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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
---------------- ----------------
Commission file Number 1-11263
Exide Corporation
(Exact name of registrant as specified in its charter)
Delaware 23-0552730
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1400 N. Woodward Avenue
Bloomfield Hills, Michigan 48304
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (810) 258-0080
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
10-3/4% Senior Notes, due December 15, 2002
(Title of Class)
12-1/4% Senior Subordinated Deferred Coupon Debentures
due December 15, 2004
(Title of Class)
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 .
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
. Aggregate market value of the voting stock held by non-affiliates of the
registrant as of June 28, 1995: $717,944,697.
. 19,991,810 outstanding shares of the Registrant's common stock as of
June 1, 1995.
(DOCUMENTS INCORPORATED BY REFERENCE)
Portions of the Proxy Statement relating to the Annual Meeting of Stockholders
to be held August 15, 1995, are incorporated by reference into
Part III of this report.
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EXIDE CORPORATION
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TABLE OF CONTENTS
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PART I
Item 1 Business 1
Item 2 Properties 12
Item 3 Legal Proceedings 14
Item 4 Submission of Matters to a Vote of Security Holders 15
PART II
Item 5 Market for Registrant's Common Equity and Related
Stockholder Matters 16
Item 6 Selected Financial Data 17
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 19
Item 8 Financial Statements and Supplementary Data 23
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 23
PART III
Item 10 Directors and Executive Officers of the Registrant 24
Item 11 Executive Compensation 24
Item 12 Description of Capital Stock 24
Item 13 Certain Relationships and Related Transactions 24
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on
Form 8-K 25
SIGNATURES 26
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES F-1
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EXIDE CORPORATION
-----------------
PART I
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Item 1. Business
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(a) General Development of Business
-------------------------------
Exide was founded in 1888 as The Electric Storage Battery Company. In
1974, Exide was acquired by a subsidiary of INCO Limited ("INCO").
Principals of The Spectrum Group, Inc. ("Spectrum") and other investors
acquired Exide from INCO in 1983. The current management joined Exide in
1985 and since that time, Exide has pursued a strategy of increasing its
market penetration by developing new marketing programs, lowering costs and
increasing productivity while achieving economies of scale by consolidating
facilities and pursuing acquisition opportunities. In furtherance of that
strategy, Exide acquired all of the issued and outstanding capital stock of
General Battery Corporation from Fruit of the Loom, Inc. in 1987, thereby
significantly expanding its customer base and reducing operating cost and
corporate overhead per unit through economies of scale. In 1989,
Wilmington Securities ("WSI"), an affiliate of The Hillman Company
("Hillman"), purchased 49% of the common stock of the Company.
Management owned 37% of the common stock at that time. This acquisition
was made through a newly formed holding company, EC Acquisition, Inc.
("ECA"). Immediately after the acquisition, ECA contributed its shares
to EC Merger, Inc. ("ECM"). As used herein, unless the context indicates
otherwise, the term "Company" refers to Exide Corporation, a Delaware
corporation, and its consolidated subsidiaries.
In June 1991, the Company sold substantially all of the assets relating to
its industrial battery product line to Yuasa-Exide, Inc., formerly Yuasa
Battery (America), Inc., affiliated with Yuasa Battery Co. Ltd. of Japan.
The buyer paid approximately $97,000,000 in cash and assumed certain
liabilities. In addition, ECA entered into a 10-year agreement not to
compete with the buyer in the industrial battery field and received a cash
payment of $20,000,000 as consideration. As a result of this sale, the
Company recorded a gain of $22,075,000.
On December 17, 1992, the Company completed a refinancing of its previously
existing debt, which resulted in the redemption of previously outstanding
debt, the issuance of Senior Notes and Senior Subordinated Deferred Coupon
Debentures, the repurchase of the Company's Class "B", "C" and "D"
Preferred Stock owned by the Class "B" Preferred Stock holders, and the
recognition of an extraordinary loss of $10,363,000, net of $1,900,000
income tax benefit (see Note 6 of Notes to the Company's Consolidated
Financial Statements appearing elsewhere herein).
Effective October 28, 1993, the Company completed an initial public
offering ("IPO") of its common stock and raised $92,000,000 (before
fees and expenses). In connection with the IPO, the Company increased
the authorized shares of common stock from 1,000 to 30,000,000 and ECA's
shareholders exchanged all outstanding
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shares of common stock of ECA for shares of common stock of the Company
on a 1.29 to 1 basis.
Effective March 8, 1994, the Company completed a secondary offering of
its common stock. The secondary offering included the issuance of an
additional 1,000,000 shares which raised $34,000,000.
Effective December 22, 1994, the Company completed an offering of its
common stock. The offering included the issuance of an additional
5,175,000 shares (including the underwriters exercise of their
overallotment option) which raised $259,000,000 (before fees and
expenses).
(b) Financial Information About Industry Segments
---------------------------------------------
The Company is primarily engaged in one industry segment, namely, the
manufacture, distribution and sale of lead acid batteries and related
accessories. (See Note 17 to the Company's Consolidated Financial
Statements appearing elswhere herein.)
(c) Narrative Description of Business
---------------------------------
The following descriptions include Exide and its consolidated subsidiaries
as of March 31, 1995. They do not include information with respect to
Compagnie Europeene d'Accumulateurs S.A. ("CEAC") which was acquired by
the Company in May, 1995 (see International Expansion - CEAC).
Principal Products
------------------
Exide, together with its affiliates, is the leading manufacturer of lead
acid batteries in the North America with approximately a 39% market share
as of March 31, 1995. The Company produces starting, lighting and ignition
("SLI") batteries primarily for automobiles and for commercial
applications, including trucks, farm equipment, tractors and other off-road
vehicles, and specialty batteries for marine and garden tractor
applications, motorcycles, golf cars and wheelchairs, battery chargers and
a broad line of battery accessories.
Exide is one of the largest manufacturers and marketers in Europe of SLI
and industrial batteries. The Company produces standby batteries used
primarily in telecommunications, as well as electrical installations.
The Company also produces traction batteries which are used to drive
electric vehicles such as forklifts, transporters, mine locomotives,
electric cars and cable-guided equipment.
Seasonality and Weather
-----------------------
The automotive aftermarket is seasonal as retail sales of replacement
batteries are generally higher in the fall and winter (the Company's second
and third fiscal quarters). Accordingly, demand for the Company's
automotive batteries is generally highest in the fall and early winter as
retailers build inventories for the winter season.
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In addition, demand for automotive batteries is affected by weather
conditions. Unusually cold winters or hot summers will increase demand for
automotive replacement batteries. Conversely, unusually mild winters or cool
summers will decrease demand for automotive replacement batteries. In North
America, over 80% of the Company's automotive batteries are sold in the
aftermarket.
Raw Materials and Suppliers
---------------------------
Lead is the principal raw material in the manufacture of batteries, and lead
prices are the most important variable in the cost of raw materials. The
Company presently operates two secondary lead smelters in North America that
obtain lead by recycling scrap batteries. The Company obtains a majority of
its lead requirements through the operation of its secondary lead smelters.
This vertical integration minimizes the effects of changes in the market
price of lead on production costs. The Company obtains the balance of its
lead from a number of suppliers.
Exide has two recycling plants in Europe that supply a significant portion
of Exide's European lead requirements. Major investments have been made in
these plants in recent years to improve lead treatment and recycling
processes.
In North America, the Company also produces approximately 80% of its plastic
molding requirements, and receives approximately 88% of its plastics
requirements through its program of recycling scrap batteries.
Other key raw materials and components in the production of batteries
include separators, lead oxide and chemicals, all of which are generally
available from multiple sources. The Company currently produces all of its
United States requirements of separators, one component in SLI batteries,
through Evanite. In order to further vertically integrate its operations and
assure a portion of its separator needs, the Company consummated the
acquisition of Evanite in February 1995. (See Note 3 to the Company's
Consolidated Financial Statements (Appearing elsewhere herein.)
The Company has not experienced any material stoppage or slowdown in
production as a result of the unavailability, or delays in the availability,
of raw materials. No single vendor accounted for 10% or more of the
Company's total purchases in fiscal 1995.
Trademarks and Patents
----------------------
The Company owns or has a license to use various trademarks which are of
value in the conduct of its business. While the Company believes such
trademarks and trade names enhance the broad recognition of its products and
therefore are important in its business, the Company also believes that its
products, engineering skills, reputation for quality and relationships with
its customers are equally important for the maintenance and growth of its
business. An unaffiliated firm has rights to the Exide
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trademark in approximately 37 foreign countries. In addition, Exide
Electronics Group, Inc., an unaffiliated company, is licensed to use Exide
on certain devices.
Exide has been issued many patents worldwide, some of which are active, with
several additional patents in process covering design of lead acid batteries
and battery manufacturing equipment. While the Company believes that patents
are important to its business operations, it also believes that the loss of
any single patent or several patents would not have a material adverse
effect on the Company.
International Expansion/(1)/
-----------------------
Battronics
In October 1993, the Company acquired for $3.0 million the remaining 50%
equity interest in Battronics, Inc. ("Battronics"), the leading automotive
battery manufacturer in Canada with approximately a 50% market unit share
for automotive batteries in Canada. Battronics, which has its primary
production facility in Maple, Ontario, had net sales of $64.4 million and
$64.9 million in fiscal 1995 and 1994, respectively.
BIG
On March 30, 1994, the Company acquired all of the issued and outstanding
capital stock of B.I.G. Batteries Group Limited ("BIG"), a company
incorporated in England and Wales, for approximately $2 million in cash and
$32.7 million in British pound denominated Loan Notes. BIG is an automotive
battery manufacturer/distributor in the United Kingdom with net sales of
$42.1 million in fiscal 1995.
Gemala
In September 1994, the Company and PT Sapta Panji Manggala ("PT Sapta"), an
Indonesian company, signed an agreement whereby the Company contributed its
interest in BIG, and PT Sapta contributed its interest in Gemala Holdings
Limited ("Gemala") into a newly formed joint venture. In exchange for PT
Sapta's interest in Gemala, the Company gave PT Sapta an 18.5% equity
interest in the joint venture and the right to certain benefits realized
from Gemala's tax loss carryforwards. PT Sapta also received the right to
require Exide to purchase its 18.5% interest in the joint venture at any
time after five years from the closing date of this transaction for a
defined multiple of earnings of the joint venture. The value of the
consideration exchanged ($6.65 million) has been allocated on the basis of
the estimated fair market value of Gemala's contributed net assets.
- --------------------------------------------------------------------------------
/(1)/ See Notes 3 and 18 to the Company's Consolidated Financial Statements
appearing elsewhere herein.
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Tudor
In October 1994, the Company acquired approximately 89.4% of the outstanding
capital stock and approximately 25% of the convertible bonds of Sociedad
Espanola del Acumulador Tudor, S.A. ("Tudor") for 1,145 pesetas per share or
approximately $229,000,000 (before fees and expenses). In December, one of
the shareholders of Tudor sold its remaining 5% ownership to Tudor at the
tender offering price in accordance with the terms of the purchase
agreement. After completion of this sale, the Company's effective ownership
in Tudor is approximately 94.1%. In addition, the Company has provided a
letter of credit which guarantees payment of the convertible bonds held by
that same shareholder. Tudor, which is based in Spain, is the third largest
lead acid battery producer in Western Europe with 1994 consolidated sales of
approximately $500,000,000 annually. Tudor manufactures both automotive and
industrial batteries and markets its products in Western Europe, most
notably in Spain, Portugal, Germany, Finland, Norway and Sweden.
CEAC
On May 18, 1995, the Company acquired 99.7% of the outstanding capital stock
of CEAC for approximately $425,000,000 in cash ($553,500,000 less assumed
debt of $131,900,000 plus interest from March 31, 1995 of $3,400,000). Exide
financed the acquisition with the April 1995 issuance of $300 million of 10%
Senior Notes repayable in April 2005 and the proceeds from the Company's
December 1994 common stock offering. The proceeds from the December 1994
common stock offering were utilized to temporarily reduce the Company's
Revolving Loans under the U.S. Credit Agreement at March 31, 1995. In
connection with CEAC acquisition, the Company paid $4,568,000 of additional
interest to amend the terms of its 10-3/4% Senior Note Indentures and its
12-1/4% Senior Subordinated Deferred Coupon Indentures. Such costs have been
deferred and are being amortized over the remaining lives of such debt.
CEAC, which is headquartered in France, is a leader in the European battery
market with 1994 consolidated sales of approximately $800,000,000, primarily
in France, Italy and Germany.
CEAC is one of the largest manufacturers and marketers of SLI batteries in
Western Europe and is a leading manufacturer and marketer of industrial
batteries. CEAC is headquartered in Genevilliers, France and has
manufacturing plants and warehouses and distribution facilities in a number
of European countries. Like other battery companies, CEAC's business is
seasonal, with higher sales generally occurring during the late fall and
winter, and is subject to significant variations on a month-to-month basis,
due to the timing of shipments of industrial batteries.
CEAC has adopted strategies that address the competitive environment and the
need to expand its markets. A principal component of this strategy has been
to enter markets, primarily through acquisitions, in order to establish
CEAC's pan-European presence. In 1991, CEAC acquired approximately 75% of
Sonnenschein, a leading German battery manufacturer and marketer, and in
1992 it purchased Fiat's Magneti Marelli battery operation. Other recent
examples of this expansion are CEAC's
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purchase of a 50% interest in Inci Aku, Turkey's second largest SLI battery
manufacturer and the acquisition of a 95% interest in CENTRA, a leading
Polish battery manufacturer.
Another key element of CEAC's strategy has been to aggressively pursue
consolidation and integration opportunities. In the last five years, CEAC
has closed four plants and moved various of its manufacturing operations in
order to achieve production and cost efficiencies. On the product side, CEAC
has taken steps to streamline production and reduce costs by standardizing
processes and products and minimizing, where practical, design variations.
Recognizing that in the industrial battery sector of the market, service is
of particular importance, CEAC has focused on improving its performance by
instituting means to improve logistics, delivery time and other service
aspects.
Products
Automotive Batteries. Automotive batteries represented $363,000,000 or
approximately 48% of CEAC's net sales in calendar 1994. CEAC sold
approximately 10.6 million automotive batteries in 1994. Similar to North
America, the automotive battery aftermarket represents approximately 70% of
the SLI battery market in Western Europe, and approximately 80% of CEAC's
automotive sales are of aftermarket batteries. CEAC offers a full range of
products to service the aftermarket including the recently introduced STR
battery, a sealed technology with gas recombination, resulting in a
maintenance-free battery and the Series 30 power range for automobiles and
the Heavy Duty and Super Heavy Duty batteries for trucks.
CEAC also produces SLI batteries for the OEM market in Europe and is the
primary supplier for Fiat and the PSA group, and a principal supplier to
Renault and Iveco. The STR battery has been approved by Renault and Fiat for
1996 car models.
Industrial Batteries. In 1994, CEAC had industrial battery sales of
approximately $364,000,000 or approximately 49% of CEAC's net sales.
Standby batteries represent approximately 50% of such sales. CEAC has the
leading market share in Western Europe for both standby and traction
batteries. This represents the third largest share of such markets on a
worldwide basis.
CEAC's standby batteries are used for telecommunications, uninterruptible
power supplies, security systems, submarines, power plants, railways and
miscellaneous mobile applications (such as wheelchairs and golf carts). CEAC
offers a complete range of standby products from one ampere hour
(portable/consumer batteries) to 10,000 ampere hours (submarine batteries).
CEAC offers both vented and sealed batteries and has been a leader in the
development of sealed battery technology. Through Sonnenschein, CEAC
introduced the Dryfit battery, a maintenance-free gel electrolyte battery
with a very wide capacity range designed to perform in extreme and difficult
applications, and has a leading position in this technology. CEAC also
produces lithium and NiCd batteries.
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Traction batteries produced by CEAC are used for materials handling
equipment such as forklifts, floor sweepers and milk trucks for quiet early
morning deliveries, and automatic guided vehicles used in mass
transportation and production and mining locomotives. CEAC offers a wide
range of products and services with over 380 models. Most product types are
focused in four main areas including a 2-volt vented battery, a 2-volt
sealed battery, 6- and 12-volt monobloc batteries and charges. CEAC has
recently updated and rationalized its product technology base developing
common cell, cell materials and battery exteriors across its product
offering and is continuing its rationalization program with development of
common electrode and process technologies across product offerings.
New Products. Innovations in the automotive, standby and traction battery
markets generally represent incremental improvements on existing designs.
CEAC's product development teams in each of these three areas work with
original equipment manufacturers to meet their evolving needs. One of the
principal focuses in recent years has been a trend toward smaller, more
powerful batteries.
Although electric vehicles are not expected to result in significant revenue
in the next few years, in order to maintain and enhance its reputation as an
innovator, CEAC is working on the development of electric vehicles with
leading automobile makers, including Fiat, the PSA group and Renault.
Markets and Marketing
Automotive. During the fourth calendar quarter of 1994, CEAC's share of the
aftermarket in Western Europe was approximately 18% and it has market
leadership in France, Italy and Belgium, with significant market presence in
several other Western European countries. CEAC's automotive aftermarket
batteries are sold principally under the brand names Fulmen, Sonnenschein
and Tudor (for which it has rights in Belgium and Italy) as well as several
private label brands. CEAC has developed a marketing strategy based
principally on product differentiation, customized trade, marketing support,
service and concern for the environment. Sales are primarily made through
battery wholesaler and OEM dealers, and to a lesser but growing extent,
through hypermarkets. CEAC is one of the leading suppliers of SLI
aftermarket batteries to battery retailers in Western Europe with major
customers including Auto Distribution International, Magneti Marelli, the
PSA group's and Renault's dealer networks and Daisa.
Industrial. The Company believes that the standby battery market offers good
opportunities for growth given the growth and evolution of the
telecommunications market, including infrastructure development in emerging
countries and the development of mobile networks and the information
superhighway, and the continued need for and importance of uninterruptible
power supplies. CEAC sells standby batteries throughout Western Europe, with
particularly strong market positions in France, Italy, Spain and Germany,
under the brand names Sonnenschein, Tudor and Fulmen. These batteries are
distributed directly by its own sales force and through independent sales
agents and distributors. CEAC has developed a strong
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presence in the telecommunications, uninterruptible power supply and power
system markets with major customers including Schneider Group, France
Telecom, Deutsches Bundespost Telekom, the Italian telecommunications
company, Electricite de France and Siemens.
In traction batteries, CEAC has a market presence throughout much of Western
Europe and, during the fourth calendar quarter of 1994, had a market share
in excess of 30% in the United Kingdom, France, Italy, Belgium, the
Netherlands and Spain. CEAC's traction batteries are sold under the brand
names Fulmen, Chloride Motive Power, Sonnenschein, Tudor, Magnetti Marelli
and ASTA. Distribution channels, which vary by country, consist of CEAC's
in-house sales force, independent dealers and commissioned agents. Service
represents a principal element of CEAC's marketing efforts for traction
batteries and is provided by CEAC's service and support staff of
approximately 300 employees. CEAC has a strong presence with the original
equipment manufacturers and its major customers include the Linde group,
Jungheinrich, BT and Hyster.
Competition
The European markets for both SLI and industrial batteries are extremely
competitive. Competition is based in significant part on price, although
quality, warranty terms and, especially in industrial batteries, service,
are also important competitive factors. CEAC's principal competitors in the
SLI segments include Varta/Bosch, Delco Remy, Fiamm, Autosil and Hoppecke,
and in the industrial battery market CEAC competes mainly against Yuasa-
Exide, Hawker Siddeley and Matsushita, as well as Varta/Bosch.
Properties and Manufacturing
CEAC manufactures its batteries and other related products in 15 facilities
located in France, Italy, Germany and other countries in Europe. Through
CEAC's investment in Turkey and its recent acquisition in Poland, CEAC also
has manufacturing facilities in Turkey and Poland. As of December 31, 1994,
CEAC had approximately 7,100 employees, including approximately 1,900 at
CENTRA in Poland. In addition, CEAC operates a lead smelter in northern
France with an annual production capacity of 25,000 tons. During the fourth
quarter of 1994, such smelter supplied approximately 16% of its lead
consumption, and CEAC's plastic processing facilities provided approximately
65% of its plastic needs.
Automotive. CEAC has initiated a manufacturing and production
rationalization program to reduce production costs, improve flexibility and
improve product quality. Since 1989, CEAC has closed four plants and
restructured one plant. As a result of its rationalization program, CEAC has
substantially improved productivity and reduced costs.
Industrial. CEAC initiated a manufacturing and production rationalization
program of its industrial battery plants including a review and
rationalization of product ranges
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and specialization of plants to improve productivity and reduce fixed costs.
This program was introduced in 1992 and will continue through the mid-1990s.
To date, CEAC has realized both improved production volumes and productivity
at most of its industrial plants.
Environmental, Health and Safety Matters
The Company completed its environmental health and safety due diligence
review of the operations and facilities of CEAC in February 1995. The
Company engaged several law firms and three consulting firms with offices in
the respective countries to assist in performing this review. While this
review identified certain environmental compliance and liability issues, the
Company does not currently believe that any such issues would have a
material adverse effect on the Company's business or financial condition.
Any further consolidation of CEAC's operations could accelerate or increase
its environmental costs. In addition, at this time, the Company has no basis
for predicting what effect stricter enforcement of existing environmental,
health and safety laws and regulations, or the adoption of additional such
laws and regulations, would have on CEAC's business or financial condition.
Yuasa-Exide
On April 1, 1992, Exide exchanged with Yuasa Battery (America) Inc., its 49%
interest in a joint venture with Yuasa Exide Battery Corporation for a 13.5%
interest in Yuasa-Exide, Inc. This company includes the operations of the
joint venture and Exide's former industrial battery product line, which was
acquired from Exide in June 1991 for $117,000,000. Yuasa-Exide, Inc. is a
leading manufacturer and marketer of motorcycle batteries in the United
States. Output is being sold primarily to the U.S. operations of Japanese
automobile and motorcycle manufacturers including Mazda and Honda. Yuasa-
Exide, Inc. also produces a sealed lead-acid battery, a product used
primarily for computer applications and security systems, in a plant in
Hays, Kansas. The Company also has a 50% ownership interest in Yuasa-Exide
Research and Development Corporation, a joint venture involved in the
research and development of new battery products and manufacturing
processes.
Customers
---------
Because the Company utilizes a varied marketing network of mass
merchandisers, auto supply chain stores and large wholesale distributors
along with the Company's own distribution network, the loss of a single
customer would not have a material impact on a material part of the business
of the Company. The five largest customers totaled 26% of fiscal 1995
consolidated net sales (see Note 1 - "Major Customers" of the Notes to the
Company's Consolidated Financial Statements appearing elsewhere herein).
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In North America, the Company markets its replacement automotive batteries
through leading mass merchandisers, auto supply chain stores and large
wholesale distributors. The Company has also established its own
distribution network to supplement independent wholesalers and to service
smaller battery retailers. The Company also markets batteries to various
original equipment manufacturers ("OEM's").
In Europe, the Company markets SLI batteries to various OEMs, battery
wholesalers and dealers and OEM dealers, and to a lesser but growing extent,
through supermarket chains, replacement part stores and hypermarkets. The
Company's principal customers for standby batteries are telecommunications
companies and, for submarine batteries, the navies of several nations. The
Company supplies traction batteries to some of the major electric vehicle
OEMs in Europe and to a wide variety of customers in the aftermarket. The
Company's industrial batteries are distributed directly by its own sales
force and through independent dealers and commissioned agents.
Backlog
-------
The Company does not have a material amount of backlog orders.
Competition
-----------
The market for automotive, commercial and specialty batteries is mature and
highly competitive in both North America and Europe. Battery manufacturers
compete primarily on the basis of price, quality, service, warranty period
and timeliness of delivery. Generally, sales are made without long-term
contracts. Both the domestic and European industry currently has excess
capacity. Consequently, prices for batteries have declined periodically in
recent years and some smaller competitors have been unable to survive.
The Company's primary domestic competitors are Johnson Controls, Inc., Delco
Remy (a division of General Motors Corporation) and GNB Incorporated (a
subsidiary of Pacific Dunlop, Ltd.). Regional manufacturers are also
significant, accounting for approximately 13% of the United States market.
Among the Company's competitors in the European SLI battery market are VB
Autobatterie GmbH ("Varta/Bosch"), Hawker Siggeley, Fiamm, Delco Remy,
Autosil and Hoppecke, and in the industrial battery market the Company
competes mainly against Yuasa-Exide, Hawker Siddeley and Matsushita, as well
as Varta/Bosch.
Employees
---------
North America. As of March 31, 1995, the Company employed approximately
1,716 salaried employees and approximately 4,496 hourly employees in North
America. Approximately 39% of such salaried employees are engaged in sales,
service and
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marketing and approximately 38% in engineering and manufacturing.
Approximately 36% of its hourly employees are represented by unions.
Relations with the unions are generally good, and during the last four years
the Company has negotiated new agreements without labor disruptions.
Contracts covering approximately 272 of the Company's union employees expire
in fiscal 1996.
Europe. As of March 31, 1995, the Company employed approximately 5,500
employees in Europe. The Company's hourly employees are generally
represented by unions. Relations with the unions are generally good.
Contracts covering the Company's European union employees expire on various
dates through 1998.
(d) Financial Information About Foreign and
---------------------------------------
Domestic Operations and Export Sales
------------------------------------
See Note 17 of Notes to the Company's Consolidated Financial Statements
appearing elsewhere herein.
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Item 2. Properties
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The chart below lists the location of the principal facilities of the Company.
All of the facilities are owned unless otherwise indicated. All of the owned
properties and the leases for the leased properties are subject to liens under
the Company's Credit Agreement.
