What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-22 compared with 2021-02-19 · 348 added, 345 removed, 1076 unchanged (39% of the section changed)

Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 238 )

To the Board of Directors and Shareholders of Rogers Corporation

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Silicone Engineering Ltd.

from its assessment of internal control over financial reporting as of December 31, 2021, because it was acquired by the Company in a purchase business combination during 2021.

We have also excluded Silicone Engineering Ltd.

from our audit of internal control over financial reporting.

Silicone Engineering Ltd.

is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 2.0% and 0.9%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

Definition and Limitations of Internal Control over Financial Reporting

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A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill Impairment Assessment - curamik ® Reporting Unit

As described in Notes 1 and 6 to the consolidated financial statements, the Company’s consolidated goodwill balance was $270.2 million as of December 31, 2020, and the goodwill associated with the curamik® reporting unit was $73.2 million.

Goodwill is tested for impairment annually as of November 30 and between annual impairment tests if events or changes in circumstances indicate the carrying value may be impaired.

If a reporting unit’s carrying value is greater than its fair value, then an impairment is recognized for the excess and charged to operations.

Management estimated the fair value of the curamik® reporting unit using an income approach based on the present value of future cash flows through a five year discounted cash flow analysis.

Determining the fair value is subjective and requires the use of significant estimates and assumptions, including financial projections for net sales, gross margin and operating margin, discount rate, terminal growth rate and future market conditions, among others.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the curamik® reporting unit is a critical audit matter are (i) the significant judgment by management when determining the fair value measurement of the reporting unit;

and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s significant assumptions related to financial projections for net sales and gross margin.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s reporting units.

These procedures also included, among others (i) testing management’s process for determining the fair value measurement of the curamik® reporting unit;

(ii) evaluating the appropriateness of the discounted cash flow analysis;

(iii) testing the completeness and accuracy of underlying data used in the analysis;

and (iv) evaluating the reasonableness of significant assumptions used by management related to the financial projections for net sales and gross margin.

Evaluating management’s assumptions related to the financial projections for net sales and gross margin involved evaluating whether the assumptions used were reasonable considering (i) the current and past performance of the reporting unit, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Asbestos-Related Liabilities and Insurance Receivables

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In connection with the recognition of liabilities for asbestos-related matters, management records asbestos-related insurance receivables that are deemed probable.

Estimates of asbestos-related contingent liabilities and related insurance receivables are based on an independent actuarial analysis and an independent insurance usage analysis, respectively, prepared annually by third parties.

The actuarial analysis contains numerous assumptions, including the number of claims that might be received, the type and severity of the disease alleged by each claimant, the long latency period associated with asbestos exposure, dismissal rates, average indemnity costs, average defense costs, costs of medical treatment, the financial resources of other companies that are co-defendants in claims, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, and the impact of potential changes in legislative or judicial standards, including potential tort reform.

Management’s estimates of asbestos-related contingent liabilities and related insurance receivables are based on a claim projection analysis and an insurance usage analysis, respectively, prepared annually by third parties.

The claim projection analysis contains numerous assumptions, including the number of claims that might be received, the type and severity of the disease alleged by each claimant, the long latency period associated with asbestos exposure, dismissal rates, average indemnity costs, average defense costs, costs of medical treatment, the financial resources of other companies that are co-defendants in claims, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, and the impact of potential changes in legislative or judicial standards, including potential tort reform.

The insurance usage analysis considers, among other things, applicable deductibles, retentions and policy limits, the solvency and historical payment experience of various insurance carriers, the likelihood of recovery as estimated by external legal counsel and existing insurance settlements.

The principal considerations for our determination that performing procedures relating to asbestos-related liabilities and insurance receivables is a critical audit matter are (i) the significant judgment by management when determining the asbestos-

related liabilities and insurance receivables;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the number of claims that might be received, type and severity of the disease alleged by each claimant, average indemnity costs, average defense costs, and dismissal rates;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

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These procedures also included, among others (i) testing management’s process for determining the asbestos-related liabilities and insurance receivables estimates;

(ii) evaluating the appropriateness of the actuarial and insurance usage analyses;

(iii) testing the completeness and accuracy of underlying data used in the analyses;

and (iv) evaluating the reasonableness of significant assumptions used by management related to the number of claims that may be received, type and severity of the disease alleged by each claimant, average indemnity costs, average defense costs, and dismissal rates.

