KEMET Reports Third Quarter of Fiscal Year 2012 Results

(PRNewswire) — KEMET Corporation ("KEMET" or the "Company") (NYSE: KEM) today reported preliminary results for the third fiscal quarter ended December 31, 2011. Net sales for the quarter ended December 31, 2011 were $218.8 million which is a 17.3% decrease over the same quarter last fiscal year. Net sales for the nine months ended December 31, 2011 were $774.2 million which is a 2.3% increase over the same period last fiscal year.

On a U.S. GAAP basis, net loss was $(27.8) million, or $(0.62) per basic and diluted share for the third quarter of fiscal year 2012 compared to net income of $27.2 million or $0.52 per diluted share for the same quarter last year.

Non-GAAP adjusted net income was $2.0 million or $0.04 per diluted share for the third quarter of fiscal year 2012 compared to $33.1 million of adjusted net income or $0.64 per diluted share for the same quarter last year.

"We entered this quarter knowing that the impact of the distribution channel inventory rebalancing would have a significant impact on our financial results", said Per Loof, Chief Executive Officer of KEMET. "However, we generated approximately $21 million of cash from operations and we were successful in securing one of our key supply sources through the acquisition of Niotan Incorporated. Even though we expect the next couple of quarters to remain challenging we are positioning the Company for a strong rebound through our continuing realignment of facilities in Europe and supply chain integration when the world economy improves," continued Loof.

On a U.S. GAAP basis, the third quarter of fiscal year 2012 includes a $15.8 million impairment charge related to the Tantalum Business Group. In addition, the third quarter of fiscal year 2012 includes $10.7 million of restructuring charges primarily comprised of termination benefits of $6.1 million related to planned facility closures in Italy that will commence during fiscal year 2013 and charges of $4.5 million to participate in a plan to save labor costs whereby a company may temporarily "lay off" employees while the government continues to pay their wages for a certain period of time. This restructuring activity is a continuation of the Company's efforts to restructure its manufacturing operations within Europe, primarily within the Film and Electrolytic segment. Construction has started on a new manufacturing facility in Pontecchio, Italy, that will allow the closure and consolidation of three manufacturing operations located in Italy. The third quarter of fiscal year 2011 included $1.1 million of restructuring charges primarily associated with the relocation of equipment and $1.0 million of debt and stock registration related fees.

About KEMET

The Company's common stock is listed on the NYSE under the ticker symbol "KEM" (NYSE: KEM). At the Investor Relations section of our web site at http://ir.kemet.com, users may subscribe to KEMET news releases and find additional information about our Company. KEMET applies world class service and quality to deliver industry leading, high performance capacitance solutions to its customers around the world and offers the world's most complete line of surface mount and through hole capacitor technologies across tantalum, ceramic, film, aluminum, electrolytic, and paper dielectrics. Additional information about KEMET can be found at http://www.kemet.com.

QUIET PERIOD

Beginning April 1, 2012, we will observe a quiet period during which the information provided in this news release and our quarterly report on Form 10-Q will no longer constitute our current expectations. During the quiet period, this information should be considered to be historical, applying prior to the quiet period only and not subject to update by management. The quiet period will extend until the day when our next quarterly earnings release is published.

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

Certain statements included herein contain forward-looking statements within the meaning of federal securities laws about KEMET Corporation's (the "Company") financial condition and results of operations that are based on management's current expectations, estimates and projections about the markets, in which the Company operates, as well as management's beliefs and assumptions. Words such as "expects," "anticipates," "believes," "estimates," variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's judgment only as of the date hereof. The Company undertakes no obligation to update publicly any of these forward-looking statements to reflect new information, future events or otherwise.

Factors that may cause actual outcome and results to differ materially from those expressed in, or implied by, these forward-looking statements include, but are not necessarily limited to the following:

(i) adverse economic conditions could impact our ability to realize operating plans if the demand for our products declines, and such conditions could adversely affect our liquidity and ability to continue to operate; (ii) adverse economic conditions could cause the write down of long-lived assets; (iii) an increase in the cost or a decrease in the availability of our principal raw materials; (iv) changes in the competitive environment; (v) uncertainty of the timing of customer product qualifications in heavily regulated industries; (vi) economic, political, or regulatory changes in the countries in which we operate; (vii) difficulties, delays or unexpected costs in completing the restructuring plan; (viii) inability to attract, train and retain effective employees and management; (ix) inability to develop innovative products to maintain customer relationships and offset potential price erosion in older products; (x) exposure to claims alleging product defects; (xi) the impact of laws and regulations that apply to our business, including those relating to environmental matters; (xii) volatility of financial and credit markets affecting our access to capital; (xiii) needing to reduce the total costs of our products to remain competitive; (xiv) potential limitation on the use of net operating losses to offset possible future taxable income; (xv) restrictions in our debt agreements that limit our flexibility in operating our business; and (xvi) additional exercise of the warrant by K Equity which could potentially result in the existence of a significant stockholder who could seek to influence our corporate decisions.

