Back to GetFilings.com
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
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
Exact name of Registrant as specified in its charter:
ROGERS CORPORATION
State or other jurisdiction of I.R.S. Employer
incorporation or organization: Identification No.:
Massachusetts 06-0513860
Address of principal executive offices:
One Technology Drive
P.O. Box 188
Rogers, Connecticut 06263-0188
Registrant's telephone number, including area code:
(860) 774-9605
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Capital Stock, American Stock Exchange
$1 Par Value Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
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 periods 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 aggregate market value of the voting stock held by
non-affiliates of the Registrant as of February 1, 1996:
Capital Stock, $1 Par Value--$140,431,240
The number of shares outstanding of the Registrant's classes
of capital stock as of February 1, 1996:
Capital Stock, $1 Par Value--7,135,090 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's annual report to shareholders for
the fiscal year ended December 31, 1995 are incorporated by
reference into Parts I and II.
Portions of the proxy statement for the Registrant's 1996 annual
meeting of stockholders to be held April 16, 1996, are
incorporated by reference into Part III.
TABLE OF CONTENTS
PART I
Item Page
1. Business 1
2. Properties 4
3. Legal Proceedings 5
4. Submission of Matters to a Vote of Security-Holders 5
Executive Officers 5
PART II
5. Market for Registrant's Common Equity and Related Stockholder
Matters 6
6. Selected Financial Data 6
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6
8. Financial Statements and Supplementary Data 6
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 6
PART III
10. Directors and Executive Officers of the Registrant 7
11. Executive Compensation 7
12. Security Ownership of Certain Beneficial Owners and
Management 7
13. Certain Relationships and Related Transactions 7
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K 8
SIGNATURES
Signatures 13
PART I
Item 1. BUSINESS
GENERAL
Rogers Corporation, founded in 1832, is one of the oldest,
publicly traded U.S. companies in continuous operation. Rogers
has adapted its products over the years to meet changing market
needs, moving from specialty paperboard to transformer boards for
electrical insulation, and now mainly to a range of specialty
polymer composite materials.
The Company's strategy in the 1980's was to concentrate a
substantial portion of its development, manufacturing and
marketing resources on electronic components. Rogers largest
single division in the 1980's manufactured and sold flexible
interconnections primarily for computer disk drives.
In 1992, under new leadership, Rogers began a process of
refocusing its business on its core competencies in specialty
polymer composite materials, and on the application of these
materials technologies to identified market needs. These
materials operations were the core activities responsible for the
Company's strong growth in the 1960's and 1970's, and provided
most of the Company's profits in the 1980's. These profits were
often offset by substantial losses in the Company's electronic
components businesses.
The Company divested its electronic components businesses during
the 1992 - 1995 period. The Company's organization has been
restructured and research and development efforts related to
electronic components, such as multi-chip modules, have been
discontinued. Resources have been shifted to materials-related
projects in both the Polymer Product and Electronic Product
business segments. In addition, longer term business planning
disciplines have been implemented to ensure that research and
development efforts, capacity expansions, and intensified sales
and marketing activities are convergent with specifically
identified, growing worldwide markets.
In the Polymer Products Group, the Company has been concentrating
on high performance elastomer materials and components, and on
moldable composites. In the Electronic Products Group,
concentration has shifted in recent years to circuit materials
for high frequency uses and flexible circuit materials.
BUSINESS SEGMENT FINANCIAL AND GEOGRAPHIC INFORMATION
"Business Segment and Geographic Information" on pages 42-43 of
the annual shareholders' report for the year ended December 31,
1995, is incorporated herein by reference.
PRODUCTS
Rogers Corporation manufactures specialty polymer composite
materials and components which it markets around the world.
Rogers has two business segments: Polymer Products and Electronic
Products. Nearly all products in both business segments are
based on Rogers technology in polymer composite materials.
1
Polymer Products include high performance elastomer materials,
high performance elastomer components, and moldable composite
materials. The Rogers INOAC Corporation (RIC) 50% owned joint
venture with INOAC Corporation of Japan, and the Durel
Corporation 50% owned joint venture with Minnesota Mining and
Manufacturing Company (3M), extend and complement Rogers
worldwide businesses in polymer products. Trade names for Rogers
Polymer Products include PORON(R), PORON(R) S-2000, PORON EXPRESS(TM),
R/bak(R), NITROPHYL(R), ENDUR(R), MPC(R), and RX(R). Polymer Products
are sold to manufacturers in the consumer products, transportation,
imaging, and computer and peripheral markets.
Electronic Products include materials for high frequency printed
circuit boards, materials for flexible printed circuit boards,
and power distribution bus bars. Trade names for Rogers high
frequency printed circuit board materials include DUROID(R),
RT/duroid(R), TMM(R), and RO3000(TM) materials, as well as RO4000(TM)
materials, the newest in a line of lower priced microwave
materials for commercial wireless communication applications.
Trade names for flexible circuit materials include FLEX-I-MID(R),
which is manufactured by Mitsui Toatsu Chemicals Inc. (MTC) of
Japan, and R/flex(R). Power distribution bus bars are manufactured
by Rogers-Mektron N.V. in Europe under the trade name Mektron.
Electronic Products are sold principally to independent and
captive printed circuit board manufacturers, where these
materials are converted to high frequency circuits for wireless
communication equipment, microwave and radio frequency
applications, computers and peripherals, and consumer products.
BACKLOG
Excluding joint venture activity, the backlog of firm orders for
Polymer Products was $12,232,000, $13,835,000, and $11,539,000 at
December 31, 1995, January 1, 1995, and January 2, 1994,
respectively. The decrease from 1994 to 1995 reflects an
unusually high backlog at year-end 1994 related to temporary
inventory build-ups by customers. The year-end increase from
1993 to 1994 was due to stronger sales and large blanket orders
from several key customers. The backlog of firm orders for
Electronic Products was $11,701,000, $9,057,000, and $11,374,000
at December 31, 1995, January 1, 1995, and January 2, 1994,
respectively. The increase from 1994 to 1995 primarily relates
to a few key customers committing to firm orders extending well
into 1996. The year-end decrease from 1993 to 1994 is primarily
attributable to the divestiture of the U.S. power distribution
business. The amount of unfilled orders is reasonably stable
throughout the year.
RAW MATERIALS
The manufacture of both Polymer and Electronics Products requires
a wide variety of purchased raw materials. Some of these raw
materials are available only from limited sources of supply
which, if discontinued, could interrupt production. When this
has occurred in the past, the Company has purchased sufficient
quantities of the particular raw material to sustain production
until alternative materials and production processes could be
qualified with customers. Management believes that similar
responses would mitigate any raw material availability issues in
the future.
EMPLOYEES
The Company employed an average of 470 people in the Polymer
Products operations and 458 people in the Electronic Products
operations during 1995.
SEASONALITY
In the Company's opinion, neither the Polymer Products business
nor the Electronics Products business is seasonal.
2
CUSTOMERS & MARKETING
Rogers products were sold to approximately 2,100 customers
worldwide in 1995. Although the loss of all the sales made to any
one of the Company's major customers would require a period of
adjustment during which the business of a segment would be
adversely affected, the Company believes that such adjustment
could be made over a period of time. The Company also believes
that its business relationships with the major customers within
each of its segments are generally favorable, and that it is in a
good position to respond promptly to variations in customer
requirements. However, the possibility exists of losing all the
business of any major customer as to any product line. Likewise,
the possibility exists of losing all the business of any single
customer.
The Company markets its full range of products throughout the
United States and in most foreign markets. More than 90% of the
Company's sales are sold through Rogers own domestic and foreign
sales force, with the balance sold through independent agents and
distributors.
COMPETITION
There are no firms which compete with Rogers across its full
range of product lines. However, each Rogers product faces
competition in each business segment in domestic and foreign
markets. Competition comes from firms of all sizes and types.
Rogers strategy is to offer technically advanced products which
are price competitive in their markets, and to link the offerings
with market knowledge and customer service. This serves to
differentiate Rogers products in many markets.
RESEARCH & DEVELOPMENT
The Company has many domestic and foreign patents and licenses
and has additional patent applications on file related to both
business segments. In some cases, the patents result in license
royalties. The patents are of varying duration and provide some
protection. Although Rogers vigorously defends its patents, the
Company believes that its patents have most value in combination
with its equipment, technology, skills, and market position.
Early in 1996, Rogers successfully settled an infringement suit
it brought against a competitor in the field of high frequency
circuit materials. The settlement establishes the validity of
the patent which covers basic technology in that field, and the
competitor will pay Rogers royalties on its sales of certain of
its products. The Company also owns a number of registered and
unregistered trademarks which it believes to be of importance.
During its fiscal year 1995, Rogers spent $9,320,000 on research
and development activities, compared with $9,230,000 in 1994, and
$9,495,000 in 1993. These amounts include the cost of the
corporate research and development effort in Rogers, Connecticut,
which amounted to $6,820,000, $6,730,000, and $6,743,000, in
1995, 1994, and 1993, respectively. The balance was comprised of
expenditures for product development and new process development
activities in its operating units.
ENVIRONMENTAL REGULATION
During fiscal year 1995, the Company spent $.9 million on capital
equipment necessary to comply with federal, state, and local
environmental protection, health and safety regulations.
Management estimates that 1996 expenditures needed for compliance
with current environmental, health, and safety regulations will
approximate $1.4 million, $.8 million of which is expected to be
capitalized. These capital expenditures will generally be
depreciated on a straight-line basis over a period of from 5 to
10 years.
3
Item 2. PROPERTIES
The Company owns its properties, except as noted below. The
Company considers that its properties are well-maintained, in
good operating condition, and suitable for its current and
anticipated business. Manufacturing capacity will be added to
the facility located in Manchester, Connecticut, during 1996.
Production capacity is being added to the Company's subsidiary in
Gent, Belgium. Operating capacity can be increased by additional
worker hours at these and at several of the Company's other
locations. Also, adequate land is available for foreseeable
future requirements at each of the Company's owned plants.
Floor
Space
(Square Feet) Type of Facility
Polymer Products
Manchester, Connecticut 166,000 Manufacturing
South Windham, Connecticut 88,000 Manufacturing
East Woodstock, Connecticut 81,000 Manufacturing
Electronic Products
Chandler, Arizona 103,000 Manufacturing/Warehouse
Chandler, Arizona* 142,000 Manufacturing Facility
Held for Sale
Mesa, Arizona 68,000 Unoccupied Manufacturing
Facility Held for Sale
Rogers, Connecticut 285,000 Manufacturing/Warehouse
Gent, Belgium 85,000 Manufacturing
Tokyo, Japan** 1,500 Sales Office
Wanchai, Hong Kong*** 1,300 Sales Office
Corporate
Rogers, Connecticut 127,000 Corporate Headquarters/
Research and Development
* The Company is leasing this facility to the purchaser of the
flexible interconnections business, which was sold in 1993, and to one
of the Company's joint ventures.
** Current lease expires September 1997.
***Current lease expires March 1997.
4
Item 3. LEGAL PROCEEDINGS
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 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.
The Company is not involved in any other litigation which
management believes will materially and adversely affect its
financial condition or results of operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None.
EXECUTIVE OFFICERS OF THE COMPANY
Served in
this capacity
Name Title since Age
Harry H. Birkenruth President and Chief Executive
Officer 1992 64
Aarno A. Hassell Vice President, Market and Venture
Development 1988 56
Bruce G. Kosa Vice President, Technology 1994 56
John A. Richie Vice President, Human Resources 1994 48
Robert D. Wachob Vice President, Sales and Marketing 1990 48
Robert M. Soffer Treasurer and Assistant Secretary 1987
Clerk 1992 48
All officers hold office until the first meeting of the Board of
Directors following the annual meeting of stockholders or until
successors are elected.
There are no family relationships between or among executive
officers and directors of the Company.
Mr. Birkenruth, Mr. Hassell, Mr. Wachob, and Mr. Soffer have held
executive office with the Company for the past five years as
their principal occupation. Mr. Birkenruth was Senior Vice
President, Polymer Products Group until August 1990 and Executive
Vice President until April 1992. Mr. Hassell was Vice President,
Circuit Materials Group until August 1994. Mr. Wachob was
Director of Marketing until October 1990.
Mr. Kosa was elected to the office of Vice President, Technology
in October 1994 after serving as Technical Director since August
1992 and as Director of Product Development from December 1983.
Mr. Richie was elected to the position of Vice President, Human
Resources after serving as Director of Human Resources from July
1992, Director of Compensation and Benefits from August 1991, and
Director of Employee Relations and Employment since January 1989.
Mr. Soffer was elected as Clerk in February 1992.
5
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Pursuant to General Instruction G to Form 10-K, there is hereby
incorporated by this reference the information set forth under
the caption "Capital Stock Market Prices" on page 45, under the
caption "Restriction on Payment of Dividends" in Note I on page
36, and under the caption "Dividend Policy" in the "Management's
Discussion and Analysis" on page 51 of the 1995 annual report to
shareholders.
Item 6. SELECTED FINANCIAL DATA
Pursuant to General Instruction G to Form 10-K, there is hereby
incorporated by this reference the information set forth under
the caption "Selected Financial Data" on page 23 of the 1995
annual report to shareholders, but specifically excluding from
said incorporation by reference the information contained therein
and set forth under the subcaption "Other Data."
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Pursuant to General Instruction G to Form 10-K, there is hereby
incorporated by this reference the information set forth under
the caption "Management's Discussion and Analysis" on pages 46
through 51 of the 1995 annual report to shareholders.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Pursuant to General Instruction G to Form 10-K, there is hereby
incorporated by this reference the information set forth on pages
24 through 44 and under the caption "Quarterly Results of
Operations (Unaudited)" on page 45 of the 1995 annual report to
shareholders.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
6
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G to Form 10-K, there is hereby
incorporated by this reference the information with respect to
the Directors of the Registrant set forth under the caption
"Nominees for Director" on page 4 of the Registrant's definitive
proxy statement dated March 11, 1996, for its 1996 annual meeting
of stockholders filed pursuant to Section 14(a) of the Act.
Information with respect to Executive Officers of the Registrant
is presented in Part I.
Item 11. EXECUTIVE COMPENSATION
Pursuant to General Instruction G to Form 10-K, there is hereby
incorporated by this reference the information set forth under
the captions "Executive Compensation" on pages 8 through 14 of
the Registrant's definitive proxy statement, dated March 11,
1996, for its 1996 annual meeting of stockholders filed pursuant
to Section 14(a) of the Act.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Pursuant to General Instruction G to Form 10-K, there is hereby
incorporated by this reference the information with respect to
Security Ownership of Certain Beneficial Owners and Management
set forth under the captions "Stock Ownership of Management" on
page 5 and "Beneficial Ownership of More than Five Percent of the
Corporation's Stock" on page 6 of the Registrant's definitive
proxy statement, dated March 11, 1996, for its 1996 annual
meeting of stockholders filed pursuant to Section 14(a) of the
Act.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to General Instruction G to Form 10-K, there is hereby
incorporated by this reference the information with respect to
certain relationships and related transactions included under the
caption "Other Arrangements and Payments" on page 15 of the
Registrant's definitive proxy statement, dated March 11, 1996,
for its 1996 annual meeting of stockholders filed pursuant to
Section 14(a) of the Act.
7
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a)(1) - The following consolidated financial statements of
Rogers Corporation and Subsidiaries, included in the
Annual Report of the Registrant to its shareholders for
the fiscal year ended December 31, 1995, are incorporated
by reference in Item 8:
Consolidated Balance Sheets--December 31, 1995 and
January 1, 1995
Consolidated Statements of Income and Retained
Earnings-- Fiscal Years Ended December 31, 1995,
January 1, 1995, and January 2, 1994
Consolidated Statements of Cash Flows--Fiscal Years
Ended December 31, 1995, January 1, 1995, and
January 2, 1994
Notes to Consolidated Financial Statements--December
31, 1995
(2) - The following consolidated financial statement
schedule of Rogers Corporation and consolidated
subsidiaries is included in Item 14(d):
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and Exchange
Commission are not required under the related instructions or are
inapplicable, and therefore have been omitted.
The financial statements and schedules and Accountants'
Compilation Report listed below are filed as Exhibit 29a to this
report. Information pertaining to 1995 and 1994 is unaudited;
however, 1993 data is audited.
Rogers INOAC Corporation (a 50/50 joint venture)
Accountants' Compilation Report
Balance Sheets--October 31, 1995 and 1994
Statements of Income and Retained Earnings--Fiscal years
ended October 31, 1995, 1994, and 1993
Statements of Cash Flows--Fiscal years ended October 31,
1995, 1994, and 1993
Notes to Financial Statements--October 31, 1995
Schedule II--Valuation and Qualifying Accounts
8
(3)Exhibits (numbered in accordance with Item 601 of Regulation S-K):
3a Restated Articles of Organization, filed with the
Secretary of State of the Commonwealth of Massachusetts on
April 6, 1966, were filed as Exhibit 3a to the
Registrant's Annual Report on Form 10-K (File No. 1-4347)
for the fiscal year ended January 1, 1989 and are hereby
incorporated by reference.
3b Articles of Amendment, filed with the Secretary of State
of the Commonwealth of Massachusetts on August 10, 1966,
were filed as Exhibit 3b to the Registrant's Annual Report
on Form 10-K (File No. 1-4347) for the fiscal year ended
January 1, 1989 and are hereby incorporated by reference.
