UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ___________________
Commission File No. 1-9389
C&D TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-3314599
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400 Union Meeting Road
Blue Bell, Pennsylvania 19422
(Address of principal executive office)
(Zip Code)
(215) 619-2700
(Registrant's telephone number, including area code)
______________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO_____
Number of shares of the Registrant's Common Stock outstanding on December 8,
1997: 6,148,985
<PAGE>
C&D TECHNOLOGIES, INC.
AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION Page No.
Item 1 - Financial Statements
Consolidated Balance Sheets -
October 31, 1997 and January 31, 1997................. 3
Consolidated Statements of Income -
Three and Nine Months Ended October 31, 1997
and 1996............................................. 5
Consolidated Statements of Cash Flows -
Nine Months Ended October 31, 1997 and 1996........... 6
Notes to Consolidated Financial Statements............ 8
Report of Independent Accountants..................... 14
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations..... 15
PART II. OTHER INFORMATION 18
SIGNATURES 19
2
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C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
October 31, January 31,
1997 1997
---- ----
ASSETS
Current assets:
Cash and cash equivalents................. $ 2,915 $ 952
Restricted cash and cash equivalents...... - 1
Accounts receivable, less allowance for
doubtful accounts of $1,675 and
$1,414, respectively................. 44,041 41,682
Inventories............................... 40,263 38,943
Deferred income taxes..................... 7,286 7,315
Other current assets...................... 1,153 437
------- -------
Total current assets........... 95,658 89,330
Property, plant and equipment, net.............. 54,487 52,469
Intangible and other assets, net................ 5,839 6,208
Goodwill, net................................... 11,304 11,966
------- -------
Total assets................... $167,288 $159,973
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt......... $ 390 $ 476
Accounts payable.......................... 22,806 23,730
Accrued liabilities....................... 17,867 14,468
Other current liabilities................. 3,292 5,220
------- -------
Total current liabilities...... 44,355 43,894
Deferred income taxes........................... 4,328 3,923
Long-term debt.................................. 17,816 29,351
Other liabilities............................... 9,924 7,899
------- -------
Total liabilities.............. $ 76,423 $ 85,067
------- -------
The accompanying notes are an integral part of these statements.
3
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C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
(Dollars in thousands)
(Unaudited)
October 31, January 31,
1997 1997
---- ----
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value,
10,000,000 shares authorized;
6,585,476 and 6,547,476 shares
issued, respectively.................. 66 65
Additional paid-in capital................. 40,541 39,326
Minimum pension liability adjustment....... (136) (136)
Treasury stock, at cost, 452,551 and
470,551 shares, respectively ......... (10,819) (11,232)
Notes receivable from stockholder,
net of discount of $33 and $85,
respectively.......................... (1,024) (1,636)
Cumulative translation adjustment.......... (310) (374)
Retained earnings.......................... 62,547 48,893
------- -------
Total stockholders' equity...... 90,865 74,906
------- -------
Total liabilities and
stockholders' equity.......... $167,288 $159,973
======= =======
The accompanying notes are an integral part of these statements.
4
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C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three months ended Nine months ended
October 31, October 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales............................ $81,381 $76,576 $230,102 $210,753
Cost of sales........................ 60,725 58,314 170,989 162,089
------ ------ ------- -------
Gross profit..................... 20,656 18,262 59,113 48,664
Selling, general and
administrative expenses......... 9,678 9,326 28,543 25,422
Research and development
expenses......................... 2,156 2,079 6,358 6,115
------ ------ ------- -------
Operating income................. 8,822 6,857 24,212 17,127
Interest expense, net................ 301 388 1,041 941
Other expense (income), net.......... 132 (14) 843 113
------ ------ ------- -------
Income before income taxes....... 8,389 6,483 22,328 16,073
Provision for income taxes........... 3,070 2,353 8,170 5,647
------ ------ ------- -------
Net income....................... $ 5,319 $ 4,130 $ 14,158 $ 10,426
====== ====== ======= =======
Net income per common and
common equivalent share.......... $ 0.84 $ 0.65 $ 2.25 $ 1.60
====== ====== ======= =======
Weighted average common and
common equivalent shares......... 6,338 6,359 6,298 6,503
====== ====== ======= =======
Dividends per share.................. $0.0275 $0.0275 $ 0.0825 $ 0.0825
====== ====== ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Nine months ended
October 31,
1997 1996
---- ----
Cash flows provided (used) by operating activities:
Net income ..................................... $ 14,158 $ 10,426
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............. 8,770 6,422
Deferred income taxes..................... 434 936
Loss on disposal of assets................ 72 9
Changes in:
Accounts receivable................. (2,443) (8,414)
Inventories......................... (1,354) 1,020
Other current assets................ (717) (388)
Accounts payable.................... (921) 4,469
Accrued liabilities................. 3,580 642
Income taxes payable................ (123) 1,672
Other current liabilities........... (1,459) 780
Other liabilities................... 2,178 1,222
Other, net................................ 269 (244)
------ ------
Net cash provided by operating activities........... 22,444 18,552
------ ------
Cash flows provided (used) by investing activities:
Acquisition of businesses, net of cash
acquired..................................... - (19,739)
Acquisition of property, plant and equipment ... (9,266) (12,329)
Proceeds from disposal of property, plant and
equipment ................................... 13 -
Change in restricted cash....................... 1 4,745
------ ------
Net cash used by investing activities............... (9,252) (27,323)
------ ------
Cash flows provided (used) by financing activities:
Repayment of long-term debt..................... (11,621) (7,983)
Proceeds from new borrowings.................... - 23,012
Proceeds from issuance of common stock.......... 435 1,096
Payment of common stock dividends............... (671) (527)
Purchase of treasury stock...................... - (10,584)
Note receivable from stockholder in
connection with issuance of common stock...... - (1,057)
Repayment of note receivable from stockholder... 664 -
------ ------
The accompanying notes are an integral part of these statements.
6
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Dollars in thousands)
(Unaudited)
Nine months ended
October 31,
1997 1996
---- ----
Net cash (used) provided by financing activities.... (11,193) 3,957
------ ------
Effect of exchange rate changes on cash............. (36) 4
------ ------
Increase (decrease) in cash and cash equivalents.... 1,963 (4,810)
Cash and cash equivalents at beginning
of period........................................ 952 5,472
------ ------
Cash and cash equivalents at end of period.......... $ 2,915 $ 662
====== ======
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid, net of amount capitalized............ $ 1,294 $ 1,115
Income taxes paid................................... 7,859 3,039
SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Acquired businesses*:
Estimated fair value of assets acquired....... $ - $13,544
Goodwill and identifiable intangible
assets . ................................... - 12,655
Purchase price obligations.................... - (1,358)
Cash paid, net of cash acquired............... - (19,739)
------ ------
Liabilities assumed........................... $ - $ 5,102
====== ======
Dividends declared but not paid..................... $ - $ 167
Note receivable from stockholder in connection
with issuance of common stock..................... $ - $ 664
Fair market value of treasury stock issued to
pension plans .................................... $ 847 $ 1,208
*Restated to include final opening balance sheet adjustments as of January 31,
1997.
The accompanying notes are an integral part of these statements.
7
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
(UNAUDITED)
1. INTERIM STATEMENTS
The accompanying interim consolidated financial statements should be read
in conjunction with the consolidated financial statements and notes thereto
contained in the Company's Annual Report to Shareholders for the fiscal year
ended January 31, 1997. The January 31, 1997 amounts were derived from the
Company's audited financial statements. The consolidated financial statements
presented herein are unaudited but, in the opinion of management, include all
necessary adjustments (which comprise only normal recurring items) required for
a fair presentation of the consolidated financial position as of October 31,
1997 and the consolidated statements of income for the three and nine months
ended October 31, 1997 and 1996 and the consolidated statements of cash flows
for the nine months ended October 31, 1997 and 1996. However, interim results of
operations necessarily involve more estimates than annual results and may not be
indicative of results for the full fiscal year.
2. INVENTORIES
Inventories consisted of the following:
October 31, January 31,
1997 1997
---- ----
Raw materials ........................... $17,048 $17,506
Work-in-progress ........................ 11,065 11,599
Finished goods .......................... 12,150 9,838
------ ------
$40,263 $38,943
====== ======
3. INCOME TAXES
A reconciliation of the provision for income taxes from the statutory rate
to the effective rate is as follows:
Nine months ended
October 31,
1997 1996*
---- ----
U.S. statutory income tax ...................... 35.0% 35.0%
State tax, net of federal income tax benefit.... 3.4 3.6
Reduction of taxes provided in prior years...... - (1.9)
Foreign sales corporation ...................... (1.1) (0.7)
Tax effect of foreign operations ............... (0.9) (0.9)
Other........................................... 0.2 -
---- ----
36.6% 35.1%
==== ====
* Reclassified for comparative purposes.
8
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands except per share data)
(UNAUDITED)
4. CONTINGENT LIABILITIES
With regard to the following contingent liabilities there have been no
material changes since January 31, 1997.
Because the Company uses lead and other hazardous substances in its
manufacturing processes, it is subject to numerous federal, Canadian, Mexican,
Irish state and local laws and regulations that are designed to protect the
environment and employee health and safety. These laws and regulations include
requirements of periodic reporting to governmental agencies regarding the use
and disposal of hazardous substances and compliance with rigorous criteria
regarding exposure to employees and the disposal of scrap. In the opinion of the
Company, the Company complies in all material respects with these laws and
regulations.
Notwithstanding such compliance, if damage to persons or the environment
has been or is caused by hazardous substances used or generated in the conduct
of the Company's business, the Company may be held liable for the damage and be
required to pay the cost of remedying the same, and the amount of any such
liability might be material to the results of operations or financial condition.
However, under the terms of the purchase agreement with Allied for the
Acquisition of the Company (the Acquisition Agreement), Allied is obligated to
indemnify the Company for any liabilities of this type resulting from conditions
existing at January 28, 1986 that were not disclosed by Allied to the Company in
the schedules to the Acquisition Agreement.
The Company, along with numerous other parties, has been requested to
provide information to the United States Environmental Protection Agency (the
EPA) in connection with investigations of the source and extent of contamination
at several lead smelting facilities (the Third Party Facilities) to which the
Company had made scrap lead shipments for reclamation prior to the date of the
Acquisition. As of January 16, 1989, the Company, with the concurrence of
Allied, entered into an agreement with other potentially responsible parties
(PRPs) relating to remediation of a portion of one of the Third Party
Facilities, the former NL Industries (NL), facility in Pedricktown, New Jersey
(the NL Site), which agreement provides for their joint funding on a
proportionate basis of certain remedial investigation and feasibility study
activities with respect to that site.
9
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
(UNAUDITED)
4. CONTINGENT LIABILITIES (continued)
In fiscal 1993 in accordance with an EPA order, a group comprised of the
Company and 30 other parties commenced work on the cleanup of a portion of the
NL Site based on a specified remedial approach which is now completed. The
Company did not incur costs in excess of the amount previously reserved.
With regard to the remainder of the NL Site, the EPA is pursuing
negotiations with NL and the other PRPs, including the Company, regarding the
conduct and funding of the remedial work plan. The EPA has proposed a cost
allocation plan, however, the allocation percentages between parties and the
basis for allocation of cost are not defined in the plan or elsewhere.
Therefore, a reliable range of the potential cost to the Company of this phase
of the clean-up cannot currently be determined. Accordingly, the Company has not
created any reserve for this potential exposure.
The remedial investigation and feasibility study at a second Third Party
Facility, the former Tonolli Incorporated facility at Nesquehoning, Pennsylvania
(the Tonolli Site), was completed in fiscal 1993. The EPA and the PRPs are
continuing to evaluate the draft remedial design work plan for the site. Based
on the estimated cost of the remedial approach selected by the EPA, the Company
believes that the potential cost of remedial action at the Tonolli Site is
likely to range between $16,000 and $17,000. The Company's allocable share of
this cost has not been finally determined, and will depend on such variables as
the financial capability of various other PRPs to fund their respective
allocable shares of the remedial cost. Based on currently available information,
however, the Company believes that its most likely exposure with respect to the
Tonolli Site will not exceed the $579 previously reserved, the majority of which
is expected to be paid over the next one to three years. The Company expects to
recover a portion of its monetary obligations for the remediation of the Tonolli
site through litigation against third parties and recalcitrant PRPs.
