<PAGE>
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
DECEMBER 13, 2000 (SEPTEMBER 29, 2000)
EXIDE CORPORATION
(Exact name of registrant as
specified in its charter)
DELAWARE 1-11263 23-0552730
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
645 Penn Street
Reading, Pennsylvania 19601
(Address of principal executive offices and zip code)
(610) 378-0500
(Registrant's telephone number,
including area code)
<PAGE>
On October 16, 2000, Exide Corporation (the "Company") filed a Current Report on
Form 8-K with respect to the acquisition (the "Acquisition") of the global
battery business of Australian-based Pacific Dunlop Limited, including its
subsidiary GNB Technologies, Inc. ("GNB"). Such Current Report indicated that
the required financial statements and pro forma financial information would be
filed at the earliest practicable date after the date of the report. The Company
hereby amends Item 7 of the Current Report to include the previously omitted
information.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
GNB's combined financial statements as of and for the fiscal year ended
June 30, 2000.
(b) Pro Forma Financial Information
Unaudited pro forma combined condensed statements of operations for the
Company's fiscal year ended March 31, 2000 and for the six months ended
October 1, 2000.
(c) Exhibits
2.1 Stock Purchase Agreement by and between the Company and Pacific
Dunlop Holdings (USA) Inc. dated as of May 9, 2000 (the "US Stock
Purchase Agreement") and Amendment No. 1 thereto dated June 19, 2000,
both of which were previously filed as Exhibit 2.1 to the report on
Form 10-Q of the Company for the fiscal quarter ended July 2, 2000
(the "July 2000 10-Q").
2.2 Amendment No. 2, dated as of September 29, 2000, to the US Stock
Purchase Agreement previously filed as Exhibit 2.1 to the July 2000
10-Q.
2.3 Amendment No. 1, dated as of September 29, 2000, to the Stock
Purchase Agreement with respect to GNB Technologies (India) Private
Limited previously filed by the Company as Exhibit 2.1 to the July
2000 10-Q.
2.4 Amendment No. 1, dated as of September 29, 2000, to the Asset
Purchase Agreement with respect to Exide Australia Pty Limited
previously filed by the Company as Exhibit 2.1 to the July 2000 10-Q.
<PAGE>
2.5 Amendment No. 3, dated as of September 29, 2000, to the Coordinating
Agreement dated as of May 9, 2000 by and between the Company and
Pacific Dunlop Holdings (USA) Inc. previously filed by the Company
as Exhibit 2.1 to the July 2000 10-Q.
4.1* Amended and Restated Credit and Guarantee Agreement dated as of
September 29, 2000 by and among the Company, Credit Suisse First
Boston, as Sole Book Manager, Joint Lead Arranger and Administrative
Agent, Salomon Smith Barney Inc., as Syndication Agent and Joint
Lead Arranger, and the lenders party thereto.
4.2* Warrant Agreement dated as of September 29, 2000 by and between the
Company and The Bank of New York, as warrant agent.
4.3* Form of Warrant Certificate (attached as Exhibit A to the Warrant
Agreement).
4.4* Registration Rights Agreement dated as of September 29, 2000 by and
among the Company and certain lenders under the Credit Agreement.
4.5* Registration Rights and Standstill Agreement dated as of September
29, 2000 by and between the Company and Pacific Dunlop Holdings
(USA) Inc.
4.6 Amendment No. 1, dated as of August 10, 2000, to the Registration
Rights Agreement dated as of October 26, 1993 previously filed by
the Company as Exhibit 4.14 to its S-1 Registration Statement dated
August 27, 1993 (the "1993 Registration Agreement").
4.7* Amendment No. 2, dated as of September 29, 2000, to the 1993
Registration Agreement.
10.1* Amended and Restated Sale Agreement dated as of September 29, 2000
by and between the Company and Exide U.S. Funding Corporation.
10.2* Amended and Restated Receivables Purchase Agreement dated as of
September 29, 2000 by and between Exide U.S. Funding and Three
Rivers Funding Corporation.
