Total pages included - 11
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-4347
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 April 26, 1996:
Capital Stock, $1 Par Value--7,146,899 shares
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ROGERS CORPORATION AND SUBSIDIARIES
FORM 10-Q
March 31, 1996
INDEX
Page No.
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Consolidated Statements of Income--
Three Months Ended March 31, 1996 and
April 2, 1995 3
Consolidated Balance Sheets--
March 31, 1996 and December 31, 1995 4-5
Consolidated Statements of Cash Flows--
Three Months Ended March 31, 1996 and
April 2, 1995 6
Supplementary Notes 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-10
PART II--OTHER INFORMATION
Item 6. Reports on Form 8-K 11
SIGNATURES 11
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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:
March 31, April 2,
1996 1995
-------------------------
Net Sales $ 34,938 $ 36,417
Cost of Sales 23,417 24,908
Selling and Administrative Expenses 5,413 5,665
Research and Development Expenses 2,418 2,404
-------------------------
Total Costs and Expenses 31,248 32,977
-------------------------
Operating Income 3,690 3,440
Other Income less Other Charges 515 754
Interest Income (Expense), Net 59 (35)
-------------------------
Income Before Income Taxes 4,264 4,159
Income Taxes:
Federal and Foreign 856 582
State 125 125
-------------------------
Net Income $ 3,283 $ 3,452
=========================
Net Income Per Share:
Primary $ .44 $ .45
=========================
Fully Diluted $ .44 $ .45
=========================
Shares Used in Computing:
Primary 7,483,903 7,648,718
=========================
Fully Diluted 7,525,358 7,684,630
=========================
The accompanying notes are an integral part of the consolidated financial
statements.
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ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in Thousands)
March 31, 1996 December 31, 1995
-------------- -----------------
Current Assets:
Cash and Cash Equivalents $ 16,117 $ 13,111
Marketable Securities 2,553 1,565
Accounts Receivable, Net 20,700 18,439
Inventories:
Raw Materials 5,312 5,267
In-Process and Finished 7,896 7,336
Less LIFO Reserve (1,791) (1,791)
-------- --------
Total Inventories 11,417 10,812
Current Deferred Income Taxes 2,560 2,560
Assets Held for Sale, Net of Valuation
Reserves of $2,032 in each period
(Note B) 6,242 8,809
Other Current Assets 550 470
-------- --------
Total Current Assets 60,139 55,766
-------- --------
Property, Plant and Equipment, Net of
Accumulated Depreciation of
$55,421 and $53,669 36,171 36,473
Investment in Unconsolidated Joint
Venture 4,926 4,763
Intangible Pension Asset 3,479 3,479
Other Assets 1,992 2,035
-------- --------
Total Assets $106,707 $102,516
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
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ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND SHAREHOLDERS' EQUITY
(Dollars in Thousands)
March 31, 1996 December 31, 1995
-------------- -----------------
Current Liabilities:
Accounts Payable $ 8,924 $ 8,338
Current Maturities of Long-Term Debt 600 600
Accrued Employee Benefits and
Compensation 7,691 8,703
Other Accrued Liabilities 5,124 4,667
Accrued Income Taxes Payable 1,971 1,084
Taxes Other than Federal and Foreign
Income 1,239 1,020
-------- --------
Total Current Liabilities 25,549 24,412
-------- --------
Long-Term Debt, less Current Maturities 4,200 4,200
Noncurrent Deferred Income Taxes 1,641 1,632
Noncurrent Pension Liability 3,223 3,223
Noncurrent Retiree Health Care and Life
Insurance Benefits 5,942 5,942
Other Long-Term Liabilities 3,226 3,009
Shareholders' Equity:
Capital Stock, $1 Par Value:
Authorized Shares 25,000,000; Issued
and Outstanding Shares 7,139,599
and 7,135,090 7,140 7,135
Additional Paid-In Capital 26,305 26,286
Unrealized Gain(Loss) on Marketable
Securities (11) --
Currency Translation Adjustment 2,077 2,545
Retained Earnings 27,415 24,132
-------- --------
Total Shareholders' Equity 62,926 60,098
-------- --------
Total Liabilities and
Shareholders' Equity $106,707 $102,516
