SOURCE: KEMET Corporation

KEMET Corporation

May 03, 2016 07:45 ET

KEMET Reports Preliminary Fourth Quarter and Fiscal Year 2016 Results

GREENVILLE, SC--(Marketwired - May 03, 2016) -  KEMET Corporation (NYSE: KEM)

  • Net sales for the quarter up 3.8% to $183.9 million compared to the prior quarter ended December 31, 2015.
  • Gross margin for fiscal year 2016 of 22.2% compared to 19.4% for the prior fiscal year 2015.
  • Cash Balance as of March 31, 2016 of $65.0 million up $21.8 million from December 31, 2015
  • Board authorizes debt repurchase plan for Fiscal Year 2017

KEMET Corporation (the "Company") (NYSE: KEM), a leading global supplier of electronic components, today reported preliminary results for the fourth quarter and fiscal year ended March 31, 2016.

"We ended the year on a solid note with a strong finish with our cash flow exceeding our earlier forecasts," stated Per Loof, KEMET's Chief Executive Officer. "Overall, in a challenging economic environment, our operational excellence continued to improve margins and meet or exceed customer expectations. Finishing the fiscal year in this position has allowed our Board of Directors to authorize a debt repurchase plan, initially up to $20 million over the course of our Fiscal Year 2017 that began April 1, 2016, to facilitate lower interest payments and position the Company to accomplish our strategic objectives," continued Loof.

Net sales of $183.9 million for the quarter ended March 31, 2016 increased 3.8% from net sales of $177.2 million for the prior quarter ended December 31, 2015, and decreased 5.0% compared to net sales of $193.7 million for the quarter ended March 31, 2015. For the fiscal year ended March 31, 2016 net sales were $734.8 million compared to $823.2 million for the fiscal year ended March 31, 2015.

U.S. GAAP net loss from continuing operations before the equity loss from NEC TOKIN for the quarter ended March 31, 2016 was $3.5 million or $0.08 per basic and diluted share, compared to a net loss from continuing operations before equity loss from NEC TOKIN of $17.8 million or $0.39 for the quarter ended March 31, 2015 which included a non-cash loss of $11.1 million or $0.24 per basic and diluted share corresponding to the change in value of the NEC TOKIN option. The total U.S. GAAP net loss, including the equity loss from NEC TOKIN, for the quarter ended March 31, 2016 was $15.2 million, or $0.33 loss per basic and diluted share, compared to a net loss for the quarter ended March 31, 2015 of $19.8 million or $0.44 loss per basic and diluted share.

Non-U.S. GAAP Adjusted net income for the quarter ended March 31, 2016 was $1.8 million or $0.04 per basic and diluted share, compared to a non-U.S. GAAP Adjusted net loss of $1.6 million or $0.04 per basic and diluted share for the quarter ended March 31, 2015.

U.S. GAAP net loss from continuing operations before equity loss from NEC TOKIN for the fiscal year ended March 31, 2016 was $37.2 million or $0.81 per basic and diluted share which includes a non-cash loss of $26.3 million or $0.57 per basic and diluted share corresponding to the change in value of the NEC TOKIN option, compared to a net loss from continuing operations before equity loss from NEC TOKIN of $17.4 million or $0.38 per basic and diluted share which includes a non-cash gain of $2.1 million or $0.05 per basic and diluted share related to the change in value of the NEC TOKIN option for the fiscal year ended March 31, 2015. The total U.S. GAAP loss, including the equity loss from NEC TOKIN, for the fiscal year ended March 31, 2016 was $53.6 million, or $1.17 loss per basic and diluted share compared to a net loss of $14.1 million, or $0.31 loss per basic and diluted share for the fiscal year ended March 31, 2015.

For the fiscal year ended March 31, 2016, the non-U.S. GAAP Adjusted net income was $8.9 million, or $0.17 per diluted share compared to non-U.S. GAAP Adjusted net income of $7.0 million, or $0.13 per diluted share for the fiscal year ended March 31, 2015.

Net income (loss) for the fiscal quarters and years ended March 31, 2016 and 2015 include various items affecting comparability as denoted in the U.S. GAAP to Non-U.S. GAAP reconciliation table included hereafter.

About KEMET

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.

QUIET PERIOD

Beginning July 1, 2016, we will observe a quiet period during which the information provided in this news release and annual report on Form 10-K will no longer constitute our current expectations. During the quiet period, this information should be considered to be historical, applying prior to the quiet period only and not subject to update by management. The quiet period will extend until the day when our next quarterly earnings release is published.

