##### 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, 2007
 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 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 AND
NINE MONTH PERIODS ENDED DECEMBER 31, 2007 AND 2006
    
    
    3CONDENSED CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2007 AND
MARCH 31, 2007
    
    
    4CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS
ENDED DECEMBER 31, 2007 AND 2006
    
    
    5NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    
    
    6Item 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
    
    
    19Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    31Item 4 CONTROLS AND PROCEDURES
    
    
    31PART II. OTHER INFORMATION
    
    
    33Item 1. LEGAL PROCEEDINGS
    
    
    33Item 1A. RISK FACTORS
    
    
    33Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    33Item 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    33Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    33Item 5. OTHER INFORMATION
    
    
    33Item 6. EXHIBITS
    
    
    33SIGNATURES
    
    
    34EX-31.1 CERTIFICATION OF GORDON A. ULSH, PRESIDENT AND CEOEX-31.2 CERTIFICATION OF FRANCIS M. CORBY JR., EXECUTIVE VICE PRESIDENT AND CFOEX-32 CERTIFICATIONS PURSUANT TO SECTION 906
  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, 2007
    
    
    December 31, 2006
    
    
    December 31, 2007
    
    
    December 31, 2006NET SALES
    
    $
    1,042,047
    
    
    $
    769,743
    
    
    $
    2,666,377
    
    
    $
    2,133,232COST OF SALES
    
    
    876,214
    
    
    
    640,038
    
    
    
    2,251,527
    
    
    
    1,788,447Gross profit
    
    
    165,833
    
    
    
    129,705
    
    
    
    414,850
    
    
    
    344,785EXPENSES:Selling, marketing and
advertising
    
    
    76,435
    
    
    
    67,336
    
    
    
    213,068
    
    
    
    201,786General and administrative
    
    
    43,623
    
    
    
    42,263
    
    
    
    126,893
    
    
    
    124,650Restructuring
    
    
    1,652
    
    
    
    6,299
    
    
    
    6,334
    
    
    
    22,222Other (income) expense, net
    
    
    (6,446
    )
    
    
    3,737
    
    
    
    (20,507
    )
    
    
    6,448Interest expense, net
    
    
    21,697
    
    
    
    22,814
    
    
    
    64,320
    
    
    
    67,742Loss on early
extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    21,342
    
    
    
    136,961
    
    
    
    142,449
    
    
    
    411,450
    
    
    
    422,848Income
(loss) before reorganization items, income taxes, and
minority interest
    
    
    28,872
    
    
    
    (12,744
    )
    
    
    3,400
    
    
    
    (78,063
    )REORGANIZATION ITEMS, NET
    
    
    1,202
    
    
    
    1,213
    
    
    
    2,412
    
    
    
    3,784INCOME TAX PROVISION
(BENEFIT)
    
    
    7,947
    
    
    
    (2,947
    )
    
    
    30,859
    
    
    
    1,924MINORITY INTEREST
    
    
    414
    
    
    
    234
    
    
    
    1,332
    
    
    
    478Net income (loss)
    
    $
    19,309
    
    
    $
    (11,244
    )
    
    $
    (31,203
    )
    
    $
    (84,249
    )EARNINGS (LOSS) PER SHAREBasic
    
    $
    0.26
    
    
    $
    (0.18
    )
    
    $
    (0.47
    )
    
    $
    (2.15
    )Diluted
    
    $
    0.25
    
    
    $
    (0.18
    )
    
    $
    (0.47
    )
    
    $
    (2.15
    )WEIGHTED AVERAGE SHARESBasic
    
    
    75,088
    
    
    
    61,167
    
    
    
    66,043
    
    
    
    39,157Diluted
    
    
    79,655
    
    
    
    61,167
    
    
    
    66,043
    
    
    
    39,157
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EXIDE TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per-share data)
 December 31, 2007
    
    
    March 31, 2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    71,172
    
    
    $
    76,211Receivables, net of allowance for doubtful accounts of $34,720 and $28,624
    
    
    762,477
    
    
    
    639,115Inventories
    
    
    590,994
    
    
    
    411,554Prepaid expenses and other
    
    
    19,461
    
    
    
    20,224Deferred financing costs, net
    
    
    5,017
    
    
    
    3,411Deferred income taxes
    
    
    27,987
    
    
    
    19,030Total current assets
    
    
    1,477,108
    
    
    
    1,169,545Property, plant and equipment, net
    
    
    650,521
    
    
    
    649,015Other assets:Other intangibles, net
    
    
    198,920
    
    
    
    191,762Investments in affiliates
    
    
    6,535
    
    
    
    5,282Deferred financing costs, net
    
    
    18,725
    
    
    
    12,908Deferred income taxes
    
    
    52,909
    
    
    
    67,006Other
    
    
    21,520
    
    
    
    24,706Total other assets
    
    
    298,609
    
    
    
    301,664Total assets
    
    $
    2,426,238
    
    
    $
    2,120,224LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Short-term borrowings
    
