##### 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 September 30, 2008
 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
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company 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 SIX
MONTH PERIODS ENDED SEPTEMBER 30, 2008 AND 2007
    
    3CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2008 AND
MARCH 31, 2008
    
    4CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS
ENDED SEPTEMBER 30, 2008 AND 2007
    
    5NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    
    6Item 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
    
    17Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    29Item 4 CONTROLS AND PROCEDURES
    
    29PART II. OTHER INFORMATIONItem 1. LEGAL PROCEEDINGS
    
    31Item 1A. RISK FACTORS
    
    31Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    31Item 3. DEFAULTS UPON SENIOR SECURITIES
    
    31Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    31Item 5. OTHER INFORMATION
    
    32Item 6. EXHIBITS
    
    32SIGNATURES
    
    33EX-31.1EX-31.2EX-32.
  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 Six Months EndedSeptember 30, 2008
    
    
    September 30, 2007
    
    
    September 30, 2008
    
    
    September 30, 2007NET SALES
    
    $
    914,174
    
    
    $
    861,942
    
    
    $
    1,885,449
    
    
    $
    1,624,329COST OF SALES
    
    
    752,290
    
    
    
    731,594
    
    
    
    1,554,085
    
    
    
    1,375,313Gross profit
    
    
    161,884
    
    
    
    130,348
    
    
    
    331,364
    
    
    
    249,016EXPENSES:Selling, marketing and advertising
    
    
    79,670
    
    
    
    68,299
    
    
    
    158,526
    
    
    
    136,633General and administrative
    
    
    43,488
    
    
    
    39,617
    
    
    
    90,659
    
    
    
    83,266Restructuring
    
    
    9,655
    
    
    
    2,550
    
    
    
    11,878
    
    
    
    4,682Other expense (income) , net
    
    
    16,692
    
    
    
    (10,520
    )
    
    
    24,515
    
    
    
    (14,061
    )Interest expense, net
    
    
    18,401
    
    
    
    21,271
    
    
    
    37,626
    
    
    
    42,623Loss on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,342167,906
    
    
    
    121,217
    
    
    
    323,204
    
    
    
    274,485Income (loss) before reorganization
items, income taxes, and minority
interest
    
    
    (6,022
    )
    
    
    9,131
    
    
    
    8,160
    
    
    
    (25,469
    )REORGANIZATION ITEMS, NET
    
    
    472
    
    
    
    769
    
    
    
    935
    
    
    
    1,211INCOME TAX PROVISION
    
    
    3,408
    
    
    
    22,696
    
    
    
    26,878
    
    
    
    22,913MINORITY INTEREST
    
    
    334
    
    
    
    495
    
    
    
    894
    
    
    
    918Net loss
    
    $
    (10,236
    )
    
    $
    (14,829
    )
    
    $
    (20,547
    )
    
    $
    (50,511
    )NET LOSS PER SHAREBasic and Diluted
    
    $
    (0.14
    )
    
    $
    (0.24
    )
    
    $
    (0.27
    )
    
    $
    (0.82
    )WEIGHTED AVERAGE SHARESBasic and Diluted
    
    
    75,455
    
    
    
    61,717
    
    
    
    75,416
    
    
    
    61,496
  3




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##### Table of Contents



EXIDE TECHNOLOGIES AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per-share data)
 September 30, 2008
    
    
    March 31, 2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    169,899
    
    
    $
    90,547Receivables, net of allowance for doubtful accounts of $32,378 and $33,630
    
    
    601,504
    
    
    
    782,944Inventories
    
    
    534,504
    
    
    
    583,593Prepaid expenses and other
    
    
    18,067
    
    
    
    17,829Deferred financing costs, net
    
    
    5,014
    
    
    
    5,215Deferred income taxes
    
    
    37,280
    
    
    
    36,853Total current assets
    
    
    1,366,268
    
    
    
    1,516,981Property, plant and equipment, net
    
    
    593,391
    
    
    
    649,526Other assets:Other intangibles, net
    
    
    186,896
    
    
    
    206,283Investments in affiliates
    
    
    4,652
    
    
    
    6,523Deferred financing costs, net
    
    
    14,899
    
    
    
    18,071Deferred income taxes
    
    
    41,969
    
    
    
    51,238Other
    
    
    46,345
    
    
    
    42,774294,761
    
    
    
    324,889Total assets
    
    $
    2,254,420
    
    
    $
    2,491,396LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Short-term borrowings
    
    $
    18,836
    
    
    $
    22,719Current maturities of long-term debt
    
    
    9,056
    
    
    
    9,875Accounts payable
    
    
    386,095
    
    
    
    468,240Accrued expenses
    
    
    302,380
    
    
    
    333,092Warrants liability
    
    
    8,743
    
    
    
    8,272Total current liabilities
    
    
    725,110
    
    
    
    842,198Long-term debt
    
    
    664,322
    
    
    
    683,601Noncurrent retirement obligations
    
    
    180,700
    
    
    
    212,438Deferred income taxes
    
    
    44,253
    
    
    
