XNYS:AVX AVX Corp Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington,  DC 20549 

 

FORM 10-Q

 

 

 

X

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2012

 

or

 

 

 

 

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 1-7201

 

 

Picture 2

(Exact name of registrant as specified in its charter)

 

 

 

 

Delaware 

 

33-0379007

(State or other jurisdiction of incorporation or organization)

 

(IRS Employer ID No.)

 

 

 

1 AVX Boulevard Fountain Inn,  South Carolina 

 

29644

(Address of principle executive offices)

 

(Zip Code)

 

(864) 967-2150

(Registrant's phone number, including area code)

 

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

X

No

 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes

X

No

 

 

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

 

 

 

 

 

 

Large accelerated filer

[   ]

 

Accelerated filer

[X]

Non-accelerated filer

[   ]

(Do not check if a smaller reporting company)

Smaller reporting company

[   ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Yes

 

No

X

   

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

 

 

 

 

Class

 

Outstanding at August 7, 2012

Common Stock, par value $0.01 per share

 

169,330,825

 

 


 

 

AVX CORPORATION

 

INDEX

 

 

 

 

 

 

Page Number

PART I:

Financial Information:

 

ITEM 1.

Financial Statements (unaudited):

 

 

Consolidated Balance Sheets as of March 31, 2012 and June 30, 2012

3

 

Consolidated Statements of Operations for the three months ended June 30, 2011 and 2012

4

 

Consolidated Statements of Comprehensive Income (Loss) for the three months ended June 30, 2011 and 2012 

5

 

Consolidated Statements of Cash Flows for the three months ended June 30, 2011 and 2012

6

 

Notes to Consolidated Financial Statements

7

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

26

ITEM 4.

Controls and Procedures

26

PART II:

Other Information:

 

ITEM 1.

Legal Proceedings

26

ITEM 1A.

Risk Factors

27

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

27

ITEM 6.

Exhibits

27

Signature

 

28

 

 

 

 

 


 

 

AVX Corporation and Subsidiaries

Consolidated Balance Sheets (unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

June 30,

 

2012

 

2012

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

395,284 

 

$

421,829 

Short-term investments in securities

 

418,133 

 

 

415,138 

Accounts receivable - trade

 

206,170 

 

 

201,011 

Accounts receivable - affiliates

 

1,883 

 

 

2,144 

Inventories

 

566,117 

 

 

541,404 

Income taxes receivable

 

14,988 

 

 

22,387 

Deferred income taxes

 

85,787 

 

 

81,882 

Prepaid and other

 

38,783 

 

 

32,936 

Total current assets

 

1,727,145 

 

 

1,718,731 

Long-term investments in securities

 

238,112 

 

 

254,304 

Property and equipment

 

1,449,981 

 

 

1,411,147 

Accumulated depreciation

 

(1,213,493)

 

 

(1,181,263)

 

 

236,488 

 

 

229,884 

Goodwill

 

162,707 

 

 

162,707 

Intangible assets, net

 

78,221 

 

 

77,123 

Deferred income taxes - non-current

 

14,493 

 

 

104,853 

Other assets

 

10,846 

 

 

10,605 

Total Assets

$

2,468,012 

 

$

2,558,207 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable - trade

$

43,719 

 

$

34,662 

Accounts payable - affiliates

 

60,078 

 

 

67,307 

Income taxes payable

 

13,815 

 

 

11,138 

Deferred income taxes

 

547 

 

 

298 

Accrued payroll and benefits

 

38,333 

 

 

36,904 

Accrued expenses

 

140,581 

 

 

161,888 

Total current liabilities

 

297,073 

 

 

312,197 

Pensions

 

22,337 

 

 

20,261 

Deferred income taxes - non-current

 

2,270 

 

 

1,945 

Other liabilities

 

25,579 

 

 

271,991 

Total Liabilities

 

347,259 

 

 

606,394 

Commitments and contingencies (Note 8)

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

Preferred stock, par value $.01 per share:

 

 

 

 

 

Authorized, 20,000 shares; None issued and outstanding

 

 -

 

 

 -

Common stock, par value $.01 per share:

 

 

 

 

 

Authorized, 300,000 shares; issued, 176,368 shares; outstanding, 169,600 and 169,431 shares at March 31 and June 30, 2012, respectively

 

1,764 

 

 

1,764 

Additional paid-in capital

 

349,474 

 

 

350,048 

Retained earnings

 

1,838,140 

 

 

1,688,636 

Accumulated other comprehensive income

 

19,363 

 

 

1,192 

Treasury stock, at cost:

 

 

 

 

 

6,768 and 6,937 shares at March 31 and June 30, 2012, respectively

 

(87,988)

 

 

(89,827)

Total Stockholders' Equity

 

2,120,753 

 

 

1,951,813 

Total Liabilities and Stockholders' Equity

$

2,468,012 

 

$

2,558,207 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

3

 


 

AVX Corporation and Subsidiaries

Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

2011

 

2012

Net sales

$

436,422 

 

$

353,154 

Cost of sales

 

311,763 

 

 

284,197 

Gross profit

 

124,659 

 

 

68,957 

Selling, general and administrative expenses

 

31,107 

 

 

29,694 

Environmental charge

 

 -

 

 

266,250 

Profit (loss) from operations

 

93,552 

 

 

(226,987)

Other income:

 

 

 

 

 

Interest income

 

1,495 

 

 

1,870 

Other, net

 

163 

 

 

Income (loss) before income taxes

 

