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 December 29, 1996
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:
(860) 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, 1997:
Capital Stock, $1 Par Value--$199,397,752
The number of shares outstanding of the Registrant's
classes of capital stock as of February 1, 1997:
Capital Stock, $1 Par Value--7,407,761 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's annual report to shareholders for
the fiscal year ended December 29, 1996 are incorporated by
reference into Parts I and II.
Portions of the proxy statement for the Registrant's 1997 annual
meeting of stockholders to be held May 1, 1997, are incorporated
by reference into Part III.
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TABLE OF CONTENTS
PART I
Item Page
1. Business 1
2. Properties 5
3. Legal Proceedings 5
4. Submission of Matters to a Vote of Security-Holders 6
Executive Officers 6
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters 7
6. Selected Financial Data 7
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
8. Financial Statements and Supplementary Data 7
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 7
PART III
10. Directors and Executive Officers of the Registrant 8
11. Executive Compensation 8
12. Security Ownership of Certain Beneficial Owners and
Management 8
13. Certain Relationships and Related Transactions 8
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K 9
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 now predominantly to a range of
specialty polymer composite materials for communication, imaging,
computer, transportation, and consumer applications.
During the 1980's, Rogers was involved in the manufacture of
materials and components, primarily for the computer industry.
However, most of Rogers profits during the 1980's, and growth in
the 1960's and 1970's, were from Rogers core businesses in
polymer composite materials.
New leadership in 1992 restructured the Company to focus on these
materials based businesses -- circuit materials, high performance
elastomers, and moldable composites. Rogers management,
operations, sales and marketing, and technology development
activities were redirected to efforts intended to grow the
materials based businesses. In so doing, Rogers takes advantage
of its core competencies in polymers, fillers, and adhesion, and
applies its related materials technologies to identified market
needs. Materials based businesses were the core businesses
responsible for Rogers strong growth in the 1960's and 1970's,
and provided most of Rogers profits in the 1980's. During that
time, the profits from the materials based businesses were often
offset by substantial losses in Rogers former electronic
components businesses, which are now divested.
The materials based businesses are guided by clearly developed
strategic business plans for profitable growth. The current
focus is on worldwide markets for elastomeric materials and
related components, high frequency and flexible circuit
materials, moldable composite materials, and the
electroluminescent lamp joint venture with 3M.
BUSINESS SEGMENT FINANCIAL AND GEOGRAPHIC INFORMATION
"Business Segment and Geographic Information" on pages 37-39 of
the annual report to shareholders for the year ended December 29,
1996, is incorporated herein by reference.
PRODUCTS
Rogers Corporation manufactures and sells specialty polymer
composite materials and components which it develops for growing
markets and applications around the world. Rogers has two
business segments: Polymer Products and Electronic Products.
Most products are based on Rogers technology in polymer composite
materials.
Polymer Products include high performance elastomer materials,
high performance elastomer components, and moldable composite
materials. Rogers polymer products have high performance
characteristics, allowing them to offer functional advantages in
many market applications, and serving to differentiate Rogers
products from other commonly available materials.
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Trade names for Rogers Polymer Products include: PORON(R) urethane
and silicone foams used for gaskets, seals, and pads in vehicles,
communication devices, computers, and footwear and foot comfort
products; R/bak(R) plate backing and mounting products for
cushioning flexographic printing plates; NITROPHYL(R) floats for
fuel level sensing in cars, trucks, and marine motors; ENDUR(R)
elastomer rollers and belts for document handling in copiers,
computer printers, and facsimile machines; and, MPC(R) and RX(R)
moldable composites for engine and transmission parts in
vehicles, and for insulating parts in electric motors,
appliances, and tools.
Polymer Products are sold to manufacturers in the imaging,
communication, computer, transportation, and consumer products
markets.
Rogers two joint ventures extend and complement Rogers worldwide
businesses in polymer products. The Rogers INOAC Corporation
(RIC), a 50% owned joint venture with INOAC Corporation of Japan,
manufactures high performance elastomer materials and components
in Mie and Nagoya, Japan, and in Malaysia. The Durel Corporation,
a 50% owned joint venture with Minnesota Mining and Manufacturing
Company (3M), manufactures electroluminescent lamps in Chandler,
Arizona.
Rogers acquired the Bisco Products silicone foam business, based
in Elk Grove Village, Illinois, from a subsidiary of Dow Corning
Corporation at the beginning of 1997. The high performance
silicone foam products of this business have heat shielding and
gasketing applications in transportation markets. These
materials are now sold under the PORON(R) trademark.
Electronic Products include laminate materials for use in high
frequency and microwave printed circuit boards, flexible printed
circuit board laminates, and power distribution bus bars. Rogers
laminate materials have special performance advantages that are
specific to targeted market applications. In particular, the
polymer based dielectric layers of Rogers laminates are
proprietary materials which provide highly specialized electrical
and mechanical properties. These attributes also serve to
differentiate Rogers products from standard circuit board
laminates that are more widely available.
Trade names for Rogers high frequency printed circuit board
materials include RO3000(TM) and RO4000(R) commercial laminates, which
are for circuitry in commercial wireless transmitters, receivers,
pagers, and telephones. Trade names for other high frequency or
microwave printed circuit board materials include DUROID(R),
RT/duroid(R), and TMM(R) laminates, which are used for circuitry in
high performance or military transmitters, receivers, radar, and
guidance systems. Trade names for flexible circuit materials
include FLEX-I-MID(R), a product marketed under a partnership
agreement with Mitsui Toatsu Chemicals, Inc. (MTC) of Japan, and
R/flex(R) circuit materials. These flexible materials are used to
make dynamic interconnections for rigid disk drives, portable
computers, and miniaturized electronic devices. Electronic
Products are sold principally to independent and captive printed
circuit board manufacturers who convert Rogers laminates to
custom printed circuits.
Power distribution bus bars are manufactured by Rogers N.V. in
Europe under the trade name MEKTRON(R), and sold to manufacturers of
communication equipment and high voltage electrical traction
systems.
BACKLOG
Excluding joint venture activity, the backlog of firm orders for
Polymer Products was $12,236,000 at December 29, 1996 and
$12,232,000 at December 31, 1995. The backlog of firm orders for
Electronic Products was $13,942,000 at December 29, 1996 and
$11,873,000 at December 31,
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1995. The increase in backlog for Electronic Products from 1995
to 1996 reflects the higher sales level of FLEX-I-MID circuit
material used with magneto-resistive (MR) heads in hard disk
drives. The amount of unfilled orders is reasonably stable
throughout the year.
RAW MATERIALS
The manufacture of both Polymer and Electronic 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, Rogers 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 463 people in the Polymer
Products operations and 391 people in the Electronic Products
operations during 1996.
SEASONALITY
In the Company's opinion, neither the Polymer Products business
nor the Electronics Products business is seasonal.
CUSTOMERS & MARKETING
Rogers products were sold to approximately 2,100 customers
worldwide in 1996. 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
both 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.
Rogers markets its full range of products throughout the United
States and in most foreign markets. Over 80% of the Company's
sales are sold through Rogers own domestic and foreign sales
force, with the balance sold through independent agents and
distributors.
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.
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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.
Early in 1996, Rogers successfully settled an infringement suit
it brought against a competitor in the field of high frequency
circuit materials. The settlement established the validity of the
patent which covers basic technology in that field, and the
competitor is paying Rogers royalties on its sales of certain of
its products. The Company also owns a number of registered and
unregistered trademarks which it believes to be of importance.
During its fiscal year 1996, Rogers spent $9,184,000 on research
and development activities, compared with $9,320,000 in 1995, and
$9,230,000 in 1994. These amounts include the cost of the
corporate research and development effort in Rogers, Connecticut,
which amounted to $6,484,000, $6,820,000, and $6,730,000 in 1996,
1995, and 1994, respectively. The balance was comprised of
expenditures for product development and new process development
activities in its operating units.
ENVIRONMENTAL REGULATION
During fiscal year 1996, the Company spent $800,000 on capital
equipment necessary to comply with federal, state, and local
environmental protection, health and safety regulations.
Management estimates that 1997 expenditures needed for compliance
with current environmental, health, and safety regulations will
approximate $700,000, $300,000 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
10 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. Manufacturing capacity will be added to
the facility located in Manchester, Connecticut, during 1997.
Production capacity is being added to the Company's subsidiary in
Gent, Belgium. Expansions of the Chandler, Arizona, and East
Woodstock, Connecticut, processes and facilities will begin in
1997. Operating capacity can be increased by additional worker
hours at these and at several of the Company's other 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 85,000 Manufacturing
Elk Grove Village, Illinois* 93,000 Manufacturing
Electronic Products
Chandler, Arizona 103,000 Manufacturing/Warehouse
Chandler, Arizona** 142,000 Manufacturing Facility Held
for Sale
Rogers, Connecticut 290,000 Manufacturing/Warehouse
Gent, Belgium 85,000 Manufacturing
Tokyo, Japan*** 1,500 Sales Office
Wanchai, Hong Kong**** 1,300 Sales Office
Corporate
Rogers, Connecticut 116,000 Corporate Headquarters/
Research & Development
* Current lease, effective January 1, 1997, expires September 30, 2001.
** The company is leasing this facility to the purchaser of the
flexible interconnections business, which was sold in 1993.
*** Current lease expires September 1997.
**** Current lease expires April 1998.
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 is currently involved as a PRP in
four 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 PRPs. 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 costs 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 position.
The Company is not involved in any other litigation which
management believes will materially and adversely affect its
financial condition or results of operations.
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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 Chairman of the Board of Directors 1997 65
Walter E. Boomer President and Chief Executive
Officer 1997 58
Aarno A. Hassell Vice President, Market and Venture
Development 1988 57
Bruce G. Kosa Vice President, Technology 1994 57
John A. Richie Vice President, Human Resources 1994 49
Robert D. Wachob Vice President, Sales and Marketing 1990 49
Robert M. Soffer Treasurer and Assistant Secretary 1987
Clerk 1992 49
Donald F. O'Leary Corporate Controller 1996 53
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. Boomer was elected to the positions of President and Chief
Executive Officer effective March 31, 1997. From February 1995
to October 1996 he was President of Babcock & Wilcox Power
Generation Group and Executive Vice President of McDermott
International, Inc., the parent corporation of Babcock & Wilcox;
from August 1994 he was Senior Vice President and Chief Project
Management Officer of McDermott International, Inc.; and from
1986 to 1994 he was a General of the U.S. Marine Corps.
Mr. Birkenruth, Mr. Hassell, Mr. Wachob, and Mr. Soffer have held
executive office with the Company for the past five years as
their principal occupation. Mr. Birkenruth was President and
Chief Financial Officer from April 1992 until March 1997 and
Executive Vice President until April 1992. Mr. Hassell was Vice
President, Circuit Materials Group until August 1994.
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 after serving as Director of Human Resources from July
1992 and Director of Compensation and Benefits from August 1991.
Mr. Soffer was elected as Clerk in February 1992. Mr. O'Leary
was elected as an executive officer in April 1996 after being
promoted to Corporate Controller in April 1995 and after serving
as Assistant Controller since 1982.
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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 41, under the
caption "Restriction on Payment of Dividends" in Note I on page
31, and under the caption "Dividend Policy" in the "Management's
Discussion and Analysis" on page 48 of the 1996 annual report to
shareholders.
At March 6, 1997, there were 1,174 shareholders of record.
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 19 of the 1996
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 42
through 49 of the 1996 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
20 through 40 and under the caption "Quarterly Results of
Operations (Unaudited)" on page 41 of the 1996 annual report to
shareholders.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 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 31, 1997, for its 1997 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 31,
1997, for its 1997 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 31, 1997, for its 1997 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 31, 1997,
for its 1997 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 December 29, 1996, are incorporated
by reference in Item 8:
Consolidated Balance Sheets--December 29, 1996 and
December 31, 1995
Consolidated Statements of Income and Retained Earnings--
Fiscal Years Ended December 29, 1996, December 31, 1995,
and January 1, 1995
Consolidated Statements of Cash Flows--Fiscal Years Ended
December 29, 1996, December 31, 1995, and January 1, 1995
Notes to Consolidated Financial Statements--December 29, 1996
(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.
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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, September
10, 1991, and June 22, 1995 were filed as Exhibit 3i to the
Registrant's Annual Report on Form 10-K (File No. 1-4347) for
the fiscal year ended December 31, 1995 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, were filed
as Exhibit 3j to the Registrant's Annual Report on Form 10-K
(File No. 1-4347) for the fiscal year ended January 1, 1995 and
are hereby incorporated by reference.
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 1997 Shareholder Rights Plan was filed on Form 8-A dated March
24, 1997 and is hereby incorporated by reference.
10a Rogers Corporation Incentive Stock Option Plan (1979, as amended
July 9, 1987 and October 23, 1996). The 1979 plan and the
July 9, 1987 amendment were 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 are hereby incorporated
by reference. The 1996 amendment is filed herewith.
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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 (as
restated and amended on December 18, 1996) is filed herewith.
10d Rogers Corporation 1988 Stock Option Plan (as amended December
17, 1988, September 14, 1989, and October 23, 1996). The 1988
plan and amendment, and the 1989 amendment were filed as Exhibit
10d to the Registrant's Annual Report on Form 10-K (File No.
1-4347) for the fiscal year ended January 1, 1995 and are hereby
incorporated by reference. The 1996 amendment is filed herewith.
10e Rogers Corporation 1990 Stock Option Plan (as restated and
amended on October 18, 1996), was filed as Registration Statement
No. 333-14419 on Form S-8 dated October 18, 1996, and is hereby
incorporated by reference.
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 (as restated and
amended on December 6, 1996) is filed herewith.
10i Rogers Corporation Voluntary Deferred Compensation Plan for
Non-Employee Directors (1994, as amended December 26, 1995 and
December 27, 1996). The 1994 plan and the December 26, 1995
amendment were filed as Exhibit 10i to the Registrant's Annual
Report on Form 10-K (File no. 1-4347) for the fiscal years ended
January 1, 1995 and December 31, 1995, respectively, and are
hereby incorporated by reference. The December 27, 1996 amendment
is filed herewith.
