Exide Technologies Announces Financial Results For Third Quarter of Fiscal 2005
LAWRENCEVILLE, N.J.--Feb. 1, 20054, 2005--Exide Technologies , a global leader in stored electrical energy solutions, today announced financial results for the third quarter of fiscal 2005 ended December 31, 2004.Consolidated net sales for the third quarter of fiscal 2005 rose 11.5% to $727.9 million from $653.0 million in the third quarter of fiscal 2004. Quarterly net sales results benefited from higher average selling prices as a result of lead-related pricing actions across the business, as well as strong Motive Power demand worldwide. Favorable currency exchange rates also benefited net sales Company-wide.
Consolidated net loss for the third quarter of fiscal 2005 was $439.0 million, or $17.56 per share, compared to a net loss of $9.3 million, or $0.34 per share, in the third quarter of fiscal 2004. The third quarter of fiscal 2005 results include a non-cash goodwill impairment charge of $399.4 million, restructuring costs and reorganization items of approximately $8.0 million and a non-cash income tax charge of $34.5 million to adjust valuation allowances against previously recognized deferred tax assets. The results were favorably offset by a gain on revaluation of Warrants of $5.8 million.
The Company uses adjusted EBITDA as a key measure of the Company's operational and financial performance because the Company believes it provides useful information for investors.
Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization and restructuring charges. The Company's adjusted EBITDA definition also adjusts reported earnings for losses from discounts on sale of accounts receivable, the effect of non-cash currency re-measurement gains or losses, the non-cash gain or loss from revaluation of the Company's warrants liability, impairment charges and non-cash gains or losses on asset sales. A reconciliation of adjusted EBITDA to income reported under Generally Accepted Accounting Principals ("GAAP") is attached hereto.
Adjusted EBITDA for the third quarter was $52.0 million compared to $59.0 million in the prior year period. As a result of stronger currency rates relative to the dollar, adjusted EBITDA results were favorably impacted by $2.7 million in the third quarter. The unrecovered portion of lead was limited to approximately $10 million in the quarter. Without lead and currency, Exide's adjusted EBITDA for the third quarter would have been slightly ahead of last year.
"Exide continued its efforts in the third quarter to mitigate the escalation in commodity and energy prices, especially the price of lead," said Craig H. Muhlhauser, President and Chief Executive Officer of Exide Technologies.
Lead, which is Exide's number-one commodity and comprises approximately one-third of the Company's cost of goods sold, rose to an average of EUR 737 ($959) per metric tonne for the third quarter of fiscal year 2005, versus the prior year's average of EUR 531 ($634) per metric tonne - approximately a 40% increase in euro terms.
"This quarter, we successfully recovered 65-70% of the increased lead costs in the quarter due to pricing actions, lead price escalators, lead hedging and improved spent battery collection rates," Mr. Muhlhauser said. "This is a significant improvement over the second quarter, when we were only able to offset 30-40% of the adverse impact from lead price increases.
"The Company will continue its efforts to implement plans and make investments to accelerate cost reductions and increase cash flow from operations," Mr. Muhlhauser said. "We remain committed to making our customers successful and creating long-term value for our shareholders."