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

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 outcomes 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 plans; (ix) equity method investment in NEC TOKIN exposes us to a variety of risks; (x) acquisitions and other strategic transactions expose us to a variety of risks; (xi) possible acquisition of NEC TOKIN may not achieve all of the anticipated results; (xii) our business could be negatively impacted by increased regulatory scrutiny and litigation; (xiii) inability to attract, train and retain effective employees and management; (xiv) inability to develop innovative products to maintain customer relationships and offset potential price erosion in older products; (xv) exposure to claims alleging product defects; (xvi) the impact of laws and regulations that apply to our business, including those relating to environmental matters; (xvii) the impact of international laws relating to trade, export controls and foreign corrupt practices; (xviii) volatility of financial and credit markets affecting our access to capital; (xix) the need to reduce the total costs of our products to remain competitive; (xx) potential limitation on the use of net operating losses to offset possible future taxable income; (xxi) restrictions in our debt agreements that limit our flexibility in operating our business; (xxii) failure of our information technology systems to function properly or our failure to control unauthorized access to our systems may cause business disruptions; (xxiii) 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; and (xxiv) fluctuation in distributor sales could adversely affect our results of operations.

 
 
KEMET CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Amounts in thousands, except per share data)
(Unaudited)
             
    Quarters Ended March 31,     Fiscal Year Ended  
    2016     2015     2016     2015  
Net sales   $ 183,926     $ 193,708     $ 734,823     $ 823,192  
Operating costs and expenses:                                
  Cost of sales     141,913       157,379       571,543       663,683  
  Selling, general and administrative expenses     25,790       24,870       101,446       98,533  
  Research and development     6,395       6,572       24,955       25,802  
  Restructuring charges     617       3,437       4,178       13,017  
  Net (gain) loss on sales and disposals of assets     608       538       375       (221 )
    Total operating costs and expenses     175,323       192,796       702,497       800,814  
      Operating income (loss)     8,603       912       32,326       22,378  
Other (income) expense:                                
  Interest income     (4 )     (4 )     (14 )     (15 )
  Interest expense     9,929       10,020       39,605       40,701  
  Change in value of NEC TOKIN options     -       11,100       26,300       (2,100 )
  Other income (expense), net     147       (2,453 )     (2,348 )     (4,082 )
    Income (loss) from continuing operations before income taxes and equity income (loss) from NEC TOKIN     (1,469 )     (17,751 )     (31,217 )     (12,126 )
Income tax expense (benefit)     2,056       3       6,006       5,227  
      Income (loss) from continuing operations before equity income (loss) from NEC TOKIN     (3,525 )     (17,754 )     (37,223 )     (17,353 )
Equity income (loss) from NEC TOKIN     (11,648 )     (2,093 )     (16,406 )     (2,169 )
      Income (loss) from continuing operations     (15,173 )     (19,847 )     (53,629 )     (19,522 )
Income (loss) from discontinued operations     -       -       -       5,379  
      Net income (loss)   $ (15,173 )   $ (19,847 )   $ (53,629 )   $ (14,143 )
Net income (loss) per basic share:                                
Income (loss) from continuing operations   $ (0.33 )   $ (0.44 )   $ (1.17 )   $ (0.43 )
Income (loss) from discontinued operations   $ -     $ -     $ -     $ 0.12  
Net income (loss)   $ (0.33 )   $ (0.44 )   $ (1.17 )   $ (0.31 )
                                 
Net income (loss) per diluted share:                                
Income (loss) from continuing operations   $ (0.33 )   $ (0.44 )   $ (1.17 )   $ (0.43 )
Income (loss) from discontinued operations   $ -     $ -     $ -     $ 0.12  
Net income (loss)   $ (0.33 )   $ (0.44 )   $ (1.17 )   $ (0.31 )
                                 
Weighted-average shares outstanding:                                
  Basic     46,160       45,443       46,004       45,381  
  Diluted     46,160       45,443       46,004       45,381  
                                   
                                   
KEMET CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Amounts in thousands, except per share data)
(Unaudited)
             
