Condensed Consolidating Financial Statements

The 10.5% Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior basis by certain of the Company’s 100% owned domestic subsidiaries (“Guarantor Subsidiaries”) and secured by a first priority lien on 51% of the capital stock of certain of our foreign restricted subsidiaries (“Non-Guarantor Subsidiaries”). The Company’s Guarantor Subsidiaries and Non-Guarantor Subsidiaries are not consistent with the Company’s business groups or geographic operations; accordingly this basis of presentation is not intended to present the Company’s financial condition, results of operations or cash flows for any purpose other than to comply with the specific requirements for subsidiary guarantor reporting. The Company is required to present condensed consolidating financial information in order for the subsidiary guarantors of the Company’s public debt to be exempt from reporting under the Securities Exchange Act of 1934, as amended.

Condensed consolidating financial statements for the Company’s Guarantor Subsidiaries and Non-Guarantor Subsidiaries are presented in the following tables (amounts in thousands):

Condensed Consolidating Balance Sheet

June 30, 2014

(Unaudited)



	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Reclassifications and Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	627	$	27,149	$	30,646	$	—		$	58,422
Accounts receivable, net	—		46,591		53,960		—			100,551
Intercompany receivable	319,335		358,102		228,417		(905,854		)	—
Inventories, net	—		124,865		64,540		—			189,405
Prepaid expenses and other	3,145		18,705		22,977		(2,941		)	41,886
Deferred income taxes	—		1,620		5,044		—			6,664
Total current assets	323,107		577,032		405,584		(908,795		)	396,928
Property and equipment, net	318		104,543		185,711		—			290,572
Goodwill	—		35,584		—		—			35,584
Intangible assets, net	—		28,034		8,533		—			36,567
Investment in NEC TOKIN	—		45,235		—		—			45,235
Investments in subsidiaries	409,255		424,313		30,285		(863,853		)	—
Restricted cash	—		13,210		—		—			13,210
Deferred income taxes	—		990		5,669		—			6,659
Other assets	5,084		7,874		930		—			13,888
Long-term intercompany receivable	80,976		63,643		2,800		(147,419		)	—
Total assets	$	818,740	$	1,300,458	$	639,512	$	(1,920,067	)	$	838,643
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	19,324	$	7,500	$	586	$	—		$	27,410
Accounts payable	228		45,577		37,818		—			83,623
Intercompany payable	197,230		595,650		112,974		(905,854		)	—
Accrued expenses	25,729		14,294		30,349		—			70,372
Income taxes payable and deferred income taxes	—		2,909		644		(2,941		)	612
Total current liabilities	242,511		665,930		182,371		(908,795		)	182,017
Long-term debt, less current portion	357,978		6,449		12,000		—			376,427
Other non-current obligations	—		5,071		50,907		—			55,978
Deferred income taxes	—		3,855		2,115		—			5,970
Long-term intercompany payable	—		80,976		66,443		(147,419		)	—
Stockholders’ equity	218,251		538,177		325,676		(863,853		)	218,251
Total liabilities and stockholders’ equity	$	818,740	$	1,300,458	$	639,512	$	(1,920,067	)	$	838,643

Condensed Consolidating Balance Sheet (1)

