UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________________________

FORM 10-K

(Mark One)
ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2019
Or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to



(Mark One)
☒		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2020



☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 001-15491

____________________________________________________________________________

KEMET Corporation

(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction ofincorporation or organization)		57-0923789(I.R.S. EmployerIdentification No.)
Delaware		57-0923789
KEMET Tower, One East Broward Blvd., Fort Lauderdale, Florida(Address of principal executive offices)		33301(Zip Code)
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

KEMET Tower, One East Broward Blvd., Fort Lauderdale, Florida 33301

(Address of principal executive offices, zip code)

Registrant’s telephone number, including area code: (954) 766-2800

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock, par value $0.01	KEM	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None.

____________________________________________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý☒ No o☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o☐ No ý☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý☒ No o☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated ~~filer~~Filer ý☒ Accelerated ~~filer~~Filer o☐ Non-accelerated ~~filer~~Filer o☐ Smaller ~~reporting~~Reporting ~~company~~Company o☐ Emerging ~~growth~~Growth ~~company~~Company o☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended

transition period for complying with any new or revised financial accounting standards provided pursuant to Section

13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant ishas filed a ~~shell~~report ~~company~~on ~~(as~~and ~~defined~~attestation into ~~Rule 12b-2~~its management's assessment of the ~~Act~~effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U. ~~Yes o No ý~~S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report ☒

~~The~~Indicate ~~aggregate market value of voting common stock held~~ by ~~non-affiliates~~check ofmark whether the registrant asis ofa ~~September 30,~~shell ~~2018~~company ~~computed~~(as bydefined ~~reference~~in toRule 12b-2 ~~the closing sale price~~ of the ~~registrant’s common stock was approximately $1,021,114,987~~Act). Yes ☐ No ☒

The ~~number~~aggregate ofmarket ~~shares~~value of ~~each~~voting ~~class of~~ common stock, ~~$0.01~~held ~~par~~by ~~value,~~non-affiliates ~~outstanding~~of the registrant as of ~~May~~September 2730, 2019 computed by reference to the closing sale price of the registrant’s common stock was 58approximately $1,~~001~~044,~~480~~995,999.

The number of shares of each class of common stock, $0.01 par value, outstanding as of May 26, 2020 was 58,508,445.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of KEMET Corporation's subsequent amendment to this Form 10-K to be filed within 120 days of March 31, 2020, or the Registrant's definitive proxy statement to be ~~delivered~~filed towith ~~stockholders~~the Securities and Exchange Commission in connection with the ~~Annual~~Registrant's ~~Meeting~~2020 ofannual ~~Stockholders~~meeting toof ~~be held July 31~~stockholders, ~~2019~~ are incorporated by reference ~~into~~in this annual report on Form 10-K in response to Part III, ofItems ~~this~~10, ~~report~~11, 12, 13, and 14.

Table of Contents

Part I		Page No.
ITEM 1.	BUSINESS	4
ITEM 1A.	RISK FACTORS	15
ITEM 1B.	UNRESOLVED STAFF COMMENTS	2224
ITEM 2.	PROPERTIES	2325
ITEM 3.	LEGAL PROCEEDINGS	2425
ITEM 4.	MINE SAFETY DISCLOSURES	2627
ITEM 4A.	INFORMATION ABOUT OUR EXECUTIVE OFFICERS	26
	INFORMATION ABOUT OUR EXECUTIVE OFFICERS	28
Part II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	2931
ITEM 6.	SELECTED FINANCIAL DATA	3234
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3335
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	6158
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	6159
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	6159
ITEM 9A.	CONTROLS AND PROCEDURES	6259
ITEM 9B.	OTHER INFORMATION	6360
Part III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	6461
ITEM 11.	EXECUTIVE COMPENSATION	6461
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	6461
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	6461
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	6461
Part IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	6562
ITEM 16.	FORM 10-K SUMMARY	~~136~~127
SIGNATURES		~~137~~128

PART I

ITEM 1. BUSINESS

Forward-looking Information

Background of Company

KEMET Corporation (“we,” “us,” “our,” “KEMET” and the “Company”), is a global manufacturer of passive electronic components. We first began manufacturing tantalum capacitors in 1958 as a division of Union Carbide Corporation (“UCC”) and became a stand-alone legal entity in 1990 following a management buyout from UCC. In 1992, we publicly issued shares of our common stock. Since then, we have made the following acquisitions:

Segment	Fiscal Year	Business
Solid Capacitors Segment (“Solid Capacitors”)	2007	Tantalum Business Unit of EPCOS AG
Film and Electrolytic Segment (“Film and Electrolytic”)	2008	Evox Rifa Group Oyj
Film and Electrolytic	2008	Arcotronics Italia S.p.A.
Film and Electrolytic	2012	Cornell Dubilier Foil, LLC (renamed KEMET Foil Manufacturing, LLC (“KFM”))
Solid Capacitors	2012	Niotan Incorporated (renamed KEMET Blue Powder Corporation (“KBP”))
Corporate	2013	34% economic interest in TOKIN Corporation (“TOKIN”) (1)
Corporate	2016	IntelliData, Inc. (“IntelliData”)
Solid Capacitors and Electro-Magnetic, Sensors, and Actuators Segment (“MSA”)	2018	TOKIN Corporation (“TOKIN”) (1)
Film and Electrolytic	2020	Novasentis, Inc. (“Novasentis”) (2)

______________________________________________________________________________

(1) In fiscal year 2013, ~~our~~the ~~subsidiary,~~Company ~~KEMET Electronics Corporation (“KEC”)~~ acquired a 34% economic interest in TOKIN ~~as calculated based on the number of common shares held by KEC, directly and indirectly, in proportion to the aggregate number of common and preferred shares of TOKIN outstanding as of such date~~. ~~The Company accounted for its investment in TOKIN using the equity method for a non-consolidated variable interest entity since KEC did not have the power to direct significant activities of TOKIN.~~ During fiscal year 2018, KEMET ~~entered~~acquired ~~into a Definitive NEC TOKIN Stock Purchase Agreement (~~the ~~“TOKIN Purchase Agreement”) with NEC Corporation (“NEC”), to acquire all of the~~ outstanding shares of ~~common stock and preferred stock of~~ TOKIN not already held by ~~KEMET.~~the ~~The~~Company ~~transaction closed on April 19, 2017~~ and ~~on that date,~~ TOKIN became a ~~100%~~fully ~~indirect~~ owned subsidiary of KEMET.

⁽²⁾ In fiscal year 2018, the Company acquired a 15% economic interest in Novasentis, which increased to 27.9% in fiscal year 2019. During fiscal year 2020, KEMET acquired the outstanding shares of Novasentis not already held by the Company and Novasentis became a fully owned subsidiary of KEMET.

Through the above acquisitions and organic growth we have expanded our product base to include multilayer ceramic, solid and electrolytic aluminum and film capacitors, and electro-magnetics, sensors, and actuators.

Yageo Merger

On November 11, 2019, the Company entered into an agreement and plan of merger (the “Agreement”) pursuant to which Yageo Corporation (“Yageo”) will acquire all of the Company’s outstanding shares of common stock for $27.20 per share, subject to the satisfaction (or waiver of) specified conditions (the “Merger”). The consummation of the Merger is subject to customary closing conditions, including the approval by the Company’s stockholders. Certain further closing conditions in the Agreement include: (a) obtaining antitrust and other regulatory approvals in the United States and certain other jurisdictions (including, among others, China and Taiwan), (b) the absence of any applicable restraining order or injunction prohibiting the Merger, (c) receipt of approval from the Committee on Foreign Investment in the United States (“CFIUS”), (d) obtaining foreign investment approval by the Investment Commission, Ministry of Economic Affairs, Taiwan, (e) the approval of Yageo’s stockholders, if required by applicable law and (f) in the case of Yageo’s obligations to complete the Merger, there not having been any “material adverse effect” (as customarily defined) on the Company. The Agreement contains certain restrictions on the conduct of our business prior to the completion of the Merger or the termination of the Agreement, including, among other things, a restriction prohibiting us from paying any dividends or making certain other distributions. Upon consummation of the Merger, the Company would be a fully owned subsidiary of Yageo.

The Agreement is subject to termination if the Merger is not consummated within twelve months, subject to an automatic extension for a period of ninety days, for the purpose of obtaining certain antitrust clearances. The Agreement also contains certain other termination rights and provides that, upon termination of the Agreement under specified circumstances, including Yageo’s decision to terminate the Agreement if there is a change in the recommendation of the Company’s Board of

Directors (the “Board”) to adopt the Merger or a termination of the Agreement by the Company to enter into an agreement for a “superior proposal,” the Company will pay Yageo a cash termination fee of $63.8 million. The Agreement additionally provides that, upon termination of the Agreement under specified circumstances, Yageo will pay the Company a cash termination fee of $65.4 million.

The Merger with Yageo is proceeding as planned with several key milestones already completed. On February 4, 2020, the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the review period under the Austrian Cartel Act expired, and the pending Merger was approved by the German Federal Cartel Office. On February 20, 2020 the Company’s stockholders approved the Merger. On March 5, 2020, the Mexican Competition Authority authorized the pending Merger and on April 15, 2020, the Taiwan Fair Trade Commission (“TFTC”) announced its approval of the pending Merger. On April 23, 2020, CFIUS notified KEMET and Yageo that it completed its review of the Merger and determined that there were no unresolved national security concerns with respect to the transaction. On April 29, 2020, the Anti-Monopoly Bureau of China's State Administration for Market Regulation approved the pending Merger.

If Yageo fails to obtain approval by Yageo’s stockholders, if such approval is required by applicable law, Yageo will pay the Company a cash termination fee of $49.1 million. If Yageo fails to obtain debt financing upon the satisfaction of all conditions to closing, the Company may, within 30 days of termination, elect to receive a cash termination fee of $63.8 million.

The only remaining regulatory approval required for the consummation of the Merger is the approval from the Investment Commission, Ministry of Economic Affairs in Taiwan. The Company currently expects the transaction to close in the summer of 2020.

Strategy

KEMET is committed to providing its customers with high quality, low cost solutions for their electronic applications and strives to create ~~shareholder~~stockholder value primarily through the following strategic priorities:


•	leveraging our manufacturing expertise;

• strengthening our “Go-to-Market” leadership position; and

• consistently attracting and retaining exceptional talent; ~~and,~~

• selectively target complementary acquisitions and equity investments.

KEMET measures its progress against these strategic priorities over the long-term based primarily on financial metrics including revenue growth, profitability, free cash flow, and balance sheet liquidity.

We believe this strategy has ~~successfully~~strengthened ~~transformed~~ the Company's ~~and~~position ~~positioned~~in itthe market to be able to capture the growing demand for custom designed, higher margin electronic components in several industry segments. KEMET's transformation has resulted in increased and sustainable margins, and has enhanced the durability of our revenue base. In addition, we intend to leverage KEMET's strong proprietary technology to support future organic growth in key markets.

Strategic Highlights

With the completion of the TOKIN acquisition and the vertical integration of KEMET's Solid Capacitors' Tantalum product line, the Tantalum product line is well positioned to ~~continue~~remain ~~its~~successful ~~recent~~in ~~success~~the market. The Tantalum product line isfocuses ~~now focused~~ on its ~~Polymer~~polymer technology and isbenefits ~~benefiting~~ from operational synergies from the TOKIN acquisition, which reduced operating costs, improved yields, and provided access to new market segments. In addition, it's our belief that our vertical integration ofstrategy ~~the~~continues to keep our tantalum ~~ore~~costs ~~supply~~the ~~chain~~lowest ~~has~~among ~~resulted~~our incompetitors. ~~savings~~This ofenables ~~approximately~~us ~~$50.0~~to ~~million~~avoid ~~per~~large ~~year~~fluctuations ~~compared~~in toselling ~~2012~~prices ~~and~~for ~~has~~tantalum ~~created~~products ~~stability~~when inthe ~~our~~market ~~cost~~price ~~structure~~for tantalum ore fluctuates. As a result of the enhanced ~~Polymer~~polymer focus, we believe KEMET’s ~~Polymer~~ ~~Tantalum~~polymer tantalum sales ~~now~~ lead the industry with ~~greater~~an ~~than~~estimated ~~50.0%~~ market share of approximately 50%. We believe that leveraging KEMET's and TOKIN's manufacturing expertise, combined with our vertical integration, has successfully transformed KEMET's Tantalum product line. ~~and~~This has positioned it well for new growth opportunities across multiple industry segments, especially those segments demanding higher reliability in harsh environment applications.

KEMET's Solid Capacitors' Ceramic product line is also well positioned for new opportunities. The Ceramic product line began its transformation in 2008 when it shifted ~~it's~~ focus from consumer markets to business to business markets, across the automotive, defense/aerospace, medical, energy, telecommunications, and industrial sectors. While KEMET's competitors focused on small case size multi-layer ceramic capacitors (MLCC's), KEMET's Ceramic product line focused on building a core competency in high-reliability, high-voltage/power, large case size MLCC's. Since 2010, the Ceramic product line's Cumulative Annual Growth Rate (CAGR) ofin ~~KEMET's~~the ~~chosen~~ markets ~~was~~in which it operates has been approximately ~~17.0~~16%. ~~KEMET's~~Based ~~Ceramic~~on ~~MLCC's~~expected ~~are~~strong inmedium ~~high demand,~~ and ~~during~~long ~~fiscal~~term ~~year~~demand ~~2019~~for MLCC's, the Company entered into three long-term (10 year) customer supply agreements ~~with~~during ~~three~~fiscal ~~significant~~year ~~customers~~2019 ~~that~~which are projected to account for approximately 33.0% of KEMET's ~~total~~MLCC capacity in fiscal year 2022. KEMET is in the process of expanding its current MLCC production capacity, which currently is approximately 4953 billion pieces per year. The Company expects to have the ability to produce 72 billion pieces per year by fiscal year 2022. Approximately 24 billion, or 33.0% of these pieces are committed to the three customers that signed long-term supply agreements. We believe operational and strategic agility have successfully transformed our Ceramic product line.

The completion of KEMET's acquisition of TOKIN in fiscal year 2018 further diversified KEMET's products and geographic markets, facilitating cross selling opportunities that support KEMET's "long tail" (see below) selling strategy. TOKIN's MSA reportable segment added approximately $240.0 million in net sales. The added liquidity from TOKIN's balance sheet reduced KEMET's consolidated net debt, permitting a debt refinancing arrangement in Japan. This debt refinancing provides annual interest savings of approximately $21.0 million. Additionally, the acquisition has contributed to the development of new technology, and as noted above, has created operational synergies and improved yields in KEMET's existing Tantalum product line.5

fiscal year 2022. Approximately 24 billion, or 33% of these pieces are committed to the three customers that signed long-term supply agreements. We believe the operational and strategic changes that we have made have successfully positioned our Ceramic product line for continued success.

The completion of KEMET's acquisition of TOKIN in fiscal year 2018 further diversified KEMET's products and geographic markets, facilitating cross selling opportunities that support KEMET's "long tail" (defined below) selling strategy. The added liquidity from TOKIN's balance sheet reduced KEMET's consolidated net debt, permitting a debt refinancing arrangement in Japan. The Company's interest expense for the fiscal year ended March 31, 2020 decreased $10.2 million and $21.9 million compared to the fiscal years ended March 31, 2019 and 2018, respectively, due to the benefit of the debt refinancing. Additionally, the TOKIN acquisition has contributed to the development of new technology, and as noted above, has created operational synergies and improved yields in KEMET's existing Tantalum product line.

KEMET's “Go-to-Market” strategy includes four key elements which have contributed to KEMET's success and supported the structural transformation noted above:


•	Global Sales Team


•	Design-In Focus


•	Service "Long Tail" (high mix, low volume) Customers


•	Customer Digital Engagement Platform

KEMET's global sales team consists of ~~over~~ ~~100~~ professionals ~~supporting~~that ~~each~~are ~~region~~local to the regions that they serve. Sales ~~people~~personnel, application engineers, and customer service representatives are located ~~close~~near to KEMET's customers, ~~allowing~~which permits frequent face-to-face conversations. In addition, we partner with all the premier distributors in the electronics industry, ensuring we obtain a large geographical sales presence and can leverage their expertise in stocking and servicing customers.

Adding value to our customers is an important part of our relationship, and over the years we have transformed our product portfolio from a commodity -based approach to a customized, design-in approach. To support our design-in strategy, our global sales team includes field application engineers with degrees in electrical engineering that work directly with our customers at the early stages of product development to ensure KEMET's products are designed-into the product applications. As a result, today, we target all the key fast growing applications in the electronic market including, but not limited to, electric vehicles, industry 4.0 (as described below), autonomous driving, artificial intelligence, and data storage.

While aour global sales team focuses on our larger customers, KEMET has also developed a comprehensive strategy to serve our “long tail” customers (the smaller customers), which are approximately 180,000 customers ~~that account for approximately 50~~.0% ofThis ~~our~~not ~~net~~only ~~sales. This~~ allows us to ~~not only~~ provide world class customer service to our smaller customers, but also provides KEMET with an improved opportunity to partner with today's smaller companies that are potentially tomorrow's leading electronic companies. To do so, we have developed an internal culture and supporting business processes to engage with high-mix/low-volume requirements that are typical from the “long-tail” customer.

5KEMET supports its global sales initiatives with what we believe is a market leading customer digital engagement platform. We believe the electronic component industry is still in the early stages of “digital disruption” (how electronic manufacturers go to market). We believe our existing and continuously improving component simulation, component search, and component quoting platforms for buyers are market leading and put KEMET at the forefront of the “digital disruption” that will transform how the electronic components are sold in the future.

~~KEMET supports its global sales initiatives with its market leading customer digital engagement platform.~~ We believe ~~the~~KEMET's ~~electronic~~business ~~component~~strategy ~~industry~~will isallow ~~still~~us into leverage the ~~early~~global ~~stages~~mega-trends of ~~“digital~~an ~~disruption”~~increasingly ~~(how~~electrified ~~electronic manufacturers go to market). We believe our existing~~ and ~~continuously~~connected ~~improving~~world ~~component simulation, component search,~~ and ~~component~~positions ~~quoting~~KEMET ~~platforms~~well for ~~buyers are market leading and put KEMET at the forefront of the “digital disruption” that will transform how the electronic components are sold in the future~~growth.

Finally, as strategic opportunities are identified, we will evaluate and possibly pursue them if they would enable us to enhance our competitive position and expand our market presence. Our strategy is to acquire complementary capacitor and other related businesses allowing us to leverage our business model, potentially including those involved in other passive components that are synergistic with our customers’ technologies and our current product offerings.

We believe KEMET's business strategy will allow us to leverage the global mega-trends of an increasingly electrified and connected world and positions KEMET well for growth, both internally and through acquisitions. Organic revenue is targeted to grow at an average annual rate of at least five percent over the next five years and revenue through acquisitions is targeted to grow at an annual rate of five percent by the end of the fifth year. Despite our plan to continue to grow, in part, through targeted acquisitions, we may be unable to continue to identify, have the financial capabilities to acquire, or successfully complete transactions with suitable acquisition candidates. Please refer to Item 1A - Risk Factors - for additional information on risks and uncertainties.

General

While KEMET competes in the broader passive electronic component industry, our strategic focus is on growth markets, specialty products requiring high reliability, and, within Ceramic, larger case size capacitors.

Our product line consists of multilayer ceramic, tantalum, film and aluminum (solid and electrolytic) capacitors, and Electro-Magnetic Compatible (“EMC”) devices, sensors, and actuators. Product offerings include surface mounts, which are attached directly to the circuit board; leaded capacitors, which are attached to the circuit board using lead wires; and chassis-mount and other pin-through-hole board-mount capacitors, which utilize attachment methods such as screw terminal and snap-in. Capacitors are electronic components that store, filter, and regulate electrical energy and current flow. As an essential passive component used in nearly all circuit boards, capacitors are typically used for coupling, decoupling, filtering, oscillating and wave shaping and are used in communication systems, servers, personal computers, tablets, cellular phones, automotive electronic systems, defense and aerospace systems, consumer electronics, power management systems and many other electronic devices and systems (basically anything that plugs in or has a battery). While our broad product offering allows us to ~~meet the majority of those needs independent of application and end use, our strategic focus is on high growth and specialty markets as noted above.~~

Solid Capacitors' products are commonly used in conjunction with integrated circuits, and the same circuit may contain both ceramic and tantalum capacitors. Tantalum capacitors are a popular choice because of their ability for high capacitance in a small volume package. While ceramic capacitors are more cost-effective at lower capacitance values, tantalum capacitors are more cost-effective at higher capacitance values while solid aluminum capacitors can be more effective in special applications.

KEMET's Tantalum business continues to transition toward a higher proportion of Polymer technology sales in which KEMET has market share leadership greater than 50.0%. Growth drivers for this product line include advanced driver assistance and autonomous driving systems, tablets and PC’s, 5G infrastructure and connectivity, data servers and solid state drives and power density energy systems.

KEMET's Ceramic business continues to focus on its specialty (value added) and large cap size business. Growth drivers for Ceramic include electric vehicles, advanced driver assistance and autonomous driving systems, 5G infrastructure and connectivity, data servers and solid state drives, wireless charging, satellites, radar, and guidance systems.

Film, paper and aluminum electrolytic capacitors can be used to support integrated circuits, but also are used in the field of power electronics to provide energy for applications such as motor starts, power conditioning, electromagnetic interference filtering safety, and inverters. Film and Electrolytic's self healing products deliver high reliability solutions for extreme conditions. Growth drivers for Film and Electrolytic include alternative energy solutions, electric vehicle charging stations, and hybrid and electric vehicles.

~~electrical~~meet ~~equipment.~~the ~~Growth~~majority ~~drivers~~of ~~for~~those ~~MSA~~needs ~~include~~independent ~~electric~~of ~~vehicles,~~application ~~advanced driver assistance~~ and ~~autonomous~~end ~~driving systems~~use, ~~industry~~our ~~4.0,~~strategic 5Gfocus ~~infrastructure~~is ~~and~~on ~~connectivity,~~high growth and ~~power~~specialty ~~density~~markets ~~and~~as ~~energy~~noted ~~efficiency systems~~above.

WeSolid ~~believe~~Capacitors' ~~the~~products ~~long-term~~are ~~demand~~commonly ~~for~~used ~~the~~in ~~components~~conjunction wewith ~~offer~~integrated ~~will~~circuits, ~~grow on a regional~~ and ~~global~~the ~~basis~~same ~~due~~circuit tomay acontain ~~variety~~both ofceramic ~~factors~~and ~~including~~tantalum ~~electric vehicles ("EV"), vehicles with advanced driver assisted electronics, 5G infrastructure, industry 4~~capacitors.0, ~~alternative~~Tantalum ~~energy~~capacitors ~~and~~are ~~energy~~a ~~storage.~~popular ~~The~~choice ~~'electrification~~because of ~~everything'~~their isability ~~driving~~for ~~growth.~~high Wecapacitance ~~expect growth not only~~ in ~~end-products,~~a ~~but~~small ~~due~~volume topackage. ~~the~~While ~~increasing~~ceramic ~~complexity~~capacitors ofare ~~electronic~~more ~~products~~cost-effective ~~and~~at ~~the~~lower ~~additional~~capacitance ~~capacitors required in those products~~values, wetantalum ~~expect~~capacitors ~~strong~~are ~~growth~~more ofcost-effective ~~the~~at ~~products~~higher ~~required~~capacitance ~~to support the 'electrification of everything'. KEMET~~values, weand ~~believe,~~solid isaluminum ~~strategically~~capacitors ~~aligned~~can inbe ~~its~~more ~~manufacturing~~effective ~~operations and~~ in ~~how~~special ~~we go-to-market to serve these growing markets~~applications.

KEMET's Tantalum business continues to transition toward a higher proportion of polymer technology sales in which we believe KEMET has an estimated market share leadership of approximately 50%. Growth drivers for this product line include advanced driver assistance and autonomous driving systems, tablets and PC’s, 5G infrastructure and connectivity, data servers and solid state drives and power density energy systems.

KEMET's Ceramic business continues to focus on its specialty (value added) and large cap size business. Growth drivers for the Ceramic business include electric vehicles, advanced driver assistance and autonomous driving systems, 5G infrastructure and connectivity, data servers and solid state drives, wireless charging, satellites, radar, and guidance systems.

Film, paper and aluminum electrolytic capacitors can be used to support integrated circuits, but also are used in the field of power electronics to provide energy for applications such as motor starts, power conditioning, electromagnetic interference filtering safety, and inverters. Film and Electrolytic's self-healing products deliver high reliability solutions for extreme conditions. Growth drivers for Film and Electrolytic include alternative energy solutions, electric vehicle charging stations, and hybrid and electric vehicles.

KEMET's MSA business offers a broad line of electrical noise management products that play a key role in maintaining signal integrity across a number of end markets including telecommunications, mobile computing, automotive, and general industries. The MSA business also offers power solutions through the inductance properties of our proprietary ferrite and metal composite materials. MSA's focus on material development enhances MSA's magnetic portfolio by providing unique magnets, e-magnets, and memoalloy products. Additionally, MSA's sensor and actuator business manufactures products that sense and respond to human activity, physical vibration, temperature change, and electric current, which are found in home appliances, consumer devices, and industrial electrical equipment. Growth drivers for MSA include electric vehicles, advanced driver assistance and autonomous driving systems, industry 4.0, 5G infrastructure and connectivity, and power density and energy efficiency systems.

We believe the long-term demand for the components we offer will grow on a regional and global basis due to a variety of factors including electric vehicles ("EV"), vehicles with advanced driver assisted electronics, 5G infrastructure, industry 4.0, alternative energy and energy storage. The 'electrification of everything' is driving growth. We expect growth not only in end-products, but due to the increasing complexity of electronic products and the additional capacitors required in those products, we expect strong growth of the products required to support the 'electrification of everything'. We believe KEMET is strategically aligned in its manufacturing operations and in how we go-to-market to serve these growing markets.

Our Industry

We compete with others that manufacture and distribute electronic components both domestically and globally and our success in the market is influenced by many factors, including price, availability, engineering specifications, quality and breadth of offering, performance characteristics, customer service and geographic location of our manufacturing sites. As in all manufacturing industries, improving cost of production is key to staying competitive. KEMET, as well as many of ~~our~~its larger competitors, have relocated their respective manufacturing operations to low cost regions and locations in closer proximity to ~~our~~their respective customers.

Because capacitors are a fundamental component of electronic circuits, demand for capacitors tends to reflect the general demand for electronic products, as well as integrated circuits, which we believe over time will continue to grow. We believe growth in the electronics market and the resulting growth in demand for capacitors will be driven primarily by a number of recent trends which include:


•	industry 4.0:


◦	the development of new products, applications and electronic controls for engines and industrial machinery, including cyber physical systems, cloud computing, and cognitive computing; security smart phones and mobile personal computing devices;

• the “internet-of-things”;”


◦	the increase in the electronic content of existing products, such as home appliances and medical equipment, smart phones and mobile personal computing devices;


•	the enhanced functionality, complexity and convergence of electronic devices that use state-of-the-art microprocessors;


•	alternative and renewable energy systems;


•	EV and advanced driver assisted electronics; and,


•	the development of 5G infrastructure and connectivity.

The acquisition of TOKIN increased our market opportunity through the EMC devices and sensor and actuator markets.

Markets and Customers

Our products are sold to a variety of ~~OEMs~~ Original Equipment Manufacturers (“OEM”) in a broad range of industries including the computer, communications, automotive, military, consumer, industrial, medical, and aerospace industries. We also sell products to electronics manufacturing services (“EMS”) providers, which serve OEMs in these industries. Electronics distributors are an important channel of distribution in the electronics industry and represent a large channel through which we sell our capacitors. One electronics distributor, TTI, Inc., accounted for over 10% of our net sales in each of fiscal years ~~2019~~2020, ~~2018~~2019 and ~~2017~~2018. If our relationship with this customer were to terminate, we would need to determine alternative means of delivering our products to the end-customers served by them. In addition, an aggregate of over 10% of our net sales in fiscal year ~~2019~~2020 were driven by sales to EMS providers for incorporation into Apple Inc. products.

Diversification is critical to the success of our business as our products reach a multitude of industries with various opportunities for growth. As a full-service provider in the capacitor space, KEMET produces the majority of the dielectrics available to cover our customer needs. The TOKIN acquisition has increased KEMET's offering with a larger product portfolio including magnetics, sensors and actuators, enhancing its ability to deliver specialty and design-in solutions to the automotive, military, aerospace, medical, energy, communications, and industrial markets. While we are seeing a merging of major segments as connectivity and “internet-of-things” grow, the following table presents an overview of the diverse industries that incorporate our capacitors into their products and the general nature of those products.

Diversification is critical to the success of our business as our products reach a multitude of industries with various opportunities for growth. As a full-service provider in the capacitor space, KEMET produces approximately 95.0% of the dielectrics available to serve our customer needs. The TOKIN acquisition has increased KEMET's offering with a larger product portfolio including magnetics, sensors and actuators, enhancing its ability to deliver specialty and design-in solutions to the automotive, military, aerospace, medical, energy, communications, and industrial markets. While we are seeing a merging of major segments as connectivity and “internet-of-things” grow, the following table presents an overview of the diverse



Industry		Products
Automotive		Adaptive cruise control, High intensity discharge headlamps, Light emitting diode electronic modules, Lane departure warning, Camera systems, Audio systems, Tire pressure monitoring, Power train electronics, Instrumentation, Airbag systems, Anti-lock braking and stabilization systems, Hybrid and electric drive vehicles, Electronic engine control modules, Driver comfort controls, Security systems, Radar, Connectivity systems and Advance driver assistance gear
Communications		Smart phones, Telephones, Switching equipment, Relays, Base stations, and Wireless infrastructure
Computer-related		Personal computers (laptops, tablets, notebooks), Workstations, Servers, Mainframes, Computer peripheral equipment, Power supplies, Solid state drives, and Local area networks
Industrial		Electronic controls, Measurement equipment, Instrumentation, Solar and wind energy generation, Down-hole drilling and Medical electronics
Consumer		Digital media devices, Game consoles, Televisions, Audio devices, and Global positioning systems
Military/Aerospace		Avionics, Radar, Guidance systems, and Satellite communications
Medical		Defibrillators, Diagnostic equipment, Imaging equipment, Cardiac devices, and Pain management devices
Alternative Energy		Wind generation systems, Solar generation systems, Geothermal generation systems, Tidal generation systems and Electric drive vehicles

We produce a small percentage of capacitors under military specification standards sold for both military and commercial uses. We do not sell any capacitors directly to the United States government. Certain of our customers purchase capacitors for products in the military and aerospace industries.

The acquisition of TOKIN increased our position in the following industries that incorporate EMC devices, sensors, and actuators into their products:



Industry		Products
Telecom Infrastructure		Switching equipment, Base stations, and Wireless infrastructure
Gaming		Consoles, Displays, Power management
Consumer		Battery chargers/AC adapters, Power supply, Refrigerators, Inductive cooking and Air conditioning
Automotive		Infotainment and Power supply
Medical		Test and Diagnostic
Industrial		Semiconductor producing equipment and Measurement equipment

Our customer base includes most of the world’s major electronics ~~original equipment manufacturers (“~~OEMs”), ~~electronics~~EMS ~~manufacturing services~~ providers, ~~(“EMSs”)~~ and distributors listed below.

Major OEMs:


•	Bosch Group, Cisco Systems Inc., Continental AG, Delphi Technologies PLC, Tesla Inc., and Denso in the automotive segment.

• Apple Inc., Western Digital Corporation, Dell Inc., ~~Nintendo,~~ and Google LLC in the Computer and consumer segment.

• ABB Group, ~~Horiba,~~ Yaskawa Electric Inc., and Schlumberger in the industrial and alternative energy segment.

Major EMSs:


•	Flextronics International Ltd., Jabil Circuit Inc., Celestica Inc., and Sanmina-SCI Corporation

Major Distributors:


•	TTI, Inc., Arrow Electronics, Inc., Satori Electric Co., Ltd., and Avnet, Inc.

KEMET in the United States

Our corporate headquarters isare ~~located~~ in Fort Lauderdale, Florida.

Component manufacturing previously located in the United States has been substantially relocated to our lower-cost manufacturing facilities in Mexico, China, Vietnam, Indonesia, Thailand, and countries in Europe. The vision for KEMET's foreign subsidiaries is for them to be primarily local operations, with local management and workers, to help achieve our objective of being a global company. These facilities are responsible for maintaining our tradition of excellence in quality, service, and delivery, while accelerating cost-reduction efforts and supporting efforts to grow our customer base. Production remaining in the United States focuses primarily on early-stage manufacturing of new products and other specialty products for which customers are predominantly located in North America.

OnIn ~~February 21,~~ 2012, we completed the acquisition of all of the outstanding shares of Blue Powder, a leading manufacturer of tantalum powders. Blue Powder had been a significant supplier of tantalum powder to KEMET for several years. ~~KBP's~~and its principal operating location was in Carson City, Nevada. ~~The~~During ~~Company~~fiscal isyear ~~currently~~2020, inthe Company completed the process of modifying its vertical integration strategy by relocating its tantalum powder facility equipment from Carson City, Nevada to its existing Matamoros, Mexico plant.

To accelerate the pace of innovations, KEMET maintains an Innovation Center for Solid Capacitors near Greenville, South Carolina. The primary objectives of the KEMET Innovation Center are to ensure the flow of new product platforms, material sets, and processes that are expected to 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.

KEMET in Mexico

We believe our operations in Mexico are among the most cost efficient in the world, and we expect they will continue to be our primary production facilities supporting North American and European customers for Solid Capacitors. One of the strengths of KEMET Mexico is that it is a local operation, including local management and workers. These facilities are responsible for maintaining KEMET’s tradition of excellence in quality, service, and delivery, while driving down costs. The facilities in Victoria and Matamoros are primarily focused on tantalum capacitors, while the facilities in Monterrey are focused on ceramic capacitors.

KEMET in Asia Pacific

We have a well-established manufacturing, sales and logistics network in Asia to support our customers’ Asian operations. We currently manufacture tantalum and aluminum polymer, film, and electrolytic products in China, tantalum products in Thailand, and film products in Indonesia. AsWe ~~a result of the acquisition of TOKIN on April 19, 2017, we~~ manufacture electromagnetic ~~compatibility~~compatible and sensor and actuator products in China, Japan, and Vietnam ~~and tantalum capacitors in Thailand~~. In addition, we operate one innovation center for Solid Capacitors and one innovation center for MSA in Japan.

KEMET in Europe

We currently have one or more manufacturing locations in each of the following countries: Bulgaria, Finland, Italy, Macedonia, Portugal, and Sweden. In addition, we operate product innovation centers in Italy, ~~Portugal~~ and ~~Sweden~~Portugal. We continue to maintain and enhance our strong European sales and customer service infrastructure, allowing us to continue to meet the local preferences of European customers who remain an important focus for KEMET.

Global Sales and Logistics

KEMET serves the needs of our global customer base through four geographic regions: North America and South America (“Americas”), Europe, the Middle East and Africa (“EMEA”), Asia and the Pacific Rim (“APAC”) and Japan and Korea (“JPKO”). We have a global sales team with 3329 sales offices located in 1115 countries and a global distribution network. We also have independent sales representatives located in several countries worldwide including: Brazil, Israel, Canada, and the United States. Our strategic focus is to ensure we have people near our customers to facilitate regular face-to-face communication. This is critical to ensure that KEMET is included during the design-in phase.

Consequently, in our major markets, we market and sell our products primarily through a direct sales force. With a global sales organization that is customer-focused, our direct sales personnel from around the world serve on KEMET Global Account Teams committed to serving any customer location in the world with a dedicated KEMET representative. The traditional sales team is supported by regional Field Application Engineers who are experts in electronic engineering and market ~~all of~~ KEMET’s products by assisting customers with the resolution of capacitor application issues. We believe our direct sales force creates a distinct advantage in the marketplace by enabling us to establish and maintain strong relationships with our customers to efficiently process simple repeat business as well as to consult with customers on new and technically complex custom applications. In addition, where appropriate, we use independent commissioned representatives. This approach requires a blend of accountability and responsibility for specific customer locations, guided by an overall account strategy for each customer. Our sales team works with the customers throughout the entire purchasing process, following opportunities as they progress through concept, design, validation and, finally, mass production. In Japan, we market and sell directly and through manufacturers agents. These manufacturers agents create unique custom solutions integrating our products which help pull our products though the channel.

9Electronics distributors are an important distribution channel in the electronics industry and accounted for 40.4%, 42.2%, and 39.2% of our net sales in fiscal years 2020, 2019 and 2018, respectively. A portion of our net sales to distributors are made under agreements allowing certain rights of return and price protection on unsold merchandise held by distributors. In addition, our distributor policy includes inventory price protection and “ship-from-stock and debit” (“SFSD”) programs common in the industry.

with our customers to efficiently process simple repeat business as well as to consult with customers on new and technically complex custom applications. In addition, where appropriate, we use independent commissioned representatives. This approach requires a blend of accountability and responsibility for specific customer locations, guided by an overall account strategy for each customer. Our sales team works with the customers throughout the entire purchasing process, following opportunities as they progress through concept, design, validation and, finally, mass production. In Japan, we market and sell directly and through manufacturers agents. These manufacturers agents create unique custom solutions integrating our products which help pull our products though the channel.

Electronics distributors are an important distribution channel in the electronics industry and accounted for 42.2%, 39.2%, and 46.8% of our net sales in fiscal years 2019, 2018 and 2017, respectively. A portion of our net sales to distributors are made under agreements allowing certain rights of return and price protection on unsold merchandise held by distributors. In addition, our distributor policy includes inventory price protection and “ship-from-stock and debit” (“SFSD”) programs common in the industry.

Sales by Geography

In fiscal years 2020 and 2019, net sales by region were as follows (dollars in thousands):

	Fiscal Year 2019						Fiscal Year 2018
	Fiscal Year 2020				Fiscal Year 2019
	Net Sales		% ofTotal		Net Sales		~~Net Sales~~		% ofTotal		~~% ofTotal~~
APAC	$	~~533~~509,~~340~~161	3840.64	%	~~APAC~~$	533,340	$	~~479,987~~	38.6	%	~~40.0~~	%
EMEA	315,535		22.8	%	EMEA		277,898				23.1	%
Americas	296,929		23.6	%	337,842				24.4	%
Americas	337,842		24.4	%	Americas		259,105				21.6	%
EMEA	276,477		21.9	%	315,535				22.8	%
JPKO	~~196~~177,~~101~~987		14.21	%	~~JPKO~~196,101		~~183,191~~		14.2	%	~~15.3~~	%
Total	$	1,~~382~~260,~~818~~554			~~Total~~$	1,382,818	$	~~1,200,181~~

We believe our regional balance of revenues is a benefit to our business. The geographic diversity of our net sales diminishes the impact of regional sales decreases caused by various holiday seasons. The Americas ~~remains~~remain the leading region in the world for product design -in activity where engagement with OEM design engineers determines product placement independent of the region of the world where the final product is manufactured. Please see Note 78, “Reportable Segment and Geographic Information” to our Consolidated Financial Statements.

Inventory and Backlog

Our customers often encounter uncertain or changing demand for their products. They historically order products from us based on their forecast and if demand does not meet their forecasts, they may cancel or reschedule the shipments included in our backlog, in many instances without penalty. Additionally, many of our customers have started to require shorter lead times and “just in time” delivery. Consequently, the twelve-month order backlog is not a meaningful trend indicator for us.

Although we manufacture and inventory standardized products, a portion of our products are produced to meet specific customer requirements. Cancellations by customers of orders already in production could have an impact on inventories. Historically, however, cancellations have not been significant.

Competition

The capacitor industry, and the electronic industry in general, is characterized by a competitive and growing market environment. Competitive factors influencing the market for our products include: product quality, customer service, technical innovation, pricing, and timely delivery. We believe we compete favorably based on each of these factors. Additionally, we believe our strategic focus positions KEMET well in specific markets within the capacitor industry, aligns with our core competencies, and allows us to focus on growth and higher profitability markets.

Our major global competitors in the passive electronic component industry include AVX Corporation, Panasonic Corporation, Murata Manufacturing Co., Ltd., Samsung Electro-Mechanics Co. LTD., Taiyo Yuden Co., Ltd., TDK-EPC Corporation, Yageo Corporation, Walsin Technology Corporation, LTD., Vishay Intertechnology, Inc. (“Vishay”), Xiamen Faratronic Co. LTD., Hitachi High-Technologies Corp., Nippon Chemi-Con Corp., Nichicon Corp., and Rubycon Corporation.

We believe the Company's strategic shift over the last few years to more customized, design-in, and high reliability solutions has given it a unique competitive position in the market place and enhanced its durability of revenue base. In the highly commoditized multi layered ceramic capacitor market, KEMET focuses primarily on the large case sizes capacitors and the growing automotive market segment offering niche products required in high temperature, vibration, and voltage environments.

Raw Materials

The principal raw materials used in the manufacture of our products are tantalum powder, tantalum ore, barium titanate, calcium zirconate, rare earth oxides, palladium, aluminum, silver, copper, nickel and tin. These materials are considered commodities and are subject to price volatility. Additionally, any delays in obtaining raw materials for our products could hinder our ability to manufacture our products, negatively impacting our competitive position and our relationships with our customers. KEMET is committed to partnerships and close relationships with key suppliers of the critical materials listed above. We also actively pursue sourcing from multiple manufacturing sites of current suppliers, as well as second sourcing of critical raw materials to mitigate the risk of supply discontinuity in case of unforeseen geo-political events or natural disasters.

Tantalum is mined principally in the Democratic Republic of Congo, Australia, Brazil, Canada, Ethiopia, Nigeria, and Rwanda. As a result of our tantalum vertical integration program which began in fiscal year 2012, we have reduced our exposure to price volatility and supply uncertainty in the tantalum supply chain. Our tantalum ore supply requirements are now met through our direct sourcing partners of conflict free tantalum, which is then processed into the intermediate product potassium heptafluorotantalate (commonly known as K-salt) at our own facility in Mexico or at third party locations, before final processing into tantalum powder at KBP operations in ~~Carson City, Nevada or~~ Matamoros, Mexico. ~~Price~~However, price increases for tantalum ore, or for the remaining tantalum powder that we source from third parties, could impact our financial performance as we may not be able to pass all such price increases on to our customers. We ~~estimate~~believe that our vertical integration strategy ~~has~~continues ~~created~~to ~~$50~~keep our tantalum costs the lowest among our competitors.0 ~~million~~This ofenables ~~cost~~us ~~savings~~to ~~per~~avoid ~~year~~large fluctuations in selling prices for tantalum products when the market price for tantalum ore fluctuates.

Silver and aluminum have generally been available in sufficient quantities, and we believe there are enough suppliers from which we can purchase our requirements. An increase in the price of silver and aluminum that we are unable to pass on to our customers, could, however, have an adverse effect on our profitability.

Patents and Trademarks

As of March 31, 2020, we held the following number of patents and trademarks:

	Patents	Trademarks
United States	~~323~~339	1720
Foreign	1,~~025~~019	~~260~~254

Many of our patents and trademarks were obtained as part of the TOKIN acquisition. We believe the success of our business is not materially dependent on the existence or duration of any individual patent, license, or trademark other than the trademarks “KEMET,” “KEMET Charged,” and "TOKIN". Our engineering and research and development staffs have developed and continue to develop proprietary manufacturing processes and equipment designed to enhance our manufacturing facilities and reduce costs.11

We believe the success of our business is not materially dependent on the existence or duration of any individual patent, license, or trademark other than the trademarks “KEMET,” “KEMET Charged,” and "TOKIN". Our engineering and research and development staffs have developed and continue to develop proprietary manufacturing processes and equipment designed to enhance our manufacturing facilities and reduce costs.

Segment Reporting

We are organized into three reportable segments: Solid Capacitors, Film and Electrolytic and ~~Electro-Magnetic, Sensors, and Actuators~~MSA. Each reportable segment is responsible for the operations of certain manufacturing sites as well as all related research and development efforts. The sales, marketing and corporate functions are shared by each of the segments. See Note 78, “Reportable Segment and Geographic Information” to our Consolidated Financial Statements for other information regarding the Company's reportable segments, including net sales, operating income, total assets, and financial information about geographic areas.

