10-K 1 rog-20151231x10k.htm 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10‑K
(Mark One)

þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015
OR

o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
Commission File No. 1-4347

ROGERS CORPORATION
(Exact name of Registrant as specified in its charter)

Massachusetts |  | 06‑0513860
(State or other jurisdiction of incorporation or organization) |  | (I. R. S. Employer Identification No.)
P.O. Box 188, One Technology Drive, Rogers, Connecticut 06263-0188 (Address of principal executive offices) Registrant's telephone number, including area code: (860) 774-9605
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
Rights to Purchase Capital Stock |  |
Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ý | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨
| (Do not check if a smaller reporting company) |

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes ¨ No ý
The aggregate market value of the voting common equity held by non-affiliates as of June 30, 2015, the last business day of the registrant's most recently completed second fiscal quarter, was approximately $1,221,463,930. Rogers has no non-voting common equity.
The number of shares outstanding of common stock as of February 4, 2016 was 17,969,554.

Documents Incorporated by Reference:
Portions of Rogers’ Definitive Proxy Statement for its 2016 Annual Meeting of Shareholders, currently scheduled for May 6, 2016, are incorporated by reference into Part III of this Form 10-K.
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ROGERS CORPORATION
FORM 10-K
December 31, 2015

TABLE OF CONTENTS
Part I
Item 1. | Business | 4
Item 1A. | Risk Factors | 10
Item 1B. | Unresolved Staff Comments | 15
Item 2. | Properties | 16
Item 3. | Legal Proceedings | 17
Item 4. | Mine Safety Disclosures | 18
Part II
Item 5. | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 19
Item 6. | Selected Financial Data | 20
Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 21
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 40
Item 8. | Financial Statements and Supplementary Data | 41
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 90
Item 9A. | Controls and Procedures | 90
Item 9B. | Other Information | 91
Part III
Item 10. | Directors, Executive Officers and Corporate Governance | 91
Item 11. | Executive Compensation | 91
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 91
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 92
Item 14. | Principal Accountant Fees and Services | 93
Part IV
Item 15. | Exhibits, Financial Statement Schedules | 93
| Signatures | 97

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Part I
Item 1. Business
In this Report, we use the terms “Company,” “Rogers,” “we,” “us,” and “our” unless otherwise indicated or the context otherwise requires, to refer to Rogers Corporation and its consolidated subsidiaries.
Forward-Looking Statements
This Annual Report on Form 10-K includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are generally accompanied by words such as “anticipate,” “assume,” “believe,” “could,” “estimate,” “expect,” “foresee,” “goal,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “seek,” “target” or similar expressions that convey uncertainty as to future events or outcomes. Forward-looking statements are based on assumptions and beliefs that we believe to be reasonable; however, assumed facts almost always vary from actual results, and the differences between assumed facts and actual results could be material depending upon the circumstances. Where we express an expectation or belief as to future results, that expectation or belief is expressed in good faith and based on assumptions believed to have a reasonable basis. We cannot assure you, however, that the stated expectation or belief will occur or be achieved or accomplished. Among the factors that could cause our results to differ materially from those indicated by forward-looking statements are risks and uncertainties inherent in our business including, without limitation:

• | volatility within the Internet Connectivity, Clean Energy, and Safety and Protection megatrends on which our business is focused, as well as specific market and industry trends within these megatrends;

• | 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;

• | 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 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;

• | financial and restrictive covenants in our credit agreement, which could limit our operational and financial flexibility;

• | the outcome of ongoing and future litigation, including our asbestos-related product liability litigation;

• | changes in environmental laws and regulations applicable to our business;

• | disruptions in, or breaches of, our information technology systems;

• | asset impairment and restructuring charges; and

• | changes in accounting standards promulgated by the Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC).

Our forward-looking statements are expressly qualified by these cautionary statements, which you should consider carefully, along with the risks discussed under the heading “Item 1A Risk Factors” and “Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report, that could cause actual results to differ materially from historical results or anticipated results. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.
Overview
Rogers Corporation (NYSE: ROG) designs, develops, manufactures and sells high-quality and high-reliability engineered materials and components for mission critical applications. We operate principally three strategic business segments-Advanced Connectivity Solutions (ACS), Elastomeric Material Solutions (EMS) and Power Electronics Solutions (PES). We have a history of innovation and established the Rogers Innovation Center for our leading research and development activities.
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Our growth strategy is based upon the following principles: (1) market-driven organization, (2) innovation leadership, (3) synergistic mergers and acquisitions, and (4) operational excellence. As a market-driven organization, we are focused on three megatrends of expanding business opportunities: Internet Connectivity, Clean Energy and Safety & Protection. During 2015, we added the Safety & Protection megatrend in place of Mass Transit in response to the increase in demand for advanced driver assistance systems and growth in products focused on consumer impact protection, passenger safety and vibration management and flexible heater insulation.
In January 2015, we completed the acquisition of Arlon LLC and its subsidiaries, other than Arlon India (Pvt) Limited (the acquired subsidiaries, collectively, Arlon), for an aggregate purchase price of approximately $157 million. Arlon manufactures high performance materials for the printed circuit board industry and silicone rubber-based materials. The acquisition of Arlon and its subsequent integration into our business segments have enabled us to increase scale and complement our existing product offerings, thus enhancing our ability to support our customers. The Arlon polyimide and thermoset laminate business, which was not integrated, was sold in December 2015. For additional information regarding the Arlon acquisition and related financing, see Note 5, “Acquisition” and Note 12, “Debt” in “Item 8 Financial Statements and Supplementary Data.”
Rogers was founded in 1832 and incorporated in Massachusetts in 1927.
Our Business Segments
We operate our business in three strategic business segments: Advanced Connectivity Solutions (ACS), Elastomeric Material Solutions (EMS) and Power Electronics Solutions (PES). The following table reflects the net sales of the reportable segments of the Company for the last three fiscal years:

(Dollars in thousands) | 2015 | 2014 | 2013
ACS | $ | 267,630 |  | $ | 240,864 |  | $ | 184,949 |
EMS | 180,898 |  | 173,671 |  | 168,082 |
PES | 150,288 |  | 171,832 |  | 160,730 |
Other | 42,627 |  | 24,544 |  | 23,721 |
Total | $ | 641,443 |  | $ | 610,911 |  | $ | 537,482 |

In 2015, we updated the names of two of our segments to better align with their product portfolios: our “Printed Circuit Materials” segment was renamed to “Advanced Connectivity Solutions,” and our “High Performance Foams” segment was renamed to “Elastomeric Material Solutions.”
Additional financial information regarding each of our reportable segments, along with information regarding our revenues and long-lived assets by geographic area, is available in Note 16, “Business Segments,” in “Item 8 Financial Statements and Supplementary Data.”
Advanced Connectivity Solutions (ACS)
Our ACS segment designs, develops, manufactures and sells circuit materials enabling high-performance and high-reliability connectivity for applications including communications infrastructure (e.g., cellular communication antennas and equipment), automotive (e.g., advanced driver assistance systems and global positioning applications), consumer electronics and aerospace/defense. We sell our circuit materials under various tradenames, including RO3000®, RO4000®, RT/duroid®, ULTRALAM®, RO2800®, LoPro®, COOLSPAN® and TMM®. In January 2015, we acquired the Arlon business, and subsequently integrated a portion of the product portfolio into the ACS segment operations and products that expanded the segment’s product portfolio, market reach and customer base, particularly in the RF antenna business.
Our ACS segment has manufacturing and administrative facilities in Chandler, Arizona; Rogers, Connecticut; Bear, Delaware; Evergem, Belgium; and Suzhou, China.
Elastomeric Material Solutions (EMS)
Our EMS segment designs, develops, manufactures and sells elastomeric material solutions for critical cushioning, sealing, impact protection and vibration management applications including general industrial, portable electronics (e.g., mobile internet devices), consumer goods (e.g., protective sports equipment), automotive, mass transportation, construction and printing applications. We sell our elastomeric materials under various trade names, including PORON®, XRD®, BISCO® and eSORBA®. In January 2015, we acquired the Arlon business, and subsequently integrated a portion of the product portfolio into the EMS segment operations and products that expanded the segment’s product portfolio, market reach and customer base, particularly in the engineered silicones for sealing and insulation applications.
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Our EMS segment has manufacturing and administrative facilities in Woodstock, Connecticut; Rogers, Connecticut; Bear, Delaware; Carol Stream, Illinois; and Suzhou, China. We also own 50% of: (1) Rogers Inoac Corporation (RIC), a joint venture that was established in Japan 1989 to design, develop, manufacture and sell PORON products predominantly for the Japanese market and (2) Rogers INOAC Suzhou Corporation (RIS) that was established in China in 2004 to design, develop, manufacture and sell PORON products primarily for RIC customers in China. 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 (PES)
Our PES segment designs, develops, manufactures and sells ceramic substrate materials for power module applications (e.g., variable frequency drives, vehicle electrification and renewable energy), laminated bus bars 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® tradename, and our bus bars under the ROLINX® tradename.
Our PES segment has manufacturing and administrative facilities in Ghent, Belgium; Eschenbach, Germany; Budapest, Hungary; and Suzhou, China.
Other
Our Other businesses consist of elastomeric components for applications in ground transportation, office equipment, consumer and other markets; elastomeric floats for level sensing in fuel tanks, motors, and storage tanks; and inverters for portable communications and automotive markets. In 2015, the Other businesses included the Arlon polyimide and thermoset laminate operations, which was sold in December 2015.
Sales and Competition
We sell our materials and components primarily through direct sales channels positioned near major concentrations of our customers in North America, Europe and Asia. We sold to over 3,000 customers worldwide in 2015, primarily original equipment manufacturers (OEMs) and component suppliers. No individual customer represented more than 3.9% of our total sales for 2015; however, there are concentrations of OEM customers in our ACS (Chinese telecommunications equipment manufacturers) and PES (semiconductor and automotive manufacturers) segments. Although the loss of all of the sales made to any one of our larger customers would require a period of adjustment during which the results of a particular operating segment would be adversely impacted, we believe that such adjustments could be successfully made over a period of time due to the diversity of our customer base. We believe that our business relationships with major customers in our key markets are favorable, and that we are in a good position to respond promptly to variations in customer requirements and technology trends.
We employ a technical sales and marketing approach pursuant to which we work collaboratively to provide design engineering, testing, product development and other technical support services to OEMs that incorporate our engineered materials and components in their products. Particularly in our ACS and EMS business segments, component suppliers convert, modify or otherwise incorporate our engineered materials and components into their components for these OEMs in accordance with their specifications. Accordingly, we provide similar technical support services to component suppliers.
We compete primarily with manufacturers of high-end materials, some of which are large, multi-national companies, principally on the basis of innovation, customer relationships, product quality and performance, technical service, breadth of product line, and manufacturing capabilities. We also compete with manufacturers of commodity materials, including smaller regional producers with lower overhead costs and profit requirements located in Asia that attempt to upsell their products based principally upon price, particularly for products that have matured in their life cycle. We believe that we have a competitive advantage because of our reputation for innovation, the quality and reliability of our materials and components and our demonstrated commitment to technical support and customer service.
Research and Development
We have a history of innovation, and innovation leadership is a key component of our overall business strategy. The markets we serve are typically characterized by rapid technological changes and advances. Accordingly, the success of our strategy is in part dependent on our ability to develop market-leading products, which is primarily driven by efforts in research and development. We are focused on identifying technologies and innovations related to both our current product portfolio as well as other long term initiatives targeted at further diversifying our business. As part of this technology commitment, we established the Rogers Innovation Center at Northeastern University in Burlington, Massachusetts, and, in 2015, opened a satellite innovation center at our facility in Suzhou, China. Our innovation centers focus on the earliest stages of technical and commercial development of new high-tech materials solutions in close alignment with market needs.
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Patents and Other Intellectual Property
We have many domestic and foreign patents and licenses and have additional patent applications on file related to all business segments. These patents and licenses vary in duration and provide some protection from competition.
We also own a number of registered and unregistered trademarks and have acquired and developed certain confidential and proprietary technology, including trade secrets that we believe to be of some importance to our business.
While we believe our patents and other intellectual property provide some important advantage to our business segments, we believe that a significant part of our competitive position and future success is also determined by such factors as the innovative skills, systems and process knowledge, and technological expertise of our personnel; the range and success of new products we develop; and our customer service and support.
Manufacturing and Raw Materials
The key raw materials used in our business are as follows: for our ACS segment, copper and polymer materials; for our EMS segment, polyurethane and silicone materials; and for our PES segment, copper and ceramic materials. We believe we have adequate sources for the supply of these key raw materials for our manufacturing needs.
Some of the raw materials used in our business are available through single or limited-source suppliers. We recently expanded our supplier base for certain key raw materials and components for efficiency, cost reduction and quality, while limiting the number of suppliers who act as the single-source supplier for a particular raw material. We seek to mitigate the impact of raw material supply disruptions by purchasing sufficient quantities of the particular raw material in advance to sustain production until alternative materials and production processes can be qualified with customers. However, this strategy may not be effective in all cases, and disruptions in our supply of raw materials could negatively impact our production and have a material adverse impact on our business.
Seasonality
There is no material concentration of products or markets within the business that are seasonal in nature, except for some minor seasonality for consumer products, which often align with year-end holidays and product launch cycles.
Our Employees
As of December 31, 2015, we employed approximately 2,800 people.
Backlog
Our backlog of firm orders was $63.3 million as of December 31, 2015, as compared to $77.0 million as of December 31, 2014. The decrease at the end of 2015 was primarily related to Power Electronics Solutions and Advanced Connectivity Solutions and our which experienced decreases in backlog of $7.3 million, $(9.1) million, respectively. These declines were slightly offset by Elastomeric Material Solutions, which experienced an increase of $2.8 million in the backlog. Contributing to the year-over-year change in backlog were customer delivery improvements, which reduced customer ordering cycles, combined with general market conditions. Additionally, the 2015 backlog contains $7.4 million related to the Arlon businesses. The backlog of firm orders is expected to be filled within the next 12 months.
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Executive Officers
Our executive officers as of February 23, 2016 were as follows:

Name | Age | Present Position | Year Elected to Present Position | Other Positions Held During 2011-2015
Bruce D. Hoechner | 56 | President and Chief Executive Officer | 2011 | President, Asia Pacific Region, Dow Advanced Materials Division, Rohm and Haas Company from 2009 to September 2011
Janice E. Stipp | 56 | Vice President, Finance, Chief Financial Officer and Corporate Treasurer | 2015 | Executive Vice President, Chief Financial Officer and Treasurer, Tecumseh from October 2011 to November 2015; Chief Financial Officer, Revstone from January 2011 to August 2011
Robert C. Daigle | 52 | Senior Vice President and Chief Technology Officer | 2009 |
Gary M. Glandon | 57 | Vice President and Chief Human Resources Officer | 2012 | Chief Human Resources Officer, Solutia from October 2010 to July 2012
Jeffrey M. Grudzien | 54 | Vice President, Advanced Connectivity Solutions | 2012 | Vice President, Sales and Marketing September 2007 to February 2012
Jay Knoll | 52 | Vice President and General Counsel | 2014 | Senior Vice President, General Counsel PKC Group Oyj - North America from June 2012 to November 2014; Director and Chief Restructuring Officer Energy Conversion Devices, Inc. from November 2011 to June 2012, Interim President Energy Conversion Devices, Inc. from May 2011 to November 2011, Executive Vice President, General Counsel and Chief Administrative Officer Energy Conversion Devices, Inc. from January 2011 to April 2011.
John J. Krawczynski | 44 | Chief Accounting Officer and Corporate Controller | 2014 | Vice President Finance, Controller, The Yankee Candle Company, Inc. from September 2012 to February 2014; Vice President, Corporate Controller, Oakleaf Waste Management from March 2010 to September 2012
Helen Zhang | 51 | Vice President, Power Electronics Solutions and President, Rogers Asia | 2013 | Global General Manager of Interconnect Technology, Dow Chemical Company, Dow Electronic Materials from July 2010 to April 2012

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Available Information
We make available on our website (http://www.rogerscorp.com), or through a link posted on our website, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, reports filed pursuant to Section 16 and amendments to those reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (SEC). In addition, the SEC maintains an internet site that contains these reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC (http://www.sec.gov).
We also make available on our website, in a printable format, the charters for our Board of Directors committees, including the Audit Committee, Compensation and Organization Committee, and Nominating and Governance Committee, in addition to our Corporate Governance Guidelines, Bylaws, Code of Business Conduct and Ethics Policy, Related Party Transactions Policy and Compensation Recovery Policy. Our website is not incorporated into or a part of this Form 10-K.
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Item 1A. Risk Factors
Our business, financial condition and results of operations are subject to various risks, including those discussed below, which may affect the value of our stock. The risks discussed below are those that we believe are currently the most significant, although additional risks not presently known to us or that we currently deem less significant may also impact our business, financial condition and results of operations, perhaps materially.
A substantial portion of our revenues is driven by the Internet Connectivity, Clean Energy, and Safety and Protection megatrends, and volatility in these megatrends may adversely affect our business.
We derived approximately 28%, 26% and 10% of our net sales for the year ended December 31, 2015 from sales relating to the Internet Connectivity, Clean Energy, and Safety and Protection megatrends, respectively. These megatrends are served by our direct and indirect customers in a variety of end markets, including the transportation, industrial, consumer electronics and communications sectors. These megatrends, as well as specific market and industry trends within these megatrends, are volatile, cyclical and sensitive to a variety of factors, including general economic conditions, technology disruptions, consumer preferences and political priorities. Adverse changes to and within these megatrends has resulted, and may continue to result, in reduced demand for certain of our products, production overcapacity, increased inventory levels and price erosion, ultimately leading to a decline in our revenues and gross margins.
We have extensive international operations and therefore events and circumstances that have general international consequence or more specific impact in the countries in which we operate may adversely affect our business.
For the year ended December 31, 2015, approximately 75% of our net sales resulted from sales in foreign markets, with approximately 51% and 22% of such net sales occurring in Asia and Europe, respectively. We expect our revenues in foreign markets to continue to represent a substantial majority of our consolidated net sales. We maintain significant manufacturing and administrative operations in China, South Korea, Germany, Hungary and Belgium, and 65% of our employees are located outside the United States. Risks related to our extensive international operations include the following:

• | foreign currency fluctuations, particularly in the value of the Euro, the Hungarian forint, the Chinese yuan and the South Korean won against the U.S. dollar;

• | economic and political instability, including regional or country-specific events;

• | accounts receivable practices, including longer payment cycles;

• | export control or customs matters and changes in trade policy, tariff regulations or other trade restrictions;

• | complications in complying with a variety of foreign laws, including unexpected changes in the laws or regulations of the countries in which we operate;

• | failure to comply with the U.S. Foreign Corrupt Practices Act or other applicable anti-corruption laws;

• | greater difficulty protecting our intellectual property;

• | employment regulations, work stoppages and labor and union disputes.

The foregoing risks may be particularly acute in emerging markets, such as China, where our operations are subject to greater uncertainty due to increased volatility associated with the developing nature of the economic, legal and governmental systems of these countries. In addition, our business has been - and may continue to be - adversely affected by the lack of development, or disruptions, of transportation or other critical infrastructure in emerging markets. If we are unable to successfully manage the risks associated with expanding our global business or to adequately manage operational fluctuations, it may adversely affect our business, financial condition and results of operations.
Our business is dependent upon our development of innovative products and our customers’ incorporation of those products into end user products and systems that achieve commercial success.
As a manufacturer and supplier of engineered materials and components, our business depends upon our ability to innovate and sell our new and improved materials and components for inclusion in other products that are developed, manufactured and sold by our customers. We strive to differentiate our products and secure long-term demand through our engagement with our customers to design in our materials and components as part of their product development processes. The value of any design in largely depends upon the decision of our customers to manufacture their products or systems in production quantities, the commercial success of the ultimate product and the extent to which the design of our customers’ products or systems could accommodate substitution of competitor products. A consistent failure to introduce new products in a timely manner, achieve design ins or achieve market acceptance on commercially reasonable terms could adversely affect our business, financial condition and results of operations. Also, the introduction of new products presents particularly significant business challenges in our business because product development commitments and expenditures must be made well in advance of product sales.
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Our dependence on sole or limited source suppliers for certain of our raw materials could adversely affect our ability to manufacture products and materially increase our costs.
We rely on sole and limited source suppliers for certain of the raw materials that are critical to the manufacturing of our products. This reliance subjects us to risks related to our potential inability to obtain an adequate supply of required components, particularly given our use of lean manufacturing and just-in-time inventory techniques, and our reduced control over pricing and timing of delivery of components. Our operating results would be adversely affected if we were unable to obtain adequate supplies of these materials in a timely manner or if their cost increased significantly.
If necessary, we believe we could obtain and qualify alternative sources for most sole and limited source supplier materials, but the transition time could be long. Seeking alternative sources for these materials could, however, require us to redesign our systems, resulting in increased costs and likely production and delivery delays. Ultimately, we may be unable to redesign our systems, which would further increase delays. If feasible, increased costs associated with such system redesigns would decrease our profit margins, perhaps materially, if we could not effectively pass such costs along to our customers. Further, production and delivery delays could lead to lost revenues and damage to our relationships with current and potential customers.
We face intense global competition, which could reduce demand for our products or cause additional pricing pressure for our products.
We operate in a highly competitive global environment and compete with domestic and international companies principally on the basis of the following:

• | innovation;

• | historical customer relationships;

• | product quality, reliability, performance and price;

• | technical and engineering service and support;

• | breadth of product line; and

• | manufacturing capabilities.

We believe that we currently compete effectively with respect to these factors in each of our operating segments and continue to devote strategic focus and investment to enhancing our competitiveness.
Our competitors include commodity materials suppliers, which offer product substitutions based mostly on price, and suppliers of alternate solutions, which offer product substitutions or eliminations based mostly on technology. Certain of these competitors have greater financial and other resources than we have and, in some cases, these competitors are well established in specific product niches. We expect that our competitors will continue to improve the design and performance of their products, which could result in the development of products that offer price or performance features superior to our products. Competition may also result from the development of disruptive technologies. If we are unable to maintain our competitive advantage for any reason, demand for our products may be materially reduced, which may adversely affect our business, financial condition and results of operations.
We may acquire businesses, dispose of businesses or engage in other transactions for which we may not realize anticipated benefits, or it may take longer than expected to realize such benefits, which may adversely affect our operating results, financial condition and existing business.
From time to time, we have explored and pursued transaction opportunities that we believe complement our core businesses, and we may do so again in the future. We also may consider divesting businesses or assets that we do not regard as part of our core businesses. These transaction opportunities may come in the form of acquisitions, joint ventures, investments, divestitures or other structures. There are risks associated with such transactions, including, without limitation, general business risk, integration risk, technology risk, market acceptance risk, litigation risk, environmental risk, regulatory approval risk and risks associated with the failure to complete announced transactions. In the case of acquisitions, we may not be able to discover, during the due diligence process or otherwise, all known and unknown risks associated with the business we are acquiring, including the existence of liabilities. In the case of divestitures, we may agree to indemnify acquiring parties for known or unknown liabilities arising from the businesses we are divesting.
Acquisition and disposition transactions may not ultimately create value for us or our stockholders and may harm our reputation and adversely affect our business, financial condition and results of operations.
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Our business may be adversely affected if we cannot protect our proprietary technology or if we infringe the proprietary rights of others.
Our proprietary technology supports our ability to compete effectively with other companies, and we seek to protect our intellectual property rights by obtaining U.S. and foreign patents, trademarks and copyrights and maintaining trade secrets for our manufacturing processes. It is possible, however, that our efforts to obtain such protection in the U.S. and abroad will be unsuccessful or that the protection afforded will not be sufficiently broad to protect our technology.
Even if U.S. and foreign laws do grant initial protection to our technology, our competitors or other third parties may subsequently obtain and unlawfully copy, use or disclose our technologies, products, and processes. We believe that the risk of piracy of our technology is particularly acute in the foreign countries in which we operate. In circumstances in which we conclude that our proprietary technology has been infringed, we may pursue litigation to enforce our rights. For instance, in December 2015, we initiated a patent infringement action in Germany against KCC Corporation and its German subsidiary for offering direct bonded copper substrates in Germany that are manufactured using a process we believe is protected by one of our German patents. The defense and prosecution of intellectual property infringement suits are both costly and time consuming, even if the outcome is favorable to us. If we are not successful in protecting our proprietary technology or if the protection afforded to us is not sufficiently broad, our competitors may be able to manufacture and offer products substantially similar to our own, thereby reducing demand for our products and adversely affecting our results of operations and financial condition. We may also be adversely affected by, and subject to increased competition as a result of, the normal expiration of our issued patents.
Third parties may also assert infringement claims against us in the future. In addition to the significant costs associated with such suits, as noted above, an adverse outcome could subject us to significant liabilities to third parties and/or require us to license rights from third parties or cease selling our products. Any of these events may have a material adverse effect on our business, financial condition and results of operations.
The failure to attract and retain specialized technical and management personnel could impair our expected growth and future success.
We depend upon the continued services and performance of key executives, senior management and skilled technical personnel, particularly our sales engineers and other professionals with significant experience in the key industries we serve. Competition for these personnel from other companies, academic institutions and government entities is intense, and our expected growth and future success will depend, in large part, upon our ability to attract and retain these individuals.
Increases in our effective tax rates as a result of decisions to repatriate non-U.S. earnings or changes in the geographic mix of our earnings or in the tax laws and regulations applicable to us may materially adversely affect our results of operations and financial condition.
We are subject to income taxes in the U.S. and in various foreign jurisdictions, and any significant increase in our future effective tax rates could materially reduce our net income in future periods. Given the global nature of our business, a number of factors may increase our effective tax rates, including:

• | decisions to repatriate non-U.S. earnings for which we have not previously provided for U.S. income taxes;

• | changes in the geographic mix of our profits among jurisdictions with differing statutory income tax rates;

• | changes in tax laws and regulations applicable to us, including the expiration, renewal or application of tax holidays.

The terms of our credit agreement require us to satisfy financial ratios and comply with numerous covenants, and our failure to do so could lead to acceleration of our outstanding indebtedness.
Our credit agreement contains, and any future debt agreements into which we enter may contain, certain financial ratios and certain restrictive covenants that, among other things, limit our ability to incur indebtedness or liens, acquire other businesses, dispose of assets, or make investments. Our ability to make scheduled payments on these borrowings and to satisfy financial ratios may be adversely affected by changes in economic or business conditions beyond our control, while the restrictive covenants to which we are subject may limit our ability to take advantage of potential business opportunities as they arise. Failure to satisfy these financial ratios or to comply with the covenants in our credit agreement would constitute a default. An uncured default with respect to one or more of our covenants could result in outstanding borrowings thereunder being declared immediately due and payable, which may also trigger an obligation to repay other outstanding indebtedness. Any such acceleration of our indebtedness would have a material adverse effect on our cash flows and financial condition.
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We may be adversely affected by litigation stemming from product liability and other claims.
We are involved in various unresolved legal matters that arise in the ordinary course of operations, including asbestos-related product liability claims related to prior operations. See “Item 3 - Legal Proceedings” and Note 15 to “Item 8 - Financial Statements and Supplementary Data” for additional information. We maintain insurance coverage with respect to certain claims, but we cannot be certain that the policy coverage limits will be adequate or that the policies will cover any particular loss. Costs associated with, among other things, the defense of, or settlements or judgments relating to, claims against us that are not covered by insurance or that result in recoveries in excess of insurance coverage may adversely affect our business, financial condition and results of operations. In addition, irrespective of insurance coverage, claims against us could divert the attention of our senior management and/or result in reputational damage, thereby adversely affecting our business.
We are subject to many environmental laws and regulations that could adversely affect our business.
We are subject to a variety of federal, state, local and foreign laws, rules and regulations related to the use, storage, handling, discharge or disposal of certain toxic, volatile or otherwise hazardous chemicals, gases and other substances used in manufacturing our products. Some of these laws in the U.S. include the Federal Clean Water Act, Clean Air Act, Resource Conservation and Recovery Act, Comprehensive Environmental Response, Compensation, and Liability Act and similar state statutes and regulations. Compliance with these laws could require us to incur substantial expenses, including in connection with the acquisition of new equipment. Any failure to comply with present or future environmental laws, rules and regulations could result in fines, suspension of production or cessation of operations, any of which could have a material adverse effect on our business, financial condition and results of operations.
In addition, some environmental laws impose liability, sometimes without fault, for investigating and/or cleaning up contamination on, or emanating from, properties currently or formerly owned, leased or operated by us, as well as for damages to property or natural resources and for personal injury arising out of such contamination. Such liability may be joint and several, meaning that we could be held responsible for more than our share of the liability involved, or even the entire liability. See Note 15, "Commitments and Contingencies" in “Item 8 - Financial Statements and Supplementary Data” for additional information.
A significant disruption in, or breach in security of, our information technology systems could materially and adversely affect our business or reputation.
In the ordinary course of business, we collect and store confidential information, including proprietary business information belonging to us, our customers, business partners and suppliers and personally identifiable information of our employees. We rely on information technology systems to protect this information and to keep financial records, process orders, manage inventory, coordinate shipments to customers, and operate other critical functions. Our information technology systems may be susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, telecommunication failures and user errors. If we experience a disruption in the information technology systems that involve our interactions with customers or suppliers, it could result in the loss of sales and customers and significant incremental costs, which could adversely affect our business.
We may also be subject to security breaches caused by computer viruses, illegal break-ins or hacking, sabotage, or acts of vandalism by disgruntled employees or third parties. The risk of a security breach or disruption, particularly through cyberattack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Our Information Technology (IT) network and systems have been and, we believe, continue to be under constant attack. Accordingly, despite our security measures or those of our third party service providers, a security breach may occur but not be detected. Security breaches of our information technology systems could result in the misappropriation or unauthorized disclosure of confidential information belonging to us or to our customers, business partners, suppliers or employees, which could result in our suffering significant financial or reputational damage.
Employee benefit cost increases could reduce our profitability.
Our profitability is affected by employee benefit costs, particularly medical, pension and other employee benefits. In recent years, employee medical costs have increased due to factors such as the increase in health care costs in the U.S. These factors will continue to put pressure on our business and financial performance, as employee benefit costs continue to escalate. Although we actively seek to control increases in employee benefit costs and encourage employees to maintain healthy lifestyles to reduce future potential medical costs, there can be no assurance that we will succeed in limiting future cost increases. Continued employee benefit cost increases could have an adverse effect on our results of operations, cash flows and financial condition.
We also sponsor various defined benefit pension plans that cover certain employees. Our costs of providing defined benefit pension plans have risen dramatically in recent years, and are dependent upon a number of factors and assumptions that drive our projected
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liabilities and annual expenses, such as discount rates, the actual and projected rates of return on the plans' assets, governmental regulation, global equity prices, portfolio composition and our required and/or voluntary contributions to the plans. Changes in assumptions, the ability to grow our pension investments over time to increase the value of the plans' assets, and other factors relating to worldwide and domestic economic trends and financial market conditions, could all have a negative impact on our pension plans, which could result in an increase in our pension liabilities, a reduction in the funded status of our plan, increases in annual expense recognized related to the plans, and requirements to increase funding for some or all of our defined benefit pension plans, among other factors, all of which could negatively impact our operations and financial condition.
To mitigate some of these risks, we amended our U.S. defined benefit pension plans during 2013 and participants no longer accrue benefits under such plans, effectively freezing the plans going forward. While the risks outlined above will remain in force, the freezing of the plans will reduce overall risk, as we no longer accrue new benefit obligations, thus reducing projected future liabilities and annual plan expenses.
Also, to mitigate some of these risks, during the fourth quarter of 2015, we announced that we would be amending the plan and changing the benefits related to the salaried and non-union hourly participants of the retirement health insurance benefits program. The result of this amendment is reduced future liabilities related to this plan.
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Item 1B. Unresolved Staff Comments
None.
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Item 2. Properties
We operate various manufacturing facilities and sales offices throughout the United States, Europe and Asia. The following table provides certain information about the principal general offices and manufacturing facilities used by our business segments:

