KEMET Reports Results of 4th Quarter and Fiscal Year 2007

GREENVILLE, S.C., May 9 /PRNewswire-FirstCall/ -- KEMET Corporation today reported that net sales for the quarter ended March 31, 2007, were $157.1 million, which is an 18% increase over the same quarter last year and 5% lower than the prior quarter. Net income before special charges was $8.3 million, or $0.10 per share, compared to $10.7 million, or $0.12 per share, for the same quarter last year and $12.3 million, or $0.15 per share, for the prior quarter. On a GAAP basis, net income was $0.1 million, or $0.00 per share, for the current quarter compared to a net loss of $2.3 million for the same quarter last year and net income of $5.3 million for the prior quarter. KEMET reports results before special charges because the results offer an alternative depiction of normal operations. Comparisons to prior periods are as follows:

Quarter Ended Year Ended Mar Dec Mar Mar Mar 2007 2006 2006 2007 2006 (In Millions, Except Per Share Data) Net sales $157.1 $165.5 $133.4 $658.7 $490.1 Before special charges and SFAS No. 123R (non-GAAP) Net income $8.3 $12.3 $10.7 $42.7 $17.8 Net income per diluted share $0.10 $0.15 $0.12 $0.50 $0.21 After special charges and SFAS No. 123R (GAAP) Net income/(loss) $0.1 $5.3 $(2.3) $6.9 $0.4 Net income/(loss) per diluted share $0.00 $0.06 $(0.03) $0.08 $0.00

"We are extremely pleased with the Company's results for the fiscal year ended March 31, 2007," stated Per Loof, Chief Executive Officer. "With revenues up 34% and net income before special charges up 140% over the prior year, we exceeded all our expectations. We are tracking a full year ahead of the improvement plan I established when I joined KEMET two years ago and I am confident that we will continue to make progress in the years to come."

"The results in the fiscal fourth quarter, though generally in line with our expectations given normal seasonality and the impact of the Chinese New Year, need to improve and will improve. Our acquisition strategy is intended to mitigate future volatility. Our relentless efforts to reduce our costs will continue as we work every day to provide better solutions for our customers and increased profitability for our shareholders."

"We are pleased to note that we closed the purchase of Evox Rifa Group Oyj on April 24, 2007. This complementary business brings us one step closer to becoming The Capacitance Company. We would like to welcome every Evox Rifa customer and employee into the KEMET family, and look forward to new opportunities to provide capacitance solutions around the world. Our success in integrating the tantalum business unit acquired from EPCOS during the past fiscal year gives us confidence that we will see accretive results from the new Evox Rifa businesses as well in fiscal year 2008."

The Company will hold a conference call at 9:00 am ET Wednesday, May 9, 2007, to discuss this earnings release. To access the call, participants in the United States should dial 1-800-416-8033, and participants outside the United States should dial 1-706-643-0979. Participants should reference "KEMET Corporation" and the Conference ID #: 5684155. In conjunction with the conference call, there will be a simultaneous live broadcast over the Internet, which can be accessed at http://www.kemet.com/IR. A replay of the conference call will be available until midnight May 23, 2007, at the same link.

