As used herein, the "Company", "Rogers", "we", "us", "our" and similar terms include Rogers Corporation and its subsidiaries, unless the context indicates otherwise.

Business Overview

We are a global enterprise that provides our customers with innovative solutions and industry leading products in a variety of markets, including portable communications, communications infrastructure, consumer products, consumer electronics, semiconductors, mass transit, automotive, ground transportation, aerospace, defense and alternative energy. We generate revenues and cash flows through the development, manufacture, and distribution of specialty material-based products that are sold to multiple customers, primarily original equipment manufacturers (OEM's) and contract manufacturers that, in turn, produce component products that are sold to end-customers for use in various applications. As such, our business is highly dependent, although indirectly, on market demand for these end-user products. Our ability to forecast future sales and earnings results is largely dependent on management's ability to anticipate changing market conditions and how our customers will react to these changing conditions. It is also highly limited due to the short lead times demanded by our customers and the dynamics of serving as a relatively small supplier in the overall supply chain for these end-user products. In addition, our sales represent a number of different products across a wide range of price points and distribution channels that do not always allow for meaningful quantitative analysis of changes in demand or price per unit with respect to the effect on forecasting.

Our current focus is on worldwide markets that have an increasing percentage of materials being used to support growing high technology applications, such as cellular base stations and antennas, handheld wireless devices, and mass transit. We continue to focus on business opportunities around the globe and particularly in the Asian marketplace, as evidenced by the continued investment in and expansion of our manufacturing facilities in Suzhou, China, which functions as our manufacturing base to serve our customers in Asia. Our goal is to become the supplier of choice for our customers in all of the various markets in which we participate. To achieve this goal, we strive to make the best products in these respective markets and to deliver the highest level of service to our customers.

At the end of 2008, we began to feel the impact of the global recession on our business as sales volumes declined significantly at the end of the fourth quarter. These volume levels have continued through the first quarter, resulting in a 33.2% decline in sales as compared to the first quarter of 2008. We did experience some slight strengthening in volumes towards the end of the first quarter, as we believe excess inventory was being worked off in the supply chain; however, we believe that 2009 will continue to be a challenging year due to the uncertainty surrounding the global economy. In recessionary times such as these, we believe that our diversification and position in the overall supply chain help to mitigate the initial impact of a recession on us, as we typically experience order declines later than many other companies that are closer to the ultimate consumer of the end-product. Historically, this has also helped us to recover faster than other companies as well, as we provide materials and component products to our customers who in turn sell to an end user, although past history is not an indication of the current marketplace and what will occur in the future. We do believe that we are well positioned to sustain our business through these difficult times, as we have a strong balance sheet with no debt, strong cash flows, and a focus on working capital management.

Overall in the first quarter of 2009, sales declined 33.2% as compared to the first quarter of 2008 from $98.0 million to $65.5 million. All of our businesses experienced declines in volumes, with the most significant declines occurring in our High Performance Foams (HPF) reportable segment (41%) and our Custom Electrical Component (CEC) reportable segment (53%). In our HPF reportable segment, sales declined as a result of both the recessionary economy and corresponding decline in consumer spending, as well as from excess inventory in the supply chain. In our CEC reportable segment, sales declined primarily as a result of the continued decline in sales of electroluminescent lamps, as this technology comes closer to end of life. Sales volumes in our Printed Circuit Materials reportable segment declined by approximately 9% as spending remained relatively strong in this segment, particularly in comparison to the volume declines experienced in our HPF and CEC reportable segments.

As a result of the decline in volumes and outlook for 2009, we announced in the first quarter of 2009 a cost reduction initiative that included a workforce reduction of approximately 10% of our worldwide salaried staff, as well as a salary freeze and significant reductions in other operating and overhead expenses. As a result of this initiative, we recognized approximately $2.8 million in severance costs in the first quarter of 2009. These changes were necessary to better align our internal cost structure with our current volume levels as we believe these initiatives will reduce our total expenses on an annualized basis by approximately $27 million. Rogers' management team is committed to the long-term success of the Company and believes that these steps were necessary to allow us to remain competitive in this economic environment, as well as to position ourselves to successfully emerge from this downturn.

