þ | ANNUAL 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 Incorporation or Organization) | (I. R. S. Employer Identification No.) |
2225 W. Chandler Blvd., Chandler, Arizona | 85224-6155 |
(Address of Principal Executive Offices) | (Zip Code) |
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, $1 Par Value | New York Stock Exchange | |
Securities registered pursuant to Section 12(g) of the Act: None |
Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o |
Smaller reporting company o | Emerging growth company o |
TABLE OF CONTENTS | ||
Part I | ||
Item 1. | Business | |
Item 1A. | Risk Factors | |
Item 1B. | Unresolved Staff Comments | |
Item 2. | Properties | |
Item 3. | Legal Proceedings | |
Item 4. | Mine Safety Disclosures | |
Part II | ||
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | |
Item 6. | Selected Financial Data | |
Item 7. | Management’s Discussion and Analysis of Results of Operations and Financial Position | |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | |
Item 8. | Financial Statements and Supplementary Data | |
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | |
Item 9A. | Controls and Procedures | |
Item 9B. | Other Information | |
Part III | ||
Item 10. | Directors, Executive Officers and Corporate Governance | |
Item 11. | Executive Compensation | |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | |
Item 13. | Certain Relationships and Related Transactions, and Director Independence | |
Item 14. | Principal Accountant Fees and Services | |
Part IV | ||
Item 15. | Exhibits, Financial Statement Schedules | |
Item 16. | Form 10-K Summary | |
Signatures |
• | failure to capitalize on, volatility within, or other adverse changes with respect to the Company’s growth drivers, including advanced mobility and advanced connectivity, such as delays in adoption or implementation of new technologies; |
• | uncertain business, economic and political conditions in the United States and abroad, particularly in China, South Korea, Germany, Hungary and Belgium, where we maintain significant manufacturing, sales or administrative operations; |
• | the ongoing trade policy dispute between the United States and China, as well as adverse changes in trade policy, tariff regulation or other trade restrictions; |
• | fluctuations in foreign currency exchange rates; |
• | our ability to develop innovative products and have them incorporated into end-user products and systems; |
• | the extent to which end-user products and systems incorporating our products achieve commercial success; |
• | the ability of our sole or limited source suppliers to deliver certain key raw materials, including commodities, to us in a timely manner; |
• | intense global competition affecting both our existing products and products currently under development; |
• | failure to realize, or delays in the realization of, anticipated benefits of acquisitions and divestitures due to, among other things, the existence of unknown liabilities or difficulty integrating acquired businesses; |
• | our ability to attract and retain management and skilled technical personnel; |
• | our ability to protect our proprietary technology from infringement by third parties and/or allegations that our technology infringes third party rights; |
• | changes in effective tax rates or tax laws and regulations in the jurisdictions in which we operate; |
• | failure to comply with financial and restrictive covenants in our credit agreement or restrictions on our operational and financial flexibility due to such covenants; |
• | the outcome of ongoing and future litigation, including our asbestos-related product liability litigation; |
• | changes in environmental laws and regulations applicable to our business; and |
• | disruptions in, or breaches of, our information technology systems. |
Name | Age | Present Position | Year Appointed to Present Position | Other Relevant Positions Held |
Bruce D. Hoechner | 59 | President and Chief Executive Officer, Director, Principal Executive Officer | 2011 | |
Michael M. Ludwig | 57 | Senior Vice President, Chief Financial Officer and Treasurer, Principal Financial Officer | 2018 | Senior Vice President and Chief Financial Officer, FormFactor, Inc., from May 2011 to March 2018. |
Marc J. Beulque | 54 | Vice President, Global Operations | 2016 | Vice President, Power Electronics Solutions Operations and Research and Development, Rogers, from June 2013 to April 2016; General Manager, Power Distribution Systems from December 2011 to May 2013. Mr. Beulque was promoted to Vice President, Global Operations in April 2016 and was appointed as an executive officer in February 2018 as a result of an expansion of his responsibility to oversee all global operations of the Company. |
Benjamin M. Buckley | 46 | Vice President and Chief Human Resources Officer | 2019 | Associate General Counsel and Director of Global Compliance and Integrity, Rogers, from October 2014 to January 2019. President and Chief Executive Officer, Verge America Ltd., from May 2013 to October 2014. |
Robert C. Daigle | 55 | Senior Vice President and Chief Technology Officer | 2009 | |
Jeffrey M. Grudzien | 57 | Senior Vice President and General Manager, Advanced Connectivity Solutions | 2017 | Vice President, Advanced Connectivity Solutions, Rogers, from February 2012 to February 2017. |
Jay B. Knoll | 55 | Senior Vice President, Corporate Development, General Counsel and Secretary | 2017 | Vice President and General Counsel, Rogers, from November 2014 to February 2017; Senior Vice President, General Counsel PKC Group Oyj - North America from June 2012 to November 2014. |
Helen Zhang | 55 | Senior Vice President and General Manager, Power Electronics Solutions and President, Rogers Asia | 2017 | Vice President, Power Electronics Solutions and President, Rogers Asia, Rogers, from May 2012 to February 2017. |
• | foreign currency fluctuations, particularly in the value of the Euro, the Hungarian forint, the Japanese yen, the Chinese yuan and the South Korean won against the U.S. dollar; |
• | economic and political instability, due to regional or country-specific events or changes in relations between the United States and the countries in which we operate; |
• | accounts receivable practices across countries, including longer payment cycles; |
• | export control or customs matters, the ongoing trade policy dispute between the United States and China and adverse changes in trade policy, tariff regulations or other trade restrictions; |
• | complications in complying, and failure to comply, with a variety of foreign laws, including due to unexpected changes in the laws or regulations of the countries in which we operate; |
• | failure to comply with the Foreign Corrupt Practices Act or other applicable anti-corruption laws; |
• | greater difficulty protecting our intellectual property; |
• | compliance with foreign employment regulations, as well as work stoppages and labor and union disputes. |
• | innovation; |
• | historical customer relationships; |
• | product quality, reliability, performance and price; |
• | technical and engineering service and support; |
• | breadth of product line; and |
• | manufacturing capabilities. |
• | decisions to redeploy foreign earnings outside of their country of origin for which we have not previously provided for income taxes; |
• | increased scrutiny of our transactions by taxing authorities; |
• | changes in the geographic mix of our profits among jurisdictions with differing statutory income tax rates; |
• | ability to utilize, or changes in the valuation of, deferred tax assets; and |
• | changes in tax laws and regulations or issuance of new interpretations of the law applicable to us. |
Location | Floor Space (Square Feet) | Type of Facility | Leased / Owned | Operating Segment | ||||
United States | ||||||||
Chandler, Arizona | 147,000 | Manufacturing | Owned | ACS | ||||
Chandler, Arizona | 105,100 | Manufacturing | Owned | ACS | ||||
Chandler, Arizona | 100,000 | Manufacturing | Owned | ACS | ||||
Chandler, Arizona | 75,000 | Administrative Offices | Owned | All | ||||
Chandler, Arizona | 17,000 | Warehouse / Administrative Offices | Leased through 3/2020 | ACS | ||||
Rogers, Connecticut | 388,100 | Manufacturing / Administrative Offices | Owned | All | ||||
Moosup, Connecticut | 185,500 | Manufacturing | Owned | EMS | ||||
Woodstock, Connecticut | 150,600 | Manufacturing | Owned | EMS | ||||
Carol Stream, Illinois | 216,600 | Manufacturing | Owned | EMS | ||||
Bear, Delaware | 125,000 | Manufacturing / Administrative Offices | Owned | ACS & EMS | ||||
Burlington, Massachusetts | 6,000 | R&D Lab / Administrative Offices | Leased through 2/2021 | All | ||||
Narragansett, Rhode Island | 84,600 | Manufacturing | Owned | EMS | ||||
North Kingston, Rhode Island | 10,000 | Warehouse | Leased through 3/2020 | EMS | ||||
Santa Fe Springs, California | 42,000 | Manufacturing / Administrative Offices | Leased through 3/2019 | EMS | ||||
Europe | ||||||||
Eschenbach, Germany | 149,000 | Manufacturing / Administrative Offices | Leased through 6/2021 | PES | ||||
Eschenbach, Germany | 24,100 | Warehouse / Administrative Offices | Leased through 3/2020 | PES | ||||
Eschenbach, Germany | 1,050 | Warehouse | Leased through 3/2020 | PES | ||||
Evergem, Belgium | 122,000 | Manufacturing / Administrative Offices | Owned | ACS & PES | ||||
Evergem, Belgium | 55,700 | Warehouse / Administrative Offices | Leased through 5/2021 | ACS & PES | ||||
Ghent, Belgium | 45,000 | Warehouse | Leased through 3/2020 | ACS & EMS | ||||
Budapest, Hungary | 64,000 | Manufacturing | Leased through 2/2023 | PES | ||||
Asia | ||||||||
Suzhou, China | 821,000 | Manufacturing / Administrative Offices | Owned | All | ||||
Ansan, South Korea | 40,000 | Manufacturing | Leased through 10/2021 | EMS |
(Dollars in thousands, except per share amounts) | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||
Financial Results | |||||||||||||||||||
Net sales | $ | 879,091 | $ | 821,043 | $ | 656,314 | $ | 641,443 | $ | 610,911 | |||||||||
Income before income tax expense | $ | 110,589 | $ | 132,925 | $ | 82,280 | $ | 66,173 | $ | 81,224 | |||||||||
Net income | $ | 87,651 | $ | 80,459 | $ | 48,283 | $ | 46,320 | $ | 53,412 | |||||||||
Per Share Data | |||||||||||||||||||
Basic earnings per share | $ | 4.77 | $ | 4.43 | $ | 2.68 | $ | 2.52 | $ | 2.94 | |||||||||
Diluted earnings per share | $ | 4.70 | $ | 4.34 | $ | 2.65 | $ | 2.48 | $ | 2.86 | |||||||||
Book value | $ | 46.12 | $ | 41.99 | $ | 35.28 | $ | 32.55 | $ | 31.91 | |||||||||
Financial Position | |||||||||||||||||||
Current assets | $ | 485,786 | $ | 454,523 | $ | 458,401 | $ | 428,665 | $ | 438,174 | |||||||||
Current liabilities | $ | 107,180 | $ | 113,808 | $ | 101,185 | $ | 78,648 | $ | 120,445 | |||||||||
Ratio of current assets to current liabilities | 4.5 to 1 | 4.0 to 1 | 4.5 to 1 | 5.5 to 1 | 3.6 to 1 | ||||||||||||||
Cash and cash equivalents | $ | 167,738 | $ | 181,159 | $ | 227,767 | $ | 204,586 | $ | 237,375 | |||||||||
Net working capital | $ | 378,606 | $ | 340,715 | $ | 357,216 | $ | 350,017 | $ | 317,729 | |||||||||
Property, plant and equipment, net | $ | 242,759 | $ | 179,611 | $ | 176,916 | $ | 178,661 | $ | 150,420 | |||||||||
Total assets | $ | 1,279,344 | $ | 1,125,134 | $ | 1,056,500 | $ | 930,355 | $ | 840,435 | |||||||||
Borrowings under revolving credit facility | $ | 228,482 | $ | 130,982 | $ | 235,877 | $ | 173,557 | $ | 25,000 | |||||||||
Shareholders’ equity | $ | 848,324 | $ | 766,573 | $ | 635,786 | $ | 584,582 | $ | 587,281 | |||||||||
Borrowings under revolving credit facility as a percentage of shareholders’ equity | 26.9 | % | 17.1 | % | 37.1 | % | 29.7 | % | 4.3 | % | |||||||||
Other Data | |||||||||||||||||||
Depreciation and amortization | $ | 50,073 | $ | 44,099 | $ | 37,847 | $ | 34,054 | $ | 26,268 | |||||||||
Research and development expenses | $ | 33,075 | $ | 29,547 | $ | 28,582 | $ | 27,644 | $ | 22,878 | |||||||||
Capital expenditures | $ | 90,549 | $ | 27,215 | $ | 18,136 | $ | 24,837 | $ | 28,755 | |||||||||
Number of employees (approximate) | 3,700 | 3,400 | 3,100 | 2,800 | 2,800 | ||||||||||||||
Net sales per employee | $ | 238 | $ | 241 | $ | 212 | $ | 229 | $ | 218 | |||||||||
Number of shares outstanding at year end | 18,395 | 18,255 | 18,021 | 17,957 | 18,403 |
• | Our net sales increase in 2018 was attributable to increases in net sales in our EMS and PES strategic operating segments. Net sales were favorably impacted by higher net sales in electric and hybrid electric vehicle and micro-channel cooler applications in our PES operating segment and higher net sales in portable electronics and automotive applications in our EMS operating segment, partially offset by lower net sales in wireless 4G LTE and portable electronics applications in our ACS operating segment. The increase in net sales was also driven in part by net sales of $13.7 million, or 1.7%, related to our acquisition of Griswold, as well as $15.5 million, or 1.9%, of favorable impacts from appreciation in value of the Euro and Renminbi relative to the U.S. dollar. The adoption of new accounting guidance for revenue recognition favorably impacted net sales in 2018 by $4.6 million, or 0.6%. |
• | Our gross margin decreased approximately 340 basis points to 35.4% in 2018 from 38.8% in 2017. Gross margin was unfavorably impacted as a result of strategic investments in capacity optimization and infrastructure to support future growth initiatives, increased costs for raw materials, facility consolidation and new product launch, as well as unfavorable |
• | Our operating income decreased 12.7% to $112.7 million in 2018, as compared to $129.1 million in 2017. The decrease was primarily due to a decrease in gross margin, as well as a $2.4 million increase in selling, general & administrative (SG&A) expenses and a $3.5 million increase in research and development (R&D) expenses, furthered by a decrease in other operating income of $2.2 million. The increase in SG&A expenses was driven by increases in acquisition expenses as well as other intangible assets amortization related to Griswold. SG&A expenses decreased as a percentage of net sales from 19.7% in 2017 to 18.7% in 2018. The decrease in other operating income was primarily due to the $3.5 million of depreciation expense on leased assets netted against the $0.9 million of imputed income related to the Isola asset acquisition. |
• | We are an innovation company, and in 2018 we continued our investment in R&D, with R&D expenses comprising 3.8% of net sales, an increase of approximately 20 basis points from 2017. R&D expenses were $33.1 million in 2018, as compared to $29.5 million in 2017. We have made concerted efforts to realign our R&D organization to better fit the expected future direction of our Company, including dedicating resources to focus on current product extensions and enhancements to meet our expected short-term and long-term technology needs. |
• | We acquired Griswold in July 2018, as we continue to execute on our synergistic acquisition strategy. Acquisitions are a core part of our growth strategy, and the Griswold acquisition extends the product portfolio and technology capabilities of our EMS operating segment. We financed our acquisition of Griswold with $82.5 million in borrowings under our revolving credit facility. As a result, borrowings under our revolving credit facility increased in 2018. |
• | In preparation for expected demand in advanced connectivity and advanced mobility, we acquired a production facility and related machinery and equipment from Isola in August 2018. We intend to use the purchased assets for capacity expansion within our ACS operating segment in contemplation of expected future demand from our 5G customers. We financed the asset acquisition with $43.4 million in cash on hand. |
2018 | 2017 | 2016 | ||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | ||
Gross margin | 35.4 | % | 38.8 | % | 38.0 | % | ||
Selling, general and administrative expenses | 18.7 | % | 19.7 | % | 21.2 | % | ||
Research and development expenses | 3.8 | % | 3.6 | % | 4.4 | % | ||
Restructuring and impairment charges | 0.5 | % | 0.4 | % | 0.1 | % | ||
Other operating (income) expense, net | (0.4 | )% | (0.6 | )% | — | % | ||
Operating income | 12.8 | % | 15.7 | % | 12.3 | % | ||
Equity income in unconsolidated joint ventures | 0.6 | % | 0.6 | % | 0.6 | % | ||
Other income (expense), net | (0.1 | )% | 0.6 | % | 0.2 | % | ||
Interest expense, net | (0.7 | )% | (0.7 | )% | (0.6 | )% | ||
Income before income tax expense | 12.6 | % | 16.2 | % | 12.5 | % | ||
Income tax expense | 2.6 | % | 6.4 | % | 5.1 | % | ||
Net income | 10.0 | % | 9.8 | % | 7.4 | % |
Net Sales | ||||||||||
(Dollars in thousands) | 2018 | 2017 | Percent Change | |||||||
Net sales | $ | 879,091 | $ | 821,043 | 7.1% |
Gross Margin | ||||||||||
(Dollars in thousands) | 2018 | 2017 | Percent Change | |||||||
Gross margin | $ | 310,783 | $ | 318,575 | (2.4)% | |||||
Percentage of net sales | 35.4 | % | 38.8 | % |
Selling, General and Administrative Expenses | ||||||||||
(Dollars in thousands) | 2018 | 2017 | Percent Change | |||||||
Selling, general and administrative expenses | $ | 164,046 | $ | 161,651 | 1.5% | |||||
Percentage of net sales | 18.7 | % | 19.7 | % |
Research and Development Expenses | ||||||||||
(Dollars in thousands) | 2018 | 2017 | Percent Change | |||||||
Research and development expenses | $ | 33,075 | $ | 29,547 | 11.9% | |||||
Percentage of net sales | 3.8 | % | 3.6 | % |
Restructuring and Impairment Charges and Other Operating (Income) Expense, Net | ||||||||||
(Dollars in thousands) | 2018 | 2017 | Percent Change | |||||||
Restructuring and impairment charges | $ | 4,038 | $ | 3,567 | 13.2% | |||||
Other operating (income) expense, net | $ | (3,087 | ) | $ | (5,329 | ) | (42.1)% |
Equity Income in Unconsolidated Joint Ventures | ||||||||||
(Dollars in thousands) | 2018 | 2017 | Percent Change | |||||||
Equity income in unconsolidated joint ventures | $ | 5,501 | $ | 4,898 | 12.3% |
Other Income (Expense), Net | ||||||||||
(Dollars in thousands) | 2018 | 2017 | Percent Change | |||||||
Other income (expense), net | $ | (994 | ) | $ | 5,019 | (119.8)% |
Interest Expense, Net | ||||||||||
(Dollars in thousands) | 2018 | 2017 | Percent Change | |||||||
Interest expense, net | $ | (6,629 | ) | $ | (6,131 | ) | 8.1% |
Income Tax Expense | ||||||||||
(Dollars in thousands) | 2018 | 2017 | Percent Change | |||||||
Income tax expense | $ | 22,938 | $ | 52,466 | (56.3)% | |||||
Effective tax rate | 20.7 | % | 39.5 | % |
Net Sales | ||||||||||
(Dollars in thousands) | 2017 | 2016 | Percent Change | |||||||
Net sales | $ | 821,043 | $ | 656,314 | 25.1% |
Gross Margin | ||||||||||
(Dollars in thousands) | 2017 | 2016 | Percent Change | |||||||
Gross Margin | $ | 318,575 | $ | 249,485 | 27.7% | |||||
Percentage of sales | 38.8 | % | 38.0 | % |
Selling, General and Administrative Expenses | ||||||||||
(Dollars in thousands) | 2017 | 2016 | Percent Change | |||||||
Selling, general and administrative expenses | $ | 161,651 | $ | 139,272 | 16.1% | |||||
Percentage of net sales | 19.7 | % | 21.2 | % |
Research and Development Expenses | ||||||||||
(Dollars in thousands) | 2017 | 2016 | Percent Change | |||||||
Research and development expenses | $ | 29,547 | $ | 28,582 | 3.4% | |||||
Percentage of net sales | 3.6 | % | 4.4 | % |
Restructuring and Impairment Charges and Other Operating (Income) Expense, Net | ||||||||||
(Dollars in thousands) | 2017 | 2016 | Percent Change | |||||||
Restructuring and impairment charges | $ | 3,567 | $ | 734 | 386.0% | |||||
Other operating (income) expense, net | $ | (5,329 | ) | $ | — | N/A |
Equity Income in Unconsolidated Joint Ventures | ||||||||||
(Dollars in thousands) | 2017 | 2016 | Percent Change | |||||||
Equity income in unconsolidated joint ventures | $ | 4,898 | $ | 4,146 | 18.1% |
Other Income (Expense), Net | ||||||||||
(Dollars in thousands) | 2017 | 2016 | Percent Change | |||||||
Other income (expense), net | $ | 5,019 | $ | 1,167 | (330.1)% |
Interest Expense, Net | ||||||||||
(Dollars in thousands) | 2017 | 2016 | Percent Change | |||||||
Interest expense, net | $ | (6,131 | ) | $ | (3,930 | ) | 56.0% |
Income Tax Expense | ||||||||||
(Dollars in thousands) | 2017 | 2016 | Percent Change | |||||||
Income tax expense | $ | 52,466 | $ | 33,997 | 54.3% | |||||
Effective tax rate | 39.5 | % | 41.3 | % |
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||||
Net sales | $ | 294,154 | $ | 301,092 | $ | 277,787 | |||||
Operating income | $ | 33,827 | $ | 55,410 | $ | 42,455 |
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||||
Net sales | $ | 341,364 | $ | 312,661 | $ | 203,181 | |||||
Operating income | $ | 52,502 | $ | 50,908 | $ | 25,884 |
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||||
Net sales | $ | 223,338 | $ | 184,954 | $ | 152,367 | |||||
Operating income | $ | 19,648 | $ | 15,668 | $ | 5,229 |
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||||
Net sales | $ | 20,235 | $ | 22,336 | $ | 22,979 | |||||
Operating income | $ | 6,734 | $ | 7,153 | $ | 7,329 |
(Dollars in thousands) | As of December 31, | ||||||
Key Financial Position Accounts: | 2018 | 2017 | |||||
Cash and cash equivalents | $ | 167,738 | $ | 181,159 | |||
Accounts receivable, less allowance for doubtful accounts | 144,623 | 140,562 | |||||
Contract assets | 22,728 | — | |||||
Inventories | 132,637 | 112,557 | |||||
Borrowings under revolving credit facility | 228,482 | 130,982 |
As of December 31, | |||||||||||
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||||
United States | $ | 41,833 | $ | 35,653 | $ | 95,481 | |||||
Europe | 31,244 | 41,307 | 37,791 | ||||||||
Asia | 94,661 | 104,199 | 94,495 | ||||||||
Total cash and cash equivalents | $ | 167,738 | $ | 181,159 | $ | 227,767 |
• | Accounts receivable, less allowance for doubtful accounts increased 2.9% to $144.6 million as of December 31, 2018, from $140.6 million as of December 31, 2017. The increase was primarily due to higher net sales at the end of 2018 compared to at the end of the 2017. |
• | We recorded contract assets of $22.7 million as of December 31, 2018 related to the adoption of ASU 2014-09. For additional information, refer to “Note 16 – Revenue from Contracts with Customers” to “Item 8. Financial Statements and Supplementary Data.” |
• | Inventories increased 17.8% to $132.6 million as of December 31, 2018, from $112.6 million as of December 31, 2017, as a result of our acquisition of Griswold, additional purchases as a result of changes in vendor allocations, supplier transition, safety stock replenishment and raw material cost increases, partially offset by the impact from the adoption of new accounting guidance for revenue recognition. For additional information regarding the impact of the new revenue recognition adoption, refer to “Note 16 – Revenue from Contracts with Customers” to “Item 8. Financial Statements and Supplementary Data.” |
• | Accrued employee benefits and compensation decreased to $30.5 million as of December 31, 2018, from $39.4 million as of December 31, 2017. This decrease is primarily due to incentive compensation payouts of $18.2 million that occurred during 2018, partially offset by $5.8 million of accruals for projected incentive compensation payouts for the 2018 performance year. |
• | Goodwill increased 11.7% to $264.9 million as of December 31, 2018, from $237.1 million as of December 31, 2017, primarily due to the acquisition of Griswold in July 2018. |
• | Other intangible assets, net of amortization, increased 10.4% to $177.0 million as of December 31, 2018, from $160.3 million as of December 31, 2017, primarily due to the acquisition of Griswold in July 2018. |
(Dollars in thousands) | For the year ended December 31, | ||||||||||
Key Cash Flow Measures: | 2018 | 2017 | 2016 | ||||||||
Net cash provided by operating activities | $ | 66,820 | $ | 138,982 | $ | 116,967 | |||||
Net cash used in investing activities | (167,437 | ) | (78,270 | ) | (151,804 | ) | |||||
Net cash provided by (used in) financing activities | 88,682 | (113,187 | ) | 57,869 |
Payments Due by Period | |||||||||||||||||||
(Dollars in thousands) | Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | ||||||||||||||
Operating leases | $ | 11,217 | $ | 3,951 | $ | 5,268 | $ | 1,998 | $ | — | |||||||||
Capital leases | 5,344 | 543 | 4,801 | — | — | ||||||||||||||
Interest payments on capital lease | 295 | 125 | 170 | — | — | ||||||||||||||
Inventory purchase obligations | 344 | 344 | — | — | — | ||||||||||||||
Capital commitments(1) | 17,606 | 17,606 | — | — | — | ||||||||||||||
Borrowings under revolving credit facility(2) | 228,482 | — | — | 228,482 | — | ||||||||||||||
Interest payments on outstanding borrowings(3) | 28,000 | 8,955 | 17,851 | 1,194 | — | ||||||||||||||
Retiree health and life insurance benefits | 1,880 | 334 | 436 | 285 | 825 | ||||||||||||||
Total | $ | 293,168 | $ | 31,858 | $ | 28,526 | $ | 231,959 | $ | 825 |
(1) | This amount represents non-cancelable vendor purchase commitments. |
(2) | All outstanding borrowings under our revolving credit facility are due on February 17, 2022. |
(3) | Estimated future interest payments are based on a leverage ratio based spread that ranges from 1.375% to 1.75%, plus projected forward 1-month LIBOR rates, and have been adjusted for the impact of the floating to fixed rate interest rate swap on $75.0 million of the outstanding borrowings under our revolving credit facility. For additional information, refer to “Note 3 – Hedging Transactions and Derivative Financial Instruments” to “Item 8. Financial Statements and Supplementary Data.” |
September 17, 2018 | February 8, 2018 | February 9, 2017 | |||
Expected volatility | 36.6% | 34.8% | 33.6% | ||
Expected term (in years) | 3.0 | 3.0 | 3.0 | ||
Risk-free interest rate | 2.85% | 2.28% | 1.38% |
• | Foreign Currency Risk |
• | Interest Rate Risk |
• | Commodity Risk |
/s/ PricewaterhouseCoopers LLP |
Hartford, Connecticut |
February 20, 2019 |
We have served as the Company’s auditor since 2015. |
(Dollars and shares in thousands, except per share amounts) | 2018 | 2017 | 2016 | ||||||||
Net sales | $ | 879,091 | $ | 821,043 | $ | 656,314 | |||||
Cost of sales | 568,308 | 502,468 | 406,829 | ||||||||
Gross margin | 310,783 | 318,575 | 249,485 | ||||||||
Selling, general and administrative expenses | 164,046 | 161,651 | 139,272 | ||||||||
Research and development expenses | 33,075 | 29,547 | 28,582 | ||||||||
Restructuring and impairment charges | 4,038 | 3,567 | 734 | ||||||||
Other operating (income) expense, net | (3,087 | ) | (5,329 | ) | — | ||||||
Operating income | 112,711 | 129,139 | 80,897 | ||||||||
Equity income in unconsolidated joint ventures | 5,501 | 4,898 | 4,146 | ||||||||
Other income (expense), net | (994 | ) | 5,019 | 1,167 | |||||||
Interest expense, net | (6,629 | ) | (6,131 | ) | (3,930 | ) | |||||
Income before income tax expense | 110,589 | 132,925 | 82,280 | ||||||||
Income tax expense | 22,938 | 52,466 | 33,997 | ||||||||
Net income | $ | 87,651 | $ | 80,459 | $ | 48,283 | |||||
Basic earnings per share | $ | 4.77 | $ | 4.43 | $ | 2.68 | |||||
Diluted earnings per share | $ | 4.70 | $ | 4.34 | $ | 2.65 | |||||
Shares used in computing: | |||||||||||
Basic earnings per share | 18,374 | 18,154 | 17,991 | ||||||||
Diluted earnings per share | 18,659 | 18,547 | 18,223 |
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||||
Net income | $ | 87,651 | $ | 80,459 | $ | 48,283 | |||||
Foreign currency translation adjustment | (12,505 | ) | 28,463 | (5,081 | ) | ||||||
Derivative instrument designated as cash flow hedge: | |||||||||||
Change in unrealized gain (loss) before reclassifications, net of tax (Note 4) | 519 | (6 | ) | — | |||||||
Unrealized (gain) loss reclassified into earnings, net of tax (Note 4) | (191 | ) | 32 | 11 | |||||||
Pension and other postretirement benefits: | |||||||||||
Actuarial net gain (loss) incurred, net of tax (Note 4) | (1,678 | ) | (1,481 | ) | 1,106 | ||||||
Amortization of gain, net of tax (Note 4) | 176 | 99 | 160 | ||||||||
Other comprehensive income (loss) | (13,679 | ) | 27,107 | (3,804 | ) | ||||||
Comprehensive income | $ | 73,972 | $ | 107,566 | $ | 44,479 |
(Dollars and share amounts in thousands, except par value of capital stock) | As of December 31, | ||||||
2018 | 2017 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 167,738 | $ | 181,159 | |||
Accounts receivable, less allowance for doubtful accounts of $1,354 and $1,525 | 144,623 | 140,562 | |||||
Contract assets | 22,728 | — | |||||
Inventories | 132,637 | 112,557 | |||||
Prepaid income taxes | 3,093 | 3,087 | |||||
Asbestos-related insurance receivables, current portion | 4,138 | 5,682 | |||||
Assets held for sale | — | 896 | |||||
Other current assets | 10,829 | 10,580 | |||||
Total current assets | 485,786 | 454,523 | |||||
Property, plant and equipment, net of accumulated depreciation of $317,414 and $289,909 | 242,759 | 179,611 | |||||
Investments in unconsolidated joint ventures | 18,667 | 18,324 | |||||
Deferred income taxes | 8,236 | 6,008 | |||||
Goodwill | 264,885 | 237,107 | |||||
Other intangible assets, net of amortization | 177,008 | 160,278 | |||||
Asbestos-related insurance receivables, non-current portion | 59,685 | 63,511 | |||||
Other long-term assets | 22,318 | 5,772 | |||||
Total assets | $ | 1,279,344 | $ | 1,125,134 | |||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 40,321 | $ | 36,116 | |||
Accrued employee benefits and compensation | 30,491 | 39,394 | |||||
Accrued income taxes payable | 7,032 | 6,408 | |||||
Capital lease obligations, current portion | 420 | 579 | |||||
Asbestos-related liabilities, current portion | 5,547 | 5,682 | |||||
Other accrued liabilities | 23,369 | 25,629 | |||||
