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): January 31, 2013

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:

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

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

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

o    Pre-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 January 31, 2013, KEMET Corporation (the “Company”) issued a News Release announcing the preliminary consolidated results for the third fiscal quarter ended December 31, 2012.

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

Item 7.01 Regulation FD Disclosure

On January 31, 2013, the Company will host a conference call to discuss financial results for its third fiscal quarter ended December 31, 2012.  The slide package prepared for use by executive management for this presentation is attached hereto as Exhibit 99.2.  All of the information in the presentation is presented as of January 31, 2013, and the Company does not assume any obligation to update such information in the future.

The information included in this Form 8-K, as well as the exhibits referenced herein, 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 January 31, 2013 issued by the Company.
99.2	Slide Package prepared for use in connection with the Company’s third fiscal quarter earnings conference call to be held on January 31, 2013.

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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 31, 2013	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

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 THIRD QUARTER FISCAL YEAR 2013 RESULTS

Greenville, South Carolina (January 31, 2013) - KEMET Corporation (the “Company”) (NYSE: KEM) ), a leading manufacturer of tantalum, ceramic, aluminum, film, paper and electrolytic capacitors, today reported preliminary results for the third fiscal quarter ended December 31, 2012.

Net sales for the third quarter of fiscal year 2013 were $200.3 million, and on a U.S. GAAP basis, the net loss was $14.3 million, or $0.32 loss per basic and diluted share for the third quarter of fiscal year 2013 compared to a net loss of $27.8 million or $0.62 loss per basic and diluted share for the third quarter of fiscal year 2012. The net loss for the third quarters of fiscal year 2013 and 2012 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 $2.2 million or $0.05 loss per basic and diluted share for the third quarter of fiscal year 2013 compared to a $6.2 million or $0.14 loss per diluted share for the second quarter of fiscal year 2013. Non-U.S. GAAP adjusted net income was $2.0 million or $0.04 per basic and diluted share for the third quarter of fiscal year 2012.  Consolidated Non-U.S. GAAP gross margin increased to 18.0% in the third quarter of fiscal year 2013 from 16.3% in the second quarter of fiscal year 2013.

“Revenue for this quarter was in our forecasted range, but more importantly our operating results clearly reflect that our cost reduction actions are taking hold as consolidated non-GAAP gross margins for this quarter rose 1.7% to 18.0% on less revenue compared to the September quarter,” said Per Loof KEMET’s Chief Executive Officer.  “Our vertical integration efforts within our tantalum business unit are clearly working and reducing our cost of raw materials and we expect additional benefits in the next several quarters as we produce more tantalum powder internally.  We are cautiously optimistic that we are at or nearing the bottom of this cycle and we remain focused on a profitable bottom line even if economic conditions do not improve,” 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 April 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) the impact of 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 December 31,						Nine Months Ended December 31,
	2012			2011			2012			2011
Net sales	$	200,297		$	218,795		$	639,920		$	774,165
Operating costs and expenses:
Cost of sales	166,117			178,305			540,491			592,128
Selling, general and administrative expenses	25,411			24,737			80,649			83,368
Research and development	6,698			7,172			21,264			21,620
Restructuring charges	3,886			10,748			13,672			13,378
Goodwill impairment	—			—			1,092			—
Write down of long-lived assets	3,084			15,786			7,318			15,786
Net curtailment and settlement (gain) loss on benefit plans	587			—			(1,088		)	—
Net (gain) loss on sales and disposals of assets	(196		)	9			(123		)	92
Total operating costs and expenses	205,587			236,757			663,275			726,372
Operating income (loss)	(5,290		)	(17,962		)	(23,355		)	47,793
Other (income) expense:
Interest income	(54		)	(62		)	(111		)	(136		)
Interest expense	10,247			7,036			30,840			21,718
Other (income) expense, net	(1,641		)	716			(1,126		)	1,918
Income (loss) before income taxes	(13,842		)	(25,652		)	(52,958		)	24,293
Income tax expense	415			2,119			3,973			5,897
Net income (loss)	$	(14,257	)	$	(27,771	)	$	(56,931	)	$	18,396
Net income (loss) per share:
Basic	$	(0.32	)	$	(0.62	)	$	(1.27	)	$	0.43
Diluted	$	(0.32	)	$	(0.62	)	$	(1.27	)	$	0.35
Weighted-average shares outstanding:
Basic	44,918			44,644			44,879			42,834
Diluted	44,918			44,644			44,879			52,302

