SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended January 1, 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
Exact name of Registrant as specified in its charter:
ROGERS CORPORATION
State or other jurisdiction of I.R.S. Employer
incorporation or organization: Identification No.:
Massachusetts 06-0513860
Address of principal executive offices:
One Technology Drive
P.O. Box 188
Rogers, Connecticut 06263-0188
Registrant's telephone number, including area code:
(203) 774-9605
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Capital Stock, American Stock Exchange
$1 Par Value Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
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 periods 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 aggregate market value of the voting stock held by non-affiliates of
the Registrant as of February 1, 1995:
Capital Stock, $1 Par Value--$187,397,064
The number of shares outstanding of the Registrant's classes of capital
stock as of February 1, 1995:
Capital Stock, $1 Par Value--3,524,053 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's annual report to shareholders for the fiscal year
ended January 1, 1995 are incorporated by reference into Parts I and II.
Portions of the proxy statement for the Registrant's 1995 annual meeting of
stockholders to be held April 18, 1995, are incorporated by reference into
Part III.
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TABLE OF CONTENTS
PART I
Item Page
1. Business 1
2. Properties 4
3. Legal Proceedings 5
4. Submission of Matters to a Vote of Security-Holders 5
Executive Officers 5
PART II
5. Market for Registrant's Common Equity and Related Stockholder
Matters 6
6. Selected Financial Data 6
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 6
8. Financial Statements and Supplementary Data 6
9. Changes in and Disagreements with Auditors on Accounting and
Financial Disclosure 6
PART III
10. Directors and Executive Officers of the Registrant 7
11. Executive Compensation 7
12. Security Ownership of Certain Beneficial Owners and Management 7
13. Certain Relationships and Related Transactions 7
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 8
SIGNATURES
Signatures 13
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PART I
Item 1. BUSINESS
GENERAL
Rogers Corporation, founded in 1832, is one of the oldest, publicly traded U.S.
companies in continuous operation. Rogers has adapted its products over the
years to meet changing market needs, moving from specialty paperboard to
transformer boards for electrical insulation, and to a range of specialty
polymer composite materials.
The Company's strategy in the 1980's was to concentrate a substantial portion
of its development, manufacturing and marketing resources on electronic
components. Rogers largest single division in the 1980's manufactured and
sold flexible interconnections primarily for computer disk drives.
In 1992, under new leadership, Rogers began a process of refocusing its
business on its core competencies in specialty polymer composite materials,
and on the application of these materials technologies to identified market
needs. These materials operations were the core activities responsible for
the Company's strong growth in the 1960's and 1970's, and provided most of
the Company's profits in the 1980's. These profits were often offset by
substantial losses in the Company's electronic components businesses.
The Company divested its major electronic components businesses during the
1992 - 1994 period. The Company's organization has been repositioned and
research and development efforts related to electronic components, such as
multi-chip modules, have been discontinued. Resources have been shifted to
materials-related projects in both the Polymer Product and Electronic Product
business segments. In addition, longer term business planning disciplines
have been implemented to ensure that research and development efforts,
capacity expansions, and intensified sales and marketing activities are
convergent with specifically identified worldwide markets.
In the Polymer Products Group, the Company has been concentrating on high
performance elastomer materials and components, and on moldable composites.
In the Electronic Products Group, concentration has shifted to circuit
materials for high frequency uses and flexible circuit materials.
BUSINESS SEGMENT FINANCIAL AND GEOGRAPHIC INFORMATION
"Business Segment and Geographic Information" on pages 40-41 of the annual
shareholders' report for the year ended January 1, 1995, is incorporated
herein by reference.
PRODUCTS
Rogers Corporation manufactures specialty polymer composite materials and
components which it markets around the world. Rogers has two business
segments: Polymer Products and Electronic Products. Nearly all products in
both business segments are based on Rogers technology in polymer composite
materials.
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Polymer Products include high performance elastomer materials, high
performance elastomer components, and moldable composite materials. The Rogers
INOAC Corporation (RIC) 50% owned joint venture with INOAC Corporation of
Japan, and the Durel Corporation 50% owned joint venture with Minnesota Mining
and Manufacturing Company (3M), extend and complement Rogers worldwide
businesses in polymer products. Trade names for Rogers Polymer Products
include PORON(R), R/bak(R), Nitrophyl(R), and ENDUR(R). Polymer Products are
sold to manufacturers in the consumer products, transportation, imaging, and
computer and peripheral markets.
Electronic Products include materials for high frequency printed circuit
boards, materials for flexible printed circuit boards, high frequency printed
circuits, and power distribution bus bars. Trade names for Rogers high
frequency circuit board materials include DUROID(R), RT/duroid(R), TMM(R), and
RO3000(R) materials, a new family of high frequency circuit materials for
commercial wireless communication applications. Trade names for flexible
circuit materials include FLEX-I-MID(R), which is manufactured by Mitsui
Toatsu Chemicals Inc. (MTC) of Japan, and R/flex(R). Electronic Products
are sold principally to independent and captive printed circuit board
manufacturers, where these materials are converted to circuits for computers
and peripherals, microwave and RF transmissions, wireless communication
equipment, and consumer products.
BACKLOG
Excluding joint venture activity, the backlog of firm orders for Polymer
Products was $13,835,000, $11,539,000, and $11,071,000 at January 1, 1995,
January 2, 1994, and January 3, 1993, respectively. The year-end increase
from 1993 to 1994 was due to stronger sales and large blanket orders from
several key customers. The backlog of firm orders for Electronic Products was
$9,057,000, $11,374,000, and $19,987,000 at January 1, 1995, January 2, 1994,
and January 3, 1993, respectively. The year-end decreases from 1993 to 1994
and from 1992 to 1993 are attributable to the divestitures of the U.S. power
distribution business and the flexible interconnections business,
respectively. The amount of unfilled orders is reasonably stable throughout
the year. Backlogged orders are generally filled within two months.
RAW MATERIALS
The manufacture of both Polymer and Electronics Products requires a wide
variety of purchased raw materials. Some of these raw materials are available
only from limited sources of supply which, if discontinued, could interrupt
production. When this has occurred in the past, the Company has purchased
sufficient quantities of the particular raw material to sustain production
until alternative materials and production processes could be qualified with
customers. Management believes that similar responses would mitigate any raw
material availability issues in the future.
EMPLOYEES
The Company employed an average of 467 people in the Polymer Products
operations and 510 people in the Electronic Products operations during 1994.
SEASONALITY
In the Company's opinion, neither the Polymer Products business nor the
Electronics Products business is seasonal.
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CUSTOMERS & MARKETING
Rogers products were sold to approximately 2,200 customers worldwide in 1994.
Although the loss of all the sales made to any one of the Company's major
customers would require a period of adjustment during which the business of a
segment would be adversely affected, the Company believes that such adjustment
could be made over a period of time. The Company also believes that its
business relationships with the major customers within each of its segments
are generally favorable, and that it is in a good position to respond promptly
to variations in customer requirements. However, the possibility exists of
losing all the business of any major customer as to any product line.
Likewise, the possibility exists of losing all the business of any single
customer.
The Company markets its products throughout the United States, and sells in
foreign markets directly, through distributors and agents, and through its 50%
owned joint venture in Japan. More than 90% of the Company's net sales are
sold through its own domestic and foreign sales force. In 1994, Rogers
market segment groupings included communications, computers and peripherals,
imaging, transportation, and consumer products.
COMPETITION
There are no firms which compete with Rogers across its full range of product
lines. However, each Rogers product faces competition in each business
segment in domestic and foreign markets. Competition comes from firms of all
sizes and types. Rogers strategy is to offer technically advanced products
which are price competitive in their markets, and to link the offerings with
market knowledge and customer service. This serves to differentiate Rogers
products in many markets.
RESEARCH & DEVELOPMENT
The Company has many domestic and foreign patents and licenses and has
additional patent applications on file related to both business segments. In
some cases, the patents result in license royalties. The patents are of
varying duration and provide some protection. Although Rogers vigorously
defends its patents, the Company believes that its patents have most value in
combination with its equipment, technology, skills, and market position. The
Company also owns a number of registered and unregistered trademarks which it
believes to be of importance.
During its fiscal year 1994, Rogers spent $9,230,000 on research and
development activities, compared with $9,495,000 in 1993, and $12,441,000 in
1992. These amounts include the cost of the corporate research and
development effort in Rogers, Connecticut, which amounted to $6,730,000,
$6,743,000 and $8,196,000, in 1994, 1993, and 1992, respectively. The balance
was comprised of expenditures for product development and new process
development activities in its operating units.
ENVIRONMENTAL REGULATION
During fiscal year 1994, the Company spent $0.4 million on capital equipment
necessary to comply with federal, state, and local environmental protection,
health and safety regulations. Management estimates that 1995 expenditures
needed for compliance with current environmental, health, and safety
regulations will approximate $1.7 million, $1.1 million of which is expected
to be capitalized. These capital expenditures will generally be depreciated
on a straight-line basis over a period of from 5 to 14 years.
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Item 2. PROPERTIES
The Company owns its properties, except as noted below. The Company considers
that its properties are well-maintained, in good operating condition, and
suitable for its current and anticipated business. Operating capacity can be
increased by additional worker hours at several of the Company's locations.
Also, adequate land is available for foreseeable future requirements at each
of the Company's owned plants.
Floor
Space
(Square Feet) Type of Facility
Polymer Products
Manchester, Connecticut 166,000 Manufacturing
South Windham, Connecticut 88,000 Manufacturing
East Woodstock, Connecticut 81,000 Manufacturing
Electronic Products
Chandler, Arizona 100,000 Manufacturing/Warehouse
Chandler, Arizona* 142,000 Manufacturing Facility
Held for Sale
Mesa, Arizona 68,000 Unoccupied Manufacturing
Facility Held for Sale
San Diego, California** 37,000 Manufacturing/Warehouse
Rogers, Connecticut 285,000 Manufacturing/Warehouse
Ghent, Belgium 85,000 Manufacturing
Tokyo, Japan*** 1,500 Sales Office
Corporate
Rogers, Connecticut 127,000 Corporate Headquarters/
Research and Development
* The Company is leasing this facility to the purchaser of the flexible
interconnections business, which was sold in 1993, and to one of the
Company's joint ventures.
** Current lease expires February 2001.
***Current lease expires September 1995.
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Item 3. LEGAL PROCEEDINGS
The Company 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 Company 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 Company alone or in relation to that of any other
potentially responsible parties. The Company 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 Company'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 Company does not believe that the
outcome of these proceedings will have a material adverse effect on its
financial condition.
The Company is not involved in any other litigation which management believes
will materially and adversely affect its financial condition or results of
operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None.
EXECUTIVE OFFICERS OF THE COMPANY
Served in
this capacity
Name Title since Age
Harry H. Birkenruth President and Chief Executive
Officer 1992 63
Aarno A. Hassell Vice President, Market and Venture
Development 1988 55
Bruce G. Kosa Vice President, Technology 1994 55
William A. Krein Vice President, Finance; Chief
Financial Officer and Secretary 1994 54
John A. Richie Vice President, Human Resources 1994 47
Robert D. Wachob Vice President, Sales and Marketing 1990 47
Robert M. Soffer Treasurer and Assistant Secretary 1987
Clerk 1992 47
All officers hold office until the first meeting of the Board of Directors
following the annual meeting of stockholders or until successors are elected.
There are no family relationships between or among executive officers and
directors of the Company.
Mr. Birkenruth, Mr. Hassell, and Mr. Soffer have held executive office with
the Company for the past five years as their principal occupation. Mr.
Birkenruth was Senior Vice President, Polymer Products Group until August 1990
and Executive Vice President until April 1992. Mr. Hassell was Vice
President, Circuit Materials Group until August 1994. Mr. Soffer served as
Treasurer and Assistant Secretary for the past five years.
Mr. Krein was elected to the positions of Vice President Finance, Chief
Financial Officer and Secretary in October 1994. Prior to his employment with
the Company, he was Senior Vice President, Finance and Administration and
Chief Finance Officer at Alpha Industries, Inc., a Massachusetts-based
company, since August 1989. Mr. Kosa was elected to the office of Vice
President, Technology in October 1994 after serving as Technical Director
since August 1992 and as Director of Product Development from December 1983.
Mr. Richie was elected to the position of Vice President, Human Resources
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after serving as Director of Human Resources from July 1992, Director of
Compensation and Benefits from August 1991, and Director of Employee Relations
and Employment since January 1989. Mr. Wachob was elected to the office of
Vice President, Sales and Marketing in October 1990 after serving as Director
of Marketing since July 1984. Mr. Soffer was elected as Clerk in February
1992.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Pursuant to General Instruction G to Form 10-K, there is hereby incorporated
by this reference the information set forth under the caption "Capital Stock
Market Prices" on page 43, under the caption "Restriction on Payment of
Dividends" in Note I on page 34, and under the caption "Dividend Policy" in
the "Management's Discussion and Analysis" on page 47 of the 1994 annual
report to shareholders.
Item 6. SELECTED FINANCIAL DATA
Pursuant to General Instruction G to Form 10-K, there is hereby incorporated
by this reference the information set forth under the caption "Selected
Financial Data" on page 23 of the 1994 annual report to shareholders, but
specifically excluding from said incorporation by reference the information
contained therein and set forth under the subcaption "Other Data."
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Pursuant to General Instruction G to Form 10-K, there is hereby incorporated
by this reference the information set forth under the caption "Management's
Discussion and Analysis" on pages 44 through 47 of the 1994 annual report to
shareholders.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Pursuant to General Instruction G to Form 10-K, there is hereby incorporated
by this reference the information set forth on pages 24 through 41 and under
the caption "Quarterly Results of Operations (Unaudited)" on page 43 of the
1994 annual report to shareholders.
Item 9. CHANGES IN AND DISAGREEMENTS WITH AUDITORS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
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PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G to Form 10-K, there is hereby incorporated
by this reference the information with respect to the Directors of the
Registrant set forth under the caption "Nominees for Director" on page 4 of
the Registrant's definitive proxy statement dated March 13, 1995, for its 1995
annual meeting of stockholders filed pursuant to Section 14(a) of the Act.
Information with respect to Executive Officers of the Registrant is presented
in Part I.
Item 11. EXECUTIVE COMPENSATION
Pursuant to General Instruction G to Form 10-K, there is hereby incorporated
by this reference the information set forth under the captions "Executive
Compensation" on pages 8 through 14 of the Registrant's definitive proxy
statement, dated March 13, 1995, for its 1995 annual meeting of stockholders
filed pursuant to Section 14(a) of the Act.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Pursuant to General Instruction G to Form 10-K, there is hereby incorporated
by this reference the information with respect to Security Ownership of
Certain Beneficial Owners and Management set forth under the captions "Stock
Ownership of Management" on page 5 and "Beneficial Ownership of More than Five
Percent of the Corporation's Stock" on page 6 of the Registrant's definitive
proxy statement, dated March 13, 1995, for its 1995 annual meeting of
stockholders filed pursuant to Section 14(a) of the Act.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to General Instruction G to Form 10-K, there is hereby incorporated
by this reference the information with respect to certain relationships and
related transactions included under the caption "Other Arrangements and
Payments" on page 15 of the Registrant's definitive proxy statement, dated
March 13, 1995, for its 1995 annual meeting of stockholders filed pursuant to
Section 14(a) of the Act.
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PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a)(1) - The following consolidated financial statements of Rogers Corporation
and Subsidiaries, included in the Annual Report of the Registrant to
its shareholders for the fiscal year ended January 1, 1995, are
incorporated by reference in Item 8:
Consolidated Balance Sheets--January 1, 1995 and January 2, 1994
Consolidated Statements of Operations and Retained Earnings
(Deficit)--Fiscal Years Ended January 1, 1995, January 2, 1994,
and January 3, 1993
Consolidated Statements of Cash Flows--Fiscal Years Ended January 1,
1995, January 2, 1994, and January 3, 1993
Notes to Consolidated Financial Statements--January 1, 1995
(2) - The following consolidated financial statement schedule of Rogers
Corporation and consolidated subsidiaries is included in Item 14(d):
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.
The following financial statements and schedules and Accountants'
Compilation Report are filed as Exhibit 29a to this report:
Rogers INOAC Corporation (a 50/50 joint venture)
Accountants' Compilation Report
Balance Sheets--October 31, 1994 (Unaudited) and 1993
Statements of Income and Retained Earnings--Fiscal years ended
October 31, 1994 (Unaudited), 1993, and 1992
Statements of Cash Flows--Fiscal years ended October 31, 1994
(Unaudited), 1993, and 1992
Notes to Financial Statements--October 31, 1994 (Unaudited)
Schedule II--Valuation and Qualifying Accounts (Unaudited)
Schedule III--Short-Term Borrowings (Unaudited)
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(3)Exhibits (numbered in accordance with Item 601 of Regulation S-K):
3a Restated Articles of Organization, filed with the Secretary of State
of the Commonwealth of Massachusetts on April 6, 1966, were filed as
Exhibit 3a to the Registrant's Annual Report on Form 10-K (File No. 1-
4347) for the fiscal year ended January 1, 1989 and are hereby
incorporated by reference.
3b Articles of Amendment, filed with the Secretary of State of the
Commonwealth of Massachusetts on August 10, 1966, were filed as
Exhibit 3b to the Registrant's Annual Report on Form 10-K (File No. 1-
4347) for the fiscal year ended January 1, 1989 and are hereby
incorporated by reference.
3c Articles of Merger of Parent and Subsidiary Corporations, filed with
the Secretary of State of the Commonwealth of Massachusetts on
December 29, 1975, were filed as Exhibit 3c to the Registrant's Annual
Report on Form 10-K (File No. 1-4347) for the fiscal year ended
January 1, 1989 and are hereby incorporated by reference.
3d Articles of Amendment, filed with the Secretary of State of the
Commonwealth of Massachusetts on March 29, 1979, were filed as Exhibit
3d to the Registrant's Annual Report on Form 10-K (File No. 1-4347)
for the fiscal year ended January 1, 1989 and are hereby incorporated
by reference.
3e Articles of Amendment, filed with the Secretary of State of the
Commonwealth of Massachusetts on March 29, 1979, were filed as Exhibit
3e to the Registrant's Annual Report on Form 10-K (File No. 1-4347)
for the fiscal year ended January 1, 1989 and are hereby incorporated
by reference.
3f Articles of Amendment, filed with the Secretary of State of the
Commonwealth of Massachusetts on April 2, 1982, were filed as Exhibit
3f to the Registrant's Annual Report on Form 10-K (File No. 1-4347)
for the fiscal year ended January 1, 1989 and are hereby incorporated
by reference.
3g Articles of Merger of Parent and Subsidiary Corporations, filed with
the Secretary of State of the Commonwealth of Massachusetts on
December 31, 1984, were filed as Exhibit 3g to the Registrant's Annual
Report on Form 10-K (File No. 1-4347) for the fiscal year ended
January 1, 1989 and are hereby incorporated by reference.
3h Articles of Amendment, filed with the Secretary of State of the
Commonwealth of Massachusetts on April 6, 1988, were filed as Exhibit
3h to the Registrant's Annual Report on Form 10-K (File No. 1-4347)
for the fiscal year ended January 1, 1989 and are hereby incorporated
by reference.
3i By-Laws of the Company as amended on March 28, 1991 and September 10,
1991, were filed as Exhibit 3i to the Registrant's Annual Report on
Form 10-K (File No. 1-4347) for the fiscal year ended January 1, 1991
and are hereby incorporated by reference.
3j Articles of Amendment, as filed with the Secretary of State of the
Commonwealth of Massachusetts on May 24, 1994, are filed herewith.
4a Certain Long-Term Debt Instruments, each representing indebtedness in
an amount equal to less than 10 percent of the Registrant's total
consolidated assets, have not been filed as exhibits to this Annual
Report on Form 10-K. The Registrant hereby undertakes to file these
instruments with the Commission upon request.
4b Shareholders' Rights Plan adopted on March 20, 1987, was filed as
Exhibit 4b to the Registrant's Report on Form 8-K (File No. 1-4347)
dated March 20, 1987 and is hereby incorporated by reference.
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10a Rogers Corporation Incentive Stock Option Plan (1979, as amended July
9, 1987) was filed as Exhibit 10c to the Registrant's Annual Report on
Form 10-K (File No. 1-4347) for the fiscal year ended January 3, 1988
and is hereby incorporated by reference.
10b Description of the Company's Life Insurance Program, was filed as
Exhibit K to the Registrant's Annual Report on Form 10-K (File No. 1-
4347) for the fiscal year ended December 28, 1980 and is hereby
incorporated by reference.
10c Rogers Corporation Annual Incentive Compensation Plan (1988, as
amended February 24, 1994), was filed as Exhibit 10c to the
Registrant's Annual Report on Form 10-K (File No. 1-4347) for the
fiscal year ended January 2, 1994 and is hereby incorporated by
reference.
10d Rogers Corporation 1988 Stock Option Plan (As amended December 17,
1988 and September 14, 1989) is filed herewith.
10e Rogers Corporation 1990 Stock Option Plan (As amended on November 6,
1991 and February 2, 1993) is filed herewith.
10f Rogers Corporation Deferred Compensation Plan (1983) was filed as
Exhibit O to the Registrant's Annual Report on Form 10-K (File No. 1-
4347) for the fiscal year ended January 1, 1984 and is hereby
incorporated by reference.
10g Rogers Corporation Deferred Compensation Plan (1986) was filed as
Exhibit 10e to the Registrant's Annual Report on Form 10-K (File No.
1-4347) for the fiscal year ended January 3, 1988 and is hereby
incorporated by reference.
10h Rogers Corporation 1994 Stock Compensation Plan was filed as Exhibit A
to the Registrant's Proxy Statement(File No. 1-4347) dated March 23,
1994, and is hereby incorporated by reference.
10i Rogers Corporation Voluntary Deferred Compensation Plan for Non-
Employee Directors (1994) is filed herewith.
10j Rogers Corporation Voluntary Deferred Compensation Plan for Key
Employees (1994, as amended on October 18, 1994 and December 22, 1994)
is filed herewith.
11 Statement Re: Computation of Per Share Earnings is filed herewith.
13 Rogers Corporation 1994 Annual Report to Shareholders is filed
herewith.