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Approximate
Location Square Footage Use
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North America:
Auburn Hills, MI 5,000 (leased) OEM Engineering and Sales
Bloomfield Hills, MI 10,000 (leased) Executive Offices
Bristol, TN 120,000 (leased) Automotive Accessory Manufacturing
Bristol, TN 510,000 (leased) Battery Manufacturing (renovations
in progress)
Burlington, IA 189,000 Battery Manufacturing
Cooper, TX 80,000 Starter and Alternator Manufacturing
Corvallis, OR 361,700 Separator and Other Manufacturing
Corydon, IN 161,000 Separator Manufacturing
Denver, CO 64,000 Distribution Center/Formation
Warehouse
Drumondville, 110,000 Battery Manufacturing
Quebec, Canada
Frankfort, IN 204,000 Battery Manufacturing
Frankfort, IN 211,000 Distribution Center
Greer, SC 131,000 Battery Manufacturing
Hamburg, PA 149,000 Battery Manufacturing
Hamburg, PA 30,000 Distribution Center
Indianapolis, IN 135,000 Starter and Alternator Manufacturing
Lampeter, PA 81,000 Battery Plastics Manufacturing
Logansport, IN 197,000 Battery Manufacturing
Manchester, IA 198,000 Battery Manufacturing
Maple, Ontario, 100,000 (leased) Distribution and Administration
Canada
Maple, Ontario, 179,000 Battery Manufacturing
Canada
Memphis, TN 4,000 Executive Offices/Sales Office
Muncie, IN 174,000 Secondary Lead Smelting
North Bay, Ontario 30,000 (leased) Battery Charger Manufacturing
Canada
Phoenix, AZ 31,000 (leased) Distribution Center
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Approximate
Location Square Footage Use
- --------------------------- ----------------- ------------------------------------
<S> <C> <C>
Reading, PA 72,000 (leased) Engineering, Research &
Development, Tech Center
Reading, PA 118,000 Secondary Lead Smelting
Reading, PA 135,000 Administrative Offices
Reading, PA 215,000 Battery Manufacturing
Reading, PA 46,000 Equipment Center
Reading, PA 74,000 Distribution Center
Salina, KS 300,000 (leased) Battery Manufacturing/Distribution
Center
Sumner, WA 87,000 (leased) Distribution Center
Travelers Rest, SC 62,000 (leased) Distribution Center
Europe:
Graz, Austria 144,000 Industrial Battery Manufacturing
Herlev, Denmark 15,000 Executive Offices
Witham Essex, 20,000 Executive Offices
England
Bristol, England 5,000 Warehouse
Vantaa, Finland 133,000 (leased) SLI Battery Manufacturing
Fougeres, France 38,000 Industrial Battery Manufacturing
Berlin, Germany 99,000 SLI Battery Manufacturing
Kassel, Germany 212,000 SLI Battery Manufacturing
Soest, Germany 386,000 Industrial Battery Manufacturing
Schimatari, Greece 69,000 SLI Battery Manufacturing
Maarssen, Holland 26,000 Executive Offices
Avellino, Italy 35,000 Lids and Containers Manufacturing
Bergamo, Italy 203,000 Lids, Containers and Separators
Manufacturing
Horten, Norway 108,000 (leased) Industrial Battery Manufacturing
Castanheira, Portugal 471,000 SLI and Industrial Battery
Manufacturing
Ilhavo, Portugal 54,000 Manual Tools Manufacturing
Azambuja (Sonalur), 21,000 Recycling
Portugal
Azambuja (Azai), 23,000 Lids and Containers Manufacturing
Portugal
Lisbon, Portugal 12,000 Executive Offices
Azuqueca de 434,000 SLI Battery Manufacturing and
Henares, Spain Research
Torrejon de Ardoz, 54,000 Industrial Battery Manufacturing
Spain
Loeches, Spain 12,000 (leased) Traction Chargers Manufacturing
Malpica, Zaragoza, 213,000 SLI Battery Manufacturing
Spain
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Approximate
Location Square Footage Use
- --------------------------- ----------------- ------------------------------------
<S> <C> <C>
Hernani, Spain 22,000 SLI Battery Manufacturing
Hernani, Spain 13,000 (leased) Warehouse
S. Esteban de 63,000 Recycling
Gormaz, Spain
Madrid, Spain 38,000 (leased) Executive Offices
Manzares, Spain 438,000 SLI Battery Manufacturing
Zaragoza, Spain 269,000 Industrial Battery Manufacturing
Nol, Sweden 447,000 SLI and Industrial Battery
Manufacturing
Cwmbran, Wales 105,000 Executive Offices and SLI Battery
Manufacturing
</TABLE>
In addition, the Company temporarily operates an SLI battery manufacturing
facility in Dagenham, England (385,000 square feet), which includes some
executive offices.
In North America the Company operates more than 130 automotive battery sales
branches and service facilities, virtually all of which are leased. The Company
also leases distribution outlets in Europe.
The Company believes that its facilities are in good operating condition,
adequately maintained, and suitable to meet its present needs and future plans.
The Company believes that it has sufficient capacity to satisfy the demand for
its products in the foreseeable future.
Item 3. Legal Proceedings
-----------------
The Company, as a result of its manufacturing and secondary lead smelting
operations, is subject to numerous environmental laws and regulations and is
exposed to the cost and risks of handling, processing, storing and disposing of
hazardous and toxic substances. The Company's operations are also subject to
federal and state occupational and health regulations, particularly relating to
the control of blood lead levels in employees. Management believes that its
competitors are subject to substantially the same regulatory requirements, and
it does not expect that compliance with such requirements will have a material
effect on the Company's capital expenditures, earnings or competitive position.
The Environmental Protection Agency ("EPA") and other parties have advised the
Company that it is considered a "potentially responsible party" under the
Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA")
with respect to certain sites. The Company is involved in the assessment and
remediation of various sites, and numerous environmental matters concerning the
Company are pending before federal and state courts and regulatory agencies.
None of such matters known to the Company is expected to have a material adverse
effect on the Company's financial condition or results of operations.
The Resource Conservation and Recovery Act ("RCRA") obligates owners/operators
of manufacturing/storage sites that handled toxic materials to file a closure
plan with the EPA for
14
<PAGE>
remediation of any environmental incidents from operation of the facility, and
to commence remediation pursuant to such plan following closure of the facility.
The Company is currently a defendant in a claim brought by one of the Company's
competitors alleging patent infringement. The claim went to trial and the jury
ruled that one of the subject patents was valid and infringed. A separate trial
was held for the award of damages and, in April 1995, the plaintiff was awarded
damages and interest (through June 1995) of approximately $5,300,000. The
Company's outside counsel believes the verdict of the jury trial was incorrect
and has advised that there is a high likelihood that the Company will prevail on
appeal. Therefore, management does not believe the ultimate resolution of this
matter will have a material adverse effect on the Company's financial condition
or results of operations.
A patent infringement suit was filed in the U.S. District Court in Oregon
against the Company in January 1995 by Tekmax, Inc. The suit alleges
infringement of Tekmax patents dealing with a device to insert battery plates
into battery separators and processes for doing so. The complaint alleges
damages in excess of the jurisdictional requirement of $50,000 (although
plaintiff requested $6,000,000 before the suit was filed). Exide has denied
infringement and asserted that such patents are invalid. Discovery has just
begun and will continue for the foreseeable future. An intelligent assessment of
this matter cannot now be made.
The Company is currently involved in three related lawsuits pending in state and
federal court in Alabama. The actions concern allegations that the Company sold
used batteries as new. Two of the actions are in state court. An action by a
purported nationwide class of more than 1,000 consumers of Exide batteries is
entitled Eddie Walton Davis, et al. v. Exide Corporation, et al. An action by a
purported nationwide class of more than 1,000 resellers of Exide batteries is
entitled Charlie Mathews v. Exide Corporation, et al. Neither class has been
certified. Both state court actions seek unspecified compensatory and punitive
damages and injunctive relief. The federal court action is a wrongful
termination suit by a former branch manager of Exide who claims he was
terminated for refusing to sell used batteries as new and is entitled Charles
Harris v. Exide Corporation. All three actions are in preliminary stages of
pretrial discovery. The Company disputes all allegations and intends to
vigorously defend itself.
In addition, the Company is involved in routine litigation incidental to the
conduct of its business. Based on consultation with legal counsel, management
does not believe that any of the litigation to which the Company is a party will
have a material adverse effect on the Company's business or financial condition.
See also Notes 13 and 15 of Notes to the Company's Consolidated Financial
Statements appearing elsewhere herein.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
15
<PAGE>
PART II
- -------
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
---------------------------------------------------------------------
Market Information
- ------------------
The Common Stock has been listed and traded on the New York Stock Exchange under
the symbol EX since October 29, 1993. The reported range of the high and low
prices of the Common Stock on the New York Stock Exchange Composite Tape and
dividends paid are shown in the following table for the periods indicated. The
initial public offering price was $20 per share.
<TABLE>
<CAPTION>
Sales Prices Quarterly
------------------ Cash
High Low Dividends
-------- -------- -----------
(per share)
<S> <C> <C> <C>
Fiscal 1994:
Third Quarter (commencing
October 29, 1993) $29-3/8 $20 $0.00
Fourth Quarter 42-1/4 29-3/8 0.02
Fiscal 1995:
First Quarter $50-1/4 $35-5/8 $0.02
Second Quarter 53-1/2 45-5/8 0.02
Third Quarter 56-1/4 47 0.02
Fourth Quarter 57-1/2 32-3/4 0.02
</TABLE>
As of June 1, 1995, there were approximately 250 record holders of Common Stock.
16
<PAGE>
Item 6. Selected Financial Data (In thousands, except per share data):
-----------------------
<TABLE>
<CAPTION>
Fiscal Year Ended March 31
--------------------------------------------------------------------
1991 1992/(1)/ 1993 1994/(2)/ 1995/(2)/
-------- --------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Net sales $742,671 $593,626 $578,755 $679,649 $1,198,546
Gross profit 132,249 118,475 128,757 158,253 265,680
Operating profit 34,168 34,830 47,170 61,758 64,162
Income (loss) from operations (12,324) 6,656 5,153 17,217 4,491
Extraordinary loss -- -- (10,363)/(3)/ -- (3,597)/(3)/
Cumulative effect of
accounting change -- -- -- (12,711)/(4)/ --
Net income (loss) (12,324) 6,656 (5,210) 4,506 894
Net income (loss) applicable
to common stock/(5)/ (18,764) (330) (10,206) 4,506 894
Per-share data/(6)/:
Income (loss) before extra-
ordinary loss and
cumulative effect of
accounting change (2.24) (0.04) 0.02 1.56 .28
Net income (loss) (2.24) (0.04) (1.22) .41 .06
Cash dividends - common
stock -- -- -- .02 .08
Balance sheet data (at end
of period):
Working capital 142,514 122,906 132,339 153,711 395,875
Total assets 595,066 463,679 474,868 629,090 1,637,589
Short-term borrowings
and long-term debt
(including current
maturities) 375,157 274,866 305,562 291,821 645,135
Redeemable preferred
stock (including
current maturities) 82,135 88,325 6,462 -- --
Common stockholders'
equity (deficit) (10,580) (10,013) 45,096 164,450 413,230
</TABLE>
(1) See Item 1(a) herein relating to the June, 1991 sale of the industrial
battery product line.
(2) See Note 3 of Notes to the Company's Consolidated Financial Statements
appearing elsewhere herein.
(3) During fiscal 1995, the Company recorded a loss of $3.6 million (net of a
tax benefit of $2.3 million) resulting from the early extinguishment of debt
in connection with obtaining a new U.S. Credit Agreement. During fiscal
1993, the Company recorded a loss of $10.4 million (net of a tax benefit of
$1.9 million) resulting from the early extinguishment of debt in connection
with the debt refinancing. See Note 6 of Notes to the Company's
Consolidated Financial Statements appearing elsewhere herein.
17
<PAGE>
(4) Effective April 1, 1993, the Company adopted SFAS 106, which resulted in a
charge of $12.7 million with no income tax effect because of the uncertainty
of deductibility at that time. See Note 8 of Notes to the Company's
Consolidated Financial Statements appearing elsewhere herein.
(5) Amounts reduced for preferred stock dividends.
(6) The per-share data was adjusted to give effect to the stock exchange. See
Note 2 of Notes to the Company's Consolidated Financial Statements appearing
elsewhere herein. The weighted average number of shares used for all
periods was 8,388,338, except for fiscal 1994 and 1995, for which the
weighted average number of shares were 11,058,185 and 16,191,075.
18
<PAGE>
Item 7. Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
<TABLE>
<CAPTION>
Year Ended March 31
--------------------------------------------
Actual
--------------------------------------------
1993 1994 1995
------------- ------------- ---------------
<S> <C> <C> <C>
(Amounts in thousands, except percentages)
Net sales $578,755 $679,649 $1,198,546
Cost of sales 449,998 521,396 932,866
-------- -------- ----------
Gross profit 128,757 158,253 265,680
Gross profit percentages 22.2% 23.3% 22.2%
Selling, general and administrative
expenses 81,587 96,495 201,518
-------- -------- ----------
Operating income 47,170 61,758 64,162
Interest expense 35,261 33,150 52,565
Other expense, net 3,365 597 874
Income taxes 3,400 10,794 5,160
Income before extraordinary loss and
cumulative effect of accounting change 5,153 17,217 4,491
Extraordinary loss (a) (10,363) -- (3,597)
Cumulative effect of accounting
change (b) -- (12,711) --
Net income (loss) (5,210) 4,506 894
</TABLE>
(a) During fiscal 1995, the Company recorded a loss of $3.6 million (net of a
tax benefit of $2.3 million) resulting from the early extinguishment of debt
in connection with obtaining a new U.S. Credit Agreement. During fiscal
1993, the Company recorded a loss of $10.4 million (net of a tax benefit of
$1.9 million) resulting from the early extinguishment of debt in connection
with the refinancing. See Note 6 of Notes to the Company's Consolidated
Financial Statements appearing elsewhere herein.
(b) Effective April 1, 1993, the Company adopted SFAS 106 which resulted in a
charge of $12.7 million with no income tax effect because of the uncertainty
of deductibility at that time. See Note 8 of Notes to the Company's
Consolidated Financial Statements appearing elsewhere herein.
19
<PAGE>
Year Ended March 31, 1995, Compared with Year Ended March 31, 1994
------------------------------------------------------------------
Net sales increased $518.9 million to $1,198.5 million in fiscal year 1995
compared with fiscal 1994. The sales increase was principally attributable to
the acquisition of Sociedad Espanola Del Acumulador Tudor, S.A. (Tudor) in
October 1994, the acquisition of B.I.G. Batteries Group Limited (B.I.G.) on
March 30, 1994; and the full year impact of Battronics (now Exide Canada Ltd.)
which was first included on a consolidated basis in October 1993. In
addition, during 1995 the Company began supplying a significant new customer,
Sears Roebuck & Co. Partially offsetting this increase was the adverse impact
of an abnormally warm winter which was experienced both in the Company's North
American and European markets.
Gross profit increased $107.4 million, while gross profit margin fell by 1.1
percentage points in fiscal year 1995 versus 1994. The increase in gross
profit was principally the result of the inclusion of Tudor and B.I.G. for
$81.1 million and $21.7 million, respectively, of gross profit. The decrease
in profit margin was due principally to one-time promotional costs associated
with Exide's domestic volume growth, and associated higher manufacturing and
transportation costs.
Selling, general and administrative expenses increased $105.0 million, or
108.8%, compared to the previous year, primarily due to Tudor and B.I.G. which
accounted for approximately $80.1 million, or 76.3% of the increase. In
addition, selling and advertising increased due to higher sales volume on new
and existing accounts, and other sales promotional activities including racing
sponsorships. General and administrative expenses increased principally due
to higher legal fees and other professional services.
Operating income increased $2.4 million, or 3.9%, primarily as a result of the
matters discussed above.
Interest expense increased $19.4 million, or 58.6% in fiscal year 1995
compared to fiscal 1994, principally as a result of higher debt levels
associated with the financing of Exide's European acquisitions.
Year Ended March 31, 1994, Compared with Year Ended March 31, 1993
------------------------------------------------------------------
Net sales increased $100.9 million, or 17.4% in fiscal 1994 compared to fiscal
1993. The sales increase was the result of substantially higher sales to new
as well as existing customers and from new product introductions. Also,
fiscal 1994 results include Battronics on a consolidated basis since October
1993, whereas the Battronics results were previously reported as an equity
investment. Of the 17.4% sales increase in the fiscal 1994 period, Battronics
sales accounted for 5.9% of such sales increase. Unit sales volume increased
by approximately 3,821,000 batteries, or 21.1% (16.0% without Battronics),
over the same period in the previous year. Unit sales growth exceeded the
increase in dollar sales due primarily to a change in product mix resulting
principally from the expiration of a defense-related contract. Additionally,
pricing in the battery industry continues to be highly competitive.
20
<PAGE>
Gross profit increased $29.5 million ($23.7 million without Battronics) and
the gross profit margin improved by 1.1 percentage points (1.4 percentage
points without Battronics) in fiscal 1994 versus fiscal 1993. The increase in
gross profit margin was attributable principally to both higher unit sales and
production volume and the favorable impact of the Company's continuing cost
reduction program in its manufacturing and distribution process. The higher
production volume resulted in additional fixed cost absorption, further
reducing cost of sales as a percentage of net sales.
Selling, general and administrative expenses increased $14.9 million, or 18.3%
($12 million or 14.7% without Battronics), compared to the previous year,
primarily due to increases in selling expenses, associated with the higher
sales volume of both large accounts and wholesale distribution outlets and the
timing of certain expenses. In addition, advertising expenses increased
principally as a result of promotional expenses connected with a marine
battery program and other programs.
Operating income increased $14.6 million, or 30.9% ($11.8 million or 25%
without Battronics), primarily as a result of the higher volume and continuing
cost reduction program discussed above.
Interest expense decreased $2.1 million or 6% in fiscal 1994 compared to
fiscal 1993, primarily as a result of the reduction in revolving loan
borrowings due to the application of the proceeds from the equity offerings
(see Note 2 of Notes to the Company's Consolidated Financial Statements
appearing elsewhere herein).
Income before extraordinary loss and the cumulative effect of an accounting
change increased in fiscal 1994 by $12.1 million or 234% over fiscal 1993.
Net income in fiscal 1994 of $4.5 million compares to a net loss in the
previous year of $5.2 million. The $12.7 million charge in fiscal 1994 for
the cumulative effect of an accounting change relates to the recognition of
the liability for postretirement benefits under SFAS 106 in fiscal 1994. In
fiscal 1993, the extraordinary loss of $10.4 million resulted from the early
retirement of debt as a result of the debt refinancing, net of the associated
income tax benefit.
Liquidity and Capital Resources
-------------------------------
The Company's liquidity requirements arise primarily from the funding of its
seasonal working capital needs, obligations on its indebtedness and capital
expenditures. In addition, the Company has paid quarterly cash dividends of
$0.02 per share on its common stock since its initial public offering. The
Company meets these liquidity requirements, both in the U.S. and Europe,
through cash flow generated from operating activities and with borrowed funds
and the proceeds of sales of accounts receivable. Due to the seasonal demands
of the battery industry, the Company builds inventory in advance of the
typically stronger selling periods during the fall and winter. The Company's
highest cash demands from operations occur during the months of June through
October.
Funds generated (used) from continuing operations were $25.0 million, $49.4
million and $(69.1) million in fiscal 1993, 1994 and 1995, respectively.
Because of the seasonality of the Company's business, more funds are typically
generated in its third and fourth fiscal
21
<PAGE>
quarters. However, during fiscal 1995, as a result of growth in the existing
customer base and the addition of the Sears business, coupled with the
abnormally warm winter weather across North America and Europe, automotive
battery inventories, especially in North America, increased. Accordingly,
continuing operations required a large use of funds during the fourth quarter
of fiscal 1995. Since inventories at March 31, 1995 were higher than planned,
the Company adjusted its fiscal 1996 production schedule.
The Company is party to a receivables purchase agreement under the terms of
which the purchaser has committed (subject to certain exceptions) to purchase
selected accounts receivable of the Company, up to a maximum commitment of $40
million.
Obligations under the U.S. Credit Agreement and under the European Credit
Facilities bear interest at fluctuating rates. The Company has two interest
rate collar agreements and an interest rate swap agreement which reduce the
impact of changes in interest rates on a portion of the Company's floating
rate debt. The collar agreements effectively limit the LIBOR base interest
rate on $100 million of borrowings under the Credit Agreement to no more than
8% through December 30, 1997. If interest rates fall below certain levels,
Exide is required to make payments to the counterparties under the agreement.
The Company also has a $50 million interest rate swap agreement which
effectively fixes LIBOR interest rates at 6.2% through May 16, 1997. See Note
6 of Notes to the Company's Consolidated Financial Statements appearing
elsewhere herein.
The Company's capital expenditures were $20.3 million in fiscal 1993, $47.2
million in fiscal 1994 and $61.3 million in fiscal 1995. Capital expenditures
in fiscal 1995 were principally due to the start-up of the Bristol, TN,
facility, other plant expansions and cost reduction programs, and Tudor's
capital expenditures. Because of the significant growth in sales in North
America, the Company is contemplating an acquisition of an additional
secondary lead smelting operation. The U.S. Credit Agreement limits the
Company's capital expenditures.
The Company borrowed $229.2 million under the Credit Agreement to finance its
acquisition of Tudor in October 1994 and is currently obligated with respect
to letters of credit totaling $67.1 million, which guarantees certain
indebtedness of Tudor. The Company plans to refinance such indebtedness,
thereby eliminating the requirement for such letters of credit and guarantees
by the Company.
In December 1994, the Company completed a public offering of its Common Stock
with net proceeds of $215.3 million and in January 1995 sold additional shares
pursuant to the overallotment option for net proceeds of $32.5 million. The
net proceeds of that offering were used to temporarily repay revolving loans
under the Credit Agreement and excess proceeds were invested in short-term,
interest bearing investment grade securities in anticipation of the CEAC
acquisition. In April 1995, the Company issued $300 million of 10% Senior
Notes due in 2005. The proceeds of these notes were used to finance the
balance of the CEAC acquisition and to reduce bank debt. (See Notes 2, 3, 6
and 18 to the Company's Consolidated Financial Statements appearing elsewhere
herein.)
22
<PAGE>
At March 31, 1995, the Company had $207.8 million available under its U.S.
Credit Agreement, with $74.2 million available on a pro forma basis after the
CEAC acquisition and Tudor refinancing as of June 22, 1995, based on a
facility size of $451 million. Availability from other sources, such as Tudor
bank facilities and other subsidiaries, was $63.2 million at March 31, 1995,
and $104.7 million on June 22, 1995, including CEAC.
The Company believes it will have sufficient funds available for its ongoing
operating needs including any environmental requirements (see Note 13 of Notes
to the Company's Consolidated Financial Statements appearing elsewhere
herein). The Company's Credit Agreement, Senior Notes and Deferred Coupon
Debentures contain various business and financial covenants. At March 31,
1995, the Company was in compliance with the terms of those agreements.
In fiscal 1996, as a result of the CEAC acquisition, almost two-thirds of the
Company's consolidated sales and operations will be outside the U.S.
Therefore, the Company's future consolidated operating results and financial
condition may be influenced by exchange rate fluctuations.
The Company's European operations are being financed through capital
contributions associated with the initial acquisitions, local borrowings and
operating cash flows. The implementation of the Company's European integration
strategy is expected to produce significant manufacturing and other cost
savings and lower working capital requirements. As a result, the Company
expects future operating cash flows in Europe to exceed its short-term cash
needs for severance and other costs associated with plant closures.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
See Index to Consolidated Financial Statements and Schedule at page F-1.
Item 9. Changes in and Disagreements with Accountants on
------------------------------------------------
Accounting and Financial Disclosures
------------------------------------------------
Not applicable.
23
<PAGE>
PART III
--------
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
The biographical information under the heading Election of Directors and the
information under the heading Section 16(a) Compliance in the Company's
Definitive Proxy Statement for its annual meeting of stockholders to be held
on August 15, 1995, is hereby incorporated by reference.
In addition to the executive officers named in the biographical section,
Messrs. Alan E. Gauthier and George J. Tinker are executive officers. Mr.
Gauthier (age 47) was appointed Executive Vice President and Chief Financial
Officer in October 1993. Prior to that time, he had been Vice President-
Finance since May 1989. Prior to joining Exide, he was Senior Vice President
and Chief Financial Officer of Airwork Corporation and prior to that held
senior financial positions with Commodore Business Machines, Inc. and General
Electric Co.
Mr. Tinker (age 50) was appointed Chief Executive Officer of Exide's European
Operations in June of 1995. Since joining Exide in March 1994, he has been
Chief Executive Officer of Euro Exide Corporation Limited. Prior to joining
Exide, he was a Divisional and Main Board Director of the Ross Group Plc and
prior to that he was the Chief Executive Officer of the Stellar Group.
Item 11. Executive Compensation
----------------------
The information under the heading Executive Compensation in the Company's
Definitive Proxy Statement for its annual meeting of stockholders to be held
on August 15, 1995, is hereby incorporated by reference.
Item 12. Description of Capital Stock
----------------------------
The information under the heading Stock Ownership in the Company's Definitive
Proxy Statement for its annual meeting of stockholders to be held on August
15, 1995, is hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
The information under the heading Certain Relationships and Related
Transactions in the Company's Definitive Proxy Statement for its annual
meeting of stockholders to be held on August 15, 1995, is hereby incorporated
by reference.
24
<PAGE>
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules
---------------------------------------
and Reports on Form 8-K
--------------------------------------
(a) Index to Financial Statements
-----------------------------
See Index to Consolidated Financial Statements and Schedule at
page F-1.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the last quarter of
the period covered by this report.
(c) Exhibits Required by Item 601 of Regulation S-K
-----------------------------------------------
See Index to Exhibits.
(d) Financial Statement Schedules
-----------------------------
See Index to Consolidated Financial Statements and Schedule at
page F-1.
25
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
EXIDE CORPORATION
By: /s/ Arthur M. Hawkins
-------------------------------------
Arthur M. Hawkins, President
Principal Executive Officer
By: /s/ Alan E. Gauthier
-------------------------------------
Alan E. Gauthier
Principal Financial and
Accounting Officer
Date: June 29, 1995
-------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
<TABLE>
<S> <C>
By: /s/ Arthur M. Hawkins By: /s/ Douglas N. Pearson
----------------------------- -----------------------------
Arthur M. Hawkins, President Douglas N. Pearson, Executive
Chairman of the Board and Vice President and President
Director North American Operations and
Director
By: /s/ William J. Rankin By: /s/ Timothy O. Fisher
----------------------------- -----------------------------
William J. Rankin, Executive Timothy O. Fisher
Vice President and Director Director
By: /s/ Lawrence M. Wagner By: /s/ Robert H. Irwin
----------------------------- -----------------------------
Lawrence M. Wagner Robert H. Irwin
Director Director
By: /s/ Earl Dolive By: /s/ Arthur R. Taylor
----------------------------- -----------------------------
Earl Dolive Arthur R. Taylor
Director Director
</TABLE>
26
<PAGE>
EXHIBITS:
--------
2.1 Agreement of Merger between EC Acquisition, Inc. ("ECA") and the
Registrant, incorporated by reference to Exhibit 2.1 of the
Registrant's Registration Statement on Form S-1 (No. 33-68016), as
amended (the "1993 Registration Statement").