Professionals with specialized skill and knowledge were used to assist in the evaluation of management’s analyses and significant assumptions related to the number of claims that may be received, the type and severity of the disease alleged by each claimant, average indemnity costs, average defense costs, and dismissal rates.

(ii) evaluating the appropriateness of the claim projection and insurance usage analyses;

(iii) testing the completeness and accuracy of the underlying data used in the analyses;

and (iv) evaluating the reasonableness of significant assumptions used by management related to the number of claims that might be received, type and severity of the disease alleged by each claimant, average indemnity costs, average defense costs, and dismissal rates.

Professionals with specialized skill and knowledge were used to assist in evaluating management’s analyses and significant assumptions related to the number of claims that might be received, type and severity of the disease alleged by each claimant, average indemnity costs, average defense costs, and dismissal rates.

Acquisition of Silicone Engineering Ltd.

- Valuation of Customer Relationships Intangible Asset

As described in Notes 1 and 17 to the consolidated financial statements, on October 8, 2021, the Company acquired Silicone Engineering Ltd.

for a combined purchase price of $172.3 million, net of cash acquired, and its facility.

This acquisition resulted in the recognition of $73.6 million of other intangible assets, including a customer relationships intangible asset of $48.9 million.

As disclosed by management, the customer relationships intangible asset was valued using the multi-period

excess earnings method of the income approach.

Significant assumptions used in the valuation include projected revenues and gross margins, customer attrition rate, and an appropriate discount rate.

The principal considerations for our determination that performing procedures relating to the valuation of the customer relationships intangible asset from the acquisition of Silicone Engineering Ltd.

is a critical audit matter are (i) the significant judgment by management when determining the fair value of the customer relationships intangible asset;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to projected revenues, customer attrition rate, and discount rate;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the customer relationships intangible asset.

These procedures also included, among others (i) reading the purchase agreement;

(ii) testing management’s process for determining the fair value of the customer relationships intangible asset;

(iii) evaluating the appropriateness of the multi-period excess earnings method;

(iv) testing the completeness and accuracy of the underlying data used in the multi-period excess earnings method;

and (v) evaluating the reasonableness of the significant assumptions used by management related to projected revenues, customer attrition rate, and discount rate.

Evaluating management’s significant assumptions related to projected revenues and customer attrition rate involved evaluating whether the significant assumptions used by management were reasonable considering (i) the current and past performance of Silicone Engineering Ltd.;

(ii) the consistency with external market and industry data;

and (iii) whether these significant assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the multi-period excess earnings method and (ii) the reasonableness of the discount rate significant assumption.

/s/ PricewaterhouseCoopers LLP

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Derivative instrument designated as cash flow hedge:

Change in unrealized (loss) gain before reclassifications, net of tax (Note 4) ( 1,504 ) ( 1,171 ) 519

Change in unrealized loss before reclassifications, net of tax (Note 4) — ( 1,504 ) ( 1,171 )

Unrealized loss (gain) reclassified into earnings, net of tax (Note 4) — 2,476 ( 155 )

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Shares issued to directors 10 5 12

Shares repurchased — — ( 23 )

Balance, end of period 18,730 18,677 18,577

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Equity compensation expense 16,994 13,532 12,305

Shares repurchased — — ( 2,976 )

Balance, end of period 163,583 147,961 138,526

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Cumulative-effect adjustment for lease accounting — — ( 20 )

Cumulative-effect adjustment for revenue recognition — — 4,212

Balance, end of period 981,825 873,692 823,702

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Pension and other postretirement benefits ( 471 ) ( 160 ) ( 943 )

Asbestos-related charges ( 682 ) 1,720 704

Loss (gain) on sale or disposal of property, plant and equipment 41 756 ( 164 )