23.1 Consent of GNB's Independent Public Accountants (filed herein).
* Incorporated by reference to the Company's Current Report on Form 8-K filed
on October 16, 2000.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Exide Technologies
Dated: December 13, 2000 By: /s/ Kevin R. Morano
-------------------------
Name: Kevin R. Morano
Title: Chief Financial Officer
ITEM 7(a). FINANCIAL STATEMENTS OF BUSINESS ACQUIRED:
<PAGE>
GNB TECHNOLOGIES GROUP
(Wholly owned by Pacific Dunlop Limited)
Combined Financial Statements
June 30, 2000
<PAGE>
GNB TECHNOLOGIES GROUP
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Independent Auditors' Report 1
Combined Statement of Assets, Liabilities and Shareholder's Equity 2
Combined Statement of Operations 4
Combined Statement of Shareholder's Equity and Comprehensive Loss 5
Combined Statement of Cash Flows 6
Notes to Combined Financial Statements 7
</TABLE>
<PAGE>
Independent Auditors' Report
The Board of Directors
Pacific Dunlop Limited:
We have audited the accompanying combined statements of assets, liabilities and
shareholder's equity of GNB Technologies Group (the Group), wholly owned by
Pacific Dunlop Limited, as of June 30, 2000, and the related combined statements
of operations, shareholder's equity and comprehensive loss and cash flows for
the year then ended. These combined financial statements are the responsibility
of the Group's management. Our responsibility is to express an opinion on these
combined financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the combined
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the combined financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall combined financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
As discussed in note 4 to the combined financial statements, GNB Technologies
Group is dependent on Pacific Dunlop Limited for its financing needs. The loss
of the financial support of Pacific Dunlop Limited would require the Group to
arrange for alternative financing. On May 9, 2000 Pacific Dunlop Holdings (USA)
Inc. entered into an agreement to sell substantially all of the assets,
liabilities and operations of the Group to Exide Corporation.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of GNB Technologies
Group as of June 30, 2000, and the results of their operations and their cash
flows for the year ended June 30, 2000 in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
Melbourne, Australia
July 28, 2000
<PAGE>
GNB TECHNOLOGIES GROUP
Combined Statement of Assets, Liabilities and Shareholder's Equity
(in thousands)
June 30, 2000
Assets
Current assets:
Cash and cash equivalents $ 23,544
Trade receivables, net of allowance of $3,302 178,307
Inventories (note 2) 137,189
Prepaid expenses 9,114
Other current assets 1,228
Due from related parties (note 3) 1,069
---------
Total current assets 350,451
---------
Property, plant and equipment:
Land and land improvements 23,489
Buildings 63,468
Machinery and equipment 478,846
Construction in progress 22,377
---------
588,180
Less accumulated depreciation and amortization (282,624)
---------
Net property, plant and equipment 305,556
Investments 4,055
Intangible assets 973
Other assets 1,000
Deferred income tax assets (note 5) 4,679
---------
Total assets $ 666,714
=========
See accompanying notes to combined financial statements.
2
<PAGE>
GNB TECHNOLOGIES GROUP
Combined Statement of Assets, Liabilities, and Shareholder's Equity
(in thousands)
June 30, 2000
Liabilities and Shareholder's Equity
<TABLE>
<S> <C>
Current liabilities:
Current maturities of capitalized lease obligations (note 8) $ 868
Trade accounts payable 112,509
Current portion of envirnomental remediation reserves (note 9) 7,000
Warranty reserves 21,282
Accrued salaries, wages and other compensation 28,486
Other accrued expenses 29,290
Due to related parties (note 3) 159,566
Income taxes payable 1,365
-----------
Total current liabilities 360,366
-----------
Capitalized lease obligations, less current portion (note 8) 497
Accrued pension obligations (note 6) 6,721
Deferred income and compensation 2,414
Postretirement benefit obligations, less current portion (note 7) 16,601
Environmental remediation reserves, less current portion (note 9) 55,983
Note payable to related parties (note 3) 200,000
Other long-term liabilities 1,472
-----------
Total liabilities 644,054
-----------
Shareholder's equity
Parent company investment 282,100
Accumulated deficit (256,636)
Accumulated other comprehensive loss (2,804)
-----------
Total shareholder's equity 22,660
Commitments and contingencies (notes 6, 7, 8, 9 and 10) --
-----------
Total liabilities and shareholder's equity $ 666,714
===========
</TABLE>
See accompanying notes to combined financial statements.