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KEMET CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(Amounts in thousands, except share data)

	December 31, 2012			March 31, 2012
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	137,559		$	210,521
Accounts receivable, net	96,648			104,950
Inventories, net	221,360			212,234
Prepaid expenses and other	36,509			32,259
Deferred income taxes	5,383			6,370
Total current assets	497,459			566,334
Property and equipment, net of accumulated depreciation of $777,780 and $761,522 as of December 31, 2012 and March 31, 2012, respectively	312,911			315,848
Goodwill	35,584			36,676
Intangible assets, net	39,750			41,527
Restricted cash	26,177			2,204
Other assets	14,459			12,963
Total assets	$	926,340		$	975,552
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	7,908		$	1,951
Accounts payable	61,593			74,404
Accrued expenses	85,077			89,079
Income taxes payable	1,104			2,256
Total current liabilities	155,682			167,690
Long-term debt, less current portion	375,587			345,380
Other non-current obligations	86,455			101,229
Deferred income taxes	4,805			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 December 31, 2012 and March 31, 2012	465			465
Additional paid-in capital	467,708			470,059
Retained deficit	(137,984		)	(81,053		)
Accumulated other comprehensive income	10,320			12,020
Treasury stock, at cost (1,588 and 1,839 shares at December 31, 2012 and March 31, 2012, respectively)	(36,698		)	(42,495		)
Total stockholders’ equity	303,811			358,996
Total liabilities and stockholders’ equity	$	926,340		$	975,552

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KEMET CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

	Nine Months Ended December 31,
	2012			2011
Net income (loss)	$	(56,931	)	$	18,396
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	33,679			33,384
Amortization of debt discount and debt issuance costs	3,046			2,903
Net (gain) loss on sales and disposals of assets	(123		)	92
Stock-based compensation expense	3,584			1,378
Goodwill impairment	1,092			—
Write down of long-lived assets	7,318			15,786
Settlement gain on benefit plan	(1,088		)	—
Change in deferred income taxes	1,517			909
Change in operating assets	(5,576		)	46,330
Change in operating liabilities	(28,173		)	(48,116		)
Other	33			841
Net cash provided by (used in) operating activities	(41,622		)	71,903
Investing activities:
Capital expenditures	(38,349		)	(31,793		)
Change in restricted cash	(24,000		)	—
Acquisition, net of cash received	—			(11,584		)
Net cash used in investing activities	(62,349		)	(43,377		)
Financing activities:
Proceeds from issuance of debt	39,825			—
Deferred acquisition payments	(6,617		)	—
Payments of long-term debt	(1,901		)	(40,581		)
Net borrowings (payments) under other credit facilities	—			(3,153		)
Proceeds from exercise of stock options	58			225
Debt issuance costs	(275		)	(36		)
Change in restricted cash	—			—
Net cash provided by (used in) financing activities	31,090			(43,545		)
Net decrease in cash and cash equivalents	(72,881		)	(15,019		)
Effect of foreign currency fluctuations on cash	(81		)	(983		)
Cash and cash equivalents at beginning of fiscal period	210,521			152,051
Cash and cash equivalents at end of fiscal period	$	137,559		$	136,049

