##### 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, 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
    
    23-0552730(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)13000 Deerfield Parkway,Building 200Alpharetta, Georgia
(Address of principal executive offices)
    
    30004
(Zip Code)
 (678) 566-9000
(Registrants telephone number, including area code)
 þ   ̈
  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 ENDED
SEPTEMBER 30, 2006 AND 2005 AND THE SIX MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
    
    
    3CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2006 AND MARCH 31, 2006
    
    
    4CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 2006 AND 2005
    
    
    5NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    
    
    6Item 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
    
    
    21Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    34Item 4 CONTROLS AND PROCEDURES
    
    
    34PART II. OTHER INFORMATION
    
    
    37Item 1. LEGAL PROCEEDINGS
    
    
    37Item 1A. RISK FACTORS
    
    
    37Item 2. UNREGISTERED SALES OF EQUTY SECURITIES AND USE OF PROCEEDS
    
    
    39Item 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    39Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    39Item 5. OTHER INFORMATION
    
    
    40Item 6. EXHIBITS
    
    
    40SIGNATURES
    
    
    41EX-3.1 AMENDED AND RESTATED ARTICLES OF INCORPORATIONEX-10.1 2004 STOCK INCENTIVE PLANEX-10.3 2007 SHORT TERM INCENTIVE PLANEX-31.1 SECTION 302 CERTIFICATION OF CEOEX-31.2 SECTION 302 CERTIFICATION OF CFOEX-32 SECTION 906 CERTIFICATIONS OF CEO AND CFO
  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, 2006
    
    
    September 30, 2005
    
    
    September 30, 2006
    
    
    September 30, 2005NET SALES
    
    $
    680,299
    
    
    $
    686,485
    
    
    $
    1,363,489
    
    
    $
    1,355,817COST OF SALES
    
    
    574,897
    
    
    
    582,587
    
    
    
    1,148,409
    
    
    
    1,149,705Gross profit
    
    
    105,402
    
    
    
    103,898
    
    
    
    215,080
    
    
    
    206,112EXPENSES:Selling, marketing and advertising
    
    
    65,944
    
    
    
    67,615
    
    
    
    134,450
    
    
    
    138,687General and administrative
    
    
    36,393
    
    
    
    43,138
    
    
    
    82,387
    
    
    
    86,877Restructuring and impairment
    
    
    7,039
    
    
    
    6,640
    
    
    
    15,923
    
    
    
    9,540Other (income) expense, net
    
    
    6,204
    
    
    
    1,412
    
    
    
    2,712
    
    
    
    4,811Interest expense, net
    
    
    22,641
    
    
    
    16,658
    
    
    
    44,928
    
    
    
    32,758138,221
    
    
    
    135,463
    
    
    
    280,400
    
    
    
    272,673Loss before reorganization items,
income taxes, and minority
interest
    
    
    (32,819
    )
    
    
    (31,565
    )
    
    
    (65,320
    )
    
    
    (66,561
    )REORGANIZATION ITEMS, NET
    
    
    964
    
    
    
    1,715
    
    
    
    2,570
    
    
    
    3,087INCOME TAX PROVISION (BENEFIT)
    
    
    1,294
    
    
    
    (202
    )
    
    
    4,872
    
    
    
    (956
    )MINORITY INTEREST
    
    
    32
    
    
    
    (55
    )
    
    
    243
    
    
    
    40Net loss
    
    $
    (35,109
    )
    
    $
    (33,023
    )
    
    $
    (73,005
    )
    
    $
    (68,732
    )NET LOSS PER SHAREBasic and Diluted
    
    $
    (1.16
    )
    
    $
    (1.29
    )
    
    $
    (2.61
    )
    
    $
    (2.69
    )WEIGHTED AVERAGE SHARESBasic and Diluted
    
    
    30,169
    
    
    
    25,576
    
    
    
    27,936
    
    
    
    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)
 September 30, 2006
    
    
    March 31, 2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    93,888
    
    
    $
    32,161Restricted cash
    
    
    613
    
    
    
    561Receivables, net of allowance for doubtful accounts of $26,404 and $21,637
    
    
    569,946
    
    
    
    617,677Inventories
    
    
    418,567
    
    
    
    414,943Prepaid expenses and other
    
    
    30,188
    
    
    
    30,243Deferred financing costs, net
    
    
    3,248
    
    
    
    3,169Deferred income taxes
    
    
    5,587
    
    
    
    11,066Total current assets
    
    
    1,122,037
    
    
    
    1,109,820Property, plant and equipment, net
    
    
    657,316
    
    
    
    685,842Other assets:Other intangibles, net
    
    
    188,945
    
    
    