March 31, 2014



	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Reclassifications and Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	616	$	22,200	$	35,113	$	—		$	57,929
Accounts receivable, net	—		49,462		49,485		—			98,947
Intercompany receivable	318,582		329,211		203,018		(850,811		)	—
Inventories, net	—		119,340		68,634		—			187,974
Prepaid expenses and other	3,146		15,286		21,380		(2,941		)	36,871
Deferred income taxes	—		1,022		5,673		—			6,695
Current assets of discontinued operations	—		—		12,160		—			12,160
Total current assets	322,344		536,521		395,463		(853,752		)	400,576
Property and equipment, net	329		104,874		187,445		—			292,648
Goodwill	—		35,584		—		—			35,584
Intangible assets, net	—		28,380		8,804		—			37,184
Investment in NEC TOKIN	—		46,419		—		—			46,419
Investments in subsidiaries	402,090		424,386		30,285		(856,761		)	—
Restricted cash	—		13,512		—		—			13,512
Deferred income taxes	—		1,010		5,768		—			6,778
Other assets	5,415		3,895		820		—			10,130
Non-current assets of discontinued operations	—		—		836		—			836
Long-term intercompany receivable	81,746		60,663		2,801		(145,210		)	—
Total assets	$	811,924	$	1,255,244	$	632,222	$	(1,855,723	)	$	843,667
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	5,988	$	—	$	1,309	$	—		$	7,297
Accounts payable	84		36,579		38,155		—			74,818
Intercompany payable	176,624		570,535		103,652		(850,811		)	—
Accrued expenses	34,236		13,698		28,534		—			76,468
Income taxes payable and deferred income taxes	—		2,909		1,012		(2,941		)	980
Current liabilities of discontinued operations	—		—		7,269		—			7,269
Total current liabilities	216,932		623,721		179,931		(853,752		)	166,832
Long-term debt, less current portion	372,251		6,449		12,592		—			391,292
Other non-current obligations	857		3,311		51,696		—			55,864
Deferred income taxes	—		3,258		1,945		—			5,203
Non-current liabilities of discontinued operations	—		—		2,592		—			2,592
Long-term intercompany payable	—		81,747		63,463		(145,210		)	—
Stockholders’ equity	221,884		536,758		320,003		(856,761		)	221,884
Total liabilities and stockholders’ equity	$	811,924	$	1,255,244	$	632,222	$	(1,855,723	)	$	843,667

(1) Derived from audited financial statements.

Condensed Consolidating Statement of Operations

For the Quarter Ended June 30, 2014

(Unaudited)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Reclassifications and Eliminations			Consolidated
Net sales	$	54		$	255,576		$	201,219		$	(243,968	)	$	212,881
Operating costs and expenses:
Cost of sales	464			222,672			184,907			(228,119		)	179,924
Selling, general and administrative expenses	11,089			17,153			12,386			(15,849		)	24,779
Research and development	66			4,349			2,174			—			6,589
Restructuring charges	—			371			1,459			—			1,830
Net loss on sales and disposals of assets	—			188			177			—			365
Total operating costs and expenses	11,619			244,733			201,103			(243,968		)	213,487
Operating income (loss)	(11,565		)	10,843			116			—			(606		)
Interest income	—						(3		)				(3		)
Interest expense	9,799			400			257						10,456
Other (income) expense, net	(10,827		)	7,444			(150		)	—			(3,533		)
Equity in earnings of subsidiaries	(6,997		)	—			—			6,997			—
Income (loss) from continuing operations before income taxes and equity loss from NEC TOKIN	(3,540		)	2,999			12			(6,997		)	(7,526		)
Income tax expense	—			23			1,259			—			1,282
Income (loss) from continuing operations before equity income from NEC TOKIN	(3,540		)	2,976			(1,247		)	(6,997		)	(8,808		)
Equity loss from NEC TOKIN	—			(1,675		)	—			—			(1,675		)
Income (loss) from continuing operations	(3,540		)	1,301			(1,247		)	(6,997		)	(10,483		)
Income (loss) from discontinued operations	—			(488		)	7,431			—			6,943
Net income (loss)	$	(3,540	)	$	813		$	6,184		$	(6,997	)	$	(3,540	)

Condensed Consolidating Statements of Comprehensive Income (Loss)

Quarter Ended June 30, 2014

(Unaudited)



Comprehensive income (loss)	$	(4,310	)	$	1,419	$	5,747	$	(6,997	)	$	(4,141	)