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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 certain 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 included in interest expense, acquisition related fees, net curtailment and settlement (gain) loss on benefit plans, net foreign exchange gain/loss, net gain/loss on sales and disposals of assets and income tax impact of 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
	December 31, 2012			September 30, 2012			December 31, 2011
	(Unaudited) (Amounts in thousands, except per share data)
U.S. GAAP
Net sales	$	200,297		$	215,991		$	218,795
Net loss	$	(14,257	)	$	(24,921	)	$	(27,771	)
Basic net loss per share	$	(0.32	)	$	(0.55	)	$	(0.62	)
Diluted net loss per share	$	(0.32	)	$	(0.55	)	$	(0.62	)
Excluding the following items (Non-U.S. GAAP)
Net loss	$	(14,257	)	$	(24,921	)	$	(27,771	)
Adjustments:
Restructuring charges	3,886			8,522			10,748
Write down of long-lived assets	3,084			4,234			15,786
ERP integration costs	1,458			2,099			1,812
Plant start-up costs	1,524			1,930			666
Stock-based compensation expense	1,078			1,242			(797		)
Goodwill impairment	—			1,092			—
Amortization included in interest expense	1,122			954			847
Acquisition related fees	164			866			—
Net curtailment and settlement (gain) loss on benefit plans	587			(1,675		)	—
Net foreign exchange (gain) loss	(464		)	(442		)	303
Net (gain) loss on sales and disposals of assets	(196		)	(31		)	9
Income tax impact of non-U.S. GAAP adjustments (1)	(228		)	(90		)	398
Adjusted net income (loss)(excluding adjustments)	$	(2,242	)	$	(6,220	)	$	2,001
Adjusted net income (loss) per share (excluding adjustments)
Basic	$	(0.05	)	$	(0.14	)	$	0.04
Diluted	$	(0.05	)	$	(0.14	)	$	0.04

(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 loss before net interest expense, income tax expense/benefit, 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, net curtailment and settlement gain/loss on benefit plans, net foreign exchange gain/loss and net loss on sales and disposals of assets.  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;

·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 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

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·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 loss to Adjusted EBITDA (amounts in thousands):

	Quarters Ended
	December 31, 2012			September 30, 2012			December 31, 2011
U.S. GAAP
Net loss	$	(14,257	)	$	(24,921	)	$	(27,771	)
Interest expense, net	10,193			10,110			6,974
Income tax expense	415			1,787			2,119
Depreciation and amortization	10,502			11,521			10,373
EBITDA	6,853			(1,503		)	(8,305		)
Excluding the following items (Non-U.S. GAAP):
Restructuring charges	3,886			8,522			10,748
Write down of long-lived assets	3,084			4,234			15,786
ERP integration costs	1,458			2,099			1,812
Plant start-up costs	1,524			1,930			666
Stock-based compensation expense	1,078			1,242			(797		)
Goodwill impairment	—			1,092			—
Acquisition related fees	164			866			—
Net curtailment and settlement (gain) loss on benefit plans	587			(1,675		)	—
Net foreign exchange (gain) loss	(464		)	(442		)	303
Net (gain) loss on sales and disposals of assets	(196		)	(31		)	9
Adjusted EBITDA	$	17,974		$	16,334		$	20,222

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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
	December 31, 2012			September 30, 2012			December 31, 2011
U.S. GAAP
Net sales	$	200,297		$	215,991		$	218,795
Gross margin	34,180			32,938			40,490
Excluding the following items (Non-U.S. GAAP):
Plant start-up costs	1,524			1,930			666
Stock-based compensation expense	359			423			(114		)
Adjusted gross margin	$	36,063		$	35,291		$	41,042
Adjusted gross margin as a percentage of net sales	18.0		%	16.3		%	18.8		%

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EX-99.2

Exhibit 99.2

Quarter Ended December 31, 2012 Earnings Conference Call January 31, 2013

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 raw materials; (iv) changes in the competitive environment; (v) uncertainty of the timing of customer product qualifications in heavily regulated industries; (vi) changes in economic, political, or regulatory environment 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) the impact of 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. 2

