Good morning. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rogers Corporation 2011 Fourth Quarter and Year-end Conference. [Operator Instructions] I would now like to turn the call over to Mr. Bruce Hoechner, President and CEO. Mr. Hoechner, you may begin your conference.

Thank you. Good morning, ladies and gentlemen. With me today are Dennis Loughran, Chief Financial Officer; and Bob Wachob, Senior Vice President, CTO and Vice President of Power Electronics Solutions. First, Dennis will dispense with the formalities and then we'll get down to business.

Thank you, Bruce. I would like to point out to all listeners 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.

Thanks, Dennis. Slowing demand and year-end inventory adjustments across many of our markets resulted in lower than originally anticipated sales and earnings for Rogers in the fourth quarter. Sequentially, sales volume declined in our Curamik Power Distribution Systems and Printed Circuit Materials business units. We believe the lower than expected demand was directly related to market uncertainty caused by the economic crisis in Europe, as well as a slowing growth in spending in China, particularly on infrastructure projects in railway, as well as wind, and solar power. In addition, lower demand in the wireless infrastructure market due to aggressive year-end inventory management across the supply chain curtailed end of year network infrastructure spending particularly in North America and Europe, adversely affecting our PCM sales. We do however remain very confident in the mid and long-term strength of our markets. Within our businesses there were a number of positive results for Rogers during the quarter. Our High Performance Foams sales for the quarter while down sequentially from quarter three, seasonally our high quarter were ahead of both our Q1 and Q2 2011 sales. Our strong sales were driven by the mobile Internet device sector where Rogers continues to achieve new design wins and strong demand from some of our key customers. We also continue to see expansion in our applications for molded PORON into sports apparel and athletic equipment achieving record quarterly sales in this rapidly growing segment. In our PCM business, while we had an overall slower sales quarter we achieved record quarterly sales of our high frequency circuit board products used for the 3G and 4G tower antennas driven by demand in Asia. For the full year, Rogers reported all-time record revenue from continuing operations of $553.2 million, a sales increase of over 46%. As we enter 2012, we…

Thank you, Bruce and good morning again to everyone. As you have read in the press release and heard in Bruce's comments there were a lot of moving parts to the fourth quarter for Rogers. At the bottom of it all is that are results came in slightly better than our previously announced reduced guidance. However, still at levels below where we would all like them to be. The reporting of the results required some detailed explanations in the press release due to both the incurrence of discontinued operations accounting for the TMS shutdown and disclosure of one-time expenses. All of our comparison periods have been fully restated for the discontinued operations. The high-end of our restated non-GAAP guidance was at $0.31 per diluted share. Our actual non-GAAP results as reflected on page 7 of our press release came in at $0.42 per diluted share. That improvement was due to slightly better gross margin performance by a 140 basis points and lower expenses. That $0.42 per share non-GAAP performance is the basis for comparing to our first quarter 2012 guidance of $0.22 to $0.30 per diluted share. At the high end of that range we are projecting lower earnings with only slightly improved margins offset by higher SG&A related primarily to higher compensation cost in the quarter, lower JV income, as well as the higher projected tax rate for the period. While the markets worked their back, we are taking steps outlined by Bruce to ensure that our organization and management team are as efficient and cost effective as possible in managing our business opportunities in the megatrends. We have taken and will take further actions to streamline our manufacturing and overheads to improve our underlying cost structures to deliver the best level of shareholder return possible. For the fourth…

Thanks Dennis. We'll now entertain your questions.

[Operator Instructions] The first question comes from the line of Daniel Moore from CJS Securities.

Can you give little bit more detail around some of these streamlining initiatives that you have mentioned in the press release and then your comments Bruce.

Sure. Our intention with the streamlining initiative is to establish a cost structure of Rogers that we believe is sustainable for the long term, but also supports our growth objectives as a high-tech supplier to the industries. Our savings are going to come from a number of different areas including operational efficiencies in our manufacturing units. We are now looking carefully at all of our manufacturing, looking at how we can improve operations looking at lean and so forth. We are also looking across the Supply Chain for savings as well. We've also looked at our non-performing assets and disposing of those items and in some cases some staff reductions, but our view is that our business remains very steady at Rogers and we have no real plans for any major workforce reductions.

