Good morning, my name is Katy and I will be your conference operator today. At this time I would like to welcome everyone to the Rogers Corporation First Quarter 2012 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question and answer session. [Operator Instructions] Bruce Hoechner, President and CEO of Rogers Corporation you may begin your conference.

With me today are Dennis Loughran, Vice President of Finance and CFO and Bob Daigle, Senior Vice President Power Electronics Solutions and CTO. First, Dennis will dispense with the formalities and then we’ll get down to business.

I would like to point out to all of our listeners on this call that statements in this conference call that are not strictly historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and should be considered as subject to the many uncertainties that exist in Rogers’ operations and environment. These uncertainties include economic conditions, market demands and competitive factors. Such factors could cause actual results to differ materially from those in any forward-looking statements. I will now turn it back over to Bruce.

Despite challenging market conditions, our first quarter revenues and non-GAAP earnings were in line with our guidance. As expected, the global slowdown in infrastructure builds and the European economic issues, continue to take their toll on our business in the first quarter of 2012. We have made good progress with our previously announced restructuring and streamlining initiatives that we expect will result in improved margins as markets recover. These initiatives included improvements in supply chain efficiencies, manufacturing operations, cost reductions, and headcount reductions through a voluntary retirement program and the consolidation of some positions. As a result of these initiatives we feel we are well positioned to improve profitability as volumes return. Across our businesses there were a number of positive results for Rogers during the quarter. Our High Performance Foams business achieved record first quarter sales. We continue to see strong demand for our PORON sealing and impact protection materials for mobile Internet devices, particularly tablets. Internet growth, including mobile devices and their enabling infrastructure continues to be a global mega trend focus for Rogers, accounting for over 26% of our first quarter sales. Although global infrastructure spending has been sluggish for the past few quarters, we are beginning to see signs of recovery. We have also achieved significant growth in sales and market share with our newest printed circuit materials developed specifically to enable the latest smart antenna technologies for 4G infrastructure. Antenna materials are an emerging segment for Rogers and the long term future looks promising. The increasing electrification of automotive technology is helping to drive growth for Rogers in several of our businesses. Sales in our printed circuit materials for automotive blind spot detection systems have been strong. We’ve also seen strong growth in x-by-wire applications for our Curamik DBC substrates as the auto industry continues to move towards greater electrification of automobiles by switching from mechanical to electrical systems. We also are continuing to win designs in hybrid and electrical vehicles for our power electronics solutions and high performance foams. In our pipeline of opportunities we have seen a significant increase in the quantity and value of major programs in our Focus Megatrend markets of Clean Technology, Internet, and Mass Transit. At the end of the first quarter we were working on 682 program opportunities, up 60% over the first quarter of last year. We have been designed into over 400 programs and many should go into production later this year. We believe that our robust design pipeline is a key indicator of future revenue growth. As we continue to grow globally, we recently added 2 executive leaders in Asia to drive our marketing and operational strength in this important region. We announced yesterday the appointment of Helen Zhang in a new role as President of Rogers Asia. Helen’s strong track record of leading and growing global businesses in greater China and across Asia will help Rogers to further strengthen our market position in the region and advance our strategic initiatives. We also recently added a new vice president of Asia marketing to help drive growth for our printed circuit materials in the wired and wireless infrastructure markets as well as other key growth segments in Asia. We are building leadership strength in the region to help forge stronger relationships with converters, fabricators and OEMs to help us capture new growth opportunities. Looking ahead in 2012 we are seeing signs of market improvement but remain cautious in our short term forecast. We will continue to focus on strengthening our technology leadership in core markets and the mega trends that we believe will position us well for future success. I’ll now turn it over to Dennis who will provide details of the quarter.