    March 31, 2016     March 31, 2015  
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 65,004     $ 56,362  
  Accounts receivable, net     93,168       90,857  
  Inventories, net     168,879       171,843  
  Prepaid expenses and other     25,496       41,503  
      Total current assets     352,547       360,565  
  Property plant and equipment net of accumulated depreciation of $815,338 and $804,286 as of March 31, 2016 and March 31, 2015, respectively     241,839       249,641  
  Goodwill     40,294       35,584  
  Intangible assets, net     33,301       33,282  
  Investment in NEC TOKIN     20,334       45,016  
  Deferred income taxes     8,397       9,774  
  Other assets     5,832       12,831  
Total assets   $ 702,544     $ 746,693  
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
  Current portion of long-term debt   $ -     $ 962  
  Accounts payable     70,981       69,785  
  Accrued expenses     50,320       60,456  
  Income taxes payable     453       884  
      Total current liabilities     121,754       132,087  
  Long-term debt, less current portion     390,597       390,409  
  Other non-current obligations     74,892       57,131  
  Deferred income taxes     2,820       2,384  
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, 2016 and 2015     465       465  
  Additional paid-in capital     452,821       461,191  
  Retained deficit     (299,510 )     (245,881 )
  Accumulated other comprehensive income     (31,425 )     (28,796 )
  Treasury stock, at cost (611 and 1,056 shares at March 31, 2016 and 2015, respectively)     (9,870 )     (22,297 )
      Total stockholders' equity     112,481       164,682  
Total liabilities and stockholders' equity   $ 702,544     $ 746,693  
                 
                 
KEMET CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Amounts in thousands)
       
(Unaudited)   Fiscal Years Ended March 31,  
    2016     2015  
Net income (loss)   $ (53,629 )   $ (14,143 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                
  Gain on sale of discontinued operations     -       (5,644 )
  Net cash provided by (used in) operating activities of discontinued operations     -       (679 )
  Depreciation and amortization     39,016       40,768  
  Non-cash debt and financing costs     859       2,032  
  Gain on early extinguishment of debt     -       (1,003 )
  Equity income (loss) from NEC TOKIN     16,406       2,169  
  Change in value of NEC TOKIN options     26,300       (2,100 )
  Net (gain) loss on sales and disposals of assets     375       (221 )
  Stock-based compensation expense     4,774       4,512  
  Pension and other post-retirement benefits     719       (13,283 )
  Deferred income tax expense (benefit)     657       (2,084 )
  Write down of receivables     24       52  
  Other, net     306       (7 )
  Changes in assets and liabilities:                
  Accounts receivable     (2,346 )     8,220  
  Inventories     3,338       8,559  
  Prepaid expenses and other current assets     13,103       (8,404 )
  Accounts payable     (5,982 )     (2,879 )
  Accrued income taxes     280       (383 )
  Other operating liabilities     (11,835 )     8,920  
    Net cash provided by (used in) operating activities     32,365       24,402  
Investing activities:                
  Capital expenditures     (20,469 )     (22,232 )
  Acquisitions, net of cash received     (2,892 )     -  
  Change in restricted cash     1,802       11,509  
  Proceeds from sale of discontinued operations     -       9,564  
  Proceeds from sale of assets     971       4,788  
    Net cash provided by (used in) investing activities     (20,588 )     3,629  
Financing activities:                
  Proceeds from revolving line of credit     10,000       42,340  
  Payments of revolving line of credit     (9,600 )     (27,342 )
  Deferred acquisition payments     (3,000 )     (19,527 )
  Payments of long-term debt     (481 )     (21,733 )
  Proceeds from exercise of stock options     -       24  
  Purchase of treasury stock     (722 )     (630 )
    Net cash provided by (used in) financing activities     (3,803 )     (26,868 )
    Net increase (decrease) in cash and cash equivalents     7,974       1,163  
Effect of foreign currency fluctuations on cash     668       (2,730 )
Cash and cash equivalents at beginning of fiscal period     56,362       57,929  
Cash and cash equivalents at end of fiscal period   $ 65,004     $ 56,362  
                 
                 

Non-U.S. GAAP Financial Measures

In this news release, the Company makes reference to certain Non-U.S. GAAP financial measures, including "Adjusted gross margin", "Adjusted operating income", "Adjusted net income (loss)", "Adjusted net income (loss) per share" and "Adjusted EBITDA". Management believes that investors may find it useful to review the Company's financial results as adjusted to exclude items as determined by management.

Adjusted Gross Margin

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.

The following table provides a reconciliation from U.S. GAAP Gross margin to Non-U.S. GAAP Adjusted gross margin (amounts in thousands):

             
             
    Quarters Ended     Fiscal Years Ended  
    March 31, 2016     December 31, 2015     March 31, 2015     March 31, 2016     March 31, 2015  
          (Unaudited)              
Net sales   $ 183,926     $ 177,184     $ 193,708     $ 734,823     $ 823,192  
Gross Margin     42,013       38,748       36,329       163,280       159,509  
Gross margin as a % of net sales     22.8 %     21.9 %     18.8 %     22.2 %     19.4 %
Non-U.S. GAAP-adjustments:                                        
Plant shut-down costs     141       231       -       372       889  
Plant start-up costs     319       160       651       861       4,556  
Stock-based compensation expense     278       268       465       1,418       1,576  
Inventory Revaluation     -       -       (928 )     -       -  
  Adjusted gross margin   $ 42,751     $ 39,407     $ 36,517     $ 165,931     $ 166,530  
Adjusted gross margin as a % of net sales     23.2 %     22.2 %     18.9 %     22.6 %     20.2 %
                                         
