UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal quarter ended June 30, 2004
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 1-11263
EXIDE TECHNOLOGIES
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 23-0552730 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) | |
| Crossroads Corporate Center 3150 Brunswick Pike, Suite 230 Lawrenceville, New Jersey |
08648 | |
| (Address of principal executive offices) | (Zip Code) | |
(609) 512-3000
(Registrant’s telephone number, including area code)
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 x No ¨
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No x
Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes x No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
As of August 9, 2004, 24,101,316 shares of common stock were outstanding.
EXIDE TECHNOLOGIES AND SUBSIDIARIES
TABLE OF CONTENTS
| Page | ||||
| PART I. FINANCIAL INFORMATION | ||||
| Item 1 |
3 | |||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| Item 2 |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
28 | ||
| Item 3 |
37 | |||
| Item 4 |
37 | |||
| PART II. OTHER INFORMATION | ||||
| Item 1 |
39 | |||
| Item 2 |
CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES |
40 | ||
| Item 3 |
40 | |||
| Item 4 |
40 | |||
| Item 5 |
40 | |||
| Item 6 |
40 | |||
| 41 | ||||
2
Item 1. Financial Statements (Unaudited)
EXIDE TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per-share data)
| Successor May 6, 2004 to |
Predecessor Company for the Period April 1, 2004 to May 5, 2004 |
Predecessor Three Months |
||||||||||
| NET SALES |
$ | 397,928 | $ | 214,607 | $ | 584,566 | ||||||
| COST OF SALES |
333,129 | 179,137 | 468,317 | |||||||||
| Gross profit |
64,799 | 35,470 | 116,249 | |||||||||
| EXPENSES: |
||||||||||||
| Selling, marketing and advertising |
41,288 | 24,504 | 67,906 | |||||||||
| General and administrative |
23,389 | 17,940 | 44,241 | |||||||||
| Restructuring and impairment (Note 19) |
2,447 | 602 | 2,485 | |||||||||
| Other (income) expense, net (Note 15) |
(42,876 | ) | 6,222 | (9,204 | ) | |||||||
| Interest expense, net (Note 14) |
6,026 | 8,870 | 25,441 | |||||||||
| 30,274 | 58,138 | 130,869 | ||||||||||
| Income (loss) before reorganization items, income taxes, minority interest and cumulative effect of change in accounting principle |
34,525 | (22,668 | ) | (14,620 | ) | |||||||
| REORGANIZATION ITEMS, NET (Note 8) |
1,693 | 18,434 | 8,651 | |||||||||
| FRESH START ACCOUNTING ADJUSTMENTS, NET (Note 4 ) |
— | (228,371 | ) | — | ||||||||
| GAIN ON DISCHARGE OF LIABILITIES SUBJECT TO COMPROMISE (Note 4 ) |
— | (1,558,839 | ) | — | ||||||||
| INCOME TAX BENEFIT |
(828 | ) | (2,482 | ) | (189 | ) | ||||||
| MINORITY INTEREST |
33 | 26 | (31 | ) | ||||||||
| Net income (loss) before cumulative effect of change in accounting principle |
33,627 | 1,748,564 | (23,051 | ) | ||||||||
| CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (Note 5) |
— | — | 15,593 | |||||||||
| Net income (loss) |
$ | 33,627 | $ | 1,748,564 | $ | (38,644 | ) | |||||
| NET INCOME (LOSS) PER SHARE, BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (Note 20) |
||||||||||||
| Basic and Diluted |
$ | 1.35 | $ | 63.86 | $ | (0.84 | ) | |||||
| CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE PER SHARE (Note 20) |
||||||||||||
| Basic and Diluted |
$ | — | $ | — | $ | (0.57 | ) | |||||
| NET INCOME (LOSS) PER SHARE (Note 20) |
||||||||||||
| Basic and Diluted |
$ | 1.35 | $ | 63.86 | $ | (1.41 | ) | |||||
| WEIGHTED AVERAGE SHARES |
||||||||||||
| Basic and Diluted |
25,000 | 27,383 | 27,383 | |||||||||
The accompanying notes are an integral part of these statements.
