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KEMET Reports Third Quarter Results of Fiscal Year 2009
Posted by: gurufocus (IP Logged)
Date: January 28, 2009 08:01AM

Press Release: KEMET Reports Third Quarter Results of Fiscal Year 2009

GREENVILLE, S.C., Jan. 28 /PRNewswire-FirstCall/ --

     Quarter Highlights:

     -- Net sales declined 16.6% versus same quarter last fiscal year

     -- Gross Margin increased approximately 1% over prior quarter September
        2008

     -- Non-GAAP net loss per share of $(.06) compared to $(.04) for prior
        quarter September 2008

     -- GAAP net loss  per share of $(0.14) compared to $(1.03) for prior
        quarter September 2008

     -- SG&A expenses declined $3.2 million compared to September 2008 quarter
        and $7.6 million versus June 2008 quarter

KEMET Corporation (Other OTC: KEME) today reported preliminary results forthe third quarter ended December 31, 2008. Net sales for the quarter endedDecember 31, 2008, were $190.7 million, which is a 16.6% decrease over thesame quarter last year. Net sales for the nine month period ended December 31,2008 were $668.3 million which is a 9.8% increase compared to the same periodlast year, inclusive of acquisitions. Sales declined approximately 13 percentcompared to the prior quarter ended September 2008 excluding the impact ofexchange rates and the sale of the Company's wet tantalum assets.

The Non-GAAP net loss, excluding special charges, was $(4.9) million or$(0.06) per share for the current quarter compared to net loss of $(1.6)million, or $(0.02) per share for the same quarter last year and compares to anet loss of $(3.6) million, or $(0.04) per share for the prior quarter endedSeptember 2008. On a U.S. GAAP basis net loss was $(11.1) million, or $(0.14)per share for the third fiscal quarter compared to a net loss of $(8.2)million or $(0.10) per share for the same quarter last year.

The current quarter includes a $4.6 million restructuring charge primarilyrelated to a global headcount reduction plan, $0.6 million in integrationexpenses related to recent acquisitions, and a $1.1 million loss on sales anddisposals of certain assets.

"Although the world-wide recession continues to put pressure on ourbusiness the actions that we took last year minimized the impact to ouroperating income this quarter. Since last August we have taken over fiftymillion dollars of annual expense out of the business and that is clearlyreflected in our financial results this quarter as sales decreased forty-fourmillion, but our operating income was only impacted by nine-hundred thousanddollars versus the September quarter," stated Per Loof, KEMET's ChiefExecutive Officer. "Our cash balance remains stable and we remain focused onkeeping our working capital in line with market demands to maximize cash toposition KEMET for a strong rebound when normal economic activities resume,"continued Loof.

Management believes that investors may find it useful to review theCompany's financial results that exclude special items as determined bymanagement. These special items include impairment charges associated withgoodwill and long-lived assets, integration costs incurred as a result ofrecent business acquisitions, restructuring charges related primarily toemployee severance and equipment moves, losses incurred due to the earlyretirement of debt and sales or disposals of certain asset groups. Managementbelieves that this Non-GAAP disclosure is useful to investors in that itprovides an alternative way to possibly better understand the underlyingoperating performance. Management uses Non-GAAP financial reporting toevaluate operating performance; however Non-GAAP financial performance shouldnot be considered as an alternative to net income, operating income or anyother performance measures derived in accordance with GAAP.

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


       GAAP to Non-GAAP
        Reconciliation
         (unaudited)           Quarters Ended              Nine Months Ended
                         Dec.      Sept.       Dec.         Dec.        Dec.
                         2008      2008        2007         2008        2007

                                 (In Millions, Except Per Share Data)

    Including special
     items (GAAP)
    Net sales            $190.7     $234.8      $228.7      $668.3      $608.9

    Net income (loss)    $(11.1)    $(83.0)      $(8.2)    $(281.3)       $2.9
    Net income (loss)
     per basic and
     diluted share        (0.14)     (1.03)      (0.10)      (3.50)       0.03

    Excluding special
     items (Non-GAAP)