Asbestos-related provision (benefit) ( 220 ) ( 682 ) 1,720

(Gain) loss on sale or disposal of property, plant and equipment ( 880 ) 41 756

Impairment charges 455 639 1,537

UTIS fire fixed asset and inventory write-offs 1,947 — —

Provision (benefit) for credit losses ( 279 ) 223 437

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Accounts receivable ( 26,197 ) ( 8,934 ) 20,677

Proceeds from insurance/government subsidies related to operations 400 — —

Contract assets ( 10,035 ) ( 4,120 ) 273

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Acquisition of business, net of cash received ( 168,204 ) — —

Isola asset acquisition — — ( 43,434 )

Capital expenditures ( 71,125 ) ( 40,385 ) ( 51,597 )

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Proceeds from issuance of shares to employee stock purchase plan 1,562 1,360 1,249

Share repurchases — — ( 2,999 )

Net cash (used in) provided by financing activities 159,057 ( 104,189 ) ( 111,843 )

Effect of exchange rate fluctuations on cash ( 4,294 ) 4,454 ( 1,406 )

Net decrease in cash and cash equivalents 24,936 ( 889 ) ( 13,421 )

Net increase (decrease) in cash and cash equivalents 40,511 24,936 ( 889 )

Cash and cash equivalents at beginning of period 191,785 166,849 167,738

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Actual results could differ from those estimates.

Our reporting structure is comprised of three strategic operating segments:

Advanced Connectivity Solutions (ACS), Elastomeric Material Solutions (EMS) and Power Electronics Solutions (PES).

The remaining operations are accumulated and reported as our Other operating segment.

Advanced Connectivity Solutions

Our ACS operating segment designs, develops, manufactures and sells circuit materials and solutions enabling high-performance and high-reliability connectivity for applications in wireless infrastructure (e.g., power amplifiers, antennas and small cells), automotive (e.g., ADAS, telematics and thermal solutions), aerospace and defense (e.g.

antenna systems, communication systems and phased array radar systems), connected devices (e.g., mobile internet devices and thermal solutions) and wired infrastructure (e.g., computing and IP infrastructure) markets.

We believe these products have characteristics that offer performance and other functional advantages in many market applications that serve to differentiate our products from other commonly available materials.

ACS products are sold principally to independent and captive printed circuit board fabricators that convert our laminates to custom printed circuits.

Trade names for our ACS products include:

RO4000 ® Series, RO3000 ® Series, RT/duroid ® , CLTE Series ® , TMM ® , AD Series ® , DiClad ® Series, CuClad ® Series, Kappa ® , COOLSPAN ® , TC Series ® , 92ML™, IsoClad ® Series, MAGTREX™, XTremeSpeed RO1200™ Laminates, IM Series™, 2929 Bondply, 3001 Bondply Film and SpeedWave™ Prepreg.

As of December 31, 2020, our ACS operating segment had manufacturing and administrative facilities in Chandler, Arizona;

Through the fourth quarter of 2020, we operated three strategic operating segments:

Advanced Connectivity Solutions (ACS), Elastomeric Material Solutions (EMS) and Power Electronics Solutions (PES), with the remaining operations, which represented our non-core businesses, being reported in a four th operating segment, the Other operating segment.

In the first quarter of 2021, we completed the realignment of our strategic business segments to reflect the combination of our ACS and PES businesses resulting in a new strategic business segment, Advanced Electronics Solutions (AES).

The combination of these two complementary businesses with capabilities in both high power and high frequency applications is expected to enhance our overall value proposition to customers in multiple high-growth markets.

As a result of our organizational and reporting structure changes, we re-evaluated the chief operating decision maker’s review and assessment of the Company’s operating performance for purposes of performance monitoring and resource allocation.

We determined, based on the financial data utilized by the chief operating decision maker to assess segment performance and allocate resources among the Company’s strategic business segments, that we now have three operating segments under this new organizational and reporting structure:

AES, EMS and Other.

Reported results for the AES operating segment prior to 2021 represent the aggregation of the results for our former ACS and PES operating segments.