    44,407Other noncurrent liabilities
    
    
    137,085
    
    
    
    145,642Total liabilities
    
    
    1,751,470
    
    
    
    1,928,286Commitments and contingenciesMinority interest
    
    
    17,542
    
    
    
    18,772STOCKHOLDERS EQUITYPreferred stock, $0.01 par value, 1,000 shares authorized, 0 shares issued and
outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value, 200,000 shares authorized, 75,426 and 75,278 shares
issued and outstanding
    
    
    754
    
    
    
    753Additional paid-in capital
    
    
    1,107,688
    
    
    
    1,104,939Accumulated deficit
    
    
    (738,209
    )
    
    
    (717,662
    )Accumulated other comprehensive income
    
    
    115,175
    
    
    
    156,308Total stockholders equity
    
    
    485,408
    
    
    
    544,338Total liabilities and stockholders equity
    
    $
    2,254,420
    
    
    $
    2,491,396
  4




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##### Table of Contents



EXIDE TECHNOLOGIES AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited, in thousands)
 For the Six Months EndedSeptember 30, 2008
    
    
    September 30, 2007Cash Flows From Operating Activities:Net loss
    
    $
    (20,547
    )
    
    $
    (50,511
    )Adjustments to reconcile net loss to net cash provided by (used in)
operating activitiesDepreciation and amortization
    
    
    51,295
    
    
    
    50,713Unrealized loss (gain) on warrants
    
    
    471
    
    
    
    (1,192
    )Net loss on asset sales / impairments
    
    
    1,135
    
    
    
    103Deferred income taxes
    
    
    7,606
    
    
    
    11,798Provision for doubtful accounts
    
    
    3,641
    
    
    
    2,715Non-cash stock compensation
    
    
    2,506
    
    
    
    2,719Reorganization items, net
    
    
    935
    
    
    
    1,211Minority interest
    
    
    894
    
    
    
    918Amortization of deferred financing costs
    
    
    2,612
    
    
    
    2,270Loss on early extinguishment of debt
    
    
    
    
    
    
    21,342Currency loss (gain)
    
    
    25,884
    
    
    
    (12,117
    )Changes in assets and liabilities Receivables
    
    
    108,960
    
    
    
    (20,529
    )Inventories
    
    
    9,599
    
    
    
    (129,202
    )Prepaid expenses and other
    
    
    (1,248
    )
    
    
    2,629Payables
    
    
    (53,098
    )
    
    
    48,847Accrued expenses
    
    
    (7,756
    )
    
    
    5,401Noncurrent liabilities
    
    
    (17,759
    )
    
    
    (26,266
    )Other, net
    
    
    (4,546
    )
    
    
    1,875Net cash provided by (used in) operating activities
    
    
    110,584
    
    
    
    (87,276
    )Cash Flows From Investing Activities:Capital expenditures
    
    
    (36,154
    )
    
    
    (23,986
    )Proceeds from sales of assets
    
    
    16,265
    
    
    
    3,658Net cash used in investing activities
    
    
    (19,889
    )
    
    
    (20,328
    )Cash Flows From Financing Activities:(Decrease) increase in short-term borrowings
    
    
    (1,937
    )
    
    
    4,432(Decrease) increase in borrowings under Senior Secured Credit Facility
    
    
    (1,662
    )
    
    
    94,387(Decrease) increase in other debt
    
    
    (3,183
    )
    
    
    3,784Financing costs and other
    
    
    
    
    
    
    (31,649
    )Net proceeds from rights offering and common stock issuance
    
    
    244
    
    
    
    49,528Net cash (used in) provided by financing activities
    
    
    (6,538
    )
    
    
    120,482Effect of Exchange Rate Changes on Cash and Cash Equivalents
    
    
    (4,805
    )
    
    
    2,517Net Increase In Cash and Cash Equivalents
    
    
    79,352
    
    
    
    15,395Cash and Cash Equivalents, Beginning of Period
    
    
    90,547
    
    
    
    76,211Cash and Cash Equivalents, End of Period
    
    $
    169,899
    
    
    $
    91,606Supplemental Disclosures of Cash Flow Information:Cash paid during the period -Interest
    
    $
    33,502
    
    
    $
    34,806Income taxes (net of refunds)
    
    
    4,797
    
    
    
    8,173Supplemental Disclosures of Non-Cash Financing Activities:Receivable from rights offering
    
    
    
    
    
    
    41,400
  5




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EXIDE TECHNOLOGIES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008
(Unaudited)
 (1) BASIS OF PRESENTATION
   (2) COMPREHENSIVE (LOSS) INCOME
  For the Three Months Ended
    
    
    For the Six Months EndedSeptember 30, 2008
    
    
    September 30, 2007
    
    
    September 30, 2008
    
    
    September 30, 2007(In thousands)Net loss
    
    $
    (10,236
    )
    
    $
    (14,829
    )
    
    $
    (20,547
    )
    
    $
    (50,511
    )Defined benefit plans
    
    
    (5,413
    )
    
