##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended December 31, 2006
 o
    
    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
(State or other jurisdiction of 
incorporation or organization)
    
    23-0552730
(I.R.S. Employer
Identification Number)13000 Deerfield Parkway, 
Building 200
Alpharetta, Georgia
(Address of principal executive offices)
    
    30004
(Zip Code)
 (678) 566-9000
(Registrants telephone number, including area code)
 þ o
  o þ o
 þ o
 o þ




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##### 



EXIDE TECHNOLOGIES AND SUBSIDIARIES
TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATION
    
    
    3Item 1 FINANCIAL STATEMENTS
    
    
    3CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS AND NINE
MONTHS ENDED DECEMBER 31, 2006 AND 2005
    
    
    3CONDENSED CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2006 AND MARCH 31, 2006
    
    
    4CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED
DECEMBER 31, 2006 AND 2005
    
    
    5NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    
    
    6Item 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
    
    
    20Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    34Item 4 CONTROLS AND PROCEDURES
    
    
    34PART II. OTHER INFORMATION
    
    
    36Item 1. LEGAL PROCEEDINGS
    
    
    36Item 1A. RISK FACTORS
    
    
    36Item 2. UNREGISTERED SALES OF EQUTY SECURITIES AND USE OF PROCEEDS
    
    
    38Item 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    38Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    38Item 5. OTHER INFORMATION
    
    
    38Item 6. EXHIBITS
    
    
    38SIGNATURES
    
    
    39EX-31.1 SECTION 302 CERTIFICATION OF PRESIDENT & CEOEX-31.2 SECTION 302 CERTIFICATION OF EXECUTIVE VICE PRESIDENT & CFOEX-32 SECTION 906 CERTIFICATIONS
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1 . Financial Statements
 EXIDE TECHNOLOGIES AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per-share data)
 For the Three Months Ended
    
    
    For the Nine Months EndedDecember 31, 2006
    
    
    December 31, 2005
    
    
    December 31, 2006
    
    
    December 31, 2005NET SALES
    
    $
    769,743
    
    
    $
    733,442
    
    
    $
    2,133,232
    
    
    $
    2,089,259COST OF SALES
    
    
    640,038
    
    
    
    614,609
    
    
    
    1,788,447
    
    
    
    1,764,317Gross profit
    
    
    129,705
    
    
    
    118,833
    
    
    
    344,785
    
    
    
    324,942EXPENSES:Selling, marketing and advertising
    
    
    67,336
    
    
    
    66,261
    
    
    
    201,786
    
    
    
    204,948General and administrative
    
    
    42,263
    
    
    
    42,471
    
    
    
    124,650
    
    
    
    129,347Restructuring
    
    
    6,299
    
    
    
    6,511
    
    
    
    22,222
    
    
    
    16,051Other (income) expense, net
    
    
    3,737
    
    
    
    7,973
    
    
    
    6,448
    
    
    
    12,781Interest expense, net
    
    
    22,814
    
    
    
    18,404
    
    
    
    67,742
    
    
    
    51,163142,449
    
    
    
    141,620
    
    
    
    422,848
    
    
    
    414,290Loss before reorganization items,
income taxes, and minority
interest
    
    
    (12,744
    )
    
    
    (22,787
    )
    
    
    (78,063
    )
    
    
    (89,348
    )REORGANIZATION ITEMS, NET
    
    
    1,213
    
    
    
    1,311
    
    
    
    3,784
    
    
    
    4,398INCOME TAX PROVISION (BENEFIT)
    
    
    (2,947
    )
    
    
    3,528
    
    
    
    1,924
    
    
    
    2,572MINORITY INTEREST
    
    
    234
    
    
    
    32
    
    
    
    478
    
    
    
    72Net loss
    
    $
    (11,244
    )
    
    $
    (27,658
    )
    
    $
    (84,249
    )
    
    $
    (96,390
    )NET LOSS PER SHAREBasic and Diluted
    
    $
    (0.18
    )
    
    $
    (1.08
    )
    
    $
    (2.16
    )
    
    $
    (3.77
    )WEIGHTED AVERAGE SHARESBasic and Diluted
    
    
    60,829
    
    
    
    25,576
    
    
    
    38,940
    
    
    
    25,576
  3




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##### Table of Contents



EXIDE TECHNOLOGIES AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per-share data)
 December 31, 2006
    
    
    March 31, 2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    64,610
    
    
    $
    32,161Restricted cash
    
    
    610
    
    
    
    561Receivables, net of allowance for doubtful accounts of $28,909 and $21,637
    
    
    621,810
    
    
    
    617,677Inventories
    
    
    451,788
    
    
    
    414,943Prepaid expenses and other
    
    
    42,540
    
    
    
    30,243Deferred financing costs, net
    
    
    3,326
    
    
    
    3,169Deferred income taxes
    
    
    15,225
    
    
    
    11,066Total current assets
    
    
    1,199,909
    
    
    
    1,109,820Property, plant and equipment, net
    
    
    651,320
    
    
    
    685,842Other assets:Other intangibles, net
    
    
    192,114
    
    
    
    186,820Investments in affiliates
    
    
    5,057
    
    
    
    4,783Deferred financing costs, net
    
    
    13,441
    
    
    
    15,196Deferred income taxes
    
    
    59,447
    
    
    
    56,358Other
    
    
    19,944
    
    
    