Okay and I realize they are a sort of nonrecurring, but could you just maybe take it as a quantifying cost slightly incurred over the next couple of quarters in terms of severance restructuring?

We're basically starting at the very start of this process and we hope by the time that we report first quarter results to have the more definitive analysis of this to base the disclosure on that kind of numbers on, so we'll need 6 to 8 weeks to get that done.

Okay. Maybe one more and I'll jump back. Given the departures that you mentioned of Mike and Pete, is Bruce -- the team in place that you want now going forward, there are a couple of gaps still needed to be filled. Just give us a sense of where you are in that process?

Sure. From the senior leadership perspective, we have Jeffery Grudzien who had been leading our Global Sales and Marketing Organization as I mentioned we moved him into the ACM leadership role. Jeff is a very accomplished, very experienced Roger's senior leader and with that move what we have done is we've embedded the sales teams into each business unit which again from my perspective as we move the company to be more customer centric this is a much better way for us to get alignment across the business units with customer needs and so forth. In the High Performance Foams business, we have a very strong team at the second level of leadership. My involvement there is to get to know that team in a lot more detail and also to help guide that business again to be more customer and market oriented. In addition, we're looking across the world as I look at our positioning in Asia. We will continue to add our skill sets out there particularly in the leadership areas around marketing and commercial activities, 50% of our sales are in that region and we need to continue to focus and develop out there. So, I think in summary to your question, I think we have a lot of good bench strength at the next level down in the organization under the senior business leaders. We continue to develop, we will be out looking for some talent, but I like what I see in the team.

Your next question comes from the line of Robert Spandau from ThinkEquity.

I had a question about Q1 guidance. It looks like sales is sort of flattish but you are looking for better earnings. Can you talk about sales mix in Q1 and where you think the better cost are going to show up, is it the gross margin or is it OPEX?

Well the guidance is down, so comparing to the upper end range of $0.30 per share versus the $0.42. At the upper end we're about comparable to where we were in the fourth quarter. I mentioned we're at slightly improved margins, we had 29.5% of fourth quarter. I think we're just over 30% in that upper end guidance range so slightly improved. I believe that would likely be due to less unfavorable absorption because we were doing a lot of production shut down and mitigation during the fourth quarter and at sort of stable level was less of that. So, I think that would be the only piece of favorable improvement there. When you look at the rest of it, we're looking at a 27% tax rate versus 22% I believe and the JV income is slightly lower related to the comments we made about our JVs in Japan and SG&A is up, some of that is related to the fact that during the fourth quarter we did have year-end true-ups related to bonus compensation, as well as we were holding back due to a bad quarter just trying to curtail as much variable expenses we could, so that is primarily the reason for about the $2 million increase in SG&A.

Okay, then I looked at the sales level while it is down a little bit, it is not down by a whole lot, but if you’re looking at better utilization and increasing gross margin, but your sales hasn't changed dramatically, are you seeing undue price pressure? And you ran markets in Q1 or it is just more of a mixed issue?

From quarter to quarter, there is not much pricing action that takes place, so if there are slight changes in margin it can be product mix, we have broad range of products out there in the market place, but I am thinking that with the de minimis amount of lesson 50 basis points of margin improvement, there is really not much that we have gone in depth to look and see if there was a problem or benefit.

Your next question comes from the line of Fred Buonocore from Rodman & Renshaw.

Just want to take a look at Robert's question maybe asking it in a different way or from a different angle. In looking at the sales guidance and the range that you've given really the midpoint is looking for a sequential decline in revenue, but it sounded like in Bruce's prepared commentary that some of the end markets are starting to see at least modest improvements, so I am just wondering why we would see some sequential decline in revenue if you're seeing some of the end markets perking up and if that is just something to be conservative or do you have some things going up, but some things still retracting.

