SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 2, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-4347
ROGERS CORPORATION
[Exact name of Registrant as specified in its charter]
Massachusetts 06-0513860
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Technology Drive
P.O. Box 188
Rogers, Connecticut 06263-0188
(Address of principal executive offices) (Zip Code)
(860) 774-9605
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ------------------- ----------------
Capital Stock, $1 Par Value American Stock Exchange, Inc.
Pacific Exchange, Inc.
Rights to Purchase Capital Stock American Stock Exchange, Inc.
Pacific Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None
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
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. [ ]
The aggregate market value of the Capital Stock, $1 par
value, held by non-affiliates of the Registrant as of March 1,
2000 was $427,378,461.
The number of shares of Capital Stock, $1 par value,
outstanding as of March 1, 2000 was 7,393,179.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's annual report to shareholders for
the fiscal year ended January 2, 2000 are incorporated by
reference into Parts I and II.
Portions of the proxy statement for the Registrant's 2000 annual
meeting of stockholders to be held April 18, 2000, are
incorporated by reference into Part III.
<PAGE>
TABLE OF CONTENTS
PART I
Item Page
1. Business 1
2. Properties 6
3. Legal Proceedings 6
4. Submission of Matters to a Vote of Security Holders 7
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
7A. Quantitative and Qualitative Disclosures About Market
Risk 8
8. Financial Statements and Supplementary Data 8
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 8
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 9
PART IV
14. Exhibits and Reports on Form 8-K 9
SIGNATURES
Signatures 12
<PAGE>
PART I
Item 1. BUSINESS
GENERAL
Rogers Corporation (the Company), founded in 1832, is one of the
oldest publicly traded U.S. companies in continuous operation.
The Company 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 communications, imaging, computer, transportation, and
consumer applications.
New leadership in 1992 restructured the Company to focus on these
materials based businesses -- circuit materials, high performance
elastomers, and moldable composites. The Company's management,
operations, sales and marketing, and technology development
activities were redirected to efforts intended to grow the
materials based businesses. In so doing, the Company 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 the Company's strong growth in
the 1960's and 1970's, and provided most of the Company's profits
in the 1980's. During that time, the profits from the materials
based businesses were often offset by substantial losses in the
Company's 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. An increasingly
large percentage of these materials are going into fast growth,
high technology applications, such as cellular telephones and
base stations, hand held computers and satellite television
receivers.
BUSINESS SEGMENT FINANCIAL AND GEOGRAPHIC INFORMATION
"Business Segment and Geographic Information" on pages 45-46 of
the annual report to shareholders for the year ended January 2,
2000, 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. The Company has two
business segments: Polymer Materials and Electronic Materials.
The Company's products are based on its core technologies in
polymers, fillers, and adhesion. Most products are proprietary,
or incorporate proprietary technology in their development and
processing, and are sold under the Company's valuable brand
names.
POLYMER MATERIALS
Polymer Materials include high performance elastomer materials,
elastomer components, and high performance thermoset moldable
composites. The Company's Polymer Materials have characteristics
that offer functional advantages in many market applications, and
serve to differentiate the Company's products from competitors'
materials and from other commonly available materials.
Polymer Materials are sold to fabricators, molders, printers and
original equipment manufacturers for applications in imaging,
communications, computer, transportation, consumer and other
markets. Trade names for the Company's Polymer Materials
include: PORON(R) urethane foams used for making high
performance gaskets and seals in vehicles, communications
devices,
1
<PAGE>
computers and peripherals; PORON cushion insole materials for
footwear and related products; PORON healthcare and medical
materials for body cushioning, orthotic appliances, and
artificial limbs; PORON silicone foams and sponges, used for
making flame retardant gaskets and seals in aircraft, trains,
cars and trucks; PORON silicone solids for shielding extreme
temperature or flame; R/bak(R) compressible printing plate
backing and mounting products for cushioning flexographic
printing on packaging materials; NITROPHYL(R) floats for fill
level sensing in fuel tanks, motors, and storage tanks;
ENDUR(R) elastomer rollers and belts for document handling in
copiers, computer printers, facsimile machines, mail sorting
machines and automated teller machines; MPCR(R) phenolic-based
and RX(R) epoxy-based thermoset moldable composites for molding
engine and transmission parts used in vehicles, and for molding
commutator hubs, brush holders, and other high performance parts
that insulate electrical activity in electric motors, appliances,
and tools. In January 1999, the Company acquired portions of the
moldable composite business of Cytec Fiberite, broadening the
line of thermoset moldable phenolic and epoxy composites that it
can offer customers for high performance applications. Acquired
products include brake piston formulations for molding disk brake
pistons, and epoxy molding materials for making opto-electronics
components.
The Company's two joint ventures extend and complement the
Company's worldwide businesses in Polymer Materials. The Rogers
Inoac Corporation (RIC), a 50% owned joint venture with Japan-
based Inoac Corporation, manufactures high performance PORON
elastomer materials and ENDUR components in Mie and Nagoya,
Japan. The Durel Corporation, a 50% owned joint venture with 3M,
manufactures DUREL electroluminescent lamps in Chandler, Arizona.
ELECTRONIC MATERIALS
Electronic Materials include printed circuit board laminates for
high frequency circuits, flexible printed circuit board laminates
for high performance flexible circuits, polyester based
industrial laminates, composite materials, and power distribution
bus bars. The Company's Electronic Materials have
characteristics that offer performance and other advantages in
many market applications, and serve to differentiate the
Company's products from competitors' products and from commonly
available materials.
Electronic Materials are sold principally to independent and
captive printed circuit board manufacturers who convert the
Company's laminates to custom printed circuits.
The polymer based dielectric layers of the Company's high
frequency circuit board laminates are proprietary materials that
provide highly specialized electrical and mechanical properties.
Trade names for the Company's high frequency printed circuit
board materials include RO3000(TM), RO4000(R), DUROID(R),
RT/duroid(R), ULTRALAM(R), and TMM(R) laminates. All of these
laminates are used for making circuitry that receive, transmit,
and process high frequency communications signals. Each laminate
addresses specific needs and applications within the
communications market. High frequency circuits are used
throughout the equipment and devices that comprise all wireless
communications systems, including cellular communications,
digital cellular communications, paging, direct broadcast
television, global positioning, mobile radio communications, and
radar.
The flexible circuit materials that the Company manufactures are
called R/flex(R) materials. They are mainly used to make
interconnections for hard disk drives, portable computers, and
miniaturized electronic devices. The performance characteristics
of R/flex materials differentiate these laminates from commonly
available flexible circuit materials.
The adhesiveless flexible circuit materials that the Company sold
to Hutchinson Technology Incorporated (HTI), for making TSA
suspensions in magneto resistive hard disk drives, are called
FLEX-I-MID(R) materials. FLEX-I-MID materials are manufactured
by Mitsui Chemicals, Inc. of Japan,
2
<PAGE>
under a technology license from Rogers Corporation. Effective
January 3, 2000 the Company started a joint venture with Mitsui
Chemicals, Inc. to eventually manufacture this flexible circuit
board laminate in Chandler, Arizona. Beginning in 2000, this
joint venture will make these sales to HTI rather than having the
resale go through the Company and eventually it will provide HTI
with a second source of supply thereby enabling the Company and
Mitsui Chemicals to remain the sole source for these materials.
Power distribution bus bars are manufactured by the Company under
the MEKTRON(R) trade name. Bus bars are sold to manufacturers of
high voltage electrical traction systems for use in mass transit
and industrial applications, and to manufacturers of
communication and computer equipment.
Industrial laminates are manufactured by the Company under the
Induflex(R) trade name. These polyester based laminates, with
thin aluminum and copper cladding, are sold to telecommunications
and data communication cable manufacturers for shielding
electromagnetic and radio frequency interference, and to
automotive component manufacturers for making flat, etched-foil
heaters.
The Company's nonwoven composite materials are manufactured for
medical padding and bandaging, electrical and thermal insulation,
and industrial pre-filtration applications. In October 1998, the
Company acquired the dampening sleeve business of Imation, a
former 3M business. These nonwoven composite roller covers, and
related pressroom products, are consumable supplies used by the
lithographic printing industry.
BACKLOG
Excluding joint venture activity, the backlog of firm orders for
Polymer Materials was $16,476,000 at January 2, 2000 and
$15,092,000 at January 3, 1999. The backlog of firm orders for
Electronic Materials was $24,626,000 at January 2, 2000 and
$21,931,000 at January 3, 1999. The amount of unfilled orders is
reasonably stable throughout the year.
RAW MATERIALS
The manufacture of both Polymer and Electronic Materials requires
a wide variety of purchased raw materials. Some of these raw
materials are available only from limited sources of supply that,
if discontinued, could interrupt production. When this has
occurred in the past, the Company has purchased sufficient
quantities of the particular raw material to sustain production
until alternative materials and production processes could be
qualified with customers. Management believes that similar
responses would mitigate any raw material availability issues in
the future.
EMPLOYEES
The Company employed an average of 577 people in the Polymer
Materials operations and 620 people in the Electronic Materials
operations during 1999.
SEASONALITY
In the Company's opinion, neither the Polymer Materials business
nor the Electronics Materials business is seasonal.
CUSTOMERS & MARKETING
The Company's products were sold to approximately 2,500 customers
worldwide in 1999. 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
3
<PAGE>
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.
The Company markets its full range of products throughout the
United States and in most foreign markets. Over 85% of the
Company's sales are sold through the Company's own domestic and
foreign sales force, with the balance sold through independent
agents and distributors.
COMPETITION
There are no firms that compete with the Company across its full
range of product lines. However, each of the Company's products
faces competition in each business segment in domestic and
foreign markets. Competition comes from firms of all sizes and
types, including those with substantially more resources than the
Company. The Company's strategy is to offer technically advanced
products that are price competitive in their markets, and to link
the offerings with market knowledge and customer service. The
Company believes this serves to differentiate the Company's
products in many markets.
RESEARCH & DEVELOPMENT
The Company has many domestic and foreign patents and licenses
and has additional patent applications on file related to both
business segments. In some cases, the patents result in license
royalties. The patents are of varying duration and provide some
protection. Although the Company vigorously defends its patents,
the Company believes that its patents have most value in
combination with its equipment, technology, skills, and market
position. The Company also owns a number of registered and
unregistered trademarks that it believes to be of importance.
During its fiscal year 1999, the Company spent $10,791,000 on
research and development activities, compared with $10,352,000 in
1998, and $9,608,000 in 1997. These amounts include the cost of
the corporate research and development effort in Rogers,
Connecticut, which amounted to $7,491,000, $7,452,000, and
$6,908,000 in 1999, 1998, and 1997, respectively. The balance
was comprised of expenditures for product development and new
process development activities in its operating units.
ENVIRONMENTAL REGULATION
During fiscal year 1999, the Company spent $1,300,000 on capital
equipment necessary to comply with federal, state, and local
environmental protection, health and safety regulations.
Management estimates that 2000 expenditures needed for compliance
with current environmental, health, and safety regulations will
approximate $2,500,000 of which $1,800,000 has been accrued and
$700,000 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.
4
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
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.
Name, Age
and Present Prior Business Experience in Past Served in Present
Position Five Years Position Since
- -------------------------------------------------------------------------------
Walter E. Boomer, 61 General in the U.S. Marine Corps from
President and Chief June 1986 to August 1994; Senior Vice
Executive Officer President and Chief Project Management
Officer of McDermott International, Inc.
to February 1995; President of Babcock &
Wilcox Power Generation Group and
Executive Vice President of McDermott
International, Inc. to October 1996. March 1997
Bruce G. Kosa, 60 Technical Director from August 1992 to
Vice President, October 1994. October 1994
Technology
John A. Richie, 52 Director of Human Resources from July
Vice President, 1992 to October 1994. October 1994
Human Resources
Frank H. Roland, 64 President of Halstead Industries, Inc.
Vice President, from June 1991 to January 1995; Vice
Finance; Chief President of RBX Corporation January
Finance Officer and 1995 to October 1996; President of
Secretary Rubatex Corporation April 1995 to
October 1996; President and Chief
Executive Officer of RBX Corporation
October 1996 to July 1998. September 1998
Robert D. Wachob, 52 Vice President, Sales and Marketing
Executive Vice from October 1990 to May 1997; Senior
President Vice President, Sales and Marketing
from May 1997 to January 2000. January 2000
Donald F. O'Leary, 56 Assistant Controller from April 1982
Corporate Controller to April 1995. April 1995
Executive Officer April 1996
Robert M. Soffer, 52
Treasurer and Assistant
Secretary March 1987
Clerk February 1992
5
<PAGE>
Item 2. PROPERTIES
The Company owns its properties, except as noted below. The
Company considers that its properties are well-maintained, in
good operating condition, and suitable for its current and
anticipated business. Operating capacity can be increased by
additional worker hours at 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 Leased/Owned
Polymer Materials ------------- ---------------- ------------
- -----------------
Manchester, Connecticut 128,000 Manufacturing Owned
38,000 Warehouse Owned
South Windham, Connecticut 88,000 Manufacturing Owned
Woodstock, Connecticut 116,000 Manufacturing Owned
Elk Grove Village, Illinois 93,000 Manufacturing Leased
through 9/07
Electronic Materials
Chandler, Arizona 112,000 Manufacturing Owned
11,000 Warehouse Owned
Chandler, Arizona* 142,000 Manufacturing Owned
Rogers, Connecticut 290,000 Manufacturing Owned
Ghent, Belgium
Rogers NV 113,000 Manufacturing Owned
Rogers Induflex NV 96,000 Manufacturing Owned
Tokyo, Japan 2,000 Sales Office Leased
through 8/01
Wanchai, Hong Kong 1,000 Sales Office Leased
through 3/01
Taipei, Taiwan, R.O.C. 1,000 Sales Office Leased
through 7/02
Seoul, Korea 1,000 Sales Office Leased
through 2/01
Corporate
Rogers, Connecticut 116,000 Corporate Headquarters/
Research &
Development Owned
* The Company is leasing this facility to the current owner of the flexible
interconnections business, which was sold by the Company in 1993.
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, as a
participant in a group of potentially responsible parties (PRPs).
The Company is currently involved as a PRP in two cases involving
waste disposal sites, both of which are Superfund sites. 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.
6
<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 Woodstock, Connecticut facility. The Company is
actively involved in the removal of the contaminated soil and
expects to complete this in 2000. On the basis of estimates
prepared by environmental engineers and consultants, the Company
recorded a provision of approximately $900,000 in 1994, and based
on updated estimates provided an additional $700,000 in 1997,
$600,000 in 1998, and $400,000 in 1999 for costs related to this
matter. During 1995, $300,000 was charged against this provision
and $200,000 per year was charged in 1996, 1997, and 1998. In
1999, $400,000 was charged. 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 this same matter the United States Environmental Protection
Agency (EPA) has alleged that the Company improperly disposed of
PCBs. An administrative law judge found the Company liable for
this alleged disposal and assessed a penalty of approximately
$300,000. The Company reflected this fine in expense in 1998 but
disputes the EPA allegations and has appealed the administrative
law judge's findings and penalty assessment.
The Company has not had any material recurring costs and capital
expenditures relating to environmental matters, except as
specifically described in the preceding statements.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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 48, under the
caption "Restriction on Payment of Dividends" in Note G on page
39, and under the caption "Dividend Policy" in the "Management's
Discussion and Analysis" on page 26 of the 1999 annual report to
shareholders.
At February 22, 2000, there were 1,035 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 17 of the 1999
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 18
through 27 of the 1999 annual report to shareholders.
7
<PAGE>
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Pursuant to General Instruction G to Form 10-K, there is hereby
incorporated by this reference the information set forth under
the caption "Market Risk" in the "Management's Discussion and
Analysis" on page 25 of the 1999 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
28 through 47 and under the caption "Quarterly Results of
Operations (Unaudited)" on page 48 of the 1999 annual report to
shareholders.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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 2 of the Registrant's definitive
proxy statement dated March 8, 2000, for its 2000 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 "Directors' Compensation" on page 5 and "Executive
Compensation" on pages 6 through 13 of the Registrant's
definitive proxy statement, dated March 8, 2000, for its 2000
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 3 and "Beneficial Ownership of More Than Five Percent of
Rogers Stock" on page 4 of the Registrant's definitive proxy
statement, dated March 8, 2000, for its 2000 annual meeting of
stockholders filed pursuant to Section 14(a) of the Act.
8
<PAGE>
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
captions "Termination of Employment and Change of Control
Arrangements" and "Certain Relationships and Related
Transactions" on page 14 of the Registrant's definitive proxy
statement, dated March 8, 2000, for its 2000 annual meeting of
stockholders filed pursuant to Section 14(a) of the Act.
PART IV
Item 14. EXHIBITS AND REPORTS ON FORM 8-K
(a)(1) - The following consolidated financial statements of
Rogers Corporation and Subsidiaries, included in the
Annual Report of the Registrant to its shareholders for
the fiscal year ended January 2, 2000, are incorporated
by reference in Item 8:
Consolidated Balance Sheets--January 2, 2000 and January 3, 1999
Consolidated Statements of Income--Fiscal Years Ended
January 2, 2000, January 3, 1999, and December 28, 1997
Consolidated Statement of Shareholders' Equity - Fiscal
Years Ended January 2, 2000, January 3, 1999, and
December 28, 1997
Consolidated Statements of Cash Flows--Fiscal Years
Ended January 2, 2000, January 3, 1999, and
December 28, 1997
Notes to Consolidated Financial Statements-January 2, 2000
All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission
are not required under the related instructions or are
inapplicable, and therefore have been omitted.
9
<PAGE>
(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 for the fiscal
year ended January 1, 1989 (the 1988 Form 10-K)*.
3b Articles of Amendment to the Articles of Organization,
filed with the Secretary of State of the Commonwealth of
Massachusetts on August 10, 1966, were filed as Exhibit 3b
to the 1988 Form 10-K*.
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 1988 Form 10-K*.
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 1988 Form 10-K*.
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 1988 Form 10-K*.
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 1988 Form 10-K*.
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 1988 Form 10-K*.
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 1988 Form 10-K*.
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
for the fiscal year ended December 31, 1995 (the 1995 Form
10-K)*.
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 1995 Form 10-K*.
3k Articles of Amendment, as filed with the Secretary of
State of the Commonwealth of Massachusetts on May 8, 1998
were filed as Exhibit 3k to the 1998 Form 10-K*.
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. The June 19, 1997 and July 7, 1997
amendments were filed on Form 8-A/A dated July 21, 1997*.
