Total pages included - 13
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 July 3, 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 August 1, 1994:
Capital Stock, $1 Par Value--3,502,757 shares
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[PAGE]
ROGERS CORPORATION AND SUBSIDIARIES
FORM 10-Q
July 3, 1994
INDEX
Page No.
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Consolidated Statements of Income--
Three Months and Six Months Ended July 3, 1994
and July 4, 1993 3
Consolidated Balance Sheets--
July 3, 1994 and January 2, 1994 4-5
Consolidated Statements of Cash Flows--
Six Months Ended July 3, 1994 and
July 4, 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 4. Submission of Matters to a Vote of Security
Holders 11
Item 6. Exhibits and Reports on Form 8-K 11-12
SIGNATURES 13
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[PAGE]
<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: Six Months Ended:
July 3, July 4, July 3, July 4,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net Sales $ 34,995 $ 30,939 $ 69,000 $ 63,718
Cost of Sales 25,663 22,657 50,207 45,873
Selling and Administrative Expenses 5,139 4,293 10,253 9,741
Research and Development Expenses 1,669 1,732 3,313 3,408
Total Costs and Expenses 32,471 28,682 63,773 59,022
Operating Income 2,524 2,257 5,227 4,696
Other Income less Other Charges 314 163 345 145
Interest Expense, Net 349 789 720 1,547
Income Before Income Taxes 2,489 1,631 4,852 3,294
Income Taxes Expense:
Federal and Foreign 63 18 121 40
State 37 1 73 1
Net Income $ 2,389 $ 1,612 $ 4,658 $ 3,253
Net Income Per Share:
Primary $ 0.70 $ 0.51 $ 1.37 $ 1.04
Fully Diluted $ 0.68 $ 0.51 $ 1.34 $ 1.03
Average Shares Outstanding:
Primary 3,436,342 3,140,550 3,405,722 3,127,321
Fully Diluted 3,673,501 3,145,975 3,656,992 3,144,162
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)
July 3, 1994 January 2, 1994
Current Assets:
Cash and Cash Equivalents $ 5,310 $ 4,533
Accounts Receivable 19,180 15,008
Inventories:
Raw Materials 4,273 3,432
In-Process and Finished 5,363 5,404
Less LIFO Reserve (808) (808)
Total Inventories 8,828 8,028
Current Deferred Income Taxes 1,861 1,820
Net Assets Held for Sale (Note D) 6,785 6,785
Prepaid Expenses 457 668
Total Current Assets 42,421 36,842
Property, Plant and Equipment, Net of
Accumulated Depreciation of
$58,006 and $54,271 34,534 36,807
Investments in Unconsolidated Joint
Ventures 3,342 3,051
Intangible Pension Asset 3,295 3,295
Other Assets 1,736 1,842
Total Assets $ 85,328 $ 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)
July 3, 1994 January 2, 1994
Current Liabilities:
Accounts Payable $ 8,715 $ 7,679
Current Maturities of Long-Term Debt 2,734 3,140
Accrued Employee Benefits and
Compensation 4,966 5,296
Accrued Cost Reduction Charge 1,924 2,222
Accrued Interest 477 542
Other Accrued Liabilities 3,890 3,258
Taxes, Other than Federal and
Foreign Income 1,027 1,546
Total Current Liabilities 23,733 23,683
Long-Term Debt, less Current Maturities 10,932 14,190
Noncurrent Deferred Income Taxes 2,164 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 2,402 2,236
Shareholders' Equity:
Capital Stock, $1 Par Value:
Authorized Shares 25,000,000; Issued
and Outstanding Shares 3,282,289
and 3,222,461 3,282 3,222
Additional Paid-In Capital 23,846 22,558
Equity Translation Adjustment 1,612 1,193
Retained Earnings 5,575 918
Total Shareholders' Equity 34,315 27,891
Total Liabilities and
Shareholders' Equity $ 85,328 $ 81,837
The accompanying notes are an integral part of the consolidated financial
statements.