Condensed Consolidating Statement of Operations

For the Quarter Ended June 30, 2013

(Unaudited)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Reclassifications and Eliminations			Consolidated
Net sales	$	19		$	237,323		$	206,945		$	(242,230	)	$	202,057
Operating costs and expenses:
Cost of sales	392			227,048			188,169			(232,096		)	183,513
Selling, general and administrative expenses	10,611			12,057			13,546			(10,134		)	26,080
Research and development	90			4,275			1,701			—			6,066
Restructuring charges	—			1,934			2,676			—			4,610
Net (gain) loss on sales and disposals of assets	—			6			(6		)	—			—
Total operating costs and expenses	11,093			245,320			206,086			(242,230		)	220,269
Operating income (loss)	(11,074		)	(7,997		)	859			—			(18,212		)
Interest income	(8		)	(3		)	(153		)	—			(164		)
Interest expense	10,129			252			(347		)	—			10,034
Other (income) expense, net	(10,060		)	10,802			(387		)	—			355
Equity in earnings of subsidiaries	23,995			—			—			(23,995		)	—
Income (loss) from continuing operations before income taxes	(35,130		)	(19,048		)	1,746			23,995			(28,437		)
Income tax expense	—			55			1,761			—			1,816
Income (loss) from continuing operations before equity loss from NEC TOKIN	(35,130		)	(19,103		)	(15		)	23,995			(30,253		)
Equity loss from NEC TOKIN	—			(3,377		)	—			—			(3,377		)
Income (loss) from continuing operations	(35,130		)	(22,480		)	(15		)	23,995			(33,630		)
Loss from discontinued operations	(10		)	(317		)	(1,183		)	—			(1,510		)
Net income (loss)	$	(35,140	)	$	(22,797	)	$	(1,198	)	$	23,995		$	(35,140	)

Condensed Consolidating Statements of Comprehensive Income (Loss)

For the Quarter Ended June 30, 2013

(Unaudited)



Comprehensive income (loss)	$	(33,510	)	$	(25,041	)	$	1,142	$	23,995	$	(33,414	)

Condensed

Consolidating Statement of Cash Flows

For the Quarter Ended June 30, 2014

(Unaudited)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Reclassifications and Eliminations		Consolidated
Sources (uses) of cash and cash equivalents
Net cash provided by (used in) operating activities	$	890		$	(3,955	)	$	(9,080	)	$	—	$	(12,145	)
Investing activities:
Capital expenditures	—			(115		)	(5,067		)	—		(5,182		)
Change in restricted cash	—			302			—			—		302
Proceeds from sale of assets	—			1,513			933			—		2,446
Proceeds from sale of discontinued operations	—			—			10,125			—		10,125
Net cash used in investing activities	—			1,700			5,991			—		7,691
Financing activities:
Proceeds from revolving line credit	—			7,500			—			—		7,500
Deferred acquisition payments				(296		)	—			—		(296		)
Payments of long-term debt	(890		)	—			(1,315		)			(2,205		)
Proceeds from exercise of stock options	11			—			—			—		11
Net cash provided by (used in) financing activities	(879		)	7,204			(1,315		)	—		5,010
Net increase (decrease) in cash and cash equivalents	11			4,949			(4,404		)	—		556
Effect of foreign currency fluctuations on cash	—			—			(63		)	—		(63		)
Cash and cash equivalents at beginning of fiscal period	616			22,200			35,113			—		57,929
Cash and cash equivalents at end of fiscal period	$	627		$	27,149		$	30,646		$	—	$	58,422

Condensed Consolidating Statements of Cash Flows

For the Quarter Ended June 30, 2013

(Unaudited)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Reclassifications and Eliminations		Consolidated
Sources (uses) of cash and cash equivalents
Net cash provided by (used in) operating activities	$	(7,889	)	$	(19,373	)	$	(369	)	$	—	$	(27,631	)
Investing activities:
Capital expenditures	—			(7,186		)	(8,295		)	—		(15,481		)
Change in restricted cash	—			1,591			—			—		1,591
Net cash used in investing activities	—			(5,595		)	(8,295		)	—		(13,890		)
Financing activities:
Deferred acquisition payments	(204		)	(1,000		)	—			—		(1,204		)
Payments of long-term debt	(306		)	—			—			—		(306		)
Proceeds from exercise of stock options	19			—			—			—		19
Net cash provided by (used in) financing activities	(491		)	(1,000		)	—			—		(1,491		)
Net increase (decrease) in cash and cash equivalents	(8,380		)	(25,968		)	(8,664		)	—		(43,012		)
Effect of foreign currency fluctuations on cash	—			—			189			—		189
Cash and cash equivalents at beginning of fiscal period	17,202			52,056			26,720			—		95,978
Cash and cash equivalents at end of fiscal period	$	8,822		$	26,088		$	18,245		$	—	$	53,155