8-K

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): November 1, 2012

KEMET Corporation

(Exact name of registrant as specified in its charter)

Delaware	001-15491	57-0923789
(State of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2835 KEMET Way, Simpsonville, SC	29681
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (864) 963-6300

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On November 1, 2012, KEMET Corporation (the “Company”) issued a News Release announcing the preliminary consolidated results for the second fiscal quarter ended September 30, 2012.

A copy of this News Release is furnished as Exhibit 99.1 to this Form 8-K.

Item 2.05 Costs Associated with Exit or Disposal Activities

On July 25, 2012, we committed to a global restructuring plan to respond to the continued economic slowdown, and in the quarter ended September 30, 2012 we incurred a $7.5 million charge to earnings related to termination benefits.  On October 26, 2012, we expanded the global restructuring plan to include additional headcount reductions, which are expected to result in additional termination charges of approximately $4.0 to $5.0 million during the second half of fiscal year 2013.  In addition, we are beginning the restructuring of our Evora, Portugal manufacturing facility.  This activity is expected to be completed during our fourth quarter ending March 31, 2013.  As a part of our ongoing commitment to expand our polymer capacity we will be moving certain Tantalum manufacturing equipment from the Evora, Portugal facility to our manufacturing facility in Mexico and the remainder of the Tantalum manufacturing equipment will be disposed.  We anticipate that, as a result, we will write-off approximately $5.0 to $7.0 million in equipment and incur termination benefits in the range of $4.0 to $4.5 million.  We will also have the manufacturing facility appraised to determine if the carrying value exceeds the fair value which would result in an impairment charge.  In addition to facilitating our polymer expansion in Mexico this action will reduce the Tantalum business unit’s operating costs as well as reduce our inventories and in turn, improve cash flow as we complete this fiscal year. The expected future total cash expenditures are estimated to be $8 to $9.5 million for the termination benefits described above.

Item 7.01 Regulation FD Disclosure

On November 1, 2012, the Company will host a conference call to discuss financial results for its second fiscal quarter ended September 30, 2012.  The slide package prepared for use by executive management for this presentation is furnished herewith as Exhibit 99.2.  All of the information in the presentation is presented as of November 1, 2012, and the Company does not assume any obligation to update such information in the future.

The information included in Item 2.02 and 7.01 of this Form 8-K, as well as the exhibits referenced herein and therein, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits

(a.)Not Applicable

(b.)Not Applicable

(c.)Not Applicable

(d.)Exhibits

Exhibit No.	Description of Exhibit
99.1	News Release, dated November 1, 2012 issued by the Company.
99.2	Slide Package prepared for use in connection with the Company’s second fiscal quarter earnings conference call to be held on November 1, 2012.

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: November 1, 2012	KEMET Corporation
	/s/ WILLIAM M. LOWE, JR.
	William M. Lowe, Jr.
	Executive Vice President and
	Chief Financial Officer

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EX-99.1

Exhibit 99.1

News Release

FOR IMMEDIATE RELEASE

Contact:	William M. Lowe, Jr.	Dean W. Dimke
	Executive Vice President and	Senior Director of Corporate and
	Chief Financial Officer	Investor Communications
	williamlowe@kemet.com	deandimke@kemet.com
	864-963-6484	954-766-2800

KEMET REPORTS SECOND QUARTER FISCAL YEAR 2013 RESULTS

Greenville, South Carolina (November 1, 2012) - KEMET Corporation (the “Company”) (NYSE: KEM) ), a leading manufacturer of tantalum, ceramic, aluminum, film, paper and electrolytic capacitors, today reported preliminary results for the second fiscal quarter ended September 30, 2012.

Net sales for the quarter ended September 30, 2012 were $216.0 million and on a U.S. GAAP basis, the net loss was $24.9 million, or $(0.55) loss per basic and diluted share for the second quarter of fiscal year 2013 compared to net income of $14.3 million or a $0.27 per diluted share for the same quarter last year. The net loss for the quarters ended September 30, 2012 and 2011 include various items affecting comparability as denoted in the U.S. GAAP to Non-U.S. GAAP reconciliation below.