10j Rogers Corporation Voluntary Deferred Compensation Plan for Key
Employees (1993, as amended on October 18, 1994, December 22,
1994, December 21, 1995, December 22, 1995, and April 16, 1996).
The 1993 plan and amendments, and the 1995 amendments were filed
as Exhibit 10j to the Registrant's Annual Report on Form 10-K
(File No. 1-4347) for the fiscal years ended January 1, 1995 and
December 31, 1995, respectively, and are hereby incorporated by
reference. The 1996 amendment is filed herewith.
11 Statement Re: Computation of Per Share Earnings is filed
herewith.
13 Rogers Corporation 1996 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.
(b) No reports on Form 8-K were filed related to the three months
ended December 29, 1996.
(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 Balance
Balance at Charged to Charged at End
Beginning Costs and to Other Other of
Description of Period Expenses Accounts Deductions Period
Year ended Dec. 29, 1996:
Deducted from asset
accounts:
Net realizable value
allowance for assets
held for sale $ 2,032 $ -- $ -- $ 1,540* $ 492
Year ended Dec. 31, 1995:
Deducted from asset
accounts:
Net realizable value
allowance for assets
held for sale $ 1,587 $ -- $ 445 $ -- $ 2,032
Year ended Jan. 1, 1995:
Deducted from asset
accounts:
Net realizable value
allowance for assets
held for sale $ 1,533 $ -- $ 54 $ -- $ 1,587
* Allowance applicable to assets sold during 1996 at approximate book value.
UNDERTAKING
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, 33-64314, 33-
15119, 33-21121, 33-38219, 33-44087, 33-53353, and 333-14419, and
Form S-3 No. 33-53369:
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.
12
<PAGE>
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/DONALD F. O'LEARY
Donald F. O'Leary
Corporate Controller
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 Executive Officer
Harry H. Birkenruth and Acting Principal Financial 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 E. MITCHELL Director
William E. Mitchell
March 26, 1997
13
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Item 14(c) - Certain Exhibits
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Year Ended
---------------------------------------
December 29, December 31, January 1,
1996 1995 1995
---------------------------------------
1. Net income $13,949,000 $13,081,000 $10,134,000
2. Weighted average number of
shares outstanding during 7,283,625 7,103,428 6,767,242
period
3. Net effect of dilutive
stock options - based on
the treasury stock method
using average market price 343,559 615,666 362,074
4. Total weighted average
number of shares and
capital equivalent shares
assumed outstanding 7,627,184 7,719,094 7,129,316
5. Additional net shares,
issuable when market value
at year-end exceeds average
market value during year 13,688 15,360 193,678
6. Shares assumed outstanding
for computation of fully
diluted earnings per share 7,640,872 7,734,454 7,322,994
Net income per capital
share and capital share
equivalent (1/4) $ 1.83 $ 1.69 $ 1.42
Net income per capital
share assuming full
dilution (1/6) $ 1.83 $ 1.69 $ 1.38
F-1
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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
Rogers Southeast Asia, Inc. 100% Delaware
TL Properties, Inc. 100% Arizona
Rogers Foreign Sales Corporation 100% U.S. Virgin Islands
Rogers Export Sales Corporation 100% Barbados
Rogers N.V. 100% Belgium
Rogers GmbH 100% Germany
Rogers (U.K.) LTD. 100% England
Rogers 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 3, 1997, included in the 1996 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,
33-64314, 33-44087, 33-53353, and 333-14419, and Form S-3 No.
33-53369) pertaining to various stock option and employee savings
plans, and stock grants, of Rogers Corporation of our report dated
February 3, 1997, 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 20, 1997
F-3
Exhibit 10a - Rogers Corporation Incentive Stock Option Plan - October 23,
1996 Amendment
AMENDMENT TO THE
ROGERS CORPORATION 1979 INCENTIVE STOCK OPTION PLAN,
AS AMENDED AND RESTATED EFFECTIVE AS OF FEBRUARY 10, 1987
A. The Rogers Corporation 1979 Incentive Stock Option Plan, as amended
and restated effective as of February 10, 1987, (the "Plan") is hereby
further amended as follows:
1. Section 2 of the Plan is hereby amended by deleting the first
sentence thereof in its entirety and substituting therefor the
following:
"The Board of Directors of the Corporation shall appoint a
committee of two or more Directors to be known as the
Compensation and Organization Committee (the `Committee') to
administer and interpret this Plan; provided, however, that no
Director shall be designated as or continue to be a member of
the Committee unless he or she shall at the time of designation
and service be a `non-employee director' within the meaning of
Rule 16b-3(b)(3)(i) of the Securities Exchange Act of 1934,
as amended."
B. The effective date of this Amendment shall be October 17, 1996.
Executed this 23rd day of October, 1996.
ROGERS CORPORATION
By /s/ Robert M. Soffer
Name: Robert M. Soffer
Title: Treasurer
F-4
<PAGE>
Exhibit 10c - Rogers Corporation Annual Incentive Compensation Plan - as
restated and amended on December 18, 1996
ROGERS CORPORATION
1997 ANNUAL INCENTIVE COMPENSATION PLAN
(The "Plan")
Plan Year: 1.1 Fiscal year of Rogers Corporation
Participants: 2.1 Those managers and professionals who directly affect
the profitability of the Company are eligible for
nomination as Participants in this Plan. Participants
for each Plan Year must be approved by the President.
Sales Engineers, Regional Sales Managers, and any other
employees who are eligible for commissions or similar
incentive compensation plans are excluded from this
Plan.
Target Award 3.1 Upon achievement of targeted financial goals,
Opportunity: Participants will be eligible for a specified Target
Award. Target Awards by Participant group are as
follows:
Target Award
As a Percent of
Position Salary
____________________________________________
CEO 50%
Group Heads, Elected 20% - 40%
Corporate Officers
Division Heads, Equivalent 20% - 30%
Corporate Executives
Other Division and 5% - 20%
Corporate Participants
Basic Award 4.1 Each Plan Year, a set percentage of the Participant's
Determinant: Target award will be determined by Corporate
performance and another set percentage will be
determined by Division/Group
1
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performance. In general, those Participants whose
actions affect the entire Company will have a higher
Corporate performance weighting while those whose
actions have a greater impact on an individual
Division/Group will have a higher Division/Group
performance weighting.
4.2 Performance weights by Participant group are as follows:
Corporate Division/Group
Position Performance Performance
_____________________________________________
Elected Corporate
Officers 100%(1) 0%
Other Corporate
Participants 50% 50%(2)
Group Heads/ 40% - 70% 60% - 30%
Division Heads
Other Division
Participants 30% 70%
4.3 The Corporate portion of a Participant's annual
incentive award is based on after tax profit (as
reflected in earnings per share). Performance goals
will be established at the beginning of each Plan Year
and expressed in an award schedule that prescribes the
percentage of Corporate Target Award paid out at each
level of performance achievement.
4.4 The Divisional (or, where applicable, Group) portion of
a Participant's annual incentive award is based on
controllable cash profit of the Division or, where
applicable, Group. Performance goals will be
established at the beginning of each Plan Year and
expressed in an award schedule that prescribes the
percentage of the Division/Group Target Award paid out
at each level of performance achievement.
- --------------------
(1) Exceptions may be made by the President.
(2) The 50% Division/Group Performance portion for each Corporate Report
will be determined by multiplying 50% of his or her Target Award by
the ratio obtained by dividing all controllable cash profit related to
Divisional Performance by the total controllable cash profit if every
Division had achieved their plan for the year.
2
F-6
<PAGE>
4.5 Calculations of the actual percentage of Corporate and
Division Target Awards will be made by interpolating
between points on the Performance Measurement Schedule.
4.6 Each Division will prepare an annual plan. After
approval or revision by the President, the annual plan
will indicate the Division's goals relative to its
controllable cash profit.
4.7 Soon after the end of the Plan Year, the President will
evaluate how well each Division accomplished its
objective(s). The President may alter the division bonus
pool on the basis of that evaluation as he deems
appropriate.
Personal 5.1 Managers are encouraged to develop a clear and well-
Performance: communicated set of individual objectives and job
responsibilities for the purpose of determining this
individual performance adjustment. These include but
are not limited to:
Progress in on-going profit improvement.
Response to unforeseen occurrences.
Adherence to TQC principles.
5.2 Managers may recommend to the President that
Participant's awards in their respective Divisions or
Corporate Departments be modified to reflect individual
performance differences.
5.3 The President has the right to modify or eliminate the
total annual incentive award for any Participant to
reflect individual performance differences.
Presidential 6.1 A special award pool will be established by assigning to
Performance it an additional amount equal to 3% of the amount
Award: generated for Participants. This pool may be used at
the discretion of the President for special individual
awards to employees, whether Participants or not, who
have achieved extraordinary performance during the Plan
Year.
Award 7.1 The annual bonus award for any Participant will be
Limitation: limited to 200% of the Target Award.
7.2 Except as noted below, the maximum incentive bonus pool
including the Presidential Performance Award and payments
made to non-Participants under this Plan will be limited
to 13% of profit. Such profit is calculated before
deductions for taxes and bonuses. If the calculation
of awards indicates that these
3
F-7
<PAGE>
limits will be exceeded, awards will be reduced
proportionally to conform to the limit.
7.3 If any Division would have received 100% or more of the
Division portion of their Target Awards and the above
13% limit causes a reduction in earned awards, the
following shall apply.
7.3.1 The reductions of those Divisions' portions of
the Target Awards will be restored and Corporate
Reports' awards increased accordingly. (This does
not apply to the elected Corporate officers.)
7.3.2 The total of such restored and increased amounts
shall not exceed $250,000. If necessary,
reductions will be made proportionally.
Input of 8.1 In comparing actual performance against the performance
Extraordinary goals, management may exclude from such comparison any
and Non-recurring extraordinary or nonrecurring gains, losses, charges, or
Items: credits which appear on the Company's books and records
as it deems appropriate.
8.2 An extraordinary or nonrecurring item may include,
without limiting the generality of the foregoing, an
item in the Company's financial statements reflecting a
change in an accounting rule or methodology, tax law, or
actuarial assumption, not taken into consideration in
the establishment of performance goals. This type of
adjustment must be approved by the Compensation and
Organization Committee of the Board of Directors.
Less Than 9.1 An individual who is made a Participant in the Plan
Full-Year Plan after the beginning of the Plan Year, but before
Participation: October 1st of that year, may receive a pro-rated award
based on the number of full weeks of eligibility during
the Plan Year.
9.2 If a Participant's employment is terminated during a
Plan Year because of death, disability, or normal
retirement, a tentative award will be determined based
on performance as of the end of the Plan Year. The
final award will be prorated by multiplying the tentative
award by the number of full weeks of employment divided
by fifty-two.
4
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<PAGE>
9.3 If a Participant's employment is terminated
involuntarily, not for cause, the Participant may be paid
a prorated bonus.
Form and 10.1 All awards will be paid in cash, less withholding
Timing requirements, as soon as possible following the end of
Of Payment: the Plan Year. However, the President may request
authorization from the Compensation and Organization
Committee of the Board of Directors to pay a portion of
the estimated Plan Year's awards before the end of the
Plan Year.
Bonus 11.1 For each Division or Corporate Department that earns an
Opportunity award under this Plan, a pool will be created for
Non-Participants: distribution to non-Participants in that Division or
Corporate Department only. Such pool will be equal to
3.0% of the aggregate, annual salaries of the non-
Participants, exempt from the payment of overtime and
who are not paid overtime by Company policy or practice,
in that Division or Corporate Department at the end of
the Plan Year. Such pool will be adjusted up or down
proportionally to the award earned divided by the Target
Award in that Division or Corporate Department. The
Division Manager and Group Head or the Corporate
Department Vice-President will determine the recipients
and amounts of such bonuses subject to the approval of
the President. These bonuses are intended for non-
Participants who have made significant contributions to
the success of the Division or Corporate Department
during the Plan Year; this bonus pool is not intended for
distribution to all non-Participants in the unit. Any
undistributed funds from this pool will be returned to
the Company and may not be distributed to other units.
Approved by the Compensation and Organization Committee of the Board of
Directors
December 18, 1996.
5
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<PAGE>
Exhibit 10d - Rogers Corporation 1988 Stock Option Plan - October 23,
1996 Amendment
AMENDMENT TO THE
ROGERS CORPORATION 1988 STOCK OPTION PLAN,
AS RESTATED SEPTEMBER 14, 1989
A. The Rogers Corporation 1988 Stock Option Plan, as restated September
14, 1989, (the "Plan") is hereby further amended as follows:
1. Section 2.1 of the Plan is hereby amended by deleting subsection
(d) in its entirety and substituting therefor the following:
"(d) `Committee' means the Compensation and Organization
Committee of the Board so long as it is composed of two or
more Directors, all of whom are `non-employee directors'
within the meaning of Rule 16b-3(b)(3)(i) under the Securities
Exchange Act of 1934, as amended (the `Act'); if said
Compensation and Organization Committee at any time fails to
be so composed, `Committee' shall mean a Committee appointed
by the Board that is so composed."
2. Section 7.13 of the Plan is hereby amended by deleting the
first sentence thereof in its entirety and substituting therefor
the following:
"Subject to the approval of the Committee, an Optionee 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 bound by all the terms
of such nonstatutory Option and the terms of the Plan."
3. Section 11.1 of the Plan is hereby amended by deleting the fourth
sentence thereof in its entirety and substituting therefor the
following:
"The Optionee's election to have shares withheld for this
purpose will be subject to the consent or disapproval of the
Committee."
B. The effective date of this Amendment shall be October 17, 1996.
Executed this 23rd day of October, 1996.
ROGERS CORPORATION
By /s/ Robert M. Soffer
Name: Robert M. Soffer
Title: Treasurer
F-10
<PAGE>
Exhibit 10h - Rogers Corporation 1994 Stock Compensation Plan - as restated
and amended on December 6, 1996
ROGERS CORPORATION
1994 STOCK COMPENSATION PLAN
AS RESTATED OCTOBER 17, 1996
SECTION 1. General Purpose of the Plan; Definitions.
