EX-99.1 2 a07-20438_1ex99d1.htm EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact:

 

David E. Gable

 

 

Senior Vice President and Chief Financial Officer

 

 

davidgable@KEMET.com

 

 

864-963-6484

KEMET Reports Results of 1st Quarter Operations

·                  Net Sales were $183.1 million for the quarter, up 16.5% over last quarter

·                  Gross Margin for the quarter was 21.6%, up from 20.6% in the previous quarter

·                  Net Income on a pro-forma basis was $9.7 million or $0.12 per share

Greenville, South Carolina (July 25, 2007) - KEMET Corporation (NYSE:KEM) today reported that net sales for the quarter ended June 30, 2007, were $183.1 million which represents an 8.0% increase over the same quarter last year and a 16.5% increase over the prior quarter. Net income before special charges was $9.7 million, or $0.12 per share (including a $2.5 million tax benefit), compared to $7.0 million, or $0.08 per share, last quarter and $8.1 million, or $0.09 per share, for the same quarter with prior year.  On a U.S. GAAP basis, net income was $7.0 million, or $0.08 per share, for the current quarter compared to net income of $0.1 million for the prior quarter and net income of $0.6 million for the same quarter last year.  KEMET also reports results before special charges because the results offer an alternative depiction of normal operations.  Comparisons to prior periods are as follows:

 

 

Quarter Ended

 

Year Ended

 

 

 

Jun 2007

 

Mar 2007

 

Jun 2006

 

Mar 2007

 

Mar 2006

 

 

 

(In Millions, Except Per Share Data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

183.1

 

$

157.1

 

$

169.6

 

$

658.7

 

$

490.1

 

 

 

 

 

 

 

 

 

 

 

 

 

Before special charges (non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

9.7

 

$

7.0

 

$

8.1

 

$

35.9

 

$

17.8

 

Net income per diluted share

 

$

0.12

 

$

0.08

 

$

0.09

 

$

0.42

 

$

0.21

 

 

 

 

 

 

 

 

 

 

 

 

 

After special charges (GAAP)

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

7.0

 

$

0.1

 

$

0.6

 

$

6.9

 

$

0.4

 

Net income per diluted share

 

$

0.08

 

$

0.00

 

$

0.01

 

$

0.08

 

$

0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based expense included in results

 

$

2.4

 

$

1.3

 

$

3.9

 

$

6.9

 

$

—

 

Share-based expense per diluted share

 

$

0.03

 

$

0.02

 

$

0.04

 

$

0.08

 

$

—

 

 

“During the June quarter, the Company made progress toward meeting our financial and operational goals,” stated Per Loof, Chief Executive Officer.  “Revenues from our base Tantalum and Ceramic businesses were up 2% on strength in the OEM markets and recovery in Asia.  Gross margin grew from 20.6% in the prior quarter to 21.6% this quarter, reflecting sales growth as well as our ongoing cost reduction efforts.  We realized the benefits of our balanced strategy across geographic markets.  Net income before special charges was $9.7 million, or $0.12 per share, up 39% over the previous quarter on a comparable basis.”

“We are also encouraged by the initial results from our recent acquisition of Evox Rifa, now the Film and Electrolytic Business Group.  Net sales were $22.7 million since the acquisition on April 24, 2007, and operating income was over 5.0% of sales, exceeding our expectations and making a positive contribution to our results.  Our recent experience with the European tantalum business will be a valuable asset as we integrate this business into KEMET.  We remain confident that this acquisition will create new opportunities for KEMET and yield additional benefits for our shareholders.”



KEMET’s common stock is listed on The New York Stock Exchange under the symbol KEM. At the Investor Relations portion of the Company’s web site at http://www.KEMET.com/IR, users can subscribe to KEMET news releases and can find additional Company information.

OUR BUSINESS

The following statements are based on current expectations. These statements may contain forward-looking information, and consequently actual results may differ materially. Current global economic conditions make it particularly difficult at present to predict product demand and other related matters.