    186,820Investments in affiliates
    
    
    5,141
    
    
    
    4,783Deferred financing costs, net
    
    
    13,891
    
    
    
    15,196Deferred income taxes
    
    
    57,941
    
    
    
    56,358Other
    
    
    20,861
    
    
    
    24,090286,779
    
    
    
    287,247Total assets
    
    $
    2,066,132
    
    
    $
    2,082,909LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Short-term borrowings
    
    $
    11,650
    
    
    $
    11,375Current maturities of long-term debt
    
    
    2,692
    
    
    
    5,643Accounts payable
    
    
    342,086
    
    
    
    360,538Accrued expenses
    
    
    285,693
    
    
    
    298,631Warrants liability
    
    
    1,324
    
    
    
    2,063Total current liabilities
    
    
    643,445
    
    
    
    678,250Long-term debt
    
    
    660,998
    
    
    
    683,986Noncurrent retirement obligations
    
    
    315,985
    
    
    
    333,248Deferred income tax liability
    
    
    28,055
    
    
    
    33,590Other noncurrent liabilities
    
    
    111,794
    
    
    
    116,430Total liabilities
    
    
    1,760,277
    
    
    
    1,845,504Commitments and contingencies
    
    
    
    
    
    
    Minority interest
    
    
    13,356
    
    
    
    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, 60,701 and 24,546
shares issued and outstanding
    
    
    607
    
    
    
    245Additional paid-in capital
    
    
    1,007,320
    
    
    
    888,647Accumulated deficit
    
    
    (712,660
    )
    
    
    (639,655
    )Accumulated other comprehensive loss
    
    
    (2,768
    )
    
    
    (24,498
    )Total stockholders equity
    
    
    292,499
    
    
    
    224,739Total liabilities and stockholders equity
    
    $
    2,066,132
    
    
    $
    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 Six Months EndedSeptember 30, 2006
    
    
    September 30, 2005Cash Flows From Operating Activities:Net loss
    
    $
    (73,005
    )
    
    $
    (68,732
    )Adjustments to reconcile net loss to net cash used in
operating activitiesDepreciation and amortization
    
    
    60,464
    
    
    
    60,343Unrealized gain on Warrants
    
    
    (739
    )
    
    
    (7,748
    )Net loss on asset sales
    
    
    6,972
    
    
    
    2,669Deferred income taxes
    
    
    239
    
    
    
    Provision for doubtful accounts
    
    
    4,701
    
    
    
    3,357Non-cash provision for restructuring
    
    
    1,343
    
    
    
    448Reorganization items, net
    
    
    2,570
    
    
    
    3,087Minority interest
    
    
    243
    
    
    
    40Amortization of deferred financing costs
    
    
    1,659
    
    
    
    897Changes in assets and liabilities Receivables
    
    
    62,225
    
    
    
    12,176Inventories
    
    
    8,875
    
    
    
    (23,497
    )Prepaid expenses and other
    
    
    2,459
    
    
    
    (11,722
    )Payables
    
    
    (30,089
    )
    
    
    (28,945
    )Accrued expenses
    
    
    (24,008
    )
    
    
    (37,421
    )Noncurrent liabilities
    
    
    (33,301
    )
    
    
    (4,587
    )Other, net
    
    
    (4,122
    )
    
    
    14,896Net cash used in operating activities
    
    
    (13,514
    )
    
    
    (84,739
    )Cash Flows From Investing Activities:Capital expenditures
    
    
    (15,602
    )
    
    
    (24,092
    )Proceeds from sales of assets, net
    
    
    2,498
    
    
    
    11,333Net cash used in investing activities
    
    
    (13,104
    )
    
    
    (12,759
    )Cash Flows From Financing Activities:Increase (decrease) in short-term borrowings
    
    
    (154
    )
    
    
    12,420Repayments of Borrowings under Senior Secured Credit Facility
    
    
    (26,545
    )
    
    
    Currency Swap
    
    
    
    
    
    
    (12,084
    )Increase (decrease) in other debt
    
    
    (3,764
    )
    
    
    52,277Financing costs and other
    
    
    (3
    )
    
    
    Net Proceeds from rights offering and private equity sale
    
    
    117,871
    
    
    
    Net cash provided by financing activities
    
    
    87,405
    
    
    
    52,613Effect of Exchange Rate Changes on Cash and Cash Equivalents
    
    
    940
    
    
    
    (1,726
    )Net Increase (Decrease) In Cash and Cash Equivalents
    
    
    61,727
    
    
    
    (46,611
    )Cash and Cash Equivalents, Beginning of Period
    
    
    32,161
    
    
    
