What changed in this filing

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Item 1. Financial Statements

2023-04-28 compared with 2022-11-09 · 192 added, 269 removed, 478 unchanged (49% of the section changed)

3 unchanged sentences

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

Three Months Ended Nine Months Ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Three Months Ended

March 31, 2023 March 31, 2022

Net sales $ 243,847 $ 248,266

5 unchanged sentences

Other operating (income) expense, net ( 219 ) ( 531 )

Operating income 18,476 33,799 61,763 106,737

Operating income (loss) ( 252 ) 19,891

Equity income in unconsolidated joint ventures 76 1,275

Pension settlement charges — ( 534 ) — ( 534 )

Other income (expense), net 5 267

Interest expense, net ( 3,462 ) ( 1,069 )

Income before income tax expense 17,673 34,128 62,004 114,373

Income tax expense 2,835 8,999 12,683 29,371

Net income $ 14,838 $ 25,129 $ 49,321 $ 85,002

Income (loss) before income taxes ( 3,633 ) 20,364

Income tax expense (benefit) ( 128 ) 3,764

Net income (loss) $ ( 3,505 ) $ 16,600

Basic earnings per share $ ( 0.19 ) $ 0.88

7 unchanged sentences

(Dollars in thousands)

Three Months Ended Nine Months Ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Net income $ 14,838 $ 25,129 $ 49,321 $ 85,002

Three Months Ended

March 31, 2023 March 31, 2022

Net income (loss) $ ( 3,505 ) $ 16,600

Foreign currency translation adjustment 9,656 ( 11,757 )

Pension and other postretirement benefits:

Actuarial net loss incurred, net of tax (Note 4) — — ( 15 ) —

Amortization of loss, net of tax (Note 4) 94 86

5 unchanged sentences

(Dollars and shares in thousands, except par value )

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Current assets

24 unchanged sentences

Asbestos-related liabilities, current portion 4,968 4,968

Finance lease obligations, current portion 380 498

Other accrued liabilities 28,214 40,067

3 unchanged sentences

Asbestos-related liabilities, non-current portion 59,996 60,065

Finance lease obligations, non-current portion 1,323 1,295

Non-current income tax 9,204 9,985

16 unchanged sentences

(Dollars in thousands)

Nine Months Ended

September 30, 2022 September 30, 2021

Three Months Ended

March 31, 2023 March 31, 2022

Operating Activities:

Net income $ 49,321 $ 85,002

Adjustments to reconcile net income to cash provided by operating activities:

Net income (loss) $ ( 3,505 ) $ 16,600

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Depreciation and amortization 14,653 10,724

3 unchanged sentences

Dividends received from unconsolidated joint ventures 1,457 1,509

Pension settlement charges (benefits) 534

Pension and other postretirement benefits — 29

(Gain) loss on sale or disposal of property, plant and equipment 18 ( 15 )

Impairment charges 212 385

UTIS fire fixed asset and inventory write-offs — 201

9 unchanged sentences

Other, net ( 1,240 ) 10,495

Net cash provided by operating activities 1,834 106,115

Net cash provided by (used in) operating activities 1,835 ( 13,723 )

Investing Activities:

Acquisition of business, net of cash received ( 1,300 ) —

Disposition of business 989 —

Capital expenditures ( 16,410 ) ( 28,249 )

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

Proceeds from insurance claims — 2,262

1 unchanged sentence

Financing Activities:

Proceeds from borrowings under revolving credit facility 100,000 —

Repayment of debt principal and finance lease obligations ( 25,118 ) ( 146 )

Line of credit issuance costs ( 1,742 ) —

Payments of taxes related to net share settlement of equity awards ( 2,506 ) ( 10,498 )

Proceeds from issuance of shares to employee stock purchase plan — 950

Net cash provided by (used in) financing activities 89,997 ( 30,844 )

Net cash used in financing activities ( 29,366 ) ( 9,694 )

Effect of exchange rate fluctuations on cash 826 ( 748 )

Net (decrease) increase in cash and cash equivalents 4,165 29,116

Net decrease in cash and cash equivalents ( 42,126 ) ( 50,152 )

Cash and cash equivalents at beginning of period 235,850 232,296

9 unchanged sentences

(Dollars and shares in thousands)

Three Months Ended Nine Months Ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Three Months Ended

March 31, 2023 March 31, 2022

Capital Stock

2 unchanged sentences

Shares issued for employee stock purchase plan — 6

Shares issued to directors — — 7 10

Balance, end of period 18,609 18,803

3 unchanged sentences

Shares issued for employee stock purchase plan — 944

Shares issued to directors — — ( 7 ) ( 10 )

Equity compensation expense 2,053 3,202

2 unchanged sentences

Balance, beginning of period 1,098,454 981,825

Net income 14,838 25,129 49,321 85,002

Net income (loss) ( 3,505 ) 16,600

Balance, end of period 1,094,949 998,425

15 unchanged sentences

For further information regarding our accounting policies, refer to the audited consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022.

Refer to the discussion below for our restructuring activities significant accounting policy.

Note 2 – Fair Value Measurements

5 unchanged sentences

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

As a result of our pension termination and settlement efforts in late 2019 and the first half of 2020, we had a pension surplus investment balance, which was accounted for as an available-for-sale investment as of June 2020.

At the end of April, 2022, the entirety of the balance was paid out as a one-time discretionary contribution to all participants of the Rogers Employees Savings Investment Plan.

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 September 30, 2022

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

Pension surplus investment (1)

$ — $ — $ — $ —

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

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

Pension surplus investment (1)

$ 6,638 $ — $ — $ 6,638

(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 December 31, 2021.

The fair value of this investment approximated its carrying value as of December 31, 2021.

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 September 30, 2022

Derivative Instruments at Fair Value as of March 31, 2023

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

11 unchanged sentences

We do not use derivative instruments for trading or speculative purposes.

The valuation of derivative contracts used to manage each of these risks is described below:

The valuation of derivative contracts used to manage each of foreign currency and commodity risks is described below:

• Foreign Currency – The fair value of any foreign currency option derivative is based upon valuation models applied to current market information such as strike price, spot rate, maturity date and volatility, and by reference to market values resulting from an over-the-counter market or obtaining market data for similar instruments with similar characteristics.