                                         

Adjusted Operating Income (Loss)

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

Adjusted operating income (loss) is calculated as follows (amounts in thousands):

             
             
    Quarters Ended     Fiscal Year Ended  
    March 31, 2016   December 31, 2015   March 31, 2015     March 31, 2016   March 31, 2015  
    (Unaudited)  
Operating income (loss)   $ 8,603   $ 8,493   $ 912     $ 32,326   $ 22,378  
Adjustments:                                  
ERP integration costs/IT transition costs     859     167     1,273       5,677     3,248  
Stock-based compensation expense     1,013     1,154     1,328       4,774     4,512  
Restructuring charges     617     1,714     3,437       4,178     13,017  
Legal expenses related to antitrust class actions     482     1,300     435       3,041     844  
NEC TOKIN investment related expenses     265     225     226       900     1,778  
Plant start-up costs     319     160     651       861     4,556  
Net (gain) loss on sales and disposals of assets     608     129     538       375     (221 )
Plant shut-down costs     141     231     -       372     889  
Pension plan adjustment     -     -     -       312     -  
Inventory Revaluation     -     -     (928 )     -     -  
Adjusted operating income (loss)   $ 12,907   $ 13,573   $ 7,872     $ 52,816   $ 51,001  
                                   
                                   

Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share

"Adjusted net income (loss)" and "Adjusted net income (loss) per share" represent net income (loss) and net income (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.

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

U.S. GAAP to Non- U.S. GAAP Reconciliation

             
    Quarters Ended     Fiscal Year Ended  
    March 31, 2016     December 31, 2015     March 31, 2015     March 31, 2016     March 31, 2015  
    (Unaudited, Amounts in thousands, except per share data)  
U.S. GAAP                                        
Net sales   $ 183,926     $ 177,184     $ 193,708     $ 734,823     $ 823,192  
Net income (loss) from continuing operations     (15,173 )     (8,600 )     (19,847 )     (53,629 )     (19,522 )
  Income (loss) from discontinued operations     -       -       -       -       5,379  
Net income (loss)   $ (15,173 )   $ (8,600 )   $ (19,847 )   $ (53,629 )   $ (14,143 )
Net income (loss) per basic and diluted share:                                        
Net income (loss) from continuing operations   $ (0.33 )   $ (0.19 )   $ (0.44 )   $ (1.17 )   $ (0.43 )
Net income (loss) from discontinued operations   $ -     $ -     $ -     $ -     $ 0.12  
Net income (loss)   $ (0.33 )   $ (0.19 )   $ (0.44 )   $ (1.17 )   $ (0.31 )
  Non-U.S. GAAP                                        
    Net income (loss)     (15,173 )     (8,600 )     (19,847 )     (53,629 )     (14,143 )
    Adjustments:                                        
      Change in value of NEC TOKIN options     -       (700 )     11,100       26,300       (2,100 )
      Equity (gain) loss from NEC TOKIN     11,648       6,505       2,093       16,406       2,169  
      Restructuring charges     617       1,714       3,437       4,178       13,017  
      ERP integration costs/IT transition costs     859       167       1,273       5,677       3,248  
      Stock-based compensation     1,013       1,154       1,328       4,774       4,512  
      Legal expenses related to antitrust class actions     482       1,300       435       3,041       844  
      Net foreign exchange (gain) loss     122       (1,036 )     (2,168 )     (3,036 )     (4,249 )
      NEC TOKIN investment related expenses     265       225       226       900       1,778  
      Income tax effect of pension curtailment     155       720       -       875       -  
      Plant start-up costs     319       160       651       861       4,556  
      Amortization included in interest expense     210       212       244       859       1,814  
      (Gain) loss on sales and disposals of assets     608       129       538       375       (221 )
      Plant shut-down costs     141       231       -       372       889  
      Pension plan adjustment     -       -       -       312       -  
      Income tax effect of non-GAAP adjustments (1)     546       (10 )     20       652       84  
      (Income) loss from discontinued operations     -       -       -       -       (5,379 )
      (Gain) loss on early extinguishment of debt     -       -       -       -       (1,003 )
      Professional fees related to financing activities     -       -       -       -       1,142  
      Inventory Revaluation     -       -       (928 )     -       -  
Adjusted net income (loss)   $ 1,812     $ 2,171     $ (1,598 )   $ 8,917     $ 6,958  
Adjusted net income (loss) per basic share   $ 0.04     $ 0.05     $ (0.04 )   $ 0.19     $ 0.15  
Adjusted net income (loss) per diluted share   $ 0.04     $ 0.04     $ (0.04 )   $ 0.17     $ 0.13  
Weighted average shares outstanding:                                        
Basic     46,160       46,081       45,443       46,004       45,381  
Diluted (2)     50,056       51,865       45,443       51,436       52,588  
                                         
                                         

(1) The income tax effect of the excluded items is calculated by applying the applicable jurisdictional income tax rate, considering the deferred tax valuation for each applicable jurisdiction.

