Kemet Corporation (fka KEM)

[di4]

KEMET Reports Fourth Quarter and Fiscal Year 2009 Results
May 19, 2009 8:00:00 AM


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View Additional ProfilesGREENVILLE, S.C., May 19 /PRNewswire-FirstCall/ --


Financial Highlights:


-- Net sales for the fourth quarter were $136 million and $804.4 million
for fiscal year 2009
-- Fourth Quarter GAAP net income (loss) per share of $0.06 compared to
$(0.14) for prior quarter ended December 31, 2008
-- Fourth Quarter Non-GAAP net income (loss) per share of $(0.23) compared
to $(0.06) for prior quarter ended December 31, 2008
-- SG&A expenses declined $7.8 million compared to quarter ended March
31, 2008 and $5.2 million versus fiscal year 2008

-- Cash balance increased $13.8 million during quarter ended March 31, 2009


KEMET Corporation (OTC Bulletin Board: KEME) today reported preliminary results for the fourth quarter ended March 31, 2009. Net sales for the quarter ended March 31, 2009, were $136.0 million, which is a 43.6% decrease over the same quarter last year and a 28.7% decrease over the prior quarter ended December 31, 2008. Net sales for fiscal year 2009, which includes a full year of operating results for the acquisition in October 2007 of Arcotronics Italia S.p.A., were $804.4 million which is a 5.4% decrease compared to the prior fiscal year ended March 31, 2008.


On a U.S. GAAP basis net income was $4.5 million, or $0.06 per share for the fourth fiscal quarter compared to a net loss of $20.5 million or $(0.24) per share for the same quarter last year and compares to a net loss of $11.1 million or $(0.14) per share for the prior quarter ended December 31, 2008. The Non-GAAP net loss, excluding special charges, was $18.5 million or $(0.23) per share for the current quarter compared to net loss of $2.3 million, or $(0.03) per share for the same quarter last year and compares to a net loss of $4.9 million, or $(0.06) per share for the prior quarter ended December 31, 2008.


The current quarter includes a net $28.6 million gain related primarily to the curtailment of a post-retirement benefit plan, $2.5 million of impairment charges related to long-lived assets, $1.8 million of restructuring charges and acquisition related integration expenses and $1.3 million of non-recurring interest amortization charges.


"Our industry and our business continue to be affected by the worldwide recession. Inventory management was a key focus for us during this last quarter and proved to be a success as we increased our unrestricted cash for the quarter by $13.8 million over last quarter even as our sales declined almost 29% from the prior quarter ended December 31, 2008," stated Per Loof, KEMET's Chief Executive Officer. "We may have hit the bottom in some markets and regions this past quarter, but we expect further decline in some markets through this current quarter. I am pleased by the actions we have taken recently that have strengthened our balance sheet and we continue to pursue that objective. Continued pressure on our operating cash will remain a challenge for us as we maneuver through the balance of the calendar year," continued Loof.



Management believes that investors may find it useful to review the Company's financial results that exclude special items as determined by management. These special items include impairment charges associated with goodwill and long-lived assets, integration costs incurred as a result of recent business acquisitions, restructuring charges related primarily to employee severance and equipment moves, losses incurred due to the early retirement of debt, benefit plan curtailments, non-recurring interest amortization charges, certain inventory adjustments, other non-cash acquisition related expenses, and sales or disposals of certain asset groups. Management believes that this Non-GAAP disclosure is useful to investors in that it provides a supplemental way to possibly better understand the underlying operating performance of the Company. Management uses Non-GAAP financial reporting to evaluate operating performance; however Non-GAAP financial performance should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP.


