What changed in this filing

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Item 1. Financial Statements

2021-07-30 compared with 2021-04-30 · 168 added, 115 removed, 580 unchanged (33% of the section changed)

3 unchanged sentences

(Dollars and shares in thousands, except per share amounts)

Three Months Ended

March 31, 2021 March 31, 2020

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Net sales $ 234,906 $ 191,157 $ 464,171 $ 389,967

7 unchanged sentences

Equity income in unconsolidated joint ventures 1,930 1,022 4,111 2,240

Pension settlement charges — ( 55 ) — ( 55 )

Other income (expense), net 1,239 634 4,207 ( 152 )

12 unchanged sentences

(Dollars in thousands)

Three Months Ended

March 31, 2021 March 31, 2020

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Net income $ 28,655 $ 14,520 $ 59,873 $ 27,779

1 unchanged sentence

Pension and other postretirement benefits:

Pension settlement benefits, net of tax (Note 4) — ( 48 ) — ( 48 )

Actuarial net gain incurred, net of tax (Note 4) — 626 — 626

Amortization of loss, net of tax (Note 4) 58 67 121 133

Derivative instrument designated as cash flow hedge:

Change in unrealized loss before reclassifications, net of tax (Note 4) — ( 1,249 )

Change in unrealized gain (loss) before reclassifications, net of tax (Note 4) — 383 — ( 866 )

Unrealized gain reclassified into earnings, net of tax (Note 4) — ( 267 ) — ( 334 )

5 unchanged sentences

(Dollars and shares in thousands, except par value )

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Current assets

47 unchanged sentences

(Dollars in thousands)

Three Months Ended

March 31, 2021 March 31, 2020

Six Months Ended

June 30, 2021 June 30, 2020

Operating Activities:

6 unchanged sentences

Dividends received from unconsolidated joint ventures 1,754 1,785

Pension settlement benefits — ( 63 )

Pension and other postretirement benefits ( 190 ) ( 100 )

4 unchanged sentences

Accounts receivable ( 24,609 ) ( 6,623 )

Proceeds from insurance/government subsidies related to operations 148 —

Contract assets ( 3,710 ) 3,174

7 unchanged sentences

Capital expenditures ( 21,415 ) ( 18,150 )

Proceeds from the sale of property, plant and equipment, net 714 —

Net cash used in investing activities ( 20,701 ) ( 18,150 )

18 unchanged sentences

(Dollars and shares in thousands)

Three Months Ended

March 31, 2021 March 31, 2020

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Capital Stock

2 unchanged sentences

Shares issued for employee stock purchase plan — — 7 6

Shares issued to directors 10 — 10 —

Balance, end of period 18,722 18,668 18,722 18,668

3 unchanged sentences

Shares issued for employee stock purchase plan — — 697 658

Shares issued to directors ( 10 ) — ( 10 ) —

Equity compensation expense 4,388 3,895 8,394 7,022

38 unchanged sentences

For additional information regarding this balance, refer to “Note 11 – Pension Benefits and Other Postretirement Benefits.” Available-for-sale investments measured at fair value on a recurring basis, categorized by the level of inputs used in the valuation, were as follows:

Available-for-Sale Investment at Fair Value as of March 31, 2021

Available-for-Sale Investment at Fair Value as of June 30, 2021

(Dollars in thousands) Level 1 Level 2 Level 3 Total

6 unchanged sentences

(1) This balance was invested in funds comprised of short-term cash and fixed income securities, and was recorded in the “Other long-term assets” line item in the condensed consolidated statements of financial position.

As of March 31, 2021, the fair value of these investments approximated its carrying value.

As of June 30, 2021, the fair value of these investments approximated its carrying value.

From time to time we enter into various instruments that require fair value measurement, including foreign currency contracts and copper derivative contracts.

Derivative instruments measured at fair value on a recurring basis, categorized by the level of inputs used in the valuation, were as follows:

Derivative Instruments at Fair Value as of March 31, 2021

Derivative Instruments at Fair Value as of June 30, 2021

(Dollars in thousands) Level 1 Level 2 Level 3 Total (1)

22 unchanged sentences

Foreign Currency

During the three months ended March 31, 2021, we entered into U.S.

dollar, Korean won, and euro forward contracts.

During the three months ended June 30, 2021, we entered into U.S.

dollar, euro, and Korean won forward contracts.

We entered into these foreign currency forward contracts to mitigate certain global transactional exposures.

1 unchanged sentence

As a result, any fair value adjustments required on these contracts are recorded in “Other income (expense), net” in our condensed consolidated statements of operations in the period in which the adjustment occurred.

As of March 31, 2021, the notional values of the remaining foreign currency forward contracts were as follows:

As of June 30, 2021, the notional values of the remaining foreign currency forward contracts were as follows:

Notional Values of Foreign Currency Derivatives

2 unchanged sentences

EUR/USD € 10,049,732

As of March 31, 2021, we had 14 outstanding contracts to hedge exposure related to the purchase of copper in our AES operating segment.