    $
    19,681
    
    
    $
    13,951Current maturities of long-term debt
    
    
    9,482
    
    
    
    3,996Accounts payable
    
    
    439,365
    
    
    
    360,278Accrued expenses
    
    
    341,690
    
    
    
    299,157Warrants liability
    
    
    4,103
    
    
    
    5,297Total current liabilities
    
    
    814,321
    
    
    
    682,679Long-term debt
    
    
    737,060
    
    
    
    666,507Noncurrent retirement obligations
    
    
    246,583
    
    
    
    263,290Deferred income tax liability
    
    
    49,066
    
    
    
    41,232Other noncurrent liabilities
    
    
    141,828
    
    
    
    121,433Total liabilities
    
    
    1,988,858
    
    
    
    1,775,141Commitments and contingencies (Note 10)Minority interest
    
    
    17,247
    
    
    
    14,560STOCKHOLDERS EQUITYPreferred stock, $0.01 par value, 1,000 shares authorized, 0 shares issued and
outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value, 200,000 and 100,000 shares authorized, 75,237 and
60,676 shares issued and outstanding
    
    
    752
    
    
    
    607Additional paid-in capital
    
    
    1,103,456
    
    
    
    1,008,481Accumulated deficit
    
    
    (780,923
    )
    
    
    (745,534
    )Accumulated other comprehensive income
    
    
    96,848
    
    
    
    66,969Total stockholders equity
    
    
    420,133
    
    
    
    330,523Total liabilities and stockholders equity
    
    $
    2,426,238
    
    
    $
    2,120,224
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EXIDE TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 For the Nine Months EndedDecember 31, 2007
    
    
    December 31, 2006Cash Flows From Operating Activities:Net loss
    
    $
    (31,203
    )
    
    $
    (84,249
    )Adjustments to reconcile net loss to net cash used in
operating activitiesDepreciation and amortization
    
    
    75,338
    
    
    
    90,152Unrealized (gain) loss on warrants
    
    
    (1,194
    )
    
    
    585Net loss on asset sales / impairments
    
    
    151
    
    
    
    16,699Deferred income taxes
    
    
    14,257
    
    
    
    (879
    )Provision for doubtful accounts
    
    
    6,591
    
    
    
    6,749Non-cash stock compensation
    
    
    4,091
    
    
    
    1,814Reorganization items, net
    
    
    2,412
    
    
    
    3,784Minority interest
    
    
    1,332
    
    
    
    478Amortization of deferred financing costs
    
    
    3,585
    
    
    
    2,535Loss on early extinguishment of debt
    
    
    21,342
    
    
    
    Changes in assets and liabilities Receivables
    
    
    (81,989
    )
    
    
    28,573Inventories
    
    
    (147,115
    )
    
    
    (12,670
    )Prepaid expenses and other
    
    
    1,641
    
    
    
    (8,898
    )Payables
    
    
    53,220
    
    
    
    (23,863
    )Accrued expenses
    
    
    34,335
    
    
    
    3,143Noncurrent liabilities
    
    
    (31,574
    )
    
    
    (47,679
    )Other, net
    
    
    (19,042
    )
    
    
    (11,326
    )Net cash used in operating activities
    
    
    (93,822
    )
    
    
    (35,052
    )Cash Flows From Investing Activities:Capital expenditures
    
    
    (39,285
    )
    
    
    (28,978
    )Proceeds from sales of assets
    
    
    3,685
    
    
    
    3,385Net cash used in investing activities
    
    
    (35,600
    )
    
    
    (25,593
    )Cash Flows From Financing Activities:Increase in short-term borrowings
    
    
    3,419
    
    
    
    3,106Increase
(decrease) in borrowings under Senior Secured Credit Facility

    
    50,856
    
    
    
    (27,654
    )Increase (decrease) in other debt
    
    
    7,721
    
    
    
    (2,441
    )Financing costs and other
    
    
    (31,736
    )
    
    
    Net proceeds from rights offerings and private equity sale
    
    
    90,998
    
    
    
    117,871Net cash provided by financing activities
    
    
    121,258
    
    
    
    90,882Effect of Exchange Rate Changes on Cash and Cash Equivalents
    
    
    3,125
    
    
    
    2,212Net (Decrease) Increase In Cash and Cash Equivalents
    
    
    (5,039
    )
    
    
    32,449Cash and Cash Equivalents, Beginning of Period
    
    
    76,211
    
    
    
    32,161Cash and Cash Equivalents, End of Period
    
    $
    71,172
    
    
    $
    64,610Supplemental Disclosures of Cash Flow Information:Cash paid
during the period Interest
    
    $
    41,635
    
    
    $
    45,709Income taxes (net of refunds)
    
    $
    12,763
    
    
    $
    6,973
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EXIDE TECHNOLOGIES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Unaudited)
 (1) BASIS OF PRESENTATION
   (2) COMPREHENSIVE INCOME (LOSS)
  For the Three Months Ended
    
