<PAGE>
________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
Quarterly Report under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
FOR THE FISCAL QUARTER ENDED JUNE 28, 1998
Commission File Number 1 - 11263
EXIDE CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 23-0552730
- -------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1400 N. WOODWARD AVE., BLOOMFIELD HILLS, MICHIGAN 48304
- ------------------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
(248) 258-0080
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by a 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
AS OF AUGUST 11, 1998, 21,347,575 SHARES OF COMMON STOCK WERE OUTSTANDING.
________________________________________________________________________________
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
- -------------------------------------
Item 1. Financial Statements (unaudited except for March 31, 1998
Consolidated Balance Sheet).
-- Condensed Consolidated Balance Sheets - -
June 28, 1998 and March 31, 1998.
-- Consolidated Statements of Operations - -
for the three months ended June 28, 1998
and June 29, 1997.
-- Consolidated Statements of Cash Flows - -
for the three months ended June 28, 1998
and June 29, 1997.
-- Notes to Condensed Consolidated Financial Statements - -
June 28, 1998.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II. OTHER INFORMATION
- ---------------------------------
Item 4. None
Item 6. Selected Financial Data
6 (a). Exhibits filed with this report.
Exhibit 27 - Financial Data Schedule
SIGNATURE
- ---------
1
<PAGE>
<TABLE>
<CAPTION>
EXIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per-share data)
June 28, March 31,
1998 1998
(Unaudited)
------------ -----------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 28,433 $ 35,613
Receivables, net of allowance for doubtful
accounts of $40,179 and $37,488 461,200 434,679
Inventories 592,329 572,188
Prepaid expenses and other 34,703 32,455
Deferred income taxes 15,209 14,896
------------ -----------
Total current assets 1,131,874 1,089,831
------------ -----------
PROPERTY, PLANT AND EQUIPMENT 806,255 744,165
Less - Accumulated depreciation (245,677) (209,052)
------------ -----------
Total property, plant and equipment, net 560,578 535,113
------------ -----------
OTHER ASSETS:
Goodwill, net 577,665 570,251
Investments in affiliates 24,647 24,620
Deferred financing costs, net 19,771 20,050
Deferred income taxes 61,774 61,461
Other 43,125 47,290
------------ -----------
726,982 723,672
------------ -----------
Total assets $ 2,419,434 $ 2,348,616
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Short-term borrowings $ 25,947 $ 17,953
Current maturities of long-term debt 32,679 35,112
Accounts payable, trade 254,772 255,952
Accrued expenses 237,042 241,898
------------ -----------
Total current liabilities 550,440 550,915
------------ -----------
LONG-TERM DEBT 1,266,186 1,195,918
------------ -----------
OTHER NONCURRENT LIABILITIES 296,766 287,531
------------ -----------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 19,556 19,304
------------ -----------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value 60,000,000 shares authorized;
21,346,827 and 21,328,439 shares issued and outstanding 213 213
Additional paid-in capital 489,939 489,851
Accumulated deficit (39,864) (33,084)
Notes receivable - stock award plan (1,478) (1,609)
Unearned compensation (274) (322)
Minimum pension liability adjustment (2,767) (2,767)
Cumulative translation adjustment (159,283) (157,334)
------------ -----------
Total stockholders' equity 286,486 294,948
------------ -----------
Total liabilities and stockholders' equity $ 2,419,434 $ 2,348,616
============ ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
2
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in thousands, except share and per-share data)
<TABLE>
<CAPTION>
For the Three Months Ended
-----------------------------
June 28, June 29,
1998 1997
------------- ------------
<S> <C> <C>
NET SALES $ 544,532 $ 490,365
COST OF SALES 405,402 366,057
------------- ------------
Gross profit 139,130 124,308
------------- ------------
OPERATING EXPENSES:
Selling, marketing and advertising 78,531 68,813
General and administrative 36,981 31,157
Goodwill amortization 4,176 4,118
------------- ------------
119,688 104,088
------------- ------------