(2) Used to calculate adjusted net income (loss) per diluted share.

Adjusted EBITDA

Adjusted EBITDA represents net income (loss) 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 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 as a supplemental measure of our performance and ability to service debt. We also present Adjusted EBITDA 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 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 are excluded in order to better reflect our continuing operations.

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

Our Adjusted EBITDA measure has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

  • 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 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.

Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations. You should compensate for these limitations by relying primarily on our U.S. GAAP results and using Adjusted EBITDA only supplementally.

The following table provides a reconciliation from U.S. GAAP net income (loss) to Adjusted EBITDA (amounts in thousands):

       
    Fiscal Year 2016  
    Q1     Q2     Q3     Q4     Total  
Net income (loss)   $ (37,050 )   $ 7,194     $ (8,600 )   $ (15,173 )   $ (53,629 )
                                         
Adjustments:                                        
Income tax expense (benefit)     (248 )     1,438       2,760       2,056       6,006  
Interest expense, net     10,010       9,808       9,848       9,925       39,591  
Depreciation and amortization     9,917       9,265       9,674       10,160       39,016  
Change in value of NEC TOKIN options     29,200       (2,200 )     (700 )     -       26,300  
Equity (gain) loss from NEC TOKIN     (1,585 )     (162 )     6,505       11,648       16,406  
ERP integration costs/IT transition costs     4,369       282       167       859       5,677  
Stock-based compensation     1,279       1,328       1,154       1,013       4,774  
Restructuring charges     1,824       23       1,714       617       4,178  
Legal expenses related to antitrust class actions     718       541       1,300       482       3,041  
Net foreign exchange (gain) loss     1,049       (3,171 )     (1,036 )     122       (3,036 )
NEC TOKIN investment-related expenses     224       186       225       265       900  
Plant start-up costs     195       187       160       319       861  
(Gain) loss on sales and disposals of assets     (58 )     (304 )     129       608       375  
Plant shut-down costs     -       -       231       141       372  
Pension plan adjustment     312       -       -       -       312  
Adjusted EBITDA   $ 20,156     $ 24,415     $ 23,531     $ 23,042     $ 91,144  
                                         
    Fiscal Year 2015  
    Q1     Q2     Q3     Q4     Total  
Net income (loss)   $ (3,540 )   $ 6,330     $ 2,914     $ (19,847 )   $ (14,143 )
                                         
Adjustments:                                        
Income tax expense (benefit)     1,282       2,583       1,359       3       5,227  
Interest expense, net     10,453       10,284       9,933       10,016       40,686  
Depreciation and amortization     10,797       10,177       9,720       10,074       40,768  
Change in value of NEC TOKIN options     (4,100 )     (6,600 )     (2,500 )     11,100       (2,100 )
Equity (gain) loss from NEC TOKIN     1,675       (232 )     (1,367 )     2,093       2,169  
ERP integration costs/IT transition costs     895       409       671       1,273       3,248  
Stock-based compensation     994       958       1,232       1,328       4,512  
Restructuring charges     1,830       1,687       6,063       3,437       13,017  
Legal expenses related to antitrust class actions     -       -       409       435       844  
Net foreign exchange (gain) loss     527       (1,351 )     (1,257 )     (2,168 )     (4,249 )
NEC TOKIN investment-related expenses     580       487       485       226       1,778  
Plant start-up costs     1,647       1,114       1,144       651       4,556  
(Gain) loss on sales and disposals of assets     365       (550 )     (574 )     538       (221 )
Plant shut-down costs     889       -       -       -       889  
(Income) loss from discontinued operations     (6,943 )     1,400       164       -       (5,379 )
(Gain) loss on early extinguishment of debt     -       -       (1,003 )     -       (1,003 )
Professional fees related to financing activities     -       -       1,142       -       1,142  
Inventory revaluation     2,676       (821 )     (927 )     (928 )     -  
Adjusted EBITDA   $ 20,027     $ 25,875     $ 27,608     $ 18,231     $ 91,741  
                                         
                                         

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