EX-99.1 2 kc3239ex991.txt Exhibit 99.1 KEMET REPORTS FINANCIAL RESULTS FOR QUARTER ENDING JUNE 30, 2005 GREENVILLE, S.C., July 26 /PRNewswire-FirstCall/ -- KEMET Corporation (NYSE: KEM) today reported financial results for the quarter ended June 30, 2005. Net sales for the quarter were $114.1 million and net income was $3.0 million or $0.04 per share. Before special charges, the net loss was $0.3 million, or $0.00 per diluted share. KEMET reports results before special charges because the results better depict normal operations (see chart below for reconciliation before and after special charges). Comparisons to prior periods are as follows: Quarter Ended ------------------------------------ Jun 2005 Mar 2005 Jun 2004 ---------- ---------- ---------- (In Millions, Except Per Share Data) Net sales $ 114.1 $ 101.4 $ 122.4 Before special charges (non-GAAP) Net income/(loss) $ (0.3) $ (16.7) $ 0.7 Net income/(loss) per diluted share $ (0.00) $ (0.19) $ 0.01 Special after tax benefits/(charges) $ 3.3 $ (109.2) $ (2.6) Special after tax benefits/(charges) per diluted share $ 0.04 $ (1.26) $ (0.03) After special charges (GAAP) Net income/(loss) $ 3.0 $ (125.9) $ (1.9) Net income/(loss) per diluted share $ 0.04 $ (1.45) $ (0.02) "I am pleased with the results for the quarter as net sales increased more than 12% from the March 2005 quarter and we achieved breakeven net income before special charges," stated Mr. Per Loof, Chief Executive Officer. "The increase in sales was driven primarily through distribution where end market demand continued to grow. The significant improvement in net income over previous quarters reflects our recent cost reduction actions and decisions to restructure the Company. While I am pleased with the improvement, I am not content with breakeven results as our mission remains clear - to return to profitability as soon as possible. "Pricing continues to be an issue for the industry, although the erosion slowed down somewhat compared to last quarter. During the quarter, mix adjusted average selling prices declined 3.4% from the previous quarter. Capacity utilization remains at approximately 85%, with the ceramics utilization rate running slightly higher than tantalum. On a positive note, demand for our tantalum polymer products continues to grow, especially in Asia. To meet this increasing demand, we are expanding our tantalum polymer capacity with the opening of our second plant in Suzhou, China, in September 2005. This new plant will produce tantalum polymer products primarily for the Asian markets. I am particularly excited about this growth opportunity for KEMET. "As I travel and meet with customers and employees around the world, I remain confident that we are well-positioned in the market, and supported by a dedicated workforce and an experienced management team. The reduction in force that we initiated in June 2005, although difficult, was necessary in order for the Company to return to profitability. This reduction, as well as other cost initiatives, was necessary to "right-size" the Company. We have also realigned our business structure in order to be better positioned to address the challenges of the future. I am confident that the KEMET team will be able to capitalize on opportunities presented in the quarters to come." As of June 30, 2005, KEMET had $218.6 million in cash and short and long- term investments in marketable securities, $100.0 million in debt, and $520.9 million in stockholders' equity. The Company will hold a conference call at 9:00 am ET Tuesday, July 26, 2005, to discuss the earnings release. The call will last approximately one hour, and after an initial presentation, questions will be taken as time permits. To access the call, participants in the United States should dial 1-800-416-8033, and participants outside the United States should dial 1-706-643-0979. Participants should reference "KEMET Corporation" and the Conference ID #: 7773176. In conjunction with the conference call, there will be a simultaneous live broadcast over the Internet, which can be accessed at http://www.KEMET.com/IR. A replay of the conference call will be available, until midnight August 9, 2005 at the same link. KEMET's common stock is listed on The New York Stock Exchange under the symbol KEM. At the Investor Relations portion of the Company's web site at http://www.KEMET.com/IR, users can subscribe to KEMET news releases and can find additional Company information. OUR BUSINESS The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. Current global economic conditions make it particularly difficult at present to predict product demand and other related matters. - Sales of surface-mount capacitors were 82.3% of net sales, and