UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

 

FORM 8-K/A

(Amendment 1)

 

CURRENT REPORT

 

Pursuant to Section 13 or 15 (d) of

The Securities Exchange Act of 1934

 

Date of Report (date of earliest event reported): December 13, 2007 (October 12, 2007)

 

KEMET Corporation

(Exact name of registrant as specified in its charter)

 

 

Registrant’s telephone number, including area code:  (864) 963-6300

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CRS 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4c))

 

 

KEMET Corporation and Subsidiaries (the “Company”) hereby amends its Current Report on Form 8-K dated October 15, 2007 to include the financial statements set forth below which were omitted from the original filing pursuant to Items 9(a)(4) and 9(b)(2) of Form 8-K.

 

Item 9.01 Financial Statements and Exhibits

 

(a)    Financial Statements of Businesses Acquired

 

As previously reported, on October 12, 2007, the Company announced that it completed its acquisition of Arcotronics Italia S.p.A. (“Arcotronics”), from Blue Skye (Lux) S.à.r.l. (“Blue Skye”).  The acquisition includes manufacturing facilities in Sasso Marconi, Monghidoro, and Vergato, Italy; Landsberg, Germany; Towcester, United Kingdom; Kyustendil, Bulgaria; and Anting-Shanghai, China.

 

The Company paid €17.5 million for 100% of the outstanding share capital of Arcotronics, assumed net financial debt of approximately €100.0 million, and certain other liabilities of the company totaling approximately €32.0 million.

 

The purchase price was determined through arms-length negotiations between representatives of the Company and Blue Skye. The financial statements of Arcotronics, included as Exhibits 99.1 and 99.2, have been prepared in accordance with accounting principles generally accepted in Italy (“Italian GAAP”). A reconciliation between results prepared under Italian GAAP and U.S. generally accepted accounting principles (“U.S. GAAP”) has been included as a note to these financial statements.

 

The acquisition of Arcotronics will use the purchase method of accounting in accordance with U.S. GAAP.  Accordingly, the purchase consideration for acquiring Arcotronics will be allocated to the tangible and intangible assets acquired and the liabilities assumed, with the excess being allocated to goodwill and presented as an intangible asset.  A preliminary allocation of the purchase price of Arcotronics has been reflected in the unaudited Pro Forma Condensed Combined Financial Information.  A final allocation of the purchase price of Arcotronics is ongoing and is dependent on the completion of certain valuations and other studies which are expected to be completed prior to the end of fiscal year 2008.

 

(b)   Unaudited Pro Forma Financial Information

The following unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2007 and the unaudited Pro Forma Condensed Combined Consolidated Statement of Operations for the three months ended June 30, 2007, the unaudited Pro Forma Condensed Combined Consolidated Statement of Operations for the year ended March 31, 2007 give effect to the purchase of Arcotronics.  The unaudited Pro Forma Condensed Combined Financial Information should be read in conjunction with:

(1.)                               Accompanying Notes of the unaudited Pro Forma Condensed Combined Balance Sheet and Notes to the unaudited Pro Forma Condensed Combined Statements of Income.

 

(2.)                               Audited financial statements of Arcotronics Italia S.p.A. for the years ended December 31, 2006, 2005 and 2004.

 

(3.)                               Unaudited financial statements of Arcotronics Italia S.p.A. for the six month period ended June 30, 2007.

 

(4.)                               The Company’s Annual Report on Form 10-K and interim financial statements filed with the SEC.

 

The unaudited Pro Forma Condensed Combined Financial Statements are being provided for illustrative purposes only and do not purport what the actual results of operations or financial position would have been had the acquisition of Arcotronics occurred on the respective dates assumed, nor do they purport to be indicative of the Company’s future operating results.

 

(c)    Not applicable

(d)   Exhibits

The following financial statements of Arcotronics are included in Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K/A:

 

(1a.)                         Independent Auditor’s Report.

 

(1b.)                        Audited Conoslidated Balance Sheets of Arcotronics Italia S.p.A as of  December 31, 2006 and 2005.

 

(1c.)                         Audited Consolidated Income Statements of Arcotronics Italia, S.p.A. for the years ended December 31, 2006, 2005, and 2004.

 

(1d.)                        Related notes to the audited financial statements.

 

(2.)                               Unaudited interim financial statements of Arcotronics Italia, S.p.A. for the six month period ended June 30, 2007.