Total current liabilities | 107,180 | 113,808 | |||||
Borrowings under revolving credit facility | 228,482 | 130,982 | |||||
Capital lease obligations, non-current portion | 4,629 | 5,873 | |||||
Pension liability | 270 | 8,720 | |||||
Retiree health care and life insurance benefits | 1,469 | 1,685 | |||||
Asbestos-related liabilities, non-current portion | 64,799 | 70,500 | |||||
Non-current income tax | 8,418 | 12,823 | |||||
Deferred income taxes | 10,806 | 10,706 | |||||
Other long-term liabilities | 4,967 | 3,464 | |||||
Commitments and contingencies (Note 13) | |||||||
Shareholders’ equity | |||||||
Capital stock - $1 par value; 50,000 authorized shares; 18,395 and 18,255 shares issued and outstanding | 18,395 | 18,255 | |||||
Additional paid-in capital | 132,360 | 128,933 | |||||
Retained earnings | 776,403 | 684,540 | |||||
Accumulated other comprehensive loss | (78,834 | ) | (65,155 | ) | |||
Total shareholders' equity | 848,324 | 766,573 | |||||
Total liabilities and shareholders' equity | $ | 1,279,344 | $ | 1,125,134 |
(Dollars in thousands) | Capital Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Shareholders’ Equity | ||||||||||||||
Balance as of December 31, 2015 | $ | 17,957 | $ | 112,017 | $ | 543,066 | $ | (88,458 | ) | $ | 584,582 | ||||||||
Net income | — | — | 48,283 | — | 48,283 | ||||||||||||||
Other comprehensive income (loss) | — | — | — | (3,804 | ) | (3,804 | ) | ||||||||||||
Shares issued for vested restricted stock units, net of cancellations for tax withholding | 63 | (1,440 | ) | — | — | (1,377 | ) | ||||||||||||
Stock options exercised | 95 | 4,048 | — | — | 4,143 | ||||||||||||||
Shares issued for employee stock purchase plan | 23 | 835 | — | — | 858 | ||||||||||||||
Shares issued to directors | 24 | (24 | ) | — | — | — | |||||||||||||
Equity compensation expense | — | 11,275 | — | — | 11,275 | ||||||||||||||
Tax adjustments on share-based compensation | — | (179 | ) | — | — | (179 | ) | ||||||||||||
Shares repurchased | (141 | ) | (7,854 | ) | — | — | (7,995 | ) | |||||||||||
Balance as of December 31, 2016 | 18,021 | 118,678 | 591,349 | (92,262 | ) | 635,786 | |||||||||||||
Net income | — | — | 80,459 | — | 80,459 | ||||||||||||||
Other comprehensive income (loss) | — | — | — | 27,107 | 27,107 | ||||||||||||||
Shares issued for vested restricted stock units, net of cancellations for tax withholding | 121 | (5,430 | ) | — | — | (5,309 | ) | ||||||||||||
Stock options exercised | 83 | 3,002 | — | 3,085 | |||||||||||||||
Shares issued for employee stock purchase plan | 15 | 880 | — | 895 | |||||||||||||||
Shares issued to directors | 15 | (15 | ) | — | — | ||||||||||||||
Equity compensation expense | — | 11,818 | — | 11,818 | |||||||||||||||
Cumulative-effect adjustment of change in accounting for share-based compensation | — | — | 12,732 | — | 12,732 | ||||||||||||||
Shares repurchased | — | — | — | — | — | ||||||||||||||
Balance as of December 31, 2017 | 18,255 | 128,933 | 684,540 | (65,155 | ) | 766,573 | |||||||||||||
Net income | — | — | 87,651 | — | 87,651 | ||||||||||||||
Other comprehensive income (loss) | — | — | — | (13,679 | ) | (13,679 | ) | ||||||||||||
Shares issued for vested restricted stock units, net of cancellations for tax withholding | 117 | (6,717 | ) | — | — | (6,600 | ) | ||||||||||||
Stock options exercised | 22 | 839 | — | — | 861 | ||||||||||||||
Shares issued for employee stock purchase plan | 12 | 1,070 | — | — | 1,082 | ||||||||||||||
Shares issued to directors | 12 | (12 | ) | — | — | — | |||||||||||||
Equity compensation expense | — | 11,223 | — | — | 11,223 | ||||||||||||||
Cumulative-effect adjustment of revenue recognition | — | — | 4,212 | — | 4,212 | ||||||||||||||
Shares repurchased | (23 | ) | (2,976 | ) | — | — | (2,999 | ) | |||||||||||
Balance as of December 31, 2018 | $ | 18,395 | $ | 132,360 | $ | 776,403 | $ | (78,834 | ) | $ | 848,324 |
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||||
Operating Activities: | |||||||||||
Net income | $ | 87,651 | $ | 80,459 | $ | 48,283 | |||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||
Depreciation and amortization | 50,073 | 44,099 | 37,847 | ||||||||
Equity compensation expense | 11,223 | 11,818 | 11,275 | ||||||||
Deferred income taxes | (3,325 | ) | 17,513 | 7,382 | |||||||
Equity in undistributed income of unconsolidated joint ventures | (5,501 | ) | (4,898 | ) | (4,146 | ) | |||||
Dividends received from unconsolidated joint ventures | 4,431 | 3,529 | 2,757 | ||||||||
Pension and other postretirement benefits | (1,552 | ) | (1,561 | ) | (2,822 | ) | |||||
Asbestos-related charges | 704 | 3,400 | 313 | ||||||||
(Gain) loss on sale or disposal of property, plant and equipment | (164 | ) | (5,154 | ) | 225 | ||||||
Impairment charges | 1,506 | 807 | — | ||||||||
Provision (benefit) for doubtful accounts | 236 | (439 | ) | 1,321 | |||||||
Proceeds from insurance related to operations | — | 932 | — | ||||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable | (3,824 | ) | (14,059 | ) | (13,005 | ) | |||||
Contract assets | (22,728 | ) | — | — | |||||||
Inventories | (19,013 | ) | (14,208 | ) | 9,689 | ||||||
Pension and postretirement benefit contributions | (25,354 | ) | (906 | ) | (842 | ) | |||||
Other current assets | (648 | ) | (576 | ) | 1,933 | ||||||
Accounts payable and other accrued expenses | (7,886 | ) | 12,341 | 21,472 | |||||||
Other, net | 991 | 5,885 | (4,715 | ) | |||||||
Net cash provided by operating activities | 66,820 | 138,982 | 116,967 | ||||||||
Investing Activities: | |||||||||||
Acquisition of business, net of cash received | (77,969 | ) | (60,191 | ) | (133,943 | ) | |||||
Isola asset acquisition | (43,434 | ) | — | — | |||||||
Capital expenditures | (47,115 | ) | (27,215 | ) | (18,136 | ) | |||||
Proceeds from the sale of property, plant and equipment, net | 1,081 | 8,095 | — | ||||||||
Proceeds from insurance claims | — | 1,041 | 275 | ||||||||
Net cash used in investing activities | (167,437 | ) | (78,270 | ) | (151,804 | ) | |||||
Financing Activities: | |||||||||||
Proceeds from borrowings under revolving credit facility | 102,500 | — | 166,000 | ||||||||
Line of credit issuance costs | — | (1,169 | ) | — | |||||||
Repayment of debt principal and capital lease obligations | (6,162 | ) | (110,689 | ) | (103,760 | ) | |||||
Payments of taxes related to net share settlement of equity awards | (6,600 | ) | (5,309 | ) | (1,377 | ) | |||||
Proceeds from the exercise of stock options, net | 861 | 895 | 858 | ||||||||
Proceeds from issuance of shares to employee stock purchase plan | 1,082 | 3,085 | 4,143 | ||||||||
Share repurchases | (2,999 | ) | — | (7,995 | ) | ||||||
Net cash provided by (used in) financing activities | 88,682 | (113,187 | ) | 57,869 | |||||||
Effect of exchange rate fluctuations on cash | (1,486 | ) | 5,867 | 149 | |||||||
Net increase (decrease) in cash and cash equivalents | (13,421 | ) | (46,608 | ) | 23,181 | ||||||
Cash and cash equivalents at beginning of period | 181,159 | 227,767 | 204,586 | ||||||||
Cash and cash equivalents at end of period | $ | 167,738 | $ | 181,159 | $ | 227,767 | |||||
Supplemental Disclosures: | |||||||||||
Accrued capital additions | $ | 2,744 | $ | 2,376 | $ | 1,081 | |||||
Assets obtained under leasing arrangements | $ | — | $ | 883 | $ | — | |||||
Cash paid during the year for: | |||||||||||
Interest, net of amounts capitalized | $ | 7,040 | $ | 5,787 | $ | 3,924 | |||||
Income taxes | $ | 29,161 | $ | 36,918 | $ | 23,952 |
As of December 31, | |||||||
(Dollars in thousands) | 2018 | 2017 | |||||
Raw materials | $ | 59,321 | $ | 43,092 | |||
Work-in-process | 30,086 | 28,133 | |||||
Finished goods | 43,230 | 41,332 | |||||
Total inventories | $ | 132,637 | $ | 112,557 |
Property, Plant and Equipment Classification | Estimated Useful Lives |
Buildings and improvements | 30-40 years |
Machinery and equipment | 5-15 years |
Office equipment | 3-10 years |
• | 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. |
Derivative Instruments at Fair Value as of December 31, 2018 | |||||||||||||||
(Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Foreign currency contracts | $ | — | $ | 522 | $ | — | $ | 522 | |||||||
Copper derivative contracts | $ | — | $ | 583 | $ | — | $ | 583 | |||||||
Interest rate swap | $ | — | $ | 461 | $ | — | $ | 461 |
Derivative Instruments at Fair Value as of December 31, 2017 | |||||||||||||||
(Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Foreign currency contracts | $ | — | $ | (396 | ) | $ | — | $ | (396 | ) | |||||
Copper derivative contracts | $ | — | $ | 2,016 | $ | — | $ | 2,016 | |||||||
Interest rate swap | $ | — | $ | 41 | $ | — | $ | 41 |
• | Foreign Currency - The fair value of any foreign currency option derivative is based upon valuation models applied to current market information such as strike price, spot rate, maturity date and volatility, and by reference to market values resulting from an over-the-counter market or obtaining market data for similar instruments with similar characteristics. |
• | Commodity - The fair value of copper derivatives is computed using a combination of intrinsic and time value valuation models, which are collectively a function of five primary variables: price of the underlying instrument, time to expiration, strike price, interest rate and volatility. 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 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. |
• | 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 Values of Foreign Currency Derivatives | |||
KRW/USD | ₩ | 1,325,760,000 | |
JPY/EUR | ¥ | 675,000,000 | |
EUR/USD | € | 10,449,335 | |
USD/CNY | $ | 23,655,942 |
Volume of Copper Derivatives | |
January 2019 - March 2019 | 189 metric tons per month |
April 2019 - June 2019 | 188 metric tons per month |
July 2019 - September 2019 | 191 metric tons per month |
October 2019 - December 2019 | 195 metric tons per month |
January 2020 - March 2020 | 202 metric tons per month |
The Effect of Current Derivative Instruments on the Financial Statements for the period ended December 31, 2018 | Fair Values of Derivative Instruments as of December 31, 2018 | |||||||||
(Dollars in thousands) | Location | Gain (Loss) | Other Assets/ (Other Liabilities)(1) | |||||||
Foreign Exchange Contracts | ||||||||||
Contracts not designated as hedging instruments | Other income (expense), net | $ | (333 | ) | $ | 522 | ||||
Copper Derivatives | ||||||||||
Contracts not designated as hedging instruments | Other income (expense), net | $ | (2,101 | ) | $ | 583 | ||||
Interest Rate Swap | ||||||||||
Contract designated as hedging instrument | Other comprehensive income (loss) | $ | 420 | $ | 461 |
The Effect of Current Derivative Instruments on the Financial Statements for the period ended December 31, 2017 | Fair Values of Derivative Instruments as of December 31, 2017 | |||||||||
(Dollars in thousands) | Location | Gain (Loss) | Other Assets/ (Other Liabilities)(1) | |||||||
Foreign Exchange Contracts | ||||||||||
Contracts not designated as hedging instruments | Other income (expense), net | $ | (7 | ) | $ | (396 | ) | |||
Copper Derivatives | ||||||||||
Contracts not designated as hedging instruments | Other income (expense), net | $ | 1,928 | $ | 2,016 | |||||
Interest Rate Swap | ||||||||||
Contract designated as hedging instrument | Other comprehensive income (loss) | $ | 41 | $ | 41 |
(Dollars and accompanying footnotes in thousands) | Foreign Currency Translation Adjustments | Pension and Other Postretirement Benefits(1) | Derivative Instrument Designated as Cash Flow Hedge(2) | Total | |||||||||||
Balance as of December 31, 2016 | $ | (46,446 | ) | $ | (45,816 | ) | $ | — | $ | (92,262 | ) | ||||
Other comprehensive income (loss) before reclassifications | 28,463 | — | (6 | ) | 28,457 | ||||||||||
Actuarial net loss incurred in the fiscal year | — | (1,481 | ) | — | (1,481 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 99 | 32 | 131 | |||||||||||
Net current-period other comprehensive income (loss) | 28,463 | (1,382 | ) | 26 | 27,107 | ||||||||||
Balance as of December 31, 2017 | (17,983 | ) | (47,198 | ) | 26 | (65,155 | ) | ||||||||
Other comprehensive income (loss) before reclassifications | (12,505 | ) | — | 519 | (11,986 | ) | |||||||||
Actuarial net loss incurred in the fiscal year | — | (1,678 | ) | — | (1,678 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 176 | (191 | ) | (15 | ) | |||||||||
Net current-period other comprehensive income (loss) | (12,505 | ) | (1,502 | ) | 328 | (13,679 | ) | ||||||||
Balance as of December 31, 2018 | $ | (30,488 | ) | $ | (48,700 | ) | $ | 354 | $ | (78,834 | ) |
(Dollars in thousands) | December 31, 2018 | December 31, 2017 | Financial Statement Line Item | ||||
Amortization of pension and other postretirement benefits | |||||||
$ | (227 | ) | $ | (154 | ) | Other income (expense), net(1) | |
51 | 55 | Income tax expense | |||||
$ | (176 | ) | $ | (99 | ) | Net income | |
Unrealized gains (losses) on derivative instruments held at year end | |||||||
$ | 247 | $ | (51 | ) | Other income (expense), net | ||
(56 | ) | 19 | Income tax expense | ||||
$ | 191 | $ | (32 | ) | Net income |
(Dollars in thousands) | July 6, 2018 | ||
Assets: | |||
Accounts receivable, less allowance for doubtful accounts | $ | 2,553 | |
Inventories | 2,951 | ||
Other current assets | 155 | ||
Property, plant & equipment | 7,554 | ||
Other intangible assets | 34,120 | ||
Goodwill | 31,738 | ||
Total assets | 79,071 | ||
Liabilities: | |||
Accounts payable | 711 | ||
Accrued employee benefits and compensation | 299 | ||
Other accrued liabilities | 92 | ||
Total liabilities | 1,102 | ||
Fair value of net assets acquired | $ | 77,969 |
(Dollars in thousands) | January 6, 2017 | ||
Assets: | |||
Accounts receivable | $ | 2,724 | |
Prepaid expenses | 21 | ||
Inventory | 2,433 | ||
Property, plant & equipment | 1,589 | ||
Other intangible assets | 35,860 | ||
Goodwill | 17,793 | ||
Total assets | 60,420 | ||
Liabilities: | |||
Accounts payable | 179 | ||
Accrued expenses | 50 | ||
Total liabilities | 229 | ||
Fair value of net assets acquired | $ | 60,191 |
(Dollars in thousands) | November 23, 2016 | ||
Assets: | |||
Cash and cash equivalents | $ | 1,539 | |
Accounts receivable | 7,513 | ||
Other current assets | 691 | ||
Inventory | 9,915 | ||
Property, plant & equipment | 9,932 | ||
Other intangible assets | 73,500 | ||
Goodwill | 35,985 | ||
Other long-term assets | 101 | ||
Total assets | 139,176 | ||
Liabilities: | |||
Accounts payable | 2,402 | ||
Other current liabilities | 1,292 | ||
Total liabilities | 3,694 | ||
Fair value of net assets acquired | $ | 135,482 |
For the Years Ended December 31, | |||||||||
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||
Net sales | $ | 893,878 | $ | 851,122 | $ | 724,877 | |||
Net income | 87,584 | 80,283 | 50,349 |
(Dollars in thousands) | August 28, 2018 | ||
Land | $ | 6,104 | |
Buildings | 8,401 | ||
Machinery and equipment | 18,616 | ||
Equipment in process | 12,633 | ||
Total property, plant and equipment | $ | 45,754 |
As of December 31, | |||||||
(Dollars in thousands) | 2018 | 2017 | |||||
Land | $ | 21,525 | $ | 14,620 | |||
Buildings and improvements | 175,279 | 135,191 | |||||
Machinery and equipment | 256,301 | 238,000 | |||||
Office equipment | 64,886 | 56,554 | |||||
Property plant and equipment, gross | 517,991 | 444,365 | |||||
Accumulated depreciation | (317,414 | ) | (289,909 | ) | |||
Property, plant and equipment, net | 200,577 | 154,456 | |||||
Equipment in process | 42,182 | 25,155 | |||||
Total property, plant and equipment, net | $ | 242,759 | $ | 179,611 |
(Dollars in thousands) | Advanced Connectivity Solutions | Elastomeric Material Solutions | Power Electronics Solutions | Other | Total | ||||||||||||||
December 31, 2017 | $ | 51,693 | $ | 111,575 | $ | 71,615 | $ | 2,224 | $ | 237,107 | |||||||||
Acquisition | — | 32,305 | — | — | 32,305 | ||||||||||||||
Purchase accounting adjustment | — | (567 | ) | — | — | (567 | ) | ||||||||||||
Foreign currency translation adjustment | — | (724 | ) | (3,236 | ) | — | (3,960 | ) | |||||||||||
December 31, 2018 | $ | 51,693 | $ | 142,589 | $ | 68,379 | $ | 2,224 | $ | 264,885 |
December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||
(Dollars in thousands) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||
Customer relationships | $ | 149,753 | $ | 30,078 | $ | 119,675 | $ | 128,907 | $ | 22,514 | $ | 106,393 | |||||||||||
Technology | 81,535 | 38,624 | 42,911 | 73,891 | 33,491 | 40,400 | |||||||||||||||||
Trademarks and trade names | 12,019 | 3,213 | 8,806 | 10,213 | 2,157 | 8,056 | |||||||||||||||||
Covenants not to compete | 1,340 | 249 | 1,091 | 1,799 | 1,108 | 691 | |||||||||||||||||
Total definite-lived other intangible assets | 244,647 | 72,164 | 172,483 | 214,810 | 59,270 | 155,540 | |||||||||||||||||
Indefinite-lived other intangible asset | 4,525 | — | 4,525 | 4,738 | — | 4,738 | |||||||||||||||||
Total other intangible assets | $ | 249,172 | $ | 72,164 | $ | 177,008 | $ | 219,548 | $ | 59,270 | $ | 160,278 |
Definite-Lived Other Intangible Asset Class | Weighted Average Remaining Amortization Period |
Customer relationships | 7.6 |
Technology | 4.4 |
Trademarks and trade names | 5.0 |
Covenants not to compete | 2.1 |
Total definite-lived other intangible assets | 6.6 |
Years Ended December 31, | |||||||||||
(In thousands, except per share amounts) | 2018 | 2017 | 2016 | ||||||||
Numerator: | |||||||||||
Net income | $ | 87,651 | $ | 80,459 | $ | 48,283 | |||||
Denominator: | |||||||||||
Weighted-average shares outstanding - basic | 18,374 | 18,154 | 17,991 | ||||||||
Effect of dilutive shares | 285 | 393 | 232 | ||||||||
Weighted-average shares outstanding - diluted | 18,659 | 18,547 | 18,223 | ||||||||
Basic earnings per share: | $ | 4.77 | $ | 4.43 | $ | 2.68 | |||||
Diluted earnings per share: | $ | 4.70 | $ | 4.34 | $ | 2.65 |
As of December 31, | |||||
2018 | 2017 | ||||
Shares reserved for issuance under the stock acquisition program(1) | — | 120,883 | |||
Shares reserved for issuance under the Rogers Employee Savings and Investment Plan(2) | — | 169,044 | |||
Shares reserved for issuance under outstanding stock options and restricted stock unit awards | 413,294 | 545,018 | |||
Deferred compensation to be paid in stock, including deferred stock units | 13,498 | 17,100 | |||
Additional shares reserved for issuance under Rogers Corporation 2009 Long-Term Equity Compensation Plan(3) | 777,385 | 793,603 | |||
Shares reserved for issuance under the Rogers Corporation Global Stock Ownership Plan for Employees | 106,344 | 117,987 | |||
Total | 1,310,521 | 1,763,635 |
(1) | The Company ceased offering capital stock under the stock acquisition program prior to the periods covered by this table. |
(2) | The Company ceased offering its capital stock as an investment option under the Rogers Employee Savings and Investment Plan prior to the periods covered by this table. |
September 17, 2018 | February 8, 2018 | February 9, 2017 | |||
Expected volatility | 36.6% | 34.8% | 33.6% | ||
Expected term (in years) | 3.0 | 3.0 | 3.0 | ||
Risk-free interest rate | 2.85% | 2.28% | 1.38% |
2018 | 2017 | 2016 | ||||||||||||||||||
Awards Outstanding | Weighted- Average Grant Date Fair Value | Awards Outstanding | Weighted- Average Grant Date Fair Value | Awards Outstanding | Weighted- Average Grant Date Fair Value | |||||||||||||||
Awards outstanding as of January 1 | 169,202 | $ | 97.16 | 151,769 | $ | 89.72 | 107,229 | $ | 66.13 | |||||||||||
Awards granted | 75,760 | 163.55 | 56,147 | 110.77 | 84,443 | 69.01 | ||||||||||||||
Stock issued | (81,230 | ) | 131.72 | (34,442 | ) | 86.59 | (25,397 | ) | 72.68 | |||||||||||
Awards forfeited | (21,298 | ) | 114.40 | (4,272 | ) | 99.35 | (14,506 | ) | 104.83 | |||||||||||
Awards outstanding as of December 31 | 142,434 | $ | 110.19 | 169,202 | $ | 97.16 | 151,769 | $ | 89.72 |
2018 | 2017 | 2016 | ||||||||||||||||||
Awards Outstanding | Weighted- Average Grant Date Fair Value | Awards Outstanding | Weighted- Average Grant Date Fair Value | Awards Outstanding | Weighted- Average Grant Date Fair Value | |||||||||||||||
Awards outstanding as of January 1 | 173,331 | $ | 69.10 | 239,189 | $ | 57.71 | 208,318 | $ | 64.27 | |||||||||||
Awards granted | 46,810 | 143.93 | 80,535 | 83.17 | 118,660 | 51.70 | ||||||||||||||
Stock issued | (82,921 | ) | 84.92 | (140,208 | ) | 58.18 | (60,326 | ) | 64.03 | |||||||||||
Awards forfeited | (19,744 | ) | 112.06 | (6,185 | ) | 60.70 | (27,463 | ) | 64.60 | |||||||||||
Awards outstanding as of December 31 | 117,476 | $ | 116.10 | 173,331 | $ | 69.10 | 239,189 | $ | 57.71 |
2018 | 2017 | 2016 | ||||||||||||||||||
Awards Outstanding | Weighted- Average Grant Date Fair Value | Awards Outstanding | Weighted- Average Grant Date Fair Value | Awards Outstanding | Weighted- Average Grant Date Fair Value | |||||||||||||||
Awards outstanding as of January 1 | 9,250 | $ | 109.48 | 11,900 | $ | 58.82 | 23,950 | $ | 27.22 | |||||||||||
Awards granted | 8,400 | 108.86 | 9,250 | 109.48 | 11,900 | 58.82 | ||||||||||||||
Stock issued | (9,250 | ) | 109.48 | (11,900 | ) | 58.82 | (23,950 | ) | 52.69 | |||||||||||
Awards outstanding as of December 31 | 8,400 | $ | 108.86 | 9,250 | $ | 109.48 | 11,900 | $ | 58.82 |
2018 | 2017 | 2016 | ||||||||||||||||||
Options Outstanding | Weighted- Average Exercise Price Per Share | Options Outstanding | Weighted- Average Exercise Price Per Share | Options Outstanding | Weighted- Average Exercise Price Per Share | |||||||||||||||
Options outstanding, vested and exercisable as of January 1 | 33,283 | $ | 36.40 | 116,575 | $ | 37.76 | 212,038 | $ | 40.47 | |||||||||||
Options exercised | (22,333 | ) | 38.57 | (83,292 | ) | 37.04 | (95,113 | ) | 43.56 | |||||||||||
Options forfeited | — | — | — | — | (350 | ) | 44.32 | |||||||||||||
Options outstanding, vested and exercisable as of December 31 | 10,950 | $ | 31.99 | 33,283 | $ | 36.40 | 116,575 | $ | 37.76 |
Joint Venture | Location | Operating Segment | Fiscal Year-End |
Rogers INOAC Corporation (RIC) | Japan | Elastomeric Material Solutions | October 31 |
Rogers INOAC Suzhou Corporation (RIS) | China | Elastomeric Material Solutions | December 31 |
As of December 31, | |||||||
(Dollars in thousands) | 2018 | 2017 | |||||
Current assets | $ | 38,730 | $ | 40,934 | |||
Non-current assets | $ | 4,839 | $ | 4,947 | |||
Current liabilities | $ | 6,376 | $ | 9,519 | |||
Shareholders' equity | $ | 37,193 | $ | 36,362 |
For the Years Ended December 31, | |||||||||||
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||||
Net sales | $ | 55,465 | $ | 54,597 | $ | 47,321 | |||||
Gross profit | $ | 21,229 | $ | 21,462 | $ | 16,829 | |||||
Net income | $ | 11,002 | $ | 9,796 | $ | 8,292 |
(Dollars in thousands) | Pension Benefits | Retirement Health and Life Insurance Benefits | |||||||||||
Change in benefit obligation: | 2018 | 2017 | 2018 | 2017 | |||||||||
Benefit obligation at beginning of year | $ | 185,760 | $ | 177,696 | $ | 2,037 | $ | 2,504 | |||||
Service cost | — | — | 73 | 80 | |||||||||
Interest cost | 6,758 | 7,356 | 62 | 71 | |||||||||
Actuarial (gain) loss | (10,805 | ) | 9,601 | (5 | ) | 460 | |||||||
Benefit payments | (9,105 | ) | (8,893 | ) | (364 | ) | (533 | ) | |||||
Plan amendment | — | — | — | (545 | ) | ||||||||
Benefit obligation at end of year | $ | 172,608 | $ | 185,760 | $ | 1,803 | $ | 2,037 |
Change in plan assets: | 2018 | 2017 | 2018 | 2017 | |||||||||
Fair value of plan assets at the beginning of the year | $ | 180,056 | $ | 171,778 | $ | — | $ | — | |||||
Actual return on plan assets | (4,299 | ) | 16,799 | — | — | ||||||||
Employer contributions | 25,000 | 372 | 364 | 533 | |||||||||
Benefit payments | (9,105 | ) | (8,893 | ) | (364 | ) | (533 | ) | |||||
Fair value of plan assets at the end of the year | 191,652 | 180,056 | — | — | |||||||||
Funding status | $ | 19,044 | $ | (5,704 | ) | $ | (1,803 | ) | $ | (2,037 | ) |
(Dollars in thousands) | Pension Benefits | Retirement Health and Life Insurance Benefits | |||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||
Noncurrent assets | $ | 19,273 | $ | 3,021 | $ | — | $ | — | |||||
Current liabilities | (4 | ) | (5 | ) | (334 | ) | (352 | ) | |||||
Noncurrent liabilities | (225 | ) | (8,720 | ) | (1,469 | ) | (1,685 | ) | |||||
Net amount recognized at end of year | $ | 19,044 | $ | (5,704 | ) | $ | (1,803 | ) | $ | (2,037 | ) |
(Dollars in thousands) | Pension Benefits | Retirement Health and Life Insurance Benefits | |||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||
Net actuarial (loss) gain | $ | (59,972 | ) | $ | (59,645 | ) | $ | 68 | $ | 63 | |||
Prior service benefit | — | — | 1,220 | 2,821 | |||||||||
Net amount recognized at end of year | $ | (59,972 | ) | $ | (59,645 | ) | $ | 1,288 | $ | 2,884 |
(Dollars in thousands) | Pension Benefits | Retirement Health and Life Insurance Benefits | |||||||||||||||||||||
2018 | 2017 | 2016 | 2018 | 2017 | 2016 | ||||||||||||||||||
Service cost | $ | — | $ | — | — | $ | 73 | $ | 80 | $ | 133 | ||||||||||||
Interest cost | 6,758 | 7,356 | 7,530 | 62 | 71 | 75 | |||||||||||||||||
Expected return of plan assets | (8,662 | ) | (9,221 | ) | (10,808 | ) | — | — | — | ||||||||||||||
Amortization of prior service cost (credit) | — | — | — | (1,602 | ) | (1,602 | ) | (1,489 | ) | ||||||||||||||
Amortization of net loss | 1,828 | 1,755 | 1,784 | — | — | (47 | ) | ||||||||||||||||
Settlement charge | — | — | — | — | — | — | |||||||||||||||||
Net periodic benefit cost (benefit) | $ | (76 | ) | $ | (110 | ) | $ | (1,494 | ) | $ | (1,467 | ) | $ | (1,451 | ) | $ | (1,328 | ) |
Pension Benefits | Retirement Health and Life Insurance Benefits | ||||||||
2018 | 2017 | 2018 | 2017 | ||||||
Discount rate | 4.25 | % | 3.70 | % | 3.75 | % | 3.25 | % |
Pension Benefits | Retirement Health and Life Insurance Benefits | ||||||||
2018 | 2017 | 2018 | 2017 | ||||||
Discount rate | 3.70 | % | 4.25 | % | 3.25 | % | 3.25 | % | |
Expected long-term rate of return on plan assets | 4.94 | % | 5.51 | % | — | % | — | % |
(Dollars in thousands) | Increase | Decrease | |||||
Effect on total service and interest cost | $ | 8 | $ | (8 | ) | ||
Effect on other postretirement benefit obligations | $ | 65 | (60 | ) |
Assets at Fair Value as of December 31, 2018 | |||||||||||||||
(Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Pooled separate accounts | $ | — | $ | 1,216 | $ | — | $ | 1,216 | |||||||
Fixed income bonds | — | 186,385 | — | 186,385 | |||||||||||
Mutual funds | 2,691 | — | — | 2,691 | |||||||||||
Guaranteed deposit account | — | — | 1,360 | 1,360 | |||||||||||
Total assets at fair value | $ | 2,691 | $ | 187,601 | $ | 1,360 | $ | 191,652 |
Assets at Fair Value as of December 31, 2017 | |||||||||||||||
(Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Pooled separate accounts | $ | — | $ | 4,610 | $ | — | $ | 4,610 | |||||||
Fixed income bonds | — | 162,934 | — | 162,934 | |||||||||||
Mutual funds | 6,223 | — | — | 6,223 | |||||||||||
Guaranteed deposit account | — | — | 6,289 | 6,289 | |||||||||||
Total assets at fair value | $ | 6,223 | $ | 167,544 | $ | 6,289 | $ | 180,056 |
(Dollars in thousands) | Guaranteed Deposit Account | ||
Balance at beginning of year | $ | 6,289 | |
Change in unrealized gain (loss) | (194 | ) | |
Purchases, sales, issuances and settlements (net) | (4,735 | ) | |
Balance at end of year | $ | 1,360 |
(Dollars in thousands) | Pension Benefits | Retiree Health and Life Insurance Benefits | |||||
2019 | $ | 9,500 | $ | 334 | |||
2020 | $ | 9,597 | $ | 265 | |||
2021 | $ | 9,818 | $ | 171 | |||
2022 | $ | 10,038 | $ | 134 | |||
2023 | $ | 10,228 | $ | 151 | |||
2024-2028 | $ | 53,901 | $ | 825 |
(Dollars in thousands) | ||||
Year Ending December 31, | ||||
2019 | $ | 543 | ||
2020 | 525 | |||
2021 | 4,276 | |||
2022 | — | |||
2023 | — | |||
Thereafter | — | |||
Total | 5,344 | |||
Less: Interest | (295 | ) | ||
Present Value of Net Future Minimum Lease Payments | $ | 5,049 |
(Dollars in thousands) | ||||
Year Ending December 31, | ||||
2019 | $ | 3,951 | ||
2020 | 3,052 | |||
2021 | 2,216 | |||
2022 | 1,507 | |||
2023 | 491 | |||
Thereafter | — | |||
Total | $ | 11,217 |
For the Year Ended December 31, | |||||||||||
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||||
Operating Leases | $ | 3,850 | $ | 3,819 | $ | 3,567 | |||||
Capital Leases | $ | 472 | $ | 608 | $ | 564 |
2018 | 2017 | ||||
Claims outstanding at beginning of year | 687 | 605 | |||
New claims filed | 275 | 362 | |||
Pending claims concluded* | (217 | ) | (280 | ) | |
Claims outstanding at end of year | 745 | 687 |
(Dollars in millions) | 2018 | 2017 | |||||
Asbestos-related claims | $ | 70.3 | $ | 76.2 | |||
Asbestos-related insurance receivables | $ | 63.8 | $ | 69.2 |
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||||
Domestic | $ | 14,381 | $ | 39,751 | $ | 10,888 | |||||
International | 96,208 | 93,174 | 71,392 | ||||||||
Total | $ | 110,589 | $ | 132,925 | $ | 82,280 |
(Dollars in thousands) | Current | Deferred | Total | ||||||||
2018 | |||||||||||
Domestic | $ | (341 | ) | $ | (3,007 | ) | $ | (3,348 | ) | ||
International | 26,604 | (318 | ) | 26,286 | |||||||
Total | $ | 26,263 | $ | (3,325 | ) | $ | 22,938 | ||||
2017 | |||||||||||
Domestic | $ | 7,535 | $ | 21,936 | $ | 29,471 | |||||
International | 27,418 | (4,423 | ) | 22,995 | |||||||
Total | $ | 34,953 | $ | 17,513 | $ | 52,466 | |||||
2016 | |||||||||||
Domestic | $ | 2,078 | $ | 3,376 | $ | 5,454 | |||||
International | 24,537 | 4,006 | 28,543 | ||||||||
Total | $ | 26,615 | $ | 7,382 | $ | 33,997 |
(Dollars in thousands) | 2018 | 2017 | |||||
Deferred tax assets | |||||||
Accrued employee benefits and compensation | $ | 4,269 | $ | 8,410 | |||
Tax loss and credit carryforwards | 18,604 | 7,905 | |||||
Reserves and accruals | 4,935 | 4,699 | |||||
Other | 1,953 | 2,977 | |||||