The name of the plan is the Rogers Corporation 1994 Stock Compensation
Plan (the "Plan"). The purpose of the Plan is to advance the interests of
Rogers Corporation (the "Company"), its Subsidiaries and its stockholders
by providing key employees and Non-Employee Directors 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 Non-Employee Directors upon whose judgment, interest, and special effort
the successful conduct and profitability of its operations are largely
dependent.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards," except where referring to a particular
category of grant under the Plan, shall include Incentive Stock
Options, Non-Qualified Stock Options, and Non-Employee Director Stock
Awards.
"Award Agreement" means the agreement (if any) executed and
delivered to the Company by the recipient of an Award.
"Board" means the Board of Directors of the Company.
"Change of Control" is defined in Section 11.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor code, and related rules, regulations and interpretations.
"Committee" means the Compensation and Organization Committee of
the Board so long as it is composed of two or more Non-Employee Directors
that are "outside directors" within the meaning of Section 162(m) of the
Code and "non-employee directors" within the meaning of Rule
16b-3(b)(3)(i) of the Act; if said committee at any time fails to be so
composed, "Committee" shall mean a committee appointed by the Board that
is so composed.
"Disability" means (1) for purposes of Incentive Stock Options,
disability as set forth in Section 22(e)(3) of the Code and (2) for
purposes of Non-Qualified Stock Options, any medically determinable
physical or mental impairment which the
1
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Committee determines generally qualifies as a "disability" for purposes
of the employee benefits for which such individual is eligible.
"Effective Date" means January 1, 1994.
"Fair Market Value" as of any given 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 (or, if the
Stock ceases to be traded on the American Stock Exchange, as determined
based on such other method as is designated by the Committee).
"Incentive Stock Option" means any Stock Option designated and
qualified as an "incentive stock option" as defined in Section 422 of
the Code.
"Non-Employee Director" means a member of the Board who is not also
an employee of the Company or any Subsidiary.
"Non-Employee Director Stock Award" means any Award made pursuant
to Section 6.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Option" or "Stock Option" means any option to purchase shares of
Stock granted pursuant to Section 5.
"Retainer Payment Date" means the day in June and day in December
of each calendar year which are designated by the Company as the dates
upon which is payable one half of the annual retainer fee due to a
Non-Employee Director with respect to such calendar year; provided,
however, that with respect to any individual who ceases to be a
Non-Employee Director, "Retainer Payment Date" shall also mean the date
designated by the Company on which is payable to such individual the
proportionate share of the retainer fee due to such individual for his
or her services as a Non-Employee Director since the later of the
Effective Date or the last Retainer Payment Date.
"Retirement" means termination of employment with the Company or
its Subsidiaries (1) that, for any individual who is eligible to
participate in the Rogers Corporation Defined Benefit Pension Plan,
qualifies as retirement under such plan and (2) that, for any individual
who is not eligible to participate in the Rogers Corporation Defined
Benefit Pension Plan, the Committee determines generally qualifies as
retirement for purposes of the employee benefits for which such
individual is eligible.
"Stock" means the Capital Stock, $1.00 par value, of the Company,
subject to adjustments pursuant to Section 3.
2
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<PAGE>
"Subsidiary" means any corporation or other entity (other than the
Company) in any unbroken chain of corporations or other entities,
beginning with the Company if each of the corporations or entities
(other than the last corporation or entity in the unbroken chain) owns
stock or other interests possessing 50% or more of the total combined
voting power of all classes of stock or other interests in one of the
other corporations or entities in the chain.
SECTION 2. Administration of Plan; Committee Authority to Select
Participants and Determine Awards, Etc.
(a) Committee. The Plan shall be administered by the Committee. 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 shall be pursuant to and in accordance with the provisions of the
Plan, shall be made or taken in the Committee's sole discretion and shall be
final, binding and conclusive for all purposes and upon all persons
whomsoever.
(b) Powers of Committee. The Committee shall have the power and
authority to grant Awards and to administer the Plan, consistent with the
terms of the Plan, including the power and authority:
(i) to select the officers and other key employees of the
Company or its Subsidiaries to whom Awards may from time to time be
granted;
(ii) to determine the time or times of grant, and the extent, if
any, of Incentive Stock Options or Non-Qualified Stock Options or any
combination of the foregoing, granted to such participants;
(iii) to determine the number of shares to be covered by any Award;
(iv) to determine and modify the terms and conditions, including
restrictions, not inconsistent with the terms of the Plan, of any Award,
which terms and conditions may differ among individual Awards and
participants, and to approve the form of Award Agreements; provided,
however, that no such action may be taken with respect to outstanding
Award Agreements without the consent of the optionee;
(v) to determine and/or accelerate the exercisability or vesting
of all or any portion of any Option;
(vi) subject to the provisions of Section 5(a)(ii), to extend the
period during which Options may be exercised;
3
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(vii) to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related Award
Agreements and any other related written instruments); to make all
determinations it deems advisable for the administration of the Plan;
to decide all disputes arising in connection with the Plan; and to
otherwise supervise the administration of the Plan.
All decisions and interpretations of the Committee shall be binding on
all persons, including the Company and Plan participants.
SECTION 3. Shares Issuable under the Plan; Mergers; Substitution.
(a) Stock Issuable. The maximum number of shares of Stock reserved
and available for issuance under the Plan shall be 500,000 shares. For
purposes of this limitation, the shares of Stock underlying any Awards which
are forfeited, cancelled, reacquired by the Company, satisfied without the
issuance of Stock or otherwise terminated (other than by exercise) shall be
added back to the shares of Stock available for issuance under the Plan.
Subject to such overall limitation, shares may be issued up to such maximum
number pursuant to any type or types of Award; provided, however, that no
Awards for more than 100,000 shares may be granted to any one individual
during any twelve-month period, subject to adjustment pursuant to Section
3(b) below. Shares issued under the Plan may be authorized but unissued
shares or shares reacquired by the Company.
(b) Stock Dividends, Mergers, etc. In the event of a stock dividend,
stock split or similar change in capitalization affecting the Stock, the
Committee shall make appropriate adjustments in (i) the number and kind of
shares of Stock or securities on which Awards may thereafter be granted,
(ii) the number and kind of shares remaining subject to outstanding Awards,
and (iii) the option or purchase price in respect of such shares. In the
event of any merger, consolidation, dissolution or liquidation of the
Company, the Committee in its sole discretion may, as to any outstanding
Awards, make such substitution or adjustment in the aggregate number of
shares reserved for issuance under the Plan and in the number and purchase
price (if any) of shares subject to such Awards as it may determine and as
may be permitted by the terms of such transaction, or accelerate, amend or
terminate such Awards upon such terms and conditions as it shall provide
(which, in the case of the termination of the vested portion of any Award,
shall require payment or other consideration which the Committee deems
equitable in the circumstances) subject, however to the provisions of
Section 11.
(c) Substitute Awards. The Company may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who concurrently become employees of the Company or a Subsidiary
as the result of a merger or consolidation of the employing corporation with
the Company or a Subsidiary or the acquisition by the Company or a
Subsidiary of property or stock of the employing corporation.
4
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The Committee may direct that the substitute awards be granted on such terms
and conditions as the Committee considers appropriate in the circumstances.
SECTION 4. Eligibility.
Participants in the Plan will be those officers and other key employees
of the Company or its Subsidiaries who are responsible for or contribute to
the management, growth or profitability of the Company and its Subsidiaries
and who are selected from time to time by the Committee, in its sole
discretion. Non-Employee Directors are also eligible to participate in the
Plan but only to the extent provided in Sections 5(b) and 6 below.
SECTION 5. Stock Options.
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock
Options or Non-Qualified Stock Options. Incentive Stock Options may be
granted only to employees of the Company or any Subsidiary. To the extent
that any option does not qualify as an Incentive Stock Option, it shall
constitute a Non-Qualified Stock Option. All Stock Options granted to
Non-Employee Directors shall be Non-Qualified Options.
No Incentive Stock Option shall be granted under the Plan following
the 10th anniversary of the Effective Date.
(a) Stock Options Granted to Employees. The Committee in its sole
discretion may grant Stock Options to officers and other key employees of
the Company or any Subsidiary. Stock Options granted to such employees
pursuant to this Section 5(a) shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem
desirable:
(i) Option Price. The option price per share of Stock
purchasable under a Stock Option shall be determined by the Committee
at the time of grant but shall be, in the case of Incentive Stock
Options, not less than 100% of Fair Market Value as of the date of
grant, and in the case of Non-Qualified Stock Options, not less than
85% of Fair Market Value as of the date of grant. If an employee
owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company or any
Subsidiary or parent corporation and an Incentive Stock Option is
granted to such employee, the option price shall be not less than
110% of Fair Market Value as of the date of grant.
5
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(ii) Option Term. The term of each Stock Option shall be fixed
by the Committee, but no Stock Option shall be exercisable more than
ten years after the date the option is granted. If an employee owns
or is deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of the Company or any Subsidiary or parent
corporation and an Incentive Stock Option is granted to such employee,
the term of such option shall be no more than five years from the date
of grant.
(iii) Exercisability; Rights of a Shareholder. Stock Options
shall become vested and exercisable at such time or times, whether
or not in installments, as shall be determined by the Committee. The
Committee may at any time accelerate the exercisability of all or
any portion of any Stock Option. An optionee shall have the rights
of a shareholder only as to shares acquired upon the exercise of a
Stock Option and not as to any shares of Stock covered by unexercised
Stock Options. Except as provided in Section 3(b), no adjustment
shall be made for dividends or other rights, the record date for
which is prior to the date of issuance of a Stock certificate which
evidences the shares acquired by an optionee.
(iv) Method of Exercise. Stock Options may be exercised in
whole or in part, by giving written notice of exercise to the
Company, specifying the number of shares to be purchased. Payment
of the purchase price may be made by one or more of the following
methods:
(1) In cash, by certified or bank check or other
instrument acceptable to the Company;
(2) In the form of shares of Stock that the optionee
has beneficially owned for more than six months and that are
not then subject to restrictions under any Company plan.
Such surrendered shares shall be valued at Fair Market Value
on the exercise date; or
(3) Delivery by a broker of cash, a certified or bank
check or other instrument payable and acceptable to the Company
to pay the option purchase price; provided that in the event
the optionee chooses to pay the option purchase price as so
provided, the optionee and the broker shall comply with such
procedures and enter into such agreements of indemnity and
other agreements as the Company shall prescribe as a condition
of such payment procedure.
Payment instruments will be received subject to collection. The
delivery of certificates representing shares of Stock to be purchased
pursuant to the exercise of a Stock Option will be contingent upon
receipt from the optionee (or a purchaser acting in his or her stead
in accordance with the provisions of the applicable Award Agreement)
by the Company of the full purchase price for such shares and the
fulfillment of any other requirements contained in the Award Agreement
or applicable provisions of laws.
6
F-16
<PAGE>
(v) Non-transferability of Options. Subject to the approval
of the Committee, an optionee may transfer a Non-Qualified Stock
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, no Stock Option shall be transferable by
the optionee otherwise than by will or by the laws of descent and
distribution and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee.
(vi) Annual Limit on Incentive Stock Options. To the extent
required for "incentive stock option" treatment under Section 422 of
the Code, the aggregate Fair Market Value (determined as of the time
of grant) of the Stock with respect to which Incentive Stock Options
granted under this Plan and any other plan of the Company or its
Subsidiaries or any parent corporation become exercisable for the
first time by an optionee during any calendar year shall not exceed
$100,000. To the extent that any Stock Option exceeds this limit,
it shall constitute a Non-Qualified Stock Option.
(vii) Form of Settlement. Shares of Stock issued upon exercise
of a Stock Option shall be free of all restrictions under the Plan
except as otherwise provided in the Plan.
(b) Stock Options Granted to Non-Employee Directors.
(i) Automatic Grant of Options. Each Non-Employee Director
shall automatically be granted, as of each Retainer Payment Date,
a Non-Qualified Stock Option to purchase a number of shares of Stock
equal to $6,750 (or, with respect to any individual who has become
or ceased to be a Non-Employee Director since the later of the
Effective Date or the last Retainer Payment Date, an amount equal
to a prorated portion of $6,750 as determined on an equitable basis
by the Company (the "Partial Retainer")) divided by the Fair Market
Value of the Stock as of the date the Option is to be granted,
rounded up to the nearest whole share. The exercise price per
share for the Stock covered by a Stock Option granted to a Non-
Employee Director under this Section 5(b) shall be equal to the
Fair Market Value of the Stock as of the date the Stock Option is
granted.
(ii) Exercise; Termination; Non-transferability. Except as
provided in Section 11, each Option granted under this Section 5(b)
may first be exercised in whole or in part by the Non-Employee
Director to whom it is granted (or, in the case of the death of
the Non-Employee Director, his or her designated beneficiary) on
the date which is six months and one day after the date as of
which it was granted and shall thereafter be exercisable by the
Non-Employee Director (or, in the case of the death of the Non-
Employee Director, his or her designated beneficiary) until the
tenth anniversary of the date such Option is granted regardless of
whether the Non-Employee Director continues to be a Director.
Except as specifically provided for in this Section 5(b), Options
granted under this Section 5(b) shall be subject to the same terms and
7
F-17
<PAGE>
conditions as are generally applicable to Non-Qualified Stock
Options granted under the Plan, including, without limitation, the
restrictions on transferability contained in Section 5(a)(v).
(iii) Limited to Non-Employee Directors. The provisions of
this Section 5(b) shall apply only to Options granted or to be
granted to Non-Employee Directors, and shall not be deemed to modify,
limit or otherwise apply to any other provision of this Plan or to
any Option issued under this Plan to a participant who is not a Non-
Employee Director of the Company. To the extent inconsistent with
the provisions of any other Section of this Plan, the provisions of
this Section 5(b) shall govern the rights and obligations of the
Company and Non-Employee Directors respecting Options granted or to
be granted to Non-Employee Directors.
SECTION 6. Non-Employee Director Stock Awards.