Operating income 19,442 20,220
INTEREST EXPENSE, net 26,543 29,264
OTHER EXPENSE (INCOME), net 1,390 2,251
------------- ------------
Loss before income taxes, minority
interest and extraordinary loss (8,491) (11,295)
INCOME TAX BENEFIT (2,338) (3,559)
------------- ------------
Loss before minority interest and
extraordinary loss (6,153) (7,736)
MINORITY INTEREST (100) (291)
------------- ------------
Loss before extraordinary loss (6,053) (7,445)
EXTRAORDINARY LOSS RELATED TO EARLY
RETIREMENT OF DEBT, net of income tax benefit
of $0 and $0 (301) (7,313)
------------- ------------
Net loss $ (6,354) $ (14,758)
============= ============
BASIC EARNINGS PER SHARE:
Loss before extraordinary loss $ (0.29) $ (0.36)
Extraordinary loss (0.01) (0.36)
------------- ------------
Net loss $ (0.30) $ (0.72)
============= ============
DILUTED EARNINGS PER SHARE:
Loss before extraordinary loss $ (0.29) $ (0.36)
Extraordinary loss (0.01) (0.36)
------------- ------------
Net loss $ (0.30) $ (0.72)
============= ============
WEIGHTED AVERAGE SHARES:
Basic 21,152,596 20,573,209
============= ============
Diluted 21,152,596 20,573,209
============= ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
3
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
For the Three Months Ended
-----------------------------
June 28, June 29,
1998 1997
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (6,354) $ (14,758)
Adjustments to reconcile net loss to net
cash used in operating activities -
Depreciation and amortization 30,756 27,751
Extraordinary loss 301 7,313
Deferred income taxes (4,811) 1,657
Original issue discount on notes 2,212 3,308
Provision for losses on accounts receivable 2,294 1,701
Minority interest (100) (291)
Changes in assets and liabilities excluding
effects of acquisitions -
Receivables (30,576) 12,482
Inventories (17,765) (41,533)
Prepaid expenses and other (650) 1,094
Payables and accrued expenses (14,692) (37,337)
Other, net 488 (1,662)
------------ -----------
Net cash used in operating activities (38,897) (40,275)
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of certain businesses (2,133) - -
Capital expenditures (24,979) (17,176)
Equipment purchased held for sale (783) - -
Proceeds from sale of assets 1,885 556
Insurance proceeds from fire damage 5,154 - -
Costs incurred this period related to fire damage (707) - -
------------ -----------
Net cash used in investing activities (21,563) (16,620)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in short-term borrowings 8,164 4,080
Borrowings under Global Credit Facilities Agreement 201,556 - -
Repayments under Global Credit Facilities Agreement (149,721) - -
Borrowings under U.S. Credit Agreement - - 122,500
Repayment of European Facilities Agreement - - (73,218)
Issuance of 9.125% Senior Notes - - 102,130
Retirement of 12.25% Senior Subordinated Notes - - (104,096)
Decrease in other debt (6,087) (3,619)
Dividends paid (426) (419)
Debt issuance costs (527) (4,167)
------------ -----------
Net cash provided by financing activities 52,959 43,191
------------ -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 321 (1,222)
------------ -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (7,180) (14,926)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 35,613 42,706
------------ -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 28,433 $ 27,780
============ ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for -
Interest (net of amount capitalized) $ 38,360 $ 36,583
Income taxes $ 463 $ 1,514
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
4
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 28, 1998
(Amounts in thousands, except share and per-share data)
(Unaudited)
(1) BASIS OF PRESENTATION, ETC.
- --------------------------------
The condensed consolidated financial statements include the accounts of Exide
Corporation (the "Company") and all of its majority-owned subsidiaries. The
accompanying financial statements are presented in accordance with the
requirements of Form 10-Q and consequently do not include all of the disclosures
normally required by generally accepted accounting principles or those normally
made in the Company's annual Form 10-K filing. Accordingly, the reader of this
Form 10-Q may wish to refer to the Company's Form 10-K for the year ended March
31, 1998 for further information.