Solid Capacitors Reportable Segment

Solid Capacitors operates in ~~ten~~nine manufacturing sites in the United States, Mexico and Asia and operates innovation centers in the United States and Japan. Solid Capacitors primarily produces tantalum, aluminum, polymer and ceramic capacitors which are sold globally. Solid Capacitors also produces tantalum powder used in the production of tantalum capacitors. Solid Capacitors employs approximately 86,~~000~~600 employees worldwide. For fiscal years ~~2019~~2020, ~~2018~~2019 and ~~2017~~2018, Solid Capacitors had consolidated net sales of $~~935~~886.81 million, $~~771~~935.28 million and $~~575~~771.12 million, respectively.

We continue to make significant investments in tantalum production within Solid Capacitors and, based on net sales, we believe we are the largest tantalum capacitor manufacturer in the world. We believe we have one of the broadest lines of tantalum product offerings and are one of the leaders in the growing market for high-frequency low equivalent series resistance (“ESR”) surface mount tantalum and aluminum polymer capacitors.

We believe KBP, which we acquired in 2012, isto be among the largest production ~~facility~~facilities for tantalum powder in the western hemisphere. Since the acquisition of KBP, KEMET has been able to stabilize its tantalum powder costs and significantly improve its operating margin through its vertical integration efforts. The Company continues to streamline its vertical integration strategy and may take actions to improve the cost structure if the anticipated results are advantageous. The Company completed the process of relocating its tantalum powder facility equipment from Carson City, Nevada to its existing Matamoros, Mexico plant during fiscal year 2020.

11Our tantalum product line has a broad product portfolio with industry leading processes and materials technology, a global manufacturing base, and on-time delivery capabilities that allow us to serve a wide range of customers in a diverse group of end markets, including computing, telecommunications, consumer, medical, military, automotive, and general industries. KEMET is the market leader in polymer tantalum, with an estimated market share of approximately 50%.

~~improve~~Within ~~its~~our ~~operating~~ceramic ~~margin~~product ~~through~~line, ~~its~~we ~~vertical~~are ~~integration~~making ~~efforts.~~significant ~~The~~investments ~~Company~~to ~~continues~~support tofuture ~~streamline~~MLCC ~~its~~growth. ~~vertical~~KEMET ~~integration~~is ~~strategy~~a global and ~~may~~well ~~take~~known ~~actions~~MLCC tosupplier ~~improve~~in the ~~cost~~automotive, ~~structure~~industrial, ifmedical, energy, defense, and aerospace markets. Due to the ~~anticipated~~extended ~~results~~global shortage of ceramic capacitors that began in 2016, customers are ~~advantageous.~~looking to KEMET as a long-term stable MLCC supplier to support their growth. The Company ishas ~~currently~~entered ininto agreements with three of its largest customers pursuant to which the ~~process~~customers have agreed to provide interest free funds to the Company in exchange for assurance of ~~relocating~~future ~~its~~supply. ~~tantalum~~These ~~powder~~funds ~~facility~~are being used by the Company to fund the purchase of certain production equipment ~~from~~and ~~Carson~~to ~~City,~~make ~~Nevada~~other investments and improvements in the Company and its operations in order to increase its ~~existing~~overall ~~Matamoros,~~capacity ~~Mexico~~to ~~plant~~produce various electronic components. We are continuing to work with many of our other customers to help them secure future MLCC supply.

Our tantalum product line has a broad product portfolio with industry leading processes and materials technology, a global manufacturing base, and on-time delivery capabilities that allow us to serve a wide range of customers in a diverse group of end markets, including computing, telecommunications, consumer, medical, military, automotive, and general industries. KEMET is a market leader in Polymer Tantalum, with an estimated market share of greater than 50.0%.

Within our ceramic product line, we are making significant investments to support future MLCC growth. KEMET is a global and well known MLCC supplier in the automotive, industrial, medical, energy, defense and aerospace markets. Due to the extended global shortage of ceramic capacitors that began in 2016, customers are looking to KEMET as a long-term stable MLCC supplier to support their growth. The Company has entered into agreements with three of its largest customers pursuant to which the customers have agreed to provide interest free loans to the Company in exchange for assurance of future supply. These interest free loans are being used by the Company to fund the purchase of certain production equipment and to make other investments and improvements in the Company and its operations in order to increase its overall capacity to produce various electronic components. We are continuing to work with many of our other customers to help them secure future MLCC supply.

Our ceramic product line offers an extensive line of MLCC's in a variety of sizes and configurations. Our high voltage, high temperature and ultra-stable dielectric technology provides us with what we believe to be a significant advantage over many of our competitors, particularly in the high reliability markets mentioned. We are increasing investments in research and development to extend our current portfolio, as well as to be able to offer more effective high-density packaging solutions for connecting multiple components. We are also working with our customers to design-in our products with a focus on the growing automotive segment.

Film and Electrolytic Reportable Segment

Our Film and Electrolytic ~~Reportable~~reportable ~~Segment~~segment produces film, paper and wet aluminum electrolytic capacitors. In addition, the segment designs and produces electromagnetic interference filters ("EMI filters"). Film capacitors can be used for applications requiring high power and high voltages, whereas aluminum electrolytic capacitors can be used for applications requiring high energy at a reasonable price. EMI filters consist of capacitive and inductive elements that reduce electromagnetic disturbance in the frequency range desired. We believe we are one of the world’s largest suppliers of film capacitors and one of the leaders in wet aluminum electrolytic capacitors. Both product families serve industrial and automotive customers, and in particular, the emerging market for alternative energy and electrical vehicles. For fiscal years 2019, 2018, and 2017, our Film and Electrolytic segment had consolidated net sales of $206.2 million, $202.0 million, and $182.2 million, respectively. Our Film and Electrolytic business is mostly concentrated in Europe, and as such, is impacted by the change in the exchange rate for the Euro to the U.S. dollar.

Our Film and Electrolytic Reportable Segment primarily serves the industrial and automotive markets. We believe our Film and Electrolytic Segment’s product portfolio, technology and experience allow us to significantly benefit from the continued growth in alternative energy solutions and energy efficiency solutions within both the automotive and industrial markets especially for demanding applications such as humidity, temperature, voltage, etc. We operate nine manufacturing sites throughout Europe and Asia and maintain product innovation centers in Italy, Portugal and Sweden. Our Film and Electrolytic Segment employs approximately 1,750 employees worldwide.

The Company is in the process of relocating axial electrolytic production from Granna, Sweden to its plant in Evora, Portugal. The Company is streamlining its manufacturing operations for axial electrolytic capacitors with this relocation, allowing the Company to increase flexibility, capabilities, and competitiveness in the marketplace.

Electro-Magnetic, Sensors, and Actuators Reportable Segment

MSA operates in four manufacturing sites throughout Asia and operates a product innovation center in Japan. MSA was a new reportable segment for KEMET in fiscal year 2018 resulting from the acquisition of TOKIN in April 2017. MSA primarily produces EMC materials and devices, piezo materials and actuators and various types of sensors which are sold globally. For fiscal years 2019 and 2018, our MSA Segment had consolidated net sales of $240.7 million and $227.0 million, respectively. MSA is aiming to sell products globally. Currently, most of MSA's net sales come from Japan, Korea, and other countries in Asia. Our MSA segment employs approximately 3,000 employees worldwide.

~~quality~~particular, ofthe ~~electronic~~emerging ~~signals~~market ~~becomes~~for ~~key~~alternative toenergy ~~the~~and ~~integrity~~electrical ofvehicles. ~~the~~For ~~information~~fiscal ~~being~~years ~~communicated.~~2020, ~~EMC~~2019, ~~products~~and ~~play~~2018, aour ~~key~~Film ~~role~~and inElectrolytic ~~maintaining~~segment ~~signal~~had ~~integrity~~consolidated ~~across~~net asales ~~number~~ of ~~end-markets~~$175.8 ~~including~~million, ~~telecommunications~~$206.2 million, ~~mobile~~and ~~computing~~$202.0 million, ~~automotive~~respectively. Our Film and ~~general~~Electrolytic ~~industries~~business is mostly concentrated in Europe and, as such, is impacted by changes in the exchange rate for the Euro to the U.S. dollar.

~~The~~Our ~~sensor~~Film and ~~actuator~~Electrolytic ~~product~~reportable ~~line~~segment ~~manufactures~~primarily ~~products~~serves ~~that~~the ~~sense~~industrial and ~~respond~~automotive tomarkets. ~~human~~We ~~activity,~~believe ~~physical~~our ~~vibration~~Film and Electrolytic Segment’s product portfolio, technology and ~~electric~~experience ~~current.~~allow ~~These~~us ~~products~~to ~~are~~significantly ~~found~~benefit infrom ~~home~~the ~~appliances,~~continued ~~consumer~~growth ~~devices,~~in alternative energy solutions and ~~industrial~~energy ~~electrical~~efficiency ~~equipment.~~solutions Inwithin ~~addition,~~both wethe ~~manufacture~~automotive ~~electromechanical~~and ~~actuation~~industrial ~~devices~~markets ~~that~~especially ~~are~~for ~~critical~~demanding toapplications ~~the~~such ~~manufacture~~as ofhumidity, ~~semiconductor~~temperature, ~~devices~~voltage, ~~and~~etc. ~~the~~We ~~management~~operate ofeight ~~industrial~~manufacturing sites throughout Europe and ~~chemical~~Asia ~~gas~~and ~~flow.~~maintain ~~Sensors~~product ~~are~~innovation ancenters ~~important~~in ~~family~~Italy ofand ~~devices~~Portugal. asOur ~~the~~Film ~~“internet-of-things”~~and ~~continues~~Electrolytic toSegment ~~permeate~~employs ~~everyday~~approximately ~~life~~1,650 employees worldwide.

~~Environmental~~The Company completed the process of relocating axial electrolytic production from Granna, Sweden to its plant in Evora, Portugal during fiscal year 2020, which is expected to increase flexibility, capabilities, and ~~Regulatory~~competitiveness ~~Compliance~~in the marketplace.

~~We are subject to various North American~~Electro-Magnetic, ~~European~~Sensors, and ~~Asian~~Actuators ~~national,~~Reportable state, and local environmental laws and regulations relating to the protection of the environment, including those governing the handling and management of certain chemicals and materials used and generated in the manufacturing of electronic components. We do not believe compliance with these laws and regulations will have a material adverse effect on our capital expenditures, earnings, or competitive position. However, we believe it is reasonably likely the trend in environmental litigation, laws, and regulations will continue to move toward stricter standards. Such changes in the laws and regulations may require us to make additional capital expenditures which, while not currently estimable with certainty, are not presently expected to have a material adverse effect on our financial condition.Segment

MSA Weoperates ~~are~~in ~~strongly~~four ~~committed~~manufacturing tosites ~~economic,~~throughout ~~environmental,~~Asia and ~~socially~~operates ~~sustainable development. As~~ a ~~result~~product ofinnovation ~~this~~center ~~commitment,~~ in ~~2008~~Japan. weMSA ~~adopted~~primarily ~~the~~produces ~~Electronic~~EMC ~~Industry~~materials ~~Citizenship~~and ~~Coalition~~devices, ~~(“EICC”)~~piezo ~~Code~~materials ofand ~~Conduct~~actuators, ~~now~~and ~~titled~~various ~~Responsible~~types ~~Business~~of ~~Alliance~~sensors ~~("RBA")~~which ~~Code~~are ofsold ~~Conduct~~globally. ~~The~~For ~~RBA~~fiscal ~~Code~~years of2020, ~~Conduct~~2019, isand a2018, ~~comprehensive~~our ~~code~~MSA ofSegment ~~conduct~~had ~~that~~consolidated ~~addresses~~net ~~all~~sales ~~aspects~~ of ~~corporate~~$198.7 ~~responsibility~~million, ~~including~~$240.7 ~~labor~~million, ~~health~~ and ~~safety,~~$227.0 ~~the environment~~million, ~~business~~respectively. ~~ethics~~Currently, ~~and~~most ~~related~~of ~~management~~MSA's ~~system~~net ~~elements.~~sales Itcome ~~outlines~~from ~~standards~~Japan, toKorea, ~~ensure~~and ~~working~~other ~~conditions~~countries in ~~the electronic industry supply chain are safe~~Asia, ~~free~~however ~~from~~MSA ~~slavery~~aims ~~and~~to ~~human~~sell ~~trafficking,~~products ~~workers~~globally. ~~are~~Our ~~treated~~MSA ~~with~~segment ~~respect~~employs ~~and~~approximately ~~dignity~~2,750 ~~manufacturing~~employees ~~processes are environmentally sustainable, materials are sourced responsibly, and business operations are conducted ethically~~worldwide.

The EMC device product line offers a broad line of electrical noise management products. As circuits become more complex within a device, and the amount of information being communicated between devices increases at a dramatic rate, the quality of electronic signals becomes key to the integrity of the information being communicated. In addition, power efficiency is a critical component of electronic devices, and with increased switching frequencies, our power inductors enable stable inductance at high currents. Our EMC and power solution products play a key role across a number of end-markets including telecommunications, mobile computing, automotive, and general industries. In addition, our electro-magnets are used in particle accelerators and in our super elastic alloy (memoalloy), which are used in guide wires in the medical field. These many offerings and uses showcase out ability to customize our materials to the needs of our customers.

The sensor and actuator product line manufactures products that sense and respond to human activity, physical vibration, temperature change, and electric current. These products are found in home appliances, consumer devices, and industrial electrical equipment. Sensors are an important family of devices as the “internet-of-things” continues to permeate everyday life. Furthermore, we manufacture electromechanical actuation devices that are critical to the manufacture of semiconductor devices, the management of industrial and chemical gas flow, ultrasonic transducers, and in medical or scientific equipment where precise position control is of the utmost importance.

Corporate Sustainability and Risk Management

We are subject to various North American, European, and Asian national, state, and local environmental laws and regulations relating to the protection of the environment, including those governing the handling and management of certain chemicals and materials used and generated in the manufacturing of electronic components. We recognize an increasing number of laws and regulations, including stakeholder expectations related to climate change. In 2019, we integrated climate change into our risk management strategy to help identify and evaluate potential risks. We do not believe compliance with these laws and regulations, or stakeholder expectations, will have a material adverse effect on our capital expenditures, earnings, or competitive position. However, we believe it is reasonably likely the trend in environmental litigation, laws, and regulations will continue to move toward stricter standards. Such changes in the laws and regulations may require us to make additional capital expenditures which, while not currently estimable with certainty, are not presently expected to have a material adverse effect on our financial condition.

We are strongly committed to economic, environmental, and socially sustainable development. As a result of this commitment, in 2008 we adopted the Responsible Business Alliance ("RBA") Code of Conduct. The RBA Code of Conduct is a comprehensive code of conduct that addresses all aspects of corporate responsibility including labor, health and safety, the environment, business ethics, and related management system elements. It outlines standards to ensure working conditions in the electronic industry supply chain are safe, free from slavery and human trafficking, workers are treated with respect and dignity, manufacturing processes are environmentally sustainable, materials are sourced responsibly, and business operations are conducted ethically.

Policies, programs, and procedures implemented throughout KEMET are intended to ensure conformity with applicable legal and regulatory requirements, the content of the RBA Code of Conduct, and customer contractual requirements related to social and environmental responsibility.

We fully support the position of the RBA, the Responsible Minerals Initiative ("RMI"), and the Tantalum-Niobium International Study Center (“TIC”) in avoiding the use of conflict minerals which directly or indirectly finance or benefit armed groups in the Democratic Republic of Congo and its adjoining countries, or in any region determined to be a conflict affected and high-risk area. In furtherance of this support, we have utilized the Organisation for Economic Co-operation and Development (“OECD”) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas as the foundation for KEMET's supply chain policy by implementing the five-step risk-based framework due diligence in our mineral supply chain. This supply chain policy and requirement has been communicated to all suppliers of conflict minerals and is communicated publicly on our website. Our tantalum supply base has been and continues to be validated as conformant to the RMI's Responsible Minerals Assurance Program ("RMAP"). We will continue to work through the RMI and TIC towards the goal of greater transparency in the supply chain.

In ~~April~~May ~~2019~~2020, KEMET published its ~~first~~second Corporate Sustainability Report (“CSR”), outlining its commitment towards the environment, its employees, and the communities within which it operates. This second CSR highlights the environmental, social, and governance topics deemed most material to the Company, and emphasizes risk management and disclosures of third-party assessments of KEMET in these areas.

Summary of Activities to Develop a Transparent Supply Chain

We are actively involved in developing a transparent supply chain through our membership in the RMI. We were a member of the EICC Global e-Sustainability Initiative (“GeSI”) working group that developed the original Conflict Free Sourcing Program assessment protocols and we participated in the pilot implementation phase of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. We participate in smelter engagement to increase the number of conflict-free validated smelters globally, the development of due diligence guidance documents and the advancement of the industry adopted RMI Conflict Minerals Reporting Template. We rely on the RMAP independent third-party audits to supplement our internal due diligence of conflict mineral suppliers and are monitoring the progress of these audits to ensure our supply chain is conflict free. We fully support Section 1502 “Conflict Minerals” of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ~~and are complying with all reporting requirements~~.

Global Code of Conduct and Mission, Vision and Values

KEMET maintains a Global Code of Conduct (“Code of Conduct”), which became effective August 1, 2010 and updated on May 16, 2019, as well as mission (“Mission”), vision (“Vision”) and values (“Values”) statements along with a set of core values, which became effective in June 2011. KEMET’s Mission is to help make the world a better, safer, more connected place to live. KEMET’s Vision is to be the world’s most trusted partner for innovative component solutions. KEMET’s Values ~~embody~~are the ~~key~~keys ~~expectations~~to ofour ~~how~~success, and they are: a belief in the passion, skills, and engagement of our employees; ~~should~~supporting ~~approach~~each ~~the~~other ~~work~~with ~~they~~no doself-interest ~~every~~and ~~day:~~no politics; a One KEMET, ~~Unparalleled~~global ~~Customer~~team ~~Experience,~~valuing ~~Ethics~~diversity and ~~Integrity~~inclusion; ethics, ~~Talent Oriented~~integrity, Noand ~~Politics~~the courage to always do the right thing; energetic responsiveness and an unparalleled customer experience; materials innovation and breakthrough technology leveraging sustainable material science; delivering sustainable, ~~The~~profitable ~~Math~~growth; ~~Must~~and ~~Work~~a commitment to protecting human health, safety, and ~~Speed~~natural resources. The Code of Conduct and Mission, Vision and Values are applicable to all employees, officers, and directors of the Company. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from a provision of our Code of Conduct, Mission, Vision and Values by posting such information on our website at http://www.kemet.com.

In ~~April~~May ~~2019~~2020, the Company published its ~~first~~second CSR, outlining its environmental and social commitments towards ~~all of~~ its stakeholders. Sustainability has been a large part of KEMET's culture for many years, and the ~~new~~ report demonstrates to all stakeholders the Company's policy of conducting business in a responsible way. Sustainability is integrated throughout KEMET's global operations, and the Company has implemented programs worldwide in support of the policy. The CSR highlights these programs, which includes the RBA Code of Conduct, as well as yearly submissions of data to the Carbon Disclosure Project. KEMET's fiscal year 2019 Carbon Disclosure Project data was made public for the first time during fiscal year 2020. Our Carbon Disclosure Project scores were released in our latest CSR.

KEMET supports the Kisengo Foundation and certain other charitable endeavors in the Democratic Republic of Congo with periodic monetary donations. Funds have been used toward building and supporting a new hospital and school as well as the installation of ~~fresh~~freshwater ~~water~~ wells, solar street lighting, infrastructure improvements and a micro-agriculture project.

Employees

We have approximately 12,450 employees as of March 31, 2020 in the following locations:

Asia	5,~~700~~100
Mexico	54,~~600~~500
Europe	1,~~500~~450
Japan and Korea	~~900~~800
United States	~~650~~600

The number of KEMET employees represented by labor organizations in each of the following countries are shown in the table below. Due to the General Data Protection Regulation (“GDPR”) that became effective in May 2018 in the European Union, the Company is not permitted to identify employees represented by labor unions in countries that are part of the European Union.

Mexico	32,~~737~~939
China	2,~~511~~310
Vietnam	1,~~390~~260
Japan	~~633~~586
Indonesia	~~319~~229
United States	1411
Taiwan	11

In fiscal year ~~2019~~2020, we did not experience any major work stoppages due to labor related issues. Our labor costs in Mexico, Asia and various locations in Europe are denominated in local currencies, and a significant depreciation or appreciation of the United States dollar against the local currencies would increase or decrease our labor costs.

Securities Exchange Act of 1934 (“Exchange Act”) Reports

We maintain an Internet website at the following address: http://www.kemet.com. KEMET makes available on or through our Internet website certain reports and amendments to those reports filed or furnished to the Securities and Exchange Commission (“SEC”) pursuant to Section 13(a) or 15(d) of the Exchange Act. These include annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and beneficial ownership reports on Forms 3, 4 and 5. This information is available on our website free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC.

ITEM 1A. RISK FACTORS.

This report contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from those expressed in, or implied by, our forward-looking statements. Words such as “expects,” “anticipates,” “believes,” “estimates” or other similar expressions and future or conditional verbs such as “will,” “should,” “would” and “could” are intended to identify such forward-looking statements. Readers of this report should not rely solely on the forward-looking statements and should consider all uncertainties and risks throughout this report. The statements are representative only as of the date they are made, and we undertake no obligation to update any forward-looking statement.

All forward-looking statements, by their nature, are subject to risks and uncertainties. Our actual future results may differ materially from those set forth in our forward-looking statements. We face risks that are inherent in the businesses and the market places in which we operate. While management believes these forward-looking statements are accurate and reasonable, uncertainties, risks and factors, including those described below, could cause actual results to differ materially from those reflected in the forward-looking statements.

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~~the ~~economic~~failure ~~conditions could impact our ability~~ to ~~realize~~complete ~~operating plans if~~ the ~~demand~~Merger ~~for our products declines,~~ and ~~such conditions could adversely affect our liquidity and ability to continue to operate and could cause a write down of long-lived assets or goodwill; (ii) an increase in~~ the ~~cost~~effects orsuch afailure ~~decrease~~would inhave ~~the~~on ~~availability of our principal or single-sourced purchased raw materials; (iii) changes in~~ the competitive environment; (iv) uncertainty of the timing of customer product qualifications in heavily regulated industries; (v) economic, political, or regulatory changes in the countries in which we operate; (vi) difficulties, delays, or unexpected costs in completing the Company’'s ~~restructuring~~financial ~~plans;~~condition ~~(vii) acquisitions~~ and ~~other~~results ~~strategic transactions expose us to a variety~~ of ~~risks~~operations, ~~including the ability to successfully integrate and maintain adequate internal controls over financial reporting in compliance with applicable regulations;~~ (~~viii~~ii) ~~our~~certain ~~acquisition of TOKIN Corporation may not achieve all of the anticipated results; (ix) our~~ business ~~could~~uncertainties ~~be negatively impacted by increased regulatory scrutiny~~ and ~~litigation;~~contractual ~~(x)~~restrictions ~~difficulties~~related ~~associated with retaining, attracting, and training effective employees and management; (xi) the need~~ to ~~develop innovative products to maintain customer relationships and offset potential price erosion in older products; (xii) exposure to claims alleging product defects; (xiii)~~ the ~~impact~~pendency of ~~laws and regulations that apply to our business, including those relating to environmental matters, data protection, cyber security and privacy; (xiv)~~ the ~~impact of international laws relating to trade~~Merger, ~~export controls and foreign corrupt practices;~~ (xviii) ~~changes impacting international trade and corporate tax provisions related to the global manufacturing and sales of~~ our ~~products~~inability ~~may have an adverse effect on our financial condition and results of operations; (xvi) volatility of financial and credit markets affecting our access~~ to ~~capital;~~pursue ~~(xvii)~~alternatives ~~default or failure of one or more of our counterparty financial institutions could cause us~~ to ~~incur significant losses; (xviii)~~ the ~~need~~Merger toduring ~~reduce~~ the ~~total~~pendency ~~costs~~ of ~~our products to remain competitive; (xix) potential limitation on~~ the ~~use~~Merger, ~~of net operating losses to offset possible future taxable income;~~ (xxiv) ~~restrictions~~adverse ineconomic ~~our~~conditions ~~debt agreements that~~ could ~~limit~~impact our ~~flexibility~~ability ~~in operating our business; (xxi) failure~~ to ~~maintain~~realize ~~effective~~operating ~~internal~~plans ~~controls~~if ~~over~~the ~~financial~~demand ~~reporting;~~for ~~(xxii)~~our ~~service~~products ~~interruption~~declines, ~~misappropriation~~and ofsuch ~~data,~~conditions ~~or breaches of security as it relates to our information systems~~ could ~~cause~~adversely aaffect ~~disruption in~~ our ~~operations,~~liquidity ~~financial losses,~~ and ~~damage~~ability to ~~our~~continue ~~reputation;~~to ~~(xxiii)~~operate ~~economic~~ and ~~demographic~~could ~~experience~~cause ~~for~~a ~~pension~~write ~~and~~down ~~other~~of ~~post~~long-~~retirement~~lived ~~benefit~~assets ~~plans~~or ~~could be less favorable than our assumptions~~goodwill; (~~xxiv~~v) ~~fluctuation~~an increase in ~~distributor~~the ~~sales~~cost ~~could~~or ~~adversely affect our results of operations; (xxv) earthquakes and other natural disasters could disrupt our operations and have~~ a ~~material~~decrease ~~adverse effect on our financial condition and results of operations; and (xxvi) volatility~~ in ~~our~~the ~~stock price.~~

availability of our principal or single-sourced purchased raw materials; (vi) changes in the competitive environment; (vii) uncertainty of the timing of customer product qualifications in heavily regulated industries; (viii) economic, political, or regulatory changes in the countries in which we operate; (ix) difficulties, delays, or unexpected costs in completing the Company’s restructuring plans; (x) acquisitions and other strategic transactions expose us to a variety of risks, including the ability to successfully integrate and maintain adequate internal controls over financial reporting in compliance with applicable regulations; (xi) our business could be negatively impacted by increased regulatory scrutiny and litigation; (xii) difficulties associated with retaining, attracting, and training effective employees and management; (xiii) the need to develop innovative products to maintain customer relationships and offset potential price erosion in older products; (xiv) exposure to claims alleging product defects; (xv) the impact of laws and regulations that apply to our business, including those relating to environmental matters, data protection, cyber security and privacy; (xvi) the impact of international laws relating to trade, export controls and foreign corrupt practices; (xvii) changes impacting international trade and corporate tax provisions related to the global manufacturing and sales of our products may have an adverse effect on our financial condition and results of operations; (xviii) volatility of financial and credit markets affecting our access to capital; (xix) default or failure of one or more of our counterparty financial institutions could cause us to incur significant losses; (xx) the need to reduce the total costs of our products to remain competitive; (xxi) potential limitation on the use of net operating losses to offset possible future taxable income; (xxii) restrictions in our debt agreements that could limit our flexibility in operating our business; (xxiii) failure to maintain effective internal controls over financial reporting; (xxiv) service interruption, misappropriation of data, or breaches of security as it relates to our information systems could cause a disruption in our operations, financial losses, and damage to our reputation; (xxv) economic and demographic experience for pension and other post-retirement benefit plans could be less favorable than our assumptions; (xxvi) fluctuation in distributor sales could adversely affect our results of operations; (xxvii) earthquakes, natural disasters, and climate change could disrupt our operations and have a material adverse effect on our financial condition and results of operations; (xxviii) global health epidemics such as the coronavirus could materially affect our business, financial condition, and results of operations; and (xxix) volatility in our stock price.

Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations and could cause actual results to differ materially from those included, contemplated or implied by the forward-looking statements made in this report, and the reader should not consider the above list of factors to be a complete set of all potential risks or uncertainties.

Completion of the merger with Yageo Corporation is subject to the satisfaction of certain conditions, including regulatory and stockholder approvals, if required, and there can be no assurances as to whether and when it may be completed.

Completion of the Merger is subject to conditions beyond our control that may prevent, delay or otherwise adversely affect its completion in a material way. For example, the Merger cannot be consummated until, among other things, the approval required from the Investment Commission, Ministry of Economic Affairs, Taiwan. Likewise, completion of the Merger is subject to (i) the approval of Yageo’s stockholders, if required by law, (ii) the absence of any applicable restraining order or injunction prohibiting the Merger, and, (iii) in the case of Yageo’s obligations to complete the Merger, there not having been any “material adverse effect.”

We can provide no assurance that all required consents and approvals will be obtained or that all closing conditions will otherwise be satisfied (or waived, if applicable), and, if all required consents and approvals are obtained and all closing conditions are satisfied (or waived, if applicable), we can provide no assurance as to the terms, conditions and timing of such consents and approvals or the timing of the completion of the Merger. Many of the conditions to completion of the Merger are not within either our or Yageo’s control, and neither company can predict when or if these conditions will be satisfied (or waived, if applicable). Any delay in completing the Merger could cause us not to realize some or all of the benefits that we expect to achieve if the Merger is successfully completed within its expected timeframe.

Failure to complete the Merger could negatively impact our stock price and our future business and financial results.

If the Merger is not completed for any reason, our ongoing business may be adversely affected and, without realizing any of the benefits of having completed the Merger, we would be subject to a number of risks, including the following:


•	we may experience negative reactions from the financial markets, including negative impacts on our stock price;


•	we may experience negative reactions from our customers, vendors and employees;


•	we may be required to pay Yageo a termination fee of $63.8 million if the Agreement is terminated under certain circumstances, including if we accept a Superior Proposal (as defined in the Agreement);


•	we will have incurred substantial expenses and will be required to pay certain costs relating to the Merger, including legal, accounting, investment banking and advisory fees, whether or not the Merger is completed;


•	we will have been bound by certain restrictions on the conduct of our business prior to completion of the Merger, the waiver of which is subject to the consent of Yageo, which may prevent us from making certain acquisitions or taking certain other specified actions during the pendency of the Merger; and


•	our management team will have devoted substantial time and resources to matters relating to the Merger (including integration planning), and would otherwise have devoted their time and resources to other opportunities that may have been beneficial to us as an independent company.

We will be subject to business uncertainties and contractual restrictions while the Merger is pending, which could adversely affect our business.

Uncertainty about the effect of the Merger on our employees and officers may have an adverse effect on the Company. These uncertainties may impair our ability to attract, retain and motivate key personnel until the Merger is completed and for a period of time thereafter, as employees and officers may experience uncertainty about their future roles. Additionally, the pendency of the Merger could cause those that deal with us to delay or defer certain business decisions, seek to terminate, change or renegotiate their relationships with us or seek alternative relationships with others.

In addition, the Agreement generally requires us to, and to cause our subsidiaries to, subject to specified exceptions, conduct our business in the ordinary course and use reasonable efforts to maintain and preserve intact our respective business organizations, employees and key business relationships. These restrictions could prevent us from pursuing certain business opportunities that arise prior to the effective time of the Merger and are outside the ordinary course of business. Under the Agreement we also are subject to certain specific restrictions on our corporate and business activity during the pendency of the Merger, including without limitation the ability in certain cases to enter into or amend contracts, dispose of assets, incur indebtedness, pay dividends, incur capital expenditures or settle claims. Such limitations could adversely affect our business and operations prior to completion of the Merger.

The Agreement limits our ability to pursue alternatives to the Merger and may discourage other companies from trying to acquire us.

The Agreement contains a non-solicitation covenant that makes it more difficult for the Company to be acquired by, or enter into certain combination transactions with, a third party. Such non-solicitation covenant, subject to certain limitations, restricts our ability to, directly or indirectly, solicit, initiate or knowingly encourage any inquiry, discussion, offer or request any proposal to enter into an alternative transaction, or to engage or participate in any negotiations or discussions or enter into certain agreements in furtherance of an alternative transaction. These provisions could discourage a potential third-party acquirer or merger partner that might have an interest in acquiring or combining with all or a significant portion of the Company or pursuing an alternative transaction from considering or proposing such a transaction.

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 and could cause the write down of long-lived assets or goodwill.

While our operating plans provide for cash generated from operations to be sufficient to cover our future operating requirements, many factors, including reduced demand for our products, currency exchange rate fluctuations, increased raw material costs, and other adverse market conditions we cannot predict could cause a shortfall in net cash generated from operations. As an example, the electronics industry is a cyclical industry with demand for capacitors reflecting the demand for products in the electronics market. Customers’ requirements for our capacitors fluctuate as a result of changes in general economic activity and other factors affecting the demand for their end-products. During periods of increasing demand for their products, they typically seek to increase their inventory of our products to avoid production bottlenecks. When demand for their products peaks and begins to decline, they may rapidly decrease orders for our products while they use accumulated inventory. Business cycles vary somewhat in different geographical regions, such as Asia, and within customer industries. We are also vulnerable to general economic events beyond our control and our sales and profits may suffer in periods of weak demand.

products peaks and begins to decline, they may rapidly decrease orders for our products while they use accumulated inventory. Business cycles vary somewhat in different geographical regions, such as Asia, and within customer industries. We are also vulnerable to general economic events beyond our control and our sales and profits may suffer in periods of weak demand.

Our ability to realize operating plans is also dependent upon meeting our payment obligations. If cash generated from operating, investing and financing activities is insufficient to pay for operating requirements and to cover interest payment obligations under debt instruments, planned operating and capital expenditures may need to be reduced.

Additionally, long-lived assets and intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of a long-lived asset or group of assets may not be recoverable. Also, goodwill is reviewed for impairment annually and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. In the event the tests show the carrying value of certain long-lived assets, intangible assets, or goodwill are impaired, we would be required to take anadditional impairment ~~charge~~charges to earnings under U.S. ~~generally accepted accounting principles. However, such a charge would have no direct effect on our cash. If the economic conditions decline we could incur impairment charges in the future.~~

generally accepted accounting principles. However, such charges would have no direct effect on our cash. If the economic conditions decline we could incur additional impairment charges in the future.

An increase in the cost or decrease in the availability of our principal or single-sourced purchased raw materials could adversely affect profitability.

The principal raw materials used in the manufacture of our products include tantalum powder, tantalum ore, palladium, aluminum, silver, copper, nickel and tin. These materials are considered commodities and are subject to price volatility. Additionally, any delays in obtaining raw materials for our products could hinder our ability to manufacture our products, negatively impacting our competitive position and our relationships with our customers.

Changes in the competitive environment could harm our business.

The capacitor business is competitive worldwide, with low transportation costs and few import barriers. Competition is based on factors such as product quality and reliability, availability, customer service, technical innovation, timely delivery and price. The industry has become increasingly consolidated and global in recent years, and our primary U.S. and non-U.S. competitors, some of which are larger than us, have significant financial resources. The greater financial resources of such competitors may enable them to commit larger amounts of capital in response to changing market conditions. Some competitors may also have the ability to use profits from other operations to subsidize losses sustained in their businesses with which we compete. Certain competitors may also develop product or service innovations that could put us at a disadvantage.

Uncertainty of the timing of customer product qualifications in heavily regulated industries could affect the timing of product revenues and profitability arising from these industries.

Our capacitors are incorporated into products used in diverse industries. Certain of these industries, such as military, aerospace and medical, are heavily regulated, with long and sometimes unpredictable product approval and qualification processes. Due to such regulatory compliance issues, there can be no assurances as to the timing of product revenues and profitability arising from our product development and sales efforts in these industries.

We manufacture many capacitors in Europe, Mexico and Asia and economic, political or regulatory changes in any of these regions could adversely affect our profitability.

Our international operations are subject to a number of special risks, in addition to the same risks as our domestic business. These risks include currency exchange rate fluctuations, differing protections of intellectual property, trade barriers, labor unrest, exchange controls, regional economic uncertainty, differing (and possibly more stringent) labor regulation, risk of governmental expropriation, domestic and foreign customs and tariffs, current and changing regulatory regimes, differences in the availability and terms of financing, political instability and potential increases in taxes. These factors could impact our production capability or adversely affect our results of operations or financial condition.

16We may experience difficulties, delays or unexpected costs in completing our restructuring plans and may not realize the expected benefits from our restructuring plans.

the availability and terms of financing, political instability and potential increases in taxes. These factors could impact our production capability or adversely affect our results of operations or financial condition.

We may experience difficulties, delays or unexpected costs in completing our restructuring plans and may not realize all of the expected benefits from our restructuring plans.

We may not realize, in full or in part, the anticipated benefits of our restructuring plans without encountering difficulties, which may include complications in the transfer of production knowledge, loss of key employees and/or customers, the disruption of ongoing business, possible inconsistencies in standards, controls and procedures and potential difficulty in meeting customer demand in the event the market dramatically improves. We are a party to collective bargaining agreements in certain jurisdictions in which we operate, which could potentially prevent or delay execution of parts of our restructuring plans.

Acquisitions and other strategic transactions expose us to a variety of operational and financial risks.

Our ability to realize the anticipated benefits of acquisitions depends, to a large extent, on our ability to integrate the acquired companies with our own. Our management devotes significant attention and resources to these efforts, which may disrupt the business of each of the companies involved and, if executed ineffectively, could preclude realization of the full benefits we expect. Failure to realize the anticipated benefits of our acquisitions could cause an interruption of, or a loss of momentum in, the operations of the acquired company. In addition, the efforts required to realize the benefits of our acquisitions may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer relationships, and the diversion of management’s attention, and may cause our stock price to decline.

Management is responsible for establishing and maintaining adequate internal control over financial reporting and failure to timely integrate acquired businesses into our Company’s operating and internal control structures may increase the risk of failure to prevent misstatements in their financial records and in our ~~consolidated~~Consolidated ~~financial~~Financial ~~statements~~Statements.

Additionally, we may finance acquisitions or future payments with cash from operations, additional indebtedness and/or the issuance of additional securities, any of which may impair the operation of our business or present additional risks, such as reduced liquidity or increased interest expense. Such acquisition financing could result in a decrease of our ratio of earnings to fixed charges. We may also seek to restructure our business in the future by disposing of certain of our assets, which may harm our future operating results, divert significant managerial attention from our operations and/or require us to accept non-cash consideration, the market value of which may fluctuate.

Furthermore, expansions or acquisitions into new geographic markets and services may require us to comply with new and unfamiliar legal and regulatory requirements, which could impose substantial obligations on us and our management, cause us to expend additional time and resources and increase our exposure to penalties or fines for non-compliance with such requirements. Failure to implement our acquisition strategy, including successfully integrating acquired businesses, could have an adverse effect on our business, financial condition and results of operations.

We may not realize the anticipated cross-selling synergies and revenue expansion expected to result from the acquisition of TOKIN and we may experience difficulties in integrating TOKIN’s business which may adversely affect our financial performance.

There can be no assurance we will realize the anticipated operating synergies, tax benefits and revenue expansion from the acquisition of TOKIN or we will not experience difficulties in integrating the operations of TOKIN with our operations. For example, the integration of TOKIN will require the experience and expertise of certain of our key managers and key managers of TOKIN. There can be no assurance, however, that these managers will remain with us for the time period necessary to successfully integrate the operations of TOKIN with our operations. In addition, the acquisition of TOKIN may present significant challenges for our management due to the increased time and resources required to properly integrate our management, employees, information systems, accounting controls, personnel and administrative functions with those of TOKIN and to manage the combined company on a going forward basis. There can be no assurance we will be able to successfully integrate and streamline overlapping functions or, if successfully accomplished, that such integration will not be more costly to accomplish than presently contemplated or that we will not encounter difficulties in managing the combined company due to its increased size and scope.

Furthermore, there can be no assurance that, as a combined company, we will continue to maintain all of the supplier and customer relationships we and TOKIN maintained as separate companies. As a combined company, we may encounter difficulties managing relationships with our suppliers and our customers due to our increased size and scope and to the increased number of relationships we will have with suppliers and customers.

We are currently subject to increased regulatory scrutiny and litigation that may negatively impact our business.

The growth of our Company and our expansion into a variety of new products expose us to a variety of new regulatory issues, and we have experienced increased regulatory scrutiny as we have grown. We are subject to various federal, foreign and state laws, including antitrust laws, violations of which can involve civil or criminal sanctions. Furthermore, as a result of our acquisition of TOKIN, we assumed all liabilities assessed against TOKIN that may arise as a result of litigation to which TOKIN is a party. Refer to “Item 3. Legal Proceedings” for a summary of the Company's material litigation and investigations. The impact of these proceedings could have a material adverse effect on our financial position, liquidity, and results of operations.

If we are unable to attract, train or retain key employees, management or a highly skilled and diverse workforce, it could have a negative impact on our business, financial condition or results of operations.

Our success depends upon the continued contributions of our executive officers and certain other employees, many of whom have many years of experience with us and would be extremely difficult to replace. We must also attract and retain experienced and highly skilled engineering, sales and marketing and managerial personnel. Competition for qualified personnel is intense in our industry, and we may not be successful in hiring and retaining these people. If we lost the services of our executive officers or our other highly qualified and experienced employees or cannot attract and retain other qualified personnel, our business could suffer through less effective management due to loss of accumulated knowledge of our business or through less successful products due to a reduced ability to design, manufacture and market our products.

We must continue to develop innovative products to maintain relationships with our customers and to offset potential price erosion in older products.

While most of the fundamental technologies used in the passive components industry have been available for a long time, the market is nonetheless characterized by rapid changes in product designs and technological advances allowing for better performance, smaller size and/or lower cost. New applications are frequently found for existing technologies, and new technologies occasionally replace existing technologies for some applications or create new business opportunities in other areas of application. We believe successful innovation is critical for avoiding product redundancy or obsolescence caused by changes in technology; for maintaining profitability to offset potential erosion of selling prices for existing products; and to ensure the flow of new products and robust manufacturing processes that will keep us at the forefront of our customers’ product designs. Non-customized products are especially vulnerable to price pressure, but customized products have also experienced price pressure in recent years. Developing and marketing new products requires start-up costs that may not be recouped if these products or production techniques are not successful. There are numerous risks inherent in product development, including the risks we will be unable to anticipate the direction of technological change or we will be unable to develop and market new ~~products and applications in a timely fashion to satisfy customer demands. If this occurs, we could lose customers and experience adverse effects on our results of operations.~~

products and applications in a timely fashion to satisfy customer demands. If this occurs, we could lose customers and experience adverse effects on our results of operations.

We may be exposed to claims alleging product defects.

Our business exposes us to claims alleging product defects or nonconformance with product specifications. We may be held liable for, or incur costs related to, such claims if any of our products, or products in which our products are incorporated, are found to have caused end market product application failures, product recalls, property damage or personal injury. Provisions in our customer and distributor agreements are designed to limit our exposure to potential material product defect claims, including warranty, indemnification, waiver and limitation of liability provisions, but such provisions may not be effective under the laws of some jurisdictions. If we cannot successfully defend ourselves against product defect claims, we may incur substantial liabilities. Regardless of the merits or eventual outcome, defect claims could entail substantial expense and require the time and attention of key management personnel.

Our insurance program may not be adequate to cover all liabilities arising out of product defect claims and, at any time, insurance coverage may not be available on commercially reasonable terms or at all. If liability coverage is insufficient, a product defect claim could result in liability to us, which could materially and adversely affect our results of operations or financial condition. Even if we have adequate insurance coverage, product defect claims, or recalls could result in negative publicity or force us to devote significant time and attention to those matters.

Various laws and regulations that apply to our business, including those relating to conflict minerals and environmental matters, could limit our ability to operate as we are currently and could result in additional costs.

We are subject to various laws and regulations of national, state and local authorities in the countries in which we operate regarding a wide variety of matters, including conflict minerals, environmental, employment, land use, antitrust, and others that affect the day-to-day operations of our business. The liabilities and requirements associated with the laws and regulations that affect us may be costly and time-consuming. There can be no assurance we have been or will be at all times in compliance with such applicable laws and regulations. Failure to comply may result in the assessment of administrative, civil and criminal penalties, the issuance of injunctions to limit or cease operations, the suspension or revocation of permits and other enforcement measures that could have the effect of limiting our operations. If we are pursued for sanctions, costs or liabilities in respect of these matters, our operations and, as a result, our profitability could be materially and adversely affected.

