EX-99.1 CHARTER 4 exhibit04991.txt EXHIBIT- 8K 1ST QTR FY04 1 Greenville, South Carolina (July 21, 2003) - KEMET Corporation (NYSE:KEM) today reported financial results for the fiscal quarter ended June 30, 2003. Net sales for the quarter were $105.4 million and net loss in the quarter was $(3.6) million, or $(0.04) per diluted share. Comparisons to prior periods are as follows:
Quarter Ended --------------- Jun 2003 Mar 2003 Jun 2002 -------- -------- -------- (In Millions, Except Per Share Data) Net Sales $ 105.4 $ 106.5 $ 124.0 Net earnings(loss) (3.6) (16.5) 3.4 Net earnings(loss) per diluted share $ (0.04) $ (0.19) $ 0.04
"A key component of our strategy in recent quarters has been enhancing our presence in Asia," stated Dr. Jeffrey Graves, President and CEO. "KEMET's Asian sales in the June quarter grew by over 40% in units and over 15% in revenue relative to the March 2003 quarter. We are pleased with the response of our customers to our increased emphasis on globalization activities, including our recent announcement to move manufacturing facilities and local support nearer our customers in low-cost regions in the world. "Overall, KEMET continues to be impacted by the sluggishness in the electronics industry, particularly in the corporate information technology and telecommunication equipment sectors. Compared to the March quarter, net revenue in the June quarter was down slightly, while total unit shipments were up approximately 13% and average selling prices declined approximately 4%. The June quarter sales growth from unit shipment increases, which were primarily smaller, high-volume products, essentially offset the reduction in revenue resulting from the decline in average selling prices. "Another key component of our strategy is accelerating the pace of innovations. Recently we announced KEMET's first acquisition of non-medical high-voltage and high-temperature ceramic capacitor and EMI filter product lines from Wilson Greatbatch Technologies. At our annual meeting, we will announce the organization of the KEMET Innovation Center. I believe these are important steps that will expand KEMET's relationships with the world's most successful electronics companies." As of June 30, 2003, KEMET had $296.7 million in cash and short-term investments, $100.0 million in long-term debt, and $792.1 million in stockholders' equity. 2 The company will hold a conference call at 8:30 am ET Tuesday, July 22, 2003, to discuss the earnings release. The call will last approximately one hour, and after an initial presentation, questions will be taken as time permits. To access the call, participants in the United States should dial 1-800-416-8033, and participants outside the United States should dial 1-706-643-0979. Participants should reference "KEMET Corporation" and the Conference ID #: 1565749. An archived replay of the conference call will be available through midnight on August 21, 2003, by calling 1-800-642-1687 inside the United States and 1-706-645-9291 internationally, and referencing the Conference ID #. 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. BUSINESS OUTLOOK The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. Current negative trends in global economic conditions make it particularly difficult at present to predict product demand and other related matters. * Sales of surface-mount capacitors were 76%, and sales of leaded parts were 24% of total sales for the June 2003 quarter. * By region, 47% percent of total sales for the June 2003 quarter were to customers in North America, 30% were to Asia, 21% were to Europe, and 2% were to the rest of the world. * On July 2, 2003, KEMET announced the reorganization of its operations around the world over the next two years. KEMET estimates it will incur special charges of approximately $35 million over the period of the reorganization related to movement of manufacturing operations. When the reorganization is complete, the company estimates this will yield an approximate one-year payback based on fiscal 2004 unit volumes, and a $50-60 million savings with volume recovery by fiscal 2006 if unit growth continues as it has in recent quarters. In addition, there will be a special charge of approximately $15 million reflecting the write-down of US manufacturing facilities to their residual value over the next seven quarters. The timing of the special charges is dependent on the timing of operational decisions, some of which have not been finalized yet, and on operational activities yet to occur. Below is the company's best estimate of the timing of the special charges, the actual timing of which may vary. 3
Quarter Ended -------------- Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Total ------ ------ ------ ------ ------ ------ ------ ----- (In Millions) Manufacturing relocation and employee Termination costs $ 3 $ 5 $ 7 $ 6 $ 6 $ 4 $ 4 $ 35 Facilities write-down to residual value 2 2 2 2 2 2 3 15 Special pre-tax charges $ 5 $ 7 $ 9 $ 8 $ 8 $ 6 $ 7 $ 50 Special after-tax changes $ 3 $ 5 $ 6 $ 5 $ 5 $ 4 $ 5 $ 33
* Average selling prices for the June 2003 quarter decreased approximately 4% from average selling prices for the March 2003 quarter. As industry unit volumes increase due to improving end demand, the decline in average selling prices should moderate to more normal annual declines of 6% to 8% per year. * For fiscal 2004, KEMET anticipates maintaining our investments in key customer relationships through our direct sales and customer service professionals, as well as our investments in research and development, to maintain our competitive position in the capacitor industry.
