Exide Technologies Announces Financial Results
LAWRENCEVILLE, N.J.--Nov. 1, 20045, 2004--Exide Technologies , a global leader in stored electrical energy solutions, today announced financial results for the second quarter and first six months of fiscal 2005 ended September 30, 2004.Consolidated net sales for the second quarter of fiscal 2005 rose 8.5% to $637.6 million from $587.4 million in the second quarter of fiscal 2004. Quarterly net sales results benefited from favorable currency exchange rates compared to the prior year and the effect of the Company's lead-related pricing actions.
Consolidated net loss for the second quarter of fiscal 2005, including restructuring costs of $4.8 million, reorganization costs of $1.7 million and gain on revaluation of warrants liability of $12.1 million, was $17.1 million, or $0.68 per share, compared to a net loss of $15.7 million, or $0.57 per share, in the second quarter of fiscal 2004, including restructuring costs of $4.8 million and reorganization costs of $15.7 million. Net loss as adjusted for these items was $22.7 million for the second quarter of fiscal 2005, compared to net income as adjusted of $4.8 million for the second quarter of fiscal 2004. (See tabular presentation attached.)
"The Company experienced further dramatic escalation in commodity prices during the second quarter of fiscal year 2005, especially the price of lead," said Craig H. Muhlhauser, President and Chief Executive Officer of Exide Technologies.
"Lead, which is our number-one commodity and comprises approximately one-third of the Company's cost of goods sold, rose to an average of EUR 763 ($932) per metric tonne for the second quarter of fiscal year 2005 versus the prior year second quarter average of EUR 454 ($511) per metric tonne - nearly a 70% increase.
"Due to the Company's inability to hedge lead prior to our emergence from Chapter 11 and despite pricing actions and cost reduction initiatives implemented during the quarter, we were only able to offset 30-40% of the approximately $40 million adverse cost impact from lead price increases during the course of the quarter. In the second half, we believe the Company will realize additional benefits from the lead hedging, pricing actions, restructuring and cost reductions implemented in the first half of fiscal year 2005 to mitigate the impact of higher lead prices."
Consolidated Half-Year Results
As a result of the Company's emergence from Chapter 11 on May 5, 2004, financial results for the first half of the fiscal year are split between "Successor Company" and "Predecessor Company." For purposes of the presentation of results of operations for the first half of fiscal 2005, unless otherwise indicated, the results of the Predecessor Company for the period April 1, 2004 through May 5, 2004 have been combined with the results of the Successor Company for the period May 6, 2004 through September 30, 2004.
Consolidated net sales for the first half of fiscal 2005 rose 6.7% to $1.25 billion from $1.17 billion in the first half of fiscal 2004.
Consolidated net income for the first half, including Fresh Start accounting adjustments, restructuring costs, reorganization items, gain on revaluation of warrants liability, gain on the discharge of liabilities subject to compromise and cumulative effect of change in accounting principle was $1.77 billion compared to a net loss of $54.3 million in the first half of 2004.
Net loss as adjusted for these items was $48.1 million in the first half of fiscal 2005 compared to a net loss of $7.1 million in the first half of fiscal 2004. (See tabular presentation attached.)
The Company estimates that it recovered approximately 30-40% of the approximately $65 million adverse lead cost impact in the first half of fiscal 2005 through pricing and related actions as compared with the first half of fiscal 2004.
Results for the second quarter and first half of fiscal 2005 reflect the implementation of Fresh Start accounting in accordance with the Company's emergence from Chapter 11. Adopting Fresh Start reporting has resulted in material adjustments to the historical carrying values of the Company's assets and liabilities, and has required the Company to allocate the reorganization value to its assets based upon estimated fair values. The Company's Form 10-Q, filed yesterday with the U.S. Securities and Exchange Commission, provides a discussion of the effects of Fresh Start accounting on comparable earnings.
Transportation Business
For its Transportation business, the Company reported net sales of $404.4 million for the second quarter 2005, a 9.1% increase compared to $370.6 million for the same quarter of 2004. Results benefited mainly from favorable currency exchange rates, higher average selling prices and higher third-party lead sales in the smelters.
Transportation income before reorganization items, income taxes, minority interest and cumulative effect of change in accounting principle in the second quarter of 2005 was $10.6 million compared to $38.7 million in the second quarter of fiscal 2004, attributable to higher lead costs and North American smelter inefficiencies, offset partially by higher average selling prices and margin benefits from third-party lead sales.