Bruce provided an excellent overview of the quarter and the many changes going on in Rogers to improve our prospects for the future. So let’s get down to the major financial factors that impacted our quarterly results. As we reported, GAAP results were a loss of $0.10 per share. However, non-GAAP results of $0.26 per share is the basis for comparing to our first quarter 2012 guidance of $0.22 to $0.30 per diluted share. One time net charges totaling $0.36 per share or $6.1 million net of tax, resulted from our publicized streamlining efforts initiated in the quarter. Those efforts will have an immediate favorable impact on our results with approximately $1.5 million in benefit in our second quarter forecast, increasing to $3.3 million in the fourth quarter and beyond. In the second quarter, those benefits will be primarily in SG&A as a result of the staffing reductions. By the fourth quarter, the benefit will be split approximately 60% to gross profit improvement and 40% to SG&A reduction. The reductions will represent a greater than 200 basis point improvement in operating profit margin percentage. Our streamlining efforts are ongoing and we expect more operational improvements to be implemented on our way to achieving a targeted 15% operating margin percent by 2016. For the first quarter of 2012, our businesses generated sales of $121.4 million, a decrease of $14.6 million from last year’s first quarter, for a decline of 10.7%. We had significant growth in a number of key market segments led by mobile Internet devices. However, this was more than offset by weak demand in industrial motor drives and certain other segments. Gross margin for the first quarter of 2012 was 30% as compared to the 31.3% reported in the first quarter of 2011. That decline was primarily attributable to loss contribution of approximately 55% on our year-over-year decline in sales. Selling and administrative expenses for the first quarter 2012 and 2011 were $24.4 million and $24.1 million respectively. The flat year-over-year total reflects containment efforts to hold expenses in the face of the economic downturn impacting our businesses. With the benefit of our streamlining efforts, we expect our normal SG&A to be approximately $23 million on an average quarterly basis through the rest of 2012. However, as reported last quarter, in addition to our normal operating expenses, in the third quarter of 2012 we expect to recognize approximately $1.5 million in pension costs related to the retirement of our former CEO. Research and development expenses were $5.3 million or 4.4% of sales in the first quarter 2012 as compared to $5.2 million or 3.8% of sales in the first quarter of 2011. In the near term, we expect our R&D spending rate to be in the range of 4.5% to 5.0% of sales. Rogers 50% owned high performance phone joint ventures with INOAC Corporation had first quarter 2012 sales totaling $12.8 million with equity income of $0.7 million compared to $18 million of sales and equity income of $1.4 million in the first quarter of 2011. As mentioned in the press release, joint venture sales this quarter were lower than last year’s first quarter due to continued weakness in the Japanese domestic and export markets, particularly LCD TVs, domestic mobile phones, and general industrial applications. The company’s 2012 first quarter effective tax rate was impacted by certain discreet items of which the most significant related to the sale of the company’s auction rate securities portfolio netting to an effective tax rate of 63% on the net loss for the quarter. Excluding the discreet items, the non-GAAP normalized rate was approximately 27% which is also the rate we expect for the remainder of 2012. Rogers ended the quarter with a cash and cash equivalents position of $93.5 million as compared to $79.7 million at December 31, 2012. We improved our cash -- Our improved position is attributed primarily to the previously announced liquidation of our remaining auction rate portfolio which netted proceeds of $25.4 million. The company choose to utilize $10 million of the proceeds to make an accelerated contribution to its defined benefit pension plan which will yield an annual savings of $1.2 million in pension expense. Capital expenditures were $4.2 million for the first quarter of 2012. As outlined in the press release, we expect capital expenditures in 2012 to now be approximately $35 million, down from the previously projected $45 million. The change in forecast is due to a recalibration of capital needs for High Performance Foams as we were able to arrange additional production capacity with our joint venture to fulfill our needs through 2013. With regard to our balance sheet, during the first quarter 2012, our net working capital position increased by $7 million primarily related to the increases in raw material inventory and a reduction in short term payables. In accounts receivable, days sales outstanding decreased to 57 days compared to 59.6 days at the end of the previous quarter and slightly lower than our average performance over the past 24 months of approximately 58 days. Inventories increased by $3.1 million in the quarter to $81.3 million primarily related to an increase in raw materials. Our inventory tracking metric increased to approximately 12.5 weeks of supply versus last quarter’s 11.2. Overall, our current assets ended the quarter at almost 3.6x current liabilities. At the end of the first quarter 2012, Rogers reported outstanding borrowing under its credit faculties of $121.3 million. During the first quarter, we made payments of $1.25 million. We incurred approximately $0.8 million of interest on the debt during the quarter at a rate of approximately 2.5%. This concludes my remarks and I will now turn the call back over to Bruce for some final comments.