8 unchanged sentences

Foreign Currency

During the three months ended September 30, 2022, we entered into U.S.

dollar, euro, and Korean won forward contracts.

During the three months ended March 31, 2023, we entered into U.S.

dollar, Korean won, and Japanese yen 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 September 30, 2022, the notional values of the remaining foreign currency forward contracts were as follows:

As of March 31, 2023, the notional values of the remaining foreign currency forward contracts were as follows:

Notional Values of Foreign Currency Derivatives

USD/CNH $ 16,131,674

EUR/USD € 4,984,006

USD/EUR $ 8,500,000

KRW/USD ₩ 3,889,350,000

As of September 30, 2022, we had 12 outstanding contracts to hedge exposure related to the purchase of copper in our AES operating segment.

JPY/EUR ¥ 600,000,000

As of March 31, 2023, we had 12 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 September 30, 2022, the volume of our copper contracts outstanding was as follows:

As of March 31, 2023, the volume of our copper contracts outstanding was as follows:

Volume of Copper Derivatives

October 2022 - December 2022 69 metric tons per month

January 2023 - March 2023 69 metric tons per month

April 2023 - June 2023 69 metric tons per month

July 2023 - September 2023 69 metric tons per month

October 2023 - December 2023 69 metric tons per month

January 2024 - March 2024 69 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 Nine Months Ended

(Dollars in thousands) Financial Statement Line Item September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Three Months Ended

(Dollars in thousands) Financial Statement Line Item March 31, 2023 March 31, 2022

Foreign Currency Contracts

9 unchanged sentences

Net current-period other comprehensive income (loss) 9,656 94 9,750

Balance as of September 30, 2022 $ ( 116,024 ) $ ( 9,357 ) $ ( 125,381 )

Balance as of March 31, 2023 $ ( 65,919 ) $ ( 9,595 ) $ ( 75,514 )

Balance as of December 31, 2021 $ ( 35,641 ) $ ( 9,602 ) $ ( 45,243 )

2 unchanged sentences

Net current-period other comprehensive income (loss) ( 11,757 ) 86 ( 11,671 )

Balance as of September 30, 2021 $ ( 29,198 ) $ ( 8,831 ) $ ( 38,029 )

(1) Net of taxes of $ 2,056 and $ 2,125 as of September 30, 2022 and December 31, 2021, respectively.

Net of taxes of $ 1,902 and $ 1,951 as of September 30, 2021 and December 31, 2020, respectively.

Balance as of March 31, 2022 $ ( 47,398 ) $ ( 9,516 ) $ ( 56,914 )

(1) Net of taxes of $ 1,899 and $ 1,926 as of March 31, 2023 and December 31, 2022, respectively.

Net of taxes of $ 2,100 and $ 2,125 as of March 31, 2022 and December 31, 2021, respectively.

Note 5 – Inventories

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

(Dollars in thousands) September 30, 2022 December 31, 2021

(Dollars in thousands) March 31, 2023 December 31, 2022

Raw materials $ 87,397 $ 87,851

6 unchanged sentences

December 31, 2022 $ 115,352 $ 234,789 $ 2,224 $ 352,365

Purchase accounting adjustment — ( 925 ) — ( 925 )

Foreign currency translation adjustment 1,212 2,290 — $ 3,502

September 30, 2022 $ 110,015 $ 226,073 $ 2,224 $ 338,312

March 31, 2023 $ 116,564 $ 237,079 $ 2,224 $ 355,867

Other Intangible Assets

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(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 $ 4.1 million and $ 3.1 million for the three months ended September 30, 2022 and 2021, respectively, and $ 12.6 million and $ 9.4 million for the nine months ended September 30, 2022 and 2021, respectively.

Amortization expense was $ 3.3 million and $ 4.3 million for the three months ended March 31, 2023 and 2022, respectively.

The estimated future amortization expense is $ 10.0 million for the remainder of 2023 and $ 12.3 million, $ 10.7 million, $ 10.3 million and $ 9.9 million for 2024, 2025, 2026 and 2027, respectively.

The weighted average amortization period as of September 30, 2022, by definite-lived other intangible asset class, was as follows:

The weighted average amortization period as of March 31, 2023, 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 Nine Months Ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Net income $ 14,838 $ 25,129 $ 49,321 $ 85,002

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

March 31, 2023 March 31, 2022

Net income (loss) $ ( 3,505 ) $ 16,600

Weighted-average shares outstanding - basic 18,604 18,780

5 unchanged sentences

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

For the three months ended September 30, 2022 and 2021, no shares and 1,994 shares were excluded, respectively.

For the three months ended March 31, 2023 and 2022, 57,000 shares and 33,000 shares were excluded, respectively.

Note 8 – Capital Stock and Equity Compensation

1 unchanged sentence

Performance-Based Restricted Stock Units

As of September 30, 2022, we had performance-based restricted stock units from 2021 and 2020 outstanding.

As of March 31, 2023, we had performance-based restricted stock units from 2023 and 2021 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 .

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 nine months ended September 30, 2022 is presented below:

A summary of activity of the outstanding performance-based restricted stock units for the three months ended March 31, 2023 is presented below:

Performance-Based

4 unchanged sentences

Awards cancelled ( 30,963 )

Awards outstanding as of September 30, 2022 79,460

We recognized $ 1.1 million and $ 2.6 million of compensation expense for performance-based restricted stock units for the three months ended September 30, 2022 and 2021, respectively.

We recognized $ 3.3 million and $ 5.8 million of compensation expense for performance-based restricted stock units for the nine months ended September 30, 2022 and 2021, respectively.

Awards outstanding as of March 31, 2023 71,366

We recognized $ 0.1 million and $ 1.1 million of compensation contra-expense and expense, respectively, for performance-based restricted stock units for the three months ended March 31, 2023 and 2022, respectively.