    76,696Cash and Cash Equivalents, End of Period
    
    $
    93,888
    
    
    $
    30,085
  5




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##### Table of Contents



EXIDE TECHNOLOGIES AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2006
 (Unaudited)
 (1) BASIS OF PRESENTATION
        6




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##### Table of Contents



(2) WARRANTS
    (3) COMPREHENSIVE LOSS
  For the Three Months Ended
    
    
    For the Six Months EndedSeptember 30, 2006
    
    
    September 30, 2005
    
    
    September 30, 2006
    
    
    September 30, 2005Net loss
    
    $
    (35,109
    )
    
    $
    (33,023
    )
    
    $
    (73,005
    )
    
    $
    (68,732
    )Additions and changes to minimum pension liability
    
    
    61
    
    
    
    22
    
    
    
    (291
    )
    
    
    279Change in cumulative translation adjustment
    
    
    (99
    )
    
    
    (2,851
    )
    
    
    22,021
    
    
    
    (23,642
    )Total comprehensive loss
    
    $
    (35,147
    )
    
    $
    (35,852
    )
    
    $
    (51,275
    )
    
    $
    (92,095
    )
 (4) REORGANIZATION ITEMS, NET
  For the Three Months Ended
    
    
    For the Six Months EndedSeptember 30, 2006
    
    
    September 30, 2005
    
    
    September 30, 2006
    
    
    September 30, 2005Professional fees
    
    $
    525
    
    
    $
    1,168
    
    
    $
    1,354
    
    
    $
    1,996Other (a)
    
    
    439
    
    
    
    547
    
    
    
    1,216
    
    
    
    1,091Total reorganization items, net
    
    $
    964
    
    
    $
    1,715
    
    
    $
    2,570
    
    
    $
    3,087
   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 September 30, 2006:Gross Amount
    
    $
    58,020
    
    
    $
    13,197
    
    
    $
    109,785
    
    
    $
    24,494
    
    
    $
    205,496Accumulated Amortization
    
    
    
    
    
    
    (2,519
    )
    
    
    (11,096
    )
    
    
    (2,936
    )
    
    
    (16,551
    )Net
    
    $
    58,020
    
    
    $
    10,678
    
    
    $
    98,689
    
    
    $
    21,558
    
    
    $
    188,945
  (6) INVENTORIES
  September 30, 2006
    
    
    March 31, 2006Raw materials
    
    $
    69,813
    
    
    $
    64,248Work-in-process
    
    
    86,444
    
    
    
    79,923Finished goods
    
    
    262,310
    
    
    
    270,772$
    418,567
    
    
    $
    414,943
 (7) OTHER ASSETS
  September 30, 2006
    
    
    March 31, 2006Deposits
    
    $
    10,317
    
    
    $
    10,317Capitalized software, net
    
    
    3,966
    
    
    
    6,524Loan to affiliate
    
    
    2,249
    
    
    
    3,563Other
    
    
    4,329
    
    
    
    3,686$
    20,861
    
    
    $
    24,090
  (8) DEBT
   8




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##### Table of Contents



September 30, 2006
    
    
    March 31, 2006Senior Secured Credit Facility
    
    $
    293,238
    
    
    $
    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
    
    
    20,452
    
    
    
    23,352Total
    
    
    663,690
    
    
    
    689,629Less  current maturities
    
    
    2,692
    
    
    
    5,643$
    660,998
    
    
    $
    683,986
  (9) INTEREST EXPENSE, NET
  (10) OTHER (INCOME) EXPENSE, NET
  For the Three Months Ended
    
    
    For the Six Months EndedSeptember 30, 2006
    
    
    September 30, 2005
    
    
    September 30, 2006
    
    
    September 30, 2005Net loss on asset sales / disposals
    
    $
    4,169
    
    
    $
    1,024
    
    
    $
    6,972
    
    
    $
    2,669Equity income
    
    
    (331
    )
    
    
    (455
    )
    
    
    (350
    )
    
    
    (989
    )Currency (gain) loss
    
    
    1,387
    
    
    
    1,360
    
    
    
    (4,202
    )
    
    
    13,034Loss on revaluation of foreign
currency forward contract
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,081
    )(Gain) loss on revaluation of Warrants
    
    
    74
    
    
    
    378
    
    
    
    (739
    )
    
    
    (7,748
    )Other
    
    
    905
    
    
    
    (895
    )
    
    
    1,031
    
    
    
    (1,074
    )$
    6,204
    
    
    $
    1,412
    
    
    $
    2,712
    
    
    $
    4,811
 (11) EMPLOYEE BENEFITS
  Pension BenefitsFor the Three Months Ended
    
    
    For the Six Months EndedSeptember 30, 2006
    
    
    September 30, 2005
    
    
    September 30, 2006
    
    
    September 30, 2005Components of net periodic benefit cost:Service cost
    
    $
    2,249
    
    
    $
    2,708
    
    
    $
    4,472
    
    
    $
    5,452Interest cost
    
    
    8,346
    
    
    