Advanced Electronics Solutions

Our AES operating segment designs, develops, manufactures and sells circuit materials, ceramic substrate materials, busbars and cooling solutions for applications in electric and hybrid electric vehicles (EV/HEV), wireless infrastructure (i.e., power amplifiers, antennas and small cells), automotive (i.e., advanced driver assistance systems (ADAS), telematics and thermal solutions, aerospace and defense (i.e., antenna systems, communication systems and phased array radar systems), mass transit, clean energy (i.e., variable frequency drives, renewable energy), connected devices (i.e., mobile internet devices and thermal solutions) and wired infrastructure (i.e., computing and IP infrastructure) markets.

We believe these materials have characteristics that offer performance and other functional advantages in many market applications, which serve to differentiate our products from other commonly available materials.

AES products are sold globally to converters, fabricators, distributors and OEMs.

Trade names for our AES products include:

curamik ® , ROLINX ® , RO4000 ® Series, RO3000 ® Series, RT/duroid ® , CLTE Series ® , TMM ® , AD Series ® , DiClad ® Series, CuClad ® Series, Kappa ® , COOLSPAN ® , TC Series ® , 92ML™, IsoClad ® Series, MAGTREX™, XTremeSpeed RO1200™ Laminates, IM Series™, 2929 Bondply, 3001 Bondply Film and SpeedWave™ Prepreg.

As of December 31, 2021, our AES operating segment had manufacturing and administrative facilities in Chandler, Arizona;

Rogers, Connecticut;

Bear, Delaware;

Eschenbach, Germany;

Evergem, Belgium;

Budapest, Hungary;

and Suzhou, China.

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Our EMS operating segment designs, develops, manufactures and sells engineered material solutions for a wide variety of applications and markets.

These include polyurethane and silicone materials used in cushioning, gasketing and sealing, and vibration management applications for general industrial, portable electronics, automotive, mass transit, aerospace and defense, footwear and impact mitigation and printing markets;

customized silicones used in flex heater and semiconductor thermal applications for general industrial, portable electronics, automotive, mass transit, aerospace and defense and medical markets;

polytetrafluoroethylene and ultra-high molecular weight polyethylene materials used in wire and cable protection, electrical insulation, conduction and shielding, hose and belt protection, vibration management, cushioning, gasketing and sealing, and venting applications for general industrial, automotive and aerospace and defense markets.

We believe these materials have characteristics that offer functional advantages in many market applications which serve to differentiate Rogers’ products from other commonly available materials.

These include polyurethane and silicone materials used in cushioning, gasketing and sealing, and vibration management applications for EV/HEV, general industrial, portable electronics, automotive, mass transit, aerospace and defense, footwear and impact mitigation and printing markets;

customized silicones used in flex heater and semiconductor thermal applications for EV/HEV, general industrial, portable electronics, automotive, mass transit, aerospace and defense and medical markets;

polytetrafluoroethylene and ultra-high molecular weight polyethylene materials used in wire and cable protection, electrical insulation, conduction and shielding, hose and belt protection, vibration management, cushioning, gasketing and sealing, and venting applications for EV/HEV, general industrial, automotive and aerospace and defense markets.

We believe these materials have characteristics that offer functional advantages in many market applications, which serve to differentiate our products from other commonly available materials.

EMS products are sold globally to converters, fabricators, distributors and original equipment manufacturers (OEMs).

Trade names for our EMS products include:

PORON ® , BISCO ® , DeWAL ® , ARLON ® , eSorba ® , Griswold ® , XRD ® , R/bak ® and HeatSORB™.

As of December 31, 2020, our EMS operating segment had administrative and manufacturing facilities in Moosup, Connecticut;

PORON ® , BISCO ® , DeWAL ® , ARLON ® , eSorba ® , Griswold ® , XRD ® , Silicone Engineering and R/bak ® .

As of December 31, 2021, our EMS operating segment had manufacturing and administrative facilities in Moosup, Connecticut;

Rogers, Connecticut;

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Narragansett, Rhode Island;

Evergem, Belgium;

Blackburn, England;

Ansan, South Korea;

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RIC has manufacturing facilities at the INOAC facilities in Nagoya and Mie, Japan, and RIS has manufacturing facilities at Rogers’ facilities in Suzhou, China.