Non-U.S. GAAP adjusted net loss was $6.2 million or $(0.14) loss per basic and diluted share for the second quarter of fiscal year 2013 compared to a $22.4 million Non-U.S. GAAP adjusted net income or $0.43 per diluted share for the same quarter last year. Non-U.S. GAAP adjusted gross margin increased to 16.3% compared to 15.2% in the prior quarter.

“Revenue for this quarter came in about as we expected, more or less flat to slightly down from our first quarter, with a higher consolidated operating margin resulting in some improvement in our bottom line from a Non-GAAP basis over our first quarter as we forecasted.   As with other technology companies the global economic conditions, primarily in Europe, will continue to provide headwinds into the next quarter for us,” said Per Loof KEMET’s Chief Executive Officer.  “We are focused on achieving improvement in our operating margins and bottom line even if revenues continue to decline in the near- term.  Actions we have already implemented, and continue to implement, over the next two months will substantially change our cost structure in our fourth fiscal quarter ending March 31 and into our next fiscal year beginning in April. Our efforts are focused on improving our bottom line and returning to profitability as we enter our next fiscal year even under these tough economic conditions,” continued Loof.

About KEMET

The Company’s common stock is listed on the NYSE under the ticker symbol “KEM” (NYSE: KEM).  At the Investor Relations section of our web site at http://www.kemet.com/IR, users may subscribe to KEMET news releases and find additional information about our Company.  KEMET applies world class service and quality to deliver industry leading, high performance capacitance solutions to its customers around the world and offers the world’s most complete line of surface mount and through hole capacitor

technologies across tantalum, ceramic, film, aluminum, electrolytic, and paper dielectrics. Additional information about KEMET can be found at http://www.kemet.com.

QUIET PERIOD

Beginning January 1, 2013, we will observe a quiet period during which the information provided in this news release and quarterly report on Form 10-Q will no longer constitute our current expectations. During the quiet period, this information should be considered to be historical, applying prior to the quiet period only and not subject to update by management. The quiet period will extend until the day when our next quarterly earnings release is published.

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

Certain statements included herein contain forward-looking statements within the meaning of federal securities laws about the Company’s financial condition and results of operations that are based on management’s current expectations, estimates and projections about the markets, in which the Company operates, as well as management’s beliefs and assumptions. Words such as “expects,” “anticipates,” “believes,” “estimates,” variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s judgment only as of the date hereof. The Company undertakes no obligation to update publicly any of these forward-looking statements to reflect new information, future events or otherwise.

Factors that may cause actual outcome and results to differ materially from those expressed in, or implied by, these forward-looking statements include, but are not necessarily limited to the following:

(i) adverse economic conditions could impact our ability to realize operating plans if the demand for our products declines, and such conditions could adversely affect our liquidity and ability to continue to operate; (ii) adverse economic conditions could cause the write down of long-lived assets or goodwill; (iii) an increase in the cost or a decrease in the availability of our principal raw materials; (iv) changes in the competitive environment; (v) uncertainty of the timing of customer product qualifications in heavily regulated industries; (vi) economic, political, or regulatory changes in the countries in which we operate; (vii) difficulties, delays or unexpected costs in completing the restructuring plan; (viii) equity method investments expose us to a variety of risks; (ix) acquisitions and other strategic transactions expose us to a variety of risks; (x)  the inability to attract, train and retain effective employees and management; (xi) the inability to develop innovative products to maintain customer relationships and offset potential price erosion in older products; (xii) exposure to claims alleging product defects; (xiii) the impact of laws and regulations that apply to our business, including those relating to environmental matters; (xiv) subject to international laws relating to trade, export controls and foreign corrupt practices; (xv) volatility of financial and credit markets affecting our access to capital; (xvi) the need to reduce the total costs of our products to remain competitive; (xvii) potential limitation on the use of net operating losses to offset possible future taxable income; (xviii) restrictions in our debt agreements that limit our flexibility in operating our business; and (xix) additional exercise of the warrant by K Equity, LLC which could potentially result in the existence of a significant stockholder who could seek to influence our corporate decisions.