3.1 Restated Certificate of Incorporation of the Registrant, incorporated
by reference to Exhibit of same number to the 1993 Registration
Statement.
3.2 Restated Bylaws of the Registrant, incorporated by reference to
Exhibit of same number to the 1993 Registration Statement.
4.1 Form of Senior Note Indenture (including form of Senior Note),
incorporated by reference to Exhibit 4.1 of the Registrant's
Registration Statement on Form S-2 (No. 33-53666), as amended (the
"S-2 Registration Statement").
4.2 Form of Senior Subordinated Deferred Coupon Debenture Indenture
(including form of Senior Subordinated Debenture), incorporated by
reference to Exhibit 4.2 of the S-2 Registration Statement.
4.3 Agreement dated as of December 7, 1992, between the Registrant and
Inco United States, Inc., relating to the assumption of certain
liabilities, incorporated by reference to Exhibit 10.30 to the S-2
Registration Statement.
4.4 Registration Rights Agreement among the Registrant, WSI and certain
other holders of the Registrant's Common Stock, incorporated by
reference to Exhibit 4.14 to the 1993 Registration Statement.
4.5 Indenture dated as of April 28, 1995, between the Registrant and The
Bank of New York, as trustee, incorporated by reference to Exhibit
99.3 of the Registrant's Form 8-K dated June 2, 1995 (the "CEAC
8-K").
10.1 Receivables Purchase Agreement dated as of February 17, 1994, among
the Registrant and Three Rivers Funding Corporation, incorporated by
reference to Exhibit 10.1 to the 1994 Registration Statement.
10.2 Employment Agreement dated June 15, 1985 between the Registrant and
Arthur M. Hawkins, incorporated by reference to Exhibit 10.4 of the
Registrant's Registration Statement on Form S-1 (No. 33-13632), as
amended (the "S-1 Registration Statement").
10.3 Amendment dated June 7, 1988 to Employment Agreement between the
Registrant and Arthur M. Hawkins, incorporated by reference to
Exhibit 10.1 to the Registrant's Form 10-Q for the quarter ended
October 2, 1988.
27
<PAGE>
10.4 Employment Agreement dated June 15, 1985 between the Registrant and
Douglas N. Pearson, incorporated by reference to Exhibit 10.5 to the
S-1 Registration Statement.
10.5 Employment Agreement dated June 1, 1987 between the Registrant and
William J. Rankin.
10.6 Amendment dated July 7, 1988 to Employment Agreement between the
Registrant and Douglas N. Pearson, incorporated by reference to
Exhibit 10.2 to the Registrant's Form 10-Q for the quarter ended
October 2, 1988.
10.7 Stock Purchase Agreement dated May 27, 1987 among the Registration,
Fruit of the Loom, Inc. and Northwest Industries Leasing Company,
incorporated by reference to Exhibit 2 to the S-1 Registration
Statement.
10.8 Lease Agreement dated July 1, 1988 between the Registrant and an
officer of the Registrant pertaining to Chippewa Trail Lodge,
incorporated by reference to Exhibit 10.28 to the 1989 10-K.
10.9 Amendment to Lease Agreement dated October 24, 1988 between the
Registrant and Chippewa Trail Lodge, Inc., incorporated by reference
to Exhibit 10.29 to the 1989 10-K.
10.10 Assignment of Lease dated July 1, 1988 between an officer of the
Registrant and Chippewa Trail Lodge, Inc., incorporated by reference
to Exhibit 10.30 to the 1989 10-K.
10.11 Assignment and Assumption of Lease dated October 24, 1988 between an
officer of the Registrant and Chippewa Trail Lodge, Inc.,
incorporated by reference to Exhibit 10.31 to the 1989 10-K.
10.12 Lease Agreement dated August 1, 1978 pertaining to the Reading,
Pennsylvania administrative office facilities, amended as of April 1,
1979, incorporated by reference to Exhibit 10.20 to the S-1
Registration Statement.
10.13 Lease Agreement dated February 1, 1974 pertaining to the Manchester,
Iowa manufacturing facilities, incorporated by reference to Exhibit
10.21 to the S-1 Registration Statement.
10.14 Lease Agreements (Series A and Series B) dated September 1, 1976
pertaining to the Salina, Kansas manufacturing facilities,
incorporated by reference to Exhibit 10.22 to the S-1 Registration
Statement.
10.15 Lease Agreement dated August 1, 1978, pertaining to the Reading,
Pennsylvania engineering facilities, incorporated by reference to
Exhibit 10.23 to the S-1 Registration Statement.
28
<PAGE>
10.16 Lease Agreement dated January 5, 1978, pertaining to the City of
Industry, California distribution facilities, incorporated by
reference to Exhibit 10.24 to the S-1 Registration Statement.
10.17 Lease Agreement dated August 11, 1986, pertaining to the Sumner,
Washington Distribution facilities, incorporated by reference to
Exhibit 10.27 to the S-1 Registration Statement.
10.18 Lease Agreement beginning December 1, 1987, pertaining to the
Travelers Rest, South Carolina distribution facilities, incorporated
by reference to Exhibit 10.27 to the Registrant's Form 10-K for the
fiscal year ended March 31, 1988.
10.19 Asset Purchase Agreement, dated as of June 10, 1991, between the
Registrant and Yuasa Battery (America), Inc., incorporated by
reference to Exhibit 1 to the Registrant's Form 8-K dated June 25,
1991.
10.20 EC Acquisition, Inc. 1993 Stock Award Plan, incorporated by
reference to Exhibit 10.23 to the 1993 Registration Statement.
10.21 Battronics Purchase Agreement, incorporated by reference to Exhibit
10.24 to the 1993 Registration Statement.
10.22 Exide 1993 Long Term Incentive Plan, incorporated by reference to
Exhibit 10.25 to the 1993 Registration Statement.
10.23 Agreement dated September 30, 1994, among Gemala (Isle of Man)
Limited, PT Sapta Panji Manggala, and B.I.G. Batteries Group Limited.
Deed dated September 30, 1994, among Euro Exide Corporation Limited,
Gemala (Isle of Man) Limited and B.I.G. Batteries Group Limited.
Master Agreement dated September 30, 1994 among Euro Exide
Corporation Limited, Gemala (Isle of Man) Limited, B.I.G. Batteries
Group Limited and PT Sapta Panji Manggala, incorporated by reference
to Exhibit 10.24 of the December 1994 Registration Statement.
10.24 Stock Purchase Agreement and Warranty Agreement dated March 17,
1995, between the Registrant and Fiat SpA and one of its affiliates,
incorporated by reference to Exhibit 2.2 of the CEAC 8-K.
10.25 Composite copy of Credit Agreement (the "Credit Agreement") dated as
of August 30, 1994, among the Registrant, various financial
institutions, Bankers Trust Company, Bank of America National Trust
and Savings Association and Bank of Montreal, as Agents, and Bankers
Trust Company, as Administrative Agent, incorporated by reference to
Exhibit 99.1 of the CEAC 8-K.
29
<PAGE>
10.26 Facilities Agreement dated February 28, 1995, among the Registrant
(CEAC and certain of its subsidiaries have joined as borrowers and
guarantors), the banks listed for the Credit Agreement, Dresdner Bank
Luxembourg and other lenders, and Amendment No. 1 thereto,
incorporated by reference to Exhibit 99.2 of the CEAC 8-K.
10.27 Lease Agreement dated February 7, 1994, pertaining to the Bristol,
Tennessee manufacturing facility and related amendment dated May 1995.
11.1 Statement re computation of per-share earnings.
21.1 Subsidiaries of the Registrant.
30
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
----------------------------------
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
-------------------------------------------------------
<TABLE>
<S> <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS F-2
CONSOLIDATED BALANCE SHEETS F-3
CONSOLIDATED STATEMENTS OF OPERATIONS F-5
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY F-6
CONSOLIDATED STATEMENTS OF CASH FLOWS F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-9
CONSOLIDATED SUPPORTING SCHEDULES FILED:
II VALUATION AND QUALIFYING ACCOUNTS
AND RESERVES F-36
</TABLE>
----------------------------------------------------------------
All other schedules are omitted because they are not applicable,
not required, or the information required to be set forth
therein is included in the Consolidated Financial Statements or
in Notes thereto.
----------------------------------------------------------------
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders,
Exide Corporation:
We have audited the accompanying consolidated balance sheets of Exide
Corporation (a Delaware corporation) and subsidiaries as of March 31, 1994 and
1995, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three fiscal years in the period ended
March 31, 1995. These financial statements and the schedule referred to below
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and the schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Exide Corporation and
subsidiaries as of March 31, 1994 and 1995, and the results of their operations
and their cash flows for each of the three fiscal years in the period ended
March 31, 1995, in conformity with generally accepted accounting principles.
As explained in Note 8 to the financial statements, effective April 1, 1993, the
Company changed its method of accounting for postretirement employee benefits
other than pensions.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
consolidated financial statements is presented for purposes of complying with
the Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
June 27, 1995
F-2
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
(In thousands)
<TABLE>
<CAPTION>
March 31
-----------------------
1994 1995
---------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 33,707 $ 63,361
Receivables, net of allowance for doubtful
accounts of $4,846 and $23,274 119,653 317,466
Inventories 169,474 476,481
Prepaid expenses and other 10,134 34,707
Deferred income taxes 9,438 19,388
-------- ----------
Total current assets 342,406 911,403
-------- ----------
PROPERTY, PLANT AND EQUIPMENT:
Land 6,104 48,320
Buildings and improvements 64,597 124,260
Machinery and equipment 188,105 355,189
Construction in progress 16,718 28,156
-------- ----------
275,524 555,925
Less- Accumulated depreciation and
amortization (94,377) (132,049)
-------- ----------
Property, plant and equipment, net 181,147 423,876
-------- ----------
OTHER ASSETS:
Goodwill 71,061 185,111
Investments in affiliates 17,814 36,095
Deferred financing costs 8,029 21,590
Deferred income taxes - 33,024
Other 8,633 26,490
-------- ----------
105,537 302,310
-------- ----------
Total assets $629,090 $1,637,589
======== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
(In thousands, except share and per-share data)
<TABLE>
<CAPTION>
March 31
-----------------------
1994 1995
---------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Short-term borrowings $ 9,550 $ 75,010
Current maturities of long-term debt 35,760 51,731
Accounts payable, trade and other 68,597 191,534
Accrued compensation 10,115 34,238
Product warranty reserve 7,338 19,053
Accrued insurance 11,339 14,219
Accrued environmental 9,500 9,072
Other accrued liabilities 36,496 120,671
-------- ----------
Total current liabilities 188,695 515,528
-------- ----------
LONG-TERM DEBT 246,511 518,394
-------- ----------
NONCURRENT RETIREMENT OBLIGATIONS 17,835 92,809
-------- ----------
OTHER NONCURRENT LIABILITIES 8,541 70,082
-------- ----------
DEFERRED INCOME TAXES 3,058 -
-------- ----------
COMMITMENTS AND CONTINGENCIES
(Notes 13 and 15)
MINORITY INTEREST - 27,546
-------- ----------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 30,000,000 shares
authorized, 14,800,000 and 19,991,810 shares 148 200
issued and outstanding
Additional paid-in capital 194,097 443,446
Retained earnings (deficit) (25,446) (25,837)
Notes receivable--stock award plan (1,826) (1,774)
Unearned compensation - (1,806)
Minimum pension liability adjustment (1,331) (5,527)
Cumulative translation adjustment (1,192) 4,528
-------- ----------
Total stockholders' equity 164,450 413,230
-------- ----------
Total liabilities and stockholders' equity $629,090 $1,637,589
======== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(In thousands, except share and per-share data)
<TABLE>
<CAPTION>
For the Fiscal Year Ended March 31
--------------------------------------
1993 1994 1995
----------- ------------ ------------
<S> <C> <C> <C>
NET SALES $ 578,755 $ 679,649 $ 1,198,546
COST OF SALES 449,998 521,396 932,866
---------- ----------- -----------
Gross profit 128,757 158,253 265,680
---------- ----------- -----------
OPERATING EXPENSES:
Selling, marketing and advertising 59,577 69,810 130,774
General and administrative 22,010 26,685 70,744
---------- ----------- -----------
81,587 96,495 201,518
---------- ----------- -----------
Operating profit 47,170 61,758 64,162
---------- ----------- -----------
OTHER (INCOME) EXPENSE:
Interest 35,261 33,150 52,565
Other, net 3,356 597 874
---------- ----------- -----------
38,617 33,747 53,439
---------- ----------- -----------
Income before income taxes, minority
interest, extraordinary loss and
cumulative effect of accounting
change 8,553 28,011 10,723
PROVISION FOR INCOME TAXES 3,400 10,794 5,160
---------- ----------- -----------
Income before minority interest,
extraordinary loss and cumulative
effect of accounting change 5,153 17,217 5,563
MINORITY INTEREST - - 1,072
---------- ----------- -----------
Income before extraordinary loss and
cumulative effect of accounting
change 5,153 17,217 4,491
EXTRAORDINARY LOSS RELATED TO EARLY
RETIREMENT OF DEBT, net of income tax
benefit of $1,900 and $2,320 (10,363) - (3,597)
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE--ADOPTION OF SFAS 106 - (12,711) -
---------- ----------- -----------
Net income (loss) $ (5,210) $ 4,506 $ 894
========== =========== ===========
NET INCOME (LOSS) PER COMMON SHARE:
Income before extraordinary loss and
cumulative effect of accounting change $0.02 $1.56 $0.28
Extraordinary loss (1.24) - (0.22)
Cumulative effect of accounting change - (1.15) -
---------- ----------- -----------
Net income (loss) $ (1.22) $ 0.41 $ 0.06
========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 8,388,338 11,058,185 16,191,075
========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
-----------------------------------------------
FOR THE YEARS ENDED MARCH 31, 1993, 1994 AND 1995
-------------------------------------------------
(In thousands)
<TABLE>
<CAPTION>
Notes Minimum Foreign
Additional Retained Receivable-- Pension Currency
Preferred Common Paid-in Earnings Stock Award Unearned Liability Translation
Stock Stock Capital (Deficit) Plan Compensation Adjustment Adjustment
--------- ------ ---------- ---------- ------------ ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES AT MARCH 31, 1992 $ 88,325 $ 1 $ 9,529 $ (19,470) $ - $ - $ (4) $ (69)
Net loss for fiscal 1993 - - - (5,210) - - - -
Accrued dividends 4,996 - - (4,996) - - - -
Redemption of preferred
stock (86,859) - 66,353 - - - - -
Minimum pension liability
adjustment - - - - - - (145) -
Translation adjustment - - - - - - - (859)
Other - - (34) - - - - -
--------- ------ ---------- ---------- ------------ ------------ ---------- -----------
BALANCES AT MARCH 31, 1993 6,462 1 75,848 (29,676) - - (149) (928)
Net income for fiscal 1994 - - - 4,506 - - - -
Redemption of preferred
stock (6,462) - - - - - - -
Conversion of existing
common stock - 83 (83) - - - - -
Issuance of common stock
grants - 8 1,818 - - - - -
Public offerings of common
stock - 56 116,514 - - - - -
Cash dividends paid
($0.02/share) - - - (276) - - - -
Minimum pension liability
adjustment - - - - - - (1,182) -
Translation adjustment - - - - - - - (264)
Notes receivable - stock
award plan - - - - (1,826) - - -
--------- ------ ---------- ---------- ------------ ------------ ---------- -----------
BALANCES AT MARCH 31, 1994 - 148 194,097 (25,446) (1,826) - (1,331) (1,192)
Net income for fiscal 1995 - - - 894 - - - -
Public offering of stock - 52 247,466 - - - - -
Compensation under stock
grants - - 1,935 - - (1,806) - -
Forfeiture of common stock
grants - - (52) - 52 - - -
Cash dividends paid
($0.08/share) - - - (1,285) - - - -
Minimum pension liability
adjustment - - - - - - (4,196) -
Translation adjustment - - - - - - - 5,720
--------- ------ ---------- ---------- ------------ ------------ ---------- -----------
BALANCES AT MARCH 31, 1995 $ - $ 200 $ 443,446 $ (25,837) $ (1,774) $ (1,806) $ (5,527) $ 4,528
========= ====== ========== ========== ============ ============ ========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(In thousands)
<TABLE>
<CAPTION>
For the Fiscal Year Ended March 31
-------------------------------------
1993 1994 1995
------------ ----------- -----------
<S> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Net income (loss) $ (5,210) $ 4,506 $ 894
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities-
Depreciation and amortization 28,437 30,613 48,524
Cumulative effect of accounting change - 12,711 -
Extraordinary loss 10,363 - 3,597
Deferred income taxes - 7,266 863
Interest expense on zero-coupon
convertible notes 2,146 7,941 8,942
Provision for losses on accounts
receivable 2,214 379 3,238
Minority interest in subsidiary income - - 1,072
Changes in assets and liabilities
excluding effects of acquisitions-
Receivables (17,751) (11,912) (14,686)
Inventories 3,243 (7,701) (138,568)
Prepaid expenses and other 455 (5,960) (3,400)
Payables and accrued expenses 2,045 19,636 31,258
Other, net (983) (8,115) (10,868)
-------- -------- ---------
Net cash provided by (used in)
operating activities 24,959 49,364 (69,134)
-------- -------- ---------
CASH FLOWS (USED IN) INVESTING ACTIVITIES:
Acquisitions of net assets of certain (1,650) (7,707) (262,995)
businesses
Capital expenditures (20,266) (47,164) (61,257)
Proceeds from sale of property, plant
and equipment 71 12 1,356
-------- -------- ---------
Net cash used in investing activities (21,845) (54,859) (322,896)
-------- -------- ---------
</TABLE>
(continued)
F-7
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(In thousands)
(continued)
<TABLE>
<CAPTION>
For the Fiscal Year Ended March 31
-------------------------------------
1993 1994 1995
------------ ----------- -----------
<S> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED IN)
FINANCING ACTIVITIES:
Increase in short-term borrowings - - 20,402
Repayment of U.S. Credit Agreement
borrowings (45,000) (66,000) (105,000)
Borrowings under U.S. Credit Agreements - - 286,500
Repayment of European term loan - - (1,421)
Redemption of preferred stock (13,590) (6,462) -
Equity from public offerings, net of
fees - 116,499 247,519
Dividends paid - (276) (1,284)
Issuance of 10-3/4% senior notes and
12-1/4% senior subordinated notes 210,743 - -
Redemption of 12-7/8% senior
subordinated notes (141,751) - -
Decrease in other debt (2,772) (5,060) (4,211)
Deferred financing costs (10,578) - (24,191)
--------- -------- ---------
Net cash provided by (used in)
financing activities (2,948) 38,701 418,314
--------- -------- ---------
EFFECT OF EXCHANGE RATE CHANGES
ON CASH - - 3,370
--------- -------- ---------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 166 33,206 29,654
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 335 501 33,707
--------- -------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 501 $ 33,707 $ 63,361
========= ======== =========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the period for-
Interest (net of amount capitalized) $ 33,645 $ 24,080 $ 41,442
Income taxes $ 1,598 $ 2,349 $ 4,047
</TABLE>
The accompanying notes are an integral part of these statements.
F-8
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
----------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(in thousands, except share and per-share data)
-----------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of Exide Corporation
(the "Company") and all of its majority-owned subsidiaries, except certain
foreign companies that are not material. All significant intercompany
transactions have been eliminated.
The investments in and the operating results of 20% to 50% owned companies and
the foreign companies referred to above are included in the consolidated
financial statements on the basis of the equity method of accounting. The
Company's equity in net income (loss) of these companies is not material.
Foreign Currency Translation
- ----------------------------
Assets and liabilities of the Company's foreign subsidiaries and affiliates are
translated into U.S. dollars at the current rate of exchange existing at year-
end, and revenues and expenses are translated at the average monthly exchange
rates. Translation gains or losses are recorded in stockholders' equity and
transaction gains and losses are included in Other (Income) Expense.
Inventories
- -----------
Inventories, which consist of material, labor and overhead, are stated at the
lower of cost or market. Cost is determined by the last-in, first-out ("LIFO")
method for substantially all U.S. inventories and by the first-in, first-out
("FIFO") method for all remaining inventories.
Property, Plant and Equipment
- -----------------------------
Property, plant and equipment are stated at cost. Depreciation is calculated by
the straight-line method over the estimated useful lives of depreciable assets.
Accelerated methods are used for tax purposes. Useful lives of depreciable
assets, by class, are as follows:
F-9
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Class Useful Life
-------------------------- -------------
<S> <C>
Buildings and improvements 5 to 40 years
Machinery and equipment 3 to 10 years
</TABLE>
Cost and accumulated depreciation for property retired or disposed of are
removed from the accounts, and any gain or loss on disposal is credited or
charged to earnings. Expenditures for maintenance and repairs are charged to
expense as incurred. In connection with constructing certain property and
equipment, the Company capitalized $274, $725 and $1,678 of interest costs
during the fiscal years ended March 31, 1993, 1994 and 1995, respectively.
Goodwill
- --------
Goodwill is amortized over 40 years on a straight-line basis. Accumulated
amortization as of March 31, 1994 and 1995, was $9,728 and $14,497,
respectively. It is the Company's policy to review goodwill and other intangible
assets for possible impairment whenever events or changes in circumstances
indicate that the carrying amount of such assets may not be recoverable. If such
review indicates that the carrying amount of goodwill and other intangible
assets is not recoverable, it is the Company's policy to reduce the carrying
amount of such assets to fair value.
Estimated Warranty Costs
- ------------------------
The Company recognizes the estimated cost of warranty obligations in the period
in which the related products are sold.
Noncurrent Retirement Obligations
- ---------------------------------
Noncurrent retirement obligations is comprised principally of reserves for
pension obligations, postretirement health care and other retirement benefits.
Other Noncurrent Liabilities
- ----------------------------
Other noncurrent liabilities is comprised principally of reserves for
environmental cleanup and severance.
Seasonality
- -----------
The Company's operating results are influenced by seasonality, as sales volumes
for automotive replacement batteries are typically higher in the months of
September through January.
F-10
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Major Customers
- ---------------
The Company's five largest customers accounted for 43%, 40% and 26% of
consolidated net sales in fiscal 1993, 1994 and 1995, respectively. Included
among these five customers is NAPA, which accounted for approximately 16.9%,
16.2% and 9.4% of consolidated net sales in fiscal 1993, 1994 and 1995,
respectively.
Net Income (Loss) Applicable to Common Stock
- --------------------------------------------
The net income applicable to common stock in fiscal 1994 and fiscal 1995 is
equal to the net income reported for the period. The net loss applicable to
common stock in fiscal 1993 was $10,206, which represents the net loss reported
for the period, plus accrued dividends on the redeemable preferred stock (none
of which had been declared or paid prior to the redemption).
Net Income (Loss) Per Common Share
- ----------------------------------
The net income (loss) per common share is based on the weighted average number
of common shares outstanding during the period. Fully diluted earnings per
common share are not presented since dilution is less than 3%.
Revenue Recognition
- -------------------
The Company records revenue upon transfer of title to the customer.
Cash Flows
- ----------
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Reclassifications
- -----------------
Prior year financial statements have been reclassified to conform to the current
year presentation.
2. STOCKHOLDERS' EQUITY:
---------------------
On August 31, 1989, all of the issued and outstanding shares of the Company's
common stock were acquired by EC Acquisition, Inc. ("ECA"), a corporation
initially organized by Wilmington Securities ("WSI"), an affiliate of the
Hillman Company, current management and certain former shareholders of the
Company. WSI acquired a 49% beneficial ownership in the Company at the
conclusion of this transaction.
F-11
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
As part of this acquisition, the previous owners of the Company's common stock
exchanged their shares for preferred stock of ECA. These shares were reflected
in the Company's financial statements using the "push down" accounting rules.
During fiscal 1993, as part of the debt refinancing (see Note 6), the Company
redeemed the Series "B," Series "C" and Series "D" preferred stock held by
Series "B" holders.
The following is a summary of the accounting for the redemption of the preferred
stock:
<TABLE>
Book value of preferred shares at redemption:
<S> <C>
Series "B" (29,617 shares) $39,568
Series "C" (34,943 shares) 46,684
Series "D" (607 shares) 607
-------
86,859
Less:
Cash offered 14,506
Estimated environmental liabilities assumed 6,000
-------
Increase in additional paid-in capital $66,353
=======
</TABLE>
Effective October 28, 1993, the Company completed an initial public offering
("IPO") of its Common Stock, which raised $92,000 (before fees and expenses).
In connection with the IPO, the Company increased the authorized shares of
common stock from 1,000 to 30,000,000 and ECA's shareholders exchanged all
outstanding shares of common stock of ECA for shares of common stock of the
Company on a 1.29-to-1 basis. Retroactive restatement has been made to all
share and per share amounts to reflect the effects of the stock exchange. The
Company also repurchased the remaining Series "D" Junior Redeemable Preferred
Stock at carrying value for $6,462.
Effective March 8, 1994, the Company completed a secondary offering of its
common stock. The secondary offering included the issuance of an additional
1,000,000 shares which raised $34,000 (before fees and expenses).
On December 22, 1994, the Company raised $225,000 (before fees and expenses)
through the issuance of 4,500,000 additional shares of common stock. In
connection with this offering, the Company's U.S. underwriters exercised their
over-allotment option and, in January 1995, the Company received additional
proceeds of $33,750 (before fees and expenses) from the issuance of 675,000 of
additional shares of common stock.