Power Electronics Solutions

Our PES operating segment designs, develops, manufactures and sells ceramic substrate materials, busbars and cooling solutions for a variety of applications in EV/HEV, general industrial, mass transit, renewable energy, aerospace and defense and wired infrastructure markets.

We sell our ceramic substrate materials and cooling solutions under the curamik ® trade name and our busbars under the ROLINX ® trade name.

As of December 31, 2020, our PES operating segment had manufacturing and administrative facilities in Evergem, Belgium;

Eschenbach, Germany;

Budapest, Hungary;

and Suzhou, China.

Our Other operating segment consists of elastomer components for applications in general industrial market, as well as elastomer floats for level sensing in fuel tanks, motors, and storage tanks applications in the general industrial and automotive markets.

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All balance sheet accounts of foreign subsidiaries are translated or remeasured at exchange rates in effect at each year end, and income statement items are translated using the average exchange rates for the year.

Translation adjustments for those entities that operate under a local currency are recorded directly to a separate component of shareholders’ equity, while remeasurement adjustments for those entities that operate under the parent’s functional currency are recorded to the income statement as a component of “Other income (expense), net.” Currency transaction gains and losses are reported as income or expense, respectively, in the consolidated statements of operations as a component of “Other income (expense), net.” Such adjustments resulted in gains of $ 0.9 million in 2020 and losses of $ 0.9 million and $ 0.7 million in 2019 and 2018, respectively.

Translation adjustments for those entities that operate under a local currency are recorded directly to a separate component of shareholders’ equity, while remeasurement adjustments for those entities that operate under the parent’s functional currency are recorded to the income statement as a component of “Other income (expense), net.” Currency transaction gains and losses are reported as income or expense, respectively, in the consolidated statements of operations as a component of “Other income (expense), net.” Such adjustments resulted in gains of $ 3.0 million, gains of $ 0.9 million and losses of $ 0.9 million in 2021, 2020 and 2019, respectively.

Allowance for Credit Losses

In 2020, we adopted Accounting Standards Update No.

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, using the modified retrospective transition method.

Upon adoption, we changed our impairment model to utilize a current expected credit losses (CECL) model in place of the incurred loss methodology for financial instruments measured at amortized cost, including our accounts receivable.

CECL estimates on accounts receivable are recorded as selling, general and administrative expenses on our consolidated statements of operations.

The cumulative effect adjustment from adoption was immaterial to our consolidated financial statements.

The allowance for credit losses is determined based on a variety of factors that affect the potential collectability of the related receivables, including the length of time receivables are past due, customer credit ratings, financial stability of customers, specific one-time events and past customer history.

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The remainder of the reserve is based on our estimates and takes into consideration historical trends, market conditions and the composition of our customer base.

Inventories are stated at the lower of cost or net realizable value.

The cost of inventories is determined using the first in, first out (FIFO) method.

An allowance is made for estimated losses due to obsolescence.

The allowance is determined for groups of products based on purchases in the recent past and/or expected future demand and market conditions.

Inventories are stated at the lower of cost or net realizable value with costs determined primarily on a first-in, first-out (FIFO) basis.

We record allowances for estimated losses due to excess, obsolete and slow-moving inventory that is determined for groups of products based on purchases in the recent past and/or expected future demand, as well as market conditions, design cycles and other economic factors.

Abnormal amounts of idle facility expense and waste are not capitalized in inventory.

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Net capitalized software and development costs were $ 28.6 million and $ 0.3 million for the years ended December 31, 2021 and 2020, respectively.

The December 31, 2021 balance is almost entirely attributable to our planned implementation of a new enterprise resource planning system.

Capitalized software is included within “Property, plant and equipment, net of accumulated depreciation” in the consolidated statements of financial position.

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Each definite-lived other intangible asset is amortized over its respective economic useful life using the economic attribution method.

Goodwill is tested for impairment annually and between annual impairment tests if events or changes in circumstances indicate the carrying value may be impaired.

If it is more likely than not that our goodwill is impaired, then we compare the estimated fair value of each of our reporting units to its respective carrying value.

