Exide Technologies Announces Financial Results For Third Quarter of Fi

    Business Editors

    LAWRENCEVILLE, N.J.--(BUSINESS WIRE)--Feb. 14, 2005--Exide Technologies (NASDAQ: XIDE), 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.

    Conference Call Details

    Craig H. Muhlhauser, President and Chief Executive Officer, J. Timothy Gargaro, Executive Vice President and Chief Financial Officer, and other company executives will host a conference call for members of the investment community to discuss the Company's financial results and general business operations at 10:30 AM Eastern Time on Monday, February 14, 2005. The conference call will include a question and answer session with senior management. The domestic dial-in number is 877-780-2271; international callers should dial +1-973-582-2737.
    For individuals unable to participate in the conference call, a telephone replay will be available from 1:00 PM on February 14, 2005 until midnight on March 4, 2005 at: 877-519-4471; international callers should dial +1-973-341-3080. The passcode is 5696935.
    An audio webcast of the conference call can also be accessed via www.exide.com and will be available for one week. RealPlayer or Windows Media Player will be required in order to access the webcast.

    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.

    Forward-Looking Statements

    This press release may be deemed to contain "forward-looking" statements. The Company desires to avail itself of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the "Act") and is including this cautionary statement for the express purpose of availing itself of the protection afforded by the Act.
    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 of 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 Company's 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: (i) the Company's ability to implement business strategies and restructuring plans, (ii) unseasonable weather (warm winters and cool summers) which adversely affects demand for automotive and some industrial batteries, (iii) the Company's substantial debt and debt service requirements which may restrict the Company's operational and financial flexibility, as well as impose significant interest and financing costs, (iv) 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, (v) the realization of the tax benefits of the Company's net operating loss carry forwards, which is dependent upon future taxable income, (vi) the fact that lead, a major constituent in most of the Company's products, experiences significant fluctuations in market price and is a hazardous material that may give rise to costly environmental and safety claims, (vii) competitiveness of the battery markets in North America and Europe, (viii) the substantial management time and financial and other resources needed for the Company's consolidation and rationalization of acquired entities requires, (ix) 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, (x) the Company's exposure to fluctuations in interest rates on its variable debt, (xi) general economic conditions, (xii) the ability to acquire goods and services and/or fulfill labor needs at budgeted costs, (xiii) the Company's reliance on a single supplier for its polyethylene battery separators, (xiv) the Company's ability to obtain an extension from the Internal Revenue Service for its temporary waiver application for 2003 and 2004 pension funding requirements in order to negotiate a lien acceptable to the Pension Benefit Guaranty Corporation, (xv) our ability to attract and retain key personnel and (xvi) the Company's ability to comply with the provisions of Section 404 of the Sarbanes Oxley Act of 2002.
    Therefore, the Company cautions each reader of this press release carefully to consider those factors hereinabove set forth, because such factors 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.

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) =========== =========

NET LOSS PER SHARE Basic and Diluted $(17.56) $ (0.34) =========== =========

WEIGHTED AVERAGE SHARES Basic and Diluted 25,000 27,383 =========== =========

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 ================= ============ ===========

--30--KK/ny*

CONTACT: Exide Technologies Media: Alan Chapple, 678-566-9514 alan.chapple@exide.com or Investors: The Abernathy MacGregor Group, Inc. Chuck Burgess/Gillian Angstadt, 212-371-5999 exideweb@abmac.com

KEYWORD: NEW JERSEY INDUSTRY KEYWORD: TRANSPORTATION AUTOMOTIVE ENERGY EARNINGS CONFERENCE CALLS SOURCE: Exide Technologies

Copyright Business Wire 2005