As of June 30, 2021, we had 10 outstanding contracts to hedge exposure related to the purchase of copper in our AES operating segment.

These contracts are held with financial institutions and are intended to offset rising copper prices and do not qualify for hedge accounting treatment.

As of March 31, 2021, the volume of our copper contracts outstanding was as follows:

As of June 30, 2021, the volume of our copper contracts outstanding was as follows:

Volume of Copper Derivatives

April 2021 - June 2021 256 metric tons per month

July 2021 - September 2021 222 metric tons per month

1 unchanged sentence

January 2022 - March 2022 213 metric tons per month

April 2022 - June 2022 168 metric tons per month

Effects on Financial Statements

The impacts from our derivative instruments on the statement of operations and statements of comprehensive income (loss) were as follows:

Three Months Ended

(Dollars in thousands) Financial Statement Line Item March 31, 2021 March 31, 2020

Three Months Ended Six Months Ended

(Dollars in thousands) Financial Statement Line Item June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Foreign Currency Contracts

12 unchanged sentences

Net current-period other comprehensive income (loss) ( 10,501 ) 121 — ( 10,380 )

Balance as of March 31, 2021 $ ( 23,830 ) $ ( 8,941 ) $ — $ ( 32,771 )

Balance as of June 30, 2021 $ ( 21,072 ) $ ( 8,883 ) $ — $ ( 29,955 )

Balance as of December 31, 2019 $ ( 35,478 ) $ ( 10,455 ) $ ( 972 ) $ ( 46,905 )

Other comprehensive loss before reclassifications ( 6,894 ) — ( 1,249 ) ( 8,143 )

Other comprehensive income (loss) before reclassifications ( 1,265 ) 626 ( 866 ) ( 1,505 )

Amounts reclassified from accumulated other comprehensive loss — 85 ( 334 ) ( 249 )

Net current-period other comprehensive income (loss) ( 1,265 ) 711 ( 1,200 ) ( 1,754 )

Balance as of March 31, 2020 $ ( 42,372 ) $ ( 10,389 ) $ ( 2,288 ) $ ( 55,049 )

(1) Net of taxes of $ 1,940 and $ 1,951 as of March 31, 2021 and December 31, 2020, respectively.

Net of taxes of $ 2,349 and $ 2,368 as of March 31, 2020 and December 31, 2019, respectively.

(2) Net of taxes of $ 0 as of both March 31, 2021 and December 31, 2020.

Net of taxes of $ 656 and $ 282 as of March 31, 2020 and December 31, 2019, respectively.

Balance as of June 30, 2020 $ ( 36,743 ) $ ( 9,744 ) $ ( 2,172 ) $ ( 48,659 )

(1) Net of taxes of $ 1,923 and $ 1,951 as of June 30, 2021 and December 31, 2020, respectively.

Net of taxes of $ 2,172 and $ 2,368 as of June 30, 2020 and December 31, 2019, respectively.

(2) Net of taxes of $ 0 as of both June 30, 2021 and December 31, 2020.

Net of taxes of $ 598 and $ 282 as of June 30, 2020 and December 31, 2019, respectively.

Note 5 – Inventories

Inventories, which are valued at the lower of cost or net realizable value, consisted of the following:

(Dollars in thousands) March 31, 2021 December 31, 2020

(Dollars in thousands) June 30, 2021 December 31, 2020

Raw materials $ 53,904 $ 44,976

7 unchanged sentences

Foreign currency translation adjustment ( 2,400 ) ( 580 ) — $ ( 2,980 )

March 31, 2021 $ 121,852 $ 142,361 $ 2,224 $ 266,437

June 30, 2021 $ 122,527 $ 142,441 $ 2,224 $ 267,192

Other Intangible Assets

The gross and net carrying amounts, as well as the accumulated amortization of other intangible assets were as follows:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

(Dollars in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount

7 unchanged sentences

In the table above, gross carrying amounts and accumulated amortization may differ from prior periods due to foreign exchange rate fluctuations.

Amortization expense was $ 3.1 million and $ 3.7 million for the three months ended March 31, 2021 and 2020, respectively.

Amortization expense was $ 3.1 million and $ 7.6 million for the three months ended June 30, 2021 and 2020, respectively, and $ 6.3 million and $ 11.2 million for the six months ended June 30, 2021 and 2020, respectively.

The estimated future amortization expense is $ 6.2 million for the remainder of 2021 and $ 11.9 million, $ 11.3 million, $ 10.0 million and $ 8.5 million for 2022, 2023, 2024 and 2025, respectively.