(a) Stock Awards. Subject to Section 6(b) below, each Non-Employee
Director shall be granted, as of each Retainer Payment Date, shares of
Stock free of any restrictions (except as otherwise provided in the Plan)
in lieu of all, or a portion, of the annual retainer fee due to such Non-
Employee Director. The number of shares granted hereunder shall equal
$6,750 (or, with respect to any individual who has become or ceased to be
a Non-Employee Director since the later of the Effective Date or the last
Retainer Payment Date, an amount equal to the Partial Retainer) divided by
the Fair Market Value of the Stock as of the date of grant, rounded up to
the nearest whole share. To the extent that the retainer fee to be paid
to a Non-Employee Director as of any Retainer Payment Date exceeds $6,750
(or, with respect to any individual who has become or ceased to be a Non-
Employee Director since the later of the Effective Date or the last
Retainer Payment Date, an amount equal to the Partial Retainer), the Non-
Employee Director may irrevocably elect to receive all or a portion of
such excess amount in the form of an additional Non-Employee Director
Stock Award hereunder. Such additional Non-Employee Director Stock Award
shall be equal to the number of shares determined by dividing such excess
amount by the Fair Market Value of the Stock as of the date of grant,
rounded up to the nearest whole share.
(b) Deferral of Awards. Each Non-Employee Director who is entitled
to an Award under Section 6(a) above, will have the right to defer up to
100% of the annual retainer fee due to such Non-Employee Director including
any portion thereof to be awarded in Stock pursuant to Section 6(a) above,
in accordance with such rules and procedures as may from time to time be
established by the Company for that purpose. Dividends, if any, which would
have been paid on any Stock so deferred, but for such deferral, will be
payable to the Non-Employee Director at the same time and in the same
manner as the shares of Stock to which they relate.
8
F-18
<PAGE>
SECTION 7. Tax Withholding.
(a) Payment by Participant. Each participant shall, no later than
the date as of which the value of an Award or of any Stock or other amounts
received thereunder first becomes includible in the gross income of the
participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Company regarding payment of, any Federal,
state, or local taxes of any kind required by law to be withheld with
respect to such income. The Company and its Subsidiaries shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the participant.
(b) Payment in Shares. Subject to the consent or disapproval of the
Committee, a participant may elect to have such tax withholding obligation
satisfied, in whole or in part, by (i) authorizing the Company to withhold
from shares of Stock to be issued pursuant to any Award a number of shares
with an aggregate Fair Market Value (as of the date the withholding is
effected) that would satisfy the withholding amount due, or (ii) transferring
to the Company shares of Stock owned by the participant with an aggregate
Fair Market Value (as of the date the withholding is effected) that would
satisfy the withholding amount due.
SECTION 8. Transfer, Leave of Absence, Etc.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or
from the Company to a Subsidiary, or from one Subsidiary to another;
(b) an approved leave of absence for military service or sickness, or
for any other purpose approved by the Company or the Subsidiary, if the
employee's right to re-employment is guaranteed either by a statute or by
contract or under the policy pursuant to which the leave of absence was
granted or if the Committee otherwise so provides in writing.
SECTION 9. Amendments and Termination.
The Board may at any time amend or discontinue the Plan and the
Committee may at any time amend or cancel any outstanding Award (or provide
substitute Awards at the same or reduced exercise or purchase price or with
no exercise or purchase price, but such price, if any, must satisfy the
requirements which would apply to the substitute or amended Award if it
were then initially granted under this Plan) for the purpose of satisfying
changes in law or for any other lawful purpose, but no such action shall
adversely affect rights under any outstanding Award without the holder's
written consent. However, no such amendment, unless approved by the
stockholders of the Company, shall be effective if it would cause the Plan
to fail to satisfy the incentive stock option requirements of the Code.
9
F-19
<PAGE>
SECTION 10. Status of Plan.
With respect to the portion of any Award which has not been exercised
and any payments in cash, Stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a
general creditor of the Company unless the Committee shall otherwise
expressly determine in connection with any Award or Awards. In its sole
discretion, the Committee may authorize the creation of trusts or other
arrangements to meet the Company's obligations to deliver Stock or make
payments with respect to Awards hereunder, provided that the existence of
such trusts or other arrangements is consistent with the provision of the
foregoing sentence.
SECTION 11. Change of Control.
Upon the occurrence of a Change of Control as defined in this
Section 11:
(a) Each Stock Option shall automatically become fully exercisable
unless the Committee shall otherwise expressly provide at the time of grant.
(b) "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 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 the Effective Date, constitute 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 the Effective Date 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
10
F-20
<PAGE>
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.
SECTION 12. General Provisions.
(a) No Distribution, Compliance with Legal Requirements. The Committee
may require each person acquiring shares pursuant to an Award to represent
to and agree with the Company in writing that such person is acquiring the
shares without a view to distribution thereof for purposes of federal
securities laws. No shares of Stock shall be issued pursuant to an Award
until all applicable securities law and other legal and stock exchange
requirements have been satisfied. The Committee may require the placing of
such stop-orders and restrictive legends on certificates for Stock and
Awards as it deems appropriate.
(b) Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or
additional compensation arrangements, subject to stockholder approval if
such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
SECTION 13. Rights of Employees.
Nothing in the Plan shall interfere with or limit in any way the right
of the Company or Subsidiary to terminate any individual's employment at any
time, nor confer upon any individual any right to continue in the service of
the Company or any Subsidiary. No individual shall have a right to be
granted a Stock Option pursuant to the terms of the Plan or, having received
a Stock Option, to again be granted a Stock Option.
SECTION 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.
11
F-21
<PAGE>
SECTION 15. Effective Date of Plan.
The Plan shall become effective upon approval by the holders of a
majority of the shares of capital stock of the Company present or
represented and entitled to vote at a meeting of stockholders. Subject to
such approval by the stockholders, and to the requirement that no Stock may
be issued hereunder prior to such approval, Awards may be granted hereunder
by the Committee on and after adoption of the Plan by the Board.
Executed this 6th day of December, 1996.
ROGERS CORPORATION
By /s/ Robert M. Soffer
Name: Robert M. Soffer
Title: Treasurer
- - Approved by the Rogers Corporation Board of Directors on December 7, 1993
- - Approved by Rogers Corporation stockholders on April 28, 1994
- - Amended and restated by the Rogers Corporation Board of Directors on
October 17, 1996
12
F-22
<PAGE>
Exhibit 10i - Rogers Corporation Voluntary Deferred Compensation Plan for
Non-Employee Directors - December 27, 1996 Amendment
AMENDMENT NO. 2 TO ROGERS CORPORATION
VOLUNTARY DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
Pursuant to the powers reserved to it in Section 10 of the Rogers
Corporation Voluntary Deferred Compensation Plan for Non-Employee Directors
(the "Plan"), Rogers Corporation (the "Company") hereby amends the Plan
with the consent of the non-employee Directors of the Company's Board of
Directors, effective as of December 18, 1996, as follows:
1. Section 3 of the Plan is hereby amended to read as follows:
"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 becomes a Director during a calendar year 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 (i) consented to in advance by the
Compensation and Organization Committee of the Company's Board of Directors
(which shall be a committee consisting of two or more "non-employee
directors" within the meaning of Rule 16b-3(b)(3)(i) promulgated under
the Securities Exchange Act of 1934, as amended (the "Act") or (ii) in
accordance with such other rules and procedures as the Company deems
necessary or appropriate to comply with the requirements of Section 16 of
the Act. 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 Cash Fees and Stock Fees which have not yet been earned and which are
payable after receipt and acceptance by the Company of such revocation."
2. Sections 5(e) and 5(f) of the Plan is hereby amended to read as follows:
"(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.
"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
F-23
<PAGE>
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.
(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 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 related shall be paid at the times an in
the amounts specified in such request."
3. Section 10(b)(i) of the Plan is hereby amended by deleting the first
parenthetical in such Section and replacing it with the following:
"(as such term is used in Sections 13(d) and 14(d)(2) of the Act)"
4. Except as herein amended, the provisions of the Plan shall remain in
full force and effect.
5. IN WITNESS WHEREOF, the Company has caused this Second Amendment to the
Plan to be executed on this 27th day of December, 1996.
ROGERS CORPORATION
By /s/ Robert M. Soffer
Name: Robert M. Soffer
Title: Treasurer
F-24
<PAGE>
Exhibit 10j - Rogers Corporation Voluntary Deferred Compensation Plan for
Key Employees - April 16, 1996
AMENDMENT NO. 4 TO 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
April 16, 1996, as follows:
1. Section 2 of the Plan is hereby amended to read as follows:
"2. Right to Defer.
(a) For each deferral election made prior to May 1, 1996,
each Participant may elect to defer, for any calendar year, payment
of (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 (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 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.
(b) For each deferral election made on or after May 1, 1996,
each Participant may elect to defer, for any calendar year, payment
of up to 50% of such Participant's Salary; 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 Salary deferral of
at least
1 of 2
F-25
<PAGE>
$4,000 determined based on the Participant's Salary at the time
of such election. For each deferral election made on or after
May 1, 1996, each Participant may elect to defer, for any calendar
year, payment of up to 100% of such Participant's Bonus; provided,
however, that if a Participant's election to defer a portion of his
or her Bonus for any calendar year does not result in a minimum Bonus
deferral of at least $4,000 no portion of such Bonus shall be deferred."
2. Except as herein amended, the provisions of the Plan, as previously
amended, shall remain in full force and effect.
3. IN WITNESS WHEREOF, the Committee has caused this Fourth Amendment to
the Plan to be executed on this 17th day of April, 1996.
PENSION COMMITTEE
By /s/ Robert M. Soffer
Name: Robert M. Soffer
Title: Secretary of the Committee and
Treasurer of Rogers Corporation
2 of 2
F-26
<PAGE>
SELECTED FINANCIAL DATA
(Dollars in Thousands, Except Per Share Amounts)
- ----------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
SALES AND INCOME
- ----------
Net Sales $141,476 $140,293 $133,866 $123,168 $172,361
Cost Reduction Charges -- -- -- -- (26,602)
Income (Loss) Before
Income Taxes and
Cumulative Effect of
Accounting Change 17,657 15,390 10,712 6,716 (28,005)
Cumulative Effect of
Change in Accounting
for Postretirement
Benefits -- -- -- -- (6,241)
Net Income (Loss) 13,949 13,081 10,134 6,670 (32,666)
PER SHARE DATA
- ----------
Income (Loss) Before
Cumulative Effect of
Accounting Change* 1.83 1.69 1.42 1.05 (4.27)
Cumulative Effect of
Change in Accounting
for Postretirement
Benefits* -- -- -- -- (1.01)
Net Income (Loss)* 1.83 1.69 1.42 1.05 (5.28)
Book Value 10.43 8.42 6.41 4.33 3.08
FINANCIAL POSITION (YEAR-END)
- ----------
Current Assets 62,725 55,766 47,720 36,842 56,028
Current Liabilities 24,637 24,412 23,016 23,683 33,532
Ratio of Current Assets
to Current
Liabilities 2.5 to 1 2.3 to 1 2.1 to 1 1.6 to 1 1.7 to 1
Cash, Cash Equivalents,
and Marketable
Securities 19,631 14,676 13,851 4,533 5,356
Working Capital 38,088 31,354 24,704 13,159 22,496
Property, Plant and
Equipment - Net 36,614 36,473 34,061 36,807 35,504
Total Assets 119,227 102,516 89,443 81,837 97,746
Long-Term Debt less
Current Maturities 3,600 4,200 6,675 14,190 24,197
Shareholders' Equity 77,212 60,098 45,125 27,891 19,083
Long-Term Debt as a
Percentage of
Shareholders' Equity 5% 7% 15% 51% 127%
OTHER DATA
- ----------
Depreciation and
Amortization 5,781 5,738 6,680 6,691 10,928
Research and Development
Expenses 9,184 9,320 9,230 9,495 12,441
Capital Expenditures 6,326 8,853 4,648 8,582 9,061
Number of Employees
(Average) 854 928 977 1,104** 2,512
Net Sales per Employee 166 151 137 112 69
Number of Shares
Outstanding at
Year-End 7,405,961 7,135,090 7,045,270 6,444,922 6,201,298
- ----------
* Based on weighted average number of shares and share equivalents
outstanding for 1993-1996, and based on weighted average number of
shares outstanding for 1992.
** Excludes employees of the divested flexible interconnections business.
19
F-27
<PAGE>
CONSOLIDATED BALANCE SHEETS
- ----------
December 29, December 31,
(Dollars in Thousands) 1996 1995
----------- -----------
ASSETS
- ----------
Current Assets:
Cash and Cash Equivalents $ 18,675 $ 13,111
Marketable Securities 956 1,565
Accounts Receivable, Net 21,108 18,439
Inventories:
Raw Materials 6,183 5,267
In-Process and Finished 7,539 7,635
Less LIFO Reserve (1,049) (2,090)
--------- ---------
Total Inventories 12,673 10,812
Current Deferred Income Taxes 2,807 2,560
Assets Held for Sale, Net of Valuation
Reserves of $492 and $2,032 (Note B) 5,158 8,809
Other Current Assets (Note P) 1,348 470
--------- ---------
Total Current Assets 62,725 55,766
--------- ---------
Property, Plant and Equipment, Net of
Accumulated Depreciation of $57,928
and $53,669 36,614 36,473
Investment in Unconsolidated Joint Venture 4,975 4,763
Pension Asset 3,851 3,744
Acquisition Escrow (Note P) 8,994 --
Other Assets 2,068 1,770
--------- ---------
Total Assets $ 119,227 $ 102,516
========= =========
20
F-28
<PAGE>
December 29, December 31,
(Dollars in Thousands) 1996 1995
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------
Current Liabilities:
Accounts Payable $ 9,726 $ 8,338
Current Maturities of Long-Term Debt 600 600
Accrued Employee Benefits and Compensation 5,880 8,703
Accrued Income Taxes Payable 3,345 1,084
Taxes, Other than Federal and Foreign Income 1,175 1,020
Other Accrued Liabilities 3,911 4,667
--------- ---------
Total Current Liabilities 24,637 24,412
--------- ---------
Long-Term Debt, less Current Maturities 3,600 4,200
Noncurrent Deferred Income Taxes 419 1,632
Noncurrent Pension Liability 3,615 3,223
Noncurrent Retiree Health Care and Life
Insurance Benefits 6,342 5,942
Other Long-Term Liabilities 3,402 3,009
Shareholders' Equity:
Capital Stock, $1 Par Value (Notes A & K):
Authorized Shares 25,000,000; Issued
and Outstanding Shares 7,405,961 and
7,135,090 7,406 7,135
Additional Paid-In Capital 29,691 26,286
Unrealized Loss on Marketable Securities (2) --
Currency Translation Adjustment 2,035 2,544
Retained Earnings 38,082 24,133
--------- ---------
Total Shareholders' Equity 77,212 60,098
--------- ---------
Total Liabilities and Shareholders'
Equity $ 119,227 $ 102,516
========= =========
- ----------
The accompanying notes are an integral part of the consolidated financial
statements.
21
F-29
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
- ----------
(Dollars in Thousands, Except Per Share
Amounts) 1996 1995 1994
---------------------------------
Net Sales $ 141,476 $ 140,293 $ 133,866
Cost of Sales 97,279 96,457 93,650
Selling and Administrative Expenses 21,285 21,501 20,705
Research and Development Expenses 9,184 9,320 9,230
---------------------------------
Total Costs and Expenses 127,748 127,278 123,585
---------------------------------
Operating Income 13,728 13,015 10,281
Other Income less Other Charges 3,415 2,440 1,579
Interest Income (Expense), Net 514 (65) (1,148)
---------------------------------
Income Before Income Taxes 17,657 15,390 10,712
Income Taxes 3,708 2,309 578
---------------------------------
Net Income 13,949 13,081 10,134
Retained Earnings at Beginning of
Year 24,133 11,052 918
---------------------------------
Retained Earnings at End of Year $ 38,082 $ 24,133 $ 11,052
=================================
Net Income Per Share (Notes A & K):
Primary $ 1.83 $ 1.69 $ 1.42
---------------------------------
Fully Diluted $ 1.83 $ 1.69 $ 1.38
---------------------------------
Shares Used in Computing (Notes A & K):
Primary 7,627,184 7,719,094 7,129,316
---------------------------------
Fully Diluted 7,640,872 7,734,454 7,322,996
=================================
- ----------
The accompanying notes are an integral part of the consolidated financial
statements.
22
F-30
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
- ----------
1996 1995 1994
CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES: --------------------------------
- ----------
Net Income $ 13,949 $ 13,081 $ 10,134
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 5,781 5,738 6,680
Benefit for Deferred Income Taxes (1,439) (768) (160)
Equity in Undistributed Income of
Unconsolidated Joint Ventures, Net (1,555) (556) (1,071)
(Gain) Loss on Disposition of Assets (10) 129 (344)
Noncurrent Pension and Postretirement
Benefits 1,482 1,455 2,107
Other, Net 202 1,674 (562)
Changes in Operating Assets and
Liabilities Excluding Effects of
Disposition of Assets:
Accounts Receivable (2,173) (1,881) (1,258)
Inventories (2,000) (2,847) (465)
Prepaid Expenses 3 (7) 260
Accounts Payable and Accrued
Expenses 46 (4,148) (1,424)
--------------------------------
Net Cash Provided by Operating
Activities 14,286 11,870 13,897
CASH FLOWS PROVIDED BY (USED IN) INVESTING
ACTIVITIES:
- ----------
Capital Expenditures (6,326) (8,853) (4,648)
Proceeds from Sale of Businesses 2,567 -- 909
Acquisition Escrow (9,690) -- --
Proceeds from Sale of Property, Plant and
Equipment 946 11 1,756
Proceeds from Sale of Marketable Securities 609 -- --
Purchase of Marketable Securities -- (1,565) --
Investment in Unconsolidated Joint Ventures
and Affiliates 490 -- --
--------------------------------
Net Cash Used in Investing
Activities (11,404) (10,407) (1,983)
CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES:
- ----------
Repayments of Debt Principal (600) (3,100) (4,903)
Proceeds from Sale of Capital Stock 3,427 810 2,092
--------------------------------
Net Cash Provided By (Used in)
Financing Activities 2,827 (2,290) (2,811)
Effect of Exchange Rate Changes on Cash (145) 87 215
--------------------------------
Net Increase (Decrease) in Cash and Cash
Equivalents 5,564 (740) 9,318
Cash and Cash Equivalents at Beginning of
Year 13,111 13,851 4,533
--------------------------------
Cash and Cash Equivalents at End of Year $ 18,675 $ 13,111 $ 13,851
================================
- ---------
The accompanying notes are an integral part of the consolidated
financial statements.
23
F-31
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ----------
NOTE A-ACCOUNTING POLICIES
- ----------
ORGANIZATION:
- ----------
Rogers Corporation manufactures specialty polymer composite materials and
components which it markets around the world. In 1996 Rogers had two
business segments which were about equal in size based on sales and assets.
Polymer Products included high performance elastomer materials and
components and moldable composite materials. Electronic Products included
materials for high frequency printed circuit boards, materials for flexible
printed circuit boards, and power distribution bus bars. Polymer Products
were sold to manufacturers in the consumer, transportation, imaging,
communication, and computer markets. Electronic Products were sold
principally to printed circuit board fabricators and equipment
manufacturers for components in computer, communication, transportation,
and consumer market applications.
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 and Federal
Agency securities with an original maturity of three months or less. These
investments are stated at cost, which approximates market value.
MARKETABLE SECURITIES:
- ----------
The Company's marketable securities are classified as available-for-sale
and are reported at fair value (based on quoted market prices) on the
Company's consolidated balance sheet. Marketable securities are comprised
of commercial paper, U.S. treasury notes, and corporate bonds. Unrealized
gains and losses on such securities are reflected, net of tax, in
shareholders' equity.
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. However, payment terms for amounts
owed by the joint ventures may be extended.
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.
24
F-32
<PAGE>
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
39% of total Company inventories at December 29, 1996 and 41% at December
31, 1995. 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 following
estimated useful lives of the assets:
Years
Buildings 30 to 45
Building improvements 10 to 25
Machinery and equipment 5 to 15
Office equipment 3 to 10
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 two noncontributory defined benefit plans covering
substantially all U.S. employees. The plan covering salaried employees
provides benefits based on salary, years of service, and age, while those
plans 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:
- ----------
The Company recognizes the cost of postretirement benefits other than
pensions over the years of service in which such benefits are earned. The
Company funds these postretirement benefits on a pay-as-you-go basis.
INCOME TAXES:
- ----------
The Company recognizes income taxes under the liability method. No
provision is made for U.S. income taxes on the undistributed earnings of
consolidated foreign subsidiaries because such earnings are substantially
reinvested in those companies for an indefinite period. Provision for the
tax consequences of distributions, if any, from consolidated foreign
subsidiaries is recorded in the year the distribution is declared.
REVENUE RECOGNITION:
- ----------
Revenue is recognized when goods are shipped.
NET INCOME 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. 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.
25
F-33
<PAGE>
USE OF ESTIMATES:
- ----------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS:
- ----------
The Company has not yet adopted Statement of Position 96-1, "Environmental
Remediation Liabilities," which is effective for fiscal year 1997. This
Statement is not expected to have a material effect on the Company's
financial statements.
RECLASSIFICATIONS:
- ----------
Certain reclassifications were made for 1994 and 1995 to report results
consistent with 1996 reporting practice.
NOTE B-DIVESTITURES
- ----------
On December 31, 1995, the Company completed the sale of its Soladyne
Division to Merix Corporation for $2.6 million which was received in
January 1996. This sale did not include this division's trade accounts
receivable which were retained by the Company. The proceeds from this
divestiture modestly exceeded the carrying value of the assets plus the
costs related to disposition.
At December 29, 1996, assets held for sale at estimated net realizable
value were $5.2 million, consisting of the land and building being leased
to the buyer of the Company's divested flexible interconnections business.
NOTE C-INVENTORIES
- ----------
Certain inventories, amounting to $4,994,000 at December 29, 1996, and
$4,423,000 at December 31, 1995, are valued at the lower of cost,
determined by the last-in, first-out method, or market.
NOTE D-PROPERTY, PLANT AND EQUIPMENT
- ----------
December 29, December 31,
(Dollars in Thousands) 1996 1995
----------- -----------
Land $ 1,031 $ 1,074
Buildings and improvements 31,430 30,630
Machinery and equipment 52,234 45,355
Office equipment 7,756 8,369
Installations in process 2,091 4,714
----------- ----------
94,542 90,142
Accumulated depreciation (57,928) (53,669)
----------- -----------
$ 36,614 $ 36,473
=========== ===========
Depreciation expense was $5,752,000 in 1996, $5,676,000 in 1995, and
$6,569,000 in 1994. Interest costs incurred during the years 1996, 1995,
and 1994 were $765,000, $1,154,000, and $1,751,000, respectively, of which
$116,000 in 1996 and $45,000 in 1995 were capitalized as part of the cost
of the new plant and equipment.
26
F-34
<PAGE>
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.
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 recorded income
from unconsolidated joint ventures and a 50% share of the income of those
joint ventures listed below.
December 29, December 31,
(Dollars in Thousands) 1996 1995
---------- ----------
Current Assets $ 20,105 $ 20,631
Noncurrent Assets 14,385 16,035
Current Liabilities 8,437 10,907
Noncurrent Liabilities 13,359 14,736
Shareholders' Equity 12,694 11,023
Year Ended
---------------------------------------
December 29, December 31, January 1,
(Dollars in Thousands) 1996 1995 1995
---------- ---------- ----------
Net Sales $ 64,850 $ 62,164 $ 53,770
Gross Profit 22,058 12,748 15,396
Net Income 3,995 322 4,572
Note that in the tables above, Rogers INOAC Corporation is reported as of
October 31 for the respective years. Also, 1995 amounts have been adjusted
to reflect the Durel audit completed in April 1996, creating timing
differences between the net income reported above and Rogers 50% share of
income reported in its financial statements.
Sales to unconsolidated joint ventures amounted to $710,000 in 1996,
$471,000 in 1995, and $858,000 in 1994.
At December 29, 1996, the Company had indirectly guaranteed 50% of a loan
entered into by one of the unconsolidated joint ventures. The Company's
proportionate share of the outstanding principal under this guarantee was
$4,750,000 at December 29, 1996 and December 31, 1995. The Company
believes that the unconsolidated joint venture will be able to meet its
obligations under this financing arrangement and accordingly no payments
will be required and no losses will be incurred under this guarantee.
Equity income from unconsolidated joint ventures is included in other
income less other charges on the consolidated statements of income and
retained earnings.
27
F-35
<PAGE>
NOTE F-PENSIONS
- -----------
The Company has two noncontributory defined benefit pension plans covering
substantially all U.S. employees. The discount rate assumptions used to
develop pension expense were 7.25% in 1996, 8.5% in 1995, and 7.5% in 1994.
The expected long-term rates of investment return were assumed to be
primarily 9.0% for the pension plan covering unionized hourly employees and
9.5% for the other pension plan in each year presented.
Net pension cost consisted of the following components:
(Dollars in Thousands) 1996 1995 1994
-------- -------- --------
Service cost (benefits earned during the period) $ 1,305 $ 1,012 $ 1,224
Interest cost on projected benefit obligation 3,374 3,008 2,976
Actual return on plan assets (6,512) (7,461) (319)
Net amortization and deferral 2,601 4,224 (2,893)
-------- -------- --------
Net pension cost $ 768 $ 783 $ 988
======== ======== ========
The following table sets forth the funded status of the plans and amounts
recognized in the Company's consolidated balance sheets:
(Dollars in Thousands) Dec. 29, 1996 December 31, 1995
------------- -------------------------------
Plans Whose Plan Whose Plan Whose
Assets Assets Accumulated
Exceed Exceed Benefits Total
Accumulated Accumulated Exceed Both
Benefits* Benefits Assets Plans
------------ -------------------------------
Actuarial present value of benefit obligations:
Vested benefit obligation $ 40,942 $ 28,163 $ 8,996 $ 37,159
============ ==============================
Accumulated benefit obligation $ 41,254 $ 28,351 $ 9,025 $ 37,376
============ ==============================
Projected benefit obligation $ (50,184) $ (37,843) $(9,025) $(46,868)
Plan assets at fair value 48,519 34,580 7,903 42,483
------------ -------------------------------
Projected benefit obligation in
excess of plan assets (1,665) (3,263) (1,122) (4,385)
Unrecognized net (gain) loss 2,775 2,467 1,916 4,383
Unrecognized prior service cost 2,132 931 1,480 2,411
Unrecognized net (asset)
obligation, net of amortization (2,383) (2,801) 83 (2,718)
Adjustment required to recognize
minimum liability -- -- (3,479) (3,479)
------------ -------------------------------
Net pension liability recognized
in the consolidated balance
sheets $ 859 $ (2,666) $(1,122) $(3,788)
============ ===============================
The net pension liability is included in the following balance sheet
accounts:
Noncurrent pension asset $ 3,851 $ -- $ 265 $ 265
Accrued employee benefits and
compensation -- -- (1,387) (1,387)
Noncurrent pension liability (2,992) (2,666) -- (2,666)
------------ -------------------------------
Net pension liability $ 859 $ (2,666) $(1,122) $(3,788)
============ ===============================
* The impact of contributions made during 1996 and 1995 have brought the
pension plan covering unionized hourly employees to a level in 1996 where
plan assets exceed accumulated benefit obligations.
28
F-36
<PAGE>
Also included in the noncurrent pension liability is an additional pension
liability of $623,000 and $557,000 in 1996 and 1995, respectively.
The discount rate used in determining the present value of benefit
obligations was 7.25% for both 1996 and 1995. The long-term annual rate of
increase in compensation levels assumption was 5.0% in both years.
Plan assets consist of 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 benefits to employees who have 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 plans contain deductible and/or coinsurance cost-sharing
features.