Total deferred tax assets | 29,761 | 23,991 | |||||
Less deferred tax asset valuation allowance | (16,889 | ) | (8,754 | ) | |||
Total deferred tax assets, net of valuation allowance | 12,872 | 15,237 | |||||
Deferred tax liabilities | |||||||
Depreciation and amortization | 8,335 | 14,300 | |||||
Postretirement benefit obligations | 3,234 | 2,311 | |||||
Unremitted earnings | 1,778 | 3,100 | |||||
Other | 2,094 | 224 | |||||
Total deferred tax liabilities | 15,441 | 19,935 | |||||
Net deferred tax asset (liability) | $ | (2,569 | ) | $ | (4,698 | ) |
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||||
Tax expense at Federal statutory income tax rate | $ | 23,224 | $ | 46,529 | $ | 28,798 | |||||
International tax rate differential | 826 | (9,603 | ) | (2,260 | ) | ||||||
Foreign source income, net of tax credits (excluding U.S. Tax Reform) | (197 | ) | 1,087 | 1,215 | |||||||
State tax, net of federal | 121 | 279 | (200 | ) | |||||||
Unrecognized tax benefits | (869 | ) | 2,874 | (5,555 | ) | ||||||
U.S. Tax Reform | 209 | 13,683 | — | ||||||||
Equity compensation excess tax deductions | (2,238 | ) | (3,867 | ) | — | ||||||
General business credits | (2,172 | ) | (1,080 | ) | (1,125 | ) | |||||
Distribution related foreign taxes | 1,916 | 2,173 | 12,433 | ||||||||
Valuation allowance change (excluding U.S. Tax Reform) | 602 | 1,393 | 171 | ||||||||
Other | 1,516 | (1,002 | ) | 520 | |||||||
Income tax expense (benefit) | $ | 22,938 | $ | 52,466 | $ | 33,997 |
(Dollars in thousands) | 2018 | 2017 | |||||
Beginning balance | $ | 14,565 | $ | 5,883 | |||
Gross increases - current period tax positions | 2,583 | 7,056 | |||||
Gross increases - tax positions in prior periods | 505 | 3,243 | |||||
Gross decreases - tax positions in prior periods | — | (375 | ) | ||||
Foreign currency exchange | (142 | ) | 467 | ||||
Lapse of statute of limitations | (7,710 | ) | (1,709 | ) | |||
Ending balance | $ | 9,801 | $ | 14,565 |
(Dollars in thousands) | Advanced Connectivity Solutions | Elastomeric Material Solutions | Power Electronics Solutions | Other | Total | ||||||||||||||
2018 | |||||||||||||||||||
Net sales - recognized over time | $ | — | $ | 5,788 | $ | 221,896 | $ | 16,973 | $ | 244,657 | |||||||||
Net sales - recognized at a point in time | $ | 294,154 | $ | 335,576 | $ | 1,442 | $ | 3,262 | $ | 634,434 | |||||||||
Total net sales | $ | 294,154 | $ | 341,364 | $ | 223,338 | $ | 20,235 | $ | 879,091 | |||||||||
Operating income | $ | 33,827 | $ | 52,502 | $ | 19,648 | $ | 6,734 | $ | 112,711 | |||||||||
Total assets | $ | 396,075 | $ | 588,841 | $ | 273,212 | $ | 21,216 | $ | 1,279,344 | |||||||||
Capital expenditures | $ | 61,425 | $ | 10,917 | $ | 18,051 | $ | 156 | $ | 90,549 | |||||||||
Depreciation & amortization | $ | 20,121 | $ | 18,501 | $ | 10,640 | $ | 811 | $ | 50,073 | |||||||||
Investment in unconsolidated joint ventures | $ | — | $ | 18,667 | $ | — | $ | — | $ | 18,667 | |||||||||
Equity income in unconsolidated joint ventures | $ | — | $ | 5,501 | $ | — | $ | — | $ | 5,501 | |||||||||
2017 | |||||||||||||||||||
Total net sales | $ | 301,092 | $ | 312,661 | $ | 184,954 | $ | 22,336 | $ | 821,043 | |||||||||
Operating income | $ | 55,410 | $ | 50,908 | $ | 15,668 | $ | 7,153 | $ | 129,139 | |||||||||
Total assets | $ | 353,786 | $ | 489,456 | $ | 261,034 | $ | 20,858 | $ | 1,125,134 | |||||||||
Capital expenditures | $ | 9,900 | $ | 7,563 | $ | 9,238 | $ | 514 | $ | 27,215 | |||||||||
Depreciation & amortization | $ | 16,351 | $ | 16,270 | $ | 10,572 | $ | 906 | $ | 44,099 | |||||||||
Investment in unconsolidated joint ventures | $ | — | $ | 18,324 | $ | — | $ | — | $ | 18,324 | |||||||||
Equity income in unconsolidated joint ventures | $ | — | $ | 4,898 | $ | — | $ | — | $ | 4,898 | |||||||||
2016 | |||||||||||||||||||
Total net sales | $ | 277,787 | $ | 203,181 | $ | 152,367 | $ | 22,979 | $ | 656,314 | |||||||||
Operating income | $ | 42,455 | $ | 25,884 | $ | 5,229 | $ | 7,329 | $ | 80,897 | |||||||||
Total assets | $ | 361,746 | $ | 421,011 | $ | 247,187 | $ | 26,556 | $ | 1,056,500 | |||||||||
Capital expenditures | $ | 7,569 | $ | 4,051 | $ | 6,009 | $ | 507 | $ | 18,136 | |||||||||
Depreciation & amortization | $ | 15,654 | $ | 10,141 | $ | 11,208 | $ | 844 | $ | 37,847 | |||||||||
Investment in unconsolidated joint ventures | $ | — | $ | 16,183 | $ | — | $ | — | $ | 16,183 | |||||||||
Equity income in unconsolidated joint ventures | $ | — | $ | 4,146 | $ | — | $ | — | $ | 4,146 |
(Dollars in thousands) | Net Sales(1) | |||||||||||||||||||
Region/Country | Advanced Connectivity Solutions | Elastomeric Material Solutions | Power Electronics Solutions | Other | Total | |||||||||||||||
December 31, 2018 | ||||||||||||||||||||
United States | $ | 52,661 | $ | 152,284 | $ | 37,325 | $ | 4,527 | $ | 246,797 | ||||||||||
Other Americas | 3,104 | 14,453 | 931 | 773 | 19,261 | |||||||||||||||
Total Americas | 55,765 | 166,737 | 38,256 | 5,300 | 266,058 | |||||||||||||||
China | 136,315 | 101,036 | 39,781 | 4,959 | 282,091 | |||||||||||||||
Other APAC | 63,318 | 40,788 | 28,414 | 2,892 | 135,412 | |||||||||||||||
Total APAC | 199,633 | 141,824 | 68,195 | 7,851 | 417,503 | |||||||||||||||
Germany | 18,165 | 9,907 | 62,359 | 584 | 91,015 | |||||||||||||||
Other EMEA | 20,591 | 22,896 | 54,528 | 6,500 | 104,515 | |||||||||||||||
Total EMEA | 38,756 | 32,803 | 116,887 | 7,084 | 195,530 | |||||||||||||||
Total net sales | $ | 294,154 | $ | 341,364 | $ | 223,338 | $ | 20,235 | $ | 879,091 | ||||||||||
December 31, 2017 | ||||||||||||||||||||
United States | $ | 48,277 | $ | 141,508 | $ | 30,403 | $ | 5,210 | $ | 225,398 | ||||||||||
Other Americas | 2,946 | 9,709 | 1,153 | 699 | 14,507 | |||||||||||||||
Total Americas | 51,223 | 151,217 | 31,556 | 5,909 | 239,905 | |||||||||||||||
China | 143,065 | 93,039 | 32,164 | 5,123 | 273,391 | |||||||||||||||
Other APAC | 64,077 | 36,233 | 21,845 | 3,421 | 125,576 | |||||||||||||||
Total APAC | 207,142 | 129,272 | 54,009 | 8,544 | 398,967 | |||||||||||||||
Germany | 23,925 | 9,211 | 54,813 | 657 | 88,606 | |||||||||||||||
Other EMEA | 18,802 | 22,961 | 44,576 | 7,226 | 93,565 | |||||||||||||||
Total EMEA | 42,727 | 32,172 | 99,389 | 7,883 | 182,171 | |||||||||||||||
Total net sales | $ | 301,092 | $ | 312,661 | $ | 184,954 | $ | 22,336 | $ | 821,043 | ||||||||||
December 31, 2016 | ||||||||||||||||||||
United States | $ | 46,951 | $ | 61,188 | $ | 25,599 | $ | 5,499 | $ | 139,237 | ||||||||||
Other Americas | 2,035 | 7,722 | 313 | 855 | 10,925 | |||||||||||||||
Total Americas | 48,986 | 68,910 | 25,912 | 6,354 | 150,162 | |||||||||||||||
China | 137,695 | 77,033 | 20,964 | 5,511 | 241,203 | |||||||||||||||
Other APAC | 53,082 | 29,109 | 17,751 | 3,898 | 103,840 | |||||||||||||||
Total APAC | 190,777 | 106,142 | 38,715 | 9,409 | 345,043 | |||||||||||||||
Germany | 19,842 | 7,621 | 53,426 | 849 | 81,738 | |||||||||||||||
Other EMEA | 18,182 | 20,508 | 34,314 | 6,367 | 79,371 | |||||||||||||||
Total EMEA | 38,024 | 28,129 | 87,740 | 7,216 | 161,109 | |||||||||||||||
Total net sales | $ | 277,787 | $ | 203,181 | $ | 152,367 | $ | 22,979 | $ | 656,314 |
Long-Lived Assets(1) | |||||||||||
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||||
United States | $ | 476,560 | $ | 370,964 | $ | 326,199 | |||||
China | 58,205 | 57,404 | 62,728 | ||||||||
Germany | 113,412 | 114,497 | 101,725 | ||||||||
Other | 36,475 | 34,131 | 32,242 | ||||||||
Total | $ | 684,652 | $ | 576,996 | $ | 522,894 |
December 31, 2018 | ||||||||||||||
(Dollars in thousands) | Advanced Connectivity Solutions | Elastomeric Material Solutions | Power Electronics Solutions | Other | Total | |||||||||
Contract Assets | — | 943 | 19,738 | 2,047 | 22,728 |
As of | |||||||||||
Consolidated Statements of Financial Position: | December 31, 2017 | January 1, 2018 | |||||||||
(Dollars in thousands) | Under ASC 605 | Impact of Adoption | Under ASC 606 | ||||||||
Contract assets | $ | — | $ | 18,099 | $ | 18,099 | |||||
Inventories | 112,557 | (12,307 | ) | 100,250 | |||||||
Deferred income taxes | 10,706 | 1,580 | 12,286 | ||||||||
Retained earnings | 684,540 | 4,212 | 688,752 |
Consolidated Statements of Operations: | Year Ended | ||||||||||
December 31, 2018 | December 31, 2018 | ||||||||||
(Dollars in thousands, except per share amounts) | Under ASC 605 | Impact of Adoption | Under ASC 606 | ||||||||
Net sales | $ | 874,462 | $ | 4,629 | $ | 879,091 | |||||
Cost of sales | 565,160 | 3,148 | 568,308 | ||||||||
Income tax expense | 22,558 | 380 | 22,938 | ||||||||
Net income | 86,550 | 1,101 | 87,651 | ||||||||
Basic earnings per share | $ | 4.71 | $ | 0.06 | $ | 4.77 | |||||
Diluted earnings per share | $ | 4.64 | $ | 0.06 | $ | 4.70 |
As of | |||||||||||
Consolidated Statements of Financial Position: | December 31, 2018 | December 31, 2018 | |||||||||
(Dollars in thousands) | Under ASC 605 | Impact of Adoption | Under ASC 606 | ||||||||
Contract assets | $ | — | $ | 22,728 | $ | 22,728 | |||||
Inventories | 148,092 | (15,455 | ) | 132,637 | |||||||
Deferred income taxes | 8,846 | 1,960 | 10,806 | ||||||||
Retained earnings | 771,090 | 5,313 | 776,403 |
Year Ended | |||||||||||
Consolidated Statements of Cash Flows: | December 31, 2018 | December 31, 2018 | |||||||||
(Dollars in thousands) | Under ASC 605 | Impact of Adoption | Under ASC 606 | ||||||||
Cash provided by operating activities: | |||||||||||
Net income | $ | 86,550 | $ | 1,101 | $ | 87,651 | |||||
Deferred income taxes | (3,705 | ) | 380 | (3,325 | ) | ||||||
Contract assets | — | (22,728 | ) | (22,728 | ) | ||||||
Inventories | (34,468 | ) | 15,455 | (19,013 | ) | ||||||
Other, net | (4,801 | ) | 5,792 | 991 | |||||||
Net cash provided by operating activities | 66,820 | — | 66,820 |
(Dollars in thousands) | Severance Related to Headquarters Relocation | ||
Balance as of December 31, 2017 | $ | 183 | |
Provisions | 186 | ||
Payments | (264 | ) | |
Balance as of December 31, 2018 | $ | 105 |
(Dollars in thousands) | Severance Related to Facility Consolidation | ||
Balance as of December 31, 2017 | $ | — | |
Provisions | 546 | ||
Payments | (23 | ) | |
Balance as of December 31, 2018 | $ | 523 |
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||||
Advanced Connectivity Solutions | |||||||||||
Severance and other related costs | $ | 244 | $ | 1,305 | $ | 375 | |||||
Allocated impairment charges | 1,506 | 161 | — | ||||||||
Elastomeric Material Solutions | |||||||||||
Severance and other related costs | 2,152 | 834 | 176 | ||||||||
Allocated impairment charges | — | 103 | — | ||||||||
Power Electronics Solutions | |||||||||||
Severance and other related costs | 136 | 621 | 183 | ||||||||
Allocated impairment charges | — | 543 | — | ||||||||
Total Restructuring and Impairment Charges | $ | 4,038 | $ | 3,567 | $ | 734 |
Year Ended December 31, | |||||||||||
(Dollars in thousands) | 2018 | 2017 | 2016 | ||||||||
Gain from antitrust litigation settlement | $ | (4,231 | ) | $ | — | $ | — | ||||
Gain on sale of property, plant and equipment | (164 | ) | (5,329 | ) | — | ||||||
Lease income | (948 | ) | — | — | |||||||
Depreciation on leased assets | 3,512 | — | — | ||||||||
Indemnity claim settlement from acquisitions | (700 | ) | — | — | |||||||
Economic incentive grants | (556 | ) | — | — | |||||||
$ | (3,087 | ) | $ | (5,329 | ) | $ | — |
2018 | |||||||||||||||
(Dollars in thousands, except per share amounts) | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||
Net sales | $ | 214,611 | $ | 214,675 | $ | 226,863 | $ | 222,942 | |||||||
Gross margin | $ | 76,606 | $ | 76,672 | $ | 79,130 | $ | 78,375 | |||||||
Net income | $ | 26,136 | $ | 17,329 | $ | 19,734 | $ | 24,452 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 1.43 | $ | 0.94 | $ | 1.07 | $ | 1.33 | |||||||
Diluted | $ | 1.40 | $ | 0.93 | $ | 1.06 | $ | 1.31 |
(Dollars in thousands, except per share amounts) | 2017 | ||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Net sales | $ | 203,828 | $ | 201,424 | $ | 206,783 | $ | 209,008 | |||||||
Gross margin | $ | 80,350 | $ | 80,546 | $ | 82,188 | $ | 75,491 | |||||||
Net income | $ | 27,032 | $ | 20,896 | $ | 25,532 | $ | 6,999 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 1.50 | $ | 1.15 | $ | 1.40 | $ | 0.38 | |||||||
Diluted | $ | 1.47 | $ | 1.13 | $ | 1.37 | $ | 0.37 |
For the Years Ended December 31, | |||||||
(Dollars in thousands) | 2018 | 2017 | |||||
Shares of capital stock repurchased | 23,138 | — | |||||
Value of capital stock repurchased | $ | 2,999 | $ | — |
(Dollars in thousands) | Balance at Beginning of Period | Charged to (Reduction of) Costs and Expenses | Taken Against Allowance | Other (Deductions) Recoveries | Balance at End of Period | |||||||||||||||
Allowance for Doubtful Accounts | ||||||||||||||||||||
December 31, 2018 | $ | 1,525 | $ | 189 | $ | (360 | ) | $ | — | $ | 1,354 | |||||||||
December 31, 2017 | $ | 1,952 | $ | (275 | ) | $ | (152 | ) | $ | — | $ | 1,525 | ||||||||
December 31, 2016 | $ | 695 | $ | 1,321 | $ | (64 | ) | $ | — | $ | 1,952 |
(Dollars in thousands) | Balance at Beginning of Period | Charged to (Reduction of) Costs and Expenses | Taken Against Allowance | Other (Deductions) Recoveries | Balance at End of Period | |||||||||||||||
Valuation on Allowance for Deferred Tax Assets | ||||||||||||||||||||
December 31, 2018 | $ | 8,754 | $ | 8,135 | $ | — | $ | — | $ | 16,889 | ||||||||||
December 31, 2017 | $ | 6,388 | $ | 2,366 | $ | — | $ | — | $ | 8,754 | ||||||||||
December 31, 2016 | $ | 6,202 | $ | 186 | $ | — | $ | — | $ | 6,388 |
• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
3.1 |
3.2 |
10.1 |
10.1.1 |
10.1.2 |
10.2 |
10.2.1 |
10.2.2 |
10.2.3 |
10.2.4 |
10.3 |
10.3.1 |
10.3.2 |
10.4 |
10.5 |
10.6 |
10.7 |
10.8 |
10.9 |
10.10 |
10.11 |
10.12 |
10.13 |
21 |
23.1 |
31.1 |
31.2 |
32 |
101 | The following materials from Rogers Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Financial Position for the fiscal years ended December 31, 2018 and 2017; (ii) Consolidated Statements of Operations for the fiscal years ended December 31, 2018, 2017 and 2016; (iii) Consolidated Statements of Shareholders’ Equity for the fiscal years ended December 31, 2018, 2017 and 2016; and (iv) Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2018, 2017 and 2016; and (v) Notes to Consolidated Financial Statements. |
** | Management contract or compensatory plan or arrangement. |
ROGERS CORPORATION (Registrant) |
/s/ Bruce D. Hoechner |
Bruce D. Hoechner |
President and Chief Executive Officer Principal Executive Officer |
Dated: February 20, 2019 |
/s/ Bruce D. Hoechner | /s/ Keith L. Barnes | |
Bruce D. Hoechner President and Chief Executive Officer Director Principal Executive Officer | Keith L. Barnes Director | |
/s/ Michael M. Ludwig | /s/ Carol R. Jensen | |
Michael M. Ludwig Senior Vice President, Chief Financial Officer and Treasurer Principal Financial Officer | Carol R. Jensen Director | |
/s/ Mark D. Weaver | ||
Mark D. Weaver Chief Accounting Officer and Corporate Controller Principal Accounting Officer | Jeffrey J. Owens Director | |
/s/ Michael F. Barry | /s/ Ganesh Moorthy | |
Michael F. Barry Director | Ganesh Moorthy Director | |
/s/ Helene Simonet | /s/ Peter C. Wallace | |
Helene Simonet Director | Peter C. Wallace Director | |
Company | Percentage of Voting Securities Owned | Jurisdiction of Incorporation or Organization |
Rogers Japan Inc. | 100% | Delaware |
Rogers Southeast Asia, Inc. | 100% | Delaware |
Rogers Taiwan, Inc. | 100% | Delaware |
Rogers Technologies Singapore, Inc. | 100% | Delaware |
Rogers Technologies (Suzhou) Co., Ltd. | 100% | China |
World Properties, Inc. | 100% | Illinois |
Rogers BVBA | 100% | Belgium |
Rogers GmbH | 100% | Germany |
Rogers U.K. Ltd. | 100% | England |
Rogers International Trading (Shanghai) Co. Ltd. | 100% | China |
Rogers KF, Inc. | 100% | Delaware |
Rogers Luxembourg Sarl | 100% | Luxembourg |
Rogers Benelux Sarl | 100% | Luxembourg |
Rogers Worldwide LLC | 100% | Delaware |
Rogers New Territories Corporation Limited | 100% | Hong Kong |
Rogers Asia Holding Company Limited | 100% | Hong Kong |
Rogers Pacific Limited | 100% | Hong Kong |
Utis Co., Ltd. | 100% | Korea |
Rogers Germany GmbH | 100% | Germany |
Rogers Korea, Inc. | 100% | Korea |
Arlon Holdings, LLC | 100% | Delaware |
Arlon LLC | 100% | Delaware |
Arlon MED International LLC | 100% | Delaware |
Rogers Material Technologies (Suzhou) Co., Ltd | 100% | China |
Arlon Materials for Electronics Co., Ltd | 100% | China |
Rogers Hungary KfT | 100% | Hungary |
Rogers Finance (Ireland) Unlimited Company | 100% | Ireland |
Rogers Finance (Luxembourg) Sarl | 100% | Luxembourg |
Chandler Holdings I Corporation | 100% | Delaware |
DeWAL Industries, Inc. | 100% | Rhode Island |
Diversified Silicone Products Corporation | 100% | Delaware |
Griswold LLC | 100% | Delaware |
Rogers Inoac Corporation * | 50% | Japan |
Rogers Inoac Suzhou Corporation * | 50% | China |
* | These entities are unconsolidated joint ventures and accordingly are not included in the consolidated financial statements of Rogers Corporation, except to the extent required by the equity method of accounting. |
1. | I have reviewed this Annual Report on Form 10-K 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 fourth fiscal quarter 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 the 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. |
Dated: February 20, 2019 |
/s/ Bruce D. Hoechner |
Bruce D. Hoechner |
President and Chief Executive Officer Principal Executive Officer |
1. | I have reviewed this Annual Report on Form 10-K 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 fourth fiscal quarter 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 the 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. |
Dated: February 20, 2019 |
/s/ Michael M. Ludwig |
Michael M. Ludwig |
Senior Vice President, Chief Financial Officer and Treasurer Principal Financial Officer |
/s/ Bruce D. Hoechner |
Bruce D. Hoechner |
President and Chief Executive Officer Principal Executive Officer |
February 20, 2019 |
/s/ Michael M. Ludwig |
Michael M. Ludwig |
Senior Vice President, Chief Financial Officer and Treasurer Principal Financial Officer |
February 20, 2019 |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Feb. 15, 2019 |
Jun. 30, 2018 |
|
Document Documentand Entity Information [Abstract] | |||
Entity Registrant Name | ROGERS CORP | ||
Entity Trading Symbol | ROG | ||
Entity Central Index Key | 0000084748 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Voluntary Filer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Well-known Season Filer | Yes | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 18,438,502 | ||
Entity Public Float | $ 2,026,896,605 |
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) - USD ($) shares in Thousands, $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, less allowance for doubtful accounts | $ 1,354 | $ 1,525 |
Property, plant and equipment, net of accumulated depreciation | $ 317,414 | $ 289,909 |
Capital Stock, par value (in dollars per share) | $ 1 | |
Capital Stock, authorized shares | 50,000 | |
Capital Stock, shares issued | 18,395 | |
Capital Stock, shares outstanding | 18,255 |
Organization and Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Summary of Significant Accounting Policies | Note 1 – Basis of Presentation, Organization and Summary of Significant Accounting Policies As used herein, the terms “Company,” “Rogers,” “we,” “us,” “our” and similar terms mean Rogers Corporation and its subsidiaries, unless the context indicates otherwise. Principles of Consolidation The consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries, after elimination of inter-company accounts and transactions. The preparation of financial statements, in conformity with accounting principles generally accepted in the United States (U.S. GAAP), requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Reclassification On January 1, 2018, the Company adopted ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-Retirement Benefit Cost. Upon adoption, the Company reclassified $1.6 million and $3.0 million in net periodic pension benefits from “Selling, general and administrative expenses” to “Other income (expense), net” for the years ended December 31, 2017 and 2016, respectively. Refer to “Note 19 – Recent Accounting Standards” for further information. Organization Our reporting structure is comprised of three strategic operating segments: Advanced Connectivity Solutions (ACS), Elastomeric Material Solutions (EMS) and Power Electronics Solutions (PES). The remaining operations are accumulated and reported as our Other operating segment. Advanced Connectivity Solutions Our ACS operating segment designs, develops, manufactures and sells circuit materials and solutions enabling high-performance and high-reliability connectivity for applications in wireless infrastructure (e.g., power amplifiers, antennas, small cells and distributed antenna systems), automotive (e.g., active safety, advanced driver assistance systems, telematics and thermal management), aerospace and defense, connected devices (e.g., mobile internet devices and Internet of Things), wired infrastructure (e.g., computing and IP infrastructure) and consumer electronics. We believe these products have characteristics that offer performance and other functional advantages in many market applications that serve to differentiate our products from other commonly available materials. These products are sold principally to independent and captive printed circuit board fabricators that convert our laminates to custom printed circuits. Trade names for our ACS products include: RO3000®, RO4000®, RT/duroid®, TMM®, AD SeriesTM and CLTE SeriesTM. As of December 31, 2018, our ACS operating segment had manufacturing and administrative facilities in Chandler, Arizona; Rogers, Connecticut; Bear, Delaware; Evergem, Belgium; and Suzhou, China. Elastomeric Material Solutions Our EMS operating segment designs, develops, manufactures and sells engineered material solutions for a wide variety of applications and end markets. These include polyurethane and silicone materials used in critical cushioning, sealing and vibration management applications for portable electronics (e.g., smart phones), automotive, aerospace, rail, footwear and printing end markets; customized silicones used in flex heater and semiconductor thermal applications; polytetrafluoroethylene and ultra-high molecular weight polyethylene materials used in wire and cable, pressure-sensitive tapes and automotive applications. We believe these materials have characteristics that offer functional advantages in many market applications which serve to differentiate Rogers’ products from other commonly available materials. EMS products are sold globally to converters, fabricators, distributors and original equipment manufacturers (OEMs). Trade names for our EMS products include: PORON®, BISCO®, DeWAL®, ARLON®, DSP®, Griswold®, eSORBA®, XRD®, HeatSORB™ and R/bak®. In July 2018, we acquired Griswold LLC (Griswold), a manufacturer of a wide range of high-performance engineered cellular elastomer and microcellular polyurethane products and solutions. In January 2017, we acquired the principal operating assets of Diversified Silicone Products, Inc. (DSP), a custom silicone product development and manufacturing business, serving a wide range of high reliability applications, and in November 2016, we acquired DeWAL Industries LLC (DeWAL), a manufacturer of polytetrafluoroethylene and ultra-high molecular weight polyethylene films, pressure sensitive tapes and specialty products for the industrial, aerospace, automotive, and electronics markets. The acquisitions of Griswold, DSP and DeWAL, and their subsequent integration into our EMS operating segment, have enabled us to increase scale and complement our existing product offerings, thus enhancing our ability to support our customers. As of December 31, 2018, our EMS operating segment had administrative and manufacturing facilities in Moosup, Connecticut; Rogers, Connecticut; Woodstock, Connecticut; Bear, Delaware; Carol Stream, Illinois; Narragansett, Rhode Island; Santa Fe Springs, California; Ansan, South Korea; and Suzhou, China. We also own 50% of: (1) Rogers Inoac Corporation (RIC), a joint venture established in Japan to design, develop, manufacture and sell PORON products predominantly for the Japanese market and (2) Rogers INOAC Suzhou Corporation (RIS), a joint venture established in China to design, develop, manufacture and sell PORON products primarily for RIC customers in various Asian countries. INOAC Corporation owns the remaining 50% of both RIC and RIS. RIC has manufacturing facilities at the INOAC facilities in Nagoya and Mie, Japan, and RIS has manufacturing facilities at Rogers’ facilities in Suzhou, China. Power Electronics Solutions Our PES operating segment designs, develops, manufactures and sells ceramic substrate materials for power module applications (e.g., variable frequency drives, vehicle electrification and renewable energy), laminated busbars for power inverter and high power interconnect applications (e.g., mass transit, hybrid-electric and electric vehicles, renewable energy and variable frequency drives) and micro-channel coolers (e.g., laser cutting equipment). We sell our ceramic substrate materials and micro channel coolers under the curamik® trade name, and our busbars under the ROLINX® trade name. As of December 31, 2018, our PES operating segment had manufacturing and administrative facilities in Evergem, Belgium; Eschenbach, Germany; Budapest, Hungary; and Suzhou, China. Other Our Other operating segment consists of elastomer components for applications in ground transportation, office equipment, consumer and other markets; elastomer floats for level sensing in fuel tanks, motors, and storage tanks; and inverters for portable communications and automotive markets. Trade names for our elastomer components include: NITROPHYL® floats for level sensing in fuel tanks, motors, and storage tanks and ENDUR® elastomer rollers. Summary of Significant Accounting Policies Cash Equivalents Highly liquid investments with original maturities of three months or less are considered cash equivalents. These investments are stated at cost, which approximates fair value. Investments in Unconsolidated Joint Ventures We account for our investments in and advances to unconsolidated joint ventures, both of which are 50% owned, using the equity method of accounting. Foreign Currency All balance sheet accounts of foreign subsidiaries are translated or remeasured at exchange rates in effect at each year end, and income statement items are translated using the average exchange rates for the year. Translation adjustments for those entities that operate under a local currency are recorded directly to a separate component of shareholders’ equity, while remeasurement adjustments for those entities that operate under the parent’s functional currency are recorded to the income statement as a component of “Other income (expense), net.” Currency transaction gains and losses are reported as income or expense, respectively, in the consolidated statements of operations as a component of “Other income (expense), net.” Such adjustments resulted in losses of $0.7 million in 2018, gains of $0.9 million in 2017 and losses of $2.7 million in 2016. Allowance for Doubtful Accounts The allowance for doubtful accounts is determined based on a variety of factors that affect the potential collectability of the related receivables, including the length of time receivables are past due, customer credit ratings, financial stability of customers, specific one-time events and past customer history. In addition, in circumstances where we are made aware of a specific customer’s inability to meet its financial obligations, a specific allowance is established. The majority of accounts are individually evaluated on a regular basis and appropriate reserves are established as deemed appropriate based on the criteria previously mentioned. The remainder of the reserve is based on our estimates and takes into consideration historical trends, market conditions and the composition of our customer base. Inventories Inventories are stated at the lower of cost or net realizable value. The cost of inventories is determined using the first in, first out (FIFO) method. An allowance is made for estimated losses due to obsolescence. The allowance is determined for groups of products based on purchases in the recent past and/or expected future demand and market conditions. Abnormal amounts of idle facility expense and waste are not capitalized in inventory. The allocation of fixed production overheads to the inventory cost is based on the normal capacity of the production facilities. Inventories consisted of the following:
Property, Plant and Equipment Property, plant and equipment are stated on the basis of cost. For financial reporting purposes, provisions for depreciation are calculated on a straight-line basis over the following estimated useful lives of the underlying assets:
Software Costs We capitalize certain computer software and software development costs incurred in connection with developing or obtaining computer software for internal use when both the preliminary project stage is completed and it is probable that the software will be used as intended. Capitalized software costs include only (i) external direct costs of materials and services utilized in developing or obtaining computer software, and (ii) compensation and related benefits for employees who are directly associated with the software project. Capitalized software costs are amortized on a straight-line basis when placed into service over the estimated useful lives of the software, which approximates three to five years. Net capitalized software and development costs were $1.7 million and $4.7 million for the years ended December 31, 2018 and 2017, respectively. Capitalized software is included within “Property, plant and equipment, net of accumulated depreciation” in the consolidated statements of financial position. Goodwill and Other Intangible Assets We have made acquisitions over the years that included the recognition of intangible assets. Intangible assets are classified into three categories: (1) goodwill; (2) other intangible assets with definite lives subject to amortization; and (3) other intangible assets with indefinite lives not subject to amortization. Other intangible assets can include items such as trademarks and trade names, licensed technology, customer relationships and covenants not to compete, among other things. Each definite-lived other intangible asset is amortized over its respective economic useful life using the economic attribution method. Goodwill is tested for impairment annually and between annual impairment tests if events or changes in circumstances indicate the carrying value may be impaired. If it is more likely than not that our goodwill is impaired, then we compare the estimated fair value of each of our reporting units to their respective carrying value. If a reporting unit’s carrying value is greater than its fair value, then an impairment is recognized for the excess and charged to operations. We currently have four reporting units with goodwill: ACS, EMS, curamik® and Elastomer Components Division (ECD). Consistent with historical practice, the annual impairment test on these reporting units was performed as of November 30, 2018. The application of the annual goodwill impairment test requires significant judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units and determination of the fair value of each reporting unit. Determining the fair value is subjective and requires the use of significant estimates and assumptions, including financial projections for net sales, gross margin and operating margin, discount rates, terminal year growth rates and future market conditions, among others. We estimated the fair value of our reporting units using an income approach based on the present value of future cash flows through a five year discounted cash flow analysis. The discounted cash flow analysis utilized the discount rates for each of the reporting units ranging from 11.25% for EMS to 12.90% for ECD, and terminal year growth rates ranging from 4.9% for curamik® to 5.9% for ACS. We believe this approach yields the most appropriate evidence of fair value as our reporting units are not easily compared to other corporations involved in similar businesses. We further believe that the assumptions and rates used in our annual goodwill impairment test are reasonable, but inherently uncertain. There were no impairment charges resulting from our goodwill impairment analysis for the year ended December 31, 2018. Our ACS, EMS, curamik® and ECD reporting units had allocated goodwill of approximately $51.7 million, $142.6 million, $68.4 million and $2.2 million respectively, as of December 31, 2018. Indefinite-lived other intangible assets are tested for impairment annually and between annual impairment tests if events or changes in circumstances indicate the carrying value may be impaired. If it is more likely than not that an indefinite-lived other intangible asset is impaired, then we compare the estimated fair value of that indefinite-lived other intangible asset to its respective carrying value. If an indefinite-lived other intangible asset’s carrying value is greater than its fair value, then an impairment charge is recognized for the excess and charged to operations. Consistent with historical practice, the annual impairment test on these reporting units was performed as of November 30, 2018. The application of the annual indefinite-lived other intangible asset impairment test requires significant judgment, including the determination of fair value of each indefinite-lived other intangible asset. Fair value is primarily based on income approaches using discounted cash flow models, which have significant assumptions. Such assumptions are subject to variability from year to year and are directly impacted by global market conditions. There were no impairment charges resulting from our indefinite-lived other intangible assets impairment analysis for the year ended December 31, 2018. The curamik® reporting unit had an indefinite-lived other intangible asset of approximately $4.5 million as of December 31, 2018. Definite-lived other intangible assets are tested for recoverability whenever events or changes in circumstances indicate the carrying value may not be recoverable. The recoverability test involves comparing the estimated sum of the undiscounted cash flows for each definite-lived other intangible asset to its respective carrying value. If a definite-lived other intangible asset’s carrying value is greater than the sum of its undiscounted cash flows, then the definite-lived other intangible asset’s carrying value is compared to its estimated fair value and an impairment charge is recognized for the excess and charged to operations. The application of the recoverability test requires significant judgment, including the identification of the asset group and determination of undiscounted cash flows and fair value of the underlying definite-lived other intangible asset. Determination of undiscounted cash flows requires the use of significant estimates and assumptions, including certain financial projections. Fair value is primarily based on income approaches using discounted cash flow models, which have significant assumptions. Such assumptions are subject to variability from year to year and are directly impacted by global market conditions. There were no impairment charges resulting from our definite-lived other intangible assets impairment analysis for the year ended December 31, 2018. Our ACS, EMS and curamik® reporting units had definite-lived other intangible assets of approximately $7.9 million, $152.2 million and $12.4 million, respectively, as of December 31, 2018. Environmental and Product Liabilities We accrue for our environmental investigation, remediation, operating and maintenance costs when it is probable that a liability has been incurred and the amount can be reasonably estimated. For environmental matters, the most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to each individual site, including existing technology, current laws and regulations and prior remediation experience. For sites with multiple potential responsible parties (PRPs), we consider our likely proportionate share of the anticipated remediation costs and the ability of the other parties to fulfill their obligations in establishing a provision for those costs. When no amount within a range of estimates is more likely to occur than another, we accrue to the low end of the range and disclose the range. When future liabilities are determined to be reimbursable by insurance coverage, an accrual is recorded for the potential liability and a receivable is recorded for the estimated insurance reimbursement amount. We are exposed to the uncertain nature inherent in such remediation and the possibility that initial estimates will not reflect the final outcome of a matter. We review our asbestos-related projections annually in the fourth quarter of each year unless facts and circumstances materially change during the year, at which time we would analyze these projections. We believe the assumptions made on the potential exposure and expected insurance coverage are reasonable at the present time, but are subject to uncertainty based on the actual future outcome of our asbestos litigation. Our estimates of asbestos-related contingent liabilities and related insurance receivables are based on an independent actuarial analysis and an independent insurance usage analysis prepared annually by third parties. The actuarial analysis contains numerous assumptions, including number of claims that might be received, the type and severity of the disease alleged by each claimant, the long latency period associated with asbestos exposure, dismissal rates, average settlement costs, average defense costs, costs of medical treatment, the financial resources of other companies that are co-defendants in claims, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, and the impact of potential changes in legislative or judicial standards, including potential tort reform. Furthermore, any predictions with respect to these assumptions are subject to even greater uncertainty as the projection period lengthens. The insurance usage analysis considers, among other things, applicable deductibles, retentions and policy limits, the solvency and historical payment experience of various insurance carriers, the likelihood of recovery as estimated by external legal counsel and existing insurance settlements. We believe the assumptions used in our models for determining our potential exposure and related insurance coverage are reasonable at the present time, but such assumptions are inherently uncertain. Given the inherent uncertainty in making projections, we plan to re-examine periodically the assumptions used in the projections of current and future asbestos claims, and we will update them if needed based on our experience, changes in the assumptions underlying our models, and other relevant factors, such as changes in the tort system. There can be no assurance that our accrued asbestos liabilities will approximate our actual asbestos-related settlement and defense costs, or that our accrued insurance recoveries will be realized. We believe that it is reasonably possible that we may incur additional charges for our asbestos liabilities and defense costs in the future, that could exceed existing reserves and insurance recovery. We plan to continue to vigorously defend ourselves and believe we have unutilized insurance coverage to mitigate future costs related to this matter. Fair Value of Financial Instruments Management believes that the carrying values of financial instruments, including cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities approximate fair value based on the maturities of these instruments. The fair value of our borrowings under credit facility are determined using discounted cash flows based upon our estimated current interest cost for similar type borrowings or current market value, which falls under Level 2 of the fair value hierarchy. Based on our credit characteristics as of December 31, 2018, borrowings would generally bear interest at LIBOR plus 150.0 basis points. As the current borrowings under our Third Amended Credit Agreement bear interest at adjusted 1-month LIBOR plus 150.0 basis points, we believe the carrying value of our borrowings approximates fair value. For additional information on the calculation of fair value measurements, refer to “Note 2 – Fair Value Measurements.” Hedging Transactions and Derivative Financial Instruments From time to time, we use derivative instruments to manage commodity, interest rate and foreign currency exposures. Derivative instruments are viewed as risk management tools and are not used for trading or speculative purposes. To qualify for hedge accounting treatment, derivatives used for hedging purposes must be designated and deemed effective as a hedge of the identified underlying risk exposure at the inception of the contract. Accordingly, changes in fair value of the derivative contract must be highly correlated with changes in the fair value of the underlying hedged item at inception of the hedge and over the life of the hedge contract. Derivatives used to hedge forecasted cash flows associated with interest rates, foreign currency commitments, or forecasted commodity purchases are accounted for as cash flow hedges. For those derivative instruments that qualify for hedge accounting treatment, if the hedge is highly effective, all changes in the fair value of the derivative hedging instrument are recorded in other comprehensive income (loss). The derivative hedging instrument will be reclassified to earnings when the hedged item impacts earnings. For those derivative instruments that do not qualify for hedge accounting treatment, any related gains and losses are recognized in the consolidated statements of operations as a component of “Other income (expense), net.” For additional information, refer to “Note 3 – Hedging Transactions and Derivative Financial Instruments.” Concentration of Credit and Investment Risk We extend credit on an uncollateralized basis to almost all customers. Concentration of credit and geographic risk with respect to accounts receivable is limited due to the large number and general dispersion of accounts that constitute our customer base. We routinely perform credit evaluations on our customers. As of December 31, 2018 and 2017, there were no customers that individually accounted for more than 10% of total accounts receivable. We have purchased credit insurance coverage for certain accounts receivable. We did not experience significant credit losses on customers’ accounts in 2018, 2017 or 2016. We are subject to credit and market risk by using derivative instruments. 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. We seek to minimize counterparty credit (or repayment) risk by entering into derivative transactions with major financial institutions with investment grade credit ratings. We invest excess cash principally in investment grade government securities and time deposits. We have established guidelines relative to diversification and maturities in order to maintain safety and liquidity. These guidelines are periodically reviewed and modified to reflect changes in market conditions. Income Taxes We are subject to income taxes in the United States and in numerous foreign jurisdictions. The Company accounts for income taxes following Accounting Standards Codification (ASC) 740, Income Taxes, recognizing deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between book and tax basis of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some or all of a deferred tax asset will not be realized. As a result of the Tax Cuts and Jobs Act of 2017 (U.S. Tax Reform), all post-1986 undistributed foreign subsidiary earnings and profits as of December 31, 2018 have been subjected to U.S. tax through the transition tax. Our unremitted foreign earnings could be subject to additional income taxes if they are redeployed outside of their country of origin. The Company did not make any changes in 2018 to its position on the permanent reinvestment of its historical earnings from foreign operations. With the exception of certain Chinese subsidiaries, the Company continues to assert that historical foreign earnings are indefinitely reinvested. As of December 31, 2018 and 2017, the Company had recorded a deferred tax liability of $1.8 million and $3.1 million, respectively, for Chinese withholding tax on undistributed earnings that are not indefinitely reinvested. The other remaining foreign subsidiaries have both the intent and ability to indefinitely reinvest their undistributed earnings and the Company does not expect that these undistributed earnings should give rise to significant additional tax liabilities as a result of such earnings. For additional information regarding U.S. Tax Reform, refer to “Note 14 – Income Taxes.” On December 22, 2017, Staff Accounting Bulletin No. 118 (SAB 118) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the U.S. Tax Reform. December 22, 2018 marked the end of the measurement period for purposes of SAB 118. As such, we have completed our analysis based on currently available legislative updates relating to the U.S. Tax Reform, as well as a more detailed analysis of the post-1986 undistributed earnings and profits that required further adjustment, resulting in a tax expense of $0.2 million in the fourth quarter of 2018 and a total tax expense of $0.2 million for the year ended December 31, 2018. The total tax expense included a $7.5 million benefit related to adjustments to the transition tax and a $7.7 million expense related to the establishment of a valuation allowance against deferred tax assets associated with carried over research and development credits. There were no significant adjustments recorded with respect to finalization of the impact of the U.S. Tax Reform on state taxes and the remeasurement of certain deferred tax assets and liabilities. U.S. Tax Reform includes two new U.S. tax base erosion provisions, the Global Intangible Low-Taxed Income (GILTI) provisions and the Base Erosion and Anti-Abuse Tax (BEAT) provisions. The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary's tangible assets. The Company has elected to account for GILTI tax in the period in which it is incurred, and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the year ended December 31, 2018. The BEAT provisions eliminate the deduction of certain base-erosion payments made to related foreign corporations, and impose a minimum tax if greater than regular tax. Starting January 1, 2018, the Company has accounted for BEAT in the period in which it is incurred to the extent the Company is subject to it. We have determined that our base erosion payments do not exceed the threshold for applicability for the year ended December 31, 2018 and we do not currently anticipate any significant long-term impact from the BEAT on our effective tax rate in future periods. We record benefits for uncertain tax positions based on an assessment of whether it is more likely than not that the tax positions will be sustained by the taxing authorities. If this threshold is not met, no tax benefit of the uncertain position is recognized. If the threshold is met, we recognize the largest amount of the tax benefit that is greater than fifty percent likely to be realized upon ultimate settlement. We recognize interest and penalties within the “Income tax expense” line item in the consolidated statements of operations. Accrued interest and penalties are included within the related tax liability line item in the consolidated statements of financial position. Revenue Recognition Recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the providing entity expects to be entitled in exchange for those goods or services. We recognize revenue when all of the following criteria are met: (1) we have entered into a binding agreement, (2) the performance obligations have been identified, (3) the transaction price to the customer has been determined, (4) the transaction price has been allocated to the performance obligations in the contract, and (5) the performance obligations have been satisfied. The majority of our shipping terms permit us to recognize revenue at point of shipment. Some shipping terms require the goods to be through customs or be received by the customer before title passes. In those instances, revenue is not recognized until either the customer has received the goods or they have passed through customs, depending on the circumstances. Shipping and handling costs are treated as fulfillment costs. Sales tax or VAT are excluded from the measurement of the transaction price. Pension and Other Postretirement Benefits We provide various defined benefit pension plans for our U.S. employees and we sponsor multiple fully insured or self-funded medical plans and fully insured life insurance plans for retirees. In 2013, the defined benefit pension plans were frozen, so that future benefits no longer accrue. The costs and obligations associated with these plans are dependent upon various actuarial assumptions used in calculating such amounts. These assumptions include discount rates, long-term rate of return on plan assets, mortality rates, and other factors. The assumptions used in these models are determined as follows: (i) the discount rate used is based on the PruCurve index; (ii) the long-term rate of return on plan assets is determined based on historical portfolio results, market results and our expectations of future returns, as well as current market assumptions related to long-term return rates; and (iii) the mortality rate is based on a mortality projection that estimates current longevity rates and their impact on the long-term plan obligations. We review these assumptions periodically throughout the year and update as necessary. In October 2017, the Company merged two of its defined benefit pension plans: the Rogers Corporation Defined Benefit Pension Plan and the Hourly Employees Pension Plan of Arlon LLC, Microwave Material and Silicone Technologies Divisions, Bear, Delaware (collectively, the Merged Plan). The Company currently intends to terminate the Merged Plan and has requested a determination letter from the Internal Revenue Service (IRS). The termination of the Merged Plan remains subject to final approval by both management and the IRS. The Company plans to provide for lump sum distributions or annuity payments in connection with the termination of the Merged Plan and we expect the settlement process to be completed in 2019. The Company lacks sufficient information as of December 31, 2018 to determine the financial impact of the proposed plan termination. At this time, there are no plans to terminate the Rogers Corporation Employees’ Pension Plan (the Union Plan). For additional information, refer to “Note 12 – Pension, Other Postretirement Benefits and Employee Savings and Investment Plans.” Advertising Costs Advertising costs are expensed as incurred and amounted to $3.8 million, $4.4 million and $3.0 million for 2018, 2017 and 2016, respectively. Earnings Per Share Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. Equity Compensation Equity compensation mainly consists of expense related to restricted stock units and deferred stock units. Performance-based restricted stock unit compensation expense is based on achievement of both market and service conditions. The fair value of these awards is determined based on a Monte Carlo simulation valuation model on the grant date. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period with no changes for final projected payout of the awards. Time-based restricted stock units compensation expense is based on the achievement of only service conditions. The fair value of these awards is determined based on the market value of the underlying stock price on the grant date. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period. Deferred stock units, which are granted to non-management directors, are fully vested on the date of grant and the related shares are generally issued on the 13-month anniversary of the grant date unless the individual elects to defer the receipt of those shares. The fair value of these awards is determined based on the market value of the underlying stock price on the grant date. The compensation related to these grants is expensed immediately on the date of grant. |
Fair Value Measurements |
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Fair Value Measurements | Note 2 – 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 contracts, copper derivative contracts and interest rate swaps. Derivative instruments measured at fair value on a recurring basis, categorized by the level of inputs used in the valuation, include:
For further discussion on our derivative contracts, refer to “Note 3 – Hedging Transactions and Derivative Financial Instruments.” |
Hedging Transactions and Derivative Financial Instruments |
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Hedging Transactions and Derivative Financial Instruments | Note 3 – Hedging Transactions and Derivative Financial Instruments We are exposed to certain risks related to our ongoing business operations. The primary risks being managed through our use of derivative instruments are foreign currency exchange rate risk and commodity pricing risk (primarily related to copper). During 2017, we entered into an interest rate swap to hedge interest rate risk. We do not use derivative financial instruments for trading or speculative purposes. The valuation of derivative contracts used to manage each of these risks is described below:
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 hedge accounting treatment as defined under the applicable accounting guidance. For derivative instruments that are designated and qualify for hedge accounting treatment as cash flow hedges (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 consolidated statements of operations associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings. As of December 31, 2018 and 2017, only our interest rate swap qualified for hedge accounting treatment as a cash flow hedge, and the hedge was highly effective. Foreign Currency During 2018, we entered into Korean Won, Japanese Yen, Euro, Hungarian Forint and Chinese Renminbi forward contracts. We entered into these foreign currency forward contracts to mitigate certain global transactional exposures. These contracts do not qualify for hedge accounting treatment. As a result, any fair value adjustments required on these contracts are recorded in “Other income (expense), net” in our consolidated statements of operations in the period in which the adjustment occurred. As of December 31, 2018 the notional values of these foreign currency forward contracts were as follows:
Commodity As of December 31, 2018, we had 26 outstanding contracts to hedge exposure related to the purchase of copper in our PES and ACS operating segments. These contracts are held with financial institutions and are intended to offset rising copper prices and do not qualify for hedge accounting treatment. As a result, any fair value adjustments required on these contracts are recorded in “Other income (expense), net” in our consolidated statements of operations in the period in which the adjustment occurred. As of December 31, 2018, the volume of our copper contracts outstanding were as follows:
Interest Rates In March 2017, we entered into an interest rate swap to hedge the variable interest rate on $75.0 million of our $450.0 million revolving credit facility. This transaction has been designated as a cash flow hedge and qualifies for hedge accounting treatment. For additional information regarding our revolving credit facility, refer to “Note 11 – Debt and Capital Leases.” Effects on Financial Statements
(1) All balances were recorded in the “Other current assets” or “Other accrued liabilities” line items in the consolidated statements of financial position, except the 2018 interest rate swap balance, which was recorded in the “Other long-term assets” line item in the consolidated statements of financial position. |
Accumulated Other Comprehensive Loss |
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Accumulated Other Comprehensive Loss | Note 4 – Accumulated Other Comprehensive Loss The changes in accumulated other comprehensive loss by component for the years ended December 31, 2018 and 2017 were as follows:
(1) Net of taxes of $9,984, $9,563 and $9,160 for the years ended December 31, 2018, 2017 and 2016, respectively. (2) Net of taxes of $106, $15 and $0 for the years ended December 31, 2018, 2017 and 2016, respectively. The impacts to the statements of operations related to reclassifications from accumulated other comprehensive loss for the years ended December 31, 2018 and 2017 were as follows:
(1) These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. For additional details, refer to “Note 12 – Pension, Other Postretirement Benefits and Employee Savings and Investment Plans.” |
Acquisitions |
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Acquisitions | Note 5 – Acquisitions Griswold On July 6, 2018, we acquired 100% of the membership interests in Griswold for an aggregate purchase price of $78.0 million, net of cash acquired, pursuant to the terms of the Membership Interest Purchase Agreement, dated July 6, 2018 by and among the Company and the owners of Griswold (the MIPA). We used borrowings of $82.5 million under our revolving credit facility to fund the acquisition. There was a possible earn-out capped at $3.0 million based on certain of Griswold’s 2018 product sales. At the time of acquisition, we determined that the probability of the earn-out was extremely low, and as a result, assigned no fair value to the contingent consideration as of the valuation date. No earn-out was actually paid based on the related sales results. Griswold is a manufacturer of a wide range of high-performance engineered cellular elastomer and microcellular polyurethane products and solutions across the automotive, transportation, medical, office products, printing and electronics industries. The acquisition built on our existing EMS platform of engineered materials and added new products and capabilities to the portfolio of our EMS operating segment. The acquisition has been accounted for in accordance with applicable purchase accounting guidance. We recorded goodwill primarily related to the expected synergies from combining operations and the value of Griswold’s existing workforce, which is expected to be deductible for tax purposes. We also recorded other intangible assets related to acquired customer relationships, developed technology, trademarks and trade names, and a covenant not to compete. The following table represents the fair values assigned to the acquired assets and liabilities assumed in the transaction. As of the filing date of this Form 10-K, the purchase accounting and purchase price allocation for the Griswold acquisition are substantially complete, as we continue to refine our valuation of certain acquired assets and assumed liabilities.