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[PAGE]
<TABLE>
ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<CAPTION>
Six Months Ended:
July 3, July 4,
1994 1993
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net Income $ 4,658 $ 3,253
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 3,432 3,381
Equity in Undistributed (Income) Loss of Unconsolidated
Joint Ventures - Net 407 (285)
Other - Net 231 649
Changes in Operating Assets and Liabilities Excluding
Effects of Acquisition and Disposition of Assets:
Accounts Receivable (4,099) (3,191)
Accounts Receivable from Unconsolidated Joint Ventures (568) 339
Inventories (792) 589
Prepaid Expenses 343 (58)
Accounts Payable and Accrued Expenses (152) 4,064
Net Cash Provided by Operating Activities 3,460 8,741
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Capital Expenditures (1,979) (4,018)
Proceeds from Sale of Business 360 7,634
Proceeds from Sale of Property, Plant and Equipment 1,235 95
Net Cash (Used In) Provided by Investing
Activities (384) 3,711
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Proceeds from Short and Long-Term Borrowings 1,250 6,956
Repayments of Debt Principal (4,887) (15,485)
Net Increase in Repayments of Revolving Lines of Credit -- (3,552)
Proceeds from Sale of Capital Stock 1,348 173
Net Cash Used in Financing Activities (2,289) (11,908)
Effect of Exchange Rate Changes on Cash (10) 406
Net Increase in Cash and Cash Equivalents 777 950
Cash and Cash Equivalents at Beginning of Year 4,533 5,356
Cash and Cash Equivalents at End of Quarter $ 5,310 $ 6,306
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
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[PAGE]
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. Sales in 1994 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 based in Chicago, Illinois. In addition to an initial cash payment,
the Company will receive royalties on sales for five years. This divestiture
is essentially complete; the equipment has been sold and the plant, located
in Mesa, Arizona, is being offered for sale.
D. Net Assets Held for Sale consists primarily of the 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 revolving credit arrangement with Fleet Bank, N.A. which is
currently a $15.0 million facility. At July 3, 1994, there were no
borrowings under this arrangement.
F. Interest paid to lenders during the first six months of 1994 and 1993 was
approximately $815,000 and $2.1 million, respectively.
G. Income taxes paid (refunded) were $188,000 and $(17,000) in the first six
months of 1994 and 1993, respectively.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Net Income in the second quarter and first half of 1994 was $2.4 million and
$4.7 million, respectively, as compared to $1.6 million and $3.3 million in the
same periods of 1993. Profits, both before and after taxes, were the highest
for any second quarter and any initial six-month period in Rogers' history.
Before-tax profits increased close to 50% in both the second quarter and in the
first half over the comparable periods a year ago, primarily due to improved
effectiveness in a number of areas and significantly lower interest expense.
After-tax profits, shown in the accompanying statements, include only a minimal
tax provision in each of the periods presented. 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.
Sales were 13% higher in the second quarter, and up 8% in the first half,
compared to the same periods in 1993. However, after adjustment for divestiture
related changes, sales volume was up more modestly in both periods. The sales
increase was mainly attributable to greater market penetration as opposed to
higher selling prices.
Polymer Product sales increased by 7% in the first six months of 1994, compared
to the same period in 1993. The revenue increase of this business segment was
led by sales of moldable composite materials, which were up 17% in the second
quarter and 14% for the first half over the comparable 1993 periods. These
increases were based on strong automotive production, an increasing share of the
electric motor commutator insulator market, and penetration of foreign markets.
In addition, the Willimantic Division achieved record second quarter sales
benefitting from strong sales of Endur (Registered Trademark) C-LE conductive
rollers for laser printer applications and from strong nitrophyl float sales to
the automotive market. These increases were offset somewhat by lower shipments
of high performance elastomer materials by the Poron Materials Division, which
were down 9% in the second quarter from the same period last year. These lower
sales are primarily a reflection of inventory reductions by customers who
because of our recent doubling of capacity, are once again being serviced with
short lead times. Poron material sales are expected to return to higher levels
in the second half.
First half sales of Electronic Products increased 10% from the comparable period
in 1993. This is primarily attributable to growing flexible circuit material
sales for computer and data storage applications, which have helped offset
declining sales to military customers.
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[PAGE]
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
Manufacturing profit as a percentage of sales in the first six months of 1994
was 27%, compared to 28% during the same period in 1993. This decline reflects
the impacts of the additional costs to double capacity in the Poron Materials
Division and the change in sales mix within the Circuit Materials Group away
from military applications to lower priced commercial applications.
Selling and administrative expenses for the first half of 1994 grew at a slower
rate than the sales increase reflecting 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 concentration on spending for materials-related projects.
Net interest expense decreased significantly from the same six-month period of
1993, due primarily to a reduction in total borrowings. Total debt outstanding
at July 4, 1993 was $23.3 million compared to $13.7 million at July 3, 1994, a
decrease of $9.6 million. In July of 1994 shortly after the end of the second
quarter, the Company's outstanding $4.5 million convertible subordinated notes
were converted into 204,545 shares of capital stock, which lowered debt even
further. Due to the lower borrowings, management expects 1994 interest expense
will continue to decline.
At July 3, 1994 other accrued liabilities were about the same as at the end of
the first quarter of 1994. The increase over year-end 1993 is primarily
attributable to two factors. Approximately $300,000 relates to reserves
provided for employee severance costs of the U.S. power distribution business.