21 Subsidiaries of the Registrant is filed herewith.
23 Consent of Independent Auditors is filed herewith.
27 Financial Data Schedule is filed herewith.
29a Rogers INOAC Corporation Unaudited Financial Statements are filed
herewith.
(b) No reports on Form 8-K were filed related to the three months ended
January 1, 1995.
(c) Exhibits - The response to this portion of Item 14 is submitted as a
separate section of this report.
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(d) Financial Statement Schedule
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
ROGERS CORPORATION AND CONSOLIDATED SUBSIDIARIES
(Dollars in Thousands)
Additions Additions Balance
Balance at Charged to Charged at End
Beginning Costs and to Other Other of
Description of Period Expenses* Accounts Deductions Period
Year ended Jan. 1, 1995:
Deducted from asset
accounts:
Net realizable value
allowance for assets
held for sale $ 1,533 $ -- $ 54 $ -- $ 1,587
Year ended Jan. 2, 1994:
Deducted from asset
accounts:
Net realizable value
allowance for assets
held for sale $17,805 $ -- $ -- $16,272** $ 1,533
Year ended Jan. 3, 1993:
Deducted from asset
accounts:
Net realizable value
allowance for assets
held for sale $ -- $17,805* $ -- $ -- $17,805
* Provision for write down of assets to net realizable value included in
the 1992 Cost Reduction Charge.
** Allowance of $17.1 million applicable to assets sold during 1993, net of
increase in allowance of $0.8 million for remaining assets.
UNDERTAKING
For the purposes of complying with the amendments to the rules governing Form
S-8 (effective July 13, 1990) under the Securities Act of 1933, the
undersigned Registrant hereby undertakes as follows, which undertaking shall
be incorporated by reference into Registrant's Registration Statements on Form
S-8 Nos. 2-84992, 33-14347, 33-15119, 33-21121, 33-38219, 33-44087, and 33-
53353:
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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/WILLIAM A. KREIN
William A. Krein
Vice President, Finance
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
By s/HARRY H. BIRKENRUTH President (Principal
Harry H. Birkenruth Executive Officer) and Director
By s/LEONID V. AZAROFF Director
Leonid V. Azaroff
By s/LEONARD M. BAKER Director
Leonard M. Baker
By s/WALLACE BARNES Director
Wallace Barnes
By s/MILDRED S. DRESSELHAUS Director
Mildred S. Dresselhaus
By s/DONALD J. HARPER Director
Donald J. Harper
By s/GREGORY B. HOWEY Director
Gregory B. Howey
By s/LEONARD R. JASKOL Director
Leonard R. Jaskol
By s/WILLIAM A. KREIN Vice President, Finance,
William A. Krein (Chief Financial Officer),
Secretary
By s/WILLIAM E. MITCHELL Director
William E. Mitchell
March 29, 1995
13
<PAGE>
Item 14(c) - Certain Exhibits
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Year-Ended
January 1, January 2, January 3,
1995 1994 1993
1. Net income (loss) $ 10,134,000 $ 6,670,000 $(32,666,000)
2. Weighted average number of
shares outstanding during
period 3,383,621 3,122,658 3,094,419
3. Net effect of dilutive stock
options - based on the
treasury stock method using
average market price 181,037 67,221 5,127
4. Total weighted average
number of shares and
capital equivalent shares
assumed outstanding 3,564,658 3,189,879 3,099,546
5. Additional net shares,
issuable when market value
at year-end exceeds
average market value
during year 96,839 60,578 1,473
6. Shares assumed outstanding
for computation of fully
diluted earnings per share 3,661,498 3,250,457 3,101,019
Net income (loss) per
capital share (1 / 2) $ 3.00 $ 2.14 $ (10.56)
Net income (loss) per
capital share and capital
share equivalent (1 / 4) $ 2.84 $ 2.09 $ (10.54)
Net income (loss) per
capital share assuming
full dilution (1 / 6) $ 2.77 $ 2.05 $ (10.53)
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EXHIBIT 21 - SUBSIDIARIES OF THE REGISTRANT
Percentage
of Voting Jurisdiction
Securities of Incorporation
Company Owned or Organization
Rogers L-K Corp. 100% Delaware
Rogers Japan Inc. 100% Delaware
TL Properties, Inc. 100% Arizona
Rogers Foreign Sales Corporation 100% U.S. Virgin Islands
Rogers-Mektron N.V. 100% Belgium
Rogers-Mektron GmbH 100% Germany
Rogers-Mektron LTD. 100% England
Rogers-Mektron S.A. 100% France
* Rogers INOAC Corporation 50% Japan
* Durel Corporation 50% Delaware
* These entities are unconsolidated joint ventures and accordingly are not
consolidated in the consolidated financial statements of Rogers
Corporation.
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EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Rogers Corporation of our report dated February 7, 1995, included in the
1994 Annual Report to Shareholders of Rogers Corporation.
Our audits also included the financial statement schedule of Rogers
Corporation listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.
We also consent to the incorporation by reference in Registration Statements
(Form S-8 Nos. 2-84992, 33-15119, 33-21121, 33-38219, 33-14347, 33-44087, and
33-53353) pertaining to various stock option and employee savings plans of
Rogers Corporation of our report dated February 7, 1995, with respect to the
consolidated financial statements incorporated herein by reference, and our
report included in the preceding paragraph with respect to the financial
statement schedule included in this Annual Report (Form 10-K) of Rogers
Corporation.
ERNST & YOUNG LLP
Providence, Rhode Island
March 23, 1995
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EXHIBIT 3J
The Commonwealth of Massachusetts
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
MICHAEL JOSEPH CONNOLLY, Secretary
ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108
ARTICLES OF AMENDMENT FEDERAL IDENTIFICATION
General Laws, Chapter 156B, Section 72 NO. 06-0513860
We Harry H. Birkenruth President and
Robert M. Soffer Clerk of
ROGERS CORPORATION
(EXACT Name of Corporation)
located at: c/o Shafner & Gillern, 75 Federal Street, 18th Floor, Boston,
MA 02110
(MASSACHUSETTS Address of Corporation)
do hereby certify that these ARTICLES OF AMENDMENT affecting Articles
NUMBERED: 3
(Number those articles 1, 2, 3, 4, 5 and/or 6 being amended hereby)
of the Articles of Organization were duly adopted at a meeting held on
April 28, 1994, by vote of:
2,471,132 shares of Capital Stock out of 3,234,719 shares outstanding,
type, class & series, (if any)
being at least a majority of each type, class or series
outstanding and entitled to vote thereon (1):
(1) For amendments adopted pursuant to Chapter 156B, Section 70.
Note: If the space provided under any Amendment or item on this form is
insufficient, additions shall be set forth on separate 8-1/2 x 11 sheets of
paper leaving a left-hand margin of at least 1 inch for binding. Additions
to more than one Amendment may be continued on a single sheet so long as each
Amendment requiring each such addition is clearly indicated.
- 1 -
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<PAGE>
To CHANGE the number of shares and the par value (if any) of any type, class
or series of stock which the corporation is authorized to issue, fill in the
following:
The total presently authorized is:
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
COMMON: COMMON: 10,000,000 $1.00
PREFERRED: PREFERRED:
CHANGE the total authorized to:
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
COMMON: COMMON: 25,000,000 $1.00
PREFERRED: PREFERRED:
- 2 -
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<PAGE>
The foregoing amendment will become effective when these articles of
amendment are filed in accordance with Chapter 156B, Section 6 of The
General Laws unless these articles specify, in accordance with the vote
adopting the amendment, a later effective date not more than thirty days
after such filing, in which event the amendment will become effective on
such later date. EFFECTIVE DATE:__________________________________________
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto
signed our names this 28th day of April, in the year 1994.
Harry Birkenruth President
Robert M. Soffer Clerk
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<PAGE>
#465932
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
GENERAL LAWS, CHAPTER 156B, SECTION 72
=======================================
I hereby approve the within articles of amendment and, the filing fee in
the amount of $15,000 having been paid, said articles are deemed to have
been filed with me this 24th day of May 1994.
MICHAEL JOSEPH CONNOLLY
Secretary of State
A TRUE COPY ATTEST
MICHAEL J. CONNOLLY
SECRETARY OF STATE
DATE 8/16/94 CLERK
TO BE FILLED IN BY CORPORATION
PHOTOCOPY OF ARTICLES OF AMENDMENT TO BE SENT
TO: Prentice Hall Legal of F.S.
15 Columbus Circle
NY, NY 10023
Attn: Mike McManus
- 4 -
F-7
<PAGE>
Exhibit 10d
ROGERS CORPORATION
1988 STOCK OPTION PLAN
As Restated September 14, 1989
Section 1. Establishment, Purpose, and Effective Date of Plan
1.1 Establishment. Rogers Corporation hereby establishes
the "Rogers Corporation 1988 Stock Option Plan" (the
"Plan") for its key Employees and Directors. The Plan
permits the grant of nonstatutory stock Options
("nonstatutory Options") or incentive stock Options upon
the recommendation of the President and the approval of
the Committee, and also provides for the grant of
Directors' Options.
1.2 Purpose. The purpose of the Plan is to advance the
interests of the Company and its stockholders by
providing key Employees and Directors of the Company
with an incentive to achieve superior Company
performance, by encouraging them to take an equity
interest in the success of the Company through Stock
ownership, and by enabling the Company to attract and
retain the services of key Employees and Directors upon
whose judgment, interest, and special effort the
successful conduct and profitability of its operations
are largely dependent.
1.3 Effective Date. The effective date of this restatement
is September 14, 1989, the date it was adopted by the
Board. This restatement incorporates certain
amendments: On September 14, 1989 the Plan was amended,
effective as of the original effective date, to clarify
that elections by members of the Committee to receive
Directors' Options must be one-time, irrevocable
elections and, effective as of September 14, 1989, to
clarify the procedures for elections by Committee
members to receive Directors' Options, the time periods
to which all Directors' Options relate, and to permit
any Director to waive his or her eligibility to
participate in the Plan. On February 7, 1989 the Plan
was amended to permit individuals not subject to Section
16(b) of the Act to make limited transfers of
nonstatutory options and on December 13, 1988 the Plan
was amended to clarify that the term "Director" included
a Director Emeritus. The Plan originally became
effective on the date of its approval by vote of the
holders of a majority of the outstanding shares of the
Company's Capital Stock present, in person or by proxy,
and entitled to vote at a duly held meeting of the
shareholders.
1
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<PAGE>
Section 2. Definitions
2.1 Definitions. Whenever used herein, the following terms
shall have their respective meanings set forth below:
(a) "Award" means any Stock Option granted under this
Plan.
(b) "Board" means the Board of Directors of the
Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the Compensation Committee of the
Board so long as it is composed of three or more
persons all of whom are "outside," independent
directors who are "disinterested" within the
meaning of Rule 16b-3 under the Securities Exchange
Act of 1934 (the "Act"); if said Compensation
Committee at any time fails to be so composed,
"Committee" shall mean a committee appointed by the
Board that is so composed. No person, while a
member of the Committee, shall be eligible for
selection as an Optionee under the Plan, and no
person shall become a member of the Committee if,
within one year prior to becoming a member, that
person shall have been eligible for selection as an
Optionee under the Plan; provided that,
notwithstanding the above, each Committee member
shall be entitled to receive Directors' Options.
(e) "Company" means Rogers Corporation.
(f) "Director" means an individual serving as a member
of the Board or a Director Emeritus.
(g) "Director's Option" means an Option granted
pursuant to Section 7.8.
(h) "Disability" means any medically determinable
physical or mental impairment which can be expected
to result in death or which has lasted or can be
expected to last for a continuous period of not
less than 12 months and that results in an
individual's inability to perform services in the
job position (or the substantial equivalent
thereof) held by the individual immediately prior
to such impairment; provided that, for purposes of
incentive stock Options,
2
F-9
"Disability" means disability as defined in Code S22(e)(3).
(i) "Employee" means a regular salaried employee
(including officers and those directors who are
also employees) of the Company and/or its
Subsidiaries, or any branch or division thereof;
"key Employee" means an executive, administrative,
management, technical or other similar professional
Employee who is determined by the Committee to be
eligible to receive Options under this Plan.
(j) "Employment" means employment as an Employee of the
Company and/or any Subsidiary and "Termination of
Employment" shall mean termination of the
individual's Employment by the Company and all of
its Subsidiaries; solely for purposes of Directors'
Options, "Employment" shall mean performance of
services as a Director.
(k) "Fair Market Value" as of any date means the mean
of the highest and lowest selling prices for Stock
as quoted in the American Stock Exchange Composite
Transactions in The Wall Street Journal on the
business day immediately preceding that particular
date.
(l) "Option" means the right to purchase Stock under
this Plan at a stated price for a specified period
of time. Options granted hereunder will be either
"incentive stock options" within the meaning of
Section 422A of the Code or nonstatutory stock
options not intended to satisfy the requirements of
Code S422A.
(m) "Optionee" means any individual to whom an Option
is granted under the Plan.
(n) "Parent Corporation" means a parent (if any) of the
Company as defined in Code S425(e).
(o) "President" means the President of Rogers
Corporation.
(p) "Retirement" (including "Early Retirement" and
"Normal Retirement") means Termination of
Employment for reasons as defined by the Rogers
Corporation Pension Plan for Salaried Employees.
(q) "Stock" means the Capital Stock of the Company.
3
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<PAGE>
(r) "Subsidiary" means any corporation, partnership,
joint venture or other entity, domestic or foreign,
in which the Company, either directly or through
another Subsidiary or Subsidiaries, has a 50% or
more ownership interest.
(s) "Subsidiary Corporation" means a subsidiary of the
Company as defined in Code S425(f).
2.2 Gender and Number. Except when otherwise indicated by
the context, words in the masculine gender when used in
the Plan shall include the female gender, the singular
shall include the plural, and the plural shall include
the singular.
Section 3. Eligibility
3.1 Eligibility. Options other than Directors' Options may
be granted to those key Employees who are in a position
to contribute materially to the Company's continued
growth and development and to its long-term financial
success and who are recommended by the President and
approved by the Committee; nonemployee Directors shall
be entitled to receive Directors' Options, pursuant to
Section 7.8.
Section 4. Administration
4.1 Administration. The Committee shall be responsible for
the administration of the Plan. The Committee is
authorized to approve or disapprove Option grants
recommended by the President, to interpret the Plan, to
prescribe, amend, and rescind rules and regulations
relating to the Plan, to provide for conditions and
assurances deemed necessary or advisable to protect the
interests of the Company, and to make all other
determinations necessary or advisable for the
administration of the Plan, but only to the extent not
contrary to the express provisions of the Plan. All
determinations, interpretations, decisions and
selections made by the Committee pursuant to this Plan
shall be made by vote of a majority of the Committee
present at a meeting at which a majority of members is
present or by the unanimous written consent of the
members of the Committee. Determinations,
interpretations, or other actions made or taken by the
Committee pursuant to the provisions of the Plan shall
be final, binding and conclusive for all purposes and
upon all persons whomsoever.
4
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<PAGE>
Section 5. Stock Subject to Plan
5.1 Number. The total number of shares of Stock that may be
made subject to Awards under the Plan may not exceed
190,000, subject to adjustment upon occurrence of any of
the events indicated in Section 5.3. The shares to be
delivered under the Plan may consist, in whole or in
part, of authorized but unissued Stock or treasury Stock
not reserved for any other purpose.
5.2 Lapsed Awards. Any shares of Stock subject to an Award
that terminates, expires, or lapses for any reason, and
any shares purchased pursuant to an Award and
subsequently repurchased by the Company pursuant to the
terms of the Award, shall again be available for the
grant of an Award.
5.3 Adjustment in Capitalization. In the event of any
change in the outstanding shares of Stock that occurs
after approval of the Plan by the shareholders of the
Company by reason of a Stock dividend or split,
recapitalization, merger, consolidation, combination,
exchange of shares, or other similar corporate change as
to which the Company is a surviving corporation, the
aggregate number of shares of Stock that thereafter may
be optioned and sold under this Plan and the number,
kind and option price of shares subject to each then
outstanding Option, shall be adjusted appropriately by
the Committee, whose determination shall be conclusive;
provided, however, that fractional shares shall be
rounded to the nearest whole share. Upon a determination
by the Board that an event has occurred that will or is
likely to result in a merger or a similar reorganization
which the Company will not survive or a sale of all or
substantially all of the assets of the Company (a
"cessation event"), the unexercised portion of all
outstanding Options shall become exercisable in full
immediately (or 180 days preceding such cessation event,
if later). The occurrence of a cessation event shall
cause every Option outstanding hereunder to terminate,
to the extent not then exercised, unless any surviving
entity agrees to assume the obligations hereunder.
Section 6. Duration of Plan
6.1 Duration of Plan. The Plan shall remain in effect,
subject to the Board's right to terminate the Plan
earlier pursuant to Section 10 hereof, until all Stock
subject to it shall have been purchased or acquired
pursuant to the provisions hereof; provided, that no
incentive stock Option may be granted after ten years
from the date this Plan is adopted.
5
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<PAGE>
Section 7. Stock Options
7.1 Grant of Options. Subject to the provisions of Sections
5 and 6, Options other than Directors' Options may be
granted to key Employees at any time and from time to
time as shall be recommended by the President and
approved by the Committee, and the Committee shall have
complete discretion in determining the number of Options
granted to each key Employee and the number of shares of
Stock subject to each Option. Nonemployee Directors
shall be entitled to receive Directors' Options pursuant
to Section 7.8.
7.2 Option Agreement. Each Option shall be evidenced by an
Option agreement, which shall specify the type of Option
granted, the Option price, the duration of the Option,
the number of shares of Stock to which the Option
pertains and such other provisions as the Committee
shall determine.
7.3 Option Price. Subject to Section 7.7, and except as
provided in Section 7.8, no incentive stock Option
granted pursuant to the Plan shall have an Option price
that is less than the Fair Market Value of the Stock on
the date the Option is granted, and no nonstatutory
Option, other than a Director's Option, granted pursuant
to the Plan shall have an Option price that is less than
50% of the Fair Market Value of the Stock on the date
the Option is granted.
7.4 Duration of Options. Subject to Section 7.7, each
Option shall expire at such time as the Committee shall
determine at the time it is granted; provided, however,
that no Option shall be exercisable later than ten years
from the date of grant.
7.5 Exercise of Options. Subject to Section 7.7, Options
granted under the Plan shall be exercisable for the full
amount or for any part thereof and at such intervals or
in such installments as the Committee may determine at
the time it grants such Option.
7.6 Payment. The purchase price of Stock upon exercise of
any Option shall be paid in full either (i) in cash,
(ii) in Stock held for a minimum of six months valued at
its Fair Market Value on the date of exercise, or (iii)
by a combination of (i) and (ii) in the manner provided
in the Option agreement.
7.7 Restrictions on Incentive Stock Options. Incentive
stock Options (but not nonstatutory Options) granted
under this Plan shall be subject to the following
restrictions:
6
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<PAGE>
(a) Limitation on Number of Shares. Except as
otherwise permitted by law, the aggregate Fair Market
Value, determined as of the date the incentive stock
Option is granted, of the shares with respect to which
incentive stock Option are exercisable for the first
time by an Optionee during any calendar year shall not
exceed $100,000 (the "$100,000 limitation"). In the
event that an Optionee is eligible to participate in any
other incentive stock option plan of the Company or any
Parent Corporation or Subsidiary Corporation which is
also intended to comply with the provisions of Section
422A of the Code, the $100,000 limitation shall apply to
the aggregate number of shares for which incentive stock
options may be granted under all such plans.
(b) 10% Stockholder. If any Employee to whom an
incentive Stock Option is granted pursuant to the
provisions of the Plan is, on the date of grant, the
owner of stock (as determined under Section 425(d) of
the Code) possessing more than 10% of the total combined
voting power of all classes of stock of the Company or
any Parent Corporation or Subsidiary Corporation, then
the following special provisions shall be applicable to
the incentive stock Option granted to such individual:
(i) The option price per share subject to such
incentive stock Option shall not be less than 110%
of the Fair Market Value of one share on the date
of grant; and
(ii) The incentive stock Option shall not have a term in
excess of five (5) years from the date of grant.
7.8 Directors' Options. Each nonemployee Director shall
receive a nonstatutory Option each calendar year in lieu
of cash Director's fees he or she would otherwise
receive for such year, but only if the Director makes a
written election to waive receipt of all or a portion of
such cash fees ("Director's Option"). With respect to
any nonemployee Director who is not and has never been a
member of the Committee, such election to waive fees
shall be made during the 60-day period immediately
preceding January 1 of a calendar year (the "Election
Period") and shall be effective for such calendar year.
With respect to any nonemployee Director who is or has
been a member of the Committee, such election must (a)
be a one-time, irrevocable written election; (b) be made
before the earlier of (i) the expiration of the first
Election Period to
7
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<PAGE>
occur at the time of or after the
director becomes a member of the Committee or (ii) the
expiration of 90 days from the later of (A) the
effective date of this Restatement or (B) the date on
which the nonemployee Director first becomes a member of
the Committee; and (C) be effective for the period
beginning on the first January 1 following such election
and ending on the earlier of the date the individual
ceases to be a Director or date the Plan terminates.
Directors' Options shall be granted on each July 15 and
January 15 (or the next following business day, if such
date is not a business day) with respect to the waived
amount of fees earned for the six-month period ending
June 30 and December 31, respectively. The Option price
per share shall equal $1.00. The number of shares
subject to a Director's Option shall be determined by
dividing the sum of the waived amount of the Director's
fees earned for attendance at Board meetings and
committee meetings and the Director's prorated annual
retainer for the applicable six-month period by the
difference between the Fair Market Value of a share of
Stock on the date of grant and $1.00. The Director's
Option shall be granted for the whole number of shares
so determined; the value of any fractional share shall
be paid in cash. Notwithstanding anything to the
contrary in this Paragraph 7.8, a nonemployee Director
may elect to waive his or her eligibility to receive a
Director's Option under the Plan provided such waiver is
for a period of at least 12 months.
7.9 Restrictions on Stock Transferability; Registration.
The Committee shall impose such restrictions on any
shares of Stock acquired pursuant to the exercise of an
Option under the Plan as it may deem advisable,
including, without limitation, restrictions under
applicable federal securities laws, under the
requirements of any stock exchange upon which such
shares of Stock are then listed and under any blue sky
or state securities laws applicable to such shares.
