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 2, 1995
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.)
P.O. Box 188, One Technology Drive, Rogers, Connecticut 06263-0188
(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 July 28, 1995:
Capital Stock, $1 Par Value--7,114,480 shares
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[PAGE]
ROGERS CORPORATION AND SUBSIDIARIES
FORM 10-Q
July 2, 1995
INDEX
Page No.
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Consolidated Statements of Income--
Three Months and Six Months Ended July 2, 1995
and July 3, 1994 3
Consolidated Balance Sheets--
July 2, 1995 and January 1, 1995 4-5
Consolidated Statements of Cash Flows--
Six Months Ended July 2, 1995 and
July 3, 1994 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 Vote of Security
Holders 11
Item 6. Exhibits and Reports on Form 8-K 11-12
SIGNATURES 13
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[PAGE]
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except for Per Share Amounts)
Three Months Ended: Six Months Ended:
July 2, July 3, July 2, July 3,
1995 1994 1995 1994
Net Sales $ 37,422 $ 34,995 $ 73,839 $ 69,000
Cost of Sales 25,255 24,998 50,163 48,877
Selling and Administrative
Expenses 5,671 5,139 11,336 10,253
Research and Development
Expenses 2,354 2,294 4,758 4,563
Total Costs and Expenses 33,280 32,431 66,257 63,693
Operating Income 4,142 2,564 7,582 5,307
Other Income less Other Charges 347 274 1,101 265
Interest Expense, Net 46 349 81 720
Income Before Income Taxes 4,443 2,489 8,602 4,852
Income Taxes Expense:
Federal and Foreign 630 63 1,212 121
State 125 37 250 73
Net Income $ 3,688 $ 2,389 $ 7,140 $ 4,658
Net Income Per Share:
Primary $ 0.94 $ 0.70 $ 1.84 $ 1.37
Fully Diluted $ 0.94 $ 0.68 $ 1.83 $ 1.34
Average Shares Outstanding:
Primary 3,899,919 3,436,342 3,890,516 3,405,722
Fully Diluted 3,906,247 3,673,501 3,900,624 3,656,992
The accompanying notes are an integral part of the consolidated financial
statements.
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[PAGE]
ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in Thousands)
July 2, 1995 January 1, 1995
Current Assets:
Cash and Cash Equivalents $ 17,350 $ 13,851
Accounts Receivable 20,751 16,495
Inventories:
Raw Materials 4,937 4,311
In-Process and Finished 5,707 5,302
Less LIFO Reserve (1,056) (1,056)
Total Inventories 9,588 8,557
Net Assets Held for Sale (Note B) 6,687 6,687
Other Current Assets 449 1,596
Total Current Assets 54,825 47,186
Property, Plant and Equipment, Net of
Accumulated Depreciation of
$56,356 and $52,464 34,734 34,061
Investments in Unconsolidated Joint
Ventures 4,410 4,072
Intangible Pension Asset 2,365 2,365
Other Assets 1,674 1,759
Total Assets $ 98,008 $ 89,443
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 2, 1995 January 1, 1995
Current Liabilities:
Accounts Payable $ 8,005 $ 7,778
Current Maturities of Long-Term Debt 600 1,225
Accrued Employee Benefits and
Compensation 7,379 6,646
Other Accrued Liabilities 7,005 5,849
Taxes Other than Federal and Foreign
Income 970 984
Total Current Liabilities 23,959 22,482
Long-Term Debt, less Current Maturities 4,800 6,675
Noncurrent Deferred Income Taxes 1,655 1,520
Noncurrent Pension Liability 4,497 4,497
Noncurrent Retiree Health Care and Life
Insurance Benefits 6,560 6,560
Other Long-Term Liabilities 2,780 2,584
Shareholders' Equity:
Capital Stock, $1 Par Value:
Authorized Shares 25,000,000; Issued
and Outstanding Shares 3,556,140
and 3,522,635 3,556 3,523
Additional Paid-In Capital 29,317 28,632
Equity Translation Adjustment 2,693 1,918
Retained Earnings 18,191 11,052
Total Shareholders' Equity 53,757 45,125
Total Liabilities and
Shareholders' Equity $ 98,008 $ 89,443
The accompanying notes are an integral part of the consolidated financial
statements.