    24,090Total other assets
    
    
    290,003
    
    
    
    287,247Total assets
    
    $
    2,141,232
    
    
    $
    2,082,909LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Short-term borrowings
    
    $
    15,892
    
    
    $
    11,375Current maturities of long-term debt
    
    
    3,579
    
    
    
    5,643Accounts payable
    
    
    358,999
    
    
    
    360,538Accrued expenses
    
    
    313,094
    
    
    
    298,631Warrants liability
    
    
    2,648
    
    
    
    2,063Total current liabilities
    
    
    694,212
    
    
    
    678,250Long-term debt
    
    
    665,909
    
    
    
    683,986Noncurrent retirement obligations
    
    
    320,119
    
    
    
    333,248Deferred income tax liability
    
    
    36,501
    
    
    
    33,590Other noncurrent liabilities
    
    
    110,977
    
    
    
    116,430Total liabilities
    
    
    1,827,718
    
    
    
    1,845,504Commitments and contingencies (Note 13)
    
    
    
    
    
    
    Minority interest
    
    
    14,019
    
    
    
    12,666STOCKHOLDERS EQUITYPreferred stock, $0.01 par value, 1,000 shares authorized, 0 shares issued and outstanding
    
    
    
    
    
    
    Common
stock, $0.01 par value, 100,000 and 61,500 shares authorized, 60,706 and 24,546 shares issued and outstanding
    
    
    607
    
    
    
    245Additional paid-in capital
    
    
    1,007,970
    
    
    
    888,647Accumulated deficit
    
    
    (723,904
    )
    
    
    (639,655
    )Accumulated other comprehensive income (loss)
    
    
    14,822
    
    
    
    (24,498
    )Total stockholders equity
    
    
    299,495
    
    
    
    224,739Total liabilities and stockholders equity
    
    $
    2,141,232
    
    
    $
    2,082,909
  4




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##### Table of Contents



EXIDE TECHNOLOGIES AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 For the Nine Months EndedDecember 31, 2006
    
    
    December 31, 2005Cash Flows From Operating Activities:Net loss
    
    $
    (84,249
    )
    
    $
    (96,390
    )Adjustments to reconcile net loss to net cash used in operating activitiesDepreciation and amortization
    
    
    90,152
    
    
    
    90,519Unrealized loss (gain) on warrants
    
    
    585
    
    
    
    (9,500
    )Net loss on asset sales / disposals
    
    
    16,699
    
    
    
    12,270Provision for doubtful accounts
    
    
    6,749
    
    
    
    2,401Non-cash stock compensation
    
    
    1,814
    
    
    
    333Reorganization items, net
    
    
    3,784
    
    
    
    4,398Minority interest
    
    
    478
    
    
    
    72Amortization of deferred financing costs
    
    
    2,535
    
    
    
    1,347Changes in assets and liabilities Receivables
    
    
    28,573
    
    
    
    10,342Inventories
    
    
    (12,670
    )
    
    
    (51,451
    )Prepaid expenses and other
    
    
    (8,898
    )
    
    
    (13,199
    )Payables
    
    
    (23,863
    )
    
    
    19,007Accrued expenses
    
    
    3,143
    
    
    
    (16,206
    )Noncurrent liabilities
    
    
    (47,679
    )
    
    
    (7,210
    )Other, net
    
    
    (12,205
    )
    
    
    8,866Net cash used in operating activities
    
    
    (35,052
    )
    
    
    (44,401
    )Cash Flows From Investing Activities:Capital expenditures
    
    
    (28,978
    )
    
    
    (37,861
    )Proceeds from sales of assets, net
    
    
    3,385
    
    
    
    19,657Net cash used in investing activities
    
    
    (25,593
    )
    
    
    (18,204
    )Cash Flows From Financing Activities:Increase in short-term borrowings
    
    
    3,106
    
    
    
    13,963Repayments under Senior Secured Credit Facility
    
    
    (27,654
    )
    
    
    (12,804
    )Settlement of foreign currency swap
    
    
    
    
    
    
    (12,084
    )Increase (decrease) in other debt
    
    
    (2,441
    )
    
    
    36,081Net Proceeds from rights offering and private equity sale
    
    
    117,871
    
    
    
    Net cash provided by financing activities
    
    
    90,882
    
    
    
    25,156Effect of Exchange Rate Changes on Cash and Cash Equivalents
    
    
    2,212
    
    
    
    (2,375
    )Net Increase (Decrease) In Cash and Cash Equivalents
    
    
    32,449
    
    
    
    (39,824
    )Cash and Cash Equivalents, Beginning of Period
    
    
    32,161
    
    
    
    76,696Cash and Cash Equivalents, End of Period
    
    $
    64,610
    
    
    $
    36,872Supplemental Disclosures of Cash Flow Information:Cash paid during the period Interest
    
    $
    45,709
    
    
    $
    31,839Income taxes (net of refunds)
    
    $
    6,973
    
    
    $
    7,980
  5




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##### Table of Contents



EXIDE TECHNOLOGIES AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006
(Unaudited)
 (1) BASIS OF PRESENTATION
        6




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(2) WARRANTS
    (3) COMPREHENSIVE INCOME (LOSS)
  For the Three Months Ended
    
    
    For the Nine Months EndedDecember 31, 2006
    
    
    December 31, 2005
    
    
    December 31, 2006
    
    
    December 31, 2005Net loss
    
    $
    (11,244
    )
    