Income Statement Highlights U.S. GAAP 3 Dec-12 Sep-12 Dec-11 Net sales 200,297 $ 215,991 $ 218,795 $ Gross margin 34,180 $ 32,938 $ 40,490 $ Gross margin as a percentage of net sales 17.1% 15.2% 18.5% Selling, general and administrative 25,411 $ 27,983 $ 24,737 $ SG&A as a percentage of net sales 12.7% 13.0% 11.3% Operating loss (5,290) $ (14,020) $ (17,962) $ Net loss (14,257) $ (24,921) $ (27,771) $ Earnings (loss) per share - basic (0.32) $ (0.55) $ (0.62) $ Earnings (loss) per share - diluted (0.32) $ (0.55) $ (0.62) $ Weighted avg. shares - basic 44,918 44,911 44,644 Weighted avg. shares - diluted 44,918 44,911 44,644 For the Quarters Ended (Amounts in thousands, except percentages and per share data)

Adjusted Gross Margin Non-GAAP 4 For the Quarters Ended (Amounts in thousands, except percentages) Dec-12 Sep-12 Dec-11 Net sales 200,297 $ 215,991 $ 218,795 $ Gross margin (loss) 34,180 $ 32,938 $ 40,490 $ Adjustments: Plant Start-up costs 1,524 1,930 666 Stock-based compensation expense (recovery) 359 423 (114) Adjusted gross margin (loss) 36,063 $ 35,291 $ 41,042 $ Adjusted gross margin as a percentage of net sales 18.0% 16.3% 18.8%

Adjusted Selling, General and Administrative Expenses Non-GAAP 5 Dec-12 Sep-12 Dec-11 Net sales 200,297 $ 215,991 $ 218,795 $ Selling, general and administrative expenses 25,411 $ 27,983 $ 24,737 $ Adjustments: ERP integration costs (1,458) (2,099) (1,812) Stock-based compensation (expense) recovery (664) (759) 683 Acquisition related fees (164) (866) - Adjusted selling, general and administrative expenses 23,125 $ 24,259 $ 23,608 $ Adjusted selling, general and administrative as a percentage of net sales 11.5% 11.2% 10.8% (Amounts in thousands, except percentages)

Adjusted Operating Income Non-GAAP 6 Dec-12 Sep-12 Dec-11 Operating loss (5,290) $ (14,020) $ (17,962) $ Adjustments: Restructuring charges 3,886 8,522 10,748 Write down of long-lived assets 3,084 4,234 15,786 ERP integration costs 1,458 2,099 1,812 Plant start-up costs 1,524 1,930 666 Stock-based compensation expense (recovery) 1,078 1,242 (797) Goodwill impairment - 1,092 - Acquisition related fees 164 866 - Net curtailment and settlement gain (loss) on benefit plans 587 (1,675) - Net (gain) loss on sales and disposals of assets (196) (31) 9 Adjusted operating income 6,295 $ 4,259 $ 10,262 $ For the Quarters Ended (Amounts in thousands)

Adjusted Net Income (Loss) and Adjusted EBITDA Non-GAAP 7 For the Quarters Ended Dec-12 Sep-12 Dec-11 Net loss (14,257) $ (24,921) $ (27,771) $ Adjustments: Restructuring charges 3,886 8,522 10,748 Write down of long-lived assets 3,084 4,234 15,786 ERP integration costs 1,458 2,099 1,812 Plant start-up costs 1,524 1,930 666 Stock-based compensation expense (recovery) 1,078 1,242 (797) Goodwill impairment - 1,092 - Amortization included in interest expense 1,122 954 847 Acquisition related fees 164 866 - Net curtailment and settlement gain (loss) on benefit plans 587 (1,675) - Net foreign exchange (gain) loss (464) (442) 303 Net (gain) loss on sales and disposals of assets (196) (31) 9 Income tax impact of non-GAAP adjustments (228) (90) 398 Adjusted net income (loss) (2,242) $ (6,220) $ 2,001 $ Adjusted EPS - basic (0.05) $ (0.14) $ 0.04 $ Adjusted EPS - diluted (0.05) $ (0.14) $ 0.04 $ Adjusted EBITDA 17,974 $ 16,334 $ 20,222 $ Weighted avg. shares - basic 44,918 44,911 44,644 Weighted avg. shares - diluted 44,918 44,911 52,209 (Amounts in thousands, except percentages and per share data)