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ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Six Months Ended:
July 2, July 3,
1995 1994
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net Income $ 7,140 $ 4,658
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 3,265 3,432
Equity in Undistributed (Income) Loss
of Unconsolidated Joint Ventures - Net (395) 407
(Gain)Loss on Disposition of Property,
Plant and Equipment 186 (1)
Other - Net 1,366 232
Changes in Operating Assets and Liabilities
Excluding Effects of Disposition of Assets:
Accounts Receivable (3,741) (4,667)
Inventories (912) (792)
Prepaid Expenses 18 343
Accounts Payable and Accrued Expenses 1,708 (152)
Net Cash Provided by Operating Activities 8,635 3,460
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Capital Expenditures (3,598) (1,979)
Proceeds from Sale of Business -- 360
Proceeds from Sale of Property,
Plant and Equipment -- 1,235
Net Cash (Used in) Investing Activities (3,598) (384)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Repayments of Debt Principal (2,500) (3,637)
Proceeds from Sale of Capital Stock 718 1,348
Net Cash (Used in) Financing Activities (1,782) (2,289)
Effect of Exchange Rate Changes on Cash 243 (10)
Net Increase in Cash and Cash Equivalents 3,499 777
Cash and Cash Equivalents at Beginning of Year 13,851 4,533
Cash and Cash Equivalents at End of Quarter $ 17,350 $ 5,310
The accompanying notes are an integral part of the consolidated financial
statements.
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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 1, 1995.
B. Net Assets Held for Sale consists 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 business of the Power Distribution Division.
C. The Company had a $15.0 million secured revolving credit arrangement
with Fleet Bank, N.A. at the end of the first quarter 1995. A new
unsecured arrangement with Fleet Bank, N.A. for a maximum of $10.0
million of borrowings was entered into on April 13, 1995. At July 2,
1995, there were no borrowings under this arrangement.
D. Interest paid to lenders during the first six months of 1995 and
1994 was approximately $700,000 and $800,000, respectively.
E. Income taxes paid were $483,000 and $188,000 in the first six months of
1995 and 1994, respectively.
F. To help widen the distribution and enhance the marketability of the
Corporation's Capital Stock, the Board of Directors, at its June 22nd
meeting, authorized a 2 for 1 stock split for shareholders of record on
July 7th, payable on July 28th. The number of shares reported on the
cover page reflect the stock split, while those on the financial
statements and Exhibit 11 do not.
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[PAGE]
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Net sales in the second quarter of 1995 were $37.4 million, a 7% increase
when compared with $35.0 million for the same period in 1994. Adjusted
for divestitures and for currency rate changes, net sales for the second
quarter increased 13% over the same period last year. For the first six
months, sales totaled $73.8 million and, after adjustments, increased 14%
over the comparable 1994 period. These sales gains were mainly the result
of unit volume increases.
Six-month sales records were established in each of the Corporation's
major product groups. Volume was especially strong in the wireless
communications market both for microwave materials and for European
manufactured power distribution components, as well as in the computer
market for components made from the Corporation's flexible circuit
materials.
Sales of continuing Polymer Products increased 9% for the second quarter
and 10% for the first half of 1995, compared with the same periods in
1994. In the high performance elastomer products group, R/bak
flexographic printing plate cushioning and ENDUR rollers and belts for
laser printers and copiers had strong sales. Rogers INOAC Corporation,
the Corporation's 50% owned joint venture with the INOAC Corporation in
Japan, achieved some sales growth, despite the continuing economic
difficulties in that country.
Sales of Electronic Products for the second quarter and for the first six
months increased 18% and 20%, respectively, compared with the same periods
last year, after adjusting for divestitures and currency rate changes.