3
<PAGE>
GNB TECHNOLOGIES GROUP
Combined Statement of Operations
(in thousands)
For the year ended June 30, 2000
<TABLE>
<S> <C>
Net sales $ 967,799
Cost of sales 732,983
-------
Gross profit 234,816
Selling, general, and administrative expenses (notes 9 and 12) 242,450
-------
Operating loss (7,634)
-------
Other income (expense):
Interest income 2,414
Interest expense (30,333)
Other (673)
-------
(28,592)
-------
Loss before taxes (36,226)
Income tax provision 3,328
-------
Net loss $ (39,554)
=======
</TABLE>
See accompanying notes to combined financial statements.
4
<PAGE>
GNB TECHNOLOGIES GROUP
Combined Statement of Shareholder's Equity and Comprehensive Loss
(in thousands)
For the year ended June 30, 2000
<TABLE>
<CAPTION>
Accumulated
Parent other
company Accumulated comprehensive
investment deficit income (loss) Total
------------------ ---------------- ------------------- --------------
<S> <C> <C> <C> <C>
Balance, June 30, 1999 $ 80,253 $ (217,082) $ (4,312) $ (141,141)
Recapitalization of note payable (note 3) 200,000 -- -- 200,000
Foreign currency translation
Adjustment 1,847 -- 1,508 3,355
Net loss -- (39,554) -- (39,554)
--------------
Total comprehensive loss (36,199)
------------------ ---------------- ------------------- --------------
Balance, June 30, 2000 $ 282,100 $ (256,636) $ (2,804) $ 22,660
================== ================ =================== ==============
</TABLE>
See accompanying notes to combined financial statements.
5
<PAGE>
GNB TECHNOLOGIES GROUP
Combined Statement of Cash Flows
(in thousands)
For the year ended June 30, 2000
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss from continuing operations $ (39,554)
Adjustments to reconcile net loss from continuing operations
to net cash provided by operating activities:
Depreciation and amortization 35,587
Loss on disposal of property, plant, and equipment 314
Unusual charges (note 12) 20,085
Deferred income taxes (216)
Changes in operating assets and liabilities:
Trade receivables (16,344)
Inventories 14,176
Prepaid expenses 2,220
Other current and noncurrent assets 884
Trade accounts payable 9,905
Warranty reserves 8,144
Accrued salaries, wages, and other compensation 5,654
Other accrued expenses 7,291
Income taxes payable 1,365
Deferred income and compensation (8,404)
Pension and postretirement benefit obligations 1,383
Environmental remediation reserve (4,492)
Other long-term liabilities 933
---------
Net cash provided by continuing operations 38,931
Cash flows from investing activities:
Purchases of property, plant, and equipment (45,539)
Proceeds from the sale of property, plant, and equipment 199
Purchase of other assets 6,451
---------
Net cash used in investing activities (38,889)
Cash flows from financing activities:
Change in parent company investment 201,847
Change in related party balances (193,143)
Payments on capital leases (1,314)
----------
Net cash provided by financing activities 7,390
Effect of translation adjustment 4,115
---------
Increase in cash and cash equivalents 11,547
Cash and cash equivalents--beginning of the year 11,997
---------
Cash and cash equivalents--end of the year $ 23,544
=========
Supplemental cash flow information:
Cash paid for interest $ 30,004
Cash paid for income taxes 1,764
Supplemental non-cash financing and investing activites: On November 1, 1999, $200,000 of notes payable to
Pacific Dunlop Holding, Inc. were converted to common stock of the group.
</TABLE>
See accompanying notes to combined financial statements.
6
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousands)
(1) Nature of Business and Summary of Significant Accounting Policies
(a) Nature of Business
GNB Technologies Group (the Group) manufactures and distributes
automotive and industrial batteries and recycles lead, which is
used as a primary component of the manufacturing process.
(b) Principles of Combination and Basis of Presentation
The combined statements of assets, liabilities and shareholder's
equity of the Group include the accounts of Pacific Dunlop GNB,
Inc. and its wholly owned subsidiary GNB Technologies, Inc. and
its wholly owned subsidiaries: Pacific Chloride Incorporated, New
Enpak Incorporated, GNB Industrial Battery Company, GNB Battery
Technologies Japan, Inc.; GNB Battery Technologies Ltd.,
Australian Battery Company (Aust) Pty Ltd, and GNB Technologies [a
division of Pacific Dunlop Limited (PDL)] and their 50% owned
associate Pacific Marine Batteries Pty Ltd; GNB Technologies (a
division of Pacific Dunlop Holdings, New Zealand), and minor
branch operations in Asia and Europe. The Group's ultimate parent
is Pacific Dunlop Limited (an Australian company). All significant
intercompany balances and transactions between the entities have
been eliminated in the combined financial total.