3. ACQUISITIONS:
-------------
In October 1994, the Company acquired approximately 89.4% of the outstanding
capital stock and approximately 25% of the convertible bonds of Sociedad
Espanola del Acumulador Tudor, S.A. ("Tudor") for 1,145 pesetas per share or
approximately $229,000 (before fees and expenses). In December 1994, one of the
shareholders of Tudor sold its
F-12
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
remaining 5% ownership to Tudor at the tender offering price in accordance with
the terms of the purchase agreement. After completion of this sale, the
Company's ownership in Tudor is approximately 94.1%. In addition, the Company
has provided a letter of credit which guarantees payment of the convertible
bonds held by that same shareholder.
This acquisition was accounted for as a purchase and the results of Tudor's
operations are included in the Company's consolidated statement of operations
effective October 3, 1994. The cost of the acquisition has been preliminarily
allocated on the basis of the estimated fair market value of the assets acquired
and the liabilities assumed. Estimated goodwill is being amortized over 40
years. The preliminary allocation of the purchase price is as follows:
<TABLE>
<S> <C>
Cash $ 12,398
Receivables, net 169,950
Inventories 147,690
Prepaid expenses and other 34,687
Property, plant and equipment 183,818
Other noncurrent assets 34,542
Accounts payable and accrued expenses (182,032)
Long-term debt (including current maturities) (140,850)
Other noncurrent liabilities (114,411)
Minority interest (17,323)
---------
128,469
Cash consideration (including fees and expenses) 234,717
---------
Preliminary estimate of goodwill $ 106,248
=========
</TABLE>
In connection with the Tudor acquisition, the Company intends to close certain
Tudor plants which will result in severance, environmental and other costs which
are reflected in the opening balance sheet.
On March 30, 1994, the Company acquired all of the issued and outstanding
capital stock of B.I.G. Batteries Group Limited ("BIG") for approximately $2,075
in cash and $32,725 in British pound denominated Loan Notes. The acquisition
was accounted for as a purchase, and the results of operations of BIG are
included in the Company's consolidated statement of operations effective April
1, 1994. The cost of the acquisition has been allocated on the basis of the
estimated fair market value of the assets acquired and the liabilities assumed.
This allocation resulted in goodwill of approximately $30,084, which is being
amortized over 40 years.
In September 1994, management of the Company and PT Sapta Panji Manggala ("PT
Sapta"), an Indonesian company, signed an agreement whereby the Company
contributed its interest in BIG, and PT Sapta contributed its interest in Gemala
Holdings Limited ("Gemala") into a newly formed joint venture, Exide Batteries
Limited. In exchange for PT Sapta's interest in Gemala, the Company gave PT
F-13
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Sapta an 18.5% equity interest in Exide Batteries Limited and the right to
certain benefits to be realized from Gemala's tax loss carryforwards. PT Sapta
also received the right to require Exide to purchase its 18.5% interest in the
joint venture at any time after five years from the closing date of the
transaction for a defined multiple of earnings of the joint venture.
On May 3, 1994, the Company acquired General Electric Credit Corporation's
secured debt position in Evanite Fiber Corporation ("Evanite"), a debtor-in-
possession, for approximately $33,700. Evanite is a manufacturer and the
Company's primary supplier of battery separators. On February 21, 1995, Exide
acquired all of the assets and assumed certain liabilities of Evanite in
exchange for its secured debt position. The purchase price was allocated
primarily to receivables, inventories and fixed assets and resulted in no
goodwill.
Effective October 15, 1993, the Company purchased the remaining 50% equity
interest in Battronics, Inc. ("Battronics") for approximately $3,000 in cash.
Battronics is an automotive battery manufacturer/distributor in Canada.
Effective October 1993, Battronics' financial results are reported on a
consolidated basis rather than the equity basis that was previously followed.
The following unaudited pro forma consolidated statements of operations for the
fiscal years ended March 31, 1994 and 1995, illustrate the estimated effects of
the BIG, Battronics, Evanite and Tudor acquisitions, after the elimination of
the equity income previously recorded for Battronics, as if the transactions
were consummated as of the beginning of each fiscal year presented:
<TABLE>
<CAPTION>
1994 1995
---------- -----------
<S> <C> <C>
Net sales $1,231,528 $1,474,627
Cost of sales 911,715 1,134,237
---------- ----------
Gross profit 319,813 340,390
Selling, general and administrative expenses 224,092 266,668
---------- ----------
Operating income 95,721 73,722
Interest expense, net 73,481 70,959
Other (income) expense 11,682 (323)
---------- ----------
Income before income taxes and minority interest 10,558 3,086
Provision for income taxes 7,100 3,052
---------- ----------
Income before minority interest 3,458 34
Minority interest 1,053 (913)
---------- ----------
Income (loss) before extraordinary loss and
cumulative effect of accounting change $ 4,511 $ (879)
========== ==========
Pro forma earnings per common share:
Income before extraordinary loss and cumulative
effect of accounting change $ 0.41 $ (0.05)
========== ==========
</TABLE>
F-14
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Pro forma adjustments include only the effects of events directly attributable
to a transaction that are factually supportable and expected to have a
continuing impact. Pro forma adjustments reflecting anticipated "efficiencies"
in operations resulting from a transaction are, under most circumstances, not
permitted. The above unaudited pro forma financial information is not
necessarily indicative of the results that would actually have been obtained if
the transactions had been effected on the dates indicated or that may be
obtained in the future.
During the fiscal years ended March 31, 1994 and 1995, the Company purchased the
net assets of various other manufacturers and distributors of batteries and
automotive parts for cash. The aggregate purchase price for these acquisitions
totaled approximately $3,082 and $249, respectively. Each purchase price was
allocated primarily to receivables, inventory and equipment. The pro forma
effect of these acquisitions on consolidated operating results was immaterial.
4. INVENTORIES:
------------
The components of inventories as of March 31, 1994 and 1995, are as follows:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Raw materials $ 36,046 $ 98,872
Work-in-process 14,539 43,840
Finished goods 118,889 333,769
-------- --------
$169,474 $476,481
======== ========
</TABLE>
At March 31, 1994 and 1995, inventories valued by the LIFO method were
approximately 71% and 42% of total inventories, respectively. If all
inventories had been determined using the first-in, first-out method, such
inventories would have been $152,407 and $459,414 at March 31, 1994 and 1995,
respectively. The carrying amount of inventories on a LIFO basis exceeds
replacement cost. Since LIFO inventories reflect the fair value of inventories
as of August 31, 1989, when all of the outstanding common shares of Exide
Corporation were acquired in a leveraged buyout, and because the inventories
subsequently produced cost less to manufacture, the Company believes that no
write-down of the carrying amount of inventories to replacement cost is
necessary as no loss will be realized upon their final sale.
5. SHORT-TERM BORROWINGS:
----------------------
At March 31, 1994 and 1995, short-term borrowings consisted of various operating
lines of credit and working capital facilities maintained by the Company's
foreign subsidiaries totaling $9,550 and $87,466, respectively. Certain of these
borrowings are secured by receivables, inventories or property. These
facilities, which are typically for one year
F-15
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
renewable terms, generally bear interest at the current market rates plus up to
1%. As of March 31, 1994 and 1995, the weighted average interest rate on these
borrowings was 6.8% and 8.9%, respectively. At March 31, 1995, $12,456 of short-
term borrowings have been classified as other long-term debt since the Company
has the ability and intent to refinance such amounts during fiscal year 1996.
6. LONG-TERM DEBT:
---------------
Following is a summary of the Company's long-term debt at March 31, 1994 and
1995 :
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
U.S. Credit Agreement borrowings primarily at
LIBOR plus 1.75% at March 31, 1994 (5.4%), and
LIBOR plus 2.5% at March 31, 1995 (8.8%) $ 13,000 $194,500
10-3/4% Senior Notes, due December 15, 2002 150,000 150,000
12-1/4% Senior Subordinated Deferred Coupon
Debentures, due December 15, 2004 70,830 79,772
European Term Loans at rates ranging from
5.0% to 11.9% at March 31, 1995, due
through March 31, 2006 - 63,286
Spanish Convertible Debentures at
average one year MIBOR revisable every
six months (9.6% at March 31, 1995) - 23,699
Guaranteed Unsecured Loan Notes at LIBOR
less 5/8% at March 31, 1994 (4.75%), and March 31,
1995 (6.1%), due on demand 32,848 35,868
Other, primarily capital lease obligations at
interest rates ranging from 5.5% to 10.4%
due in installments through 2001, and
other debt 15,593 23,000
-------- --------
282,271 570,125
Less- Current maturities 35,760 51,731
-------- --------
$246,511 $518,394
======== ========
</TABLE>
Effective August 30, 1994, the Company entered into a new U.S. Credit Agreement
that initially provided a borrowing capacity of $550,000 and is divided into
three components: Loan A ($100,000), having a five year term; Loan B ($100,000),
having a seven year term; and a Revolving Credit Facility ($350,000,
subsequently reduced to $304,760), expiring September 30, 1999. The Revolving
Credit Facility and Term Loan A bear interest at LIBOR plus 2.5% (LIBOR plus
2.0% through April 17, 1995) and Term Loan B bears interest at LIBOR plus 3.0%
(LIBOR plus 2.5% through April 17, 1995). The two term loans have fixed
amortization schedules, both of which provide for the majority of principal
repayment late in their respective maturity periods. The Revolving Credit
Facility contains a sub-limit
F-16
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
which provides for the Company's letter of credit needs. As of March 31, 1995,
the Company had $87,700 of letters of credit outstanding and $14,425 of
additional availability under such sub-limit. The agreement contains a number of
financial and other covenants which place restrictions on dividends, new
indebtedness, liens, acquisitions, capital expenditures and other items. As of
March 31, 1995, the Company was in compliance with these covenants.
Initial borrowings were used in the paydown and early termination of the former
Credit Agreement which resulted in an extraordinary loss of $3,597, net of
$2,320 income tax benefit. The new U.S. Credit Agreement also provided funding
for the acquisition of Tudor. The Former Credit Agreement provided for the
extension of credit in an aggregate principal amount which, as of March 31,
1994, was structured not to exceed $98,664 (previously $170,000).
Deferred financing costs of $17,322 were incurred in connection with the new
U.S. Credit Agreement. These costs will be amortized over the life of the new
Credit Agreement, to August 30, 1999, for Loan A and the Revolving Credit
Facility and August 30, 2001, for Loan B. Amortization of deferred financing
costs related to the current and previous Credit Agreements amounted to $1,321
in fiscal 1993, $1,418 in fiscal 1994 and $2,249 in fiscal 1995. Additionally,
in fiscal 1995, the Company expensed $2,000 of bridge loan commitment fees.
In December 1992, the Company completed a refinancing of its previously existing
debt, which resulted in the following:
A) Redemption of 12-7/8% Senior Subordinated Notes at a call
premium of 105% of face value ($135,000) plus accrued
interest.
B) The paydown of the term loan of $15,000, the standby loan
of $10,000 and the repayment of outstanding Revolving
Loans of $18,000.
C) The issuance of 10-3/4% Senior Notes due December 15,
2002, in the amount of $150,000 and the issuance of 12-
1/4% Senior Subordinated Deferred Coupon Debentures due
December 15, 2004, with a face amount of $110,000
discounted to $60,700.
D) The recognition of an extraordinary loss of $10,363, net
of $1,900 income tax benefit. The components of the
extraordinary loss related to the early retirement of
debt were the 5% early redemption premium on the 12-7/8%
Senior Subordinated Notes ($6,750), the write-off of the
unamortized bond issuance costs ($2,850) and original
issue discount ($580) on the 12-7/8% Senior Subordinated
Notes, the write-off of the
F-17
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
unamortized deferred financing costs on the previous
credit agreement ($907), and the net interest expense
from the notification date until the redemption became
effective ($1,176).
Interest on the 10-3/4% Senior Notes is payable semiannually on June 15 and
December 15. Interest on the 12-1/4% Senior Subordinated Debentures is accreted
to the principal balance through December 15, 1997. Semiannual interest
payments commence on June 15, 1998. In connection with the issuance of this
senior debt, the Company incurred financing costs of $6,858. These costs are
being amortized over the lives of the Senior and Subordinated debt of 10 and 12
years, respectively. Amortization during fiscal 1993, 1994 and fiscal 1995 was
$217, $649 and $784, respectively.
Tudor and certain of its subsidiaries have outstanding term loan arrangements
with financial institutions. Most of these arrangements are secured by
property.
The Spanish convertible debentures were issued by Tudor in December 1993 and are
redeemable in December 1997. In October, as part of the Company's acquisition
of Tudor, the Company repurchased 99,781 of the original 400,000 debentures
issued by Tudor. In connection with the acquisition, the primary ex-shareholder
of Tudor also relinquished its conversion rights on 299,887 debentures.
Outstanding debentures bear interest payable semiannually.
In connection with the acquisition of BIG, on March 30, 1994, the Company issued
$32,725 of British pound denominated Guaranteed Unsecured Loan Notes ("Loan
Notes") to the previous owners of the acquired entity ($35,868 as of March 31,
1995). Interest is payable quarterly at the LIBOR rate less 5/8%. The Loan
Notes are secured by a Company-purchased, British pound denominated certificate
of deposit (cash equivalent) of equal amount ($35,868 as of March 31, 1995). On
April 13, 1995, the certificate of deposit was redeemed and the proceeds were
used to fully redeem the Loan Notes.
During fiscal 1994, the Company had an outstanding interest rate swap agreement
with a commercial bank that reduced the impact of changes in interest rates on
floating rate debt. This agreement effectively adjusted the floating interest
rate to a fixed 9.08% on a notional principal of $27,500 through September 1997.
This agreement was terminated in connection with the August 30, 1994 refinancing
of the U.S. Credit Agreement. In March 1994, the Company terminated its interest
rate collar agreements that limited the range of the Company's interest rate
exposure on $32,500 of borrowings from LIBOR 7.15% to 12.00% through September
1994 and 1997 for the cap and floor portions, respectively. Effective December
1994, the Company entered into two interest rate collar agreements which reduce
the impact of changes in interest rates on a portion of the Company's floating
rate debt. These agreements effectively limit the LIBOR base interest rate on
$100,000 of borrowings under the U.S. Credit Agreement to no more than 8% and no
less than 5.5% graduating up
F-18
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
to 7.5% through December 30, 1997. During fiscal 1993, 1994 and 1995, the
Company recognized $4,850, $2,433 and $24, respectively, of additional interest
expense related to these swap and collar agreements. Additionally, effective May
17, 1995, the Company entered into an interest rate swap agreement which fixed
the LIBOR base interest rate on a notional amount of $50,000 at 6.21% for two
years.
Annual principal payments required under long-term debt obligations are as
follows:
<TABLE>
<CAPTION>
Fiscal Year Amount
---------- --------
<S> <C>
1996 $ 51,731
1997 31,921
1998 57,725
1999 76,570
2000 44,247
2001 and thereafter 307,931
--------
$570,125
========
</TABLE>
7. EMPLOYEE BENEFIT PLANS:
-----------------------
North American Pension Plans
- ----------------------------
The Company has noncontributory defined benefit pension plans covering
substantially all hourly employees in North America. Plans covering hourly
employees provide pension benefits of stated amounts for each year of credited
service. Substantially all salaried employees in North America are covered
under a defined contribution plan, which requires the Company to contribute 4%
of eligible employees' salaries on an annual basis.
A summary of the components of net periodic pension cost for the defined benefit
plans and pension expense for the defined contribution plans for the years ended
March 31, 1993, 1994 and 1995, is as follows:
<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Defined Benefit Plans:
Service cost of current period $ 573 $ 616 $ 1,217
Interest cost on projected benefit obligation 3,876 3,834 4,609
Actual return on plan assets (2,716) (5,809) 3,173
Net amortization and deferrals (1,136) 2,058 (7,909)
------- ------- -------
Net defined benefit pension expense 597 699 1,090
Defined Contribution Plan 1,544 2,039 2,003
------- ------- -------
Total pension expense $ 2,141 $ 2,738 $ 3,093
======= ======= =======
</TABLE>
F-19
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
It is the Company's policy to make contributions sufficient to meet the minimum
contributions required by law and regulation.
The following table sets forth the funded status and the amounts recognized in
the consolidated balance sheets for the Company's defined benefit pension plans:
<TABLE>
<CAPTION>
March 31
--------------------
1994 1995
--------- ----------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $ 58,005 $ 60,597
======== ========
Accumulated benefit obligation $ 60,138 $ 62,838
======== ========
Actuarial present value of:
Projected benefit obligation $ 61,490 $ 64,497
Plan assets at fair value 51,179 48,833
-------- --------
Plan assets less than projected benefit obligation (10,311) (15,664)
Prior service cost 1,422 1,624
Unrecognized net loss 2,406 9,124
Additional minimum liability recognized (2,668) (9,234)
-------- --------
Accrued pension cost recognized in the
consolidated balance sheet $ (9,151) $(14,150)
======== ========
</TABLE>
The weighted average interest rates used in determining the projected benefit
obligation were 8% and 8.5%, respectively, as of March 31, 1994 and 1995. The
rate of increase in future compensation levels and the expected long-term rate
of return on plan assets were 6.0% and 10.5%, respectively, as of March 31, 1994
and 1995. The pension plan assets are invested primarily in equity and fixed
income securities.
Statement of Financial Accounting Standards ("SFAS") No. 87 requires that
underfunded pension plans reflect an additional balance sheet liability if the
excess of the accumulated benefit obligation over the plan assets exceeds the
accrued pension liability. However, SFAS No. 87 also permits the Company to
establish an intangible asset, not to exceed the unrecognized prior service
cost, as an offsetting entry. Any remaining amount of additional liability that
is not offset by the intangible asset must be offset through a charge against
equity. Accordingly, the Company increased the additional minimum liability
$2,285 in 1994 by increasing the intangible asset $443 and increasing the charge
against equity $1,842 (tax effected to $1,182). In 1995, the Company increased
the additional minimum liability $6,567 by increasing the intangible asset $55
and increasing the charge against equity $6,512 (tax effected to $4,197).
F-20
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
European Pension Plans
- ----------------------
European subsidiaries of the Company sponsor several defined benefit and defined
contribution plans that cover substantially all employees who are not covered by
statutory plans. For defined benefit plans, charges to expense are based upon
costs computed by independent actuaries. In most cases, the defined benefit
plans are not funded--book reserves are maintained. Benefit formulas are similar
to those used by the U.S. plans.
Total pension expense related to the European plans was $4,111 in fiscal 1995.
These programs are unfunded and, therefore, the accrued pension liability is
included in Noncurrent Retirement Obligations. The accrued pension liability and
the accumulated benefit obligation at March 31, 1995, for these plans is
approximately $59,560, of which approximately $56,332 is vested. The discount
rate used in determining the actuarial present value of the projected benefit
obligation ranged from 7% to 9.5%, and the assumed increase in salaries ranged
from 4% to 5%. In connection with the Company's plan to close certain
facilities, the Company reflected a curtailment benefit related to the closed
plants of approximately $10,300 in their opening balance sheet. This benefit is
primarily attributable to the elimination of the future salary progression
assumption.
8. POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS:
-------------------------------------------------------
The Company provides certain health care and life insurance benefits for a
limited number of retired employees. In addition, a limited number of the
Company's active employees may become eligible for those benefits if they reach
normal retirement age while working for the Company. Prior to fiscal year 1994,
the Company accounted for these costs on a pay-as-you-go basis. In the first
quarter of fiscal year 1994, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." The Company elected
to recognize the cumulative effect of this accounting change by expensing
$12,711, with no income tax effect because of the uncertainty of deductibility
at that time. This amount represented the accumulated postretirement benefit
obligation for current and future retirees at the beginning of fiscal year 1994.
The Company's current policy is to fund the cost of postretirement health care
and life insurance currently.
F-21
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The following table sets forth the plan's postretirement benefit liability as of
March 31:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Accumulated postretirement benefit obligation
("APBO"):
Retirees, beneficiaries and dependents $ 12,511 $ 10,370
Fully eligible actives 791 400
Not fully eligible actives 814 450
-------- --------
Total 14,116 11,220
Unrecognized (gain) loss (1,484) 1,138
-------- --------
Accrued postretirement benefit cost recognized in the
consolidated balance sheet $ 12,632 $ 12,358
======== ========
</TABLE>
The Company charges postretirement benefit costs as accrued, based on actuarial
calculations. The net periodic postretirement benefit cost for fiscal 1994 and
1995 included the following components:
<TABLE>
<CAPTION>
1994 1995
------ ------
<S> <C> <C>
Service cost $ 135 $ 99
Interest cost 1,019 856
------ ------
Net periodic postretirement benefit cost $1,154 $ 955
====== ======
</TABLE>
The significant assumptions used to calculate the net periodic postretirement
benefit cost and the accumulated postretirement benefit obligation were a
discount rate of 7.5% and 8.0%, respectively, and medical costs that are assumed
to increase at a rate of 10.0% per year during fiscal 1995 grading down to 5.0%
per year by 2004. The effect of a one percentage point increase in the assumed
health care cost trend rate would increase the accumulated postretirement
benefit obligation as of March 31, 1995, by approximately 9.0%, and the
aggregate of the service and interest cost components of net periodic
postretirement benefit cost by approximately 9.0%.
9. INCENTIVE COMPENSATION PLAN:
----------------------------
On April 28, 1993, the Board of Directors adopted an incentive compensation plan
for fiscal year 1994, under which certain members of the Company's management
were granted 811,662 shares of the Company's Class A Common Stock. These shares
vest over a five-year period and have certain restrictions related to sale,
transferability, as well as employment with the Company. Upon complete vesting,
participants must pay $2.25 per share, the estimated fair value at the grant
date, prior to transferring such shares.
F-22
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
During fiscal 1995, a total of 40,000 restricted shares of the Company's common
stock were granted to certain employees. The market value of the shares awarded
($1,935) has been recorded as unearned compensation and is shown as a separate
component of stockholders' equity. Unearned compensation is being amortized to
expense over the five year vesting period and amounted to $129 in fiscal 1995.
10. INCOME TAXES:
-------------
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards (SFAS) No. 109 which requires the use of a
liability method for accounting for deferred taxes. If it is more likely than
not that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is recognized.
The provision for income taxes includes federal, state and foreign taxes
currently payable and those deferred because of temporary differences between
the financial statement and tax bases of assets and liabilities. The components
of the provision for income taxes for the fiscal years ended March 31, 1993,
1994 and 1995, are as follows:
<TABLE>
<CAPTION>
1993 1994 1995
------ ------- -------
<S> <C> <C> <C>
Current:
Federal $1,632 $ 1,286 $ 2,940
State 1,768 1,366 218
Foreign - 876 2,865
------ ------- -------
3,400 3,528 6,023
------ ------- -------
Deferred:
Federal - 6,866 (4,253)
State - 400 (911)
Foreign - - 4,301
------ ------- -------
- 7,266 (863)
------ ------- -------
Total provision $3,400 $10,794 $ 5,160
====== ======= =======
</TABLE>
Major differences between the federal statutory rate and the effective tax rate
are as follows:
<TABLE>
<CAPTION>
Percent of
Pretax Income
---------------------------
1993 1994 1995
------ ------ ------
<S> <C> <C> <C>
Federal statutory rate 34.0% 35.0% 35.0%
State taxes, net of federal benefit 14.4 4.1 (4.2)
Nondeductible goodwill 8.3 3.5 15.3
Difference in rates on foreign subsidiaries - - 0.8
Capital loss on sale of subsidiary (21.0) - -
Changes in valuation allowance - (2.5) (2.5)
Other, net 5.0 (1.3) 3.7
----- ---- -----
Effective tax rate 40.7% 38.8% 48.1%
===== ==== =====
</TABLE>
F-23
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The net current and noncurrent components of deferred income taxes recognized in
the consolidated balance sheet at March 31, 1994 and 1995, are as follows:
<TABLE>
<CAPTION>
1994 1995
------ -------
<S> <C> <C>
Net current assets $9,438 $19,388
Net noncurrent assets - 33,024
Net noncurrent liabilities 3,058 -
------ -------
$6,380 $52,412
====== =======
</TABLE>
The following is a summary of the significant components of the Company's
deferred tax assets and liabilities as of March 31, 1994 and 1995:
<TABLE>
<CAPTION>
Deferred Tax
Assets (Liabilities)
---------------------
1994 1995
---------- ----------
<S> <C> <C>
Depreciation/property basis $(19,095) $(25,285)
Operating loss and tax credit carryforwards 15,720 44,672
Inventory basis difference (6,352) (6,741)
Compensation reserves 1,285 22,218
Environmental reserves 6,071 12,888
Retirement benefits 7,675 6,494
Interest 3,530 6,660
Self-insurance 2,880 3,681
Warranty 2,008 2,951
Other 3,958 15,402
-------- --------
17,680 82,940
Valuation allowance (11,300) (30,528)
-------- --------
$ 6,380 $ 52,412
======== ========
</TABLE>
As of March 31, 1995, the Company has net operating loss and tax credit
carryforwards for U.S. income tax purposes of approximately $25,600 and $7,400,
respectively, which expire in years 1996 through 2008. Certain of these
carryforwards are preacquisition tax attributes, which will reduce goodwill upon
realization. For financial reporting purposes, a valuation allowance of $11,300
has been recognized to offset the deferred tax assets related to these
preacquisition tax attributes ($7,000) and certain nondeductible reserves which
are not considered probable of realization.
During fiscal 1994 and 1995, the Company utilized approximately $38,000 and
$3,000 of preacquisition net operating loss carryforwards, which resulted in the
reduction of goodwill of approximately $12,000 and $1,000, respectively.
F-24
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
As of March 31, 1995, certain of the Company's European subsidiaries have net
operating loss and tax credit carryforwards for income tax purposes of
approximately $60,000 and $5,900, respectively, which expire in years 1995
through 1999. Certain of these carryforwards are preacquisition tax attributes,
which will reduce goodwill upon realization. For financial reporting purposes,
a valuation allowance of $19,128 has been recognized to offset the deferred tax
assets related to these preacquisition tax attributes and certain nondeductible
reserves which are not considered probable of realization.
During fiscal 1995, non-U.S. pretax income was approximately $19,000. Also, as
of March 31, 1995, the Company has not provided for withholding or U.S. federal
income taxes on approximately $9,000 of undistributed earnings of foreign
subsidiaries as they are considered by management to be permanently reinvested.
