(Source: Business Wire)
Rogers Corporation (NYSE: ROG) today announced it will record in its second quarter 2009 results certain net charges of approximately $61.5 to $69.0 million related to valuation reserves against the Company's US deferred tax assets, the impairment of certain long-lived operating assets, and other non-recurring items, in accordance with generally accepted accounting principles. A reconciliation of these charges is included at the end of this press release. The Company is currently in the process of finalizing these charges.
In accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109), the Company evaluates its deferred income tax assets quarterly to determine if valuation allowances are required or should be adjusted. This evaluation includes the consideration of all available evidence, both positive and negative, using a "more likely than not" standard to determine if a deferred tax asset will be realizable in the future. As a result of our second quarter 2009 assessment, the Company will record a charge of approximately $50 - $55 million to establish a valuation allowance against its US deferred tax assets. This conclusion was due primarily to the fact that the Company is now projecting that it will be in a significant cumulative three-year loss position in its US operations in the second half of 2009. This loss position is the result of many factors, including the cumulative losses from past impairments of US assets, combined with substantially reduced US operating results during the current economic recession. This situation constitutes significant negative evidence that is difficult to overcome on a "more likely than not" standard through objectively verifiable data. While the Company is pursuing certain tax planning strategies that could permit it to realize its deferred tax assets in the future, the Company concluded that its deferred tax asset was impaired due primarily to its forecasted three-year cumulative loss position in the US.
In addition to the deferred tax valuation allowance, the Company will record additional net charges related to the impairment of certain operating assets and other special charges that will total approximately $11.5 - $14.0 million net of taxes. These charges result primarily from the economic declines and product end-of-life position in certain businesses and are comprised of the following specific items:
$4.0 - $5.0 million of non-cash impairment charges associated with electroluminescent (EL) lamp screen printing production equipment in China as a result of the termination of product and technology development initiatives aimed at future use of that equipment, as well as the continued decline of the existing EL lamp business;
$5.0 - $6.0 million of non-cash impairment charges on certain production equipment that was intended to be used primarily in the development and production of thin, flexible circuit material film products. However, management determined in the second quarter that market opportunities for these potential products were limited and abandoned further development efforts;
$3.0 - $3.5 million of non-cash impairment charges associated with buildings, equipment and inventory which have been rendered surplus or obsolete due to economic declines within the related businesses;
$1.9 million charge to accrue for product liability claims from two customers resulting from an isolated manufacturing incident which was quickly remedied.