Our view is that we are seeing some pickup in our end markets and as I mentioned in the prepared text the issue is how fast does it roll through the supply chain. So, what we said is we don't have clear visibility, we know it is coming I think what we're saying in our guidance is that we're tampering that guidance until we see some real movement through the system. One thing I will comment though is that we continue to see some weakness in the Curamik business as we moved through the quarter one and that has to do certainly with the wind particularly in Asia, but also in Europe where we had very strong sales last year that has curtailed. We have not seen that recovery yet. We have seen on the industrial side some pickup on the control modules from the Curamik perspective so that is good news. One of the things that we were very concerned about was the investment particularly in China in new equipments that appears to be starting up again and so that should flow through, but overall Curamik is going to have a slower quarter Q1 than certainly we had last year.

That leads me to my next question as it relates the Curamik, certainly below the run rate that had been through much of the year and below what I was expecting, it sounds like in addition to wind you saw some down tick on the industrial motor drive business through the control modules. Can you just give us a little bit more color on what happened there, what might be changing and where you see that market going in the more intermediate term?

I am going to ask Bob Daigle who is the Vice President for that business to comment on what he sees in the market.

So Fred, as we steadfast to and I think this relates to your earlier question as well. Part of what the dynamic you saw on Q4 was really softening during the quarter so we actually kicked off with the Curamik business pretty well in October and then we saw a trail lost during the quarter and part of the reversal your seeing is really of a low phase in December. The triggers for this couple of things that we have mentioned before, one of the biggest areas of decline was related to the wind market and in particular in China. I think there has been a fair amount of press out there about the issues that the China has seen in terms of hooking up the wind turbines to the grid and having everything functioning properly. So there is a tremendous amount of investment today in China that is on track to get the wind capacity that is in place online, but what that's meant for the industry is really a low in terms of putting new wind turbines out of the market place. So you've got that factor. The other thing that as we talked about before is really related to the credit markets and in particular in China and we are all aware of the softness in Europe and the economic downturn, but something that you read about this, but isn't nearly as visible as the Chinese government stepped on the brakes in the second half of 2011 that had some impact through the manufacturing sector in terms of CapEx spending which we believe is part of the reason we've seen from softness in demand and the industrial applications requirement.

Next question relates to the anticipated increase in CapEx. Can you give us a little bit more color on the investments that you are making there? And as a second part to that going back to I guess early 2011 late 2010 you had investment in your Suzhou facility, as well as investment in Arizona. So, can you talk about where you are going with CapEx and can you also talk about where we are with those previous investments in those facilities and what is happening there?

I certainly can. I'll start with the previous and bring it to date. Beginning of 2011 was basically the end of the capital project for putting in the China Laminate Facility for a certain materials business. They built that mostly during 2010 and prior and then 2011 was a ramp-up period so little capital spending, we had higher expenses during the year to ramp that facility up. So, that is up and running, it is being qualified, shipping good product and we have set 2012 to be the year of that facility ramps-up to a good level of capacity. The North American Power Distributions Busbar facility was a fairly small capital expenditure of under a couple of million dollars to start producing Busbar solutions in North America that is in place and was qualifying products during the second half of the year. So those were 2 fairly modest 2011 numbers. The ramp-up in the $45 million is approximately $37 million primarily related to major capacity expansions that need to be in place by mid-2013. The first one is related to Circuit Materials, the High Speed Digital project, everybody knows the paper product with Hitachi. So we are moving ahead on bringing North American production of that product line to Rogers in 2013. Our PORON production lines have enough capacity to get us through about early to mid-2013, so we have a capital project that will put a PORON production line in place during 2012, and be ready to go by the middle to the end of 2013. And the last one is, basically with our Curamik business, it was growing just like the rest of the businesses at over 20% and as we look at capacities for 2013 for bonding, for structuring, in ancillary capacities, that business will also need some capacity and we are going to be starting those in 2013. The expenditures in 2012, excuse me.