Net periodic postretirement benefit cost includes the following components:
(Dollars in Thousands) 1996 1995 1994
---------- ----------- ----------
Service cost $ 245 $ 219 $ 309
Interest cost 336 367 413
Amortization of unrecognized net gain (89) (129) (32)
---------- ----------- ----------
Net periodic postretirement benefit cost $ 492 $ 457 $ 690
========== =========== ==========
The discount rate assumption used to develop postretirement benefit expense
was 7.25% in 1996, 8.5% in 1995, and 7.5% in 1994.
The actuarial and recorded liabilities for these three plans, none of which
have been funded, were as follows:
December 29, December 31,
(Dollars in Thousands) 1996 1995
---------- -----------
Accumulated postretirement benefit obligation:
Retirees $ (2,618) $ (2,429)
Fully eligible active plan participants (1,035) (768)
Other active plan participants (1,222) (1,102)
---------- -----------
Accumulated postretirement benefit obligation (4,875) (4,299)
Unrecognized net gain (1,867) (2,293)
---------- -----------
Accrued postretirement benefit liability $ (6,742) $ (6,592)
========== ===========
29
F-37
<PAGE>
The net periodic postretirement benefit liability of $6,742,000 in 1996 and
$6,592,000 in 1995 consists of a noncurrent liability of $6,342,000 and
$5,942,000, respectively, and a current postretirement benefit liability of
$400,000 and $650,000, 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 6.5% for 1997 (7.5% and 10.0% assumed for 1996 and 1995,
respectively), and is assumed to decrease by approximately one percentage
point each year to 4.5% in 1999 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
1997 by approximately $321,000 and the aggregate of the service and interest
cost components of net periodic postretirement benefit cost for 1996 by
$54,000. Postretirement benefit costs and obligations are decreasing due to
declining estimated health care cost trend rates.
The discount rate used in determining the accumulated postretirement benefit
obligation was 7.25% for both 1996 and 1995.
NOTE H-EMPLOYEE SAVINGS AND INVESTMENT PLAN
- ----------
The Rogers Employee Savings and Investment Plan (RESIP) meets the
requirements contained in Section 401(k) of the Internal Revenue Code. All
regular U.S. employees with at least one month of service are eligible to
participate. The plan is designed to encourage the Company's U.S.
employees to save for retirement. Contributions to the plan 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, the Company matched employee
contributions up to 4% of a participant's deferred eligible annual
compensation subject to IRS limitations, at a rate of 50% in 1996, 40% in
1995, and 25% in 1994, for all participants other than those in collective
bargaining units. One-half of the Company's contribution was invested in
Company stock and the other half was invested at the employee's discretion.
RESIP related expense amounted to $427,000 in 1996, $396,000 in 1995, and
$276,000 in 1994, including Company matching contributions of $415,000,
$349,000, and $191,000, respectively.
NOTE I-DEBT
- ----------
LONG-TERM DEBT:
- ----------
In 1988 the Company borrowed $6,000,000 at 10.6%. Principal repayments of
$600,000 per year began in 1994 and are scheduled to continue until 2003.
At December 29, 1996, $4,200,000 of this debt was still outstanding
($4,800,000 at December 31, 1995). In general, interest rates are lower
today than they were in 1988 and this, in conjunction with the reduced
number of years remaining on the loan, result in an estimated market value
for this debt of approximately $4,600,000. Subject to certain loan
agreement limitations, the Company has the right to prepay this loan in
whole or in part, but the Company has not yet chosen to do so because of
the prepayment penalty.
30
F-38
<PAGE>
In April 1995 the Company entered into a $10 million unsecured revolving
credit arrangement with Fleet Bank, N.A. (now Fleet National Bank). The
Company has the unilateral right to terminate this agreement at any time
and reduce the commitment. On April 30, 1996, the Company reduced the
maximum borrowings permitted to $5 million and agreed with the bank to
extend the agreement until March 31, 1999, at which time any borrowings
will have to be repaid in full. There were no borrowings made pursuant to
this revolving credit arrangement during 1996. Under the arrangement the
ongoing commitment fee varies from 25 to 40 basis points of the unused
portion of the credit line and the rate of interest charged on outstanding
loans can, at the Company's option and subject to certain restrictions, be
based on the prime rate, a rate negotiated between the parties, or at a
rate from 100 to 175 basis points over London Interbank Offered Rate
(LIBOR). The spread over LIBOR and the level of commitment fees is based
on a measure of the Company's financial strength.
The agreements contain restrictive covenants primarily related to working
capital, leverage, and net worth. The Company is in compliance with these
covenants.
MATURITIES:
- ----------
Required long-term debt principal repayments of $600,000 are due each year
from 1997 to 2003.
INTEREST PAID:
- ----------
Interest paid during the years 1996, 1995, and 1994, was $935,000,
$1,235,000, and $1,879,000, respectively.
RESTRICTION ON PAYMENT OF DIVIDENDS:
- ----------
Under the most restrictive covenant of the loan agreements, $18,515,000 of
retained earnings was available at December 29, 1996, for cash dividends.
NOTE J-INCOME TAXES
- ----------
Consolidated income before income taxes consists of:
(Dollars in Thousands) 1996 1995 1994
----------------------------------
Domestic $ 17,114 $ 13,342 $ 9,660
Foreign 543 2,048 1,052
----------------------------------
$ 17,657 $ 15,390 $ 10,712
==================================
31
F-39
<PAGE>
The income tax expense (benefit) in the consolidated statements of income
consists of:
(Dollars in Thousands) Current Deferred Total
-----------------------------------
1996:
Federal $ 4,872 $ (1,481) $ 3,391
Foreign 53 42 95
State 222 -- 222
-----------------------------------
$ 5,147 $ (1,439) $ 3,708
===================================
1995:
Federal $ 1,824 $ (976) $ 848
Foreign 613 208 821
State 640 -- 640
-----------------------------------
$ 3,077 $ (768) $ 2,309
===================================
1994:
Federal $ 444 $ (207) $ 237
Foreign 234 47 281
State 60 -- 60
-----------------------------------
$ 738 $ (160) $ 578
===================================
Deferred tax assets and liabilities as of December 29, 1996 and December
31, 1995, respectively, are comprised of the following:
(Dollars in Thousands) December 29, December 31,
1996 1995
---------- ----------
Deferred tax assets:
Accruals not currently deductible for tax
purposes:
Accrued employee benefits and compensation $ 1,331 $ 1,073
Accrued postretirement benefits 2,081 2,208
Other accrued liabilities and reserves 1,254 1,602
Tax loss carryforwards 728 857
Tax credit carryforwards 1,577 3,471
Investments in and advances to joint ventures 2,596 2,642
Other 131 364
--------- ---------
Total deferred tax assets 9,698 12,217
Less deferred tax asset valuation allowance 3,327 6,752
--------- ---------
Net deferred tax assets 6,371 5,465
Deferred tax liabilities:
Depreciation and amortization 3,983 4,537
--------- ---------
Total deferred tax liabilities 3,983 4,537
--------- ---------
Net deferred tax assets $ 2,388 $ 928
========= =========
32
F-40
<PAGE>
Income tax expense differs from the amount computed by applying the U.S.
statutory federal income tax rate to income before income tax expense. The
reasons for this difference are as follows:
(Dollars in Thousands) 1996 1995 1994
--------------------------------
Tax expense at statutory rate $ 6,180 $ 5,386 $ 3,749
U.S. tax on foreign earnings 314 712 --
State income taxes, net of federal benefit 144 417 40
General business credits (375) -- --
Net deferred tax benefits utilized in the
current year:
Tax loss carryforwards -- (500) (2,936)
Employee benefits and compensation 111 (918) (448)
Other accrued liabilities and reserves (152) 74 546
Other net temporary differences (48) (692) (328)
General business credit carryforwards -- (829) --
Net deferred tax benefits to be used in
future years (2,114) (976) (207)
Other (352) (365) 162
-------------------------------
Income tax expense $ 3,708 $ 2,309 $ 578
===============================
The deferred tax asset valuation allowance decreased by $3,425,000 and
$3,305,000 during 1996 and 1995, respectively. The 1996 decrease results
primarily from the recognition for financial reporting purposes in 1996 of
tax credit carryforwards which the Company utilized for tax purposes in
1996 as well as tax credit carryforwards which the Company expects to
utilize for tax purposes in future years. The $3,305,000 decrease in 1995
relates primarily to the utilization for tax purposes in 1995 of deferred
deductions for certain employee benefit expenses, tax credit carryforwards,
and tax loss carryforwards. The utilization of tax benefits in future
years is dependent upon the future taxable earnings of the Company.
At December 29, 1996, the Company had Alternative Minimum Tax Credit
carryforwards of approximately $1,600,000 and foreign net operating loss
carryforwards of approximately $1,800,000. The use of the tax credit
carryforwards is dependent upon the future taxable earnings of the Company.
The use of the net operating loss carryforwards is dependent on the future
taxable earnings of the applicable foreign subsidiary. The Alternative
Minimum Tax Credit carryforwards and the foreign net operating loss
carryforwards each have an indefinite carryforward period.
Undistributed foreign earnings, before available tax credits and
deductions, amounted to $3,589,000 at December 29, 1996, $4,627,000 at
December 31, 1995, and $4,155,000 at January 1, 1995.
Income taxes paid were $2,554,000, $1,952,000, and $547,000, in 1996, 1995,
and 1994, respectively.
33
F-41
<PAGE>
NOTE K-SHAREHOLDERS' EQUITY AND STOCK OPTIONS
- ----------
Changes in shareholders' equity are shown below:
(Dollars in Thousands)
Capital Unrealized Currency
Stock Additional Loss on Trans-
(Number Paid-In Marketable lation Retained
of Shares) Capital Securities Adjustment Earnings
-----------------------------------------------------
Balance at January 2, 1994 6,444,922 $ 19,335 $ 1,193 $ 918
-----------------------------------------------------
Net income for 1994 10,134
Stock options exercised 200,346 1,892
RESIP shares issued 26,498 372
Conversion of convertible
subordinated notes into
capital stock 409,090 4,091
Stock issued to directors
and officers 10,454 164
Shares reacquired and
cancelled (46,040) (744)
Translation adjustment
for 1994 725
-----------------------------------------------------
Balance at January 1, 1995 7,045,270 $ 25,110 $ 1,918 $11,052
-----------------------------------------------------
Net income for 1995 13,081
Stock options exercised 84,743 725
RESIP shares issued 2,762 70
Stock issued to directors 3,864 91
Shares reacquired and
cancelled (1,549) (46)
Tax benefit on stock
options exercised 336
Translation adjustment
for 1995 626
-----------------------------------------------------
Balance at December 31,
1995 7,135,090 $ 26,286 $ 2,544 $24,133
-----------------------------------------------------
Net income for 1996 13,949
Stock options exercised 70,854 656
Stock issued to directors 3,661 92
Shares reacquired and
cancelled (3,644) (106)
Warrants exercised 200,000 2,500
Tax benefit on stock
options exercised 263
Translation adjustment
for 1996 (509)
Unrealized loss on
marketable securities (2)
-----------------------------------------------------
Balance at December 29,
1996 7,405,961 $ 29,691 $ (2) $ 2,035 $38,082
=====================================================
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 granting a
total of 380,000 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 under the plan 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 were able to 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. Options for a total of
1,370,000 shares have been authorized for issuance under this 1990 plan.
34
F-42
<PAGE>
In 1994, shareholders approved the 1994 Stock Compensation Plan which
permits granting a total of 500,000 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 semi-
annually in shares of Rogers capital stock with the number of shares of
stock granted based on its then fair market value. Stock 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 an
exercise 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.
In general, stock options granted to officers and employees have ten-year
terms and become exercisable in one-third increments beginning on the second
anniversary of the grant date. Non-employee director options granted under
the 1988 plan became 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 December 29, 1996, expire on various dates, beginning
October 27, 1997, and ending on December 16, 2006.
Shares of capital stock reserved for possible future issuance are as follows:
December 29, December 31,
1996 1995
----------- -----------
Shareholder Rights Plan 9,652,034 8,874,699
Options 2,159,040 1,453,099
Stock purchase warrants -- 200,000
Rogers Employee Savings and Investment Plan 84,522 84,522
Stock to be issued in lieu of deferred
directors' fees 2,511 1,988
----------- -----------
Total 11,898,107 10,614,308
=========== ===========
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123 (SFAS No. 123), "Accounting for
Stock-Based Compensation." Accordingly, no compensation cost has been
recognized in the financial statements for the stock option plans. Had
compensation cost for the Company's stock option plans been determined
based on the fair value at the grant date for awards in 1996 and 1995
consistent with the provisions of SFAS No. 123, the Company's net earnings
and earnings per share would have been reduced to the pro forma amounts
indicated below:
1996 1995
--------------------------------------
Net income As Reported $13,949,000 $13,081,000
Pro Forma 13,551,000 13,012,000
--------------------------------------
Primary earnings per share As Reported $1.83 $1.69
Pro Forma 1.78 1.69
--------------------------------------
Fully diluted earnings per share As Reported $1.83 $1.69
Pro Forma 1.77 1.68
--------------------------------------
The effects on pro forma net income and earnings per share of expensing the
estimated fair value of stock options are not necessarily representative of
the effects on reported net income for future years due to such things as
the vesting period of the stock options and the potential for issuance of
additional stock options in future years. Additionally, because SFAS No.
123 is applicable only to options granted subsequent to December 31, 1994,
its pro forma effect will not be fully reflected until 1998.
35
F-43
<PAGE>
An average vesting period of 36 months was used for the assumption regarding
stock options issued in 1996 and 1995. Options usually become exercisable
in one-third increments beginning on the second anniversary of the grant
date.
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in both 1996 and 1995: dividend yield of 0%;
expected volatility of 30.5%; risk-free interest rate of 6.0%; and expected
lives of 4.7 years.
