ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Massachusetts | 06-0513860 |
(State or other jurisdiction of | (I. R. S. Employer Identification No.) |
incorporation or organization) | |
P.O. Box 188, One Technology Drive, Rogers, Connecticut | 06263-0188 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer ý | Accelerated filer o | |
Non-accelerated filer o | (Do not check if a smaller reporting company) | Smaller reporting company o |
TABLE OF CONTENTS | |||
Part I – Financial Information | |||
Condensed Consolidated Statements of Comprehensive Income (Loss) | |||
Part II – Other Information | |||
Exhibits: | |||
Exhibit 23.1 | Consent of National Economic Research Associates, Inc. | ||
Exhibit 23.2 | Consent of Marsh U.S.A., Inc. | ||
Exhibit 31.1 | Certification of President and CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
Exhibit 31.2 | Certification of Vice President, Finance and CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
Exhibit 32 | Certification of President and CEO and Vice President, Finance and CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
Exhibit 101.INS | XBRL Instance Document | ||
Exhibit 101.SCH | XBRL Schema Document | ||
Exhibit 101.CAL | XBRL Calculation Linkbase Document | ||
Exhibit 101.LAB | XBRL Labels Linkbase Document | ||
Exhibit 101.PRE | XBRL Presentation Linkbase Document | ||
Exhibit 101.DEF | XBRL Definition Linkbase Document |
Item 1. | Financial Statements |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Net sales | $ | 132,452 | $ | 125,295 | $ | 258,432 | $ | 245,450 | |||||||
Cost of sales | 88,023 | 88,641 | 172,713 | 172,392 | |||||||||||
Gross margin | 44,429 | 36,654 | 85,719 | 73,058 | |||||||||||
Selling and administrative expenses | 25,547 | 22,329 | 50,753 | 46,568 | |||||||||||
Research and development expenses | 6,250 | 4,474 | 11,519 | 9,797 | |||||||||||
Restructuring and impairment charges | 4,525 | 834 | 4,525 | 8,183 | |||||||||||
Operating income (loss) | 8,107 | 9,017 | 18,922 | 8,510 | |||||||||||
Equity income in unconsolidated joint ventures | 762 | 1,305 | 1,291 | 1,962 | |||||||||||
Other income (expense), net | (177 | ) | 261 | (766 | ) | 121 | |||||||||
Realized investment gain (loss): | |||||||||||||||
Increase (decrease) in fair value of investments | — | — | — | (522 | ) | ||||||||||
Less: Portion reclassified to/from other comprehensive income | — | — | — | 2,723 | |||||||||||
Net realized gain (loss) | — | — | — | (3,245 | ) | ||||||||||
Interest income (expense), net | (830 | ) | (1,072 | ) | (1,735 | ) | (2,262 | ) | |||||||
Income (loss) before income tax expense (benefit) | 7,862 | 9,511 | 17,712 | 5,086 | |||||||||||
Income tax expense (benefit) | 2,279 | 3,094 | 5,152 | 255 | |||||||||||
Income (loss) from continuing operations | 5,583 | 6,417 | 12,560 | 4,831 | |||||||||||
Income (loss) from discontinued operations, net of income taxes | (18 | ) | 38 | 102 | (185 | ) | |||||||||
Net income (loss) | $ | 5,565 | $ | 6,455 | $ | 12,662 | $ | 4,646 | |||||||
Basic net income (loss) per share: | |||||||||||||||
Income (loss) from continuing operations | $ | 0.33 | $ | 0.40 | $ | 0.73 | $ | 0.29 | |||||||
Income (loss) from discontinued operations | — | — | 0.01 | (0.01 | ) | ||||||||||
Net income (loss) | $ | 0.33 | $ | 0.40 | $ | 0.74 | $ | 0.28 | |||||||
Diluted net income (loss) per share: | |||||||||||||||
Income (loss) from continuing operations | $ | 0.32 | $ | 0.38 | $ | 0.71 | $ | 0.28 | |||||||
Income (loss) from discontinued operations | — | — | 0.01 | (0.01 | ) | ||||||||||
Net income (loss) | $ | 0.32 | $ | 0.38 | $ | 0.72 | $ | 0.27 | |||||||
Shares used in computing: | |||||||||||||||
Basic net income per share | 17,107,727 | 16,309,053 | 17,090,093 | 16,270,955 | |||||||||||
Diluted net income per share | 17,599,481 | 16,864,166 | 17,636,440 | 16,842,768 |
June 30, 2013 | December 31, 2012 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 137,015 | $ | 114,863 | |||
Restricted cash | — | 950 | |||||
Accounts receivable, less allowance for doubtful accounts of $1,661 and $1,773 | 88,846 | 78,788 | |||||
Accounts receivable from joint ventures | 1,778 | 2,142 | |||||
Accounts receivable, other | 1,752 | 2,297 | |||||
Taxes receivable | 2,212 | 5,079 | |||||
Inventories | 66,733 | 73,178 | |||||
Prepaid income taxes | 5,134 | 4,914 | |||||
Deferred income taxes | 7,074 | 7,225 | |||||
Asbestos-related insurance receivables | 8,195 | 8,195 | |||||
Other current assets | 7,450 | 8,559 | |||||
Assets of discontinued operations | — | 746 | |||||
Total current assets | 326,189 | 306,936 | |||||
Property, plant and equipment, net of accumulated depreciation of $211,592 and $205,575 | 148,669 | 149,017 | |||||
Investments in unconsolidated joint ventures | 19,022 | 21,171 | |||||
Deferred income taxes | 59,150 | 71,439 | |||||
Goodwill | 103,000 | 105,041 | |||||
Other intangible assets | 49,570 | 53,288 | |||||
Asbestos-related insurance receivables | 40,067 | 40,067 | |||||
Investments, other | 5,127 | 5,000 | |||||
Other long-term assets | 7,715 | 8,065 | |||||
Total assets | $ | 758,509 | $ | 760,024 | |||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 17,753 | $ | 16,730 | |||
Accrued employee benefits and compensation | 23,981 | 23,156 | |||||
Accrued income taxes payable | 1,921 | 3,135 | |||||
Current portion of lease obligation | 1,004 | 1,423 | |||||
Current portion of long term debt | 23,000 | 20,500 | |||||
Asbestos-related liabilities | 8,195 | 8,195 | |||||
Other accrued liabilities | 11,454 | 11,363 | |||||
Liabilities of discontinued operations | — | 3 | |||||
Total current liabilities | 87,308 | 84,505 | |||||
Long term lease obligation | 6,734 | 6,942 | |||||
Long term debt | 70,000 | 77,500 | |||||
Pension liability | 34,008 | 65,942 | |||||
Retiree health care and life insurance benefits | 10,654 | 10,654 | |||||
Asbestos-related liabilities | 43,222 | 43,222 | |||||
Non-current income tax | 20,033 | 19,300 | |||||
Deferred income taxes | 15,820 | 17,545 | |||||
Other long-term liabilities | 350 | 262 | |||||
Shareholders’ Equity | |||||||
Capital Stock - $1 par value; 50,000,000 authorized shares; 17,242,257 and 16,904,441 shares outstanding | 17,242 | 16,904 | |||||
Additional paid-in capital | 83,655 | 74,272 | |||||
Retained earnings | 413,446 | 400,784 | |||||
Accumulated other comprehensive income (loss) | (43,963 | ) | (57,808 | ) | |||
Total shareholders' equity | 470,380 | 434,152 | |||||
Total liabilities and shareholders' equity | $ | 758,509 | $ | 760,024 |
Capital Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | |||||||||||||||
Balance at December 31, 2012 | $ | 16,904 | $ | 74,272 | $ | 400,784 | $ | (57,808 | ) | $ | 434,152 | ||||||||
Net income (loss) | — | — | 12,662 | — | 12,662 | ||||||||||||||
Other comprehensive income (loss) | 13,845 | 13,845 | |||||||||||||||||
Stock options exercised | 261 | 7,830 | — | — | 8,091 | ||||||||||||||
Stock issued to directors | 15 | (15 | ) | — | — | — | |||||||||||||
Shares issued for employees stock purchase plan | 15 | 375 | — | — | 390 | ||||||||||||||
Shares issued for restricted stock | 47 | (1,052 | ) | — | — | (1,005 | ) | ||||||||||||
Stock-based compensation expense | — | 2,245 | — | — | 2,245 | ||||||||||||||
Balance at June 30, 2013 | $ | 17,242 | $ | 83,655 | $ | 413,446 | $ | (43,963 | ) | $ | 470,380 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Income (loss) from continuing operations, net of tax | $ | 5,583 | 6,417 | $ | 12,560 | $ | 4,831 | ||||||||
Foreign currency translation adjustment | 3,192 | (10,857 | ) | (6,206 | ) | (4,886 | ) | ||||||||
Net unrealized gains (losses) on securities: | |||||||||||||||
Net unrealized gain (loss) on marketable securities reclassified into earnings (1) | — | — | — | 1,168 | |||||||||||
Derivative instruments designated as cash flow hedges: | |||||||||||||||
Unrealized gain (loss) on derivative instruments held at period end, net of tax (1) | 82 | (43 | ) | 73 | 212 | ||||||||||
Pension and postretirement actuarial net gain (loss) incurred in fiscal year | 17,225 | — | 17,225 | — | |||||||||||
Pension and postretirement benefit plans reclassified into earnings, net of tax (1) | |||||||||||||||
Amortization of loss | 735 | 1,508 | 1,749 | 2,972 | |||||||||||
Amortization of prior service cost | 982 | 3 | 1,004 | 6 | |||||||||||
Other comprehensive income (loss) | 22,216 | (9,389 | ) | 13,845 | (528 | ) | |||||||||
Comprehensive income (loss) from continuing operations | 27,799 | (2,972 | ) | 26,405 | 4,303 | ||||||||||
Income (loss) from discontinued operations, net of income taxes | (18 | ) | 38 | 102 | (185 | ) | |||||||||
Comprehensive income (loss) | $ | 27,781 | $ | (2,934 | ) | $ | 26,507 | $ | 4,118 |
Six Months Ended | |||||||
June 30, 2013 | June 30, 2012 | ||||||
Operating Activities: | |||||||
Net income (loss) | $ | 12,662 | $ | 4,646 | |||
Loss (earnings) from discontinued operations | (102 | ) | 185 | ||||
Adjustments to reconcile net income to cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 13,027 | 13,561 | |||||
Stock-based compensation expense | 2,245 | 2,678 | |||||
Loss from long-term investments | — | 3,245 | |||||
Deferred income taxes | (515 | ) | (1,050 | ) | |||
Equity in undistributed income of unconsolidated joint ventures | (1,291 | ) | (1,962 | ) | |||
Dividends received from unconsolidated joint ventures | 1,988 | 2,929 | |||||
Pension and postretirement benefits | 5,496 | 6,718 | |||||
Gain from the sale of property, plant and equipment | (75 | ) | (579 | ) | |||
Impairment of assets | — | 539 | |||||
Changes in operating assets and liabilities excluding effects of acquisition and disposition of businesses: | |||||||
Accounts receivable, accounts receivable other and taxes receivable | (7,697 | ) | (3,330 | ) | |||
Accounts receivable, joint ventures | 364 | (778 | ) | ||||
Inventories | 5,941 | 3,027 | |||||
Pension contribution | (6,500 | ) | (16,000 | ) | |||
Other current assets | 1,443 | (3,331 | ) | ||||
Accounts payable and other accrued expenses | 1,563 | (7,261 | ) | ||||
Other, net | 1,171 | 1,332 | |||||
Net cash provided by (used in) operating activities of continuing operations | 29,720 | 4,569 | |||||
Net cash provided by (used in) operating activities of discontinued operations | 848 | (268 | ) | ||||
Net cash provided by (used in) operating activities | 30,568 | 4,301 | |||||
Investing Activities: | |||||||
Capital expenditures | (10,537 | ) | (10,767 | ) | |||
Proceeds from short-term investments | — | 25,438 | |||||
Proceeds from the sale of property, plant and equipment, net | 75 | 1,979 | |||||
Deferred purchase price for previous acquisition of business | — | (3,100 | ) | ||||
Net cash provided by (used in) investing activities of continuing operations | (10,462 | ) | 13,550 | ||||
Financing Activities: | |||||||
Repayment of debt principal and long term lease obligation | (5,530 | ) | (2,992 | ) | |||
Proceeds from sale of capital stock, net | 8,091 | 3,427 | |||||
Issuance of restricted stock shares | (1,005 | ) | (571 | ) | |||
Proceeds from issuance of shares to employee stock purchase plan | 390 | 413 | |||||
Net cash provided by (used in) financing activities of continuing operations | 1,946 | 277 | |||||
Effect of exchange rate fluctuations on cash | 100 | (2,070 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 22,152 | 16,058 | |||||
Cash and cash equivalents at beginning of year | 114,863 | 79,728 | |||||
Cash and cash equivalents at end of quarter | $ | 137,015 | $ | 95,786 | |||