Location |  | Floor Space (Sq Ft) |  | Type of Facility |  | Leased / Owned
United States |  |  |  |  |  |
Rogers, Connecticut |  | 506,000 |  | Manufacturing / Administrative Offices |  | Owned
Chandler, Arizona |  | 418,000 |  | Manufacturing |  | Owned
Chandler, Arizona |  | 17,000 |  | Warehouse/Administrative Offices |  | Leased through 03/2017
Carol Stream, Illinois |  | 215,000 |  | Manufacturing |  | Owned
Woodstock, Connecticut |  | 152,000 |  | Manufacturing |  | Owned
Bear, Delaware |  | 125,000 |  | Manufacturing / Administrative Offices |  | Owned
Burlington, Massachusetts |  | 5,000 |  | R&D Lab and Office Space |  | Leased through 2/2018
Europe |  |  |  |  |  |
Eschenbach, Germany |  | 149,000 |  | Manufacturing / Administrative Offices |  | Leased through 6/2021
Ghent, Belgium |  | 114,000 |  | Manufacturing |  | Owned
Evergem, Belgium |  | 77,000 |  | Manufacturing / Administrative Offices |  | Owned
Budapest, Hungary |  | 42,000 |  | Manufacturing |  | Leased through 2/2019
Asia |  |  |  |  |  |
Suzhou, China |  | 821,000 |  | Manufacturing / Administrative Offices |  | Owned
Ansan, Korea |  | 40,000 |  | Manufacturing |  | Leased through 10/2018
Tokyo, Japan |  | 3,094 |  | Sales Office |  | Leased through 2/2018
Taipei, Taiwan, R.O.C. |  | 1,000 |  | Sales Office |  | Leased through 7/2016
Hwasung City, Korea |  | 1,000 |  | Sales Office |  | Leased through 8/2016
Singapore |  | 1,000 |  | Sales Office |  | Leased through 12/2016
Shanghai, China |  | 1,000 |  | Sales Office |  | Leased through 3/2017
Shenzhen, China |  | 1,000 |  | Sales Office |  | Leased through 5/2018
Beijing, China |  | 1,000 |  | Sales Office |  | Leased through 5/2018

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Item 3. Legal Proceedings
Asbestos products litigation
We were a defendant in 488 asbestos-related product liability cases as of December 31, 2015, compared to 440 cases as of December 31, 2014, with the change reflecting new cases, dismissals, settlements and other dispositions. 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. In virtually all of the cases against us, the plaintiffs are seeking unspecified damages above a jurisdictional minimum against multiple defendants who may have manufactured, sold or used asbestos-containing products to which the plaintiffs were allegedly exposed and from which they purportedly suffered injury. Most of these cases are being litigated in Illinois, Pennsylvania and Mississippi, however we are also defending cases in other states. We intend to vigorously defend these cases, primarily on the basis of the plaintiffs’ inability to establish compensable loss as a result of exposure to our products. As of December 31, 2015, the estimated liability and estimated insurance recovery for the ten-year period through 2025 were $56.6 million and $53.4 million, respectively.
The defense and settlement costs of our asbestos-related product liability litigation to date have been substantially covered by insurance, and we have recorded a $3.2 million accrual for the amount by which estimated asbestos-related expenses exceed asbestos-related insurance coverage over a 10-year projection period. See Note 15, "Commitments and Contingencies" to “Item 8 - Financial Statements and Supplementary Data” for additional information regarding our asbestos-related product liability litigation.
Other matters
We are currently involved in a variety of other legal proceedings that we view as ordinary routine litigation incidental to our business, including commercial disputes, intellectual property matters, personal injury claims, tax claims and employment matters. Although the outcome of no legal matter can be predicted with certainty, we do not believe that the outcome of any of these legal proceedings, either individually or in the aggregate, will have a material adverse effect on our business, consolidated financial position, results of operations or cash flows. In addition, we are involved in certain environmental matters, principally investigations, that we do not view as material legal proceedings, either pending or known to be contemplated. See Note 15, "Commitments and Contingencies" to “Item 8 - Financial Statements and Supplementary Data” for additional information regarding these matters.
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Item 4. Mine Safety Disclosures
Not applicable.
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Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Capital Stock Market Prices and Dividend Policy
Our capital stock is traded on the New York Stock Exchange under the symbol “ROG”. As of the end of business on February 4, 2016, we had 366 shareholders of record. On the same date, the trading price of our capital stock closed at $45.61 per share.
The following table sets forth the high and low prices during each quarter of the last two fiscal years on a per share basis:

| 2015 |  | 2014
| High |  | Low |  | High |  | Low
Fourth | $57.15 |  | $46.23 |  | $82.48 |  | $51.40
Third | 66.99 |  | 51.65 |  | 68.34 |  | 53.69
Second | 83.85 |  | 66.07 |  | 67.30 |  | 56.26
First | 84.92 |  | 73.19 |  | 65.73 |  | 56.17

We did not pay any dividends on our capital stock in fiscal 2015 and 2014. We periodically evaluate the desirability of paying a dividend; however, at present, we expect to maintain a policy of emphasizing longer-term growth of capital rather than immediate dividend income. We do not currently have any restrictions in our ability to pay dividends under our current, amended credit agreement, (see Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-K), as no default of event of default has occurred. If a default or event of default occurs, we would be restricted in our ability to pay dividends.
Issuer Purchases of Equity Securities
On August 6, 2015, we initiated a share repurchase program ("the Program") of up to $100.0 million of the Company's capital stock. The Program has no expiration date, and may be suspended or discontinued at any time without notice. We initiated this program to mitigate potentially dilutive effects of stock options and shares of restricted stock granted by the Company, in addition to enhancing shareholder value.
All repurchases were made using cash from operations and cash on hand. As of December 31, 2015, $60.0 million remained available to purchase under the program. See Note 19 "Share Repurchase" to “Item 8 Financial Statements and Supplementary Data for information regarding dividends and share repurchases for the year.
Following are our monthly stock repurchases for the fourth quarter of 2015, all of which were made as part of publicly announced plans or programs:

(Dollars in thousands, except per share amounts) |  |  |  |  |  |
Period |  | Total Number of Shares Purchased |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  | Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs
October 1, 2015 to October 31, 2015 |  | 49,273 |  |  | $ | 51.44 |  |  | 49,273 |  |  | $ | 60,007 |

We did not repurchase any shares during November or December 2015.
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Item 6. Selected Financial Data

(Dollars in thousands, except per share amounts) | 2015 |  | 2014 |  | 2013 |  | 2012 |  | 2011
Financial Results |  |  |  |  |  |  |  |  |
Net sales | $ | 641,443 |  |  | $ | 610,911 |  |  | $ | 537,482 |  |  | $ | 498,761 |  |  | $ | 548,341 |
Income before income taxes | $ | 66,173 |  |  | $ | 81,224 |  |  | $ | 49,722 |  |  | $ | 23,273 |  |  | $ | 56,496 |
Net Income | $ | 46,320 |  |  | $ | 53,412 |  |  | $ | 38,203 |  |  | $ | 67,473 |  |  | $ | 44,978 |
Per Share Data |  |  |  |  |  |  |  |  |
Basic | $ | 2.52 |  |  | $ | 2.94 |  |  | $ | 2.22 |  |  | $ | 4.11 |  |  | $ | 2.81 |
Diluted | $ | 2.48 |  |  | $ | 2.86 |  |  | $ | 2.15 |  |  | $ | 3.97 |  |  | $ | 2.69 |
Book value | $ | 32.55 |  |  | $ | 31.91 |  |  | $ | 31.38 |  |  | $ | 25.93 |  |  | $ | 21.22 |
Financial Position |  |  |  |  |  |  |  |  |
Current assets | $ | 429,137 |  |  | $ | 438,174 |  |  | $ | 383,623 |  |  | $ | 312,472 |  |  | $ | 272,269 |
Current liabilities | $ | 79,120 |  |  | $ | 120,445 |  |  | $ | 90,040 |  |  | $ | 84,502 |  |  | $ | 78,558 |
Ratio of current assets to current liabilities | 4.7 to 1 |  |  | 3.6 to 1 |  |  | 4.3 to 1 |  |  | 3.7 to 1 |  |  | 3.5 to 1 |
Cash and cash equivalents | $ | 204,586 |  |  | $ | 237,375 |  |  | $ | 191,884 |  |  | $ | 114,863 |  |  | $ | 79,728 |
Net working capital | $ | 350,017 |  |  | $ | 317,729 |  |  | $ | 293,583 |  |  | $ | 227,970 |  |  | $ | 193,711 |
Property, plant and equipment, net | $ | 178,661 |  |  | $ | 150,420 |  |  | $ | 146,931 |  |  | $ | 149,017 |  |  | $ | 148,182 |
Total assets | $ | 932,458 |  |  | $ | 840,435 |  |  | $ | 811,321 |  |  | $ | 764,267 |  |  | $ | 683,532 |
Long-term debt | $ | 175,188 |  |  | $ | 25,000 |  |  | $ | 60,000 |  |  | $ | 77,500 |  |  | $ | 115,000 |
Shareholders’ equity | $ | 584,582 |  |  | $ | 587,281 |  |  | $ | 560,314 |  |  | $ | 438,395 |  |  | $ | 344,160 |
Long-term debt as a percentage of shareholders’ equity | 30.0 | % |  | 4.3 | % |  | 10.7 | % |  | 17.7 | % |  | 33.4 | %
Other Data |  |  |  |  |  |  |  |  |
Depreciation and amortization | $ | 34,054 |  |  | $ | 26,268 |  |  | $ | 26,351 |  |  | $ | 27,130 |  |  | $ | 26,308 |
Research and development expenses | $ | 27,644 |  |  | $ | 22,878 |  |  | $ | 21,646 |  |  | $ | 19,311 |  |  | $ | 21,530 |
Capital expenditures | $ | 24,837 |  |  | $ | 28,755 |  |  | $ | 16,859 |  |  | $ | 23,774 |  |  | $ | 21,316 |
Number of employees (average) | 2,800 |  |  | 2,800 |  |  | 2,500 |  |  | 2,441 |  |  | 2,566 |
Net sales per employee | $ | 229 |  |  | $ | 218 |  |  | $ | 215 |  |  | $ | 204 |  |  | $ | 214 |
Number of shares outstanding at year end | 17,957,760 |  |  | 18,403,109 |  |  | 17,854,506 |  |  | 16,904,441 |  |  | 16,220,648 |

Amounts disclosed above have been adjusted for the Company's 2015 conversion from the last in, first out (LIFO) cost method to the first in, first out (FIFO) cost method for valuing inventory for all operations that were using the LIFO cost method. The financial data included within the preceding table should be read in conjunction with our Management's Discussion and Analysis of Financial Condition and Results of Operations as well as the Financial Statements and Supplementary Data (Items 7 and 8 of this Form 10-K), and with our previously filed Forms 10-K.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with the Selected Financial Data and our Consolidated Financial Statements and the related notes that appear elsewhere in this Form 10-K.
In the following discussion and analysis, we sometimes provide financial information that was not prepared in accordance with U.S. generally accepted accounting principles (GAAP). Management believes that this non-GAAP information provides meaningful supplemental information regarding the Company's performance by excluding certain expenses that are generally non-recurring or otherwise may not be indicative of the core business operating results. In general, the Company believes that the additional non-GAAP financial information provided herein is useful to management and investors in assessing the Company's historical performance and for planning, forecasting and analyzing future periods. However, non-GAAP information has limitations as an analytical tool and should not be considered in isolation from, or solely as an alternative to, financial information prepared in accordance with GAAP. Any time we provide non-GAAP information in the following narrative we identify it as such and in close proximity provide the most directly comparable GAAP financial measure, as well as the information necessary to reconcile the two measures.
Business Overview
Rogers Corporation designs, develops, manufactures and sells high-quality and high-reliability engineered materials and components for mission critical applications. We operate principally three strategic business segments: Advanced Connectivity Solutions (ACS), Elastomeric Material Solutions (EMS) and Power Electronics Solutions (PES). We have a history of innovation and have established two Rogers Innovation Centers for our leading research and development activities, in Massachusetts and China.
Our growth strategy is based upon the following principles: (1) market-driven organization, (2) innovation leadership, (3) synergistic mergers and acquisitions, and (4) operational excellence. As a market-driven organization, we are focused on three megatrends of expanding business opportunities: Internet Connectivity, Clean Energy and Safety & Protection. During 2015, we added the Safety & Protection megatrend in place of Mass Transit in response to the increase in demand for advanced driver assistance systems and growth in products focused on consumer impact protection, passenger safety and vibration management and flexible heater insulation.
In January 2015, we completed the acquisition of Arlon LLC and its subsidiaries, other than Arlon India (Pvt) Limited (the acquired subsidiaries, collectively, Arlon), for an aggregate purchase price of approximately $157 million. Arlon manufactures high performance materials for the printed circuit board industry and silicone rubber-based materials. The acquisition of Arlon and its subsequent integration into our business segments have enabled us to increase scale and complement our existing product offerings, thus enhancing our ability to support our customers. The Arlon polyimide and thermoset laminate business, which was not integrated, was sold in December 2015.
2015 Executive Summary
In 2015 as compared to 2014, our revenue increased 5.0% to $641.4 million, gross margin decreased 170 bps to 36.7%, and operating income decreased 6.1% to $76.3 million. The following key factors should be considered when reviewing our results of operations, financial condition and liquidity for the periods discussed:

• | Our revenue growth in 2015 was attributable primarily to our newly-acquired Arlon operations. The increase in net sales in 2015 was composed of an organic sales decrease of 6.9%, negative currency impact of 4.5%, offset by acquisition related growth of 16.4%. We believe our revenue decline is associated with the uncertain macro-economic conditions in China and Europe as well as the U.S. This situation has resulted in the delay of several key projects within the markets that we participate in, leading to weaker demand in certain applications across all three business segments. We expect to see a moderate recovery in sales going forward however we remain cautious as to the exact timing of the recovery.

• | Our operating income declined due to a variety of factors in 2015. We achieved $76.3 million in operating income during 2015, a 6.1% decline over the $81.2 million achieved in 2014. Operating results in 2015 and 2014 included approximately $11.2 million and $7.7 million of special charges, respectively. Contributing to the decline in operating income was the decline in gross margin. Gross margin declined due to the lower organic sales and the lower gross margin from the Arlon business; however, this decline was partially mitigated through operational excellence initiatives across our business units. Gross margin was 36.7% in 2015 as compared to 38.4% in 2014.

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• | We are an innovation company and in 2015 spent approximately 4.3% of our revenues on research and development, an increase from 3.7% in 2014. Research and development (R&D) expenses were $27.6 million in 2015, an increase of 20.8%, from $22.9 million in 2014. The increased spending was due to increased investments that are targeted at developing new platforms and technologies, as evidenced by the recent creation of the Rogers Innovation Centers in Massachusetts and in Asia. Since 2013, we have made concerted efforts to realign our R&D organization to better fit the future direction of our Company, including dedicating resources to focus on current product extensions and enhancements to meet our short term technology needs.

• | We completed $40.0 million in share repurchases in 2015. These repurchases were part of a $100 million share repurchase program announced in August 2015. The repurchases were made at an average price of $54.97 per share. We initiated this program to mitigate potentially dilutive effects of stock options and shares of restricted stock granted by the Company, in addition to enhancing shareholder value. Further share repurchases under the program will be subject to management’s consideration of cash availability, including cash generation, as well as potential cash uses, including capital spending and other investments, and potential acquisitions.

• | We closed on the acquisition of Arlon in January of 2015. The Arlon business has been fully integrated into the ACS and EMS businesses, and contributed approximately $100.0 million in sales in 2015.

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Results of Continuing Operations
The following table sets forth, for the periods indicated, selected operations data expressed as a percentage of net sales.

| 2015 |  | 2014 |  | 2013
Net sales | 100.0% |  | 100.0% |  | 100.0%
Gross margin | 36.7% |  | 38.4% |  | 35.1%
Selling, general and administrative expenses | 20.5% |  | 20.5% |  | 19.8%
Research and development expenses | 4.3% |  | 3.7% |  | 4.0%
Restructuring and impairment charges | — |  | 0.9% |  | 1.9%
Operating income | 11.9% |  | 13.3% |  | 9.3%
Equity income in unconsolidated joint ventures | 0.5% |  | 0.7% |  | 0.8%
Interest income (expense), net | (0.7)% |  | (0.5)% |  | (0.6)%
Other income (expense), net | (1.3)% |  | (0.2)% |  | (0.2)
Income before income taxes | 10.3% |  | 13.3% |  | 9.3%
Income tax expense | 3.1% |  | 4.6% |  | 2.1%
Income from continuing operations | 7.2% |  | 8.7% |  | 7.0%

2015 vs. 2014
Net Sales

(Dollars in thousands) |  | 2015 |  | 2014 |  | Percent Change
Net Sales |  | $ | 641,443 |  |  | $ | 610,911 |  |  | 5.0%

Net sales increased by 5.0% in 2015 from 2014. The increase in net sales in 2015 was composed of an organic sales decrease of 6.9% and a negative currency impact of 4.5%, offset by Arlon acquisition related growth of 16.4%. The decline in organic sales was the result of a decline in all operating segments. The Advanced Connectivity Solutions (ACS) operating segment net sales increased 11.1%: organic sales decline of 11.4% and negative currency impact of 1.3%, which partially offset acquisition growth of 23.8%. The Elastomeric Material Solutions (EMS) operating segment net sales increased 4.2%: organic sales decline of 7.9% and negative currency impact of 1.8%, which partially offset acquisition growth of 13.8%. The Power Electronics Solutions (PES) operating segment net sales declined 12.5%: organic sales decline of 0.5% combined with a negative currency impact of 12.0%. See “Segment Sales and Operations” below for further discussion on segment performance.
Gross Margin

(Dollars in thousands) |  | 2015 |  | 2014 |  | Percent Change
Gross Margin |  | $ | 235,362 |  |  | $ | 234,753 |  |  | 0.3%
Percentage of sales |  | 36.7 | % |  | 38.4 | % |  |

Gross margin as a percentage of net sales declined by 170 basis points to 36.7% in 2015 compared to 38.4% in 2014. Our 2015 results included approximately $1.8 million of purchase accounting related to the Arlon acquisition, of which, $1.6 million was the non-recurring fair value adjustment for inventory. The year over year decline was primarily the result of lower organic net sales and lower gross margin contribution related to the Arlon business. This was partially offset by improvements in supply chain, product quality and procurement, which favorably impacted margin performance.
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Selling, General and Administrative Expenses

(Dollars in thousands) |  | 2015 |  | 2014 |  | Percent Change
Selling, general and administrative expenses |  | $ | 131,463 |  |  | $ | 125,244 |  |  | 5.0%
Percentage of sales |  | 20.5 | % |  | 20.5 | % |  |

Selling, general and administrative (SG&A) expenses increased by 5.0% in 2015 compared with 2014. Our 2015 results included approximately $9.6 million of special charges comprised of $1.6 million of severance related charges, $4.8 million in integration expenses related to the Arlon acquisition and $3.2 million related to the establishment of an environmental reserve. Our 2014 results included approximately $2.3 million of acquisition costs.
Excluding these special charges, SG&A expense decreased $1.1 million and as a percentage of sales, decreased by 110 basis points from 20.1% in 2014 to 19.0% in 2015. The decrease in expenses, excluding special charges, is due to a variety of factors, including $12.0 million of lower incentive and equity compensation costs, $1.1 million of lower costs related to asbestos related liabilities, $1.0 million of lower severance and lower operational spending and other discrete items incurred in 2014 of $2.2 million. Partially offsetting these amounts are increases in expenses due to a variety of factors, including $13.5 million of SG&A expenses related to the Arlon business (including $5.8 million of intangible amortization associated with the acquisition) and $1.8 million of defined benefit pension and retirement plan costs.
Research and Development Expenses

(Dollars in thousands) |  | 2015 |  | 2014 |  | Percent Change
Research and development expense |  | $ | 27,644 |  |  | $ | 22,878 |  |  | 20.8%
Percentage of sales |  | 4.3 | % |  | 3.7 | % |  |

Research and development (R&D) expenses increased by 20.8% in 2015 compared with 2014. As a percentage of sales, R&D costs increased from 3.7% in 2014 to 4.3% in 2015. The overall increase is due to $1.8 million of expenses related to the Arlon business as well as an increase in investments that are targeted at developing new platforms and technologies focused on long term growth initiatives at our innovation centers in the U.S. and Asia.
Equity Income in Unconsolidated Joint Ventures

(Dollars in thousands) |  | 2015 |  | 2014 |  | Percent Change
Equity income in unconsolidated joint ventures |  | $ | 2,890 |  |  | $ | 4,123 |  |  | (29.9)%

Equity income in unconsolidated joint ventures declined approximately 29.9% in 2015 from 2014. The decrease was due to lower demand, product mix and unfavorable currency exchange rate shifts.
Interest Income (Expense), Net

(Dollars in thousands) |  | 2015 |  | 2014 |  | Percent Change
Interest income (expense), net |  | $ | (4,480 | ) |  | $ | (2,946 | ) |  | 52.1%

Interest income (expense), net, was higher expense by 52.1% in 2015 from 2014. The increase year over year was driven by the increase in long term debt associated with the Arlon acquisition, which occurred in January of 2015.
Other Income (Expense), Net

(Dollars in thousands) |  | 2015 |  | 2014 |  | Percent Change
Other income (expense), net |  | $ | (8,492 | ) |  | $ | (1,194 | ) |  | 611.2%

Other income (expense), net was higher expense of $7.3 million from 2014 to 2015. Our 2015 results included approximately $7.2 million of special charges comprised of $4.8 million of a loss on the sale of the Arlon specialty polyimide and epoxy-based laminates business and $2.4 million of receivables related to the tax indemnities that were reversed, which related to the release of uncertain tax positions.
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Income Tax Expense

(Dollars in thousands) |  | 2015 |  | 2014 |  | Percent Change
Income tax expense |  | $ | 19,853 |  |  | $ | 27,812 |  |  | (28.6)%
Effective tax rate |  | 30.0 | % |  | 34.2 | % |  |

In 2015, the difference between the our effective tax rate and the statutory federal tax rate was favorably impacted by taxable income generated in countries with a lower tax rate to that of the United States, research and development credits, a tax benefit related to a change in the effective state rate and release of valuation allowance on certain state tax attributes. The rate was unfavorably impacted by reserves for uncertain tax positions, change to prior estimates and nondeductible expenses. The rate decreased from 2014 primarily due to a reduction in the level of repatriation of current foreign earnings, increased reversals of uncertain tax benefits and deferred state tax benefits due to the acquisition of Arlon, partially offset with a shift of earnings from low tax to high tax jurisdictions.
Backlog
Our backlog of firm orders was $63.3 million as of December 31, 2015, as compared to $77.0 million as of December 31, 2014. The decrease at the end of 2015 was primarily related to Power Electronics Solutions, Advanced Connectivity Solutions and our Other businesses, which experienced decreases in backlog of $7.3 million, $(9.1) million and , respectively. These declines were slightly offset by Elastomeric Material Solutions, which experienced an increase of $2.8 million in the backlog. Contributing to the year-over-year change in backlog were customer delivery improvements, which reduced customer ordering cycles, combined with general market conditions. Additionally, the 2015 backlog contains $7.4 million related to the Arlon businesses. The backlog of firm orders is expected to be filled within the next 12 months.
2014 vs. 2013
Net Sales

(Dollars in thousands) |  | 2014 |  | 2013 |  | Percent Change
Net Sales |  | $ | 610,911 |  |  | $ | 537,482 |  |  | 13.7%

Net sales in 2014 increased 13.7% from 2013. The increase in net sales in 2014 was attributable to volume increases in all of our operating segments. Net sales in the Advanced Connectivity Solutions (ACS) operating segment experienced a 30.2% increase from $184.9 million in 2013 to $240.9 million in 2014, the Power Electronics Solutions (PES) operating segment achieved a 6.9% increase from $160.7 million in 2013 to $171.8 million in 2014, and the Elastomeric Material Solutions (EMS) operating segment increased 3.3% from $168.1 million in 2013 to $173.7 million in 2014. See “Segment Sales and Operations” below for further discussion on segment performance.
Gross Margin

(Dollars in thousands) |  | 2014 |  | 2013 |  | Percent Change
Gross Margin |  | 234,753 |  |  | 188,537 |  |  | 24.5%
Percentage of sales |  | 38.4 | % |  | 35.1 | % |  |

Gross margin increased by approximately 330 basis points from 35.1% in 2013 to 38.4% in 2014. Our 2013 results included approximately $0.9 million or 20 basis points of special charges related to relocation costs associated with the move of certain manufacturing operations from the Power Electronics Solutions manufacturing facility in Eschenbach, Germany to a lower cost facility in Hungary. The primary driver of the improvement in gross margin was the increased sales volume achieved during 2014, which contributed approximately 180 basis points to the improvement. The remaining net improvement of 150 basis points was attributable primarily to our ability to leverage our existing asset base through production efficiencies to absorb the increased sales volume.
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Selling, General and Administrative Expenses

(Dollars in thousands) |  | 2014 |  | 2013 |  | Percent Change
Selling, general and administrative expenses |  | $ | 125,244 |  |  | $ | 106,398 |  |  | 17.7%
Percentage of sales |  | 20.5 | % |  | 19.8 | % |  |

Selling, general and administrative (SG&A) expenses in 2014 increased 17.7% from 2013. Our 2014 results included approximately $2.3 million of acquisition costs. Our 2013 results included approximately $1.3 million of special charges comprised of $0.6 million in costs related to the move of certain manufacturing operations from the Power Electronic Solutions manufacturing facility is Eschenbach, Germany to a lower cost facility in Hungary and $0.7 million of other severance related charges. Excluding these charges, SG&A expense increased $17.8 million. As a percentage of sales, SG&A expenses increased by 70 basis points from 19.8% in 2013 to 20.5% in 2014. The overall increase in expenses was due to a variety of factors, including $7.7 million of incremental incentive and equity compensation costs, $10.1 million for incremental expenditures in certain key strategic areas, such as sales and marketing, strategic planning, information technology and executive recruiting, as well as costs related to merit increases. Also contributing to the increased costs in 2014 were charges related to the CFO transition of $0.8 million, severance of $2.8 million, $1.3 million of incremental asbestos related liabilities and other cost increases of $2.1 million. These increases were offset by approximately $7.0 million in expense reductions related primarily to changes in our defined benefit pension plans initiated in 2013.
Research and Development Expenses

(Dollars in thousands) |  | 2014 |  | 2013 |  | Percent Change
Research and development expense |  | $ | 22,878 |  |  | $ | 21,646 |  |  | 5.7%
Percentage of sales |  | 3.7 | % |  | 4.0 | % |  |

Research and development (R&D) expenses in 2014 increased 5.7%, from 2013. As a percentage of sales, R&D costs decreased from 4.0% in 2013 to 3.7% in 2014. The lower rate was due primarily to the significant increase in net sales. From a gross spending perspective, in the past year we have made concerted efforts to realign our R&D organization to better fit the future direction of the Company, including dedicating resources to focus on current product extensions and enhancements to meet our short term technology needs. We also increased investments that were targeted at developing new platforms and technologies focused on long term growth initiatives, as evidenced by our partnership with Northeastern University in Boston, Massachusetts. This partnership has resulted in the creation of the Rogers Innovation Center on its Burlington, Massachusetts campus.
Restructuring and Impairment Charges
Restructuring and impairment charges decreased 48.0% in 2014 from 2013. In 2014, these charges were comprised primarily of the following: (i) $5.2 million related to the settlement of certain long term pension obligations and (ii) $ 0.2 million related to an impairment charge on an investment in BrightVolt, Inc. (formerly Solicore, Inc.). In 2013, these charges were comprised primarily of the following: (i) $4.6 million related to the impairment charge on the investment in BrightVolt, Inc., (ii) $4.2 million of severance and related charges as a result of additional streamlining initiatives as well as changes to the executive management team, and (iii) a $1.5 million curtailment charge related to the freezing of the defined benefit pension plans.
Equity Income in Unconsolidated Joint Ventures

(Dollars in thousands) |  | 2014 |  | 2013 |  | Percent Change
Equity income in unconsolidated joint ventures |  | $ | 4,123 |  |  | $ | 4,326 |  |  | (4.7)%

Equity income in unconsolidated joint ventures decreased 4.7% in 2014 from 2013. The decline was primarily due to the depreciation of the Japanese Yen against the U.S. dollar of approximately 8.6% year over year.
Interest Income (Expense), Net

(Dollars in thousands) |  | 2014 |  | 2013 |  | Percent Change
Interest income (expense), net |  | $ | (2,946 | ) |  | $ | (3,481 | ) |  | (15.4)%

Interest income (expense), net, declined by 15.4% in 2014 from 2013. The decline was due primarily to lower interest expense on our debt facility, as we paid down principal from $98.0 million at the end of 2013 to $60.0 million at the end of 2014
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Other Income (Expense), Net

(Dollars in thousands) |  | 2014 |  | 2013 |  | Percent Change
Other income (expense), net |  | $ | (1,194 | ) |  | $ | (1,240 | ) |  | (3.7)%

Other income (expense), net remained consistent in 2014 from 2013. Although the ending balance was the same year over year, there were changes in the activity. Our 2014 results included unfavorable commodity hedging transactions offset by lower commission payments to the joint ventures. Our 2013 results included approximately $0.7 million of unfavorable mark to market adjustments related to copper hedging contracts and approximately $0.3 million related to unfavorable foreign currency transaction adjustments.
Income Tax Expense

(Dollars in thousands) |  | 2014 |  | 2013 |  | Percent Change
Income tax expense |  | $ | 27,812 |  |  | $ | 11,519 |  |  | 141.4 | %
Effective tax rate |  | 34.2 | % |  | 23.2 | % |  |

In 2014, the difference between the our effective tax rate and the statutory federal tax rate was favorably impacted by taxable income generated in countries with a lower tax rate to that of the United States and research and development credits. The rate was unfavorably impacted by reserves for uncertain tax positions, distributions of current year earnings from our foreign subsidiaries as well as nondeductible acquisition costs. The rate increased from 2013 primarily due to an increased level of repatriation of current foreign earnings which was done to facilitate the Arlon acquisition, mix of earnings, lower reversals of uncertain tax benefits and nondeductible acquisition costs.
Backlog
The backlog of firm orders was $77.0 million at December 31, 2014, as compared to $50.5 million at December 31, 2013. The increase at the end of 2014 was primarily related to the Power Electronics Solutions and Advanced Connectivity Solutions operating segments, which experienced an increase in backlog of $8.3 million and $18.9 million, respectively, at December 31, 2014 as compared to December 31, 2013.
Segment Sales and Operations
Core Strategic
Advanced Connectivity Solutions