The other intangible assets consist of customer relationships valued at $22.1 million, developed technology valued at $9.6 million, trademarks and trade names valued at $1.8 million, and a covenant not to compete valued at $0.6 million. The fair value of acquired identified other intangible assets was determined by applying the income approach, using several significant unobservable inputs for projected cash flows and a discount rate. These inputs are considered Level 3 under the fair value measurements and disclosure guidance. At the acquisition date, the weighted average amortization period for the other intangible asset classes was 9.5 years for customer relationships, 3.5 years for developed technology, 10.4 years for trademarks and trade names, and 3.2 years for the covenant not to compete, resulting in amortization expenses ranging from $0.7 million to $3.0 million annually. The estimated annual future amortization expense is $2.8 million for 2019, $3.0 million for 2020, $2.8 million for 2021, $2.7 million for 2022, and $2.5 million for 2023. During 2018, we incurred transaction costs of $1.1 million related to the Griswold acquisition, which were recorded within selling, general and administrative (SG&A) expenses in the consolidated statements of operations. The results of Griswold have been included in our consolidated financial statements for the period subsequent to the completion of the acquisition on July 6, 2018, through December 31, 2018. Griswold’s net sales for that period totaled $13.7 million. DSP On January 6, 2017, we acquired the principal operating assets of DSP, pursuant to the terms of the Asset Purchase Agreement by and among the Company, DSP and the principal shareholders of DSP (the Purchase Agreement). Pursuant to the terms of the Purchase Agreement, we acquired certain assets and assumed certain liabilities of DSP for a total purchase price of approximately $60.2 million. We used borrowings of $30.0 million under our revolving credit facility in addition to cash on hand to fund the acquisition. The acquisition was accounted for in accordance with applicable purchase accounting guidance. We recorded goodwill primarily related to the expected synergies from combining operations and the value of the existing workforce. We also recorded other intangible assets related to customer relationships, developed technology, trade names and a covenant not to compete. The following table represents the fair values assigned to the acquired assets and liabilities in the transaction:
The other intangible assets consist of customer relationships valued at $30.5 million, developed technology valued at $1.8 million, trademarks valued at $3.3 million, and a covenant not to compete valued at $0.3 million. The fair value of acquired identified other intangible assets was determined by applying the income approach, using several significant unobservable inputs for projected cash flows and a discount rate. These inputs are considered Level 3 under the fair value measurements and disclosure guidance. At the acquisition date, the weighted average amortization period for the other intangible asset classes was 11.8 years for customer relationships, 4.3 years for developed technology, 11.7 years for trademarks, and 4.1 years for the covenant not to compete, resulting in amortization expenses ranging from $1.1 million to $2.0 million annually. The estimated annual future amortization expense is $1.8 million for each of 2019, 2020 and 2021, and $1.7 million for each of 2022 and 2023. During 2017, we incurred transaction costs of $0.5 million related to the DSP acquisition, which were recorded within SG&A expenses in the consolidated statements of operations. DSP’s net sales totaled $22.3 million for the year ended December 31, 2017. DeWAL On November 23, 2016, we acquired all of the membership interests in DeWAL pursuant to the terms of the Membership Interest Purchase Agreement, dated November 23, 2016, by and among the Company and the owners of DeWAL for an aggregate purchase price of $135.5 million. We used borrowings of $136.0 million under our revolving credit facility to fund the acquisition. The acquisition was accounted for in accordance with applicable purchase accounting guidance. We recorded goodwill, primarily related to the expected synergies from combining operations and the value of the existing workforce. We also recorded other intangible assets related to customer relationships, developed technology, trade names and covenants not to compete. The following table represents the fair values assigned to the acquired assets and liabilities in the transaction:
The other intangible assets consist of customer relationships valued at $46.7 million, developed technology valued at $22.0 million, trademarks valued at $4.3 million, and covenants not to compete valued at $0.5 million. The fair value of acquired identified other intangible assets was determined by applying the income approach, using several significant unobservable inputs for projected cash flows and a discount rate. These inputs are considered Level 3 under the fair value measurements and disclosure guidance. At the acquisition date, the weighted average amortization period for the other intangible asset classes was 13.5 years for customer relationships, 8.6 years for developed technology, 5.2 years for trademarks, and 3.8 years for the covenants not to compete, resulting in amortization expenses ranging from $2.4 million to $4.3 million, annually. The future estimated annual amortization expense is $4.1 million for 2019, $4.3 million for each of 2020, 2021, 2022 and 2023. During 2016, we incurred transaction costs of $2.1 million related to the DeWAL acquisition, which were recorded within SG&A expenses in the consolidated statements of operations. DeWAL’s net sales totaled $5.4 million for the year ended December 31, 2016. Pro Forma Financial Information The following unaudited pro forma financial information presents the combined results of operations of Rogers, Griswold, DSP, and DeWAL as if the Griswold acquisition had occurred on January 1, 2017, the DSP acquisition had occurred on January 1, 2016 and the DeWAL acquisition had occurred on January 1, 2015. The unaudited pro forma financial information is not intended to represent or be indicative of our consolidated results of operations that would have been reported had the Griswold, DSP, and DeWAL acquisitions been completed as of January 1, 2017, January 1, 2016 and January 1, 2015, respectively, and should not be taken as indicative of our future consolidated results of operations.
Isola Asset Acquisition On August 28, 2018, the Company entered into an Asset Purchase Agreement (APA) with Isola USA Corp. (Isola) to acquire a production facility and related machinery and equipment located in Chandler, Arizona for cash consideration of $43.4 million. In connection with the APA, the Company also entered into a Transition Services Agreement and a Lease Agreement with Isola whereby Isola leases back a portion of the facility and related machinery and equipment from the Company during the transition period through December 31, 2019. We used cash on hand to fund the asset purchase. This transaction was evaluated under ASC 805, Business Combinations and was determined to be an asset acquisition as the transaction did not meet the definition of a business. The assets acquired in connection with the acquisition were recorded by the Company at their estimated relative fair values as follows:
The $45.8 million of capitalized cost summarized above includes both lease consideration valued at $2.0 million and transaction costs incurred of $0.4 million. |
Property, Plant and Equipment |
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Property, Plant and Equipment | Note 6 – Property, Plant and Equipment
Depreciation expense was $33.5 million in 2018, $29.3 million in 2017 and $26.6 million in 2016. Additionally, we recognized $1.5 million in impairment charges on certain assets in connection with the Isola asset acquisition. In the second quarter of 2017, we began actively marketing for sale unutilized property in Chandler, Arizona, consisting of a building and two adjacent parcels of land with an aggregate net book value of $0.9 million. In the second quarter of 2018, we completed the sale of the building and one parcel of land and recognized a gain on sale of approximately $0.4 million in operating income. The remaining parcel of land, which was previously classified as held for sale, had a net book value of $0.4 million and was reclassified in the third quarter of 2018 to held and used as the initial held for sale classification had surpassed one year. In the third quarter of 2017, we completed the sale of a facility located in Belgium that had been classified as held for sale as of June 30, 2017 and recognized a gain on sale of approximately $4.4 million in operating income. In the first quarter of 2017, we completed the planned sale of a parcel of land in Belgium that had been classified as held for sale as of December 31, 2016 and recognized a gain on sale of approximately $0.9 million in operating income. |
Goodwill and Other Intangible Assets |
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Goodwill and Other Intangible Assets | Note 7 – Goodwill and Other Intangible Assets On July 6, 2018, we acquired Griswold. For further detail on the goodwill and other intangible assets recorded in connection with the acquisition, refer to “Note 5 – Acquisitions.” Goodwill The changes in the carrying amount of goodwill for the period ending December 31, 2018, by operating segment, were as follows:
Other Intangible Assets The changes in the carrying amount of other intangible assets for the two-year period ending December 31, 2018, were as follows:
In the table above, gross carrying amounts and accumulated amortization may differ from prior periods due to foreign exchange rate fluctuations. Amortization expense was approximately $16.5 million, $14.8 million and $11.2 million in 2018, 2017 and 2016, respectively. The estimated annual future amortization expense is $17.7 million, $14.6 million, $13.8 million, $13.3 million and $12.7 million in 2019, 2020, 2021, 2022 and 2023, respectively. These amounts could vary based on changes in foreign currency exchange rates. The weighted average amortization period as of December 31, 2018, by definite-lived other intangible asset class, is presented in the table below:
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Note 8 – Earnings Per Share Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. The following table sets forth the computation of basic and diluted earnings per share:
Certain options to purchase shares were excluded from the calculation of diluted weighted-average shares outstanding because the exercise price was greater than the average market price of our capital stock during the year. For 2018, 36,642 shares were excluded. No shares were excluded in 2017 and 2016. |
Capital Stock and Equity Compensation |
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Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Stock and Equity Compensation | Note 9 – Capital Stock and Equity Compensation Capital Stock Our 2009 Long-Term Equity Compensation Plan, which expired in early February 2019, permitted the granting of restricted stock units and certain other forms of equity awards to officers and other key employees. Under this plan, we also awarded each non-management director deferred stock units, which permitted non-management directors to receive, at a later date, one share of Rogers capital stock for each deferred stock unit, with no payment of any consideration by the director at the time the shares were received. Shares of capital stock reserved for possible future issuance were as follows:
(3) This plan expired in early February 2019, and these shares are no longer available for issuance thereunder. Equity Compensation Performance-Based Restricted Stock Units As of December 31, 2018, we had performance-based restricted stock units from 2018, 2017 and 2016 outstanding. These awards generally cliff vest at the end of a three year measurement period. However, employees whose employment terminates during the measurement period due to death, disability, or, in certain cases, retirement may receive a pro-rata payout based on the number of days they were employed during the measurement period. Participants are eligible to be awarded shares ranging from 0% to 200% of the original award amount, based on certain defined performance measures. The outstanding awards have one measurement criteria: the three year total shareholder return (TSR) on our capital stock as compared to that of a specified group of peer companies. The TSR measurement criteria of the awards is considered a market condition. As such, the fair value of this measurement criteria is determined on the grant date using a Monte Carlo simulation valuation model. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period with no changes for final projected payout of the awards. We account for forfeitures as they occur. Below were the assumptions used in the Monte Carlo calculation on the respective grant dates for awards granted in 2018 and 2017:
Expected volatility – In determining expected volatility, we have considered a number of factors, including historical volatility. Expected term – We use the vesting period of the award to determine the expected term assumption for the Monte Carlo simulation valuation model. Risk-free interest rate – We use an implied “spot rate” yield on U.S. Treasury Constant Maturity rates as of the grant date for our assumption of the risk-free interest rate. Expected dividend yield – We do not currently pay dividends on our capital stock; therefore, a dividend yield of 0% was used in the Monte Carlo simulation valuation model. A summary of activity of the outstanding performance-based restricted stock units for 2018, 2017 and 2016 is presented below:
We recognized $4.4 million, $4.7 million and $4.6 million of compensation expense related to performance-based restricted stock units for the years ended December 31, 2018, 2017 and 2016, respectively. As of December 31, 2018, there was $6.0 million of total unrecognized compensation cost related to unvested performance-based restricted stock units. That cost is expected to be recognized over a weighted-average period of 0.9 years. Time-Based Restricted Stock Units As of December 31, 2018, we had time-based restricted stock unit awards from 2018, 2017 and 2016 outstanding. The outstanding awards all ratably vest on the first, second and third anniversaries of the original grant date. However, employees whose employment terminates during the measurement period due to death, disability, or, in certain cases, retirement may receive a pro-rata payout based on the number of days they were employed subsequent to the last grant anniversary date. Each time-based restricted stock unit represents a right to receive one share of the Rogers’ capital stock at the end of the vesting period. The fair value of the award is determined by the market value of the underlying stock price at the grant date. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period. We account for forfeitures as they occur. A summary of activity of the outstanding time-based restricted stock units for 2018, 2017 and 2016 is presented below:
We recognized $5.6 million, $5.7 million and $5.6 million of compensation expense related to time-based restricted stock units for the years ended December 31, 2018, 2017 and 2016, respectively. As of December 31, 2018, there was $6.7 million of total unrecognized compensation cost related to unvested time-based restricted stock units. That cost is expected to be recognized over a weighted-average period of 0.9 years. Deferred Stock Units We grant deferred stock units to non-management directors. These awards are fully vested on the date of grant and the related shares are generally issued on the 13-month anniversary of the grant date unless the individual elects to defer the receipt of those shares. Each deferred stock unit results in the issuance of one share of Rogers’ capital stock. The grant of deferred stock units is typically done annually during the second quarter of each year. The fair value of the award is determined by the market value of the underlying stock price at the grant date. A summary of activity of the outstanding deferred stock units for 2018, 2017 and 2016 is presented below:
We recognized compensation expense related to deferred stock units of $0.9 million, $1.0 million and $0.7 million, for the years ended December 31, 2018, 2017 and 2016, respectively. Stock Options Stock options have been granted under various equity compensation plans. The maximum contractual term for all options is normally 10 years. We have not granted any stock options since the first quarter of 2012. As of February 2016, all outstanding stock option awards were fully vested and the related compensation cost had been expensed. The total grant-date fair value of stock options that vested during 2016 and the equity compensation expense related to stock options that we recognized in 2016 were both de minimis. During the years ended December 31, 2018 and 2017, the total intrinsic value of options exercised (i.e., the difference between the market price at time of exercise and the price paid by the individual to exercise the options) was $2.4 million and $6.0 million, respectively. The total amount of cash received from the exercise of these options was $0.9 million and $3.1 million, during the years ended December 31, 2018 and 2017, respectively. A summary of the activity under our stock option plans for 2018, 2017 and 2016, is presented below:
As of December 31, 2018 and 2017, our outstanding stock options had a weighted-average remaining contractual life of 2.0 years and 2.2 years, respectively, and an aggregate intrinsic value of $0.7 million and $4.2 million, respectively. Employee Stock Purchase Plan We have an ESPP that allows eligible employees to purchase, through payroll deductions, shares of our capital stock at a discount to fair market value. The ESPP has two six-month offering periods each year, the first beginning in January and ending in June and the second beginning in July and ending in December. The ESPP contains a look-back feature that allows the employee to acquire stock at a 15% discount from the underlying market price at the beginning or end of the applicable period, whichever is lower. We recognize compensation expense on this plan ratably over the offering period based on the fair value of the anticipated number of shares that will be issued at the end of each offering period. Compensation expense is adjusted at the end of each offering period for the actual number of shares issued. Fair value is determined based on two factors: (i) the 15% discount on the underlying stock’s market value on the first day of the applicable offering period, and (ii) the fair value of the look-back feature determined by using the Black-Scholes model. We recognized approximately $0.3 million of compensation expense associated with the plan for the year ended December 31, 2018, and $0.5 million for each of the years ended December 31, 2017 and 2016, respectively. |
Joint Ventures |
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Joint Ventures | Note 10 – Joint Ventures As of December 31, 2018, we had two joint ventures, each 50% owned, which are accounted for under the equity method of accounting.
We recognized equity income related to the joint ventures of $5.5 million, $4.9 million and $4.1 million for the years ended December 31, 2018, 2017 and 2016, respectively. These amounts are presented in “Equity income in unconsolidated joint ventures” on our consolidated statements of operations. The summarized financial information for the joint ventures for the periods indicated was as follows:
Receivables from and payables to joint ventures arise during the normal course of business from transactions between us and the joint ventures. As of December 31, 2018 and 2017, we had receivables of $1.5 million and $3.7 million, respectively, due from RIC, RIS, our affiliated partner in the joint ventures, as well as its subsidiaries. These receivables are included in “Accounts receivable, less allowance for doubtful accounts” on our consolidated statements of financial position. As of December 31, 2018 and 2017, we owed payables of $2.3 million and $2.1 million, respectively, to RIC and RIS. These payables are included in “Accounts payable” on our consolidated statements of financial position. |
Debt and Capital Leases |
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Debt Disclosure [Abstract] | |
Debt and Capital Leases | Note 11 – Debt and Capital Leases Debt On February 17, 2017, we entered into a secured five year credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (the Third Amended Credit Agreement), which increased the principal amount of our revolving credit facility to up to $450.0 million borrowing capacity, with sublimits for multicurrency borrowings, letters of credit and swing-line notes, and provided an additional $175.0 million accordion feature. Borrowings may be used to finance working capital needs, for letters of credit and for general corporate purposes in the ordinary course of business, including the financing of permitted acquisitions (as defined in the Third Amended Credit Agreement). In 2018, we borrowed $82.5 million under our revolving credit facility to fund the acquisition of Griswold and an additional $20.0 million to fund the Merged Plan as part of the proposed plan termination process. Borrowings under the Third Amended Credit Agreement can be made as alternate base rate loans or euro-currency loans. Alternate base rate loans bear interest that includes a base reference rate plus a spread of 37.5 to 75.0 basis points, depending on our leverage ratio. The base reference rate is the greater of the prime rate; federal funds effective rate (or the overnight bank funding rate, if greater) plus 50 basis points. Euro-currency loans bear interest based on adjusted LIBOR plus a spread of 137.5 to 175.0 basis points, depending on our leverage ratio. Based on our leverage ratio as of December 31, 2018, the spread was 150.0 basis points. We incurred interest expense on our outstanding debt of $6.1 million, $5.2 million, and $3.1 million for the years ended December 31, 2018, 2017 and 2016, respectively. In addition to interest payable on the principal amount of indebtedness outstanding from time to time under the Third Amended Credit Agreement, we are required to pay a quarterly fee of 20 to 30 basis points (based upon our leverage ratio) of the unused amount of the lenders’ commitments under the Third Amended Credit Agreement. We incurred an unused commitment fee of $0.6 million, $0.6 million and $0.4 million for the years ended December 31, 2018, 2017 and 2016, respectively. The Third Amended Credit Agreement contains customary representations, warranties, covenants, mandatory prepayments and events of default under which our payment obligations may be accelerated. If an event of default occurs, the lenders may, among other things, terminate their commitments and declare all outstanding borrowings to be immediately due and payable together with accrued interest and fees. The financial covenants include requirements to maintain (1) a leverage ratio of no more than 3.25 to 1.00, subject to an election to increase the maximum leverage ratio to 3.50 to 1.00 for one fiscal year in connection with a permitted acquisition, and (2) an interest coverage ratio of no less than 3.00 to 1.00. All obligations under the Third Amended Credit Agreement are guaranteed by each of our existing and future material domestic subsidiaries, as defined in the Third Amended Credit Agreement (the Guarantors). The obligations are also secured by a Third Amended and Restated Pledge and Security Agreement, dated as of February 17, 2017, entered into by us and the Guarantors which grants to the administrative agent, for the benefit of the lenders, a security interest, subject to certain exceptions, in substantially all of the non-real estate assets of the Guarantors. These assets include, but are not limited to, receivables, equipment, intellectual property, inventory, and stock in certain subsidiaries. All revolving loans are due on the maturity date, February 17, 2022. We are not required to make any quarterly principal payments under the Third Amended Credit Agreement and as of December 31, 2018, we had $228.5 million in outstanding borrowings under our revolving credit facility. However, we made discretionary principal payments totaling $5.0 million and $110.2 million on our revolving credit facility in 2018 and 2017, respectively. As of December 31, 2018, we had $1.7 million of outstanding line of credit issuance costs that will be amortized over the life of the Third Amended Credit Agreement, which will terminate in February 2022. We recorded amortization expense of $0.6 million and $0.5 million for the years ended December 31, 2018 and 2017, respectively, related to these deferred costs. In March 2017, we entered into an interest rate swap to hedge the variable interest rate on $75.0 million of our $450.0 million revolving credit facility. For further information regarding the interest rate swap, refer to “Note 3 – Hedging Transactions and Derivative Financial Instruments.” Restriction on Payment of Dividends Our Third Amended Credit Agreement generally permits us to pay cash dividends to our shareholders, provided that (i) no default or event of default has occurred and is continuing or would result from the dividend payment and (ii) our leverage ratio does not exceed 2.75 to 1.00. If our leverage ratio exceeds 2.75 to 1.00, we may nonetheless make up to $20.0 million in restricted payments, including cash dividends, during the fiscal year, provided that no default or event of default has occurred and is continuing or would result from the payments. Our leverage ratio did not exceed 2.75 to 1.00 as of December 31, 2018. Capital Leases We have a capital lease obligation related to our manufacturing facility in Eschenbach, Germany. Under the terms of the leasing agreement, we have an option to purchase the property 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 residual book value of the land including the buildings and installations thereon. The total obligation recorded for this lease as of December 31, 2018 and 2017 was $5.0 million and $5.7 million, respectively. Depreciation expense related to this capital lease was $0.3 million for each of the years ending December 31, 2018, 2017 and 2016. The depreciation expense related to this capital lease was recorded in “Cost of sales” on our consolidated statements of operations. Accumulated depreciation as of December 31, 2018 and 2017 was $3.5 million and $3.3 million, respectively. We also incurred an immaterial amount of interest expense on this capital lease for the years ended December 31, 2018, 2017 and 2016, respectively. The interest expense related to this capital lease was recorded in “Interest expense, net” on our consolidated statements of operations. |
Pension, Other Postretirement Benefits and Employee Savings and Investment Plans |
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Pension, Other Postretirement Benefits and Employee Savings and Investment Plans | Note 12 – Pension, Other Postretirement Benefits and Employee Savings and Investment Plans Pension and Other Postretirement Benefits As of December 31, 2018, we had two qualified noncontributory defined benefit pension plans: 1) the Union Plan and 2) the Merged Plan. All qualified noncontributory defined benefit pension plans have been frozen and have ceased accruing benefits. The Company also maintains the Rogers Corporation Amended and Restated Pension Restoration Plan effective as of January 1, 2004 and the Rogers Corporation Amended and Restated Pension Restoration Plan effective as of January 1, 2005 (collectively, the Nonqualified Plans). The Nonqualified Plans serve to restore certain retirement benefits that might otherwise be lost due to limitations imposed by federal law on qualified pension plans, as well as to provide supplemental retirement benefits, for certain senior executives of the Company. In addition, we sponsor multiple fully insured or self-funded medical plans and life insurance plans for certain retirees. The measurement date for all plans is December 31st for each respective plan year. We are required, as an employer, to: (a) recognize in our consolidated statements of financial position an asset for a plan’s overfunded status or a liability for a plan’s underfunded status; (b) measure a plan’s assets and our obligations that determine our funded status as of the end of the year; and (c) recognize changes in the funded status of a defined benefit postretirement plan in the year in which the changes occur and report these changes in accumulated other comprehensive loss. In addition, actuarial gains and losses that are not immediately recognized as net periodic pension cost are recognized as a component of accumulated other comprehensive loss and amortized into net periodic pension cost in future periods. Pension Plan Merger and Proposed Termination The Company currently intends to terminate the Merged Plan and has requested a determination letter from the IRS. The termination of the Merged Plan remains subject to final approval by both management and the IRS. The Company plans to provide for lump sum distributions or annuity payments in connection with the termination of the Merged Plan and we expect the settlement process to be completed in 2019. The Company lacked sufficient information as of December 31, 2018 to determine the financial impact of the proposed plan termination. At this time, there are no plans to terminate the Union Plan.
Amounts included in the consolidated statements of financial position consist of:
The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with an accumulated benefit obligation in excess of plan assets were $0.2 million, $0.2 million and $0.0 million, respectively, as of December 31, 2018 and $155.8 million, $155.8 million and $147.1 million, respectively, as of December 31, 2017. The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with plan assets in excess of an accumulated benefit obligation were $172.4 million, $172.4 million and $191.7 million, respectively, as of December 31, 2018. For 2017, the projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with plan assets in excess of an accumulated benefit obligation were $30.0 million, $30.0 million and $33.0 million, respectively. Components of Net Periodic (Benefit) Cost
The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $1.8 million. The estimated net benefit for the defined benefit postretirement plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $1.0 million. Weighted-average assumptions used to determine benefit obligations at December 31:
Weighted-average assumptions used to determine net benefit cost for the years ended December 31:
Rate of compensation increase - An expected rate of compensation increase was not included in the weighted average assumptions as there would be no impact to the net benefit cost, as the plans have been previously frozen. Discount rate - To determine the discount rate, we review current market indices of high quality corporate bonds, particularly the PruCurve index, to ensure that the rate used in our calculations is consistent and within an acceptable range based on these indices, which reflect current market conditions. The market-based rates are modified to be Rogers-specific, which is done by applying our pension benefit cash flow projections to the generic index rate. Long-term rate of return on assets - To determine the expected long-term rate of return on plan assets, we review historical and projected portfolio performance, the historical long-term rate of return, and we consider how any change in the allocation of the assets could affect the anticipated returns. Adjustments are made to the projected rate of return if it is deemed necessary based on those factors and other current market trends. Health care cost trend rates - For measurement purposes as of December 31, 2018, we assumed an annual health care cost trend rates of 7.00% and 7.00% for covered health care benefits for retirees pre-age 65 and post-age 65, respectively. The rates were assumed to decrease gradually by 0.25% annually until reaching 4.50% and 4.50%, respectively, and remain at those levels thereafter. For measurement purposes as of December 31, 2017, we assumed annual health care cost trend rates of 7.25% and 7.25% for covered health care benefits for retirees pre-age 65 and post-age 65, respectively. Assumed health care cost trend rates may have a significant effect on the amounts reported for the health care plans. A one-percentage point change in assumed health care cost trend rates would have been expected to have the following effects as of December 31, 2018:
Pension Plan Assets Our defined benefit pension assets are invested with the objective of achieving a total rate of return over the long-term that is sufficient to fund future pension obligations. In managing these assets and our investment strategy, we take into consideration future cash contributions to the plans, as well as the potential of the portfolio underperforming the market, which is partially mitigated by maintaining a diversified portfolio of assets. In order to meet our investment objectives, we set asset allocation target ranges based on current funding status and future projections in order to mitigate the risk in the plan while maintaining its funded status. In November 2014, we implemented a pension risk reduction strategy related to our investments, which included a change in our asset mix to hold a larger amount of fixed income securities. As of December 31, 2018, we held approximately 1% equity securities and 99% fixed income and short-term cash securities in our portfolio, compared to December 31, 2017 when we held approximately 4% equity securities and 96% fixed income securities. In determining our investment strategy and calculating the net benefit cost, we utilized an expected long-term rate of return on plan assets. This rate is developed based on several factors, including the plans’ asset allocation targets, the historical and projected performance on those asset classes, and the plans’ current asset composition. To justify our assumptions, we analyze certain data points related to portfolio performance. For example, we analyze the actual historical performance of our total plan assets, which has generated a return of approximately 7.05% over the past 20 year period. Based on the historical returns and the projected future returns, we determined that a target return of 4.69% is appropriate for the current portfolio. Investments were stated at fair value as of the dates reported. Securities traded on a national securities exchange are valued at the last reported sales price on the last business day of the plan year. The fair value of the guaranteed deposit account was determined through discounting expected future investment cash flow from both investment income and repayment of principal for each investment purchased. The estimated fair values of the participation units owned by the plan in pooled separate accounts were based on quoted redemption values and adjusted for management fees and asset charges, as determined by the recordkeeper, on the last business day of the relevant plan year. Pooled separate accounts are accounts established solely for the purpose of investing the assets of one or more plans. Funds in a separate account are not commingled with other Company assets for investment purposes. The following table presents the fair value of the pension plan net assets by asset category and level, within the fair value hierarchy, as of December 31, 2018 and 2017.
The table below sets forth a summary of changes in the fair value of the guaranteed deposit account’s Level 3 assets for the year ended December 31, 2018:
Cash Flows Contributions We made a voluntary contribution of $25.0 million to the Merged Plan during the third quarter of 2018 as part of the proposed plan termination process. We made required contributions of $0.4 million to our qualified defined benefit pension plans in 2017. As there is no funding requirement for the Nonqualified Plans or the Retiree Health and Life Insurance benefit plans, we fund the amount of benefit payments made during the year. Estimated Future Payments The following pension benefit payments are expected to be paid through the utilization of plan assets for the funded plans and from the Company’s operating cash flows for the unfunded plans. The Retiree Health and Life Insurance benefits, for which no funding has been made, are expected to be paid from the Company’s operating cash flows. The benefit payments are based on the same assumptions used to measure our benefit obligation at the end of fiscal 2018.