In 2009, we will continue to focus on positioning ourselves to take advantage of the potential opportunities that could arise if and when the global economy begins to shift in a positive direction, as well as potential opportunities that could present themselves during the downturn, as we focus on maintaining our strong balance sheet position, while continuing to manage our working capital requirements. Our new business development efforts will focus on acquiring new businesses or products that will complement our existing product portfolio and allow us to expand either geographically into new regions or into new markets. We will also focus internally on developing new products that will either enhance or expand on our existing product and technology base. These efforts resulted in the acquisition of certain assets of MTI Global Inc.'s (MTI) silicone foam business for $7.4 million. This deal was announced on March 23, 2009 and closed on April 30, 2009. The assets we will acquire include product lines, technology, and manufacturing equipment located at MTI's Bremen, Germany, Richmond, Virginia, USA plant sites. Sales associated with these assets were approximately $21 million in 2008. We believe that this acquisition will allow us to expand our worldwide market presence in silicone foams though expansion into key markets, including aerospace and mass transit, and expansion of our product portfolio and customer base. We also believe we will be able to leverage our existing worldwide market presence to expand the opportunities for MTI's existing products, as well as to develop new solutions utilizing the acquired technologies.

Results of Operations

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

                                                              Three Months Ended
                                                         March 31,         March 30,
                                                            2009             2008

 Net sales                                                    100.0 %           100.0 %
 Manufacturing margins                                         21.3              32.2

 Selling and administrative expenses                           25.5              18.1
 Research and development expenses                              8.4               5.4
 Restructuring charges                                          4.3                 -
 Operating (loss) income                                      (16.9 )             8.7

 Equity (loss) income in unconsolidated joint ventures         (0.6 )             1.1
 Other (expense) income, net                                   (0.1 )             0.6
 Interest income, net                                           0.3               0.9
 Income (loss) before income taxes                            (17.3 )            11.3

 Income tax (benefit) expense                                  (4.0 )             3.3

 Net (loss) income                                            (13.3 )%            8.0 %

Net Sales

Net sales for the first quarter of 2009 were $65.5 million as compared to $98.0 million for the first quarter of 2008. The decrease was primarily the result of sales declines in our High Performance Foams and Custom Electrical Components reportable segments and, to a lesser extent, to declines in our Printed Circuit Materials and Other Polymer Products reportable segments. See "Segment Sales and Operations" section below for further discussion on segment performance.

Manufacturing Margins

Manufacturing margins as a percentage of sales decreased from 32.2% in the first quarter of 2008 to 21.3% in the first quarter of 2009. This decline is directly attributable to the decline in sales volumes during the first quarter of 2009, as well as unfavorable absorption due to the decline in production levels during the quarter as inventory levels decreased from $41.6 million at December 31, 2008 to $35.8 million at March 31, 2009.

Selling and Administrative Expenses

Selling and administrative expenses decreased from $17.8 million in the first quarter of 2008 to $16.7 million in the first quarter of 2009. As a percentage of sales, selling and administrative expenses were 25.5% and 18.1%, respectively, for the first quarter of 2009 and 2008. The overall decrease in costs in the first quarter of 2009 as compared to 2008 can be attributed to a decline in incentive compensation costs; partially offset by an increase in pension costs. The increase in costs as a percentage of sales is due to the significant volume declines experienced in the first quarter of 2009. We implemented certain cost reduction initiatives in the first quarter as we announced a workforce reduction, as well as other operational cost cutting measures; however, we do not believe we will fully realize the impact of these initiatives until the second quarter of 2009.

Research and development (R&D) expense remained relatively flat in the first quarter of 2009 ($5.5 million) as compared to the first quarter of 2008 ($5.3 million). As a percentage of sales, research and development expenses were 8.4% in the first quarter of 2009 as compared to 5.4% in the first quarter of 2008. The decline is primarily due to the large decrease in sales volumes in the first quarter of 2009 as compared to 2008, as overall spending levels remained relatively consistent over that time period. We continue to target a reinvestment percentage of approximately 6% of sales into R&D activities each year. We are focused on continually investing in R&D, both in our efforts to improve the technology and products in our current portfolio, as well as researching new business development opportunities to further expand and grow the business. We believe that technology is one of the cornerstones of our past success and our future success is dependent on our continued focus on research and development initiatives.