The Committee, in its sole discretion, shall have the
right at any time, and from time to time, if it deems
such to be in the best interests of the Company and its
stockholders, to cause the Company to file and to
thereafter process an appropriate registration statement
with the Securities and Exchange Commission and with
appropriate state securities laws regulators pertaining
to the offer and sale of shares of Stock issued or
issuable upon exercise of such Options and to the public
resale of such shares.
8
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<PAGE>
7.10 Termination of Employment Due to Retirement. In the
event that an Optionee has a Termination of Employment
by reason of Normal Retirement or Early Retirement, any
restriction on exercise applicable to any outstanding
Options held by such Optionee pursuant to Section 7.5
hereof shall automatically terminate and, except as
otherwise provided in Section 7.9, such Options shall
thereby be free of restrictions and shall be immediately
and freely exercisable. In the case of the Normal
Retirement or Early Retirement of an Optionee, any
outstanding nonstatutory Options, or unexercised portion
thereof, held by the Optionee may be exercised at any
time prior to the expiration date of the Options or
within a three-year period after the date of such
Retirement, whichever period is shorter; any outstanding
incentive stock Option, or unexercised portion thereof,
held by the Optionee may be exercised at any time prior
to the expiration date of the Options or within a three-
month period after the date of such Retirement,
whichever period is shorter. Upon the expiration of any
such period, the Option shall terminate.
7.11 Termination of Employment Due to Death or Disability.
In the event of an Optionee's Termination of Employment
by reason of death or Disability, any outstanding Option
held by such Optionee, or unexercised portion of such-
Option, to the extent exercisable on the date of death
or Disability, may be exercised at any time prior to the
expiration date of the Option or within twelve months
after such date of Termination of Employment, whichever
period is shorter. Upon the expiration of such period,
the Option shall terminate.
7.12 Termination of Employment for Reasons Other Than Death,
Disability, or Retirement. In the event of an
Optionee's Termination of Employment for any reason
other than death, Disability, Normal or Early
Retirement, all Options held by such Optionee, or
unexercised portion thereof, to the extent exercisable
on the date of such termination of Employment, may be
exercised at any time within a period of three months
after such Termination of Employment. Upon the
expiration of such period, the Option shall terminate
and shall not thereafter be exercisable.
7.13 Nontransferability of Options. An Optionee who is not
subject to Section 16(b) of the Act may transfer a
nonstatutory Option granted under the Plan to a family
member, trust, or charitable organization to the extent
permitted by applicable law, provided that the
transferee agree in writing with the Company to be
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<PAGE>
bound by all the terms of such nonstatutory Option and the
terms of the Plan. Except as permitted in the preceding
sentence, Options granted under the Plan may not be
sold, transferred, pledged, assigned or otherwise
alienated or hypothecated, otherwise than by will or the
laws of descent and distribution. Unless transferred as
permitted in this Section, all Options granted to an
Optionee under the Plan shall be exercisable during his
lifetime only by such Optionee.
7.14 No Rights as Stockholder. No Optionee shall have any
rights as a stockholder with respect to shares of Stock
covered by an Option until the date of issuance of a
stock certificate for such shares. Except as provided in
Section 5.3, no adjustment shall be made for dividends
or other rights the record date for which is prior to
the date of issuance of such certificate.
Section 8. Beneficiary Designation.
8.1 Beneficiary Designation. Each Optionee may name, from
time to time, any beneficiary or beneficiaries (who may
be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or
her death before he or she receives any or all of such
benefit. Each designation will revoke all prior
designations by the same Optionee, shall be in a form
prescribed by the Committee, and shall be effective only
when filed by the Optionee in writing with the Committee
during his or her lifetime. In the absence of any such
designation, benefits remaining unpaid at the Optionee's
death shall be paid to his or her estate.
Section 9. Rights of Employees
9.1 Employment. Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate
any Optionee's Employment at any time, nor confer upon
any Optionee any right to continue in the service of the
Company.
9.2 Participation. No Employee shall have a right to be
granted any Award or, having received an Award, to again
be granted an Award.
Section 10. Amendment, Modification, and Termination of Plan
10.1 Amendment, Modification, and Termination of Plan. The
Board at any time may terminate, and from time to time may amend
or modify, the Plan, provided:
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<PAGE>
(a) that no such termination or amendment shall
adversely affect or impair any then outstanding Option
without the consent of the Optionee holding such Option;
and
(b) that any such amendment which:
(i) increases the maximum number of shares of Stock
subject to this Plan,
(ii) changes the class of persons eligible to
participate in this Plan, or
(iii) materially increases the benefits accruing to
participants under this Plan
shall be subject to approval by the shareholders of the
Company within one (1) year from the effective date of
such amendment and shall be null and void if such
approval is not obtained.
Section 11. Tax Withholding
11.1 Tax Withholding. The Company's obligation to deliver
shares upon exercise of an Option, in whole or in part,
shall be subject to the Optionee's satisfaction of all
applicable federal, state and local income and
employment tax withholding obligations. The Optionee may
satisfy the obligation(s), in whole or in part, by
electing (i) to make a cash payment to the Company, (ii)
to have the Company withhold shares or (iii) to deliver
to the Company already-owned shares of Capital Stock,
having a value equal to the amount required to be
withheld. The value of shares to be withheld or of
delivered shares shall be based on the Fair Market Value
of a share of Capital Stock on the date the amount of
tax to be withheld is to be determined (the "Tax Date").
The Optionee's election to have shares withheld for this
purpose will be subject to the following restrictions:
(1) the election must be made prior to the Tax Date, (2)
the election must be irrevocable, (3) the election will
be subject to the disapproval of the Committee, and (4)
if an Optionee is a person whose transactions in stock
of the Company are subject to Section 16(b) of the Act,
such election may not be made within six months of the
date the Option is granted (except in the event of the
Optionee's death or disability) and must be made either
six months prior to the Tax Date or in the ten-day
"window period" beginning on the third day following the
release of the Company's quarterly or annual summary
statement of sales and earnings; provided, if
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the Tax Date of such Optionee is deferred until six months after
exercise and the Optionee elects to have shares
withheld, the full number of shares will be issued on
exercise but the Optionee will be unconditionally
obligated to tender back to the Company the proper
number of shares.
Section 12. Requirements of Law
12.1 Requirements of Law. The granting of Awards and the
issuance of shares of Stock upon the exercise of an
Option shall be subject to all applicable laws, rules,
and regulations and to such approvals by any
governmental agencies or national securities exchanges
as may be required.
12.2 Governing Law. The Plan, and all agreements hereunder,
shall be construed in accordance with and governed by
the laws of The Commonwealth of Massachusetts.
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Exhibit l0e
ROGERS CORPORATION
1990 STOCK OPTION PLAN
Restatement No. 2
1. Purpose. The purpose of the Rogers Corporation 1990
Stock Option Plan (the "Plan") is to advance the interests
of Rogers Corporation (the "Company") and its shareholders
by providing selected Key Employees with an incentive to
achieve superior performance, by encouraging them to take an
equity interest in the success of the Company through Stock
ownership, and by enabling the Company to attract and retain
the services of Key Employees upon whose judgment, interest,
and special effort the successful conduct and profitability
of its operations are largely dependent. It is intended that
this purpose will be effected by granting nonqualified stock
options pursuant to this Plan upon the recommendation of the
President and the approval of the Compensation and
Organization Committee (the "Committee") of the Board of
Directors of the Company (the "Board").
2. Effective Date. The original effective date of this
Plan is September 13, 1990, the date it was duly adopted by
the Board. Whereas the Board has retained the power to
amend the Plan from time to time pursuant to the provisions
of Section 12 of the Plan, the Plan was restated in its
entirety effective November 6, 1991, and is hereby again
restated effective February 2, 1993.
3. Stock Subject to the Plan. The shares that may be
made subject to Options under this Plan shall not exceed in
the aggregate 310,000 shares of Stock. The shares to be
delivered upon exercise of an Option granted under the Plan
may consist, in whole or in part, of authorized but unissued
Stock or treasury Stock not reserved for any other purpose.
Any shares of Stock subject to an Option that for any reason
terminates, expires, or lapses unexercised with respect to
shares, and any shares purchased pursuant to an Option and
subsequently repurchased by the Company pursuant to the
terms of the Option, shall again be available for the grant
of an Option.
4. Administration. This Plan shall be administered by
the Committee. The Committee is authorized to approve or
disapprove Option grants recommended by the President, to
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interpret the Plan, to prescribe, amend, and rescind rules
and regulations relating to the Plan, to provide for
conditions and assurances deemed necessary or advisable to
protect the interests of the Company, and to make all other
determinations necessary or advisable for the administration
of the Plan, but only to the extent not contrary to the
express provisions of the Plan. All determinations,
interpretations, decisions and selections made by the
Committee pursuant to this Plan shall be made by vote of a
majority of the Committee present at a meeting at which a
majority of members is present or by the unanimous written
consent of the members of the Committee. Determinations,
interpretations, or other actions made or taken by the
Committee pursuant to the provisions of the Plan shall be
final, binding and conclusive for all proposes and upon all
persons whomsoever.
5. Eligible Participants. Options may be granted to and
Stock may be purchased by those Key Employees who are in a
position to contribute materially to the Company's continued
growth and development and to its long term financial
success and who are recommended by the President and
approved by the Committee. In addition, Options may be
granted to and Stock may be purchased by former Employees
(including individuals who are receiving payments under the
Company's severance policy) and beneficiaries of deceased
Employees, but in either case only in consideration of the
cancellation of outstanding options under the Rogers
Corporation 1988 Stock Option Plan (the "1988 Plan") held by
such individual, provided that any such grant shall be for a
number of shares equal to the number of shares subject to
the 1988 Plan options being surrendered. The Committee may
also, in its discretion, grant Options to any employee of a
Designated Entity in consideration of the individual's
surrender of or in replacement of an equal number of Options
under this Plan and/or options under the 1988 Plan and/or
the Rogers Corporation Incentive Stock Option Plan (1979),
and shall designate the terms and conditions of any Options
so granted, including the exercise schedule, expiration date
and option price for such Options, provided, however, that
such Options shall expire no later than the second
anniversary of the date of the spinoff or other divestiture
of the applicable Designated Entity. Options may also be
granted, under such terms and conditions as the Committee
deems appropriate, to former employees of the Circuit
Components Division of the Company in order to treat such
employees in a manner similar to employees of a Designated
Entity. Notwithstanding any of the foregoing, in no event
shall an individual whose profit from transactions in Stock
would be subject to recovery pursuant to Section 16(b) of
the Securities Exchange Act of 1934, as amended (a "S16(b)
Person") be eligible to be granted an Option under the Plan.
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6. Duration of the Plan. The Plan shall remain in
effect, unless terminated earlier pursuant to Section 12,
until all Stock subject to it shall have been purchased or
acquired pursuant to the provisions hereof. Thereafter, no
Options may be granted hereunder.
7. Terms and Conditions of Options. Options granted
under this Plan shall be evidenced by agreements in such
form and containing such terms and conditions as the
Committee shall determine; provided however, that such
agreements shall evidence among their terms and conditions
the following:
(a) Option Price. The purchase price per share of Stock
payable upon the exercise of each Option granted pursuant
to the Plan shall have an Option price that is at least
equal to 50% of the fair market value per share of the
Stock on the date the Option is granted. The fair market
value of Stock on any date means the mean of the highest
and lowest selling prices for Stock as quoted in the
American Stock Exchange Composite Transactions in The
Wall Street Journal on the business day most immediately
preceding the date of valuation on which such selling
Prices for stock are quoted and available ("Fair Market
Value").
(b) Number of Shares. Each Option agreement shall
specify the number of shares of Stock to which it
pertains.
(c) Exercisability. Each Option granted pursuant to the
Plan shall be exercisable for the full amount or for any
part thereof and at such intervals or in such
installments as the Committee may determine at the time
it grants such Option. Each Option shall expire at such
time as the Committee shall determine at the time it is
granted; provided however, that no Option shall be
exercisable later than ten (10) years from the date of
grant of the Option.
(d) Notice of Exercise and Payment. An Option shall be
exercisable only by delivery of a written notice to the
Company's Treasurer or any other officer of the Company
designated by the Committee to accept such notices on its
behalf, specifying the number of shares for which it is
being exercised. The purchase price of Stock upon
exercise of any option shall be paid in full either (i)
in cash or by check, (ii) in stock held for a minimum of
six months valued at its Fair Market Value on the date of
exercise, or (iii) by a combination of (i) and (ii), as
provided in the Option agreement.
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(e) Withholding Taxes, Delivery of Shares. The Company's
obligation to deliver shares upon exercise of an Option,
in whole or in part, shall be subject to the Optionee's
satisfaction of all applicable federal, state and local
income and employment tax withholding obligations. The
Optionee may satisfy the obligation(s), in whole or in
part, by electing (i) to make a cash payment to the
Company, (ii) to have the Company withhold shares or,
(iii) to deliver to the Company already-owned shares of
Stock, having a value equal to the amount required to be
withheld. The value of shares to be withheld or of
delivered shares shall be based on the Fair Market Value
of a share of Stock on the date the amount of tax to be
withheld is to be determined (the "Tax Date"). The
Optionee's election to have shares withheld for this
purpose will be subject to the following restrictions: 1)
the election must be made prior to the Tax Date, 2) the
election must be irrevocable, and 3) the election will be
subject to the disapproval of the Committee.
(f) Nontransferability. An Optionee who is not a S16(b)
Person may transfer an Option to a family member, trust,
or charitable organization to the extent permitted by
applicable law, provided that the transferee agrees in
writing with the Company to be bound by all of the terms
and conditions of such Option and this Plan. Except as
permitted in the preceding sentence, Options granted
pursuant to the Plan shall not be transferable otherwise
than by will or the laws of descent and distribution, and
each Option shall be exercisable during the Optionee's
lifetime only by the Optionee.
(g) Restrictions on Transfer of Shares. If at the time
shares of Stock are acquired on exercise of an Option
those shares are not effectively registered under the
Securities Act of 1933, as amended, the Optionee shall
include with his or her exercise notice a letter, in form
and substance satisfactory to the Company, confirming
that the shares are being acquired for the Optionee's own
account for investment and not with a view to
distribution. In addition, the Committee shall impose
such restrictions on any shares of Stock acquired
pursuant to the exercise of an Option as it may deem
advisable, including, without limitation, restrictions
under applicable federal securities laws, under the
requirements of any stock exchange upon which such shares
of Stock are then listed and under any blue sky or state
securities laws applicable to such shares.
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(h) Termination of Employment. Each Option agreement
shall contain provisions for the termination of the
Option if the Optionee for any reason incurs a
Termination of Employment no more favorable to the
Optionee than the following:
(i) Retirement: in the event of an
Optionee's Termination of Employment by reason of
Retirement, any outstanding Option held by such
Optionee shall become immediately vested and
exercisable in full, and the Option may be exercised
at any time during the period prior to the
expiration date of such Option, or within the three
(3) year period after the date of such Retirement,
whichever period is shorter;
(ii) Death or Disability: in the event of an
Optionee's Termination of Employment by reason of
death or disability (within the meaning of Code
Section 22(e)(3)), any outstanding Option held by
such Optionee, to the extent exercisable on the date
of death or disability, may be exercised at any time
during the period prior to the expiration date of
the Option, or within the twelve (12) month period
after such date of Termination of Employment,
whichever period is shorter;
(iii) Termination other than Death, Disability
or Retirement: in the event of an Optionee's
Termination of Employment for any reason other than
death, disability, or Retirement, any outstanding
Option held by such Optionee, to the extent
exercisable on the date of such Termination of
Employment, may be exercised at any time within the
three (3) month period after such Termination of
Employment, or during the period prior to the
expiration date of the Option, whichever period is
shorter;
provided, however, that (1) the Committee may provide
specifically in an Option agreement for such other period
of time during which an Optionee may exercise an Option
after Termination of Employment as the Committee may
approve, subject to the overriding limitation that no
Option may be exercised to any extent by anyone after the
date of expiration of the Option, and (2) the Committee
may, in its discretion, designate certain employees of
any Designated Entity such that any Options held by such
employees will continue to be treated as Options held by
an active Employee as long as such employee continues to
be employed by the Designated Entity; provided, however, that
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any Options held by such individuals shall expire no
later than the second anniversary of the spinoff or other
divestiture of the applicable Designated Entity.
(i) Rights as Shareholder. No Optionee shall have any
rights as a shareholder with respect to shares of Stock
covered by an Option until the date of issuance of a
stock certificate for such shares. Except as provided in
Section 8, no adjustment shall be made for dividends or
other rights, the record date for which is prior to the
date of issuance of such certificate.
8. Stock Dividends; Stock Splits; Stock Combinations;
Recapitalizations. In the event of any change in the
outstanding shares of Stock that occurs after approval of
the Plan by the Board by reason of a Stock dividend or
split, recapitalization, merger, consolidation, combination,
exchange of shares, or other similar corporate change as to
which the Company is a surviving corporation, the aggregate
number of shares of Stock that thereafter may be optioned
and sold under this Plan and the number, kind and Option
price of shares subject to each then outstanding Option,
shall be adjusted appropriately by the Committee, whose
determination shall be conclusive; provided, however, that
fractional shares shall be rounded to the nearest whole
share. Upon a determination by the Board that an event has
occurred that will or is likely to result in a merger or a
similar reorganization which the Company will not survive or
a sale of all or substantially all of the assets of the
Company (a "Cessation Event"), the unexercised portion of
all outstanding Options shall become exercisable in full
immediately (or as of the date which is 180 days preceding
such Cessation Event, if later than such determination).
The occurrence of a Cessation Event shall cause every Option
outstanding hereunder to terminate, to the extent not then
exercised, unless any surviving entity agrees to assume the
obligations hereunder.
9. Definitions. Whenever used herein, the following
terms shall have their respective meanings set forth below:
(a) "Code" means the Internal Revenue Code of
1986, as amended from time to time and regulations
thereunder.
(b) "Designated Entity" means any Subsidiary,
division or other identifiable business operation of the
Company which is spun-off or otherwise divested by the
Company and which is designated as such by the Committee
for purposes of this Plan. Any such designation, and all
references to the Designated Entity, shall include the
successor entity with respect to such business operation.
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(c) "Employee" means a regular salaried employee
of the Company, its Parent, if any, and/or its
Subsidiaries, or any branch or division thereof; "Key
Employee" means an executive, administrative, management,
technical or other similar professional Employee who is
determined by the Committee to be eligible to receive
Options under this Plan.
(d) "Employment" means an individual's status as
an employee, within the meaning of Code Section 3401(c),
of the Company, or any Parent or Subsidiary, whichever is
applicable; "Termination of Employment" means termination
of the individual's Employment. With respect to an
employee of a Designated Entity, "Employment" means an
individual's status as an employee, within the meaning of
Code Section 3401(c), of the Designated Entity and
"Termination of Employment" means termination of the
individual's employment with the Designated Entity.
(e) "Option" means the right to purchase Stock
granted pursuant to this Plan at a stated price for a
specified period of time. Options granted hereunder
shall be nonstatutory stock options that are not intended
to satisfy the requirements of Code Section 422.
(f) "Optionee" means any individual to whom an
Option is granted under this Plan.
(g) "Parent" means a parent (if any) of the
Company as defined in Code Section 424(e).
(h) "President" means the President of Rogers
Corporation.
(i) "Retirement" means a Termination of Employment
that qualifies as retirement under the Rogers Corporation
Pension Plan for Salaried Employees.
(j) "Stock" means the Capital Stock, $1 par value
per share, of the Company.
(k) "Subsidiary" means any corporation,
partnership, joint venture or other entity, domestic or
foreign, in which the Company, either directly or through
another Subsidiary or Subsidiaries, has a 50% or more
ownership interest.
10. Beneficiary Designation. Each Optionee may name,
from time to time, any beneficiary or beneficiaries (who may be
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named contingently or successively) to whom shall be
transferred any rights under any Options which survive the
Optionee's death. Each designation will revoke all prior
designations by the same Optionee, shall be in a form
prescribed by the Committee, and shall be effective only
when filed by the Optionee in writing with the Committee
during his or her lifetime. In the absence of any such
designation, any rights under any Options which survive the
Optionee's death shall be rights of his or her estate.
11. Rights of Employees. Nothing in the Plan shall
interfere with or limit in any way the right of the Company
or any Parent, Subsidiary or Designated Entity to terminate
any Optionee's Employment at any time, nor confer upon any
Optionee any right to continue in the service of the Company
or any Parent, Subsidiary or Designated Entity. No Employee
shall have a right to be granted an Option pursuant to the
terms of the Plan or, having received an Option, to again be
granted an Option.
12. Amendment, Modification and Termination of Plan.
The Board at any time may terminate, and from time to time
may amend or modify, the Plan in its sole discretion,
provided that no such termination or amendment shall
adversely affect or impair any then outstanding Option
without the consent of the Optionee holding such Option.
13. Gender and Number. Except when otherwise indicated
by the context, words in the masculine gender when used in
the Plan shall include the female gender, the singular shall
include the plural, and the plural shall include the
singular.
14. Governing Law. The Plan, and all agreements
hereunder, shall be construed in accordance with and
governed by the laws of the Commonwealth of Massachusetts.
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EXHIBIT 10I
ROGERS CORPORATION
VOLUNTARY DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. Name and Purpose. The name of this plan is the Rogers
Corporation Voluntary Deferred Compensation Plan for Non-Employee
Directors (the "Plan"). The purpose of the Plan is to permit
each member of the Board of Directors (the "Board") of Rogers
Corporation (the "Company") who is not an employee of the Company
or any subsidiary of the Company (a "Director") to elect to defer
all or a portion of his or her compensation from the Company.
2. Right to Defer. For each calendar year, each Director
may elect to defer payment of up to one hundred percent (100%) of
each of (i) the portion of the annual retainer fee payable to
such Director in shares of capital stock, $1 par value (the
"Stock") of the Company (the "Stock Fees") and/or (ii) the
meeting fees and the portion, if any, of the annual retainer fee
payable to such Director in cash (the "Cash Fees"), for service
as a director of the Company during such calendar year.
