-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GuYkkQSQ1eIoBWDgGZ2HTW/GeemElKmm+Y5XqBdDxxqcNZjJnP8ffFBc0hkzBXgJ YHrU0KYnZAuBq2mCfQofoQ== 0000887730-05-000007.txt : 20050131 0000887730-05-000007.hdr.sgml : 20050131 20050128175220 ACCESSION NUMBER: 0000887730-05-000007 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050126 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050131 DATE AS OF CHANGE: 20050128 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KEMET CORP CENTRAL INDEX KEY: 0000887730 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS & ACCESSORIES [3670] IRS NUMBER: 570923789 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15491 FILM NUMBER: 05559454 BUSINESS ADDRESS: STREET 1: 2835 KEMET WAY CITY: SIMPSONVILLE STATE: SC ZIP: 29681 BUSINESS PHONE: 8039636300 MAIL ADDRESS: STREET 1: P O BOX 5928 STREET 2: 2835 KEMET WAY CITY: SIMPSONVILLE STATE: SC ZIP: 29681 8-K 1 eightfypr0105.txt 8K - DIRECTOR COMPENSATION, GRAVES RESIGNS, AVX LAWSUIT, EARNINGS RELEASE 3Q FY05 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15 (d) of The Securities Exchange Act of 1934 Date of Report (date of earliest event reported): January 28, 2005 KEMET Corporation - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-20289 57-0923789 - ------------------------------------------------------------------------------- (State or other (Commission File Number) (IRS Employer jurisdiction) Identification No.) 2835 KEMET Way, Simpsonville, SC 29681 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrants telephone number, including area code: (864) 963-6300 2 Item 1.01 Entry into a Material Definitive Agreement On January 26, 2005, the Board of Directors of KEMET Corporation approved an update to the Corporate Governance Guidelines regarding Director compensation. The new guidelines provide that, in addition to the current annual retainer of $20,000 per year, as of January 1, 2005, each Director (other than any Director that is employed by the Company) shall receive as additional compensation a fee of $1,000 per meeting for attendance at each meeting of the Board, a fee of $1,500 per meeting for attendance at a meeting of a Committee of the Board by the chairperson of that Committee, and a fee of $1,000 per meeting for attendance at a meeting of a Committee of the Board by a member of that Committee. Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers On January 26, 2005, KEMET Corporation issued a press release announcing the resignation of Dr. Jeffrey A. Graves as the Chief Executive Officer of the Company and as a Director of the Company. A copy of the press release is furnished as Exhibit 99 to this report. (a) Not Applicable (b) Not Applicable (c) The following exhibit is included with this Report EXHIBIT 99. Press Release, dated January 26, 2005, issued by the Company. Item 8.01 Other Events On January 18, 2005, KEMET Corporation issued a press release announcing that KEMET has filed a lawsuit against AVX Corporation. A copy of the press release is furnished as Exhibit 99 to this report. (a) Not Applicable (b) Not Applicable (c) The following exhibit is included with this Report Exhibit 99. Press Release, dated January 18, 2005 issued by the Company. Item 9.01 Financial Statements and Exhibits (a)Not Applicable (b) Not Applicable (c) The following exhibit is included with this Report Exhibit 99.1. Press Release, dated January 24, 2005 issued by the Company. 3 Signature Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: January 28, 2005 KEMET Corporation /S/ D. E. Gable David E. Gable Vice President and Chief Financial Officer EX-99 2 exhibit0105a991.txt EXHIBIT - GRAVES RESIGNATION Exhibit 99. Greenville, South Carolina (January 26, 2005) - KEMET Corporation (NYSE:KEM) today announced that Dr. Jeffrey A. Graves had resigned from his position as Chief Executive Officer of the Company and as a Director of the Company. The Board of Directors is actively conducting a search for a new Chief Executive Officer. During the search, James P. McClintock, President and Chief Operating Officer, and David E. Gable, Vice President and Chief Financial Officer, will assume the responsibilities of Chief Executive Officer. About KEMET KEMET Corporation is a preferred supplier of standardized components to the world''s most demanding customers of quality, delivery, and