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 for the
fiscal year ended January 3, 1988 (the 1987 Form 10-K).
The October 23, 1996 amendment was filed as Exhibit 10a to
the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 29, 1996 (the 1996 Form 10-K)*.
10b Description of the Company's Life Insurance Program**, was
filed as Exhibit K to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 28, 1980*.
10c Rogers Corporation Annual Incentive Compensation Plan**
(as restated and amended on December 18, 1996) was filed
as Exhibit 10c to the 1996 Form 10-K*.
10d Rogers Corporation 1988 Stock Option Plan** (as amended
December 17, 1988, September 14, 1989, and October 23,
1996). The 1988 plan, the 1988 amendment, and the 1989
amendment were filed as Exhibit 10d to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
January 1, 1995 (the 1994 Form 10-K)*. The 1996 amendment
was filed as Exhibit 10d to the 1996 Form 10-K*.
10
<PAGE>
10e Rogers Corporation 1990 Stock Option Plan** (as restated
and amended on October 18, 1996 and December 21, 1999).
The October 18, 1996 restatement and amendment was filed
as Registration Statement No. 333-14419 on Form S-8 dated
October 18, 1996*. The December 21, 1999 amendment is
filed herewith.
10f Rogers Corporation Deferred Compensation Plan** (1983) was
filed as Exhibit O to the Registrant's Annual Report on
Form 10-K for the fiscal year ended January 1, 1984*.
10g Rogers Corporation Deferred Compensation Plan** (1986) was
filed as Exhibit 10e to the 1987 Form 10-K*.
10h Rogers Corporation 1994 Stock Compensation Plan** (as
restated and amended on October 17, 1996 and amended on
December 18, 1997). The 1994 plan, as amended and
restated on October 17, 1996, was filed as Exhibit 10h to
the 1996 Form 10-K. The 1997 amendment was filed as
Exhibit 10h to the 1997 Form 10-K*.
10i Rogers Corporation Voluntary Deferred Compensation Plan
for Non-Employee Directors** (1994, as amended December
26, 1995, December 27, 1996 and as restated and amended
December 21, 1999). The 1994 plan, the December 26, 1995
and December 27, 1996 amendments were filed as Exhibit 10i
to the 1994 Form 10-K, 1995 Form 10-K, and 1996 Form 10-K,
respectively*. The December 21, 1999 restatement and
amendment are filed herewith.
10j Rogers Corporation Voluntary Deferred Compensation Plan
for Key Employees** (1993, as amended on December 22,
1994, December 21, 1995, December 22, 1995, April 17, 1996
and as restated and amended on December 21, 1999). The
1993 plan and the 1994 amendments were filed as Exhibit
10j to the 1994 Form 10-K. The 1995 and 1996 amendments
were filed as Exhibit 10j to the 1995 Form 10-K and 1996
Form 10-K, respectively*. The December 21, 1999
restatement and amendment are filed herewith.
10k Rogers Corporation Long-Term Enhancement Plan for Senior
Executives of Rogers Corporation** dated December 18,
1997.*
10l Rogers Corporation 1998 Stock Incentive Plan (1998, as
amended September 9, 1999 and December 21, 1999).** The
1998 Plan was filed as Registration Statement No. 333-
50901 on April 24, 1998*. The September 9, 1999 and
December 21, 1999 amendments are filed herewith.
13 Portions of the Rogers Corporation 1999 Annual Report to
Shareholders which are specifically incorporated by
reference in this Annual Report on Form 10-K.
21 Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
27.1 Financial Data Schedule.
* In accordance with Rule 12b-23 and Rule 12b-32 under the
Securities Exchange Act of 1934, as amended, reference is made
to the documents previously filed with the Securities and
Exchange Commission, which documents are hereby incorporated
by reference.
** Management Contract.
(b) No reports on Form 8-K were filed during the three months
ended January 2, 2000.
(c) Exhibits - The response to this portion of Item 14 is
submitted as a separate section of this report.
11
<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)
Date: March 29, 2000 By /s/Frank H. Roland
Frank H. Roland
Vice President, Finance; Chief
Financial Officer; and
Secretary
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below on March 23, 2000, by the
following persons on behalf of the Registrant and in the
capacities indicated.
By /s/Walter E. Boomer President (Principal Executive
Walter E. Boomer Officer)and Director
By /s/Leonard M. Baker Director
Leonard M. Baker
By /s/Harry H. Birkenruth Director
Harry H. Birkenruth
By /s/Edward L. Diefenthal Director
Edward L. Diefenthal
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
12
<PAGE>
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
Rogers Taiwan, Inc. 100% Delaware
Rogers Korea, Inc. 100% Delaware
Rogers Specialty Materials 100% Delaware
Corporation
TL Properties, Inc. 100% Arizona
World Properties, Inc. 100% Illinois
Rogers Export Sales Corporation 100% Barbados
Rogers Induflex N.V. 100% Belgium
Rogers N.V. 100% Belgium
Rogers GmbH 100% Germany
Rogers (UK) LTD. 100% England
Rogers S.A. 100% France
* Rogers Inoac Corporation 50% Japan
* Durel Corporation 50% Delaware
* Polyimide Laminate Systems LLC 50% Delaware
* These entities are unconsolidated joint ventures and accordingly are not
consolidated in the consolidated financial statements of Rogers Corporation.
F-1
<PAGE>
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
January 31, 2000, included in the 1999 Annual Report to
Shareholders of Rogers Corporation.
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, 333-14419, and 333-42545, 333-50901
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 January 31, 2000, with respect to the consolidated
financial statements incorporated herein by reference, and our
report included in the preceding paragraph with respect to the
financial statement schedule included in this Annual Report (Form
10-K) of Rogers Corporation.
ERNST & YOUNG LLP
Providence, Rhode Island
March 23, 2000
F-2
SELECTED FINANCIAL DATA
(Dollars in Thousands, Except per Share Amounts)
- ----------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
SALES AND INCOME
- ----------
Net Sales $247,839 $216,574 $189,652 $141,476 $140,293
Income Before Income Taxes 25,877 19,126 22,005 17,657 15,390
Net Income 18,631 13,771 16,500 13,949 13,081
PER SHARE DATA
- ----------
Basic 2.48 1.81 2.21 1.92 1.84
Diluted 2.38 1.74 2.10 1.83 1.69
Book Value 15.88 14.47 12.51 10.43 8.42
FINANCIAL POSITION (YEAR-END)
- ----------
Current Assets 72,547 69,164 74,325 57,567 50,608
Current Liabilities 36,741 32,305 33,983 24,637 24,412
Ratio of Current Assets
to Current Liabilities 2.0 to 1 2.1 to 1 2.2 to 1 2.3 to 1 2.1 to 1
Cash, Cash Equivalents,
and Marketable Securuties 9,955 9,849 21,555 19,631 14,676
Working Capital 35,806 36,859 40,342 32,930 26,196
Property, Plant and
Equipment - Net 84,652 79,969 57,359 41,772 41,631
Total Assets 183,406 176,174 158,440 119,227 102,516
Long-Term Debt less Current
Maturities 9,740 13,687 13,660 3,600 4,200
Shareholders' Equity 116,417 110,231 94,378 77,212 60,098
Long-Term Debt as a
Percentage of
Shareholders' Equity 8% 12% 14% 5% 7%
OTHER DATA
- ----------
Depreciation and
Amortization 10,375 8,439 6,614 5,781 5,738
Research and Development
Expenses 10,791 10,352 9,608 9,184 9,320
Capital Expenditures 13,621 28,965 17,739 6,326 8,853
Number of Employees
(Average) 1,197 1,122 993 854 928
Net Sales per Employee 207 193 191 166 151
Number of Shares Outstanding
at Year-End 7,332,326 7,617,666 7,543,699 7,405,961 7,135,090
17
F-3
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
CONSOLIDATED SALES AND OPERATIONS - 1999 TO 1998
Net sales were $247.8 million for 1999, 14% higher than those
reported in 1998. Combined Sales, which include 50% of the sales
of the Company's two unconsolidated joint ventures, totaled
$285.0 million, up 16% over 1998. A majority of the Company's
major product groups achieved record sales in 1999 mainly as the
result of unit volume increases. Worldwide sales of high
frequency circuit materials accounted for a significant portion
of the sales gain. Wireless communications infrastructure,
satellite television receivers, and wireless communication
antennas are the current primary uses for these materials. The
year-over-year revenue improvement is partly attributable to
higher sales of urethane and silicone foam materials,
particularly for wireless communication and computer
applications. The acquisition of most of the engineered molding
compounds business of Cytec Fiberite in January 1999, and the
purchase of the Imation lithographic printing dampening sleeve
business in September 1998 also boosted 1999 sales.
Effective January 1999, the Company acquired most of the
engineered molding compounds business of Cytec Fiberite. This
acquisition has added capabilities that have enhanced the
Company's molding materials business. The transfer of Cytec
Fiberite's manufacturing equipment is on schedule and will be
completed during 2000.
Income before income taxes rose 35% to a record $25.9 million in
1999 while after-tax profits also increased 35% to $18.6 million,
also a record. Diluted earnings per share for the year were
$2.38, up from $1.74 in 1998. Basic earnings per share were
$2.48 in 1999 and $1.81 in 1998. The improvement in earnings was
primarily the result of improved margins, higher sales, and
increased joint venture income offset somewhat by the added
spending to strengthen sales and marketing capabilities and
further develop information systems. Also 1998 numbers include
the results of disappointing second and third quarters that were
adversely impacted by depressed conditions in Southeast Asia and
in the computer disk drive industry.
Durel Corporation, the Company's 50% owned joint venture with 3M
in electroluminescent lamps, achieved 50% growth in sales which
included late-year contracts from two of the largest
manufacturers of cellular telephones. This growth was driven by
a more than 130% increase in sales of Durel's products for
wireless telephones and other hand held electronic devices. To
meet this growing demand, a doubling of lamp manufacturing
capacity is nearing completion. This will be followed by another
significant increase in capacity in late 2000. The
aforementioned sales gains helped Durel achieve record earnings
despite a very significant increase in legal costs associated
with the patent infringement lawsuit brought by Durel to protect
its proprietary technology. After many delays this patent
infringement lawsuit finally came to trial on January 24,2000 and
on February 14,2000 in a jury decision in the United States
District Court for the District of Arizona, $49 million in
damages were awarded to Durel Corporation. These damages were
assessed against Osram Sylvania, Inc., a subsidiary of Siemens AG
of Munich, Germany for infringement of three exclusively licensed
patents relating to technology for electroluminescent lamps.
Osram Sylvania, Inc. may appeal this award.
Rogers Inoac Corporation (RIC), the Company's 50% owned joint
venture with Inoac Corporation of Japan, continues to improve.
RIC was negatively impacted in 1998 by the loss of disk drive
business and the poor economic conditions in Japan and Southeast
Asia. In 1999, RIC successfully moved PORON materials into
industrial applications and, with the Company, strengthened
relationships with a leading footwear manufacturer.
The Company's manufacturing profit was 29% in 1999 and 27% in
1998. The increase from 1998 to 1999 begins to reflect the
attention paid to improving manufacturing yields over the
18
F-4
<PAGE>
past several years. New equipment installed as part of a capital
expansion campaign during the past couple of years has produced
immediate process improvements with enhanced product flow and
efficiency. Manufacturing profit percentages were held down by
the lower margins on the sales of FLEX-I-MID materials to
Hutchinson Technology Inc.(HTI). Such materials were produced
for the Company by Mitsui Chemicals, Inc. in Japan and carry a
lower margin than material that the Company manufactures.
Effective January 3,2000 the Company started a joint venture with
Mitsui Chemicals, Inc. to eventually manufacture this specialty
flexible circuit board laminate in Chandler, Arizona. This joint
venture will provide HTI with a second source of supply thereby
enabling the Company and Mitsui Chemicals to remain the sole
source for these materials. Beginning in 2000, this joint
venture will make these sales to HTI rather than having the
resale go through the Company. The Company expects to report a
drop in net sales for the first quarter of 2000, compared with
the first quarter of 1999, when the Company's sales to HTI were
approximately $10 million. However, since the Company expects to
earn the same commissions on the laminates sold to HTI, comparable
levels of profitability will be achieved by the Company despite
the fact that the sales themselves will be made through the joint
venture. Full year sales to HTI were $30.7 million in 1999 and $27.6
million in 1998.
Selling and Administrative expenses increased in total dollars
and increased as a percentage of sales from 13% in 1998 to 15% in
1999. This increase in spending levels reflects the
strengthening of sales and marketing capabilities at both the
Corporate and Divisional levels and the continued development of
information systems. It also includes higher payroll costs
related to bonus accruals and terminations.
Research and development expense totaled $10.8 million in 1999
compared with $10.4 million in 1998. Greater R&D emphasis
continues to be given to the development of new product platforms
resulting in the creation of product families. An example of a
product platform development is the Company's program to make
Copper-LCP (Liquid Crystal Polymer) film laminates to be used in
flexible circuits where superior electrical and physical
properties are necessary. Good progress continued with this
program which will remain in development during 2000.
Major development activities in circuit materials included
improvements to the RO3000 and RO4000 high frequency circuit
board materials which are designed for use in high volume, low
cost, commercial wireless communication applications. RO4350B
was developed for applications where an improved UL Thermal Index
is required. In constructions of 0.020 inches or greater, RO4350B
has a thermal index of 125 (degrees) Celsius or higher.
Application of the Company's R&D capability in fillers allowed
improved processing of fluoropolymer based laminates for the
RO3000 line of products. Flexible circuit materials development
efforts improved the processing of a new epoxy based adhesive
system, R/flex Crystal. Manufacturing improvements designed
to significantly improve the dimensional stability of all
R/flex laminates continued. PORON materials development
activities included commercialization of several new
formulations for industrial and footwear applications.
A thin soft PORON foam on PET (polyester) film was
introduced for cell phone and other electronic applications where
good sealing characteristics and shock protection are required.
The first in a series of copper-polyester film laminates were
introduced and found significant use as cell phone antennas.
To better support the adoption of phenolic molding materials
in automotive applications, more sophisticated FEA
(finite element analysis) computer system support was acquired.
19
F-5
<PAGE>
Corporate R&D emphasis on core capability improvement continued.
Greater resources were applied to adhesion and better
understanding of material dielectric properties during 1999. The Company
expects these technical resources to benefit the development of
new products for its circuit material and high performance foam
product lines.
Net interest income decreased almost $600,000 from 1998 to 1999.
This decrease is primarily due to lower cash balances during the
year, lower amounts of interest expense capitalized as part of
long-term capital spending projects, and the prepayment penalty
incurred in 1999 as a result of the payoff of debt which carried
a 10.6% interest rate.
Other income less other charges reflected a net income amount of
$1.6 million in 1999 and a net expense amount of $1.0 million in
1998. This $2.6 million positive impact on earnings was caused
primarily by a $1.6 million increase in joint venture income, and
a $600,000 decrease in environmental expenses in 1999.
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, as a
participant in a group of potentially responsible parties (PRPs).
The Company is currently involved as a PRP in two cases involving
waste disposal sites, both of which are Superfund sites. 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 Woodstock, Connecticut facility. The Company is
actively involved in the removal of the contaminated soil and
expects to complete this in 2000. On the basis of estimates
prepared by environmental engineers and consultants, the Company
recorded a provision of approximately $900,000 in 1994, and based
on updated estimates provided an additional $700,000 in 1997,
$600,000 in 1998, and $400,000 in 1999 for costs related to this
matter. During 1995, $300,000 was charged against this provision
and $200,000 per year was charged in 1996, 1997, and 1998. In
1999, $400,000 was charged. 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 this same matter the United States Environmental Protection
Agency (EPA) has alleged that the Company improperly disposed of
PCBs. An administrative law judge found the Company liable for
this alleged disposal and assessed a penalty of approximately
$300,000. The Company reflected this fine in expense in 1998 but
disputes the EPA allegations and has appealed the administrative
law judge's findings and penalty assessment.
The Company has not had any material recurring costs and capital
expenditures relating to environmental matters, except as
specifically described in the preceding statements.
20
F-6
<PAGE>
CONSOLIDATED SALES AND OPERATIONS - 1998 TO 1997
Net sales of $216.6 million in 1998 were 14% higher than the
previous year. Combined Sales, which include one-half of the
sales of the Company's two unconsolidated joint ventures totaled
$245.3 million, up 11% from 1997. Several of the Company's major
product groups achieved record sales in 1998 mainly as the result
of unit volume increases. A majority of the year-to-year volume
increase came from sales of a customized FLEX-I-MID material to
Hutchinson Technology Inc. and from sales by Induflex,
the European flexible laminates business the Company acquired at
the end of September 1997. The 1998 sales increase was achieved
despite a severely overbuilt market in hard disk drives that
peaked in 1997 causing customers to draw down inventories through
most of 1998. This resulted in a major customer losing nearly
one-third of its business in 1998, an event that affected the
Company's sales and profitability during the second and third
quarters.
The Company's strategy continued to emphasize growth by
developing current markets, particularly through the introduction
of new products, and by means of acquisitions. In 1998 the
Company committed to a market-driven process for product
development called Concurrent Product Development. CPD adds
discipline to the process of bringing new products to market,
forcing hard decisions relative to the commitment of people and
resources. It helps the Company more effectively bring to market
new products that have the properties customers need, and that
the Company can manufacture.
Effective September 30, 1998, the Company acquired a line of
printing pressroom products from Imation Corp., formerly a
business of 3M Corporation. This dampening sleeve business is
integral to the water transfer and inking of many types of offset
presses in use throughout the world. This acquisition
complemented the Company's existing line of R/bak compressible
plate mounting materials for flexography and resulted in better
utilization of the Rogers, Connecticut facility.
Net Income was $13.8 million or $1.74 per share on a diluted
basis in 1998 compared with $2.10 per share in 1997. Basic
earnings per share were $1.81 in 1998 and $2.21 in 1997. Before-
tax profits declined 13% from $22.0 million in 1997 to $19.1
million in 1998. The effective tax rates were 28% and 25% in 1998
and 1997, respectively. The decrease in both before-tax profits
and net income primarily can be attributed to the severe downturn
in sales in 1998 of R/flex flexible circuit materials
manufactured by the Company. The widely reported overbuilding by
hard disk drive manufacturers coupled with the 32% reduction of
sales to a major customer, the largest producer of flexible
circuits in the United States, resulted in dramatic sales and
profit reductions in this product group.
Durel Corporation, the Company's 50% owned joint venture with 3M
in electroluminescent lamps, was in the midst of a challenging
transition to convert its processes to manufacture smaller, more
complex pieces at higher volumes for the wireless communications
market. In addition, Durel had significant business in Asia, and
suffered from the decline in the Asian economy, the strong U.S.
dollar, and increasing competition which caused customers to
demand steep price reductions. Also, profits continued to be
negatively impacted by costs related to the patent infringement
suit brought by Durel in 1995 against Osram Sylvania.
Rogers Inoac Corporation (RIC), the Company's 50% owned joint
venture with Inoac Corporation of Japan, was negatively impacted
by the loss of disk drive business and the poor economic
conditions in Japan and Southeast Asia. While sales in local
currency in 1998 decreased 10%, currency rate changes caused
sales measured in U.S. dollars to decrease 20%. On the positive
side, RIC positioned itself to broaden its product offerings in
Asia. This included ongoing participation with Rogers
21
F-7
<PAGE>
Corporation in a major marketing success of 1998, the
incorporation of significant volumes of PORON materials into the
products of one of the world's largest sports shoe companies.
The Company's manufacturing profit was 27% in 1998 and 30% in
1997. This decrease was primarily due to the lower profit
margins earned on resale of the specialty FLEX-I-MID material to
Hutchinson Technology Inc., the world leader in
suspension assemblies for hard disk drives. This material is
manufactured by Mitsui Chemicals, Inc. under a technology license
from the Company. The doubling of sales of this material to HTI
during the year resulted in a 3 percentage point decrease in
consolidated manufacturing profit.
Selling and administrative expense increased in total dollars but
decreased as a percentage of net sales to 13% in 1998 from 14% in
1997. The increase in dollars primarily reflected steps taken to
strengthen the internal organization and to improve information
systems.
Research and development expense totaled $10.4 million in 1998
compared with $9.6 million in 1997. Greater R&D emphasis
continued to be given to the development of product platforms
resulting in the creation of product families, combined with
increased resources applied to improving process capability to
achieve lower cost and better controlled manufacturing
operations.
Major development activities in circuit materials included
process and product improvements to the RO3000 and RO4000 high
frequency circuit board materials which are designed for use in
high volume, low cost commercial wireless communication
applications. These activities included the development of a
bondply addition to the RO4000 family that will allow multi-layer
circuit boards to be made using RO4000 laminates. Flexible
circuit materials development efforts focused on the introduction
of a new epoxy based adhesive system, R/flex Crystal, and on
manufacturing improvements designed to significantly improve the
dimensional stability of all R/flex laminates. PORON materials
development activities included commercialization of several new
formulations for industrial and footwear applications; in
addition, new thinner adhesive-backed R/bak tapes were being
developed for the flexographic printing market. Molding
materials development continued to emphasize tougher, more
dimensionally stable materials for small electric motor
commutators.
Net interest income decreased $100,000 from 1997 to 1998. This
decrease was primarily due to the lower interest income earned as
a result of the significant decrease in cash and marketable
securities.
Other income less other charges reflected a net income amount of
$1.1 million in 1997 and a net expense amount of $1.0 million in
1998. This $2.1 million negative impact on earnings was caused
primarily by a $600,000 decrease in royalties and income from
joint ventures, a $700,000 change in gains/(losses) from disposal
of assets, and $400,000 of additional environmental costs in
1998.
SEGMENT SALES AND OPERATIONS
Sales in the Polymer Materials business segment increased 27%,
4%, and 24% in 1999, 1998, and 1997 respectively. The increase
from 1998 to 1999 is primarily attributable to the acquisition of
most of the engineered molding compounds business of Cytec
Fiberite in January 1999 and of the dampening sleeve business
from Imation Corp. in September 1998. It also reflects
significantly higher sales of urethane and silicone foam
materials in 1999, particularly for wireless communications and
computer applications. The increase from 1997 to 1998 was led by
a record sales performance in the Elastomer Components Division.
A new application for NITROPHYL floats for fuel
22
F-8
<PAGE>
level sensing in propane tanks contributed to this sales growth.
The moldable composites business was bolstered by increasing sales
to Europe and by the addition of a major new U.S. customer for
electric commutator materials. The major expansion completed
in 1997 is effectively supporting the growth of moldable composites
in Europe and in the United States.
The Polymer Materials business segment generated operating income
of $15.0 million in 1999, $10.7 million in 1998, and $8.9 million
in 1997. Improvement in manufacturing yields and the higher
sales of urethane and silicone foam materials coupled with the
benefits from acquisitions resulted in the significant
improvement from 1998 to 1999. Since the beginning of 1997 the
Company has made three domestic acquisitions all of which are in
the Polymer Materials segment. The purchase of the Imation
dampening sleeve business and the Cytec Fiberite engineered
molding compounds business have resulted in significant
meaningful contributions to the Company's performance in 1999.
The integration and improvement of the Bisco silicone foam
business acquired at the beginning of 1997 has also reached this
stage although it took longer than originally anticipated.
Benefits related to the acquisition of the dampening sleeves
business in September 1998, and significantly lower bonus
expenses for the year 1998 were the primary contributors to the
improved 1998 income levels.
Revenues from the Electronic Materials business segment increased
3% in 1999, 26% in 1998, and 47% in 1997. Worldwide sales of
high frequency circuit materials set a record in 1999. Sales to
the consumer electronics market were particularly strong. This
was significantly offset by the disappointing sales levels of
R/flex materials that the Company manufactures, reflecting the
softness in demand being experienced by its major customer for
such flexible materials. Sales of FLEX-I-MID adhesiveless
laminate materials to HTI dropped sharply in the fourth quarter
1999 as this customer continued to work off its inventories
resulting in a smaller year over year increase. The addition of
a full year of Induflex sales in 1998 accounted for 36% of the
1998 increase. Continuing growth of sales of FLEX-I-MID material
to HTI in 1998 more than offset the decline in sales of flexible
circuit materials manufactured in Chandler, Arizona. Production
and sale of high frequency circuit materials continued an upward
trend in 1998. This was made possible by the completion and
startup of the new manufacturing facility in Arizona. This
facility not only increased the Company's capacity to make high
frequency laminates, but also enabled the Company to manufacture
rather than purchase a critical material used in this product
line. Also in 1998, Rogers N.V., a European manufacturing
facility, strengthened its position in bus bars, used as power
distribution components for trains and mass transit systems, as
well as in cellular base stations. Already the market leader in
Germany and Scandinavia, the Company made significant inroads
toward gaining market share in England and France.
Electronic Materials operating income was $9.4 million in 1999,
$9.0 million in 1998, and $11.5 million in 1997. The small
increase in 1999 reflects higher sales and improved margins of
high frequency circuit materials significantly offset by the
continued decline in sales of flexible circuit materials
manufactured in Chandler, Arizona. The decline in sales of
flexible circuit materials manufactured in Chandler, Arizona, is
also the primary reason for the drop in operating income in 1998.
Sales made through Rogers N.V. stated in local currencies
increased 12% in 1999, 20% in 1998, and 42% in 1997. When
translated into U.S. dollars these changes became gains of 7%,
18%, and 30% in 1999, 1998, and 1997, respectively. Over the
past several years, the Company
23
F-9
<PAGE>
has intensified its sales and marketing activities in Europe.
This effort is now paying off handsomely with sales of almost
all product lines in Europe increasing in 1998 and 1999.
BACKLOG
The Company's backlog of firm orders was $44.5 million at January
2, 2000, and $38.5 million at January 3, 1999. The increase is
due primarily to the higher level of sales.
SOURCES OF LIQUIDITY AND CAPITAL
Net cash provided by operating activities amounted to $32.5
million in 1999, $17.9 million in 1998, and $19.2 million in
1997. Primary factors contributing to the year-to-year increase
from 1998 to 1999 include increased earnings, a reduction in
accounts receivable and a higher level of accounts payable and
accrued expenses. The major reason for the decrease in 1998 is
the lower level of income in that year.
Capital expenditures totaled $13.6 million in 1999, $29.0 million
in 1998, and $17.7 million in 1997. In terms of capacity in
1998, the Company built new production facilities and expanded
production lines in the United States and Europe. In addition to
the multi-million dollar expansion at the Microwave Materials
Division in Chandler, Arizona, a new production line was built at
the Poron Materials Unit in Woodstock, Connecticut. Also, in
Ghent, Belgium, installation of the microwave laminates product
line was virtually completed. In 1999 capital expenditures have
been reduced to more traditional levels.
Cash generated from the Company's operating activities exceeded
capital spending in both 1997 and 1999. In 1998 capital
expenditures exceeded cash generated from operating activities by
$13.0 million and more than accounted for the $11.7 million
reduction in cash and marketable securities during 1998. For
2000, it is anticipated that capital spending will approximate
$25.0 million and that this will be financed by internally
generated funds.
Under the Company's unsecured multi-currency revolving credit
agreement with Fleet National Bank, the Company can borrow up to
$20.0 million, or the equivalent in Belgian francs and/or
Japanese yen and eventually the Euro. Amounts borrowed under
this agreement are to be paid in full by September 19, 2003.
Under the arrangement, the ongoing facility fee varies from 17.5
to 30 basis points of the maximum amount that can be borrowed.
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, or at rates from 45 to 65 basis points over
either London Interbank Offered Rate (LIBOR) quoted in U.S.
dollars or Japanese yen, or Belgian Interbank Offered Rate
(BIBOR) quoted in Belgian francs. The spreads over LIBOR and
BIBOR and the level of facility fees is based on a measure of the
Company's financial strength. The borrowing at year-end was
denominated in Belgian francs and the interest rate on the loan
at that time was 3.47%. The carrying value of this debt
approximates fair value as of January 2, 2000. In 1988 the
Company borrowed $6,000,000 at 10.6% and principal payments of
$600,000 per year were made through October 1999. On December 21, 1999,
the Company prepaid the $2,400,000 remainder of the loan in full.
Included in the provisions of the Company's long-term loan
agreement 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. This agreement also imposes financial covenants
requiring the Company to maintain a certain level of fixed
charge coverage and net worth, and specified leverage ratios.
At January 2, 2000, the Company had indirectly guaranteed 50% of
a loan entered into by one of the unconsolidated joint ventures.
The Company's proportionate
24
F-10
<PAGE>
share of the outstanding principal under this guarantee was
$4,636,000 at January 2, 2000 and $5,000,000 at January 3, 1999.
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.
Management believes that in the near term, internally generated
funds plus available lines of credit will be sufficient to meet
the regular needs of the business. The Company continually
reviews and assesses its lending relationships.
MARKET RISK
The Company is exposed to market risk from changes in interest
rates and foreign exchange rates. The Company does not use
derivative instruments for trading purposes. The Company
monitors foreign exchange and interest rate risks and manages
such risks on specific transactions. The risk management process
primarily uses analytical techniques and sensitivity analysis.
The Company has obligations where the interest rate, although not
fixed, is relatively low compared to the prime interest rate. An
increase in interest rates would not significantly increase
interest expense due to the current makeup of the Company's debt
obligations. Because of the size and structure of these
obligations, a 100 basis point increase in the prime interest
rate would not result in a material change in the Company's
interest expense or in the fair value of the debt obligations.
The fair value of the Company's investment portfolio or the
related interest income would not be significantly impacted by
either a 100 basis point increase or decrease in interest rates
due mainly to the size and short-term nature of the Company's
investment portfolio and the relative insignificance of interest
income to consolidated pretax income, respectively.
The Company's largest foreign currency exposure is against the
Belgian franc, primarily because of its investments in its
ongoing operations in Belgium. Exposure to variability in
currency exchange rates is mitigated, when possible, through the
use of natural hedges, whereby purchases and sales in the same
foreign currency and with similar maturity dates offset one
another. The Company also has a borrowing arrangement under
which the Company has borrowed 390 million Belgian francs which
is to be paid in full by September 19, 2003. This arrangement
functions as a natural hedge against its other Belgian franc
exposure. Additionally, the Company can initiate hedging
activities by entering into foreign exchange forward contracts
with third parties when the use of natural hedges is not
possible.
Relative to foreign currency exposures existing at January 2,
2000, a 10% unfavorable movement in the Belgian franc exchange
rate would not significantly affect consolidated operating
results, financial position or cash flows. In addition to the
direct effects of changes in exchange rates, such changes
typically affect the volume of sales or the foreign currency
sales prices as competitors' products become more or less
attractive. The Company's sensitivity analysis does not factor
in a potential change in sales levels or local currency selling
prices.
YEAR 2000
The year 2000 issue is the result of computer programs using two
digits, rather than four, to define the applicable year. It was
feared that computer programs with date-sensitive software, or
equipment with embedded, date-sensitive technology, might
misinterpret a two digit code, resulting in system or equipment
failures and disruptions of operations.
The Company completed its review of systems and operations prior
to the end of 1999 and, through March 1, 2000, has not
experienced any significant problems related to the year 2000
issue. The Company's compliance efforts were funded with cash
25
F-11
<PAGE>
flows from operations, were expensed as incurred, and did not
have a material adverse effect on the Company.
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, economic, and
political conditions both in the United States and in foreign
countries; uncertainties and expenses associated with litigation
and changes in laws, regulations, and policies of governmental
entities; 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; any difficulties in integrating acquired
businesses into the Company's operations; 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 wireless communication 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.
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 to meet the needs of this market, the Company's results
may be affected by these factors. The Company's recently formed
50/50 joint venture with Mitsui Chemicals, Inc. is called
Polyimide Laminate Systems. This joint venture now sells FLEX-I-
MID circuit materials in the U.S. and Europe through an
arrangement with Mitsui Chemicals which produces this material in
Japan under a technology license from the Company. In this case,
neither the Company nor Polyimide Laminate Systems have direct
control over the manufacturing process, delivery dates or the
impact of foreign exchange rates on the sale of FLEX-I-MID
circuit materials.
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,
26
F-12
<PAGE>
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.
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 is currently engaged in proceedings involving a
number of Superfund sites, 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 2000 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 or modifications of 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.
27
F-13
<PAGE>
CONSOLIDATED BALANCE SHEETS
- ----------
January 2, January 3,
(Dollars in Thousands) 2000 1999
---------- ----------
ASSETS
- ----------
Current Assets:
Cash and Cash Equivalents $ 9,955 $ 9,593
Marketable Securities -- 256
Accounts Receivable, Net 33,884 32,590
Inventories:
Raw Materials 10,566 10,392
In-Process and Finished 13,688 12,637
Less LIFO Reserve (935) (272)
--------- ---------
Total Inventories 23,319 22,757
Current Deferred Income Taxes 4,728 3,481
Other Current Assets 661 487
--------- ---------
Total Current Assets 72,547 69,164
--------- ---------
Property, Plant and Equipment, Net of
Accumulated Depreciation of $75,069
and $69,051 84,652 79,969
Investment in Unconsolidated Joint Venture 5,294 5,467
Pension Asset 4,223 4,606
Goodwill and Other Intangible Assets 14,510 14,935
Other Assets 2,180 2,033
--------- ---------
Total Assets $ 183,406 $ 176,174
========= =========
28
F-14
<PAGE>
January 2, January 3,
(Dollars in Thousands) 2000 1999
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------
Current Liabilities:
Accounts Payable $ 14,855 $ 17,766
Current Maturities of Long-Term Debt -- 600
Accrued Employee Benefits and Compensation 10,782 6,577
Accrued Income Taxes Payable 4,341 1,059
Taxes, Other than Federal and Foreign Income 518 1,038
Other Accrued Liabilities 6,245 5,265
--------- ---------
Total Current Liabilities 36,741 32,305
--------- ---------
Long-Term Debt, less Current Maturities 9,740 13,687
Noncurrent Deferred Income Taxes 6,362 5,938
Noncurrent Pension Liability 4,215 3,703
Noncurrent Retiree Health Care and Life
Insurance Benefits 5,966 6,268
Other Long-Term Liabilities 3,965 4,042
Shareholders' Equity:
Capital Stock, $1 Par Value (Notes A & I):
Authorized Shares 50,000,000; Issued
Shares 7,715,226 and 7,630,466 7,715 7,630
Additional Paid-In Capital 34,716 33,323
Treasury Stock (382,900 and 12,800 shares)
(Note A) (13,436) (423)
Accumulated Other Comprehensive Income,
Net of Tax (Note I) 438 1,348
Retained Earnings 86,984 68,353
--------- ---------
Total Shareholders' Equity 116,417 110,231
--------- ---------
Total Liabilities and Shareholders'
Equity $ 183,406 $ 176,174
========= =========
- ----------
The accompanying notes are an integral part of the consolidated financial
statements.
29
F-15
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
- ----------
(Dollars in Thousands, Except Per Share Amounts)
1999 1998 1997
(52 weeks) (53 weeks) (52 weeks)
---------- --------- ---------
Net Sales $ 247,839 $ 216,574 $ 189,652
Cost of Sales 175,964 158,509 133,653
Selling and Administrative Expenses 36,735 28,073 26,061
Research and Development Expenses 10,791 10,352 9,608
--------- --------- ---------
Total Costs and Expenses 223,490 196,934 169,322
--------- --------- ---------
Operating Income 24,349 19,640 20,330
Other Income less Other Charges 1,626 (981) 1,108
Interest Income (Expense), Net (98) 467 567
--------- --------- ---------
Income Before Income Taxes 25,877 19,126 22,005
Income Taxes 7,246 5,355 5,505
--------- --------- ---------
Net Income $ 18,631 $ 13,771 $ 16,500
========= ========= =========
Net Income Per Share (Notes A & I):
Basic $ 2.48 $ 1.81 $ 2.21
========= ========= =========
Diluted $ 2.38 $ 1.74 $ 2.10
========= ========= =========
Shares Used in Computing (Notes A & I):
Basic 7,527,517 7,601,235 7,474,992
========= ========= =========
Diluted 7,821,422 7,899,913 7,863,084
========= ========= =========
- ----------
The accompanying notes are an integral part of the consolidated financial
statements.