Time-Based Restricted Stock Units

As of September 30, 2022, we had time-based restricted stock unit awards from 2022, 2021, 2020 and 2019 outstanding.

As of March 31, 2023, we had time-based restricted stock unit awards from 2023, 2022, 2021 and 2020 outstanding.

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

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 subsequent to the last grant anniversary date, except as noted below in Chief Executive Officer’s 2021 Equity Award Grants .

Each time-based restricted stock unit represents a right to receive one share of Rogers’ capital stock at the end of the vesting period.

2 unchanged sentences

We account for forfeitures as they occur.

A summary of activity of the outstanding time-based restricted stock units for the nine months ended September 30, 2022 is presented below:

A summary of activity of the outstanding time-based restricted stock units for the three months ended March 31, 2023 is presented below:

Restricted Stock Units

3 unchanged sentences

Awards cancelled ( 20,721 )

Awards outstanding as of September 30, 2022 108,773

We recognized $ 2.4 million and $ 2.0 million of compensation expense for time-based restricted stock units for the three months ended September 30, 2022 and 2021, respectively.

We recognized $ 7.0 million and $ 5.8 million of compensation expense for time-based restricted stock units for the nine months ended September 30, 2022 and 2021, respectively.

Chief Executive Officer’s 2021 Equity Award Grants

The terms of the performance-based and time-based restricted stock unit awards granted to our Chief Executive Officer (CEO), Bruce Hoechner, in February 2021 were modified from the standard language provisions from prior year awards to allow for accelerated vesting of the full awards provided certain criteria are met.

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 retire.

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

Awards outstanding as of March 31, 2023 121,736

We recognized $ 2.1 million and $ 2.1 million of compensation expense for time-based restricted stock units for the three months ended March 31, 2023 and 2022, respectively.

Deferred Stock Units

4 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 nine months ended September 30, 2022 is presented below:

A summary of activity of the outstanding deferred stock units for the three months ended March 31, 2023 is presented below:

Deferred Stock Units

2 unchanged sentences

Stock issued —

Awards outstanding as of September 30, 2022 6,850

We recognized no compensation expense for deferred stock units for the three months ended September 30, 2022 and 2021, respectively.

We recognized $ 1.3 million and $ 1.2 million of compensation expense for deferred stock units for the nine months ended September 30, 2022 and 2021, respectively.

Awards outstanding as of March 31, 2023 6,850

We recognized no compensation expense for deferred stock units for the three months ended March 31, 2023 and 2022, respectively.

Note 9 – Debt

On October 16, 2020, we entered into the Fourth Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (the Fourth Amended Credit Agreement).

The Fourth Amended Credit Agreement amends and restates the Third Amended Credit Agreement, and provides for a revolving credit facility with up to a $ 450.0 million borrowing capacity, with sublimits for multicurrency borrowings, letters of credit and swing-line notes, in addition to a $ 175.0 million accordion feature.

Borrowings may be used to finance working capital needs, for letters of credit and for general corporate purposes in the ordinary course of business, including the financing of permitted acquisitions (as defined in the Fourth Amended Credit Agreement).

The Fourth Amended Credit Agreement extends the maturity, the date on which all amounts borrowed or outstanding under the Fourth Amended Credit Agreement are due, from February 17, 2022 to March 31, 2024.

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.

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

In October 2020, we entered into the Fourth Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (the Fourth Amended Credit Agreement).

The Fourth Amended Credit Agreement amended and restated the Third Amended Credit Agreement, and provided for a revolving credit facility with up to a $ 450.0 million borrowing capacity, with sublimits for multicurrency borrowings, letters of credit and swing-line notes, in addition to a $ 175.0 million accordion feature.

Borrowings could have been used to finance working capital needs, for letters of credit and for general corporate purposes in the ordinary course of business, including the financing of permitted acquisitions (as defined in the Fourth Amended Credit Agreement).

The Fourth Amended Credit Agreement extended the maturity, the date on which all amounts borrowed or outstanding under the Fourth Amended Credit Agreement are due, from February 17, 2022 to March 31, 2024.

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

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

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

On March 5, 2021, the U.K.

3 unchanged sentences

1) to the Fourth Amended Credit Agreement to adopt a new benchmark interest rate to replace the discontinued LIBOR reference rates.

Borrowings under the Fourth Amended Credit Agreement can be made as alternate base rate loans, euro-currency loans, or RFR loans.

Alternate base rate loans bear interest at a base reference rate plus a spread of 62.5 to 100.0 basis points, depending on our leverage ratio.

The base reference rate is the greatest of (a) the prime rate in effect on such day, (b) the NYFRB rate in effect on such day plus ½ of 1%, and (c) the adjusted LIBOR for a one month interest period in dollars on such day (or if such day is not a business day, the immediately preceding business day) plus 1 %.

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.

RFR loans bears interest based upon the Sterling Overnight Index Average (SONIA) plus 0.0326 % plus a spread of 162.5 to 200.0 basis points.

Based on our leverage ratio as of September 30, 2022, the spread was 175.0 basis points.

In addition to interest payable on the principal amount of indebtedness outstanding, we incur an annual fee of 25 to 35 basis points (based upon our leverage ratio), paid quarterly, of the unused amount of the lenders’ commitments under the Fourth Amended Credit Agreement.

The Fourth Amended Credit Agreement contains customary representations and warranties, covenants, mandatory prepayments and events of default under which our payment obligations may be accelerated.

If an event of default occurs, the lenders may, among other things, terminate their commitments and declare all outstanding borrowings to be immediately due and payable together with accrued interest and fees.

The financial covenants include requirements to maintain (1) a total net leverage ratio of no more than 3.25 to 1.00, subject to a one-time election to increase the maximum total net leverage ratio to 3.50 to 1.00 for one fiscal year in connection with a permitted acquisition, and (2) an interest coverage ratio of no less than 3.00 to 1.00.

We are permitted to net up to $ 50.0 million of unrestricted domestic cash and cash equivalents against indebtedness in the calculation of the total net leverage ratio.