(Dollars in millions) | 2015 |  | 2014 |  | 2013
Net sales | $ | 267.6 |  |  | $ | 240.9 |  |  | $ | 184.9 |
Operating income | $ | 45.1 |  |  | $ | 44.0 |  |  | $ | 19.1 |

The Advanced Connectivity Solutions (ACS) operating segment is comprised of high frequency circuit material products used for making circuitry that receives, processes and transmits high frequency communications signals, in a wide variety of markets and applications, including wireless communications, high reliability, and automotive, among others.
2015 vs. 2014
Net sales in this segment increased by 11.1% in 2015. Organic sales declined 11.4%, currency fluctuations decreased net sales by 1.3% and the acquisition of Arlon added 23.8% net sales growth as compared to the same period in the prior year. The year over year increase in net sales, including the acquisition, was driven by an increase in automotive radar applications for Advanced Drive Assistance Systems (33.4%) and aerospace and defense applications (54.4%) and the wireless telecom market (1.5%). These increases were partially offset by weaker demand in 4G LTE base stations, primarily in China (-25%).
Operating income improved by 2.5% in 2015. As a percentage of net sales, operating income in 2015 was 16.9%, a 140 basis point decline as compared to the 18.3% reported in 2014. Our 2015 operating income included approximately $5.3 million of special charges comprised of $2.6 million of integration expenses related to the Arlon acquisition, $1.0 million of Arlon purchase accounting expenses related to the non-recurring fair value adjustment for inventory, a $1.4 million environmental charge and $0.4 million of severance related charges. Our 2014 operating income included approximately $2.9 million of special charges comprised of
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$1.9 million from the early payment of certain long term pension obligations, $0.9 million related to acquisition costs and $0.1 million related to the impairment of the BrightVolt investment (formerly Solicore). As a percentage of sales, excluding the 2015 and 2014 special charges, 2015 operating income was 18.8%, a 70 basis point decline as compared to the 19.5% achieved in 2014. This decline is primarily due to the lower organic net sales partially offset by the addition of the operating income from the acquisition, combined with favorable results from the continuous efforts targeted at manufacturing efficiency improvements and favorable inventory absorption.
2014 vs. 2013
Net sales in this segment increased 30.2% in 2014. The increase in net sales was due primarily to a 52.9% increase in orders for high frequency circuit materials to support wireless base station and antenna applications in connection with the global 4G/LTE infrastructure build-out, particularly in China. Further, demand in automotive safety radar applications for Advanced Driver Assistance Systems increased by 37.7% year over year as auto manufacturers continue to adopt this safety feature into their designs. These increases were partially offset by a 15.9% decline in net sales for certain applications in handheld devices for improved internet connectivity.
Operating income improved by 130.4% in 2014. As a percentage of net sales, operating income for 2014 was 18.3%, an increase from 10.3% in 2013. 2014 operating income includes approximately $2.9 million of special charges comprised of $1.9 million from the early payment of certain long term pension obligations, $0.9 million related to acquisition costs and $0.1 million related to the impairment of the BrightVolt investment. Our 2013 operating income included approximately $2.8 million of special charges comprised primarily of $1.0 million in severance charges and $1.6 million allocation related to the impairment of the BrightVolt investment. Excluding these charges, operating income increased by 114.2% from $21.9 million in 2013 to $46.9 million in 2014. As a percentage of sales, excluding the 2014 and 2013 special charges, 2014 operating income was 19.5%, a 920 basis point improvement as compared to the 10.3% achieved in 2013. This increase was due primarily to the increase in net sales as we were able to achieve this growth by utilizing our existing manufacturing capacity. Results were also favorably impacted by the continuous efforts targeted at manufacturing efficiency improvements. This increase was partially offset by $6.9 million of higher allocated SG&A expenses in 2014 compared to 2013.
Elastomeric Material Solutions

(Dollars in millions) | 2015 |  | 2014 |  | 2013
Net sales | $ | 180.9 |  |  | $ | 173.7 |  |  | $ | 168.1 |
Operating income | $ | 20.0 |  |  | $ | 23.3 |  |  | $ | 22.6 |

The Elastomeric Material Solutions (EMS) operating segment is comprised of polyurethane and silicone foam products, which are sold into a wide variety of markets for various applications such as general industrial, portable electronics, consumer and transportation markets for gasketing, sealing, and cushioning applications.
2015 vs. 2014
Net sales in this segment increased by 4.2% in 2015. Organic sales declined 7.9%, currency fluctuations decreased net sales by 1.8% and the acquisition of Arlon added 13.8% of sales growth as compared to the prior year. The increase in net sales, including the acquisition, was driven by increased demand in mass transit (26.2%) and general industrial (26.1%) applications. Offsetting these increases, this operating segment experienced a decline in net sales into the portable electronics segment (mobile internet devices and feature phone applications) (-22.7%) and consumer applications (-11.0%).
Operating income declined by 14.4% in 2015. As a percentage of net sales, the 2015 operating income was 11.0%, a 240 basis point decline as compared to the 13.4% reported in 2014. Our 2015 operating income includes approximately $3.2 million of special charges comprised of $1.6 million of integration expenses related to the Arlon acquisition, $0.5 million of Arlon purchase accounting expenses related to the non-recurring fair value adjustment for inventory, a $0.8 million environmental charge and $0.3 million of severance related charges. Our 2014 operating income includes approximately $2.0 million of special charges comprised of $1.3 million for the early payment of certain long term pension obligations and $0.6 million of acquisition costs. As a percentage of net sales, excluding the 2015 and 2014 special charges, 2015 operating income was 12.8%, a 180 basis point decline as compared to the 14.6% achieved in 2014. This decline is primarily due to the lower organic net sales partially offset by the addition of the operating income from the acquisition.
2014 vs. 2013
Net sales increased by 3.3% in 2014. This increase in net sales was driven primarily due to higher demand in general industrial (5.5%), battery applications for hybrid electric vehicles (67.4%), consumer comfort and impact protection (13.4%), and mass transit (12.3%). Elastomeric Material Solutions demand into the portable electronics (mobile internet devices and feature phones) applications was down 9.2% year over year.
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Operating income increased by 3.1% in 2014. As a percentage of net sales, operating income for both 2014 and 2013 was 13.4%. Our 2014 operating income includes approximately $2.0 million of special charges comprised of $1.3 million for the early payment of certain long term pension obligations and $0.6 million of acquisition costs. Our 2013 results included approximately $3.3 million of special charges comprised primarily of $1.5 million in severance charges and a $1.6 million allocation related to the impairment of the BrightVolt investment. Excluding these items, operating income declined by 2.7% from $26.0 million in 2013 to $25.3 million in 2014. As a percentage of net sales, excluding the 2014 and 2013 special charges, 2014 operating income was 14.6%, a 90 basis point decline as compared to the 15.5% achieved in 2013. This decline is primarily attributable to the increase of $4.7 million in allocated selling, general and administrative expenses incurred during 2014 and was partially offset by increased operating profit due to increased net sales.
Power Electronics Solutions

(Dollars in millions) | 2015 |  | 2014 |  | 2013
Net sales | $ | 150.3 |  |  | $ | 171.8 |  |  | $ | 160.7 |
Operating income | $ | 3.8 |  |  | $ | 5.7 |  |  | $ | 1.3 |

The Power Electronics Solutions (PES) operating segment is comprised of two product lines - curamik® direct-bonded copper (DBC) substrates that are used primarily in the design of intelligent power management devices, such as IGBT (insulated gate bipolar transistor) modules that enable a wide range of products including highly efficient industrial motor drives, wind and solar energy converters and electrical systems in automobiles, and RO-LINX® busbars that are used primarily in power distribution systems products in mass transit and clean technology applications.
2015 vs. 2014
Net sales in this segment decreased by 12.5% in 2015. Organic net sales declined 0.5% as compared to 2014. Net sales were unfavorably impacted by 12.0% due to currency fluctuations. The net sales decline was impacted by weaker demand in variable frequency motor drives (-19.1%), vehicle electrification (x-by-wire) (-25.2%) and certain renewable energy applications (-21.8%). These declines were partially offset by an increase in demand in electric vehicle applications (41.5%) and laser diode applications (11.5%).
Operating income declined by 33.7% in 2015. As a percentage of net sales, the 2015 operating income was 2.5%, a 80 basis point decline as compared to the 3.3% reported in 2014. Our 2015 operating income included approximately $2.0 million of special charges comprised of $1.1 million of an environmental charge and $0.9 million of severance related charges. Our 2014 operating income includes approximately $2.8 million of special charges comprised of $1.9 million for the early payment of certain long term pension obligations and $0.9 million of acquisition costs. As a percentage of net sales, excluding the 2015 and 2014 special charges, 2015 operating income was 3.8%, a 110 basis point decline as compared to the 4.9% achieved in 2014. This decrease was due to the lower organic net sales as well as the unfavorable foreign currency exchange impact.
2014 vs. 2013
Net sales increased by 6.9% in 2014. This increase in net sales was led by an increase in demand in mass transit (14.9%), energy efficient motor control applications (16.2%) and vehicle electrification (x-by-wire) applications (26.8%). These increases more than offset weaker demand in laser diode (15.1%) and certain renewable energy applications (8.2%).
Operating income increased by 338.5% in 2014. As a percentage of net sales, operating income in 2014 was 3.3%, an increase from 1.0% in 2013. Our 2014 operating income includes approximately $2.8 million of special charges comprised of $1.9 million of the early payment of certain long term pension obligations and $0.9 million of acquisition costs. Our 2013 results included approximately $6.1 million of special charges comprised primarily of $3.8 million of severance related charges, a $1.2 million allocation related to the impairment of the SG&A investment, and $1.1 million related to the start-up of inspecting operations in Hungary. Excluding these items, operating income improved by 14.9% from $7.4 million in 2013 to $8.5 million in 2014. This improvement was the result of sales volume increases achieved in this operating segment and manufacturing efficiency improvements, partially offset by an increase of $7.6 million of higher allocated selling, general and administrative expenses incurred in 2014.
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Other

(Dollars in millions) | 2015 |  | 2014 |  | 2013
Net sales | $ | 42.6 |  |  | $ | 24.5 |  |  | $ | 23.7 |
Operating income | $ | 7.4 |  |  | $ | 8.2 |  |  | $ | 7.1 |

Our Other businesses consist of our elastomer rollers and float products, as well as the inverter distribution operations. Additionally, the Arlon acquisition added a business to this segment that manufactured specialty polyimide and epoxy-based laminates and bonding materials, which was sold in December 2015.
2015 vs 2014
Net sales increased by 73.7% in 2015. The acquisition of Arlon added 76.0% sales growth as compared to the same period in the prior year. Net sales were unfavorably impacted primarily by 2.2% due to currency fluctuations.
Operating income decreased 10.0% in 2015. The decline is comprised of lower operating profit of $0.6 million due to lower organic sales volume, $0.6 million of integration expenses related to the Arlon acquisition, offset by the performance of the specialty polyimide and epoxy-based laminates and bonding materials business.
2014 vs 2013
Net sales increased by 3.5% in 2014. The increase in net sales was due primarily to stronger demand for elastomer rollers and floats products, which increased 3.5% year over year. There was also stronger demand for inverters, which increased 3.0% year over year.
Operating results improved by 15.5% in 2014. Our 2013 results included approximately $0.4 million of special charges related primarily to this segment's allocated portion of severance charges and the BrightVolt impairment charge. The overall improvement in operating results in this segment was attributable primarily to the increase in volume and improved operational efficiencies.
Joint Ventures
Rogers INOAC Corporation (RIC)
RIC, our joint venture with Japan-based INOAC Corporation, was established over 30 years ago and manufactures high performance PORON urethane foam materials in Japan. RIC's 2015 net sales decreased by approximately 13.5% from 2014 to 2015 and decreased by approximately 17.7% from 2013 to 2014. A portion of these decreases relates to the depreciation of the Japanese Yen against the U.S. dollar as the currency value significantly changed during these periods. Excluding the impact of the currency change, net sales declined year over year primarily due to the continued weakness in the Japanese domestic and export markets, particularly LCD TV's, domestic mobile phones and general industrial applications.
Rogers INOAC Suzhou Corporation (RIS)
RIS, our joint venture agreement with INOAC Corporation for the purpose of manufacturing PORON urethane foam materials in China, began operations in 2004. Net sales decreased by approximately 6.3% from 2014 to 2015 and increased approximately 2.3% from 2013 to 2014. The decrease from 2014 to 2015 was primarily related to declines in portable electronic devices. The increase from 2013 to 2014 was primarily related small market gains in mobile internet devices.
Discontinued Operations
In the second quarter of 2012, we decided to cease production of our non-woven composite materials operating segment located in Rogers, Connecticut. Manufacturing operations ceased by the end of 2012 and last sales out of inventory occurred in the first quarter of 2013. In 2013, operating income of $0.1 million, net of tax, was reflected as discontinued operations in the accompanying consolidated statements of operations, net sales were $0.2 million, and income tax related to the discontinued operation was $0.1 million. There was no impact from discontinued operations in 2014 or 2015.
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Product and Market Development
Our research and development team is dedicated to growing our business by developing cost effective solutions that improve the performance of customers' products and by identifying business and technology acquisition opportunities to expand our market presence. Currently, R&D spend is approximately 4% of net sales.
Liquidity, Capital Resources and Financial Position
We believe our existing sources of liquidity and cash flows expected to be generated from operations, together with available credit facilities, will be sufficient to fund our operations, capital expenditures, research and development efforts, and debt service commitments, as well as our other operating and investing needs, for at least the next twelve months and, well into the foreseeable future. We continue to have access to the remaining portion of the line of credit available under the Amended Credit Agreement (as defined in the Credit Facilities section which follows), as evidenced by our purchase of Arlon, LLC in the first quarter of 2015, for which we drew down our line of credit for approximately $125.0 million. We continually review and evaluate the adequacy of our cash flows, borrowing facilities and banking relationships to ensure that we have the appropriate access to cash to fund both near-term operating needs and long-term strategic initiatives.

(Dollars in thousands) |  |  |
Key Balance Sheet Accounts: | December 31, 2015 |  | December 31, 2014
Cash and cash equivalents | $ | 204,586 |  |  | $ | 237,375 |
Accounts receivable, net | $ | 101,428 |  |  | $ | 99,065 |
Inventories | $ | 91,824 |  |  | $ | 76,806 |
Outstanding borrowings on credit facilities | $ | 178,626 |  |  | $ | 60,000 |

(Dollars in thousands) | For the year ended
Key Cash Flow Measures: | December 31, 2015 |  | December 31, 2014
Cash provided by operating activities | $ | 73,922 |  |  | $ | 85,207 |
Cash used in investing activities | $ | (180,297 | ) |  | $ | (28,520 | )
Cash provided by financing activities | $ | 83,027 |  |  | $ | 1,867 |

At December 31, 2015, cash and cash equivalents were $204.6 million as compared to $237.4 million at the end of 2014, a decrease of $32.8 million, or approximately 13.8%. This decrease was due primarily to $33.4 million (net) being disbursed for the acquisition of Arlon, $40.0 million in share repurchases, $24.8 in capital expenditures, $7.7 million in a contribution to our defined benefit plans and $6.4 million in required debt payments, partially offset by strong cash generated from operations and the receipt of $7.0 million related to stock option exercises and $2.9 million of dividends from our joint ventures.
The following table illustrates the location of our cash and cash equivalents by our three major geographic areas:

(Dollars in thousands) | December 31, 2015 |  | December 31, 2014 |  | December 31, 2013
U.S. | $ | 37,263 |  |  | $ | 96,721 |  |  | $ | 40,058 |
Europe | 66,295 |  |  | 71,802 |  |  | 93,764 |
Asia | 101,028 |  |  | 68,852 |  |  | 58,062 |
Total cash and cash equivalents | $ | 204,586 |  |  | $ | 237,375 |  |  | $ | 191,884 |

U.S. income taxes have not been provided on $179.1 million of undistributed earnings of foreign subsidiaries since it is the Company’s intention to permanently reinvest such earnings or to distribute them only when it is tax efficient to do so. It is impracticable to estimate the total tax liability, if any, that would be created by the future distribution of these earnings.
Net working capital was $350.0 million, $317.7 million and $293.6 million in 2015, 2014 and 2013, respectively.
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Significant changes in our balance sheet accounts from December 31, 2014 to December 31, 2015 were as follows:

◦ | Goodwill increased $77.2 million or 78.6% from $98.2 million at December 31, 2014 to $175.4 million at December 31, 2015. This increase is primarily due to the acquisition of Arlon. There have been no impairments of goodwill during the year ended December 31, 2015.

◦ | Other intangible assets increased $36.7 million or 95.8% from $38.3 million at December 31, 2014 to $75.0 million at December 31, 2015. This increase is primarily due to the acquisition of Arlon. There have been no impairments of Other intangible assets during the year ended December 31, 2015.

◦ | Overall, our debt position increased by $118.6 million from $60.0 million at December 31, 2014 to $178.6 million at December 31, 2015 due to additional borrowings made to finance the acquisition of Arlon.

◦ | Property, plant and equipment increased by $28.2 million or 18.8% from $150.4 million at December 31, 2014 to $178.6 million at December 31, 2015. The increase was primarily due to the acquisition of Arlon, which increased property, plant and equipment by $28.7 million. Contributing to the increase was capital expenditures of $24.8 million, which was substantially offset by depreciation expense of $20.1 million.

During 2015, $180.3 million of net cash was used for investing activities as compared to $28.5 million in 2014 and $17.0 million in 2013. Investing activity for 2015 included the acquisition of Arlon, which used $158.4 million in investing cash. Capital expenditures were $24.8 million, $28.8 million and $16.9 million in 2015, 2014 and 2013, respectively.
Net cash provided by financing activities was $83.0 million, $1.9 million and $10.7 million in 2015, 2014 and 2013, respectively. Financing activities in 2015 included borrowings of $125.0 million to finance the acquisition of Arlon, offset by $40.0 million of cash used for the share buyback program.
Credit Facilities
On June 18, 2015, we entered into a secured five year credit agreement (the "Amended Credit Agreement"). The Amended Credit Agreement amends and restates the credit agreement signed between the Company and the same banks on July 13, 2011 and increased our borrowing capacity from $265.0 million to $350.0 million, with an additional $50.0 million accordion feature.
The Amended Credit Agreement provides (1) a $55.0 million term loan; (2) up to $295.0 million of revolving loans, with sublimits for multicurrency borrowings, letters of credit and swing-line notes; and (3) a $50.0 million expansion 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 Amended Credit Agreement).
Borrowings under the Amended Credit Agreement bear interest based on one of two options. Alternate base rate loans bear interest that includes a base reference rate plus a spread of 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 plus 50 basis points; or adjusted 1-month LIBOR plus 100 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.
In addition to interest payable on the principal amount of indebtedness outstanding from time to time under the Amended Credit Agreement, the Company is required to pay a quarterly fee of 0.20% to 0.30% (based upon our leverage ratio) of the unused amount of the lenders’ commitments under the Amended Credit Agreement.
The Amended Credit Agreement contains customary representations, warranties, covenants, mandatory prepayments and events of default under which the Company's payment obligations may be accelerated. The financial covenants include requirements to maintain (1) a leverage ratio of no more than 3.25 to 1.00, subject to a one-time 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 ("ICR") of no less than 3.00 to 1.00. The ICR is the ratio determined as of the end of each of its fiscal quarters ending on and after September 30, 2015, of (i) Consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) (as defined in the Amended Credit Agreement) minus the unfinanced portion of Consolidated Capital Expenditures to (ii) Consolidated Interest Expense paid in cash, in each case for the period of four consecutive fiscal quarters ending with the end of such fiscal quarter, all calculated for the Borrower and its subsidiaries on a consolidated basis. As of December 31, 2015, we were in compliance with all of the financial covenants in the Amended Credit Agreement, as we achieved actual ratios of approximately 1.47 to 1.00 on the leverage ratio and 23.82 to 1.00 on the ICR.
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The Amended Credit Agreement requires the mandatory quarterly repayment of principal on amounts borrowed under such term loan. Payments commenced on September 30, 2015, and are scheduled to be completed in June 2020. The aggregate mandatory principal payments due are as follows:

Year |  | Payments Due |
2016 |  |  | $3.4 | million
2017 |  |  | $4.1 | million
2018 |  |  | $4.8 | million
2019 |  |  | $5.5 | million
2020 |  |  | $160.8 | million

All obligations under the Amended Credit Agreement are guaranteed by each of the Corporation’s existing and future material domestic subsidiaries, as defined in the Amended Credit Agreement (the “Guarantors”). The obligations are also secured by a Second Amended and Restated Pledge and Security Agreement, dated as of June 18, 2015, entered into by the Company 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.
All amounts borrowed or outstanding under the Amended Credit Agreement, with the exception of amounts borrowed under the term loan which are subject to quarterly principal payments, are due and mature on June 18, 2020, unless the commitments are terminated earlier either at the request of the Company or if certain events of default occur.
In addition, as of December 31, 2015 we had a $1.2 million standby letter of credit (LOC) to guarantee Rogers workers compensation plans that were backed by the Amended Credit Agreement. No amounts were drawn on the LOC as of December 31, 2015 or 2014.
The Amended Credit Agreement is secured by many of the assets of Rogers, including but not limited to, receivables, equipment, intellectual property, inventory, and stock in certain subsidiaries.
Before entering into the Amended Credit Agreement, we had $0.5 million of remaining capitalized costs from the previous credit agreements. These costs will continue to be amortized over the life of the Amended Credit Agreement. In the second quarter of 2015, we capitalized an additional $1.8 million in connection with the Amended Credit Agreement. These costs will be amortized over the life of the Amended Credit Agreement, which will terminate in June 2020.
We incurred amortization expense of $0.5 million in each of the years ended 2015, 2014 and 2013, respectively. At December 31, 2015, we have approximately $2.1 million of credit facility costs remaining to be amortized.
We borrowed $125.0 million under the line of credit in the first quarter of 2015 to fund the acquisition of Arlon. During 2015 and 2014, we made principal payments of $6.4 million and $17.5 million, respectively, on the outstanding debt. The principal amount of this debt has been transferred to the new revolving credit line created in June of 2015. We are obligated to pay $3.4 million on this debt obligation in the next 12 months under the term loan.
We incurred interest expense on our outstanding debt of $3.5 million, $1.8 million and $2.2 million for the years ended December 31, 2015, 2014 and 2013, respectively.
We incurred an unused commitment fee of $0.3 million, $0.4 million and $0.5 million for the years ended December 31, 2015, 2014 and 2013, respectively. In July 2012, we entered into an interest rate swap to hedge the variable interest rate on our term loan debt. As of December 31, 2015, the remaining notional amount of the interest rate swap covers $16.2 million of our term loan debt and has a rate of 0.752%. At December 31, 2015, our outstanding debt balance is comprised of a term loan of $53.6 million and $125.0 million borrowed on the revolving line of credit. At December 31, 2015, the rate charged on this debt is the 1 month LIBOR at 0.4375% plus a spread of 1.500%.
Capital Lease
During the first quarter of 2011, we recorded a capital lease obligation related to the acquisition of Curamik for its primary manufacturing facility in Eschenbach, Germany. Under the terms of the leasing agreement, we had an option to purchase the property in either 2013 or upon the expiration of the lease in 2021 at a price which is the greater of (i) the then-current market value or (ii) the residual book value of the land including the buildings and installations thereon. We chose not to exercise the option to purchase the property that was available to us on June 30, 2013. The total obligation recorded for the lease as of December 31, 2015 and 2014 was $5.8 million and $6.8 million, respectively. Depreciation expense related to the capital lease was $0.3 million, $0.4 million and $0.4 million for the years ending December 31, 2015, 2014 and 2013, respectively. Accumulated depreciation as of December 31, 2015 and 2014 was $1.9 million and $1.6 million, respectively.
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These expenses are included as depreciation expense in Cost of Sales on our consolidated statements of operations. Interest expense related to the debt recorded on the capital lease is included in interest expense on the consolidated statements of operations.
We also incurred interest expense on the capital lease of $0.4 million, $0.5 million and $0.5 million for the years ended December 31, 2015, 2014 and 2013, respectively. Cash paid for interest was $3.3 million, $2.5 million and $3.1 million for 2015, 2014 and 2013, respectively.
Restriction on Payment of Dividends
Pursuant to the Amended Credit Agreement, we cannot make a cash dividend payment if (i) a default or event of default has occurred and is continuing or will result from the cash dividend payment.We do not currently have any restrictions in our ability to pay dividends under our current, amended credit agreement, as no default of event of default has occurred.
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Contractual Obligations
The following table summarizes our significant contractual obligations as of December 31, 2015:

(Dollars in thousands) | Payments Due by Period
| Total |  | Less than 1 Year |  | 1-3 Years |  | 3-5 Years |  | More than 5 Years
Operating leases | $ | 10,221 |  |  | $ | 2,981 |  |  | $ | 3,764 |  |  | $ | 1,664 |  |  | $ | 1,812 |
Capital lease | 5,833 |  |  | 284 |  |  | 568 |  |  | 568 |  |  | 4,413 |
Interest payments on capital lease | 2,058 |  |  | 383 |  |  | 766 |  |  | 766 |  |  | 143 |
Inventory purchase obligation | 868 |  |  | 868 |  |  | — |  |  | — |  |  | — |
Capital commitments | 3,691 |  |  | 3,691 |  |  | — |  |  | — |  |  | — |
Outstanding borrowings on credit facilities | 178,626 |  |  | 3,438 |  |  | 8,938 |  |  | 166,250 |  |  | — |
Retiree health and life insurance benefits | 3,005 |  |  | 537 |  |  | 784 |  |  | 528 |  |  | 1,156 |
Pension obligation funding | 362 |  |  | 287 |  |  | 75 |  |  | — |  |  | — |
Interest payments on outstanding borrowings (1) | 19,971 |  |  | 3,674 |  |  | 8,913 |  |  | 7,384 |  |  | — |
Total | $ | 224,635 |  |  | $ | 16,143 |  |  | $ | 23,808 |  |  | $ | 177,160 |  |  | $ | 7,524 |

(1) | Estimated future interest payments are based on (1) rates that range from 1.375% to 1.75%, which take into consideration projected forward 1 Month LIBOR and (2) a leverage-based spread.

Unfunded pension benefit obligations, which amount to $11.4 million at December 31, 2015, are expected to be paid from operating cash flows and the timing of payments is not definitive. Retiree health and life insurance benefits, which amount to $2.7 million, are expected to be paid from operating cash flows.
Other long-term liabilities, such as deferred taxes, unrecognized tax benefits and asbestos-related product liability reserves, have been excluded from the table due to the uncertainty of the timing of payments combined with the absence of historical trends to be used as a predictor for such payments.
Effects of Inflation
We do not believe that inflation had a material impact on our business, sales, or operating results during the periods presented.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have, or are, in the opinion of management, reasonably likely to have, a current or future material effect on our financial condition or results of operations.
Critical Accounting Policies
Our Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles, which require management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances and believe that appropriate reserves have been established based on reasonable methodologies and appropriate assumptions based on facts and circumstances that are known; however, actual results may differ from these estimates under different assumptions or conditions. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions that are highly judgmental and uncertain at the time the estimate is made, if different estimates could reasonably have been used, or if changes to those estimates are reasonably likely to periodically occur that could affect the amounts carried in the financial statements. These critical accounting policies are as follows:
Revenue Recognition
We recognize revenue when all of the following criteria are met: (1) we have entered into a binding agreement, (2) the product has shipped and title and risk of ownership have passed, (3) the sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured. We recognize revenue based upon a determination that all criteria for revenue recognition have been met, which, based on the majority of our shipping terms, is considered to have occurred upon shipment of the finished product. Some shipping terms require the goods to be through customs or be received by the customer before title passes. In those
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instances, revenue is not recognized until either the customer has received the goods or they have passed through customs, depending on the circumstances. As appropriate, we record estimated reductions to revenue for customer returns and allowances and warranty claims. Provisions for such allowances are made at the time of sale and are typically derived from historical trends and other relevant information.
Inventory Valuation
Inventories are stated at the lower of cost or market with costs determined primarily on a first-in first-out basis. We also maintain a reserve for excess, obsolete and slow-moving inventory that is primarily developed by utilizing both specific product identification and historical product demand as the basis for our analysis. Products and materials that are specifically identified as obsolete are fully reserved. In general, most products that have been held in inventory greater than one year are fully reserved unless there are mitigating circumstances, including forecasted sales or current orders for the product. The remainder of the allowance is based on our estimates and fluctuates with market conditions, design cycles and other economic factors. Risks associated with this allowance include unforeseen changes in business cycles that could affect the marketability of certain products and an unexpected decline in current production. We closely monitor the marketplace and related inventory levels and have historically maintained reasonably accurate allowance levels. Our obsolescence reserve has ranged from 10.0% to 11.6% of gross inventory over the last three years.
Goodwill and Other Intangibles
We have made acquisitions over the years that included the recognition of goodwill and other intangible assets. Goodwill and indefinite lived intangibles are tested for impairment annually or more frequently if events or changes in circumstances indicate the carrying value may have been impaired. Application of the 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 of a reporting unit is subjective and requires the use of significant estimates and assumptions, including revenue growth rates and operating margins, discount rates, and future market conditions, among others. We test goodwill for impairment using a two-step process. The first step of the impairment test requires a comparison of the implied fair value of each of our reporting units to the respective carrying value. If the carrying value of a reporting unit is less than its implied fair value, no indication of impairment exists and a second step is not performed. If the carrying amount of a reporting unit is higher than its fair value, there is an indication that impairment may exist and a second step must be performed. In the second step, the impairment is computed by comparing the implied fair value of the reporting unit's goodwill with the carrying amount of the goodwill. If the carrying amount of the reporting unit's goodwill is greater than the implied fair value of its goodwill, an impairment loss must be recognized for the excess and charged to operations.
In 2015, we estimated the fair value of our reporting units using an income approach based on the present value of future cash flows. 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 impairment test are reasonable, but inherently uncertain. We currently have four reporting units with goodwill and intangible assets - Advanced Connectivity Solutions (ACS), Elastomeric Material Solutions (EMS), Curamik and the Elastomer Components Division (ECD) and the annual impairment test was performed in the fourth quarter of 2015 as has been our historical practice. The ACS, EMS, Curamik and ECD reporting units had allocated goodwill of approximately $51.9 million, $56.3 million, $65.0 million and $2.2 million, respectively, at December 31, 2015. No impairment charges resulted from this analysis. The excess of fair value over carrying value for these reporting units was 341.0% for ACS, 208.6% for EMS, 73.8% for Curamik and 232.3% for ECD. From a sensitivity perspective, if the fair value of these reporting units declined by 10%, the fair value of the ACS reporting unit would exceed its carrying value by approximately 300%, the fair value of the EMS reporting unit would exceed its carrying value by approximately 178%, the fair value of the Curamik reporting unit would exceed its carrying value by approximately 56%, and the fair value of the ECD reporting unit would exceed its carrying value by approximately 199%. These valuations are based on a five year discounted cash flow analysis, which utilized discount rates ranging from 12.0% for EMS and ECD to 15.3% for Curamik and a terminal year growth rate of 3% for all three reporting units.
Intangible assets, such as purchased technology, customer relationships, and the like, are generally recorded in connection with a business acquisition. Values assigned to intangible assets are determined based on estimates and judgments regarding expectations of the success and life cycle of products and technology acquired and the value of the acquired businesses customer base. These assets are reviewed at least annually, or more frequently, if facts and circumstances surrounding such assets indicate a possible impairment of the asset exists. In 2015, there were no indicators of impairment on any of our other intangible assets.
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Product Liability
For product liability claims, we typically maintain insurance coverage with reasonable deductible levels to protect us from potential exposures. Any liability associated with such claims is based on management's best estimate of the potential claim value, while insurance receivables associated with related claims are not recorded until verified by the insurance carrier.
For asbestos related claims, we recognize projected asbestos liabilities and related insurance receivables, with any difference between the liability and related insurance receivable recognized as an expense in the consolidated statements of operations. In order to determine projected asbestos related liabilities, we have historically engaged National Economic Research Associates, Inc. (NERA), a consulting firm with expertise in the field of evaluating mass tort litigation asbestos bodily-injury claims. Further, in order to determine the projected insurance coverage on the asbestos liabilities, we have historically engaged Marsh USA, Inc., also known as Marsh Risk Consulting (Marsh), to develop these projections. Projecting future asbestos costs and related insurance coverage is subject to numerous variables that are extremely difficult to predict, including the number of claims that might be received, the type and severity of the disease alleged by each claimant, the long latency period associated with asbestos exposure, dismissal rates, costs of medical treatment, the financial resources of other companies that are co-defendants in claims, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, and the impact of potential changes in legislative or judicial standards, including potential tort reform.
The models developed for determining the potential exposure and related insurance coverage were developed by outside consultants deemed to be experts in their respective fields with the forecast for asbestos related liabilities generated by NERA and the related insurance receivable projections developed by Marsh. The models contain numerous assumptions that significantly impact the results generated by the models. We believe the assumptions made are reasonable at the present time, but are subject to uncertainty based on the actual future outcome of our asbestos litigation. We determined that a ten-year projection period is appropriate as we have experience in addressing asbestos related lawsuits over the last few years to use as a baseline to project the liability over ten years. However, we do not believe we have sufficient data to justify a longer projection period at this time. As of December 31, 2015, the estimated liability and estimated insurance recovery for the ten-year period through 2025 was $56.6 million and $53.4 million, respectively.
Given the inherent uncertainty in making future projections, we plan to have the projections of current and future asbestos claims periodically re-examined, and we will update them further if needed based on our experience, changes in the underlying assumptions that formed the basis for NERA's and Marsh's 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 will incur additional charges for our asbestos liabilities and defense costs in the future, which could exceed existing reserves, but cannot reasonably estimate such excess amounts at this time.
Pension and Other Postretirement Benefits
We provide various defined benefit pension plans for our U.S. employees and sponsor three defined benefit health care plans and a life insurance plan. The costs and obligations associated with these plans are dependent upon various actuarial assumptions used in calculating such amounts. These assumptions include discount rates, long-term rates of return on plan assets, mortality rates, and other factors. The assumptions used were determined as follows: (i) the discount rate used is based on the PruCurve high quality corporate bond index, with comparisons against other similar indices; and (ii) the long-term rate of return on plan assets is determined based on historical portfolio results, market conditions and our expectations of future returns. We determine these assumptions based on consultation with outside actuaries and investment advisors. Any changes in these assumptions could have a significant impact on future recognized pension costs, assets and liabilities.
The rates used to determine our costs and obligations under our pension and postretirement plans are disclosed in Note 10 to “Item 8 - Financial Statements and Supplementary Data”. Each assumption has different sensitivity characteristics. For the year ended December 31, 2015, a 25 basis point decrease in the discount rate would have increased our total pension expense by approximately $20,500. This number represents the aggregate increase in expense for the four pension plans: Employees' Pension Plan, Defined Benefit Pension Plan, Bear Pension Plan and the Restoration Plan. A 25 basis point decrease in the discount rate would decrease the other post-employment benefits (OPEB) expense by approximately $8,000. A 25 basis point decrease in the expected return on assets would increase the total 2015 pension expense approximately $0.4 million. This number represents the aggregate increase in the expense for the three qualified pension plans. Since the OPEB and non-qualified plans are unfunded, those plans would not be impacted by this assumption change.
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Income Taxes
We are subject to income taxes in the U.S. and in numerous foreign jurisdictions. The Company accounts for income taxes following ASC 740 (Accounting for 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.
U.S. income taxes have not been provided on $179.1 million of undistributed earnings of foreign subsidiaries since it is the Company’s intention to permanently reinvest such earnings or to distribute them only when it is tax efficient to do so. It is impracticable to estimate the total tax liability, if any, that would be created by the future distribution of these earnings. If circumstances change and it becomes apparent that some, or all of the undistributed earnings as of December 31, 2015 will not be indefinitely reinvested, the provision for the tax consequences, if any, will be recorded in the period when circumstances change. Distributions out of current and future earnings are permissible to fund discretionary activities such as business acquisitions. However, when distributions are made, this could result in a higher effective tax rate.
We record benefits for uncertain tax positions based on an assessment of whether it is more likely than not that the tax positions will be sustained by the taxing authorities. 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 more than fifty percent likely to be realized upon ultimate settlement.
We recognize interest and penalties within the income tax expense line in the accompanying consolidated statements of operations. Accrued interest and penalties are included within the related tax liability line in the consolidated statements of financial position.
Stock-Based Compensation
Stock-based compensation expense associated with stock options, time-based and performance-based restricted stock grants, deferred stock units, and related awards is recognized in the consolidated statements of operations. Determining the amount of stock-based compensation expense to be recorded requires us to develop estimates to be used in calculating the grant-date fair value of stock options.

