-----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, NNmoXdkNYT0oMVeXlUbUxK6GL2LWrajfMP1xfgSpvBDdgbFW0ScUzQ4PW+FHfL53 ZhLRkbITPXDGBeqcc2MUbg== 0000084748-98-000015.txt : 19980520 0000084748-98-000015.hdr.sgml : 19980520 ACCESSION NUMBER: 0000084748-98-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980405 FILED AS OF DATE: 19980519 SROS: AMEX SROS: PCX 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: 98627955 BUSINESS ADDRESS: STREET 1: P.O. BOX 188 STREET 2: ONE TECHNOLOGY DRIVE CITY: ROGERS STATE: CT ZIP: 06263-0188 BUSINESS PHONE: 860 774-96 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 April 5, 1998 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 May 3, 1998: Capital Stock, $1 Par Value-7,599,174 shares -1- ROGERS CORPORATION AND SUBSIDIARIES FORM 10-Q April 5, 1998 INDEX Page No. PART I--FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited): Consolidated Statements of Income-- Three Months Ended April 5, 1998 and March 30, 1997 3 Consolidated Balance Sheets-- April 5, 1998 and December 28, 1997 4-5 Consolidated Statements of Cash Flows-- Three Months Ended April 5, 1998 and March 30, 1997 6 Supplementary Notes 7-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-12 PART II--OTHER INFORMATION Item 6. Reports on Form 8-K 13 SIGNATURES 13 -2- PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ROGERS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands Except Per Share Amounts) Three Months Ended: ---------------------- April 5, March 30, 1998 1997 (14 weeks) (13 weeks) ---------- ---------- Net Sales $ 58,313 $ 44,340 Cost of Sales 42,233 31,266 Selling and Administrative Expenses 7,272 5,610 Research and Development Expenses 2,611 2,451 --------- --------- Total Costs and Expenses 52,116 39,327 --------- --------- Operating Income 6,197 5,013 Other Income less Other Charges (148) 414 Interest Income, Net 231 107 --------- --------- Income Before Income Taxes 6,280 5,534 Income Taxes: Federal and Foreign 1,696 1,369 State 125 125 --------- --------- Net Income $ 4,459 $ 4,040 ========= ========= Net Income Per Share (Note F): Basic $ .59 $ .54 ========= ========= Diluted $ .56 $ .52 ========= ========= Shares Used in Computing (Note F): Basic 7,586,000 7,422,000 ========= ========= Diluted 7,960,000 7,740,000 ========= ========= The accompanying notes are an integral part of the consolidated financial statements. -3- ROGERS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS (Dollars in Thousands) April 5, 1998 December 28, 1997 ------------- ----------------- Current Assets: Cash and Cash Equivalents $ 14,263 $ 18,791 Marketable Securities 3,022 2,764 Accounts Receivable, Net 32,825 28,658 Inventories: Raw Materials 10,892 10,262 In-Process and Finished 12,881 12,446 Less LIFO Reserve (1,123) (1,123) -------- -------- Total Inventories 22,650 21,585 Current Deferred Income Taxes 1,940 1,936 Assets Held for Sale, Net of Valuation Reserves of $492 in each period (Note B) 5,158 5,158 Other Current Assets 610 591 -------- -------- Total Current Assets 80,468 79,483 -------- -------- Property, Plant and Equipment, Net of Accumulated Depreciation of $65,809 and $63,856 57,280 52,201 Investment in Unconsolidated Joint Venture 5,052 5,373 Pension Asset 4,731 4,731 Goodwill and Other Intangibles, Net 14,407 14,500 Other Assets 2,143 2,152 -------- -------- Total Assets $164,081 $158,440 ======== ======== 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) April 5, 1998 December 28, 1997 ------------- ----------------- Current Liabilities: Accounts Payable $ 16,399 $ 16,771 Current Maturities of Long-Term Debt 600 600 Accrued Employee Benefits and Compensation 7,517 8,098 Accrued Income Taxes Payable 5,106 3,628 Taxes, Other than Federal and Foreign Income 1,221 839 Other Accrued Liabilities 4,434 4,047 -------- -------- Total Current Liabilities 35,277 33,983 -------- -------- Long-Term Debt, less Current Maturities 13,660 13,660 Noncurrent Deferred Income Taxes 2,258 2,311 Noncurrent Pension Liability 3,901 3,900 Noncurrent Retiree Health Care and Life Insurance Benefits 6,277 6,277 Other Long-Term Liabilities 4,184 3,931 Shareholders' Equity: Capital Stock, $1 Par Value: Authorized Shares 25,000,000; Issued and Outstanding Shares 7,599,174 and 7,543,699 7,599 7,544 Additional Paid-In Capital 31,672 31,097 Unrealized Loss on Marketable Securities (2) (5) Currency Translation Adjustment 215 1,160 Retained Earnings 59,040 54,582 -------- -------- Total Shareholders' Equity 98,524 94,378 -------- -------- Total Liabilities and Shareholders' Equity $164,081 $158,440 ======== ======== 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) Three Months Ended: --------------------- April 