Fiscal Year Ended Fiscal Quarter Ended ------------------- --------------------- 1999 2000 2001 2002 2003 Sep 2002 Dec 2002 Mar 2003 Jun 2003 ---- ---- ---- ---- ---- -------- -------- -------- -------- (In Millions) SG&A $52.7 $55.2 $62.3 $54.4 $54.4 $13.3 $13.8 $13.4 $13.5 R&D $22.1 $24.9 $27.2 $26.3 $25.3 $ 6.9 $ 5.6 $ 5.9 $ 6.0
4 * Capital expenditures for the June 2003 quarter were $3 million. "Production capacity" is equipment that can be added incrementally during the year as market demand dictates. "Facilities and cost reduction" are long-term investments that maintain KEMET's ability to be cost competitive and to add space for new equipment lines as needed to respond to market demands.
Fiscal Year Ended March Fiscal Quarter Ended ------------------------- --------------------- 1999 2000 2001 2002 2003 Sep 2002 Dec 2002 Mar 2003 Jun 2003 ---- ---- ---- ---- ---- -------- -------- -------- -------- (In Millions) Production capacity $ 35 $ 61 $ 135 $ 47 $ 18 $ 5 $ 4 $ 4 $ 3 Facilities & Cost reduction 24 21 76 31 4 1 2 1 - $ 59 $ 82 $ 211 $ 78 $ 22 $ 6 $ 6 $ 5 $ 3 ===== ===== ===== ===== ===== ===== ===== ===== =====
* During the June 2003 quarter, inventories decreased $16 million to $168 million from $184 million at March 31, 2003. Raw materials and supplies decreased $10 million in the June 2003 quarter, and finished goods and work in process decreased $6 million.
Mar 1999 Mar 2000 Mar 2001 Mar 2002 Sep 2002 Dec 2002 Mar 2003 Jun 2003 ---- ---- ---- ---- ---- -------- -------- -------- (In Millions) Raw materials and supplies $ 45 $ 53 $ 115 $ 118 $ 97 $ 102 $ 91 $ 81 Work in process and finished goods 81 78 149 141 120 108 93 87 ------ ------ ------ ------ ------ ------ ------ ------ $ 126 $ 131 $ 264 $ 259 $ 217 $ 210 $ 184 $ 168 ------ ------ ------ ------ ------ ------ ------ ------
* Cash and short-term investments during the June 2003 quarter increased $33 million to $297 million from $264 million at March 31, 2003. Cash primarily increased due to a reduction in income tax receivable. * The Board of Directors has authorized the purchase of up to 8.0 million shares of common stock on the open market. As of July 21, 2003, the net results of the company's stock repurchase program were purchases of a total of 2,100,000 shares at a weighted average cost of $18.24 per share. The company does not anticipate any further stock purchases under this authorization. 5 QUIET PERIOD Beginning October 1, 2003, KEMET will observe a Quiet Period during which the Business Outlook as 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, the Business Outlook in these documents should be considered to be historical, applying prior to the Quiet Period only and not subject to update by the company. During the Quiet Period, KEMET representatives will not comment concerning the Business Outlook or KEMET's financial results or expectations. 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 Mexico, 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. 6
KEMET CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (Dollars in Thousands Except Per Share Data) Unaudited Three months ended June 30, ------------------- 2003 2002 ------------- ---------- Income Statement Data: Net Sales $ 105,362 $ 124,045 Cost of goods sold 96,289 100,953 Selling, general and administrative expenses 13,546 13,856 Research and development 5,963 6,780 ---------- ---------- Operating income (loss) (10,436) 2,456 Interest expense 1,572 1,547 Interest income (760) (938) Other income (1,384) (3,338) Income tax expense (benefit) (6,293) 1,763 ----------- ----------- Net earnings (loss) $ (3,571) $ 3,422 =========== =========== Earnings Per Share Data: Net earnings (loss) per share: Basic $ (0.04) $ 0.04 Diluted $ (0.04) $ 0.04 Weight-average shares outstanding: Basic 86,349,086 86,078,012 Diluted 86,349,086 86,956,317
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KEMET CORPORATION AND SUBSIDIARIES Consolidated Balance Sheet (Dollars in Thousands) Unaudited June 30, 2003 March 31, 2003 ------------- --------------- ASSETS Cash and cash equivalents $ 291,498 $ 263,585 Short-term investments 5,198 - Accounts receivable, net 50,013 45,418 Inventories 167,988 184,074 Income tax refund receivable - 24,640 Prepaid expenses and other current assets 8,299 6,120 Deferred income taxes 22,103 23,947 ------------ ------------ Total current assets 545,099 547,784 Property, plant and equipment, net 469,996 485,166 Intangible assets, net 43,460 41,560 Other assets 26,789 26,500 ------------ ------------ Total assets $ 1,085,344 $ 1,101.010 ============ ============ Liabilities and Stockholders' Equity Accounts payable trade $ 23,407 $ 49,171 Accrued expenses 30,303 35,078 Income taxes payable 23,739 - ------------ ------------ Total current liabilities 77,449 88,249 Long-term debt 100,000 100,000 Other non-current obligations 57,617 57,617 Deferred income taxes 58,158 65,869 ------------ ------------ Total liabilities 293,224 307,735 Common stock 879 879 Additional paid-in capital 317,981 318,545 Retained earnings 503,344 506,915 Accumulated other comprehensive loss (1,574) (2,996) Treasury stock, at cost (28,510) (30,068) ------------ -----------= Total stockholders' equity $ 792,120 $ 793,275 ============ ============