The following table provides reconciliation from GAAP net income (loss) to Non-GAAP net income (loss):



GAAP to Non-GAAP Reconciliation
(Unaudited) Fiscal
Quarters Ended Years Ended
------------------------- --------------
March December March March March
2009 2008 2008 2009 2008
------ --------- ------ ------ ------
(Amounts in millions, except per share data)
Including special items (GAAP)
Net sales $136.0 $190.7 $241.2 $804.4 $850.1

Net income (loss) $4.5 $(11.1) $(20.5) $(276.9) $(17.6)
Net income (loss) per share
(basic and diluted) 0.06 (0.14) (0.24) (3.44) (0.21)

Excluding special items
(Non-GAAP)
Net income (loss) $4.5 $(11.1) $(20.5) $(276.9) $(17.6)
Special items (after tax):
Restructuring charges 1.3 4.2 13.7 29.4 24.9
Goodwill impairment - - - 174.3 -
Write down of long
lived assets 2.5 - 2.1 67.3 4.2
(Gain) loss on sales
and disposals of assets - 1.4 - (26.8) -
Net benefit plan
adjustments (28.6) - - (28.6) -
Non-recurring interest
amortization charges 1.3 - - 1.3 -
Loss on early retirement
of debt - - - 2.2 -
Inventory adjustment - - - 8.6 -
Acquisitions integration
costs 0.5 0.6 1.5 5.1 3.7
Other non-cash
acquisition expense - - 0.9 - 0.9
------------------------------------------
Adjusted net income (loss)
(excluding special items) $(18.5) $(4.9) $(2.3) $(44.1) $16.1
Adjusted net income (loss)
per basic and diluted share
(excluding special items) $(0.23) $(0.06) $(0.03) $(0.55) $0.19


KEMET's common stock is listed on the OTC Bulletin Board and on the Pink OTC Markets, Inc., Pink Quote System under the symbol KEME. At the Investor Relations section of our web site at http://www.KEMET.com/IR, users may subscribe to KEMET news releases and find additional information about our Company.


QUIET PERIOD

Beginning July 1, 2009, we will observe a quiet period during which the information provided in this news release and our annual report on Form 10-K 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 security laws about KEMET Corporation (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) the Company's ability to consummate the tender offer for its 2.25% Convertible Senior Notes due 2026 and accomplish its financing plan described in the Offer to Purchase dated May 5, 2009; (ii) generally adverse economic and industry conditions, including a decline in demand for the Company's products; (iii) the ability to maintain sufficient liquidity to realize current operating plans; (iv) adverse economic conditions could cause further reevaluation of the fair value of our reporting segments and the write down of long-lived assets; (v) the cost and availability of raw materials; (vi) changes in the competitive environment of the Company; (vii) economic, political, or regulatory changes in the countries in which the Company operates; (viii) the ability to successfully integrate the operations of acquired businesses; (ix) the ability to attract, train and retain effective employees and management; (x) the ability to develop innovative products to maintain customer relationships; (xi) the impact of environmental issues, laws, and regulations; (xii) the Company's ability to achieve the expected benefits of its manufacturing relocation plan or other restructuring plan; and (xiii) volatility of financial and credit markets which would affect access to capital for the Company. Other risks and uncertainties may be described from time to time in the Company's other reports and filings with the Securities and Exchange Commission.




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

Quarters Ended Fiscal Years Ended
---------------------- ----------------------
March 2009 March 2008 March 2009 March 2008
---------- ---------- ---------- ----------

Net sales $136,043 $241,178 $804,385 $850,120

Operating costs and expenses:
Cost of sales 137,368 203,842 736,286 695,397
Selling, general and
administrative
expenses 21,183 28,970 93,770 99,048
Research and
development 5,644 9,813 28,956 35,699
Restructuring charges 1,295 13,937 30,874 25,341
Goodwill impairment - - 174,327 -
Write down of long-
lived assets 2,469 2,120 67,624 4,218
(Gain) loss on sales
and disposals of
assets 1,731 (661) (25,505) (702)
Curtailment gains on
benefit plans (30,835) - (30,835) -
------- - ------- -
Total operating
costs and expenses 138,855 258,021 1,075,497 859,001
------- ------- --------- -------
Operating loss (2,812) (16,843) (271,112) (8,881)

Other (income) expense:
Interest income (73) (1,030) (618) (6,061)
Interest expense 5,695 5,302 21,459 14,074
Other income, net (7,778) (1,571) (14,084) (4,412)
Loss on early
retirement of debt - - 2,212 -
- - ----- -
Loss before income
taxes (656) (19,544) (280,081) (12,482)
Income tax expense
(benefit) (5,120) 941 (3,202) 5,111
------ --- ------ -----
Net income (loss) $4,464 $(20,485) $(276,879) $(17,593)
====== ======== ========= ========