The financial information has been prepared in accordance with the Company's
customary accounting practices and has not been audited (except for Balance
Sheet information presented at March 31, 1998). In the opinion of management,
the accompanying condensed consolidated financial information reflects all
adjustments necessary to present fairly the results of operations and financial
position for the periods presented.
The Company adopted Statement of Financial Accounting Standards No. 128
"Earnings per Share" ("SFAS No. 128") in the third quarter of fiscal 1998 and
earlier periods presented have been restated. Included below is a
reconciliation of shares for the basic and diluted earnings per share ("EPS")
computations.
<TABLE>
<CAPTION>
For the Three Months Ended
--------------------------
June 28, June 29,
1998 1997
------------- -----------
<S> <C> <C>
Basic EPS Shares 21,152,596 20,573,209
Effect of Dilutive Securities -- --
------------- -----------
Diluted EPS Shares 21,152,596 20,573,209
============= ===========
</TABLE>
There is no difference between basic and diluted shares in each period presented
because the effects of outstanding stock options, grants and convertible
securities are antidilutive.
Options to purchase 496,000 shares ranging from $25-7/8 to $50 were outstanding
during the first quarter of fiscal 1999 but were not included in the computation
of diluted EPS because the option's exercise price was greater than the average
market price of the common shares. These options expire in the years 2000 to
2006.
5
<PAGE>
In the first quarter of fiscal 1999, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS No.
130"). Under SFAS No. 130, comprehensive income is defined as the total of net
income and all other non-owner changes in equity. The adoption of SFAS No. 130
involves new disclosure requirements only and did not impact the reported
financial position or results of operations.
Total comprehensive loss and its components are as follows:
<TABLE>
<CAPTION>
For the Three Months Ended
--------------------------
June 28, June 29,
1998 1997
------------ ----------
<S> <C> <C>
Net loss $ (6,354) (14,758)
Cumulative translation adjustment (1,949) (24,367)
------------ ---------
Total comprehensive loss $ (8,303) $ (39,125)
============ =========
</TABLE>
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities", which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities. It requires that all entities recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. The Company is evaluating the impact of the
statement and will be required to adopt it in the second quarter of fiscal 2000.
(2) INVENTORIES
- ----------------
<TABLE>
<CAPTION>
June 28, March 31,
1998 1998
---------- -----------
<S> <C> <C>
Raw materials $ 141,065 $ 143,652
Work-in-process 89,054 78,004
Finished goods 362,210 350,532
---------- -----------
$ 592,329 $ 572,188
========== ===========
</TABLE>
At June 28, 1998 and March 31, 1998, inventories valued by the LIFO method were
approximately 28% and 30% of consolidated inventories, respectively. If all
inventories had been determined using the first-in, first-out method, such
inventories would have been $575,262 and $555,121 at June 28, 1998 and March 31,
1998, respectively.
6
<PAGE>
(3) LONG-TERM DEBT
- -------------------
On May 11, 1998, the Company entered into a bond swap agreement for $4,430
(principal amount) of its 10% Senior Notes. Under the agreement, the Company
pays LIBOR plus 1.75% to a counterparty and receives from the counterparty the
fixed coupon rate payments made by the Company. At the end of the agreement,
the counterparty is guaranteed repayment of its open market purchase price of
the Notes which exceeded face value by $233. This debt modification was
accounted for as an extinguishment of debt, and the related write-off of
unamortized deferred financing costs along with the premium paid by the
counterparty resulted in an extraordinary loss of $301. No income tax benefit
on the extraordinary loss was recognized.
(4) 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 in Note 12 of Notes to Consolidated Financial
Statements included in the Company's March 31, 1998 Form 10-K or herein, the
Company believes that it is in substantial compliance with all material
environmental, health and safety requirements.