For the first six months of fiscal 2005, the Transportation business reported net sales of $782.2 million, a 7.5% increase compared to $727.9 million in the first six months of fiscal 2004.
Transportation income before reorganization items, income taxes, minority interest and cumulative effect of change in accounting principle in the first six months of fiscal 2005 was $21.0 million compared to $62.5 million in the same period last year. Higher lead costs were the principal factor adversely impacting reported results.
Industrial Energy Business
For the Industrial Energy business, net sales for the second quarter of fiscal 2005 were $233.2 million, a 7.6% increase compared to $216.8 million for the same period of fiscal 2004. Favorable currency exchange rates, higher Motive Power volumes and higher average selling prices positively impacted Industrial Energy net sales in the second quarter.
The Industrial Energy business reported income before reorganization items, income taxes, minority interest and cumulative effect of change in accounting principle for the second quarter 2005 of $1.8 million compared to $10.6 million in the second quarter of the previous fiscal year. Industrial Energy income results declined as a result of higher lead costs not recovered through pricing and lower Network Power sales.
For the Industrial Energy business, net sales for the first half of fiscal 2005 were $467.9 million, a 5.4% increase compared to $444.1 million for the same period of 2004. Reported income before reorganization items, income taxes, minority interest and cumulative effect of change in accounting principle for the Industrial Energy business segment in the first half of 2005 was $12.2 million compared to $24.6 million in the first half of the previous fiscal year. Higher lead costs were the principal factor adversely impacting reported results.
About Exide Technologies
Exide Technologies, with operations in 89 countries, is one of the world's largest producers and recyclers of lead-acid batteries. The company's two global business groups - industrial energy and transportation - provide a comprehensive range of stored electrical energy products and services for industrial and transportation applications.
Transportation markets include original-equipment and aftermarket automotive, heavy-duty truck, agricultural and marine applications, and new technologies for hybrid vehicles and 42-volt automotive applications. Industrial markets include network power applications such as telecommunications systems, electric utilities, railroads, photovoltaic (solar-power related) and uninterruptible power supply (UPS), and motive power applications including lift trucks, mining and other commercial vehicles.
Further information about Exide, its financial results and other information is available at www.exide.com.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004 (SUCCESSOR COMPANY)
AND THE THREE MONTHS ENDED SEPTEMBER 30, 2003 (PREDECESSOR COMPANY)
(Unaudited, in thousands, except per-share data)
Successor Predecessor
Company Company
for the for the
Three Three
Months Months
Ended Ended
September September
30, 2004 30, 2003
---------- -----------
NET SALES $637,599 $587,433
COST OF SALES 542,587 460,739
---------- -----------
Gross profit 95,012 126,694
---------- -----------
EXPENSES:
Selling, marketing and advertising 68,326 61,987
General and administrative 37,847 40,038
Restructuring and impairment 4,826 4,827
Other (income) expense, net (9,161) (4,892)
Interest expense, net 11,411 24,252
---------- -----------
113,249 126,212
---------- -----------
Income (loss) before reorganization
items, income taxes and minority
interest (18,237) 482
REORGANIZATION ITEMS, NET 1,725 15,661
INCOME TAX (BENEFIT) PROVISION (2,874) 748
MINORITY INTEREST 13 (251)
---------- -----------
Net loss $(17,101) $(15,676)
---------- -----------
NET LOSS PER SHARE
Basic and Diluted $ (0.68) $ (0.57)
---------- -----------
WEIGHTED AVERAGE SHARES
Basic and Diluted 25,000 27,383
---------- -----------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIOD MAY 6, 2004 TO SEPTEMBER 30, 2004 (SUCCESSOR COMPANY),
THE PERIOD APRIL 1, 2004 TO MAY 5, 2004 (PREDECESSOR COMPANY) AND THE
SIX MONTHS ENDED SEPTEMBER 30, 2003 (PREDECESSOR COMPANY)