    
    For the Nine Months EndedDecember 31, 2007
    
    
    December 31, 2006
    
    
    December 31, 2007
    
    
    December 31, 2006(In thousands)Net income (loss)
    
    $
    19,309
    
    
    $
    (11,244
    )
    
    $
    (31,203
    )
    
    $
    (84,249
    )Additions and changes to pension liability
    
    
    (1,015
    )
    
    
    (578
    )
    
    
    (2,680
    )
    
    
    (868
    )Change in cumulative translation adjustment
    
    
    5,612
    
    
    
    18,166
    
    
    
    32,559
    
    
    
    40,188Total comprehensive income (loss)
    
    $
    23,906
    
    
    $
    6,344
    
    
    $
    (1,324
    )
    
    $
    (44,929
    )
 (3) INTANGIBLE ASSETS
  Trademarks andTradenames (not
    
    
    Trademarks andsubject to
    
    
    Tradenames (subject
    
    
    Customeramortization)
    
    
    to amortization)
    
    
    relationships
    
    
    Technology
    
    
    Total(In thousands)As of December 31, 2007:Gross Amount
    
    $
    64,078
    
    
    $
    14,575
    
    
    $
    120,872
    
    
    $
    27,051
    
    
    $
    226,576Accumulated Amortization
    
    
    
    
    
    
    (4,221
    )
    
    
    (18,516
    )
    
    
    (4,919
    )
    
    
    (27,656
    )Net
    
    $
    64,078
    
    
    $
    10,354
    
    
    $
    102,356
    
    
    $
    22,132
    
    
    $
    198,920As of March 31, 2007:Gross Amount
    
    $
    60,056
    
    
    $
    13,660
    
    
    $
    113,361
    
    
    $
    25,354
    
    
    $
    212,431Accumulated Amortization
    
    
    
    
    
    
    (3,147
    )
    
    
    (13,855
    )
    
    
    (3,667
    )
    
    
    (20,669
    )Net
    
    $
    60,056
    
    
    $
    10,513
    
    
    $
    99,506
    
    
    $
    21,687
    
    
    $
    191,762
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(4) INVENTORIES
  December 31, 2007
    
    
    March 31, 2007(In thousands)Raw materials
    
    $
    74,656
    
    
    $
    53,337Work-in-process
    
    
    126,782
    
    
    
    89,339Finished goods
    
    
    389,556
    
    
    
    268,878$
    590,994
    
    
    $
    411,554
 (5) OTHER ASSETS
  December 31, 2007
    
    
    March 31, 2007(In thousands)Deposits (a)
    
    $
    11,994
    
    
    $
    15,596Capitalized software, net
    
    
    3,168
    
    
    
    2,495Loan to affiliate
    
    
    2,805
    
    
    
    3,702Other
    
    
    3,553
    
    
    
    2,913$
    21,520
    
    
    $
    24,706
 
 (a)
    
    Deposits principally represent amounts held by beneficiaries as cash collateral for the
Companys contingent obligations with respect to certain environmental matters, workers
compensation insurance, and operating lease commitments. (6) DEBT
   December 31, 2007
    
    
    March 31, 2007(In thousands)Senior Secured Credit Facility
    
    $
    360,724
    
    
    $
    297,26310.5% 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%, due in installments through 2015
    
    
    35,818
    
    
    
    23,240Total
    
    
    746,542
    
    
    
    670,503Less  current maturities
    
    
    9,482
    
    
    
    3,996Total Long-Term Debt
    
    $
    737,060
    
    
    $
    666,507
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The Revolving Loan
    The Term Loan
     (7) INTEREST EXPENSE, NET
  8




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(8) OTHER (INCOME) EXPENSE, NET
  For the Three Months Ended
    
    
    For the Nine Months EndedDecember 31, 2007
    
    
    December 31, 2006
    
    
    December 31, 2007
    
    
    December 31, 2006(In thousands)Net loss on asset sales / impairments
    
    $
    48
    
    
    $
    9,727
    
    
    $
    151
    
    
    $
    16,699Equity (income) loss
    
    
    (246
    )
    
    
    129
    
    
    
    (554
    )
    
    
    (221
    )Currency remeasurement gain
    
    
    (6,113
    )
    
    
    (6,365
    )
    
    
    (18,230
    )
    
    
    (10,567
    )(Gain) loss on revaluation of warrants
(a)
    
    
    (3
    )
    
    
    1,324
    
    
    
    (1,194
    )
    
    
    585Other
    
    
    (132
    )
    
    
    (1,078
    )
    
    
    (680
    )
    
    
    (48
    )$
    (6,446
    )
    
    $
    3,737
    
    
    $
    (20,507
    )
    
    $
    6,448
 
 (a)
    