11. RECEIVABLES SALE AGREEMENT:
---------------------------
The Company entered into a Receivables Sale Agreement with certain banks (the
"Purchasers"), and under this agreement, the Purchasers have committed to
purchase, with limited recourse, all right, title and interest in selected
accounts receivable of the Company, up to a maximum net investment of $50,000
(reduced from $75,000 effective February 17, 1994). As of March 31, 1994 and
1995, gross uncollected receivables sold under the Receivables Sale Agreement
were $45,308 and $43,880, respectively. Loss on receivables sold under this
agreement for the years ended March 31, 1993, 1994 and 1995, were $2,075, $1,593
and $1,467, respectively, and are included in Other Expense.
12. RELATED-PARTY TRANSACTIONS:
---------------------------
The Company is party to an agreement with Yuasa-Exide, Inc., a 13.5% owned
affiliate, whereby the Company provides facilities and certain administrative
support to Yuasa-Exide, Inc. During fiscal 1993, 1994 and 1995, the Company
received payments under this agreement of $948, $694, and $174, respectively.
In July 1988, the Company entered into a net lease with a corporation whose
stockholders include certain officers and employees of the Company. This
corporation owns approximately 70 acres of land and certain buildings in
Michigan that the Company uses for customer meetings and other business
purposes. The lease expires in 1996 and provides for quarterly rental payments
during the term of $26. In addition, the Company has the option, exercisable at
any time during the term, to purchase the leased property at its appraised
market value. The Company believes the terms of the lease are no less favorable
to it than those that could have been obtained from nonaffiliated parties.
F-25
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Company used $6,500 of the net proceeds from its IPO to purchase for
liquidation value all of the outstanding shares of preferred stock of the
Company's predecessor, substantially all of which was held by WSI and certain
members of management.
In connection with the secondary offering in March 1994, the Company paid the
offering expenses with respect to shares sold by Messrs. Hawkins, Pearson and
Rankin and WSI (except their underwriters' discount) as required by an agreement
pursuant to which WSI and certain current and past members of management had
certain rights requiring the Company to register their shares for sale.
13. ENVIRONMENTAL MATTERS:
----------------------
The Company, particularly as a result of its manufacturing and secondary lead
smelting operations, is subject to numerous environmental laws and regulations
and is exposed to liabilities and compliance costs arising from its past and
current handling, processing, recycling, storing and disposing of hazardous
substances and hazardous wastes. The Company's operations are also subject to
occupational safety and health laws and regulations, particularly relating to
the monitoring of employee health in North America and, to a lesser extent, in
Europe. Except as disclosed herein, the Company believes that it is in
substantial compliance with all material environmental, health and safety
requirements.
To protect the environment, minimize future liability and help ensure a stable
supply of lead to its battery manufacturing facilities, the Company has
developed a comprehensive materials recycling program. This program consists of
reverse distribution of spent batteries through the Company's wholesale
distribution system and open market purchasing of lead-bearing materials. In
the U.S., these materials are processed at the Company's smelters to make lead
alloys for use in the battery plants and plastic pellets for case manufacturing
at the Company's plastic molding facility in Lampeter, Pennsylvania. The
Company is the third largest secondary lead producer in the United States.
Currently, the Company does not recycle spent sulfuric acid from spent
batteries, but is actively pursuing recycling methods. The Company employs over
70 full-time staff to ensure compliance with environmental, safety and health
laws and regulations at its various facilities. The Company also maintains
numerous permits with the U.S. Environmental Protection Agency ( the "EPA") and
state and provincial agencies which allow the Company to legally operate its
facilities and transport, store and recycle spent batteries, lead-bearing
materials and wastes, and certain other hazardous wastes.
NORTH AMERICA
The Company has been advised by the EPA that it is a "Potentially Responsible
Party" ("PRP") under the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") or similar state laws at 46 federally defined Superfund
or state equivalent
F-26
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
sites. At 16 of these sites, the Company has either paid or
is in the process of paying its share of liability. In most instances, the
Company's obligations are not expected to be significant because its portion of
any potential liability appears to be minor to insignificant in relation to the
total liability of all PRPs that have been identified and which are viable. The
Company's share of the anticipated remediation costs associated with all of the
Superfund sites where it has been named a PRP, which share is based on the
Company's estimated volumetric contribution to each site, is included in the
environmental remediation reserves discussed below. Because the Company's
liability under such statutes may, as a technical matter, be imposed on a joint
and several basis, the Company's liability may not necessarily be based on
volumetric allocations and could be greater than the Company's estimates.
Management believes, however, that its PRP status at these Superfund sites will
not have a material adverse effect on the Company's business or financial
condition because, based on the Company's experience, it is reasonable to expect
that liability will be roughly proportionate to its volumetric contribution of
waste to the sites.
The Company is the primary PRP at four Superfund sites. Other than these four
sites, the Company's volumetric allocation exceeds 5% at only eight such
Superfund sites (with respect to two of which the Company's share of liability
has been paid) and its volumetric allocation at the six sites where the
Company's liability has not yet been paid averages 13.2%. At all other sites,
the Company's volumetric allocations are currently estimated to be less than 5%
of the total waste of the site.
The Company is the primary PRP at the Brown's Battery site located in
Pennsylvania. The site was operated by third-party owners in the 1960s and
early 1970s. The EPA issued a final Record of Decision ("ROD") adopting an
innovative technology developed by the Company which, though not yet used for
lead remediation on a production volume basis, is lower in cost than other
prevailing options and offers to the Company and EPA additional significant
potential enhancements for remediation of other similar sites. The cost of
remediation for this approach is estimated to be approximately $16,000, a
substantial portion of which would constitute capital improvements. If the
innovative technology is not commercially feasible, the alternative remediation
plan, which entails relocation of contaminated soil, would be employed at a cost
(estimated by EPA) of approximately $30,000. The Company has tested and is
actively developing the innovative technology. The Company has established its
reserves based upon the innovative technology remediation plan, net of amounts
to be capitalized and not considering potential insurance recovery.
The Company is also the primary PRP at the Wortham Lead Salvage State Superfund
Site located in Texas, another site that was owned and operated by third
parties. Remediation of the Wortham Site is expected to have a cost of $770.
F-27
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Company is also the primary PRP at the Seventh Street Lead Site located in
Iowa, another site that was owned and operated by third parties. Remediation of
the Seventh Street Site was completed in January 1994, and the Company paid
$1,300 as its share of liability. The EPA has determined that the Company is in
full compliance with the unilateral order issued by the EPA to the Company and
other PRPs.
Also, the Company is the primary PRP at the Jones Tire & Battery Superfund Site
in Alabama. Like the other sites listed above, the Company never owned or
operated this site. Accordingly, the Company's volumetric share of the waste
found at this site was fairly small. Because of the large number of nonpaying
PRPs, however, the Company has paid the largest single share of the expenses to
date. The paying PRPs have collectively paid nearly $4,000 at this site, of
which the Company has paid approximately $1,300. As a result of the Company's
efforts, the remediation of soils and waste materials found at the site is
nearly complete, although discussions regarding the future of this site are
continuing with the EPA. The Company has commenced litigation against those
PRPs who have declined to fund their share of the cleanup and currently believes
that much of the additional funds which the Company has been forced to expend on
this matter will be recovered through that litigation.
The Company is also involved in the assessment and remediation of various other
properties, including certain Company-owned or -operated facilities. Such
assessment and remedial work is being conducted pursuant to a number of state
and federal environmental laws and with varying degrees of involvement by state
and federal authorities. Where reasonably estimable, the costs of such projects
have been accrued in reserves established by the Company, as discussed further
below. In addition, several environmental matters concerning the Company are
pending in federal and state courts or with regulatory agencies.
South Carolina environmental officials have alleged that the Company improperly
disposed of soil from the Company's Greer, South Carolina facility in 1991. The
Company, in consultation with South Carolina authorities, reexcavated and
disposed of the soil. Federal authorities are investigating this incident,
which may result in civil or criminal action being taken against the Company.
The Company does not now believe that this matter will result in any civil or
criminal action having a material adverse effect on its business or financial
condition.
The Company's Bristol, Tennessee facility was previously contaminated by Unisys
Corporation's ("Operating Owner") manufacturing operations. The location was
designated by the State of Tennessee as a "Superfund" site in 1988. Under the
direction of the State of Tennessee, the Operating Owner has, at its own
expense, completed soil remediation at the site and is in the process of
completing a groundwater cleanup. In 1990, the Operating Owner discontinued
manufacturing at the facility and in 1993 sold it to an investor ("Investor")
who did not operate it. The Company purchased the facility from a
F-28
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
party ("Seller") who obtained title to the property from the Investor. As part
of the Company's purchase, the Seller agreed to indemnify the Company with
respect to environmental conditions in existence at the time of purchase. The
State of Tennessee has informed the Company that it considers the Operating
Owner to be primarily responsible for any contamination existing at the facility
at the time of the Company's purchase.
Pursuant to the debt refinancing completed in fiscal 1993, the Company agreed
with one of the former holders of its preferred stock to provide certain
environmental management services and to indemnify such holder for certain
potential environmental liabilities. The Company established an additional
environmental reserve of $6,000 with respect to this liability, which the
Company believes will be adequate.
While the ultimate outcome of the foregoing environmental matters is uncertain,
after consultation with legal counsel, management does not believe the
resolution of these matters will have a material adverse effect on the Company's
business, financial condition or results of operations. The Company's policy is
to accrue for environmental costs when it is probable that a liability has been
incurred and the amount of such liability is reasonably estimable.
The Company has established reserves for on-site and off-site environmental
remediation costs and believes that such reserves are adequate. As of March 31,
1995, the amount of such reserves on the Company's balance sheet was $21,822.
Of this total amount, $4,072 was included in "Other accrued liabilities" and
$17,750 was included in "Other Noncurrent Liabilities." These reserves consist
of amounts accrued for active Company facilities, closed facilities, and 11 of
the Superfund sites. They also include a general allowance for other Superfund
sites where the Company's exposure is estimated to be less than $100 per site.
Because environmental liabilities are not accrued until a liability is
determined to be probable and reasonably estimable, not all potential future
environmental liabilities have been included in the Company's environmental
reserves and, therefore, additional earnings charges are possible.
In 1993, the CNA Insurance Companies ("CNA") filed a declaratory judgment
lawsuit in Delaware state court. CNA seeks to have the court determine that CNA
owes no duty to the Company for costs of defending environmental actions and for
response costs, property damage and bodily injury claims stemming from
environmental conditions. In addition to suing the Company, the CNA Action
names Northwest Industries and over 75 other insurance companies as defendants.
In 1994, Exide filed a cost recovery action against CNA and other insurance
companies in Illinois state court. The Company seeks to have the court
determine that each of the insurance companies owes the Company a duty to defend
and reimburse for certain property damage and bodily injury arising from
environmental conditions that the Company allegedly caused, suffered or allowed.
The Company intends to vigorously defend the suit and vigorously pursue
recovery. While the ultimate outcome of these lawsuits is uncertain, after
consultation with legal counsel, management does not
F-29
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
believe the resolution of these matters will have a material adverse effect on
the Company's business, financial condition or results of operations.
EUROPE
The Company is subject to numerous environmental, health and safety requirements
and is exposed to differing degrees of liabilities and compliance costs arising
from its past and current manufacturing and recycling activities in various
European countries. The laws and regulations applicable to such activities
differ from country to country and also substantially differ from the United
States laws and regulations. Except as disclosed herein, the Company believes,
based upon reports from its foreign subsidiaries and/or independent qualified
opinions, that it is in substantial compliance with all material environmental,
health and safety requirements in each country.
At the lead-acid battery manufacturing facility in Malpica, Spain, and at the
Sonalur secondary lead smelting facility in Azambuja, Portugal, treated
wastewater is discharged in excess of permit levels for lead. At the Torrejon
de Ardoz nickel-cadmium battery manufacturing facility, treated wastewater is
discharged in excess of permit levels for cadmium. The Company is working
cooperatively with appropriate authorities to make improvements to the
wastewater treatment plants at each facility. It is possible that the Company
could be subject to fines or penalties with regard to these violations. The
cost to upgrade the facilities to attain compliance is not expected to be
material. The subject violations are not expected to interfere with continued
operations at the subject facilities.
The Company expects that its European operations will continue to incur capital
and operating expenses in order to maintain compliance with evolving
environmental, health and safety requirements or more stringent enforcement of
existing requirements in each country.
As a result of the Company's plan to consolidate its European manufacturing
operations, it is probable that certain environmental costs will be incurred. A
preliminary estimate of the probable liability has been included in the Tudor
purchase price allocation.
14. FAIR VALUE OF FINANCIAL INSTRUMENTS:
------------------------------------
The estimated fair value of financial instruments has been determined by the
Company using available market information and appropriate methodologies;
however, considerable judgment is required in interpreting market data to
develop the estimates for fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the Company could
realize in a current market exchange.
F-30
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The methods and assumptions used to estimate the fair value of each class of
financial instruments are set forth below:
Cash and cash equivalents, accounts receivable and accounts payable--the
carrying amounts of these items are a reasonable estimate of their fair
values at March 31, 1995.
Investments in affiliates--the estimated fair value of these items could
not be obtained without incurring excessive costs as these investments have
no quoted market price.
Investment in limited partnership--the estimated fair value of this item
was determined based upon quoted market values of the related underlying
assets.
Long-term receivables--the carrying amounts of these items are a reasonable
estimate of their fair value.
Short-term borrowings--
Borrowings under the line of credit arrangements have variable rates
that reflect currently available terms and conditions for similar
debt. The carrying amount of this debt is a reasonable estimate of its
fair value.
Long-term debt--
Borrowings under the credit agreement have variable rates that reflect
currently available terms and conditions for similar debt. The
carrying amount of this debt is a reasonable estimate of its fair
value.
Senior notes and senior subordinated debentures are traded
occasionally in public markets.
Interest rate protection agreements have no carrying value; however,
if the Company were to terminate these agreements at March 31, 1995,
the Company would be obligated to pay $477.
F-31
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The carrying values and estimated fair values of the Company's financial
instruments for which the amounts differ are as follows at March 31, 1995:
<TABLE>
<CAPTION>
Carrying Estimated
Value Fair Value
-------- ----------
<S> <C> <C>
Investments in Limited Partnership $ 1,600 $ 2,436
Long-Term Debt:
Senior Notes 150,000 149,625
Senior Subordinated Debentures 79,772 79,750
</TABLE>
15. COMMITMENTS AND CONTINGENCIES:
------------------------------
The Company is currently a defendant in a claim brought by one of the Company's
competitors alleging patent infringement. The claim went to trial and the jury
ruled that one of the subject patents was valid and infringed. A separate trial
was held for the award of damages and, in April 1995, the plaintiff was awarded
damages and interest (through June 1995) of approximately $5,300. The Company's
outside counsel believes the verdict of the jury trial was incorrect and has
advised that there is a high likelihood that the Company will prevail on appeal.
Therefore, management does not believe the ultimate resolution of this matter
will have a material adverse effect on the Company's financial condition or
results of operations.
A patent infringement suit was filed in the U.S. District Court in Oregon
against the Company in January 1995 by Tekmax, Inc. The suit alleges
infringement of Tekmax patents dealing with a device to insert battery plates
into battery separators and processes for doing so. The complaint alleges
damages in excess of the jurisdictional requirement of $50 (although plaintiff
requested $6 million before the suit was filed). Exide has denied infringement
and asserted that such patents are invalid. Discovery has just begun and will
continue for the foreseeable future. An intelligent assessment of this matter
cannot now be made.
The Company is currently involved in three related lawsuits pending in state and
federal court in Alabama. The actions concern allegations that the Company sold
used batteries as new. Two of the actions are in state court. An action by a
purported nationwide class of more than 1,000 consumers of Exide batteries is
entitled Eddie Walton Davis, et al. v. Exide Corporation, et al. An action by a
purported nationwide class of more than 1,000 resellers of Exide batteries is
entitled Charlie Mathews v. Exide Corporation, et al. Neither class has been
certified. Both state court actions seek unspecified compensatory and punitive
damages and injunctive relief. The federal court action is a wrongful
termination suit by a former branch manager of Exide who claims he was
terminated for refusing to sell used batteries as new and is entitled Charles
Harris v. Exide Corporation. All three actions are in preliminary stages of
pretrial discovery. The Company disputes all allegations and intends to
vigorously defend itself.
F-32
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
In addition, the Company is involved in various claims and litigation incidental
to the conduct of its business which are not considered material to the
Company's financial condition or results of operations.
Following is a summary of future minimum payments under operating leases that
have initial or remaining noncancelable lease terms in excess of one year at
March 31, 1995:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1996 $21,553
1997 17,685
1998 12,039
1999 9,397
2000 6,111
2001 and thereafter 11,109
-------
$77,894
=======
</TABLE>
Rent expense amounted to $14,013, $14,322 and $21,994 for the fiscal years ended
March 31, 1993, 1994 and 1995, respectively.
16. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED):
----------------------------------------------
The following is a summary of the Company's unaudited quarterly consolidated
results of operations for the fiscal years ended March 31, 1994 and 1995:
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------------
July 4, October 3, January 2, March 31,
1993 1993 1994 1994
-------- ---------- ---------- ---------
(In thousands, except per-share amounts)
<S> <C> <C> <C> <C>
Net sales $130,761 $177,868 $185,661 $185,359
Gross profit 28,269 47,224 46,086 36,674
Income (loss) before cumulative effect
of accounting change (2,139) 10,037 7,588 1,731
Net income (loss) (14,850) 10,037 7,588 1,731
Net income (loss) per common share:
Income (loss) before cumulative
effect of accounting change $ (.25) $ 1.12 $ .62 $ .12
Cumulative effect of accounting
change (1.46) - - -
-------- -------- -------- --------
Net income (loss) per common share $ (1.71) $ 1.12 $ .62 $ .12
======== ======== ======== ========
</TABLE>
F-33
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Quarter Ended
-----------------------------------------------
July 3, October 2, January 1, March 31,
1994 1994 1995 1995
-------- -------- -------- ---------
(In thousands, except per-share amounts)
<S> <C> <C> <C> <C>
Net sales $165,067 $233,142 $436,796 $363,541
Gross profit 40,617 56,007 98,530 70,526
Income (loss) before extraordinary
loss (41) 10,038 10,453 (15,959)
Net income (loss) (41) 6,441 10,453 (15,959)
Net income (loss) per common share:
Income (loss) before extraordinary
loss $ - $ .68 $ .69 $ (.80)
Extraordinary loss - (.24) - -
-------- -------- -------- --------
Net income (loss) per common share $ - $ .44 $ .69 $ (.80)
======== ======== ======== ========
</TABLE>
17. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION
--------------------------------------------
The Company is primarily engaged in one industry segment, namely, the
manufacture, distribution and sale of lead acid batteries and related
accessories. Financial information, summarized by geographic area, is as
follows:
<TABLE>
<CAPTION>
North
America Europe Other Consolidated
--------- --------- --------- ------------
<S> <C> <C> <C> <C>
Year ended March 31, 1995:
Sales to unaffiliated
customers $ 825,133 $ 373,413 $ - $ 1,198,546
========= ========= ========= ============
Operating profit $ 35,934 $ 28,228 $ - $ 64,162
========= ========= ========= ============
Identifiable assets $ 691,234 $ 783,897 $ 162,458 $ 1,637,589
========= ========= ========= ============
</TABLE>
Other includes cash and cash equivalents, deferred tax assets, investments and
deferred financing costs.
18. SUBSEQUENT EVENTS:
------------------
On May 18, 1995, the Company acquired 99.7% of the outstanding capital stock of
Compagnie Europeene d'Accumulateurs S.A. ("CEAC") for approximately $425,000 in
cash ($553,500 less assumed debt of $131,900 plus interest from March 31, 1995
of $3,400). Exide financed the acquisition with the April 1995 issuance of
$300,000 of 10% Senior Notes repayable in April 2005 and the proceeds from the
Company's December 1994 common stock offering. The proceeds from the December
1994 common stock offering were utilized
F-34
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
to temporarily reduce the Company's Revolving Loans under the U.S. Credit
Agreement at March 31, 1995. In connection with the CEAC acquisition, the
Company paid $4,568 of additional interest to amend the terms of its 10-3/4%
Senior Note indentures and its 12-1/4% Senior Subordinated Deferred Coupon
Indentures. Such costs have been deferred and are being amortized over the
remaining lives of such debt. CEAC, which is headquartered in France, is a
leader in the European battery market with annual sales of approximately
$800,000, primarily in France, Italy and Germany.
The following unaudited pro forma consolidated statement of operations
illustrates the estimated effect of the CEAC acquisition, as if the transaction,
along with the pro forma effects of the fiscal 1995 acquisitions (see Note 3),
were consummated on April 1, 1994:
<TABLE>
<S> <C>
Net sales $2,263,368
Cost of sales 1,715,545
----------
Gross profit 547,823
Selling, general and administrative expenses 431,931
----------
Operating income 115,892
Interest expense, net 115,324
Other expense 2,252
----------
Loss before income taxes and minority interest (1,684)
Provision for income taxes 6,062
----------
Loss before minority interest (7,746)
Minority interest 2,079
----------
Loss before extraordinary item $ (9,825)
==========
Pro forma earnings per common share:
Loss before extraordinary item $(0.61)
==========
</TABLE>
Pro forma adjustments include only the effects of events directly attributable
to a transaction that are factually supportable and expected to have a
continuing impact. Pro forma adjustments reflecting anticipated "efficiencies"
in operations resulting from a transaction are, under most circumstances, not
permitted. The above unaudited pro forma financial information is not
necessarily indicative of the results that would actually have been obtained if
the transactions had been effected on the date indicated or that may be obtained
in the future.
F-35
<PAGE>
SCHEDULE II
EXIDE CORPORATION AND SUBSIDIARIES
----------------------------------
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
----------------------------------------------
(Amounts in thousands)
----------------------
<TABLE>
<CAPTION>
Balance
Balance at Additions at
Beginning Charged to End of
of Period Expenses Write-offs Other Period
--------- ---------- ---------- -------------- --------
<S> <C> <C> <C> <C> <C>
YEAR ENDED MARCH 31, 1995:
Allowance for doubtful
accounts
$ 4,846 $ 3,238 $ (12,508) $ 27,698 (1) $ 23,274
========= ========== ========== ========= ========
YEAR ENDED MARCH 31, 1994:
Allowance for doubtful
accounts $ 4,771 $ 379 $ (1,725) $ 1,421 (1) $ 4,846
========= ========== ========== ========= ========
YEAR ENDED MARCH 31, 1993:
Allowance for doubtful
accounts $ 6,712 $ 2,214 $ (2,180) (1,975) (2) $ 4,771
========= ========== ========== ========= ========
</TABLE>
(1) Principally from the acquisitions of certain businesses.
(2) Sale of the Company's subsidiary ESB Puerto Rico.
F-36
<PAGE>
Exhibit 10.5
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT, made and entered into as of the 1st day of June, 1987,
between EXIDE CORPORATION, a Delaware corporation (the "Company"), and William
J. Rankin, an individual ("Employee").
W I N E S S E T H
-----------------
The Company desires to retain the services of Employee, whose experience,
knowledge and abilities are valuable to the Company, and the Employee desires to
be employed by the Company, all on the terms set forth herein.
1. Duties. The Company hereby employs Employee initially as Vice President
------
Engineering with powers and duties consistent with such position. Employee
shall, during the term of this Agreement, perform such additional or different
duties, and accept the election or appointment to such other offices or
positions as may be specified by the Company's Board of Directors.
Employee shall devote his full time and best efforts to the performance
of his duties and to the advancement of the interests of the Company. Nothing
herein shall be deemed to preclude or prohibit Employee from performing during
regular business hours, services within the business and civic community
commensurate with his prior practice including, without limitation, serving on
boards of civic and governmental groups and
<PAGE>
other companies, advisory groups, committees and panels, but not to the
detriment of his principal duties hereunder.
2. Compensation.
-------------
(a) On the date of this Agreement and in order to induce Employee to
enter into this Agreement, the Company is paying Employee $75,000.
(b) During the term of this Agreement, the Company shall pay to Employee
an annual salary of not less than $135,000. Employee's salary will be paid in
equal installments on the Company's regular payroll date, but will be pro rated
in any partial year of employment.
(c) Employee will have the opportunity to earn a bonus of up to 100%
of his salary each year during the term of this Agreement (to be pro rated for
partial years) based upon the achievement of performance goals which have been
specified by the Company's Board of Directors. The Board of Directors will set
such goals after receiving and discussing the business plan for the Company for
the period involved.
3. Expenses. The Company will reimburse Employee for all usual, reasonable
--------
and necessary expenses paid or incurred by him in the performance of his duties
hereunder, subject to receipt by the Company of appropriate documentary proof of
such expenditures and to the right of the Company at any time to place
reasonable limitations on expenses thereafter to be incurred or reimbursed.
-2-
<PAGE>
4. Employee Benefits. Employee shall be entitled to participate in and
-----------------
receive any and all benefits pursuant to any benefit programs existing during
the term of this Agreement that are generally available to other executives of
the Company including, among other things, participation in any life insurance,
hospital, surgical, medical or other group health and accident benefit plans,
and the Company's annual vacation plan. The Company will provide Employee with a
suitable automobile for business use. In addition, Employee will be entitled to
participate in all profit sharing, pension, bonus or retirement plans as may be
in existence during the term of this Agreement in accordance with their
respective terms and provisions, but, to the extent participation or the amount
of participation is in the discretion of the Board of Directors of the Company
or any committee thereof, then Employee's participation shall likewise be solely
in such discretion.
5. Termination.
-----------
(a) This Agreement shall terminate (except for those provisions that
require performance after termination) upon the first to occur of the following
events:
(i) Employee's death or permanent disability;
(ii) Employee's discharge for any reason which a majority of the
Company's directors then in office (excluding for this purpose
Employee, if then a director) determine to be reasonable;
-3-
<PAGE>
(iii) Employee's discharge for Cause (for purposes of this paragraph,
the term "Cause" means the conviction of Employee of a crime involving
moral turpitude, conduct tending to bring the Company into public disgrace
or disrepute, or substantial failure to perform the duties required
hereunder, but does not mean the Company's disagreement with any lawful
action undertaken by Employee in the good faith exercise of his business
judgment);
and
(iv) 90 days after Employee submits written notice of his resignation
to the Company's Board of Directors or its Compensation Committee (or such
earlier date within such 90-day period as the Board of Directors or its
Compensation Committee may specify).
