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Acquisitions | 12 Months Ended
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Dec. 31, 2017
Business Combinations [Abstract] |
Acquisitions | ACQUISITIONS Diversified Silicone Products On January 6, 2017, we acquired the principal operating assets of DSP, pursuant to the terms of the Asset Purchase Agreement by and among the Company, DSP and the principal shareholders of DSP (the Purchase Agreement). Pursuant to the terms of the Purchase Agreement, we acquired certain assets and assumed certain liabilities of DSP for a total purchase price of approximately $60.2 million. We used borrowings of $30.0 million under our credit facility in addition to cash on hand to fund the acquisition. DSP is a custom silicone product development and manufacturing business and expands the portfolio of the EMS operating segment in cellular sponge and specialty extruded silicone profile technologies, while strengthening existing expertise in precision-calendered silicone and silicone formulating and compounding. 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 other intangible assets related to acquired customer relationships, developed technology, trademarks, and a covenant not to compete. 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 values assigned to the acquired assets and liabilities in the transaction:
(Dollars in thousands) | January 6, 2017
Assets: |
Accounts receivable | $ | 2,724 |
Prepaid expenses | 21 |
Inventory | 2,433 |
Property, plant & equipment | 1,589 |
Other intangible assets | 35,860 |
Goodwill | 17,793 |
Total assets | 60,420 |
Liabilities: |  |
Accounts payable | 179 |
Accrued expenses | 50 |
Total liabilities | 229 |
Fair value of net assets acquired | $ | 60,191 |
The other intangible assets consist of customer relationships valued at $30.5 million, developed technology valued at $1.8 million, trademarks valued at $3.3 million, and a covenant not to compete valued at $0.3 million. The fair value of acquired identified other intangible assets was determined by applying the income approach, using several significant unobservable inputs for projected cash flows and a discount rate. These inputs are considered Level 3 under the fair value measurements and disclosure guidance. The weighted average amortization period for the other intangible asset classes are 11.8 years for customer relationships, 4.3 years for developed technology, 11.7 years for trademarks, and 4.1 years for a covenant not to compete, resulting in amortization expenses ranging from $1.1 million to $2.0 million annually. The estimated annual future amortization expense is $1.9 million for 2018, $1.8 million for each of 2019, 2020, and 2021 and $1.7 million for 2022. During 2017, we incurred transaction costs of $0.5 million related to the DSP acquisition, which were recorded within selling, general and administrative expenses in the consolidated statements of operations. The results of DSP have been included in our consolidated financial statements only for the period subsequent to the completion of the acquisition on January 6, 2017, through December 31, 2017. DSP’s net sales for the three and twelve months ended December 31, 2017 totaled $5.5 million and $22.3 million, respectively. DeWAL On November 23, 2016, we acquired all of the membership interests in DeWAL Industries LLC (DeWAL), pursuant to the terms of the Membership Interest Purchase Agreement, dated November 23, 2016, by and among the Company and the owners of DeWAL for an aggregate purchase price of $135.5 million. We used borrowings of $136.0 million under our credit facility to fund the acquisition. DeWAL is a leading manufacturer of polytetrafluoroethylene and ultra-high molecular weight polyethylene films, pressure sensitive tapes and specialty products for the industrial, aerospace, automotive, and electronics markets. The 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 other intangible assets primarily related to customer relationships, developed technology, trademarks, and a covenant not to compete. 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 values assigned to the acquired assets and liabilities in the transaction:
(Dollars in thousands) | November 23, 2016
Assets: |
Cash and cash equivalents | $ | 1,539 |
Accounts receivable | 7,513 |
Other current assets | 691 |
Inventory | 9,915 |
Property, plant & equipment | 9,932 |
Other intangible assets | 73,500 |
Goodwill | 35,985 |
Other long-term assets | 101 |
Total assets | 139,176 |
Liabilities: |  |
Accounts payable | 2,402 |
Other current liabilities | 1,292 |
Total liabilities | 3,694 |
Fair value of net assets acquired | $ | 135,482 |
The other intangible assets consist of customer relationships valued at $46.7 million, developed technology valued at $22.0 million, trademarks valued at $4.3 million, and a covenant not to compete valued at $0.5 million. The fair value of acquired identified other intangible assets was determined by applying the income approach, using several significant unobservable inputs for projected cash flows and a discount rate. These inputs are considered Level 3 under the fair value measurements and disclosure guidance. The weighted average amortization period for the other intangible asset classes are 13.5 years for customer relationships, 8.6 years for developed technology, 5.2 years for trademarks, and 3.8 years for a covenant not to compete, resulting in amortization expenses ranging from $2.4 million to $4.3 million, annually. The future estimated annual amortization expense is $3.7 million for 2018, $4.1 million for 2019, and $4.3 million for 2020, 2021, and 2022. During 2017, we incurred transaction costs of $0.1 million related to the DeWAL acquisition, which were recorded within selling, general and administrative expenses in the consolidated statements of operations. In 2016, we incurred transaction costs of $2.1 million related to this acquisition. DeWAL’s net sales totaled $62.0 million and $5.4 million for the years ended December 31, 2017 and 2016, respectively. Arlon 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. and its subsidiary Bairnco Corporation, as amended, (the “Arlon Purchase Agreement”). Pursuant to the terms of the Arlon Purchase Agreement, we acquired Arlon and assumed certain liabilities related to the acquisition for an aggregate purchase price of approximately $157.0 million. We used borrowings of $125.0 million under our bank credit facility in addition to cash on hand to fund the acquisition. Arlon manufactures high performance materials for the printed circuit board industry and silicone rubber-based materials. 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 other 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 values assigned to the acquired assets and liabilities in the transaction:
(Dollars in thousands) | January 22, 2015
Assets: |
Cash and cash equivalents | $ | 142 |
Accounts receivable | 17,301 |
Other current assets | 856 |
Inventory | 9,916 |
Deferred income tax assets, current | 1,084 |
Property, plant & equipment | 30,667 |
Other intangible assets | 50,020 |
Goodwill | 85,565 |
Other long-term assets | 106 |
Total assets | 195,657 |
Liabilities: |  |
Accounts payable | 4,958 |
Other current liabilities | 4,385 |
Deferred tax liability | 23,225 |
Other long-term liabilities | 4,540 |
Total liabilities | 37,108 |
Fair value of net assets acquired | $ | 158,549 |
The other 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 other intangible assets was determined by applying the income approach, using several significant unobservable inputs for projected cash flows and a discount rate. These inputs are considered Level 3 under the fair value measurements and disclosure guidance. The weighted average amortization period for the other 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 2018 and 2019. During 2015, we incurred transaction costs of $1.5 million related to the Arlon acquisition, 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. During the year ended December 31, 2015, net sales attributable to Arlon totaled $100.0 million and operating income attributable to Arlon totaled $25.1 million. 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 operating segment. 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. Pro Forma Financial Information The following unaudited pro forma financial information presents the combined results of operations of Rogers, DSP, DeWAL and Arlon as if the DSP acquisition had occurred on January 1, 2016, the DeWAL acquisition occurred on January 1, 2015, and the Arlon acquisition 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 DSP, DeWAL and Arlon acquisitions been completed as of January 1, 2016, January 1, 2015 and January 1, 2014, respectively, and should not be taken as indicative of our future consolidated results of operations.
| For the Years Ended December 31,
(Dollars in thousands) | 2017 | 2016 | 2015
Net sales | $ | 821,043 |  | $ | 724,877 |  | $ | 693,462 |
Net income | 81,184 |  | 50,349 |  | 41,976 |

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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