    
    (1,237
    )
    
    
    (5,233
    )
    
    
    (1,665
    )Cumulative translation adjustment
    
    
    (37,357
    )
    
    
    16,551
    
    
    
    (38,575
    )
    
    
    26,947Derivatives qualifying as hedges
    
    
    (1,236
    )
    
    
    
    
    
    
    2,675
    
    
    
    Total comprehensive (loss) income
    
    $
    (54,242
    )
    
    $
    485
    
    
    $
    (61,680
    )
    
    $
    (25,229
    )
 (3) ACCOUNTING FOR DERIVATIVES
 Accounting for Derivative Instruments and
Hedging Activities" , Accounting for Certain Derivative Instruments and
Certain Hedging Activities Amendment of Statement 133 on Derivative Instruments and
Hedging Activities
   6




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(4) INTANGIBLE ASSETS
  Trademarks and
    
    
    Trademarks andTradenames
    
    
    Tradenames(not subject to
    
    
    (subject to
    
    
    Customeramortization)
    
    
    amortization)
    
    
    relationships
    
    
    Technology
    
    
    Total(In thousands)As of September 30, 2008:Gross Amount
    
    $
    61,969
    
    
    $
    14,095
    
    
    $
    116,901
    
    
    $
    26,161
    
    
    $
    219,126Accumulated Amortization
    
    
    
    
    
    
    (4,917
    )
    
    
    (21,583
    )
    
    
    (5,730
    )
    
    
    (32,230
    )Net
    
    $
    61,969
    
    
    $
    9,178
    
    
    $
    95,318
    
    
    $
    20,431
    
    
    $
    186,896As of March 31, 2008:Gross Amount
    
    $
    67,089
    
    
    $
    15,260
    
    
    $
    126,529
    
    
    $
    28,323
    
    
    $
    237,201Accumulated Amortization
    
    
    
    
    
    
    (4,720
    )
    
    
    (20,696
    )
    
    
    (5,502
    )
    
    
    (30,918
    )Net
    
    $
    67,089
    
    
    $
    10,540
    
    
    $
    105,833
    
    
    $
    22,821
    
    
    $
    206,283
  (5) INVENTORIES
  September 30, 2008
    
    
    March 31, 2008(In thousands)Raw materials
    
    $
    76,072
    
    
    $
    71,779Work-in-process
    
    
    118,822
    
    
    
    115,840Finished goods
    
    
    339,610
    
    
    
    395,974$
    534,504
    
    
    $
    583,593
 7




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(6) OTHER ASSETS
  September 30, 2008
    
    
    March 31, 2008(In thousands)Deposits (a)
    
    $
    11,856
    
    
    $
    12,631Capitalized software, net
    
    
    3,421
    
    
    
    3,711Loan to affiliate
    
    
    1,015
    
    
    
    1,811Retirement plans
    
    
    20,994
    
    
    
    17,391Financial instruments
    
    
    3,000
    
    
    
    Other
    
    
    6,059
    
    
    
    7,230$
    46,345
    
    
    $
    42,774
 
 (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. (7) DEBT
   September 30, 2008
    
    
    March 31, 2008(In thousands)Senior Secured Credit Facility
    
    $
    292,292
    
    
    $
    306,39510.5% 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
    
    
    31,086
    
    
    
    37,081Total
    
    
    673,378
    
    
    
    693,476Less - current maturities
    
    
    9,056
    
    
    
    9,875$
    664,322
    
    
    $
    683,601
  (8) INTEREST EXPENSE, NET
  8




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(9) OTHER EXPENSE (INCOME), NET
  For the Three Months Ended
    
    
    For the Six Months EndedSeptember 30, 2008
    
    
    September 30, 2007
    
    
    September 30, 2008
    
    
    September 30, 2007(In thousands)Net loss on asset sales / impairments
    
    $
    1,040
    
    
    $
    702
    
    
    $
    1,135
    
    
    $
    103Equity income
    
    
    (1,276
    )
    
    
    (126
    )
    
    
    (1,427
    )
    
    
    (309
    )Currency loss (gain)
    
    
    27,690
    
    
    
    (9,599
    )
    
    
    25,884
    
    
    
    (12,117
    )(Gain) loss on revaluation of warrants (a)
    
    
    (9,214
    )
    
    
    (1,457
    )
    
    
    471
    
    
    
    (1,192
    )Other
    
    
    (1,548
    )
    
    
    (40
    )
    
    
    (1,548
    )
    
    
    (546
    )$
    16,692
    
    
    $
    (10,520
    )
    
    $
    24,515
    
    
    $
    (14,061
    )
 
 (a)
    
    The warrants entitle the holders to purchase an aggregate of 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 150, Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity, 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. (10) EMPLOYEE BENEFITS
  Pension BenefitsFor the Three Months Ended
    
    
    For the Six Months EndedSeptember 30, 2008
    
    
    September 30, 2007
    
    
    September 30, 2008
    
    
    September 30, 2007(In thousands)Components of net periodic benefit cost:Service cost
    