Well, I think we’ll open it up now for questions.

[Operator Instructions] Your first question comes from the line of Fred Buonocore, Rodman & Renshaw, LLC.

My first question relates to the High Performance Foam segment and as you indicated it was a record high Q1 revenue for the segment so that’s great. I was looking for a little bit more growth than 3% year-over-year growth, just given the strong trends that we've all been reading about in the smartphone markets and tablets. Can you talk a little bit about maybe why growth year-over-year wasn’t as robust as maybe the news from those device markets would seem to indicate it could have been? And then, talk about High Performance Foams growth opportunities going forward?

Sure. First, as you mentioned we did have record first quarter sales over 2011 first quarter which was also a record sales quarter for us so very strong I’d say from that perspective. When we break down the sales by market segment and we look at the mobile Internet devices, Rogers’ sales were up about 22% year-over-year Q1 over Q1 in that market segment. So while certainly the market continues to be robust in that area and we’ve seen good growth continuing for us, we also see that going forward with new introductions of new designs that this growth will continue. We have achieved design in wins in almost every OEM product that’s coming forward so we’re strong on that side. In terms of sort of counter balancing this high demand growth, what we saw in Q1 was slow growth in the Mass Transit area so that kind of pulled us down. Industrial also had some slower growth than we would have liked to have seen. But, as we move forward, we continue to expand our product line into other areas even beyond mobile Internet devices. This quarter we’ve introduced conductive foam, electrically conductive foam that will provide EMF and RFI shielding. So this is a new opportunity for us, it goes certainly beyond mobile Internet devices into other areas as well. We’ve also introduced our next generation of thin soft ultra compressible LCD gas gain [ph] material so we continue to build out our portfolio on that side. We’re also in the early days of developing our unique technology in molded PORONand PORON XRD for the sports and leisure apparel markets. Protective sporting equipment, protective cases for smartphones, tablets, ereaders and so forth. So that’s still early days for us there, we’ve seen strong growth and certainly without a doubt a lot of market pull and we’re busily developing our manufacturing processes, scaling things up, and making investments so we can meet the needs out there.

Then secondly, realizing that you always tend to avoid any sort of outlook beyond the next quarter given sort of the short turnaround nature of your orders, but would it be possible just given your comments on the release and on the call in your prepared remarks, would it be possible to give us a little bit more information about what you’re thinking about from a revenue growth standpoint for the full year? It seems like some of your markets seem to have bottomed and maybe you’re showing a gradual upward trajectory now and if you look at what you’ve seen thus far into the second quarter can you give us some sense of what you’re thinking about for the full year revenue and I guess, do you think you can generate any growth in total revenue for the year at all?

Well, Fred as you know, we do give just one quarter ahead guidance and that’s what we’ve done. Generally what we will say and what I’ll say is that we’re looking at the second half to be improving for us. Now, so much really depends on the situation, the financial situations in Europe, a pickup in demand in Asia across the Rail, Clean Tech, and infrastructure 3G/4G build out and so on. So we know we’re in the designs, we know that we’ve been spec-ed in, the question is when does the production start pulling and it is very hard for us to predict beyond certainly a quarter where that’s headed. But, the signs are there, as we said and we’ll hear maybe through some of the questions this morning that we’re starting to see some backlog building in some of our businesses so that’s a good indicator that things are starting to take off. So I can’t give you full year guidance but certainly I would say that second half should be an improvement.

Finally, I’d just ask about your announcement yesterday, the appoint of Helen Zhang to run your Asia business, just looking at her background this looks like someone you may have worked with in a past life. Can you talk a little bit more about Ms. Zhang’s background and what you expect her to bring to that organization?