The weighted average amortization period as of March 31, 2021, by definite-lived other intangible asset class, was as follows:

The weighted average amortization period as of June 30, 2021, by definite-lived other intangible asset class, was as follows:

Definite-Lived Other Intangible Asset Class Weighted Average Remaining Amortization Period

8 unchanged sentences

The following table sets forth the computation of basic and diluted earnings per share:

(Dollars and shares in thousands, except per share amounts) Three Months Ended

March 31, 2021 March 31, 2020

(Dollars and shares in thousands, except per share amounts) Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Net income $ 28,655 $ 14,520 $ 59,873 $ 27,779

6 unchanged sentences

Anti-dilutive shares are excluded from the calculation of diluted shares and diluted earnings per share.

For the three months ended March 31, 2021 and 2020, 44,792 shares and 127,106 shares were excluded, respectively.

For the three months ended June 30, 2021 and 2020, 1,769 shares and 55,961 shares were excluded, respectively.

Note 8 – Capital Stock and Equity Compensation

1 unchanged sentence

Performance-Based Restricted Stock Units

As of March 31, 2021, we had performance-based restricted stock units from 2021, 2020, 2019 and 2018 outstanding.

As of June 30, 2021, we had performance-based restricted stock units from 2021, 2020 and 2019 outstanding.

These awards generally cliff vest at the end of a three-year measurement period.

However, employees whose employment terminates

during the measurement period due to death, disability, or, in certain cases, retirement may receive a pro-rata payout based on the number of days they were employed during the measurement period, except as noted below in Chief Executive Officer’s 2021 Equity Award Grants .

However, employees whose employment terminates during the measurement period due to death, disability, or, in certain cases, retirement may receive a pro-rata payout based on the number of days they were employed during the measurement period, except as noted below in Chief Executive Officer’s 2021 Equity Award Grants .

Participants are eligible to be awarded shares ranging from 0 % to 200 % of the original award amount, based on certain defined performance measures.

16 unchanged sentences

therefore, a dividend yield of 0 % was used in the Monte Carlo simulation valuation model.

A summary of activity of the outstanding performance-based restricted stock units for the three months ended March 31, 2021 is presented below:

A summary of activity of the outstanding performance-based restricted stock units for the six months ended June 30, 2021 is presented below:

Performance-Based

4 unchanged sentences

Awards cancelled ( 34,020 )

Awards outstanding as of March 31, 2021 129,136

We recognized $ 2.1 million and $ 1.5 million of compensation expense for performance-based restricted stock units for the three months ended March 31, 2021 and 2020, respectively.

Awards outstanding as of June 30, 2021 116,994

We recognized $ 1.1 million and $ 1.3 million of compensation expense for performance-based restricted stock units for the three months ended June 30, 2021 and 2020, respectively.

We recognized $ 3.2 million and $ 2.7 million of compensation expense for performance-based restricted stock units for the six months ended June 30, 2021 and 2020, respectively.

Time-Based Restricted Stock Units

As of March 31, 2021, we had time-based restricted stock unit awards from 2021, 2020, 2019 and 2018 outstanding.

As of June 30, 2021, we had time-based restricted stock unit awards from 2021, 2020, 2019 and 2018 outstanding.

The outstanding awards all ratably vest on the first, second and third anniversaries of the original grant date.

4 unchanged sentences

We account for forfeitures as they occur.

A summary of activity of the outstanding time-based restricted stock units for the three months ended March 31, 2021 is presented below:

A summary of activity of the outstanding time-based restricted stock units for the six months ended June 30, 2021 is presented below:

Restricted Stock Units

3 unchanged sentences

Awards cancelled ( 5,450 )

Awards outstanding as of March 31, 2021 103,610

We recognized $ 1.8 million and $ 1.5 million of compensation expense for time-based restricted stock units for the three months ended March 31, 2021 and 2020, respectively.

Awards outstanding as of June 30, 2021 99,653

We recognized $ 1.9 million and $ 1.5 million of compensation expense for time-based restricted stock units for the three months ended June 30, 2021 and 2020, respectively.

We recognized $ 3.7 million and $ 3.1 million of compensation expense for performance-based restricted stock units for the six months ended June 30, 2021 and 2020, respectively.

Chief Executive Officer’s 2021 Equity Award Grants

1 unchanged sentence

Accounting Standards Codification (ASC) Topic 718:

Compensation—Stock Compensation requires companies that allow for accelerated vesting of employees’ unvested equity upon retirement to recognize the expense from the date of grant to the date the employee becomes eligible to retire – regardless of whether or not the employee actually retires when he or she is eligible to.

As a result, the $ 4.0 million of expense related to the awards granted on February 10, 2021 to our CEO, which provide for immediate vesting upon retirement, will be expensed from the date of the grant, February 10, 2021, through his retirement eligibility date, November 9, 2021.

5 unchanged sentences

The fair value of the award is determined by the market value of the underlying stock price at the grant date.

A summary of activity of the outstanding deferred stock units for the three months ended March 31, 2021 is presented below:

A summary of activity of the outstanding deferred stock units for the six months ended June 30, 2021 is presented below:

Deferred Stock Units

2 unchanged sentences

Stock issued ( 9,400 )

Awards outstanding as of March 31, 2021 12,450

We recognized no compensation expense related to deferred stock units for each of the three-month periods ended March 31, 2021 and 2020, respectively.