    The warrants entitle the holders to purchase up to approximately 6.7 million shares of
new common stock at an exercise price of $29.84 per share. The warrants are exercisable
through May 5, 2011. In accordance with Emerging Issues Task Force abstract (EITF) 00-19
and Statement of Financial Accounting Standards (SFAS) 150, the warrants have been
marked-to-market based upon quoted market prices. Future results of operations may be
subject to volatility from changes in the market value of such warrants. (9) EMPLOYEE BENEFITS
  Pension BenefitsFor the Three Months Ended
    
    
    For the Nine Months EndedDecember 31, 2007
    
    
    December 31, 2006
    
    
    December 31, 2007
    
    
    December 31, 2006(In thousands)Components of net periodic benefit cost:Service cost
    
    $
    1,402
    
    
    $
    2,273
    
    
    $
    4,024
    
    
    $
    6,744Interest cost
    
    
    9,169
    
    
    
    8,410
    
    
    
    26,887
    
    
    
    25,031Expected return on plan assets
    
    
    (7,578
    )
    
    
    (6,256
    )
    
    
    (22,174
    )
    
    
    (18,611
    )Amortization of:Prior service cost
    
    
    5
    
    
    
    5
    
    
    
    15
    
    
    
    14Actuarial gain
    
    
    (418
    )
    
    
    (307
    )
    
    
    (1,175
    )
    
    
    (898
    )Net periodic benefit cost
    
    $
    2,580
    
    
    $
    4,125
    
    
    $
    7,577
    
    
    $
    12,280
 Other Post-Retirement BenefitsFor the Three Months Ended
    
    
    For the Nine Months EndedDecember 31, 2007
    
    
    December 31, 2006
    
    
    December 31, 2007
    
    
    December 31, 2006(In thousands)Components of net periodic benefit cost:Service cost
    
    $
    51
    
    
    $
    42
    
    
    $
    148
    
    
    $
    126Interest cost
    
    
    377
    
    
    
    390
    
    
    
    1,123
    
    
    
    1,169Amortization of:Actuarial loss
    
    
    19
    
    
    
    53
    
    
    
    55
    
    
    
    159Net periodic benefit cost
    
    $
    447
    
    
    $
    485
    
    
    $
    1,326
    
    
    $
    1,454
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(10) COMMITMENTS AND CONTINGENCIES
 Claims Reconciliation
     10




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Private Party Lawsuits and other Legal Proceedings
       11




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Environmental Matters
   .
  12




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Tampa, Florida
  Columbus, Georgia
  Azambuja (SONALUR) Portugal
  Guarantees
  13




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Sales Returns and Allowances
   Balance at March 31, 2007
    
    $
    48,526Accrual for sales returns and allowances provided during the period
    
    
    46,706Settlements made (in cash or credit), and currency translation
during the period
    
    
    (40,328
    )Balance at December 31, 2007
    
    $
    54,904
 (11) INCOME TAXES
         14




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(12) RESTRUCTURING
    Severance Costs
    
    
    Closure Costs
    
    
    Total(In thousands)Balance at March 31, 2007
    
    $
    1,860
    
    
    $
    3,803
    
    
    $
    5,663Restructuring Charges
    
    
    2,914
    
    
    
    3,420
    
    
    
    6,334Payments and currency translation
    
    
    (3,249
    )
    
    
    (4,157
    )
    
    
    (7,406
    )Balance at December 31, 2007
    
    $
    1,525
    
    
    $
    3,066
    
    
    $
    4,591
  (13) EARNINGS (LOSS) PER SHARE
 Earnings Per
Share
 15




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##### Table of Contents



For the Three Months Ended
    
    
    For the Nine Months EndedDecember 31, 2007
    
    
    December 31, 2006
    
    
    December 31, 2007
    
    
    December 31, 2006(In thousands)Net income (loss)
    
    $
    19,309
    
    
    $
    (11,244
    )
    
    $
    (31,203
    )
    
    $
    (84,249
    )Interest expense on Floating Rate
Convertible Senior Subordinated Notes
    
    
    485
    
    
    
    
    
    
    
    
    
    
    
    $
    19,794
    
    
    $
    (11,244
    )
    
    $
    (31,203
    )
    
    $
    (84,249
    )Basic weighted average shares outstanding
    
    
    75,088
    
    
    
    61,167
    
    
    
    66,043
    
    
    
    39,157Effect of dilutive securities:Floating Rate Convertible Senior
Subordinated Notes
    
    
    3,697
    
    
    
    
    
    
    
    
    
    
    
    Employee stock options
    
    
    536
    
    
    
    
    
    
    
    
    
    
    
    Employee restricted stock awards
(non-vested)
    
    
    334
    
    
    
    
    
    
    
    
    
    
    
    4,567
    
    
    
    
    
    
    
    
    
    
    
    Diluted weighted average shares
outstanding
    
    
    79,655
    
    
    
    61,167
    
    
    
    66,043
    
    
    
    39,157Basic earnings (loss) per share:
    
    $
    0.26
    
    
    $
    (0.18
    )
    
    $
    (0.47
    )
    
    $
    (2.15
    )Diluted earnings (loss) per share:
    
    $
    0.25
    
    
    $
    (0.18
    )
    