    $
    (27,658
    )
    
    $
    (84,249
    )
    
    $
    (96,390
    )Additions and changes to minimum pension liability
    
    
    (578
    )
    
    
    54
    
    
    
    (868
    )
    
    
    333Change in cumulative foreign currency translation
adjustment
    
    
    18,166
    
    
    
    (5,901
    )
    
    
    40,188
    
    
    
    (29,543
    )Total comprehensive income (loss)
    
    $
    6,344
    
    
    $
    (33,505
    )
    
    $
    (44,929
    )
    
    $
    (125,600
    )
 (4) REORGANIZATION ITEMS, NET
  For the Three Months Ended
    
    
    For the Nine Months EndedDecember 31, 2006
    
    
    December 31, 2005
    
    
    December 31, 2006
    
    
    December 31, 2005Professional fees
    
    $
    328
    
    
    $
    917
    
    
    $
    1,682
    
    
    $
    2,913Other (a)
    
    
    885
    
    
    
    394
    
    
    
    2,102
    
    
    
    1,485Total reorganization items, net
    
    $
    1,213
    
    
    $
    1,311
    
    
    $
    3,784
    
    
    $
    4,398
  
 (a)
    
    Other represents expenses primarily related to directors and officers liability insurance
coverage for directors and officers of the
Predecessor Company. 7




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##### Table of Contents



(5) INTANGIBLE ASSETS, NET
 Trademarks and
    
    
    Trademarks andTradenames (not
    
    
    Tradenames (subject
    
    
    Customersubject to amortization)
    
    
    to amortization)
    
    
    Relationships
    
    
    Technology
    
    
    Total(in thousands)As of March 31, 2006:Gross Amount
    
    $
    56,331
    
    
    $
    12,813
    
    
    $
    106,594
    
    
    $
    23,781
    
    
    $
    199,519Accumulated Amortization
    
    
    
    
    
    
    (1,939
    )
    
    
    (8,499
    )
    
    
    (2,261
    )
    
    
    (12,699
    )Net
    
    $
    56,331
    
    
    $
    10,874
    
    
    $
    98,095
    
    
    $
    21,520
    
    
    $
    186,820As of December 31, 2006:Gross Amount
    
    $
    59,535
    
    
    $
    13,542
    
    
    $
    112,644
    
    
    $
    25,134
    
    
    $
    210,855Accumulated Amortization
    
    
    
    
    
    
    (2,852
    )
    
    
    (12,565
    )
    
    
    (3,324
    )
    
    
    (18,741
    )Net
    
    $
    59,535
    
    
    $
    10,690
    
    
    $
    100,079
    
    
    $
    21,810
    
    
    $
    192,114
  (6) INVENTORIES
  December 31, 2006
    
    
    March 31, 2006Raw materials
    
    $
    75,263
    
    
    $
    64,248Work-in-process
    
    
    93,773
    
    
    
    79,923Finished goods
    
    
    282,752
    
    
    
    270,772$
    451,788
    
    
    $
    414,943
 (7) OTHER ASSETS
  December 31, 2006
    
    
    March 31, 2006Deposits (a)
    
    $
    10,317
    
    
    $
    10,317Capitalized software, net
    
    
    2,910
    
    
    
    6,524Loan to affiliate
    
    
    2,557
    
    
    
    3,563Other
    
    
    4,160
    
    
    
    3,686$
    19,944
    
    
    $
    24,090
 
 (a)
    
    Deposits principally represent amounts held by the beneficiaries as cash collateral for the
Companys contingent obligations with respect to certain environmental matters, workers
compensation insurance and operating lease commitments. (8) DEBT
  8




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##### Table of Contents



December 31, 2006
    
    
    March 31, 2006Senior Secured Credit Facility
    
    $
    296,494
    
    
    $
    316,27710.5% Senior Secured Notes due 2013
    
    
    290,000
    
    
    
    290,000Floating Rate Convertible Senior Subordinated Notes due 2013
    
    
    60,000
    
    
    
    60,000Other, including capital lease obligations and other loans at interest
rates generally ranging up to 11.0% due in installments through 2015
    
    
    22,994
    
    
    
    23,352Total
    
    
    669,488
    
    
    
    689,629Less  current maturities
    
    
    3,579
    
    
    
    5,643$
    665,909
    
    
    $
    683,986
  (9) INTEREST EXPENSE, NET
  (10) OTHER (INCOME) EXPENSE, NET
  For the Three Months Ended
    
    
    For the Nine Months EndedDecember 31, 2006
    
    
    December 31, 2005
    
    
    December 31, 2006
    
    
    December 31, 2005Net loss on asset sales /
disposals
    
    $
    9,727
    
    
    $
    9,602
    
    
    $
    16,699
    
    
    $
    12,270Equity investment loss (income)
    
    
    129
    
    
    
    (432
    )
    
    
    (221
    )
    
    
    (1,421
    )Foreign currency remeasurement
(gain) loss
    
    
    (6,365
    )
    
    
    768
    
    
    
    (10,567
    )
    
    
    13,802Gain on revaluation of foreign
currency forward contract
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,081
    )(Gain) loss on revaluation of
warrants
    
    
    1,324
    
    
    
    (1,750
    )
    
    
    585
    
    
    
    (9,500
    )Other
    
    
    (1,078
    )
    
    
    (215
    )
    
    
    (48
    )
    