The Company has responded to requests for information from the EPA with
regard to four other Third Party Facilities, one in September 1991, one (the
Chicago Site) in October 1991, one (the ILCO Site) in October 1993 and the
fourth (Bern Metal Super Fund Site) in March 1997. Of the four sites, the
Company has been identified as a PRP at the ILCO and Chicago Sites only. In July
1997, Allied accepted responsibility for the Bern Metal Super Fund Site.
Based on currently available information, the Company believes that the
potential cost of remediation at the ILCO Site is likely to range between
$54,000 and $59,000 (based on the estimated costs of the remedial approach
selected by the EPA). The Company's allocable share of this cost has not been
finally determined and will depend on such variables as the financial capability
10
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
(UNAUDITED)
4. CONTINGENT LIABILITIES (continued)
of various other PRPs to fund their respective allocable shares of the remedial
cost. However, on October 31, 1995 the Company received confirmation from the
EPA that it is a de minimis PRP at the ILCO Site and the Company has accepted a
proposed buyout offer from the EPA. Based on currently available information the
Company believes that its most likely exposure with respect to the ILCO Site is
an immaterial amount which has been previously reserved, the majority of which
is expected to be paid over the next year.
Based on currently available information, the Company believes that the
potential cost of the remediation at the Chicago Site is likely to range between
$8,000 and $10,500 (based on the preliminary estimated costs of the remediation
approach negotiated with the EPA). Sufficient information is not available to
determine the Company's allocable share of this cost. Based on currently
available information, however, the Company believes that its most likely
exposure with respect to the Chicago Site will be the approximately $283
previously reserved, the majority of which is expected to be paid over the next
two to five years.
Allied has accepted responsibility under the Acquisition Agreement for
potential liabilities relating to all Third Party Facilities other than the
aforementioned Sites. Based on currently available information, management of
the Company believes that the foregoing will not have a material adverse effect
on the Company's financial condition or results of operations.
5. ACQUISITIONS
Effective February 22, 1996 the Company acquired certain equipment and
inventory of LH Research, Inc. (LH) used in its power supply business, along
with all rights to the name "LH Research." In addition, effective March 12,
1996, the Company acquired from Burr-Brown Corporation its entire interest in
Power Convertibles Corporation (PCC), consisting of 1,044,418 shares of PCC
common stock and all outstanding preferred stock, and also acquired or repaid
$5,158 of indebtedness of PCC. On April 26, 1996, the Company acquired 190,000
shares of PCC common stock from the former chief executive officer of PCC, which
together with the shares previously acquired represented in excess of 99.6% of
the outstanding PCC common stock. As of May 29, 1996, the Company purchased all
remaining shares of PCC common stock and shares of PCC common stock issuable
upon exercise of stock options.
11
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
(UNAUDITED)
5. ACQUISITIONS (continued)
The acquisitions were recorded using the purchase method of accounting. The
aggregate purchase prices were $4,428 and $16,932 for LH and PCC, respectively.
The purchase prices were allocated on the basis of the estimated fair market
values of the assets acquired and liabilities assumed. The results of operations
are included in the Company's consolidated financial statements from the date of
acquisition.
The following unaudited pro forma financial information combines the
consolidated results of operations as if both acquisitions had occurred as of
the beginning of the periods presented. Pro forma adjustments include only the
effects of events directly attributed to a transaction that are factually
supportable and expected to have a continuing impact. The pro forma adjustments
contained in the table below include amortization of intangibles, interest
expense on the acquisition debt, elimination of interest expense on debt not
acquired, reduction of certain selling, general and administrative expenses and
the related income tax effects.
Nine months ended
October 31, 1996
------------------
Net sales.............................. $212,676
Net income............................. $ 10,172
Net income per common share ........... $ 1.56
The pro forma financial information does not necessarily reflect the
operating results that would have occurred had the acquisitions been consummated
as of the above dates, nor is such information indicative of future operating
results. In addition, the pro forma financial results contain estimates since
the acquired businesses did not maintain information on a period comparable with
the Company's fiscal year-end.
6. STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS NOT YET ADOPTED
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share." SFAS No.
128 specifies new standards designed to improve the earnings per share (EPS)
information provided in financial statements by simplifying the existing
computational guidelines, revising the disclosure requirements, and increasing
the comparability of EPS data on an international basis. Some of the changes
made to simplify the EPS computations include: (i) eliminating the presentation
of primary EPS and replacing it with basic EPS, with the principal difference
being that common stock equivalents are not considered in computing basic EPS,
(ii) eliminating the modified treasury stock method and the three percent
12
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
(UNAUDITED)
6. STATEMENTS OF FINANCIAL ACCOUNTING
STANDARDS NOT YET ADOPTED (continued)
materiality provision and (iii) revising the contingent share provisions and the
supplemental EPS data requirements. The new rule will require specific
disclosure of both basic earnings per share and diluted earnings per share. SFAS
No. 128 also makes a number of changes to existing disclosure requirements. SFAS
No. 128 is effective for financial statements issued for periods ending after
December 15, 1997.
Pro forma amounts (unaudited) assuming the new accounting principle was
applied during all periods presented follow.
Three Months Ended Nine Months Ended
October 31, October 31,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
Net income per common share $ 0.87 $ 0.66 $ 2.32 $ 1.65
===== ===== ===== =====
Diluted net income per common share $ 0.84 $ 0.65 $ 2.25 $ 1.60
===== ===== ===== =====
13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of
C&D TECHNOLOGIES, INC.
We have reviewed the accompanying consolidated balance sheet of C&D
TECHNOLOGIES, INC. and Subsidiaries as of October 31, 1997, the related
consolidated statements of income for the three and nine months ended October
31, 1997 and 1996 and the related consolidated statements of cash flows for the
nine months ended October 31, 1997 and 1996. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of January 31, 1997 and the related
consolidated statements of income, stockholders' equity and cash flows for the
year then ended (not presented herein); and in our report dated March 14, 1997,
we expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying consolidated
balance sheet as of January 31, 1997, is fairly presented, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
November 25, 1997
14
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net sales for the fiscal 1998 third quarter and nine months ended October
31, 1997 increased $4,805,000 or six percent and $19,349,000 or nine percent,
respectively, compared to the equivalent periods in fiscal 1997. The increase in
fiscal 1998 third quarter sales over the same quarter of the prior fiscal year
was primarily due to a 15 percent increase in sales of both
telecommunications-related products and non-telecommunications-related power
conversion products, partially offset by lower UPS and government sales. On a
company-wide basis, fiscal 1998 third quarter telecommunications-related sales
were approximately 50 percent of total company sales versus 46 percent of sales
for the third quarter of fiscal 1997. The increase in sales for the nine months
ended October 31, 1997 compared to the equivalent period in fiscal 1997 was
primarily due to higher telecommunications sales, non-telecommunications-related
power conversion sales, and motive power sales, up 12 percent, 13 percent and 7
percent, respectively, partially offset by lower government sales. A portion of
the sales increase during the first nine months of fiscal 1998 resulted from the
recording of a full nine months of sales versus a partial nine-month period in
the comparable period of the prior fiscal year due to the acquisition of two
power conversion companies during the first quarter of fiscal 1997. On a
company-wide basis, telecommunications-related sales for the first nine months
of fiscal 1998 were approximately 48 percent of total company sales versus 46
percent for the comparable period of the prior year.
Gross profit increased $2,394,000 or 13 percent for the third quarter of
fiscal 1998 and increased $10,449,000 or 21 percent for the nine-month period
ended October 31, 1997 as compared to the same periods in the prior year. Gross
margin increased to 25.4 percent for the third quarter of fiscal 1998 versus
23.8 percent for the comparable quarter of the prior year. For the nine months
ended October 31, 1997, gross margin increased to 25.7 percent, up from 23.1
percent from the same nine-month period of fiscal 1997. Gross margins for both
the fiscal 1998 third quarter and nine months ended October 31, 1997 increased
primarily as a result of lower material costs and shift in product mix.
Selling, general and administrative expenses remained proportional to sales
at 12 percent of sales for the third quarter and first nine months of both
fiscal 1998 and 1997. Selling, general and administrative expenses for the three
months ended October 31, 1997 increased $352,000 or four percent over the
comparable period of the prior year primarily due to higher payroll related
costs partially offset by lower variable selling expense. For the nine-month
period ended October 31, 1997, selling, general and administrative expenses
increased $3,121,000 or 12 percent over the same period of the prior year. This
increase was primarily due to higher payroll related costs, goodwill
amortization, due diligence costs, and the resolution of legal disputes,
partially offset by lower variable selling expense. A portion of this increase
in selling, general and administrative expenses during the first nine months of
Fiscal 1998 resulted from the recording of a full nine months of expenses versus
a partial nine-month period in the comparable period of the prior fiscal year
due to the acquisition of two power conversion companies during the first
quarter of fiscal 1997.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
Research and development expenses remained proportional to sales at three
percent of sales for the third quarter and first nine months of both fiscal 1998
and 1997.
Interest expense, net, decreased $87,000 in the third quarter of fiscal
1998 versus the third quarter of fiscal 1997 primarily due to lower debt
balances outstanding offset partially by lower capitalized interest. For the
nine-month period ended October 31, 1997, interest expense, net, increased
$100,000 over the comparable period of the prior year as a result of lower
capitalized interest related to plant expansions and lower interest income,
which was partially offset by lower debt balances outstanding.
Other expense, net, for the third quarter of fiscal 1998 increased $146,000
primarily due to a foreign exchange loss in the current quarter versus a foreign
exchange gain during the same quarter of the prior year. For the nine months
ended October 31, 1997, other expense, net, increased $730,000 over the
comparable period of the prior year primarily as a result of higher amortization
expense associated with the write-off of capitalized debt acquisition costs
related to the company's current credit facility and the Development Authority
of Rockdale County Industrial Revenue Bonds (Georgia Bonds) and lower
non-operating income. Other expense, net, also increased due to a foreign
exchange loss for the first nine months of fiscal 1998 versus a foreign exchange
gain during the same period of the prior year.
As a result of the above, income before income taxes increased 29 percent
for the third quarter of fiscal 1998 and increased 39 percent for the nine-month
period ended October 31, 1997 versus the comparable periods of the prior year.
Net income for the third quarter increased 29 percent over the third quarter in
the prior year to $5,319,000 or 84 cents per share and increased 36 percent over
the first nine months of the prior year to $14,158,000 or $2.25 per share.
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased 21 percent to
$22,444,000 for the nine-month period ended October 31, 1997 compared to
$18,552,000 in the comparable period of the prior year. This increase was
primarily due to higher net income and depreciation and amortization expense
during the first nine months of fiscal 1998, less of an increase in accounts
receivable and a greater increase in accrued liabilities versus the first nine
months of the prior year. These changes resulting in higher cash flows from
operations were partially offset by decreases in accounts payable and other
current liabilities during the first nine months of the current year versus
increases during the comparable period of the prior year, coupled with an
increase in inventories versus a decrease in the prior year.
Net cash used by investing activities totaled $9,252,000 for the nine-month
period ended October 31, 1997, resulting in a decrease of $18,071,000 versus the
same period of the prior year which included the purchase by the Company of PCC
and certain equipment and inventory of LH, as well as higher capital spending.
The decrease in restricted cash for the first nine months of fiscal 1997
resulted from the use of proceeds obtained from the Georgia Bonds. The Company
exercised its option and redeemed the Georgia Bonds during the second quarter of
fiscal 1998.