    8,178
    
    
    
    16,621
    
    
    
    16,484Expected return on plan assets
    
    
    (6,206
    )
    
    
    (5,299
    )
    
    
    (12,355
    )
    
    
    (10,669
    )Amortization of:Prior service cost
    
    
    5
    
    
    
    
    
    
    
    10
    
    
    
    Actuarial loss
    
    
    (300
    )
    
    
    
    
    
    
    (592
    )
    
    
    Net periodic benefit cost
    
    $
    4,094
    
    
    $
    5,587
    
    
    $
    8,156
    
    
    $
    11,267
 Other Post-Retirement BenefitsFor the Three Months Ended
    
    
    For the Six Months EndedSeptember 30, 2006
    
    
    September 30, 2005
    
    
    September 30, 2006
    
    
    September 30, 2005Components of net periodic benefit cost:Service cost
    
    $
    42
    
    
    $
    25
    
    
    $
    84
    
    
    $
    50Interest cost
    
    
    390
    
    
    
    335
    
    
    
    780
    
    
    
    669Amortization of:Actuarial loss
    
    
    53
    
    
    
    
    
    
    
    106
    
    
    
    Net periodic benefit cost
    
    $
    485
    
    
    $
    360
    
    
    $
    970
    
    
    $
    719
 9




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(12) ENVIRONMENTAL MATTERS
  (13) COMMITMENTS AND CONTINGENCIES
 Claims Reconciliation
   10




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Historical Federal Plea Agreement
       Private Party Lawsuits and other Legal Proceedings
  11




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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
  15




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Sales Returns and Allowances
   Balance at March 31, 2006
    
    $
    45,618Accrual for sales returns and allowances provided during the period
    
    
    24,205Settlements made (in cash or credit) during the period
    
    
    (23,881
    )Foreign currency translation
    
    
    812Balance at September 30, 2006
    
    $
    46,754
 (14) RESTRUCTURING
    Severance Costs
    
    
    Closure Costs
    
    
    TotalBalance at March 31, 2006
    
    $
    6,773
    
    
    $
    3,025
    
    
    $
    9,798Charges, Six Months Ended September 30, 2006
    
    
    9,584
    
    
    
    6,339
    
    
    
    15,923Payments and Currency Translation
    
    
    (13,773
    )
    
    
    (6,192
    )
    
    
    (19,965
    )Balance at September 30, 2006
    
    $
    2,584
    
    
    $
    3,172
    
    
    $
    5,756
  (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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(18) STOCK-BASED COMPENSATION PLANS
  18




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Three Months
    
    
    Six MonthsEnded
    
    
    EndedSeptember 30, 2005
    
    
    September 30, 2005Net loss as reported
    
    $
    (33,023
    )
    
    $
    (68,732
    )Less: stock based compensation
expense determined under the fair
value based method
    
    
    (473
    )
    
    
    (473
    )Pro forma net loss
    
    $
    (33,496
    )
    
    $
    (69,205
    )Weighted average shares outstanding
    
    
    25,576
    
    
    
    25,576Basic and diluted loss per share:As reported
    
    $
    (1.29
    )
    
    $
    (2.69
    )Pro forma
    
    $
    (1.31
    )
    
    $
    (2.71
    )
 (19) SEGMENT INFORMATION
       19




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For the Three Months Ended September 30, 2006Transportation
    
    IndustrialEurope
    
    
    
    
    
    EuropeNorth
    
    and
    
    North
    
    and
    
    OtherAmerica
    
    ROW
    
    America
    
    ROW
    
    (a)
    
    Consolidated(in thousands)Net sales
    
    $
    227,711
    
    
    $
    186,937
    
    
    $
    64,972
    
    
    $
    200,679
    
    
    
    
    
    
    $
    680,299Gross profit
    
    
    36,683
    
    
    
    21,395
    
    
    
    14,045
    
    
    
    33,279
    
    
    
    
    
    
    
    105,402Income (loss)
before
reorganization
items, income
taxes, and minority
interest
    
    
    5,824
    
    
    
    (7,192
    )
    
    
    5,313
    
    
    
    (1,118
    )
    
    
    (35,646
    )
    
    
    (32,819
    )
 For the Three Months Ended September 30, 2005Transportation
    
    IndustrialEurope
    
    
    
    
    