Awards outstanding as of June 30, 2021 9,500

We recognized $ 1.2 million of compensation expense related to deferred stock units for the three and six months ended June 30, 2021, and $ 1.0 million of compensation expense for the three and six months ended June 30, 2020.

Note 9 – Debt

4 unchanged sentences

All obligations under the Fourth Amended Credit Agreement are guaranteed by each of our existing and future material domestic subsidiaries, as defined in the Fourth Amended Credit Agreement (the Guarantors).

The obligations are also secured by a Fourth Amended and Restated Pledge and Security Agreement, dated as of October 16, 2020, entered into by us and the Guarantors which grants to the administrative agent, for the benefit of the lenders, a security interest, subject to certain exceptions, in substantially all of our and the Guarantors’ non-real estate assets.

exceptions, in substantially all of our and the Guarantors’ non-real estate assets.

These assets include, but are not limited to, receivables, equipment, intellectual property, inventory, and stock in certain subsidiaries.

3 unchanged sentences

Euro-currency loans bear interest based on adjusted LIBOR plus a spread of 162.5 to 200.0 basis points, depending on our leverage ratio.

Based on our leverage ratio on March 31, 2021, the spread was 162.5 basis points.

Based on our leverage ratio on June 30, 2021, the spread was 162.5 basis points.

In addition to interest payable on the principal amount of indebtedness outstanding from time to time under the Fourth Amended Credit Agreement, we are required to pay a quarterly fee of 25 to 35 basis points (based upon our leverage ratio) of the unused amount of the lenders’ commitments under the Fourth Amended Credit Agreement.

5 unchanged sentences

If our total net leverage ratio exceeds 2.75 to 1.00, we may nonetheless make up to $ 20.0 million in restricted payments, including cash dividends, during the fiscal year, provided that no default or event of default has occurred and is continuing or would result from the payments.

Our total net leverage ratio did not exceed 2.75 to 1.00 as of March 31, 2021.

We did no t borrow anything under the Fourth Amended Credit Agreement for the three months ended March 31, 2021.

Our total net leverage ratio did not exceed 2.75 to 1.00 as of June 30, 2021.

We did no t borrow anything under the Fourth Amended Credit Agreement for the three and six months ended June 30, 2021.

During the three months ended March 31, 2020, we borrowed $ 150.0 million under the Third Amended Credit Agreement (prior to its restatement) as a precautionary measure in order to increase our cash position and preserve financial flexibility given current uncertainty in the global markets resulting from the COVID-19 pandemic.

We did not borrow anything further for the three months ended June 30, 2020.

We are not required to make any quarterly principal payments under the Fourth Amended Credit Agreement.

We made $ 21.0 million of discretionary principal payments on our revolving credit facility for the three months ended March 31, 2021.

We had $ 4.0 million and $ 25.0 million in outstanding borrowings under our revolving credit facility as of March 31, 2021 and December 31, 2020, respectively.

We had $ 2.1 million and $ 2.3 million of outstanding line of credit issuance costs as of March 31, 2021 and December 31, 2020, respectively, which will be amortized over the life of the Fourth Amended Credit Agreement.

However, we made $ 4.0 million and $ 25.0 million of discretionary principal payments on our revolving credit facility for the three and six months ended June 30, 2021, respectively, and we made $ 50.0 million of discretionary principal payments for both of the three and six month periods ended June 30, 2020.

We had no outstanding borrowings under our revolving credit facility as of June 30, 2021, and $ 25.0 million as of December 31, 2020.

We had $ 2.0 million and $ 2.3 million of outstanding line of credit issuance costs as of June 30, 2021 and December 31, 2020, respectively, which will be amortized over the life of the Fourth Amended Credit Agreement.

Note 10 - Leases

We have a finance lease obligation related to our manufacturing facility in Eschenbach, Germany.

Under the terms of the lease agreement, we have an option to purchase the property upon the expiration of the lease on June 30, 2021 at a price which is the greater of (i) the then-current market value or (ii) the residual book value of the land including the buildings and installations thereon.

We expect to exercise this purchase option.

Our finance lease obligation related to this facility was $ 4.2 million and $ 4.5 million as of March 31, 2021 and December 31, 2020, respectively.

The finance lease right-of-use asset balance for this facility was $ 6.2 million and $ 6.5 million as of March 31, 2021 and December 31, 2020, respectively.

Accumulated amortization related to this finance lease right-of-use asset was $ 4.3 million and $ 4.5 million as of March 31, 2021 and December 31, 2020, respectively.

The aggregate of all other finance lease obligations, finance lease right-of-use assets and related accumulated amortization, were immaterial as of March 31, 2021 and December 31, 2020.