Net cash used by financing activities was $11,193,000 for the nine-month
period ended October 31, 1997 compared to net cash provided by financing
activities of $3,957,000 in the comparable period of the prior year. The
additional borrowings in the prior year's first nine months were used primarily
for the funding of the acquisitions of PCC and LH and the purchase of stock in a
stock repurchase program.
The Company's availability under the current loan agreement is expected to
be sufficient to meet its ongoing cash needs for working capital requirements,
debt service, capital expenditures and possible strategic acquisitions. Capital
expenditures in the first nine months of fiscal 1998 were incurred primarily to
fund capacity expansion, new product development, a continuing series of cost
reduction programs, normal maintenance capital, and regulatory compliance.
Fiscal 1998 capital expenditures are expected to be approximately $14,000,000
for similar purposes.
FORWARD LOOKING STATEMENTS
Certain information contained in this Quarterly Report on Form 10-Q,
including, without limitation, information appearing under Item 2, "Management's
Discussion and Analysis of Financial Condition and Results of Operations," are
forward-looking statements (within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Factors
that appear with the forward-looking statements, or in the Company's other
Securities and Exchange Commission filings, could affect the Company's actual
results and could cause the Company's actual results to differ materially from
those expressed in any forward-looking statements made by the Company in this
Quarterly Report on Form 10-Q.
17
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.1 Employment Agreement, dated September 30, 1997, between John J.
Murray, Jr. and the Company (filed herewith).
10.2 Supplemental Executive Retirement Plan dated December 11, 1997
(filed herewith).
10.3 Supplemental Executive Retirement Plan for Alfred Weber dated
December 11, 1997 (filed herewith).
11. Computation of per share earnings (filed herewith).
15. Letter from Coopers & Lybrand L.L.P., independent accountants for
the Company, regarding unaudited interim financial information
(filed herewith).
27. Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K:
None
18
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SIGNATURES
- -------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
C&D TECHNOLOGIES, INC.
December 11, 1997 BY: /s/ Alfred Weber
---------------------------------
Alfred Weber
Chairman, President and Chief
Executive Officer
December 11, 1997 BY: /s/ Stephen E. Markert, Jr.
----------------------------------
Stephen E. Markert, Jr.
Vice President Finance
(Principal Financial and
Accounting Officer)
19
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EXHIBIT INDEX
10. Employment Agreement, dated September 30, 1997, between John J.
Murray, Jr. and the Company.
10.2 Supplemental Executive Retirement Plan dated December 11, 1997.
10.3 Supplemental Executive Retirement Plan for Alfred Weber dated
December 11, 1997.
11. Computation of per share earnings.
15. Letter from Coopers & Lybrand L.L.P., independent accountants for
the Company, regarding unaudited interim financial information.
27. Financial Data Schedule.
20
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C&D TECHNOLOGIES, INC.
1400 Union Meeting Road
Blue Bell, PA 19422
September 30, 1997
John J. Murray, Jr.
4100 Meadow Lane
Echo Valley
Newtown Square, PA 19073
Dear John:
C&D Technologies, Inc., a Delaware corporation (the "Company"), agrees to employ
you, and you agree to accept such employment, under the following terms and
conditions:
I. TERM OF EMPLOYMENT.
1.1 Except for earlier termination as is provided in Section 10
below, your employment under this Agreement shall be for a
term (the "Initial Term") commencing on October 13, 1997 (the
"Effective Date") and terminating on October 12, 1998.
1.2 This Agreement shall be automatically renewed for successive
terms of one month each, unless either party shall have given
to the other party at least 30 days' prior written notice of
the termination of this Agreement. If such 30 days' prior
written notice is given by either party, (i) the Company
shall, without any liability to you, have the right,
exercisable at any time after such notice is sent, to elect
any other person to the office or offices in which you are
then serving and to remove you from such office or offices,
but (ii) all other obligations each of you and the Company
have to the other, including the Company's obligation to pay
your compensation and make available the medical and dental
insurance which you are entitled hereunder, shall continue
until the date your employment terminates as specified in such
notice.
1
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John J. Murray
September 30, 1997
2. COMPENSATION.
2.1 You shall be compensated for all services rendered by you
under this Agreement at the rate of $125,000.00 per annum
(such salary, as it is from time to time adjusted, is herein
referred to as the "Base Salary"). Such Base Salary shall be
payable in periodic installations twice monthly in accordance
with the Company's payroll practices for salaried employees.
The Compensation Committee of the Board of Directors shall
review such Base Salary prior to October 31,1998 and each year
thereafter during the term of this Agreement, including any
renewal term, and shall make such adjustments, if any, as the
Compensation Committee of the Board shall determine; provided,
however, that no adjustment shall reduce the Base Salary below
$125,000.00
2.2 If your employment hereunder shall be terminated (i) by the
Company without Cause (as defined in Section 10.3) therefor
having been given to you (other than pursuant to Sections 10.1
or 10.2), or (ii) as a result of the non-renewal of this
Agreement by the Company upon expiration of the Initial Term
or any renewal term, then for a one year period after the
effective date of such termination the Company shall pay you
at the rate of your Base Salary in effect at the time of such
termination.
3. DUTIES.
3.1 During the term of your employment hereunder, including any
renewal thereof, you agree to serve as the Vice President &
General Manager Motive Power Division, or in such other
capacity with duties and responsibilities of a similar nature
as those initially undertaken by you hereunder as the
President of the Company may from time to time determine. Your
duties may be changed at any time and from time to time
hereafter, upon mutual agreement, in a manner appropriate to
the Company for the times and circumstances for which the
change is to be made. You also agree to perform such other
services and duties consistent with the office or offices in
which you are serving and its responsibilities as may from
time to time be prescribed by the Board of Directors, and you
also agree to serve, if elected, as an officer and/or director
of the Company, and/or any of the Company's other direct or
indirect subsidiaries, in all cases in conformity to the
by-laws
2
<PAGE>
John J. Murray
September 30, 1997
of each such corporation. Unless you otherwise agree, you will
not be required to relocate from [the Company's headquarters
in the Blue Bell, Pennsylvania area].
3.2 You shall devote your full employment energies, interest,
abilities, time and attention during normal business hours
(excluding the vacation periods provided in Section 4.2 below)
exclusively to the business and affairs of the Company, its
parent corporation and subsidiaries, if any, and shall not
engage in any activity which conflicts or interferes with the
performance of duties hereunder.
3.3 You agree to cooperate with the Company, including taking such
reasonable medical examinations as may be necessary, in the
event the Company shall desire or be required (such as
pursuant to the terms of any bank loan or any other agreement)
to obtain life insurance insuring your life.
3.4 You shall, except as otherwise provided herein, be subject to
the Company's rules, practices and policies applicable to the
Company's senior executive employees. Without limiting the
generality of the foregoing, you shall, with respect to the
Company and its parent, subsidiaries, assets and stockholders,
act in a manner consistent with your fiduciary
responsibilities as an executive of the Company.
4. BENEFITS.
4.1 You shall have the benefit of such life and medical insurance,
bonus, stock option and other similar plans as the Company may
have or may establish from time to time, and in which you
would be entitled to participate, by reason of your position
with the Company, pursuant to the terms thereof. Also to the
extent you have met the qualifications required, you may
participate in the Company's Savings and Retirement plans. The
foregoing, however, shall not be construed to require the
Company to establish any such plans or to prevent the Company
from modifying or terminating any such plans, and no such
action or failure thereof shall affect this Agreement.
4.2 You shall be entitled to a vacation of four (4) weeks each year.
4.3 The Company will provide you with an annual physical examination
3
<PAGE>
John J. Murray
September 30, 1997
5. WORKING AND OTHER FACILITIES.
During the Initial Term of this Agreement and any renewal term thereof,
you shall be furnished with such working facilities and other services
as are suitable to your position and adequate for the performance of
your duties.
6. EXPENSES.
The Company will reimburse you for reasonable expenses, (consistent
with Company policy), including traveling expenses, incurred by you in
connection with the business of the Company upon the presentation by
you of appropriate substantiation for such expenses.
7. RESTRICTIVE COVENANTS.
7.1 During such time as you shall be employed by the Company, and
for a period of one year thereafter, you shall not, without
the written consent of the Board of Directors, directly or
indirectly become associated with, render services to, invest
in, represent, advise or otherwise participate as an officer,
employee, director, stockholder, partner, agent of or
consultant for, any business which is competitive with the
business in which the Company is engaged at the time your
employment with the Company ceases (a "Competitive Business");
PROVIDED, HOWEVER, that nothing herein (i) shall prevent you
from investing without limit in the securities of any company
listed on a national securities exchange, PROVIDED that your
involvement with any such company is solely that of a
stockholder, and (ii) is intended to prevent you from being
employed during the one-year period following the termination
of your employment with the Company referred to herein by any
business other than a Competitive Business.
7.2 The parties hereto intend that the covenant contained in this
Section 7 shall be deemed a series of separate covenants for
each state, county and city. If, in any judicial proceeding, a
court shall refuse to enforce all the separate covenants
deemed included in this Section 7, because, taken together,
they cover too extensive a geographic area, the parties intend
that those of such covenants (taken in order of the states,
counties and cities therein which are least populous), which,
if eliminated, would permit the remaining separate
4
<PAGE>
John J. Murray
September 30, 1997
covenants to be enforced in such proceeding, shall, for the
purpose of such proceeding, be deemed eliminated from the
provisions of this Section 7.
8. CONFIDENTIALITY, NON-INTERFERENCE, INVENTIONS AND PROPRIETARY INFORMATION.
8.1 CONFIDENTIALITY. In the course of (i) your employment by the
Company hereunder, and (ii) your prior employment with the
Company, you will have and have had access to confidential or
proprietary data or information of the Company. You will not
at any time divulge or communicate to any person nor shall you
direct any Company employee to divulge or communicate to any
person (other than to a person bound by confidentiality
obligations similar to those contained herein and other than
as necessary in performing your duties hereunder) or use to
the detriment of the Company any of such data or information.
The provisions of this Section 8.1 shall survive your
employment hereunder, whether by the normal expiration thereof
or otherwise. The term "confidential or proprietary data or
information" as used in this Agreement shall mean information
not generally available to the public, including, without
limitation, personnel information, financial information,
customer lists, supplier lists, product and tooling
specifications, trade secrets, product composition and
formulae, tools and dies, drawings and schematics,
manufacturing processes, knowhow, computer and any other
processed or collated data, computer programs, pricing,
marketing and advertising data.
8.2 NON-INTERFERENCE. You agree that you will not at any time
after the termination of your employment by the Company, for
your own account or for the account of any other person,
interfere with the Company's relationship with any of its
suppliers, customers or employees; PROVIDED that your
employment by a competitor of the Company, if not in violation
of your non-competition agreement contained in Section 7.1
above, and your contacting of suppliers and customers in
connection therewith, if not in violation of Section 8.1 above
or Sections 8.3 or 8.4 below, shall not constitute
"interference" hereunder.
5
<PAGE>
John J. Murray
September 30, 1997
8.3 INVENTIONS. It is understood that you may, during your
employment, conceive or develop certain inventions,
innovations or discoveries related to any business in which
the Company may be engaged, either solely or jointly with
others. In connection with the conception or development
thereof, you agree to disclose promptly to the Company all
such inventions, innovations and discoveries, to assign, and
hereby do assign, to the Company all of your right, title and
interest in and to said inventions, innovations and
discoveries, and to do all things and sign all documents
deemed by the Company to be necessary or appropriate to vest
in it, its successors and assigns, all of your right, title
and interest in and to such inventions, innovations or
discoveries, and to procure for it, at the Company's expense,
patents, copyrights and/or trademarks covering such
inventions, innovations or discoveries in the United States
and its possessions and in foreign countries, at the
discretion and under the direction of the Company. In the
event the Company is unable for any reason to assure your
signature on such documents, you irrevocably appoint the
Company and its duly authorized officers and agents as your
agents and attorneys-in-fact to execute such documents and to
do such things with the same legal force and effect as if
executed or done by you.