    EuropeNorth
    
    and
    
    North
    
    and
    
    OtherAmerica
    
    ROW
    
    America
    
    ROW
    
    (a)
    
    Consolidated(in thousands)Net sales
    
    $
    225,981
    
    
    $
    187,906
    
    
    $
    73,045
    
    
    $
    199,553
    
    
    
    
    
    
    $
    686,485Gross profit
    
    
    28,923
    
    
    
    23,895
    
    
    
    14,051
    
    
    
    37,029
    
    
    
    
    
    
    
    103,898Income (loss)
before
reorganization
items, income
taxes, and minority
interest
    
    
    3,518
    
    
    
    4,582
    
    
    
    4,917
    
    
    
    7,559
    
    
    
    (52,141
    )
    
    
    (31,565
    )
 For the Six Months Ended September 30, 2006Transportation
    
    IndustrialEurope
    
    
    
    
    
    EuropeNorth
    
    and
    
    North
    
    and
    
    OtherAmerica
    
    ROW
    
    America
    
    ROW
    
    (a)
    
    Consolidated(in thousands)Net sales
    
    $
    442,221
    
    
    $
    369,688
    
    
    $
    137,921
    
    
    $
    413,659
    
    
    
    
    
    
    $
    1,363,489Gross profit
    
    
    69,617
    
    
    
    41,002
    
    
    
    31,656
    
    
    
    72,805
    
    
    
    
    
    
    
    215,080Income (loss)
before
reorganization
items, income
taxes, and minority
interest
    
    
    1,012
    
    
    
    (13,335
    )
    
    
    12,804
    
    
    
    2,516
    
    
    
    (68,317
    )
    
    
    (65,320
    )
 For the Six Months Ended September 30, 2005Transportation
    
    IndustrialEurope
    
    
    
    
    
    EuropeNorth
    
    and
    
    North
    
    and
    
    OtherAmerica
    
    ROW
    
    America
    
    ROW
    
    (a)
    
    Consolidated(in thousands)Net sales
    
    $
    444,149
    
    
    $
    367,345
    
    
    $
    140,478
    
    
    $
    403,845
    
    
    
    
    
    
    $
    1,355,817Gross profit
    
    
    59,396
    
    
    
    42,661
    
    
    
    27,051
    
    
    
    77,004
    
    
    
    
    
    
    
    206,112Income (loss)
before
reorganization
items, income
taxes, and minority
interest
    
    
    7,600
    
    
    
    2,935
    
    
    
    9,286
    
    
    
    17,122
    
    
    
    (103,504
    )
    
    
    (66,561
    )
 
 (a)
    
    Other includes unallocated corporate expenses, interest
expense, currency remeasurement losses (gains), and losses
(gains) on revaluation of warrants. 20




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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.
 21




---



##### Table of Contents



Competition
 Exchange Rates
 Markets
 Seasonality and Weather.
  Interest Rates.
 Second 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 September 30, 2006 compared with three months ended September 30, 2005
 Overview
 .
 Net Sales
  23




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##### Table of Contents



FAVORABLE (UNFAVORABLE)For the Three Months Ended
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencySeptember 30, 2006
    
    
    September 30, 2005
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationNorth America
    
    $
    227,711
    
    
    $
    225,981
    
    
    $
    1,730
    
    
    
    
    
    
    $
    1,730Europe & ROW
    
    
    186,937
    
    
    
    187,906
    
    
    
    (969
    )
    
    
    7,021
    
    
    
    (7,990
    )414,648
    
    
    
    413,887
    
    
    
    761
    
    
    
    7,021
    
    
    
    (6,260
    )Industrial EnergyNorth America
    
    
    64,972
    
    
    
    73,045
    
    
    
    (8,073
    )
    
    
    
    
    
    
    (8,073
    )Europe & ROW
    
    
    200,679
    
    
    
    199,553
    
    
    
    1,126
    
    
    
    7,520
    
    
    
    (6,394
    )265,651
    
    
    
    272,598
    
    
    
    (6,947
    )
    
    
    7,520
    
    
    
    (14,467
    )TOTAL
    
    $
    680,299
    
    
    $
    686,485
    
    
    $
    (6,186
    )
    
    $
    14,541
    
    
    $
    (20,727
    )
     Gross Profit
  24




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##### Table of Contents



For the Three Months Ended
    
    
    For the Three Months EndedSeptember 30, 2006
    
    
    September 30, 2005
    
    
    FAVORABLE (UNFAVORABLE)Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencyTOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationNorth America
    
    $
    36,683
    
    
    
    16.1
    %
    
    $
    28,923
    
    
    
    12.8
    %
    
    $
    7,760
    
    
    
    
    
    
    $
    7,760Europe & ROW
    
    
    21,395
    
    
    