• | Stock Options

Historically, we have used stock options as part of our overall compensation plan for key employees. To value stock options, we calculated the grant-date fair values using the Black-Scholes valuation model. The use of valuation models requires us to make estimates for the following assumptions:
Expected volatility - In determining expected volatility, we consider a number of factors, including historical volatility and implied volatility.
Expected term - We use historical employee exercise data to estimate the expected term assumption for the Black-Scholes valuation model.
Risk-free interest rate - We use the yield on zero-coupon U.S. Treasury securities for a period commensurate with the expected term assumption as 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 Black-Scholes model.
The amount of stock-based compensation expense recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered option. Based on an analysis of our historical forfeitures, we have applied an annual forfeiture rate of 3% to all unvested stock-based awards as of December 31, 2015. The rate of 3% represents the portion that is expected to be forfeited each year over the vesting period. This analysis is re-evaluated annually and the forfeiture rate is adjusted as necessary. Ultimately, the actual expense recognized over the vesting period will only be for those awards that vest.
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• | Performance-Based Restricted Stock

In 2006, we began granting performance-based restricted stock awards to certain key executives. We currently have awards from 2013, 2014 and 2015 outstanding. These awards cliff vest at the end of a 3 year measurement period to those individuals who are retirement eligible during the grant period, as such awards are subject to accelerated vesting as the grant is earned over the course of the vesting period (i.e. a pro-rata payout occurs based on the retirement date). Participants are eligible to be awarded shares ranging from 0% to 200% of the original award amount, based on certain defined performance measures. Compensation expense is recognized using the straight line method over the vesting period, unless the employee has an accelerated vesting schedule.
The 2013, 2014 and 2015 awards have two measurement criteria on which the final payout of the award is based - (i) the three year return on invested capital (ROIC) compared to that of a specified group of peer companies, and (ii) the three year total shareholder return (TSR) on the performance of our capital stock as compared to that of a specified group of peer companies. In accordance with the applicable accounting literature, the ROIC portion of the award is considered a performance condition. As such, the fair value of the ROIC portion is determined based on the market value of the underlying stock price at the grant date with cumulative compensation expense recognized to date being increased or decreased based on changes in the forecasted pay out percentage at the end of each reporting period. The TSR portion of the awards is considered a market condition. As such, the fair value of these awards was determined on the date of grant using a Monte Carlo simulation valuation model with related compensation expense fixed on the grant date and expensed on a straight-line basis over the life of the awards that ultimately vest with no changes for the final projected payout of the award. The assumptions used in the Monte Carlo are as follows:
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.

• | Time-Based Restricted Stock

In 2011, we began granting time-based restricted stock awards to certain key executives and other key members of the Company’s management team. We currently have grants from 2013, 2014 and 2015 outstanding. The majority of the 2013, 2014 and 2015 grants ratably vest on the first, second and third anniversaries of the original grant date. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period. The fair value of the award is determined based on the market value of the underlying stock price at the grant date.

• | 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 th month anniversary of the grant date unless the individual elects to defer the receipt of these shares. Each deferred stock unit results in the issuance of one share of Rogers’ stock. The grant of deferred stock units is typically done annually in the second quarter of each year. The fair value of the award is determined based on the market value of the underlying stock price at the grant date.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk

• | Foreign Currency Risk

Our financial results are affected by changes in foreign exchange rates and economic conditions in foreign countries in which we operate. Our primary overseas markets are in Europe and Asia, thus exposing us to exchange rate risk from fluctuations in the Euro and the various currencies used in Asia. Exposure to variability in currency exchange rates is mitigated, when possible, through the use of natural hedges, whereby purchases and sales in the same foreign currency and with similar maturity dates offset one another. We further mitigate this exposure through hedging activities by entering into foreign exchange forward contracts with third parties when the use of natural hedges is not possible or desirable. We currently do not use derivative instruments for trading or speculative purposes. We monitor foreign exchange risks and at times manage such risks on specific transactions. Our risk management process primarily uses analytical techniques and sensitivity analysis. In 2015, a 10% increase/decrease in exchange rates would have resulted in an approximate increase/decrease to sales and net income of $26.1 million and $2.9 million, respectively.

• | Interest Rate Risk

During the first quarter of 2011, we borrowed $145.0 million against our existing credit facilities to finance the strategic acquisition of Curamik Electronics GmbH. The interest charged on this credit facility fluctuates with movements in the benchmark LIBOR. In 2012, to limit exposure to upward movement in interest rates, we entered into an interest rate swap, which became effective in July 2013. This instrument caps exposure to upward movements in rates at 0.752% initially on 65% of the outstanding debt. Any movement in rates above this level would be offset by gains on the interest rate swap. During the first quarter of 2015, we borrowed an additional $125.0 million against our existing credit facilities to finance the strategic acquisition of Arlon. At December 31, 2015, the effective all-in rate of interest on the debt facility was 1.9375% and the amount of debt covered by the swap was $16.2 million. To illustrate, based on the outstanding debt as of December 31, 2015 of $178.6 million, a 100 basis point increase in LIBOR would increase the amount of interest expense by $1.8 million, annually. The effects of the interest rate swap would offset the interest expense increase by $1.0 million resulting in a net increase determined to be $0.8 million as of December 31, 2015.

• | Commodity Risk

We are subject to fluctuations in the cost of raw materials used to manufacture our materials and products. In particular, we are exposed to market fluctuations in commodity pricing as we utilize certain materials, such as copper and ceramic, that are key materials in certain of our products. In order to minimize the risk of market driven price changes in these commodities, we utilize hedging strategies to insulate us against price fluctuations of copper, the commodity most used in our manufacturing processes. We currently do not use hedging strategies to minimize the risk of price fluctuations on other commodity-based raw materials; however, we continually review such strategies to hedge market risk on an ongoing basis.
For additional discussion, see Note 2, “Fair Value Measurements” and Note 3, “Hedging Transactions and Derivative Financial Instruments” in “Item 8 Financial Statements and Supplementary Data.”
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Item 8. Financial Statements and Supplementary Data
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). The Company's internal control over financial reporting was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Our internal control over financial reporting includes those policies and procedures that:

- | 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 of America, 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.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2015. In making its assessment of internal control over financial reporting, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on the results of this assessment, management, including our Chief Executive Officer and our Chief Financial Officer, has concluded that, as of December 31, 2015, our internal control over financial reporting was effective.
The Company's independent registered public accounting firm, PricewaterhouseCoopers, LLP, has audited the effectiveness of the Company's internal control over financial reporting as of December 31, 2015.
On January 22, 2015, the Company completed the acquisition of Arlon and its subsidiaries (collectively, “Arlon”). As a result, the Company has excluded Arlon from our assessment of internal control over financial reporting. Arlon is a wholly-owned subsidiary whose total assets and total revenues represent 6% and 15%, respectively as of December 31, 2015.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Rogers Corporation
In our opinion, the accompanying consolidated statement of financial position as of December 31, 2015 and the related consolidated statements of operations, of comprehensive income (loss), of shareholders’ equity and of cash flows for the year then ended present fairly, in all material respects, the financial position of Rogers Corporation and its subsidiaries at December 31, 2015, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 8. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audit of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.
As discussed in Note 1 to the consolidated financial statements, the Company has changed the manner in which it accounts for certain inventory from the last in, first out (LIFO) method to the first in, first out (FIFO) method in 2015.
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As described in Management's Report on Internal Control over Financial Reporting, management has excluded Arlon from its assessment of internal control over financial reporting as of December 31, 2015 because Arlon (other than Arlon India (PvT) Limited) was acquired by the Company in a purchase business combination during 2015. We have also excluded Arlon from our audit of internal control over financial reporting. Arlon is a wholly-owned subsidiary whose total assets and total revenues represent 6% and 15%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2015.

/s/ PricewaterhouseCoopers LLP |
Hartford, Connecticut |
February 23, 2016 |

42

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of Rogers Corporation
We have audited the accompanying consolidated statement of financial position of Rogers Corporation as of December 31, 2014, and the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each of the two years in the period ended December 31, 2014. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Rogers Corporation at December 31, 2014, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 18, 2015
Except for note 1, as to which the date is
February 23, 2016
43

CONSOLIDATED STATEMENTS OF OPERATIONS
For each of the fiscal years in the three-year period ended December 31, 2015
(Dollars and shares in thousands, except per share amounts)

| 2015 |  | 2014 |  | 2013
Net sales | $ | 641,443 |  |  | $ | 610,911 |  |  | $ | 537,482 |
Cost of sales | 406,081 |  |  | 376,158 |  |  | 348,945 |
Gross margin | 235,362 |  |  | 234,753 |  |  | 188,537 |
Selling, general and administrative expenses | 131,463 |  |  | 125,244 |  |  | 106,398 |
Research and development expenses | 27,644 |  |  | 22,878 |  |  | 21,646 |
Restructuring and impairment charges | — |  |  | 5,390 |  |  | 10,376 |
Operating income | 76,255 |  |  | 81,241 |  |  | 50,117 |
Equity income in unconsolidated joint ventures | 2,890 |  |  | 4,123 |  |  | 4,326 |
Interest income (expense), net | (4,480 | ) |  | (2,946 | ) |  | (3,481 | )
Other income (expense), net | (8,492 | ) |  | (1,194 | ) |  | (1,240 | )
Income before income taxes | 66,173 |  |  | 81,224 |  |  | 49,722 |
Income tax expense | 19,853 |  |  | 27,812 |  |  | 11,519 |
Income from continuing operations | 46,320 |  |  | 53,412 |  |  | 38,203 |
Income from discontinued operations, net of income taxes | — |  |  | — |  |  | 102 |
Net income | $ | 46,320 |  |  | $ | 53,412 |  |  | $ | 38,305 |
Basic earnings per share: |  |  |  |  |  |  |
Income from continuing operations | $ | 2.52 |  |  | $ | 2.94 |  |  | $ | 2.22 |
Income from discontinued operations | — |  |  | — |  |  | 0.01 |
Net income | $ | 2.52 |  |  | $ | 2.94 |  |  | $ | 2.23 |
Diluted earnings per share: |  |  |  |  |  |  |
Income from continuing operations | $ | 2.48 |  |  | $ | 2.86 |  |  | $ | 2.15 |
Income from discontinued operations | — |  |  | — |  |  | 0.01 |
Net income | $ | 2.48 |  |  | $ | 2.86 |  |  | $ | 2.16 |
Shares used in computing: |  |  |  |  |  |
Basic earnings per share | 18,371 |  |  | 18,177 |  |  | 17,198 |
Diluted earnings per share | 18,680 |  |  | 18,698 |  |  | 17,768 |

The accompanying notes are an integral part of the consolidated financial statements.
44

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For each of the fiscal years in the three-year period ended December 31, 2015
(Dollars in thousands)

| 2015 |  | 2014 |  | 2013
Income from continuing operations, net of tax | $ | 46,320 |  |  | $ | 53,412 |  |  | $ | 38,203 |
Foreign currency translation adjustments | (27,172 | ) |  | (36,949 | ) |  | 10,171 |
Derivative instruments designated as cash flow hedges: |  |  |  |  |
Unrealized gain (loss) on derivative instruments held at year end (net of taxes of $5 in 2015, $50 in 2014 and $110 in 2013) | (2 | ) |  | (93 | ) |  | (210 | )
Unrealized gain (loss) reclassified into earnings | 84 |  |  | 209 |  |  | 236 |
Accumulated other comprehensive income (loss) pension and post-retirement benefits: |  |  |  |  |
Actuarial net gain (loss) incurred in fiscal year | 2,760 |  |  | (20,715 | ) |  | 32,749 |
Amortization of gain (loss) | 966 |  |  | 3,904 |  |  | 2,482 |
Amortization of prior service credit (cost) | — |  |  | — |  |  | 930 |
Other comprehensive income (loss) | (23,364 | ) |  | (53,644 | ) |  | 46,358 |
Comprehensive income (loss) from continuing operations | 22,956 |  |  | (232 | ) |  | 84,561 |
Income from discontinued operations, net of income taxes | — |  |  | — |  |  | 102 |
Comprehensive income (loss) | $ | 22,956 |  |  | $ | (232 | ) |  | $ | 84,663 |

The accompanying notes are an integral part of the consolidated financial statements.
45

ROGERS CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Dollars and share amounts in thousands)

| December 31, 2015 |  | December 31, 2014
Assets |  |  |
Current assets |  |  |
Cash and cash equivalents | $ | 204,586 |  |  | $ | 237,375 |
Accounts receivable, less allowance for doubtful accounts of $695 and $476 | 101,428 |  |  | 99,065 |
Inventories | 91,824 |  |  | 76,806 |
Prepaid income taxes | 5,058 |  |  | 4,586 |
Deferred income taxes | 9,565 |  |  | 6,467 |
Asbestos-related insurance receivables | 8,245 |  |  | 6,827 |
Other current assets | 8,431 |  |  | 7,048 |
Total current assets | 429,137 |  |  | 438,174 |
Property, plant and equipment, net of accumulated depreciation | 178,661 |  |  | 150,420 |
Investments in unconsolidated joint ventures | 15,348 |  |  | 17,214 |
Deferred income taxes | 8,594 |  |  | 44,051 |
Goodwill | 175,453 |  |  | 98,227 |
Other intangible assets | 75,019 |  |  | 38,340 |
Asbestos-related insurance receivables | 45,114 |  |  | 46,186 |
Other long-term assets | 5,132 |  |  | 7,823 |
Total assets | $ | 932,458 |  |  | $ | 840,435 |
Liabilities and Shareholders’ Equity |  |  |  |  |
Current liabilities |  |  |  |  |
Accounts payable | $ | 19,851 |  |  | $ | 20,020 |
Accrued employee benefits and compensation | 23,263 |  |  | 33,983 |
Accrued income taxes payable | 3,599 |  |  | 6,103 |
Current portion of lease obligation | 284 |  |  | 747 |
Current portion of long term debt | 3,438 |  |  | 35,000 |
Asbestos-related liabilities | 8,245 |  |  | 6,827 |
Other accrued liabilities | 20,440 |  |  | 17,765 |
Total current liabilities | 79,120 |  |  | 120,445 |
Long term debt | 175,188 |  |  | 25,000 |
Long term lease obligation | 5,549 |  |  | 6,042 |
Pension liability | 12,623 |  |  | 17,652 |
Retiree health care and life insurance benefits | 2,185 |  |  | 8,768 |
Asbestos-related liabilities | 48,390 |  |  | 49,718 |
Non-current income tax | 11,863 |  |  | 10,544 |
Deferred income taxes | 9,455 |  |  | 14,647 |
Other long-term liabilities | 3,503 |  |  | 338 |
Commitments and Contingencies (Note 15) |  |  |  |  |
Shareholders’ Equity |  |  |  |  |
Capital Stock - $1 par value; 50,000 authorized shares; 17,957 and 18,404 shares outstanding | 17,957 |  |  | 18,404 |
Additional paid-in capital | 112,017 |  |  | 137,225 |
Retained earnings | 543,066 |  |  | 496,746 |
Accumulated other comprehensive loss | (88,458 | ) |  | (65,094 | )
Total shareholders' equity | 584,582 |  |  | 587,281 |
Total liabilities and shareholders' equity | $ | 932,458 |  |  | $ | 840,435 |

The accompanying notes are an integral part of the consolidated financial statements.
46

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For each of the fiscal years in the three-year period ended December 31, 2015
(Dollars in thousands)

| Capital Stock/Capital Shares |  | Additional Paid-In Capital |  | Retained Earnings |  | Accumulated Other Comprehensive Income (Loss) |  | Total Shareholders’ Equity
Balance at December 31, 2012 | $ | 16,904 |  |  | $ | 74,272 |  |  | $ | 405,029 |  |  | $ | (57,808 | ) |  | $ | 438,397 |
Net income | — |  |  | — |  |  | 38,305 |  |  | — |  |  | 38,305 |
Other comprehensive income (loss) | — |  |  | — |  |  | — |  |  | 46,358 |  |  | 46,358 |
Stock options exercised | 859 |  |  | 31,567 |  |  | — |  |  | — |  |  | 32,426 |
Stock issued to directors | 15 |  |  | (15 | ) |  | — |  |  | — |  |  | — |
Shares issued for employees stock purchase plan | 24 |  |  | 710 |  |  | — |  |  | — |  |  | 734 |
Shares issued for restricted stock | 53 |  |  | (1,350 | ) |  | — |  |  | — |  |  | (1,297 | )
Stock-based compensation expense | — |  |  | 5,393 |  |  | — |  |  | — |  |  | 5,393 |
Balance at December 31, 2013 | 17,855 |  |  | 110,577 |  |  | 443,334 |  |  | (11,450 | ) |  | 560,316 |
Net income | — |  |  | — |  |  | 53,412 |  |  | — |  |  | 53,412 |
Other comprehensive income (loss) | — |  |  | — |  |  | — |  |  | (53,644 | ) |  | (53,644 | )
Stock options exercised | 465 |  |  | 20,048 |  |  | — |  |  | — |  |  | 20,513 |
Stock issued to directors | 16 |  |  | (16 | ) |  | — |  |  | — |  |  | — |
Shares issued for employees stock purchase plan | 16 |  |  | 677 |  |  | — |  |  | — |  |  | 693 |
Shares issued for restricted stock | 52 |  |  | (1,594 | ) |  | — |  |  | — |  |  | (1,542 | )
Stock-based compensation expense | — |  |  | 7,533 |  |  | — |  |  | — |  |  | 7,533 |
Balance at December 31, 2014 | 18,404 |  |  | 137,225 |  |  | 496,746 |  |  | (65,094 | ) |  | 587,281 |
Net income | — |  |  | — |  |  | 46,320 |  |  | — |  |  | 46,320 |
Other comprehensive income (loss) | — |  |  | — |  |  | — |  |  | (23,364 | ) |  | (23,364 | )
Stock options exercised | 175 |  |  | 6,792 |  |  | — |  |  | — |  |  | 6,967 |
Stock issued to directors | 16 |  |  | (16 | ) |  | — |  |  | — |  |  | — |
Shares issued for employees stock purchase plan | 13 |  |  | 714 |  |  | — |  |  | — |  |  | 727 |
Shares issued for restricted stock | 77 |  |  | (2,817 | ) |  | — |  |  | — |  |  | (2,740 | )
Shares repurchased | (728 | ) |  | (39,265 | ) |  | — |  |  | — |  |  | (39,993 | )
Tax shortfalls on share-based compensation | — |  |  | (259 | ) |  | — |  |  | — |  |  | (259 | )
Stock-based compensation expense | — |  |  | 9,643 |  |  | — |  |  | — |  |  | 9,643 |
Balance at December 31, 2015 | $ | 17,957 |  |  | $ | 112,017 |  |  | $ | 543,066 |  |  | $ | (88,458 | ) |  | $ | 584,582 |

The accompanying notes are an integral part of the consolidated financial statements.
47

CONSOLIDATED STATEMENTS OF CASH FLOWS
For each of the fiscal years in the three-year period ended December 31, 2015
(Dollars in thousands)

| December 31, 2015 |  | December 31, 2014 |  | December 31, 2013
Operating Activities: |  |  |  |  |
Net income | $ | 46,320 |  |  | $ | 53,412 |  |  | $ | 38,305 |
Income from discontinued operations | — |  |  | — |  |  | (102 | )
Adjustments to reconcile net income to cash from operating activities: |  |  |  |  |  |  |  |
Depreciation and amortization | 34,054 |  |  | 26,268 |  |  | 26,351 |
Stock-based compensation expense | 9,643 |  |  | 7,533 |  |  | 5,393 |
Deferred income taxes | 3,668 |  |  | 8,435 |  |  | 5,927 |
Equity in income of unconsolidated joint ventures | (2,890 | ) |  | (4,123 | ) |  | (4,326 | )
Dividends received from unconsolidated joint ventures | 3,463 |  |  | 3,849 |  |  | 5,162 |
Pension and postretirement benefits | (1,512 | ) |  | 1,976 |  |  | 5,118 |
Loss from the disposal of property, plant and equipment | 295 |  |  | (69 | ) |  | (7 | )
Impairment of assets/investments | 150 |  |  | — |  |  | 4,620 |
Loss on disposition of a business | 4,819 |  |  | — |  |  | — |
Changes in operating assets and liabilities excluding effects of acquisition and disposition of businesses: |  |  |  |  |  |  |
Accounts receivable | 10,056 |  |  | (10,188 | ) |  | (2,727 | )
Inventories | (10,608 | ) |  | (6,054 | ) |  | 6,351 |
Pension contribution | (7,737 | ) |  | (14,645 | ) |  | (13,751 | )
Other current assets | (1,278 | ) |  | 1,063 |  |  | 639 |
Accounts payable and other accrued expenses | (17,632 | ) |  | 16,638 |  |  | 9,020 |
Other, net | 3,111 |  |  | 1,112 |  |  | (8,806 | )
Net cash provided by operating activities of continuing operations | 73,922 |  |  | 85,207 |  |  | 77,167 |
Net cash provided by operating activities of discontinued operations | — |  |  | — |  |  | 848 |
Net cash provided by operating activities | 73,922 |  |  | 85,207 |  |  | 78,015 |
Investing Activities: |  |  |  |  |  |  |
Capital expenditures | (24,837 | ) |  | (28,755 | ) |  | (16,859 | )
Proceeds from life insurance | 2,682 |  |  | — |  |  | — |
Loss from the sale of property, plant and equipment, net | — |  |  | 69 |  |  | 7 |
Other investing activities | (1,000 | ) |  | 166 |  |  | (127 | )
Proceeds from the sale of a business | 1,265 |  |  | — |  |  | — |
Acquisition of business, net of cash received | (158,407 | ) |  | — |  |  | — |
Net cash used in investing activities | (180,297 | ) |  | (28,520 | ) |  | (16,979 | )
Financing Activities: |  |  |  |  |  |  |
Proceeds from long term borrowings | 125,000 |  |  | — |  |  | — |
Repayment of debt principal and long term lease obligation | (6,641 | ) |  | (17,797 | ) |  | (21,206 | )
Debt issuance costs | (293 | ) |  | — |  |  | — |
Repurchases of capital stock | (39,993 | ) |  | — |  |  | — |
Proceeds from issuance of capital stock, net | 6,967 |  |  | 20,513 |  |  | 32,426 |
Issuance of restricted stock | (2,740 | ) |  | (1,542 | ) |  | (1,297 | )
Proceeds from issuance of shares to employee stock purchase plan | 727 |  |  | 693 |  |  | 734 |
Net cash provided by financing activities | 83,027 |  |  | 1,867 |  |  | 10,657 |
Effect of exchange rate fluctuations on cash | (9,441 | ) |  | (13,063 | ) |  | 5,328 |
Net (decrease) increase in cash and cash equivalents | (32,789 | ) |  | 45,491 |  |  | 77,021 |
Cash and cash equivalents at beginning of year | 237,375 |  |  | 191,884 |  |  | 114,863 |
Cash and cash equivalents at end of year | $ | 204,586 |  |  | $ | 237,375 |  |  | $ | 191,884 |

The accompanying notes are an integral part of the consolidated financial statements.
48

ROGERS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 ‑ ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
For all periods and amounts presented, reclassifications have been made for discontinued operations. In the fourth quarter of 2012, the operations of the non-woven composite materials operating segment (aggregated in Other business) ended and the segment qualified as a discontinued operation. See Note 18, "Discontinued Operations" for further discussion. In 2015, the we changed our method for accounting for certain inventory items from the last in, first out (LIFO) method to the first in, first out (FIFO) method. Adjustments have been made to all periods and amounts presented to appropriately reflect the retrospective application of this accounting change. See the discussion below entitled "Inventories" for further information.
The preparation of financial statements, in conformity with accounting principles generally accepted in the United States, 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.
Organization
Our reporting structure is comprised of the following operating segments: Advanced Connectivity Solutions (ACS), Elastomeric Material Solutions (EMS) and Power Electronics Solutions (PES). The remaining operations are reported under our Other business.
In 2015, we updated the names of two of our segments to better align with their product portfolios: our “Printed Circuit Materials” segment was renamed to “Advanced Connectivity Solutions,” and our “High Performance Foams” segment was renamed to “Elastomeric Material Solutions.”

• | Advanced Connectivity Solutions

Our ACS segment designs, develops, manufactures and sells circuit materials enabling high-performance and high-reliability connectivity for applications including communications infrastructure (e.g., cellular communication antennas and equipment), automotive (e.g., advanced driver assistance systems and global positioning applications), consumer electronics and aerospace/defense. We sell our circuit materials under various tradenames, including RO3000®, RO4000®, RT/duroid®, ULTRALAM®, RO2800®, LoPro®, COOLSPAN® and TMM®. In January 2015, we acquired the Arlon business, and subsequently integrated a portion of the product portfolio into the ACS segment operations and products that expanded the segment’s product portfolio, market reach and customer base, particularly in the RF antenna business.
Our ACS segment has manufacturing and administrative facilities in Chandler, Arizona; Rogers, Connecticut; Bear, Delaware; Evergem, Belgium; and Suzhou, China.

• | Elastomeric Material Solutions

Our EMS segment designs, develops, manufactures and sells elastomeric material solutions for critical cushioning, sealing, impact protection and vibration management applications including general industrial, portable electronics (e.g., mobile internet devices), consumer goods (e.g., protective sports equipment), automotive, mass transportation, construction and printing applications. We sell our elastomeric materials under various trade names, including PORON®, XRD®, BISCO® and eSORBA®. In January 2015, we acquired the Arlon business, and subsequently integrated a portion of the product portfolio into the EMS segment operations and products that expanded the segment’s product portfolio, market reach and customer base, particularly in the engineered silicones for sealing and insulation applications.
Our EMS segment has administrative and manufacturing facilities in Woodstock, Connecticut; Rogers, Connecticut; Bear, Delaware; Carol Stream, Illinois; and Suzhou, China. We also own 50% of (1) Rogers Inoac Corporation (RIC), a joint venture that was established in Japan 1989 to design, develop, manufacture and sell PORON products predominantly for the Japanese market and (2) Rogers INOAC Suzhou Corporation (RIS) that was established in China in 2004 to design, develop, manufacture and sell PORON products primarily for RIC customers in China. INOAC Corporation owns the remaining 50% of both RIC and RIS. RIC has manufacturing facilities at INOAC facilities in Nagoya and Mie, Japan, and RIS has manufacturing facilities at Rogers’ facilities in Suzhou, China.
49

• | Power Electronics Solutions

Our PES segment designs, develops, manufactures and sells ceramic substrate materials for power module applications (e.g., variable frequency drives, vehicle electrification and renewable energy), laminated bus bars 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® tradename, and our bus bars under the ROLINX® tradename.
Our PES segment has administrative and manufacturing facilities in Ghent, Belgium; Eschenbach, Germany; Budapest, Hungary; and Suzhou, China.