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KEMET CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

(Amounts in thousands, except per share data)

(Unaudited)

	Quarters Ended September 30,						Six Months Ended September 30,
	2012			2011			2012			2011
Net sales	$	215,991		$	265,514		$	439,623		$	555,370
Operating costs and expenses:
Cost of sales	183,053			203,319			374,374			413,823
Selling, general and administrative expenses	27,983			28,355			55,238			58,631
Research and development	6,833			7,362			14,566			14,448
Restructuring charges	8,522			1,605			9,786			2,630
Goodwill impairment	1,092			—			1,092			—
Write down of long-lived assets	4,234			—			4,234			—
Settlement gain on benefit plan	(1,675		)				(1,675		)
Net (gain) loss on sales and disposals of assets	(31		)	(40		)	73			83
Total operating costs and expenses	230,011			240,601			457,688			489,615
Operating income (loss)	(14,020		)	24,913			(18,065		)	65,755
Other (income) expense:
Interest income	(26		)	(31		)	(57		)	(74		)
Interest expense	10,136			7,282			20,593			14,682
Other (income) expense, net	(996		)	1,297			515			1,202
Income (loss) before income taxes	(23,134		)	16,365			(39,116		)	49,945
Income tax expense	1,787			2,047			3,558			3,778
Net income (loss)	$	(24,921	)	$	14,318		$	(42,674	)	$	46,167
Net income (loss) per share:
Basic	$	(0.55	)	$	0.32		$	(0.95	)	$	1.10
Diluted	$	(0.55	)	$	0.27		$	(0.95	)	$	0.88
Weighted-average shares outstanding:
Basic	44,911			44,370			44,860			41,924
Diluted	44,911			52,230			44,860			52,307

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KEMET CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(Amounts in thousands, except per share data)

	September 30, 2012			March 31, 2012
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	160,495		$	210,521
Accounts receivable, net	99,160			104,950
Inventories, net	224,773			212,234
Prepaid expenses and other	41,041			32,259
Deferred income taxes	5,658			6,370
Total current assets	531,127			566,334
Property and equipment, net of accumulated depreciation of $773,184 and $761,522 as of September 30, 2012 and March 31, 2012, respectively	316,182			315,848
Goodwill	35,584			36,676
Intangible assets, net	40,102			41,527
Other assets	17,802			15,167
Total assets	$	940,797		$	975,552
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	1,576		$	1,951
Accounts payable	82,156			74,404
Accrued expenses	88,623			89,079
Income taxes payable	622			2,256
Total current liabilities	172,977			167,690
Long-term debt, less current portion	359,621			345,380
Other non-current obligations	90,098			101,229
Deferred income taxes	4,788			2,257
Stockholders’ equity:
Preferred stock, par value $0.01, authorized 10,000 shares, none issued	—			—
Common stock, par value $0.01, authorized 175,000 shares, issued 46,508 shares at September 30, 2012 and March 31, 2012	465			465
Additional paid-in capital	466,906			470,059
Retained deficit	(123,727		)	(81,053		)
Accumulated other comprehensive income	6,658			12,020
Treasury stock, at cost (1,600 and 1,839 shares at September 30, 2012 and March 31, 2012, respectively)	(36,989		)	(42,495		)
Total stockholders’ equity	313,313			358,996
Total liabilities and stockholders’ equity	$	940,797		$	975,552

4

KEMET CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

	Six Months Ended September 30,
	2012			2011
Net income (loss)	$	(42,674	)	$	46,167
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	23,177			$	23,011
Amortization of debt discount and debt issuance costs	1,924			2,056
Net (gain) loss on sales and disposals of assets	(31		)	83
Stock-based compensation expense	2,506			2,175
Goodwill impairment	1,092			—
Write down of long-lived assets	4,234			—
Settlement gain on benefit plan	(1,675		)	—
Change in deferred income taxes	838			379
Change in operating assets	(18,395		)	18,438
Change in operating liabilities	2,259			(42,517		)
Other	121			1,197
Net cash provided by (used in) operating activities	(26,624		)	50,989
Investing activities:
Capital expenditures	(30,343		)	(20,105		)
Acquisition, net of cash received	—			(11,584		)
Net cash used in investing activities	(30,343		)	(31,689		)
Financing activities:
Proceeds from issuance of debt	15,825			—
Deferred acquisition payments	(6,617		)	—
Payments of long-term debt	(1,576		)	(4,084		)
Net borrowings (payments) under other credit facilities	—			(3,153		)
Proceeds from exercise of stock options	42			159
Debt issuance costs.	(275		)	(29		)
Change in restricted cash	—			(36,497		)
Net cash provided by (used in) financing activities	7,399			(43,604		)
Net decrease in cash and cash equivalents	(49,568		)	(24,304		)
Effect of foreign currency fluctuations on cash	(458		)	(584		)
Cash and cash equivalents at beginning of fiscal period	210,521			152,051
Cash and cash equivalents at end of fiscal period	$	160,495		$	127,163

