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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 April 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 May 2, 1994:
Capital Stock, $1 Par Value--3,257,864 shares
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ROGERS CORPORATION AND SUBSIDIARIES
FORM 10-Q
April 3, 1994
INDEX
Page No.
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Consolidated Statements of Income--
Three Months Ended April 3, 1994 and
April 4, 1993 3
Consolidated Balance Sheets--
April 3, 1994 and January 2, 1994 4-5
Consolidated Statements of Cash Flows--
Three Months Ended April 3, 1994 and
April 4, 1993 6
Supplementary Notes 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
PART II--OTHER INFORMATION
Item 6. Reports on Form 8-K 10
SIGNATURES 10
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
Three Months Ended:
-------------------------
April 3, April 4,
1994 1993
-------------------------
Net Sales $ 34,005 $ 32,779
Cost of Sales 24,544 23,216
Selling and Administrative Expenses 5,114 5,448
Research and Development Expenses 1,644 1,676
---------- ----------
Total Costs and Expenses 31,302 30,340
---------- ----------
Operating Income 2,703 2,439
Other Income less Other Charges 31 (18)
Interest Expense, Net 371 758
---------- ----------
Income Before Income Taxes 2,363 1,663
Income Taxes:
Federal and Foreign 58 22
State 36 --
---------- ----------
Net Income $ 2,269 $ 1,641
========== ==========
Income Per Share $ .67 $ .53
========== ==========
Average Shares Outstanding and Common
Stock Equivalents 3,375,103 3,114,093
========== ==========
The accompanying notes are an integral part of the consolidated
financial statements.
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ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in Thousands)
April 3, 1994 January 2, 1994
------------- ---------------
Current Assets:
Cash and Cash Equivalents $ 4,245 $ 4,533
Accounts Receivable 18,624 15,008
Inventories:
Raw Materials 3,596 3,432
In-Process and Finished 5,925 5,404
Less LIFO Reserve (808) (808)
-------- --------
Total Inventories 8,713 8,028
Current Deferred Income Taxes 1,844 1,820
Net Assets Held for Sale (Note D) 7,554 6,785
Prepaid Expenses 768 668
-------- --------
Total Current Assets 41,748 36,842
-------- --------
Property, Plant and Equipment, Net of
Accumulated Depreciation of
$56,212 and $54,271 35,083 36,807
Investments in Unconsolidated Joint
Ventures 3,138 3,051
Intangible Pension Asset 3,295 3,295
Other Assets 1,790 1,842
-------- --------
Total Assets $ 85,054 $ 81,837
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
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ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND SHAREHOLDERS' EQUITY
(Dollars in Thousands)
April 3, 1994 January 2, 1994
------------- ---------------
Current Liabilities:
Accounts Payable $ 9,502 $ 7,679
Notes Payable to Banks (Note E) 1,000 --
Current Maturities of Long-Term Debt 2,736 3,140
Accrued Employee Benefits and
Compensation 4,541 5,296
Accrued Cost Reduction Charge 2,161 2,222
Accrued Interest 656 542
Other Accrued Liabilities 3,923 3,258
Taxes, Other than Federal and
Foreign Income 1,201 1,546
-------- --------
Total Current Liabilities 25,720 23,683
-------- --------
Long-Term Debt, less Current Maturities 12,208 14,190
Noncurrent Deferred Income Taxes 2,107 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 2,310 2,236
Shareholders' Equity:
Capital Stock, $1 Par Value:
Authorized Shares 10,000,000; Issued
and Outstanding Shares 3,247,404
and 3,222,461 3,247 3,222
Additional Paid-In Capital 23,097 22,558
Equity Translation Adjustment 1,397 1,193
Retained Earnings 3,186 918
-------- --------
Total Shareholders' Equity 30,927 27,891
-------- --------
Total Liabilities and
Shareholders' Equity $ 85,054 $ 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>
Three Months Ended:
-----------------------
April 3, April 4,
1994 1993
-----------------------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net Income $ 2,269 $ 1,641
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 1,710 2,519
Equity in Undistributed (Income) Loss of Unconsolidated
Joint Ventures - Net 197 (104)
Loss on Disposition of Property, Plant and Equipment (16) (1)
Other - Net 129 62
Changes in Operating Assets and Liabilities Excluding
Effects of Disposition of Assets:
Accounts Receivable (3,563) (2,656)
Accounts Receivable from Unconsolidated Joint Ventures (274) 339
Inventories (644) 762
Prepaid Expenses (86) 41
Accounts Payable and Accrued Expenses 1,731 2,485
------------ ------------
Net Cash Provided by Operating Activities 1,453 5,088
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Capital Expenditures (968) (2,098)
Proceeds from Sale of Property, Plant and Equipment 37 65
------------ ------------
Net Cash Used in Investing Activities (931) (2,033)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Proceeds from Short and Long-Term Borrowings 1,250 1,956
Repayments of Debt Principal (3,637) (2,512)
Net Increase in Borrowings (Repayments) of Revolving
Lines of Credit 1,000 (2,740)
Proceeds from Sale of Capital Stock 564 202
------------ ------------
Net Cash Used in Financing Activities (823) (3,094)
Effect of Exchange Rate Changes on Cash 13 284
------------ ------------
Net Increase (Decrease) in Cash and Cash Equivalents (288) 245
Cash and Cash Equivalents at Beginning of Year 4,533 5,356
------------ ------------
Cash and Cash Equivalents at End of Quarter $ 4,245 $ 5,601
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
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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. Sales in 1994 include flexible circuit material sales to ADFlex
Solutions, Inc., the Company that purchased Rogers' Flexible
Interconnections 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. Methode will integrate this
business into its own facilities, and the Company will sell
separately the production equipment and the building in Mesa,
Arizona.
