a13-23158_1ex99d1 (1)

“We are encouraged by the continued and growing strength of our markets around the globe,” stated Per Loof, KEMET’s Chief Executive Officer. “Revenue exceeded our expectations, cost reduction actions are seeing their way to the bottom line, and we are well positioned to continue improving our financial performance into our next fiscal year. While we have some more work to complete, we are pleased with the general improvement of our operating margins this past fiscal year and we plan to build upon our efforts this past year to improve them further,” continued Loof.

The U.S. GAAP net loss from continuing operations was $15.2 million, or $0.34 loss per basic and diluted share for the quarter ended March 31, 2014, compared to a net loss from continuing operations of $23.7 million or $0.53 loss per basic and diluted share for the quarter ended March 31, 2013. For the fiscal year ended March 31, 2014, the net loss from continuing operations was $65.5 million, or $1.45 per basic and diluted share compared a net loss from continuing operations of $77.9 million, or $1.74 per basic and diluted share for the fiscal year ended March 31, 2013.

Non-U.S. GAAP Adjusted net income improved to $0.4 million or $0.01 per diluted share for the quarter ended March 31, 2014, compared to a non-U.S. GAAP Adjusted net loss of $8.3 million or $0.18 loss per basic and diluted share for the period ended March 31, 2013. For the fiscal year ended March 31, 2014, the non-U.S. GAAP net loss from continuing operations was $18.8 million, or $0.42 loss per basic and diluted share compared to a net loss from continuing operations of $23.1 million, or $0.51 loss per basic and diluted share for the fiscal year ended March 31, 2013.

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.

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



	Quarters Ended March 31,						Fiscal Year Ended
	2014			2013			2014			2013
Net sales	$	215,821		$	199,540		$	833,666		$	823,903
Operating costs and expenses:
Cost of sales	181,315			171,342			712,037			697,076
Selling, general and administrative expenses	24,055			30,501			94,881			107,620
Research and development	6,763			6,693			24,466			26,876
Restructuring charges	5,953			5,047			14,122			18,719
Goodwill impairment	—			—			—			1,092
Write down of long-lived assets	1,118			264			4,476			7,582
Net (gain) loss on sales and disposals of assets	(39		)	141			32			18
Total operating costs and expenses	219,165			213,988			850,014			858,983
Operating loss	(3,344		)	(14,448		)	(16,348		)	(35,080		)
Other (income) expense:
Interest income	(13		)	(28		)	(195		)	(139		)
Interest expense	10,671			10,491			40,962			41,331
Other income, net	(2,632		)	(1,738		)	(2,681		)	(2,864		)
Loss from continuing operations before income taxes and equity loss from NEC TOKIN	(11,370		)	(23,173		)	(54,434		)	(73,408		)
Income tax expense (benefit)	(754		)	(735		)	3,539			3,269
Loss from continuing operations before equity loss from NEC TOKIN	(10,616		)	(22,438		)	(57,973		)	(76,677		)
Equity loss from NEC TOKIN	(4,580		)	(1,254		)	(7,542		)	(1,254		)
Loss from continuing operations	(15,196		)	(23,692		)	(65,515		)	(77,931		)
Loss from discontinued operations	(63		)	(1,559		)	(3,800		)	(4,251		)
Net loss	$	(15,259	)	$	(25,251	)	$	(69,315	)	$	(82,182	)
Net loss per basic and diluted share:
Loss from continuing operations	$	(0.34	)	$	(0.53	)	$	(1.45	)	$	(1.74	)
Loss from discontinued operations	$	—		$	(0.03	)	$	(0.08	)	$	(0.09	)
Net loss	$	(0.34	)	$	(0.56	)	$	(1.54	)	$	(1.83	)

Weighted-average shares outstanding:
Basic and diluted	45,174			44,953			45,102			44,897



