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 July 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)
CHARTER POWER SYSTEMS, INC.
(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 September 2,
1997: 6,104,425
<PAGE>
C&D TECHNOLOGIES, INC.
AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION Page No.
Item 1 - Financial Statements
Consolidated Balance Sheets -
July 31, 1997 and January 31, 1997.................... 3
Consolidated Statements of Income -
Three and Six Months Ended July 31, 1997
and 1996............................................. 5
Consolidated Statements of Cash Flows -
Six Months Ended July 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
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
July 31, January 31,
1997 1997
---- ----
ASSETS
Current assets:
Cash and cash equivalents................. $ 1,190 $ 952
Restricted cash and cash equivalents...... - 1
Accounts receivable, less allowance for
doubtful accounts of $1,658 and
$1,414, respectively................. 43,302 41,682
Inventories............................... 40,924 38,943
Deferred income taxes..................... 7,307 7,315
Other current assets...................... 1,001 437
-------- --------
Total current assets........... 93,724 89,330
Property, plant and equipment, net.............. 51,863 52,469
Intangible and other assets, net................ 5,374 6,208
Goodwill, net................................... 11,465 11,966
-------- --------
Total assets................... $ 162,426 $ 159,973
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt......... $ 452 $ 476
Accounts payable.......................... 22,447 23,730
Accrued liabilities....................... 16,658 14,468
Other current liabilities................. 3,201 5,220
-------- --------
Total current liabilities...... 42,758 43,894
Deferred income taxes........................... 4,459 3,923
Long-term debt.................................. 21,867 29,351
Other liabilities............................... 9,827 7,899
-------- --------
Total liabilities.............. 78,911 85,067
-------- --------
The accompanying notes are an integral part of these statements.
3
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
(Dollars in thousands)
(Unaudited)
July 31, January 31,
1997 1997
---- ----
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value,
10,000,000 shares authorized;
6,574,976 and 6,547,476 shares
issued, respectively.................... 66 65
Additional paid-in capital.................. 39,869 39,326
Minimum pension liability adjustment........ (136) (136)
Treasury stock, at cost, 470,551 shares..... (11,232) (11,232)
Notes receivable from stockholder, net of
discount of $51 and $85, respectively... (1,671) (1,636)
Cumulative translation adjustment........... (778) (374)
Retained earnings........................... 57,397 48,893
-------- --------
Total stockholders' equity....... 83,515 74,906
-------- --------
Total liabilities and
stockholders' equity........... $ 162,426 $ 159,973
======== ========
The accompanying notes are an integral part of these statements.
4
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three months ended Six months ended
July 31, July 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales............................ $ 75,375 $ 71,748 $ 148,721 $ 134,177
Cost of sales........................ 55,901 56,467 110,264 103,775
------- ------- -------- --------
Gross profit..................... 19,474 15,281 38,457 30,402
Selling, general and
administrative expenses......... 9,610 8,653 18,865 16,096
Research and development
expenses......................... 2,126 2,162 4,202 4,036
------- ------- -------- --------
Operating income................. 7,738 4,466 15,390 10,270
Interest expense, net................ 364 291 740 553
Other (income) expense, net.......... (1) 130 711 127
------- ------- -------- --------
Income before income taxes....... 7,375 4,045 13,939 9,590
Provision for income taxes........... 2,671 1,395 5,100 3,294
------- ------- -------- --------
Net income....................... $ 4,704 $ 2,650 $ 8,839 $ 6,296
======= ======= ======== ========
Net income per common and
common equivalent share.......... $ .75 $ .40 $ 1.41 $ .96
======= ======= ======== ========
Weighted average common and
common equivalent shares......... 6,292 6,602 6,278 6,576
======= ======= ======== ========
Dividends per share.................. $ 0.0275 $ 0.0275 $ 0.0550 $ 0.0550
======= ======= ======== ========
</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)
Six months ended
July 31,
1997 1996
---- ----
Cash flows provided (used) by operating activities:
Net income ..................................... $ 8,839 $ 6,296
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............. 6,092 4,104
Deferred income taxes..................... 544 1,000
(Gain) loss on disposal of assets......... (1) 10
Changes in:
Accounts receivable................. (1,655) (3,976)
Inventories......................... (2,001) 602
Other current assets................ (564) (391)
Accounts payable.................... (1,281) 928
Accrued liabilities................. 2,357 (1,654)
Income taxes payable................ (401) (72)