If a reporting unit’s carrying value is greater than its fair value, then an impairment is recognized for the excess and charged to operations.

We currently have four reporting units with goodwill:

ACS, EMS, curamik ® and Elastomer Components Division (ECD).

Consistent with historical practice, the annual impairment test on these reporting units was performed as of November 30, 2020.

The application of the annual goodwill impairment test requires significant judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units and determination of the fair value of each reporting unit.

Goodwill is evaluated for impairment annually, and between annual impairment assessments if events or changes in circumstances indicate the carrying value may be impaired, by first performing a qualitative assessment to determine whether a quantitative goodwill impairment assessment is necessary.

If it is determined, based on qualitative factors, the fair value of the reporting unit may be more likely than not less than its carrying amount or if significant changes to macro-economic factors related to the reporting unit have occurred that could materially impact fair value, a quantitative goodwill impairment assessment would be required.

We can elect to forgo the qualitative assessment and perform a quantitative assessment.

The quantitative assessment compares the fair value of a reporting unit with its carrying amount.

The application of the quantitative assessment requires significant judgment, including the assignment of assets and liabilities to reporting units and determination of the fair value of each reporting unit.

Determining the fair value is subjective and requires the use of significant estimates and assumptions, including financial projections for net sales, gross margin and operating margin, discount rates, terminal growth rates and future market conditions, among others.

We estimated the fair value of our reporting units using an income approach based on the present value of future cash flows through a five-year discounted cash flow analysis.

The discounted cash flow analysis utilized the discount rates for each of the reporting units ranging from 10.5 % for EMS to 13.1 % for ECD, and terminal growth rates ranging from 3.4 % for curamik ® to 4.2 % for ACS.

We believe this approach yields the most appropriate evidence of fair value as our reporting units are not easily compared to other corporations involved in similar businesses.

We further believe that the assumptions and rates used in our annual goodwill impairment test are reasonable, but inherently uncertain.

There were no impairment charges resulting from our goodwill impairment analysis for the year ended December 31, 2020.

Our ACS, EMS, curamik ® and ECD reporting units had allocated goodwill of $ 51.7 million, $ 143.0 million, $ 73.2 million and $ 2.2 million respectively, as of December 31, 2020.

Indefinite-lived other intangible assets are tested for impairment annually and between annual impairment tests if events or changes in circumstances indicate the carrying value may be impaired.

If it is more likely than not that an indefinite-lived other intangible asset is impaired, then we compare the estimated fair value of that indefinite-lived other intangible asset to its respective carrying value.

If an indefinite-lived other intangible asset’s carrying value is greater than its fair value, then an impairment charge is recognized for the excess and charged to operations.

When performing the quantitative assessment, we have historically estimated the fair value of our reporting units using an income approach based on the present value of future cash flows through a five-year discounted cash flow analysis.

Upon performing the quantitative assessment, if the carrying value of the reporting unit exceeds its fair value, an impairment charge is recognized in an amount equal to that excess, not to exceed the carrying amount of goodwill.

We currently have four reporting units with goodwill:

RF Solutions, EMS, curamik ® and Elastomer Components Division (ECD).

Consistent with historical practice, the annual impairment test on these reporting units was performed as of November 30, 2021.

The application of the annual indefinite-lived

other intangible asset impairment test requires significant judgment, including the determination of fair value of each indefinite-lived other intangible asset.

In 2021, we elected to utilize a qualitative assessment.

There were no impairment charges resulting from our goodwill impairment assessment for the year ended December 31, 2021.

Our RF Solutions, EMS, curamik ® and ECD reporting units had allocated goodwill of $ 51.7 million, $ 248.4 million, $ 67.9 million and $ 2.2 million respectively, as of December 31, 2021.

Indefinite-lived other intangible assets are evaluated for impairment annually, and between annual impairment assessments if events or changes in circumstances indicate the carrying value may be impaired, by first performing a qualitative assessment to determine whether a quantitative indefinite-lived other intangible asset impairment assessment is necessary.

If it is determined, based on qualitative factors, the fair value of the indefinite-lived other intangible asset may be more likely than not less than its carrying amount or if significant changes to macro-economic factors related to the indefinite-lived other intangible asset have occurred that could materially impact fair value, a quantitative indefinite-lived other intangible asset impairment assessment would be required.