18The SEC requires issuers for whom tantalum, tin, tungsten and gold are necessary to the functionality or production of a product manufactured, or contracted to be manufactured, by such person to conduct certain diligence procedures and make certain disclosures annually regarding whether any of those minerals originated in the Democratic Republic of Congo or an adjoining country. As defined by the SEC, tantalum, tin, tungsten and gold are commonly referred to as “conflict minerals” or “3TG”. If an issuer’s conflict minerals originated in those countries, the rule requires the issuer to submit a report to the SEC that includes a description of the measures it took to exercise due diligence on the conflict minerals’ source and chain of custody. We use tantalum, tin and, to a lesser degree, other of the 3TG minerals in our production processes and in our products. We have exercised due diligence on the source and chain of custody during the reporting period and, as required under the rule, annually disclose a description of these measures and certain of our findings in a special disclosure on Form SD. Disclosure in accordance with the rule may cause changes to the pricing of 3TG minerals, which could adversely affect our profitability. In addition, it is possible some of our disclosures pursuant to the rule related to our inquiries and supply chain custody diligence could cause reputational harm and cause the company to lose customers or sales.

and criminal penalties, the issuance of injunctions to limit or cease operations, the suspension or revocation of permits and other enforcement measures that could have the effect of limiting our operations. If we are pursued for sanctions, costs or liabilities in respect of these matters, our operations and, as a result, our profitability could be materially and adversely affected.

The SEC requires issuers for whom tantalum, tin, tungsten and gold are necessary to the functionality or production of a product manufactured, or contracted to be manufactured, by such person to conduct certain diligence procedures and make certain disclosures annually regarding whether any of those minerals originated in the Democratic Republic of Congo or an adjoining country. As defined by the SEC, tantalum, tin, tungsten and gold are commonly referred to as “conflict minerals” or “3TG”. If an issuer’s conflict minerals originated in those countries, the rule requires the issuer to submit a report to the SEC that includes a description of the measures it took to exercise due diligence on the conflict minerals’ source and chain of custody. We use tantalum, tin and, to a lesser degree, other of the 3TG minerals in our production processes and in our products. We have exercised due diligence on the source and chain of custody during the reporting period and, as required under the rule, have disclosed a description of these measures and certain of our findings in a special disclosure on Form SD. Disclosure in accordance with the rule may cause changes to the pricing of 3TG minerals, which could adversely affect our profitability. In addition, it is possible some of our disclosures pursuant to the rule related to our inquiries and supply chain custody diligence could cause reputational harm and cause the company to lose customers or sales.

In addition, we are subject to a variety of U.S. federal, state and local, as well as foreign, environmental laws and regulations relating, among other things, to wastewater discharge, air emissions, handling of hazardous materials, disposal of solid and hazardous wastes, and remediation of soil and groundwater contamination. We use a number of chemicals or similar substances and generate waste that are considered hazardous. We are required to hold environmental permits to conduct many of our operations. Violations of environmental laws and regulations could result in substantial fines, penalties, and other sanctions. Changes in environmental laws or regulations (or in their enforcement) affecting or limiting, for example, our chemical uses, certain of our manufacturing processes, or our disposal practices, could restrict our ability to operate as we are currently operating or impose additional costs. In addition, we may experience releases of certain chemicals or discover existing contamination, which could cause us to incur material cleanup costs or other damages.

Our international sales and operations are subject to applicable laws relating to trade, export controls and foreign corrupt practices, the violation of which could adversely affect our operations.

We must comply with all applicable export control laws and regulations of the United States and other countries. United States laws and regulations applicable to us include the Arms Export Control Act, the International Traffic in Arms Regulations (“ITAR”), the Export Administration Regulations (“EAR”) and the trade and trade sanctions laws and regulations administered by the Office of the United States Trade Representative (“OFTR”) and the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”). The import and export of our products from each of our United States and international manufacturing facilities and distribution hubs are subject to international trade agreements, the modification or repeal of which could impact our business. We must comply with the requirements of OFTR and non-U.S. trade representative offices to benefit from existing trade agreements. EAR restricts the export of dual-use products and technical data to certain countries, while ITAR restricts the export of defense products, technical data and defense services. The U.S. government agencies responsible for administering EAR and ITAR have significant discretion in the interpretation and enforcement of these regulations. We also cannot provide services to certain countries subject to United States trade sanctions unless we first obtain the necessary authorizations from OFAC. In addition, we are subject to the Foreign Corrupt Practices Act and other anti-bribery laws that, generally, bar bribes or unreasonable gifts to foreign governments or officials.

Treasury’s Office of Foreign Assets Control (“OFAC”). The import and export of our products from each of our United States and international manufacturing facilities and distribution hubs are subject to international trade agreements, the modification or repeal of which could impact our business. We must comply with the requirements of OFTR and non-U.S. trade representative offices to benefit from existing trade agreements. EAR restricts the export of dual-use products and technical data to certain countries, while ITAR restricts the export of defense products, technical data and defense services. The U.S. government agencies responsible for administering EAR and ITAR have significant discretion in the interpretation and enforcement of these regulations. We also cannot provide services to certain countries subject to United States trade sanctions unless we first obtain the necessary authorizations from OFAC. In addition, we are subject to the Foreign Corrupt Practices Act and other anti-bribery laws that, generally, bar bribes or unreasonable gifts to foreign governments or officials.

Violations of these laws or regulations could result in significant additional sanctions including fines, more onerous compliance requirements, more extensive debarments from export privileges, loss of authorizations needed to conduct aspects of our international business and criminal penalties and may harm our ability to enter contracts with customers who have contracts with the U.S. government. A violation of the laws or the regulations enumerated above could materially adversely affect our business, financial condition and results of operations.

Changes impacting international trade and corporate tax provisions related to the global manufacturing and sales of our products may have an adverse effect on our financial condition and results of operations.

A significant portion of our business activities are conducted in foreign countries, including Mexico and China. Our business benefits from free trade agreements such as the North American Free Trade Agreement (“NAFTA”) and we also rely on various U.S. corporate tax provisions related to international commerce as we build, market and sell our products globally. Changes in trade treaties and corporate tax policy could impact U.S. trade relations with other countries such as Mexico, and adversely affect our financial condition and results of operations.

Volatility of financial and credit markets could affect our access to capital.

Uncertainty in the global financial and credit markets could impact our ability to implement new financial arrangements or to modify our existing financial arrangements. An inability to obtain new financing or to further modify existing financing could adversely impact the execution of our restructuring plans and delay the realization of the expected cost reductions. Our ability to generate adequate liquidity will depend on our ability to execute our operating plans and to manage costs in light of developing economic conditions. An unanticipated decrease in sales, or other factors that would cause the actual outcome of our plans to differ from expectations, could create a shortfall in cash available to fund our liquidity needs. Being unable to access new capital, experiencing a shortfall in cash from operations to fund our liquidity needs and the failure to implement an initiative to offset the shortfall in cash would likely have a material adverse effect on our business.

Default by or failure of one or more of our counterparty financial institutions could cause us to incur significant losses.

As part of our hedging activities, we enter into transactions involving derivative financial instruments with a financial institution. In addition, we have significant amounts of cash, cash equivalents and other investments on deposit or in accounts with banks or other financial institutions in the United States and abroad. As a result, we are exposed to the risk of default by or failure of counterparty financial institutions. The risk of counterparty default or failure may be heightened during economic downturns and periods of uncertainty in the financial markets. If one of our counterparties were to become insolvent or file for bankruptcy, our ability to recover losses incurred as a result of default or to retrieve our assets that are deposited or held in accounts with such counterparty may be limited by the counterparty's liquidity or the applicable laws governing any related financial institution's insolvency or bankruptcy proceedings. In the event of default by or failure of one or more of our counterparties, we could incur significant losses, which could negatively impact our results of operations and financial condition.

We must consistently reduce the total costs of our products to remain competitive.

Our industry is intensely competitive and prices for existing products tend to decrease steadily over their life cycle. There is substantial and continuing pressure from customers to reduce the total cost of capacitors. To remain competitive, we must achieve continuous cost reductions through process and product improvements.

We must also be in a position to minimize our customers’ shipping and inventory financing costs and to meet their other goals for rationalization of supply and production. Our growth and the profit margins of our products will suffer if our competitors are more successful in reducing the total cost to customers of their products than we are. We must also continue to introduce new products that offer performance advantages over our existing products and can thereby achieve premium prices, offsetting the price declines in our more mature products.

Our use of net operating losses to offset possible future taxable income could be limited by ownership changes.

In addition to the general limitations on the carryback and carryforward of net operating losses under Section 172 of the Internal Revenue Code (the “Code”), Section 382 of the Code imposes further limitations on the utilization of net operating losses by a corporation following ownership changes which result in more than a 50-percentage point change in ownership of a corporation within a three-year period. If Section 382 applies, the post-ownership change utilization of our net operating losses may be subject to limitation for federal income tax purposes related to regular and alternative minimum tax. While we do not believe we have experienced an ownership change to date, the application of Section 382 of the Code now or in the future could limit a substantial part of our future utilization of available net operating losses. Such limitation could require us to pay substantial additional income taxes and adversely affect our liquidity and financial position.

Even if we have not experienced an ownership change to date, we could experience an ownership change in the near future if there are significant purchases of our common stock or other events outside our control.

Our debt agreements contain restrictions that could limit our flexibility in operating our business.

Our debt agreements contain various covenants that, subject to exceptions, may limit our ability to, among other things: incur additional indebtedness; create liens on assets; make capital expenditures; engage in mergers, consolidations, liquidations and dissolutions; sell assets (including pursuant to sale leaseback transactions); pay dividends and distributions on or repurchase capital stock; make investments (including acquisitions), loans, or advances; prepay certain junior indebtedness; engage in certain transactions with affiliates; enter into restrictive agreements; amend material agreements governing certain junior indebtedness; and change lines of business. The agreement governing our revolving credit facility also includes a fixed charge coverage ratio covenant that we must satisfy if an event of default occurs or in the event we do not meet certain excess availability requirements under our revolving credit facility. Our ability to comply with these covenants is dependent on our future performance, which may be subject to many factors, some of which are beyond our control.

Our controls and procedures may fail or be circumvented, which may result in a material adverse effect on our business, financial condition, and results of operations.

Management regularly reviews and updates our internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurance that the objectives of the system are met. Any failure or circumvention of the controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, results of operations and financial condition.

As disclosed in Part II - Item 9A. “Controls and Procedures” of ~~this~~our fiscal year 2019 Form 10-K in the section “Management’s Report on Internal Control Over Financial Reporting,” a material weakness was identified in our internal control over financial reporting as of March 31, 2019 resulting from certain control deficiencies in our internal control over financial reporting pertaining to the initiation and recording of net sales and accounts receivable, net ~~at March 31, 2019~~. ~~The specific issues leading to these conclusions are described in that section.~~ A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness identified at March 31, 2019 in Item 9A did not result in any ~~misstatement~~misstatements of the Company’s Consolidated Financial Statements for any ~~period~~periods presented. ~~The~~When ~~Company has already commenced efforts to remediate~~ the material weakness ~~and~~was ~~expects~~identified, ~~for~~we ~~the~~promptly ~~material~~developed ~~weakness~~and toimplemented bea ~~remediated~~comprehensive ~~this~~remediation ~~year.~~plan ~~However, our remedial measures~~ to address ~~the~~this material weakness, ~~may~~which beincluded ~~insufficient~~implementing new, and werefining ~~may~~existing, incontrols, ~~the~~as ~~future~~well ~~discover~~as ~~areas~~providing ofadditional ~~our~~training ~~internal~~and ~~controls~~improving ~~that~~our ~~need~~documentation ~~improvement. Failure~~as toit ~~maintain~~pertains ~~effective controls or~~ to ~~timely~~the ~~implement~~initiation ~~any~~and ~~necessary~~recording ~~improvement~~ of ~~our~~net ~~internal~~sales and ~~disclosure~~accounts ~~controls~~receivable. ~~could,~~Based ~~among~~on ~~other~~these ~~things~~measures, ~~result~~management inhas ~~losses~~concluded ~~from~~that ~~errors, harm our reputation or cause investors to lose confidence in~~ the ~~reported~~material ~~financial~~weakness ~~information,~~described ~~all~~above ofhas ~~which~~been ~~could~~remediated ~~have~~as ~~a material adverse effect on our results~~ of ~~operations~~March ~~and~~31, ~~financial condition~~2020.

There is a risk that in the future the Company could have another material weakness, fail to maintain effective controls, or timely implement any necessary improvement of our internal and disclosure controls. This could, among other things, result in losses from errors, harm our reputation or cause investors to lose confidence in the reported financial information, all of which could have a material adverse effect on our results of operations and financial condition.

If we are unable to protect our information systems against service interruption, misappropriation of data, or breaches of security, our operations could be disrupted, we may suffer financial losses, and our reputation may be damaged.

As a global company we rely on networks and information systems and other technology (“information systems”), including the internet and third-party hosted services, to support our business. Any inability to successfully manage the procurement, development, implementation, execution or maintenance of our information systems, including matters related to ~~system and data security, reliability, compliance or performance could have an adverse effect on our business including our results of operation and timeliness of financial reporting.~~

system and data security, reliability, compliance or performance could have an adverse effect on our business including our results of operation and timeliness of financial reporting.

Because information systems are critical to many of the Company's operating activities, our business may be impacted by system shutdowns, service disruptions or security breaches. These incidents may be caused by failures during routine operations such as system upgrades or by user errors, as well as network or hardware failures, malicious or disruptive software, unintentional or malicious actions of employees or contractors, cyberattacks by common hackers, criminal groups or nation-state organizations or social-activist (hacktivist) organizations, geopolitical events, natural disasters, failures or impairments of telecommunications networks, or other catastrophic events. In addition, such incidents could result in unauthorized or accidental disclosure of material confidential information of the Company or its customers, or regulated individual personal data. If our information systems suffer severe damage, disruption or shutdown and our business continuity plans do not effectively resolve the issues in a timely manner, we could experience delays in reporting our financial results, and we may lose revenue and profits as a result of our inability to timely manufacture, distribute, invoice and collect payments for products. The loss or disclosure of misappropriated confidential information could have the following implications: loss of intellectual property, disruption to key business operations, and diversion of management’s attention from key business operations and key informational technology resources. The Company could also be required to spend significant financial and other resources to remedy the damage caused by a security breach or to repair or replace networks and information systems

In addition, we are subject to federal defense procurement regulations relating to the effectiveness of our cybersecurity operations, and to laws, rules, and regulations in the U.S., U.K., European Union, and other countries relating to the collection, use, and security of user data. Our ability to execute transactions and to possess and use personal information and data in conducting our business subjects us to legislative and regulatory burdens that may require us to notify vendors, customers, or employees of a data security breach, potentially damaging our brand and reputation. If we fail to comply with applicable federal, state, or international cybersecurity, privacy-related, or data protection laws or regulations, we may incur a loss of business (including defense-related business) and/or penalties or significant legal liability or be subject to proceedings by government entities.

If economic and demographic experience for pension and other post-retirement benefit plans are less favorable than our assumptions (e.g., discount rates or return on investments), then it may affect our financial condition and results of operations.

21The measurement of our obligations, costs, and liabilities associated with benefits pursuant to our pension and other post-retirement benefit plans requires that we estimate the present value of projected future payments to all participants. We use many assumptions in calculating these estimates, including assumptions related to discount rates, return on investments on designated plan assets, and demographic experience (e.g. mortality and retirement rates). To the extent actual results are less favorable than our assumptions, there could be a substantial adverse impact on our financial condition and results of operations. For instance, significant decreases in market interest rates could lead to increases in annual pension expense. Further, decreases in the value of plan assets could lead to an increased use of cash for plan contributions. For discussion of our assumptions, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in Item 7 and Note 10 to the consolidated financial statements.

The measurement of our obligations, costs, and liabilities associated with benefits pursuant to our pension and other post-retirement benefit plans requires that we estimate the present value of projected future payments to all participants. We use many assumptions in calculating these estimates, including assumptions related to discount rates, return on investments on designated plan assets, and demographic experience (e.g. mortality and retirement rates). To the extent actual results are less favorable than our assumptions, there could be a substantial adverse impact on our financial condition and results of operations. For instance, significant decreases in market interest rates could lead to increases in annual pension expense. Further, decreases in the value of plan assets could lead to an increased use of cash for plan contributions. For discussion of our assumptions, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in Item 7 and Note 9 to the consolidated financial statements.

Sales to distribution channel customers may fluctuate and adversely affect our results of operations.

From time-to-time, if end customer demand decreases, our sales to distributors also decrease while the distributors reduce their inventory levels. In addition, a single customer, a distributor, accounted for over 10% of our net sales in each of fiscal years ~~2019~~2020, ~~2018~~2019 and ~~2017~~2018. If our relationship with this customer were to terminate, we would need to determine alternative means of delivering our products to the end-customers served by it.

Earthquakes, ~~and other~~ natural disasters, and climate change could disrupt our operations and have a material adverse effect on our financial condition and results of operations.

Several of our facilities in Japan are located in regions that could be subject to earthquakes and other natural disasters. Our production facilities located in Japan are in areas with above average seismic activity and some have been affected by other natural disasters such as tsunami. If any of our facilities in Japan or elsewhere were to experience a catastrophic earthquake or other natural disaster, such event could disrupt our operations, delay production, shipments, and revenue, and result in large expenses to repair or replace the facility or facilities. While KEMET has property insurance to partially reimburse it for losses caused by windstorm and earth movement, such insurance would not cover all possible losses. In addition, our existing disaster recovery and business continuity plans (including those relating to our information technology systems) may not be fully responsive to, or minimize losses associated with, catastrophic events.

Our business, results of operations and financial condition may be adversely affected by the outbreak of the novel coronavirus (COVID-19) and the responses thereto taken by various governmental authorities throughout the world.

The novel strain of the coronavirus (COVID-19) identified in China in late 2019 has spread throughout the world and in response governmental authorities have ordered mandatory shut-downs of non-essential business, quarantines, travel-bans and shelter-in-place orders. The spread of COVID-19 and the governmental responses to it have negatively impacted our business by, among other things, forcing us to temporarily suspend our manufacturing operations at certain locations and forcing our non-manufacturing employees to work remotely. As of March 31, 2020, the spread of COVID-19 and governmental responses did not have a significant impact on our results of operations and financial condition.

We are modifying our business practices in response to COVID-19 to ensure the health and safety of our employees; however we may in the future be forced to temporarily shut down one or more of our facilities if any of our workers test positive for COVID-19 or any of our facilities or the services provided at those facilities are not deemed to be “essential” under applicable government shut-down orders or are otherwise not considered exempt from government-imposed shut-down orders for any reason. In addition, governmental guidelines in response to COVID-19 may limit our workforce to a certain number of employees per shift or cause us to modify our operations in other ways that could be disruptive to our business. Any such temporary shut-down, limitation on our workforce, or other government-imposed modification of our operations could have a significant impact on the production of our products. Additionally, COVID-19 may cause some of our suppliers to fail to deliver the quantities of supplies we need or fail to deliver such supplies in a timely manner. The failure to receive any such supplies could inhibit our ability to run our manufacturing operations and otherwise operate our business. Additionally, our ability to transport our products could be impaired by disruptions in our global transportation network resulting from the COVID-19 pandemic. Finally, the continued spread of COVID-19 has led to increased volatility in the global capital markets. Such volatility increases the cost of, and decreases access to, capital. If the Company needs to access the capital markets to fund its operations, such capital could be prohibitively expensive which could cause the Company to pursue alternative sources of funding for its operations and working capital.

As a result of COVID-19, our employees, contractors, and consultants are working remotely and it is possible that this could have a negative impact on the execution of our business plans and operations. If a natural disaster, power outage, connectivity issue, or other event occurred that impacted our employees ability to work remotely, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time. The increase in remote working may also result in consumer privacy, IT security, and fraud concerns, as well as increase our exposure to potential wage and hours issues.

The extent to which COVID-19 may adversely impact our business depends on future developments, which are highly uncertain and unpredictable, including new information concerning the severity of the outbreak and the effectiveness of actions globally to contain or mitigate its effects. The effects of COVID-19 have led to a global economic slowdown and while we expect this matter to negatively impact our results of operations, cash flows, and financial condition in the future, the current level of uncertainty over the economic and operational impacts of COVID-19 means the related financial impact cannot be reasonably estimated at this time. As of March 31, 2020, the effects of COVID-19 have not had a significant impact on the Company's liquidity. The Company will continue to take appropriate steps to mitigate the impact of COVID-19 on the Company's operations, liquidity, and financial condition.

Our stock price can be volatile.

The market price for our common stock has been volatile historically. Our stock price may be significantly affected by factors including those described elsewhere in "Part 1, Item 1A. Risk Factors," as well as the following:


•	general market and economic conditions;


•	quarterly fluctuations in our operating results compared to market expectations;


•	investors' perceptions of the electronic component industry;


•	changes in financial estimates by us or securities analysts and recommendations by securities analysts;


•	the composition of our stockholders, particularly the presence of "short sellers" trading our stock; and


•	a decline in our credit rating.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

2224

ITEM 2. PROPERTIES.

We are headquartered in Fort Lauderdale, Florida, and, as of March 31, ~~2019~~2020, we had 2321 manufacturing plants located in North America, Europe and Asia. Our manufacturing and research facilities include approximately 4.97 million square feet of floor space and use proprietary manufacturing processes and equipment.

Our facilities in Mexico operate under the Maquiladora program. In general, a company that operates under this program is afforded certain duty and tax preferences and incentives on products brought into the United States. Our manufacturing standards, including compliance with worker safety laws and regulations, are essentially identical in North America, Europe and Asia. Our operations in Mexico, Europe and Asia, similar to our United States operations, have won numerous quality, environmental and safety awards.

We believe substantially all of our property and equipment is in good condition, and overall we have sufficient capacity to meet our current and projected manufacturing and distribution needs. The following table provides certain information regarding our principal facilities:

Location	SquareFootage(in thousands)	Type ofInterest	Description of Use
Fort Lauderdale, Florida, U.S.A	61	Leased	Headquarters
Solid Capacitor Reportable Segment
Simpsonville, South Carolina, U.S.A.	382	Owned	Innovation Center, Advanced Tantalum Manufacturing
Matamoros, Mexico	286	Owned	Manufacturing
Monterrey, Mexico (1)	532	Owned	Manufacturing
Suzhou, China (1)	353	Leased	Manufacturing
Ciudad Victoria, Mexico	265	Owned	Manufacturing
Carson City, Nevada, U.S.A.	87	Owned	Manufacturing
Nyuzen, Toyama, Japan	209	Owned	Manufacturing and Innovation Center
Chachoengsao, Thailand	~~170~~171	Owned	Manufacturing
Film and Electrolytic Reportable Segment
Evora, Portugal	233	Owned	Manufacturing and Innovation Center
Skopje, Macedonia	126	Owned	Manufacturing
Granna, Sweden	132	Owned	Manufacturing
Suomussalmi, Finland	56	Leased	Manufacturing
Batam, Indonesia	68	Owned	Manufacturing
Kyustendil, Bulgaria (2)	86	(2)	(2)
Pontecchio, Italy	226	Owned	Manufacturing and Innovation Center
Anting, China (3)	73	(3)	(3)
Farjestaden, Sweden	28	Leased	Manufacturing and Innovation Center
Electro-Magnetic, Sensors, and Actuators Segment Reportable Segment
Electro-Magnetic, Sensors and Actuators Reportable Segment
Shiroishi, Miyagi, Japan	524	Owned	Manufacturing
Sendai, Miyagi, Japan	378	Owned	Manufacturing and Innovation Center
Bien Hoa City, Dong Nai Province, Vietnam	174	Owned	Manufacturing
Xiamen, China	432	Owned	Manufacturing

______________________________________________________________________________

⁽¹⁾ Includes two manufacturing facilities.

⁽²⁾ Includes one owned manufacturing facility and one leased warehouse facility.

⁽³⁾ Includes one owned manufacturing facility and one leased manufacturing facility.

ITEM 3. LEGAL PROCEEDINGS.

We or our subsidiaries may at any one time be parties to lawsuits arising out of our respective operations, including workers’ compensation or ~~work~~workplace ~~place~~ safety cases, some of which involve claims of substantial damages. Although there can be no assurance, based upon information known to us, we do not believe that any liability which might result from an adverse determination of such lawsuits would have a material adverse effect on our financial condition or results of operations.

As previously reported, KEMET and KEC, along with more than 20 other capacitor manufacturers and subsidiaries (including TOKIN, as described below), are defendants in a purported antitrust class action complaint, In re: Capacitors Antitrust Litigation, No. 3:14-cv-03264-JD, filed on December 4, 2014 with the United States District Court, Northern District of California (the “U.S. Class Action Complaint”). The complaint alleges a violation of Section 1 of the Sherman Act, for which it seeks injunctive and equitable relief and money damages. The complaint is currently nearing the end of the expert merits discovery phase. In addition, KEMET and KEC, along with more than 20 other capacitor manufacturers and subsidiaries, have been named as defendants in two suits by plaintiffs who have chosen not to participate in the U.S. Class Action Complaint (collectively with the U.S. Class Action Complaint, the “U.S. Complaints”): AASI Beneficiaries’ Trust v. AVX Corporation, et al., filed on August 29, 2016 in the United States District Court, Southern District of Florida, and Benchmark Electronics, Inc., et al. v. AVX Corporation, et al., filed on April 18, 2017 in the United States District Court, Southern District of Texas. The AASI and Benchmark complaints allege generally the same violations as the U.S. Class Action Complaint.

In addition, as previously reported, KEMET and KEC, along with certain other capacitor manufacturers and subsidiaries (including TOKIN, as described below), were named as defendants in several additional suits that were filed in Canada (collectively, the “Canadian Complaints”): Badamshin v. Panasonic Corporation, et al., filed August 6, 2014 in the Superior Court, Province of Quebec, District of Montreal; Herard v. Panasonic Corporation, et al., filed August 6, 2014 in the Superior Court, Province of Quebec, District of Montreal; Cygnus Electronics Corporation v. Panasonic Corporation, et al., filed August 6, 2014 in the Superior Court of Justice, Province of Ontario; LeClaire v. Panasonic Corporation, et al., filed August 6, 2014 in the Superior Court, Province of Quebec, District of Montreal; Taylor v Panasonic Corporation, et al., filed August 11, 2014 in the Superior Court of Justice, Province of Ontario; Ramsay v. Panasonic Corporation, et al., filed August 14, 2014 in the Supreme Court, Province of British Columbia; Martin v. Panasonic Corporation, et al., filed September 25, 2014 in the Superior Court, Province of Quebec, District of Montreal; Parikh v. Panasonic Corporation, et al., filed October 3, 2014 in the Superior Court of Justice, Province of Ontario; Fraser v. Panasonic Corporation, et al., filed October 3, 2014 in the Court of Queen’s Bench, Province of Saskatchewan; Pickering v. Panasonic Corporation, et al., filed October 6, 2014 in the Supreme Court, Province of British Columbia; McPherson v Panasonic Corporation et al., filed on November 6, 2014 in the Court of Queen’s Bench, Province of Manitoba; and Allott v AVX Corporation, et al., filed on May 13, 2016 in the Superior Court of Justice, Province of Ontario. The Canadian Complaints generally allege the same unlawful acts as in the U.S. Complaints, assert claims under Canada’s Competition Act as well as various civil and common law causes of action, and seek injunctive and equitable relief and money damages.

There have been no material updates to the proceedings described in the immediately preceding paragraph except that the claims against KEMET and KEC in Leclaire were dismissed on December 6, 2018. In addition, Parikh and Taylor have been stayed in favor of Cygnus, and Badamshin, Martin and Herard have been stayed in favor of LeClaire. Further, on November 18, 2018, the Ontario Supreme Court of Justice temporarily stayed Cygnus pending the outcome of a matter on appeal concerning class certification, and the Ramsay plaintiffs voluntarily suspended that proceeding until class certification for Cygnus has been determined.

Except for the TOKIN accrual described below and certain attorneys’ fees, the Company has not recorded any accrual concerning the U.S. Complaints and the Canadian Complaints.

TOKIN-Specific Legal Proceedings

In July 2013, TOKIN was named as one of eight defendants in two purported U.S. class action antitrust lawsuits (In Re: Lithium Ion Batteries Antitrust Litigation, 13-MD-02420-YGR, United States District Court, Northern District of California) (the “Battery Class Action Suits”) regarding the sale of lithium ion batteries brought on behalf of direct product purchasers and indirect product purchasers. On March 2, 2018, TOKIN entered into a settlement agreement, which, subject to court approval, provides for the release of TOKIN and its subsidiaries from claims asserted in the Battery Class Action Suits, in consideration of which, TOKIN agreed to pay $2.0 million to the settlement class of indirect product purchasers. TOKIN paid the settlement amount into an escrow account on January 25, 2019. On May 16, 2018, the Court granted final approval to a settlement agreement by which, in consideration of the release of TOKIN and its subsidiaries from claims asserted in the Battery Class Action Suits, TOKIN agreed to pay $4.95 million to the settlement class of direct product purchasers. Prior to final court approval, TOKIN had paid the settlement amount into an escrow account on January 18, 2018.

Beginning in March 2014, TOKIN and certain of its subsidiaries received inquiries, requests for information and other communications from government authorities in China, the United States, the European Commission, Japan, South Korea, Taiwan, Singapore, and Brazil concerning alleged anti-competitive activities within the capacitor industry.

On September 2, 2015, the United States Department of Justice announced a plea agreement with TOKIN in which TOKIN agreed to plead guilty to a one-count felony charge of unreasonable restraint of interstate and foreign trade and commerce in violation of Section 1 of the Sherman Act, and to pay a criminal fine of $13.8 million. The plea agreement was approved by the United States District Court, Northern District of California, on January 21, 2016. The fine is payable over 5 years in six installments of $2.3 million each, plus accrued interest. The first four payments were made in February 2016, January 2017, January 2018, and January 2019, while the next payment is due in January 2020.

On December 9, 2015, the Taiwan Fair Trade Commission (“TFTC”) publicly announced that TOKIN would be fined 1.2 billion New Taiwan dollars (“NTD”) (approximately $39.5 million) for violations of the Taiwan Fair Trade Act. Subsequently, the TFTC indicated the fine would be reduced to NTD 609.1 million (approximately $19.8 million). In February 2016, TOKIN commenced an administrative suit in Taiwan, challenging the validity of the amount of the fine. On August 23, 2018, the Taipei High Administrative Court revoked the TFTC decision, finding that the decision had been time-barred by applicable statute. On September 21, 2018, the TFTC filed an appeal against the High Administrative Court's decision. Payment of the TFTC fine is not stayed during the administrative appeals; TOKIN has made installment payments of the fine aggregating to approximately NTD 152.3 million (approximately $4.9 million) as of March 31, 2019.

On March 29, 2016, the Japan Fair Trade Commission published an order by which TOKIN was fined JPY 127.2 million (approximately U.S. $1.1 million) for violation of the Japanese Antimonopoly Act. Payment of the fine was made on October 31, 2016.

On July 15, 2016, TOKIN entered into definitive settlement agreements in two antitrust suits filed with the United States District Court, Northern District of California as In re: Capacitors Antitrust Litigation, No. 3:14-cv-03264-JD (the “Capacitor Class Action Suits”). Pursuant to the terms of the settlement, in consideration of the release of TOKIN and its subsidiaries (including TOKIN America, Inc.) from claims asserted in the Capacitor Class Action Suits, TOKIN will pay an aggregate $37.3 million to a settlement class of direct purchasers of capacitors and a settlement class of indirect purchasers of capacitors. Each of the respective class payments is payable in five installments, four of which were paid on or before the respective due dates of July 29, 2016, May 15, 2017, May 15, 2018, and May 15, 2019. The final payment is due by December 31, 2019.

On July 27, 2016, Brazil’s Administrative Council for Economic Defense approved a cease and desist agreement with TOKIN in which TOKIN made a financial contribution of Brazilian Real 0.6 million (approximately $0.2 million) to Brazil’s Fund for Defense of Diffuse Rights.

On March 21, 2018, the European Commission announced a decision by which TOKIN was fined EUR 8.8 million directly (approximately $10.3 million) and EUR 5.0 million (approximately $5.9 million) jointly and severally with NEC Corporation, for violation of the competition laws of the European Union. Payment of the fines were made on June 28, 2018. On June 4, 2018, TOKIN filed an appeal with the General Court of the European Union, seeking annulment and/or reduction of the fines.

As noted above, TOKIN, along with KEMET and certain of its other subsidiaries, were named as defendants in the Canadian Complaints. On May 30, 2018, TOKIN entered into definitive settlement agreement with the plaintiffs in the Canadian Complaints Pursuant to the terms of the settlement, in consideration of the release of TOKIN and its subsidiaries (including TOKIN America, Inc.) from claims asserted in the Canadian Complaints, TOKIN paid CAD 2.9 million (approximately $2.2 million) to a settlement class of purchasers of aluminum and tantalum electrolytic capacitors and purchasers of products containing such capacitors. The settlement payment was made on June 27, 2018. The settlement agreement has been approved by the Quebec and Ontario courts; approval by the Supreme Court of British Columbia is pending.

On November 30, 2018, the Korean Fair Trade Commission (“KFTC”) notified TOKIN of its decision to impose an administrative fine on TOKIN of KRW 8.1 billion (approximately $7.2 million) for violation of South Korea's Monopoly Regulation and Fair Trade Law. TOKIN filed its appeal of the KFTC's decision with the Seoul High Court on December 28, 2018. Payment of the fine is not stayed during appeal; TOKIN paid the full fine amount on February 1, 2019.

On July 2, 2018, TOKIN and TOKIN America Inc. were named as two of 20 defendants in a purported U.S. class action antitrust lawsuit, In re: Inductors Antitrust Litigation, No. 5:18-cv-00198-EJD-NC, filed in the United States District Court, Northern District of California, regarding the sale of inductors brought on behalf of direct product purchasers and indirect product purchasers. The complaint alleges violations of Sections 1 and 3 of the Sherman Act, for which it seeks injunctive and equitable relief and money damages.

As ofpreviously ~~March 31~~reported, ~~2019~~KEMET and KEC, ~~TOKIN’s~~along ~~accrual~~with ~~for~~more ~~antitrust~~than 20 other capacitor manufacturers and ~~civil~~subsidiaries were ~~litigation~~named ~~claims~~as ~~totaled~~defendants ~~$37~~in a purported antitrust class action complaint, In re: Capacitors Antitrust Litigation, No.7 ~~million~~3:14-cv-03264-JD, ~~which~~filed ison ~~stated~~December in4, 2014 with the ~~following~~United ~~line~~States ~~items~~District Court, ~~“Account~~Northern ~~payable”~~District of California (~~$15~~the “U.0S. ~~million~~Class Action Complaint”). The complaint alleged a violation of Section 1 of the Sherman Act, ~~“Accrued~~for ~~expenses”~~which ~~($9~~it sought injunctive and equitable relief and money damages.5 ~~million)~~On November 8, 2019 KEMET and ~~“Other~~KEC ~~non-current~~entered ~~obligations”~~into a settlement agreement (~~$13.2~~the ~~million~~“Settlement Agreement”) onwith the ~~Consolidated~~plaintiffs ~~Balance~~in ~~Sheets~~the U.S. ~~This~~Class ~~amount~~Action ~~includes~~Complaint ~~the~~by ~~best~~which, ~~estimate~~in consideration for the release of ~~losses~~KEMET, ~~which~~KEC, ~~may~~and ~~result~~their affiliates from all claims relating in any way to the ~~ongoing~~conduct ~~antitrust~~alleged ~~investigations,~~in ~~civil~~the ~~litigation~~U.S. Class Action Complaint and from claims which could have been asserted in the U.S. ~~However~~Class Action Complaint to the extent they relate to the sale of capacitors in the United States, KEMET agreed to pay an aggregate of $62.0 million to the ~~actual~~settlement ~~outcomes~~class ~~could~~of ~~differ~~plaintiffs. ~~from~~The ~~what~~Settlement ~~has~~Agreement ~~been~~is ~~accrued~~subject to court approval. Pursuant to the terms of the Settlement Agreement, KEMET paid $10.0 million into an escrow account on December 6, 2019. The remaining amount will be paid by KEMET within 12 months of the date of the Settlement Agreement. Under the terms of the Settlement Agreement KEMET and KEC did not admit to any violation of any statute or law or any liability or wrongdoing.

~~ITEM~~In 4addition, as previously reported, KEMET and KEC, along with certain other capacitor manufacturers and subsidiaries (including TOKIN, as described below), were named as defendants in several additional suits that were filed in Canada (collectively, the “Canadian Complaints”): Badamshin v. ~~MINE~~ ~~SAFTETY~~Panasonic ~~DISCLOSURES~~Corporation, et al., filed August 6, 2014 in the Superior Court, Province of Quebec, District of Montreal; Herard v. Panasonic Corporation, et al., filed August 6, 2014 in the Superior Court, Province of Quebec, District of Montreal; Cygnus Electronics Corporation v. Panasonic Corporation, et al., filed August 6, 2014 in the Superior Court of Justice, Province of Ontario; LeClaire v. Panasonic Corporation, et al., filed August 6, 2014 in the Superior Court, Province of Quebec, District of Montreal; Taylor v Panasonic Corporation, et al., filed August 11, 2014 in the Superior Court of Justice, Province of Ontario; Ramsay v. Panasonic Corporation, et al., filed August 14, 2014 in the Supreme Court, Province of British Columbia; Martin v. Panasonic Corporation, et al., filed September 25, 2014 in the Superior Court, Province of Quebec, District of Montreal; Parikh v. Panasonic Corporation, et al., filed October 3, 2014 in the Superior Court of Justice, Province of Ontario; Fraser v. Panasonic Corporation, et al., filed October 3, 2014 in the Court of Queen’s Bench, Province of Saskatchewan; Pickering v. Panasonic Corporation, et al., filed October 6, 2014 in the Supreme Court, Province of British Columbia; McPherson v Panasonic Corporation et al., filed on November 6, 2014 in the Court of Queen’s Bench, Province of Manitoba; and Allott v AVX Corporation, et al., filed on May 13, 2016 in the Superior Court of Justice, Province of Ontario. The Canadian Complaints generally allege the same unlawful acts as in the U.S. Class Action Complaint, assert claims under Canada’s Competition Act as well as various civil and common law causes of action, and seek injunctive and equitable relief and money damages.

On December 6, 2018 the claims against KEMET and KEC in Leclaire were dismissed. In addition, Parikh and Taylor have been stayed in favor of Cygnus, and Badamshin, Martin and Herard have been stayed in favor of LeClaire. Further, on November 18, 2018, the Ontario Supreme Court of Justice temporarily stayed Cygnus pending the outcome of a matter on appeal concerning class certification, and the Ramsay plaintiffs voluntarily suspended that proceeding until class certification for Cygnus has been determined.

TOKIN-Specific Legal Proceedings

As previously reported, on September 2, 2015, the United States Department of Justice announced a plea agreement with TOKIN in which TOKIN agreed to plead guilty to a one-count felony charge of unreasonable restraint of interstate and foreign trade and commerce in violation of Section 1 of the Sherman Act, and to pay a criminal fine of $13.8 million. The plea agreement was approved by the United States District Court, Northern District of California, on January 21, 2016. The fine is payable over 5 years in six installments of $2.3 million each, plus accrued interest. TOKIN has paid the first five installments, with the final payment due January 21, 2021.

As previously reported, on December 21, 2015, the Taiwan Fair Trade Commission (“TFTC”) notified TOKIN of its decision to impose an administrative fine on TOKIN of NTD 609.1 million (approximately $20.2 million) for violation of the Taiwan Fair Trade Act. TOKIN filed its appeal of the TFTC's decision with the Taipei High Administrative Court on January 15, 2016. On August 23, 2018, the Taipei High Administrative Court issued its judgment dismissing TFTC's fine decision, against which TFTC submitted its petition for appeal to the Taiwan Administrative Supreme Court. On December 31, 2019, the Taiwan Administrative Supreme Court granted judgment in favor of the TFTC appeal, but directed the TFTC to recalculate the fine, in part by excluding the revenues of TOKIN’s subsidiaries which had been included in the calculations of the original fine. The TFTC’s revised fine determination is expected during the summer 2020. On March 17, 2020, the TFTC refunded to TOKIN the NTD 243.6 million (approximately $8.1 million) which TOKIN had paid under the original fine; subject to any rights of appeal, TOKIN remains liable for full payment of the revised fine.

As previously reported, on March 21, 2018, the European Commission announced a decision by which TOKIN was fined EUR 8.8 million (approximately $10.3 million) directly and EUR 5.0 million (approximately $5.9 million) jointly and

severally with NEC Corporation, for violation of the competition laws of the European Union. Payment of the fines were made on June 28, 2018. On June 4, 2018, TOKIN filed an appeal with the General Court of the European Union, seeking annulment and/or reduction of the fines.

As previously reported, on November 30, 2018, the Korean Fair Trade Commission (“KFTC”) notified TOKIN of its decision to impose an administrative fine on TOKIN of KRW 8.1 billion (approximately $7.2 million) for violation of South Korea's Monopoly Regulation and Fair Trade Law. TOKIN filed its appeal of the KFTC's decision with the Seoul High Court on December 28, 2018. Payment of the fine is not stayed during appeal; TOKIN paid the full fine amount on February 1, 2019. On December 11, 2019, the Seoul High Court issued its judgment, dismissing TOKIN’s appeal. On December 31, 2019, TOKIN submitted its petition for appeal of the High Court’s decision to the Supreme Court of Korea.

As noted above, TOKIN, along with KEMET and certain of its other subsidiaries, were named as defendants in the Canadian Complaints. On May 30, 2018, TOKIN entered into a definitive settlement agreement with the plaintiffs in the Canadian Complaints Pursuant to the terms of the settlement agreement, in consideration of the release of TOKIN and its subsidiaries (including TOKIN America, Inc.) from claims asserted in the Canadian Complaints, TOKIN paid CAD 2.9 million (approximately $2.2 million) to a settlement class of purchasers of aluminum and tantalum electrolytic capacitors and purchasers of products containing such capacitors. The settlement payment was made on June 27, 2018. On January 20, 2020, the Supreme Court of British Columbia approved the settlement agreement, completing all required approvals.

As previously reported, on July 2, 2018, TOKIN and TOKIN America Inc. were named as two of 20 defendants in a purported U.S. class action antitrust lawsuit, In re: Inductors Antitrust Litigation, No. 5:18-cv-00198-EJD-NC, filed in the United States District Court, Northern District of California, regarding the sale of inductors brought on behalf of direct product purchasers and indirect product purchasers. The complaint alleged violations of Sections 1 and 3 of the Sherman Act, for which it sought injunctive and equitable relief and money damages. On September 24, 2019, the Court granted the defendants’ motion to dismiss the lawsuit; the plaintiffs were granted leave to amend the complaint. On November 20, 2019, the plaintiffs filed their amended complaint, in which TOKIN and TOKIN America Inc. remained as two of 21 named defendants. On January 15, 2020, TOKIN and TOKIN America filed a motion to dismiss the amended complaint; the plaintiffs’ motion in opposition was filed on March 16.

As of March 31, 2020, the Company's accrual for antitrust and civil litigation claims totaled $77.4 million. This amount includes the best estimate of losses which may result from the ongoing antitrust investigations, civil litigation and claims. However, the actual outcomes could differ from what has been accrued.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

~~ITEM 4A. INFORMATION ABOUT OUR EXECUTIVE OFFICERS~~27

Name	Age	Position	Years withCompany
William M. Lowe, Jr.	66	Chief Executive Officer and Director	11
Gregory C. Thompson	63	Executive Vice President and Chief Financial Officer	—
Charles C. Meeks, Jr.	57	Executive Vice President, Solid Capacitors-Tantalum	35
Shigenori (Sean) Oyama	62	Executive Vice President, Magnetics, Sensors, and Actuators	37
R. James Assaf	59	Senior Vice President, General Counsel and Secretary	11
Claudio Lollini	39	Senior Vice President of Global Sales and Marketing	14
Stefano Vetralla	56	Senior Vice President and Chief Human Resources Officer	11
Susan B. Barkal	56	Senior Vice President Quality, Chief Compliance Officer and Chief of Staff	19
Dr. Phillip M. Lessner	60	Senior Vice President and Chief Technology Officer	23
Andreas Meier	51	Senior Vice President, Film and Electrolytic	21
Robert S. Willoughby	58	Senior Vice President, Solid Capacitors-Ceramics	33
Michael L. Raynor	53	Vice President and Corporate Controller	12
Richard J. Vatinelle	55	Vice President and Treasurer	6

INFORMATION ABOUT OUR EXECUTIVE OFFICERS.