    $
    (0.47
    )
    
    $
    (2.15
    )
     (14) RIGHTS OFFERING
   16




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##### Table of Contents



(15) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities, Including an Amendment of FASB Statement No. 115
 Noncontrolling Interests in Consolidated
Financial Statementsan amendment of ARB No. 51 Business Combinations
 (16) SEGMENT INFORMATION
     17




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##### Table of Contents



For the Three Months Ended December 31, 2007Transportation
    
    IndustrialEurope
    
    
    
    
    
    Europe
    
    OtherAmericas
    
    and ROW
    
    Americas
    
    and ROW
    
    (a)
    
    Consolidated(in thousands)Net sales
    
    $
    289,888
    
    
    $
    360,256
    
    
    $
    84,175
    
    
    $
    307,728
    
    
    
    
    
    
    $
    1,042,047Gross profit
    
    
    54,874
    
    
    
    47,654
    
    
    
    22,801
    
    
    
    40,504
    
    
    
    
    
    
    
    165,833Expenses
    
    
    32,615
    
    
    
    33,660
    
    
    
    9,021
    
    
    
    36,492
    
    
    
    25,173
    
    
    
    136,961Income (loss) before
reorganization items, income
taxes, and minority interest
    
    
    22,259
    
    
    
    13,994
    
    
    
    13,780
    
    
    
    4,012
    
    
    
    (25,173
    )
    
    
    28,872
 For the Three Months Ended December 31, 2006Transportation
    
    IndustrialEurope
    
    
    
    
    
    Europe
    
    OtherAmericas
    
    and ROW
    
    Americas
    
    and 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
    
    
    
    
    
    
    
    129,705Expenses
    
    
    29,917
    
    
    
    35,721
    
    
    
    7,856
    
    
    
    37,753
    
    
    
    31,202
    
    
    
    142,449Income (loss) before
reorganization items, income
taxes, and minority interest
    
    
    17,098
    
    
    
    (8,128
    )
    
    
    5,760
    
    
    
    3,728
    
    
    
    (31,202
    )
    
    
    (12,744
    )
 For the Nine Months Ended December 31, 2007Transportation
    
    IndustrialEurope
    
    
    
    
    
    Europe
    
    OtherAmericas
    
    and ROW
    
    Americas
    
    and ROW
    
    (a)
    
    Consolidated(in thousands)Net sales
    
    $
    816,685
    
    
    $
    829,536
    
    
    $
    222,445
    
    
    $
    797,711
    
    
    
    
    
    
    $
    2,666,377Gross profit
    
    
    152,118
    
    
    
    102,398
    
    
    
    57,619
    
    
    
    105,109
    
    
    
    (2,394
    )
    
    
    414,850Expenses
    
    
    96,188
    
    
    
    84,453
    
    
    
    28,278
    
    
    
    105,300
    
    
    
    97,231
    
    
    
    411,450Income (loss) before
reorganization items, income
taxes, and minority interest
    
    
    55,930
    
    
    
    17,945
    
    
    
    29,341
    
    
    
    (191
    )
    
    
    (99,625
    )
    
    
    3,400
 For the Nine Months Ended December 31, 2006Transportation
    
    IndustrialEurope
    
    
    
    
    
    Europe
    
    OtherAmericas
    
    and ROW
    
    Americas
    
    and 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
    
    
    
    
    
    
    
    344,785Expenses
    
    
    98,523
    
    
    
    90,059
    
    
    
    26,709
    
    
    
    108,041
    
    
    
    99,516
    
    
    
    422,848Income (loss) before
reorganization items, income
taxes, and minority interest
    
    
    18,109
    
    
    
    (21,464
    )
    
    
    18,563
    
    
    
    6,245
    
    
    
    (99,516
    )
    
    
    (78,063
    )
 
 (a)
    
    Other includes unallocated corporate expenses, interest expense,
currency remeasurement gain, and (gain) loss on revaluation of
warrants. In the nine months ended December 31, 2007, Other also
includes a $21.3 million loss on early extinguishment of debt and $2.4
million for additional estimated environmental remediation costs for a
previously closed facility. 18




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##### Table of Contents



Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
   Executive Overview
    Factors Which Affect the Companys Financial Performance
 Lead and other Raw Materials.
 Energy Costs.
 Competition
 Exchange Rates
  19




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##### Table of Contents



Markets
 Seasonality and Weather.
  Interest Rates.
 Third Quarter of Fiscal 2008 Highlights and Outlook
        20




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##### Table of Contents



Critical Accounting Policies and Estimates
   Results of Operations
 Three months ended December 31, 2007 compared with three months ended December 31, 2006
 Net Sales
  FAVORABLE (UNFAVORABLE)For the Three Months Ended
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencyDecember 31, 2007
    
    
    December 31, 2006
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationAmericas
    
    $
    289,888
    
    
    $
    234,329
    
    
    $
    55,559
    
    
    
    
    
    
    $
    55,559Europe & ROW
    
    
    360,256
    
    
    
