Exhibit 99.2
ROGERS CORPORATION
Introduction to Unaudited Pro Forma Condensed Combined Financial Statements
On September 30, 2003, Rogers Corporation (the "Company") and 3M Company ("3M")
executed a Stock Purchase Agreement (the "Purchase Agreement") pursuant to which
the Company acquired 3M's 50 percent interest in Durel Corporation ("Durel"), a
50/50 joint venture established between the Company and 3M in 1988. Pursuant to
the Purchase Agreement, on September 30, 2003 3M delivered to the Company 1,000
of its $.01 per share par value common shares in Durel, representing 50 percent
of the 2,000 outstanding common shares of Durel. The Company delivered to 3M $26
million in cash consideration, which was funded from the Company's available
working capital.
The unaudited pro forma combined balance sheet has been prepared as if the
acquisition occurred on September 28, 2003, and the unaudited pro forma combined
statements of income have been prepared as if the acquisition occurred on
December 29, 2002 for the nine months ended September 28, 2003 and as if it had
occurred on December 31, 2001 for the year ended December 29, 2002. These
unaudited combined financial statements illustrate the pro forma effect on the
Company's financial results as if the Company acquired 3M's 50 percent interest
in Durel on the dates previously noted.
The unaudited pro forma combined financial information set forth below reflects
pro forma adjustments that are based upon available information and certain
assumptions that the Company believes are reasonable. The unaudited pro forma
combined financial information does not purport to represent the Company's
results of operations or financial position that would have resulted had the
Durel acquisition been consummated as of the dates or for the periods indicated.
Additionally, the pro forma combined statements of income should not be
considered indicative of expected future results. The Durel acquisition has been
accounted for by the purchase method of accounting. The pro forma information
below sets forth the preliminary allocation of the purchase price for the Durel
acquisition, which may be adjusted as a result of the finalization of certain
valuations. Management does not expect such adjustments to be material.
The unaudited pro forma combined financial statements and accompanying notes
should be read in conjunction with the historical consolidated financial
statements of the Company and Durel included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 29, 2002 and the historical
consolidated financial statements of the Company included in the Company's
Quarterly Report on Form 10-Q for the quarter ended September 28, 2003, both
filed with the Securities and Exchange Commission, and the additional financial
statements of Durel included in Item 7(a) of this Current Report.
Exhibit 99.2
Rogers Corporation
Unaudited Pro forma Condensed Combined Balance Sheet
As of September 28, 2003
($ amounts in thousands)
Rogers Durel Pro Forma Pro Forma
Historical Historical Adjustments Combined
----------------- ---------------- ------------------- -----------------
Cash and Cash Equivalents $ 35,273 $ 8,344 $ (26,000) (c) $ 17,617
Accounts Receivable, net 43,480 8,333 186 (a) 51,999
Inventories, net 18,135 4,632 2,209 (a) 24,976
Other Current Assets 10,133 98 (302) (h) 9,929
----------------- ---------------- ------------------- -----------------
Total Current Assets 107,021 21,407 (23,907) 104,521
Property Plant and Equipment, net 104,479 19,355 2,000 (a) 125,834
Goodwill and Other Intangibles, net 22,204 - 2,168 (b) 24,372
Investments in Joint Ventures 23,145 200 (13,551) (d) 9,794
Other Long-Term Assets 24,245 2,426 (563) (a) 26,108
----------------- ---------------- ------------------- -----------------
Total Assets $ 281,094 $ 43,388 $ (33,853) $ 290,629
================= ================ =================== =================
Accounts Payable And Other Accrued
Liabilities $ 27,331 $ 7,600 $ 448 (a) $ 35,379
Accrued Income Taxes Payable 13,169 782 - 13,951
----------------- ---------------- ------------------- -----------------
Total Current Liabilities 40,500 8,382 448 49,330
Non-current Deferred Tax Liability 8,868 1,439 (2,534) (i) 7,773
Other Non-current Liabilities 25,523 - 1,800 (a) 27,323
----------------- ---------------- ------------------- -----------------
Common Shares, $1 par value
50,000,000 shares authorized,
16,175,689 shares issued 16,176 - - 16,176
Additional Paid-in Capital 38,584 7,040 (7,040) (d) 38,584
Retained Earnings 165,335 26,527 (26,527) (d) 165,335
Accumulated Other Comprehensive Loss (1,959) - - (1,959)
Treasury Shares (330,516 shares), at cost (11,933) - - (11,933)
----------------- ---------------- ------------------- -----------------
Total Shareholders' Equity 206,203 33,567 (33,567) 206,203
----------------- ---------------- ------------------- -----------------
Total Liabilities and Shareholders' Equity $ 281,094 $ 43,388 $ (33,853) $ 290,629
================= ================ =================== =================
The accompanying notes are an integral part of these pro forma financial statements.