Helen and I have known each other for probably 15 or 20 years in the various times that I’ve worked out in Asia I’ve worked with her. From about 2006 to 2011 Helen worked directly for me as general manager in Rohm & Haas coatings for North Asia and then once Dow bought Rohm & Haas she moved over there. She then worked for a couple years with the Interconnect business for Electronic Materials in Dow Chemical. Helen is a very accomplished commercial, marketing, and also supply chain expert. So we’re bringing her into Rogers to help us manage overall our infrastructure in Asia. Over 50% of our business is in Asia and so my view, and the view of the leadership of the company is that we require someone with executive oversight of all of our operations out there. I think equally important to have someone who is from China leading our Asian operations and leading our Asian activities. I think that sends a very strong message to our Asian customers who continue to grow in stature and importance. Also, having the knowledge of the industry through the Interconnect Business from Dow will help us certainly in our ACM business. Helen is, as I said, an extremely talented and accomplished executive and we look forward to having her on board.

Your next question comes from Daniel Moore from CJS Securities.

With regard to the guidance in Q2, still obviously a pretty wide range for revenue growth. What areas of your business, if any, do you see the most variability within that guidance range?

I would say that we’re looking at ACM as one area that we believe that there could be some uptick certainly coming -- we’re planning for some in the second quarter and certainly moving forward from there. But again, it is very dependent on the demands that are placed on us by our customers. What I will say is that the supply chain through the system is very low in inventory so when this comes this will be a big one for us and it’s just a question of timing. I think we’re probably a little bit more upbeat on the Curamik side, we’ve seen again, a little bit of uptick there. Probably not as bullish as we certainly are on ACM but we’re starting to see things move ahead there as well and we’ll continue, I believe, on the foam side to see very good market performance on that.

You mentioned specifically Curamik, if we take a quick step back and look at the acquisition. Obviously, highly accretive kind of hit a wall in Q4 and Q1, can you talk a little bit about where the market is now, what signs you're -- maybe a little bit more detail on the signs that you’re seeing that there’s some improvement and that things are starting to recover there?

I’m going to ask Bob Daigle to give us the details on that.

As we talked about on the last conference call, the dynamic that drove down demand for Curamik was heavily influenced by 2 factors. One, was the decline in the wind market especially in places like China, where they had some grid issues and they pretty much shutdown many of the wind programs and everybody in the industry felt that. But probably more impactful for us, but we believe short term in nature, was the downturn in the intelligent motor drive, the variable speed motor drive area where around the middle of last year when they pulled back on -- tried to slowdown growth in China, the banking sector pretty much shut down and demand basically in the industrial sector dried up for a while. And the response, as is usually is the case, you get the combination of a little bit of sluggish demand and everybody adjusts their inventories. Then part of what we felt late in Q4 and we talked about in Q1 was that factor, where it wasn’t just a decline in demand but everybody is basically pulling back pretty hard in inventory. Our customers were pretty open about that with us in terms of the fact that they were consuming more of our product in production than we were shipping so they could bring their inventory down. That pretty much played out as we expected. In the first quarter there may be some of that inventory correction left for Q2 but overall, I’m feeling pretty good about the outlook. What we talked about is we thought we had bottomed out in Q1, we’d see some improvement in Q2 and based on, again, we rely on the industry reports in terms of the outlook for the overall year for 2012 but everybody is expecting, what I’m reading, is expecting a nice rebound this year and that would bode well for the second half of the year. If you want me to touch on PDS I can touch on that as well?

I’d be happy to let you do it.

All right In the case of our Power Distribution business, if you recall what triggered a major decline in the second half of last year was China and some influence in Europe and a soft economy but basically, when they had the high speed rail accident and all the debt issues with the Ministry of Rail surfaced, they pretty much shut down mass transit programs in China. As we talked about in the first quarter, the intent of the Chinese government was to basically restart those this year and that overall for 2012 they were expecting their spend to be down about 15% versus 2011 and that’s happening. They’re focusing on you’ve got the high speed trains and you’ve got the ultra high speed trains. Right now there’s not much expected in terms of the ultra high speed trains but the high speed trains are back up in terms of order rates and we’re seeing very positive signs there as well in terms of recovery from the bottom.

A quick accounting question, the $1.2 million cost savings for pension, will that run through the P&L or is that strictly cash savings?

That runs through the P&L.

So that’s in addition to the kind of $13 million in restructuring?

That’s all in the $13 million number for the year starting in the second quarter.

Your next question comes from the line of Avinash Kant, D.A. Davidson & Company.