3c Articles of Merger of Parent and Subsidiary
Corporations, filed with the Secretary of State of the
Commonwealth of Massachusetts on December 29, 1975, were
filed as Exhibit 3c to the Registrant's Annual Report on
Form 10-K (File No. 1-4347) for the fiscal year ended
January 1, 1989 and are hereby incorporated by reference.
3d Articles of Amendment, filed with the Secretary of State
of the Commonwealth of Massachusetts on March 29, 1979,
were filed as Exhibit 3d to the Registrant's Annual Report
on Form 10-K (File No. 1-4347) for the fiscal year ended
January 1, 1989 and are hereby incorporated by reference.
3e Articles of Amendment, filed with the Secretary of State
of the Commonwealth of Massachusetts on March 29, 1979,
were filed as Exhibit 3e to the Registrant's Annual Report
on Form 10-K (File No. 1-4347) for the fiscal year ended
January 1, 1989 and are hereby incorporated by reference.
3f Articles of Amendment, filed with the Secretary of State
of the Commonwealth of Massachusetts on April 2, 1982,
were filed as Exhibit 3f to the Registrant's Annual Report
on Form 10-K (File No. 1-4347) for the fiscal year ended
January 1, 1989 and are hereby incorporated by reference.
3g Articles of Merger of Parent and Subsidiary
Corporations, filed with the Secretary of State of the
Commonwealth of Massachusetts on December 31, 1984, were
filed as Exhibit 3g to the Registrant's Annual Report on
Form 10-K (File No. 1-4347) for the fiscal year ended
January 1, 1989 and are hereby incorporated by reference.
3h Articles of Amendment, filed with the Secretary of State
of the Commonwealth of Massachusetts on April 6, 1988,
were filed as Exhibit 3h to the Registrant's Annual Report
on Form 10-K (File No. 1-4347) for the fiscal year ended
January 1, 1989 and are hereby incorporated by reference.
3i By-Laws of the Company as amended on March 28, 1991,
September 10, 1991, and June 22, 1995 are filed herewith.
3j Articles of Amendment, as filed with the Secretary of
State of the Commonwealth of Massachusetts on May 24,
1994, were filed as Exhibit 3j to the Registrant's Annual
Report on Form 10-K (File No. 1-4347) for the fiscal year
ended January 1, 1995 and are hereby incorporated by
reference.
4a Certain Long-Term Debt Instruments, each representing
indebtedness in an amount equal to less than 10 percent of
the Registrant's total consolidated assets, have not been
filed as exhibits to this Annual Report on Form 10-K. The
Registrant hereby undertakes to file these instruments
with the Commission upon request.
4b Shareholders' Rights Plan adopted on March 20, 1987, was
filed as Exhibit 4b to the Registrant's Report on Form 8-K
(File No. 1-4347) dated March 20, 1987 and is hereby
incorporated by reference.
9
10a Rogers Corporation Incentive Stock Option Plan (1979, as
amended July 9, 1987) was filed as Exhibit 10c to the
Registrant's Annual Report on Form 10-K (File No. 1-4347)
for the fiscal year ended January 3, 1988 and is hereby
incorporated by reference.
10b Description of the Company's Life Insurance Program, was
filed as Exhibit K to the Registrant's Annual Report on
Form 10-K (File No. 1-4347) for the fiscal year ended
December 28, 1980 and is hereby incorporated by reference.
10c Rogers Corporation Annual Incentive Compensation Plan
(1988, as amended February 24, 1994), was filed as Exhibit
10c to the Registrant's Annual Report on Form 10-K (File
No. 1-4347) for the fiscal year ended January 2, 1994 and
is hereby incorporated by reference.
10d Rogers Corporation 1988 Stock Option Plan (As amended
December 17, 1988 and September 14, 1989) was filed as
Exhibit 10d to the Registrant's Annual Report on Form 10-K
(File No. 1-4347) for the fiscal year ended January 1,
1995 and is hereby incorporated by reference.
10e Rogers Corporation 1990 Stock Option Plan (As amended on
November 6, 1991 and February 2, 1993) was filed as
Exhibit 10e to the Registrant's Annual Report on Form 10-K
(File No. 1-4347) for the fiscal year ended January 1,
1995 and is hereby incorporated by reference.
10f Rogers Corporation Deferred Compensation Plan (1983) was
filed as Exhibit O to the Registrant's Annual Report on
Form 10-K (File No. 1-4347) for the fiscal year ended
January 1, 1984 and is hereby incorporated by reference.
10g Rogers Corporation Deferred Compensation Plan (1986) was
filed as Exhibit 10e to the Registrant's Annual Report on
Form 10-K (File No. 1-4347) for the fiscal year ended
January 3, 1988 and is hereby incorporated by reference.
10h Rogers Corporation 1994 Stock Compensation Plan was filed
as Exhibit A to the Registrant's Proxy Statement(File No.
1-4347) dated March 23, 1994, and is hereby incorporated
by reference.
10i Rogers Corporation Voluntary Deferred Compensation Plan
for Non-Employee Directors (1994, as amended December 26,
1995). The 1994 agreement was filed as Exhibit 10i to the
Registrant's Annual Report on Form 10-K (File No. 1-4347)
for the fiscal year ended January 1, 1995 and is hereby
incorporated by reference. The December 26, 1995
amendment is filed herewith.
10j Rogers Corporation Voluntary Deferred Compensation Plan
for Key Employees (1994, as amended on October 18, 1994,
December 22, 1994, December 21, 1995, and December 22, 1995).
The 1994 agreement and 1994 amendments were filed as Exhibit
10j to the Registrant's Annual Report on Form 10-K (File No.
1-4347) for the fiscal year ended January 1, 1995 and are
hereby incorporated by reference. The 1995 amendments are
filed herewith.
11 Statement Re: Computation of Per Share Earnings is filed
herewith.
13 Rogers Corporation 1995 Annual Report to Shareholders is
filed herewith.
21 Subsidiaries of the Registrant is filed herewith.
23 Consent of Independent Auditors is filed herewith.
27 Financial Data Schedule is filed herewith.
29a Rogers INOAC Corporation Unaudited Financial Statements
are filed herewith.
10
(b) No reports on Form 8-K were filed related to the three months
ended December 31, 1995.
(c) Exhibits - The response to this portion of Item 14 is
submitted as a separate section of this report.
(d) Financial Statement Schedule
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
ROGERS CORPORATION AND CONSOLIDATED SUBSIDIARIES
(Dollars in Thousands)
Additions Additions Balance
Balance at Charged to Charged at End
Beginning Costs and to Other Other of
Description of Period Expenses Accounts Deductions Period
Year ended Dec. 31, 1995:
Deducted from asset
accounts:
Net realizable value
allowance for assets
held for sale $ 1,587 $ -- $ 445 $ -- $ 2,032
Year ended Jan. 1, 1995:
Deducted from asset
accounts:
Net realizable value
allowance for assets
held for sale $ 1,533 $ -- $ 54 $ -- $ 1,587
Year ended Jan. 2, 1994:
Deducted from asset
accounts:
Net realizable value
allowance for assets
held for sale $17,805 $ -- $ -- $16,272* $ 1,533
* Allowance of $17.1 million applicable to assets sold during
1993, net of increase in allowance of $0.8 million for
remaining assets.
11
UNDERTAKING
The undersigned Registrant hereby undertakes as follows, which
undertaking shall be incorporated by reference into Registrant's
Registration Statements on Form S-8 Nos. 2-84992, 33-14347, 33-15119,
33-21121, 33-38219, 33-44087, and 33-53353, and Form S-3 No. 33-53369:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
Corporate Controller
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the date
indicated.
By s/HARRY H. BIRKENRUTH President (Principal Executive Officer
Harry H. Birkenruth and Acting Principal Financial Officer)
and Director
By s/LEONID V. AZAROFF Director
Leonid V. Azaroff
By s/LEONARD M. BAKER Director
Leonard M. Baker
By s/WALLACE BARNES Director
Wallace Barnes
By s/MILDRED S. DRESSELHAUS Director
Mildred S. Dresselhaus
By s/DONALD J. HARPER Director
Donald J. Harper
By s/GREGORY B. HOWEY Director
Gregory B. Howey
By s/LEONARD R. JASKOL Director
Leonard R. Jaskol
By s/WILLIAM E. MITCHELL Director
William E. Mitchell
March 29, 1996
13
Item 14(c) - Certain Exhibits
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Year-Ended
December 31, January 1, January 2,
1995 1995 1994
1. Net income $13,081,000 $10,134,000 $ 6,670,000
2. Weighted average number of
shares outstanding during period 7,103,428 6,767,242 6,245,316
3. Net effect of dilutive stock options
- based on the treasury stock
method using average market price 615,666 362,074 134,442
4. Total weighted average number of
shares and capital equivalent
shares assumed outstanding 7,719,094 7,129,316 6,379,758
5. Additional net shares, issuable
when market value at year-end
exceeds average market value
during year 15,360 193,678 121,156
6. Shares assumed outstanding
for computation of fully
diluted earnings per share 7,734,454 7,322,994 6,500,914
Net income per capital
share and capital share
equivalent (1 / 4) $ 1.69 $ 1.42 $ 1.05
Net income per capital
share assuming full
dilution (1 / 6) $ 1.69 $ 1.38 $ 1.03
F-1
EXHIBIT 21 - SUBSIDIARIES OF THE REGISTRANT
Percentage
of Voting Jurisdiction
Securities of Incorporation
Company Owned or Organization
Rogers L-K Corp. 100% Delaware
Rogers Japan Inc. 100% Delaware
Rogers Southeast Asia, Inc. 100% Delaware
TL Properties, Inc. 100% Arizona
Rogers Foreign Sales Corporation 100% U.S. Virgin Islands
Rogers Export Sales Corporation 100% Barbados
Rogers-Mektron N.V. 100% Belgium
Rogers-Mektron GmbH 100% Germany
Rogers-Mektron LTD. 100% England
Rogers-Mektron S.A. 100% France
*Rogers INOAC Corporation 50% Japan
*Durel Corporation 50% Delaware
* These entities are unconsolidated joint ventures and
accordingly are not consolidated in the consolidated financial
statements of Rogers Corporation.
F-2
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual
Report (Form 10-K) of Rogers Corporation of our report dated
February 6, 1996, included in the 1995 Annual Report to
Shareholders of Rogers Corporation.
Our audits also included the financial statement schedule of
Rogers Corporation listed in Item 14(a). This schedule is the
responsibility of the Company's management. Our responsibility
is to express an opinion based on our audits. In our opinion,
the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information
set forth therein.
We also consent to the incorporation by reference in Registration
Statements (Form S-8 Nos. 2-84992, 33-15119, 33-21121, 33-38219,
33-14347, 33-44087, and 33-53353, and Form S-3 No. 33-53369) pertaining
to various stock option and employee savings plans, and stock grants,
of Rogers Corporation of our report dated February 6, 1996, with respect
to the consolidated financial statements incorporated herein by reference,
and our report included in the preceding paragraph with respect to the
financial statement schedule included in this Annual Report (Form 10-K)
of Rogers Corporation.
ERNST & YOUNG LLP
Providence, Rhode Island
March 22, 1996
F-3
BY-LAWS
of
ROGERS CORPORATION
ARTICLE I
STOCKHOLDERS
1. Annual Meeting. The annual meeting of stockholders shall be
held within six months of the end of the corporation's fiscal
year on a date and at a time to be determined by a majority of
the Directors then in office. The purposes for which the annual
meeting is to be held, in addition to those prescribed by law, by
the Articles of Organization or by these By-Laws, may be
specified by the Directors or the President. If no annual
meeting is held in accordance with the foregoing provisions, a
special meeting may be held in lieu thereof, and any action taken
at such meeting shall have the same effect as if taken at the
annual meeting.
2. Special Meetings. Special meetings of stockholders may be
called by the President or by the Directors. Upon written
application of one or more stockholders who hold at least 40% in
interest of the capital stock entitled to vote at the meeting,
special meetings shall be called by the Clerk, or in the case of
the death, absence, incapacity or refusal of the Clerk, by any
other officer.
3. Place of Meetings. All meetings of stockholders shall be
held at such place in the United States as is stated in the
notice of the meeting, and such place shall be in Connecticut
unless a different place is fixed by the Directors.
4. Notice of Meetings. A written notice of every meeting of
stockholders, stating the place, date and hour thereof, and the
purposes for which the meeting is to be held, shall be given by
the Clerk or by the person calling the meeting at least ten days
before the meeting to each stockholder entitled to vote thereat
and to each stockholder, who by law, by the Articles of
Organization or by these By-Laws is entitled to such notice, by
leaving such notice with him or at his residence or usual place
of business, or by mailing it postage prepaid and addressed to
such stockholder at his address as it appears upon the books of
the corporation. No notice need be given to any stockholder if a
written waiver of notice, executed before or after the meeting by
the stockholder or his attorney thereunto authorized, is filed
with the records of the meeting.
F-4
5. Quorum. The holders of a majority in interest of all stock
issued, outstanding and entitled to vote at a meeting shall
constitute a quorum, but a lesser number may adjourn any meeting
from time to time without further notice.
6. Voting and Proxies. Each stockholder shall have one vote
for each share of stock entitled to vote held by him of record
according to the records of the corporation. Stockholders may
vote either in person or by written proxy dated not more than six
months before the meeting named therein. Proxies shall be filed
with the Clerk of the meeting, or of any adjournment thereof,
before being voted. Except as otherwise limited therein, proxies
shall entitle the persons named therein to vote at any
adjournment of such meeting but shall not be valid after final
adjournment of such meeting. A proxy with respect to stock held
in the name of two or more persons shall be valid if executed by
one of them unless at or prior to exercise of the proxy the
corporation receives a specific written notice to the contrary
from any one of them. A proxy purporting to be executed by or on
behalf of a stockholder shall be deemed valid unless challenged
at or prior to its exercise.
7. Action at Meeting. When a quorum is present, the holders of
a majority of the stock present or represented and voting on a
matter, except where a larger vote is required by law, the
Articles of Organization or these By-Laws, shall decide any
matter to be voted on by the stockholders. Any election by
stockholders shall be determined by a plurality of the votes cast
by the stockholders entitled to vote at the election. No ballot
shall be required for such election unless requested by a
stockholder present or represented at the meeting and entitled to
vote in the election. The corporation shall not directly or
indirectly vote any share of its stock.
ARTICLE II
DIRECTORS
1. Powers. The business of the corporation shall be managed by
a Board of Directors who may exercise all the powers of the
corporation except as otherwise provided by law, by the Articles
of Organization or by these By-Laws. In the event of a vacancy
in the Board of Directors, the remaining Directors, except as
otherwise provided by law, may exercise the powers of the full
Board until the vacancy is filled.
F-5
2. Election. A Board of Directors of such number, not less
than seven, nor more than fifteen, as shall be fixed by the
stockholders, shall be elected by the stockholders at the annual
meeting. No person serving as a Director on September 10, 1991
shall be elected or re-elected as a Director on a date which is
on or after his or her seventy-second birthday; no other person
shall be elected or re-elected as a Director on a date which is
on or after his or her seventieth birthday.
3. Vacancies. Any vacancy in the Board of Directors, other
than a vacancy resulting from the enlargement of the Board by the
Directors, may be filled by the stockholders or, in the absence
of stockholder action, by a majority of the Directors then in
office.
4. Enlargement of the Board. The number of the Board of
Directors may be increased and one or more additional Directors
elected at any special meeting of the stockholders or by the
Directors by vote of two-thirds of the Directors then in office.
5. Tenure. Except as otherwise provided by law, by the
Articles of Organization or by these By-Laws, Directors shall
hold office until the next annual meeting of stockholders and
thereafter until their successors are chosen and qualified. Any
Director may resign by delivering his written resignation to the
President, Clerk or Secretary. Such resignation shall be
effective upon receipt unless it is specified to be effective at
some other time or upon the happening of some other event.
6. Removal. A Director may be removed from office (a) with or
without cause by vote of a majority of the stockholders or (b)
for cause by vote of two-thirds of the Directors then in office.
A removal for cause shall state the cause. A Director may be
removed for cause only after reasonable notice and opportunity to
be heard before the body proposing to remove him.
7. Meetings. Regular meetings of the Directors may be held
without call or notice at such places and at such times as the
Directors may from time to time determine, provided that any
Director who is absent when such determination is made shall be
given notice of the determination. A regular meeting of the
Directors may be held without a call or notice at the same place
as the annual meeting of stockholders, or the special meeting
held in lieu thereof, following such meeting of stockholders.
F-6
Special meetings of the Directors may be held at any time
and place designated by the President, Treasurer or two or more
Directors.
If in the judgment of the person calling the meeting it is
impractical for the Directors to meet in person a special meeting
of the Directors may be held by means of a conference telephone
or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same
time, which meeting shall be deemed to have been held at a place
designated by the Board of Directors at the meeting.
Participation in a telephone conference meeting shall constitute
presence in person at a meeting.
8. Notice of Meetings. Notice of all special meetings of the
Directors shall be given to each Director by the Secretary, or if
there be no Secretary, by the Clerk, or Assistant Clerk, or in
case of the death, absence, incapacity or refusal of such
persons, by the officer or one of the Directors calling the
meeting. Notice shall be given to each Director in person or by
telephone or by telegram sent to his business or home address at
least forty-eight hours in advance of the meeting, or by written
notice mailed to his business or home address at least one week
in advance of the meeting. Notice need not be given to any
Director if a written waiver of notice, executed by him before or
after the meeting, is filed with the records of the meeting, or
to any Director who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to him. A
notice or waiver of notice of a Director's meeting need not
specify the purposes of the meeting.