Amortization expense related to our finance lease right-of-use assets, which is primarily included in the “Cost of sales” line item of the condensed consolidated statements of operations, was immaterial for each of the three months ended March 31, 2021 and 2020.

Interest expense related to our finance lease obligations, which is included in the “Interest expense, net” line item of the condensed consolidated statements of operations, was immaterial for each of the three-month periods ended March 31, 2021 and 2020.

Payments made on the principal portion of our finance lease obligations were immaterial for each of the three-month periods ended March 31, 2021 and 2020.

We had a finance lease obligation related to our manufacturing facility in Eschenbach, Germany.

Under the terms of the lease agreement, we had an option to purchase the property upon the expiration of the lease on June 30, 2021 at a price which was the greater of (i) the then-current market value or (ii) the residual book value of the land including the buildings and installations thereon.

We exercised this purchase option with a net cash payment of $ 5.0 million on June 30, 2021, extinguishing the remaining finance lease obligation and finance lease right-of-use asset related to this facility.

Our finance lease obligation related to this facility was $ 4.2 million just prior to the exercise of the purchase option and $ 4.5 million as of December 31, 2020.

The finance lease right-of-use asset balance for this facility was $ 6.1 million just prior to the exercise of the purchase option and $ 6.5 million as of December 31, 2020, respectively.

Accumulated amortization related to this finance lease right-of-use asset was $ 4.5 million just prior to the exercise of the purchase option and as of June 30, 2021.

The aggregate of all other finance lease obligations, finance lease right-of-use assets and related accumulated amortization, were immaterial as of June 30, 2021 and December 31, 2020.

Payments made on the principal portion of our finance lease obligations were

immaterial for each of the three- and six-month periods ended June 30, 2021 and 2020, excluding the $ 5.0 million net cash payment to exercise the Eschenbach, Germany manufacturing facility purchase option.

We have operating leases primarily related to building space and vehicles.

4 unchanged sentences

Our expenses and payments for operating leases were as follows:

Three Months Ended

(Dollars in thousands) March 31, 2021 March 31, 2020

Three Months Ended Six Months Ended

(Dollars in thousands) June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Operating leases expense $ 779 $ 694 $ 1,460 $ 1,422

3 unchanged sentences

(Dollars in thousands) Location in Statements of

Financial Position March 31, 2021 December 31, 2020

Financial Position June 30, 2021 December 31, 2020

Finance lease right-of-use assets Property, plant and equipment, net $ 418 $ 7,017

7 unchanged sentences

Net Future Minimum Lease Payments

The following table includes future minimum lease payments under finance and operating leases together with the present value of the net future minimum lease payments as of March 31, 2021:

The following table includes future minimum lease payments under finance and operating leases together with the present value of the net future minimum lease payments as of June 30, 2021:

Finance Operating

(Dollars in thousands) Leases in Effect Leases Signed Less:

(Dollars in thousands) Leases Signed Less:

Leases Not Yet Commenced Leases in Effect Leases Signed Less:

Leases Not Yet Commenced Leases in Effect

14 unchanged sentences

Pension and Other Postretirement Benefit Plans

As of March 31, 2021, we had one qualified noncontributory defined benefit pension plan, the Rogers Corporation Employees’ Pension Plan (the Union Plan), which was frozen and ceased accruing benefits in 2013.

As of June 30, 2021, we had one qualified noncontributory defined benefit pension plan, the Rogers Corporation Employees’ Pension Plan (the Union Plan), which was frozen and ceased accruing benefits in 2013.

Additionally, we sponsor other postretirement benefit plans, including multiple fully insured or self-funded medical plans and life insurance plans for certain retirees.

9 unchanged sentences

The funds in the RESIP trust suspense account have been, and will continue to be, used to fund certain employer contributions.

In the second quarter of 2021, we will use $ 0.9 million of the pension surplus investment balance to pay a discretionary contribution to RESIP eligible employees, which was recognized to expense in the first quarter of 2021.

As of March 31, 2021, the combined remaining pension surplus investment balance was approximately $ 8.8 million.

As of June 30, 2021, the combined remaining pension surplus investment balance was approximately $ 7.7 million.

Components of Net Periodic Benefit (Credit) Cost

1 unchanged sentence

Pension Benefits Other Postretirement Benefits

Three Months Ended Three Months Ended

March 31, March 31,

Three Months Ended Six Months Ended Three Months Ended Six Months Ended

June 30, June 30, June 30, June 30,

(Dollars in thousands) 2021 2020 2021 2020 2021 2020 2021 2020

4 unchanged sentences

Amortization of net loss 98 114 196 228 — — — —

Settlement benefit — ( 63 ) — ( 63 ) — — — —

Net periodic benefit (credit) cost $ ( 108 ) $ ( 111 ) $ ( 216 ) $ ( 159 ) $ ( 3 ) $ ( 1 ) $ ( 6 ) $ ( 2 )

Employer Contributions

There were no required or voluntary contributions made to the Union Plan or the Merged Plan for the three months ended March 31, 2021 and 2020.