A few questions, first is regarding the guidance for Q2, your guidance, does it incorporate growth in every sub segment or you expect some growing and some not growing? I’m talking more in terms of Printed Circuit Materials, High Performance Foams, Power Electronics and others.

By segment there’s growth across all the segments, smaller in some and larger in others. But as you can tell by the uptick it is pretty conservative in terms of the expectations of growth.

Any differentiation like which grow faster which could grow less?

Well, I’d tell you which could grow faster or less when you look at what Bob and Bruce have talked about in terms of expectations, certainly ACM could grow faster if the indications that Bruce had mentioned come to fruition. When you look at -- we expect in the mobile Internet device -- so if the pieces of High Performance Foams relative to the mobile Internet device, the industrial and the Mass Transit are probably relatively the same. With mobile Internet devices being the faster of those 3 segments, Mass Transit being the slowest for sure, and Circuit Materials has the ability to rebound nicely and as Bob just mentioned if the indicators start happening for Curamik they could also grow quicker than even what our estimates have been.

At one point on the call you did mention that Internet growth segment was roughly 26% of Q1 sales. Could you give us the numbers for Mass Transit and sustainable energy? Those are the 3 segments you’ve been highlighting as the growth drivers.

For Clean Energy it’s 22%, in the Megatrends, for Internet growth we said it was 27% and for Mass Transit it’s 8%.

Dennis, you talked about the operating margin target of 15%, what kind of gross margin target do you have? Longer term?

Longer term? We would like to achieve 40% or above. In that 14% target we’d probably -- in that 15% target you'd probably be at the 38% range on average to get to that level. If we achieve 40% we would probably over achieve that 15% operating profit number.

Just a modeling question, the tax rate going forward for the rest of the year what should we be thinking of?

Per my comments 27%.

Did you give the depreciation for the quarter?

$6.5 million, depreciation and amortization.

Your next question comes from the line of Shawn Severson from JMP Securities.

I was wondering, obviously China’s becoming increasingly important for you and I was just wondering if you guys looked at the business and tried to figure out how much of your revenue now is coming from China in a sense that internal consumption in the Chinese economy versus exports? I’m just trying to gage where the exposure is these days in terms of geographies for real end use consumption.

It’s difficult to get that fine of a line on this because materials are consumed, some are produced and re-exported out of China, others are consumed inside of China. I think the point that I would make is that we’ve developed very strong relationships with many Chinese producers, ZTE and others, the big boys, and so we continue to supply those folks as well as other multinationals that are producing and selling both inside of China and outside of China but it’s very difficult to break that out.

Kind of along the same lines but in Europe, though, if you look at kind of the turmoil there and what’s been going on, have you guys seen a material impact on your business specifically to Europe that you can quantify or talk about as it relates to things happening there?

Not specifically to Europe. Overall, what we have seen is consumption of materials for example, in Curamik there’s purchases that are made in Europe and then exported out of Europe into places like China and so forth for the power modules. So it becomes again, related back to some of the situation more towards what’s happening in Asia rather than the overall story of Europe itself.

Lastly, through the inventory corrections and some of the weaker quarters here, how’s pricing been holding up? Has anything changed on that front that you can talk about or have things been fairly steady?

Pricing has been fairly steady. One of the things that we continue to look at, particularly as we introduce new products, is getting the value pricing that we think we should get for the performance of our products. That’s a little bit behind the efforts we have to bring in some experienced marketing talent, people who are able to analyze market needs and also convert that to the value that we create. So we’ll continue to push on the pricing side of things, but generally our pricing has been very steady.

Your next question comes from the line of Jiwon Lee from Sidoti & Company.

I just wanted to get back on the antenna materials market opportunity especially if we think about the 4G side of things, what will that be dollar wise?