• | Level 1 – Quoted prices in active markets for identical assets or liabilities. |
• | Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
• | 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. |
(Dollars in thousands) | Balance Sheet Location | Carrying amount as of June 30, 2013 | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets | |||||||||||||||||
Pension assets (1) | $ | 156,741 | $ | 106,619 | $ | 33,530 | $ | 16,592 | |||||||||
Foreign exchange option contracts | Other current assets | (9 | ) | — | (9 | ) | — | ||||||||||
Copper derivative instruments | Other current assets | 56 | — | 56 | — | ||||||||||||
Liabilities | |||||||||||||||||
Interest rate swap instrument | Other accrued liabilities | (249 | ) | — | (249 | ) | — |
(Dollars in thousands) | Balance Sheet Location | Carrying amount as of December 31, 2012 | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets | |||||||||||||||||
Pension assets (1) | $ | 143,540 | $ | 98,269 | $ | 29,869 | $ | 15,402 | |||||||||
Foreign exchange option contracts | Other current assets | 15 | — | 15 | — | ||||||||||||
Copper derivative instruments | Other current assets | 267 | — | 267 | — | ||||||||||||
Liabilities | |||||||||||||||||
Interest rate swap instrument | Other accrued liabilities | (361 | ) | — | (361 | ) | — |
(Dollars in thousands) | Auction Rate Securities | ||
Balance at December 31, 2011 | $ | 25,960 | |
Cash received for redemptions at par | (25,438 | ) | |
Reclassified from other comprehensive income | 2,723 | ||
Reported in earnings | (3,245 | ) | |
Balance at June 30, 2012 | $ | — |
• | 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 established by an over-the-counter market or obtaining market data for similar instruments with similar characteristics. The fair value of any forward contract is based on the difference between the contract rate and the spot rate at the end of the reporting period. |
• | Commodity - The fair value of copper derivatives is computed using a combination of intrinsic and time value valuation models. The intrinsic valuation model reflects the difference between the strike price of the underlying copper derivative instrument and the current prevailing copper prices in an over-the-counter market at period end. The time value valuation model incorporates the constant changes in the price of the underlying copper derivative instrument, the time value of money, the underlying copper derivative instrument's strike price and the remaining time to the underlying copper derivative instrument's expiration date from the period end date. Overall, fair value is a function of five primary variables: price of the underlying instrument, time to expiration, strike price, interest rate, and volatility. |
• | Interest Rates - The fair value of interest rate swap instruments is derived by comparing the present value of the interest rate forward curve against the present value of the swap rate, relative to the notional amount of the swap. The net value represents the estimated amount we would receive or pay to terminate the agreements. Settlement amounts for an "in the money" swap would be adjusted down to compensate the counterparty for cost of funds, and the adjustment is directly related to the counterparties' credit ratings. |
Notional Value of Copper Derivatives | Notional Values of Foreign Currency Derivatives | ||||
January 2013 - December 2013 | 55 | metric tons per month | YEN/USD | ¥300,000,000 | |
July 2013 - November 2013 | 40 | metric tons per month | USD/EUR | $900,000 | |
December 2013 - March 2014 | 30 | metric tons per month | HUF/EUR | 290,000,000 | |
January 2014 - April 2014 | 30 | metric tons per month |
(Dollars in thousands) | The Effect of Current Derivative Instruments on the Financial Statements for the period ended June 30, 2013 | |||||||||
Amount of gain (loss) | ||||||||||
Foreign Exchange Contracts | Location of gain (loss) | Three months ended | Six months ended | |||||||
Contracts not designated as hedging instruments | Other income, net | $ | (14 | ) | $ | (9 | ) | |||
Copper Derivative Instruments | ||||||||||
Contracts not designated as hedging instruments | Other income, net | (162 | ) | (345 | ) | |||||
Interest Rate Swap Instrument | ||||||||||
Contracts designated as hedging instruments | Other comprehensive income (loss) | 121 | 112 |
(Dollars in thousands) | The Effect of Current Derivative Instruments on the Financial Statements for the period ended June 30, 2012 | ||||||||
Amount of gain (loss) | |||||||||
Foreign Exchange Contracts | Location of gain (loss) | Three months ended | Six months ended | ||||||
Contracts not designated as hedging instruments | Other income, net | $ | — | $ | 81 | ||||
Copper Derivative Instruments | |||||||||
Contracts designated as hedging instruments | Other comprehensive income (loss) | (66 | ) | 189 |
(Dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Raw materials | $ | 24,880 | $ | 29,064 | |||
Work-in-process | 14,552 | 13,154 | |||||
Finished goods | 27,301 | 30,960 | |||||
Total Inventory | $ | 66,733 | $ | 73,178 |
(Dollars in thousands) | Foreign currency translation adjustments | Funded status of pension plans and other postretirement benefits (1) | Unrealized gain (loss) on derivative instruments (2) | Total | |||||||||||
Beginning Balance December 31, 2012 | $ | 12,585 | $ | (70,158 | ) | $ | (235 | ) | $ | (57,808 | ) | ||||
Other comprehensive income before reclassifications | (6,206 | ) | — | 73 | (6,133 | ) | |||||||||
Actuarial net gain (loss) incurred in the fiscal year | — | 17,225 | — | 17,225 | |||||||||||
Amounts reclassified from accumulated other comprehensive income | — | 2,753 | — | 2,753 | |||||||||||
Net current-period other comprehensive income | (6,206 | ) | 19,978 | 73 | 13,845 | ||||||||||
Ending Balance June 30, 2013 | $ | 6,379 | $ | (50,180 | ) | $ | (162 | ) | $ | (43,963 | ) |
(Dollars in thousands) | Foreign currency translation adjustments | Funded status of pension plans and other postretirement benefits (3) | Unrealized gain (loss) on derivative instruments (4) | Unrealized gain (loss) on marketable securities (5) | Total | ||||||||||||||
Beginning Balance December 31, 2011 | $ | 5,875 | $ | (67,239 | ) | $ | (270 | ) | $ | (1,168 | ) | $ | (62,802 | ) | |||||
Other comprehensive income before reclassifications | (4,886 | ) | — | 212 | — | (4,674 | ) | ||||||||||||
Amounts reclassified from accumulated other comprehensive income | — | 2,978 | — | 1,168 | 4,146 | ||||||||||||||
Net current-period other comprehensive income | (4,886 | ) | 2,978 | 212 | 1,168 | (528 | ) | ||||||||||||
Ending Balance June 30, 2012 | $ | 989 | $ | (64,261 | ) | $ | (58 | ) | $ | — | $ | (63,330 | ) |
Amounts reclassified from accumulated other comprehensive income (loss) for the period ended June 30, 2013 | ||||||||
Details about accumulated other comprehensive income components | Three months ended | Six months ended | Affected line item in the statement where net income is presented | |||||
Amortization of defined benefit pension and other post-retirement benefit items | ||||||||
Prior service costs | $ | 1,511 | $ | 1,545 | (6) | |||
Actuarial losses | 1,130 | 2,690 | (6) | |||||
2,641 | 4,235 | Total before tax | ||||||
(924 | ) | (1,482 | ) | Tax (benefit) expense | ||||
$ | 1,717 | $ | 2,753 | Net of tax |
Amounts reclassified from accumulated other comprehensive income (loss) for the period ended June 30, 2012 | ||||||||
Details about accumulated other comprehensive income components | Three months ended | Six months ended | Affected line item in the statement where net income is presented | |||||
Unrealized gains and losses on marketable securities | ||||||||
$ | — | $ | (2,723 | ) | Realized gain (loss) | |||
— | 1,555 | Tax benefit (expense) | ||||||
$ | — | $ | (1,168 | ) | Net of tax | |||
Amortization of defined benefit pension and other post-retirement benefit items | ||||||||
Prior service costs | $ | 3 | $ | 6 | (6) | |||
Actuarial losses | 1,508 | 2,972 | (6) | |||||
1,511 | 2,978 | Total before tax | ||||||
— | — | Tax (benefit) expense | ||||||
$ | 1,511 | $ | 2,978 | Net of tax | ||||
(In thousands, except per share amounts) | Three Months Ended | Six Months Ended | |||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Numerator: | |||||||||||||||
Income (loss) from continuing operations | $ | 5,583 | $ | 6,417 | $ | 12,560 | $ | 4,831 | |||||||
Denominator: | |||||||||||||||
Denominator for basic earnings per share - | |||||||||||||||
Weighted-average shares | 17,108 | 16,309 | 17,090 | 16,271 | |||||||||||
Effect of dilutive stock options | 491 | 555 | 546 | 572 | |||||||||||
Denominator for diluted earnings per share - Adjusted | |||||||||||||||
weighted-average shares and assumed conversions | 17,599 | 16,864 | 17,636 | 16,843 | |||||||||||
Basic income (loss) from continuing operations per share: | $ | 0.33 | $ | 0.40 | $ | 0.73 | $ | 0.29 | |||||||
Diluted income (loss) from continuing operations per share: | 0.32 | 0.38 | 0.71 | 0.28 |
Three Months Ended | |||||
June 30, 2013 | June 30, 2012 | ||||
Anti-dilutive shares excluded | 697,878 | 932,104 | |||
Dilutive shares excluded due to net loss | — | — |
June 30, 2012 | ||||
Options granted | 46,950 | |||
Weighted average exercise price | $ | 41.27 | ||
Weighted-average grant date fair value | 19.08 | |||
Assumptions: | ||||
Expected volatility | 47.70 | % | ||
Expected term (in years) | 5.9 | |||
Risk-free interest rate | 1.43 | % | ||
Expected dividend yield | — |
Options Outstanding | Weighted- Average Exercise Price Per Share | Weighted-Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | |||||||||
Options outstanding at March 31, 2013 | 1,670,647 | $ | 41.06 | 4.3 | $ | 15,558,730 | ||||||
Options granted | — | — | ||||||||||
Options exercised | (156,057 | ) | 29.80 | |||||||||
Options cancelled | (10,717 | ) | 36.17 | |||||||||
Options outstanding at June 30, 2013 | 1,503,873 | 42.26 | 3.7 | 12,388,067 | ||||||||
Options exercisable at June 30, 2013 | 1,201,313 | 43.66 | 2.9 | 9,078,139 | ||||||||
Options vested or expected to vest at June 30, 2013* | 1,494,796 | 42.29 | 3.7 | 12,288,769 |
Options Outstanding | Weighted- Average Exercise Price Per Share | |||||
Options outstanding at December 31, 2012 | 1,765,947 | $ | 40.58 | |||
Options granted | — | — | ||||
Options exercised | (251,240 | ) | 30.71 | |||
Options cancelled | (10,834 | ) | 36.05 | |||
Options outstanding at June 30, 2013 | 1,503,873 |
Expected volatility | 37.1 | % |
Expected term (in years) | 3.0 | |
Risk-free interest rate | 0.40 | % |
Expected dividend yield | — |
Performance-Based Restricted Stock Awards | ||
Non-vested awards outstanding at December 31, 2012 | 73,458 | |
Awards granted | 48,660 | |
Stock issued | (33,538 | ) |
Awards forfeited | (11,502 | ) |
Non-vested awards outstanding at June 30, 2013 | 77,078 |
Time-Based Restricted Stock Awards | ||
Non-vested awards outstanding at December 31, 2012 | 115,139 | |
Awards granted | 63,200 | |
Stock issued | (124 | ) |
Awards forfeited | (18,297 | ) |
Non-vested awards outstanding at June 30, 2013 | 159,918 |
Deferred Stock Units | ||
Awards outstanding at December 31, 2012 | 30,150 | |
Awards granted | 16,800 | |
Stock issued | (15,400 | ) |
Awards outstanding at June 30, 2013 | 31,550 |
(Dollars in thousands) | Pension Benefits | ||
Change in benefit obligation: | June 30, 2013 | ||
Benefit obligation at beginning of year | $ | 209,844 | |
Service cost | 2,210 | ||
Interest cost | 4,015 | ||
Actuarial (gain) loss | 1,658 | ||
Benefit payments | (3,642 | ) | |