    236,588
    
    
    
    123,668
    
    
    
    40,698
    
    
    
    82,970Industrial EnergyAmericas
    
    
    84,175
    
    
    
    61,764
    
    
    
    22,411
    
    
    
    
    
    
    
    22,411Europe & ROW
    
    
    307,728
    
    
    
    237,062
    
    
    
    70,666
    
    
    
    34,555
    
    
    
    36,111TOTAL
    
    $
    1,042,047
    
    
    $
    769,743
    
    
    $
    272,304
    
    
    $
    75,253
    
    
    $
    197,051
   21




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##### Table of Contents



Gross Profit
  For
the Three Months EndedDecember 31, 2007
    
    
    December 31, 2006
    
    
    FAVORABLE (UNFAVORABLE)Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencyTOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationAmericas
    
    $
    54,874
    
    
    
    18.9
    %
    
    $
    47,015
    
    
    
    20.1
    %
    
    $
    7,859
    
    
    
    
    
    
    $
    7,859Europe & ROW
    
    
    47,654
    
    
    
    13.2
    %
    
    
    27,593
    
    
    
    11.7
    %
    
    
    20,061
    
    
    
    5,476
    
    
    
    14,585Industrial EnergyAmericas
    
    
    22,801
    
    
    
    27.1
    %
    
    
    13,616
    
    
    
    22.0
    %
    
    
    9,185
    
    
    
    
    
    
    
    9,185Europe & ROW
    
    
    40,504
    
    
    
    13.2
    %
    
    
    41,481
    
    
    
    17.5
    %
    
    
    (977
    )
    
    
    4,551
    
    
    
    (5,528
    )TOTAL
    
    $
    165,833
    
    
    
    15.9
    %
    
    $
    129,705
    
    
    
    16.9
    %
    
    $
    36,128
    
    
    $
    10,027
    
    
    $
    26,101
     Expenses
  
    
    Selling, marketing, and advertising expenses increased by $9.1 million, to $76.4 million
in the third quarter of fiscal 2008 from $67.3 million in the third quarter of fiscal 2007
due primarily to incremental marketing spending designed to attract future growth, combined
with increased commissions resulting from higher sales and the unfavorable impact of
stronger foreign currencies. The Company also increased its provision for bad debts by
approximately $1.8 million in part due to a
 22




---



##### Table of Contents



bankruptcy filing of one of its larger
automotive aftermarket accounts in Europe.
    
    General and administrative expenses increased by $1.4 million, to $43.6 million in the
third quarter of fiscal 2008 from $42.2 million in the third quarter of fiscal 2007. The
increase results from currency translation and non-cash stock compensation expenses which
increased by $0.7 million to $1.4 million in the third quarter of fiscal 2008.
    
    Restructuring expenses decreased by $4.7 million, to $1.6 million in the third quarter
of fiscal 2008 from $6.3 million in the third quarter of fiscal 2007. This change is due to
an overall decrease in the level of restructuring activities throughout the Company in
fiscal 2008.
    
    Other (income) expense was ($6.5) million in the third quarter of fiscal 2008 versus
$3.7 million in the third quarter of fiscal 2007. The increase is primarily due to the
prior year recognition of a loss on asset sales and impairments including a $9.2 million
fixed asset impairment charge related to a former manufacturing facility held for sale.
    
    Interest Expense decreased $1.1 million, to $21.7 million in the third quarter of fiscal
2008 from $22.8 million in the third quarter of fiscal 2007 primarily due to the favorable
impact of lower interest rates under the Companys new Credit Agreement, offset by higher
borrowing required to fund incremental working capital caused by significantly higher lead
costs. See Note 6 to the Condensed Financial Statements.
    
    Foreign currency translation unfavorably impacted expenses by $9.5 million in the third
quarter of fiscal 2008.
 FAVORABLE (UNFAVORABLE)For the Three Months Ended
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencyDecember 31, 2007
    
    
    December 31, 2006
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationAmericas
    
    $
    32,615
    
    
    $
    29,917
    
    
    $
    (2,698
    )
    
    
    
    
    
    $
    (2,698
    )Europe & ROW
    
    
    33,660
    
    
    
    35,721
    
    
    
    2,061
    
    
    
    (3,819
    )
    
    
    5,880Industrial EnergyAmericas
    
    
    9,021
    
    
    
    7,856
    
    
    
    (1,165
    )
    
    
    
    
    
    
    (1,165
    )Europe & ROW
    
    
    36,492
    
    
    
    37,753
    
    
    
    1,261
    
    
    
    (4,038
    )
    
    
    5,299Unallocated expenses
    
    
    25,173
    
    
    
    31,202
    
    
    
    6,029
    
    
    
    (1,626
    )
    
    
    7,655TOTAL
    
    $
    136,961
    
    
    $
    142,449
    
    
    $
    5,488
    
    
    $
    (9,483
    )
    