    11.4
    %
    
    
    23,895
    
    
    
    12.7
    %
    
    
    (2,500
    )
    
    
    796
    
    
    
    (3,296
    )58,078
    
    
    
    14.0
    %
    
    
    52,818
    
    
    
    12.8
    %
    
    
    5,260
    
    
    
    796
    
    
    
    4,464Industrial EnergyNorth America
    
    
    14,045
    
    
    
    21.6
    %
    
    
    14,051
    
    
    
    19.2
    %
    
    
    (6
    )
    
    
    
    
    
    
    (6
    )Europe & ROW
    
    
    33,279
    
    
    
    16.6
    %
    
    
    37,029
    
    
    
    18.6
    %
    
    
    (3,750
    )
    
    
    1,246
    
    
    
    (4,996
    )47,324
    
    
    
    17.8
    %
    
    
    51,080
    
    
    
    18.7
    %
    
    
    (3,756
    )
    
    
    1,246
    
    
    
    (5,002
    )TOTAL
    
    $
    105,402
    
    
    
    15.5
    %
    
    $
    103,898
    
    
    
    15.1
    %
    
    $
    1,504
    
    
    $
    2,042
    
    
    $
    (538
    )
     Expenses
  25




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FAVORABLE (UNFAVORABLE)For the Three Months Ended
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencySeptember 30, 2006
    
    
    September 30, 2005
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationNorth America
    
    $
    30,859
    
    
    $
    25,405
    
    
    $
    (5,454
    )
    
    
    
    
    
    $
    (5,454
    )Europe & ROW
    
    
    28,587
    
    
    
    19,313
    
    
    
    (9,274
    )
    
    
    (1,017
    )
    
    
    (8,257
    )59,446
    
    
    
    44,718
    
    
    
    (14,728
    )
    
    
    (1,017
    )
    
    
    (13,711
    )Industrial EnergyNorth America
    
    
    8,732
    
    
    
    9,134
    
    
    
    402
    
    
    
    
    
    
    
    402Europe & ROW
    
    
    34,397
    
    
    
    29,470
    
    
    
    (4,927
    )
    
    
    (1,373
    )
    
    
    (3,554
    )43,129
    
    
    
    38,604
    
    
    
    (4,525
    )
    
    
    (1,373
    )
    
    
    (3,152
    )Unallocated
corporate expenses
    
    
    35,646
    
    
    
    52,141
    
    
    
    16,495
    
    
    
    (428
    )
    
    
    16,923TOTAL
    
    $
    138,221
    
    
    $
    135,463
    
    
    $
    (2,758
    )
    
    $
    (2,818
    )
    
    $
    60
      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 EndedSeptember 30, 2006
    
    
    September 30, 2005Percent of
    
    
    
    
    
    
    Percent of
    
    
    FAVORABLE/TOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Net Sales
    
    
    (UNFAVORABLE)(in thousands)TransportationNorth America
    
    $
    5,824
    
    
    
    2.6
    %
    
    $
    3,518
    
    
    
    1.6
    %
    
    $
    2,306Europe & ROW
    
    
    (7,192
    )
    
    
    (3.8
    %)
    
    
    4,582
    
    
    
    2.4
    %
    
    
    (11,774
    )(1,368
    )
    
    
    (0.3
    %)
    
    
    8,100
    
    
    
    2.0
    %
    
    
    (9,468
    )Industrial EnergyNorth America
    
    
    5,313
    
    
    
    8.2
    %
    
    
    4,917
    
    
    
    6.7
    %
    
    
    396Europe & ROW
    
    
    (1,118
    )
    
    
    (0.6
    %)
    
    
    7,559
    
    
    
    3.8
    %
    
    
    (8,677
    )4,195
    
    
    
    1.6
    %
    
    
    12,476
    
    
    
    4.6
    %
    
    
    (8,281
    )Other
    
    
    (35,646
    )
    
    
    n/a
    
    
    
    (52,141
    )
    
    
    n/a
    
    
    
    16,495TOTAL
    
    $
    (32,819
    )
    
    
    (4.8
    %)
    
    $
    (31,565
    )
    
    
    (4.6
    %)
    
    $
    (1,254
    )
 Reorganization items
  Income Taxes
  Six months ended September 30, 2006 compared with six months ended September 30, 2005
 Overview
  Net Sales
  27




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FAVORABLE (UNFAVORABLE)For the Six Months Ended
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencySeptember 30, 2006
    
    
    September 30, 2005
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationNorth America
    
    $
    442,221
    
    
    $
    444,149
    
    
    $
    (1,928
    )
    
    
    
    
    