Okay, no that was good summary thanks, Dennis. And just finally, looking at the balance sheet, the pension liability jumped up sequentially to close to $70 million from like $30 million-ish in Q3, does that have to do with your retired CEO's pension at least in part or what are we seeing there?

No, not at all. I am believing that all major corporations probably had some jump in that balance, simply due to the fact that the measures that you require to go through at the end of every year to calculate your present value, you future liabilities are dependent on several things. First of all, the discount rate, which is typically picked by third parties and certified by auditors, that is the long term high corporate bond rates and that number drops, so you have a basically valuing future liability discounting at a lower discount rate, the present value goes up. When you look at the portfolio yields, we have been seeing over the last couple of years, they have been dropping on our Defined Benefit portfolio and we were forced to take, just by the practicality of the nature, lower assumed interest earned on our portfolio, those two things combined on a present value basis to generate about $40 million plus of increase in that unfunded U.S. GAAP liability on the balance sheet. We currently would be -- with those calculations, we would still be over 90% funded on both of our plans and would be looking this year in terms of our cash contributions to it. Last year we were at about 94% and we calculated roughly, it would take probably an incremental $4.5 million to $5 million of contribution this year to bring us back up to our previous year level. But the impact of that increase is amortized over about 15 years into expense, hence my comment to the $1.4 million per quarter of incremental expense.

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

So maybe, I didn't get the comments from Dennis's side. So Dennis when you talked about the SG&A throughout 2012 being somewhere between $25 million to $26 million, that includes the pension contribution right?

Absolutely, the pension expense contribution is a cash payment.

Your contribution to the plan?

We accrue the expense of $1.4 million per quarter extra over 2011, so that is in our expenses for the income statement, the extra dollar value of contribution is a cash payment that is made during the year to our pension portfolio is separate and apart from the accrual of the expense.

But you also talked about specific to Bob's plan, which quarter was that you said there will be another $1.5 million?

In the third quarter due to U.S. GAAP considerations and when the termination of his service contract is, there will be an accrual of $1.5 million to close out the pension accounting for him. And that is an addition to our normal expenses, not in that 1.4, thank you Avinash for clearing that up.

Okay. And then also historically in Q1 you have had somewhat higher SG&A expenses due to stock comp and everything else, should we expect something similar this year also?

Somewhat reduced this year, due to less people of the age bracket that required immediate expensing. So, might be about half of, typically $1 million or maybe $500,000 in the first quarter and that's built into our numbers. Last year, if you will remember we had options in the second quarter, this year we did them in the first quarter. So that's actually moved up when you compare to last year will be $500,000 higher expense versus the first quarter and when we get to the second quarter we will have lower.

Would you give us some idea, I don't when you talk to, when you acquired Curamik, you had talked about that contribution from Curamik for the year and everything, now that you have finished the year, what was the eventual contribution from them in revenue or maybe if in PSMs if you could talk about that?

I believe it was about $0.35 to $0.38 of incremental EPS.

And in revenue terms?

Basically 133. We had originally estimated $0.20 to $0.30 when we recently did the acquisition.

Yes. And you talked about $115 million to $125 million in revenues.

Exactly.

So it really came out better than what you have thought. Also, in terms of margin profile, now that you have Curamik integrated, but at the same time you seem to be doing some streamlining efforts too. How should we think of the margins, like do you have any margin model that adds so much in revenues you would like to get to this kind of gross margins?

At full capacity, we would hope over a two to three-year period of moving them closer to Rogers' average. They were I believe 27% to 28% exclusive of amortization related to the acquisition and so they have got a 3 to 4 percentage point improvement that they have to do and through the integration Bob and his team are looking at ways to streamline some of those activities, especially in the very heavy people related inspection processes that over the next couple years we hope to ameliorate some of that cost. But, we will remind you that on an operating profit basis, they are at or slightly above Rogers' average. So they have lower commercial expenses to offset with a pretty high manufacturing cost.

As far as business is concerned, where do you think you are in terms of specifically in the foams side of the business, High Performance Foams?