Contact:

Dean W. Dimke
Director of Corporate and
Investor Communications
Email Contact
954-766-2800

William M. Lowe, Jr.
Executive Vice President and
Chief Financial Officer
Email Contact
864-963-6484

KEMET CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Amounts in thousands except per share data)
(Unaudited)

				Quarters Ended December 31,		Nine Months Ended December 31,
				2011	2010	2011	2010

Net sales				$ 218,795	$ 264,654	$ 774,165	$ 757,036

Operating costs and expenses:
	Cost of sales			178,305	192,132	592,128	553,888
	Selling, general and administrative expenses			24,737	27,453	83,368	76,667
	Research and development			7,172	6,947	21,620	19,202
	Restructuring charges			10,748	1,102	13,378	5,197
	Write down of long-lived assets			15,786	-	15,786	-
	Net (gain) loss on sales and disposals of assets			9	29	92	(1,406)
		Total operating costs and expenses		236,757	227,663	726,372	653,548
			Operating income (loss)	(17,962)	36,991	47,793	103,488

Other (income) expense:
	Interest income			(62)	(28)	(136)	(133)
	Interest expense			7,036	7,756	21,718	22,548
	Other (income) expense, net			716	1,471	1,918	(1,647)
	Loss on early extinguishment of debt			-	-	-	38,248
		Income (loss) before income taxes		(25,652)	27,792	24,293	44,472
		Income tax expense		2,119	625	5,897	2,493
			Net income (loss)	$ (27,771)	$ 27,167	$ 18,396	$ 41,979

Net income (loss) per share:
Basic				$ (0.62)	$ 0.96	$ 0.43	$ 1.53
Diluted				$ (0.62)	$ 0.52	$ 0.35	$ 0.82

Weighted-average shares outstanding:
Basic				44,644	28,295	42,834	27,464
Diluted				44,644	51,960	52,302	51,124

KEMET CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Amounts in thousands, except per share data)


				December 31, 2011	March 31, 2011
ASSETS				(Unaudited)
Current assets:
	Cash and cash equivalents			$ 136,049	$ 152,051
	Accounts receivable, net			102,432	150,370
	Inventories, net			212,118	206,440
	Prepaid expenses and other			23,536	28,097
	Deferred income taxes			4,027	5,301
			Total current assets	478,162	542,259
	Property and equipment, net of accumulated depreciation of $770,259
	and $740,773 as of December 31, 2011 and March 31, 2011, respectively			290,045	310,412
	Goodwill and intangible assets, net			20,479	20,092
	Other assets			12,993	11,546
Total assets				$ 801,679	$ 884,309

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Current portion of long-term debt			$ 1,219	$ 42,101
	Accounts payable			71,072	90,997
	Accrued expenses			65,073	88,291
	Income taxes payable			4,239	4,265
			Total current liabilities	141,603	225,654
	Long-term debt, less current portion			229,847	231,215
	Other non-current obligations			58,113	59,727
	Deferred income taxes			6,894	7,960
				-	-
Stockholders' equity:
	Preferred stock, par value $0.01, authorized 10,000 shares, none issued			-	-
	Common stock, par value $0.01, authorized 175,000 and 300,000 shares, issued
		46,508 and 39,508 shares, at December 31, 2011 and March 31, 2011, respectively		465	395
	Additional paid-in capital			468,646	479,322
	Retained deficit			(69,349)	(87,745)
	Accumulated other comprehensive income			8,305	22,555
	Treasury stock, at cost (1,854 and 2,370 shares at December 31, 2011 and
		March 31, 2011, respectively)		(42,845)	(54,774)
Total stockholders' equity				365,222	359,753
				-	-
Total liabilities and stockholders' equity				$ 801,679	$ 884,309

KEMET CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)


						Nine Months Ended December 31,
						2011	2010
Sources (uses) of cash and cash equivalents
	Operating activities:
		Net income				$ 18,396	$ 41,979
		Adjustments to reconcile net income to net cash provided by
			operating activities:
			Depreciation and amortization			33,384	41,303
			Write down of long-lived assets			15,786	-
			Amortization of debt discount and debt issuance costs			2,903	3,964
			Net (gain) loss on sales and disposals of assets			92	(1,406)
			Stock-based compensation expense			1,378	911
			Change in deferred income taxes			909	(1,186)
			Change in operating assets			46,330	(64,485)
			Change in operating liabilities			(48,116)	17,658
			Other			841	(1,885)
			Loss on early extinguishment of debt			-	38,248
				Net cash provided by operating activities		71,903	75,101

	Investing activities:
		Capital expenditures				(31,793)	(19,559)
		Acquisition, net of cash received				(11,584)	-
		Proceeds from sales of assets				-	5,425
				Net cash used in investing activities		(43,377)	(14,134)

	Financing activities:
		Proceeds from issuance of debt				-	227,525
		Payments of long-term debt				(40,581)	(230,300)
		Net payments under other credit facilities				(3,153)	(2,626)
		Proceeds from exercise of stock options				225	21
		Debt issuance costs				(36)	(7,750)
		Debt extinguishment costs				-	(207)
				Net cash used in financing activities		(43,545)	(13,337)
					Net increase (decrease) in cash and cash equivalents	(15,019)	47,630
	Effect of foreign currency fluctuations on cash					(983)	943
	Cash and cash equivalents at beginning of fiscal period					152,051	79,199
	Cash and cash equivalents at end of fiscal period					$ 136,049	$ 127,772

1 | 2 | 3 | 4 Next Page »

Be the first to review this article