The Fourth Amended Credit Agreement generally permits us to pay cash dividends to our shareholders, provided that (i) no default or event of default has occurred and is continuing or would result from the dividend payment and (ii) our total net leverage ratio does not exceed 2.75 to 1.00.

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 September 30, 2022.

We borrowed $ 30.0 million under the Fourth Amended Credit Agreement for the three months ended September 30, 2022, and $ 100.0 million for the nine months ended September 30, 2022.

There were no borrowings for the three and nine months ended September 30, 2021.

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

We made no payments for the three and nine months ended September 30, 2022, and no payments for the three months ended September 30, 2021.

We made $ 25.0 million of discretionary principal payments on our revolving credit facility for the nine months ended September 30, 2021.

We had $ 290.0 million outstanding borrowings under our revolving credit facility as of September 30, 2022, and $ 190.0 million as of December 31, 2021.

We had $ 1.1 million and $ 1.6 million of outstanding line of credit issuance costs as of September 30, 2022 and December 31, 2021, respectively, which will be amortized over the life of the Fourth Amended Credit Agreement.

Borrowings under the Fourth Amended Credit Agreement could have been made as alternate base rate loans, euro-currency loans, or RFR loans.

Alternate base rate loans bore interest at a base reference rate plus a spread of 62.5 to 100.0 basis points, depending on our leverage ratio.

The base reference rate was the greatest of (a) the prime rate in effect on such day, (b) the NYFRB rate in effect on such day plus ½ of 1%, and (c) the adjusted LIBOR for a one-month interest period in dollars on such day (or if such day is not a business day, the immediately preceding business day) plus 1 %.

Euro-currency loans bore interest

based on adjusted LIBOR plus a spread of 162.5 to 200.0 basis points, depending on our leverage ratio.

RFR loans bore interest based upon the Sterling Overnight Index Average (SONIA) plus 0.0326 % plus a spread of 162.5 to 200.0 basis points.

In addition to interest payable on the principal amount of indebtedness outstanding, we incurred an annual fee of 25 to 35 basis points (based upon our leverage ratio), paid quarterly, of the unused amount of the lenders’ commitments under the Fourth Amended Credit Agreement.

The Fourth Amended Credit Agreement contained customary representations and warranties, covenants, mandatory prepayments and events of default under which our payment obligations may be accelerated.

If an event of default occurred, the lenders may have, among other things, terminated their commitments and declared all outstanding borrowings to be immediately due and payable together with accrued interest and fees.

The financial covenants included requirements to maintain (1) a total net leverage ratio of no more than 3.25 to 1.00, subject to a one-time election to increase the maximum total net leverage ratio to 3.50 to 1.00 for one fiscal year in connection with a permitted acquisition, and (2) an interest coverage ratio of no less than 3.00 to 1.00.

We were permitted to net up to $ 50.0 million of unrestricted domestic cash and cash equivalents against indebtedness in the calculation of the total net leverage ratio.

The Fourth Amended Credit Agreement generally permitted us to pay cash dividends to our shareholders, provided that (i) no default or event of default had occurred and was continuing or would have resulted from the dividend payment and (ii) our total net leverage ratio did not exceed 2.75 to 1.00.

If our total net leverage ratio exceeded 2.75 to 1.00, we may have nonetheless made up to $ 20.0 million in restricted payments, including cash dividends, during the fiscal year, provided that no default or event of default had occurred and was continuing or would have resulted from the payments.

On March 24, 2023, we entered into a Fifth Amended and Restated Credit Agreement (the Fifth Amended Credit Agreement) with each of the lenders party thereto, JPMorgan Chase Bank, N.A.

as administrative agent, and HSBC Bank USA, National Association, Wells Fargo Bank, National Association, Citibank, N.A.

and Citizens Bank, N.A.

as Co-Syndication Agents.

The Fifth Amended Credit Agreement amends and restates the Fourth Amended Credit Agreement, and provides for (1) a revolving credit facility with up to $ 450.0 million of revolving loans, with sub-limits for multicurrency borrowings, letters of credit and swing-line notes, and (2) a $ 225.0 million expansion feature.

Borrowings may be used to finance working capital needs, for letters of credit and for the general corporate purposes in the ordinary course of business, including the financing of permitted acquisitions (as defined in the Fifth Amended Credit Agreement).

The Fifth Amended Credit Agreement extends the maturity, the date on which all amounts borrowed or outstanding under the Fifth Amended Credit Agreement are due, from March 31, 2024 to March 24, 2028.

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

The obligations are also secured by a Fifth Amended and Restated Pledge and Security Agreement, dated as of March 24, 2023, 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 the non-real estate assets of ours and the Guarantors.

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

Borrowings under the Fifth Amended Credit Agreement bear interest based on one of two options.

Alternate base rate loans will bear interest at a rate that includes a base reference rate plus a spread of 62.5 to 100.0 basis points, depending on our leverage ratio.

The base reference rate will be the greater of the (1) prime rate, (2) federal funds effective rate plus 50 basis points, and (3) the one-month Term Secured Overnight Financial Rate (SOFR) plus 110 basis points.

Loans bearing an interest rate determined by reference to the Adjusted Term SOFR Rate, the Adjusted Euro Interbank Offered Rate (EURIBOR), or the Adjusted (Tokyo Interbank Offered Rate (TIBOR) (each as defined in the Fifth Amended Credit Agreement) will bear interest based on screen rate plus a spread of 162.5 to 200.0 basis points, depending on our leverage ratio.

Based on our leverage ratio as of March 31, 2023, the spread was 175.0 basis points.

The Fifth Amended Credit Agree ment contains customary representations and warranties, covenants, mandatory prepayments and events of default under which the Company’s payment obligations may be accelerated.

The financial covenants include a requirement to maintain (1) a total net leverage ratio of no more than 3.25 to 1.00, subject to a one-time election to increase the maximum total net leverage ratio to 3.75 to 1.00 for one fiscal year in connection with a permitted acquisition, and (2) an interest coverage ratio of no less than 3.00 to 1.00.

We are permitted to net up to $ 50.0 million of unrestricted domestic cash and cash equivalents in the calculation of the total net leverage ratio.