North America
- -------------
The Company has been advised by the U.S. Environmental Protection Agency ("EPA")
that it is a "Potentially Responsible Party" ("PRP") under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") or similar
state laws at 62 federally defined Superfund or state equivalent sites. At 36
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 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, 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 affect on the Company's
business or financial condition because, based on the Company's experience, it
is reasonable to expect that the liability will be roughly proportionate to its
volumetric contribution of waste to the sites.
While the ultimate outcome of the various 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, cash flows, financial condition or results of operations. The
Company's policy is to accrue for
7
<PAGE>
environmental costs when it is probable that a liability has been incurred and
the amount of such liability is reasonably estimable. While the Company
believes its current estimates of future remediation costs are reasonable,
future findings or changes in estimates could have a material effect on the
recorded reserves.
The Company has reserves for on-site and off-site environmental remediation
costs and believes that such reserves are adequate. As of June 28, 1998, the
amount of such reserves on the Company's balance sheet was $29,930. Of this
amount, $20,505 was included in other noncurrent liabilities. Because
environmental liabilities are not recorded until the 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
future adjustments to the reserves are possible.
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 U.S. laws and
regulations.
Certain facilities in France, Germany and Spain are not in compliance with
certain limits contained in air and wastewater treatment discharge permits. In
every case, the Company is working cooperatively with appropriate authorities to
come into compliance. It is possible that the Company could be subject to fines
or penalties with regard to these violations, although management believes any
such fines/penalties will not be material. The cost to upgrade the facilities
to attain compliance is not expected to be material. The 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.
(5) COMMITMENTS AND CONTINGENCIES
- ----------------------------------
There have been no significant changes from the March 31, 1998 audited financial
statements.
(6) SUBSEQUENT EVENT
- ---------------------
On July 30, 1998, the Company and Schumacher Electric Corporation, Inc.
("Schumacher Electric"), a company headquartered in Mount Prospect, Illinois,
signed an agreement to form a joint venture to be named Schumacher Corporation.
Schumacher Electric will contribute its battery charger and related products
business and Exide will contribute its battery charger business and its Speed
Clip division to the new company. Exide will own over 50% of the joint venture
and accordingly, Exide will account for this transaction as an acquisition of
the Schumacher Electric business and will apply purchase accounting, Schumacher
Electric's business had annual revenues of $59,700 in its most recent fiscal
year.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
-------------------------------------------------
GENERAL
- -------
The Company through its European operations is exposed to foreign currency risk
in most Western European countries, principally France, Spain, Germany, Italy
and the U.K. The Company does not have material operations in countries whose
economies can be classified as hyper-inflationary. Movements of exchange rates
vis-a-vis the U.S. dollar can result in both unrealized and realized exchange
gains or losses. In some instances gains in one currency may be offset by losses
in another as all currencies may not move in unison vis-a-vis the U.S. dollar.
It is the policy of the Company to reduce foreign currency risk by balancing net
foreign currency positions where possible. In addition, the Company enters into
foreign exchange contracts, including forward and purchased option contracts .
The Company enters into forward exchange contracts to reduce the exposure to
foreign currency fluctuations associated with certain monetary assets and
liabilities, as well as certain firm commitments and highly anticipated cash
flows. The Company also enters into purchased option contracts which, if
exercised, involve the sale or purchase of foreign currency at a fixed exchange
rate for a specified time. As of June 28, 1998, the net fair value of open
foreign exchange contracts and the related gains and losses were not material.
During the first quarter of fiscal 1999, $1.9 million of the decrease in
stockholders' equity was due to foreign currency translation adjustments
associated with the continued weakening of most European currencies relative to
the U.S. dollar.
RESULTS OF OPERATIONS
- ---------------------
Three months ended June 28, 1998 compared with the three months ended June 29,
- ------------------------------------------------------------------------------
1997.
- -----
Net sales increased 11.0 % ($54.2 million) to $544.5 million in the first
quarter of fiscal 1999 from $490.4 million in the first quarter of fiscal 1998.