Curtailment charge | (22,649 | ) | |
Special termination benefit | — | ||
Benefit obligation at end of the period | $ | 191,436 |
(Dollars in thousands) | Pension Benefits | ||
Change in plan assets: | June 30, 2013 | ||
Fair value of plan assets at the beginning of the year | $ | 143,540 | |
Actual return on plan assets | 10,981 | ||
Employer contributions | 6,500 | ||
Benefit payments | (3,642 | ) | |
Settlement charge | — | ||
Fair value of plan assets at the end of the period | 157,379 | ||
Funded status | $ | (34,057 | ) |
(Dollars in thousands) | Pension Benefits | ||
June 30, 2013 | |||
Noncurrent assets | $ | — | |
Current liabilities | (49 | ) | |
Noncurrent liabilities | (34,008 | ) | |
Net amount recognized at end of period | $ | (34,057 | ) |
(Dollars in thousands) | Pension Benefits | ||
June 30, 2013 | |||
Net actuarial loss | $ | 58,860 | |
Prior service cost | — | ||
Net amount recognized at end of period | $ | 58,860 |
(Dollars in thousands) | Pension Benefits | Retirement Health and Life Insurance Benefits | |||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
Change in benefit obligation: | June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | |||||||||||||||||||||||
Service cost | $ | 956 | $ | 1,108 | $ | 2,210 | $ | 2,297 | $ | 170 | $ | 149 | $ | 341 | $ | 331 | |||||||||||||||
Interest cost | 1,954 | 2,124 | 4,015 | 4,242 | 71 | 92 | 141 | 180 | |||||||||||||||||||||||
Expected return on plan assets | (2,731 | ) | (2,495 | ) | (5,447 | ) | (4,903 | ) | — | — | — | — | |||||||||||||||||||
Amortization of prior service cost | 31 | 116 | 124 | 232 | (58 | ) | (113 | ) | (115 | ) | (226 | ) | |||||||||||||||||||
Amortization of net loss | 1,049 | 1,442 | 2,525 | 2,791 | 83 | 66 | 165 | 181 | |||||||||||||||||||||||
Special termination benefit | — | — | — | — | — | (707 | ) | — | 1,593 | ||||||||||||||||||||||
Curtailment charge | 1,537 | — | 1,537 | — | — | — | — | — | |||||||||||||||||||||||
Net periodic benefit cost | $ | 2,796 | $ | 2,295 | $ | 4,964 | $ | 4,659 | $ | 266 | $ | (513 | ) | $ | 532 | $ | 2,059 |
Pension Benefits | ||||
April 30, 2013 | December 31, 2012 | |||
Discount rate | 4.00 | % | 4.00 | % |
Rate of compensation increase | 4.00 | % | 4.00 | % |
Expected long-term rate of return on plan assets | 7.50 | % | 7.50 | % |
Pension Benefits | ||||
April 30, 2013 | December 31, 2012 | |||
Discount rate | 4.00 | % | 4.50 | % |
Expected long-term rate of return on plan assets | 7.50 | % | 7.75 | % |
Rate of compensation increase | 4.00 | % | 4.00 | % |
(Dollars in thousands) | April 30, 2013 | December 31, 2012 | |||||
Pooled separate accounts | $ | 33,530 | $ | 29,869 | |||
Mutual funds | 106,619 | 98,269 | |||||
Guaranteed deposit account | 16,592 | 15,402 | |||||
Total investments at fair value | $ | 156,741 | $ | 143,540 |
Assets at Fair Value as of April 30, 2013 | |||||||||||||||
(Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Pooled separate accounts | $ | — | $ | 33,530 | $ | — | $ | 33,530 | |||||||
Mutual funds | 106,619 | — | — | 106,619 | |||||||||||
Guaranteed deposit account | — | — | 16,592 | 16,592 | |||||||||||
Total assets at fair value | $ | 106,619 | $ | 33,530 | $ | 16,592 | $ | 156,741 | |||||||
Assets at Fair Value as of December 31, 2012 | |||||||||||||||
(Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Pooled separate accounts | $ | — | $ | 29,869 | $ | — | $ | 29,869 | |||||||
Mutual funds | 98,269 | — | — | 98,269 | |||||||||||
Guaranteed deposit account | — | — | 15,402 | 15,402 | |||||||||||
Total assets at fair value | $ | 98,269 | $ | 29,869 | $ | 15,402 | $ | 143,540 |
(Dollars in thousands) | Guaranteed Deposit Account | ||
Balance at December 31, 2012 | $ | 15,402 | |
Realized gains (losses) | — | ||
Unrealized gains relating to instruments still held at the reporting date | 1,177 | ||
Purchases, sales, issuances and settlements (net) | 13 | ||
Transfers in and/or out of Level 3 | — | ||
Balance at April 30, 2013 | $ | 16,592 |
Pension Benefits | |||
2014 | $ | 8,441 | |
2015 | 8,029 | ||
2016 | 8,209 | ||
2017 | 8,303 | ||
2018 | 8,595 | ||
2019-2023 | 48,629 |
Segment Structure | ||
Core Strategic | ||
High Performance Foams | ||
Printed Circuit Materials | ||
Power Electronics Solutions | ||
Curamik Electronics Solutions | ||
Power Distribution Systems | ||
Other |
(Dollars in thousands) | Three Months Ended | Six Months Ended | |||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Net sales | |||||||||||||||
Core Strategic | |||||||||||||||
High Performance Foams | $ | 39,933 | $ | 43,329 | $ | 82,379 | $ | 83,763 | |||||||
Printed Circuit Materials | 45,584 | 40,533 | 89,148 | 79,914 | |||||||||||
Power Electronics Solutions | |||||||||||||||
Curamik Electronics Solutions | 28,508 | 23,908 | 51,814 | 48,200 | |||||||||||
Power Distribution Systems | 12,276 | 11,573 | 23,269 | 22,089 | |||||||||||
Other | 6,151 | 5,952 | 11,822 | 11,484 | |||||||||||
Net sales | $ | 132,452 | $ | 125,295 | $ | 258,432 | $ | 245,450 | |||||||
Operating income (loss) | |||||||||||||||
Core Strategic | |||||||||||||||
High Performance Foams | $ | 3,532 | $ | 5,708 | $ | 10,132 | $ | 7,153 | |||||||
Printed Circuit Materials | 3,996 | 3,123 | 7,793 | 2,777 | |||||||||||
Power Electronics Solutions | |||||||||||||||
Curamik Electronics Solutions | (2,514 | ) | (1,205 | ) | (5,636 | ) | (2,978 | ) | |||||||
Power Distribution Systems | 1,112 | 135 | 2,649 | (515 | ) | ||||||||||
Other | 1,981 | 1,256 | 3,984 | 2,073 | |||||||||||
Operating income (loss) | 8,107 | 9,017 | 18,922 | 8,510 | |||||||||||
Equity income in unconsolidated joint ventures | 762 | 1,305 | 1,291 | 1,962 | |||||||||||
Other income (expense), net | (177 | ) | 261 | (766 | ) | 121 | |||||||||
Net realized gain (loss) | — | — | — | (3,245 | ) | ||||||||||
Interest income (expense), net | (830 | ) | (1,072 | ) | (1,735 | ) | (2,262 | ) | |||||||
Income (loss) before income tax expense (benefit) | $ | 7,862 | $ | 9,511 | $ | 17,712 | $ | 5,086 |
Joint Venture | Location | Reportable Segment | Fiscal Year-End |
Rogers INOAC Corporation (RIC) | Japan | High Performance Foams | October 31 |
Rogers INOAC Suzhou Corporation (RIS) | China | High Performance Foams | December 31 |
(Dollars in thousands) | Three Months Ended | Six Months Ended | |||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Net sales | $ | 12,623 | $ | 15,880 | $ | 23,288 | $ | 28,685 | |||||||
Gross profit (loss) | 1,488 | 2,608 | 2,592 | 4,433 | |||||||||||
Net income (loss) | 1,524 | 2,610 | 2,582 | 3,924 |
2011 | $2.5 | million | |
2012 | $7.5 | million | |
2013 | $12.5 | million | |
2014 | $17.5 | million | |
2015 | $35.0 | million | |
2016 | $25.0 | million |
Period | Ratio | |
March 31, 2012 to December 31, 2012 | 1.25 : 1.00 | |
March 31, 2013 to December 31, 2013 | 1.50 : 1.00 | |
March 31, 2014 and thereafter | 1.75 : 1.00 |
Periods | Q2 2012 | Q3 2012 | Q4 2012 | Q1 2013 | Q2 2013 | |||||
Covenant Limit | 1.25 | 1.25 | 1.25 | 1.50 | 1.50 | |||||
Actual FCCR | 2.09 | 1.93 | 2.18 | 2.27 | 2.06 |
• | $1.4 million letter of credit to guarantee Rogers workers compensation plan; |
• | $0.1 million letter guarantee to guarantee a payable obligation for a Chinese subsidiary (Rogers Suzhou), |
• | $0.1 million letter guarantee to guarantee a payable obligation for a Chinese subsidiary (Rogers Suzhou). |
(Dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
Trademarks and patents | $ | 1,013 | $ | 250 | $ | 763 | $ | 1,065 | $ | 227 | $ | 838 | |||||||||||
Technology | 36,020 | 10,450 | 25,570 | 36,479 | 8,394 | 28,085 | |||||||||||||||||
Covenant-not-to-compete | 971 | 456 | 515 | 1,042 | 358 | 684 | |||||||||||||||||
Customer relationships | 20,034 | 2,469 | 17,565 | 20,529 | 2,066 | 18,463 | |||||||||||||||||
Total definite lived intangible assets | $ | 58,038 | $ | 13,625 | $ | 44,413 | $ | 59,115 | $ | 11,045 | $ | 48,070 |
Intangible Asset Class | Weighted Average Amortization Period | |
Trademarks and patents | 9.7 | |
Technology | 6.7 | |
Covenant not-to-compete | 4.1 | |
Customer relationships | 9.7 | |
Total other intangible assets | 7.9 |
(Dollars in thousands) | High Performance Foams | Printed Circuit Materials | Curamik Electronics Solutions | Power Distribution Systems | Other | Total | |||||||||||||||||
December 31, 2012 | $ | 23,973 | $ | — | $ | 78,844 | $ | — | $ | 2,224 | $ | 105,041 | |||||||||||
Foreign currency translation adjustment | (1,140 | ) | — | (901 | ) | — | — | (2,041 | ) | ||||||||||||||
June 30, 2013 | $ | 22,833 | $ | — | $ | 77,943 | $ | — | $ | 2,224 | $ | 103,000 |
• | Claims |
• | Defenses |
• | Dismissals and Settlements |
• | Potential Liability |
• | Insurance Coverage |
• | Cost Sharing Agreement |
• | Impact on Financial Statements |
• | In the second quarter of 2010, the CT DEEP contacted us to discuss a disposal site in Killingly, Connecticut. We are currently in the very early stages of evaluating this matter and have initiated internal due diligence work related to the site to better understand the issue and our alleged involvement. Currently, we do not know the nature and extent of any alleged contamination at the site, how many parties could be potentially involved in any remediation, if necessary, or the extent to which we could be deemed a potentially responsible party. CT DEEP has not made any assessment of the nature of any potential remediation work that may be done, nor have they made any indication of any potential costs associated with such remediation. Therefore, based on the facts and circumstances known to us at the present time, we are not able to estimate the probability of incurring a contingent liability related to this site, nor are we able to reasonably estimate any potential range of exposure at this time. As such, no reserve has been established for this matter at this time. We continually monitor this situation and are in correspondence with the CT DEEP as appropriate. When and if facts and circumstances related to this matter change, we will review our position and our ability to estimate the probability of any potential loss contingencies, as well as the range of any such potential exposure. |
• | The Rogers Corporate Headquarters located in Rogers, Connecticut is part of the Connecticut Voluntary Corrective Action Program (VCAP). As part of this program, we have started conversations with the CT DEEP to begin to determine if any corrective actions need to be taken at the site related to any potential contamination issues. We are currently in the very early stages of evaluating this matter and have initiated internal due diligence work related to the site to better understand any potential issues. However, at this time, it is currently unknown what the nature and extent of any potential contamination is at the site, nor what any potential remediation or associated costs would be if any such issues were found. Therefore, based on the facts and circumstances known to us at the present time, we are unable to estimate the probability of incurring a contingent liability related to this site, nor are we able to reasonably estimate any potential range of exposure at this time. As such, no reserve has been established for this matter at this time. |
• | Realigned our organizational structure by consolidating a number of senior executive positions, reorganizing certain business functions and redeploying resources across the Company; |
• | Exited the Thermal Management Solutions business (previously announced in the fourth quarter of 2011); |
