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KEMET Reports Results of 2nd Quarter Operations

- Net Sales were $197.1 million for the quarter, up 7.7% over last quarter

- Net Income on a pro-forma basis was $10.6 million or $0.13 per share

GREENVILLE, S.C., Oct. 24 /PRNewswire-FirstCall/ -- KEMET Corporation (NYSE:KEM) today reported that net sales for the quarter ended September 30, 2007, were $197.1 million which is an 18.4% increase over the same quarter last year and 7.7% higher than the prior quarter. Net income before special charges was $10.6 million, or $0.13 per share, compared to $9.7 million, or $0.12 per share, last quarter and $ 9.6 million, or $0.11 per share, for the same quarter last year. On a U.S. GAAP basis, net income was $4.0 million, or $0.05 per share, for the current quarter compared to net income of $7.0 million for the prior quarter and net income of $0.8 million for the same quarter last year. KEMET also reports results before special charges because the results offer an alternative depiction of normal operations. Comparisons to prior periods are as follows:

Quarter Ended
Sep 2007 Jun 2007 Sep 2006
(In Millions, Except Per Share Data)

Net sales $197.1 $183.1 $166.5

Before special charges (non-GAAP)
Net income $10.6 $9.7 $9.6
Net income per diluted share $0.13 $0.12 $0.11

After special charges (GAAP)
Net income $4.0 $7.0 $0.8
Net income per diluted share $0.05 $0.08 $0.01

Share-based expense included in results $1.4 $2.4 $0.5
Share-based expense per diluted share $0.02 $0.03 $0.01

"We are pleased with the performance for the quarter as we increased both top and bottom line results," stated Per Loof, Chief Executive Officer. "Revenue increased sequentially based on strength in Asia and solid results in our new Film and Electrolytic Business Group. Both shipments and bookings gained momentum late in the quarter, and this trend is continuing into the December quarter. End market demand appears to be healthy, as we see strengthening in most segments, particularly in Asia, and continued stability in others. Working capital improved in the quarter as we reduced inventories and increased our cash balance. Overall, we are pleased with the results and the positive market indicators we currently see."

"As noted, we continue to be pleased with the performance of the Film and Electrolytic Business Group. Net sales for this group during the quarter were $29.9 million and operating income increased to over 6.8% of sales. Earlier this month, this group was enhanced with the successful completion of the acquisition of Arcotronics Italia S.p.A. The combination of Arcotronics with the previously acquired Evox Rifa Group has provided us the foundation for a market-leading film and paper capacitor business which positions KEMET as a premier capacitance solution provider."

KEMET's common stock is listed on The New York Stock Exchange under the symbol KEM. At the Investor Relations portion of the Company's web site at http://www.kemet.com/IR, users can subscribe to KEMET news releases and can find additional Company information.

OUR BUSINESS

The following statements are based on current expectations. These statements may contain forward-looking information, and consequently actual results may differ materially. Current global economic conditions make it particularly difficult at present to predict product demand and other related matters.

-- Net sales for the September 2007 quarter were $108.3 million for the
Tantalum Business Group, $58.9 million for the Ceramics Business Group
and $29.9 million for the Film and Electrolytic Business Group.

-- By region, 29.9% of net sales for the September 2007 quarter were to
customers in the Americas, 39.5% were to customers in Asia Pacific, and
30.6% were to customers in Europe.

-- By channel, 47.4% of net sales for the September 2007 quarter were to
distribution customers, 21.1% were to Electronics Manufacturing
Services (EMS) customers, and 31.5% were to Original Equipment
Manufacturing (OEM) customers. Average selling prices for the September
2007 quarter, adjusted for changes in product mix, were down
approximately 4%, reflecting a 23% increase in volumes in Asia Pacific
versus a 10% increase in the Americas and flat volumes in Europe.

-- Cash and cash equivalents and investments in marketable securities
increased $7.5 million to $164.9 million during the three months ended
September 2007, from $157.4 million at June 30, 2007. The increase was
due primarily to a reduction in inventory levels ($12.9 million) offset
partially by the purchase of the remaining portion of the outstanding
stock of Evox Rifa Group Oyj ($3.0 million).

-- During the September 2007 quarter, inventories decreased $12.9 million
to $171.2 million from $184.1 million at June 30, 2007 driven by
strengthening sales volumes. Raw materials and supplies decreased
$3.5 million in the September 2007 quarter, and work in process and
finished goods decreased $9.4 million.

Fiscal Year Ended
Mar 2005 Mar 2006 Mar 2007
(In Millions)
Raw materials and supplies $47.5 $45.7 $54.6
Work in process and finished goods 86.4 79.4 99.3
Total inventory $133.9 $125.1 $153.9

Fiscal Quarter Ended
Dec 2006 Mar 2007 Jun 2007 Sep 2007
(In Millions)

Raw materials and supplies $55.0 $54.6 $76.5 $73.0
Work in process and finished goods 90.9 99.3 107.6 98.2
Total inventory $145.9 $153.9 $184.1 $171.2

-- Capital expenditures for the September 2007 quarter were $15.8 million.
Depreciation and amortization expense in the quarter was $13.7 million.
The Company anticipates capital expenditures for fiscal year 2008 of
$50 to $55 million, including $7 million of capital expenditures at our
new Evox Rifa facilities.

Fiscal Year Ended
Mar 2005 Mar 2006 Mar 2007
(In Millions)
Additions to property, plant
and equipment $39.6 $22.8 $36.9

Fiscal Quarter Ended
Dec 2006 Mar 2007 Jun 2007 Sep 2007
(In Millions)

Additions to property, plant $13.8 $10.5 $9.1 $15.8
and equipment

-- SG&A expense for the quarter decreased $1.6 million to $20.2 million.
This decrease resulted from a $1.1 million decrease in non-cash,
share-based incentive expense and another $1.0 million decrease in core
SG&A offset by an increase of $0.5 million for Evox Rifa integration
costs.

-- The level of R&D costs reflects the Company's continuing efforts to be
"The Capacitance Company."

Fiscal Year Ended
Mar 2005 Mar 2006 Mar 2007
(In Millions)

Selling, General & Administrative $51.7 $49.7 $89.4
Research & Development $26.6 $26.0 $33.4

Fiscal Quarter Ended
Dec 2006 Mar 2007 Jun 2007 Sep 2007
(In Millions)

Selling, General & Administrative $21.2 $23.1 $21.8 $20.2
Research & Development $8.8 $9.4 $9.1 $8.2

-- Special charges for the quarter were primarily related to manufacturing
moves to low-cost regions and reductions in force actions in Mexico,
Portugal, and Germany, to reduce our costs and further capitalize on
Lean Manufacturing initiatives.

Summary of special charges in the September 2007 quarter:

Fiscal Quarter
Ended
September 30, 2007
(In Millions)

Manufacturing relocation $2.7
Reduction in workforce 3.3
EVOX Rifa business unit integration 0.6
Special charges $6.6

Share based compensation was lower in the September quarter as the June quarter included the impact of some restricted stock grants. For the remainder of the fiscal year, we expect stock based compensation expense to be similar to the September amount.