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
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ROGERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Three Months Ended:
-------------------
March 31, April 2,
1996 1995
-------------------
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net Income $ 3,283 $ 3,452
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 1,651 1,648
Benefit for Deferred Income Taxes 42 138
Equity in Undistributed (Income) Loss of
Unconsolidated Joint Ventures, Net 385 (255)
Loss on Disposition of Assets 25 85
Noncurrent Pension and Postretirement Benefits 382 355
Other, Net 207 47
Changes in Operating Assets and Liabilities
Excluding Effects of Disposition of Assets:
Accounts Receivable (3,044) (2,148)
Inventories (648) (377)
Prepaid Expenses (92) (76)
Accounts Payable and Accrued Expenses 981 1,194
------------------
Net Cash Provided by Operating Activities 3,172 4,063
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Capital Expenditures (1,475) (1,085)
Proceeds from Sale of Business 2,567 --
Purchase of Marketable Securities (989) --
------------------
Net Cash Provided by (Used in) Investing
Activities 103 (1,085)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Proceeds from Sale of Capital Stock 24 263
------------------
Net Cash Provided by Financing Activities 24 263
Effect of Exchange Rate Changes on Cash (293) 245
------------------
Net Increase in Cash and Cash Equivalents 3,006 3,486
Cash and Cash Equivalents at Beginning of Year 13,111 13,851
------------------
Cash and Cash Equivalents at End of Quarter $ 16,117 $ 17,337
==================
The accompanying notes are an integral part of the consolidated financial
statements.
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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 31, 1995.
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 and the land and building in
Mesa, Arizona, related to the divested business of the Power
Distribution Division.
C. As of April 13, 1995, the Company may borrow up to a maximum of
$10.0 million under an unsecured revolving credit arrangement with
Fleet Bank, N.A. Amounts borrowed under this arrangement are to be
paid in full by March 31, 1998. The Company had no borrowings
under revolving credit arrangements at March 31, 1996.
D. Interest paid during the first three months of 1996 and 1995 was
approximately $108,000 and $112,000, respectively.
E. Income taxes paid were $39,000 and $83,000 in the first three
months of 1996 and 1995, respectively.
F. To help widen the distribution and enhance the marketability of the
Company's capital stock, the Board of Directors in 1995 effected a
two-for-one stock split in the form of a 100% stock dividend on
July 7, 1995. All references in the financial statements to number
of shares and per share amounts of the Company's capital stock have
been retroactively restated to reflect the increased number of
capital shares outstanding.
G. Certain reclassifications were made for 1995 to report results
consistent with 1996 reporting practices.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net sales of $34.9 million for the first quarter of 1996 were just
over the level in the first quarter of 1995, when adjusted for the
year-end 1995 divestiture of the Company's small microwave printed
circuit board fabricating operation in California.
Changes made in the Company's high performance elastomers organization
in mid-1995 are leading to more concentrated sales efforts, improved
service, and lower costs. In 1995, after a fine first-half, high
performance elastomer sales fell sharply in the third quarter because
of several coinciding customer inventory adjustments and some slowness
in the automotive industry. Since then, led by increasing sales of
Poron(R) materials for a range of industrial applications, sales have
moved up again strongly. Sales of Endur(R) paper handling components and
fuser rolls, including initial shipments from the new manufacturing
line in the Company's Gent, Belgium, facility, have also recovered so
that sales of Polymer Products in the first quarter of 1996 were only
3% below the level in the same period in 1995.
