What changed in this filing

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Item 1A. Risk Factors

2022-02-22 compared with 2021-02-19 · 59 added, 29 removed, 166 unchanged (35% of the section changed)

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Management’s Discussion and Analysis of Results of Operations and Financial Position,” when evaluating an investment in our capital stock.

Risks Relating to the DuPont Merger

We may not be able to complete the proposed merger with DuPont and we may incur substantial costs that may adversely affect our financial results and operations and the market price of our capital stock.

Adoption of the merger agreement is subject to customary closing conditions, including the receipt of foreign and domestic regulatory approvals, which may not be fulfilled in a timely manner or at all, and accordingly, the merger may not be completed.

In addition, the parties can mutually decide to terminate the merger agreement, or Rogers or DuPont may unilaterally elect to terminate the merger agreement under certain circumstances.

If the merger agreement is terminated under certain circumstances, we may be required to pay a $135.0 million termination fee to DuPont.

If the proposed merger with DuPont is not completed, the price of our capital stock may decline to the extent that the current market price of our capital stock reflects a market assumption that the merger will be completed.

Additionally, if the merger is not completed, we may experience negative reactions from financial markets and our suppliers, customers and employees.

Each of these factors may adversely affect the trading price of our capital stock, as well as our results and operations and financial condition.

Several lawsuits relating to the merger have been filed, as discussed further in “Item 3.

Legal Proceedings.” Rogers and DuPont may be subject to additional lawsuits challenging the merger, and adverse rulings in these lawsuits may delay or prevent the merger from being completed or require Rogers or DuPont to incur significant costs to defend or settle these lawsuits.

Any delay in completing the merger could cause us not to realize, or be delayed in realizing, some or all of the benefits that we expect to achieve if the merger is successfully completed within the anticipated time frame.

While the proposed merger is pending, we will be subject to contractual restrictions that could adversely affect our business and operations.

The merger agreement with DuPont restricts us from taking specified actions without DuPont’s consent until the merger is completed or the merger agreement is terminated, including making certain significant acquisitions or investments, incurring certain indebtedness, making non-ordinary course capital expenditures in excess of certain thresholds, amending or modifying certain material contracts, divesting certain assets, and making certain non-ordinary course changes to personnel and employee compensation.

These restrictions, and others more fully described in the merger agreement, may affect our ability to execute our business strategies and attain our financial and other goals and may impact our financial condition, results of operations and cash flows.

Uncertainties related to the merger could adversely affect our businesses, sales and gross margins.

In response to the announcement of the merger or due to ongoing uncertainty about the merger, customers may delay or defer purchasing decisions or elect to switch to other suppliers.

In particular, prospective customers could be reluctant to purchase our products and services due to uncertainty about the direction of our offerings and willingness to support our products.

To the extent that the merger creates uncertainty among those persons and organizations contemplating purchases such that one large customer, or a significant group of smaller customers, delays, defers or changes purchases in connection with the planned merger, our revenues could be adversely affected.

We may make assurances to customers to address their uncertainty about the direction of our products and related support offerings, which may result in additional obligations.

In addition, the announcement of the merger may cause prospective customers to delay or defer purchasing decisions resulting in a decline in our net sales, which could have a significant impact on our results of operations and financial condition.

Our quarterly net sales and net income could be substantially below expectations of market analysts, potentially resulting in a decline in our stock price.

We may also experience negative reactions from the Company’s employees, suppliers, vendors, or regulators.

Additionally, matters relating to the merger will require substantial commitments of time and resources by our management and the expenditure of significant funds in the form of fees and expenses, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to us as an independent company.

Risks Relating to the COVID-19 Pandemic

The COVID-19 pandemic and global responsive measures have impacted our business and results of operations and could materially adversely affect our business, results of operations and financial position in future periods.

The COVID-19 pandemic has spread globally and resulted in governmental authorities implementing numerous responsive measures, such as travel bans and other restrictions, including quarantines, shelter-in-place and stay-home orders, transportation disruptions, closures and shutdowns.