9. Quorum. At any meeting of the Directors, a majority of the
Directors then in office shall constitute a quorum. Less than a
quorum may adjourn any meeting from time to time without further
notice.
10. Action at Meeting. At any meeting of the Directors at which
a quorum is present, the vote of a majority of those present,
unless a different vote is specified by law, by the Articles of
Organization, or by these By-Laws, shall be sufficient to decide
any matter.
11. Action by Consent. Any action by the Directors may be taken
without a meeting if a written consent thereto is signed by all
the Directors and filed with the records of the Directors'
meetings. Such consent shall be treated as a vote of the
Directors for all purposes.
F-7
12. Committees. The Directors may elect from their number an
executive or other committees and may delegate thereto some or
all of their powers except those which by law, the Articles of
Organization or these By-Laws they are prohibited from
delegating. Except as the Directors may otherwise determine, any
such committee may make rules for the conduct of its business,
but unless otherwise provided by the Directors or in such rules,
its business shall be conducted as nearly as may be in the same
manner as is provided by these By-Laws for the Directors. If
power to bind the corporation is delegated to such a committee,
such election, removal, delegation and/or determination shall be
by a majority of the Directors then in office.
13. Issuance of Stock. The Directors are authorized, at any
time, to provide for the issuance of unissued capital stock from
time to time authorized under the Articles of Organization of the
corporation.
ARTICLE III
OFFICERS
1. Enumeration. The officers of the corporation shall consist
of a President, a Treasurer, a Clerk, and such other officers,
including a Chairman of the Board of Directors, one or more Vice
Presidents, Assistant Treasurers, Assistant Clerks, Secretary and
Assistant Secretaries as the Directors may determine.
2. Election. The President, Treasurer and Clerk shall be
elected annually by the Directors at their first meeting
following the annual meeting of stockholders, provided that the
Directors may fill vacancies in such offices at any time. Other
officers may be chosen by the Directors at such meeting or at any
other meeting.
3. Qualification. The President and, if any is elected, the
Chairman of the Board shall be Directors. Other officers may be
Directors but need not be. No officer need be a stockholder.
Any two or more offices may be held by the same person, provided
that the President and Clerk shall not be the same person. The
Clerk shall be a resident of Massachusetts unless the corporation
has a resident agent appointed for the purpose of service of
process. Any officer may be required by the Directors to give
bond for the faithful performance of his duties to the
corporation in such amount and with such sureties as the
Directors may determine.
F-8
4. Tenure. Except as otherwise provided by law, by the
Articles of Organization or by these By-Laws, the President,
Treasurer and Clerk shall each hold office until the first
meeting of the Directors following the annual meeting of
stockholders and thereafter until his successor is chosen and
qualified; and all other officers shall hold office until the
first meeting of the Directors following the annual meeting of
stockholders, unless a shorter term is specified in the vote
choosing or appointing them. Any officer may resign by
delivering his written resignation to the President, Clerk or
Secretary, and such resignation shall be effective upon receipt
unless it is specified to be effective at some other time or upon
the happening of some other event.
5. Removal. The Directors may remove any officer with or
without cause by a vote of a majority of the entire number of
Directors then in office, provided that a removal for cause shall
state the cause and an officer may be removed for cause only
after reasonable notice and opportunity to be heard by the Board
of Directors prior to action thereon.
6. President, Vice Presidents, and Chairman of the Board. The
President shall be the chief executive officer of the corporation
and shall, subject to the direction of the Directors, have
general supervision and control of its business. Unless
otherwise provided by the Directors he shall preside, when
present, at all meetings of stockholders and (unless a Chairman
of the Board has been elected and is present) of the Directors.
If a Chairman of the Board of Directors is elected he shall
preside at all meetings of the Board of Directors at which
he is present.
Any Vice President shall have such powers as the Directors
may from time to time designate.
7. Treasurer and Assistant Treasurers. The Treasurer shall,
subject to the direction of the President, have general charge of
the financial affairs of the corporation and shall cause to be
kept accurate books of account. He shall have custody of all
funds, securities, and valuable documents of the corporation,
except as the Directors may otherwise provide.
Any Assistant Treasurer shall have such powers as the
Directors may from time to time designate.
8. Clerk and Assistant Clerks. The Clerk shall keep a record
of the meetings of stockholders.
F-9
In case a Secretary is not elected, the Clerk shall keep a
record of the meetings of the Directors.
Any Assistant Clerk shall have such powers as the Directors
may from time to time designate. In the absence of the Clerk
from any meeting of stockholders, an Assistant Clerk, if one be
elected, otherwise a Temporary Clerk designated by the person
presiding at the meeting, shall perform the duties of the Clerk.
9. Secretary and Assistant Secretaries. If a Secretary is
elected, he shall keep a record of the meetings of the Directors
and in his absence, an Assistant Secretary, if one be elected,
otherwise a Temporary Secretary designated by the person
presiding at the meeting, shall keep a record of the meetings of
the Directors.
10. Other Powers and Duties. Each officer shall, subject to
these By-Laws, have in addition to the duties and powers
specifically set forth in these By-Laws, such duties and powers
as are customarily incident to his office and such duties and
powers as the Directors may from time to time designate.
ARTICLE IV
CAPITAL STOCK
1. Certificates of Stock. Each stockholder shall be entitled
to a certificate of the capital stock of the corporation in such
form as may be prescribed from time to time by the Directors.
The certificate shall be signed by the President or a Vice
President, and by the Treasurer or an Assistant Treasurer, but
when a certificate is countersigned by a transfer agent or a
registrar, other than a Director, officer or employee of the
corporation, such signatures may be facsimiles. In case any
officer who has signed or whose facsimile signature has been
placed on such certificate shall have ceased to be such officer
before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at
the time of its issue.
2. Transfers. Subject to the restrictions, if any, stated or
noted on the stock certificates, shares of stock may be
transferred on the books of the corporation by the surrender to
the corporation or its transfer agent of the certificate
F-10
therefor properly endorsed or accompanied by a written assignment
and power of attorney properly executed, with necessary transfer
stamps affixed, and with such proof of the authenticity of
signature as the corporation or its transfer agent may reasonably
require. Except as may be otherwise required by law, or by these
By-Laws, the corporation shall be entitled to treat the record
holder of stock as shown on its books as the owner of such stock
for all purposes, including the payment of dividends and the
right to vote with respect thereto, regardless of any transfer,
pledge or other disposition of such stock, until the shares have
been transferred on the books of the corporation in accordance
with the requirements of these By-Laws.
It shall be the duty of each stockholder to notify the
corporation of his post office address.
3. Record Date. The Directors may fix in advance a time which
shall be not more than sixty days preceding the date of any
meeting of stockholders, or the date for the payment of any
dividend or the making of any distribution to stockholders, or
the last day on which the consent or dissent of stockholders may
be effectively expressed for any purpose, and which in the case
of such a dividend or distribution shall be at least ten days
after the meeting at which such dividend or distribution is
declared, as the record date for determining the stockholders
having the right to notice of and to vote at such meeting, and
any adjournment thereof, or the right to receive such dividend or
distribution or the right to give such consent or dissent. In
such case only stockholders of record on such record date shall
have such right, notwithstanding any transfer of stock on the
books of the corporation after the record date. Without fixing
such record date the Directors may for any of such purposes
except the payment of a dividend or the making of a distribution
to stockholders close the transfer books for all or any part of
such period.
4. Replacement of Certificates. In case of the alleged loss or
destruction or the mutilation of a certificate of stock, a
duplicate certificate may be issued in place thereof, upon such
terms as the Directors may prescribe.
F-11
ARTICLE V
MISCELLANEOUS PROVISIONS
1. Fiscal Year. The fiscal year of the corporation shall begin
on the Monday nearest January 1 and end on the Sunday nearest
December 31.
2. Seal. The seal of the corporation shall, subject to
alteration by the Directors, bear its name, the word
"Massachusetts", and the year of its incorporation.
3. Execution of Instruments. All deeds, leases, transfers,
contracts, bonds, notes and other obligations authorized to be
executed by an officer of the corporation in its behalf shall be
signed by the President or the Treasurer except as the Directors
may generally or in particular cases otherwise determine.
4. Voting Upon Securities of Other Corporations. Unless
otherwise ordered by the Board of Directors the President shall
have full power and authority on behalf of the corporation to
attend any meetings of security holders of any corporation in
which this corporation may hold securities, and to vote or give
any consent on behalf of the corporation as such security holder
at any such meeting or otherwise, and in connection therewith he
shall possess and exercise any and all rights and powers incident
to the ownership of securities which, as the owner thereof, this
corporation might possess and exercise, and he may delegate such
powers of the corporation to a proxy or proxies. The Board of
Directors may confer like powers upon any other person or persons
from time to time, and may revoke any such power so granted at
its pleasure.
5. Corporate Records. The original, or attested copies, of the
Articles of Organization, By-Laws and records of all meetings of
the incorporators and stockholders, and the stock and transfer
records, which shall contain the names of all stockholders and
the record address and the amount of stock held by each, shall be
kept in Massachusetts at the principal office of the corporation,
or at an office of its transfer agent or of the Clerk. Said
copies and records need not all be kept in the same office. They
shall be available at all reasonable times to the inspection of
any stockholder for any proper purpose but not to secure a list
of stockholders for the purpose of selling said list or copies
thereof or of using the same for a purpose other than in the
interest of the applicant, as a stockholder, relative to the
affairs of the corporation.
F-12
6. Articles of Organization. All references in these By-Laws
to the Articles of Organization shall be deemed to refer to the
Articles of Organization of the corporation, as restated and/or
amended and in effect from time to time.
7. Power to Act Notwithstanding Interest in Transaction. In
the absence of fraud or bad faith, no contract or transaction by
the corporation shall be void, voidable or in any way affected by
reason of the fact that the contract or transaction is (a) with
one or more of its officers, Directors, stockholders or
employees, (b) with a person who is in any way interested in the
corporation or (c) with a corporation, organization or other
concern in which an officer, Director, stockholder or employee of
this corporation is an officer, Director, stockholder, employee
or in any way interested. The provisions of this section shall
apply notwithstanding the fact that the presence of a Director or
stockholder, with whom a contract or transaction is made or
entered into or who is an officer, director, stockholder or
employee of a corporation, organization or other concern with
which a contract or transaction is made or entered into or who is
in any way interested in such contract or transaction, was
necessary to constitute a quorum at the meeting of Directors (or
any authorized committee thereof) or stockholders at which such
contract or transaction was authorized and/or that the vote of
such Director or stockholder was necessary for the adoption of
such contract or transaction, provided that if said interest was
material, it shall have been known or disclosed to the Directors
or stockholders participating in the vote on said contract or
transaction. A general notice to any person voting on said
contract or transaction that an officer, Director, stockholder or
employee has a material interest in any corporation, organization
or other concern shall be sufficient disclosure as to such
officer, Director, stockholder or employee with respect to all
contracts and transactions with such corporations, organization
or other concern.
8. Indemnification of Directors, Officers and Employees. This
corporation shall indemnify each Director, officer and employee
and each former Director, officer and employee against, and each
such Director, officer and employee shall be entitled without
further act on his part to indemnity from this corporation for,
any cost, expenses (including attorneys' fees), judgments, fines,
penalties, and/or liabilities (including amounts paid in
settlements, other than amounts paid to this corporation itself,
made with a view to curtailment of the costs of litigation)
reasonably incurred by or imposed upon him in connection with or
arising out of any action; suit or other proceeding (whether
civil or criminal,
F-13
and including any proceeding before any administrative or legislative
body or agency), in which he may be involved or with which he may be
threatened
(i) by reason of his being or having been such
Director, officer or employee of this corporation
or of any other corporation or organization which
he served as Director, officer or employee at the
request of this corporation, or
(ii) by reason of his serving or having served in any
capacity with respect to any employee benefit plan
within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, as amended
from time to time, or successor provision of law,
which plan has been established or maintained by
this corporation or a subsidiary thereof or for
which this corporation or such subsidiary has been
declared responsible by a court of law or agency
of government,
whether or not he continues to be such Director, officer or
employee at the time such action, suit or proceeding is
brought or threatened; provided, however, that no such
Director, officer or employee shall be so indemnified with
respect to any matter (a) as to which he shall have been
adjudicated in any proceeding not to have acted in good
faith in the reasonable belief that his action was in the
best interests of the corporation, or (b) as to which he
shall have been adjudicated in any proceeding to have been
derelict in the performance of his duty as such Director,
officer or employee or (c) arising out of his wilful
malfeasance, bad faith, gross negligence or reckless
disregard of such duty; and provided further that, in
respect of any matter in which any settlement is effected,
such indemnification shall be limited to matters covered by
the settlement as to which this corporation is advised by
independent legal counsel that such Director, officer or
employee, in the opinion of such counsel, acted in good
faith in the reasonable belief that his action was in the
best interests of this corporation; and provided further
that in any criminal matter such indemnification shall be
limited to matters as to which this corporation is advised
by independent legal counsel that such Director, officer or
employee, in the opinion of such counsel, acted in the
reasonable belief that his conduct was lawful. All
questions arising under this section shall be determined by
or in the manner designated by a vote of a majority of those
Directors who are not parties to such proceeding, which may
include the designation of legal counsel to make such
determination, and shall include such designation as called
for above in the case
F-14
of any matter in which any settlement is effected and in any
criminal matter.
Advances may be made by this corporation against costs,
expenses and fees at the discretion of, and upon such terms
and conditions as may be determined by, the Board of
Directors.
The foregoing right of indemnification shall inure to the
benefit of the executors or administrators of each such
Director, officer and employee and shall not be exclusive of
other rights to which any such Director, officer or employee
may otherwise be entitled, including rights under insurance
purchased or maintained by the corporation, provided that
the corporation's obligation hereunder shall be offset to
the extent of any actual payment to or on behalf of such
Director, officer or employee pursuant to another source of
indemnification or to any insurance coverage.
9. Charitable Contributions. The Corporation by vote of the
Board of Directors may make contributions, in such amounts
as the Board of Directors may deem reasonable, to
corporations, trusts, funds, or foundations, organized and
operated exclusively for charitable, scientific or
educational purposes, no part of the net earnings of which
inures to the benefit of any private stockholder or
individual; provided that in any fiscal year the aggregate
of all such contributions shall not exceed one-half of one
per cent of the capital and surplus of the corporation
determined as of the end of the preceding fiscal year,
unless contributions in excess of such aggregate shall be
authorized by vote of the holders of a majority of the
shares of stock of the corporation outstanding and entitled
to vote taken at a regular or special meeting duly called
and held in the fiscal year during which contributions in
excess of such limit shall be made.
10. Amendments. These By-Laws may at any time be amended by
vote of the stockholders, provided that notice of the
substance of the proposed amendment is stated in the notice
of the meeting. In addition they may be amended by vote of
a majority of the Directors then in office, except with
respect to removal of Directors, the election of committees
by Directors and delegation of powers thereto, or amendment
of these By-Laws, and except with respect to any provision
which by law, the Articles of Organization as heretofore or
from time to time amended, or other provisions of these By-
Laws, requires action by the stockholders. Not later than
the time of giving notice of the meeting of stockholders
next following the making, amending or repealing by the
Directors of any By-Law, notice
F-15
thereof stating the substance of such change shall be given
to all stockholders entitled to vote on amending the By-Laws.
Any By-Law adopted by the Directors may be amended or repealed
by the stockholders.
June 22, 1995
F-16
EXHIBIT 10i
AMENDMENT NO. 1 TO ROGERS CORPORATION
VOLUNTARY DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
Pursuant to the powers reserved to it in Section 10 of the Rogers
Corporation Voluntary Deferred Compensation Plan for Non-Employee
Directors (the "Plan"), Rogers Corporation (the "Company") hereby
amends the Plan with the consent of the non-employee Directors of
the Company's Board of Directors, effective as of October 19, 1995,
as follows:
1. Section 5(a) of the Plan is hereby amended to read as follows:
"(a) Effective for Deferral Elections made for years
beginning before January 1, 1996, amounts standing to
the credit of each sub-account within a Director's
Deferred Compensation Account shall be paid, or commence
to be paid, on the January 15 first following the earlier
of (i) the passage of the number of calendar years (not to
exceed twenty and including the year of deferral) specified
by the Director in his or her Deferral Election(s) with
respect to the amount credited to such sub-account or
(ii) the calendar year in which the Director ceases to be
a member of the Board for any reason whatsoever.
Effective for Deferral Elections made for years beginning
after December 31, 1995, amounts standing to the credit of
each sub-account within a Director's Deferred Compensation
Account shall be paid, or commence to be paid, in accordance
with the Director's Deferral Election(s). Each Deferral
Election shall specify whether payments will commence on the
January 15 first following (i) the passage of the number of
calendar years (not to exceed twenty and including the year
of deferral) specified by the Director in his or her Deferral
Election(s) with respect to the amount credited to such
sub-account, (ii) the calendar year in which the Director
ceases to be a member of the Board for any reason whatsoever
or (iii) the later of (i) or (ii).
The amount of each payment hereunder shall be determined by
the amount credited to such sub-account as of the preceding
December 31."