There were no required or voluntary contributions made to the Union Plan or the Merged Plan for each of the three and six-month periods ended June 30, 2021 and 2020.

Additionally, we are no t required to make additional contributions to the Union Plan for the remainder of 2021.

As there is no funding requirement for the other postretirement benefit plans, we funded these benefit payments as incurred, which were immaterial for each of the three-month periods ended March 31, 2021 and 2020, using cash from operations.

As there is no funding requirement for the other postretirement benefit plans, we funded these benefit payments as incurred, which were immaterial for each of the three and six-month periods ended June 30, 2021 and 2020, using cash from operations.

Note 12 – Commitments and Contingencies

5 unchanged sentences

Remediation activities on the site are ongoing and are recorded as reductions to the accrual as they are incurred.

We incurred $ 1.7 million of aggregate remediation costs through March 31, 2021, and the accrual for future remediation efforts is $ 0.9 million.

We incurred $ 1.8 million of aggregate remediation costs through June 30, 2021, and the accrual for future remediation efforts is $ 0.9 million.

We, like many other industrial companies, have been named as a defendant in a number of lawsuits filed in courts across the country by persons alleging personal injury from exposure to products containing asbestos.

2 unchanged sentences

Most of the claims filed against us involve numerous defendants, sometimes as many as several hundred.

The following table summarizes the change in number of asbestos claims outstanding for the three months ended March 31, 2021:

The following table summarizes the change in number of asbestos claims outstanding for the six months ended June 30, 2021:

Asbestos Claims

2 unchanged sentences

Pending claims concluded (1)

Claims outstanding as of March 31, 2021

(1) For the three months ended March 31, 2021, 37 claims were dismissed and 2 claims were settled.

Settlements totaled approximately $ 0.1 million for the three months ended March 31, 2021.

Claims outstanding as of June 30, 2021

(1) For the six months ended June 30, 2021, 71 claims were dismissed and 6 claims were settled.

Settlements totaled approximately $ 0.5 million for the six months ended June 30, 2021.

Impact on Financial Statements

9 unchanged sentences

We expect to continue to exhaust individual primary, excess and umbrella coverages over time, and there is no assurance that such exhaustion will not accelerate due to additional claims, damages and settlements or that coverage will be available as expected.

We are responsible for uninsured indemnity and defense costs, and we incurred an immaterial amount of expenses for each of the three months ended March 31, 2021 and 2020, respectively, related to such costs.

We are responsible for uninsured indemnity and defense costs, and we incurred an immaterial amount of expenses for each of the three- and six-month periods ended June 30, 2021 and 2020, respectively, related to such costs.

The amounts recorded for the asbestos-related liability and the related insurance receivables are based on facts known at the time and a number of assumptions.

2 unchanged sentences

Our projected asbestos-related liabilities and insurance receivables were as follows:

(Dollars in thousands) March 31, 2021 December 31, 2020

(Dollars in thousands) June 30, 2021 December 31, 2020

Asbestos-related liabilities $ 73,084 $ 73,235

5 unchanged sentences

Note 13 – Income Taxes

Our effective income tax rate was 25.2 % and 20.6 % for the three months ended March 31, 2021 and 2020, respectively.

The increase from the first quarter of 2020 was primarily due to the decrease in the current quarter valuation allowance release and

decrease in current quarter reversals of unrecognized tax benefits.

The total amount of unrecognized tax benefits as of March 31, 2021 was $ 14.3 million, of which $ 13.8 million would affect our effective tax rate if recognized.

Additionally, the balance of unrecognized tax benefits as of March 31, 2021 also included $ 0.5 million of tax benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes.

Our effective income tax rate was 25.6 % and 30.6 % for the three months ended June 30, 2021 and 2020, respectively.

The decrease from the second quarter of 2020 was primarily due to the decrease in the current quarter accruals for reserves of unrecognized tax benefits and the pretax mix across jurisdictions with disparate tax rates, partially offset by the second quarter of 2020 beneficial impact of changes in valuation allowance related to research and development (R&D) credits.

Our effective income tax rate was 25.4 % and 26.1 % for the six months ended June 30, 2021 and 2020, respectively.

The decrease from the first half of 2020 was primarily due to the decrease in the current quarter accruals of reserves of unrecognized tax benefits and the pretax mix across jurisdictions with disparate tax rates, partially offset by the first half of 2020 beneficial impact of changes in valuation allowance related to R&D credits.

The total amount of unrecognized tax benefits as of June 30, 2021 was $ 15.5 million, of which $ 14.9 million would affect our effective tax rate if recognized.

Additionally, the balance of unrecognized tax benefits as of June 30, 2021 also included $ 0.6 million of tax benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes.

We recognize interest and penalties related to unrecognized tax benefits through income tax expense.

As of March 31, 2021, we had $ 1.3 million accrued for the payment of interest.

As of June 30, 2021, we had $ 1.5 million accrued for the payment of interest.