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Non-U.S. GAAP Financial Measures

In this news release, the Company makes reference to certain Non-U.S. GAAP financial measures, including “Adjusted net income (loss)”, “Adjusted net income (loss) per share”, “Adjusted EBITDA” and “Adjusted gross margin”.  Management believes that investors may find it useful to review the Company’s financial results as adjusted to exclude items as determined by management.

Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share

“Adjusted net income (loss)” and “Adjusted net income (loss) per share” represent net income (loss) and net income (loss) per share excluding restructuring charges related primarily to equipment moves and employee severance,  write down of long-lived assets, ERP integration costs, plant start-up costs,  stock-based compensation expense, goodwill impairment, amortization related to debt issuance costs and debt discount/premium, acquisition related fees, settlement gain on benefit plan, net foreign exchange gain/loss, net gain/loss on sales and disposals of assets, registration related fees and income tax effect on Non-U.S. GAAP adjustments.  Management believes that these Non-U.S. GAAP financial measures are useful to investors because they provide a supplemental way to understand the underlying operating performance of the Company.  Management uses these Non-U.S. GAAP financial measures to evaluate operating performance.  Non-U.S. GAAP financial measures should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with U.S. GAAP.

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The following table provides reconciliation from U.S. GAAP net income (loss) to Non-U.S. GAAP adjusted net income (loss):

U.S. GAAP to Non-U.S. GAAP Reconciliation

	Quarters Ended
	September 30, 2012			June 30, 2012			September 30, 2011
	(Unaudited) (Amounts in thousands, except per share data)
U.S. GAAP
Net sales	$	215,991		$	223,632		$	265,514
Net income (loss)	$	(24,921	)	$	(17,753	)	$	14,318
Basic net income (loss) per share	$	(0.55	)	$	(0.40	)	$	0.32
Diluted net income (loss) per share	$	(0.55	)	$	(0.40	)	$	0.27
Excluding the following items (Non-U.S. GAAP)
Net income (loss)	$	(24,921	)	$	(17,753	)	$	14,318
Adjustments:
Restructuring charges	8,522			1,264			1,605
Write down of long-lived assets	4,234			—			—
ERP integration costs	2,099			1,676			1,918
Plant start-up costs	1,930			1,361			718
Stock-based compensation expense	1,242			1,264			984
Goodwill impairment	1,092			—			—
Amortization included in interest expense	954			971			1,012
Acquisition related fees	866			542			—
Settlement gain on benefit plan	(1,675		)	—			—
Net foreign exchange (gain) loss	(442		)	1,789			1,391
Net (gain) loss on sales and disposals of assets	(31		)	104			(40		)
Registration related fees	—			20			77
Income tax effect of non-U.S. GAAP adjustments (1)	(90		)	4			406
Adjusted net income (loss)(excluding adjustments)	$	(6,220	)	$	(8,758	)	$	22,389
Adjusted net income (loss) per share (excluding adjustments)
Basic	$	(0.14	)	$	(0.20	)	$	0.50
Diluted	$	(0.14	)	$	(0.20	)	$	0.43

(1)The income tax effect of the excluded items is calculated by applying the applicable jurisdictional income tax rate, considering the deferred tax valuation for each applicable jurisdiction, and includes the income tax affect of law changes related to the utilization of net operating loss carryforwards.

