-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N4PmrJPyXxwSKG7ozKh7puS/faw5ZasS7iPv5k0BFyG7Vv/xOVeaszBK1D9woQE4 O27qs8bsjHSCpl7xEaYhmg== 0000084748-97-000019.txt : 19970811 0000084748-97-000019.hdr.sgml : 19970811 ACCESSION NUMBER: 0000084748-97-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970629 FILED AS OF DATE: 19970808 SROS: AMEX SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROGERS CORP CENTRAL INDEX KEY: 0000084748 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS, MATERIALS, SYNTH RESINS & NONVULCAN ELASTOMERS [2821] IRS NUMBER: 060513860 STATE OF INCORPORATION: MA FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04347 FILM NUMBER: 97653857 BUSINESS ADDRESS: STREET 1: P.O. BOX 188 STREET 2: ONE TECHNOLOGY DRIVE CITY: ROGERS STATE: CT ZIP: 06263-0188 BUSINESS PHONE: 860 774-9605 10-Q 1 Total pages included - 12 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 29, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-4347 ROGERS CORPORATION (Exact name of Registrant as specified in its charter) Massachusetts 06-0513860 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 188, One Technology Drive, Rogers, Connecticut 06263-0188 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (860) 774-9605 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares outstanding of the Registrant's classes of common stock as of July 27, 1997: Capital Stock, $1 Par Value--7,479,287 shares -1- ROGERS CORPORATION AND SUBSIDIARIES FORM 10-Q June 29, 1997 INDEX Page No. PART I--FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited): Consolidated Statements of Income-- Three Months and Six Months Ended June 29, 1997 and June 30, 1996 3 Consolidated Balance Sheets-- June 29, 1997 and December 29, 1996 4-5 Consolidated Statements of Cash Flows-- Six Months Ended June 29, 1997 and June 30, 1996 6 Supplementary Notes 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-11 PART II--OTHER INFORMATION Item 6. Reports on Form 8-K 12 SIGNATURES 12 -2- PART I - FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS ROGERS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands Except for Per Share Amounts) Three Months Ended: Six Months Ended: ------------------------------------------ June 29, June 30, June 29, June 30, 1997 1996 1997 1996 ------------------------------------------ Net Sales $ 45,788 $ 35,424 $ 90,128 $ 70,362 Cost of Sales 32,183 24,145 63,449 47,562 Selling and Administrative Expenses 6,179 5,362 11,789 10,775 Research and Development Expenses 2,516 2,303 4,967 4,721 ------------------------------------------ Total Costs and Expenses 40,878 31,810 80,205 63,058 ------------------------------------------ Operating Income 4,910 3,614 9,923 7,304 Other Income less Other Charges 520 865 934 1,380 Interest Income, Net 194 118 301 177 ------------------------------------------ Income Before Income Taxes 5,624 4,597 11,158 8,861 Income Taxes: Federal and Foreign 1,394 932 2,763 1,788 State 125 125 250 250 ------------------------------------------ Net Income $ 4,105 $ 3,540 $ 8,145 $ 6,823 ========================================== Net Income Per Share (Note F): Primary $ 0.53 $ 0.47 $ 1.05 $ 0.91 ========================================== Fully Diluted $ 0.52 $ 0.47 $ 1.04 $ 0.90 ========================================== Shares Used in Computing (Note F): Primary 7,800,540 7,570,330 7,770,490 7,527,044 ========================================== Fully Diluted 7,862,208 7,570,330 7,854,182 7,547,776 ========================================== The accompanying notes are an integral part of the consolidated financial statements. -3- ROGERS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS (Dollars in Thousands) June 29, 1997 December 29, 1996 ------------- ----------------- Current Assets: Cash and Cash Equivalents $ 22,079 $ 18,675 Marketable Securities 934 956 Accounts Receivable, Net 24,497 21,108 Inventories: Raw Materials 7,387 6,183 In-Process and Finished 9,663 7,539 Less LIFO Reserve (1,049) (1,049) -------- -------- Total Inventories 16,001 12,673 Current Deferred Income Taxes 2,812 2,807 Assets Held for Sale, Net of Valuation Reserves of $492 in each period (Note B) 5,168 5,158 Other Current Assets 460 1,348 -------- -------- Total Current Assets 71,951 62,725 -------- -------- Property, Plant and Equipment, Net of Accumulated Depreciation of $60,894 and $57,928 40,308 36,614 Investment in Unconsolidated Joint Venture 4,902 4,975 Pension Asset 3,851 3,851 Acquisition Escrow -- 8,994 Goodwill and Other Intangibles, Net 8,668 129 Other Assets 2,001 1,939 -------- -------- Total Assets $131,681 $119,227 ======== ======== The accompanying notes are an integral part of the consolidated financial statements. -4- ROGERS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - CONTINUED LIABILITIES AND SHAREHOLDERS' EQUITY (Dollars in Thousands) June 29, 1997 December 29, 1996 ------------- ----------------- Current Liabilities: Accounts Payable $ 11,921 $ 9,726 Current Maturities of Long-Term Debt 600 600 Accrued Employee Benefits and Compensation 6,515 5,880 Accrued Income Taxes Payable 4,550 3,345 Taxes, Other than Federal and Foreign Income 1,338 1,175 Other Accrued Liabilities 4,203 3,911 --------- -------- Total Current Liabilities 29,127 24,637 --------- -------- Long-Term Debt, less Current Maturities 3,600 3,600 Noncurrent Deferred Income Taxes 315 419 Noncurrent Pension Liability 3,615 3,615 Noncurrent Retiree Health Care and