The Fifth Amended Credit Agreement generally permits us to pay cash dividends to our shareholders, provided that (i) no default or event of default has occurred and is continuing or would result from the dividend payment and (ii) our total net leverage ratio did not exceed 2.75 to 1.00.

If our total net leverage ratio exceeded 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

Our total net leverage ratio did not exceed 2.75 to 1.00 and our interest coverage ratio was greater than or equal to 3.00 to 1.00 as of March 31, 2023.

There were no borrowings under the Fifth Amended Credit Agreement for the three months ended March 31, 2023 and there were no borrowings under the Fourth Amended Credit Agreement for the three months ended March 31, 2022.

We are not required to make any quarterly principal payments under the Fifth Amended Credit Agreement, and we were not required to make any quarterly principal payments under the Fourth Amended Credit Agreement.

We made a $ 25.0 million of discretionary principal payment for the three months ended March 31, 2023, and no discretionary principal payments for the three months ended March 31, 2022.

We had $ 190.0 million outstanding borrowings under our revolving credit facility as of March 31, 2023, and $ 215.0 million as of December 31, 2022.

We had $ 2.4 million and $ 0.9 million of outstanding line of credit issuance costs as of March 31, 2023 and December 31, 2022, respectively, which will be amortized over the life of the Fifth Amended Credit Agreement.

Note 10 - Leases

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- and nine-month periods ended September 30, 2022 and 2021.

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- and nine-month periods ended September 30, 2022 and 2021.

Payments made on the principal portion of our finance lease obligations were immaterial for each of the three- and nine-month periods ended September 30, 2022 and 2021, excluding the $ 5.0 million net cash payment to exercise the Eschenbach, Germany manufacturing facility purchase option.

Finance Leases

Operating Leases

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

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Our expenses and payments for operating leases were as follows:

Three Months Ended Nine Months Ended

(Dollars in thousands) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Three Months Ended

(Dollars in thousands) March 31, 2023 March 31, 2022

Operating leases expense $ 991 $ 692

1 unchanged sentence

Payments on operating lease obligations $ 807 $ 869

Lease Balances in Statements of Financial Position

Our assets and liabilities balances related to finance and operating leases reflected in the condensed consolidated statements of financial position were as follows:

(Dollars in thousands) Location in Statements of

Financial Position September 30, 2022 December 31, 2021

Financial Position March 31, 2023 December 31, 2022

Finance lease right-of-use assets Property, plant and equipment, net $ 1,752 $ 1,749

Operating lease right-of-use assets Other long-term assets $ 13,219 $ 13,013

Finance lease obligations, current portion Other accrued liabilities $ 389 $ 198

Finance lease obligations, non-current portion Other long-term liabilities $ 1,227 $ 209

Finance lease obligations, current portion Finance lease obligations, current portion $ 380 $ 498

Finance lease obligations, non-current portion Finance lease obligations, non-current portion $ 1,323 $ 1,295

Total finance lease obligations $ 1,703 $ 1,793

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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 September 30, 2022:

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, 2023:

Finance Operating

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Weighted Average Discount Rate 5.55 % 4.97 %

In April 2022, we successfully negotiated the termination of a lease signed for the facility in South Korea, which went into effect in October 2021, in exchange for an approximately $ 0.4 million settlement fee.

The termination of this lease reduced our operating lease right-of-use assets and lease liabilities by approximately $ 9.2 million each.

Note 11 – Pension Benefits and Other Postretirement Benefits

Pension and Other Postretirement Benefit Plans

As of September 30, 2022, 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 March 31, 2023, 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.

The measurement date for all plans is December 31 st for each respective plan year.

Pension Termination Surplus Funds

On October 17, 2019, our Chief Executive Officer approved the termination of the Rogers Corporation Defined Benefit Pension Plan (following its merger with the Hourly Employees Pension Plan of Arlon LLC, Microwave Material and Silicone Technologies Divisions, Bear, Delaware (collectively, the Merged Plan)).

We provided participants of the Merged Plan an option to elect either a lump sum distribution or an annuity.

A group annuity contract was purchased with an insurance company for all participants who did not elect a lump sum distribution.

The insurance company became responsible for administering and paying pension benefit payments effective January 1, 2020.

Upon completion of the pension termination and settlement processes for the Merged Plan, we had a $ 9.7 million remaining pension surplus investment balance.

In July 2020 and December 2021, we transferred $ 9.2 million of the pension surplus investment balance to a suspense account held within a trust for the Rogers Employee Savings and Investment Plan (RESIP), a 401(k) plan for domestic employees.

In December 2021, we transferred the remaining pension investment balance not initially transferred, to the RESIP trust suspense account.

The investment balance not transferred to the trust suspense account will be used to pay any final plan expenses, after which the remainder of these funds will be moved to the RESIP trust suspense account.

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

There was no remaining balance for the pension surplus investments as of September 30, 2022.

Components of Net Periodic Benefit (Credit) Cost

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Pension Benefits Other Postretirement Benefits

Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended

September 30, September 30, September 30, September 30,

Three Months Ended Three Months Ended

March 31, March 31,

(Dollars in thousands) 2023 2022 2023 2022

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Amortization of prior service credit — — — —

Amortization of net loss 111 95 333 291 — — — —

Amortization of net loss (gain) 122 111 ( 2 ) —

Net periodic benefit (credit) cost $ 34 $ ( 38 ) $ 34 $ 18

Employer Contributions

There were no required or voluntary contributions made to the Union Plan or the Merged Plan for each of the three and nine- months ended September 30, 2022 and 2021.

There were no required or voluntary contributions made to the Union Plan for each of the three months ended March 31, 2023 and 2022.

Additionally, we are no t required to make additional contributions to the Union Plan for the remainder of 2023.

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 nine- months ended September 30, 2022 and 2021, 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 months ended March 31, 2023 and 2022, using cash from operations.

Note 12 – Commitments and Contingencies

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

We incurred $ 1.9 million of aggregate remediation costs through September 30, 2022, and the accrual for future remediation efforts is $ 0.8 million.

