AVX Corporation Announces Preliminary Second Quarter Results

October 23, 2009 8:36 AM EDT

MYRTLE BEACH, S.C.--(BUSINESS WIRE)-- AVX Corporation (NYSE: AVX) AVX today reported preliminary results for the second quarter ended September 30, 2009.

Highlights:

    --  Revenue for the September 2009 quarter increased 6.3% from the previous
        quarter to $310.5 million.
    --  Gross Profit margin excluding special charges reached its highest level
        since the fourth quarter of fiscal 2001, improving to 21.0% in the
        current quarter.
    --  Non-GAAP net income of $32.5 million, or $0.19 per share, for the
        September 2009 quarter.
    --  Dividends of $6.8 million, or $0.04 per share, were paid during the
        current quarter.
    --  Cash and investments in securities increased to $864.0 million with no
        debt at September 30, 2009.

For the quarter ended September 30, 2009, net sales increased sequentially over the previous quarter by $18.5 million, or 6.3%, to $310.5 million. Gross profit as a percent of sales (including special charges) improved over both the previous quarter and the same quarter last year to 20.8%. On a U.S. GAAP basis, unaudited net income (including special charges) for the quarter was $31.6 million, or $0.19 per diluted share.

Non-GAAP net income (excluding special charges) was $32.5 million, or $0.19 per diluted share, for the quarter ended September 30, 2009. Non-GAAP gross profit as a percent of sales (excluding special charges) improved to 21.0% this quarter.

Chief Executive Officer and President, John Gilbertson, stated, "We executed well in the second quarter, posting results that reflect sequential improvement over the previous quarter in both margins and revenue. The sale of higher value products in addition to the proactive management of our cost structure led to significant improvement in our gross profit margins during the quarter. While we can't predict where the macro economy will go, we are seeing more positive signs of end market growth and overall low supply chain inventories. We continue to remain optimistic about the future. Our competitive advantage and sustained financial strength provides us a solid base for future performance improvement. The Company has worked hard to maintain a solid balance sheet and is proud of its ability to continue to pay a quarterly cash dividend."

During the current quarter, the Company incurred $1.1 million of pre-tax restructuring charges related to global actions to realign production capabilities and reduce personnel costs.

GAAP to Non-GAAP Reconciliation
                                    Three Months Ended    Six Months Ended
(unaudited)
                                    September 30,         September 30,
(in thousands, except per share
data)

                                    2008       2009       2008         2009

Including special charges and
gains (GAAP)

Net Sales                         $ 400,280  $ 310,522  $ 797,169    $ 602,562

Net income (loss)                 $ 27,791   $ 31,642   $ 58,796     $ 55,922

Diluted income (loss) per share   $ 0.16     $ 0.19     $ 0.34       $ 0.33

Excluding special charges and
gains (Non-GAAP)

Special charges (after-tax)

Restructuring                     $ 2,801    $ 853      $ 3,705      $ 1,696

Other operating income              -          -          (2,957  )    -

Available-for-Sale securities       1,178      -          1,178        264
impairment

Net income                        $ 31,770   $ 32,495   $ 60,722     $ 57,882

Diluted income per share          $ 0.19     $ 0.19     $ 0.35       $ 0.34

See discussion of GAAP/Non-GAAP presentation below.

Chief Financial Officer, Kurt Cummings, stated, "We posted solid financial progress in all major aspects of our business while maintaining our disciplined cost management to deliver improving gross margins. The Company's financial position remains exceptionally strong with cash and cash equivalents and short and long-term investments in securities of $864.0 million and no debt at September 30, 2009. During the quarter, the Company paid $6.8 million of dividends to stockholders and spent $0.9 million to repurchase shares of AVX stock on the open market which are held as treasury stock."

In order to better understand the Company's short-term and long-term financial trends, investors may find it helpful to consider results excluding special charges and gains related to other operating income from gains on the sale of corporate assets, operations' restructuring charges and the write down of certain available-for-sale securities due to an other-than-temporary impairment. The resulting non-GAAP financial measure provides additional information to investors regarding the underlying business trends and performance of the Company's ongoing operations and may be of assistance for period-over-period comparisons of such operations. Management considers the exclusion of such charges as part of its evaluation of the operating performance of the Company. Investors should consider the non-GAAP measure as a supplement to, and not as a substitute for, financial performance measures prepared in accordance with GAAP. In addition, the non-GAAP financial measure may not be similar to non-GAAP information presented by other companies. Detail of the Company's non-GAAP measure is provided in the table above.

AVX, headquartered in Myrtle Beach, South Carolina, is a leading manufacturer and supplier of a broad line of passive electronic components and related products.

Please visit our website at www.avx.com.

AVX CORPORATION

Consolidated Condensed Statements of Income

(unaudited)

(in thousands, except per share data)

                                     Three Months Ended    Six Months Ended

                                     September 30,         September 30,

                                     2008       2009       2008         2009

Net sales                          $ 400,280  $ 310,522  $ 797,169    $ 602,562

Cost of sales                        333,510    245,174    666,968      482,372

Restructuring charges                3,297      612        4,576        1,312

Gross profit                         63,473     64,736     125,625      118,878

Selling, general & admin. expense    32,530     27,064     66,679       54,395

Restructuring charges                705        457        717          757

Other operating (income)/expense     -          -          (4,051  )    -

Profit from operations               30,238     37,215     62,280       63,726

Other income                         5,595      2,442      13,971       4,496

Income before income taxes           35,833     39,657     76,251       68,222

Provision for taxes                  8,042      8,015      17,455       12,300

Net income                         $ 27,791   $ 31,642   $ 58,796     $ 55,922

Basic income per share             $ 0.16     $ 0.19     $ 0.34       $ 0.33

Diluted income per share           $ 0.16     $ 0.19     $ 0.34       $ 0.33

Weighted average common

shares outstanding:

Basic                                170,700    170,277    170,837      170,304

Diluted                              170,802    170,277    171,103      170,304

Results for the three and six months ended September 30, 2008 include pre-tax restructuring charges of $4,002 and $5,293, respectively. In addition, during the quarter ended September 30, 2008, the Company recorded a $1,646 impairment charge in other income related to the decline in value of its available-for-sale securities. For the six month period ended September 30, 2008, results also reflect a gain on the sale of corporate assets of $4,051 included in other operating income.

Results for the three and six months ended September 30, 2009 include pre-tax restructuring charges of $1,069 and $2,069, respectively. In addition, results for the six months ended September 30, 2009 include a pre-tax impairment charge of $362 in other income related to the decline in value of the Company's available-for-sale securities.

AVX CORPORATION

Consolidated Condensed Balance Sheets

(unaudited)

(in thousands)

                                              March 31,     September 30,

                                              2009          2009

Assets

Cash and cash equivalents                   $ 522,709     $ 623,272

Short-term investments in securities          -             50,000

Available-for-sale securities                 24,014        15,978

Accounts receivable, net                      143,715       163,431

Inventories                                   365,003       339,876

Other current assets                          77,063        84,319

 Total current assets                         1,132,504     1,276,876

Long-term investments in securities           199,192       170,115

Long-term available-for-sale securities       16,565        4,591

Property, plant and equipment, net            263,387       260,036

Goodwill and other intangibles                252,849       251,564

Other assets                                  8,032         9,707

 TOTAL ASSETS                               $ 1,872,529   $ 1,972,889

Liabilities and Stockholders' Equity

Accounts payable                            $ 63,975      $ 83,454

Income taxes payable and accrued expenses     85,427        79,744

 Total current liabilities                    149,402       163,198

Other liabilities                             53,374        52,532

 TOTAL LIABILITIES                            202,776       215,730

 TOTAL STOCKHOLDERS' EQUITY                   1,669,753     1,757,159

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $ 1,872,529   $ 1,972,889

    Source: AVX Corporation

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