3. Deferral Elections. A Director's election to defer
payments hereunder (a "Deferral Election") shall be in writing
and shall be deemed to have been made upon receipt and acceptance
by the Company. In order to be effective hereunder, a Deferral
Election for any calendar year must be made not later than
December 31 of the preceding calendar year and shall specify the
time and method of payment pursuant to Sections 5(a) and 5(c)
below applicable to the amount(s) deferred thereunder; provided,
however, that a person who
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becomes a Director during a calendaryear may make a Deferral
Election for such calendar year at any time on or before the
forty-fifth (45th) day after the date he or she becomes a Director.
Notwithstanding the foregoing, any Deferral Election by a Director
with respect to a Stock Fee must be made not later than six (6)
months and one (1) day preceding the date such Stock Fee would
otherwise have been paid to such Director. A Deferral Election
made for a calendar year may not be revised after the last date on
which it could have been made, except that any such Deferral
Election may be revoked in its entirety by the Director at any
time by filing a written notice of revocation with the Company,
but only as to (i) Cash Fees which have not yet been earned and
which are payable after receipt and acceptance by the Company of
such revocation and (ii) Stock Fees which have not yet been earned
and which are payable more than six months after receipt and
acceptance by the Company of such revocation.
4. Accounts; Crediting of Dividend Equivalents and Interest.
(a) All amounts deferred by a Director under this Plan
shall be credited by the Company to a book account (a "Deferred
Compensation Account") in the name of such Director as of the
dates such amounts would have been paid to the Director but for
his or her Deferral Election. Separate sub-accounts will be
maintained for deferred Stock Fees (which shall be maintained in
terms of numbers of shares of Stock) and deferred Cash Fees
(which sub-accounts shall be maintained in terms of dollars) for
each calendar year; provided, however, that (i) deferred Stock
Fees with respect to different calendar years which are payable
at the same time and pursuant to the same method may be combined
into a single sub-account and (ii) deferred Cash Fees with
respect to different calendar years which are
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payable at the same time and pursuant to the same method and
which are being credited with the same rate of interest may be
combined into a single sub-account.
(b) An amount equal to the aggregate dividends that
would have been paid on any Stock Fees deferred hereunder, but
for such deferral, shall be credited to the Director's Deferred
Compensation Account as of the payable date that would have been
applicable to such dividends had the related Stock Fees not been
deferred. Such dividend equivalent amounts (i) shall be payable
at the same time and pursuant to the same method as the deferred
Stock Fees to which they relate, (ii) shall be credited to one or
more sub-accounts within such Director's Deferred Compensation
Account, which sub-account(s) shall be maintained in terms of
dollars, and (iii) may be combined with a sub-account for
deferred Cash Fees which are payable at the same time and
pursuant to the same method and which are being credited with the
same rate of interest.
(c) As of the last day of each month, the Company
shall credit each sub-account within a Director's Deferred
Compensation Account which is being maintained in terms of
dollars with interest on the amount credited to such sub-account
as of the sixteenth (16th) day of such month. The rate of
interest to be used for this purpose during any calendar year
shall be the 30-year U.S. Treasury bond rate in effect as of the
January 1 of such year. The foregoing rate shall be determined
by reference to the first January issue of Barron's for such
calendar year, or such other comparable publication as may be
selected by the Company if Barron's is no longer published or no
longer provides such information. Notwithstanding the foregoing,
the Company may increase (but not decrease) the rate of interest
to be used under the Plan by written notice to each Director
(including former
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Directors who then have a Deferred Compensation Account which
would be affected by such change), which notice shall specify
the new rate of interest to be used, the effective date of such
change and the Deferred Compensation Accounts to which such new
rate of interest shall apply.
5. Time and Method of Payment.
(a) Amounts standing to the credit of each sub-account
within a Director's Deferred Compensation Account shall be paid,
or commence to be paid, on the January 15 first following the
earlier of (i) the passage of the number of calendar years (not
to exceed twenty and including the year of deferral) specified by
the Director in his or her Deferral Election(s) with respect to
the amount credited to such sub-account or (ii) the calendar year
in which the Director ceases to be a member of the Board for any
reason whatsoever. The amount of each such payment shall be
determined by the amount credited to such sub-account as of the
preceding December 31.
(b) All amounts credited to each sub-account within
the Director's Deferred Compensation Account which is maintained
in terms of numbers of shares of Stock shall be distributed in
shares of Stock. All Amounts credited to each sub-account within
the Director's Deferred Compensation Account which is maintained
in terms of dollars shall be distributed in cash. Each such sub-
account shall be charged with the amount paid therefrom as of the
date of payment.
(c) All amounts credited to a sub-account within the
Director's Deferred Compensation Account shall be paid in either
a single lump sum or in annual installments over a period of five
years, as the Director has specified in the Deferral Election(s)
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<PAGE>
applicable to such sub-account. In the case of installment
payments, (i) interest on any sub-account which is maintained in
terms of dollars shall continue to be credited in accordance with
Section 3 during the payment period, and (ii) the amount of each
payment shall be equal to the amount credited to the Deferred
Compensation Account as of the preceding December 31 divided by
the number of annual payments remaining to be made, including the
current payment.
(d) All amounts credited to a Director's Deferred
Compensation Account shall be paid as they become due to the
Director if then living. All amounts credited to a Director's
Deferred Compensation Account at the time of his or her death
shall be paid pursuant to Section 6.
(e) Notwithstanding any provision hereof to the
contrary, if a Director believes he or she is suffering from a
"hardship," an application may be made to the Company for an
acceleration of payments from one or more sub-accounts within
such Director's Deferred Compensation Account which are
maintained in terms of dollars. "Hardship" for this purpose
shall mean a need for financial assistance in meeting real
emergencies which would cause substantial hardship to the
Director or any member of the Director's immediate family, and
which are beyond the Director's control. If the Company
determines, in its sole discretion, that the Director is
suffering from "hardship," the Company may accelerate payment to
the Director of such portion of such sub-account(s) within the
Director's Deferred Compensation Account as the Company may
determine is required to alleviate such hardship, and each such
sub-account shall be charged with the amount paid therefrom as of
the date of payment.
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<PAGE>
(f) Notwithstanding any provision hereof to the
contrary, but subject to the approval of the Company in its sole
discretion, a Director may request payment of all or a portion of
any sub-account within his or her Deferred Compensation Account
which are maintained in terms of dollars in different amounts
and/or over a different period or periods of time than that
specified in the applicable Deferral Election. The Director must
communicate any such request to the Company at least 15 months
prior to the initial date on which the amount credited to the sub-
account to which such request relates would otherwise be paid or
commence to be paid. The Company may approve such request in its
sole discretion at any time which is at least 12 months and 15
days prior to such initial payment date. If any such request is
so approved by the Company, the amount credited to the sub-
account (or portion thereof) to which such request and approval
relates shall be paid at the times and in the amounts specified
in such request.
6. Payments after Death. Each Director may designate,
from time to time, a beneficiary or beneficiaries (who may be
named contingently or successively) to whom any amounts which
remain credited to the Director's Deferred Compensation Account
at the time of his or her death shall be paid. All such amounts
shall be paid in a single lump sum in shares of Stock and/or cash
in accordance with Section 5(b) as soon as practicable after such
Director's death. Each such designation shall revoke all prior
designations by the same Director, except to the extent otherwise
specifically noted, shall be in a form prescribed by the Company,
and shall be effective only when filed by the Director in writing
with the Company during his or her lifetime. Any amounts which
remain credited to a Director's Deferred Compensation Account at
the time of his or her death which are not payable to a
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<PAGE>
designated beneficiary shall be paid to the estate of such
Director in a single lump sum in shares of Stock and/or cash in
accordance with Section 5(b) as soon as practicable after the
death of such Director.
7. No Funding Required. Nothing in this Plan will be
construed to create a trust or to obligate the Company or any
other person to segregate a fund, purchase an insurance contract,
or in any other way to fund currently the future payment of any
benefits hereunder, nor will anything herein be construed to give
any Director or any other person rights to any specific assets of
the Company or of any other person. A Director who has elected
to defer any portion of his or her Stock Fees hereunder shall
have no shareholder rights with respect to the shares of Stock so
deferred until such shares of Stock are actually received by such
Director as payment hereunder pursuant to Section 5. Any
benefits which become payable hereunder shall be paid from the
general assets of the Company in accordance with the terms
hereof.
8. Plan Administration and Interpretation. The Company
shall have complete control over the administration of the Plan
and complete control and authority to determine, in its sole
discretion, the rights and benefits and all claims, demands and
actions arising out of the provisions of the Plan of any
Director, beneficiary, or other person having or claiming to have
any interest under the Plan and the Company's determinations
shall be conclusive and binding on all such parties. The rights
of the Company hereunder shall be exercised by the Pension
Committee of the Board in which event such rights shall be
exercised by the Pension Committee. To the extent that the
Committee is unable or unwilling to exercise any
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right hereunder or make any determination hereunder, however,
the Board shall exercise such right or make such determination.
9. Non-Assignable. Amounts payable under this Plan shall
not be subject to alienation, assignment, garnishment, execution
or levy of any kind, and any attempt to cause any such amount to
be so subjected shall be null, void and of no effect and shall
not be recognized by the Company.
10. Termination and Modification.
(a) The Company may terminate this Plan by written
notice to each Director participating therein. A termination of
the Plan shall have no effect other than to eliminate the right
of each Director to defer further compensation. Except for such
"prospective" termination, neither the Plan nor any Deferral
Election in effect hereunder may be amended, modified, waived,
discharged or terminated, except by mutual consent of the Company
and the Director or Directors affected thereby, which consent
shall be evidenced by an instrument in writing, signed by the
party against which enforcement of such amendment, modification,
waiver, discharge or termination is sought. Notwithstanding the
foregoing, if, on or after January 1, 1996, (a) the Company's
ratio of current assets to current liabilities as reflected on
any quarterly or annual financial statements filed by the Company
with the Securities and Exchange Commission falls below 1.4 to 1
for two consecutive quarters, (b) the total of the Company's long-
term debt for borrowed money (excluding the current portion
thereof) exceeds 85% of the Company's net worth as reflected in
such statements filed with the Securities and Exchange Commission
or (c) the Company is subject to a "change of control," this
Plan shall immediately terminate and the Company
- 8 -
F-35
<PAGE>
shall, in complete discharge of its obligations hereunder,
distribute to each Director the full amount then credited to his
or her Deferred Compensation Account, such amount to be payable
in shares of Stock and/or cash in accordance with Section 5(b).
(b) For purposes of this Section 10, "change of
control" shall mean the occurrence of any one of the following
events:
(i) any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1943,
as amended (the "Act")) becomes a "beneficial owner" (as
such term is defined in Rule 13d-3 promulgated under the
Act) (other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the
Company, or any corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company),
directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined
voting power of the Company's then outstanding securities;
or
(ii) persons who, as of November 30, 1993, constituted
the Company's Board (the "Incumbent Board") cease for any
reason, including without limitation as a result of a tender
offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board, provided that
any person becoming a director of the Company subsequent to
November 30, 1993 whose nomination or election was approved
by at least a majority of the directors then comprising the
Incumbent Board shall, for purposes of this Plan, be
considered a member of the Incumbent Board; or
(iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other
corporation or other entity, other than (a) a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity)
more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation
or (b) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no "person" (as hereinabove defined) acquires more
than 20% of the combined voting power of the Company's then
outstanding securities; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially
all of the Company's assets.
- 9 -
F-36
<PAGE>
11. Parties. The terms of this Plan shall be binding upon
the Company and its successors or assigns and each Director
participating herein and his or her beneficiaries, heirs,
executors and administrators.
12. Liability of Company. Subject to its obligation to pay
the amount credited to the Director's Deferred Compensation
Account at the time distribution is called for by the payment
option in effect, neither the Company nor any person acting in
behalf of the Company shall be liable to any Director or any
other person for any act performed or the failure to perform any
act with respect to the Plan.
13. Notices. Notices, elections or designations by a
Director to the Company hereunder shall be addressed to the
Company to the attention of the Treasurer of the Company.
Notices by the Company to a Director shall be addressed to the
Director at his or her most recent home address as reflected in
the records of the Company.
14. Unsecured General Creditors. No Director or his or her
legal representative or any beneficiary designated by him or her
shall have any right, other than the right of an unsecured
general creditor, against the Company in respect of the Deferred
Compensation Account of such Director established hereunder.
- 10 -
F-37
<PAGE>
15. Governing Law. This Plan shall be construed and
enforced in accordance with, and governed by, the laws of the
Commonwealth of Massachusetts.
Executed this 28th day of February, 1994.
ROGERS CORPORATION
By: Robert M. Soffer
Treasurer
37208.b3
- 11 -
F-38
<PAGE>
EXHIBIT 10J
ROGERS CORPORATION
VOLUNTARY DEFERRED COMPENSATION PLAN
FOR KEY EMPLOYEES
As Adopted Effective November 1, 1993 and Amended Effective October 18, 1994
1. Name and Purpose. The name of this plan is the Rogers
Corporation Voluntary Deferred Compensation Plan for Key
Employees (the "Plan"). The purpose of the Plan is to permit
(i) each elected corporate officer of Rogers Corporation (the
"Company") in office as of November 1, 1993 and (ii) each
subsequently elected corporate officer or other key employee of
the Company or any subsidiary thereof (a "Subsidiary") who is
designated by the President of the Company (in any case, a
"Participant"), to elect to defer a portion of his or her
compensation from the Company. The Plan is intended to be "a
plan which is unfunded and is maintained by an employer primarily
for the purpose of providing deferred compensation for a select
group of management or highly compensated employees" within the
meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and shall be interpreted and administered to the
extent possible in a manner consistent with that intent.
2. Right to Defer. For each calendar year, each
Participant may elect to defer payment* of (i) up to 25% of such
Participant's salary otherwise payable for services rendered in
such year ("Salary") and/or (ii) from 50% to 100% of such
Participant's bonus otherwise payable in such year ("Bonus");
provided, however, that a Participant's election to defer a
portion of his or her Salary for any calendar year must be for a
projected minimum deferral
*The December 1994, Amendment No. 1 increased this amount to 50%.
See the 14th page.
- 1 -
F-39
<PAGE>
of at least (1) $10,000 for elections made before October 18, 1994
and (2) $8,000 for elections made after October 17, 1994, with
respect to such year, determined based on the Participant's salary
at the time of such election. Notwithstanding the foregoing, for
calendar year 1993, a Participant may elect to defer payment of up
to 100% of such Participant's Salary otherwise payable for services
rendered on or after November 1, 1993, subject however to the
applicable minimum deferral requirement.
3. Deferral Elections. A Participant's election to defer
payments under Section 2 above (a "Deferral Election") shall be
in writing and shall be deemed to have been made upon receipt and
acceptance by the Company. Separate Deferral Elections shall be
made under Section 2 with respect to Salary and Bonus payable
with respect to a calendar year. In order to be effective
hereunder, a Deferral Election must be made not later than
(i) the December 31 of the calendar year preceding the calendar
year in which the affected Salary is to be paid and (ii) the
October 31 of the calendar year preceding the calendar year in
which the Bonus (if any) is to be paid, and in any case shall
specify the time and method of payment pursuant to Section 5
below applicable to the amount(s) deferred hereunder.
Notwithstanding the foregoing, (a) any Deferral Election for
calendar year 1993 may be made no later than October 31, 1993 and
(b) a person who becomes a Participant during a calendar year may
make Deferral Elections with respect to Salary to be earned
during the remainder of such calendar year and/or Bonus payable
for such calendar year at any time on or before the thirtieth
(30th) day after the date he or she becomes a Participant. A
Deferral Election made for a calendar year may not be revised
after the last date on which it could have been made, except that
any Deferral Election made with respect to a Participant's Salary
may be revoked in its entirety by the Participant at any time by
filing a written notice
- 2 -
F-40
<PAGE>
of revocation with the Company, but only as to Salary which has
not yet been earned and which is payable after receipt and
acceptance by the Company of such revocation. A deferral made
with respect to a Participant's Salary shall be effected by
reducing the Participant's Salary payments in equal amounts or
percentages for each pay period unless the Participant elects
another method of reduction which the Company has not determined
to be administratively burdensome.
4. Accounts; Crediting Interest; Additional Credits.
(a) All amounts deferred by a Participant under
Section 2 shall be credited by the Company or Subsidiary,
whichever is the employer of the Participant, to a book account
(a "Deferred Compensation Account") in the name of such
Participant as of the dates such amounts would have been paid to
the Participant but for his or her Deferral Election. Two
separate sub-accounts will be maintained for Salary and Bonus
deferred for each calendar year pursuant to Section 2; provided,
however, that all Salary and Bonus deferred pursuant to Section 2
with respect to the same or different calendar years which are
payable at the same time and pursuant to the same method and
which are being credited with the same rate of interest may be
combined into a single sub-account.
(b) As of the last day of each month, the Company or
Subsidiary, whichever is the employer of the Participant, shall
credit each sub-account described in Section 4(a) within a
Participant's Deferred Compensation Account with interest on the
amount credited to such sub-account as of the sixteenth (16th)
day of such month (or, if such day is not a business day, the
first business day thereafter). The rate of interest to be used
for this purpose during any calendar year shall be the 30-year
U.S. Treasury bond rate in
- 3 -
F-41
<PAGE>
effect as of the January 1 of such year. The foregoing rate
shall be determined by reference to the first January issue of
Barron's for such calendar year, or such other comparable
publication as may be selected by the Company if Barron's is no
longer published or no longer provides such information.
(c) Notwithstanding the foregoing, the Pension
Committee of the Board of Directors of the Company (the
"Committee") may change the method of determining the rate of
interest to be used under (b) by written notice to each
Participant (including former Participants who then have a
Deferred Compensation Account which would be affected by such
change), which notice shall specify the new rate of interest to
be used under (b), the effective date of such change and the
Deferred Compensation Accounts to which such new rate of interest
or method shall apply; provided, however, that a new method of
determining the rate of interest to be used under (b) shall not
apply to any amounts deferred pursuant to a Deferral Election
made by a Participant prior to the receipt by such Participant of
notice of such change unless such Participant files a written
consent to such change with the Company within sixty (60) days of
his or her receipt of the notice of such change.
(d) To the extent that any Participant's Deferral
Election hereunder results in a reduction of the pension payments
to be made to such Participant under the Company's qualified and
non-qualified defined benefit pension plans, such reduction will
be made up for in accordance with the terms of a non-qualified
plan established by the Company for that purpose.
- 4 -
F-42
<PAGE>
5. Time and Method of Payment.
(a) Amounts standing to the credit of each sub-account
within a Participant's Deferred Compensation Account shall be
paid, or commence to be paid, on the April 15 (or, if such day is
not a business day, the first business day thereafter), first
following the earlier of (i) the passage of the number of
calendar years (not to exceed twenty and including the year of
deferral which counts as year one) specified by the Participant
in his or her Deferral Election(s) with respect to the amount
credited to such sub-account or (ii) the calendar year in which
the Participant ceases to be an employee of the Company and its
Subsidiaries for any reason whatsoever. The amount of each such
payment shall be determined by the amount credited to such sub-
account as of the preceding March 31 (or, if such day is not a
business day, the first business day thereafter).
(b) All amounts credited to each sub-account within
the Participant's Deferred Compensation Account shall be
distributed in cash and shall be made by the Company or the
Subsidiary which credited such amounts to the Participant's
Deferred Compensation Account. Each such sub-account shall be
charged with the amount paid therefrom as of the date of payment.
(c) All amounts credited to a sub-account within the
Participant's Deferred Compensation Account shall be paid in
either a single lump sum or in substantially equal quarterly or
annual installments over a period not to exceed ten years (or
over a period of 5 years in the case of an election made prior to
October 18, 1994), as the Participant has specified in the
Deferral Election(s) applicable to such sub-account. In the case
of installment payments, (i) interest under Section 4(b), shall
continue to be credited in
- 5 -
F-43
<PAGE>
accordance with Section 4 during the payment period, and (ii) the
amount of the first payment and any other payments in the same year
thereof shall be equal to the amount credited to the applicable
sub-account as of the preceding March 31 (or, if such day is not
a business day, the first business day thereafter) divided by the
number of payments remaining to be made, including the current
payment, and the amount of each subsequent payment for subsequent
years shall be equal to the amount credited to the applicable
sub-account as of the preceding December 31 divided by the number
of payments remaining to be made, including the current payment.
Notwithstanding the foregoing, the final payment out of any sub-
account shall be equal to 100% of the amount credited to such sub-
account at the time of such payment.
(d) All amounts credited to a Participant's Deferred
Compensation Account shall be paid as they become due to the
Participant if then living. All amounts credited to a
Participant's Deferred Compensation Account at the time of his or
her death shall be paid pursuant to Section 6.
(e) Notwithstanding any provision hereof to the
contrary, if a Participant or beneficiary believes he or she is
suffering from a "hardship," an application may be made to the
Committee for an acceleration of payments from one or more sub-
accounts within such Participant's Deferred Compensation Account.
"Hardship" for this purpose shall mean a need for financial
assistance in meeting real emergencies which would cause
substantial hardship to the Participant or any member of the
Participant's immediate family, and which are beyond the
Participant's control. If the Committee determines, in its sole
discretion, that the Participant is suffering from a "hardship,"
the Committee may accelerate payment to the
- 6 -
F-44
<PAGE>
Participant of such portion of such sub-account(s) within the
Participant's Deferred Compensation Account as the Committee may
determine is required to alleviate such hardship, and each such
sub-account shall be charged with the amount paid therefrom as of
the date of payment.
(f) Notwithstanding any provision hereof to the
contrary, but subject to the approval of the Committee in its
sole discretion, a Participant who has not yet terminated
employment with the Company may request that payment of all or a
portion of any sub-account within his or her Deferred
Compensation Account which is to be paid pursuant to
Section 5(a)(ii) be made in different amounts or over a different
period of time (but in any event, consistent with payment options
provided for under Section 5(c)) than that specified in the
applicable Deferral Election, provided however that such payments
shall be paid or commence to be paid on the April 15 following
his or her termination of employment. The Participant must
communicate any such request to the Committee at least 4 months
and 15 days prior to the initial date on which the amount
credited to the sub-account to which such request relates would
otherwise be paid or commence to be paid. The Committee may
approve such request in its sole discretion at any time which is
at least 3 months and 15 days prior to such initial payment date.