    Net income (loss)    $(11.1)    $(83.0)      $(8.2)    $(281.3)       $2.9
      Special items
      (after tax):
        Goodwill
         impairment
         charges              -       85.7           -       174.3           -
        Write down
         of long-
         lived assets         -        1.0         2.1        64.9         2.1
       (Gain) loss on
         sale or disposal
         of assets          1.4      (28.6)          -      (26.9)           -
        Restructuring       4.2       17.4         2.9        28.1        11.2
        Inventory
         adjustments          -          -                     8.6           -
        Integration         0.6        1.7         1.6         4.5         2.2
        Loss on early
         retirement of
         debt                 -        2.2           -         2.2           -
    Adjusted net income
     (loss) (excluding
     special items)      $(4.9)      $(3.6)      $(1.6)     $(25.6)      $18.4
    Adjusted net income
    (loss) per basic
     and diluted share
    (excluding special
     items)             $(0.06)     $(0.04)     $(0.02)     $(0.32)      $0.22

    Basic Shares    80,605,960  80,463,192  83,984,668  80,489,021  83,942,502
    Fully Diluted
     Shares         80,605,960  80,463,192  83,984,668  80,489,021  84,163,133

KEMET's common stock is listed on the Financial Industry RegulatoryAuthority's over-the-counter bulletin board and on the Pink Sheets Inc.'s PinkQuote System under the symbol KEME. At the Investor Relations section of ourweb site at :85bf:http://www.KEMET.com/IR:/85bf:, users may subscribe to KEMET newsreleases and find additional information about our Company.

QUIET PERIOD

Beginning April 1, 2009, we will observe a quiet period during which theinformation provided in this news release and our 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 thequiet period only and not subject to update by management. The quiet periodwill extend until the day when our next quarterly earnings release ispublished.

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

Certain statements included herein contain forward-looking statementswithin the meaning of federal security laws about KEMET Corporation (the"Company") financial condition and results of operations that are based onmanagement's current expectations, estimates and projections about the marketsin which the Company operates, as well as management's beliefs andassumptions. Words such as "expects," "anticipates," "believes," "estimates,"variations of such words and other similar expressions are intended toidentify such forward-looking statements. These statements are not guaranteesof future performance and involve certain risks, uncertainties andassumptions, which are difficult to predict. Therefore, actual outcomes andresults may differ materially from what is expressed or forecasted in, orimplied by, such forward-looking statements. Readers are cautioned not toplace undue reliance on these forward-looking statements, which reflectmanagement's judgment only as of the date hereof. The Company undertakes noobligation to update publicly any of these forward-looking statements toreflect new information, future events or otherwise.

Factors that may cause actual outcome and results to differ materiallyfrom those expressed in, or implied by, these forward-looking statementsinclude, but are not necessarily limited to the following: (i) generallyadverse economic and industry conditions, including a decline in demand forthe Company's products; (ii) the ability to maintain sufficient liquidity torealize current operating plans; (iii) adverse economic conditions could causefurther reevaluation of the fair value of our reporting segments and the writedown of long-lived assets; (iv) the cost and availability of raw materials;(v) changes in the competitive environment of the Company; (vi) economic,political, or regulatory changes in the countries in which the Companyoperates; (vii) the ability to successfully integrate the operations ofacquired businesses; (viii) the ability to attract, train and retain effectiveemployees and management; (ix) the ability to develop innovative products tomaintain customer relationships; (x) the impact of environmental issues, laws,and regulations; (xi) the Company's ability to achieve the expected benefitsof its manufacturing relocation plan or other restructuring plan; and (xii)volatility of financial and credit markets which would affect access tocapital for the Company. Other risks and uncertainties may be described fromtime to time in the Company's other reports and filings with the Securitiesand Exchange Commission.