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Adjusted EBITDA

“Adjusted EBITDA” represents net income (loss) before net interest expense, income tax expense, and depreciation and amortization expense, adjusted to exclude: restructuring charges, write down of long-lived assets, ERP integration costs, plant start-up costs, stock-based compensation expense, goodwill impairment, acquisition related fees, settlement gain on benefit plan, net foreign exchange gain/loss, net loss on sales and disposals of assets, and registration related fees.  We use “Adjusted EBITDA” to monitor and evaluate our operating performance and to facilitate internal and external comparisons of the historical operating performance of our business.  We present “Adjusted EBITDA” as a supplemental measure of our performance and ability to service debt.  We also present “Adjusted EBITDA” because we believe such measure is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

We believe “Adjusted EBITDA” is an appropriate supplemental measure of debt service capacity, because cash expenditures on interest are, by definition, available to pay interest, and tax expense is inversely correlated to interest expense because tax expense goes down as deductible interest expense goes up; depreciation and amortization are non-cash charges. The other items excluded from “Adjusted EBITDA” are excluded in order to better reflect our continuing operations.

In evaluating “Adjusted EBITDA”, you should be aware that in the future we may incur expenses similar to the adjustments noted below.  Our presentation of “Adjusted EBITDA” should not be construed as an inference that our future results will be unaffected by these types of adjustments.  “Adjusted EBITDA” is not a measurement of our financial performance under U.S. GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with U.S. GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity.

Our “Adjusted EBITDA” measure has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.  Some of these limitations are:

·it does not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments;

·it does not reflect changes in, or cash requirements for, our working capital needs;

·it does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt;

·although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and our “Adjusted EBITDA” measure does not reflect any cash requirements for such replacements;

·t is not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows;

·t does not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations;

·it does not reflect limitations on or costs related to transferring earnings from our subsidiaries to us; and

8

·other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, “Adjusted EBITDA” should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations.  You should compensate for these limitations by relying primarily on our U.S. GAAP results and using “Adjusted EBITDA” only supplementally.

The following table provides a reconciliation from U.S. GAAP net income (loss) to Adjusted EBITDA (amounts in thousands):

	Quarters Ended
	September 30, 2012			June 30, 2012			September 30, 2011
U.S. GAAP
Net income (loss)	$	(24,921	)	$	(17,753	)	$	14,318
Interest expense, net	10,110			10,426			7,251
Income tax expense	1,787			1,771			2,047
Depreciation and amortization	11,521			11,656			11,852
EBITDA	(1,503		)	6,100			35,468
Excluding the following items (Non-U.S. GAAP):
Restructuring charges	8,522			1,264			1,605
Write down of long-lived assets	4,234			—			—
ERP integration costs	2,099			1,676			1,918
Plant start-up costs	1,930			1,361			718
Stock-based compensation expense	1,242			1,264			984
Goodwill impairment	1,092			—			—
Acquisition related fees	866			542			—
Settlement gain on benefit plan	(1,675		)	—			—
Net foreign exchange (gain) loss	(442		)	1,789			1,391
Net (gain) loss on sales and disposals of assets	(31		)	104			(40		)
Registration related fees	—			20			77
Adjusted EBITDA	$	16,334		$	14,120		$	42,121

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Adjusted gross margin

“Adjusted gross margin” represents net sales less cost of sales excluding adjustments which are outlined in the quantitative reconciliation provided below.  Management uses Adjusted gross margin to facilitate our analysis and understanding of our business operations and believes that Adjusted gross margin is useful to investors because it provides a supplemental way to understand the underlying operating performance of the Company.  Adjusted gross margin should not be considered as an alternative to gross margin or any other performance measure derived in accordance with U.S. GAAP.

The following table provides a reconciliation from U.S. GAAP gross margin to Adjusted gross margin (amounts in thousands):

	Quarters Ended
	September 30, 2012		June 30, 2012		September 30, 2011
U.S. GAAP
Net sales	$	215,991	$	223,632	$	265,514
Gross margin	$	32,938	$	32,311	$	62,195
Excluding the following items (Non-U.S. GAAP):
Plant start-up costs	1,930		1,361		718
Stock-based compensation expense	423		401		206
Adjusted gross margin	$	35,291	$	34,073	$	63,119
Adjusted gross margin as a percentage of net sales	16.3%		15.2%		23.8%