sales of leaded parts were 17.7% of net sales for the June 2005 quarter. - By region, 44.2% of net sales for the June 2005 quarter were to customers in North America, 35.9% were to Asia, and 19.9% were to Europe. - By channel, 56.2% of net sales for the June 2005 quarter were to distribution customers, 23.6% were to Electronic Manufacturing Services customers, and 20.2% were to Original Equipment Manufacturing customers. Average selling prices for the June 2005 quarter, adjusted for changes in product mix, decreased approximately 3.4% from average selling prices for the March 2005 quarter. - In July 2003, KEMET announced the reorganization of its operations around the world, resulting in the location of virtually all of its production in low cost regions to be completed in mid 2005. KEMET estimates it will incur special charges of approximately $39 million over the period of the reorganization related to movement of manufacturing operations. Completed portions of KEMET's announced move of production have occurred in accordance with the anticipated time line. Charges related to movement of manufacturing operations in the June 2005 quarter were $2.5 million bringing the total manufacturing relocation charges to approximately $36.4 million to date. The balance of the $39 million is expected to be realized in the September 2005 quarter. During the June 2005 quarter, KEMET reduced its workforce by approximately 138 employees worldwide, which resulted in one-time charges of $5.2 million in the June 2005 quarter and expected annualized savings of approximately $7.5 million. The Company also recorded a $0.8 million contract termination charge relating to a site to be shutdown. - Summary of special charges in the June 2005 quarter, net of tax: (In Millions) ------------- Manufacturing relocation $ 2.5 Reduction in workforce 5.2 Contract termination 0.8 Reduction in previous restructuring accruals (0.3) 1Q 2006 Restructuring charge 8.2 Loss on investment in unconsolidated affiliate 0.6 Included in Other expense Tax refund benefit (12.1) Included in Income tax expense/(benefit) Special after tax charges/(benefit) $ (3.3) - For fiscal 2006, KEMET anticipates maintaining our investments in key customer relationships through our direct sales and customer service professionals, as well as our investments in research and development, to maintain our competitive position in the capacitor industry. We are continuing to enhance research and development, focused on organic polymer tantalum and high-capacitance ceramic capacitor technologies.
Fiscal Year Fiscal Quarter Ended --------------------------------- --------------------------------------------- 2003 2004 2005 Sep 2004 Dec 2004 Mar 2005 Jun 2005 --------- --------- --------- --------- --------- --------- --------- (In Millions) SG&A $ 54.4 $ 51.2 $ 51.7 $ 13.0 $ 12.0 $ 13.8 $ 12.2 R&D $ 25.3 $ 24.4 $ 26.6 $ 6.6 $ 7.5 $ 6.2 $ 6.2
- Capital expenditures for the June 2005 quarter were $6.4 million.
Fiscal Year Ended Fiscal Quarter Ended --------------------------------- --------------------------------------------- 2003 2004 2005 Sep 2004 Dec 2004 Mar 2005 Jun 2005 --------- --------- --------- --------- --------- --------- --------- (In Millions) Additions to property, plant and equipment $ 22.2 $ 25.8 $ 39.6 $ 7.4 $ 10.8 $ 12.0 $ 6.4
- Depreciation and amortization expense in the quarter was $11.6 million. - During the June 2005 quarter, inventories decreased $8.2 million to $125.7 million from $133.9 million at March 31, 2005. Raw materials and supplies decreased $1.1 million in the June 2005 quarter, and work in process and finished goods decreased $7.1 million. Fiscal Year Ended ------------------------------------ Mar 2003 Mar 2004 Mar 2005 ---------- ---------- ---------- (In Millions) Raw materials and supplies $ 91.3 $ 59.8 $ 47.5 Work in process and finished goods 92.7 69.2 86.4 $ 184.0 $ 129.0 $ 133.9
Fiscal Quarter Ended ------------------------------------------------- Sep 2004 Dec 2004 Mar 2005 Jun 2005 ---------- ---------- ---------- ---------- (In Millions) Raw materials and supplies $ 65.5 $ 56.7 $ 47.5 $ 46.4 Work in process and finished goods 88.5 91.6 86.4 79.3 $ 154.0 $ 148.3 $ 133.9 $ 125.7