·      Net sales for the June 2007 quarter were $105.3 million for the Tantalum Business Group, $55.1 million for the Ceramics Business Group and $22.7 million for the new Film and Electrolytic Business Group.

·      By region, 30% of net sales for the June 2007 quarter were to customers in the Americas, 39% were to customers in Asia Pacific, and 31% were to customers in Europe. This geographic distribution meets the Company’s goal of balancing its business to best leverage its global sales, customer service and manufacturing expertise.

·      By channel, 52% of net sales for the June 2007 quarter were to distribution customers, 18% were to Electronics Manufacturing Services (EMS) customers, and 30% were to Original Equipment Manufacturing (OEM) customers. The higher percentage of OEM business as compared with previous quarters is primarily due to the Evox Rifa business at approximately 66% OEM.  Average selling prices for the June 2007 quarter, adjusted for changes in product mix, were down approximately 1%.

·      Cash and cash equivalents and long-term investments in marketable securities decreased $100.6 million to $157.4 million during the June 2007 quarter, from $258.0 million at March 31, 2007. The decrease was primarily attributable to the acquisition of Evox Rifa ($36.7 million); a scheduled amortization payment on the senior notes ($20.0 million); the repayment of certain of Evox Rifa’s debt ($11.0 million); annual payments of employee benefit items ($15.0 million); the payment of interest on the senior notes and convertible notes ($4.0 million); and capital expenditures ($9.1 million).

·      During the June 2007 quarter, inventories increased $30.2 million to $184.1 million from $153.9 million at March 31, 2007.  Raw materials and supplies increased $21.9 million in the June 2007 quarter, and work in process and finished goods increased $8.3 million. This increase was related to the inventory purchased as part of the Evox Rifa acquisition which was completed on April 24, 2007.

 

 

Fiscal Year Ended

 

Fiscal Quarter Ended

 

 

 

Mar 2005

 

Mar 2006

 

Mar 2007

 

Sept 2006

 

Dec 2006

 

Mar 2007

 

Jun 2007

 

 

 

(In Millions)

 

(In Millions)

 

Raw materials and supplies

 

$

47.5

 

$

45.7

 

$

54.6

 

$

48.8

 

$

55.0

 

$

54.6

 

$

76.5

 

Work in process and finished goods

 

86.4

 

79.4

 

99.3

 

88.6

 

90.9

 

99.3

 

107.6

 

Total inventory

 

$

133.9

 

$

125.1

 

$

153.9

 

$

137.4

 

$

145.9

 

$

153.9

 

$

184.1

 

 

·      Capital expenditures for the June 2007 quarter were $9.1 million.  Depreciation and amortization expense in the quarter was $12.1 million. The Company anticipates capital expenditures for fiscal year 2008 of $50 to $55 million, including $7 million of capital expenditures at our Evox Rifa facilities.

 

 

Fiscal Year Ended

 

Fiscal Quarter Ended

 

 

 

Mar 2005

 

Mar 2006

 

Mar 2007

 

Sept 2006

 

Dec 2006

 

Mar 2007

 

Jun 2007

 

 

 

(In Millions)

 

(In Millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

$

39.6

 

$

22.8

 

$

36.9

 

$

8.9

 

$

13.8

 

$

10.5

 

$

9.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2



·              SG&A expense for the quarter decreased $1.3 million to $21.8 million.  This decrease resulted from a $4.1 million decrease in integration expenses and another $1.3 million decrease in core SG&A offset by increases of $3.0 million for Evox Rifa SG&A and $1.1 million for share-based incentive expense.  The increase in SG&A expense for the fiscal year ended March 31, 2007 over the prior year was primarily due to integration and other special charges for the European tantalum business of $15.9 million, ongoing SG&A expenses related to that business of $5.1 million, and share-based incentive expense of $6.9 million.

·              The level of R&D costs reflects the Company’s continuing efforts to be the “The Capacitance Company.”