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EX-99.2

Exhibit 99.2

Quarter Ended September 30, 2012 Earnings Conference Call November 1, 2012

Cautionary Statement Certain statements included herein contain forward-looking statements within the meaning of federal securities laws about KEMET Corporation's (the "Company") financial condition and results of operations that are based on management's current expectations, estimates and projections about the markets in which the Company operates, as well as management's beliefs and assumptions. Words such as "expects," "anticipates," "believes," "estimates," variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's judgment only as of the date hereof. The Company undertakes no obligation to update publicly any of these forward-looking statements to reflect new information, future events or otherwise. Factors that may cause actual outcome and results to differ materially from those expressed in, or implied by, these forward-looking statements include, but are not necessarily limited to, the following: (i) adverse economic conditions could impact our ability to realize operating plans if the demand for our products declines, and such conditions could adversely affect our liquidity and ability to continue to operate; (ii) adverse economic conditions could cause the write down of long-lived assets or goodwill; (iii) an increase in the cost or a decrease in the availability of our principal raw materials; (iv) changes in the competitive environment; (v) uncertainty of the timing of customer product qualifications in heavily regulated industries; (vi) economic, political, or regulatory changes in the countries in which we operate; (vii) difficulties, delays or unexpected costs in completing the restructuring plan; (viii) equity method investments expose us to a variety of risks; (ix) acquisitions and other strategic transactions expose us to a variety of risks; (x) inability to attract, train and retain effective employees and management; (xi) inability to develop innovative products to maintain customer relationships and offset potential price erosion in older products; (xii) exposure to claims alleging product defects; (xiii) the impact of laws and regulations that apply to our business, including those relating to environmental matters; (xiv) subject to international laws relating to trade, export controls and foreign corrupt practices; (xv) volatility of financial and credit markets affecting our access to capital; (xvi) needing to reduce the total costs of our products to remain competitive; (xvii) potential limitation on the use of net operating losses to offset possible future taxable income; (xviii) restrictions in our debt agreements that limit our flexibility in operating our business; and (xix) additional exercise of the warrant by K Equity which could potentially result in the existence of a significant stockholder who could seek to influence our corporate decisions.

Orders Received by Channel $180,000,000 $200,000,000 Booking trends for all 3 channels aligned through cycles $140,000,000 $160,000,000 $100,000,000 $120,000,000 DIST EMS $60,000,000 $80,000,000 OEM $20,000,000 $40,000,000 $0 FY10 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY11 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY12 Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY13 Q1 FY13 Q2 EMS & OEM Channel booking trends less erratic due to Forecasting and Inventory models

Income Statement Highlights U.S. GAAP (Amounts in thousands, except percentages and per share data) For the Quarters Ended Sep-12 Jun-12 Sep-11 Net sales $ 215,991 $ 223,632 $ 265,514 Gross margin $ 32,938 $ 32,311 $ 62,195 Gross margin as a percentage of net sales 15.2% 14.4% 23.4% Selling, general and administrative $ 27,983 $ 27,255 $ 28,355 SG&A as a percentage of net sales 13.0% 12.2% 10.7% Operating income (loss) $ (14,020) $ (4,045) $ 24,913 Net income (loss) $ (24,921) $ (17,753) $ 14,318 Earnings (loss) per share - basic $ (0.55) $ (0.40) $ 0.32 Earnings (loss) per share - diluted $ (0.55) $ (0.40) $ 0.27 Weighted avg. shares - basic 44,911 44,808 44,370 Weighted avg. shares - diluted 44,911 44,808 52,230

Adjusted Net Income (Loss) and Adjusted EBITDA Non-GAAP (Amounts in thousands, except percentages and per share data) For the Quarters Ended Sep-12 Jun-12 Sep-11 Net income (loss) $(24,921) $(17,753) $ 14,318 Adjustments: Restructuring charges 8,522 1,264 1,605 Write down of long-lived assets 4,234 - - ERP integration costs 2,099 1,676 1,918 Plant start-up costs 1,930 1,361 718 Stock-based compensation expense 1,242 1,264 984 Goodwill impairment 1,092 - - Amortization included in interest expense 954 971 1,012 Acquisition related fees 866 542 - Settlement gain on benefit plan (1,675) - - Net foreign exchange (gain) loss (442) 1,789 1,391 (Gain) loss on sales and disposals of assets (31) 104 (40) Registration related fees - 20 77 Income tax effect of non-GAAP adjustments (90) 4 406 Adjusted net income (loss) $ (6,220) $ (8,758) $ 22,389 Adjusted EPS - basic $ (0.14) $ (0.20) $ 0.50 Adjusted EPS - diluted $ (0.14) $ (0.20) $ 0.43 Adjusted EBITDA $ 16,334 $ 14,120 $ 42,121 Weighted avg. shares - basic 44,911 44,808 44,370 Weighted avg. shares - diluted 44,911 44,808 52,230