We incurred $ 2.0 million of aggregate remediation costs through March 31, 2023, and the accrual for future remediation efforts is $ 0.7 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.

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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 nine months ended September 30, 2022:

The following table summarizes the change in number of asbestos claims outstanding for the three months ended March 31, 2023:

Asbestos Claims

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Pending claims concluded (1)

Claims outstanding as of September 30, 2022

(1) For the nine months ended September 30, 2022, 94 claims were dismissed and 13 claims were settled.

Settlements totaled approximately $ 1.7 million for the nine months ended September 30, 2022.

Claims outstanding as of March 31, 2023

(1) For the three months ended March 31, 2023, 17 claims were dismissed and 1 claim was settled.

Settlements were immaterial for the three months ended March 31, 2023.

Impact on Financial Statements

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The cost sharing agreement may be terminated by any party, but will continue until a party elects to terminate it.

As of the filing date for this report, the agreement has not been terminated, and no carrier had informed us it intended to terminate the agreement.

As of the filing date for this report, the agreement has not been terminated, and no carrier had informed us that it intends to terminate the agreement.

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- and nine-month periods ended September 30, 2022 and 2021, 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 month periods ended March 31, 2023 and 2022, 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.

However, projecting future events, such as the number of new claims to be filed each year, the average cost of disposing of such claims, the length of time it takes to dispose of such claims, coverage issues among insurers and the continuing solvency of various insurance companies, as well as the numerous uncertainties surrounding asbestos litigation in the United States, could cause the actual liability and insurance recoveries for us to be higher or lower than those projected or recorded.

However, projecting for future events, such as the number of new claims to be filed each year, the average cost of disposing of such claims, the length of time it takes to dispose of such claims, coverage issues among insurers and the continuing solvency of various insurance companies, as well as the numerous uncertainties surrounding asbestos litigation in the United States, could cause the actual liability and insurance recoveries for us to be higher or lower than those projected or recorded.

Changes recorded in the estimated liability and estimated insurance recovery based on projections of asbestos litigation and corresponding insurance coverage, result in the recognition of expense or income.

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

(Dollars in thousands) September 30, 2022 December 31, 2021

(Dollars in thousands) March 31, 2023 December 31, 2022

Asbestos-related liabilities $ 64,964 $ 65,033

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Note 13 – Income Taxes

Our effective income tax rate was 16.0 % and 26.4 % for the three months ended September 30, 2022 and 2021, respectively.

The decrease from the third quarter of 2021 was primarily due to the beneficial impact of a decrease in current quarter accruals of reserves for uncertain tax positions.

Our effective income tax rate was 20.5 % and 25.7 % for the nine months ended September 30, 2022 and 2021, respectively.

The decrease from the first nine months of 2021 was primarily due to the beneficial impact of a decrease in current quarter accruals of reserves for uncertain tax positions.

The total amount of unrecognized tax benefits as of September 30, 2022 was $ 6.5 million, of which $ 5.9 million would affect our effective tax rate if recognized.

Additionally, the balance of unrecognized tax benefits as of September 30, 2022 also included $ 0.6 million of tax benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes.

Our effective income tax rate was 3.5 % and 18.5 % for the three months ended March 31, 2023 and 2022, respectively.

The decrease from the first quarter of 2022 was primarily due to the increase in the current quarter valuation allowance attributable to loss jurisdictions in which no benefit is anticipated to be realized, as well as the decrease in the excess tax benefits associated with stock compensation windfalls.

The total amount of unrecognized tax benefits as of March 31, 2023 was $ 9.0 million, of which $ 7.8 million would affect our effective tax rate if recognized.

Additionally, the balance of unrecognized tax benefits as of March 31, 2023 also included $ 1.1 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 September 30, 2022, we had $ 0.7 million accrued for the payment of interest.

As of March 31, 2023, we had $ 1.4 million accrued for the payment of interest.

We are subject to taxation in the U.S.

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The remaining operations, which represent our non-core businesses, are reported in the Other operating segment.

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.

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), automotive (i.e., advanced driver assistance systems (ADAS)), aerospace and defense (i.e., antenna systems, communication systems and phased array radar systems), renewable energy (i.e., wind and solar), wireless infrastructure (i.e., power amplifiers, antennas and small cells), mass transit, industrial (variable frequency drives), connected devices (i.e., mobile internet devices and thermal solutions) and wired infrastructure (i.e., computing and internet protocol (IP) infrastructure) markets.

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, EV/HEV, 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, EV/HEV, 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, EV/HEV and aerospace and defense markets.

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

We sell our elastomer components under our ENDUR ® trade name and our floats under our NITROPHYL ® trade name.

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 and footwear and impact mitigation 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;

and 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.

Our Other operating segment consists of elastomer components for applications in the 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.

The following table presents a disaggregation of revenue from contracts with customers and other pertinent financial information, for the periods indicated;

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

Three Months Ended September 30, 2022

Net sales - recognized over time $ 72,969 $ 3,346 $ 4,110 $ 80,425

Net sales - recognized at a point in time 57,639 107,637 1,530 166,806

Total net sales $ 130,608 $ 110,983 $ 5,640 $ 247,231

Operating income $ 2,263 $ 14,322 $ 1,891 $ 18,476

Three Months Ended September 30, 2021

Net sales - recognized over time $ 64,277 $ 4,612 $ 4,829 $ 73,718

Net sales - recognized at a point in time 70,714 93,339 492 164,545

Total net sales $ 134,991 $ 97,951 $ 5,321 $ 238,263

Operating income $ 13,945 $ 18,104 $ 1,750 $ 33,799

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Net sales - recognized over time $ 62,419 $ 8,966 $ 3,911 $ 75,296

2 unchanged sentences

Operating income $ ( 5,509 ) $ 3,217 $ 2,040 $ ( 252 )

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Net sales - recognized over time $ 70,486 $ 3,046 $ 4,373 $ 77,905

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Region/Country Advanced Electronics Solutions Elastomeric Material Solutions Other Total