    $
    1,136
    
    
    $
    1,091
    
    
    $
    2,315
    
    
    $
    2,622Interest cost
    
    
    9,679
    
    
    
    8,903
    
    
    
    19,561
    
    
    
    17,718Expected return on plan assets
    
    
    (7,861
    )
    
    
    (7,329
    )
    
    
    (15,845
    )
    
    
    (14,596
    )Amortization of:Prior service cost
    
    
    5
    
    
    
    5
    
    
    
    11
    
    
    
    10Actuarial loss
    
    
    (678
    )
    
    
    (388
    )
    
    
    (1,384
    )
    
    
    (757
    )Net periodic benefit cost$
    2,281
    
    
    $
    2,282
    
    
    $
    4,658
    
    
    $
    4,997
 Other Post-Retirement BenefitsFor the Three Months Ended
    
    
    For the Six Months EndedSeptember 30, 2008
    
    
    September 30, 2007
    
    
    September 30, 2008
    
    
    September 30, 2007(In thousands)Components of net periodic benefit cost:Service cost
    
    $
    51
    
    
    $
    49
    
    
    $
    104
    
    
    $
    97Interest cost
    
    
    336
    
    
    
    374
    
    
    
    674
    
    
    
    745Amortization of:Prior service cost
    
    
    (96
    )
    
    
    
    
    
    
    (192
    )
    
    
    Actuarial loss
    
    
    34
    
    
    
    18
    
    
    
    67
    
    
    
    37Net periodic
benefit cost
    
    $
    325
    
    
    $
    441
    
    
    $
    653
    
    
    $
    879
  (11) COMMITMENTS AND CONTINGENCIES
 Claims Reconciliation
  9




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Private Party Lawsuits and other Legal Proceedings
   10




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Environmental Matters
    11




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.
       Tampa, Florida
  12




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Columbus, Georgia
  Azambuja (SONALUR) Portugal
  Guarantees
   Sales Returns and Allowances
   Balance at March 31, 2008
    
    $
    57,757Accrual for sales returns and allowances provided
    
    
    27,117Settlements made (in cash or credit), and currency translation
    
    
    (32,630
    )Balance at September 30, 2008
    
    $
    52,244
 (12) INCOME TAXES
   13




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For the Three Months Ended
    
    
    For the Six Months EndedSeptember 30, 2008
    
    
    September 30, 2007
    
    
    September 30, 2008
    
    
    September 30, 2007Federal statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Local tax provision
    
    
    -14.0
    %
    
    
    -4.0
    %
    
    
    39.5
    %
    
    
    0.9
    %Change in valuation allowances
    
    
    -160.3
    %
    
    
    106.3
    %
    
    
    392.0
    %
    
    
    -96.7
    %Revaluation of warrants
    
    
    49.7
    %
    
    
    -6.1
    %
    
    
    2.3
    %
    
    
    1.6
    %Rate difference on foreign subsidiaries
    
    
    41.4
    %
    
    
    -70.1
    %
    
    
    -89.6
    %
    
    
    38.3
    %Change in tax rate
    
    
    0.0
    %
    
    
    199.6
    %
    
    
    0.0
    %
    
    
    -60.2
    %Other, net
    
    
    -4.3
    %
    
    
    10.7
    %
    
    
    -7.2
    %
    
    
    -4.8
    %Effective tax rate
    
    
    -52.5
    %
    
    
    271.4
    %
    
    
    372.0
    %
    
    
    -85.9
    %
       (13) RESTRUCTURING
    14




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##### Table of Contents



Severance Costs
    
    
    Closure Costs
    
    
    Total(In thousands)Balance at March 31, 2008
    
    $
    1,788
    
    
    $
    3,282
    
    
    $
    5,070Restructuring Charges
    
    
    10,543
    
    
    
    1,335
    
    
    
    11,878Payments and Currency Translation
    
    
    (9,161
    )
    
    
    (2,321
    )
    
    
    (11,482
    )Balance at September 30, 2008
    
    $
    3,170
    
    
    $
    2,296
    
    
    $
    5,466
  (14) LOSS PER SHARE
 Earnings Per Share
   (15) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 Employers Accounting for Defined
Benefit Pension and other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and
132(R)
 Noncontrolling Interests in Consolidated
Financial Statementsan amendment of ARB No. 51 Business Combinations
 Disclosures about Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133
 15




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##### Table of Contents



(16) FAIR VALUE MEASUREMENTS
 Fair Value Measurements
 
    
    Level 1  Observable inputs such as quoted prices in active markets for identical
assets and liabilities
    
    Level 2  Inputs other than quoted prices in active markets that are observable
either directly or indirectly, and
    
    Level 3  Inputs from valuation techniques in which one or more key value drivers are
not observable, and must be based on the reporting entitys own assumptions
  (17) SEGMENT INFORMATION
     16




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##### Table of Contents



For the Three Months Ended September 30, 2008Transportation
    
    IndustrialEurope
    
    
    
    
    