    
    (1,289
    )$
    3,737
    
    
    $
    7,973
    
    
    $
    6,448
    
    
    $
    12,781
 (11) EMPLOYEE BENEFITS
  9




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Pension BenefitsFor the Three Months Ended
    
    
    For the Nine Months EndedDecember 31, 2006
    
    
    December 31, 2005
    
    
    December 31, 2006
    
    
    December 31, 2005Components of net periodic benefit cost:Service cost
    
    $
    2,273
    
    
    $
    2,684
    
    
    $
    6,744
    
    
    $
    8,136Interest cost
    
    
    8,410
    
    
    
    8,101
    
    
    
    25,031
    
    
    
    24,585Expected return on plan assets
    
    
    (6,256
    )
    
    
    (5,263
    )
    
    
    (18,611
    )
    
    
    (15,932
    )Amortization of:Prior service cost
    
    
    5
    
    
    
    
    
    
    
    14
    
    
    
    Actuarial loss
    
    
    (307
    )
    
    
    
    
    
    
    (898
    )
    
    
    Net periodic benefit cost
    
    $
    4,125
    
    
    $
    5,522
    
    
    $
    12,280
    
    
    $
    16,789
 Other Post-Retirement BenefitsFor the Three Months Ended
    
    
    For the Nine Months EndedDecember 31, 2006
    
    
    December 31, 2005
    
    
    December 31, 2006
    
    
    December 31, 2005Components of net periodic benefit cost:Service cost
    
    $
    42
    
    
    $
    25
    
    
    $
    126
    
    
    $
    75Interest cost
    
    
    390
    
    
    
    337
    
    
    
    1,169
    
    
    
    1,005Amortization of:Actuarial loss
    
    
    53
    
    
    
    
    
    
    
    159
    
    
    
    Net periodic benefit cost
    
    $
    485
    
    
    $
    362
    
    
    $
    1,454
    
    
    $
    1,080
     (12) ENVIRONMENTAL MATTERS
  (13) COMMITMENTS AND CONTINGENCIES
 Claims Reconciliation
 10




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Historical Federal Plea Agreement
     11




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Private Party Lawsuits and other Legal Proceedings
     12




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13




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Environmental Matters
   .
     14




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Tampa, Florida
  Columbus, Georgia
  Azambuja (SONALUR) Portugal
  Purchase Commitment
  Guarantees
   Sales Returns and Allowances
  15




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Balance at March 31, 2006
    
    $
    45,618Accrual for sales returns and allowances provided during the period
    
    
    37,126Settlements made (in cash or credit) during the period
    
    
    (36,720
    )Foreign currency translation
    
    
    1,565Balance at December 31, 2006
    
    $
    ,47,589
 (14) RESTRUCTURING
    Severance Costs
    
    
    Closure Costs
    
    
    TotalBalance at March 31, 2006
    
    $
    6,773
    
    
    $
    3,025
    
    
    $
    9,798Charges, Nine Months Ended December 31, 2006
    
    
    12,645
    
    
    
    9,577
    
    
    
    22,222Payments and foreign currency translation
    
    
    (17,508
    )
    
    
    (9,106
    )
    
    
    (26,614
    )Balance at December 31, 2006
    
    $
    1,910
    
    
    $
    3,496
    
    
    $
    5,406
  (15) NET LOSS PER SHARE
    16




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(16) RIGHTS OFFERING AND PRIVATE SALE OF COMMON STOCK
    (17) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
      17




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##### Table of Contents



(18) STOCK-BASED COMPENSATION PLANS
   Three Months
    
    
    Nine MonthsEnded
    
    
    EndedDecember
31, 2005
    
    
    December 31, 2005Net loss as reported
    
    $
    (27,658
    )
    
    $
    (96,390
    )Less: stock based compensation
expense determined under the fair
value based method
    
    
    (337
    )
    
    
    (810
    )Pro forma net loss
    
    $
    (27,995
    )
    
    $
    (97,200
    )Weighted average shares outstanding
    
    
    25,576
    
    
    
    25,576Basic and diluted net loss per share:As reported
    
    $
    (1.08
    )
    
    $
    (3.77
    )Pro forma
    
    $
    (1.11
    )
    
    $
    (3.86
    )
 (19) SEGMENT INFORMATION
    18




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19




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##### Table of Contents



For the Three Months Ended December 31, 2006Transportation
    
    IndustrialEurope
    
    
    
    
    
    EuropeNorth
    
    and
    
    North
    
    and
    
    OtherAmerica
    
    ROW
    
    America
    
    ROW
    
    (a)
    
    Consolidated(in thousands)Net sales
    
    $
    234,329
    
    
    $
    236,588
    
    
    $
    61,764
    
    
    $
    237,062
    
    
    
    
    
    
    $
    769,743Gross profit
    
    
    47,015
    
    
    
    27,593
    
    
    
    13,616
    
    
    
    41,481
    
    
    
    
    
    
    
    129,705Income (loss)
before
reorganization
items, income
taxes, and minority
interest
    
    
    17,098
    
    
    
    (8,128
    )
    
    
    5,760
    
    
    
    3,728
    
    
    
    (31,202
    )
    
    
    (12,744
    )
 For the Three Months Ended December 31, 2005Transportation
    
    IndustrialEurope
    
    
    
    
    
    EuropeNorth
    
    and
    
    North
    
    and
    
    OtherAmerica
    
    ROW
    
    America
    
    ROW
    
    (a)
    