Three Months Ended September 30, 2022

United States $ 33,969 $ 46,772 $ 1,087 $ 81,828

Other Americas 843 2,534 247 3,624

Total Americas 34,812 49,306 1,334 85,452

China 36,126 37,349 2,290 75,765

Other APAC 16,544 5,173 508 22,225

Total APAC 52,670 42,522 2,798 97,990

Germany 19,727 7,310 393 27,430

Other EMEA 23,399 11,845 1,115 36,359

Total EMEA 43,126 19,155 1,508 63,789

Total net sales $ 130,608 $ 110,983 $ 5,640 $ 247,231

Three Months Ended September 30, 2021

United States $ 22,119 $ 42,338 $ 1,510 $ 65,967

Other Americas 950 2,415 195 3,560

Total Americas 23,069 44,753 1,705 69,527

China 47,153 34,789 1,059 83,001

Other APAC 17,608 6,177 645 24,430

Total APAC 64,761 40,966 1,704 107,431

Germany 24,620 5,892 175 30,687

Other EMEA 22,541 6,340 1,737 30,618

Total EMEA 47,161 12,232 1,912 61,305

Total net sales $ 134,991 $ 97,951 $ 5,321 $ 238,263

(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.

(Dollars in thousands) Net Sales (1)

Region/Country Advanced Electronics Solutions Elastomeric Material Solutions Other Total

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

United States $ 21,549 $ 41,869 $ 1,131 $ 64,549

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Total net sales $ 135,868 $ 102,241 $ 5,738 $ 243,847

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

United States $ 29,207 $ 45,389 $ 843 $ 75,439

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Contract assets by operating segment were as follows:

(Dollars in thousands) September 30, 2022 December 31, 2021

(Dollars in thousands) March 31, 2023 December 31, 2022

Advanced Electronics Solutions 37,862 $ 33,736

2 unchanged sentences

Total contract assets 46,746 $ 38,853

We did not have any contract liabilities as of September 30, 2022 or December 31, 2021.

No impairment losses were recognized for the three or nine-month periods ended September 30, 2022 and 2021, respectively, on any receivables or contract assets arising from our contracts with customers.

We did not have any contract liabilities as of March 31, 2023 or December 31, 2022.

No impairment losses were recognized for the three-month periods ended March 31, 2023 and 2022, 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 Nine Months Ended

(Dollars in thousands) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Three Months Ended

(Dollars in thousands) March 31, 2023 March 31, 2022

Restructuring charges

Manufacturing footprint optimization $ — $ 69

Global workforce reduction 7,028 —

Facility consolidations 3,473 —

Total restructuring charges 10,501 69

Impairment charges

Fixed asset impairment charges — 385 212 385

Total impairment charges — 385 212 385

Total restructuring and impairment charges $ 10,501 $ 69

Our AES operating segment incurred $ 0.4 million and $ 1.1 million of restructuring and impairment charges for the three and nine months ended September 30, 2022, respectively, while our EMS operating segment incurred an immaterial amount of restructuring and impairment charges for the three and nine months ended September 30, 2022.

Our AES operating segment incurred $ 1.0 million and $ 3.2 million of restructuring and impairment charges, respectively, for the three and nine months ended September 30, 2021, while our EMS operating segment incurred an immaterial amount of restructuring and impairment charges for the three and nine months ended September 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.

The majority of the restructuring activities were completed in the first half of 2021.

We incurred an immaterial amount of restructuring charges and related expenses for the three and nine months ended September 30, 2022, including severance and related benefits.

Severance and related benefits activity related to the manufacturing footprint optimization plan is presented in the table below for the nine months ended September 30, 2022:

(Dollars in thousands) Manufacturing Footprint Optimization Restructuring Severance

Allocation of Restructuring and Impairment Charges to Operating Segments

The following table summarizes the allocation of restructuring and impairment charges to our operating segments:

Three Months Ended

(Dollars in thousands) March 31, 2023 March 31, 2022

Advanced Electronics Solutions

Allocated restructuring charges $ 5,446 $ 69

Elastomeric Material Solutions

Allocated restructuring charges 5,055 —

Total restructuring and impairment charges $ 10,501 $ 69

Restructuring Charges - Global Workforce Reduction

On February 16, 2023, we announced a reduction in force plan of our global workforce that is expected to be completed in the first half of 2023.

The plan is expected to significantly reduce our manufacturing costs and operating expenses.

We estimate that we will incur approximately $ 7.5 million to $ 8.5 million in pre-tax restructuring charges related to this plan, all of which are expected to be in the form of cash-based expenditures and substantially all of which are expected to be related to employee severance and other termination benefits.

(Dollars in thousands) Global Workforce Reduction Restructuring Severance and Related Benefits

Balance as of December 31, 2022 $ —

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Foreign currency translation adjustment 61

Balance as of September 30, 2022 $ 168

Balance as of March 31, 2023

Restructuring Charges - Facility Consolidations

In late 2022 and early 2023, we announced our intention to exit certain facilities in the U.S.

The plan is expected to significantly reduce our manufacturing costs and operating expenses.

We estimate that we will incur approximately $ 5.5 million to $ 6.5 million in pre-tax restructuring charges related to these facility consolidations, most of which are expected to be in the form of accelerated depreciation.

As part of our facility consolidations plan, on February 17, 2023, we entered into an asset purchase agreement to sell our high-performance engineered cellular elastomer business in our EMS operating segment for a purchase price of $ 1.8 million.

The first phase of the deal, which pertained to the net assets other than the land and building, was completed in late March 2023, while the second phase, which pertains to the sale of the land and building, is expected to be completed in the second quarter of 2023.

Of the $ 1.8 million purchase price, $ 1.0 million and $ 0.8 million was allocated to the first and second phases of the deal, respectively.

First phase of the deal included $ 3.7 million in assets and $ 3.1 million in liabilities.

The assets were primarily comprised of accounts receivable, contract assets and inventories, while the liabilities primarily comprised of accounts payable and other accrued liabilities, along with the previously recognized accrual against the net assets of the business based on the estimated fair value of the business in December 2022.

We incurred $ 1.2 million of selling costs in the first quarter of 2023, which were recorded in “Selling, general and administrative expenses” in our condensed consolidated statements of operations.