(b) If this Agreement is terminated under sub-paragraph 5(a)(ii), the
Company shall pay Employee one year's base salary in force at the time of
termination as severance pay within 30 days after the effective date of such
termination.
6. Confidential Information. Employee agrees that he will not at any time,
both during and after the term of this Agreement, divulge, furnish or make
accessible to any party (except to any entity which shall succeed to the
Company's business, or as specifically authorized by the Company's Board of
Directors) any of the Company's trade secrets, patents, patent applications,
price decisions or determinations, inventions or customers, until after such
time as such information has become publicly known otherwise than by act or
collusion of Employee .
-4-
<PAGE>
7. Restrictive Covenant.
--------------------
(a) Employee agrees that during the term of this Agreement, and for two
years thereafter (unless this Agreement is terminated pursuant to sub-paragraph
5(a)(ii), he will neither directly nor indirectly engage in a business
competing with any of the businesses conducted by the Company or any of its
succesors or then subsidiaries or affiliates, nor without prior written consent
of the Company's Board of Directors, directly or indirectly, have any interest
in, own, manage, operate, control, be connected with as a stockholder, joint
venturer, officer, employee, partner, or consultant, or otherwise engage, invest
or participate in any business which shall be competitive with any material part
of the businesses so conducted.
(b) Nothing contained in this paragraph 7 shall prevent Employee from
owing up to a 5% interest in any corporation or entity having one or more
classes of its securities listed on a national securities exchange or publicly
traded in the over-the-counter market, provided Employee is not actively
involved in the operation or management of such corporation or entity. In the
event that Employee's employment is terminated pursuant to sub-paragraph
5(a)(ii), he will be free to seek employment in any business regardless of
whether that organization is engaged in activities that compete with any of the
businesses conducted by the Company.
(c) If under the circumstances existing at the time of enforcement of
this Agreement the period, scope or area described in this paragraph 7 shall be
found or held to be unreasonable,
-5-
<PAGE>
the parties hereto agree that the maximum period, scope or area reasonable under
the circumstances shall be substituted for the stated period, scope or area.
(d) The parties hereto agree that in the event of the breach of this
paragraph 7 by Employee monetary damages alone would not be an adequate remedy
to the Company for the injury that would result from such breach, and that the
Company shall be entitled, at any time after any such breach, to immediately
obtain injuctive relief prohibiting any further breach of this Agreement.
Employee further agrees that any such injunctive relief obtained by the Company
shall be in addition to monetary damages.
8. Company Stock Matters. The Company has established and set aside an
---------------------
amount of its authorized but unissued Common Stock and/or Common Stock held in
its treasury equal to approximately 33% of its Common Stock issued and committed
to be issued (including such shares) (the "Executive Stock") to be available for
sale as determined by the Company's Board of Directors to employees of the
Company. It is the Company's intention, subject to obtaining all necessary
consents or approvals of its Board of Directors to enter into an Executive Stock
Agreement, the form of which is as set forth in Exhibit A hereto, and to sell to
Employee a portion of the Executive stock equal to 0.75% of its Common Stock
issued and committed to be issued at a price of $10.00 per share payable in cash
as to the par value ($.01 per share) of such stock and by Employee's five year
promissory note (secured by such stock) as to the remainder of the price. Such
stock will "vest" (i.e., cease to be subject to a right on the
-6-
<PAGE>
part of the Company to repurchase it at original cost in the event Employee's
employment hereunder terminates) in four equal installations over four years as
provided for in the Executive Stock Agreement to be executed by Employee to the
extent Employee remains in the Company's employ during such four year period and
the Company achieves performance goals which have been established by the Board
of Directors of the Company.
9. Waiver of Modification. Any waiver, alteration or modifications of any
----------------------
of the provisions of this Agreement shall not be valid unless made in writing
and signed by the parties hereto. Waiver by either of a breach of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
10. Construction. This Agreement shall inure to the benefit of, and be
------------
binding upon any successor or assign of the parties hereto. This Agreement
supersedes all prior agreements, amendments, memoranda representations or
understandings, whether written or oral, with respect to the subject matter
hereof between the Company and Employee.
11. Notices. Any notice required or permitted to be given under this
-------
Agreement shall be in writing and delivered in person or sent by registered,
certified or express mail, postage and fees prepaid, in the case of the Company,
to the then current address of its then principal office and, in the case of
Employee, to the then current address of his office of employment hereunder or
such
-7-
<PAGE>
other address or to the attention of such other person as the recipient party
will have specified by prior written notice to the sending party.
12. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be construed as an original for all purposes,
but all of which taken together shall constitute one same Agreement.
13. Description Headings. The descriptive headings for the paragraphs in
--------------------
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
14. Negotiated Agreement. This Agreement reflects the negotiations of both
--------------------
parties hereto. The language used herein shall be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction shall be applied.
15. Severability. Whenever possible, each provision of this Agreement will
------------
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be applicable by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement effective the
day and year first above written.
EXIDE CORPORATION
------------------------------
Its President
--------------------------
------------------------------
William J. Rankin
<PAGE>
EXHIBIT A
---------
EXECUTIVE STOCK AGREEMENT
-------------------------
Agreement made as of March 26, 1987, between Exide Corporation, a Delaware
corporation (the "Company"), and ("Executive").
The parties hereto agree as follows:
1. Purchase of Executive Stock. Upon the execution of this Agreement,
---------------------------
Executive is purchasing, for $10.00 per share, shares of the Company's
Class B Common Stock, par value $.01 per share (the "Executive Stock"). The
purchase price shall be payable by Executive's delivery of Executive's 9%
promissory note in the form of Exhibit 1 hereto (the "Note") and Executive's
check for $.01 per share purchased.
2. Repurchase Option.
-----------------
(a) In consideration of the sale of the Executive Stock, Executive grants
the Company the option described in this paragraph to buy from him, at his
original cost, Executive Stock that has not become "Fully Vested" (as defined
below) in the event that Executive ceases to be employed by the Company or the
Company fails to achieve the annual performance goals referred to below. At its
option, the Company may pay any portion of such purchase price by forgiving
principal or interest owing under the Note.
(b) On each March 31 commencing March 31, 1987 (a "Vesting Date"), 25% of
the Executive Stock will "Time Vest" (i.e., will be partially vested) if
Executive is then employed by the Company. Executive Stock which Time Vests on a
Vesting Date will become Fully Vested if the Company achieves the annual
performance goal specified in Exhibit 2 hereto for the year which ended on such
Vesting Date (or, as noted in paragraph (d), if the performance goal is not
achieved but the Company fails to exercise its option to purchase such Executive
Stock).
(c) If Executive's employment by the Company terminates before all the
Executive Stock becomes Fully Vested, the Company may exercise its option to
purchase any or all of the Executive Stock which is not Fully Vested on the date
of termination by giving Executive notice of such exercise within 180 days after
such termination.
(d) If the Company fails to achieve an annual performance goal, the
Company may exercise its option to purchase any or all of the Executive Stock
which failed to become Fully Vested
<PAGE>
because such annual goal was not achieved by giving Executive notice of such
exercise within 180 days after the date (a "Determination Date") the Company
receives the opinion of its auditors on its financial statements for such annual
period. Determination of whether a performance goal has been achieved will be
made on or after the applicable Determination Date based upon the Company's
audited financial statements. Notwithstanding the foregoing, there shall be
excluded from the Company's results for purposes of determining whether any
annual goal has been met, such amounts as the Board of Directors of the
Company, in its sole discretion, shall determine appropriate to eliminate the
results of businesses which have been sold, discontinued or acquired by the
Company after the date hereof. If any shares become subject to the Company's
option because a performance goal has not been achieved, but the Company does
not exercise its option as to such shares they will be considered Fully Vested.
(e) The Company will retain possession of each share of Executive Stock
as escrow agent until such time as it is Fully Vested, the audit of the
Company's financial statements for the year ended on the date of such vesting
is completed and all principal of and interest on the Note have been paid. With
respect to Executive Stock that does not Fully Vest, the Company will retain
possession until the date of the closing of the Company's purchase pursuant to
its option or until the option expires. While any Executive Stock is in the
Company's possession, Executive shall have the right to vote such shares and to
receive any dividends (other than stock dividends, which shall be delivered to
the Company as escrow agent) paid thereon.
(f) In the event of any stock split, stock dividend, reverse stock
split, combination of shares, merger, consolidation, reorganization or
recapitalization of or with respect to any Executive Stock, the purchase price,
the number and the type of shares or property subject to purchase by the Company
hereunder shall be equitably adjusted as determined by the Company's Board of
Directors and any shares or property distributed with respect to the Executive
Stock shall also be considered Executive Stock. Executive agrees to deliver
any such shares or property to the Company to hold as escrow agent.
(g) Executive agrees that the certificates for Executive Stock may bear
a legend regarding the restrictions contained in this paragraph 2.
3. Section 83(b) Election. Executive agrees that within 30 days
----------------------
after the date of this Agreement and within 30 days after he acquires any
additional Executive Stock, he will make an effective election with the Internal
Revenue Service
-2-
<PAGE>
under Section 83(b) of the Internal Revenue Code and the regulations promulgated
thereunder. A form of such election is attached hereto.
4. Rights and Obligations Under Investment Agreement. The Company and
-------------------------------------------------
certain other persons are parties to an Investment Agreement dated as of January
28, 1983, as amended as of April 30, 1984, July 16, 1984 and March 14, 1986 (as
so amended, the "Investment Agreement"). Executive acknowledges having received
copies of such documents. Executive (i) agrees to vote his Executive Stock for
the directors designated in accordance with paragraph 4C(i) of the Investment
Agreement; (ii) agrees to be bound by the conditions of paragraph 5 of the
Investment Agreement as to restrictions on the transfer of Executive Stock;
(iii) agrees to be bound by paragraph 4L of the Investment Agreement regarding
appointment of a purchaser representative in certain transactions; and (iv)
makes to the Company the investment representations contained in paragraph 8C of
the Investment Agreement (and agrees to the legending requirements of such
paragraph). Executive represents to the Company that he understands that he may
not dispose of the Executive Stock except as provided in paragraph 5 of the
Investment Agreement and he may therefore be required to hold it indefinitely,
that he has been provided with copies of the Company's latest audited financial
statements and interim unaudited statements, that he is able to bear the risk of
loss of his entire investment in the Executive Stock and that he has been
afforded an opportunity to ask any questions he may have of an officer of the
Company regarding the foregoing and his investment.
5. Waiver or Modification. Any waiver or modification of any of the
----------------------
provisions of this Agreement shall not be valid unless made in writing and
signed by the parties hereto. Waiver by either party of any breach of this
Agreement shall not operate as a waiver of any subsequent breach.
6. Construction. This Agreement shall be governed by the laws of the
------------
State of Pennsylvania.
7. Binding Effect. This Agreement shall inure to the benefit of, and be
--------------
binding upon any successor or assign of the parties hereto.
8. Notices. Any notice required or permitted to be given under this
-------
Agreement shall be in writing and delivered in person or sent by registered,
certified or express mail, postage and fees prepaid, in the case of the Company,
to the then current address of its then principal office and, in the case of
Executive, to the then current address of his office of employment
-3-
<PAGE>
hereunder or such other address or to the attention of such other person as the
recipient party will have specified by prior written notice to the sending
party.
9. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be construed as an original for all purposes,
but all of which taken together shall constitute one and the same Agreement.
10. Negotiated Agreement. This Agreement reflects the negotiations of both
--------------------
parties hereto. The language used herein shall be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction shall be applied.
IN WITNESS WHEREOF, the parties hereby have executed this Agreement as of
the date first above written.
EXIDE CORPORATION
EXECUTIVE
-4-
<PAGE>
EXHIBIT 1
PROMISSORY NOTE
March 26, 1987
("Maker"), for value received, hereby promises
to pay to Exide Corporation, a Delaware corporation, (the "Company"), at 101
Gibraltar Road, Horsham, PA 19044, or at such other place as may be designated
in writing by the Company, the principal sum of One Thousand Five Hundred Eight
Dollars and Forty-Nine Cents ($1,508.49) together with interest accruing thereon
at the rate of nine percent (9%) per annum, compounded semi-annually, as
hereinafter provided. Unless otherwise defined, terms used herein shall have the
meanings assigned in the Executive Stock Agreement (the "Agreement") between the
Maker and the Company and dated as of March 26, 1987.
All unpaid principal and interest on this Note shall be payable at the
earlier of: (i) the fifth anniversary of the date of this Note or (ii) the
180th day after the date on which Maker ceases to be employed by the Company.
The Company may declare all or a portion of the outstanding principal hereof due
and payable on fifteen days' notice in the event that counsel advises the
Company that such action is necessary or desirable for compliance with state
securities laws in connection with a public offering of the Company's
securities. Together with each such principal payment, all interest shall be
payable which shall have accrued on such principal payment from the date hereof
to and including the date of payment.
This Note may be prepaid in whole or in part at any time without premium or
penalty, provided that there shall first be paid all interest which shall have
accrued on the portion of principal being prepaid from the date hereof to and
including the date of such prepayment.
Maker hereby grants the Company a security interest in each share of
Executive Stock (including any shares which are received pursuant to any stock
split, stock dividend, merger, consolidation, reorganization or
recapitalization) to secure the performance of the Maker's obligations under
this Note.
Failure to make full payment of principal and interest when due as
hereinabove provided within three days after notice of such nonpayment has been
given to Maker shall constitute a
<PAGE>
default. The filing by Maker of a petition in bankruptcy, his acquiescence in
such a filing by any other person against him, the making by Maker of an
assignment for the benefit of creditors and any other action by Maker seeking
judicial relief from creditors shall constitute a default. Upon default, this
Note shall become immediately due and payable without further notice or demand.
Maker hereby waives presentment, demand and notice of dishonor in
connection with the collection of the principal and interest due hereunder and
agrees to pay the holder's reasonable legal and other fees and expenses incurred
in such collection.
This Note is executed and delivered as of the date first written above
under the laws of the State of Pennsylvania and shall be interpreted thereunder.
WITNESS: MAKER:
- ----------------------------- ------------------------------
-1-
<PAGE>
EXHIBIT 2
<TABLE>
<CAPTION>
Earnings (Loss) Before Income Taxes
-----------------------------------
Fiscal Year Ending Amount
- ------------------ ------
<S> <C>
March 31, 1987 $ 5.9 million
March 31, 1988 $ 9.6 million
March 31, 1989 $13.7 million
March 31, 1990 $18.0 million
</TABLE>
<PAGE>
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned purchased shares of Class B Common Stock, par value, $.01
share (the "Shares") of Exide Corporation, a Delaware corporation (the
"Company"), on March 26, 1987. The Company has the right to repurchase certain
of the Shares at cost from the undersigned (or from the holder of the Shares, if
different from the undersigned) should the undersigned cease to be employed by
the Company. Hence, the Shares are subject to a substantial risk of forfeiture
and are nontransferable. The undersigned desires to make an election to have the
Shares taxed under the provision of Code (S)83(b) at the time he purchased the
Shares.
Therefore, pursuant to Code (S)83(b) and Treasury Regulation (S)1.83-2
promulgated thereunder, the undersigned hereby makes an election, with respect
to the Shares described below, to report as taxable income in 1986 the excess
(if any) of such Shares' fair-market value on March 26, 1987 over their purchase
price.
The following information is supplied in accordance with Treasury
Regulation 1.83-2(a):
1. The name, address and social security number of the undersigned:
2. A description of the property with respect to which the election is
being made: 151 shares of the Company's Class B Common Stock, par value $.01 per
share.
3. The date on which the property was transferred: March 26, 1987. The
taxable year for which such election is made: calendar 1987.
4. The restrictions to which the property is subject: The Company has the
right to repurchase so many of the Shares as have not yet vested at a price
equal to the amount paid therefor within 180 days after the date the
undersigned ceases to be employed by the Company or within 180 days after the
Company receives its annual audited statements showing annual performance
<PAGE>
goals were not met (a "Repurchase Event"). One-fourth of the Shares will vest on
each of the first four anniversaries of March 31, 1986. Vested Shares are
subject to repurchase at original cost upon the occurrence of a Repurchase
Event.
5. The fair-market value on March 26, 1987 of the property with respect to
which the election is being made, determined without regard to any lapse of
restrictions, was
6. The amount paid for such property was
A copy of this election has been furnished to the Secretary of the Company
pursuant to Treasury Regulations (S)1.83-2(e)(7).
Dated: March __, 1987
-2-
<PAGE>
Exhibit 10.27
This Instrument Prepared By:
Jeffrey H. Benedict
BAKER, WORTHINGTON, CROSSLEY,
STANSBERRY & WOOLF
207 Mockingbird Lane
P.O. Box 3038 CRS
Johnson City, Tennessee 37602
(615) 928-0181
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LEASE AGREEMENT
between
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF BRISTOL, TENNESSEE
as Lessor
and
EXIDE CORPORATION
as Lessee
Dated as of February 7, 1994
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
LEASE AGREEMENT
TABLE OF CONTENTS
This Table of Contents is not a part of the Lease Agreement
and is only for convenience of reference.
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties......................................................... 1
ARTICLE I
Definitions
Section 1.1 Use of Defined Terms.............................. 1
Section 1.2 Definitions....................................... 1
Section 1.3 Certain Words Used Herein......................... 3
Section 1.4 References to Articles, Etc....................... 3
Section 1.5 Headings.......................................... 3
ARTICLE II
Representations and Undertakings
Section 2.1 Representations by the Lessor..................... 3
Section 2.2 Representations by the Lessee..................... 4
ARTICLE III
Demising Clause; Warranty of Title
Section 3.1 Demise of the Project............................. 5
Section 3.2 Warranty of Title................................. 5
ARTICLE IV
Construction of the Project
Section 4.1 Agreement to Acquire, Construct and Equip
the Building on the Leased Land................. 5
Section 4.2 Modification or Abandonment of the Project........ 5
</TABLE>
ii
<PAGE>
Page
----
ARTICLE V
Effective Date of This Lease Agreement; Duration of
Lease Term; Rental Provisions;
Calculation of Imputed Tax Benefit
Section 5.1 Effective Date and Duration of Lease Term............... 6
Section 5.2 Delivery and Acceptance of Possession................... 6
Section 5.3 Rents................................................... 6
ARTICLE VI
Maintenance, Taxes and Insurance
Section 6.1 Maintenance and Modification of Project
by Lesses............................................. 6
Section 6.2 Removal of Leased Equipment............................. 7
Section 6.3 Tax Exemptions.......................................... 7
Section 6.4 Insurance Required...................................... 7
Section 6.5 Application of Net Proceeds of Insurance................ 7
ARTICLE VII
Damage, Destruction and Condemnation
Section 7.1 Damage and Destruction.................................. 7
Section 7.2 Condemnation............................................ 7
ARTICLE VIII
Additional Covenants
Section 8.1 No Warranty of Condition or Suitability
by the Lessor......................................... 8
Section 8.2 Lessor's Right of Access to the Project................. 8
Section 8.3 Qualification in the State.............................. 8
Section 8.4 Future Financing........................................ 8
Section 8.5 Granting of Easements................................... 8
Section 8.6 Indemnity............................................... 8
Article IX
Assignment, Subleasing, Mortgaging and Selling
Section 9.1 Assignment and Subleasing............................... 9
Section 9.2 Restrictions on Sale of Project by Lessor............... 9
iii
<PAGE>
Page
----
ARTICLE X
Events of Default and Remedies
Section 10.1 Events of Default Defined.............................. 10
Section 10.2 Remedies in Default................................... 11
Section 10.3 Lessor's Default....................................... 11
ARTICLE XI
Options in Favor of Lessee
Section 11.1 General Options to Terminate Lease Agreement and
Purchase Project...................................... 11
Section 11.2 No Obligation to Purchase Project...................... 11
Section 11.3 Conveyance on Exercise of Option to Purchase........... 11
Section 11.4 Closing Adjustments.................................... 12
Section 11.5 Closing................................................ 12
ARTICLE XII
Miscellaneous
Section 12.1 Quiet Enjoyment........................................ 12
Section 12.2 Surrender of Project................................... 13
Section 12.3 Notices................................................ 13
Section 12.4 Recording and Filing................................... 13
Section 12.5 Blinding Effect........................................ 13
Section 12.6 Severability........................................... 13
Section 12.7 Execution of Counterparts............................... 13
Section 12.8 Law Governing Construction of Lease Agreement.......... 13
SIGNATURES AND SEALS................................................. 15
EXHIBIT A - Leased Land.............................................. 17
EXHIBIT B - Leased Equipment......................................... 18
iv
<PAGE>
THIS LEASE AGREEMENT, dated as of February 7, 1994, by and between THE
INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF BRISTOL, TENNESSEE, a public
nonprofit corporation organized and existing under the laws of the State of
Tennessee (the "Lessor"), and EXIDE CORPORATION, a Delaware corporation (the
"Lessee").
WITNESSETH:
In consideration of the respective representations and agreements
hereinafter contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.1 Use of Defined Terms. Certain terms used in this Lease
Agreement are defined herein. When used herein, such terms as shall have the
meanings given to them by the language employed in Section 1.2 hereof defining
-----------
such terms, unless the context clearly indicates otherwise.
Section 1.2 Definitions. The following terms are defined terms under this
Lease Agreement:
"Act" means Chapter 53 of Title 7, Tennessee Code Annotated, as the same
may be from time to time supplemented and amended.
"Additions" means improvements, replacements, alterations, additions,
enlargements or expansions in, on or to the Project, including any and all
machinery and equipment therefor.
"Authorized Lessor Representative" means the person at the time designated
to act in behalf of the Lessor.
"Authorized Lessee Representative" means the person at the time designated
to act in behalf of the Lessee.
"Building" means the building and all other facilities forming a part of
the Project and not constituting part of the Leased Equipment which are located
or to be constructed on the Leased Land, as they may at any time exist.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commencement Date" means the first day of the calendar year immediately
following the year in which the Project is finally completed and fully
operational to the reasonable satisfaction of Lessee.
"Executive Officer" means, with respect to the Lessor, the Chairman of the
Lessor or its Governing Body and with respect to the Lessee, the President or
Division President, any Vice President or the Secretary or Treasurer of the
Lessee.
"Governing Body" means the Board of Directors of the Lessor or the
successor to the powers of said body, or the Board of Directors of the Lessee or
the successor to the powers of said body.
1
<PAGE>
"Lease Agreement" means the within Lease Agreement by and between the
Lessor and the Lessee as the same may be amended from time to time in accordance
with the provisions hereof.
"Lease Term" means the duration of the leasehold estate created in this
Lease Agreement as specified in Section 5.1 hereof.
-----------
"Leased Equipment" means those items of machinery, equipment and related
property acquired and installed in the Building or elsewhere on the Leased Land
(and any item of machinery, equipment and related property acquired and
installed in the Building or elsewhere on the Leased Land in substitution
therefor and renewals and replacements thereof) owned by the Lessor and hereby
leased to the Lessee which is not included in the definition of Leased Land or
Building, but not including Lessee's own machinery and equipment. Leased
Equipment specifically includes, but is not limited to, the equipment described
in Exhibit B attached hereto which, by this reference thereto, is incorporated
---------
herein. Leased equipment shall also include equipment made subject to this Lease
Agreement under Section 4.1(c) hereof.
-------------
"Leased Land" means all those lots, tracts or parcels of land located in
the Fourth Civil District of Sullivan County, Tennessee, and more specifically
described on Exhibit A attached hereto and incorporated herein by reference,
---------
together with all rights, ways, alleys, waters, privileges, easements,
appurtenances and advantages thereto belonging or in anywise appurtenant
thereto.
"Lessee" means Exide Corporation, a Delaware corporation, and its
successors and assigns and any surviving, resulting or transferee corporation.
"Lessor" means The Industrial Development Board of the City of Bristol,
Tennessee, a public nonprofit corporation organized under the laws of the State.
"Net Proceeds" means, when used with respect to any insurance or
condemnation award, the gross proceeds from the insurance or condemnation award
with respect to which that term is used remaining after payment of all expenses
incurred in the collection of such gross proceeds.
"Permitted Encumbrances" means, as of any particular time, such liens and
encumbrances on the Project that Lessee may, prior to the attachment thereof,
specifically consent to in writing.
"Project" means collectively, the Leased Land, the Building and the Leased
Equipment.
"Settlement Date" shall mean the fourth anniversary of the last day of the
calendar year that commences with the Commencement Date.
"State" means the State of Tennessee.
"Tax Payment Date" means, with respect to any Taxing Period commencing on
or after the Commencement Date, the day after which unpaid City of Bristol,
Tennessee, real property and personal ad valorem taxes assessed for such Taxing
Period would become delinquent.
2
<PAGE>
"Taxing Period" means any twelve (12) month period commencing January 1 and
ending December 31, if the first day of such twelve (12) month period coincides
with or follows the Commencement Date; provided, however, that if Sullivan
County, Tennessee should cease assessing real property and personal property as
valorem taxes on an annual basis from January 1 to December 31 and instead
substitute some other period, then the first day and last day, respectively, of
such other period shall be substituted, respectively, for January 1 and December
31 above.
Section 1.3 Certain Words Used Herein. The words "hereof," "herein,"
"hereunder," and other words of similar import refer to this Lease Agreement as
a whole.
Section 1.4 References to Articles, Ect. References to Articles, Sections,
and other subdivisions of this Lease Agreement are to the designated Articles,
Sections and other subdivisions of this Lease Agreement as originally executed.
Section 1.5 Headings. The headings of this Lease Agreement are for
convenience only and shall not define or limit the provisions hereof.
ARTICLE II
Representations and Undertakings
Section 2.1 Representations by the Lessor. The Lessor makes the following
representations as the basis for the undertakings on its part herein contained:
(a) The Lessor is a public nonprofit corporation, duly organized and
existing under the laws of the State, is authorized and empowered by the
provisions of the Act to enter into the transactions contemplated by this Lease
Agreement and to carry out its obligations hereunder, and by proper action of
its Governing Body has been duly authorized to execute and deliver this Lease
Agreement. Neither the Project nor the Lessee's interest therin is subject to ad
valorem personal or real property taxation. The Project constitutes a "project"
within the meaning of the Act. The Lessor is a "corporation" within the meaning
of the Act.