We maintain significant manufacturing and administrative operations in the U.S., China, Belgium, Germany, South Korea and Hungary, and each of these countries has been significantly affected by the outbreak and taken measures to try to contain it and to distribute vaccines as they are approved.

The COVID-19 pandemic continues to have global impacts and has resulted in governmental authorities implementing numerous responsive measures, such as travel bans and other restrictions, including quarantines, shelter-in-place and stay-home

orders, transportation disruptions, closures and shutdowns.

We maintain significant manufacturing and administrative operations in the U.S., China, Belgium, Germany, England, South Korea and Hungary, and each of these countries has been significantly affected by the outbreak and taken measures to try to contain it and to distribute vaccines as they are approved.

We have also modified our business practices in an effort to ensure business continuity while promoting continued employee health and well-being.

Collectively, these measures have impacted and are likely to continue to impact our workforce and operations.

In addition, the outbreak and associated responsive measures have resulted in significant disruption of the global economy, leading to steep declines and increased volatility in the financial markets, and it is possible that a potentially severe global recession will follow.

In addition, the outbreak and associated responsive measures have resulted in significant disruption of the global economy, including increased volatility in financial markets, supply chains and demand for certain goods and services, as well as significant intervention and stimulus measures by governments.

There is considerable uncertainty regarding the effect of COVID-19 as well as current and future responsive measures on our business, including on our workforce and operations.

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These growth drivers are served by our direct and indirect customers in a variety of markets, including automotive (i.e., ADAS) and EV/HEV, wireless infrastructure and portable electronics.

These growth drivers, as well as specific market and industry trends within them, may be volatile, cyclical and sensitive to a variety of factors, including general economic conditions (including higher inflation and interest rates), demand disruptions (including third-party component availability at our customers), technology disruptions, consumer preferences and political priorities.

Adverse or cyclical changes to and within these growth drivers, such as delays in adoption or implementation of new technologies, has resulted in, and may continue to result in, reduced demand for certain of our products, production overcapacity, increased inventory levels and related risks of obsolescence, as well as price erosion, ultimately leading to a decline in our operating results.

Acceleration within these growth drivers and corresponding rapid increases in demand for certain products may also require us to make significant capital investments or acquisitions in order to increase production levels and to maintain customer relationships and market positions.

Acceleration within these growth drivers and corresponding rapid increases in demand for certain products may also require us to make significant capital investments or acquisitions in facilities and information systems and significantly increase our personnel in order to increase production levels and to maintain customer relationships and market positions.

However, we may not be able to increase our production levels with sufficient speed or efficiency to capitalize on such increases in demand.

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We expect our net sales in foreign markets to continue to represent a substantial majority of our consolidated net sales.

We maintain significant manufacturing and administrative operations in China, Belgium, Germany, South Korea and Hungary, and approximately 60% of our employees were located outside the U.S.

We maintain significant manufacturing and administrative operations in China, Belgium, Germany, England, South Korea and Hungary, and approximately 60% of our employees were located outside the U.S.

as of December 31, 2021.

Risks related to our extensive international operations include the following:

• foreign currency fluctuations, particularly in the value of the euro, the Chinese renminbi, the South Korean won, the Japanese yen and the Hungarian forint against the U.S.

• foreign currency fluctuations, particularly in the value of the euro, the Chinese renminbi, the South Korean won, the British pound, the Japanese yen and the Hungarian forint against the U.S.

• economic and political instability due to regional or country-specific events or changes in relations between the U.S.

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• compliance with foreign employment regulations, as well as work stoppages and labor and union disputes.

The foregoing risks may be particularly acute in emerging markets such as China and India, where our operations are subject to greater uncertainty due to increased volatility associated with the developing nature of the economic, legal and governmental systems of these countries, changes in bilateral and multilateral arrangements with the U.S.

The foregoing risks may be particularly acute in emerging markets such as China, where our operations are subject to greater uncertainty due to increased volatility associated with the developing nature of the economic, legal and governmental systems of these countries, changes in bilateral and multilateral arrangements with the U.S.

and other governments, and challenges that some multinational customers that are headquartered in emerging markets may have complying fully with U.S.