8.4 RETURN OF PROPERTY. All written materials, records and
documents made by you or coming into your possession during
your employment concerning any products, processes or equip-
ment, manufactured, used, developed, investigated or con-
sidered by the Company or otherwise concerning the business
or affairs of the Company, shall be the sole property of
the Company, and upon termination of your employment, or upon
request of the Company during your employment, you shall
promptly deliver the same to the Company. In addition, upon
termination of your employment, or upon request of the Company
during your employment, you will deliver to the Company all
other Company property in your possession or under your
control, including but not limited to, financial statements,
marketing and sales data, patent applications, drawings and
other documents, and all Company credit cards and automobiles.
6
<PAGE>
John J. Murray
September 30, 1997
9. EQUITABLE RELIEF. With respect to the covenants contained in
Sections 7 and 8 of this Agreement, you agree that any remedy
at law for any breach of said covenants may be inadequate and
that the Company shall be entitled to specific performance or
any other mode of injunctive and/or other equitable relief to
enforce its rights hereunder or any other relief a court might
award.
10. EARLIER TERMINATION. Your employment hereunder shall terminate
prior to the Initial Term (or any renewal term, in the event
of renewal) on the following terms and conditions:
10.1 This Agreement shall terminate automatically on the date
of your death. Notwithstanding the foregoing the Company
shall (i) continue to make payments to your estate of your
Base Salary as then in effect pursuant to this Agreement for
six (6) months after your death, and (ii) pay your estate any
reimbursable expenses which otherwise would have been paid to
you to the date of your death.
10.2. This Agreement shall be terminated if you are unable to
perform your duties hereunder for a period of any 180 days in
any 365 consecutive day period by reason of physical or
mental disability. Notwithstanding the foregoing, it this
Agreement is terminated pursuant to this Section, the Company
shall pay any accrued but unpaid Base Salary through the date
of termination and any reimburseable expenses due to you
hereunder. For purposes of this Agreement "physical or mental
disability" shall mean your inability, due to health reasons,
to discharge properly your duties of employment, supported by
the opinion of a physician satisfactory to both you and the
Company. If the parties do not agree on a physician mutually
satisfactory to both you and the Company within ten days of
written demand by one or the other, a physician shall be
selected by the president of the Pennsylvania Medical
Association, and the physician shall, within 30 days
thereafter, make a determin- ation as to whether disability
exists and certify the same in writing. Services of the
physician shall be paid for by the Company. You shall fully
cooperate with the examining physician including submitting
yourself to such examinations as may be requested by the
physician for the purpose of determining whether you are
disabled.
7
<PAGE>
John J. Murray
September 30, 1997
10.3. This Agreement shall terminate immediately upon the Company's
sending you written notice terminating your employment
hereunder for Cause. The Company may terminate this Agreement
for Cause, but only after written notice specifying the Cause
of such action shall have been rendered to you by the
President of the Company. "Cause" shall mean any of the
following:
(i) Breach of this Agreement.
(ii) Refusal or inability (other than pursuant to Sections
10.1 or 10.2) to perform duties assigned in
accordance with the terms of this Agreement or overt
and willful disobedience of orders or directives
issued to you by the Company and within the scope of
your duties to the Company.
(iii) Willful misconduct in the performance of your duties,
functions and responsibilities.
(iv) Commission of acts which are illegal in connection
with the performance of your duties, functions and
responsibilities under this Agreement.
(v) Commission of acts which would constitute a felony
offense during the term of this Agreement.
(vi) Violation of Company rules and regulations concerning
conflict of interest.
(vii) Gross mismanagement of the assets of the Company.
(viii) Gross incompetence, gross insubordination or gross
neglect in the performance of your duties hereunder
or being under the habitual influence of alcohol
while on duty or possession, use, manufacture,
distribution, dispensation or sale of illegal drugs
while on or off duty.
(ix) Any act or omission, whether or not included in the
foregoing, that a court of competent jurisdiction
would determine to constitute cause for termination.
8
<PAGE>
John J. Murray
September 30, 1997
If the Company terminates this Agreement for Cause under this Section,
the Company shall not be obligated to make any further payments under
this Agreement except for amounts due at the time of such termination.
Existence of Cause shall be conclusively determined for all purposes
hereunder by the President of the Company. Such advice and consultation
shall be utilized as such officer regards as appropriate, and no
obligation or duty with respect to any procedure or formality is
created by this Agreement.
11. POST-EMPLOYMENT BENEFITS COVERAGE.
11.1 Your coverage under the benefits program provided by the
Company will cease effective on your termination date. You
will be entitled to elect continuation of your medical and
dental benefits at the same cost the Company pays, pursuant to
the provision of the Consolidated Omnibus Budget
Reconciliation At (COBRA). Details with regard to COBRA
continuation coverage will be provided to you shortly after
your termination date.
11.2. Life Insurance coverage will cease upon your termination date.
You may, however, apply to General American Life Insurance
Company (or such other insurance company as may provide group
life insurance to the Company's employees at the time) for an
individual converted life policy, with such application and
payment of the first premium required to be accomplished
within 31 days after your termination date. Details regarding
this conversion option will be provided to you shortly after
your termination date.
11.3 Accidental Death and Dismemberment and Long Term Disability
coverages cease with your termination date and may not be
extended or converted.
12. TERMINATION OF PRIOR AGREEMENT; MODIFICATION. This Agreement
constitutes the full and complete understanding of the parties, and
will, on the Effective Date, supersede all prior agreements and
understandings, oral or written, between the parties. This Agreement
may not be modified or amended except by an instrument in writing
signed by the party against which enforcement thereof may be sought.
9
<PAGE>
John J. Murray
September 30, 1997
13. ENTIRE AGREEMENT. Each party to this Agreement acknowledges that no
representations, inducements, promises or agreements, oral or written,
have been made by either party or anyone acting on behalf of either
party, which are not embodied herein and that no other agreement,
statement or promise not contained in this Agreement shall be valid or
binding.
14. SEVERABILITY. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability
without rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in
any other jurisdiction.
15. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed as a
waiver of any subsequent breach.
16. NOTICES. All notices hereunder shall be in writing and shall be sent by
express mail or by certified or registered mail, postage prepaid,
return receipt requested; if to you, to your residence as listed in the
Company's records; and if to the Company, to the address set forth
above with copies to the President.
17. ASSIGNABILITY; BINDING EFFECT. This Agreement shall not be assigned by
you without the written consent of the Board of Directors of the
Company. This Agreement shall be binding upon and inure to the benefit
of you, your legal representatives, heirs and distributees, and shall
be binding upon and inure to the benefit of the Company, its successors
and assigns.
18. GOVERNING LAW. All questions pertaining to the validity, construction,
execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the Commonwealth of
Pennsylvania, without giving effect to the conflicts or choice of law
provisions thereof.
19. HEADINGS. The headings of this Agreement are intended solely for
convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
10
<PAGE>
John J. Murray
September 30, 1997
If this Agreement correctly sets forth our understanding, please sign the
duplicate original in the space provided below and return it to the Company,
whereupon this shall constitute the employment agreement between you and the
Company effective and for the term as stated herein.
C&D Technologies, Inc.
By: /s/ Alfred Weber
Alfred Weber
President/Chief Executive Officer/
Chairman of the Board of Directors
Agreed as of the date first above written:
/s/ John J. Murray, Jr.
John J. Murray, Jr.
11
<PAGE>
C&D TECHNOLOGIES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
W I T N E S S E T H:
WHEREAS, C&D TECHNOLOGIES, INC., intends to adopt a nonqualified
supplemental executive retirement plan to provide supplemental retirement income
to certain employees who are considered part of a "select group of management or
highly compensated employees" within the meaning of Sections 201(2), 301(a)(3)
and 401(a)(1) of ERISA, whose benefits under the Pension Plan and the Savings
Plan have been restricted by federal law.
NOW, THEREFORE, C&D TECHNOLOGIES, INC. adopts the C&D TECHNOLOGIES, INC.
Supplemental Executive Retirement Plan, effective as of September 30, 1997, in
order to provide supplemental retirement income to Executives whose benefits
have been restricted under the Pension Plan and the Savings Plan.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the Company hereby adopts the Plan as follows:
1. DEFINITIONS. For purposes of this Plan, the following definitions apply:
(a) "Actuarial Equivalent" means an amount equal in value on an actuarial
basis, as determined by an actuary selected by the Committee, based upon the
UP-84 mortality table (unisex) with no setback and an annual interest rate of 7
1/4%.
(b) "Affiliate" means any company or other entity, presently or in the
future existing, which is affiliated with the Company within the meaning of
Sections 414(b), (c), (m) and (o) of the Code.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means (i) in the case where there is no employment or
consulting agreement between the Company or an Affiliate and Executive, or where
there is an employment or consulting agreement, but such agreement does not
define cause (or words of like import), termination due to Executive's fraud,
willful misconduct, gross negligence with respect to the Company or an
Affiliate, or Executive's conviction of a felony; or (ii) in the case where
there is an employment or consulting agreement between the Company or an
Affiliate and Executive, termination that is or would be deemed to be for cause
(or words of like import) as defined under such agreement. The Committee shall
have sole discretion to determine whether Cause exists, and its determination
shall be final, binding and conclusive.
(e) "Change of Control" means the occurrence of any of the following: (i)
any person (as defined in Section 3(a)(9) of the Exchange Act and as used in
Sections 13(d) and 14(d) thereof), excluding the Company, any Subsidiary and any
employee benefit plan sponsored or
1
<PAGE>
maintained by the Company or any Subsidiary (including any trustee of any such
plan acting in his or her capacity as trustee), but including a "group" as
defined in Section 13(d)(3) of the Exchange Act, becomes the beneficial owner
(as defined in Rule 13(d)-3 under the Exchange Act) of shares of the Company
having at least thirty percent (30%) of the total number of votes that may be
cast for the election of directors of the Company; (ii) the shareholders of the
Company shall approve any merger or other business combination of the Company,
sale of all or substantially all of the Company's assets or combination of the
foregoing transactions (a "Transaction"), other than a Transaction involving
only the Company and one or more of its Subsidiaries, or a Transaction
immediately following which the shareholders of the Company immediately prior to
the Transaction continue to have a majority of the voting power in the resulting
entity (excluding for this purpose any shareholder of the Company owning
directly or indirectly more than ten percent (10%) of the shares of the other
company involved in the Transaction) and no person is the beneficial owner (as
defined in Rule 13(d)-3 under the Exchange Act) of at least thirty percent (30%)
of the shares of the resulting entity as contemplated by subparagraph (i) above;
or (iii) within any twenty-four (24) month period beginning on or after the date
hereof, the persons who were directors of the Company immediately before the
beginning of such period (the "Incumbent Directors") shall cease (for any reason
other than death) to constitute at least a majority of the Board or the board of
directors of any successor to the Company, provided that, any director who was
not a director as of the date hereof shall be deemed to be an Incumbent Director
if such director was elected to the Board by, or on the recommendation of or
with the approval of, at least two-thirds (2/3) of the directors who then
qualified as Incumbent Directors either actually or by prior operation of this
subparagraph (iii), unless such election, recommendation or approval was the
result of an actual or threatened election contest of the type contemplated by
Rule 14a-11 promulgated under the Exchange Act or any successor provision.
Notwithstanding the foregoing, no Change of Control of the Company shall be
deemed to have occurred for purposes of this Plan by reason of any actions or
events in which Executive participates in a capacity other than in his or her
capacity as an executive of the Company.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means the Compensation Committee of the Board to which the
Board has delegated its authority to administer this Plan on its behalf.
(h) "Company" means C&D TECHNOLOGIES, INC. or any successor thereto.
(i) "Disability" or "Disabled" means disability or disabled as defined in
the Pension Plan.