service. KEMET's common stock is listed on The New York Stock Exchange under the symbol KEM. Additional information can be found at http://www.KEMET.com/ir. EX-99 3 exhibit0105991.txt EXHIBIT - AVX LAWSUIT Exhibit 99. Greenville, South Carolina (January 18, 2005) - KEMET Corporation (NYSE: KEM) announced that it has filed a lawsuit against AVX Corporation (NYSE: AVX) in the South Carolina Court of Common Pleas to protect trade secrets relating to the development and manufacture of tantalum polymer capacitors. KEMET has been manufacturing these advanced components since 1999, and they now constitute the fastest growing segment of the tantalum capacitor market. In the lawsuit, KEMET alleges that AVX had access to KEMET's trade secrets after hiring a KEMET scientist working in KEMET's Technology group. The suit alleges that through this scientist, certain KEMET trade secrets related to tantalum polymer capacitor manufacturing were acquired by AVX, which has recently introduced similar products on a commercial basis. KEMET seeks judgment against AVX for actual and exemplary damages, attorney's fees, and injunctive relief to eliminate any commercial advantage that otherwise would be derived by AVX from the misappropriation of KEMET trade secrets. About KEMET KEMET Corporation is a preferred supplier of standardized components to the world's most demanding customers of quality, delivery, and service. KEMET's common stock is listed on The New York Stock Exchange under the symbol KEM. Additional information can be found at http://www.KEMET.com/ir. EX-99 4 exhibit0105b991.txt EXHIVIT - EARNINGS RELEASE 3RD QTR FY05 1 Greenville, South Carolina (January 24, 2005) - KEMET Corporation (NYSE:KEM) today reported financial results for the quarter ended December 31, 2004. Net sales for the quarter were $95.5 million and net loss before special charges was $18.6 million, or $0.21 per diluted share. Comparisons to prior periods are as follows:
Quarter Ended - --------------- Dec 2004 Sep 2004 Dec 2003 - -------- - -------- - -------- (In Millions, Except Per Share Data) Net Sales $ 95.5 $ 106.0 $ 111.3 Before special charges (non-GAAP) Net loss (18.6) (16.7) (7.3) Net loss per diluted share (0.21) (0.19) (0.08) Special after-tax (charges) income (20.3) 9.2 (5.8) Special after-tax (charges) income per diluted share (0.24) 0.10 (0.07) After special charges (GAAP) Net loss (38.9) (7.5) (13.1) Net loss per diluted share $ (0.45) $ (0.09) $ (0.15)
"In the December quarter, KEMET continued to be negatively impacted by an inventory cycle in our industry, especially at our distribution customers which represent approximately one half of our revenue. Our revenue decline in the quarter was due primarily to volume, as average selling prices, adjusted for changes in product mix, declined 1%," stated Dr. Jeffrey Graves, Chief Executive Officer. "While we are encouraged orders rates are improving, this is tempered by the fact that our distributors' inventories may decline further." "In a challenging demand environment, the KEMET team continues to perform well. Our program to move virtually all of our commodity production to low cost regions in 2005 remains on track. Our lean, six sigma programs to further reduce cost and improve quality are well under way. We continue to place emphasis on enhancing our Innovation Center, focusing in particular on the high growth segments of high- capacitance ceramics and organic polymer tantalum capacitors. We continue to build on our experienced management team, our strong balance sheet, and our commitment to research and development." 2 As of December 31, 2004, KEMET had $226.6 million in cash and short and long-term investments in marketable securities, $100.0 million in long-term debt, and $640.1 million in stockholders' equity. The company will hold a conference call at 8:30 am ET Tuesday, January 25, 2005, 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 #: 3216150. An archived replay of the conference call will be available through midnight on February 9, 2005, by calling 1-800-642-1687 inside the United States, and 1-706-645-9291 internationally, and referencing the Conference ID #: 3216150. 