We can elect to forgo the qualitative assessment and perform a quantitative assessment.

The quantitative assessment compares the fair value of the indefinite-lived other intangible asset with its carrying amount.

The application of the quantitative assessment requires significant judgment, including determining the fair value of each indefinite-lived other intangible asset.

Fair value is primarily based on income approaches using discounted cash flow models, which have significant assumptions.

Such assumptions are subject to variability from year to year and are directly impacted by global market conditions.

There were no impairment charges resulting from our indefinite-lived other intangible assets impairment analysis for the year ended December 31, 2020.

The curamik ® reporting unit had an indefinite-lived other intangible asset of $ 4.8 million as of December 31, 2020.

There were no impairment charges resulting from our indefinite-lived other intangible assets impairment assessment

for the year ended December 31, 2021.

Our curamik ® reporting unit had an indefinite-lived other intangible asset of $ 4.5 million as of December 31, 2021.

Definite-lived other intangible assets are tested for recoverability whenever events or changes in circumstances indicate the carrying value may not be recoverable.

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Such assumptions are subject to variability from year to year and are directly impacted by global market conditions.

There were immaterial impairment charges resulting from our definite-lived other intangible assets impairment analysis for the year ended December 31, 2020.

Our ACS, EMS and curamik ® reporting units had definite-lived other intangible assets of $ 3.7 million, $ 101.2 million and $ 8.2 million, respectively, as of December 31, 2020.

There were no impairment charges resulting from our definite-lived other intangible assets impairment analysis for the year ended December 31, 2021.

Our RF Solutions, EMS and curamik ® reporting units had definite-lived other intangible assets of $ 2.8 million, $ 163.0 million and $ 6.1 million, respectively, as of December 31, 2021.

The useful life determination for each indefinite-lived other intangible asset is evaluated each reporting period to determine whether events and circumstances support an indefinite useful life.

The useful life determination for each definite-lived other intangible asset is evaluated each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization.

Pension and Other Postretirement Benefits

We sponsor one material defined benefit pension plan, the Rogers Corporation Employees’ Pension Plan (the Union Plan), which covers certain union employees, and we sponsor multiple fully insured or self-funded medical plans and fully insured life insurance plans for retirees.

The Union Plan was frozen in 2013 so that future benefits no longer accrue.

The costs and obligations associated with these plans are dependent upon various actuarial assumptions used in calculating such amounts.

These assumptions include discount rates, long-term rates of return on plan assets, mortality rates, and other factors.

The assumptions used in these models are determined as follows:

(i) the discount rate used is based on the PruCurve bond index;

(ii) the long-term rate of return on plan assets is determined based on historical portfolio results, market conditions and our expectations of future returns;

and (iii) the mortality rate is based on a mortality projection that estimates current longevity rates and their impact on the long-term plan obligations.

We determine these assumptions based on consultation with outside actuaries and investment advisors.

Any changes in these assumptions could have a significant impact on our assets and liabilities.

We review these assumptions periodically throughout the year and update as necessary.

We are required, as an employer, to:

(a) recognize in our consolidated statements of financial position an asset for a plan’s overfunded status or a liability for a plan’s underfunded status;

(b) measure a plan’s assets and a plan’s obligations that determine our funded status as of the end of the year;

and (c) recognize changes in the funded status of a defined benefit plan in the year in which the changes occur and report these changes in accumulated other comprehensive loss.

Additionally, actuarial losses (gains) that are not immediately recognized as net periodic pension cost (credit) are recognized as a component of accumulated other comprehensive loss (income) and amortized into net periodic pension cost (credit) in future periods.

Investments were stated at fair value as of the dates reported.

Securities traded on a national securities exchange were valued at the last reported sales price on the last business day of the plan year.

Fixed-income bonds were valued using price evaluations provided by independent pricing services.

The fair value of the guaranteed deposit account was determined through discounting expected future investment cash flow from both investment income and repayment of principal for each investment purchased.