3
EXIDE TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per-share data)
| Successor 2004 |
Predecessor March 31, 2004 |
|||||||
| ASSETS | ||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 42,973 | $ | 37,413 | ||||
| Restricted cash |
2,581 | 15,469 | ||||||
| Receivables, net of allowance for doubtful accounts of $22,703 and $24,433, respectively |
625,936 | 667,026 | ||||||
| Inventories (Note 11) |
434,603 | 414,516 | ||||||
| Prepaid expenses and other |
20,512 | 24,372 | ||||||
| Deferred financing costs, net |
— | 3,498 | ||||||
| Deferred income taxes |
34,410 | 34,035 | ||||||
| Total current assets |
1,161,015 | 1,196,329 | ||||||
| PROPERTY, PLANT AND EQUIPMENT, NET |
814,900 | 543,124 | ||||||
| OTHER ASSETS: |
||||||||
| Goodwill, net (Note 10) |
399,388 | 527,705 | ||||||
| Other intangibles, net (Note 10) |
197,843 | 46,440 | ||||||
| Investments in affiliates |
7,175 | 6,695 | ||||||
| Deferred financing costs, net |
— | 1,645 | ||||||
| Deferred income taxes |
95,768 | 104,703 | ||||||
| Other (Note 12) |
34,825 | 45,167 | ||||||
| 734,999 | 732,355 | |||||||
| Total assets |
$ | 2,710,914 | $ | 2,471,808 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES: |
||||||||
| Short-term borrowings (Note 13) |
$ | 11,181 | $ | 8,624 | ||||
| Current maturities of long-term debt (Note 13) |
3,748 | 736,165 | ||||||
| Accounts payable |
285,185 | 295,987 | ||||||
| Accrued expenses |
367,700 | 425,947 | ||||||
| Warrants liability |
30,688 | — | ||||||
| Total current liabilities |
698,502 | 1,466,723 | ||||||
| LONG-TERM DEBT (Note 13) |
540,720 | 21,574 | ||||||
| NONCURRENT RETIREMENT OBLIGATIONS |
319,214 | 193,525 | ||||||
| NONCURRENT DEFERRED TAX LIABILITY |
111,650 | — | ||||||
| OTHER NONCURRENT LIABILITIES |
112,628 | 53,726 | ||||||
| LIABILITIES SUBJECT TO COMPROMISE (Note 9) |
— | 1,481,120 | ||||||
| Total liabilities |
1,782,714 | 3,216,668 | ||||||
| COMMITMENTS AND CONTINGENCIES (Notes 17 and 18) |
||||||||
| MINORITY INTEREST |
12,236 | 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, 23,414 shares issued and outstanding at June 30, 2004 |
234 | — | ||||||
| Additional paid-in capital |
888,157 | 570,589 | ||||||
| Retained earnings (Accumulated deficit) |
33,627 | (1,046,087 | ) | |||||
| Notes receivable—stock award plan |
— | (665 | ) | |||||
| Accumulated other comprehensive loss |
(6,054 | ) | (293,880 | ) | ||||
| Total stockholders’ equity (deficit) |
915,964 | (769,769 | ) | |||||
| Total liabilities and stockholders’ equity (deficit) |
$ | 2,710,914 | $ | 2,471,808 | ||||
The accompanying notes are an integral part of these statements.
4
EXIDE TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
| Successor May 6, 2004 to June 30, 2004 |
Predecessor April 1, 2004 to May 5, 2004 |
Predecessor Three Months |
||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||||||
| Net income (loss) |
$ | 33,627 | $ | 1,748,564 | $ | (38,644 | ) | |||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities— |
||||||||||||
| Depreciation and amortization |
21,699 | 7,848 | 23,993 | |||||||||
| 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 |
(43,612 | ) | — | — | ||||||||
| Net gain on asset sales |
— | — | (3,175 | ) | ||||||||
| Provision for doubtful accounts |
590 | 473 | 1,657 | |||||||||
| Non-cash provision for restructuring |
84 | 18 | 56 | |||||||||
| Reorganization items, net |
1,693 | 18,434 | 8,651 | |||||||||
| Minority interest |
33 | 26 | (31 | ) | ||||||||
| Amortization of deferred financing costs |
— | 1,251 | 6,047 | |||||||||
| Changes in assets and liabilities, excluding effects of Fresh Start accounting, acquisitions and divestitures— |
||||||||||||
| Receivables |
(5,781 | ) | 45,924 | 40,412 | ||||||||
| Inventories |
(17,317 | ) | (10,873 | ) | (1,328 | ) | ||||||
| Prepaid expenses and other |
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