The combined financial statements are intended to be presented as
if the Group had existed as a separate entity from PDL for the
period presented. However, this presentation may not necessarily
reflect the financial position or results of operations of the
Group that would have been reported had the Group been a
stand-alone entity for this period.
(c) Cash and Cash Equivalents
Cash and cash equivalents consist primarily of money market
instruments with original maturities of three months or less.
(d) Concentration of Risk
Financial instruments that potentially subject the Group to
significant concentrations of credit risk consist principally of
cash investments and accounts receivable. The Group places its
cash investments with high quality financial institutions and
limits the amount of credit exposure to any one institution.
The Group's customers are not concentrated in any specific
geographic region, but are concentrated in several large
multi-outlet retail chains and automobile manufacturers.
Wal-mart/Sam's Club accounted for $191,652 of the Group's sales
for the fiscal year ended June 30, 2000. The five largest
customers accounted for approximately 36% of net sales in 2000.
The Group reviews a customer's credit history before extending
credit. The Group establishes an allowance for doubtful accounts
based upon factors surrounding the credit risk of specific
customers, historical trends and other information.
7 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousands)
(e) Inventories
Inventories are stated at the lower of cost or market. Cost is
determined by the first-in, first-out (FIFO) method.
(f) Property, Plant and Equipment
The cost of property, plant and equipment is depreciated using the
straight-line method over the estimated useful lives of the assets
as follows:
Buildings and land improvements 20 to 30 years
Machinery and equipment 2 to 12-1/2 years
====================
Assets under capital leases are amortized using the straight-line
method over the shorter of the term of the lease or the estimated
useful life of the assets.
(g) Intangible Assets
Intangible assets consist primarily of non-compete agreements and
other intangibles acquired in transactions accounted for as
purchases, and are amortized ratably over their estimated useful
lives.
(h) Product Warranty
The Group's warranty policies cover certain products from 6 months
to 20 years after sale. Costs estimated to be incurred under
product warranties are provided for in the period of sale.
(i) Income Taxes
The U.S. operations of the Group are included in consolidated
federal and, where applicable, state income tax returns with the
other U.S. operating entities owned by PDL.
The U.S. components of the deferred income tax asset and liability
balances are reflected in the combined financial statements as if
the Group's U.S. operations had always reported on a separate
company basis. The combined financial statements do not reflect
any provision for additional tax exposure which may arise in the
event of the disaggregation of the company from the previously
existing consolidated tax group, or from income tax examinations.
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled.
8 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousands)
(j) Translation
The operations of all foreign entities are measured in local
currencies. Revenues and expenses are translated at exchange rates
in effect when recognized. Assets and liabilities of the foreign
entities are translated at the current exchange rates. Adjustments
resulting from translating the financial statements of the foreign
entities into U.S. dollars are recorded as a separate component of
shareholder's equity.
(k) Postretirement Benefits Other Than Pensions
Pursuant to Statement of Financial Accounting Standard No. 106,
Employers' Accounting for Postretirement Benefits Other Than
Pensions and Financial Accounting Standard No. 132, Employers'
Disclosure about Pensions and Other Postretirement Benefits, the
Group accounts for postretirement benefits other than pensions in
the period in which the services are rendered by the employees.
The Group's current policy is to fund the cost of postretirement
health care benefits on a pay-as-you-go basis.
(l) Accounting Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
(m) Environmental Remediation Obligations
The Group accrues costs associated with environmental remediation
obligations when it is probable that such costs will be incurred
and they are reasonably estimable. Accruals of estimated losses
from environmental remediation obligations generally are
recognized no later than completion of the remedial feasibility
study and are charged to environmental remediation expense. Such
costs are based on management's current estimate of amounts that
are expected to be incurred when the remediation work is performed
within current laws and regulations. Recoveries of environmental
remediation costs from other parties are recorded as assets when
their receipt is deemed probable. It is reasonably possible that,
due to uncertainties associated with defining the nature and
extent of environmental contamination, application of laws and
regulation by regulatory authorities, and changes in remediation
technology, the ultimate cost of remediation could change in the
future. The Group periodically reviews and adjusts its accrued
liabilities for such remediation costs as evidence becomes
available indicating that its remediation liability has changed.