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In addition, our business has been, and may continue to be, adversely affected by the lack of development, or disruptions, of transportation or other critical infrastructure, including wireless infrastructure, in emerging markets.

If we are unable to successfully manage the risks associated with expanding our global business, or to adequately manage operational fluctuations, it may materially adversely affect our business, results of operations and financial position.

If we are unable to successfully manage the risks associated with expanding our global business, or to

adequately manage operational fluctuations, it may materially adversely affect our business, results of operations and financial position.

Deteriorating trade relations between the U.S.

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The May 2019 U.S.

Department of Commerce addition of Huawei to its “entity list,” and subsequently implemented Foreign Direct Products Rules, limits the ability of U.S.

Department of Commerce addition of Huawei Technologies Co., Ltd.

(Huawei) to its “entity list,” and subsequently implemented Foreign Direct Products Rules, limited the ability of U.S.

and foreign companies to export products and license technologies to Huawei.

Although we have been able to continue supplying Huawei’s fabricators while in compliance with all restrictions, the ongoing impact of the Huawei export controls on 5G demand and the demand for our products is currently uncertain.

Such export controls, as well as retaliatory controls and tariffs that China has imposed and which remain in place to a certain extent under the Phase 1 agreement reached between the U.S.

and China on January 15, 2020, could continue to restrict our ability to do business with Huawei and other Chinese customers.

and China on January 15, 2020, could continue to restrict our ability to do business with Chinese customers.

government actions to protect domestic economic and security interests could lead to further restrictions.

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China’s stated policy of reducing its dependence on foreign manufacturers and technology companies has resulted and may continue to result in reduced demand for our products in China.

These trends could have a material adverse impact on our business, results of operations and financial position.

In addition, there are risks that the Chinese government may, among other things, require the use of local suppliers, compel companies that do business in China to partner with local companies to conduct business, or provide incentives to government-backed local customers to buy from local suppliers rather than companies like ours, all of which could adversely impact our business, results of operations and financial position.

These trends, combined with supply chain disruptions caused by COVID-19, may lead to increased decoupling of the supply chains for U.S.

and Chinese economies, thereby leading to reduced market opportunities and disrupted supply chains for U.S.

companies with sales and operations in China.

Increased geopolitical tensions between the U.S.

and China would likely accelerate these trends.

Both countries could pursue policies to reduce their dependence on foreign goods.

Such policies could have a material adverse impact on our business, results of operations and financial position.

In addition, as a consequence of such policies, there are risks that the Chinese government may, among other things, require the use of local suppliers, compel companies that do business in China to partner with local companies to conduct business, or provide incentives to government-backed local customers to buy from local suppliers rather than companies like ours, all of which could adversely impact our business, results of operations and financial position.

Our business is dependent upon our development of innovative products and our customers’ incorporation of those products into end user products and systems that achieve commercial success.

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Even if a system redesign is feasible, increased costs associated with such a redesign would decrease our profit margins, perhaps materially, if we could not effectively pass such costs along to our customers.

Further, it would likely result in production and delivery delays, which could lead to lost sales and damage to our relationships with current and potential customers.

Further, it would likely result in

production and delivery delays, which could lead to lost sales and damage to our relationships with current and potential customers.

We face intense global competition, which could reduce demand for our products or create additional pricing pressure on our products.

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For instance, the COVID-19 pandemic and related quarantines and work and travel restrictions have disrupted, and may continue to disrupt, production of and demand for certain of our products.

Additionally, there was a fire at our UTIS manufacturing facility in Ansan, South Korea in early February 2021, which resulted in extensive damage to the manufacturing site.

Additionally, there was a fire at our UTIS manufacturing facility in Ansan, South Korea in early

February 2021, which resulted in extensive damage to the manufacturing site.

While some commercial operations resumed in late 2021, with the launch of a replacement production line at one of our Suzhou, China facilities, as we have not yet resumed commercial operations in South Korea.

