Total pages included - 12
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 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
ROGERS CORPORATION
(Exact name of Registrant as specified in its charter)
Massachusetts 06-0513860
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
P.O. Box 188, One Technology Drive, Rogers, Connecticut 06263-0188
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 774-9605
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
The number of shares outstanding of the Registrant's classes of common
stock as of October 29, 1995:
Capital Stock, $1 Par Value--7,132,696 shares
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<PAGE>
ROGERS CORPORATION AND SUBSIDIARIES
FORM 10-Q
October 1, 1995
INDEX
Page No.
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Consolidated Statements of Income--
Three Months and Nine Months Ended October 1, 1995
and October 2, 1994 3
Consolidated Balance Sheets--
October 1, 1995 and January 1, 1995 4-5
Consolidated Statements of Cash Flows--
Nine Months Ended October 1, 1995 and
October 2, 1994 6
Supplementary Notes 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-10
PART II--OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
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<PAGE>
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except for Per Share Amounts)
Three Months Ended: Nine Months Ended:
October 1, October 2, October 1, October 2,
1995 1994 1995 1994
----------------------------------------------
Net Sales $ 32,943 $ 32,605 $ 106,782 $ 101,605
Cost of Sales 23,049 22,786 73,212 71,663
Selling and Administrative
Expenses 5,078 4,714 16,414 14,967
Research and Development
Expenses 2,190 2,349 6,948 6,912
-----------------------------------------------
Total Costs and Expenses 30,317 29,849 96,574 93,542
-----------------------------------------------
Operating Income 2,626 2,756 10,208 8,063
Other Income less Other Charges 524 270 1,625 535
Interest Income (Expense), Net 112 (137) 31 (857)
-----------------------------------------------
Income Before Income Taxes 3,262 2,889 11,864 7,741
Income Taxes Expense:
Federal and Foreign 311 158 1,523 279
State 125 35 375 108
----------------------------------------------
Net Income $ 2,826 $ 2,696 $ 9,966 $ 7,354
==============================================
Net Income Per Share:
Primary $ .36 $ .37 $ 1.28 $ 1.05
==============================================
Fully Diluted $ .36 $ .37 $ 1.28 $ 1.04
==============================================
Average Shares Outstanding:
Primary 7,787,089 7,371,684 7,783,223 6,998,858
===============================================
Fully Diluted 7,787,089 7,389,026 7,796,700 7,048,610
===============================================
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE>
ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in Thousands)
October 1, 1995 January 1, 1995
---------------------------------
Current Assets:
Cash and Cash Equivalents $ 14,126 $ 13,851
Accounts Receivable 20,563 16,495
Inventories:
Raw Materials 5,407 4,311
In-Process and Finished 5,924 5,302
Less LIFO Reserve (1,056) (1,056)
----------------------------------
Total Inventories 10,275 8,557
Net Assets Held for Sale (Note B) 6,562 6,687
Other Current Assets 1,032 1,596
----------------------------------
Total Current Assets 52,558 47,186
----------------------------------
Property, Plant and Equipment, Net of
Accumulated Depreciation of
$57,316 and $52,464 35,041 34,061
Investments in Unconsolidated Joint
Ventures 4,584 4,072
Intangible Pension Asset 2,365 2,365
Other Assets 1,640 1,759
----------------------------------
Total Assets $ 96,188 $ 89,443
==================================
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE>
ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND SHAREHOLDERS' EQUITY
(Dollars in Thousands)
October 1, 1995 January 1, 1995
----------------------------------
Current Liabilities:
Accounts Payable $ 8,128 $ 7,778
Current Maturities of Long-Term Debt 600 1,225
Accrued Employee Benefits and
Compensation 3,946 6,646
Other Accrued Liabilities 6,154 5,849
Taxes, Other than Federal and
Foreign Income 400 984
----------------------------------
Total Current Liabilities 19,228 22,482
----------------------------------
Long-Term Debt, less Current Maturities 4,800 6,675
Noncurrent Deferred Income Taxes 1,623 1,520
Noncurrent Pension Liability 4,497 4,497
Noncurrent Retiree Health Care and Life
Insurance Benefits 6,560 6,560
Other Long-Term Liabilities 2,917 2,584
Shareholders' Equity:
Capital Stock, $1 Par Value:
Authorized Shares 25,000,000; Issued
and Outstanding Shares 7,132,696
and 7,045,270 7,133 7,045
Additional Paid-In Capital 25,901 25,110
Equity Translation Adjustment 2,512 1,918
Retained Earnings 21,017 11,052
---------------------------------
Total Shareholders' Equity 56,563 45,125
---------------------------------
Total Liabilities and
Shareholders' Equity $ 96,188 $ 89,443
=================================
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE>
ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Nine Months Ended:
----------------------
October 1, October 2,
1995 1994
----------------------
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net Income $ 9,966 $ 7,354
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 4,602 5,000
Equity in Undistributed (Income) Loss of
Unconsolidated Joint Ventures - Net (333) 28
Loss on Disposition of Property, Plant & Equipment 217 30
Other - Net 1,196 (449)
Changes in Operating Assets and Liabilities Excluding
Effects of Acquisition and Disposition of Assets:
Accounts Receivable (4,052) (4,579)
Inventories (1,628) (105)
Prepaid Expenses (97) 283
Accounts Payable and Accrued Expenses (2,821) (925)
--------------------
Net Cash Provided by Operating Activities 7,050 6,637
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Capital Expenditures (5,373) (2,851)
Proceeds from Sale of Businesses -- 909
Proceeds from Sale of Property, Plant and Equipment 8 1,664
-------------------
Net Cash Used in Investing Activities (5,365) (278)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Repayments of Debt Principal (2,500) (4,903)
Proceeds from Sale of Capital Stock 879 1,667
-------------------
Net Cash Used in Financing Activities (1,621) (3,236)
Effect of Exchange Rate Changes on Cash 211 130
-------------------
Net Increase in Cash and Cash Equivalents 275 3,253
Cash and Cash Equivalents at Beginning of Year 13,851 4,533
------------------
Cash and Cash Equivalents at End of Quarter $14,126 $7,786
==================
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE>
ROGERS CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY NOTES
A. The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. For further
information, refer to the audited consolidated financial statements
and footnotes thereto included in the Company's annual report on
Form 10-K for the fiscal year ended January 1, 1995.