Tantalum – Adjusted Gross Margin Non-GAAP 8 (in thousands) Q3 - FY13 Q2 - FY13 Net sales 98,496 $ 109,308 $ Gross margin 17,492 17,168 Gross margin % 17.8% 15.7% Plant start-up costs - 540 Stock-based compensation (expense) recovery 132 155 - - Adjusted gross margin 17,624 $ 17,863 $ Adjusted gross margin as a % of net sales 17.9% 16.3%

Ceramic – Adjusted Gross Margin Non-GAAP 9 (in thousands) Q3 - FY13 Q2 - FY13 Net sales 51,276 $ 53,116 $ Gross margin 18,562 15,984 Gross margin % 36.2% 30.1% Plant start-up costs - (13) Stock-based compensation expense 74 93 - - Adjusted gross margin 18,636 $ 16,064 $ Adjusted gross margin as a % of net sales 36.3% 30.2%

Film & Electrolytic – Adjusted Gross Margin Non-GAAP 10 (in thousands) Q3 - FY13 Q2 - FY13 Net sales 50,525 $ 53,567 $ Gross loss (1,874) (214) Gross margin % -3.7% -0.4% Plant start-up costs 1,524 1,403 Stock-based compensation expense 154 175 - - Adjusted gross margin (196) $ 1,364 $ Adjusted gross margin as a % of net sales -0.4% 2.5%

Financial Highlights Includes only Accounts receivable, net; Inventories, net; and Accounts payable Calculated by annualizing the current quarter’s Net sales and Cost of sales 11 (Amounts in millions, except DSO and DPO) Dec-12 Sep-12 FX Impact Cash, cash equivalents and restricted cash 163.7 $ 162.6 $ 0.4 $ Capital expenditures 8.0 $ 17.2 $ Short-term debt 7.9 $ 1.6 $ Long-term debt 372.9 355.5 Debt premium 2.7 4.1 Total debt 383.5 $ 361.2 $ - $ Equity 303.8 $ 313.3 $ Net working capital (1) 256.4 $ 241.8 $ 0.9 $ Days in receivables (DSO)(2) 44 42 Days in payables (DPO)(2) 34 41

Adjusted EBITDA Reconciliation Non-GAAP 12 For the Quarters Ended (Amounts in thousands) Dec-12 Sep-12 Dec-11 GAAP Net loss (14,257) $ (24,921) $ (27,771) $ Interest expense, net 10,193 10,110 6,974 Income tax expense (benefit) 415 1,787 2,119 Depreciation and amortization 10,502 11,521 10,373 EBITDA 6,853 (1,503) (8,305) Excluding the following items (Non-GAAP) Restructuring charges 3,886 8,522 10,748 Write down of long-lived assets 3,084 4,234 15,786 ERP integration costs 1,458 2,099 1,812 Plant start-up costs 1,524 1,930 666 Stock-based compensation expense (recovery) 1,078 1,242 (797) Goodwill impairment - 1,092 - Acquisition related fees 164 866 - Net curtailment and settlement gain (loss) on benefit plans 587 (1,675) - Net foreign exchange (gain) loss (464) (442) 303 Net (gain) loss on sales and disposals of assets (196) (31) 9 Adjusted EBITDA 17,974 $ 16,334 $ 20,222 $ 

Non-GAAP Financial Measures 13 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 14 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 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 (recovery), goodwill impairment, acquisition related fees, net curtailment and settlement gain (loss) on benefit plans, net foreign exchange (gain) loss, and net (gain) loss on sales and disposals of assets. 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 15 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 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 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.