(j) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2
<PAGE>
(l) "Executive" means an employee, other than the Chief Executive Officer,
who is considered part of a select group of management or highly compensated
employees, including direct reports to the Chief Executive Officer and other key
employees as from time to time may be designated by the Board. Executives who
are designated by the Board to participate in the Plan are listed on Appendix A.
The Board may at any time add additional Executives to Appendix A and exclude
any Executive from future participation in this Plan, except that any such
exclusion shall not reduce any benefit previously accrued hereunder.
(m) "Maximum Annual Benefit" means an amount calculated by subtracting from
$100,000, indexed annually by 4% beginning September 30, 1998: (i) the annual
accrued benefit as of the Qualifying Event (based on a monthly single life
annuity) payable at normal retirement age (as defined in the Pension Plan); (ii)
one-half of Executive's Social Security Benefit as of the Qualifying Event; and
(iii) the annual single life annuity payable at age 65 based on the Actuarial
Equivalent of Executive's account under the Savings Plan as of the Qualifying
Event solely attributable to matching contributions made by the Company.
(n) "Pension Plan" means the C&D TECHNOLOGIES, INC. Pension Plan for
Salaried Employees, as amended from time to time.
(o) "Plan" means this C&D TECHNOLOGIES, INC. Supplemental Executive
Retirement Plan, as amended from time to time.
(p) "Qualifying Event" means the occurrence of the first of any of the
following events while Executive is employed by the Company or an Affiliate: (i)
retirement on or after attainment of age 65; (ii) early retirement before age 65
and after age 62; (iii) Disability; (iv) death; and (v) a Change of Control.
(q) "Savings Plan" means the C&D TECHNOLOGIES, INC. Savings Plan, which is
the Code Section 401(k) Plan maintained by the Company, as amended from time to
time.
(r) "SERP Benefit" means the vested benefit payable under this Plan.
(s) "Social Security Benefit" means the amount of Executive's social
security benefit that would be payable upon the Executive's attainment of age
65, calculated by the Company's actuary in accordance with reasonable actuarial
assumptions.
(t) "Subsidiary" means a subsidiary corporation under Section 424(f) of the
Code.
2. COVENANT NOT TO COMPETE.
(a) Except in the case of payment of the SERP Benefit to Executive upon a
Change of Control, during the period for which the SERP Benefit is paid and
during the period following Executive's termination of employment with the
Company or an Affiliate, Executive shall not, without having first obtained the
written consent of the Board, perform consulting or other services for, or have
any position with (whether as director, officer, employee, consultant, agent or
otherwise) or ownership interest in any business or organization which, in the
sole opinion of the Board, is engaged in any activity which is in competition
with the business then being conducted by the Company or any Affiliate. The term
"ownership interest" as used in the
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preceding sentence includes a proprietorship, partnership, joint venture, stock
or other equity interest of five percent (5%) or more held of record or
beneficially by Executive.
(b) Except in the case of payment of the SERP Benefit to Executive upon a
Change of Control, if Executive terminates his or her employment with the
Company or an Affiliate and performs service for a competitor, as defined in
paragraph 2(a) above, he or she shall forfeit all rights, privileges and claims
hereunder and to any SERP Benefit and all rights of Executive, his or her
spouse, his or her designees and his or her estate to any such SERP Benefit
shall terminate and be forfeited (to the maximum extent permitted by law).
3. ELIGIBILITY FOR AND CALCULATION OF SERP BENEFIT.
(a) PAYMENT DATE. The Company shall pay the SERP Benefit to Executive (or,
in the case of death prior to a Qualifying Event, to Executive's spouse)
beginning on the first of the month following the date on which Executive has a
Qualifying Event. Notwithstanding the foregoing, in the event that Executive
shall have terminated employment with the Company or an Affiliate prior to a
Qualifying Event but on or after the date Executive becomes fully vested under
Section 3(f) of the Plan, the Company shall pay the SERP Benefit to Executive
(or, in the case of death prior to a Qualifying Event, to Executive's spouse)
beginning on the first of the month following the earliest of the following
events: (i) attainment of age 65; (ii) death; or (iii) occurrence of a Change of
Control.
(b) CALCULATION OF SERP BENEFIT. Except with respect to a Change of
Control, Executive shall not accrue a SERP Benefit if the Qualifying Event
occurs before Executive has completed seven and one-half (7.5) full and
consecutive years of employment with the Company or an Affiliate. If the
Qualifying Event occurs on or after seven and one-half (7.5) full and
consecutive years of employment with the Company or an Affiliate, the SERP
Benefit shall be calculated by multiplying (i) the Maximum Annual Benefit by
(ii) the appropriate percentage from the following schedule:
Years of Employment
PRIOR TO QUALIFYING EVENT PERCENTAGE BENEFIT
less than 7.5 0%
7.5 50%
8 53.3%
9 60%
10 66.7%
11 73.3%
12 80%
13 86.7%
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14 93.3%
15 or more 100%
If the Qualifying Event is a Change of Control, the SERP Benefit for any
Executive who has completed at least five (5) full and consecutive years of
employment with the Company or an Affiliate, shall be calculated by multiplying
(i) the Maximum Annual Benefit by (ii) a fraction (not to exceed 1), the
numerator of which is Executive's number of his or her full and consecutive
years of employment with the Company or an Affiliate that the Executive would
have had if he or she were continuously employed through age 65, and the
denominator of which is 15. If the Qualifying Event is a Change of Control, the
SERP Benefit for any Executive who has completed less than five (5) full and
consecutive years of employment with the Company or an Affiliate, shall be
calculated in accordance with the immediately preceding sentence multiplied by
fifty percent (50%).
EXAMPLE 1 - For an unmarried Executive who leaves after 15 years:
$100,000 (Assumed retirement in 1997)
- 35,000 Age 65 Pension Plan Benefit
- 15,000 1/2 Age 65 Social Security Benefit
- 5,000 Age 65 Savings Plan Benefit Annuity
-------
$ 45,000 Maximum Annual Benefit
X 100% Percentage Benefit @ 15 years
-------
$ 45,000* Annual Age 65 SERP Benefit
EXAMPLE 2 - For an unmarried Executive who leaves after 10 years:
$100,000 (Assumed retirement in 1997)
- 35,000 Age 65 Pension Plan Benefit
- 15,000 1/2 Age 65 Social Security Benefit
- 5,000 Age 65 Savings Plan Benefit Annuity
-------
$ 45,000 Maximum Annual Benefit
66.7% Percentage Benefit @ 10 years
-------
$ 30,015* Annual Age 65 SERP Benefit
EXAMPLE 3 - For an unmarried Executive at age 62 with 10 years of
employment with the Company or an Affiliate and the Qualifying Event is
a Change of Control occurring in 1997 (due to the Change of Control,
Executive is credited with 3 additional years of employment as if he or
she were continuously employed through age 65):
$100,000 (Assumed retirement in 1997)
- 35,000 Age 65 Pension Plan Benefit
- 15,000 1/2 Age 65 Social Security Benefit
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- 5,000 Age 65 Savings Plan Benefit Annuity
-------
$ 45,000 Maximum Annual Benefit
86.7% Percentage Benefit @ 13 years
-------
$ 39,015* Annual Age 65 SERP Benefit
(To Be Converted into a Lump
Sum Payment under Section 7)
* To be a djusted on an Actuarial Equivalent basis for forms other than a
single life annuity.
(c) NORMAL FORM OF SERP BENEFIT. An Executive who is not married at the
time of a Qualifying Event shall receive the SERP Benefit in the form of a
single life annuity, providing for monthly benefits for the life of Executive,
with payments ceasing upon Executive's death. Subject to Section 3(d) below, an
Executive who is married at the time of a Qualifying Event shall receive the
SERP Benefit in the form of a joint and fifty percent (50%) survivor annuity,
which provides for benefits to be paid monthly to Executive for life, and if his
or her spouse at the time of the Qualifying Event survives him or her, for the
spouse's life or until the spouse remarries, whichever comes first, monthly
payments in an amount equal to fifty percent (50%) of the monthly amount
received by Executive while alive.
(d) OPTIONAL FORM OF SERP BENEFIT FOR MARRIED EXECUTIVES. Except in the
case of death prior to commencement of the SERP Benefit which is governed by
Section 6(a) or in the case of a Change of Control which is governed by Section
7, the Executive shall have the right, in a writing filed with the Committee, to
elect (subject to the written consent of a married Executive's spouse in a form
specified by the Committee) to have his or her SERP Benefit paid in the form of
a single life annuity (providing for monthly benefits for the life of Executive,
with payments ceasing upon Executive's death); provided, that such election is
made and filed with the Committee at least one (1) year prior to the Executive's
Qualifying Event. Such an election may be revoked by Executive at any time or
from time to time by written notice filed with the Committee at least one (1)
year prior to Executive's Qualifying Event.
(e) ACTUARIAL EQUIVALENCE. The normal form of SERP Benefit for an Executive
who is not married at the time of a Qualifying Event shall be a single life
annuity. The normal form of SERP Benefit for an Executive who is married at the
time of a Qualifying Event shall be the Actuarial Equivalent of a single life
annuity payable in the form of a joint and fifty percent (50%) survivor annuity.
(f) VESTING OF SERP BENEFIT. An Executive's rights under this Plan to any
SERP Benefit shall be fully vested and nonforfeitable, except as set forth in
paragraph 2 hereof, solely upon the earlier of the: (i) completion of seven and
one-half (7.5) years of full and consecutive employment with the Company or an
Affiliate; or (ii) occurrence of a Change of Control. Notwithstanding anything
herein to the contrary, Executive shall not have any rights to a SERP Benefit in
the event Executive is terminated by the Company or an Affiliate for Cause.
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4. REDUCTION FOR EARLY RETIREMENT OF EXECUTIVE.
The SERP Benefit of an Executive who retires from the Company or an
Affiliate before age 65 and after age 62 shall be reduced by seven percent (7%)
per year prior to age 65 and shall be paid on the first of the month following
the Qualifying Event.
5. DISABILITY OF EXECUTIVE.
(a) DISABILITY WHILE EMPLOYED. In the event that Executive becomes Disabled
while employed by the Company or an Affiliate, he or she shall cease to accrue
benefits under this Plan. Such Executive shall be entitled to retire and receive
a SERP Benefit at age 65 under the terms of this Plan if he or she remains
Disabled until age 65. If such Executive does not remain Disabled, any SERP
Benefit to which he or she is eligible to receive hereunder or his or her right
to participation hereunder shall be determined under the provisions of this Plan
as of the date his or her Disability ceases. In the event that Executive is no
longer disabled and he or she becomes reemployed by the Company or an Affiliate
immediately following such Disability, then Executive: (i) shall begin to accrue
benefits under this Plan from the date of reemployment; and (ii) shall not be
entitled to any accruals during the period during which Executive was Disabled.
Notwithstanding anything herein to the contrary, Executive's full and
consecutive years of employment with the Company or an Affiliate prior to the
Disability shall be added to Executive's full and consecutive years of
employment with the Company or an Affiliate after the Disability for purposes of
vesting under Section 3(f) of the Plan and for purposes of calculating the SERP
Benefit under Section 3(b) of the Plan.
(b) DEATH WHILE DISABLED. Death benefits, if any, shall be paid to the
spouse of a Disabled Executive in accordance with Section 6.
6. DEATH OF EXECUTIVE.
(a) PRIOR TO COMMENCEMENT OF THE SERP BENEFIT. In the event of the death of
Executive while he or she is employed by the Company or an Affiliate, his or her
spouse to which he or she must have been married to for over one (1) year
immediately prior to his or her death, shall be entitled to a monthly single
life annuity equal to fifty percent (50%) of the single life annuity to which
Executive would have received if he or she had retired on his or her date of
death, payable beginning the first of the month following the date he or she
would have attained age 65.
(b) AFTER COMMENCEMENT OF THE SERP BENEFIT. In the event of the death of
Executive after commencement of the SERP Benefit, Executive's spouse shall be
entitled to a SERP Benefit solely to the extent provided under the form of
benefit payable to Executive and elected (subject to spousal consent, if
applicable) under Section 3 of the Plan.