(b) The Lessor has acquired title to the Leased Land (and Lessor has
not encumbered such title, except on behalf of Lessee), and has authorized, and
does hereby authorize, the Lessee to acquire and improve the Building and to
acquire and install the Leased Equipment on the Leased Land, and to acquire,
construct and equip the Project, and the Lessor proposes to lease the Project to
the Lessee for the purposes set forth in the Act, to wit: to maintain and
increase employment opportunities and increase the quantity of housing available
in affected municipalities by promoting industry, trade, commerce, tourism and
recreational and housing construction by inducing manufacturing, industrial,
governmental, educational, financial, service, commercial, and recreational
enterprises to locate in or remain in the State and further its agricultural and
natural resources.
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(c) Nothing in this Lease Agreement shall be construed to require the
Lessor to operate the Project other than as lessor. The parties acknowledge and
agree that Lessee shall have sole dominion and control over the Leased Equipment
and that Lessor shall not be liable for the maintenance, storage or care of the
equipment, or for its condition, or for any injury sustained by any person in
connection with the installation, operation or removal of the Leased Equipment.
(d) The Project is to be located wholly within the boundaries of
Bristol, Tennessee.
(e) The execution of this Lease Agreement has been approved by the
Governing Body of the Lessor in accordance with the Act. Neither the execution
and delivery of this Agreement, the consummation of the transaction contemplated
hereby, nor the fulfillment of or compliance with the terms and conditions of
this Agreement, will conflict with or result in a breach of any of the terms,
conditions or provisions of any restriction or any agreement or instrument to
which the Lessor is now a party or by which it is bound, or constitute a default
under any of the foregoing, or result in the creation or imposition of any
prohibited lien, charge or encumbrance of any nature whatsoever upon any of the
property or assets of the Lessor under the terms of any instrument or agreement.
Section 2.2 Representations by the Lessee. The Lessee makes the following
representations as the basis for the undertakings on its part herein contained:
(a) The Lesses is a corporation duly organized and existing under the
laws of the State of Delaware, is in good standing under its Articles of
Incorporation and the laws of the State of Delaware, is qualified to do
business as a foreign corporation and is in good standing as a foreign
corporation under the laws of the State and has power to enter into this Lease
Agreement and by proper corporate action has been duly authorized to execute
and deliver this Lease Agreement.
(b) Neither the execution and delivery of this Lease Agreement, the
consummation of the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Lease Agreement, will conflict
with or result in a breach of any of the terms, conditions or provisions of any
restriction or any agreement or instrument to which the Lessee is now a party or
by which it is bound, or constitute a default under any of the foregoing, or
result in the creation or imposition of any prohibited lien, charge or
encumbrance of any nature whatsoever upon any of the property or assets of the
Lessee under the terms of any instrument of agreement.
(c) Lessee agrees that it will reimburse Lessor for reasonable expenses
(including reasonable attorneys' fees) incurred by Lessor in connection with the
preparation and execution of this Lease Agreement, and in connection with future
actions to be taken by Lessor at the request of Lessee pursuant to the terms
hereof during the Lease Term described herein.
(d) Lessee agrees that it shall use its best efforts to operate the
Project in compliance with all applicable federal, state and local environmental
laws, rules and regulations.
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ARTICLE III
Demising Clause: Warranty of Title
Section 3.1 Demise of the Project. The Lessor demises and leases to the
Lessee, and the Lessee leases from the Lessor, the Leased Land, the Building and
the Leased Equipment at the rental set forth in Section 5.3 hereof and in
-----------
accordance with the provisions of the Lease Agreement, subject to Permitted
Encumbrances.
Section 3.2 Warranty of Title. The Lessor warrants that the Lessor has
acquired title to the Leased Land, free and clear of liens and encumbrances
created or incurred by, on behalf of, in the interest of, at the request of, or
as a result of the activities of Lessor, except the same that may be incurred or
created by Lessor on behalf of, in the interest of, at the request of or as a
result of the activities of Lessee.
ARTICLE IV
Construction of the Project
Section 4.1 Agreement to Acquire, Construct and Equip the Building on the
Leased Land. The Lessee agrees that:
(a) The Lessee will cause the Building to be improved on the Leased Land,
and may construct other buildings on the Leased Land, wholly within the boundary
lines thereof; and
(b) The Lessee will cause to be acquired and installed in the Building or
on the Leased Land for the use of Lessee the Leased Equipment, to consist of the
machinery, equipment and related property described in the general list thereof
in Exhibit B Attached hereto, and incorporated herein by reference thereto, and
---------
such other facilities and items of machinery and equipment as in the Lessee's
judgment may be necessary for the operation of the Project.
(c) Lessee shall have the right, exercisable from time to time in its sole
discretion, to transfer to the Lessor or cause to be transferred to the Lessor,
Leased Equipment of such types as Lessee may in its sole discretion determine.
Such transfers shall be made by bill of sale, transfer of certificate of title
or such other instruments of transfer and conveyance as may be necessary to vest
title to such Leased Equipment in the Lessor. Upon the transfer of any such
Leased Equipment to Lessor, Lessor shall promptly acknowledge in writing to
Lessee (i) the receipt of such Leased Equipment and (ii) the fact of Lessor's
title to such Leased Equipment and (iii) that such Leased Equipment will be held
by Lessor subject to the terms of this Lease Agreement.
Section 4.2 Modification or Abandonment of the Project. Notwithstanding any
term or provision of this Lease Agreement to the contrary, Lessee shall have the
option, exercisable at its sole discretion without notice to Lessor, to modify
its present plans for the improvement of the Building, the installation of the
Leased Equipment or any other facet of the Project including, but not limited
to, abandoning its plans for the Project.
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Should Lessee permanently abandon the Project, this Lease Agreement shall
terminate. Furthermore, no term or provision of this Lease Agreement shall be
interpreted as requiring Lessee to construct any particular facility or type of
facility, or to acquire for the Project any particular equipment or type of
equipment; provided, however, that Lessee's use of the Leased Land shall not
violate any state, federal or local law governing the use of the Leased Land.
Lessee's modification of its present plans for the Project shall not adversely
affect the option granted to Lessee under Article XI hereof. Lessor agrees that
it will cooperate fully with Lessee to obtain all necessary or proper
governmental approvals, consents and variances in connection with the Project,
any Additions, or any modification or abandonment of the Project. Such
obligation to cooperate fully with Lessee shall include, but not be limited to,
the execution of all proper petitions, documents, requests and applications
related to the Project and presented to Lessor by Lessee in connection with the
Project, any Addition, or any modification or abandonment of the Project.
ARTICLE V
Effective Date of This Lease Agreement; Duration of Lease Term;
Rental Provisions; Calculation of Imputed Tax Benefit
Section 5.1 Effective Date and Duration of Lease Term. This Lease Agreement
and the leasehold interest created hereunder shall become effective upon
delivery on the date hereof. Lessee shall be entitled to immediate occupancy of
the Project. Subject to the provisions of Article XI hereof, this Lease
Agreement and the leasehold interest created herein shall terminate at midnight
on the Settlement Date.
Section 5.2 Delivery and Acceptance of Possession. The Lessor agrees to
deliver to the Lessee sole and exclusive possession of the Project with the
delivery of this Lease Agreement on the date hereof. The Lessor covenants and
agrees that it will not take any action, other than pursuant to Article X of the
Lease Agreement, to prevent the Lessee from having quiet and peaceable
possession and enjoyment of the Project during the Lease Term and warrants that
the Lessee shall have quiet and peaceable possession and enjoyment of the
Project.
Section 5.3 Rents. The Lessee agrees to pay to the Lessor as rent hereunder
the sum of $56,300 for each Taxing Period, payable with respect to each such
Taxing Period on the Tax Payment Date associated with each such Taxing Period.
ARTICLE VI
Maintenance, Taxes and Insurance
Section 6.1 Maintenance and Modification of Project by Lessee. The Lessee
agrees that during the Lease Term it will at its own expense (i) keep the
Project in as reasonably safe condition as its operations shall permit and (ii)
keep the Building and the Leased Equipment and all other improvements forming a
part of the Project in good repair and in good operating condition, making from
time to time, subject to the provisions of
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Section 6.2 hereof, such repairs thereto and renewals and replacements thereof
- -----------
as Lessee may in its sole discretion deem proper. The Lessee may, also at its
own expense, make from time to time any Additions or Alterations to the Project
it may deem desirable for its business purposes. Such Additions and Alterations
so made by the Lessee shall be on the Leased Land and shall become a part of the
Project.
Section 6.2 Removal of Leased Equipment. The Lessee shall not be under any
obligation to renew, repair or replace and inadequate, obsolete, worn out,
unsuitable, undesirable or unnecessary Leased Equipment. In any instance where
the Lessee in its discretion determines that any items of Leased Equipment have
become inadequate, obsolete, worn out, unsuitable, undesirable or unnecessary,
the Lessee may remove such items of Leased Equipment from the Leased Land and
sell, trade in, exchange or otherwise dispose of them (as a whole or in part)
without any responsibility or accountability to the Lessor therefor.
Section 6.3 Tax Exemption. It is recognized that under current law,
including particularly the Act, the Project is exempt from ad valorem property
taxation so long as the same is owned by the Lessor.
Section 6.4 Insurance Required. During the Lease Term, the Lessee shall
keep the Project or cause the same to be kept continuously insured against such
risks as are customarily insured against by businesses of like size and type in
an amount and with an insurance company determined in the sole discretion of the
lessee. Lessee shall provide copies of such policies to Lessor.
Section 6.5 Application of Net Proceeds of Insurance. The Net Proceeds of
the insurance carried pursuant to the provisions hereof shall be paid and
applied in such fashion as Lessee in its sole discretion may determine.
ARTICLE VII
Damage, Destruction, and Condemnation
Section 7.1 Damage and Destruction. In the event of substantial or total
damage to or destruction of the Project, Lessee, in its sole and absolute
discretion, shall have the right and power to terminate this Lease Agreement. If
the Project is destroyed or substantially damaged and Lessee determines not to
rebuild the Project, then Lessee shall be obligated to exercise the option to
purchase the Project granted to it in Article XI hereof, the provisions of
Paragraph 4.2 hereof notwithstanding.
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Section 7.2 Condemnation. If all or any portion of the Project is taken by
condemnation, the Lessee, in its sole and absolute discretion, shall have the
right and power to terminate this Lease Agreement. The Lessee shall be entitled
to the entirety of any condemnation award, relocation payments or any other
similar payments made with respect to the Project.
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ARTICLE VII
Additional Covenants
Section 8.1 No. Warranty of Condition or Suitability by the Lessor. EXCEPT
AS OTHERWISE SET FORTH IN THIS LEASE AGREEMENT, THE LESSOR MAKES NO WARRANTY,
EITHER EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY, CONDITION OF WORKMANSHIP
OF ANY PART OF THE PROJECT OR THAT IT WILL BE SUITABLE FOR THE LESSEE'S PURPOSES
OR NEEDS.
Section 8.2 Lessor's Right of Access to the Project. The Lesse agrees that
the Lessor, upon obtaining Lessee's prior written consent (which shall not be
unreasonably withheld) may enter upon the Leased Land to examine and inspect
the Project.
Section 8.3 Qualification in the State. Lessee warrants that it is and
throughout the Lease Term it (or the surviving, resulting or transferee
corporation) will continue to be duly qualified to do business in the State of
Tennessee.
Section 8.4 Future Financing. Lessor and Lessee acknowledge that during the
Lease Term Leesee may from time to time deem it advisable to obtain financing
from one or more third-party lender(s) and to secure such financing with all or
some portion of the Project. In such event(s) Lessor agrees to fully cooperate
with Lessee and such Lender(s) and to take such actions and execute such
documents as Lesses or such Lender(s) may reasonably require, including, but not
limited to, deeds of trust granting security interests in the Leassed Land to
such Lender(s) and security agreements and financing statements granting
security interests in the Leased Equipment to such Lender(s); provided, however,
that Lessor shall not be required to obligate itself to such Lender(s) beyond
transferring security interests (or security title, as applicable) to the
Project (or parts thereof) and agreeing to forbear from future transfers of
interests in the Project. Lessor agrees to make such modifications of this Lease
Agreement (and to execute documents in evidence thereof) as may be reasonably
required by Lessee or such third-party lender(s) in connection with such
financing.
Section 8.5 Granting of Easements. The Lesses may at any time or times
grant easements (including party wall agreements), licenses, rights of way
(including the dedication of public highways) and other rights or privileges in
the nature of easements with respect to any property included in the Project, or
the Lessee may release existing easements, licenses, rights of way and other
rights or privileges with or without consideration, and the Lessor agrees that
it shall execute and deliver any instrument necessary or appropriate to confirm
and grant or release any such easement, license, right of way or other right or
privilege. Lessee shall be entitled to any payments or other consideration given
in return for the granting of any such rights or privileges with respect to the
Project during the Lease Term.
Section 8.6 Indemnity.
(a) Lessee shall and agrees to indemnify and save the Lessor and its
directors and officers harmless against and from all claims by or on behalf of
any person, firm or corporation rising from the conduct or management of, or
from any work or thing
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done on, the Project during the Lease Term, and against and from all claims
arising during the Lease Term from (i) any condition of the Project, (ii) any
breach or default on the part of Lessee in the performance of any of its
obligations under this Lease Agreement, (iii) any act or negligence of Lessee or
of any of its agents, contractors, servants, employees or licensees or of any
assignee or sublessee of Leases and (iv) any violation by Lessee of any federal,
state or local environmental law, act, rule or regulation. Lessee shall
indemnify and save the Lessor harmless from and against all costs and expenses
incurred in or in connection with any such claim arising as aforesaid from (i),
(ii), (iii) or (iv) supra, or in connection with any action or proceeding
-----
brought thereon, and upon notice from the Lessor Lessee shall defend them or
either of them in any such action or proceeding. Notwithstanding any other term
or provision hereof, Lessee shall have no obligation to indemnify Lessor for any
claim arising in whole or in part from or out of (i) any set of circumstances
that would give rise to an indemnity obligation of Lessor under Section 8.6(b)
--------------
hereof or (ii) the claims of any governments or authorities seeking to impose
any taxes, fees or assessments with respect to the Project.
(b) Lessor shall and agrees to indemnify and save the Lessee harmless
against and from all claims by or on behalf of any person, firm or corporation
arising out of or related to (i) any breach or default on the part of the Lessor
in the performance of any of its obligations under this Lease Agreement, (ii)
any breach or default on the part of the Lessor of any of its representations
and warranties to Lessee under this Lease Agreement, and (iii) any act or
negligence of Lessor or of any of its agents, contractors, servants, employees
or licenses or of any assignees Lessor. Lessor shall indemnify and save the
Lessee harmless from and against all costs and expenses incurred in or in
connection with any such claim arising as aforesaid from (i), (ii) or (iii)
supra, or in connection with any action or proceeding brought thereon, and upon
- -----
notice from the Lessee, Lessor shall defend them in any such action or
proceeding.
ARTICLE IX
Assignment, Subleasing, Mortgaging and Selling
Section 9.1 Assignment and Subleasing. This Lease Agreement may be
assigned, mortgaged, hypothecated, transferred or encumbered, and the Project
may be subleased as a whole or in part, by the Lessee, without the Lessor's
approval or consent, as follows: (i) to any partnership, corporation or other
entity owned by or controlled by Lessee and (ii) as may be necessary or proper
in connection with any financing obtained by Lessee in connection with the
Project. Except as provided in the immediately preceding sentence, Lessee shall
not assign its rights hereunder without the prior written consent of Lessor,
which shall not be unreasonably withheld.
Section 9.2 Restrictions on Sale of Project by Lessor. Except as required
under Section 8.4 hereof, the Lessor agrees that it will not sell, convey,
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mortgage, encumber, transfer, assign or otherwise dispose of all or any part of
the Project or its rights or obligations under this Lease Agreement during the
Lease Term except that if the laws of the State of Tennessee at the time shall
permit such sale, assignment, transfer or
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conveyance to be taken, nothing contained in this Section 9.2 shall prevent the
-----------
consolidation of the Lessor with,or merger of the Lessor into, or transfer of
the Project as an entirety, subject to this Lease Agreement, to any political
subdivision of the State of Tennessee whose real and personal property and
income are not subject to taxation and which has corporate authority to carry on
the business of owning and leasing the Project, provided, that upon any such
consolidation, merger or transfer, the due and punctual performance and
observance of all the agreements and conditions of this Lease Agreement to be
kept and performed by the Lessor shall be expressly assumed in writing by the
corporation resulting from such consolidation or surviving such merger or to
which the Project shall be transferred as an entirety.
ARTICLE X
Events of Default and Remedies
Section 10.1 Events of Default Defined. The following shall be "events of
default" under this Lease Agreement and the terms "event of default" or
"default" shall mean, whenever they are used in this Lease Agreement, any one or
more of the following events:
(a) Failure by the Lessee to pay the rents required to be paid under this
Lease Agreement at the times specified therein and continuing for a period of
thirty (30) business days after notice by mail, given to Lessee by the Lessor
that the payment referred to in such notice has not been received.
(b) Failure by the Lessee to observe and perform any covenant, condition or
agreement in this Lease Agreement on the part of the Lessee to be observed or
performed, other than as referred to in subsection (a) of this Section 10.1, for
------------
a period of sixty (60) days after receipt of written notice specifying such
failure and requesting that it be remedied, given to the Lessee by the Lessor,
unless the Lessor shall agree to an extension of such time; or in the case of
any such default which cannot with due diligence be cured within such 60-day
period, it shall not constitute an event of default if corrective action is
instituted by the Lessee within the applicable period and diligently pursued
until the default is corrected.
(c) The provisions of Section 10.1(b) are subject to the following
---------------
limitations: If by reason of force majeure the Lessee is unable in whole or in
part to carry out the agreements of the Lessee on its part herein contained the
Lessee shall not be deemed in default during the continuance of such inability.
The term "force majeure" as used herein shall mean, without limitation, the
following: acts of God; strikes, lockouts or other industrial disturbances; acts
of public enemies; orders of any kind of the government of the United States or
of the State or any of their department, agencies, or officials, or any civil or
military authority; insurrections; riots; epidemics; landslides, lightning,
earthquake, fire, hurricanes, storms; floods; washouts; droughts; arrests;
restraint of government and people; civil disturbances; explosions; breakage or
accident to machinery, transmission pipes or canals; partial or entire failure
of utilities; or any cause or event not reasonably within the control of the
Lessee, it being agreed that the settlement of strikes,
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lockouts and other industrial disturbances shall be entirely within the
discretion of the Lesses, and Lessee shall not be required to make settlement of
strikes, lockouts and other industrial disturbances by acceding to the demands
of the opposing party or parties when such course is, in the judgment of the
Lessee, unfavorable to the Lessee.
Section 10.2 Remedies in Default. Whenever any event of default referred
to in Section 10.1 hereof shall have happened and be subsisting, the Lessor may,
------------
upon thirty (30) days' prior written notice to the Lessee (the Lessee having an
opportunity to cure such default in such period), terminate the Lease Agreement
and exclude the Lessee from possession of the Project; provided, however that in
no event shall any such event of default limit or terminate the option granted
to Lessee under Article XI hereof.
Section 10.3 Lessor's Default. If Lessor defaults or breaches any of
Lessor's obligations, representations or warranties contained in this Lease
Agreement, Lessee shall be entitled, in Lessee's sole discretion, to (i)
terminate this Lease Agreement, (ii) obtain injunctive relief in an appropriate
court of equity, (iii) recover money damages from Lessor in an amount equal to
Lessee's direct an consequential damage resulting from or arising out of
Lessor's breach, plus attorney's fees, (iv) exercise Lessee's rights under
Paragraph 5.5 hereof, or (v) any combination of (i) - (iv). Lessee acknowledges
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that the City of Bristol, Tennessee shall not be liable for breaches of this
Lease Agreement by Lessor; provided, however, that the City of Bristol shall be
liable for its actions in connection with any assignment of any interest in this
Lease Agreement to the City of Bristol and the exercise of any rights and powers
obtained by the City of Bristol under any such assignment.
ARTICLE XI
Options in Favor of Leases
Section 11.1 General Options to Terminate Lease Agreement and Purchase
Project. At any time during the Lease Term, the Lessee may terminate the Lease
Term by giving the Lessor notice in writing of such termination and such
termination shall forthwith become effective. At any time prior to or within
sixty (60) days after the expiration or sooner termination of the Lease Term,
the Lessee shall also have, and is hereby granted, the option to purchase the
Project for One Hundred Dollars ($100.00). To exercise such option, the Lessee
shall give written notice to the Lessor and shall specify therein the date of
closing such purchase, which date shall not be less than forty-five (45) nor
more than one hundred twenty (120) days from the date such notice is mailed.
Section 11.2 No Obligation to Purchase Project. The Lessee shall be under
no obligation to purchase the Project except as herein expressly required or
provided.
Section 11.3 Conveyance on Exercise of Option to Purchase. At the closing
of any purchase pursuant to any option to purchase granted herein, the Lessor
shall upon receipt of the purchase price deliver to the Lessee documents
conveying to the Lessee good and marketable title to the Project being
purchased. The deed by which the Leased
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Land is conveyed at the closing shall be a customary general warranty deed in
proper statutory form for recording and shall be duly executed and acknowledged
by Lessor and shall convey to Lessee good, marketable and insurable fee simple
title to the Leased Land, free of all encumbrances, liens, encroachments,
interests and adverse matters of any nature or description, incurred by, on
behalf of, in the interest of, at the request of, or as a result of the
activities of Lessor, except the same that may have been incurred by, on behalf
of, in the interest of, at the request of, or as a result of the activities of
Lessee.
Section 11.4 Closing Adjustments. Real property and personal property taxes
and assessments for the Taxing Period in which occurs the closing of the sale of
the Project pursuant to this Article XI shall be prorated to the date of the
closing.
Section 11.5 Closing. At the closing of the sale of the Project pursuant to
this Article XI, Lessor shall deliver to Lessee the following documents :
(a) A general warranty deed for the Leased Land as required by Section
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11.3 hereof with the grantee thereunder being Lessee, or the designee of Lessee;
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(b) A bill of sale or other appropriate documents to confirm and vest in
Lessee title to the Leased Equipment, free of all liens, security interests or
encumbrances, incurred by, on behalf of, in the interest of, at the request of,
or as a result of the activities of Lessor, except the same that may have been
incurred by, on behalf of, in the interest of, at the request of, or as a result
of the activities of Lessee;
(c) An owner's lien affidavit satisfactory to the Lessee to remove the
lien exceptions from any title policy to be issued to Lessee;
(d) Any and all other items reasonably necessary and proper to
effectuate the closing of the transaction.
(e) An instrument in recordable form executed by the Lessor and
evidencing the termination of the leasehold interest created by this Lease
Agreement.
(f) An opinion of Lessor's counsel, in form satisfactory to Lessee and
Lessee's counsel, that all actions taken and all the execution of all
instruments by the Lessor in connection with the transfer and sale of the
Project to the Lessee have been duly authorized by all necessary action of the
Lessor and its Governing Body.
ARTICLE XII
Miscellaneous
Section 12.1 Quiet Enjoyment. The Lessor agrees so long as the Lessee shall
fully and punctually pay all of the rents and other amounts provided to be paid
hereunder by the Lessee and comply with its other obligations hereunder, that
the Lessee shall peaceably and quietly have, hold and enjoy the Project during
the Lease Term.
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Section 12.2 Surrender of Project. Except as otherwise provided in this Lease
Agreement, at the expiration or sooner termination of the Lease Term the Lessee
agrees to surrender possession of the Project peaceably and promptly to the
Lessor in as good condition as at the commencement of the Lease Term, ordinary
wear, tear and obsolescence only excepted; provided, however, that Lessee shall
have the right to continue to occupy the Premises until the expiration of all
periods during which it may exercise the option granted to Lessee under Article
XI hereof; and provided, further, that if Lessee exercises the option granted to
it under Article XI, Lessee shall have the right to continue to occupy the
Premises until the expiration of all periods during which the closing of the
sale of the Premises pursuant to such option may occur.
Section 12.3 Notices. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when mailed by
registered or certified mail, postage prepaid, addressed as follows:
If to the Lessor: The Industrial Development Board of the City of
Bristol, Tennessee
801 Broad Street
P.O. Box 1189
Bristol, Tennessee 37621
Attention: Chairman
If to the Lessee: Exide Corporation
8 Boswell Drive
P.O. Box 3548
Bristol, Tennessee 37620
Attention: Richard R. Randlees
Section 12.4 Recording and Filing. An appropriate memorandum of this Lease
Agreement shall be recorded in all offices as may at the time be provided by law
as the proper place for the recordation thereof. Lessee and Lessor agree that
this Lease Agreement shall not be recorded.
Section 12.5 Binding Effect. Subject to Section 9.2 hereof, this Lease
Agreement shall inure to the benefit of and shall be binding upon the Lessor,
the Lessee and their respective successors and assigns.
Section 12.6 Severability. In the event any provision of this Lease Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidese or render unenforceable any other provision
hereof.
Section 12.7 Execution of Counterparts. This Lease Agreement may be executed
in several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
Section 12.8 Law Governing Construction of Lease Agreement. This Lease
Agreement is prepared and entered into with the intention that the law of the
State of Tennessee shall govern its construction.
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IN WITNESS WHEREOF, the Lessor, has executed this Lease Agreement by causing
its name to be hereunto subscribed by its Chairman and the official seal of said
Lessor to be impressed hereon and attested by its Secretary; and the Lessee has
executed this Lease Agreement by causing its corporate name to be hereunto
subscribed by its authorized officer all being done as of the day and year first
above written.
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THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF BRISTOL,
TENNESSEE
By: /s/ H. John Brooks
----------------------
Chairman
(SEAL)
Attest:
/s/ M. Marion Jones
- ---------------------------------
Secretary
STATE OF TENNESSEE )
)
COUNTY OF SULLIVAN )
Before me, Jack W. Hyder, Jr., a Notary Public within and for the State and
County aforesaid, personally appeared H. John Brooks and M. Marion Jones with
both of whom I am personally acquainted, and who upon their several oaths
acknowledged themselves to be the Chairman and Secretary, respectively, of THE
INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF BRISTOL, TENNESSEE, one of the
within named bargainors, a Tennessee public nonprofit corporation, and that
they, as such Chairman and Secretary, being authorized so to do, executed the
foregoing instrument (Lease Agreement) for the purpose therein contained by
subscribing thereto the name of said corporation and by affixing thereto the
official seal of said corporation by themselves as such Chairman and Secretary,
respectively.