So from High Performance Foams business, again we look at the mobile internet device applications as continuing to grow. We are seeing continued new tablets being rolled out and from our perspective, we have been getting a number wins, design wins and so we believe that market should remain strong for us going forward. We are also seeing on the industrial side, it is strengthening there as well, Seal, Gasketing and so forth we are seeing that pick up. So, I think what I would characterize certainly for Q1, a good quarter for the foams business.

And final question, so the tax rate you guys talked about 27% for the year, is it going to be steady all through or it is going be depending on mix, of course most likely, I believe the sales team in Asia.

When asked for a range, tax people give you a range of 15% to 44% Avinash. It always goes up and down because of certain income-related activities by quarter, so it has to, before you mix of profitability is and so we try, you have seen our rates plus or minus 3 to 4 percentage points off of an average, so that is the best we can really do.

But, what I am trying to get from this one is that, do you expect a meaningful change in mix of sales to regions throughout the year?

They have based their average based on our entity projections for the year, so we think that is a fairly confident rate right now.

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

Just wanted to dig in a little bit more on the inventory issue. I think you said, you know you feel like they have, the things have cleared up a bit and I was just wondering if you could talk a little bit more about why you feel that way? And then specifically into the LTE side of it, when that market does come back and I know you are further back in the supply chain, but how long is it from, when you see an order versus when we would expect one of the 4G boxes to be installed in the U.S.?

On the inventory side, the reasons that we see inventory being cleared out is we are starting to see some strength and pick up in some of the demand, particularly as I mentioned in the China area and also starting in North America on the circuit boards. So, we know that that's cleared out and balance is improved. And so we are starting to see that. I think the other point to make is on the industrial side at Curamik. We do see those customers who are in those module areas starting to pick up, now there is still, we believe in China some back order or back materials are backing up in the inventories on the wind and solar side, particularly in the wind. So overall, we see improvement and balancing on the inventories and the question really still remains, how fast will it ramp up in Q1 and into Q2 and that again is our problem, where we sit in the supply chain. On the LTE side I am going to turn it over to Bob.

Shawn usually and there is always some variability depending on how much products is in the supply chain for the OEMs, but generally speaking if they are getting, if they are ramping, we see it pretty early. We are pretty far back in the supply chain, our products end up in sub-assemblies, they go to the OEM's, so they usually place the orders pretty early on, but again you always have the little bit of variability driven by how much inventory everybody has in the supply chain. And back to Dennis's question that was asked earlier, I think by Fred, about the whole CapEx spend and in particular what we are doing on the ACM side is really trying to address, I think what you are getting at Shawn and if you read the market reports out there, there is an expectation that LTE will be very strong in 2012. I mean, I have seen, I think I have supplied the numbers out there that look at a 100% increase in CapEx spending for LTE in '12 versus '11 and '13, what I am reading is that they are expecting LTE to really be the dominant spend. And for us it is not just, we have been in 3G for a long time, a pretty high share, our share is higher in 4G, but as we talked about before, our content in particular with one of the major OEMs, their architecture can be three to four times in terms of the amount of content. So, we are trying to get ready for that and make sure that we are prepared for when this ramp that everybody is talking about hits later this year, that we are prepared for that and carrying it to 2013.

So if they wanted to install a box, the end of April they wanted to deploy one in a particular market, well would you be seeing that order when, like end of February or in the March like a 6-week, 8-week type for new product for you guys?

It is hard to say Shawn, but they're pushed, at least what we are hearing these days is the OEM's have pushed pretty hard for quick delivery. It is not like the old days, where they would put contracts out and it will be six months later. I think you are talking pretty short fuses and assuming that the inventories are down.

And then just as you rollout to fuel the CapEx, should we expect any impact on gross margins this year or is that more of a 2013 issue, regard to absorptions.

2012 will be the expenditure year, there won't be any depreciation or facility going live until maybe second or third quarter of 2013, depending on which project.