    Europe
    
    OtherAmericas
    
    and ROW
    
    Americas
    
    and ROW
    
    (a)
    
    Consolidated(In thousands)Net sales
    
    $
    315,610
    
    
    $
    245,355
    
    
    $
    76,830
    
    
    $
    276,379
    
    
    
    
    
    
    $
    914,174Gross profit
    
    
    55,741
    
    
    
    27,011
    
    
    
    22,990
    
    
    
    56,142
    
    
    
    
    
    
    
    161,884Expenses
    
    
    31,987
    
    
    
    33,582
    
    
    
    10,067
    
    
    
    45,511
    
    
    
    46,759
    
    
    
    167,906Income (loss)
before
reorganization
items, income
taxes, and
minority
interest
    
    
    23,754
    
    
    
    (6,571
    )
    
    
    12,923
    
    
    
    10,631
    
    
    
    (46,759
    )
    
    
    (6,022
    )
 For the Three Months Ended September 30, 2007Transportation
    
    IndustrialEurope
    
    
    
    
    
    Europe
    
    OtherAmericas
    
    and ROW
    
    Americas
    
    and ROW
    
    (a)
    
    Consolidated(In thousands)Net sales
    
    $
    275,768
    
    
    $
    256,571
    
    
    $
    72,995
    
    
    $
    256,608
    
    
    $
    
    
    
    $
    861,942Gross profit
    
    
    49,519
    
    
    
    32,594
    
    
    
    18,707
    
    
    
    31,922
    
    
    
    (2,394
    )
    
    
    130,348Expenses
    
    
    32,543
    
    
    
    24,938
    
    
    
    9,151
    
    
    
    34,702
    
    
    
    19,883
    
    
    
    121,217Income (loss)
before
reorganization
items, income
taxes, and
minority
interest
    
    
    16,976
    
    
    
    7,656
    
    
    
    9,556
    
    
    
    (2,780
    )
    
    
    (22,277
    )
    
    
    9,131
 For the Six Months Ended September 30, 2008Transportation
    
    IndustrialEurope
    
    
    
    
    
    Europe
    
    OtherAmericas
    
    and ROW
    
    Americas
    
    and ROW
    
    (a)
    
    Consolidated(In thousands)Net sales
    
    $
    621,985
    
    
    $
    521,228
    
    
    $
    166,027
    
    
    $
    576,209
    
    
    
    
    
    
    $
    1,885,449Gross profit
    
    
    115,187
    
    
    
    57,442
    
    
    
    46,781
    
    
    
    111,954
    
    
    
    
    
    
    
    331,364Expenses
    
    
    64,741
    
    
    
    64,620
    
    
    
    20,033
    
    
    
    89,537
    
    
    
    84,273
    
    
    
    323,204Income (loss)
before
reorganization
items, income
taxes, and
minority
interest
    
    
    50,446
    
    
    
    (7,178
    )
    
    
    26,748
    
    
    
    22,417
    
    
    
    (84,273
    )
    
    
    8,160
 For the Six Months Ended September 30, 2007Transportation
    
    IndustrialEurope
    
    
    
    
    
    Europe
    
    OtherAmericas
    
    and ROW
    
    Americas
    
    and ROW
    
    (a)
    
    Consolidated(In thousands)Net sales
    
    $
    526,797
    
    
    $
    469,280
    
    
    $
    138,269
    
    
    $
    489,983
    
    
    $
    
    
    
    $
    1,624,329Gross profit
    
    
    97,244
    
    
    
    54,743
    
    
    
    34,818
    
    
    
    64,605
    
    
    
    (2,394
    )
    
    
    249,016Expenses
    
    
    63,570
    
    
    
    50,792
    
    
    
    19,257
    
    
    
    68,808
    
    
    
    72,058
    
    
    
    274,485Income (loss)
before
reorganization
items, income
taxes, and
minority
interest
    
    
    33,674
    
    
    
    3,951
    
    
    
    15,561
    
    
    
    (4,203
    )
    
    
    (74,452
    )
    
    
    (25,469
    )
 
 (a)
    
    Other includes unallocated corporate expenses, interest expense,
currency remeasurement gain, and (gain) loss on revaluation of
warrants. In the six months ended September 30, 2007, Other also
includes a $21.3 million loss on early extinguishment of debt. 
 Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
   17




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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
 Exchange Rates
  Markets
 Seasonality and Weather.
 18




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##### Table of Contents



Interest Rates.
 Second Quarter of Fiscal 2009 Highlights and Outlook
           Critical Accounting Policies and Estimates
 19




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##### Table of Contents



Results of Operations
 Three months ended September 30, 2008 compared with three months ended September 30, 2007
 Net Sales
  FAVORABLE (UNFAVORABLE)For the Three Months Ended
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencySeptember 30, 2008
    
    
    September 30, 2007
    
    
    TOTAL
    
    
    Related
    
    
    Related(In thousands)TransportationAmericas
    
    $
    315,610
    
    
    $
    275,768
    
    
    $
    39,842
    
    
    $
    
    
    
