-----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, RxmI9AXydS/m6rA5qjLAQ3ACdCUldAVNAoN59pTgSr+5JoI8yJ3ODGcB4tPaVC/G 2oDhYbvOO0F4Cz8G2iB8PQ== 0000084748-97-000022.txt : 19971110 0000084748-97-000022.hdr.sgml : 19971110 ACCESSION NUMBER: 0000084748-97-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970928 FILED AS OF DATE: 19971107 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: SEC FILE NUMBER: 001-04347 FILM NUMBER: 97710390 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 - 13 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 September 28, 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 October 26, 1997: Capital Stock, $1 Par Value-7,504,608 shares -1- ROGERS CORPORATION AND SUBSIDIARIES FORM 10-Q September 28, 1997 INDEX Page No. PART I--FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited): Consolidated Statements of Income-- Three Months and Nine Months Ended September 28, 1997 and September 29, 1996 3 Consolidated Balance Sheets-- September 28, 1997 and December 29, 1996 4-5 Consolidated Statements of Cash Flows-- Nine Months Ended September 28, 1997 and September 29, 1996 6 Supplementary Notes 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-12 PART II--OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 13 SIGNATURES 13 -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: Nine Months Ended: --------------------------------------------------------- September 28, September 29, September 28, September 29, 1997 1996 1997 1996 --------------------------------------------------------- Net Sales $ 47,752 $ 33,972 $ 137,880 $ 104,334 Cost of Sales 33,359 23,461 96,808 71,023 Selling and Administrative Expenses 6,387 5,046 18,176 15,821 Research and Development Expenses 2,441 2,388 7,408 7,109 ------------------------------------------------------ Total Costs and Expenses 42,187 30,895 122,392 93,953 ------------------------------------------------------ Operating Income 5,565 3,077 15,488 10,381 Other Income less Other Charges 205 933 1,139 2,313 Interest Income, Net 172 134 473 311 ------------------------------------------------------ Income Before Income Taxes 5,942 4,144 17,100 13,005 Income Taxes: Federal and Foreign 1,479 698 4,242 2,486 State 125 125 375 375 ------------------------------------------------------ Net Income $ 4,338 $ 3,321 $ 12,483 $ 10,144 ====================================================== Net Income Per Share (Note F): Primary $ .55 $ .43 $ 1.60 $ 1.34 ====================================================== Fully Diluted $ .55 $ .43 $ 1.57 $ 1.33 ====================================================== Shares Used in Computing (Note F): Primary 7,883,425 7,711,231 7,808,135 7,588,439 ====================================================== Fully Diluted 7,945,992 7,711,231 7,937,188 7,602,261 ======================================================
The accompanying notes are an integral part of the consolidated financial statements. -3- ROGERS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS (Dollars in Thousands) September 28, 1997 December 29, 1996 ------------------------------------- Current Assets: Cash and Cash Equivalents $ 20,613 $ 18,675 Marketable Securities 710 956 Accounts Receivable, Net 28,691 21,108 Inventories: Raw Materials 7,922 6,183 In-Process and Finished 9,707 7,539 Less LIFO Reserve (1,049) (1,049) --------- --------- Total Inventories 16,580 12,673 Current Deferred Income Taxes 2,814 2,807 Assets Held for Sale, Net of Valuation Reserves of $492 in each period (Note B) 5,168 5,158 Other Current Assets 3,692 1,348 --------- --------- Total Current Assets 78,268 62,725 --------- --------- Property, Plant and Equipment, Net of Accumulated Depreciation of $61,729 and $57,928 42,296 36,614 Investment in Unconsolidated Joint Venture 5,110 4,975 Pension Asset 3,851 3,851 Acquisition Escrow 7,634 8,994 Goodwill and Other Intangibles, Net 8,455 129 Other Assets 2,002 1,939 --------- --------- Total Assets $ 147,616 $ 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) September 28, 1997 December 29, 1996 ------------------------------------- Current Liabilities: Accounts Payable $ 12,245 $ 9,726 Current Maturities of Long-Term Debt 600 600 Accrued Employee Benefits and Compensation 5,470 5,880 Accrued Income Taxes Payable 6,089 3,345 Taxes, Other than Federal and Foreign Income 1,041 1,175 Other Accrued Liabilities 4,190 3,911 --------- --------- Total Current Liabilities 29,635 24,637 --------- --------- Long-Term Debt, less Current Maturities 14,359 3,600 Noncurrent Deferred Income Taxes 302 419 Noncurrent Pension Liability 3,615 3,615 Noncurrent Retiree Health Care and Life Insurance Benefits 6,342 6,342 Other Long-Term Liabilities 3,841 3,402 Shareholders' Equity: Capital Stock, $1 Par Value: Authorized Shares 25,000,000; Issued and Outstanding Shares 7,498,353 and 7,405,961 7,498 7,406 Additional Paid-In Capital 30,429 29,691 Unrealized Gain (Loss) on Marketable Securities 5 (2) Currency Translation Adjustment 1,025 2,035 Retained Earnings 50,565 38,082 --------- --------- Total Shareholders' Equity 89,522 77,212 --------- --------- Total Liabilities and Shareholders' Equity $ 147,616 $ 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) Nine Months Ended: ---------------------------- September 28, September 29, 1997 1996 ---------------------------- CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES: Net Income $ 12,483 $ 10,144 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 5,668 4,898 Benefit for Deferred Income Taxes -- 61 Equity in Undistributed Income of Unconsolidated Joint Ventures, Net (803) (747) Loss on Disposition of Property, Plant & Equipment 75 113 Noncurrent Pension and Postretirement Benefits 939 1,473 Other, Net 427 (83) Changes in Operating Assets and Liabilities Excluding Effects of Disposition of Assets: Accounts Receivable (7,985) (2,881) Inventories (3,206) (2,452) Prepaid Expenses (141) (161) Accounts Payable and Accrued Expenses 3,790 (1,531) --------- --------- Net Cash Provided by Operating Activities 11,247 8,834 CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES: Capital Expenditures (9,721) (4,499) Proceeds from Sales of Business -- 2,529 Acquisition of Business (1,294) -- Acquisition Escrow (10,759) -- Proceeds from Sale of Property, Plant & Equipment 57 946 Proceeds from Sale of Marketable Securities 247 607 Investment in Unconsolidated Joint Ventures 386 408 --------- --------- Net Cash Used in Investing Activities (21,084) (9) CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: Proceeds from Short and Long-Term Borrowings 12,259 -- Repayments of Debt Principal (1,500) -- Proceeds from Sale of Capital Stock 830 3,124 --------- --------- Net Cash Provided by Financing Activities 11,589 3,124 Effect of Exchange Rate Changes on Cash 186 (44) --------- --------- Net Increase in Cash and Cash Equivalents 1,938 11,905 Cash and Cash Equivalents at Beginning of Year 18,675 13,111 --------- --------- Cash and Cash Equivalents at End of Quarter $ 20,613 $ 25,016 ========= ========= 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. In September 1997 the Company cancelled its $5.0 million unsecured revolving credit agreement with Fleet National Bank and replaced it with an unsecured multi-currency revolving credit agreement, also with Fleet. Under the new arrangement, the Company can borrow up to $15.0 million, or the equivalent in Belgian Francs and/or Japanese Yen. Amounts borrowed under this agreement are to be paid in full by September 19, 2002. The Company borrowed 390,207,039 Belgian Francs (the equivalent of U.S. $10,759,000 as of September 28, 1997) under the new arrangement to facilitate the Rogers Induflex acquisition in Belgium. D. Interest paid during the first nine months of 1997 and 1996 was approximately $500,000 in each period. E. Income taxes paid were $1,953,000 and $1,819,000 in the first nine 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: Nine Months Ended: ---------------------------- ---------------------------- September 28, September 29, September 28, September 29, 1997 1996 1997 1996 ---------------------------- ---------------------------- Basic Net Income Per Share $0.58 $0.45 $1.67 $1.40 Shares Used in Computing 7,488,331 7,375,041 7,457,307 7,246,428 -7- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net sales were $47.8 million in the third quarter and $137.9 million for the first nine months of 1997, up 41% and 32%, respectively, over the comparable periods in 1996. Every operating unit exceeded 1996 sales for the third quarter and nine months. Combined Sales, which include one half of the sales from Rogers two 50% owned joint ventures, were $56.1 million for the quarter and $162.1 million for the first nine months, up 32% and 26%, respectively, over the same periods last year. Sales gains this quarter were led by significant increases in flexible circuit laminates sold from the recently expanded circuit materials operation in Chandler, Arizona for hard disk drive, notebook computer, and cellular telephone applications. In addition, sales continued to increase for FLEX-I- MID(R) adhesiveless laminate materials supplied to Rogers by Mitsui Chemicals Inc. (formerly Mitsui Toatsu Chemicals) and sold to Hutchinson Technology Incorporated for suspension assemblies used in advanced hard disk drives. Sales of Polymer Products in the third quarter and first nine months of 1997 were 30% and 26%, respectively, above the levels in the same periods of 1996. The High Performance Elastomers Division continued its solid performance. Worldwide sales of PORON(R) urethane materials increased significantly for consumer, industrial and hard disk drive applications. The third quarter also reflected substantial sales contributions from the Elastomer Components Unit in South Windham, Connecticut, where ENDUR(R) components are manufactured for high performance copiers and printers. Additionally, about one-fifth of the first nine months 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. Sales of Electronic Products for the third quarter and first nine months increased 54% and 41%, respectively, from the comparable 1996 periods. Led by strong European demand, the Microwave Materials Division in Chandler, Arizona, continued to make solid gains in sales of high frequency laminate materials for communication applications, with dollar sales attaining record levels for the first nine months of 1997. Sales of RO4000(R) and RO3000(TM) high frequency materials, targeted to commercial wireless applications, both grew significantly. To better serve European customers, Rogers has committed to begin manufacturing high frequency laminates at Rogers N.V. in Gent, Belgium. To further