(c) Spousal benefits shall terminate upon remarriage of spouse.
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<PAGE>
7. CHANGE OF CONTROL.
Notwithstanding anything herein to the contrary, a Qualifying Event due to
a Change of Control will result in a SERP Benefit, payable to Executive (or, in
the case of death, Executive's spouse) in an Actuarial Equivalent single lump
sum as soon as administratively feasible following the date of the Change of
Control (but in no event later than the first of the month following the Change
of Control), equal to the SERP Benefit that would have been payable to Executive
at age 65 as accrued as of the Qualifying Event, except with respect to the
crediting of additional years of employment (as if the Executive were
continuously employed through age 65) for the purpose of calculating the
Percentage Benefit under Section 3(b) of the Plan. Without limiting the
generality of the foregoing, an Executive or spouse who has commenced receiving
payment of his or her SERP Benefit prior to a Change of Control, shall receive,
upon a Change of Control, an Actuarial Equivalent single lump sum payment based
on the remainder of the SERP Benefit that would have otherwise been paid under
the Plan had the Change of Control not occurred.
EXAMPLE 4 -
$ 39,015 Maximum Annual Benefit
X 6.5826 Lump Sum Conversion Factor (Based on Age on Change of
Control)*
--------
$256,820 Change of Control SERP Benefit
*Conversion factor will vary based on age. Example is based on age 62.
8. FUNDING.
(a) GENERAL ASSETS. Nothing contained in this Plan and no action taken
pursuant to the provisions of this Plan shall create or be construed to create a
trust of any kind, or a fiduciary relationship between the Company and
Executive, the Executive's spouse or any other person. All benefits and rights
described under this Plan shall be and remain unsecured obligations of the
Company. The Company may prefund all or any portion of such benefits or rights
and may enter into a trust agreement solely for such purpose (a "grantor trust"
under the Code); provided that the assets of any such trust fund shall be
considered general assets of the Company and shall be subject to the claims of
the Company's general creditors. None of the Executive, the Executive's spouse
or any estate of such Executive or spouse shall have an interest, vested or
otherwise, in any trust fund hereunder or a secured or preferred position with
respect thereto or shall have any claim thereto other than as a general creditor
of the Company.
(b) CHANGE OF CONTROL. Any trust hereunder shall be revocable by the
Company until the occurrence of a Change of Control, at which time the trust, if
any, shall become irrevocable.
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9. CONSTRUCTION OF AGREEMENT.
(a) Any powers reserved by the Board under this Plan may be exercised by
the Committee which shall have general responsibility for the administration and
interpretation of the Plan including selection of participants, determinations
of years of employment for purposes of this Plan, and compliance, if required,
with reporting and disclosure rules of ERISA. Any determination or
interpretation of the Board or the Committee with respect to the Plan shall be
final, binding and conclusive on all persons.
(b) If the Board shall find that any person to whom any amount is payable
under this Plan is unable to care for his or her affairs because of illness,
accident or physical or mental incapacitation, is a minor, has died, or for any
other reason shall be incapable of properly or legally receiving benefits to
which he or she is entitled to under this Plan, then any SERP Benefit due him or
her or his or her spouse may, if the Board so elects, be paid to his or her
Beneficiary. Any such payment shall be in complete discharge of the liability of
the Company therefor.
(c) Neither this Plan nor any action taken hereunder shall be construed as
giving Executive the right to be retained or continue in the employ of the
Company or an Affiliate or as evidence of any agreement by the Company or an
Affiliate to employ Executive in any particular position or at any particular
rate of remuneration or affect the right of the Company or an Affiliate to
dismiss Executive.
(d) The making of this Plan does not constitute or create an employment
agreement between the Company or an Affiliate and Executive or give Executive
any legal or equitable right against the Company or an Affiliate, its agents, or
its successors or assigns, except as expressly provided by this Plan.
(e) Any SERP Benefit payable under this Plan shall not be deemed salary or
other compensation to Executive for the purpose of computing benefits to which
Executive may be entitled under any pension or profit-sharing plan or other
arrangement of the Company for the benefit of its employees nor shall anything
contained herein affect any rights or obligations which Executive may have under
any pre-existing agreement with the Company or an Affiliate .
(f) Employment, compensation paid, and insurance or other disability,
retirement, or death benefits or health plans to be taken into account under
this Plan shall include employment, compensation paid, and insurance or other
benefits or plans provided by any Affiliate or organization which Executive
served at the request of the Company.
10. ASSIGNMENT AND NONALIENATION OF SERP BENEFIT.
(a) This Plan shall be binding upon and inure to the benefit of (i) the
Company and its successors, assigns and any purchaser of either the Company or
its assets; and (ii) Executive, his or her heirs, executors, administrators and
legal representatives.
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No amount payable at any time under this Plan shall be subject in any
manner to alienation by anticipation, sale, transfer, assignment, bankruptcy,
pledge, attachment, charge or encumbrance of any kind nor in any manner be
subject to the debts or liabilities of any person, and any attempt to so
alienate or subject any such amount, whether presently or thereafter payable,
shall be null and void. If any person shall attempt to, or shall, alienate,
sell, transfer, assign, pledge, attach, charge or otherwise encumber any amount
payable under this Plan, or any part thereof, or if by reason of his or her
bankruptcy or other event happening at any such time such amount would be made
subject to his or her debts or liabilities or would otherwise not be enjoyed by
him or her, then the Board, if it so elects, may direct that such amount be
withheld and that the same or any part thereof be paid or applied to or for the
benefit of such person, in such manner and proportion as the Board may deem
proper.
11. ADMINISTRATION.
(a) ADMINISTRATION OF PLAN. The Board and the Committee shall have full
power and responsibility to administer this Plan. The Board may, in its sole
discretion, appoint a committee, an agent or agents to carry out designated
administrative functions.
(b) LEGAL, ACCOUNTING, CLERICAL AND OTHER SERVICES. The Board may authorize
one or more of its members, the Committee or the management of the Company to
act on its behalf and may contract for legal, accounting, clerical and other
services to carry out the purposes of this Plan. All expenses of the Board in
this regard shall be paid by the Company.
(c) CLAIMS PROCEDURE. The Committee shall be responsible for determining
all claims for benefits under this Plan by Executive or his or her spouse.
Within ninety (90) days after receiving a claim (or within up to one hundred
eighty (180) days, if the claimant is so notified, including notification of the
reason for the delay), the Committee shall provide adequate notice in writing to
any Executive or spouse whose claim for benefits under this Plan has been
denied, setting forth the specific reasons for such denial. The Executive or
spouse will be given an opportunity for a full and fair review by the Committee
of the decision denying the claim. The Executive or spouse shall be given sixty
(60) days from the date of the notice denying any such claim to request such
review by written notice to the Committee. Within sixty (60) days after
receiving a request for review, the Committee shall notify the claimant in
writing of (i) its decision; (ii) the reasons therefor; and (iii) the Plan
provisions upon which it is based. The Committee may at any time alter the
claims procedure set forth herein, so long as the revised claims procedure
complies with ERISA, and the regulations issued thereunder.
(d) LIMITATION OF LIABILITY. No officer of the Company or member of the
Committee, the Board or any of its authorized agents acting under this Plan
shall be liable for any action taken or omitted in good faith hereunder or for
exercise of any power given hereunder or for the actions of other members of the
Board or the Committee with regard to the Plan. As a condition precedent to the
establishment of this Plan or the receipt of benefits hereunder, or both, such
liability, if any, is expressly waived and released by Executive, his or her
spouse and all persons claiming under or through Executive or his or her spouse.
Such waiver and release shall be conclusively evidenced by the acceptance of any
benefits under this Plan.
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(e) INDEMNIFICATION. Each officer of the Company or member of the Board or
the Committee, whether or not acting under this Plan, shall be indemnified by
the Company against expenses (other than amounts paid in a settlement to which
the Company does not consent) reasonably incurred by him or her in connection
with any action to which he or she may be a party by reason of performance of
administrative functions and duties under this Plan, except in relation to
matters as to which he or she shall be adjudged in such action to be personally
guilty of gross negligence or willful misconduct in the performance of his or
her duties. The foregoing right to indemnification shall be in addition to such
other rights as the officer or member of the Board or the Committee may enjoy as
a matter of law or by reason of insurance coverage of any kind. Rights granted
hereunder shall be in addition to and not in lieu of any rights to
indemnification pursuant to the by-laws of the Company.
12. AMENDMENT AND TERMINATION.
The Board has the right at any time and from time to time to amend or
terminate (whether retroactively or otherwise) this Plan for any reason in any
manner which does not reduce any benefit previously accrued hereunder.
13. MISCELLANEOUS.
(a) GOVERNING LAW. Except to the extent preempted by federal law, this Plan
shall be governed by the laws of the Commonwealth of Pennsylvania from time to
time in effect without regard to its conflict of law provisions.
(b) WITHHOLDINGS. The Company shall have the right to make such provisions
as it deems necessary or appropriate to satisfy any obligations it may have to
withhold federal, state or local income or other taxes incurred by reason of
this Plan.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed this
11th day of December, 1997.
By: /s/ Alfred Weber
Title: Chairman, President and Chief
Executive Officer
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APPENDIX A
EXECUTIVES
1. A. Gordon Goodyear
2. Leslie S. Holden
3. Apostolos T. Kambouroglou
4. Stephen E. Markert, Jr.
5. Larry W. Moore
6. John J. Murray, Jr.
7. Stephen J. Weglarz
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C&D TECHNOLOGIES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR ALFRED WEBER
W I T N E S S E T H:
WHEREAS, C&D TECHNOLOGIES, INC., intends to adopt a nonqualified
supplemental executive retirement plan to provide supplemental retirement income
to Alfred Weber who is considered part of a "select group of management or
highly compensated employees" within the meaning of Sections 201(2), 301(a)(3)
and 401(a)(1) of ERISA and whose benefits under the Pension Plan and the Savings
Plan have been restricted by federal law.
NOW, THEREFORE, C&D TECHNOLOGIES, INC. adopts the C&D TECHNOLOGIES, INC.
Supplemental Executive Retirement Plan for Alfred Weber, effective as of
September 30, 1997, in order to provide supplemental retirement income to Alfred
Weber whose benefits have been restricted under the Pension Plan and the Savings
Plan.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the Company hereby adopts the Plan as follows:
1. DEFINITIONS. For purposes of this Plan, the following definitions apply:
(a) "Actuarial Equivalent" means an amount equal in value on an actuarial
basis, as determined by an actuary selected by the Committee, based upon the
UP-84 mortality table (unisex) with no setback and an annual interest rate of 7
1/4%.
(b) "Affiliate" means any company or other entity, presently or in the
future existing, which is affiliated with the Company within the meaning of
Sections 414(b), (c), (m) and (o) of the Code.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means (i) in the case where there is no employment or
consulting agreement between the Company or an Affiliate and Executive, or where
there is an employment or consulting agreement, but such agreement does not
define cause (or words of like import), termination due to Executive's fraud,
willful misconduct, gross negligence with respect to the Company or an
Affiliate, or Executive's conviction of a felony; or (ii) in the case where
there is an employment or consulting agreement between the Company or an
Affiliate and Executive, termination that is or would be deemed to be for cause
(or words of like import) as defined under such agreement. The Committee shall
have sole discretion to determine whether Cause exists, and its determination
shall be final, binding and conclusive.
(e) "CEO" means Alfred Weber.