A summary of the status of the Company's stock option program at year-end
1996, 1995, and 1994, and changes during the years ended on those dates is
presented below:
--------------------------------------------------------------
1996 1995 1994
--------------------------------------------------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Stock Options Shares Price Shares Price Shares Price
--------------------------------------------------------------
Outstanding at
beginning of
year 995,437 $13.35 920,230 $11.06 928,466 $ 9.49
Granted 143,061 26.04 175,716 23.57 227,736 16.91
Exercised 72,354 10.26 84,743 9.55 200,346 10.33
Cancelled 2,400 19.55 15,766 13.88 17,026 8.79
Expired 467 8.38 -- -- 18,600 14.44
--------------------------------------------------------------
Outstanding at
end of year 1,063,277 15.26 995,437 13.35 920,230 11.06
==============================================================
Options exercisable
at end of year 533,480 390,575 270,086
==============================================================
Weighted-average
fair value of
options granted
during year $ 9.52 $ 8.63
==============================================================
The following table summarizes information about stock options outstanding
at December 29, 1996:
----------------------------------------------------------------------
Options Outstanding Options Exercisable
----------------------------------------------------------------------
Weighted-
Average Weighted- Weighted-
Range of Number Remaining Average Number Average
Excersise Outstanding Contractual Exercise Exercisable Exercise
Prices at 12/29/96 Life in Years Price at 12/29/96 Price
--------------------------------------------------------------------
$7 to $15 545,906 5.1 $ 8.97 465,146 $ 9.08
$15 to $28 517,371 8.7 21.90 68,334 17.30
---------------------------------------------------------------------
$7 to $28 1,063,277 6.8 $15.26 533,480 $10.13
---------------------------------------------------------------------
NOTE L-LEASES
- ----------
The Company's principal noncancellable operating lease obligations are for
building space 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
$581,000 in 1996, $782,000 in 1995, and $1,016,000 in 1994.
Future minimum lease payments under noncancellable operating leases at
December 29, 1996, aggregate $1,145,000. Of this amount, annual minimum
payments are $537,000, $276,000, $175,000, $86,000, and $20,000 for years
1997 through 2001, respectively.
36
F-44
<PAGE>
NOTE M-FOREIGN OPERATIONS
- ----------
The net assets of wholly-owned foreign subsidiaries were $8,188,000 at
December 29, 1996, and $10,261,000 at December 31, 1995. Net income of
these foreign subsidiaries was $462,000 in 1996, $1,262,000 in 1995, and
$796,000 in 1994, including net currency transaction losses of $23,000 in
1996, $45,000 in 1995, and $3,000 in 1994.
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 is currently involved
as a PRP in four 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 PRPs. 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 costs 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
position.
In addition to the above proceedings, the Company has been actively working
with the Connecticut Department of Environmental Protection (CT DEP) related
to certain polychlorinated biphenyl (PCB) contamination in the soil beneath
a 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 environmental engineers and consultants, the Company
recorded a provision of approximately $900,000 in 1994 for costs related to
this matter. During 1995, $300,000 was charged against this provision and
$200,000 was charged in 1996. Management believes, based on facts currently
available, that the implementation of the aforementioned remediation will
not have a material additional adverse 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.
NOTE O-BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION
- ----------
The presentation of business segment information for the years 1994-1996 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
circuit board materials and flexible circuit materials.
37
F-45
<PAGE>
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. In 1996, approximately 52% of total sales
were to the electronics industry. Approximately 22% of the Company's sales
of products manufactured by U.S. divisions were made to customers located in
foreign countries. This includes sales to Europe of 13%, sales to Asia of
5%, and sales to Canada of 3%.
At December 29, 1996, the electronics industry accounted for approximately
62% of and one customer accounted for approximately 14% of total accounts
receivable due from customers. Accounts receivable due from customers
located within the United States accounted for 75% of the total accounts
receivable owed to the Company at the end of 1996. 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 had an operation in Mexico related to the
domestic power distribution business; however, this business was divested in
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
in the following tables:
BUSINESS SEGMENT INFORMATION
(Dollars in Thousands) 1996 1995 1994
---------------------------------
Net sales:
Polymer Products $ 79,867 $ 74,693 $ 71,919
Electronic Products 61,609 65,600 61,947
---------------------------------
Total $ 141,476 $ 140,293 $ 133,866
=================================
Income before income taxes:
Polymer Products $ 9,425 $ 4,644 $ 5,981
Electronic Products 7,952 11,186 5,609
Unallocated corporate expenses
[mainly interest income (expense),
net] 280 (440) (878)
---------------------------------
Total $ 17,657 $ 15,390 $ 10,712
=================================
Capital expenditures:
Polymer Products $ 3,286 $ 2,248 $ 3,225
Electronic Products 3,040 6,605 1,423
---------------------------------
Total $ 6,326 $ 8,853 $ 4,648
=================================
Depreciation:
Polymer Products $ 3,080 $ 2,971 $ 2,561
Electronic Products 2,672 2,705 4,008
---------------------------------
Total $ 5,752 $ 5,676 $ 6,569
=================================
Assets:
Polymer Products $ 53,123 $ 42,416 $ 39,754
Electronic Products 43,666 42,864 34,692
Unallocated corporate assets
(mainly cash and cash equivalents) 22,438 17,236 14,997
---------------------------------
Total $ 119,227 $ 102,516 $ 89,443
=================================
38
F-46
<PAGE>
Information about the Company's operations in different geographic locations
is shown below:
(Dollars in Thousands) North America Europe Total
--------------------------------------
1996:
Net sales $ 121,973 $ 19,503 $ 141,476
Income before income taxes 16,952 705 17,657
Assets 108,463 10,764 119,227
======================================
1995:
Net sales $ 120,409 $ 19,884 $ 140,293
Income before income taxes 13,332 2,058 15,390
Assets 89,765 12,751 102,516
======================================
1994:
Net sales $ 116,481 $ 17,385 $ 133,866
Income before income taxes 9,660 1,052 10,712
Assets 79,022 10,421 89,443
======================================
NOTE P-SUBSEQUENT EVENTS
- ----------
Effective January 1, 1997, the Company completed the acquisition of the
Bisco Products silicone foam materials business based in Elk Grove Village,
Illinois, from a wholly-owned subsidiary of Dow Corning Corporation for
approximately $11.0 million. The acquisition included machinery and
equipment and other fixed assets; inventories of supplies, merchandise,
materials, and products; intellectual property rights; books, records and
computer software; and all unfilled customer orders. The Company did not
acquire the cash and accounts receivable of the Seller and did not assume
the liabilities of the Seller.
In connection with this acquisition, $9.8 million was placed in escrow as
of year-end, of which $8.9 million was classified as a Long-Term Asset and
$0.9 million as a Current Asset.
The acquisition will be accounted for as a purchase in 1997. In addition
to the escrow fund indicated above, a note payable of $1.5 million payable
in six months bearing 8% annual interest was used to finance the purchase.
This note was prepaid in January 1997.
39
F-47
<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 December 29, 1996 and December 31, 1995,
and the related consolidated statements of income and retained earnings and
cash flows for each of the three fiscal years in the period ended December
29, 1996. 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 December 29, 1996 and December 31, 1995, and
the consolidated results of their operations and their cash flows for each
of the three fiscal years in the period ended December 29, 1996, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Providence, Rhode Island
February 3, 1997
40
F-48
<PAGE>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
- ----------
(Dollars in Thousands, Except Per Share Amounts)
Net Manufacturing Net Net Income
Quarter Sales Profit Income Per Share
- ----------------------------------------------------------------------
1996 Fourth $ 37,142 $ 10,886 $ 3,805 $ .49
Third 33,972 10,511 3,321 .43
Second 35,424 11,279 3,540 .47
First 34,938 11,521 3,283 .44
- ----------------------------------------------------------------------
1995 Fourth $ 33,511 $ 10,266 $ 3,115 $ .41
Third 32,943 9,894 2,826 .36
Second 37,422 12,167 3,688 .47
First 36,417 11,509 3,452 .45
- -----------------------------------------------------------------------
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.
1996 1995
- --------------------------------------------------------------------
Quarter High Low High Low
- --------------------------------------------------------------------
Fourth $ 29 $ 23-3/4 $ 24-5/8 $ 21-3/4
Third 25-5/8 23-3/4 31-1/2 23-3/4
Second 26-1/2 23-1/4 28-5/8 24-3/4
First 23-3/8 20 27-3/4 22-1/8
- --------------------------------------------------------------------
41
F-49
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
CONSOLIDATED SALES AND OPERATIONS - 1996 TO 1995
Net sales were $141.5 million for 1996, an increase of 6% over the prior
year after adjusting for the 1995 divestiture of the Soladyne Division and
for currency rate changes. Combined Sales, which include half of the
sales of Rogers two unconsolidated joint ventures, grew an adjusted 8%
over sales in 1995. These sales gains were mainly the result of unit volume
increases.
Key improvements in 1996 included the acceleration of worldwide sales of
PORON urethane foam products, particularly for printing, transportation and
computer applications, and the better results at Durel Corporation - the
Company's 50% owned joint venture with 3M in electroluminescent lamps -
which made significant gains in both sales and profits. In addition,
flexible circuit materials sales recovered in the second half of the year
after having relatively weak sales into the disk drive market in the first
half of 1996.
Full year before-tax profits rose 15% to $17.7 million in 1996, while
after-tax profits improved 7% to $13.9 million. Earnings per share for
the year were $1.83, up from $1.69 in 1995. Higher sales, greater
contribution from unconsolidated joint ventures, and increased interest
income were the major contributing factors to the improvement in before-
tax income. After-tax profits reflect a 21% tax rate in 1996 and a 15% tax
rate in 1995. These rates result from the use in 1995 of the Company's
domestic tax loss carryforwards and the recognition in 1996 and 1995 of a
significant amount of domestic tax credit carryforwards.
Effective January 1, 1997, Rogers completed the acquisition of the Bisco
Products silicone foam materials business based in Elk Grove Village,
Illinois, from a wholly-owned subsidiary of Dow Corning Corporation for
approximately $11 million. The Company is now well into the process of
integrating Bisco's silicone materials into Rogers existing high
performance elastomer product lines, thereby offering a broader range of
materials options for customers.
Durel Corporation sales growth which exceeded 20% in 1996, was fueled by
penetration into the personal organizer/data bank market in Southeast Asia.
Significant progress has been made introducing DUREL technology to key
customers. Leading worldwide manufacturers of global positioning systems
(GPS), watches, and pagers have incorporated DUREL lamps and inverters in
their products. Durel also made substantial profit progress, reflecting
the impact of increased productivity, reduced costs of standard lamp
constructions, and shortened lead times. These gains continued to be
reduced by ongoing significant costs associated with the patent
infringement lawsuit brought by Durel to protect its proprietary technology.
Rogers INOAC Corporation (RIC), the Company's 50% owned joint venture with
INOAC Corporation of Japan, had a strong year based primarily on continued
sales growth of PORON urethane products in the Far East. While sales in
local currency increased 9%, currency rate changes caused sales measured
in U.S. dollars to decrease 6%.
The Company's manufacturing profit was 31% of sales in both 1996 and in
1995. Favorable changes in product mix, and production cost improvements
in certain domestic product lines offset start-up costs and high early
stage processing costs
42
F-50
<PAGE>
associated with our newer commercial high frequency laminate materials. The
ongoing shift of the microwave business to lower priced wireless communication
applications continues to result in a decline in average sales price per square
foot for laminates.
Selling and administrative expense decreased slightly but as a percentage
of net sales was 15% in both 1996 and 1995.
Research and development expense totaled $9.2 million in 1996 compared to
$9.3 million in 1995. Significant product and process development
activities in 1996 included: process and product development for RO4003
and RO4350 high frequency circuit materials for commercial applications
with particular emphasis on improved high volume manufacturing processes;
process and product improvements to enhance performance of RO3003 and
RO3010 fluoropolymer laminates; process and formulation support directed
towards PORON formulations which are low outgassing and flame retardant;
improved molding materials; and ENDUR product development and application
testing to support its use in new printer applications. Core technical
capabilities in polymers, fillers, and adhesion were strengthened through
added organizational focus and new analytical equipment and facilities.
These R&D capabilities were valuable in providing specialized technology
to support the development activities listed above.
Net interest income for 1996 increased from 1995 due mainly to lower
borrowings and the interest earned on the higher level of cash equivalents
and marketable securities. Average debt outstanding during 1996 was $4.5
million compared with $6.4 million for 1995.
Other income less other charges was $3.4 million for 1996 compared with
$2.4 million for the same period in 1995. The primary factor contributing
to this increase was higher joint venture income.
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 is
currently involved as a PRP in four 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 PRPs. 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 costs 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 position.
43
F-51
<PAGE>
In addition to the above proceedings, the Company has been actively working
with the Connecticut Department of Environmental Protection (CT DEP)
related to certain polychlorinated biphenyl (PCB) contamination in the
soil beneath a 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 environmental engineers
and consultants, the Company recorded a provision of approximately
$900,000 in 1994 for costs related to this matter. During 1995, $300,000
was charged against this provision and $200,000 was charged in 1996.
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 December 29, 1996, other accrued liabilities were lower than at
year-end 1995, primarily due to the decrease in the cost reduction reserve
and the utilization of certain environmental reserves established prior
to 1995.
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 - 1995 TO 1994
Net sales of $140.3 million were 10% higher than the previous year when
adjusted for divestitures. Each of the Company's major product groups
achieved record sales in 1995. These sales gains were mainly the result
of unit volume increases. A major portion of the sales increase came
from higher sales of circuit materials to the wireless communication and
computer markets. Part of that growth came from the Company's newer high
frequency materials. One of these products, RO4000, was introduced in
the first quarter of 1995. This material is aimed at applications in
pagers, identification systems, personal communication systems, global
positioning systems, and other wireless communication products.
Net income was $13.1 million, or $1.69 per share in 1995, compared with
$10.1 million, or $1.42 per share in 1994. Before-tax profits rose 44%,
from $10.7 million in 1994 to $15.4 million in 1995. The effective tax
rates were 15% and 5% in 1995 and 1994, respectively. The improvement in
before-tax profits was primarily the result of improved margins, higher
sales, increased royalty income, and lower interest expense.
The Company completed the sale of its small microwave printed circuit
board fabricating operation, the Soladyne Division, to Merix Corporation
on December 31, 1995. This action completed the Company's planned
divestiture of electronic components businesses and allows the Company
to concentrate on its growing line of high performance specialty materials.