KEMET CORPORATION AND SUBSIDIARIES
              Condensed Consolidated Statements of Operations
               (Amounts in thousands, except per share data)
                                (Unaudited)

                                  Quarters Ended     Nine Months Ended
                                   December 31,        December 31,
                                  2008      2007      2008       2007

    Net sales                   $190,679  $228,694   $668,342  $608,942

    Operating costs and
     expenses:
    Cost of sales                166,507   188,616    598,918   491,555
    Selling, general and
     administrative expenses      20,569    28,059     72,587    70,078
    Research and
     development                   6,168     8,646     23,312    25,886
    Restructuring charges          4,572     2,870     29,579    11,404
    Goodwill impairment              -         -      174,327       -
    Write down of long-lived
     assets                          -       2,098     65,155     2,098
    (Gain) loss on sales and
     disposals of assets           1,054        11    (27,236)      (41)
         Total operating costs
          and expenses           198,870   230,300    936,642   600,980

             Operating (loss)
              income              (8,191)   (1,606)  (268,300)    7,962

    Other (income) expense:
       Interest income              (129)   (1,814)      (545)   (5,031)
       Interest expense            4,617     4,087     15,764     8,772
       Other (income) expense,
        net                       (2,407)   (1,476)    (6,306)   (2,841)
       Loss on early retirement
        of debt                      -         -        2,212       -

          (Loss) income before
           income taxes          (10,272)   (2,403)  (279,425)    7,062

    Income tax expense               793     5,747      1,918     4,170

             Net (loss) income  $(11,065)  $(8,150) $(281,343)   $2,892

    Net (loss) income per share:
       Basic and Diluted          $(0.14)   $(0.10)    $(3.50)    $0.03



                       KEMET CORPORATION AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
                  (Amounts in thousands, except per share data)
                                   (Unaudited)

                                            December 31, 2008   March 31, 2008
    ASSETS
    Current assets:
      Cash and cash equivalents                   $25,387            $81,383
      Accounts receivable, net                    152,804            197,258
      Inventories                                 191,210            243,714
      Prepaid expenses and other current
       assets                                      12,108             15,692
      Deferred income taxes                         4,399              4,017
          Total current assets                    385,908            542,064
      Property and equipment, net of
       accumulated depreciation of $606.3
       million and $673.6 million as of
       December 31, 2008 and March 31, 2008,
       respectively                               377,429            475,912
      Assets held for sale                          3,546              4,638
      Goodwill                                        -              182,273
      Intangible assets, net                       27,572             35,786
      Other assets                                  9,738             11,227
    Total assets                                 $804,193         $1,251,900

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Current portion of long-term debt           $74,722           $108,387
      Accounts payable, trade                      82,253            131,468
      Accrued expenses                             56,275             59,626
      Income taxes payable                            197              3,524
          Total current liabilities               213,447            303,005
      Long-term debt                              265,919            304,294
      Post-retirement benefits and other
       non-current obligations                     68,562             80,130
      Deferred income taxes                        17,278             21,679

    Stockholders' equity:
      Common stock, par value $0.01,
       authorized 300,000 shares, issued
       88,524 and 88,240 shares at December 31,
       2008 and March 31, 2008, respectively          885                882
      Additional paid-in capital                  323,835            323,359
      Retained earnings (deficit)                 (67,147)           214,180
      Accumulated other comprehensive
       income                                      41,726             65,565
      Treasury stock, at cost (7,835 and
       7,950 shares at December 31, 2008
       and March 31, 2008, respectively)          (60,312)           (61,194)
    Total stockholders' equity                    238,987            542,792

    Total liabilities and stockholders'
     equity                                      $804,193         $1,251,900



                KEMET CORPORATION AND SUBSIDIARIES
          Condensed Consolidated Statements of Cash Flows
                      (Amounts in thousands)
                            (Unaudited)

                                        Nine Months Ended December 31,
                                             2008          2007
    Sources (uses) of cash and cash
     equivalents
      Operating activities:
        Net (loss) income                  $(281,343)      $2,892
        Adjustments to reconcile net
         (loss) income to net cash (used
          in) provided by operating
          activities:
          Depreciation and amortization       43,859       38,749
          Goodwill impairment                174,327          -
          Write down of long-lived assets     65,155        2,098
          (Gain) loss on sales and
           disposals of assets               (27,236)         (41)
          Stock-based compensation expense     1,115        4,508
          Change in deferred income taxes     (1,650)       3,701
          Change in operating assets          61,182        1,022
          Change in operating liabilities    (43,260)     (39,521)
          Other                               (2,905)      (2,547)
            Net cash (used in) provided by
             operating activities            (10,756)      10,861