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 global economic conditions make it particularly difficult at present to predict product demand and other related matters. Sales of surface-mount capacitors were 82%, and sales of leaded parts were 18% of total sales for the December 2004 quarter. By region, 43% percent of total sales for the December 2004 quarter were to customers in North America, 35% were to Asia, 21% were to Europe, and 1% were to the rest of the world. By channel, 49% percent of total sales for the December 2004 quarter were to distribution customers, 27% were to Electronic Manufacturing Services customers, and 24% were to Original Equipment Manufacturing customers. Average selling prices for the December 2004 quarter, adjusted for changes in product mix, declined by 1% compared to average selling prices for the September 2004 quarter. On July 2, 2003, KEMET announced the reorganization of its operations around the world, resulting in the location of virtually all of its commodity production in low cost regions to be completed in mid 2005. KEMET estimates it will incur special charges of approximately $39 million (an increase of $4 million from the previous estimate of $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 3 based on unit volumes at the time of the announcement, and $50-60 million in annual savings with volume recovery by fiscal 2006. Completed portions of KEMET's announced move of production have occurred in accordance with the anticipated time line. Charges related to movement of manufacturing operations in the December 2004 quarter were $1.6 million bringing the total manufacturing relocation charges to approximately $32 million to date. The balance of the $39 million is expected to be realized ratably over the next three quarters. The timing and amount of the special charges are dependent on the timing of operational decisions, some of which have not been finalized, and on operational activities yet to occur. In addition to the cost reduction initiatives above, KEMET announced additional cost reduction plans in the September 2004 earnings elease. The workforce was reduced by approximately 820 employees orldwide, or approximately 10%, which resulted in one-time charges of 5.8 million in the December 2004 quarter and annualized savings of 11.1 million. KEMET also recognized one-time charges of approximately $12.9 million in the December 2004 quarter to reflect the impairment and disposal of certain assets. This amount includes accelerated facility epreciation of $2 million related to the anticipated shut-down of a manufacturing facility by mid 2005. We anticipate recording an dditional $7 million of one-time charges comprised of accelerated depreciation related to the shut down of this facility plus other harges associated with the impairment and disposal of certain other assets over the next several quarters. Summary of special charges in the December 2004 quarter:
(In Millions) Manufacturing relocation $ 1.6 Reduction in workforce 5.8 Equipment write-off 8.5 Accelerated depreciation on manufacturing facility $ 2.0 Included in cost of goods sold Lamina investment write-down $ 2.4 - -------------- Special charges net of taxes $ 20.3 ==============
4 For fiscal 2005, 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. We are continuing to enhance research and development, focused on organic polymer tantalum and high-capacitance ceramic capacitor technologies
Fiscal Year Ended Fiscal Quarter Ended - --------------------------------------- - --------------------------------------- 2001 2002 2003 2004 Mar 2004 Jun 2004 Sep 2004 Dec 2004 - ---- - ---- - ---- - ---- - ---- - -------- - -------- - -------- (In millions) SG&A $62.3 $54.4 $54.4 $51.2 $12.8 $12.9 $13.0 $12.0 R&D $27.1 $26.3 $25.3 $24.4 $ 6.3 $ 6.3 $ 6.6 $ 7.5
Capital expenditures for the December 2004 quarter were $10.8 million.
Fiscal Year Ended Fiscal Quarter Ended - ---------------------- - -------------------------------- 2002 2003 2004 Mar 2004 Jun 2004 Sep 2004 Dec 2004 - ------ - ------ - ------ - ------ - ------ - ------ - ------ (In Millions) Additions to property, plant and equipment $ 79 $ 22 $ 26 $ 12 $ 9 $ 7 $ 11 ===== ===== ===== ===== ===== ===== =====
During the December 2004 quarter, inventories decreased $5.7 million to $148.3 million from $154.0 million at September 30, 2004. Raw materials and supplies decreased $9 million in the December 2004 quarter, and finished goods and work in process increased $3 million.