    Consolidated(in thousands)Net sales
    
    $
    237,650
    
    
    $
    219,709
    
    
    $
    67,292
    
    
    $
    208,791
    
    
    
    
    
    
    $
    733,442Gross profit
    
    
    27,184
    
    
    
    33,646
    
    
    
    14,089
    
    
    
    43,914
    
    
    
    
    
    
    
    118,833Income (loss)
before
reorganization
items, income
taxes, and minority
interest
    
    
    3,741
    
    
    
    12,402
    
    
    
    (4,245
    )
    
    
    14,343
    
    
    
    (49,028
    )
    
    
    (22,787
    )
 For the Nine Months Ended December 31, 2006Transportation
    
    IndustrialEurope
    
    
    
    
    
    EuropeNorth
    
    and
    
    North
    
    and
    
    OtherAmerica
    
    ROW
    
    America
    
    ROW
    
    (a)
    
    Consolidated(in thousands)Net sales
    
    $
    676,550
    
    
    $
    606,277
    
    
    $
    199,684
    
    
    
    650,721
    
    
    
    
    
    
    $
    2,133,232Gross profit
    
    
    116,632
    
    
    
    68,595
    
    
    
    45,272
    
    
    
    114,286
    
    
    
    
    
    
    
    344,785Income (loss)
before
reorganization
items, income
taxes, and minority
interest
    
    
    18,109
    
    
    
    (21,464
    )
    
    
    18,563
    
    
    
    6,245
    
    
    
    (99,516
    )
    
    
    (78,063
    )
 For the Nine Months Ended December 31, 2005Transportation
    
    IndustrialEurope
    
    
    
    
    
    EuropeNorth
    
    and
    
    North
    
    and
    
    OtherAmerica
    
    ROW
    
    America
    
    ROW
    
    (a)
    
    Consolidated(in thousands)Net sales
    
    $
    681,799
    
    
    $
    587,054
    
    
    $
    207,770
    
    
    $
    612,636
    
    
    
    
    
    
    $
    2,089,259Gross profit
    
    
    86,580
    
    
    
    76,311
    
    
    
    41,140
    
    
    
    120,911
    
    
    
    
    
    
    
    324,942Income (loss)
before
reorganization
items, income
taxes, and minority
interest
    
    
    11,399
    
    
    
    15,226
    
    
    
    5,118
    
    
    
    31,341
    
    
    
    (152,432
    )
    
    
    (89,348
    )
 
 (a)
    
    Other includes unallocated corporate expenses, interest
expense, foreign currency remeasurement losses (gains), and
losses (gains) on revaluation of warrants. 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  20




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##### Table of Contents



Executive Overview
     Factors Which Affect the Companys Financial Performance
 Lead and other Raw Materials.
 Energy Costs.
 Competition
 21




---



##### Table of Contents



Exchange Rates
 Markets
 Seasonality and Weather.
  Interest Rates.
 Third Quarter of Fiscal 2007 Highlights and Outlook
      22




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##### Table of Contents



Critical Accounting Policies and Estimates
   Results of Operations
 Three months ended December 31, 2006 compared with three months ended December 31, 2005
 Overview
  Net Sales
  23




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FAVORABLE (UNFAVORABLE)For the Three Months Ended
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencyDecember 31, 2006
    
    
    December 31, 2005
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationNorth America
    
    $
    234,329
    
    
    $
    237,650
    
    
    $
    (3,321
    )
    
    
    
    
    
    $
    (3,321
    )Europe & ROW
    
    
    236,588
    
    
    
    219,709
    
    
    
    16,879
    
    
    
    17,500
    
    
    
    (621
    )470,917
    
    
    
    457,359
    
    
    
    13,558
    
    
    
    17,500
    
    
    
    (3,942
    )Industrial EnergyNorth America
    
    
    61,764
    
    
    
    67,292
    
    
    
    (5,528
    )
    
    
    
    
    
    
    (5,528
    )Europe & ROW
    
    
    237,062
    
    
    
    208,791
    
    
    
    28,271
    
    
    
    17,364
    
    
    
    10,907298,826
    
    
    
    276,083
    
    
    
    22,743
    
    
    
    17,364
    
    
    
    5,379TOTAL
    
    $
    769,743
    
    
    $
    733,442
    
    
    $
    36,301
    
    
    $
    34,864
    
    
    $
    1,437
     Gross Profit
  24




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##### Table of Contents



For the Three Months Ended
    
    
    For the Three Months EndedDecember 31, 2006
    
    
    December 31, 2005
    
    
    FAVORABLE (UNFAVORABLE)Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencyTOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationNorth America
    
    $
    47,015
    
    
    
    20.1
    %
    
    $
    27,184
    
    
    
    11.4
    %
    
    $
    19,831
    
    
    
    
    
    
    $
    19,831Europe & ROW
    
    
    27,593
    
    
    
    11.7
    %
    
    
    33,646
    
    
    
    15.3
    %
    
    
    (6,053
    )
    
    
    1,953
    
    
    
    (8,006
    )74,608
    
    
    
    15.8
    %
    
    
    60,830
    
    
    
    13.3
    %
    
    
    13,778
    
    
    
    1,953
    
    
    
    11,825Industrial EnergyNorth America
    
    
    13,616
    
    
    
    22.0
    %
    
    
    14,089
    
    
    