Exhibit 99.2
Rogers Corporation
Unaudited Pro forma Condensed Combined Statement of Income
For the nine months ended September 28, 2003
($ and share amounts in thousands, except per share amounts)
Rogers Durel Pro forma Pro forma
Historical Historical Adjustments Combined
----------- ----------- --------------- ------------
Net Sales $ 157,534 $51,331 $ - $208,865
Cost of Sales 107,614 29,243 1,316 (e) 138,173
Selling and Administrative Expenses 29,085 6,377 - 35,462
Research and Development 9,132 2,410 - 11,542
----------- ----------- --------------- ------------
Total Costs and Expenses 145,831 38,030 1,316 185,177
----------- ----------- --------------- ------------
Operating Income 11,703 13,301 (1,316) 23,688
Other Income (Expense), net 11,158 (154) (4,783) (g) 6,221
Interest Income (Expense), net 179 77 - 256
----------- ----------- --------------- ------------
Income Before Taxes 23,040 13,224 (6,099) 30,165
Income Taxes 5,760 3,968 (1,282) (f) 8,446
----------- ----------- --------------- ------------
Net Income $ 17,280 $ 9,256 $ (4,817) $ 21,719
=========== =========== =============== ============
EARNINGS PER SHARE
Basic $ 1.10 $ 1.38
=========== ============
Diluted $ 1.07 $ 1.34
=========== ============
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 15,712 15,712
----------- ------------
Diluted 16,214 16,214
----------- ------------
The accompanying notes are an integral part of these pro forma financial statements.
Exhibit 99.2
Rogers Corporation
Unaudited Pro forma Condensed Combined Statement of Income
For the year ended December 29, 2002
($ and share amounts in thousands, except per share amounts)
Rogers Durel Pro forma Pro forma
Historical Historical Adjustments Combined
------------ ------------ --------------- -------------
Net Sales $ 219,438 $ 84,062 $ - $ 303,500
Cost of Sales 150,183 47,168 1,529 (e) 198,880
Selling and Administrative Expenses 39,335 10,988 - 50,323
Acquisition/Restructuring Costs 2,150 - - 2,150
Research and Development 13,596 2,991 - 16,587
------------ ------------ --------------- -------------
Total Costs and Expenses 205,264 61,147 1,529 267,940
------------ ------------ --------------- -------------
Operating Income 14,174 22,915 (1,529) 35,560
Other Income (Expense), net 10,861 29 (7,272) (g) 3,618
Interest Income (Expense), net (226) (913) - (1,139)
------------ ------------ --------------- -------------
Income Before Taxes 24,809 22,031 (8,801) 38,039
Income Taxes 6,202 7,490 (3,041) (f) 10,651
------------ ------------ --------------- -------------
Net Income $ 18,607 $ 14,541 $ (5,760) $ 27,388
============ ============ =============== =============
EARNINGS PER SHARE
Basic $ 1.20 $ 1.77
============ =============
Diluted $ 1.16 $ 1.71
============ =============
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 15,471 15,471
------------ -------------
Diluted 16,023 16,023
------------ -------------
The accompanying notes are an integral part of these pro forma financial statements.
Exhibit 99.2
Rogers Corporation
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
GENERAL
Basis for presentation - The unaudited Pro Forma Combined Statement of Income
for the nine months ended September 28, 2003 is based on the Company's and
Durel's nine months ended September 28, 2003. The unaudited Pro Forma Combined
Statement of Income for the year ended December 29, 2002 is based on the
Company's and Durel's fiscal year ended December 29, 2002 fiscal year. These
financial statements have been prepared using generally accepted accounting
principles.
Purchase Price Allocation - The purchase price of the Durel acquisition has been
allocated to the acquired identifiable assets and liabilities based on their
estimated fair values. The Company is still obtaining appraisals for certain
assets acquired, and, accordingly the purchase price allocation is preliminary
and subject to adjustment based on the final determination of the fair value of
the net assets acquired. Any purchase price in excess of the fair value of
acquired identifiable assets and liabilities has been allocated to goodwill.
NOTES
(a) To adjust the assets and liabilities acquired to their estimated fair
market value based on a preliminary allocation of purchase price to
net assets acquired. Since the Company had owned 50% of Durel's common
shares, fair value adjustments are based on 50% of the excess of fair
market value over the net book value. The Company is still in the
process of obtaining appraisals for certain of the net assets and
determining the fair value and, therefore, the amounts allocated to
various net assets is subject to change.
(b) To record goodwill equal to the excess of purchase price over the
estimated fair value of identifiable net assets acquired.
(c) To record funding of the acquisition. The purchase price was paid
using excess cash.
(d) To eliminate shareholders' equity of Durel. Since Durel had been a
50%-owned investment of the Company, a portion of this equity has been
eliminated against the Company's investment in joint ventures.
(e) To reflect the estimated pro forma income statement impact for the
incremental effect in adjusting for the fair market value of the
assets and liabilities acquired.
(f) To reflect the pro forma tax effects of the acquisition. The effective
tax rate on consolidated pro forma income before taxes is estimated to
be 28%.
(g) To eliminate equity income for Durel earnings already reflected in the
Company's financial statements.
(h) To eliminate trading balances between the Company and Durel.
(i) To eliminate the Company's deferred tax liability resulting from the
Company's historical investment in Durel and to reflect
the deferred tax effect of the acquisition adjustments.