 

 

Fiscal Year Ended

 

Fiscal Quarter Ended

 

 

 

Mar 2005

 

Mar 2006

 

Mar 2007

 

Sept 2006

 

Dec 2006

 

Mar 2007

 

Jun 2007

 

 

 

(In Millions)

 

(In Millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, General & Administrative

 

$

51.7

 

$

49.7

 

$

89.4

 

$

21.2

 

$

21.2

 

$

23.1

 

$

21.8

 

Research & Development

 

$

26.6

 

$

26.0

 

$

33.4

 

$

7.4

 

$

8.8

 

$

9.4

 

$

9.1

 

 

·      Special charges for the quarter were primarily due to the manufacturing moves to low-cost regions and a reduction in workforce in Mexico to reduce our costs and capitalize on Lean manufacturing efficiencies.

Summary of special charges in the June 2007 quarter:

 

Fiscal Quarter

 

 

 

Ended

 

 

 

June 2007

 

 

 

(In thousands)

 

 

 

 

 

Manufacturing relocation

 

$

1,335

 

Reduction in workforce

 

1,214

 

Evox Rifa business unit integration

 

131

 

Special charges

 

$

2,680

 

 

Note: The Company incurred $2.4 million of charges related to share-based payments during the quarter. This amount is included in SG&A expenses.  In prior quarters, KEMET recorded share-based payments as a pro-forma adjustment.

QUIET PERIOD

Beginning October 1, 2007, KEMET will observe a Quiet Period during which the information provided in this news release and the Company’s quarterly report on Form 10-Q will no longer constitute the Company’s 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 the Company. The Quiet Period will extend until the day when KEMET’s next quarterly earnings release is published.

This release contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We intend that these forward-looking statements be subject to the safe harbor created by that provision. These forward-looking statements involve risks and uncertainties and include, but are not limited to, statements regarding future events and our plans, goals, and objectives. Our actual results may differ materially from these statements. These risks, trends, and uncertainties, which in some instances are beyond our control, include: risks associated with the cyclical nature of the electronics industry, the requirement to continue to reduce the cost of our products, the competitiveness of our industry, an increase in the cost of our raw materials, the location of several of our plants in international locations, and the possible loss of key employees. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, we can give no assurance that the results contemplated in these forward-looking statements will be realized. The inclusion of this forward-looking information should not be regarded as a representation by our Company or any person that the future events, plans, or expectations contemplated by our Company will be achieved. Furthermore, past performance in operations and share price is not necessarily predictive of future performance.

3



 

KEMET CORPORATION AND SUBSIDIARIES        
CONSOLIDATED U.S. GAAP STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Data)
Unaudited

 

 

Three months ended

 

 

 

June 30

 

 

 

2007

 

2006

 

 

 

 

 

 

 

Income Statement Data:

 

 

 

 

 

Net sales

 

$

183,119

 

$

169,570

 

Cost of goods sold

 

143,542

 

132,715

 

Selling, general and administrative expenses

 

21,807

 

23,920

 

Research and development

 

9,067

 

7,792

 

Restructuring charges

 

2,549

 

4,675

 

 

 

 

 

 

 

Operating income

 

6,154

 

468

 

 

 

 

 

 

 

Interest expense

 

2,600

 

1,448

 

Interest income

 

(1,861

)

(861

)

Other (income)/expense

 

(332

)

(1,199

)

Income tax (benefit)/expense

 

(1,310

)

483

 

Minority interest

 

25

 

—

 

 

 

 

 

 

 

Net income

 

$

7,032

 

$

597

 

 

 

 

 

 

 

Income Per Share Data:

 

 

 

 

 

Net income per share:

 

 

 

 

 

Basic

 

$

0.08

 

$

0.01

 

Diluted

 

$

0.08

 

$

0.01

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

Basic

 

83,889,707

 

86,995,839

 

Diluted

 

84,147,957

 

87,291,324

 

 

4



KEMET CORPORATION AND SUBSIDIARIES

PRO FORMA RECONCILIATION OF RESULTS BEFORE SPECIAL CHARGES TO GAAP RESULTS

(Dollars in Thousands, Except Per Share Data)

Unaudited

 

 

Three months ended June 30, 2007

 

 

 

Before

 

 

 

 