    20.9
    %
    
    
    (473
    )
    
    
    
    
    
    
    (473
    )Europe & ROW
    
    
    41,481
    
    
    
    17.5
    %
    
    
    43,914
    
    
    
    21.0
    %
    
    
    (2,433
    )
    
    
    2,891
    
    
    
    (5,324
    )55,097
    
    
    
    18.4
    %
    
    
    58,003
    
    
    
    21.0
    %
    
    
    (2,906
    )
    
    
    2,891
    
    
    
    (5,797
    )TOTAL
    
    $
    129,705
    
    
    
    16.9
    %
    
    $
    118,833
    
    
    
    16.2
    %
    
    $
    10,872
    
    
    $
    4,844
    
    
    $
    6,028
     Expenses
  25




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FAVORABLE (UNFAVORABLE)For the Three Months Ended
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencyDecember 31, 2006
    
    
    December 31, 2005
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationNorth America
    
    $
    29,917
    
    
    $
    23,443
    
    
    $
    (6,474
    )
    
    
    
    
    
    $
    (6,474
    )Europe & ROW
    
    
    35,721
    
    
    
    21,244
    
    
    
    (14,477
    )
    
    
    (2,825
    )
    
    
    (11,652
    )65,638
    
    
    
    44,687
    
    
    
    (20,951
    )
    
    
    (2,825
    )
    
    
    (18,126
    )Industrial EnergyNorth America
    
    
    7,856
    
    
    
    18,334
    
    
    
    10,478
    
    
    
    
    
    
    
    10,478Europe & ROW
    
    
    37,753
    
    
    
    29,571
    
    
    
    (8,182
    )
    
    
    (2,768
    )
    
    
    (5,414
    )45,609
    
    
    
    47,905
    
    
    
    2,296
    
    
    
    (2,768
    )
    
    
    5,064Unallocated
corporate expenses
    
    
    31,202
    
    
    
    49,028
    
    
    
    17,826
    
    
    
    (1,082
    )
    
    
    18,908TOTAL
    
    $
    142,449
    
    
    $
    141,620
    
    
    $
    (829
    )
    
    $
    (6,675
    )
    
    $
    5,846
      Loss before reorganization items, income taxes, and minority interest
  26




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##### Table of Contents



For the Three Months Ended
    
    
    For the Three Months EndedDecember 31, 2006
    
    
    December 31, 2005Percent of
    
    
    
    
    
    
    Percent of
    
    
    FAVORABLE/TOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Net Sales
    
    
    (UNFAVORABLE)(in thousands)TransportationNorth America
    
    $
    17,098
    
    
    
    7.3
    %
    
    $
    3,741
    
    
    
    1.6
    %
    
    $
    13,357Europe & ROW
    
    
    (8,128
    )
    
    
    -3.4
    %
    
    
    12,402
    
    
    
    5.6
    %
    
    
    (20,530
    )8,970
    
    
    
    1.9
    %
    
    
    16,143
    
    
    
    3.5
    %
    
    
    (7,173
    )Industrial EnergyNorth America
    
    
    5,760
    
    
    
    9.3
    %
    
    
    (4,245
    )
    
    
    -6.3
    %
    
    
    10,005Europe & ROW
    
    
    3,728
    
    
    
    1.6
    %
    
    
    14,343
    
    
    
    6.9
    %
    
    
    (10,615
    )9,488
    
    
    
    3.2
    %
    
    
    10,098
    
    
    
    3.7
    %
    
    
    (610
    )Other
    
    
    (31,202
    )
    
    
    n/a
    
    
    
    (49,028
    )
    
    
    n/a
    
    
    
    17,826TOTAL
    
    $
    (12,744
    )
    
    
    -1.7
    %
    
    $
    (22,787
    )
    
    
    -3.1
    %
    
    $
    10,043
 Reorganization items
  Income Taxes
  Nine months ended December 31, 2006 compared with nine months ended December 31, 2005
 Overview
  Net Sales
  27




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##### Table of Contents



FAVORABLE (UNFAVORABLE)For the Nine Months Ended
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencyDecember 31, 2006
    
    
    December 31, 2005
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationNorth America
    
    $
    676,550
    
    
    $
    681,799
    
    
    $
    (5,249
    )
    
    
    
    
    
    $
    (5,249
    )Europe & ROW
    
    
    606,277
    
    
    
    587,054
    
    
    
    19,223
    
    
    
    24,177
    
    
    
    (4,954
    )1,282,827
    
    
    
    1,268,853
    
    
    
    13,974
    
    
    
    24,177
    
    
    
    (10,203
    )Industrial EnergyNorth America
    
    
    199,684
    
    
    
    207,770
    
    
    
    (8,086
    )
    
    
    
    
    
    
    (8,086
    )Europe & ROW
    
    
    650,721
    
    
    
    612,636
    
    
    
    38,085
    
    
    
    24,727
    
    
    
    13,358850,405
    
    
    
    820,406
    
    
    
    29,999
    
    
    
    24,727
    
    
    
    5,272TOTAL
    
    $
    2,133,232
    
    
    $
    2,089,259
    
    
    $
    43,973
    
    
    $
    48,904
    
    
    $
    (4,931
    )
     Gross Profit
  For the Nine Months Ended
    
    
    For the Nine Months EndedDecember 31, 2006
    
    
    December 31, 2005
    
    
    FAVORABLE (UNFAVORABLE)Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencyTOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationNorth America
    