Restructuring Charges

In the first quarter of 2009, we announced a cost reduction initiative that included a workforce reduction, as well a significant reduction in our operating and overhead expenses, to better align our cost structure with the lower sales volumes experienced at the end of 2008 and in the first quarter of 2009. We recognized approximately $2.8 million in severance charges and paid out approximately $0.5 million related to severance in the first quarter of 2009.

Also, in the second quarter of 2009, we announced a plan to further reduce our salaried workforce by approximately 5% globally. Severance charges associated with this reduction in force are expected to approximate $1.2 million, which will be recorded in the second quarter of 2009.

In the second quarter of 2007, we underwent significant restructuring activities as a result of the decline of our Durel and Flexible Circuit Material operating segments, which resulted in net charges of $13.8 million in 2007. Such activities, and the related charges, were substantially completed by the end of 2007. The residual financial impact of these activities in the first quarter of 2009 and 2008 was insignificant, except for the a reduction in inventory reserves of approximately $0.5 million in the first quarter of 2008 due to the sale of inventory that had been specifically reserved in the second quarter of 2007.

Equity Income/Loss in Unconsolidated Joint Ventures

Equity income/loss in unconsolidated joint ventures decreased from income of $1.1 million in the first quarter of 2008 to a loss of $0.4 million in the first quarter of 2009. This decrease is due primarily to the significant decline in volumes at our foam joint ventures in China, Rogers Inoac Suzhou Corporation (RIS), and in Japan, Rogers Inoac Corporation (RIC), as these entities experienced market conditions similar to our wholly owned foams operation.

Other Income/Loss, Net

Other income/loss decreased from income of $0.6 million in the first quarter of 2008 to a loss of $0.1 million in the first quarter of 2009. This decline is primarily attributable to a decline in sales commission income from our Polyimide Laminate Systems (PLS) joint venture, as volumes were down significantly quarter over quarter; partially offset by more favorable foreign currency positions in the first quarter of 2009 as compared to the first quarter of 2008.

Interest Income, Net

Interest income decreased from $0.8 million in the first quarter of 2008 to $0.2 million in the first quarter of 2009, primarily due to the decline in interest rates as a result of the Federal government's actions to reduce rates in order to stimulate the recessionary economy.

Income Taxes

Our effective tax rate was 23.2% and 29.4%, respectively, for the three month periods ended March 31, 2009 and March 30, 2008, as compared with the statutory rate of 35.0%. For the three month period ended March 31, 2009, our tax rate continued to benefit from favorable tax rates on certain foreign business activity, as well as from research and development tax credits and the favorable resolution of certain tax contingencies. In the three month period ended March 30, 2008, our tax rate benefited from favorable tax rates on certain foreign business activity.

Discontinued Operations

On October 31, 2008, we entered into an agreement to sell the shares of our Induflex subsidiary to an affiliate of BV Capital Partners. Under the terms of the agreement, Rogers received approximately 10.7 million euros (US$13.6 million at the October 31, 2008 spot price), which represents the purchase price of approximately 8.9 million euros (US$11.3 million at the October 31, 2008 spot price) plus other amounts due under the agreement. In addition to this purchase price, there is an opportunity for Rogers to receive additional earn out amounts over the next three years based on the future performance of the divested business.

Segment Sales and Operations

High Performance Foams

                (Dollars in millions)         Three Months Ended
                                          March 31,        March 30,
                                             2009             2008
                Net sales                 $     17.2       $     29.3
                Operating (loss) income         (4.7 )            4.8

Our High Performance Foams (HPF) reportable segment is comprised of our Poron® and Bisco® foam products. Net sales in this segment decreased by 41.4% from the first quarter of 2008 to the first quarter of 2009 and operating results declined from a profit of $4.8 million in the first quarter of 2008 to a loss of $4.7 million in the first quarter of 2009. The significant decline in volumes was the result of weakened consumer spending and supply chain inventory issues, which negatively impacted revenues across all end markets in this segment for the first quarter of 2009. In particular, cell phone applications experienced significant declines as manufacturers had excess inventory in the supply chain. However, toward the end of the first quarter, sales into the cell phone market began to recover from the volumes experienced at the beginning of the year.