The increase was principally attributable to the inclusion of DETA which was
acquired effective September, 1997 ($49.9 million) and higher automotive sales,
offset by the impact of foreign exchange rates ($7.4 million). Industrial
battery sales (included above) for the first quarter of fiscal 1999 were $181.9
million versus $152.8 million for the first quarter of fiscal 1998. This
increase is due to the DETA acquisition.
Gross profit increased $14.8 million in the first quarter of fiscal 1999
compared to the same period in the prior year. The gross profit margin was 25.6%
in the first quarter of fiscal 1999 versus 25.4% in the first quarter of fiscal
1998. The increase in gross profit is largely the result of the DETA acquisition
($12.9 million at a margin of 25.9%) and manufacturing cost reductions relating
to the continuing European rationalization / consolidation process. The effects
of weaker European currencies reduced gross profit $2.5 million.
9
<PAGE>
Selling, marketing and advertising expenses increased $9.7 million or 14.1%
largely due to the acquisition of DETA ($7.1 million) and higher provisions
($0.9 million) for accounts receivable losses primarily as a result of the
bankruptcy filings by certain major U.S. retailers. Offsetting these increases
was the effect of weaker European currencies ($1.2 million).
General and administrative expenses increased $5.8 million or 18.7% largely due
to the acquisition of DETA ($4.8 million) and the write off of expenses
associated with the financing commitments made for a potential acquisition; a
bid that was subsequently awarded to another entity. Offsetting these increases
was the effect of weaker European currencies ($0.8 million).
Operating income decreased $ 0.8 million, or 3.8%, as result of the matters
discussed above.
Interest expense decreased $2.7 million, or 9.3%, primarily due to the lower
rates related to the refinancing of debt in the third and fourth quarters of
fiscal 1998. Offsetting the decrease was increased expense for borrowing
related to the acquisition of DETA.
Other expense, net was $1.4 million in the first quarter of fiscal 1999 versus
$2.3 million in the first quarter of fiscal 1998. The $0.9 million decrease
principally relates to net currency transaction gains recorded in the first
quarter of fiscal 1999 versus net currency transaction losses recorded in the
first quarter of fiscal 1998 ($1.2 million) and the ratable recognition of the
deferred gain on the sales/leaseback transaction entered into in December 1997
($1.0 million). Offsetting these decreases were increased losses on the sales
of accounts receivable and associated fees in Europe under the agreement
initiated in July, 1997 ($1.8 million).
Net loss decreased $8.4 million, primarily as a result of the matters discussed
above and due to the recording of a $7.3 million extraordinary loss in the first
quarter of fiscal 1998 related to the early retirement of debt.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's liquidity requirements arise primarily from the funding of
seasonal working capital needs, obligations on its indebtedness and capital
expenditures. Historically, the Company has met these liquidity requirements
through operating cash flows, with borrowed funds and the proceeds of sales of
accounts receivable. The Company is party to a U.S. receivables purchase
agreement and a European receivables purchase agreement under which the other
parties have committed (subject to certain exceptions) to purchase selected
accounts receivable of the Company, up to a maximum commitment of $75.0 million
and $175.0 million, respectively. The Company's greatest cash demands from
operations occur during the months of June through October. During fiscal 1999
and beyond, the Company also expects to meet its liquidity requirements in the
same manner.
Cash used in operating activities were $38.9 million and $40.3 million in the
first quarters of fiscal 1999 and 1998, respectively. Because of the seasonality
of the Company's business, more funds are typically generated in its third and
fourth fiscal quarters. In the next several years, the Company will continue to
complete the closure of various European plants which will necessitate cash
payments for severance and other closure
10
<PAGE>
costs. While the Company believes that a large portion of its cash requirements
for its European consolidation activities will be generated from operations, it
has substantial liquidity and capital resources through its Senior Secured
Global Credit Facilities Agreement, as discussed below.