Employee Savings and Investment Plans We sponsor the Rogers Employee Savings and Investment Plan (RESIP), a 401(k) plan for domestic employees. Employees can defer an amount they choose, up to the annual IRS limit of $18,500. Certain eligible participants are also allowed to contribute the maximum catch-up contribution per IRS regulations. Our matching contribution is 6% of an eligible employee’s annual pre-tax contribution at a rate of 100% for the first 1% and 50% for the next 5% for a total match of 3.5%. Unless otherwise indicated by the participant, the matching dollars are invested in the same funds as the participant’s contributions. RESIP related expense amounted to $5.6 million in 2018, $4.0 million in 2017 and $3.0 million in 2016, which related solely to our matching contributions. We acquired Griswold in July 2018 and eligible Griswold employees were included in the Griswold LLC 401K Plan. As of January 2019, eligible Griswold employees are being included in the RESIP. Compensation expense related to the additional Griswold employees was de minimis in 2018. We acquired DSP in January 2017 and DeWAL in November 2016. Eligible DSP and DeWAL employees were included in the RESIP as of the third quarter of 2017 and the first quarter of 2018, respectively. Compensation expense related to the additional DSP and DeWAL employees was de minimis in 2017. DeWAL employees were initially included under the DeWAL Industries, Inc. 401k Profit Sharing Plan (DeWAL Plan) from the acquisition date through the end of 2017. The DeWAL Plan matching contribution was 100% of the first 3% of employee pre-tax contributions. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Note 13 – Commitments and Contingencies Leases Our principal non-cancelable operating lease obligations are for building space and vehicles. The leases generally provide that we pay maintenance costs. The lease periods typically range from one to five years and include purchase or renewal provisions. We have leases that are cancelable with minimal notice. Additionally, we have capital leases for our manufacturing facility in Eschenbach, Germany as well as office related equipment in various worldwide locations. The following table includes future minimum lease payments under capital leases together with the present value of the net future minimum lease payments as of December 31, 2018:
The following table includes future minimum lease payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2018:
The following table includes lease expense for each of the three years ended December 31, 2018:
Environmental & Legal We are currently engaged in the following environmental and legal proceedings: Voluntary Corrective Action Program Our location in Rogers, Connecticut is part of the Connecticut Voluntary Corrective Action Program (VCAP). As part of this program, we partnered with the Connecticut Department of Energy and Environmental Protection (CT DEEP) to determine the corrective actions to be taken at the site related to contamination issues. We evaluated this matter and completed internal due diligence work related to the site in the fourth quarter of 2015. Remediation activities on the site are ongoing and are recorded as reductions to the accrual as they are incurred. We have incurred aggregate remediation costs of $0.7 million through December 31, 2018, and the accrual for future remediation efforts is $1.7 million. Asbestos Overview We, like many other industrial companies, have been named as a defendant in a number of lawsuits filed in courts across the country by persons alleging personal injury from exposure to products containing asbestos. We have never mined, milled, manufactured or marketed asbestos; rather, we made and provided to industrial users a limited number of products that contained encapsulated asbestos, but we stopped manufacturing these products in the late 1980s. Most of the claims filed against us involve numerous defendants, sometimes as many as several hundred. The following table summarizes the change in number of asbestos claims outstanding during 2018 and 2017:
* For the year ended December 31, 2018, 192 claims were dismissed and 25 claims were settled. For the year ended December 31, 2017, 258 claims were dismissed and 22 claims were settled. Settlements totaled approximately $7.1 million for the year ended December 31, 2018, compared to $5.0 million for the year ended December 31, 2017. Impacts on Financial Statements We recognize a liability for asbestos-related contingencies that are probable of occurrence and reasonably estimable. In connection with the recognition of liabilities for asbestos-related matters, we record asbestos-related insurance receivables that are deemed probable. The liability projection period covers all current and future claims through 2058, which represents the expected end of our asbestos liability exposure with no further ongoing claims expected beyond that date. This conclusion was based on our history and experience with the claims data, the diminished volatility and consistency of observable claims data, the period of time that has elapsed since we stopped manufacturing products that contained encapsulated asbestos and an expected downward trend in claims due to the average age of our claimants, which is approaching the average life expectancy. To date, the defense and settlement costs of our asbestos-related product liability litigation have been substantially covered by insurance. We have identified continuous coverage for primary, excess and umbrella insurance from the 1950s through the mid-1980s, except for a period in the early 1960s, with respect to which we have entered into an agreement for primary, but not excess or umbrella, coverage. In addition, we have entered into a cost sharing agreement with most of our primary, excess and umbrella insurance carriers to facilitate the ongoing administration and payment of claims by the carriers. The cost sharing agreement may be terminated by any party, but will continue until a party elects to terminate it. As of the filing date for this report, the agreement has not been terminated, and no carrier had informed us it intended to terminate the agreement. During 2018, we received notices that primary coverage for a period of eight years and excess coverage for a period of three years had been exhausted. In 2018, we incurred indemnity and defense costs of $1.2 million for the year ended December 31, 2018, primarily related to the periods referenced above. We expect to exhaust individual primary, excess and umbrella coverages over time, and there is no assurance that such exhaustion will not accelerate due to additional claims, damages and settlements or that coverage will be available as expected. The amounts recorded for the asbestos-related liability and the related insurance receivables are based on facts known at the time and a number of assumptions. However, projecting future events, such as the number of new claims to be filed each year, the average cost of disposing of such claims, the length of time it takes to dispose of such claims, coverage issues among insurers and the continuing solvency of various insurance companies, as well as the numerous uncertainties surrounding asbestos litigation in the United States, could cause the actual liability and insurance recoveries for us to be higher or lower than those projected or recorded. Changes recorded in the estimated liability and estimated insurance recovery based on the projections of asbestos litigation and corresponding insurance coverage, result in the recognition of expense or income. For the years ended December 31, 2018, 2017 and 2016, we recognized expense of $0.7 million, $3.4 million and $0.3 million, respectively. The increase in expense recognized in 2017 compared to 2016 was primarily attributable to the change in the forecast period from 10 years to 40 years. For the years ended December 31, 2018 and 2017, our projected asbestos-related claims and insurance receivables were as follows:
General In addition to the above issues, the nature and scope of our business brings us in regular contact with the general public and a variety of businesses and government agencies. Such activities inherently subject us to the possibility of litigation, including environmental and product liability matters that are defended and handled in the ordinary course of business. We have established accruals for matters for which management considers a loss to be probable and reasonably estimable. It is the opinion of management that facts known at the present time do not indicate that such litigation will have a material adverse impact on our results of operations, financial position or cash flows. |
Income Taxes |
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Income Taxes | Note 14 – Income Taxes The “Income before income tax expense” line item in the consolidated statements of operations consisted of:
The “Income tax expense” line item in the consolidated statements of operations consisted of:
Deferred tax assets and liabilities as of December 31, 2018 and 2017, were comprised of the following:
As of December 31, 2018, the Company had state net operating loss carryforwards ranging from $3.7 million to $6.1 million in various state taxing jurisdictions, which expire between 2021 and 2038 and approximately $8.4 million of credit carryforwards in Arizona, which will expire between 2019 and 2033. The Company also had $8.3 million of federal research and development credit carryforwards that begin to expire in 2026. We believe that it is more likely than not that the benefit from certain of the state net operating loss, state credits and federal research and development credits carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $16.9 million relating to these carryforwards. We currently have approximately $3.7 million of foreign tax credits that begin to expire in 2027 and $0.5 million of minimum tax credits that can be utilized or refunded by tax year 2021. We had a valuation allowance of $16.9 million as of December 31, 2018 and $8.8 million as of December 31, 2017, against certain of our deferred tax assets, primarily carryforwards expected to expire unused and deferred tax assets that are capital in nature. No valuation allowance has been provided on our other deferred tax assets, as we believe it is more likely than not that all such assets will be realized in the applicable jurisdictions. We reached this conclusion after considering the availability of taxable income in prior carryback years, tax planning strategies, and the likelihood of future taxable income exclusive of reversing temporary differences and carryforwards in the respective jurisdictions or entities. Differences between forecasted and actual future operating results or changes in carryforward periods could adversely impact the amount of deferred tax asset considered realizable. Income tax expense differs from the amount computed by applying the United States federal statutory income tax rate to income before income taxes. The reasons for this difference were as follows:
Our effective income tax rate for 2018 was 20.7% compared to 39.5% for 2017. The 2018 rate decrease was primarily due to a lower U.S. statutory tax rate in 2018 and the absence of the one-time impact from the enactment of the Tax Cuts and Jobs Act of 2017 (U.S. Tax Reform) in 2017, an increase in reversal of reserves associated with uncertain tax positions and lower foreign tax impact on remitted and unremitted foreign earnings and profits. The Company did not make any changes in 2018 to its position on the permanent reinvestment of its earnings from foreign operations. With the exception of certain Chinese subsidiaries, the Company continues to assert that historical foreign earnings are indefinitely reinvested. As of December 31, 2018 and 2017, the Company had recorded a deferred tax liability of $1.8 million and $3.1 million, respectively, for Chinese withholding tax on undistributed earnings that are not indefinitely reinvested. The other remaining foreign subsidiaries have both the intent and ability to indefinitely reinvest their undistributed earnings and the Company does not expect that these undistributed earnings should give rise to significant additional tax liabilities as a result of distribution of such earnings. On December 22, 2017, Staff Accounting Bulletin No. 118 (SAB 118) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the U.S. Tax Reform. December 22, 2018 marked the end of the measurement period for purposes of SAB 118. As such, we completed our analysis based on currently available legislative updates relating to the U.S. Tax Reform, as well as a more detailed analysis of the post-1986 undistributed earnings and profits that required further adjustment, resulting in a tax expense of $0.2 million in the fourth quarter of 2018 and a total tax expense of $0.2 million for the year ended December 31, 2018. The total tax expense included a $7.5 million benefit related to adjustments to the transition tax and a $7.7 million expense related to the establishment of a valuation allowance against deferred tax assets associated with carried over research and development credits. There were no significant adjustments recorded with respect to finalization of the impact of the U.S. Tax Reform on state taxes and the remeasurement of certain deferred tax assets and liabilities. Unrecognized tax benefits, excluding potential interest and penalties, for the years ended December 31, 2018 and December 31, 2017, were as follows:
Included in the balance of unrecognized tax benefits as of December 31, 2018 were $9.6 million of tax benefits that, if recognized, would impact the effective tax rate. Also included in the balance of unrecognized tax benefit as of December 31, 2018 were $0.2 million of tax benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes. We recognize interest accrued related to unrecognized tax benefit as income tax expense. Related to the unrecognized tax benefits noted above, at December 31, 2018 and 2017, we had accrued potential interest and penalties of approximately $0.5 million and $0.6 million, respectively. We have recorded a net income tax benefit of $0.1 million during 2018, net income tax expense of $0.2 million during 2017 and $0.9 million net income tax benefit during 2016. It is possible that up to $1.8 million of our currently unrecognized tax benefits could be recognized within 12 months as a result of projected resolutions of worldwide tax disputes or the expiration of the statute of limitations. We are subject to taxation in the United States and various state and foreign jurisdictions. Our tax years from 2014 through 2018 are subject to examination by the tax authorities. With few exceptions, we are no longer subject to United States federal, state, local and foreign examinations by tax authorities for the years before 2014. |
Operating Segments and Geographic Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Segments and Geographic Information | Note 15 – Operating Segment and Geographic Information Our reporting structure is comprised of the following strategic operating segments: ACS, EMS and PES. The remaining operations, which represent our non-core businesses, are reported in the Other operating segment. We believe this structure aligns our external reporting presentation with how we currently manage and view our business internally. On January 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers. For additional information regarding the impacts of adoption of new accounting guidance for revenue recognition, refer to “Note 16 – Revenue from Contracts with Customers.” We sell products to fabricators and distributors who then sell directly into various end markets. End markets within our ACS operating segment include wireless infrastructure, aerospace and defense, automotive, connected devices, wired infrastructure and consumer electronics. End markets within our EMS operating segment include portable electronics, mass transit, automotive and consumer. End markets within our PES operating segment include e-mobility, industrial, renewable energy, mass transit and micro channel coolers. End markets in our Other operating segment include automotive and industrial. The following table presents a disaggregation of revenue from contracts with customers and other pertinent financial information, for the periods indicated; inter-segment sales have been eliminated from the net sales data:
The following table presents net sales by our operating segment operations by geographic area for the years indicated:
(1) Net sales are allocated to countries based on the location of the customer. The table above lists individual countries with 10% or more of net sales for the periods indicated. Information relating to our long-lived assets by geographic area was as follows as of December 31 for the year indicated:
(1) Long-lived assets are based on the location of the asset and are comprised of goodwill, other intangible assets and property, plant and equipment. Countries with 10% of more of long-lived assets have been disclosed. |
Revenue from Contracts with Customers |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers | Note 16 – Revenue from Contracts with Customers Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, to achieve a consistent application of revenue recognition, resulting in a single revenue model to be applied by reporting companies under U.S. generally accepted accounting principles. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the providing entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company manufactures some products to customer specifications which are customized to such a degree that it is unlikely that another entity would purchase these products or that we could modify these products for another customer. These products are deemed to have no alternative use to the Company whereby we have an enforceable right to payment evidenced by contractual termination clauses. In accordance with ASC 606, for those circumstances we recognize revenue on an over-time basis. Revenue recognition does not occur until the product meets the definition of “no alternative use” and therefore, items that have not yet reached that point in the production process are not included in the population of items with over-time revenue recognition. As appropriate, we record estimated reductions to revenue for customer returns, allowances, and warranty claims. Provisions for such reductions are made at the time of sale and are typically derived from historical trends and other relevant information. Performance Obligations Manufactured goods are our primary performance obligations. Revenue related to our performance obligations is predominantly recognized at a point in time consistent with our shipping terms. For certain products that meet the criteria of no alternative use whereby the Company has the right to payment, we recognize revenue on an over-time basis. The selection of a method to measure progress toward completion of a contract requires judgment and is based on the nature of the products or services to be provided. We use the cost incurred method to measure the progress of our contracts with no alternative use products whereby the Company has the right to payment as we believe it is the best depiction of the transferring of value to the customer. Under the cost incurred method, the extent of progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the contract. Contract costs include labor, materials and subcontractors costs, as well as an allocation of indirect costs. Net sales, including estimated fees or profits, are recorded as costs are incurred. Performance obligations are typically satisfied within three months of receipt of a customer order; therefore, a change in cost estimates will not have a material impact on the percentage of completion noted at the prior quarter end. Our typical payment terms with customers range from 30 days to 105 days. Product pricing is determined and negotiated on a standalone basis. Product pricing is determined without consideration for the pricing, margin, or other information specific to other products that the same customer or other parties related to that customer may also purchase, whether in the same or a different contract. Management allocates the transaction price to its performance obligations primarily based on stand-alone selling prices that may have been developed via specific customer quote for no alternative use products and non-standard products or standard price lists for standard products. The accounting for the estimate of variable consideration is consistent with our current practice. Contract modifications occur when there is a change to the products, price, or both. Contract modifications are treated as a separate contract if there are additions to promised goods and services that are distinct and if the price for that separate performance obligation reflects the stand-alone selling price for those goods or services. However, if the obligations in the contract modification are not distinct and are part of a single performance obligation that is only partially satisfied, the contract is not determined to be a separate contract and is accounted for as a revision to an existing contract. These modifications are accounted for prospectively when remaining promises are distinct from those previously transferred, or through a cumulative catch-up adjustment. Contract Balances The Company has contract assets primarily related to unbilled revenue for revenue recognized related to products that are deemed to have no alternative use whereby we have the right to payment. Revenue is recognized in advance of billing to the customer in these circumstances as billing is typically performed at the time of shipment to the customer. The unbilled revenue is included in the contract assets on the consolidated statements of financial position. The Company did not have any contract liabilities as of December 31, 2018. The following table presents contract assets by operating segment as of December 31, 2018:
No impairment losses were recognized during the year ended December 31, 2018 on any receivables or contract assets arising from our contracts with customers. Transition We adopted ASU 2014-09 in the first quarter of 2018 retrospectively with the cumulative effect of applying the standard recognized at the date of implementation and without restatement of comparative periods. This application of the new standard resulted in an increase to the January 1, 2018 balance of retained earnings of approximately $4.2 million, net of tax. The guidance was applied to all contracts that were not completed at the date of implementation. The primary reason for the impact of adoption is due to over-time revenue recognition. If the criteria for over-time recognition are not met, revenue is recognized at a point in time. In considering at what point in time control of the product or service has transferred to the customer, we consider qualitative factors such as: 1) present right to payment; 2) legal title to the asset; 3) physical possession; 4) risks and rewards of ownership; and, 5) customer acceptance. The impact of adoption using the modified retrospective method on the Company’s consolidated financial statements is as follows:
The following tables set forth the amount by which each financial statement line item is affected in the current reporting period by the application of ASC 606, as compared to the guidance that was in effect before its adoption. The impact of adoption on the consolidated financial statements as of and for the year ended December 31, 2018 is as follows:
Practical Expedients The Company recognizes the incremental costs of obtaining a contract as an expense when incurred as the amortization period of the asset is expected to be one year or less. The Company does not adjust the promised amount of consideration for the effects of a significant financing component as we expect, at contract inception, that the period between when the transfer of goods to our customer occurs and when the customer fully pays for the goods will be one year or less. We do not disclose the Company’s unsatisfied performance obligations as they are part of contracts that have an original expected duration of one year or less. |
Restructuring and Impairment Charges |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Impairment Charges | Note 17 – Restructuring and Impairment Charges Restructuring Charges Global Headquarters Relocation In 2017, we completed the physical relocation of our global headquarters from Rogers, Connecticut to Chandler, Arizona. We recorded $0.6 million, $2.8 million and $0.7 million of expense for the years ended December 31, 2018, 2017 and 2016, respectively, related to the headquarters relocation, including $0.1 million, $0.4 million and $0.6 million of severance benefits expense for the years ended December 31, 2018, 2017 and 2016, respectively. The fair value of the total severance benefits to be paid (including payments already made) in connection with the headquarter relocation was $1.1 million. The total severance costs were expensed ratably over the required service period for the affected employees. The following table presents severance activity related to the headquarters relocation for the year ended December 31, 2018:
Facility Consolidation On April 24, 2018, we made the decision to consolidate our Santa Fe Springs, California operations into the Company’s facilities in Carol Stream, Illinois and Bear, Delaware. We recorded $2.0 million of expense for the year ended December 31, 2018 related to the facility consolidation, including $0.5 million of severance benefits expense for the year ended December 31, 2018. The fair value of the total severance benefits to be paid (including payments already made) in connection with the facility consolidation is $0.5 million. The total severance costs are being expensed ratably over the required service period for the affected employees. Additionally, we incurred $1.6 million in capital expenditures for the year ended December 31, 2018 related to the facility consolidation. The following table presents severance activity related to the facility consolidation for the year ended December 31, 2018:
Impairment Charges In 2018, we recognized $1.5 million in impairment charges on certain assets in connection with the Isola asset acquisition, which was allocated specifically to the ACS operating segment. In 2017, we recognized a $0.3 million charge related to the impairment of our remaining investment in BrightVolt, Inc. As this investment did not relate to a specific operating segment, we allocated it ratably among ACS, EMS and PES. Also in 2017, we recognized a $0.5 million impairment charge related to the remaining net book value of an other intangible asset within the ROLINX® product line in our PES operating segment. Allocation of Charges to Operating Segments The following table summarizes the restructuring and impairment charges recorded in our operating results in 2018, 2017 and 2016:
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Supplemental Financial Information |
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Supplemental Income Statement Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Financial Information | Note 18 – Supplemental Financial Information The components of Other operating (income) expense, net are as follows:
In 2018, we recorded a gain from the settlement of antitrust litigation in the amount of $4.2 million as a result of the settlement of a class action lawsuit, filed in 2005, which alleged that Dow Chemical Company and other urethane raw material suppliers unlawfully agreed to fix, raise, maintain or stabilize the prices of Polyether Polyol Products sold in the United States from January 1, 1999 through December 31, 2004 in violation of the federal antitrust laws. We also recorded a gain of $0.7 million for the settlement of indemnity claims related to the DSP acquisition, income of $0.6 million from economic incentive grants related to the physical relocation of our global headquarters from Rogers, Connecticut to Chandler, Arizona and a gain on sale of property, plant and equipment of $0.2 million. In 2018, we recognized lease income of approximately $0.9 million and related depreciation expense on leased assets of approximately $3.5 million in connection with the transitional leaseback of a portion of the facility and certain machinery and equipment acquired from Isola in August 2018. In 2017, we recognized other operating income of $5.3 million as a result of the sales of a facility and a parcel of land located in Belgium. |
Recent Accounting Standards |
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Accounting Policies [Abstract] | |
Recent Accounting Standards | Note 19 – Recent Accounting Standards Recently Issued Standards In October 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes, which permits the use of the OIS rate based on the SOFR as a U.S. benchmark interest rate for hedge accounting purposes. This ASU is effective for our fiscal year ending December 31, 2019 and the interim periods within that year. The amendments in this update will be adopted on a prospective basis and the Company does not expect this guidance to have a significant impact on our results of operations or statements of cash flows. In August 2018, the FASB issued Accounting Standards Update ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud computing Arrangement that is a Service Contract, which aligns the requirements for capitalizing costs incurred in the implementation of a hosting arrangement that is a service contract with the requirements for capitalizing costs incurred to develop or obtain internal use software. This ASU is effective for our fiscal year ending December 31, 2020 and for the interim periods within that year, with early adoption permitted. The amendments in this update may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, which modifies the disclosure requirements for employers that sponsor defined benefit plans or other postretirement plans. This ASU is effective for our fiscal year ending December 31, 2020, with early adoption permitted. ASU 2018-14 is required to be applied on a retrospective basis to all periods presented. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. This ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income (loss). This ASU is effective for our fiscal year ending December 31, 2020 and for the interim periods within that year. Early adoption is permitted. ASU 2018-13 is generally required to be applied retrospectively to all periods presented upon their effective date with the exception of certain amendments, which should be applied prospectively to the most recent interim or annual period presented in the year of adoption. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU allows for reclassification of stranded tax effects resulting from U.S. Tax Reform from accumulated other comprehensive loss to retained earnings but it does not require this reclassification. This ASU is effective for our fiscal year ending December 31, 2019 and the interim periods within that year. The Company will adopt this ASU in the first quarter of 2019 and will not elect to reclassify the stranded tax effects resulting from U.S. Tax Reform. As a result of that election, the adoption of ASU 2018-02 will not have an impact on the Company’s consolidated financial statements and disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to classify leases as either finance or operating leases and record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. An accounting policy election may be made to account for leases with a term of 12 months or less similar to existing guidance for operating leases today. ASU No. 2016-02 supersedes the existing guidance on accounting for leases. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which allows for an optional transition method for the adoption of Topic 842. The two permitted transition methods are now the modified retrospective approach, which applies the new lease requirements at the beginning of the earliest period presented, and the optional transition method, which applies the new lease requirements through a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2016-02 is effective for our fiscal year ending December 31, 2019 and the interim periods within that year. The Company will adopt this standard in the first quarter of 2019 using the optional transition method. The Company also intends to elect the practical expedients that allows us to carry forward the historical lease classification. The Company has established an inventory of existing leases and implemented a new process of evaluating the classification of each lease. The financial impact of the adoption of the new standard is estimated to increase total assets and total liabilities by approximately $9.0 million to $11.0 million, as of January 1, 2019. The financial impact of the adoption primarily relates to the capitalization of right-of-use assets related to operating leases. The Company has implemented changes to its processes and internal controls, as necessary, to meet the reporting and disclosure requirements of the new standard. Recently Adopted Standards Reflected in Our 2018 Financial Statements In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. This ASU adds guidance that answers questions regarding how certain income tax effects from the U.S. Tax Reform should be applied to companies’ financial statements. The guidance also lists which financial statement disclosures are required under a measurement period approach. In January 2018, the FASB released guidance on the accounting for tax on the Global Intangible Low Tax Income (GILTI) provisions of U.S. Tax Reform. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that accounting for deferred taxes related to GILTI inclusions or treating any taxes on GILTI inclusions as period costs are both acceptable methods subject to an accounting policy election. This guidance was effective for our first quarter of 2018 and the Company elected to treat any potential GILTI inclusions as a period cost. In December 2017, SAB 118 was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of U.S. Tax Reform. In accordance with SAB 118, the company recorded provisional estimates for the deferred tax expense recorded in connection with the remeasurement of certain deferred tax assets and tax expense associated with the mandatory deemed repatriation of foreign earnings at December 31, 2017. The Company completed the analysis of the impact of U.S. Tax Reform during 2018 and recorded an additional tax expense of $0.2 million for the year ended December 31, 2018. In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The Company adopted this standard on January 1, 2018, which did not have a material effect on the consolidated financial statements. Adoption of this standard was applied prospectively to awards modified on or after the adoption date. In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-Retirement Benefit Cost. The changes to the standard require employers to report the service cost component in the same line item as other compensation costs arising from services rendered by employees during the reporting period. The other components of net periodic pension benefit costs are now being presented in the statement of operations separately from the service cost and outside of a subtotal of operating income from operations. In addition, only the service cost component may be eligible for capitalization, where applicable. The Company adopted this standard on January 1, 2018. In conjunction with the adoption of this guidance, the Company reclassified $1.6 million and $3.0 million in net periodic pension benefits from “Selling, general and administrative expenses” to “Other income (expense), net” for the years ended December 31, 2017 and 2016. |
Quarterly Results of Operations (Unaudited) |
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Quarterly Results of Operations (Unaudited) | Note 20 – Quarterly Results of Operations (Unaudited)
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Share Repurchases |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Share Repurchases | Note 21 – Share Repurchases In 2015, we initiated a share repurchase program (the Program) of up to $100.0 million of the Company’s capital stock. We initiated the Program to mitigate potentially dilutive effects of stock options and shares of restricted stock granted by the Company, in addition to enhancing shareholder value. The share repurchase program has no expiration date, and may be suspended or discontinued at any time without notice. As of December 31, 2018, $49.0 million remained of our $100.0 million share repurchase program. We repurchased the following shares of capital stock through the Program, using cash from operations and cash on hand, during the years presented below:
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SCHEDULE II Valuation and Qualifying Accounts |
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SCHEDULE II Valuation and Qualifying Accounts | Valuation and Qualifying Accounts
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Organization and Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries, after elimination of inter-company accounts and transactions. The preparation of financial statements, in conformity with accounting principles generally accepted in the United States (U.S. GAAP), requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
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Reclassification | Reclassification On January 1, 2018, the Company adopted ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-Retirement Benefit Cost. Upon adoption, the Company reclassified $1.6 million and $3.0 million in net periodic pension benefits from “Selling, general and administrative expenses” to “Other income (expense), net” for the years ended December 31, 2017 and 2016, respectively. Refer to “Note 19 – Recent Accounting Standards” for further information. |
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Organization | Organization Our reporting structure is comprised of three strategic operating segments: Advanced Connectivity Solutions (ACS), Elastomeric Material Solutions (EMS) and Power Electronics Solutions (PES). The remaining operations are accumulated and reported as our Other operating segment. Advanced Connectivity Solutions Our ACS operating segment designs, develops, manufactures and sells circuit materials and solutions enabling high-performance and high-reliability connectivity for applications in wireless infrastructure (e.g., power amplifiers, antennas, small cells and distributed antenna systems), automotive (e.g., active safety, advanced driver assistance systems, telematics and thermal management), aerospace and defense, connected devices (e.g., mobile internet devices and Internet of Things), wired infrastructure (e.g., computing and IP infrastructure) and consumer electronics. We believe these products have characteristics that offer performance and other functional advantages in many market applications that serve to differentiate our products from other commonly available materials. These products are sold principally to independent and captive printed circuit board fabricators that convert our laminates to custom printed circuits. Trade names for our ACS products include: RO3000®, RO4000®, RT/duroid®, TMM®, AD SeriesTM and CLTE SeriesTM. As of December 31, 2018, our ACS operating segment had manufacturing and administrative facilities in Chandler, Arizona; Rogers, Connecticut; Bear, Delaware; Evergem, Belgium; and Suzhou, China. Elastomeric Material Solutions Our EMS operating segment designs, develops, manufactures and sells engineered material solutions for a wide variety of applications and end markets. These include polyurethane and silicone materials used in critical cushioning, sealing and vibration management applications for portable electronics (e.g., smart phones), automotive, aerospace, rail, footwear and printing end markets; customized silicones used in flex heater and semiconductor thermal applications; polytetrafluoroethylene and ultra-high molecular weight polyethylene materials used in wire and cable, pressure-sensitive tapes and automotive applications. We believe these materials have characteristics that offer functional advantages in many market applications which serve to differentiate Rogers’ products from other commonly available materials. EMS products are sold globally to converters, fabricators, distributors and original equipment manufacturers (OEMs). Trade names for our EMS products include: PORON®, BISCO®, DeWAL®, ARLON®, DSP®, Griswold®, eSORBA®, XRD®, HeatSORB™ and R/bak®. In July 2018, we acquired Griswold LLC (Griswold), a manufacturer of a wide range of high-performance engineered cellular elastomer and microcellular polyurethane products and solutions. In January 2017, we acquired the principal operating assets of Diversified Silicone Products, Inc. (DSP), a custom silicone product development and manufacturing business, serving a wide range of high reliability applications, and in November 2016, we acquired DeWAL Industries LLC (DeWAL), a manufacturer of polytetrafluoroethylene and ultra-high molecular weight polyethylene films, pressure sensitive tapes and specialty products for the industrial, aerospace, automotive, and electronics markets. The acquisitions of Griswold, DSP and DeWAL, and their subsequent integration into our EMS operating segment, have enabled us to increase scale and complement our existing product offerings, thus enhancing our ability to support our customers. As of December 31, 2018, our EMS operating segment had administrative and manufacturing facilities in Moosup, Connecticut; Rogers, Connecticut; Woodstock, Connecticut; Bear, Delaware; Carol Stream, Illinois; Narragansett, Rhode Island; Santa Fe Springs, California; Ansan, South Korea; and Suzhou, China. We also own 50% of: (1) Rogers Inoac Corporation (RIC), a joint venture established in Japan to design, develop, manufacture and sell PORON products predominantly for the Japanese market and (2) Rogers INOAC Suzhou Corporation (RIS), a joint venture established in China to design, develop, manufacture and sell PORON products primarily for RIC customers in various Asian countries. INOAC Corporation owns the remaining 50% of both RIC and RIS. RIC has manufacturing facilities at the INOAC facilities in Nagoya and Mie, Japan, and RIS has manufacturing facilities at Rogers’ facilities in Suzhou, China. Power Electronics Solutions Our PES operating segment designs, develops, manufactures and sells ceramic substrate materials for power module applications (e.g., variable frequency drives, vehicle electrification and renewable energy), laminated busbars for power inverter and high power interconnect applications (e.g., mass transit, hybrid-electric and electric vehicles, renewable energy and variable frequency drives) and micro-channel coolers (e.g., laser cutting equipment). We sell our ceramic substrate materials and micro channel coolers under the curamik® trade name, and our busbars under the ROLINX® trade name. As of December 31, 2018, our PES operating segment had manufacturing and administrative facilities in Evergem, Belgium; Eschenbach, Germany; Budapest, Hungary; and Suzhou, China. Other Our Other operating segment consists of elastomer components for applications in ground transportation, office equipment, consumer and other markets; elastomer floats for level sensing in fuel tanks, motors, and storage tanks; and inverters for portable communications and automotive markets. Trade names for our elastomer components include: NITROPHYL® floats for level sensing in fuel tanks, motors, and storage tanks and ENDUR® elastomer rollers. |
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Cash Equivalents | Cash Equivalents Highly liquid investments with original maturities of three months or less are considered cash equivalents. These investments are stated at cost, which approximates fair value. |
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Investments in Unconsolidated Joint Ventures | Investments in Unconsolidated Joint Ventures We account for our investments in and advances to unconsolidated joint ventures, both of which are 50% owned, using the equity method of accounting. |