Bank Covenant
Due to the fact that the Company failed to satisfy its leverage ratio covenant as of December 31, 2004 under its Senior Secured Credit Facility, Exide has requested and expects to receive a waiver of the leverage ratio covenant from its lenders, as well as amendments relating to the Company's proposed senior note offering.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2004 (SUCCESSOR COMPANY) AND
THE THREE MONTHS ENDED DECEMBER 31, 2003 (PREDECESSOR COMPANY)
(Unaudited, in thousands, except per-share data)
Successor Predecessor
Company Company
for the for the
Three Months Three Months
Ended Ended
December 31, December 31,
2004 2003
------------- ---------------
NET SALES $727,902 $653,016
COST OF SALES 602,151 510,925
---------- ---------
Gross profit 125,751 142,091
---------- ---------
EXPENSES:
Selling, marketing and advertising 69,003 65,143
General and administrative 47,365 43,181
Restructuring and impairment 5,713 12,662
Goodwill Impairment 399,388 --
Other (income) expense, net (5,005) (20,619)
Interest expense, net 11,728 24,758
---------- ---------
528,192 125,125
---------- ---------
Income (loss) before reorganization
items, income taxes and minority
interest (402,441) 16,966
REORGANIZATION ITEMS, NET 2,236 21,605
INCOME TAX PROVISION 34,484 4,080
MINORITY INTEREST (121) 604
---------- ---------
Net loss $(439,040) $ (9,323)
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NET LOSS PER SHARE
Basic and Diluted $(17.56) $ (0.34)
=========== =========
WEIGHTED AVERAGE SHARES
Basic and Diluted 25,000 27,383
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIOD MAY 6, 2004 TO DECEMBER 31, 2004 (SUCCESSOR COMPANY),
THE PERIOD APRIL 1, 2004 TO MAY 5, 2004 (PREDECESSOR COMPANY) AND
THE NINE MONTHS ENDED DECEMBER 31, 2003 (PREDECESSOR COMPANY)
(Unaudited, in thousands, except per-share data)
Successor
Company Predecessor
for the Predecessor Company
Period Company for the
May 6, 2004 for the Nine Months
to Period Ended
December April 1, December
31, 2004 to 31,
2004 May 5, 2004 2003
------------ ------------ -----------
NET SALES $1,763,429 $ 214,607 $1,825,015
COST OF SALES 1,477,867 179,137 1,439,981
------------ ------------ -----------
Gross profit 285,562 35,470 385,034
------------ ------------ -----------
EXPENSES:
Selling, marketing and
advertising 178,617 24,504 195,036
General and administrative 108,601 17,940 127,460
Restructuring and impairment 12,986 602 19,974
Goodwill Impairment 399,388 -- --
Other (income) expense,
net (57,042) 6,222 (34,715)
Interest expense, net 29,165 8,870 74,451
------------ ------------ -----------
671,715 58,138 382,206
------------ ------------ -----------
Income (loss) before
reorganization items,
income taxes, minority
interest and cumulative
effect of change in
accounting principle (386,153) (22,668) 2,828
REORGANIZATION ITEMS, NET 5,654 18,434 45,917
FRESH START ACCOUNTING
ADJUSTMENTS, NET -- (228,371) --
GAIN ON DISCHARGE OF
LIABILITIES SUBJECT TO
COMPROMISE -- (1,558,839) --
INCOME TAX (BENEFIT)
PROVISION 30,782 (2,482) 4,639
MINORITY INTEREST (75) 26 322
------------ ------------ -----------
Net income (loss) before
cumulative effect of
change in accounting
principle (422,514) 1,748,564 (48,050)
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE -- -- 15,593
------------ ------------ -----------
Net income (loss) $(422,514) $ 1,748,564 $ (63,643)
============ ============ ===========
NET INCOME (LOSS) PER SHARE,
BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE
Basic and Diluted $(16.90) $ 63.86 $ (1.75)
============ ============ ===========
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE PER
SHARE
Basic and Diluted $-- $ -- $ (0.57)
============ ============ ===========
NET INCOME (LOSS) PER SHARE
Basic and Diluted $(16.90) $ 63.86 $ (2.32)
============ ============ ===========
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
December 31, March 31,
2004 2004
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $26,081 $ 37,413
Restricted cash 2,005 15,469
Receivables, net of allowance for
doubtful accounts of $26,044 and
$24,433, respectively 715,839 667,026
Inventories 460,239 414,516
Prepaid expenses and other 24,832 24,372
Deferred financing costs, net -- 3,498
Deferred income taxes 36,917 34,035
------------ ------------
Total current assets 1,265,913 1,196,329
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, NET 839,606 543,124
------------ ------------
OTHER ASSETS:
Goodwill, net -- 527,705