If any such request is so approved by the Committee, the amount
credited to the sub-account (or portion thereof) to which such
request and approval relates shall be paid at the times and in
the amounts specified in such request.
6. Payments after Death. Each Participant may designate,
from time to time, a beneficiary or beneficiaries (who may be
named contingently or successively) to whom any amounts which
remain credited to the Participant's Deferred Compensation
Account at the
- 7 -
F-45
<PAGE>
time of his or her death shall be paid. Each such
designation shall revoke all prior designations by the same
Participant, except to the extent otherwise specifically noted,
shall be in a form prescribed by the Company, and shall be
effective only when filed by the Participant in writing with the
Company during his or her lifetime. Payments shall be made to a
beneficiary hereunder in the same manner of distribution as was
elected by the Participant pursuant to Section 5. Any amounts
which remain credited to a Participant's Deferred Compensation
Account at the time of his or her death which are not payable to
a designated beneficiary shall be paid to the estate of such
Participant in a single lump sum in accordance with Section 5(c)
as soon as practicable after the death of such Participant.
7. No Funding Required.
(a) Nothing in this Plan will be construed to create a
trust or to obligate the Company, any Subsidiary or any other
person to segregate a fund, purchase an insurance contract, or in
any other way to fund currently the future payment of any
benefits hereunder, nor will anything herein be construed to give
any Participant or any other person rights to any specific assets
of the Company, any Subsidiary or of any other person. Except as
described in (b) below, any benefits which become payable
hereunder shall be paid from the general assets of the Company or
Subsidiary, whichever is applicable, in accordance with the terms
hereof.
(b) The Company, in its sole discretion, may establish
(i) a grantor or other trust of which the Company is treated as
the owner under the Internal Revenue Code of 1986, as amended,
and the assets of which are subject to the claims of the
Company's general creditors in the event of its insolvency,
(ii) an insurance arrangement, or (iii) any
- 8 -
F-46
<PAGE>
other arrangement or arrangements designed to provide for the
payment of benefits hereunder. Any such arrangement shall be
subject to such other terms and conditions as the Company may
deem necessary or advisable to ensure (i) that benefits are not
includible, by reason of the establishment of any such arrangement
or the funding of any such trust, in the income of the beneficiaries
of such trust or other arrangement prior to actual distribution or
other payment and (ii) that the existence of such arrangement
does not cause the Plan or any other arrangement to be considered
funded for purposes of Title I of ERISA. The President, the Vice
President, Finance or the Treasurer of the Company may act to
establish a trust or other arrangement pursuant to this
Section 7(b).
8. Plan Administration and Interpretation. The Company
shall have complete control over the administration of the Plan
and complete control and authority to determine, in its sole
discretion, the rights and benefits and all claims, demands and
actions arising out of the provisions of the Plan of any
Participant, beneficiary, or other person having or claiming to
have any interest under the Plan and the Company's determinations
shall be conclusive and binding on all such parties. The
Company shall be deemed to be the Plan administrator with the
responsibility for complying with any reporting and disclosure
requirements of ERISA. The rights of the Company hereunder which
have not been delegated to the Committee shall be exercised by
the elected corporate officers of the Company. To the extent
that such officers are unable or unwilling to exercise any right
hereunder or make any determination hereunder, then the Committee
shall exercise such right or make such determination unless it is
unable or unwilling to do so, in which case the Board
- 9 -
F-47
<PAGE>
of Directors of the Company (the "Board") shall exercise such right
or make such determination.
9. Non-Assignable. Amounts payable under this Plan shall
not be subject to alienation, assignment, garnishment, execution
or levy of any kind, and any attempt to cause any such amount to
be so subjected shall be null, void and of no effect and shall
not be recognized by the Company or its Subsidiaries.
10. Termination and Modification.
(a) The Committee may terminate or amend this Plan by
written notice to each Participant participating herein. A
termination of the Plan shall have no effect other than to
eliminate the right of each Participant to defer further
compensation. Except for such "prospective" termination, neither
the Plan nor any Deferral Election in effect hereunder may be
amended, modified, waived, discharged or terminated, except by
mutual consent of the Committee and the Participant or
Participants affected thereby, which consent shall be evidenced
by an instrument in writing, signed by the party against which
enforcement of such amendment, modification, waiver, discharge or
termination is sought. Notwithstanding the foregoing, if, on or
after January 1, 1996, (i) the Company's ratio of current assets
to current liabilities as reflected on any quarterly or annual
financial statements filed by the Company with the Securities and
Exchange Commission falls below 1.4 to 1 for two consecutive
quarters, (ii) the total of the Company's long-term debt for
borrowed money (excluding the current portion thereof) exceeds
85% of the Company's net worth as reflected in such statements
filed with the Securities and Exchange Commission or (iii) the
Company is subject to a "change of control," this Plan shall
immediately terminate and the Committee
- 10 -
F-48
<PAGE>
shall, in complete discharge of its obligations hereunder,
distribute to each Participant the full amount then credited to
his or her Deferred Compensation Account, such amount to be
payable in a single lump sum in accordance with Section 5(c).
(b) For purposes of this Section 10, "change of
control" shall mean the occurrence of any one of the following
events:
(i) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1943, as amended (the "Act")) becomes a "beneficial
owner" (as such term is defined in Rule 13d-3 promulgated
under the Act) (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan
of the Company, or any corporation owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of
stock of the Company), directly or indirectly, of securities
of the Company representing twenty percent (20%) or more of
the combined voting power of the Company's then outstanding
securities; or
(ii) persons who, as of November 30, 1993,
constituted the Company's Board (the "Incumbent Board")
cease for any reason, including without limitation as a
result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the Board,
provided that any person becoming a director of the Company
subsequent to November 30, 1993 whose nomination or election
was approved by at least a majority of the directors then
comprising the Incumbent Board shall, for purposes of this
Plan, be considered a member of the Incumbent Board; or
(iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other
corporation or other entity, other than (a) a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity)
more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation
or (b) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no "person" (as hereinabove defined) acquires more
than 20% of the combined voting power of the Company's then
outstanding securities; or
- 11 -
F-49
<PAGE>
(iv) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or
substantially all of the Company's assets.
11. Parties. The terms of this Plan shall be binding upon
the Company, its Subsidiaries and their successors or assigns and
each Participant participating herein and his or her
beneficiaries, heirs, executors and administrators.
12. Liability of Company. Subject to its obligation to pay
the amount credited to the Participant's Deferred Compensation
Account at the time distribution is called for by the payment
option in effect, none of the Company, its Subsidiaries nor any
person acting in behalf of the Company or its Subsidiaries shall
be liable to any Participant or any other person for any act
performed or the failure to perform any act with respect to the
Plan.
13. Notices. Notices, elections or designations by a
Participant to the Company hereunder shall be addressed to the
Company to the attention of the Vice President of Human Resources
of the Company or his designee or, in the absence of the Vice
President of Human Resources or his designee, to the Treasurer of
the Company. Notices by the Company to a Participant shall be
addressed to the Participant at his or her most recent home
address as reflected in the records of the Company. Requests
made by a Participant or a beneficiary to the Committee hereunder
shall be addressed to the attention of the Secretary of the
Committee or the Secretary of the Company.
14. Unsecured General Creditors. No Participant or his or
her legal representative or any beneficiary designated by him or
her shall have any right, other than the right of an unsecured
general creditor, against the Company or any Subsidiary in
respect of the Deferred Compensation Account of such Participant
established hereunder.
- 12 -
F-50
<PAGE>
15. Severability. In case any provision or provisions of
this Plan shall be held illegal, invalid or otherwise
unenforceable for any reason, the illegality, invalidity or
unenforceability shall not affect the remaining provisions of the
Plan, but shall be fully severable, and the Plan shall be
construed and enforced as if the illegal, invalid or
unenforceable provisions had never been inserted in the Plan.
16. Effective Date. This Plan shall be effective as of
November 1, 1993 and shall continue in existence thereafter until
terminated pursuant to Section 10.
17. Governing Law. This Plan shall be construed and
enforced in accordance with, and governed by, the laws of the
Commonwealth of Massachusetts.
Executed as of the 18th day of October, 1994.
ROGERS CORPORATION
By: Robert M. Soffer, Treasurer
85875.b3
- 13 -
F-51
<PAGE>
AMENDMENT NO. 1 TO THE ROGERS CORPORATION
VOLUNTARY DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES
Pursuant to the powers reserved to it in Section 10 of the Rogers
Corporation Voluntary Deferred Compensation Plan for Key Employees
(the "Plan"), the Pension Committee of the Board of Directors of
Rogers Corporation (the "Committee") hereby amends the Plan,
effective as of December 20, 1994, as follows:
1. Section 2(i) of the Plan is hereby amended to read as follows:
"(i) up to (A) 25% of such Participant's salary otherwise
payable for services rendered in such year ("Salary") for
elections made before December 20, 1994 and (B) 50% of such
Participant's Salary for elections made on or after December
20, 1994, and/or"
2. Except as herein amended, the provisions of the Plan shall
remain in full force and effect.
3. IN WITNESS WHEREOF, the Committee has caused this First
Amendment to the Plan to be executed on the 22nd day of
December 1994.
PENSION COMMITTEE
By: Robert M. Soffer
Secretary of the Committee and
Treasurer of Rogers Corporation
- 14 -
F-52
<PAGE>
EXHIBIT 13
ROGERS CORPORATION 1994 ANNUAL REPORT TO SHAREHOLDERS
<TABLE>
SELECTED FINANCIAL DATA
(Dollars in Thousands, Except Per Share Amounts)
----------
<CAPTION>
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
SALES AND INCOME
----------
Net Sales $133,866 $123,168 $172,361 $182,352 $190,319
Cost Reduction Charges (Note B) -- -- (26,602) (2,774) (7,075)
Income (Loss) Before Income Taxes
and Cumulative Effect of Accounting
Change 10,712 6,716 (28,005) (3,403) (3,632)
Cumulative Effect of Change in
Accounting for Postretirement
Benefits -- -- (6,241) -- --
Net Income (Loss) 10,134 6,670 (32,666) (2,320) (2,447)
PER SHARE DATA
----------
Income (Loss) Before Cumulative
Effect of Accounting Change <F1> 2.84 2.09 (8.54) (.75) (.80)
Cumulative Effect of Change in
Accounting for Postretirement
Benefits <F1> -- -- (2.02) -- --
Net Income (Loss) <F1> 2.84 2.09 (10.56) (.75) (.80)
Cash Dividends Declared -- -- -- .09 .12
Book Value 12.81 8.66 6.15 16.85 17.84
FINANCIAL POSITION (YEAR-END)
----------
Current Assets 47,186 36,842 56,028 55,769 57,608
Current Liabilities 22,482 23,683 33,532 35,226 37,294
Ratio of Current Assets
to Current Liabilities 2.1 to 1 1.6 to 1 1.7 to 1 1.6 to 1 1.5 to 1
Working Capital 24,704 13,159 22,496 20,543 20,314
Property, Plant and
Equipment - Net 34,061 36,807 35,504 60,189 65,645
Total Assets 89,443 81,837 97,746 122,674 129,472
Long-Term Debt less Current
Maturities 6,675 14,190 24,197 26,336 27,526
Shareholders' Equity 45,125 27,891 19,083 51,983 54,859
Long-Term Debt as a Percentage
of Shareholders' Equity 15% 51% 127% 51% 50%
OTHER DATA
----------
Depreciation and Amortization 6,680 6,691 10,928 11,702 11,184
Research and Development Expenses 9,230 9,495 12,441 12,214 11,412<F2>
Capital Expenditures 4,648 8,582 9,061 11,710 13,601
Number of Employees (Average) 977 1,104<F3> 2,512 2,989 3,213
Sales per Employee 137 112 69 61 59
Number of Shares Outstanding at
Year-End <F2> 3,522,635 3,222,461 3,100,649 3,084,659 3,075,288
----------
<FN>
<F1> Based on weighted average number of shares and share equivalents
outstanding for 1994 and 1993, and based on weighted average number
of shares outstanding for 1992, 1991 and 1990.
<F2> After a $1,698 deduction for outside funding of the multichip module
development project.
<F3> Excludes employees of the divested flexible interconnections business.
</TABLE>
- 23 -
F-53
<PAGE>
CONSOLIDATED BALANCE SHEETS
----------
January 1, January 2,
(Dollars in Thousands) 1995 1994
ASSETS
----------
Current Assets:
Cash and Cash Equivalents $ 13,851 $ 4,533
Accounts Receivable 16,495 15,008
Inventories:
Raw Materials 4,311 3,432
In-Process and Finished 5,302 5,404
Less LIFO Reserve (1,056) (808)
Total Inventories 8,557 8,028
Current Deferred Income Taxes 1,146 1,820
Net Assets Held for Sale (Note B) 6,687 6,785
Prepaid Expenses 450 668
Total Current Assets 47,186 36,842
Property, Plant and Equipment, Net of
Accumulated Depreciation of $52,464
and $54,271 34,061 36,807
Investments in Unconsolidated Joint Ventures 4,072 3,051
Intangible Pension Asset 2,365 3,295
Other Assets 1,759 1,842
Total Assets $ 89,443 $ 81,837
- 24 -
F-54
<PAGE>
January 1, January 2,
(Dollars in Thousands) 1995 1994
LIABILITIES AND SHAREHOLDERS' EQUITY
----------
Current Liabilities:
Accounts Payable $ 7,778 $ 7,679
Current Maturities of Long-Term Debt 1,225 3,140
Accrued Employee Benefits and Compensation 6,646 5,296
Accrued Cost Reduction Charges (Note B) 925 2,222
Other Accrued Liabilities 4,924 3,800
Taxes, Other than Federal and Foreign Income 984 1,546
Total Current Liabilities 22,482 23,683
Long-Term Debt, less Current Maturities 6,675 14,190
Noncurrent Deferred Income Taxes 1,520 2,055
Noncurrent Pension Liability 4,497 5,660
Noncurrent Retiree Health Care and Life
Insurance Benefits 6,560 6,122
Other Long-Term Liabilities 2,584 2,236
Shareholders' Equity:
Capital Stock, $1 Par Value:
Authorized Shares 25,000,000 and 10,000,000;
Issued and Outstanding Shares 3,522,635 and
3,222,461 3,523 3,222
Additional Paid-In Capital 28,632 22,558
Equity Translation Adjustment 1,918 1,193
Retained Earnings 11,052 918
Total Shareholders' Equity 45,125 27,891
Total Liabilities and Shareholders'
Equity $ 89,443 $ 81,837
----------
The accompanying notes are an integral part of the consolidated financial
statements.
- 25 -
F-55
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
----------
1994 1993 1992
(Dollars in 000s, Except Per Share Amounts) (52 Weeks) (52 Weeks) (53 Weeks)
Net Sales $ 133,866 $ 123,168 $ 172,361
Cost of Sales 93,650 86,402 136,462
Selling and Administrative Expenses 20,705 18,787 22,084
Research and Development Expenses 9,230 9,495 12,441
Cost Reduction Charges (Note B) -- -- 26,602
Total Costs and Expenses 123,585 114,684 197,589
Operating Income (Loss) 10,281 8,484 (25,228)
Other Income less Other Charges 1,579 848 298
Interest Expense - Net 1,148 2,616 3,075
Income (Loss) Before Income Taxes (Benefit)
and Cumulative Effect of Accounting Change 10,712 6,716 (28,005)
Income Taxes (Benefit) 578 46 (1,580)
Income (Loss) Before Cumulative Effect of
Accounting Change 10,134 6,670 (26,425)
Cumulative Effect of Change in Accounting
for Postretirement Benefits (Note G) -- -- (6,241)
Net Income (Loss) 10,134 6,670 (32,666)
Retained Earnings (Deficit) at Beginning
of Year 918 (5,752) 27,007
Cash Dividends -- -- 93
Retained Earnings (Deficit) at End of Year $ 11,052 $ 918 $ (5,752)
Income (Loss) per Share:
Primary:
Average Shares Outstanding and Common
Stock Equivalents 3,564,658 3,189,879 3,094,419
Income (Loss) Before Cumulative Effect
of Accounting Change $ 2.84 $ 2.09 $ (8.54)
Cumulative Effect of Accounting Change -- -- (2.02)
Income (Loss) Per Share $ 2.84 $ 2.09 $ (10.56)
Fully Diluted:
Average Shares Outstanding and Common
Stock Equivalents 3,661,498 3,250,457 3,094,419
Income (Loss) Before Cumulative Effect
of Accounting Change $ 2.77 $ 2.05 $ (8.54)
Cumulative Effect of Accounting Change -- -- (2.02)
Income (Loss) Per Share $ 2.77 $ 2.05 $ (10.56)
The accompanying notes are an integral part of the consolidated financial
statements.
- 26 -
F-56
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
---------- 1994 1993 1992
(52 weeks) (52 weeks) (53 weeks)
CASH FLOWS PROVIDED BY (USED IN) OPERATING
ACTIVITIES:
----------
Net Income (Loss) $10,134 $ 6,670 $(32,666)
Adjustments to Reconcile Net Income (Loss)
to Net Cash Provided by Operating Activities:
Depreciation and Amortization 6,680 6,691 10,928
Benefit for Deferred Income Taxes (160) -- (1,919)
Equity in Undistributed (Income) Loss of
Unconsolidated Joint Ventures - Net (1,071) 103 (49)
Accrued Cost Reduction Charges -- -- 25,447
Cumulative Effect of Accounting Change -- -- 6,662
(Gain) Loss on Disposition of Assets (344) 87 (142)
Other - Net (577) (559) 2,731
Changes in Operating Assets and Liabilities
Excluding Effects of Acquisition and
Disposition of Assets:
Accounts Receivable (1,258) (1,285) (1,308)
Inventories (465) 1,116 1,060
Prepaid Expenses 260 (30) 1
Accounts Payable and Accrued Expenses 916 (868) (4,993)
Net Cash Provided by Operating Activities 14,115 11,925 5,752
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
----------
Capital Expenditures (4,648) (8,582) (9,061)
Proceeds from Sale of Businesses 909 10,899 4,985
Proceeds from Sale of Property, Plant
and Equipment 1,756 179 963
Investment in Unconsolidated Joint Ventures -- -- (35)
Net Cash Provided by (Used in) Investing
Activities (1,983) 2,496 (3,148)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
----------
Proceeds from Short- and Long-Term Borrowings -- 6,956 5,991
Repayments of Debt Principal (4,903) (19,951) (5,470)
Net Repayments of Revolving Lines of Credit -- (3,534) (4,387)
Proceeds from Sale of Capital Stock 1,874 1,063 293
Dividends Paid -- -- (93)
Net Cash Used in Financing Activities (3,029) (15,466) (3,666)
Effect of Exchange Rate Changes on Cash 215 222 (253)
Net Incr. (Decr.) in Cash and Cash Equivalents 9,318 (823) (1,315)
Cash and Cash Equivalents at Beginning of Year 4,533 5,356 6,671
Cash and Cash Equivalents at End of Year $13,851 $ 4,533 $ 5,356
----------
The accompanying notes are an integral part of the consolidated financial
statements.
- 27 -
F-57
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------
NOTE A-ACCOUNTING POLICIES
----------
PRINCIPLES OF CONSOLIDATION:
----------
The consolidated financial statements include the accounts of Rogers
Corporation and its wholly-owned subsidiaries (the Company), after elimination
of significant intercompany accounts and transactions.
CASH EQUIVALENTS:
----------
Cash equivalents include commercial paper and U.S. Government treasury bills
with an original maturity of three months or less. These investments are
stated at cost, which approximates market value.
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES:
----------
The Company accounts for its investments in and advances to unconsolidated
joint ventures, both of which are 50% owned, using the equity method.
RELATED PARTY TRANSACTIONS:
----------
Sales to unconsolidated joint ventures are made on terms similar to those
prevailing with unrelated customers, except that for each joint venture,
payments to its owners may be deferred depending on the joint venture's
availability of funds, with payment priority given to parties other than the
owners of the venture.
FOREIGN CURRENCY TRANSLATION:
----------
All balance sheet accounts of foreign subsidiaries are translated at rates of
exchange in effect at each year-end, and income statement items are translated
at the average exchange rates for the year. Resulting translation adjustments
are made directly to a separate component of shareholders' equity. Currency
transaction adjustments are reported as income or expense.
INVENTORIES:
----------
Inventories are valued at the lower of cost or market. The last-in, first-out
(LIFO) method was used for determining the cost of approximately 36% of total
Company inventories at January 1, 1995 and 31% at January 2, 1994. The cost
of the remaining portion of the inventories was determined principally on the
basis of standard costs, which approximate actual first-in, first-out (FIFO)
costs.
PROPERTY, PLANT AND EQUIPMENT:
----------
Property, plant and equipment is stated on the basis of cost, including
capitalized interest. For financial reporting purposes, provisions for
depreciation are calculated on a straight-line basis over the estimated useful
lives of the assets.
OTHER ASSETS:
----------
Purchased patents, licensed technology and other intangibles included in other
assets are capitalized and amortized on a straight-line basis over their
estimated useful lives, generally ranging from 2 to 17 years.
PENSIONS:
----------
The Company has noncontributory defined benefit plans covering substantially
all U.S. employees. Plans covering salaried employees provide benefits based
on salary, years of service and age, while those covering hourly employees
provide benefits of stated amounts for each year of credited service with
adjustments depending on age. The Company's funding policy for all plans is
to contribute amounts sufficient to meet the minimum funding requirements set
forth in the Employee Retirement Income Security Act of 1974, plus such
additional amounts as the Company may determine to be appropriate from time to
time.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:
----------
In 1992 the Company adopted Statement of Financial Accounting Standards No.
106 (FAS 106), "Employers' Accounting for Postretirement Benefits Other than
Pensions," using the immediate recognition transition option. This standard
requires employers to recognize the expected cost of providing postretirement
benefits, such as health and life insurance, during the years that the
employees render ser-
- 28 -
F-58
<PAGE>
vice. The Company funds these postretirement benefits on a pay-as-you-go
basis.
INCOME TAXES:
----------
In the first quarter of 1993, the Company implemented the provisions of
Statement of Financial Accounting Standards No. 109 (FAS 109), "Accounting for
Income Taxes." The adoption of FAS 109 changed the Company's method of
accounting for income taxes from the deferred method (Accounting Principles
Board Opinion 11) to the liability method. The liability method requires the
recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been recognized in the Company's
financial statements or tax returns. As permitted under FAS 109, the Company
elected not to restate prior years' financial statements.