• | Other

Other business consists of elastomeric components for applications in ground transportation, office equipment, consumer and other markets; elastomeric floats for level sensing in fuel tanks, motors, and storage tanks; and inverters for portable communications and automotive markets. The Arlon polyimide and thermoset laminate business, which was sold in December 2015, was also included within our Other businesses in 2015.
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, all 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 at the average exchange rates for the year. Resulting translation adjustments for those entities that operate under the local currency are made directly to a separate component of shareholders' equity, while remeasurement adjustments for those entities that operate under the parent's functional currency are made 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 a gain of $0.3 million in 2015 and a loss of $0.7 million in 2013. There were no material foreign currency transaction gains/losses in 2014.
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 management's estimates and takes into consideration historical trends, market conditions and the composition of our customer base.
Inventories
Inventories are valued at the lower of cost or market. Effective October 1, 2015, the Company changed its method for inventory costing from the last in, first out (LIFO) cost method to the first in, first out (FIFO) cost method for all operations that were using the LIFO cost method. This change in accounting method was deemed preferable because this change causes inventory to be valued on a consistent basis throughout the entire Company and on a more comparable basis with industry peer companies.
This change in accounting method was completed in accordance with Accounting Standards Codification (ASC) 250 Accounting changes and error corrections, and all periods presented have been retrospectively adjusted to reflect the period-specific effects of applying the new accounting principle. The cumulative effect of this change to the new accounting principle, on periods prior to those presented, resulted in an increase in retained earnings of $4.2 million as of December 31, 2012, as presented in this Form 10-K.
50

The following table summarizes the effect of this accounting change on the Company’s consolidated statements of operations for each of the two years ended December 31, 2014 and 2013:

(Dollars in thousands, except per share amounts) |  | As Originally Reported under LIFO |  | As Adjusted under FIFO |  | Effect of Change
2013 |  |  |  |  |  |
Cost of Sales |  | $ | 349,782 |  |  | $ | 348,945 |  |  | $ | (837 | )
Income from continuing operations |  | $ | 37,659 |  |  | $ | 38,203 |  |  | $ | 544 |
Net income |  | $ | 37,761 |  |  | $ | 38,305 |  |  | $ | 544 |
Basic earnings per share |  | $ | 2.20 |  |  | $ | 2.23 |  |  | $ | 0.03 |
Diluted earnings per share |  | $ | 2.13 |  |  | $ | 2.16 |  |  | $ | 0.03 |
2014 |  |  |  |  |  |
Cost of Sales |  | $ | 376,972 |  |  | $ | 376,158 |  |  | $ | (814 | )
Income from continuing operations |  | $ | 52,883 |  |  | $ | 53,412 |  |  | $ | 529 |
Net income |  | $ | 52,883 |  |  | $ | 53,412 |  |  | $ | 529 |
Basic earnings per share |  | $ | 2.91 |  |  | $ | 2.94 |  |  | $ | 0.03 |
Diluted earnings per share |  | $ | 2.83 |  |  | $ | 2.86 |  |  | $ | 0.03 |

There was no impact on cash provided by operating activities as a result of the above changes.
Inventories consisted of the following:

(Dollars in thousands) | December 31, 2015 |  | December 31, 2014 (1)
Raw materials | $ | 35,499 |  |  | $ | 29,980 |
Work-in-process | 22,804 |  |  | 18,537 |
Finished goods | 33,521 |  |  | 28,289 |
Total Inventory | $ | 91,824 |  |  | $ | 76,806 |

(1) Inventory amounts have been adjusted for the 2015 conversion from LIFO to FIFO as discussed above.
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:

| Years
Buildings and improvements | 30-40
Machinery and equipment | 5-15
Office equipment | 3-10

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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 included in property, plant and equipment on our consolidated statement of financial position and 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 $6.7 million and $3.4 million for the years ended December 31, 2015 and 2014, respectively. Capitalized software is included within "Property, plant and equipment, net of accumulated depreciation" in the consolidated statements of financial position.
Goodwill and Intangible Assets
Intangible assets are classified into three categories: (1) intangible assets with definite lives subject to amortization; (2) intangible assets with indefinite lives not subject to amortization; and (3) goodwill. We review goodwill, which has an indefinite life, and intangible assets with indefinite lives for impairment annually and/or if events or changes in circumstances indicate the carrying value of an asset may have been impaired. We review intangible assets with definite lives for impairment whenever conditions exist that indicate the carrying value may not be recoverable.
Goodwill and indefinite lived intangible assets are assessed for impairment by comparing the net book value of a reporting unit to its estimated fair value. Fair values are estimated using a discounted cash flow methodology. The determination of discounted cash flows is based on the reporting unit's strategic plans and long-term operating forecasts. The revenue growth rates included in the plans are management's best estimates based on current and forecasted market conditions, and the profit margin assumptions are projected by each segment based on the current cost structure and expected strategic changes to the cost structure.
Purchased or acquired patents, covenants-not-to-compete, customer relationships and licensed technology are capitalized and amortized on a straight-line over their estimated useful lives.
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. 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 periodically perform a formal analysis to determine potential future liability and related insurance coverage for asbestos-related matters. Projecting future asbestos costs is subject to numerous variables that are extremely difficult to predict, including the number of claims that might be received, the type and severity of the disease alleged by each claimant, the long latency period associated with asbestos exposure, dismissal rates, 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 variables are subject to even greater uncertainty as the projection period lengthens.
The models developed for determining the potential exposure and related insurance coverage were developed by outside consultants deemed to be experts in their respective fields with the forecast for asbestos related liabilities generated by National Economic Research Associates, Inc. (NERA) and the related insurance receivable projections developed by Marsh Risk Consulting (Marsh). The models contain numerous assumptions that significantly impact the results generated by the models. We believe the assumptions made are reasonable at the present time, but are subject to uncertainty based on the actual future outcome of our asbestos litigation. We determined that a ten-year projection period is appropriate as we have experience in addressing asbestos related lawsuits over the last few years to use as a baseline to project the liability over ten years. However, we do not believe we have sufficient data to justify a longer projection period at this time.
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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 values of our long-term debt are determined using discounted cash flows based upon the our estimated current interest cost for similar type borrowings or current market value, which falls under Level 2 of the fair value hierarchy. The carrying values of the long-term debt approximate fair market value.
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. At December 31, 2015 and 2014, there were no customers that individually accounted for more than ten percent 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 2015, 2014 or 2013.
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 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. 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 U.S. and in numerous foreign jurisdictions. The Company accounts for income taxes following ASC 740 (Accounting for 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.
U.S. income taxes have not been provided on $179.1 million of undistributed earnings of foreign subsidiaries since it is the Company’s intention to permanently reinvest such earnings or to distribute them only when it is tax efficient to do so. It is impracticable to estimate the total tax liability, if any, that would be created by the future distribution of these earnings. If circumstances change and it becomes apparent that some, or all of the undistributed earnings as of December 31, 2015 will not be indefinitely reinvested, the provision for the tax consequences, if any, will be recorded in the period when circumstances change. Distributions out of current and future earnings are permissible to fund discretionary activities such as business acquisitions. However, when distributions are made, this could result in a higher effective tax rate.
We record benefits for uncertain tax positions based on an assessment of whether it is more likely than not that the tax positions will be sustained by the taxing authorities. 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 in the accompanying consolidated statements of operations. Accrued interest and penalties are included within the related tax liability line in the consolidated statements of financial position.
Revenue Recognition
We recognize revenue when all of the following criteria are met: (1) we have entered into a binding agreement, (2) the product has shipped and title and risk of ownership have passed, (3) the sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured. We consider that the criteria for revenue recognition have been met upon shipment of the finished product, based on the majority of our shipping terms. 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. As appropriate, we record estimated reductions to revenue for customer returns and allowances and warranty claims. Provisions for such allowances are made at the time of sale and are typically derived from historical trends and other relevant information.
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Shipping and Handling Charges
Costs that we incur for shipping and handling charges are charged to “Cost of sales” and payments received from our customers for shipping and handling charges are included in “Net sales” on our consolidated statements of operations.
Pension and Retiree Health Care and Life Insurance 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.
Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share:

(In thousands, except per share amounts) | 2015 |  | 2014 |  | 2013
Numerator: |  |  |  |  |
Net income from continuing operations | $ | 46,320 |  |  | $ | 53,412 |  |  | $ | 38,203 |
Denominator: |  |  |  |  |
Weighted-average shares outstanding - basic | 18,371 |  |  | 18,177 |  |  | 17,198 |
Effect of dilutive shares | 309 |  |  | 521 |  |  | 570 |
Weighted-average shares outstanding - diluted | 18,680 |  |  | 18,698 |  |  | 17,768 |
Basic income from continuing operations per share: | $ | 2.52 |  |  | $ | 2.94 |  |  | $ | 2.22 |
Diluted income from continuing operations per share: | $ | 2.48 |  |  | $ | 2.86 |  |  | $ | 2.15 |

Certain potential 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 2015, 44,350 shares were excluded. No shares were excluded in 2014 or 2013.
Hedging Activity
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 foreign currency commitments or forecasted commodity purchases are accounted for as cash flow hedges. For those derivative instruments that qualify for hedge accounting treatment, gains and losses are recorded in other comprehensive income and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedged transactions. The ineffective portion of all hedges, if any, is recognized currently in 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."
Advertising Costs
Advertising is expensed as incurred and amounted to $3.2 million for 2015, $3.3 million for 2014 and $2.9 million for 2013.
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Equity Compensation
Stock-based compensation is comprised of stock options and restricted stock. Stock options are measured at the grant date, based on the grant-date fair value of the awards ultimately expected to vest and, in most cases, is recognized as an expense on a straight-line basis over the vesting period, which is typically four years. A provision in our stock option agreements requires us to accelerate the expense for retirement eligible employees, as any unvested options would immediately vest upon retirement for such employees. We develop estimates used in calculating the grant-date fair value of stock options to determine the amount of stock-based compensation to be recorded. We calculate the grant-date fair value using the Black-Scholes valuation model. The use of this valuation model requires estimates of assumptions such as expected volatility, expected term, risk-free interest rate, expected dividend yield and forfeiture rates.
Performance-based restricted stock compensation expense is based on achievement of certain performance and service conditions. The fair value of the awards is determined based on the market value of the underlying stock price at the grant date and marked to market over the vesting period based on probabilities and projections of the underlying performance measures.
Time-based restricted stock compensation awards are expensed over the vesting period, which is typically three years. The fair value of the awards is determined based on the market value of the underlying stock price at the grant date.
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.

• | 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.

From time to time we enter into various instruments that require fair value measurement, including foreign currency contracts, interest rate swaps and copper derivative contracts. Assets measured at fair value on a recurring basis, categorized by the level of inputs used in the valuation, include:

(Dollars in thousands) | Carrying amount as of December 31, 2015 |  | Level 1 |  | Level 2 |  | Level 3
Foreign currency contracts | $ | (78 | ) |  | $ | — |  |  | $ | (78 | ) |  | $ | — |
Copper derivative contracts | $ | 193 |  |  | $ | — |  |  | $ | 193 |  |  | $ | — |
Interest rate swap | $ | (18 | ) |  | $ | — |  |  | $ | (18 | ) |  | $ | — |

(Dollars in thousands) | Carrying amount as of December 31, 2014 |  | Level 1 |  | Level 2 |  | Level 3
Foreign currency contracts | $ | (18 | ) |  | $ | — |  |  | $ | (18 | ) |  | $ | — |
Copper derivative contracts | $ | 355 |  |  | $ | — |  |  | $ | 355 |  |  | $ | — |
Interest rate swap | $ | (144 | ) |  | $ | — |  |  | $ | (144 | ) |  | $ | — |

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The following table presents information about our assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2015, aggregated by the level in the fair value hierarchy within which those measurements fall. This Level 3 asset represents the investment in BrightVolt, Inc. (formerly known as Solicore, Inc.) The valuation is based on our evaluation of BrightVolt's financial performance through December 31, 2015 and the most recent round of capital financing that was initiated in the first quarter of 2015. See Note 9, "Investment" for further details.

(Dollars in thousands) | Carrying amount as of December 31, 2015 |  | Level 1 |  | Level 2 |  | Level 3
BrightVolt investment | $ | 341 |  |  | $ | — |  |  | $ | — |  |  | $ | 341 |

There were no changes in the fair value of the BrightVolt investment Level 3 asset for the year ended December 31, 2015.
Derivatives Contracts
We are exposed to certain risks relating to our ongoing business operations. The primary risks being managed through the use of derivative instruments are interest rate risk, foreign currency exchange rate risk and commodity pricing risk (particularly related to copper).
Foreign Currency - The fair value of any foreign currency option derivatives 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 (Copper) - The fair value of copper derivatives is computed using a combination of intrinsic and time value valuation models. The intrinsic valuation model reflects the difference between the strike price of the underlying copper derivative instrument and the current prevailing copper prices in an over-the-counter market at period end. The time value valuation model incorporates the constant changes in the price of the underlying copper derivative instrument, the time value of money, the underlying copper derivative instrument's strike price and the remaining time to the underlying copper derivative instrument's expiration date from the period end date. Overall, fair value is a function of five primary variables: price of the underlying instrument, time to expiration, strike price, interest rate, and volatility.
Interest Rates - The fair value of our 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 counterparty's credit ratings.
We do not use derivative financial instruments for trading or speculation purposes.
For further discussion on our derivative contracts, see Note 3, "Hedging Transactions and Derivative Financial Instruments."
NOTE 3 – HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS
The guidance for the accounting and disclosure of derivatives and hedging transactions requires companies to recognize all of their derivative instruments as either assets or liabilities at fair value in the consolidated 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 (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. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of the future cash flows of the hedged item (i.e., the ineffective portion) if any, is recognized in the earnings during the current period. There was no material ineffectiveness for the year ended December 31, 2015, 2014 or 2013.
As of December 31, 2015, we have twenty-four outstanding contracts to hedge our exposure related to the purchase of copper by our Power Electronics Solutions and Advanced Connectivity Solutions operating segments. These contracts are held with financial institutions and minimize our risk associated with a potential rise in copper prices. These contracts cover the 2016 and 2017 monthly
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copper exposure and do not qualify for hedge accounting treatment; therefore, any mark-to-market adjustments required on these contracts are recorded in the "Other income, net" line item in our consolidated statements of operations.
In 2015, we entered into Euro, Japanese Yen, U.S Dollar, South Korean Won, Great Britain Pound and Chinese Yuan currency forward contracts. We entered into these foreign currency forward contracts to mitigate certain global balance sheet exposures. Mark-to-market adjustments required on the contracts that do not qualify for hedge accounting treatment are recorded in the "Other income, net" line item in our consolidated statements of operations.
We have an interest rate swap to hedge the variable interest rate on our term loan debt. As of December 31, 2015, the remaining notional amount of the interest rate swap covers $16.2 million of our term loan debt. This transaction has been designated as a cash flow hedge and qualifies for hedge accounting treatment.

Notional Value of Copper Derivatives
January 2016- March 2016 | 150 metric tons per month
April 2016 - June 2016 | 130 metric tons per month
July 2016 - September 2016 | 127 metric tons per month
October 2016 - December 2016 | 117 metric tons per month
January 2017 - March 2017 | 16 metric tons per month

Notional Values of Foreign Currency Derivatives
YEN/USD | ¥ | 155,000,000 |
USD/KRW | ₩ | 7,580,028,000 |
CNY/EUR | ¥ | 14,000,000 |
EUR/GBP | € | 408,291 |
CNY/USD | ¥ | 45,000,000 |
USD/EUR | $ | 400,000 |
YEN/EUR | ¥ | 160,000,000 |
EUR/CNH | € | 363,029 |

(Dollars in thousands) |  | The Effect of Current Derivative Instruments on the Financial Statements for the year ended December 31, 2015 |  | Fair Values of Derivative Instruments as of December 31, 2015
Foreign Exchange Contracts |  | Location of gain (loss) |  | Amount of gain (loss) |  | Other Assets (Liabilities)
Contracts not designated as hedging instruments |  | Other income (expense), net |  | $ | (78 | ) |  | $ | (78 | )
Copper Derivative Instruments |  |  |  |  |  |  |  |
Contracts not designated as hedging instruments |  | Other income (expense), net |  | (666 | ) |  | 193 |
Interest Rate Swap Instrument |  |  |  |  |  |
Contracts designated as hedging instruments |  | Other comprehensive income (loss) |  | 126 |  |  | (18 | )

(Dollars in thousands) |  | The Effect of Current Derivative Instruments on the Financial Statements for the year ended December 31, 2014 |  | Fair Values of Derivative Instruments as of December 31, 2014
Foreign Exchange Contracts |  | Location of gain (loss) |  | Amount of gain (loss) |  | Other Assets (Liabilities)
Contracts not designated as hedging instruments |  | Other income (expense), net |  | $ | (18 | ) |  | $ | (18 | )
Copper Derivative Instruments |  |  |  |  |  |  |  |
Contracts not designated as hedging instruments |  | Other income (expense), net |  | (605 | ) |  | 355 |
Interest Rate Swap Instrument |  |  |  |  |  |  |  |
Contracts designated as hedging instruments |  | Other comprehensive income (loss) |  | 152 |  |  | (144 | )

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NOTE 4 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The changes in accumulated other comprehensive income (loss) by component for the year ended December 31, 2015 were as follows:

(Dollars in thousands) | Foreign currency translation adjustments |  | Funded status of pension plans and other postretirement benefits (1) |  | Unrealized gain (loss) on derivative instruments (2) |  | Total
Beginning Balance December 31, 2014 | $ | (14,193 | ) |  | $ | (50,808 | ) |  | $ | (93 | ) |  | $ | (65,094 | )
Other comprehensive income before reclassifications | (27,172 | ) |  | — |  |  | (2 | ) |  | (27,174 | )
Actuarial net gain (loss) incurred in the fiscal year | — |  |  | 2,760 |  |  | — |  |  | 2,760 |
Amounts reclassified from accumulated other comprehensive income | — |  |  | 966 |  |  | 84 |  |  | 1,050 |
Net current-period other comprehensive income | (27,172 | ) |  | 3,726 |  |  | 82 |  |  | (23,364 | )
Ending Balance December 31, 2015 | $ | (41,365 | ) |  | $ | (47,082 | ) |  | $ | (11 | ) |  | $ | (88,458 | )

(1) Net of taxes of $9,879 and $11,952 for the periods ended December 31, 2015 and December 31, 2014, respectively.
(2) Net of taxes of $5 and $50 for the periods ended December 31, 2015 and December 31, 2014, respectively.
The changes in accumulated other comprehensive income (loss) by component for the year ended December 31, 2014 were as follows:

(Dollars in thousands) | Foreign currency translation adjustments |  | Funded status of pension plans and other postretirement benefits (3) |  | Unrealized gain (loss) on derivative instruments (4) |  | Total
Beginning Balance December 31, 2013 | $ | 22,756 |  |  | $ | (33,997 | ) |  | $ | (209 | ) |  | $ | (11,450 | )
Other comprehensive income before reclassifications | (36,949 | ) |  | — |  |  | (93 | ) |  | (37,042 | )
Actuarial net gain (loss) incurred in the fiscal year | — |  |  | (20,715 | ) |  | — |  |  | (20,715 | )
Amounts reclassified from accumulated other comprehensive income | — |  |  | 3,904 |  |  | 209 |  |  | 4,113 |
Net current-period other comprehensive income | (36,949 | ) |  | (16,811 | ) |  | 116 |  |  | (53,644 | )
Ending Balance December 31, 2014 | $ | (14,193 | ) |  | $ | (50,808 | ) |  | $ | (93 | ) |  | $ | (65,094 | )

(3) Net of taxes of $11,952 and $2,900 for the periods ended December 31, 2014 and December 31, 2013, respectively.
(4) Net of taxes of $50 and $110 for the periods ended December 31, 2014 and December 31, 2013, respectively.
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The reclassifications out of accumulated other comprehensive income (loss) for the year ended December 31, 2015 were as follows:

Details about accumulated other comprehensive income components | Amounts reclassified from accumulated other comprehensive income (loss) for the period ended December 31, 2015 | Affected line item in the statement where net income is presented
Unrealized gains and losses on derivative instruments: |  |  |
| $ | 129 |  |  | Other income (expense), net
| (45 | ) |  | Tax benefit (expense)
| $ | 84 |  |  | Net of tax
Amortization of defined benefit pension and other post-retirement benefit items: |  |  |
Actuarial losses | $ | 1,486 |  |  | Total before tax (5)
| (520 | ) |  | Tax benefit (expense)
| $ | 966 |  |  | Net of tax

(5) These accumulated other comprehensive income components are included in the computation of net periodic pension cost. See Note 10 - "Pension Benefits and Retirement Health and Life Insurance Benefits" for additional details.
The reclassifications out of accumulated other comprehensive income (loss) for the year ended December 31, 2014 were as follows:

Details about accumulated other comprehensive income components | Amounts reclassified from accumulated other comprehensive income (loss) for the period ended December 31, 2014 | Affected line item in the statement where net income is presented
Unrealized gains and losses on derivative instruments: |  |  |
| $ | 321 |  |  | Realized gain (loss)
| (112 | ) |  | Tax benefit (expense)
| $ | 209 |  |  | Net of tax
Amortization of defined benefit pension and other post-retirement benefit items: |  |  |
Actuarial losses | $ | 6,006 |  |  | (6) Total before tax
| (2,102 | ) |  | Tax benefit (expense)
| $ | 3,904 |  |  | Net of tax

(6) These accumulated other comprehensive income components are included in the computation of net periodic pension cost. See Note 10 - "Pension Benefits and Other Postretirement Benefit Plans" for additional details.
NOTE 5 - ACQUISITION
On January 22, 2015, we completed the acquisition of Arlon and its subsidiaries, other than Arlon India (Pvt) Limited (collectively, “Arlon”), pursuant to the terms of the Stock Purchase Agreement, dated December 18, 2014, by and among the Company, Handy & Harman Group, Ltd. (“H&H Group”) and its subsidiary Bairnco Corporation (“Bairnco”), as amended, (the “Purchase Agreement”).
Pursuant to the terms of the Purchase Agreement, we acquired Arlon and assumed certain liabilities related to the acquisition for an aggregate purchase price of approximately $157 million. We used borrowings of $125.0 million under our bank credit facility in addition to cash on hand to fund the acquisition.
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Arlon manufactures high performance materials for the printed circuit board industry and silicone rubber-based materials. The acquisition of Arlon and its integration into our operating segments is expected to provide increased scale and complementary product offerings, allowing us to enhance our ability to support our customers.
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 the existing workforce. We also recorded intangible assets related to trademarks, technology and customer relationships. As of the filing date of this Form 10-K, the process of valuing the net assets of the business is complete. The following table represents the fair market values assigned to the acquired assets and liabilities in the transaction:

(Dollars in thousands) | January 22, 2015
Assets: |
Cash | $ | 142 |
Accounts receivable | 17,301 |
Other current assets | 856 |
Inventory | 9,916 |
Deferred income tax assets, current | 1,084 |
Property, plant & equipment | 30,667 |
Intangible assets | 50,020 |
Goodwill | 85,803 |
Other long-term assets | 106 |
Total assets | 195,895 |
Liabilities: |  |
Accounts payable | 4,958 |
Other current liabilities | 4,385 |
Deferred tax liability | 23,463 |
Other long-term liabilities | 4,540 |
Total liabilities | 37,346 |
Fair value of net assets acquired | $ | 158,549 |

The intangible assets consist of developed technology valued at $15.8 million, customer relationships valued at $32.7 million and trademarks valued at $1.6 million. The fair value of acquired identified 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.
The weighted average amortization period for the intangible asset classes are 5.7 years for developed technology, 6.0 years for customer relationships and 3.2 years for trademarks, resulting in amortization expenses ranging from $1.8 million to $5.8 million annually. The estimated annual future amortization expense is $5.8 million for each of the years ending 2016, 2017, 2018 and 2019.
During 2015, we incurred transaction costs of $1.5 million, which were recorded within selling, general and administrative expenses on the consolidated statements of operations.
The results of Arlon have been included in our consolidated financial statements only for the period subsequent to the completion of our acquisition. Arlon's revenues for the year ended December 31, 2015 totaled $100.0 million. Arlon's net operating income for the year ended December 31, 2015 totaled $24.7 million.
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The following unaudited pro forma financial information presents the combined results of operations of Rogers and Arlon for the year and quarter ended December 31, 2014, as if the acquisition had occurred on January 1, 2014. 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 Arlon acquisition been completed as of January 1, 2014 and should not be taken as indicative of our future consolidated results of operations.

| December 31, 2014
(Dollars in thousands) | Year ended | Quarter ended
Net sales | $ | 714,303 |  | $ | 173,633 |
Net income | $ | 63,751 |  | $ | 8,814 |

On December 21, 2015 we sold an Arlon business, which makes polyimide and thermoset epoxy laminate products. This operation was acquired as part of our acquisition of Arlon. The operations were previously reported with our Other business. We received proceeds of $1.3 million and recognized a loss of $4.8 million, which was recorded in "Other income (expense), net" within the consolidated statements of operations. The assets of this business were reported as assets held for sale in the third quarter of 2015.
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

(Dollars in thousands) | December 31, 2015 |  | December 31, 2014
Land | $ | 16,726 |  |  | $ | 14,045 |
Buildings and improvements | 141,082 |  |  | 132,105 |
Machinery and equipment | 191,459 |  |  | 165,979 |
Office equipment | 42,696 |  |  | 36,810 |
| 391,963 |  |  | 348,939 |
Accumulated depreciation | (237,150 | ) |  | (225,092 | )
Property, plant and equipment, net | 154,813 |  |  | 123,847 |
Equipment in process | 23,848 |  |  | 26,573 |
Total property, plant and equipment, net | $ | 178,661 |  |  | $ | 150,420 |

Depreciation expense was $23.2 million in 2015, $20.1 million in 2014, and $20.4 million in 2013. As part of the acquisition of Curamik in 2011, we acquired a capital lease on its facility in Eschenbach, Germany. The total obligation recorded for the lease as of December 31, 2015 and 2014 was $5.8 million and $6.8 million, respectively. Depreciation expense related to the capital lease was $0.3 million, $0.4 million and $0.4 million for the years ending December 31, 2015, 2014 and 2013, respectively. Accumulated depreciation for the capital lease as of December 31, 2015 and 2014 was $1.9 million and $1.6 million, respectively.
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NOTE 7 – GOODWILL AND INTANGIBLE ASSETS
Intangible Assets
The changes in the carrying amount of other intangible assets for the period ending December 31, 2015, were as follows:

| December 31, 2015 |  | December 31, 2014
(Dollars in thousands) | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Trademarks and patents | $ | 2,543 |  |  | $ | 718 |  |  | $ | 1,825 |  |  | $ | 1,046 |  |  | $ | 364 |  |  | $ | 682 |
Technology | 47,724 |  |  | 19,681 |  |  | 28,043 |  |  | 33,942 |  |  | 15,958 |  |  | 17,984 |
Covenant-not-to-compete | 943 |  |  | 943 |  |  | — |  |  | 1,016 |  |  | 823 |  |  | 193 |
Customer relationships | 49,948 |  |  | 9,100 |  |  | 40,848 |  |  | 19,123 |  |  | 4,406 |  |  | 14,717 |
Total definite lived intangible assets | 101,158 |  |  | 30,442 |  |  | 70,716 |  |  | 55,127 |  |  | 21,551 |  |  | 33,576 |
Indefinite lived intangible assets | 4,303 |  |  | — |  |  | 4,303 |  |  | 4,764 |  |  | — |  |  | 4,764 |
Total intangible assets | $ | 105,461 |  |  | $ | 30,442 |  |  | $ | 75,019 |  |  | $ | 59,891 |  |  | $ | 21,551 |  |  | $ | 38,340 |

In the table above, gross carrying amounts and accumulated amortization may differ from prior periods due to foreign exchange rate fluctuations.
The indefinite-lived trademark intangible assets were acquired from the acquisition of Curamik. These assets are assessed for impairment annually or when changes in circumstances indicated that the carrying values may be recoverable. The definite-lived intangibles are amortized using a fair value methodology that is based on the projected economic use of the related underlying asset.
On January 22, 2015, we acquired Arlon. For further detail on the goodwill and intangible assets recorded on the acquisition, see Note 5 - Acquisition.
In November 2015, we entered into a technology license agreement with Saber, Inc., which resulted in a $1.0 million intangible asset that will be amortized on a straight-line basis over 5 years.
Amortization expense was approximately $10.9 million, $6.1 million and $6.0 million in 2015, 2014 and 2013, respectively. The estimated annual future amortization expense is $10.6 million, $10.2 million, $9.6 million, $9.1 million and $5.6 million in 2016, 2017, 2018, 2019 and 2020, respectively. These amounts could vary based on changes in foreign currency exchange rates.
The weighted average amortization period as of December 31, 2015, by intangible asset class, is presented in the table below:

Intangible Asset Class |  | Weighted Average Amortization Period
Trademarks and patents |  | 3.7
Technology |  | 4.1
Customer relationships |  | 5.5
Total other intangible assets |  | 4.9

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Goodwill
The changes in the carrying amount of goodwill for the period ending December 31, 2015, by reportable segment, were as follows:

(Dollars in thousands) | Elastomeric Material Solutions |  | Advanced Connectivity Solutions |  | Power Electronics Solutions |  | Other |  | Total
December 31, 2014 | $ | 23,565 |  |  | $ | — |  |  | $ | 72,438 |  |  | $ | 2,224 |  |  | $ | 98,227 |
Arlon acquisition | 33,872 |  |  | 51,931 |  |  | — |  |  | — |  |  | 85,803 |
Foreign currency translation adjustment | (1,168 | ) |  | — |  |  | (7,409 | ) |  | — |  |  | (8,577 | )
December 31, 2015 | $ | 56,269 |  |  | $ | 51,931 |  |  | $ | 65,029 |  |  | $ | 2,224 |  |  | $ | 175,453 |

Annual Impairment Testing
We perform our annual goodwill impairment testing in the fourth quarter of the year. In 2015, we estimated the fair value of our reporting units using an income approach based on the present value of future cash flows. 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 impairment test are reasonable, but inherently uncertain. No impairment charges resulted from these analyses.
We currently have four reporting units with goodwill and intangible assets - Advanced Connectivity Solutions (ACS), Elastomeric Material Solutions (EMS), Curamik and the Elastomer Components Division (ECD). The ACS, EMS, Curamik and ECD reporting units had allocated goodwill of approximately $51.9 million, $56.3 million, $65.0 million and $2.2 million, respectively, at December 31, 2015. No impairment charges resulted from the annual goodwill impairment analysis. The excess of fair value over carrying value for these reporting units was 341.0% for ACS, 208.6% for EMS, 73.8% for Curamik and 232.3% for ECD. These valuations are based on a five year discounted cash flow analysis, which utilized a discount rates ranging from 12.0% for EMS and ECD to 15.3% for Curamik and a terminal year growth rate of 3% for all three reporting units.
NOTE 8 – SUMMARIZED FINANCIAL INFORMATION OF UNCONSOLIDATED JOINT VENTURES
As of December 31, 2015, we had two joint ventures, each 50% owned, which are accounted for under the equity method of accounting.