    $
    39,842Europe & ROW
    
    
    245,355
    
    
    
    256,571
    
    
    
    (11,216
    )
    
    
    18,414
    
    
    
    (29,630
    )Industrial EnergyAmericas
    
    
    76,830
    
    
    
    72,995
    
    
    
    3,835
    
    
    
    
    
    
    
    3,835Europe & ROW
    
    
    276,379
    
    
    
    256,608
    
    
    
    19,771
    
    
    
    21,448
    
    
    
    (1,677
    )TOTAL
    
    $
    914,174
    
    
    $
    861,942
    
    
    $
    52,232
    
    
    $
    39,862
    
    
    $
    12,370
     Gross Profit
  20




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##### Table of Contents



For the Three Months EndedSeptember 30, 2008
    
    
    September 30, 2007
    
    
    FAVORABLE / (UNFAVORABLE)Percent of
    
    
    
    

    
    

    Percent of
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencyTOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Related
    
    
    Related(In thousands)TransportationAmericas
    
    $
    55,741
    
    
    
    17.7
    %
    
    $
    49,519
    
    
    
    18.0
    %
    
    $
    6,222
    
    
    $
    
    
    
    $
    6,222Europe & ROW
    
    
    27,011
    
    
    
    11.0
    %
    
    
    32,594
    
    
    
    12.7
    %
    
    
    (5,583
    )
    
    
    1,734
    
    
    
    (7,317
    )Industrial EnergyAmericas
    
    
    22,990
    
    
    
    29.9
    %
    
    
    18,707
    
    
    
    25.6
    %
    
    
    4,283
    
    
    
    
    
    
    
    4,283Europe & ROW
    
    
    56,142
    
    
    
    20.3
    %
    
    
    31,922
    
    
    
    12.4
    %
    
    
    24,220
    
    
    
    4,152
    
    
    
    20,068Unallocated Other
    
    
    
    
    
    
    n/a
    
    
    
    (2,394
    )
    
    
    n/a
    
    
    
    2,394
    
    
    
    
    
    
    
    2,394TOTAL
    
    $
    161,884
    
    
    
    17.7
    %
    
    $
    130,348
    
    
    
    15.1
    %
    
    $
    31,536
    
    
    $
    5,886
    
    
    $
    25,650
      Expenses
  
    
    Selling, marketing, and advertising expenses increased $11.4 million, to $79.7 million
in the second quarter of fiscal 2009 from $68.3 million in the second quarter of fiscal
2008 due primarily to increased sales commissions resulting from higher sales, unfavorable
currency translation of $2.6 million, and an increase in bad debt expense.
    
    General and administrative expenses increased $3.9 million, to $43.5 million in the
second quarter of fiscal 2009 from $39.6 million in the second quarter of fiscal 2008. The
increase primarily resulted from higher professional fees and unfavorable currency
translation of $1.9 million.
    
    Restructuring expenses increased $7.1 million to $9.7 million in the second quarter of
fiscal 2009 from $2.6 million in the second quarter of fiscal 2008. This change related
primarily to headcount reductions in Europe and Australia.
 21




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##### Table of Contents




    
    Other expense (income) was $16.7 million in the second quarter of fiscal 2009 versus
($10.5) million in the second quarter of fiscal 2008. The increase is primarily due to
$37.3 million higher foreign currency remeasurement losses, partially offset by $7.8
million higher gains on revaluation of warrants.
    
    Interest expense decreased $2.9 million, to $18.4 million in the second quarter of
fiscal 2009 from $21.3 million in the second quarter of fiscal 2008 primarily due to lower
borrowings.
    
    Foreign currency translation unfavorably impacted expenses by $7.8 million in the second
quarter of fiscal 2009.
 FAVORABLE / (UNFAVORABLE)For the Three Months Ended
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencySeptember 30, 2008
    
    
    September 30, 2007
    
    
    TOTAL
    
    
    Related
    
    
    Related(In thousands)TransportationAmericas
    
    $
    31,987
    
    
    $
    32,543
    
    
    $
    556
    
    
    $
    
    
    
    $
    556Europe & ROW
    
    
    33,582
    
    
    
    24,938
    
    
    
    (8,644
    )
    
    
    (2,218
    )
    
    
    (6,426
    )Industrial EnergyAmericas
    
    
    10,067
    
    
    
    9,151
    
    
    
    (916
    )
    
    
    
    
    
    
    (916
    )Europe & ROW
    
    
    45,511
    
    
    
    34,702
    
    
    
    (10,809
    )
    
    
    (3,927
    )
    
    
    (6,882
    )Unallocated expenses
    
    
    46,759
    
    
    
    19,883
    
    
    
    (26,876
    )
    
    
    (1,692
    )
    
    
    (25,184
    )TOTAL
    
    $
    167,906
    
    
    $
    121,217
    
    
    $
    (46,689
    )
    
    $
    (7,837
    )
    
    $
    (38,852
    )
      For the Three Months Ended
    
    
    FAVORABLESeptember 30, 2008
    
    
    September 30, 2007
    
    
    (UNFAVORABLE)(In thousands)Corporate expenses
    
    $
    10,606
    
    
    $
    9,560
    
    
    $
    (1,046
    )Restructuring
    
    
    153
    
    
    
    96
    
    
    
    (57
    )Other expense:Currency remeasurement loss (gain)
    
    
    26,805
    
    
    
    (9,686
    )
    
    
    (36,491
    )Gain on revaluation of warrants
    
    
    (9,214
    )
    
    
    (1,457
    )
    
    
    7,757Other
    
    
    8
    
    
    
    99
    
    
    
    91Interest, net
    
    
    18,401
    
    
    
    21,271
    
    
    
    2,870TOTAL
    
    $
    46,759
    
    
    $
    19,883
    
    
    $
    (26,876
    )
  Income Taxes
 22




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For the Three Months EndedSeptember 30, 2008
    
    September 30, 2007(In thousands)Pre-tax income (loss)
    
    $
    (6,494
    )
    
    $
    8,362Income tax provision
    
    $
    3,408
    
    
    $
    22,696Effective tax rate
    
    
    -52.5
    %
    
    
    271.4
    %
  Six months ended September 30, 2008 compared with six months ended September 30, 2007
 Net Sales
  FAVORABLE (UNFAVORABLE)For the Six Months Ended
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencySeptember 30, 2008
    
    
    September 30, 2007
    
    
    TOTAL
    
    
    Related
    
    
    Related(In thousands)TransportationAmericas
    
    $
    621,985
    
    
    $
    526,797
    
    
    $
    95,188
    
    
    $
    
    
    
    $
    95,188Europe & ROW
    
    
    521,228
    
    
    
    469,280
    
    
    
    51,948
    
    
    
    55,726
    
    
    
    (3,778
    )Industrial EnergyAmericas
    
    
    166,027
    
    
    
    138,269
    
    
    
    27,758
    
    
    
    
    
    
    
    27,758Europe & ROW
    
    
    576,209
    
    
    
    489,983
    
    
    
    86,226
    
    
    
    61,917
    
    
    
    24,309TOTAL
    

    $
    1,885,449
    
    
    $
    1,624,329
    
    
    $
    261,120
    
    
    $
    117,643
    
    
    $
    143,477
     23




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##### Table of Contents



Gross Profit
  For the Six Months EndedSeptember 30, 2008
    
    
    September 30, 2007
    
    
    FAVORABLE / (UNFAVORABLE)Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencyTOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Related
    
    
    Related(In thousands)TransportationAmericas
    
    $
    115,187
    
    
    
    18.5
    %
    
    $
    97,244
    
    
    
    18.5
    %
    
    $
    17,943
    
    
    $
    
    
    
    $
    17,943Europe & ROW
    
    
    57,442
    
    
    
    11.0
    %
    
    
    54,743
    
    
    
    11.7
    %
    
    
    2,699
    
    
    
    5,905
    
    
    
    (3,206
    )Industrial EnergyAmericas
    
    
    46,781
    
    
    
    28.2
    %
    
    
    34,818
    
    
    
    25.2
    %
    
    
    11,963
    
    
    
    
    
    
    
    11,963Europe & ROW
    
    
    111,954
    
    
    
    19.4
    %
    
    
    64,605
    
    
    
    13.2
    %
    
    
    47,349
    
    
    
    11,660
    
    
    
    35,689Unallocated Other
    
    
    
    
    
    
    n/a
    
    
    
    (2,394
    )
    
    
    n/a
    
    
    
    2,394
    
    
    
    
    
    
    
    2,394TOTAL
    
    $
    331,364
    
    
    
    17.6
    %
    
    $
    249,016
    
    
    
    15.3
    %
    
    $
    82,348
    
    
    $
    17,565
    
    
    $
    64,783
      Expenses
  
    
    Selling, marketing, and advertising increased $21.9 million, to $158.5 million in the
first half of fiscal 2009 from $136.6 million in the first half of fiscal 2008. Foreign
currency translation unfavorably impacted selling, marketing, and
 24




---



##### Table of Contents



advertising costs in the
first half of fiscal 2009 by approximately $8.7 million. The remaining increase was due
primarily to increased commissions costs related to higher sales.
    
    General and administrative increased $7.4 million, to $90.7 million in the first half of
fiscal 2009 from $83.3 million in the first half of fiscal 2008 primarily due to
unfavorable currency translation of $5.8 million and higher professional service fees.
    
    Restructuring increased $7.2 million, to $11.9 million in the first half of fiscal 2009
from $4.7 million in the first half of fiscal 2008. This change is due primarily to
headcount reductions in Europe.
    
    Other expense (income) was $24.5 million in the first half of fiscal 2009 versus ($14.1)
million in the first half of fiscal 2008. The increase in expense is primarily due to
$38.0 million higher foreign currency remeasurement losses.
    