    $
    116,632
    
    
    
    17.2
    %
    
    $
    86,580
    
    
    
    12.7
    %
    
    $
    30,052
    
    
    
    
    
    
    $
    30,052Europe & ROW
    
    
    68,595
    
    
    
    11.3
    %
    
    
    76,311
    
    
    
    13.0
    %
    
    
    (7,716
    )
    
    
    2,720
    
    
    
    (10,436
    )185,227
    
    
    
    14.4
    %
    
    
    162,891
    
    
    
    12.8
    %
    
    
    22,336
    
    
    
    2,720
    
    
    
    19,616Industrial EnergyNorth America
    
    
    45,272
    
    
    
    22.7
    %
    
    
    41,140
    
    
    
    19.8
    %
    
    
    4,132
    
    
    
    
    
    
    
    4,132Europe & ROW
    
    
    114,286
    
    
    
    17.6
    %
    
    
    120,911
    
    
    
    19.7
    %
    
    
    (6,625
    )
    
    
    4,081
    
    
    
    (10,706
    )159,558
    
    
    
    18.8
    %
    
    
    162,051
    
    
    
    19.8
    %
    
    
    (2,493
    )
    
    
    4,081
    
    
    
    (6,574
    )TOTAL
    
    $
    344,785
    
    
    
    16.2
    %
    
    $
    324,942
    
    
    
    15.6
    %
    
    $
    19,843
    
    
    $
    6,801
    
    
    $
    13,042
 28




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##### Table of Contents



Expenses
  FAVORABLE (UNFAVORABLE)For the Nine Months Ended
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencyDecember 31, 2006
    
    
    December 31, 2005
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationNorth America
    
    $
    98,523
    
    
    $
    75,181
    
    
    $
    (23,342
    )
    
    
    
    
    
    $
    (23,342
    )Europe & ROW
    
    
    90,059
    
    
    
    61,085
    
    
    
    (28,974
    )
    
    
    (3,757
    )
    
    
    (25,217
    )188,582
    
    
    
    136,266
    
    
    
    (52,316
    )
    
    
    (3,757
    )
    
    
    (48,559
    )Industrial EnergyNorth America
    
    
    26,709
    
    
    
    36,022
    
    
    
    9,313
    
    
    
    
    
    
    
    9,313Europe & ROW
    
    
    108,041
    
    
    
    89,570
    
    
    
    (18,471
    )
    
    
    (4,066
    )
    
    
    (14,405
    )134,750
    
    
    
    125,592
    
    
    
    (9,158
    )
    
    
    (4,066
    )
    
    
    (5,092
    )Unallocated
corporate expenses
    
    
    99,516
    
    
    
    152,432
    
    
    
    52,916
    
    
    
    (1,952
    )
    
    
    54,868TOTAL
    
    $
    422,848
    
    
    $
    414,290
    
    
    $
    (8,558
    )
    
    $
    (9,775
    )
    
    $
    1,217
   29




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##### Table of Contents



Loss before reorganization items, income taxes, and minority interest
  For the Nine Months Ended
    
    
    For the Nine Months EndedDecember 31, 2006
    
    
    December 31, 2005Percent of
    
    
    
    
    
    
    Percent of
    
    
    FAVORABLE/TOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Net Sales
    
    
    (UNFAVORABLE)(in thousands)TransportationNorth America
    
    $
    18,109
    
    
    
    2.7
    %
    
    $
    11,399
    
    
    
    1.7
    %
    
    $
    6,710Europe & ROW
    
    
    (21,464
    )
    
    
    -3.5
    %
    
    
    15,226
    
    
    
    2.6
    %
    
    
    (36,690
    )(3,355
    )
    
    
    -0.3
    %
    
    
    26,625
    
    
    
    2.1
    %
    
    
    (29,980
    )Industrial EnergyNorth America
    
    
    18,563
    
    
    
    9.3
    %
    
    
    5,118
    
    
    
    2.5
    %
    
    
    13,445Europe & ROW
    
    
    6,245
    
    
    
    1.0
    %
    
    
    31,341
    
    
    
    5.1
    %
    
    
    (25,096
    )24,808
    
    
    
    2.9
    %
    
    
    36,459
    
    
    
    4.4
    %
    
    
    (11,651
    )Other
    
    
    (99,516
    )
    
    
    n/a
    
    
    
    (152,432
    )
    
    
    n/a
    
    
    
    52,916TOTAL
    
    $
    (78,063
    )
    
    
    -3.7
    %
    
    $
    (89,348
    )
    
    
    -4.3
    %
    
    $
    11,285
 Reorganization items
  Income Taxes
  30




---



##### Table of Contents



Liquidity and Capital Resources
        31




---



##### Table of Contents



Sources Of Cash
      32




---



##### Table of Contents



Uses Of Cash
          Purchase Commitment
  33




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##### Table of Contents



Financial Instruments and Market Risk
   Accounts Receivable Factoring Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risks
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
    34




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##### Table of Contents



Changes in Internal Control Over Financial Reporting
   
    
    A lack of sufficient resources in our accounting and finance organization;
    
    Controls over the completeness, accuracy, and valuation of certain inventories;
    
    Controls over accounting for investments in affiliates;
    
    Controls over accounting for income taxes; and
    
    Effective segregation of duties.
   