Life Insurance Benefits 6,342 6,342 Other Long-Term Liabilities 3,680 3,402 Shareholders' Equity: Capital Stock, $1 Par Value: Authorized Shares 25,000,000; Issued and Outstanding Shares 7,475,404 and 7,405,961 7,475 7,406 Additional Paid-In Capital 30,210 29,691 Unrealized Loss on Marketable Securities (23) (2) Currency Translation Adjustment 1,113 2,035 Retained Earnings 46,227 38,082 -------- -------- Total Shareholders' Equity 85,002 77,212 -------- -------- Total Liabilities and Shareholders' Equity $131,681 $119,227 ======== ======== The accompanying notes are an integral part of the consolidated financial statements. -5- ROGERS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) Six Months Ended: June 29, June 30, 1997 1996 -------------------- CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES: Net Income $ 8,145 $ 6,823 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 4,187 3,193 Benefit for Deferred Income Taxes -- 57 Equity in Undistributed (Income) Loss of Unconsolidated Joint Ventures, Net (473) (192) Loss on Disposition of Assets 50 50 Noncurrent Pension and Postretirement Benefits 585 803 Other, Net 124 271 Changes in Operating Assets and Liabilities Excluding Effects of Disposition of Assets: Accounts Receivable (3,797) (4,103) Inventories (2,602) (2,561) Prepaid Expenses (29) (64) Accounts Payable and Accrued Expenses 3,525 788 -------------------- Net Cash Provided by Operating Activities 9,715 5,065 CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES: Capital Expenditures (5,958) (2,868) Proceeds from Sales of Business -- 2,567 Acquisition of Business (1,294) -- Proceeds from Sale of Property, Plant & Equipment 53 14 Proceeds from Sale of Marketable Securities 22 -- Purchase of Marketable Securities -- (684) Investment in Unconsolidated Joint Ventures and Affiliates 386 490 -------------------- Net Cash Provided by (Used in) Investing Activities (6,791) (481) CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: Proceeds from Short and Long-Term Borrowings 1,500 -- Repayments of Debt Principal (1,500) -- Proceeds from Sale of Capital Stock 589 3,026 -------------------- Net Cash Provided by Financing Activities 589 3,026 Effect of Exchange Rate Changes on Cash (109) (43) -------------------- Net Increase in Cash and Cash Equivalents 3,404 7,567 Cash and Cash Equivalents at Beginning of Year 18,675 13,111 -------------------- Cash and Cash Equivalents at End of Quarter $ 22,079 $ 20,678 ==================== The accompanying notes are an integral part of the consolidated financial statements. -6- ROGERS CORPORATION AND SUBSIDIARIES SUPPLEMENTARY NOTES A. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the fiscal year ended December 29, 1996. B. Net Assets Held for Sale consist of land and a building in Chandler, Arizona, currently being leased to the buyer of the Flexible Interconnections Division. The land and building in Mesa, Arizona, which were formerly included in Net Assets Held for Sale, were sold essentially at book value during the third quarter of 1996. C. As of April 30, 1996, the Company can borrow up to a maximum of $5.0 million under an unsecured revolving credit agreement with Fleet National Bank. Amounts borrowed under this arrangement are to be paid in full by March 31, 1999. No borrowings have been made under this credit facility. D. Interest paid during the first six months of 1997 and 1996 was $403,000 and $411,000, respectively. E. Income taxes paid were $1,792,000 and $1,639,000 in the first six months of 1997 and 1996, respectively. F. Basic Net Income Per Share, as defined in Statement of Financial Accounting Standards No. 128, was as follows: Quarter Ended: Six Months Ended: --------------------------------------------- June 29, June 30, June 29, June 30, 1997 1996 1997 1996 --------------------------------------------- Basic Net Income Per Share $0.55 $0.49 $1.09 $0.95 Shares Used in Computing 7,461,928 7,226,884 7,441,794 7,182,122 -7- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net sales were $45.8 million in the second quarter and $90.1 million for the first six months of 1997, up 29% and 28%, respectively, over the comparable periods in 1996. During the quarter, every operating unit exceeded 1996 second quarter sales. Combined Sales, which include one-half of the sales from Rogers two 50% owned joint ventures, were $54.3 million for the quarter and $106.0 million for the half, both up about 23% over the same periods in 1996. These increases reflect progress in development of our geographic sales base, the introduction of new products, and the integration of our new silicone foam business. A majority of the sales growth during the first half is from flexible circuit materials and PORON urethane foams. These products have had more intensive sales and market development over the past few years, including focused efforts in Europe and Asia. Sales of Polymer Products in the second quarter and first half of 1997 were 22% and 24%, respectively, above the levels in the same periods of 1996. PORON urethane materials had strong and widespread sales gains across industrial, printing, and consumer market areas. PORON sales networks are being extended and product lines broadened. Another capacity expansion has been started at the East Woodstock, Connecticut, plant where capacity was more than doubled just three years ago. The Elastomer Components Unit in South Windham, Connecticut, recently began to