5, March 30, 1998 1997 --------- ---------- CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES: Net Income $ 4,459 $ 4,040 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 2,236 1,933 Equity in Undistributed (Income) Loss of Unconsolidated Joint Ventures, Net 42 (197) Loss on Disposition of Assets -- 25 Noncurrent Pension and Postretirement Benefits 531 275 Other, Net 247 20 Changes in Operating Assets and Liabilities Excluding Effects of Disposition of Assets: Accounts Receivable (4,493) (4,033) Inventories (1,217) (594) Prepaid Expenses (32) (67) Accounts Payable and Accrued Expenses 771 3,083 -------- -------- Net Cash Provided by Operating Activities 2,544 4,485 CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES: Capital Expenditures (7,397) (3,065) Acquisition of Business -- (1,294) Proceeds from Sale of Property, Plant and Equipment -- 49 Proceeds from Sale of Marketable Securities -- 10 Purchase of Marketable Securities (258) -- Investment in Unconsolidated Joint Ventures and Affiliates 333 394 -------- -------- Net Cash Provided by (Used in) Investing Activities (7,322) (3,906) CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: Proceeds from Short and Long-Term Borrowings 284 1,500 Repayments of Debt Principal (265) (1,500) Proceeds from Sale of Capital Stock 630 306 -------- -------- Net Cash Provided by Financing Activities 649 306 Effect of Exchange Rate Changes on Cash (399) 131 -------- -------- Net Increase in Cash and Cash Equivalents (4,528) 1,016 Cash and Cash Equivalents at Beginning of Year 18,791 18,675 -------- -------- Cash and Cash Equivalents at End of Quarter $ 14,263 $ 19,691 ======== ======== 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 28, 1997. B. Net Assets Held for Sale consist of land and a building in Chandler, Arizona, currently being leased to the purchaser of the Company's Flexible Interconnection Business in 1993. 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 under the new arrangement to facilitate the Rogers Induflex acquisition in Belgium in September 1997. D. Interest paid during the first three months of 1998 and 1997 was $231,000 and $92,000, respectively. E. Income taxes paid (refunded) were $79,634 and $(36,000) in the first three months of 1998 and 1997, respectively. F. As of the beginning of 1998, the Company adopted Financial Accounting Standard Board Statement No. 130 (FAS No. 130), "Reporting Comprehensive Income". FAS No. 130 establishes new rules for the reporting and display of comprehensive income and its components; however, the adoption of this Statement had no impact on the Company's net income or shareholders' equity. FAS No. 130 requires unrealized gains or losses on the Company's available-for- sale securities and foreign currency translation adjustments, which prior to adoption were reported separately in shareholders' equity, to be included in other comprehensive income. Prior year financial statements have been reclassified to conform to the requirements of Statement 130. During the first quarter of 1998 and 1997, total comprehensive income amounted to $3.5 million and $3.3 million, respectively. -7- SUPPLEMENTARY NOTES, CONTINUED G. In 1997, the Financial Accounting Standards Board issued Statement No. 128 (FAS No. 128), "Earnings per Share." FAS No. 128 replaced the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Diluted earnings per share is very similar to the previously reported fully diluted earnings per share. All earnings per share amounts for all periods presented have been restated to conform to the FAS No. 128 requirements. The following table sets forth the computation of basic and diluted earnings per share: (Dollars in Thousands, Except Per Share Amounts) April 5, March 30, 1998 1997 --------------------- Numerator: Net income $ 4,459 $ 4,040 Denominator: Denominator for basic earnings per share - weighted-average shares 7,586 7,422 Effect of stock options 374 318 --------------------- Denominator for diluted earnings per share - adjusted weighted-average shares and assumed conversions 7,960 7,740 ===================== Basic earnings per share $ .59 $ .54 ===================== Diluted earnings per share $ .56 $ .52 ===================== H. The Company's fiscal year begins on the Monday nearest January 1 and ends on the Sunday nearest December 31. The fiscal year ending January 3, 1999 is a 53 week year and the quarter ending April 5, 1998 is a 14 week quarter. -8- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net sales of $58 million in the first quarter of 1998 were the highest for any quarter in the Company's history, and were up 32% over the comparable period last year. Combined Sales, which include one-half