Adjusted Selling, General and Administrative Expenses Non-GAAP (Amounts in thousands, except percentages) For the Quarters Ended Sep-12 Jun-12 Sep-11 Net sales $ 215,991 $ 223,632 $ 265,514 Selling, general and administrative expenses $ 27,983 $ 27,255 $ 28,355 Adjustments: ERP integration costs (2,099) (1,676) (1,918) Stock-based compensation expense (759) (825) (778) Acquisisition related fees (866) (542) - Registration related fees - (20) (77) Adjusted selling, general and administrative expenses $ 24,259 $ 24,192 $ 25,582 Adjusted selling, general and administrative as a percentage of net sales 11.2% 10.8% 9.6%

Adjusted Gross Margin Non-GAAP For the Quarters Ended (Amounts in thousands, except percentages) Sep-12 Jun-12 Sep-11 Net sales $ 215,991 $ 223,632 $ 265,514 Gross margin $ 32,938 $ 32,311 $ 62,195 Adjustments: Plant Start-up costs 1,930 1,361 718 Stock-based compensation expense 423 401 206 Adjusted gross margin $ 35,291 $ 34,073 $ 63,119 Adjusted gross margin as a percentage of net sales 16.3% 15.2% 23.8%

Adjusted Gross Margin by Business Group Non-GAAP (Amounts in thousands, except percentages) For the Quarter Ended September 30, 2012 Tantalum Ceramic Film & Electrolytic Net sales $ 109,308 $ 53,116 $ 53,567 Gross margin $ 17,168 $ 15,984 $ (214) Adjustments: Plant Start-up costs 540 - 1,390 Stock-based compensation expense 155 93 175 Adjusted gross margin $ 17,863 $ 16,077 $ 1,351 Adjusted gross margin as a percentage of net sales 16.3% 30.3% 2.5%

Adjusted Operating Income Non-GAAP (Amounts in thousands) For the Quarters Ended Sep-12 Jun-12 Sep-11 Operating income (loss) $ (14,020) $ (4,045) $ 24,913 Adjustments: Restructuring charges 8,522 1,264 1,605 Write down of long-lived assets 4,234 - - ERP integration costs 2,099 1,676 1,918 Plant start-up costs 1,930 1,361 718 Stock-based compensation expense 1,242 1,264 984 Goodwill impairment 1,092 - - Acquisition related fees 866 542 - Settlement gain on benefit plan (1,675) - - (Gain) loss on sales and disposals of assets (31) 104 (40) Registration related fees - 20 77 Adjusted operating income $ 4,259 $ 2,186 $ 30,175

Balance Sheet Highlights Includes only Accounts receivable, net; Inventories, net; and Accounts payable Calculated by annualizing the current quarter’s Net sales and Cost of sales (Amounts in millions, except DSO and DPO) September 30, 2012 June 30, 2012 FX Impact Cash and cash equivalents $ 160.5 $ 187.8 $ 0.5 Capital expenditures $ 17.2 $ 13.1 Short-term debt $ 1.6 $ 1.5 Long-term debt 355.5 355.6 Debt premium 4.1 4.2 Total debt $ 361.2 $ 361.3 $ 0.1 Equity $ 313.3 $ 334.6 Net working capital (1) $ 241.8 $ 235.9 $ 1.2 Days in receivables (DSO)(2) 42 43 Days in payables (DPO)(2) 41 42

Adjusted EBITDA Reconciliation Non-GAAP For the Quarters Ended (Amounts in thousands) Sep-12 Jun-12 Sep-11 GAAP Net income (loss) $ (24,921) $ (17,753) $ 14,318 Interest expense, net 10,110 10,426 7,251 Income tax expense 1,787 1,771 2,047 Depreciation and amortization 11,521 11,656 11,852 EBITDA (1,503) 6,100 35,468 Excluding the following items (Non-GAAP) Restructuring charges 8,522 1,264 1,605 Write down of long-lived assets 4,234 - - ERP integration costs 2,099 1,676 1,918 Plant start-up costs 1,930 1,361 718 Stock-based compensation expense 1,242 1,264 984 Goodwill impairment 1,092 - - Acquisition related fees 866 542 - Settlement gain on benefit plan (1,675) - - Net foreign exchange (gain) loss (442) 1,789 1,391 Net (gain) loss on disposals of assets (31) 104 (40) Registration related fees - 20 77 Adjusted EBITDA $ 16,334 $ 14,120 $ 42,121