30
F-16
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- ----------
Capital Accumulated Total
Stock Additional Compre- Share-
(Number Paid-In Retained hensive Treasury holders'
of Shares) Capital Earnings Income Stock Equity
-------------------------------------------------------------
Balance at
December 29,
1996 7,405,961 $ 29,691 $ 38,082 $ 2,033 $ -- $ 77,212
--------------------------------------------------------------
Comprehensive
Income:
Net Income for
1997 16,500 16,500
Other
Comprehensive
Income(Loss) (878) (878)
--------
Total
Comprehensive
Income 15,622
Stock Options
Exercised 138,076 1,298 1,436
Stock Issued
to Directors 2,506 92 95
Shares Reacquired
and Cancelled (2,844) (103) (106)
Tax Benefit on
Stock Options
Exercised 119 119
-------------------------------------------------------------
Balance at
December 28,
1997 7,543,699 $ 31,097 $ 54,582 $ 1,155 $ -- $ 94,378
-------------------------------------------------------------
Comprehensive
Income:
Net Income
for 1998 13,771 13,771
Other
Comprehensive
Income 193 193
--------
Total
Comprehensive
Income 13,964
Stock Options
Exercised 90,167 884 974
Stock Issued
to Directors 10,966 352 363
Shares Reacquired
and Cancelled (14,366) (589) (604)
Tax Benefit on
Stock Options
Exercised 1,579 1,579
Treasury Stock
Acquisitions
(12,800 Shares) (423) (423)
-------------------------------------------------------------
Balance at
January 3, 1999 7,630,466 $ 33,323 $ 68,353 $ 1,348 $ (423) $110,231
-------------------------------------------------------------
Comprehensive
Income:
Net Income
for 1999 18,631 18,631
Other
Comprehensive
Income(Loss) (910) (910)
--------
Total
Comprehensive
Income 17,721
Stock Options
Exercised 85,889 867 953
Stock Issued
to Directors 7,734 291 299
Shares Reacquired
and Cancelled (8,863) (215) (224)
Tax Benefit on
Stock Options
Exercised 450 450
Treasury Stock
Acquisitions
(382,900 Shares) (13,013) (13,013)
--------------------------------------------------------------
Balance at
January 2, 2000 7,715,226 $ 34,716 $ 86,984 $ 438 $(13,436) $116,417
==============================================================
The dollar amount of the capital stock ($1 par value) is equal to the indicated
number of shares.
- ----------
The accompanying notes are an integral part of the consolidated financial
statements.
31
F-17
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
CASH FLOWS PROVIDED BY (USED IN) OPERATING
ACTIVITIES: 1999 1998 1997
(52 weeks) (53 weeks) (52 weeks)
- ---------- ---------- ---------- ----------
Net Income $ 18,631 $ 13,771 $ 16,500
Adjustments to Reconcile Net Income to Cash
Provided by Operating Activities:
Depreciation and Amortization 10,375 8,439 6,614
(Benefit) Expense for Deferred Income
Taxes (577) 2,009 2,543
Equity in Undistributed Income of
Unconsolidated Joint Ventures, Net (1,897) (414) (635)
Loss on Disposition of Assets 304 249 52
Noncurrent Pension and Postretirement
Benefits 441 (58) 1,610
Other, Net 247 (161) (688)
Changes in Operating Assets and
Liabilities Excluding Effects of
Acquisition and Disposition of Assets:
Accounts Receivable 264 (3,984) (6,683)
Inventories (1,261) (912) (6,515)
Prepaid Expenses (233) 124 (161)
Accounts Payable and Accrued Expenses 6,203 (1,196) 6,533
-------- -------- --------
Net Cash Provided by Operating
Activities 32,497 17,867 19,170
CASH FLOWS PROVIDED BY (USED IN) INVESTING
ACTIVITIES:
- ----------
Capital Expenditures (13,621) (28,965) (17,739)
Acquisition of Businesses (4,302) (1,500) (11,589)
Proceeds from Sale of Property, Plant and
Equipment 118 100 59
Proceeds from Sale of Marketable Securities 256 2,508 --
Purchase of Marketable Securities -- -- (1,808)
Investment in Unconsolidated Joint Ventures
and Affiliates 737 333 386
-------- -------- --------
Net Cash Used in Investing
Activities (16,812) (27,524) (30,691)
CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES:
- ----------
(Repayments) Proceeds from Short- and Long-
Term Borrowings (16) 736 12,259
Repayments of Debt Principal (3,369) (603) (2,100)
Acquisition of Treasury Stock (13,013) (423) --
Proceeds from Sale of Capital Stock - Net 729 370 1,330
-------- -------- --------
Net Cash Provided by (Used in)
Financing Activities (15,669) 80 11,489
Effect of Exchange Rate Changes on Cash 346 379 148
-------- -------- --------
Net Increase (Decrease) in Cash and Cash
Equivalents 362 (9,198) 116
Cash and Cash Equivalents at Beginning of
Year 9,593 18,791 18,675
-------- -------- --------
Cash and Cash Equivalents at End of Year $ 9,955 $ 9,593 $ 18,791
======== ======== ========
- ----------
The accompanying notes are an integral part of the consolidated financial
statements.
32
F-18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ----------
NOTE A-ACCOUNTING POLICIES
- ----------
ORGANIZATION:
- ----------
Rogers Corporation manufactures specialty materials, which it sells to
targeted markets around the world.
In 1999 Rogers had two business segments which were about equal in size based
on sales and assets. Polymer Materials included high performance elastomer
materials and components, and moldable composite materials. Polymer Materials
were sold principally to manufacturers in the communications, computer,
imaging, transportation, and consumer markets. Electronic Materials included
circuit board laminates for high frequency printed circuits, flexible circuit
board laminates for interconnections, industrial laminates for shielding of
electromagnetic interference, and bus bars for power distribution. Electronic
Materials were sold principally to printed circuit board manufacturers and
equipment manufacturers for applications in the computer, communications,
transportation, and consumer markets.
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.
INVENTORIES:
- ----------
Inventories are valued at the lower of cost or market. Certain inventories,
amounting to $8,395,000 at January 2, 2000, and $7,965,000 at January 3, 1999,
or 36% and 35% of total Company inventories in the respective periods, are
valued at the lower of cost, determined by the last-in, first-out (LIFO)
method, or market. 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.
33
F-19
<PAGE>
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 -- 45
Building improvements 10 -- 25
Machinery and equipment 5 -- 15
Office equipment 3 -- 10
INTANGIBLE ASSETS:
- ----------
Goodwill, representing the excess of the cost over the net tangible and
identifiable assets of acquired businesses, is stated at cost. Goodwill is
being amortized on a straight-line method over periods ranging from 10-40
years. Amortization charges to operations amounted to $625,000 in 1999 and
$453,000 in 1998. When events and circumstances so indicate, all long-term
assets are assessed for recoverability based upon cash flow forecasts. Based
on its most recent analysis, the Company believes that no material impairment
of goodwill exists at January 2, 2000.
Purchased patents and licensed technology are capitalized and amortized on a
straight-line basis over their estimated useful lives, generally from 2 to 17
years.
PENSIONS AND OTHER POSTRETIREMENT BENEFIT PLANS:
- ----------
The Company adopted Statement of Financial Accounting Standards (FAS No. 132),
"Employers' Disclosures about Pensions and Other Postretirement Benefits," in
1998. The provisions of FAS No. 132 revise employers' disclosures about
pension and other postretirement benefit plans. It does not change the
measurement or recognition of these plans. It standardizes the disclosure
requirements for pensions and other postretirement benefits to the extent
practicable.
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:
- ----------
The following table sets forth the computation of basic and diluted earnings
per share:
(Dollars in Thousands, Except Per Share
Amounts) 1999 1998 1997
Numerator:
Net income $ 18,631 $ 13,771 $ 16,500
Denominator:
Denominator for basic earnings per
share - Weighted-average shares 7,527,517 7,601,235 7,474,992
Effect of stock options 293,905 298,678 388,092
--------- --------- ---------
Denominator for diluted earnings per
Share - adjusted weighted-average
shares and assumed conversions 7,821,422 7,899,913 7,863,084
========= ========= =========
Basic earnings per share $ 2.48 $ 1.81 $ 2.21
========= ========= =========
Diluted earnings per share $ 2.38 $ 1.74 $ 2.10
========= ========= =========
34
F-20
<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.
TREASURY STOCK:
- ----------
From time to time the Company's Board of Directors authorizes the repurchase,
at management's discretion, of shares of the Company's capital stock. The
most recent authorization was approved on August 19, 1999 and provided for the
repurchase of up to an aggregate of $13.0 million in market value of such
stock. On June 17, 1998, the Board of Directors adopted a policy that stated
that all such subsequently repurchased stock be maintained as authorized and
issued, but not outstanding shares (i.e., Treasury Shares) until transferred
pursuant to authority previously or subsequently granted by the Board of
Directors. Currently, Treasury Stock totals 382,900 shares and is shown at
cost on the balance sheet as a reduction of Shareholders' Equity.
RECLASSIFICATIONS:
- ----------
Certain reclassifications were made for 1997 and 1998 to report results
consistent with 1999 reporting practice.
NOTE B-ACQUISITIONS AND DIVESTITURES
- ----------
CYTEC ACQUISITION:
- -----------------
Effective January 19, 1999, the Company acquired certain assets of the
engineered molding compounds business of Cytec Industries, Inc. for
approximately $4.3 million. These assets included machinery and equipment;
intellectual property rights; accounts receivable and customer lists. This
acquisition was accounted for as a purchase and, accordingly, results are
included in the Company's consolidated financial statements since the date of
acquisition.
IMATION SLEEVES BUSINESS ACQUISITION:
- ----------
Effective September 30, 1998, the Company acquired a line of printing
pressroom products from Imation Corp., formerly a business of 3M Corporation,
for $2.25 million. The acquisition included a line of dampening and ductor
sleeves used in lithographic printing, along with related manufacturing assets
and intellectual property rights. This acquisition was accounted for as a
purchase and, accordingly, results are included in the Company's consolidated
financial statements since the date of acquisition.
ROGERS INDUFLEX N.V. ACQUISITION:
- ----------
The Company acquired UCB Induflex N.V. of Ghent, Belgium from UCB S.A. on
September 30, 1997. Induflex, which is now known as Rogers Induflex N.V.,
manufactures thin aluminum and copper laminates for shielding electromagnetic
and radio frequency interference, primarily in telecommunication and data
communication applications. The purchase included the business and its Ghent,
Belgium facility.
For financial statement purposes, the acquisition was accounted for as a
purchase and, accordingly, Rogers Induflex N.V.'s results are included in the
Company's consolidated financial statements since the date of acquisition.
The aggregate purchase price of approximately $11.3 million, which included
costs of acquisition, has been allocated to the assets of the Company based on
their respective fair market values. The excess of the purchase price over
assets acquired (Goodwill) approximated $6.1 million and is being amortized
over 40 years.
The majority of the purchase price was funded through a Multi-Currency
Revolving Credit Agreement with Fleet National Bank, although at the time the
Company could have drawn down its cash position to make the purchase. The
Company borrowed 390.2 million Belgian francs ($10.8 million) in September
1997, which is payable in full on or before September 19, 2003.
35
F-21
<PAGE>
PRO FORMA RESULTS (UNAUDITED):
- ----------
The following unaudited pro forma consolidated results of operations have been
prepared as if the acquisitions of Rogers Induflex N.V., of the dampening
sleeve business from Imation Corp. and of the engineered molding compounds
business from Cytec Industries, Inc. had occurred as of the beginning of the
fiscal year prior to acquisition:
Pro Forma Years
(Dollars in Thousands, Except Per Share (Unaudited)
Amounts) --------------------------------
1999 1998 1997
---- ---- ----
Net sales $ 247,839 $238,310 $205,608
Net income 18,631 17,843 15,802
Net income per share:
Basic $ 2.48 $ 2.08 $ 2.39
Diluted $ 2.38 $ 2.00 $ 2.27
The pro forma consolidated results do not purport to be indicative of results
that would have occurred had the acquisitions been in effect for the period
presented, nor do they purport to be indicative of the results that will be
obtained in the future.
NOTE C-PROPERTY, PLANT AND EQUIPMENT
- ----------
January 2, January 3,
(Dollars in Thousands) 2000 1999
---------- ----------
Land $ 1,580 $ 1,674
Buildings and improvements 52,298 47,177
Machinery and equipment 85,829 76,142
Office equipment 11,169 7,915
Installations in process 8,845 16,112
-------- --------
159,721 149,020
Accumulated depreciation (75,069) (69,051)
--------- --------
$ 84,652 $ 79,969
========== ==========
Depreciation expense was $9,750,000 in 1999, $7,986,000 in 1998, and
$6,169,000 in 1997. Interest costs incurred during the years 1999, 1998, and
1997 were $1,423,000, $1,358,000, and $1,033,000, respectively, of which
$506,000 in 1999, $894,000 in 1998, and $251,000 in 1997 were capitalized as
part of the cost of plant and equipment additions.
NOTE D-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 Materials 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) The
Company's major initial contribution to each venture was technology which was
valued differently by the joint venture than it was on the Company's books; 2)
one of the joint
36
F-22
<PAGE>
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.
January 2, January 3,
(Dollars in Thousands) 2000 1999
---------- ----------
Current Assets $ 27,296 $ 19,691
Noncurrent Assets 13,628 12,171
Current Liabilities 12,392 6,758
Noncurrent Liabilities 12,287 12,468
Shareholders' Equity 16,245 12,636
Year Ended
-----------------------------------------
January 2, January 3, December 28,
(Dollars in Thousands) 2000 1999 1997
---------- ---------- ----------
Net Sales $ 73,411 $ 58,570 $ 64,265
Gross Profit 20,909 18,530 21,234
Net Income 4,049 718 971
Note that in the tables above, Rogers Inoac Corporation is reported as of
October 31 for the respective years.
Sales to unconsolidated joint ventures amounted to $393,000 in 1999, $275,000
in 1998, and $659,000 in 1997.
At January 2, 2000, 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
$4,636,000 at January 2, 2000 and $5,000,000 at January 3, 1999. 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.
On September 24,1999, the Company agreed to lend Durel Corporation, one of its
50% owned joint ventures, up to $2.0 million at an interest rate of 8% on an
unsecured basis. As of January 2, 2000, Durel had borrowed $500,000 under
this facility. Borrowings must be made in increments of $250,000, and any
amounts repaid by Durel may subsequently be re-borrowed during the term of the
loan arrangement. The arrangement expires on September 24, 2000, unless
extended at the sole discretion of the Company.
Equity income from unconsolidated joint ventures is included in other income
less other charges on the consolidated statements of operations.
NOTE E-PENSIONS AND OTHER POSTRETIREMENT BENEFIT PLANS
- ----------
PENSIONS:
- ----------
The Company has two qualified noncontributory defined benefit pension plans
covering substantially all U.S. employees. The Company also has established a
nonqualified unfunded noncontributory defined benefit pension plan to restore
certain retirement benefits that might otherwise be lost due to limitations
imposed by federal law on qualified pension plans. In addition, the Company
sponsors three unfunded defined benefit health care and life insurance plans
for retirees. The following provides a reconciliation of benefit obligations,
plan assets, and funded status of the plans:
37
F-23
<PAGE>
Pension Benefits Other Postretirement Benefits
---------------------------- -----------------------------
(Dollars in
Thousands) 1999 1998 1997 1999 1998 1997
-------- -------- -------- -------- -------- ---------
Components of net
periodic benefits
cost:
Service cost $ 1,853 $ 1,569 $ 1,408 $ 218 $ 304 $ 267
Interest cost 4,257 3,791 3,627 264 354 341
Expected return
on plan assets (5,359) (5,346) (4,507) -- -- --
Amortizations and
deferrals 524 417 467 (152) (75) (97)
Amortization of
transition asset (335) (335) (335) -- -- --
-------- -------- -------- -------- -------- -------
Net periodic
benefit costs $ 940 $ 96 $ 660 $ 330 $ 583 $ 511
======== ======== ======== ======== ======== ========
Change in plan
assets:
Fair value of plan
plan assets
January 1 $ 58,211 $ 57,860 $ -- $ --
Actual return on
plan assets 5,760 2,559 -- --
Employer
contributions 268 87 632 492
Benefit payments (2,856) (2,295) (632) (492)
-------- -------- -------- -------
Fair value of
plan assets
December 31 $ 61,383 $ 58,211 $ -- $ --
======== ======== ======== ========
Change in benefit
obligation:
Benefit
obligation
at January 1 $ 63,548 $ 54,814 $ 5,288 $ 4,910
Service cost 1,853 1,569 218 304
Interest cost 4,257 3,791 264 354
Actuarial return
on plan assets (10,247) 5,669 (1,743) 212
Benefit payments (2,856) (2,295) (632) (492)
-------- -------- -------- --------
Benefit
obligation
at December 31 $ 56,555 $ 63,548 $ 3,395 $ 5,288
======== ======== ======== ========
Reconciliation of
funded status:
Funded status $ 4,828 $ (5,337) $ (3,395) $ (5,288)
Unrecognized
net gain/(loss) (4,888) 5,941 (3,171) (1,580)
Unrecognized
prior service
cost 1,736 2,079 -- --
Unrecognized
transition
(asset) (1,376) (1,712) -- --
-------- -------- -------- --------
Prepaid/(accrued)
benefit cost at
December 31 $ 300 $ 971 $ (6,566) $ (6,868)
======== ======== ======== ========
Assumptions as of
December 31:
Discount rate 8.00% 6.75% 8.00% 6.75%
Rate of
compensation
increase 4.00% 4.00% -- --
The expected long-term rates of investment return were assumed to be 9.00% for
the pension plan covering unionized hourly employees and 9.50% for the other
pension plan in each year presented.
The Company has one nonqualified unfunded pension plan with accumulated
benefit obligations in excess of plan assets. Amounts applicable to this plan
are:
1999 1998
--------- ---------
Projected benefit obligation $ 1,284 $ 1,281
Accumulated benefit obligation 1,018 1,015
Fair value of plan assets -- --
38
F-24
<PAGE>
The assumed health care cost trend rate of increase is 4.5% for 2000 and 1999
and 5.5% for 1998. It is expected to continue at 4.5% after 2000. 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 for each future year would increase the accumulated
postretirement benefit obligation as of the beginning of 2000 by $255,000 and
the aggregate of service cost and interest cost components of net periodic
postretirement benefit cost for fiscal 1999 by $47,000; decreasing the assumed
rates by one percentage point would decrease the accumulated postretirement
benefit obligation at the beginning of 2000 by $231,000 and the aggregate of
service cost and interest cost components of net periodic postretirement
benefit cost for fiscal 1999 by $42,000.