manufacture several new components for the leading U.S. based manufacturer of computer printers. Additionally, about one-fourth of the first half sales increase for all products and approximately one-half of the increase for Polymer Products is attributable to the January 1, 1997 acquisition of the Bisco Products silicone foam materials business from Dow Corning Corporation. As expected, the initial profit contribution from Bisco is modest as required changes are made to complete the integration of the Bisco Materials Unit into the PORON high performance elastomers business. The Molding Materials business, which had record first half sales in 1996, topped those sales in 1997 and made good progress on new applications for high performance phenolic molding compounds. A major capacity expansion at the Manchester, Connecticut, plant is coming on-line in the third quarter. Sales of Electronic Products for the second quarter and first six months increased 29% and 28%, respectively, from the comparable 1996 periods. Sales of FLEX-I-MID adhesiveless laminate materials to Hutchinson Technology Incorporated for suspension assemblies used in advanced hard disk drives continue to increase. Rogers profit margins on these sales are somewhat lower than the average for Rogers manufactured products, since the Company presently acts only in a technical sales and distributor capacity under the partnership arrangement with Mitsui Toatsu Chemicals. Over the past two years, unit sales of Rogers high frequency laminate material to the wireless communication market increased substantially but, because of the transition to lower-priced -8- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED materials, dollar sales did not reflect the volume growth. However, dollar sales started to climb during the first half of 1997 and, led by European demand for our new materials, record sales were achieved. Major investments are being made at the Chandler, Arizona, plant to increase manufacturing capability for newer products and to ramp-up to higher volumes. Profits before and after tax, and earnings per share for the second quarter and the first half of 1997 were the highest in Rogers history. Before tax profits of $5.6 million for the second quarter and $11.2 million for the first half were up 22% and 26%, respectively, over last year's record results in the comparable periods. Net income of $4.1 million for the quarter and $8.2 million for the half, after a 4% higher tax rate in 1997, rose 16% and 19%, respectively. Earnings per share for the second quarter this year were $0.53, up from $0.47 in the same period last year. For the first half of 1997, earnings per share were $1.05 compared to $0.91 in the initial six-month period a year ago. Manufacturing profit as a percentage of sales in the first six months of 1997 and 1996 was 30% and 32%, respectively. The decrease from 1996 to 1997 reflects the integration costs related to Bisco and the continuing start-up costs and high early stage processing costs associated with the Company's newer commercial high frequency laminate materials. It also reflects a decline in average sales price per square foot for laminates as the microwave business shifts to lower-priced wireless communication applications. Selling and administrative expense increased 9% for the first six months of 1997, but declined as a percentage of sales from 15% in 1996 to 13% in 1997. Research and development expense for the first half of 1997 increased 5% from the comparable 1996 period. Significant product and process development activities included: process and product development for RO4003 and RO4350 high frequency circuit materials for commercial applications with particular emphasis on improved high volume manufacturing processes; process and product improvements to enhance performance of RO3003 and RO3010 fluoropolymer laminates; process and formulation support directed towards PORON formulations which are low outgassing and flame retardant; improved molding materials; and ENDUR component product development and application testing to support its use in new printer applications. Core technical capabilities in polymers, fillers, and adhesion are continuing to be strengthened through added organizational focus and new analytical equipment and facilities. Net interest income for 1997 increased slightly from 1996 due mainly to the interest earned on the higher level of cash equivalents and marketable securities and to lower borrowings. As of April 30, 1996, the Company can borrow up to a maximum of $5.0 million under an unsecured revolving credit agreement with Fleet National Bank. Amounts borrowed under this arrangement are to be paid in full by March 31, 1999. No borrowings have been made under this credit facility. -9- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED Other income less other charges was $.9 million for the first six months of 1997 compared with $1.4 million for the same period in 1996. This decline was primarily the result of lower royalty income. Durel Corporation, our 50% owned joint venture with 3M in electroluminescent lamps, achieved record first half sales in 1997 and profits also improved over the first half a year ago. However, continuing high costs associated with the patent infringement lawsuit Durel has brought to protect its proprietary technology continue to significantly impact profits. The trial originally scheduled for the third quarter of 1997 