The Company's capital expenditures were $25.0 million and $17.2 million in the
first quarters of fiscal 1999 and 1998, respectively. The Senior Secured Global
Credit Facilities Agreement restricts the amount of capital expenditures which
may be made by the Company and its subsidiaries. However, the Company believes
that it has sufficient resources for its capital expenditure programs from
operating cash flows and borrowing availability under its existing credit
agreements.
As of June 28, 1998, the Company had $551.9 million outstanding on its Senior
Secured Global Credit Facilities Agreement, including letters of credit.
Obligations under the Senior Secured Global Credit Facilities Agreement bear
interest at fluctuating rates. Increases in interest rates on such obligations
could adversely affect the Company's results of operations and financial
condition. The Senior Secured Global Credit Facilities Agreement is fully
secured by guarantees of the European subsidiaries and certain fixed assets,
inventory and receivables. The Company has an interest rate collar agreement
which reduces the impact of changes in interest rates on a portion of the
Company's floating rate debt. The collar agreement effectively limits the PIBOR
base interest rate on 593.1 million French francs (U.S. $100 million) of
borrowings to no more than 6.6% and no less than 3.5% through December 23, 2000.
The Company has two currency and interest rate swap agreements which effectively
converts $175 million of borrowings under the Senior Secured Global Credit
Facilities Agreement into 778.8 million French francs (U.S. $133 million) and
25.2 million British pound sterling (U.S. $42 million). The Company receives
LIBOR and pays PIBOR and pound sterling LIBOR. Additionally, the Company
entered into a series of bond swaps agreements which effectively converted $45.1
million (principal amount) of the 10% Senior Notes into a variable LIBOR
interest rate through April 15, 2000. The Company has the right to terminate
the $45.1 million bond swap agreements at any time before maturity.
As of June 28, 1998, the Company had $92.9 million available under its Senior
Secured Global Credit Facilities Agreement after consideration of $23.1 million
of outstanding letters of credit.
As of June 28, 1998, the Company has significant NOL carryforwards in Europe and
in the United States which are available, subject to certain restrictions, to
offset future U.S. and European taxable income.
YEAR 2000 ISSUE
- ---------------
The Year 2000 issue results from the fact that some computer systems and
applications utilizing two-digit date fields to designate years may not
correctly interpret the year 2000. As a result, some date-sensitive systems may
recognize the year 2000 as 1900, or not at all, which may cause systems to
process financial and operational information incorrectly. The Company has
assessed the impact of the Year 2000 issue, including cost estimates to complete
required changes. Plans to address the Year 2000 issue have been developed and
are being implemented. Currently, the Company does not expect that the costs to
be incurred will be material to results of operations or financial condition,
and expects all systems and applications to be modified in advance of the year
2000.
11
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EXIDE CORPORATION
Date: August 12, 1998 By: /s/ Leland E. Coulter
------------------------ ----------------------------
Leland E. Coulter
Chief Financial Officer
(Authorized Signatory)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-28-1998
<CASH> 28,433
<SECURITIES> 0
<RECEIVABLES> 501,379
<ALLOWANCES> 40,179
<INVENTORY> 592,329
<CURRENT-ASSETS> 1,131,874
<PP&E> 806,255
<DEPRECIATION> 245,677
<TOTAL-ASSETS> 2,419,434
<CURRENT-LIABILITIES> 550,440
<BONDS> 1,266,186
0
0
<COMMON> 213
<OTHER-SE> 286,273
<TOTAL-LIABILITY-AND-EQUITY> 2,419,434
<SALES> 544,532
<TOTAL-REVENUES> 544,532
<CGS> 405,402
<TOTAL-COSTS> 405,402
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,294
<INTEREST-EXPENSE> 26,543
<INCOME-PRETAX> (8,491)
<INCOME-TAX> (2,338)
<INCOME-CONTINUING> (6,053)
<DISCONTINUED> 0
<EXTRAORDINARY> 301
<CHANGES> 0
<NET-INCOME> (6,354)
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.30
</TABLE>