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, building and
equipment in Mesa, Arizona, related to the divested Power
Distribution Division. The difference between Net Assets Held for
Sale at year-end 1993 and at April 3, 1994 is due to a
reclassification of machinery and equipment related to the sale of
the U.S. power distribution business.
E. At April 4, 1993, the Company fully utilized its $3.0 million
revolving credit arrangement with a domestic bank. The Company
subsequently terminated this arrangement in 1993 and entered into a
revolving credit arrangement with Fleet Bank, N.A. which is currently
a $15.0 million facility. At April 3, 1994, $2.3 million was
outstanding under the revolving credit arrangement. Of this amount,
$1.0 million was considered short-term.
F. Interest paid to lenders during the first three months of 1994 and
1993 was approximately $300,000 and $800,000, respectively.
G. Income taxes paid (refunded) were $36,000 and $(68,000) in the first
three 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 and earnings per share in the first quarter were $2,269,000
and 67 cents respectively, compared with $1,641,000 and 53 cents for the
same period a year ago. Before-tax profits of $2,363,000 were up 42%
from the first quarter last year. The assumed tax rate for 1994 is
slightly above the rate in the first quarter of 1993, but the tax
provision will again be quite small this year.
The Power Distribution Division, which the Company is currently in the
process of divesting, was restructured in 1993, and its impact on
earnings was more favorable in the first quarter of 1994 than in the
first three months of last year. Higher profits in the first quarter
also came from lower expenses and interest costs, as well as generally
improved operations.
In the first quarter, sales were up 17% from last year's fourth quarter
but, on a comparable basis, volume was about the same as in the first
three months of 1993. The gains in sales of PORON (R) materials,
flexible circuit materials and moldable composites were largely offset
by declines in sales of microwave materials and circuits, mainly for
military applications. Sales rose from the last quarter of 1993 in
almost every area of the Company' business.
Polymer Products sales increased 8% in the first three months of 1994,
compared to the same period of 1993. In the Poron Materials Division,
the new production line, which more than doubles capacity, was brought
on line successfully, and the division is producing and shipping record
amounts of materials. Sales effort for these products is continuing to
be intensified, especially in foreign markets.
Benefitting from increased automotive production and a rising share of
the motor commutator market, first quarter 1994 sales of moldable
composite materials were the highest in the past five years. Faster
cure materials were introduced in the first quarter and offer a 10% to
20% reduction in molding cycle times for customers.
Electronic Products sales decreased 1% from the comparable three-month
period of 1993. The Company is continuing to replace military microwave
circuit and circuit materials applications with commercial business.
New products, including the RO3003 (TM) high frequency circuit material
recently introduced in Europe and in the U.S., should help to make this
conversion successful. Also, TMM (R) high frequency circuit laminate
material has achieved recent new adoptions as an antenna substrate for
global positioning systems, for cellular telephones, and for the next
generation of pocket pagers. In addition, flexible circuit materials
enjoyed higher sales for both computer and integrated circuit packaging
applications.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, CONTINUED
Continuing growth at Durel Corporation, the Company's 50% owned joint
venture with 3M, will necessitate further facilities expansion in 1994.
This will be the first year of substantial sales of DUREL (R)
electroluminescent lamps to the automotive market.
Manufacturing profit as a percentage of sales in the first three months
of 1994 was 28%, compared to 29% during the same period in 1993. This
slight decline primarily reflects the lower sales of microwave materials
and circuits for military applications and some higher costs related to
added capacity.
Selling and administrative expenses for the first three months of 1994
decreased slightly as a percentage of sales from the previous year
reflecting the impact of continuing expense reduction efforts. Research
and development expenditures also decreased slightly from 1993, and were
approximately 5% of sales in both years. The Company is continuing
concentration on spending for materials-related projects.
Net interest expense decreased 51% from the same three-month period of
1993, due primarily to a reduction in total borrowings. Total debt
outstanding at April 4, 1993 was $32.1 million compared to $15.9 million
at April 3, 1994, a decrease of $16.2 million. Unless interest rates
increase substantially, management expects 1994 interest expense will
continue to decline.
Net cash provided from operating activities in the first three months of
1994 was $1.5 million, compared to $5.1 million during the first three
months of 1993. This year-to-year decrease was mainly attributable to
increased levels of accounts receivable and inventories, and decreased
levels of accounts payable and accrued expenses.
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 repaid 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 properties and intellectual property.
Capital expenditures in the first three months of 1994 and 1993 were
$1.0 million and $2.1 million, respectively. For 1994, capital spending
is expected to be about the same as in 1993, and will focus on new
process equipment, capacity expansions, cost reductions and quality
improvements. It is anticipated that this spending will be financed
with internally generated funds.
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PART II - OTHER INFORMATION
Item 6. Reports on Form 8-K
(b) There were no reports on Form 8-K filed for the three
months ended April 3, 1994.
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: May 6, 1994
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