Mar 2001 Mar 2002 Mar 2003 Mar 2004 Jun 2004 Sep 2004 Dec 2004 - -------- - -------- - -------- - -------- - -------- - -------- - -------- (In Millions) Raw materials and supplies $ 79 $ 118 $ 91 $ 60 $ 66 $ 70 $ 61 Work in process and finished goods 123 141 93 69 74 84 87 - ------ - ------ - ------ - ------ - ------ - ------ - ------ $ 202 $ 259 $ 184 $ 129 $ 140 $ 154 $ 148 ====== ====== ====== ====== ====== ====== ======
5 Cash and long and short-term investments in marketable securities during the December 2004 quarter decreased $10.9 million to $226.6 million from $237.5 million at September 30, 2004. This is related to capital expenditures during the quarter. QUIET PERIOD Beginning April 1, 2005, 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 China, 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 Nine months ended December 31, December 31, - ------------------------------ - ------------------------------ 2004 2003 2004 2003 ------------- ------------- - -------------- - -------------- Income Statement Data: Net Sales $ 95,503 $ 111,335 $ 323,908 $ 316,781 Cost of goods sold (See note 1) 95,813 103,605 298,711 312,104 Loss (gain) on long-term supply contract - - (11,139) 12,355 Selling, general and administrative expenses 12,004 13,919 37,944 38,494 Research and development 7,488 6,297 20,422 18,167 Pension settlement charges - - 218 - Restructuring and impairment charges 18,352 8,788 22,551 37,629 ----------- ----------- ----------- ----------- Operating income (loss) (38,154) (19,274) (44,799) (101,968) Interest expense 1,633 1,502 4,835 4,740 Interest income (1,511) (1,068) (4,876) (2,715) Other (income) expense (189) 98 2,107 (2,083) Income tax expense (benefit) 774 (6,734) 1,312 (41,987) ----------- ----------- ----------- ----------- Net loss $ (38,861) $ (13,072) $ (48,177) $ (59,923) =========== =========== =========== =========== Loss Per Share Data: Net loss per share: Basic $ (0.45) $ (0.15) $ (0.56) $ (0.69) Diluted $ (0.45) $ (0.15) $ (0.56) $ (0.69) Weight-average shares outstanding: Basic 86,525.730 86,434,209 86,509,040 86,395,460 Diluted 86,525,730 86,434,209 86,509,040 86,395,460
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KEMET CORPORATION AND SUBSIDIARIES Consolidated Balance Sheet (Dollars in Thousands) Unaudited December 31,2004 March 31, 2004 ------------- - ------------------ ASSETS Cash and cash equivalents $ 23,546 $ 183,528 Short-term investments 40,003 3,172 Accounts receivable, net 56,321 57,303 Inventories 148,344 129,016 Prepaid expenses and other current assets 9,951 6,979 Deferred income taxes 12,201 29,046 - ------------ - ------------ Total current assets 290,366 409,044 Property, plant and equipment, net 390,354 424,161 Long-term investments in marketable securities 163,016 84,584 Investments in affiliates 1,085 3,610 Intangible assets, net 44,234 45,088 Other assets 3,630 3,321 - ------------ - ------------ Total assets $ 892,685 $ 969,808 ============ ============ Liabilities and Stockholders'' Equity Accounts payable trade $ 37,123 $ 38,268 Accrued expenses 36,166 41,182 Income taxes payable 18,338 15,863 - ------------ - ------------ Total current liabilities 91,627 95,313 Long-term debt 100,000 100,000 Other non-current obligations 49,576 61,623 Deferred income taxes 11,356 28,394 - ------------ - ------------ Total liabilities 252,559 285,330 Common stock 880 879 Additional paid-in capital 317,828 317,497 Retained earnings 346,762 394,940 Accumulated other comprehensive (loss) 1,895 (1,457) Treasury stock, at cost (27,239) (27,381) - ------------ - ------------ Total stockholders' equity 640,126 684,478 Total liabilities and stockholders' equity $ 892,685 $ 969,808 ============ ============
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