NOTE F-EMPLOYEE SAVINGS AND INVESTMENT PLAN
- ----------
The Company sponsors the Rogers Employee Savings and Investment Plan (RESIP)
for domestic employees. The plan allows such employees to contribute up to
18% of their compensation through payroll deductions. Currently up to 5% of
an eligible employee's annual pre-tax contribution is matched at a rate of 50%
by the Company. In 1999 and 1998, 100% of the Company's matching contribution
was invested in Company stock. In 1997, one-half of the Company's matching
contribution was invested in Company stock and the other half was invested at
the employee's discretion. RESIP related expense amounted to $723,000 in 1999,
$697,000 in 1998, and $654,000 in 1997, including Company matching
contributions of $703,000, $686,000, and $501,000, respectively.
NOTE G-DEBT
- ----------
LONG-TERM DEBT:
- ----------
In 1988 the Company borrowed $6,000,000 at 10.6% and principal payments of
$600,000 per year were made through 1999. On December 21,1999, the Company
prepaid the $2,400,000 remainder of the loan in full.
Under the Company's unsecured multi-currency revolving credit agreement with
Fleet National Bank, the Company can borrow up to $20.0 million, or the
equivalent in Belgian francs and/or Japanese yen and eventually the Euro.
Amounts borrowed under this agreement are to be paid in full by September 19,
2003. Under the arrangement, the ongoing facility fee varies from 17.5 to 30
basis points of the maximum amount that can be borrowed. 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, or at rates from 45 to 65
basis points over either London Interbank Offered Rate (LIBOR) quoted in U.S.
dollars or Japanese yen, or Belgian Interbank Offered Rate (BIBOR) quoted in
Belgian francs. The spreads over LIBOR and BIBOR and the level of facility
fees are based on a measure of the Company's financial strength. The borrowing
at year-end was denominated in Belgian francs and the interest rate on the
loan was 3.47% as of January 2, 2000. The carrying value of this debt
approximates fair value as of January 2, 2000. The loan agreement contains
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 repayment due on September 19, 2003 is
$9,740,000.
INTEREST PAID:
- ----------
Interest paid during the years 1999, 1998, and 1997, was $1,523,000,
$1,362,000, and $1,003,000, respectively.
RESTRICTION ON PAYMENT OF DIVIDENDS:
- ----------
Pursuant to the aforementioned Fleet loan agreement, $44,466,000 of retained
earnings was available at January 2, 2000, for cash dividends.
39
F-25
<PAGE>
NOTE H-INCOME TAXES
- ----------
Consolidated income before income taxes consists of:
(Dollars in Thousands) 1999 1998 1997
----------------------------------------
Domestic $ 21,523 $ 14,756 $ 18,168
Foreign 4,354 4,370 3,837
----------------------------------------
$ 25,877 $ 19,126 $ 22,005
========================================
The income tax expense (benefit) in the consolidated statements of income
consists of:
(Dollars in Thousands) Current Deferred Total
----------------------------------
1999:
Federal $ 6,365 $ (1074) $ 5,291
Foreign 1,338 408 1,746
State 120 89 209
----------------------------------
$ 7,823 $ (577) $ 7,246
==================================
1998:
Federal $ 2,276 $ 1,322 $ 3,598
Foreign 1,066 687 1,753
State 4 -- 4
----------------------------------
$ 3,346 $ 2,009 $ 5,355
==================================
1997:
Federal $ 2,477 $ 1,548 $ 4,025
Foreign 447 995 1,442
State 38 -- 38
----------------------------------
$ 2,962 $ 2,543 $ 5,505
==================================
Deferred tax assets and liabilities as of January 2, 2000 and January 3, 1999,
respectively, are comprised of the following:
(Dollars in Thousands) January 2, January 3
2000 1999
---------- ----------
Deferred tax assets:
Accruals not currently deductible
for tax purposes:
Accrued employee benefits and
compensation $ 2,110 $ 1,533
Accrued post-retirement benefits 2,228 2,020
Other accrued liabilities and reserves 2,015 1,346
Net investments in joint ventures 1,563 2,547
Other 262 107
--------- ---------
Total deferred tax assets 8,178 7,553
Less deferred tax asset valuation allowance 1,053 3,327
--------- ---------
Net deferred tax assets 7,125 4,226
--------- ---------
Deferred tax liabilities:
Depreciation and amortization 8,759 6,683
--------- ---------
Total deferred tax liabilities 8,759 6,683
--------- ---------
Net deferred tax asset (liability) $ (1,634) $ (2,457)
========= =========
40
F-26
<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) 1999 1998 1997
------------------------------
Tax expense at statutory rate $ 9,056 $ 6,694 $ 7,702
Net U.S. tax (foreign tax credit)
On foreign earnings (722) (326) (745)
General business credits (446) (400) (500)
Nontaxable foreign sales income (424) (421) (392)
State income taxes, net of federal
benefit 136 3 25
Other (354) (195) (585)
------------------------------
Income tax expense $ 7,246 $ 5,355 $ 5,505
===============================
The deferred tax asset valuation allowance decreased by $2,274,000 during
1999. The 1999 decrease resulted primarily from the Company's reassessment of
its ability to claim foreign tax credits on undistributed profits from its
Japanese joint venture. The valuation allowance remained unchanged during
1998 and 1997.
Undistributed foreign earnings, before available tax credits and deductions,
amounted to $10,956,000 at January 2, 2000, $8,601,000 at January 3, 1999,
and $5,984,000 at
December 28, 1997.
Income taxes paid were $4,795,000, $4,442,000, and $3,090,000, in 1999, 1998,
and 1997, respectively.
NOTE I-SHAREHOLDERS' EQUITY AND STOCK OPTIONS
- ----------
Components of Other Comprehensive Income (Loss) consist of the following:
(Dollars in Thousands) 1999 1998 1997
------- ------ -------
Foreign currency translation adjustments $ (683) $ 112 $ (875)
Change in unrealized gains (losses) on
marketable securities 2 3 (3)
Change in minimum pension liability (229) 78 --
------- ------ -------
Other comprehensive income (loss) $ (910) $ 193 $ (878)
======= ====== =======
Reclassification adjustments in each year are immaterial.
Accumulated balances related to each component of Other Comprehensive Income
(Loss) are as follows:
(Dollars in Thousands) 1/2/00 1/3/99
------- --------
Foreign currency translation adjustments $ 589 $ 1,272
Unrealized loss on marketable securities -- (2)
Change in minimum pension liability (151) 78
------- --------
Accumulated balance $ 438 $ 1,348
======= ========
41
F-27
<PAGE>
Under various plans the Company may grant stock options to officers and other
key employees at exercise prices that range as low as 50% of the fair market
value of the Company's stock as of the date of grant. To date virtually all
such options have been granted at an exercise price equal to the fair market
value of the Company's stock as of the date of grant. In general, regular
employee options become exercisable over a four-year period from the grant date
and expire ten years after the date of the grant. Stock option grants are also
made to non-employee directors, generally on a semi-annual basis. For such
stock options, the exercise price is equal to the fair market value of the
Company's stock and they are immediately exercisable and expire ten years after
the date of grant. Stock grants in lieu of cash compensation are also made to
non-employee directors.
Shares of capital stock reserved for possible future issuance are as follows:
January 2, January 3,
2000 1999
----------- -----------
Shareholder Rights Plan 10,210,796 10,209,263
Stock options 2,334,222 2,435,711
Rogers Employee Savings and Investment Plan 84,522 84,522
Long-Term Enhancement Plan 64,951 68,242
Stock to be issued in lieu of deferred
directors' fees 11,875 3,122
----------- -----------
Total 12,706,366 12,800,860
=========== ===========
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123 (FAS 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 1999, 1998, and 1997 consistent with the provisions of
FAS No. 123, the Company's net earnings and earnings per share would have been
reduced to the pro forma amounts indicated below:
(Dollars in Thousands,
Except Per Share Amounts) 1999 1998 1997
---------------------------------------
Net income As Reported $18,631 $13,771 $16,500
Pro Forma 17,207 12,440 15,678
---------------------------------------
Basic earnings per share As Reported $ 2.48 $ 1.81 $ 2.21
Pro Forma 2.29 1.64 2.10
---------------------------------------
Diluted earnings per share As Reported $ 2.38 $ 1.74 $ 2.10
Pro Forma 2.21 1.56 1.99
---------------------------------------
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.
An average vesting period of 36 months was used for the assumption regarding
stock options issued in 1999, 1998, and 1997. Regular options granted to
officers and other key employees usually become exercisable in one-third
increments beginning on the second anniversary of the grant date.
42
F-28
<PAGE>
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:
1999 1998 1997
--------- --------- ---------
Risk-free interest rate 6.42% 4.65% 5.7%
Dividend yield 0% 0% 0%
Volatility factor 30.6% 30.6% 28.2%
Weighted-average expected life 5.8 years 5.5 years 5.3 years
A summary of the status of the Company's stock option program at year-end 1999,
1998, and 1997, and changes during the years ended on those dates is presented
below:
1999 1998 1997
-----------------------------------------------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Stock Options Shares Price Shares Price Shares Price
------------------------------------------------------------
Outstanding at
beginning of
year 1,190,323 $21.81 1,130,183 $20.54 1,063,277 $15.26
Granted 178,160 34.77 160,418 25.15 205,050 41.11
Exercised (85,889) 12.06 (90,167) 10.79 (138,076) 10.40
Cancelled (23,169) 39.53 (10,111) 30.32 (68) 47.90
-----------------------------------------------------------
Outstanding at end
of year 1,259,425 23.99 1,190,323 21.81 1,130,183 20.54
===========================================================
Options exercisable
at end of year 932,016 92,067 604,198
===========================================================
Weighted-average
fair value of
options granted
during year $14.61 $9.36 $15.30
===========================================================
The following table summarizes information about stock options outstanding at
January 2, 2000:
--------------------------------------------------------------
Options Outstanding Options Exercisable
--------------------------------------------------------------
Weighted-
Average Weighted- Weighted-
Number Remaining Average Number Average
Range of Outstanding Contractual Exercise Exercisable Exercise
Exercise Prices at 01/02/00 Life in Years Price at 01/02/00 Price
--------------------------------------------------------------
$7 to $22 450,650 3.5 $12.08 450,650 $12.08
$23 to $45 808,775 7.8 30.62 481,366 27.06
--------------------------------------------------------------
$7 to $45 1,259,425 6.3 $23.99 932,016 $19.82
==============================================================
43
F-29
<PAGE>
NOTE J-COMMITMENTS AND CONTINGENCIES
- ----------
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 $1,076,000
in 1999, $975,000 in 1998, and $951,000 in 1997.
Future minimum lease payments under noncancellable operating leases at January
2, 2000, aggregate $3,616,000. Of this amount, annual minimum payments are
$760,000, $604,000, $504,000, $448,000, and $361,000 for years 2000 through
2004, respectively.
PURCHASE COMMITMENTS:
- ----------
At January 2, 2000, the Company had committed to capital expenditures of
approximately $.6 million, to be used primarily for information systems
improvement.
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, as a participant in a group of potentially
responsible parties (PRPs). The Company is currently involved as a PRP in two
cases involving waste disposal sites, both of which are Superfund sites. 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 Woodstock, Connecticut facility. The Company
is actively involved in the removal of the contaminated soil and expects to
complete this in 2000. On the basis of estimates prepared by environmental
engineers and consultants, the Company recorded a provision of approximately
$900,000 in 1994, and based on updated estimates provided an additional
$700,000 in 1997, $600,000 in 1998, and $400,000 in 1999 for costs related to
this matter. During 1995, $300,000 was charged against this provision and
$200,000 per year was charged in 1996, 1997 and 1998. In 1999, $400,000 was
charged. 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 this same matter the United States Environmental Protection Agency (EPA) has
alleged that the Company improperly disposed of PCBs. An administrative law
judge found the Company liable for this alleged disposal and assessed a penalty
of approximately $300,000. The Company reflected this fine in expense in 1998
but disputes the EPA allegations and has appealed the administrative law
judge's findings and penalty assessment.
44
F-30
<PAGE>
In addition to the environmental issues, the nature and scope of the Company's
business bring it in 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 that 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 K-BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION
- ----------
The Company adopted Statement of Financial Accounting Standards (FAS) No. 131,
"Disclosures about Segments of an Enterprise and Related Information" in 1998
which changed the way the Company reported information about its operating
segments.
The Company's nine business units and two joint ventures have separate
management teams and infrastructures that in most cases offer different
products and services. The business units and joint ventures have been
aggregated into two reportable segments, Polymer Materials, and Electronic
Materials.
Polymer Materials: This segment consists of five business units and two joint
ventures. The products produced by these operations consist primarily of high
performance elastomer foams and proprietary reinforced plastics that are
engineered to perform to predetermined specifications where combinations of
properties are needed to satisfy rigorous electrical, mechanical, and
environmental requirements. The products, which can be in the form of either
materials or components, are sold worldwide and for the most part are sold to
fabricators and original equipment manufacturers.
Electronic Materials: This segment consists of four business units. The
products produced by these operations consist primarily of laminate materials
and power distribution components used in electronics equipment for
transmitting, receiving, and controlling electrical signals. These products
tend to be proprietary materials which provide highly specialized electrical
and mechanical properties to meet the demands imposed by increasing speed,
complexity, and power of analog, digital, and microwave equipment. These
materials are fabricated, coated and/or customized as necessary to meet
customer demands and are sold worldwide.
The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The Company evaluates performance
based on operating income of the respective business units.
The principal operations of the Company are located in the United States and
Europe. 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 1999, approximately 52% of total
sales were to the electronics industry and one customer accounted for
approximately 12% of total sales. 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 9%, sales to Asia of 7%,
and sales to Canada of 2%.
At January 2, 2000, the electronics industry accounted for approximately 56% of
the total accounts receivable due from customers. Accounts receivable due from
customers located within the United States accounted for 72% of the total
accounts receivable owed to the Company at the end of 1999. 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.
45
F-31
<PAGE>
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 Polymer Electronic
(Dollars in Thousands) Materials Materials Other Total
---------------------------------------------
1999:
Net sales $ 130,315 $ 117,524 $ 247,839
Operating income 14,954 9,395 24,349
Total assets 92,500 76,223 $ 14,683 183,406
Capital expenditures 6,304 7,317 13,621
Depreciation 4,978 4,772 9,750
============================================
1998:
Net sales $ 102,450 $ 114,124 $ 216,574
Operating income 10,682 8,958 19,640
Total assets 72,155 90,689 $ 13,330 176,174
Capital expenditures 9,284 19,681 28,965
Depreciation 4,200 3,786 7,986
============================================
1997:
Net sales $ 98,853 $ 90,799 $ 189,652
Operating income 8,850 11,480 20,330
Total assets 65,251 69,698 $ 23,491 158,440
Capital expenditures 9,857 7,882 17,739
Depreciation 3,820 2,349 6,169
============================================
Information relating to the Company's operations by geographic area are as
follows:
Europe
United (primarily
(Dollars in Thousands) States Belgium) Total
---------------------------------
1999:
Net sales $ 205,623 $ 42,216 $ 247,839
Long-lived assets 83,258 18,084 101,342
=================================
1998:
Net sales $ 173,694 $ 42,880 $ 216,574
Long-lived assets 78,032 18,905 96,937
=================================
1997:
Net sales $ 160,116 $ 29,536 $ 189,652
Long-lived assets 59,981 14,030 74,011
=================================
Net sales are attributed to the business unit making the sale. Long-lived
assets are attributed to the location of the asset.
The net assets of wholly-owned foreign subsidiaries were $16,916,000 at January
2, 2000, and $16,609,000 at January 3, 1999. Net income of these foreign
subsidiaries was $2,600,000 in 1999, $2,631,000 in 1998, and $2,409,000 in
1997, including net currency transaction gains (losses) of ($51,000) in 1999,
$62,000 in 1998, and $180,000 in 1997.
46
F-32
<PAGE>
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
- ----------
Board of Directors and Shareholders
Rogers Corporation
- ----------
We have audited the accompanying consolidated balance sheets of Rogers
Corporation and subsidiaries as of January 2, 2000 and January 3, 1999, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three fiscal years in the period ended January 2, 2000. 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 auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Rogers
Corporation and subsidiaries at January 2, 2000 and January 3, 1999, and the
consolidated results of their operations and their cash flows for each of the
three fiscal years in the period ended January 2, 2000, in conformity with
accounting principles generally accepted in the United States.
ERNST & YOUNG LLP
Providence, Rhode Island
January 31, 2000
47
F-33
<PAGE>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
- ----------
(Dollars in Thousands, Except Per Share Amounts)
Basic Diluted
Net Manufacturing Net Net Income Net Income
Quarter Sales Profit Income Per Share Per Share
- ----------------------------------------------------------------------------
1999 Fourth $ 59,058 $ 18,751 $ 4,985 $ .68 $ .65
Third 61,076 18,365 4,608 .60 .58
Second 62,801 16,425 4,341 .57 .55
First 64,904 18,334 4,697 .62 .60
- ----------------------------------------------------------------------------
1998 Fourth $ 53,553 $ 15,928 $ 3,998 $ .53 $ .51
Third 51,319 12,910 2,693 .36 .34
Second 53,389 13,147 2,621 .35 .33
First 58,313 16,080 4,459 .59 .56
- ----------------------------------------------------------------------------
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 closing
prices during each quarter of the last two years on a per share basis.
1999 1998
- ---------------------------------------------------------------------
Quarter High Low High Low
- ---------------------------------------------------------------------
Fourth $ 40-7/8 $ 36-1/8 $ 29-7/8 $ 22-7/16
Third 37-7/8 29-1/4 33-3/4 21-3/8
Second 32-3/8 24-7/8 46-1/2 30-1/8
First 31-7/8 23-3/4 41-1/2 37
- ---------------------------------------------------------------------
48
F-34
FIRST AMENDMENT TO THE
ROGERS CORPORATION
1998 STOCK INCENTIVE PLAN
The Rogers Corporation 1998 Stock Incentive Plan (the "Plan") is
hereby amended as follows:
1. Effective as of January 1, 2000, Section 5(b)(i) of the Plan
is amended by deleting the first sentence thereof and
substituting therefor the following:
"Each Non-Employee Director shall automatically be
granted, as of each Retainer Payment Date, beginning
with the Retainer Payment Date of June 2000, a Non-
Qualified Stock Option to purchase 1,000 shares of
Stock (or, with respect to any individual who has
become or ceased to be a Non-Employee Director since
the later of December 31, 1999 or the last Retainer
Payment Date, an amount equal to a prorated portion of
1,000 shares as determined on an equitable basis by the
Company (the 'Partial Retainer'))."
