e10vk
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-K
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(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the fiscal
year ended March 31,
2010
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Commission File Number 1-11263
EXIDE TECHNOLOGIES
(Exact Name of Registrant as
Specified in Its Charter)
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Delaware
(State or other jurisdiction
of
incorporation or organization)
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23-0552730
(I.R.S. Employer
Identification Number)
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13000 Deerfield Parkway, Building 200
Milton, Georgia
(Address of principal
executive offices)
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30004
(Zip
Code)
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(678) 566-9000
(Registrants telephone
number, including area code)
Securities registered pursuant to Section 12(b) of the
Act:
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Common Stock, $.01 par value
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Warrants to subscribe for Common Stock
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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 o No þ
Indicate by check mark if the Registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Exchange
Act. Yes o No þ
Indicate by a 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 þ No o
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 o No o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of the Registrants knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this
Form 10-K
or any amendment to this
Form 10-K o
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. (Check one):
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o
(Do not check if a smaller reporting company)
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Smaller Reporting company o
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Indicate by check mark whether the Registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes o No þ
The aggregate market value of common stock held by
non-affiliates of the Registrant as of September 30, 2009
was $404,505,092.
Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest
practicable date: As of May 27, 2010,
75,596,285 shares of common stock were outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
The definitive proxy statement relating to the registrants
Annual Meeting of Stockholders to be held on September 15,
2010 is incorporated by reference in Part III to the extent
described therein.
EXIDE
TECHNOLOGIES
TABLE OF CONTENTS
2
EXIDE
TECHNOLOGIES
Overview
and General Discussion of the Business
Exide Technologies is a Delaware corporation organized in 1966
to succeed to the business of a New Jersey corporation founded
in 1888. Exides principal executive offices are located at
13000 Deerfield Parkway, Building 200, Milton, Georgia 30004.
The Company is a global leader in stored electrical energy
solutions, and one of the largest manufacturers and suppliers of
lead-acid batteries for transportation and industrial
applications in the world, with fiscal 2010 net sales of
approximately $2.7 billion. The Companys operations
in the Americas and Europe and Rest of World (ROW)
represented approximately 43.2% and 56.8%, respectively, of
fiscal 2010 net sales.
Unless otherwise indicated or unless the context otherwise
requires, references to fiscal year refer to the
period ended March 31 of that year (e.g., fiscal
2010 refers to the period beginning April 1, 2009 and
ending March 31, 2010). Unless the context indicates
otherwise, the Company, Exide,
we, or us refers to Exide Technologies
and its subsidiaries.
Company
Products and Business Segments
The Company reports its financial results through four principal
business segments: Transportation Americas, Transportation
Europe and ROW, Industrial Energy Americas, and Industrial
Energy Europe and ROW. Refer to Note 17 to the Consolidated
Financial Statements in Item 8 of this
Form 10-K
for financial information about the Companys business
segments as well as the geographic areas in which each segment
conducts operations.
Transportation
The Companys transportation batteries include ignition and
lighting batteries for cars, trucks, off-road vehicles,
agricultural and construction vehicles, motorcycles,
recreational vehicles, marine, and other applications. The
Companys principal batteries sold in the transportation
market are represented by the following brands: Centra, DETA,
Exide, Exide Extreme, Exide NASCAR Select, Orbital, Fulmen,
and Tudor, as well as other brands under various private
labels. The market for transportation batteries is divided
between sales to aftermarket customers and original equipment
manufacturers (OEMs). Transportation segments
represented approximately 65.0% of the Companys net sales
in fiscal 2010. Within the transportation segments, aftermarket
sales and OEM sales represented approximately 84.4% and 15.6% of
fiscal 2010 net sales, respectively.
Aftermarket sales are driven by a number of factors, including
the number of vehicles in use, average battery life, average age
of vehicles, weather conditions, and population growth.
Aftermarket demand historically has been less cyclical than OEM
demand due to the typical three to five-year replacement cycle.
Some of the Companys major aftermarket customers include
Wal-Mart, Bosch, Tractor Supply, Canadian Tire, ADI, GAUI,
although the Wal-Mart business is scheduled to be phased out
between June and October, 2010 . In addition, the Company is
also a supplier of authorized replacement batteries for major
OEMs including FIAT, BMW, Volkswagen, John Deere,
Renault/Nissan, and PACCAR.
OEM sales are driven in large part by new vehicle manufacturing
rates, which are driven by consumer demand for vehicles. The
Company believes that the OEM market increasingly prefers
suppliers with established global production capabilities that
can meet their needs as they expand internationally and increase
platform standardization across multiple markets. The Company
supplies batteries for two of the 10 top-selling vehicles in the
United States of America (U.S.) and five of the 10
top-selling vehicles in Europe. Some of the Companys
significant OEM customers include International
Truck & Engine, FIAT, the PSA group
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(Peugeot S.A./Citroën), Case/New Holland, BMW, John Deere,
Renault Nissan, Scania, Volvo Trucks, Volkswagen, and Toyota.
Transportation
Americas
In the Americas, the Company sells aftermarket transportation
products through various distribution channels, including mass
merchandisers, auto parts outlets, wholesale distributors, and
battery specialists. The Company sells its OEM transportation
replacement products principally through dealer networks. The
Companys operations in the U.S., Canada, and Mexico
include a network of 80 branches which sell and distribute
batteries and other products to the Companys distributor
channel customers, battery specialists, national account
customers, retail stores, and OEM dealers. In addition, these
branches collect spent batteries for the Companys
recycling centers.
With its five active recycling centers, the Company is the
largest recycler of lead in North America. The Companys
recycling centers supply recycled lead for use in almost all of
Exides Transportation and Industrial Energy products
manufactured in North America as well as supplying lead to a
variety of external customers. The recycling centers also
recover and recycle plastic materials that are used to produce
new battery covers and cases.
Transportation
Europe and ROW
The Company sells OEM batteries to the European light vehicle,
light commercial vehicle and commercial vehicle industry. The
commercial vehicle industry includes truck manufacturers as well
as construction and agriculture vehicle manufacturers. Exide
supplies most of its OEM batteries directly to the assembly
plants of its customers. The Company supplies BMW, Fiat, Nissan,
Renault, Volkswagen, Iveco, Scania, Volvo Trucks, and many other
well known manufacturers. The Company also delivers service and
replacement batteries into this segment. Those are either
distributed by the OEM customers themselves or delivered
directly to the service points through the Exide logistics
network. The Company also supplies advanced lead-acid batteries
to microhybrid vehicles equipped with
CO2-
reducing technologies such as Start & Stop and
regenerative braking systems.
The Company sells aftermarket batteries in Europe and ROW
primarily through automotive parts and battery wholesalers,
mass-merchandisers, auto centers, service installers, and oil
companies. Wholesalers have traditionally represented the
majority of this market, but sales through hypermarket chains
and automotive parts stores, most often integrated in European
or global buying groups, have increased. Many automotive parts
wholesalers are also increasingly organized in European
organizations active in purchasing and merchandising programs.
Battery specialists sell and distribute batteries to a network
of automotive parts retailers, service stations, independent
retailers, and garages throughout Europe.
Industrial
Energy
The Companys Industrial Energy segments supply both motive
power and network power applications. Motive power batteries are
used in the material handling industry for electric forklift
trucks, and in other industries, including floor cleaning
machinery, powered wheelchairs, railroad locomotives, mining,
and the electric road vehicles market. Network power batteries
are used for
back-up
power applications to ensure continuous power supply in case of
a temporary power failure or outage. Industrial Energy
represented 35.0% of the Companys net sales in fiscal
2010. Within the Industrial Energy segments, motive power sales
and network power sales represented approximately 52.2% and
47.8% of Industrial Energy net sales, respectively.
The battery technologies for the motive power markets include
flooded flat plate products, tubular plate products, absorbed
glass mat (AGM) products, and gel electrolyte
products. The Company also offers a complete range of battery
chargers and related equipment for the operation and maintenance
of battery-powered vehicles.
Network power batteries are used to provide
back-up
power for use with telecommunications systems, computer
installations, hospitals, air traffic control, security systems,
utility, railway and military applications.
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Telecommunications applications include central and local
switching systems, satellite stations, wireless base stations
and mobile switches, optical fiber repeating boxes, cable TV
transmission boxes, and radio transmission stations. The
Companys strongest network power battery brands,
Absolyte and Sonnenschein, offer customers the
choice of AGM or gel electrolyte valve regulated battery
technologies and deliver among the highest energy and power
densities in their class.
Industrial
Energy Americas
The Company distributes motive power products and services
through multiple channels. These include sales and service
locations owned by the Company that are augmented by a network
of independent manufacturers representatives. The Company
serves a wide range of customers including OEM suppliers of lift
trucks, large industrial companies, retail distributors,
warehousing companies, and manufacturers. The Companys
primary motive power customers in the Americas include NACCO,
Toyota, Wal-Mart, Target, and Kroger. The Company distributes
network power products and services through sales and service
locations owned by the Company that are augmented by a network
of independent manufacturers representatives. The
Companys primary network power customers in the Americas
include AT&T, APC, Emerson Electric, and Verizon Wireless.
Industrial
Energy Europe and ROW
The Company distributes motive power products and services in
Europe through in-house sales and service organizations and
utilizes distributors and agents for the export of products from
Europe to ROW countries. Motive power products in Europe are
also sold to a wide range of customers in the aftermarket,
ranging from large industrial companies and retail distributors
to small warehousing and manufacturing operations. Motive power
batteries are also sold in complete packages, including
batteries, chargers, and increasingly through
on-site
service. The Companys major OEM motive power customers
include TMH, KION and Jungheinrich. The Company distributes
network power products and services in Europe and batteries and
chargers in Australia and New Zealand through in-house sales and
service organizations. In Asia, products are distributed through
independent distributors. The Company utilizes distributors,
agents, and direct sales to export products from Europe and
North America to ROW. The Companys primary Network Power
customers in Europe and ROW include China Mobile, Deutsche
Telecom, Alcatel, MGE, Emerson Electric, Nokia, Ericsson and
Siemens.
Quality
The Company recognizes that product performance and quality are
critical to its success. The Companys Customer-focused
Excellence Lean Leadership (EXCELL) initiative and
Quality Management System (QMS) are both important
drivers of operational excellence, improved levels of quality,
productivity, and delivery of goods and services to the global
transportation and industrial energy markets. The Company
implemented EXCELL to systematically reduce and ultimately
eliminate waste and to implement the concepts of continuous flow
and customer pull throughout the Companys supply chain.
The EXCELL framework follows lean production techniques and
process improvements, and is also designed to prioritize
improvement initiatives that drive quality improvement and
customer satisfaction while achieving all of the Companys
business objectives. The Companys Take Charge! initiative,
which is an integral component of the EXCELL framework, is
designed to identify waste in the Companys manufacturing
and distribution processes, and to implement changes to enhance
productivity and throughput while reducing investment in
inventories. The Companys QMS was developed to streamline
and standardize the global quality systems so that key
measurements could be evaluated to drive best practices as it
continues to pursue improved EXCELL certifications across all
facilities. The QMS plays a major role in the Companys
efforts to achieve product quality.
The Companys quality process begins in the design phase
with an in-depth understanding of customer and application
requirements. The Companys products are designed to
required performance, industry, and customer quality standards
using design processes, tools, and materials needed to achieve
reliability and durability. The Companys commitment to
quality continues through the manufacturing process. The Company
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has quality audit processes and standards in each of its
production and distribution facilities. The Companys
quality process extends throughout the entire product lifecycle
including operation in service.
All of the Companys major production facilities are
approved under ISO/TS 16949
and/or ISO
9001 quality standards. The Company has also obtained ISO 14001
Environmental Health & Safety (EH&S)
certification at the majority of its manufacturing plants, and
has received quality certifications and awards from a number of
OEM and aftermarket customers.
Research
and Development
The Company is committed to developing new and technologically
advanced products, services, and systems that provide superior
performance and value to customers. To support this commitment,
the Company focuses on developing opportunities across its
global markets and operating a number of product and
process-development centers of excellence around the world.
These centers work cooperatively to define and improve the
Companys product design and production processes. By
leveraging this network, the Company is able to transfer
technological, product and process knowledge among its various
operating facilities to adopt best practices for use throughout
the Company. During fiscal 2010, the Company added approximately
fifty technical employees to its research and development
(R&D) organization, primarily in Milton,
Georgia and Büdingen, Germany. These additional resources
will enable the R&D function to focus on longer-term
development opportunities as well as ongoing business support.
In addition to in-house efforts, the Company continues to pursue
the formation of alliances and collaborative partnerships to
develop energy-management systems for automotive electrical and
electronic architectures for the global OEM market. The Company
is also pursuing development initiatives targeted at the
industrial, military, and the renewable energy markets. In the
first quarter of fiscal 2010, the Company signed a technology
development agreement with NanoTerra, a nano-technology company
in Cambridge, Massachusetts that specializes in surface
chemistry and surface engineering. Also in the first quarter of
fiscal 2010, the Company signed a memorandum of understanding
with Axion Power, an advanced lead-acid development company in
Newcastle, Pennsylvania. In the second quarter of fiscal 2010,
the Company signed a three-way Cooperative Research &
Development Agreement (CRADA) with Savannah River
National Laboratory and the University of Idaho to study the
benefits of hollow glass microspheres in lead-acid batteries.
In August 2009, the Company was awarded a $34.3 million
grant by the United States Department of Energy
(DOE) under the American Recovery and Reinvestment
Act to increase manufacturing capacity of AGM batteries with and
without advanced carbon technology. These AGM batteries are
designed for Start & Stop, Micro-Hybrid and no-idle
vehicle applications and enable improved fuel efficiency and
reduced
CO2
emissions. Our total investment including the DOE grant will be
approximately $70.0 million for expansion of our Columbus,
Georgia and Bristol, Tennessee facilities. Additionally, we
received tax incentives from the State of Georgia of
approximately $9.3 million and approximately
$6.0 million from the State of Tennessee. As a result of
these grants, we expect to create as many as 320 jobs and expand
battery production capacity by about 1.5 million batteries
per year. These investments are expected to be completed within
two to three years.
Patents,
Trademarks and Licenses
The Company owns or has a license to use various trademarks that
are valuable to its business. The Company believes these
trademarks and licenses enhance the brand recognition of the
Companys products. The Company currently owns
approximately 281 trademarks, and maintains licenses from others
to use approximately 19 trademarks worldwide. For example, the
Company licenses the NASCAR mark from NASCAR, and the
Exide mark in the United Kingdom and Ireland from
Chloride Group Plc. The Companys license with NASCAR
expires on December 31, 2011. The Company also acts as
licensor under certain trademark licensing agreements.
The Company has generated a number of patents in the operation
of its business and currently owns all or a partial interest in
greater than 209 patents and applications for patents pending
worldwide. Although the
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Company believes its patents and patent applications
collectively are important to the Companys business, and
that technological innovation is important to the Companys
market competitiveness, currently no operating segment is
substantially dependent on any single patent or group of patents.
In March 2003, the Company brought legal proceedings in the
U.S. Bankruptcy Court for the District of Delaware to
reject certain agreements relating to EnerSys, Inc.s right
to use the Exide trademark on certain industrial
battery products in the United States and 80 foreign countries.
In April 2006, the Bankruptcy Court granted the Companys
request to reject those agreements. EnerSys, Inc. has appealed
this decision. For further information regarding this matter,
see Note 11 to the Consolidated Financial Statements.
Manufacturing,
Raw Materials and Suppliers
Lead is the primary material used in the manufacture of the
Companys lead-acid batteries, representing approximately
45.0% of the cost of goods produced. The Company obtains
substantially all of its North American lead requirements
through the operation of five secondary lead recycling plants
which reclaim lead by recycling spent lead-acid batteries. In
North America, the Company obtains spent batteries for recycling
primarily from the Companys customers, through
Company-owned branch networks, and from outside spent battery
collectors. In Europe and ROW, the Company obtains a small
portion of its lead requirements through the operation of four
lead recycling plants. The majority of the Companys lead
requirements in Europe and ROW, however, are obtained from
third-party suppliers.
The Company uses both polyethylene and AGM battery separators.
There are a number of suppliers from whom the Company purchases
AGM battery separators. Polyethylene battery separators are
purchased primarily from one supplier pursuant to a supply
agreement expiring in 2012. There is no second source that could
readily provide the volume of certain polyethylene separators
used by the Company. As a result, any major disruption in supply
from the Companys primary supplier of polyethylene
separators would have a material adverse impact on the Company.
Other key raw materials and components in the production of
batteries include lead oxide, acid, steel, plastics and
chemicals, all of which are generally available from multiple
sources. The Company has not experienced any material stoppage
or disruption in production as a result of non-availability or
delays in the availability of raw materials.
Competition
Transportation
Segments
The Americas and European transportation markets are highly
competitive. The manufacturers in these markets compete on
price, quality, technical innovation, service, and warranty.
Well-recognized brand names are also important for aftermarket
customers who do not purchase private label batteries. Most
sales are made without long-term contracts.
In the Americas transportation aftermarket, the Company believes
it has the third largest market position. Other principal
competitors in this market are Johnson Controls, Inc. and East
Penn Manufacturing. Competition is strongest in the auto parts
retail and mass merchandiser channels where large customers use
their buying power to negotiate lower prices. The largest
competitor in the Americas transportation OEM market is Johnson
Controls, Inc. Due to technical and production qualification
requirements, OEMs change battery suppliers less frequently than
aftermarket customers, but because of their purchasing size,
they can influence market participants to compete on price and
other terms. The Company also believes that it has the overall
second largest market position in Europe in transportation
batteries for the light vehicles and commercial vehicles product
categories. The Companys largest competitor in the
European transportation markets is Johnson Controls, Inc.
Industrial
Energy Segments
The Company believes that it is one of the significant
participants in the global motive power battery market.
Competitors in the Americas include EnerSys Inc., East Penn
Manufacturing, and Crown Battery, Inc.
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Competitors in Europe include EnerSys, Inc., Hoppecke, and
MIDAC. In Asia, GS/Yuasa, Shinkobe, and EnerSys, Inc. are the
primary competitors.
The Company is also one of the significant participants in the
global network power battery market. Competitors in the Americas
include C&D Technologies, EnerSys, Inc., and East Penn
Manufacturing. The major competitor in Europe is EnerSys, Inc.
In Asia, GS/Yuasa, Shinkobe, and EnerSys, Inc. are the primary
competitors.
Seasonal
Factors
The Company sells a disproportionate share of its transportation
aftermarket batteries during the fall and early winter (the
Companys third and a portion of its fourth fiscal
quarters). Retailers and distributors buy automotive batteries
during these periods so they will have sufficient inventory for
cold weather periods. Unusually cold winters or hot summers may
accelerate battery failure and increase demand for
transportation replacement batteries. Mild winters and cool
summers, however, may have the opposite effect.
Environmental,
Health and Safety Matters
As a result of its manufacturing, distribution, and recycling
operations, the Company is subject to numerous federal, state,
and local environmental, occupational safety, and health laws
and regulations, as well as similar laws and regulations in
other countries in which the Company operates (collectively,
EH&S laws). For a discussion of the legal
proceedings relating to environmental, health, and safety
matters, see Note 11 to the Consolidated Financial
Statements.
Employees
The Company employed approximately 10,349 persons at
March 31, 2010, compared to approximately
12,081 persons at March 31, 2009.
Americas
As of March 31, 2010, the Company employed approximately
1,277 salaried employees and 2,772 hourly employees in the
Americas, primarily in the U.S. Approximately 44% of these
salaried employees are engaged in sales, service, marketing, and
administration and 56% in manufacturing and engineering.
Approximately 17% of the Companys hourly employees in the
Americas are represented by unions. Relations with the unions
are generally good. Union contracts covering approximately 264
of the Companys domestic employees expire in fiscal 2011,
and the remainder thereafter.
Europe
and ROW
As of March 31, 2010, the Company employed approximately
2,400 salaried employees and 3,900 hourly employees outside
of the Americas, primarily in Europe. Approximately 27% of these
salaried employees are engaged in sales, service, marketing, and
administration and 73% in manufacturing and engineering.
Generally, the Companys hourly employees and some of its
salaried employees in Europe and ROW are represented by unions.
The Company meets regularly with the European Works Councils.
Relations with the unions are generally good. Contracts covering
most of the Companys union employees expire on various
dates through fiscal 2011.
Executive
Officers
Gordon A. Ulsh (64) Chief Executive Officer and
member of the Board of Directors. Since November 2009,
Mr. Ulsh has served solely as Chief Executive Officer of
the Company and is scheduled to retire from this position on
June 30, 2010. From April 2005 until November 2009,
Mr. Ulsh served as President and Chief Executive Officer.
Mr. Ulsh was appointed to his current position in April
2005. From 2001 until March 2005, Mr. Ulsh was Chairman,
President and Chief Executive Officer of Texas-based FleetPride
Inc., the nations largest independent aftermarket
distributor of heavy-duty truck parts. Prior to joining
FleetPride in 2001,
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Mr. Ulsh worked with Ripplewood Equity Partners, providing
analysis of automotive industry segments for investment
opportunities. Earlier, he served as President and Chief
Operating Officer of Federal-Mogul Corporation in 1999 and as
head of its Worldwide Aftermarket Division in 1998. Prior to
Federal-Mogul, he held a number of leadership positions with
Cooper Industries, including Executive Vice President of its
automotive products segment. Mr. Ulsh joined Coopers
Wagner Lighting business unit in 1984 as Vice President of
Operations, following 16 years in manufacturing and
engineering management at Ford Motor Company. Mr. Ulsh is a
director of OM Group, Inc. and Cellu Tissue Holdings, Inc.
Edward J. OLeary (54) President and Chief
Operating Officer. Mr. OLeary joined the Company in
June 2005 as President, Transportation Americas, and was
named Executive Vice President and Chief Operating Officer in
August 2007. In November 2009, Mr. OLeary was named
President and Chief Operating Officer and has announced his
resignation from his positions effective June 16, 2010.
Prior to joining the Company, Mr. OLeary served as
President, the Americas at Oetiker Inc. From 2002 to 2004,
Mr. OLeary served in a consulting capacity with Jag
Management Consultants. Mr. OLeary served as Chief
Executive Officer of iStarSystems from 2000 to 2002, and served
as Vice President Sales and Distribution, the Americas at
Federal-Mogul Corp. from 1998 to 1999. Prior to that,
Mr. OLeary served as Executive Vice President of
Cooper Automotive, a division of Cooper Industries, from 1995 to
1998, after spending 17 years at Tenneco Automotive.
Mitchell S. Bregman (56) President, Industrial
Energy Americas. Mr. Bregman joined Exide in September 2000
in connection with the Companys acquisition of GNB
Technologies, Inc. (GNB). He has served in his
current role since March 2003 and prior to that was President,
Global Network Power. Mr. Bregman joined GNB in 1979. He
served for 12 years as a Vice President with various
responsibilities with GNB Industrial Power and nine years with
GNBs Transportation Division.
Bruce A. Cole (47) President, Transportation
Americas. Mr. Cole joined the Company in September 2000 in
connection with the Companys acquisition of GNB. He has
served in his current role since August 2007 and prior to that
was Vice President and General Manager, North American
Recycling. Mr. Cole joined GNB in 1989. He has served in a
variety of roles at the Company including VP,
Manufacturing & Engineering for Industrial Energy
Americas and VP, Global Marketing, Industrial Energy.
Phillip A. Damaska (55) Executive Vice President and
Chief Financial Officer. Mr. Damaska joined the Company in
January 2005 as Vice President, Finance, was appointed Vice
President and Corporate Controller in September 2005, was named
Senior Vice President and Corporate Controller in March 2006,
and was named Executive Vice President and Chief Financial
Officer effective April 1, 2008. Prior to joining the
Company, Mr. Damaska served in numerous capacities with
Freudenberg-NOK from 1996 through 2004, most recently as
President of Corteco, an automotive and industrial seal supplier
that is part of the partnerships global group of companies.
Barbara A. Hatcher (55) has been Executive
Vice President and General Counsel since May 2006, after having
served as Deputy General Counsel from April 2004 through April
2006. Ms. Hatcher joined the Company in 2000 through its
acquisition of GNB, where she served as Vice
President & General Counsel.
George S. Jones, Jr. (57) Executive
Vice President, Human Resources and Communications.
Mr. Jones joined the Company in July 2005. From 1974 to
2004, Mr. Jones served in several executive positions at
Cooper Industries, most recently as Vice President, Operations
at the Lighting Division from 1997 to 2004.
Louis E. Martinez (44) Vice President, Corporate
Controller, and Chief Accounting Officer. Mr. Martinez was
appointed to this position in March 2008. Previously,
Mr. Martinez served as the Companys Assistant
Corporate Controller since joining the Company in May 2005.
Mr. Martinez served as Corporate Controller for Airgate
PCS, Inc., from March 2003 through May 2005. Mr. Martinez
has also served as Corporate Controller for Cotelligent, Inc.,
from March 2000 through February 2003 and as Director of
Finance & Controller for Aegis Communications Group
from 1996 through February 2000.
Michael Ostermann (44) President, Exide
Europe. Mr. Ostermann joined Exide in January
2009 as President, Transportation Europe and was named
President, Exide Europe in March 2010. Prior to joining the
Company, Mr. Ostermann served in a variety of automotive
industry and operational roles including his most recent
position as Management Board Member and Managing Director for
Frauenthal Holding AG, a European
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manufacturer of industrial ceramic products. Mr. Ostermann
was responsible for establishing that companys Automotive
Division.
Backlog
The Companys order backlog at March 31, 2010 was
approximately $35.4 million for Industrial Energy Americas
and approximately $83.8 million for Industrial Energy
Europe and ROW. The Company expects to fill those backlogs
during fiscal 2011. The Transportation backlog at March 31,
2010 was not significant.
Available
Information
The Company maintains a website on the internet at
www.exide.com. The Company makes available free of charge
through its website, by way of a hyperlink to a third-party
Securities Exchange Commission (SEC) filing website
(www.sec.gov), its annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K
and amendments to those reports electronically filed or
furnished pursuant to Section 13(a) or 15(d) of the
Exchange Act of 1934. The information on the Companys
website is not, and shall not be deemed to be, a part of this
annual report on
form 10-K
or incorporated into any other filings the Company makes with
the SEC. The SEC website (www.sec.gov) contains reports,
proxy and other statements, and other information regarding
issuers, including the Company, that file electronically with
the SEC. All of this information is available as soon as
reasonably practicable after it is filed with the SEC. In
addition, the public may read and copy any materials the Company
files with the SEC at the SECs Public Reference Room at
100 F Street, N.E., Washington D.C., 20549.
Information on the operation of the Public Reference Room may be
obtained by calling the SEC at
1-800-SEC-0330.
The Companys Code of Ethics and Business Conduct may be
accessed within the Investor Relations section of its website.
Amendments and waivers of the Code of Ethics and Business
Conduct will also be disclosed within four business days of
issuance on the website. Information found in the Companys
website is neither part of this annual report on
Form 10-K
nor any other report filed with the SEC.
The
Company has experienced significant fluctuations in raw material
prices, particularly lead, and further changes in the prices of
raw materials or in energy costs could have a material adverse
effect on the Companys business, financial condition, cash
flows or results of operations.
Lead is the primary material used in the manufacture of
batteries, representing approximately 45.0% of the
Companys cost of goods sold. Average lead prices quoted on
the London Metal Exchange (LME) have fluctuated
dramatically, from $1,654 per metric ton for fiscal 2009 to
$1,984 per metric ton for fiscal 2010. As of May 27, 2010,
lead prices quoted on the LME were $1,777 per metric ton. If the
Company is unable to maintain or increase the prices of its
products proportionate to the increase in raw material costs,
the Companys gross margins will decline. The Company
cannot provide assurance that it will be able to hedge its lead
requirements at reasonable costs or that the Company will be
able to pass on these costs onto its customers. Fluctuations in
the Companys prices could also cause customer demand for
the Companys products to be reduced and net sales to
decline which could be a material adverse affect on our
business, financial condition, cash flows, or results of
operations. Rising lead costs require the Company to make
significant investments in inventory and accounts receivable,
which reduces amounts of cash available for other purposes.
The Company also consumes significant amounts of polypropylene,
steel and other materials in its manufacturing process and
incurs energy costs in connection with manufacturing and
shipping of its products. The market prices of these materials
are also subject to fluctuation, which could further impact the
Companys available cash.
10
The
Companys restructuring activities, designed to address the
worsening global economy and excess capacity caused by reduced
demand, may not realize the efficiencies anticipated and could
result in additional unanticipated costs, which could have a
material adverse effect on the Companys business,
financial condition, cash flows or results of
operations.
The Company is continuing to undertake restructuring activities
to address excess capacity created, in part, by worsening
economic conditions and reduction in demand for some of the
Companys products. The restructuring plans may involve
higher costs or a longer timetable than the Company currently
anticipates, mainly due to the timing and execution of some
plans and programs subject to local labor law requirements, and
consultation with appropriate work councils. The Company also
expects the restructuring plans to result in substantial costs
related to severance and other employee-related costs, and these
costs may not result in improvements in future financial
performance. The restructuring plans may also subject the
Company to litigation risks and expenses. If the Company is
unable to realize the benefits of these restructuring activities
or appropriately structure the business to meet market
conditions, the restructuring activities could have a material
adverse effect on the Companys business, financial
condition, cash flows or results of operations. See Note 12
to the Consolidated Financial Statements.
The
Company remains subject to a preliminary SEC
inquiry.
The Enforcement Division of the SEC is conducting a preliminary
inquiry into statements the Company made during fiscal 2005
about its ability to comply with fiscal 2005 loan covenants and
the going concern qualification in the audit report in the
Companys annual report on
Form 10-K
for fiscal 2005, which the Company filed with the SEC in June
2005. This preliminary inquiry remains in process, and should it
result in a formal investigation, it could have a material
adverse effect on the Companys business, financial
condition, cash flows or results of operations.
The
Company is subject to fluctuations in exchange rates and other
risks associated with its
non-U.S.
operations which could adversely affect the Companys
business, financial condition, cash flows or results of
operations.
The Company has significant manufacturing operations in, and
exports to, several countries outside the
U.S. Approximately 56.8% of the Companys net sales
for fiscal 2010 were generated in Europe and ROW with the
significant majority generated in Euros. Because such a
significant portion of the Companys operations are based
overseas, the Company is exposed to foreign currency risk,
resulting in uncertainty as to future asset and liability
values, and results of operations that are denominated in
foreign currencies. The Company invoices foreign sales and
service transactions in local currencies, using actual exchange
rates during the period, and translates these revenues and
expenses into U.S. Dollars at average monthly exchange
rates. Because a significant portion of the Companys net
sales and expenses are denominated in foreign currencies, the
depreciation of these foreign currencies in relation to the
U.S. Dollar could adversely affect the Companys
reported net sales and operating margins. The Company translates
its
non-U.S. assets
and liabilities into U.S. Dollars using current rates as of
the balance sheet date. Therefore, foreign currency depreciation
against the U.S. Dollar would result in a decrease in the
Companys net investment in foreign subsidiaries.
In addition, foreign currency depreciation, particularly
depreciation of the Euro, would make it more expensive for the
Companys
non-U.S. subsidiaries
to purchase certain raw material commodities that are priced
globally in U.S. Dollars such as lead, which is quoted on
the LME in U.S. Dollars. The Company does not engage in
significant hedging of its foreign currency exposure and cannot
assure that it will be able to hedge its foreign currency
exposures at a reasonable cost.
There are other risks inherent in the Companys
non-U.S. operations,
including:
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Changes in local economic conditions, including disruption of
markets;
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Changes in laws and regulations, including changes in import,
export, labor and environmental laws;
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Exposure to possible expropriation or other government
actions; and
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Unsettled political conditions and possible terrorist attacks
against American interests.
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These and other risks may have a material adverse effect on the
Companys
non-U.S. operations
or on its business, financial condition, cash flows or results
of operations.
The
Companys liquidity is affected by the seasonality of its
business. Warm winters and cool summers adversely affect the
Company.
The Company sells a disproportionate share of its automotive
aftermarket batteries during the fall and early winter.
Resellers buy automotive batteries during these periods so that
they will have sufficient inventory for cold weather periods.
This seasonality increases the Companys working capital
requirements and makes it more sensitive to fluctuations in the
availability of liquidity. Unusually cold winters or hot summers
may accelerate battery failure and increase demand for
automotive replacement batteries. Mild winters and cool summers
may have the opposite effect. As a result, if the Companys
sales are reduced by an unusually warm winter or cool summer, it
may not be possible for the Company to recover these sales in
later periods. Further, if the Companys sales are
adversely affected by the weather, it cannot make offsetting
cost reductions to protect the Companys liquidity and
gross margins in the short-term because a large portion of the
Companys manufacturing and distribution costs are fixed,
which could be a material adverse affect on our business,
financial condition, cash flows, or results of operations.
Decreased
demand in the industries in which the Company operates may
adversely affect its business, financial condition, cash flows
or results of operations.
The Companys financial performance depends, in part, on
conditions in the automotive, material handling, and
telecommunications industries which, in turn, are generally
dependent on the U.S. and global economies. As a result,
economic and other factors adversely affecting production by
OEMs and their customers spending could adversely impact
the Companys business. Relatively modest declines in
customer purchases from the Company could have a significant
adverse impact on its profitability because the Company has
substantial fixed production costs. If the Companys OEM
and large aftermarket customers reduce their inventory levels,
or reduce their orders, the Companys performance would be
significantly adversely impacted. In this economic environment,
the Company cannot predict future production rates or inventory
levels or the underlying economic factors. Continued uncertainty
and unexpected fluctuations may adversely affect the
Companys business, financial conditions, cash flows, or
results of operations.
The remaining portion of the Companys battery sales are of
aftermarket batteries. The factors influencing demand for
automotive replacement batteries include: (1) the number of
vehicles in use; (2) average battery life; (3) the
average age of vehicles and their operating environment;
(4) weather conditions; (5) population growth; and
(6) overall economic conditions. Any significant adverse
change in any one of these factors may adversely affect the
Companys business, financial condition, cash flows or
results of operations.
The
loss of the Companys primary supplier of polyethylene
battery separators would have a material adverse effect on the
Companys business, financial condition, cash flows or
results of operations.
The Company relies on a single supplier to fulfill certain of
its needs for polyethylene battery separators a
critical component of many of the Companys products. There
is no second source that could readily provide the volume of
certain of its polyethylene separators used by the Company. As a
result, any major disruption in supply from this supplier would
have a material adverse impact on the Companys business,
financial condition, cash flows or results of operations.
Many
of the industries in which the Company operates are
cyclical.
The Companys operating results are affected by the general
cyclical pattern of the industries in which its major customer
groups operate. Any significant decline in demand for
replacement batteries for automobiles, light trucks, or sport
utility vehicles could have a material adverse impact on the
Companys business,
12
financial condition, cash flows or results of operations of the
Companys Transportation segments. To a lesser extent, a
prolonged decline in the demand for new automobiles, light
trucks or sport utility vehicles could also have an adverse
impact on these segments. A weak capital expenditure environment
in the telecommunications, uninterruptible power systems or
electric industrial forklift truck markets could have a material
adverse effect on the business, financial condition, cash flows
or results of operations of the Companys Industrial Energy
segments.
The
Company is subject to pricing pressure from its larger
customers.
The Company faces significant pricing pressures in all of its
business segments from its larger customers. Because of their
purchasing volume, the Companys larger customers can
influence market participants to compete on price and other
terms. Such customers also use their buying power to negotiate
lower prices. If the Company is not able to offset pricing
reductions resulting from these pressures by improved operating
efficiencies and reduced expenditures, those price reductions
may have an adverse impact on the Companys business,
financial condition, cash flows or results of operations.
The
Company faces increasing competition and pricing pressure from
other companies in its industries, and if the Company is unable
to compete effectively with these competitors, the
Companys sales and profitability could be adversely
affected.
The Company competes with a number of major domestic and
international manufacturers and distributors of lead-acid
batteries, as well as a large number of smaller, regional
competitors. Due to excess capacity in some sectors of its
industry and consolidation among industrial purchasers, the
Company has been subjected to continued and significant pricing
pressures. The North American, European and Asian lead-acid
battery markets are highly competitive. The manufacturers in
these markets compete on price, quality, technical innovation,
service, and warranty. In addition, the Company is experiencing
heightened competitive pricing pressure as Asian producers,
which are able to employ labor at significantly lower costs than
producers in the U.S. and Western Europe, expand their
export capacity and increase their marketing presence in the
Companys major markets. If the Company is unable to
compete effectively with these competitors, its sales and
profitability could be adversely affected, which could be a
material adverse affect on our business, financial condition,
cash flows, or results of operations.
If the
Company is not able to develop new products or improve upon its
existing products on a timely basis, the Companys
business, financial condition, cash flows or results of
operations could be adversely affected.
The Company believes that its future success depends, in part,
on the ability to develop, on a timely basis, new
technologically advanced products or improve on the
Companys existing products in innovative ways that meet or
exceed its competitors product offerings. Maintaining the
Companys market position will require continued investment
in research and development and sales and marketing. Industry
standards, customer expectations, or other products may emerge
that could render one or more of the Companys products
less desirable or obsolete. The Company may be unsuccessful in
making the technological advances necessary to develop new
products or improve its existing products to maintain its market
position. If any of these events occur, they could cause
decreases in sales and have an adverse effect on the
Companys business, financial condition, cash flows or
results of operations.
The
Company may be adversely affected by the instability and
uncertainty in the world financial markets and the global
economy, and uncertainty around potential terrorist activities
against global companies.
Unfavorable changes in global economic conditions, including
tightening credit markets, inflation or recession may result in
consumers, businesses and governments deferring or lowering
purchases of the Companys products in the future. In
addition, terrorist activities may cause unpredictable or
unfavorable economic conditions and could have a material
adverse impact on the Companys business, financial
condition, cash flows or results of operations. These economic
conditions also may impact the ability of the Companys
customers to purchase the Companys products and services.
As a result, reserves for doubtful accounts and
13
write-offs of accounts receivable may increase. In addition, the
Companys ability to meet customers demands depends,
in part, on the Companys ability to obtain timely and
adequate delivery of quality materials, parts and components
from its suppliers. If certain key suppliers were to become
capacity constrained or insolvent as a result of the global
economic conditions, it could result in a reduction or
interruption in supplies or a significant increase in the price
of supplies. If such economic conditions persist, they could
have a material adverse effect on the Companys business,
financial condition, cash flows or results of operations.
The
Company may be unable to successfully implement its business
strategy, which could adversely affect its business, financial
condition, cash flows or results of operations.
The Companys ability to achieve its business and financial
objectives is subject to a variety of factors, many of which are
beyond the Companys control. For example, the Company may
not be successful in increasing its manufacturing and
distribution efficiency through productivity, process
improvements and cost reduction initiatives. Further, the
Company may not be able to realize the benefits of these
improvements and initiatives within the time frames the Company
currently expects. In addition, the Company may not be
successful in increasing the Companys percentage of
captive arrangements and spent-battery collections or in
otherwise hedging its lead requirements, leaving it exposed to
fluctuations in the price of lead. Any failure to successfully
implement the Companys business strategy could adversely
affect the Companys business, financial condition, cash
flows or results of operations, and could further impair the
Companys ability to make certain strategic capital
expenditures and meet its restructuring objectives.
The
Companys senior management team is in
transition.
The Companys future success depends to a significant
extent upon the service of its senior executives and key
operational personnel. As previously announced, Mr. Gordon
A. Ulsh, the Companys Chief Executive Officer, intends to
retire upon expiration of his employment contract on
June 30, 2010. Additionally,
Mr. Edward J. OLeary, President and Chief
Operating Officer, resigned effective June 16, 2010.
Earlier this year, the Company retained an executive search firm
to assist in identifying qualified external and internal
candidates for the position of President and Chief Executive
Officer. However, the Company cannot provide assurance that it
will identify, recruit and appoint a new Chief Executive Officer
and President prior to Mr. Ulshs retirement.
Mr. Ulsh has agreed, if requested, to continue serving as
Chief Executive Officer for a period currently expected not to
extend beyond July 2010. Any disruption resulting from the
transition in senior management may adversely impact our
customer relationships, employee morale and our business.
If the Company is not able to appoint a new President and Chief
Executive Officer in a timely manner, retain our current
management team or effectively manage the transition in senior
management, the Companys business, financial condition,
cash flows or results of operations could be materially and
adversely affected.
The
Company is subject to costly regulation in relation to
environmental and occupational, health and safety matters, which
could adversely affect its business, financial condition, cash
flows or results of operations.
Throughout the world, the Company manufactures, distributes,
recycles, and otherwise uses large amounts of potentially
hazardous materials, especially lead and acid. As a result, the
Company is subject to a substantial number of costly
regulations. In particular, the Company is required to comply
with increasingly stringent requirements of federal, state, and
local environmental, occupational health and safety laws and
regulations in the U.S. and other countries, including
those governing emissions to air, discharges to water, noise and
odor emissions; the generation, handling, storage,
transportation, treatment, and disposal of waste materials; and
the cleanup of contaminated properties and human health and
safety. Compliance with these laws and regulations results in
ongoing costs. The Company could also incur substantial costs,
including cleanup costs, fines, and civil or criminal sanctions,
third-party property damage or personal injury claims, or costs
to upgrade or replace existing equipment, as a result of
violations of or liabilities under environmental laws or
non-compliance with environmental permits required at its
facilities. In addition, many of the
14
Companys current and former facilities are located on
properties with histories of industrial or commercial
operations. Because some environmental laws can impose liability
for the entire cost of cleanup upon any of the current or former
owners or operators, regardless of fault, the Company could
become liable for the cost of investigating or remediating
contamination at these properties if contamination requiring
such activities is discovered in the future. The Company may
become obligated to pay material remediation-related costs at
its closed Tampa, Florida facility in the amount of
approximately $12.5 million to $20.5 million, and at
the Columbus, Georgia facility in the amount of approximately
$6.0 million to $9.0 million.
The Company cannot be certain that it has been, or will at all
times be, in complete compliance with all environmental
requirements, or that the Company will not incur additional
material costs or liabilities in connection with these
requirements in excess of amounts it has reserved. Private
parties, including current or former employees, could bring
personal injury or other claims against the Company due to the
presence of, or exposure to, hazardous substances used, stored
or disposed of by it, or contained in its products, especially
lead. Environmental requirements are complex and have tended to
become more stringent over time. These requirements or their
enforcement may change in the future in a manner that could have
a material adverse effect on the Companys business,
financial condition, cash flows or results of operations. The
Company has made and will continue to make expenditures to
comply with environmental requirements. These requirements,
responsibilities and associated expenditures, if they continue
to increase, could have a material adverse effect on the
Companys business, financial condition, cash flows or
results of operations. While the Companys costs to defend
and settle claims arising under environmental laws in the past
have not been material, the Company cannot provide assurance
that this will remain so in the future.
On November 12, 2008, the Environmental Protection Agency
(EPA) published new lead emissions standards under
the National Ambient Air Quality Standards (NAAQS),
which became effective on January 12, 2009. The new
standards further restrict lead emissions by reducing the
off-site concentration standards for lead in air from 1.5
micrograms per cubic meter to 0.15 micrograms per cubic meter.
The Company believes that the new standards could impact a
number of its U.S. facilities. Under the Clean Air Act
(CAA), publication by the EPA of these ambient air
quality standards initiates a process by which the states
develop rules implementing the standards, and the likelihood and
timing of the implementation of these emission standards by the
states, as adopted, has not been determined. Although the final
impact on the Companys operations cannot be reasonably
determined at the current time, the Company believes that the
impact of these recently adopted lead emissions standards on its
U.S. facilities could have a material adverse effect on its
business, financial condition, cash flows or results of
operations.
The
EPA or state environmental agencies could take the position that
the Company has liability under environmental laws that were not
discharged in bankruptcy. To the extent these authorities are
successful in disputing the pre-petition nature of these claims,
the Company could be required to perform remedial work that has
not yet been performed for alleged pre-petition contamination,
which would have a material adverse effect on the Companys
business, financial condition, cash flows or results of
operations.
The EPA or state environmental agencies could take the position
that the Company has liability under environmental laws that
were not discharged in bankruptcy. To the extent these
authorities are successful in disputing the pre-petition nature
of these claims, the Company could be required to perform
remedial work that has not yet been performed for alleged
pre-petition contamination, which would have a material adverse
effect on the Companys financial condition, cash flows or
results of operations. The Company previously has been advised
by the EPA or state agencies that it is a Potentially
Responsible Party under the Comprehensive Environmental
Response, Compensation and Liability Act or similar state laws
at 102 federally defined Superfund or state equivalent sites. At
45 of these sites, the Company has paid its share of liability.
While the Company believes it is probable its liability for most
of the remaining sites will be treated as disputed unsecured
claims under the Plan of Reorganization (the Plan),
there can be no assurance these matters will be discharged. If
the Companys liability is not discharged at one or more
sites, the government may be able to file claims for additional
response costs in the future, or to order the Company to perform
remedial work at such sites. In addition, the EPA, in the course
of negotiating this pre-petition claim, had notified the Company
of the possibility of additional
clean-up
costs associated with Hamburg, Pennsylvania properties of
15
approximately $35.0 million. The EPA has provided summaries
of past costs and an estimate of future costs that approximate
the amounts in its notification; however, the Company disputes
certain elements of the claimed past costs, has not received
sufficient information supporting the estimated future costs,
and is in negotiations with the EPA. To the extent the EPA or
other environmental authorities dispute the pre-petition nature
of these claims, the Company would intend to resist any such
effort to evade the bankruptcy laws intended result, and
believes there are substantial legal defenses to be asserted in
that case. However, there can be no assurance that the Company
would be successful in challenging any such actions.
Regulation
and legislation adopted to address possible global climate
change could increase our costs of operation and adversely
affect the Companys business, financial condition, cash
flows or results of operations.
Recently, there has been an increasing focus on whether
emissions of certain gases, commonly referred to as
greenhouse gases including carbon dioxide, may be
contributing to certain atmospheric and other climatic changes.
Legislative and regulatory measures directed at limiting the
emissions of greenhouse gases and other possible causes of
climate change are in various phases of discussions or
implementation in a number of countries in which the Company
operates. Legislative, regulatory or other efforts in the United
States, and international treaties to combat climate change
could result in future increases in the cost of raw materials
and energy sources such as electricity, natural gas and fossil
fuels, all of which may result in higher manufacturing and
distribution costs for the Company. The Companys
facilities may also be subject to additional regulation under
future climate change policies. Compliance with environmental
laws or regulations regarding the reduction of greenhouse gases
could result in significant changes to our facilities and
operations and result in an increased cost of conducting
business. If the Company is unable to manage the financial risks
or otherwise recover costs related to complying with climate
change regulatory requirements, it could have a material adverse
effect on the Companys business, financial condition, cash
flows or results of operations.
The
Company may be adversely affected by legal proceedings to which
the Company is, or may become, a party.
The Company and its subsidiaries are currently, and may in the
future become, subject to legal proceedings which could
adversely affect its business, financial condition, cash flows
or results of operations. See Note 11 to the Consolidated
Financial Statements.
The
cost of resolving the Companys pre-petition disputed
claims, including legal and other professional fees involved in
settling or litigating these matters, could have a material
adverse effect on its business, financial condition, cash flows
or results of operations.
At March 31, 2010, there are approximately 145 pre-petition
disputed unsecured claims on file in the bankruptcy case that
remain to be resolved through the Plans claims
reconciliation and allowance procedures. The Company established
a reserve of common stock and warrants to purchase common stock
for issuance to holders of these disputed unsecured claims as
the claims are allowed by the Bankruptcy Court. Although these
claims are generally resolved through the issuance of common
stock and warrants from the reserve rather than cash payments,
the process of resolving these claims through settlement or
litigation requires considerable Company resources, including
expenditures for legal and professional fees and the attention
of Company personnel. These costs could have a material adverse
effect on the Companys business, financial condition, cash
flows or results of operations.
Work
stoppages or other labor issues at the Companys facilities
or its customers or suppliers facilities could
adversely affect the Companys business, financial
condition, cash flows or results of operations.
At March 31, 2010, approximately 17% of the Companys
hourly employees in the Americas and many of its
non-U.S. employees
were unionized. It is likely that a significant portion of the
Companys workforce will remain unionized for the
foreseeable future. It is also possible that the portion of the
Companys workforce that is unionized may increase in the
future. Contracts covering approximately 264 of the
Companys domestic employees expire in fiscal 2011, and the
remainder thereafter. In addition, contracts
16
covering most of the Companys union employees in Europe
and ROW expire on various dates through fiscal 2011. Although
the Company believes that its relations with employees are
generally good, if conflicts develop between the Company and its
employees unions in connection with the renegotiation of
these contracts or otherwise, work stoppages or other labor
disputes could result. A work stoppage at one or more of the
Companys plants, or a material increase in its costs due
to unionization activities, may have a material adverse effect
on the Companys business, financial condition, cash flows
or results of operations. Work stoppages at the facilities of
the Companys customers or suppliers may also negatively
affect the Companys business. If any of the Companys
customers experience a material work stoppage, the customer may
halt or limit the purchase of the Companys products. This
could require the Company to shut down or significantly reduce
production at facilities relating to those products. Moreover,
if any of the Companys suppliers experience a work
stoppage, the Companys operations could be adversely
affected if an alternative source of supply is not readily
available.
The
Companys substantial indebtedness could adversely affect
its business, financial condition, cash flows or results of
operations.
The Company has a significant amount of indebtedness. As of
March 31, 2010, the Company had total indebtedness,
including capital leases, of approximately $659.5 million.
The Companys level of indebtedness could have significant
consequences. For example, it could:
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Limit the Companys ability to borrow money to fund its
working capital, capital expenditures, acquisitions and debt
service requirements;
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Limit the Companys flexibility in planning for, or
reacting to, changes in its business and future business
opportunities;
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Make the Company more vulnerable to a downturn in its business
or in the economy;
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Place the Company at a disadvantage relative to some of its
competitors, who may be less highly leveraged; and
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Require a substantial portion of the Companys cash flow
from operations to be used for debt payments, thereby reducing
the availability of cash to fund working capital, capital
expenditures, acquisitions and other general corporate purposes.
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One or a combination of these factors could adversely affect the
Companys business, financial condition, cash flows or
results of operations. Subject to restrictions in the indenture
governing the Companys senior secured notes and
convertible notes and its senior secured credit facility (the
Credit Agreement), the Company may incur additional
indebtedness, which could increase the risks associated with its
already substantial indebtedness.
Restrictive
covenants limit the Companys ability to operate its
business and to pursue its business strategies, and its failure
to comply with these covenants could result in an acceleration
of its indebtedness.
The Credit Agreement and the indenture governing the senior
secured notes contain covenants that limit or restrict the
Companys ability to finance future operations or capital
needs, to respond to changing business and economic conditions
or to engage in other transactions or business activities that
may be important to its growth strategy or otherwise important
to the Company. The Credit Agreement and the indenture governing
the Companys senior secured notes limit or restrict, among
other things, the Companys ability and the ability of its
subsidiaries to:
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Incur additional indebtedness;
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Pay dividends or make distributions on the Companys
capital stock or certain other restricted payments or
investments;
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Purchase or redeem stock;
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Issue stock of the Companys subsidiaries;
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Make investments and extend credit;
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Engage in transactions with affiliates;
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Transfer and sell assets;
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Effect a consolidation or merger or sell, transfer, lease or
otherwise dispose of all or substantially all of the
Companys assets; and
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Create liens on the Companys assets to secure debt.
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In addition, the Credit Agreement requires the Company to repay
outstanding borrowings with portions of the proceeds the Company
receives from certain sales of property or assets and specified
future debt offerings. The Companys ability to comply with
these provisions may be affected by events beyond its control.
Any breach of the covenants in the Credit Agreement or the
indenture governing its senior secured notes could cause a
default under the Companys Credit Agreement and other debt
(including the notes), which would restrict the Companys
ability to borrow under its Credit Agreement, thereby
significantly impacting the Companys liquidity which could
be a material adverse affect on our business, financial
condition, cash flows or results of operations. If there were an
event of default under any of the Companys debt
instruments that was not cured or waived, the holders of the
defaulted debt could cause all amounts outstanding with respect
to the debt instrument to be due and payable immediately. The
Companys assets and cash flow may not be sufficient to
fully repay borrowings under its outstanding debt instruments if
accelerated upon an event of default. If, as or when required,
the Company is unable to repay, refinance or restructure its
indebtedness under, or amend the covenants contained in, its
senior secured credit facility, the lenders under that facility
could institute foreclosure proceedings against the assets
securing borrowings under the Credit Agreement.
Holders
of the Companys common stock are subject to the risk of
dilution of their investment as the result of the issuance of
additional shares of common stock and warrants to purchase
common stock to holders of pre-petition claims to the extent the
reserve of common stock and warrants established to satisfy such
claims is insufficient.
On April 15, 2002, (the Petition Date), Exide
Technologies, together with certain of its subsidiaries (the
Debtors), filed voluntary petitions for
reorganization under Chapter 11 of the federal bankruptcy
laws (Bankruptcy Code or
Chapter 11) in the Bankruptcy Court. The
Debtors, along with the Official Committee of Unsecured
Creditors, filed the Plan with the Bankruptcy Court on
February 27, 2004 and, on April 21, 2004, the
Bankruptcy Court confirmed the Plan.
Pursuant to the Plan, the Company has established a reserve of
common stock and warrants to purchase common stock for issuance
to holders of unsecured pre-petition disputed claims. To the
extent this reserve is insufficient to satisfy these disputed
claims, the Company would be required to issue additional shares
of common stock and warrants, which would result in dilution to
holders of its common stock.
Under the claims reconciliation and allowance process set forth
in the Plan, the Official Committee of Unsecured Creditors, in
consultation with the Company, established a reserve to provide
for a pro rata distribution of common stock and warrants to
holders of disputed claims as they become allowed. As claims are
evaluated and processed, the Company will object to some claims
or portions thereof, and upward adjustments (to the extent stock
and warrants not previously distributed remain) or downward
adjustments to the reserve will be made pending or following
adjudication of these objections. Predictions regarding the
allowance and classification of claims are inherently difficult
to make. With respect to environmental claims in particular,
there is inherent difficulty in assessing the Companys
potential liability due to the large number of other potentially
responsible parties. For example, a demand for the total cleanup
costs of a landfill used by many entities may be asserted by the
government using joint and several liability theories. Although
the Company believes that there is a reasonable basis in law to
believe that it will ultimately be responsible for only its
share of these remediation costs, there can be no assurance that
the Company will prevail on these claims. In addition, the scope
of remedial costs or other environmental injuries are highly
variable, and estimating these costs involves complex legal,
scientific and technical judgments. Many of the claimants who
18
have filed disputed claims, particularly environmental, and
personal injury claims produce little or no proof of fault on
which the Company can assess its potential liability and either
specify no determinate amount of damages or provide little or no
basis for the alleged damages. In some cases the Company is
still seeking additional information needed for claims
assessment, and information that is unknown to the Company at
the current time may significantly affect its assessment
regarding the adequacy of the reserve amounts in the future.
As general unsecured claims have been allowed in the Bankruptcy
Court, the Company has distributed approximately one share of
common stock of the Company per $383.00 in allowed claim amount
and approximately one warrant per $153.00 in allowed claim
amount. These rates were established based upon the assumption
that the new common stock and warrants allocated to holders of
general unsecured claims on the effective date, including the
reserve established for disputed claims, would be fully
distributed so that the recovery rates for all allowed unsecured
claims would comply with the Plan without the need for any
redistribution or supplemental issuance of securities. If the
amount of general unsecured claims that is eventually allowed
exceeds the amount of claims anticipated in the setting of the
reserve, additional new common stock and warrants will be issued
for the excess claim amounts at the same rates as used for the
other general unsecured claims. If this were to occur,
additional new common stock would also be issued to the holders
of pre-petition secured claims to maintain the ratio of their
distribution in common stock at nine times the amount of common
stock distributed for all unsecured claims.
The
Companys ability to recognize the benefits of deferred tax
assets is dependent on future cash flows and taxable
income.
The Company recognizes the expected future tax benefit from
deferred tax assets when realization of the tax benefit is
considered to be more likely than not. Otherwise, a valuation
allowance is applied against deferred tax assets. Assessing the
recoverability of deferred tax assets requires management to
make significant estimates related to expectations of future
taxable income. Estimates of future taxable income are based on
forecasted cash flows from operations and the application of
existing tax laws in each jurisdiction. To the extent that
future cash flows and taxable income differ significantly from
estimates, the ability of the Company to realize the deferred
tax assets could be impacted. Additionally, future changes in
tax laws could limit the Companys ability to obtain the
future tax benefits represented by its deferred tax assets. As
of March 31, 2010, the Companys current and long-term
deferred tax assets were $24.4 million and
$85.6 million, respectively.
Negative
tax consequences could materially and adversely affect the
Companys business, financial condition, cash flows or
results of operations.
Adverse changes in the underlying profitability and financial
outlook of the Companys operations in several
jurisdictions could lead to changes in the Companys
valuation allowances against deferred tax assets and other tax
reserves on the Companys statement of financial position
that could materially and adversely affect the Companys
business, financial condition, cash flows or results of
operations. Additionally, changes in tax laws in the
U.S. or in other countries where the Company has
significant operations could materially affect deferred tax
assets and liabilities on the Companys consolidated
statement of financial position and tax expense. The Company is
also subject to tax audits by governmental authorities in the
U.S. and in
non-U.S. jurisdictions.
The Company is currently subject to a tax audit in Spain for
fiscal years 2003 through 2006 that is related to its current
and certain former Spanish subsidiaries. Negative results from
one or more such tax audits could materially and adversely
affect the Companys business, financial condition, cash
flows, or results of operations.
The
Company is subject to regulation of its international operations
that could adversely affect its business, financial condition,
cash flows or results of operations.
Due to the Companys global operations, it is subject to
many laws governing international relations, including those
that prohibit improper payments to government officials and
restrict where it can do business, what information or products
it can supply to certain countries and what information it can
provide to a
19
non-U.S. government,
including but not limited to the Foreign Corrupt Practices Act
and the U.S. Export Administration Act. Violations of these
laws, which are complex and often times difficult to interpret
and apply, may result in severe criminal penalties or sanctions
that could have a material adverse effect on the Companys
business, financial condition, cash flows or results of
operations.
CAUTIONARY
STATEMENT FOR PURPOSES OF THE SAFE HARBOR
PROVISION OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Except for historical information, this report may be deemed to
contain forward-looking statements. The Company is
including this cautionary statement for the express purpose of
availing itself of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995.
Examples of forward-looking statements include, but are not
limited to (a) projections of revenues, cost of raw
materials, income or loss, earnings or loss per share, capital
expenditures, growth prospects, dividends, the effect of
currency translations, capital structure, and other financial
items, (b) statements of plans and objectives of the
Company or its management or Board of Directors, including the
introduction of new products, or estimates or predictions of
actions by customers, suppliers, competitors or regulating
authorities, (c) statements of future economic performance,
and (d) statements of assumptions, such as the prevailing
weather conditions in the Companys market areas,
underlying other statements and statements about the Company or
its business.
Factors that could cause actual results to differ materially
from these forward looking statements include, but are not
limited to, the following general factors such as: (i) the
fact that lead, a major constituent in most of the
Companys products, experiences significant fluctuations in
market price and is a hazardous material that may give rise to
costly environmental and safety claims, (ii) the
Companys ability to implement and fund business strategies
based on current liquidity, (iii) the Companys
ability to realize anticipated efficiencies and avoid additional
unanticipated costs related to its restructuring activities,
(iv) the cyclical nature of the industries in which the
Company operates and the impact of current adverse economic
conditions on those industries, (v) unseasonable weather
(warm winters and cool summers) which adversely affects demand
for automotive and some industrial batteries, (vi) the
Companys substantial debt and debt service requirements
which may restrict the Companys operational and financial
flexibility, as well as imposing significant interest and
financing costs, (vii) the litigation proceedings to which
the Company is subject, the results of which could have a
material adverse effect on the Company and its business,
(viii) the realization of the tax benefits of the
Companys net operating loss carry forwards, which is
dependent upon future taxable income, (ix) the negative
results of tax audits in the U.S. and Europe which could
require the payment of significant cash taxes,
(x) competitiveness of the battery markets in the Americas
and Europe, (xi) risks involved in foreign operations such
as disruption of markets, changes in import and export laws,
currency restrictions, currency exchange rate fluctuations and
possible terrorist attacks against U.S. interests,
(xii) the ability to acquire goods and services
and/or
fulfill later needs at budgeted costs, (xiii) general
economic conditions, (xiv) the Companys ability to
successfully pass along increased material costs to its
customers, and (xv) recently adopted U.S. lead
emissions standards and the implementation of such standards by
applicable states.
The Company cautions each reader to carefully consider those
factors hereinabove set forth and the acknowledgements contained
in the Risk Factors section of this Annual Report on
Form 10-K.
Such factors and statements have, in some instances, affected
and in the future could affect the ability of the Company to
achieve its projected results and may cause actual results to
differ materially from those expressed herein. We undertake no
obligation to update any forward-looking statements in this
Form 10-K.
|
|
Item 1B.
|
Unresolved
Staff Comments
|
None.
20
The chart below lists the locations of the Companys
principal facilities. All of the facilities are owned by the
Company unless otherwise indicated. Most of the Companys
significant U.S. properties and some of its European
properties secure its financing arrangements. For a description
of these financing arrangements, refer to
Item 7 Managements Discussion and
Analysis of Financial Condition and Results of Operations,
Liquidity and Capital Resources. The leases for leased
facilities generally expire at various dates through 2016.
|
|
|
|
|
Location
|
|
|
|
Use
|
|
Americas:
|
|
|
|
|
Milton, GA
|
|
(leased)
|
|
Executive Offices
|
Aurora, IL
|
|
(leased)
|
|
Executive Offices
|
Bristol, TN
|
|
|
|
Transportation Battery Manufacturing and Distribution Center
|
Cannon Hollow, MO
|
|
|
|
Secondary Lead Recycling
|
Columbus, GA
|
|
|
|
Industrial Battery Manufacturing and Distribution Center
|
Fort Smith, AR
|
|
(leased)
|
|
Industrial Battery Manufacturing and Distribution Center
|
Frisco, TX
|
|
|
|
Secondary Lead Recycling
|
Kansas City, KS
|
|
(portions leased)
|
|
Industrial Battery Manufacturing and Distribution Center
|
Lampeter, PA
|
|
|
|
Plastics Manufacturing
|
Manchester, IA
|
|
|
|
Transportation Battery Manufacturing and Distribution Center
|
Mississauga, Canada
|
|
(leased)
|
|
Distribution Center
|
Muncie, IN
|
|
|
|
Secondary Lead Recycling
|
Reading, PA
|
|
|
|
Secondary Lead Recycling and Polypropylene Reprocessing and
Formation Center
|
Salina, KS
|
|
|
|
Transportation Battery Manufacturing and Distribution Center
|
Vernon, CA
|
|
|
|
Secondary Lead Recycling
|
Europe and ROW:
|
|
|
|
|
Adelaide, Australia
|
|
|
|
Transportation Battery Manufacturing and Distribution Center
|
Sydney, Australia
|
|
|
|
Industrial Battery Manufacturing
|
Florival, Belgium
|
|
|
|
Distribution Center
|
Shanghai, China
|
|
(leased)
|
|
Executive Offices
|
Bolton, England
|
|
|
|
Industrial Battery Manufacturing
|
Trafford Park, England
|
|
(leased)
|
|
Charger Manufacturing
|
Gennevilliers, France
|
|
(leased)
|
|
Executive Offices
|
Lille, France
|
|
|
|
Industrial Battery Manufacturing
|
Peronne, France
|
|
|
|
Plastics Manufacturing
|
Bad Lauterberg, Germany
|
|
|
|
Industrial Battery Manufacturing and Warehouse
|
Budingen, Germany
|
|
|
|
Industrial Battery Manufacturing, Distribution Center and
Executive Offices
|
Vlaardingen, Holland
|
|
|
|
Distribution Center
|
Tamilnadu, India
|
|
(leased)
|
|
Industrial Battery Manufacturing and Distribution Center
|
Ahmadabad, India
|
|
(leased)
|
|
Transportation Battery Manufacturing
|
Avelino, Italy
|
|
|
|
Plastics Manufacturing
|
Canonica dAdda, Italy
|
|
|
|
Plastics Manufacturing
|
21
|
|
|
|
|
Location
|
|
|
|
Use
|
|
Romano Di Lombardia, Italy
|
|
|
|
Transportation Battery Manufacturing
|
Toluca, Mexico
|
|
(leased)
|
|
Distribution Center
|
Lower Hutt, New Zealand
|
|
|
|
Distribution Center
|
Petone, New Zealand
|
|
|
|
Secondary Lead Recycling
|
Poznan, Poland
|
|
(leased)
|
|
Transportation Battery Manufacturing
|
Castanheira do Riatejo, Portugal
|
|
|
|
Industrial Battery Manufacturing
|
Azambuja, Portugal
|
|
|
|
Secondary Lead Recycling and Plastics Manufacturing
|
Azuqueca de Henares, Spain
|
|
|
|
Transportation Battery Manufacturing
|
San Esteban de Gomez, Spain
|
|
|
|
Secondary Lead Recycling
|
La Cartuja, Spain
|
|
|
|
Industrial Battery Manufacturing
|
Manzanares, Spain
|
|
|
|
Transportation Battery Manufacturing
|
In addition, the Company also leases sales and distribution
outlets in North America, Europe and Asia.
The Company believes that its facilities are in good operating
condition, adequately maintained, and suitable to meet the
Companys present needs.
|
|
Item 3.
|
Legal
Proceedings
|
See Note 11 to the Consolidated Financial Statements, which
is hereby incorporated herein by reference.
|
|
Item 4.
|
(Removed
and Reserved)
|
|
|
Item 5.
|
Market
for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
|
Unregistered
Sales of Equity Securities and Use of Proceeds
None
Market
Data
The Companys common stock and warrants trade on The NASDAQ
Global Market under the symbol XIDE and
XIDEW, respectively. The high and low sales price of
the Companys common stock and warrants are set forth below.
|
|
|
|
|
|
|
|
|
|
|
High
|
|
Low
|
|
Common Stock
|
|
|
|
|
|
|
|
|
Fiscal 2010:
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
6.75
|
|
|
$
|
3.06
|
|
Second Quarter
|
|
$
|
8.75
|
|
|
$
|
3.31
|
|
Third Quarter
|
|
$
|
8.12
|
|
|
$
|
5.94
|
|
Fourth Quarter
|
|
$
|
8.72
|
|
|
$
|
5.17
|
|
Fiscal 2009:
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
18.80
|
|
|
$
|
13.12
|
|
Second Quarter
|
|
$
|
16.10
|
|
|
$
|
6.90
|
|
Third Quarter
|
|
$
|
6.60
|
|
|
$
|
3.01
|
|
Fourth Quarter
|
|
$
|
5.72
|
|
|
$
|
1.86
|
|
22
|
|
|
|
|
|
|
|
|
|
|
High
|
|
Low
|
|
Warrants
|
|
|
|
|
|
|
|
|
Fiscal 2010:
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.58
|
|
|
$
|
0.08
|
|
Second Quarter
|
|
$
|
0.30
|
|
|
$
|
0.17
|
|
Third Quarter
|
|
$
|
0.22
|
|
|
$
|
0.05
|
|
Fourth Quarter
|
|
$
|
0.17
|
|
|
$
|
0.04
|
|
Fiscal 2009:
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
2.90
|
|
|
$
|
1.13
|
|
Second Quarter
|
|
$
|
2.49
|
|
|
$
|
1.25
|
|
Third Quarter
|
|
$
|
1.30
|
|
|
$
|
0.11
|
|
Fourth Quarter
|
|
$
|
0.35
|
|
|
$
|
0.09
|
|
The Company did not declare or pay dividends on its common stock
during fiscal years 2010 and 2009. Covenants in the Credit
Agreement restrict the Companys ability to pay cash
dividends on capital stock and the Company presently does not
intend to pay dividends on its common stock.
As of May 27, 2010, the Company had 75,596,285 shares
of its common stock and 5,034,815 of its warrants outstanding,
with approximately 4,413 and 5,965 holders of record,
respectively.
Equity
Compensation Plan Information
As of March 31, 2010, the Company maintained stock option
and incentive plans under which employees and non-employee
directors could be granted options to purchase shares of the
Companys common stock or awarded shares of common stock.
The following table contains information relating to such plans
as of March 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
to be Issued Upon
|
|
|
Weighted-Average
|
|
|
Number of Securities
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Remaining Available for
|
|
|
|
Outstanding Options
|
|
|
Outstanding Options
|
|
|
Future Issuance under
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Equity Compensation Plans
|
|
|
Equity compensation plans approved by security holders
|
|
|
3,925,539
|
|
|
$
|
7.68
|
|
|
|
3,157,534
|
|
Equity compensation plans not approved by security holders
|
|
|
80,000
|
|
|
$
|
13.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,005,539
|
|
|
$
|
7.79
|
|
|
|
3,157,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
|
|
Item 6.
|
Selected
Financial Data
|
The following table sets forth selected financial data for the
Company. The reader should read this information in conjunction
with the Companys Consolidated Financial Statements and
Notes thereto and Managements Discussion and
Analysis of Financial Condition and Results of Operations
that appear elsewhere in this report.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
|
(In thousands except per share data)
|
|
Statement of Operations Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
2,685,808
|
|
|
$
|
3,322,332
|
|
|
$
|
3,696,671
|
|
|
$
|
2,939,785
|
|
|
$
|
2,819,876
|
|
Gross profit
|
|
|
538,096
|
|
|
|
613,668
|
|
|
|
593,190
|
|
|
|
472,776
|
|
|
|
406,831
|
|
Selling, marketing and advertising expenses
|
|
|
258,212
|
|
|
|
297,032
|
|
|
|
289,975
|
|
|
|
270,413
|
|
|
|
271,059
|
|
General and administrative expenses
|
|
|
182,549
|
|
|
|
173,990
|
|
|
|
176,607
|
|
|
|
173,128
|
|
|
|
190,993
|
|
Restructuring
|
|
|
70,594
|
|
|
|
63,271
|
|
|
|
10,507
|
|
|
|
24,483
|
|
|
|
21,714
|
|
Other (income) expense net
|
|
|
(1,566
|
)
|
|
|
41,264
|
|
|
|
(39,069
|
)
|
|
|
9,636
|
|
|
|
3,684
|
|
Interest expense, net
|
|
|
59,933
|
|
|
|
72,240
|
|
|
|
85,517
|
|
|
|
90,020
|
|
|
|
69,464
|
|
Loss on early extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
21,342
|
|
|
|
|
|
|
|
|
|
(Loss) Income before reorganization items and income taxes
|
|
|
(31,626
|
)
|
|
|
(34,129
|
)
|
|
|
48,311
|
|
|
|
(94,904
|
)
|
|
|
(150,083
|
)
|
Reorganization items, net
|
|
|
1,674
|
|
|
|
2,179
|
|
|
|
3,822
|
|
|
|
4,310
|
|
|
|
6,158
|
|
Net income attributable to noncontrolling interest
|
|
|
477
|
|
|
|
1,041
|
|
|
|
1,544
|
|
|
|
882
|
|
|
|
529
|
|
Income tax (benefit) provision
|
|
|
(21,963
|
)
|
|
|
32,173
|
|
|
|
10,886
|
|
|
|
5,783
|
|
|
|
15,962
|
|
Net (loss) income attributable to Exide Technologies
|
|
$
|
(11,814
|
)
|
|
$
|
(69,522
|
)
|
|
$
|
32,059
|
|
|
$
|
(105,879
|
)
|
|
$
|
(172,732
|
)
|
Basic (loss) earnings per share
|
|
$
|
(0.16
|
)
|
|
$
|
(0.92
|
)
|
|
$
|
0.47
|
|
|
$
|
(2.37
|
)
|
|
$
|
(6.72
|
)
|
Diluted (loss) earnings per share
|
|
$
|
(0.16
|
)
|
|
$
|
(0.92
|
)
|
|
$
|
0.46
|
|
|
$
|
(2.37
|
)
|
|
$
|
(6.72
|
)
|
Balance Sheet Data (at period end)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital(1)
|
|
$
|
428,996
|
|
|
$
|
489,216
|
|
|
$
|
674,783
|
|
|
$
|
486,866
|
|
|
$
|
431,570
|
|
Property, plant and equipment, net
|
|
|
603,160
|
|
|
|
586,261
|
|
|
|
649,526
|
|
|
|
649,015
|
|
|
|
685,842
|
|
Total assets
|
|
|
1,956,226
|
|
|
|
1,900,187
|
|
|
|
2,491,396
|
|
|
|
2,120,224
|
|
|
|
2,082,909
|
|
Total debt
|
|
|
659,527
|
|
|
|
658,205
|
|
|
|
716,195
|
|
|
|
684,454
|
|
|
|
701,004
|
|
Total stockholders equity attributable to Exide
Technologies
|
|
|
332,334
|
|
|
|
326,227
|
|
|
|
544,338
|
|
|
|
330,523
|
|
|
|
224,739
|
|
Other Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
$
|
109,162
|
|
|
$
|
120,521
|
|
|
$
|
1,080
|
|
|
$
|
1,177
|
|
|
$
|
(44,348
|
)
|
Investing activities
|
|
|
(95,242
|
)
|
|
|
(101,087
|
)
|
|
|
(49,797
|
)
|
|
|
(47,447
|
)
|
|
|
(32,817
|
)
|
Financing activities
|
|
|
1,930
|
|
|
|
(29,441
|
)
|
|
|
57,374
|
|
|
|
87,586
|
|
|
|
34,646
|
|
Capital expenditures
|
|
|
96,092
|
|
|
|
108,914
|
|
|
|
56,854
|
|
|
|
51,932
|
|
|
|
58,133
|
|
|
|
|
(1) |
|
Working capital is calculated as current assets less current
liabilities. |
|
|
Item 7.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
External
Factors Which Affect the Companys Financial
Performance
Lead and other Raw Materials. Lead represents
approximately 45.0% of the Companys cost of goods sold.
The market price of lead fluctuates. Generally, when lead prices
decrease, customers may seek disproportionate price reductions
from the Company, and when lead prices increase, customers may
resist price increases. Either of these situations may cause
customer demand for the Companys products to be reduced
and the Companys net sales and gross margins to decline.
The average price of lead as quoted on the LME has increased
20.0% from $1,654 per metric ton for the fiscal year ended
March 31, 2009 to $1,984 per metric ton for the fiscal year
ended March 31, 2010. At May 27, 2010, the quoted
price on the LME was $1,777 per metric ton. To the extent that
lead prices continue to be volatile and the Company is unable to
pass higher material costs resulting from this volatility to its
customers, its financial performance will be adversely impacted.
24
Energy Costs. The Company relies on various
sources of energy to support its manufacturing and distribution
process, principally natural gas at its recycling facilities and
diesel fuel for distribution of its products. The Company seeks
to recoup increases in energy costs through price increases or
surcharges. To the extent the Company is unable to pass on these
higher energy costs to its customers, its financial performance
will be adversely impacted.
Competition. The global transportation and
industrial energy battery markets are highly competitive. In
recent years, competition has continued to intensify and has
impacted the Companys ability to pass along increased
prices to keep pace with rising production costs. The effects of
this competition have been exacerbated by excess capacity in
certain of the Companys markets, fluctuating lead prices,
and low-priced Asian imports in certain of the Companys
markets.
Exchange Rates. The Company is exposed to
foreign currency risk in most European countries, principally
from fluctuations in the Euro. For fiscal 2010 and 2009, the
average exchange rate of the Euro to the U.S. Dollar was
essentially flat at $1.42. At March 31, 2010, the Euro was
$1.35 as compared to $1.33 at March 31, 2009. Movements in
foreign currencies impacted the Companys results for the
periods presented herein. For the fiscal year ended
March 31, 2010, approximately 56.8% of the Companys
net sales were generated in Europe and ROW. Further,
approximately 65.1% of the Companys aggregate accounts
receivable and inventory as of March 31, 2010 were held by
European and ROW subsidiaries.
The Company is also exposed, although to a lesser extent, to
foreign currency risk in the U.K., Poland, Australia, and
various countries in the Pacific Rim. Movements of exchange
rates against the U.S. Dollar can result in variations in
the U.S. Dollar value of
non-U.S. sales,
expenses, assets, and liabilities. In some instances, gains in
one currency may be offset by losses in another.
Markets. The Company is subject to
concentrations of customers and sales in a few geographic
locations and is dependent on customers in certain industries,
including the automotive, communications and data and material
handling markets. Economic difficulties experienced in these
markets and geographic locations impact the Companys
financial results. Original equipment volumes in the
transportation and motive power channels have been and continue
to be depressed, reflecting the global economic conditions. In
addition, capital spending by major customers in our network
power channels also continue to be below historic levels.
Seasonality and Weather. The Company sells a
disproportionate share of its transportation aftermarket
batteries during the fall and early winter (the Companys
third and a portion of its fourth fiscal quarters). Retailers
and distributors buy automotive batteries during these periods
so they will have sufficient inventory for cold weather periods.
The impact of seasonality on sales has the effect of increasing
the Companys working capital requirements and also makes
the Company more sensitive to fluctuations in the availability
of liquidity.
Unusually cold winters or hot summers may accelerate battery
failure and increase demand for transportation replacement
batteries. Mild winters and cool summers may have the opposite
effect. As a result, if the Companys sales are reduced by
an unusually warm winter or cool summer, it is not possible for
the Company to recover these sales in later periods. Further, if
the Companys sales are adversely affected by the weather,
the Company cannot make offsetting cost reductions to protect
its liquidity and gross margins in the short-term because a
large portion of the Companys manufacturing and
distribution costs are fixed.
Interest Rates. The Company is exposed to
fluctuations in interest rates on its variable rate debt,
portions of which were hedged during fiscal 2009 and fiscal
2010. See Notes 2 and 7 to the Consolidated Financial
Statements.
Fiscal
2010 Highlights and Outlook
The Companys reported results continued to be impacted in
fiscal 2010 by unfavorable global economic conditions, as well
as fluctuations in the cost of materials and energy used in the
manufacturing and distribution of the Companys products.
25
In the Americas, the Company obtains the vast majority of its
lead requirements from five Company-owned and operated secondary
lead recycling plants. These facilities reclaim lead by
recycling spent lead-acid batteries, which are obtained for
recycling from the Companys customers and outside
spent-battery collectors. Recycling helps the Company control
the cost of its principal raw material used in North America as
compared to purchasing lead at prevailing market prices. Similar
to the fluctuation in lead prices, however, the cost of spent
batteries has also fluctuated. The average cost of spent
batteries increased approximately 18.7% in fiscal 2010 versus
fiscal 2009. The Company continues to take pricing actions and
is attempting to secure higher captive spent battery return
rates to help mitigate the risks associated with this price
volatility.
In Europe, the Companys lead requirements are mainly
fulfilled by third-party suppliers. Because of the
Companys exposure to the historically volatile lead market
prices in Europe, the Company has implemented several measures
to offset changes in lead prices, including selective pricing
actions and lead price escalators. The Company has automatic
lead price escalators with virtually all OEM customers. The
Company currently obtains a small portion of its lead
requirements from recycling in its European facilities.
The Company expects that volatility in lead and other commodity
costs, which affect all business segments, will continue to put
pressure on the Companys financial performance. However,
selective pricing actions, lead price escalators in certain
contracts and fuel surcharges have been implemented to help
mitigate these risks. The implementation of selective pricing
actions and price escalators generally lag the rise in market
prices of lead and other commodities. Both lead price escalators
and fuel surcharges may not be accepted by our customers, and if
the price of lead decreases, our customers may seek
disproportionate price reductions.
In addition to managing the impact of fluctuations in lead and
other commodity costs on the Companys results, the key
elements of the Companys underlying business plans and
continued strategies are:
(i) Successful execution and completion of the
Companys restructuring plan and organizational realignment
of divisional and corporate functions intended to result in
further targeted headcount reductions.
(ii) Actions designed to improve the Companys
liquidity and operating cash flow through working capital
reduction plans, the sale of non-strategic assets and
businesses, streamlining cash management processes, implementing
plans to minimize the cash costs of the Companys
restructuring initiatives, and closely managing capital
expenditures.
(iii) Continued factory and distribution productivity
improvements through its established EXCELL program and Take
Charge! initiative.
(iv) Continued review and rationalization of the various
brand offerings of products in its markets to gain efficiencies
in manufacturing and distribution, and better leverage the
Companys marketing spending.
(v) Increased research and development and engineering
investments designed to develop enhanced lead-acid products as
well as products utilizing alternative chemistries. In this
regard, the Company continues to identify government funding
opportunities to support near and long-term technological
improvements in energy storage applications.
(vi) Gain further product and process efficiencies with
implementation of the Global Procurement structure. This
initiative focuses on leveraging existing relationships and
creating an infrastructure for global search for products and
components.
Critical
Accounting Policies and Estimates
The Companys discussion and analysis of its financial
condition and results of operations are based upon the
Companys Consolidated Financial Statements, which have
been prepared in accordance with accounting principles generally
accepted in the United States of America (GAAP). The
preparation of these financial statements requires the Company
to make estimates and judgments that affect the reported amounts
of assets, liabilities, revenues, and expenses, and the related
disclosure of contingent assets and liabilities. On an ongoing
26
basis, the Company evaluates its estimates based on its
historical experience and on various other assumptions 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. Actual results may differ from these
estimates under different assumptions or conditions.
The Company believes the following critical accounting policies
and estimates affect the preparation of its Consolidated
Financial Statements.
Inventory Reserves. The Company adjusts its
inventory carrying value to estimated market value (when below
historical cost basis) based upon assumptions of future demand
and market conditions. If actual market conditions are less
favorable than those projected by the Company, additional
inventory write-downs may be required.
Valuation of Long-lived Assets. The
Companys long-lived assets include property, plant and
equipment, and identified intangible assets. Long-lived assets
(other than indefinite lived intangible assets) are depreciated
and amortized over their estimated useful lives, and are
reviewed for impairment whenever changes in circumstances
indicate the carrying value may not be recoverable.
Indefinite-lived intangible assets are reviewed for impairment
on both an annual basis and whenever changes in circumstances
indicate that the carrying value may not be recoverable. The
fair value of indefinite-lived intangible assets is based upon
the Companys estimates of future cash flows and other
factors including discount rates to determine the fair value of
the respective assets. An erosion of future business results in
any of the Companys business units could create
impairments in the Companys long-lived assets and require
a significant write-down in future periods.
Employee Benefit Plans. The Company considers
accounting for employee benefit plans critical because
management is required to make significant subjective judgments
about a number of actuarial assumptions, including discount
rates, compensation growth, long-term return on plan assets,
retirement, turnover, health care cost trend rates and mortality
rates. Depending on the assumptions and estimates used, the
pension and postretirement benefit expense could vary within a
range of outcomes and have a material effect on reported
results. In addition, the assumptions can materially affect
accumulated benefit obligations and future cash funding. For a
detailed discussion of the Companys retirement benefits,
see Employee Benefit Plans herein and Note 8 to the
Consolidated Financial Statements.
Deferred Taxes. The Company records valuation
allowances to reduce its deferred tax assets to amounts that are
more likely than not to be realized. While the Company has
considered future taxable income and used ongoing prudent and
feasible tax planning strategies in assessing the need for
valuation allowances, if the Company were to determine that it
would be able to realize deferred tax assets in the future in
excess of the Companys net recorded amount, an adjustment
to the net deferred tax asset would increase income in the
period that such determination was made. Likewise, should the
Company determine that it would not be able to realize all or
part of its net deferred tax assets in the future, an adjustment
to the net deferred tax asset would decrease income in the
period such determination was made. The Company regularly
evaluates the need for valuation allowances against its deferred
tax assets, and currently has full valuation allowances recorded
for deferred tax assets in the United Kingdom, France, Italy,
and Spain as well as in several other countries in ROW.
Revenue Recognition. The Company records sales
when revenue is earned. Shipping terms are generally FOB
shipping point and revenue is recognized when product is shipped
to the customer. In limited cases, terms are FOB destination and
in these cases, revenue is recognized when the product is
delivered to the customers delivery site. The Company
records sales net of discounts and estimated customer allowances
and returns.
Sales Returns and Allowances. The Company
provides for an allowance for product returns
and/or
allowances at the time sales are recorded. Based upon its
manufacturing re-work process, the Company believes that the
majority of its product returns are not the result of product
defects. The Company recognizes the estimated cost of product
returns as a reduction of sales in the period in which the
related revenue is recognized. The product return estimates are
based upon historical trends and claims experience, and include
an assessment of the anticipated lag between the date of sale
and claim/return date.
27
Environmental Reserves. The Company is subject
to numerous environmental laws and regulations in all the
countries in which it operates. In addition, the Company can be
held liable for the cost of investigation and remediation of
sites impacted by its past operating activities. The Company
maintains reserves for the cost of addressing these liabilities
once they are determined to be both probable and reasonably
estimable. These estimates are determined through a combination
of methods, including outside estimates of likely expense and
the Companys historical experience in the management of
these matters.
Because environmental liabilities are not accrued until a
liability is determined to be probable and reasonably estimable
and there is a constructive obligation to remediate, not all
potential future environmental liabilities have been included in
the Companys environmental reserves and, therefore,
additional earnings charges are possible. Also, future findings
or changes in estimates could result in either an increase or
decrease in the reserves and have a significant impact on the
Companys liquidity and its results of operations.
Litigation. The Company has legal
contingencies that have a high degree of uncertainty. When a
contingency becomes probable and reasonably estimable, a reserve
is established. Lawsuits have been filed against the Company for
which the liabilities are not considered probable and reasonably
estimable. Consequently, no reserves have been established for
these matters. If future litigation or the resolution of
existing matters results in liability to the Company, such
liability could have a significant impact on the Companys
future results and liquidity.
Results
of Operations
The Company reports its results as four business segments:
Transportation Americas, Transportation Europe and ROW,
Industrial Energy Americas, and Industrial Energy Europe and
ROW. The following discussions provide a comparison of the
Companys results of operations for the fiscal year ended
March 31, 2010 with those for the fiscal year ended
March 31, 2009, and a comparison of the Companys
results of operations for the fiscal year ended March 31,
2009 with those for the fiscal year ended March 31, 2008.
The information in this section should be read in conjunction
with the Consolidated Financial Statements and related notes
thereto appearing in Item 8 Financial
Statements and Supplementary Data.
Fiscal
Year Ended March 31, 2010 compared with Fiscal Year Ended
March 31, 2009
Net
Sales
Net sales were $2.7 billion for fiscal 2010 versus
$3.3 billion in fiscal 2009. Foreign currency translation
favorably impacted net sales in fiscal 2010 by approximately
$27.0 million. Excluding the foreign currency translation
impact, net sales decreased by approximately
$663.6 million, or 20.0%, primarily as a result of lower
unit sales and $86.6 million in reduced pricing related to
the decrease in the lower average price of lead.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended
|
|
|
Favorable/(Unfavorable)
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
|
Currency
|
|
|
Non-Currency
|
|
|
|
2010
|
|
|
2009
|
|
|
Total
|
|
|
Related
|
|
|
Related
|
|
|
|
(In thousands)
|
|
|
Transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
922,629
|
|
|
$
|
1,136,631
|
|
|
$
|
(214,002
|
)
|
|
$
|
|
|
|
$
|
(214,002
|
)
|
Europe and ROW
|
|
|
824,190
|
|
|
|
908,085
|
|
|
|
(83,895
|
)
|
|
|
18,403
|
|
|
|
(102,298
|
)
|
Industrial Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
237,137
|
|
|
|
287,120
|
|
|
|
(49,983
|
)
|
|
|
|
|
|
|
(49,983
|
)
|
Europe and ROW
|
|
|
701,852
|
|
|
|
990,496
|
|
|
|
(288,644
|
)
|
|
|
8,639
|
|
|
|
(297,283
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
2,685,808
|
|
|
$
|
3,322,332
|
|
|
$
|
(636,524
|
)
|
|
$
|
27,042
|
|
|
$
|
(663,566
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation Americas net sales were $922.6 million for
fiscal 2010 versus $1.14 billion for fiscal 2009. Net sales
for fiscal 2010 were $214.0 million, or 18.8%, lower than
fiscal 2009 due to the decline in aftermarket and OEM unit sales
as well as a $3.9 million unfavorable impact of the lower
average price of lead. Third-party lead sales for fiscal 2010
were approximately $62.0 million higher than such
third-party sales in fiscal 2009.
28
Transportation Europe and ROW net sales were $824.2 million
for fiscal 2010 versus $908.1 million for fiscal 2009. Net
sales in fiscal 2010, excluding the favorable impact of
$18.4 million in foreign currency translation, decreased by
$102.3 million, or 11.3% compared to fiscal 2009. The
decrease was primarily due to lower unit sales in the OEM
channel, as well as $46.3 million in reduced pricing
related to the lower average price of lead.
Industrial Energy Americas net sales were $237.1 million
for fiscal 2010 versus $287.1 million for fiscal 2009. Net
sales in fiscal 2010 were $50.0 million, or 17.4%, lower
than fiscal 2009 due primarily to lower unit sales in the motive
power and network power markets as well as a $10.7 million
unfavorable impact of the lower average price of lead.
Industrial Energy Europe and ROW net sales were
$701.9 million for fiscal 2010 versus $990.5 million
for fiscal 2009. Net sales in fiscal 2010, excluding favorable
foreign currency translation of $8.6 million, decreased
$297.3 million, or 30.0%, compared to fiscal 2009 due to
lower unit sales in the network power and motive power markets
as well as a $25.6 million unfavorable impact of the lower
average price of lead.
Gross
Profit
Gross profit was $538.1 million in fiscal 2010 versus
$613.7 million in fiscal 2009. Gross margin increased to
20.0% of net sales in fiscal 2010 from 18.5% of net sales in
fiscal 2009. Foreign currency translation favorably impacted
gross profit in fiscal 2010 by approximately $6.3 million.
Excluding the foreign currency translation impact, gross profit
decreased by $81.9 million primarily due to lower unit
sales, partially offset by improved manufacturing efficiencies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended
|
|
|
For the Fiscal Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2010
|
|
|
March 31, 2009
|
|
|
Favorable/(Unfavorable)
|
|
|
|
|
|
|
Percent of
|
|
|
|
|
|
Percent of
|
|
|
|
|
|
Currency
|
|
|
Non-Currency
|
|
|
|
Total
|
|
|
Net Sales
|
|
|
Total
|
|
|
Net Sales
|
|
|
Total
|
|
|
Related
|
|
|
Related
|
|
|
|
(In thousands)
|
|
|
Transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
206,472
|
|
|
|
22.4
|
%
|
|
$
|
215,051
|
|
|
|
18.9
|
%
|
|
$
|
(8,579
|
)
|
|
$
|
|
|
|
$
|
(8,579
|
)
|
Europe and ROW
|
|
|
142,509
|
|
|
|
17.3
|
%
|
|
|
100,394
|
|
|
|
11.1
|
%
|
|
|
42,115
|
|
|
|
5,197
|
|
|
|
36,918
|
|
Industrial Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
53,958
|
|
|
|
22.8
|
%
|
|
|
79,894
|
|
|
|
27.8
|
%
|
|
|
(25,936
|
)
|
|
|
|
|
|
|
(25,936
|
)
|
Europe and ROW
|
|
|
135,157
|
|
|
|
19.3
|
%
|
|
|
218,329
|
|
|
|
22.0
|
%
|
|
|
(83,172
|
)
|
|
|
1,142
|
|
|
|
(84,314
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
538,096
|
|
|
|
20.0
|
%
|
|
$
|
613,668
|
|
|
|
18.5
|
%
|
|
$
|
(75,572
|
)
|
|
$
|
6,339
|
|
|
$
|
(81,911
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation Americas gross profit was $206.5 million, or
22.4% of net sales, in fiscal 2010 versus $215.1 million,
or 18.9% of net sales, in fiscal 2009. The decrease in gross
profit was primarily due to lower unit sales, partially offset
by improved plant and distribution efficiencies. The increase in
gross margin percentage as a percentage of net sales is
principally the result of the benefits of restructuring
initiatives taken during the first quarter of fiscal 2010.
Transportation Europe and ROW gross profit was
$142.5 million, or 17.3% of net sales, in fiscal 2010
versus $100.4 million, or 11.1% of net sales, in fiscal
2009. Foreign currency translation favorably impacted gross
profit during fiscal 2010 by approximately $5.2 million.
Excluding the foreign currency translation impact, gross profit
increased by $36.9 million primarily due to higher unit
sales in the aftermarket channel as well as benefits realized by
the closure of the Auxerre, France battery plant and other
improved manufacturing efficiencies, partially offset by lower
unit sales in the OEM channel.
Industrial Energy Americas gross profit was $54.0 million,
or 22.8% of net sales, in fiscal 2010 versus $79.9 million,
or 27.8% of net sales, in fiscal 2009. The decrease in gross
profit was primarily due to lower unit sales in both the network
power and motive power markets.
Industrial Energy Europe and ROW gross profit was
$135.2 million, or 19.3% of net sales, in fiscal 2010
versus $218.3 million, or 22.0% of net sales, in fiscal
2009. Foreign currency translation favorably impacted gross
profit in fiscal 2010 by approximately $1.1 million.
Excluding the foreign currency translation impact, the gross
profit decreased by $84.3 million primarily due to lower
unit sales in both the network power and motive power markets,
partially offset by improved plant and distribution efficiencies.
29
Expenses
Expenses were $569.7 million in fiscal 2010 versus
$647.8 million in fiscal 2009. Restructuring and impairment
charges of $80.2 million in fiscal 2010 and
$71.6 million in fiscal 2009 were included in these
expenses. Excluding these restructuring and impairment charges,
expenses were $489.5 million and $576.2 million in
fiscal 2010 and fiscal 2009, respectively. Foreign currency
translation unfavorably impacted expenses by approximately
$1.1 million in fiscal 2010. The decrease in expenses was
the result of the following:
i. Selling, marketing, and advertising expenses decreased
$38.8 million, to $258.2 million in fiscal 2010 from
$297.0 million in fiscal 2009. Foreign currency translation
favorably impacted selling, marketing, and advertising costs in
fiscal 2010 by approximately $1.8 million. The decrease in
these expenses was due primarily to decreases in sales
commissions and other spending controls;
ii. General and administrative expense increased
$8.5 million, to $182.5 million in fiscal 2010 from
$174.0 million in fiscal 2009. Foreign currency translation
favorably impacted general and administrative costs in fiscal
2010 by approximately $0.6 million. The remaining increase
was due primarily to increases in engineering spending and
$5.1 million in non-cash stock compensation costs,
partially offset by decreases in discretionary expenses;
iii. Restructuring expenses increased by $7.3 million,
to $70.6 million in fiscal 2010 from $63.3 million in
fiscal 2009. This increase primarily related to costs associated
with headcount reductions in certain manufacturing facilities,
principally the Auxerre, France transportation battery plant and
the Over Hulton, U.K. industrial energy battery plant closures;
iv. Other (income) expense was ($1.6) million in
fiscal 2010 versus $41.3 million in fiscal 2009. The change
is primarily due to a $52.4 million favorable variance in
currency remeasurement, partially offset by a $6.3 million
lower gain on revaluation of warrants; and
v. Interest expense decreased $12.3 million, to
$59.9 million in fiscal 2010 from $72.2 million in
fiscal 2009 due primarily to the favorable impact of lower
interest rates on borrowings under the Companys Credit
Agreement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended
|
|
|
Favorable/(Unfavorable)
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
|
Currency
|
|
|
Non-Currency
|
|
|
|
2010
|
|
|
2009
|
|
|
Total
|
|
|
Related
|
|
|
Related
|
|
|
|
(In thousands)
|
|
|
Transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
123,501
|
|
|
$
|
132,331
|
|
|
$
|
8,830
|
|
|
$
|
|
|
|
$
|
8,830
|
|
Europe and ROW
|
|
|
127,654
|
|
|
|
162,592
|
|
|
|
34,938
|
|
|
|
1,096
|
|
|
|
33,842
|
|
Industrial Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
40,858
|
|
|
|
38,689
|
|
|
|
(2,169
|
)
|
|
|
|
|
|
|
(2,169
|
)
|
Europe and ROW
|
|
|
180,479
|
|
|
|
165,496
|
|
|
|
(14,983
|
)
|
|
|
949
|
|
|
|
(15,932
|
)
|
Unallocated expenses
|
|
|
97,230
|
|
|
|
148,689
|
|
|
|
51,459
|
|
|
|
(3,179
|
)
|
|
|
54,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
569,722
|
|
|
$
|
647,797
|
|
|
$
|
78,075
|
|
|
$
|
(1,134
|
)
|
|
$
|
79,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation Americas expenses were $123.5 million in
fiscal 2010 versus $132.3 million in fiscal 2009. The
decrease in expenses was due to cost reductions and
restructuring initiatives.
Transportation Europe and ROW expenses were $127.7 million
in fiscal 2010 versus $162.6 million in fiscal 2009.
Foreign currency translation favorably impacted expenses in
fiscal 2010 by approximately $1.1 million. Excluding the
impact of foreign currency translation, expenses decreased by
$33.8 million due primarily to $25.2 million lower
restructuring and asset impairment expenses related to the
closure of the Auxerre, France battery plant, as well as other
cost reduction activities and a prior year bad debt write-off.
Industrial Energy Americas expenses were $40.9 million in
fiscal 2010 versus $38.7 million in fiscal 2009. The
increase in expenses was primarily due to costs related to new
product engineering initiatives.
Industrial Energy Europe and ROW expenses were
$180.5 million in fiscal 2010 versus $165.5 million in
fiscal 2009. Foreign currency translation favorably impacted
expenses in fiscal 2010 by approximately
30
$1.0 million. Excluding the impact of foreign currency
translation, expenses increased by $15.9 million primarily
due to $29.9 million in higher restructuring and asset
impairment expenses primarily related to the closure of the
Companys U.K. battery plant, partially offset by cost
reduction initiatives and lower selling costs.
Unallocated expenses were $97.2 million in fiscal 2010
versus $148.7 million in fiscal 2009. The following table
summarizes the Companys unallocated expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
Favorable
|
|
|
|
2010
|
|
|
2009
|
|
|
(Unfavorable)
|
|
|
|
(In thousands)
|
|
|
Corporate expenses
|
|
$
|
44,530
|
|
|
$
|
43,597
|
|
|
$
|
(933
|
)
|
Restructuring
|
|
|
2,401
|
|
|
|
924
|
|
|
|
(1,477
|
)
|
Other (income) expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency remeasurement (gain) loss
|
|
|
(9,088
|
)
|
|
|
39,055
|
|
|
|
48,143
|
|
Gain on revaluation of warrants
|
|
|
(807
|
)
|
|
|
(7,129
|
)
|
|
|
(6,322
|
)
|
Other
|
|
|
261
|
|
|
|
2
|
|
|
|
(259
|
)
|
Interest expense, net
|
|
|
59,933
|
|
|
|
72,240
|
|
|
|
12,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
97,230
|
|
|
$
|
148,689
|
|
|
$
|
51,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expenses included $5.1 million related to higher
non-cash stock compensation expenses. The currency remeasurement
(gain) loss relate primarily to the remeasurement of
Euro-denominated intercompany loans (receivables) in the U.S.A.
Foreign currency translation unfavorably impacted unallocated
expenses by $3.2 million in fiscal 2010.
Reorganization
Items
Reorganization items for fiscal 2010 and 2009 were
$1.7 million and $2.2 million, respectively. These
expenses include professional fees, consisting primarily of
legal services.
Income
Taxes
The effective tax rate for fiscal 2010 and fiscal 2009 was
impacted by the generation of income in tax-paying jurisdictions
in certain countries in Europe, the U.S., Asia, and Canada, and
the movement of valuation allowances in the United Kingdom,
Italy, Spain, France, and Australia. During fiscal 2010, the
income tax benefit increased by $38.8 million due to the
change in valuation of certain deferred tax balances. The
Company evaluates its deferred tax assets and liabilities on a
quarterly basis and during the fourth quarter, new information
became available that led the Company to re-evaluate certain
deferred tax liabilities. The effective tax rate for fiscal 2009
was impacted by the establishment of a full valuation reserve of
$13.3 million on its net deductible temporary differences
and loss carry forwards related to its Australian operations. In
addition, the income tax provision for fiscal 2009 decreased as
a result of the removal of $3.1 million in valuation
allowances against net deferred tax assets generated from the
Companys Austrian and Mexican operations. The Company is
also subject to tax audits by governmental authorities in the
U.S. and in
non-U.S. jurisdictions.
The Company is currently subject to a tax audit in Spain for
fiscal years 2003 through 2006 that is related to its current
and certain former Spanish subsidiaries. Negative results from
one or more such tax audits could materially and adversely
affect the Companys business, financial condition, cash
flows, or results of operations.
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Pre-tax (loss) income
|
|
$
|
(33,300
|
)
|
|
$
|
(36,308
|
)
|
Income tax (benefit) provision
|
|
|
(21,963
|
)
|
|
|
32,173
|
|
Effective tax rate
|
|
|
66.0
|
%
|
|
|
(88.6
|
)%
|
31
Fiscal
Year Ended March 31, 2009 compared with Fiscal Year Ended
March 31, 2008
Net
Sales
Net sales were $3.32 billion for fiscal 2009 versus
$3.70 billion in fiscal 2008. Foreign currency translation
unfavorably impacted net sales in fiscal 2009 by approximately
$1.6 million. Excluding the foreign currency translation
impact, net sales decreased by approximately
$372.8 million, or 10.1%, primarily as a result of lower
unit sales and $141.9 million reduced pricing related to
the decrease in the market price of lead.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended
|
|
|
Favorable/(Unfavorable)
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
|
Currency
|
|
|
Non-Currency
|
|
|
|
2009
|
|
|
2008
|
|
|
Total
|
|
|
Related
|
|
|
Related
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
Transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
1,136,631
|
|
|
$
|
1,126,388
|
|
|
$
|
10,243
|
|
|
$
|
|
|
|
$
|
10,243
|
|
Europe and ROW
|
|
|
908,085
|
|
|
|
1,156,007
|
|
|
|
(247,922
|
)
|
|
|
1,215
|
|
|
|
(249,137
|
)
|
Industrial Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
287,120
|
|
|
|
301,562
|
|
|
|
(14,442
|
)
|
|
|
|
|
|
|
(14,442
|
)
|
Europe and ROW
|
|
|
990,496
|
|
|
|
1,112,714
|
|
|
|
(122,218
|
)
|
|
|
(2,768
|
)
|
|
|
(119,450
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
3,322,332
|
|
|
$
|
3,696,671
|
|
|
$
|
(374,339
|
)
|
|
$
|
(1,553
|
)
|
|
$
|
(372,786
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation Americas net sales were $1.14 billion for
fiscal 2009 versus $1.13 billion for fiscal 2008. Net sales
for fiscal 2009 were $10.2 million, or 0.9%, higher than
fiscal 2008 due to the favorable impact of price, partially
offset by a decline in aftermarket and OEM unit sales as well as
a $45.6 million unfavorable impact caused by the lower
average price of lead. Third-party lead sales for fiscal 2009
were approximately $21.3 million lower than fiscal 2008.
Transportation Europe and ROW net sales were $908.1 million
for fiscal 2009 versus $1.16 billion for fiscal 2008. Net
sales in fiscal 2009, excluding the favorable impact of
$1.2 million in foreign currency translation, decreased by
$249.1 million, or 21.6% compared to fiscal 2008. The
decrease was primarily due to lower unit volumes in the
aftermarket and OEM channels as well as $63.2 million in
reduced pricing related to the decrease in the market price of
lead, partially offset by favorable non-lead pricing actions in
both channels.
Industrial Energy Americas net sales were $287.1 million
for fiscal 2009 versus $301.6 million for fiscal 2008. Net
sales in fiscal 2009 were $14.4 million, or 4.8%, lower
than fiscal 2008 due primarily to lower unit sales in the motive
power markets and, to a lesser extent, the network power markets
as well as a $7.0 million unfavorable impact caused by the
lower average price of lead, partially offset by favorable
non-lead pricing actions implemented in both markets.
Industrial Energy Europe and ROW net sales were
$990.5 million for fiscal 2009 versus $1.11 billion
for fiscal 2008. Net sales in fiscal 2009, excluding unfavorable
foreign currency translation of $2.8 million, decreased
$119.5 million, or 10.7%, compared to fiscal 2008 due to
lower unit sales in the network power and motive power markets
as well as a $26.1 million unfavorable impact of the lower
average price of lead, partially offset by favorable non-lead
pricing actions implemented in both markets.
Gross
Profit
Gross profit was $613.7 million in fiscal 2009 versus
$593.2 million in fiscal 2008. Gross margin increased to
18.5% of net sales in fiscal 2009 from 16.0% of net sales in
fiscal 2008. Foreign currency translation unfavorably impacted
gross profit in fiscal 2009 by approximately $3.4 million.
Excluding the foreign currency translation impact, gross profit
increased by $23.9 million primarily due to favorable non-
32
lead pricing actions and manufacturing efficiencies in the
Companys operations, partially offset by lower unit sales.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2009
|
|
|
March 31, 2008
|
|
|
Favorable/(Unfavorable)
|
|
|
|
|
|
|
Percent of
|
|
|
|
|
|
Percent of
|
|
|
|
|
|
Currency
|
|
|
Non-Currency
|
|
|
|
Total
|
|
|
Net Sales
|
|
|
Total
|
|
|
Net Sales
|
|
|
Total
|
|
|
Related
|
|
|
Related
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
215,051
|
|
|
|
18.9
|
%
|
|
$
|
209,395
|
|
|
|
18.6
|
%
|
|
$
|
5,656
|
|
|
$
|
|
|
|
$
|
5,656
|
|
Europe and ROW
|
|
|
100,394
|
|
|
|
11.1
|
%
|
|
|
146,565
|
|
|
|
12.7
|
%
|
|
|
(46,171
|
)
|
|
|
1,633
|
|
|
|
(47,804
|
)
|
Industrial Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
79,894
|
|
|
|
27.8
|
%
|
|
|
77,561
|
|
|
|
25.7
|
%
|
|
|
2,333
|
|
|
|
|
|
|
|
2,333
|
|
Europe and ROW
|
|
|
218,329
|
|
|
|
22.0
|
%
|
|
|
162,063
|
|
|
|
14.6
|
%
|
|
|
56,266
|
|
|
|
(5,080
|
)
|
|
|
61,346
|
|
Unallocated
|
|
|
|
|
|
|
|
|
|
|
(2,394
|
)
|
|
|
|
|
|
|
2,394
|
|
|
|
|
|
|
|
2,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
613,668
|
|
|
|
18.5
|
%
|
|
$
|
593,190
|
|
|
|
16.0
|
%
|
|
$
|
20,478
|
|
|
$
|
(3,447
|
)
|
|
$
|
23,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation Americas gross profit was $215.1 million, or
18.9% of net sales, in fiscal 2009 versus $209.4 million,
or 18.6% of net sales, in fiscal 2008. The increase in gross
margin was primarily due to favorable non-lead pricing actions
and improved plant and distribution efficiencies, partially
offset by the impact of lower unit sales reflecting
deteriorating market conditions and the transition of volumes
from NAPA and CSK Auto, Inc. to other suppliers.
Transportation Europe and ROW gross profit was
$100.4 million, or 11.1% of net sales, in fiscal 2009
versus $146.6 million, or 12.7% of net sales, in fiscal
2008. Foreign currency translation favorably impacted gross
profit during fiscal 2009 by approximately $1.6 million.
Excluding the foreign currency translation impact, the gross
profit decreased by $47.8 million primarily due to lower
unit sales in both the aftermarket and OEM channels, partially
offset by favorable non-lead pricing actions.
Industrial Energy Americas gross profit was $80.0 million,
or 27.8% of net sales, in fiscal 2009 versus $77.6 million,
or 25.7% of net sales, in fiscal 2008. The increase in gross
profit was primarily due to favorable pricing actions in both
the network power and motive power markets, partially offset by
lower unit sales in both markets.
Industrial Energy Europe and ROW gross profit was
$218.3 million, or 22.0% of net sales, in fiscal 2009
versus $162.1 million, or 14.6% of net sales, in fiscal
2008. Foreign currency translation unfavorably impacted gross
profit in fiscal 2009 by approximately $5.1 million.
Excluding the foreign currency translation impact, the gross
profit increased by $61.3 million primarily due to
favorable pricing actions in both the network power and motive
power markets and because of the lag of quarterly lead
escalators in a downward commodity market, as well as cost
reductions resulting from the installation of the Take Charge!
initiative at the divisions manufacturing facilities. The
increase was partially offset by lower unit sales in both the
network power and motive power markets.
Unallocated other gross profit consisted of an expense of
$2.4 million in fiscal 2008 for environmental remediation
costs for a previously closed facility. As this site was closed
many years ago, the costs have not been allocated to the current
business segments.
Expenses
Expenses were $647.8 million in fiscal 2009 versus
$544.9 million in fiscal 2008. Restructuring and impairment
charges of $71.6 million in fiscal 2009 and
$11.7 million in fiscal 2008 were included in these
expenses. Excluding these restructuring charges, expenses were
$576.2 million and $533.2 million in fiscal
33
2009 and fiscal 2008, respectively. Foreign currency translation
favorably impacted expenses by approximately $11.4 million
in fiscal 2009. The increase in expenses was the result of the
following:
i. Selling, marketing, and advertising expenses increased
$7.0 million, to $297.0 million in fiscal 2009 from
$290.0 million in fiscal 2008. Foreign currency translation
favorably impacted selling, marketing, and advertising costs in
fiscal 2009 by approximately $7.2 million. The increase in
these expenses was due primarily to increases in commissions on
more profitable sales, increases in sales personnel principally
in our Industrial Energy Americas Segment, and $2.1 million
increases in provisions for doubtful accounts receivable;
ii. General and administrative expense decreased
$2.6 million, to $174.0 million in fiscal 2009 from
$176.6 million in fiscal 2008. Foreign currency translation
favorably impacted general and administrative costs in fiscal
2009 by approximately $1.5 million. The remaining decrease
was due primarily to decreases in discretionary expenses and
decreases in certain professional services;
iii. Interest expense decreased $13.3 million, to
$72.2 million in fiscal 2009 from $85.5 million in
fiscal 2008 due to lower borrowings and the favorable impact of
lower interest rates on borrowings under the Companys
Credit Agreement;
iv. Fiscal 2009 and fiscal 2008 expenses included currency
remeasurement loss (gains) of $42.1 million and
($40.8) million, respectively, included in Other expense
(income), net;
v. Restructuring expenses increased by $52.8 million,
to $63.3 million in fiscal 2009 from $10.5 million in
fiscal 2008. This increase was due primarily to costs associated
with headcount reductions in Europe and Australia and a targeted
closure of the Auxerre, France manufacturing facility:
vi. Fiscal 2009 and fiscal 2008 expenses included a (gain)
loss on revaluation of warrants of ($7.1) million and
$3.0 million, respectively, included in Other expense
(income), net; and
vii. Fiscal 2009 and fiscal 2008 expenses included a loss
(gain) on sale/impairment of fixed assets of $11.7 million
and ($0.2) million, respectively, included in Other expense
(income), net. This increase primarily reflects the impairment
of assets at the Auxerre, France manufacturing plant due to
restructuring activities at that facility.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended
|
|
|
Favorable/(Unfavorable)
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
|
Currency
|
|
|
Non-Currency
|
|
|
|
2009
|
|
|
2008
|
|
|
Total
|
|
|
Related
|
|
|
Related
|
|
|
|
(In thousands)
|
|
|
Transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
132,331
|
|
|
$
|
130,509
|
|
|
$
|
(1,822
|
)
|
|
$
|
|
|
|
$
|
(1,822
|
)
|
Europe and ROW
|
|
|
162,592
|
|
|
|
116,300
|
|
|
|
(46,292
|
)
|
|
|
10,623
|
|
|
|
(56,915
|
)
|
Industrial Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
38,689
|
|
|
|
39,528
|
|
|
|
839
|
|
|
|
|
|
|
|
839
|
|
Europe and ROW
|
|
|
165,496
|
|
|
|
144,160
|
|
|
|
(21,336
|
)
|
|
|
289
|
|
|
|
(21,625
|
)
|
Unallocated expenses
|
|
|
148,689
|
|
|
|
114,382
|
|
|
|
(34,307
|
)
|
|
|
477
|
|
|
|
(34,784
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
647,797
|
|
|
$
|
544,879
|
|
|
$
|
(102,918
|
)
|
|
$
|
11,389
|
|
|
$
|
(114,307
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation Americas expenses were $132.3 million in
fiscal 2009 versus $130.5 million in fiscal 2008. The
increase in expenses was due to higher selling and marketing
costs related to increased commission resulting from higher and
more profitable sales.
Transportation Europe and ROW expenses were $162.6 million
in fiscal 2009 versus $116.3 million in fiscal 2008.
Foreign currency translation favorably impacted expenses in
fiscal 2009 by approximately $10.6 million. Excluding the
impact of foreign currency translation, expenses increased by
$56.9 million due primarily to $44.2 million of
restructuring charges and $8.0 million for impairment of
fixed assets.
34
Industrial Energy Americas expenses were $38.7 million in
fiscal 2009 versus $39.5 million in fiscal 2008. The
decrease in expenses was primarily due to costs incurred in
fiscal 2008 related to the closure of the Kankakee, Illinois
manufacturing plant.
Industrial Energy Europe and ROW expenses were
$165.5 million in fiscal 2009 versus $144.2 million in
fiscal 2008. Foreign currency translation favorably impacted
expenses in fiscal 2008 by approximately $0.3 million.
Excluding the impact of foreign currency translation, expenses
increased by $21.6 million primarily due to
$14.6 million in restructuring costs as well as higher
sales commissions related to more profitable sales.
Unallocated expenses were $148.7 million in fiscal 2009
versus $114.4 million in fiscal 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
Favorable
|
|
|
|
2009
|
|
|
2008
|
|
|
(Unfavorable)
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
Corporate expenses
|
|
$
|
43,597
|
|
|
$
|
47,333
|
|
|
$
|
3,736
|
|
Restructuring
|
|
|
924
|
|
|
|
504
|
|
|
|
(420
|
)
|
Other expense (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency remeasurement loss (gain)
|
|
|
39,055
|
|
|
|
(41,443
|
)
|
|
|
(80,498
|
)
|
(Gain) loss on revaluation of warrants
|
|
|
(7,129
|
)
|
|
|
2,975
|
|
|
|
10,104
|
|
Other
|
|
|
2
|
|
|
|
(1,846
|
)
|
|
|
(1,848
|
)
|
Interest expense, net
|
|
|
72,240
|
|
|
|
85,517
|
|
|
|
13,277
|
|
Loss on early extinguishment of debt
|
|
|
|
|
|
|
21,342
|
|
|
|
21,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
148,689
|
|
|
$
|
114,382
|
|
|
$
|
(34,307
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The $39.1 million and $(41.4) million of currency
remeasurement loss (gains) in fiscal 2009 and 2008,
respectively, relate primarily to the remeasurement of
Euro-denominated intercompany loans (receivables) in the U.S.A.
The $21.3 million loss on early extinguishment of debt
relates to the Companys May 2007 extinguishment of its
prior credit facility. Foreign currency translation favorably
impacted unallocated expenses by $0.5 million in fiscal
2009.
Reorganization
Items
Reorganization items for fiscal 2009 and 2008 were
$2.2 million and $3.8 million, respectively. These
expenses include professional fees, consisting primarily of
legal services.
Income
Taxes
The effective tax rate for fiscal 2009 and fiscal 2008 was
impacted by the generation of income in tax-paying jurisdictions
in certain countries in Europe, the U.S., and Canada, and the
recognition of valuation allowances on tax benefits generated
from losses in the United Kingdom, Italy, Spain, France, and
Australia. During fiscal 2009, the Company established a full
valuation reserve of $13.3 million on its net deductible
temporary differences and loss carry forwards related to its
Australian operations. In addition, the income tax provision for
fiscal 2009 decreased as a result of the removal of
$3.1 million in valuation allowances against net deferred
tax assets generated from the Companys Austrian and
Mexican operations. The effective tax rate for fiscal 2008 was
impacted by the recognition of $26.6 million of valuation
allowances on current year tax benefits generated primarily in
the UK, France and Spain. In addition, the income tax provision
for fiscal 2008 increased $16.7 million due to a reduction
in the deferred tax assets for Germany due to legislation
enacted during the period which reduced the Companys
German subsidiaries marginal tax rate from approximately
37% to approximately 28%. Finally, the income tax provision for
fiscal 2008 decreased as a result of the
35
removal of a $25.0 million valuation allowance against net
deferred tax assets generated from the Companys
U.S. operations.
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year
|
|
|
|
Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Pre-tax (loss) income
|
|
$
|
(36,308
|
)
|
|
$
|
44,489
|
|
Income tax provision
|
|
|
32,173
|
|
|
|
10,886
|
|
Effective tax rate
|
|
|
(88.6
|
)%
|
|
|
24.5
|
%
|
Liquidity
and Capital Resources
As of March 31, 2010, the Company had cash and cash
equivalents of $89.6 million and availability under the
Companys revolving senior secured credit facility
(Revolving Loan Facility) of $124.6 million.
This compared to cash and cash equivalents of $69.5 million
and availability under the Revolving Loan Facility of
$130.6 million as of March 31, 2009.
In May 2007, the Company entered into a five-year
$495.0 million Credit Agreement. The Credit Agreement
consists of a $295.0 million term loan and a
$200.0 million asset-based revolving loan and matures in
May 2012. The Credit Agreement contains no financial maintenance
covenants.
The
Revolving Loan
Borrowings under the Revolving Loan Facility bear interest at a
rate equal to the London Interbank Offered Rate, or LIBOR, plus
1.50%. The applicable spread on the Revolving Loan Facility will
be subject to change and may increase or decrease in accordance
with a leverage-based pricing grid. The Revolving Loan Facility
includes a letter of credit
sub-facility
of $75.0 million and an accordion feature that allows the
Company to increase the facility size up to $250.0 million
if the Company can obtain commitments from existing or new
lenders for the incremental amount. The Revolving Loan Facility
will mature in May 2012, but is prepayable at any time at par.
Availability under the Revolving Loan Facility is subject to a
borrowing base comprised of up to 85.0% of the Companys
eligible accounts receivable plus 85.0% of the net orderly
liquidation value of eligible North American inventory less, in
each case, certain limitations and reserves. Revolving loans
made to the Company domestically under the Revolving Loan
Facility are guaranteed by substantially all domestic
subsidiaries of the Company, and revolving loans made to Exide
Global Holding Netherlands C.V. (Exide C.V.) under
the Revolving Loan Facility are guaranteed by substantially all
domestic subsidiaries of the Company and certain foreign
subsidiaries. These guaranteed obligations are secured by a lien
on substantially all of the assets of such respective borrowers
and guarantors, including, subject to certain exceptions, in the
case of security provided by the domestic subsidiaries, first
priority lien in current assets and a second priority lien in
fixed assets.
The Revolving Loan Facility contains customary terms and
conditions, including, without limitation, limitations on liens,
indebtedness, implementation of cash dominion and control
agreements, and other typical covenants. A springing fixed
charge financial covenant of 1.0:1.0 will be triggered if the
excess availability under the Revolving Loan Facility falls
below $40.0 million. The Company is also required to pay an
unused line fee that varies based on usage of the Revolving Loan
Facility.
The Term
Loan
Borrowings under the term loan in U.S. Dollars bear
interest at a rate equal to LIBOR plus 3.00%, and borrowings
under the Term Loan in Euros bear interest at a rate equal to
LIBOR plus 3.25%. The term loans will mature in May 2012, but
are prepayable at any time at par value.
The term loans will amortize as follows: 0.25% of the initial
principal balance of the term loans will be due and payable on a
quarterly basis, with the balance payable at maturity. Mandatory
prepayment by the
36
Company may be required under the term loans as a result of
excess cash flow, asset sales and casualty events, in each case,
subject to certain exceptions.
The portion of the term loan made to the Company is guaranteed
by substantially all domestic subsidiaries of the Company, and
the portion of the term loan made to Exide C.V. is guaranteed by
substantially all domestic subsidiaries of the Company and
certain foreign subsidiaries. These obligations are secured by a
lien on substantially all of the assets of such respective
borrowers and guarantors, including, subject to certain
exceptions, in the case of security provided by the domestic
subsidiaries, a first priority lien in fixed assets and a second
priority lien in current assets.
The term loan contains customary terms and conditions,
including, without limitation, (1) limitations on debt
(including a leverage or coverage based incurrence test),
(2) limitations on mergers and acquisitions,
(3) limitations on restricted payments,
(4) limitations on investments, (5) limitations on
capital expenditures, (6) limitations on asset sales with
limited exceptions, (7) limitations on liens, and
(8) limitations on transactions with affiliates.
Borrowings of the Company and other domestic borrowers are
guaranteed by substantially all domestic subsidiaries of the
Company, and borrowings of Exide C.V. are guaranteed by the
Company, substantially all domestic subsidiaries of the Company,
and certain foreign subsidiaries. These guarantee obligations
are secured by a lien on substantially all of the assets of such
respective borrowers and guarantors.
The
Senior Notes
In March 2005, the Company issued $290.0 million in
aggregate principal amount of 10.5% senior secured notes
due 2013. Interest of $15.2 million is payable
semi-annually on March 15 and September 15. The
10.5% senior secured notes are redeemable at the option of
the Company, in whole or in part, on or after March 15,
2009, initially at 105.25% of the principal amount, plus accrued
interest, declining to 100% of the principal amount, plus
accrued interest on or after March 15, 2011. The
10.5% senior secured notes were redeemable at the option of
the Company, in whole or in part, subject to payment of a make
whole premium, at any time prior to March 15, 2009. In the
event of a change of control or the sale of certain assets, the
Company may be required to offer to purchase the
10.5% senior secured notes from the note holders. Those
notes are secured by a junior priority lien on the assets of the
U.S. parent company, including the stock of its
subsidiaries. The Indenture for these notes contains financial
covenants which limit the ability of the Company and its
subsidiaries to among other things incur debt, grant liens, pay
dividends, invest in non-subsidiaries, engage in related party
transactions and sell assets. Under the Indenture, proceeds from
asset sales (to the extent in excess of a $5.0 million
threshold) must be applied to offer to repurchase notes to the
extent such proceeds exceed $20.0 million in the aggregate
and are not applied within 365 days to retire senior
secured credit agreement borrowings or the Companys
pension contribution obligations that are secured by a first
priority lien on the Companys assets or to make
investments or capital expenditures.
The
Convertible Notes
Also, in March 2005, the Company issued floating rate
convertible senior subordinated notes due September 18,
2013, with an aggregate principal amount of $60.0 million.
These notes bear interest at a per annum rate equal to the
3-month
LIBOR, adjusted quarterly, minus a spread of 1.5%. The interest
rate at March 31, 2010 and March 31, 2009 was 0.0%.
Interest is payable quarterly. The notes are convertible into
the Companys common stock at a conversion rate of
61.6143 shares per one thousand dollars principal amount at
maturity, subject to adjustments for any common stock splits,
dividends on the common stock, tender and exchange offers by the
Company for the common stock and third-party tender offers, and
in the case of a change in control in which 10% or more of the
consideration for the common stock is cash or non-traded
securities, the conversion rate increases, depending on the
value offered and timing of the transaction, to as much as
70.2247 shares per one thousand dollars principal amount.
At March 31, 2010, the Company was in compliance with
covenants contained in the Credit Agreement and indenture
agreements that cover the 10.5% senior secured notes and
floating rate convertible subordinated notes.
37
At March 31, 2010, the Company had outstanding letters of
credit with a face value of $51.3 million and surety bonds
with a face value of $3.8 million. The majority of the
letters of credit and surety bonds have been issued as
collateral or financial assurance with respect to certain
liabilities that the Company has recorded, including but not
limited to environmental remediation obligations and
self-insured workers compensation reserves. Failure of the
Company to satisfy its obligations with respect to the primary
obligations secured by the letters of credit or surety bonds
could entitle the beneficiary of the related letter of credit or
surety bond to demand payments pursuant to such instruments. The
letters of credit generally have terms up to one year.
Collateral held by the surety in the form of letters of credit
at March 31, 2010, pursuant to the terms of the agreement,
was $3.7 million.
Risks and uncertainties could cause the Companys
performance to differ from managements estimates. As
discussed above under Factors Which Affect the
Companys Financial Performance Seasonality and
Weather, the Companys business is seasonal. During
the Companys first and second fiscal quarters, the Company
builds inventory in anticipation of increased sales in the
winter months. This inventory build increases the Companys
working capital needs. During these quarters, because working
capital needs are already high, unexpected costs or increases in
costs beyond predicted levels would place a strain on the
Companys liquidity.
Sources
Of Cash
The Companys liquidity requirements have been met
historically through cash provided by operations, borrowed funds
and the proceeds of sales of accounts receivable. Additional
cash has been generated in recent years through rights
offerings, common stock issuance, and the sale of non-core
businesses and assets.
Cash flows provided by operating activities were
$109.2 million and $120.5 million in fiscal 2010 and
fiscal 2009 respectively. The operating cash flows decreased
primarily due to an increase in restructuring related payments
of $60.5 million and a lower net loss before changes in
working capital, partially offset by the favorable impact of
improved working capital management.
The Company generated $0.9 million and $7.8 million in
cash from the sale of non-core assets in fiscal 2010 and fiscal
2009, respectively. These sales principally relate to the sale
of surplus land and buildings.
Total debt at March 31, 2010 was $659.5 million, as
compared to $658.2 million at March 31, 2009. See
Note 7 to the Consolidated Financial Statements for the
composition of such debt.
Cash provided by (used in) financing activities was
$1.9 million and ($29.4) million in fiscal 2010 and
fiscal 2009, respectively. This increase relates primarily to
proceeds of $9.7 million from an interest-free loan in
connection with a government economic stimulus program,
partially offset by payments under the Companys Senior
Credit Facility and the increase in controlling interests in
certain of the Companys subsidiaries.
Going forward, the Companys principal sources of liquidity
will be cash on hand, cash from operations, and borrowings under
the Revolving Loan Facility.
Uses
Of Cash
The Companys liquidity needs arise primarily from the
funding of working capital needs, obligations on indebtedness,
and capital expenditures. Because of the seasonality of the
Companys business, more cash has typically been generated
in the third and fourth fiscal quarters than the first and
second fiscal quarters. Greatest cash demands from operations
have historically occurred during the months of June through
October.
The Company believes that it will have ongoing liquidity to
support its operational restructuring programs during fiscal
2011, including payment of remaining accrued restructuring costs
of approximately $26.6 million as of March 31, 2010.
For further discussion, see Note 12 to the Consolidated
Financial Statements.
Capital expenditures were $96.1 million and
$108.9 million in fiscal 2010 and fiscal 2009,
respectively. The Company plans capital spending of
approximately $100.0 million in fiscal 2011.
38
Total pension and other post-retirement employer contributions
and direct benefit payments were approximately
$18.9 million and $79.7 millions in fiscal 2010 and
fiscal 2009, respectively. Fiscal 2009 included
$23.0 million of payments which prefunded all fiscal 2010
required payments to its U.S. defined benefit plans.
Employee
Benefit Plans
Accounting
and Significant Assumptions
The Company accounts for pension benefits using the accrual
method. The accrual method of accounting for pensions involves
the use of actuarial assumptions concerning future events that
impact estimates of the amount and timing of benefit obligations
and future benefit payments.
Significant assumptions used in calculating the Companys
pension benefit obligations and related expense are the discount
rate, rate of compensation increase, and the expected long-term
rate of return on plan assets. The Company establishes these
underlying assumptions in consultation with its actuaries.
Depending on the assumptions used, pension obligations and
related expense could vary within a range of outcomes and have a
material effect on the Companys results, benefit
obligations, and cash funding requirements.
The discount rates used by the Company for determining benefit
obligations are generally based on high quality corporate bonds
and reflect the cash flows of the respective plans. The assumed
rates of compensation increases reflect estimates of the
projected change in compensation levels based on future
expectations, general price levels, productivity, and historical
experience, among other factors. In evaluating the expected
long-term rate of return on plan assets, the Company considers
the allocation of assets and the expected return on various
asset classes in the context of the long-term nature of pension
obligations.
At March 31, 2010, the Company had decreased the discount
rates used to value its pension benefit obligations to reflect
the decrease in yields on high quality corporate bonds, and
decreased the rate of compensation increases to reflect current
inflationary expectations. The aggregate effect of these changes
increased the present value of projected benefit obligations as
of March 31, 2010.
A one-percentage point increase or decrease in the weighted
average expected return on plan assets for defined benefit plans
would increase or decrease net periodic benefit cost by
approximately $3.3 million in fiscal 2010. A one-percentage
point increase in the weighted average discount rate would
decrease net periodic benefit cost for defined benefit plans by
approximately $3.4 million in fiscal 2010. A one-percentage
point decrease in the weighted average discount rate would
increase net periodic benefit cost for defined benefit plans by
approximately $0.4 million in fiscal 2010.
Plan
Funding Requirements
Cash contributions to the Companys pension plans are
generally made in accordance with minimum regulatory
requirements. The Company expects its cumulative minimum future
cash contributions to its pension plans will total approximately
$141.9 million to $175.9 million from fiscal 2011 to
fiscal 2015, including $19.2 million in fiscal 2011. In
addition, the Company expects that cumulative contributions to
its other post retirement benefit plans will total approximately
$8.6 million from fiscal 2011 to fiscal 2015, including
$1.9 million in fiscal 2011.
Financial
Instruments and Market Risk
From time to time, the Company has used forward contracts to
economically hedge certain commodity price exposures, including
lead. The forward contracts are entered into for periods
consistent with related underlying exposures and do not
constitute positions independent of those exposures. The Company
expects that it may increase the use of financial instruments,
including fixed and variable rate debt as well as swap, forward
and option contracts to finance its operations and to hedge
interest rate, currency and certain commodity purchasing
requirements in the future. The swap, forward, and option
contracts would be entered into for periods consistent with
related underlying exposures and would not constitute positions
independent of those exposures. The Company has not entered
into, and does not intend to enter into, contracts for
speculative
39
purposes nor be a party to any leveraged instruments. For
further discussion of the Companys financial instruments,
see Note 2 to the Consolidated Financial Statements.
The Companys ability to utilize financial instruments may
be restricted because of tightening,
and/or
elimination of unsecured credit availability with
counter-parties. If the Company is unable to utilize such
instruments, the Company may be exposed to greater risk with
respect to its ability to manage exposures to fluctuations in
foreign currencies, interest rates, lead prices, and other
commodities.
Accounts
Receivable Factoring Arrangements
In the ordinary course of business, the Company utilizes
accounts receivable factoring arrangements in countries where
programs of this type are typical. Under these arrangements, the
Company may sell certain of its trade accounts receivable to
financial institutions. The arrangements in virtually all cases
do not contain recourse provisions against the Company for its
customers failure to pay. The Company sold approximately
$38.5 million and $0.6 million of foreign currency
trade accounts receivable as of March 31, 2010 and 2009,
respectively. Changes in the level of receivables sold from year
to year are included in the change in accounts receivable within
cash flow from operations in the Consolidated Statements of Cash
Flows.
Contractual
Obligations and Commercial Commitments
The Companys contractual obligations and commercial
commitments at March 31, 2010 are summarized by fiscal year
in which the payments are due in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 and
|
|
|
|
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
Beyond
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
10.5% Senior Secured Notes
|
|
$
|
|
|
|
$
|
|
|
|
$
|
290,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
290,000
|
|
Floating Rate Convertible Senior Subordinated Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
Senior Secured Credit Facility
|
|
|
2,947
|
|
|
|
2,947
|
|
|
|
280,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
286,661
|
|
Interest on long-term debt(a)
|
|
|
46,299
|
|
|
|
42,157
|
|
|
|
34,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
123,089
|
|
Short term borrowings
|
|
|
7,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,682
|
|
Government loans (non-interest bearing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,663
|
|
|
|
9,663
|
|
Other term loans
|
|
|
974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
974
|
|
Capital leases(b)
|
|
|
2,147
|
|
|
|
2,511
|
|
|
|
2,319
|
|
|
|
1,789
|
|
|
|
1,970
|
|
|
|
46
|
|
|
|
10,782
|
|
Operating leases
|
|
|
24,602
|
|
|
|
16,851
|
|
|
|
10,169
|
|
|
|
5,416
|
|
|
|
3,001
|
|
|
|
2,268
|
|
|
|
62,307
|
|
Other non-current liabilities(c)
|
|
|
|
|
|
|
14,560
|
|
|
|
10,659
|
|
|
|
8,129
|
|
|
|
6,738
|
|
|
|
62,936
|
|
|
|
103,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual cash obligations
|
|
$
|
84,651
|
|
|
$
|
79,026
|
|
|
$
|
628,547
|
|
|
$
|
75,334
|
|
|
$
|
11,709
|
|
|
$
|
74,913
|
|
|
$
|
954,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Reflects the Companys scheduled interest payments and
assumes an interest rate of 0.0% on the floating rate
convertible senior subordinated notes, and 6% on the Credit
Agreement. It also includes the cash settlements on the interest
rate swap agreements. |
|
(b) |
|
Capital leases reflect future minimum lease payments including
imputed interest charges. |
|
(c) |
|
Other non-current liabilities include amounts on the
Consolidated Balance Sheet as of March 31, 2010 (amounts
that have been discounted are reflected as such on the table
above). |
|
(d) |
|
Pension and other post-retirement benefit obligations are not
included in the table above. The Company expects that cumulative
contributions to its pension plans will total approximately
$141.9 to $175.9 million from fiscal 2011 to fiscal 2015,
including $19.2 million in fiscal 2011. In addition, the
Company expects that cumulative contributions to its other
post-retirement benefit plans will total approximately
$8.6 million from fiscal 2011 to fiscal 2015, including
$1.9 million in fiscal 2011. See Note 8 to the
Consolidated Financial Statements. |
40
|
|
|
(e) |
|
The Companys liability for unrecognized tax benefits of
$15.6 million is not included in the table above. Due to
the uncertainties related to these matters, the Company is not
able to make a reasonably reliable estimate as to the future
periods in which cash settlement with the related taxing
authorities will take place. See Note 10 to the
Consolidated Financial Statements. |
Effects
of Inflation
Inflation has not had a material impact on the Companys
operations. The Company generally has been able to partially
offset the effects of inflation with cost-reduction programs,
operating efficiencies, and pricing actions.
Future
Environmental Developments
As a result of its multinational manufacturing, distribution and
recycling operations, the Company is subject to numerous
federal, state, and local environmental, occupational safety,
and health laws and regulations, and similar laws and
regulations in other countries in which the Company operates.
For a discussion of the legal proceedings relating to
environmental matters, see Note 11 to the Consolidated
Financial Statements.
|
|
Item 7A.
|
Quantitative
and Qualitative Disclosures About Market Risks
|
The Company is exposed to market risks from changes in foreign
currency exchange rates, certain commodity prices and interest
rates. The Company does not enter into contracts without the
intent to mitigate a particular risk, nor is it a party to any
leveraged instruments. A discussion of the Companys
accounting policies for derivative instruments is provided in
Notes 1 and 2 to the Consolidated Financial Statements.
Foreign
Currency Exchange Rate Risk
The Company is exposed to foreign currency risk related to
uncertainties to which future earnings or assets and liability
values are exposed due to operating cash flows and various
financial instruments that are denominated in foreign
currencies. More specifically, the Company is exposed to foreign
currency risk in most European countries, principally Germany,
France, the United Kingdom, Spain, Italy, and Poland. It is also
exposed, although to a lesser extent, to foreign currency risk
in Australia and the Pacific Rim. Movements of exchange rates
against the U.S. Dollar can result in variations in the
U.S. Dollar value of
non-U.S. sales.
In some instances, gains in one currency may be offset by losses
in another. The Company enters into foreign currency forward
contracts to mitigate the effect of foreign currency exchange
rate fluctuations on certain transactions subject to foreign
currency risk. See Note 2 to the Consolidated Financial
Statements.
Commodity
Price Risk
Lead is the primary material used in the manufacture of
batteries, representing approximately 45% of the Companys
cost of goods sold. The market price of lead fluctuates.
Generally, when lead prices decrease, customers may seek
disproportionate price reductions from the Company, and when
lead prices increase, customers may resist price increases. The
Company occasionally enters into certain non-lead commodity
hedging instruments to mitigate the effect of price fluctuations
in those commodities. See Note 2 to the Consolidated
Financial Statements.
Interest
Rate Risk
The Company is exposed to interest rate risk on its variable
rate, long-term debt. In February 2008, the Company entered into
an interest rate swap agreement to fix the variable component of
interest on $200.0 million of its floating rate long-term
obligations through February 27, 2011. See Note 2 to
the Consolidated Financial Statements.
41
The following table presents the expected outstanding debt
balances and related interest rates, excluding capital lease
obligations and lines of credit, under the terms of the
Companys borrowing arrangements in effect at
March 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 and
|
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
Beyond
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
10.5% Senior Secured Notes
|
|
$
|
290,000
|
|
|
$
|
290,000
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
Fixed Interest Rate
|
|
|
10.5
|
%
|
|
|
10.5
|
%
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
Floating Rate Convertible Senior Subordinated Notes
|
|
|
60,000
|
|
|
|
60,000
|
|
|
$
|
60,000
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
Variable Interest Rate(a)
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
Senior Secured Credit Facility
|
|
|
283,714
|
|
|
|
280,767
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
Variable Interest Rate
|
|
|
6.0
|
%
|
|
|
6.0
|
%
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
|
(a) |
|
Variable components of interest rates based upon market rates at
March 31, 2010. See Note 7 to the Consolidated
Financial Statements. |
|
|
Item 8.
|
Financial
Statements and Supplementary Data
|
See Index to Financial Statements at
page F-1.
|
|
Item 9.
|
Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure
|
None.
|
|
Item 9A.
|
Controls
and Procedures
|
Evaluation
of Disclosure Controls and Procedures
The Company maintains disclosure controls and
procedures, as such term is defined in
Rules 13a-15(e)
and
15d-15(e) of
the Securities Exchange Act of 1934 (the Exchange
Act), that are designed to ensure that information
required to be disclosed by the Company in reports that it files
or submits under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in
SEC rules and forms, and that such information is accumulated
and communicated to the Companys management, including the
Companys chief executive officer and chief financial
officer, as appropriate, to allow timely decisions regarding
required disclosure.
As of the end of the period covered by this report, the Company
carried out an evaluation, under the supervision and with the
participation of senior management, including the chief
executive officer and the chief financial officer, of the
effectiveness of the design and operation of our disclosure
controls and procedures pursuant to Exchange Act
Rules 13a-15(b)
and
15d-15(b).
Based upon this evaluation, the chief executive officer and the
chief financial officer concluded that the Companys
disclosure controls and procedures were effective.
Managements
Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and
maintaining adequate internal control over financial reporting,
as such term is defined in Exchange Act
Rules 13a-15(f)
and
15d-15(f).
The Companys internal control over financial reporting is
a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. 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.
42
Management, together with our Chief Executive Officer and Chief
Financial Officer, has completed its evaluation of the
effectiveness of the Companys internal control over
financial reporting as of March 31, 2010 based on the
criteria established in Internal Control
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on our
assessment and on those criteria, we determined that, as of
March 31, 2010, the Companys internal control over
financial reporting was effective.
The effectiveness of the Companys internal control over
financial reporting as of March 31, 2010 has been audited
by PricewaterhouseCoopers LLP, an independent registered public
accounting firm, as stated in their report which is included
herein.
Changes
in Internal Control Over Financial Reporting
There have not been any changes in the Companys internal
control over financial reporting during the fiscal quarter ended
March 31, 2010 that have materially affected or are
reasonably likely to materially affect the Companys
internal control over financial reporting.
|
|
Item 9B.
|
Other
Information
|
None
|
|
Item 10.
|
Directors
and Executive Officers, and Corporate Governance
|
Information concerning the Board of Directors of the Company,
the members of the Companys Audit Committee, the
Companys Audit Committee financial expert and the
Companys Code of Ethics is incorporated by reference to
the Companys Proxy Statement for the Annual Meeting of
Stockholders currently scheduled to be held on
September 15, 2010 (the Proxy Statement).
Section 16(a)
Beneficial Ownership Reporting Compliance
Information concerning compliance with Section 16(a) of the
Securities Exchange Act of 1934 is incorporated by reference to
the Proxy Statement.
Director
Independence
The information required by this item is incorporated by
reference to the Proxy Statement.
Audit
Committee Financial Expert
The information required by this item is incorporated by
reference to the Proxy Statement.
Code of
Ethics
The information required by this item is incorporated by
reference to the Proxy Statement.
|
|
Item 11.
|
Executive
Compensation
|
The information required by this item is incorporated by
reference to the Proxy Statement.
|
|
Item 12.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
The information required by this item is incorporated by
reference to the Proxy Statement.
43
|
|
Item 13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
The information required by this item is incorporated by
reference to the Proxy Statement.
|
|
Item 14.
|
Principal
Accountant Fees and Services
|
The information required by this item is incorporated by
reference to the Proxy Statement.
PART IV
|
|
Item 15.
|
Exhibits
and Financial Statement Schedules
|
(a) Index to Financial Statements
See Index to Consolidated Financial Statements at
page F-1.
(b) Exhibits Required by Item 601 of
Regulation S-K
See Index to Exhibits.
(c) Financial Statement Schedules
See Index to Consolidated Financial Statements at
page F-1.
44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on June 2, 2010.
EXIDE TECHNOLOGIES
|
|
|
|
By:
|
/s/ PHILLIP
A. DAMASKA
|
Phillip A. Damaska,
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities
stated, in each case, on June 2, 2010.
|
|
|
|
|
|
|
By:
|
|
/s/ GORDON
A. ULSH
|
|
By:
|
|
/s/ DAVID
S. FERGUSON
|
|
|
|
|
|
|
|
|
|
Gordon A. Ulsh,
Chief Executive Officer
(principal executive officer)
|
|
|
|
David S. Ferguson,
Director
|
|
|
|
|
|
|
|
By:
|
|
/s/ PHILLIP
A. DAMASKA
|
|
By:
|
|
/s/ JOHN
P. REILLY
|
|
|
|
|
|
|
|
|
|
Phillip A. Damaska,
Executive Vice President and
Chief Financial Officer
(principal financial officer)
|
|
|
|
John P. Reilly,
Chairman of the Board of Directors
|
|
|
|
|
|
|
|
By:
|
|
/s/ LOUIS
E. MARTINEZ
|
|
By:
|
|
/s/ MICHAEL
P. RESSNER
|
|
|
|
|
|
|
|
|
|
Louis E. Martinez,
Vice President, Corporate Controller, and
Chief Accounting Officer
(principal accounting officer)
|
|
|
|
Michael P. Ressner,
Director
|
|
|
|
|
|
|
|
By:
|
|
/s/ HERBERT
F. ASPBURY
|
|
By:
|
|
/s/ CARROLL
R. WETZEL
|
|
|
|
|
|
|
|
|
|
Herbert F. Aspbury,
Director
|
|
|
|
Carroll R. Wetzel,
Director
|
|
|
|
|
|
|
|
By:
|
|
/s/ MICHAEL
R. DAPPOLONIA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael R. DAppolonia,
Director
|
|
|
|
|
45
INDEX TO
EXHIBITS
|
|
|
|
|
|
2
|
.1
|
|
Joint Plan of Reorganization of the Official Committee of
Unsecured Creditors and the Debtors, dated March 11, 2004,
incorporated by reference to Exhibit 2.1 to the Companys
Report on Form 8-K (file no. 001-11263) dated May 6, 2004.
|
|
2
|
.2
|
|
Amended Technical Amendment to Joint Plan of Reorganization of
the Official Committee of Unsecured Creditors and the Debtors,
dated April 21, 2004, incorporated by reference to Exhibit 2.2
to the Companys Current Report on Form 8-K (file no.
001-11263) dated May 6, 2004.
|
|
2
|
.3
|
|
Order confirming the Joint Plan of Reorganization of the
Official Committee of Unsecured Creditors and the Debtors
entered April 21, 2004, incorporated by reference to Exhibit 2.3
to the Companys Report on Form 8-K (file no. 001-11263)
dated May 6, 2004.
|
|
3
|
.1
|
|
Amended and Restated Certificate of Incorporation, incorporated
by reference to Exhibit 3.1 to the Companys Quarterly
Report on Form 10-Q (file no. 001-11263) dated November 8, 2007.
|
|
3
|
.2
|
|
Amended and Restated Bylaws of the Company, effective March 25,
2009, incorporated by reference to Exhibit 3.1 to the
Companys Report on Form 8-K (file no. 001-11263) dated
March 31, 2010.
|
|
4
|
.1
|
|
Warrant Agreement, dated as of May 5, 2004, by and between the
Company and American Stock Transfer Trust Company, incorporated
by reference to Exhibit 3 to the Companys Registration
Statement on Form 8-A (file no. 001-11263) dated May 6, 2004.
|
|
4
|
.2
|
|
Indenture dated as of March 18, 2005 by and between the Company,
certain guarantees, and SunTrust Bank relating to the 10
1/2% Senior
Secured Notes due 2013, incorporated by reference to Exhibit
10.1 to the Companys Report on Form 8-K (file no.
001-11263) dated March 25, 2005.
|
|
4
|
.3
|
|
Indenture, dated as of March 18, 2005, by and between the
Company and SunTrust Bank relating to the Floating Rate
Convertible Senior Subordinated Notes due 2013, incorporated by
reference to Exhibit 10.2 to the Companys Report on Form
8-K (file no. 001-11263) dated March 25, 2005.
|
|
4
|
.4
|
|
Intercreditor Agreement, dated as of March 18, 2005, reflecting
changes from First Amendment to Intercreditor Agreement dated as
of June 10, 2005 among the Company, certain of the Company
subsidiaries the administrative agent under the senior secured
credit facility, the trustee for the Companys two series
of notes and the Pension Benefit Guaranty Corporation,
incorporated by reference to Exhibit 99.4 to the Companys
Report on Form 8-K (file no. 001-11263) dated June 15, 2005.
|
|
4
|
.5
|
|
Security Agreement between the Company and the Pension Benefit
Guaranty Corporation, dated as of June 10, 2005, incorporated by
reference to Exhibit 99.2 to the Companys Report on Form
8-K (file no. 001-11263) dated June 15, 2005.
|
|
4
|
.6
|
|
Pledge Agreement between the Company, certain of the
Companys subsidiaries, and the Pension Benefit Guaranty
Corporation, dated as of June 10, 2005, incorporated by
reference to Exhibit 99.3 to the Companys Report on Form
8-K (file no. 001-11263) dated June 15, 2005.
|
|
4
|
.7
|
|
Credit Agreement, dated as of May 15, 2007, among Exide
Technologies, certain of the Companys subsidiaries, Exide
Global Holding Netherlands C.V., various financial institutions
named therein, and Deutsche Bank AG New York Branch as
Administrative Agent, incorporated by reference to Exhibit 10.1
to the Companys Report on Form 8-K (file no. 001-11263)
dated May 15, 2007.
|
|
4
|
.8
|
|
Registration Rights Agreement, dated September 18, 2006, between
Exide Technologies, Tontine Capital Partners, L.P., Tontine
Partners, L.P., Tontine Overseas Associates, L.L.C., Tontine
Capital Overseas Master Fund, L.P., Arklow Capital, LLC and Legg
Mason Investment Trust, Inc., incorporated by reference to
Exhibit 10.1 to the Companys Report on Form 8-K (file no.
001-11263) dated September 19, 2006.
|
|
4
|
.9
|
|
Rights Agreement, dated as of December 6, 2008, by end between
the Company and American Stock Transfer Trust Company, LLC,
incorporated by reference to Exhibit 4.1 to the Registration
Statement in Form 8-A (file no. 001-11263)dated December 8, 2008.
|
|
4
|
.10
|
|
First Amendment to Credit Agreement, dated as of September 30,
2009, among the Company, each Domestic Subsidiary, Exide Global
Holding Netherlands C.V., a limited partnership organized under
the laws of The Netherlands, the Lenders party hereto and
Deutsche Bank AG New York Branch, as Administrative Agent,
incorporated by reference to Exhibit 4.1 to the Companys
Quarterly Report on Form10-Q (file no. 001-11263)dated November
5, 2009.
|
46
|
|
|
|
|
|
4
|
.11
|
|
Second Amendment to Credit Agreement, dated as of November 12,
2009, among the Company, each Domestic Subsidiary, Exide Global
Holding Netherlands C.V., a limited partnership organized under
the laws of The Netherlands, the Lenders party hereto and
Deutsche Bank AG New York Branch, as Administrative Agent,
incorporated by reference to Exhibit 4.1 to the Companys
Quarterly Report on Form10-Q (file no. 001-11263) dated February
3, 2010.
|
|
10
|
.30
|
|
Form of Indemnity Agreement, dated February 27, 2006,
incorporated by reference to Exhibit 10.1 to the Companys
Report on Form 8-K (file no. 001-11263) dated March 2, 2006.
|
|
10
|
.31
|
|
Form of Restricted Stock Unit Award Agreement, incorporated by
reference to Exhibit 10.1 to the Companys Report on Form
8-K (file no. 001-11263) dated March 27, 2007.
|
|
10
|
.32
|
|
Form of Exide Technologies Employee Restricted Stock Award
Agreement, incorporated by reference to Exhibit 10.1 to the
Companys Report on Form 8-K (file no. 001-11263) dated
October 20, 2004.
|
|
10
|
.33
|
|
Form of Exide Technologies Employee Stock Option Award
Agreement, incorporated by reference to Exhibit 10.2 to the
Companys Report on Form 8-K (file no. 001-11263) dated
October 20, 2004.
|
|
10
|
.34
|
|
Form of Non-Employee Director Stock Option Agreement,
incorporated by reference to Exhibit 10.4 to the Companys
Report on Form 8-K (file no. 001-11263) dated October 20, 2004.
|
|
10
|
.35
|
|
Form of Non-Employee Director Stock Option Agreement,
incorporated by reference to Exhibit 10.5 to the Companys
Report on Form 8-K (file no. 001-11263) dated October 20, 2004.
|
|
10
|
.36
|
|
Standby Purchase Agreement between Exide Technologies and
Tontine Capital Partners, L.P., and Legg Mason Investment Trust,
Inc., dated August 28, 2007, incorporated by reference to
Exhibit 10.1 to the Companys Report on Form 8-K (file no.
001-11263) dated August 28, 2007.
|
|
10
|
.37
|
|
Exide Technologies 2004 Stock Incentive Plan, as amended
and restated effective August 22, 2007, incorporated by
reference to Exhibit 10.1 to the Companys Report on Form
10-Q (file no. 001-11263) dated November 8, 2007.
|
|
10
|
.38
|
|
Amended and Restated Employment Agreement of Gordon A. Ulsh,
dated January 31, 2008, incorporated by reference to Exhibit
10.1 to the Companys Report on Form 8-K (file no.
001-11263) dated February 6, 2008.
|
|
10
|
.39
|
|
Letter dated January 28, 2009, amending the Amended and Restated
Employment Agreement of Gordon A. Ulsh, incorporated by
reference to Exhibit 10.1 to the Companys Report on Form
8-K (file no. 001-11263) dated February 2, 2009.
|
|
10
|
.40
|
|
Amendment to Stock Option Award Agreement between Exide
Technologies and Gordon A. Ulsh, dated February 18, 2008,
incorporated by reference to Exhibit 10.1 to the Companys
Report on Form 8-K (file no. 001-11263) dated February 20, 2008.
|
|
10
|
.41
|
|
Amendment to Stock Option Award Agreement between Exide
Technologies and Edward J. OLeary, dated
February 18, 2008, incorporated by reference to Exhibit 10.3 to
the Companys Report on Form 8-K (file no. 001-11263) dated
February 20, 2008.
|
|
10
|
.42
|
|
Amendment to Stock Option Award Agreement between Exide
Technologies and Mitchell S. Bregman, dated February
18, 2008, incorporated by reference to Exhibit 10.4 to the
Companys Report on Form 8-K (file no. 001-11263) dated
February 20, 2008.
|
|
10
|
.43
|
|
Amendment to Stock Option Award Agreement between Exide
Technologies and Phillip A. Damaska, dated February 18, 2008,
incorporated by reference to Exhibit 10.5 to the Companys
Report on Form 8-K (file no. 001-11263) dated February 20, 2008.
|
|
10
|
.44
|
|
Performance Unit Award Agreement, dated as of May 15, 2008, by
and between the Company and Gordon A. Ulsh, incorporated by
reference to Exhibit 10.2 to the Companys Quarterly Report
on Form 10-Q (file no. 001-11263) dated August 6, 2008. #
|
|
10
|
.45
|
|
Consulting Services Agreement between Exide Technologies and
Joel M. Campbell, dated January 28, 2009.
|
|
10
|
.46
|
|
Fiscal 2010 Short Term Incentive Plan adopted by the
Compensation Committee of the Board of Directors on March 25,
2009.
|
|
10
|
.47
|
|
Performance Unit Award Agreement, dated as of May 4, 2009 by and
between the Company and Gordon A. Ulsh.#
|
47
|
|
|
|
|
|
10
|
.48
|
|
Performance Unit Award Agreement, dated as of May 4, 2009 by and
between the Company and Mitchell S. Bregman.#
|
|
10
|
.49
|
|
Performance Unit Award Agreement, dated as of May 4, 2009 by and
between the Company and Phillip A. Damaska.#
|
|
10
|
.50
|
|
Performance Unit Award Agreement, dated as of May 4, 2009 by and
between the Company and Barbara A. Hatcher.#
|
|
10
|
.51
|
|
Performance Unit Award Agreement, dated as of May 4, 2009 by and
between the Company and Edward J. OLeary.#
|
|
10
|
.52
|
|
Exide Technologies 2009 Stock Incentive Plan, incorporated by
reference to the Companys Report on Form 8-K (file no.
001-11263) dated September 21, 2009
|
|
10
|
.53
|
|
Letter dated August 27, 2009, amending the Amended and Restated
Employment Agreement of Gordon A. Ulsh, incorporated by
reference to Exhibit 10.1 to the Companys Report on Form
8-K (file no. 001-11263) dated August 31, 2009.
|
|
10
|
.54
|
|
Letter dated November 3, 2009 amending the Amended and Restated
Employment Agreement of Gordon A. Ulsh, incorporated by
reference to Exhibit 10.1 to the Companys Report on Form
8-K (file no. 001-11263) dated November 5, 2009.
|
|
*10
|
.55
|
|
Form of Performance Share Award Agreement. #
|
|
10
|
.56
|
|
Form of Restricted Stock Award Agreement incorporated by
reference to the Companys Report on Form 8-K (file no.
001-11263) dated March 31, 2010.
|
|
*10
|
.57
|
|
Supply Agreement between Daramic, LLC and Exide Technologies,
dated January 17, 2010.#
|
|
*21
|
|
|
Subsidiaries of the Company.
|
|
*23
|
.1
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
*31
|
.1
|
|
Certification of Gordon A. Ulsh, Chief Executive Officer,
pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
|
|
*31
|
.2
|
|
Certification of Phillip A. Damaska, Executive Vice President
and Chief Financial Officer, pursuant to Section 302 of
Sarbanes-Oxley Act of 2002.
|
|
*32
|
.1
|
|
Certifications pursuant to Section 906 of Sarbanes-Oxley Act of
2002.
|
|
|
|
* |
|
Filed with this Report. |
|
|
|
Management contract or compensatory plan or arrangement. |
|
# |
|
Pursuant to a request for confidential treatment, portions of
this exhibit have been redacted from the publicly filed document
and have been furnished separately to the SEC as required by
Rule 24b-2
under the Securities Exchange Act of 1934. |
48
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
|
|
|
|
|
Exide Technologies and Subsidiaries
|
|
|
|
|
|
|
|
F-2
|
|
|
|
|
F-3
|
|
|
|
|
F-4
|
|
|
|
|
F-5
|
|
|
|
|
F-6
|
|
|
|
|
F-7
|
|
|
|
|
|
|
FINANCIAL STATEMENT SCHEDULE:
|
|
|
|
|
|
|
|
F-40
|
|
All other schedules are omitted because they are not applicable,
not required, or the information required to be set forth
therein is included in the Consolidated Financial Statements or
in the Notes thereto.
Other
Financial Statements of Certain Exide Technologies
Subsidiaries
The following financial statements for certain of Exide
Technologies wholly owned subsidiaries are included
pursuant to
Regulation S-X,
Rule 3-16,
Financial Statements of Affiliates Whose Securities
Collateralize an Issue Registered or Being Registered. See
Note 7 to the Consolidated Financial Statements.
|
|
|
|
|
Exide Global Holding Netherlands C.V. and Subsidiaries
|
|
|
|
|
|
|
|
F-41
|
|
|
|
|
F-42
|
|
|
|
|
F-43
|
|
|
|
|
F-44
|
|
|
|
|
F-45
|
|
|
|
|
F-46
|
|
F-1
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Exide Technologies
In our opinion, the accompanying consolidated balance sheets and
the related consolidated statements of operations,
stockholders equity and cash flows present fairly, in all
material respects, the financial position of Exide Technologies
and its subsidiaries at March 31, 2010 and 2009, and the
results of their operations and their cash flows for each of the
three years in the period ended March 31, 2010 in
conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the
financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related
consolidated financial statements. Also in our opinion, the
Company maintained, in all material respects, effective internal
control over financial reporting as of March 31, 2010,
based on criteria established in Internal Control
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The
Companys management is responsible for these financial
statements and financial statement schedule, for maintaining
effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over
financial reporting, included in Managements Report on
Internal Control Over Financial Reporting appearing under
Item 9A. Our responsibility is to express opinions on these
financial statements, on the financial statement schedule, and
on the Companys internal control over financial reporting
based on our integrated audits. We conducted our audits in
accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material
misstatement and whether effective internal control over
financial reporting was maintained in all material respects. Our
audits of the financial statements included examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. Our audit of internal
control over financial reporting included obtaining an
understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also
included performing such other procedures as we considered
necessary in the circumstances. We believe that our audits
provide a reasonable basis for our opinions.
As discussed in Note 1 to the consolidated financial
statements, the Company changed the manner in which it accounts
for noncontrolling interests effective April 1, 2009.
A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (ii) 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
company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
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.
PricewaterhouseCoopers LLP
Atlanta, GA
June 2, 2010
F-2
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands, except per-share data)
|
|
|
NET SALES
|
|
$
|
2,685,808
|
|
|
$
|
3,322,332
|
|
|
$
|
3,696,671
|
|
COST OF SALES
|
|
|
2,147,712
|
|
|
|
2,708,664
|
|
|
|
3,103,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
538,096
|
|
|
|
613,668
|
|
|
|
593,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, marketing and advertising
|
|
|
258,212
|
|
|
|
297,032
|
|
|
|
289,975
|
|
General and administrative
|
|
|
182,549
|
|
|
|
173,990
|
|
|
|
176,607
|
|
Restructuring
|
|
|
70,594
|
|
|
|
63,271
|
|
|
|
10,507
|
|
Other (income) expense, net
|
|
|
(1,566
|
)
|
|
|
41,264
|
|
|
|
(39,069
|
)
|
Interest expense, net
|
|
|
59,933
|
|
|
|
72,240
|
|
|
|
85,517
|
|
Loss on early extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
21,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
569,722
|
|
|
|
647,797
|
|
|
|
544,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before reorganization items and income taxes
|
|
|
(31,626
|
)
|
|
|
(34,129
|
)
|
|
|
48,311
|
|
REORGANIZATION ITEMS, NET
|
|
|
1,674
|
|
|
|
2,179
|
|
|
|
3,822
|
|
INCOME TAX (BENEFIT) PROVISION
|
|
|
(21,963
|
)
|
|
|
32,173
|
|
|
|
10,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
(11,337
|
)
|
|
|
(68,481
|
)
|
|
|
33,603
|
|
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
|
|
|
477
|
|
|
|
1,041
|
|
|
|
1,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Exide Technologies
|
|
$
|
(11,814
|
)
|
|
$
|
(69,522
|
)
|
|
$
|
32,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) EARNINGS PER SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.16
|
)
|
|
$
|
(0.92
|
)
|
|
$
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
(0.16
|
)
|
|
$
|
(0.92
|
)
|
|
$
|
0.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
75,960
|
|
|
|
75,526
|
|
|
|
68,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
75,960
|
|
|
|
75,526
|
|
|
|
69,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these statements.
F-3
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(In thousands, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
89,558
|
|
|
$
|
69,505
|
|
Receivables, net of allowance for doubtful accounts of $31,274
and $28,855
|
|
|
488,942
|
|
|
|
497,841
|
|
Inventories
|
|
|
418,396
|
|
|
|
420,815
|
|
Prepaid expenses and other
|
|
|
16,599
|
|
|
|
17,427
|
|
Deferred financing costs, net
|
|
|
4,944
|
|
|
|
4,890
|
|
Deferred income taxes
|
|
|
24,386
|
|
|
|
33,005
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,042,825
|
|
|
|
1,043,483
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
603,160
|
|
|
|
586,261
|
|
|
|
|
|
|
|
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
Goodwill and intangibles
|
|
|
180,428
|
|
|
|
179,333
|
|
Investments in affiliates
|
|
|
2,156
|
|
|
|
2,048
|
|
Deferred financing costs, net
|
|
|
7,316
|
|
|
|
12,134
|
|
Deferred income taxes
|
|
|
85,613
|
|
|
|
51,272
|
|
Other
|
|
|
34,728
|
|
|
|
25,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
310,241
|
|
|
|
270,443
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,956,226
|
|
|
$
|
1,900,187
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
$
|
7,682
|
|
|
$
|
6,977
|
|
Current maturities of long-term debt
|
|
|
5,241
|
|
|
|
5,048
|
|
Accounts payable
|
|
|
333,532
|
|
|
|
261,652
|
|
Accrued expenses
|
|
|
267,038
|
|
|
|
279,447
|
|
Warrants liability
|
|
|
336
|
|
|
|
1,143
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
613,829
|
|
|
|
554,267
|
|
Long-term debt
|
|
|
646,604
|
|
|
|
646,180
|
|
Noncurrent retirement obligations
|
|
|
221,248
|
|
|
|
197,403
|
|
Deferred income tax liability
|
|
|
23,485
|
|
|
|
30,229
|
|
Other noncurrent liabilities
|
|
|
103,022
|
|
|
|
130,041
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,608,188
|
|
|
|
1,558,120
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value, 1,000 shares
authorized, 0 shares issued and outstanding
|
|
|
|
|
|
|
|
|
Common stock, $0.01 par value, 200,000 shares
authorized, 75,601 and 75,499 shares issued and outstanding
|
|
|
756
|
|
|
|
755
|
|
Additional paid-in capital
|
|
|
1,119,959
|
|
|
|
1,111,001
|
|
Accumulated deficit
|
|
|
(799,095
|
)
|
|
|
(787,281
|
)
|
Accumulated other comprehensive income
|
|
|
10,714
|
|
|
|
1,752
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity attributable to Exide
Technologies
|
|
|
332,334
|
|
|
|
326,227
|
|
Noncontrolling interests
|
|
|
15,704
|
|
|
|
15,840
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
348,038
|
|
|
|
342,067
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
1,956,226
|
|
|
$
|
1,900,187
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these statements.
F-4
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (Loss) Income
|
|
|
|
|
|
Exide
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Defined
|
|
|
Derivatives
|
|
|
Cummulative
|
|
|
Non-
|
|
|
Technologies
|
|
|
|
Common
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Benefit
|
|
|
Qualifying as
|
|
|
Transalation
|
|
|
controlling
|
|
|
Comprehensive
|
|
|
|
Stock
|
|
|
Capital
|
|
|
Deficit
|
|
|
Plans
|
|
|
Hedges
|
|
|
Adjustment
|
|
|
Interest
|
|
|
(Loss) Income
|
|
|
|
(In thousands)
|
|
|
|
|
|
Balance at March 31, 2007
|
|
$
|
607
|
|
|
$
|
1,008,481
|
|
|
$
|
(745,534
|
)
|
|
$
|
16,155
|
|
|
$
|
|
|
|
$
|
50,814
|
|
|
$
|
14,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
32,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,544
|
|
|
$
|
32,059
|
|
Defined benefit plans, net of tax of $12,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,560
|
|
Translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,293
|
|
|
|
2,668
|
|
|
|
54,293
|
|
Unrealized loss on derivatives, net of tax of $925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,514
|
)
|
|
|
|
|
|
|
|
|
|
|
(2,514
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
121,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative effect of the adoption of Fin 48
|
|
|
|
|
|
|
|
|
|
|
(4,187
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issuance
|
|
|
146
|
|
|
|
90,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
|
|
|
|
|
|
|
5,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2008
|
|
$
|
753
|
|
|
$
|
1,104,939
|
|
|
$
|
(717,662
|
)
|
|
$
|
53,715
|
|
|
$
|
(2,514
|
)
|
|
$
|
105,107
|
|
|
$
|
18,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
(69,522
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,041
|
|
|
$
|
(69,522
|
)
|
Defined benefit plans, net of tax of $25,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(74,677
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(74,677
|
)
|
Translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(77,424
|
)
|
|
|
(3,973
|
)
|
|
|
(77,424
|
)
|
Unrealized loss on derivatives, net of tax of $841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,455
|
)
|
|
|
|
|
|
|
|
|
|
|
(2,455
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(224,078
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative effect of the measurement date change provision of
FAS 158
|
|
|
|
|
|
|
|
|
|
|
(97
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issuance
|
|
|
2
|
|
|
|
366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
|
|
|
|
|
|
|
5,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2009
|
|
$
|
755
|
|
|
$
|
1,111,001
|
|
|
$
|
(787,281
|
)
|
|
$
|
(20,962
|
)
|
|
$
|
(4,969
|
)
|
|
$
|
27,683
|
|
|
$
|
15,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
(11,814
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
477
|
|
|
$
|
(11,814
|
)
|
Defined benefit plans, net of tax of $4,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17,436
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17,436
|
)
|
Translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,914
|
|
|
|
390
|
|
|
|
24,914
|
|
Net recognition of unrealized loss on derivatives, net of tax of
$527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,484
|
|
|
|
|
|
|
|
|
|
|
|
1,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(2,852
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in ownership of sub
|
|
|
|
|
|
|
(1,789
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,003
|
)
|
|
|
|
|
Common stock issuance
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation/other
|
|
|
|
|
|
|
10,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2010
|
|
$
|
756
|
|
|
$
|
1,119,959
|
|
|
$
|
(799,095
|
)
|
|
$
|
(38,398
|
)
|
|
$
|
(3,485
|
)
|
|
$
|
52,597
|
|
|
$
|
15,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these statements.
F-5
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(11,337
|
)
|
|
$
|
(68,481
|
)
|
|
$
|
33,603
|
|
Adjustments to reconcile net (loss) income to net cash provided
by operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
90,113
|
|
|
|
95,918
|
|
|
|
101,161
|
|
Unrealized (gain) loss on warrants
|
|
|
(807
|
)
|
|
|
(7,129
|
)
|
|
|
2,975
|
|
Loss (gain) on asset sales / impairments
|
|
|
10,002
|
|
|
|
11,744
|
|
|
|
(237
|
)
|
Deferred income taxes
|
|
|
(28,363
|
)
|
|
|
12,916
|
|
|
|
(5,435
|
)
|
Provision for doubtful accounts
|
|
|
4,741
|
|
|
|
8,044
|
|
|
|
5,974
|
|
Non-cash stock compensation
|
|
|
10,747
|
|
|
|
5,696
|
|
|
|
5,465
|
|
Reorganization items, net
|
|
|
1,674
|
|
|
|
2,179
|
|
|
|
3,822
|
|
Amortization of deferred financing costs
|
|
|
5,004
|
|
|
|
5,034
|
|
|
|
4,900
|
|
Loss on early extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
21,342
|
|
Currency remeasurement (gain) loss
|
|
|
(10,239
|
)
|
|
|
42,134
|
|
|
|
(40,782
|
)
|
Changes in assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
21,090
|
|
|
|
162,390
|
|
|
|
(43,606
|
)
|
Inventories
|
|
|
20,128
|
|
|
|
88,739
|
|
|
|
(113,877
|
)
|
Prepaid expenses and other
|
|
|
1,451
|
|
|
|
(1,570
|
)
|
|
|
3,763
|
|
Payables
|
|
|
68,060
|
|
|
|
(155,958
|
)
|
|
|
58,596
|
|
Accrued liabilities
|
|
|
(36,562
|
)
|
|
|
(14,107
|
)
|
|
|
7,625
|
|
Noncurrent liabilities
|
|
|
(23,661
|
)
|
|
|
(67,004
|
)
|
|
|
(46,578
|
)
|
Other, net
|
|
|
(12,879
|
)
|
|
|
(24
|
)
|
|
|
2,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
109,162
|
|
|
|
120,521
|
|
|
|
1,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(96,092
|
)
|
|
|
(108,914
|
)
|
|
|
(56,854
|
)
|
Proceeds from asset sales, net
|
|
|
850
|
|
|
|
7,827
|
|
|
|
7,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(95,242
|
)
|
|
|
(101,087
|
)
|
|
|
(49,797
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in short-term borrowings
|
|
|
(236
|
)
|
|
|
(10,438
|
)
|
|
|
4,699
|
|
Payments under Senior Credit Facility
|
|
|
(3,005
|
)
|
|
|
(2,977
|
)
|
|
|
(13,176
|
)
|
Common stock issuance
|
|
|
|
|
|
|
368
|
|
|
|
91,139
|
|
Increase (Decrease) in other debt
|
|
|
6,995
|
|
|
|
(16,394
|
)
|
|
|
6,697
|
|
Increase in controlling interests in subsidiaries
|
|
|
(1,789
|
)
|
|
|
|
|
|
|
|
|
Financing costs and other
|
|
|
(35
|
)
|
|
|
|
|
|
|
(31,985
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
1,930
|
|
|
|
(29,441
|
)
|
|
|
57,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
|
|
4,203
|
|
|
|
(11,035
|
)
|
|
|
5,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) In Cash and Cash Equivalents
|
|
|
20,053
|
|
|
|
(21,042
|
)
|
|
|
14,336
|
|
Cash and Cash Equivalents, Beginning of Period
|
|
|
69,505
|
|
|
|
90,547
|
|
|
|
76,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, End of Period
|
|
$
|
89,558
|
|
|
$
|
69,505
|
|
|
$
|
90,547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
47,129
|
|
|
$
|
63,567
|
|
|
$
|
75,234
|
|
Income taxes (net of refunds)
|
|
$
|
9,954
|
|
|
$
|
16,288
|
|
|
$
|
18,848
|
|
The accompanying notes are an integral part of these statements.
F-6
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
March 31,
2010
|
|
(1)
|
BASIS OF
PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
|
The Consolidated Financial Statements include the accounts of
Exide Technologies (referred to together with its subsidiaries,
unless the context requires otherwise, as Exide or
the Company) and all of its majority-owned
subsidiaries. The Consolidated Financial Statements are prepared
in accordance with U.S. generally accepted accounting
principles (GAAP).
Certain amounts in the Consolidated Financial Statements as of
March 31, 2009 and 2008 have been adjusted to conform to
the presentation of equivalent amounts in the current period
which reflect the adoption of a new accounting standard related
to the presentation of minority (noncontrolling) ownership
interests in consolidated subsidiaries.
Principles
of Consolidation
The Consolidated Financial Statements include the accounts of
Exide Technologies and all of its majority owned subsidiaries in
which it exercises control. Investments in affiliates of less
than a 20% interest are accounted for by the cost method.
Investments in 20% to 50% owned companies are accounted for by
the equity method. All significant intercompany transactions
have been eliminated.
Nature
of Operations
The Company is one of the largest manufacturers and suppliers of
lead-acid batteries for the transportation and industrial energy
applications in the world. The Company manufactures industrial
and transportation batteries in North America, Europe, India,
and Australia. The Companys transportation batteries
include ignition and lighting batteries for cars, trucks,
off-road vehicles, agricultural and construction vehicles,
motorcycles, recreational vehicles, marine, and other
applications. The Companys industrial batteries consist of
motive power batteries, such as those used in forklift trucks
and other electric vehicles, and network power batteries used
for back-up
power applications, such as those used for telecommunication
systems. The Company markets its transportation batteries to a
broad range of retailers and distributors of replacement
batteries and automotive original equipment manufacturers
(OEM).
The Company currently has four business segments: Transportation
Americas, Transportation Europe and Rest of World
(ROW), Industrial Energy Americas, and Industrial
Energy Europe and ROW. For a discussion of the Companys
segments, see Note 17.
Major
Customers and Concentration of Credit
The Company has a number of major end-user customers, retail and
OEM, both in North America and Europe. No single customer
accounted for more than 10% of consolidated net sales during any
of the fiscal years presented. The Company does not believe a
material part of its business is dependent upon a single
customer, the loss of which would have a material long-term
impact on the business of the Company.
Foreign
Currency Translation
The functional currencies of the Companys foreign
subsidiaries are primarily the respective local currencies.
Assets and liabilities of the Companys foreign
subsidiaries and affiliates are translated into
U.S. Dollars at the year-end exchange rate, and revenues
and expenses are translated at average monthly exchange rates.
Translation gains and losses are recorded as a component of
accumulated other comprehensive income within stockholders
equity. Foreign currency gains and losses from certain
intercompany transactions are also recorded as a component of
accumulated other comprehensive income. All other foreign
currency gains and losses are included in other expense
(income), net.
F-7
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Cash
Equivalents
Cash equivalents consist of highly liquid instruments with
maturities at the time of acquisition of three months or less.
Cash equivalents are stated at cost, which approximates fair
value because of the short-term maturity of these instruments.
Allowance
for Doubtful Accounts
The Company maintains allowances for doubtful accounts for
estimated probable losses resulting from the inability of the
Companys customers to make required payments. The Company
continues to assess the adequacy of the reserves for doubtful
accounts based on the financial condition of the Companys
customers and other external factors that may impact
collectibility. The majority of the Companys accounts
receivable are due from trade customers. Credit is extended
based on an evaluation of the Companys customers
financial condition and generally, collateral is not required.
Payment terms vary and accounts receivable are stated in the
Consolidated Financial Statements at amounts due from customers
net of an allowance for doubtful accounts. Accounts outstanding
for longer than the payment terms are considered past due. The
Company considers a number of factors in determining the
allowance for doubtful accounts, including the length of time
trade accounts receivable are past due, the customers
current ability to pay their obligations to the Company, the
Companys previous loss history, and the condition of the
general economy and the industry as a whole. The Company writes
off accounts receivable when they become uncollectible.
Inventories
Inventories, which consist of material, labor and overhead, are
stated at the lower of cost or market using the
first-in,
first-out (FIFO) method. The Company writes down its
inventory to estimated net realizable value (when below
historical cost) based on assumptions of future demand and
market conditions.
Property,
Plant and Equipment
Depreciation is provided on a straight-line basis over the
estimated useful lives of the assets. The range of original
estimated useful lives is: buildings and improvements,
25-40 years;
machinery and equipment,
3-14 years.
Cost and accumulated depreciation for property retired or
disposed of are removed from the accounts, and any gain or loss
on disposal is credited or charged to earnings. Expenditures for
maintenance and repairs are charged to expense as incurred.
Additions, improvements and major renewals are capitalized.
Deferred
Financing Costs
Deferred financing costs are amortized to interest expense over
the life of the related debt.
Valuation
of Long-Lived Assets
The Companys long-lived assets include property, plant and
equipment, identified intangible assets, and goodwill.
Long-lived assets (other than indefinite lived intangible assets
and goodwill) are depreciated over their estimated useful lives,
and are reviewed for impairment whenever changes in
circumstances indicate the carrying value may not be
recoverable. Indefinite-lived intangible assets and goodwill are
reviewed for impairment on both an annual basis and whenever
changes in circumstances indicate the carrying value may not be
recoverable. The fair value of indefinite-lived intangible
assets and goodwill is based upon the Companys estimates
of future cash flows and other factors including discount rates
to determine the fair value of the respective assets. If these
assets or their related assumptions change in the future, the
Company may be required to record impairment charges.
F-8
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Sales
Returns and Allowances
The Company provides for an allowance for product returns
and/or
allowances. Based upon its manufacturing re-work process, the
Company believes that the majority of its product returns are
not the result of product defects. The Company recognizes the
estimated cost of product returns as a reduction of sales in the
period in which the related revenue is recognized. The product
return estimates are based upon historical trends and claims
experience, and include an assessment of the anticipated lag
between the date of sale and claim/return date.
Income
Taxes
The Company accounts for income taxes using the liability method
in accounting for deferred taxes. If it is more likely than not
that some portion, or all, of a deferred tax asset will not be
realized, a valuation allowance is recognized.
Revenue
Recognition
The Company records sales when revenue is earned. Shipping terms
are generally FOB shipping point and revenue is recognized when
product is shipped to the customer. In limited cases, terms are
FOB destination and in these cases, revenue is recognized when
product is delivered to the customers delivery site.
Accounting
for Shipping and Handling Costs
The Company records shipping and handling costs incurred in cost
of sales and records shipping and handling costs billed to
customers in net sales.
Advertising
The Company expenses advertising costs as they are incurred.
Net
(Loss) Earnings Per Share
The Company computes basic (loss) earnings per share by dividing
net (loss) income by the weighted average number of common
shares outstanding during the period. Diluted earnings per share
is computed by dividing net income by diluted weighted average
shares outstanding. Potentially dilutive shares include the
assumed exercise of stock options and the assumed vesting of
restricted stock and stock unit awards (using the treasury stock
method) as well as the assumed conversion of the Companys
Floating Rate Convertible Senior Subordinated Notes, if
dilutive. The potential dilutive effect of the assumed
conversion of convertible debt is determined using the
if-converted method, and considers both the impact of
incremented common shares after an assumed conversion, and the
related addition to net income of the after-tax interest
recognized during the period on the convertible debt. Shares
which are contingently issuable under the Companys plan of
reorganization have been included as outstanding common shares
for purposes of calculating basic (loss) earnings per share.
Use of
Estimates in the Preparation of Financial
Statements
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could
differ from those estimates.
F-9
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Recently
Issued Accounting Standards
In June 2009, the Financial Accounting Standards Board
(FASB) amended its guidance on accounting for
variable interest entities (VIEs). A VIE is an
entity in which an investor holds a controlling interest based
on factors other than a majority of voting rights. Among other
things, the new guidance requires more qualitative than
quantitative analyses to determine the primary beneficiary of a
VIE, requires continuous assessments of whether an enterprise is
the primary beneficiary of a VIE, enhances disclosures about an
enterprises involvement with a VIE, and amends certain
guidance for determining whether an entity meets the definition
of a VIE. Under the new guidance, a VIE must be consolidated if
the enterprise has both (a) the power to direct the
activities of the VIE that most significantly impact the
entitys economic performance, and (b) the obligation
to absorb losses or the right to receive benefits from the VIE
that could potentially be significant to the VIE. This new
guidance is effective for fiscal years beginning after
November 15, 2009 (the Companys fiscal 2011), and for
interim periods within that year. The Company is currently
evaluating the impact of the adoption of this new guidance on
its financial statements but at this time, no significant impact
is anticipated.
|
|
(2)
|
ACCOUNTING
FOR DERIVATIVES
|
The Company uses derivative contracts to hedge the volatility
arising from changes in the fair value of certain assets and
liabilities that are subject to market risk, such as interest
rates on debt instruments, foreign currency exchange rates, and
certain commodities. The Company does not enter into derivative
contracts for trading or speculative purposes.
The Company recognizes outstanding derivative instruments as
assets or liabilities, based on measurements of their fair
values. If a derivative qualifies for hedge accounting, gains or
losses in its fair value that offset changes in the fair value
of the asset or liability being hedged (effective
gains or losses) are reported in accumulated other comprehensive
income, and subsequently recorded to earnings only as the
related variability on the hedged transaction is recorded in
earnings. If a derivative does not qualify for hedge accounting,
changes in its fair value are reported in earnings immediately
upon occurrence. Derivatives qualify for hedge accounting if
they are designated as hedging instruments at their inception,
and if they are highly effective in achieving fair value changes
that offset the fair value changes of the assets or liabilities
being hedged. Regardless of a derivatives accounting
qualification, changes in its fair value that are not offset by
fair value changes in the asset or liability being hedged are
considered ineffective, and are recognized in earnings
immediately.
In February 2008, the Company entered into an interest rate swap
agreement to fix the variable component of interest on
$200.0 million of its floating rate long-term obligations
through February 27, 2011. The rate is fixed at 3.3% per
annum through the remainder of the agreement. The interest rate
swap is designated as a cash-flow hedging instrument.
In August 2008, the Company entered into a foreign currency
forward contract in the notional amount of $62.8 million to
mitigate the effect of foreign currency exchange rate
fluctuations of a certain foreign subsidiarys debt that is
denominated in U.S. dollars. The forward contract and the
indebtedness mature in May 2012. The Company also enters into
similar short-term currency forward contracts to mitigate the
effect of foreign currency remeasurement gains and losses.
Because the Company has not designated these contracts as
hedging instruments, changes in their fair value are recognized
immediately in earnings.
F-10
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following tables set forth information on the presentation
of these derivative instruments in the Companys
Consolidated Financial Statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value As of
|
|
|
|
|
March 31,
|
|
March 31,
|
|
|
Balance Sheet Location
|
|
2010
|
|
2009
|
|
|
|
|
(In thousands)
|
|
Asset Derivatives:
|
|
|
|
|
|
|
|
|
|
|
Foreign Exchange Forward(a)
|
|
Other noncurrent assets
|
|
$
|
4,034
|
|
|
$
|
4,962
|
|
Commodity Swap(a)
|
|
Current assets
|
|
|
665
|
|
|
|
|
|
Liability Derivatives:
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Swap(b)
|
|
Current liabilities
|
|
|
5,350
|
|
|
|
7,461
|
|
Foreign Exchange Forward(a)
|
|
Current liabilities
|
|
|
270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended
|
|
|
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
|
Statement of Operations Location
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
(In thousands)
|
|
Foreign Exchange Forwards(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Gain
|
|
Other (income) expense, net
|
|
$
|
(1,198
|
)
|
|
$
|
4,962
|
|
|
$
|
|
|
Commodity Swap(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
|
|
Cost of goods sold
|
|
|
665
|
|
|
|
|
|
|
|
|
|
Interest Rate Swap(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
|
|
Interest expense, net
|
|
|
(6,042
|
)
|
|
|
(2,941
|
)
|
|
|
(67
|
)
|
|
|
|
(a) |
|
Not designated as a hedging instrument |
|
(b) |
|
Designated as a cash flow hedging instrument. Approximately
$5.4 million is expected to be reclassified from OCI to
interest expense during fiscal 2011. |
|
|
(3)
|
ACCOUNTING
FOR GOODWILL AND INTANGIBLE ASSETS
|
The Company completed its most recent annual impairment
assessment of goodwill and intangible assets effective
March 31, 2010, utilizing its business plan as the basis
for development of cash flows and an estimate of fair values. No
adjustment of carrying values was deemed necessary.
Goodwill and intangible assets consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks and
|
|
|
Trademarks and
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
Tradenames
|
|
|
Tradenames
|
|
|
|
|
|
|
|
|
|
|
|
|
(not Subject to
|
|
|
(not Subject to
|
|
|
(Subject to
|
|
|
Customer
|
|
|
|
|
|
|
|
|
|
Amortization)
|
|
|
Amortization)
|
|
|
Amortization)
|
|
|
Relationships
|
|
|
Technology
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
As of March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount
|
|
$
|
4,538
|
|
|
$
|
61,110
|
|
|
$
|
13,886
|
|
|
$
|
115,175
|
|
|
$
|
30,742
|
|
|
$
|
225,451
|
|
Accumulated Amortization
|
|
|
|
|
|
|
|
|
|
|
(6,489
|
)
|
|
|
(28,517
|
)
|
|
|
(10,017
|
)
|
|
|
(45,023
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
$
|
4,538
|
|
|
$
|
61,110
|
|
|
$
|
7,397
|
|
|
$
|
86,658
|
|
|
$
|
20,725
|
|
|
$
|
180,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount
|
|
$
|
4,022
|
|
|
$
|
58,134
|
|
|
$
|
13,223
|
|
|
$
|
109,690
|
|
|
$
|
28,544
|
|
|
$
|
213,613
|
|
Accumulated Amortization
|
|
|
|
|
|
|
|
|
|
|
(5,134
|
)
|
|
|
(22,569
|
)
|
|
|
(6,577
|
)
|
|
|
(34,280
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
$
|
4,022
|
|
|
$
|
58,134
|
|
|
$
|
8,089
|
|
|
$
|
87,121
|
|
|
$
|
21,967
|
|
|
$
|
179,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-11
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Amortization of intangible assets for fiscal year 2010 and 2009
was $8.9 million and $7.9 million, respectively.
Excluding the impact of any future acquisitions (if any), the
Company anticipates annual amortization of intangible assets for
each of the next five years to be approximately
$8.0 million to $9.0 million. Intangible assets have
been recorded at the legal entity level and are subject to
foreign currency fluctuation.
Goodwill
In the fourth quarter of fiscal 2009, the Company purchased
shares not previously owned in a majority-owned subsidiary. The
purchase price of the additional shares amounted to
approximately $4.9 million. Of this amount, approximately
$4.2 million could not be attributed to the fair values of
specific purchased tangible assets or identifiable intangible
assets, and has been recorded as goodwill. The goodwill has been
recorded in the Companys Transportation Europe and ROW
business segment.
Inventories, valued using the
first-in,
first-out (FIFO) method, consist of:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Raw materials
|
|
$
|
73,337
|
|
|
$
|
61,681
|
|
Work-in-process
|
|
|
85,838
|
|
|
|
87,986
|
|
Finished goods
|
|
|
259,221
|
|
|
|
271,148
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
418,396
|
|
|
$
|
420,815
|
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
PROPERTY,
PLANT AND EQUIPMENT
|
Property, plant and equipment consist of:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Land
|
|
$
|
58,992
|
|
|
$
|
56,532
|
|
Buildings and improvements
|
|
|
208,145
|
|
|
|
211,662
|
|
Machinery and equipment
|
|
|
850,078
|
|
|
|
762,216
|
|
Construction in progress
|
|
|
60,878
|
|
|
|
52,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,178,093
|
|
|
|
1,082,523
|
|
Accumulated depreciation
|
|
|
574,933
|
|
|
|
496,262
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
$
|
603,160
|
|
|
$
|
586,261
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense was $78.7 million, $86.2 million,
and $92.3 million, for fiscal 2010, 2009, and 2008,
respectively.
F-12
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Other assets consist of:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Deposits(a)
|
|
$
|
18,981
|
|
|
$
|
9,265
|
|
Capitalized software, net
|
|
|
4,402
|
|
|
|
4,017
|
|
Loan to affiliate
|
|
|
1,005
|
|
|
|
1,005
|
|
Retirement plans
|
|
|
1,958
|
|
|
|
1,341
|
|
Financial instruments
|
|
|
4,034
|
|
|
|
4,962
|
|
Other
|
|
|
4,348
|
|
|
|
5,066
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
34,728
|
|
|
$
|
25,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Deposits principally represent amounts held by the beneficiaries
as cash collateral for the Companys contingent obligations
with respect to certain environmental matters, workers
compensation insurance and operating lease commitments. |
At March 31, 2010 and 2009, short-term borrowings of
$7.7 million and $7.0 million, respectively, consisted
of borrowings under various operating lines of credit and
working capital facilities maintained by certain of the
Companys
non-U.S. subsidiaries.
Certain of these borrowings are collateralized by receivables,
inventories
and/or
property. These borrowing facilities, which are typically for
one-year renewable terms, generally bear interest at current
local market rates plus up to one percent per annum. The
weighted average interest rate on short-term borrowings was
approximately 4.5% and 5.8% at March 31, 2010 and 2009,
respectively.
Total long-term debt at March 31, 2010 and 2009 consisted
of the following:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Senior Secured Credit Facility
|
|
$
|
286,661
|
|
|
$
|
287,966
|
|
10.5% Senior Secured Notes due 2013
|
|
|
290,000
|
|
|
|
290,000
|
|
Floating Rate Convertible Senior Subordinated Notes due 2013
|
|
|
60,000
|
|
|
|
60,000
|
|
Other, including capital lease obligations and other loans at
interest rates generally ranging up to 11.0% due in installments
through 2015
|
|
|
15,184
|
|
|
|
13,262
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
651,845
|
|
|
|
651,228
|
|
Less-current maturities
|
|
|
5,241
|
|
|
|
5,048
|
|
|
|
|
|
|
|
|
|
|
Total Long-Term Debt
|
|
$
|
646,604
|
|
|
$
|
646,180
|
|
|
|
|
|
|
|
|
|
|
Total debt at March 31, 2010 and 2009 was
$659.5 million and $658.2 million, respectively
In May 2007, the Company entered into a five-year
$495.0 million Credit Agreement. The Credit Agreement
consists of a $295.0 million term loan and a
$200.0 million asset-based revolving loan and matures in
May 2012. The Credit Agreement contains no financial maintenance
covenants.
F-13
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The
Revolving Loan
Borrowings under the Revolving Loan Facility bear interest at a
rate equal to the London Interbank Offered Rate, or LIBOR, plus
1.50%. The applicable spread on the Revolving Loan Facility will
be subject to change and may increase or decrease in accordance
with a leverage-based pricing grid. The Revolving Loan Facility
includes a letter of credit
sub-facility
of $75.0 million and an accordion feature that allows the
Company to increase the facility size up to $250.0 million
if the Company can obtain commitments from existing or new
lenders for the incremental amount. The Revolving Loan Facility
will mature in May 2012, but is prepayable at any time at par.
Availability under the Revolving Loan Facility is subject to a
borrowing base comprised of up to 85.0% of the Companys
eligible accounts receivable plus 85.0% of the net orderly
liquidation value of eligible North American inventory less, in
each case, certain limitations and reserves. Revolving loans
made to the Company domestically under the Revolving Loan
Facility are guaranteed by substantially all domestic
subsidiaries of the Company, and revolving loans made to Exide
Global Holding Netherlands C.V. (Exide C.V.) under
the Revolving Loan Facility are guaranteed by substantially all
domestic subsidiaries of the Company and certain foreign
subsidiaries. These guaranteed obligations are secured by a lien
on substantially all of the assets of such respective borrowers
and guarantors, including, subject to certain exceptions, in the
case of security provided by the domestic subsidiaries, first
priority lien in current assets and a second priority lien in
fixed assets.
The Revolving Loan Facility contains customary terms and
conditions, including, without limitation, limitations on liens,
indebtedness, implementation of cash dominion and control
agreements, and other typical covenants. A springing fixed
charge financial covenant of 1.0:1.0 will be triggered if the
excess availability under the Revolving Loan Facility falls
below $40.0 million. The Company is also required to pay an
unused line fee that varies based on usage of the Revolving Loan
Facility.
The Term
Loan
Borrowings under the term loan in U.S. Dollars bear
interest at a rate equal to LIBOR plus 3.00%, and borrowings
under the Term Loan in Euros bear interest at a rate equal to
LIBOR plus 3.25%. The term loan will mature in May 2012, but is
prepayable at any time at par value.
The term loan will amortize as follows: 0.25% of the initial
principal balance of the term loans will be due and payable on a
quarterly basis, with the balance payable at maturity. Mandatory
prepayment by the Company may be required under the term loans
as a result of excess cash flow, asset sales and casualty
events, in each case, subject to certain exceptions.
The portion of the term loan made to the Company is guaranteed
by substantially all domestic subsidiaries of the Company, and
the portion of the term loan made to Exide C.V. is guaranteed by
substantially all domestic subsidiaries of the Company and
certain foreign subsidiaries. These obligations are secured by a
lien on substantially all of the assets of such respective
borrowers and guarantors, including, subject to certain
exceptions, in the case of security provided by the domestic
subsidiaries, a first priority lien in fixed assets and a second
priority lien in current assets.
The term loan contains customary terms and conditions,
including, without limitation, (1) limitations on debt
(including a leverage or coverage based incurrence test),
(2) limitations on mergers and acquisitions,
(3) limitations on restricted payments,
(4) limitations on investments, (5) limitations on
capital expenditures, (6) limitations on asset sales with
limited exceptions, (7) limitations on liens, and
(8) limitations on transactions with affiliates.
Borrowings of the Company and other domestic borrowers are
guaranteed by substantially all domestic subsidiaries of the
Company, and borrowings of Exide C.V. are guaranteed by the
Company, substantially all
F-14
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
domestic subsidiaries of the Company, and certain foreign
subsidiaries. These guarantee obligations are secured by a lien
on substantially all of the assets of such respective borrowers
and guarantors.
In March 2005, the Company issued $290.0 million in
aggregate principal amount of 10.5% senior secured notes
due 2013. Interest of $15.2 million is payable
semi-annually on March 15 and September 15. The
10.5% senior secured notes are redeemable at the option of
the Company, in whole or in part, on or after March 15,
2009, initially at 105.25% of the principal amount, plus accrued
interest, declining to 100% of the principal amount, plus
accrued interest on or after March 15, 2011. In the event
of a change of control or the sale of certain assets, the
Company may be required to offer to purchase the
10.5% senior secured notes from the note holders. Those
notes are secured by a junior priority lien on the assets of the
U.S. parent company, including the stock of its
subsidiaries. The Indenture for these notes contains financial
covenants which limit the ability of the Company and its
subsidiaries to among other things incur debt, grant liens, pay
dividends, invest in non-subsidiaries, engage in related party
transactions and sell assets. Under the Indenture, proceeds from
asset sales (to the extent in excess of a $5.0 million
threshold) must be applied to offer to repurchase notes to the
extent such proceeds exceed $20.0 million in the aggregate
and are not applied within 365 days to retire senior
secured credit agreement borrowings or the Companys
pension contribution obligations that are secured by a first
priority lien on the Companys assets or to make
investments or capital expenditures.
Also, in March 2005, the Company issued floating rate
convertible senior subordinated notes due September 18,
2013, with an aggregate principal amount of $60.0 million.
These notes bear interest at a per annum rate equal to the
3-month
LIBOR, adjusted quarterly, minus a spread of 1.5%. The interest
rate at March 31, 2010 and March 31, 2009 was 0.0%.
Interest is payable quarterly. The notes are convertible into
the Companys common stock at a conversion rate of
61.6143 shares per one thousand dollars principal amount at
maturity, subject to adjustments for any common stock splits,
dividends on the common stock, tender and exchange offers by the
Company for the common stock and third-party tender offers, and
in the case of a change in control in which 10% or more of the
consideration for the common stock is cash or non-traded
securities, the conversion rate increases, depending on the
value offered and timing of the transaction, to as much as
70.2247 shares per one thousand dollars principal amount.
At March 31, 2010, the Company was in compliance with
covenants contained in the Credit Agreement and indenture
agreements that govern the 10.5% senior secured notes and
floating rate convertible subordinated notes.
At March 31, 2010, the Company had outstanding letters of
credit with a face value of $51.3 million and surety bonds
with a face value of $3.8 million. The majority of the
letters of credit and surety bonds have been issued as
collateral or financial assurance with respect to certain
liabilities that the Company has recorded, including but not
limited to environmental remediation obligations and
self-insured workers compensation reserves. Failure of the
Company to satisfy its obligations with respect to the primary
obligations secured by the letters of credit or surety bonds
could entitle the beneficiary of the related letter of credit or
surety bond to demand payments pursuant to such instruments. The
letters of credit generally have terms up to one year.
Collateral held by the surety in the form of letters of credit
at March 31, 2010, pursuant to the terms of the agreement,
was $3.7 million.
The Companys variable rate debt at March 31, 2010 and
2009 was $354.3 million and $354.9 million,
respectively. As discussed in Note 2, in February 2008, the
Company entered into an interest rate swap agreement to fix the
variable interest component of $200.0 million of its
floating rate long-term obligations at a rate of 3.33%.
F-15
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Annual principal payments required under long-term debt
obligations at March 31, 2010 are as follows:
|
|
|
|
|
|
|
Amount
|
|
|
|
(In thousands)
|
|
|
2011
|
|
$
|
2,947
|
|
2012
|
|
|
2,947
|
|
2013
|
|
|
570,767
|
|
2014
|
|
|
60,000
|
|
2015
|
|
|
|
|
2016 and beyond
|
|
|
9,663
|
|
|
|
|
|
|
Total
|
|
$
|
646,324
|
|
|
|
|
|
|
See note 11 for principal payments required under capital
lease obligations, which are not shown above.
|
|
(8)
|
EMPLOYEE
BENEFIT PLANS AND POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE
BENEFITS
|
In the U.S., the Company has a noncontributory defined benefit
pension plan that covers substantially all hourly and salaried
employees. In Europe and ROW, the Company sponsors several
defined benefit plans that cover substantially all employees who
are not covered by statutory plans. For defined benefit plans,
charges to expense are based upon underlying assumptions
established by the Company in consultation with its actuaries.
In most cases, the defined benefit plans are not funded. The
Company has frozen the benefit accruals for certain salaried and
hourly employees.
The Company also has defined contribution plans in North
America, Europe, and ROW with related expense of
$14.0 million, $16.3 million, and $11.3 million,
for fiscal 2010, 2009, and 2008, respectively.
The Company provides certain retiree health care and life
insurance benefits to a limited number of employees. The Company
accrues the estimated cost of providing post-retirement benefits
during the employees applicable years of service.
F-16
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following tables set forth the plans funded status and
the amounts recognized in the Companys Consolidated
Financial Statements at March 31, 2010 and 2009:
Pension
Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of period
|
|
$
|
515,220
|
|
|
$
|
643,173
|
|
|
|
|
|
Adjustment due to adoption of FAS 158 measurement date
provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost and interest cost during gap period
|
|
|
|
|
|
|
4,895
|
|
|
|
|
|
Gap period benefit payments from plan, employee contributions,
expenses, taxes and premiums paid
|
|
|
|
|
|
|
(4,784
|
)
|
|
|
|
|
Service cost
|
|
|
3,184
|
|
|
|
3,935
|
|
|
|
|
|
Interest cost
|
|
|
36,592
|
|
|
|
36,816
|
|
|
|
|
|
Actuarial loss (gain)
|
|
|
103,653
|
|
|
|
(46,914
|
)
|
|
|
|
|
Plan participants contributions
|
|
|
493
|
|
|
|
722
|
|
|
|
|
|
Benefits paid
|
|
|
(38,277
|
)
|
|
|
(42,569
|
)
|
|
|
|
|
Currency translation
|
|
|
9,711
|
|
|
|
(70,211
|
)
|
|
|
|
|
Settlements and other
|
|
|
(7,301
|
)
|
|
|
(9,843
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of period
|
|
$
|
623,275
|
|
|
$
|
515,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of period
|
|
$
|
327,518
|
|
|
$
|
450,513
|
|
|
|
|
|
Adjustment due to adoption of FAS 158 measurement date
provisions
|
|
|
|
|
|
|
(4,784
|
)
|
|
|
|
|
Actual return on plan assets
|
|
|
101,504
|
|
|
|
(100,259
|
)
|
|
|
|
|
Employer contributions
|
|
|
16,747
|
|
|
|
77,082
|
|
|
|
|
|
Plan participants contributions
|
|
|
493
|
|
|
|
722
|
|
|
|
|
|
Benefits paid
|
|
|
(38,277
|
)
|
|
|
(42,569
|
)
|
|
|
|
|
Currency translation
|
|
|
7,571
|
|
|
|
(45,627
|
)
|
|
|
|
|
Settlements and other
|
|
|
(3,574
|
)
|
|
|
(7,560
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of period
|
|
$
|
411,982
|
|
|
$
|
327,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of funded status:
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of period
|
|
$
|
623,275
|
|
|
$
|
515,220
|
|
|
|
|
|
Fair value of plan assets at end of period
|
|
|
411,982
|
|
|
|
327,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(211,293
|
)
|
|
$
|
(187,702
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts recognized in Statement of Financial Position:
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent other assets
|
|
$
|
1,958
|
|
|
$
|
1,341
|
|
|
|
|
|
Accrued expenses
|
|
|
(8,940
|
)
|
|
|
(8,792
|
)
|
|
|
|
|
Noncurrent retirement obligations
|
|
|
(204,311
|
)
|
|
|
(180,251
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized at end of period
|
|
$
|
(211,293
|
)
|
|
$
|
(187,702
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts recognized in accumulated other comprehensive
(income) loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost
|
|
$
|
151
|
|
|
$
|
196
|
|
|
|
|
|
Net actuarial loss
|
|
|
61,435
|
|
|
|
39,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized in accumulated other comprehensive loss:
|
|
$
|
61,586
|
|
|
$
|
39,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-17
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Other
Post-Retirement Benefits:
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of period
|
|
$
|
19,243
|
|
|
$
|
23,036
|
|
Adjustment due to adoption of FAS 158 measurement date
provisions
|
|
|
|
|
|
|
250
|
|
Service cost
|
|
|
141
|
|
|
|
185
|
|
Interest cost
|
|
|
1,235
|
|
|
|
1,314
|
|
Actuarial loss (gain)
|
|
|
659
|
|
|
|
(1,745
|
)
|
Plan participants contributions
|
|
|
110
|
|
|
|
154
|
|
Benefits paid
|
|
|
(2,256
|
)
|
|
|
(2,816
|
)
|
Plan amendments
|
|
|
(1,073
|
)
|
|
|
|
|
Premiums paid
|
|
|
(27
|
)
|
|
|
(37
|
)
|
Medical subsidies received
|
|
|
|
|
|
|
91
|
|
Currency translation
|
|
|
942
|
|
|
|
(1,189
|
)
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of period
|
|
$
|
18,974
|
|
|
$
|
19,243
|
|
|
|
|
|
|
|
|
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of period
|
|
$
|
|
|
|
$
|
|
|
Employer contributions
|
|
|
2,173
|
|
|
|
2,608
|
|
Plan participants contributions
|
|
|
110
|
|
|
|
154
|
|
Benefits paid
|
|
|
(2,256
|
)
|
|
|
(2,816
|
)
|
Premiums paid
|
|
|
(27
|
)
|
|
|
(37
|
)
|
Medical subsidies received
|
|
|
|
|
|
|
91
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of period
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of funded status:
|
|
|
|
|
|
|
|
|
Benefit obligation at end of period
|
|
$
|
18,974
|
|
|
$
|
19,243
|
|
Fair value of plan assets at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,974
|
)
|
|
|
(19,243
|
)
|
Contributions after measurement date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(18,974
|
)
|
|
$
|
(19,243
|
)
|
|
|
|
|
|
|
|
|
|
Amounts recognized in statement of financial position:
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
$
|
(2,037
|
)
|
|
$
|
(2,090
|
)
|
Noncurrent retirement obligations
|
|
|
(16,937
|
)
|
|
|
(17,153
|
)
|
|
|
|
|
|
|
|
|
|
Net amount recognized at end of period
|
|
$
|
(18,974
|
)
|
|
$
|
(19,243
|
)
|
|
|
|
|
|
|
|
|
|
Amounts recognized in accumulated other comprehensive
(income) loss:
|
|
|
|
|
|
|
|
|
Prior service credit
|
|
$
|
(4,420
|
)
|
|
$
|
(3,732
|
)
|
Net actuarial loss
|
|
|
2,454
|
|
|
|
1,864
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized in accumulated other comprehensive income:
|
|
$
|
(1,966
|
)
|
|
$
|
(1,868
|
)
|
|
|
|
|
|
|
|
|
|
F-18
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Disclosure Assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Post-
|
|
|
|
Pension Benefits
|
|
|
Retirement Benefits
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
Weighted-average assumptions as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
5.5
|
%
|
|
|
7.1
|
%
|
|
|
5.7
|
%
|
|
|
7.5
|
%
|
Rate of compensation increase
|
|
|
2.9
|
%
|
|
|
3.5
|
%
|
|
|
n/a
|
|
|
|
n/a
|
|
Expense Assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Post-
|
|
|
|
Pension Benefits
|
|
|
Retirement Benefits
|
|
|
|
FY 2011
|
|
|
FY 2010
|
|
|
FY 2011
|
|
|
FY 2010
|
|
|
|
Expense
|
|
|
Expense
|
|
|
Expense
|
|
|
Expense
|
|
|
Weighted-average assumptions for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
5.5
|
%
|
|
|
7.1
|
%
|
|
|
5.7
|
%
|
|
|
7.5
|
%
|
Expected return on plan assets
|
|
|
7.2
|
%
|
|
|
7.2
|
%
|
|
|
n/a
|
|
|
|
n/a
|
|
Rate of compensation increase
|
|
|
2.9
|
%
|
|
|
3.5
|
%
|
|
|
n/a
|
|
|
|
n/a
|
|
For fiscal year 2010 pension benefit expense, the Company
assumed an expected weighted average return on plan assets of
7.2%. In developing this rate assumption, the Company evaluated
input from third-party pension plan asset managers, including
their review of asset class return expectations and long-term
inflation assumptions.
The following tables set forth the plans expenses
recognized in the Companys Consolidated Financial
Statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Components of net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
3,184
|
|
|
$
|
3,935
|
|
|
$
|
5,401
|
|
Interest cost
|
|
|
36,592
|
|
|
|
36,816
|
|
|
|
36,310
|
|
Expected return on plan assets
|
|
|
(23,443
|
)
|
|
|
(30,061
|
)
|
|
|
(29,525
|
)
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost
|
|
|
11
|
|
|
|
21
|
|
|
|
21
|
|
Actuarial loss (gain)
|
|
|
1,038
|
|
|
|
(2,417
|
)
|
|
|
(1,515
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
17,382
|
|
|
$
|
8,294
|
|
|
$
|
10,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Excludes the impact of settlement net losses (gains) of
$0.6 million and ($0.2) million, in fiscal 2010 and
fiscal 2009, respectively and curtailment net gain of
$3.8 million, $2.2 million, in fiscal 2010 and fiscal
2009, respectively. |
F-19
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
(b) |
|
$1.1 million of expense will be amortized from accumulated
other comprehensive (income) loss into net periodic benefit cost
in fiscal 2011 relating to the Companys pension plans. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Post-Retirement Benefits
|
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Components of net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
141
|
|
|
$
|
185
|
|
|
$
|
203
|
|
Interest cost
|
|
|
1,235
|
|
|
|
1,314
|
|
|
|
1,420
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost
|
|
|
(385
|
)
|
|
|
(385
|
)
|
|
|
|
|
Actuarial (gain) loss
|
|
|
(15
|
)
|
|
|
135
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
976
|
|
|
$
|
1,249
|
|
|
$
|
1,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
$0.4 million of income will be amortized from accumulated
other comprehensive (income) loss into net periodic benefit cost
in fiscal 2011 relating to the Companys other post
retirement benefit plans. |
The projected benefit obligation, accumulated benefit
obligation, and fair value of plan assets for the pension plans
with accumulated benefit obligations in excess of plan assets
were $480.9 million, $475.7 million and
$267.7 million, respectively, as of March 31, 2010 and
$405.6 million, $401.2 million and $216.5 million
respectively, as of March 31, 2009.
The accumulated benefit obligation for the Companys
pension plans was $614.4 million as of March 31, 2010.
Expected future benefit payments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Post-
|
|
|
|
|
Retirement Gross
|
|
|
Pension
|
|
Expected Benefit
|
Fiscal Year
|
|
Benefits
|
|
Payments
|
|
|
(In thousands)
|
|
2011
|
|
$
|
38,338
|
|
|
$
|
1,902
|
|
2012
|
|
|
35,492
|
|
|
|
1,845
|
|
2013
|
|
|
36,123
|
|
|
|
1,725
|
|
2014
|
|
|
37,333
|
|
|
|
1,611
|
|
2015
|
|
|
38,372
|
|
|
|
1,555
|
|
2016 to 2020
|
|
|
207,305
|
|
|
|
6,908
|
|
Pension
Plan Investment Strategy
The Companys pension plans are invested in a diversified
portfolio of investments consisting almost entirely of equity
and fixed income securities. The target asset allocation for the
plan portfolio is based on a combination of financial,
demographic, and actuarial considerations, along with the advice
of an investment advisory firm that the Companys
investment committee has engaged for many years. The plans
target allocation is a mix of approximately 45% equity
investments and 55% long duration fixed-income investments. The
Company believes this target allocation will be effective in
achieving the plans long-term investment objectives of:
|
|
|
|
|
protecting the plans funded status from volatility
|
F-20
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
optimizing the long-term return on plan assets sufficient to
accommodate current and future pension obligations
|
|
|
|
maintaining an acceptable level of risk for each asset category
|
The Company utilizes various investment managers to actively
manage the assets of its U.S. plan. Based on its underlying
risk parameters, the Company has established investment
guidelines for each investment manager within which they have
agreed to operate. These guidelines include criteria for
identifying eligible and ineligible securities as well as
diversification criteria. In addition, investment managers are
required to seek approval prior to making investments in certain
commodity contracts, illiquid investments, or futures or options
strategies, and are prohibited from engaging in certain
transactions including the short selling of securities,
borrowing money, or engaging in futures or options strategies
for purposes of speculation or leverage.
The Companys
non-U.S. pension
plans are also managed by investment managers who are appointed
by the trustees of those plans. The investment strategies of
those plans are similar to those of the U.S. plan, but are
in some instances influenced by local laws and regulations.
The asset allocation for the Companys pension plans by
asset category are as follows:
|
|
|
|
|
|
|
|
|
|
|
Percentage of Plan Assets at Year End
|
|
|
|
2010
|
|
|
2009
|
|
|
Cash and cash equivalents
|
|
|
1
|
%
|
|
|
3
|
%
|
Equity securities
|
|
|
45
|
%
|
|
|
53
|
%
|
Fixed income securities
|
|
|
53
|
%
|
|
|
43
|
%
|
Other
|
|
|
1
|
%
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
Plan
Contributions
The estimated fiscal 2011 pension plan contributions are
$19.2 million and other post-retirement contributions are
$1.9 million. Cash contributions to the Companys
pension plans are generally made in accordance with minimum
regulatory requirements.
The Company expects that cumulative contributions to its pension
plans will total approximately $141.9 million to
$175.9 million from fiscal 2011 to fiscal 2015, and
contributions to its other post retirement benefit plans will
total approximately $8.6 million from fiscal 2011 to fiscal
2015.
Assumed health care cost trend rates have a significant effect
on the amounts reported for other post-retirement benefits. A
one-percentage-point change in assumed health care cost trend
rates would have the following effects:
|
|
|
|
|
|
|
|
|
|
|
One Percentage-
|
|
One Percentage-
|
|
|
Point Increase
|
|
Point Decrease
|
|
|
(In thousands)
|
|
Effect on total of service and interest cost components
|
|
$
|
210
|
|
|
$
|
131
|
|
Effect on the postretirement benefit obligation
|
|
$
|
1,792
|
|
|
$
|
1,274
|
|
F-21
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
(9)
|
STOCK
BASED COMPENSATION PLANS
|
The Company accounts for stock based compensation by recognizing
the cost resulting from all share-based payment transactions in
the financial statements. The Company uses fair value as the
basis for measuring the cost of such compensation. The fair
values of stock awards are determined using an estimated
expected life. The Company recognizes compensation expense on a
straight-line basis over the period the award is earned by the
employee.
The Companys stock incentive plan provides incentives and
awards to employees and directors of the Company as well as
certain consultants. Under the plan, all employees are eligible
to receive awards. The plan permits the granting of stock
options, restricted stock, restricted stock units, and
performance awards.
Under the terms of the plan, stock options are generally subject
to a three-year vesting schedule, and generally expire
10 years from the option grant date. Restricted stock and
restricted stock units are generally subject to a three to
five-year vesting schedule. In addition, as part of their annual
compensation, each non-employee member of the Companys
Board of Directors receives restricted stock or restricted stock
units. These awards are generally 100% vested one year after the
grant date, but restricted stock units are generally not
deliverable until the director has completed his or her service
on the board. The vesting schedules for the awards are subject
to certain change in control provisions, including full vesting
if an employee is terminated within 12 months of a change
in control.
Total compensation cost related to stock compensation plans was
$10.8 million and $5.7 million for fiscal 2010 and
2009, respectively. As of March 31, 2010, total
compensation cost related to non-vested awards not yet
recognized in the Companys Consolidated Financial
Statements was $8.4 million, which is expected to be
recognized over a weighted average period of 1.5 years.
Stock
Option Awards
The fair value of each option grant is estimated at the date of
grant using the Black-Scholes option pricing model. Expected
volatility is calculated based on the historical volatility of
the Companys stock. The risk free interest rate is based
on the U.S. Treasury yield for a term equal to the expected
life of the options at the time of grant. The following table
includes information about the weighted-average fair values of
options:
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended
|
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
|
2010
|
|
2009
|
|
2008
|
|
Weighted average fair value
|
|
$4.38
|
|
$9.77
|
|
$3.99
|
Expected volatility
|
|
77.7% to 78.4%
|
|
67.0% to 67.7%
|
|
53% to 57%
|
Risk-free interest rates
|
|
2.7% to 2.9%
|
|
3.3% to 3.8%
|
|
4.4% to 5%
|
Expected term of options
|
|
5.6 to 6.5 years
|
|
6.5 years
|
|
5.5 to 6.5 years
|
F-22
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following is a summary of stock option activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
Number of
|
|
|
Weighted Average
|
|
|
Remaining
|
|
|
|
Stock Options
|
|
|
Exercise Price
|
|
|
Contractual Life
|
|
|
|
(In thousands)
|
|
|
Shares under option:
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2007
|
|
|
3,153
|
|
|
$
|
6.25
|
|
|
|
9.2 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
77
|
|
|
$
|
7.39
|
|
|
|
|
|
Forfeited
|
|
|
(110
|
)
|
|
$
|
6.96
|
|
|
|
|
|
Exercised
|
|
|
(38
|
)
|
|
$
|
4.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2008
|
|
|
3,082
|
|
|
$
|
6.28
|
|
|
|
8.2 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
742
|
|
|
$
|
14.99
|
|
|
|
|
|
Forfeited
|
|
|
(222
|
)
|
|
$
|
8.80
|
|
|
|
|
|
Exercised
|
|
|
(106
|
)
|
|
$
|
5.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2009
|
|
|
3,496
|
|
|
$
|
8.00
|
|
|
|
7.6 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
605
|
|
|
$
|
6.29
|
|
|
|
|
|
Forfeited
|
|
|
(31
|
)
|
|
$
|
9.28
|
|
|
|
|
|
Exercised
|
|
|
(64
|
)
|
|
$
|
3.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2010
|
|
|
4,006
|
|
|
$
|
7.79
|
|
|
|
7.0 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and Exercisable at:
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2010
|
|
|
2,956
|
|
|
$
|
6.97
|
|
|
|
6.3 years
|
|
March 31, 2009
|
|
|
2,246
|
|
|
$
|
6.57
|
|
|
|
7.0 years
|
|
March 31, 2008
|
|
|
1,521
|
|
|
$
|
7.10
|
|
|
|
7.9 years
|
|
Restricted
Stock Awards
During the fiscal years ended March 31, 2010, 2009, and
2008, 0.5 million, 0.2 million, and 0.1 million,
shares of restricted stock
and/or
restricted stock units, respectively, were approved to be
granted to certain eligible employees.
Restricted stock transactions during the fiscal year ended
March 31, 2010 were as follows:
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Weighted-Average
|
|
|
|
Shares
|
|
|
Fair Value
|
|
|
|
(In thousands)
|
|
|
|
|
|
Outstanding (non-vested) at March 31, 2009
|
|
|
897
|
|
|
$
|
8.22
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
492
|
|
|
$
|
6.24
|
|
Vested
|
|
|
(343
|
)
|
|
$
|
7.29
|
|
Forfeited
|
|
|
(25
|
)
|
|
$
|
8.26
|
|
|
|
|
|
|
|
|
|
|
Outstanding (non-vested) at March 31, 2010
|
|
|
1,021
|
|
|
$
|
7.58
|
|
|
|
|
|
|
|
|
|
|
F-23
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The provision for income taxes includes federal, state and
foreign taxes currently payable and those deferred because of
net operating losses and temporary differences between the
financial statement and tax bases of assets and liabilities. The
components of income (loss) before income taxes and minority
interest, and the (benefit) provision for income taxes are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Income (loss) before income taxes and minority interest:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
33,017
|
|
|
$
|
31,084
|
|
|
$
|
58,570
|
|
Foreign
|
|
|
(66,317
|
)
|
|
|
(67,392
|
)
|
|
|
(14,081
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(33,300
|
)
|
|
$
|
(36,308
|
)
|
|
$
|
44,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) provision:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
(5,746
|
)
|
|
$
|
2,364
|
|
|
$
|
1,093
|
|
Foreign
|
|
|
12,146
|
|
|
|
16,893
|
|
|
|
15,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,400
|
|
|
|
19,257
|
|
|
|
16,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
(23,332
|
)
|
|
|
9,665
|
|
|
|
(24,967
|
)
|
Foreign
|
|
|
(5,031
|
)
|
|
|
3,251
|
|
|
|
19,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(28,363
|
)
|
|
|
12,916
|
|
|
|
(5,435
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (benefit) provision
|
|
$
|
(21,963
|
)
|
|
$
|
32,173
|
|
|
$
|
10,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Major differences between the federal statutory rate and the
effective tax rate are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Federal statutory rate
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
Thin cap disallowance
|
|
|
|
|
|
|
|
|
|
|
0.5
|
|
Dividend income
|
|
|
(2.1
|
)
|
|
|
2.9
|
|
|
|
1.9
|
|
Change in tax rate
|
|
|
0.5
|
|
|
|
0.4
|
|
|
|
31.4
|
|
Change in uncertain tax positions
|
|
|
15.9
|
|
|
|
3.5
|
|
|
|
2.5
|
|
Local tax provision
|
|
|
(7.2
|
)
|
|
|
(13.7
|
)
|
|
|
12.0
|
|
Change in valuation allowances
|
|
|
(93.4
|
)
|
|
|
(162.3
|
)
|
|
|
(19.2
|
)
|
Revaluation of warrants
|
|
|
0.9
|
|
|
|
6.9
|
|
|
|
2.3
|
|
Rate differences on foreign subsidiaries
|
|
|
18.0
|
|
|
|
41.4
|
|
|
|
(46.4
|
)
|
Executive Compensation
|
|
|
(6.3
|
)
|
|
|
(1.9
|
)
|
|
|
0.8
|
|
Deferred tax valuation change
|
|
|
116.4
|
|
|
|
|
|
|
|
|
|
Sub Part F Income
|
|
|
(2.0
|
)
|
|
|
|
|
|
|
|
|
Other, net
|
|
|
(9.7
|
)
|
|
|
(0.8
|
)
|
|
|
3.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
66.0
|
%
|
|
|
(88.6
|
%)
|
|
|
24.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-24
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following is a summary of the significant components of the
Companys deferred tax assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Operating loss and tax credit carry-forwards
|
|
$
|
285,069
|
|
|
$
|
237,013
|
|
Compensation reserves
|
|
|
68,020
|
|
|
|
55,426
|
|
Environmental reserves
|
|
|
10,944
|
|
|
|
11,777
|
|
Warranty
|
|
|
8,839
|
|
|
|
9,206
|
|
Purchase commitments
|
|
|
|
|
|
|
1,113
|
|
Other
|
|
|
32,343
|
|
|
|
48,152
|
|
Valuation allowance
|
|
|
(242,678
|
)
|
|
|
(203,895
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
162,537
|
|
|
|
158,792
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
(23,500
|
)
|
|
|
(52,643
|
)
|
Foreign Exchange
|
|
|
(6,486
|
)
|
|
|
(5,020
|
)
|
Intangible assets
|
|
|
(46,037
|
)
|
|
|
(47,081
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(76,023
|
)
|
|
|
(104,744
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
86,514
|
|
|
$
|
54,048
|
|
|
|
|
|
|
|
|
|
|
The net deferred income tax asset is classified in the
consolidated balance sheet as follows:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Current asset
|
|
$
|
24,386
|
|
|
$
|
33,005
|
|
Noncurrent asset
|
|
|
85,613
|
|
|
|
51,272
|
|
Noncurrent liability
|
|
|
(23,485
|
)
|
|
|
(30,229
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
86,514
|
|
|
$
|
54,048
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2010 the Company has net operating loss
carry-forwards (NOLs) for U.S. and state income
tax purposes of $143.1 million. These loss carry-forwards
will expire in years 2011 through 2027. The Company determined
that a Sec. 382 ownership change occurred during the fiscal year
ending March 31, 2007 related to the September 2007 rights
offering. IRC Sec. 382 places annual limits on the amount of the
Companys U.S. and state NOLs that may be used to
offset future taxable income. The Company has calculated its
Sec. 382 limitation on U.S. and state losses incurred prior
to September 15, 2006 to approximate $5.0 million per
year over the next nineteen years.
At March 31, 2010, certain of the Companys foreign
subsidiaries have NOLs for income tax purposes of approximately
$1.08 billion, of which approximately $212.9 million
expire in fiscal years 2011 through 2024. The remaining NOLs are
available for carry-forward indefinitely.
During fiscal 2010, the income tax benefit increased by
$38.8 million due to the change in valuation of certain
deferred tax balances. The Company evaluates its deferred tax
assets and liabilities on a quarterly basis and during the
fourth quarter, new information became available that led the
Company to re-evaluate certain deferred tax liabilities.
F-25
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Valuation allowances have been recognized in certain foreign tax
jurisdictions to reduce the deferred tax assets for NOLs and
temporary differences for which it is more likely than not that
the related tax benefits will not be realized. In other
jurisdictions (primarily the U.S. and Germany), the
Companys net deferred tax assets include NOLs and
temporary differences which management believes are realizable
through a combination of forecasted future taxable income and
anticipated tax planning strategies. The Company has implemented
certain tax planning strategies in prior years to utilize a
portion of such deferred tax assets. Failure to achieve
forecasted future taxable income might affect the ultimate
realization of any remaining deferred tax assets.
As of March 31, 2010, the Company had not provided for
withholding or U.S. Federal income taxes on current or
prior year undistributed earnings of certain foreign
subsidiaries since such earnings are expected to be reinvested
indefinitely or be substantially offset by available foreign tax
credits and operating loss carry forwards. As of March 31,
2010 and 2009, the Company had approximately $130.9 million
and $127.6 million, respectively, of undistributed earnings
in its foreign subsidiaries. It is not practicable to determine
the amount of unrecognized deferred U.S. income tax
liability on these unremitted earnings.
The Company or one of its subsidiaries files income tax returns
in the U.S. federal jurisdiction and various state and
foreign jurisdictions. The Company is no longer subject to
U.S. federal income tax examinations by tax authorities for
years ended before March 31, 2008.
With respect to state and local jurisdictions and countries
outside of the United States, with limited exceptions, the
Company and its subsidiaries are no longer subject to income tax
audits for years ended before March 31, 2004. Although the
outcome of tax audits is always uncertain, the Company believes
that adequate amounts of tax, interest and penalties have been
provided for any adjustments that could result from these years.
A reconciliation of the beginning and ending amount of
unrecognized tax benefit is as follows:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Beginning of year
|
|
$
|
70,544
|
|
|
$
|
83,336
|
|
Increases for tax positions taken during current period
|
|
|
6,085
|
|
|
|
8,397
|
|
Decreases for tax positions taken during prior year
|
|
|
|
|
|
|
(5,426
|
)
|
(Decreases) increases for currency fluctuation on tax positions
|
|
|
2,711
|
|
|
|
(9,911
|
)
|
Decreases for settlements with taxing authorities
|
|
|
(22,634
|
)
|
|
|
(1,233
|
)
|
Decreases for lapse of the applicable statue of limitations
|
|
|
(4,706
|
)
|
|
|
(4,619
|
)
|
|
|
|
|
|
|
|
|
|
End of year
|
|
$
|
52,000
|
|
|
$
|
70,544
|
|
|
|
|
|
|
|
|
|
|
The amount, if recognized, that would affect the Companys
effective tax rate at March 31, 2010 and March 31,
2009 is $18.7 million and $22.2 million, respectively.
The Company classifies interest and penalties on uncertain tax
benefits as income tax expense. At March 31, 2010 and
March 31, 2009, before any tax benefits, the Company had
$3.9 million and $4.3 million, respectively, of
accrued interest and penalties on unrecognized tax benefits.
During the next twelve months, the Company does not expect the
resolution of any tax audits which could potentially reduce
unrecognized tax benefits by a material amount. However,
expiration of the statute of limitations for a tax year in which
the Company has recorded uncertain tax benefits will occur in
the next twelve months. The removal of these uncertain tax
benefits would affect the Companys effective tax rate by
$0.5 million.
F-26
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
(11)
|
COMMITMENTS
AND CONTINGENCIES
|
Claims
Reconciliation
On April 15, 2002, the Petition Date, Exide
Technologies, together with certain of its subsidiaries (the
Debtors), filed voluntary petitions for
reorganization under Chapter 11 of the federal bankruptcy
laws (Bankruptcy Code or
Chapter 11) in the United States Bankruptcy
Court for the District of Delaware (Bankruptcy
Court). The Debtors continued to operate their businesses
and manage their properties as
debtors-in-possession
throughout the course of the bankruptcy case. The Debtors, along
with the Official Committee of Unsecured Creditors, filed a
Joint Plan of Reorganization (the Plan) with the
Bankruptcy Court on February 27, 2004 and, on
April 21, 2004, the Bankruptcy Court confirmed the Plan.
Under the Plan, holders of general unsecured claims were
eligible to receive collectively 2.5 million shares of
common stock and warrants to purchase up to approximately
6.7 million shares of common stock at $29.84 per share.
Approximately 13.4% of such common stock and warrants were
initially reserved for distribution for disputed claims. The
Official Committee of Unsecured Creditors, in consultation with
the Company, established such reserve to provide for a pro rata
distribution of new common stock and warrants to holders of
disputed claims as they become allowed. As claims are evaluated
and processed, the Company will object to some claims or
portions thereof, and upward adjustments (to the extent common
stock and warrants not previously distributed remain) or
downward adjustments to the reserve will be made pending or
following adjudication of such objections. Predictions regarding
the allowance and classification of claims are difficult to
make. With respect to environmental claims in particular, it is
difficult to assess the Companys potential liability due
to the large number of other potentially responsible parties.
For example, a demand for the total cleanup costs of a landfill
used by many entities may be asserted by the government using
joint and several liability theories. Although the Company
believes that there is a reasonable basis to believe that it
will ultimately be responsible for only its proportional share
of these remediation costs, there can be no assurance that the
Company will prevail on these claims. In addition, the scope of
remedial costs, or other environmental injuries, is highly
variable and estimating these costs involves complex legal,
scientific and technical judgments. Many of the claimants who
have filed disputed claims, particularly environmental and
personal injury claims, produce little or no proof of fault on
which the Company can assess its potential liability. Such
claimants often either fail to specify a determinate amount of
damages or provide little or no basis for the alleged damages.
In some cases, the Company is still seeking additional
information needed for a claims assessment and information that
is unknown to the Company at the current time may significantly
affect the Companys assessment regarding the adequacy of
the reserve amounts in the future.
As general unsecured claims have been allowed in the Bankruptcy
Court, the Company has distributed approximately one share of
common stock per $383.00 in allowed claim amount and
approximately one warrant per $153.00 in allowed claim amount.
These rates were established based upon the assumption that the
common stock and warrants allocated to holders of general
unsecured claims on the effective date, including the reserve
established for disputed claims, would be fully distributed so
that the recovery rates for all allowed unsecured claims would
comply with the Plan without the need for any redistribution or
supplemental issuance of securities. If the amount of general
unsecured claims that is eventually allowed exceeds the amount
of claims anticipated in the setting of the reserve, additional
common stock and warrants will be issued for the excess claim
amounts at the same rates as used for the other general
unsecured claims. If this were to occur, additional common stock
would also be issued to the holders of pre-petition secured
claims to maintain the ratio of their distribution in common
stock at nine times the amount of common stock distributed for
all unsecured claims.
Based on information available as of May 28, 2010,
approximately 11.3% of common stock and warrants reserved for
this purpose has been distributed. The Company also continues to
resolve certain non-objected claims.
F-27
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Private
Party Lawsuits and other Legal Proceedings
In 2003, the Company served notices to reject certain contracts
with EnerSys, which the Company contends are executory,
including a 1991 Trademark and Trade Name License Agreement (the
Trademark License), pursuant to which the Company
had licensed to EnerSys use of the Exide trademark
on certain industrial battery products in the United States and
80 foreign countries. EnerSys objected to the rejection of
certain of those contracts, including the Trademark License. In
2006, the Bankruptcy Court granted the Companys request to
reject certain of the contracts, including the Trademark
License, and it ordered a two-year transition period, which has
now expired. EnerSys appealed those rulings. On June 1,
2010, the Third Circuit Court of Appeals held that certain of
the contracts, including the Trademark License, were not
executory contracts and, therefore, were not subject to
rejection. The Third Circuit remanded the case to the Federal
District Court with instructions that it remand the case to the
Bankruptcy Court for further proceedings consistent with that
ruling. The Company is reviewing the Third Circuits
ruling. The Company is considering the potential implications of
the ruling and its options, including a possible request for
rehearing or appeal.
In July 2001, Pacific Dunlop Holdings (US), Inc.
(PDH) and several of its foreign affiliates under
the various agreements through which Exide and its affiliates
acquired GNB, filed a complaint in the Circuit Court for Cook
County, Illinois alleging breach of contract, unjust enrichment
and conversion against Exide and three of its foreign
affiliates. The plaintiffs maintain they are entitled to
approximately $17.0 million in cash assets acquired by the
defendants through their acquisition of GNB. In December 2001,
the Court denied the defendants motion to dismiss the
complaint, without prejudice. The defendants filed an answer and
counterclaim. In 2002, the Court authorized discovery to proceed
as to all parties except the Company. In August 2002, the case
was moved to the U.S. Bankruptcy Court for the Northern
District of Illinois. In February 2003, the U.S. Bankruptcy
Court for the Northern District of Illinois transferred the case
to the U.S. Bankruptcy Court in Delaware. In November 2003,
the Bankruptcy Court denied PDHs motion to abstain or
remand the case and issued an opinion holding that the
Bankruptcy Court had jurisdiction over PDHs claims and
that liability, if any, would lie solely against Exide
Technologies and not against any of its foreign affiliates. The
Bankruptcy Court denied PDHs motion to reconsider. In an
order dated March 22, 2007, the U.S. District Court
for the District of Delaware denied PDHs appeal in its
entirety, affirming the Orders of the Bankruptcy Court. PDH then
appealed the matter to the United States Court of Appeals for
the Third Circuit. On September 19, 2008, the Third Circuit
vacated the prior orders of the Bankruptcy Court, remanding the
matter with instructions that the Bankruptcy Court hear evidence
before ruling whether Exide (as opposed to its non-debtor
affiliates) would be solely liable, if any liability is found at
all, under the GNB agreements.
In December 2001, PDH filed a separate action in the Circuit
Court for Cook County, Illinois seeking recovery of
approximately $3.1 million for amounts allegedly owed by
the Company under various agreements between the parties. The
claim arises from letters of credit and other security allegedly
provided by PDH for GNBs performance of certain of
GNBs obligations to third parties that PDH claims the
Company was obligated to replace. The Companys answer
contested the amounts claimed by PDH and the Company filed a
counterclaim. Although this action has been consolidated with
the Cook County suit concerning GNBs cash assets, the
claims relating to this action have been transferred to the
U.S. Bankruptcy Court for the District of Delaware and are
currently subject to a stay injunction by that court. The
Company plans to vigorously defend itself and pursue its
counterclaims.
On July 1, 2005, the Company was informed by the
Enforcement Division of the Securities and Exchange Commission
(the SEC) that it commenced a preliminary inquiry
into statements the Company made in fiscal 2005 regarding its
ability to comply with fiscal 2005 loan covenants and the going
concern modification in the audit report in the Companys
annual report on
Form 10-K
for fiscal 2005. The SEC noted that the inquiry should not be
construed as an indication by the SEC or its staff that any
violations of law have occurred. The Company intends to fully
cooperate with the inquiry and continues to do so.
F-28
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Environmental
Matters
As a result of its multinational manufacturing, distribution and
recycling operations, the Company is subject to numerous
federal, state, and local environmental, occupational health,
and safety laws and regulations, as well as similar laws and
regulations in other countries in which the Company operates
(collectively, EH&S laws).
The Company is exposed to liabilities under such EH&S laws
arising from its past handling, release, storage and disposal of
materials now designated as hazardous substances and hazardous
wastes. The Company previously has been advised by the
U.S. Environmental Protection Agency (EPA) or
state agencies that it is a Potentially Responsible
Party under the Comprehensive Environmental Response,
Compensation and Liability Act or similar state laws at 102
federally defined Superfund or state equivalent sites. At 45 of
these sites, the Company has paid its share of liability. While
the Company believes it is probable its liability for most of
the remaining sites will be treated as disputed unsecured claims
under the Plan, there can be no assurance these matters will be
discharged. If the Companys liability is not discharged at
one or more sites, the government may be able to file claims for
additional response costs in the future, or to order the Company
to perform remedial work at such sites. In addition, the EPA, in
the course of negotiating this pre-petition claim, had notified
the Company of the possibility of additional
clean-up
costs associated with Hamburg, Pennsylvania properties of
approximately $35.0 million, as described in more detail
below. The EPA has provided summaries of past costs and an
estimate of future costs that approximate the amounts in its
notification; however, the Company disputes certain elements of
the claimed past costs, has not received sufficient information
supporting the estimated future costs, and is in negotiations
with the EPA. To the extent the EPA or other environmental
authorities dispute the pre-petition nature of these claims, the
Company would intend to resist any such effort to evade the
bankruptcy laws intended result, and believes there are
substantial legal defenses to be asserted in that case. However,
there can be no assurance that the Company would be successful
in challenging any such actions.
The Company is also involved in the assessment and remediation
of various other properties, including certain Company-owned or
operated facilities. Such assessment and remedial work is being
conducted pursuant to applicable EH&S laws with varying
degrees of involvement by appropriate legal authorities. Where
probable and reasonably estimable, the costs of such projects
have been accrued by the Company, as discussed below. In
addition, certain environmental matters concerning the Company
are pending in various courts or with certain environmental
regulatory agencies with respect to these currently or formerly
owned or operating locations. While the ultimate outcome of the
foregoing environmental matters is uncertain, after consultation
with legal counsel, the Company does not believe the resolution
of these matters, individually or in the aggregate, will have a
material adverse effect on the Companys financial
condition, cash flows or results of operations.
On September 6, 2005, the U.S. Court of Appeals for
the Third Circuit issued an opinion in U.S. v. General
Battery/Exide
(No. 03-3515)
affirming the district courts holding that the Company is
liable, as a matter of federal common law of successor
liability, for lead contamination at certain sites in the
vicinity of Hamburg, Pennsylvania. This case involves several of
the pre-petition environmental claims of the federal government
for which the Company, as part of its Chapter 11
proceeding, had established a reserve of common stock and
warrants. The amount of the government claims for these sites at
the time reserves were established was approximately
$14.0 million. On October 2, 2006, the United States
Supreme Court denied review of the appellate decision, leaving
Exide subject to a stipulated judgment for approximately
$6.5 million, based on the ruling that Exide has successor
liability for these EPA cost recovery claims. The judgment will
be a general unsecured claim payable in common stock and
warrants. Additionally, the EPA has asserted a general unsecured
claim for costs related to other Hamburg, Pennsylvania sites.
The current amount of the governments claims for the
aforementioned sites (including the stipulated judgment
discussed above) is
F-29
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
approximately $20.0 million. A reserve of common stock and
warrants for the estimated value of all claims, including the
aforementioned claims, was established as part of the Plan.
In October 2004, the EPA, in the course of negotiating a
comprehensive settlement of all its environmental claims against
the Company, had notified the Company of the possibility of
additional
clean-up
costs associated with other Hamburg, Pennsylvania properties of
approximately $35.0 million. The EPA has provided cost
summaries for past costs and an estimate of future costs that
approximate the amounts in its notification; however, the
Company disputes certain elements of the claimed past costs, has
not received sufficient information supporting the estimated
future costs, and is in negotiations with the EPA.
As unsecured claims are allowed in the Bankruptcy Court, the
Company is required to distribute common stock and warrants to
the holders of such claims. To the extent the government is able
to prove the Company is responsible for the alleged
contamination at the other Hamburg, Pennsylvania properties and
substantiate its estimated $35.0 million of additional
clean-up
costs discussed above, these claims would ultimately result in
an inadequate reserve of common stock and warrants to the extent
not offset by the reconciliation of all other claims for lower
amounts than the aggregate reserve. The Company would still
retain the right to perform and pay for such cleanup activities,
which would preserve the existing reserved common stock and
warrants. Except for the governments cost recovery claim
resolved by the U.S. v. General Battery/Exide case
discussed above, it remains the Companys position that it
is not liable for the contamination of this area, and that any
liability it may have derives from pre-petition events which
would be administered as a general, unsecured claim, and
consequently no provisions have been recorded in connection
therewith.
The Company is conducting an investigation and risk assessment
of lead exposure near its Reading recycling plant from past
facility emissions and non-Company sources such as lead paint.
In 2000, the Company entered into a Consent Order with the EPA
to investigate and (as appropriate) remediate potential
environmental impacts to properties in the vicinity of its
Reading, Pennsylvania recycling plant. Since 2000, Exide has
reached agreement with the EPA regarding the boundaries of a
study area defining the area of potential impacts, and has
sampled all properties but one (where the property owner denied
access) within the study area. The EPA established a soil
cleanup standard for developed residential properties within the
study area and all developed residential properties exceeding
that standard have now been remediated. No further sampling of
developed residential properties within the study area is
required. The Company continues to discuss with the EPA the
appropriateness and scope of remediation of other types of
properties in the study area including undeveloped residential,
commercial, industrial, and recreational (public parks). Where
such future remediation is probable and reasonably estimable,
the Company has established reserves for such obligations.
The Company received a number of notices of violation issued by
the Pennsylvania Department of Environmental Protection
(PADEP) for alleged violations of pollution control
laws at its Reading, Pennsylvania recycling facility. To resolve
these notices of violation, the Company negotiated a settlement
agreement with PADEP that included monetary sanctions of
approximately $0.225 million.
The Company has established reserves for
on-site and
off-site environmental remediation costs where such costs are
probable and reasonably estimable and believes that such
reserves are adequate. As of March 31, 2010 and
March 31, 2009, the amount of such reserves on the
Companys Consolidated Balance Sheets was approximately
$31.8 million and $33.8 million, respectively. Because
environmental liabilities are not accrued until a liability is
determined to be probable and reasonably estimable, not all
potential future environmental liabilities have been included in
the Companys environmental reserves and, therefore,
additional earnings charges are possible. Also, future findings
or changes in estimates could have a material adverse effect on
the recorded reserves and cash flows.
F-30
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The sites that currently have the largest reserves include the
following:
Tampa,
Florida
The Tampa site is a former secondary lead recycling plant, lead
oxide production facility, and sheet lead-rolling mill that
operated from 1943 to 1989. Under a RCRA Part B Closure
Permit and a Consent Decree with the State of Florida, Exide is
required to investigate and remediate certain historic
environmental impacts to the site. Cost estimates for
remediation (closure and post-closure) are expected to range
from $12.5 million to $20.5 million depending on final
State of Florida requirements. The remediation activities are
expected to occur over the course of several years.
Columbus,
Georgia
The Columbus site is a former secondary lead recycling plant
that was mothballed in 1999, which is part of a larger facility
that includes an operating lead-acid battery manufacturing
facility. Groundwater remediation activities began in 1988.
Costs for supplemental investigations, remediation and site
closure are currently estimated at $6.0 million to
$9.0 million.
Guarantees
At March 31, 2010, the Company had outstanding letters of
credit with a face value of $51.3 million and surety bonds
with a face value of $3.8 million. The majority of the
letters of credit and surety bonds have been issued as
collateral or financial assurance with respect to certain
liabilities the Company has recorded including, but not limited
to, environmental remediation obligations and self-insured
workers compensation reserves. Failure of the Company to
satisfy its obligations with respect to the primary obligations
secured by the letters of credit or surety bonds could entitle
the beneficiary of the related letter of credit or surety bond
to demand payments pursuant to such instruments. The letters of
credit generally have terms up to one year. Collateral held by
the sureties in the form of letters of credit at
December 31, 2009, pursuant to the terms of the agreement,
totaled approximately $3.7 million.
Certain of the Companys European and Asia Pacific
subsidiaries have issued bank guarantees as collateral or
financial assurance in connection with environmental
obligations, income tax claims and customer contract
requirements. At March 31, 2010, bank guarantees with a
face value of $13.4 million were outstanding.
Sales
Returns and Allowances
The Company provides for an allowance for product returns
and/or
allowances. Based upon its manufacturing re-work process, the
Company believes that the majority of its product returns are
not the result of product defects. The Company recognizes the
estimated cost of product returns as a reduction of sales in the
period in which the related revenue is recognized. The product
return estimates are based upon historical trends and claims
experience, and include assessment of the anticipated lag
between the date of sale and claim/return date.
Changes in the Companys sales returns and allowances
liability (in thousands) are as follows:
|
|
|
|
|
Balance at March 31, 2009
|
|
$
|
39,721
|
|
Accrual for sales returns and allowances
|
|
|
31,377
|
|
Settlements made (in cash or credit) and currency translation
|
|
|
(34,841
|
)
|
|
|
|
|
|
Balance at March 31, 2010
|
|
$
|
36,257
|
|
|
|
|
|
|
F-31
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Leases
Future minimum lease payments under operating and capital leases
that have initial or remaining noncancelable lease terms in
excess of one year at March 31, 2010, are:
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
Operating
|
|
|
Capital
|
|
|
|
(In thousands)
|
|
|
2011
|
|
|
24,602
|
|
|
|
2,147
|
|
2012
|
|
|
16,851
|
|
|
|
2,511
|
|
2013
|
|
|
10,169
|
|
|
|
2,319
|
|
2014
|
|
|
5,416
|
|
|
|
1,789
|
|
2015
|
|
|
3,001
|
|
|
|
1,970
|
|
Thereafter
|
|
|
2,268
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
Total minimum payments
|
|
$
|
62,307
|
|
|
|
10,782
|
|
|
|
|
|
|
|
|
|
|
Less Interest on capital leases
|
|
|
|
|
|
|
615
|
|
|
|
|
|
|
|
|
|
|
Total principal payable on capital leases (included in Long-term
debt)
|
|
|
|
|
|
$
|
10,167
|
|
|
|
|
|
|
|
|
|
|
Rent expense amounted to $52.5 million, $55.2 million,
and $55.9 million, for the fiscal years ended
March 31, 2010, 2009, and 2008, respectively.
During fiscal 2010, the Company has continued to implement
operational changes to streamline and rationalize its structure
in an effort to simplify the organization and eliminate
redundant
and/or
unnecessary costs. As part of these restructuring programs, the
nature of the positions eliminated range from plant employees
and clerical workers to operational and sales management.
During the year ended March 31, 2010, the Company
recognized restructuring charges of $70.6 million,
representing $55.6 million for severance and
$15.0 million for related closure costs. These charges
resulted from actions completed during fiscal 2010, which
related to continued consolidation efforts in the Transportation
and Industrial Energy Europe and ROW segments (including the
closure of two European plants), and corporate. Approximately
1,442 positions have been eliminated in connection with the
fiscal 2010 restructuring activities. The following is a summary
of restructuring reserve movements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closure
|
|
|
|
|
|
|
Severance
|
|
|
Costs
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Balance, March 31, 2007
|
|
$
|
1,860
|
|
|
$
|
3,803
|
|
|
$
|
5,663
|
|
Charges
|
|
|
4,530
|
|
|
|
5,977
|
|
|
|
10,507
|
|
Payments and Currency Translation
|
|
|
(4,602
|
)
|
|
|
(6,498
|
)
|
|
|
(11,100
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2008
|
|
|
1,788
|
|
|
|
3,282
|
|
|
|
5,070
|
|
Charges
|
|
|
57,508
|
|
|
|
5,763
|
|
|
|
63,271
|
|
Payments and Currency Translation
|
|
|
(21,496
|
)
|
|
|
(4,427
|
)
|
|
|
(25,923
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2009
|
|
|
37,800
|
|
|
|
4,618
|
|
|
|
42,418
|
|
Charges
|
|
|
55,550
|
|
|
|
15,044
|
|
|
|
70,594
|
|
Payments and Currency Translation
|
|
|
(73,867
|
)
|
|
|
(12,567
|
)
|
|
|
(86,434
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2010
|
|
$
|
19,483
|
|
|
$
|
7,095
|
|
|
$
|
26,578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-32
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Remaining expenditures principally represent a) severance
and related benefits payable per employee agreements over
periods up to three years
and/or
regulatory requirements; b) lease commitments for certain
closed facilities, branches and offices, as well as leases for
excess and permanently idle equipment payable in accordance with
contractual terms, over periods up to five years; and
c) certain other closure costs including dismantlement and
costs associated with removal obligations incurred in connection
with the exit of facilities.
|
|
(13)
|
(LOSS)
EARNINGS PER SHARE
|
Basic and diluted (loss) earnings per share for the fiscal years
ended March 31, 2010, 2009, and 2008 are summarized as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Net (loss) income attributable to Exide Technologies
|
|
$
|
(11,814
|
)
|
|
$
|
(69,522
|
)
|
|
$
|
32,059
|
|
Basic weighted average shares outstanding
|
|
|
75,960
|
|
|
|
75,526
|
|
|
|
68,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee stock options
|
|
|
|
|
|
|
|
|
|
|
678
|
|
Employee restricted stock awards (non-vested)
|
|
|
|
|
|
|
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding
|
|
|
75,960
|
|
|
|
75,526
|
|
|
|
69,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per share:
|
|
$
|
(0.16
|
)
|
|
$
|
(0.92
|
)
|
|
$
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings per share:
|
|
$
|
(0.16
|
)
|
|
$
|
(0.92
|
)
|
|
$
|
0.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2010, 2009, and 2008, certain potentially
dilutive outstanding shares were excluded from the diluted
(loss) earnings per share calculations because their effect
would be antidilutive:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Shares associated with convertible debt (assumed conversion)
|
|
|
3,697
|
|
|
|
3,697
|
|
|
|
3,697
|
|
Employee stock options
|
|
|
3,967
|
|
|
|
3,496
|
|
|
|
453
|
|
Restricted stock awards
|
|
|
1,026
|
|
|
|
897
|
|
|
|
|
|
Warrants
|
|
|
6,725
|
|
|
|
6,725
|
|
|
|
6,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
15,415
|
|
|
|
14,815
|
|
|
|
10,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14)
|
INTEREST
EXPENSE, NET
|
Interest income of $1.1 million, $2.4 million, and
$1.8 million, is included in interest expense, net for the
fiscal years ended March 31, 2010, 2009, and 2008,
respectively.
F-33
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
(15)
|
OTHER
(INCOME) EXPENSE, NET
|
Other (income) expense, net consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Loss (gain) on asset sales / impairments
|
|
$
|
10,002
|
|
|
$
|
11,744
|
|
|
$
|
(237
|
)
|
Equity income
|
|
|
(443
|
)
|
|
|
(1,190
|
)
|
|
|
(481
|
)
|
Currency remeasurement (gain) loss(a)
|
|
|
(10,239
|
)
|
|
|
42,134
|
|
|
|
(40,782
|
)
|
(Gain) loss on revaluation of warrants(b)
|
|
|
(807
|
)
|
|
|
(7,129
|
)
|
|
|
2,975
|
|
Other
|
|
|
(79
|
)
|
|
|
(4,295
|
)
|
|
|
(544
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(1,566
|
)
|
|
$
|
41,264
|
|
|
$
|
(39,069
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
The currency remeasurement (gain) loss relates primarily to
U.S.A. intercompany loans to foreign subsidiaries denominated in
Euros and Australian dollars. |
|
(b) |
|
The warrants entitle the holders to purchase an aggregate of up
to approximately 6.7 million shares of new common stock at
an exercise price of $29.84 per share. The warrants are
exercisable through May 5, 2011. The warrants have been
marked-to-market
based upon quoted market prices. Future results of operations
may be subject to volatility from changes in the market value of
such warrants. |
|
|
(16)
|
FAIR
VALUE MEASUREMENTS
|
The Company uses available market information and appropriate
methodologies to estimate the fair value of its financial
instruments. Considerable judgment is required in interpreting
market data to develop these estimates. Accordingly, the
estimates presented herein are not necessarily indicative of the
amounts that the Company could realize in a current market
exchange. Certain of these financial instruments are with major
financial institutions and expose the Company to market and
credit risks and may at times be concentrated with certain
counterparties or groups of counterparties. The creditworthiness
of counterparties is continually reviewed, and full performance
is currently anticipated.
F-34
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The Companys cash and cash equivalents, accounts
receivable, accounts payable, and short-term borrowings all have
carrying amounts that are a reasonable estimate of their fair
values. The carrying values and estimated fair values of the
Companys long-term obligations and other financial
instruments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2010
|
|
|
March 31, 2009
|
|
|
|
Carrying
|
|
|
Estimated
|
|
|
Carrying
|
|
|
Estimated
|
|
|
|
Value
|
|
|
Fair Value
|
|
|
Value
|
|
|
Fair Value
|
|
|
|
(In thousands)
|
|
|
(Liability) Asset:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Secured Credit Facility
|
|
$
|
(286,661
|
)
|
|
$
|
(264,816
|
)
|
|
$
|
(287,966
|
)
|
|
$
|
(195,817
|
)
|
Senior Secured Notes due 2013
|
|
|
(290,000
|
)
|
|
|
(294,350
|
)
|
|
|
(290,000
|
)
|
|
|
(174,000
|
)
|
Convertible Senior Subordinated Notes due 2013
|
|
|
(60,000
|
)
|
|
|
(39,150
|
)
|
|
|
(60,000
|
)
|
|
|
(17,475
|
)
|
Interest Rate Swap(a)
|
|
|
(5,350
|
)
|
|
|
(5,350
|
)
|
|
|
(7,461
|
)
|
|
|
(7,461
|
)
|
Foreign Currency Forwards(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
|
|
|
4,034
|
|
|
|
4,034
|
|
|
|
4,962
|
|
|
|
4,962
|
|
Liability
|
|
|
(270
|
)
|
|
|
(270
|
)
|
|
|
|
|
|
|
|
|
Commodity Swap(a)
|
|
|
665
|
|
|
|
665
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
These financial instruments are required to be measured at fair
value, and are based on inputs as described in the three-tier
hierarchy that prioritizes inputs used in measuring fair value
as of the reported date: |
|
|
|
Level 1 Observable inputs
such as quoted prices in active markets for identical assets and
liabilities;
|
|
|
|
Level 2 Inputs other than
quoted prices in active markets that are observable either
directly or indirectly; and
|
|
|
|
Level 3 Inputs from
valuation techniques in which one or more key value drivers are
not observable, and must be based on the reporting entitys
own assumptions.
|
The following table represents our financial instruments that
are measured at fair value on a recurring basis, and the basis
for that measurement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
Quoted Price in
|
|
Other
|
|
Significant
|
|
|
Total
|
|
Active Markets for
|
|
Observable
|
|
Unobservable
|
|
|
Fair Value
|
|
Identical Assets
|
|
Inputs
|
|
Inputs
|
|
|
Measurement
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
|
(In thousands)
|
|
March 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward
|
|
$
|
4,034
|
|
|
$
|
|
|
|
$
|
4,034
|
|
|
$
|
|
|
Commodity Swap (diesel fuel)
|
|
|
665
|
|
|
|
|
|
|
|
665
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap
|
|
|
5,350
|
|
|
|
|
|
|
|
5,350
|
|
|
|
|
|
Foreign currency forward
|
|
|
270
|
|
|
|
|
|
|
|
270
|
|
|
|
|
|
March 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward
|
|
$
|
4,962
|
|
|
$
|
|
|
|
$
|
4,962
|
|
|
$
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap
|
|
|
7,461
|
|
|
|
|
|
|
|
7,461
|
|
|
|
|
|
F-35
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The fair value of the interest rate swap is based on observable
prices as quoted for receiving the variable LIBOR rate, and
paying fixed interest rates and, therefore, was classified as
Level 2. The fair value of the foreign currency forwards
and the commodity swap were based upon current quoted market
prices and is classified as Level 2 based on the nature of
the underlying market in which this derivative is traded. For
additional discussion of the Companys derivative
instruments and hedging activities, see Note 2.
The following table summarizes the investments that comprise the
assets of the Companys pension plans (see Note 8),
all of which are measured at fair value on a recurring basis,
and the basis for that measurement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
Quoted Price in
|
|
|
Other
|
|
|
Significant
|
|
|
|
Total
|
|
|
Active Markets for
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
Fair Value
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
Measurement
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
(In thousands)
|
|
|
March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
5,525
|
|
|
$
|
5,525
|
|
|
$
|
|
|
|
$
|
|
|
Mutual funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
U.S.-based
companies
|
|
|
94,785
|
|
|
|
|
|
|
|
94,785
|
|
|
|
|
|
Equity International-based companies
|
|
|
89,070
|
|
|
|
|
|
|
|
89,070
|
|
|
|
|
|
Fixed income
|
|
|
220,209
|
|
|
|
|
|
|
|
220,209
|
|
|
|
|
|
Other
|
|
|
2,395
|
|
|
|
|
|
|
|
2,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pension assets
|
|
$
|
411,984
|
|
|
$
|
5,525
|
|
|
$
|
406,459
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents consist primarily of excess cash
balances in the plans investment accounts, and are classified as
Level 1. The fair value of the plans mutual fund
investments are based on net asset value, which is based on
quoted market prices of the underlying assets owned by the fund
(reduced by its liabilities) divided by the number of shares
outstanding.
The Company reports its results in four business segments:
Transportation Americas, Transportation Europe and ROW,
Industrial Energy Americas and Industrial Energy Europe and ROW.
The Company will continue to evaluate its reporting segments
pending future organizational changes that may take place.
The Company is a global producer and recycler of lead-acid
batteries. The Companys four business segments provide a
comprehensive range of stored electrical energy products and
services for transportation and industrial applications.
Transportation markets include original-equipment and
aftermarket batteries for cars, trucks, off-road vehicles,
agricultural and construction vehicles, motorcycles,
recreational vehicles, marine, and other applications.
Industrial markets include batteries for motive power and
network power applications. Motive power batteries are used in
the materials handling industry for electric forklift trucks,
and in other industries, including floor cleaning machinery,
powered wheelchairs, railroad locomotives, mining and the
electric road vehicles market. Network power batteries are used
for backup power for use with telecommunications systems,
computer installations, hospitals, air traffic control, security
systems, utility, railway and military applications.
The Companys four reportable segments are determined based
upon the nature of the markets served and the geographic regions
in which they operate. The Companys chief operating
decision-maker monitors and manages the financial performance of
these four business groups. Costs of shared services and other
corporate costs are not allocated or charged to the business
groups.
F-36
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Selected financial information concerning the Companys
reportable segments is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended March 31, 2010
|
|
|
|
Transportation
|
|
|
Industrial
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
|
|
|
Europe
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
ROW
|
|
|
Americas
|
|
|
ROW
|
|
|
Other(a)
|
|
|
Consolidated
|
|
|
|
(In thousands)
|
|
|
Net sales
|
|
$
|
922,629
|
|
|
$
|
824,190
|
|
|
$
|
237,137
|
|
|
$
|
701,852
|
|
|
$
|
|
|
|
$
|
2,685,808
|
|
Gross profit
|
|
|
206,472
|
|
|
|
142,509
|
|
|
|
53,958
|
|
|
|
135,157
|
|
|
|
|
|
|
|
538,096
|
|
Income (loss) before reorganization items and income taxes
|
|
|
82,971
|
|
|
|
14,855
|
|
|
|
13,100
|
|
|
|
(45,322
|
)
|
|
|
(97,230
|
)
|
|
|
(31,626
|
)
|
Depreciation and amortization
|
|
|
28,819
|
|
|
|
20,775
|
|
|
|
10,731
|
|
|
|
22,902
|
|
|
|
6,886
|
|
|
|
90,113
|
|
Restructuring expenses
|
|
|
4,852
|
|
|
|
26,037
|
|
|
|
372
|
|
|
|
36,932
|
|
|
|
2,401
|
|
|
|
70,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended March 31, 2009
|
|
|
|
Transportation
|
|
|
Industrial
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
|
|
|
Europe
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
ROW
|
|
|
Americas
|
|
|
ROW
|
|
|
Other(a)
|
|
|
Consolidated
|
|
|
|
(In thousands)
|
|
|
Net sales
|
|
$
|
1,136,631
|
|
|
$
|
908,085
|
|
|
$
|
287,120
|
|
|
$
|
990,496
|
|
|
$
|
|
|
|
$
|
3,322,332
|
|
Gross profit
|
|
|
215,051
|
|
|
|
100,394
|
|
|
|
79,894
|
|
|
|
218,329
|
|
|
|
|
|
|
|
613,668
|
|
Income (loss) before reorganization items and income taxes
|
|
|
82,720
|
|
|
|
(62,198
|
)
|
|
|
41,205
|
|
|
|
52,833
|
|
|
|
(148,689
|
)
|
|
|
(34,129
|
)
|
Depreciation and amortization
|
|
|
30,194
|
|
|
|
24,634
|
|
|
|
9,379
|
|
|
|
24,726
|
|
|
|
6,985
|
|
|
|
95,918
|
|
Restructuring expenses
|
|
|
3,427
|
|
|
|
44,178
|
|
|
|
130
|
|
|
|
14,612
|
|
|
|
924
|
|
|
|
63,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended March 31, 2008
|
|
|
|
Transportation
|
|
|
Industrial
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
|
|
|
Europe
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
ROW
|
|
|
Americas
|
|
|
ROW
|
|
|
Other(a)
|
|
|
Consolidated
|
|
|
|
(In thousands)
|
|
|
Net sales
|
|
$
|
1,126,388
|
|
|
$
|
1,156,007
|
|
|
$
|
301,562
|
|
|
$
|
1,112,714
|
|
|
$
|
|
|
|
$
|
3,696,671
|
|
Gross profit
|
|
|
209,395
|
|
|
|
146,565
|
|
|
|
77,561
|
|
|
|
162,063
|
|
|
|
(2,394
|
)
|
|
|
593,190
|
|
Income (loss) before reorganization items and income taxes
|
|
|
78,886
|
|
|
|
30,265
|
|
|
|
38,033
|
|
|
|
17,903
|
|
|
|
(116,776
|
)
|
|
|
48,311
|
|
Depreciation and amortization
|
|
|
29,930
|
|
|
|
27,597
|
|
|
|
8,876
|
|
|
|
28,714
|
|
|
|
6,044
|
|
|
|
101,161
|
|
Restructuring expenses
|
|
|
2,185
|
|
|
|
4,714
|
|
|
|
1,115
|
|
|
|
1,990
|
|
|
|
503
|
|
|
|
10,507
|
|
|
|
|
(a) |
|
Other includes unallocated corporate expenses, interest expense,
currency remeasurement gain/loss, and gain/loss on revaluation
of warrants. |
F-37
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Geographic information is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from External Customers
|
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
United States
|
|
$
|
1,028,339
|
|
|
$
|
1,293,326
|
|
|
$
|
1,527,222
|
|
France
|
|
|
180,182
|
|
|
|
242,565
|
|
|
|
324,747
|
|
Germany
|
|
|
297,732
|
|
|
|
423,741
|
|
|
|
509,967
|
|
Italy
|
|
|
183,467
|
|
|
|
209,287
|
|
|
|
265,244
|
|
Spain
|
|
|
242,084
|
|
|
|
260,822
|
|
|
|
317,401
|
|
Poland
|
|
|
109,730
|
|
|
|
125,384
|
|
|
|
153,133
|
|
Other
|
|
|
644,274
|
|
|
|
767,207
|
|
|
|
598,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,685,808
|
|
|
$
|
3,322,332
|
|
|
$
|
3,696,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Lived Assets
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
United States
|
|
$
|
260,703
|
|
|
$
|
252,406
|
|
France
|
|
|
22,598
|
|
|
|
31,759
|
|
Germany
|
|
|
72,395
|
|
|
|
68,201
|
|
Italy
|
|
|
61,364
|
|
|
|
54,363
|
|
Spain
|
|
|
81,752
|
|
|
|
79,407
|
|
Poland
|
|
|
26,356
|
|
|
|
14,905
|
|
Other
|
|
|
77,992
|
|
|
|
85,220
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
603,160
|
|
|
$
|
586,261
|
|
|
|
|
|
|
|
|
|
|
|
|
(18)
|
SELECTED
QUARTERLY FINANCIAL DATA (Unaudited)
|
The following is a summary of the Companys quarterly
consolidated results of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended March 31, 2010
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
|
(In thousands, except per share data)
|
|
|
Net sales
|
|
$
|
592,854
|
|
|
$
|
631,815
|
|
|
$
|
746,472
|
|
|
$
|
714,667
|
|
Gross profit
|
|
|
106,684
|
|
|
|
129,906
|
|
|
|
158,198
|
|
|
|
143,308
|
|
(Loss) income before reorganization items and income taxes
|
|
|
(48,589
|
)
|
|
|
1,529
|
|
|
|
22,933
|
|
|
|
(7,499
|
)
|
Net (loss) income attributable to Exide Technologies
|
|
|
(53,974
|
)
|
|
|
(7,989
|
)
|
|
|
9,772
|
|
|
|
40,377
|
|
(Loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.71
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
0.13
|
|
|
$
|
0.53
|
|
Diluted
|
|
$
|
(0.71
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
0.12
|
|
|
$
|
0.50
|
|
F-38
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended March 31, 2009
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
|
(In thousands, except per share data)
|
|
|
Net sales
|
|
$
|
971,275
|
|
|
$
|
914,174
|
|
|
$
|
782,602
|
|
|
$
|
654,281
|
|
Gross profit
|
|
|
169,480
|
|
|
|
161,884
|
|
|
|
162,015
|
|
|
|
120,289
|
|
(Loss) income before reorganization items and income taxes
|
|
|
14,181
|
|
|
|
(6,022
|
)
|
|
|
22,305
|
|
|
|
(64,593
|
)
|
Net (loss) income attributable to Exide Technologies
|
|
|
(10,311
|
)
|
|
|
(10,236
|
)
|
|
|
15,427
|
|
|
|
(64,402
|
)
|
(Loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
$
|
(0.14
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
0.20
|
|
|
$
|
(0.85
|
)
|
(Loss) income before reorganization items and income taxes in
the first quarter of fiscal 2010 reflects a significant portion
of the Companys fiscal 2010 restructuring initiatives. See
Note 12.
F-39
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
Schedule II
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
Additions
|
|
|
Deductions/
|
|
|
|
|
|
Balance
|
|
|
|
Beginning of
|
|
|
Charged to
|
|
|
Charge-
|
|
|
Currency
|
|
|
at End of
|
|
|
|
Period
|
|
|
Expense
|
|
|
offs
|
|
|
Translation
|
|
|
Period
|
|
|
|
(In thousands)
|
|
|
Allowance for Doubtful Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2008
|
|
$
|
28,624
|
|
|
|
5,974
|
|
|
|
(5,723
|
)
|
|
|
4,755
|
|
|
$
|
33,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2009
|
|
$
|
33,630
|
|
|
|
8,044
|
|
|
|
(7,310
|
)
|
|
|
(5,509
|
)
|
|
$
|
28,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2010
|
|
$
|
28,855
|
|
|
|
4,741
|
|
|
|
(3,000
|
)
|
|
|
678
|
|
|
$
|
31,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation Allowance on Deferred Tax Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2008
|
|
$
|
321,001
|
|
|
|
13,952
|
|
|
|
(69,651
|
)
|
|
|
(80,662
|
)
|
|
$
|
184,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2009
|
|
$
|
184,640
|
|
|
|
55,188
|
|
|
|
(3,783
|
)
|
|
|
(32,150
|
)
|
|
$
|
203,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2010
|
|
$
|
203,895
|
|
|
|
40,545
|
|
|
|
(2,427
|
)
|
|
|
665
|
|
|
$
|
242,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-40
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners and Board of Directors of
Exide Global Holdings Netherlands C.V.
In our opinion, the accompanying consolidated balance sheets and
the related consolidated statements of operations, equity and
cash flows present fairly, in all material respects, the
financial position of Exide Global Holdings Netherlands C.V., a
wholly-owned subsidiary of Exide Technologies, and its
subsidiaries (the Company) at March 31, 2010 and 2009, and
the results of their operations and cash flows for each of the
three years in the period ended March 31, 2010 in
conformity with accounting principles generally accepted in the
United States of America. These financial statements are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles
used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
As discussed in Note 1 to the consolidated financial
statements, the Company changed the manner in which it accounts
for noncontrolling interests effective April 1, 2009.
/s/ PricewaterhouseCoopers
LLP
Atlanta, Georgia
June 2, 2010
F-41
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
NET SALES
|
|
|
|
|
|
|
|
|
|
|
|
|
Net customer sales
|
|
$
|
1,585,694
|
|
|
$
|
1,955,911
|
|
|
$
|
2,311,652
|
|
Net affiliate sales
|
|
|
34,097
|
|
|
|
36,473
|
|
|
|
67,735
|
|
COST OF SALES
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer sales
|
|
|
1,301,882
|
|
|
|
1,626,299
|
|
|
|
1,989,913
|
|
Affiliate sales
|
|
|
34,097
|
|
|
|
36,473
|
|
|
|
67,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
283,812
|
|
|
|
329,612
|
|
|
|
321,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, marketing and advertising
|
|
|
154,649
|
|
|
|
181,330
|
|
|
|
180,834
|
|
General and administrative
|
|
|
106,382
|
|
|
|
100,650
|
|
|
|
101,289
|
|
Restructuring
|
|
|
65,315
|
|
|
|
59,680
|
|
|
|
7,218
|
|
Other expense (income), net
|
|
|
7,923
|
|
|
|
15,579
|
|
|
|
(14,359
|
)
|
Interest expense, net
|
|
|
24,671
|
|
|
|
39,856
|
|
|
|
50,706
|
|
Loss on early extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
10,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
358,940
|
|
|
|
397,095
|
|
|
|
336,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(75,128
|
)
|
|
|
(67,483
|
)
|
|
|
(14,623
|
)
|
INCOME TAX PROVISION
|
|
|
4,456
|
|
|
|
21,547
|
|
|
|
34,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(79,584
|
)
|
|
|
(89,030
|
)
|
|
|
(49,134
|
)
|
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
|
|
|
477
|
|
|
|
1,040
|
|
|
|
1,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to EGHN
|
|
$
|
(80,061
|
)
|
|
$
|
(90,070
|
)
|
|
$
|
(50,678
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these statements.
F-42
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
March 31, 2010
|
|
|
March 31, 2009
|
|
|
|
(In thousands)
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
58,716
|
|
|
$
|
20,294
|
|
Receivables, net of allowance for doubtful accounts of $26,246
and $22,895, respectively
|
|
|
348,720
|
|
|
|
370,528
|
|
Receivables from affiliates
|
|
|
7,973
|
|
|
|
11,138
|
|
Inventories
|
|
|
250,133
|
|
|
|
228,149
|
|
Prepaid expenses and other
|
|
|
9,934
|
|
|
|
9,340
|
|
Deferred financing costs, net
|
|
|
1,662
|
|
|
|
1,607
|
|
Deferred income taxes
|
|
|
8,297
|
|
|
|
9,419
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
685,435
|
|
|
|
650,475
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
341,529
|
|
|
|
333,114
|
|
|
|
|
|
|
|
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
Goodwill and intangibles
|
|
|
125,550
|
|
|
|
121,676
|
|
Investments in affiliates
|
|
|
782
|
|
|
|
673
|
|
Deferred financing costs, net
|
|
|
2,167
|
|
|
|
3,702
|
|
Deferred income taxes
|
|
|
41,319
|
|
|
|
39,009
|
|
Other
|
|
|
17,458
|
|
|
|
18,589
|
|
|
|
|
|
|
|
|
|
|
Total other assets
|
|
|
187,276
|
|
|
|
183,649
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,214,240
|
|
|
$
|
1,167,238
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
$
|
7,682
|
|
|
$
|
6,977
|
|
Current maturities of long-term debt
|
|
|
3,740
|
|
|
|
3,576
|
|
Accounts payable
|
|
|
248,398
|
|
|
|
172,436
|
|
Payables to affiliates
|
|
|
29,719
|
|
|
|
30,516
|
|
Accrued expenses
|
|
|
175,879
|
|
|
|
191,635
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
465,418
|
|
|
|
405,140
|
|
Long-term debt
|
|
|
170,972
|
|
|
|
169,047
|
|
Notes payable to affiliates
|
|
|
186,916
|
|
|
|
128,731
|
|
Noncurrent retirement obligations
|
|
|
148,950
|
|
|
|
127,928
|
|
Deferred income tax liability
|
|
|
23,053
|
|
|
|
29,824
|
|
Other noncurrent liabilities
|
|
|
38,654
|
|
|
|
43,407
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,033,963
|
|
|
|
904,077
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
Partners capital
|
|
|
787,903
|
|
|
|
789,692
|
|
Accumulated deficit
|
|
|
(671,173
|
)
|
|
|
(591,112
|
)
|
Accumulated other comprehensive income
|
|
|
47,843
|
|
|
|
48,741
|
|
|
|
|
|
|
|
|
|
|
Total equity attributable to EGHN
|
|
|
164,573
|
|
|
|
247,321
|
|
Noncontrolling interests
|
|
|
15,704
|
|
|
|
15,840
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
180,277
|
|
|
|
263,161
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
1,214,240
|
|
|
$
|
1,167,238
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these statements.
F-43
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined
|
|
|
Derivatives
|
|
|
Cummulative
|
|
|
Non-
|
|
|
EGHN
|
|
|
|
Partners
|
|
|
Accumulated
|
|
|
Benefit
|
|
|
Qualifying as
|
|
|
Transalation
|
|
|
Controlling
|
|
|
Comprehensive
|
|
|
|
Capital
|
|
|
Deficit
|
|
|
Plans
|
|
|
Hedges
|
|
|
Adjustment
|
|
|
Interest
|
|
|
Income (Loss)
|
|
|
|
(In thousands)
|
|
|
Balance at March 31, 2007
|
|
$
|
739,692
|
|
|
$
|
(446,832
|
)
|
|
$
|
25,263
|
|
|
$
|
|
|
|
$
|
52,883
|
|
|
$
|
14,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
(50,678
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,544
|
|
|
$
|
(50,678
|
)
|
Defined benefit plans, net of tax of $5,619
|
|
|
|
|
|
|
|
|
|
|
27,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,959
|
|
Translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,250
|
|
|
|
2,668
|
|
|
|
50,250
|
|
Unrealized loss on derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,068
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,068
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
26,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative effect of the adoption of Fin 48
|
|
|
|
|
|
|
(3,532
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2008
|
|
$
|
739,692
|
|
|
$
|
(501,042
|
)
|
|
$
|
53,222
|
|
|
$
|
(1,068
|
)
|
|
$
|
103,133
|
|
|
$
|
18,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
(90,070
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,040
|
|
|
$
|
(90,070
|
)
|
Defined benefit plans, net of tax of $594
|
|
|
|
|
|
|
|
|
|
|
(34,042
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,042
|
)
|
Translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(71,364
|
)
|
|
|
(3,972
|
)
|
|
|
(71,364
|
)
|
Unrealized loss on derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,140
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,140
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(196,616
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital contribution
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2009
|
|
$
|
789,692
|
|
|
$
|
(591,112
|
)
|
|
$
|
19,180
|
|
|
$
|
(2,208
|
)
|
|
$
|
31,769
|
|
|
$
|
15,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
(80,061
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
477
|
|
|
$
|
(80,061
|
)
|
Defined benefit plans, net of tax of $5,327
|
|
|
|
|
|
|
|
|
|
|
(18,863
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,863
|
)
|
Translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,305
|
|
|
|
390
|
|
|
|
17,305
|
|
Unrealized loss on derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
660
|
|
|
|
|
|
|
|
|
|
|
|
660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(80,959
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in ownership of subsidiary
|
|
|
(1,789
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,003
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2010
|
|
$
|
787,903
|
|
|
$
|
(671,173
|
)
|
|
$
|
317
|
|
|
$
|
(1,548
|
)
|
|
$
|
49,074
|
|
|
$
|
15,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these statements.
F-44
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(79,584
|
)
|
|
$
|
(89,030
|
)
|
|
$
|
(49,134
|
)
|
Adjustments to reconcile net loss to net cash provided by (used
in) operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
48,846
|
|
|
|
55,361
|
|
|
|
61,685
|
|
Loss (gain) on asset sales / impairments
|
|
|
9,589
|
|
|
|
9,005
|
|
|
|
(2,966
|
)
|
Deferred income taxes
|
|
|
(5,764
|
)
|
|
|
6,934
|
|
|
|
19,208
|
|
Provision for doubtful accounts
|
|
|
3,688
|
|
|
|
6,481
|
|
|
|
3,878
|
|
Amortization of deferred financing costs
|
|
|
1,722
|
|
|
|
1,745
|
|
|
|
1,722
|
|
Loss on early extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
10,674
|
|
Currency remeasurement (gain) loss
|
|
|
(1,889
|
)
|
|
|
7,126
|
|
|
|
(9,478
|
)
|
Changes in assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
32,382
|
|
|
|
131,120
|
|
|
|
(21,604
|
)
|
Inventories
|
|
|
(4,930
|
)
|
|
|
81,576
|
|
|
|
(68,169
|
)
|
Prepaid expenses and other
|
|
|
(8
|
)
|
|
|
(1,733
|
)
|
|
|
1,467
|
|
Payables
|
|
|
72,302
|
|
|
|
(120,072
|
)
|
|
|
31,538
|
|
Accrued liabilities
|
|
|
(27,811
|
)
|
|
|
4,567
|
|
|
|
1,242
|
|
Noncurrent liabilities
|
|
|
(14,035
|
)
|
|
|
(9,317
|
)
|
|
|
(8,325
|
)
|
Other, net
|
|
|
2,604
|
|
|
|
(2,443
|
)
|
|
|
(21,791
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
37,112
|
|
|
|
81,320
|
|
|
|
(50,053
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(51,098
|
)
|
|
|
(57,258
|
)
|
|
|
(27,567
|
)
|
Proceeds from asset sales, net
|
|
|
755
|
|
|
|
11,071
|
|
|
|
6,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(50,343
|
)
|
|
|
(46,187
|
)
|
|
|
(20,987
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in short-term borrowings
|
|
|
(236
|
)
|
|
|
(10,438
|
)
|
|
|
4,699
|
|
Increase (decrease) in notes payable to affiliates
|
|
|
44,147
|
|
|
|
(87,559
|
)
|
|
|
101,025
|
|
Payments under Senior Credit Facility
|
|
|
(1,705
|
)
|
|
|
(1,677
|
)
|
|
|
(12,055
|
)
|
Decrease in other debt
|
|
|
7,167
|
|
|
|
(9,353
|
)
|
|
|
(1,192
|
)
|
Financing costs and other
|
|
|
|
|
|
|
|
|
|
|
(15,164
|
)
|
Increase in controlling interests in subsidiaries
|
|
|
(1,789
|
)
|
|
|
|
|
|
|
|
|
Capital contribution
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
47,584
|
|
|
|
(59,027
|
)
|
|
|
77,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
|
|
4,069
|
|
|
|
(11,059
|
)
|
|
|
5,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) In Cash and Cash Equivalents
|
|
|
38,422
|
|
|
|
(34,953
|
)
|
|
|
11,594
|
|
Cash and Cash Equivalents, Beginning of Period
|
|
|
20,294
|
|
|
|
55,247
|
|
|
|
43,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, End of Period
|
|
$
|
58,716
|
|
|
$
|
20,294
|
|
|
$
|
55,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
18,104
|
|
|
$
|
31,807
|
|
|
$
|
43,651
|
|
Income taxes (net of refunds)
|
|
$
|
7,733
|
|
|
$
|
14,833
|
|
|
$
|
18,337
|
|
The accompanying notes are an integral part of these statements.
F-45
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
March 31,
2010
|
|
(1)
|
BASIS OF
PRESENTATION
|
The Consolidated Financial Statements include the accounts of
Exide Global Holding Netherlands C.V. (referred together with
its subsidiaries, unless the context requires otherwise, as
EGHN or the Company) and all of its
majority-owned subsidiaries. The Company is a partnership that
is ultimately wholly owned by Exide Technologies (referred to as
Exide or the Parent Company). The
Consolidated Financial Statements are prepared in conformity
with U.S. generally accepted accounting principles.
EGHN was formed on April 14, 2004 as a limited partnership
under the laws of the Netherlands with the General Partner,
Exide Technologies, owning 99.99% and the Limited Partner, EH
International, LLC (a limited liability company, wholly owned by
Exide Technologies), owning 0.01%. EGHN was formed by
Exides contribution of its ownership interest in its then
wholly owned subsidiaries Exide Holding Europe S.A. (referred to
as EHE) and Exide Holding Asia Pte Limited (referred
to as EHA) and its interest in a participating loan
due from EHE. As the Company was the successor to substantially
all of the business of EHE and EHA and the Companys own
operations are insignificant relative to the operations
contributed, the consolidated financial statements for all
periods prior to the date of formation of the Company include
the consolidated financial results and position of EHE and EHA,
accounted for as a merger of entities under common control.
Certain amounts of the Parent Companys corporate expenses,
including insurance, centralized legal, accounting, information
technology services, treasury, internal audit, and other
consulting and professional fees, have been allocated to EGHN on
a basis that the Parent Company considers to be a reasonable
reflection of the utilization of services provided to or the
benefit received by EGHN. These services are charged to the
Company in the form of a fee.
Certain amounts in the Consolidated Financial Statements as of
March 31, 2009 and 2008 have been adjusted to conform to
the presentation of equivalent amounts in the current period
which reflect the adoption of a new accounting standard related
to the presentation of minority (noncontrolling) ownership
interests in consolidated subsidiaries.
|
|
(2)
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
Principles
of Consolidation and Combination
The Consolidated Financial Statements include the accounts of
EGHN and all of its majority owned subsidiaries in which the
Company exercises control.
Investments in affiliates of less than a 20% interest are
accounted for by the cost method. Investments in 20% to 50%
owned companies are accounted for by the equity method. All
significant intercompany transactions have been eliminated.
Transactions between the Company and other Exide entities have
been identified in the consolidated financial statements as
transactions among related parties.
Nature
of Operations
The Company manufactures and markets industrial and automotive
batteries in Europe, India, Canada, Australia and New Zealand.
The Companys industrial batteries consist of motive power
batteries, such as those used in forklift trucks and other
electric vehicles, and network power batteries used for
back-up
power applications, such as those used for telecommunication
systems. The Company markets its automotive batteries to a broad
range of retailers and distributors of replacement batteries and
automotive original equipment manufacturers.
F-46
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Major
Customers and Concentration of Credit
The Company has a number of major end-user, retail and original
equipment manufacturer customers. No single customer accounted
for more than 10% of consolidated net sales during any of the
fiscal years presented. The Company does not believe a material
part of its business is dependent upon a single customer, the
loss of which would have a material long-term impact on the
business of the Company. However, the loss of one or more of the
Companys largest customers would most likely have a
negative short-term impact on the Companys results of
operations.
Foreign
Currency Translation
The functional currencies of the Companys foreign
subsidiaries are primarily the respective local currencies.
Assets and liabilities of the Companys subsidiaries and
affiliates are translated into U.S. Dollars at the year-end
exchange rate, and revenues and expenses are translated at
average monthly exchange rates. Translation gains and losses are
recorded as a component of accumulated other comprehensive
income (loss) within partnership capital or stockholders
equity. Foreign currency gains and losses from certain
intercompany transactions meeting the permanently advanced
criteria of the FASBs guidance on foreign currency
translation are also recorded as a component of accumulated
other comprehensive income (loss). All other foreign currency
gains and losses are included in other (income) expense, net.
Cash
Equivalents
Cash equivalents consist of highly liquid instruments with
maturities at the time of acquisition of three months or less.
Cash equivalents are stated at cost, which approximates fair
value, because of the short-term maturity of these instruments.
Allowance
for Doubtful Accounts
The Company maintains allowances for doubtful accounts for
estimated probable losses resulting from the inability of the
Companys customers to make required payments. The Company
continues to assess the adequacy of the reserves for doubtful
accounts based on the financial condition of the Companys
customers and other external factors that may impact
collectibility. The majority of the Companys accounts
receivable is due from trade customers. Credit is extended based
on an evaluation of the Companys customers financial
condition and generally, collateral is not required. Payment
terms vary and accounts receivable are stated in the
consolidated financial statements at amounts due from customers
net of an allowance for doubtful accounts. Accounts outstanding
longer than the payment terms are considered past due. The
Company considers a number of factors in determining the
allowance for doubtful accounts, including the length of time
trade accounts receivable are past due, the customers
current ability to pay their obligations to the Company, the
Companys previous loss history, and the condition of the
general economy and the industry as a whole. The Company writes
off accounts receivable when they become uncollectible.
Inventories
Inventories, which consist of material, labor and overhead, are
stated at the lower of cost or market using the
first-in,
first-out (FIFO) method. The Company writes down its
inventory to estimated market value based on assumptions of
future demand and market conditions.
Property,
Plant and Equipment
Depreciation is provided on a straight-line basis over the
estimated useful lives of the assets. The range of original
estimated useful lives is as follows: buildings and
improvements,
25-40 years;
machinery and equipment, 3-14 years. Cost and accumulated
depreciation for property retired or disposed of are removed
F-47
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
from the accounts, and any gain or loss on disposal is credited
or charged to earnings. Expenditures for maintenance and repairs
are charged to expense as incurred. Additions, improvements and
major renewals are capitalized.
Deferred
Financing Costs
Deferred financing costs are amortized to interest expense over
the life of the related debt.
Valuation
of Long-Lived Assets
The Companys long-lived assets include property, plant and
equipment, identified intangible assets, and goodwill.
Long-lived assets (other than indefinite lived intangible assets
and goodwill) are depreciated over their estimated useful lives,
and are reviewed for impairment whenever changes in
circumstances indicate the carrying value may not be
recoverable. Indefinite-lived intangible assets and goodwill are
reviewed for impairment on both an annual basis and whenever
changes in circumstances indicate the carrying value may not be
recoverable. The fair value of indefinite-lived intangible
assets and goodwill is based upon the Companys estimates
of future cash flows and other factors including discount rates
to determine the fair value of the respective assets. If these
assets or their related assumptions change in the future, the
Company may be required to record impairment charges.
Sales
Returns and Allowances
The Company provides for an allowance for product returns
and/or
allowances. Based upon its manufacturing re-work process, the
Company believes that the majority of its product returns are
not the result of product defects. The Company recognizes the
estimated cost of product returns as a reduction of sales in the
period in which the related revenue is recognized. The product
return estimates are based upon historical trends and claims
experience, and include assessment of the anticipated lag
between the date of sale and claim/return date.
Income
Taxes
The Company accounts for income taxes using the liability method
in accounting for deferred taxes. If it is more likely than not
that some portion, or all, of a deferred tax asset will not be
realized, a valuation allowance is recognized.
Revenue
Recognition
The Company records sales when revenue is earned. Shipping terms
are generally FOB shipping point and revenue is recognized when
product is shipped to the customer. In limited cases, terms are
FOB destination and in these cases, revenue is recognized when
product is delivered to the customers delivery site.
Accounting
for Shipping and Handling Costs
The Company records shipping and handling costs incurred in cost
of sales and records shipping and handling costs billed to
customers in net sales.
Advertising
The Company expenses advertising costs as they are incurred.
F-48
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Use of
Estimates in the Preparation of Financial
Statements
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could
differ from those estimates.
Recently
Issued Accounting Standards
In June 2009, the Financial Accounting Standards Board
(FASB) amended its guidance on accounting for
variable interest entities (VIEs). A VIE is an
entity in which an investor holds a controlling interest based
on factors other than a majority of voting rights. Among other
things, the new guidance requires more qualitative than
quantitative analyses to determine the primary beneficiary of a
VIE, requires continuous assessments of whether an enterprise is
the primary beneficiary of a VIE, enhances disclosures about an
enterprises involvement with a VIE, and amends certain
guidance for determining whether an entity meets the definition
of a VIE. Under the new guidance, a VIE must be consolidated if
the enterprise has both (a) the power to direct the
activities of the VIE that most significantly impact the
entitys economic performance, and (b) the obligation
to absorb losses or the right to receive benefits from the VIE
that could potentially be significant to the VIE. This new
guidance is effective for fiscal years beginning after
November 15, 2009 (the Companys fiscal 2011), and for
interim periods within that year. The Company is currently
evaluating the impact, if any, of the adoption of this new
guidance on its financial statements.
|
|
(3)
|
ACCOUNTING
FOR DERIVATIVES
|
The Company uses derivative contracts to hedge the volatility
arising from changes in the fair value of certain assets and
liabilities that are subject to market risk, such as interest
rates on debt instruments, foreign currency exchange rates, and
certain commodities. The Company does not enter into derivative
contracts for trading or speculative purposes.
The Company recognizes outstanding derivative instruments as
assets or liabilities, based on measurements of their fair
values. If a derivative qualifies for hedge accounting, gains or
losses in its fair value that offset changes in the fair value
of the asset or liability being hedged (effective
gains or losses) are reported in accumulated other comprehensive
income, and subsequently recorded to earnings only as the
related variability on the hedged transaction is recorded in
earnings. If a derivative does not qualify for hedge accounting,
changes in its fair value are reported in earnings immediately
upon occurrence. Derivatives qualify for hedge accounting if
they are designated as hedging instruments at their inception,
and if they are highly effective in achieving fair value changes
that offset the fair value changes of the assets or liabilities
being hedged. Regardless of a derivatives accounting
qualification, changes in its fair value that are not offset by
fair value changes in the asset or liability being hedged are
considered ineffective, and are recognized in earnings
immediately.
In February 2008, the Company entered into an interest rate swap
agreement to fix the variable component of interest on
$61.2 million of EGHNs floating rate long-term
obligations through February 27, 2011. The rate is fixed at
3.3% per annum through the remainder of the agreement. The
interest rate swap is designated as a cash-flow hedging
instrument.
In August 2008, the Company entered into a foreign currency
forward contract in the notional amount of $62.8 million to
mitigate the effect of foreign currency exchange rate
fluctuations of EGHNs debt that is denominated in
U.S. dollars. The forward contract and the indebtedness
mature in May 2012. Because the Company has not designated this
contract as a hedging instrument, changes in its fair value are
recognized immediately in earnings.
F-49
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following tables set forth information on the presentation
of these derivative instruments in the Companys
Consolidated Financial Statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value As of
|
|
|
|
|
March 31,
|
|
March 31,
|
|
|
Balance Sheet Location
|
|
2010
|
|
2009
|
|
|
|
|
(In thousands)
|
|
Asset Derivatives:
|
|
|
|
|
|
|
|
|
|
|
Foreign Exchange Forward(a)
|
|
Other noncurrent assets
|
|
$
|
4,034
|
|
|
$
|
4,962
|
|
Liability Derivatives:
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Swap(b)
|
|
Current liabilities
|
|
|
1,638
|
|
|
|
2,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended
|
|
|
Statement of
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
|
Operations Location
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
(In thousands)
|
|
Foreign Currency Forward
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) gain
|
|
Other (income) expense, net
|
|
$
|
(928
|
)
|
|
$
|
4,962
|
|
|
$
|
|
|
Interest Rate Swap(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized loss
|
|
Interest expense, net
|
|
|
(1,891
|
)
|
|
|
(754
|
)
|
|
|
(20
|
)
|
|
|
|
(a) |
|
Not designated as a hedging instrument under SFAS 133 |
|
(b) |
|
Designated as a cash flow hedging instrument under SFAS 133
Approximately $1.6 million is expected to be reclassified
from OCI to interest expense during fiscal 2011 |
|
|
(4)
|
ACCOUNTING
FOR GOODWILL AND INTANGIBLE ASSETS
|
The Company completed its most recent annual impairment
assessment of goodwill and intangible assets effective
March 31, 2010, utilizing its business plan as the basis
for development of cash flows and an estimate of fair values. No
adjustment of carrying values was deemed necessary.
Goodwill and intangible assets consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks and
|
|
|
Trademarks and
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
Tradenames
|
|
|
Tradenames
|
|
|
|
|
|
|
|
|
|
|
|
|
(not Subject to
|
|
|
(not Subject to
|
|
|
(Subject to
|
|
|
Customer
|
|
|
|
|
|
|
|
|
|
Amortization)
|
|
|
Amortization)
|
|
|
Amortization)
|
|
|
Relationships
|
|
|
Technology
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
As of March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount
|
|
$
|
4,538
|
|
|
$
|
42,626
|
|
|
$
|
9,696
|
|
|
$
|
80,187
|
|
|
$
|
17,990
|
|
|
$
|
155,037
|
|
Accumulated Amortization
|
|
|
|
|
|
|
|
|
|
|
(4,530
|
)
|
|
|
(19,680
|
)
|
|
|
(5,277
|
)
|
|
|
(29,487
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
$
|
4,538
|
|
|
$
|
42,626
|
|
|
$
|
5,166
|
|
|
$
|
60,507
|
|
|
$
|
12,713
|
|
|
$
|
125,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount
|
|
$
|
4,022
|
|
|
$
|
39,804
|
|
|
$
|
9,054
|
|
|
$
|
74,872
|
|
|
$
|
16,803
|
|
|
$
|
144,555
|
|
Accumulated Amortization
|
|
|
|
|
|
|
|
|
|
|
(3,516
|
)
|
|
|
(15,266
|
)
|
|
|
(4,097
|
)
|
|
|
(22,879
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
$
|
4,022
|
|
|
$
|
39,804
|
|
|
$
|
5,538
|
|
|
$
|
59,606
|
|
|
$
|
12,706
|
|
|
$
|
121,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets for fiscal year 2010, 2009,
and 2008 was $5.1 million, $5.1 million, and
$5.2 million, respectively. Excluding the impact of any
future acquisitions (if any), the Company anticipates annual
amortization of intangible assets for each of the next five
years to be approximately $5.2 million. Intangible assets
have been recorded at the legal entity level and are subject to
foreign currency fluctuation.
F-50
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Goodwill
In the fourth quarter of fiscal 2009, the Company purchased
shares not previously owned in a majority-owned subsidiary. The
purchase price of the additional shares amounted to
approximately $4.9 million. Of this amount, approximately
$4.2 million could not be attributed to the fair values of
specific purchased tangible assets or identifiable intangible
assets, and has been recorded as goodwill. The goodwill has been
recorded in the Companys Transportation Europe and ROW
business segment.
Inventories, valued using the
first-in,
first-out (FIFO) method, consist of:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Raw materials
|
|
$
|
48,501
|
|
|
$
|
31,270
|
|
Work-in-process
|
|
|
40,566
|
|
|
|
37,809
|
|
Finished goods
|
|
|
161,066
|
|
|
|
159,070
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
250,133
|
|
|
$
|
228,149
|
|
|
|
|
|
|
|
|
|
|
|
|
(6)
|
PROPERTY,
PLANT AND EQUIPMENT
|
Property, plant and equipment consist of:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Land
|
|
$
|
34,247
|
|
|
$
|
31,900
|
|
Buildings and improvements
|
|
|
137,543
|
|
|
|
140,511
|
|
Machinery and equipment
|
|
|
475,690
|
|
|
|
434,921
|
|
Construction in progress
|
|
|
41,304
|
|
|
|
30,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
688,784
|
|
|
|
637,829
|
|
Less Accumulated depreciation
|
|
|
347,255
|
|
|
|
304,715
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
$
|
341,529
|
|
|
$
|
333,114
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense was $42.5 million, $49.3 million,
and $55.9 million, for fiscal 2010, 2009, and 2008,
respectively.
F-51
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Other assets consist of:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Deposits
|
|
$
|
4,492
|
|
|
$
|
4,783
|
|
Capitalized software, net
|
|
|
2,158
|
|
|
|
1,804
|
|
Loan to affiliate
|
|
|
1,005
|
|
|
|
1,005
|
|
Retirement plans
|
|
|
1,614
|
|
|
|
1,085
|
|
Financial instruments
|
|
|
4,034
|
|
|
|
4,962
|
|
Other
|
|
|
4,155
|
|
|
|
4,950
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
17,458
|
|
|
$
|
18,589
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2010 and 2009, short-term borrowings of
$7.7 million, and $7.0 million respectively, consisted
of various operating lines of credit and working capital
facilities maintained by certain of the Companys
subsidiaries. Certain of these borrowings are secured by
receivables, inventories
and/or
property. These borrowing facilities, which are typically for
one-year renewable terms, generally bear interest at current
local market rates plus up to one percent per annum. As of
March 31, 2010 and 2009, the weighted average interest rate
on these borrowings was 4.5%, and 5.8% respectively.
Total long-term debt at March 31, 2010 and 2009 comprised
the following:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Senior Secured Credit Facility
|
|
$
|
160,236
|
|
|
$
|
160,241
|
|
Other, including capital lease obligations and other loans at
interest rates generally ranging up to 11.0% due in installments
through 2015
|
|
|
14,476
|
|
|
|
12,382
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
174,712
|
|
|
|
172,623
|
|
Less-current maturities
|
|
|
3,740
|
|
|
|
3,576
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
170,972
|
|
|
$
|
169,047
|
|
|
|
|
|
|
|
|
|
|
Total debt at March 31, 2010 and 2009 was
$182.4 million and $179.6 million, respectively.
In May 2007, the Parent Company and the Company entered into a
$495.0 million senior secured credit facility (Credit
Agreement) consisting of a $200.0 million asset based
revolving senior secured credit facility (Revolving Loan
Facility) and a $295.0 million Term Loan (Term
Loan). Availability for Exide under the Revolving Loan
Facility and other loan facilities was $124.6 million and
$27.7 million, respectively as of March 31, 2010. At
March 31, 2010 and 2009, weighted average interest on the
Credit Agreement was 3.4% and 3.9%, respectively.
The Companys variable rate debt at March 31, 2010 and
March 31, 2009 was $167.9 million and
$167.2 million, respectively. As discussed in Note 3,
in February 2008, the Parent Company entered into an interest
rate swap agreement to fix the variable interest component of
$61.2 million of EGHNs floating rate long-term
obligations at a rate of 3.33% per annum.
F-52
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Annual principal payments required under long-term debt
obligations at March 31, 2010 are as follows:
|
|
|
|
|
|
|
Amount
|
|
|
|
(In thousands)
|
|
|
2011
|
|
$
|
1,647
|
|
2012
|
|
|
1,647
|
|
2013
|
|
|
156,942
|
|
2014
|
|
|
|
|
2015
|
|
|
|
|
2016 and beyond
|
|
|
9,663
|
|
|
|
|
|
|
Total
|
|
$
|
169,899
|
|
|
|
|
|
|
|
|
|
(a) |
|
See note 11 for principal payments required under capital
lease obligations. |
|
|
(9)
|
EMPLOYEE
BENEFIT PLANS AND POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE
BENEFITS
|
European subsidiaries of the Company sponsor several defined
benefit plans that cover substantially all employees who are not
covered by statutory plans. For defined benefit plans, charges
to expense are based upon underlying assumptions established by
the Company in consultation with its actuaries. In most cases,
the defined benefit plans are not funded. The Company has
noncontributory defined benefit pension plans covering
substantially all hourly and salaried employees in Canada. Plans
covering hourly employees provide pension benefits of stated
amounts for each year of credited service. The Company has
numerous defined contribution plans with related expense of
$6.8 million, $6.6 million, and $6.7 million, in
fiscal 2010, 2009, and 2008, respectively.
The Company provides certain health care and life insurance
benefits for a limited number of retired employees. The Company
accrues the estimated cost of providing postretirement benefits
during the employees applicable years of service.
F-53
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table sets forth the plans funded status and
the amounts recognized in the Companys Consolidated
Financial Statements at March 31, 2010 and 2009:
Pension
Benefits:
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of period
|
|
$
|
245,272
|
|
|
$
|
332,218
|
|
Service cost
|
|
|
2,907
|
|
|
|
3,575
|
|
Interest cost
|
|
|
16,381
|
|
|
|
17,593
|
|
Actuarial loss (gain)
|
|
|
49,824
|
|
|
|
(5,301
|
)
|
Plan participants contributions
|
|
|
493
|
|
|
|
722
|
|
Benefits paid
|
|
|
(19,416
|
)
|
|
|
(23,480
|
)
|
Currency translation
|
|
|
9,711
|
|
|
|
(70,211
|
)
|
Settlements and other
|
|
|
(7,300
|
)
|
|
|
(9,844
|
)
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of period
|
|
$
|
297,872
|
|
|
$
|
245,272
|
|
|
|
|
|
|
|
|
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of period
|
|
$
|
113,319
|
|
|
$
|
184,072
|
|
Actual return on plan assets
|
|
|
31,900
|
|
|
|
(16,698
|
)
|
Employer contributions
|
|
|
16,747
|
|
|
|
21,890
|
|
Plan participants contributions
|
|
|
493
|
|
|
|
722
|
|
Benefits paid
|
|
|
(19,416
|
)
|
|
|
(23,480
|
)
|
Currency translation
|
|
|
7,571
|
|
|
|
(45,627
|
)
|
Settlements and other
|
|
|
(3,576
|
)
|
|
|
(7,560
|
)
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of period
|
|
$
|
147,038
|
|
|
$
|
113,319
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of funded status:
|
|
|
|
|
|
|
|
|
Benefit obligation at end of period
|
|
$
|
297,872
|
|
|
$
|
245,272
|
|
Fair value of plan assets at end of period
|
|
|
147,038
|
|
|
|
113,319
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(150,834
|
)
|
|
$
|
(131,953
|
)
|
|
|
|
|
|
|
|
|
|
Amounts recognized in Statement of Financial Position:
|
|
|
|
|
|
|
|
|
Noncurrent other assets
|
|
$
|
1,958
|
|
|
$
|
1,341
|
|
Accrued expenses
|
|
|
(8,940
|
)
|
|
|
(8,792
|
)
|
Noncurrent retirement obligations
|
|
|
(143,852
|
)
|
|
|
(124,502
|
)
|
|
|
|
|
|
|
|
|
|
Net amount recognized at end of period
|
|
$
|
(150,834
|
)
|
|
$
|
(131,953
|
)
|
|
|
|
|
|
|
|
|
|
Amounts recognized in accumulated other comprehensive
(income) loss:
|
|
|
|
|
|
|
|
|
Prior service cost
|
|
$
|
151
|
|
|
$
|
196
|
|
Net loss (gain)
|
|
|
1,771
|
|
|
|
(22,032
|
)
|
|
|
|
|
|
|
|
|
|
Net amount recognized in accumulated other comprehensive loss
(income):
|
|
$
|
1,922
|
|
|
$
|
(21,836
|
)
|
|
|
|
|
|
|
|
|
|
F-54
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Other
Post-Retirement Benefits:
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of period
|
|
$
|
3,736
|
|
|
$
|
5,772
|
|
Service cost
|
|
|
141
|
|
|
|
185
|
|
Interest cost
|
|
|
335
|
|
|
|
313
|
|
Actuarial loss (gain)
|
|
|
545
|
|
|
|
(1,140
|
)
|
Benefits paid
|
|
|
(212
|
)
|
|
|
(206
|
)
|
Currency translation
|
|
|
941
|
|
|
|
(1,188
|
)
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of period
|
|
$
|
5,486
|
|
|
$
|
3,736
|
|
|
|
|
|
|
|
|
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of period
|
|
$
|
|
|
|
$
|
|
|
Employer contributions
|
|
|
212
|
|
|
|
206
|
|
Benefits paid
|
|
|
(212
|
)
|
|
|
(206
|
)
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of period
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of funded status:
|
|
|
|
|
|
|
|
|
Benefit obligation at end of period
|
|
$
|
5,486
|
|
|
$
|
3,736
|
|
Fair value of plan assets at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(5,486
|
)
|
|
$
|
(3,736
|
)
|
|
|
|
|
|
|
|
|
|
Amounts recognized in statement of financial position:
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
$
|
(388
|
)
|
|
$
|
(310
|
)
|
Noncurrent retirement obligations
|
|
|
(5,098
|
)
|
|
|
(3,426
|
)
|
|
|
|
|
|
|
|
|
|
Net amount recognized at end of period
|
|
$
|
(5,486
|
)
|
|
$
|
(3,736
|
)
|
|
|
|
|
|
|
|
|
|
Amounts recognized in accumulated other comprehensive
income:
|
|
|
|
|
|
|
|
|
Prior service cost
|
|
$
|
|
|
|
$
|
|
|
Net gain
|
|
|
(64
|
)
|
|
|
(540
|
)
|
|
|
|
|
|
|
|
|
|
Net amount recognized in accumulated other comprehensive income:
|
|
$
|
(64
|
)
|
|
$
|
(540
|
)
|
|
|
|
|
|
|
|
|
|
Disclosure Assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Post-
|
|
|
|
Pension Benefits
|
|
|
Retirement Benefits
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
Weighted-average assumptions as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
5.1
|
%
|
|
|
6.4
|
%
|
|
|
6.4
|
%
|
|
|
8.0
|
%
|
Rate of compensation increase
|
|
|
2.8
|
%
|
|
|
2.8
|
%
|
|
|
n/a
|
|
|
|
n/a
|
|
F-55
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Expense Assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Post-
|
|
|
|
|
|
|
Retirement
|
|
|
|
Pension Benefits
|
|
|
Benefits
|
|
|
|
FY 2011
|
|
|
FY 2010
|
|
|
FY 2011
|
|
|
FY 2010
|
|
|
|
Expense
|
|
|
Expense
|
|
|
Expense
|
|
|
Expense
|
|
|
Weighted-average assumptions for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
5.1
|
%
|
|
|
6.3
|
%
|
|
|
6.4
|
%
|
|
|
8.0
|
%
|
Expected return on plan assets
|
|
|
6.5
|
%
|
|
|
6.5
|
%
|
|
|
n/a
|
|
|
|
n/a
|
|
Rate of compensation increase
|
|
|
2.8
|
%
|
|
|
2.8
|
%
|
|
|
n/a
|
|
|
|
n/a
|
|
For fiscal year 2010 expense, the Company assumed an expected
weighted average return on plan assets of 6.5%. In developing
this rate assumption, the Company evaluated input from
third-party pension plan asset managers, including their review
of asset class return expectations and long-term inflation
assumptions.
The following tables set forth the plans expense
recognized in the Companys Consolidated Financial
Statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Components of net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
2,907
|
|
|
$
|
3,575
|
|
|
$
|
4,845
|
|
Interest cost
|
|
|
16,381
|
|
|
|
17,593
|
|
|
|
17,482
|
|
Expected return on plan assets
|
|
|
(8,191
|
)
|
|
|
(10,122
|
)
|
|
|
(11,877
|
)
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost
|
|
|
11
|
|
|
|
21
|
|
|
|
21
|
|
Actuarial gain
|
|
|
(268
|
)
|
|
|
(2,417
|
)
|
|
|
(1,515
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost(a)
|
|
$
|
10,840
|
|
|
$
|
8,650
|
|
|
$
|
8,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Excludes the impact of settlement net losses (gains) of
$0.6 million, and ($0.2) million in fiscal 2010 and
fiscal 2009, respectively, and curtailment net gain of
$3.8 million and $2.2 million in fiscal 2010 and
fiscal 2009, respectively. |
$0.03 million of income will be amortized from accumulated
other comprehensive income (loss) into net periodic benefit cost
in fiscal 2011 relating to the Companys pension plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Post-Retirement Benefits
|
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Components of net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
141
|
|
|
$
|
185
|
|
|
$
|
203
|
|
Interest cost
|
|
|
334
|
|
|
|
313
|
|
|
|
304
|
|
Amortization of actuarial (gain) loss
|
|
|
(15
|
)
|
|
|
3
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
460
|
|
|
$
|
501
|
|
|
$
|
526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-56
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The projected benefit obligation, accumulated benefit
obligation, and fair value of plan assets for the pension plans
with accumulated benefit obligations in excess of plan assets
were $155.5 million, $150.6 million and
$2.8 million, respectively, as of March 31, 2010 and
$135.6 million, $131.5 million and $2.3 million,
respectively, as of March 31, 2009.
The accumulated benefit obligation for the Companys
pension plans was $289.2 million as of March 31, 2010.
Expected future benefit payments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Post-
|
|
|
|
|
Retirement
|
|
|
Pension
|
|
Gross Expected
|
Fsical Year
|
|
Benefits
|
|
Benefit Payments
|
|
|
(In thousands)
|
|
2011
|
|
$
|
15,975
|
|
|
$
|
253
|
|
2012
|
|
|
16,151
|
|
|
|
262
|
|
2013
|
|
|
16,397
|
|
|
|
262
|
|
2014
|
|
|
17,254
|
|
|
|
271
|
|
2015
|
|
|
17,590
|
|
|
|
279
|
|
2016 to 2020
|
|
|
95,880
|
|
|
|
1,442
|
|
Pension
Plan Investment Strategy
The Companys pension plans are invested in a diversified
portfolio of investments consisting almost entirely of equity
and fixed income securities. The plans target allocation
is a mix of approximately 45% equity investments and 55% long
duration fixed-income investments. The Company believes this
target allocation will be effective in achieving the plans
long-term investment objectives of:
|
|
|
|
|
protecting the plans funded status from volatility
|
|
|
|
optimizing the long-term return on plan assets sufficient to
accommodate current and future pension obligations
|
|
|
|
maintaining an acceptable level of risk for each asset category
|
The Companys
non-U.S. pension
plans are managed by investment managers who are appointed by
the trustees of those plans. The investment strategies of those
plans are in some instances influenced by local laws and
regulations. Based on its underlying risk posture, the Company
has established guidelines for each investment manager within
which they have agreed to operate. These guidelines include
criteria for identifying eligible and ineligible securities as
well as diversification criteria. In addition, investment
managers are required to seek approval prior to making
investments in certain commodity contracts, illiquid
investments, or futures or options strategies, and are
prohibited from engaging in certain transactions including the
short selling of securities, borrowing money, or engaging in
futures or options strategies for purposes of speculation or
leverage.
F-57
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The asset allocation for the Companys pension plans by
asset category is as follows:
|
|
|
|
|
|
|
|
|
|
|
Percentage of Plan Assets at Year End
|
|
|
|
2010
|
|
|
2009
|
|
|
Cash and cash equivalents
|
|
|
3
|
%
|
|
|
8
|
%
|
Equity securities
|
|
|
43
|
%
|
|
|
43
|
%
|
Fixed income securities
|
|
|
52
|
%
|
|
|
47
|
%
|
Other
|
|
|
2
|
%
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
Total pension assets
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
The estimated fiscal 2011 pension plan contributions are
$15.6 million and other postretirement contributions are
$0.3 million.
Cash contributions to the Companys pension plans are
generally made in accordance with minimum regulatory
requirements.
Assumed health care cost trend rates have a significant effect
on the amounts reported for other post-retirement benefits. A
one-percentage point change in assumed health care cost trend
rates would have the following effects:
|
|
|
|
|
|
|
|
|
|
|
One Percentage-
|
|
One Percentage-
|
|
|
Point Increase
|
|
Point Decrease
|
|
|
(In thousands)
|
|
Effect on total of service and interest cost components
|
|
$
|
173
|
|
|
$
|
97
|
|
Effect on the postretirement benefit obligation
|
|
$
|
1,104
|
|
|
$
|
648
|
|
F-58
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The provision for income taxes includes local, federal, and
foreign taxes currently payable and those deferred because of
net operating losses and temporary differences between the
financial statement and tax bases of assets and liabilities. The
components of the provision for income taxes are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Income/(loss) before income taxes and minority interest:
|
|
|
|
|
|
|
|
|
|
|
|
|
Netherlands
|
|
$
|
10,622
|
|
|
$
|
18,158
|
|
|
$
|
58,386
|
|
Foreign
|
|
|
(85,750
|
)
|
|
|
(85,641
|
)
|
|
|
(73,009
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(75,128
|
)
|
|
$
|
(67,483
|
)
|
|
$
|
(14,623
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
Netherlands
|
|
$
|
1,808
|
|
|
$
|
614
|
|
|
$
|
759
|
|
Foreign
|
|
|
8,412
|
|
|
|
13,999
|
|
|
|
14,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,220
|
|
|
$
|
14,613
|
|
|
$
|
15,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Netherlands
|
|
$
|
(911
|
)
|
|
$
|
(2,203
|
)
|
|
$
|
1,530
|
|
Foreign
|
|
|
(4,853
|
)
|
|
|
9,137
|
|
|
|
17,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,764
|
)
|
|
|
6,934
|
|
|
|
19,208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total provision
|
|
$
|
4,456
|
|
|
$
|
21,547
|
|
|
$
|
34,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Major differences between the Netherlands federal statutory rate
and the effective tax rate are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Netherlands statutory rate
|
|
|
25.5
|
%
|
|
|
25.5
|
%
|
|
|
25.5
|
%
|
Thin cap disallowance
|
|
|
|
|
|
|
|
|
|
|
(1.1
|
)
|
Change in Equity Investment
|
|
|
|
|
|
|
(7.8
|
)
|
|
|
1.9
|
|
Deferred Tax Valuation Change
|
|
|
(0.4
|
)
|
|
|
(1.2
|
)
|
|
|
(9.2
|
)
|
Change in Tax Rate
|
|
|
0.1
|
|
|
|
|
|
|
|
(95.8
|
)
|
Change in Uncertain Tax Positions
|
|
|
(2.8
|
)
|
|
|
2.8
|
|
|
|
(4.2
|
)
|
Change in valuation allowances
|
|
|
(29.5
|
)
|
|
|
(59.8
|
)
|
|
|
(265.9
|
)
|
Rate differences on foreign subsidiaries
|
|
|
4.2
|
|
|
|
12.1
|
|
|
|
128.5
|
|
Local Tax Provision
|
|
|
(0.7
|
)
|
|
|
(4.2
|
)
|
|
|
(19.4
|
)
|
Other, net
|
|
|
(2.3
|
)
|
|
|
0.7
|
|
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
(5.9
|
)%
|
|
|
(31.9
|
)%
|
|
|
(238.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-59
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following is a summary of the significant components of the
Companys deferred tax assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Operating loss and tax credit carry-forwards
|
|
$
|
250,420
|
|
|
$
|
205,532
|
|
Compensation reserves
|
|
|
26,369
|
|
|
|
17,177
|
|
Warranty
|
|
|
2,399
|
|
|
|
2,000
|
|
Asset and other realization reserves
|
|
|
478
|
|
|
|
900
|
|
Other
|
|
|
26,783
|
|
|
|
33,073
|
|
Valuation allowance
|
|
|
(242,947
|
)
|
|
|
(203,340
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
63,502
|
|
|
|
55,342
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
(9,132
|
)
|
|
|
(7,360
|
)
|
Foreign Exchange
|
|
|
(1,410
|
)
|
|
|
(3,174
|
)
|
Intangible assets
|
|
|
(26,397
|
)
|
|
|
(26,204
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(36,939
|
)
|
|
|
(36,738
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
26,563
|
|
|
$
|
18,604
|
|
|
|
|
|
|
|
|
|
|
The net deferred income tax asset is classified in the
consolidated balance sheet as follows:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Current asset
|
|
$
|
8,297
|
|
|
$
|
9,419
|
|
Noncurrent asset
|
|
|
41,319
|
|
|
|
39,009
|
|
Noncurrent liability
|
|
|
(23,053
|
)
|
|
|
(29,824
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
26,563
|
|
|
$
|
18,604
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2010, certain of the Parent Companys
subsidiaries have net operating loss carry-forwards for income
tax purposes of approximately $1.06 billion, of which
approximately $192.3 million expire in fiscal years 2011
through 2024. The remaining losses are available for
carry-forward indefinitely.
Valuation allowances have been recognized in certain tax
jurisdictions, to reduce the deferred tax assets for net
operating loss carry-forwards and temporary differences for
which it is more likely than not that the related tax benefits
will not be realized. In other jurisdictions, the Companys
net deferred tax assets include net operating loss
carry-forwards and temporary differences which management
believes are realizable through a combination of forecasted
future taxable income and anticipated tax planning strategies.
The majority of the net deferred tax assets are derived in
Germany where there is no expiration on the utilization of net
operating loss carry-forwards. The Company has implemented
certain tax planning strategies in prior years to utilize a
portion of such deferred tax assets. Failure to achieve
forecasted future taxable income might affect the ultimate
realization of any remaining deferred tax assets.
F-60
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
A reconciliation of the beginning and ending amount of
unrecognized tax benefit is as follows:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Beginning of year
|
|
$
|
55,208
|
|
|
$
|
67,560
|
|
Increase for tax positions taken during current period
|
|
|
1,265
|
|
|
|
3,411
|
|
(Decrease)/increase for currency fluctuation on tax positions
|
|
|
2,371
|
|
|
|
(9,911
|
)
|
Decrease for settlements with taxing authorities
|
|
|
(3,566
|
)
|
|
|
(1,233
|
)
|
Decrease for the lapse of the applicable statute of limitations
|
|
|
(4,706
|
)
|
|
|
(4,619
|
)
|
|
|
|
|
|
|
|
|
|
End of Year
|
|
$
|
50,572
|
|
|
$
|
55,208
|
|
|
|
|
|
|
|
|
|
|
The amount, if recognized, that would affect the Companys
effective tax rate at March 31, 2010 and March 31,
2009 is $16.8 million and $18.6 million, respectively.
The Company classifies interest and penalties on uncertain tax
benefits as income tax expense. At March 31, 2010 and
March 31, 2009, before any tax benefits, the Company had
$3.8 million and $4.3 million, respectively, of
accrued interest and penalties on unrecognized tax benefits.
During the next twelve months, the Company does not expect the
resolution of any tax audits which could potentially reduce
unrecognized tax benefits by a material amount. However,
expiration of the statute of limitations for a tax year in which
the Company has recorded uncertain tax benefits will occur in
the next twelve months. The removal of these uncertain tax
benefits would affect the Companys effective tax rate by
$0.5 million.
|
|
11)
|
COMMITMENTS
AND CONTINGENCIES
|
Private
Party Lawsuits and other Legal Proceedings
In July 2001, Pacific Dunlop Holdings (US), Inc.
(PDH) and several of its foreign affiliates under
the various agreements through which Exide and its affiliates
acquired GNB, filed a complaint in the Circuit Court for Cook
County, Illinois alleging breach of contract, unjust enrichment
and conversion against Exide and three of its foreign
affiliates. The plaintiffs maintain they are entitled to
approximately $17.0 million in cash assets acquired by the
defendants through their acquisition of GNB. In December 2001,
the Court denied the defendants motion to dismiss the
complaint, without prejudice. The defendants filed an answer and
counterclaim. In 2002, the Court authorized discovery to proceed
as to all parties except the Company. In August 2002, the case
was moved to the U.S. Bankruptcy Court for the Northern
District of Illinois. In February 2003, the U.S. Bankruptcy
Court for the Northern District of Illinois transferred the case
to the U.S. Bankruptcy Court in Delaware. In November 2003,
the Bankruptcy Court denied PDHs motion to abstain or
remand the case and issued an opinion holding that the
Bankruptcy Court had jurisdiction over PDHs claims and
that liability, if any, would lie solely against Exide
Technologies and not against any of its foreign affiliates. The
Bankruptcy Court denied PDHs motion to reconsider. In an
order dated March 22, 2007, the U.S. District Court
for the District of Delaware denied PDHs appeal in its
entirety, affirming the Orders of the Bankruptcy Court. PDH then
appealed the matter to the United States Court of Appeals for
the Third Circuit. On September 19, 2008, the Third Circuit
vacated the prior orders of the Bankruptcy Court, remanding the
matter with instructions that the Bankruptcy Court hear evidence
before ruling whether Exide (as opposed to its non-debtor
affiliates) would be solely liable, if any liability is found at
all, under the GNB agreements.
In December 2001, PDH filed a separate action in the Circuit
Court for Cook County, Illinois seeking recovery of
approximately $3.1 million for amounts allegedly owed by
the Company under various agreements between the parties. The
claim arises from letters of credit and other security allegedly
provided by PDH for GNBs performance of certain of
GNBs obligations to third parties that PDH claims the
Company was
F-61
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
obligated to replace. The Companys answer contested the
amounts claimed by PDH and the Company filed a counterclaim.
Although this action has been consolidated with the Cook County
suit concerning GNBs cash assets, the claims relating to
this action have been transferred to the U.S. Bankruptcy
Court for the District of Delaware and are currently subject to
a stay injunction by that court. The Company plans to vigorously
defend itself and pursue its counterclaims.
Environmental
Matters
As a result of its multinational manufacturing, distribution and
recycling operations, the Company is subject to numerous
federal, state, and local environmental, occupational health,
and safety laws and regulations, as well as similar laws and
regulations in other countries in which the Company operates
(collectively, EH&S laws).The Company is
exposed to liabilities under such EH&S laws arising from
its past handling, release, storage and disposal of materials
now designated as hazardous substances and hazardous wastes.
The Company is also involved in the assessment and remediation
of various other properties, including certain Company-owned or
operated facilities. Such assessment and remedial work is being
conducted pursuant to applicable EH&S laws with varying
degrees of involvement by appropriate legal authorities. Where
probable and reasonably estimable, the costs of such projects
have been accrued by the Company, as discussed below. In
addition, certain environmental matters concerning the Company
are pending in various courts or with certain environmental
regulatory agencies with respect to these currently or formerly
owned or operating locations. While the ultimate outcome of the
foregoing environmental matters is uncertain, after consultation
with legal counsel, the Company does not believe the resolution
of these matters, individually or in the aggregate, will have a
material adverse effect on the Companys financial
condition, cash flows or results of operations.
The Company has established reserves for
on-site and
off-site environmental remediation costs where such costs are
probable and reasonably estimable and believes that such
reserves are adequate. As of March 31, 2010 and
March 31, 2009, the amount of such reserves on the
Companys Consolidated Balance Sheets was approximately
$5.0 million and $5.8 million, respectively. Because
environmental liabilities are not accrued until a liability is
determined to be probable and reasonably estimable, not all
potential future environmental liabilities have been included in
the Companys environmental reserves and, therefore,
additional earnings charges are possible. Also, future findings
or changes in estimates could have a material adverse effect on
the recorded reserves and cash flows.
Guarantees
Certain of the Companys European subsidiaries have bank
guarantees outstanding, which have been issued as collateral or
financial assurance in connection with environmental
obligations, income tax claims and customer contract
requirements. At March 31, 2010, bank guarantees with a
face value of $13.3 million were outstanding.
Sales
Returns and Allowances
The Company provides for an allowance for product returns
and/or
allowances. Based upon its manufacturing re-work process, the
Company believes that the majority of its product returns are
not the result of product defects. Many returns are in fact
subsequently sold as seconds at a reduced price. The Company
recognizes the estimated cost of product returns as a reduction
of sales in the period in which the related revenue is
recognized. The product return estimates are based upon
historical trends and claims experience,
F-62
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
and include assessment of the anticipated lag between the date
of sale and claim/return date.A reconciliation of changes in the
Companys sales returns and allowances liability follows
(in thousands):
|
|
|
|
|
Balance at March 31, 2009
|
|
$
|
18,996
|
|
Accrual for sales returns and allowances
|
|
|
11,826
|
|
Settlements made (in cash or credit) and currency translation
|
|
|
(13,336
|
)
|
|
|
|
|
|
Balance at March 31, 2010
|
|
$
|
17,486
|
|
|
|
|
|
|
Leases
Future minimum lease payments under operating and capital leases
that have initial or remaining noncancelable lease terms in
excess of one year at March 31, 2010, are:
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
Operating
|
|
|
Capital
|
|
|
|
(In thousands)
|
|
|
2011
|
|
$
|
14,382
|
|
|
$
|
1,947
|
|
2012
|
|
|
9,595
|
|
|
|
2,197
|
|
2013
|
|
|
5,466
|
|
|
|
2,084
|
|
2014
|
|
|
2,783
|
|
|
|
1,789
|
|
2015
|
|
|
799
|
|
|
|
1,970
|
|
Thereafter
|
|
|
218
|
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
Total minimum payments
|
|
$
|
33,243
|
|
|
|
10,031
|
|
|
|
|
|
|
|
|
|
|
Less Interest on capital leases
|
|
|
|
|
|
|
572
|
|
|
|
|
|
|
|
|
|
|
Total principal payable on capital leases (included in Long-term
debt)
|
|
|
|
|
|
$
|
9,459
|
|
|
|
|
|
|
|
|
|
|
Rent expense amounted to $29.1 million, $31.9 million,
and $29.9 million, for the fiscal years ended
March 31, 2010, 2009, and 2008, respectively.
During fiscal 2010, the Company has continued to implement
operational changes to streamline and rationalize its structure
in an effort to simplify the organization and eliminate
redundant
and/or
unnecessary costs. As part of these restructuring programs, the
nature of the positions eliminated range from plant employees
and clerical workers to operational and sales management.
During the year ended March 31, 2010, the Company
recognized restructuring and impairment charges of
$65.3 million, representing $53.3 million for
severance and $12.0 million for related closure costs.
These charges resulted from actions completed during fiscal
2010, which related to consolidation efforts in the
Transportation Europe and ROW and Industrial Energy Europe and
ROW segments. Approximately 796
F-63
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
positions have been eliminated in connection with the fiscal
2010 restructuring activities. The following is a summary of
restructuring reserve movements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
Closure Costs
|
|
|
Total
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
Balance, March 31, 2007
|
|
$
|
1,594
|
|
|
$
|
3,894
|
|
|
$
|
5,488
|
|
Charges
|
|
|
4,522
|
|
|
|
2,696
|
|
|
|
7,218
|
|
Payments and currency translation
|
|
|
(4,562
|
)
|
|
|
(3,356
|
)
|
|
|
(7,918
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2008
|
|
|
1,554
|
|
|
|
3,234
|
|
|
|
4,788
|
|
Charges
|
|
|
55,264
|
|
|
|
4,416
|
|
|
|
59,680
|
|
Payments and currency translation
|
|
|
(21,233
|
)
|
|
|
(3,179
|
)
|
|
|
(24,412
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2009
|
|
|
35,585
|
|
|
|
4,471
|
|
|
|
40,056
|
|
Charges
|
|
|
53,332
|
|
|
|
11,983
|
|
|
|
65,315
|
|
Payments and currency translation
|
|
|
(69,657
|
)
|
|
|
(9,470
|
)
|
|
|
(79,127
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2010
|
|
$
|
19,260
|
|
|
$
|
6,984
|
|
|
$
|
26,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining expenditures principally represent a) severance
and related benefits payable per employee agreements over
periods up to three years
and/or
regulatory requirements; b) lease commitments for certain
closed facilities, branches, and offices, as well as leases for
excess and permanently idle equipment payable in accordance with
contractual terms, over periods up to five years; and
c) certain other closure costs including dismantlement and
costs associated with removal obligations incurred in connection
with the exit of facilities.
|
|
(13)
|
INTEREST
EXPENSE, NET
|
Interest income of $1.0 million, $1.3 million, and
$1.4 million, is included in interest expense, net for the
fiscal years ended March 31, 2010, 2009, and 2008,
respectively. These amounts include interest income from
affiliates. See Note 15 to the Consolidated Financial
Statements.
|
|
(14)
|
OTHER
EXPENSE (INCOME), NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands )
|
|
|
Net loss (gain) on asset sales/impairments
|
|
$
|
9,589
|
|
|
$
|
9,005
|
|
|
$
|
(2,966
|
)
|
Equity gain
|
|
|
(79
|
)
|
|
|
(451
|
)
|
|
|
(1,372
|
)
|
Currency remeasurement (gain) loss
|
|
|
(1,889
|
)
|
|
|
7,126
|
|
|
|
(9,478
|
)
|
Other
|
|
|
302
|
|
|
|
(101
|
)
|
|
|
(543
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,923
|
|
|
$
|
15,579
|
|
|
$
|
(14,359
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15)
|
RELATED
PARTY TRANSACTIONS
|
The Parent Company charges EGHN certain fees. These costs are
classified in the Consolidated Statements of Operations as
General and administrative expenses. The cost of these functions
and services has been directly charged to EGHN using a method
that the Parent Companys management believes is
reasonable. Because of the relationship between the Company and
the Parent Company, it is possible that the terms and costs of
the services provided are not the same as those that would
result from transactions among wholly unrelated parties. Fees
charged during the fiscal year ended March 31, 2010, 2009,
and 2008 were $14.9 million, $6.0 million, and
$6.4 million, respectively.
F-64
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Current intercompany balances represent commercial trading
activities and other transactions in the normal course of
business between EGHN and other Parent Company affiliates. Sales
to Parent Company affiliates are at prices that approximate the
cost of the products sold. Purchases from Parent Company
affiliates during the fiscal years ended March 31, 2010,
2009, and 2008 were $29.7 million, $30.5 million, and
$45.1 million, respectively. Purchases from Parent Company
affiliates are at prices that include a profit margin over and
above the cost of the products purchased.
Long-term intercompany balances represent financing activities
between EGHN and other Parent Company affiliates. The Parent
Company charges interest to EGHN based on the actual interest
cost on intercompany indebtedness. At March 31, 2010 and
March 31, 2009, the Company had notes payables to
affiliates of $186.9 million, and $128.7 million,
respectively. Interest expense related to intercompany financing
arrangements and included in Interest expense, net in the
Consolidated Statements of Operations for the years ended
March 31, 2010, 2009, and 2008 was $11.0 million,
$14.3 million, and $19.4 million, respectively.
|
|
(16)
|
FAIR
VALUE OF FINANCIAL INSTRUMENTS
|
The Company uses available market information and appropriate
methodologies to estimate the fair value of its financial
instruments. Considerable judgment is required in interpreting
market data to develop these estimates. Accordingly, the
estimates presented herein are not necessarily indicative of the
amounts that the Company could realize in a current market
exchange. Certain of these financial instruments are with major
financial institutions and expose the Company to market and
credit risks and, may at times, be concentrated with certain
counterparties or groups of counterparties. The creditworthiness
of counterparties is continually reviewed, and full performance
is currently anticipated.
The Companys cash and cash equivalents, accounts
receivable, accounts payable, and short-term borrowings all have
carrying amounts that are a reasonable estimate of their fair
values. The carrying values and estimated fair values of the
Companys long-term obligations and other financial
instruments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2010
|
|
March 31, 2009
|
|
|
Carrying
|
|
Estimated
|
|
Carrying
|
|
Estimated
|
|
|
Value
|
|
Fair Value
|
|
Value
|
|
Fair Value
|
|
|
|
|
(In thousands)
|
|
|
|
(Liability) Asset:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Secured Credit Facility
|
|
$
|
(160,236
|
)
|
|
$
|
(146,450
|
)
|
|
$
|
(160,241
|
)
|
|
$
|
(108,964
|
)
|
Interest Rate Swap(a)
|
|
|
(1,638
|
)
|
|
|
(1,638
|
)
|
|
|
(2,284
|
)
|
|
|
(2,284
|
)
|
Foreign Currency Forward(a)
|
|
|
4,034
|
|
|
|
4,034
|
|
|
|
4,962
|
|
|
|
4,962
|
|
|
|
|
(a) |
|
These financial instruments are required to be measured at fair
value, and are based on inputs as described in the three-tier
hierarchy that prioritizes inputs used in measuring fair value
as of the reported date: |
|
|
|
Level 1 Observable inputs
such as quoted prices in active markets for identical assets and
liabilities;
|
|
|
|
Level 2 Inputs other than quoted
prices in active markets that are observable either directly or
indirectly; and
|
|
|
|
Level 3 Inputs from
valuation techniques in which one or more key value drivers are
not observable, and must
be
based on the reporting entitys own assumptions.
|
F-65
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table represents our financial (liabilities)
assets that are measured at fair value on a recurring basis, and
the basis for that measurement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Price in
|
|
Significant
|
|
|
|
|
|
|
Active Markets
|
|
Other
|
|
Significant
|
|
|
Total
|
|
for
|
|
Observable
|
|
Unobservable
|
|
|
Fair Value
|
|
Identical Assets
|
|
Inputs
|
|
Inputs
|
|
|
Measurement
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
|
|
|
(In thousands)
|
|
|
|
March 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward
|
|
$
|
4,034
|
|
|
$
|
|
|
|
$
|
4,034
|
|
|
$
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap
|
|
|
1,638
|
|
|
|
|
|
|
|
1,638
|
|
|
|
|
|
March 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward
|
|
$
|
4,962
|
|
|
$
|
|
|
|
$
|
4,962
|
|
|
$
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap
|
|
|
2,284
|
|
|
|
|
|
|
|
2,284
|
|
|
|
|
|
The fair value of the interest rate swap is based on observable
prices as quoted for receiving the variable LIBOR rate, and
paying fixed interest rates and, therefore, was classified as
Level 2. The fair value of the foreign currency forward was
based upon current quoted market prices and is classified as
Level 2 based on the nature of the underlying market in
which this derivative is traded. For additional discussion of
the Companys derivative instruments and hedging
activities, see Note 3.
The following table summarizes the investments that comprise the
assets of the Companys pension plans (see Note 9),
all of which are measured at fair value on a recurring basis,
and the basis for that measurement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Price in
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
Active Markets
|
|
|
Other
|
|
|
Significant
|
|
|
|
Total
|
|
|
for
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
Fair Value
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
Measurement
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
Cash and cash equivalents:
|
|
$
|
5,125
|
|
|
$
|
5,125
|
|
|
$
|
|
|
|
$
|
|
|
Mutual funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity U.S. companies
|
|
|
14,385
|
|
|
|
|
|
|
|
14,385
|
|
|
|
|
|
Equity International companies
|
|
|
48,670
|
|
|
|
|
|
|
|
48,670
|
|
|
|
|
|
Fixed income
|
|
|
76,465
|
|
|
|
|
|
|
|
76,465
|
|
|
|
|
|
Other
|
|
|
2,393
|
|
|
|
|
|
|
|
2,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Pension Assets
|
|
$
|
147,038
|
|
|
$
|
5,125
|
|
|
$
|
141,913
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents consist primarily of excess cash
balances in the plans investment accounts, and are classified as
Level 1. The fair value of the plans mutual fund
investments are based on net asset value, which is based on
quoted market prices of the underlying assets owned by the fund
(reduced by its liabilities) divided by the number of shares
outstanding.
F-66