The estimated fair values of the participation units owned by the plan in pooled separate accounts were based on quoted redemption values and adjusted for management fees and asset charges, as determined by the recordkeeper, on the last business day of the relevant plan year.

Pooled separate accounts are accounts established solely for the purpose of investing the assets of one or more plans.

Funds in a separate account are not commingled with other Company assets for investment purposes.

Environmental and Product Liabilities

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When no amount within a range of estimates is more likely to occur than another, we accrue to the low end of the range and disclose the range.

When future liabilities are determined to be reimbursable by insurance coverage, an accrual is recorded for the potential liability and a receivable is recorded for the estimated insurance reimbursement amount.

When future liabilities are determined to be reimbursable by insurance coverage, an accrual is recorded for the potential liability and a receivable is recorded for the estimated insurance

reimbursement amount.

We are exposed to the uncertain nature inherent in such remediation and the possibility that initial estimates will not reflect the final outcome of a matter.

1 unchanged sentence

We believe the assumptions made on the potential exposure and expected insurance coverage are reasonable at the present time, but are subject to uncertainty based on the actual future outcome of our asbestos litigation.

Our estimates of asbestos-related contingent liabilities and related insurance receivables are based on an independent actuarial analysis and an independent insurance usage analysis prepared annually by third parties.

The actuarial analysis contains numerous assumptions, including number of claims that might be received, the type and severity of the disease alleged by each claimant, the long latency period associated with asbestos exposure, dismissal rates, average indemnity costs, average defense costs, costs of medical treatment, the financial resources of other companies that are co-defendants in claims, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, and the impact of potential changes in legislative or judicial standards, including potential tort reform.

Our estimates of asbestos-related contingent liabilities and related insurance receivables are based on a claim projection analysis and an insurance usage analysis prepared annually by third parties.

The claim projection analysis contains numerous assumptions, including number of claims that might be received, the type and severity of the disease alleged by each claimant, the long latency period associated with asbestos exposure, dismissal rates, average indemnity costs, average defense costs, costs of medical treatment, the financial resources of other companies that are co-defendants in claims, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, and the impact of potential changes in legislative or judicial standards, including potential tort reform.

Furthermore, any predictions with respect to these assumptions are subject to even greater uncertainty as the projection period lengthens.

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Management believes that the carrying values of financial instruments, including cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities approximate fair value based on the maturities of these instruments.

The fair value of our borrowings under credit facility are determined using discounted cash flows based upon our estimated current interest cost for similar type borrowings or current market value, which falls under Level 2 of the fair value hierarchy.

The fair value of our borrowings under our revolving credit facility are determined using discounted cash flows based upon our estimated current interest cost for similar type borrowings or current market value, which falls under Level 2 of the fair value hierarchy.

Based on our credit characteristics as of December 31, 2021, borrowings would generally bear interest at London interbank offered rate (LIBOR) plus 162.5 basis points.

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Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some or all of a deferred tax asset will not be realized.

We did not make any changes in 2020 to our position on the permanent reinvestment of our historical earnings from foreign operations.

With the exception of certain of our Chinese subsidiaries, we continue to assert that historical foreign earnings are indefinitely reinvested.

As of December 31, 2020 and 2019, we recorded a deferred tax liability of $ 2.4 million and $ 1.6 million, respectively, for Chinese withholding tax on undistributed earnings that are not indefinitely reinvested.

The other remaining foreign subsidiaries have both the intent and ability to indefinitely reinvest their undistributed earnings and we estimate that, if these undistributed earnings are distributed, they may give rise to an estimated $ 3.8 million of additional tax liabilities.

If circumstances change and it becomes apparent that some, or all of the undistributed earnings as of December 31, 2020 will not be indefinitely reinvested, the provision for the tax consequences, if any, will be recorded in the period when circumstances change.

Distributions out of current and future earnings are permissible to fund discretionary activities such as business acquisitions.

However, when distributions are made, this could result in a higher effective tax rate.

We record benefits for uncertain tax positions based on an assessment of whether it is more likely than not that the tax positions will be sustained by the taxing authorities.

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Sales tax or VAT are excluded from the measurement of the transaction price.