F-17
2. Except as herein amended, the provisions of the Plan shall remain
in full force and effect.
4. IN WITNESS WHEREOF, the Company has caused this First Amendment
to the Plan to be executed on this 26th day of December, 1995.
ROGERS CORPORATION
By: ROBERT M. SOFFER
Robert M. Soffer, Treasurer
F-18
EXHIBIT 10j
AMENDMENT NO. 2 TO ROGERS CORPORATION
VOLUNTARY DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES
Pursuant to the powers reserved to it in Section 10 of the Rogers
Corporation Voluntary Deferred Compensation Plan for Key
Employees (the "Plan"), the Pension Committee of the Board of
Directors of Rogers Corporation (the "Committee") hereby amends
the Plan, effective as of January 1, 1995, as follows:
1. The Plan is hereby amended by adding a new Section 2A
directly following Section 2 of the Plan to read as follows:
"2A. Matching Credits. (The Company Match)
(a) Effective for Deferral Elections made by a Participant for
periods commencing after December 31, 1994, the Company or
Subsidiary, whichever is the employer for the Participant, shall
as of the last day of each calendar month credit to a separate
sub-account maintained under each Participant's Deferred
Compensation Account, an additional amount equal to a percentage
of all or a portion of the amount deferred by such Participant
pursuant to Section 2 during such calendar month. The percentage
(if any) to be credited to a Participant's Deferred Compensation
Account and the portion of a deferral to which it will apply
under this Section 2A(a) for any month shall be the same as the
percentage credited and portion applicable for the matching
contribution made under the Rogers Employee Savings and
Investment Plan (the "RESIP") for such month.
(b) Notwithstanding the foregoing, any amount in a Participant's
Deferred Compensation Account which is credited to a sub-account
maintained pursuant to Section 2A(a) in any calendar year shall
be payable to the Participant at the same time and in the same
manner as the amounts to which they relate which were deferred by
the Participant during such calendar year and credited to such
Participant's Deferred Compensation Account pursuant to Section
2A(a); provided, however, that such distribution shall be made
only to the extent the Participant has a vested interest in such
amount as determined in accordance with the following schedule:
F-19
Years of Continuous Service
Vested Interest
At Least But Less Than Percentage
-------- ------------- ----------
Less than 2 years 0%
2 years 3 years 25%
3 years 4 years 50%
4 years 5 years 75%
5 years or more 100%
For purposes of this Plan, a Participant has the same number
of Years of Continuous Service as he or she has been credited
under the RESIP. Any portion of the amount credited to such
Participant's Deferred Compensation Account pursuant to Section
2A(a) and all earnings and losses credited thereon in which
the Participant is not vested (the "Non-Vested Amount") at the
time of the Participant's termination of employment with the
Company shall be forfeited. Any Non-Vested Amount which exists
at the time payment hereunder would otherwise be made or commence
shall not be forfeited while the Participant is still employed by
the Company and the Participant shall continue to vest in such
amounts until his or her termination of employment. Any portion
of the Non-Vested Amount which becomes payable pursuant to the
preceding sentence shall be paid to the Participant as soon as
practicable upon becoming vested.
Not withstanding the foregoing, a Participant shall have a 100%
vested interest in his or her Deferred Compensation Account
coincident with the occurrence of any event which results in such
Participant becoming 100% vested in all amounts held under the
RESIP on his or her behalf.
(c) The Plan shall be construed in a manner which is
consistent with the purposes described herein, including
without limitation, the so-called "anti-conditioning"
rules of Section 401(k)(4) of the Internal Revenue Code
of 1986, as amended."
2. Section 4(b) of the Plan is hereby amended by inserting the
words, "or Section 2A(a)" directly following the words "in
Section 4(a)" where such words appear therein.
3. Except as herein amended, the provisions of the Plan shall
remain in full force and effect.
F-20
4. IN WITNESS WHEREOF, the Committee has caused this Second
Amendment to the Plan to be executed on this 21st day of
December, 1995.
PENSION COMMITTEE
By: ROBERT M. SOFFER
Robert M. Soffer
Secretary of the Committee and
Treasurer of Rogers Corporation
F-21
AMENDMENT NO. 3 TO ROGERS CORPORATION
VOLUNTARY DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES
Pursuant to the powers reserved to it in Section 10 of the Rogers
Corporation Voluntary Deferred Compensation Plan for Key Employees
(the "Plan"), the Pension Committee of the Board of Directors of Rogers
Corporation (the "Committee") hereby amends the Plan, effective as of
October 19, 1995, as follows:
1. The third sentence of Section 3 of the Plan is hereby amended by
inserting the words "(or, for a Deferral Election to be made with
respect to a Bonus to be paid in 1996, November 20, 1995)" directly
following the words "(ii) the October 31."
2. Section 5(a) of the Plan is hereby amended to read as follows:
"(a) Effective for Deferral Elections made for years beginning before
January 1, 1996, amounts standing to the credit of each sub-account
within a Participant's Deferred Compensation Account shall be paid,
or commence to be paid, on the April 15 (or, if such day is not a
business day, the first business day thereafter) first following the
earlier of: (i) the passage of the number of calendar years (not to
exceed twenty and including the year of deferral, which counts as year
one) specified by the Participant in his or her Deferral Election(s)
with respect to the amount credited to such sub-account or (ii) the
calendar year in which the Participant ceases to be an employee of the
Company and its Subsidiaries for any reason whatsoever.
Effective for Deferral Elections made for years beginning after
December 31, 1995, amounts standing to the credit of each sub-account
within a Participant's Deferred Compensation Account shall be paid, or
commence to be paid, in accordance with the Participant's Deferral
Election(s). Each Deferral Election shall specify whether payments
will commence on the April 15 (or, if such day is not a business day,
the first business day thereafter) first following: (i) the passage
of the number of calendar years (not to exceed twenty and including
the year of deferral, which counts as year one) specified by the
Participant in his or her Deferral Election(s) with respect to the
amount credited to such sub-account, (ii) the calendar year in which
the Participant ceases to be an employee of the Company and its
Subsidiaries for any reason whatsoever or (iii) the later of (i) or
(ii).
F-22
The amount of each such payment shall be determined by the amount
credited to such sub-account as of the preceding March 31 (or, if
such day is not a business day, the first business day thereafter)."
3. Except as herein amended, the provisions of the Plan shall remain
in full force and effect.
4. IN WITNESS WHEREOF, the Committee has caused this Third Amendment
to the Plan to be executed on this 22nd day of December, 1995.
PENSION COMMITTEE
By: ROBERT M. SOFFER
Robert M. Soffer
Secretary of the Committee and
Treasurer of Rogers Corporation
F-23
SELECTED FINANCIAL DATA
(Dollars in Thousands, Except Per Share Amounts)
- ----------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
SALES AND INCOME
- ----------
Net Sales $140,293 $133,866 $123,168 $172,361 $182,352
Cost Reduction Charges
(Note B) -- -- -- (26,602) (2,774)
Income (Loss) Before Income
Taxes and Cumulative Effect
of Accounting Change 15,390 10,712 6,716 (28,005) (3,403)
Cumulative Effect of Change in
Accounting for Postretirement
Benefits -- -- -- (6,241) --
Net Income (Loss) 13,081 10,134 6,670 (32,666) (2,320)
PER SHARE DATA*
- ----------
Income (Loss) Before Cumulative
Effect of Accounting Change** 1.69 1.42 1.05 (4.27) (.38)
Cumulative Effect of Change in
Accounting for Postretirement
Benefits** -- -- -- (1.01) --
Net Income (Loss)** 1.69 1.42 1.05 (5.28) (.38)
Cash Dividends Declared -- -- -- -- .04
Book Value 8.42 6.41 4.33 3.08 8.43
FINANCIAL POSITION (YEAR-END)
- ----------
Current Assets 55,766 47,18 36,842 56,028 55,769
Current Liabilities 24,412 22,482 23,683 33,532 35,226
Ratio of Current Assets
to Current Liabilities 2.3 to 1 2.1 to 1 1.6 to 1 1.7 to 1 1.6 to 1
Working Capital 31,354 24,704 13,159 22,496 20,543
Property, Plant and Equipment
- Net 36,473 34,061 36,807 35,504 60,189
Total Assets 102,516 89,443 81,837 97,746 122,674
Long-Term Debt less Current
Maturities 4,200 6,675 14,190 24,197 26,336
Shareholders' Equity 60,098 45,125 27,891 19,083 51,983
Long-Term Debt as a Percentage
of Shareholders' Equity 7% 15% 51% 127% 51%
OTHER DATA
- ----------
Depreciation and Amortization 5,738 6,680 6,691 10,928 11,702
Research and Development
Expenses 9,320 9,230 9,495 12,441 12,214
Capital Expenditures 8,853 4,648 8,582 9,061 11,710
Number of Employees (Average) 928 977 1,104*** 2,512 2,989
Net Sales per Employee 151 137 112 69 61
Number of Shares Outstanding at
Year-End* 7,135,090 7,045,270 6,444,922 6,201,298 6,169,318
- ----------
* Restated for the two-for-one stock split in July 1995.
** Based on weighted average number of shares and share equivalents
outstanding for 1995, 1994, and 1993, and based on weighted average
number of shares outstanding for 1992 and 1991.
*** Excludes employees of the divested flexible interconnections business.
F-24
CONSOLIDATED BALANCE SHEETS
- ----------
December 31, January 1,
(Dollars in Thousands) 1995 1995
---------- ----------
ASSETS
- ----------
Current Assets:
Cash and Cash Equivalents $ 13,111 $ 13,851
Marketable Securities 1,565 --
Accounts Receivable, Net 18,439 16,495
Inventories:
Raw Materials 5,267 4,311
In-Process and Finished 7,635 5,302
Less LIFO Reserve (2,090) (1,056)
--------- ---------
Total Inventories 10,812 8,557
Current Deferred Income Taxes 2,560 1,680
Assets Held for Sale, Net of Valuation
Reserves of $2,032 and $1,587 (Note B) 8,809 6,687
Prepaid Expenses 470 450
--------- ---------
Total Current Assets 55,766 47,720
--------- ---------
Property, Plant and Equipment, Net of
Accumulated Depreciation of $53,669
and $52,464 36,473 34,061
Investment in Unconsolidated Joint Venture 4,763 4,072
Intangible Pension Asset 3,479 2,365
Other Assets 2,035 1,759
--------- ---------
Total Assets $ 102,516 $ 89,977
========= =========
F-25
December 31, January 1,
(Dollars in Thousands) 1995 1995
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------
Current Liabilities:
Accounts Payable $ 8,338 $ 7,778
Current Maturities of Long-Term Debt 600 1,225
Accrued Employee Benefits and Compensation 8,703 6,646
Accrued Cost Reduction Charges 529 925
Accrued Income Taxes Payable 1,084 534
Taxes, Other than Federal and Foreign Income 1,020 984
Other Accrued Liabilities 4,138 4,924
--------- ---------
Total Current Liabilities 24,412 23,016
--------- ---------
Long-Term Debt, less Current Maturities 4,200 6,675
Noncurrent Deferred Income Taxes 1,632 1,520
Noncurrent Pension Liability 3,223 4,497
Noncurrent Retiree Health Care and Life
Insurance Benefits 5,942 6,560
Other Long-Term Liabilities 3,009 2,584
Shareholders' Equity:
Capital Stock, $1 Par Value (Notes A & K):
Authorized Shares 25,000,000; Issued and
Outstanding Shares 7,135,090 and 7,045,270 7,135 7,045
Additional Paid-In Capital 26,286 25,110
Currency Translation Adjustment 2,544 1,918
Retained Earnings 24,133 11,052
--------- ---------
Total Shareholders' Equity 60,098 45,125
--------- ---------
Total Liabilities and Shareholders'
Equity $ 102,516 $ 89,977
========= =========
- ----------
The accompanying notes are an integral part of the consolidated financial
statements.
F-26
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
- ----------
(Dollars in Thousands, Except Per Share
Amounts) 1995 1994 1993
--------------------------------
Net Sales $ 140,293 $ 133,866 $ 123,168
Cost of Sales 96,457 93,650 86,402
Selling and Administrative Expenses 21,501 20,705 18,787
Research and Development Expenses 9,320 9,230 9,495
--------------------------------
Total Costs and Expenses 127,278 123,585 114,684
--------------------------------
Operating Income 13,015 10,281 8,484
Other Income less Other Charges 2,440 1,579 848
Interest Expense, Net 65 1,148 2,616
--------------------------------
Income Before Income Taxes 15,390 10,712 6,716
Income Taxes 2,309 578 46
--------------------------------
Net Income 13,081 10,134 6,670
Retained Earnings (Deficit) at Beginning
of Year 11,052 918 (5,752)
--------------------------------
Retained Earnings at End of Year $ 24,133 $ 11,052 $ 918
================================
Net Income Per Share (Notes A & K):
Primary $ 1.69 $ 1.42 $ 1.05
--------------------------------
Fully Diluted $ 1.69 $ 1.38 $ 1.03
--------------------------------
Shares Used in Computing (Notes A & K):
Primary 7,719,094 7,129,316 6,379,758
--------------------------------
Fully Diluted 7,734,454 7,322,996 6,500,914
================================
- ----------
The accompanying notes are an integral part of the consolidated financial
statements.
F-27
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
- ----------
CASH FLOWS PROVIDED BY (USED IN) OPERATING 1995 1994 1993
ACTIVITIES: ------------------------------
- ----------
Net Income $ 13,081 $ 10,134 $ 6,670
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 5,738 6,680 6,691
Benefit for Deferred Income Taxes (768) (160) --
Equity in Undistributed (Income) Loss
of Unconsolidated Joint Ventures, Net (556) (1,071) 103
(Gain) Loss on Disposition of Assets 129 (344) 87
Noncurrent Pension and Postretirement
Benefits 1,455 2,107 2,357
Other, Net 1,217 (344) (221)
Changes in Operating Assets and Liabilities
Excluding Effects of Disposition of Assets:
Accounts Receivable (1,881) (1,258) (1,285)
Inventories (2,847) (465) 1,116
Prepaid Expenses (7) 260 (30)
Accounts Payable and Accrued Expenses (4,148) (1,424) (3,563)
------------------------------
Net Cash Provided by Operating
Activities 11,413 14,115 11,925
CASH FLOWS PROVIDED BY (USED IN) INVESTING
ACTIVITIES:
- ----------
Capital Expenditures (8,853) (4,648) (8,582)
Proceeds from Sale of Businesses -- 909 10,899
Proceeds from Sale of Property, Plant and
Equipment 11 1,756 179
Purchase of Marketable Securities (1,565) -- --
------------------------------
Net Cash Provided by (Used in)
Investing Activities (10,407) (1,983) 2,496
CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES:
- ----------
Proceeds from Short- and Long-Term Borrowings -- -- 6,956
Repayments of Debt Principal (3,100) (4,903) (19,951)
Net Repayments of Revolving Lines of Credit -- -- (3,534)
Proceeds from Sale of Capital Stock 1,267 1,874 1,063
------------------------------
Net Cash Used in Financing
Activities (1,833) (3,029) (15,466)
Effect of Exchange Rate Changes on Cash 87 215 222
------------------------------
Net Increase (Decrease) in Cash and Cash
Equivalents (740) 9,318 (823)
Cash and Cash Equivalents at Beginning of Year 13,851 4,533 5,356
------------------------------
Cash and Cash Equivalents at End of Year $ 13,111 $ 13,851 $ 4,533
==============================
- ----------
The accompanying notes are an integral part of the consolidated financial
statements.
F-28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ----------
NOTE A-ACCOUNTING POLICIES
- ----------
ORGANIZATION:
- ----------
Rogers Corporation manufactures specialty polymer composite materials and
components which it markets around the world. In 1995 Rogers had two
business segments which were about equal in size based on sales and assets.
Polymer Products included high performance elastomer materials and
components and moldable composite materials. Electronic Products included
materials for high frequency printed circuit boards, materials for flexible
printed circuit boards, high frequency printed circuits, and power
distribution bus bars. Polymer Products were sold to manufacturers in the
consumer, transportation, imaging, communications, and computer and
peripheral markets. Electronic Products were sold principally to printed
circuit board fabricators and equipment manufacturers for components in
computer and peripheral, wireless communications, transportation, and
consumer market applications.
PRINCIPLES OF CONSOLIDATION:
- ----------
The consolidated financial statements include the accounts of Rogers
Corporation and its wholly-owned subsidiaries (the Company), after
elimination of significant intercompany accounts and transactions.
CASH EQUIVALENTS:
- ----------
Cash equivalents include commercial paper and U.S. Government treasury
bills with an original maturity of three months or less. These investments
are stated at cost, which approximates market value.
MARKETABLE SECURITIES:
- ----------
The Company's marketable securities are classified as available-for-sale
and are reported at fair value (based on quoted market prices) on the
Company's consolidated balance sheet. Marketable securities are comprised
of commercial paper, U.S. treasury notes, and corporate bonds. The
unrealized gain was not material since these investments were initiated in
December 1995. Beginning with the first quarter of 1996, there will be a
separate component of shareholders' equity to account for unrealized gains
(losses) from marketable securities.
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES:
- ----------
The Company accounts for its investments in and advances to unconsolidated
joint ventures, both of which are 50% owned, using the equity method.
RELATED PARTY TRANSACTIONS:
- ----------
Sales to unconsolidated joint ventures are made on terms similar to those
prevailing with unrelated customers. However, payment terms for amounts
owed by the joint ventures may be extended.