    $
    (1,928
    )Europe & ROW
    
    
    369,688
    
    
    
    367,345
    
    
    
    2,343
    
    
    
    6,677
    
    
    
    (4,334
    )811,909
    
    
    
    811,494
    
    
    
    415
    
    
    
    6,677
    
    
    
    (6,262
    )Industrial EnergyNorth America
    
    
    137,921
    
    
    
    140,478
    
    
    
    (2,557
    )
    
    
    
    
    
    
    (2,557
    )Europe & ROW
    
    
    413,659
    
    
    
    403,845
    
    
    
    9,814
    
    
    
    7,364
    
    
    
    2,450551,580
    
    
    
    544,323
    
    
    
    7,257
    
    
    
    7,364
    
    
    
    (107
    )TOTAL
    
    $
    1,363,489
    
    
    $
    1,355,817
    
    
    $
    7,672
    
    
    $
    14,041
    
    
    $
    (6,369
    )
     Gross Profit
  For the Six Months Ended
    
    
    For the Six Months EndedSeptember 30, 2006
    
    
    September 30, 2005
    
    
    FAVORABLE (UNFAVORABLE)Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencyTOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationNorth America
    
    $
    69,617
    
    
    
    15.7
    %
    
    $
    59,396
    
    
    
    13.4
    %
    
    $
    10,221
    
    
    
    
    
    
    $
    10,221Europe & ROW
    
    
    41,002
    
    
    
    11.1
    %
    
    
    42,661
    
    
    
    11.6
    %
    
    
    (1,659
    )
    
    
    767
    
    
    
    (2,426
    )110,619
    
    
    
    13.6
    %
    
    
    102,057
    
    
    
    12.6
    %
    
    
    8,562
    
    
    
    767
    
    
    
    7,795Industrial EnergyNorth America
    
    
    31,656
    
    
    
    23.0
    %
    
    
    27,051
    
    
    
    19.3
    %
    
    
    4,605
    
    
    
    
    
    
    
    4,605Europe & ROW
    
    
    72,805
    
    
    
    17.6
    %
    
    
    77,004
    
    
    
    19.1
    %
    
    
    (4,199
    )
    
    
    1,190
    
    
    
    (5,389
    )104,461
    
    
    
    18.9
    %
    
    
    104,055
    
    
    
    19.1
    %
    
    
    406
    
    
    
    1,190
    
    
    
    (784
    )TOTAL
    
    $
    215,080
    
    
    
    15.8
    %
    
    $
    206,112
    
    
    
    15.2
    %
    
    $
    8,968
    
    
    $
    1,957
    
    
    $
    7,011
  28




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Expenses
  FAVORABLE (UNFAVORABLE)For the Six Months Ended
    
    
    
    
    
    
    Currency
    
    
    Non-CurrencySeptember 30, 2006
    
    
    September 30, 2005
    
    
    TOTAL
    
    
    Related
    
    
    Related(in thousands)TransportationNorth America
    
    $
    68,605
    
    
    $
    51,796
    
    
    $
    (16,809
    )
    
    
    
    
    
    $
    (16,809
    )Europe & ROW
    
    
    54,337
    
    
    
    39,726
    
    
    
    (14,611
    )
    
    
    (932
    )
    
    
    (13,679
    )122,942
    
    
    
    91,522
    
    
    
    (31,420
    )
    
    
    (932
    )
    
    
    (30,488
    )Industrial EnergyNorth America
    
    
    18,852
    
    
    
    17,765
    
    
    
    (1,087
    )
    
    
    
    
    
    
    (1,087
    )Europe & ROW
    
    
    70,289
    
    
    
    59,884
    
    
    
    (10,405
    )
    
    
    (1,297
    )
    
    
    (9,108
    )89,141
    
    
    
    77,649
    
    
    
    (11,492
    )
    
    
    (1,297
    )
    
    
    (10,195
    )Unallocated corporate expenses
    
    
    68,317
    
    
    
    103,504
    
    
    
    35,187
    
    
    
    (562
    )
    
    
    35,749TOTAL
    
    $
    280,400
    
    
    $
    272,675
    
    
    $
    (7,725
    )
    
    $
    (2,791
    )
    
    $
    (4,934
    )
    29




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##### Table of Contents



Loss before reorganization items, income taxes, and minority interest
  For the Six Months Ended
    
    
    For the Six Months EndedSeptember 30, 2006
    
    
    September 30, 2005Percent of
    
    
    
    
    
    
    Percent of
    
    
    FAVORABLE/TOTAL
    
    
    Net Sales
    
    
    TOTAL
    
    
    Net Sales
    
    
    (UNFAVORABLE)(in thousands)TransportationNorth America
    
    $
    1,012
    
    
    
    0.2
    %
    
    $
    7,600
    
    
    
    1.7
    %
    
    $
    (6,588
    )Europe & ROW
    
    
    (13,335
    )
    
    
    (3.6
    %)
    
    
    2,935
    
    
    
    0.8
    %
    
    
    (16,270
    )(12,323
    )
    
    
    (1.5
    %)
    
    
    10,535
    
    
    
    1.3
    %
    
    
    (22,858
    )Industrial EnergyNorth America
    
    
    12,804
    
    
    
    9.3
    %
    
    
    9,286
    
    
    
    6.6
    %
    
    
    3,518Europe & ROW
    
    
    2,516
    
    
    
    0.6
    %
    
    
    17,122
    
    
    
    4.2
    %
    
    
    (14,606
    )15,320
    
    
    
    2.8
    %
    
    
    26,408
    
    
    
    4.9
    %
    
    
    (11,088
    )Other
    
    
    (68,317
    )
    
    
    n/a
    
    
    
    (103,504
    )
    
    
    n/a
    
    
    
    35,187TOTAL
    
    $
    (65,320
    )
    
    
    (4.8
    %)
    
    $
    (66,561
    )
    
    
    (4.9
    %)
    
    $
    1,241
 Reorganization items
  Income Taxes
  Liquidity and Capital Resources
  30




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##### Table of Contents



31




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##### Table of Contents



Sources Of Cash
       32




---



##### Table of Contents



Uses Of Cash
          Purchase Commitment
  33




---



##### 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
  34




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##### Table of Contents




    
    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.
  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
     36




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##### Table of Contents



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.
  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.
   
 
  37




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##### Table of Contents



The Company has entered into a plea agreement with the U.S. Attorney for the Southern District of
Illinois under which it is required to pay a fine of $27.5 million over five years. If the Company
is unable to post adequate security for this fine by February 2007 and the U.S. District Court is
unwilling to modify the plea agreement, the Company could be unable to remain in compliance with
its senior credit facility and senior secured notes, which could have a material adverse effect on
its business and financial condition.
 c
 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.
 38




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##### Table of Contents




    
    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.
 
 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
   Name
    
    Votes For
    
    Votes WithheldHerbert F. Aspbury
    
    21,013,459
    
    226,911Michael R. DAppolonia
    
    20,418,691
    
    821,679David S. Ferguson
    
    20,419,625
    
    820,745John P. Reilly
    
    20,419,674
    
    820,696Michael P. Ressner
    
    20,572,878
    
    667,492Gordon A. Ulsh
    
    21,010,108
    
    230,262Carroll R. Wetzel
    
    20,573,910
    
    666,460
  39




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##### Table of Contents



Vote For
    
    Votes Against
    
    Abstentions13,952,722
    
    200,181
    
    14,188
  Vote For
    
    Votes Against
    
    Abstentions13,752,069
    
    217,072
    
    198,650
  Vote For
    
    Votes Against
    
    Abstentions11,199,968
    
    1,767,304
    
    1,200,519
  Vote For
    
    Votes Against
    
    Abstentions18,282,387
    
    2,199,048
    
    758,934
 
 Item 5. Other Information
  
 Item 6. Exhibits
 2.1
    
    Standby Purchase Agreement between Exide Technologies and Tontine Capital Partners, L.P.,
Legg Mason Capital Management, Inc. and Arklow Capital LLC, dated June 28, 2006, including the term sheet and the form of
registration rights agreement attached thereto as Annexes A and B, respectively, incorporated by reference to Exhibit 10.1
to the Companys Report on Form 8-K dated June 29, 2006.2.2
    
    First Amendment to Standby Purchase Agreement dated August 1, 2006, incorporated by
reference to Exhibit 2.3 to Amendment No. 1 to the Form S-3 Registration Statement filed on August 2, 2006.*3.1
    
    Amended and Restated Articles of Incorporation.*10.1
    
    2004 Stock Incentive Plan, as amended, approved at the 2006 Annual Meeting of Shareholders10.2
    
    Registration Rights Agreement dated September 18, 2006, between Exide Technologies,
Tontine Capital Partners, L.P., Tontine Partners, L.P., Tontine Overseas Associates,
L.L.C., Tontine Capital Overseas Master Fund, L.P., Arklow Capital, LLC and Legg Mason
Investment Trust, Inc., incorporated by reference to Exhibit 10.1 to the Companys Report
on Form 8-K filed on September 19, 2006.*10.3
    
    2007 Short Term Incentive Plan adopted
by the Board of Directors on June 28, 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.* Filed with this document
 40




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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: November 9, 2006
 41