Other current liabilities........... (1,400) 477
Other liabilities................... 1,928 609
Other, net................................ (341) 63
------- -------
Net cash provided by operating activities........... 12,116 7,996
------- -------
Cash flows provided (used) by investing activities:
Acquisition of businesses, net of cash
acquired..................................... - (19,739)
Acquisition of property, plant and equipment ... (4,187) (8,847)
Change in restricted cash....................... 1 3,597
------- -------
Net cash used by investing activities............... (4,186) (24,989)
------- -------
Cash flows provided (used) by financing activities:
Repayment of long-term debt..................... (7,508) (7,094)
Proceeds from new borrowings.................... - 20,500
Proceeds from issuance of common stock.......... 326 739
Payment of common stock dividends............... (502) (350)
Note receivable from stockholder in
connection with issuance of common stock...... - (1,057)
------- -------
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)
Six months ended
July 31,
1997 1996
---- ----
Net cash (used) provided by financing activities.... (7,684) 12,738
------- ------
Effect of exchange rate changes on cash............. (8) 2
------- ------
Increase (decrease) in cash and cash equivalents.... 238 (4,253)
Cash and cash equivalents at beginning
of period........................................ 952 5,472
------- ------
Cash and cash equivalents at end of period.......... $ 1,190 $ 1,219
======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid, net.................................. $ 924 $ 593
Income taxes paid................................... 4,957 2,368
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..................... $ - $ 177
Note receivable from stockholder in connection
with issuance of common stock..................... $ - $ 664
* 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 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 July 31, 1997 and the
consolidated statements of income for the three and six months ended July 31,
1997 and 1996 and the consolidated statements of cash flows for the six months
ended July 31, 1997 and 1996. However, interim results of operations necessarily
involve more estimates than annual results and are not indicative of results for
the full fiscal year.
2. INVENTORIES
Inventories consisted of the following:
July 31, January 31,
1997 1997
---- ----
Raw materials ........................... $ 16,466 $ 17,506
Work-in-progress ........................ 11,498 11,599
Finished goods .......................... 12,960 9,838
------- -------
$ 40,924 $ 38,943
======= =======
3. INCOME TAXES
A reconciliation of the provision for income taxes from the statutory rate
to the effective rate is as follows:
Six months ended
July 31,
1997 1996*
---- ----
U.S. statutory income tax ...................... 35.0% 35.0%
State tax, net of federal income tax benefit.... 3.8 3.3
Reduction of taxes provided in prior years...... - (3.1)
Foreign sales corporation ...................... (1.1) (0.7)
Tax effect of foreign operations ............... (1.1) -
Other........................................... - (0.2)
---- ----
36.6% 34.3%
==== ====
*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,
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 be the approximately $579 previously reserved, the majority of
which is expected to be paid over the next three to five 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. Based on currently available
information, however, 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 three to
five years.
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.
Six months ended
July 31, 1996
------------------
Net sales.............................. $136,100
Net income............................. $ 6,042
Net income per common share ........... $ .92
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 Six Months Ended
July 31, July 31,
------------------ ----------------
1997 1996 1997 1996
---- ---- ---- ----
Net income per common share $ 0.77 $ 0.41 $ 1.45 $ 0.99
===== ===== ===== =====
Diluted net income per common share $ 0.75 $ 0.40 $ 1.41 $ 0.96
===== ===== ===== =====
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 July 31, 1997, the related
consolidated statements of income for the three and six months ended July 31,
1997 and 1996 and the related consolidated statement of cash flows for the six
months ended July 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
August 28, 1997
14
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net sales for the fiscal 1998 second quarter and six months ended July 31,
1997 increased $3,627,000 or five percent and $14,544,000 or 11 percent,
respectively, compared to the equivalent periods in fiscal 1997. The increase in
fiscal 1998 second quarter sales versus the same quarter of the prior fiscal
year was primarily due to higher sales to the telecommunications, motive power
and uninterruptible power supply (UPS) markets, which were up ten percent, five
percent and 11 percent, respectively. These increases were partially offset by
an eight percent decrease in non-telecommunications-related power supply sales.