B. Net Assets Held for Sale consist primarily of land and building in
Chandler, Arizona, currently being leased to the buyer of the
Flexible Interconnections Division and the land and building in
Mesa, Arizona, related to the divested business of the Power
Distribution Division.
C. The Company had a $15.0 million secured revolving credit
arrangement with Fleet Bank, N.A. at the end of the first quarter
1995. This secured arrangement was replaced with a new unsecured
arrangement with Fleet Bank, N.A. on April 13, 1995, for a maximum
of $10.0 million of borrowings. There have been no borrowings under
this new arrangement.
D. Interest paid to lenders during the first nine months of 1995 and
1994 was approximately $800,000 and $1,800,000, respectively.
E. Income taxes paid were $1,168,000 and $290,000 in the first nine
months of 1995 and 1994, respectively.
F. To help widen the distribution and enhance the marketability of the
Corporation's Capital Stock, the Board of Directors, at its June
22nd meeting, authorized a 2 for 1 stock split for shareholders of
record on July 7th, payable on July 28th.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net sales of $32.9 million for the third quarter of 1995 were only
slightly above the comparable period in 1994. For the first nine
months, sales totaled $106.8 million, and after adjustment for
currency rate changes and past divestitures, increased 9% over the
same period in 1994. These sales gains were mainly the result of unit
volume increases.
Although sales in the third quarter are usually below the rate in the
first half of the year because of certain seasonal factors, this past
quarter also had some unexpected, significant customer inventory
corrections. Sales, however, are quite strong in the Company's
circuit material products for the communications and computer and
peripheral markets. Flexible laminate material sales are at record
levels and the Company is experiencing growing demand for its newer,
lower-priced circuit materials for the wireless communications
markets.
Sales of Polymer Products decreased 2% for the third quarter but
increased 6% for the first nine months of 1995, compared with the same
periods in 1994. The largest sales gain in this segment during the
first months of 1995 has been realized from molding materials, which
are sold in both the U.S. and European automotive markets.
Sales of Electronic Products for the third quarter and for the first
nine months increased 2% and 13%, respectively, compared with the same
periods last year, after adjusting for divestitures and currency rate
changes. Sales of flexible circuit material for disk drives and
laptop computers have contributed to a significant portion of this
segment's sales increase. Additionally, the Company's position as an
important supplier of materials for wireless communications is
becoming stronger. Sales of RO3000(TM) commercial microwave laminate,
introduced in 1994, are growing nicely, and widespread interest is
developing for RO4000(TM) microwave laminate introduced earlier this
year. The Company's customers are starting to convert to its lower
priced materials for some applications.
Compared with the same periods last year, before-tax profits rose 13%
in the quarter and 53% for the nine months. Net income, incorporating
a higher income tax rate in 1995, was up 5% for the quarter and gained
36% for the nine months. Earnings per share were slightly below last
year's for the quarter but were 22% higher year to date. Better
profits for the nine month period were attributable to higher sales,
improved operating margins, lower net interest expense, and increased
royalty and other income.
Manufacturing profit as a percentage of sales in the first nine months
increased from 29% in 1994 to 31% in 1995. This increase was
attributable to stronger manufacturing margins in several operations.
Selling and administrative expenses for the first nine months of 1995
as a percentage of sales were approximately the same as the previous
year.
Research and development expenses for the first nine months of 1995
were at about the same level as the comparable period in 1994. Three
new circuit materials aimed at the wireless communications market were
introduced during the first quarter of 1995, and technical support
activity and the development of lower cost processes is continuing and
is a key consideration in the market positioning of these new circuit
materials.