Net income (loss) per
share (basic and
diluted) 0.06 (0.24) (3.44) (0.21)



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

March 31,
--------------------
2009 2008
---- ----
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $39,204 $81,383
Accounts receivable, net 120,139 197,258
Inventories 154,981 243,714
Other current assets 11,245 15,692
Deferred income taxes 151 4,017
--- -----
Total current assets 325,720 542,064
------- -------
Property, plant and equipment, net 357,977 479,396
Goodwill - 182,273
Intangible assets, net 24,094 35,786
Other assets 7,010 12,381
----- ------
Total assets $714,801 $1,251,900
======== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $25,994 $108,387
Accounts payable 52,332 131,468
Accrued expenses 51,125 59,626
Income taxes payable 1,127 3,524
----- -----
Total current liabilities 130,578 303,005
------- -------
Long-term debt 307,111 304,294
Other non-current obligations 57,316 80,130
Deferred income taxes 5,466 21,679
Commitments and contingencies

Stockholders' equity:
Common stock, par value $0.01, authorized
300,000, shares issued 88,525 and 88,240
shares at March 31, 2009 and 2008,
respectively 885 882
Additional paid-in capital 322,905 323,359
Retained earnings (deficit) (62,699) 214,180
Accumulated other comprehensive income 12,663 65,565
Treasury stock, at cost (7,714 and 7,950
shares at March 31, 2009 and 2008,
respectively) (59,424) (61,194)
------- -------
Total stockholders' equity 214,330 542,792
------- -------
Total liabilities and stockholders' equity $714,801 $1,251,900
======== ==========



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


Fiscal Years Ended
March 31,
-------------------
2009 2008
---- ----
(Unaudited)
Sources (uses) of cash and cash equivalents
Operating activities:
Net loss $(276,879) $(17,593)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization 57,290 53,522
Goodwill impairment 174,327 -
Write down of long-lived assets 67,624 4,218
(Gains) losses on sales and disposals of
assets (25,505) (702)
Curtailment gains on benefit plans (30,835) -
Stock-based compensation expense 1,070 3,340
Deferred income taxes (8,076) 2,342
Changes in assets and liabilities:
Accounts receivable 44,777 1,810
Inventories 71,308 (8,214)
Prepaid expenses and other current assets 4,055 3,217
Accounts payable (67,356) (15,499)
Accrued expenses and income taxes (490) (42,329)
Deferred income taxes payable (2,976) (5,751)
Other non-current obligations (2,609) 1,122
Other - (46)
- ---
Net cash provided by (used in) operating
activities 5,725 (20,563)
----- -------

Investing activities:
Capital expenditures (30,541) (43,605)
Proceeds from sale of assets 34,870 3,018
Acquisitions, net of cash received (1,000) (69,896)
Change in restricted cash 3,900 (37)
Proceeds from sale of fuel cell business - 5,759
Proceeds from maturity of short-term investments - 46,076
Other - (768)
- ----
Net cash provided by (used in) investing
activities 7,229 (59,453)
----- -------

Financing activities:
Proceeds from sale of common stock to employee
savings plan 249 575
Proceeds from issuance of long-term debt 23,317 142,014
Payment on long-term debt (75,487) (170,150)
Debt issuance costs (1,574) (602)
Purchases of treasury stock - (18,221)
Proceeds from exercise of stock options - 131
- ---
Net cash used in financing activities (53,495) (46,253)
------- -------
Net decrease in cash and cash equivalents (40,541) (126,269)
Effect of foreign currency fluctuations on cash (1,638) 1,963
Cash and cash equivalents at beginning of fiscal
year 81,383 205,689
------ -------
Cash and cash equivalents at end of fiscal year $39,204 $81,383
======= =======



Contact:

Dean W. Dimke
Director of Corporate and Investor Communications
[e-mail]
954-766-2800

William M. Lowe, Jr.
Executive Vice President and Chief Financial Officer
[e-mail]
864-963-6484



SOURCE KEMET Corporation



----------------------------------------------
William M. Lowe
Jr.
Executive Vice President and Chief Financial Officer
[e-mail]
[phone]; or Dean W. Dimke
Director of Corporate and Investor Communications
[e-mail]
[phone]