And then on High Performances Foams, I know you don't talk about specific customer, but we have had of lot of new products coming out, in both tablets and smart phones over the last six months and I was just wondering if you give us an update, kind of programs, maybe a rough number of percentage of programs you are on or how you want to quantify it?

Well in terms of, again we don't talk about specific applications or specific customers, but I will say for 2011, we had 68 design wins in production and that measured very well in terms of maintaining what we term as relatively high market in the smart phone and in the tablet market. So we continue to get the wins and so that will translate into what we think will be solid sales in 2012.

And just lastly, I wanted to clarify, did you say that the locomotive business has picked up in China already, I know you addressed the wind issue and you spoke some points on the renewables, but the locomotive side that you are seeing reorders there now?

Yes, I think with everybody still believe it is going to be later in the year before you see something significant although. The Chinese government, I don't know if you have read this Shawn, but basically they put an announcement out earlier in the year that basically said that, I think the Ministry of Rail announced that their CapEx budgets for 2012 are going to be about 63 billion, which is down about, I think they are saying 15% from 2011 spend. But for us considering, what has happened for us in Power Distribution, where last year we had a very strong first half, driven heavily by China, then we saw a lot of, really fourth quarter that as this thing ramps back up, if they live up to what they are talking about in terms roll outs in '12, we would expect things to come back as we move through the year.

Your next question comes from the line of [ James Marshall from the Bulletins ].

You might have just addressed this in a general way, but us being your local newspaper, we are concerned about the plants at Rogers, Connecticut and Woodstock, Connecticut, can you speak the particulars of staff reductions at those facilities?

I won't really speak specifically about staff reductions, but as I mentioned, really what we are looking at is streamlining the organizations, we don't necessarily see any major staff reductions. What I will say and this is related to the last question about the foams business, we are running very hard at our operations here at Woodstock and that's producing the foams. So demand continues to be very strong, we don't see any let up in that. So, as a matter of fact, we need to continue to add capacity and do de-bottlenecking, certainly de-bottlenecking here in Woodstock. So from that perspective, from the production line perspective, I think we are in very good shape and we will continue to push our teams to make the products.

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

And just kind of wanted to talk about the revenue side for this year. Obviously, the hope now is sequential improvement throughout the year and if we have to think about where could you possibly see some surprise upside in the second half, which year do you envision?

From our perspective, again we are seeing some strength in the automotive side of our business, the X5 Wire has been a very strong growth for us in 2011. We think we will see that continuing in 2012, will that be a surprise. I don't think it is surprise, if you look how that market is moving, Rogers has a very good positioning under the hood as car companies move from the belt driven drives of the air conditioning and so forth to the motor driven and the electrical drives. And so we will continue to see that as that migrates across the Atlantic to the US car makers, a lot of the German's are doing it now. So that's one area. The other one that we see some strength in is the blind spot detection, this is side view mirror notification of someone in the lane next to you in the car, Rogers has about $4 per car of our circuit board material. And what we are seeing is that that market also taking off and even Ford now in the Ford Focus is offering that as an option. So we see that market growing substantially over the next few years. By 2016, our understanding is that about 25% of the cars made will have that capability. Again we have very high market share there. So that's an upside for us.

Okay, good. And then back on the Curamik, Dennis, if the currency -- if we are using, what would the 2011s revenue has been? And also kind of going through what you are going through now with the Curamik, would you be still expecting growth from that business this year?

If you are saying, if we adjusted 2011 for what we are seeing in the rate now we would probably see a 4% to 5% reduction in revenue from last year, so that would be $5 million or $6 million top line reduction, so that would be down from last year. And your second question again, I am sorry?

Would you be still expecting growth from Curamik this year going through what you are going through now?

I would say, with the steep decline during the latter part of the fourth quarter and looking at first and second quarters and not seeing visibility the second half with the decline in exchange rate and what they are seeing in the first half think it as a very difficult year and possibly be down from the totals for 2011. Not seeing the full year. And you just say looking at first quarter they are down from the fourth quarter, quarter-over-quarter and hopefully they can come back in the second quarter and beat first quarter they would be on the upward swing but very difficult to project being at 2011 rates right now.