95,210 

 

 

(225,108)

Provision for (benefit from) income taxes

 

27,611 

 

 

(88,324)

Net income (loss)

$

67,599 

 

$

(136,784)

Income (loss) per share:

 

 

 

 

 

Basic

$

0.40 

 

$

(0.81)

Diluted

$

0.40 

 

$

(0.81)

 

 

 

 

 

 

Dividends declared

$

0.055 

 

$

0.075 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

 

170,139 

 

 

169,528 

Diluted

 

170,605 

 

 

169,528 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

 

4

 


 

AVX Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

2011

 

2012

Net income (loss)

$

67,599 

 

$

(136,784)

Other comprehensive income, net of income taxes

 

 

 

 

 

Foreign currency translation adjustment

 

6,602 

 

 

(19,408)

Foreign currency cash flow hedges adjustment

 

221 

 

 

1,014 

Pension liability adjustment

 

492 

 

 

223 

Unrealized gain on available-for-sale securities

 

39 

 

 

 -

Other comprehensive income (loss), net of income taxes

 

7,354 

 

 

(18,171)

Comprehensive income (loss)

$

74,953 

 

$

(154,955)

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

5

 


 

AVX Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

 (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

2011

 

2012

Operating Activities:

 

 

 

 

 

Net income (loss)

$

67,599 

 

$

(136,784)

Adjustment to reconcile net income to net cash from operating activities:

 

 

 

 

Depreciation and amortization

 

11,529 

 

 

10,554 

Stock-based compensation expense

 

425 

 

 

575 

Deferred income taxes

 

526 

 

 

(88,419)

Other

 

(4)

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(19,575)

 

 

4,974 

Inventories

 

(43,813)

 

 

17,509 

Accounts payable and accrued expenses

 

(5,406)

 

 

20,606 

Income taxes payable

 

17,609 

 

 

(2,446)

Other assets

 

8,305 

 

 

(6,472)

Other liabilities

 

(1,829)

 

 

246,411 

Net cash provided by operating activities

 

35,366 

 

 

66,512 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

Purchases of property and equipment

 

(15,294)

 

 

(10,716)

Purchases of investment securities

 

(362,712)

 

 

(207,236)

Sales of available-for-sale securities

 

395 

 

 

 -

Redemptions of investment securities

 

301,555 

 

 

193,527 

Net cash used in investing activities

 

(76,056)

 

 

(24,425)

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

Dividends paid

 

(9,367)

 

 

(12,720)

Purchase of treasury stock

 

(1,555)

 

 

(1,839)

Proceeds from exercise of stock options

 

776 

 

 

 -

Excess tax benefit from stock-based payment arrangements

 

82 

 

 

 -

Net cash used in financing activities

 

(10,064)

 

 

(14,559)

 

 

 

 

 

 

Effect of exchange rate on cash

 

284 

 

 

(983)

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

(50,470)

 

 

26,545 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

379,350 

 

 

395,284 

 

 

 

 

 

 

Cash and cash equivalents at end of period

$

328,880 

 

$

421,829 

 

 

 

See accompanying notes to consolidated financial statements.

6

 


 

AVX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except per share data)

 

   1. Basis of Presentation:

 

Our consolidated financial statements of AVX Corporation and its subsidiaries (“AVX” or the “Company”) include all accounts of the Company and its subsidiaries.  All significant intercompany transactions and accounts have been eliminated.  We have prepared the accompanying financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial reporting. These consolidated financial statements are unaudited and, in the opinion of management, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for the fair statement of the consolidated balance sheets, operating results, comprehensive income (loss), and cash flows for the periods presented.  Operating results for the three months ended June 30, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2013 due to cyclical and other factors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted in accordance with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2012.

 

Critical Accounting Policies and Estimates:

We have identified the accounting policies and estimates that are critical to our business operations and understanding our results of operations.  Those policies and estimates can be found in Note 1, "Summary of Significant Accounting Policies", of the Notes to Consolidated Financial Statements and in "Critical Accounting Policies and Estimates", in “Management's Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2012. Accordingly, this Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended March 31, 2012. During the three month period ended June 30,  2012,  there were no significant changes to any critical accounting policies or to the methodology used in determining estimates including those related to investment securities, revenue recognition, inventories, goodwill, intangible assets, property and equipment, income taxes, and contingencies.  

 

New Accounting Standards

 

Effective April 1, 2012, we adopted Accounting Standards Update 2011-05, Presentation of Comprehensive Income, or ASU 2011-05, which revises the manner in which companies present comprehensive income.  Under ASU 2011-05, companies may present comprehensive income, which is net income adjusted for the components of other comprehensive income, either in a single, continuous statement of comprehensive income or by using two separate but consecutive statements.  Regardless of the alternative chosen, companies must display adjustments for items reclassified from other comprehensive income into net income within the presentation of both net income and other comprehensive income.  ASU 2011-05 requires retrospective application.  The adoption affects only the display of those components of equity categorized as other comprehensive income and does not change existing recognition and measurement requirements that determine net earnings.  The Company has elected to present two separate but consecutive statements.

 

Effective April 1, 2012, we adopted Accounting Standards Update 2011-12, which effectively deferred the changes in ASU 2011-05 that relate to the presentation of reclassifications out of accumulated other comprehensive income.  Our adoption of ASU 2011-12 did not have a material effect on our consolidated financial statements.