Joint Venture | Location | Reportable 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

Equity income related to the joint ventures of $2.9 million, $4.1 million and $4.3 million for the years ended December 31, 2015, 2014 and 2013, respectively, is included in the consolidated statements of operations.
The summarized financial information for the joint ventures for the periods indicated was as follows:

(Dollars in thousands) | December 31, 2015 |  | December 31, 2014
Current assets | $ | 28,239 |  |  | $ | 31,155 |
Noncurrent assets | $ | 7,207 |  |  | $ | 9,427 |
Current liabilities | $ | 4,608 |  |  | $ | 6,473 |
Shareholders' equity | $ | 30,838 |  |  | $ | 34,109 |

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| For the years ended
(Dollars in thousands) | December 31, 2015 |  | December 31, 2014 |  | December 31, 2013
Net sales | $ | 43,438 |  |  | $ | 48,259 |  |  | $ | 52,982 |
Gross profit | $ | 11,993 |  |  | $ | 14,277 |  |  | $ | 15,214 |
Net income | $ | 5,753 |  |  | $ | 8,246 |  |  | $ | 8,652 |

Receivables from and payables to joint ventures arise during the normal course of business from transactions between us and the joint ventures. We had receivables of $1.8 million and $1.8 million, as of December 31, 2015 and 2014, respectively, which were included in accounts receivable on our consolidated statements of financial position.
NOTE 9 - INVESTMENT
In the third quarter of 2009, we made a strategic investment of $5.0 million in BrightVolt Inc. (formerly known as Solicore, Inc.), headquartered in Lakeland, Florida. BrightVolt is focused on penetrating the market for embedded power solutions, offering its patented Flexicon advanced ultra-thin, flexible, lithium polymer batteries for smart cards, controlled access cards, RFID tags, and medical devices. We account for this investment under the cost method as we cannot exert significant influence over the business. We also entered into a joint development agreement with BrightVolt to develop the next generation of power solution products using screen printing technology. If this technology is adopted, we will have the option to manufacture a significant portion of the products that result from this collaboration. In the first quarter of 2013, we made an additional investment of $0.1 million in BrightVolt.
During the fourth quarter of 2013, BrightVolt raised additional equity capital through a round of capital financing that decreased our ownership interest in BrightVolt as we did not participate in this round of financing. Further, the financing round was issued at a significantly lower price than when we had initially invested in BrightVolt. In accordance with the applicable accounting guidance, this event represented an indicator of impairment. As a result, we performed an impairment analysis during the fourth quarter of 2013. The valuation was based on an option pricing methodology to estimate the per share value of the equity classes of stock held in BrightVolt. This method utilized a Black-Scholes option pricing model and the analytic process utilized to perform the valuation, which included back solving for the total equity value of BrightVolt. Based on the results of this valuation, there was a significant decline in the fair value of the BrightVolt business, which caused us to recognize an impairment charge on our investment in BrightVolt of approximately $4.6 million. The remaining book value of our investment in BrightVolt as of December 31, 2013 was $0.5 million.
During the fourth quarter of 2014, we determined that BrightVolt continued to have negative business results, in addition to Rogers not participating in the latest round of financing initiated in the fourth quarter of 2014. As a result, we performed an impairment analysis during the fourth quarter of 2014. This valuation was done using the same methodology as performed in 2013, and described above. Based on the results of this valuation, there was a decline in the fair value of the BrightVolt business, which caused us to recognize an impairment charge on our investment in BrightVolt of approximately $0.2 million. The remaining book value of our investment in BrightVolt as of December 31, 2014 was approximately $0.3 million.
During the fourth quarter of 2015, we determined that BrightVolt continued to have negative business results, in addition to Rogers not participating in the latest round of financing initiated in the first quarter of 2015. As a result, we performed an impairment analysis during the fourth quarter of 2015. This valuation was done using the same methodology as performed in 2014, as described above. Based on the results of this valuation, the fair value of BrightVolt was determined to be not further impaired. The remaining book value of our investment in BrightVolt as of December 31, 2015 was approximately $0.3 million.
NOTE 10 – PENSION BENEFITS AND RETIREMENT HEALTH AND LIFE INSURANCE BENEFITS
We have three qualified noncontributory defined benefit pension plans for unionized hourly employees, all other U.S. employees hired before December 31, 2007 and employees of the acquired Arlon business. We also have established a nonqualified unfunded noncontributory defined benefit pension plan 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 plan for certain retirees. The measurement date for all plans is December 31 for each respective plan year.
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We are required, as an employer, to: (a) recognize in our statement 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 fiscal 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 income. 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 income (loss) and amortized into net periodic pension cost in future periods.
Defined Benefit Pension Plan Amendments and Retiree Medical Plan Amendments
During the fourth quarter of 2015, we announced that we would be changing the benefits related to the salaried and non-union hourly participants of the retirement health insurance benefits program. This program had been frozen to new participants in 2007. The 2015 amendment to the plan was approved on October 2, 2015 and resulted in a negative prior service cost, which will be amortized over the average expected remaining years of future benefit payments for this group. This change resulted in a remeasurement event requiring us to remeasure the plan liabilities, as well as the expense related to the plan, as of October 31, 2015.
All qualified noncontributory defined benefit pension plans have ceased accruing benefits. The Arlon pension plan (the "Bear Plan") was frozen previous to our acquisition of Arlon. Effective June 30, 2013, for salaried and non-union hourly employees in the U.S., and effective December 31, 2013 for union employees in the U.S., benefits under the Rogers defined benefit pension plans no longer accrue.

(Dollars in thousands) | Pension Benefits |  | Retirement Health and Life Insurance Benefits
Change in benefit obligation: | 2015 | 2014 |  | 2015 | 2014
Benefit obligation at beginning of year | $ | 187,882 |  | $ | 174,325 |  |  | $ | 9,839 |  | $ | 10,824 |
Addition of Bear Plan | 4,169 |  | — |  |  | — |  | — |
Service cost | — |  | — |  |  | 411 |  | 556 |
Interest cost | 7,523 |  | 8,015 |  |  | 216 |  | 305 |
Actuarial (gain) loss | (8,674 | ) | 34,006 |  |  | (1,362 | ) | (1,071 | )
Benefit payments | (8,541 | ) | (24,934 | ) |  | (766 | ) | (775 | )
Plan Amendment | — |  | — |  |  | (5,616 | ) | — |
Special termination benefit | — |  | (3,530 | ) |  | — |  | — |
Benefit obligation at end of year | $ | 182,359 |  | $ | 187,882 |  |  | $ | 2,722 |  | $ | 9,839 |

Change in plan assets: | 2015 | 2014 |  | 2015 | 2014
Fair value of plan assets at the beginning of the year | $ | 170,600 |  | $ | 171,218 |  |  | $ | — |  | $ | — |
Addition of Bear Plan | 2,171 |  | — |  |  | — |  | — |
Actual return on plan assets | (194 | ) | 10,445 |  |  | — |  | — |
Employer contributions | 6,971 |  | 13,871 |  |  | 766 |  | 775 |
Benefit payments | (8,541 | ) | (24,934 | ) |  | (766 | ) | (775 | )
Fair value of plan assets at the end of the year | 171,007 |  | 170,600 |  |  | — |  | — |
Funded status | $ | (11,352 | ) | $ | (17,282 | ) |  | $ | (2,722 | ) | $ | (9,839 | )

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Amounts recognized in the consolidated statements of financial position consist of:

(Dollars in thousands) | Pension Benefits |  | Retirement Health and Life Insurance Benefits
| 2015 | 2014 |  | 2015 | 2014
Noncurrent assets | $ | 1,273 |  | $ | 404 |  |  | $ | — |  | $ | — |
Current liabilities | (1 | ) | (34 | ) |  | (537 | ) | (1,071 | )
Noncurrent liabilities | (12,624 | ) | (17,652 | ) |  | (2,185 | ) | (8,768 | )
Net amount recognized at end of year | $ | (11,352 | ) | $ | (17,282 | ) |  | $ | (2,722 | ) | $ | (9,839 | )

(Dollars in thousands) | Pension Benefits |  | Retirement Health and Life Insurance Benefits |  | Pension Benefits |  | Retirement Health and Life Insurance Benefits
| 2015 |  | 2015 |  | 2014 |  | 2014
Net actuarial (loss) gain | $ | (62,972 | ) |  | $ | 643 |  |  | (62,053 | ) |  | (707 | )
Prior service benefit | — |  |  | 5,368 |  |  | — |  |  | — |
Net amount recognized at end of year | $ | (62,972 | ) |  | $ | 6,011 |  |  | (62,053 | ) |  | (707 | )

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 $151.9 million, $151.9 million and $139.3 million, respectively, as of December 31, 2015 and $155.2 million, $155.2 million and $137.6 million, respectively, as of December 31, 2014.
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 $30.5 million, $30.5 million and $31.7 million, respectively, as of December 31, 2015. For 2014, 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 $32.6 million, $32.6 million, and $33.0 million, respectively.
Components of Net Periodic (Benefit) Cost

(Dollars in thousands) | Pension Benefits |  | Postretirement Health and Life Insurance Benefits
| 2015 |  | 2014 |  | 2013 |  | 2015 |  | 2014 |  | 2013
Service cost | $ | — |  |  | $ | — |  |  | $ | 2,473 |  |  | $ | 411 |  |  | $ | 556 |  |  | $ | 627 |
Interest cost | 7,523 |  |  | 8,015 |  |  | 7,753 |  |  | 216 |  |  | 305 |  |  | 262 |
Expected return of plan assets | (11,148 | ) |  | (12,909 | ) |  | (11,247 | ) |  | — |  |  | — |  |  | — |
Amortization of prior service cost (credit) | — |  |  | — |  |  | 124 |  |  | (248 | ) |  | — |  |  | (230 | )
Amortization of net loss | 1,690 |  |  | 686 |  |  | 3,615 |  |  | (12 | ) |  | — |  |  | 204 |
Settlement charge | 57 |  |  | 5,321 |  |  | — |  |  | — |  |  | — |  |  | — |
Curtailment charge | — |  |  | — |  |  | 1,537 |  |  | — |  |  | — |  |  | — |
Net periodic benefit cost (benefit) | $ | (1,878 | ) |  | $ | 1,113 |  |  | $ | 4,255 |  |  | $ | 367 |  |  | $ | 861 |  |  | $ | 863 |

In the second quarter of 2013, the decision to freeze the accruing of benefits in the defined benefit pension plans resulted in a curtailment charge of $1.5 million.
In the fourth quarter of 2014, certain eligible participants in the defined benefit pension plans were given a lump sum payout offer. The payout of this program resulted in a settlement charge of $5.2 million.
The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income 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 income into net periodic benefit cost over the next fiscal year is $1.6 million.
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Weighted-average assumptions used to determine benefit obligations at December 31:

| Pension Benefits |  | Retirement Health and Life Insurance Benefits
| 2015 | 2014 |  |  | 2015 | 2014 |
Discount rate | 4.25 | % | 4.00 | % |  |  | 3.00 | % | 3.00 | % |

Weighted-average assumptions used to determine net benefit cost for the years ended:

| Pension Benefits |  | Retirement Health and Life Insurance Benefits
| 2015 | 2014 |  | 2015 | 2014 |
Discount rate | 4.00 | % | 4.75 | % |  | 3.00 | % | 3.25 | % |
Expected long-term rate of return on plan assets | 6.50 | % | 7.50 | % |  | — |  | — |  |

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, and this is done by applying our pension benefit cash flow projections to the generic index rate. At December 31, 2015, this analysis resulted in a 25 basis point increase to the discount rate which went from 4.00% at December 31, 2014 to 4.25% at December 31, 2015.
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 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, 2015 we assumed annual health care cost trend rates of 7.50% and 7.50% for covered health care benefits for retirees pre-age 65 and post-age 65, respectively. The rates were assumed to decrease gradually by 0.5% annually until reaching 4.50% and 4.50%, respectively, and remain at those levels thereafter. For measurement purposes as of December 31, 2014, we assumed annual health care cost trend rates of 7.50% and 7.50% 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 the following effects:

| One Percentage Point
(Dollars in thousands) | Increase |  | Decrease
Effect on total service and interest cost | $ | 41 |  |  | $ | (38 | )
Effect on other postretirement benefit obligations | 73 |  |  | (68 | )

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 of 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. At December 31, 2015, we held approximately 27% equity securities and 73% fixed income and short term cash securities
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in our portfolio, compared to December 31, 2014 when we had approximately 23% in equity securities and 77% in 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 on 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 8.4% over the past 20 year period. Also, we analyze hypothetical rates of return for plan assets based on our current asset allocation mix, which we estimate would have generated a return of approximately, 8.5% over the last 20 years and 7.5% over the last 10 years. Based on the historical returns and the projected future returns we determined that a target return of 6.5% 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 record keeper, on the last business day of the 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 assets of the Company for investment purposes.
The following table presents the fair value of the pension plan net assets by asset category at December 31, 2015 and 2014:

(Dollars in thousands) | 2015 |  | 2014
Pooled separate accounts | $ | 6,782 |  |  | $ | 5,204 |
Fixed income bonds | 110,427 |  |  | 102,535 |
Mutual funds | 43,454 |  |  | 51,097 |
Guaranteed deposit account | 10,344 |  |  | 11,764 |
Total investments at fair value | $ | 171,007 |  |  | $ | 170,600 |

The following tables set forth by level, within the fair value hierarchy, the assets carried at fair value as of December 31, 2015 and 2014.

| Assets at Fair Value as of December 31, 2015
(Dollars in thousands) | Level 1 |  | Level 2 |  | Level 3 |  | Total
Pooled separate accounts | $ | — |  |  | $ | 6,782 |  |  | $ | — |  |  | $ | 6,782 |
Fixed income bonds | — |  |  | 110,427 |  |  | — |  |  | 110,427 |
Mutual funds | 43,454 |  |  | — |  |  | — |  |  | 43,454 |
Guaranteed deposit account | — |  |  | — |  |  | 10,344 |  |  | 10,344 |
Total assets at fair value | $ | 43,454 |  |  | $ | 117,209 |  |  | $ | 10,344 |  |  | $ | 171,007 |
| Assets at Fair Value as of December 31, 2014
(Dollars in thousands) | Level 1 |  | Level 2 |  | Level 3 |  | Total
Pooled separate accounts | $ | — |  |  | $ | 5,204 |  |  | $ | — |  |  | $ | 5,204 |
Fixed Income Bonds | — |  |  | 102,535 |  |  | — |  |  | 102,535 |
Mutual funds | 51,097 |  |  | — |  |  | — |  |  | 51,097 |
Guaranteed deposit account | — |  |  | — |  |  | 11,764 |  |  | 11,764 |
Total assets at fair value | $ | 51,097 |  |  | $ | 107,739 |  |  | $ | 11,764 |  |  | $ | 170,600 |

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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, 2015:

(Dollars in thousands) | Guaranteed Deposit Account
Balance at beginning of year | $ | 11,764 |
Unrealized gains relating to instruments still held at the reporting date | 476 |
Purchases, sales, issuances and settlements (net) | (1,896 | )
Balance at end of year | $ | 10,344 |

Cash Flows
Contributions
At December 31, 2015, we have not met the minimum funding requirements for all of our qualified defined benefit pension plans and are therefore required to make a contribution to the Bear Plan of $0.3 million for 2015 and we estimate that we will be required to make a contribution of $0.3 million for 2016. In 2015 and 2014, we made voluntary contributions of $6.5 million and $13.0 million, respectively. As there is no funding requirement for the nonqualified defined benefit pension plans nor 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 2015.

(Dollars in thousands) | Pension Benefits |  | Retiree Health and Life Insurance Benefits
2016 | $ | 8,489 |  |  | $ | 537 |
2017 | $ | 8,666 |  |  | $ | 465 |
2018 | $ | 8,858 |  |  | $ | 319 |
2019 | $ | 9,121 |  |  | $ | 266 |
2020 | $ | 9,389 |  |  | $ | 262 |
2021-2025 | $ | 52,370 |  |  | $ | 1,156 |

NOTE 11 ‑ EMPLOYEE SAVINGS AND INVESTMENT PLAN
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 yearly IRS limit of $18,000 in 2015 and $17,500 in 2014. 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 $3.2 million in 2015, $2.7 million in 2014 and $2.1 million in 2013, which related solely to our matching contributions.
NOTE 12 - DEBT
On June 18, 2015, we entered into a secured five year credit agreement (the "Amended Credit Agreement"). The Amended Credit Agreement amends and restates the credit agreement signed between the Company and the same banks on July 13, 2011 and increased our borrowing capacity from $265.0 million to $350.0 million, with an additional $50.0 million accordion.
The Amended Credit Agreement provides (1) a $55.0 million term loan; (2) up to $295.0 million of revolving loans, with sublimits for multicurrency borrowings, letters of credit and swing-line notes; and (3) a $50.0 million expansion feature. Borrowings may
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be used to finance working capital needs, for letters of credit and for general corporate purposes in the ordinary course of business, including the financing of permitted acquisitions (as defined in the Amended Credit Agreement).
Borrowings under the Amended Credit Agreement bear interest based on one of two options. Alternate base rate loans bear interest that includes a base reference rate plus a spread of 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 plus 50 basis points; or adjusted 1-month LIBOR plus 100 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.
In addition to interest payable on the principal amount of indebtedness outstanding from time to time under the Amended Credit Agreement, the Company is required to pay a quarterly fee of 0.20% to 0.30% (based upon our leverage ratio) of the unused amount of the lenders’ commitments under the Amended Credit Agreement.
The Amended Credit Agreement contains customary representations, warranties, covenants, mandatory prepayments and events of default under which the Company's payment obligations may be accelerated. The financial covenants include requirements to maintain (1) a leverage ratio of no more than 3.25 to 1.00, subject to a one-time 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 ("ICR") of no less than 3.00 to 1.00. The ICR is the ratio determined as of the end of each of its fiscal quarters ending on and after September 30, 2015, of (i) Consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) (as defined in the Amended Credit Agreement) minus the unfinanced portion of Consolidated Capital Expenditures to (ii) Consolidated Interest Expense paid in cash, in each case for the period of four consecutive fiscal quarters ending with the end of such fiscal quarter, all calculated for the Borrower and its subsidiaries on a consolidated basis. As of December 31, 2015, we were in compliance with all of the financial covenants in the Amended Credit Agreement, as we achieved actual ratios of approximately 1.47 to 1.00 on the leverage ratio and 23.82 to 1.00 on the ICR.
The Amended Credit Agreement requires the mandatory quarterly repayment of principal on amounts borrowed under such term loan. Payments commenced on September 30, 2015, and are scheduled to be completed on June 30, 2020. The aggregate mandatory principal payments due are as follows:

Year |  | Payments Due
2016 |  |  | $3.4 | million
2017 |  |  | $4.1 | million
2018 |  |  | $4.8 | million
2019 |  |  | $5.5 | million
2020 |  |  | $160.8 | million

All obligations under the Amended Credit Agreement are guaranteed by each of the Corporation’s existing and future material domestic subsidiaries, as defined in the Amended Credit Agreement (the “Guarantors”). The obligations are also secured by a Second Amended and Restated Pledge and Security Agreement, dated as of June 18, 2015, entered into by the Company 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.
All amounts borrowed or outstanding under the Amended Credit Agreement, with the exception of amounts borrowed under the term loan which are subject to quarterly principal payments, are due and mature on June 18, 2020, unless the commitments are terminated earlier either at the request of the Company or if certain events of default occur.
In addition, as of December 31, 2015 and 2014 we had a $1.2 million and $1.4 million standby letter of credit (LOC) to guarantee Rogers workers compensation plans that were backed by the Amended Credit Agreement. No amounts were drawn on the LOC as of December 31, 2015 or 2014.
The Amended Credit Agreement is secured by many of the assets of Rogers, including but not limited to, receivables, equipment, intellectual property, inventory, and stock in certain subsidiaries.
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.
Before entering into the Amended Credit Agreement, we had $0.5 million of remaining capitalized costs from the previous credit agreements. These costs will continue to be amortized over the life of the Amended Credit Agreement. In the second quarter of
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2015, we capitalized an additional $1.8 million in connection with the Amended Credit Agreement. These costs will be amortized over the life of the Amended Credit Agreement, which will terminate in June 2020.
We incurred amortization expense of $0.5 million in each of the years ended 2015, 2014 and 2013, respectively. At December 31, 2015, we have approximately $2.1 million of credit facility costs remaining to be amortized.
We borrowed $125.0 million under the line of credit in the first quarter of 2015 to fund the acquisition of Arlon. During 2015 and 2014, we made principal payments of $6.4 million and $17.5 million, respectively, on the outstanding debt. The principal amount of this debt has been transferred to the new revolving credit line created in June of 2015. We are obligated to pay $3.4 million on this debt obligation in the next 12 months under the term loan.
We incurred interest expense on our outstanding debt of $3.5 million, $1.8 million, and $2.2 million for the years ended December 31, 2015, 2014 and 2013, respectively. Cash paid for interest was $3.3 million, $2.5 million and $3.1 million for 2015, 2014 and 2013, respectively.
We incurred an unused commitment fee of $0.3 million, $0.4 million and $0.5 million for the years ended December 31, 2015, 2014 and 2013, respectively. In July 2012, we entered into an interest rate swap to hedge the variable interest rate on our term loan debt. As of December 31, 2015, the remaining notional amount of the interest rate swap covers $16.2 million of our term loan debt and has a rate of 0.752%. At December 31, 2015, our outstanding debt balance is comprised of a term loan of $53.6 million and $125.0 million borrowed on the revolving line of credit. At December 31, 2015, the rate charged on this debt is the 1 month LIBOR at 0.4375% plus a spread of 1.50%.
Capital Lease
During the first quarter of 2011, we recorded a capital lease obligation related to the acquisition of Curamik for its primary manufacturing facility in Eschenbach, Germany. Under the terms of the leasing agreement, we had an option to purchase the property in either 2013 or upon the expiration of the lease in 2021 at a price which is the greater of (i) the then-current market value or (ii) the residual book value of the land including the buildings and installations thereon. We chose not to exercise the option to purchase the property that was available to us on June 30, 2013. The total obligation recorded for the lease as of December 31, 2015 and 2014 was $5.8 million and $6.8 million, respectively. Depreciation expense related to the capital lease was $0.3 million, $0.4 million and $0.4 million for the years ending December 31, 2015, 2014 and 2013, respectively. Accumulated depreciation as of December 31, 2015 and 2014 was $1.9 million and $1.6 million, respectively.
These expenses are included as depreciation expense in Cost of Sales on our consolidated statements of operations. Interest expense related to the debt recorded on the capital lease is included in interest expense on the consolidated statements of operations.
We also incurred interest expense on the capital lease of $0.4 million, $0.5 million and $0.5 million for the years ended December 31, 2015, 2014 and 2013, respectively.
Restriction on Payment of Dividends
Pursuant to the Amended Credit Agreement, we cannot make a cash dividend payment if (i) a default or event of default has occurred and is continuing or will result from the cash dividend payment.We do not currently have any restrictions in our ability to pay dividends under our current, amended credit agreement, as no default of event of default has occurred.
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NOTE 13 – INCOME TAXES
Consolidated income before income taxes consisted of:

(Dollars in thousands) | 2015 |  | 2014 |  | 2013
Domestic | $ | 14,832 |  |  | $ | 9,604 |  |  | $ | 2,201 |
International | 51,341 |  |  | 71,620 |  |  | 47,521 |
Total | $ | 66,173 |  |  | $ | 81,224 |  |  | $ | 49,722 |

Foreign earnings repatriated to the U.S. previously reported as U.S. income have been reclassified in both 2014 and 2013 to conform to the current year presentation.
The income tax expense in the consolidated statements of operations consisted of:

(Dollars in thousands) | Current |  | Deferred |  | Total
2015 |  |  |  |  |
Domestic | $ | 993 |  |  | $ | 4,272 |  |  | $ | 5,265 |
International | 15,192 |  |  | (604 | ) |  | 14,588 |
Total | $ | 16,185 |  |  | $ | 3,668 |  |  | $ | 19,853 |
2014 |  |  |  |  |
Domestic | $ | 2,205 |  |  | $ | 6,984 |  |  | $ | 9,189 |
International | 17,172 |  |  | 1,451 |  |  | 18,623 |
Total | $ | 19,377 |  |  | $ | 8,435 |  |  | $ | 27,812 |
2013 |  |  |  |  |
Domestic | $ | (7,075 | ) |  | $ | 6,187 |  |  | $ | (888 | )
International | 12,667 |  |  | (260 | ) |  | 12,407 |
Total | $ | 5,592 |  |  | $ | 5,927 |  |  | $ | 11,519 |

Deferred tax assets and liabilities as of December 31, 2015 and 2014, were comprised of the following:

(Dollars in thousands) | 2015 |  | 2014
Deferred tax assets |  |  |
Accrued employee benefits and compensation | $ | 9,284 |  |  | $ | 9,168 |
Postretirement benefit obligations | 5,434 |  |  | 7,866 |
Tax loss and credit carryforwards | 9,318 |  |  | 16,533 |
Reserves and accruals | 5,075 |  |  | 4,230 |
Depreciation and amortization | — |  |  | 17,862 |
Other | 3,474 |  |  | 2,550 |
Total deferred tax assets | 32,585 |  |  | 58,209 |
Less deferred tax asset valuation allowance | (6,202 | ) |  | (7,691 | )
Total deferred tax assets, net of valuation allowance | 26,383 |  |  | 50,518 |
Deferred tax liabilities |  |  |
Depreciation and amortization | 17,492 |  |  | 14,303 |
Other | 187 |  |  | 344 |
Total deferred tax liabilities | 17,679 |  |  | 14,647 |
Net deferred tax asset | $ | 8,704 |  |  | $ | 35,871 |

At December 31, 2015, the Company had state net operating loss carryforwards ranging from $0.5 million to $8.5 million in various state taxing jurisdictions, which expire between 2016 and 2034. We also had approximately $7.6 million of credit
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carryforwards in Arizona, which will expire between 2016 and 2030, and a $1.3 million capital loss carryforward, which will expire in 2017. In addition, the Company had a $0.2 million net operating loss carryforward in one of our Chinese entities that will expire in 2018. We believe that it is more likely than not that the benefit from the China and state net operating loss carryforwards as well as our state credit and capital loss carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $6.2 million relating to these carryforwards.
We currently have approximately $10.1 million of foreign tax credits that begin to expire in 2020, $6.1 million of research and development credits that begin to expire in 2026, and $0.5 million of minimum tax credits that can be carried forward indefinitely.
As a result of certain realization requirements, the table of deferred tax assets and liabilities shown above does not include certain deferred tax assets as of December 31, 2015 for which the benefit thereof was postponed by tax deductions related to equity compensation in excess of compensation recognized for financial reporting. Those deferred tax assets include foreign tax credits of $10.1 million, research and development credits of $2.1 million and minimum tax credits of $0.4 million. Equity will be increased by these amounts if and when such deferred tax assets are ultimately realized by a reduction of taxes payable.
We had a valuation allowance of $6.2 million at December 31, 2015 and $7.7 million at December 31, 2014, against certain of our deferred tax assets, primarily carryfowards expected to expire unused. In 2015, we reversed the valuation allowance on California deferred tax assets due to positive factors from the Arlon acquisition. 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.
In appropriate circumstances we have the opportunity to undertake a tax planning strategy to ensure that our tax credit carryforwards do not expire unutilized. This strategy is based upon our ability to make a federal tax election to capitalize certain expenses that will result in generating taxable income to allow us to utilize our tax credit carryforwards before they expire. We would undertake such a strategy to realize these tax credit carryforwards prior to expiration as it is reasonable, prudent, and feasible.
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:

(Dollars in thousands) | 2015 |  | 2014 |  | 2013
Tax expense at Federal statutory income tax rate | $ | 23,161 |  |  | $ | 28,429 |  |  | $ | 17,403 |
International tax rate differential | (4,792 | ) |  | (6,772 | ) |  | (2,541 | )
Foreign source income, net of tax credits | 2,449 |  |  | 5,195 |  |  | (786 | )
State tax, net of federal | (416 | ) |  | — |  |  | — |
Unrecognized tax benefits | 148 |  |  | 603 |  |  | (2,197 | )
General business credits | (908 | ) |  | (604 | ) |  | (702 | )
Acquisition related expenses | 453 |  |  | 590 |  |  | — |
Valuation allowance change | (1,489 | ) |  | 388 |  |  | — |
Other | 1,247 |  |  | (17 | ) |  | 342 |
Income tax expense (benefit) | $ | 19,853 |  |  | $ | 27,812 |  |  | $ | 11,519 |

The Company’s effective tax rate for 2015 was 30.0% compared to 34.2% in 2014 and 23.2% in 2013. In 2015, the difference between the Company’s effective tax rate and the statutory federal tax rate was favorably impacted by taxable income generated in countries with a lower tax rate to that of the United States, research and development credits, a tax benefit related to a change in the effective state rate and release of valuation allowance on certain state tax attributes. The rate was unfavorably impacted by reserves for uncertain tax positions, change in prior estimates and non-deductible expenses. The rate decreased from 2014 primarily due to a reduction in the level of repatriation of current foreign earnings, increased reversals of uncertain tax benefits, and deferred state tax benefits due to the acquisition of Arlon, partially offset with a shift of earnings from low tax to high tax jurisdictions.
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Included in the 2015 effective tax rate are releases of reserves for uncertain tax positions for which an indemnity receivable had been recorded. The reversal of the receivable has been recorded in "Other income (expense), net."
U.S. income taxes have not been provided on $179.1 million of undistributed earnings of foreign subsidiaries since it is the Company’s intention to permanently reinvest such earnings or to distribute them only when it is tax efficient to do so. It is impracticable to estimate the total tax liability, if any, that would be created by the future distribution of these earnings. If circumstances change and it becomes apparent that some, or all of the undistributed earnings as of December 31, 2015 will not be indefinitely reinvested, the provision for the tax consequence, if any, will be recorded in the period when circumstances change.
Income taxes paid, net of refunds, were $18.7 million, $14.5 million, and $11.1 million, in 2015, 2014, and 2013, respectively.
Unrecognized tax benefits, excluding potential interest and penalties, for the years ended December 31, 2015 and December 31, 2014, were as follows:

(Dollars in thousands) |  |  |
| 2015 |  | 2014
Beginning balance | $ | 9,368 |  |  | $ | 9,148 |
Gross increases - current period tax positions | 4,229 |  |  | 1,763 |
Gross increases - tax positions in prior periods | 1,428 |  |  | 335 |
Foreign currency exchange | (475 | ) |  | (230 | )
Lapse of statute of limitations | (3,979 | ) |  | (1,648 | )
Ending balance | $ | 10,571 |  |  | $ | 9,368 |