The extent to which these events will affect our results of operations and financial position remains uncertain.

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Continued employee benefit cost increases could have an adverse effect on our results of operations, cash flows and financial position.

We also sponsor one material defined benefit pension plan that covers certain union employees.

Our costs of providing this plan are dependent upon a number of factors and assumptions that drive the plan’s funding status and projected annual expenses, such as discount rates, the actual and projected rates of return on the plans’ assets, governmental regulation, global equity prices, portfolio composition, mortality rates and required or voluntary contributions to the plan.

Changes in these factors and assumptions could have a negative impact on our defined benefit pension plan, which could result in unfavorable changes in the net assets and funded status of the plan and increases in annual net periodic benefit costs.

Unfavorable changes in the plan’s net assets and funded status could result in increased funding requirements.

All of these potential changes could negatively impact our results of operations, cash flows and financial position.

Legal, Compliance and Regulatory Risks

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The defense and prosecution of intellectual property infringement suits are both costly and time consuming, even if the outcome is favorable to us.

If we are not successful in protecting our proprietary technology or if the protection afforded to us is not sufficiently broad, our competitors may be able to manufacture and offer products substantially similar to our own, thereby reducing demand for our products and adversely affecting our results of operations and financial position.

If we are not successful in protecting our proprietary technology or if the protection afforded to us is

not sufficiently broad, our competitors may be able to manufacture and offer products substantially similar to our own, thereby reducing demand for our products and adversely affecting our results of operations and financial position.

We may also be adversely affected by, and subject to increased competition as a result of, the normal expiration of our issued patents.

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Failure to satisfy these financial ratios or to comply with the covenants in our credit agreement would constitute a default.

An uncured default with respect to one or more of our covenants could result in outstanding borrowings thereunder being declared

immediately due and payable, which may also trigger an obligation to repay other outstanding indebtedness.

An uncured default with respect to one or more of our covenants could result in outstanding borrowings thereunder being declared immediately due and payable, which may also trigger an obligation to repay other outstanding indebtedness.

Any such acceleration of our indebtedness would have a material adverse effect on our cash flows, financial position and results of operations.

Our credit agreement currently permits us to borrow euro-currency loans that bear interest based on the London interbank offered rate (LIBOR), plus a specified spread.

In July 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021.

However, LIBOR borrowings may become unavailable before that date.

When LIBOR becomes unavailable, our credit agreement provides for a new reference rate for borrowings thereunder, dependent upon certain facts and circumstances.

Our credit agreement historically permitted us to borrow euro-currency loans that bear interest based on the London interbank offered rate (LIBOR), plus a specified spread.

As announced in March 2021 by the United Kingdom’s Financial Conduct Authority (FCA) and LIBOR’s administrator, the publication of the one-week and two-month USD LIBOR maturities and non-USD LIBOR maturities ceased immediately after December 31, 2021, with the remaining USD LIBOR maturities ceasing immediately after June 30, 2023.

Certain LIBOR borrowings may now be unavailable.

Rogers Corporation and JPMorgan Chase Bank, N.A.

entered into an amendment to our credit agreement that provides for a a new benchmark interest rate to replace the discontinued LIBOR reference rates as necessary.

There is a risk that this new reference rate may be higher than our projected future LIBOR interest rates, thereby causing the cost of our borrowings to increase.

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Financial Statements and Supplementary Data.” We maintain insurance coverage with respect to certain claims, but the policy coverage limits may not be adequate or cover a particular loss.

Costs associated with, among other things, the defense of, or settlements or judgments relating to, claims against us that are not covered by insurance or that result in recoveries in excess of insurance coverage may adversely affect our business, results of operations and financial position.

Costs associated with, among other things, the defense of, or settlements or judgments relating to, claims against us that are not covered by insurance or that result in settlements in excess of insurance coverage may adversely affect our business, results of operations and financial position.

Irrespective of insurance coverage, claims against us could divert the attention of our senior management and/or result in reputational damage, thereby adversely affecting our business.

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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-K

Item 1A. Risk Factors