FOREIGN CURRENCY TRANSLATION:
- ----------
All balance sheet accounts of foreign subsidiaries are translated at rates
of exchange in effect at each year-end, and income statement items are
translated at the average exchange rates for the year. Resulting
translation adjustments are made directly to a separate component of
shareholders' equity. Currency transaction adjustments are reported as
income or expense.
F-29
INVENTORIES:
- ----------
Inventories are valued at the lower of cost or market. The last-in,
first-out (LIFO) method was used for determining the cost of approximately
41% of total Company inventories at December 31, 1995 and 36% at January 1,
1995. The cost of the remaining portion of the inventories was determined
principally on the basis of standard costs, which approximate actual first-
in, first-out (FIFO) costs.
PROPERTY, PLANT AND EQUIPMENT:
- ----------
Property, plant and equipment is stated on the basis of cost, including
capitalized interest. For financial reporting purposes, provisions for
depreciation are calculated on a straight-line basis over the estimated
useful lives of the assets.
OTHER ASSETS:
- ----------
Purchased patents, licensed technology and other intangibles included in
other assets are capitalized and amortized on a straight-line basis over
their estimated useful lives, generally ranging from 2 to 17 years.
PENSIONS:
- ----------
The Company has noncontributory defined benefit plans covering
substantially all U.S. employees. The plan covering salaried employees
provides benefits based on salary, years of service and age, while those
plans covering hourly employees provide benefits of stated amounts for each
year of credited service with adjustments depending on age. The Company's
funding policy for all plans is to contribute amounts sufficient to meet
the minimum funding requirements set forth in the Employee Retirement
Income Security Act of 1974, plus such additional amounts as the Company
may determine to be appropriate from time to time.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:
- ----------
The Company recognizes the cost of postretirement benefits other than
pensions over the years of service in which such benefits are earned. The
Company funds these postretirement benefits on a pay-as-you-go basis.
INCOME TAXES:
- ----------
The Company recognizes income taxes under the liability method. No
provision is made for U.S. income taxes on the undistributed earnings of
consolidated foreign subsidiaries because such earnings are substantially
reinvested in those companies for an indefinite period. Provision for the
tax consequences of distributions, if any, from consolidated foreign
subsidiaries is recorded in the year the distribution is declared.
STOCK SPLIT:
- ----------
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 7th. All
references in the financial statements to number of shares, per share
amounts and market prices of the Company's capital stock have been
retroactively restated to reflect the increased number of capital shares
outstanding.
REVENUE RECOGNITION:
- ----------
Revenue is recognized when goods are shipped.
F-30
NET INCOME PER SHARE:
- ----------
Net income per share is computed based on the weighted average number of
shares of capital stock and capital stock equivalents outstanding during
each year. Capital stock equivalents are additional shares which may be
issued upon the exercise of dilutive stock options using the average market
price of the Company's capital stock during the year for primary earnings
per share and market price at the end of the year for fully diluted
earnings per share. Conversion of the convertible subordinated notes into
shares of capital stock was not assumed in the 1993 computation of fully
diluted net income per share because such conversion was antidilutive.
USE OF ESTIMATES:
- ----------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS:
- ----------
The Company has not yet adopted Statement of Financial Accounting Standards
(FAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" or FAS No. 123, "Accounting for Stock-
Based Compensation," which are effective for fiscal year 1996. Neither
Statement is expected to have a material effect on the Company's financial
statements.
RECLASSIFICATIONS:
- ----------
Certain reclassifications were made for 1993 and 1994 to report results
consistent with 1995 reporting practice.
NOTE B-DIVESTITURES
- ----------
On June 28, 1993, the Company completed the sale of its flexible
interconnections business, including the 50% interest in a related joint
venture, Smartflex Systems, to a limited partnership managed by Ampersand
Ventures, a venture capital firm based in Wellesley, Massachusetts. The
Company received a total of $10.9 million from the sale. Costs related to
the sale had been accrued in 1992 when the decision was made to withdraw
from the business of producing and selling custom designed flexible
circuits.
At year end 1995, the Company had a remaining balance of $.5 million from
the cost reduction reserves established in 1991 and 1992. This balance
relates primarily to pension liabilities resulting from 1991 European work
force reductions.
During the first quarter of 1994, the Power Distribution Division business
was sold to Methode Electronics, Inc. for initial cash payments of $.6
million plus royalties on future sales. Remaining equipment of this
business was sold separately.
On December 31, 1995, the Company completed the sale of its Soladyne
Division to Merix Corporation for $2.6 million which was received in
January 1996. This sale did not include this division's trade accounts
receivable which were retained by the Company. The proceeds from this
divestiture are expected to modestly exceed the carrying value of the
assets plus the costs related to disposition.
F-31
At December 31, 1995, assets held for sale at estimated net realizable
value were $8.8 million, consisting of the land and building being leased
to the buyer of the flexible interconnections business, the land and
building that formerly housed the Power Distribution Division, and the
proceeds to be received from the divested assets of the Soladyne Division.
NOTE C-INVENTORIES
- ----------
Certain inventories, amounting to $4,423,000 at December 31, 1995, and
$3,106,000 at January 1, 1995, are valued at the lower of cost, determined
by the last-in, first-out method, or market.
NOTE D-PROPERTY, PLANT AND EQUIPMENT
- ----------
December 31, January 1,
(Dollars in Thousands) 1995 1995
---------- ----------
Land $ 1,074 $ 1,032
Buildings and improvements 30,630 30,258
Machinery and equipment 45,355 45,372
Office equipment 8,369 8,818
Installations in process 4,714 1,045
---------- ----------
90,142 86,525
Accumulated depreciation (53,669) (52,464)
---------- ----------
$ 36,473 $ 34,061
========== ==========
Depreciation expense was $5,676,000 in 1995, $6,569,000 in 1994, and
$6,574,000 in 1993. Interest costs incurred during the years 1995, 1994,
and 1993 were $1,109,000, $1,751,000, and $3,016,000, respectively, of
which $45,000 in 1995 and $126,000 in 1993 were capitalized as part of the
cost of the new plant and equipment.
NOTE E-SUMMARIZED FINANCIAL INFORMATION OF UNCONSOLIDATED JOINT VENTURES
AND RELATED PARTY TRANSACTIONS
- ----------
The tables shown below summarize combined financial information of the
Company's unconsolidated joint ventures which are accounted for by the
equity method. Amounts presented include the financial information
reported by Rogers INOAC Corporation, located in Japan, and Durel
Corporation, located in Arizona, both of which are Polymer Products
ventures. Each of these ventures is 50% owned by the Company.
The difference between the Company's investment in unconsolidated joint
ventures and its one-half interest in the underlying shareholders' equity
of the joint ventures is due primarily to the following factors: 1) Rogers
major initial contribution to each venture was technology which was valued
differently by the joint venture than it was on Rogers books; 2) one of the
joint ventures has a negative retained earnings
F-32
balance; and 3) translation of foreign currency at current rates differs
from that at historical rates. This also results in a difference between
the Company's recorded income from unconsolidated joint ventures and a
50% share of the income of those joint ventures listed below.
December 31, January 1,
(Dollars in Thousands) 1995 1995
---------- ----------
Current Assets $ 21,149 $ 18,173
Noncurrent Assets 15,807 9,777
Current Liabilities 9,946 8,418
Noncurrent Liabilities 15,033 8,112
Shareholders' Equity 11,977 11,420
Year Ended
---------------------------------------
December 31, January 1, January 2,
(Dollars in Thousands) 1995 1995 1994
---------- ---------- ----------
Net Sales $ 62,377 $ 53,770 $ 38,041
Gross Profit 19,327 15,396 10,218
Net Income 1,267 4,572 3,208
Note that in the tables above, Rogers INOAC Corporation is reported as of
October 31 for the respective years.
Sales to unconsolidated joint ventures amounted to $471,000 in 1995,
$858,000 in 1994, and $363,000 in 1993.
At December 31, 1995, the Company had indirectly guaranteed 50% of a loan
entered into by one of the unconsolidated joint ventures. The Company's
proportionate share of the outstanding principal under this guarantee was
$4,750,000 at December 31, 1995. The Company believes that the
unconsolidated joint venture will be able to meet its obligations under
this financing arrangement and accordingly no payments will be required and
no losses will be incurred under this guarantee.
Equity income (loss) from unconsolidated joint ventures is included in
other income less other charges on the consolidated statements of income
and retained earnings.
NOTE F-PENSIONS
- -----------
The Company has two noncontributory defined benefit pension plans covering
substantially all U.S. employees. The discount rate assumptions used to
develop pension expense were 8.5% in 1995, 7.5% in 1994, and 8.25% in 1993.
The expected long-term rates of investment return were assumed to be
primarily 9.0% for the pension plan covering unionized hourly employees and
9.5% for the other pension plan in each year presented.
F-33
Net pension cost consisted of the following components:
(Dollars in Thousands) 1995 1994 1993
-------- --------- --------
Service cost (benefits earned during the period) $ 1,012 $ 1,224 $ 1,132
Interest cost on projected benefit obligation 3,008 2,976 2,754
Actual return on plan assets (7,461) (319) (2,900)
Net amortization and deferral 4,224 (2,893) (276)
-------- -------- -------
Net pension cost $ 783 $ 988 $ 710
======== ======== =======
The following table sets forth the funded status of the plans and amounts
recognized in the Company's consolidated balance sheets:
(Dollars in Thousands) December 31, 1995 January 1, 1995
------------------------- -------------------------
Plan Whose Plan Whose Plan Whose Plan Whose
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Benefits Assets Benefits Assets
------------------------ --------------------------
Actuarial present value of
benefit obligations:
Vested benefit obligation $ 28,163 $ 8,996 $ 22,930 $ 7,153
========================= ==========================
Accumulated benefit
obligation $ 28,351 $ 9,025 $ 23,045 $ 7,189
========================= ==========================
Projected benefit
obligation $ (37,843) $ (9,025) $ (29,735) $ (7,189)
Plan assets at fair value 34,580 7,903 29,441 4,092
------------------------- --------------------------
Projected benefit
obligation in excess of
plan assets (3,263) (1,122) (294) (3,097)
Unrecognized net (gain)
loss 2,467 1,916 (30) 1,162
Unrecognized prior service
cost 931 1,480 1,037 1,101
Unrecognized net (asset)
obligation, net of
amortization (2,801) 83 (3,156) 102
Adjustment required to
recognize minimum liability -- (3,479) -- (2,365)
------------------------- --------------------------
Net pension liability
recognized in the
consolidated balance
sheets $ (2,666) $ (1,122) $ (2,443) $ (3,097)
========================= ==========================
The net pension liability is included in the following balance sheet accounts:
Noncurrent pension asset $ -- $ 265 $ -- $ --
Accrued employee benefits
and compensation -- (1,387) -- (1,389)
Noncurrent pension
liability (2,666) -- (2,443) (1,708)
------------------------- --------------------------
Net pension liability $ (2,666) $ (1,122) $ (2,443) $ (3,097)
========================= ==========================
Also included in the noncurrent pension liability is an additional pension
liability of $557,000 and $346,000 in 1995 and 1994, respectively.
The discount rate used in determining the present value of benefit
obligations was 7.25% for 1995 and 8.5% for 1994. The long-term annual
rate of increase in compensation levels assumption was 5.0% in both years.
Plan assets consist of investments in equities and short- and long-term
debt instruments managed by various investment managers.
F-34
NOTE G-POSTRETIREMENT BENEFIT PLANS OTHER THAN PENSIONS
- ----------
In addition to the Company's noncontributory defined benefit pension
plans, the Company sponsors three unfunded defined benefit health care
and life insurance plans for retirees. The plan for full-time U.S.
salaried employees provides medical and dental benefits to employees
with a credited service period of ten years beginning on or after age 45.
These benefits cease at age 70. These employees also receive life
insurance benefits if they retire before 1998. The plan for U.S.
unionized hourly employees provides medical and life insurance benefits
to employees who have a credited service period of ten years on or after
age 60. Medical benefits cease at age 65. The plan for nonunion U.S.
hourly employees provides life insurance benefits to employees who
retire before 1998 with a credited service period of five years on or
after age 60. Only the union hourly plan is contributory. All medical
and dental plans contain deductible and coinsurance cost-sharing features.
Net periodic postretirement benefit cost includes the following components:
(Dollars in Thousands) 1995 1994 1993
--------- ---------- ---------
Service cost $ 219 $ 309 $ 340
Interest cost 367 413 478
Amortization of unrecognized net gain (129) (32) (9)
--------- ---------- ---------
Net periodic postretirement benefit cost $ 457 $ 690 $ 809
========= ========== =========
The discount rate assumption used to develop postretirement benefit
expense was 8.5% in 1995, 7.5% in 1994, and 8.25% in 1993.
The actuarial and recorded liabilities for these three plans, none of
which have been funded, were as follows:
December 31, January 1,
(Dollars in Thousands) 1995 1995
---------- -----------
Accumulated postretirement benefit obligation:
Retirees $ (2,429) $ (3,151)
Fully eligible active plan participants (768) (711)
Other active plan participants (1,102) (1,427)
---------- -----------
Accumulated postretirement benefit obligation (4,299) (5,289)
Unrecognized net gain (2,293) (1,671)
---------- -----------
Accrued postretirement benefit liability $ (6,592) $ (6,960)
========== ===========
The net periodic postretirement benefit liability of $6,592,000 in 1995
and $6,960,000 in 1994 consists of a noncurrent liability of $5,942,000
and $6,560,000, respectively, and a current postretirement benefit
liability of $650,000 and $400,000, respectively, which is included in
accrued employee benefits and compensation.
The annual assumed rate of increase in the per capita cost of covered
health benefits is 7.5% for 1996 (10.0% and 11.0% assumed for 1995 and
1994, respectively), and is assumed to decrease by approximately one
percentage point each year to 4.5% in 1999 and remain at that level
thereafter. The health care cost trend rate assumption has the following
effect on the amounts reported: increasing the assumed health care cost
trend rates by one percentage point in each future year would increase
the accumulated postretirement benefit obligation for health benefits as
of the beginning of 1996 by approximately
F-35
$303,000 and the aggregate of the service and interest cost components
of net periodic postretirement benefit cost for 1995 by $53,000.
Postretirement benefit costs and obligations are decreasing due to
declining estimated health care cost trend rates.
The discount rate used in determining the accumulated postretirement
benefit obligation was 7.25% for 1995 and 8.5% for 1994.
NOTE H-EMPLOYEE SAVINGS AND INVESTMENT PLAN
- ----------
The Rogers Employee Savings and Investment Plan (RESIP) meets the
requirements contained in Section 401(k) of the Internal Revenue Code.
All regular U.S. employees with at least one month of service are
eligible to participate. The plan is designed to encourage the
Company's U.S. employees to save for retirement. Contributions to
the plan as well as earnings thereon benefit from tax deferral.
Participating employees generally may contribute up to 18% of their
salaries and wages. An employee's elective pretax contribution for
which a tax deferral is available is limited to the maximum allowed
under the Internal Revenue Code. To further encourage employee
savings, the Company matched employee contributions up to 4% of a
participant's annual compensation at a rate of 40% in 1995, 25% in
1994, and 12.5% in 1993 for all participants other than those in
collective bargaining units. Starting in 1994, one-half of the
Company's contribution was invested in Company stock and the other
half continued to be invested at the employee's discretion. RESIP
related expense amounted to $396,000 in 1995, $276,000 in 1994, and
$177,000 in 1993, including Company matching contributions of $349,000,
$191,000, and $100,000, respectively.
NOTE I-DEBT
- ----------
LONG-TERM DEBT:
December 31, January 1,
(Dollars in Thousands) 1995 1995
-------------------------
10.5% Senior Notes $ -- $ 2,500
10.6% Senior Notes due 1996-2003 4,800 5,400
-------------------------
Total long-term debt 4,800 7,900
Current maturities (600) (1,225)
-------------------------
Total long-term debt less current maturities $ 4,200 $ 6,675
=========================
In April 1995 the Company entered into a $10 million unsecured
revolving credit arrangement with Fleet Bank, N.A. The Company has
the right to reduce this commitment or terminate the entire agreement
at any time. Amounts borrowed under this arrangement are to be repaid
in full by March 31, 1998. At year-end 1995, there were no borrowings
pursuant to this revolving credit arrangement. Under the arrangement
the ongoing commitment fee varies from 25 to 40 basis points of the
unused portion of the credit line and the rate of interest charged on
outstanding loans can, at the Company's option and subject to certain
restrictions, be based on the prime rate, a rate negotiated between
the parties or at a rate from 100 to 175 basis points over London
Interbank Offered Rate (LIBOR). The spread over LIBOR and the level
of commitment fees is based on a measure of the Company's financial
strength. The agreement contains restrictive covenants primarily
related to interest coverage, working capital, leverage and net worth.
The Company is in compliance with these covenants.
F-36
In 1988 the Company borrowed $6,000,000 at 10.6%. Principal repayments
of $600,000 per year began in 1994 and are scheduled to continue until
2003.
At December 31, 1995, $4,800,000 of this debt was still outstanding.
In general, interest rates are lower today than they were in 1988 and
this, in conjunction with the reduced number of years remaining on the
loan, results in an estimated market value for this debt of approximately
$5,300,000. In 1995, as in other years, the Company prepaid debt when
appropriate. Subject to certain loan agreement limitations, the Company
has the right to prepay this $4,800,000 loan in whole or in part, but the
Company has not yet chosen to do so because of the prepayment penalty.