Just an additional comment on the Curamik. What could drive some upside here is how we see investment going in China, particularly in capital investment in factories and so forth, a significant part of that business is around the motor drives and so forth. As we see that pick up that could pull-through through the rest of the year. Again, the visibility forward, early indications, a few things that look good, but we don't just simply don't have that visibility and we will be watching carefully.

Yes, Jiwon, it's Bob Wachob. The industry reports I have been reading, if you look at the biggest application if you recall for Curamik is in the industrial motor drive and they are still looking over a multiyear period that this is a double-digit growth market, but if you look at just '12 and the snapshot for '12, they are really talking about single-digit growth. And then with the inventory correction issues that took place beginning in Q4 and we are seeing in Q1 then that makes it harder frankly to come back up over 2011 revenue levels.

I think that's fair. And then on the CapEx, the $45 million for this year, did I hear correctly the biggest portion of the expansion would be on the ACM, the circuit materials side?

No, of that -- I mentioned the total of about $37 million of the $45 million being strategic capacity expansions. In that total, the high speed digital project and the PORON project they were about equal and Curamik slightly less but they are fairly comparable in terms of the kind of capacity percentages they need to add in 2013.

And then most of those high speed digital and PORON capacity addition would be in China?

We are determining the right locations. Right now our high speed digital service model is to be producing laminates in the United States with possible future expansions in Asia wherever the market takes us. Likely for the PORON probably we got to fix the location closest to our customers.

[Operator Instructions] And your next question comes from the line of Daniel Moore from CJS Securities.

I'll make it quick. Interpolating your comments of very cautiousness in H1, but also some pick up in end markets and how that might roll through the supply chain. From what you see to date would we at least expect sequential improvement in Q2 over Q1 in revenue and earnings adjusting for some of those one-time items? Obviously, just trying to get a sense of how you see the full year playing out?

We would see certainly sequentially an increase in Q2 over Q1 that is traditionally what we see also in the markets, in the markets that we serve, but as I mentioned we are seeing glimmers of the strength coming back. So, our view is as we said before certainly first half is not as robust of this year as certainly as it was in 2011, but sequentially we should see it move up.

Your next question comes from the line of Fred Buonocore from Rodman & Renshaw.

Yes. This is relative again to the CapEx expenditure. Can you give us some update on the high speed digital projects and where you are with Hitachi on that? What the market looks like and maybe dimensionalize the revenues you are generating there now versus what you could expect to see here 2 years from now.

Yes. So Fred, this is Bob Daigle. As we talked about this is I guess the way to think about the what is going to drive the short term for ACM it is LTE and then in the midterm so really 2013 to 2014 we would expect to see some impact from the high speed digital. It is still a relatively small part of the business because we're as we have mentioned in previous calls we have been qualified at the OM level, we've been qualified by the fabricators and the supply chain and we're in the process of being designed in. So, most of what you see are qualification size orders these days and we would expect at least I would think a lot of 2012 for high speed digitals around that. Getting qualified team things up for growth in 2013. I think what we have talked about is if you go out a few years, this could be a sizeable piece of the ACM business numbers around 40 million to 80 million, 80 million if you go up more like 5 years, so fairly substantial and impactful. What we are in the process of doing is Beta was the first generation product and the collaboration is going very well with Hitachi in terms of developing and introducing a second product line offering that is even higher performance and we think that will be well received as well by the market players.

And with no further questions in queue, I turn the call back over to Mr. Hoechner for any closing remarks.

Thank you. In closing, I believe that Rogers is well positioned to capitalize on the strong growth trends that we see in our core markets over the next several years. As we continue to transform our company to be even more customer centric and market oriented. I see Rogers as a company of great promise that can deliver even greater value for our customers and our stock holders in the years to come. Thanks for joining us today. Have a good day.

And this concludes today's conference call. You may now disconnect.