2. Effective August 19, 1999, Section 5(b)(i) of the Plan is
further amended by adding the following sentence at the end
of the first sentence thereof:
"Further, each individual who is a Non-Employee
Director on August 31, 1999 shall automatically be
granted on such date a Non-Qualified Stock Option to
purchase 5,000 shares of Stock."
Executed this 9th day of September, 1999.
ROGERS CORPORATION
By:/s/ Robert M. Soffer
Robert M. Soffer, Treasurer
F-35
FIRST AMENDMENT TO THE
ROGERS CORPORATION
1990 STOCK OPTION PLAN
(Restatement No. 3)
Pursuant to the powers reserved to it in Section 12 of the
Rogers Corporation 1990 Stock Option Plan (Restatement No. 3)
(the "Plan"), the Board of Directors of Rogers Corporation (the
"Board") hereby amends the Plan, effective as of December 21,
1999, as follows:
1. Section 1 of the Plan is hereby amended by deleting the
parenthetical "(the `Committee')" as it appears in the
penultimate sentence of such section and inserting in lieu
thereof the following:
"(such committee, or any successor committee designated
as such by the Board, being referred to hereinafter as
the `Committee')"
2. Section 4 of the Plan is hereby amended by adding the
following new sentence at the end of such section:
"Notwithstanding any provision to the contrary elsewhere
herein, the Board may take any action authorized to be taken
by the Committee hereunder."
3. Section 7(a) of the Plan is hereby amended by adding
the following parenthetical immediately after the word
"available" as it appears in the last sentence of such section:
"(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)."
4. Section 7(e) of the Plan is hereby amended by adding
the following sentence at the end of such subsection:
"To the extent that an Optionee chooses to satisfy his
or her tax withholding obligations by electing
alternative (ii) described above, the Company shall not
withhold more than the minimum number of shares
required for tax withholding."
5. Section 7(g) of the Plan is hereby amended by inserting
the following sentence immediately after the first sentence of
such subsection:
"Notwithstanding anything herein to the contrary, no shares
of Stock shall be issued upon the exercise of an Option
F-36
<PAGE>
until all applicable securities law and other legal and
stock exchange requirements have been satisfied."
6. The Plan is hereby amended by adding a new Section 7A
immediately following the existing Section 7 of the Plan to read
as follows:
"7A. Stock Awards.
(a) Stock Awards in Lieu of Compensation.
Notwithstanding any provision elsewhere herein to the
contrary, but subject to (i) the first sentence of
Section 3 and (ii) Section 7A(b), each Employee who is
eligible to participate in the Rogers Corporation
Voluntary Deferred Compensation Plan For Key Employees,
as amended from time to time (the "Employees' DC Plan")
and who is either identified on Exhibit A attached
hereto and made a part hereof or designated by the
Board or the Committee from time to time in its sole
discretion as eligible to participate in the Stock
Award feature of the Plan (each, a "Designated
Employee") shall be given the opportunity to elect, by
the date(s) specified in the Employees' DC Plan, to
receive, in lieu of up to 100 percent of the annual
bonus and/or up to 50 percent of the annual salary
otherwise due and payable in cash to such Designated
Employee during the following calendar year (or such
other period as the Board (or a duly authorized
committee of the Board) may specify) and subject to the
applicable minimum deferral requirement set forth in
the Employees' DC Plan, a grant of shares of Stock free
of any restrictions (except as otherwise provided in
the Plan) (each, a "Stock Award"). The Board (or a
duly authorized committee of the Board) may change the
percentages described in the preceding sentence from
time to time in its sole discretion, and reserves the
right, in its sole discretion, to reject any Designated
Employee's election to the extent it deems necessary to
avoid any violation of any applicable securities law or
any other applicable legal or stock exchange
requirement. Each Stock Award granted under this
Section 7A(a) shall be for the number of shares of
Stock obtained by dividing the applicable dollar amount
by the Fair Market Value per share of Stock as of the
last day of the calendar month which includes the date
on which such annual bonus or salary payment would have
otherwise been paid to such Designated Employee,
rounded up to the next higher whole number of shares.
(b) Deferred Payment of Stock Awards. All Stock
Awards granted to a Designated Employee pursuant to
Section 7A(a) above shall be deferred and credited to
F-37
<PAGE>
an account or accounts maintained in terms of shares of
Stock (each, a "stock-based account") for such
Designated Employee under the Employees' DC Plan and
shall be subject to the rules and procedures of the
Employees' DC Plan. Notwithstanding the foregoing, the
Board or the Committee may, in its sole discretion,
allow a Designated Employee to elect, at the time of
the election to receive a Stock Award pursuant to
Section 7A(a), to receive payment of such Stock Award
on a current, rather than a deferred, basis.
(c) Matching Contributions. Each Designated
Employee who elects to receive a Stock Award pursuant
to Section 7A(a) which is payable on a deferred basis
pursuant to Section 7A(b) shall be granted an
additional Stock Award in an amount equal to the
matching credit determined under Section 3(a) of the
Employees' DC Plan. Each Stock Award granted under
this Section 7A(c) shall be granted as of the same day
as the Stock Award to which it relates was granted, and
shall be for the number of shares of Stock obtained by
dividing the amount of such matching credit under the
Employees' DC Plan by the Fair Market Value per share
of Stock as of the date of grant, rounded up to the
next higher whole number of shares. Each Stock Award
granted pursuant to this Section 7A(c) shall be
credited to a separate account under the Employees' DC
Plan and paid on the same basis as the Stock Award
granted pursuant to Section 7A(a) to which it relates.
(d) Conversion of Certain Cash Balances. Each
Designated Employee shall have the right to elect, on
or before December 31, 1999, to receive a Stock Award
hereunder by converting, as of December 31, 1999, all
or any part of the balance(s) maintained in cash-based
account(s) for such Designated Employee under the
Employees' DC Plan to an account or accounts maintained
in terms of shares of Stock under the Employees' DC
Plan, all in accordance with the provisions of the
Employees' DC Plan. Each Stock Award granted under
this Section 7A(d) shall be granted as of December 31,
1999, and shall be for the number of shares of Stock
obtained by dividing the applicable dollar amount by
the Fair Market Value per share of Stock as of December
31, 1999, rounded up to the next higher whole number of
shares.
(e) The provisions of Section 7(g) shall apply to
the issuance of all shares of Stock to a Designated
F-38
<PAGE>
Employee (or beneficiary) pursuant to a Stock Award as
if such shares were being acquired by such Designated
Employee (or beneficiary) pursuant to an exercise of an
Option."
7. Except as herein amended, the provisions of the Plan
shall remain in full force and effect.
8. Executed as of the 21st day of December, 1999.
ROGERS CORPORATION
By: /s/ Robert M. Soffer
Robert M. Soffer
Treasurer
F-39
<PAGE>
Exhibit A
Name Position
1. Dirk M. Baars Molding Materials Division Vice
President
2. Walter E. Boomer President and Chief Executive Officer
3. Michael L. Cooper Chief Information Officer
4. Robert C. Daigle Microwave Materials Division Manager
5. Frank J. Gillern Elastomer Components Division Manager
6. Aarno A. Hassell Severance Arrangement
7. Peter G. Kaczmarek Circuit Materials Division Manager
8. Harry W. Kenworthy Poron Materials Division Vice President
9. Bruce G. Kosa Vice President, Technology
10. Donald F. O'Leary Corporate Controller
11. David W. Richardson Composite Materials
Division Manager
12. John A. Richie Vice President, Human
Resources
13. Ronald F. Robinson Consumer and Printing Markets Center
Vice President
14. Frank H. Roland Vice President, Finance and Chief
Financial Officer
15. William C. Schunmann International Marketing Vice President
16. W. Harry Short Vice President, Business Analysis and
Planning
17. Robert M. Soffer Treasurer
18. Robert D. Wachob Senior Vice President, Sales and
Marketing
12/99
F-40
<PAGE>
SECOND AMENDMENT TO THE
ROGERS CORPORATION
1998 STOCK INCENTIVE PLAN
Pursuant to the powers reserved to it in Section 9 of the
Rogers Corporation 1998 Stock Incentive Plan, as amended (the
"Plan"), the Board of Directors of Rogers Corporation (the
"Board") hereby amends the Plan, effective as of December 21,
1999, as follows:
1. The definition of "Committee" as it appears in
Section 1 of the Plan is hereby amended by inserting the
following words immediately before the word "fails" as it appears
in such definition:
"ceases to exist or"
2. Section 2 of the Plan is hereby amended by adding the
following new sentence at the end of such section:
"Notwithstanding any provision elsewhere herein to the
contrary, the Board may take any action authorized to be
taken by the Committee hereunder."
3. Section 6(a) of the Plan is hereby amended by deleting
such section in its entirety and inserting the following in lieu
thereof:
"(a) Stock Awards.
(i) Annual Retainer. 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 of the annual
retainer fee due to such Non-Employee Director on such
Retainer Payment Date.
(ii) Meeting Fees. Subject to Section 6(b)
below, each Non-Employee Director shall have the right
to elect to receive, in lieu of all or a portion of the
meeting fees due to such Non-Employee Director, a grant
of shares of Stock free of any restrictions (except as
otherwise provided in the Plan).
(iii) Conversion of Certain Cash
Balances. Each Non-Employee Director shall have the
right to elect, on or before December 31, 1999, to
receive an Award hereunder by converting, as of
December 31, 1999, all or any part of the balance(s)
F-41
<PAGE>
maintained in cash-based account(s) for such Non-
Employee Director under the Rogers Corporation
Voluntary Deferred Compensation Plan For Non-Employee
Directors, as amended from time to time (the
"Directors' DC Plan") to an account or accounts
maintained in terms of shares of Stock under the
Directors' DC Plan, all in accordance with the
provisions of the Directors' DC Plan.
Each Award granted under this Section 6(a)
shall be for the number of shares of Stock obtained by
dividing the applicable dollar amount by the Fair
Market Value per share of Stock (A) as of the date on
which such fees would have otherwise been paid to such
Non-Employee Director in the case of an Award under
Sections 6(a)(i) or (ii), or (B) as of December 31,
1999 in the case of an Award under Section 6(a)(iii),
in all cases rounded up to the next higher whole number
of shares."
4. Section 6(b) of the Plan is hereby amended by deleting
such section in its entirety and inserting the following in lieu
thereof:
"(b) Deferral of Awards. Each Non-Employee Director
who is entitled to an Award under Section 6(a)(i) or (ii)
above will have the right to elect to defer up to 100% of
such Award in accordance with the rules and procedures of
the Directors' DC Plan. 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 in accordance
with the provisions of the Directors' DC Plan."
5. Section 7(b) of the Plan is hereby amended by deleting
such subsection in its entirety and inserting the following in
lieu thereof:
"(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
minimum required tax 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."
6. Except as herein amended, the provisions of the Plan
F-42
<PAGE>
shall remain in full force and effect.
7. Executed as of the 21st day of December, 1999.
ROGERS CORPORATION
By: /s/ Robert M. Soffer
Robert M. Soffer
Treasurer
F-43
<PAGE>
ROGERS CORPORATION
VOLUNTARY DEFERRED COMPENSATION PLAN
FOR KEY EMPLOYEES
AMENDED AND RESTATED EFFECTIVE AS OF DECEMBER 21, 1999
1. Name and Purpose. The name of this plan is the Rogers
Corporation Voluntary Deferred Compensation Plan For Key
Employees, as Amended and Restated Effective as of December 21,
1999 (the "Plan"). The purpose of the Plan is to permit each
elected corporate officer or other key employee of Rogers
Corporation (the "Company") or any subsidiary thereof (a
"Subsidiary") who is designated by the President of the Company
(in any case, a "Participant") to elect to defer a portion of his
or her compensation from the Company or Subsidiary. The Plan is
intended to be "a plan which is unfunded and is maintained by an
employer primarily for the purpose of providing deferred
compensation for a select group of management or highly
compensated employees" within the meaning of Sections 201(2),
301(a)(3) and 401(a)(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and shall be
interpreted and administered to the extent possible in a manner
consistent with that intent.
2. Right to Defer. Subject to the limitations set forth
herein, each Participant may elect, for each calendar year, to
defer payment of (i) the portion of (A) the Participant's salary
otherwise payable for services rendered in such calendar year
("Salary") or (B) the Participant's bonus otherwise payable in
such calendar year ("Bonus"), if any, payable to such Participant
in shares of capital stock, $1 par value (the "Stock") of the
Company (the "Stock Compensation") and/or (ii) the portion of (A)
the Salary or (B) the Bonus, if any, payable to such Participant
in cash (the "Cash Compensation"), for service as an employee of
the Company or a Subsidiary
F-44
<PAGE>
during such calendar year. In the case of a Participant who
has elected under the Rogers Corporation 1990 Stock Option Plan
(Restatement No. 3), as amended and in effect from time to time
(the "1990 Plan"), to receive a deferred Stock Award (as
defined in the 1990 Plan), such Participant shall be deemed
for purposes of this Plan to have elected to have deferred
payment of Stock Compensation regardless of whether such
Participant had any right to receive current payment of
such Stock Award. A Participant's election to
defer a portion of his or her Salary for any calendar year shall
be limited to 50% of such Salary, but must be for a projected
minimum Salary deferral of at least $4,000 determined based on
the Participant's Salary at the time of such election. In
addition, 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.
3. Matching Credits (The Company Match).
(a) The Company or Subsidiary, whichever is the
employer for such Participant, shall as of the last day of each
calendar month credit to a separate sub-account maintained under
each Participant's Deferred Compensation Account (as defined in
Section 5(a)), an additional amount determined as follows:
For purposes of such determination, "eligible
compensation" is the Participant's: (1) annual salary, (2) annual
bonus, (3) payments made pursuant to the Long-Term Enhancement
Plan For Senior Executives of Rogers Corporation, (4) auto
allowance or imputed income related to autos, (5) any other
imputed income included in the Participant's taxable income and
(6) any other compensation determined by the Company, in its sole
discretion, to be "eligible compensation" for such purpose. Once
"eligible compensation" has been determined, this
F-45
<PAGE>
amount will be multiplied by the (1) "match level" as defined in the Rogers
Employee Savings and Investment Plan, as amended from time to
time (the "RESIP"), and (2) "Applicable Percentage" as defined in
the RESIP, both as may be in effect from time to time. This
multiplication produces the maximum total Company Match that can
be paid under all deferred compensation programs of the Company.
Compensation, as defined in the RESIP and to the extent eligible
to be used to determine an actual Company Match credited under
the RESIP, will then be subtracted from "eligible compensation"
as determined hereunder and the difference will be multiplied by
the "match level." The result of such multiplication (the
"Product") will then be compared to the amount deferred pursuant
to the Plan (the "Deferred Amount"). To the extent that the
Deferred Amount is equal to or greater than the Product, the
additional amount to be credited to the Participant's sub-account
pursuant to this Section 3(a) will be equal to the Product
multiplied by the "Applicable Percentage." To the extent that
the Deferred Amount is less than the Product, then the additional
amount to be credited to the Participant's sub-account pursuant
to this Section 3(a) will be equal to the Deferred Amount
multiplied by the "Applicable Percentage."
To the extent such additional amount relates to
deferred Stock Compensation, such amount shall be credited as a
number of Shares determined by dividing such amount by the Fair
Market Value (as defined in the 1990 Plan) per share of Stock as
of the last day of such calendar month (rounded up to the next
higher whole number of shares). To the extent such additional
amount relates to deferred Cash Compensation, such amount shall
be credited to a sub-account maintained in terms of dollars as of
the last day of such calendar month. For purposes of the two
foregoing sentences, the portion of such additional amount which
relates to
F-46
<PAGE>
deferred Stock Compensation and the portion which
relates to deferred Cash Compensation shall bear the same
proportion to the total additional amount as the amount of
deferred Stock Compensation for such calendar month and the
amount of deferred Cash Compensation for such calendar month
bear, respectively, to the Deferred Amount for such calendar
month. Amounts credited under this Section 3(a) on account of
deferred Stock Compensation shall constitute Stock Awards
contemplated by Section 7(A)(c) of the 1990 Plan.
(b) Notwithstanding the foregoing, any amount in a
Participant's Deferred Compensation Account which is credited to
a sub-account pursuant to Section 3(a) in any calendar year shall
be payable to the Participant at the same time and in the same
manner as the deferred Stock Compensation and/or Cash
Compensation to which such amount relates; provided, however,
that such distribution shall be made only to the extent the
Participant has a vested interest in such "matching credit"
amount as determined in accordance with the following
schedule:
Years of Continuous Service Vested Interest
At Least But Less Than Percentage
Less than 2 years 0%
2 years 3 years 25%
3 years 4 years 50%
4 years 5 years 75%
5 years or more 100%
For purposes of this Plan, a Participant has the same
number of Years of Continuous Service as he or she has been
credited under the RESIP. Any portion of the amount credited to
such Participant's Deferred Compensation Account pursuant to
Section 3(a) above and all earnings and losses credited thereon
in which the Participant is not vested (the "Non-Vested Amount")
at the time of the Participant's termination of employment with
the Company
F-47
<PAGE>
shall be forfeited. Any Non-Vested Amount which
exists at the time payment hereunder would otherwise be made or
commenced shall not be forfeited while the Participant is still
employed by the Company or a Subsidiary and the Participant shall
continue to vest in such amounts until his or her termination of
employment. Any portion of the Non-Vested Amount which becomes
payable pursuant to the preceding sentence shall be paid to the
Participant as soon as practicable upon becoming vested.
Notwithstanding the foregoing, a Participant shall have
a 100% vested interest in his or her Deferred Compensation
Account coincident with the occurrence of any event which results
in such Participant becoming 100% vested in all amounts held
under the RESIP on his or her behalf.
Once a Participant's sub-account(s) created under this
Section 3 have become 100% vested, such sub-account(s) may be
combined with any other sub-account as long as all amounts in
such combined sub-account are payable in the same medium (Stock
or cash), at the same time and pursuant to the same method of
payment and, in the case of cash, are being credited with the
same rate of interest.
(c) The Plan shall be construed in a manner which is
consistent with the purposes described herein, including without
limitation, the so-called "anti-conditioning" rules of Section
401(k)(4) of the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations promulgated thereunder.