On a company-wide basis, fiscal 1998 second quarter telecommunications-related
sales were approximately 49 percent of total company sales versus 47 percent of
sales for the second quarter of fiscal 1997. The increase in sales for the six
months ended July 31, 1997 compared to the equivalent period in fiscal 1997 was
primarily due to higher sales to the telecommunications and motive power
markets, up ten percent and 12 percent, respectively, as well as higher UPS and
power supply sales which were both up 13 percent. A portion of the sales
increase during the first six months of fiscal 1998 resulted from the recording
of a full half year of sales by PCC versus a partial half year in the comparable
period of the prior fiscal year due to the acquisition of PCC on March 12, 1996.
On a company-wide basis, telecommunications-related sales remained at 47 percent
of total sales for the first half year of both fiscal 1998 and fiscal 1997.
Gross profit increased $4,193,000 or 27 percent for the second quarter of
fiscal 1998 and increased $8,055,000 or 26 percent for the six-month period
ended July 31, 1997. Gross margin increased to 25.8 percent for the second
quarter of fiscal 1998 versus 21.3 percent for the comparable quarter of the
prior year. For the six months ended July 31, 1997, gross margin increased to
25.9 percent, up from 22.7 percent from the same six-month period of fiscal
1997. Gross margins for both the fiscal 1998 second quarter and half year
increased primarily as a result of lower material costs, operating efficiencies
associated with higher sales volumes, shift in product mix, and the absence of
the non-recurring charge incurred in the second quarter of fiscal 1997 related
to the relocation of an electronics business from Seattle, Washington to Tucson,
Arizona and Dunlap, Tennessee.
Selling, general and administrative expenses for the three months ended
July 31, 1997 increased $957,000 or 11 percent over the comparable period of the
prior year primarily due to costs associated with the resolution of legal
disputes and higher payroll-related costs. For the six-month period ended July
31, 1997, selling, general and administrative expenses increased $2,769,000 or
17 percent over the same period of the prior year. This increase was primarily
due to goodwill amortization, due diligence costs, consulting fees and the legal
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
and payroll costs mentioned above. A portion of the increase was also due to the
recording of a full half year of selling, general and administrative expenses by
PCC during fiscal 1998, versus a partial half year in the comparable period of
the prior year due to the acquisition of PCC during that period.
Research and development expenses remained proportional to sales at three
percent of sales for the second quarter and first six months of both fiscal 1998
and 1997.
Interest expense, net, increased $73,000 in the second quarter of fiscal
1998 primarily due to lower capitalized interest related to plant expansions and
lower interest income, partially offset by the impact of lower debt balances
outstanding versus the second quarter of fiscal 1997. For the six-month period
ended July 31, 1997, interest expense, net, increased $187,000 over the
comparable period of the prior year due to lower capitalized interest related to
plant expansions and lower interest income.
Other expense, net, for the second quarter of fiscal 1998 decreased
$131,000 primarily due to a foreign exchange gain in the current quarter versus
a foreign exchange loss during the same quarter of the prior year. For the six
months ended July 31, 1997, other expense, net, increased $584,000 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).
As a result of the above, income before income taxes increased 82 percent
for the second quarter of fiscal 1998 and increased 45 percent for the six-month
period ended July 31, 1997 versus the comparable periods of the prior year. Net
income for the second quarter increased 78 percent over the second quarter in
the prior year to $4,704,000 or 75 cents per share and increased 40 percent to
$8,839,000 over the first six months in the prior year or $1.41 per share.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased 52 percent to
$12,116,000 for the six-month period ended July 31, 1997 compared to $7,996,000
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 six
months of fiscal 1998; less of an increase in accounts receivable; and an
increase in accrued liabilities during the first six months of the current year
versus a decrease in accrued liabilities in the comparable period of the prior
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
year. These changes, resulting in higher cash flows from operations, were
partially offset by an increase in inventories and decrease in accounts payable
during the first six-month period of the current year versus a decrease in
inventories and an increase in accounts payable in the first six months of the
prior year.
Net cash used by investing activities totaled $4,186,000 for the six-month
period ended July 31, 1997, resulting in a decrease of $20,803,000 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 six months of fiscal 1997 resulted
from the use of proceeds obtained from the Georgia Bonds. The Company exercised
its option to redeem the Georgia Bonds during the second quarter of fiscal 1998.
Net cash used by financing activities was $7,684,000 for the six-month
period ended July 31, 1997 compared to net cash provided by financing activities
of $12,738,000 in the comparable period of the prior year. The additional
borrowings in the prior year's first six months were used primarily for the
funding of the acquisitions of PCC and LH.