	March 31, 2014			March 31, 2013
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	57,929		$	95,978
Accounts receivable, net	98,947			93,774
Inventories, net	187,784			198,888
Prepaid expenses and other	36,871			41,101
Deferred income taxes	6,681			4,167
Current assets of discontinued operations	12,160			9,517
Total current assets	400,372			443,425
Property and equipment	292,648			303,682
Goodwill	35,584			35,584
Intangible assets, net	37,184			38,646
Investment in NEC TOKIN	45,970			52,738
Restricted cash	13,512			17,397
Deferred income taxes	6,778			7,994
Other assets	10,130			10,149
Noncurrent assets of discontinued operations	836			1,976
Total assets	$	843,014		$	911,591
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	7,297		$	10,793
Accounts payable	73,370			70,774
Accrued expenses	75,868			93,178
Income taxes payable and deferred income taxes	1,342			1,074
Current liabilities of discontinued operations	7,269			5,661
Total current liabilities	165,146			181,480
Long-term debt, less current portion	391,292			372,707
Other non-current obligations	55,864			69,022
Deferred income taxes	5,189			8,542
Noncurrent liabilities of discontinued operations	2,592			2,924
Commitments and contingencies
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 March 31, 2014 and March 31, 2013	465			465
Additional paid-in capital	465,026			467,096
Retained deficit	(232,550		)	(163,235		)
Accumulated other comprehensive income	20,044			7,694
Treasury stock, at cost (1,301 and 1,519 shares at March 31, 2014 and March 31, 2013, respectively)	(30,054		)	(35,104		)
Total stockholders’ equity	222,931			276,916
Total liabilities and stockholders’ equity	$	843,014		$	911,591



	Fiscal Years Ended March 31,
	2014			2013
Net loss	$	(69,315	)	$	(82,182	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Net cash provided by operating activities of discontinued operations	29			4,440
Depreciation and amortization	49,842			45,559
Amortization of debt discount and debt issuance costs	3,596			4,138
Equity loss from NEC TOKIN	7,542			1,254
Change in value of NEC TOKIN options	(3,111		)	—
Net loss on sales and disposals of assets	32			18
Stock-based compensation expense	2,909			4,599
Pension and other post-retirement benefits	(78		)	1,071
Deferred income taxes	(4,676		)	(317		)
Write down of long-lived assets	4,476			7,582
Write down of receivables	1,484			—
Goodwill impairment	—			1,092
Other, net	(372		)	554
Changes in assets and liabilities:
Accounts receivable	(4,618		)	4,882
Inventories	14,921			(324		)
Prepaid expenses and other current assets	3,748			(11,151		)
Accounts payable	(3,523		)	300
Accrued income taxes	535			(1,052		)
Other operating liabilities	(8,346		)	(3,290		)
Net cash used in operating activities	(4,925		)	(22,827		)
Investing activities:
Capital expenditures	(32,147		)	(46,174		)
Investment in NEC TOKIN	—			(50,917		)
Change in restricted cash	4,047			(15,284		)
Proceeds from sales of assets	1,026			398
Net cash used in investing activities	(27,074		)	(111,977		)
Financing activities:
Proceeds from revolving line of credit	21,000			—
Payment of revolving line of credit	(2,551		)	—
Deferred acquisition payments	(21,977		)	(16,900		)
Proceeds from issuance of debt	—			39,825
Payments of long-term debt	(3,599		)	(1,909		)
Proceeds from exercise of stock options	250			111
Debt issuance costs	—			(275		)
Net cash (used in) provided by financing activities	(6,877		)	20,852
Net decrease in cash and cash equivalents	(38,876		)	(113,952		)
Effect of foreign currency fluctuations on cash	827			(591		)
Cash and cash equivalents at beginning of fiscal period	95,978			210,521
Cash and cash equivalents at end of fiscal period	$	57,929		$	95,978

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.



	Quarters Ended									Fiscal Years Ended
	March 31, 2014			December 31, 2013			March 31, 2013			March 31, 2014			March 31, 2013
				(Unaudited)
Net sales	$	215,821		$	207,339		$	199,540		$	833,666		$	823,903
Gross margin	34,506			37,662			28,198			121,629			126,827
Non-U.S. GAAP-adjustments:
Plant shut-down costs	2,668			—			—			2,668			—
Plant start-up costs	669			485			1,307			3,336			6,122
Stock-based compensation expense	186			278			373			1,006			1,554
Inventory write-down	—			—			—			3,886			—
Adjusted gross margin	$	38,029		$	38,425		$	29,878		$	132,525		$	134,503
	17.6		%	18.5		%	15.0		%	15.9		%	16.3		%

Adjusted operating loss represents operating income, excluding adjustments which are outlined in the quantitative reconciliation provided above. We use Adjusted operating loss to facilitate our analysis and understanding of our business operations and believe that Adjusted operating loss is useful to investors because it provides a supplemental way to understand our underlying operating performance. Adjusted operating loss should not be considered as an alternative to operating income or any other performance measure derived in accordance with U.S. GAAP.



	Quarters Ended
	March 31, 2014			December 31, 2013		March 31, 2013
	(Unaudited)
Operating income (loss)	$	(3,344	)	$	3,623	$	(14,448	)
Adjustments:
Restructuring charges	5,953			2,194		5,047
Plant shut-down costs	2,668			—		—
Write down of long-lived assets	1,118			3,358		—
ERP integration costs	837			994		2,404
Plant start-up costs	669			485		1,307
NEC TOKIN investment related expenses	618			249		3,009
Stock-based compensation expense	579			702		1,018
Net loss (gain) on sales and disposals of assets	(39		)	29		141
Net curtailment and settlement loss on benefit plans	—			—		1,354
Adjusted operating income (loss)	$	9,059		$	11,634	$	(168	)

“Adjusted net loss” and “Adjusted net loss per share” represent net loss and net loss per share excluding adjustments which are outlined in the quantitative reconciliation provided below. 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.



	Fiscal Year Ended			Quarters Ended
	March 31, 2014			March 31, 2014			December 31, 2013			March 31, 2013
	(Unaudited, Amounts in thousands, except per share data)
U.S. GAAP
Net sales	$	833,666		$	215,821		$	207,339		$	199,540
Net loss from continuing operations	(65,515		)	(15,196		)	(4,746		)	(23,692		)
Loss from discontinued operations	(3,800		)	(63		)	(1,076		)	(1,559		)
Net loss	$	(69,315	)	$	(15,259	)	$	(5,822	)	$	(25,251	)
Net loss from continuing operations - basic and diluted	$	(1.45	)	$	(0.34	)	$	(0.11	)	$	(0.53	)
Loss from discontinued operations - basic and diluted	$	(0.08	)	$	—		$	(0.02	)	$	(0.03	)
Net loss - basic and diluted	$	(1.54	)	$	(0.34	)	$	(0.13	)	$	(0.56	)
Non-U.S. GAAP
Loss from continuing operations	(65,515		)	(15,196		)	(4,746		)	(23,692		)
Adjustments:
Restructuring charges	14,122			5,953			2,194			5,047
Equity loss (gain) from NEC TOKIN	7,542			4,580			(1,657		)	1,254
Write down of long-lived assets	4,476			1,118			3,358			264
Inventory write down	3,886			—			—			—
ERP integration expenses	3,880			837			994			2,404
Amortization included in interest expense	3,596			779			858			1,092
Plant start-up costs	3,336			669			485			1,307
Stock-based compensation expense	2,909			579			702			1,018
Plant shut-down costs	2,668			2,668			—			—
Acquisition related fees	2,299			618			249			3,009
Note receivable write off	1,444			—			—			—
Loss (gain) on sales and disposals of assets	32			(39		)	29			141
Income tax effect of non-GAAP adjustments (1)	(27		)	99			(52		)	(591		)
Net curtailment and settlement gain on benefit plans	—			—			—			1,354
Net foreign exchange loss (gain)	(304		)	(449		)	207			(911		)
Change in value of NEC TOKIN Option	(3,111		)	(1,777		)	(1,716		)	—
Adjusted net income (loss) from continuing operations	$	(18,767	)	$	439		$	905		$	(8,304	)
Adjusted net income (loss) per basic share from continuing operations	$	(0.42	)	$	0.01		$	0.02		$	(0.18	)
Adjusted net income (loss) per diluted share from continuing operations	$	(0.42	)	$	0.01		$	0.02		$	(0.18	)
Weighted average shares outstanding:
Basic	45,102			45,174			45,120			44,953
Diluted	45,102			52,524			52,494			44,953

Adjusted EBITDA from continuing operations represents net loss from continuing operations before net interest expense, income tax expense, and depreciation and amortization expense, adjusted to exclude certain item which are outlined in the quantitative reconciliation provided below. We use Adjusted EBITDA from continuing operations 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 from continuing operations as a supplemental measure of our performance and ability to service debt. We also present Adjusted EBITDA from continuing operations 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 from continuing operations 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 adjustments to arrive at Adjusted EBITDA from continuing operations are excluded in order to better reflect our continuing operations.