On April 30, 2009, we announced the completion of the acquisition of certain assets of MTI Global Inc.'s silicone foam business, which will be incorporated into our Bisco operating segment and aggregated into the High Performance Foams reportable segment beginning in the second quarter of 2009.

Printed Circuit Materials

                (Dollars in millions)         Three Months Ended
                                          March 31,        March 30,
                                             2009             2008
                Net sales                 $     30.0       $     33.0
                Operating (loss) income         (0.9 )            3.1

Our Printed Circuit Materials (PCM) reportable segment is comprised of our high frequency circuit material products. Net sales in this segment decreased by 8.9% in the first quarter of 2009 as compared to the first quarter of 2008 and operating results declined from a profit of $3.1 million in the first quarter of 2008 to a loss of $0.9 million in the first quarter of 2009. The decline in both volumes and operating results is primarily attributable to the continued soft demand for high frequency materials for low noise block-down converters into the satellite television market. Sales into the 3G (third generation) wireless infrastructure market in China are continuing to progress and are positively impacting this segment's results. Sales into the defense and high reliability markets remained stable in the first quarter of 2009.

Custom Electrical Components

                (Dollars in millions)         Three Months Ended
                                          March 31,        March 30,
                                             2009             2008
                Net sales                 $     13.2       $     28.0
                Operating (loss) income         (3.1 )            1.9

Our Custom Electrical Components reportable segment is comprised of electroluminescent (EL) lamps, inverters, and power distribution systems products. Net sales in this segment decreased by 53.0% in the first quarter of 2009 as compared to the first quarter of 2008 and operating results declined commensurately from a profit of $1.9 million in the first quarter of 2008 to a loss of $3.1 million in the first quarter of 2009. The decline in volumes and resulting decline in operating performance was directly attributable to the continued decline in demand for EL lamps for keypad backlighting in the portable communications market. Power distribution systems for locomotives continued to have strong demand into the mass transit infrastructure builds around the globe. Also, power distribution systems wind power applications continue to have robust demand as more countries focus on alternative clean energy sources. Also, during the first quarter of 2009, we made our first sale into power converters for solar farm applications.

Other Polymer Products

                 (Dollars in millions)       Three Months Ended
                                         March 31,        March 30,
                                            2009             2008
                 Net sales               $      5.1       $      7.8
                 Operating loss                (2.4 )           (1.3 )

Our Other Polymer Products reportable segment consists of elastomer rollers, floats, non-woven materials, thermal management products and flexible circuit material products. Net sales in this segment decreased by 34.0% in the first quarter of 2009 as compared to the first quarter of 2008 and operating results also declined from a loss of $1.3 million in the first quarter of 2008 to a loss of $2.4 million in the first quarter of 2009. These declines are primarily attributable to sales volume decreases of our elastomer rollers and floats products due primarily to the global recession. Also contributing to the decline in operating results were costs associated with our new Thermal Management Systems operating segment, which is still in its start up phase and has yet to generate significant sales volumes. We continuously evaluate the viability of the product portfolio in this segment as it relates to our long-term strategic and operational focus.

Liquidity, Capital Resources and Financial Position

We believe our ability to generate cash from operations to reinvest in the business is one of our fundamental strengths, as demonstrated by the continued strength in our financial position at the end of the first quarter of 2009. We have remained debt free since 2002 and continue to finance our operating needs through internally generated funds. We believe that over the next twelve months, internally generated funds plus available lines of credit will be sufficient to meet the capital expenditures and ongoing financial needs of the business. In addition, we continue to have availability to substantial lines of credit should any unforeseen need impact the period. We continually review and evaluate the adequacy of our lending facilities and relationships.