As we’ve said, and we’ve seen some very good growth in the short term here with our variable frequency antennas and what we’re seeing is that, that will continue to grow probably at the rates that we’ve seen for the next few quarters. Certainly, it’s been strong, I would say in terms of market size the market is probably in the range of $100 to $150 million. I’m going to say our target if you go out and look at the market dynamics, market growth, it’s really driven by 4G and share shift because historically 70% or 80% of the antennas were metal and cable and you’re seeing this transition with 4G, we think north of 50% to 60% that are going to be -- that are printed circuit based products. With that dynamic we see this market growing towards the $100 million. Today it is smaller because a lot of the 2G/3G is still bent metal and cable but we’re seeing very, very nice growth rates with the 2 new product platforms that we introduced over the past couple of years that were aimed directly at this market opportunity and we continue to see some very nice growth in that area as 4G LTE rolls out.

I was curious as to why you put out this kind of a long term margin goal and also to get to that operating margin what kind of revenue level were you assuming?

The revenue level would be obviously we said we’d like to grow double digits over the next 3 to 5 years and so organically you could be in the range of $700 to $800 million depending on how that works itself out. So part of that margin improvement is the fact that we’ll be holding our overhead costs to less than 5% growth per year on a dollar basis and having the top line grow at double digits as well as taking the gross margins from what I mentioned were currently 30% in the guidance up to about 36% to 38%. Obviously, things happen in the span of time that if you added those numbers up I just told you we’d probably exceed the 15% so there could be margin mix portfolio changes, all those kinds of things, so we’ve set that long range target to drive the businesses through this transformational stage that we’ve started here in the company to make sure we’re moving every aspect towards a much better return number for the company.

Then lastly for me, Bruce you highlighted 400 or so design wins and if you could talk about whether or not you’re in store [ph] source with any of this and how much conviction do you have for some of these products to happen? Or, said differently, how many design wins do you have a high conviction for ultimate success and ramp?

I would say the majority of our design wins are single sourced and in other words it’s based on the performance of our product and so substitutes are very difficult. So I would say certainly 75% of these we’re very confident that we’re in and could not be easily displaced. Now, the real question comes, when does production really start? And so we know that we’ve got, for example, in 4G we know that we have 85% to 90% market share with our design in wins so we know we’re very solid there, it’s just a question of when that’s going to start really taking hold for us.

Your next question comes from the line of Stefan Mykytiuk from Pike Place Capital.

I just wanted to follow up on that question, you gave that the programs were up 60%, the pipeline, and you’re designed in on 400, what was the increase on the design in amount?

If we just compare it to last year quarter-on-quarter it was in the range of about 175 or so over last year’s end of Q1.

About 80% improvement.

You said some of them start to ramp later this year, is really 2013 when the bulk of those start to kick in?

It’s very hard to tell. A lot of these wins are in mobile Internet devices, a number of them, and so there’s a shorter design life cycle for those so we would expect to see those happen this year for the most part. Some of the longer term ones around wired infrastructure or wireless infrastructure, Clean Energy, and so forth might take a little bit longer. We know for example, in some of the electric and hybrid vehicles that we anticipate certainly later this year to see a ramp up in some of those design wins as new models get introduced. So we’re very, very pleased with how we proceeded on the EV and HEV designs.

On the 400, is there any way to break out how much of that is kind of new wins versus kind of incremental business versus -- like, on the mobile device I assume some of those are you’re winning new products but then there’s other stuff, products, that are going away. How much of that is really incremental versus really just replacing an existing program?

As you said, it’s very hard to tell but certainly in mobile Internet devices there’s probably more churn than any place else in the portfolio so a lot of those wins are next generation and so forth and so we should anticipate a steady continued growth as the market grows for us in mobile Internet devices. In other areas, a lot of these are new wins for us. As I mentioned earlier, the hybrid electrical vehicles but also wired infrastructure, that’s a new opportunity, that’s the digital systems that we’re investing in. So that is new stuff and we’re pretty excited about that aspect. Also, in wireless infrastructure, much of that is 4G, that’s new for us as well in the sense that those demands will come as that gets built out. Of course, the one that I definitely want to mention is our strong growth that we’ve seen in our antenna market which is a new market for us using some of our existing and newer technology in circuit boards.

Lastly, I know you said the inventories were up mostly due to raw materials but the last couple of quarters you had talked about trying to draw down inventory and now we’re increasing it. Is that a signal to us that you are expecting business to start picking up?