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 of the Tantalum Business Group were $99.8 million, and net sales of the Ceramics Business Group were $57.3 million for the March 2007 quarter. -- By region, 34% of net sales for the March 2007 quarter were to customers in the Americas, 40% were to customers in Asia Pacific, and 26% were to customers in Europe. -- By channel, 54% of net sales for the March 2007 quarter were to distribution customers, 22% were to Electronics Manufacturing Services customers, and 24% were to Original Equipment Manufacturing customers. Average selling prices for the March 2007 quarter, adjusted for changes in product mix, were basically flat. -- Cash and long-term investments in marketable securities increased $3.9 million to $258.0 million during the March 2007 quarter, from $254.2 million at December 31, 2006. -- During the March 2007 quarter, inventories increased $8.0 million to $153.9 million from $145.9 million at December 31, 2006. Raw materials and supplies decreased $0.4 million in the March 2007 quarter, and work in process and finished goods increased $8.4 million. Fiscal Year Ended Fiscal Quarter Ended Mar Mar Mar Jun Sept Dec Mar 2004 2005 2006 2006 2006 2006 2007 (In Millions) Raw materials and supplies $59.8 $47.5 $45.7 $46.7 $48.8 $55.0 $54.6 Work in process and finished goods 69.2 86.4 79.4 85.4 88.6 90.9 99.3 Total inventory $129.0 $133.9 $125.1 $132.1 $137.4 $145.9 $153.9 -- Capital expenditures for the March 2007 quarter were $10.7 million. Depreciation and amortization expense in the quarter was $9.9 million. Net capital expenditures for fiscal year 2007 were $35.3 million. The Company anticipates capital expenditures for fiscal year 2008 of $45 to $50 million, including approximately $7 million of capital expenditures at our new Evox Rifa facilities. Fiscal Year Ended Fiscal Quarter Ended Mar Mar Mar Mar Jun Sept Dec Mar 2004 2005 2006 2007 2006 2006 2006 2007 (In Millions) Additions to property, plant and equipment $25.8 $39.6 $22.8 $35.3 $3.7 $8.9 $12.0 $10.7 -- For fiscal year 2008, KEMET anticipates continuing our investments in key customer relationships through our direct sales and customer service professionals. We will make investments in research and development to improve our competitive position in the capacitor industry, working to become a technology leader. We continue to invest in research and development activities with a primary focus on organic polymer tantalum and high-capacitance ceramic capacitor technologies. We will also invest additional resources in research and development activities for our Evox Rifa businesses. Fiscal Year Ended Fiscal Quarter Ended Mar Mar Mar Mar Jun Sept Dec Mar 2004 2005 2006 2007 2006 2006 2006 2007 (In Millions) Selling, General & Admin. $51.2 $51.7 $49.7 $89.4 $23.9 $21.2 $21.2 $23.1 Research & Development $24.4 $26.6 $26.0 $33.4 $7.8 $7.4 $8.8 $9.4 -- The increase in SG&A expenses for the March 2007 quarter as compared to the prior quarter was due primarily to year end accounting adjustments for incentive based compensation and higher European tantalum integration costs. -- The increase in R&D costs reflects the Company's continuing efforts to be The Capacitance Company. KEMET introduced over 3,000 new Ceramics part numbers during the March 2007 quarter. KEMET also introduced 125 new Tantalum products during the quarter of which 41 were first to market. -- The manufacturing moves to low-cost regions are substantially complete. Two manufacturing operation moves still remain to be made. One is the anode manufacturing move to Mexico, which is currently in process, and the other is the tantalum polymer manufacturing move to China, which was started in the fiscal first quarter 2007. It is expected that both moves will be completed by the end of calendar 2007. Summary of special charges in the March 2007 quarter: Fiscal Quarter Ended March 2007 (In Millions) Manufacturing relocation $2.5 Property writedown 0.1 Reduction in workforce 0.1 Shown separately on income statement Restructuring charges $2.7 EPCOS tantalum business unit integration 4.2 Included in SG&A expenses Impact of SFAS No. 123R "Share-Based Payment" 1.3 Included in SG&A expenses Special charges $8.2

As of the end of the March 2007 quarter, all European tantalum integration activities are complete, and the Company does not anticipate any future costs associated with those activities.

QUIET PERIOD

Beginning July 1, 2007, KEMET will observe a Quiet Period during which the information provided in this news release and the Company's annual report on Form 10-K will no longer constitute the Company's 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 the Company. The Quiet Period will extend until the day when KEMET's next quarterly earnings release is published.

This release contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We intend that these forward-looking statements be subject to the safe harbor created by that provision. These forward-looking statements involve risks and uncertainties and include, but are not limited to, statements regarding future events and our plans, goals, and objectives. Our actual results may differ materially from these statements. These risks, trends, and uncertainties, which in some instances are beyond our control, include: risks associated with the cyclical nature of the electronics industry, the requirement to continue to reduce the cost of our products, the competitiveness of our industry, an increase in the cost of our raw materials, the location of several of our plants in Mexico, China, and Portugal, and the possible loss of key employees. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, we can give no assurance that the results contemplated in these forward-looking statements will be realized. The inclusion of this forward- looking information should not be regarded as a representation by our Company or any person that the future events, plans, or expectations contemplated by our Company will be achieved. Furthermore, past performance in operations and share price is not necessarily predictive of future performance.