- Cash and short and long-term investments in marketable securities during the June 2005 quarter decreased $0.9 million to $218.6 million from $219.5 million at March 31, 2005. This is related to favorable cash from operations which includes the receipt of a tax refund, offset by capital expenditures, reduction in force payouts, and manufacturing relocation expenditures. QUIET PERIOD Beginning October 1, 2005, KEMET will observe a Quiet Period during which the information provided in this news release and the Company's quarterly report on Form 10-Q will no longer constitute the Company's 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 the Company. The Quiet Period will extend until the day when KEMET's next quarterly earnings release is published. This release contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We intend that these forward-looking statements be subject to the safe harbor created by that provision. These forward-looking statements involve risks and uncertainties and include, but are not limited to, statements regarding future events and our plans, goals, and objectives. Our actual results may differ materially from these statements. These risks, trends, and uncertainties, which in some instances are beyond our control, include: risks associated with the cyclical nature of the electronics industry, the requirement to continue to reduce the cost of our products, the competitiveness of our industry, an increase in the cost of our raw materials, the location of several of our plants in Mexico and China, and the possible loss of key employees. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, we can give no assurance that the results contemplated in these forward-looking statements will be realized. The inclusion of this forward-looking information should not be regarded as a representation by our Company or any person that the future events, plans, or expectations contemplated by our Company will be achieved. Furthermore, past performance in operations and share price is not necessarily predictive of future performance. Contact: David E. Gable Senior Vice President and Chief Financial Officer DavidGable@KEMET.com 864-963-6484 KEMET CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands Except Per Share Data) Unaudited Three months ended June 30, ------------------------------ 2005 2004 ------------- ------------- Income Statement Data: Net sales $ 114,104 $ 122,383 Cost of goods sold 94,990 100,124 Selling, general and administrative expenses 12,226 12,878 Research and development 6,217 6,297 Restructuring charges 8,173 2,550 Operating income/(loss) (7,502) 534 Interest expense 1,668 1,623 Interest income (1,325) (1,910) Other expense 1,064 2,285 Income tax expense/(benefit) (11,944) 387 Net income/(loss) $ 3,035 $ (1,851) Income/(Loss) Per Share Data: Net income/(loss) per share: Basic $ 0.04 $ (0.02) Diluted $ 0.04 $ (0.02) Weighted-average shares outstanding: Basic 86,612,454 86,494,650 Diluted 86,660,437 86,494,650 KEMET CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) Unaudited June 30, 2005 March 31, 2005 ------------- -------------- ASSETS Cash and cash equivalents $ 36,502 $ 26,898 Short-term investments 60,114 34,992 Accounts receivable, net 61,887 59,228 Inventories 125,728 133,935 Prepaid expenses and other current assets 10,455 9,571 Deferred income taxes 5,704 5,945 Total current assets 300,390 270,569 Property, plant and equipment, net 278,406 279,626 Property held for sale 2,326 2,326 Long-term investments in marketable securities 122,010 157,576 Investments in affiliates 371 682 Goodwill 30,471 30,471 Intangible assets, net 13,261 13,512 Other assets 3,341 3,335 Total assets $ 750,576 $ 758,097 LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt $ 20,000 $ - Accounts payable, trade 33,395 38,943 Accrued expenses 30,071 34,617 Income taxes payable 10,300 12,430 Total current liabilities 93,766 85,990 Long-term debt 80,000 100,000 Other non-current obligations 48,275 48,951 Deferred income taxes 7,592 7,953 Total liabilities 229,633 242,894 Common stock 881 880 Additional paid-in capital 318,015 317,728 Retained earnings 223,881 220,846 Accumulated other comprehensive income 4,981 2,669 Treasury stock, at cost (26,815) (26,920) Total stockholders' equity 520,943 515,203 Total liabilities and stockholders' equity $ 750,576 $ 758,097 SOURCE KEMET Corporation -0- 07/26/2005 /CONTACT: David E. Gable, Senior Vice President and Chief Financial Officer, +1-864-963-6484, or DavidGable@KEMET.com / /Web site: http://www.kemet.com http://www.KEMET.com/IR / (KEM) CO: KEMET Corporation ST: South Carolina IN: CPR ECP SEM SU: ERN CCA WB-JK -- CLTU012A -- 7708 07/26/2005 08:00 EDT http://www.prnewswire.com Subject Codes: PT/lang.en, IN/CPR, IN/ECP, IN/SEM, SU/ERN, SU/CCA, RE/South_Carolina, PC/priority.r, PC/category.f Company Codes: NYSE:KEM You are receiving this Complimentary Monitoring transmission at no charge, as a benefit of your organization's membership with PR Newswire. If you would like to stop receiving Complimentary Monitoring transmissions, please reply to this email with your request. PR Newswire Association LLC, Distribution Services Department, 810 7th Avenue, New York, NY 10019