• | Initiated a plan to shut down the Power Distribution Systems startup operation in North America, which was completed in the third quarter of 2012; and |
• | Liquidated our remaining auction rate securities. |
• | We announced the shutdown of the High Performance Foams manufacturing facility in Bremen, Germany, which was completed by the end of 2012. The manufacture of certain silicone foam materials produced in the Bremen facility was consolidated into our existing facility in Carol Stream, Illinois. The expenses and charges related to the termination of the operations at the Bremen facility were approximately $3.1 million and are comprised primarily of (i) $0.9 million for the early termination of the lease on the building; (ii) $0.8 million for severance charges for employees in Bremen; (iii) $0.4 million related to the impairment of certain assets; and (iv) $0.3 million of costs to remove and transport certain equipment to Carol Stream and prepare the building for return to the landlord. We recognized approximately $1.5 million of these charges in the second quarter of 2012, and recognized the remaining charges in the second half of 2012. |
• | We decided to cease production of our non-woven composite materials products in an effort to redeploy resources to focus on our Core Strategic segments. Sales of these products had been steadily declining for several years and totaled approximately $1.4 million in the second quarter of 2012 and $4.8 million in fiscal 2011. Production was shutdown by the end of 2012 and it did not have a material impact on our overall operations. No material charges were incurred from this initiative. |
(Dollars in thousands) | Three Months Ended | Six Months Ended | Three Months Ended | Six Months Ended | |||||||||||
June 30, 2013 | June 30, 2013 | June 30, 2012 | June 30, 2012 | ||||||||||||
Cost of Sales | |||||||||||||||
High Performance Foams | |||||||||||||||
Accelerated depreciation expense related to Bremen shut-down | $ | — | $ | — | $ | 585 | $ | 585 | |||||||
Inventory impairment related to Bremen shut-down | — | — | 191 | 191 | |||||||||||
Union ratification bonus | 181 | 181 | — | — | |||||||||||
Printed Circuit Materials | |||||||||||||||
Union ratification bonus | 179 | 179 | — | — | |||||||||||
Curamik Electronics Solutions | |||||||||||||||
Union ratification bonus | 5 | 5 | — | — | |||||||||||
Power Distribution Systems | |||||||||||||||
Accelerated depreciation expense related to U.S. shut-down | — | — | 360 | 360 | |||||||||||
Union ratification bonus | 3 | 3 | — | — | |||||||||||
Other | |||||||||||||||
Union ratification bonus | — | — | — | — | |||||||||||
Total charges for Cost of Sales | $ | 368 | $ | 368 | $ | 1,136 | $ | 1,136 | |||||||
Restructuring and Impairment | |||||||||||||||
High Performance Foams | |||||||||||||||
Fixed asset impairment for Bisco and Poron asset disposal | $ | — | $ | — | $ | — | $ | 79 | |||||||
Severance and other employee related costs (1) | 1,253 | 1,253 | 670 | 3,088 | |||||||||||
Printed Circuit Materials | |||||||||||||||
Severance and other employee related costs (1) | 708 | 708 | (276 | ) | 3,046 | ||||||||||
Curamik Electronics Solutions | |||||||||||||||
Severance and other employee related costs (1) | 1,618 | 1,618 | 213 | 957 | |||||||||||
Power Distribution Systems | |||||||||||||||
Impairment of investment related receivable | — | — | 264 | 264 | |||||||||||
Severance and other employee related costs (1) | 845 | 845 | (13 | ) | 477 | ||||||||||
Other | |||||||||||||||
Severance and other employee related costs (1) | 101 | 101 | (24 | ) | 272 | ||||||||||
Total charges for Restructuring and Impairment | $ | 4,525 | $ | 4,525 | $ | 834 | $ | 8,183 |
(Dollars in thousands) | Streamlining and restructuring related activities | Curamik finishing operations relocation to Hungary | Total | ||||||||
Balance at December 31, 2012 | $ | 1,447 | $ | 3,774 | $ | 5,221 | |||||
Provisions | 3,003 | — | 3,003 | ||||||||
Payments | (2,357 | ) | (2,113 | ) | (4,470 | ) | |||||
Balance at June 30, 2013 | $ | 2,093 | $ | 1,661 | $ | 3,754 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended | Six Months Ended | ||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||
Gross margin | 33.5 | % | 29.3 | % | 33.2 | % | 29.8 | % | |||
Selling and administrative expenses | 19.3 | % | 17.8 | % | 19.6 | % | 19.0 | % | |||
Research and development expenses | 4.7 | % | 3.6 | % | 4.5 | % | 4.0 | % | |||
Restructuring and impairment charges | 3.4 | 0.7 | % | 1.9 | 3.3 | % | |||||
Operating income (loss) | 6.1 | % | 7.2 | % | 7.2 | % | 3.5 | % | |||
Equity income in unconsolidated joint ventures | 0.6 | % | 1.1 | % | 0.5 | % | 0.8 | % | |||
Other income (expense), net | (0.1 | )% | 0.2 | % | (0.3 | )% | — | % | |||
Net realized gain (loss) | — | — | % | — | (1.3 | )% | |||||
Interest income (expense), net | (0.6 | )% | (0.9 | )% | (0.6 | )% | (0.9 | )% | |||
Income (loss) before income tax expense (benefit) | 6.0 | % | 7.6 | % | 6.8 | % | 2.1 | % | |||
Income tax expense (benefit) | 1.7 | % | 2.5 | % | 2.0 | % | 0.1 | % | |||
Income (loss) from continuing operations | 4.3 | % | 5.1 | % | 4.8 | % | 2.0 | % |
(Dollars in millions) | Three Months Ended | Six Months Ended | |||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Net sales | $ | 39.9 | $ | 43.3 | $ | 82.4 | $ | 83.8 | |||||||
Operating income (loss) | 3.5 | 5.7 | 10.1 | 7.2 |
(Dollars in millions) | Three Months Ended | Six Months Ended | |||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Net sales | $ | 45.6 | $ | 40.5 | $ | 89.1 | $ | 79.9 | |||||||
Operating income (loss) | 4.0 | 3.1 | 7.8 | 2.8 |
• | Curamik Electronics Solutions |
(Dollars in millions) | Three Months Ended | Six Months Ended | |||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Net sales | $ | 28.5 | $ | 23.9 | $ | 51.8 | $ | 48.2 | |||||||
Operating income (loss) | (2.5 | ) | (1.2 | ) | (5.6 | ) | (3.0 | ) |
• | Power Distribution Systems |
(Dollars in millions) | Three Months Ended | Six Months Ended | |||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Net sales | $ | 12.3 | $ | 11.6 | $ | 23.3 | $ | 22.1 | |||||||
Operating income (loss) | 1.1 | 0.1 | 2.6 | (0.5 | ) |
(Dollars in millions) | Three Months Ended | Six Months Ended | |||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
Net sales | $ | 6.2 | $ | 6.0 | $ | 11.8 | $ | 11.5 | |||||||
Operating income (loss) | 2.0 | 1.3 | 4.0 | 2.1 |
(Dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
Key Balance Sheet Accounts: | |||||||
Cash and cash equivalents | $ | 137,015 | $ | 114,863 | |||
Accounts receivable | 88,846 | 78,788 | |||||
Inventory | 66,733 | 73,178 | |||||
Outstanding borrowing on credit facilities (short term and long term) | 93,000 | 98,000 |
Six Months Ended | |||||||
June 30, 2013 | June 30, 2012 | ||||||
Key Cash Flow Measures: | |||||||
Cash provided by (used in) operating activities of continuing operations | $ | 29,720 | $ | 4,569 | |||
Cash provided by (used in) investing activities of continuing operations | (10,462 | ) | 13,550 | ||||
Cash provided by (used in) financing activities of continuing operations | 1,946 | 277 |
(Dollars in thousands) | June 30, 2013 | December 31, 2012 | |||||
U.S. | $ | 21,817 | $ | 26,813 | |||
Europe | 56,190 | 47,918 | |||||
Asia | 59,008 | 40,132 | |||||
Total cash and cash equivalents | $ | 137,015 | $ | 114,863 |
◦ | Accounts receivable trade increased by 12.8% from $78.8 million at December 31, 2012 to $88.8 million at June 30, 2013. This increase is primarily attributable to the increased sales volumes experienced throughout fiscal 2013 as our days sales outstanding metric has improved over that time period from 63.8 days outstanding at December 31, 2012 to 58.8 days outstanding at June 30, 2013, indicating that we are efficiently collecting our receivables even as sales volumes increase. |
◦ | Inventory decreased by 8.9% from $73.2 million at December 31, 2012 to $66.7 million at June 30, 2013. This decrease is primarily attributable to higher sales volumes, particularly at Curamik, as we had sold out of inventory to meet demand |
◦ | Current taxes receivable declined by 56.4% from $5.1 million at December 31, 2012 to $2.2 million at June 30, 2013. This decrease is primarily attributable to receipt of tax refunds totaling $2.7 million in the first quarter of 2013. |
◦ | Long term deferred income tax assets decreased by 17.2% from $71.4 million at December 31, 2012 to $59.2 million at June 30, 2013. This decrease is primarily attributable to the change in the unrealized loss related to our pension liability. |
◦ | Long term pension liability decreased by 48.4% from $65.9 million at December 31, 2012 to $34.0 million at June 30, 2013. This decrease was due to the change in our defined benefit pension plans as the plans were frozen so that future benefits will no longer accrue under these plans. |
2011 | $2.5 | million | |
2012 | $7.5 | million | |
2013 | $12.5 | million | |
2014 | $17.5 | million | |
2015 | $35.0 | million | |
2016 | $25.0 | million |
Period | Ratio | |
March 31, 2012 to December 31, 2012 | 1.25 : 1.00 | |
March 31, 2013 to December 31, 2013 | 1.50 : 1.00 | |
March 31, 2014 and thereafter | 1.75 : 1.00 |
Periods | Q2 2012 | Q3 2012 | Q4 2012 | Q1 2013 | Q2 2013 | |||||
Covenant Limit | 1.25 | 1.25 | 1.25 | 1.50 | 1.50 | |||||
Actual FCCR | 2.09 | 1.93 | 2.18 | 2.27 | 2.06 |
• | $1.4 million letter of credit to guarantee Rogers workers compensation plan; |
• | $0.1 million letter guarantee to guarantee a payable obligation for a Chinese subsidiary (Rogers Suzhou), |
• | $0.1 million letter guarantee to guarantee a payable obligation for a Chinese subsidiary (Rogers Suzhou). |
(Dollars in thousands) | Payments Due by Period | ||||||||||||||||||
Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | |||||||||||||||
Pension benefits (1) | $ | 90,207 | $ | 8,441 | $ | 16,238 | $ | 16,899 | $ | 48,629 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 6. | Exhibits |
List of Exhibits: | |
23.1 | Consent of National Economic Research Associates, Inc., filed herewith. |
23.2 | Consent of Marsh U.S.A., Inc., filed herewith. |
31.1 | Certification of President and Chief Executive Officer (Principal Executive Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith. |
31.2 | Certification of Vice President, Finance and Chief Financial Officer (Principal Financial Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith. |
32 | Certification of President and Chief Executive Officer (Principal Executive Officer) and Vice President, Finance and Chief Financial Officer (Principal Financial Officer) pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith. |
101 | The following materials from Rogers Corporation's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2013 formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Income (Loss) for the three and six months ended June 30, 2013 and June 30, 2012, (ii) Condensed Consolidated Statements of Financial Position at June 30, 2013 and December 31, 2012, (iii) Condensed Consolidated Statements of Stockholders Equity at June 30, 2013 and December 31, 2012, (iv) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2013 and June 30, 2012, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and June 30, 2012 and (vi) Notes to Condensed Consolidated Financial Statements.+ |
+ | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
ROGERS CORPORATION (Registrant) |
/s/ Dennis M. Loughran | /s/ Ronald J. Pelletier | |
Dennis M. Loughran | Ronald J. Pelletier | |