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(f) "Change of Control" means the occurrence of any of the following: (i)
any person (as defined in Section 3(a)(9) of the Exchange Act and as used in
Sections 13(d) and 14(d) thereof), excluding the Company, any Subsidiary and any
employee benefit plan sponsored or maintained by the Company or any Subsidiary
(including any trustee of any such plan acting in his capacity as trustee), but
including a "group" as defined in Section 13(d)(3) of the Exchange Act, becomes
the beneficial owner (as defined in Rule 13(d)-3 under the Exchange Act) of
shares of the Company having at least thirty percent (30%) of the total number
of votes that may be cast for the election of directors of the Company; (ii) the
shareholders of the Company shall approve any merger or other business
combination of the Company, sale of all or substantially all of the Company's
assets or combination of the foregoing transactions (a "Transaction"), other
than a Transaction involving only the Company and one or more of its
Subsidiaries, or a Transaction immediately following which the shareholders of
the Company immediately prior to the Transaction continue to have a majority of
the voting power in the resulting entity (excluding for this purpose any
shareholder of the Company owning directly or indirectly more than ten percent
(10%) of the shares of the other company involved in the Transaction) and no
person is the beneficial owner (as defined in Rule 13(d)-3 under the Exchange
Act) of at least thirty percent (30%) of the shares of the resulting entity as
contemplated by subparagraph (i) above; or (iii) within any twenty-four (24)
month period beginning on or after the date hereof, the persons who were
directors of the Company immediately before the beginning of such period (the
"Incumbent Directors") shall cease (for any reason other than death) to
constitute at least a majority of the Board or the board of directors of any
successor to the Company, provided that, any director who was not a director as
of the date hereof shall be deemed to be an Incumbent Director if such director
was elected to the Board by, or on the recommendation of or with the approval
of, at least two-thirds (2/3) of the directors who then qualified as Incumbent
Directors either actually or by prior operation of this subparagraph (iii),
unless such election, recommendation or approval was the result of an actual or
threatened election contest of the type contemplated by Rule 14a-11 promulgated
under the Exchange Act or any successor provision. Notwithstanding the
foregoing, no Change of Control of the Company shall be deemed to have occurred
for purposes of this Plan by reason of any actions or events in which Executive
participates in a capacity other than in his capacity as an executive of the
Company.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means the Compensation Committee of the Board to which the
Board has delegated its authority to administer this Plan on its behalf.
(i) "Company" means C&D TECHNOLOGIES, INC. or any successor thereto.
(j) "Disability" or "Disabled" means disability or disabled as defined in
the Pension Plan.
(k) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(m) "Executive" means the CEO.
(n) "Maximum Annual Benefit" means an amount calculated by subtracting from
$150,000, indexed annually by 4% beginning September 30, 1998: (i) the annual
accrued benefit as of the Qualifying Event (based on a monthly single life
annuity) payable at age 66; (ii) one-half of Executive's Social Security Benefit
as of the Qualifying Event; and (iii) the annual single life annuity payable at
age 66 based on the Actuarial Equivalent of Executive's account under the
Savings Plan as of the Qualifying Event solely attributable to matching
contributions made by the Company.
(o) "Pension Plan" means the C&D TECHNOLOGIES, INC. Pension Plan for
Salaried Employees, as amended from time to time.
(p) "Plan" means this C&D TECHNOLOGIES, INC. Supplemental Executive
Retirement Plan, as amended from time to time.
(q) "Qualifying Event" means the occurrence of the first of any of the
following events while Executive is employed by the Company or an Affiliate: (i)
retirement on or after attainment of age 66; (ii) early retirement before age 66
and after age 62; (iii) Disability; (iv) death; (v) a Change of Control; and
(vi) the expiration of the CEO's employment agreement.
(r) "Savings Plan" means the C&D TECHNOLOGIES, INC. Savings Plan, which is
the Code Section 401(k) Plan maintained by the Company, as amended from time to
time.
(s) "SERP Benefit" means the vested benefit payable under this Plan.
(t) "Social Security Benefit" means the amount of Executive's social
security benefit that would be payable upon the Executive's attainment of age
66, calculated by the Company's actuary in accordance with reasonable actuarial
assumptions.
(u) "Subsidiary" means a subsidiary corporation under Section 424(f) of the
Code.
2. COVENANT NOT TO COMPETE.
(a) Except in the case of payment of the SERP Benefit to Executive upon a
Change of Control, during the period for which the SERP Benefit is paid and
during the period following Executive's termination of employment with the Board
or an Affiliate, Executive shall not, without having first obtained the written
consent of the Company, perform consulting or other services for, or have any
position with (whether as director, officer, employee, consultant, agent or
otherwise) or ownership interest in any business or organization which, in the
sole opinion of the Board, is engaged in any activity which is in competition
with the business then being conducted by the Company or any Affiliate. The term
"ownership interest" as used in the
3
<PAGE>
preceding sentence includes a proprietorship, partnership, joint venture, stock
or other equity interest of five percent (5%) or more held of record or
beneficially by Executive.
(b) Except in the case of payment of the SERP Benefit to Executive upon a
Change of Control, if Executive terminates his employment with the Company or an
Affiliate and performs service for a competitor, as defined in paragraph 2(a)
above, he shall forfeit all rights, privileges and claims hereunder and to any
SERP Benefit and all rights of Executive, his spouse, his designees and his
estate to any such SERP Benefit shall terminate and be forfeited (to the maximum
extent permitted by law).
3. ELIGIBILITY FOR AND CALCULATION OF SERP BENEFIT.
(a) PAYMENT DATE. The Company shall pay the SERP Benefit to Executive (or,
in the case of death prior to a Qualifying Event, to Executive's spouse)
beginning on the first of the month following the date on which Executive has a
Qualifying Event. Notwithstanding the foregoing, in the event that Executive
shall have terminated employment with the Company or an Affiliate prior to a
Qualifying Event but on or after the date Executive becomes fully vested under
Section 3(f) of the Plan, the Company shall pay the SERP Benefit to Executive
(or, in the case of death prior to a Qualifying Event, to Executive's spouse)
beginning on the first of the month following the earliest of the following
events: (i) attainment of age 66; (ii) death; (iii) occurrence of a Change of
Control; or (iv) the expiration of the CEO's employment agreement.
(b) CALCULATION OF SERP BENEFIT. Except with respect to a Change of Control
or the expiration of the CEO's employment agreement, Executive shall not accrue
a SERP Benefit if the Qualifying Event occurs before Executive has completed
seven and one-half (7.5) full and consecutive years of employment with the
Company or an Affiliate. Except with respect to a Change of Control or the
expiration of the CEO's employment agreement, if the Qualifying Event occurs on
or after seven and one-half (7.5) full and consecutive years of employment with
the Company or an Affiliate, the SERP Benefit shall be calculated by multiplying
(i) the Maximum Annual Benefit by (ii) the appropriate percentage from the
following schedule:
Years of Employment
PRIOR TO QUALIFYING EVENT PERCENTAGE BENEFIT
less than 7.5 0%
7.5 50%
8 53.3%
9 60%
10 66.7%
11 73.3%
12 80%
4
<PAGE>
13 86.7%
14 93.3%
15 or more 100%
Notwithstanding anything herein to the contrary, if the Qualifying Event is
a Change of Control or the expiration of the CEO's employment agreement, the
SERP Benefit for Executive shall be calculated by multiplying (i) the Maximum
Annual Benefit by (ii) 100%.
EXAMPLE 1 - For Alfred Weber:
$150,000 (Assumed retirement in 1997)
- 35,000 Age 66 Pension Plan Benefit
- 15,000 1/2 Age 66 Social Security Benefit
- 5,000 Age 66 Savings Plan Benefit Annuity
-------
$ 95,000 Maximum Annual Benefit
X 100% Percentage Benefit @ 15 years
-------
$ 95,000* Annual Age 66 SERP Benefit
* To be adjusted on an Actuarial Equivalent basis for forms other than a
single life annuity.
(c) NORMAL FORM OF SERP BENEFIT. An Executive who is not married at the
time of a Qualifying Event shall receive the SERP Benefit in the form of a
single life annuity, providing for monthly benefits for the life of Executive,
with payments ceasing upon Executive's death. Subject to Section 3(d) below, an
Executive who is married at the time of a Qualifying Event shall receive the
SERP Benefit in the form of a joint and fifty percent (50%) survivor annuity,
which provides for benefits to be paid monthly to Executive for life, and if his
spouse at the time of the Qualifying Event survives him, for the spouse's life
or until the spouse remarries, whichever comes first, monthly payments in an
amount equal to fifty percent (50%) of the monthly amount received by Executive
while alive.
(d) OPTIONAL FORM OF SERP BENEFIT FOR MARRIED EXECUTIVES. Except in the
case of death prior to commencement of the SERP Benefit which is governed by
Section 6(a) or in the case of a Change of Control which is governed by Section
7, the Executive shall have the right, in a writing filed with the Committee, to
elect (subject to the written consent of a married Executive's spouse in a form
specified by the Committee) to have his SERP Benefit paid in the form of a
single life annuity, providing for monthly benefits for the life of Executive,
with payments ceasing upon Executive's death; provided, that such election is
made and filed with the Committee at least one (1) year prior to the Executive's
Qualifying Event. Such an election may be revoked by Executive at any time or
from time to time by written notice filed with the Committee at least one (1)
year prior to Executive's Qualifying Event.
5
<PAGE>
(e) ACTUARIAL EQUIVALENCE. The normal form of SERP Benefit for an Executive
who is not married at the time of a Qualifying Event shall be a single life
annuity. The normal form of SERP Benefit for an Executive who is married at the
time of a Qualifying Event shall be the Actuarial Equivalent of a single life
annuity payable in the form of a joint and fifty percent (50%) survivor annuity.
(f) VESTING OF SERP BENEFIT. An Executive's rights under this Plan to any
SERP Benefit shall be fully vested and nonforfeitable, except as set forth in
paragraph 2 hereof, solely upon the earliest of the: (i) completion of seven and
one-half (7.5) years of full and consecutive employment with the Company or an
Affiliate; (ii) occurrence of a Change of Control; or (iii) the expiration date
of the CEO's employment agreement. Notwithstanding anything herein to the
contrary, Executive shall not have any rights to a SERP Benefit in the event
Executive is terminated by the Company or an Affiliate for Cause.
4. REDUCTION FOR EARLY RETIREMENT OF EXECUTIVE.
The SERP Benefit of an Executive who retires from the Company or an
Affiliate before age 66 and after age 62 shall be reduced by seven percent (7%)
per year prior to age 66 and shall be paid on the first of the month following
the Qualifying Event.
5. DISABILITY OF EXECUTIVE.
(a) DISABILITY WHILE EMPLOYED. In the event that Executive becomes Disabled
while employed by the Company or an Affiliate, he shall cease to accrue benefits
under this Plan. Such Executive shall be entitled to retire and receive a SERP
Benefit at age 66 under the terms of this Plan if he remains Disabled until age
66. If such Executive does not remain Disabled, any SERP Benefit to which he is
eligible to receive hereunder or his right to participation hereunder shall be
determined under the provisions of this Plan as of the date his Disability
ceases. In the event that Executive is no longer disabled and he becomes
reemployed by the Company or an Affiliate immediately following such Disability,
then Executive: (i) shall begin to accrue benefits under this Plan from the date
of reemployment; and (ii) shall not be entitled to any accruals during the
period during which Executive was Disabled. Notwithstanding anything herein to
the contrary, Executive's full and consecutive years of employment with the
Company or an Affiliate prior to the Disability shall be added to Executive's
full and consecutive years of employment with the Company or an Affiliate after
the Disability for purposes of vesting under Section 3(f) of the Plan and for
purposes of calculating the SERP Benefit under Section 3(b) of the
Plan.
(b) DEATH WHILE DISABLED. Death benefits, if any, shall be paid to the
spouse of a Disabled Executive in accordance with Section 6.
6. DEATH OF EXECUTIVE.
(a) PRIOR TO COMMENCEMENT OF THE SERP BENEFIT. In the event of the death of
Executive while he is employed by the Company or an Affiliate, his spouse to
which he must have been married to for over one (1) year immediately prior to
his death, shall be entitled to a
6
<PAGE>
monthly single life annuity equal to fifty percent (50%) of the single life
annuity to which Executive would have received if he had retired on his date of
death payable beginning the first of the month following the date he would have
attained age 66.