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 Nine Months Ended

(Dollars in thousands) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Fixed assets write-offs $ — $ — $ — $ 891

Three Months Ended

(Dollars in thousands) March 31, 2023 March 31, 2022

Inventory charges — 201

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Lease obligations — 232

Lease impairments — 495 — 495

Compensation & benefits — 796

Third-party property claims — 4,650 — 4,650

Other 2 — 15 76

Insurance recoveries ( 500 ) ( 2,190 )

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however, there was extensive damage to the manufacturing site and some damage to nearby property.

Operations in South Korea will be disrupted into the first half of 2023.

In connection with the UTIS fire, we recognized insurance recoveries of $ 1.6 million and $ 6.6 million related to our ongoing insurance claim for property damage and compensation and benefits of hourly employees for the three and nine months ended September 30, 2022, respectively.

We incurred $ 0.4 million and $ 1.3 million for various professional services for the three and nine months ended September 30, 2022, respectively, in connection with the assessment of the fire and the efforts to rebuild and resume operations.

Further, we incurred $ 0.6 million and $ 1.9 million for compensation and benefits for UTIS manufacturing employees subsequent to the fire for the three and nine months ended September 30, 2022, respectively.

We recognized fixed asset write-offs and inventory charges of $ 0.9 million and $ 0.4 million, respectively, related to property destroyed in the fire for the nine months ended September 30, 2021.

Additionally, we recognized a $ 4.7 million contingent liability pertaining to damage to nearby property and 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 incurred $ 0.6 million and $ 2.2 million of fees for various professional services for the three and nine months ended September 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 $ 1.5 million of compensation and benefits for UTIS manufacturing employees, subsequent to the fire, for the three and nine months ended September 30, 2021, respectively.

In connection with the UTIS fire, we recognized insurance recoveries of $ 5.0 million and $ 6.5 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 nine months ended September 30, 2021, respectively.

Commercial production at our new location in Siheung, South Korea commenced in late January 2023.

In connection with the UTIS fire, we recognized insurance recoveries of $ 0.5 million related to our ongoing insurance claims for business interruption and property damage for the three months ended March 31, 2023.

We incurred $ 0.3 million for various professional services for the three months ended March 31, 2023, in connection with the pursuit of our insurance claims.

In connection with the UTIS fire, we recognized insurance recoveries of $ 2.2 million related to our ongoing insurance claim for property damage and compensation and benefits of hourly employees for the three months ended March 31, 2022.

We incurred $ 0.4 million for various professional services for the three months ended March 31, 2022, in connection with the assessment of the fire and the efforts to rebuild and resume operations.

Further, we incurred $ 0.8 million for compensation and benefits for UTIS manufacturing employees subsequent to the fire for the three months ended March 31, 2022.

Interest Expense, Net

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

Three Months Ended Nine Months Ended

(Dollars in thousands) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Three Months Ended

(Dollars in thousands) March 31, 2023 March 31, 2022

Interest on revolving credit facility $ ( 3,380 ) $ ( 839 )

4 unchanged sentences

Total interest expense, net $ ( 3,462 ) $ ( 1,069 )

Note 16 – Mergers and Acquisitions

Acquisition of Silicone Engineering Ltd.

On October 8, 2021, we acquired Silicone Engineering Ltd.

(Silicone Engineering), a leading European manufacturer of silicone material solutions based in Blackburn, England, for a combined purchase price of $ 172.3 million for the company, net of cash acquired, and its facility.

As part of the agreement, there was a $ 4.1 million holdback, upon which we could issue claims against until six months after the close of the acquisition, at which point in time the holdback amount, less any holdback claims, be paid to the previous owners of Silicone Engineering.

In April 2022, we paid $ 1.3 million of the holdback in exchange for a 6-month extension of the holdback period.

In October 2022, we paid back the remaining of the holdback, less an immaterial amount for claims.

Substantially all of our $ 190.0 million in borrowings under our existing credit facility in October 2021 were used to fund the transaction, with the remaining amounts being used for general corporate purposes.

Silicone Engineering expands our existing advanced silicones platform in our EMS operating segment and provides us a European Center of Excellence to service customers requiring premium silicone solutions for applications in the EV/HEV, industrial, medical and other markets.

Pro-Forma Financial Information

The following unaudited pro forma financial information presents the combined results of operations of Rogers and Silicone Engineering as if the Silicone Engineering acquisition had occurred on January 1, 2020.

The unaudited pro forma financial information is not intended to represent or be indicative of our consolidated results of operations that would have been reported had the Silicone Engineering acquisition been completed as of January 1, 2020 and should not be taken as indicative of our future consolidated results of operations.

Three Months Ended Nine Months Ended

(Dollars in thousands) September 30, 2021 September 30, 2021

Net sales $ 248,679 $ 733,404

Net income $ 26,419 $ 88,271

Terminated Merger Agreement with DuPont

On November 1, 2021, we entered into a definitive merger agreement to be acquired by DuPont de Nemours, Inc.

(DuPont) in an all-cash transaction at a price of $ 277.00 per share of the Company’s capital stock.

The merger agreement provided for the acquisition of Rogers Corporation by DuPont through the merger of Cardinalis Merger Sub, Inc., a wholly owned subsidiary of DuPont, with and into Rogers Corporation, with Rogers Corporation surviving the merger as a wholly owned subsidiary of DuPont.

Company shareholders approved the merger agreement at a special shareholder meeting held on January 25, 2022.

The merger agreement provided both Rogers Corporation and DuPont with a right to terminate the merger agreement if the merger had not closed on or before November 1, 2022.

Consummation of the merger was subject to various customary closing conditions, including regulatory approval by the State Administration for Market Regulation of China (SAMR).

As of November 1, 2022, the parties had not received regulatory approval from SAMR.

On November 1, 2022, the Company received from DuPont a notice of termination of the merger agreement.

Pursuant to the terms of the merger agreement, the Company received a regulatory termination fee from DuPont in the amount of $ 162.5 million, before taxes and transaction-related fees.

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