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

December 31, 2015

(Unaudited)



	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Reclassifications and Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	640	$	18,643	$	23,875	$	—		$	43,158
Accounts receivable, net	—		34,009		55,276		—			89,285
Intercompany receivable	320,070		436,045		174,539		(930,654		)	—
Inventories, net	—		119,665		55,413		—			175,078
Prepaid expenses and other	3,325		17,114		13,576		(2,964		)	31,051
Deferred income taxes	—		4,335		5,399		—			9,734
Total current assets	324,035		629,811		328,078		(933,618		)	348,306
Property and equipment, net	267		95,496		140,584		—			236,347
Goodwill	—		40,294		—		—			40,294
Intangible assets, net	—		27,643		5,928		—			33,571
Investment in NEC TOKIN	—		35,795		—		—			35,795
Investments in subsidiaries	387,852		429,723		30,285		(847,860		)	—
Deferred income taxes	—		816		3,582		—			4,398
Other assets	3,094		4,559		611		—			8,264
Long-term intercompany receivable	64,547		39,616		1,088		(105,251		)	—
Total assets	$	779,795	$	1,303,753	$	510,156	$	(1,886,729	)	$	706,975
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	—	$	5,000	$	—	$	—		$	5,000
Accounts payable	—		34,386		29,279		—			63,665
Intercompany payable	290,533		565,412		74,709		(930,654		)	—
Accrued expenses	7,946		15,661		20,922		—			44,529
Income taxes payable and deferred income taxes	—		3,020		800		(2,964		)	856
Total current liabilities	298,479		623,479		125,710		(933,618		)	114,050
Long-term debt, less current portion	356,906		18,981		14,000		—			389,887
Other non-current obligations	—		23,546		47,375		—			70,921
Deferred income taxes	—		6,577		1,130		—			7,707
Long-term intercompany payable	—		64,547		40,704		(105,251		)	—
Stockholders’ equity	124,410		566,623		281,237		(847,860		)	124,410
Total liabilities and stockholders’ equity	$	779,795	$	1,303,753	$	510,156	$	(1,886,729	)	$	706,975

Condensed Consolidating Balance Sheet (1)

March 31, 2015



	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Reclassifications and Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	640	$	33,094	$	22,628	$	—		$	56,362
Accounts receivable, net	—		35,535		55,322		—			90,857
Intercompany receivable	321,233		403,557		195,518		(920,308		)	—
Inventories, net	—		119,221		52,622		—			171,843
Prepaid expenses and other	3,191		21,134		20,164		(2,986		)	41,503
Deferred income taxes	—		5,031		5,731		—			10,762
Total current assets	325,064		617,572		351,985		(923,294		)	371,327
Property and equipment, net	293		100,844		148,504		—			249,641
Goodwill	—		35,584		—		—			35,584
Intangible assets, net	—		26,998		6,284		—			33,282
Investment in NEC TOKIN	—		45,016		—		—			45,016
Investments in subsidiaries	401,062		423,737		30,285		(855,084		)	—
Deferred income taxes	—		971		4,140		—			5,111
Other assets	4,088		7,824		919		—			12,831
Long-term intercompany receivable	63,788		39,151		1,088		(104,027		)	—
Total assets	$	794,295	$	1,297,697	$	543,205	$	(1,882,405	)	$	752,792
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	—	$	500	$	462	$	—		$	962
Accounts payable	47		36,565		33,173		—			69,785
Intercompany payable	254,852		578,318		87,138		(920,308		)	—
Accrued expenses	17,253		16,644		26,559		—			60,456
Income taxes payable and deferred income taxes	—		2,928		1,075		(2,986		)	1,017
Total current liabilities	272,152		634,955		148,407		(923,294		)	132,220
Long-term debt, less current portion	357,461		20,948		12,000		—			390,409
Other non-current obligations	—		2,987		54,144		—			57,131
Deferred income taxes	—		7,272		1,078		—			8,350
Long-term intercompany payable	—		63,789		40,238		(104,027		)	—
Stockholders’ equity	164,682		567,746		287,338		(855,084		)	164,682
Total liabilities and stockholders’ equity	$	794,295	$	1,297,697	$	543,205	$	(1,882,405	)	$	752,792

(1) Derived from audited financial statements.

Condensed Consolidating Statement of Operations

For the Quarter Ended December 31, 2015

(Unaudited)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Reclassifications and Eliminations			Consolidated
Net sales	$	—		$	211,268		$	170,531		$	(204,615	)	$	177,184
Operating costs and expenses:
Cost of sales	232			173,368			156,669			(191,833		)	138,436
Selling, general and administrative expenses	8,306			16,207			10,547			(12,782		)	22,278
Research and development	79			4,232			1,823			—			6,134
Restructuring charges	—			726			988			—			1,714
Net (gain) loss on sales and disposals of assets	—			(348		)	477			—			129
Total operating costs and expenses	8,617			194,185			170,504			(204,615		)	168,691
Operating income (loss)	(8,617		)	17,083			27			—			8,493
Non-operating (income) expense:
Interest income	—			—			(4		)	—			(4		)
Interest expense	9,461			267			124			—			9,852
Change in value of NEC TOKIN options	—			(700		)	—			—			(700		)
Other (income) expense, net	(7,931		)	7,997			(1,386		)	—			(1,320		)
Equity in earnings of subsidiaries	(1,547		)	—			—			1,547			—
Income (loss) from continuing operations before income taxes and equity income (loss) from NEC TOKIN	(8,600		)	9,519			1,293			(1,547		)	665
Income tax expense (benefit)	—			44			2,716			—			2,760
Income (loss) from continuing operations before equity income (loss) from NEC TOKIN	(8,600		)	9,475			(1,423		)	(1,547		)	(2,095		)
Equity income (loss) from NEC TOKIN	—			(6,505		)	—			—			(6,505		)
Income (loss) from continuing operations	(8,600		)	2,970			(1,423		)	(1,547		)	(8,600		)
Income (loss) from discontinued operations	—			—			—			—			—
Net income (loss)	$	(8,600	)	$	2,970		$	(1,423	)	$	(1,547	)	$	(8,600	)

Condensed Consolidating Statements of Comprehensive Income (Loss)

Quarter Ended December 31, 2015

(Unaudited)



Comprehensive income (loss)	$	(10,474	)	$	4,604	$	517	$	(1,547	)	$	(6,900	)

Condensed Consolidating Statement of Operations

For the Quarter Ended December 31, 2014

(Unaudited)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Reclassifications and Eliminations			Consolidated
Net sales	$	85		$	242,498		$	188,122		$	(229,395	)	$	201,310
Operating costs and expenses:
Cost of sales	687			192,305			179,437			(215,587		)	156,842
Selling, general and administrative expenses	7,193			18,562			11,427			(13,808		)	23,374
Research and development	149			4,321			1,833			—			6,303
Restructuring charges	—			1,133			4,930			—			6,063
Net (gain) loss on sales and disposals of assets	—			(144		)	(430		)	—			(574		)
Total operating costs and expenses	8,029			216,177			197,197			(229,395		)	192,008
Operating income (loss)	(7,944		)	26,321			(9,075		)	—			9,302
Non-operating (income) expense:
Interest income	—			—			(5		)	—			(5		)
Interest expense	9,631			39			268			—			9,938
Change in value of NEC TOKIN options	—			(2,500		)	—			—			(2,500		)
Other (income) expense, net	(7,373		)	8,435			(2,263		)	—			(1,201		)
Equity in earnings of subsidiaries	(13,116		)	—			—			13,116			—
Income (loss) from continuing operations before income taxes and equity income (loss) from NEC TOKIN	2,914			20,347			(7,075		)	(13,116		)	3,070
Income tax expense (benefit)	—			57			1,302			—			1,359
Income (loss) from continuing operations before equity income (loss) from NEC TOKIN	2,914			20,290			(8,377		)	(13,116		)	1,711
Equity income (loss) from NEC TOKIN	—			1,367			—			—			1,367
Income (loss) from continuing operations	2,914			21,657			(8,377		)	(13,116		)	3,078
Income (loss) from discontinued operations	—			(2		)	(162		)	—			(164		)
Net income (loss)	$	2,914		$	21,655		$	(8,539	)	$	(13,116	)	$	2,914

Condensed Consolidating Statements of Comprehensive Income (Loss)

For the Quarter Ended December 31, 2014

(Unaudited)



Comprehensive income (loss)	$	293	$	24,794	$	(12,135	)	$	(13,116	)	$	(164	)

Condensed Consolidating Statement of Operations

For the Nine Month Period Ended December 31, 2015

(Unaudited)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Reclassifications and Eliminations			Consolidated
Net sales	$	—		$	655,808		$	527,604		$	(632,515	)	$	550,897
Operating costs and expenses:
Cost of sales	931			528,352			490,621			(590,274		)	429,630
Selling, general and administrative expenses	27,028			56,197			34,672			(42,241		)	75,656
Research and development	26			12,834			5,700			—			18,560
Restructuring charges	—			2,182			1,379			—			3,561
Net (gain) loss on sales and disposals of assets	(7		)	(1,101		)	875			—			(233		)
Total operating costs and expenses	27,978			598,464			533,247			(632,515		)	527,174
Operating income (loss)	(27,978		)	57,344			(5,643		)	—			23,723
Non-operating (income) expense:
Interest income	—			—			(10		)	—			(10		)
Interest expense	28,395			865			416			—			29,676
Change in value of NEC TOKIN options	—			26,300			—			—			26,300
Other (income) expense, net	(25,484		)	25,065			(2,076		)	—			(2,495		)
Equity in earnings of subsidiaries	7,567			—			—			(7,567		)	—
Income (loss) from continuing operations before income taxes and equity income (loss) from NEC TOKIN	(38,456		)	5,114			(3,973		)	7,567			(29,748		)
Income tax expense (benefit)	—			(320		)	4,270			—			3,950
Income (loss) from continuing operations before equity income (loss) from NEC TOKIN	(38,456		)	5,434			(8,243		)	7,567			(33,698		)
Equity income (loss) from NEC TOKIN	—			(4,758		)	—			—			(4,758		)
Income (loss) from continuing operations	(38,456		)	676			(8,243		)	7,567			(38,456		)
Income (loss) from discontinued operations	—			—			—			—			—
Net income (loss)	$	(38,456	)	$	676		$	(8,243	)	$	7,567		$	(38,456	)

Condensed Consolidating Statements of Comprehensive Income (Loss)

For the Nine Month Period Ended December 31, 2015

(Unaudited)



Comprehensive income (loss)	$	(37,698	)	$	(7,109	)	$	(6,107	)	$	7,567	$	(43,347	)

Condensed Consolidating Statement of Operations

For the Nine Month Period Ended December 31, 2014

(Unaudited)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Reclassifications and Eliminations			Consolidated
Net sales	$	195		$	748,094		$	588,324		$	(707,129	)	$	629,484
Operating costs and expenses:
Cost of sales	1,712			626,305			540,184			(661,897		)	506,304
Selling, general and administrative expenses	31,338			50,785			36,772			(45,232		)	73,663
Research and development	355			12,918			5,957			—			19,230
Restructuring charges	—			1,695			7,885			—			9,580
Net (gain) loss on sales and disposals of assets	(9		)	86			(836		)	—			(759		)
Total operating costs and expenses	33,396			691,789			589,962			(707,129		)	608,018
Operating income (loss)	(33,201		)	56,305			(1,638		)	—			21,466
Non-operating (income) expense:
Interest income	—			—			(11		)	—			(11		)
Interest expense	29,156			702			823			—			30,681
Change in value of NEC TOKIN options	—			(13,200		)	—			—			(13,200		)
Other (income) expense, net	(31,175		)	35,934			(6,388		)	—			(1,629		)
Equity in earnings of subsidiaries	(36,886		)	—			—			36,886			—
Income (loss) from continuing operations before income taxes and equity income (loss) from NEC TOKIN	5,704			32,869			3,938			(36,886		)	5,625
Income tax expense (benefit)	—			290			4,934			—			5,224
Income (loss) from continuing operations before equity income (loss) from NEC TOKIN	5,704			32,579			(996		)	(36,886		)	401
Equity income (loss) from NEC TOKIN	—			(76		)	—			—			(76		)
Income (loss) from continuing operations	5,704			32,503			(996		)	(36,886		)	325
Income (loss) from discontinued operations	—			102			5,277			—			5,379
Net income (loss)	$	5,704		$	32,605		$	4,281		$	(36,886	)	$	5,704

Condensed Consolidating Statements of Comprehensive Income (Loss)

For the Nine Month Period Ended December 31, 2014

(Unaudited)



Comprehensive income (loss)	$	(4,061	)	$	40,644	$	(8,320	)	$	(36,886	)	$	(8,623	)

Condensed

Consolidating Statement of Cash Flows

For the Nine Month Period Ended December 31, 2015

(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	$	691		$	(8,085	)	$	6,837		$	—	$	(557	)
Investing activities:
Capital expenditures	—			(6,221		)	(7,899		)	—		(14,120		)
Proceeds from sale of assets	—			247			651			—		898
Acquisitions, net of cash received	—			(2,892		)	—			—		(2,892		)
Net cash used in investing activities	—			(8,866		)	(7,248		)	—		(16,114		)
Financing activities:
Proceeds from revolving line of credit	—			8,000			2,000			—		10,000
Payments of revolving line of credit	—			(5,500		)	—			—		(5,500		)
Payments of long-term debt	—			—			(481		)	—		(481		)
Purchase of treasury stock	(691		)	—			—			—		(691		)
Net cash provided by (used in) financing activities	(691		)	2,500			1,519			—		3,328
Net increase (decrease) in cash and cash equivalents	—			(14,451		)	1,108			—		(13,343		)
Effect of foreign currency fluctuations on cash	—			—			139			—		139
Cash and cash equivalents at beginning of fiscal period	640			33,094			22,628			—		56,362
Cash and cash equivalents at end of fiscal period	$	640		$	18,643		$	23,875		$	—	$	43,158

Condensed Consolidating Statements of Cash Flows

For the Nine Month Period Ended December 31, 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	$	31,316		$	(18,502	)	$	(16,084	)	$	—	$	(3,270	)
Investing activities:
Capital expenditures	—			(9,542		)	(7,932		)	—		(17,474		)
Change in restricted cash	—			11,509			—			—		11,509
Proceeds from sale of assets	—			2,274			2,266			—		4,540
Proceeds from sale of discontinued operations	—			—			9,564			—		9,564
Net cash used in investing activities	—			4,241			3,898			—		8,139
Financing activities:
Proceeds from revolving line of credit	—			37,340			5,000			—		42,340
Payments of revolving line of credit	—			(14,342		)	—			—		(14,342		)
Deferred acquisition payments	(10,899		)	(1,000		)	—			—		(11,899		)
Payments of long-term debt	(20,417		)	—			(1,316		)	—		(21,733		)
Proceeds from exercise of stock options	24			—			—			—		24
Net cash provided by (used in) financing activities	(31,292		)	21,998			3,684			—		(5,610		)
Net increase (decrease) in cash and cash equivalents	24			7,737			(8,502		)	—		(741		)
Effect of foreign currency fluctuations on cash	—			(1		)	(1,605		)	—		(1,606		)
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	$	640		$	29,936		$	25,006		$	—	$	55,582