(b) AFTER COMMENCEMENT OF THE SERP BENEFIT. In the event of the death of
Executive after commencement of the SERP Benefit, Executive's spouse shall be
entitled to a SERP Benefit solely to the extent provided under the form of
benefit payable to Executive and elected (subject to spousal consent, if
applicable) under Section 3 of the Plan.
(c) Spousal benefits shall terminate upon remarriage of spouse.
7. CHANGE OF CONTROL.
Notwithstanding anything herein to the contrary, a Qualifying Event due to
a Change of Control will result in a SERP Benefit, payable to Executive (or, in
the case of death, Executive's spouse) in an Actuarial Equivalent single lump
sum as soon as administratively feasible following the date of the Change of
Control (but in no event later than the first of the month following the Change
of Control), equal to the SERP Benefit calculated under Section 3(b) of the
Plan. Without limiting the generality of the foregoing, an Executive or spouse
who has commenced receiving payment of his SERP Benefit prior to a Change of
Control, shall receive, upon a Change of Control, an Actuarial Equivalent single
lump sum payment based on the remainder of the SERP Benefit that would have
otherwise been paid under the Plan had the Change of Control not occurred.
EXAMPLE 2 -
$ 95,000 Maximum Annual Benefit
X 6.5826 Lump Sum Conversion Factor (Based on Age 62)
-------
$625,347 Change of Control SERP Benefit
8. FUNDING.
(a) GENERAL ASSETS. Nothing contained in this Plan and no action taken
pursuant to the provisions of this Plan shall create or be construed to create a
trust of any kind, or a fiduciary relationship between the Company and
Executive, the Executive's spouse or any other person. All benefits and rights
described under this Plan shall be and remain unsecured obligations of the
Company. The Company may prefund all or any portion of such benefits or rights
and may enter into a trust agreement solely for such purpose (a "grantor trust"
under the Code); provided that the assets of any such trust fund shall be
considered general assets of the Company and shall be subject to the claims of
the Company's general creditors. None of the Executive, the Executive's spouse
or any estate of such Executive or spouse shall have an interest, vested or
otherwise, in any trust fund hereunder or a secured or preferred position with
respect thereto or shall have any claim thereto other than as a general creditor
of the Company.
7
<PAGE>
(b) CHANGE OF CONTROL. Any trust hereunder shall be revocable by the
Company until the occurrence of a Change of Control, at which time the trust, if
any, shall become irrevocable.
9. CONSTRUCTION OF AGREEMENT.
(a) Any powers reserved by the Board under this Plan may be exercised by
the Committee which shall have general responsibility for the administration and
interpretation of the Plan including selection of participants, determinations
of years of employment for purposes of this Plan, and compliance, if required,
with reporting and disclosure rules of ERISA. Any determination or
interpretation of the Board or the Committee with respect to the Plan shall be
final, binding and conclusive on all persons.
(b) If the Board shall find that any person to whom any amount is payable
under this Plan is unable to care for his affairs because of illness, accident
or physical or mental incapacitation, is a minor, has died, or for any other
reason shall be incapable of properly or legally receiving benefits to which he
is entitled to under this Plan, then any SERP Benefit due him or his spouse may,
if the Board so elects, be paid to his spouse. Any such payment shall be in
complete discharge of the liability of the Company therefor.
(c) Neither this Plan nor any action taken hereunder shall be construed as
giving Executive the right to be retained or continue in the employ of the
Company or an Affiliate or as evidence of any agreement by the Company or an
Affiliate to employ Executive in any particular position or at any particular
rate of remuneration or affect the right of the Company or an Affiliate to
dismiss Executive.
(d) The making of this Plan does not constitute or create an employment
agreement between the Company or an Affiliate and Executive or give Executive
any legal or equitable right against the Company or an Affiliate, its agents, or
its successors or assigns, except as expressly provided by this Plan.
(e) Any SERP Benefit payable under this Plan shall not be deemed salary or
other compensation to Executive for the purpose of computing benefits to which
Executive may be entitled under any pension or profit-sharing plan or other
arrangement of the Company for the benefit of its employees nor shall anything
contained herein affect any rights or obligations which Executive may have under
any pre-existing agreement with the Company or an Affiliate.
(f) Employment, compensation paid, and insurance or other disability,
retirement, or death benefits or health plans to be taken into account under
this Plan shall include employment, compensation paid, and insurance or other
benefits or plans provided by any Affiliate or organization which Executive
served at the request of the Company.
8
<PAGE>
10. ASSIGNMENT AND NONALIENATION OF SERP BENEFIT.
(a) This Plan shall be binding upon and inure to the benefit of (i) the
Company and its successors, assigns and any purchaser of either the Company or
its assets; and (ii) Executive, his spouse, executors, administrators and legal
representatives.
No amount payable at any time under this Plan shall be subject in any
manner to alienation by anticipation, sale, transfer, assignment, bankruptcy,
pledge, attachment, charge or encumbrance of any kind nor in any manner be
subject to the debts or liabilities of any person, and any attempt to so
alienate or subject any such amount, whether presently or thereafter payable,
shall be null and void. If any person shall attempt to, or shall, alienate,
sell, transfer, assign, pledge, attach, charge or otherwise encumber any amount
payable under this Plan, or any part thereof, or if by reason of his bankruptcy
or other event happening at any such time such amount would be made subject to
his debts or liabilities or would otherwise not be enjoyed by him, then the
Board, if it so elects, may direct that such amount be withheld and that the
same or any part thereof be paid or applied to or for the benefit of such
person, in such manner and proportion as the Board may deem proper.
11. ADMINISTRATION.
(a) ADMINISTRATION OF PLAN. The Board and the Committee shall have full
power and responsibility to administer this Plan. The Board may, in its sole
discretion, appoint a committee, an agent or agents to carry out designated
administrative functions.
(b) LEGAL, ACCOUNTING, CLERICAL AND OTHER SERVICES. The Board may authorize
one or more of its members, the Committee or the management of the Company to
act on its behalf and may contract for legal, accounting, clerical and other
services to carry out the purposes of this Plan. All expenses of the Board in
this regard shall be paid by the Company.
(c) CLAIMS PROCEDURE. The Committee shall be responsible for determining
all claims for benefits under this Plan by Executive or his spouse. Within
ninety (90) days after receiving a claim (or within up to one hundred eighty
(180) days, if the claimant is so notified, including notification of the reason
for the delay), the Committee shall provide adequate notice in writing to any
Executive or spouse whose claim for benefits under this Plan has been denied,
setting forth the specific reasons for such denial. The Executive or spouse will
be given an opportunity for a full and fair review by the Committee of the
decision denying the claim. The Executive or spouse shall be given sixty (60)
days from the date of the notice denying any such claim to request such review
by written notice to the Committee. Within sixty (60) days after receiving a
request for review, the Committee shall notify the claimant in writing of (i)
its decision; (ii) the reasons therefor; and (iii) the Plan provisions upon
which it is based. The Committee may at any time alter the claims procedure set
forth herein, so long as the revised claims procedure complies with ERISA, and
the regulations issued thereunder.
(d) LIMITATION OF LIABILITY. No officer of the Company or member of the
Committee, the Board or any of its authorized agents acting under this Plan
shall be liable for any action
9
<PAGE>
taken or omitted in good faith hereunder or for exercise of any power given
hereunder or for the actions of other members of the Board or the Committee with
regard to the Plan. As a condition precedent to the establishment of this Plan
or the receipt of benefits hereunder, or both, such liability, if any, is
expressly waived and released by Executive, his spouse and all persons claiming
under or through Executive or his spouse. Such waiver and release shall be
conclusively evidenced by the acceptance of any benefits under this Plan.
(e) INDEMNIFICATION. Each officer of the Company or member of the Board or
the Committee, whether or not acting under this Plan, shall be indemnified by
the Company against expenses (other than amounts paid in a settlement to which
the Company does not consent) reasonably incurred by him in connection with any
action to which he may be a party by reason of performance of administrative
functions and duties under this Plan, except in relation to matters as to which
he shall be adjudged in such action to be personally guilty of gross negligence
or willful misconduct in the performance of his duties. The foregoing right to
indemnification shall be in addition to such other rights as the officer or
member of the Board or the Committee may enjoy as a matter of law or by reason
of insurance coverage of any kind. Rights granted hereunder shall be in addition
to and not in lieu of any rights to indemnification pursuant to the by-laws of
the Company.
12. AMENDMENT AND TERMINATION.
The Board has the right at any time and from time to time to amend or
terminate (whether retroactively or otherwise) this Plan for any reason in any
manner which does not reduce any benefit previously accrued hereunder.
13. MISCELLANEOUS.
(a) GOVERNING LAW. Except to the extent preempted by federal law, this Plan
shall be governed by the laws of the Commonwealth of Pennsylvania from time to
time in effect without regard to its conflict of law provisions.
(b) WITHHOLDINGS. The Company shall have the right to make such provisions
as it deems necessary or appropriate to satisfy any obligations it may have to
withhold federal, state or local income or other taxes incurred by reason of
this Plan.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed this
11th day of December, 1997.
By: /s/ Stephen E. Markert, Jr.
Title: Vice President Finance
10
<PAGE>
EXHIBIT 11
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
EARNINGS PER SHARE COMPUTATIONS
(Dollars and shares in thousands)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
October 31, October 31,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
NET INCOME $5,319 $4,130 $14,158 $10,426
===== ===== ====== ======
Weighted average number of common
shares outstanding 6,111 6,236 6,098 6,320
Effect of shares issuable under
stock option plan 227 123 200 183
----- ----- ----- -----
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING (PRIMARY) 6,338 6,359 6,298 6,503
===== ===== ===== =====
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE (PRIMARY) $ 0.84 $ 0.65 $ 2.25 $ 1.60
===== ===== ===== =====
Weighted average number of common
shares outstanding 6,111 6,236 6,098 6,320
Effect of shares issuable under
stock option plan 229 127 207 185
----- ----- ----- -----
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING (FULLY DILUTED) 6,340 6,363 6,305 6,505
===== ===== ===== =====
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE (FULLY DILUTED) $ 0.84 $ 0.65 $ 2.25 $ 1.60
===== ===== ===== =====
EXHIBIT 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
re: C&D TECHNOLOGIES, Inc. and Subsidiaries
Registration on Forms S-8 (Registration No. 33-31978,
No. 33-71390, No. 33-86672, No. 333-17979 and No. 333-38891)
We are aware that our report dated November 25, 1997 on our review of interim
financial information of C&D TECHNOLOGIES, Inc. and Subsidiaries for the period
ended October 31, 1997 and included in the Company's quarterly report on Form
10-Q for the quarter then ended is incorporated by reference in the registration
statements of C&D Technologies, Inc. and Subsidiaries on Forms S-8 (Registration
No. 33-31978, No. 33-71390, No. 33-86672, No. 333-17979 and No. 333-38891).
Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not
be considered a part of the registration statement prepared or certified by us
within the meaning of Sections 7 and 11 of that Act.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 11, 1997
<PAGE>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED BALANCE SHEET AS OF 10/31/97 AND STATEMENT
OF INCOME FOR THE PERIOD ENDED 10/31/97 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> OCT-31-1997
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<RECEIVABLES> 45716
<ALLOWANCES> 1675
<INVENTORY> 40263
<CURRENT-ASSETS> 95658
<PP&E> 54487
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<TOTAL-ASSETS> 167288
<CURRENT-LIABILITIES> 44355
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0
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<COMMON> 66
<OTHER-SE> 90799
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<SALES> 230102
<TOTAL-REVENUES> 230102
<CGS> 170989
<TOTAL-COSTS> 170989
<OTHER-EXPENSES> 6358
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1041
<INCOME-PRETAX> 22328
<INCOME-TAX> 8170
<INCOME-CONTINUING> 14158
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