The name, age, business experience, positions and offices held, and period served in such positions or offices for each of the executive officers and certain key employees of the Company are listed below. There are no family relationships among our executive officers and directors or any other arrangement or understanding pursuant to which any person was selected as an officer.



Name	Age	Position	Years with Company
William M. Lowe, Jr.	67	Chief Executive Officer and Director	12
Gregory C. Thompson	64	Executive Vice President and Chief Financial Officer	1
Charles C. Meeks, Jr.	58	Executive Vice President, Solid Capacitors–Tantalum	36
Shigenori (Sean) Oyama	63	Executive Vice President and President–TOKIN Corporation	38
R. James Assaf	60	Senior Vice President, General Counsel and Secretary	12
Claudio Lollini	40	Senior Vice President of Global Sales and Marketing	15
Stefano Vetralla	57	Senior Vice President and Chief Human Resources Officer	12
Robert S. Willoughby	59	Senior Vice President, Solid Capacitors–Ceramics	34
Susan B. Barkal	57	Senior Vice President Quality and Global Supply Chain, Chief Compliance Officer and Chief of Staff	20
Fumihiro Katakura	60	Senior Vice President, Magnetics, Sensors and Actuators	11
Dr. Phillip M. Lessner	61	Senior Vice President and Chief Technology Officer	24
Andreas Meier	52	Senior Vice President, Film and Electrolytic	22
Michael L. Raynor	54	Vice President and Corporate Controller	13
Richard J. Vatinelle	56	Vice President and Treasurer	7

Executive Officers

William M. Lowe, Jr., Chief Executive Officer and Director, was named such in December 2018. Mr. Lowe joined KEMET in July 2008 as its Executive ~~Price~~Vice President and Chief Financial Officer. Before joining KEMET, Mr. Lowe was the Vice President, Chief Operating Officer, and Chief Financial Officer of Unifi, Inc., a producer and processor of textured synthetic yarns from January 2004 to October 2007. Prior to holding that position, he was Executive Vice President and Chief Financial Officer for Metaldyne, an automotive components manufacturer. He also held various financial management positions with ArvinMeritor, Inc., a premier global supplier of integrated automotive components. He received his B.S. degree in business administration with a major in accounting from Tri-State University and was certified as a Certified Public Accountant in the state of Ohio (current license status inactive).

Gregory C. Thompson, Executive Vice President and Chief Financial Officer, joined KEMET in such capacity in December 2018. Earlier that month, Mr. Thompson joined KEMET as its Executive Vice President-–Finance. Mr. Thompson previously served as Executive Vice President of Axiall Corporation, a Delaware corporation, from July 2015 until October 2016 and Chief Financial Officer from February 2008 until October 2016. Before beginning at Axiall in 2008, Mr. Thompson served as the Senior Vice President and Chief Financial Officer of Invacare Corporation, a medical equipment manufacturer. Prior thereto, he served in various financial management positions with Sensormatic Electronics Corporation, Wang Laboratories, Inc. and ~~Price Waterhouse~~PriceWaterhouse. He is a Certified Public Accountant and is a Member of the American Institute of Certified Public Accountants. He holds a Bachelor of Science degree in Accounting from Virginia Tech.

Charles C. Meeks, Jr., Executive Vice President, Solid Capacitors-–Tantalum, was named such in July 2017. He joined KEMET in December 1983 in the position of Process Engineer, and has held various positions of increased responsibility including the positions of Plant Manager and Director of Operations, Ceramic Product Line. He was named Vice President, Ceramic Product Line in June 2005, Senior Vice President, Ceramic Product Line in October 2007, Senior Vice President, Ceramic and Film and Electrolytics in March 2010, Executive Vice President Ceramic and Film and Electrolytics in May 2011, and Executive Vice President, Solid Capacitors in July 2017 prior to his appointment to his current position. In addition, since January 2000, Mr. Meeks has served as President of Top Notch Inc., a private company that offers stress management therapy services. Mr. Meeks received a Masters of Business Administration degree and a Bachelor of Science degree in Ceramic Engineering from Clemson University.

26Shigenori (Sean) Oyama, Executive Vice President and President–TOKIN Corporation, was named such in December 2019. Prior to his current position, Mr. Oyama was appointed Executive Vice President, Magnetics, Sensors and Actuators in

and Executive Vice President, Solid Capacitors in July 2017 prior to his appointment to his current position. In addition, since January 2000, Mr. Meeks has served as President of Top Notch Inc., a private company that offers stress management therapy services. Mr. Meeks received a Masters of Business Administration degree and a Bachelor of Science degree in Ceramic Engineering from Clemson University.28

~~Shigenori (Sean) Oyama, Executive Vice President, Magnetics, Sensors, and Actuators, was named such in~~ July 2017 after the Company's acquisition of TOKIN. Mr. Oyama joined TOKIN in 1982. He moved to California in 1989 and held various management roles in Field Application Engineering, Sales and Marketing at TOKIN America Inc. Mr. Oyama returned to TOKIN Japan and was appointed General Manager of Product Marketing for Energy Devices in 2003, General Manager and Vice President for the EMC Division in 2005, Senior Vice President of all Business Groups in 2010, followed by his appointment to President of TOKIN in 2012. Mr. Oyama holds a B.S. degree in Electrical Engineering from Tohoku University.

R. James Assaf, Senior Vice President, General Counsel and Secretary, was named such in February 2014. Mr. Assaf joined KEMET as Vice President, General Counsel in March 2008, and was appointed Vice President, General Counsel and Secretary in July 2008 prior to his appointment to his current position. Before joining KEMET, Mr. Assaf served as General Manager for InkSure Inc., a start-up seller of product authentication solutions. He had also previously held several positions with Sensormatic Electronics Corporation, including Associate General Counsel and Director of Business Development, Mergers and Acquisitions. Prior to Sensormatic, Mr. Assaf served as an Associate Attorney with the international law firm Squire Sanders and Dempsey. Mr. Assaf received his Bachelor of Arts degree from Kenyon College and his Juris Doctor degree from Case Western Reserve University School of Law.

Claudio Lollini, Senior Vice President of Global Sales and Marketing, was named such in July 2015. He joined KEMET in October 2007 through the Company’s acquisition of Arcotronics Italia S.p.A., where he served as Manager, Sales-–Greater China. Mr. Lollini was appointed Director of Product Management for Film and Electrolytic in January 2009, Director of Sales Taiwan in June 2012, and Vice President, Sales-Asia Pacific in May 2013 prior to his appointment to his current position. Mr. Lollini holds a Bachelor of Science degree in Engineering Management from the University of Bologna and a Master of Business Administration from the Kellogg School of Management and is a 2011 graduate of the KEMET Leadership Forum.

Stefano Vetralla, Senior Vice President and Chief Human Resources Officer, was named such in July 2015. He joined KEMET in May 2008 as Director-HR, Film and Electrolytic Business Group. Mr. Vetralla was appointed Director-HR, Global Sales and Film and Electrolytic Business Group in January 2011; Senior Director HR, Global Sales and Film and Electrolytic Business Group in January 2012; Senior Director-HR, Field in September 2012; Vice President-Global HR Operations in September 2013; and Vice President-Global HR and Chief Human Resources Officer in May 2014 prior to his current appointment. Prior to KEMET, he held Human Resources positions of increasing responsibility in international corporations including Hewlett-Packard Company, 3Com Corporation and Telindus /Belgacom. Mr. Vetralla holds a Law Degree from the State University of Milan and is a 2011 graduate of the KEMET Leadership Forum.

Robert S. Willoughby, Senior Vice President, Solid Capacitors-–Ceramics, was named such in July 2017. He joined KEMET in December 1985 and has held positions of increasing responsibility within Diagnostic, Quality, New Product and Process Engineering. Mr. Willoughby served as Director-Ceramic Operations from July 2007 until March 2010; served as Vice President of Operations-Film and Electrolytic Business Unit from March 2010 until May 2013; served as Vice President, Film and Electrolytic Business Group from May 2013 through December 2014; and served as Senior Vice President-Film and Electrolytic Business Group from January 2015 through April 2016. Mr. Willoughby was named Senior Vice President-–Global Supply Chain in May 2016, prior to his appointment to his current position. He holds a Bachelor of Science degree in Industrial Engineering from Clemson University and is a 2007 graduate of the KEMET Leadership Forum.

Other Key Employees

Susan B. Barkal, Senior Vice President Quality and Global Supply Chain, Chief Compliance Officer and Chief of Staff, was named such in ~~February~~December ~~2014~~2019. Ms. Barkal joined KEMET in November 1999 and has served as Quality Manager for the Tantalum Business Group (now a part of Solid Capacitors), Technical Product Manager for all Tantalum product lines and Director of Tantalum Product Management. Ms. Barkal was appointed Vice President of Quality and Chief Compliance Officer in December 2008 and Senior Vice President Quality, Chief Compliance Officer and Chief of Staff in February 2014 prior to her appointment to her current position. Ms. Barkal holds a B.S. degree in Chemical Engineering from Clarkson University, a Master of Science degree in Mechanical Engineering from California Polytechnic University and is a 2007 graduate of the KEMET Leadership Forum.

~~Dr. Philip~~Fumiro ~~M. Lessner~~Katakura, Senior Vice President, ~~and~~Magnetics, ~~Chief~~Sensors ~~Technology~~& ~~Officer~~Actuators, was named such in ~~February~~December ~~2014~~2019. HePrior ~~joined~~to ~~KEMET~~his incurrent ~~March~~position, ~~1996~~Mr. asKatakura awas ~~Technical~~appointed ~~Associate~~Vice inPresident–Global ~~the~~Supply ~~Tantalum~~Chain ~~Technology~~in ~~Group.~~July He2017 ~~has~~after ~~held~~the ~~several~~Company’s ~~positions~~acquisition of ~~increasing~~TOKIN. ~~responsibility~~Mr. Katakura joined NEC Corporation in ~~the~~April ~~Technology~~1982 and ~~Product~~held ~~Management~~various ~~areas~~management ~~including~~roles ~~Senior~~there ~~Technical~~prior ~~Associate,~~to ~~Director~~his ~~Tantalum~~appointment ~~Technology,~~as ~~Director~~Head ~~Technical~~of ~~Marketing~~Corporate ~~Services~~Strategy ~~and~~for ~~Vice~~NEC-TOKIN ~~President~~Corporation ~~Tantalum~~in ~~Technology~~2011. DrMr. ~~Lessner~~ ~~was~~Katakura ~~named~~holds a Bachelor of Arts degree in Politics from Keio University.

27Dr. Philip M. Lessner, Senior Vice President and Chief Technology Officer, was named such in February 2014. He joined KEMET in March 1996 as a Technical Associate in the Tantalum Technology Group. He has held several positions of

Vice President, Chief Technology Officer and Chief Scientist in December 2006, Senior Vice President, Chief Technology Officer and Chief Scientist in May 2011 and Senior Vice President and Chief Technology and Marketing Officer in November 2012 prior to his appointment to his current position. Dr. Lessner received a PhD in Chemical Engineering from the University of California, Berkeley and a B.S. in Chemical Engineering from Cooper Union.29

~~Andreas~~increasing ~~Meier,~~responsibility ~~Senior~~in ~~Vice~~the ~~President-Film~~Technology and ~~Electrolytic,~~Product ~~was~~Management ~~named~~areas ~~such~~including inSenior ~~May~~Technical ~~2016.~~Associate, ~~Mr.~~Director ~~Meier~~Tantalum ~~joined~~Technology, ~~KEMET~~Director inTechnical ~~January~~Marketing ~~1998~~Services and ~~has~~Vice ~~held~~President ~~several~~Tantalum ~~positions~~Technology. ofDr. Lessner ~~increasing~~was ~~responsibility~~named inVice ~~the~~President, ~~Sales~~Chief ~~and~~Technology ~~Product~~Officer ~~Management~~and ~~areas.~~Chief ~~Mr.~~Scientist ~~Meier~~in ~~was~~December ~~named~~2006, Senior Vice President~~-Product Management~~, ~~Film~~Chief Technology Officer and ~~Electrolytics~~Chief Scientist in ~~January,~~May ~~2010~~2011 and Senior Vice President, ~~Sales-EMEA~~and Chief Technology and Marketing Officer in ~~December,~~November 2012 prior to his appointment to his current position. MrDr. Lessner ~~Meier~~received ~~holds~~ a ~~degree~~PhD in ~~Electronic~~Chemical Engineering from the University of ~~Paderborn~~California, Berkeley and a B.S. in ~~Germany~~Chemical Engineering from Cooper Union.

Andreas Meier, Senior Vice President-Film and Electrolytic, was named such in May 2016. Mr. Meier joined KEMET in January 1998 and has held several positions of increasing responsibility in the Sales and Product Management areas. Mr. Meier was named Vice President-Product Management, Film and Electrolytics in January 2010 and Vice President, Sales-EMEA in December, 2012 prior to his appointment to his current position. Mr. Meier holds a degree in Electronic Engineering from the University of Paderborn in Germany.

Michael L. Raynor, Vice President and Corporate Controller, was named such in November 2012. Mr. Raynor joined the Company in July 2007 as the Assistant Corporate Controller; in November of 2008 Mr. Raynor was named Director of Financial Planning and Analysis prior to his appointment to his current position. Prior to joining KEMET, Mr. Raynor held various controller level positions with distribution and manufacturing companies. Mr. Raynor received a Bachelor of Arts degree in Economics and a Masters of Accounting from the University of North Carolina at Chapel Hill, is a Certified Public Accountant in the state of North Carolina and is a 2015 graduate of the KEMET Leadership Forum.

Richard J. Vatinelle, Vice President and Treasurer, was named such in March 2014. Mr. Vatinelle joined the Company in November 2012 as Controller-Tantalum Business Group. Prior to joining KEMET, Mr. Vatinelle served for two years as Regional Controller-Latin America for Leo Pharma A/S, a global manufacturer of pharmaceutical products. From 2007 to 2009 he served as Director of Finance, Policies and Reporting, for Stiefel Laboratories, a pharmaceutical company specialized in dermatology. Mr. Vatinelle’s career in finance includes eight years with Conagra Foods Inc., where he held various international finance roles, and eleven years with Banque Sudameris, an international banking group where he began his career. Mr. Vatinelle holds a Bachelor of Science degree in Finance and International Management from Georgetown University and is a 2015 graduate of the KEMET Leadership Forum.

2830

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market for Common Stock of the Company

Our common stock trades on the ~~NYSE~~New York Stock Exchange under the ticker symbol “KEM.” We had 7264 stockholders of record as of May 2726, ~~2019~~2020.

Dividend Policy

Between the date of our initial public offering in October 1992 and until fiscal year 2019, we had not declared or paid any cash dividends on our common stock. Beginning in the third quarter of fiscal year 2019, we announced our intention to pay regular quarterly cash dividends to holders of our common stock. Cash dividends of $0.05 per share were paid to holders of our common stock during the third and fourth quarters of fiscal year 2019. Onand ~~May 16, 2019,~~ the ~~Company~~first ~~announced~~and asecond ~~cash~~quarters ~~dividend~~ of ~~$0.05~~fiscal ~~per~~year ~~share of the Company's common stock~~2020. ~~Payment will be made on June 10, 2019 to shareholders of record at the close of business on May 30, 2019.~~

On ~~Any~~November ~~future determination to pay dividends will be at the discretion of our Board and will depend upon~~11, ~~among other factors~~2019, the ~~capital~~Company ~~requirements,~~entered ~~operating~~into ~~results,~~the ~~and~~Agreement ~~our~~pursuant ~~financial~~to ~~condition.~~which InYageo ~~addition,~~will ~~under~~acquire ~~the~~all ~~terms~~ of the ~~Revolving~~Company's ~~Line~~outstanding shares of ~~Credit~~common ~~(as~~stock. ~~hereinafter~~The ~~defined),~~Agreement werestricts ~~are~~our ~~restricted~~ability ~~from~~to ~~paying~~continue ~~cash~~making ~~dividends~~dividend inpayments anduring ~~amount~~the ~~greater~~pendency ~~than~~of ~~$15.0 million in~~ the ~~aggregate per year~~Merger.

29In addition, under the terms of the Revolving Line of Credit (as hereinafter defined), we are restricted from paying cash dividends in an amount greater than $15.0 million in the aggregate per year.

PERFORMANCE GRAPH

The following graph compares our cumulative total stockholder return for the past five fiscal years, beginning on March 31, ~~2014~~2015, with the Russell 3000 index and a peer group (the “Peer Group”) comprised of certain companies which we consider to be peers because they either manufacture capacitors or other electronic components, or compete in the same market segments in which we compete. The ~~Peer~~graph ~~Group~~assumes isthat ~~comprised~~$100 ofwas ~~AVX~~invested ~~Corporation~~on March 31, ~~Littelfuse~~2015 in each of our common stock, ~~Inc.~~the Russell 300 index, and ~~Vishay~~the ~~Intertechnology~~Peer Group. The graph also assumes that all dividends, ~~Inc~~ if paid, were reinvested.

*$100 invested on March 31, 2014 in stock or index, including reinvestment of dividends

RETURNS

Years Ending March 31,

	2014		2015		2016		2017		2018		2019
	2015		2016		2017		2018		2019		2020
KEMET Corporation	$	100.00	$	7146.2662	$	33289.2286	$	~~206~~437.5492	$	~~312~~411.0599	$	~~293~~589.7794
Russell 3000	100.00		~~120~~97.5365		~~132~~113.3300		~~128~~126.4523		~~149~~134.0970		~~166~~120.0510
Peer Group	100.00		104.50		109.80		146.25		182.00		170.47
New Peer Group (1)	100.00		84.80		102.79		115.73		121.76		133.39
Old Peer Group (2)	100.00		104.65		139.08		172.82		161.29		147.52

______________________________________________________________________________

⁽¹⁾ The new peer group consists of the following companies: Vishay Intertechnology, Inc., TDK-EPC Corporation, Murata Manufacturing Co, Ltd., and Taiyo Yuden Co, Ltd. Our board of directors uses this peer group to benchmark our performance. The peer group is weighted by market capitalization.

⁽²⁾ The old peer group consists of the following companies: Vishay Intertechnology, Inc., AVX Corporation, and Littelfuse, Inc. AVX Corporation has been excluded from the new peer group as this entity has been recently acquired. Littelfuse Inc. has been excluded from the new peer group as this entity is no longer considered a main competitor by the Solid Capacitors reportable segment.

Unregistered Sales of Equity Securities

We did not sell any of our equity securities during fiscal year ~~2019~~2020 that were not registered under the Securities Act of 1933, as amended (the “Securities Act”).

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Repurchase of Equity Securities

~~The~~There ~~following~~were ~~table~~no ~~provides~~repurchases ~~information relating to our purchase~~ of ~~shares~~the ofCompany's ~~our~~equity ~~common~~securities ~~stock~~ during the quarter ended March 31, ~~2019:~~2020.

Periods	(a) Total Number of Shares Purchased (1)	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	(d) Maximum Number of Shares that may yet be Purchased Under the Plan or Programs (2)
January 1 to January 31, 2019	—	$	—	—	—
February 1 to February 28, 2019	447	18.31		—	—
March 1 to March 31, 2019	21,190	17.51		—	—
Total for Quarter Ended March 31, 2019	21,637	$	17.53

_______________________________________________________________________________

(1) Represents shares withheld by the Company upon vesting of restricted stock to pay taxes due. The Company does not currently have a publicly announced share repurchase plan or program.

(2) The Company does not currently have a publicly announced share repurchase plan or program.

Equity Compensation Plan Disclosure

The following table summarizes equity compensation plans approved by stockholders and equity compensation plans that were not approved by stockholders as of March 31, 2020:

	(a)	(b)		(c)
Plan category	Number ofsecurities to beissued uponexercise ofoutstandingoptions, warrants,and rights	Weighted-averageexerciseprice ofoutstandingoptions,warrants,and rights		Number of securitiesremaining available forfuture issuance underequity compensationplans (excludingsecurities reflected incolumn (a))
Equity compensation plans approved by stockholders	1,~~962~~971,~~361~~775(1)	$	67.3704	43,~~284~~889,~~048~~781
Equity compensation plans not approved by stockholders	—	—		—
Total	1,~~962~~971,~~361~~775	$	67.3704	43,~~284~~889,~~048~~781

______________________________________________________________________________

(1) Includes ~~419~~336,~~985~~688 shares subject to outstanding LTIP Awards (time-based), ~~208~~294,~~442~~687 shares subject to outstanding LTIP Awards (performance-based) and 1,~~178~~248,~~817~~450 outstanding non-vested restricted shares of Common Stock; the weighted-average exercise price does not take into account these shares as they have no exercise price.

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ITEM 6. SELECTED FINANCIAL DATA.

The following table summarizes our selected historical consolidated financial information for each of the last five years. The selected financial information under the captions “Summary of Operations,” “Per Share Data,” “Balance Sheet Data,” and “Other Data” shown below has been derived from our audited Consolidated Financial Statements. This table should be read in conjunction with other consolidated financial information of KEMET, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements, included elsewhere herein. The data set forth below may not be indicative of our future financial condition or results of operations (see Item 1A, “Risk Factors”) (amounts in thousands except per share amounts):

	Fiscal Years Ended March 31,
	2019			2018			2017			2016			2015
	2020			2019			2018			2017			2016
Summary of Operations:
Net sales (1)	$	1,382,818		$	1,200,181		$	757,338		$	734,823		$	823,192
Net sales	$	1,260,554		$	1,382,818		$	1,200,181		$	757,338		$	734,823
Operating income (1)	200,849			112,852			34,968			33,833			23,832
Operating income	147,866			200,849			112,852			34,968			33,833
Interest income	(23,~~035~~325		)	(~~809~~2,035		)	(24809		)	(1424		)	(1514		)
Interest expense	2111,~~239~~021			3221,~~882~~239			3932,~~755~~882			39,~~605~~755			4039,~~701~~605
Income (loss) from continuing operations (1)	206,587			254,127			47,157			(53,629		)	(19,522		)
Net income (loss)	41,381			206,587			254,127			47,157			(53,629		)
Income from discontinued operations, net of income tax expense (benefit)	—			—			—			—			5,379
Per Share Data:
Net income (1)	206,587			254,127			47,157			(53,629		)	(14,143		)
Net income (loss) per basic share	$	0.71		$	3.57		$	4.81		$	1.01		$	(1.17	)
Per Share Data (1):
Net income (loss) per diluted share	0.70			3.50			4.33			0.85			(1.17		)
Net income (loss) from continuing operations per basic share	$	3.57		$	4.81		$	1.01		$	(1.17	)	$	(0.43	)
Dividends declared per share	0.10			0.10			—			—			—
Net income from discontinued operations, net of income tax expense (benefit) per basic share	—			—			—			—			0.12
Net income (loss) per basic share	3.57			4.81			1.01			(1.17		)	(0.31		)
Net income (loss) from continuing operations per diluted share	3.50			4.33			0.85			(1.17		)	(0.43		)
Net income from discontinued operations, net of income tax expense (benefit) per diluted share	—			—			—			—			0.12
Net income (loss) per diluted share	3.50			4.33			0.85			(1.17		)	(0.31		)
Dividends declared per share	0.10			—			—			—			—
Balance Sheet Data:
Total assets (1)	$	1,318,095		$	1,222,923		$	739,439		$	699,780		$	742,604
Total assets	$	1,393,097		$	1,318,095		$	1,222,923		$	739,439		$	699,780
Working capital	~~363~~343,~~580~~783			~~391~~363,~~295~~580			~~248~~391,~~252~~295			~~228~~248,~~793~~252			228,~~478~~793
Long-term debt, less current portion	~~266~~235,~~041~~673			~~304~~254,~~083~~771			~~386~~304,~~211~~083			~~385~~386,~~833~~211			~~386~~385,~~320~~833
Other non-current obligations	~~125~~193,~~360~~392			~~152~~136,~~249~~630			60152,~~707~~249			7460,~~892~~707			5774,~~131~~892
Stockholders’ equity (2)	639,415			463,875			155,569			112,481			164,682
Stockholders’ equity	647,262			639,415			463,875			155,569			112,481
Other Data:
Cash flow provided by (used in) operating activities	$	~~131~~158,~~731~~856		$	~~120~~131,~~761~~731		$	71120,~~667~~761		$	3271,~~365~~667		$	2432,~~402~~365
Capital expenditures	146,056			65,004			25,617			20,469			22,232
Cash flow provided by (used in) investing activities	(143,313		)	(147,012		)	102,364			(25,598		)	(20,588		)
Research and development expenses(1)	44,612			39,114			26,693			24,613			25,513
Cash flow provided by (used in) financing activities	8,814			(56,657		)	(55,798		)	(125		)	(3,803		)
Capital expenditures	146,331			146,056			65,004			25,617			20,469
Research and development expenses	49,264			44,612			39,114			26,693			24,613

~~(1) Fiscal years ended March 31, 2018 and 2017 adjusted due to the adoption of Accounting Standard Codification ("ASC") 606, Revenue from Contracts with Customers (“ASC 606”).~~ 34

(2) Fiscal years ended March 31 ,2018 and 2017 adjusted due to the adoption of ASC 606.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis provide information that we believe is useful in understanding our operating results, cash flows, and financial condition for the three fiscal years ended March 31, ~~2019~~2020, ~~2018~~2019, and ~~2017~~2018. The discussion should be read in conjunction with, and is qualified in its entirety by reference to, the consolidated financial statements and related notes appearing elsewhere in this report. The discussions in this document contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties. Our actual future results could differ materially from those discussed here. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the Item 1A, “Risk Factors” and, from time to time, in our other filings with the Securities and Exchange Commission.

Our Competitive Strengths

We believe that our Company benefits from the following competitive strengths:

Strong Customer Relationships

We have a large and diverse customer base. We believe that our emphasis on quality control and our performance history establishes loyalty with OEMs, EMSs and distributors. Our customer base includes most of the world’s major electronics OEMs (including Bosch Group, Cisco Systems, Inc., Continental AG, Delphi Technologies PLC, Dell Inc., Apple Inc., Google LLC, ~~Nintendo,~~ Tesla Inc., ~~Delphi~~and ~~Technologies PLC,~~ ABB Group~~, and Horiba~~), EMSs (including Celestica Inc., Flextronics International LTD, Jabil Circuit, Inc., and Sanmina-SCI Corporation) and distributors (including TTI, Inc., Arrow Electronics, Inc., Satori Electric Co., and Avnet, Inc.). Our strong, extensive and efficient worldwide distribution network is one of our differentiating factors. We believe our ability to provide innovative and flexible service offerings, superior customer support and focus on speed-to-market results in a more rewarding customer experience, earning us a high degree of customer loyalty.

Breadth of Our Diversified Product Offering and Markets

We believe that we have the most complete line of primary capacitor types spanning a full spectrum of dielectric materials including tantalum, multilayer ceramic, solid and electrolytic aluminum and film capacitors. As discussed below, our acquisition of (and previous private label partnership with) TOKIN, has expanded our product offerings and markets. As a result, we believe we can satisfy virtually all of our customers’ capacitance needs, thereby strengthening our position as their supplier of choice. In addition, through our acquisition of TOKIN, we have products to assist in the management of electronic noise within a device and in communications between devices, as well as products that can sense and respond to human activity, physical vibration, and electric current. We sell our products into a wide range of end-markets, including computing, industrial, telecommunications, transportation, consumer, defense and healthcare across all geographical regions. No single end market industry accounted for more than 30% of net sales; although, one customer, an electronics distributor, accounted for more than 10% of our net sales in fiscal year ~~2019~~2020. No single end-use direct customer accounted for more than 5% of our net sales in fiscal year ~~2019~~2020. We believe that well-balanced product, geographic and customer diversification helps us mitigate some of the negative financial impact through economic cycles.

Leading Market Positions and Operating Scale

Based on net sales, we believe that we are the largest manufacturer of tantalum capacitors in the world and one of the largest manufacturers of direct current film capacitors in the world and have a substantial market position in the specialty ceramic and custom wet aluminum electrolytic markets. We believe KEMET's ~~Polymer~~polymer ~~Tantalum~~tantalum sales ~~now~~ lead the industry with ~~greater~~an ~~than~~estimated ~~50.0%~~ market share of approximately 50%. As discussed below, our acquisition of (and previous private label partnership with) TOKIN allows us to achieve true scale in operations to manage raw materials sourcing as well as maximize efficiencies. We believe that our leading market positions and operating scale allow us to realize production efficiencies, leverage economies of scale and capitalize on growth opportunities in the global capacitor market.

Strong Presence in Specialty Products

We engage in design collaboration with our customers in order to meet their specific needs and provide them with customized products satisfying their engineering specifications. Whether at the concept or design stage, KEMET provides engineering tools and samples to our customers to enable them to make the best product selections. KEMET’s Field Application Engineers (experts in electrical circuits) and Technical Product Managers (experts in product applications) assist our Sales team as they navigate the product selection process with our customers. During fiscal years ~~2019~~2020 and ~~2018~~2019, respectively, specialty products accounted for 3942.41% and 4139.84% of our revenue. By allocating an increasing portion of our management resources and research and development (“R&D”) investment particularly through our acquisition of (and previous partnership with) TOKIN to specialty products, we have established ourselves as one of the leading innovators in this

3335

fast growing, emerging segment of the market, including healthcare, renewable energy, telecommunication infrastructure and oil and gas.

Low-Cost and Strategic Locations

We believe our manufacturing plants located in Mexico, China, Vietnam, Indonesia, Thailand, Bulgaria, and Macedonia provide some of the lowest cost production facilities in the industry. Many of our key customers relocated or added production facilities to Asia, particularly China. We believe our manufacturing production footprint is essential to best meet our customers' demands, production needs, and total value proposition.

Our Brand

Founded by Union Carbide in 1919 as KEMET Laboratories, we believe that we have established a reputation as a high quality, efficient and affordable partner that sets our customers’ needs as the top priority. This has allowed us to successfully attract loyal clientele and enable us to expand our operations and market share over the past few years. We believe our commitment to addressing the needs of the industry in which we operate has differentiated us from our competitors. In addition to our traditional reputation of being the “Easy-To-Buy-From” company by providing excellent customer service and on-time delivery, we have now evolved to be the “Easy-To-Design-In” company with the addition of technical resources like KEMET’s online Engineering Center and capacitor selection simulation tools.

Our People

We believe that we have successfully developed a unique corporate culture based on innovation, customer focus and commitment. We have a strong, highly experienced and committed team in each of our markets. Many of our professionals have developed unparalleled experience in building leadership positions in new markets, as well as successfully integrating acquisitions. Our 2122-member senior management team has an average of 1820 years of experience with us and an average of 2829 years of experience in the manufacturing industry.

Business Strategy

Our strategy is to use our position as a leading, high-quality manufacturer of electronic components and materials to capitalize on the increasingly demanding requirements of our customers. Refer to “Item 1. Business” for KEMET's strategic highlights. Other important elements of our strategy include:

One KEMET Campaign.

We continue to focus on improving our commercial and technological capabilities through various initiatives that all fall under our One KEMET campaign. The One KEMET campaign aims to ensure that we, as a company, are focused on the same goals and working with the same processes and systems to ensure consistent quality and service that allow us to provide our customers with the technologies they require at a competitive “total cost of ownership.” This effort was launched to ensure that, as we continue to grow, we not only remain grounded in our core principles but that we also use those principles, operating procedures and systems as the foundation from which to expand. These initiatives include our Lean and Six Sigma culture evolution, our global customer accounts management program and our evolution toward a philosophy of being “easy to design-in.”

Develop Our Significant Customer Relationships and Industry Presence.

We continue to focus on our responsiveness to our customers’ needs and requirements by making order entry and fulfillment easier, faster, more flexible and more reliable for our customers. ~~This~~We ~~will~~believe this can be accomplished by focusing on building products around customers’ needs and by giving decision-making authority to customer-facing personnel and by providing purpose-built systems and processes.

Leverage Our Technological Competence and Expand Our Leadership in Specialty Products

We continue to leverage our technological competence and our acquisition of TOKIN, by introducing new products in a timely and cost-efficient manner. This allows us to generate an increasing portion of our sales from new and customized solutions that meet our customers’ varied and evolving electronic component needs, as well as to improve our financial performance. We believe that by continuing to build on our strength in the higher growth and higher margin specialty segments of the capacitor, electro-magnetic, sensor and actuator markets, we will be well-positioned to achieve our long-term growth objectives while also improving our profitability. During fiscal year ~~2019~~2020, we introduced 3113,~~902~~233 new products of which ~~336~~1,361 were first to market, and specialty products accounted for 3942.41% of our revenue over this period.

3436

Further Expand Our Broad Capacitance Capabilities

We identify ourselves as the "Electronic Components" company and strive to be the supplier of choice for all our customers' capacitance needs across the full spectrum of dielectric materials including tantalum, multilayer ceramic, solid and electrolytic aluminum, film and paper. While we believe we have the most complete line of capacitor technologies across these primary capacitor types, we intend to continue to research and pursue additional capacitance technologies and solutions to maximize the breadth of our product offerings. As discussed below through our acquisition of TOKIN, we have further expanded our product offerings to electric double layer capacitors, electro-magnetic devices, sensors, and actuators. This expansion of product offerings is a continuation of our focus on the higher margin specialty segments of the market.

Selectively Target Complementary Acquisitions and Equity Investments

As strategic opportunities are identified, we will evaluate and possibly pursue them if they would enable us to enhance our competitive position and expand our market presence. Our strategy is to acquire complementary capacitor and other related businesses allowing us to leverage our business model, potentially including those involved in other passive components that are synergistic with our customers’ technologies and our current product offerings. For example, in fiscal year 2012, we acquired KBP, which has allowed us to vertically integrate certain manufacturing processes within Solid Capacitors. Further, as described below, in fiscal year 2018 we acquired TOKIN, a manufacturer of tantalum capacitors and electro-magnetic devices.

In fiscal year 2018, we entered into a Joint Venture Agreement for the formation of KEMET Jianghai Electronic Components Co. Ltd., a limited liability company located in Nantong, China with Jianghai (Nantong) Film Capacitor Co., Ltd, a subsidiary of Nantong Jianghai Capacitor Co. Ltd ("Jianghai"). KEMET Jianghai Electronic Components manufactures axial electrolytic, (H)EV Film DC brick, solid aluminum electrolytic, and hybrid aluminum electrolytic capacitors for distribution through the KEMET and Jianghai sales channels.

Also, during fiscal year 2018, the Company invested in Novasentis' Series-D round of funding. Novasentis makes the world's thinnest, electro mechanical polymer-based actuators that provide rich haptic feedback for a variety of applications, including augmented/virtual reality and wearables. Novasentis supplies its "smart" film and KEMET applies its expertise in manufacturing film capacitors to the development and commercial production of the actuators.

Promote the KEMET Brand Globally

We are focused on promoting the KEMET brand globally by highlighting the high-quality and high reliability of our products and our superior customer service. We will continue to market our products to new and existing customers around the world to expand our business. We continue to be recognized by our customers as a leading global supplier. For example, in calendar years 2015, 2016, and 2017, we received the “Global Operations Excellence Award” from TTI, Inc.

OnWe ~~June 29, 2018, we~~ received the “Supplier of the Year Award” in the “Consistent Supply Chain ” category for calendar year 2018 from Elektronika Sales Pvt. Ltd and ~~on March 22, 2019 TTI, Inc. announced that KEMET~~ won the 2018 and 2019 “Supplier Excellence Award.” from TTI, Inc.

Global Sales & Marketing Strategy

Our motto “Think Global, Act Local” describes our approach to sales and marketing. Each of our four sales regions (Americas, EMEA, JPKO and APAC) have account managers, field application engineers, and strategic marketing managers. In addition, we also have local customer and quality-control support in each region. This organizational structure allows us to respond to the needs of our customers on a timely basis and in their native language. The regions are managed locally and report to a senior manager who is on the KEMET Leadership Team. Furthermore, this organizational structure ensures the efficient communication of our global goals and strategies and allows us to serve the language, cultural and other region-specific needs of our customers. Our ~~customer base is approximately 180,000 strong, with our top 1,000 customers accounting for about 50.0% of our revenues. Our~~ go-to-market strategy includes a combination of strong engagement face to face with those top customers and an industry leading state of the art digital platform to engage the remaining customers. In addition, we partner with all the premier distributors in the electronics industry to ensure we obtain the biggest reach and leverage their expertise in stocking and servicing those customers.

TOKIN Acquisition

Through our acquisition of TOKIN and the previous cross licensing agreement and Amended and Restated Private Label Agreement with TOKIN, we have expanded product offerings and markets for both KEMET and TOKIN. KEMET’s strong presence in the western hemisphere and TOKIN's excellent position in Japan and Asia significantly enhanced our customer reach and has created cross-selling opportunities. Through TOKIN we believe we ~~can~~have ~~achieve~~achieved true scale in operations allowing us to manage raw materials sourcing as well as to maximize efficiencies and best practices in manufacturing and product development. We believe that the international management team of KEMET and TOKIN allows us to be more sensitive and aware of region-specific business needs compared to our competitors. Combining our R&D capabilities and university relationships allows us to be on the forefront of new developments and technological advancements in the capacitor industry. Leveraging R&D investment in both Japan and the U.S. enables KEMET to diversify beyond capacitors in the passives market as a result of the TOKIN acquisition.

35Subsequent to the acquisition of TOKIN, the Company has been able to improve its cash balance, net debt, and interest expense. The purchase of TOKIN gave the Company access to the Japanese capital markets, which allowed the Company to refinance its U.S. based debt with a Japanese bank. Interest rates in Japan are significantly lower than in the U.S.

aware of region-specific business needs compared to our competitors. Combining our R&D capabilities and university relationships allows us to be on the forefront of new developments and technological advancements in the capacitor industry. Leveraging R&D investment in both Japan and the U.S. enables KEMET to diversify beyond capacitors in the passives market as a result of the TOKIN acquisition.

Since the acquisition of TOKIN, the Company has been able to improve its cash balance, net debt, and interest expense. The purchase of TOKIN gave the Company access to the Japanese capital markets, which allowed the Company to refinance its U.S. based debt with a Japanese bank. Interest rates in Japan are significantly less than in the U.S., which contributed to the lower interest expense in fiscal year 2019 compared to fiscal years 2018 and 2017.

Recent Developments and Trends

~~TOKIN~~COVID-19

On ~~April~~March 1911, ~~2017~~2020, the ~~Company~~World ~~completed~~Health ~~its~~Organization ~~acquisition~~characterized the outbreak of ~~TOKIN,~~a ~~which~~novel atstrain ~~that~~of ~~time~~coronavirus, itknown ~~became~~as COVID-19, as a ~~100%~~global ~~owned~~pandemic ~~indirect~~and ~~subsidiary~~recommended ofcontainment ~~KEMET~~and mitigation measures. AsThere ~~such~~have been extraordinary and wide-ranging actions taken by international, ~~the~~federal, ~~results~~state ~~for~~and ~~fiscal~~local ~~year~~public ~~2017~~health and ~~the~~governmental ~~first~~authorities 19to ~~days~~contain and combat the spread of ~~fiscal~~COVID-19 ~~year~~across ~~2018~~the doworld, ~~not~~including ~~include~~quarantines, ~~TOKIN's~~“stay-at-home” ~~sales~~orders, travel-bans, and ~~expenses.~~similar ~~See~~mandates ~~Note~~for 2,many ~~"Acquisitions"~~individuals to ~~the~~substantially ~~Consolidated~~restrict ~~Financial~~daily ~~Statements~~activities and for ~~further~~many ~~discussion~~non-essential onbusinesses ~~the~~to ~~TOKIN~~curtail ~~acquisition~~or cease normal operations.

~~Tax~~Every ~~Cuts~~region is experiencing the severity of COVID-19 differently. As a result, we're monitoring and ~~Jobs~~complying ~~Act~~with local, state, and federal government requirements and mandated orders regarding our manufacturing, sales, and corporate

The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. The Act reduced the US federal corporate tax rate from 35% to 21%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and created new taxes on certain foreign-sourced earnings.37

Infacilities. ~~fiscal~~As ~~year 2018, the Company recorded provisional amounts for certain enactment-date effects~~ of ~~the~~March ~~Act~~31, by2020, ~~applying~~our ~~the~~manufacturing ~~guidance~~facilities in ~~SAB 118, because~~ the ~~Company~~North ~~had not yet completed its accounting for all of the tax effects of the Act. Certain provisions of the Act did not impact the Company until the fiscal year 2019. These provisions include~~America, ~~but are not limited to~~Asia, ~~the~~and ~~base erosion anti-abuse tax (“BEAT”)~~Europe, ~~the~~excluding ~~provision~~our ~~designed~~facility toin ~~tax global intangible low-taxed income (“GILTI”)~~Italy, ~~the~~were ~~foreign-derived~~operational ~~intangible~~with ~~income~~increased ~~(“FDII”)~~safety ~~provision, the expansion of the IRC Sec. 162(m) limitation,~~ and ~~the~~health ~~provision~~protocols ~~designed~~applicable to ~~limit~~all ~~interest expense deductions~~employees.

InOur ~~fiscal~~plants ~~year~~in ~~2019~~China (Suzhou, ~~the~~Anting, ~~Company~~and ~~completed~~Xiamen) ~~its~~were ~~accounting~~closed for ~~the~~a ~~enactment-date~~short ~~income~~period ~~tax~~of ~~effects~~time ofduring the ~~Act~~month of February, ~~based~~but ondid ~~legislative~~not ~~updates~~experience ~~relating~~any tomajor ~~the~~shut-downs. ~~Act~~Our ~~currently~~plant ~~available.~~in ~~These~~Pontecchio, ~~tax~~Italy ~~effects~~was ~~related~~shut-down in March in response to the ~~one~~Italian Prime Minister’s shut-~~time~~down ~~transition~~of ~~tax,~~all business activities in the ~~reduced~~country ~~corporate~~except ~~tax~~for ~~rate,~~those ~~and~~activities anessential ~~additional~~to ~~limitation~~the ~~for~~health ~~executive~~and ~~compensation~~safety ~~under~~of ~~IRC~~the ~~Sec~~country. ~~162(m).~~This ~~For~~government ~~further~~mandated ~~information~~stoppage onimpacted ~~the~~our ~~impact~~ability ofto ~~the~~produce ~~Act~~and ondeliver ~~the~~film ~~Company,~~capacitors. ~~refer~~Our toplant ~~Note~~in 11Pontecchio, ~~“Income~~Italy ~~Taxes~~reopened and resumed operations on April 4, 2020.”

~~Tariffs~~KEMET has instituted a work from home order and temporarily closed our corporate and sales offices in North America and Europe. In Asia, a work from home order has been instituted in our sales offices in accordance with local, state, and federal government mandates. The Company will continue to closely monitor the situation and maintain efforts to protect the health and safety of our employees. The Company is working to ensure business continuity for our employees and contractors through secure connections to our systems and access to necessary equipment while working from home.

OnWhile ~~July~~there 6,was ~~2018,~~little impact to the ~~United~~Company's ~~States~~results ~~government-imposed~~of ~~tariffs~~operations ~~according~~and tofinancial ~~Section~~condition ~~301~~as of ~~the~~March ~~Trade~~31, ~~Act~~2020 due to COVID-19, onthere ~~particular~~is ~~products~~uncertainty related to the future impact that ~~are~~the ~~imported~~global ~~into~~pandemic will have on the ~~United~~Company's ~~States~~results ~~from~~of ~~China~~operations and financial condition. The ~~Company~~extent ~~primarily~~to ~~imports~~which ~~film,~~COVID-19 ~~tantalum~~may ~~Polymer~~adversely impact our business depends on future developments, which are highly uncertain and ~~MSA~~unpredictable, ~~products~~including ~~into~~new information concerning the ~~United~~severity ~~States~~of ~~from~~the ~~China~~outbreak and the effectiveness of actions globally to contain or mitigate its effects. ~~The~~For ~~impact~~example, onvirus ~~the~~containment ~~Company's~~efforts ~~future~~could ~~results~~lead ~~from~~to ~~these~~reductions ~~tariffs~~in isplant ~~expected~~utilization levels and/or plant closures which could cause us to beincur ~~minimal~~additional asdirect ~~the~~costs ~~Company~~and ~~does~~lost ~~not~~revenue. ~~import~~If aour ~~significant~~suppliers ~~number~~experience ofsimilar impacts, we may have difficulty sourcing materials necessary to fulfill customer production requirements and transporting completed products ~~into~~to ~~the~~our ~~United~~end ~~States~~customers. ~~from~~As ~~China~~of March 31, ~~and~~2020, the ~~Company~~effects ~~expects~~of toCOVID-19 ~~pass~~have not had a significant impact on the ~~entire~~Company's ~~cost~~liquidity. ofThe Company is actively monitoring the ~~tariffs~~impact ~~onto~~of ~~its~~COVID-19 ~~direct~~on ~~customers~~its liquidity and ~~distributors.~~its ability to raise additional capital, if necessary.

~~Long-term~~Yageo ~~debt~~ Merger

On ~~October~~November 2911, ~~2018~~2019, the Company entered into athe ~~JPY~~Agreement 33pursuant to which Yageo will acquire all of the Company’s outstanding shares of common stock for $27.020 ~~billion~~per ~~Term~~share, ~~Loan~~subject ~~Agreement~~to (the ~~“TOKIN~~satisfaction ~~Term~~(or ~~Loan~~waiver ~~Facility~~of) specified conditions (the “Merger”). The consummation of the Merger is subject to customary closing conditions, including the approval by the Company’s stockholders. Certain further closing conditions in the Agreement include: (a) obtaining antitrust and other regulatory approvals in the United States and certain other jurisdictions (including, among ~~TOKIN~~others, China and Taiwan), (b) the ~~lenders~~absence ~~party~~of ~~thereto~~any applicable restraining order or injunction prohibiting the Merger, (c) receipt of approval from the Committee on Foreign Investment in the United States (“~~Lenders~~CFIUS”), ~~and~~(d) ~~Sumitomo~~obtaining ~~Mitsui~~foreign ~~Trust~~investment ~~Bank,~~approval ~~Limited~~by inthe ~~its~~Investment ~~capacity~~Commission, asMinistry ~~agent~~of Economic Affairs, Taiwan, (e) the ~~“Agent”)~~approval of Yageo’s stockholders, ~~arranger~~if ~~and~~required ~~Lender.~~by ~~Funding~~applicable ~~for~~law and (f) in the ~~TOKIN~~case ~~Term~~of ~~Loan~~Yageo’s ~~Facility~~obligations ~~occurred~~to oncomplete ~~November~~the 7Merger, ~~2018~~there not having been any “material adverse effect” (as customarily defined) on the Company. The ~~proceeds,~~Agreement ~~which~~contains ~~were~~certain ~~net~~restrictions on the conduct of anour ~~arrangement~~business ~~fee~~prior ~~withheld~~to ~~from~~the completion of the ~~funding~~Merger ~~amount~~or the termination of the Agreement, ~~were~~including, ~~JPY~~among ~~32.1~~other ~~billion~~things, a restriction prohibiting us from paying any dividends or ~~approximately~~making ~~$283~~certain other distributions.9 ~~million~~Upon ~~using~~consummation of the ~~exchange~~Merger, ~~rate~~the asCompany ofwould ~~November~~be 7,a ~~2018.~~fully owned subsidiary of Yageo.

The ~~proceeds~~Agreement ~~from~~is subject to termination if the ~~TOKIN~~Merger ~~Term~~is ~~Loan~~not ~~Facility~~consummated ~~were~~within ~~used~~twelve bymonths, ~~TOKIN~~subject to ~~make~~an ~~intercompany~~automatic ~~loans~~extension ~~(the~~for ~~“Intercompany~~a ~~Loans”)~~period toof ninety days, for the ~~Company~~purpose of obtaining certain antitrust clearances. The ~~proceeds,~~Agreement ~~along~~also ~~with~~contains certain other ~~cash~~termination onrights ~~hand~~and provides that, ~~were~~upon ~~used~~termination toof ~~prepay~~the inAgreement ~~full~~under specified circumstances, including Yageo’s decision to terminate the ~~outstanding~~Agreement ~~amounts~~if ~~under~~there is a change in the recommendation of the Company'’s ~~Term~~Board ~~Loan~~of ~~Credit~~Directors ~~Agreement~~(the ~~with~~“Board”) ~~Bank~~to adopt the Merger or a termination of ~~America~~the Agreement by the Company to enter into an agreement for a “superior proposal,” ~~N.A.~~the ofCompany ~~$323.4~~will ~~million~~pay ~~and~~Yageo a ~~prepayment~~cash ~~premium~~termination fee of 1$63.0%8 million. ~~For~~The ~~further~~Agreement ~~information~~additionally provides that, ~~refer~~upon totermination ~~Note~~of 3the Agreement under specified circumstances, ~~“Debt~~Yageo will pay the Company a cash termination fee of $65.”4 million.

~~Dividends~~The Merger with Yageo is proceeding as planned with several key milestones already completed. On February 4, 2020, the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the review period under the Austrian Cartel Act expired, and the pending Merger was approved by the German Federal Cartel Office. On February 20, 2020 the Company’s stockholders approved the Merger. On March 5, 2020, the Mexican Competition Authority authorized the pending Merger and on April 15, 2020, the Taiwan Fair Trade Commission (“TFTC”) announced its approval of the pending Merger. On April 23, 2020, CFIUS notified KEMET and Yageo that it completed its review of the Merger and determined that there were no unresolved national security concerns with respect to the transaction. On April 29, 2020, the Anti-Monopoly Bureau of China's State Administration for Market Regulation approved the pending Merger.

During fiscal year 2019, the Company announced its intention to pay regular quarterly cash dividends to holders of our common stock. During the fiscal year, the Company declared and paid two quarterly cash dividends of $0.05 per share of its common stock. On May 16, 2019, the Company announced a cash dividend of $0.05 per share of the Company's common stock. Payment will be made on June 10, 2019 to shareholders of record at the close of business on May 30, 2019.38

36If Yageo fails to obtain approval by Yageo’s stockholders, if such approval is required by applicable law, Yageo will pay the Company a cash termination fee of $49.1 million. If Yageo fails to obtain debt financing upon the satisfaction of all conditions to closing, the Company may, within 30 days of termination, elect to receive a cash termination fee of $63.8 million.

~~Any~~The ~~future~~only ~~determination~~remaining toregulatory ~~pay~~approval ~~dividends~~required ~~will~~for ~~be at~~ the ~~discretion~~consummation of the ~~Company’s~~Merger ~~Board~~is ~~and~~the ~~will~~approval ~~depend~~from ~~upon~~the Investment Commission, ~~among~~Ministry ~~other~~of ~~factors,~~Economic ~~the~~Affairs ~~capital~~in ~~requirements,~~Taiwan. ~~operating~~The ~~results,~~Company ~~and~~currently ~~financial~~expects ~~condition~~the oftransaction to close in the ~~Company~~summer of 2020.

~~Restructuring~~Novasentis

		Total expected to be incurred				Incurred during year ended March 31, 2019				Cumulative incurred to date
Restructuring Plan	Segment	Personnel Reduction Costs		Relocation & Exit Costs		Personnel Reduction Costs		Relocation & Exit Costs		Personnel Reduction Costs		Relocation & Exit Costs
TOKIN operational & overhead function reduction in force	MSA, Corporate, & Solid Capacitors	$	5,339	$	—	$	942	$	—	$	5,339	$	—
Tantalum powder facility relocation (1)	Solid Capacitors	850		2,468		—		3,355		—		3,355
Axial electrolytic production relocation from Granna to Evora	Film and Electrolytic	879		3,232		—		2,296		—		2,296
Reorganization due to decline of MnO2 Products	Solid Capacitors	1,798		—		1,585		—		1,585		—
All Other (2)	Corporate, Film and Electrolytic					296		305

On July 1, 2019, the Company acquired the remaining 72.1% interest in Novasentis for a preliminary purchase price of $2.7 million. Prior to July 2019 the Company owned 27.9% of Novasentis, a leading developer of film-based haptic actuators, and accounted for its investment using the equity method of accounting.

~~(1)~~We ~~The~~believe ~~Company~~Novasentis' ~~expects~~haptic toactuator ~~recover~~technology ~~approximately~~that ~~$0.9~~we ~~million~~have ~~related~~acquired towill ~~tantalum~~provide ~~reclaim~~unique flexibility, which ~~would~~will ~~decrease~~enable ~~the~~it ~~cumulative~~to ~~expenses~~be ~~incurred~~incorporated tointo ~~date~~a ~~for~~wide ~~relocation~~variety of wearables and ~~exit~~virtual/augmented ~~costs~~reality ~~upon~~applications ~~the~~to ~~completion~~provide a variety of ~~reclaim~~tactile ~~activities~~sensations.

~~(2)~~Antitrust ~~The~~Class ~~Company~~Action ~~incurred~~Legal ~~$0.6~~Settlement million in restructuring charges for minor projects not included in the table above during fiscal year ended March 31, 2019, consisting of $0.3 million each in personal reduction costs and relocation and exit costs.

As previously reported, including as reported in “Item 3. Legal Proceedings” of the Company's 2019 Annual Report, KEMET and KEC, along with more than 20 other capacitor manufacturers and subsidiaries (including TOKIN), were named as defendants in a purported antitrust class action complaint, In re: Capacitors Antitrust Litigation, No. 3:14-cv-03264-JD, filed on December 4, 2014 with the United States District Court, Northern District of California (the "U.S. Class Action Complaint”). The complaint alleges a violation of Section 1 of the Sherman Act, for which it seeks injunctive and equitable relief and money damages. On November 8, 2019 KEMET and KEC entered into a settlement agreement (the “Settlement Agreement”) with the plaintiffs in the U.S. Class Action Complaint by which, in consideration for the release of KEMET, KEC, and their affiliates from all claims relating in any way to the conduct alleged in the U.S. Class Action Complaint and from claims which could have been asserted in the U.S. Class Action Complaint to the extent they relate to the sale of capacitors in the United States, KEMET agreed to pay an aggregate of $62.0 million to the settlement class of plaintiffs. The Settlement Agreement is subject to court approval. Pursuant to the terms of the Settlement Agreement, KEMET paid $10.0 million into an escrow account on December 6, 2019. The remaining amount will be paid by KEMET within 12 months of the date of the Settlement Agreement. Under the terms of the Settlement Agreement KEMET and KEC did not admit to any violation of any statute or law or any liability or wrongdoing.

The Company recognized the $62.0 million expense in the Consolidated Statements of Operations for the year ended March 31, 2020 in the line item, “Antitrust class action settlements and regulatory costs.” The remaining payable is included in the line item, “Accrued expenses,” in the Consolidated Balance Sheets as of March 31, 2020.

Outlook

For the first quarter of fiscal year 2021, we expect net sales to be within the $278.0 million to $295.0 million range, non-GAAP adjusted gross margin as a percentage of net sales is expected to be between 28.0% and 30.0%, non-GAAP adjusted SG&A expenses are expected to be between $43.0 million and $45.0 million, and R&D expenses are expected to be approximately $12.5 million to $13.5 million. Our non-GAAP adjusted global effective tax rate is expected to be between 35.0% and 39.0%. We expect to spend in the range of $25.0 million to $35.0 million in capital expenditures for the first quarter of fiscal year 2021. The forecast provided for the first quarter of fiscal year 2021 does not include the impact of any unexpected shutdowns.

The Company has presented certain non-GAAP financial measures as projected for the first quarter of fiscal year 2021, including adjusted gross margin as a percentage of net sales, adjusted SG&A expenses, and adjusted global effective tax rate. Reconciliations of GAAP to non-GAAP adjusted gross margin, GAAP to non-GAAP adjusted SG&A expenses, and GAAP to non-GAAP global effective tax rate are not provided. The Company does not forecast GAAP gross margin, GAAP SG&A expenses, and GAAP global effective tax rate as it cannot, without unreasonable effort, estimate or predict with certainty various components of each. These components include stock-based compensation expenses for GAAP gross margin, stock-based compensation expenses and enterprise resource planning (“ERP”) integration costs/IT transition costs for GAAP SG&A expenses, and the timing of nondeductible items and tax reform provisions impacting foreign income for GAAP global effective tax rate. Further, in the future, other items with similar characteristics to those currently included in adjusted gross margin, adjusted SG&A expenses, and adjusted global effective tax rate that have a similar impact on the comparability of periods, and which are not known at this time, may exist and impact adjusted gross margin, adjusted SG&A expenses, and adjusted global effective tax rate.

Off-Balance Sheet Arrangements

As of March 31, ~~2019~~2020, ~~other than operating lease commitments as described in Note 15, “Commitments and Contingencies”,~~ we are not a party to any off-balance sheet financing arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

Our accounting policies are summarized in Note 1, “Organization and Significant Accounting Policies” to the consolidated financial statements. The following identifies a number of policies which require significant judgments and estimates or are otherwise deemed critical to our financial statements.

Our estimates and assumptions are based on historical data and other assumptions that we believe are reasonable. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. In addition, they affect the reported amounts of revenues and expenses during the reporting period.

Our judgments are based on our assessment as to the effect certain estimates, assumptions, or future trends or events may have on the financial condition and results of operations reported in the consolidated financial statements. Readers should understand that actual future results could differ from these estimates, assumptions, and judgments.

A quantitative sensitivity analysis is provided where that information is reasonably available, can be reliably estimated and provides material information to investors. The amounts used to assess sensitivity (i.e., 1%, 10%, etc.) are included to allow readers of this Annual Report on Form 10-K to understand a general cause and effect of changes in the estimates and do not represent our predictions of variability. For these estimates, it should be noted that future events rarely develop exactly as forecast, and estimates require regular review and adjustment. We believe the following critical accounting policies contain the most significant judgments and estimates used in the preparation of the consolidated financial statements:

REVENUE RECOGNITION. The Company recognizes revenue under the guidance provided in Accounting Standard Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”). Consistent with the terms of ASC 606, the Company records revenue on product sales in the period in which the Company satisfies its performance obligation by transferring control over a product to a customer. The amount of revenue recognized reflects the consideration the Company expects to receive in exchange for transferring products to a customer. Recognized revenue is net of certain sales adjustments common in the industry, including but not limited to:

37• Ship-from-stock and debit (“SFSD”) programs,

~~satisfies~~• ~~its~~Price ~~performance~~protection obligation by transferring control over a product to a customer. The amount of revenue recognized reflects the consideration the Company expects to receive in exchange for transferring products to a customer. programs

~~The~~• ~~Company~~Product ~~sells~~return ~~its products to distributors~~programs, ~~OEMs,~~ and EMS providers, and the sales price may include adjustments for sales discounts, price adjustments, and sales allowances. The Company has elected the practical expedient under ASC 606-10-10-4 and evaluates these sales-related adjustments on a portfolio basis. The principle forms of these adjustments include:

• ~~Inventory~~Rebate ~~price protection and ship-from-stock and debit (“SFSD”)~~ programs,

•SFSD ~~Distributor~~represents ~~rights~~the Company's largest sales program and provides authorized distributors with the flexibility to meet marketplace prices by allowing them, upon a pre-approved case-by-case basis, to adjust their purchased inventory cost to correspond with current market demand. KEMET's SFSD program is specific to certain distributors within the Americas and EMEA regions. Requests for SFSD adjustments are considered on an individual basis, require a pre-approved cost adjustment quote from their local KEMET sales representative, and apply only to a specific customer, part, specified special price amount, specified quantity, and are only valid for a specific period of ~~returns~~time. To estimate potential SFSD adjustments corresponding with current period sales, KEMET records an allowance based on historical SFSD credits, distributor inventory levels, and certain accounting assumptions, all of which are reviewed quarterly. We believe this methodology enables us to make reliable estimates of future adjustments under the SFSD program. If the historical SFSD run rates used in our calculation changed by 1% in fiscal year 2020, net sales would have been impacted by $1.2 million.

•The ~~Sales~~Company's sales adjustments are recognized as a reduction in the line item “Net sales” on the Consolidated Statements of Operations, while the associated allowances are included in the line item “Accounts receivable, net” on the Consolidated Balance Sheets. Estimates used in determining allowances are subject to various factors. This includes, but is not limited to, changes in economic conditions, pricing changes, product demand, inventory levels in the supply chain, the effects of technological change, and other variables that might result in changes to the Company’s estimates.

•The ~~Limited~~Company ~~assurance~~has ~~warranties~~elected the practical expedient under ASC 606-10-10-4 and evaluates these sales-related adjustments on a portfolio basis.

~~The~~INVENTORIES. Inventories ~~Company's~~are ~~inventory~~valued ~~price~~at ~~protection and SFSD programs provide authorized distributors with~~ the ~~flexibility~~lower toof ~~meet~~cost ~~marketplace~~or ~~prices~~net byrealizable ~~allowing~~value. ~~them,~~For ~~upon~~most aof ~~pre-approved~~the ~~case-by-case basis~~inventory, ~~to adjust their purchased inventory~~ cost ~~to correspond with current market demand. KEMET's SFSD program~~ is ~~specific~~determined tounder ~~certain distributors within~~ the ~~Americas and EMEA regions. Requests for SFSD adjustments are considered on an individual basis~~first-in, ~~require a pre~~first-~~approved~~out cost adjustment quote from their local KEMET sales representative, and apply only to a specific customer, part, specified special price amount, specified quantity, and are only valid for a specific period of timemethod. ToFor ~~estimate~~tool ~~potential SFSD adjustments corresponding with current period sales~~crib, ~~KEMET records~~ a ~~sales~~component ~~reserve based on historical SFSD credits, distributor inventory levels, and certain accounting assumptions, all~~ of ~~which are reviewed quarterly. We believe this methodology enables us to make reliable estimates of future adjustments under the SFSD program. If the historical SFSD run rates used in~~ our ~~calculation~~raw ~~changed~~material ~~by 1% in fiscal year 2019~~inventory, ~~net~~cost ~~sales~~is ~~would~~determined ~~be impacted by $1.3 million.~~

Select distributors have the right to return a certain portion of their purchased inventory to KEMET from the previous fiscal quarter. The Company estimates future returns based on historical return patterns and records a corresponding right of return asset and refund liability as a component of the line items, “Inventories, net” and “Accrued expenses,” respectively, on the Consolidated Balance Sheets. The Company also offers volume-based rebates on a case-by-case basis to certain customers in each of the Company’s sales channels.40

~~The~~under ~~Company's sales allowances are recognized as a reduction in~~ the ~~line~~average ~~item~~cost ~~“Net~~method. ~~sales”~~The onvaluation ~~the~~of ~~Consolidated~~inventories ~~Statements~~requires ofus ~~Operations,~~to ~~while~~make ~~the~~estimates. ~~associated~~We ~~reserves~~also ~~are~~must ~~included~~assess in the ~~line~~prices ~~item~~at ~~“Accounts~~which ~~receivable,~~we ~~net”~~believe on the ~~Consolidated~~finished ~~Balance~~goods ~~Sheets.~~inventory ~~Estimates~~can ~~used~~be insold ~~determining~~compared ~~sales allowances are subject~~ to ~~various~~its ~~factors~~cost. ~~This~~A ~~includes,~~sharp ~~but~~decrease ~~is not limited to, changes~~ in ~~economic conditions, pricing changes, product~~ demand, ~~inventory~~could ~~levels~~adversely inimpact ~~the~~earnings ~~supply~~as ~~chain,~~ the ~~effects~~reserve ofestimates ~~technological~~could ~~change, and other variables that might result in changes to the Company’s estimates~~increase.

INVENTORIES. Inventories are valued at the lower of cost or net realizable value. For most of the inventory, cost is determined under the first-in, first-out method. For tool crib, a component of our raw material inventory, cost is determined under the average cost method. The valuation of inventories requires us to make estimates. We also must assess the prices at which we believe the finished goods inventory can be sold compared to its cost. A sharp decrease in demand could adversely impact earnings as the reserve estimates could increase.

Excess and obsolete inventories are based on a combination of usage, age, order requirements, and sales history. Raw materials and tool crib obsolescence reserves are based on usage over one and two years, respectively, and the Company maintains reserves for raw materials and tool cribs that exceed these ages. Finished goods obsolescence reserves are either based on product age limits determined by market requirements, and/or based on excess quantities that exceed product orders and historical product sales.

PENSION AND POST-RETIREMENT BENEFITS. Our management, with the assistance of actuarial firms, performs actuarial valuations of the fair values of our pension and post-retirement plans’ benefit obligations. We make certain assumptions that have a significant effect on the calculated fair value of the obligations such as the:


•	discount rate—used to arrive at the net present value of the obligation; and


•	salary increases—used to calculate the impact future pay increases will have on post-retirement obligations.

WeThese ~~understand that these~~ assumptions directly impact the actuarial valuation of the obligations recorded on the Consolidated Balance Sheets and the income or expense that flows through the Consolidated Statements of Operations.

We base our assumptions on either historical or market data that we consider reasonable. Variations in these assumptions could have a significant effect on the amounts reported in Consolidated Balance Sheets and the Consolidated Statements of Operations. The most critical assumption relates to the discount rate. A 25 basis point increase or decrease in the weighted average discount rate would result in changes to the projected benefit obligation of ($3.7) million and $4.0 million, respectively.

38GOODWILL, INTANGIBLE ASSETS, AND PROPERTY, PLANT, AND EQUIPMENT. Intangible assets are classified into three categories: (i) goodwill; (ii) intangible assets with indefinite useful lives not subject to amortization; and (iii) intangible assets with definite useful lives subject to amortization. For goodwill and intangible assets with indefinite useful lives, tests for impairment must be performed at least annually, or more frequently if events or circumstances indicate that an asset may be impaired. For intangible assets with definite useful lives, tests for impairment must be performed if conditions exist that indicate the carrying value may not be recoverable.

~~Statements~~For ofgoodwill, ~~Operations~~the Company has the option to perform a qualitative assessment rather than completing the impairment test. The ~~most~~Company ~~critical~~must ~~assumption~~assess ~~relates~~whether toit is more likely than not that the ~~discount~~fair ~~rate.~~value Aof 25the ~~basis~~reporting ~~point~~unit ~~increase~~is orless ~~decrease~~than inits carrying amount. If the ~~weighted~~Company ~~average~~concludes ~~discount~~that ~~rate~~this ~~would~~is ~~result~~the incase, ~~changes~~it tomust perform the ~~projected~~testing ~~benefit~~discussed ~~obligation~~below. ofOtherwise, ~~($4~~the Company does not need to perform any further assessment.~~0) million~~ The Company assesses its goodwill for impairment and ~~$4.4 million~~performs testing, ~~respectively~~if necessary, as of the first day of the fourth fiscal quarter.

~~GOODWILL~~We ~~AND~~evaluate ~~LONG-LIVED~~our ~~ASSETS~~goodwill on a reporting unit basis. ~~Goodwill~~ This requires us to estimate the fair value of the reporting units based on the future net cash flows expected to be generated. The impairment test, if deemed necessary, involves a comparison of the fair value of each reporting unit, with the corresponding carrying amounts. If the reporting unit’s carrying amount exceeds its fair value, then an indication exists that the reporting unit’s goodwill may be impaired. The impairment to be recognized is measured by the amount by which ~~represents~~the carrying value of the reporting unit’s goodwill being measured exceeds its implied fair value. The implied fair value of goodwill is the excess of ~~purchase~~the ~~price~~fair value of the reporting unit over the sum of the amounts assigned to identified net assets. As a result, the implied fair value of goodwill is generally the residual amount that results from subtracting the value of net assets ~~acquired,~~including all tangible assets and identified intangible assets ~~with~~from ~~indefinite~~the ~~useful~~fair ~~lives~~value ~~are~~of ~~tested~~the ~~for~~reporting ~~impairment~~unit’s atfair ~~least~~value. onWe determine the fair value of our reporting units using an ~~annual~~income-based, ~~basis~~discounted cash flow (“DCF”) analysis, and market-based approaches (Guideline Publicly Traded Company Method and Guideline Transaction Method) which examine transactions in the marketplace involving the sale of the stocks of similar publicly-owned companies, or the sale of entire companies engaged in operations similar to KEMET. WeIn ~~perform~~addition to the above described reporting unit valuation techniques, our goodwill impairment ~~test~~assessment ~~during~~also ~~the~~considers ~~fourth~~our ~~quarter~~aggregate offair ~~each~~value ~~fiscal~~based ~~year~~upon ~~and~~the ~~when~~value ~~otherwise~~of ~~warranted~~our outstanding shares of common stock.

WeOur ~~evaluate our~~ goodwill onbalance aof ~~reporting unit basis~~$41.2 ~~This~~million ~~requires~~is uscomprised ~~to estimate the fair value~~ of ~~the~~$35.6 ~~reporting~~million ~~units~~related ~~based on the future net cash flows expected~~ to beKBP, ~~generated.~~which ~~The~~is ~~impairment~~within ~~test involves a comparison of~~ the ~~fair~~Tantalum ~~value of each~~ reporting unit, ~~with the corresponding carrying amounts~~$4.7 Ifmillion ~~the~~related ~~reporting~~to ~~unit’s~~IntelliData, ~~carrying~~which ~~amount~~is ~~exceeds~~a ~~its~~corporate ~~fair value~~asset, ~~then~~and ~~an indication exists that the reporting unit’s goodwill may be impaired~~$0.9 ~~The~~million ~~impairment~~related to beNovasentis, ~~recognized is measured by the amount by~~ which ~~the carrying value of the reporting unit’s goodwill being measured exceeds its implied fair value. The implied fair value of goodwill~~ is ~~the~~within ~~excess of~~ the ~~fair~~Film ~~value~~and ofElectrolytic ~~the~~ reporting unit ~~over the sum of the amounts assigned to identified net assets~~. As apart ~~result, the implied fair value~~ of ~~goodwill~~our isannual ~~generally~~impairment ~~the~~testing, ~~residual~~if ~~amount~~deemed ~~that~~necessary, ~~results~~we ~~from~~determine ~~subtracting~~ the ~~value of net assets including all tangible assets and identified intangible assets from the~~ fair value of the relevant reporting unit’(s) ~~fair value. We determine the fair value of our reporting units~~ using an income-based, ~~discounted cash flow (“~~DCF”) analysis, ~~and~~for ~~market-based~~KBP ~~approaches~~at ~~(Guideline~~the ~~Publicly~~Tantalum ~~Traded~~product ~~Company~~line ~~Method~~level and ~~Guideline~~for ~~Transaction~~Novasentis ~~Method)~~at ~~which examine transactions in~~ the ~~marketplace~~Film ~~involving~~and ~~the~~Electrolytic ~~sale~~reportable ofsegment ~~the stocks of similar publicly-owned companies, or the sale of entire companies engaged in operations similar to KEMET~~level. InAn ~~addition~~internal torate ~~the above described reporting unit valuation techniques, our goodwill impairment assessment also considers our aggregate fair value based upon the value~~ of ~~our~~return ~~outstanding~~analysis ~~shares~~is ofperformed ~~common~~for ~~stock~~IntelliData.

Our goodwill balance of $40.3 million is comprised of $35.6 million related to KBP, which is within the Tantalum product line of the Solid Capacitors reportable segment, and $4.7 million related to IntelliData, which is a corporate asset. As part of our annual impairment testing, we determine the fair value of the relevant reporting unit(s) using an income-based, DCF analysis for KBP at the Tantalum product line level, and an internal rate of return analysis for IntelliData. 41

Significant assumptions used in ~~the~~a DCF analysis are:


•	the discount rate based on the weighted average cost of capital (“WACC”),


•	estimated sales growth rates, and


•	the estimated market price and production cost for tantalum products

Our WACC is determined through market comparisons combined with small stock and equity risk premiums. Tantalum’s sales growth rates are estimated through KEMET’s three-year strategic plan.

~~Long~~For indefinite-lived intangible assets, ~~and~~the ~~intangible~~Company ~~assets~~has ~~subject~~the option to ~~amortization~~perform ~~are~~a ~~reviewed~~qualitative ~~for~~assessment rather than completing the impairment ~~whenever~~test. ~~events~~The orCompany ~~changes~~must inassess ~~circumstances~~whether ~~indicate~~it is more likely than not that the ~~carrying~~fair ~~amount~~value of athe ~~long-lived~~intangible asset oris ~~group~~less ofthan ~~assets~~its ~~may~~carrying amount. If the Company concludes that this is the case, it must perform the testing described below. Otherwise, the Company does not beneed ~~recoverable~~to perform any further assessment. AIf ~~long~~deemed necessary, the Company tests its indefinite-lived intangible assets (trademarks) for impairment annually, or more frequently if events or circumstances indicate that an asset ~~classified~~may asbe ~~held~~impaired. ~~for~~The ~~sale~~Company isperforms ~~initially~~these ~~measured~~annual ~~and~~impairment ~~reported~~tests atas of the ~~lower~~first day of ~~its~~our ~~carrying~~fourth ~~amount~~fiscal orquarter. ~~fair~~We evaluate the value ~~less~~of ~~cost~~our totrademarks ~~sell~~using an income-based, relief from royalty analysis.

~~Long~~Definite-lived intangible assets subject to beamortization ~~disposed~~and ofproperty, ~~other~~plant, ~~than~~and byequipment ~~sale~~ are ~~classified~~reviewed asfor ~~held~~impairment ~~and~~whenever ~~used~~events ~~until~~or changes in circumstances indicate that the ~~long-lived~~carrying amount of an asset isor ~~disposed~~group of assets may not be recoverable.

Tests for the recoverability, when necessary, of a ~~long~~definite-lived intangible asset, toproperty, beplant, ~~held~~and equipment, and ~~used~~other long-lived assets are performed by comparing the carrying amount of the ~~long-lived~~ asset to the sum of the estimated future undiscounted cash flows expected to be generated by the asset. In estimating the future undiscounted cash flows, we use future projections of cash flows directly associated with, and which are expected to arise as a direct result of, the use and eventual disposition of the assets. These assumptions include, among other estimates, periods of operation and projections of sales and cost of sales. Changes in any of these estimates could have a material effect on the estimated future undiscounted cash flows expected to be generated by the asset. If it is determined that the book value of aan ~~long-lived~~ asset is not recoverable, an impairment loss would be calculated equal to the excess of the carrying amount of the ~~long-lived~~ asset over its fair value. The fair value is calculated as the discounted cash flows of the underlying assets.

INCOME WeTAXES. Tax ~~evaluate~~regulations requires items to be included in the ~~value~~tax ofreturn at different times than when these items are reflected in the consolidated financial statements. As a result, the annual effective tax rate reflected in our ~~other~~consolidated ~~indefinite-lived~~financial ~~intangible~~statements ~~assets~~is different from that reported in our tax return (~~trademarks~~our cash tax rate). Some of these differences are permanent, such as expenses that are not deductible in our tax return, and some differences reverse over time, such as depreciation expense. These timing differences create deferred tax assets and liabilities. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The Company periodically evaluates its net deferred tax assets based on an assessment of historical performance, ability to forecast future events, and the likelihood that the Company will realize the benefits through future taxable income-. Valuation allowances are recorded to reduce the net deferred tax assets to the amount that is more likely than not to be realized. For interim reporting purposes, the Company records income taxes based on the expected annual effective income tax rate, ~~relief~~taking ~~from~~into ~~royalty~~consideration ~~analysis~~global forecasted tax results and the effect of discrete tax events. The Company makes certain estimates and judgments in the calculation for the provision for income taxes, in the resulting tax liabilities, and in the recoverability of deferred tax assets. All deferred tax assets are reported as noncurrent in the Consolidated Balance Sheets.

~~The~~We ~~Company~~believe ~~completed~~that ~~its~~it ~~impairment~~is ~~test~~more onlikely ~~goodwill~~than ~~and~~not ~~intangible~~that a portion of the deferred tax assets ~~with~~in ~~indefinite~~various ~~useful~~jurisdictions ~~lives~~will asnot ofbe ~~January 1~~realized, ~~2019~~based ~~and~~on ~~concluded~~the ~~that~~scheduled ~~goodwill~~reversal ~~and~~of ~~indefinite-lived~~deferred ~~assets~~tax ~~were~~liabilities, ~~not~~the ~~impaired~~recent ~~nor~~history ~~were~~of ~~they~~cumulative atlosses, ~~risk~~and the insufficient evidence of ~~failing~~projected ~~step~~future ~~one~~taxable ofincome to overcome the ~~impairment~~loss ~~test~~history. asTherefore, ~~the~~we ~~fair~~have ~~value~~provided ofa ~~each~~valuation ofallowance ~~the~~related ~~assets~~to ~~exceeds~~benefits ~~the~~from ~~carrying~~income ~~value~~taxes. ~~The~~We ~~type~~continue ofto ~~events~~have ~~that~~net ~~could~~deferred ~~result~~tax assets (future tax benefits) in aseveral ~~future~~jurisdictions ~~goodwill~~which ~~impairment~~we ~~could~~expect ~~include~~to anrealize, ~~increase~~assuming, ofbased ~~over~~on ~~100~~certain ~~basis~~estimates ~~points~~and assumptions, sufficient taxable income can be generated to utilize these deferred tax benefits. If these estimates and related assumptions change in the ~~Company's~~future, ~~derived~~we ~~weighted-average~~may be required to reduce the value of the deferred tax assets resulting in additional tax expense.

39Differences between the provision for income taxes on earnings from continuing operations and the amount computed using the U.S. Federal statutory income tax rate are primarily due to the tax on foreign earnings, non-deductible permanent differences, and differences due to U.S. and foreign tax law changes.

			Discount Rate Sensitivity, in millions
	Fair Value in Excess of Carrying Value, %		+1%			-1%
Goodwill - KBP	92.6	%	$	(56.0	)	$	64.0
Goodwill - IntelliData	118.1	%	(0.9		)	1.0
Trademarks	609.3	%	(7.7		)	9.0

The accounting rules require that we recognize, in our financial statements, the impact of a tax position, if that position is “more likely than not” of not being sustained on audit, based on the technical merits of the position. Accruals for estimated interest and penalties are recorded as a component of income tax expense.

INCOME TAXES. Tax law requires items to be included in the tax return at different times than when these items are reflected in the consolidated financial statements. As a result, the annual effective tax rate reflected in our consolidated financial statements is different from that reported in our tax return (our cash tax rate). Some of these differences are permanent, such as expenses that are not deductible in our tax return, and some differences reverse over time, such as depreciation expense. These timing differences create deferred tax assets and liabilities. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The Company periodically evaluates its net deferred tax assets based on an assessment of historical performance, ability to forecast future events, and the likelihood that the Company will realize the benefits through future taxable income. Valuation allowances are recorded to reduce the net deferred tax assets to the amount that is more likely than not to be realized. For interim reporting purposes, the Company records income taxes based on the expected annual effective income tax rate, taking into consideration global forecasted tax results and the effect of discrete tax events. The Company makes certain estimates and judgments in the calculation for the provision for income taxes, in the resulting tax liabilities, and in the recoverability of deferred tax assets. All deferred tax assets are reported as noncurrent in the Consolidated Balance Sheets.42

WeTo ~~believe~~the ~~that~~extent ~~it is more likely than not~~ that ~~a portion of~~ the ~~deferred~~provision ~~tax~~for ~~assets~~income intaxes ~~various~~changed ~~jurisdictions~~by ~~will~~1.0% ~~not be realized, based on the scheduled reversal~~ of ~~deferred tax liabilities, the recent history of cumulative losses, and the insufficient evidence of projected future taxable~~ income tobefore ~~overcome the loss history. We have provided a valuation allowance related to any benefits from~~ income taxes, ~~resulting~~consolidated ~~from the application of a statutory tax rate to the deferred tax assets. We continue to have~~ net ~~deferred tax assets (future tax benefits) in several jurisdictions which we expect to realize, assuming, based on certain estimates and assumptions, sufficient taxable~~ income ~~can~~would behave ~~generated~~changed toby ~~utilize these deferred tax benefits~~$0.8 Ifmillion ~~these estimates and related assumptions change~~ in ~~the~~fiscal ~~future,~~year ~~we may be required to reduce the value of the deferred tax assets resulting in additional tax expense~~2020. ~~The amount of future income required for the Company to realize its net deferred tax assets is $227.1 million.~~

~~Differences~~STOCK-BASED ~~between~~COMPENSATION. Stock-based ~~the~~compensation ~~provision~~ for ~~income~~stock ~~taxes~~options is estimated on ~~earnings~~the ~~from~~date ~~continuing~~of ~~operations~~grant ~~and~~using the ~~amount~~Black-Scholes ~~computed~~option-pricing ~~using~~model. The Black-Scholes model considers volatility in the ~~U.S.~~price ~~Federal~~of ~~statutory~~the ~~income~~Company’s ~~tax~~stock, the risk-free interest rate, ~~are~~the ~~primarily~~estimated ~~due~~life toof the ~~changes~~equity-based inaward, the Uclosing market price of the Company’s stock on the grant date and the exercise price.S. The estimates utilized in the Black-Scholes calculation involve inherent uncertainties and ~~foreign~~the ~~valuation~~application ~~allowances~~of management judgment. The Company's stock options were fully expensed during the fiscal year ended March 31, ~~tax~~2017. ~~non~~Upon adoption of Accounting Standard Update (“ASU”) No. 2016-~~deductible~~09, ~~permanent~~Compensation ~~differences~~Stock-Compensation, ~~and~~the ~~differences~~Company ~~due~~elected to Udiscontinue estimating forfeitures.S Stock-based compensation cost for restricted stock is measured based on the closing fair market value of the Company’s common stock on the date of grant. ~~and~~The ~~foreign~~Company ~~tax~~recognizes ~~law~~stock-based ~~changes~~compensation cost for arrangements with cliff vesting as expense ratably on a straight-line basis over the requisite service period. The Company recognizes stock-based compensation cost for arrangements with graded vesting as expense on an accelerated basis over the requisite service period.

The accounting rules require that we recognize, in our financial statements, the impact of a tax position, if that position is “more likely than not” of not being sustained on audit, based on the technical merits of the position. Any accruals for estimated interest and penalties would be recorded as a component of income tax expense.

To the extent that the provision for income taxes changed by 1.0% of income before income taxes, consolidated net income would have changed by $1.7 million in fiscal year 2019.

Results of Operations

Historically, revenues and earnings may or may not be representative of future operating results due to various economic and other factors. The following table sets forth the Consolidated Statements of Operations for the periods indicated (amounts in thousands):

	Fiscal Years Ended March 31,
	2019			2018			2017
	2020			2019			2018
Net sales (1)	$	1,382,818		$	1,200,181		$	757,338
Net sales	$	1,260,554		$	1,382,818		$	1,200,181
Operating costs and expenses:
Cost of sales (1)	924,276			860,744			571,944
Cost of sales	840,066			924,276			860,744
Selling, general and administrative expenses	~~202~~194,~~642~~766			~~173~~202,~~620~~642			~~107~~173,~~658~~620
Research and development (1)	44,612			39,114			26,693
Research and development	49,264			44,612			39,114
Restructuring charges	8,~~779~~882			148,~~843~~779			514,~~404~~843
(Gain) loss on write down and disposal of long-lived assets	119,~~660~~710			~~(992~~1,660		)	~~10,671~~(992		)
Total operating costs and expenses	1,~~181~~112,~~969~~688			1,~~087~~181,~~329~~969			~~722~~1,~~370~~087,329
Operating income (1)	200,849			112,852			34,968
Operating income	147,866			200,849			112,852
Non-operating (income) expense:
Interest income	(23,~~035~~325		)	(~~809~~2,035		)	(24809		)
Interest expense	2111,~~239~~021			3221,~~882~~239			3932,~~755~~882
Acquisition (gain) loss	—			~~(130,880~~—		)	—(130,880		)
Change in value of TOKIN options	—			—			(10,700		)
Antitrust class action settlements and regulatory costs	64,695			6,701			9,900
Other (income) expense, net (1)	11,214			24,592			(3,871		)
Other (income) expense, net	(4,356		)	4,513			14,692
Income before income taxes and equity income (loss) from equity method investments (1)	170,431			187,067			9,808
Income before income taxes and equity income (loss) from equity method investments	79,831			170,431			187,067
Income tax expense (benefit) (1)	(39,460		)	9,132			4,294
Income tax expense (benefit)	38,526			(39,460		)	9,132
Income before equity income (loss) from equity method investments (1)	209,891			177,935			5,514
Income before equity income (loss) from equity method investments	41,305			209,891			177,935
Equity income (loss) from equity method investments	~~(3,304~~76		)	76(3,~~192~~304		)	4176,~~643~~192
Net income (1)	$	206,587		$	254,127		$	47,157
Net income	$	41,381		$	206,587		$	254,127

~~______________________________________________________________________________~~43

~~(1)~~Consolidated ~~Fiscal~~Comparison ~~years~~of ~~ended~~Fiscal ~~March~~Year ~~31,~~2020 ~~2018 and 2017 adjusted due~~ to ~~the~~Fiscal ~~adoption~~Year of2019 ~~ASC 606.~~

Consolidated Comparison of Fiscal Year 2019 to Fiscal Year 2018

Net Sales

Net sales of $1.43 billion in fiscal year ~~2019~~2020 ~~increased~~decreased 15$122.2%3 million from $1.24 billion in fiscal year ~~2018~~2019. ~~primarily due to an increased in~~ Solid Capacitor net sales decreased $~~164~~49.68 million~~. In addition~~, Film and Electrolytic net sales ~~increased~~decreased by $430.34 million, and MSA net sales ~~increased~~decreased by $1342.81 million.

The ~~increase~~decrease in Solid Capacitors net sales was ~~primarily~~ driven by a $~~111~~67.6 million decrease in Tantalum net sales, which was partially offset by a $17.8 million increase in Ceramics net sales. The decrease in Tantalum net sales was primarily due to a $56.6 million decrease in distributor net sales across all regions except for the ~~Americas,~~JPKO ~~APAC~~region, a $12.4 million decrease in EMS net sales in the Americas and EMEA regions., ~~The~~and a $~~111~~7.83 million ~~increase~~decrease ~~consisted~~in ofOEM anet ~~$72~~sales across all regions except for the Americas regions.8 ~~million~~These ~~increase~~decreases in ~~Ceramic~~Tantalum ~~product~~net ~~line~~ sales ~~and~~were partially offset by a $395.01 million increase in ~~Tantalum~~distributor ~~product~~net ~~line~~ sales. ~~Also~~in ~~contributing~~the toJPKO ~~the~~region, a $1.9 million increase in EMS net sales ~~was~~in the APAC region, and a $301.68 million increase in OEM net sales ~~across~~in the ~~APAC,~~Americas ~~EMEA,~~region. ~~and~~The ~~JPKO~~increase ~~regions,~~in ~~and~~Ceramics net sales was primarily due to a $2812.0 million increase in ~~EMS~~OEM net sales across all regions, a $10.3 ~~These~~million ~~increases~~increase in EMS net sales ~~were~~across ~~partially~~all ~~offset~~regions, byand a $35.27 million ~~decrease~~increase in distributor net sales inacross the APAC and JPKO ~~region~~regions. ~~and~~These increases in Ceramics net sales were partially offset by a $210.72 million decrease in ~~OEM~~distributor net sales inacross the Americas ~~region.~~and InEMEA ~~addition,~~regions. Solid Capacitors net sales was unfavorably impacted by $04.56 million from foreign currency exchange due to the change in the value of the Euro compared to the U.S. ~~dollar~~Dollar.

The ~~increase~~decrease in Film and Electrolytic net sales was ~~primarily~~ driven by a $1021.51 million ~~increase~~decrease in distributor net sales across ~~the~~all ~~Americas and EMEA~~ regions. ~~Also~~except ~~contributing~~for to the ~~increase~~JPKO inregion, ~~net~~an ~~sales was~~ $111.75 million ~~increase~~decrease in ~~EMS~~OEM net sales inacross the ~~Americas~~EMEA ~~region~~and JPKO regions, and a $02.81 million ~~increase~~decrease in ~~OEM~~EMS net sales in the ~~JPKO~~EMEA region. These ~~increases~~decreases in net sales were partially offset by a $53.62 million ~~decrease~~increase in ~~OEM~~EMS net sales across the ~~APAC~~Americas and ~~EMEA~~APAC regions, a $0.6 million increase in distributor net sales in the JPKO region, and a $30.15 million ~~decrease~~increase in ~~distributor~~OEM net sales across the ~~APAC~~Americas and ~~JPKO~~APAC regions. InFilm ~~addition,~~and ~~there~~Electrolytic ~~was~~net ansales ~~unfavorable~~was ~~impact~~unfavorably ofimpacted by $05.12 million from foreign currency exchange ~~primarily~~ due to the change in the value of the Euro compared to the U.S. ~~dollar~~Dollar.

The decrease in MSA net sales was driven by a $41.3 million decrease in OEM net sales across all regions except for the EMEA region, a $1.4 million decrease in EMS net sales across all regions, and a $0.8 million decrease in distributor net sales in the APAC region. These decreases in net sales were partially offset by a $1.2 million increase in distributor net sales across the Americas and EMEA regions. MSA net sales was favorably impacted by $2.5 million from foreign currency exchange due to the change in the value of the Japanese Yen compared to the U.S. dollar.

In fiscal years 2020 and 2019, net sales by channel and the percentages of net sales by region to total net sales were as follows (dollars in thousands):

The increase in MSA net sales was primarily driven by a $15.0 million increase in OEM sales in the JPKO region. Also contributing to the increase in net sales was a $4.3 million increase in EMS sales across all regions and a $3.7 million increase in distributor sales across the Americas and EMEA regions. These increase in net sales were partially offset by a $5.5 million decrease in distributor sales across the APAC and JPKO regions and a $3.8 million decrease in OEM sales across the Americas, APAC, and JPKO regions.



	Fiscal Year 2020				Fiscal Year 2019
	Net Sales		% of Total		Net Sales		% of Total
APAC	$	509,161	40.4	%	$	533,340	38.6	%
Americas	296,929		23.6	%	337,842		24.4	%
EMEA	276,477		21.9	%	315,535		22.8	%
JPKO	177,987		14.1	%	196,101		14.2	%
Total	$	1,260,554			$	1,382,818

In fiscal years 2020 and 2019, the percentages of net sales by channel to total net sales were as follows (dollars in thousands):

	Fiscal Year 2019				Fiscal Year 2018
	Fiscal Year 2020				Fiscal Year 2019
	Net Sales		% ~~ofTotal~~of Total		Net Sales		% ~~ofTotal~~of Total
APAC	$	533,340	38.6	%	$	479,987	40.0	%
OEM	$	552,629	43.8	%	$	598,306	43.3	%
EMEA	315,535		22.8	%	277,898		23.1	%
Distributor	508,536		40.4	%	584,618		42.2	%
Americas	337,842		24.4	%	259,105		21.6	%
EMS	199,389		15.8	%	199,894		14.5	%
JPKO	196,101		14.2	%	183,191		15.3	%
Total	$	1,260,554			$	1,382,818
Total	$	1,382,818			$	1,200,181

	Fiscal Year 2019				Fiscal Year 2018
	Net Sales		% of Total		Net Sales		% of Total
OEM	$	598,306	43.3	%	$	563,495	46.9	%
Distributor	584,618		42.2	%	470,324		39.2	%
EMS	199,894		14.5	%	166,362		13.9	%
Total	$	1,382,818			$	1,200,181

Gross Margin

Gross margin for the fiscal year ended March 31, ~~2019~~2020 of $~~458~~420.5 million (33.24% of net sales) ~~increased~~decreased $~~119~~38.1 million ~~or 35.1%~~ from $~~339~~458.45 million (2833.32% of net sales) in the prior fiscal year. Gross margin as a percentage of net sales improved ~~490~~20 basis points in the year-to-year period comparison.

Solid Capacitors gross margin increased $118.4 million, or 43.1% primarily due to an increase in net sales, as well as continued margin improvement due to our restructuring activities, vertical integration, and manufacturing process improvements resulting from our cost reduction activities. 44

~~Film~~Solid ~~and~~Capacitors ~~Electrolytic~~ gross margin ~~increased~~ decreased $410.81 million, primarily ordue 31to a decrease in net sales.6% ~~primarily~~The decrease in gross margin due to anthe ~~increase~~decrease in net sales, aswas ~~well~~substantially asoffset by continued variable margin improvement ~~due~~resulting tofrom ~~our~~manufacturing process improvements, vertical integration, and ongoing restructuring activities, as well as a favorable shift in sales mix and ~~manufacturing~~channel. ~~process~~Price ~~improvements~~increases ~~resulting~~for ~~from~~certain ~~our~~products ~~cost~~also ~~reduction~~contributed ~~activities~~to a higher margin on a number of products.

~~MSA~~Film and Electrolytic gross margin decreased $412.12 million, ~~or 8.4%~~ primarily due to a ~~change~~decrease in ~~the~~net sales ~~mix~~caused toby ~~lower~~a ~~margin~~softening ~~products.~~in the industrial and automotive market, and an unfavorable change in sales channel and region mix.

MSA gross margin decreased $15.7 million primarily due to a decrease in net sales and an unfavorable shift in sales mix.

Selling, General and Administrative Expenses (“SG&A”)

SG&A expenses of $~~202~~194.68 million (1415.75% of net sales) for fiscal year ~~2019~~2020 ~~increased~~decreased $297.09 million, ~~or 16.7%~~ compared to $~~173~~202.6 million (14.57% of net sales) for fiscal year ~~2018~~2019. The ~~increase~~decrease was ~~primarily~~mainly ~~attributable~~attributed to a $1115.87 million ~~increase~~decrease in payroll ~~and related~~ expenses, ~~primarily~~mainly ~~consisting~~due ofto ~~salaries~~a ~~and~~decrease in incentive~~-based~~ compensation, a $82.71 million ~~increase~~decrease in ~~ERP~~travel ~~integration~~expenses, and ~~technology transition costs,~~ a $42.01 million ~~increase~~decrease in ~~rent~~consultants and ~~software~~contractors ~~costs, and a $2~~expenses.8 ~~million~~This ~~increase~~decrease inwas ~~consulting~~partially ~~expenses.~~offset ~~Additionally,~~by $27.51 million ofin ~~the~~Merger-related ~~overall~~expenses ~~increase~~incurred ~~was~~during ~~attributed~~fiscal toyear 192020 ~~additional~~compared ~~days~~to ofno ~~ownership~~such ofexpenses ~~our TOKIN subsidiary~~ during ~~the~~ fiscal year ~~ended~~2019. ~~March~~In 31addition, ~~2019,~~a ~~compared~~$2.5 tomillion ~~the~~increase ~~fiscal~~in ~~year~~depreciation ~~ended~~and ~~March~~amortization ~~31,~~expense ~~2018~~and a $2.4 ~~Partially~~million ~~offsetting~~increase ~~these~~in ~~increases~~professional ~~was~~fees aunfavorably ~~$1.5~~impacted ~~million~~SG&A ~~decrease~~expenses in ~~legal~~fiscal ~~fees~~year ~~incurred~~2020 ~~defending~~compared ~~anti-trust~~to ~~litigation~~fiscal ~~claims~~year 2019.

Research and Development

R&D expenses of $4449.63 million (3.29% of net sales) for fiscal year ~~2019~~2020 increased $54.57 million ~~or 14.1%~~ compared to $3944.16 million (3.32% of net sales) for fiscal year 2019. The increase was primarily related to ana ~~increase in payroll and related expenses of~~ $4.91 million, ~~a $0.8 million~~ increase in ~~expenses~~payroll ~~related to supplies~~expenses, ~~and~~driven aby ~~$0.6~~an ~~million~~ increase in ~~costs~~headcount ~~attributed~~related to the 19Novasentis ~~additional~~acquisition ~~days~~in ~~of ownership of our TOKIN subsidiary during~~ the current fiscal year ~~ended March 31~~, ~~2019,~~and ~~compared~~a to$0.6 ~~the~~million ~~fiscal~~increase ~~year~~in ~~ended~~materials ~~March~~and ~~31,~~supplies ~~2018~~expenses.

~~(Gain)~~ Loss on Write Down and Disposal of Long-Lived Assets

During fiscal year ~~2019~~2020, KEMET recorded a net loss on the write down and disposal of long-lived assets of $119.7 million, which was comprised of $018.79 million in impairment charges and $1.0.8 million in net losses on the sale and disposal of long-lived assets. The impairment charges ~~were~~of ~~primarily~~$18.9 ~~related~~million toconsisted ~~the~~of ~~write~~(i) ~~down~~an $8.9 million impairment of ~~idle~~previously ~~land~~capitalized ~~and~~IT ~~machinery~~application ofdevelopment costs related to a hosted arrangement that was abandoned; (ii) a $06.51 million impairment of buildings and ~~$0.2~~equipment ~~million,~~related ~~respectively~~to the Film and Electrolytic plant in Italy, atwhich ~~TOKIN.~~is ~~The~~operating ~~$1.0~~significantly ~~million~~under ~~net~~capacity; ~~loss~~(iii) ona ~~write~~$1.4 ~~down~~million ~~and~~impairment ~~disposal~~related ofto ~~long~~under-~~lived~~utilized ~~assets~~Solid ~~primarily~~Capacitors' ~~consisted~~equipment ofat the ~~disposal~~Thailand ofplant; ~~furniture~~(iv) ~~and~~a ~~fixtures~~$0.9 ~~resulting~~million ~~from~~impairment of the ~~Company~~Film ~~relocation~~and ofElectrolytic ~~its~~building ~~corporate~~in ~~headquarters~~Sweden due to ~~Fort~~the ~~Lauderdale,~~relocation ~~Florida~~of ~~and~~operations ~~the~~to ~~disposal~~Portugal; ofand ~~old~~(v) ~~machinery~~a ~~throughout~~$0.8 ~~the~~million ~~Company~~impairment ~~that~~related ~~was~~to noan ~~longer~~idle ~~being~~facility ~~used~~in Japan.

During fiscal year ~~2018~~2019, the Company recorded a net ~~gain~~loss on the write down and disposal of long-lived assets of $1.07 million, which was comprised of $10.27 million inof ~~net~~impairment ~~gains~~charges ~~on the sale~~ and ~~disposal of long-lived assets offset by~~ $01.20 million in ~~impairment charges. The~~ net ~~gains~~losses on the sale and disposal of long-lived assets. The impairment charges were primarily related to the ~~sale~~write ~~of equipment, land, and buildings from KFM, which was shut~~ down inof ~~fiscal~~idle ~~year 2017. On March 13, 2018, the Company sold KFM's~~ land and ~~buildings~~machinery ~~to a third party for a gross sales price~~ of $30.65 million. ~~The~~and ~~net proceeds realized by the Company were approximately~~ $~~3.4 million after payment of $~~0.2 million, inrespectively, ~~closing~~at ~~costs~~TOKIN. The ~~Company~~$1.0 ~~realized~~million anet ~~gain~~loss on the sale ~~of the land~~ and ~~buildings~~disposal of ~~approximately~~long-lived ~~$1.9~~assets ~~million~~primarily ~~during~~consisted of the ~~year~~disposal ~~ended~~of ~~March 31,~~furniture ~~2019~~and asfixtures aresulting ~~result~~from of the ~~sale. In addition, the~~ Company ~~sold~~relocation ~~KFM's equipment for a $1.4 million gain. These gains were partially offset by MSA's loss on disposals~~ of ~~assets~~its ofcorporate ~~$1.3~~headquarters ~~million primarily related~~ to ~~equipment~~Fort ~~and~~Lauderdale, ~~buildings~~Florida ~~used for discontinued products~~ and ~~Solid Capacitors' loss of approximately $0.6 million related to~~ the ~~relocation~~disposal of ~~its~~old ~~K-Salt~~machinery ~~operations~~that ~~from~~was ano ~~leased~~longer ~~facility~~being ~~to its existing Matamoros, Mexico facility~~used.

Restructuring Charges

The Company has implemented restructuring plans, which include programs to increase competitiveness by removing excess capacity, relocating production to lower cost locations, and eliminating unnecessary costs throughout the Company. Significant restructuring plans that occurred during the fiscal year ended March 31, 2020 are summarized below:

Restructuring charges of $8.8 million in fiscal year 2019 decreased $6.1 million or 40.9% from $14.8 million in fiscal year 2018.



		Total expected to be incurred		Incurred during year ended March 31, 2020			Cumulative incurred to date
Restructuring Plan	Segment	Personnel Reduction Costs	Relocation & Exit Costs	Personnel Reduction Costs	Relocation & Exit Costs		Personnel Reduction Costs	Relocation & Exit Costs
Tantalum powder facility relocation ⁽¹⁾	Solid Capacitors	1,107	2,606	1,107	(777	)	1,107	2,580
Axial electrolytic production relocation from Granna to Evora	Film and Electrolytic	732	4,313	732	2,018		732	4,313
TOKIN Japan fixed cost reduction ⁽²⁾	MSA and Corporate	5,729	—	5,021	—		5,021	—
All Other	Corporate, Film and Electrolytic	1,505	432	758	23		1,198	432

______________________________________________________________________________

(1) The ~~Company~~credit ~~incurred~~to ~~$8.8~~relocation ~~million~~and inexit ~~restructuring~~costs ~~charges~~during in the fiscal year ended March 31, ~~2019~~2020 ~~comprised~~was ~~of $2.8 million in personnel reduction costs and $6.0 million in relocation and exit costs. The personnel reduction costs of $2.8 million were primarily~~ due to ~~$0.9 million in costs related to headcount reductions in~~ the ~~TOKIN~~recovery ~~legacy~~of ~~group across various internal and operational functions, and $1.6 million in~~ costs related to ~~reorganization in~~ the ~~Solid~~sale ~~Capacitors reportable segment due to a permanent structural change driven by the decline~~ of ~~MnO2~~tantalum ~~products,~~that ~~$0.3~~was ~~million~~recovered in(“tantalum ~~severance~~reclaim”) ~~charges~~as ~~related~~part ~~to personnel reductions in the Film and Electrolytic reportable segment resulting from a reorganization~~ of the ~~segment's~~plant ~~management~~exit ~~structure~~activities.

~~The~~(2) ~~relocation~~Personnel ~~and~~reduction ~~exits~~ costs of $65.0 million ~~were~~for ~~primarily due to $3.4 million in costs related to~~ the ~~relocation~~fiscal ofyear ~~its~~ended ~~tantalum~~March ~~powder equipment from Carson City~~31, ~~Nevada~~2020 toare ~~its~~comprised ~~plant~~of in$3.5 ~~Matamoros,~~million ~~Mexico~~ and $21.35 million in ~~costs related to~~ the ~~relocation~~MSA ofsegment ~~axial~~and ~~electrolytic~~corporate ~~production equipment from Granna, Sweden to its plant in Evora, Portugal~~respectively.

~~The~~Restructuring ~~Company~~charges ~~incurred~~of $~~14.~~8.9 million in ~~restructuring charges in the~~ fiscal year ~~ended~~2020 ~~March 31,~~increased ~~2018, comprised of~~ $120.61 million ~~related~~from ~~to personnel reduction costs and~~ $28.38 million ofin ~~relocation~~fiscal ~~and~~year ~~exit costs~~2019.

The ~~personnel~~restructuring ~~reduction~~charges ~~costs~~for ~~of $12.6 million were due to $5.2 million related to a voluntary reduction in force in~~ the ~~Film~~fiscal ~~and~~year ~~Electrolytic~~ended ~~reportable~~March 31, ~~segment's~~2020, ~~Italian~~are ~~operations;~~comprised of $47.46 million ~~related~~in topersonnel ~~a headcount~~ reduction incosts ~~the TOKIN legacy group across various internal~~ and ~~operational functions;~~ $21.73 million in ~~severance~~relocation ~~charges across various overhead functions in the Simpsonville, South Carolina office as these functions were relocated to the Company's new corporate headquarters in Fort Lauderdale, Florida;~~ and ~~$0.2~~exit ~~million in headcount reductions related to a European sales reorganization~~costs.

The ~~relocation~~personnel ~~and~~reduction ~~exit~~ costs of $27.36 million ~~included~~were primarily due to $05.90 million in ~~lease~~severance ~~termination~~charges ~~penalties~~due ~~related~~ to headcount ~~the~~reductions ~~relocation~~at TOKIN Japan as part of ~~global~~a ~~marketing,~~fixed ~~finance~~cost ~~and~~reduction ~~accounting~~plan, ~~and~~$1.1 ~~information~~million in ~~technology~~severance ~~functions~~charges toresulting from the ~~Company's~~closing ~~Fort~~of ~~Lauderdale~~the ~~office~~tantalum powder facility in Carson City, Nevada, $0.87 million in ~~expenses~~severance ~~related~~charges toresulting from the ~~relocation~~closing of the ~~K-Salt operations to the existing Matamoros~~Granna, ~~Mexico~~Sweden manufacturing plant, ~~$0.4~~as ~~million~~axial inelectrolytic ~~exit~~production ~~costs~~was ~~related~~moved to the ~~shut-down~~plant ofin ~~operations~~Evora, ~~for KFM~~Portugal, and $0.15 million in severance charges related to ~~the~~personnel ~~transfer~~reductions ofresulting ~~certain~~from ~~Tantalum~~a ~~production~~reorganization ~~from~~of ~~Simpsonville,~~Film ~~South~~and ~~Carolina~~Electrolytic's tomanagement ~~Victoria, Mexico~~structure.

43The relocation and exit costs of $1.3 million were primarily related to $2.0 million in costs resulting from the relocation of axial electrolytic production equipment from the Company's plant in Granna, Sweden to its plant in Evora, Portugal. This expense was partially offset by a $0.8 million credit related to tantalum reclaim at the tantalum powder facility in Carson City, Nevada.

The Company incurred $8.8 million in restructuring charges in the fiscal year ended March 31, 2019, including $2.8 million in personnel reduction costs and $6.0 million in relocation and exit costs.

The personnel reduction costs of $2.8 million were primarily due to $0.9 million in costs related to headcount reductions in the TOKIN legacy group across various internal and operational functions, $0.3 million in severance charges related to personnel reductions in the Film and Electrolytic reportable segment resulting from a reorganization of the segment's management structure, and $1.6 million in severance charges related to headcount reductions in the Tantalum product line due to a decline in MnO2 sales.

The relocation and exit costs of $6.0 million were primarily due to $3.4 million in costs related to the Company's relocation of its tantalum powder equipment from Carson City, Nevada to its plant in Matamoros, Mexico and $2.3 million in costs related to the relocation of axial electrolytic production equipment from Granna, Sweden to its plant in Evora, Portugal.

Operating Income

Operating income for fiscal year ~~2019~~2020 of $~~200~~147.89 million ~~increased~~declined $8753.90 million compared to operating income of $~~112~~200.98 million in fiscal year ~~2018~~2019. The ~~improvement~~decrease in operating income was primarily due to a $~~119~~38.1 million ~~increase~~decrease in gross margin, ~~and~~ a $618.1 million ~~decrease~~increase in ~~restructuring~~net ~~charges.~~loss ~~These~~on ~~improvements~~write todown ~~operating~~and ~~income~~disposal ~~were~~of ~~partially~~long-lived ~~offset~~assets, by a $294.07 million increase in SGR&AD expenses, and a $50.51 million increase in ~~R&D~~restructuring ~~expenses,~~charges. ~~and~~These aunfavorable ~~$2.7~~changes ~~million~~to ~~unfavorable~~operating ~~impact~~income ~~from~~were ~~(gain)~~partially ~~loss~~offset onby ~~write~~a ~~down~~$7.9 ~~and~~million ~~disposal~~decrease ofin ~~long-lived~~SG&A ~~assets~~expenses.

Non-Operating (Income) Expense, net

Non-operating expense, net was $3068.40 million in fiscal year ~~2019~~2020 compared to non-operating ~~income~~expense, net of $7430.24 million in fiscal year ~~2018~~2019. The $~~104~~37.6 million ~~unfavorable~~increase ~~change~~in non-operating expense, net was primarily attributable to ~~the~~a ~~acquisition gain of~~ $~~130~~58.90 million ~~recognized~~increase ~~during~~in ~~fiscal~~antitrust ~~year~~class ~~2018,~~action ~~compared~~settlements toand noregulatory ~~such~~costs. ~~gain~~Also incontributing ~~fiscal~~to ~~year~~the ~~2019.~~increase Inin ~~addition~~non-operating expense, ~~the~~net ~~Company~~was ~~recognized~~ a $152.9 million ~~loss~~decrease onin ~~the~~R&D ~~early~~grant ~~extinguishment~~reimbursements ofand ~~debt~~grant inincome, ~~fiscal~~a ~~year 2019~~$1.9 ~~Partially~~million ~~offsetting~~pension ~~these~~curtailment ~~unfavorable~~expense ~~changes~~that ~~were~~occurred ~~the~~during ~~following~~fiscal ~~favorable~~year ~~items~~2020 ~~which~~compared ~~occurred~~to ~~during~~no ~~the~~such ~~fiscal~~expense ~~year~~in ~~2019 versus~~ fiscal year ~~2018:~~2019, and a $121.97 million ~~decrease~~unfavorable change in ~~net~~foreign ~~interest~~currency ~~expense~~exchange (gain) loss, awhich ~~$3.3~~was ~~million~~primarily ~~decrease~~due into ~~anti-trust~~currency ~~litigation~~fluctuations ~~fines, a~~in ~~$4.5~~the ~~million~~Euro, ~~gain~~Chinese ~~related~~Yuan, toJapanese ~~research~~Yen and ~~development~~British ~~grant~~Pound. ~~reimbursements~~These ~~from~~unfavorable ~~the~~changes ~~Japanese~~were ~~and~~partially ~~Italian~~offset ~~governments,~~by ~~and~~ a $2015.39 million ~~net~~decrease ~~favorable~~in ~~change~~loss inon ~~foreign~~the ~~currency~~early ~~exchange~~extinguishment ~~gain~~of debt. Additionally, ~~which~~net ~~was~~interest ~~primarily~~expense ~~due~~decreased $11.5 million compared to ~~the~~fiscal ~~change~~year in2019 due to the ~~value~~refinancing of the ~~Chinese~~Company's ~~Yuan~~term ~~Renminbi,~~loan ~~Thai~~during ~~Baht,~~fiscal ~~British~~year ~~Pound, and the Euro~~2019.

Income Taxes

Income tax ~~benefit~~expense of $3938.5 million for fiscal year ~~2019~~2020 ~~decreased~~increased by $4878.60 million compared to income tax ~~expense~~benefit of $939.15 million in fiscal year ~~2018~~2019. ~~The~~Fiscal ~~fiscal~~ year ~~2019~~2020 income tax ~~benefit~~expense was ~~primarily~~ comprised of $5019.19 million ~~related to the partial release~~ of ~~valuation allowances in the~~ U.S. ~~and~~federal ~~Japan,~~income ~~offset~~tax ~~in part by~~ expense, $1017.42 million inof income tax ~~expense~~ related to foreign operations, and $01.24 million in state income tax expense ~~related to U~~.~~S. operations.~~

Fiscal year ~~2018~~2019 income tax ~~expense~~benefit of $939.15 million was comprised of 9$50.71 million inrelated ~~foreign~~to ~~income~~the ~~tax~~partial ~~expense~~release ~~and~~of avaluation ~~$0.6~~allowances ~~million~~in the U.S. ~~federal~~and ~~income~~Japan, ~~tax~~offset ~~benefit.~~in ~~The~~part Uby $10.S.4 ~~federal~~million ~~benefit~~in ofincome ~~$0.6~~tax ~~million~~expense ~~included~~related anto ~~estimated~~foreign operations and $0.82 million ~~tax~~in ~~benefit~~income ~~resulting~~tax ~~from~~expense ~~the~~related ~~Tax~~to ~~Cuts~~U.S. ~~and Jobs Act of 2017~~operations.

Equity Income (Loss) from Equity Method Investments

Equity ~~loss~~income from equity method investments of $30.31 million in fiscal year ~~2019~~2020 had ana ~~unfavorable~~favorable change of $793.54 million compared to an equity loss of $763.23 million in fiscal year ~~2018~~2019. The favorable change ~~was~~ primarily related to ~~the~~a ~~TOKIN acquisition that occurred in the first quarter of fiscal year 2018. The Company recognized equity income of~~ $840.24 million ~~related~~gain toassociated ~~our~~with ~~34%~~the ~~economic~~Novasentis ~~interest~~acquisition in ~~TOKIN~~July ~~for~~2019 ~~the~~as ~~19-day~~a ~~period~~result ~~ended~~of ~~April 19, 2017 for~~ the ~~sale~~Company ofadjusting ~~TOKIN's~~its ~~electrical-mechanical~~investment ~~devices~~balance ~~("EMD")~~to ~~business~~fair ~~and~~value aprior ~~$9.0~~to ~~million~~its ~~unfavorable~~acquisition ~~removal~~during offiscal ~~the~~year ~~cost~~2020. ~~basis~~The ofCompany ~~the~~impaired ~~portion~~its ~~of equity~~ investment ~~related~~in toNovasentis ~~the~~by ~~EMD division~~$2.7 ~~TOKIN~~million isduring ~~now~~fiscal ayear ~~fully~~2019, ~~owned~~which ~~subsidiary~~primarily ofcaused the ~~Company~~$3.3 ~~and~~million ~~there were no such gains from our~~ equity method ~~investments~~loss in fiscal year 2019. ~~In fiscal year 2019, the Company impaired its investment in Novasentis by $2.7 million.~~

44Reportable Segment Comparison of Fiscal Year 2020 to Fiscal Year 2019

The following table sets forth the operating income (loss) for each of our reportable segments for the fiscal years 2020 and 2019. The table also sets forth each of the reportable segments’ net sales as a percentage of total net sales and total operating income as a percentage of total net sales (amounts in thousands, except percentages):

Reportable Segment Comparison of Fiscal Year 2019 to Fiscal Year 2018



	For the Fiscal Years Ended
	March 31, 2020					March 31, 2019
	Amount			% of Total Sales		Amount			% of Total Sales
Net sales
Solid Capacitors	$	886,063		70.3	%	$	935,838		67.7	%
Film and Electrolytic	175,803			13.9	%	206,240			14.9	%
MSA	198,688			15.8	%	240,740			17.4	%
Total	$	1,260,554		100.0	%	$	1,382,818		100.0	%

Operating income (loss)
Solid Capacitors	$	345,245				$	348,150
Film and Electrolytic	(14,209		)			8,183
MSA	13,101					22,546
Corporate	(196,271		)			(178,030		)
Total	$	147,866		11.7	%	$	200,849		14.5	%

	For the Fiscal Years Ended
	March 31, 2019					March 31, 2018
	Amount			% of TotalSales		Amount			% of TotalSales
Net sales
Solid Capacitors	$	935,838		67.7	%	$	771,240		64.3	%
Film and Electrolytic (1)	206,240			14.9	%	201,977			16.8	%
MSA	240,740			17.4	%	226,964			18.9	%
Total (1)	$	1,382,818		100.0	%	$	1,200,181		100.0	%
Operating income (loss)
Solid Capacitors	$	348,150				$	234,473
Film and Electrolytic (1)	8,183					3,622
MSA	22,546					15,694
Corporate	(178,030		)			(140,937		)
Total (1)	$	200,849		14.5	%	$	112,852		9.4	%

(1) Fiscal year ending March 31, 2018 adjusted due to the adoption of ASC 606.

Solid Capacitors

The table below sets forth net sales, operating income and operating income as a percentage of net sales for our Solid Capacitors reportable segment for fiscal years 2020 and 2019 (amounts in thousands, except percentages):

For the Fiscal Years Ended

March 31, 2019

March 31, 2018

March 31, 2020

March 31, 2019

Amount

% to NetSales

Amount

% to NetSales

Tantalum product line net sales

~~563~~495,~~255~~695

~~495~~563,~~114~~255

Ceramic product line net sales

~~372~~390,~~583~~368

~~276~~372,~~126~~583

Solid Capacitors net sales

~~935~~886,~~838~~063

~~771~~935,~~240~~838

Solid Capacitors operating income

~~348~~345,~~150~~245

3739.20

~~234~~348,~~473~~150

3037.42

Net Sales

Solid Capacitors net sales of $~~935~~886.81 million in fiscal year ~~2019~~2020 ~~increased~~decreased $~~164~~49.68 million ~~or 21.3%~~ from $~~771~~935.28 million in fiscal year ~~2018~~2019. Tantalum product line net sales of $~~563~~495.37 million in fiscal year ~~2019~~2020 ~~increased~~decreased $6867.16 million ~~or 13.8%~~ from $~~495~~563.13 million in fiscal year ~~2018~~2019. Ceramic product line net sales of $~~372~~390.64 million in fiscal year ~~2019~~2020 increased $9617.58 million ~~or 34.9%~~ from $~~276~~372.16 million in fiscal year ~~2018~~2019.

Reportable Segment Operating Income

Segment operating income of $~~348~~345.2 million for fiscal year ~~2019~~2020 ~~increased~~decreased $~~113~~2.79 million ~~or 48.5%~~ from $~~234~~348.52 million for fiscal year ~~2018~~2019. The ~~increase~~decrease in operating income was primarily attributable to ana ~~increase~~decrease in gross margin of $~~118~~10.41 million, which was driven by ana ~~increase~~decrease in net sales,. asThe ~~well~~decrease asin gross margin due to the decrease in net sales was substantially offset by continued variable margin improvement ~~due~~resulting tofrom ~~our~~manufacturing ~~restructuring~~process ~~activities~~improvements, vertical integration, and ~~manufacturing~~ongoing ~~process~~restructuring ~~improvements~~activities, ~~resulting~~as ~~from~~well ~~our~~as ~~cost~~a ~~reduction~~favorable ~~activities~~shift in sales mix and channel. Price increases for certain products also contributed to a higher margin on a number of products. Also contributing to the ~~increase~~decrease in operating income was a $21.6 million increase in R&D expenses. These unfavorable changes to operating income were partially offset by a $5.7 million decrease in SG&A expenses, a $4.4 million decrease in restructuring charges, and a $01.53 million decrease in net loss on write down and disposal of long-lived assets. ~~Partially~~during ~~offsetting~~fiscal ~~these~~year ~~improvements~~2020 ~~was~~compared ato ~~$3.9~~fiscal ~~million~~year ~~increase in restructuring charges and a $3~~2019.~~8 million increase in R&D expenses.~~

Film and Electrolytic

The table below sets forth net sales, operating income (loss) and operating income (loss) as a percentage of net sales for our Film and Electrolytic reportable segment for the fiscal years 2020 and 2019 (amounts in thousands, except percentages):

	For the Fiscal Years Ended
	March 31, 2019					March 31, 2018
	March 31, 2020					March 31, 2019
	Amount			% to NetSales		Amount		% to NetSales
Net sales (1)	$	206,240				$	201,977
Net sales	$	175,803				$	206,240
Segment operating income (1)	8,183			4.0	%	3,622		1.8	%
Segment operating income (loss)	(14,209		)	(8.1	)%	8,183		4.0	%

(1) Fiscal year ending March 31, 2018 adjusted due to the adoption of ASC 606.

Net Sales

Film and Electrolytic net sales of $~~206~~175.28 million in fiscal year ~~2019~~2020 ~~increased~~decreased $430.34 million ~~or 2.1%~~ from $~~202~~206.02 million in fiscal year ~~2018~~2019. The ~~increase~~decrease in net sales was ~~primarily~~ driven by a $1021.51 million ~~increase~~decrease in distributor net sales across ~~the~~all ~~Americas and EMEA~~ regions. ~~Also~~except ~~contributing~~for to the ~~increase~~JPKO inregion, ~~net~~an ~~sales was~~ $111.75 million ~~increase~~decrease in ~~EMS~~OEM net sales inacross the ~~Americas~~EMEA ~~region~~and JPKO regions, and a $02.81 million ~~increase~~decrease in ~~OEM~~EMS net sales in the ~~JPKO~~EMEA region. These ~~increases~~decreases in net sales were partially offset by a $53.62 million ~~decrease~~increase in ~~OEM~~EMS net sales across the ~~APAC~~Americas and ~~EMEA~~APAC regions, a $0.6 million increase in distributor net sales in the JPKO region, and a $30.15 million ~~decrease~~increase in ~~distributor~~OEM net sales across the ~~APAC~~Americas and ~~JPKO~~APAC regions. InFilm ~~addition,~~and ~~there~~Electrolytic ~~was~~net ansales ~~unfavorable~~was ~~impact~~unfavorably ofimpacted by $05.12 million from foreign currency exchange ~~primarily~~ due to the change in the value of the Euro compared to the U.S. ~~dollar~~Dollar.

Reportable Segment Operating Income (Loss)

Segment operating ~~income~~loss of $814.2 million in fiscal year ~~2019~~2020 ~~increased~~had a $422.64 million unfavorable change from operating income of $38.62 million in fiscal year ~~2018~~2019. The ~~increase~~unfavorable change in operating income was primarily attributable to a $412.82 million ~~increase~~decrease in gross margin driven by ana ~~increase~~decrease in net sales, ascaused ~~well~~by asa ~~continued~~softening ~~margin~~in ~~improvement~~the ~~due~~industrial toand ~~our~~automotive ~~restructuring~~market, ~~activities~~ and ~~manufacturing~~an ~~process~~unfavorable ~~improvements~~change ~~resulting~~in ~~from~~sales ~~our~~channel ~~cost~~and ~~reduction~~region ~~activities~~mix. The ~~increase~~unfavorable change in operating income (loss) was also ~~attributed~~attributable to a $3.1.5 million ~~decrease~~increase in ~~restructuring~~R&D ~~charges~~expenses, ~~and~~ a $0.67 million ~~decrease~~increase in ~~SG&A~~restructuring ~~expenses.~~charges, ~~These improvements were partially offset by~~ a $37.39 million ~~decrease~~unfavorable change in ~~net~~ (gain) loss on write down and disposal of long-lived assets, and a $0.61 million increase in RSG&DA expenses.

Electro-Magnetic, Sensors, and Actuators

The following table sets forth net sales, operating income, and operating income as a percentage of net sales for our MSA reportable segment in fiscal years 2020 and 2019 (amounts in thousands, except percentages).

For the Fiscal Years Ended

March 31, 2019

March 31, 2018

March 31, 2020

March 31, 2019

Amount

% to NetSales

Amount

% to NetSales

Net sales

~~240~~198,~~740~~688

~~226~~240,~~964~~740

Segment operating income

2213,~~546~~101

96.46

1522,~~694~~546

6.9.4

Net Sales

MSA net sales of $~~240~~198.7 million in fiscal year ~~2019~~2020 ~~increased~~decreased $1342.81 million ~~or 6.1%~~ from $~~227~~240.07 million in fiscal year ~~2018~~2019. The ~~increase~~decrease in net sales was ~~primarily~~ driven by a $1541.03 million ~~increase~~decrease in OEM net sales inacross all regions except for the ~~JPKO~~EMEA region., ~~Also~~a ~~contributing~~$1.4 tomillion ~~the~~decrease ~~increase~~ in EMS net sales ~~was~~across all regions, and a $40.38 million ~~increase~~decrease in ~~EMS~~distributor net sales ~~across~~in ~~all~~the ~~regions~~APAC ~~and~~region. These decreases in net sales were partially offset by a $31.72 million increase in distributor net sales across the Americas and EMEA regions. ~~These~~MSA ~~increase in~~ net sales ~~were~~was ~~partially~~favorably ~~offset~~impacted by a $52.5 million from foreign currency exchange due to the change in the value of the Japanese Yen compared to the U.S. dollar.

decrease in distributor sales across the APAC and JPKO regions and a $3.8 million decrease in OEM sales across the Americas, APAC, and JPKO regions.

Reportable Segment Operating Income

Segment operating income of $2213.51 million in fiscal year ~~2019~~2020 ~~increased~~decreased $6.9.4 million from $1522.75 million in fiscal year ~~2018~~2019. The ~~increase~~decrease in operating income was primarily due to a $615.67 million decrease in ~~SG&A~~gross ~~expenses~~margin, ~~resulting~~which ~~from a decrease in payroll expenses that~~ was ~~caused~~primarily driven by a ~~reduction~~decrease in ~~head~~net ~~count.~~sales ~~Also~~and ~~contributing~~an tounfavorable ~~the~~shift ~~increase~~ in ~~operating~~sales ~~income~~mix. ~~was~~A a $23.91 million ~~decrease~~increase in restructuring charges, aalso ~~$1.3~~contributed ~~million~~to the decrease in ~~net~~operating ~~loss~~income. onThis ~~write~~decrease ~~down~~to ~~and~~operating ~~disposal~~income ofwas ~~long-lived~~partially ~~assets,~~offset ~~and~~by a $09.2 million decrease in RSG&DA expenses. ~~Partially~~and ~~offsetting these improvements was~~ a $40.12 million decrease in ~~gross~~R&D ~~margin,~~expenses ~~which~~during ~~was~~fiscal ~~primarily~~year ~~driven~~2020 bycompared ~~a change in the sales mix~~ to ~~lower~~fiscal ~~margin~~year ~~products~~2019.

Consolidated Comparison of Fiscal Year 2018 to Fiscal Year 2017

Net sales

Net sales of $1.2 billion for fiscal year 2018 increased 58.5% from $757.3 million for fiscal year 2017. Solid Capacitor and Film and Electrolytic sales increased by $196.1 million and $19.7 million, respectively and net sales for MSA, our new reportable segment in fiscal year 2018, was $227.0 million. Prior to the acquisition of TOKIN on April 19, 2017, the Company did not have any MSA sales.

The increase in Solid Capacitors net sales was primarily driven by the addition of net sales of $133.8 million resulting from the TOKIN acquisition and an increase in net sales to the legacy products distributor channel of $81.7 million. To a lesser degree, an increase in legacy Ceramic products' net sales of $6.0 million in the EMS channel across all regions and $10.2 million in the OEM channel in the EMEA and APAC regions also contributed to the increase in Solid Capacitors net sales. These increases were partially offset by a $28.0 million decrease in net sales in the OEM channel for legacy Tantalum products across all regions. In addition, Solid Capacitors net sales was favorably impacted by $6.1 million from foreign currency exchange due to the change in the value of the Euro compared to the U.S. dollar.

The increase in Film and Electrolytic net sales was driven by an increase in net sales in the distributor channel across the APAC and EMEA regions of $13.7 million, and to a lesser degree, a $3.3 million increase in net sales in the OEM channel of the EMEA region and a $4.2 million increase in the EMS channel across the Americas, EMEA, and APAC regions. These increases were partially offset by a decrease in net sales of $1.2 million in the OEM channel across the Americas, APAC, and JPKO regions. In addition, there was a favorable impact of $7.6 million from foreign currency exchange primarily due to the change in the value of the Euro compared to the U.S. dollar.

	Fiscal Year 2018				Fiscal Year 2017
	Net Sales		% of Total		Net Sales		% of Total
APAC	$	479,987	40.0	%	$	288,764	38.1	%
EMEA	277,898		23.1	%	237,437		31.4	%
Americas	259,105		21.6	%	224,056		29.6	%
JPKO	183,191		15.3	%	7,081		0.9	%
Total	$	1,200,181			$	757,338

	Fiscal Year 2018				Fiscal Year 2017
	Net Sales		% of Total		Net Sales		% of Total
OEM	$	563,495	46.9	%	$	246,397	32.5	%
Distributors	470,324		39.2	%	354,639		46.8	%
EMS	166,362		13.9	%	156,302		20.7	%
Total	$	1,200,181			$	757,338

Gross Margin

Gross margin for the fiscal year ended March 31, 2018 of $339.4 million (28.3% of net sales) increased $154.0 million or 83.1% from $185.4 million (24.5% of net sales) in the prior fiscal year. Gross margin as a percentage of net sales improved 380 basis points.

Solid Capacitors gross margin increased $100.4 million, or 57.5% due to an increase in net sales, cost improvements in vertical integration, favorable foreign currency impact to manufacturing costs, and manufacturing process improvements resulting from annual cost reduction activities, as well as our acquisition of TOKIN. TOKIN contributed $47.0 million to Solid Capacitors gross margin in fiscal year 2018.

Film and Electrolytic gross margin increased $4.3 million, or 39.9% due an increase in net sales, as well as the benefit of completed restructuring activities.

MSA gross margin was $49.3 million for the fiscal year ended March 31, 2018.

SG&A

SG&A expenses of $173.6 million (14.5% of net sales) for fiscal year 2018 increased $66.0 million or 61.3% compared to $107.7 million (14.2% of net sales) for fiscal year 2017. The increase was primarily attributable to $41.9 million in SG&A expenses incurred by TOKIN for the fiscal year ended March 31, 2018. In addition, the increase was related to $15.7 million in increased payroll-related expenses and benefits, a $9.1 million increase in office related expenses and rent, a $4.1 million increase in professional fees and a $2.4 million increase in travel related expenses. These increases were partially offset by a $7.0 million decrease in ERP integration and technology transition costs and a $0.4 million decrease in legal expenses.

Research and Development

R&D expenses of $39.1 million (3.3% of net sales) for fiscal year 2018 increased $12.4 million or 46.5% compared to $26.7 million (3.5% of net sales). The increase was primarily related to $10.1 million in R&D expenses incurred by TOKIN for fiscal year 2018 and $2.2 million in increased payroll-related expenses.

(Gain) Loss on Write Down and Disposal of Long-Lived Assets

During fiscal year 2018, the Company recorded a net gain on the write down and disposal of long-lived assets of $1.0 million, which was comprised of $1.2 million in net gains on the sale and disposal of long-lived assets offset by $0.2 million in impairment charges. The net gains on the sale and disposal of long-lived assets were primarily related to the sale of equipment, land, and buildings from KFM, which was shut down in fiscal year 2017. On March 13, 2018, the Company sold KFM's land and buildings to a third party for a gross sales price of $3.6 million. The net proceeds realized by the Company were approximately $3.4 million after payment of $0.2 million in closing costs. The Company realized a gain on the sale of the land and buildings of approximately $1.9 million during the year ended March 31, 2018 as a result of the sale. In addition, the Company sold KFM's equipment for a $1.4 million gain. These gains were partially offset by MSA's loss on disposals of assets of $1.3 million primarily related to equipment and buildings used for discontinued products and Solid Capacitors' loss of approximately $0.6 million related to the relocation of its K-Salt operations from a leased facility to its existing Matamoros, Mexico facility.

During fiscal year 2017, the Company recorded a net loss on write down and disposal of long-lived assets of $10.7 million, which was comprised of $10.3 million in impairment charges and $0.4 million in net losses on the sale and disposal of long-lived assets. In fiscal year 2017, Film and Electrolytic incurred impairment charges totaling $8.2 million. The impairment charges consisted of the following two actions.

On August 31, 2016, KEMET Electronics Corporation, a wholly-owned subsidiary of KEMET made the decision to shut-down operations of its wholly-owned subsidiary, KFM. Operations at KFM’s Knoxville, Tennessee plant ceased as of October 31, 2016. The Company recorded impairment charges related to KFM totaling $4.1 million comprised of $3.0 million for the write down of property plant and equipment and $1.1 million for the write down of intangible assets.

The Company also recorded impairment charges of $4.1 million related to a decline in real estate market conditions surrounding its vacated Sasso Marconi, Italy manufacturing facility.

In fiscal year 2017, Solid Capacitors incurred impairment charges totaling $2.1 million related to the relocation of our leased K-salt facility to our existing Matamoros, Mexico facility.

Restructuring Charges

Restructuring charges of $14.8 million in fiscal year 2018 increased $9.4 million or 174.7% from $5.4 million in fiscal year 2017.

The Company incurred $14.8 million in restructuring charges in the fiscal year ended March 31, 2018, comprised of $12.6 million related to personnel reduction costs and $2.3 million of relocation and exit costs.

The personnel reduction costs of $12.6 million were due to $5.2 million related to a voluntary reduction in force in the Film and Electrolytic reportable segment's Italian operations; $4.4 million related to a headcount reduction in the TOKIN legacy group across various internal and operational functions; $2.7 million in severance charges across various overhead functions in the Simpsonville, South Carolina office as these functions were relocated to the Company's new corporate headquarters in Fort Lauderdale, Florida; and $0.2 million in headcount reductions related to a European sales reorganization.

The relocation and exit costs of $2.3 million included $0.9 million in lease termination penalties related to the relocation of global marketing, finance and accounting, and information technology functions to the Company's Fort Lauderdale office, $0.8 million in expenses related to the relocation of the K-Salt operations to the existing Matamoros, Mexico plant, $0.4 million in exit costs related to the shut-down of operations for KFM, and $0.1 million related to the transfer of certain Tantalum production from Simpsonville, South Carolina to Victoria, Mexico.

The Company incurred $5.4 million in restructuring charges in the fiscal year ended March 31, 2017, including $2.2 million related to personnel reduction costs and $3.2 million of relocation and exit costs.

The personnel reduction costs of $2.2 million corresponded with the following: $0.3 million related to the consolidation of certain Solid Capacitor manufacturing in Matamoros, Mexico; $0.4 million for headcount reductions related to the shut-down of operations for KFM; $0.3 million related to headcount reductions in Europe (primarily Italy and Landsberg, Germany) corresponding with the relocation of certain production lines and laboratories to lower cost regions; $0.3 million for overhead reductions in Sweden; $0.3 million in U.S. headcount reductions related to the relocation of global marketing functions to the Company’s Fort Lauderdale, Florida office; $0.3 million in headcount reductions related to the transfer of certain Tantalum production from Simpsonville, South Carolina to Victoria, Mexico; $0.2 million in overhead reductions for the relocation of research and development operations from Weymouth, England to Evora, Portugal; and $0.1 million in manufacturing headcount reductions related to the relocation of the K-Salt operations to the existing Matamoros, Mexico plant.

The relocation and exit costs of $3.2 million included $1.9 million in expenses related to contract termination costs related to the shut-down of operations for KFM; $0.6 million in expenses related to the relocation of the K-Salt operations to the existing Matamoros, Mexico plant; $0.6 million for transfers of Film and Electrolytic production lines and R&D functions to lower cost regions; and $0.1 million related to the transfer of certain Tantalum production from Simpsonville, South Carolina to Victoria, Mexico.

Operating Income

Operating income for fiscal year 2018 of $112.9 million increased $77.9 million compared to operating income of $35.0 million in fiscal year 2017. The improvement was primarily due a $154.0 million increase in gross margin and an $11.7 million improvement in (gain) loss on write down and disposal of long-lived assets. These improvements to operating income were partially offset by a $66.0 million increase in SG&A expenses, a $12.4 million increase in R&D expenses, and a $9.4 million increase in restructuring charges.

Non-Operating (Income) Expense, net

Non-operating income, net was $74.2 million in fiscal year 2018 compared to a net expense of $25.2 million in fiscal year 2017. The $99.4 million improvement was primarily due to a $130.9 million gain on acquisition in fiscal 2018 and a $7.7 million decrease in net interest and amortization expense under the Term Loan and Credit Agreement for fiscal year 2018 as compared to net interest and amortization expense under the Senior Notes in fiscal year 2017. Partially offsetting these favorable changes were the following unfavorable changes: a $16.9 million net unfavorable change in foreign currency exchange gain/(loss), which was primarily due to the change in the value of the Chinese Yuan Renminbi, Euro, Great Britain Pound, Thai Baht, and Japanese Yen, compared to the U.S. dollar; a $10.7 million decrease in gains related to the TOKIN Option as there was no such gain recorded in fiscal year 2018 compared to fiscal year 2017; $11.3 million in antitrust litigation fines recorded in fiscal year 2018, $1.1 million in integration expenses incurred by TOKIN in fiscal year 2018, and $0.6 million increase in net other operating expenses.

Income Taxes

Income tax expense of $9.1 million in fiscal year 2018 increased $4.8 million compared to income tax expense of $4.3 million in fiscal year 2017. The increase was primarily driven by income tax expense from foreign operations. Of the $4.8 million increase, $3.3 million related income tax expense from operations of newly acquired subsidiaries.

Fiscal year 2018 income tax expense of $9.1 million was comprised of 9.7 million in income tax expense related to foreign operations and a $0.6 million of U.S. federal income tax benefit. The U.S. federal benefit of $0.6 million included an estimated $0.8 million tax benefit resulting from the Tax Cuts and Jobs Act of 2017.

~~Fiscal~~Consolidated ~~year~~Comparison ~~2017 income tax expense~~ of ~~$4.3~~Fiscal ~~million~~Year ~~was~~2019 ~~comprised of $4.3 million in foreign income tax expense. No U.S. federal income tax expense benefit was recognized for the U.S. taxable loss for fiscal year 2017 due~~ to aFiscal ~~valuation~~Year ~~allowance~~2018 ~~provided for U.S. net operating losses.~~

~~Equity~~For ~~Income~~a ~~(Loss)~~discussion ~~from~~of ~~Equity~~consolidated ~~Method~~results ~~Investments~~for the fiscal year ended March 31, 2019 compared to the fiscal year ended March 31, 2018, refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019, which is incorporated herein by reference.

InReportable ~~fiscal~~Segment ~~year~~Comparison ~~2018, we incurred equity income related to our equity method investments~~ of ~~$76.2~~Fiscal ~~million~~Year ~~compared~~2019 to ~~$41.6~~Fiscal ~~million~~Year in fiscal year 2017. The increase was primarily due to equity income of $84.2 million related to our 34% economic interest in TOKIN for the 19-day period ended April 19, 2017, which included the gain on the sale of the EMD business. The increase was also due to $0.8 million and $0.4 million of income from TOKIN's equity method investments, Nippon Yttrium Co., Ltd ("NYC") and NT Sales Co., Ltd ("NTS"), respectively. Partially offsetting these favorable items was a $9.0 million removal of the balance of the cost basis of the portion of equity investment related to the EMD division which was established at the time of initial acquisition of 34% of TOKIN, as well as $0.1 million of loss from our joint venture with Novasentis.2018

~~Reportable~~For ~~Segment~~a ~~Comparison~~discussion of ~~Fiscal~~reportable ~~Year~~segment results for the fiscal year ended March 31, 2019 compared to the fiscal year ended March 31, 2018, refer to ~~Fiscal~~Part ~~Year~~II, ~~2017~~Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019, which is incorporated herein by reference.

	For the Fiscal Years Ended
	March 31, 2018					March 31, 2017
	Amount			% of TotalSales		Amount			% of TotalSales
Net sales
Solid Capacitors	$	771,240		64.3	%	$	575,110		75.9	%
Film and Electrolytic (1)	201,977			16.8	%	182,228			24.1	%
MSA	226,964			18.9	%	—			—	%
Total (1)	$	1,200,181		100.0	%	$	757,338		100.0	%
Operating income (loss)
Solid Capacitors	$	234,473				$	147,662
Film and Electrolytic (1)	3,622					(9,028		)
MSA (2)	15,694					—
Corporate (1)	(140,937		)			(103,666		)
Total	$	112,852		9.4	%	$	34,968		4.6	%

(1) Fiscal years ending March 31, 2018 and 2017 adjusted due to the adoption of ASC 606.

(2) After the TOKIN acquisition in fiscal year 2018, MSA became a new reportable segment.

Solid Capacitors

The table below sets forth net sales, operating income and operating income as a percentage of net sales for our Solid Capacitors reportable segment for the fiscal years 2018 and 2017 (amounts in thousands, except percentages):

	For the Fiscal Years Ended
	March 31, 2018				March 31, 2017
	Amount		% to NetSales		Amount		% to NetSales
Tantalum product line net sales	$	495,114			$	342,184
Ceramic product line net sales	276,126				232,926
Net sales	$	771,240			$	575,110
Segment operating income	$	234,473	30.4	%	$	147,662	25.7	%

Net Sales

Solid Capacitors net sales of $771.2 million in fiscal year 2018 increased $196.1 million or 34.1% from $575.1 million in fiscal year 2017. Tantalum product line net sales of $495.1 million in fiscal year 2018 increased $152.9 million or 44.7% from $342.2 million in fiscal year 2017. Ceramic product line net sales of $276.1 million in fiscal year 2018 increased $43.2 million or 18.5% from $232.9 million in fiscal year 2017.

Reportable Segment Operating Income

Segment operating income of $234.5 million for fiscal year 2018 increased $86.8 million or 58.8% from $147.7 million for fiscal year 2017. The increase in operating income was primarily attributable to an increase in gross margin of $100.4 million. TOKIN contributed $47.0 million in additional gross margin in fiscal year 2018. Legacy KEMET gross margin increased $53.3 million, or 30.6%, primarily driven by an increase in net sales, cost improvements in vertical integration, favorable foreign currency impact to manufacturing costs, and manufacturing process improvements resulting from our cost reduction activities. In addition, there was a $1.6 million improvement in (gain) loss on write down and disposal of long-lived assets. Partially offsetting these improvements were a $10.5 million increase in SG&A expenses and a $5.0 million increase in R&D expenses. TOKIN accounted for $10.2 million of the increase in SG&A expenses and $4.1 million of the increase in R&D expenses.

Film and Electrolytic

The table below sets forth net sales, operating income (loss) and operating income (loss) as a percentage of net sales for our Film and Electrolytic reportable segment for the fiscal years 2018 and 2017 (amounts in thousands, except percentages):

	For the Fiscal Years Ended
	March 31, 2018				March 31, 2017
	Amount		% to NetSales		Amount			% to NetSales
Net sales (1)	$	201,977			$	182,228
Segment operating income (loss) (1)	3,622		1.8	%	(9,028		)	(5.0	)%

_______________________________________________

(1) Fiscal years ending March 31, 2018 and 2017 adjusted due to the adoption of ASC 606

Net Sales

Film and Electrolytic net sales of $202.0 million in fiscal year 2018 increased $19.7 million or 10.8% from $182.2 million in fiscal year 2017. The increase in net sales was primarily driven by an increase in net sales in the distributor channel across all the APAC and EMEA regions of $13.7 million,a $3.3 million increase in net sales in the OEM channel of the EMEA region and a $4.2 million increase in the EMS channel across the Americas, EMEA, and APAC regions. These increases were partially offset by a decrease in net sales of $1.2 million in the OEM channel across the Americas, APAC, and JPKO regions. In addition, there was a favorable impact of $7.6 million from foreign currency exchange primarily due to the change in the value of the Euro compared to the U.S. dollar.

Reportable Segment Operating Income (Loss)

Segment operating income of $3.6 million in fiscal year 2018 improved $12.7 million from $9.0 million of operating loss in fiscal year 2017. The improvement was primarily attributable to a $4.3 million increase in gross margin driven by higher net sales, as well as the benefit of completed restructuring activities. The increase was also attributed to an $11.7 million improvement in (gain) loss on the write down and disposal of long-lived assets. These improvements were partially offset by a $2.1 million increase in restructuring charges, a $0.7 million increase in SG&A expenses, and a $0.6 million increase in R&D expenses.

Liquidity and Capital Resources

Our liquidity needs arise from working capital requirements, acquisitions, capital expenditures, principal and interest payments on debt, costs associated with the implementation of our restructuring plans, and in the past, dividend payments. Historically, these cash needs have been met by cash flows from operations, borrowings under our loan agreements, and existing cash and cash equivalents balances.

TOKIN Term Loan Facility

On October 29, 2018, the Company entered into a JPY 33.0 billion Term Loan Agreement (the “TOKIN Term Loan Facility”) by and ~~received~~among ~~funding~~TOKIN, the lenders party thereto (the “Lenders”) and Sumitomo Mitsui Trust Bank, Limited in its capacity as agent (the “Agent”), arranger and Lender. Funding for the Term Loan facility occurred on November 7, 2018. The proceeds, which were net of an arrangement fee withheld from the funding amount, were JPY 32.1 billion, or approximately $283.9 million using the exchange rate as of November 7, 2018. Net of the arrangement fee, bank issuance costs, and other indirect issuance costs, the Company's net proceeds from the TOKIN Term Loan Facility was $281.8 million.

~~The~~Principal ~~proceeds~~payments ~~from~~on the TOKIN Term Loan Facility ~~were~~are ~~used~~required bysemi-annually ~~TOKIN~~in tothe ~~make~~amount ~~Intercompany~~of ~~Loans~~JPY 1.4 ~~The~~billion ~~proceeds~~(approximately $12.7 million using the exchange rate as of March 31, ~~along~~2020), with ~~other~~a ~~cash~~final onpayment ~~hand,~~of ~~were~~JPY ~~used~~16.5 tobillion ~~prepay~~(approximately in$152.0 ~~full~~million using the ~~outstanding~~exchange ~~amounts~~rate ~~under~~as ~~the~~of ~~Company’s~~March 31, ~~Term~~2020) ~~Loan~~due ~~Credit~~upon ~~Agreement~~maturity ofon ~~$323~~September 30, 2024.4 ~~million~~Interest ~~and~~payments aare ~~prepayment~~due ~~premium~~semi-annually ofon 1the TOKIN Term Loan Facility.~~0%.~~

The TOKIN Term Loan Facility consists of (i) a JPY 16.5 billion (approximately $146.0 million using the exchange rate as of November 7, 2018) Term Loan A tranche (the “Term Loan A”) and (ii) a JPY 16.5 billion (approximately $146.0 million using the exchange rate as of November 7, 2018) Term Loan B tranche (the “Term Loan B” and, together with the Term Loan A, collectively, the “Term Loans”). Principal payments under Term Loan A are required semi-annually, in the amount of JPY 1.4 billion (approximately $12.4 million using the exchange rate as of March 31, 2019), while the principal of Term Loan B is due in one payment at maturity. At each reporting period, the carrying value of the ~~loan is translated from JPY to U.S. Dollars (“USD”) using the spot exchange rate as of the end of the reporting period. The carrying value of the~~ TOKIN Term Loan Facility at March 31, 2020 and 2019 was $258.7 million and $276.8 million., respectively.

Interest payments are due semi-annually on the Term Loans, with the interest rate based on a margin over the six-month Japanese TIBOR. The applicable margin for Term Loan A is 2.00% and for Term Loan B is 2.25%. Japanese TIBOR at March 31, 2019 was 0.13%. Interest payable related to the TOKIN Term Loan Facility included in the line item “Accrued expenses” on the Condensed Consolidated Balance Sheets was $0.1 million as of March 31, 2019.

The Term Loans mature on September 30, 2024. KEMET and certain subsidiaries of TOKIN provided guarantees of the obligations under the Term Loans, which will also be secured by certain assets, properties and equity interests of TOKIN and its material subsidiaries. The Term Loans contain customary covenants applicable to both the Company and to TOKIN, including maintenance of a consolidated net leverage ratio, the absence of two consecutive years of consolidated operating losses and the maintenance of certain required levels of consolidated net assets. The TOKIN Term Loan Facility also contains customary events of default. The Company may prepay the Term Loans at any time, subject to certain notice requirements and reimbursement of loan breakage costs.

Revolving Line of Credit

In connection with the closing of the TOKIN Term Loan Facility on October 29, 2018, the Company entered into Amendment No. 10 to the Loan and Security Agreement, Waiver and Consent (the “Revolver Amendment”), by and among KEMET, KEC, the other borrowers named therein, the financial institutions party thereto as lenders and Bank of America, N.A., a national banking association, as agent for the lenders. The Revolver Amendment provides the Company with, among other things, increased flexibility for certain restricted payments (including dividends), and released certain pledges that allowed the Company to obtain the TOKIN Term Loan Facility to pay down the Term Loan Credit Agreement. The revolving line of credit has a facility amount of up to $75.0 million which is based on factors including outstanding eligible accounts receivable, inventory, and equipment collateral. There were no borrowings under the revolving line of credit during fiscal year ~~2019~~2020, and the Company’s available borrowing capacity under the Loan and Security Agreement was $6634.03 million as of March 31, ~~2019~~2020.

Customer Advances

InAs ~~September,~~of ~~November~~March 31, ~~and February of fiscal year 2019~~2020, the Company ~~entered~~has ~~into~~received ~~three~~a ~~agreements~~total ~~with~~of ~~different~~$56.5 ~~customers~~million in customer advances (collectively, the “~~Customers~~Advances”) ~~pursuant~~from tothree ~~which~~separate ~~the~~customers. ~~Customers~~The three customers agreed to make ~~advances (collectively, the “~~Advances”) to the Company in an aggregate amount of up to $72.0 million (collectively, the “Customer Capacity Agreements”). The ~~Company~~Customer isCapacity ~~using~~Agreements ~~these~~are ~~Advances~~being used to fund the ~~purchase~~expansion of ~~production equipment and to make other investments and improvements in its business and operations (the “Investments”) to increase overall~~ capacity tofor ~~produce~~ various electronic components ofthat ~~the~~are ~~type and part as may be~~ sold ~~by the Company~~ to ~~the~~these ~~Customers~~customers ~~from time to time. The Company retains all rights to~~ (the ~~production equipment purchased with the funds from the Advances~~“Investments”). ~~The Advances from the Customers are being made in quarterly~~

52The Advances will be repaid beginning on the date that production from the Investments is sufficient to meet the Company's obligations under the agreements with the Customers. Repayments will be made on a quarterly basis as determined by calculations that generally consider the number of components purchased by the Customers during the quarter. Repayments based on the calculations will continue until either the Advances are repaid in full, or December 31, 2038 for all three Customers. The Company has a quarterly repayment cap in the agreement with each of the Customers and is not required to make any quarterly repayments to the Customers that in the aggregate exceeds $1.8 million. If the Customers do not purchase a minimum number of components that would require full repayment of the Advances by December 31, 2038, then the Advances shall be deemed repaid in full. Additionally, if the Customers do not purchase a minimum number of components that would require a payment on the Advances for a period of 16 consecutive quarters, the Advances shall be deemed repaid in full.

~~installments (“Installments”) over an expected period of 18 to 24 months from the effective date of the Customer Capacity Agreements.~~50

The ~~Advances~~carrying ~~will~~value beof ~~repaid~~these ~~beginning~~Advances onwas ~~the~~$56.5 ~~date~~million ~~that~~and ~~production from the Investments is sufficient to meet the Company's obligations under the agreements with the Customers~~$13.4 ~~Repayments~~million ~~will be made on a quarterly basis~~ as ~~determined by calculations that generally consider the number~~ of ~~components purchased by the Customers during the quarter. Repayments based on the calculations will continue until either the Advances are repaid in full~~March 31, or2020 ~~December~~and 312019, ~~2038 for all three Customers~~respectively. ~~The~~During ~~Company~~fiscal ~~has~~year a2020, ~~quarterly repayment cap in~~ the ~~agreement~~Company ~~with~~had ~~each of the Customers and is not required to make any quarterly repayments to the Customers that in the aggregate exceeds~~ $142.8 million. ~~If the Customers do not purchase a number of components that would require full repayment of the Advances by December 31, 2038, then the Advances shall be deemed repaid~~ in ~~full.~~capital ~~Additionally,~~expenditures ifrelated ~~the~~to ~~Customers do not purchase a number of components that would require a payment on~~ the ~~Advances~~Customer ~~for~~Capacity ~~a period of 16 consecutive quarters, the Advances shall be deemed repaid in full~~Agreements.

As of March 31, 2019, the Company has received a total of $13.4 million in Advances from these Customers. Since the debt is non-interest bearing, we have recorded debt discounts on the Advances. These discounts are being amortized over the expected life of the Advances through interest expense. During fiscal year 2019, the Company had $16.3 million in capital expenditures related to the Customer Capacity Agreements.

Derivatives

On November 7, 2018, the Company entered into two cross-currency swaps designated as fair value hedges to hedge the foreign currency risk on the Intercompany Loans. These agreements are contracts to exchange floating-rate payments in JPY with floating rate payments in USD. The swaps are intended to offset in the same period the remeasurement of the carrying value of the underlying foreign currency Intercompany Loans. The terms of these cross-currency swaps are as follows:

• An amortizing cross-currency swap with an initial notional value JPY 16.5 billion. The notional amount is amortized by approximately JPY 1.4 billion every six months and matures on September 30, 2024. The Company receives interest in JPY on March 31 and September 30 of each year based on the JPY notional value and JPY Libor plus 2.00%. Interest payments are made by the Company in USD on March 31 and September 30 of each year based on the USD equivalent of the JPY notional value and USD Libor plus 2.70%.

• A non-amortizing cross-currency swap contract with a notional value of JPY 16.5 billion maturing on September 30, 2024. The Company receives interest in JPY on March 31 and September 30 of each year based on the JPY notional value and JPY Libor plus 2.25%. Interest payments are made by the Company in USD on March 31 and September 30 of each year based on the USD equivalent of the JPY notional value and USD Libor plus 3.15%.

Also, on November 7, 2018, the Company entered into a cross-currency swap designated as a net investment hedge to hedge the JPY currency exposure of the Company's net investment in TOKIN. This agreement is a contract to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. The terms of this cross-currency swap are as follows:

• An amortizing cross-currency swap with an initial notional value of JPY 33.0 billion. The notional amount is amortized by approximately JPY 1.4 billion every six months and matures on September 30, 2024. Interest payments are made by the Company in JPY on March 31 and September 30 of each year based on the JPY notional value and a fixed rate of 2.61%. The Company receives interest in USD on March 31 and September 30 of each year based on the USD equivalent of the JPY notional value and a fixed rate of 6.25%.

Short-term Liquidity

Cash and cash equivalents of $~~207~~222.94 million as of March 31, ~~2019~~2020 ~~decreased~~increased $7814.95 million from $~~286~~207.89 million as of March 31, ~~2018~~2019. Our net working capital (current assets less current liabilities) ~~decreased~~of $27343.78 million, ~~with~~decreased ~~the balance as of March 31, 2019 of~~ $~~363~~19.68 million ~~compared~~from to $~~391~~363.36 million ~~of net working capital~~ as of March 31, ~~2018~~2019, with the decrease primarily ~~driven~~due byto ~~the~~an ~~cash~~increase ~~holdings~~in ofaccrued ~~TOKIN~~expenses related to anti-trust settlements. Cash and cash equivalents held by our foreign subsidiaries totaled $~~139~~137.61 million and $~~196~~139.86 million at March 31, ~~2019~~2020 and ~~2018~~2019, respectively~~, with the decrease primarily driven by cash holdings of TOKIN and Suzhou, China~~. ~~Our~~We ~~operating income outside the U.S. is no longer deemed to be permanently reinvested in foreign jurisdictions. However, we~~ currently do not intend nor foresee a need to repatriate cash and cash equivalents held by foreign subsidiaries. If these funds are needed for our operations in the U.S., we may be required to accrue U.S. withholding taxes on the distributed foreign earnings.

Based on our current operating plans, we believe ~~domestic~~ cash and cash equivalents, including expected cash generated from operations, are sufficient to fund our operating requirements for at least the next twelve months, including $65.39 million in interest payments, $2829.41 million in debt principal payments, $54.3 million in antitrust settlement payments, $~~120~~50.0 million to $~~135~~75.0 million in capital expenditures, excluding approximately $15.0 million to $18.0 million of customer-funded capacity expansion related to Customer Capacity Agreements, and $1.7 million in restructuring payments. The Company's expected capital expenditures in fiscal year 2021 mainly relate to the Company's continued plan of capacity expansion to support future growth, and to improve our information technology infrastructure around the world. As of March 31, 2020, our borrowing capacity, which is based on factors including outstanding eligible accounts receivable, inventory and equipment collateral, under the revolving line of credit was $34.3 million. The revolving line of credit expires on April 28, 2022.

Cash and cash equivalents increased by $14.5 million during the year ended March 31, 2020, as compared to a decrease of $78.9 million during the year ended March 31, 2019 and an increase of $177.1 million during the year ended March 31, 2018 as follows (amounts in thousands):



	Fiscal Years Ended March 31,
	2020			2019			2018
Net cash provided by (used in) operating activities	$	158,856		$	131,731		$	120,761
Net cash provided by (used in) investing activities	(143,313		)	(147,012		)	102,364
Net cash provided by (used in) financing activities	8,814			(56,657		)	(55,798		)
Effect of foreign currency fluctuations on cash	(1,812		)	(6,990		)	9,745
Net increase (decrease) in cash, cash equivalents, and restricted cash	22,545			(78,928		)	177,072
Less: restricted cash at the end of the year	8,064			—			—
Net increase (decrease) in cash and cash equivalents	$	14,481		$	(78,928	)	$	177,072

excluding approximately $45.0 million to $50.0 million of customer-funded capacity expansion related to Customer Capacity Agreements, $1.9 million in restructuring payments, and $11.6 million in expected cash dividends. The Company's expected capital expenditures in fiscal year 2020 mainly relate to the Company's continued plan of capacity expansion to support future growth, and to improve our information technology infrastructure around the world. As of March 31, 2019, our borrowing capacity, which is based on factors including outstanding eligible accounts receivable, inventory and equipment collateral, under the revolving line of credit was $66.0 million. The revolving line of credit expires on April 28, 2022.

	Fiscal Years Ended March 31,
	2019			2018			2017
Net cash provided by (used in) operating activities (1)	$	131,731		$	120,761		$	71,667
Net cash provided by (used in) investing activities	(147,012		)	102,364			(25,598		)
Net cash provided by (used in) financing activities	(56,657		)	(55,798		)	(125		)
Effect of foreign currency fluctuations on cash (2)	(6,990		)	9,745			(1,174		)
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	(78,928	)	$	177,072		$	44,770

(1) Fiscal years ended March 31, 2018 and 2017 adjusted due to the adoption of ASC 606.

(2) Fiscal year ended March 31, 2018 adjusted due to the adoption of ASC 606.

Operating Cash Flow Activities

During fiscal years ~~2019~~2020, ~~2018~~2019, and ~~2017~~2018, cash provided by operating activities totaled $~~131~~158.79 million, $~~120~~131.~~8 million, and $71.~~7 million, ~~respectively. During fiscal year 2019, cash provided by operating activities was positively impacted by our net income of $206.6 million, a $7.7 million increase in accounts payable,~~ and a $1120.~~0 million decrease in accrued income taxes. Operating cash flows were negatively impacted by a $70.6 million decrease in other operating liabilities, a $42.~~8 million ~~increase in inventories~~, ~~an $8~~respectively.9 million increase in accounts receivable, and a $4.4 million increase in prepaid expenses and other assets. The decrease in other operating liabilities was driven by a $46.3 million decrease in accruals for TOKIN anti-trust fines and a $7.8 million decrease in restructuring liabilities. The increase in inventory is due to increased customer demand.

During fiscal year ~~2018~~2020, cash provided by operating activities was ~~positively impacted by our net income of~~ $~~254~~27.1 million. ~~Excluding~~higher ~~the~~than ~~acquired~~fiscal ~~balances~~year ~~from~~2019 ~~TOKIN,~~due ~~operating~~to ~~cash flows were also positively impacted by~~ a ~~$30.2~~lower ~~million~~use ~~decrease~~of innet ~~accounts~~working ~~receivable,~~capital a(excluding ~~$4.3 million decrease in prepaid expenses and other assets~~cash), ~~and~~which apositively ~~$1.3~~impacted ~~million increase in accrued income taxes. Excluding the acquired balances from TOKIN,~~ operating cash flows ~~were negatively impacted by a $16~~.1 ~~million~~This ~~decrease~~favorable inchange ~~accounts~~was ~~payable~~partially ~~and~~offset aby ~~$13.8~~lower ~~million~~cash-generating ~~increase in inventories~~income.

During fiscal year ~~2017~~2019, cash provided by operating activities was ~~positively impacted by our net income of~~ $4711.20 million, ahigher ~~$16.8~~than ~~million~~fiscal ~~decrease~~year in2018 ~~inventories,~~due ato ~~$6.2~~higher ~~million~~cash-generating ~~increase~~income. inThis ~~accounts~~favorable ~~payable,~~change ~~and~~was apartially ~~$1.7~~offset ~~million~~by an increase in ~~other~~net ~~operating~~working ~~liabilities.~~capital ~~Operating~~(excluding cash), ~~flows~~which ~~were~~ negatively impacted byoperating acash $2flows.~~6 million increase in accounts receivable and a $1.8 million increase in prepaid expenses and other assets.~~

Investing Cash Flow Activities

During fiscal years ~~2019~~2020, ~~2018~~2019, and ~~2017~~2018, cash provided by (used in) investing activities totaled $(~~147~~143.03) million, $~~102.4 million, and $~~(25147.60) million, respectively. During fiscal year 2019, cash used in investing activities included capital expenditures of $146.1 million, primarily related to expanding capacity at our manufacturing facilities in Mexico, Portugal, China, Thailand and ~~Japan, as well as information technology projects in the United States and Mexico.~~ $16102.~~3 million of the $146.1 million in capital expenditures were related to the Customer Capacity Agreements. Additionally, the Company invested $~~4.0 million ~~in the form of capital contributions to KEMET Jianghai and Novasentis. Offsetting these uses of cash~~, ~~we had asset sales of $2~~respectively.3 ~~million and received dividends of $0.8 million.~~

During fiscal year 2018, cash provided by investing activities was primarily due to $164.0 million in net cash received attributable to the bargain purchase of TOKIN. Additionally, we had proceeds from asset sales of $3.6 million and received dividends of $2.7 million. This was partially offset by capital expenditures of $65.0 million, primarily related to expanding capacity at our manufacturing facilities in Mexico, Portugal, China, Thailand and Japan, as well as for information technology projects in the United States and Mexico. In addition, the Company invested $3.0 million in the form of capital contributions to Novasentis.51

54During fiscal year 2020, cash used in investing activities included capital expenditures of $146.3 million, primarily related to expanding capacity at our manufacturing facilities in Mexico, China, Thailand and Japan, as well as information technology projects across the world. Of the $146.3 million capital expenditures, $42.8 million related to the Customer Capacity Agreements. Additionally, the Company invested $5.0 million in the form of capital contributions to KEMET Jianghai and used $1.3 million in cash to purchase the remaining ownership interests in Novasentis. Partially offsetting these uses of cash was the receipt of $8.9 million from the periodic settlements of a net investment hedge and $0.4 million in dividends from our equity method investments.

During fiscal year ~~2017~~2019, cash used in investing activities ~~was~~included ~~primarily due to~~ capital expenditures of $25146.61 million, primarily related to expanding capacity at our manufacturing facilities in Mexico, ~~Italy~~Portugal, ~~Portugal~~China, Thailand and ~~China~~Japan, as well as information technology projects in the United States and Mexico. Of the $146.1 million in capital expenditures, $16.3 million related to the Customer Capacity Agreements. Additionally, the Company invested $4.0 million in the form of capital contributions to KEMET Jianghai and Novasentis. Partially offsetting these uses of cash were $2.3 million in proceeds from asset sales and $0.8 million in dividend proceeds.

Financing Cash Flow Activities

During fiscal years ~~2019~~2020, ~~2018~~2019, and ~~2017~~2018, cash provided by (used in) financing activities totaled $~~56.7 million, $55.~~8 ~~million, and $0~~.~~1 million, respectively. During fiscal year 2019, the Company received $281.~~8 million ~~in proceeds from the TOKIN Term Loan Facility~~, ~~net of discount, bank issuance costs, and other indirect issuance costs,~~ $13(56.47) million ~~in proceeds from advances from customers~~, ~~as described in the earlier section titled "Customer Advances", received proceeds on an interest free loan from the Portuguese Government of $1.1 million,~~ and ~~received~~ $0(55.5 million in cash proceeds from the exercise of stock options. The Company made $344.5 million in payments on long term debt, including two quarterly principal payments on the Term Loan Credit Agreement of $4.3 million, for a total of $8.6) million, ~~$323~~respectively.4 million to repay the remaining balance on the Term Loan Credit Agreement, and one principal payment on the TOKIN Term Loan Facility of $12.4 million. An early payment premium on the Term Loan Credit Agreement used $3.2 million in cash. Lastly, the Company paid two quarterly cash dividends for a total of $5.8 million.

During fiscal year ~~2018~~2020, ~~cash used in financing activities was impacted by~~ the ~~following~~Company ~~payments:~~received ~~(i)~~ $~~353~~43.01 million toin ~~pay~~customer ~~off~~advances ~~the~~related ~~remaining~~to ~~outstanding~~Customer ~~balance~~Capacity ~~of the 10~~Agreements.5% ~~Senior Notes~~Additionally, ~~(ii)~~we received $336.95 million toupon ~~repay~~ the ~~remaining~~termination ~~outstanding~~of ~~balance~~cross-currency ofswaps ~~the~~designated ~~revolving~~as ~~line~~fair ofvalue ~~credit~~hedges, and ~~(iii)~~we ~~three~~received ~~quarterly~~$0.3 ~~principal~~million ~~payments~~in onproceeds from the ~~Term~~exercise ~~Loan~~of ~~Credit~~stock ~~Agreement for $4~~options.3 ~~million~~Partially ~~each,~~offsetting ~~for~~these acash ~~total~~inflows ofwas $1226.9 million. ~~The~~in ~~Company~~payments ~~received~~on long term debt, $~~329~~5.78 million in ~~proceeds~~dividend ~~from~~payments ~~the~~for ~~Term~~two ~~Loan Credit Agreement~~quarters, ~~net~~$7.0 ofmillion ~~discount,~~in ~~bank~~payments ~~issuance~~for ~~costs, and other indirect issuance costs, received proceeds from~~ the ~~exercise~~periodic settlement of ~~stock~~cross-currency ~~warrants~~swaps ~~and~~designated ~~stock~~as ~~options~~cash ~~for~~flow ~~$8.8 million and $5.2 million~~hedges, ~~respectively,~~ and ~~received~~ $01.35 million in ~~proceeds~~principal payments on anfinance ~~interest free loan from the Portuguese Government~~leases.

During fiscal year ~~2017~~2019, the Company ~~made~~received $0281.18 million in proceeds from the TOKIN Term Loan Facility, net of discount, bank issuance costs, and other indirect issuance costs, $13.4 million in customer advances related to Customer Capacity Agreements, received proceeds on an interest free loan from the Portuguese Government of $1.1 million, and received $0.5 million in cash proceeds from the exercise of stock options. The Company made $344.5 million in payments on long- term debt, ~~had~~including ~~cash~~two ~~outflows~~quarterly principal payments on the Term Loan Credit Agreement of $14.13 million, for ~~the~~a ~~purchase~~total of ~~treasury~~$8.6 ~~stock~~million, $323.4 million to repay the remaining balance on the Term Loan Credit Agreement, and ~~received~~one principal payment on the TOKIN Term Loan Facility of $112.14 million. ~~from~~An early payment premium on the ~~exercise~~Term Loan Credit Agreement used $3.2 million in cash. Lastly, the Company paid two quarterly cash dividends for a total of ~~stock~~$5.8 ~~options~~million.

Commitments

At March 31, 2020, the Company's contractual liabilities, including payments due by period, were as follows (amounts in thousands):

	Payment Due by Period
Contractual obligations	Total		Year 1		Years 2 - 3		Years 4 - 5		More than5 years
Debt obligations (1)	$	~~305~~272,~~927~~618	$	2829,~~430~~111	$	5951,~~509~~942	$	55191,~~708~~311	$	~~162,280~~254
Interest obligations (1)	28,200		6,326		11,039		8,928		1,907
Pension and other post-retirement benefits (2)	93,661		6,486		15,327		19,081		52,767
Operating lease obligations	48,311		10,898		14,302		9,402		13,709
Contract liabilities (3)	56,506		—		9,000		14,400		33,106
Pension and other post-retirement benefits (2)	94,178		6,758		15,184		18,024		54,212
Antitrust settlements and regulatory costs (4)	54,310		54,310		—		—		—
Employee separation liability	7,640		594		674		674		5,698
Operating lease obligations (5)	35,711		8,921		10,914		6,558		9,318
Restructuring liability	2,181		1,869		312		—		—
Purchase commitments	29,055		29,055		—		—		—
Purchase commitments	31,468		31,468		—		—		—
Interest obligations (1)	22,341		5,918		10,190		6,233		—
Capital lease obligations	2,049		993		888		168		—
Employee separation liability	7,044		487		657		657		5,243
Anti-trust fines and settlements (3)	34,880		21,712		10,203		2,965		—
Finance lease obligations (5)	3,195		1,376		1,542		202		75
Total	$	554,834	$	109,048	$	112,111	$	95,869	$	237,806
Restructuring liability	1,833		1,744		89		—		—
Total	$	576,274	$	137,408	$	99,661	$	238,442	$	100,763

______________________________________________________________________________

(1) Refer to Note 34, “Debt” for additional information. ~~Repayment of the Customer Capacity Agreements assumes the customers purchase products in a quantity sufficient to require the maximum permitted debt repayment amount per quarter.~~

(2) Reflects expected benefit payments through fiscal year ~~2029~~2030.

(3) InRepayment ~~addition~~of tothe ~~amounts~~Customer ~~reflected~~Advances assumes the customers purchase products in a quantity sufficient to require the ~~table,~~maximum anpermitted ~~additional~~quarterly $2repayment allowed per the agreements.9 ~~million~~Repayment ~~has~~timing ~~been~~and ~~recorded~~amounts inare estimates and are subject to change based upon actual and estimated product purchases by the ~~line~~customers ~~item~~in ~~"Accrued~~these ~~expenses,"~~agreements. ~~for~~Refer ~~which~~to the ~~timing~~contract ofliabilities ~~payment~~section ~~has~~in ~~not~~Note ~~been~~1, ~~determined~~“Organization and significant accounting policies” for additional information.

⁽⁴⁾In addition to amounts reflected in the table, an additional $23.1 million has been recorded in the line item "Accrued expenses," for which the timing of payment has not been determined.

⁽⁵⁾ Refer to Note 14, “Leases” for additional information.

Uncertain Income Tax Positions

We have recognized a liability for our unrecognized uncertain income tax positions of approximately $26.43 million as of March 31, ~~2019~~2020. The ultimate resolution and timing of payment for remaining matters continues to be uncertain and are, therefore, excluded from the above table.

Non-GAAP Financial Measures

To complement our Consolidated Statements of Operations and Cash Flows, we use non-GAAP financial measures of ~~Adjusted~~adjusted gross margin, ~~Adjusted~~adjusted SG&A expenses, adjusted operating income, ~~Adjusted~~adjusted net income, ~~and Adjusted~~ EBITDA., Weadjusted ~~believe that Adjusted gross margin~~EBITDA, ~~Adjusted~~and ~~operating~~certain ~~income,~~related ~~Adjusted~~ratios. Management ~~net~~believes ~~income,~~that ~~and~~these ~~Adjusted~~non-GAAP ~~EBITDA~~financial measures are complements to ~~U.S.~~ GAAP amounts and such measures are useful to investors. The presentation of these non-GAAP measures is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or, in the case of EBITDA, as an alternative to cash flows from operating activities as a measure of liquidity.

	Fiscal Years Ended March 31,
	2019			2018			2017
Net sales (1)	$	1,382,818		$	1,200,181		$	757,338
Cost of sales (1)	924,276			860,744			571,944
Gross Margin (GAAP) (1)	458,542			339,437			185,394
Gross margin as a % of net sales	33.2		%	28.3		%	24.5		%
Non-GAAP adjustments:
Plant start-up costs (2)	(927		)	929			427
Stock-based compensation expense	2,756			1,519			1,384
Adjusted gross margin (non-GAAP) (1)	$	460,371		$	341,885		$	187,205
Adjusted gross margin as a % of net sales	33.3		%	28.5		%	24.7		%

The following table provides a reconciliation from non-GAAP adjusted gross margin to GAAP gross margin, the most directly comparable GAAP measure (amounts in thousands, except percentages):

(1) Fiscal years ending March 31, 2018 and 2017 adjusted due to the adoption of ASC 606.



	Fiscal Years Ended March 31,
	2020			2019			2018
Net sales	$	1,260,554		$	1,382,818		$	1,200,181
Cost of sales	840,066			924,276			860,744
Gross Margin (GAAP)	420,488			458,542			339,437
Gross margin as a % of net sales	33.4		%	33.2		%	28.3		%
Non-GAAP adjustments:
Plant start-up costs	369			(927		)	929
Stock-based compensation expense	3,843			2,756			1,519
Adjusted gross margin (non-GAAP)	$	424,700		$	460,371		$	341,885
Adjusted gross margin as a % of net sales	33.7		%	33.3		%	28.5		%

The following table provides a reconciliation from non-GAAP adjusted SG&A expenses to GAAP SG&A expenses, the most directly comparable GAAP measure (amounts in thousands):

(2) $0.9 million in costs incurred during fiscal year 2018 related to the relocation of the Company's tantalum powder facility equipment from Carson City, Nevada to its existing Matamoros, Mexico plant were reclassified from “Plant start-up costs” to “Restructuring charges” during fiscal year 2019.



	Fiscal Years Ended March 31,
	2020		2019		2018
SG&A expenses (GAAP)	$	194,766	$	202,642	$	173,620
Non-GAAP adjustments:
ERP integration costs/IT transition costs	6,282		8,813		80
Stock-based compensation expense	7,803		9,751		5,890
Legal expenses related to antitrust class actions	5,454		5,195		6,736
Merger related expenses	7,119		—		—
Contingent consideration fair value adjustment	127		—		—
Adjusted SG&A expenses (non-GAAP)	$	167,981	$	178,883	$	160,914

The following table provides a reconciliation from non-GAAP adjusted operating income to GAAP operating income, the most directly comparable GAAP measure (amounts in thousands):

	Fiscal Years Ended March 31,
	2019			2018			2017
	2020			2019			2018
Operating income (GAAP) (1)	$	200,849		$	112,852		$	34,968
Operating income (GAAP)	$	147,866		$	200,849		$	112,852
Non-GAAP adjustments:
(Gain) loss on write down and disposal of long-lived assets	119,~~660~~710			~~(992~~1,660		)	~~10,671~~(992		)
ERP integration costs/IT transition costs	86,~~813~~282			808,813			~~7,045~~80
Stock-based compensation	12,~~866~~084			712,~~657~~866			47,~~720~~657
Restructuring charges (2)	8,779			14,843			5,404
Restructuring charges	8,882			8,779			14,843
Legal expenses related to antitrust class actions	5,~~195~~454			65,~~736~~195			26,~~640~~736
TOKIN investment-related expenses	—			—			1,101
Plant start-up costs	369			(927		)	929
Plant start-up costs (2)	(927		)	929			427
Merger related expenses	7,119			—			—
Adjusted operating income (non-GAAP) (1)	$	237,235		$	142,105		$	66,976
Contingent consideration fair value adjustment	127			—			—
Adjusted operating income (non-GAAP)	$	207,893		$	237,235		$	142,105

~~(1) Fiscal years ending March 31, 2018 and 2017 adjusted due to the adoption of ASC 606.~~54

The following table provides a reconciliation from non-GAAP adjusted net income to GAAP net income, the most directly comparable GAAP measure (amounts in thousands):



	Fiscal Years Ended March 31,
	2020			2019			2018
Net income (GAAP)	$	41,381		$	206,587		$	254,127
Non-GAAP adjustments:
Equity (income) loss from equity method investments	(76		)	3,304			(76,192		)
Acquisition (gain) loss	—			—			(130,880		)
(Gain) loss on write down and disposal of long-lived assets	19,710			1,660			(992		)
Restructuring charges	8,882			8,779			14,843
R&D grant reimbursements and grant income	(1,595		)	(4,559		)	—
ERP integration costs/IT transition costs	6,282			8,813			80
Stock-based compensation	12,084			12,866			7,657
Settlements, regulatory costs, and legal expenses related to antitrust class actions	70,149			11,896			16,636
Net foreign exchange (gain) loss	(6,762		)	(7,230		)	13,145
Plant start-up costs	369			(927		)	929
Loss on early extinguishment of debt	—			15,946			486
Write off of debt issuance costs	453			—			—
Merger related expenses	7,119			—			—
Curtailment/settlement expense on defined benefit pension plans	1,949			—			—
Unrealized (gain) loss on equity securities	(705		)	—			—
Contingent consideration fair value adjustment	127			—			—
Income tax effect of non-GAAP adjustments	(22,085		)	(50,012		)	(30		)
Adjusted net income (non-GAAP)	$	137,282		$	207,123		$	99,809

The following table provides a reconciliation from EBITDA and non-GAAP adjusted EBITDA to GAAP net income, the most directly comparable GAAP measure (amounts in thousands):



	Fiscal Years Ended March 31,
	2020			2019			2018
Net income (U.S. GAAP)	$	41,381		$	206,587		$	254,127
Non-GAAP adjustments:
Income tax expense (benefit)	38,526			(39,460		)	9,132
Interest expense, net	7,696			19,204			32,073
Depreciation and amortization	62,819			52,628			50,661
EBITDA (non-GAAP)	150,422			238,959			345,993
Excluding the following items:
Equity (income) loss from equity method investments	(76		)	3,304			(76,192		)
Acquisition (gain) loss	—			—			(130,880		)
(Gain) loss on write down and disposal of long-lived assets	19,710			1,660			(992		)
ERP integration costs/IT transition costs	6,282			8,813			80
Stock-based compensation	12,084			12,866			7,657
Restructuring charges	8,882			8,779			14,843
R&D grant reimbursements and grant income	(1,595		)	(4,559		)	—
Settlements, regulatory costs, and legal expenses related to antitrust class actions	70,149			11,896			16,636
Net foreign exchange (gain) loss	(6,762		)	(7,230		)	13,145
Plant start-up costs	369			(927		)	929
Loss on early extinguishment of debt	—			15,946			486
Write off of debt issuance costs	453			—			—
Merger related expenses	7,119			—			—
Curtailment/settlement expense on defined benefit pension plans	1,949			—			—
Unrealized (gain) loss on equity securities	(705		)	—			—
Contingent consideration fair value adjustment	127			—			—
Adjusted EBITDA (non-GAAP)	$	268,408		$	289,507		$	191,705

Adjusted gross margin represents net sales less cost of sales excluding adjustments which are outlined in the quantitative reconciliation provided above. Management uses adjusted gross margin to facilitate our analysis and understanding of our business operations by excluding the items outlined in the quantitative reconciliation provided above which might otherwise make comparisons of our ongoing business with prior periods more difficult and obscure trends in ongoing operations. The Company 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 GAAP.

Adjusted SG&A expenses represents SG&A expenses excluding adjustments which are outlined in the quantitative reconciliation provided above. Management uses Adjusted SG&A expenses to facilitate our analysis and understanding of our business operations by excluding these items which might otherwise make comparisons of our ongoing business with prior periods more difficult and obscure trends in ongoing operations. The Company believes that Adjusted SG&A expenses is useful to investors because it provides a supplemental way to understand the underlying operating performance of the Company. Adjusted SG&A expenses should not be considered as an alternative to SG&A expenses or any other performance measure derived in accordance with GAAP.

Adjusted operating income represents operating income, excluding adjustments which are outlined in the quantitative reconciliation provided above. We use adjusted operating income to facilitate our analysis and understanding of our business operations by excluding the items outlined in the quantitative reconciliation provided above which might otherwise make comparisons of our ongoing business with prior periods more difficult and obscure trends in ongoing operations. The Company believes that adjusted operating income is useful to investors to provide a supplemental way to understand our underlying operating performance and allows investors to monitor and understand changes in our ability to generate income from ongoing

	Fiscal Years Ended March 31,
	2019			2018			2017
Net income (GAAP) (1)	$	206,587		$	254,127		$	47,157
Non-GAAP adjustments:
Equity (income) loss from equity method investments	3,304			(76,192		)	(41,643		)
Acquisition (gain) loss	—			(130,880		)	—
Change in value of TOKIN options	—			—			(10,700		)
(Gain) loss on write down and disposal of long-lived assets	1,660			(992		)	10,671
Restructuring charges (2)	8,779			14,843			5,404
R&D grant reimbursements and grant income	(4,559		)	—			—
ERP integration costs/IT transition costs	8,813			80			7,045
Stock-based compensation	12,866			7,657			4,720
Legal expenses/fines related to antitrust class actions	11,896			16,636			2,640
Net foreign exchange (gain) loss	(7,230		)	13,145			(3,758		)
TOKIN investment-related expenses	—			—			1,101
Plant start-up costs (2)	(927		)	929			427
Amortization included in interest expense	1,872			2,467			761
Income tax effect of non-GAAP adjustments	(50,012		)	(30		)	(741		)
Loss on early extinguishment of debt	15,946			486			—
Adjusted net income (non-GAAP) (1)	$	208,995		$	102,276		$	23,084

business operations. Adjusted operating income should not be considered as an alternative to operating income or any other performance measure derived in accordance with GAAP.

~~(1)~~Adjusted ~~Fiscal~~net ~~years~~income ~~ending~~represents ~~March~~net 31income, ~~2018~~excluding adjustments which are outlined in the quantitative reconciliation provided above. We use adjusted net income to evaluate our operating performance by excluding the items outlined in the quantitative reconciliation provided above which might otherwise make comparisons of our ongoing business with prior periods more difficult and ~~2017~~obscure trends in ongoing operations. The Company believes that adjusted ~~due~~net income is useful to investors because it provides a supplemental way to understand the ~~adoption~~underlying operating performance of ~~ASC~~the ~~606~~Company and allows investors to monitor and understand changes in our ability to generate income from ongoing business operations. Adjusted net income should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP.

~~(2)~~EBITDA $0represents net income before income tax expense, interest expense, net, and depreciation and amortization expense.9 We ~~million~~present inEBITDA ~~costs~~as ~~incurred~~a ~~during~~supplemental ~~fiscal~~measure ~~year~~of ~~2018~~our ~~related~~ability to ~~the~~service ~~relocation~~debt. We believe EBITDA is an appropriate supplemental measure of ~~the~~debt ~~Company's~~service ~~tantalum~~capacity ~~powder~~because ~~facility~~cash ~~equipment~~expenditures ~~from~~on ~~Carson~~interest ~~City~~are, ~~Nevada~~by todefinition, ~~its~~available ~~existing~~to ~~Matamoros~~pay interest, ~~Mexico~~and ~~plant~~tax ~~were~~expense ~~reclassified~~is ~~from~~inversely ~~“Plant~~correlated ~~start-up~~to ~~costs”~~interest toexpense ~~“Restructuring~~because ~~charges”~~tax ~~during~~expense ~~fiscal~~goes ~~year~~down ~~2019~~as deductible interest expense goes up; and depreciation and amortization are non-cash charges.

57We also present adjusted EBITDA, which is EBITDA excluding adjustments that are outlined in the quantitative reconciliation provided above, as a supplemental measure of our performance and because we believe this measure is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. The items excluded from adjusted EBITDA are excluded in order to better reflect our continuing operations.

	Fiscal Years Ended March 31,
	2019			2018			2017
Net income (U.S. GAAP) (1)	$	206,587		$	254,127		$	47,157
Non-GAAP adjustments:
Income tax expense (benefit)	(39,460		)	9,132			4,294
Interest expense, net	19,204			32,073			39,731
Depreciation and amortization	52,628			50,661			38,151
EBITDA (non-GAAP) (1)	238,959			345,993			129,333
Excluding the following items:
Equity (income) loss from equity method investments	3,304			(76,192		)	(41,643		)
Acquisition (gain) loss	—			(130,880		)	—
Change in value of TOKIN options	—			—			(10,700		)
(Gain) loss on write down and disposal of long-lived assets	1,660			(992		)	10,671
ERP integration costs/IT transition costs	8,813			80			7,045
Stock-based compensation	12,866			7,657			4,720
Restructuring charges (2)	8,779			14,843			5,404
R&D grant reimbursements and grant income	(4,559		)	—			—
Legal expenses/fines related to antitrust class actions	11,896			16,636			2,640
Net foreign exchange (gain) loss	(7,230		)	13,145			(3,758		)
TOKIN investment-related expenses	—			—			1,101
Plant start-up costs (2)	(927		)	929			427
Loss on early extinguishment of debt	15,946			486			—
Adjusted EBITDA (non-GAAP) (1)	$	289,507		$	191,705		$	105,240

In evaluating adjusted EBITDA, one should be aware that in the future we may incur expenses similar to the adjustments noted above. 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 GAAP and should not be considered as an alternative to net income, operating income, or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity.

~~(1)~~Our ~~Fiscal~~adjusted ~~years~~EBITDA ~~ending~~measure ~~March~~has ~~31,~~limitations ~~2018~~as an analytical tool, and ~~2017~~should ~~adjusted~~not ~~due~~be toconsidered ~~the~~in ~~adoption~~isolation or as a substitute for analysis of ~~ASC~~our ~~606~~results as reported under GAAP. Some of these limitations are:

Adjusted gross margin represents net sales less cost of sales excluding adjustments which are outlined in the quantitative reconciliation provided above. Management uses Adjusted gross margin to facilitate our analysis and understanding of our business operations by excluding the items outlined in the quantitative reconciliation provided above which might otherwise make comparisons of our ongoing business with prior periods more difficult and obscure trends in ongoing operations. The Company 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.

Adjusted operating income represents operating income, excluding adjustments which are outlined in the quantitative reconciliation provided above. We use Adjusted operating income to facilitate our analysis and understanding of our business operations by excluding the items outlined in the quantitative reconciliation provided above which might otherwise make comparisons of our ongoing business with prior periods more difficult and obscure trends in ongoing operations. The Company believes that Adjusted operating income is useful to investors because it provides a supplemental way to understand the underlying operating performance of the Company and allows investors to monitor and understand changes in our ability to generate income from ongoing operations.

Adjusted operating income should not be considered as an alternative to operating income or any other performance measure derived in accordance with U.S. GAAP.

Adjusted net income represents net income, excluding adjustments which are outlined in the quantitative reconciliation provided above. We use Adjusted net income to evaluate the Company’s operating performance by excluding the items outlined in the quantitative reconciliation provided above which might otherwise make comparisons of our ongoing business with prior periods more difficult and obscure trends in ongoing operations. The Company believes that adjusted net income is useful to investors because it provides a supplemental way to understand the underlying operating performance of the Company and allows investors to monitor and understand changes in our ability to generate income from ongoing operations.

Adjusted net income should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with U.S. GAAP.

Adjusted EBITDA represents net income before income tax expense, interest expense, net, and depreciation and amortization, excluding adjustments which are outlined in the quantitative reconciliation provided above. 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 items excluded from adjusted EBITDA are excluded to better reflect our continuing operations.

In evaluating adjusted EBITDA, one should be aware that in the future we may incur expenses similar to the adjustments noted above. 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 you should not consider it 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 payments 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 Consolidated 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 ~~supplementary~~supplementally.

Recent Accounting Pronouncements

InRecently ~~August~~Adopted ~~2018, the Financial~~ Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This ASU amends the definition of a hosting arrangement and requires a customer in a hosting arrangement that is a service contract to capitalize certain implementation costs as if the arrangement was an internal-use software project. Under this ASU, a customer will apply ASC 350-40 to determine whether to capitalize implementation costs of the cloud computing arrangement that is a service contract or expense them as incurred. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this guidance on the Company’s Condensed Consolidated Financial Statements.Pronouncements

InOn ~~March~~April ~~2018~~1, 2019, the ~~FASB~~Company ~~issued~~early adopted ASU No. 2018-0515, ~~Amendments~~Customer's ~~to SEC Paragraphs Pursuant to SEC Staff~~ Accounting ~~Bulletin~~for ~~(“SAB”)~~Implementation ~~No.~~Costs ~~118.~~Incurred ~~The amendments~~ in ~~this~~a ~~update~~Cloud ~~provide~~Computing ~~guidance~~Arrangement onthat ~~when~~is toa ~~record~~Service ~~and~~Contract. ~~disclose~~This ~~provisional~~ASU ~~amounts~~amends ~~for~~the ~~certain~~definition ~~income tax effects~~ of ~~the~~a ~~Tax~~hosting ~~Cuts~~arrangement and ~~Jobs~~requires ~~Act.~~a ~~The~~customer ~~amendments also require any provisional amounts or subsequent adjustments to be included~~ in ~~net~~a ~~income~~hosting ~~from~~arrangement ~~continuing operations. Additionally, this ASU discusses required disclosures~~ that anis ~~entity~~a ~~must~~service ~~make~~contract ~~with regard~~ to ~~the~~capitalize ~~Act.~~certain ~~This~~implementation ~~ASU is effective immediately as new information is~~

5957

~~available~~costs as if the arrangement was an internal-use software project. Under this ASU, a customer will apply ASC 350-40 to ~~adjust~~determine ~~provisional~~whether ~~amounts~~to capitalize implementation costs of the cloud computing arrangement that ~~were~~is ~~previously~~a ~~recorded~~service contract or expense them as incurred. The Company ~~has~~early adopted this ~~standard~~ASU ~~and~~in ~~has~~the ~~finalized~~first ~~its~~quarter ~~accounting~~of ~~for~~fiscal year 2020 and applied the ~~Act.~~ASU ~~See~~prospectively ~~Note~~to 11implementation costs incurred after April 1, ~~“Income~~2019. ~~Taxes”~~The ~~for~~adoption ~~additional~~of ~~information~~this ASU did not have a material impact on ~~the~~our ~~Act~~Consolidated Financial Statements.

InOn ~~August~~April ~~2017~~1, 2019, the ~~FASB~~Company ~~issued~~adopted ~~ASU~~Topic ~~No. 2017-12~~842, ~~Targeted~~as ~~Improvements~~amended, towhich ~~Accounting~~superseded ~~for~~the ~~Hedging~~lease ~~Activities~~accounting ~~(“ASU~~guidance ~~2017-12”).~~under ~~The~~Topic ~~ASU~~840, ~~amends~~ and ~~simplifies~~generally ~~existing~~requires ~~guidance~~lessees to ~~allow~~recognize ~~companies~~operating toand ~~more~~financing ~~accurately~~lease ~~present~~liabilities ~~the~~and ~~economic~~corresponding ~~effects~~ROU ofassets ~~risk~~on ~~management activities in~~ the ~~financial~~balance ~~statements.~~sheet ~~For~~and ~~cash~~to ~~flow~~provide ~~hedges~~enhanced ~~existing~~disclosures onsurrounding the ~~date~~amount, ~~of adoption~~timing, anand ~~entity~~uncertainty isof ~~required~~cash toflows ~~eliminate~~arising ~~the~~from ~~separate~~leasing ~~measurement~~arrangements. ofThe ~~ineffectiveness~~Company inadopted ~~earnings~~the bynew ~~means~~guidance ofusing athe ~~cumulative-effect~~modified ~~adjustment~~retrospective totransition ~~accumulated~~approach ~~other~~by ~~comprehensive~~applying ~~income~~the ~~(“AOCI”)~~standard ~~with~~to aall ~~corresponding~~leases ~~adjustment~~existing toas of the ~~opening~~date ~~balance~~ of ~~retained~~the ~~earnings.~~initial ~~ASU~~application ~~2017-12~~and ~~becomes~~not ~~effective~~restating ~~for~~comparative ~~fiscal years and interim~~ periods. ~~beginning~~The ~~after~~most ~~December~~significant ~~15,~~impact ~~2018~~was ~~and~~the ~~early~~recognition ~~adoption~~of isROU ~~permitted.~~assets Inand ~~the~~lease ~~third~~liabilities ~~quarter~~for ofoperating ~~fiscal year 2019~~leases, ~~the~~while ~~Company~~our ~~entered~~accounting ~~into~~for ~~new~~finance ~~derivative~~leases ~~contracts~~remained ~~and~~substantially ~~elected~~unchanged. toFor ~~early~~information ~~adopt~~regarding the ~~ASU~~impact ~~effective as~~ of ~~October~~Topic 1,842 ~~2018. The~~ adoption, ofsee ~~the~~“Significant ~~standard~~Accounting ~~did~~Policies ~~not~~- ~~result~~Leases” in aNote ~~cumulative-effect~~1, ~~adjustment~~"Organization ~~since~~and ~~the~~significant ~~Company~~accounting ~~has~~policies” ~~not~~and ~~previously~~Note ~~had~~14, ~~any ineffectiveness associated with its cash flows hedges~~"Leases."

InRecent ~~August~~Accounting ~~2016,~~Pronouncements ~~the~~Not ~~FASB~~Yet issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments. The update clarifies how cash receipts and cash payments in certain transactions are presented and classified in the statement of cash flows. The effective date of this update is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The update requires retrospective application to all periods presented but may be applied prospectively if retrospective application is impracticable. The Company adopted this guidance as of April 1, 2018. In connection with the adoption of this ASU, the Company elected to account for distributions received from equity method investees using the nature of distributions approach, under which distributions are classified based on the nature of activity that generated them. The other provisions of this ASU did not have an impact on the Company's Condensed Consolidated Cash Flows. Adopted

In ~~February~~March ~~2016~~2020, the ~~FASB~~Financial ~~issued~~Accounting ~~ASU~~Standards ~~No.~~Board ~~2016-02~~ (“~~ASU 2016-02~~FASB”)~~, Leases,~~ asissued ~~modified by~~ ASU ~~2017~~2020-0304, Reference ~~Transition~~Rate ~~and~~Reform ~~Open~~(Topic ~~Effective~~848): Facilitation ~~Date~~of ~~Information,~~the ~~requiring~~Effects ~~lessees to recognize a right-~~of~~-use~~ ~~asset~~Reference ~~and~~Rate aReform ~~lease~~on ~~liability~~Financial ~~for~~Reporting (“ASU ~~all~~2020-04”) ~~leases.~~to ~~This~~provide ~~ASU~~temporary ~~also~~optional ~~requires~~expedients ~~expanded~~and ~~disclosures~~exceptions to ~~help~~the ~~financial~~contract ~~statement~~modifications, ~~users~~hedge ~~better understand the amount~~relationships, ~~timing,~~ and ~~uncertainty~~other oftransactions ~~cash~~affected ~~flows~~by ~~arising~~reference ~~from~~rate ~~leases.~~reform ~~The~~if ~~standard~~certain iscriteria ~~effective~~are ~~for~~met. ~~fiscal~~This ~~years beginning after December 15~~ASU, ~~2018,~~which ~~and~~was ~~interim~~effective ~~periods~~upon ~~within~~issuance ~~those fiscal years~~ and ~~the~~may ~~Company~~be ~~will~~applied ~~adopt~~through ~~ASU~~December ~~2016-02 on April 1~~31, ~~2019. The Company has substantially completed its preparation for the adoption of this ASU~~2022, ~~and the ASU~~ is ~~expected~~applicable to ~~have~~all acontracts ~~material impact on lease assets~~ and ~~lease~~hedging ~~liabilities~~relationships onthat ~~its~~reference ~~Consolidated~~the ~~Balance~~London ~~Sheets~~Interbank ~~upon~~Offered ~~adoption.~~Rate ~~This~~or ~~ASU~~any isother ~~not~~reference rate expected to ~~have~~be ~~a material effect on the amount of expense recognized in connection with the Company's current practice~~discontinued. The Company ~~plans~~is tocurrently ~~elect~~evaluating the ~~optional~~impact ~~transition method that will give companies the option to use the effective date as the date~~ of ~~initial~~this ~~application~~ASU on ~~transition, and as a result, we will not adjust~~ our ~~comparative~~Consolidated ~~period~~Financial ~~financial information or make the new required lease disclosures for periods before the effective date~~Statements. ~~For information about the Company's future lease commitments as of March 31, 2019, see Note 15, "Commitments and Contingencies."~~

In ~~May~~December ~~2014~~2019, the FASB issued ASU ~~No. 2014~~2019-0912, ~~Revenue~~Income ~~from~~Taxes ~~Contracts~~(Topic ~~with~~740): ~~Customers,~~Simplifying ~~which~~the ~~superseded~~Accounting ~~existing accounting standards~~ for ~~revenue~~Income ~~recognition~~Taxes, ~~and~~which ~~created~~simplifies athe ~~single~~accounting ~~framework.~~for ~~ASU~~income ~~2014-09 and its amendments were included primarily in ASC 606~~taxes. The ~~core~~guidance ~~principle~~will ~~of ASC 606 is that an entity should recognize revenue for the transfer of goods or services equal to an amount that it expects to~~ be ~~entitled~~effective ~~to receive~~ for ~~those goods or services. ASC 606 also requires additional disclosures about~~ the ~~nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The~~ Company ~~adopted the requirements of ASC 606 effective~~ in the first quarter of fiscal year ~~2019,~~2022 ~~using~~on ~~the~~a ~~full~~prospective ~~retrospective method~~basis, ~~which~~and ~~required~~early usadoption tois ~~restate each prior reporting period presented~~permitted. The Company ~~has~~is ~~applied~~currently ~~practical~~evaluating ~~expedient ASC 606-10-65-1(f)(3) and notes that all previously reported historical amounts are adjusted for~~ the impact of ~~ASC~~this ~~606.~~ASU ~~See~~on ~~Note 1, “Organization and Significant Accounting Polices,” for tables showing how the adoption of ASC 606 impacted~~ our ~~previously reported~~ Consolidated ~~Balance~~Financial ~~Sheet as of March 31, 2018 and our Consolidated~~ Statements ~~of Operations, Statements of Comprehensive Income, Statements of Changes in Stockholders' Equity, and Statements of Cash Flows for the fiscal years ended March 31, 2018 and 2017~~.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model which will result in earlier recognition of credit losses. The guidance will be effective for the Company in the first quarter of fiscal year 2021 and we do not expect the adoption of this guidance to have a material impact on our Consolidated Financial Statements.

There are currently no other accounting standards that have been issued that will have a significant impact on the Company’s financial position, results of operations or cash flows upon adoption.

Effect of Inflation

Inflation generally affects us by increasing the cost of labor, equipment, and raw materials. We do not believe that inflation has had any material effect on our business over the past three fiscal years except for the following discussion in Commodity Price Risk.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Interest Rate Risk

On October 29, 2018, the Company entered into the TOKIN Term Loan Facility and received funding on November 7, 2018 at an equivalent of $292.0 million using the exchange rate on November 7, 2018. The TOKIN Term Loan Facility has a variable interest rate and had an outstanding principal balance of $~~285~~266.51 million as of March 31, ~~2019~~2020. We are exposed to interest rate risk through the Term Loan Facility, and a 1% change in the interest rate would yield a $2.97 million change in interest expense on an annualized basis.

Foreign Currency Exchange Rate Risk

Given our international operations and sales, we are exposed to movements in foreign exchange rates. Of these, the most significant are currently the Euro, Japanese Yen, Thai Baht, Taiwan New Dollar, and Mexican Peso. A portion of our sales to our customers and operating costs in Europe, Japan, Thailand, Hong Kong, Singapore, and ~~Thailand~~Vietnam are denominated in Euro, Japanese Yen, ~~and~~ Thai Baht, ~~respectively,~~Hong ~~creating~~Kong anDollar, ~~exposure~~Singapore toDollar, ~~foreign~~and ~~currency~~Vietnamese ~~exchange rates. Also~~Dong, ~~a portion of our costs in our operations in Mexico are denominated in Mexican Pesos~~respectively, creating an exposure to foreign currency exchange rates. Additionally, certain of our non-U.S. subsidiaries make sales denominated in U.S. dollars which expose them to foreign currency transaction gains and losses. Historically, to minimize our exposure, we periodically entered into forward foreign exchange contracts in which the future cash flows were hedged against the U.S. dollar (see Note 12, “Derivatives” to the Consolidated Financial Statements).

Additionally, during fiscal year 2019, the we entered into cross-currency swaps to hedge the foreign currency risk on Intercompany Loans and to hedge the JPY currency exposure of the Company's net investment in TOKIN. We use these derivative financial instruments primarily to reduce our exposure to adverse fluctuations in foreign currency exchange rates. We do not enter into derivative financial instruments for speculative purposes and our derivative positions are used to reduce risk by hedging an underlying economic exposure. Because of the high correlation between the hedging instrument and the underlying exposure, fluctuations in the value of the instruments are generally offset by reciprocal changes in the value of the underlying exposure.58

Ato 10foreign ~~percent~~currency ~~weakening~~exchange orrates. ~~strengthening~~Also, a portion of ~~the~~our costs in our operations in Mexico are denominated in Mexican Pesos, creating an exposure to foreign currency exchange rates. Additionally, certain of our non-U.S. ~~dollar~~subsidiaries make sales denominated in ~~relation~~U.S. todollars ~~the~~which expose them to foreign ~~currencies~~currency transaction gains and losses. Historically, to minimize our exposure, we ~~transact~~periodically inentered ~~would~~into ~~result~~forward foreign exchange contracts in ~~approximately~~which athe ~~$14.2~~future ~~million~~cash ~~increase~~flows orwere ahedged ~~$11~~against the U.9S. ~~million~~dollar ~~decrease~~(see Note 13, “Derivatives” to ~~our~~the ~~net~~Consolidated ~~income,~~Financial ~~respectively~~Statements).

During fiscal year 2019, we entered into cross-currency swaps to hedge the foreign currency risk on intercompany financings and to hedge the JPY currency exposure of the Company's net investment in TOKIN. We used these derivative financial instruments primarily to reduce our exposure to adverse fluctuations in foreign currency exchange rates. We do not enter into derivative financial instruments for speculative purposes and our derivative positions are used to reduce risk by hedging an underlying economic exposure. Because of the high correlation between the hedging instrument and the underlying exposure, fluctuations in the value of the instruments are generally offset by reciprocal changes in the value of the underlying exposure. In the first quarter of fiscal year 2020, we terminated our fair value hedges and subsequently entered into two cash flow hedges to limit our exposure to fluctuations in foreign currency exchange rates.

A 10 percent weakening or strengthening of the U.S. dollar in relation to the foreign currencies we transact in would result in approximately a $35.2 million increase or a $37.3 million decrease to our net income, respectively.

Raw Material Price Risk

As a result of our tantalum vertical integration efforts which began in fiscal year 2012, we have reduced our exposure to price volatility and supply uncertainty in the tantalum supply chain. A majority of our tantalum needs are now met through our direct sourcing of conflict free tantalum ore or tantalum scrap reclaim, which is then processed into the intermediate product potassium heptafluorotantalate (commonly known as K-salt) at our facility in Mexico, before final processing into tantalum powder ~~at KBP~~. Price increases for tantalum ore, or for the remaining tantalum powder that we source from third parties, could impact our financial performance as we may be unable to pass all such price increases on to our customers.

Silver and aluminum have generally been available in sufficient quantities, and we believe there are enough suppliers from which we can purchase our requirements. An increase in the price of silver and aluminum that we are unable to pass on to our customers, however, could have an adverse effect on our profitability.

To evaluate the impact of price changes in precious metals on net income we used the following assumptions: the selling prices of our products would not be impacted, all the precious metals change in the same direction at the same time, and we do not have commitment contracts in place. Under these assumptions, a 10 percent increase or decrease in the cost of precious metals would result in approximately a $118.05 million increase or decrease to our net income. We believe we have partially mitigated this risk through our vertical integration efforts.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The response to this item is submitted as a separate section of this Form 10-K. See Item 15.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

As of March 31, ~~2019~~2020, our management, including the Company’s Chief Executive Officer and Chief Financial Officer, has performed an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) in ensuring that the information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our management has concluded that such disclosure controls and procedures were ~~not~~ effective as of March 31, ~~2019~~2020 (the end of the period covered by this Annual Report on Form 10-K)~~, as a result of a material weakness in internal control over financial reporting, as described in Management’s Report on Internal Control over Financial Reporting below~~.

Remediation of Material Weakness in Internal Control over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s Annual or Interim Financial Statements will not be prevented or detected on a timely basis.

During the quarter ended March 31, 2019, the Company's management identified a material weakness in the internal control over financial reporting as a result of certain control deficiencies pertaining to the initiation and recording of net sales and accounts receivable, net. We promptly developed and implemented a comprehensive remediation plan to address this material weakness, which included implementing new, and refining existing, controls, as well as providing additional training and improving our documentation as it pertains to the initiation and recording of net sales and accounts receivable. Based on these measures, management has concluded that the material weakness described above has been remediated as of March 31, 2020.

Management's Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act). Internal control over financial reporting is a process, designed by, or under the supervision of, an entity’s principal executive and principal financial officers, and effected by an entity’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and the dispositions of the assets of the entity; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the entity are being made only in accordance with authorizations of the management and directors of the entity; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the entity’s assets that could have a material effect on its Consolidated Financial Statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company’s management conducted an assessment of the effectiveness of its internal control over financial reporting based on the criteria set forth in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this evaluation, management concluded that the Company's internal control over financial reporting was effective as of March 31, 2020.

Because of certain control deficiencies in our internal control over financial reporting pertaining to the initiation and recording of net sales and accounts receivable, net at March 31, 2019, management has concluded that our internal control over financial reporting was not effective as of March 31, 2019. These control deficiencies create a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis, and management has concluded that the control deficiencies represent a material weakness in internal control over financial reporting. Therefore, our internal control over financial reporting was not effective as of March 31, 2019.

As a result of the identified material weakness, management performed additional procedures to ensure that our year-end financial statements are accurate. Notwithstanding the identified material weakness as of March 31, 2019, management, including our Chief Executive Officer and our Chief Financial Officer, believes that the audited Consolidated Financial Statements contained in this Annual Report on Form 10-K fairly present, in all material respects, our financial condition, results of operations and cash flows for the fiscal years presented in conformity with GAAP. Additionally, this material weakness in our internal control over financial reporting did not identify or result in a material misstatement in the Company’s Consolidated Financial Statements for the year ended March 31, 2019.

The Company’s independent registered public accounting firm, Ernst & Young LLP, has issued an adverse opinion on the effectiveness of the Company’s internal control over financial reporting as of March 31, 2019, which is included herein. They have also audited our Consolidated Financial Statements included in this Annual Report on Form 10-K and have issued an unqualified opinion.

Remediation

Management is addressing the identified control deficiencies and is designing additional processes and controls to ensure they are remediated. The remediation plan includes identifying and implementing new controls as well as improving existing controls pertaining to the initiation and recording of net sales and accounts receivable, net, including enhanced employee training and identifying and implementing an appropriate suite of IT general controls and automated controls within the IT environments that support revenue initiation and recording.

We will work to remediate these deficiencies prior to the end of fiscal year 2020. However, the deficiencies will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that the controls are operating effectively.

Changes in Internal Control over Financial Reporting

In ~~addition~~Except tofor the ~~material~~remediation ~~weakness~~of ~~identified during~~ the ~~quarter~~material ~~and~~weakness ~~year~~discussed ~~end described~~ above, ~~as of March 31, 2019,~~ there were no changes in our internal control ~~related~~over tofinancial ~~the~~reporting ~~integration~~(as defined in Rule 13a-15(f) and 15d-15(f) of the ~~TOKIN~~Exchange ~~operations~~Act) ~~acquired~~during inthe ~~fiscal~~quarter ~~year 2018~~ended March 31, ~~implementation~~2020 that ~~efforts~~has ~~over~~materially ~~new information technology solutions~~affected, ~~and~~or ~~the~~is ~~design~~reasonably oflikely ~~internal~~to ~~controls~~materially ~~for~~affect, the ~~implementation~~Company’s ofinternal ~~the~~control ~~new~~over ~~lease~~financial ~~standard that becomes effective in fiscal year 2020~~reporting.

Other than those changes described above, there have been no other changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended March 31, 2019 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

6360

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

~~Other~~For ~~than~~information ~~the~~required ~~information~~by ~~under~~this item with respect to certain officers, see “Executive Officers” and “Other Key Employees” under Part I, Item ~~4A,~~ ~~the~~4 hereof. The other information required by ~~Item~~ this item will be filed with the Securities and Exchange Commission (“SEC”) in an amendment to this Annual Report on Form 10-K iswithin 120 days of March 31, 2020 or will be incorporated herein by reference ~~from~~to the Company’s ~~definitive~~Proxy ~~proxy~~Statement ~~statement~~ for its ~~annual~~2020 ~~stockholders~~Annual ~~meeting~~Meeting toof beStockholders ~~held~~(the on“2020 ~~July 31,~~Proxy ~~2019~~ Statement”) under the headings “Nominees for Board of Directors,” “Continuing Directors,” ~~“Delinquent Section 16(a) Reports,”~~ "Review, Approval or Ratification of Transactions with Related Persons," and “Information about the Board of Directors.”

ITEM 11. EXECUTIVE COMPENSATION.

The information required by ~~Item 11~~this isitem ~~incorporated~~will bybe ~~reference~~filed ~~from~~with the ~~Company’s~~SEC ~~definitive~~in ~~proxy~~an ~~statement~~amendment ~~for~~to ~~its~~this ~~annual~~Annual ~~stockholders’~~Report ~~meeting~~on toForm be10-K ~~held~~within on120 ~~July~~ days of March 31, ~~2019~~2020 or will be incorporated herein by reference to the 2020 Proxy Statement under the headings “Compensation Discussion and Analysis,” “Summary Compensation Table,” “Grants of Plan-Based Awards Table,” “Outstanding Equity Awards at Fiscal Year-End Table,” “Option Exercises and Stock Vested Table,” “Nonqualified Deferred Compensation Table,” “Potential Payments Upon Termination or Change in Control,” “Compensation of Directors,” “Director Compensation Table,” “Report of the Compensation Committee,” “Compensation Committee Interlocks and Insider Participation,” and "“CEO Pay Ratio ~~Table~~."”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

~~The~~For the information required by this item with respect to equity compensation plans, see “Equity Compensation Plan Disclosure” under Item 12 is5 ~~incorporated~~hereof. byThe ~~reference~~other ~~from~~information ~~the~~required ~~Company’s~~by ~~definitive~~this ~~proxy~~item ~~statement~~will ~~for~~be ~~its~~filed ~~annual~~with ~~stockholders’~~the ~~meeting~~SEC in an amendment to bethis ~~held~~Annual Report on ~~July~~ Form 10-K within 120 days of March 31, ~~2019~~2020 ~~under~~or ~~the~~will ~~heading~~be ~~“Security~~incorporated ~~Ownership,”~~herein ~~and~~by ~~from~~reference ~~“Equity~~to ~~Compensation~~the ~~Plan~~2020 ~~Disclosure”~~Proxy inStatement ~~Item 5~~under ~~hereof~~the heading “Security Ownership”.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The information required by ~~Item 13~~this isitem ~~incorporated~~will bybe ~~reference~~filed ~~from~~with the ~~Company’s~~SEC ~~definitive~~in ~~proxy~~an ~~statement~~amendment ~~for~~to ~~its~~this ~~annual~~Annual ~~stockholders’~~Report ~~meeting~~on toForm be10-K ~~held~~within on120 ~~July~~ days of March 31, ~~2019~~2020 or will be incorporated herein by reference to the 2020 Proxy Statement under the headings “Review, Approval or Ratification of Transactions with Related Persons” and “Information about the Board of Directors.”

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information required by ~~Item 14~~this isitem ~~incorporated~~will bybe ~~reference~~filed ~~from~~with the ~~Company’s~~SEC ~~definitive~~in ~~proxy~~an ~~statement~~amendment ~~for~~to ~~its~~this ~~annual~~Annual ~~stockholders’~~Report ~~meeting~~on toForm be10-K ~~held~~within on120 ~~July~~ days of March 31, ~~2019~~2020 or will be incorporated herein by reference to the 2020 Proxy Statement under the heading “Audit and Non-Audit Fees.”

6461

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.


(a)	(1) Financial Statements

The following financial statements are filed as a part of this report:

	Page No.
Report of Independent Registered Public Accounting Firm	67
Report of Independent Registered Public Accounting Firm	69
Report of Independent Registered Public Accounting Firm	70
Consolidated Financial Statements:
Consolidated Balance Sheets as of March 31, 2019 and 2018	72
Consolidated Balance Sheets as of March 31, 2020 and 2019	70
Consolidated Statements of Operations for the years ended March 31, 2019, 2018 and 2017	73
Consolidated Statements of Operations for the years ended March 31, 2020, 2019, and 2018	71
Consolidated Statements of Comprehensive Income (Loss) for the years ended March 31, 2019, 2018 and 2017	74
Consolidated Statements of Comprehensive Income (Loss) for the years ended March 31, 2020, 2019 and 2018	72
Consolidated Statements of Changes in Stockholders’ Equity for the years ended March 31, 2019, 2018 and 2017	75
Consolidated Statements of Changes in Stockholders’ Equity for the years ended March 31, 2020, 2019 and 2018	73
Consolidated Statements of Cash Flows for the years ended March 31, 2019, 2018 and 2017	76
Consolidated Statements of Cash Flows for the years ended March 31, 2020, 2019 and 2018	74
Notes to Consolidated Financial Statements	7876

(2) Financial Statement Schedules

Financial statement schedules are omitted because they are not applicable or because the required information is included in the consolidated financial statements or notes thereto.

(3) List of Exhibits

The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the SEC:

2.1			Stock Purchase Agreement, dated as of March 12, 2012, by and among KEMET Electronics Corporation, NEC Corporation and NEC TOKIN Corporation (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K (File No. 1-15491) filed on March 15, 2012)
2.2			Amendment No. 1 to the Stock Purchase Agreement dated as of December 12, 2012, by and among KEMET Electronics Corporation, NEC Corporation and NEC TOKIN Corporation (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K (File No. 1-15491) filed on December 14, 2012)
2.3			Definitive NEC TOKIN Stock Purchase Agreement dated as of February 23, 2017, by and between KEMET Electronics Corporation and NEC Corporation (incorporated by reference to Exhibit 2.1 to the Company's Current Report on form 8-K (File No. 1-15491) filed on February 23, 2017)
2.4			Master Sale and Purchase Agreement, dated February 23, 2017 between NEC TOKIN Corporation, NTJ Holdings 1 Ltd. and Japan Industrial Partner, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K (File No. 1-15491) filed on April 20, 2017)
2.5			Amendment, dated April 7, 2017, to the Master Sale and Purchase Agreement between NEC TOKIN Corporation, NTJ Holdings 1 Ltd. and Japan Industrial Partners, Inc. (incorporated by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K (File No. 1-15491) filed on April 20, 2017)
2.6			Amendment, dated April 14, 2017, to the Master Sale and Purchase Agreement between NEC TOKIN Corporation, NTJ Holdings 1 Ltd. and Japan Industrial Partners, Inc. (incorporated by reference to Exhibit 2.3 to the Company's Current Report on Form 8-K (File No. 1-15491) filed on April 20, 2017)
3.1			Second Restated Certificate of Incorporation of the Company, as amended to date (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-15491) for the quarter ended June 30, 2011)
2.7			Agreement and Plan of Merger, dated as of November 11, 2019, by and among KEMET Corporation, Yageo Corporation and Sky Merger Sub Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 1-15491) filed on November 12, 2019)



3.1			Second Restated Certificate of Incorporation of the Company, as amended to date (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-15491) for the quarter ended June 30, 2011)

3.2			Second Amended and Restated By-laws, dated as of November 11, 2019 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 1-15491) filed on November 12, 2019)

4.1			Description of Capital Stock (incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the year ended March 31, 2019 (File No. 1-15491) filed on May 30, 2019

10.1			Registration Agreement, dated as of December 21, 1990, by and among the Company and each of the investors and executives listed on the schedule of investors and executives attached thereto (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1 (Reg. No. 33-48056))

10.2			Form of Amendment No. 1 to Registration Agreement, dated as of April 28, 1994 (incorporated by reference to Exhibit 10.3.1 to the Company’s Registration Statement on Form S-1 (Reg. No. 33-61898))

10.3			1995 Executive Stock Option Plan by and between the Company and each of the executives listed on the schedule attached thereto (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K (File No. 1-15491) for the year ended March 31, 1996)*

10.4			1992 Key Employee Stock Option Plan (incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K (File No. 1-15491) for the year ended March 31, 2009)*

10.5			Amendment No. 1 to KEMET Corporation 1992 Key Employee Stock Option Plan effective October 23, 2000 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-15491) for the quarter ended December 31, 2000)*

10.6			2004 Long-Term Equity Incentive Plan (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-8 (Reg. No. 333-123308))*

10.7			Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-15491) filed on April 23, 2009)*

10.8			Second Amended and Restated KEMET Corporation Deferred Compensation Plan (incorporated by reference to Exhibit 10.56 to the Company’s Annual Report on Form 10-K (File No. 1-15491) for the year ended March 31, 2009)*

10.9			Loan and Security Agreement, dated as of September 30, 2010, by and among KEMET Electronics Corporation, KEMET Electronics Marketing (S) Pte Ltd., and Bank of America, N.A., as agent and Banc of America Securities LLC, as lead arranger and bookrunner (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-15491) filed on October 5, 2010)

10.10			KEMET Executive Secured Benefit Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-15491) for the quarter ended December 31, 2010)*

10.11			Form of Change in Control Severance Compensation Agreement, entered into with executive officers of the Company (incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K (File No. 1-15491) for the year ended March 31, 2016)*

10.12			Stockholders’ Agreement, dated as of March 12, 2012, by and among KEMET Electronics Corporation, NEC Corporation and NEC TOKIN Corporation (incorporated by reference to Exhibit 99.4 to the Company’s Current Report on Form 8-K (File No. 1-15491) filed on March 15, 2012)

10.13			Form of Restricted Stock Unit Grant Agreement for Employees (incorporated by reference to Exhibit 10.61 to the Company’s Annual Report on Form 10-K (File No. 1-15491) for the year ended March 31, 2012)*

10.14			Form of Restricted Stock Unit Grant Agreement for Directors (incorporated by reference to Exhibit 10.62 to the Company’s Annual Report on Form 10-K (File No. 1-15491) for the year ended March 31, 2012)*



10.15			Form of Restricted Stock Unit Grant Agreement for Directors for the year ended March 31, 2019 (incorporated by reference to Exhibit 10.15 of the Company’s Annual Report on Form 10-K (File No. 1-15491) for the year ended March 31, 2019)*

10.16			Amendment No. 1 to Loan and Security Agreement, Waiver and Consent, dated as of March 19, 2012, by and among KEMET Electronics Corporation, KEMET Electronics Marketing (S) Pte Ltd., the financial institutions party thereto as lenders and Bank of America, N.A., as agent (incorporated by reference to Exhibit 10.63 to the Company’s Annual Report on Form 10-K (File No. 1-15491) for the year ended March 31, 2012)

10.17			Form of Long-Term Incentive Plan Award Agreement (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q (File No. 1-15491) filed on August 3, 2016)*

10.18			Consolidated Amendment to Loan and Security Agreement, dated as of July 8, 2013, by and among KEMET Electronics Corporation, KEMET Foil Manufacturing, LLC, KEMET Blue Powder Corporation, KEMET Electronics Marketing (S) PTE LTD., the financial institutions party thereto as lenders and Bank of America, N.A., as agent (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-15491) filed on August 2, 2013)

10.19			Amendment No. 5 to Loan and Security Agreement, dated April 30, 2014, among KEMET Electronics Corporation and its subsidiaries KEMET Foil Manufacturing, LLC, KEMET Blue Powder Corporation, and KEMET Electronics Marketing (S) PTE LTD., as Borrowers, and Bank of America, N.A., as agent for the Lenders (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-15491) filed on May 5, 2014)

10.20			KEMET Corporation 2011 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 1-15491) filed on August 2, 2011)*

10.21			2014 Amendment and Restatement of the KEMET Corporation 2011 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-15491) filed on July 24, 2014)*

10.22			KEMET Corporation Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-15491) filed on August 2, 2017)*

10.23			Incentive Award, Severance and Non-Competition Agreement, dated as of December 1, 2014, between KEMET Corporation and William M. Lowe, Jr. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-15491) filed on December 5, 2014)*

10.24			Incentive Award and Non-Competition Agreement, dated as of December 1, 2014, between KEMET Corporation and Charles C. Meeks, Jr. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 1-15491) filed on December 5, 2014)*

10.25			Amendment No. 6 to Loan and Security Agreement, Waiver and Consent dated December 19, 2014, among KEMET Electronics Corporation, KEMET Foil Manufacturing, LLC, KEMET Blue Powder Corporation, The Forest Electric Company and KEMET Electronics Marketing (S) PTE LTD., as Borrowers, the financial institutions party thereto, as Lenders, and Bank of America, N.A., as agent for the Lenders (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-15491) filed on December 22, 2014)

10.26			Amendment No. 7 to Loan and Security Agreement, dated March 27, 2015, among KEMET Electronics Corporation, KEMET Foil Manufacturing, LLC, KEMET Blue Powder Corporation, The Forest Electric Company and KEMET Electronics Marketing (S) PTE LTD., as Borrowers, the financial institutions party thereto, as Lenders, and Bank of America, N.A., as agent for the Lenders (incorporated by reference to Exhibit 10.30 to the Company's Annual Report on Form 10-K (File No. 1-15491) filed for the year ended March 31, 2016)

10.27			Amended and Restated Employment Agreement between KEMET Corporation and Per-Olof Lööf, dated April 18, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-15491) filed on April 20, 2018)*



10.28			Amendment No. 8 to Loan and Security Agreement, dated May 2, 2016, among KEMET Electronics Corporation, KEMET Foil Manufacturing, LLC, KEMET Blue Powder Corporation, The Forest Electric Company and KEMET Electronics Marketing (S) PTE LTD., as Borrowers, the financial institutions party thereto, as Lenders, and Bank of America, N.A., as agent

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