Included in the balance of unrecognized tax benefits as of December 31, 2015 were $10.6 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, 2015 were $0.1 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, 2015 and 2014, we had accrued potential interest and penalties of approximately $1.3 million and $1.2 million, respectively. We recorded net income tax expense of $0.1 million and $0.1 million during 2015 and 2014, respectively, and a net tax benefit of $0.9 million during 2013. It is possible that up to $8.3 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 U.S. and various state and foreign jurisdictions. Our tax years from 2012 through 2015 are subject to examination by the tax authorities. With few exceptions, we are no longer subject to U.S. federal, state, local and foreign examinations by tax authorities for the years before 2012.
NOTE 14 - SHAREHOLDERS' EQUITY AND EQUITY COMPENSATION
Capital Stock and Equity Compensation Awards
Under the Rogers Corporation 2009 Long-Term Equity Compensation Plan, we may grant stock options to officers, directors, and other key employees at exercise prices that are at least equal to the fair market value of our stock on the date of grant. Under our older plans, stock options to officers, directors, and other key employees could be granted at exercise prices that were as low as 50% of the fair market value of our stock as of the date of grant. However, in terms of these older plans, virtually all such options were granted at exercise prices equal to the fair market value of our stock as of the date of grant. With shareholder approval of the Rogers Corporation 2009 Long-Term Equity Compensation Plan, no new equity awards will be granted from our older plans. Regular options granted to employees in the United States generally become exercisable over a four-year period from the grant date and expire ten years after such grant. Stock option grants were also made under the older plans to non-management directors, on a semi-annual basis, with the last of such grants being made in June 2008.
Beginning in December 2008, each non-management director was awarded deferred stock units instead of stock options. Such deferred stock units permit non-management directors to receive, at a later date, one share of Rogers stock for each deferred stock unit with no payment of any consideration by the director at the time the shares are received. For director stock options, the exercise price was equal to the fair market value of our stock as of the grant date, were immediately exercisable, and expire ten years after
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the date of grant. Our 2005 Equity Compensation Plan and our 2009 Long-Term Equity Compensation Plan also permit the granting of restricted stock and certain other forms of equity awards to officers and other key employees, although, as mentioned above, no new equity awards are being made pursuant to the 2005 plan. Stock grants in lieu of cash compensation are also made to non-management directors and the Stock Acquisition Program, approved in 2009, is now being used for such grants if a non-management director chooses to receive Rogers stock in lieu of cash compensation.
Shares of capital stock reserved for possible future issuance were as follows:

| December 31, 2015 |  | December 31, 2014
Stock acquisition program | 120,883 |  |  | 120,883 |
Stock options and restricted stock | 678,904 |  |  | 862,040 |
Shares available for issuance | 1,079,491 |  |  | 1,176,882 |
Rogers Employee Savings and Investment Plan | 169,044 |  |  | 169,044 |
Rogers Corporation Global Stock Ownership Plan for Employees | 153,357 |  |  | 166,152 |
Deferred compensation to be paid in stock | 13,239 |  |  | 13,248 |
Total | 2,214,918 |  |  | 2,508,249 |

Each outstanding share of Rogers capital stock has attached to it a stock purchase right. One stock purchase right entitles the holder to buy one share of Rogers capital stock at an exercise price of $240.00 per share. The rights become exercisable only under certain circumstances related to a person or group acquiring or offering to acquire a substantial block of Rogers capital stock. In certain circumstances, holders may acquire Rogers stock, or in some cases the stock of an acquiring entity, with a value equal to twice the exercise price. The rights expire on March 30, 2017, but may be exchanged or redeemed earlier. If such rights are redeemed, the redemption price would be $0.01 per right.
Stock Options
Stock options have been granted under various equity compensation plans. While we may grant options to employees that become exercisable at different times or within different periods, we have generally granted options to employees that vest and become exercisable in one-third increments on the second, third and fourth anniversaries of the grant dates. The maximum contractual term for all options is normally ten years.
We use the Black-Scholes option-pricing model to calculate the grant-date fair value of an option. We have not granted any stock options since the first quarter of 2012.
In most cases, we recognize expense using the straight-line attribution method for stock option grants. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered option. We currently expect, based on an analysis of our historical forfeitures, an annual forfeiture rate of approximately 3% and applied that rate to the grants issued. This assumption will be reviewed periodically and the rate will be adjusted as necessary based on these reviews. Ultimately, the actual expense recognized over the vesting period will only be for those options that vest.
Our employee stock option agreements contain a retirement provision, which results in the vesting of any unvested options immediately upon retirement. This provision affects the timing of option expense recognition for options meeting the criteria for retirement. We recognize compensation expense over the period from the date of grant to the date retirement eligibility is met, if it is shorter than the required service period, or upon grant if the employee is eligible for retirement on that date.
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A summary of the activity under our stock option plans as of December 31, 2015 and changes during the year then ended, is presented below:

| Options Outstanding |  | Weighted- Average Exercise Price Per Share |  | Weighted-Average Remaining Contractual Life in Years |  | Aggregate Intrinsic Value
Options outstanding at December 31, 2014 | 393,347 |  |  | $ | 40.72 |  |  | 3.8 |  | 16,019,130 |
Options exercised | (178,759 | ) |  | 40.90 |  |  |  |  |  |
Options forfeited | (2,550 | ) |  | 40.09 |  |  |  |  |  |
Options outstanding at December 31, 2015 | 212,038 |  |  | 40.47 |  |  | 3.2 |  | 2,557,193 |
Options exercisable at December 31, 2015 | 204,394 |  |  | 40.44 |  |  | 3.1 |  | 2,478,456 |
Options vested at December 31, 2015 or expected to vest* | 211,809 |  |  | 40.50 |  |  | 3.2 |  | 2,554,831 |

* In addition to the vested options, we expect a portion of the unvested options to vest at some point in the future. Options expected to vest are calculated by applying an estimated forfeiture rate to the unvested options.
During the years ended December 31, 2015 and 2014, 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 $6.7 million and $9.4 million, respectively. The total amount of cash received from the exercise of these options was $7.0 million and $20.5 million, respectively. The total grant-date fair value of stock options that vested during the years ended December 31, 2015 and 2014 was approximately $0.0 million and $0.3 million, respectively.
As of December 31, 2015, there was $0.0 million of total unrecognized compensation cost related to unvested stock option awards. That cost is expected to be recognized over a weighted-average period of 0.1 years.
We recognized $0.2 million, $0.3 million and $0.4 million of compensation expense related to stock options for the years ended December 31, 2015, 2014 and 2013, respectively.
A summary of the activity under our stock option plans for the fiscal years ended 2015, 2014 and 2013, is presented below:

| 2015 |  | 2014 |  | 2013
| Options Outstanding |  | Weighted- Average Exercise Price Per Share |  | Options Outstanding |  | Weighted- Average Exercise Price Per Share |  | Options Outstanding |  | Weighted- Average Exercise Price Per Share
Outstanding at beginning of year | 393,347 |  |  | $ | 40.72 |  |  | 893,139 |  |  | $ | 43.23 |  |  | 1,765,947 |  |  | $ | 40.58 |
Options exercised | (178,759 | ) |  | 40.90 |  |  | (476,793 | ) |  | 44.60 |  |  | (847,340 | ) |  | 37.82 |
Options forfeited | (2,550 | ) |  | 40.09 |  |  | (22,999 | ) |  | 57.07 |  |  | (25,468 | ) |  | 39.04 |
Outstanding at year-end | 212,038 |  |  | 40.47 |  |  | 393,347 |  |  | 40.72 |  |  | 893,139 |  |  | 43.23 |
Options exercisable at year-end | 204,394 |  |  |  |  | 364,770 |  |  |  |  | 721,645 |  |  |

Performance-Based Restricted Stock
In 2006, we began granting performance-based restricted stock awards to certain key executives. We currently have awards from 2013, 2014 and 2015 outstanding. These awards cliff vest at the end of a three year measurement period, except for 2015 grants to those individuals who are retirement eligible during the grant period, as such grants are subject to accelerated vesting as the grant is earned over the course of the vesting period (i.e., a pro-rata payout occurs based on the retirement date). Participants are eligible to be awarded shares ranging from 0% to 200% of the original award amount, based on certain defined performance measures. Compensation expense is recognized using the straight line method over the vesting period, unless the employee has an accelerated vesting schedule.
The 2013, 2014 and 2015 awards have two measurement criteria on which the final payout of each award is based - (i) the three year return on invested capital (ROIC) compared to that of a specified group of peer companies, and (ii) the three year total shareholder return (TSR) on the performance of our capital stock as compared to that of a specified group of peer companies. In accordance with the applicable accounting literature, the ROIC portion of the award is considered a performance condition. As such, the fair value of the ROIC portion is determined based on the market value of the underlying stock price at the grant date
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with cumulative compensation expense recognized to date being increased or decreased based on changes in the forecasted pay out percentage at the end of each reporting period. The TSR portion of the award is considered a market condition. As such, the fair value of this award was determined on the date of grant using a Monte Carlo simulation valuation model with related compensation expense fixed on the grant date and expensed on a straight-line basis over the life of the awards that ultimately vest with no changes for the final projected payout of the award.
Below were the assumptions used in the Monte Carlo calculation:

| 2015 |  | 2014
Expected volatility | 28.2 | % |  | 33.7 | %
Expected term (in years) | 3 |  |  | 3 |
Risk-free interest rate | 0.96 | % |  | 0.67 | %

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 under the performance-based restricted stock plans for the fiscal years ended 2015, 2014 and 2013 is presented below:

| 2015 |  | 2014 |  | 2013
| Awards Outstanding |  | Weighted- Average Grant Date Fair Value |  | Awards Outstanding |  | Weighted- Average Grant Date Fair Value |  | Awards Outstanding |  | Weighted- Average Grant Date Fair Value
Non-vested awards outstanding at beginning of year | 92,437 |  |  | $ | 52.75 |  |  | 71,175 |  |  | $ | 47.49 |  |  | 73,458 |  |  | $ | 38.01 |
Awards granted | 51,475 |  |  | 78.01 |  |  | 51,850 |  |  | 58.61 |  |  | 47,625 |  |  | 47.10 |
Stock issued | (20,910 | ) |  | 41.27 |  |  | (14,383 | ) |  | 47.89 |  |  | (33,538 | ) |  | 27.43 |
Awards forfeited or expired | (15,773 | ) |  | 59.45 |  |  | (16,205 | ) |  | 52.71 |  |  | (16,370 | ) |  | 44.90 |
Non-vested awards outstanding at end of year | 107,229 |  |  | $ | 66.13 |  |  | 92,437 |  |  | $ | 52.75 |  |  | 71,175 |  |  | $ | 47.49 |

We recognized $3.2 million, $2.3 million, and $1.3 million of compensation expense related to performance-based restricted stock grants for the years ended December 31, 2015, 2014 and 2013, respectively.
As of December 31, 2015, there was $6.0 million of total unrecognized compensation cost related to unvested performance-based restricted stock. That cost is expected to be recognized over a weighted-average period of 1.4 years.
Time-Based Restricted Stock
In 2011, we began granting time-based restricted stock awards to certain key executives and other key members of the Company’s management team. We currently have grants from 2013, 2014 and 2015 outstanding. The majority of 2013 grants ratably vest on the first, second and third anniversaries of the original grant date. The 2014 and 2015 grants all ratably vest on the first, second and third anniversaries of the original grant date. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period. The fair value of the award is determined based on the market value of the underlying stock price at the grant date.
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| 2015 |  | 2014 |  | 2013
| Awards Outstanding |  | Weighted- Average Grant Date Fair Value |  | Awards Outstanding |  | Weighted- Average Grant Date Fair Value |  | Awards Outstanding |  | Weighted-Average Grant Date Fair Value
Non-vested awards outstanding at beginning of year | 238,386 |  |  | $ | 53.80 |  |  | 231,026 |  |  | $ | 48.54 |  |  | 115,139 |  |  | $ | 43.27 |
Awards granted | 75,160 |  |  | 77.15 |  |  | 93,780 |  |  | 61.7 |  |  | 156,665 |  |  | 51.78 |
Stock issued | (93,813 | ) |  | 48.35 |  |  | (62,378 | ) |  | 47.19 |  |  | (12,436 | ) |  | 43.97 |
Awards forfeited or expired | (11,415 | ) |  | 61.32 |  |  | (24,042 | ) |  | 51.19 |  |  | (28,342 | ) |  | 47.07 |
Non-vested awards outstanding at end of year | 208,318 |  |  | $ | 64.27 |  |  | 238,386 |  |  | $ | 53.80 |  |  | 231,026 |  |  | $ | 48.54 |

We recognized $5.0 million, $3.6 million, and $2.5 million of compensation expense related to time-based restricted stock for years ended December 31, 2015, 2014 and 2013, respectively. As of December 31, 2015, there was $7.9 million of total unrecognized compensation cost related to unvested time-based restricted stock. That cost is expected to be recognized over a weighted-average period of 1.5 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 th month anniversary of the grant date unless the individual elects to defer the receipt of these shares. Each deferred stock unit results in the issuance of one share of Rogers’ stock. The grant of deferred stock units is typically done annually in the second quarter of each year. The fair value of the award is determined based on the market value of the underlying stock price at the grant date.

| 2015 |  | 2014 |  | 2013
| Awards Outstanding |  | Weighted- Average Grant Date Fair Value |  | Awards Outstanding |  | Weighted- Average Grant Date Fair Value |  | Awards Outstanding |  | Weighted-Average Grant Date Fair Value
Non-vested awards outstanding at beginning of year | 30,150 |  |  | $ | 24.43 |  |  | 31,550 |  |  | $ | 26.77 |  |  | 30,150 |  |  | $ | 26.13 |
Awards granted | 10,300 |  |  | 73.79 |  |  | 14,700 |  |  | 58.45 |  |  | 16,800 |  |  | 41.67 |
Stock issued | (16,500 | ) |  | 51.20 |  |  | (16,100 | ) |  | 60.08 |  |  | (15,400 | ) |  | 41.77 |
Non-vested awards outstanding at end of year | 23,950 |  |  | $ | 27.22 |  |  | 30,150 |  |  | $ | 24.43 |  |  | 31,550 |  |  | $ | 26.77 |

We recognized compensation expense related to deferred stock units of $0.8 million, $0.8 million and $0.7 million, for the years ended December 31, 2015, 2014 and 2013, respectively.
Employee Stock Purchase Plan
We have an employee stock purchase plan (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 6 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 amount 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 $0.5 million of compensation expense associated with the plan for the year ended December 31, 2015, $0.5 million for the year ended December 31, 2014 and $0.5 million for the year ended December 31, 2013.
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NOTE 15 – COMMITMENTS AND CONTINGENCIES
Leases
Our principal noncancellable 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 cancellable with minimal notice. Additionally, we have a capital lease on our manufacturing facility in Eschenbach, Germany, which was entered into in 2011.

| Lease Expense
(Dollars in thousands) | 2015 |  | 2014 |  | 2013
Operating leases | $ | 3,531 |  |  | $ | 2,716 |  |  | $ | 2,634 |
Capital lease | $ | 667 |  |  | $ | 747 |  |  | $ | 1,233 |

| Future Minimum Lease Payments |  |
(Dollars in thousands) |  | Total | 2016 | 2017 | 2018 | 2019 | 2020 | Thereafter
Operating leases |  | $ | 10,221 |  | $ | 2,981 |  | $ | 2,089 |  | $ | 1,675 |  | $ | 915 |  | $ | 749 |  | $ | 1,812 |
Capital lease |  | $ | 5,833 |  | $ | 284 |  | $ | 300 |  | $ | 320 |  | $ | 342 |  | $ | 366 |  | $ | 4,221 |

Environmental & Legal
We are currently engaged in the following environmental and legal proceedings:
Superfund Sites
We are currently involved as a potentially responsible party (PRP) in one active case involving a waste disposal site, the Chatham Superfund Site. The costs incurred since inception for this claim have been immaterial and have been primarily covered by insurance policies, for both legal and remediation costs. In this matter we have been assessed a cost sharing percentage of approximately 2% in relation to the range for estimated total cleanup costs of $18.8 million to $29.6 million. We believe that we have sufficient insurance coverage to fully cover this liability and have recorded a liability and related insurance receivable of approximately $0.4 million as of December 31, 2015, which approximates our share of the low end of the estimated range. We believe we are a de minimis participant and, as such, have been allocated an insignificant percentage of the total PRP cost sharing responsibility. Based on facts presently known to us, we believe that the potential for the final results of this case having a material adverse effect on our results of operations, financial position or cash flows is remote. This case has been ongoing for many years and we believe that it will continue on for the indefinite future. No time frame for completion can be estimated at the present time.
PCB Contamination
We have been working with the Connecticut Department of Energy and Environmental Protection (CT DEEP) and the United States Environmental Protection Agency, Region I, in connection with certain polychlorinated biphenyl (PCB) contamination at our facility in Woodstock, Connecticut. The issue was originally discovered in the soil at the facility in the late 1990s, and this initial issue was remediated in 2000. Further contamination was later found in the groundwater beneath the property, which was addressed with the installation of a pump and treat system in 2011. Additional PCB contamination at this facility was found in the facility's original buildings, courtyards and surrounding areas including an on-site pond. Remediation costs related to this contamination are expected to approximate $0.7 million. Remediation activities of the affected buildings and courtyards were completed in 2014 at a total cost of $0.5 million. Currently, we have an accrualof $0.2 million for the pond remediation recorded on our consolidated statements of financial position. We believe this accrual will be adequate to cover the remaining remediation work related to the soil and pond contamination based on the information known at this time. However, if additional contamination is found, the cost of the remaining remediation may increase.
Overall, we have spent approximately $2.5 million in remediation and monitoring costs related to these PCB contamination issues. The future costs related to the maintenance of the groundwater pump and treat system now in place at the site are expected to be minimal. We believe that the remaining remediation activity will continue for several more years and no time frame for completion can be estimated at the present time.
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Asbestos
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 presents information about our recent asbestos claims activity:

| For the Year Ended December 31,
| 2015 | 2014
Claims outstanding at beginning of year | 440 |  | 362 |
New claims filed | 231 |  | 195 |
Pending claims concluded* | (183 | ) | (117 | )
Claims outstanding at end of year | 488 |  | 440 |

* For the year ended December 31, 2015, 231 claims were dismissed and 6 claims were settled. For the year ended December 31, 2014, 104 claims were dismissed and 13 claims were settled. Settlements totaled approximately $1.6 million for the year ended December 31, 2015, compared to $3.2 million for the year ended December 31, 2014.
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. 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 general assumptions regarding the asbestos-related product liability litigation environment and company-specific assumptions regarding claims rates (including diseases alleged), dismissal rates, average settlement costs and average defense costs. 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 review our asbestos-related forecasts annually in the fourth quarter of each year unless facts and circumstances materially change during the year, at which time we would analyze these forecasts. Currently, these analyses project liabilities and related insurance receivables over a 10-year period. It is probable we will incur additional costs for asbestos-related claims following this 10-year period, but we do not believe that any related contingencies are reasonably estimable beyond such period based on, among other things, the significant proportion of future claims included in the analysis and the lag time between the date a claim is filed and its resolution. Accordingly, no liability (or related asset) has been recorded for claims that may be asserted subsequent to 2025.
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For the years ended December 31, 2015 and 2014, respectively, our forecasted asbestos-related claims and insurance receivables for the 10-year projection period were as follows:

(Dollars in millions) | 2015 | 2014
Asbestos-related claims | $ | 56.6 |  | $ | 56.5 |
Asbestos-related insurance receivables | $ | 53.4 |  | $ | 53.0 |

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. As previously disclosed, however, 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. Accordingly, while we believe it is reasonably possible that we may incur losses and defense costs in excess of our accruals in the future, we do not have sufficient data to provide a reasonable estimate or range of such losses and defense costs, at this time.
Impact on Financial Statements
The models developed for determining the potential exposure and related insurance coverage were developed by outside consultants deemed to be experts in their respective fields with the forecast for asbestos related liabilities generated by NERA and the related insurance receivable projections developed by Marsh. The models contain numerous assumptions that significantly impact the results generated by the models. We believe the assumptions made are reasonable at the present time, but are subject to uncertainty based on the actual future outcome of our asbestos litigation. We determined that a ten-year projection period is appropriate as we have experience in addressing asbestos related lawsuits over the last few years to use as a baseline to project the liability over ten years. However, we do not believe we have sufficient data to justify a longer projection period at this time. As of December 31, 2015, the estimated liability and estimated insurance recovery for the ten-year period through 2025 was $56.6 million and $53.4 million, respectively. Each year we evaluate the changes in the estimated liability and estimated insurance recovery based on the projections of asbestos litigation and corresponding insurance coverage for that litigation and record the resulting expense or income. For the years ended December 31, 2015 and 2013, we recognized income of $0.3 million and $0.5 million, respectively, and for the year ended December 31, 2014 we recorded expense of $0.8 million.
The amounts recorded for the asbestos-related liability and the related insurance receivables described above were 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.
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 will incur additional charges for our asbestos liabilities and defense costs in the future, which could exceed existing accruals, but such excess amount cannot be reasonably estimated at this time. We will continue to vigorously defend ourselves and believe we have substantial unutilized insurance coverage to mitigate future costs related to this matter.
Other Environmental and General Litigation

• | The Rogers Corporate Headquarters located in Rogers, Connecticut is part of the Connecticut Voluntary Corrective Action

Program (VCAP). As part of this program, we have partnered with the CT DEEP to determine the corrective actions to be taken at the site related to contamination issues. We have evaluated this matter and have completed internal due diligence work related to the site. Based on the facts and circumstances known to us at the present time an accrual of $3.2 million was recorded as of December 31, 2015 for remediation that will be required.
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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, after taking into account insurance coverage and the aforementioned accruals, will have a material adverse impact on our results of operations, financial position or cash flows.
NOTE 16 – BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION
Our reporting structure is comprised of the following operating segments: Advanced Connectivity Solutions (ACS), Elastomeric Material Solutions (EMS) and Power Electronics Solutions (PES). Our non-core businesses are reported in the "Other" reportable segment.

• | Advanced Connectivity Solutions

The Advanced Connectivity Solutions operating segment includes printed circuit board laminate products for high frequency, high performance applications. These products have characteristics that offer performance and other functional advantages in many market applications and 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.
The polymer-based dielectric layers of our circuit board laminates are proprietary materials that provide highly specialized electrical and mechanical properties. Trade names for our printed circuit board materials include RO3000®, RO4000®, RT/duroid®, ULTRALAM®, RO2800®, LoPro®, COOLSPAN® and TMM® laminates. All of these laminates are used for making circuitry that receive, transmit, and process high frequency communications signals, yet each laminate has varying properties that address specific needs and applications within the communications market. High frequency circuits are used in the equipment and devices that comprise wireless communications systems, including cellular communications, digital cellular communications, paging, direct broadcast television, global positioning, mobile radio communications, and radar for both aviation and automotive applications.

• | Elastomeric Material Solutions

The Elastomeric Material Solutions operating segment includes polyurethane and silicone foam as well as solid products manufactured in roll stock, sheet, and molded formats. These materials have characteristics that offer functional advantages in many market applications which serve to differentiate Rogers' products from other commonly available materials.
Elastomeric Material Solutions products are sold globally to converters, fabricators, distributors and original equipment manufacturers (OEMs) for use in general industrial applications, portable electronics including mobile internet devices, consumer goods, mass transportation, construction, printing applications and other markets. Trade names for our Elastomeric Material Solutions include: PORON® Microcellular Urethanes used for making high performance gaskets and seals in vehicles, portable communications devices, computers and peripherals; PORON® cushion insole materials for footwear and related products; PORON® healthcare and medical materials for body cushioning and orthotic appliances; R/bak® compressible printing plate backing and mounting products for cushioning flexographic plates for printing on packaging materials; PORON® and XRD® for high impact cushioning protection; Rogers BISCO® silicone foams, solids, sponge and extrusion products for flame retardant gaskets, seals and cushioning applications in communications infrastructure equipment, aircraft, trains, cars and trucks, and for shielding extreme temperature or flame; and eSORBA® urethane foams used in portable communications, entertainment devices and other industrial applications.
We have two 50% owned joint ventures that extend and complement our worldwide business in Elastomeric Material Solutions. Rogers INOAC Corporation (RIC), a joint venture with Japan-based INOAC Corporation, manufactures high performance polyurethane foam materials in Mie and Taketoyo, Japan to predominantly serve the Japanese and Taiwanese markets. Rogers INOAC Suzhou Corporation (RIS) was established in 2004 with INOAC Corporation and provides polyurethane foam materials primarily to the Asian marketplace.
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• | Power Electronics Solutions

The Power Electronics Solutions operating segment is comprised of direct bond copper (DBC) ceramic substrate products and busbar power distribution products. We believe that our advanced, customized components enable the performance and reliability of today’s growing array of power electronic devices and serve to increase the efficiency of applications by managing heat and ensuring the reliability of these critical devices used in converting raw energy into controlled and regulated power that can be used and managed.
Trade names for our Power Electronics Solutions products include curamik® ceramic substrates and RO-LINX® products. Curamik® ceramic substrates are used in the design of intelligent power management devices, such as insulated gate bipolar transistor (IGBT) modules, which enable a wide range of products including highly efficient industrial motor drives, wind and solar converters and electric and hybrid electric vehicle drive systems. RO-LINX® products are used in high power electrical inverter and converter systems for use in mass transit (e.g. high speed trains); clean technology applications (e.g. wind turbines, solar farms and electric vehicles) and variable frequency drives for high to mid power applications.

• | Other

The remainder of operations are accumulated and reported as our Other business, which consists of elastomer components, floats and inverter distribution activities. Elastomer components are sold to OEMs for applications in ground transportation, office equipment, consumer and other markets. Trade names for our elastomer components include: NITROPHYL® floats for level sensing in fuel tanks, motors, and storage tanks and ENDUR® elastomer rollers and belts for document handling in copiers, printers, mail sorting machines and automated teller machines. Inverters are sold primarily to OEMs and fabricators that in turn sell to various other third parties primarily serving the portable communication and automotive markets. In 2015, the Other businesses included the Arlon polyimide and thermoset laminate operations, which was sold in December 2015.
The following table sets forth the information about our reportable segments for the periods indicated:

(Dollars in thousands) | Elastomeric Material Solutions |  | Advanced Connectivity Solutions |  | Power Electronics Solutions |  | Other |  | Total
2015 |  |  |  |  |  |  |  |  |
Net sales | $ | 180,898 |  |  | $ | 267,630 |  |  | $ | 150,288 |  |  | $ | 42,627 |  |  | $ | 641,443 |
Operating income | $ | 19,979 |  |  | $ | 45,115 |  |  | $ | 3,750 |  |  | $ | 7,411 |  |  | $ | 76,255 |
Total assets | $ | 265,575 |  |  | $ | 316,235 |  |  | $ | 321,248 |  |  | $ | 29,400 |  |  | $ | 932,458 |
Capital expenditures | $ | 4,103 |  |  | $ | 15,532 |  |  | $ | 4,185 |  |  | $ | 1,017 |  |  | $ | 24,837 |
Depreciation & amortization | $ | 9,280 |  |  | $ | 15,403 |  |  | $ | 7,855 |  |  | $ | 1,516 |  |  | $ | 34,054 |
Investment in unconsolidated joint ventures | $ | 15,348 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 15,348 |
Equity income in unconsolidated joint ventures | $ | 2,890 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2,890 |
2014 |  |  |  |  |  |  |  |  |
Net sales | $ | 173,671 |  |  | $ | 240,864 |  |  | $ | 171,832 |  |  | $ | 24,544 |  |  | $ | 610,911 |
Operating income (loss) | $ | 23,350 |  |  | $ | 44,007 |  |  | $ | 5,654 |  |  | $ | 8,230 |  |  | $ | 81,241 |
Total assets | $ | 221,013 |  |  | $ | 217,173 |  |  | $ | 377,181 |  |  | $ | 25,068 |  |  | $ | 840,435 |
Capital expenditures | $ | 6,197 |  |  | $ | 14,290 |  |  | $ | 7,489 |  |  | $ | 779 |  |  | $ | 28,755 |
Depreciation & amortization | $ | 6,561 |  |  | $ | 9,575 |  |  | $ | 9,332 |  |  | $ | 800 |  |  | $ | 26,268 |
Investment in unconsolidated joint ventures | $ | 17,214 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 17,214 |
Equity income in unconsolidated joint ventures | $ | 4,123 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 4,123 |
2013 |  |  |  |  |  |  |  |  |
Net sales | $ | 168,082 |  |  | $ | 184,949 |  |  | $ | 160,730 |  |  | $ | 23,721 |  |  | $ | 537,482 |
Operating income (loss) | $ | 22,601 |  |  | $ | 19,076 |  |  | $ | 1,338 |  |  | $ | 7,102 |  |  | $ | 50,117 |
Total assets | $ | 223,346 |  |  | $ | 179,363 |  |  | $ | 384,249 |  |  | $ | 24,363 |  |  | $ | 811,321 |
Capital expenditures | $ | 3,030 |  |  | $ | 7,793 |  |  | $ | 5,287 |  |  | $ | 749 |  |  | $ | 16,859 |
Depreciation & amortization | $ | 6,410 |  |  | $ | 7,004 |  |  | $ | 12,406 |  |  | $ | 531 |  |  | $ | 26,351 |
Investment in unconsolidated joint ventures | $ | 18,463 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 18,463 |
Equity income in unconsolidated joint ventures | $ | 4,326 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 4,326 |

Inter-segment sales have been eliminated from the sales data in the preceding table.
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The following table sets forth the operating income reconciliation to the consolidated statements of operations for the periods indicated:

| 2015 |  | 2014 |  | 2013
Operating income | $ | 76,255 |  |  | $ | 81,241 |  |  | $ | 50,117 |
Equity income in unconsolidated joint ventures | 2,890 |  |  | 4,123 |  |  | 4,326 |
Other income (expense), net | (8,492 | ) |  | (1,194 | ) |  | (1,240 | )
Interest income (expense), net | (4,480 | ) |  | (2,946 | ) |  | (3,481 | )
Income before income taxes | $ | 66,173 |  |  | $ | 81,224 |  |  | $ | 49,722 |

Information relating to our operations by geographic area was as follows:

| Net Sales (1) | Long-lived Assets (2)
(Dollars in thousands) | 2015 | 2014 |  | 2013 |  | 2015 |  | 2014 |  | 2013
United States | $ | 162,662 |  | $ | 124,305 |  |  | $ | 118,217 |  |  | $ | 217,595 |  |  | $ | 70,728 |  |  | $ | 64,744 |
China | 192,155 |  | 236,488 |  |  | 193,734 |  |  | 65,994 |  |  | 49,794 |  |  | 44,805 |
Germany | 81,452 |  | 93,478 |  |  | 79,043 |  |  | 110,240 |  |  | 129,702 |  |  | 154,688 |
Other | 205,174 |  | 156,640 |  |  | 146,488 |  |  | 34,998 |  |  | 36,999 |  |  | 40,535 |
Total | $ | 641,443 |  | $ | 610,911 |  |  | $ | 537,482 |  |  | $ | 428,827 |  |  | $ | 287,223 |  |  | $ | 304,772 |

(1) Net sales are allocated to countries based on the location of the customer. Countries with 10% of more of net sales have been disclosed.
(2) Long-lived assets are based on the location of the asset and are comprised of goodwill and other intangibles and property, plant and equipment. Countries with 10% of more of long-lived assets have been disclosed.
NOTE 17 – RESTRUCTURING AND IMPAIRMENT CHARGES

• | 2015

There were no restructuring or impairment charges in 2015.

• | 2014

In the fourth quarter of 2014, we recognized a $0.2 million charge related to the impairment of the investment in BrightVolt, Inc. As this investment does not specifically relate to any of our operating segments, we have allocated this impairment charge on a basis similar to other Corporate allocations. See Note 9, "Investment" for further details on this write-down.
In the fourth quarter of 2014, certain eligible participants in the defined benefit pension plans were given a lump sum payout offer. The payout of this program resulted in a settlement charge of $5.2 million.