of the sales from Rogers two 50% owned joint ventures, grew 27% to $66 million for the quarter. Over 40% of the sales increase for the quarter was attributable to sales by Induflex, the European flexible laminates business acquired at the end of the third quarter last year and sales of a customized FLEX-I-MID(R) material to Hutchinson Technology Incorporated (HTI). Sales of Polymer Materials for the first three months increased 17% from the comparable 1997 period. Continued investments in people and capacity have resulted in improved service to customers, better operating metrics, and higher sales. A new application for NITROPHYL(R) floats for fuel level sensing in propane tanks grew more rapidly than planned contributing to substantial sales growth at the Elastomer Components Unit. Sales of domestically manufactured PORON(R) urethane materials continued their upward climb. The completed expansion of the Woodstock, Connecticut, warehouse and plant has enabled the Poron Materials Unit to achieve improvements in customer service, while the addition of a third PORON production line is proceeding on schedule. Sales and operating performance of the moldable phenolic composites business are both improving and benefiting from the major capital investment made last year to expand capacity. Sales of Electronic Materials for the first quarter increased 51% over the same period in 1997. About 60% of this increase is attributed to the aforementioned sales by Induflex and sales of FLEX-I-MID materials to HTI. Additionally, sales continue to improve at the Microwave Materials Division as it successfully targets commercial high frequency applications in wireless communications. The introduction of Rogers Express service, a next day shipping policy for some of our standard products, has been well received. The Division has also improved its production yields and is doing a better job of pleasing customers with on-time delivery. The current major expansion project is on track. The Circuit Materials Division experienced a softer computer market in the first quarter, slowing sales of traditional flexible circuit materials. Europe continues to be a bright spot for sales growth, showing a 37% increase over the first quarter of last year, even when sales from the recently acquired Induflex business are not included. Furthermore, the strength of the U.S. Dollar dampened our reported European sales. Stated in local currency, Rogers European sales growth, excluding Induflex sales, was actually 57%. All of Rogers core products are now stocked in Europe, and Rogers is adding a microwave materials production facility and expanding its power distribution bus bar production capability in Belgium. Profits before and after-tax and earnings per share for the first three months of 1998 were also the highest for any quarter in Rogers history. Compared with the first quarter -9- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED last year, before-tax profits of $6.3 million were up 13%, and net income of $4.5 million, after a slightly higher tax rate, increased 10%. Diluted earnings per share for the quarter were $.56, up from $.52 in the first three months of 1997. Manufacturing profit as a percentage of sales in the first three months decreased from 29% in 1997 to 28% in 1998. This was primarily attributable to the lower margin on the sales of customized material to HTI. This material is produced for Rogers by Mitsui Chemical, Incorporated in Japan and has a lower margin than material that Rogers manufactures. Selling and administrative expenses for the first three months of 1998 increased in total dollars but as a percentage of sales were approximately the same as the comparable period in the previous year. The increase in dollars reflects steps taken to develop the internal organization and information systems to support the Company's drive to become the first choice of customers worldwide. Research and Development expense was approximately the same in the first three months of 1998 and 1997. Major development activities in Electronic Materials included process and product improvements to the RO3000(TM) and RO4000(R) high frequency circuit board materials, which are designed for use in high volume, low cost commercial wireless communication applications. In flexible circuit materials, development efforts focused on improved adhesives and improved processing in our plant and at our customers' facility. Polymer Materials activity continue to include the commercialization of a slow rebound PORON urethane material for the foot comfort market, as well as improvements to a variety of other PORON materials for industrial and printing applications. New ENDUR(R) component