In evaluating Adjusted EBITDA from continuing operations, you should be aware that in the future we may incur expenses similar to the adjustments noted below. Our presentation of Adjusted EBITDA from continuing operations should not be construed as an inference that our future results will be unaffected by these types of adjustments. Adjusted EBITDA from continuing operations 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.



	Fiscal Year 2014
	Q1			Q2			Q3			Q4			Total
Net loss	$	(35,138	)	$	(13,096	)	$	(5,822	)	$	(15,259	)	$	(69,315	)

Adjustments:
Income tax expense (benefit)	1,816			1,444			1,033			(754		)	3,539
Interest expense, net	9,870			9,897			10,342			10,658			40,767
Depreciation and amortization expense	13,639			11,951			11,762			12,182			49,534
Restructuring charges	4,611			1,364			2,194			5,953			14,122
Net loss from discontinued operations	1,510			1,151			1,076			63			3,800
Write down of long lived assets	—			—			3,358			1,118			4,476
ERP integration costs	978			1,071			994			837			3,880
Plant start-up costs	1,132			1,050			485			669			3,336
Plant shut-down costs	—			—			—			2,668			2,668
NEC TOKIN investment related expenses	1,308			124			249			618			2,299
Stock-based compensation expense	969			659			702			579			2,909
Loss (gain) on sales and disposals of assets	—			42			29			(39		)	32
Change in value of NEC TOKIN option	—			382			(1,716		)	(1,777		)	(3,111		)
Inventory write-down	3,886			—			—			—			3,886
Long-term receivable write down	1,444			—			—			—			1,444
Equity loss (gain) from NEC TOKIN	3,376			1,243			(1,657		)	4,580			7,542
Net foreign exchange loss (gain)	(577		)	515			207			(449		)	(304		)
Adjusted EBITDA	$	8,824		$	17,797		$	23,236		$	21,647		$	71,504

	Fiscal Year 2013
	Q1			Q2			Q3			Q4			Total
Net loss	$	(17,754	)	$	(24,920	)	$	(14,257	)	$	(25,251	)	$	(82,182	)

Adjustments:
Income tax expense (benefit)	1,736			1,657			611			(735		)	3,269
Interest expense, net	10,427			10,109			10,193			10,464			41,193
Depreciation and amortization expense	11,558			11,426			10,405			11,781			45,170
Net (income) loss from discontinued operations	(278		)	1,313			1,657			1,559			4,251
Restructuring charges	1,264			8,522			3,886			5,047			18,719
Write down of long lived assets	—			4,234			3,083			264			7,582
ERP integration costs	1,601			2,018			1,375			2,404			7,398
Plant start-up costs	1,361			1,930			1,524			1,307			6,122
NEC TOKIN investment related expenses	542			866			164			3,009			4,581
Stock-based compensation expense	1,262			1,242			1,078			1,018			4,600
Goodwill impairment	—			1,092			—			—			1,092
Loss (gain) on sales and disposals of assets	104			(31		)	(196		)	141			18
Net curtailment and settlement gain on benefit plans	—			(1,675		)	588			1,354			267
Equity loss (gain) from NEC TOKIN	—			—			—			1,254			1,254
Net foreign exchange loss (gain)	1,789			(442		)	(464		)	(911		)	(28		)
Registration related fees	20			—			—			—			20
Adjusted EBITDA	$	13,632		$	17,341		$	19,647		$	12,705		$	63,326



Contact:	William M. Lowe, Jr.	Richard J. Vatinelle
	Executive Vice President and	Director of Finance and
	Chief Financial Officer	Investor Relations
	williamlowe@kemet.com	richardvatinelle@kemet.com
	864-963-6484	954-766-2800


•	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 from continuing operations 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.



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