    $
    14,971
      23




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##### Table of Contents



For the Three Months Ended
    
    
    FAVORABLEDecember 31, 2007
    
    
    December 31, 2006
    
    
    (UNFAVORABLE)(In thousands)Corporate general and
administrative
    
    $
    10,015
    
    
    $
    12,804
    
    
    $
    2,789Restructuring
    
    
    3
    
    
    
    (52
    )
    
    
    (55
    )Other (income) expense:Currency
remeasurement gain
    
    
    (6,474
    )
    
    
    (6,351
    )
    
    
    123(Gain) loss on
revaluation of
warrants
    
    
    (3
    )
    
    
    1,324
    
    
    
    1,327Other
    
    
    (65
    )
    
    
    663
    
    
    
    728Interest, net
    
    
    21,697
    
    
    
    22,814
    
    
    
    1,117TOTAL
    
    $
    25,173
    
    
    $
    31,202
    
    
    $
    6,029
  Reorganization Items
  Income Taxes
 For the Three Months EndedDecember 31, 2007
    
    December 31, 2006(In thousands)Pre-tax income (loss)
    
    $
    27,669
    
    
    $
    (13,957
    )Income tax provision (benefit)
    
    $
    7,947
    
    
    $
    (2,947
    )Effective tax rate
    
    
    28.7
    %
    
    
    21.1
    %
   Nine months ended December 31, 2007 compared with nine months ended December 31, 2006
 Net Sales
  24




---



##### Table of Contents



FAVORABLE (UNFAVORABLE)For the Nine Months Ended
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencyDecember 31, 2007
    
    
    December 31, 2006
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationAmericas
    
    $
    816,685
    
    
    $
    676,550
    
    
    $
    140,135
    
    
    
    
    
    
    $
    140,135Europe & ROW
    
    
    829,536
    
    
    
    606,277
    
    
    
    223,259
    
    
    
    76,177
    
    
    
    147,082Industrial EnergyAmericas
    
    
    222,445
    
    
    
    199,684
    
    
    
    22,761
    
    
    
    
    
    
    
    22,761Europe & ROW
    
    
    797,711
    
    
    
    650,721
    
    
    
    146,990
    
    
    
    71,134
    
    
    
    75,856TOTAL
    
    $
    2,666,377
    
    
    $
    2,133,232
    
    
    $
    533,145
    
    
    $
    147,311
    
    
    $
    385,834
     Gross Profit
  For the Nine Months Ended
    
    
    For the Nine Months EndedDecember 31, 2007
    
    
    December 31, 2006
    
    
    FAVORABLE (UNFAVORABLE)Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencyTOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationAmericas
    
    $
    152,118
    
    
    
    18.6
    %
    
    $
    116,632
    
    
    
    17.2
    %
    
    $
    35,486
    
    
    
    
    
    
    $
    35,486Europe & ROW
    
    
    102,398
    
    
    
    12.3
    %
    
    
    68,595
    
    
    
    11.3
    %
    
    
    33,803
    
    
    
    9,638
    
    
    
    24,165Industrial EnergyAmericas
    
    
    57,619
    
    
    
    25.9
    %
    
    
    45,272
    
    
    
    22.7
    %
    
    
    12,347
    
    
    
    
    
    
    
    12,347Europe & ROW
    
    
    105,109
    
    
    
    13.2
    %
    
    
    114,286
    
    
    
    17.6
    %
    
    
    (9,177
    )
    
    
    9,286
    
    
    
    (18,463
    )Unallocated Other
    
    
    (2,394
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,394
    )
    
    
    
    
    
    
    (2,394
    )TOTAL
    
    $
    414,850
    
    
    
    15.6
    %
    
    $
    344,785
    
    
    
    16.2
    %
    
    $
    70,065
    
    
    $
    18,924
    
    
    $
    51,141
  25




---



##### Table of Contents



Expenses
  
    
    Selling, marketing, and advertising increased $11.3 million, to $213.1 million in the
first nine months of fiscal 2008 from $201.8 million in the first nine months of fiscal
2007 due primarily to incremental marketing spending designed to attract future growth,
combined with increased commissions resulting from higher sales, and the unfavorable impact
of stronger foreign currencies.
    
    General and administrative increased $2.2 million, to $126.9 million in the first nine
months of fiscal 2008 from $124.7 million in the first nine months of fiscal 2007. The
increase primarily consists of non-cash stock compensation expenses which increased by $2.3
million to $4.1 million in the first nine months of fiscal 2008 from $1.8 million in the
first nine months of fiscal 2007. Costs were also negatively impacted by weaker U.S.
dollar.
    
    Restructuring decreased $15.9 million, to $6.3 million in the first nine months of
fiscal 2008 from $22.2 million in the first nine months of fiscal 2007. This change is due
to an overall decrease in the level of restructuring activities throughout the Company in
fiscal 2008. In the fiscal 2007 period, the Company closed its Transportation battery
plant in Shreveport, Louisiana, and Wellington, New Zealand. In addition, in the fiscal
2007 period, the Company announced and executed a sizable reduction in force in its United
Kingdom Industrial Energy business.
    