See notes 9 and 10 to the financial statements.
9 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousands)
(n) New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging
Activities (as amended by SFAS No. 137 with respect to the
effective date and SFAS No. 138 with respect to certain hedging
activities) will be effective for the Group during the year ending
June 30, 2001. SFAS No. 133 requires all derivatives to be
recognized as assets or liabilities on the balance sheet and
measured at fair value on a mark to market basis. The Group has
not yet assessed the impact on the combined financial statements
as a result of the implementation of this standard.
(2) Inventories
Principal classifications of inventories were as follows:
June 30,
2000
-------------
Finished products $ 94,832
Work-in-progress 22,690
Materials 19,667
-------------
$ 137,189
=============
10 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousands)
(3) Amounts Due from and Due to Related Parties
The balances due from and due to other direct and indirect subsidiaries of
Pacific Dunlop Limited (the Group's ultimate parent), consisted of the
following:
June 30,
2000
------------
Due from related companies:
Pacific Dunlop Holdings, Inc. $ 73
Pacific Dunlop Limited (or other PDL
group subsidiaries) 996
------------
Total amounts due from
parent and subsidiaries $ 1,069
============
Due to related companies:
Pacific Dunlop Holdings, Inc. $ 110,425
Pacific Dunlop Limited (or other PDL
group subsidiaries) 49,141
------------
Total current portion 159,566
------------
Note payable to Pacific Dunlop Holding, Inc. 200,000
------------
Total long-term portion 200,000
------------
Total amounts due to parent
and subsidiaries $ 359,566
============
On November 1, 1999, affiliates of the Group's parent company agreed to
convert $200,000 of its $300,000 note payable to Pacific Dunlop Holdings,
Inc., into additional shares of common stock of the Group.
The remaining $100,000 of its note payable and $100,000 due to Pacific
Dunlop Holdings, Inc. at the date of conversion were converted into a new
note payable.
The outstanding principal balance on the new note payable is due in full on
November 1, 2005. Interest on the outstanding balance is payable quarterly
commencing January 1, 2000 at the prime commercial rate as defined in the
agreement.
The interest rate on amounts due to Pacific Dunlop Holdings, Inc. and its
subsidiaries during the fiscal year ended June 30, 2000 was 8.0% through
May 4, 2000 and 9.5% thereafter. Interest charged by related companies was
$29,981.
11 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousands)
(4) Economic Dependency on Parent and Sale of the Group
The Group's ultimate Parent is Pacific Dunlop Limited (PDL). The Group
receives cash to fund operations and working capital needs from its Parent
and subsidiaries. The Group is dependent on PDL, or other group
subsidiaries, for capital to operate its business. The loss of the
financial support of PDL would require the Group to arrange for alternative
financing.
In May 2000, Pacific Holdings (USA) Inc., a subsidiary of PDL, entered into
an agreement with Exide Corporation (Exide) to sell substantially all of
the assets, liabilities and operations of the Group to Exide. Completion of
the transaction is, among other things pending the approval from the
Department of Justice and Exide arranging for financing for the
transaction. The accompanying combined financial statements do not include
any adjustments to reflect Exide's financing requirements on a stand-alone
basis, nor do they include any adjustments for the impact of the sale of
the Group.
(5) Income Tax Provision (Benefit)
The Group's U.S. operations file consolidated federal and, where
applicable, state income tax returns with its parent and affiliated
companies in the U.S. Taxes are allocated to the Group as if the Group were
a separate tax paying entity.