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 six 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 $15,000,000
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 4. Submission of Matters to a Vote of Security Holders
(a) The Company held its annual meeting of stockholders on June 24, 1997.
(b) See Item 4(c) below.
(c) Alfred Weber was elected as a director by a vote of 5,357,761 for and
11,645 withheld. Kevin P. Dowd was elected as a director by a vote of
5,317,011 for and 52,395 withheld. Glenn M. Feit was elected as a
director by a vote of 5,354,111 for and 15,295 withheld. Alan G. Lutz
was elected as a director by a vote of 5,355,911 for and 13,495 with-
held. William Harrall, III was elected as a director by a vote of
5,354,911 for and 14,495 withheld. Warren A. Law was elected as a
director by a vote of 5,356,411 for and 12,995 withheld. John A. H.
Shober was elected as a director by a vote of 5,358,961 for and 10,445
withheld.
The amendment to the Company's restated certificate of incorporation
changing the name of the Company to "C&D Technologies, Inc." was
approved by a vote of 5,353,070 for and 5,851 against with 10,485
abstentions.
The appointment of Coopers & Lybrand L.L.P. as the Company's
independent accountants for the year ending January 31, 1998 was
ratified by a vote of 5,357,559 for and 5,000 against, with 6,850
abstentions.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3.1 Composite Certificate of Incorporation (filed herewith).
10.1 Charter Power Systems, Inc. Incentive Compensation Plan (filed
herewith).
10.2 Employment Agreement, dated August 1, 1997 between Larry W. Moore
and the Company (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
<PAGE>
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.
September 11, 1997 BY: /s/ Alfred Weber
---------------------------------
Alfred Weber
Chairman, President and Chief
Executive Officer
September 11, 1997 BY: /s/ Stephen E. Markert, Jr.
----------------------------------
Stephen E. Markert, Jr.
Vice President Finance and
Treasurer
(Principal Financial and
Accounting Officer)
19
<PAGE>
EXHIBIT INDEX
3.1 Composite Certificate of Incorporation.
10.1 Charter Power Systems, Inc. Incentive Compensation Plan.
10.2 Employment Agreement, dated August 1, 1997 between Larry W. Moore
and the Company.
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
<PAGE>
EXHIBIT 3.1
COMPOSITE CERTIFICATE OF INCORPORATION
OF
C&D TECHNOLOGIES, INC.
(This Composite Certificate of Incorporation is being filed to comply
with Item 601(3)(i) of Regulation S-K. It consists of a composite of the
Corporation's Restated Certificate of Incorporation and the amendments thereto.
It has not been filed with the Secretary of State of Delaware in this form.)
FIRST: The name of the Corporation is C&D TECHNOLOGIES, INC.
SECOND: The registered office of the Corporation is located at 299 South State
Street, in the City of Dover, in the County of Kent, in the State of Delaware.
The name of its registered agent at that address is The Prentice-Hall
Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act of
activity for which a Corporation may be organized under the General Corporation
Law of the State of Delaware. Without limiting in any manner the scope and
generality of the foregoing, it is hereby provided that the Corporation shall
have the power to do all and everything necessary suitable and proper for the
accomplishment of any of the purposes or the attainment of any of the objects or
the furtherance of any of the powers of which a corporation may be organized
under the General Corporation Law of the State of Delaware, either alone or in
association with other corporations, firms or individuals, and to do every other
act or acts, thing or things incidental or appurtenant to or growing out of or
connected with the Corporation's business or powers or any part or parts
thereof, provided the same be not inconsistent with said General Corporation
Law; and it shall have the power to conduct and carry on its business, or any
part thereof, and to have one or more offices, and to exercise any or all of its
corporate powers and rights, in the State of Delaware, and in the various other
states, territories, colonies and dependencies of the United States, in the
District of Columbia, and in all or any foreign countries.
FOURTH: The total number of shares of capital stock that may be issued by the
Corporation is 10,000,000 shares of common stock, par value $.01 per share.
FIFTH: The name and address of the sole incorporator are as follows:
Name Address
Steven J. Wright 488 Madison Avenue
New York, New York 10022
SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and its
directors and stockholders:
<PAGE>
1. The number of directors of the Corporation shall be such as from
time to time shall be fixed by, or in the manner provided in the by-laws.
Election of directors need not be by ballot unless the by-laws so provide.