 

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KEMET CORPORATION AND SUBSIDIARIES

Pro Forma Condensed Combined Balance Sheet

June 30, 2007

(U.S. Dollars in Thousands)

(Unaudited)

 

		KEMET			Arcotronics			Pro Forma					Pro Forma
		Corporation			Italia S.p.A			Adjustments			Notes		Results
ASSETS
Current assets:
Cash and cash equivalents		$	111,893		$	9,789		$	(23,838	)	c		$	97,844
Short-term investments		4,897			—			—					4,897
Accounts receivable, net		133,232			60,001			—					193,233
Inventories, net		184,087			55,199			—					239,286
Prepaid expenses and other current assets		6,166			821			—					6,987
Deferred income taxes		5,075			8,992			—					14,067
Total current assets		445,350			134,802			(23,838		)			556,314
Property and equipment, net		370,543			59,307			17,612			a,b		447,462
Property held for sale		2,647			—			—					2,647
Investments in U.S. governmental marketable securities		40,573			—			—					40,573
Investments in affiliates		119			—			—					119
Goodwill		54,852			—			78,204			a,b		133,056
Intangible assets		17,543			400			15,080			a,b		33,023
Other long-term assets		8,725			83			—					8,808
Total assets		$	940,352		$	194,592		$	87,058				$	1,222,002
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt		$	23,888		$	33,753		$	—				$	57,641
Accounts payable, trade		85,197			81,687			—					166,884
Accrued expenses		34,164			977			—					35,141
Income taxes payable		1,224			13,160			—					14,384
Total current liabilities		144,473			129,577			—					274,050
Long-term debt		224,450			110,041			—					334,491
Postretirement benefits and other non-current obligations		19,676			37,315			—					56,991
Other long-term liabilities		—			1,888			—					1,888
Minority Interest		531			—			—					531
Deferred income taxes		—			2,829			—					2,829
Total liabilities		389,130			281,650			—					670,780
Common stock, par value $0.01		882			48,776			(48,776		)	a,b		882
Additional paid-in capital		322,341			—			—					322,341
Retained earnings		239,442			(137,188		)	137,188			a,b,c		239,442
Accumulated other comprehensive income		31,816			1,354			(1,354		)	a,b		31,816
Treasury stock, at cost		(43,259		)	—			—					(43,259		)
Total stockholders’ equity		551,222			(87,058		)	87,058					551,222
Total liabilities and stockholders’ equity		$	940,352		$	194,592		$	87,058				$	1,222,002

 

See accompanying Notes to Unaudited Pro Forma Condensed Combined Balance Sheet.

 

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Note 1 – Basis of Presentation

 

The unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2007 has been prepared assuming the Company’s acquisition of Arcotronics, more fully described in Item 2.01 and Exhibit 99.1 of the Company’s previously filed Current Report on Form 8-K dated October 15, 2007, had occurred on June 30, 2007.  The Company has a fiscal year that ends March 31st, whereas Arcotronics has a fiscal year that ends December 31st. The Pro Forma Condensed Combined Balance Sheet at June 30, 2007 includes the unaudited balance sheet of the Company and the unaudited balance sheet of Arcotronics, both as of June 30, 2007.

 

The historical financial statements of Arcotronics contained in Item 9.01(a) of this Current Report on Form 8-K/A are denominated in Euros and have been prepared in accordance with Italian GAAP.  As required by the Securities and Exchange Commission, reconciliations between Italian GAAP and U.S. GAAP have been included as a footnote to those financial statements and these adjustments have been reflected in the statement above.  In addition, the amounts are presented in U.S. dollars using historical exchange rates in accordance with SFAS No. 52, “Foreign Currency Translation”.

 

The unaudited pro forma financial information does not give effect to any potential synergies that could result from the acquisition.

 

Note 2 – Pro Forma Adjustments

 

Pro Forma adjustments to reflect the acquisition of Arcotronics are described below.

 

a.          EXCESS OF PURCHASE PRICE OVER FAIR VALUE OF NET ASSETS ACQUIRED

 

Total purchase price		$	23,838
Estimated fair value of net liabilities of Arcotronics (see Note 2b)		69,446
Identifiable intangible assets		(15,080		)
Excess of purchase price over fair value of net assets acquired		$	78,204
Amount allocated to goodwill		$	78,204

 

Certain intangible assets, such as patents have been identified and assigned a fair value as part of the ongoing purchase price allocation. Intangible assets are recorded at purchase or production cost and amortized on a straight-line basis over the estimated useful life of the respective intangible assets.

 

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b.          ESTIMATED FAIR VALUE OF NET ASSETS OF BUSINESS ACQUIRED:

 

Historical book value of Arcotronics’ assets and liabilities		$	(87,058	)
Adjustments to reflect fair value:
Property, plant and equipment		17,612
Preliminary fair value adjustments		17,612
Estimated fair value of net liabilities of Arcotronics		$	(69,446	)

 

The allocation of the purchase price is based upon preliminary estimates of the fair value. The actual allocation of the purchase price may differ from the preliminary allocation due to adjustments to the purchase price and refinements of the fair values of the net liabilities acquired.

 

The Company funded the acquisition of Arcotronics through cash on hand.

 

5

 

KEMET CORPORATION AND SUBSIDIARIES

Pro Forma Condensed Combined Statement of Income

For The Three Months Ended June 30, 2007

(U.S. Dollars in Thousands, Except Per Share Amounts)

(Unaudited)

 

		KEMET			Arcotronics			Pro Forma					Pro Forma
		Corporation			Italia S.p.A.			Adjustments			Note 2		Results
Net sales		$	183,119		$	47,256		$	—				$	230,375
Operating costs and expense:
Cost of goods sold		143,542			39,168			587			a		183,297
Selling, general and administrative expenses		21,807			7,308			503			a		29,618
Research and development		9,067			1,087			—					10,154
Restructuring and impairment charges		2,549			—			—					2,549
Total operating costs and expenses		176,965			47,563			1,090					225,618
Operating income/(loss)		6,154			(307		)	(1,090		)			4,757
Other (income) and expense:
Interest income		(1,861		)	—			266			b		(1,595		)
Interest expense		2,600			1,646			—					4,246
Other expense/(income)		(332		)	1,347			—					1,015
Total other expense		407			2,993			266					3,666
Income/(loss) before income taxes		5,747			(3,300		)	(1,356		)	c		1,091
Income tax (benefit)/expense		(1,310		)	954			(420		)			(776		)
Minority interest, net of tax		25			(35		)	—					(10		)
Net income/(loss)		$	7,032		$	(4,219	)	$	(936	)			$	1,877
Net income/(loss) per share:
Basic		$	0.08										$	0.02
Diluted		$	0.08										$	0.02
Weighed-average shares outstanding:
Basic		83,889,707											83,889,707
Diluted		84,147,957											84,147,957

 

See accompanying Notes to Unaudited Pro Forma Condensed Combined Statements of Income.

 

6

 

KEMET CORPORATION AND SUBSIDIARIES

Pro Forma Condensed Combined Statement of Income

For The Fiscal Year Ended March 31, 2007

(U.S. Dollars in Thousands, Except Per Share Amounts)

(Unaudited)

 

		KEMET			Arcotronics			Pro Forma					Pro Forma
		Corporation			Italia S.p.A.			Adjustments			Note 2		Results
Net sales		$	658,714		$	198,891		$	—				857,605
Operating costs and expense:
Cost of goods sold		517,443			165,114			1,761			a		684,318
Selling, general and administrative expenses		89,450			26,539			1,508			a		117,497
Research and development		33,385			7,460			—					40,845
Restructuring and impairment charges		12,572			—			—					12,572
Total operating costs and expenses		652,850			199,113			3,269					855,232
Operating income/(loss)		5,864			(222		)	(3,269		)			2,373
Other (income) and expenses:
Interest income		(6,283		)	—			1,064			b		(5,219		)
Interest expense		7,174			6,928			—					14,102
Other income		(2,487		)	(333		)	—					(2,820		)
Total other (income)/expense		(1,596		)	6,595			1,064					6,063
Income (loss) before income taxes		7,460			(6,817		)	(4,333		)	c		(3,690		)
Income tax expense		563			2,414			1,343					1,634
Minority interest, net of tax		—			(49		)	—					(49		)
Net income (loss)		$	6,897		$	(9,182	)	$	(2,990	)			$	(5,275	)
Net income (loss) per share:
Basic		$	0.08										$	(0.06	)
Diluted		$	0.08										$	(0.06	)
Weighed-average shares outstanding:
Basic		85,647,914											85,647,914
Diluted		85,795,486											85,647,914

 

See accompanying Notes to Unaudited Pro Forma Condensed Combined Statement of Income.

 

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Note 1 – Basis of Presentation

The unaudited Pro Forma Condensed Combined Statements of Income for the three month period ended June 30, 2007, and the fiscal year ended March 31, 2007 have been prepared assuming the Company’s acquisition of Arcotronics, more fully described in Item 2.01 and Exhibit 99.1 to the Company’s previously filed Current Report on Form 8-K dated October 15, 2007, had occurred on April 1, 2006.  The Company has a fiscal year that ends on March 31st, whereas Arcotronics has a fiscal year that ends December 31st.

 

The unaudited Pro Forma Condensed Combined Statement of Income for the year ended March 31, 2007 includes the audited fiscal year ended March 31, 2007 for the Company and the audited twelve month period ended December 31, 2006 for Arcotronics.

 

The historical financial statements of Arcotronics contained in Item 9.01(a) to this Current Report on Form 8-K/A are denominated in Euros and have been prepared in accordance with Italian GAAP.  As required by the Securities and Exchange Commission, reconciliations between Italian GAAP and U.S. GAAP have been included as a footnote to those financial statements and these adjustments have been reflected in the Arcotronics column in the statements. In addition, the amounts are presented in U.S. dollars using historical exchange rates in accordance with SFAS No. 52, “Foreign Currency Translation”.

 

Note 2 – Pro Forma Adjustments

 

Pro forma adjustments to reflect the acquisition of Arcotronics and other pro forma adjustments are described below.  The pro forma amounts do not include anticipated synergies from the acquisition.

 

(a.)                               Adjustments relate to an increase in depreciation and amortization expense related to an increase in the fair value of the properties, plant and equipment and certain intangible assets acquired in connection with the purchase of Arcotronics. Intangible assets are amortized using the straight-line method over the estimated useful life of the respective assets.

 

(b.)                              Adjustment relates to the decrease in interest income as a result of the Company’s use of cash and investments to purchase Arcotronics.

 

(c.)                               Adjustment relates to the tax benefit on the pro forma adjustments in items (a) and (b) above.

 

8

 

Signature

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Date: December 13, 2007	KEMET Corporation
	/s/ DAVID E. GABLE
	David E. Gable
	Executive Vice President and
	Chief Financial Officer

 

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