4. Deferral Elections. A Participant's election to defer
payments under Section 2 above (a "Deferral Election") shall be
in writing and shall be deemed to have been made upon receipt and
acceptance by the Company. Separate Deferral Elections shall be
made under
F-48
<PAGE>
Section 2 with respect to Salary payable as Stock
Compensation, Salary payable as Cash Compensation, Bonus payable
as Stock Compensation and Bonus payable as Cash Compensation, in
each case payable with respect to a calendar year. In order to
be effective hereunder, a Deferral Election must be made not
later than (i) the December 31 of the calendar year preceding the
calendar year in which the affected Salary is to be paid and (ii)
the October 31 (or, for a Deferral Election to be made with
respect to a Bonus payable as Stock Compensation in calendar year
2000, December 31) of the calendar year preceding the calendar
year in which the Bonus (if any) is otherwise payable, and in any
case shall specify the time and method of payment pursuant to
Section 6 below applicable to the amount(s) deferred hereunder.
Notwithstanding the foregoing, any person who becomes a
Participant during a calendar year may make Deferral Elections
with respect to Salary to be earned during the remainder of such
calendar year and/or Bonus payable for such calendar year at any
time on or before the thirtieth (30th) day after the date he or
she becomes a Participant. Notwithstanding the foregoing, any
Deferral Election made by a Participant who is or may become
subject to Section 16 of the Securities Exchange Act of 1934, as
amended (the "Act"), with respect to Salary or Bonus payable as
Stock Compensation shall be made in accordance with such rules
and procedures as the Company deems necessary or appropriate to
comply with the requirements of such 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 Deferral
Election made with respect to a Participant's Salary (whether
Stock Compensation, Cash Compensation or both) may be revoked in
its entirety by the Participant at any time by filing a written
notice of revocation with the Company, but only as to Salary
which has not yet been earned and which is payable after receipt
and acceptance by
F-49
<PAGE>
the Company of such revocation. A deferral
made with respect to a Participant's Salary shall be effected by
reducing the Participant's Salary payments (Stock Compensation,
Cash Compensation or both, as applicable) in equal amounts or
percentages for each pay period unless (i) the Company mandates
another method of reduction, in its sole discretion or, (ii) the
Participant elects another method of reduction which the Company
has not determined to be administratively burdensome.
In addition to the foregoing, each Participant shall be
permitted to elect not later than December 31, 1999 to transfer
as of December 31, 1999 up to 100% of the balance in such
Participant's sub-account(s), if any, maintained in terms of
dollars to a sub-account(s) maintained in terms of shares of
Stock. Such transfer shall be accomplished by dividing such
amount to be transferred by the Fair Market Value per share of
Stock as of December 31, 1999, and crediting the resulting number
of shares (rounded up to the next higher whole number of shares)
of Stock to such new sub-account(s) maintained in terms of shares
of Stock. Any such conversion election shall be irrevocable
after December 31, 1999. All Deferral Elections previously made
by such Participant with respect to the timing and method of
payment pursuant to Section 6(a) and Section 6(c) with respect to
the amount(s) converted shall remain in full force and effect.
5. Accounts; Crediting Interest; Additional Credits.
(a) All amounts deferred by a Participant under
Section 2 shall be credited by the Company or Subsidiary,
whichever is the employer of the Participant, to a book account
(a "Deferred Compensation Account") in the name of such
Participant as of the last day of the calendar month during which
such amounts would have been paid to the Participant but for his
or her Deferral Election. Separate sub-accounts will be
maintained for Salary and Bonus deferred
F-50
<PAGE>
for each calendar year pursuant to Section 2, and, in addition,
separate sub-accounts will be maintained hereunder for deferred
Stock Compensation (which sub-accounts will be maintained
in terms of numbers of shares of Stock) and deferred Cash
Compensation (which sub-accounts will be maintained in terms
of dollars) for each calendar year; provided, however, that
(i) all Salary and Bonus deferred pursuant to Section 2 as
deferred Stock Compensation with respect to the same or different
calendar years (including amounts converted pursuant to the last
paragraph of Section 4) which are payable at the same time
and pursuant to the same method may be combined into a
separate sub-account and (ii) all Salary and Bonus deferred
pursuant to Section 2 as deferred Cash Compensation with
respect to the same or different calendar years
which are payable at the same time and pursuant to the same
method and which are being credited with the same rate of
interest may be combined into a single account.
(b) (i) Dividend Credits. An amount equal to the
aggregate dividends that would have been paid on the number of
shares of Stock credited to each Participant's sub-account(s)
maintained in shares had such share credits been issued and
outstanding shares of Stock, shall be credited to the
Participant's Deferred Compensation Account as of the last day of
the calendar month which includes the payable date that would
have been applicable to such dividends had the related share
credits been issued and outstanding shares of Stock. Such
dividend equivalent amounts (i) shall be payable at the same time
and pursuant to the same method as the shares of Stock to which
they relate, (ii) shall be credited to one or more sub-accounts
within such Participant's Deferred Compensation Account, which
sub-account(s) shall be maintained in terms of dollars, and (iii)
may be combined with a sub-account for deferred
F-51
Cash Compensation which is payable at the same time and
pursuant to the same method and which is being credited with
the same rate of interest.
(ii) Interest Credits. As of the last day of each
calendar month, each sub-account within a Participant's Deferred
Compensation Account which is being maintained in terms of
dollars shall be credited with interest on the amount credited to
such sub-account as of the last day of the preceding calendar
month. The rate of interest to be used for this purpose during
any calendar year shall be the 30-year U.S. Treasury bond rate in
effect as of January 1 of such year. The foregoing rate shall be
determined by reference to the first January issue of Barron's
for such calendar year, or such other comparable publication as
may be selected by the Company if Barron's is no longer published
or no longer provides such information.
(c) Notwithstanding the foregoing, the Pension
Committee of the Board of Directors of the Company or any
successor committee designated as such by the Board of Directors
of the Company (the "Committee") may change the method of
determining the rate of interest to be used under Section
5(b)(ii) above by written notice to each Participant (including
former Participants who then have a Deferred Compensation Account
which would be affected by such change), which notice shall
specify the new rate of interest to be used under Section
5(b)(ii), the effective date of such change and the Deferred
Compensation Accounts to which such new rate of interest or
method shall apply; provided, however, that a new method of
determining the rate of interest to be used under Section
5(b)(ii) shall not apply to any amounts deferred pursuant to a
Deferral Election made by a Participant prior to the receipt by
such Participant of notice of such change unless such Participant
files a written consent to such change with the Company within
sixty (60) days of his or her receipt of the notice of such
change.
F-52
<PAGE>
(d) To the extent that any Participant's Deferral
Election hereunder results in a reduction of the pension payments
to be made to such Participant under the Company's qualified and
non-qualified defined benefit pension plans, such reduction will
be made up for in accordance with the terms of a non-qualified
plan established by the Company for that purpose.
6. Time and Method of Payment.
(a) Amounts standing to the credit of each sub-account
within a Participant's Deferred Compensation Account shall be
paid, or commence to be paid, in accordance with the
Participant's Deferral Election(s). Each Deferral Election shall
specify whether payments will commence on April 15 (or, if such
day is not a business day, the first business day thereafter)
first following: (i) the passage of the number of calendar years
(not to exceed twenty (and in the case of Stock Compensation
deferrals, not to be less than three) and including the year of
deferral, which counts as year one) specified by the Participant
in his or her Deferral Election(s) with respect to the amount
credited to such sub-account, (ii) the calendar year in which the
Participant ceases to be an employee of the Company and its
Subsidiaries for any reason whatsoever or (iii) (A) the later of
(i) or (ii) in the case of Cash Compensation (including amounts
converted pursuant to the last paragraph of Section 4) or (B) the
earlier of (i) or (ii) in the case of Stock Compensation. The
amount of each such payment shall be determined by the amount
credited to such sub-account as of the preceding March 31.
(b) All amounts credited to each sub-account within
the Participant's Deferred Compensation Account which is
maintained in terms of numbers of shares of Stock shall be
distributed in shares of Stock by the Company. All amounts
credited to each sub-account within the Participant's Deferred
Compensation Account which is maintained in terms of dollars
shall be
F-53
<PAGE>
distributed in cash and shall be made by the Company or
Subsidiary which credited such amounts to the Participant's
Deferred Compensation Account. Each such sub-account shall be
charged with the amount paid therefrom as of the date of payment.
(c) All amounts credited to a sub-account within the
Participant's Deferred Compensation Account shall be paid in
either a single lump sum or in substantially equal quarterly or
annual installments over a period not to exceed ten years (or
over a period of 5 years in the case of an election made prior to
October 18, 1994), as the Participant has specified in the
Deferral Election(s) applicable to such sub-account. In the case
of installment payments, (i) dividend and interest credits under
Section 5(b), whichever is applicable, shall continue to be
credited in accordance with Section 5(b) during the payment
period, and (ii) the amount of the first payment and any other
payments in the same year thereof shall be equal to the amount
credited to the applicable sub-account as of the preceding March
31 divided by the number of payments remaining to be made,
including the current payment, and the amount of each subsequent
payment for subsequent years shall be equal to the amount
credited to the applicable sub-account as of the preceding
December 31 divided by the number of payments remaining to be
made, including the current payment. Notwithstanding the
foregoing, the final payment out of any sub-account shall be
equal to 100% of the amount credited to such sub-account at the
time of such payment.
(d) All amounts credited to a Participant's Deferred
Compensation Account shall be paid as they become due to the
Participant if then living. All amounts credited to a
Participant's Deferred Compensation Account at the time of his or
her death shall be paid pursuant to Section 7.
F-54
<PAGE>
(e) Notwithstanding any provision hereof to the
contrary, if a Participant or beneficiary believes he or she is
suffering from a "hardship," an application may be made to the
Committee for an acceleration of payments from one or more sub-
accounts within such Participant's Deferred Compensation Account.
"Hardship" for this purpose shall mean a need for financial
assistance in meeting real emergencies which would cause
substantial hardship to the Participant or any member of the
Participant's immediate family, and which are beyond the
Participant's control. If the Committee determines, in its sole
discretion, that the Participant is suffering from a "hardship,"
the Committee may accelerate payment to the Participant of such
portion of such sub-account(s) within the Participant's Deferred
Compensation Account as the Committee may determine is required
to alleviate such hardship, and each such sub-account shall be
charged with the amount paid therefrom as of the date of payment.
(f) Notwithstanding any provision hereof to the
contrary, but subject to the approval of the Committee in its
sole discretion, a Participant 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 (but in any event, consistent with
payment options provided for under Section 6(c)) than that
specified in the applicable Deferral Election. The Participant
must communicate any such request to the Committee at least 4
months and 15 days prior to the initial date on which the amount
credited to the sub-account to which such request relates would
otherwise be paid or commence to be paid. The Committee may
approve such request in its sole discretion at any time which is
at least 3 months and 15 days prior to such initial payment date.
If any such request is so approved by the Committee, the
F-55
<PAGE>
amount credited to the sub-account (or portion thereof) to which such
request and approval relates shall be paid at the times and in
the amounts specified in such request.
7. Payments After Death. Each Participant may designate,
from time to time, a beneficiary or beneficiaries (who may be
named contingently or successively) to whom any amounts which
remain credited to the Participant's Deferred Compensation
Account at the time of his or her death shall be paid. Each such
designation shall revoke all prior designations by the same
Participant, except to the extent otherwise specifically noted,
shall be in a form acceptable to the Company, and shall be
effective only when filed by the Participant in writing with the
Company during his or her lifetime. Payments shall be made to a
beneficiary hereunder in the same manner of distribution as was
elected by the Participant pursuant to Section 6. Any amounts
which remain credited to a Participant's Deferred Compensation
Account at the time of his or her death which are not payable to
a designated beneficiary shall be paid to the estate of such
Participant in a single lump sum in accordance with Section 6(c)
as soon as practicable after the death of such Participant.
8. No Funding Required.
(a) Nothing in this Plan will be construed to create a
trust or to obligate the Company, any Subsidiary or any other
person to segregate a fund, purchase an insurance contract, or in
any other way to fund currently the future payment of any
benefits hereunder, nor will anything herein be construed to give
any Participant or any other person rights to any specific assets
of the Company, any Subsidiary or of any other person. A
Participant who has elected to defer any portion of his or her
Stock Compensation hereunder or to elect a conversion pursuant to
the last paragraph of Section 4 shall have no stockholder rights
with respect to the
F-56
<PAGE>
shares of Stock so deferred and/or credited
until such shares of Stock are actually issued to such
Participant as payment hereunder pursuant to Section 6. Except
as provided in (b) below, any benefits which become payable
hereunder shall be paid from the general assets of the Company or
Subsidiary, whichever is applicable, in accordance with the terms
hereof.
(b) The Company, in its sole discretion, may establish
(i) a grantor or other trust of which the Company is treated as
the owner under the Internal Revenue Code of 1986, as amended,
and the assets of which are subject to the claims of the
Company's general creditors in the event of its insolvency, (ii)
an insurance arrangement, or (iii) any other arrangement or
arrangements designed to provide for the payment of benefits
hereunder. Any such arrangement(s) shall be subject to such
other terms and conditions as the Company may deem necessary or
advisable to ensure (i) that benefits are not includible, by
reason of the establishment of any such arrangement(s) or the
funding of any such trust, in the income of the beneficiaries of
such trust or other arrangement(s) prior to actual distribution
or other payment and (ii) that the existence of such
arrangement(s) does not cause the Plan or any other
arrangement(s) to be considered funded for purposes of Title I of
ERISA. The President, the Vice President, Finance or the
Treasurer of the Company may act to establish a trust or other
arrangement(s) pursuant to this Section 8(b).
9. Plan Administration and Interpretation. The Company
shall have complete control over the administration of the Plan
and complete control and authority to determine, in its sole
discretion, the rights and benefits and all claims, demands and
actions arising out of the provisions of the Plan of any
Participant, beneficiary, or other person having or claiming to
have any interest under the Plan and the Company's determinations
shall be conclusive and binding on
F-57
<PAGE>
all such parties. The Company shall be deemed to be the
Plan administrator with the responsibility for complying
with any reporting and disclosure requirements of ERISA.
The rights of the Company hereunder which have not been
delegated to the Committee shall be exercised by the
elected corporate officers of the Company. To the extent
that such officers are unable or unwilling to exercise any right
or make any determination hereunder, then the Committee shall
exercise such right or make such determination unless it is
unable or unwilling to do so, in which case the Board of
Directors of the Company (the "Board") shall exercise such
right or make such determination.
10. Non-Assignable. Amounts payable under this Plan shall
not be subject to alienation, assignment, garnishment, execution or
levy of any kind, and any attempt to cause any such amount to be so
subjected shall be null, void and of no effect and shall not be
recognized by the Company or its Subsidiaries.
11. Termination and Modification.
(a) The Committee may terminate or amend this Plan by
written notice to each Participant participating herein. A
termination of the Plan shall have no effect other than to eliminate
the right of each Participant to defer further compensation.
Except for such "prospective" termination, neither the Plan nor any
Deferral Election in effect hereunder may be amended, modified, waived,
discharged or terminated, except by mutual consent of the
Committee and the Participant or Participants affected thereby,
which consent shall be evidenced by an instrument in writing,
signed by the party against which enforcement of such amendment,
modification, waiver, discharge or termination is sought.
Notwithstanding the foregoing, if, on or after January 1, 2000,
(i) the Company's ratio of current assets to current liabilities
as reflected
F-58
<PAGE>
on any quarterly or annual financial statements filed by the
Company with the Securities and Exchange Commission falls
below 1.4 to 1 for two consecutive quarters, (ii) the total
of the Company's long-term debt for borrowed money (excluding the
current portion thereof) exceeds 85% of the Company's net worth
as reflected in such statements filed with the Securities and
Exchange Commission or (iii) the Company is subject to a "change
of control," this Plan shall immediately terminate and the
Committee shall, in complete discharge of its obligations
hereunder, distribute to each Participant the full amount then
credited to his or her Deferred Compensation Account, such amount
to be payable in shares of Stock and/or cash in a single lump sum
in accordance with Section 6(c).
(b) For purposes of this Section 11, "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 November 30, 1999,
constituted the Company's Board (the "Incumbent Board") cease for
any reason, including without limitation as a result of a tender
offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board, provided that any
person becoming a director of the Company subsequent to November
F-59
<PAGE>
30, 1999 whose nomination or election was approved by at least a
majority of the directors then comprising the Incumbent Board
shall, for purposes of this Plan, be considered a member of the
Incumbent Board; or
(iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation
or other entity, other than (a) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) more than 80% of the combined
voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation or (b) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than 20% of the combined voting power of the
Company's then outstanding securities; or
(iv) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially
all of the Company's assets.
12. Parties. The terms of this Plan shall be binding upon
the Company, its Subsidiaries and their successors or assigns and
each Participant participating herein and his or her
beneficiaries, heirs, executors and administrators.
13. Liability of Company. Subject to its obligation to pay
the amount credited to the Participant's Deferred Compensation
Account at the time distribution is called for by the payment
option in effect, none of the Company, its Subsidiaries nor any
person acting on behalf of the
F-60
<PAGE>
Company or its Subsidiaries shall be liable to any
Participant or any other person for any act performed or
the failure to perform any act with respect to the Plan.
14. Notices. Notices, elections or designations by a
Participant hereunder shall be addressed to the Company to the
attention of the Treasurer of the Company or his or her designee
or, in the absence of the Treasurer or his or her designee, to
the Vice President of Human Resources of the Company. Notices by
the Company to a Participant shall be addressed to the
Participant at his or her most recent home address as reflected
in the records of the Company or to such other address as the
Participant may specify in writing to the Company. Requests made
by a Participant or a beneficiary to the Committee hereunder
shall be addressed to the attention of the Secretary of the
Committee or the Clerk of the Company.
15. Unsecured General Creditors. No Participant or his or
her legal representative or any beneficiary designated by him or
her shall have any right, other than the right of an unsecured
general creditor, against the Company or any Subsidiary in
respect of the Deferred Compensation Account of such Participant
established hereunder.
16. Severability. In case any provision or provisions of
this Plan shall be held illegal, invalid or otherwise
unenforceable for any reason, the illegality, invalidity or
unenforceability shall not affect the remaining provisions of the
Plan, but shall be fully severable, and the Plan shall be
construed and enforced as if the illegal, invalid or
unenforceable provisions had never been inserted in the Plan.
17. Stock Dividends, etc. In the event of any change in
the outstanding shares of Stock by reason of a stock dividend or
split, recapitalization, merger, consolidation, combination,
exchange of shares or other similar corporate change as to which
the Company is a surviving
F-61
<PAGE>
corporation, the number and kind of shares of Stock credited
to each such sub-account maintained in shares of Stock shall
be appropriately adjusted by the Company, whose determination
shall be conclusive.