    Other (income) expense was ($20.5) million in the first nine months of fiscal 2008
versus $6.5 million in the first nine months of fiscal 2007. The favorability in other
(income) expenses is primarily due to prior year asset impairments of $9.2 million related
to a former manufacturing facility held for sale, and $7.1 million related to the closure
of the Shreveport, Louisiana facility. Currency remeasurement gains also contributed an
additional $7.7 million of favorability to the first nine months of fiscal 2008.
    
    Interest expense decreased $3.4 million, to $64.3 million in the first nine months of
fiscal 2008 from $67.7 million in the first nine months of fiscal 2007 due primarily to the
favorable impact of lower interest rates on the Companys new Credit Agreement. See Note 6
to the Condensed Consolidated Financial Statements.
    
    Foreign currency translation unfavorably impacted expenses by $21.1 million in the first
nine months of fiscal 2008.
 26




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##### Table of Contents



FAVORABLE (UNFAVORABLE)For the Nine Months Ended
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencyDecember 31, 2007
    
    
    December 31, 2006
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationAmericas
    
    $
    96,188
    
    
    $
    98,523
    
    
    $
    2,335
    
    
    
    
    
    
    $
    2,335Europe & ROW
    
    
    84,453
    
    
    
    90,059
    
    
    
    5,606
    
    
    
    (7,703
    )
    
    
    13,309Industrial EnergyAmericas
    
    
    28,278
    
    
    
    26,709
    
    
    
    (1,569
    )
    
    
    
    
    
    
    (1,569
    )Europe & ROW
    
    
    105,300
    
    
    
    108,041
    
    
    
    2,741
    
    
    
    (9,090
    )
    
    
    11,831Unallocated expenses
    
    
    97,231
    
    
    
    99,516
    
    
    
    2,285
    
    
    
    (4,285
    )
    
    
    6,570TOTAL
    
    $
    411,450
    
    
    $
    422,848
    
    
    $
    11,398
    
    
    $
    (21,078
    )
    
    $
    32,476
      For the Nine Months Ended
    
    
    FAVORABLEDecember 31, 2007
    
    
    December 31, 2006
    
    
    (UNFAVORABLE)(In thousands)Corporate general and administrative
    
    $
    31,683
    
    
    $
    39,968
    
    
    $
    8,285Restructuring
    
    
    99
    
    
    
    324
    
    
    
    225Other (income) expense:Currency remeasurement gain
    
    
    (19,065
    )
    
    
    (11,096
    )
    
    
    7,969(Gain) loss on revaluation of
warrants
    
    
    (1,194
    )
    
    
    585
    
    
    
    1,779Other
    
    
    45
    
    
    
    1,993
    
    
    
    1,948Interest, net
    
    
    64,320
    
    
    
    67,742
    
    
    
    3,422Loss on early extinguishment of debt
    
    
    21,343
    
    
    
    
    
    
    
    (21,343
    )TOTAL
    
    $
    97,231
    
    
    $
    99,516
    
    
    $
    2,285
  27




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##### Table of Contents



Reorganization items
  Income Taxes
 For the Nine Months EndedDecember 31, 2007
    
    December 31, 2006(In thousands)Pre-tax income (loss)
    
    $
    989
    
    
    $
    (81,847
    )Income tax provision
    
    $
    30,860
    
    
    $
    1,924Effective tax rate
    
    
    3,119.4
    %
    
    
    -2.4
    %
  Liquidity and Capital Resources
    The Revolving Loan
   28




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##### Table of Contents



The Term Loan
         29




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##### Table of Contents



Sources Of Cash
     Uses Of Cash
       30




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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
   Changes in Internal Control Over Financial Reporting
  31




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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
     32




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  (d) MaximumNumber (orApproximate Dollar(c) Total Number of
    
    Value) of Shares (orShares (or Units)
    
    Units) that May Yet(a) Total Number of
    
    (b) Average Price
    
    Purchased as Part of
    
    Be Purchased UnderShares (or Units)
    
    Paid per Share (or
    
    Publicly Announced
    
    the Plans orPeriod
    
    Purchased (1)
    
    Unit)
    
    Plans or Programs
    
    ProgramsOctober 1 through October 31
    
    
    500
    
    
    
    6.94November 1 through November 30
    
    
    11,124
    
    
    
    6.12December 1 through December 31
 
 (1)
    
    Acquired by the Company in exchange for payment of U.S. tax obligations for certain
participants in the Companys 2004 Stock Incentive Plan that elected to surrender a portion of
their shares in conjunction with vesting of restricted stock awards. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 31.1
    
    Certification of Gordon A. 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.
 33




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##### Table of Contents



SIGNATURES
  EXIDE TECHNOLOGIESBy:
    /S/ Francis M. Corby, Jr.Francis M. Corby, Jr.Executive Vice President and
Chief Financial Officer

Date: February 6, 2008 34