KEMET CORPORATION AND SUBSIDIARIES CONSOLIDATED GAAP STATEMENTS OF OPERATIONS (Dollars in Thousands Except Per Share Data) Unaudited Three months ended Twelve months ended March 31 March 31 2007 2006 2007 2006 Income Statement Data: Net sales $157,077 $133,406 $658,714 $490,106 Cost of goods sold 124,744 105,551 517,443 399,264 Selling, general and administrative expenses 23,077 13,114 89,450 49,660 Research and development 9,418 7,370 33,385 25,976 Gain on sale of intellectual property - (2,917) - (2,917) Restructuring charges 2,658 12,457 12,572 28,319 Operating income/(loss) (2,820) (2,169) 5,864 (10,196) Interest expense 2,110 1,667 7,174 6,628 Interest income (2,361) (1,452) (6,283) (5,640) Other (income)/expense (1,666) (331) (2,486) 916 Income tax (benefit)/expense (1,031) 218 563 (12,475) Net income/(loss) $128 $(2,271) $6,896 $375 Income/(Loss) Per Share Data: Net income/(loss) per share: Basic $0.00 $(0.03) $0.08 $0.00 Diluted $0.00 $(0.03) $0.08 $0.00 Weighted-average shares outstanding: Basic 83,746,252 86,866,937 85,647,914 86,721,589 Diluted 83,875,700 86,866,937 85,795,486 86,779,653 KEMET CORPORATION AND SUBSIDIARIES PRO FORMA RECONCILIATION OF RESULTS BEFORE SPECIAL CHARGES TO GAAP RESULTS (Dollars in Thousands, Except Per Share Data) Unaudited Three months ended March 31, 2007 Before Special Special See GAAP Charges Charges Note Results Net sales $157,077 $157,077 Cost of goods sold 124,744 124,744 Selling, general and administrative expenses 17,577 $5,500 (1)(2) 23,077 Research and development 9,418 9,418 Restructuring charges - 2,658 (3) 2,658 Operating income/(loss) 5,338 (8,158) (2,820) Interest expense 2,110 2,110 Interest income (2,361) (2,361) Other (income)/expense (1,666) (1,666) Income tax (benefit)/expense (1,031) (1,031) Net income/(loss) $8,286 $(8,158) $128 Income/(Loss) Per Share Data: Net income/(loss) per share: Basic $0.10 $(0.10) $0.00 Diluted $0.10 $(0.10) $0.00 Weighted-average shares outstanding: Basic 83,746,252 83,746,252 83,746,252 Diluted 83,875,700 83,746,252 83,875,700 Notes: (1) - EPCOS tantalum business unit integration costs were $4.2 million for the quarter ended March 31, 2007. (2) - Includes the impact of $1.3 million related to the implementation SFAS No. 123R "Share-Based Payment." (3) - Restructuring costs were $2.7 million as follows: Manufacturing relocation $2.5 Property writedown 0.1 Reduction in workforce 0.1 Total restructuring charges $2.7 KEMET CORPORATION AND SUBSIDIARIES PRO FORMA RECONCILIATION OF RESULTS BEFORE SPECIAL CHARGES TO GAAP RESULTS (Dollars in Thousands, Except Per Share Data) Unaudited Twelve months ended March 31, 2007 Before Special Special See GAAP Charges Charges Note Results Net sales $658,714 $658,714 Cost of goods sold 517,443 517,443 Selling, general and administrative expenses 66,396 $23,054 (1)(2) 89,450 Research and development 33,385 33,385 Restructuring charges - 12,572 (3) 12,572 Operating income/(loss) 41,490 (35,626) 5,864 Interest expense 7,174 7,174 Interest income (6,283) (6,283) Other (income)/expense (2,646) 160 (4) (2,486) Income tax (benefit)/expense 563 563 Net income/(loss) $42,682 $(35,786) $6,896 Income/(Loss) Per Share Data: Net income/(loss) per share: Basic $0.50 $(0.42) $0.08 Diluted $0.50 $(0.42) $0.08 Weighted-average shares outstanding: Basic 85,647,914 85,647,914 85,647,914 Diluted 85,795,486 85,647,914 85,795,486 Notes: (1) - EPCOS tantalum business unit integration costs were $16.2 million for the twelve months ended March 31, 2007. (2) - Includes the impact of $6.8 million related to the implementation SFAS No. 123R "Share-Based Payment." (3) - Restructuring costs were $12.6 million as follows: Manufacturing relocation $9.6 Property writedown 0.2 Reduction in workforce 2.8 Total restructuring charges $12.6 (4) Write-off related to acquisition of EPCOS tantalum business unit of $160 thousand. CONSOLIDATED GAAP BALANCE SHEETS (Dollars in Thousands) Unaudited March 31, 2007 March 31, 2006 ASSETS Cash and cash equivalents $212,202 $163,778 Short-term investments - 4,889 Accounts receivable, net 108,830 68,457 Inventories 153,868 125,070 Prepaid expenses and other current assets 6,816 7,822 Deferred income taxes 5,071 4,647 Total current assets 486,787 374,663 Property, plant and equipment, net 349,174 253,303 Property held for sale 3,647 4,502 Long-term investments in marketable securities 45,767 67,195 Investments in affiliates 119 972 Goodwill 36,552 30,471 Intangible assets, net 14,260 12,506 Other assets 7,110 4,706 Total assets $943,416 $748,318 LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt $20,000 $20,000 Accounts payable, trade 70,799 47,251 Accrued expenses 49,777 32,303 Income taxes payable 7,225 5,770 Total current liabilities 147,801 105,324 Long-term debt 238,744 80,000 Other non-current obligations 19,587 44,139 Deferred income taxes 1,526 6,152 Total liabilities 407,658 235,615 Common stock 881 881 Additional paid-in capital 321,329 315,500 Retained earnings 228,117 221,221 Accumulated other comprehensive income 30,419 (2,343) Treasury stock, at cost (44,988) (22,556) Total stockholders' equity 535,758 512,703 Total liabilities and stockholders' equity $943,416 $748,318 Contact: David E. Gable Senior Vice President and Chief Financial Officer davidgable@KEMET.com 864-963-6484