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Foreign Currency | Foreign Currency All balance sheet accounts of foreign subsidiaries are translated or remeasured at exchange rates in effect at each year end, and income statement items are translated using the average exchange rates for the year. Translation adjustments for those entities that operate under a local currency are recorded directly to a separate component of shareholders’ equity, while remeasurement adjustments for those entities that operate under the parent’s functional currency are recorded to the income statement as a component of “Other income (expense), net.” Currency transaction gains and losses are reported as income or expense, respectively, in the consolidated statements of operations as a component of “Other income (expense), net. |
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Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The allowance for doubtful accounts is determined based on a variety of factors that affect the potential collectability of the related receivables, including the length of time receivables are past due, customer credit ratings, financial stability of customers, specific one-time events and past customer history. In addition, in circumstances where we are made aware of a specific customer’s inability to meet its financial obligations, a specific allowance is established. The majority of accounts are individually evaluated on a regular basis and appropriate reserves are established as deemed appropriate based on the criteria previously mentioned. The remainder of the reserve is based on our estimates and takes into consideration historical trends, market conditions and the composition of our customer base. |
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Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. The cost of inventories is determined using the first in, first out (FIFO) method. An allowance is made for estimated losses due to obsolescence. The allowance is determined for groups of products based on purchases in the recent past and/or expected future demand and market conditions. Abnormal amounts of idle facility expense and waste are not capitalized in inventory. The allocation of fixed production overheads to the inventory cost is based on the normal capacity of the production facilities. |
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Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are stated on the basis of cost. For financial reporting purposes, provisions for depreciation are calculated on a straight-line basis over the following estimated useful lives of the underlying assets:
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Software Costs | Software Costs We capitalize certain computer software and software development costs incurred in connection with developing or obtaining computer software for internal use when both the preliminary project stage is completed and it is probable that the software will be used as intended. Capitalized software costs include only (i) external direct costs of materials and services utilized in developing or obtaining computer software, and (ii) compensation and related benefits for employees who are directly associated with the software project. Capitalized software costs are amortized on a straight-line basis when placed into service over the estimated useful lives of the software, which approximates three to five years. Net capitalized software and development costs were $1.7 million and $4.7 million for the years ended December 31, 2018 and 2017, respectively. Capitalized software is included within “Property, plant and equipment, net of accumulated depreciation” in the consolidated statements of financial position. |
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Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets We have made acquisitions over the years that included the recognition of intangible assets. Intangible assets are classified into three categories: (1) goodwill; (2) other intangible assets with definite lives subject to amortization; and (3) other intangible assets with indefinite lives not subject to amortization. Other intangible assets can include items such as trademarks and trade names, licensed technology, customer relationships and covenants not to compete, among other things. Each definite-lived other intangible asset is amortized over its respective economic useful life using the economic attribution method. Goodwill is tested for impairment annually and between annual impairment tests if events or changes in circumstances indicate the carrying value may be impaired. If it is more likely than not that our goodwill is impaired, then we compare the estimated fair value of each of our reporting units to their respective carrying value. If a reporting unit’s carrying value is greater than its fair value, then an impairment is recognized for the excess and charged to operations. We currently have four reporting units with goodwill: ACS, EMS, curamik® and Elastomer Components Division (ECD). Consistent with historical practice, the annual impairment test on these reporting units was performed as of November 30, 2018. The application of the annual goodwill impairment test requires significant judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units and determination of the fair value of each reporting unit. Determining the fair value is subjective and requires the use of significant estimates and assumptions, including financial projections for net sales, gross margin and operating margin, discount rates, terminal year growth rates and future market conditions, among others. We estimated the fair value of our reporting units using an income approach based on the present value of future cash flows through a five year discounted cash flow analysis. The discounted cash flow analysis utilized the discount rates for each of the reporting units ranging from 11.25% for EMS to 12.90% for ECD, and terminal year growth rates ranging from 4.9% for curamik® to 5.9% for ACS. We believe this approach yields the most appropriate evidence of fair value as our reporting units are not easily compared to other corporations involved in similar businesses. We further believe that the assumptions and rates used in our annual goodwill impairment test are reasonable, but inherently uncertain. There were no impairment charges resulting from our goodwill impairment analysis for the year ended December 31, 2018. Our ACS, EMS, curamik® and ECD reporting units had allocated goodwill of approximately $51.7 million, $142.6 million, $68.4 million and $2.2 million respectively, as of December 31, 2018. Indefinite-lived other intangible assets are tested for impairment annually and between annual impairment tests if events or changes in circumstances indicate the carrying value may be impaired. If it is more likely than not that an indefinite-lived other intangible asset is impaired, then we compare the estimated fair value of that indefinite-lived other intangible asset to its respective carrying value. If an indefinite-lived other intangible asset’s carrying value is greater than its fair value, then an impairment charge is recognized for the excess and charged to operations. Consistent with historical practice, the annual impairment test on these reporting units was performed as of November 30, 2018. The application of the annual indefinite-lived other intangible asset impairment test requires significant judgment, including the determination of fair value of each indefinite-lived other intangible asset. Fair value is primarily based on income approaches using discounted cash flow models, which have significant assumptions. Such assumptions are subject to variability from year to year and are directly impacted by global market conditions. There were no impairment charges resulting from our indefinite-lived other intangible assets impairment analysis for the year ended December 31, 2018. The curamik® reporting unit had an indefinite-lived other intangible asset of approximately $4.5 million as of December 31, 2018. Definite-lived other intangible assets are tested for recoverability whenever events or changes in circumstances indicate the carrying value may not be recoverable. The recoverability test involves comparing the estimated sum of the undiscounted cash flows for each definite-lived other intangible asset to its respective carrying value. If a definite-lived other intangible asset’s carrying value is greater than the sum of its undiscounted cash flows, then the definite-lived other intangible asset’s carrying value is compared to its estimated fair value and an impairment charge is recognized for the excess and charged to operations. The application of the recoverability test requires significant judgment, including the identification of the asset group and determination of undiscounted cash flows and fair value of the underlying definite-lived other intangible asset. Determination of undiscounted cash flows requires the use of significant estimates and assumptions, including certain financial projections. Fair value is primarily based on income approaches using discounted cash flow models, which have significant assumptions. Such assumptions are subject to variability from year to year and are directly impacted by global market conditions. There were no impairment charges resulting from our definite-lived other intangible assets impairment analysis for the year ended December 31, 2018. Our ACS, EMS and curamik® reporting units had definite-lived other intangible assets of approximately $7.9 million, $152.2 million and $12.4 million, respectively, as of December 31, 2018. |
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Environmental and Product Liabilities | Environmental and Product Liabilities We accrue for our environmental investigation, remediation, operating and maintenance costs when it is probable that a liability has been incurred and the amount can be reasonably estimated. For environmental matters, the most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to each individual site, including existing technology, current laws and regulations and prior remediation experience. For sites with multiple potential responsible parties (PRPs), we consider our likely proportionate share of the anticipated remediation costs and the ability of the other parties to fulfill their obligations in establishing a provision for those costs. When no amount within a range of estimates is more likely to occur than another, we accrue to the low end of the range and disclose the range. When future liabilities are determined to be reimbursable by insurance coverage, an accrual is recorded for the potential liability and a receivable is recorded for the estimated insurance reimbursement amount. We are exposed to the uncertain nature inherent in such remediation and the possibility that initial estimates will not reflect the final outcome of a matter. We review our asbestos-related projections annually in the fourth quarter of each year unless facts and circumstances materially change during the year, at which time we would analyze these projections. We believe the assumptions made on the potential exposure and expected insurance coverage are reasonable at the present time, but are subject to uncertainty based on the actual future outcome of our asbestos litigation. Our estimates of asbestos-related contingent liabilities and related insurance receivables are based on an independent actuarial analysis and an independent insurance usage analysis prepared annually by third parties. The actuarial analysis contains numerous assumptions, including number of claims that might be received, the type and severity of the disease alleged by each claimant, the long latency period associated with asbestos exposure, dismissal rates, average settlement costs, average defense costs, costs of medical treatment, the financial resources of other companies that are co-defendants in claims, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, and the impact of potential changes in legislative or judicial standards, including potential tort reform. Furthermore, any predictions with respect to these assumptions are subject to even greater uncertainty as the projection period lengthens. The insurance usage analysis considers, among other things, applicable deductibles, retentions and policy limits, the solvency and historical payment experience of various insurance carriers, the likelihood of recovery as estimated by external legal counsel and existing insurance settlements. We believe the assumptions used in our models for determining our potential exposure and related insurance coverage are reasonable at the present time, but such assumptions are inherently uncertain. Given the inherent uncertainty in making projections, we plan to re-examine periodically the assumptions used in the projections of current and future asbestos claims, and we will update them if needed based on our experience, changes in the assumptions underlying our models, and other relevant factors, such as changes in the tort system. There can be no assurance that our accrued asbestos liabilities will approximate our actual asbestos-related settlement and defense costs, or that our accrued insurance recoveries will be realized. We believe that it is reasonably possible that we may incur additional charges for our asbestos liabilities and defense costs in the future, that could exceed existing reserves and insurance recovery. We plan to continue to vigorously defend ourselves and believe we have unutilized insurance coverage to mitigate future costs related to this matter. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments Management believes that the carrying values of financial instruments, including cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities approximate fair value based on the maturities of these instruments. The fair value of our borrowings under credit facility are determined using discounted cash flows based upon our estimated current interest cost for similar type borrowings or current market value, which falls under Level 2 of the fair value hierarchy. Based on our credit characteristics as of December 31, 2018, borrowings would generally bear interest at LIBOR plus 150.0 basis points. As the current borrowings under our Third Amended Credit Agreement bear interest at adjusted 1-month LIBOR plus 150.0 basis points, we believe the carrying value of our borrowings approximates fair value. For additional information on the calculation of fair value measurements, refer to “Note 2 – Fair Value Measurements.” |
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Hedging Activity | Hedging Transactions and Derivative Financial Instruments From time to time, we use derivative instruments to manage commodity, interest rate and foreign currency exposures. Derivative instruments are viewed as risk management tools and are not used for trading or speculative purposes. To qualify for hedge accounting treatment, derivatives used for hedging purposes must be designated and deemed effective as a hedge of the identified underlying risk exposure at the inception of the contract. Accordingly, changes in fair value of the derivative contract must be highly correlated with changes in the fair value of the underlying hedged item at inception of the hedge and over the life of the hedge contract. Derivatives used to hedge forecasted cash flows associated with interest rates, foreign currency commitments, or forecasted commodity purchases are accounted for as cash flow hedges. For those derivative instruments that qualify for hedge accounting treatment, if the hedge is highly effective, all changes in the fair value of the derivative hedging instrument are recorded in other comprehensive income (loss). The derivative hedging instrument will be reclassified to earnings when the hedged item impacts earnings. For those derivative instruments that do not qualify for hedge accounting treatment, any related gains and losses are recognized in the consolidated statements of operations as a component of “Other income (expense), net.” |
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Concentration of Credit and Investment Risk | Concentration of Credit and Investment Risk We extend credit on an uncollateralized basis to almost all customers. Concentration of credit and geographic risk with respect to accounts receivable is limited due to the large number and general dispersion of accounts that constitute our customer base. We routinely perform credit evaluations on our customers. As of December 31, 2018 and 2017, there were no customers that individually accounted for more than 10% of total accounts receivable. We have purchased credit insurance coverage for certain accounts receivable. We did not experience significant credit losses on customers’ accounts in 2018, 2017 or 2016. We are subject to credit and market risk by using derivative instruments. 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. We seek to minimize counterparty credit (or repayment) risk by entering into derivative transactions with major financial institutions with investment grade credit ratings. We invest excess cash principally in investment grade government securities and time deposits. We have established guidelines relative to diversification and maturities in order to maintain safety and liquidity. These guidelines are periodically reviewed and modified to reflect changes in market conditions. |
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Income Taxes | Income Taxes We are subject to income taxes in the United States and in numerous foreign jurisdictions. The Company accounts for income taxes following Accounting Standards Codification (ASC) 740, Income Taxes, recognizing deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between book and tax basis of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some or all of a deferred tax asset will not be realized. As a result of the Tax Cuts and Jobs Act of 2017 (U.S. Tax Reform), all post-1986 undistributed foreign subsidiary earnings and profits as of December 31, 2018 have been subjected to U.S. tax through the transition tax. Our unremitted foreign earnings could be subject to additional income taxes if they are redeployed outside of their country of origin. The Company did not make any changes in 2018 to its position on the permanent reinvestment of its historical earnings from foreign operations. With the exception of certain Chinese subsidiaries, the Company continues to assert that historical foreign earnings are indefinitely reinvested. As of December 31, 2018 and 2017, the Company had recorded a deferred tax liability of $1.8 million and $3.1 million, respectively, for Chinese withholding tax on undistributed earnings that are not indefinitely reinvested. The other remaining foreign subsidiaries have both the intent and ability to indefinitely reinvest their undistributed earnings and the Company does not expect that these undistributed earnings should give rise to significant additional tax liabilities as a result of such earnings. For additional information regarding U.S. Tax Reform, refer to “Note 14 – Income Taxes.” On December 22, 2017, Staff Accounting Bulletin No. 118 (SAB 118) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the U.S. Tax Reform. December 22, 2018 marked the end of the measurement period for purposes of SAB 118. As such, we have completed our analysis based on currently available legislative updates relating to the U.S. Tax Reform, as well as a more detailed analysis of the post-1986 undistributed earnings and profits that required further adjustment, resulting in a tax expense of $0.2 million in the fourth quarter of 2018 and a total tax expense of $0.2 million for the year ended December 31, 2018. The total tax expense included a $7.5 million benefit related to adjustments to the transition tax and a $7.7 million expense related to the establishment of a valuation allowance against deferred tax assets associated with carried over research and development credits. There were no significant adjustments recorded with respect to finalization of the impact of the U.S. Tax Reform on state taxes and the remeasurement of certain deferred tax assets and liabilities. U.S. Tax Reform includes two new U.S. tax base erosion provisions, the Global Intangible Low-Taxed Income (GILTI) provisions and the Base Erosion and Anti-Abuse Tax (BEAT) provisions. The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary's tangible assets. The Company has elected to account for GILTI tax in the period in which it is incurred, and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the year ended December 31, 2018. The BEAT provisions eliminate the deduction of certain base-erosion payments made to related foreign corporations, and impose a minimum tax if greater than regular tax. Starting January 1, 2018, the Company has accounted for BEAT in the period in which it is incurred to the extent the Company is subject to it. We have determined that our base erosion payments do not exceed the threshold for applicability for the year ended December 31, 2018 and we do not currently anticipate any significant long-term impact from the BEAT on our effective tax rate in future periods. We record benefits for uncertain tax positions based on an assessment of whether it is more likely than not that the tax positions will be sustained by the taxing authorities. If this threshold is not met, no tax benefit of the uncertain position is recognized. If the threshold is met, we recognize the largest amount of the tax benefit that is greater than fifty percent likely to be realized upon ultimate settlement. We recognize interest and penalties within the “Income tax expense” line item in the consolidated statements of operations. Accrued interest and penalties are included within the related tax liability line item in the consolidated statements of financial position. |
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Revenue Recognition | Revenue Recognition Recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the providing entity expects to be entitled in exchange for those goods or services. We recognize revenue when all of the following criteria are met: (1) we have entered into a binding agreement, (2) the performance obligations have been identified, (3) the transaction price to the customer has been determined, (4) the transaction price has been allocated to the performance obligations in the contract, and (5) the performance obligations have been satisfied. The majority of our shipping terms permit us to recognize revenue at point of shipment. Some shipping terms require the goods to be through customs or be received by the customer before title passes. In those instances, revenue is not recognized until either the customer has received the goods or they have passed through customs, depending on the circumstances. Shipping and handling costs are treated as fulfillment costs. Sales tax or VAT are excluded from the measurement of the transaction price. |
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Pension and Other Postretirement Benefits | Pension and Other Postretirement Benefits We provide various defined benefit pension plans for our U.S. employees and we sponsor multiple fully insured or self-funded medical plans and fully insured life insurance plans for retirees. In 2013, the defined benefit pension plans were frozen, so that future benefits no longer accrue. The costs and obligations associated with these plans are dependent upon various actuarial assumptions used in calculating such amounts. These assumptions include discount rates, long-term rate of return on plan assets, mortality rates, and other factors. The assumptions used in these models are determined as follows: (i) the discount rate used is based on the PruCurve index; (ii) the long-term rate of return on plan assets is determined based on historical portfolio results, market results and our expectations of future returns, as well as current market assumptions related to long-term return rates; and (iii) the mortality rate is based on a mortality projection that estimates current longevity rates and their impact on the long-term plan obligations. We review these assumptions periodically throughout the year and update as necessary. |
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Advertising Cost | Advertising Costs Advertising costs are expensed as incurred |
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Earnings Per Share | Earnings Per Share Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. |
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Equity Compensation | Equity Compensation Equity compensation mainly consists of expense related to restricted stock units and deferred stock units. Performance-based restricted stock unit compensation expense is based on achievement of both market and service conditions. The fair value of these awards is determined based on a Monte Carlo simulation valuation model on the grant date. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period with no changes for final projected payout of the awards. Time-based restricted stock units compensation expense is based on the achievement of only service conditions. The fair value of these awards is determined based on the market value of the underlying stock price on the grant date. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period. Deferred stock units, which are granted to non-management directors, are fully vested on the date of grant and the related shares are generally issued on the 13-month anniversary of the grant date unless the individual elects to defer the receipt of those shares. The fair value of these awards is determined based on the market value of the underlying stock price on the grant date. The compensation related to these grants is expensed immediately on the date of grant. |
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Recent Accounting Standards | Recently Issued Standards In October 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes, which permits the use of the OIS rate based on the SOFR as a U.S. benchmark interest rate for hedge accounting purposes. This ASU is effective for our fiscal year ending December 31, 2019 and the interim periods within that year. The amendments in this update will be adopted on a prospective basis and the Company does not expect this guidance to have a significant impact on our results of operations or statements of cash flows. In August 2018, the FASB issued Accounting Standards Update ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud computing Arrangement that is a Service Contract, which aligns the requirements for capitalizing costs incurred in the implementation of a hosting arrangement that is a service contract with the requirements for capitalizing costs incurred to develop or obtain internal use software. This ASU is effective for our fiscal year ending December 31, 2020 and for the interim periods within that year, with early adoption permitted. The amendments in this update may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, which modifies the disclosure requirements for employers that sponsor defined benefit plans or other postretirement plans. This ASU is effective for our fiscal year ending December 31, 2020, with early adoption permitted. ASU 2018-14 is required to be applied on a retrospective basis to all periods presented. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. This ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income (loss). This ASU is effective for our fiscal year ending December 31, 2020 and for the interim periods within that year. Early adoption is permitted. ASU 2018-13 is generally required to be applied retrospectively to all periods presented upon their effective date with the exception of certain amendments, which should be applied prospectively to the most recent interim or annual period presented in the year of adoption. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU allows for reclassification of stranded tax effects resulting from U.S. Tax Reform from accumulated other comprehensive loss to retained earnings but it does not require this reclassification. This ASU is effective for our fiscal year ending December 31, 2019 and the interim periods within that year. The Company will adopt this ASU in the first quarter of 2019 and will not elect to reclassify the stranded tax effects resulting from U.S. Tax Reform. As a result of that election, the adoption of ASU 2018-02 will not have an impact on the Company’s consolidated financial statements and disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to classify leases as either finance or operating leases and record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. An accounting policy election may be made to account for leases with a term of 12 months or less similar to existing guidance for operating leases today. ASU No. 2016-02 supersedes the existing guidance on accounting for leases. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which allows for an optional transition method for the adoption of Topic 842. The two permitted transition methods are now the modified retrospective approach, which applies the new lease requirements at the beginning of the earliest period presented, and the optional transition method, which applies the new lease requirements through a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2016-02 is effective for our fiscal year ending December 31, 2019 and the interim periods within that year. The Company will adopt this standard in the first quarter of 2019 using the optional transition method. The Company also intends to elect the practical expedients that allows us to carry forward the historical lease classification. The Company has established an inventory of existing leases and implemented a new process of evaluating the classification of each lease. The financial impact of the adoption of the new standard is estimated to increase total assets and total liabilities by approximately $9.0 million to $11.0 million, as of January 1, 2019. The financial impact of the adoption primarily relates to the capitalization of right-of-use assets related to operating leases. The Company has implemented changes to its processes and internal controls, as necessary, to meet the reporting and disclosure requirements of the new standard. Recently Adopted Standards Reflected in Our 2018 Financial Statements In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. This ASU adds guidance that answers questions regarding how certain income tax effects from the U.S. Tax Reform should be applied to companies’ financial statements. The guidance also lists which financial statement disclosures are required under a measurement period approach. In January 2018, the FASB released guidance on the accounting for tax on the Global Intangible Low Tax Income (GILTI) provisions of U.S. Tax Reform. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that accounting for deferred taxes related to GILTI inclusions or treating any taxes on GILTI inclusions as period costs are both acceptable methods subject to an accounting policy election. This guidance was effective for our first quarter of 2018 and the Company elected to treat any potential GILTI inclusions as a period cost. In December 2017, SAB 118 was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of U.S. Tax Reform. In accordance with SAB 118, the company recorded provisional estimates for the deferred tax expense recorded in connection with the remeasurement of certain deferred tax assets and tax expense associated with the mandatory deemed repatriation of foreign earnings at December 31, 2017. The Company completed the analysis of the impact of U.S. Tax Reform during 2018 and recorded an additional tax expense of $0.2 million for the year ended December 31, 2018. In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The Company adopted this standard on January 1, 2018, which did not have a material effect on the consolidated financial statements. Adoption of this standard was applied prospectively to awards modified on or after the adoption date. In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-Retirement Benefit Cost. The changes to the standard require employers to report the service cost component in the same line item as other compensation costs arising from services rendered by employees during the reporting period. The other components of net periodic pension benefit costs are now being presented in the statement of operations separately from the service cost and outside of a subtotal of operating income from operations. In addition, only the service cost component may be eligible for capitalization, where applicable. The Company adopted this standard on January 1, 2018. In conjunction with the adoption of this guidance, the Company reclassified $1.6 million and $3.0 million in net periodic pension benefits from “Selling, general and administrative expenses” to “Other income (expense), net” for the years ended December 31, 2017 and 2016. |
Organization and Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventory | Inventories consisted of the following:
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Schedule of property, plant and equipment, estimated useful lives | For financial reporting purposes, provisions for depreciation are calculated on a straight-line basis over the following estimated useful lives of the underlying assets:
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Fair Value Measurements (Tables) |
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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 | Derivative instruments measured at fair value on a recurring basis, categorized by the level of inputs used in the valuation, include:
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Hedging Transactions and Derivative Financial Instruments (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notional values of outstanding derivative positions | As of December 31, 2018, the volume of our copper contracts outstanding were as follows:
As of December 31, 2018 the notional values of these foreign currency forward contracts were as follows:
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Gain (loss) on derivative instruments | Effects on Financial Statements
(1) All balances were recorded in the “Other current assets” or “Other accrued liabilities” line items in the consolidated statements of financial position, except the 2018 interest rate swap balance, which was recorded in the “Other long-term assets” line item in the consolidated statements of financial position. |
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Accumulated balances related to each component of accumulated other comprehensive income (loss) | The changes in accumulated other comprehensive loss by component for the years ended December 31, 2018 and 2017 were as follows:
(1) Net of taxes of $9,984, $9,563 and $9,160 for the years ended December 31, 2018, 2017 and 2016, respectively. (2) Net of taxes of $106, $15 and $0 for the years ended December 31, 2018, 2017 and 2016, respectively. |
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Reclassification out of accumulated other comprehensive income | The impacts to the statements of operations related to reclassifications from accumulated other comprehensive loss for the years ended December 31, 2018 and 2017 were as follows:
(1) These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. For additional details, refer to “Note 12 – Pension, Other Postretirement Benefits and Employee Savings and Investment Plans |
Acquisitions (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business acquisition, pro forma information | The following unaudited pro forma financial information presents the combined results of operations of Rogers, Griswold, DSP, and DeWAL as if the Griswold acquisition had occurred on January 1, 2017, the DSP acquisition had occurred on January 1, 2016 and the DeWAL acquisition had occurred on January 1, 2015. The unaudited pro forma financial information is not intended to represent or be indicative of our consolidated results of operations that would have been reported had the Griswold, DSP, and DeWAL acquisitions been completed as of January 1, 2017, January 1, 2016 and January 1, 2015, respectively, and should not be taken as indicative of our future consolidated results of operations.
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Schedule of asset acquisition | The assets acquired in connection with the acquisition were recorded by the Company at their estimated relative fair values as follows:
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Griswold | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets acquired and liabilities assumed | The following table represents the fair values assigned to the acquired assets and liabilities assumed in the transaction. As of the filing date of this Form 10-K, the purchase accounting and purchase price allocation for the Griswold acquisition are substantially complete, as we continue to refine our valuation of certain acquired assets and assumed liabilities.
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Diversified Silicone Products, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets acquired and liabilities assumed | The following table represents the fair values assigned to the acquired assets and liabilities in the transaction:
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DeWAL | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets acquired and liabilities assumed | The following table represents the fair values assigned to the acquired assets and liabilities in the transaction:
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Property, Plant and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property, plant and equipment | For financial reporting purposes, provisions for depreciation are calculated on a straight-line basis over the following estimated useful lives of the underlying assets:
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Goodwill and Other Intangible Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in the carrying amount of goodwill, by segment | The changes in the carrying amount of goodwill for the period ending December 31, 2018, by operating segment, were as follows:
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Intangible assets | The changes in the carrying amount of other intangible assets for the two-year period ending December 31, 2018, were as follows:
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Weighted average amortization period, by intangible asset class | The weighted average amortization period as of December 31, 2018, by definite-lived other intangible asset class, is presented in the table below:
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Earnings Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share:
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Capital Stock and Equity Compensation (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares of capital stock reserved for possible future issuance | Shares of capital stock reserved for possible future issuance were as follows:
(3) This plan expired in early February 2019, and these shares are no longer available for issuance thereunder. |
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Schedule of weighted-average assumptions used | Weighted-average assumptions used to determine benefit obligations at December 31:
Weighted-average assumptions used to determine net benefit cost for the years ended December 31:
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Activity under our stock option plans | A summary of the activity under our stock option plans for 2018, 2017 and 2016, is presented below:
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Performance Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of weighted-average assumptions used | Below were the assumptions used in the Monte Carlo calculation on the respective grant dates for awards granted in 2018 and 2017:
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Schedule of restricted stock and restricted stock activity | A summary of activity of the outstanding performance-based restricted stock units for 2018, 2017 and 2016 is presented below:
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Time Based Restricted Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restricted stock and restricted stock activity | A summary of activity of the outstanding time-based restricted stock units for 2018, 2017 and 2016 is presented below:
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Deferred Stock Units | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restricted stock and restricted stock activity | deferred stock units for 2018, 2017 and 2016 is presented below:
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Summarized Financial Information of Unconsolidated Joint Ventures (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joint ventures accounted for under equity method of accounting |
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Summarized information for joint ventures | The summarized financial information for the joint ventures for the periods indicated was as follows:
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Pension, Other Postretirement Benefits and Employee Savings and Investment Plans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in benefit obligation | The Company currently intends to terminate the Merged Plan and has requested a determination letter from the IRS. The termination of the Merged Plan remains subject to final approval by both management and the IRS. The Company plans to provide for lump sum distributions or annuity payments in connection with the termination of the Merged Plan and we expect the settlement process to be completed in 2019. The Company lacked sufficient information as of December 31, 2018 to determine the financial impact of the proposed plan termination. At this time, there are no plans to terminate the Union Plan.
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Change in plan assets |
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Amounts recognized in consolidated balance sheet | Amounts included in the consolidated statements of financial position consist of:
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Schedule of net periodic benefit cost not yet recognized |
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Components of net periodic benefit cost | Components of Net Periodic (Benefit) Cost
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Schedule of weighted-average assumptions used | Weighted-average assumptions used to determine benefit obligations at December 31:
Weighted-average assumptions used to determine net benefit cost for the years ended December 31:
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Schedule of effect of one-percentage-point change in assumed health care cost trend rates | A one-percentage point change in assumed health care cost trend rates would have been expected to have the following effects as of December 31, 2018:
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Schedule of allocation of plan assets | The following table presents the fair value of the pension plan net assets by asset category and level, within the fair value hierarchy, as of December 31, 2018 and 2017.
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Changes in fair value of Level 3 assets | The table below sets forth a summary of changes in the fair value of the guaranteed deposit account’s Level 3 assets for the year ended December 31, 2018:
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Schedule of future benefit payments | The following pension benefit payments are expected to be paid through the utilization of plan assets for the funded plans and from the Company’s operating cash flows for the unfunded plans. The Retiree Health and Life Insurance benefits, for which no funding has been made, are expected to be paid from the Company’s operating cash flows. The benefit payments are based on the same assumptions used to measure our benefit obligation at the end of fiscal 2018.