No provision is made for income taxes on undistributed earnings of foreign
subsidiaries because such earnings are substantially reinvested in those
companies for an indefinite period.
NET INCOME (LOSS) PER SHARE:
----------
Net income per share is computed based on the weighted average number of
shares of capital stock and capital stock equivalents outstanding during each
year, while net loss per share is based only on the weighted average number of
shares of capital stock. Capital stock equivalents are additional shares which
may be issued upon the exercise of dilutive stock options using the average
market price of the Company's capital stock during the year for primary
earnings per share and market price at the end of the year for fully diluted
earnings per share. Conversion of the convertible subordinated notes (see
Note I) was not assumed in the 1993 and 1992 computation of fully diluted net
income (loss) per share because such conversion was antidilutive.
RECLASSIFICATIONS:
----------
Certain reclassifications were made for 1990-1993 to report results consistent
with 1994 reporting practice.
NOTE B-COST REDUCTION CHARGES
----------
During the fourth quarter of 1992, as part of a strategy to refocus and build
further on its existing specialty polymer composite materials businesses, the
Company identified restructuring measures that resulted in a pretax charge of
$26.6 million. The major component, $22.4 million, of this charge was
primarily for asset writedowns and employee severance costs related to the
divestiture of the Company's flexible interconnections business, including the
50% interest in a related joint venture, Smartflex Systems. This divestiture
was completed on June 28, 1993 and the Company received a total of $10.9
million from the sale.
Also included in the 1992 pretax charge was $4.2 million of costs associated
with streamlining the U.S. sales force, consolidating European sales and
administrative functions, the reduction and consolidation of certain corporate
functions in the United States, restructuring/divesting the Power Distribution
Division, and adjustments of certain assets to net realizable value.
During the first quarter of 1994, the Power Distribution Division business was
sold to Methode Electronics, Inc. for initial cash payments of $560,000 plus
royalties on future sales. Remaining equipment of this business was sold
separately.
At January 1, 1995, assets held for sale at net realizable value were $6.7
million, consisting of the land and building being leased to the buyer of the
flexible interconnections business, and the land and building that formerly
housed the Power Distribution Division.
NOTE C-INVENTORIES
----------
Certain inventories, amounting to $3,106,000 at January 1, 1995, and
$2,515,000 at January 2, 1994, are valued at the lower of cost, determined by
the last-in, first-out method, or market.
- 29 -
F-59
<PAGE>
NOTE D-PROPERTY, PLANT AND EQUIPMENT
----------
January 1, January 2,
(Dollars in Thousands) 1995 1994
Land $ 1,032 $ 915
Buildings and improvements 30,258 29,022
Machinery and equipment 45,372 48,039
Office equipment 8,818 9,865
Installations in process 1,045 3,237
86,525 91,078
Less accumulated depreciation (52,464) (54,271)
$ 34,061 $ 36,807
Depreciation expense was $6,569,000 in 1994, $6,574,000 in 1993, and
$10,609,000 in 1992. Depreciation expense in 1992 includes depreciation on
assets of the flexible interconnections business which was sold in 1993.
Interest costs incurred during the years 1994, 1993, and 1992 were $1,751,000,
$3,016,000, and $3,585,000, respectively, of which $126,000 in 1993 and
$29,000 in 1992 were capitalized as part of the cost of new plant and
equipment.
NOTE E-SUMMARIZED FINANCIAL INFORMATION OF UNCONSOLIDATED JOINT VENTURES
AND RELATED PARTY TRANSACTIONS
----------
The tables shown below summarize combined financial information of the
Company's unconsolidated joint ventures which are accounted for by the equity
method. Amounts presented include the financial information reported by:
Rogers INOAC Corporation, located in Japan, and Durel Corporation, located in
Arizona, both of which are Polymer Products ventures. Each of these ventures
is 50% owned by the Company.
Additionally, 1992 financial information for Smartflex Systems has been
included in the following tables. The Company disposed of its interest in
Smartflex Systems, located in California, as of the beginning of 1993.
The difference between the Company's investment in unconsolidated joint
ventures and its one-half interest in the underlying shareholders' equity of
the joint ventures is due primarily to the following factors: 1) Rogers'
major initial contribution to each venture was technology which was valued
differently by the joint venture than it was on Rogers' books; 2) one of the
joint ventures has a negative retained earnings balance; and 3) translation
of foreign currency at current rates differs from that at historical rates.
This also results in a difference between the Company's income from
unconsolidated joint ventures and its one-half share of the income of those
joint ventures.
January 1, January 2,
(Dollars in Thousands) 1995 1994
Current Assets $ 18,173 $ 13,760
Noncurrent Assets 9,777 3,359
Current Liabilities 8,418 9,204
Noncurrent Liabilites 8,112 3,362
Shareholders' Equity 11,420 4,553
Year Ended
January 1, January 2, January 3,
(Dollars in Thousands) 1995 1994 1993
Net Sales $ 58,576 $ 41,538 $ 70,088
Gross Profit 15,396 10,218 10,536
Net Income 4,572 3,208 1,973
Note that in the tables above, Rogers INOAC Corporation is reported as of
October 31 for the respective years.
- 30 -
F-60
<PAGE>
Sales to unconsolidated joint ventures amounted to $858,000 in 1994,
$363,000 in 1993, and $10,945,000 in 1992. The significant decrease in 1993
is a result of the exclusion of sales to Smartflex Systems.
Loans from unconsolidated joint ventures amounting to $1,955,000 in 1993 and
$991,000 in 1992 were repaid in full during 1993.
Equity income from unconsolidated joint ventures is included in other income
less other charges on the consolidated statements of operations and retained
earnings (deficit).
NOTE F-PENSIONS
-----------
At year-end 1993, the Company had three noncontributory defined benefit plans
covering substantially all U.S. employees. During 1994, the Company merged
two of these plans, although the different benefit structures will continue
within the combined plan. The discount rate assumptions used to develop
pension expense were 7.5% in 1994 and 8.25% in 1993 and 1992. The expected
long-term rate of investment return assumptions were 9.5% for assets related
to the salaried employees of the defined benefit plan in 1993 and 1992, and
9.0% for the other plans in each year presented.
As a result of the divestiture of the flexible interconnections business (see
Note B), the Company recognized a curtailment gain of $1,361,000 as part of
the 1992 cost reduction charge.
Net pension cost consisted of the following components:
(Dollars in Thousands) 1994 1993 1992
Service cost (benefits earned during the period) $ 1,224 $ 1,132 $ 1,369
Interest cost on projected benefit obligation 2,976 2,754 2,667
Actual return on plan assets (319) (2,900) (2,690)
Net amortization and deferral (2,893) (276) (491)
Net pension cost $ 988 $ 710 $ 855
The following table sets forth the funded status of the plans and amounts
recognized in the Company's consolidated balance sheets:
<TABLE>
<CAPTION>
(Dollars in Thousands) January 1, 1995 January 2, 1994
Plan Whose Plan Whose Plans Whose Plan Whose
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Benefits Assets Benefits Assets
<C> <S> <S> <S> <S>
Actuarial present value of benefit obligations:
Vested benefit obligation $ 22,930 $ 7,153 $ 21,916 $ 8,792
Accumulated benefit obligation $ 23,045 $ 7,189 $ 22,686 $ 8,928
Projected benefit obligation $ (29,735) $ (7,189) $ (30,603) $ (8,928)
Plan assets at fair value 29,441 4,092 29,521 5,187
Projected benefit obligation in excess of
plan assets (294) (3,097) (1,082) (3,741)
Unrecognized net (gain) loss (30) 1,162 880 2,008
Unrecognized prior service cost 1,037 1,101 1,174 1,319
Unrecognized net (asset) obligation, net of
amortization (3,156) 102 (3,357) (32)
Adjustment required to recognize minimum
liability -- (2,365) -- (3,295)
Net pension liability $ (2,443) $ (3,097) $ (2,385) $ (3,741)
The net pension liability is included in the following balance sheet accounts:
Accrued employee benefits and compensation $ -- $ (1,389) $ -- $ (662)
Noncurrent pension liability (2,443) (1,708) (2,385) (3,079)
Net pension liability $ (2,443) $ (3,097) $ (2,385) $ (3,741)
</TABLE>
- 31 -
F-61
<PAGE>
Also included in the noncurrent pension liability is an additional pension
liability of $346,000 and $196,000 in 1994 and 1993, respectively.
The discount rate used in determining the present value of benefit obligations
was 8.5% for 1994 and 7.5% for 1993. The long-term annual rate of increase
in compensation levels assumption was 5.0% in both years.
Plan assets consist of group annuity contracts with major insurance companies
and investments in equities and short- and long-term debt instruments managed
by various investment managers.
NOTE G-POSTRETIREMENT BENEFIT PLANS OTHER THAN PENSIONS
----------
In addition to the Company's noncontributory defined benefit pension plans, the
Company sponsors three unfunded defined benefit health care and life insurance
plans for retirees. The plan for full-time U.S. salaried employees provides
medical and dental benefits to employees with a credited service period of ten
years beginning on or after age 45. These benefits cease at age 70. These
employees also receive life insurance benefits if they retire before 1998.
The plan for U.S. unionized hourly employees provides medical and life
insurance benefits to employees who have a credited service period of ten
years on or after age 60. Medical benefits cease at age 65. The plan for
nonunion U.S. hourly employees provides life insurance benefits to employees
who retire before 1998 with a credited service period of five years on or
after age 60. Only the union hourly plan is contributory. All medical and
dental plans contain deductible and coinsurance cost-sharing features.
As indicated in Note A, the Company changed its method of accounting for
postretirement benefits other than pensions in 1992 to conform with Statement
of Financial Accounting Standards No. 106 (FAS 106), "Employers' Accounting
for Postretirement Benefits Other than Pensions." The Company elected to
immediately recognize the accumulated liability, measured as of December 30,
1991. This resulted in a one-time after-tax charge (no tax benefit was
attributable) of $6,241,000, or $2.02 per share. Aside from the one-time
effect of this adjustment, adoption of FAS 106 was not material to 1992
financial results.
Net periodic postretirement benefit cost includes the following components:
1994 1993 1992
Service cost $ 309 $ 340 $ 394
Interest cost 413 478 522
Amortization of unrecognized net gain (32) (9) --
Net periodic postretirement benefit cost $ 690 $ 809 $ 916
The discount rate assumption used to develop postretirement benefit expense
was 7.5% in 1994 and 8.25% in 1993 and 1992.
The actuarial and recorded liabilities for these three plans, none of which
have been funded, were as follows:
January 1, January 2,
(Dollars in Thousands) 1995 1994
Accumulated postretirement benefit obligation:
Retirees $ (3,151) $ (3,209)
Fully eligible active plan participants (711) (718)
Other active plan participants (1,427) (1,826)
Accumulated postretirement benefit obligation (5,289) (5,753)
Unrecognized net gain (1,671) (869)
Accrued postretirement benefit liability $ (6,960) $ (6,622)
- 32 -
F-62
<PAGE>
Net periodic postretirement benefit liability of $6,960,000 in 1994 and
$6,622,000 in 1993 consists of a noncurrent liability of $6,560,000 and
$6,122,000, respectively, and a current postretirement benefit liability of
$400,000 and $500,000, respectively, which is included in accrued employee
benefits and compensation.
The annual assumed rate of increase in the per capita cost of covered health
benefits is 10% for 1995 (11% and 13% assumed for 1994 and 1993,
respectively), and is assumed to decrease by approximately one percentage
point each year to 6% in 2000 and remain at that level thereafter. The health
care cost trend rate assumption has the following effect on the amounts
reported: increasing the assumed health care cost trend rates by one
percentage point in each future year would increase the accumulated
postretirement benefit obligation for health benefits as of the beginning of
1995 by approximately $358,000 and the aggregate of the service and interest
cost components of net periodic postretirement benefit cost for 1994 by
$69,000.
The discount rate used in determining the accumulated postretirement benefit
obligation was 8.5% for 1994 and 7.5% for 1993.
As a result of the divestiture of the flexible interconnections business (see
Note B), the Company recognized a curtailment gain of $419,000 as part of the
1992 cost reduction charge.
NOTE H-EMPLOYEE SAVINGS AND INVESTMENT PLANS
----------
The Company has three Employee Savings and Investment Plans (RESIP I, II, and
III) which meet the requirements contained in Section 401(k) of the Internal
Revenue Code. All regular U.S. salaried employees with at least one month of
service are eligible to participate in RESIP I, most other regular U.S.
employees with at least one month of service who are not members of collective
bargaining units are eligible to participate in RESIP II, and members of the
Company's collective bargaining units with one month of service are eligible
to participate in RESIP III. With the exception of the Company match, the
plans are essentially identical and are designated to encourage the Company's
U.S. employees to save for retirement. Contributions to the plans as well as
earnings thereon benefit from tax deferral. Participating employees generally
may contribute up to 18% of their salaries and wages. An employee's elective
pretax contribution for which a tax deferral is available is limited to the
maximum allowed under the Internal Revenue Code. To further encourage
employee savings in RESIP I and II, the Company matched employees'
contributions up to 4% of participating employees' annual compensation at a
rate of 25% in 1994, and 12.5% in 1993 and 1992. In 1994 the Company began to
make half of its contribution with Company stock and continued to make the
other half with cash. RESIP related expense amounted to $276,000 in 1994,
$177,000 in 1993, and $210,000 in 1992, including Company matching
contributions of $191,000, $100,000, and $125,000, respectively.
NOTE I-DEBT
----------
LONG-TERM DEBT:
January 1, January 2,
(Dollars in Thousands) 1995 1994
10.5% Senior Notes due 1995-1998 $ 2,500 $ 3,125
10.6% Senior Notes due 1995-2003 5,400 6,000
10.5% Convertible Subordinated Notes* -- 4,500
Term Note with interest at 4.9% -- 3,637
Other -- 68
7,900 17,330
Less current maturities (1,225) (3,140)
$ 6,675 $ 14,190
* During the third quarter of 1994, the convertible subordinated notes were
converted into 204,545 shares of capital stock.
- 33 -
F-63
<PAGE>
In 1993 the Company entered into a $25 million revolving credit and term loan
arrangement with Fleet Bank, N.A. Using the proceeds from the sale of the
flexible interconnections business and proceeds from the Fleet facility, the
Company paid off a portion of its outstanding debt. Also, the Company
renegotiated agreements with other lenders with respect to certain of its
debt.
Under the terms of the Fleet agreement, the Company received a $5 million term
note, which had been reduced to $3.6 million by January 2, 1994 and then
prepaid in full on February 1, 1994. The Company may borrow up to a maximum of
$15 million under a revolving credit arrangement. 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. Interest is payable monthly at a rate no greater
than prime plus .75 percentage points on amounts oustanding under the
revolving credit facility. In addition there are administrative fees
associated with the arrangement, as well as a commitment fee of 0.25% per
annum on any unborrowed funds which are available under the revolving credit
facility. At year-end 1994, there were no borrowings under this revolving
credit arrangement. Borrowings under the revolving credit facility are
secured by virtually all of the Company's domestic assets other than real
properties and intellectual property. The Company is in negotiations for a
new $10 million unsecured credit arrangement.
MATURITIES:
----------
Required long-term debt principal repayments during the four years after 1995
are: $1,225,000 in each year from 1996-1998 and $600,000 in 1999.
INTEREST PAID:
----------
Interest paid during the years 1994, 1993, and 1992, was $1,879,000,
$3,358,000, and $3,636,000, respectively.
PLEDGED ASSETS:
----------
At January 1, 1995, collateral for long-term debt consisted of personal
property and equipment totaling $16,106,000 and other assets amounting to
$34,202,000.
RESTRICTION ON PAYMENT OF DIVIDENDS:
----------
Certain covenants of the Company's loan agreements restrict the payment of
dividends based upon a specified level of retained earnings. At January 1,
1995, the level of retained earnings was not sufficient to permit the
declaration or payment of dividends.
NOTE J-INCOME TAXES
----------
Consolidated income (loss) before income taxes (benefit) and cumulative
effect of accounting change consists of:
(Dollars in Thousands) 1994 1993 1992
Domestic $ 9,660 $ 5,980 $ (25,887)
Foreign 1,052 736 (2,118)
$ 10,712 $ 6,716 $ (28,005)
- 34 -
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<PAGE>
The income tax expense (benefit) before cumulative effect of accounting change
in the consolidated statements of operations consists of:
(Dollars in Thousands) Current Deferred Total
1994:
Federal $ 444 $ (207) $ 237
Foreign 234 47 281
State 60 -- 60
$ 738 $ (160) $ 578
1993:
Federal $ (90) $ -- $ (90)
Foreign (6) -- (6)
State 142 -- 142
$ 46 $ -- $ 46
1992:
Federal $ 203 $ (1,771) $(1,568)
Foreign 65 (148) (83)
State 71 -- 71
$ 339 $ (1,919) $(1,580)
The adoption of FAS 109 in 1993 (see Note A) resulted in a reduction to both
the Company's current deferred tax asset and its noncurrent deferred tax
liability of approximately $2.5 million as of January 4, 1993. The net
adjustment to the Company's consolidated balance sheet did not have a material
impact on the Company's consolidated statement of operations and retained
earnings.
Deferred tax assets and liabilities as of January 1, 1995 and January 2, 1994,
respectively, are comprised of the following:
(Dollars in Thousands) January 1, January 2,
1995 1994
Deferred Tax Assets:
Accruals Not Currently Deductible for Tax Purposes:
Accrued Employee Benefits and Compensation $ 1,991 $ 2,439
Accrued Postretirement Benefits 2,256 2,354
Other Accrued Liabilities and Reserves 1,528 982
Tax Loss Carryovers 1,538 4,760
Tax Credit Carryforwards 4,272 2,714
Investments in Joint Ventures 1,506 447
Accounts Receivable 955 985
Other 492 32
Total Deferred Tax Assets 14,538 14,713
Less Deferred Tax Asset Valuation Allowance 10,057 10,095
Deferred Tax Assets 4,481 4,618
Deferred Tax Liabilities:
Depreciation & Amortization 4,321 4,618
Total Deferred Tax Liabilities 4,321 4,618
Net Deferred Tax Asset $ 160 $ 0
- 35 -
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<PAGE>
Income tax expense (benefit) differs from the amount computed by applying the
U.S. statutory federal income tax rate to income (loss) before income tax
expense (benefit) and cumulative effect of accounting change. The reasons for
this difference are as follows:
(Dollars in Thousands) 1994 1993 1992
Tax expense (benefit) at statutory rate $ 3,749 $ 2,283 $ (9,522)
Losses producing no tax benefit -- 58 6,879
Tax loss carryovers (3,143) (707) (72)
Alternative minimum tax 154 -- --
Other net deductible temporary difference (230) (1,663) --
U.S. tax on foreign earnings -- -- 1,104
Other 48 75 31
Income tax expense (benefit) $ 578 $ 46 $ (1,580)
The deferred tax asset valuation allowance decreased by $38,000 and $1,663,000
during 1994 and 1993, respectively. The $1,663,000 decrease in 1993 related
primarily to the recognition for tax purposes in 1993 of certain accrued cost
reduction expenses which were recognized for financial reporting purposes in
prior years.
At January 1, 1995, the Company had a U.S. net operating loss carryforward of
approximately $1,034,000 which expires in the year 2008. The Company also has
foreign net operating loss carryforwards of approximately $2,584,000. Under
the applicable foreign tax laws, these net operating loss carryforwards have
an indefinite carryforward period. The utilization of U.S. and foreign net
operating loss carryforwards is dependent upon the future taxable earnings of
the Company's U.S. operations and of the applicable foreign subsidiary,
respectively.
At January 1, 1995, the Company had Alternative Minimum Tax Credit
carryforwards of approximately $1,667,000 and General Business Credit
carryforwards of approximately $2,331,000. The use of these tax credit
carryforwards is limited to future taxable earnings of the Company. The
Alternative Minimum Tax Credit carryforwards have an indefinite carryforward
period. The Company's General Business Credit carryforwards expire in annual
increments of between $100,000 and $300,000 beginning in 1998 and ending in
the year 2009.
Provision has not been made for U.S. or additional foreign taxes on
undistributed earnings of foreign subsidiaries. These earnings could become
subject to additional tax if they were remitted as dividends, if foreign
earnings were lent to the Company or a U.S. affiliate, or if the Company
should sell its stock in the subsidiaries. It is not practical to estimate
the amount of additional tax that might be payable on foreign earnings;
however, the Company believes that U.S. foreign tax credits would largely
eliminate any U.S. tax and offset any foreign tax.
Undistributed foreign earnings, before available tax credits and deductions,
amounted to $4,155,000 at January 1, 1995, $3,359,000 at January 2, 1994, and
$2,582,000 at January 3, 1993.
Income taxes paid (refunded) were $547,000, $(193,000), and $(352,000), in
1994, 1993, and 1992, respectively.
- 36 -
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<PAGE>
NOTE K-SHAREHOLDERS' EQUITY AND STOCK OPTIONS
----------
Changes in shareholders' equity are shown below:
(Dollars in Thousands)
Capital
Stock Additional Equity Retained
(Number Paid-In Translation Earnings
of Shares) Capital Adjustment (Deficit)
Balance at December 29, 1991 3,084,659 $ 19,840 $ 2,051 $ 27,007
Net loss for 1992 (32,666)
Cash dividends declared (93)
RESIP shares issued 15,990 277
Translation adjustment for 1992 (434)
Balance at January 3, 1993 3,100,649 20,117 1,617 (5,752)
Net income for 1993 6,670
Stock options exercised 38,655 785
RESIP shares issued 12,727 184
Conversion of convertible
subordinated notes into
capital stock 68,181 1,432
Stock issued to officers 6,000 125
Shares reacquired and cancelled (3,751) (85)
Translation adjustment for 1993 (424)
Balance at January 2, 1994 3,222,461 22,558 1,193 918
Net income for 1994 10,134
Stock options exercised 100,173 1,992
RESIP shares issued 13,249 385
Conversion of convertible
subordinated notes into
capital stock 204,545 4,295
Stock issued to directors and
officers 5,227 169
Shares reacquired and cancelled (23,020) (767)
Translation adjustment for 1994 725
Balance at January 1, 1995 3,522,635 $ 28,632 $ 1,918 $ 11,052
The dollar amount of the capital stock ($1 par value) is equal to the above
indicated number of shares.