No signal there. Many of the businesses in terms of production and balancing out inventories when we came into the first quarter we actually were trying to reduce overall inventories and when you look at the mix of raw, in process, and finished goods some of the raw materials went up. In process and finished goods went down slightly. When you look at the balance of all the inventories some of it has to do with the inability to bring down inventories that had been produced in the fourth quarter because different product lines were selling better in the first quarter than others. Overall, we would still like our total to be declining slightly and certainly a lot of it will come as we start to grow out of this thing and inventories go down. So I think part of that was the unsuccessful effort to bring down -- we were hoping to get a $3 million decline so there’s no signal there other than the fact that a few of the businesses actually had raw material increases going on.

Your next question comes from the line of Dana Walker from Kalmar Investments.

If raw material prices are rising do you expect some type of a cost of -- or a gross margin pinch?

From our perspective our biggest raw material is copper and we have various methods where we manage our costs over a range of periods and so don’t necessarily see -- if that were to be an impact, that would be affecting us over a short period of time.

How have you used the softer couple of last quarter’s at Curamik to make any possibly necessary adjustments or at least to drive towards the types of margin goals you have long term, adjustments in their production processes?

This is Bob Daigle. We’ve used frankly the sluggishness to take, and I think that we talked about it in the fourth quarter, that we were adding some capacity in Eschenbach and we continued with that project. Part of that is because we expect demand to recover, the fundamentals are strong in the market but the other reason for doing that was to position ourselves so that we could reduce our structural costs by migrating from what’s pretty expensive in Germany which is a 7-day work week to something more normal, a 5-day work week with the ability to do overtime on Saturday. We pulled the trigger on that, it’s allowed us to reduce our hourly workforce. We had a pretty sizeable temporary workforce in that organization, which we have some flexibility to pull back on, which we’ve done. Effectively, we’ve positioned ourselves with a little bit better leverage as volume picks back up.

I don’t know if it would be too sensitive to talk specifically about Curamik but can you address where you think the breakeven level is with Curamik right now and what type of flow through you would have off of that breakeven level?

Let’s put it this way, we continue to analyze the situation that we have there. Our belief, as I think Bob has pointed out, our belief is that the fundamentals are very strong and that it will recover, but we are working to take costs out. One of the things that we’ve also looked at or we are actually actively doing is in the inspection side of things we’ve automated a significant amount of activity there which, as Bob pointed out, we’ve been able to reduce some of the workforce, some of the temporary workforce very rapidly. We'll continue to be seeking those kinds of opportunities.

Let me ask one last question related to gross margins. Bruce you mentioned earlier about value pricing, where you would like with the introduction of new products that make a big difference to your customers, to keep more of that value for yourself. Aside from that, if there is an aside from that, what would be the difference in Rogers being a 32% to 35% let's say, gross margin business historically and prospectively being as much as a 36%, 38% to 40% gross margin business?

The question is really in addition to our pricing activities what other things are we pursuing? A number of areas. Certainly, one of the areas when I arrived here at Rogers and looked at is in our manufacturing supply chain management. I think Rogers has areas of excellence in these disciplines but I think there’s room for improvement so we actually have undertaken and appointed a person to manage what we’re calling our process excellence and supply chain activities to see if we can consolidated, which we will, some of our purchasing power. But also, to get a lot more in depth and involved in looking at our supply chain management and manufacturing management to pull scrap rates down and to get lean manufacturing in place across the network. That’s a longer term activity, certainly there’s some short term wins that we’ll have, but I envision a very aggressive approach that we’ll take in that aspect on the manufacturing side.

What role will the cost reduction phase that you’ve just gone through, though, which sounds like by the end of this year it will begin to reflect in gross margin, what role will that play in raising the bar over time?

The ones that we’ve announced would be probably about 150 basis points in improvement by fourth quarter. I believe in terms of certainly cost and the pricing efforts, both of them to have incremental impact going forward in the future with new effort that we’ll undertake and we’ll certainly disclose them as they become material in nature to our prospects.

[Operator Instructions] Your next question comes from the line of Fred Buonocore from Rodman & Renshaw, LLC.