• | 2013

In 2013, we recognized approximately $10.4 million of restructuring and impairment charges. Approximately $5.7 million of these charges are related to the streamlining initiatives that began in 2012 as we incurred approximately $4.2 million in severance and related charges as a result of these activities as well as changes to the executive management team and we recognized a $1.5 million curtailment charge related to the freezing of the defined benefit pension plans. Further in 2013, we recognized a $4.6 million charge related to the impairment of the investment in Solicore, Inc. As this investment does not specifically relate to any of our operating segments, we have allocated this impairment charge on a basis similar to other Corporate allocations. See Note 9, "Investment" for further details on this write-down.
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The following table summarizes the restructuring and impairment charges related to these activities recorded in our operating results in 2015, 2014 and 2013.

(Dollars in thousands) |  |  |  |
|  | December 31, 2014 |  | December 31, 2013
Cost of Sales |  |  |  |
Elastomeric Material Solutions |  |  |  |
Union ratification bonus |  | — |  |  | 181 |
Advanced Connectivity Solutions |  |  |  |
Union ratification bonus |  | — |  |  | 179 |
Power Electronics Solutions |  |  |  |
Union ratification bonus |  | — |  |  | 8 |
Total charges for Cost of Sales |  | $ | — |  |  | $ | 368 |
Restructuring and Impairment |  |  |  |  |
Elastomeric Material Solutions |  |  |  |  |
Pension settlement charge |  | 1,332 |  |  | — |
Severance related to Bremen shut-down |  | — |  |  | 1,345 |
Allocated Solicore impairment |  | 42 |  |  | 1,617 |
Advanced Connectivity Solutions |  |  |  |  |
Pension settlement charge |  | 1,954 |  |  | — |
Allocated severance and related costs |  | — |  |  | 802 |
Allocated Solicore impairment |  | 62 |  |  | 1,617 |
Power Electronics Solutions |  |  |  |  |
Pension settlement charge |  | 1,921 |  |  | — |
Severance and related costs |  | — |  |  | 3,494 |
Allocated Solicore impairment |  | 61 |  |  | 1,155 |
Other |  |  |  |  |
Pension settlement charge |  | 17 |  |  | — |
Allocated severance and related costs |  | — |  |  | 115 |
Allocated Solicore impairment |  | 1 |  |  | 231 |
Total charges for Restructuring and Impairment |  | $ | 5,390 |  |  | $ | 10,376 |

NOTE 18 – DISCONTINUED OPERATIONS
In 2012, we decided to cease production of our non-woven composite materials operating segment located in Rogers, Connecticut. Sales of non-woven products had been steadily declining for several years. Manufacturing operations ceased by the end of 2012 and last sales out of inventory occurred in the first quarter of 2013. There was no activity for this segment in 2014 or 2015. For the year ended December 31, 2013, an operating loss of $0.1 million, net of tax, was reflected as discontinued operations in the accompanying consolidated statements of operations. Net sales for 2013 were $0.2 million and tax related to the discontinued operation was $0.1 million for the year ended December 31, 2013.
NOTE 19 – SHARE REPURCHASE
On August 6, 2015, we initiated a share repurchase program of up to $100.0 million of the Company's capital stock. We initiated this 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, 2015, $60.0 million remained of our $100.0 million share repurchase program.
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We repurchased the following shares of common stock through our share repurchase program during the periods presented:

(Dollars in thousands) | December 31, 2015
Shares of capital stock repurchased | 727,573 |
Value of capital stock repurchased | $ | 39,993 |

No shares of capital stock were repurchased during 2014. All repurchases were made using cash from operations and cash on hand. Refer to Part II, Item 5 for further detail of the share repurchase program.
NOTE 20 – QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

| As adjusted for impact of the change to FIFO
(Dollars in thousands, except per share amounts) | 2015
| First Quarter |  | Second Quarter |  | Third Quarter |  | Fourth Quarter
Net sales | $ | 165,051 |  |  | $ | 163,098 |  |  | $ | 160,366 |  |  | $ | 152,928 |
Gross margin | $ | 62,425 |  |  | $ | 60,661 |  |  | $ | 59,672 |  |  | $ | 52,604 |
Net income | $ | 13,643 |  |  | $ | 13,554 |  |  | $ | 12,546 |  |  | $ | 6,577 |
Net income per share: |  |  |  |  |  |  |
Basic | $ | 0.74 |  |  | $ | 0.73 |  |  | $ | 0.68 |  |  | $ | 0.37 |
Diluted | $ | 0.72 |  |  | $ | 0.71 |  |  | $ | 0.67 |  |  | $ | 0.37 |
| 2014
| First Quarter |  | Second Quarter |  | Third Quarter |  | Fourth Quarter
Net sales | $ | 146,640 |  |  | $ | 153,495 |  |  | $ | 163,052 |  |  | $ | 147,724 |
Gross margin | $ | 54,107 |  |  | $ | 57,376 |  |  | $ | 64,576 |  |  | $ | 58,695 |
Net income | $ | 14,702 |  |  | $ | 11,056 |  |  | $ | 20,407 |  |  | $ | 7,247 |
Net income per share: |  |  |  |  |  |  |
Basic | $ | 0.82 |  |  | $ | 0.61 |  |  | $ | 1.12 |  |  | $ | 0.40 |
Diluted | $ | 0.79 |  |  | $ | 0.59 |  |  | $ | 1.09 |  |  | $ | 0.39 |

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| As originally reported
(Dollars in thousands, except per share amounts) | 2015
| First Quarter |  | Second Quarter |  | Third Quarter |  | Fourth Quarter
Net sales | $ | 165,051 |  |  | $ | 163,098 |  |  | $ | 160,366 |  |  | $ | 152,928 |
Gross margin | $ | 62,355 |  |  | $ | 60,589 |  |  | $ | 59,530 |  |  | $ | 52,604 |
Net income | $ | 13,627 |  |  | $ | 13,540 |  |  | $ | 12,455 |  |  | $ | 6,577 |
Net income per share: |  |  |  |  |  |  |
Basic | $ | 0.74 |  |  | $ | 0.73 |  |  | $ | 0.68 |  |  | $ | 0.37 |
Diluted | $ | 0.72 |  |  | $ | 0.71 |  |  | $ | 0.67 |  |  | $ | 0.37 |
| 2014
| First Quarter |  | Second Quarter |  | Third Quarter |  | Fourth Quarter
Net sales | $ | 146,640 |  |  | $ | 153,495 |  |  | $ | 163,052 |  |  | $ | 147,724 |
Gross margin | $ | 53,919 |  |  | $ | 57,138 |  |  | $ | 64,548 |  |  | $ | 58,335 |
Net income | $ | 14,580 |  |  | $ | 10,902 |  |  | $ | 20,388 |  |  | $ | 7,013 |
Net income per share: |  |  |  |  |  |  |
Basic | $ | 0.81 |  |  | $ | 0.60 |  |  | $ | 1.12 |  |  | $ | 0.38 |
Diluted | $ | 0.79 |  |  | $ | 0.58 |  |  | $ | 1.09 |  |  | $ | 0.37 |

NOTE 21 – RECENT ACCOUNTING STANDARDS
In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard to achieve a consistent application of revenue recognition within the U.S., 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 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. On July 9, 2015, the FASB agreed to delay the effective date by one year. In accordance with the agreed upon delay, the new standard is effective for us beginning in the first quarter of 2018. Early adoption is permitted, but not before the original effective date of the standard. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. We have not yet selected a transition method nor have we determined the impact of the new standard on our consolidated condensed financial statements.
In September, 2015, the FASB issued a new standard to simplify the accounting for measurement-period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment be recognized in the reporting period in which the adjustment is identified. The new standard is effective for interim and annual periods beginning after December 31, 2015. Early adoption is permitted. The new standard should be applied prospectively to measurement period adjustments that occur after the effective date. We have elected early adoption of the standard and have determined the impact of the new standard on our consolidated financial statements to be immaterial.
In November 2015, the Financial Accounting Standards Board (“FASB”) issued a new accounting update which requires companies to classify all deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. This update is effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of this update is permitted and an entity may choose to adopt this update on either a prospective or retrospective basis. We are still evaluating the impact this new standard will have on our financial statements.
In April 2015, the FASB issued amendments that require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Under current guidance, our debt issuance costs are reflected as a deferred charge, within other current assets and
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other long-term assets on our consolidated balance sheets. This update is effective for the annual reporting periods beginning after December 15, 2015. In August 2015, the FASB confirmed that the aforementioned amendments did not address the presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. For line-of-credit arrangements, borrowers have the option of presenting debt issuance costs as an asset which is subsequently amortized ratably over the term of the line-of-credit arrangement, regardless of whether there are any related outstanding borrowings. These amendments are not expected to have a material impact on our financial statements.
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SCHEDULE II
Valuation and Qualifying Accounts

(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, 2015 |  | $ | 476 |  |  | $ | 1,085 |  |  | $ | (866 | ) |  | $ | — |  |  | $ | 695 |
December 31, 2014 |  | $ | 1,655 |  |  | $ | 250 |  |  | $ | (1,429 | ) |  | $ | — |  |  | $ | 476 |
December 31, 2013 |  | $ | 1,773 |  |  | $ | 670 |  |  | $ | (788 | ) |  | $ | — |  |  | $ | 1,655 |

(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, 2015 |  | $ | 7,691 |  |  | $ | (1,484 | ) |  | $ | — |  |  | $ | (5 | ) |  | $ | 6,202 |
December 31, 2014 |  | $ | 7,302 |  |  | $ | 159 |  |  | $ | — |  |  | $ | 230 |  |  | $ | 7,691 |
December 31, 2013 |  | $ | 7,992 |  |  | $ | (85 | ) |  | $ | — |  |  | $ | (605 | ) |  | $ | 7,302 |

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
The Audit Committee (the "Audit Committee) of the Board of Directors selects the independent accountants for the Company each year. On July 23, 2015, the Company approved the engagement of PricewaterhouseCoopers, LLP ("PwC") as the Company's new independent registered public accounting firm and dismissed Ernst & Young, LLP ("EY"), effective July 31, 2015, following the filing of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015.
The reports of EY on the Company's consolidated financial statements for the fiscal years ended December 31, 2014 and 2013 did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principle. The Company requested EY to furnish to the Company a letter addressed to the Securities and Exchange Commission stating whether it agrees with the above statements. Such letter, received by the Company on July 31, 2015 was filed as an exhibit to Form 8-K by the Company with the Securities and Exchange Commission on August 3, 2015. The decision to change accountants was approved by the Audit Committee of the Company and ratified by the Board of Directors.
Item 9A. Controls and Procedures
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
The Company, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act”), as of December 31, 2015. The Company's disclosure controls and procedures are designed (i) to ensure that information required to be disclosed by it in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) to ensure that information required to be disclosed in the reports the Company files or submits under the Exchange Act is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective as of December 31, 2015.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in the Company's internal control over financial reporting during the fourth quarter of the fiscal year ended December 31, 2015 that have materially affected or are reasonably likely to materially affect its internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
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Item 9B. Other Information
None.
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Pursuant to General Instruction G to Form 10-K, there is hereby incorporated by this reference the information with respect to the Directors, Executive Officers and Corporate Governance set forth under the captions “Nominees for Director”, “Director Qualifications and Experience”, “Section 16(a) Beneficial Ownership Reporting Compliance” and “Board of Directors - Meetings of Certain Committees” in our Definitive Proxy Statement for our 2016 Annual Meeting of Shareholders that will be filed within 120 days after the end of our fiscal year pursuant to Section 14(a) of the Exchange Act. Information with respect to Executive Officers of the Company is presented in Part I, Item 1 of this report and is hereby incorporated into this Item 10 by reference.
Code of Ethics
We have adopted a code of business conduct and ethics policy, which applies to all employees, officers and directors of Rogers Corporation. The Rogers Corporation Code of Business Conduct and Ethics Policy is posted on our website at http://www.rogerscorp.com. We intend to satisfy the disclosure requirements regarding any amendment to, or waiver of, a provision of the Code of Business Conduct and Ethics Policy for the Principal Executive Officer, Principal Financial Officer or Principal Accounting Officer (or others performing similar functions) by posting such information on our website. Our website is not incorporated into or a part of this Form 10-K.
Item 11. Executive Compensation
Pursuant to General Instruction G to Form 10-K, there is hereby incorporated by this reference the information with respect to Executive Compensation set forth under the captions “Board of Directors - Directors' Compensation”, “Board of Directors - Meetings of Certain Committees”, “Compensation Discussion and Analysis”, “Compensation and Organization Committee Report” and "Executive Compensation" in our Definitive Proxy Statement for our 2016 Annual Meeting of Shareholders that will be filed within 120 days after the end of our fiscal year pursuant to Section 14(a) of the Exchange Act.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
EQUITY COMPENSATION PLAN INFORMATION
The table and footnotes below describe those equity compensation plans approved and not approved by security holders of Rogers Corporation as of December 31, 2015, the end of the Company's fiscal year.
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EQUITY COMPENSATION PLANS AS OF DECEMBER 31, 2015

|  | (a) |  | (b) |  | (c)
Plan Category |  | Number of securities to be issued upon exercise of outstanding options, warrants and rights (5) |  | Weighted average exercise price of outstanding options, warrants and rights (5) |  | Number of securities remaining available for future issuance under each equity compensation plan excluding securities referenced in column (a) (6)
Equity Compensation Plans Approved by Security Holders |  |  |  |  |  |
Rogers Corporation 2009 Long-Term Equity Compensation Plan |  | 69,626 |  | $35.46 |  | 1,079,491
Rogers Corporation Global Stock Ownership Plan For Employees (1) |  | — |  |  |  | 153,357
Equity Compensation Plans Not Approved by Security Holders |  |  |  |  |  |
Rogers Corporation Stock Acquisition Program (3) |  | — |  | — |  | 120,883
Inducement Awards for the CEO (4) |  | 23,200 |  | $37.05 |  | —
Total (5) |  | 92,826 |  | $35.86 |  | 1,353,731

(1) | This is an employee stock purchase plan within the meaning of Section 432(b) of the Internal Revenue Code of 1986, as amended.

(2) | The Rogers Corporation 1990 Stock Option Plan was adopted in 1990 to award certain key employees of Rogers with stock option grants. Under this plan, options generally have an exercise price equal to at least the fair market value of Rogers' stock as of the date of grant. Regular options generally have a ten-year life and generally vest in one-third increments on the second, third and fourth anniversary dates of the grant, except for the grants made to most employees in 2004 and 2005. Such 2004 and 2005 stock options were immediately vested upon grant, but any shares acquired upon option exercise during the first four years after the grant date could not be sold during the four year period if the individual was still actively employed at Rogers. Termination of employment because of retirement, or for certain other reasons, may shorten the vesting schedule, the expiration date or eliminate the aforementioned sales restriction.

(3) | The purpose of the Stock Acquisition Program is to enable non-management directors and executive officers to acquire shares of Rogers' common stock in lieu of cash compensation at the then current fair market value of such common stock.

(4) | Bruce D. Hoechner was granted three equity awards when he joined Rogers Corporation as its new President and Chief Executive Officer in October of 2011. This consisted of two time-based restricted stock unit awards with different vesting schedules and the non-qualified stock option, shown in the table above. The Board of Directors (including a majority of its independent directors) approved these equity inducement awards in reliance on an employment inducement exception to shareholder approval provided for in the New York Stock Exchange governance rules.

(5) | Does not include deferred stock units, restricted stock or phantom stock units. As of December 31, 2015, 25,050 shares were reserved for deferred stock unit awards, 318,770 shares were reserved for restricted stock awards and 15,283 shares were reserved for phantom stock units related to the deferral of compensation ultimately to be paid in Rogers stock.

(6) | On May 7, 2009, shareholders approved the Rogers Corporation 2009 Long-Term Equity Compensation Plan and as of that date no further equity awards will be made pursuant to the provisions of the Rogers Corporation (i)1988 Stock Option Plan, (ii) 1994 Stock Compensation Plan, (iii) 1998 Stock Incentive Plan, (iv) 2005 Equity Compensation Plan and (v) 1990 Stock Option Plan. For this reason a zero (i.e., a dash) appears in the applicable rows of this column. The number for the 2009 Long-Term Equity Compensation Plan has been reduced by shares reserved for restricted stock awards and deferred stock units.

Pursuant to General Instruction G to Form 10-K, there is hereby incorporated by this reference the information with respect to Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters set forth under the captions “Stock Ownership of Management” and “Beneficial Ownership of More Than Five Percent of Rogers Stock” in our Definitive Proxy Statement for our 2015 Annual Meeting of Shareholders that will be filed within 120 days after the end of our fiscal year pursuant to Section 14(a) of the Exchange Act.
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Item 13. Certain Relationships and Related Transactions, and Director Independence
Pursuant to General Instruction G to Form 10-K, there is hereby incorporated by this reference the information with respect to Certain Relationships and Related Transactions and Director Independence as set forth under the captions “Related Party Transactions” and “Board of Directors-Director Independence” in our Definitive Proxy Statement for our 2016 Annual Meeting of Shareholders that will be filed within 120 days after the end of our fiscal year pursuant to Section 14(a) of the Exchange Act.
Item 14. Principal Accountant Fees and Services
Pursuant to General Instruction G to Form 10-K, there is hereby incorporated by this reference the information with respect to Accountant Fees and Services set forth under the caption “Fees of Independent Registered Public Accounting Firm” in our Definitive Proxy Statement for our 2016 Annual Meeting of Shareholders that will be filed within 120 days after the end of our fiscal year pursuant to Section 14(a) of the Exchange Act.
Part IV
Item 15. Exhibits, Financial Statement Schedules
(1) Financial Statements and Schedules
The following consolidated financial statements of the Company are included in Item 8 of this Form 10-K:
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Statements of Financial Position
Consolidated Statements of Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules.
Schedule II- Valuation and Qualifying Accounts
Other than as set forth above, schedules are omitted because they are not applicable, or are not required, or because the information is included in the consolidated financial statements and notes thereto.
(3) Exhibits.
The following list of exhibits includes exhibits submitted with this Form 10-K as filed with the SEC and those incorporated by reference to other filings.

2.1 | Share Purchase and Transfer Agreement, dated December 31, 2010, among the Registrant, Electrovac Curamik GmbH, Curamik Electronics GmbH, and DZ Equity Partner GmbH, filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on January 10, 2011*.

2.2 | Stock Purchase Agreement, dated as of December 18, 2014, by and among Handy & Harman Group, Ltd., Bairnco, LLC and Rogers Corporation, filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on December 22, 2014.

2.3 | Amendment No. 1 to Stock Purchase Agreement, dated January 22, 2015, by and among Handy & Harman Group, Ltd.,Bairnco, LLC and Rogers Corporation, filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on January 26, 2015.

3.1 | Restated Articles of Organization of Rogers Corporation, as amended, filed as Exhibit 3a to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (the 2006 Form 10-K)*.

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3.2 | Amended and Restated Bylaws of Rogers Corporation, effective October 2, 2008, filed as Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed on October 7, 2008*.

4.1 | Shareholder Rights Agreement, dated as of February 22, 2007, between the Registrant and Registrar and Transfer Company, as Rights Agent, filed as Exhibit 4.1 to the Registrant's registration statement on form 8-A filed on February 23, 2007*.

10.1 | Rogers Corporation Annual Incentive Compensation Plan (as amended)**, filed as Exhibit II to the Registrant's Definitive Proxy Statement filed on March 20, 2009*. Second Amendment to Rogers Corporation Annual Incentive Compensation Plan, filed as Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed on February 17, 2010*. Third Amendment to Rogers Corporation Annual Incentive Compensation Plan, filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on February 14, 2011*. Fourth Amendment to Rogers Corporation Annual Incentive Compensation Plan, filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on May 18, 2011*.

10.2 | Rogers Corporation 1988 Stock Option Plan, as restated September 14, 1989 (the 1988 Plan)** (as amended October 23, 1996, April 18, 2000, June 21, 2001, August 22, 2002, December 5, 2002 and October 27, 2006). The 1988 Plan was filed as Exhibit 10d to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 1, 1995 (the 1994 Form 10-K)*. The October 23, 1996 amendment was filed as Exhibit 10d to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 29, 1996 (the 1996 Form 10-K)*. The April 18, 2000, June 21, 2001, August 22, 2002 and December 5, 2002 amendments were filed as Exhibit 10d to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 28, 2003 (the 2003 Form 10-K)*. The October 27, 2006 amendment was filed as Exhibit 10aab to the 2006 Form 10-K*.

10.3 | The Restated Rogers Corporation 1990 Stock Option Plan (the 1990 Plan)** (as amended December 21, 1999, April 18, 2000, June 21, 2001, August 22, 2002, October 7, 2002, December 5, 2002 and October 27, 2006) was filed as Exhibit 99.1 to Registration Statement on Form S-8 (No. 333-14419) dated October 18, 1996*. The December 21, 1999 amendment was filed as Exhibit 10e to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 2, 2000 (the 1999 Form 10-K)*. The October 7, 2002 amendment was filed as Exhibit 10e to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 29, 2002 (the 2002 Form 10-K)*. The April 18, 2000, June 21, 2001, August 22, 2002 and December 5, 2002 amendments were filed as Exhibit 10e to the Registrant's 2003 Form 10-K*. The October 27, 2006 amendment was filed as Exhibit 10aab to the 2006 Form 10-K*.

10.4 | The Amended and Restated Rogers Corporation Voluntary Deferred Compensation Plan for Non-Management Directors**, filed as Exhibit 10i to the Registrant's Quarterly Report on Form 10-Q filed November 8, 2007*. First Amendment to the Amended and Restated Rogers Corporation Voluntary Deferred Compensation Plan for Non-Management Directors, filed as Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q filed November 3, 2009*. Second Amendment to the Amended and Restated Rogers Corporation Voluntary Deferred Compensation Plan for Non-Management Directors, filed as Exhibit 10.5 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (the 2010 Form 10-K)*.

10.5 | The Amended and Restated Rogers Corporation Voluntary Deferred Compensation Plan for Key Employees**, filed as Exhibit 10j to the Registrant's Quarterly Report on Form 10-Q filed November 8, 2007*. First Amendment to the Amended and Restated Rogers Corporation Voluntary Deferred Compensation Plan for Key Employees, filed as Exhibit 10j to the Registrant's Quarterly Report on Form 10-Q filed August 7, 2008*. Second Amendment to the Amended and Restated Rogers Corporation Voluntary Deferred Compensation Plan for Key Employees, filed as Exhibit 10.6 to the Registrant's Quarterly Report on Form 10-Q filed November 3, 2009*. Third Amendment to the Amended and Restated Rogers Corporation Voluntary Deferred Compensation Plan for Key Employees, filed as Exhibit 10.4 to the Registrant's Current Report on Form 8-K filed February 17, 2010*. Fourth Amendment to the Amended and Restated Rogers Corporation Voluntary Deferred Compensation Plan for Key Employees, filed as Exhibit 10.6 to the 2010 Form 10-K*.

10.6 | Rogers Corporation 1998 Stock Incentive Plan (the 1998 Plan)** (as amended September 9, 1999, December 21, 1999, April 18, 2000, June 21, 2001, October 10, 2001, August 22, 2002, November 7, 2002, December 5, 2002, February 19, 2004, and October 27, 2006). The 1998 Plan was filed as Exhibit A to the Definitive Proxy Statement dated March 17, 1998*. The September 9, 1999 and December 21, 1999 amendments were filed as Exhibit 10l to the 1999 Form 10-K*. The October 10, 2001 and November 7, 2002 amendments were filed as Exhibit 10l to the 2002 Form 10-K*. The April 18, 2000, June 21, 2001, August 22, 2002, December 5, 2002 and February 19, 2004 amendments were filed as Exhibit 10l to the 2003 Form 10-K*. The April 28, 2005 amendment was filed as Exhibit 10.8 to the Registrant's Current Report on Form 8-K filed on May 2, 2005*. The October 27, 2006 amendment was filed as Exhibit 10aab to the 2006 Form 10-K*.

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10.7 | Rogers Corporation Amended and Restated Pension Restoration Plan**, filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed December 17, 2008*. First Amendment to the Rogers Corporation Amended and Restated Pension Restoration Plan, filed as Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q filed November 3, 2009*. Second Amendment to the Rogers Corporation Amended and Restated Pension Restoration Plan, filed as Exhibit 10.10 to the 2010 Form 10-K*.

10.8 | Form of Indemnification Agreement between the Registrant and each of its executive officers**, filed as Exhibit 99.2 to the Registrant's Current Report on Form 8-K on December 14, 2004*.

10.9 | Form of Indemnification Agreement between the Registrant and each of its Directors**, filed as Exhibit 99.1 to the Registrant's Current Report on Form 8-K on December 14, 2004*.

10.10 | Rogers Compensation Recovery Policy**, filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed October 19, 2009*.

10.11 | Amended Rogers Corporation 2009 Long-Term Equity Compensation Plan**, filed as Exhibit 10.1 to the Registrant's Registration Statement on Form S-8 (File No. 333-181199) filed May 7, 2012*.

10.12 | Form of Performance-Based Restricted Stock Award Agreement under the 2009 Plan**, filed as Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q filed August 2, 2011*.

10.13 | Form of Performance-Based Restricted Stock Award Agreement under the 2009 Plan**, filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q filed May 2, 2012*.

10.14 | Form of Performance-Based Restricted Stock Award Agreement under the 2009 Plan**, filed herewith.

10.15 | Form of Basic Time-Based Restricted Stock Unit Award Agreement under the 2009 Plan**, filed as Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q filed August 2, 2011*.

10.16 | Form of Time-Based Restricted Stock Unit Award Agreement under the 2009 Plan**, filed herewith.

10.17 | Form of Non-Qualified Stock Option Agreement (For Officers and Employees) under the 2009 Plan**, filed as Exhibit 10.6 to the Registrant's Quarterly Report on Form 10-Q filed August 4, 2009*.

10.18 | Form of Non-Qualified Stock Option Agreement (For Officers and Employees) under the 2009 Plan**, filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q filed November 3, 2009*.

10.19 | Form of Performance-Based Restricted Stock Award Agreement under the 2009 Plan**, filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q filed November 3, 2009*.

10.20 | Form of Restricted Stock Agreement under the 2009 Plan**, filed as Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q filed November 3, 2009*.

10.21 | Second Amended and Restated Credit Agreement, dated as of June 18, 2015, with each of the lenders party thereto, JPMorgan Chase Bank, N.A. as administrative agent, HSBC Bank USA, National Association and Citizens Bank, N.A. as co-syndication agents, Fifth Third Bank and Citibank, N.A. as co-documentation agents and JPMorgan Securities LLC and HSBC Bank USA, National Association as joint bookrunners and joint lead arrangers, filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed June 24, 2015.

10.22 Amendment No. 1, dated as of October 29, 2015, to the Second Amended and Restated Credit Agreement, by
and among the Registrant, JPMorgan Chase Bank, N.A. as an Issuing Bank and Administrative Agent, HSBC Bank USA, National Association as a Lender and an Issuing Bank, and Citizens Bank, N.A., Fifth Third Bank, Citibank, N.A. filed herewith.

10.23 | Letter Agreement between the Registrant and Bruce D. Hoechner, dated September 15, 2011 and accepted on September 20, 2011**, filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed September 26, 2011*.

10.24 | Non-Qualified Stock Option Agreement between the Registrant and Bruce D. Hoechner**, filed as Exhibit 10.2 to the Registrant's Registration Statement on Form S-8 (File No. 333-181199) filed May 7, 2012*.

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10.25 | Time-Based Restricted Stock Unit Award Agreement between the Registrant and Bruce D. Hoechner**, filed as Exhibit 10.3 to the Registrant's Registration Statement on Form S-8 (File No. 333-181199) filed May 7, 2012*.

10.26 | Time-Based Restricted Stock Unit Award Agreement (4 Year Cliff Vested) between the Registrant and Bruce D. Hoechner**, filed as Exhibit 10.4 to the Registrant's Registration Statement on Form S-8 (File No. 333-181199) filed May 7, 2012*.

10.27 | Letter Agreement between the Company and David Mathieson, agreed to May 11, 2014, filed with the SEC as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 12, 2014.

10.28 | Letter Agreement between the Company and Janice Stipp, dated October 1, 2015 and accepted on October 5, 2015, filed herewith.

10.29 | Rogers Corporation 2009 Long-Term Equity Compensation Plan, as amended, filed with the SEC as Exhibit B to the Company's Definitive Proxy Statement which was filed on March 24, 2014.

10.30 | Rogers Corporation Deferred Compensation Plan, filed with the SEC as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 26, 2014.

10.31 | Form of Officer Special Severance Agreement between the Company and each of its executive officers, filed with the SEC as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on July 30, 2015**.

18.1 | Preferability Letter from PricewaterhouseCoopers, LLP, filed herewith.

21 | Subsidiaries of the Registrant, filed herewith.

23.1 | Consent of Marsh U.S.A., Inc., filed herewith.

23.2 | Consent of National Economic Research Associates, Inc., filed herewith.

23.3 | Consent of PricewaterhouseCoopers, LLP, Independent Registered Public Accounting Firm, filed herewith

23.4 | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm, filed herewith.

31.1 | Certification of President and Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

31.2 | Certification of Vice President, Finance and Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

32 | Certification of President and Chief Executive Officer and Vice President, Finance and Chief Financial Officer Pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

101 | The following materials from Rogers Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Financial Position for the fiscal years ended December 31, 2015 and 2014; (ii) Consolidated Statements of Operations for the fiscal years ended December 31, 2015, 2014 and 2013; (iii) Consolidated Statements of Shareholders' Equity for the fiscal years ended December 31, 2015, 2014 and 2013; and (iv) Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2015, 2014 and 2013; and (v) Notes to Consolidated Financial Statements.

* | In accordance with Rule 12b-32 under the Securities Exchange Act of 1934, as amended, references are made to the indicated documents previously filed with the SEC, which documents are hereby incorporated by reference.

** | Management contract or compensatory plan or arrangement.

+ | Confidential Treatment granted for the deleted portion of this Exhibit.

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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ROGERS CORPORATION (Registrant)
/s/ Bruce D. Hoechner
Bruce D. Hoechner
President and Chief Executive Officer Principal Executive Officer
Dated: February 23, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 23, 2016, by the following persons on behalf of the Registrant and in the capacities indicated.

/s/ Bruce D. Hoechner |  | /s/ Carol R. Jensen
Bruce D. Hoechner President and Chief Executive Officer Director Principal Executive Officer |  | Carol R. Jensen Director
/s/ Janice E. Stipp |  | /s/ William E. Mitchell
Janice E. Stipp Vice President, Finance, Chief Financial Officer, Principal Financial Officer |  | William E. Mitchell Director
/s/ John K. Krawczynski |  | /s/ Ganesh Moorthy
John J. Krawczynski Chief Accounting Officer and Corporate Controller, Principal Accounting Officer |  | Ganesh Moorthy Director
/s/ Michael F. Barry |  | /s/ Robert G. Paul
Michael F. Barry Director |  | Robert G. Paul Director
/s/ Helene Simonet |  | /s/ Peter C. Wallace
Helene Simonet Director |  | Peter C. Wallace Director
/s/ Keith Barnes |  |
Keith Barnes Director |  |

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