The balance of the change is caused by our period accrual approach to a number
of costs such as vacation and holiday pay, advertising, property taxes,
professional services, etc. The actual payments for these costs are normally
somewhat lower in the first six months of the year. This results in increased
levels of accruals above the total at year-end.
Net cash provided from operating activities in the first six months of 1994 was
$3.5 million, compared to $8.7 million in the first half of 1993. This year-to-
year decrease is mainly attributable to the increased levels of accounts payable
and accrued expenses in 1993 and the increased levels of accounts receivable and
inventory in 1994.
The Company may 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 July 3, 1994.
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[PAGE]
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
Capital expenditures in the first half of 1994 and 1993 were $2.0 million and
$4.0 million, respectively. The higher level of spending in 1993 reflected the
acquisition and related costs of the 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 a participant in 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 has been
seeking to identify 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.
The Company has not had any material recurring costs and capital expenditures
relating to the above environmental matters.
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[PAGE]
PART II - OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders
The Registrant held its Annual Meeting of shareholders on April 28, 1994. The
following members were elected to the Company's Board of Directors to hold
office in the ensuing year:
Nominee In Favor Withheld
Leonid V. Azaroff 2,734,010 202,374
Leonard M. Baker 2,662,145 274,239
Wallace Barnes 2,661,641 274,743
Harry H. Birkenruth 2,733,405 202,979
Mildred S. Dresselhaus 2,726,745 209,639
Donald J. Harper 2,662,941 273,443
Gregory B. Howey 2,662,445 273,939
Leonard R. Jaskol 2,733,414 202,970
William E. Mitchell 2,662,445 273,939
The results of the voting on additional items were as follows:
Broker
In Favor Opposed Abstained Non-Vote
1. To approve the Corporation's
1994 Stock Compensation Plan 2,212,518 290,471 22,820 464,475
2. To amend the Corporation's
Restated Articles of
Organization to increase the
authorized Capital Stock, $1
par value per share to
25,000,000 shares 2,471,132 496,783 22,369 --
Item 6. Reports on Form 8-K
(b) There were no reports on Form 8-K filed for the six months ended
July 3, 1994.
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[PAGE]
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Three Months Ended: Six Months Ended:
----------------------- ---------------------
July 3, July 4, July 3, July 4,
1994 1993 1994 1993
-------------------------------------------------
1. Net income $2,389,000 $1,612,000 $4,658,000 $3,253,000
2. Interest on convertible
subordinated debentures,
net of taxes* 113,000 -- 227,000 --
-------------------------------------------------
3. Net income as adjusted $2,502,000 $1,612,000 $4,885,000 $3,253,000
=================================================
4. Weighted average number of
shares outstanding during
period 3,269,230 3,111,061 3,252,721 3,109,248
5. Net effect of dilutive
stock options - based on
the treasury stock method
using average market price 167,112 29,490 153,001 18,073
--------------------------------------------------
6. Total weighted average
number of shares and
capital equivalent shares
assumed outstanding 3,436,342 3,140,550 3,405,722 3,127,321
7. Additional net shares,
issuable when market value
at period end exceeds
average market value during
period 32,613 5,424 46,724 16,841
8. Assuming conversion of
convertible subordinated
debentures* 204,545 -- 204,545 --
--------------------------------------------------
9. Shares assumed outstanding
for computation of fully
diluted earnings per share 3,673,501 3,145,975 3,656,992 3,144,162
==================================================
Net income per capital
share (1 / 4) $.73 $.52 $1.43 $1.05
==================================================
Net income per capital
share and capital share
equivalent (1 / 6) $.70 $.51 $1.37 $1.04
==================================================
Net income per capital
share assuming full
dilution (3 / 9) $.68 $.51 $1.34 $1.03
==================================================
* In 1993, convertible subordinated debentures were not included in the
computation of per share earnings because they did not lower fully diluted
per share earnings.
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: August 16, 1994
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[PAGE]
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-01-1995
<PERIOD-END> JUL-03-1994
<CASH> 5,310
<SECURITIES> 0
<RECEIVABLES> 19,180
<ALLOWANCES> 0
<INVENTORY> 8,828
<CURRENT-ASSETS> 42,421
<PP&E> 34,534
<DEPRECIATION> 58,006
<TOTAL-ASSETS> 85,328
<CURRENT-LIABILITIES> 23,733
<BONDS> 0
<COMMON> 3,282
0
0
<OTHER-SE> 31,033
<TOTAL-LIABILITY-AND-EQUITY> 85,328
<SALES> 69,000
<TOTAL-REVENUES> 69,000
<CGS> 50,207
<TOTAL-COSTS> 63,773
<OTHER-EXPENSES> (345)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 720
<INCOME-PRETAX> 4,852
<INCOME-TAX> 194
<INCOME-CONTINUING> 4,658
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,658
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.34
</TABLE>