    
    Several corporate level accounting and finance review practices have been implemented to
improve oversight into regional accounting issues, including more adequate global review of
balance sheet accounts requiring judgment and estimates;
    
    Hiring additional accounting and audit personnel to focus on our ongoing remediation initiatives and compliance efforts;
    
    Ensuring our inventory controls operate as designed;
    
    Ensuring our controls over investments in affiliates operate as designed;
    
    Engaging expert resources to assist with worldwide tax planning and compliance; and
    
    Re-allocating and/or relocating duties of accounting and finance personnel to enhance segregation of duties.
    
    Completion of the following relating to managements assessment of the adequacy of the
Companys internal controls over financial reporting for its fiscal year 2007:
 
    
    Management believes it has remediated substantially all deficiencies
identified during its fiscal 2006 evaluation process.
    
    Management completed an update of the Companys FY2007 process documentation,
which included the performance of walk-throughs of key processes to confirm and validate
process flows and key controls were adequately documented.
    
    During the period October, 2006 through mid-January, 2007, the Company
completed initial management testing of all of the Companys key controls. Deficiencies
identified by management have been reviewed and assessed by a Deficiency Control Team
consisting of the Senior VP and Corporate Controller, the VP Internal Audit and the
respective global and European Directors of Controls and Compliance. As a result of the
assessment, management does not believe any of the deficiencies would give rise to
material errors in the financial statements. Noted deficiencies are being remediated as
identified, and such deficiencies are planned to be remediated in the fourth fiscal
quarter.
  35




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##### Table of Contents



CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR
PROVISION OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
     
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  The Company has experienced significant increases in raw material prices, particularly lead, and
further changes in the prices of raw materials or in energy costs could have a material adverse
impact on the Company.
  36




---



##### Table of Contents



Other Risk Factors
  
    
    The going concern modification received from the Companys independent registered public
accounting firm could cause adverse reactions from the Companys creditors, vendors,
customers and others.
    
    The Company is subject to a preliminary SEC inquiry.
    
    The Company is subject to fluctuations in exchange rates and other risks associated with
its non-U.S. operations which could adversely affect the Companys results of operations.
    
    The Companys liquidity is affected by the seasonality of its business. Warm winters and
cool summers adversely affect the Company.
    
    Decreased demand in the industries in which the Company operates may adversely affect
its business.
    
    The loss of the Companys sole supplier of polyethylene battery separators would have a
material adverse effect on the Companys business.
    
    Many of the industries in which the Company operates are cyclical.
    
    The Company is subject to pricing pressure from its larger customers.
    
    The Company faces increasing competition and pricing pressure from other companies in
its industries, and if the Company is unable to compete effectively with these competitors,
the Companys sales and profitability could be adversely affected.
    
    If the Company is not able to develop new products or improve upon its existing products
on a timely basis, the Companys business and financial condition could be adversely
affected.
    
    The Company may be adversely affected by the instability and uncertainty in the world
financial markets and the global economy, including the effects of turmoil in the Middle
East.
    
    The Company may be unable to successfully implement its business strategy, which could
adversely affect its results of operations and financial condition.
    
    The Company is subject to costly regulation in relation to environmental, health and
safety matters, which could adversely affect its business and results of operations.
    
    The EPA or state environmental agencies could take the position that the Company has
liability under environmental laws that were not discharged in bankruptcy. To the extent
these authorities are successful in disputing the pre-petition nature of these claims, the
Company could be required to perform remedial work that has not yet been performed for
alleged pre-petition contamination, which would have a material adverse effect on the
Companys financial condition, cash flows or results of operations.
    
    The Company may be adversely affected by legal proceedings to which the Company is, or
may become, a party.
    
    The Companys ability to operate its business effectively could be impaired if the
Company fails to attract and retain experienced key personnel.
    
    Work stoppages or other labor issues at the Companys facilities or its customers or
suppliers facilities could adversely affect the Companys operations.
    
    The Companys substantial indebtedness could adversely affect its financial condition.
    
    The Companys internal control over financial reporting was not effective as of March 31, 2006.
    
    Restrictive covenants restrict the Companys ability to operate its business and to
pursue the Companys business strategies, and its failure to comply with these covenants
could result in an acceleration of its indebtedness.
    
    The Company has large pension contributions required over the next several years.
    
    Holders of the Companys common stock are subject to the risk of dilution of their
investment as the result of the issuance of additional shares of common stock and warrants
to purchase common stock to holders of pre-petition claims to the extent the reserve of
common stock and warrants established to satisfy such claims is insufficient.
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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 10.1
    
    Compromise Agreement between CMP Batteries Limited (a subsidiary of
Exide Technologies) and Neil Bright, incorporated by reference to
Exhibit 10.1 to the Report on Form 8-K dated November 6, 2006.* 31.1
    
    Certification of Gordon Ulsh, President and Chief Executive Officer,
pursuant to Section 302 of Sarbanes-Oxley Act of 2002.* 31.2
    
    Certification of Francis M. Corby, Jr., Executive Vice President and
Chief Financial Officer, pursuant to Section 302 of Sarbanes-Oxley
Act of 2002.* 32
    
    Certifications pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
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##### Table of Contents



SIGNATURES
  EXIDE TECHNOLOGIESBy:
    
    /S/ Francis M. Corby, Jr.Francis M. Corby, Jr.Executive Vice President andChief Financial OfficerDate: February 7, 2007
 39