We are subject to taxation in the U.S.

16 unchanged sentences

(Dollars in thousands) Advanced Electronics Solutions Elastomeric Material Solutions Other Total

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Net sales - recognized over time $ 57,248 $ 3,758 $ 4,761 $ 65,767

2 unchanged sentences

Operating income $ 18,288 $ 15,637 $ 1,820 $ 35,745

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Net sales - recognized over time $ 45,060 $ 2,667 $ 3,077 $ 50,804

2 unchanged sentences

Operating income $ 17,070 $ 2,995 $ 1,027 $ 21,092

Six Months Ended June 30, 2021

Net sales - recognized over time $ 112,062 $ 6,445 $ 9,973 $ 128,480

Net sales - recognized at a point in time 160,256 174,735 700 335,691

Total net sales $ 272,318 $ 181,180 $ 10,673 $ 464,171

Operating income $ 33,137 $ 35,714 $ 4,087 $ 72,938

Six Months Ended June 30, 2020

Net sales - recognized over time $ 91,461 $ 5,494 $ 6,727 $ 103,682

Net sales - recognized at a point in time 135,973 149,658 654 286,285

Total net sales $ 227,434 $ 155,152 $ 7,381 $ 389,967

Operating income $ 21,848 $ 14,512 $ 2,207 $ 38,567

Net sales by operating segment and by geographic area were as follows:

1 unchanged sentence

Region/Country Advanced Electronics Solutions Elastomeric Material Solutions Other Total

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

United States $ 21,824 $ 40,666 $ 1,353 $ 63,843

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Total net sales $ 140,426 $ 89,331 $ 5,149 $ 234,906

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

United States $ 22,885 $ 30,073 $ 707 $ 53,665

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The table above lists individual countries with 10% or more of net sales for the periods indicated.

(Dollars in thousands) Net Sales (1)

Region/Country Advanced Electronics Solutions Elastomeric Material Solutions Other Total

Six Months Ended June 30, 2021

United States $ 45,621 $ 78,398 $ 2,025 $ 126,044

Other Americas 1,384 5,309 387 7,080

Total Americas 47,005 83,707 2,412 133,124

China 108,264 55,258 2,419 165,941

Other APAC 48,804 14,698 1,368 64,870

Total APAC 157,068 69,956 3,787 230,811

Germany 26,814 16,165 351 43,330

Other EMEA 41,431 11,352 4,123 56,906

Total EMEA 68,245 27,517 4,474 100,236

Total net sales $ 272,318 $ 181,180 $ 10,673 $ 464,171

Six Months Ended June 30, 2020

United States $ 45,510 $ 68,640 $ 1,686 $ 115,836

Other Americas 1,811 4,117 359 6,287

Total Americas 47,321 72,757 2,045 122,123

China 77,633 38,534 1,249 117,416

Other APAC 33,118 22,788 1,001 56,907

Total APAC 110,751 61,322 2,250 174,323

Germany 35,136 8,433 193 43,762

Other EMEA 34,226 12,640 2,893 49,759

Total EMEA 69,362 21,073 3,086 93,521

Total net sales $ 227,434 $ 155,152 $ 7,381 $ 389,967

(1) Net sales are allocated to countries based on the location of the customer.

The table above lists individual countries with 10% or more of net sales for the periods indicated.

Revenue from Contracts with Customers

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Contract assets by operating segment were as follows:

(Dollars in thousands) March 31, 2021 December 31, 2020

(Dollars in thousands) June 30, 2021 December 31, 2020

Advanced Electronics Solutions $ 25,947 $ 24,199

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Total contract assets $ 30,285 $ 26,575

We did not have any contract liabilities as of March 31, 2021 or December 31, 2020.

No impairment losses were recognized for the three-month periods ended March 31, 2021 and 2020, respectively, on any receivables or contract assets arising from our contracts with customers.

We did not have any contract liabilities as of June 30, 2021 or December 31, 2020.

No impairment losses were recognized for the three or six-month periods ended June 30, 2021 and 2020, respectively, on any receivables or contract assets arising from our contracts with customers.

Note 15 – Supplemental Financial Information

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The components of “Restructuring and impairment charges” line item in the condensed consolidated statements of operations, which contains restructuring charges and related expenses, as well as impairment charges, were as follows:

Three Months Ended

(Dollars in thousands) March 31, 2021 March 31, 2020

Three Months Ended Six Months Ended

(Dollars in thousands) June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Restructuring charges

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Total restructuring and impairment charges $ 747 $ — $ 2,253 $ —

Our AES and EMS operating segments incurred $ 1.5 million and an immaterial amount of restructuring and impairment charges, respectively, for the three months ended March 31, 2021.

Our AES operating segment incurred $ 0.7 million and $ 2.3 million of restructuring and impairment charges for the three and six months ended June 30, 2021, respectively, and our EMS operating segment incurred an immaterial amount of restructuring and impairment charges for the three and six months ended June 30, 2021.