In 1988 the Company adopted a stock option plan which permits the granting of
incentive stock options and nonqualified stock options to officers and other
key employees. Additionally, nonqualified stock options can be granted to
directors. Incentive stock option grants must be at a price no less than the
market value of the capital stock as of the date of grant. Nonqualified stock
options for officers and other key employees must be granted at a price equal
to at least 50% of the market value of the capital stock as of the date of
grant. To date, all options granted to officers and other key employees have
been at a price equal to the market value of the capital stock as of the date
of grant.
Under certain conditions, non-employee directors may receive nonqualified
stock options at a discounted exercise price in lieu of a corresponding amount
of directors' fees pursuant to the 1988 plan. Currently existing options
issued under the plan are exercisable within a period of ten years from the
date of grant. In 1990 the Company adopted another stock option plan which
only permits the granting of nonqualified stock options to key employees who
are not officers or directors. In other respects, the 1990 plan is
essentially the same as the one established in 1988.
In 1994, shareholders approved the 1994 Stock Compensation Plan which permits
the granting of incentive stock options and nonqualified stock options to
officers and other key employees. Additionally, the plan requires that the
retainer fee for non-employee directors be paid semiannually in shares of
Rogers Capital Stock with the number of shares of stock granted based on its
then fair market value. Stock
- 37 -
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<PAGE>
options also are granted to non-employee directors twice a year. The number
of shares in each six-month non-employee director stock option grant is
determined by dividing $6,750 (half of the annual director retainer fee at the
time the plan was established) by the fair market value of a share of the
Company's Capital Stock as of the date of grant. Nonqualified stock options
for officers and other key employees must be granted at a price equal to at
least 85% of the fair market value of the Capital Stock as of the date of
grant. To date, all options granted under this plan have been at a price
equal to the fair market value of the Capital Stock as of the date of grant.
Currently existing stock options issued under this plan are exercisable within
a period of ten years from date of grant.
Average
Number Option Aggregate
of Shares Price (000s)
Outstanding at December 29, 1991 380,882 $ 22.24 $ 8,470
Granted 105,468 17.44 1,839
Cancelled 91,930 22.87 2,102
Expired 1,500 16.25 24
Outstanding at January 3, 1993 392,920 20.83 8,183
Granted 205,468 17.98 3,695
Exercised 38,655 20.19 780
Cancelled 68,500 21.82 1,495
Expired 27,000 29.18 788
Outstanding at January 2, 1994 464,233 18.99 8,815
Granted 113,868 33.83 3,852
Exercised 100,173 20.67 2,070
Cancelled 8,513 17.57 150
Expired 9,300 28.88 269
Outstanding at January 1, 1995 460,115 $ 22.12 $10,178
In general, stock options granted to officers and employees become exercisable
in one-third increments beginning on the second anniversary of the grant date.
Non-employee director options granted under the 1988 plan become exercisable
on the first anniversary of the date of grant, while options to such
individuals granted pursuant to the 1994 plan become exercisable six months
and one day after the date of grant. The options outstanding on January 1,
1995, expire on various dates, beginning June 27, 1995, and ending on December
12, 2004. Options outstanding at January 1, 1995, included 135,043 which were
exercisable (167,524 at January 2, 1994).
Shares of capital stock reserved for possible future issuance are as follows:
January 1, January 2,
1995 1994
Options granted 460,115 464,233
Options as yet ungranted 311,014 410,014
Stock to be issued in lieu of deferred
directors' fees 2,945 --
Employee Savings and Investment Plans 43,642 56,891
Stock purchase warrant* 100,000 100,000
Shareholders' Rights Plan 4,440,351 4,500,418
Shares for conversion of convertible
subordinated notes -- 246,819
Total 5,358,067 5,778,375
* This warrant was granted in connection with a research and development
arrangement and is convertible at $27 per share during the period from
June 30, 1993 through June 29, 1996.
- 38 -
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<PAGE>
NOTE L-LEASES
----------
The Company's principal noncancellable operating lease obligations are for
buildings and vehicles. The leases generally provide that the Company pay
maintenance costs. The lease periods range from one to five years and include
purchase or renewal provisions at the Company's option. The Company also has
leases that are cancellable with minimal notice. Lease expense was $1,016,000
in 1994, $1,469,000 in 1993, and $1,895,000 in 1992.
Future minimum lease payments under noncancellable operating leases at
January 1, 1995, aggregate $2,586,000. Of this amount, annual minimum
payments are $698,000, $477,000, $363,000, $323,000, and $327,000, for years
1995 through 1999, respectively.
NOTE M-FOREIGN OPERATIONS
----------
The net assets of wholly-owned foreign subsidiaries were $8,221,000 at
January 1, 1995, and $6,941,000 at January 2, 1994. Net income (loss) of
these foreign subsidiaries was $796,000 in 1994, $820,000 in 1993, and
$(1,961,000) in 1992, including net currency transaction gains (losses) of
$(3,000) in 1994, $(38,000) in 1993, and $225,000 in 1992.
NOTE N-CONTINGENCIES
----------
The Company 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 Company 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 govenmental authorities, and the amount of liability,
if any, of the Company alone or in relation to that of any other potentially
responsible parties. The Company 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 Company'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 know to it, the Company does not believe that the outcome of these
precedings 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 certain PCB contamination in the soil beneath a small section of cement
flooring at its East Woodstock, Connecticut facility. The Company is
developing a remediation plan with CT DEP. On the basis of estimates prepared
by our environmental engineers and consultants, the Company 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 impact on earnings.
In addition to the environmental issues, the nature and scope of the Company's
business bring it into regular contact with the general public and a variety
of businesses and government agencies. Such activities inherently subject the
Company to the possibility of litigation which is defended and handled in the
ordinary course of business. The Company has established accruals for matters
for which management considers a loss to be probable and reasonably estimable.
It is the opinion of management that facts known at the present time do not
indicate that such litigation, after taking into account insurance coverage
and the aforementioned accruals, will have a material adverse effect on the
financial position of the Company.
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<PAGE>
NOTE O-BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION
----------
The presentation of business segment information for the years 1992-1994 is
generally reflective of the Company's current internal reporting structure and
has been divided into two segments, Polymer Products and Electronic Products.
Polymer Products consists of high performance elastomer materials and
components, and moldable composites. Equity from Rogers INOAC Corporation and
Durel Corporation is also included in income for Polymer Products. Electronic
Products are comprised primarily of high frequency circuits and materials and
flexible circuit materials. Sales figures for 1992 also include
interconnection circuits and components; these product lines were sold as part
of the 1993 sale of the flexible interconnections business.
The Company markets its products throughout the United States and in foreign
markets directly and through distributors and agents. In 1994, approximately
63% of total sales were to the electronics industry. Sales to one
unaffiliated customer, consisting of many different products, accounted for
approximately 15% of sales in 1992. Sales to this customer were well under
10% after 1992 due to the disposition of the flexible interconnections
business.
At January 1, 1995, the electronics industry accounted for approximately 61%
of total accounts receivable due from customers. Accounts receivable due from
customers located within the United States accounted for 73% of the total
accounts receivable owed to the Company at the end of 1994. The Company
performs periodic credit evaluations of its customers' financial condition and
generally does not require collateral. Receivables are generally due within
30 days. Credit losses relating to customers have been minimal and have been
within management's expectations.
The principal operations of the Company are located in the United States and
Europe. The Company formerly owned operations in Mexico related to the
flexible interconnections business and the domestic power distribution
business. Since these businesses were divested in 1993 and 1994,
respectively, no assets remain in Mexico at year-end 1994.
Inter-segment and inter-area sales, which are generally priced with reference
to costs or prevailing market prices, are not material in relation to
consolidated net sales and have been eliminated from the sales data reported
on the following page.
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<PAGE>
BUSINESS SEGMENT INFORMATION
(Dollars in Thousands) 1994 1993 1992(a)
Net sales:
Polymer Products $ 71,919 $ 66,238 $ 62,396
Electronic Products 61,947 56,930 109,965
Total $ 133,866 $ 123,168 $ 172,361
Income (loss) before income taxes
(benefit) and cumulative effect of
accounting change:
Polymer Products $ 5,981 $ 8,755 $ 5,136
Electronic Products 5,609 1,044 (28,069)
Unallocated corporate expenses
(mainly interest expense - net) (878) (3,083) (5,072)
Total $ 10,712 $ 6,716 $ (28,005)
Capital expenditures:
Polymer Products $ 3,225 $ 6,534 $ 2,772
Electronic Products 1,423 2,048 6,289
Total $ 4,648 $ 8,582 $ 9,061
Depreciation:
Polymer Products $ 2,561 $ 2,224 $ 2,753
Electronic Products 4,008 4,350 7,856
Total $ 6,569 $ 6,574 $ 10,609
Assets:
Polymer Products $ 39,754 $ 36,717 $ 35,479
Electronic Products 34,692 38,767 50,527
Unallocated corporate assets
(mainly cash and cash equivalents) 14,997 6,353 11,740
Total $ 89,443 $ 81,837 $ 97,746
GEOGRAPHIC INFORMATION
(Dollars in Thousands) North America Europe Total
1994:
Net sales $ 116,481 $ 17,385 $ 133,866
Income (loss) before income taxes 9,660 1,052 10,712
Assets 79,022 10,421 89,443
1993:
Net sales $ 108,324 $ 14,844 $ 123,168
Income (loss) before income taxes
(benefit) 5,980 736 6,716
Assets 72,046 9,791 81,837
1992:
Net sales $ 157,142 $ 15,219 $ 172,361
Loss before income tax benefit and
cumulative effect of accounting
change (b) (25,887) (2,118) (28,005)
Assets 87,345 10,401 97,746
(a) Polymer Electronic
Products Products Total
Includes allocations of:
Cumulative effect of accounting
change $ 2,900 $ 3,300 $ 6,200
Cost reduction charges 1,800 24,800 26,600
Undistributed earnings of previously
owned unconsolidated joint venture -- 800 800
Investment in previously owned
unconsolidated joint venture -- 3,000 3,000
(b) North America Europe Total
Includes allocations of:
Cost reduction charges $ 25,100 $ 1,500 $ 26,600
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<PAGE>
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
----------
Board of Directors and Shareholders
Rogers Corporation
----------
We have audited the accompanying consolidated balance sheets of Rogers
Corporation and subsidiaries as of January 1, 1995 and January 2, 1994, and
the related consolidated statements of operations and retained earnings
(deficit) and cash flows for each of the three fiscal years in the period
ended January 1, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Rogers
Corporation and subsidiaries at January 1, 1995 and January 2, 1994, and the
consolidated results of their operations and their cash flows for each of the
three fiscal years in the period ended January 1, 1995, in conformity with
generally accepted accounting principles.
As discussed in Note G to the financial statements, in 1992 the Company
changed its method of accounting for postretirement benefits other than
pensions.
ERNST & YOUNG LLP
Providence, Rhode Island
February 7, 1995
- 42 -
F-72
<PAGE>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
----------
(Dollars in Thousands, Except Per Share Amounts)
Net Manufacturing Net Net Income
Quarter Sales Profit* Income Per Share
1994 Fourth $ 32,261 $ 10,274 $ 2,780 $ .74
Third 32,605 9,819 2,696 .73
Second 34,995 9,997 2,389 .70
First 34,005 10,126 2,269 .67
1993 Fourth $ 29,138 $ 8,261 $ 1,705 $ .52
Third 30,312 9,214 1,712 .53
Second 30,939 9,005 1,612 .51
First 32,779 10,286 1,641 .53
* Certain reclassifications were made for 1993 and the first three quarters
of 1994 to report results consistent with 1994 reporting practice.
CAPITAL STOCK MARKET PRICES
----------
The Company's capital stock is traded on the American and Pacific Stock
Exchanges. The following table sets forth the composite high and low prices
during each quarter of the last two years on a per share basis.
At February 21, 1995, there were 1,246 shareholders of record.
1994 1993
Quarter High Low High Low
Fourth $ 51 $ 33 $ 29 $ 24-3/4
Third 34-5/8 31-1/4 27 19-3/8
Second 34-1/4 25-5/8 23-3/8 16
First 29-7/8 24-1/2 18-7/8 12-5/8
- 43 -
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
CONSOLIDATED SALES AND OPERATIONS - 1994 TO 1993
Net sales were $133.9 million for 1994 compared with $123.2 million for
1993. Sales growth, ranging from quite modest to substantial, was attained
in 1994 in all but one of the Company's divisions. The most substantial
increases were in flexible circuit materials for computer and peripheral
applications; elastomeric components for printers, copiers, and automotive
needs; moldable composites for electrical and transportation industry
applications; high frequency circuit materials for commercial wireless
communications uses; and, power distribution components for European
electronics applications. These sales gains were attributable mainly to
increased unit volumes; price increases and mix did not have a material
effect. The only business unit that had decreased sales was the Company's
small microwave circuit board manufacturing operation, which converted from
mainly military to commercial products during the year.
In 1994, net income was $10.1 million, or $2.84 per share, compared with
$6.7 million, or $2.09 per share in 1993. This improvement was mainly the
result of increased sales, the positive impact related to divestitures,
greater contribution from the Company's 50% owned joint ventures, and lower
net interest expense.
The Company concluded the sale of its U.S. power distribution business to
Methode Electronics, Inc., during the second quarter of 1994. In addition
to an initial cash payment, the Company will receive royalties on sales for
five years. The building where the business was operating, located in
Mesa, Arizona, is being offered for sale. The remaining equipment of this
business was sold separately. Also in the third quarter of 1994, a small
polyimide components business was sold to E.I. du Pont de Nemours and
Company for a modest gain.
Durel Corporation, the Company's 50% owned joint venture with 3M, had a
sales gain of 62% in 1994. This growth came mainly from applications in
watches, automobiles, and hand-held wireless communication devices. A new
77,000 square foot plant is being constructed in Chandler, Arizona, to help
meet increased demand. Beginning in the first quarter of 1995, the
Company's 50% share of Durel's profits will be included in other income.
Profits were not included through 1994 because of the accumulated losses
during the initial years of Durel's operations.
Rogers INOAC Corporation (RIC), the Company's 50% owned joint venture with
INOAC Corporation of Japan, achieved record sales in 1994. In local
currency, this high performance elastomer joint venture in Japan grew 27%
in 1994, despite the relatively weak economy in Japan, and RIC's profits
increased 34% in 1994 compared with 1993. In the second quarter of 1994,
RIC started up a new PORON materials production line, more than doubling
capacity for the Asian market.
The Company's manufacturing profit was 30% of sales in both 1994 and 1993.
Improved profit margins in several operations in 1994 were offset by the
changes required to convert from mainly military applications to commercial
products in the microwave circuit board manufacturing operation, and by the
impact of the start-up of our new PORON production line in the United
States.
Beginning with 1994, certain new product and process development expenses,
previously included as cost of sales, have been reclassified as research
and development expense. Prior year data has been restated accordingly.
This reclassification has no effect on net income for any period. Research
and development expense totaled $9.2 million in 1994 compared with $9.5
million in 1993, or 7% and 8% of sales, respectively. Significant product
and process development activities in 1994 included: process and product
improvements which further reduce the cost of the RO3000 family of
composite fluoropolymer laminates; development of the RO4000 family of low
loss, controlled dielectric constant thermoset composite laminates planned
for market introduction in 1995; completion of a new PORON casting machine
of improved design which produces wider product at faster rates; improved
ENDUR fuser roll coating capability and a broader range of ENDUR LE
conductive formulations; continued development of faster-curing moldable
phenolic composite compounds; and the introduction of recycle capability
for MPC phenolic cured product.
Selling and administrative expense as a percentage of net sales was
consistent at 15% in both 1994 and 1993.
Net interest expense decreased 56% from 1993 to 1994, primarily because of
lower borrowing levels. At current borrowing levels, management expects
interest expense will continue to decline in 1995.
- 44 -
F-74
<PAGE>
Other income increased from $0.8 million in 1993 to $1.6 million in 1994.
This increase reflects gains on disposition of assets and positive
contribution from the Company's 50% owned joint ventures, offset partially
by estimated costs to remove and dispose of soil contaminated by
polychlorinated biphenyls (PCB) at the Company's East Woodstock,
Connecticut, facility as described below.
The Company 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 Company 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 Company alone or
in relation to that of any other potentially responsible parties. The
Company 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 Company'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 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 certain PCB contamination in the soil beneath a small section of
cement flooring at its East Woodstock, Connecticut facility. The Company is
developing a remediation plan with CT DEP. On the basis of estimates
prepared by our environmental engineers and consultants, the Company
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 January 1, 1995, other accrued liabilities were greater than January 2,
1994, primarily as a result of reserves established for the PCB clean-up.
The Company has not had any material recurring costs and capital
expenditures relating to environmental matters, except as specifically
described in the preceding statements.
CONSOLIDATED SALES AND OPERATIONS - 1993 TO 1992
1993 sales were $123.2 million compared with $172.4 million for 1992. The
decline was related primarily to divestiture of the flexible
interconnections business which was completed June 28, 1993. Led by a
substantial increase in high performance elastomer products, sales of the
Company's core specialty polymer composite materials and components grew
10% in 1993. These gains were offset partially by decreases in domestic
power distribution component sales which dropped by almost $10.0 million
during the previous two years. Higher sales of PORON materials
necessitated a production line expansion in the U.S. which more than
doubled capacity. Construction of a 10,000 square foot expansion to the
Willimantic Division to support the continuing growth in sales of ENDUR
components for office equipment was started in 1993 and completed in 1994.
Net income in 1993 was $6.7 million, or $2.09 per share, compared with a
net loss of $32.7 million in 1992. The loss in 1992 included a fourth
quarter restructuring charge of $26.6 million and an additional $6.6
million charge related to the adoption of Statement of Financial Accounting
Standards No. 106 (FAS 106), "Employers' Accounting for Postretirement
Benefits Other than Pensions." The financial results in 1993 excluded the
sales and earnings of the divested flexible interconnections business for
the full year. This divestiture, coupled with improved sales and
performance in the Company's continuing businesses, was the major reason
for the higher profits in 1993.
Manufacturing profit, after the reclassification of certain new product and
process development expenditures to research and development expense, was
30% of net sales in 1993, compared with 21% in 1992. This increase
resulted primarily from divestiture of the flexible interconnections
business, which operated with low margins and at a substantial loss in
1992, and from improved profit margins in continuing businesses.
Research and development expense, as reclassified and commented upon
elsewhere, decreased 24% from 1992, and was approximately 8% of sales in
1993 and 7% in 1992. Significant product and process developments during
1993 included: lower cost processing of composite fluoropolymer laminates
which resulted in the introduction of RO3003 for the commercial microwave
market; the development of other low cost laminates designed for the
commercial microwave market; improved process equipment for improved ENDUR-
C LE conductive elastomer materials; PORON S-2000 silicone products using
proprietary process technology; and faster-curing moldable phenolic
composite compounds.
- 45 -
F-75
<PAGE>
Selling and administrative expense decreased 15% from 1992 to 1993.
However, because of much lower total sales, these expenses represented 15%
of sales in 1993 compared with 13% in 1992.
Net interest expense in 1993 was 15% lower than in 1992 primarily because
of reduced borrowing. Proceeds from the sale of the flexible
interconnections business, combined with improved generation of cash from
operations, resulted in debt reductions from $35.4 million in 1992 to $17.3
million in 1993.
In the first quarter of 1993, the Company implemented the provisions of
Statement of Financial Accounting Standards No. 109 (FAS 109) "Accounting
for Income Taxes." The adjustment required to record the adoption of FAS
109 did not have a material impact on the Company's consolidated statement
of operations and retained earnings. As permitted under FAS 109, the
Company elected not to restate prior years' financial statements.
RESTRUCTURING/COST REDUCTION CHARGES
During 1992, it was decided that the Company's strategy should be one of
building further on its existing specialty polymer composite materials
businesses. Actions were taken during 1992 and early 1993 to begin to
implement this strategy. The major element of this strategy was to
withdraw from the business of producing and selling custom designed
flexible circuits and multimetal layer tape automated bonding components.
As of the end of 1992, the Company shut down the Micro Interconnections
unit which produced the multimetal layer tape automated bonding components,
and a letter of intent was signed for the divestiture of the Flexible
Interconnections Division (FID), the Company's largest division, to a
limited partnership managed by Ampersand Ventures, a venture capital firm
based in Wellesley, Massachusetts. The divestiture, which included the
Company's 50% interest in a related joint venture, Smartflex Systems, was
completed in June 1993. The costs associated with these two actions
amounted to $22.4 million and consisted primarily of a writedown of assets,
employee severance at both the divisional and corporate staff levels,
professional fees, and other related expenses. These represented the major
components of the 1992 restructuring charge.
In addition, several other steps were taken to set the new strategic
direction of the Company and to improve its operations and future
profitability. These steps added $4.2 million to the charge and included
costs associated with various asset writedowns, streamlining the U.S. sales
group, consolidating the European sales and administrative functions,
restructuring the Power Distribution Division, and the reduction and
consolidation of certain corporate functions in the United States.
During 1994, 1993 and 1992, $1.3 million, $19.3 million, and $6.2 million,
respectively, was charged against these reserves and the Company believes
the net balance in the accrued cost reduction reserve of $.9 million,
coupled with the valuation reserve in assets held for sale of $1.6 million
at January 1, 1995, are adequate for the completion of the restructuring
actions. The majority of this remaining accrued reserve relates to pension
liabilities resulting from 1991 work force reductions.
When the disposition of assets held for sale and the payment of the cost
reduction liabilities (as both appear on our January 1, 1995 Balance Sheet)
are completed, it is expected that there will be a net increase in cash of
approximately $6.0 million.
SEGMENT SALES AND OPERATIONS
Sales in the Polymer Products business segment increased 9%, 6%, and 10% in
1994, 1993 and 1992, respectively. Two divisions in this business segment,
Poron Materials and Willimantic, achieved record sales in all three years
from 1992 - 1994. Poron Materials' sales growth was reduced by the impact
of customer inventory reductions primarily in the second quarter of 1994.