MATURITIES:
- ----------
Required long-term debt principal repayments of $600,000 are due each
year from 1996 to 2003.
INTEREST PAID:
- ----------
Interest paid during the years 1995, 1994, and 1993, was $1,235,000,
$1,879,000, and $3,358,000, respectively.
RESTRICTION ON PAYMENT OF DIVIDENDS:
- ----------
Under the most restrictive covenant of the loan agreements, $9,212,000
of retained earnings was available at December 31, 1995, for cash
dividends.
NOTE J-INCOME TAXES
- ----------
Consolidated income before income taxes consists of:
(Dollars in Thousands) 1995 1994 1993
-----------------------------------
Domestic $ 13,342 $ 9,660 $ 5,980
Foreign 2,048 1,052 736
-----------------------------------
$ 15,390 $ 10,712 $ 6,716
===================================
The income tax expense (benefit) in the consolidated statements
of income consists of:
(Dollars in Thousands) Current Deferred Total
-----------------------------------
1995:
Federal $ 1,824 $ (976) $ 848
Foreign 613 208 821
State 640 -- 640
-----------------------------------
$ 3,077 $ (768) $ 2,309
===================================
1994:
Federal $ 444 $ (207) $ 237
Foreign 234 47 281
State 60 -- 60
-----------------------------------
$ 738 $ (160) $ 578
===================================
1993:
Federal $ (90) $ -- $ (90)
Foreign (6) -- (6)
State 142 -- 142
-----------------------------------
$ 46 $ -- $ 46
===================================
F-37
Deferred tax assets and liabilities as of December 31, 1995 and
January 1, 1995, respectively, are comprised of the following:
(Dollars in Thousands) December 31, January 1,
1995 1995
---------- ----------
Deferred tax assets:
Accruals not currently deductible for
tax purposes:
Accrued employee benefits and
compensation $ 1,073 $ 1,991
Accrued postretirement benefits 2,208 2,256
Other accrued liabilities and reserves 1,602 1,528
Tax loss carryforwards 857 1,538
Tax credit carryforwards 3,471 4,272
Investments in and advances to joint
ventures 2,642 2,461
Other 364 492
--------- ---------
Total deferred tax assets 12,217 14,538
Less deferred tax asset valuation allowance 6,752 10,057
--------- ---------
Net deferred tax assets 5,465 4,481
Deferred tax liabilities:
Depreciation and amortization 4,537 4,321
--------- ---------
Total deferred tax liabilities 4,537 4,321
--------- ---------
Net deferred tax assets $ 928 $ 160
========= =========
Income tax expense differs from the amount computed by applying the U.S.
statutory federal income tax rate to income before income tax expense. The
reasons for this difference are as follows:
(Dollars in Thousands) 1995 1994 1993
--------------------------------
Tax expense at statutory rate $ 5,386 $ 3,749 $ 2,283
U.S. tax on foreign earnings 712 -- --
State income taxes, net of federal
benefit 417 40 94
Net deferred tax benefits utilized in
the current year:
Tax loss carryforwards (500) (2,936) (707)
Employee benefits and compensation (918) (448) --
Other accrued liabilities and reserves 74 546 (1,663)
Other net temporary differences (692) (328) --
General business credit carryforwards (829) -- --
Net deferred tax benefits to be used in
future years (976) (207) --
Other (365) 162 39
-------------------------------
Income tax expense $ 2,309 $ 578 $ 46
===============================
F-38
The deferred tax asset valuation allowance decreased by $3,305,000 and
$38,000 during 1995 and 1994, respectively. The $3,305,000 decrease
relates to the utilization for tax purposes in 1995 of approximately
$2,300,000 in deferred tax benefits, primarily deferred deductions for
certain employee benefit expenses, tax credit carryforwards, and tax
loss carryforwards, as well as the recognition for financial reporting
purposes in 1995 of approximately $1,000,000 of previously unrecognized
tax benefits which the Company expects to utilize for tax purposes in
future years. The utilization of tax benefits in future years is
dependent upon the future taxable earnings of the Company.
The Company has foreign net operating loss carryforwards of approximately
$2,100,000. Under the applicable foreign tax laws, these net operating
loss carryforwards have an indefinite carryforward period. The
utilization of foreign net operating loss carryforwards is dependent
upon the future taxable earnings of the Company's applicable foreign
subsidiary.
At December 31, 1995, the Company had Alternative Minimum Tax Credit
carryforwards of approximately $1,600,000 and General Business Credit
carryforwards of approximately $1,900,000. The use of these tax credit
carryforwards is dependent upon the future taxable earnings of the
Company. The Alternative Minimum Tax Credit carryforwards have an
indefinite carryforward period. The Company's General Business Credit
carryforwards expire in annual increments of between $100,000 and
$300,000 beginning in 1998 and ending in the year 2010.
Undistributed foreign earnings, before available tax credits and
deductions, amounted to $4,627,000 at December 31, 1995, $4,155,000
at January 1, 1995, and $3,359,000 at January 2, 1994.
Income taxes paid (refunded) were $1,952,000, $547,000, and $(193,000),
in 1995, 1994, and 1993, respectively.
F-39
NOTE K-SHAREHOLDERS' EQUITY AND STOCK OPTIONS
- ----------
Changes in shareholders' equity are shown below:
(Dollars in Thousands)
Capital
Stock Additional Currency Retained
(Number Paid-in Translation Earnings
of shares) Capital Adjustment (Deficit)
---------------------------------------------
Balance at January 3, 1993 6,201,298 $ 17,017 $ 1,617 $ (5,752)
---------------------------------------------
Net income for 1993 6,670
Stock options exercised 77,310 746
RESIP shares issued 25,454 171
Conversion of convertible
subordinated notes into
capital stock 136,362 1,364
Stock issued to officers 12,000 119
Shares reacquired and cancelled (7,502) (82)
Translation adjustment for 1993 (424)
---------------------------------------------
Balance at January 2, 1994 6,444,922 19,335 1,193 918
---------------------------------------------
Net income for 1994 10,134
Stock options exercised 200,346 1,892
RESIP shares issued 26,498 372
Conversion of convertible
subordinated notes into
capital stock 409,090 4,091
Stock issued to directors
and officers 10,454 164
Shares reacquired and cancelled (46,040) (744)
Translation adjustment for 1994 725
---------------------------------------------
Balance at January 1, 1995 7,045,270 25,110 1,918 11,052
---------------------------------------------
Net income for 1995 13,081
Stock options exercised 84,743 725
RESIP shares issued 2,762 70
Stock issued to directors 3,864 91
Shares reacquired and cancelled (1,549) (46)
Tax benefit on stock options
exercised 336
Translation adjustment for 1995 626
---------------------------------------------
Balance at December 31, 1995 7,135,090 $ 26,286 $ 2,544 $ 24,133
=============================================
The dollar amount of the capital stock ($1 par value) is equal to the
above indicated number of shares.
In 1988 the Company adopted a stock option plan which permits the
granting of incentive stock options and nonqualified stock options
to officers and other key employees. Additionally, nonqualified
stock options can be granted to directors. Incentive stock option
grants must be at a price no less than the market value of the
capital stock as of the date of grant. Nonqualified stock options
for officers and other key employees must be granted at a price equal
to at least 50% of the market value of the capital stock as of the
date of grant. To date, all options granted to officers and other
key employees have been at a price equal to the market value of the
capital stock as of the date of grant.
F-40
Under certain conditions, non-employee directors were able to receive
nonqualified stock options at a discounted exercise price in lieu of a
corresponding amount of directors' fees pursuant to the 1988 plan.
Currently existing options issued under the plan are exercisable within
a period of ten years from the date of grant. In 1990 the Company
adopted another stock option plan which only permits the granting of
nonqualified stock options to key employees who are not officers or
directors. In other respects, the 1990 plan is essentially the same
as the one established in 1988.
In 1994, shareholders approved the 1994 Stock Compensation Plan which
permits the granting of incentive stock options and nonqualified stock
options to officers and other key employees. Additionally, the plan
requires that the retainer fee for non-employee directors be paid
semi-annually in shares of Rogers capital stock with the number of
shares of stock granted based on its then fair market value. Stock
options also are granted to non-employee directors twice a year. The
number of shares in each six-month non-employee director stock option
grant is determined by dividing $6,750 (half of the annual director
retainer fee at the time the plan was established) by the fair market
value of a share of the Company's capital stock as of the date of grant.
Nonqualified stock options for officers and other key employees must
be granted at a price equal to at least 85% of the fair market value
of the capital stock as of the date of grant. To date, all options
granted under this plan have been at an exercise price equal to the
fair market value of the capital stock as of the date of grant.
Currently existing stock options issued under this plan are exercisable
within a period of ten years from date of grant.
Weighted
Average
Number Option
of Shares Price
--------------------
Outstanding at January 3, 1993 785,840 $ 10.41
Granted 410,936 8.99
Exercised 77,310 10.09
Cancelled 137,000 10.91
Expired 54,000 14.59
--------------------
Outstanding at January 2, 1994 928,466 9.49
Granted 227,736 16.91
Exercised 200,346 10.33
Cancelled 17,026 8.79
Expired 18,600 14.44
--------------------
Outstanding at January 1, 1995 920,230 11.06
Granted 175,716 23.57
Exercised 84,743 9.55
Cancelled 15,766 13.88
--------------------
Outstanding at December 31, 1995 995,437 $ 13.35
--------------------
In general, stock options granted to officers and employees become
exercisable in one-third increments beginning on the second anniversary
of the grant date. Non-employee director options granted under the
1988 plan become exercisable on the first anniversary of the date of
grant, while options to such individuals granted pursuant to the 1994
plan become exercisable six months and one day after the date of grant.
The options outstanding on December 31, 1995, expire on various dates,
beginning April 8, 1996, and ending on December 14, 2005. Options
outstanding at December 31, 1995, included 390,575 which were
exercisable (270,086 at January 1, 1995).
F-41
Shares of capital stock reserved for possible future issuance are
as follows:
December 31, January 1,
1995 1995
----------- -----------
Shareholders' Rights Plan 8,874,699 8,876,248
Options 1,453,099 1,542,258
Stock purchase warrants* 200,000 200,000
Rogers Employee Savings and Investment Plan 84,522 87,284
Stock to be issued in lieu of deferred
directors' fees 1,988 1,436
----------- -----------
Total 10,614,308 10,707,226
=========== ===========
* These warrants were granted in connection with a research and
development arrangement entered into in 1989 and are convertible
at $13.50 per share through June 29, 1996.
NOTE L-LEASES
- ----------
The Company's principal noncancellable operating lease obligations
are for building space and vehicles. The leases generally provide
that the Company pay maintenance costs. The lease periods range from
one to five years and include purchase or renewal provisions at the
Company's option. The Company also has leases that are cancellable
with minimal notice. Lease expense was $782,000 in 1995, $1,016,000
in 1994, and $1,469,000 in 1993.
Future minimum lease payments under noncancellable operating leases
at December 31, 1995, aggregate $1,147,000. Of this amount, annual
minimum payments are $533,000, $282,000, $182,000, $79,000, and
$15,000 for years 1996 through 2000, respectively.
NOTE M-FOREIGN OPERATIONS
- ----------
The net assets of wholly-owned foreign subsidiaries were $10,261,000
at December 31, 1995, and $8,221,000 at January 1, 1995. Net income
of these foreign subsidiaries was $1,262,000 in 1995, $796,000 in 1994,
and $820,000 in 1993, including net currency transaction losses of
$45,000 in 1995, $3,000 in 1994, and $38,000 in 1993.
NOTE N-CONTINGENCIES
- ----------
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
F-42
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 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
our environmental engineers and consultants, the Company recorded a
provision of approximately $900,000 in 1994 for costs related to
this matter. During 1995, $300,000 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.
In addition to the environmental issues, the nature and scope of the
Company's business bring it into regular contact with the general
public and a variety of businesses and government agencies. Such
activities inherently subject the Company to the possibility of
litigation which is defended and handled in the ordinary course of
business. The Company has established accruals for matters for which
management considers a loss to be probable and reasonably estimable.
It is the opinion of management that facts known at the present time
do not indicate that such litigation, after taking into account
insurance coverage and the aforementioned accruals, will have a
material adverse effect on the financial position of the Company.
NOTE O-BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION
- ----------
The presentation of business segment information for the years
1993-1995 is generally reflective of the Company's current internal
reporting structure and has been divided into two segments, Polymer
Products and Electronic Products. Polymer Products consists of high
performance elastomer materials and components, and moldable composites.
Equity from Rogers INOAC Corporation and Durel Corporation is also
included in income for Polymer Products. Electronic Products are
comprised primarily of high frequency materials and circuits and
flexible circuit materials.
The Company markets its products throughout the United States and
sells in foreign markets directly, through distributors and agents,
and through its 50% owned joint venture in Japan. In 1995,
approximately 65% of total sales were to the electronics industry.
At December 31, 1995, the electronics industry accounted for
approximately 65% of total accounts receivable due from customers.
Accounts receivable due from customers located within the United
States accounted for 73% of the total accounts receivable owed to
the Company at the end of 1995. The Company performs periodic credit
evaluations of its customers' financial condition and generally does
not require collateral. Receivables are generally due within 30 days.
Credit losses relating to customers have been minimal and have been
within management's expectations.
The principal operations of the Company are located in the United
States and Europe. The Company formerly had operations in Mexico
related to the flexible interconnections business and the domestic
power distribution business; however, these businesses were divested
in 1993 and 1994, respectively.
Inter-segment and inter-area sales, which are generally priced with
reference to costs or prevailing market prices, are not material in
relation to consolidated net sales and have been eliminated from the
sales data reported on the following page.
F-43
BUSINESS SEGMENT INFORMATION
(Dollars in Thousands) 1995 1994 1993
----------------------------------
Net sales:
Polymer Products $ 74,693 $ 71,919 $ 66,238
Electronic Products 65,600 61,947 56,930
----------------------------------
Total $ 140,293 $ 133,866 $ 123,168
==================================
Income before income taxes:
Polymer Products $ 4,644 $ 5,981 $ 8,755
Electronic Products 11,186 5,609 1,044
Unallocated corporate expenses
(mainly interest expense, net) (440) (878) (3,083)
----------------------------------
Total $ 15,390 $ 10,712 $ 6,716
==================================
Capital expenditures:
Polymer Products $ 2,248 $ 3,225 $ 6,534
Electronic Products 6,605 1,423 2,048
----------------------------------
Total $ 8,853 $ 4,648 $ 8,582
==================================
Depreciation:
Polymer Products $ 2,971 $ 2,561 $ 2,224
Electronic Products 2,705 4,008 4,350
----------------------------------
Total $ 5,676 $ 6,569 $ 6,574
==================================
Assets:
Polymer Products $ 42,416 $ 39,754 $ 36,717
Electronic Products 42,864 34,692 38,767
Unallocated corporate assets
(mainly cash and cash
equivalents) 17,236 14,997 6,353
----------------------------------
Total $ 102,516 $ 89,443 $ 81,837
==================================
GEOGRAPHIC INFORMATION
(Dollars in Thousands) North America Europe Total
-----------------------------------
1995:
Net sales $ 120,244 $ 20,049 $ 140,293
Income before income taxes 13,332 2,058 15,390
Assets 89,765 12,751 102,516
==================================
1994:
Net sales $ 116,481 $ 17,385 $ 133,866
Income before income taxes 9,660 1,052 10,712
Assets 79,022 10,421 89,443
==================================
1993:
Net sales $ 108,324 $ 14,844 $ 123,168
Income before income taxes 5,980 736 6,716
Assets 72,046 9,791 81,837
==================================
F-44
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
- ----------
Board of Directors and Shareholders
Rogers Corporation
- ----------
We have audited the accompanying consolidated balance sheets of Rogers
Corporation and subsidiaries as of December 31, 1995 and January 1, 1995,
and the related consolidated statements of income and retained earnings
and cash flows for each of the three fiscal years in the period ended
December 31, 1995. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of Rogers Corporation and subsidiaries at December 31, 1995 and
January 1, 1995, and the consolidated results of their operations
and their cash flows for each of the three fiscal years in the period
ended December 31, 1995, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Providence, Rhode Island
February 6, 1996
F-45
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
- ----------
(Dollars in Thousands, Except Per Share Amounts)
Net Manufacturing Net Net Income
Quarter Sales Profit Income Per Share*
- ----------------------------------------------------------------------
1995 Fourth $ 33,511 $ 10,266 $ 3,115 $ .41
Third 32,943 9,894 2,826 .36
Second 37,422 12,167 3,688 .47
First 36,417 11,509 3,452 .45
- -----------------------------------------------------------------------
1994 Fourth $ 32,261 $ 10,274 $ 2,780 $ .37
Third 32,605 9,819 2,696 .37
Second 34,995 9,997 2,389 .35
First 34,005 10,126 2,269 .33
- ----------------------------------------------------------------------
* Restated for the two-for-one stock split in 1995.
CAPITAL STOCK MARKET PRICES*
- ----------
The Company's capital stock is traded on the American and Pacific
Stock Exchanges. The following table sets forth the composite high
and low prices during each quarter of the last two years on a per
share basis.
At February 20, 1996, there were 1,204 shareholders of record.
1995 1994
- --------------------------------------------------------------------
Quarter High Low High Low
- --------------------------------------------------------------------
Fourth $ 24-5/8 $ 21-3/4 $ 25-1/2 $ 16-1/2
Third 31-1/2 23-3/4 17-3/8 15-5/8
Second 28-5/8 24-3/4 17-1/8 12-7/8
First 27-3/4 22-1/8 15 12-1/4
- --------------------------------------------------------------------
* Restated for the two-for-one stock split in 1995.
F-46
MANAGEMENT'S DISCUSSION AND ANALYSIS
CONSOLIDATED SALES AND OPERATIONS - 1995 TO 1994
Net sales of $140.3 million were 10% higher than last year when
adjusted for divestitures. Each of the Company's major product
groups as currently constituted achieved record sales in 1995.
These sales gains were mainly the result of unit volume
increases. A major portion of the sales increase came from higher
sales of circuit materials to the wireless communications and
computer markets. Part of that growth came from the Company's
newer high frequency materials. The newest in the Company's line
of lower-priced commercial microwave materials, RO4000, was
introduced in the first quarter of 1995, and has received
favorable response in the marketplace. This new material is
aimed at applications in pagers, identification systems, personal
communication systems, global positioning systems, and other
wireless communications products. High volume production will
begin in the first half of 1996. Major process and facilities
projects are underway to support the increased activity in high
frequency and flexible circuit materials.
Net income was $13.1 million, or $1.69 per share in 1995,
compared with $10.1 million, or $1.42 per share in 1994. Before-
tax profits rose 44%, from $10.7 million in 1994 to $15.4 million
in 1995. The effective tax rates were 15% and 5% in 1995 and
1994, respectively. The improvement in before-tax profits was
primarily the result of improved margins, higher sales, increased
royalty income, and lower interest expense.
The Company completed the sale of its small microwave printed
circuit board fabricating operation, the Soladyne Division, to
Merix Corporation on December 31, 1995. This action completes
the Company's planned divestiture of electronic components
businesses and now allows the Company to concentrate on its
growing line of high performance specialty materials. Cash
payments totaling $2.6 million were received in January 1996 from
the sale of the Soladyne Division. This sale did not include
this division's trade accounts receivable which were retained by
the Company. The proceeds from this divestiture are expected to
modestly exceed the carrying value of the assets plus the costs
related to disposition.
Durel Corporation, the Company's 50% owned electroluminescent
lamp joint venture with 3M, had sales growth of 28% in 1995. An
important portion of this sales gain came from the ramp-up of a
complex new automotive application. However, profits were
unfavorably impacted in the initial production period for this
application and by the move to Durel's new 77,000 square foot
facility in Chandler, Arizona. Sales and profits were also
affected by a major inventory adjustment at one of Durel's
largest customers in the watch market. As a result, the
Company's 50% share of Durel's earnings did not have a
significant impact on the Company's earnings for the full year
1995. During the year, patents important to Durel's future were
issued, and Durel has filed an infringement suit based on these
patents. Significant ongoing costs are being incurred to
prosecute the suit and protect Durel's proprietary position.
Sales of Rogers INOAC Corporation (RIC), the Company's 50% owned
joint venture with INOAC Corporation of Japan, stated in dollars,
were higher in 1995 than in 1994. However, sales stated in local
currency remained approximately the same. At mid-year, RIC
introduced an innovative line of consumer footcare products which
has been well received in the market.
The Company's manufacturing profit was 31% of sales in 1995 and
30% in 1994. This increase was due to production cost
improvements in a number of domestic product lines and a more
profitable product mix in the European operation. These
F-47
[NOTE: A chart showing the following information is included in
the printed copy of the 1995 Annual Report to Shareholders:
Earnings Per Share: 1993 - $1.05; 1994 - $1.42; 1995 - $1.69
(Restated for the two-for-one stock split in 1995.)]
gains offset a continuing decline in sales price per square foot of
high frequency microwave materials resulting from the shift of
microwave business from military to commercial applications.
Research and development expense totaled $9.3 million in 1995
compared with $9.2 million in 1994, or 7% of sales in each year.
Significant product and process development activities in 1995
included: technical support of the commercial introduction of
RO4003, the first of a family of low cost, controlled dielectric
constant thermoset laminates with excellent electrical and
physical properties; development of a flame retardant version of
RO4003; further development of lower cost processes for
manufacturing both RO4000 thermoset laminates and RO3000
fluoropolymer laminates; scale-up to commercial production of
PORON S-2000 silicone foam material; introduction of a low
outgassing flame retardant PORON urethane foam material;
development of improved materials and process technology related
to ENDUR fuser rolls and conductive elastomers; development of an
improved extrusion compounding process for phenolic molding
material and the development of improved adhesive systems for
flexible circuit materials.
Selling and administrative expense increased slightly but as a
percentage of net sales was 15% in both 1995 and 1994.
Net interest expense in 1995 decreased substantially from 1994
because of lower borrowings and increased investment income on
the higher level of cash equivalents and marketable securities.
During the second quarter, debt of $2.5 million bearing an
interest rate of 10.5% was prepaid. The prepayment expense of
$180,000 is reflected in other income less other charges. Total
debt outstanding at December 31, 1995, was $4.8 million compared
with $7.9 million at January 1, 1995.
Other income less other charges was $2.4 million for 1995
compared with $1.6 million for the same period in 1994. Royalty
payments related to the 1994 sale of the U.S. power distribution
business more than accounted for this increase. These royalty
payments are expected to decrease over the next four years.
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 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 small section of cement
flooring at its East Woodstock, Connecticut facility. The Company
F-48
[NOTE: A chart showing the following information is included in
the printed copy of the 1995 Annual Report to Shareholders:
Net Sales Per Employee: 1993 - $112,000; 1994 - $137,000; 1995 - $151,000]
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
$900,000 in 1994 for costs related to this matter. During 1995,
$300,000 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.
At December 31, 1995, other accrued liabilities were lower than
January 1, 1995, primarily due to the utilization and/or
settlement of certain environmental and legal reserves
established prior to 1995.
The Company has not had any material recurring costs and capital
expenditures relating to environmental matters, except as
specifically described in the preceding statements.
CONSOLIDATED SALES AND OPERATIONS - 1994 TO 1993
Net sales were $133.9 million for 1994 compared with $123.2
million for 1993. Sales growth, ranging from quite modest to
substantial, was attained in 1994 in all but one of the Company's
divisions. The most substantial increases were in flexible
circuit materials for computer and peripheral applications;
elastomeric components for printers, copiers, and automotive
needs; moldable composites for electrical and transportation
industry applications; high frequency circuit materials for
commercial wireless communications uses; and, power distribution
components for European electronics applications. These sales
gains were attributable mainly to increased unit volumes; price
increases and mix did not have a material effect. The only
business unit that had decreased sales was the Company's small
microwave circuit board manufacturing operation, which converted
from mainly military to commercial products during the year.
In 1994, net income was $10.1 million, or $1.42 per share,
compared with $6.7 million, or $1.05 per share in 1993. This
improvement was mainly the result of increased sales, the
positive impact related to divestitures, greater contribution
from the Company's 50% owned joint ventures, and lower net
interest expense.
The Company concluded the sale of its U.S. power distribution
business to Methode Electronics, Inc., during the second quarter
of 1994. In addition to an initial cash payment, the Company is
receiving royalties on sales until 1999. The building where the
business was operating, located in Mesa, Arizona, is being
offered for sale. The remaining equipment of this business was
sold separately. Also in the third quarter of 1994, a small
polyimide components business was sold to E.I. du Pont de Nemours
and Company for a modest gain.
Durel Corporation, the Company's 50% owned joint venture with 3M,
had a sales gain of 62% in 1994. This growth came mainly from
applications in watches, automobiles, and hand-held wireless
communication devices. To help meet increased demand,
construction of a new 77,000 square foot plant in Chandler,
Arizona, was started in 1994 and completed in 1995.
RIC, the Company's 50% owned joint venture with INOAC Corporation
of Japan, achieved record sales in 1994. In local currency, this
high performance elastomer joint venture in Japan grew 25% in
1994, despite the relatively weak economy in Japan, and RIC's
profits increased 34% in 1994 compared with 1993. In the second
quarter of 1994, RIC started up a new PORON materials production
line, more than doubling capacity for the Asian market.
F-49
The Company's manufacturing profit was 30% of sales in both 1994
and 1993. Improved profit margins in several operations in 1994
were offset by the changes required to convert from mainly
military applications to commercial products in the microwave
circuit board manufacturing operation, and by the impact of the
start-up of the new PORON production line in the United States.
Beginning with 1994, certain new product and process development
expenses, previously included as cost of sales, have been
reclassified as research and development expense. Prior year data
has been restated accordingly. This reclassification has no
effect on net income for any period. Research and development
expense totaled $9.2 million in 1994 compared with $9.5 million
in 1993, or 7% and 8% of sales, respectively. Significant
product and process development activities in 1994 included:
process and product improvements which further reduce the cost of
the RO3000 family of composite fluoropolymer laminates;
development of the RO4000 family of low cost, controlled
dielectric constant thermoset composite laminates with excellent
electrical and physical properties; completion of a new PORON
casting machine of improved design which produces wider product
at faster rates; improved ENDUR fuser roll coating capability and
a broader range of ENDUR LE conductive formulations; continued
development of faster curing MPC (moldable phenolic composite)
compounds; and the introduction of recycle capability for cured
MPC product.
Selling and administrative expense as a percentage of net sales
was consistent at 15% in both 1994 and 1993.
Net interest expense decreased 56% from 1993 to 1994, primarily
because of lower borrowing levels.
Other income less other charges increased from $.8 million in
1993 to $1.6 million in 1994. This increase reflects gains on
disposition of assets and positive contribution from the
Company's 50% owned joint ventures, offset partially by estimated
costs to remove and dispose of soil contaminated by PCBs at the
Company's East Woodstock, Connecticut, facility as described
above.
At January 1, 1995, other accrued liabilities were greater than
January 2, 1994, primarily as a result of reserves established
for the PCB cleanup.
RESTRUCTURING/COST REDUCTION CHARGES
During 1992, it was decided that the Company's strategy should be
one of building further on its existing specialty polymer
composite materials businesses. Actions were taken during 1992
and early 1993 to begin to implement this strategy. The major
element of this strategy was to withdraw from the business of
producing and selling custom designed flexible circuits and
multimetal layer tape automated bonding components. As of the
end of 1992, the Company shut down the Micro Interconnections
Unit which produced the multimetal layer tape automated bonding
components, and a letter of intent was signed for the divestiture
of the Flexible Interconnections Division (FID), the Company's
largest division, to a limited partnership managed by Ampersand
Ventures, a venture capital firm based in Wellesley,
Massachusetts. The divestiture, which included the Company's 50%
interest in a related joint venture, Smartflex Systems, was
completed in June 1993. The costs associated with these two
actions amounted to $22.4 million. An additional $4.2 million
was reserved for steps taken to set the new strategic direction
of the Company and to improve its operations and future
profitability. As of the end of 1992, charges totaling $6.2
million were applied against these reserves.
F-50
During 1995, 1994, and 1993, $.3 million, $1.3 million, and $19.3
million, respectively, was charged against the remaining reserve.
The net balance of $.5 million, coupled with the valuation
reserve in assets held for sale of $1.7 million at December 31,
1995, are adequate for the completion of the residual
restructuring actions. The majority of this remaining accrued
reserve relates to pension liabilities resulting from 1991
European work force reductions.
Net assets held for sale as of December 31, 1995, also included
$2.6 million for the divestiture of the Soladyne Division. The
proceeds were received from Merix Corporation in January 1996,
and this asset account was reduced accordingly.
SEGMENT SALES AND OPERATIONS
Sales in the Polymer Products business segment increased 4%, 9%,
and 6% in 1995, 1994, and 1993, respectively. All three of the
units in this business segment have had sales growth over the
three-year period. Sales of moldable composite materials had the
highest rate of increase in 1995 primarily driven by increasing
market share, particularly in electronic motor applications.
The Polymer Products business segment generated profits of $4.6
million in 1995, $6.0 million in 1994, and $8.8 million in 1993.
Factors contributing to the decrease from 1994 to 1995 include
lower joint venture income, higher raw material costs,
unfavorable product mix changes, inventory corrections by
customers in the second half of 1995, and higher professional
service costs. The decrease from 1993 to 1994 was primarily due
to higher costs related to the Poron Materials Unit's capacity
expansion and provisions for the removal and disposal of PCB
contaminated soil.
Revenues from the Electronic Products business segment, adjusted
for divestitures, increased 10% in 1995, 12% in 1994, and 7% in
1993. Sales gains were driven by the rapidly growing notebook
computer and disk drive markets and by growing applications in
wireless communications for high frequency circuit laminate
materials.
Electronic Products operating income was $11.2 million in 1995, a
100% increase over 1994's level of $5.6 million. This increase
is mainly attributable to the higher sales level and to the
reduction of losses at the Soladyne Division.
European sales stated in local currencies, increased 5% in 1995,
14% in 1994 and 3% in 1993. Sales gains (decreases) were 15%,
17% and (2%) in 1995, 1994, and 1993, respectively, when
translated into U.S. dollars. Increased sales for older
applications in mainframe computers led the sales growth in 1994;
however, these sales declined significantly in 1995. New
applications in power distribution devices for cellular telephone
base stations and large power equipment accounted for most of the
higher sales figures in 1995. The change in the product mix in
1995 also resulted in higher profit margins.
BACKLOG
The Company's backlog of firm orders was $24.1 million at
December 31, 1995, $20.2 million at January 1, 1995, and $17.9
million at January 2, 1994 (excluding orders of the Company's
divested businesses). The increase from 1994 to 1995 primarily
relates to a few key customers of the Electronic Products
business segment committing to firm orders extending well into
1996. From 1993 to 1994 the
[NOTE: A chart showing the following information in included in the
printed copy of the 1995 Annual Report to Shareholders:
Total Debt to Capitalization (Capitalization is Shareholders' Equity
Plus Total Debt, Including Current Portion): 1993 - 38%; 1994 - 15%;
1995 - 7%]
F-51
increase was due to a generally higher level of sales and a few
key customers of the Polymer Products business segment committing
to firm orders extending well into the next year.
SOURCES OF LIQUIDITY AND CAPITAL
Net cash provided by operating activities in 1995 amounted to
$11.4 million in 1995, $14.1 million in 1994, and $11.9 million
in 1993. The year-to-year decrease from 1994 to 1995 is
attributable to higher inventories, the fact that the cash
payment for the sale of the Soladyne Division was not received
until early 1996, and the third quarter $3.0 million additional
contribution to the Company's union pension plan. The year-to-
year increase from 1993 to 1994 is mainly due to the higher level
of income.
Capital expenditures totaled $8.9 million in 1995, $4.6 million
in 1994, and $8.6 million in 1993. In 1995, major process and
facilities expansion projects were initiated to support the
Company's growing sales of commercial microwave materials.
Additionally, major investments were started to more than double
the capacity of the flexible circuit laminate facility. Both
expansions are expected to be completed by mid-1996. The high
level of spending in 1993 was mainly for plant expansions and
added capacity in the Poron Materials Unit and the Elastomer
Components Unit.
Capital spending was exceeded by cash generated from the
Company's operating activities in all three years presented. For
1996, capital spending is expected to be somewhat higher than
1995. During 1996, work will begin on a substantial increase in
moldable composites manufacturing capacity and production
capacity is being added for certain high performance elastomer
components at the Company's subsidiary in Gent, Belgium. It is
anticipated that this spending will be financed with internally
generated funds.
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 December 31,
1995.
Included in the provisions of the Company's long-term loan
agreements are restrictions on the Company and its subsidiaries
with respect to additional borrowings, loans to others except for
subsidiaries, payment of dividends, transactions in capital
stock, asset acquisitions and dispositions, and lease
commitments. These agreements also impose financial covenants
requiring the Company to maintain certain levels of working
capital and net worth, and specified leverage ratios.
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.
DIVIDEND POLICY
In 1992, the Board of Directors voted to discontinue cash
dividends. At present, the Company expects to maintain a policy
of emphasizing longer-term growth of capital rather than
immediate dividend income.
[NOTE: A chart showing the following information is included in the
printed copy of the 1995 Annual Report to Shareholders:
Ratio of Current Assets to Current Liabilities: 1993 - 1.6; 1994 - 2.1;
1995 - 2.3]
F-52
NOTE: EXHIBIT 27 - FINANCIAL DATA SCHEDULE - IS PAGE F-53
Financial Statements
and Other Financial Information (Unaudited)
Rogers Inoac Corporation
October 31, 1995
F-54
Rogers Inoac Corporation
Financial Statements
and Other Financial Information
October 31, 1995
Contents
Financial Statements:
Accountants' Compilation Report 1
Balance Sheets at October 31, 1995, and
1994 (Unaudited) 2
Statements of Income and Retained Earnings
for the years ended October 31, 1995 (Unaudited),
1994 (Unaudited), and 1993 4
Statements of Cash Flows
for the years ended October 31, 1995 (Unaudited),
1994 (Unaudited), and 1993 5
Notes to Financial Statements 6
Schedule
number
-------
Financial Statement Schedules:
Valuation and Qualifying Accounts
for the years ended October 31, 1995 (Unaudited),
1994 (Unaudited), and 1993 II
For the years ended October 31, 1995, 1994 and 1993 all other
schedules have been omitted, as permitted by the rules and
regulations of the Securities and Exchange Commission, as the
required information is presented either in the financial
statements or the notes thereto, or as the schedule is not
applicable.
F-55
Accountants' Compilation Report
The Board of Directors and Shareholders
Rogers Inoac Corporation
We have compiled the accompanying balance sheets of Rogers Inoac
Corporation as of October 31, 1995 and 1994, the related
statements of income and retained earnings and cash flows for
the years then ended and the financial statement schedules listed
in the accompanying index, in accordance with Statements on
Standards for Accounting and Review Services issued by the American
Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial
statements information that is the representation of management.
We have not audited or reviewed the accompanying financial statements
and, accordingly, do not express an opinion or any other form of
assurance on them.
The financial statements for the year ended October 31, 1993 were
audited by us and we expressed an unqualified opinion on them in
our report dated December 22, 1993, but we have not performed
any auditing procedures subsequent to that date.
ERNST & YOUNG
Tokyo, Japan
December 26, 1995
F-56
Rogers Inoac Corporation
Balance Sheets
October 31,
1995 1994
(Thousands of yen)
(Unaudited)
------------------------
Assets
Current assets:
Cash and cash equivalents (Note 10) Y 581,942 Y 418,261
Receivables:
Trade receivables 41,080 37,671
Due from affiliates (Note 4) 391,201 452,468
------------------------
432,281 490,139
Less allowance for doubtful accounts (7,195) (5,135)
------------------------
425,086 485,004
Inventories:
Merchandise and finished goods 116,066 98,691
Work in process 61,609 57,115
Raw materials 124,764 108,827
------------------------
302,439 264,633
Deferred income taxes (Note 3) 11,496 14,319
Prepaid expenses and other current assets 639 2,329
------------------------
Total current assets 1,321,602 1,184,546
Plant and equipment:
Buildings and improvements 26,302 16,991
Machinery and equipment 557,245 534,276
Vehicles 8,730 4,006
Furniture and fixtures 48,941 34,452
Construction in progress 2,575 2,163
------------------------
643,793 591,888
Less accumulated depreciation (337,244) (236,885)
------------------------
306,549 355,003
Other assets 20,596 19,049
------------------------
Total assets Y 1,648,747 Y 1,558,598
========================
F-57
October 31,
1995 1994
(Thousands of yen)
(Unaudited)
------------------------
Liabilities and shareholders' equity
Current liabilities:
Trade payables Y 124,904 Y 98,875
Due to affiliates (Note 4) 243,253 286,431
Income taxes payable (Note 3) 81,911 127,136
Accrued expenses and other liabilities 43,885 28,857
------------------------
Total current liabilities 493,953 541,299
Deferred income taxes (Note 3) 20,362 27,150
Shareholders' equity:
Common stock, '50,000 par value:
Authorized - 3,200 shares;
Issued and outstanding - 880 shares 44,000 44,000
Legal reserve (Note 7) 11,000 11,000
Retained earnings (Notes 2 and 7) 1,079,432 935,149
------------------------
Total shareholders' equity 1,134,432 990,149
Commitments (Note 9)
------------------------
Total liabilities and shareholders' equity Y 1,648,747 Y 1,558,598
========================
See Accountants' Compilation Report and Notes to Financial
Statements.
F-58
Rogers Inoac Corporation
Statements of Income and Retained Earnings
Year ended October 31,
1995 1994 1993
-------------------------------------
(Thousands of yen)
(Unaudited)
Net sales (Note 4) Y 3,876,542 Y 3,879,367 Y 3,172,282
Interest income (Note 4) 7,380 10,806 16,499
Other income (Note 4) 4,869 5,195 4,542
-------------------------------------
3,888,791 3,895,368 3,193,323
Costs and expenses (Notes 4 and 6):
Cost of products sold 3,146,177 3,039,344 2,498,630
Selling, general and administrative
expenses (Note 8) 421,441 400,935 315,057
Interest expense (Note 5) -- -- 1,232
Other 675 -- --
-------------------------------------
3,568,293 3,440,279 2,814,919
-------------------------------------
Income before income taxes 320,498 455,089 378,404
Income taxes (Note 3):
Current 166,980 218,595 192,571
Deferred (credit) (3,965) 20,405 12,192
-------------------------------------
163,015 239,000 204,763
-------------------------------------
Net income (Note 2) 157,483 216,089 173,641
Retained earnings at beginning of year
(Note 2) 935,149 730,060 567,419
Cash dividends (13,200) (11,000) (11,000)
------------------------------------
Retained earnings at end of year
(Notes 2 and 7) Y 1,079,432 Y 935,149 Y 730,060
=====================================
Amounts per share (Note 11):
Net income Y178.96 Y245.56 Y197.32
Cash dividends 15.00 12.50 12.50
See Accountants' Compilation Report and Notes to Financial Statements.
F-59
Rogers Inoac Corporation
Statements of Cash Flows
Year ended October 31,
1995 1994 1993
-------------------------------------
(Thousands of yen)
(Unaudited)
Operating activities
Net income Y 157,483 Y 216,089 Y 173,641
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 106,925 98,565 31,571
Provision for deferred income taxes (3,965) 20,405 12,192
Loss on disposal of plant and
equipment 675 -- --
Changes in operating assets and
liabilities:
Receivables 59,918 (139,518) 33,954
Inventories (37,806) (72,048) 33,798
Prepaid expenses and other current
assets 1,690 245 (2,039)
Trade payables and due to
affiliates (17,149) 80,031 (36,025)
Accrued expenses and other
liabilities and income taxes
payable (30,197) 36,763 (47,594)
-------------------------------------
Net cash provided by operating
activities 237,574 240,532 199,498
Investing activities
Purchases of plant and equipment (54,228) (325,438) (57,829)
Proceeds from sales of property and
equipment 80 -- --
Increase in other assets (6,545) (20,189) (144)
-------------------------------------
Net cash used in investing activities (60,693) (345,627) (57,973)
Financing activities
Dividends paid (13,200) (11,000) (11,000)
-------------------------------------
Net cash used in financing activities (13,200) (11,000) (11,000)
-------------------------------------
Increase (decrease) in cash and cash
equivalents 163,681 (116,095) 130,525
Cash and cash equivalents at beginning
of year 418,261 534,356 403,831
-------------------------------------
Cash and cash equivalents at end of
year Y 581,942 Y 418,261 Y 534,356
=====================================
See Accountants' Compilation Report and Notes to Financial Statements.
F-60
Rogers Inoac Corporation
Notes to Financial Statements
October 31, 1995
(Data with respect to the years ended
October 31, 1995 and 1994 are unaudited.)
1. Significant Accounting Policies
Basis of Financial Statements
The Company was incorporated under the Commercial Code of Japan in
January 1984, and is owned 50% by Rogers Corporation (a U.S.
corporation) and 50% by Inoac Corporation (a Japanese corporation).
The Company maintains its official accounting records and prepares
its financial statements for domestic purposes in yen in accordance
with Japanese accounting practices. The accompanying financial
statements have been prepared in conformity with accounting principles
generally accepted in the United States and differ from those issued
for domestic purposes in Japan. Accordingly, the financial
statements reflect certain adjustments not recorded in the Company's
official accounting records. These adjustments are explained in
Note 2 to the financial statements.
Certain amounts from prior years have been reclassified to conform
to be current year presentation.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with a
maturity of three months or less when purchased to be cash equivalents.
Inventories
Inventories are valued at the lower of cost (first-in, first-out
method) or market.
Plant and Equipment
Plant and equipment is stated on the basis of cost. Depreciation
is computed by the declining-balance method over the estimated useful
lives of the respective assets.
See Accountants' Compilation Report.
F-61
Rogers Inoac Corporation
Notes to Financial Statments (continued)
1. Significant Accounting Policies (continued)
Income Taxes
The Company computes and records current income taxes payable based
upon its determination of taxable income which is different from pretax
accounting income. The differences relate principally to the adjustments
required to conform the accompanying financial statements to accounting
principles generally accepted in the United States. Deferred income
taxes arising from temporary differences are not recognized in the
official accounting records; however, they are included in the
adjustments explained in Note 2 to the financial statements.
2. Adjustments Not Reflected in the Official Accounting Records
The following adjustments, not reflected in the official accounting
records, have been made to conform the Company's Japanese yen-based
financial statements to accounting principles generally accepted in the
United States (U.S. GAAP):
Retained Retained
earnings at Net earnings at
beginning of Appropri- income for end of
year ations the year year
-----------------------------------------------
(Thousands of yen)
Year ended October 31, 1995:
As recorded in the official
accounting records Y 768,900 Y (18,200) Y 175,566 Y 926,266
Japanese GAAP adjustment:
Income tax provision 135,000 -- -- 135,000
-----------------------------------------------
Per Japanese GAAP 903,900 (18,200) 175,566 1,061,266
U.S. GAAP adjustments:
Accrued compensated
absences (16,823) -- (3,817) (20,640)
Accrued directors' bonuses (5,000) 5,000 (5,000) (5,000)
Prepaid expenses 12,980 -- -- 12,980
Depreciation 52,923 -- (13,231) 39,692
Deferred income taxes (12,831) -- 3,965 (8,866)
----------------------------------------------
31,249 5,000 (18,083) 18,166
----------------------------------------------
As adjusted to U.S. GAAP Y 935,149 Y (13,200) Y 157,483 Y 1,079,432
==============================================
See Accountants' Compilation Report.
F-62
Rogers Inoac Corporation
Notes to Financial Statments (continued)
3. Income Taxes
Income taxes include corporation, enterprise, and inhabitants' taxes
which, in the aggregate, resulted in statutory tax rates of approximately
51.3% for 1995 and 1994, and 52.3% for 1993. The Company made income
tax payments of 212,205 thousand yen, 179,384 thousand yen and 243,630
thousand yen during 1995, 1994 and 1993, respectively.
For the years ended October 31, 1995, 1994 and 1993, the differences
between the statutory tax rates and the effective tax rates are
reconciled as follows:
Year ended October 31,
1995 1994 1993
-------------------------
(Thousands of yen)
Statutory income tax rate 51.3% 51.3% 52.3%
Tax effect of:
Expenses not deductible for tax purposes 1.9 1.2 1.0
Reversal of contingent provision (2.1) --- ---
Other (0.3) 0.0 0.8
-------------------------
Effective tax rate 50.8% 52.5% 54.1%
=========================
Total deferred tax assets and liabilities as of October 31, 1995
and 1994 were as follows:
1995 1994
------------------------------- ------------------------------
Current Noncurrent Total Current Noncurrent Total
------------------------------- ------------------------------
(Thousands of yen)
Deferred tax
assets Y 18,155 Y -- Y 18,155 Y 20,978 Y -- Y 20,978
Deferred tax
liabilities (6,659) (20,362) (27,021) (6,659) (27,150) (33,809)
-------------------------------- ------------------------------
Y 11,496 Y(20,362) Y (8,866) Y 14,319 Y (27,150) Y(12,831)
================================ ==============================
Temporary differences at October 31, 1995 and 1994 mainly consisted
of accrued expenses that gave rise to deferred tax assets, and prepaid
expenses and depreciation that gave rise to deferred tax liabilities.
The total tax effect of these temporary differences is recognized in the
statements of income and retained earnings.
See Accountants' Compilation Report.
F-63
Rogers Inoac Corporation
Notes to Financial Statments (continued)
4. Transactions with Affiliates
A substantial portion of the Company's business is conducted through
its Japanese parent, Inoac Corporation ("Inoac") and its subsidiaries,
which purchase the Company's products for resale. Inoac also provided
certain services to the Company for which it charged a management
service fee.
Balances due from and due to affiliates at October 31, 1995, and 1994,
and transactions with affiliates for the years ended October 31, 1995,
1994 and 1993 are summarized as follows:
October 31,
1995 1994
------------------------
(Thousands of yen)
Due from:
Inoac and its subsidiaries and
affiliates Y 391,201 Y 452,468
========================
Due to:
Inoac and its subsidiaries and
affiliates Y 242,487 Y 283,843
Rogers Corporation 766 2,588
------------------------
Y 243,253 Y 286,431
========================
Year ended October 31,
1995 1994 1993
-------------------------------------
(Thousands of yen)
Inoac and its subsidiaries and
affiliates:
Sales to Y 3,758,399 Y 3,814,019 Y 3,065,889
Management service fee income 4,800 -- --
Purchases from 1,265,691 1,429,380 1,138,766
Management service fee expense 55,049 56,122 53,591
Plant and office rent 80,293 74,651 49,501
Purchases of equipment 15,474 323,176 5,611
Subcontractors' fee 366,219 415,215 352,746
Rogers Corporation:
Commission income Y -- Y 4,923 Y 819
Sales commission expense 8,693 9,032 7,340
Interest income -- -- 7,079
See Accountants' Compilation Report.
F-64
Rogers Inoac Corporation
Notes to Financial Statments (continued)
5. Interest Paid
Interest paid for the year ended October 31, 1993 amounted to 1,232
thousand yen.
6. Pension Cost
All employees of the Company are seconded from its Japanese parent,
Inoac, and are covered by Inoac's pension plan and Inoac bears the
ultimate pension obligation for these employees. The Company reimburses
Inoac for the current pension cost for these employees. Amounts
charged to the Company by Inoac for its pension plan for the years
ended October 31, 1995, 1994 and 1993 amounted to 6,476 thousand yen,
5,144 thousand yen and 5,050 thousand yen, respectively.
A director of the Company, who is also a director of Inoac, is not
covered by the pension plan. Payments of termination benefits to
the directors are at the discretion of the shareholders of the Company
and are not determinable in advance of a resolution by the shareholders
covering such payments. Consequently, no provision for the director's
termination benefits has been included in the accompanying financial
statements.
7. Retained Earnings and Legal Reserve
The amount of retained earnings available for distribution to the
shareholders is based on the financial statements prepared under the
Japanese Commercial Code. The Commercial Code provides that an amount,
which at least 10% of cash dividends paid and bonuses to directors and
statutory auditors paid, be appropriated as a legal reserve until such
reserve equals 25% of stated capital (common stock). The legal reserve
is not available for dividends, but may be used to reduce a deficit by
resolution of the shareholders or may be capitalized by resolution of
the Board of Directors. The amount of unrestricted retained earnings
available at October 31, 1995 for dividends was approximately 926,266
thousand yen.
8. Advertising
The Company expenses advertising costs as incurred. Amounts charged
to advertising expense for the years ended October 31, 1995, 1994 and
1993 amounted to 39,516 thousand yen, 30,166 thousand yen and 22,644
thousand yen.
See Accountants' Compilation Report.
F-65
Rogers Inoac Corporation
Notes to Financial Statments (continued)
9. Commitments
The Company leases certain equipment under leases which are
noncancelable. Future minimum payments, by year and in the aggregate,
for equipment under noncancelable operating leases with terms of one
year or more consisted of the following at October 31, 1995:
(Thousands of yen)
------------------
1996 Y 5,312
1997 4,584
1998 4,522
1999 1,948
2000 and thereafter 1,934
--------
Y 18,300
========
For the years ended October 31, 1995, 1994 and 1993, total rental
expense for all operating leases amounted to 80,677 thousand yen,
80,046 thousand yen and 53,865 thousand yen, respectively.
10. Financial Instruments
The total carrying amount reported in the balance sheets for financial
instruments, cash and cash equivalents, approximates their respective
fair value.
11. Amounts per Share
The computation of net income per share is based on the weighted
average number of shares (880 shares) of common stock outstanding
during each year.
Cash dividends per share represent the cash dividends proposed by
the Board of Directors as applicable to the respective year.
See Accountants' Compilation Report.
F-66
12. Short-Term Borrowings
Rogers Inoac Corporation
Average Weighted
Maximum amount average
Weighted amount outstanding interest
Category of Balance avergage outstanding during rate during
aggregate short- at end interest during the year the year
term borrowings of year rate the year (2) (3)
- --------------------------------------------------------------------------------
(Yen)
Year ended 10/31/95 (4)
Year ended 10/31/94 (4)
Year ended 10/31/93:
Overdraft from bank (1) Y 0 4.389% Y 80,000,000 Y 26,666,667 4.618%
(1) Notes payable to bank represent borrowings under line-of-credit
arrangements which have no termination date but are reviewed annually
for renewal.
(2) The average amount outstanding during the year was computed by dividing
the total of the month-end outstanding principal balances by 12.
(3) The weighted average interest rate during the year was computed by
dividing the actual interest expense by the monthly average short-term
debt outstanding during the year.
(4) There were no short-term borrowings outstanding during the years ended
October 31, 1994 and 1995.
F-67
SCHEDULE II
Valuation and Qualifying Accounts
Rogers Inoac Corporation
Balance
at Charged Charged Balance
beginning to costs to other Deduc- at end
Description of year and expenses accounts tions of year
- --------------------------------------------------------------------------------
Year ended 10/31/95:
Deducted from asset
accounts: Y 5,135,040 Y 2,060,456 Y 7,195,496
Allowance for
doubtful accounts
Year ended 10/31/94:
Deducted from asset
accounts:
Allowance for
doubtful accounts Y 2,000,000 Y 3,135,040 Y 5,135,040
Year ended 10/31/93:
Deducted from asset
accounts:
Allowance for
doubtful accounts Y 5,713,994 Y 3,713,994 Y 2,000,000
F-68
[PAGE]