WITNESS my hand and official seal, this 8th day of February, 1994.
/s/ Jack W. Hyder Jr.
----------------------------
Notary Public
(SEAL)
My Commission Expires: 3-6-95
----------------
15
<PAGE>
EXIDE CORPORATION
By: /s/
------------------------
Its: Division President
STATE OF TENNESSEE )
)
COUNTY OF SULLIVAN )
Before me, Jeffrey H. Benedict, a Notary Public within and for the State
and County aforesaid, personally appeared Richard R. Randles with whom I am
personally acquainted, and who upon oath acknowledged himself to be the Division
President of EXIDE CORPORATION, one of the within named bargainors, a Delaware
corporation, and that he, as such Division President, being authorized so to do,
executed the foregoing instrument (Lease Agreement) for the purpose therein
contained by subscribing thereto the name of said corporation.
WITNESS my hand and official seal, this 7th day of February, 1994.
/s/ Jeffrey H. Benedict
-----------------------
Notary Public
(SEAL)
My Commission Expires: 7-24-95
16
<PAGE>
EXHIBIT A
DESCRIPTION OF LEASED LAND
--------------------------
BEGINNING at a p.k. nail in the northerly right-of-way line of Sperry Road,
corner to property of the City of Bristol, Tennessee (Book 586C, Page 455);
thence with the property of the City of Bristol, thirteen courses and distances
as follows: 35 (degrees) 17' 15" W 657.02 feet to an iron pin; North 66
(degrees) 07' East 298.99 feet to an iron pin; North 17 (degrees) 16' West
136.53 feet to an iron pin; North 27 (degrees) 32' East 264.21 feet to an iron
pin; North 72 (degrees) 57' East 527.93 feet to an iron pin; North 24 (degrees)
36' West 91.96 feet to an iron pin; North 56 (degrees) 32' feet 301.98 feet to
an iron pin; South 46 (degrees) 34' East 140.51 feet to an iron pin; South 22
(degrees) 36' East 35.08 feet to an iron pin; North 70 (degrees) 18' East 182.63
feet to an iron pin: South 19 (degrees) 18' East 480.83 feet to an iron pin;
North 70 (degrees) 49' East 127.74 feet to an iron pin; and South 21 (degrees)
56' East 501.29 feet to an iron pin in the northerly right-of-way of Old Bethal
Road; thence with the northerly right-of-way of Old Bethel Road, South 67
(degrees) 42' West 193.09 feet to an iron pin; thence crossing Old Bethal Road
and with the line of R.J. Earhart (Book 659C, Page 44), South 30 (degrees) 32'
East 163.50 feet to an iron pin in the northerly right-of-way line of Sperry
Road, South 78 (degrees) 46' West 1,379.03 feet to the POINT OF BEGINNING,
containing 36.01 acres, more or less, and being designated as Tract 2 of a
survey entitled "Survey for Exide Corporation" dated January 6, 1994, prepared
by Joe B. Fugate, Jr., TRLS No. 1581, Cross Land Surveying and Planning, 612
Greenfield Place, Bristol, TN 37620.
BEGINNING at an iron pipe in the northerly right-of-way line of Sperry Road,
common corner with Lawrence Earhart; thence N 35 (degrees) 17' 15" W 2910.13
feet to an axle: N 63 (degrees) 48' E 414.65 feet to an iron pin; thence N
05(degrees) 41' B 286.99 feet to an axle; thence S 84(degrees) 46' E 320.27 feet
to an axle; thence N. 76 (degrees) 35' E 258.14 feet to an axle; thence S 77
(degrees) 42' E 210.37 feet to an axle; thence S 8 (degrees) 17' E 138.56 feet
to an axle; thence S 61 (degrees) 26' E 84.57 feet to an axle; thence N 53
(degrees) 50' E 319.93 feet to an axle; thence S 23 (degrees) 20' E 60.39 feet
to an iron pin; thence S 88 (degrees) 38' E 283.16 feet to an iron pin; thence N
18 (degrees) 13' W 408.92 feet to an iron pin; thence S 84 (degrees) 17' E 75.09
feet to an iron pin; thence N 18 (degrees) 9' W 179.66 feet to an iron pin;
thence S 84 (degrees) 30' S 391.28 feet to an iron pin; thence S 24 (degrees)
08' E 3079.12 feet to an iron pin; thence S 69 (degrees) 57' W 161.85 feet to an
iron pin; thence S 67 (degrees) 42' W 170.07 feet to an iron pin; thence N 21
(degrees) 56' W 501.29 feet to an iron pin; thence S 70 (degrees) 49' W 127.74
feet to an iron pin; thence N 18 (degrees) 18' W 480.83 feet to an iron pin;
thence S 70 (degrees) 18' W 182.63 feet to an iron pin; thence N 22 (degrees)
36' W 35.08 feet to an iron pin; thence N 46 (degrees) 34' W 140.51 feet to an
iron pin; thence S 56 (degrees) 32' W 301.88 feet to an iron pin; thence S 24
(degrees) 36' E 91.96 feet to an iron pin; thence S 72 (degrees) 57' W 527.93
feet to an iron pin; thence S 27 (degrees) 32' W 264.21 feet to an iron pin;
thence S 17 (degrees) 16' E 136.53 feet to an iron pin; thence S 66 (degrees)
07' W 298.99 feet to an iron pin; thence S 35 (degrees) 17' 15" E 657.02 feet to
a P.K. nail in the northerly line of Sperry Road; thence with the northerly line
of Sperry Road, S 78 (degrees) 46' W 54.76 feet to the point of BEGINNING and
shown as Tract No. 3, Tract No. 4, and that portion of Tract No. 2 identified as
"50' Access Right of Way" on plan entitled "Map of Property of Sperry
Corporation" dated May 6, 1987, as revised August 20, 1987, prepared by Steven
Gerald Cross, Tennessee R.L.S. 1429.
17
<PAGE>
EXHIBIT B
DESCRIPTION OF LEASED EQUIPMENT
-------------------------------
All of the following items located on the Leased Land or in the Building:
1. Any and all cabling, wiring, connectors, switches, receptacles, outlets,
conduit, junction boxes, terminals, keyboards, central processing units,
printers, plotters, control panels, plans, schematic diagrams, system manuals,
repair logs, testing and diagnostic equipment, all spare or replacement parts,
all supplies, and all other components or equipment utilized in distributing
computer data throughout the Premises.
2. Any and all cabling, wiring, connectors, switches, receptacles, outlets,
conduit, junction boxes, speakers, control panels, key service units,
telephones, plans, schematic diagrams, system manuals, repair logs, testing and
diagnostic equipment, all spare or replacement parts, all supplies, and all
other components and equipment utilized in receiving and distributing telephone
signals throughout the Premises.
3. Any and all cabling, wiring, connectors, switches, lighting fixtures, back-up
generators, receptacles, outlets, conduit, junction boxes, circuit breakers,
fuses, transformers, insulators, control panels, plans, schematic diagrams,
system manuals, repair logs, testing and diagnostic equipment, all spare or
replacement parts, all supplies, and all other components or equipment used in
supplying or distributing electricity throughout the Premises.
4. Any and all chillers, boilers, thermostats, sensors, switches, duct work,
fans, fan motors, belts, pulleys, supply and return lines, valves, connectors,
dampers, radiators, vent grills, filtration devices, gauges, evaporators,
humidifiers, compressors, refrigerants, control panels, plans, schematic
diagrams, system manuals, repair logs, testing and diagnostic equipment, all
spare and replacement parts, all supplies, and all other components or equipment
utilized in the heating, ventilation and air conditioning systems throughout the
Premises.
5. Any and all pumps, pipes, joints, connectors, faucets, lavatories, drinking
fountains, sinks, traps, hose, tubing, pressure regulators, water heaters, water
softeners, toilets, urinals, sprinklers, shower heads, drain grates or covers,
control panels, plans, schematic diagrams, system manuals, repair logs, testing
and diagnostic equipment, all spare or replacement parts, all supplies, and all
other components utilized in supplying and distributing water throughout the
Premises.
6. Any and all sensors, detectors, telecommunication devices, bells, sirens,
cables, wiring, conduit, connectors, junction boxes, switches, outlets,
receptacles, programing devices, control panels, plans, schematic diagrams,
system manuals, repair logs, testing and diagnostic equipment, all spare or
replacement parts, all supplies, and all other components or equipment utilized
in the operation of an alarm system on the Premises.
7. Any and all speakers, microphones, wiring, switches, junction boxes,
receptacles, outlets, cabling, connectors, amplifiers, control panels, plans,
schematic diagrams, system manuals, repair logs, testing or diagnostic
equipment, all spare or replacement parts, all supplies, and all other
components or equipment utilized in the operation of an intercom system on the
Premises.
18
<PAGE>
8. Any and all refrigerators, freezers, cooktops, ovens, dishwashers, exhaust
hoods and fans, garbage disposals, compactors, mixers, blenders, broilers,
toasters, steamers, pressure cookers, fryers, grills, counter tops, racks,
serving units, shelving, cabinets, cash registers, tables, chairs, utensils,
cutlery, slicers, cookware, pots, pans, skillets, serving trays, plates, bowls,
glasses, cups, dishes and all other kitchen equipment and or equipment used in
food preparation, storage, or services on the Premises.
9. Any and all air compressors, compressed air storage tanks, tubing, hoses,
lines, valves, pressure regulators, couplings, fittings, connectors, switches,
controls, pneumatic tools, compressor motors, belts, pulleys, plans, schematic
diagrams, system manuals, repair logs, testing or diagnostic equipment, all
spare or replacement parts, all supplies, and all other components or equipment
utilized in the operation of a compressed air supply and distribution system
within the Premises.
10. Any and all tanks, vats, hoppers, drums, mixers, blenders, conveyers,
augers, pipes, tubes, instruments, control panels, meters, gauges, testers,
plotters, recorders, scales, motors, pulleys, belts, chains, plans, schematic
diagrams, system manuals, repair logs, testing or diagnostic equipment, all
spare or replacement parts, all supplies, and all other components or equipment
utilized in the operation of a wastewater treatment system on the Premises.
11. Any and all power tools, hand tools, work benches, vices, cabinets, racks,
lifts, presses, jacks, ladders, grinders, buffers, welders, polishers, painting
equipment, chains, testers, analyzers, diagnostic tools, repair logs, all spare
or replacement parts, all supplies, and all other components or equipment
utilized in operating a maintenance and repair shop on the Premises.
12. Any and all lawn mowers, tractors, hedgers, trimmers, snowblowers, leaf
blowers, vacuums, spreaders, hoses, pressure washers, sprinklers, power tools,
hand tools, and all spare or replacement parts, all supplies, and all other
components or equipment utilized in exterior maintenance on the Premises.
13. Any and all racks in the distribution center.
Excluding, however, any and all groundwater treatment equipment on the Leased
Property installed for the purpose of removing groundwater contaminants.
19
<PAGE>
FIRST AMENDMENT TO LEASE
FIRST AMENDMENT TO LEASE, dated as of May __, 1995, between THE INDUSTRIAL
DEVELOPMENT BOARD OF THE CITY OF BRISTOL, TENNESSEE, a public nonprofit
corporation organized and existing under the laws of the State of Tennessee (the
"Lessor") and EXIDE CORPORATION, a Delaware corporation (the "Lessee").
W I T N E S S E T H
WHEREAS, Lessor and Lessee entered into that certain Lease, dated as of
Febriary 7, 1994 (the "Lease"), covering certain premises consisting of all
the lots, tracts or parcels of land located in the Fourth Civil District of
Sullivan County, Tennessee, and more specifically described on Exhibit A annexed
hereto and made a part hereof (the "Premises");
WHEREAS, Lessee and Bankers Trust Company (the "Leasehold Mortgages") have
entered into that certain Credit Agreement, dated as of August 30, 1994,
pursuant to which the Bank has agreed to make a loan to Lessee in the amount of
$550,000,000 (the "Loan"), which Loan is secured in part by a deed of trust
encumbering Lessee's leasehold interest in the Premises;
WHEREAS, in connection with the Loan, the Leasehold Mortgage has requested
that Lessee enter into certain modifications of the Lease;
WHEREAS, pursuant to Section 8.4 of the Lease, Lessee is requesting that
Lessor agree to certain modifications of the Lease; and
WHEREAS, Lessor has agreed to modify Lease as set forth herein.
NOW, THEREFORE, in consideration of the Premises, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree that the Lease be and the same
hereby is amended as follows:
<PAGE>
1. Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to them in the Lease.
2. The following Article shall be deemed added to the Lease:
ARTICLE XIII
13.1 Leasehold Mortgagee. Lessor hereby acknowledges that the
Leasehold Mortgagee is the beneficiary under a deed of trust encumbering
Lessee's leasehold interest in the Premises, and as such, is entitled
to the benefits contained in this Article XIII. All notices to the
Leasehold Mortgage shall be deemed to have been duly given when sent
in the manner required hereunder addressed to the Leasehold Mortgagee at
One Bankers Trust Place, New York, New York 10006.
13.2 Cancellations and Modifications. No cancellation, surrender,
acceptance of surrender, or modification of this Lease shall be
binding upon the Leasehold Mortgage or affect the lien of any mortgage
on the leasehold estate without the prior consent of the Leasehold
Mortgagee.
13.3 Notices and Demands. Lessor shall give to the Leasehold
Mortgagee a copy of each notice of default by Lessee at the same time
and in the same manner as the notice given by Lessor to Lessee,
addressed to the Leasehold Mortgagee at its address set forth herein or
such other address that Leasehold Mortgagee may have subsequently
furnished to Lessor. No notice by Lessor to Lessee under this Lease
shall be deemed to have been duly given unless and until a copy of the
notice has been served on the Leasehold Mortgagee in the manner
provided in this Section 13.3.
13.4 Right to Cure. Subject to the terms of Section 13.6 hereof, the
Leasehold Mortgagee shall have a period that shall run consecutively
with the cure period afforded to Lessee within which to remedy any
default of Lessee hereunder or cause such default to be remedied.
Following receipt of notice of any such default in accordance with
Section 13.3 above, the Leasehold Mortgagee shall
-2-
<PAGE>
diligently commence a cure to the default; if such a diligent commencement is
undertaken, and continued without interruption, the Leasehold Mortgages shall
also be given an additional period of time as the Leasehold Mortgages may
reasonably require in order to complete such cure. The Leasehold Mortgages shall
have the option, as provided herein, but not the obligation, to cure any default
of Leases hereunder.
13.5 Performance of Lease by Leasehold Mortgages. The Leasehold
-------------------------------------------
Mortgages shall have the right to perform any term, covenant, condition, or
agreement and to remedy any default by Leases under this Lease, and Lessor shall
accept such performance by the Leasehold Mortgagee with the same force and
effect as if performed by Lessee.
13.6 Certain Defaults. In the event a default by Lessee occurs in the
----------------
performance or observance of any term, covenant, condition, or agreement on
Lessee's part to be performed under this Lease (other than a term, covenant,
condition or agreement requiring the payment of a sum of money) which cannot
practicably be cured by the Leasehold Mortgagee without taking possession of the
Premises, or if such default is of such a nature that the same is not
susceptible of being cured by the Leasehold Mortgagee, then Lessor shall not
serve a notice or election to terminate or otherwise exercise remedies under or
in respect of this Lease pursuant to the terms thereof, or otherwise terminate
the leasehold estate or any other estate, right, title or interest of Lessee
hereunder by reason of such default without allowing the Leasehold Mortgagee
reasonable time within which:
(1) In the case of a default which cannot practically be cured by the
Leasehold Mortgagee without taking possession of the Premises,
to obtain possession of the Premises as mortgagee (through the
appointment of a receiver of otherwise), and, upon obtaining
possession, to commence promptly and diligently prosecute to
completion such action as may be necessary to cure such default;
and
-3-
<PAGE>
(ii) In the case of a default which is not susceptible
of being cured by the Leasehold Mortgagee, to
commence promptly and diligently prosecute to
completion foreclosure proceedings or to acquire Lessee's
estate hereunder, either in its own name or through a
nominee, by assignment in lieu of foreclosure.
The Leasehold Mortgages shall not be required to continue
to proceed to obtain possession, or to continue in possession as
mortgagee, of the premises pursuant to clause (i) above, or to
continue to prosecute foreclosure proceedings pursuant to
clause (ii) above, if and when such default shall be cured.
Nothing herein shall preclude Lessor from exercising any of its
rights or remedies with respect to any other default by Lessee
during any period when Lessor shall be forebearing termination
of this Lease as above provided, but in such event the Leasehold
mortgages shall have all of the rights and protections
hereinabove provided for. If the Leasehold Mortgagee, or its
nominee, or a purchaser at a foreclosure sale, shall acquire
title to Lessee's leasehold estate hereunder, and shall cure all
defaults of Lessee hereunder which can be cured by the Leasehold
Mortgages, or by such purchaser, as the case may be, then the
defaults of any prior holder of Lessee's leasehold estate or any
other estate, right, title or interest hereunder which are not
susceptible of being cured by the Leasehold Mortgages (or by
such purchaser) shall no longer be deemed to be defaults
hereunder.
13.7 Termination of Lessor May Lease to Leasehold Mortgages.
------------------------------------------------------
In the event (i) this Lease is terminated by reason of Lessee's
default hereunder, or (ii) this Lease is disaffirmed in the
event of Lessee's bankruptcy, then, within ten (10) days
after such termination (which term as used herein shall include
a disaffirmance) Lessor shall give notice to the Leasehold
Mortgages that this Lease has been terminated, together with a
statement of any and all sums which would at that time be due
under this Lease but for such termination, and of all other
defaults, if any,
-4-
<PAGE>
under this Lease then known as Lessor, and the Leasehold
Mortgagee, by notice to Lessor, thereupon may request Lessor to
enter into a new lease of the Premiums and Lessor shall enter
into a new lease (the "New Lease") with the Leasehold Mortgagee
(or its nominee), within 60 days after the giving of such notice
by the Leasehold Mortgagee provided that the Leasehold Mortgagee
shall have cured or caused to be cured any defaults of Lessee
existing at the date of termination that are susceptible of
being cured. The New Lease shall commence and Rent and all
obligations of the Lessee under the New Lease shall accrue, as
of the date of termination of this Lease. The term of the New
Lease shall continue for the period which would have constituted
the remainder of the term of this Lease had this Lease not been
terminated, and shall be upon all of the terms, covenants,
conditions, conditional limitations, and agreements contained
herein which were in force and affect immediately prior to the
termination of this Lease. The New Lease, and this covenant,
shall be superior to all rights, liens, estates, titles and
interests, other than these to which this Lease shall have been
subject immediately prior to termination and these matters to
which this Lease may, by its terms, become subject. The
provisions of the immediately preceding sentence shall be self-
executing, and Lessor shall have no obligation to do anything
(other than to execute such New Lease as herein provided) to
assure to the Leasehold Mortgagee or to the tenant under the New
Lease good title to the leasehold estate and the other estates,
rights, titles and interests granted thereby. Simultaneously
therewith, Lessor shall pay over to the Leasehold Mortgagee all
monies on deposit with Lessor, if any, which Lessee would have
been entitled to use but for the termination of this Lease for
the purposes of and in accordance with the provisions of the New
Lease. Each subtenant of space in the premises whose sublease
was in force and effect immediately prior to the delivery of the
New Lease shall attorn to the tenant under the New Lease, unless
such lessee shall, at its option, elect to dispossess such
subtenant or otherwise terminate the sublease held by such
subtenant. The Leasehold Mortgagee shall, simultaneously with
the delivery of the New Lease,
-5-
<PAGE>
pay to Lessor (1) all Rent and other sums of money
due under this Lease on the date of termination of
this Lease and remaining unpaid; plus (2) all Rent
and other sums of money due under the New Lease for
the period from the date of commencement of the term
thereof to the date of delivery of the New Lease; plus
(3) all costs and expenses, including reasonable
attorneys' fees, court costs, and litigation expenses,
incurred by Lessor in connection with termination of
this Lease, the recovery of possession of the Premises,
putting the premises in good condition and repair, and
the preparation, execution and delivery of such new lease.
13.8 Assignment. If the Leasehold Mortgagee forecloses
----------
upon or otherwise acquires all or part of Lessee's
leasehold interest, the transfer to the Leasehold
Mortgagee (or any nominee of the Leasehold Mortgagee)
shall not require Lessor's consent and the acquiring
Leasehold Mortgagee shall be permitted to transfer the
acquired interest without Lessor's prior consent and
shall thereupon be released from all liability for the
performance or observance of the covenants and conditions
in such lease contained on Lessee's part to be performed
and observed from and after the date of such assignment;
provided that the assignee shall have assumed such lease;
and provided further that notwithstanding the foregoing
or any other term or provision hereof, the Leasehold
Mortgagee may assign this Lease, in whole or in part,
or any rights granted hereunder, or delegate to another
party any of the duties hereunder, without the prior
consent of Lessor if, in the reasonable judgment of the
Leasehold Mortgagee, such other party has such operating
capability as shall enable such party to perform the
obligations of Lessee hereunder.
13.9 No Amendments without Leasehold Mortgages Consent.
-------------------------------------------------
Lessor and Lessee shall not enter into any amendments,
modifications or supplements to this Lease without the
prior consent of the Leasehold Mortgagee if such amendment,
modification or supplement could reasonably be expected
to have a material adverse effect on the interest of the
Leasehold Mortgagee under the Lease.
-6-
<PAGE>
3. Except as amended herein, all of the other terms, unmodified and
covenants and conditions of the Lease are and shall remain in full force and
affect and are hereby ratified and confirmed.
4. This Amendment shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
IN WITNESS WHEREOF, Lessor and Leases have executed this amendment as of
the day and year first above written.
THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF BRISTOL,
TENNESSEE, Lessor
By: /s/ Signature appears here
---------------------------
EXIDE CORPORATION, Lessee
By:
----------------------------
-7-
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11.1
Exide Corporation and Subsidiaries
Computation of Per Share Earnings
(After Extraordinary Loss and Cumulative
Effect of Accounting Changes)
(Amounts in thousands except share and per share data)
Fiscal Fiscal Fiscal
Year Year Year
Ended Ended Ended
March 31, March 31, March 31,
1993 1994 1995
--------- --------- ---------
<S> <C> <C> <C>
Primary earnings per common share:
Income (loss) before extraordinary loss and cumulative effect of
accounting change applicable to common stock $ 157 $ 17,217 $ 4,491
========== ========== ==========
Net income (loss) applicable to common stock $ (10,206) $ 4,506 $ 894
========== ========== ==========
Shares and equivalents outstanding--
Base shares after ECA exchange 8,385,338 8,388,338 8,388,338
Common stock equivalents--
Stock award grants, assuming exercised at the
average market price -- 688,665 763,080
IPO shares (average shares outstanding throughout the year) -- 1,916,667 4,600,000
Secondary offering shares (average shares outstanding
throughout the year -- 64,515 1,000,000
12/94 stock offering (average shares outstanding throughout
the year) -- -- 1,439,657
---------- ---------- ----------
Weighted average of common shares outstanding and equivalents 8,388,338 11,058,185 16,191,075
========== ========== ==========
Primary earnings (loss) per common share before extraordinary
loss and cumulative effect of accounting change $ 0.02 $ 1.56 $ 0.28
========== ========== ==========
Primary earnings (loss) per common share $ (1.22) $ 0.41 $ 0.06
========== ========== ==========
Fully diluted earnings per common share:
Income (loss) before extraordinary loss and cumulative effect
of accounting change applicable to common stock $ 1.57 $ 17,217 $ 4,491
========== ========== ==========
Net income (loss) applicable to common stock $ (10,206) $ 4,506 $ 894
========== ========== ==========
Shares and equivalents outstanding--
Base shares after ECA exchange 8,388,338 8,388,338 8,388,338
Common stock equivalents--
Stock award grants, assuming exercised at
the ending market price -- 698,779 763,080
IPO shares (average shares outstanding throughout the year) -- 1,916,667 4,600,000
Secondary offering shares (average shares outstanding
throughout the year) -- 64,515 1,000,000
12/94 stock offering (average shares outstanding throughout
the year) -- -- 1,439,657
---------- ---------- ----------
Weighted average of common shares outstanding and equivalents 8,388,338 11,068,299 16,191,075
========== ========== ==========
Fully diluted earnings (loss) per common share before extraordinary
loss and cumulative effect of accounting change $ 0.02 $ 1.56 $ 0.28
========== ========== ==========
Fully diluted earnings (loss) per common share $ (1.22) $ 0.41 $ 0.06
========== ========== ==========
</TABLE>
<PAGE>
Exhibit 21.1
Exide Corporation - Subsidiaries
Jurisdiction
Subsidiary Name of incorporation
- --------------- ----------------
Exide Batteries Limited United Kingdom
Euro Exide Corporation Limited United Kingdom
Exide Canada, Inc. Canada
GBC, Inc. Delaware
General Battery Corporation Pennsylvania (1)
Sociedad Espanola del Acumulador Tudor, S.A. Spain
Hagen Batterie AG Germany
Hagen Batterijen, B.V. The Netherlands
Industria Composicioni, Stampate S.p.A (I.C.S.) Italy
Megorsa de Gormaz, S.A. Spain
Pakkasakku OY Finland
Sociedad Portuguesa Do Accumulador Tudor, S.A. Portugal
Tudor - Sonnak A/S Norway
Tudor Hellenic, Ltd. Greece
Exide Holdings France, S.A. France
Compagnie Europeenne D'Accumulateurs S.A. France
Accumulatorenfabrik Sonnenschein GmbH Germany
CMP Batteries Limited United Kingdom
Societa' Industriale Accumulatori S.r.l. Italy
Centra S.A. Poland
Compagnia Generale Accumulatori S.p.A. Italy
Accumulateurs Tudor S.A. Belgium
Fabbrica Accumulatori York S.p.A. Italy
Fulmen Tudor Service Belgique N.V. Belgium
CMP Batterijen B.V. The Netherlands
(1) Pennsylvania Business Trust