2. The Board of Directors shall have power, without the assent or vote
of the stockholders:
(a) to make, alter, amend, change, add or repeal the by-laws of
the Corporation; to fix and vary the amount to be reserved for any
proper purpose; to authorize and cause to be executed mortgages and
liens upon all or any part of the property of the Corporation; to
determine the use and disposition of any surplus or net profits; to
declare dividends; and to fix the record date and the date for the
payment of any dividends; and
(b) to determine from time to time whether and to what extent,
and at what times and places, and under what conditions and
regulations, the accounts and books of the Corporation (other than the
stock ledger) or any of them, shall be open to the inspection of the
stockholders.
3. The directors in their discretion may submit any contract or act
for approval or ratification by the written consent of the stockholders, at any
annual meeting of the stockholders or at any special meeting of the stockholders
called for the purpose of considering any such act or contract, and any contract
or act that shall be approved or ratified by the written consent or vote of the
holders of a majority of the stock of the Corporation (which in the case of a
meeting is represented in person or by proxy at such meeting, provided a lawful
quorum of stockholders be there represented in person or by proxy) shall be as
valid and as binding upon the Corporation and upon all the stockholders as
though it had been approved or ratified by every stockholder of the corporation,
whether or not the contract or act would otherwise be open to legal attack
because of the directors' interest, or for any other reason.
4. In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation; subject, nevertheless, to the provisions of the
statutes of Delaware, of this certificate, and to any by-laws from time to time
made by the stockholders; provided, however, that no by-laws so made shall
invalidate any prior act of the directors which would have been valid if such
by-laws had not been made.
<PAGE>
SEVENTH: The corporation shall, to the full extent permitted by Section 145 of
the General Corporation Law of the State of Delaware, as amended from time to
time, indemnify all persons whom it may indemnify pursuant thereto.
EIGHTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or any creditor or stockholders thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors, and/or of the stockholders
or class of stockholders of the Corporation, as the case may be, agree to any
compromise or arrangement and the said reorganization of the Corporation as a
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the creditors or
class of creditors and/or on all the stockholders or class of stockholders of
the Corporation, as the case may be, and also on the Corporation.
NINTH: The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed by law, and all rights and powers conferred herein on
stockholders, directors and officers are subject to this reserved power.
CHARTER POWER SYSTEMS, INC.
---------------------------
INCENTIVE COMPENSATION PLAN
---------------------------
FOR EXECUTIVE AND KEY SALARIED EMPLOYEES
----------------------------------------
(EXCLUDES SALES BONUS PROGRAM)
------------------------------
FOR THE YEAR ENDING JANUARY 31, 1998
------------------------------------
I. INTRODUCTION
------------
The Incentive Compensation Plan for Executives and Key Salaried
Employees as adopted and amended by the Compensation Committee of the
Board of Directors is designed to reward individual performance as
measured against specified objectives. The Plan is also designed to
recognize other employees for a completely discretionary bonus based
upon significant contribution. Executive and key employees who joined
the company in the plan year may, with the approval of the
Chairman/President, participate in the Incentive Compensation Plan on a
prorated basis (based on the number of full months they are actively
employed).
II. ESTABLISHMENT OF OBJECTIVES
---------------------------
Each executive and key employee shall establish at the beginning of
each year, with his/her supervisor, objectives against which his/her
performance for that year shall be measured.
These objectives must correspond to the overall goals of the company.
III. OBJECTIVES
----------
Objectives include: earnings per share; achieving corporate cash flow
goals and other significant individual goals.
IV. ADDITIONAL CRITERIA & CONDITIONS
--------------------------------
- 60% or more of individual participants' priorities must be
accomplished to earn any bonus.
- It is possible for participants to receive in excess of 100%
achievement of an individual goal. However, these achievements must
satisfy the combined judgement of the individual's direct manager, the
Chairman/President and the Compensation Committee for executive
officers. In no situation can achievement of an individual goal exceed
150%.
<PAGE>
- At its sole discretion, the Board reserves the right to recognize
significant issues, factors or contributions related to individual
participants and to adjust all or part of any participant's bonus
accordingly. The Board reserves the right to alter, amend, reduce,
suspend or terminate the Incentive Plan. Only active employees (those
physically performing their assigned duties) are eligible to
participate in the Incentive Compensation Plan.