The Corporation's position as an important supplier of materials for
wireless communications is becoming stronger. Sales of RO3000(TM)
commercial microwave laminate, introduced in 1994, are growing nicely, and
widespread interest is developing for RO4000(TM) microwave laminate
introduced earlier this year. The Corporation's customers are starting to
convert to our lower priced materials for some applications. There is
good demand for the Corporation's established RT/duroid microwave
laminates; however, customer conversions to lower priced RO3000 and RO4000
are expected to have greater impact in the second half of the year.
Durel Corporation, the Corporation's 50% owned electroluminescent lamp
joint venture with 3M, moved into its new 77,000 square foot manufacturing
plant in the second quarter. Sales were lower than in the first three
months of the year, mainly because of inventory reductions at two major
customers. In the second half of the year, Durel's sales are expected to
increase in each of its three major application areas: watches,
automotive, and wireless communications.
Profits, both before and after taxes, and earnings per share for the
second quarter and first half were the highest for any quarter and for any
six-month period in the Corporation's history. Compared with the same
periods last year, before-tax profits for 1995 were up over 75% in both
the second quarter and first half. Net income, incorporating a 17% income
tax rate in 1995, gained over 50% and earnings per share rose 34% in each
of the periods. The significantly higher profits were attributable to
increased sales, operating cost improvements, increased royalty and joint
venture income, and reduced interest expense.
Manufacturing profit as a percentage of sales in the first six months
increased from 29% in 1994 to 32% in 1995. This increase was attributable
to stronger manufacturing margins in several operations, notably Soladyne
Division, Rogers small microwave printed circuit operation which has
continued the transition to increased commercial applications.
Selling and administrative expenses for the first six months of 1995 as a
percentage of sales were approximately the same as the previous year.
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[PAGE]
Research and development expenses for the first half of 1995 were at the
approximate level of 1994 expenses. Three new circuit materials aimed at
the wireless communications market were introduced during the first
quarter of 1995 with technical support activity continuing into the second
quarter. The development of lower cost processes continues to be
important and is a key consideration in the market positioning of these
new circuit materials.
Net interest expense for the first half of 1995 decreased substantially
from the comparable 1994 period because of lower borrowings and the
significant increase in cash and cash equivalents which led directly to
increased investment income. During the second quarter, debt of $2.5
million bearing an interest rate of 10.5% was prepaid. The prepayment
expense of $180,000 is reflect in Other Income less Other Charges. Total
debt outstanding at July 2, 1995, was $5.4 million compared with $13.7
million at July 3, 1994.
Net cash provided by operating activities in the first six months of 1995
totaled $8.6 million, compared with $3.5 million in the same 1994 period.
The year-to-year increase is attributable mainly to increased net income
and other working capital changes.
As of April 13, 1995, the Corporation can borrow up to a maximum of $10.0
million under a new unsecured revolving credit arrangement with Fleet
Bank, N.A. Amounts borrowed under this arrangement are to be paid in full
by March 31, 1998. The Corporation had no borrowings under revolving
credit arrangements at July 2, 1995.
Capital expenditures in the first half of 1995 and 1994 were $3.6 million
and $2.0 million, respectively. Management expects that the level of
spending for 1995 will approximate $7.0 million, primarily for capacity
expansions and new process equipment. It is anticipated that these
expenditures will be financed with internally generated funds.
Other income less other charges aggregated $1.1 million for the first half
of 1995 compared with $0.3 million for the same period in 1994. This
increase is attributable primarily to higher income from the Corporation's
50% owned joint ventures and from royalties. In 1995, for the first time,
the Corporation was able to recognize its share of the profits of Durel
Corporation. In addition, royalty payments related to the sale in 1994 of
the U.S. power distribution business were reflected in first half 1995
results. Quarterly royalty payments related to this sale are expected to
be included in the Corporation's statements at decreasing rates over the
next four years.