formulations are being developed to provide improved friction properties and longevity in document transport applications. Finally, higher strength phenolic composites were developed for demanding applications in automotive powertrains and electric motors. The Company's core technical capabilities in polymers, fillers and adhesion continued to improve with these specialized technologies now applied to immediate as well as longer term development tasks. Net interest income for 1998 increased from 1997 due mainly to a tax interest refund received from the Internal Revenue Service. As of September 1997, the Company can borrow up to $15.0 million or the equivalent in Belgian Francs and/or Japanese Yen under an unsecured multi-currency revolving credit agreement with Fleet National Bank. Amounts borrowed under this agreement are to be repaid in full by September 19, 2002. The Company has borrowed 390 million Belgian Francs under this agreement as of April 5, 1998. -10- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED Other income less other charges decreased by more than $0.5 million when comparing 1998 first quarter with the comparable 1997 period. This change is attributable to lower gains on sale of assets and to a decline in joint venture and royalty income. Rogers INOAC Corporation, our joint venture with INOAC Corporation, lost a major customer in the disk drive industry and is working to replace this business. Net cash provided by operating activities in the first three months of 1998 totaled $2.5 million compared with $4.5 million in the comparable 1997 period. This decrease is more than accounted for by the change in level of Accounts Payable. Investments in capital equipment topped $7 million for the first quarter of 1998, a steep climb from the $3 million invested in the first three months of 1997. More than half of this spending is related to expansion projects in our Microwave Materials Division and our Poron Materials Unit. Management expects that spending for 1998, primarily for capacity expansions, new process equipment, and new information systems capability will total $30 million, nearly double the amount spent in 1997. It is anticipated that this spending will be financed with internally generated funds. Management believes that in the near term internally generated funds and its credit facility with Fleet National Bank will be sufficient to meet the needs of the business. The Company continually reviews and assesses its lending relationships. The Company has completed an assessment and has modified or replaced portions of its internally developed software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter. The Company also uses software purchased from vendors. Each vendor was contacted and all software packages are year 2000 compliant. The only costs that will be incurred in the future will be for rigorous testing of the software and these costs are expected to be insignificant. 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 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 -11- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED 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 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 based on updated estimates provided an additional $700,000 in 1997 for costs related to this matter. During 1995, $300,000 was charged against this provision and $200,000 was charged in both 1996 and 1997. 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 (the "EPA") originally sought an administrative penalty of $227,000, which was later changed to $300,000. The EPA has alleged that the Company improperly disposed of PCBs. An administrative law judge found the Company liable for this alleged disposal, but a penalty hearing has not yet been held. The Company disputes the allegations and intends to contest the assessment of any penalty. The Company has not had any material recurring costs and capital expenditures relating to environmental matters, except as specifically described in the preceding statements. -12- PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) List of Exhibits: (27) Financial Data Schedule (b)There were no reports on Form 8-K filed for the three months ended April 5, 1998. 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/DALE S. SHEPHERD Dale S. Shepherd Authorized Officer Vice President, Finance Chief Financial Officer Dated: May 19, 1998 -13- EX-27 2
5 1,000 3-MOS JAN-03-1999 APR-05-1998 14263 3022 32973 148 22650 80468 123089 65809 164081 35277 0 0 0 7599 90925 164081 58313 58313 42233 52116 148 0 (231) 6280 1821 4459 0 0 0 4459 .59 .56 This is basic earnings per share.
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