(Unaudited, in thousands, except per-share data)
Successor
Company Predecessor Predecessor
for the Company Company
Period for the for the
May 6, 2004 Period Six Months
to April 1, Ended
September 2004 to September
30, 2004 May 5, 2004 30, 2003
----------- ------------ -----------
NET SALES $1,035,527 $ 214,607 $1,171,999
COST OF SALES 875,716 179,137 929,056
----------- ------------ -----------
Gross profit 159,811 35,470 242,943
----------- ------------ -----------
EXPENSES:
Selling, marketing and
advertising 109,614 24,504 129,893
General and administrative 61,236 17,940 84,279
Restructuring and impairment 7,273 602 7,312
Other (income) expense, net (52,037) 6,222 (14,096)
Interest expense, net 17,437 8,870 49,693
----------- ------------ -----------
143,523 58,138 257,081
----------- ------------ -----------
Income (loss) before
reorganization items,
income taxes, minority
interest and cumulative
effect of change in
accounting principle 16,288 (22,668) (14,138)
REORGANIZATION ITEMS, NET 3,418 18,434 24,312
FRESH START ACCOUNTING
ADJUSTMENTS, NET -- (228,371) --
GAIN ON DISCHARGE OF
LIABILITIES SUBJECT TO
COMPROMISE -- (1,558,839) --
INCOME TAX (BENEFIT) PROVISION (3,702) (2,482) 559
MINORITY INTEREST 46 26 (282)
----------- ------------ -----------
Net income (loss) before
cumulative effect of
change in accounting
principle 16,526 1,748,564 (38,727)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE -- -- 15,593
----------- ------------ -----------
Net income (loss) $ 16,526 $ 1,748,564 $ (54,320)
----------- ------------ -----------
NET INCOME (LOSS) PER SHARE,
BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE
Basic and Diluted $ 0.66 $ 63.86 $ (1.41)
----------- ------------ -----------
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE PER SHARE
Basic and Diluted $ -- $ -- $ (0.57)
----------- ------------ -----------
NET INCOME (LOSS) PER SHARE
Basic and Diluted $ 0.66 $ 63.86 $ (1.98)
----------- ------------ -----------
WEIGHTED AVERAGE SHARES
Basic and Diluted 25,000 27,383 27,383
----------- ------------ -----------
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per-share data)
Successor Predecessor
Company Company
September March 31,
30, 2004 2004
----------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 27,293 $ 37,413
Restricted cash 1,820 15,469
Receivables, net of allowance for
doubtful accounts of $25,232 and
$24,433, respectively 638,647 667,026
Inventories 439,324 414,516
Prepaid expenses and other 19,371 24,372
Deferred financing costs, net -- 3,498
Deferred income taxes 35,985 34,035
----------- ------------
Total current assets 1,162,440 1,196,329
----------- ------------
PROPERTY, PLANT AND EQUIPMENT, NET 807,957 543,124
----------- ------------
OTHER ASSETS:
Goodwill, net 399,388 527,705
Other intangibles, net 196,148 46,440
Investments in affiliates 7,656 6,695
Deferred financing costs, net -- 1,645
Deferred income taxes 95,262 104,703
Other 36,249 45,167
----------- ------------
734,703 732,355
----------- ------------
Total assets $2,705,100 $ 2,471,808
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
CURRENT LIABILITIES:
Short-term borrowings $ 13,662 $ 8,624
Current maturities of long-term debt 4,984 736,165
Accounts payable 288,505 295,987
Accrued expenses 361,584 425,947
Warrants liability 18,625 --
----------- ------------
Total current liabilities 687,360 1,466,723
LONG-TERM DEBT 550,343 21,574
NONCURRENT RETIREMENT OBLIGATIONS 322,068 193,525
NONCURRENT DEFERRED TAX LIABILITY 111,733 --
OTHER NONCURRENT LIABILITIES 111,814 53,726
LIABILITIES SUBJECT TO COMPROMISE -- 1,481,120
----------- ------------
Total liabilities 1,783,318 3,216,668
----------- ------------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 12,430 24,909
----------- ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Predecessor Company common stock, $0.01 par
value, 100,000 shares authorized, 27,383
shares issued and outstanding at March 31,
2004 -- 274
Successor Company common stock, $0.01 par
value, 25,000 shares authorized, 24,101
shares issued and outstanding at September
30, 2004 234 --
Additional paid-in capital 888,157 570,589
Retained earnings (Accumulated deficit) 16,526 (1,046,087)
Notes receivable--stock award plan -- (665)
Accumulated other comprehensive income