Other intangibles, net 194,501 46,440
Investments in affiliates 6,922 6,695
Deferred financing costs, net -- 1,645
Deferred income taxes 43,552 104,703
Other 35,963 45,167
------------ ------------
280,938 732,355
------------ ------------
Total assets $2,386,457 $ 2,471,808
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Short-term borrowings $17,308 $ 8,624
Current maturities of long-term debt 5,017 736,165
Accounts payable 342,334 295,987
Accrued expenses 378,223 425,947
Warrants liability 12,813 --
------------ ------------
Total current liabilities 755,695 1,466,723
LONG-TERM DEBT 560,417 21,574
NONCURRENT RETIREMENT OBLIGATIONS 332,884 193,525
NONCURRENT DEFERRED TAX LIABILITY 98,018 --
OTHER NONCURRENT LIABILITIES 114,774 53,726
LIABILITIES SUBJECT TO COMPROMISE -- 1,481,120
------------ ------------
Total liabilities 1,861,788 3,216,668
------------ ------------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 13,159 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, 24,162
shares issued and outstanding at December
31, 2004 234 --
Additional paid-in capital 888,157 570,589
Retained earnings (Accumulated deficit) (422,514) (1,046,087)
Notes receivable--stock award plan -- (665)
Accumulated other comprehensive income
(loss) 45,633 (293,880)
------------ ------------
Total stockholders' equity (deficit) 511,510 (769,769)
------------ ------------
Total liabilities and
stockholders' equity (deficit) $2,386,457 $ 2,471,808
============ ============
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Predecessor
Predecessor Company
Successor Company for the
Company for the Nine Months
for the Period Period Ended
May 6, 2004 to April 1, December
December 31, 2004 to 31,
2004 May 5, 2004 2003
--------------- -------------- ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $(422,514) $ 1,748,564 $ (63,643)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities --
Depreciation and amortization 84,194 7,848 72,023
Impairment of Goodwill 399,388
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 (61,488) -- --
Net loss (gain) on
asset sales 1,227 -- (4,806)
Provision for doubtful
accounts 2,167 473 4,825
Deferred income taxes 680 -- --
Non-cash provision for
restructuring 108 18 56
Reorganization items, net 5,654 18,434 45,917
Minority interest (75) 26 322
Amortization of deferred
financing costs -- 1,251 15,649
Changes in assets and
liabilities, excluding effects
of Fresh Start accounting,
acquisitions and divestitures --
Receivables (41,745) 45,924 33,381
Inventories (12,408) (10,873) 10,659
Prepaid expenses and other (2,378) 286 (14,153)
Payables 32,464 (20,967) (11,308)
Accrued expenses (28,982) (20,564) (40,470)
Noncurrent liabilities (3,443) (294) (4,361)
Other, net 33,503 9,898 (38,802)
----------------- ------------ -----------
Net cash provided by
(used in) operating
activities (13,648) (7,186) 20,882
----------------- ------------ -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures (44,577) (7,152) (44,252)
Proceeds from sales
of assets 20,962 2,800 19,538
----------------- ------------ -----------
Net cash used in
investing activities (23,615) (4,352) (24,714)
----------------- ------------ -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Increase in short-term
borrowings 4,174 2,425 3,504
Repayments under 9.125%
Senior Notes (Deutschemark
denominated) -- (110,082) --
Borrowings under DIP
Credit Facility -- -- 693,677
Repayments under DIP
Credit Facility -- -- (703,239)
Borrowings under
Replacement DIP
Credit Facility -- 121,258 --
Repayments under
Replacement DIP
Credit Facility -- (452,875) --
Borrowings under
Senior Secured
Credit Facility 168,593 500,000 --
Repayments under
Senior Secured
Credit Facility (169,332)
European asset
securitization -- 7,538
Increase (decrease)
in other debt (2,036) (2,412) 1,120
Financing costs and
other (682) (23,146) (400)
----------------- ------------ -----------
Net cash provided by
(used in) financing
activities 717 35,168 2,200
----------------- ------------ -----------
EFFECT OF EXCHANGE RATE
CHANGES ON CASH AND CASH
EQUIVALENTS 3,031 (1,447) 5,420
----------------- ------------ -----------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (33,515) 22,183 3,788
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 59,596 37,413 39,766
----------------- ------------ -----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $26,081 $ 59,596 $ 43,554
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