broaden the products offered by the Circuit Materials Division, Rogers signed an agreement with Nippon Polytech Corporation of Tokyo, Japan, for the distribution of photoimageable covercoat and soldermask products. The agreement provides for -8- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED exclusive distribution rights in the U.S. and non-exclusive distribution rights in Europe, along with a technology transfer and rights to produce these materials. Selling photoimageable covercoats with high performance flexible circuit materials improves Rogers ability to support customers who need to fabricate flexible circuits with fine pattern resolution. Before tax profits were up 43% in the third quarter and 31% for the nine months compared with the same periods last year. Net income rose 31% for the quarter and 23% for the nine months, and earnings per share were up 28% and 19%, respectively. These record results were achieved despite a higher income tax rate in 1997. Earnings per share for the third quarter and nine months were $0.55 and $1.60 respectively, up from $0.43 and $1.34 for the same periods last year. Manufacturing profit as a percentage of sales in the first nine 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 15% for the first nine 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 4% 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. -9- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED On September 30, 1997, Rogers acquired UCB Induflex N.V. of Gent, Belgium, from UCB SA. Induflex manufactures thin aluminum and copper laminates for electromagnetic and radio frequency interference shielding, primarily in telecommunication and data communication applications. Induflex sales for 1997 are estimated to be about $11million. This acquisition expands the product range Rogers offers its computer and communication customers, complementing the high frequency and flexible circuit laminates that Rogers now sells. This business also extends Rogers capabilities in high speed lamination and slitting. The new business, Rogers Induflex N.V., will continue to operate in Gent, Belgium, which is also the location of Rogers N.V. and the base of Rogers European operations. In September 1997 the Company cancelled its $5.0 million unsecured revolving credit agreement with Fleet National Bank and replaced it with an unsecured multi-currency revolving credit agreement, also with Fleet. Under it, the Company can borrow up to $15.0 million, or the equivalent in Belgian Francs and/or Japanese Yen. Amounts borrowed under this agreement are to be paid in full by September 19, 2002. The Company borrowed 390,207,039 Belgian Francs (U.S. $10,759,000 as of September 28, 1997) under the new arrangement to facilitate the Rogers Induflex acquisition in Belgium. Other income less other charges was $1.1 million for the first nine months of 1997 compared with $2.3 million for the same period in 1996. This decline was primarily the result of lower royalty income. Sales of PORON materials and ENDUR components continued to grow at Rogers INOAC Corporation (RIC), the company's 50% owned joint venture in Japan, despite continuing economic weakness in Japan. Durel Corporation, the 50% owned joint venture with 3M in electroluminescent lamps, is increasing production on several new custom lamp systems for the world's largest manufacturer of pagers. Durel is continuing to shift its new business focus towards wireless communication applications, gaining sales in this market while sales for a major automotive lamp program are winding down. The patent infringement lawsuit brought by Durel continues, with a trial now expected in the second quarter of 1998. Net cash provided by operating activities amounted to $11.2 million in the first nine months of 1997 compared to $8.8 million for the same period in 1996. The primary factor contributing to the year-to-year increase from 1996 to 1997 is higher earnings. Capital expenditures totaled $9.7 million and $4.5 million for the first nine 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 -10- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED 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. These expansions include major capacity increases for microwave materials used in commercial applications and for high performance elastomer products. Both expansions will be completed in 1998. Additionally, a new production line for molding materials was completed during 1997. 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 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 and added an additional provision of $275,000 in 1997 for costs related to this matter. To date, approximately $600,000 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. -11- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED 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. -12- PART II - OTHER INFORMATION Item 6. Reports on Form 8-K (b) There were no reports on Form 8-K filed for the three months ended September 28, 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: November 7, 1997 -13- EX-27 2
5 1,000 9-MOS DEC-28-1997 SEP-28-1997 20613 710 28839 148 16580 78268 104025 61729 147616 29635 0 0 0 7498 82024 147616 137880 137880 96808 122392 (1139) 0 (473) 17100 4617 12483 0 0 0 12483 1.60 1.57
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