(loss) 4,435 (293,880)
----------- ------------
Total stockholders' equity
(deficit) 909,352 (769,769)
----------- ------------
Total liabilities and stockholders'
equity (deficit) $2,705,100 $ 2,471,808
----------- ------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Successor
Company Predecessor Predecessor
for the Company Company
Period for the for the
May 6, Period Six Months
2004 to April 1, Ended
September 2004 to September
30, 2004 May 5, 2004 30, 2003
--------- ------------ -----------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ 16,526 $ 1,748,564 $ (54,320)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities--
Depreciation and
amortization 52,519 7,848 46,782
Cumulative effect of
change in accounting
principle -- -- 15,593
Gain on discharge of
liabilities subject to
compromise -- (1,558,839) --
Fresh Start accounting
adjustments, net -- (228,371) --
Unrealized gain on
Warrants (55,675) -- --
Net loss (gain) on asset
sales 11 -- (3,304)
Provision for doubtful
accounts 2,521 473 2,608
Deferred income taxes 680 -- --
Non-cash provision for
restructuring 98 18 56
Reorganization items, net 3,418 18,434 24,312
Minority interest 46 26 (282)
Amortization of deferred
financing costs -- 1,251 12,205
Changes in assets and
liabilities, excluding
effects of Fresh Start
accounting, acquisitions and
divestitures--
Receivables (12,849) 45,924 54,569
Inventories (17,956) (10,873) 2,839
Prepaid expenses and
other 2,524 286 (13,312)
Payables 2,387 (20,967) (17,314)
Accrued expenses (19,315) (20,564) (27,189)
Noncurrent liabilities 915 (294) (130)
Other, net (4,938) 9,898 (16,978)
--------- ------------ -----------
Net cash provided by
(used in) operating
activities (29,088) (7,186) 26,315
--------- ------------ -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures (26,018) (7,152) (26,154)
Proceeds from sales of assets 10,034 2,800 17,892
--------- ------------ -----------
Net cash used in
investing activities (15,984) (4,352) (8,262)
--------- ------------ -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Increase in short-term
borrowings 2,407 2,425 5,568
Repayments under 9.125% Senior
Notes (Deutschemark
denominated) -- (110,082) --
Borrowings under DIP Credit
Facility -- -- 446,200
Repayments under DIP Credit
Facility -- -- (448,914)
Borrowings under Replacement
DIP Credit Facility -- 121,258 --
Repayments under Replacement
DIP Credit Facility -- (452,875) --
Borrowings under Senior
Secured Credit Facility 8,962 500,000 --
European asset securitization -- -- (29,118)
Increase (decrease) in other
debt 659 (2,412) 2,459
Financing costs and other (681) (23,146) (400)
--------- ------------ -----------
Net cash provided by
(used in) financing
activities 11,347 35,168 (24,205)
--------- ------------ -----------
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS 1,422 (1,447) 3,101
--------- ------------ -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (32,303) 22,183 (3,051)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 59,596 37,413 39,766
--------- ------------ -----------
CASH AND CASH EQUIVALENTS, END OF
PERIOD $ 27,293 $ 59,596 $ 36,715
--------- ------------ -----------
NON-GAAP INCOME RECONCILIATION
(Unaudited, in thousands)
(in millions) Second Second
Quarter Quarter
Fiscal Fiscal
2005 2004
--------------------
Net income (loss) as reported $ (17.1) $ (15.7)
Less:
Restructuring and impairment 4.8 4.8
Reorganization items 1.7 15.7
Gain on revaluation of warrants liability (12.1) --
--------------------
Net income (loss) as adjusted $ (22.7) $ 4.8
====================
(in millions) First Half First Half
Fiscal Fiscal
2005 2004
------------------------
Net income (loss) as reported $ 1,765.1 $ (54.3)
Less:
Fresh Start accounting adjustments, net (1,558.8) --
Gain on discharge of liabilities subject to
compromise (228.4) --
Restructuring and impairment 7.9 7.3
Reorganization items 21.8 24.3
Gain on revaluation of warrants liability (55.7) --
Cumulative effect of change in accounting
principle -- 15.6
------------------------
Net income (loss) as adjusted $ (48.1) $ (7.1)
========================
The Company has adjusted GAAP net income (loss) as reported to exclude
the material effects of Fresh Start accounting and restructuring to
enhance the comparability of reported results.