      Investing activities:
        Proceeds from sale of assets          34,870        8,389
        Proceeds from sale of investments        -         46,076
        Capital expenditures                 (27,699)     (36,527)
        Acquisitions, net of cash received    (1,000)     (70,629)
        Other                                    -           (454)
            Net cash provided by (used in)
             investing activities              6,171      (53,145)

      Financing activities:
        Proceeds from sale of common stock
         to employee savings plan                244          484
        Proceeds from issuance of debt        20,944      140,268
        Payments of debt                     (71,300)    (169,517)
        Other                                    -            130
            Net cash used in financing
             activities                      (50,112)     (28,635)
              Net decrease in cash and
               cash equivalents              (54,697)     (70,919)
      Effect of foreign currency
       fluctuations on cash                   (1,299)      (1,660)
      Cash and cash equivalents at
       beginning of fiscal period              81,383      212,202
      Cash and cash equivalents at end of
       fiscal period                          $25,387     $139,623


    Contact:

    Dean W. Dimke
    Director of Corporate and Investor Communications
    deandimke@KEMET.com
    954-766-2800

    William M. Lowe, Jr.
    Executive Vice President and Chief Financial Officer
    billlowe@KEMET.com
    864-963-6484

KEMET's common stock is listed on the Financial Industry RegulatoryAuthority's over-the-counter bulletin board and on the Pink Sheets Inc.'s PinkQuote System under the symbol KEME. At the Investor Relations section of ourweb site at :85bf:http://www.KEMET.com/IR:/85bf:, users may subscribe to KEMET newsreleases and find additional information about our Company.

QUIET PERIOD

Beginning April 1, 2009, we will observe a quiet period during which theinformation provided in this news release and our 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 thequiet period only and not subject to update by management. The quiet periodwill extend until the day when our next quarterly earnings release ispublished.

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

Certain statements included herein contain forward-looking statementswithin the meaning of federal security laws about KEMET Corporation (the"Company") financial condition and results of operations that are based onmanagement's current expectations, estimates and projections about the marketsin which the Company operates, as well as management's beliefs andassumptions. Words such as "expects," "anticipates," "believes," "estimates,"variations of such words and other similar expressions are intended toidentify such forward-looking statements. These statements are not guaranteesof future performance and involve certain risks, uncertainties andassumptions, which are difficult to predict. Therefore, actual outcomes andresults may differ materially from what is expressed or forecasted in, orimplied by, such forward-looking statements. Readers are cautioned not toplace undue reliance on these forward-looking statements, which reflectmanagement's judgment only as of the date hereof. The Company undertakes noobligation to update publicly any of these forward-looking statements toreflect new information, future events or otherwise.

Factors that may cause actual outcome and results to differ materiallyfrom those expressed in, or implied by, these forward-looking statementsinclude, but are not necessarily limited to the following: (i) generallyadverse economic and industry conditions, including a decline in demand forthe Company's products; (ii) the ability to maintain sufficient liquidity torealize current operating plans; (iii) adverse economic conditions could causefurther reevaluation of the fair value of our reporting segments and the writedown of long-lived assets; (iv) the cost and availability of raw materials;(v) changes in the competitive environment of the Company; (vi) economic,political, or regulatory changes in the countries in which the Companyoperates; (vii) the ability to successfully integrate the operations ofacquired businesses; (viii) the ability to attract, train and retain effectiveemployees and management; (ix) the ability to develop innovative products tomaintain customer relationships; (x) the impact of environmental issues, laws,and regulations; (xi) the Company's ability to achieve the expected benefitsof its manufacturing relocation plan or other restructuring plan; and (xii)volatility of financial and credit markets which would affect access tocapital for the Company. Other risks and uncertainties may be described fromtime to time in the Company's other reports and filings with the Securitiesand Exchange Commission.

Source: PRNewsWire

Gurus who own KEME

KEME is in the portfolios of Arnold Van Den Berg.


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