures (638) 339
Inventories (105) 1,004
Prepaid Expenses 283 (129)
Accounts Payable and Accrued Expenses (925) 288
----------------------------
Net Cash Provided by Operating Activities 6,637 8,989
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Capital Expenditures (2,851) (6,259)
Proceeds from Sale of Businesses 909 10,634
Proceeds from Sale of Property, Plant and Equipment 1,664 224
----------------------------
Net Cash Provided by (Used in) Investing Activities (278) 4,599
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Proceeds from Short and Long-Term Borrowings 1,250 6,956
Repayments of Debt Principal (6,153) (19,478)
Net Increase in Repayments of Revolving Lines of Credit -- (3,539)
Proceeds from Sale of Capital Stock 1,667 272
----------------------------
Net Cash Used in Financing Activities (3,236) (15,789)
Effect of Exchange Rate Changes on Cash 130 433
----------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 3,253 (1,768)
Cash and Cash Equivalents at Beginning of Year 4,533 5,356
----------------------------
Cash and Cash Equivalents at End of Quarter $ 7,786 $ 3,588
============================
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
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ROGERS CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY NOTES
A. The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. For further
information, refer to the audited consolidated financial statements
and footnotes thereto included in the Company's annual report on
Form 10-K for the fiscal year ended January 2, 1994.
B. Beginning with the third quarter of 1993, sales include flexible
circuit material sales to ADFlex Solutions, Inc., the company that
purchased Rogers' flexible interconnections business in June 1993.
C. In February 1994 the Company concluded an agreement to sell its
U.S. power distribution business to Methode Electronics, Inc., a
manufacturer of bus bar products located in Chicago, Illinois. In
addition to an initial cash payment, the Company will receive
royalties on sales for five years. The sale has been completed.
The plant, where the business was operating, located in Mesa,
Arizona, is being offered for sale.
D. Net Assets Held for Sale consist primarily of land and building in
Chandler, Arizona, currently being leased to the buyer of the
Flexible Interconnections Division and the land and building in
Mesa, Arizona, related to the divested Power Distribution Division.
E. The Company has a $15.0 million revolving credit arrangement with
Fleet Bank, N.A. At October 2, 1994, there were no borrowings
under this arrangement.
F. Interest paid to lenders during the first nine months of 1994 and
1993 was approximately $1,769,000 and $2,679,000, respectively.
G. Income taxes paid were $290,000 and $162,000 in the first nine
months of 1994 and 1993, respectively.
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[PAGE]
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net Income in the third quarter and first nine months of 1994 was $2.7
million and $7.4 million, respectively, as compared with $1.7 million
and $5.0 million in the same periods of 1993. Profits, both before
and after taxes, were the largest for any third quarter and any
initial nine-month period in Rogers history. 1994 before-tax profits
increased 66% in the third quarter, and 54% in the first nine months,
compared with the same periods a year ago. Increased sales,
especially in flexible circuit materials and in the European power
distribution component business, and significantly lower interest
costs were the major reasons for the third quarter year-to-year profit
improvement. In addition, 1994 third quarter earnings included a
modest gain from the sale in September of Rogers small ENVEX (registered
trademark) polyimide components business to DuPont.
After-tax profits included only a nominal tax provision in 1994 and
1993. The Company expects to use substantially all of its domestic
tax loss carryforwards in 1994. In addition, there are approximately
$6 million of tax credit carryforwards and other adjustments for which
no tax benefit has been recorded. Recognition of tax benefits
associated with these items is dependent on future taxable earnings.
The Company currently anticipates a tax rate in the range of 10% - 20%
for the full year 1995.
Durel Corporation, the Company's 50% owned joint venture with 3M for
electroluminescent lamps, followed up its first full year of profits
in 1993 with a stronger performance in the first nine months of 1994.
Because aggregate losses during Durel's development period from 1988
to 1992 exceed aggregate earnings, Durel profits have not yet been
reflected in Rogers financial statements. It is now expected,
however, that a 50% share of Durel 1995 earnings will be included in
Rogers results beginning in the first quarter of 1995. In response to
additional growth opportunities, Durel broke ground in September for a
77,000 square foot manufacturing facility in Chandler, Arizona.
Initial production in the new facility is planned for the spring of
1995.
Sales were 8% greater in both the third quarter and in the first nine
months, compared with the same periods last year. Adjusted to reflect
divestitures, the sales gain was 14% in the quarter and 7% for the
first three quarters. The sales gain was attributable mainly to
higher unit sales as opposed to increased selling prices.
Sales of Polymer Products increased 7% in the first nine months of
1994, compared with the same period in 1993. The Polymer Product
sales increase was led by the Willimantic and Molding Materials
Divisions. Sales of high performance elastomers benefited from
continued strong growth of sales of Endur (registered trademark) C-LE
conductive rollers for laser printer applications and from strong
NITROPHYL (registered trademark) float sales to the automotive market.
Volume increases in Molding Materials was attributable to robust
automotive production, an increasing share of the electric motor
commutator insulator market, and penetration of
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foreign markets. Led by improving sales to printing and industrial
markets, Poron Materials shipments were 10% greater in the third
quarter of 1994 compared with the second quarter. In September,
increased manufacturing capacity for PORON (registered trademark)
S2000 silicone foam was approved, thereby extending the range of
PORON product offerings to applications which require materials
capable of performing at extreme temperatures.
Sales of PORON materials and ENDUR components to Asian markets
continue to increase. Stated in local currency, sales of Rogers INOAC
Corporation, the Company's 50% owned joint venture in Japan, rose 36%
in the third quarter compared with the same period last year. These
joint venture sales are not recorded in Rogers' financial statements.