Sales of Electronic Products for the first three months increased 5%
from the comparable 1995 period, after adjusting for the year-end 1995
divestiture. Sales gains were mainly the result of unit volume
increases. After a slow start in January, sales in the U.S. of
flexible circuit materials for computer applications began to climb
again. Sales of these materials continued strong in Europe where the
Company is gaining market share. A new flexible laminate production
line in the U.S., which will more than double capacity, will start up
in the second quarter.
Customer interest in the Company's new commercial-grade laminates for
wireless communications applications continues to grow - especially
for the RO4000(TM) high frequency materials which printed circuit
fabricators can process like conventional laminates. To meet the
growing demand, new production equipment to manufacture commercial
laminates at much lower cost is being installed. Because of the
Company's long experience with high frequency materials, and an
expanding product line, significant growth in this market is expected.
Net income of $3.3 million and earnings per share of $0.44 were down
only slightly from last year's comparable period, even though the tax
rate was 23% in the first quarter of 1996, compared with a 17% tax
rate in the first three months of 1995. Before tax profits increased
modestly from the first quarter of 1995 due to improved margins and
lower interest expense.
Manufacturing profit as a percentage of sales in the first three
months increased from 32% in 1995 to 33% in 1996 due to production
cost improvements in certain domestic product lines and higher
inventories. These factors offset a continuing decline in sales price
per square foot of high frequency microwave materials resulting from
the continuing shift of microwave business to lower cost commercial
applications.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
Selling and administrative expenses for the first three months of 1996
as a percentage of sales were approximately the same as in the
previous year.
Research and development expenses were $2.4 million, or 7% of sales,
in both the first quarter of 1995 and 1996. Significant product and
process development activities included the following: Continued
process and product development for RO4003(TM) and RO4003FR high frequency
circuit materials; process improvement effort to improve performance
of RO3003(TM) and RO3010(TM) fluoropolymer laminates; process and formulation
support to expand the number of Poron formulations which are both low
outgassing and flame retardant; and improved compounding processes
that result in higher strength phenolic materials.
Durel Corporation, the Company's 50% owned electroluminescent lamp
joint venture with 3M, continues to make good progress in improving
operations in its new facility. Sales of Durel(R) electroluminescent
lamps and chip inverters are expected to grow substantially again this
year. However, there are ongoing high costs associated with the
patent infringement lawsuit Durel has brought to protect its
proprietary technology.
Net interest income was recognized for the first quarter of 1996
compared to net interest expense in the corresponding 1995 period.
This increase in earnings was due to lower borrowings. Total debt
outstanding at March 31, 1996, was $4.8 million compared with $7.9
million at April 2, 1995.
As of April 13, 1995, the Company can borrow up to a maximum of $10.0
million under an unsecured revolving credit arrangement with Fleet
Bank, N.A. Amounts borrowed under this arrangement are to be paid in
full by March 31, 1998. The Company had no borrowings under revolving
credit arrangements at March 31, 1996.
Other income less other charges was $0.5 million for the first three
months of 1996 compared with $0.8 million for the same period in 1995.
The decrease was primarily attributable to lower joint venture income.
Net cash provided by operating activities in the first three months of
1996 totaled $3.2 million, compared with $4.1 million in the same 1995
period. The year-to-year decrease from 1995 to 1996 is attributable to
higher levels of inventories and accounts receivable.
Capital expenditures in the first quarter of 1996 and 1995 totaled
$1.5 million and $1.1 million, respectively. Management expects that
spending for 1996, primarily for capacity expansions and new process
equipment, will approximate $10.0 million. It is anticipated that
these expenditures will be financed with internally generated funds.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
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 has been named as a PRP in six 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 cost 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 small 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
the Company's environmental engineers and consultants, the Company
recorded a provision of approximately $0.9 million in 1994 for costs
related to this matter. During 1995 and early 1996, $0.4 million was
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.
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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 March 31, 1996.
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)
Donald F. O'Leary
By s/DONALD F. O'LEARY
Donald F. O'Leary
Authorized Officer
Corporate Controller
Dated: May 14, 1996
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