 

 

 

 

 

Special

 

Special

 

See

 

GAAP

 

 

 

Charges

 

Charges

 

Note

 

Results

 

Net sales

 

$

183,119

 

 

 

 

 

$

183,119

 

Cost of goods sold

 

143,542

 

 

 

 

 

143,542

 

Selling, general and administrative expenses

 

21,676

 

$

131

 

(1)

 

21,807

 

Research and development

 

9,067

 

 

 

 

 

9,067

 

Restructuring charges

 

—

 

2,549

 

(2)

 

2,549

 

 

 

 

 

 

 

 

 

 

 

Operating income/(loss)

 

8,834

 

(2,680

)

 

 

6,154

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

2,600

 

 

 

 

 

2,600

 

Interest income

 

(1,861

)

 

 

 

 

(1,861

)

Other (income)/expense

 

(332

)

 

 

 

 

(332

)

Income tax (benefit)/expense (3)

 

(1,310

)

 

 

 

 

(1,310

)

Minority interest

 

25

 

 

 

 

 

25

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss)

 

$

9,712

 

$

(2,680

)

 

 

$

7,032

 

 

 

 

 

 

 

 

 

 

 

Income/(Loss) Per Share Data:

 

 

 

 

 

 

 

 

 

Net income/(loss) per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.12

 

$

(0.04

)

 

 

$

0.08

 

Diluted

 

$

0.12

 

$

(0.04

)

 

 

$

0.08

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

83,889,707

 

83,889,707

 

 

 

83,889,707

 

Diluted

 

84,147,957

 

83,899,707

 

 

 

84,147,957

 

 

Notes:

(1) - Evox Rifa business unit integration costs were $0.1 million for the quarter ended June 30, 2007.

 

(2) - Restructuring costs were $2.5 million as follows:

Manufacturing relocation

 

$

1.3

 

Reduction in workforce

 

1.2

 

Total restructuring charges

 

$

2.5

 

 

(3) - Results include a benefit of $2.5 million recognized as a result of a change in Texas income tax law.

5



KEMET CORPORATION AND SUBSIDIARIES

CONSOLIDATED U.S. GAAP BALANCE SHEETS

(Dollars in Thousands)

Unaudited

 

 

June 30, 2007

 

March 31, 2007

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

111,893

 

$

212,202

 

Accounts receivable, net

 

133,232

 

108,830

 

Inventories

 

184,087

 

153,868

 

Prepaid expenses and other current assets

 

6,166

 

6,816

 

Deferred income taxes

 

5,075

 

5,071

 

Total current assets

 

440,453

 

486,787

 

Property, plant and equipment, net

 

370,543

 

349,174

 

Property held for sale

 

2,647

 

3,647

 

Long-term investments in marketable securities

 

45,470

 

45,767

 

Investments in affiliates

 

119

 

119

 

Goodwill

 

54,852

 

36,552

 

Intangible assets, net

 

17,402

 

14,260

 

Other assets

 

8,336

 

7,110

 

Non-current deferred income taxes

 

530

 

—

 

 

 

 

 

 

 

Total assets

 

$

940,352

 

$

943,416

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

22,910

 

$

20,000

 

Accounts payable, trade

 

85,369

 

70,799

 

Accrued expenses

 

33,998

 

49,777

 

Income taxes payable

 

1,224

 

7,225

 

Total current liabilities

 

143,501

 

147,801

 

Long-term debt

 

226,606

 

238,744

 

Other non-current obligations

 

18,498

 

19,587

 

Deferred income taxes

 

—

 

1,526

 

 

 

 

 

 

 

Minority interest

 

531

 

—

 

 

 

 

 

 

 

Common stock

 

882

 

882

 

Additional paid-in capital

 

322,341

 

321,329

 

Retained earnings

 

238,837

 

228,116

 

Accumulated other comprehensive income 

 

32,415

 

30,419

 

Treasury stock, at cost

 

(43,259

)

(44,988

)

Total stockholders’ equity

 

551,216

 

535,758

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

940,352

 

$

943,416

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6