-Employees who terminate their employment with the company, or
employees who are terminated by the company for any reason whatsoever,
are not eligible for incentive compensation for the fiscal year during
which employment is terminated.
<PAGE>
C&D TECHNOLOGIES, INC.
1400 Union Meeting Road
Blue Bell, PA 19422
August 1, 1997
Larry W. Moore
190 Collis Circle NE
Eatonton, GA 31024
Dear Mr. Moore:
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:
1. 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 August 1, 1997 (the
"Effective Date") and terminating on July 31, 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.
2. COMPENSATION.
2.1
You shall be compensated for all services rendered by you
under this Agreement at the rate of $140,000 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
<PAGE>
August 1, 1997
Page 2
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 April
30, 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 shall
determine; provided, however, that no adjustment shall
reduce the Base Salary below $140,000.
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
and General Manager PowerCom (Sales/Marketing) 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 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.
<PAGE>
August 1, 1997
Page 3
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 parents, 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 many 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 weeks each year.
4.3 The Company will provide you with an annual physical
examination.
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.
<PAGE>
August 1, 1997
Page 4
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 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
<PAGE>
August 1, 1997
Page 5
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.
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.
<PAGE>
August 1, 1997
Page 6
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
equipment, manufactured, used, developed, investigated or
considered 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
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.
9. EQUITABLE RELIEF. With respect to the covenants contained in Articles
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, if you die during
the terms of this Agreement, 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, if 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 reimbursable 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
<PAGE>
August 1, 1997
Page 7
Company. If the parties do not agree on a physician mutually
satisfactory to both of 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 determination 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.
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.
<PAGE>
August 1, 1997
Page 8
(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.
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 provisions of the Consolidated Omnibus Budget
Reconciliation Act (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 AGREEMENTS; 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.
<PAGE>
August 1, 1997
Page 9
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.
<PAGE>
August 1, 1997
Page 10
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
Chairman, President and Chief Executive Officer
Agreed as of the date first above written:
/S/ LARRY W. MOORE
Larry W. Moore
<PAGE>
EXHIBIT 11
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
EARNINGS PER SHARE COMPUTATIONS
(Dollars and shares in thousands)
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
July 31, July 31,
------------------ ----------------
1997 1996 1997 1996
---- ---- ---- ----
NET INCOME $4,704 $2,650 $8,839 $6,296
===== ===== ===== =====
Weighted average number of common
shares outstanding 6,099 6,441 6,091 6,363
Effect of shares issuable under
stock option plan 193 161 187 213
----- ----- ----- -----
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING (PRIMARY) 6,292 6,602 6,278 6,576
===== ===== ===== =====
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE (PRIMARY) $ 0.75 $ 0.40 $ 1.41 $ 0.96
===== ===== ===== =====
Weighted average number of common
shares outstanding 6,099 6,441 6,091 6,363
Effect of shares issuable under
stock option plan 212 161 197 213
----- ----- ----- -----
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING (FULLY DILUTED) 6,311 6,602 6,288 6,576
===== ===== ===== =====
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE (FULLY DILUTED) $ 0.75 $ 0.40 $ 1.41 $ 0.96
===== ===== ===== =====
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 and No. 333-17979)
We are aware that our report dated August 28, 1997 on our review of interim
financial information of C&D Technologies, Inc. and Subsidiaries for the period
ended July 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 and No. 333-17979). 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.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
September 10, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF 7/31/97 AND STATEMENT OF INCOME FOR THE PERIOD
ENDED 7/31/97 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> JUL-31-1997
<CASH> 1190
<SECURITIES> 0
<RECEIVABLES> 44960
<ALLOWANCES> 1658
<INVENTORY> 40924
<CURRENT-ASSETS> 93724
<PP&E> 51863
<DEPRECIATION> 0
<TOTAL-ASSETS> 162426
<CURRENT-LIABILITIES> 42758
<BONDS> 21867
0
0
<COMMON> 66
<OTHER-SE> 83449
<TOTAL-LIABILITY-AND-EQUITY> 162426
<SALES> 148721
<TOTAL-REVENUES> 148721
<CGS> 110264
<TOTAL-COSTS> 110264
<OTHER-EXPENSES> 4202
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 740
<INCOME-PRETAX> 13939
<INCOME-TAX> 5100
<INCOME-CONTINUING> 8839
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8839
<EPS-PRIMARY> 1.41
<EPS-DILUTED> 1.41
</TABLE>
