Attached files
| file | filename |
|---|---|
| EX-2.3 - EXHIBIT 2.3 - KEMET CORP | fy2017_q4xex2x3xpjvoltamen.htm |
| EX-2.2 - EXHIBIT 2.2 - KEMET CORP | fy2017_q4xex2x2xpjvoltamen.htm |
| EX-2.1 - EXHIBIT 2.1 - KEMET CORP | fy2017_q4xex2x1xvoltmaster.htm |
| 8-K - 8-K - KEMET CORP | fy2017_q4xform8kxntsaleofe.htm |
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements of KEMET Corporation ("KEMET" or the "Company") have been derived by applying pro forma adjustments to the historical consolidated financial statements of KEMET. The following unaudited pro forma condensed consolidated financial statements give effect to the sale by NEC TOKIN Corporation ("NEC TOKIN"), a joint venture between KEMET Electronics Corporation (a wholly-owned subsidiary of the Company) and NEC Corporation, of its electro-mechanical devices ("EMD") business, as if the sale occurred on April 1, 2015 for the unaudited pro forma condensed consolidated statements of operations (for the fiscal year ended March 31, 2016 and the nine-month period ended December 31, 2016) and as if the sale occurred on December 31, 2016 for the unaudited pro forma condensed consolidated balance sheet (as of December 31, 2016).
KEMET's investment in NEC TOKIN Investment is accounted for as an equity method investment under the provisions of Accounting Standards Codification (“ASC”) 323, “Investments — Equity Method and Joint Ventures,” (“ASC 323”). Under the equity method, an investor shall recognize its share of the earnings or losses of an investee in the periods for which they are reported by the investee in its financial statements rather than in the period in which an investee declares a dividend. An investor shall adjust the carrying amount of an investment for its share of the earnings or losses of the investee after the date of investment and shall report the recognized earnings or losses in income. An investor’s share of the earnings or losses of an investee shall be based on the shares of common stock and in-substance common stock held by that investor.
The unaudited pro forma condensed consolidated financial statements reflect the application of preliminary pro forma adjustments based upon available information and certain assumptions, described in the accompanying notes thereto, that management believes are reasonable under the circumstances. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed consolidated financial statements. The unaudited pro forma condensed consolidated financial statements have been prepared by management and are not necessarily indicative of the financial position or results of operations that would have been realized had the transaction occurred as of the dates indicated, nor is it meant to be indicative of any anticipated financial position or future results of operations that KEMET will experience going forward.
The following unaudited pro forma condensed consolidated balance sheet as of December 31, 2016 and unaudited pro forma condensed consolidated statement of operations for the nine-month period ended December 31, 2016, are based upon, derived from, and should be read in conjunction with the historical unaudited financial statements of KEMET included in its Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (the "SEC") on February 2, 2017. The following unaudited pro forma condensed consolidated statement of operations for the fiscal year ended March 31, 2016 is based upon, derived from and should be read in conjunction with the historical audited financial statements of KEMET included in its Annual Report on Form 10-K filed with the SEC on May 25, 2016.
The following pro forma adjustments include amounts translated from Japanese Yen to U.S. dollars, using the following exchange rates:
Japanese Yen to U.S. Dollar | ||
December 31, 2016 | 117.4900 | |
Nine-month period ended December 31, 2016 | 106.6296 | |
Fiscal year ended March 31, 2016 | 120.7693 | |
KEMET CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
as of December 31, 2016
(Amounts in thousands, except per share data)
(Unaudited)
KEMET Historical (a) | Gain on Sale of EMD | Elimination of EMD AOCI and Memo Accounts | Adjusted | ||||||||||||
ASSETS | |||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents | $ | 87,356 | $ | 87,356 | |||||||||||
Accounts receivable, net | 82,519 | 82,519 | |||||||||||||
Inventories, net | 154,519 | 154,519 | |||||||||||||
Prepaid expenses and other | 24,035 | 24,035 | |||||||||||||
Total current assets | 348,429 | — | — | 348,429 | |||||||||||
Property, plant and equipment, net of accumulated depreciation of $817,605 as of December 31, 2016 | 211,927 | 211,927 | |||||||||||||
Goodwill | 40,294 | — | 40,294 | ||||||||||||
Intangible assets, net | 30,204 | — | 30,204 | ||||||||||||
Investment in NEC TOKIN | 21,202 | 117,065 | a | (9,957 | ) | b | 128,310 | ||||||||
Deferred income taxes | 7,768 | — | 7,768 | ||||||||||||
Other assets | 2,712 | — | 2,712 | ||||||||||||
Total assets | $ | 662,536 | $ | 117,065 | $ | (9,957 | ) | $ | 769,644 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||
Current liabilities: | |||||||||||||||
Current portion of long-term debt | $ | — | $ | — | $ | — | |||||||||
Accounts payable | 62,347 | — | 62,347 | ||||||||||||
Accrued expenses | 46,418 | — | 46,418 | ||||||||||||
Income taxes payable | 1,068 | — | 1,068 | ||||||||||||
Total current liabilities | 109,833 | — | — | 109,833 | |||||||||||
Long-term debt, less current portion | 386,226 | — | 386,226 | ||||||||||||
Other non-current obligations | 72,704 | — | 72,704 | ||||||||||||
Deferred income taxes | 3,326 | — | 3,326 | ||||||||||||
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, 2016 | 465 | — | 465 | ||||||||||||
Additional paid-in capital | 445,950 | — | 445,950 | ||||||||||||
Retained deficit | (304,565 | ) | 117,065 | a | (8,461 | ) | b | (195,961 | ) | ||||||
Accumulated other comprehensive income | (51,024 | ) | (1,496 | ) | b | (52,520 | ) | ||||||||
Treasury stock, at cost (67 shares at December 31, 2016) | (379 | ) | — | (379 | ) | ||||||||||
Total stockholders’ equity | 90,447 | 117,065 | (9,957 | ) | 197,555 | ||||||||||
Total liabilities and stockholders’ equity | $ | 662,536 | $ | 117,065 | $ | (9,957 | ) | $ | 769,644 | ||||||
See accompanying notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
NOTES TO PRO FORMA BALANCE SHEET
a. | KEMET's proportionate share of NEC TOKIN's gain on the sale of the EMD business is calculated as follows: |
Oku-Yen | $USD (in thousands)* | |||||
Sales price | ¥ | 482.0 | $ | 410,214 | ||
Less: | ||||||
Carrying amount of EMD net assets | 62.3 | 53,051 | ||||
Remove AOCI | 5.2 | 4,400 | ||||
Transaction related fees and taxes | 9.9 | 8,453 | ||||
Gain on sale | 404.5 | 344,308 | ||||
KEMET's equity interest | 34 | % | 34 | % | ||
KEMET's gain on sale (1) | ¥ | 137.5 | $ | 117,065 | ||
*Utilizing an exchange rate as of December 31, 2016 of 117.49 Japanese Yen to U.S. Dollar.
The gain calculation above is based upon preliminary estimates of the sales price (prior to working capital adjustments as outlined in the master sale and purchase agreement), carrying amount of the EMD net assets, the tax impact of the transaction and transaction fees.
b. | Reflects the elimination of KEMET’s portion of the EMD business' AOCI balance and the memo accounts related to the EMD business, including the proportionate share (based on relative fair values) of goodwill and the technology intangible asset as well as the step-up basis of the EMD business’ property plant and equipment. The relative fair values used to allocate goodwill to the EMD business are based upon the Company's current estimate. Adjustments are made utilizing an exchange rate as of December 31, 2016 of 117.49 Japanese Yen to U.S. Dollar. |
KEMET CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
for the Nine-Month Period Ended December 31, 2016
(Amounts in thousands, except per share data)
(Unaudited)
KEMET Historical | Elimination of Interest Expense & EMD Net Income | Adjusted | |||||||||
Net sales | $ | 560,272 | $ | 560,272 | |||||||
Operating costs and expenses: | |||||||||||
Cost of sales | 423,999 | 423,999 | |||||||||
Selling, general and administrative expenses | 78,551 | 78,551 | |||||||||
Research and development | 21,107 | 21,107 | |||||||||
Restructuring charges | 4,317 | 4,317 | |||||||||
Write down of long-lived assets | 6,193 | 6,193 | |||||||||
Net (gain) loss on sales and disposals of assets | 307 | 307 | |||||||||