Vice President, Finance and Chief Financial Officer | Corporate Controller and Principal Accounting Officer | |
Principal Financial Officer | ||
Dated: July 31, 2013 |
1. | I have reviewed this quarterly report on Form 10-Q of Rogers Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: July 31, 2013 |
/s/ Bruce D Hoechner |
Bruce D. Hoechner |
President and Chief Executive Officer |
Principal Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Rogers Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: July 31, 2013 |
/s/ Dennis M. Loughran |
Dennis M. Loughran |
Vice President and Chief Financial Officer |
Principal Financial Officer |
/s/ Bruce D Hoechner |
Bruce D. Hoechner |
President and Chief Executive Officer |
Principal Executive Officer |
July 31, 2013 |
/s/ Dennis M. Loughran |
Dennis M. Loughran |
Vice President and Chief Financial Officer |
Principal Financial Officer |
July 31, 2013 |
Commitments and Contingencies - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | 12 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | 3 Months Ended | 6 Months Ended | |||||||||||
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Dec. 31, 2012
LegalMatter
|
Jun. 30, 2013
claim
LegalMatter
|
Sep. 30, 2012
|
Dec. 31, 2012
LegalMatter
|
Dec. 31, 2011
claim
|
Dec. 31, 2010
Minimum [Member]
LegalMatter
|
Sep. 30, 2012
Minimum [Member]
|
Dec. 31, 2010
Maximum [Member]
LegalMatter
|
Dec. 31, 2012
Maximum [Member]
|
Jun. 30, 2013
Claims that Specify Amount of Damages Sought [Member]
LegalMatter
|
Jun. 30, 2013
Claims that Cite Jurisdictional Amounts [Member]
LegalMatter
|
Jun. 30, 2013
Claims that Specify Amount of Damages Sought not Based on Jurisdictional Requirements [Member]
LegalMatter
|
Jun. 30, 2013
Claims that Specify Amount of Damages Sought not Based on Jurisdictional Requirements [Member]
Maximum [Member]
LegalMatter
|
Jun. 30, 2013
Claims that Specify Amount of Damages Sought not Based on Jurisdictional Requirements [Member]
Legal Claim 1 [Member]
Compensatory [Member]
|
Jun. 30, 2013
Claims that Specify Amount of Damages Sought not Based on Jurisdictional Requirements [Member]
Legal Claim 1 [Member]
Punitive [Member]
|
Jun. 30, 2013
Claims that Specify Amount of Damages Sought not Based on Jurisdictional Requirements [Member]
Legal Claim 3 [Member]
Punitive [Member]
|
Jun. 30, 2013
Superfund Sites Proceedings [Member]
LegalMatter
|
Dec. 31, 2012
Superfund Sites Proceedings [Member]
|
Mar. 31, 2010
PCB Contamination Proceedings [Member]
|
Jun. 30, 2013
PCB Contamination Proceedings [Member]
|
Jun. 30, 2013
PCB Contamination Proceedings [Member]
Building [Member]
|
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Commitments and Contingencies Disclosure [Line Items] | |||||||||||||||||||||
Number of pending claims | 319 | 358 | 319 | 76 | 281 | 1 | 1 | ||||||||||||||
Estimated total cleanup costs, cost sharing percentage | 2.00% | ||||||||||||||||||||
Loss contingency, minimum possible loss | $ 18.8 | $ 17.0 | |||||||||||||||||||
Loss contingency, maximum possible loss | 29.6 | 24.0 | |||||||||||||||||||
Estimated total cleanup costs, accrual | 0.4 | ||||||||||||||||||||
Estimated total cleanup costs, insurance receivable | 0.3 | ||||||||||||||||||||
Remediation and monitoring costs incurred since inception related to the PCB soil and building contamination | 2.5 | 0.8 | |||||||||||||||||||
PCB contamination of the building, liability recording during the period | 1.0 | 0.2 | |||||||||||||||||||
Percentage of pending claims | 1.00% | ||||||||||||||||||||
Damages sought | 20 | 20 | 1 | ||||||||||||||||||
Number of defendants | 1 | 833 | 21 | ||||||||||||||||||
Description of named defendants | Cases involving us typically name 50-300 defendants | ||||||||||||||||||||
Number of claims dismissed | 45 | 93 | |||||||||||||||||||
Number of claims settled | 3 | 16 | |||||||||||||||||||
Claims settlements amount | 0.9 | 6.3 | |||||||||||||||||||
Cost Sharing Agreement, Expiration Period | 4 years | ||||||||||||||||||||
Cost Sharing Agreement, expiration date | Jan. 25, 2015 | ||||||||||||||||||||
Asbestos-related liabilities, estimated liability | 51.4 | 51.4 | |||||||||||||||||||
Asbestos-related liabilities, estimated insurance recovery | 48.3 | 48.3 | |||||||||||||||||||
Asbestos Forcast Claim Period | 5 years | 10 years | |||||||||||||||||||
Environmental Expense and Liabilities | 2.9 | ||||||||||||||||||||
Environmental Remediation Expense | $ 0.2 |
Restructuring and Impairment Charges (Narrative) (Details) (USD $)
|
3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||||||||||
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Jun. 30, 2012
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Mar. 31, 2012
|
Jun. 30, 2012
|
Jun. 30, 2013
High Performance Foams [Member]
Employee Severance [Member]
|
Jun. 30, 2012
High Performance Foams [Member]
Employee Severance [Member]
|
Jun. 30, 2013
High Performance Foams [Member]
Employee Severance [Member]
|
Jun. 30, 2012
High Performance Foams [Member]
Employee Severance [Member]
|
Jun. 30, 2013
Composite Material Division [Member]
|
Dec. 31, 2012
Composite Material Division [Member]
|
Jun. 30, 2012
Composite Material Division [Member]
|
Jun. 30, 2013
Composite Material Division [Member]
|
Jun. 30, 2012
Composite Material Division [Member]
|
Dec. 31, 2011
Composite Material Division [Member]
|
Jun. 30, 2012
Bremen, Germany [Member]
High Performance Foams [Member]
|
Jun. 30, 2012
Bremen, Germany [Member]
High Performance Foams [Member]
|
Jun. 30, 2012
Bremen, Germany [Member]
High Performance Foams [Member]
Lease Contract Termination [Member]
|
Jun. 30, 2012
Bremen, Germany [Member]
High Performance Foams [Member]
Employee Severance [Member]
|
Jun. 30, 2012
Bremen, Germany [Member]
High Performance Foams [Member]
Asset Impairments [Member]
|
Jun. 30, 2012
Bremen, Germany [Member]
High Performance Foams [Member]
Equipment Removal and Transportation [Member]
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Restructuring Cost and Reserve [Line Items] | |||||||||||||||||||||||||
Restructuring charges | $ (700,000) | $ 2,300,000 | $ 1,600,000 | $ 1,253,000 | [1] | $ 670,000 | [1] | $ 1,253,000 | [1] | $ 3,088,000 | [1] | $ 1,500,000 | $ 3,100,000 | $ 900,000 | $ 800,000 | $ 400,000 | $ 300,000 | ||||||||
Net sales associated with the discontinued operations | $ (100,000) | $ 100,000 | $ 5,300,000 | $ 1,400,000 | $ 200,000 | $ 2,600,000 | $ 4,800,000 | ||||||||||||||||||
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Joint Ventures
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joint Ventures | Joint Ventures As of June 30, 2013, we had two joint ventures, each 50% owned, which are accounted for under the equity method of accounting.
Equity income of $0.8 million and $1.3 million for the three and six month periods ended June 30, 2013, respectively, and equity income of $1.3 million and $2.0 million for the three and six month periods ended June 30, 2012, respectively, is included in the condensed consolidated statements of income (loss) related to the joint ventures. The summarized financial information for the joint ventures for the periods indicated is as follows:
The effect of transactions between us and our unconsolidated joint ventures is accounted for on a consolidated basis. Receivables from and payables to joint ventures arise during the normal course of business from transactions between us and the joint ventures, typically from the joint venture purchasing raw materials from us to produce end products, which are sold to third parties, or from us purchasing finished goods from our joint ventures, which are then sold to third parties. |
Stock Based Compensation - Deferred Stock Units (Detail) (Deferred Stock Units [Member])
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Deferred Stock Units [Member]
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Non-vested awards outstanding at beginning balance | 30,150 |
Awards granted | 16,800 |
Stock issued | (15,400) |
Non-vested awards outstanding ending balance | 31,550 |
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Accounts receivable, allowance for doubtful accounts | $ 1,661 | $ 1,773 |
Property, plant and equipment, accumulated depreciation | $ 211,592 | $ 205,575 |
Capital Stock, par value (in dollars per share) | $ 1 | $ 1 |
Capital Stock, authorized shares | 50,000,000 | 50,000,000 |
Capital Stock, shares outstanding | 17,242,257 | 16,904,441 |
Hedging Transactions and Derivative Financial Instruments
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Jun. 30, 2013
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hedging Transactions and Derivative Financial Instruments | Hedging Transactions and Derivative Financial Instruments The guidance for the accounting and disclosure of derivatives and hedging transactions requires companies to recognize all of their derivative instruments as either assets or liabilities at fair value in the statements of financial position. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies for special hedge accounting treatment as defined under the applicable accounting guidance. For derivative instruments that are designated and qualify for hedge accounting treatment (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss). This gain or loss is reclassified into earnings in the same line item of the statements of income (loss) associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of the future cash flows of the hedged item (i.e., the ineffective portion) if any, is recognized in the statements of income (loss) during the current period. For the three and six month periods ended June 30, 2013 and 2012 there were no hedge ineffectiveness. We currently have four outstanding contracts to hedge exposure related to the purchase of copper at our German subsidiary, Curamik, and U.S. operations in Arizona. These contracts are held with financial institutions and minimize the risk associated with a potential rise in copper prices. They cover the 2013 and 2014 monthly copper exposure and do not qualify for hedge accounting treatment; therefore, any mark-to-market adjustment on these contracts is recorded in the "Other income, net" line item in our condensed consolidated statements of income (loss). In 2012, we entered into Euro currency forward contracts to mitigate the exposure in the U.S. for pending Euro-denominated purchases. These contracts do not qualify for hedge accounting treatment therefore, any mark-to-market adjustment on these contracts are recorded in the "Other income, net" line item in our condensed consolidated statements of income (loss). Through the first half of 2013, we entered into Japanese Yen, Euro, U.S Dollar and Hungarian Forint currency forward contracts to mitigate certain global balance sheet exposures. These contracts do not qualify for hedge accounting treatment therefore, any mark-to-market adjustment on these contracts are recorded in the "Other income, net" line item in our condensed consolidated statements of income (loss). Also in 2012, we entered into an interest rate swap derivative instrument to hedge the variable LIBOR portion of the interest rate on 65% of the term loan debt then outstanding, effective July 2013. This transaction has been designated as a cash flow hedge and qualifies for hedge accounting treatment. At June 30, 2013, the term loan debt represents $85.0 million of our total outstanding debt of $93.0 million. At June 30, 2013, the rate charged on this debt is the 1 month LIBOR at 0.25% plus a spread of 2.00%.
Concentration of Credit Risk By using derivative instruments, we are subject to credit and market risk. If a counterparty fails to fulfill its performance obligations under a derivative contract, our credit risk will equal the fair value of the derivative instrument. Generally, when the fair value of a derivative contract is positive, the counterparty owes the Company, thus creating a receivable risk for the Company. We minimize counterparty credit (or repayment) risk by entering into derivative transactions with major financial institutions with investment grade credit ratings. |
Recent Accounting Pronouncements Recent Accounting Pronouncements
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6 Months Ended |
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Jun. 30, 2013
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Accounting Policies [Abstract] | |
Significant Accounting Policies | Recent Accounting Pronouncements Comprehensive Income In January 2013, the Financial Accounting Standards Board issued an update which seeks to improve the reporting of reclassifications out of accumulated other comprehensive income. This change requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. This update supersedes the presentation requirements for reclassifications out of accumulated other comprehensive income in Accounting Standards Update (ASU) No. 2011-05, Presentation of Comprehensive Income, and ASU No. 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This update is effective for the reporting periods beginning after December 15, 2012, which was our first quarter of fiscal year 2013. The adoption of the update is reflected in Note 5 - "Accumulated other comprehensive income (loss)" but has not impacted our financial condition or results of operations. |
Joint Ventures - Accounted for Under Equity Method of Accounting (Detail)
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6 Months Ended |
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Jun. 30, 2013
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Schedule of Equity Method Investments [Line Items] | |
Fiscal Year-End | --12-31 |
Rogers INOAC Corporation [Member] | JAPAN [Member] | High Performance Foams [Member]
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Schedule of Equity Method Investments [Line Items] | |
Fiscal Year-End | --10-31 |
Rogers INOAC Suzhou Corporation [Member] | CHINA [Member] | High Performance Foams [Member]
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Schedule of Equity Method Investments [Line Items] | |
Fiscal Year-End | --12-31 |
Pension Benefit and Other Postretirement Benefit Plans - Change in Plan Assets (Details) (Pension Benefits [Member], USD $)
In Thousands, unless otherwise specified |
6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Apr. 30, 2013
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Pension Benefits [Member]
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Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | |||
Fair value of plan assets at the beginning of the year | $ 143,540 | $ 156,741 | |
Actual return on plan assets | 10,981 | ||
Employer contributions | 6,500 | 16,000 | |
Benefit payments | (3,642) | ||
Curtailment charge | |||
Fair value of plan assets at the end of the period | 157,379 | 156,741 | |
Funded status | $ (34,057) |
Debt
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt On July 13, 2011, we entered into an amended and restated $265.0 million secured five year credit agreement. This credit agreement (“Amended Credit Agreement”) is with (i) JPMorgan Chase Bank, N.A., as administrative agent; (ii) HSBC Bank USA, National Association; (iii) RBS Citizens, National Association; (iv) Fifth Third Bank; and (v) Citibank, N.A. JPMorgan Securities LLC and HSBC Bank USA, National Association acted as joint bookrunners and joint lead arrangers; HSBC Bank USA, National Association and RBS Citizens, National Association acted as co-syndication agents; and Fifth Third Bank and Citibank, N.A. acted as co-documentation agents. The Amended Credit Agreement amends and restates the credit agreement signed between the Company and the same banks on November 23, 2010 and increased our borrowing capacity from $165.0 million under the original agreement to $265.0 million under the Amended Credit Agreement. Key features of the Amended Credit Agreement, as compared to the November 23, 2010 credit agreement, include an increase in credit from $165.0 million to $265.0 million with the addition of a $100.0 million term loan; the extension of maturity from November 23, 2014 to July 13, 2016; a 25 basis point reduction in interest costs; an increase in the size of permitted acquisitions from $25.0 million to $100.0 million; and an increase in permitted additional indebtedness from $20.0 million to $120.0 million. The Amended Credit Agreement provided for the extension of credit in the form of a $100.0 million term loan (which refinanced outstanding borrowings in the amount of $100.0 million from the existing revolving credit line), as further described below; and up to $165.0 million of revolving loans, in multiple currencies, at any time and from time to time until the maturity of the Amended Credit Agreement on July 13, 2016. We may borrow, pre-pay and re-borrow amounts under the $165.0 million revolving portion of the Amended Credit Agreement; however, with respect to the $100.0 million term loan portion, any principal amounts re-paid may not be re-borrowed. 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 Amended Credit Agreement). Borrowings under the Amended Credit Agreement bear interest based on one of two options. Alternate base rate loans bear interest that includes a base reference rate plus a spread of 75 - 150 basis points, depending on our leverage ratio. The base reference rate is the greater of the prime rate; federal funds effective rate plus 50 basis points; and adjusted London interbank offered (“LIBO”) rate plus 100 basis points. Eurocurrency loans bear interest based on the adjusted LIBO rate plus a spread of 175 - 250 basis points, depending on our leverage ratio. In addition to interest payable on the principal amount of indebtedness outstanding from time to time under the Amended Credit Agreement, the Company is required to pay a quarterly fee of 0.20% to 0.35% (based upon its leverage ratio) of the unused amount of the lenders’ commitments under the Amended Credit Agreement. In connection with the Amended Credit Agreement, we transferred borrowings in the amount of $100.0 million from the revolving credit line under the November 23, 2010 credit agreement to the term loan under the Amended Credit Agreement. The Amended Credit Agreement requires the mandatory quarterly repayment of principal of amounts borrowed under such term loan. Payments commenced on September 30, 2011, and are scheduled to be completed on June 30, 2016. The aggregate mandatory principal payments due are as follows:
The Amended Credit Agreement is secured by many of the assets of Rogers and our World Properties, Inc, subsidiary, including but not limited to, receivables, equipment, intellectual property, inventory, stock in certain subsidiaries and real property. As part of the Amended Credit Agreement, we are restricted in our ability to perform certain actions, including, but not limited to, our ability to pay dividends, incur additional debt, sell certain assets, and make capital expenditures, with certain exceptions. Further, we are currently required to maintain certain financial covenant ratios, including (i) a leverage ratio of no more than 3.0 to 1.0 and (ii) a minimum fixed charge coverage ratio (FCCR) as defined in the following table:
The FCCR is the ratio between Adjusted Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) and Consolidated Fixed Charges as defined in the Amended Credit Agreement, which measures our ability to cover the fixed charge obligations. The key components of Consolidated Fixed Charges are capital expenditures, scheduled debt payments, capital lease payments, rent and interest expenses. In the first quarter of 2012, through an amendment to the Amended Credit Agreement, the FCCR was modified from 2.50 to the tiered structure outlined in the table above. Several factors contributed to the need for an amendment to this covenant. The original 2.50 ratio was based on a more robust set of financial projections and these have moderated to some extent with the recent events in the marketplace and the overall global economy, particularly in Europe and China. Additionally, there were no mandatory term loan payments when the original ratio was determined, which would further stress the ratio. Finally, we forecasted an increase in planned capital investment to support certain strategic initiatives, which added pressure to the ratio as well. Fixed Charge metrics are detailed in the table below.
As of June 30, 2013, we were in compliance with all of our covenants, as we achieved actual ratios of approximately 1.27 on the leverage ratio and 2.06 on the fixed charge coverage ratio. 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. In connection with the establishment of the initial credit agreement in 2010, we capitalized approximately $1.6 million of debt issuance costs. We capitalized an additional $0.7 million of debt issuance costs in 2011 related to the Amended Credit Agreement, as amended. Also in connection with the Amended Credit Agreement, as amended, we capitalized an additional $0.1 million of debt issuance costs in the first quarter of 2012. These costs will be amortized over the life of the Amended Credit Agreement, as amended, which will expire in June 2016. We incurred amortization expense of $0.1 million in each of the second quarters of 2013 and 2012, respectively, and expenses of $0.2 million in each of the first six months of 2013 and 2012, respectively. At June 30, 2013, we have approximately $1.5 million of credit facility costs remaining to be amortized. In the first quarter of 2011, we made an initial draw on the line of credit of $145.0 million to fund the acquisition of Curamik. During the first six months of 2013, we made principal payments of $5.0 million on the debt. We made $24.5 million of principal payments in fiscal 2012. We are obligated to pay $15.0 million on this debt obligation and are scheduling $8.0 million of discretionary revolver payments within the next 12 months. As of June 30, 2013, our outstanding debt related to the Amended Credit Agreement, as amended, consists of $85.0 million of term loan debt and $8.0 million on the revolving line of credit. We have the option to pay part of or the entire amount at any time over the remaining life of the Amended Credit Agreement, as amended, with any balance due and payable at the agreement's expiration. In addition, as of June 30, 2013 we had the following standby letters of credit (LOC) and guarantees that are backed by the Amended Credit Agreement, as amended:
No amounts were owed on the LOC or guarantees as of June 30, 2013 or December 31, 2012. We also guarantee an interest rate swap related to the lease of the Curamik manufacturing facility in Eschenbach, Germany. The swap agreement is between the lessor and a third party bank. We guarantee any liability related to the swap agreement in case of default by the lessor through the term of the swap until expiration in July 2016, or if we exercised the option to buyout the lease at June 30, 2013 as specified within the lease agreement. We did not exercise our option to buyout the lease at June 30, 2013. The swap is in a liability position with the bank at June 30, 2013. We have concluded that the probability of default by the lessor is not probable during the term of the swap, and we chose not to exercise the option to buyout the lease during the leasing period; therefore, the guarantee has no value. Capital Lease During the first quarter of 2011, we recorded a capital lease obligation related to the acquisition of Curamik for its primary manufacturing facility in Eschenbach, Germany. We had an option to purchase the property in either 2013 or upon the expiration of the lease in 2021 at a price which is the greater of (i) the then-current market value or (ii) the financial residual book value of the land including the buildings and installations thereon. We chose not to exercise the option to purchase the property that was available to us on June 30, 2013. The total obligation recorded for the lease as of June 30, 2013 is $7.7 million. Depreciation expense related to the capital lease was $0.1 million in each of the three month periods ending June 30, 2013 and 2012, and $0.2 million in each of the six month periods ending June 30, 2013 and June 30, 2012. Accumulated depreciation at June 30, 2013 and December 31, 2012 was $0.9 million and $0.8 million, respectively. Depreciation expense on the capital lease asset is recorded in Cost of Sales in our condensed consolidated statements of income (loss). Interest expense related to the debt recorded on the capital lease is included in interest expense in our condensed consolidated statements of income (loss). See “Interest” section below for further discussion. Interest We incurred interest expense on our outstanding debt of $0.5 million and $1.1 million in the three and six month periods ended June 30, 2013, respectively, and $0.7 million and $1.5 million in the three and six month periods ended June 30, 2012, respectively. We incurred an unused commitment fee of approximately $0.1 million and $0.3 million in the three and six month periods ended June 30, 2013, respectively, and of approximately $0.1 million and $0.2 million in the three and six month periods ended June 30, 2012, respectively. In July 2012, we entered into an interest rate swap to hedge the variable interest rate on 65% of the term loan debt, then outstanding, effective July 2013. At June 30, 2013, the term loan debt amounted to $85.0 million of our total outstanding debt of $93.0 million. At June 30, 2013, the rate charged on this debt is the 1 month LIBOR at 0.25% plus a spread of 2.00%. We also incurred interest expense on the capital lease of $0.1 million and $0.3 million in the three and six month periods ended June 30, 2013, respectively, and of $0.4 million and $0.8 million in the three and six month periods ended June 30, 2012, respectively. Restriction on Payment of Dividends Pursuant to the Amended Credit Agreement, as amended, we cannot make a cash dividend payment if a default or event of default has occurred and is continuing or shall result from the cash dividend payment. |
Restructuring Impairment Charges - Summary of Severance Accrual Activity (Detail) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended |
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Jun. 30, 2013
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Restructuring Reserve [Roll Forward] | |
Beginning Balance | $ 5,221 |
Provisions | 3,003 |
Payments | 4,470 |
Ending Balance | 3,754 |
Employee Severance [Member]
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Restructuring Reserve [Roll Forward] | |
Beginning Balance | 1,447 |
Provisions | 3,003 |
Payments | (2,357) |
Ending Balance | 2,093 |
Curamik finishing operations relocated to Hungary [Member]
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Restructuring Reserve [Roll Forward] | |
Beginning Balance | 3,774 |
Provisions | 0 |
Payments | 2,113 |
Ending Balance | $ 1,661 |
Pension Benefit and Other Postretirement Benefit Plans - Amounts Recognized in Balance Sheet (Details) (Pension Benefits [Member], USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Pension Benefits [Member]
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Defined Benefit Plan, Amounts Recognized in Balance Sheet [Abstract] | |
Noncurrent assets | $ 0 |
Current liabilities | (49) |
Noncurrent liabilities | (34,008) |
Net amount recognized at end of period | (34,057) |
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), before Tax [Abstract] | |
Net actuarial loss | 58,860 |
Prior service cost | 0 |
Net amount recognized at end of period | $ 58,860 |
Inventories (Tables)
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Jun. 30, 2013
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories were as follows:
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Hedging Transactions and Derivative Financial Instruments (Tables)
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Jun. 30, 2013
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notional Amounts of Outstanding Derivative Positions |
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Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance |
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Earnings Per Share - Computation of Basic and Diluted (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Numerator: | ||||
Income (Loss) | $ 5,583 | $ 6,417 | $ 12,560 | $ 4,831 |
Denominator: | ||||
Denominator for basic earnings per share - Weighted-average shares | 17,107,727 | 16,309,053 | 17,090,093 | 16,270,955 |
Effect of dilutive stock options (in shares) | 491,000 | 555,000 | 546,000 | 572,000 |
Denominator for diluted earnings per share - Adjusted weighted-average shares and assumed conversions | 17,599,481 | 16,864,166 | 17,636,440 | 16,842,768 |
Basic income (loss) per share (in dollars per share) | $ 0.33 | $ 0.40 | $ 0.73 | $ 0.29 |
Diluted income (loss) per share (in dollars per share) | $ 0.32 | $ 0.38 | $ 0.71 | $ 0.28 |
Debt (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Maturities of Long-term Debt | The aggregate mandatory principal payments due are as follows:
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Debt Covenants and Fixed Charge Metrics | Further, we are currently required to maintain certain financial covenant ratios, including (i) a leverage ratio of no more than 3.0 to 1.0 and (ii) a minimum fixed charge coverage ratio (FCCR) as defined in the following table:
Fixed Charge metrics are detailed in the table below.
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Hedging Transactions and Derivative Financial Instruments - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
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Jun. 30, 2013
Bank Term Loan [Member]
Contract
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Jul. 31, 2012
Bank Term Loan [Member]
Cash Flow Hedging [Member]
Subsequent Event [Member]
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Derivative Instruments and Hedging Activities Disclosure [Line Items] | |||
Number of derivative contracts related to minimizing risk associated with potential rise in copper prices | 4 | ||
Interest rate swap derivative, percentage of debt hedged | 65.00% | ||
Term loan debt | $ 85.0 | ||
Total outstanding debt | $ 93.0 | ||
Variable interest rate | 0.25% | ||
Interest rate spread over variable rate | 2.00% | 2.00% |
Stock Based Compensation - Fair Value of Options Granted Calculated Using Weighted Average Assumptions (Detail) (USD $)
|
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2013
|
Jun. 30, 2012
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Share-based Compensation [Abstract] | |||
Options granted | 0 | 0 | 46,950 |
Weighted average exercise price | $ 0.00 | $ 0.00 | $ 41.27 |
Weighted-average grant date fair value | $ 19.08 | ||
Assumptions: | |||
Expected volatility | 47.70% | ||
Expected term (in years) | 5 years 10 months 25 days | ||
Risk-free interest rate | 1.43% | ||
Expected dividend yield | 0.00% | 0.00% |
Pension Benefit and Other Postretirement Benefit Plans (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in benefit obligation [Table Text Block] |
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Change in plan assets [Table Text Block] |
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Amounts recognized in consolidated balance sheet [Table Text Block] | Amounts recognized in the consolidated balance sheet consist of:
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Schedule of net periodic benefit cost not yet recognized [Table Text Block] |
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Components of net periodic benefit cost [Table Text Block] | The components of net periodic benefit cost for the periods indicated are:
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Schedule of assumptions used [Table Text Block] | Weighted-average assumptions used to determine benefit obligations:
Weighted-average assumptions used to determine net benefit cost for the period ended:
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Schedule of allocation of plan assets [Table Text Block] | The following table presents the fair value of the net assets by asset category:
The following tables set forth by level, within the fair value hierarchy, the assets carried at fair value:
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Changes in fair value of Level 3 assets [Table Text Block] | The table below sets forth a summary of changes in the fair value of the guaranteed deposit account's Level 3 assets for the period ended April 30,2013.
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Schedule of future benefit payments [Table Text Block] | The following pension benefit payments, which reflect expected future employee service, as appropriate, are expected to be paid through the utilization of plan assets for the funded plans and from operating cash flows for the unfunded plans. The benefit payments are based on the same assumptions used to measure our benefit obligation at April 30, 2013.
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Segment Information - Additional Information (Detail) (Power Electronics Solutions [Member])
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6 Months Ended |
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Jun. 30, 2013
Segment
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Power Electronics Solutions [Member]
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Segment Reporting Information [Line Items] | |
Number of operating segments | 2 |
Goodwill and Intangible Assets - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Amortization expense | $ 1.4 | $ 1.0 | $ 2.9 | $ 2.2 |
Anticipated future amortization expense for remainder of 2013 | 2.9 | 2.9 | ||
Anticipated future amortization expense for 2014 | 5.9 | 5.9 | ||
Anticipated future amortization expense for 2015 | 5.6 | 5.6 | ||
Anticipated future amortization expense for 2016 | 5.2 | 5.2 | ||
Anticipated future amortization expense for 2017 | 4.8 | 4.8 | ||
Curamik Electronics GmbH [Member] | Unclassified Indefinite-lived Intangible Assets [Member]
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Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Intangible assets | $ 5.2 | $ 5.2 |
Pension Benefit and Other Postretirement Benefit Plans - Estimated Future Payments (Details) (Pension Benefits [Member], USD $)
In Thousands, unless otherwise specified |
Apr. 30, 2013
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Pension Benefits [Member]
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Defined Benefit Plan Disclosure [Line Items] | |
2014 | $ 8,441 |
2015 | 8,029 |
2016 | 8,209 |
2017 | 8,303 |
2018 | 8,595 |
2019-2023 | $ 48,629 |
Inventories (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Inventory Disclosure [Abstract] | ||
Raw materials | $ 24,880 | $ 29,064 |
Work-in-process | 14,552 | 13,154 |
Finished goods | 27,301 | 30,960 |
Inventories | $ 66,733 | $ 73,178 |
Debt - Additional Information (Detail) (USD $)
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1 Months Ended | 3 Months Ended | 6 Months Ended | 1 Months Ended | 1 Months Ended | 3 Months Ended | 6 Months Ended | 1 Months Ended | |||||||||||||||||||||
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Nov. 30, 2010
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Jun. 30, 2013
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Jun. 30, 2012
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Mar. 31, 2011
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Jun. 30, 2013
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Jun. 30, 2012
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Mar. 31, 2013
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Dec. 31, 2012
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Sep. 30, 2012
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Dec. 31, 2011
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Jul. 13, 2011
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Dec. 31, 2010
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Nov. 23, 2010
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Dec. 31, 2012
Minimum [Member]
|
Jul. 31, 2011
Credit Agreement [Member]
|
Jun. 30, 2013
Credit Agreement [Member]
|
Jul. 13, 2011
Credit Agreement [Member]
|
Jun. 30, 2013
Bank Term Loan [Member]
|
Jul. 31, 2012
Bank Term Loan [Member]
Cash Flow Hedging [Member]
Subsequent Event [Member]
|
Jul. 31, 2011
Amended Credit Facility [Member]
|
Dec. 31, 2012
Amended Credit Facility [Member]
|
Jun. 30, 2013
Amended Credit Facility [Member]
|
Jul. 13, 2011
Amended Credit Facility [Member]
|
Jul. 31, 2011
Amended Credit Facility [Member]
Minimum [Member]
|
Jul. 31, 2011
Amended Credit Facility [Member]
Maximum [Member]
|
Jul. 13, 2011
Amended Credit Facility [Member]
Federal Funds Rate [Member]
|
Jul. 13, 2011
Amended Credit Facility [Member]
One Month LIBOR [Member]
|
Jul. 13, 2011
Amended Credit Facility [Member]
Bank Term Loan [Member]
|
Jul. 13, 2011
Eurocurrency loans [Member]
Credit Agreement [Member]
|
|
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||
Credit agreement, maximum borrowing capacity | $ 165,000,000 | $ 265,000,000 | $ 100,000,000 | ||||||||||||||||||||||||||
Credit agreement, agreement period | 5 years | ||||||||||||||||||||||||||||
Credit agreement, maturity date | Nov. 23, 2014 | Jul. 13, 2016 | |||||||||||||||||||||||||||
Reduction in interest costs | 0.25% | ||||||||||||||||||||||||||||
Size of permitted acquisitions | 25,000,000 | 100,000,000 | |||||||||||||||||||||||||||
Permitted additional indebtedness | 20,000,000 | 120,000,000 | |||||||||||||||||||||||||||
Revolving credit outstanding borrowings | 100,000,000 | 8,000,000 | |||||||||||||||||||||||||||
Debt Instrument Lower Range Basis Spread On Variable Rate | 0.75% | 0.50% | |||||||||||||||||||||||||||
Debt Instrument Higher Range Basis Spread On Variable Rate | 1.50% | 1.00% | |||||||||||||||||||||||||||
Line of credit, interest rate description | The base reference rate is the greater of the prime rate; federal funds effective rate plus 50 basis points; and adjusted London interbank offered (“LIBO”) rate plus 100 basis points. | ||||||||||||||||||||||||||||
Line of credit, LIBOR rate, minimum spread | 1.75% | ||||||||||||||||||||||||||||
Line of credit, LIBOR rate, maximum spread | 2.50% | ||||||||||||||||||||||||||||
Unused commitment fee percentage | 0.20% | 0.35% | |||||||||||||||||||||||||||
Payments commencement date | Sep. 30, 2011 | ||||||||||||||||||||||||||||
Covenants, leverage ratio | 3.0 | ||||||||||||||||||||||||||||
Leverage ratio | 1.27 | 1.27 | |||||||||||||||||||||||||||
Fixed Charge Coverage Ratio Minimum | 2.06 | 2.09 | 2.06 | 2.09 | 2.27 | 2.18 | 1.93 | 1.0 | |||||||||||||||||||||
Capitalized debt issuance costs | 100,000 | 700,000 | 1,600,000 | ||||||||||||||||||||||||||
Amortization expense, debt issue costs | 100,000 | 100,000 | 200,000 | 400,000 | |||||||||||||||||||||||||
Capitalized debt issuance costs, net | 1,500,000 | 1,500,000 | |||||||||||||||||||||||||||
Amount drawn on the line of credit to fund the acquisition of Curamik | 145,000,000 | ||||||||||||||||||||||||||||
Repayment of debt principal | 5,530,000 | 2,992,000 | 24,500,000 | 5,000,000 | |||||||||||||||||||||||||
Required payment on debt obligation within the next 12 months | 15,000,000 | ||||||||||||||||||||||||||||
Repayments of Lines of Credit | 8,000,000 | ||||||||||||||||||||||||||||
Term loan debt | 85,000,000 | 85,000,000 | |||||||||||||||||||||||||||
Total outstanding debt | 93,000,000 | 93,000,000 | |||||||||||||||||||||||||||
LIBOR in Effect at Period End | 0.25% | 0.25% | |||||||||||||||||||||||||||
Interest rate spread over variable rate | 2.00% | 2.00% | 2.00% | ||||||||||||||||||||||||||
Irrevocable standby letters of credit | 1,400,000 | 1,400,000 | |||||||||||||||||||||||||||
Letter guarantee | 100,000 | 100,000 | |||||||||||||||||||||||||||
Option to buy out capital lease, year | 2013 | ||||||||||||||||||||||||||||
Capital lease, expiration date | 2021 | ||||||||||||||||||||||||||||
Capital lease obligation | 7,700,000 | 7,700,000 | |||||||||||||||||||||||||||
Amortization expense related to the capital lease | 100,000 | 100,000 | 200,000 | 300,000 | |||||||||||||||||||||||||
Capital Leases, Lessee Balance Sheet, Assets by Major Class, Accumulated Depreciation | 900,000 | 900,000 | 800,000 | ||||||||||||||||||||||||||
Interest expense on outstanding debt | 500,000 | 700,000 | 1,100,000 | 1,500,000 | |||||||||||||||||||||||||
Unused commitment fee | 100,000 | 100,000 | 300,000 | 200,000 | |||||||||||||||||||||||||
Interest rate swap derivative, percentage of debt hedged | 65.00% | ||||||||||||||||||||||||||||
Interest expense on capital lease | $ 100,000 | $ 400,000 | $ 300,000 | $ 800,000 |
Fair Value Measurements (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis, Categorized by the Level of Inputs Used in the Valuation | From time to time we enter into various instruments that require fair value measurement, including foreign currency option contracts, interest rate swaps and copper derivative contracts. Assets measured on a recurring basis, categorized by the level of inputs used in the valuation, include:
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Reconciliation of Assets Measured at Fair Value on a Recurring Basis using Unobservable Inputs (Level 3) | The reconciliation of our assets measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows:
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|||||||
Income (loss) from continuing operations, net of tax | $ 5,583 | $ 6,417 | $ 12,560 | $ 4,831 | ||||||
Foreign currency translation adjustment | 3,192 | (10,857) | (6,206) | (4,886) | ||||||
Net unrealized gain (loss) on marketable securities reclassified into earnings | [1] | [1] | [1] | 1,168 | [1] | |||||
Unrealized gain (loss) on derivative instruments held at period end, net of tax | 82 | [1] | (43) | [1] | 73 | [1] | 212 | [1] | ||
Pension and postretirement actuarial net gain (loss) incurred in fiscal year | 17,225 | 0 | 17,225 | 0 | ||||||
Other comprehensive income (loss) | 22,216 | (9,389) | 13,845 | (528) | ||||||
Comprehensive income (loss) from continuing operations | 27,799 | (2,972) | 26,405 | 4,303 | ||||||
Income (loss) from discontinued operations, net of income taxes | (18) | 38 | 102 | (185) | ||||||
Comprehensive income (loss) | 27,781 | (2,934) | 26,507 | 4,118 | ||||||
Amortization of loss [Member]