 

7

 


 

Effective April 1, 2012, we adopted Accounting Standards Update 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment, which intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The ASU also expands upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The ASU did not have a material effect on our consolidated financial statements.

 

We have reviewed newly issued accounting pronouncements and concluded that they are either not applicable to our business or that no material effect is expected on our consolidated financial statements as a result of future adoption.

 

 2. Earnings Per Share:

 

Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding for the period.  Diluted earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the dilutive effect of potential common stock equivalents during the period.  Stock options are the only common stock equivalents currently used in our calculation and are computed using the treasury stock method. 

 

The table below represents the basic and diluted weighted average number of shares of common stock and potential common stock equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

2011

 

2012

Net Income (Loss)

$

67,599 

 

$

(136,784)

Computation of Basic EPS:

 

 

 

 

 

Weighted Average Shares Outstanding used in computing Basic EPS

 

170,139 

 

 

169,528 

Basic earnings per share

$

0.40 

 

$

(0.81)

Computation of Diluted EPS:

 

 

 

 

 

Weighted Average Shares Outstanding

 

170,139 

 

 

169,528 

Effect of stock options

 

466 

 

 

 -

Shares used in computing Diluted EPS (1)

 

170,605 

 

 

169,528 

Diluted Income (Loss) per share

$

0.40 

 

$

(0.81)

 

 

 

(1) Common stock equivalents, not included in the computation of diluted earnings per share because the impact would have been antidilutive were 1,472 shares and 3,358 shares for the three months ended June 30, 2011 and 2012, respectively.  In addition, 88 shares that would have been dilutive if we had income were excluded from the computation of diluted earnings per share due to the Company's net loss position for the three months ended June 30, 2012.

 

 

8

 


 

 3. Trade Accounts Receivable:

 

 

 

 

 

 

 

March 31, 2012

 

June 30, 2012

Gross Accounts Receivable - Trade

$

228,396 

 

$

222,516 

Less:

 

 

 

 

 

Allowances for doubtful accounts

 

720 

 

 

615 

Stock rotation and ship from stock and debit

 

14,327 

 

 

14,898 

Sales returns and discounts

 

7,179 

 

 

5,992 

    Total allowances

 

22,226 

 

 

21,505 

Net Accounts Receivable - Trade

$

206,170 

 

$

201,011 

 

 

Charges related to allowances for doubtful accounts are charged to selling, general and administrative expenses.  Charges related to stock rotation, ship from stock and debit, sales returns and sales discounts are reported as deductions from revenue.

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

2011

 

2012

Allowances for doubtful accounts:

 

 

 

 

 

 Beginning Balance

$

686 

 

$

720 

 Charges

 

 -

 

 

103 

 Applications

 

(2)

 

 

(208)

 Ending Balance

$

684 

 

$

615 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

2011

 

2012

Stock rotation and ship from stock and debit:

 

 

 

 

 

 Beginning Balance

$

13,340 

 

$

14,327 

 Charges

 

7,840 

 

 

9,149 

 Applications

 

(7,750)

 

 

(8,578)

 Ending Balance

$

13,430 

 

$

14,898 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

2011

 

2012

Sales returns and discounts:

 

 

 

 

 

 Beginning Balance

$

7,954 

 

$

7,179 

 Charges

 

4,714 

 

 

2,886 

 Applications

 

(4,642)

 

 

(3,996)

 Translation and other

 

 -

 

 

(77)

 Ending Balance

$

8,026 

 

$

5,992 

 

 

 

 4. Fair Value:

Fair Value Hierarchy:

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to value the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

 

-

Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.

9

 


 

 

-

Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

 

-

Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Based on

 

 

 

Quoted prices

 

Other

 

 

 

 

 

in active

 

observable

 

Unobservable

 

Fair Value at

 

markets

 

inputs

 

inputs

 

March 31, 2012

 

(Level 1)

 

(Level 2)

 

(Level 3)

Assets measured at fair value on a recurring basis:

 

 

 

 

 

 

 

 

 

 

 

Assets held in the non-qualified deferred compensation program(1)

$

9,150 

 

$

9,150 

 

$

 -

 

$

 -

Foreign currency derivatives(2)

 

1,760 

 

 

 -

 

 

1,760 

 

 

 -

Total

$

10,910 

 

$

9,150 

 

$

1,760 

 

$

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Based on

 

 

 

Quoted prices

 

Other

 

 

 

 

 

in active

 

observable

 

Unobservable

 

Fair Value at

 

markets

 

inputs

 

inputs

 

March 31, 2012

 

(Level 1)

 

(Level 2)

 

(Level 3)

Liabilities measured at fair value on a recurring basis:

 

 

 

 

 

 

 

 

 

 

 

Obligation related to assets held in the non-qualified deferred compensation program(1)

$

9,150 

 

$

9,150 

 

$

 -

 

$

 -

Foreign currency derivatives(2)

 

3,541 

 

 

 -

 

 

3,541 

 

 

 -

Total

$

12,691 

 

$

9,150 

 

$

3,541 

 

$

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Based on

 

 

 

Quoted prices

 

Other

 

 

 

 

 

in active

 

observable

 

Unobservable

 

Fair Value at

 

markets

 

inputs

 

inputs

 

June 30, 2012

 

(Level 1)

 

(Level 2)

 

(Level 3)

Assets measured at fair value on a recurring basis:

 

 

 

 

 

 

 

 

 

 

 

Assets held in the non-qualified deferred compensation program(1)

$

8,982 

 

$

8,982 

 

$

 -

 

$

 -

Foreign currency derivatives(2)

 

1,889 

 

 

 -

 

 

1,889 

 

 

 -

Total

$

10,871 

 

$

8,982 

 

$

1,889 

 

$

 -

 

10

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Based on

 

 

 

Quoted prices

 

Other

 

 

 

 

 

in active

 

observable

 

Unobservable

 

Fair Value at

 

markets

 

inputs

 

inputs

 

June 30, 2012

 

(Level 1)

 

(Level 2)

 

(Level 3)

Liabilities measured at fair value on a recurring basis:

 

 

 

 

 

 

 

 

 

 

 

Obligation related to assets held in the non-qualified deferred compensation program(1)

$

8,982 

 

$

8,982 

 

$

 -

 

$

 -

Foreign currency derivatives(2)

 

1,773 

 

 

 -

 

 

1,773 

 

 

 -

Total

$

10,755 

 

$

8,982 

 

$

1,773 

 

$

 -

 

 

(1) The market value of the assets held in the trust for the non-qualified deferred compensation program is included as an asset and a liability as the trust’s assets are available to us as general creditors in the event of our insolvency.

 

(2) Foreign currency derivatives in the form of forward contracts are included in prepaid and other in the consolidated balance sheets. Unrealized gains and losses on derivatives classified as cash flow hedges are recorded in other comprehensive income (loss). Gains and losses on derivatives not designated as hedges are recorded in other income. 

 

Valuation Techniques:

 

The following describes valuation techniques used to appropriately value our assets held in the non-qualified deferred compensation plan and derivatives.

 

Assets held in the non-qualified deferred compensation plan

 

Assets valued using Level 1 inputs in the table above represent assets from our non-qualified deferred compensation program. The funds in the non-qualified deferred compensation program are valued based on the number of shares in the funds using a price per share traded in an active market.

 

Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. If the cost of an investment exceeds its fair value, among other factors, we evaluate general market conditions, the duration and extent to which the fair value is less than cost, and whether or not we expect to recover the security's entire amortized cost basis. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis in the investment is established.

 

Derivatives

 

We primarily use forward contracts, with maturities generally less than four months, designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in our forecasted transactions related to purchase commitments and sales, denominated in various currencies. We also use derivatives not designated as hedging instruments to hedge foreign currency balance sheet exposures. These derivatives are used to offset currency changes in the fair value of the hedged assets and liabilities. Fair values for all of our derivative financial instruments are valued by adjusting the market spot rate by forward points, based on the date of the contract. The spot rates and forward points used are an average rate from an actively traded market. At March 31, 2012 and June 30, 2012, all of our forward contracts are Level 2 measurements.

 

 5. Financial Instruments and Investments in Securities:

 

At March 31, 2012 and June 30, 2012, we classified investments in debt securities and time deposits as held-to-maturity securities.  

11

 


 

 

Our long-term and short-term investment securities are accounted for as held-to-maturity securities and are carried at amortized cost. We have the ability and intent to hold these investments until maturity.  All income generated from the held-to-maturity securities investments are recorded as interest income.

 

Investments in held-to-maturity securities, recorded at amortized cost, were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2012

 

 

 

Gross

 

Gross

 

 

 

 

 

 

Unrealized

 

Unrealized

 

Estimated

 

Cost

 

Gains

 

Losses

 

Fair Value

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

$

6,800 

 

$

 -

 

$

(2)

 

$

6,798 

Corporate bonds

 

40,638 

 

 

138 

 

 

 -

 

 

40,776 

Time deposits

 

370,695 

 

 

 -

 

 

 -

 

 

370,695 

Long-term investments:

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

68,061 

 

 

229 

 

 

(72)

 

 

68,218 

U.S. government and agency securities

 

170,051 

 

 

164 

 

 

(154)

 

 

170,061 

 

$

656,245 

 

$

531 

 

$

(228)

 

$

656,548 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2012

 

 

 

Gross

 

Gross

 

 

 

 

 

 

Unrealized

 

Unrealized

 

Estimated

 

Cost

 

Gains

 

Losses

 

Fair Value

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

$

6,800 

 

$

 -

 

$

(2)

 

$

6,798 

Corporate bonds

 

54,640 

 

 

126 

 

 

(17)

 

 

54,749 

Time Deposits

 

353,698 

 

 

 -

 

 

 -

 

 

353,698 

Long-term investments:

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

84,235 

 

 

150 

 

 

(197)

 

 

84,188 

U.S. government and agency securities

 

170,069 

 

 

230 

 

 

(47)

 

 

170,252 

 

$

669,442 

 

$

506 

 

$

(263)

 

$

669,685 

 

 

 

The amortized cost and estimated fair value of held-to-maturity investments at June 30, 2012, by contractual maturity, are shown below.  Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-Maturity

 

 

 

 

Amortized

 

Estimated

 

 

 

 

Cost

 

Fair Value

Due in one year or less

 

 

 

$

415,138 

 

$

415,245 

Due after one year through five years

 

 

 

 

254,304 

 

 

254,440 

Total

 

 

 

$

669,442 

 

$

669,685 

 

 

12

 


 

 6. Inventories:

 

 

 

 

 

 

 

March 31, 2012

 

June 30, 2012

Finished goods

$

118,916 

 

$

102,818 

Work in process

 

101,923 

 

 

105,935 

Raw materials and supplies

 

345,278 

 

 

332,651 

 

$

566,117 

 

$

541,404 

 

 

 

 7. Stock-Based Compensation:

 

In May 2012, we granted 493 options to employees pursuant to the 2004 Stock Option Plan described in Note 10, “Stock Based Compensation”, of the Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2012.  The weighted average grant date fair value per share and the weighted average exercise price per share for these options are $2.13 and $10.90, respectively.

 

There were no stock options exercised during the first quarter of fiscal year 2013.

 

 8. Commitments and Contingencies:

 

We have been identified by the United States Environmental Protection Agency ("EPA"), state governmental agencies, or other private parties as a potentially responsible party ("PRP") under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") or equivalent state or local laws for clean-up and response costs associated with certain sites at which remediation is required with respect to prior contamination.  Because CERCLA has generally been construed to authorize joint and several liability, the EPA could seek to recover all clean-up costs from any one of the PRPs at a site despite the involvement of other PRPs.  At certain sites, financially responsible PRPs other than AVX also are, or have been, involved in site investigation and clean-up activities.  We believe that liability resulting from these sites will be apportioned between AVX and other PRPs.

 

To resolve our liability at the sites at which the Company has been named a PRP, we have entered into various administrative orders and consent decrees with federal and state regulatory agencies governing the timing and nature of investigation and remediation.  As is customary, the orders and decrees regarding sites where the PRPs are not themselves implementing the chosen remedy contain provisions allowing the EPA to reopen the agreement and seek additional amounts from settling PRPs in the event that certain contingencies occur, such as the discovery of significant new information about site conditions.

 

In 1991, in connection with a consent decree, we paid $66 million, plus interest, toward the environmental conditions at, and remediation of, New Bedford Harbor in the Commonwealth of Massachusetts (“the harbor”) in settlement with the United States and the Commonwealth of Massachusetts, subject to reopener provisions, including a reopener if certain remediation costs for the site exceed $130.5 million.  In 2007, we received notification from the EPA and the Department of Justice indicating that the United States was preparing to exercise the cost reopener.  In March 2011, the EPA issued the Fourth Explanation of Significant Differences (“ESD #4”) that explains the planned changes to the existing remedial action plan for the harbor to include the use of a confined aquatic disposal (“CAD”) cell, along with interim off-site transportation and disposal of certain contaminated dredge spoils, and the continued use of long-term on-site storage for other contaminated dredge spoils.  ESD #4 provides future cost estimates under the new remedial action plan (in addition to costs incurred to date) ranging from $362 million to $401 million, net present value, based on certain criteria included in the ESD #4.  The EPA has indicated that remediation costs through December 31, 2011 were approximately $456 million, not all of which are subject to the reopener provisions.

 

On April 18, 2012, the EPA issued to the Company a Unilateral Administrative Order (“UAO”) directing the Company to perform the Remedial Design, the Remedial Action, and Operation and Maintenance for the harbor cleanup.  The effective date set forth in the UAO was June 18, 2012, pursuant to which the Company had until June 25, 2012 to inform the EPA if it intends to comply with the UAO.  The EPA has extended the effective date of the UAO to October 1, 2012.

 

13

 


 

We are continuing to assess the UAO as well as potential defenses and other actions with respect to the site and to engage in mediation with the EPA and the Commonwealth of Massachusetts.  Our current estimate of the potential liability is $366 million in connection with this matter.  We recognize liabilities for environmental exposures when analysis indicates that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated.  Accordingly, we have recorded a charge for the first quarter ended June 30, 2012 (in addition to the $100 million charge recorded in the quarter ended March 31, 2012) of $266 million with respect to this matter.

 

There are two suits pending with respect to property adjacent to our Myrtle Beach, South Carolina factory claiming property values have been negatively impacted by alleged migration of certain pollutants from our property.   On November 27, 2007 a  suit was filed in the South Carolina State Court by certain individuals as a class actionAnother suit is a commercial suit filed on January 16, 2008 in South Carolina State Court. Both of these suits are pending.  We intend to defend vigorously the claims that have been asserted in these two lawsuits. At this stage of the litigation, there has not been a determination as to responsible parties or the amount, if any, of damages. Based on our estimate of potential outcomes, we have accrued approximately $0.3 million with respect to these cases as of June 30, 2012.

 

We currently have reserves of approximately $381.9 million at June 30, 2012 related to the various matters discussed above.  These reserves are classified in the Consolidated Balance Sheets as $137.7 million in accrued expenses and $244.2 million in other non-current liabilities at June 30, 2012.  The amount recorded for identified contingent liabilities is based on estimates.  Amounts recorded are reviewed periodically and adjusted to reflect additional legal and technical information that becomes available.  Also, uncertainties about the status of laws, regulations, regulatory actions, technology, and information related to individual sites make it difficult to develop an estimate of the reasonably possible aggregate environmental remediation exposure.  Therefore, these costs could differ from our current estimates.

 

During fiscal 2010, AVX was named as a third party defendant in a case filed in Massachusetts Superior Court captioned DaRosa v. City of New Bedford.  This case relates to a former disposal site in the City of New Bedford located at Parker Street.  The City asserts that AVX, among others, contributed to that site.  We intend to defend vigorously the claims that have been asserted in this lawsuit. In light of the foregoing, we are not able to estimate any amount of loss or range of loss. No accrual for costs has been recorded and the potential impact of this case on our financial position, results of operations, comprehensive income (loss), and cash flows cannot be determined at this time.

 

We also operate on other sites that may have potential future environmental issues as a result of activities at sites during AVX’s long history of manufacturing operations or prior to the start of operations by AVX.  Even though we may have rights of indemnity for such environmental matters at certain sites, regulatory agencies in those jurisdictions may require us to address such issues.  Once it becomes probable that we will incur costs in connection with remediation of a site and such costs can be reasonably estimated, we establish reserves or adjust our reserves for our projected share of these costs.  A separate account receivable is recorded for any indemnified costs.

 

We are involved in disputes, warranty, and legal proceedings arising in the normal course of business.  While we cannot predict the outcome of these disputes and proceedings, management believes, based upon a review with legal counsel, that none of these proceedings will have a material impact on our financial position, results of operations, comprehensive income (loss), or cash flows.

 

We have an employment agreement with our Chief Executive Officer that provides for salary continuance equivalent to his most recent base salary as a full-time employee during a two-year advisory period upon retirement.

 

 9. Comprehensive Income (Loss):

 

Comprehensive income (loss) represents changes in equity during a period except those resulting from investments by and distributions to shareholders.  The specific components include net income (loss), pension liability and other post-retirement benefit adjustments, deferred gains and losses resulting from foreign currency translation adjustments, unrealized gains and losses on qualified foreign currency cash flow hedges, and unrealized gains and losses on available-for-sale securities.

 

14

 


 

Other comprehensive income (loss) includes the following components:

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

2011

 

2012

 

Pre-tax

 

Net of Tax

 

Pre-tax

 

Net of Tax

Foreign currency translation adjustment

$

6,602 

 

$

6,602 

 

$

(19,408)

 

$

(19,408)

Foreign currency cash flow hedges adjustment

 

307 

 

 

221 

 

 

1,201 

 

 

1,014 

Pension liability adjustment

 

683 

 

 

492 

 

 

310 

 

 

223 

Unrealized gain on available-for-sale securities

 

54 

 

 

39 

 

 

 -

 

 

 -

Other comprehensive income (loss)

$

7,646 

 

$

7,354 

 

$

(17,897)

 

$

(18,171)

 

 

 

 

 10. Segment and Geographic Information:

 

We have three reportable segments: Passive Components, KED Resale, and Interconnect. The Passive Components segment consists primarily of surface mount and leaded ceramic capacitors, RF thick and thin film components, tantalum capacitors, film capacitors, ceramic and film power capacitors, super capacitors, EMI filters, thick and thin film packages, varistors, thermistors, inductors, and resistive products.  The KED Resale segment consists primarily of ceramic capacitors, frequency control devices, SAW devices, sensor products, RF modules, actuators, acoustic devices, and connectors produced by Kyocera and resold by AVX.  The Interconnect segment consists primarily of Elco automotive, telecom, and memory connectors manufactured by AVX Interconnect.  Sales and operating results from these reportable segments are shown in the tables below.  In addition, we have a corporate administration group consisting of finance and administrative activities and a separate Research and Development group. 

 

We evaluate performance of our segments based upon sales and operating profit.  There are no intersegment revenues.  We allocate the costs of shared resources between segments based on each segment's usage of the shared resources.  Cash, accounts receivable, investments in securities, and certain other assets, which are centrally managed, are not readily allocable to operating segments.

 

The tables below present information about reported segments:

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

2011

 

2012

Net sales:

 

 

 

 

 

Passive Components

$

276,179 

 

$

213,821 

KDP and KCD Resale

 

113,268 

 

 

92,871 

KCP Resale

 

15,944 

 

 

13,432 

Total KED Resale

 

129,212 

 

 

106,303 

Interconnect

 

31,031 

 

 

33,030 

Total

$

436,422 

 

$

353,154 

 

 

15

 


 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

2011

 

2012

Operating profit:

 

 

 

 

 

Passive Components

$

91,720 

 

$

40,989 

KED Resale

 

7,246 

 

 

2,577 

Interconnect

 

6,130 

 

 

6,988 

Research & development

 

(1,986)

 

 

(1,679)

Corporate administration

 

(9,558)

 

 

(275,862)

Total

$

93,552 

 

$

(226,987)

 

 

 

 

 

 

 

 

 

 

 

March 31, 2012

 

June 30, 2012

Assets:

 

 

 

 

 

Passive Components

$

760,121 

 

$

707,094 

KED Resale

 

47,506 

 

 

40,975 

Interconnect

 

55,001 

 

 

52,738 

Research & development

 

6,493 

 

 

5,240 

Cash, A/R, and investments in securities

 

1,259,582 

 

 

1,294,426 

Goodwill - Passive components

 

152,429 

 

 

152,429 

Goodwill - Interconnect

 

10,277 

 

 

10,277 

Corporate administration

 

176,603 

 

 

295,028 

Total

$

2,468,012 

 

$

2,558,207 

 

The following geographic data is based upon net sales generated by operations located within particular geographic areas:

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

2011

 

2012

Net sales:

 

 

 

 

 

Americas

$

120,657 

 

$

100,409 

Europe

 

120,712 

 

 

89,298 

Asia

 

195,053 

 

 

163,447 

Total

$

436,422 

 

$

353,154 

 

16

 


 

   

11. Pension Plans:

 

Net periodic pension cost for our defined benefit plans consisted of the following for the three months ended June 30,  2011 and 2012:

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Plans

 

International Plans

 

Three Months Ended June 30,

 

Three Months Ended June 30,

 

2011

 

2012

 

2011

 

2012

Service cost

$

133 

 

$

109 

 

$

121 

 

$

115 

Interest cost

 

435 

 

 

413 

 

 

1,613 

 

 

1,577 

Expected return on plan assets

 

(584)

 

 

(538)

 

 

(1,468)

 

 

(1,551)

Amortization of prior service cost

 

 

 

 

 

 -

 

 

 -

Recognized actuarial loss

 

156 

 

 

220 

 

 

405 

 

 

423 

Net periodic pension cost

$

143 

 

$

206 

 

$

671 

 

$

564 

 

Based on current actuarial computations, during the quarter ended June 30, 2012, we made contributions of $1,972 to the international plans. We expect to make additional contributions of approximately $5,916 to the international plans over the remainder of fiscal 2013.  We made no contributions to the U.S. plans during the current quarter due to their funding status, and we do not anticipate making any contributions during the remainder of the fiscal year.

 

 12. Derivative Financial Instruments:

 

We are exposed to foreign currency exchange rate fluctuations in the normal course of business and use derivative instruments (forward contracts) to hedge certain foreign currency exposures as part of the risk management strategy.  The objective is to offset gains and losses resulting from these exposures with gains and losses on the forward contracts used to hedge them, thereby reducing volatility of earnings or protecting fair values of assets and liabilities.  We do not enter into any trading or speculative positions with regard to derivative instruments.

 

We primarily use forward contracts, with maturities less than four months, designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in our forecasted transactions related to purchase commitments and sales, denominated in various currencies.  These derivative instruments are designated and qualify as cash flow hedges

 

The effectiveness of the cash flow hedges is determined by comparing the cumulative change in the fair value of the hedge contract with the cumulative change in the fair value of the hedged transaction, both of which are based on forward rates. The effective portion of the gain or loss on these cash flow hedges is initially recorded in accumulated other comprehensive income as a separate component of stockholders' equity.  Once the hedged transaction is recognized, the gain or loss is recognized in our statement of operations. At March 31, 2012 and June  30, 2012, respectively, the following forward contracts were entered into to hedge against the volatility of foreign currency exchange rates for certain forecasted sales and purchases.

 

 

 

 

 

 

 

 

 

 

March 31, 2012

 

Fair Value of Derivative Instruments

 

Asset Derivatives

 

Liability Derivatives

 

Balance

 

 

 

Balance

 

 

 

Sheet

Fair

 

Sheet

Fair

 

Caption

Value

 

Caption

Value

 

 

 

 

 

 

 

 

  Foreign exchange contracts

Prepaid and other

$

1,646 

 

Accrued expenses

$

2,992 

 

 

 

17

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2012

 

Fair Value of Derivative Instruments

 

Asset Derivatives

 

Liability Derivatives

 

Balance

 

 

 

Balance

 

 

 

Sheet

Fair

 

Sheet

Fair

 

Caption

Value

 

Caption

Value

 

 

 

 

 

 

 

 

  Foreign exchange contracts

Prepaid and other

$

1,539 

 

Accrued expenses

$

1,684 

 

 

 

For these derivatives designated as hedging instruments, during the three months ended June 30,  2012, net pretax losses of $463 were recognized in other comprehensive loss. In addition, during the three months ended June 30,  2012, net pretax losses  of $1,188 were reclassified from accumulated other comprehensive income into cost of sales (for hedging purchases), and net pretax gains  of $672 were reclassified from accumulated other comprehensive income into sales (for hedging sales) in the accompanying Statement of Operations. During the quarters  ended June 30, 2011 and 2012, we discontinued an immaterial amount of cash flow hedges for which it was probable that a forecasted transaction would not occur.

 

Derivatives not designated as hedging instruments consist primarily of forwards used to hedge foreign currency balance sheet exposures representing hedging instruments used to offset foreign currency changes in the fair values of the underlying assets and liabilities.  The gains and losses on these foreign currency forward contracts are recognized in other income in the same period as the remeasurement gains and losses of the related foreign currency denominated assets and liabilities and thus naturally offset these gains and losses. At March 31, 2012 and June  30,  2012, we had the following forward contracts that were entered into to hedge against these exposures.

 

 

 

 

 

 

 

 

 

 

March 31, 2012

 

Fair Value of Derivative Instruments

 

Asset Derivatives

 

Liability Derivatives

 

Balance

 

 

 

Balance

 

 

 

Sheet

Fair

 

Sheet

Fair

 

Caption

Value

 

Caption

Value

 

 

 

 

 

 

 

 

  Foreign exchange contracts

Prepaid and other

$

114 

 

Accrued expenses

$

549 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2012

 

Fair Value of Derivative Instruments

 

Asset Derivatives

 

Liability Derivatives

 

Balance

 

 

 

Balance

 

 

 

Sheet

Fair

 

Sheet

Fair

 

Caption

Value

 

Caption

Value

 

 

 

 

 

 

 

 

  Foreign exchange contracts

Prepaid and other

$

350 

 

Accrued expenses

$

89 

 

 

 

18

 


 

For these derivatives not designated as hedging instruments during the three months ended June 30,  2012,  losses  of $11 on hedging contracts were recognized in other income, which offset the approximately $1,758 in exchange losses that were recognized in other income in the accompanying Statement of Operations.

 

At March  31, 2012 and June 30, 2012,  we had outstanding foreign exchange contracts with notional amounts totaling $228,206 and $187,864, respectively, denominated primarily in euros, Czech korunas, British pounds, and Japanese yen.

 

 13. Subsequent Event:

 

On July 23,  2012, the Board of Directors of the Company declared a $0.075 dividend per share of common stock with respect to the quarter ended June 30, 2012.  The dividend will be paid to stockholders of record on August 6,  2012 and will be disbursed on August 17,  2012.

19

 


 

 

 

 

 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

 

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995.  All statements other than statements of historical fact, including statements regarding industry prospects and future results of operations or financial position, made in this Quarterly Report on Form 10-Q are forward-looking.  The forward-looking information may include, among other information, statements concerning our outlook for fiscal year 2013, overall volume and pricing trends, cost reduction and acquisition strategies and their anticipated results, expectations for research and development, and capital expenditures.  There may also be other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts.  Forward-looking statements reflect management's expectations and are inherently uncertain.  The forward-looking information and statements in this report are subject to risks and uncertainties, including those discussed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2012, that could cause actual results to differ materially from those expressed in or implied by the information or statements herein.  Forward-looking statements should be read in context with, and with the understanding of, the various other disclosures concerning the Company and its business made elsewhere in this quarterly report as well as other public reports filed by the Company with the SEC.  You should not place undue reliance on any forward-looking statements as a prediction of actual results or developments.

 

Any forward-looking statements by the Company are intended to speak as of the date thereof. We do not intend to update or revise any forward-looking statement contained in this quarterly report to reflect new events or circumstances unless and to the extent required by applicable law.  All forward-looking statements contained in this quarterly report constitute "forward-looking statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934 and, to the extent it may be applicable by way of incorporation of statements contained in this quarterly report by reference or otherwise, Section 27A of the United States Securities Act of 1933, each of which establishes a safe-harbor from private actions for forward-looking statements as defined in those statutes.

 

Critical Accounting Policies and Estimates

 

"Management's Discussion and Analysis of Financial Condition and Results of Operations" is based upon our unaudited Consolidated Financial Statements and Notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States.  The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods.  On an ongoing basis, management evaluates its estimates and judgments, including those related to investment securities, revenue recognition, inventories, property and equipment, goodwill, intangible assets, income taxes, and contingencies.  Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  There can be no assurance that actual results will not differ from those estimates. 

 

We have identified the accounting policies and estimates that are critical to our business operations and understanding the Company's results of operations.  Those policies and estimates can be found in Note 1, "Summary of Significant Accounting Policies", of the Notes to Consolidated Financial Statements and in "Critical Accounting Policies and Estimates", in “Management's Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2012 and in Note 1, "Critical Accounting Policies and Estimates", in the Notes to Consolidated Financial Statements in this Form 10-Q.  Accordingly, this Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended March 31, 2012.  During the three month period ended June 30, 2012, there were no significant changes to any critical accounting policies, judgments involved in applying those policies, or the methodology used in determining estimates with respect to those related to investment securities, revenue recognition, inventories, goodwill, intangible assets, property and equipment, income taxes, and contingencies.

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Business Overview

 

AVX is a leading worldwide manufacturer and supplier of a broad line of passive electronic components. Virtually all types of electronic devices use our passive component products to store, filter, or regulate electric energy.  We also manufacture and supply high-quality electronic connectors and interconnect systems for use in electronic products. 

 

We have manufacturing, sales, and distribution facilities located throughout the world, which are divided into three main geographic regions: the Americas, Asia, and Europe.  AVX is organized into five main product groups with three reportable segments: Passive Components, KED Resale, and Interconnect.  The Passive Components segment consists primarily of surface mount and leaded ceramic capacitors, RF thick and thin film components, tantalum capacitors, film capacitors, ceramic and film power capacitors, super capacitors, EMI filters, thick and thin film packages, varistors, thermistors, inductors, and resistive products.  The KED Resale segment consists primarily of ceramic capacitors, frequency control devices, SAW devices, sensor products, RF modules, actuators, acoustic devices, and connectors produced by Kyocera and resold by AVX.  The Interconnect segment consists of Elco automotive, telecom, and memory connectors manufactured by AVX Interconnect and KCP Resale connector products.  

 

Our customers are multi-national original equipment manufacturers, or OEMs, independent electronic component distributors, and electronic manufacturing service providers, or EMSs.  We market our products through our own direct sales force and independent manufacturers' representatives, based upon market characteristics and demands.  We coordinate our sales, marketing, and manufacturing organizations by strategic customer account and globally by region.

 

We sell our products to customers in a broad array of industries, such as telecommunications, information technology hardware, automotive electronics, medical devices and instrumentation, industrial instrumentation, defense and aerospace electronic systems, and consumer electronics.

 

Results of Operations - Three Months Ended June 30, 2012 and 2011

 

Our net loss for the quarter ended June 30, 2012 was $(136.8) million, or $(0.81) per share, compared to net income of $67.6 million, or $0.40 per share, for the quarter ended June 30, 2011.  The net loss for the quarter includes an environmental charge of $266 million, or $(0.98) per share on an after-tax basis, related to environmental issues at the New Bedford Harbor Superfund site in Massachusetts.  This decrease is a result of the factors set forth below.

 

 

 

 

 

 

 

(in thousands, except per share data)

Three Months Ended June 30,

 

2011

 

2012

Net Sales

$

436,422 

 

$

353,154 

Gross Profit

 

124,659 

 

 

68,957 

Operating Income (Loss)

 

93,552 

 

 

(226,987)

Net Income (Loss)

 

67,599 

 

 

(136,784)

Diluted Earnings (Loss) per Share

$