Sales of Electronic Products for the initial nine-month period
increased 9% compared with the prior year. Sales gains in flexible
circuit materials for computer data storage applications and high
frequency materials for cellular telephone base station applications
more than offset lower sales of military microwave circuits.
Considerable prototyping continued for commercial wireless
applications, and the range of materials offered is being broadened.
Additionally, sales in Europe ran well ahead of 1993 for the quarter
and for the first nine months of the year. These results are
attributable to sales for older applications in mainframe computers,
where lower sales are expected in 1995, and from new applications both
in power distribution devices for cellular telephone base stations and
in large power equipment where further sales gains are anticipated.
Manufacturing profit as a percentage of sales in the first nine months
of 1994 was essentially unchanged compared with the corresponding
period of 1993.
Selling and administrative expenses for the first nine months of 1994
grew at a slower rate than the sales increase reflecting in part the
impact of continuing expense reduction efforts. Research and
development expenditures decreased slightly from 1993, but were
approximately 5% of sales in both years. The Company is continuing to
concentrate on spending for materials-related projects and is devoting
an increased share of R&D resources to extend conductive elastomer
technology for applications related to the imaging industry.
Net interest expense for the first nine months of 1994 decreased from
the comparative nine month period of 1993, as a result primarily of a
reduction in total borrowing. Total debt outstanding at October 2,
1994 was $7.9 million compared with $19.3 million at October 3, 1993,
a decrease of $11.4 million. The Company's debt was reduced $5.7
million in the third quarter, as a result of the conversion of $4.5
million convertible subordinated notes into 204,545 shares of capital
stock, and regularly scheduled loan repayments of $1.2 million. As a
result of lower borrowings, management expects 1994 interest expense
will continue to decline.
Net cash provided from operating activities in the first nine months
of 1994 was $6.6 million, compared with $9.0 million in the same 1993
period. The year-to-year decrease is attributable mainly to increased
working capital requirements associated with sales increases.
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The Company can borrow up to a maximum of $15 million under a
revolving credit arrangement with Fleet Bank, N.A. Amounts borrowed
under this arrangement are to be paid in full on April 14, 1996.
Repayments on the revolving credit facility are necessary to the
extent the Company's collateral decreases to a level which does not
support borrowings under the facility, although this is not likely.
Borrowings under the revolving credit facility are secured by
virtually all of the Company's domestic assets other than real
property and intellectual property. The Company had no borrowings
under this arrangement at October 2, 1994.
Capital expenditures in the first half of 1994 and 1993 were $2.9
million and $6.3 million, respectively. The higher level of spending
in 1993 reflected the acquisition and related costs of a new Poron
production line, which more than doubled capacity of the Poron
Materials Division.
The Company is subject to federal, state, and local regulations
concerning the environment and is currently engaged in proceedings
involving a number of sites under these laws. In each of these cases,
Rogers is one of a group of potentially responsible parties (PRPs).
Several of these proceedings are at a preliminary stage and it is
impossible to estimate the cost of remediation, the timing and extent
of remedial action which may be required by governmental authorities,
and the amount of liability, if any, of the Company alone or in
relation to that of any other responsible parties. The Company also
may have some insurance coverage with respect to these matters. Based
on facts presently known to it, the Company does not believe that the
outcome of these proceedings will have a material adverse effect on
its financial condition.
In addition to the above proceedings, the Company has been actively
working with the Connecticut Department of Environmental Protection
(CT DEP) related to polychlorinated biphenyl (PCB) contamination in
the soil beneath a small section of cement flooring at the East
Woodstock, Connecticut facility. The Company is developing a
remediation plan with CT DEP. On the basis of estimates prepared by
Rogers' environmental engineers and consultants, the Company recorded
a provision of approximately $450,000 in the third quarter 1994 to
cover the costs of this plan. Management believes, based on facts
currently available, that the implementation of the aforementioned
plan will not have a material additional impact on earnings.
At October 2, 1994 other accrued liabilities were greater than year-
end 1993 primarily as a result of reserves established for PCB clean-
up.
The Company has not had any material recurring costs and capital
expenditures relating to the above environmental matters, except as
specifically described above.
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[PAGE]
PART II - OTHER INFORMATION
Item 6. Reports on Form 8-K
(b) There were no reports on Form 8-K filed for the nine months
ended October 2, 1994.
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Three Months Ended: Nine Months Ended:
----------------------------------------------
October 2, October 3, October 2, October 3,
1994 1993 1994 1993
----------------------------------------------
1. Net income $2,696,000 $1,712,000 $7,354,000 $4,965,000
==============================================
2. Weighted average number of
shares outstanding during
period 3,508,534 3,114,355 3,338,326 3,110,965
3. Net effect of dilutive stock
options - based on the
treasury stock method using
average market price 177,307 95,811 161,103 43,986
---------------------------------------------
4. Total weighted average number
of shares and capital
equivalent shares assumed
outstanding 3,685,842 3,210,166 3,499,429 3,154,951
5. Additional net shares,
issuable when market value
at period end exceeds average
market value during period 8,671 26,457 24,876 78,282
---------------------------------------------
6. Shares assumed outstanding
for computation of fully
diluted earnings per share 3,694,513 3,236,623 3,524,305 3,233,233
=============================================
Net income per capital share
(1 / 2) $.77 $.55 $2.20 $1.60
=============================================
Net income per capital share
and capital share equivalent
(1 / 4) $.73 $.53 $2.10 $1.57
=============================================
Net income per capital share
assuming full dilution (1 / 6) $.73 $.53 $2.09 $1.54
=============================================
This calculation is submitted in accordance with Regulation S-K Item 601(b)(11).
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[PAGE]
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.
ROGERS CORPORATION
(Registrant)
By s/DONALD F. O'LEARY
Donald F. O'Leary
Authorized Officer
Assistant Controller
Dated: November 14, 1994
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[PAGE]
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