The Willimantic Division sales gain was led by ENDUR-LE conductive
elastomer components and by NITROPHYL floats used in the automotive
industry. Additionally, the Molding Materials Division achieved solid
growth based on strong automotive production and an increasing share of the
electric motor commutator insulator market.
The Polymer Products business segment generated profits of $6.0 million in
1994, $8.8 million in 1993, and $6.9 million in 1992, before the allocation
of cost reduction charges of $1.8 million in 1992. The decrease in 1994
was attributable primarily to higher costs related to the Poron Materials
capacity expansion and provisions for the removal and disposal of PCB
contaminated soil.
Electronic Products business segment revenues increased 9% in 1994. Sales
of flexible circuit materials were up significantly over last year. The
gain was attributable largely to sales of flexible circuit materials to the
laptop computer and hard disk drive segments of the computer peripherals
market and sales of high frequency materials for commercial applications.
This sales growth was offset by decreases in the Company's microwave
circuit board manufacturing unit. This unit
- 46 -
F-76
<PAGE>
is in transition from a predominantly military to a predominantly
industrial customer base. Also, only six months of Power Distribution
Division sales were included in 1994. Electronic Products business segment
revenues decreased 48% in 1993. This decrease was primarily attributable
to the divestiture of the flexible interconnections business. Excluding
these sales from 1992, the business segment experienced a 3% sales
increase in 1993.
European sales stated in local currencies, net of the 1991 divestiture of
the keyboard business, increased 14% in 1994 and 3% in 1993, and decreased
1% in 1992. Translated into U.S. currency, these sales increased 17% in
1994 and declined 2% and 4% in 1993 and 1992, respectively. The increase
in 1994 in both local currencies and U.S. dollars is attributable to sales
for older applications in mainframe computers where lower sales are
expected in 1995, and new applications in power distribution devices for
cellular telephone base stations, and large power equipment where further
sales gains are anticipated.
The Electronic Products business segment showed operating income of $5.6
million in 1994 and $1.0 million in 1993. These profits followed losses of
$3.3 million in 1992, before the allocation of cost reduction charges of
$24.8 million. The better operating income in both 1994 and 1993 was
caused mainly by the higher sales mentioned earlier and the elimination of
losses of divested businesses, as well as the positive impact from sale of
assets in 1994.
BACKLOG
The Company's backlog of firm orders was $22.9 million at January 1, 1995,
$19.2 million at January 2, 1994, and $19.0 million at January 3, 1993
(excluding orders of the Company's divested businesses). The increase in
1994 relates primarily to a generally higher level of sales and a few key
customers of the polymer products business segment committing to firm
orders extending well into 1995.
SOURCES OF LIQUIDITY AND CAPITAL
Cash provided by the Company's operating activities amounted to $14.1
million in 1994, $11.9 million in 1993, and $5.8 million in 1992. Capital
expenditures in 1994 were $4.7 million, compared with $8.6 million and $9.1
million in 1993 and 1992, respectively. The higher level of capital
spending in 1993 resulted from the two plant expansions for expanded
capacity in the Poron Materials and Willimantic Divisions. Capital spending
in 1992 included spending for divested flexible interconnections business
activities.
Capital spending in 1994 and 1993 was exceeded by cash generated from the
Company's operating activities. Spending in 1992 was financed primarily by
cash generated from the Company's operating activities and proceeds from
the sale of a business. For 1995, capital spending is expected to be
somewhat higher than 1994 and will focus on new process equipment, cost
reductions and quality improvements. It is anticipated that this spending
will be financed with internally generated funds.
During 1994 the Company reduced its existing debt by $9.4 million through
cash payments and conversion of the convertible subordinated note into
capital stock. The Company can borrow up to a maximum of $15.0 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.
Repayment of the revolving credit facility is 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 for most of 1994 and none
at year-end. European operations have unused lines of credit with local
banks that permit borrowing in various currencies. There are no significant
restrictions on the remittance of funds by the Company's foreign
subsidiaries to the United States.
Included in the provisions of the Company's long-term loan agreements are
restrictions on the Company and its subsidiaries with respect to additional
borrowings, loans to others except for subsidiaries, payment of dividends,
transactions in capital stock, asset acquisitions and dispositions, and
lease commitments. These agreements also impose financial covenants
requiring the Company to maintain certain levels of working capital and net
worth, and specified leverage ratios.
Management believes that in the near term, internally generated funds plus
long-term and short-term financing will be sufficient to meet the needs of
the business. The Company continually reviews and assesses its lending
relationships and plans to replace its existing secured revolving credit
agreement with an unsecured arrangement.
DIVIDEND POLICY
In 1992, the Board of Directors voted to discontinue cash dividends. At
present, the Company expects to maintain a policy of emphasizing longer-
term growth of capital rather than immediate dividend income.
- 47 -
F-77
<PAGE>
PAGE F-78 IS THE FINANCIAL DATA SCHEDULE, WHICH IS EXHIBIT 27.
<PAGE>
EXHIBIT 29A
Financial Statements
and Other Financial Information
(Unaudited)
Rogers Inoac Corporation
October 31, 1994
F-79
<PAGE>
Rogers Inoac Corporation
Financial Statements
and Other Financial Information
October 31, 1994
Contents
Financial Statements:
Accountants' Compilation Report 1
Balance Sheets at October 31, 1994 (Unaudited),
and 1993 2
Statements of Income and Retained Earnings
for the years ended October 31, 1994 (Unaudited),
1993 and 1992 4
Statements of Cash Flows
for the years ended October 31, 1994 (Unaudited),
1993 and 1992 5
Notes to Financial Statements 6
Schedule
number
--------
Financial Statement Schedules:
Valuation and Qualifying Accounts
for the years ended October 31, 1994 (Unaudited),
1993 and 1992 II
Short-Term Borrowings
for the years ended October 31, 1994 (Unaudited),
1993 and 1992 III
For the years ended October 31, 1993 and 1992 all other
schedules have been omitted, as permitted by the rules and
regulations of the Securities and Exchange Commission, as
the required information is presented either in the
financial statements or the notes thereto, or as the
schedule is not applicable.
F-80
<PAGE>
Accountants' Compilation Report
The Board of Directors and Shareholders
Rogers Inoac Corporation
We have compiled the accompanying balance sheet of Rogers
Inoac Corporation as of October 31, 1994, the related
statements of income and retained earnings and cash flows
for the year then ended and the financial statement
schedules listed in the accompanying index, in accordance
with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified
Public Accountants.
A compilation is limited to presenting in the form of
financial statements information that is the representation
of management. We have not audited or reviewed the
accompanying financial statements and, accordingly, do not
express an opinion or any other form of assurance on them.
The financial statements for the years ended October 31,
1993 and 1992 were audited by us and we expressed an
unqualified opinion on them in our report dated December 22,
1993, but we have not performed any auditing procedures
subsequent to that date.
ERNST & YOUNG
Tokyo, Japan
December 20, 1994
1
F-81
<PAGE>
Rogers Inoac Corporation
Balance Sheets
October 31,
1994 1993
-----------------------
(Thousands of yen)
(Unaudited)
Assets
Current assets:
Cash and cash equivalents 418,261 534,356
Receivables:
Trade receivables 37,671 4,385
Due from affiliates (Note 4) 452,468 343,101
-----------------------
490,139 347,486
Less allowance for doubtful accounts (5,135) (2,000)
-----------------------
485,004 345,486
Inventories:
Merchandise and finished goods 98,691 64,037
Work in process 57,115 48,941
Raw materials 108,827 79,607
-----------------------
264,633 192,585
Deferred income taxes (Note 3) 14,319 7,574
Prepaid expenses and other current
assets 2,329 2,574
-----------------------
Total current assets 1,184,546 1,082,575
Plant and equipment:
Buildings and improvements 16,991 9,783
Machinery and equipment 534,276 183,920
Vehicles 4,006 4,006
Furniture and fixtures 34,452 29,171
Construction in progress 2,163 39,571
-----------------------
591,888 266,451
Less accumulated depreciation (236,885) (140,702)
-----------------------
355,003 125,749
Other assets 19,049 1,241
-----------------------
Total assets 1,558,598 1,209,565
=======================
2
F-82
<PAGE>
October 31,
1994 1993
(Thousands of yen)
(Unaudited)
-----------------------
Liabilities and shareholders' equity
Current liabilities:
Trade payables 98,875 69,495
Due to affiliates (Note 4) 286,431 235,780
Income taxes payable (Note 3) 127,136 87,925
Accrued expenses and other liabilities 28,857 31,305
-----------------------
Total current liabilities 541,299 424,505
Deferred income taxes (Note 3) 27,150 --
Shareholders' equity:
Common stock, 50,000 yen par value:
Authorized - 3,200 shares;
Issued and outstanding - 880 shares 44,000 44,000
Legal reserve (Note 7) 11,000 11,000
Retained earnings (Notes 2 and 7) 935,149 730,060
-----------------------
Total shareholders' equity 990,149 785,060
Commitments (Note 8)
Total liabilities and shareholders'
equity 1,558,598 1,209,565
=======================
See Accountant's Compilation Report and Notes to Financial Statements.
3
F-83
<PAGE>
Rogers Inoac Corporation
Statements of Income and Retained Earnings
Year ended October 31,
1994 1993 1992
----------------------------------
(Thousands of yen)
(Unaudited)
Net sales (Note 4) 4,378,303 3,568,764 3,590,199
Interest income (Note 4) 10,806 16,499 11,037
Other income 5,195 4,542 9,308
----------------------------------
4,394,304 3,589,805 3,610,544
Costs and expenses (Notes 4 and 6):
Cost of products sold 3,538,280 2,895,112 2,857,145
Selling, general and
administrative expenses 400,935 315,057 321,212
Interest expense (Note 5) -- 1,232 101
Other -- -- 5
----------------------------------
3,939,215 3,211,401 3,178,463
----------------------------------
Income before income taxes 455,089 378,404 432,081
Income taxes (Note 3):
Current 218,595 192,571 242,400
Deferred (credit) 20,405 12,192 (7,023)
----------------------------------
239,000 204,763 235,377
----------------------------------
Net income (Note 2) 216,089 173,641 196,704
Retained earnings at beginning of
period (Note 2) 730,060 567,419 384,715
Cash dividends (11,000) (11,000) (11,000)
Transfer to legal reserve -- -- (3,000)
----------------------------------
Retained earnings at end of period
(Notes 2 and 7) 935,149 730,060 567,419
==================================
Amounts per share (Note 9):
Net income 245.56 197.32 223.53
Cash dividends 12.50 12.50 12.50
See Accountants' Compilation Report and Notes to Financial Statements.
4
F-84
<PAGE>
Rogers Inoac Corporation
Statements of Cash Flows
Year ended October 31,
1994 1993 1992
----------------------------------
(Thousands of yen)
(Unaudited)
Operating activities
Net income 216,089 173,641 196,704
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 98,565 31,571 30,400
Provision for deferred income
taxes 20,405 12,192 (7,023)
Changes in operating assets and
liabilities:
Receivables (139,518) 33,954 (74,946)
Inventories (72,048) 33,798 (12,295)
Prepaid expenses and other
current assets 245 (2,039) (125)
Trade payables and due to
affiliates 80,031 (36,025) 52,273
Accrued expenses and
other liabilities 36,763 (47,594) 25,343
----------------------------------
Net cash provided by operating
activities 240,532 199,498 210,331
Investing activities
Purchases of plant and equipment (325,438) (57,829) (48,360)
Increase in other assets (20,189) (144) --
----------------------------------
Net cash used in investing
activities (345,627) (57,973) (48,360)
Financing activities
Repayment of long-term debt -- -- (3,350)
Dividends paid (11,000) (11,000) (11,000)
----------------------------------
Net cash used in financing
activities (11,000) (11,000) (14,350)
----------------------------------
(Decrease) increase in cash and
cash equivalents (116,095) 130,525 147,621
Cash and cash equivalents at
beginning of year 534,356 403,831 256,210
----------------------------------
Cash and cash equivalents at
end of year 418,261 534,356 403,831
==================================
See Acountants' Compilation Report and Notes to Financial Statements.
5
F-85
<PAGE>
Rogers Inoac Corporation
Notes to Financial Statements
October 31, 1994
(Data with respect to the year ended October 31, 1994 are unaudited.)
1. Significant Account Policies
Basis of Financial Statements
The Company was incorporated under the Commercial Code of Japan in
January 1984, and is owned 50% by Rogers Corporation (a U.S. corporation)
and 50% by Inoac Corporation (a Japanese corporation).
The Company maintains its official accounting records and prepares its
financial statements for domestic purposes in yen in accordance with
Japanese accounting practices. The accompanying financial statements have
been prepared in conformity with accounting principles generally accepted
in the United States and differ from those issued for domestic purposes in
Japan. Accordingly, the financial statements reflect adjustments not
recorded in the Company's official accounting records. These adjustments
are explained in Note 2 to the financial statements.
Cash and Cash Equivalents
For the purpose of the statements of cash flows, the Company considers all
highly liquid debt instruments with a maturity of three months or less when
purchased to be cash equivalents.
Inventories
Inventories are valued at the lower of cost (first-in, first-out method) or
market.
Plant and Equipment
Plant and equipment is stated on the basis of cost. Depreciation is
computed by the declining-balance method over the estimated useful lives
of the respective assets.
See Accountant's Compilation Report.
6
F-86
<PAGE>
Rogers Inoac Corporation
Notes to Financial Statements (continued)
1. Significant Account Policies (continued)
Income Taxes
The Company computes and records current income taxes payable based upon
its determination of taxable income which is different from pretax
accounting income. The differences relate principally to the adjustments
required to conform the accompanying financial statements to accounting
principles generally accepted in the United States. Deferred income taxes
arising from temporary differences are not recognized in the official
accounting records; however, they are included in the adjustments explained
in Note 2 to the financial statements.
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," in the year ended October 31, 1993. The
effect of this change on net income in the years presented is not material.
2. Adjustments Not Reflected in the Official Accounting Records
The following adjustments, not reflected in the official accounting records,
have been made to conform the Company's Japanese yen-based financial
statements to accounting principles generally accepted in the United States
(U.S. GAAP):
Retained Retained
earnings at Net earnings at
beginning of Appropri- income for end of
year ations the year year
------------------------------------------------
(Thousands of Yen)
(Unaudited)
Year ended October 31, 1994:
As recorded in the official
accounting records 609,821 16,000 175,079 768,900
Japanese GAAP adjustment:
Income tax provision 117,000 -- 18,000 135,000
------------------------------------------------
Per Japanese GAAP 726,821 16,000 193,079 903,900
U.S. GAAP adjustments:
Accrued compensated
absences (12,315) -- (4,508) (16,823)
Accrued directors' bonuses (5,000) (5,000) (5,000) (5,000)
Prepaid expenses 12,980 -- -- 12,980
Depreciation -- -- 52,923 52,923
Deferred income taxes 7,574 -- (20,405) (12,831)
-------------------------------------------------
3,239 (5,000) 23,010 31,249
-------------------------------------------------
As adjusted to U.S. GAAP 730,060 11,000 216,089 935,149
=================================================
See Accountants' Compilation Report.
7
F-87
<PAGE>
Rogers Inoac Corporation
Notes to Financial Statements (continued)
3. Income Taxes
Income taxes include corporation, enterprise, and inhabitants' taxes which,
in the aggregate, resulted in a statutory tax rate of approximately 51.3%
for 1994, and 52.3% for 1993 and 1992. The Company made income tax payments
of 179,384 thousand yen (unaudited), 243,630 thousand yen and 209,855
thousand yen during 1994, 1993 and 1992, respectively.
For the years ended October 31, 1994, 1993 and 1992, the differences
between the statutory income tax rates and the effective tax rates are
reconciled as follows:
Year ended October 31,
1994 1993 1992
----------------------------
(Thousands of yen)
(Unaudited)
Statutory income tax rate 51.3% 52.3% 52.3%
Tax effect of:
Expenses not deductible for tax purposes 1.2 1.0 0.9
Other 0.0 0.8 1.3
----------------------------
Effective tax rate 52.5% 54.1% 54.5%
============================
Total deferred tax assets and liabilities as of October 31, 1994 and 1993
were as follows:
1994 1993
-------------------
(Thousands of yen)
(Unaudited)
Deferred tax assets 20,978 14,363
Deferred tax liabilities (33,809) (6,789)
Temporary differences at October 31, 1994 and 1993 mainly consisted of
accrued expenses that gave rise to deferred tax assets, and prepaid
expenses and depreciation that gave rise to deferred tax liabilities.
The total tax effect of these temporary differences is recognized in the
statements of income and retained earnings.
See Accountant's Compilation Report.
8
F-88
<PAGE>
Rogers Inoac Corporation
Notes to Financial Statements (continued)
4. Transactions with Affiliates
A substantial portion of the Company's business is conducted through its
Japanese parent, Inoac Corporation ("Inoac") and its subsidiaries, which
purchase the Company's products for resale. Inoac also provided certain
services to the Company for which it charged a management service fee.
Balances due from and due to affiliates at October 31, 1994, and 1993,
and transactions with affiliates for the years ended October 31, 1994,
1993 and 1992 are summarized as follows:
October 31,
1994 1993
----------------------
(Thousands of yen)
(Unaudited)
Due from:
Inoac and its subsidiaries and affiliates 452,468 343,101
======================
Due to:
Inoac and its subsidiaries and affiliates 283,843 234,122
Rogers Corporation 2,588 1,658
----------------------
286,431 235,780
======================
Year ended October 31,
1994 1993 1992
-----------------------------------
(Thousands of yen)
(Unaudited)
Inoac and its subsidiaries and affiliates:
Sales to 4,178,453 3,450,295 3,517,731
Purchases from 1,793,814 1,423,172 1,419,962
Management service fee 56,122 53,591 59,993
Plant and office rent 74,651 49,501 47,736
Purchases of equipment 323,176 5,611 0
Subcontractors' fee 415,215 352,746 423,080
Rogers Corporation:
Commission income 4,923 819 4,113
Sales commission expense 9,032 7,340 9,496
Interest income -- 7,079 0
See Accountants' Compilation Report.
9
F-89
<PAGE>
Rogers Inoac Corporation
Notes to Financial Statements (continued)
5. Interest Paid
Interest paid for the years ended October 31, 1993 and 1992 amounted to
1,232 thousand yen and 101 thousand yen, respectively.
6. Pension Cost
All employees of the Company are seconded from its Japanese parent, Inoac,
and are covered by Inoac's pension plan and Inoac bears the ultimate pension
obligation for these employees. The Company reimburses Inoac for the
current pension cost for these employees. Amounts charged to the Company
by Inoac for its pension plan for the years ended October 31, 1994, 1993
and 1992 amounted to 5,144 thousand yen (unaudited), 5,050 thousand yen and
5,076 thousand yen, respectively.
A director of the Company, who is also a director of Inoac, is not covered
by the pension plan. Payments of termination benefits to the directors are
at the discretion of the shareholders of the Company and are not determinable
in advance of a resolution by the shareholders covering such payments.
Consequently, no provision for the director's termination benefits has been
included in the accompanying financial statements.
7. Retained Earnings and Legal Reserve
The amount of retained earnings available for distribution to the
shareholders is based on the financial statements prepared under the
Commercial Code of Japan. The Commercial Code of Japan provides that a
legal reserve be appropriated until such reserve equals 25% of stated
capital (common stock). The legal reserve is not available for dividends,
but may be used to reduce a deficit by resolution of the shareholders or
may be capitalized by resolution of the Board of Directors. The amount of
unrestricted retained earnings available at October 31, 1994 for dividends
was approximately 768,900 thousand yen (unaudited).
See Accountants' Compilation Report.
10
F-90
<PAGE>
Rogers Inoac Corporation
Notes to Financial Statements (continued)
8. Commitments
The Company leases certain equipment under leases which are noncancelable.
Future minimum payments, by year and in the aggregate, for equipment under
noncancelable operating leases with terms of one year or more consisted of
the following at October 31, 1994:
(Thousands of yen)
(Unaudited)
------------------
1995 5,093
1996 4,567
1997 3,649
1998 3,585
1999 and thereafter 1,364
----------
18,258
==========
For the years ended October 31, 1994, 1993 and 1992, total rental expense
for all operating leases amounted to 80,046 thousand yen (unaudited), 53,865
thousand yen and 53,715 thousand yen, respectively.
9. Amounts per Share
The computation of net income per share is based on the weighted average
number of shares (880 shares) of common stock outstanding during each year.
Cash dividends per share represent the cash dividends proposed by the Board
of Directors as applicable to the respective year.
See Accountant's Compilation Report.
11
F-91
<PAGE>
<TABLE>
SCHEDULE II
Valuation and Qualifying Accounts
Rogers Inoac Corporation
<CAPTION>
Balance at Charged to Charged to
beginning of costs and other Balance at
Description year expenses accounts Deductions end of year
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended October 31, 1994:
Deducted from asset accounts:
Allowance for doubtful accounts (unaudited) 2,000,000 3,135,040 0 0 5,135,040
Year ended October 31, 1993:
Deducted from asset accounts:
Allowance for doubtful accounts 5,713,994 0 0 3,713,994 2,000,000
Year ended October 31, 1992:
Deducted from asset accounts:
Allowance for doubtful accounts 3,719,716 1,994,278 0 0 5,713,994
</TABLE>
F-92
<PAGE>
SCHEDULE III
Short-Term Borrowings
Rogers Inoac Corporation
Weighted
Average average
Maximum amount interest
Weighted amount outstanding rate
Balance average outstanding during during
Category of aggregate at end interest during the year the year
short-term borrowings of year rate the year (2) (3)
------------------------------------------------------------------------------
(Yen)
Year ended October 31, 1994
(unaudited) (4)
Year ended October 31, 1993:
Overdraft from bank (1) 0 4.389% 80,000,000 26,666,667 4.618%
Year ended October 31, 1992 (4)
(1) Notes payable to bank represent borrowings under line-of-credit
arrangements which have no termination date but are reviewed annually
for renewal.
(2) The average amount outstanding during the year was computed by dividing
the total of the month-end outstanding principal balances by 12.
(3) The weighted average interest rate during the year was computed by
dividing the actual interest expense by the monthly average short-term
debt outstanding during the year.
(4) There were no short-term borrowings outstanding during the years ended
October 31, 1994 (unaudited) and 1992.
F-93
<PAGE>
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