The Corporation is subject to federal, state and local laws and
regulations concerning the environment and is currently engaged in
proceedings involving a number of sites under these laws, usually as a
participant in a group of potentially responsible parties (PRPs). The
Corporation has been named as a PRP in six cases involving waste disposal
sites, all of which are superfund sites. 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 Corporation alone or in relation to that of any other potentially
responsible parties. The Corporation also has been seeking to identify
insurance coverage with respect to these matters. Where it has been
possible to make a reasonable estimate of the Corporation's liability, a
provision has been established. Insurance proceeds have only been taken
into account when they have been confirmed by or received from the
insurance company. Actual cost to be incurred in future periods may vary
from these estimates. Based on facts presently known to it, the
Corporation does not believe that the outcome of these proceedings will
have a material adverse effect on its financial condition.
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[PAGE]
In addition to the above proceedings, the Corporation has been actively
working with the Connecticut Department of Environmental Protection (CT
DEP) related to certain PCB contamination in the soil beneath a small
section of cement flooring at its East Woodstock, Connecticut facility.
The Corporation is developing a remediation plan with CT DEP. On the
basis of estimates prepared by the Corporation's environmental engineers
and consultants, the Corporation recorded a provision of approximately
$0.9 million in 1994 for costs related to this matter. Management
believes, based on facts currently available, that the implementation of
the aforementioned remediation will not have a material additional adverse
impact on earnings.
At July 2, 1995, other accrued liabilities were greater than July 3, 1994,
primarily because of environmental reserves.
The Corporation has not had any material recurring costs and capital
expenditures relating to environmental matters, except as specifically
described in the preceding statements.
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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 18, 1995.
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 3,288,298 8,727
Leonard M. Baker 3,288,812 8,213
Wallace Barnes 3,288,199 8,826
Harry H. Birkenruth 3,288,467 8,558
Mildred S. Dresselhaus 3,285,003 12,022
Donald J. Harper 3,288,199 8,826
Gregory B. Howey 3,288,812 8,213
Leonard R. Jaskol 3,288,707 8,318
William E. Mitchell 3,288,812 8,213
Item 6. Reports on Form 8-K
(b) There were no reports on Form 8-K filed for the six months ended
July 2, 1995.
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[PAGE]
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Three Months Six Months
Ended: Ended:
July 2, July 3, July 2, July 3,
1995 1994 1995 1994
1.Net income $3,688,000 $2,389,000 $7,140,000 $4,658,000
2.Interest on convertible
subordinated debentures,
net of taxes -- 113,000 -- 277,000
3.Net income as adjusted $3,688,000 $2,502,000 $7,140,000 $4,885,000
4.Weighted average number
of shares outstanding
during period 3,549,364 3,269,230 3,538,794 3,252,721
5.Net effect of dilutive
stock options - based on
the treasury stock method
using average market price 296,757 167,112 296,143 153,001
6.Additional net shares due
to windfall tax benefit-based
on average market price 53,798 -- 55,579 --
7.Total weighted average
number of shares and
capital equivalent shares
assumed outstanding 3,899,919 3,436,342 3,890,516 3,405,722
8.Additional net shares,
issuable when market value
at period end exceeds average
market value during period 8,271 32,613 13,114 46,724
9.Adjustment of additional
net shares due to windfall
tax benefit - based on higher
of market or closing price (1,943) -- (3,006) --
10. Assuming conversion of
convertible subordinated
debentures -- 204,546 -- 204,546
11. Shares assumed outstanding
for computation of fully
diluted earnings per share 3,906,247 3,673,501 3,900,624 3,656,992
Net income per capital share (1/4) $1.04 $0.73 $2.02 $1.43
Net income per capital share
and capital share equivalant (1/7) $0.94 $0.70 $1.84 $1.37
Net income per capital share
assuming full dilution (3/11) $0.94 $0.68 $1.83 $1.34
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)
William A. Krein
By s/WILLIAM A. KREIN
William A. Krein
Authorized Officer
Vice President, Finance
Dated: August 14, 1995
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