Total operating costs and expenses | 534,474 | 534,474 | |||||||||
Operating income (loss) | 25,798 | 25,798 | |||||||||
Non-operating (income) expense: | |||||||||||
Interest income | (14 | ) | (14 | ) | |||||||
Interest expense | 29,751 | 29,751 | |||||||||
Change in value of NEC TOKIN option | 3,500 | 3,500 | |||||||||
Other (income) expense, net | (6,683 | ) | (6,683 | ) | |||||||
Income (loss) before income taxes and equity income (loss) from NEC TOKIN | (756 | ) | (756 | ) | |||||||
Income tax expense (benefit) | 4,440 | 4,440 | |||||||||
Income (loss) before equity income (loss) from NEC TOKIN | (5,196 | ) | (5,196 | ) | |||||||
Equity income (loss) from NEC TOKIN | 271 | (3,753 | ) | a | (3,482 | ) | |||||
Net income (loss) | $ | (4,925 | ) | $ | (3,753 | ) | $ | (8,678 | ) | ||
Net income (loss) per basic share | $ | (0.11 | ) | $ | (0.19 | ) | |||||
Net income (loss) per diluted share | $ | (0.11 | ) | $ | (0.19 | ) | |||||
Weighted-average shares outstanding: | |||||||||||
Basic | 46,469 | 46,469 | |||||||||
Diluted | 46,469 | 46,469 | |||||||||
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
NOTES TO PRO FORMA Income Statement for the Nine-Month Period Ended December 31, 2016
a. | Elimination of the following: KEMET's portion of NEC TOKIN's interest expense, as the proceeds from the sale of EMD business were utilized to pay off all of NEC TOKIN's long term debt, KEMET's portion of the EMD business' net income and the depreciation of KEMET's memo accounts related to the EMD business (including technology and property plant and equipment basis step-up). Adjustments are made utilizing an exchange rate for the nine-month period ended December 31, 2016 of 106.6296 Japanese Yen to U.S. Dollar. |
KEMET CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
for the Year Ended March 31, 2016
(Amounts in thousands, except per share data)
(Unaudited)
KEMET Historical | Elimination of EMD Memo Accounts, Interest Expense & EMD Net Income | Adjusted | |||||||||
Net sales | $ | 734,823 | $ | 734,823 | |||||||
Operating costs and expenses: | |||||||||||
Cost of sales | 571,543 | — | 571,543 | ||||||||
Selling, general and administrative expenses | 101,446 | 101,446 | |||||||||
Research and development | 24,955 | 24,955 | |||||||||
Restructuring charges | 4,178 | 4,178 | |||||||||
Write down of long-lived assets | — | — | |||||||||
Net (gain) loss on sales and disposals of assets | 375 | 375 | |||||||||
Total operating costs and expenses | 702,497 | — | 702,497 | ||||||||
Operating income (loss) | 32,326 | — | 32,326 | ||||||||
Non-operating (income) expense: | |||||||||||
Interest income | (14 | ) | (14 | ) | |||||||
Interest expense | 39,605 | 39,605 | |||||||||
Change in value of NEC TOKIN option | 26,300 | 26,300 | |||||||||
Other (income) expense, net | (2,348 | ) | — | (2,348 | ) | ||||||
Income (loss) before income taxes and equity income (loss) from NEC TOKIN | (31,217 | ) | — | (31,217 | ) | ||||||
Income tax expense (benefit) | 6,006 | 6,006 | |||||||||
Income (loss) before equity income (loss) from NEC TOKIN | (37,223 | ) | — | (37,223 | ) | ||||||
Equity income (loss) from NEC TOKIN | (16,406 | ) | (2,955 | ) | a | (19,361 | ) | ||||
Net income (loss) | $ | (53,629 | ) | $ | (2,955 | ) | $ | (56,584 | ) | ||
Net income (loss) per basic share | $ | (1.17 | ) | $ | (1.23 | ) | |||||
Net income (loss) per diluted share | $ | (1.17 | ) | $ | (1.23 | ) | |||||
Weighted-average shares outstanding: | |||||||||||
Basic | 46,004 | 46,004 | |||||||||
Diluted | 46,004 | 46,004 | |||||||||
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
NOTES TO PRO FORMA Income Statement for the Year-Ended March 31, 2016
a. | Elimination of the following: KEMET's portion of NEC TOKIN's interest expense, as the proceeds from the sale of EMD business were utilized to pay off all of NEC TOKIN's long term debt, KEMET's portion of the EMD business' net income and the depreciation of KEMET's memo accounts related to the EMD business (including technology and property plant and equipment basis step-up). Adjustments are made utilizing an exchange rate for the fiscal year ended March 31, 2016 of 120.7693 Japanese Yen to U.S. Dollar. |