Cash payments totaling $2.6 million were received in January 1996 from the
sale of the Soladyne Division. This sale did not include this division's
trade accounts receivable which were retained by the Company. The proceeds
from this divestiture modestly exceeded the carrying value of the assets
plus the costs related to disposition.
Durel Corporation, the Company's 50% owned joint venture with 3M in
electroluminescent lamps, had sales growth of 28% in 1995. An important
portion of this sales gain came from the ramp-up of a complex new
automotive application. However, profits were unfavorably impacted in
the initial production period for this application and by the move to
Durel's new 77,000 square foot facility in Chandler, Arizona. Sales and
profits were also affected by a major inventory adjustment at one of
Durel's largest customers in the watch market. As a result, the
Company's 50% share of Durel's earnings did not have a significant impact
on the Company's earnings for the full year 1995. During the year, patents
important to Durel's future were issued, and Durel filed an infringement
suit based on these patents. Significant ongoing costs were and are still
beingincurred to prosecute the suit and protect Durel's proprietary
position.
44
F-52
<PAGE>
Sales of Rogers INOAC Corporation (RIC), the Company's 50% owned joint
venture with INOAC Corporation of Japan, stated in dollars, were higher
in 1995 than in 1994. However, sales stated in local currency remained
approximately the same. At mid-year 1995, RIC introduced an innovative
line of consumer foot comfort products which were well received in the
market.
The Company's manufacturing profit was 31% of sales in 1995 and 30% in
1994. This increase was due to production cost improvements in a number
of domestic product lines and a more profitable product mix in the
European operation. These gains offset a continuing decline in sales
price per square foot of high frequency microwave materials resulting from
the shift of microwave business from military to commercial applications.
Research and development expense totaled $9.3 million in 1995 compared
with $9.2 million in 1994, or 7% of sales in each year. Significant
product and process development activities in 1995 included: technical
support of the commercial introduction of RO4003, the first of a family
of low cost, controlled dielectric constant thermoset laminates with
excellent electrical and physical properties; development of a flame
retardant version of RO4003; further development of lower cost processes
for manufacturing both RO4000 thermoset laminates and RO3000 fluoropolymer
laminates; scale-up to commercial production of PORON S-2000 silicone
foam material; introduction of a low outgassing flame retardant PORON
urethane foam material; development of improved materials and process
technology related to ENDUR fuser rollers and conductive elastomers;
development of an improved extrusion compounding process for phenolic
molding materials and the development of improved adhesive systems for
flexible circuit materials.
Selling and administrative expense increased slightly but as a percentage
of net sales was 15% in both 1995 and 1994.
Net interest expense in 1995 decreased substantially from 1994 because of
lower borrowings and increased investment income on the higher level of
cash equivalents and marketable securities. 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 December 31, 1995, was $4.8 million
compared with $7.9 million at January 1, 1995.
Other income less other charges was $2.4 million for 1995 compared with
$1.6 million for the same period in 1994. Royalty payments related to the
1994 sale of the U.S. power distribution business more than accounted for
this increase. These royalty payments are expected to decrease over the
next four years.
At December 31, 1995, other accrued liabilities were lower than at
January 1, 1995, primarily due to the utilization and/or settlement of
certain environmental and legal reserves established prior to 1995.
SEGMENT SALES AND OPERATIONS
Sales in the Polymer Products business segment increased 7%, 4%, and 9%,
in 1996, 1995, and 1994, respectively. PORON cellular urethanes had a
record year of worldwide sales in 1996, led by strong sales of R/bak
compressible materials for the rapidly growing flexographic printing
market, and accelerated sales of industrial PORON urethanes for use in
the transportation, communication and computer markets. Sales of moldable
composite materials grew 10% from 1994 to 1995 primarily driven by
increasing market share, particularly in electronic motor applications.
Overall sales gains in this segment have been negatively impacted by lower
than planned sales of ENDUR components, resulting from market
redistribution among manufacturers of laser printers together with
increasing price pressure by copier and printer manufacturers.
45
F-53
<PAGE>
The Polymer Products business segment generated profits of $9.4 million
in 1996, $4.6 million in 1995, and $6.0 million in 1994. The increase
from 1995 to 1996 was due mainly to the earnings resulting from the
record year of worldwide sales of the Poron Materials Unit, higher joint
venture income, and a strong performance by molding materials. Factors
contributing to the decrease from 1994 to 1995 include lower joint venture
income, higher raw material costs, unfavorable product mix changes,
inventory corrections by customers in the second half of 1995, and higher
professional service costs.
Revenues from the Electronic Products business segment, adjusted for
divestitures, increased 3% in 1996, 17% in 1995, and 18% in 1994. Sales
of flexible circuit materials rose from 1995 with particularly strong
second half shipments to both existing and new customers in the computer
market. A new application for FLEX-I-MID materials with Hutchinson
Technology Incorporated contributed to this improvement. Demand also
continues to increase for our high frequency laminate materials for
wireless communication applications. However, this growth is more
significantly reflected in units than in dollars. These gains were
substantially offset by decreased bus bar sales in Europe, primarily due
to inventory corrections by key customers of our European subsidiary,
Rogers N.V. Sales gains from 1994 to 1995 were driven by the rapidly
growing notebook computer and disk drive markets and by growing
applications in wireless communications for high frequency circuit
laminate materials.
Electronic Products operating income was $8.0 million in 1996, $11.2
million in 1995, and $5.6 million in 1994. The contributing factors to
the decrease from 1995 to 1996 were the substantial investments in people,
capacity, and start-up costs to bring new high frequency circuit materials
to commercial production, and the lower sales of bus bars at Rogers N.V.
The increase from 1994 to 1995 was mainly attributable to the higher sales
level and to the reduction of losses at the Soladyne Division.
Sales of Rogers N.V., stated in local currencies, increased 2% in 1996,
5% in 1995, and 14% in 1994. When translated into U.S. dollars, these
changes became gains (losses) of (2)%, 15%, and 17% in 1996, 1995, and
1994, respectively. Increased sales of bus bars for older applications
in mainframe computers led the sales growth in 1994; however, these sales
declined significantly in 1995 and 1996. New applications in power
distribution devices for cellular telephone base stations and large
power equipment accounted for most of the higher sales figures in 1995
and 1996. Large customer inventories at the beginning of 1996 were drawn
down and as a result sales were reduced.
BACKLOG
The Company's backlog of firm orders was $26.2 million at December 29,
1996, and $24.1 million at December 31, 1995. The increase from 1995 to
1996 reflects, in part, the higher sales level of FLEX-I-MID circuit
material used with magneto-resistive (MR) heads in hard disk drives.
SOURCES OF LIQUIDITY AND CAPITAL
Net cash provided by operating activities amounted to $14.3 million in
1996, $11.9 million in 1995, and $13.9 million in 1994. Primary factors
contributing to the year-to-year increase from 1995 to 1996 include higher
earnings, substantial loan repayments from our Durel joint venture, and
a lower contribution to the Company's domestic pension plan for unionized
employees. The year-to-year decrease from 1994 to 1995 is attributable to
higher inventories, the fact that the cash payment for the sale of the
Soladyne Division was not received until early 1996, and the third quarter
$3.0 million additional contribution to the union pension plan mentioned
above.
Capital expenditures totaled $6.3 million in 1996, $8.9 million in 1995,
and $4.6 million in 1994. In 1995, major process and facilities expansion
projects were initiated to support the Company's growing sales of
commercial microwave materials. Additionally, major investments were
started to more than double the capacity of the flexible
46
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circuit laminate facility which was completed in 1996. In 1996, projects
included an additional molding materials production line, which will be
completed and brought on line in the second half of 1997, and additional high
volume production equipment for commercial microwave materials. Other
strategic expenditures were related to expanding product offerings or
processes.
Capital spending was exceeded by cash generated from the Company's
operating activities in all three years presented. For 1997, capital
spending is expected to more than double the amount spent in 1996. In
1997, major expansions are planned in commercial microwave equipment and
facilities, along with capacity increases in high performance elastomer
products and, in the early part of the year, the new production line for
molding materials will be completed. It is anticipated that this spending
will be financed with internally generated funds.
Net cash used in investing activities in 1996 was affected by three major
events. On December 31, 1995, the Company completed the sale of its
Soladyne Division to Merix Corporation for $2.6 million which was received
in January 1996. The land and building in Mesa, Arizona, which were
formerly included in Net Assets Held for Sale, were sold essentially at
book value during the third quarter of 1996. Additionally, in connection
with the purchase of the Bisco Products silicone foam materials business,
$9.8 million was placed in escrow as of year-end 1996.
In June 1996, the Company issued 200,000 shares and received $2.7 million
in cash from the exercise of the Company's only outstanding stock purchase
warrants. These warrants had been issued in 1989 in connection with a
research and development arrangement.
As of April 30, 1996, the Company can borrow up to a maximum of $5.0
million under an unsecured revolving credit agreement with Fleet National
Bank. Amounts borrowed under this arrangement are to be paid in full by
March 31, 1999. The one-year extension of the loan agreement and the
reduction in the level of maximum borrowings were requested by the Company.
There were no borrowings under this credit facility during 1996.
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.
47
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Management believes that in the near term, internally generated funds will
be sufficient to meet the needs of the business. The Company continually
reviews and assesses its lending relationships.
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.
FORWARD-LOOKING INFORMATION
Certain statements in this Management's Discussion and Analysis section
and in other parts of this annual report may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements involve known and unknown
risks, uncertainties, and other factors which may cause the actual results
or performance of the Company to be materially different from any future
results or performance expressed or implied by such forward-looking
statements. Such risks include changing business and economic conditions,
uncertainties and expenses associated with litigation, increasing
competition, changes in product mix, the development of new products and
manufacturing processes and the inherent risks associated with such
efforts, changes in the availability and cost of raw materials,
fluctuations in foreign currency exchange rates and the pace of
technological change. Additional information about certain factors that
could cause actual results to differ from such forward-looking statements
include the following:
The hard disk drive market for personal computers is characterized by
volatility in demand, rapid technological change, significant pricing
pressures and short lead times. Since the Company manufactures and sells
its own circuit materials and high performance elastomers to meet the
needs of this market, the Company's results may be affected by these
factors. The Company also sells FLEX-I-MID circuit materials in the U.S.
and Europe through an arrangement with Mitsui Toatsu Chemical Company
which produces this material in Japan. In this case, the Company has no
direct control over the manufacturing process, delivery dates or the
impact of foreign exchange rates on its sale of FLEX-I-MID circuit
materials.
The wireless communications market is characterized by frequent new
product introductions, evolving industry standards, rapid changes in
product and process technologies, price competition and many new
potential applications. The RO4000 laminates and other circuit materials
that the Company manufactures and sells to this market are relatively new.
To be successful in this area, the Company must be able to consistently
manufacture and supply high frequency circuit materials that meet the
demanding expectations of customers for quality, performance and
reliability at competitive prices. The timely introduction by the Company
of such new products could be affected by engineering or other development
program slippages and problems in effectively and efficiently ramping up
production to meet customer needs.
While the personal computer industry and the wireless communications
industry have in the past experienced overall growth, these industries
historically have been characterized by wide fluctuations in product supply
and demand. From time to time, the industries have experienced significant
downturns, often in connection with, or in anticipation of, maturing
product cycles and declines in general economic conditions. These
downturns have been characterized by diminished product demand, production
over-capacity and subsequent accelerated price erosion. The Company's
business may in the future be materially and adversely affected by
downturns.
48
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The Company's future results depend upon its ability to continue to
develop new products and improve its product and process technologies.
The Company's success in this effort will depend upon the Company's
ability to anticipate market requirements in its product development
efforts, the acceptance and continued commercial success of the end user
products for which the Company's products have been designed, and the
ability to adapt to technological changes and to support established and
emerging industry standards.
The Company has been actively working with the Connecticut Department of
Environmental Protection related to certain polychlorinated biphenyl
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 the Connecticut Department of Environmental
Protection. While the Company believes that the implementation of the
remediation activities will not have a material adverse impact on the
Company's results, there can be no assurance that unanticipated costs will
not arise.
In addition, the Company is currently engaged in proceedings involving a
number of Superfund sites, usually as a participant in a group of
potentially responsible parties. The Company's estimation of environmental
liabilities is based on an evaluation of currently available information
with respect to each individual situation, including existing technology,
presently enacted laws and regulations and the Company's experience in the
addressing of such environmental matters. While current regulations
impose potential joint and several liability upon each named party at any
Superfund site, the Company's contribution for cleanup is expected to be
limited due to the number of other potentially responsible parties, and
the Company's share of the volume contributions of alleged waste to the
sites, which the Company believes is de minimis. However, there can be
no assurances that the Company's estimates will not be disputed or that
any ultimate liability concerning these sites will not have a material
adverse effect on the Company.
The level of anticipated 1997 capital expenditures could differ
significantly from the forecasted amount due to a number of factors,
including but not limited to changes in design, differences between the
anticipated and actual delivery dates for new machinery and equipment,
problems with the installation and start-up of such machinery and
equipment, delays in the construction of new buildings and delays caused
by the need to address other business priorities.
The Company from time to time must procure certain raw materials from
single or limited sources which involves certain risks, including
vulnerability to price increases and the quality of the material. In
addition, the inability of the Company to obtain these materials in
required quantities could result in significant delays or reductions in
its own product shipments. When such problems have occurred in the past,
the Company has been able to purchase sufficient quantities of the
particular raw material to sustain production until alternative materials
and production processes could be requalified with customers. However,
any inability of the Company to obtain timely deliveries of materials of
acceptable quantity or quality, or a significant increase in the prices
of materials, could materially and adversely affect the Company's
operating results.
The Company's international sales involve a number of inherent risks,
including imposition of governmental controls, currency exchange
fluctuations, potential insolvency of international customers, reduced
protection for intellectual property rights in some areas, the impact of
recessions in foreign countries, political instability and generally
longer receivables collection periods, as well as tariffs and other
trade barriers. There can be no assurance that these factors will not
have an adverse effect on the Company's future international sales, and
consequently, on the Company's business, operating results and financial
condition.
49
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<PAGE>
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