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KEMET Announces Cost Saving Initiatives
Posted by: gurufocus (IP Logged)
Date: December 22, 2008 10:03AM

Press Release: KEMET Announces Cost Saving Initiatives KEMET Corporation and its subsidiaries is the world's largest manufacturer of solid tantalum capacitors and and one of the world's largest manufacturer of multilayer ceramic capacitors. According to industry sources tantalum and ceramic capacitors are the two fastest growing sectors of the United States capacitor industry. Capacitors are electronic components that store filter and regulate electrical energy and current flow and are one of the essential passive components used on circuit boards. KEMET Corp. has a market cap of $24.16 million; its shares were traded at around $0.26 with and P/S ratio of 0.03.

More on KEM: Gurus buys and sells of KEM 10-year financial history of KEM. Insider buys/sells of KEM.

Press Release:

GREENVILLE, S.C., Dec. 22 /PRNewswire-FirstCall/ -- KEMET Corporation(NYSE: KEM) announced today that it is taking several initiatives to minimizethe impact of the downturn in the world economy. The Company currentlyexpects that net sales, excluding the wet tantalum assets which were sold inSeptember 2008, will decline approximately fourteen to seventeen percent inthe third fiscal quarter ending December 31, 2008, as compared to the secondfiscal quarter ended September 30, 2008. Accounting for currency exchangerates, primarily the Euro, the decline is approximately nine to twelve percent.Previously, the Company indicated an anticipated decline of approximatelyseven percent.

The Company is eliminating approximately 1,500 manufacturing jobsrepresenting approximately 14% of the Company's total workforce. The jobreductions will begin immediately and be completed by mid-January 2009. Thetotal cost savings from these actions will be approximately $4.0 million perquarter or $16.0. million annually. There will be a one time implementationcharge of approximately $2.0 million which will be accounted for in thecurrent fiscal quarter, ending December 31. As sales volume returns to morenormal levels, these manufacturing positions will be re-staffed, where prudent,with contract labor.

Additionally, to adjust inventories to match reduced customer demand andto maximize available cash, the Company will extend its normal holiday plantshut-down schedules at many of its manufacturing facilities between December23, and January 5, 2009. The Company will continue to ship product fromexisting inventories during this period.

"It is imperative that in this time of worldwide economic slowdown wematch our costs to the reality of our current market environment," said PerLoof, KEMET's Chief Executive Officer. "We are taking immediate actions tomaximize cash flow by continuing to reduce costs, working capital, and capitalexpenditures. We took aggressive actions to reduce costs earlier this year,and started realizing benefits in our second quarter as well as early withinthis current quarter. Regardless of these encouraging results, we cannotignore the reduction in our sales volume that we are experiencing due to thecurrent economic environment. We must and we will keep our costs in line withour revenue. Our goal remains steadfast to bringing KEMET back toprofitability as quickly as possible," continued Loof.

The Company also announced, where possible, that it will impose a tenpercent reduction in pay for all salaried employees effective January 1, 2009,excluding those on a commission based salary. To implement this action,negotiations are underway with all labor unions where employees arerepresented by collective bargaining agreements. In the U.S., the Companywill also temporarily suspend its 401(k) matching percentage, reducing it fromsix to zero. Permanent reductions will also be made in several retireebenefit programs. Salary reductions for affected employees are expected to berestored when the financial performance of the company returns to acceptablelevels. There is no implementation cost associated with the salary andbenefits reductions. Savings from these initiatives will be approximately$1.0 million per month.

Total cash savings to the Company from all of these initiatives will beapproximately $7.0 million per quarter commencing in February 2009, afterseverance expenses are paid in January 2009.

For more information on the Company and these initiatives please see themessage to KEMET Stakeholders from Per Loof on

KEMET Corporation (KEM) applies world-class service and quality to deliverindustry-leading, high-performance capacitance solutions to its customersaround the world. KEMET offers the world's most complete line of surface-mountand through-hole capacitor technologies across tantalum, ceramic, film,aluminum, electrolytic, and paper dielectrics. KEMET's common stock is listedon The New York Stock Exchange under the symbol KEM. Additional informationabout KEMET can be found at [] .


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 markets,in which the Company operates, as well as management's beliefs and assumptions.Words such as "expects," "anticipates," "believes," "estimates," variations ofsuch words and other similar expressions are intended to identify suchforward-looking statements. These statements are not guarantees of futureperformance and involve certain risks, uncertainties and assumptions, whichare difficult to predict. Therefore, actual outcomes and results may differmaterially from what is expressed or forecasted in, or implied by, suchforward-looking statements. Readers are cautioned not to place undue relianceon these forward-looking statements, which reflect management's judgment onlyas of the date hereof. The Company undertakes no obligation to update publiclyany of these forward-looking statements to reflect new information, futureevents 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, availability, sourcing andpricing of raw materials, pressures on sales prices and volumes due tocompetition and economic conditions, reliance on and financial viability ofsignificant customers, operating performance of joint ventures, alliances andother equity investments, technological advancements, employee relations,changes in construction spending, capital expenditures and long-terminvestments (including those related to unforeseen acquisition opportunities),continued availability of financial resources through financing arrangementsand operations, outcomes of pending or threatened legal proceedings,negotiation of new or modifications of existing contracts for asset managementand for property and equipment construction and acquisition, regulationsgoverning tax laws, other governmental and authoritative bodies' policies andlegislation, and proceeds received from the sale of assets held for disposal.In addition to these representative factors, forward-looking statements couldbe impacted by general domestic and international economic and industryconditions in the markets where the Company competes, such as changes incurrency exchange rates, interest and inflation rates, recession and othereconomic and political factors over which the Company has no control. Otherrisks and uncertainties may be described from time to time in the Company'sother reports and filings with the Securities and Exchange Commission.

    Dean W. Dimke
    Director of Corporate and
     Investor Communications

    William M. Lowe, Jr.
    Executive Vice President and
     Chief Financial Officer

Source: PRNewsWire

More on KEM: Gurus buys and sells of KEM 10-year financial history of KEM. Insider buys/sells of KEM.

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KEM is in the portfolios of Arnold Van Den Berg.

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