    Interest expense decreased $5.0 million, to $37.6 million in the first half of fiscal
2009 from $42.6 million in the first half of fiscal 2008 due primarily to lower borrowings
and the favorable impact of lower interest rates on borrowings under the Companys Credit
Agreement.
    
    Foreign currency translation unfavorably impacted expenses by $20.1 million in the first
half of fiscal 2009.
 FAVORABLE / (UNFAVORABLE)For the Six Months Ended
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencySeptember 30, 2008
    
    
    September 30, 2007
    
    
    TOTAL
    
    
    Related
    
    
    Related(In thousands)TransportationAmericas
    
    $
    64,741
    
    
    $
    63,570
    
    
    $
    (1,171
    )
    
    $
    
    
    
    $
    (1,171
    )Europe & ROW
    
    
    64,620
    
    
    
    50,792
    
    
    
    (13,828
    )
    
    
    (6,381
    )
    
    
    (7,447
    )Industrial EnergyAmericas
    
    
    20,033
    
    
    
    19,257
    
    
    
    (776
    )
    
    
    
    
    
    
    (776
    )Europe & ROW
    
    
    89,537
    
    
    
    68,808
    
    
    
    (20,729
    )
    
    
    (9,922
    )
    
    
    (10,807
    )Unallocated expenses
    
    
    84,273
    
    
    
    72,058
    
    
    
    (12,215
    )
    
    
    (3,748
    )
    
    
    (8,467
    )TOTAL
    
    $
    323,204
    
    
    $
    274,485
    
    
    $
    (48,719
    )
    
    $
    (20,051
    )
    
    $
    (28,668
    )
      25




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##### Table of Contents



For the Six Months Ended
    
    
    FAVORABLESeptember 30, 2008
    
    
    September 30, 2007
    
    
    (UNFAVORABLE)(In thousands)Corporate expenses
    
    $
    20,264
    
    
    $
    21,668
    
    
    $
    1,404Restructuring
    
    
    154
    
    
    
    96
    
    
    
    (58
    )Other expense:Currency remeasurement loss (gain)
    
    
    25,760
    
    
    
    (12,591
    )
    
    
    (38,351
    )Loss (gain) on revaluation of warrants
    
    
    471
    
    
    
    (1,192
    )
    
    
    (1,663
    )Other
    
    
    (2
    )
    
    
    112
    
    
    
    114Interest, net
    
    
    37,626
    
    
    
    42,623
    
    
    
    4,997Loss on early extinguishment of debt
    
    
    
    
    
    
    21,342
    
    
    
    21,342TOTAL
    
    $
    84,273
    
    
    $
    72,058
    
    
    $
    (12,215
    )
  Income Taxes
 For the Six Months EndedSeptember 30, 2008
    
    September 30, 2007(In thousands)Pre-tax loss
    
    $
    7,225
    
    
    $
    26,680Income tax provision
    
    $
    26,878
    
    
    $
    22,913Effective tax rate
    
    
    372.0
    %
    
    
    (85.9
    %)
  Liquidity and Capital Resources
   The Revolving Loan
  26




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##### Table of Contents



The Term Loan
        27




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##### Table of Contents



Sources of Cash
     Uses Of Cash
     28




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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
  29




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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
     30




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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  Adverse global economic conditions could have a material adverse effect on the Companys business,
financial condition and results of operations.
  Recently adopted U.S. lead emissions standards under the NAAQS and the implementation of such
standards by applicable states could have a material adverse effect on the Companys financial
condition, cash flows and results of operations.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 (d) MaximumNumber (orApproximate Dollar(c) Total Number of
    
    Value) of Shares (or(a) Total
    
    
    
    
    
    Shares (or Units)
    
    Units) that May YetNumber 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
    
    ProgramsJuly 1 through July 31August 1 through August 31September 1 through
September 30
    
    
    21,141
    
    
    $
    9.448
 
 (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
  31




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##### Table of Contents



Name
    
    Votes For
    
    Votes WithheldHerbert F. Aspbury
    
    
    64,515,168
    
    
    
    153,732Michael R. DAppolonia
    
    
    64,511,239
    
    
    
    157,661David S. Ferguson
    
    
    64,259,640
    
    
    
    409,260Paul W. Jennings
    
    
    46,868,801
    
    
    
    17,800,099Joseph V. Lash
    
    
    64,518,156
    
    
    
    150,744John P. Reilly
    
    
    64,507,229
    
    
    
    161,671Michael P. Ressner
    
    
    63,928,378
    
    
    
    740,522Gordon A. Ulsh
    
    
    64,515,599
    
    
    
    153,301Carroll R. Wetzel
    
    
    64,261,738
    
    
    
    407,162
  Vote For
    
    Votes Against
    
    Abstentions62,504,061
    
    
    2,143,326
    
    
    
    21,510
 
 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 Phillip A. Damaska, 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.
 32




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##### Table of Contents



SIGNATURES
  EXIDE TECHNOLOGIESBy:
    
    /S/ Phillip A. DamaskaPhillip A. DamaskaExecutive Vice President and 

Chief Financial OfficerDate: November 6, 2008
 33