Restructuring Charges & Related Expenses - Manufacturing Footprint Optimization

During the third quarter of 2020, we commenced manufacturing footprint optimization plans involving certain Europe and Asia manufacturing locations, primarily impacting our AES operating segment, in order to achieve greater cost competitiveness as well as align capacity with end market demand.

We expect the majority of the restructuring activities to be completed by the end of the first half of 2021.

We incurred restructuring charges and related expenses of $ 1.5 million for the three months ended March 31, 2021, of which $ 0.5 million related to severance and related benefits.

Severance and related benefits activity related to the manufacturing footprint optimization plan is presented in the table below for the three months ended March 31, 2021:

The majority of the restructuring activities have been completed as of the end of the first half of 2021.

We incurred restructuring charges and related expenses of $ 0.7 million and $ 2.3 million for the three and six months ended June 30, 2021, respectively, of which $ 0.4 million of contra-expense and $ 0.1 million of expense is related to severance and related benefits for the three and six months ended June 30, 2021, respectively.

Severance and related benefits activity related to the manufacturing footprint optimization plan is presented in the table below for the six months ended June 30, 2021:

(Dollars in thousands) Manufacturing Footprint Optimization Restructuring Severance

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Foreign currency translation adjustment ( 312 )

Balance as of March 31, 2021 $ 10,294

Balance as of June 30, 2021 $ 3,902

Other Operating (Income) Expense, Net

The components of “Other operating (income) expense, net” line item in the condensed consolidated statements of operations, were as follows:

Three Months Ended

(Dollars in thousands) March 31, 2021 March 31, 2020

Three Months Ended Six Months Ended

(Dollars in thousands) June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Fixed assets write-offs — — 891 —

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Compensation & benefits 600 — 844 —

Other 76 — 76 —

Insurance recoveries ( 359 ) — ( 1,478 ) —

1 unchanged sentence

(Gain) loss on sale or disposal of property, plant and equipment ( 593 ) 33 ( 682 ) 53

Economic incentive grants — ( 145 ) — ( 145 )

Total other operating (income) expense, net $ 890 $ ( 112 ) $ 2,105 $ ( 92 )

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The cause of the fire is still under investigation.

Operations at this facility will be disrupted into at least late 2021.

Operations at this facility will be disrupted into at least the first quarter of 2022.

We are currently evaluating alternative facility options.

We recognized fixed asset write-offs and inventory charges of $ 0.9 million and $ 0.3 million, respectively, related to property destroyed in the fire for the three months ended March 31, 2021.

We recognized fixed asset write-offs and inventory charges of $ 0.9 million and $ 0.3 million, respectively, related to property destroyed in the fire for the six months ended June 30, 2021.

Additionally, we recognized a $ 0.5 million contingent liability pertaining to our obligations for the fire damage to the building in connection with the underlying lease agreement.

We have incurred $ 0.5 million of fees for various professional services for the three months ended March 31, 2021, in connection with the assessment of the fire and the efforts to rebuild and resume operations.

Further, we incurred $ 0.2 million of compensation and benefits for UTIS manufacturing employees, subsequent to the fire, for the three months ended March 31, 2021.

In connection with the UTIS fire, we have recognized anticipated insurance recoveries of $ 1.1 million related to our ongoing insurance claim for property damage and compensation and benefits of hourly employees, less the applicable $ 0.3 million deductible, for the three months ended March 31, 2021.

We have incurred $ 1.1 million and $ 1.6 million of fees for various professional services for the three and six months ended June 30, 2021, respectively, in connection with the assessment of the fire and the efforts to rebuild and resume operations.

Further, we incurred $ 0.6 million and $ 0.8 million of compensation and benefits for UTIS manufacturing employees, subsequent to the fire, for the three and six months ended June 30, 2021, respectively.

In connection with the UTIS fire, we have recognized anticipated insurance recoveries of $ 0.4 million and $ 1.5 million related to our ongoing insurance claim for property damage and compensation and benefits of hourly employees, less the applicable $ 0.3 million deductible, for the three and six months ended June 30, 2021, respectively.

Based on the facts and circumstances known to us as of our filing, while we are aware of other potential liabilities, we are unable presently to estimate the probability or amount of any further contingent liabilities associated with damages to nearby property or other potential costs due to the fire at our UTIS manufacturing facility.

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The components of “Interest expense, net” line item in the condensed consolidated statements of operations, were as follows:

Three Months Ended

(Dollars in thousands) March 31, 2021 March 31, 2020

Three Months Ended Six Months Ended

(Dollars in thousands) June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Interest on revolving credit facility $ 5 $ 1,388 $ 106 $ 2,467

4 unchanged sentences

Interest income ( 150 ) ( 269 ) ( 345 ) ( 589 )

Other 32 2 69 27

Total interest expense, net $ 404 $ 1,779 $ 1,011 $ 2,986

17 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements