Exide Reports Third Quarter Fiscal 1999 Results

2 February 1999

    READING, Pa., Feb. 1 -- Exide Corporation , the
world's leading manufacturer of lead-acid batteries, today reported fiscal
third-quarter results below the anticipated results announced last month.
This deviation is due solely to a legal decision rendered late last week.
    Net sales for the third-quarter, which ended December 27, 1998, were
$678,530,000 as compared to $691,715,000 for the same period in fiscal 1998.
Net income for the quarter was $(45,919,000) or $(2.16) basic earnings per
share as compared to $14,714,000 or $0.71 basic earnings per share a year ago.
Of the 1999 quarterly loss, $(1.20) per share, reflects the adverse
consequences of the company's inability to benefit from its U.S. tax losses.
    For the fiscal year to date at the close of the third quarter, net sales
were $1,824,198,000 as compared to $1,734,469,000.  Year-to-date net income
was $(49,990,000) or $(2.35) basic earnings per share as compared to
$6,665,000 or $0.32 basic earnings per share a year ago.
    Third-quarter results reflect a reduction in operating income of
$56.5 million, the majority of which was explained January 19 in a report on
preliminary third-quarter results.
    According to Chief Financial Officer James M. Diasio, an appellate court's
decision rendered January 27, 1999, upholding a lower-court's ruling (in 1995)
on a patent-infringement suit, resulted in a $6.1 million charge which
required recognition in the company's third-quarter results.
    "Last month, when we reported expected results for the third-quarter in a
range of $(1.75) to $(1.90), we were not expecting this legal charge," he
reported.  "On the basis of outside counsel's advice, we anticipated a
reversal of the lower-court's ruling and therefore are very disappointed by
this decision.  Without this charge, we would have been within the predicted
earnings range.
    "As we said last month, we anticipated a shortfall in our third-quarter
fiscal 1999 results as compared to last year.  A significant portion of the
shortfall was due to decisions we have made on business strategy -- a revised
focus on profitable business, even if it means relinquishing some less-
profitable volume sales -- and certain third quarter events."
    Some of the more significant charges for the third quarter, as reported
earlier, included:
    Facilities closure -- The decisions to close the Frankfort, IN, and
Memphis, TN, facilities were a direct reflection of the new management
philosophy and resulted in a $6.1 million charge.  A change in the lead
market, as well as in the company's long-term lead needs, precipitated the
closure of the Memphis smelter.  The move away from a volume- and market-share
based structure brought about the decision to abandon the plan for a
centralized refurbishment center at the former Frankfort battery manufacturing
plant.
    Russian operations -- The realities of a rapidly changing -- and
deteriorating -- economic situation in Russia resulted in a $6.9 million
charge.  This reflects uncollectible receivables and the write off of
unsaleable inventory specified for the Russian market.
    Security battery -- A $3.7 million write off of consisting primarily of
inventory and equipment with no alternative use following the decision to end
development of a security battery.
    Bad debts -- An additional write off of $3.7 million for receivables
related primarily to customers going through bankruptcies (for which it has
become probable that such amounts would not be collected).
    Severance -- A $6.5 million charge related to the separation packages of
24 executives (primarily reflecting packages for the former
Chairman/President/CEO and executive vice president/President of North
American operations).  These executives left during the third quarter.
    Interest-rate swap agreements -- As discussed in the second-quarter
Form 10-Q, the company expensed an amendment fee of $6 million which was paid
to the counterparty to its interest-rate swap agreements related to its
10-percent Senior Notes.
    In addition to the above items, reduced SLI (starting, lighting and
ignition) volume in Europe and North America resulted in a $3.4 million
shortfall in operating earnings when compared to last year's third-quarter
results.  Depressed SLI pricing in Europe, primarily the result of reduced
lead prices driving battery prices downward and unfavorable product mix,
caused another $11.2 million reduction in operating earnings from last year's
figures.
    A combination of pricing pressure and lower volume resulted in a
$2.7 million reduction in European industrial battery profitability during the
third-quarter of fiscal 1999 when compared to the same quarter in fiscal 1998.
    In the United States, increased legal costs of $1.3 million and writeoffs
of retired machinery and equipment of $1.1 million further contributed to the
third-quarter shortfall in operating results from the prior year.
    On a positive note, manufacturing efficiencies attained through the
continuing consolidation and rationalization of European operations produced a
$4.8 million improvement in operating income as compared to the third-quarter
of fiscal 1998.
    Spearheading the change in the basic operational strategy of the company
is Robert A. Lutz, who joined Exide December 1, 1998 as Chairman, President
and Chief Executive Officer.
    "We are going to look at the world battery market, decide which segments
make the most sense for Exide to pursue and then apply our resources
accordingly," explained Lutz.  "And we will not sign customers simply to
enhance our volume or position as the number one battery producer.
    "This business strategy may -- on a temporary basis -- adversely affect
our bottom line.  These may be difficult decisions, but they will be necessary
to provide the solid foundation to weather changes in our industry as well as
the world's economy."
    Lessons learned at Chrysler Corporation, where he had been Vice Chairman
and Chief Operating Officer, prepared Lutz for the type of restructuring
needed at Exide.
    Exide Corporation is the world's leading manufacturer of automotive and
industrial lead-acid batteries.  Sales exceeded $2.2 billion in fiscal year
1998.  The company has operations in 19 countries.
    Exide has additional interest in related technologies including battery
chargers, accessories, starters and alternators.  Further information about
Exide is available at http://www.exideworld.com.

                      EXIDE CORPORATION AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF OPERATIONS  (Unaudited)
           (Amounts in thousands, except share and per-share data)


                       For the Three Months Ended  For the Nine Months Ended
                         December 27, December 28, December 27,  December 28
                            1998         1997          1998          1997

    NET SALES             $678,530      $691,715   $1,824,198    $1,734,469

    COST OF SALES          514,580       502,000    1,359,060     1,272,100

      Gross profit         163,950       189,715      465,138       462,369

    OPERATING EXPENSES:
     Selling, marketing and
      advertising           88,819        79,519      247,364       218,238
     General and
      administrative        54,266        35,352      127,450        98,385
     Goodwill
      amortization           6,526         3,977       15,374        12,378
                           149,611       118,848      390,188       329,001

      Operating income      14,339        70,867       74,950       133,368
    INTEREST EXPENSE, net   29,747        28,918       83,202        86,016
    OTHER EXPENSE, net      12,141        (1,210)      18,102         2,467

      Income (loss) before
       income taxes, minority
       interest and
       extraordinary loss  (27,549)       43,159      (26,354)       44,885
    INCOME TAX EXPENSE      18,477        19,714       23,644        21,240
      Income (loss) before
       minority interest
       and extraordinary
       loss                (46,026)       23,445      (49,998)       23,645

    MINORITY INTEREST         (107)          395         (309)         (114)
      Income (loss) before
       extraordinary
       loss                (45,919)       23,050      (49,689)       23,759

    EXTRAORDINARY LOSS
     RELATED TO EARLY
     RETIREMENT OF DEBT,
     net of income tax
     benefit of $0 for
     the nine months ended
     December 27, 1998 and
     $2,899 for the three
     months and $3,667 for
     the nine months ended
     December 28, 1997         ---        (8,336)        (301)      (17,094)
      Net income
       (loss)             $(45,919)      $14,714     $(49,990)       $6,665

    BASIC EARNINGS
     PER SHARE:
      Income (loss)
       before extraordinary
       loss                 $(2.16)        $1.12       $(2.34)        $1.15
      Extraordinary loss       ---         (0.41)       (0.01)        (0.83)
       Net income
        (loss)              $(2.16)        $0.71       $(2.35)        $0.32

    DILUTED EARNINGS
     PER SHARE:
      Income (loss) before
       extraordinary
       loss                 $(2.16)        $1.05       $(2.34)        $1.10
      Extraordinary loss       ---         (0.38)       (0.01)        (0.79)
       Net income
        (loss)              $(2.16)        $0.67       $(2.35)        $0.31

    WEIGHTED AVERAGE
     SHARES:
      Basic             21,250,997    20,593,115   21,235,248    20,585,076
      Diluted           21,250,997    21,891,000   21,235,248    21,606,169