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Pension and post retirement benefit plans reclassified into earnings, net of tax | 735 | [1] | 1,508 | [1] | 1,749 | [1] | 2,972 | [1] | ||
Amortization of prior service cost [Member]
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Pension and post retirement benefit plans reclassified into earnings, net of tax | $ 982 | [1] | $ 3 | [1] | $ 1,004 | [1] | $ 6 | [1] | ||
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Basis of Presentation
|
6 Months Ended |
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Jun. 30, 2013
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, these statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In our opinion, the accompanying condensed consolidated statements of financial position and related interim condensed consolidated statements of income (loss), condensed consolidated statements of shareholders' equity, condensed consolidated statement of comprehensive income (loss) and condensed consolidated statements of cash flows include all normal recurring adjustments necessary for their fair presentation in accordance with U.S. generally accepted accounting principles. All significant intercompany transactions have been eliminated. For all periods and amounts presented, reclassifications have been made for discontinued operations. In the second quarter of 2012, we ceased production at our non-woven composite materials operating segment that was classified as a discontinued operation as of December 31, 2012. See Note 16 -"Discontinued Operations" for further discussion. Certain amounts in the prior-year unaudited condensed consolidated financial statements have been reclassified to conform with the current-year presentation. Interim results are not necessarily indicative of results for a full year. For further information regarding our accounting policies, refer to the audited consolidated financial statements and footnotes thereto included in our Form 10-K for the fiscal year ended December 31, 2012. |
Inventories
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories were as follows:
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Goodwill and Intangible Assets - Intangible Assets (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 58,038 | $ 59,115 |
Accumulated Amortization | 13,625 | 11,045 |
Net Carrying Amount | 44,413 | 48,070 |
Trademarks and patents [Member]
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||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,013 | 1,065 |
Accumulated Amortization | 250 | 227 |
Net Carrying Amount | 763 | 838 |
Technology [Member]
|
||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 36,020 | 36,479 |
Accumulated Amortization | 10,450 | 8,394 |
Net Carrying Amount | 25,570 | 28,085 |
Covenant not-to-compete [Member]
|
||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 971 | 1,042 |
Accumulated Amortization | 456 | 358 |
Net Carrying Amount | 515 | 684 |
Customer relationships [Member]
|
||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 20,034 | 20,529 |
Accumulated Amortization | 2,469 | 2,066 |
Net Carrying Amount | $ 17,565 | $ 18,463 |
Fair Value Measurements
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The accounting guidance for fair value measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.
From time to time we enter into various instruments that require fair value measurement, including foreign currency option contracts, interest rate swaps and copper derivative contracts. Assets measured on a recurring basis, categorized by the level of inputs used in the valuation, include:
(1) Pension assets are recorded net of the projected benefit obligation as a long term pension liability. Auction Rate Securities During the first quarter of 2012, we liquidated our auction rate security portfolio, receiving net proceeds of $25.4 million on a stated par value of $29.5 million. As a result of this liquidation, we recognized a loss on the discount of the securities of $3.2 million (the remaining difference between the liquidation value and par value of $0.9 million had previously been recognized as an impairment loss) in our earnings. Since the markets for these securities failed in the first quarter of 2008, we had redeemed $24.9 million of these securities, mostly at par, prior to the liquidation in the first quarter of 2012. Prior to the first quarter of 2008, our available-for-sale auction rate securities were recorded at fair value as determined in the active market at the time. However, due to events in the credit markets, the auctions failed during the first quarter of 2008 for the auction rate securities that we held at that time, and all of our auction rate securities had been in a loss position since that time until they were liquidated in the first quarter of 2012. Given the lack of unobservable inputs in the auction markets since the first quarter of 2008, such securities were considered Level 3 securities. During 2011, we performed a fair value assessment of these securities based on a discounted cash flow model, utilizing various assumptions that included estimated interest rates, probabilities of successful auctions, the timing of cash flows, and the quality and level of collateral of the securities. These inputs were chosen based on our understanding of the expectations of the market and are consistent with the assumptions utilized during our assessment of these securities at year end 2011. Prior to the first quarter of 2012, we had recognized an other-than-temporary impairment (OTTI) on these securities. An OTTI is recognized in earnings for a security in an unrealized loss position when an entity either (a) has the intent to sell the security or (b) more likely than not will be required to sell the security before its anticipated recovery. If neither of these circumstances (a) or (b) are present the other-than-temporary loss is separated into (i) the amount representing the credit loss and (ii) the amount related to all other factors. The credit loss is primarily based on the underlying ratings of the securities and is recognized in earnings, and the remaining amount is recorded in other comprehensive income. This is the approach we used to recognize the OTTI taken prior to liquidation in the first quarter of 2012. The amount representing the credit loss was recognized in earnings, and since circumstances (a) and (b) above were not present, the remaining amount was recorded in other comprehensive income. Due to our belief that it would have taken more than twelve months for the auction rate securities market to recover, these securities were classified as long-term assets, except for those that were scheduled to be redeemed within a twelve month period, which were classified as short-term investments. Since par value redemptions had recently slowed with no clear path for full redemption over the next several years and the rate of return on these securities being very low, management determined that a discounted redemption in the first quarter of 2012 was in the best interests of the Company as the related cash could be better utilized for other purposes going forward. The reconciliation of our assets measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows:
There were no credit losses recognized for the six months ended June 30, 2012. Derivatives Contracts We are exposed to certain risks related to our ongoing business operations. The primary risks being managed through the use of derivative instruments are foreign currency exchange rate risk, commodity pricing risk (primarily copper) and interest rate risk.
We do not use derivative financial instruments for trading or speculative purposes. For further discussion on our derivative contracts, see Note 3 - "Hedging Transactions and Derivative Financial Instruments" below. Pension Assets Our pension assets are stated at fair value on an annual basis and there are categories of assets in Level 1, 2 and 3 of the fair value hierarchy. During the second quarter of 2013, we made the decision to freeze the accumulation of benefits related to our defined benefit pension plans. This event required a fair value measurement of the pension assets as of April 30, 2013 and those are the values presented here. See further discussed in Note 8 - “Pension Benefits and Other Postretirement Benefit Plans”. |
Hedging Transactions and Derivative Financial Instruments - Notional Values of Derivative Instruments (Detail)
In Thousands, unless otherwise specified |
Jun. 30, 2013
Copper January 2013 - December 2013 [Member]
|
Jun. 30, 2013
Copper July 2013 - November 2013 [Member]
|
Jun. 30, 2013
Copper December 2013 - March 2014 [Member]
|
Jun. 30, 2013
Copper January 2014 - April 2014 [Member]
|
Jun. 30, 2013
YEN/USD Notional Amount of Foreign Currency Derivatives [Member]
JPY (¥)
|
Jun. 30, 2013
USD/EUR Notional Amount of Foreign Currency Derivatives [Member]
USD ($)
|
Jun. 30, 2013
HUF/EUR Notional Amount of Foreign Currency Derivatives [Member]
HUF
|
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Derivative [Line Items] | |||||||
Notional Value of Copper Derivatives | 55 | 40 | 30 | 30 | |||
Notional Amount of Foreign Currency Derivatives | ¥ 300,000,000 | $ 900,000 | 290,000,000 |
Accumulated Other Comprehensive Income (Loss) (Tables)
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Jun. 30, 2013
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Accumulated Other Comprehensive Income (Loss) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Balances Related to Each Component of Accumulated Other Comprehensive Income (Loss) | The changes of accumulated other comprehensive income (loss) by component at June 30, 2013 were as follows:
(1) Net of taxes of $11,613 and $22,371 for the periods ended June 30, 2013 and December 31, 2012, respectively. (2) Net of taxes of $87 and $127 for the periods ended June 30, 2013 and December 31, 2012, respectively. The changes of accumulated other comprehensive income (loss) by component at June 30, 2012 were as follows:
(3) Net of taxes of $20,799 and $20,799 for the periods ended June 30, 2012 and December 31, 2011, respectively. (4) Net of taxes of $23 and $0 for the periods ended June 30, 2012 and December 31, 2011, respectively. (5) Net of taxes of $1,555 for the period ended December 31, 2011. |
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Reclassification out of Accumulated Other Comprehensive Income | The reclassifications out of accumulated other comprehensive income (loss) for the six months ended June 30, 2013 were as follows:
(6) These accumulated other comprehensive income components are included in the computation of net periodic pension cost. See Note 8 - "Pension Benefit and Other Postretirement Benefit Plans" for additional details. The reclassifications out of accumulated other comprehensive income (loss) for the six months ended June 30, 2012 were as follows:
(6) These accumulated other comprehensive income components are included in the computation of net periodic pension cost. See Note 8 - "Pension Benefit and Other Postretirement Benefit Plans" for additional details. |
Segment Information (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segment Information | The following table sets forth the information about our reportable segments for the periods indicated:
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Debt - Fixed Charge Metrics (Detail)
|
6 Months Ended | 10 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Mar. 31, 2013
|
Dec. 31, 2012
|
Sep. 30, 2012
|
Jun. 30, 2012
|
Dec. 31, 2011
|
Jun. 30, 2013
Amended Credit Facility [Member]
|
Dec. 31, 2012
Amended Credit Facility [Member]
|
|
Debt Disclosure [Line Items] | ||||||||
Minimum fixed charge coverage ratio in 2012 | 1.25 | |||||||
Minimum fixed charge coverage ratio in 2013 | 1.50 | |||||||
Minimum fixed charge coverage ratio in 2014 and thereafter | 1.75 | |||||||
Covenant Limit | 1.50 | 1.50 | 1.25 | 1.25 | 1.25 | 2.50 | ||
Actual FCCR | 2.06 | 2.27 | 2.18 | 1.93 | 2.09 |
Fair Value Measurements - Additional Information (Detail) (Auction Rate Securities [Member], USD $)
In Millions, unless otherwise specified |
3 Months Ended |
---|---|
Mar. 31, 2012
|
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Net proceeds from liquidation of auction rate security | $ 25.4 |
Loss on liquidation of the securities | 3.2 |
Impairment on auction rate securities | 0.9 |
Securities Redeemed at Less Than Par Value [Member]
|
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Par value of auction rate securities redeemed | 29.5 |
Securities Redeemed at Par Value [Member]
|
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Par value of auction rate securities redeemed | $ 24.9 |
Debt - Aggregate Payments (Detail) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
|
---|---|
Debt Instrument [Line Items] | |
2011 | $ 2.5 |
2012 | 7.5 |
2013 | 12.5 |
2014 | 17.5 |
2015 | 35.0 |
2016 | $ 25.0 |
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