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Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Lease Payments for Operating Leases | The following table includes future minimum lease payments under capital leases together with the present value of the net future minimum lease payments as of December 31, 2018:
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Schedule of Future Minimum Lease Payments for Capital Leases | The following table includes future minimum lease payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2018:
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Operating and capital leases | The following table includes lease expense for each of the three years ended December 31, 2018:
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Schedule of Liability for Unpaid Claims and Claims Adjustment Expense | The following table summarizes the change in number of asbestos claims outstanding during 2018 and 2017:
* For the year ended December 31, 2018, 192 claims were dismissed and 25 claims were settled. For the year ended December 31, 2017, 258 claims were dismissed and 22 claims were settled. Settlements totaled approximately $7.1 million for the year ended December 31, 2018, compared to $5.0 million for the year ended December 31, 2017. |
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Schedule of Loss Contingencies by Contingency | For the years ended December 31, 2018 and 2017, our projected asbestos-related claims and insurance receivables were as follows:
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated income (loss) from continuing operations before income taxes by location | The “Income before income tax expense” line item in the consolidated statements of operations consisted of:
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Income tax expense (benefit) by location | The “Income tax expense” line item in the consolidated statements of operations consisted of:
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Deferred tax assets and liabilities | Deferred tax assets and liabilities as of December 31, 2018 and 2017, were comprised of the following:
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Effective income tax rate reconciliation | Income tax expense differs from the amount computed by applying the United States federal statutory income tax rate to income before income taxes. The reasons for this difference were as follows:
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Reconciliation of unrecognized tax benefits | Unrecognized tax benefits, excluding potential interest and penalties, for the years ended December 31, 2018 and December 31, 2017, were as follows:
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Operating Segments and Geographic Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable segment information | The following table presents a disaggregation of revenue from contracts with customers and other pertinent financial information, for the periods indicated; inter-segment sales have been eliminated from the net sales data:
The following table presents net sales by our operating segment operations by geographic area for the years indicated:
(1) Net sales are allocated to countries based on the location of the customer. The table above lists individual countries with 10% or more of net sales for the periods indicated. |
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Revenue and long-lived assets by geographic region | Information relating to our long-lived assets by geographic area was as follows as of December 31 for the year indicated:
(1) Long-lived assets are based on the location of the asset and are comprised of goodwill, other intangible assets and property, plant and equipment. Countries with 10% of more of long-lived assets have been disclosed. |
Revenue from Contracts with Customers (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract with Customer, Asset | The following table presents contract assets by operating segment as of December 31, 2018:
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Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The impact of adoption using the modified retrospective method on the Company’s consolidated financial statements is as follows:
The following tables set forth the amount by which each financial statement line item is affected in the current reporting period by the application of ASC 606, as compared to the guidance that was in effect before its adoption. The impact of adoption on the consolidated financial statements as of and for the year ended December 31, 2018 is as follows:
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Restructuring and Impairment Charges (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and related costs | The following table presents severance activity related to the headquarters relocation for the year ended December 31, 2018:
The following table presents severance activity related to the facility consolidation for the year ended December 31, 2018:
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Restructuring and impairment charges | The following table summarizes the restructuring and impairment charges recorded in our operating results in 2018, 2017 and 2016:
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Supplemental Financial Information (Tables) |
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Supplemental Income Statement Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income Statement Supplemental Disclosures | The components of Other operating (income) expense, net are as follows:
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Quarterly Results of Operations (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly financial information |
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Share Repurchases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of shares of common stock through the repurchase program | We repurchased the following shares of capital stock through the Program, using cash from operations and cash on hand, during the years presented below:
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Organization and Summary of Significant Accounting Policies (Reclassification) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Selling, general and administrative expenses | $ 164,046 | $ 161,651 | $ 139,272 |
Accounting Standards Update 2017-07 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Selling, general and administrative expenses | $ (1,600) | $ (3,000) |
Organization and Summary of Significant Accounting Policies (Organization) (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018
Segment
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segments | 3 |
Organization and Summary of Significant Accounting Policies (Investments in Unconsolidated Joint Ventures) (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Schedule of Equity Method Investments [Line Items] | |
Document Fiscal Year Focus | 2018 |
Rogers INOAC Corporation (RIC) | |
Schedule of Equity Method Investments [Line Items] | |
Joint venture ownership percentage | 50.00% |
Rogers INOAC Corporation (RIC) | INOAC Corporation | |
Schedule of Equity Method Investments [Line Items] | |
Joint venture ownership percentage | 50.00% |
Rogers INOAC Suzhou Corporation (RIS) | INOAC Corporation | |
Schedule of Equity Method Investments [Line Items] | |
Joint venture ownership percentage | 50.00% |
Organization and Summary of Significant Accounting Policies (Foreign Currency) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Accounting Policies [Abstract] | |||
Currency transaction adjustment gain (loss) | $ (0.7) | $ 0.9 | $ (2.7) |
Organization and Summary of Significant Accounting Policies (Inventories) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Accounting Policies [Abstract] | ||
Document Fiscal Year Focus | 2018 | |
Inventory, Gross [Abstract] | ||
Raw materials | $ 59,321 | $ 43,092 |
Work-in-process | 30,086 | 28,133 |
Finished goods | 43,230 | 41,332 |
Total inventories | $ 132,637 | $ 112,557 |
Organization and Summary of Significant Accounting Policies (Property, Plant and Equipment Estimated Useful Lives) (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Buildings and improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 30 years |
Buildings and improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 40 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 15 years |
Office equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Office equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 10 years |
Organization and Summary of Significant Accounting Policies (Income Tax) (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Accounting Policies [Abstract] | |||
Deferred tax liabilities, undistributed foreign earnings | $ 1.8 | $ 1.8 | $ 3.1 |
Provisional income tax expense (benefit) | (7.5) | ||
Tax Cuts and Jobs Act of 2017, income tax expense (benefit) | $ 0.2 | 0.2 | |
Change in tax rate, deferred tax asset, provisional income tax expense | $ 7.7 |
Organization and Summary of Significant Accounting Policies (Software Costs) (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
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Property, Plant and Equipment [Line Items] | ||
Net capitalized software and development costs | $ 1.7 | $ 4.7 |
Software and Software Development Costs | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 3 years | |
Software and Software Development Costs | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 5 years |
Organization and Summary of Significant Accounting Policies (Fair Value of Financial Statements) (Details) - London Interbank Offered Rate (LIBOR) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Interest rate spread over variable rate | 1.50% |
Third Amended Credit Agreement | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Interest rate spread over variable rate | 1.50% |
Organization and Summary of Significant Accounting Policies (Concentration of Credit and Investment Risk) (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Accounting Policies [Abstract] | |
Significant credit losses, amount | $ 0 |
Organization and Summary of Significant Accounting Policies (Advertising Costs) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Accounting Policies [Abstract] | |||
Advertising expense | $ 3.8 | $ 4.4 | $ 3.0 |
Organization and Summary of Significant Accounting Policies (Equity Compensation) (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Anniversary period from grant date | 13 months |
Hedging Transactions and Derivative Financial Instruments (Notional Values of Derivative Instruments) (Detail) - Not Designated as Hedging Instrument - Foreign Exchange Forward |
Dec. 31, 2018
USD ($)
|
---|---|
USD/KRW Notional Amount of Foreign Currency Derivatives | |
Derivative [Line Items] | |
Notional values of foreign currency derivatives | $ 1,325,760,000 |
JPY/EUR Notional Amount of Foreign Currency Derivatives | |
Derivative [Line Items] | |
Notional values of foreign currency derivatives | 675,000,000 |
EUR/USD Notional Amount of Foreign Currency Derivatives | |
Derivative [Line Items] | |
Notional values of foreign currency derivatives | 10,449,335 |
USD/CNY Notional Amount of Foreign Currency Derivatives | |
Derivative [Line Items] | |
Notional values of foreign currency derivatives | $ 23,655,942 |
Hedging Transactions and Derivative Financial Instruments (Effect and Fair Value of Derivative Instruments) (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Not Designated as Hedging Instrument | Other income (expense), net | Foreign Exchange Contracts | ||
Derivative [Line Items] | ||
Effect of current derivative instruments | $ (333) | $ (7) |
Fair values of derivative instruments | 522 | (396) |
Not Designated as Hedging Instrument | Other income (expense), net | Copper Derivatives | ||
Derivative [Line Items] | ||
Effect of current derivative instruments | (2,101) | 1,928 |
Fair values of derivative instruments | 583 | 2,016 |
Designated as Hedging Instrument | Other comprehensive income (loss) | Interest Rate Swap | ||
Derivative [Line Items] | ||
Effect of current derivative instruments | 420 | 41 |
Fair values of derivative instruments | $ 461 | $ 41 |
Acquisitions (Business Acquisition Pro Forma Information) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Business Combinations [Abstract] | |||
Net sales | $ 893,878 | $ 851,122 | $ 724,877 |
Net income | $ 87,584 | $ 80,283 | $ 50,349 |
Acquisitions (Schedule of Asset Acquisition) (Details) $ in Thousands |
Aug. 28, 2018
USD ($)
|
---|---|
Business Combinations [Abstract] | |
Land | $ 6,104 |
Buildings | 8,401 |
Machinery and equipment | 18,616 |
Equipment in process | 12,633 |
Total property, plant and equipment | $ 45,754 |
Property, Plant and Equipment (Schedule of Plant Property and Equipment) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, gross | $ 517,991 | $ 444,365 |
Accumulated depreciation | (317,414) | (289,909) |
Property, plant and equipment, net | 200,577 | 154,456 |
Equipment in process | 42,182 | 25,155 |
Total property, plant and equipment, net | 242,759 | 179,611 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, gross | 21,525 | 14,620 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, gross | 175,279 | 135,191 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, gross | 256,301 | 238,000 |
Office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, gross | $ 64,886 | $ 56,554 |
Property, Plant and Equipment (Additional Information) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Sep. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2018 |
Jun. 30, 2017 |
|
Property, Plant and Equipment [Line Items] | ||||||||
Depreciation | $ 33,500 | $ 29,300 | $ 26,600 | |||||
Impairment charges | 1,506 | 807 | 0 | |||||
Assets held for sale | 0 | 896 | ||||||
Gain on sale of property, plant and equipment | $ 3,087 | $ 5,329 | $ 0 | |||||
Property plant and equipment, held for sale | $ 400 | |||||||
Arizona | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Assets held for sale | $ 900 | |||||||
Gain on sale of property, plant and equipment | $ 400 | |||||||
Belgium | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Gain on sale of property, plant and equipment | $ 4,400 | $ 900 |
Goodwill and Other Intangible Assets (Additional Information) (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense | $ 16.5 | $ 14.8 | $ 11.2 |
Estimated future amortization expense for 2019 | 17.7 | ||
Estimated future amortization expense for 2020 | 14.6 | ||
Estimated future amortization expense for 2021 | 13.8 | ||
Estimated future amortization expense for 2022 | 13.3 | ||
Estimated future amortization expense for 2023 | $ 12.7 |
Goodwill and Other Intangible Assets (Weighted Average Amortization Period by Intangible Asset Class) (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted average useful life | 6 years 7 months 2 days |
Customer relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted average useful life | 7 years 6 months 19 days |
Technology | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted average useful life | 4 years 4 months 7 days |
Trademarks and trade names | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted average useful life | 5 years 11 days |
Covenants not to compete | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted average useful life | 2 years 1 month 6 days |
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Numerator: | |||
Net income | $ 87,651 | $ 80,459 | $ 48,283 |
Denominator: | |||
Weighted-average shares outstanding - basic (in shares) | 18,374,000 | 18,154,000 | 17,991,000 |
Effect of dilutive shares (in shares) | 285,000 | 393,000 | 232,000 |
Weighted-average shares outstanding - diluted (in shares) | 18,659,000 | 18,547,000 | 18,223,000 |
Basic earnings per share (in dollars per share) | $ 4.77 | $ 4.43 | $ 2.68 |
Diluted earnings per share (in dollars per share) | $ 4.70 | $ 4.34 | $ 2.65 |
Antidilutive securities excluded from computation of earnings per share (shares) | 36,642 | 0 | 0 |
Capital Stock and Equity Compensation (Monte Carlo Assumptions Used) (Details) - Performance Shares |
Sep. 17, 2018 |
Feb. 08, 2018 |
Feb. 09, 2017 |
---|---|---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 36.60% | 34.80% | 33.60% |
Expected term (in years) | 3 years | 3 years | 3 years |
Risk-free interest rate | 2.85% | 2.28% | 1.38% |
Capital Stock and Equity Compensation (Deferred Stock Units) (Detail) - Deferred Stock Units - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Awards Outstanding | |||
Non-vested awards outstanding, beginning balance (in shares) | 9,250 | 11,900 | 23,950 |
Awards granted (in shares) | 8,400 | 9,250 | 11,900 |
Stock issued (in shares) | (9,250) | (11,900) | (23,950) |
Non-vested awards outstanding, ending balance (in shares) | 8,400 | 9,250 | 11,900 |
Weighted- Average Grant Date Fair Value | |||
Weighted-Average Grant Date Fair Value, Outstanding at period beginning (in dollars per share) | $ 109.48 | $ 58.82 | $ 27.22 |
Weighted-Average Grant Date Fair Value, Awards granted (in dollars per share) | 108.86 | 109.48 | 58.82 |
Weighted-Average Grant Date Fair Value, Stock issued (in dollars per share) | 109.48 | 58.82 | 52.69 |
Weighted-Average Grant Date Fair Value, Outstanding at period end (in dollars per share) | $ 108.86 | $ 109.48 | $ 58.82 |
Capital Stock and Equity Compensation (Summary of Activity Under Stock Option Plans) (Detail) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Options Outstanding | |||
Options outstanding at beginning of period (in shares) | 33,283 | 116,575 | 212,038 |
Options exercised (in shares) | (22,333) | (83,292) | (95,113) |
Options forfeited (in shares) | 0 | 0 | (350) |
Options outstanding at end of period (in shares) | 10,950 | 33,283 | 116,575 |
Weighted- Average Exercise Price Per Share | |||
Weighted Average Exercise Price Per Share, Outstanding at period start (in dollars per share) | $ 36.40 | $ 37.76 | $ 40.47 |
Weighted Average Exercise Price Per Share, Options exercised (in dollars per share) | 38.57 | 37.04 | 43.56 |
Weighted Average Exercise Price Per Share, Options forfeited (in dollars per share) | 0.00 | 0.00 | 44.32 |
Weighted Average Exercise Price Per Share, Outstanding at period end (in dollars per share) | $ 31.99 | $ 36.40 | $ 37.76 |
Joint Ventures (Additional Information) (Detail) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018
USD ($)
joint_venture
|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Schedule of Equity Method Investments [Line Items] | |||
Number of joint ventures that are 50% owned | joint_venture | 2 | ||
Equity income in unconsolidated joint ventures | $ 5,501 | $ 4,898 | $ 4,146 |
Due from joint ventures, current | $ 1,500 | 3,700 | |
Rogers INOAC Corporation (RIC) | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership interest in joint venture | 50.00% | ||
Corporate Joint Venture | |||
Schedule of Equity Method Investments [Line Items] | |||
Due to related parties, current | $ 2,300 | $ 2,100 | |
INOAC Corporation | Rogers INOAC Corporation (RIC) | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership interest in joint venture | 50.00% |
Joint Ventures (Accounted for Under Equity Method of Accounting) (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Schedule of Equity Method Investments [Line Items] | |
Fiscal Year-End | --12-31 |
Rogers INOAC Corporation (RIC) | Japan | Elastomeric Material Solutions | |
Schedule of Equity Method Investments [Line Items] | |
Fiscal Year-End | --10-31 |
Rogers INOAC Suzhou Corporation (RIS) | China | Elastomeric Material Solutions | |
Schedule of Equity Method Investments [Line Items] | |
Fiscal Year-End | --12-31 |
Joint Ventures (Assets, Liabilities, and Equity) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Equity Method Investments and Joint Ventures [Abstract] | ||
Current assets | $ 38,730 | $ 40,934 |
Non-current assets | 4,839 | 4,947 |
Current liabilities | 6,376 | 9,519 |
Shareholders' equity | $ 37,193 | $ 36,362 |
Joint Ventures (Sales, Profit, and Income) (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Equity Method Investments and Joint Ventures [Abstract] | |||
Net sales | $ 55,465 | $ 54,597 | $ 47,321 |
Gross profit | 21,229 | 21,462 | 16,829 |
Net income | $ 11,002 | $ 9,796 | $ 8,292 |
Pension, Other Postretirement Benefits and Employee Savings and Investment Plans (Components of Net Periodic Benefit Cost) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Pension Benefits | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Service cost | $ 0 | $ 0 | $ 0 |
Interest cost | 6,758 | 7,356 | 7,530 |
Expected return of plan assets | (8,662) | (9,221) | (10,808) |
Amortization of prior service cost (credit) | 0 | 0 | 0 |
Amortization of net loss | 1,828 | 1,755 | 1,784 |
Settlement charge | 0 | 0 | 0 |
Net periodic benefit cost (benefit) | (76) | (110) | (1,494) |
Retirement Health and Life Insurance Benefits | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Service cost | 73 | 80 | 133 |
Interest cost | 62 | 71 | 75 |
Expected return of plan assets | 0 | 0 | 0 |
Amortization of prior service cost (credit) | (1,602) | (1,602) | (1,489) |
Amortization of net loss | 0 | 0 | (47) |
Settlement charge | 0 | 0 | 0 |
Net periodic benefit cost (benefit) | $ (1,467) | $ (1,451) | $ (1,328) |
Pension, Other Postretirement Benefits and Employee Savings and Investment Plans (Assumptions Used) (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Pension Benefits | ||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | ||
Discount rate | 4.25% | 3.70% |
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | ||
Discount rate | 3.70% | 4.25% |
Expected long-term rate of return on plan assets | 4.94% | 5.51% |
Retirement Health and Life Insurance Benefits | ||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | ||
Discount rate | 3.75% | 3.25% |
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | ||
Discount rate | 3.25% | 3.25% |
Expected long-term rate of return on plan assets | 0.00% | 0.00% |
Pension, Other Postretirement Benefits and Employee Savings and Investment Plans (One-Percentage Point Change in Assumed Health Care Cost Trend Rates) (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Defined Benefit Plan, Effect of One-Percentage Point Change in Assumed Health Care Cost Trend Rate [Abstract] | |
Effect on total service and interest cost - Increase | $ 8 |
Effect on total service and interest cost - Decrease | (8) |
Effect on other postretirement benefit obligations - Increase | 65 |
Effect on other postretirement benefit obligations - Decrease | $ (60) |
Pension, Other Postretirement Benefits and Employee Savings and Investment Plans (Summary of Changes in Fair Value of Guaranteed Deposit Account's Level 3 Assets) (Details) - Pension Benefits - Guaranteed deposit account - Level 3 $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance at beginning of year | $ 6,289 |
Change in unrealized gain (loss) | (194) |
Purchases, sales, issuances and settlements (net) | (4,735) |
Balance at end of year | $ 1,360 |
Pension, Other Postretirement Benefits and Employee Savings and Investment Plans (Estimated Future Payments) (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Pension Benefits | |
Defined Benefit Plan Disclosure [Line Items] | |
2019 | $ 9,500 |
2020 | 9,597 |
2021 | 9,818 |
2022 | 10,038 |
2023 | 10,228 |
2024-2028 | 53,901 |
Retirement Health and Life Insurance Benefits | |
Defined Benefit Plan Disclosure [Line Items] | |
2019 | 334 |
2020 | 265 |
2021 | 171 |
2022 | 134 |
2023 | 151 |
2024-2028 | $ 825 |
Commitments and Contingencies (Additional Information) (Detail) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018
USD ($)
claims
|
Dec. 31, 2017
USD ($)
claims
|
Dec. 31, 2016
USD ($)
|
|
Loss Contingencies [Line Items] | |||
Number of claims dismissed | claims | 192 | 258 | |
Number of claims settled | claims | 25 | 22 | |
Claims settlements amount | $ 7.1 | $ 5.0 | |
Projection period (years) | 40 years | 10 years | |
Asbestos-related claims | $ 70.3 | $ 76.2 | |
Recorded third-party environmental recoveries receivable | 63.8 | 69.2 | |
Environmental remediation expense (income) | $ 0.7 | $ 3.4 | $ 0.3 |
Minimum | |||
Loss Contingencies [Line Items] | |||
Operating lease period | 1 year | ||
Maximum | |||
Loss Contingencies [Line Items] | |||
Operating lease period | 5 years | ||
Connecticut Voluntary Corrective Action Program | |||
Loss Contingencies [Line Items] | |||
Environmental remediation expense | $ 0.7 | ||
Estimated total cleanup costs, accrual | $ 1.7 |
Commitments and Contingencies (Operating Leases) (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2019 | $ 543 |
2020 | 525 |
2021 | 4,276 |
2022 | 0 |
2023 | 0 |
Thereafter | 0 |
Total | 5,344 |
Less: Interest | (295) |
Present Value of Net Future Minimum Lease Payments | $ 5,049 |
Commitments and Contingencies (Capital Leases) (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2019 | $ 3,951 |
2020 | 3,052 |
2021 | 2,216 |
2022 | 1,507 |
2023 | 491 |
Thereafter | 0 |
Total | $ 11,217 |
Commitments and Contingencies (Leases) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
Operating Leases | $ 3,850 | $ 3,819 | $ 3,567 |
Capital Leases | $ 472 | $ 608 | $ 564 |
Commitments and Contingencies (Claims for Asbestos) (Details) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2018
USD ($)
claims
|
Dec. 31, 2017
claims
|
|
Commitments and Contingencies Disclosure [Abstract] | ||
Indemnity and defense costs | $ | $ 1.2 | |
Claims outstanding at beginning of year | 687 | 605 |
New claims filed | 275 | 362 |
Pending claims concluded | (217) | (280) |
Claims outstanding at end of year | 745 | 687 |
Commitments and Contingencies (Schedule to Total Estimated of Liability for Asbestos) (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Asbestos-related claims | $ 70.3 | $ 76.2 |
Asbestos-related insurance receivables | $ 63.8 | $ 69.2 |
Income Taxes (Consolidated Income (Loss) from Continuing Operations Before Income Taxes) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Domestic | $ 14,381 | $ 39,751 | $ 10,888 |
International | 96,208 | 93,174 | 71,392 |
Total | $ 110,589 | $ 132,925 | $ 82,280 |
Income Taxes (Income Tax Expense (Benefit) in the Consolidated Statements of Income) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Current | |||
Domestic | $ (341) | $ 7,535 | $ 2,078 |
International | 26,604 | 27,418 | 24,537 |
Total | 26,263 | 34,953 | 26,615 |
Deferred | |||
Domestic | (3,007) | 21,936 | 3,376 |
International | (318) | (4,423) | 4,006 |
Total | (3,325) | 17,513 | 7,382 |
Domestic | (3,348) | 29,471 | 5,454 |
International | 26,286 | 22,995 | 28,543 |
Total | $ 22,938 | $ 52,466 | $ 33,997 |
Income Taxes (Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|
Deferred tax assets | ||||
Accrued employee benefits and compensation | $ 4,269 | $ 8,410 | ||
Tax loss and credit carryforwards | 18,604 | 7,905 | ||
Reserves and accruals | 4,935 | 4,699 | ||
Other | 1,953 | 2,977 | ||
Total deferred tax assets | 29,761 | 23,991 | ||
Less deferred tax asset valuation allowance | (16,889) | (8,754) | $ (6,388) | $ (6,202) |
Total deferred tax assets, net of valuation allowance | 12,872 | 15,237 | ||
Deferred tax liabilities | ||||
Depreciation and amortization | 8,335 | 14,300 | ||
Postretirement benefit obligations | 3,234 | 2,311 | ||
Unremitted earnings | 1,778 | 3,100 | ||
Other | 2,094 | 224 | ||
Total deferred tax liabilities | 15,441 | 19,935 | ||
Net deferred tax asset (liability) | $ (2,569) | $ (4,698) |
Income Taxes (Income Tax Expense Difference) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Tax expense at Federal statutory income tax rate | $ 23,224 | $ 46,529 | $ 28,798 |
International tax rate differential | 826 | (9,603) | (2,260) |
Foreign source income, net of tax credits (excluding U.S. Tax Reform) | (197) | 1,087 | 1,215 |
State tax, net of federal | 121 | 279 | (200) |
Unrecognized tax benefits | (869) | 2,874 | (5,555) |
U.S. Tax Reform | 209 | 13,683 | 0 |
Equity compensation excess tax deductions | (2,238) | (3,867) | 0 |
General business credits | (2,172) | (1,080) | (1,125) |
Distribution related foreign taxes | 1,916 | 2,173 | 12,433 |
Valuation allowance change (excluding U.S. Tax Reform) | 602 | 1,393 | 171 |
Other | 1,516 | (1,002) | 520 |
Total | $ 22,938 | $ 52,466 | $ 33,997 |
Income Taxes (Reconciliation of Unrecognized Tax Benefits, Excluding Potential Interest and Penalties) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Beginning balance | $ 14,565 | $ 5,883 |
Gross increases - current period tax positions | 2,583 | 7,056 |
Gross increases - tax positions in prior periods | 505 | 3,243 |
Gross decreases - tax positions in prior periods | 0 | (375) |
Foreign currency exchange | (142) | 467 |
Lapse of statute of limitations | (7,710) | (1,709) |
Ending balance | $ 9,801 | $ 14,565 |
Operating Segments and Geographic Information (Operations by Geographic Area) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Segment Reporting Information [Line Items] | |||
Long-Lived Assets | $ 684,652 | $ 576,996 | $ 522,894 |
United States | |||
Segment Reporting Information [Line Items] | |||
Long-Lived Assets | 476,560 | 370,964 | 326,199 |
China | |||
Segment Reporting Information [Line Items] | |||
Long-Lived Assets | 58,205 | 57,404 | 62,728 |
Germany | |||
Segment Reporting Information [Line Items] | |||
Long-Lived Assets | 113,412 | 114,497 | 101,725 |
Other | |||
Segment Reporting Information [Line Items] | |||
Long-Lived Assets | $ 36,475 | $ 34,131 | $ 32,242 |
Revenue from Contracts with Customers (Narrative) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Retained earnings | $ 776,403 | $ 684,540 | |
Accounting Standards Update 2014-09 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Retained earnings | $ 688,752 | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Retained earnings | $ 5,313 | $ 4,212 |
Revenue from Contracts with Customers (Contract Assets) (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Contract Assets | $ 22,728 |
Advanced Connectivity Solutions | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Contract Assets | 0 |
Elastomeric Material Solutions | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Contract Assets | 943 |
Power Electronics Solutions | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Contract Assets | 19,738 |
Other | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Contract Assets | $ 2,047 |
Restructuring and Impairment Charges (Schedule of Restructuring Charges) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Apr. 24, 2018 |
Dec. 31, 2018 |
|
Severance and other related costs | ||
Restructuring Reserve [Roll Forward] | ||
Balance at December 31, 2017 | $ 183 | |
Provisions | 186 | |
Payments | (264) | |
Balance as of December 31, 2018 | 105 | |
Facility Closing | ||
Restructuring Reserve [Roll Forward] | ||
Balance at December 31, 2017 | 0 | |
Provisions | $ 2,000 | 546 |
Payments | (23) | |
Balance as of December 31, 2018 | $ 523 |
Supplemental Financial Information (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Condensed Financial Statements, Captions [Line Items] | |||
Gain from antitrust litigation settlement | $ (4,231) | $ 0 | $ 0 |
Gain on sale of property, plant and equipment | (3,087) | (5,329) | 0 |
Lease income | (948) | 0 | 0 |
Depreciation on leased assets | 3,512 | 0 | 0 |
Indemnity claim settlement from acquisitions | (700) | 0 | 0 |
Economic incentive grants | (556) | 0 | 0 |
Other operating income (expense) | (3,087) | (5,329) | 0 |
Global Headquarters Move | |||
Condensed Financial Statements, Captions [Line Items] | |||
Gain on sale of property, plant and equipment | $ (164) | $ (5,329) | $ 0 |
Recent Accounting Standards - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Jan. 01, 2019 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Income tax expense | $ 200 | $ 200 | |||
Selling, general and administrative expenses | $ 164,046 | $ 161,651 | $ 139,272 | ||
Accounting Standards Update 2017-07 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Selling, general and administrative expenses | $ (1,600) | $ (3,000) | |||
Minimum | Subsequent Event | Accounting Standards Update 2016-02 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Operating lease, right-of-use asset | $ 9,000 | ||||
Operating lease, liability | 9,000 | ||||
Maximum | Subsequent Event | Accounting Standards Update 2016-02 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Operating lease, right-of-use asset | 11,000 | ||||
Operating lease, liability | $ 11,000 |
Quarterly Results of Operations (Unaudited) (Results of Operations) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net sales | $ 222,942 | $ 226,863 | $ 214,675 | $ 214,611 | $ 209,008 | $ 206,783 | $ 201,424 | $ 203,828 | $ 879,091 | $ 821,043 | $ 656,314 |
Gross margin | 78,375 | 79,130 | 76,672 | 76,606 | 75,491 | 82,188 | 80,546 | 80,350 | $ 310,783 | $ 318,575 | $ 249,485 |
Net income | $ 24,452 | $ 19,734 | $ 17,329 | $ 26,136 | $ 6,999 | $ 25,532 | $ 20,896 | $ 27,032 | |||
Net income per share: | |||||||||||
Basic (in dollars per share) | $ 1.33 | $ 1.07 | $ 0.94 | $ 1.43 | $ 0.38 | $ 1.40 | $ 1.15 | $ 1.50 | |||
Diluted (in dollars per share) | $ 1.31 | $ 1.06 | $ 0.93 | $ 1.40 | $ 0.37 | $ 1.37 | $ 1.13 | $ 1.47 |
Share Repurchases (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2015 |
---|---|---|
Equity [Abstract] | ||
Stock repurchase program, authorized amount | $ 100,000,000 | |
Stock repurchase program, remaining authorized repurchase amount | $ 49,000,000 |
Share Repurchases (Schedule of Shares of Common Stock Through the Repurchase Program) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Equity [Abstract] | |||
Shares of capital stock repurchased (in shares) | 23,138 | 0 | |
Value of capital stock repurchased | $ 2,999 | $ 0 | $ 7,995 |
SCHEDULE II Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Allowance for Doubtful Accounts | |||
Balance at Beginning of Period | $ 1,525 | $ 1,952 | $ 695 |
Charged to (Reduction of) Costs and Expenses | 189 | (275) | 1,321 |
Taken Against Allowance | (360) | (152) | (64) |
Other (Deductions) Recoveries | 0 | 0 | 0 |
Balance at End of Period | 1,354 | 1,525 | 1,952 |
Valuation on Allowance for Deferred Tax Assets | |||
Balance at Beginning of Period | 8,754 | 6,388 | 6,202 |
Charged to (Reduction of) Costs and Expenses | 8,135 | 2,366 | 186 |
Taken Against Allowance | 0 | 0 | 0 |
Other (Deductions) Recoveries | 0 | 0 | 0 |
Balance at End of Period | $ 16,889 | $ 8,754 | $ 6,388 |
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