Just in printed circuit materials your press release had mentioned that high reliability applications were soft in terms of volume. That would be defense related I guess which is a decent chunk of that segment, if I understand correctly. Is any of that softness do you think defense budget related and inventory draw dawn ahead of program cuts? Or, can you give us some insight into your defense related business?

Well, defense is about 7% of Rogers and what our view is on what’s happened here in the first quarter is a draw down on inventory. We believe though that a number of our design wins in this area for future activities will build back up some demand for us. So I don’t see this as a demise or reduction, significant reduction, in the share that this will occupy for Rogers, I just think it’s more of a temporary adjustment in the market.

Just one other one, just circling back with Bob related to Curamik and your view that you think things are improving and should improve or could improve later in the year, are there any specific - I mean, I know you don’t always know where your products are going to, but are there any specific niches within the overall end market for power electronics that you have some sort of indications where demand or construction activity should be improving? Any specific things that we can look to, to try and gage whether activity is improving there or not?

It's Bob Daigle. Let’s talk about the various segments and the largest piece of the business is in the variable frequency, the intelligent motor drive space which the indications there is it’s tied to the CapEx area, industrial equipment markets. But again, I think the thing that we’re focusing on is if you look at the softness of demand, a lot of that was inventory correction and in particular as you ended first quarter with some of the Japanese customers at the end of their fiscal year, they were pretty aggressive in trying to bring down their inventories. So I think if you’re looking for some of the outlook, some of the industry reports you read out there I would focus around the power semiconductor area and looking at some of the industry projections there, which are still looking for overall growth for 2012 and do talk pretty openly about the sluggishness in demand in first quarter. In terms of wind, unfortunately wind is a pretty small part of Rogers' overall business 2% to 3%, but frankly I’m not real optimistic that we see a significant rebound in wind this year. If you look at the area of solar, that’s been pretty stable frankly. You read a lot, you hear a lot about how the solar cell manufacturers are getting crushed because of oversupply but where we play is really in the power electronic, the inverters, the converters there and that’s been pretty stable for us overall. Then I think the shining star for us has frankly been where we’ve seen very nice growth even with the depressed power electronics industry is in the whole x-by-wire electrification of the automobile to improve fuel efficiency. That continues to look very, very positive and I think there again, you can find some industry reports that will help you with that.

Your next question comes from the line of Colin Rusch from ThinkEquity.

This is Noah in for Colin. You just touched on the solar question but if you could expand a little bit more on what you’re seeing in terms of demand from micro hybrid, where geographically you’re seeing the pickup and what you think the competitive landscape is like there that would be terrific?

This is Bob Daigle again. In terms of micro hybrids, I think we’ve talked about this in a previous calls, you can think about our content is really tied to the degree of electrification. So if you go to a full EV type opportunity it’s pretty wide spread opportunities from us from power distribution to substrates for the inverter controls to foams that are used to seal in the battery area so for us I think you want to pay most attention to the full hybrids, plug-in hybrids, the EV markets. The micro hybrids is a pretty small, small part of our business so again if you read I think first quarter there was some encouraging news in the HEV market in general where I think in general it grew from 2.2% of overall vehicle production a year ago to 3.3% of overall vehicle production in the HEV areas. There seems to be some positive trend in the overall market but again, for us, I think you want to pay attention to the full hybrids and the higher degree of electrification beyond that.

Just in terms of what you are seeing in the overall market perhaps, understanding that the content is higher for the HEV and EV, what are your expectations as you look into the next couple of quarters?

We’ve seen the pickup and I think more importantly for us has been, and as Bruce talked about, the number of design wins in that we continue to capture more and more of these opportunities for Rogers and the contents are looking pretty good for us. So I think for us our outlook is very, very favorable for the HEV market but it goes beyond just the market dynamic, it’s our content that’s improving.

We have no further questions in queue. I turn the call back over to you Mr. Hoechner.

Thanks for all the questions. I believe that Rogers is well positioned to capitalize on the strong growth trends we see in our core markets over the next several years. As the technology leaders in our key businesses we are continuing to strengthen our marketing and operations to deliver even greater value for our customers and our stockholders in the years to come. Thank you for joining us on the call today and have a good day.

This concludes today’s conference call. You may now disconnect.