Durel Corporation, the Company's 50% owned electroluminescent lamp
joint venture with 3M, had lower than expected sales in the quarter
due to inventory corrections by a major customer. Management
understands this situation will continue at least through the fourth
quarter. As a result, the Company's 50% share of Durel's earnings
should not have a significant impact on the Company's earnings for the
full year 1995. Important patents have been issued recently which
should solidify the joint venture's leadership position in
electroluminescent lamps.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
During the quarter, the Company announced the signing of a memorandum
of understanding for the sale of its small microwave printed circuit
board fabricating operation, the Soladyne Division, to Merix
Corporation, one of the Company's important high frequency materials
customers. This action, for which a modest gain will be realized at
closing, completes the planned divestiture of the Company's electronic
components businesses and allows the Company to concentrate fully on
its growing line of high performance specialty materials.
To intensify focus on both operating improvements and sales growth in
Rogers elastomer product lines, two divisions were combined into a new
High Performance Elastomers Division in July and a new Consumer and
Printing Marketing Center was formed to concentrate initially on sales
of PORON materials.
Net interest expense for the first three quarters of 1995 decreased
substantially from the comparable 1994 period because of lower
borrowings. The significant increase in cash and cash equivalents
produced investment income which exceeded interest costs for the third
quarter and the first nine months of 1995. During the second quarter,
debt of $2.5 million bearing an interest rate of 10.5% was prepaid.
The prepayment expense of $180,000 is reflected in Other Income less
Other Charges. Total debt outstanding at October 1, 1995, was $5.4
million compared with $7.9 million at October 2, 1994.
As of April 13, 1995, the Company can borrow up to a maximum of $10.0
million under a new unsecured revolving credit arrangement with Fleet
Bank, N.A. Amounts borrowed under this arrangement are to be paid in
full by March 31, 1998. The Company had no borrowings under revolving
credit arrangements at October 1, 1995.
Net cash provided by operating activities in the first nine months of
1995 totaled $7.1 million, compared with $6.6 million in the same 1994
period. The year-to-year increase is attributable mainly to increased
net income and other working capital changes. In the third quarter
the Company made a $3.0 million contribution to its union pension
plan.
Capital expenditures in the first three quarters of 1995 and 1994
totaled $5.4 million and $2.9 million, respectively. Management
expects that spending for 1995, primarily for capacity expansions and
new process equipment, will approximate $8.0 million. It is
anticipated that these expenditures will be financed with internally
generated funds.
Other income less other charges was $1.6 million for the first nine
months of 1995 compared with $0.5 million for the same period in 1994.
Royalty payments related to the 1994 sale of the U.S. power
distribution business had a significant positive impact on 1995
results. Quarterly royalty payments related to this sale are expected
to be included in the Company's statements at decreasing rates over
the next four years.
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.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
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 the Company's 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 October 1, 1995, other accrued liabilities were greater than
October 2, 1994, primarily because of environmental reserves.
The Company has not had any material recurring costs and capital
expenditures relating to environmental matters, except as specifically
described in the preceding statements.
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<PAGE>
PART II - OTHER INFORMATION
Item 6. Reports on Form 8-K
(b) There were no reports on Form 8-K filed
for the nine months ended October 1, 1995.
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Three Months Ended: Nine Months Ended:
----------------------------------------------
October 1, October 2, October 1, October 2,
1995 1994 1995 1994
----------------------------------------------
1. Net income $2,826,000 $2,696,000 $9,966,000 $7,354,000
==============================================
2. Weighted average number of
shares outstanding during
period 7,125,208 7,017,068 7,093,633 6,676,652
3. Net effect of dilutive stock
options - based on the treasury
stock method using average
market price 592,674 354,616 592,415 322,206
4. Additional net shares due to
windfall tax benefit - based
on average market price 69,207 -- 97,175 --
----------------------------------------------
5. Total weighted average number
of shares and capital
equivalent shares assumed
outstanding 7,787,089 7,371,684 7,783,223 6,998,858
6. Additional net shares,
issuable when market value
at period end exceeds
average market value during
period -- 17,342 (4,008) 49,752
7. Adjustment of additional net
shares due to windfall tax
benefit - based on higher of
market or closing price -- -- 17,485 --
-----------------------------------------------
8. Shares assumed outstanding
for computation of fully
diluted earnings per share 7,787,089 7,389,026 7,797,700 7,048,610
===============================================
Net income per capital share
(1 / 2) $.40 $.38 $1.40 $1.10
===============================================
Net income per capital
share and capital share
equivalent (1 / 5) $.36 $.37 $1.28 $1.05
===============================================
Net income per capital
share assuming full
dilution (1 / 8) $.36 $.37 $1.28 $1.04
===============================================
This calculation is submitted in accordance with Regulation S-K
Item 601(b)(11).
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ROGERS CORPORATION
(Registrant)
By s/DONALD F. O'LEARY
Donald F. O'Leary
Authorized Officer
Controller
Dated: November 1, 1995
-12-
<PAGE>
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