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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 09, 2003
KEMET Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-20289 57-0923789
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(State or other (Commission File Number) (IRS Employer
jurisdiction) Identification No.)
2835 KEMET Way, Simpsonville, SC 29681
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(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (864) 963-6300
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KEMET Announces Enhanced Strategic Plan
Greenville, South Carolina (July 2, 2003) ? KEMET Corporation (NYSE:KEM)
announced today a strategic plan to enhance the company's position as a global
leader in passive electronic technologies. Dr. Jeffrey Graves, President and
Chief Executive Officer, said, "The last several years have seen profound
changes in the competitive landscape of the electronics industry. We have
listened closely to our customers describe their future directions, and we are
aligning KEMET's future plans closely with them. Building on our foundation of
success in being the preferred supplier to the world's most successful
electronics manufacturers and distributors, KEMET is adapting our organization
to continue to succeed in the new global environment."
KEMET's strategy has three foundations:
? Enhancing our position as the market leader in quality, delivery, and
service through outstanding execution,
? Having a global mindset, with an increased emphasis on growing our
presence in Asia, and
? Accelerating the pace of innovations to broaden our product portfolio.
To execute this strategic plan, KEMET is reorganizing its operations around the
world. Over the next two years, several KEMET facilities will be relocated
based on access to key customers, access to key technical resources and
knowledge, and availability of low cost resources. The company currently has
only a preliminary estimate of the cost and savings of this reorganization, and
additional information will be announced as it becomes available. KEMET
estimates it will incur special charges of approximately $35 million over the
period of the reorganization related to movement of manufacturing operations.
This will yield an approximate one year payback based on FY'04 volumes, and a
$50-60 million savings with volume recovery by FY'06, when the reorganization
is complete. In addition, there will be a special "impairment" charge of
approximately $15 million reflecting the change in status of the facilities
that will be vacated through this move.
KEMET in the United States
KEMET's Corporate Headquarters will remain in Greenville, South Carolina,
though individual functions will evolve to support our global activities in
Asia, Europe, and North America, either from Greenville or through locations in
appropriate parts of the world.
Commodity manufacturing currently in the United States will be relocated to our
lower cost manufacturing facilities in Mexico and China. Approximately 650
production-related jobs in the United States will be impacted by this
relocation over the next two years. Production that remains in the U.S. will
focus primarily on early stage manufacturing of new products and other
specialty products for which customers are predominantly located in North
America.
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To accelerate the pace of innovations, the KEMET Innovation Center is being
created. The primary objectives of the Innovation Center are to ensure the
flow of new products and robust manufacturing processes that will keep us at
the forefront of our customers' product designs, while enabling these products
to be transferred rapidly to the most appropriate KEMET manufacturing location
in the world for low-cost, high-volume production. The main campus of the
KEMET Innovation Center will be located in the Greenville, South Carolina,
area.
KEMET in Mexico
KEMET believes our Mexican operations are among the finest and most cost
efficient in the world, and they will continue to be our primary production
facilities supporting North American and European customers. One of the
strengths of KEMET Mexico is that it is truly a Mexican operation, including
Mexican management and workers. These facilities will be responsible for
maintaining KEMET's traditional excellence in quality, service, and delivery,
while driving costs down. Our facilities in Victoria and Matamoros will remain
focused primarily on tantalum and polymer capacitors, and our facilities in
Monterrey will continue to support our ceramic capacitor lines.
KEMET in China
In recent years, low production costs and proximity to large, growing markets
have caused many of KEMET's key customers to relocate production facilities to
Asia, in particular China. KEMET has a well established sales and logistics
network in Asia to support our customers' Asian operations. Our initial China
production facilities in Suzhou near Shanghai will be operational by the last
quarter of calendar 2003. Manufacturing operations in China will grow rapidly,
and within two to three years KEMET anticipates that production capacity in
China may be equivalent to Mexico, with most of the equipment to support these
operations being transferred from existing capacity in the United States or
Mexico. Like KEMET Mexico, the vision for KEMET China is to be a Chinese
operation, with Chinese management and workers, to help achieve KEMET's
objective of being a truly global company. These facilities will be responsible
for maintaining KEMET's traditional excellence in quality, service, and
delivery, while accelerating our cost reduction efforts and supporting our
efforts to grow our customer base in Asia.
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KEMET in Europe
KEMET will maintain and enhance its strong European sales and customer service
infrastructure, allowing KEMET to continue to meet the local preferences of
European customers who remain an important focus for KEMET going forward.
Global Sales and Logistics
In recent years, it has become more complex to do business in the electronics
industry. Market leading electronics manufacturers have spread their facilities
more globally. The growth of the electronics manufacturing services industry
has resulted in a more challenging supply chain. New Asian electronics
manufacturers are rapidly emerging. The most successful business models in the
electronics industry are based on tightly integrated supply chain logistics to
drive down costs. KEMET's direct salaried sales force worldwide and a well
developed global logistics infrastructure distinguishes it in the marketplace,
and will remain a hallmark of KEMET in meeting the needs of its global
customers.
Additional Announcements
KEMET will hold a press conference at its Simpsonville, South Carolina
headquarters at 3:00 pm ET on Wednesday, July 2, 2003, to discuss the impact of
this announcement on KEMET's operations in the Greenville, South Carolina area.
KEMET will release earnings for the June 2003 quarter after 4:00 pm ET on
Monday, July 21, 2003. The company will hold a conference call at 8:30 am ET
Tuesday, July 22, 2003, to discuss the earnings release. Details for accessing
the call will be announced separately.
KEMET will hold its annual shareholders' meeting on Wednesday, July 23,
beginning at 1:00 pm ET in Greenville, South Carolina. The main campus of the
KEMET Innovation Center will be named and additional details of its operation
will be discussed at that time.
KEMET will hold a meeting with analyst and interested shareholders on Thursday,
August 7 beginning at 12:00 noon ET through dinner in Greenville, South
Carolina to discuss these announcements in greater detail and to introduce new
members of the KEMET senior management team.
Contact John Warner at JohnWarner@KEMET.com or 864-963-6640 to discuss the
content of these meetings, or Dottie Sutton at DottieSutton@KEMET.com or
864-963-6656 to RSVP and to discuss the logistics of attending these meetings.
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About KEMET
KEMET Corporation is a global leader in passive electronic technologies, by
being the preferred supplier to the world's most successful electronic
manufacturers and distributors through providing comprehensive solutions in an
easy-to-buy-from environment encompassing technology, quality, delivery, and
service at competitive prices. KEMET's common stock is listed on The New York
Stock Exchange under the symbol KEM.
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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 thereunto duly authorized.
KEMET Corporation
Dated: July 9, 2003 /S/ D. Ray Cash
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D. Ray Cash
Senior Vice President, Chief Financial
Officer and Assistant Secretary
(Principal Accounting and Financial
Officer)