has been delayed by the court. A new trial date has not yet been established. Net cash provided by operating activities amounted to $9.7 million in the first half of 1997 compared to $5.1 million for the same period in 1996. Primary factors contributing to the year-to-year increase from 1996 to 1997 include higher earnings and a higher level of trade accounts payable. Capital expenditures totaled $6.0 million and $2.9 million for the first six months of 1997 and 1996, respectively. Capital spending was exceeded by cash generated from the Company's operating activities in both periods. For the full year 1997, capital spending is expected to more than double the $6.3 million spent in 1996. To satisfy growing demand, major capacity expansions are underway or have been completed recently at four of Rogers seven domestic manufacturing plants. In 1997, major expansions will be made in commercial microwave equipment and facilities, along with capacity increases in high performance elastomer products and a new production line for molding materials. It is anticipated that this spending will be financed with internally generated funds. Management believes that in the near term, internally generated funds will be sufficient to meet the needs of the business. The Company continually reviews and assesses its lending relationships. The Company is subject to federal, state, and local laws and regulations concerning the environment and is currently engaged in proceedings involving a number of sites under these laws, usually as a participant in a group of potentially responsible parties (PRPs). The Company is currently involved as a PRP in four cases involving waste disposal sites, all of which are Superfund sites. Several of these proceedings are at a preliminary stage and it is impossible to estimate the cost of remediation, the timing and extent of remedial action which may be required by governmental authorities, and the amount of liability, if any, of the Company alone or in relation to that of any other PRPs. The Company also has been seeking to identify insurance coverage with respect to these matters. Where it has been possible to make a reasonable estimate of the Company's liability, a provision has been established. Insurance proceeds have only been taken into account when they have been confirmed by or received from -10- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED the insurance company. Actual costs to be incurred in future periods may vary from these estimates. Based on facts presently known to it, the Company does not believe that the outcome of these proceedings will have a material adverse effect on its financial position. In addition to the above proceedings, the Company has been actively working with the Connecticut Department of Environmental Protection (CT DEP) related to certain polychlorinated biphenyl (PCB) contamination in the soil beneath a section of cement flooring at its East Woodstock, Connecticut facility. The Company is developing a remediation plan with CT DEP. On the basis of estimates prepared by environmental engineers and consultants, the Company recorded a provision of approximately $900,000 in 1994 for costs related to this matter. To date, approximately $550,000 has been charged against this provision. Management believes, based on facts currently available, that the implementation of the aforementioned remediation will not have a material additional adverse impact on earnings. The Company has not had any material recurring costs and capital expenditures relating to environmental matters, except as specifically described in the preceding statements. Statements in this report that are not strictly historical are "forward- looking" statements which should be considered as subject to the many uncertainties that exist in the Company's operations and environment. These uncertainties, which include economic conditions, market demand and pricing, competitive and cost factors, and the like, are incorporated by reference in the Rogers Corporation 1996 Form 10-K filed with the Securities and Exchange Commission. Such factors could cause actual results to differ materially from those in the forward-looking statements. -11- PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The Registrant held its Annual Meeting of Stockholders on May 1, 1997. The following members were elected to the Company's Board of Directors to hold office in the ensuing year: Nominee In Favor Withheld ---------------------------------------------------- Leonid V. Azaroff 6,858,767 17,941 Leonard M. Baker 6,859,933 16,775 Wallace Barnes 6,858,757 17,951 Harry H. Birkenruth 6,859,761 16,947 Walter E. Boomer 6,861,233 15,475 Mildred S. Dresselhaus 6,860,969 15,739 Donald J. Harper 6,858,415 18,293 Gregory B. Howey 6,859,535 17,173 Leonard R. Jaskol 6,860,213 16,495 William E. Mitchell 6,860,335 16,373 Item 6. Reports on Form 8-K (b) There were no reports on Form 8-K filed for the three months ended June 29, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ROGERS CORPORATION (Registrant) __________________________________ By s/DONALD F. O'LEARY Donald F. O'Leary Authorized Officer Corporate Controller Dated: August 8, 1997 -12- EX-27 2
5 6-MOS DEC-28-1996 JUN-29-1997 22079 934 24645 148 16001 71951 101202 60894 131681 29127 0 0 0 7475 77527 131681 90128 90128 63449 80205 (934) 0 (301) 11158 3013 8145 0 0 0 8145 1.05 1.04
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