Non-GAAP Financial Measures 11 Non-GAAP Financial Measures Included in this presentation are certain non-GAAP financial measures designed to complement the financial information presented in accordance with generally accepted accounting principles in the United States of America because management believes such measures are useful to investors. Adjusted gross margin Adjusted gross margin represents net sales less cost of sales excluding adjustments which are outlined in the quantitative reconciliation provided earlier in this presentation. Management uses Adjusted gross margin to facilitate our analysis and understanding of our business operations and believes that Adjusted gross margin is useful to investors because it provides a supplemental way to understand the underlying operating performance of the Company. Adjusted gross margin should not be considered as an alternative to gross margin or any other performance measure derived in accordance with GAAP. Adjusted selling, general and administrative expenses Adjusted selling, general and administrative expenses represents selling, general and administrative expenses excluding adjustments which are outlined in the quantitative reconciliation provided earlier in this presentation. Management uses Adjusted selling, general and administrative expenses to facilitate our analysis and understanding of our business operations and believes that Adjusted selling, general and administrative expenses is useful to investors because it provides a supplemental way to understand the underlying operating performance of the Company. Adjusted selling, general and administrative expenses should not be considered as an alternative to selling, general and administrative expenses or any other performance measure derived in accordance with GAAP. Adjusted operating income Adjusted operating income represents operating income (loss), excluding adjustments which are outlined in the quantitative reconciliation provided earlier in this presentation. Management uses Adjusted operating income to facilitate our analysis and understanding of our business operations and believes that Adjusted operating income is useful to investors because it provides a supplemental way to understand the underlying operating performance of the Company. Adjusted operating income should not be considered as an alternative to operating income or any other performance measure derived in accordance with GAAP.

Non-GAAP Financial Measures Continued 12 Adjusted net income (loss) and Adjusted EPS Adjusted net income and Adjusted EPS represent net income (loss) and EPS, excluding adjustments which are more specifically outlined in the quantitative reconciliation provided earlier in this presentation. Management uses Adjusted net income and Adjusted EPS to evaluate the Company's operating performance and believes that Adjusted net income and Adjusted EPS are useful to investors because they provide a supplemental way to possibly better understand the underlying operating performance of the Company. Adjusted net income and Adjusted EPS should not be considered as alternatives to net income, operating income or any other performance measures derived in accordance with GAAP. Adjusted EBITDA Adjusted EBITDA represents net income (loss) before income tax expense (benefit), interest expense, net, and depreciation and amortization expense, adjusted to exclude the following: restructuring charges, write down of long-lived assets, ERP integration costs, plant start-up costs, stock-based compensation expense, goodwill impairment, acquisition related fees, settlement gain on benefit plan, net foreign exchange (gain) loss, net (gain) loss on disposals of assets, and registration related fees. We present Adjusted EBITDA as a supplemental measure of our performance and ability to service debt. We also present Adjusted EBITDA because we believe such measure is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We believe Adjusted EBITDA is an appropriate supplemental measure of debt service capacity, because cash expenditures on interest are, by definition, available to pay interest, and tax expense is inversely correlated to interest expense because tax expense goes down as deductible interest expense goes up; depreciation and amortization are non-cash charges. The other items excluded from Adjusted EBITDA are excluded in order to better reflect our continuing operations. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these types of adjustments. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity.

Non-GAAP Financial Measures Continued 13 Our Adjusted EBITDA measure has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: it does not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments; it does not reflect changes in, or cash requirements for, our working capital needs; it does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and our Adjusted EBITDA measure does not reflect any cash requirements for such replacements; it is not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows; it does not reflect the impact of earnings or charges resulting from matters we consider not be indicative of our ongoing operations; it does not reflect limitations on or costs related to transferring earnings from our subsidiaries to us; and other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure. Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations. You should compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally.