Commitments and Contingencies

12 Months Ended

Mar. 31, 2012

Commitments and Contingencies

Commitments and Contingencies

Note 15: Commitments and Contingencies

Equity Investment

        On March 12, 2012, the Company entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") to acquire 51% of the common stock (which will represent a 34% economic interest) of NT , a manufacturer of tantalum capacitors, electro-magnetic, electro-mechanical and access devices, (the "Initial Purchase") from NEC Corporation ("NEC") of Japan. Revenue of NT for the fiscal year ended March 31, 2011 was JPY64,770 million or approximately $755 million. The transaction is subject to customary closing conditions, including required regulatory filings. The transaction is expected to close in the second quarter of fiscal year 2013, at which time the Company will pay a purchase price of $50.0 million for new shares of common stock of NT (the "Initial Closing"). Upon the Initial Closing, the Company will account for the pending equity investment using the equity method in a non-consolidated variable interest entity since the Company will not have the power to direct significant activities of NT.

        In connection with the Company's entry into the Stock Purchase Agreement, KEMET entered into a Stockholders'Agreement (the "Stockholders' Agreement") with NT and NEC, which provides for restrictions on transfers of NT's capital stock, certain tag-along and first refusal rights on transfer, restrictions on NEC's ability to convert the preferred stock of NT held by it, certain management services to be provided to NT by KEMET Electronics Corporation (or an affiliate of KEMET Electronics Corporation) and certain board representation rights. At the Initial Closing, KEMET will hold four of seven NT director positions. However, NEC will have significant board rights. The Stockholders' Agreement also contemplates a loan from NEC to NT in connection with NT's rebuilding of its operations in Thailand as a result of flooding that occurred in 2011.

        Concurrently with entry into the Stock Purchase Agreement and the Stockholders' Agreement, KEMET entered into an Option Agreement (the "Option Agreement") with NEC whereby KEMET may purchase additional shares of NT common stock from NT for a purchase price of $50.0 million resulting in an economic interest of approximately 49% while maintaining ownership of 51% of NT's common stock (the "First Call Option") by providing notice of the First Call Option between the Initial Closing and August 31, 2014. Upon providing such notice, KEMET may also exercise an option to purchase all outstanding capital stock of NT from its stockholders, primarily NEC, for a purchase price based on the greater of six times LTM EBITDA (as defined in the Option Agreement) less the previous payments and certain other adjustments, or the outstanding amount of NT's debt obligation to NEC (the "Second Call Option") by providing notice of the Second Call Option by May 31, 2018. From August 1, 2014 through May 31, 2018, NEC may require us to purchase all outstanding capital stock of NT from its stockholders, primarily NEC. However, NEC may only exercise this right (the "Put Option") from August 1, 2014 through April 1, 2016 if NT achieves certain financial performance. The purchase price for the Put Option will be based on the greater six times LTM EBITDA less previous payments and certain other adjustments, or the outstanding amount of NT's debt obligation to NEC as of the date the Put Option is exercised. The purchase price for the Put Option is reduced by the amount of NT's debt obligation to NEC which KEMET will assume. The determination of the purchase price will be modified in the event there is an unresolved agreement between NEC and us under the Stockholders' Agreement. In the event the Put Option is exercised, NEC will be required to maintain in place the outstanding debt obligation owed by NT to NEC.

        The Company's leases are primarily for distribution facilities or sales offices that expire principally between 2013 and 2023. A number of leases require the Company to pay certain executory costs (taxes, insurance, and maintenance) and contain certain renewal and purchase options. Annual rental expenses for operating leases were included in results of operations and were $9.8 million, $10.0 million and $7.3 million in fiscal years 2012, 2011, and 2010, respectively.

        Future minimum lease payments over the next five fiscal years and thereafter under non-cancelable operating leases at March 31, 2012, are as follows (amounts in thousands):

	Fiscal Years Ended March 31,
	2013			2014			2015			2016			2017		Thereafter		Total
Minimum lease payments	$	10,192		$	7,476		$	4,389		$	2,414		$	1,364	$	1,487	$	27,322
Sublease rental income		(251	)		(252	)		(252	)		(21	)		—		—		(776	)
Net minimum lease payments	$	9,941		$	7,224		$	4,137		$	2,393		$	1,364	$	1,487	$	26,546

        The Company or its subsidiaries are at any one time parties to a number of lawsuits arising out of their respective operations, including workers' compensation or work place safety cases, some of which involve claims of substantial damages. Although there can be no assurance, based upon information known to the Company, the Company does not believe that any liability which might result from an adverse determination of such lawsuits would have a material adverse effect on the Company's financial condition or results of operations.