18. Effective Date. This Plan, as amended and restated in
its entirety as set forth herein, is effective as of December 21,
1999, and shall continue in existence until terminated pursuant
to Section 11. All Deferred Compensation Accounts established
under the Plan as in effect prior to such effective date, all
amounts credited to such accounts (and sub-accounts) as of such
date, and (subject to changes made after such date in accordance
with the Plan) all elections (including elections regarding the
time and method of payment) and beneficiary designations made
under the Plan prior to such date shall remain in effect after
such effective date.
19. Governing Law. This Plan shall be construed and
enforced in accordance with, and governed by, the laws of the
Commonwealth of Massachusetts.
Executed as of the 21st day of December, 1999.
ROGERS CORPORATION
By: /s/ Robert M. Soffer
Robert M. Soffer
Treasurer
F-62
<PAGE>
ROGERS CORPORATION
VOLUNTARY DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
AMENDED AND RESTATED EFFECTIVE AS OF DECEMBER 21, 1999
1. Name and Purpose. The name of this plan is the Rogers
Corporation Voluntary Deferred Compensation Plan For Non-Employee
Directors, as Amended and Restated Effective as of December 21,
1999 (the "Plan"). The purpose of the Plan is to permit each
member of the Board of Directors (the "Board") of Rogers
Corporation (the "Company") who is not an employee of the Company
or any subsidiary of the Company (each a "Director") to elect to
defer all or a portion of his or her compensation from the
Company.
2. Right to Defer. For each calendar year beginning on or
after January 1, 2000, each Director may elect to defer payment
of up to one-hundred percent (100%) of each of (i) the portion of
(A) the annual retainer fee or (B) the meeting fees, if any,
payable to such Director in shares of capital stock, $1 par value
(the "Stock") of the Company (the "Stock Fees") and/or (ii) the
portion of the meeting fees, if any, payable to such Director in
cash (the "Cash Fees"), for service as a director of the Company
during such calendar year.
3. Deferral Elections. A Director's election to defer
payments hereunder (a "Deferral Election") shall be in writing
and shall be deemed to have been made upon receipt and acceptance
by the Company. In order to be effective hereunder, a Deferral
Election for any calendar year must be made not later than
December 31 of the preceding calendar year and shall specify the
time and method of payment pursuant to Sections 5(a) and 5(c)
below applicable to the amount(s) deferred thereunder; provided,
however, that a person who becomes a Director during a calendar
year may make a Deferral Election for such calendar year at any
time on or
F-63
<PAGE>
before the thirtieth (30th) 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 shall be made in
accordance with such rules and procedures as the Company deems
necessary or appropriate to comply with the requirements of
Section 16 of the Securities Exchange Act of 1934, as amended
(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.
4. Accounts; Crediting of Dividend Equivalents and Interest.
(a) All amounts deferred by a Director under this Plan
shall be credited by the Company to a book account (a "Deferred
Compensation Account") in the name of such Director as of the
dates(s) which such amounts would have been paid to the Director
but for his or her Deferral Election. Separate sub-accounts will
be maintained for deferred Stock Fees (which sub-accounts shall
be maintained in terms of numbers of shares of Stock) and
deferred Cash Fees (which sub-accounts shall be maintained in
terms of dollars) for each calendar year; provided, however, that
(i) deferred Stock Fees with respect to the same or different
calendar years (including amounts converted pursuant to the next
following paragraph) which are payable at the same time and
pursuant to the same method may be combined into a single sub-
account and (ii) deferred Cash Fees with respect to the same or
different calendar years which are payable at the same time and
pursuant to the same method and which are being credited with the
same rate of interest may be combined into a single sub-account.
F-64
<PAGE>
In addition to the foregoing, each Director shall be
permitted to elect not later than December 31, 1999 to transfer
as of December 31, 1999 up to 100% of the balance in such
Director's sub-account(s), if any, maintained in terms of dollars
for previously deferred Cash Fees to a sub-account(s) maintained
in terms of shares of Stock. Such transfer shall be accomplished
by dividing such amount to be transferred by the Fair Market
Value (as defined in the Rogers Corporation 1998 Stock Incentive
Plan) per share of Stock as of December 31, 1999, and crediting
the resulting number of shares (rounded up to the next higher
whole number of shares) of Stock to such new sub-account(s)
maintained in terms of shares of Stock. Any such conversion
election shall be irrevocable after December 31, 1999. All
Deferral Elections previously made by such Director with respect
to the timing and method of payment pursuant to Section 5(a) and
Section 5(c) with respect to the amount(s) so converted shall
remain in full force and effect.
(b) An amount, equal to the aggregate dividends that
would have been paid on the number of shares of Stock credited to
each Director's sub-account(s) maintained in shares had such
share credits been issued and outstanding shares of Stock, shall
be credited to the Director's Deferred Compensation Account as of
the payable date that would have been applicable to such
dividends had the related share credits been issued and
outstanding shares of Stock. Such dividend equivalent amounts
(i) shall be payable to the Director at the same time and
pursuant to the same method as the shares of Stock to which they
relate, (ii) shall be credited to one or more sub-accounts within
such Director's Deferred Compensation Account, which sub-
account(s) shall be maintained in terms of dollars, and (iii) may
be combined with a sub-account for deferred Cash Fees which are
payable at the same time and pursuant to the same method and
which are being credited with the same rate of interest.
F-65
<PAGE>
(c) As of the last day of each calendar month, the
Company shall credit each sub-account within a Director's
Deferred Compensation Account which is being maintained in terms
of dollars with interest on the amount credited to such sub-
account as of the sixteenth (16th) day of such calendar month.
The rate of interest to be used for this purpose during any
calendar year shall be the 30-year U.S. Treasury bond rate in
effect as of January 1 of such year. The foregoing rate shall be
determined by reference to the first January issue of Barron's
for such calendar year, or such other comparable publication as
may be selected by the Company if Barron's is no longer published
or no longer provides such information. Notwithstanding the
foregoing, the Company may increase (but not decrease) the rate
of interest to be used under the Plan by written notice to each
Director (including former Directors who then have a Deferred
Compensation Account which would be affected by such change),
which notice shall specify the new rate of interest to be used,
the effective date of such change and the Deferred Compensation
Accounts to which such new rate of interest shall apply.
5. Time and Method of Payment.
(a) Amounts standing to the credit of each sub-account
within a Director's Deferred Compensation Account shall be paid,
or commence to be paid, in accordance with the Director's
Deferral Election(s). Each Deferral Election shall specify
whether payments will commence on January 15 (or, if such day is
not a business day, the first business day thereafter) first
following (i) the passage of the number of calendar years (not to
exceed twenty (and in the case of deferred Stock Fees not to be
less than three for elections made after November 1, 1999) and
including the year of deferral, which counts as year one)
specified by the Director in his or her Deferral Election(s) with
respect to the amount credited to such sub-account, (ii) the
calendar year in which the Director ceases to be a member of the
Board for any reason whatsoever or (iii)
F-66
<PAGE>
(A) the later of (i) or (ii) in the case of Cash Fees
(including amounts converted pursuant to the last paragraph
of Section 4(a)) or (B) the earlier of (i) or (ii) in the
case of Stock Fees.
The amount of each such payment shall be determined by
the amount credited to such sub-account as of the preceding
December 31.
(b) All amounts credited to each sub-account within
the Director's Deferred Compensation Account which is maintained
in terms of numbers of shares of Stock shall be distributed in
shares of Stock. All amounts credited to each sub-account within
the Director's Deferred Compensation Account which is maintained
in terms of dollars shall be distributed in cash. Each such sub-
account shall be charged with the amount paid therefrom as of the
date of payment.
(c) All amounts credited to a sub-account within the
Director's Deferred Compensation Account shall be paid in either
a single lump sum or in annual installments over a period not to
exceed five years, as the Director has specified in the Deferral
Election(s) applicable to such sub-account. In the case of
installment payments, (i) dividend credits under Section 4(b) and
interest credits under Section 4(c), whichever is applicable,
shall continue to be credited in accordance with such sections
during the payment period, and (ii) the amount of each payment
shall be equal to the amount credited to the Deferred
Compensation Account as of the preceding December 31 divided by
the number of annual payments remaining to be made, including the
current payment. Notwithstanding the foregoing, the final
payment out of any sub-account shall be equal to 100% of the
amount credited to such sub-account at the time of such payment.
F-67
<PAGE>
(d) All amounts credited to a Director's Deferred
Compensation Account shall be paid as they become due to the
Director if then living. All amounts credited to a Director's
Deferred Compensation Account at the time of his or her death
shall be paid pursuant to Section 6.
(e) Notwithstanding any provision hereof to the
contrary, if a Director believes he or she is suffering from a
"hardship," an application may be made to the Company for an
acceleration of payments from one or more sub-accounts within
such Director's Deferred Compensation Account. "Hardship" for
this purpose shall mean a need for financial assistance in
meeting real emergencies which would cause substantial hardship
to the Director or any member of the Director's immediate family,
and which are beyond the Director's control. If the Company
determines, in its sole discretion, that the Director is
suffering from "hardship," the Company may accelerate payment to
the Director of such portion of such sub-account(s) within the
Director's Deferred Compensation Account as the Company may
determine is required to alleviate such hardship, and each such
sub-account shall be charged with the amount paid therefrom as of
the date of payment.
(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
F-68
<PAGE>
portion thereof) to which such request and approval relates
shall be paid at the times and in the amounts specified in
such request.
6. Payments After Death. Each Director may designate,
from time to time, a beneficiary or beneficiaries (who may be
named contingently or successively) to whom any amounts which
remain credited to the Director's Deferred Compensation Account
at the time of his or her death shall be paid. All such amounts
shall be paid in a single lump sum in shares of Stock and/or cash
in accordance with Section 5(b) as soon as practicable after such
Director's death. Each such designation shall revoke all prior
designations by the same Director, except to the extent otherwise
specifically noted, shall be in a form acceptable to the Company,
and shall be effective only when filed by the Director in writing
with the Company during his or her lifetime. Any amounts which
remain credited to a Director's Deferred Compensation Account at
the time of his or her death which are not payable to a
designated beneficiary shall be paid to the estate of such
Director in a single lump sum in shares of Stock and/or cash in
accordance with Section 5(b) as soon as practicable after the
death of such Director.
7. No Funding Required.
(a) Nothing in this Plan will be construed to create a
trust or to obligate the Company or any other person to segregate
a fund, purchase an insurance contract, or in any other way to
fund currently the future payment of any benefits hereunder, nor
will anything herein be construed to give any Director or any
other person rights to any specific assets of the Company or of
any other person. A Director who has elected to defer any
portion of his or her Stock Fees hereunder or to elect a
conversion pursuant to the last paragraph of Section 4(a) shall
have no stockholder rights with respect to the shares of Stock so
deferred and/or credited until such shares of Stock are actually
issued to such Director as payment hereunder pursuant to
Section 5. Except
F-69
<PAGE>
as provided in (b) below, any benefits which become payable
hereunder shall be paid from the general assets of the
Company in accordance with the terms hereof.
(b) The Company, in its sole discretion, may establish
(i) a grantor or other trust of which the Company is treated as
the owner under the Internal Revenue Code of 1986, as amended,
and the assets of which are subject to the claims of the
Company's general creditors in the event of its insolvency,
(ii) an insurance arrangement, or (iii) any other arrangement or
arrangements designed to provide for the payment of benefits
hereunder. Any such arrangement(s) shall be subject to such
other terms and conditions as the Company may deem necessary or
advisable to ensure that benefits are not includible, by reason
of the establishment of any such arrangement(s) or the funding of
any such trust, in the income of the beneficiaries of such trust
or other arrangement(s) prior to actual distribution or other
payment. The President, the Vice President, Finance or the
Treasurer of the Company may act to establish a trust or other
arrangement(s) pursuant to this Section 7(b).
8. Plan Administration and Interpretation. The Company
shall have complete control over the administration of the Plan
and complete control and authority to determine, in its sole
discretion, the rights and benefits and all claims, demands and
actions arising out of the provisions of the Plan of any
Director, beneficiary, or other person having or claiming to have
any interest under the Plan and the Company's determinations
shall be conclusive and binding on all such parties. The rights
of the Company hereunder shall be exercised by the Pension
Committee of the Board or by any successor committee designated
as such by the Board. To the extent that such committee is
unable or unwilling to exercise any right or make any
determination hereunder, however, the Board shall exercise such
right or make such determination.
F-70
<PAGE>
9. Non-Assignable. Amounts payable under this Plan shall
not be subject to alienation, assignment, garnishment, execution
or levy of any kind, and any attempt to cause any such amount to
be so subjected shall be null, void and of no effect and shall
not be recognized by the Company.
10. Termination and Modification.
(a) The Company may terminate or amend this Plan by
written notice to each Director participating therein. A
termination of the Plan shall have no effect other than to
eliminate the right of each Director to defer further
compensation. Except for such "prospective" termination, neither
the Plan nor any Deferral Election in effect hereunder may be
amended, modified, waived, discharged or terminated, except by
mutual consent of the Company and the Director or Directors
affected thereby, which consent shall be evidenced by an
instrument in writing, signed by the party against which
enforcement of such amendment, modification, waiver, discharge or
termination is sought. Notwithstanding the foregoing, if, on or
after January 1, 2000, (a) the Company's ratio of current assets
to current liabilities as reflected on any quarterly or annual
financial statements filed by the Company with the Securities and
Exchange Commission falls below 1.4 to 1 for two consecutive
quarters, (b) the total of the Company's long-term debt for
borrowed money (excluding the current portion thereof) exceeds
85% of the Company's net worth as reflected in such statements
filed with the Securities and Exchange Commission or (c) the
Company is subject to a "change of control," this Plan shall
immediately terminate and the Company shall, in complete
discharge of its obligations hereunder, distribute to each
Director the full amount then credited to his or her Deferred
Compensation Account, such amount to be payable in shares of
Stock and/or cash in accordance with Section 5(b).
F-71
<PAGE>
(b) For purposes of this Section 10, "change of
control" shall mean the occurrence of any one of the following
events:
(i) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Act) becomes a "beneficial
owner" (as such term is defined in Rule 13d-3 promulgated under
the Act) (other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company,
or any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions
as their ownership of stock of the Company), directly or
indirectly, of securities of the Company representing twenty
percent (20%) or more of the combined voting power of the
Company's then outstanding securities; or
(ii) persons who, as of November 30, 1999,
constituted the Company's Board (the "Incumbent Board") cease for
any reason, including without limitation as a result of a tender
offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board, provided that any
person becoming a director of the Company subsequent to November
30, 1999 whose nomination or election was approved by at least a
majority of the directors then comprising the Incumbent Board
shall, for purposes of this Plan, be considered a member of the
Incumbent Board; or
(iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other
corporation or other entity, other than (a) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 80% of
the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such
merger or consolidation or (b) a merger or consolidation effected
to implement a
F-72
<PAGE>
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.
11. Parties. The terms of this Plan shall be binding upon
the Company and its successors or assigns and each Director
participating herein and his or her beneficiaries, heirs,
executors and administrators.
12. Liability of Company. Subject to its obligation to pay
the amount credited to the Director's Deferred Compensation
Account at the time distribution is called for by the payment
option in effect, neither the Company nor any person acting on
behalf of the Company shall be liable to any Director or any
other person for any act performed or the failure to perform any
act with respect to the Plan.
13. Notices. Notices, elections or designations by a
Director to the Company hereunder shall be addressed to the
Company to the attention of the Treasurer of the Company.
Notices by the Company to a Director shall be addressed to the
Director at his or her most recent home address as reflected in
the records of the Company, or to such other address as the
Director may specify in writing to the Company.
14. Unsecured General Creditors. No Director or his or her
legal representative or any beneficiary designated by him or her
shall have any right, other than the right of an unsecured
general creditor, against the Company in respect of the Deferred
Compensation Account of such Director established hereunder.
F-73
<PAGE>
15. Severability. In case any provision or provisions of
this Plan shall be held illegal, invalid or otherwise
unenforceable for any reason, the illegality, invalidity or
unenforceability shall not affect the remaining provisions of the
Plan, but shall be fully severable, and the Plan shall be
construed and enforced as if the illegal, invalid or
unenforceable provisions had never been inserted in the Plan.
16. Stock Dividends, etc. In the event of any change in
the outstanding shares of Stock by reason of a stock dividend or
split, recapitalization, merger, consolidation, combination,
exchange of shares or other similar corporate change as to which
the Company is a surviving corporation, the number and kind of
shares of Stock credited to each sub-account maintained in shares
of Stock shall be appropriately adjusted by the Company, whose
determination shall be conclusive.
17. Effective Date. This Plan, as amended and restated in
its entirety as set forth herein, is effective as of December 21,
1999, and shall continue in existence until terminated pursuant
to Section 10. All Deferred Compensation Accounts established
under the Plan as in effect prior to such effective date, all
amounts credited to such accounts (and sub-accounts) as of such
date, and (subject to changes made after such date in accordance
with the Plan) all elections (including elections regarding the
time and method of payment) and beneficiary designations made
under the Plan prior to such date shall remain in effect after
such effective date.
18. Governing Law. This Plan shall be construed and
enforced in accordance with, and governed by, the laws of the
Commonwealth of Massachusetts.
F-74
<PAGE>
Executed as of the 21st day of December, 1999.
ROGERS CORPORATION
By: /s/ Robert M. Soffer
Robert M. Soffer
Treasurer
F-75
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-02-2000
<PERIOD-END> JAN-02-2000
<CASH> 9955
<SECURITIES> 0
<RECEIVABLES> 33566
<ALLOWANCES> 318
<INVENTORY> 23319
<CURRENT-ASSETS> 72547
<PP&E> 159721
<DEPRECIATION> 75069
<TOTAL-ASSETS> 183406
<CURRENT-LIABILITIES> 36740
<BONDS> 0
0
0
<COMMON> 7715
<OTHER-SE> 108702
<TOTAL-LIABILITY-AND-EQUITY> 183406
<SALES> 247839
<TOTAL-REVENUES> 247839
<CGS> 175964
<TOTAL-COSTS> 223490
<OTHER-EXPENSES> 1626
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (99)
<INCOME-PRETAX> 25877
<INCOME-TAX> 7246
<INCOME-CONTINUING> 18631
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18631
<EPS-BASIC> 2.48
<EPS-DILUTED> 2.38
</TABLE>