Income tax expense (benefit) attributable to loss from continuing
operations consists of:
Current Deferred Total
------- -------- -----
Year ended June 30, 2000:
U.S. Federal $ -- $ 1,454 $ 1,454
State and local 63 -- 63
Foreign 3,481 (1,670) 1,811
------- ------- -------
Total $ 3,544 $ (216) $ 3,328
======= ======= =======
12 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousands)
The provision for income tax expense (benefit) differs from the amount computed
by applying the statutory U.S. federal income tax rate to loss from continuing
operations for the following reasons:
June 30,
2000
---------
Computed expected tax benefit at statutory rate $ (12,680)
State taxes, net of federal effect 41
Increase in valuation allowance 15,009
Provision for possible adjustments of income taxes --
Other, net 958
---------
$ 3,328
=========
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets (liabilities) are as follows:
June 30,
2000
----------
Reserves $ 53,916
Differences in tax and book treatment
of inventory 3,391
Federal net operating loss carryforwards 10,911
State net operating loss carryforwards 4,631
Federal tax credits 1,028
Other expenses 6,117
---------
Total gross deferred tax asset 79,994
Difference in tax and book depreciation
on plant and equipment (10,377)
---------
Total gross deferred tax liability (10,377)
Valuation allowance (64,938)
---------
Net deferred tax asset $ 4,679
=========
13 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousands)
A reconciliation of the valuation allowance for deferred taxes is as
follows:
June 30,
2000
--------
Valuation allowance at beginning of year $ 49,929
Increase in allowance 15,009
--------
Valuation allowance at end of year $ 64,938
========
The net deferred tax asset, with respect to net operating loss
carryforwards and temporary differences for the Group's U.S. operations,
has been subjected to a 100% valuation allowance.
At June 30, 2000, the Company, on a separate company basis, has net
operating loss carryforwards for federal purposes of $31,175 which are
available to offset future federal taxable income, if any, and expire
between 2005 and 2020. At June 30, 2000, the Company also has net operating
loss carryforwards for state purposes of $92,620 which are available to
offset future state taxable income, if any, and expire between 2005 and
2020. At June 30, 2000, the Company also has tax credit carryforwards of
approximately $1,028 which are available to reduce future federal income
taxes, if any. These credits include general business credit carryforwards
which expire between 2000 and 2005, and alternative minimum tax credit
carryforwards which do not expire. A portion of the net operating loss and
tax credit carryforwards are subject to the federal separate return
limitation year rules.
(6) Employee Benefit Plans
The Group sponsors a number of noncontributory defined benefit retirement
plans covering substantially all employees in its North American
operations. The plan covering salaried employees provides benefits based on
the employee's compensation during the years in which the credited service
is earned. Plans covering hourly employees generally provide benefits based
on years of service. The Group's funding policy for all plans is to
contribute amounts to the plans sufficient to meet the minimum funding
requirements set forth in the Employee Retirement Income Security Act of
1974. Plan assets consist principally of equity securities.
The Group also sponsors an investment savings and profit sharing plan
covering substantially all salaried employees of its North American
operations and a Pacific Chloride Incorporated hourly incentive savings
plan. The Group matches the voluntary employee contributions to the plans'
trusts at a rate determined by the Group, based on profitability. The
Group's matching contributions and profit sharing under these plans were
$1,798 for the fiscal year ended June 30, 2000.
Additionally, the Group participates in two multi-employer plans that
provide defined benefits to certain of the Group's union employees. Costs
to the Group for these plans were $795 for the fiscal year ended June 30,
2000.
14
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousand)
Employees of the Group's Australian operations are members of PDL's retirement
plans. Accordingly, no pension asset or liability has been provided in the
Group's financial statements for these employees.
Assumptions used in the accounting for the defined benefit plans were:
June 30,
2000
----
Weighted average discount rates 7.75%
Rates of increase in compensation levels 5.00%
Expected long-term rate of return on assets 11.00%
=====
The following table sets forth the funded status and amounts recognized in the
combined balance sheets for the Group's North American defined benefit pension
plans:
June 30,
2000
----
Change in benefit obligation:
Benefit obligation, beginning of year $ 134,497
Service cost 4,012
Interest cost 9,337
Plan amendments 1,196
Actuarial gain (17,826)
Benefits paid (6,513)
---------
Benefit obligation, end of year $ 124,703
=========
Change in plan assets:
Fair value of plan assets, beginning of year $ 135,562
Actual return on plan assets 7,712
Benefits paid (6,513)
--------
Fair value of plan assets, end of year $ 136,761
========
15 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousand)
June 30,
2000
----
Reconciliation of funded status:
Funded status $ 12,058
Unrecognized actuarial gain (27,025)
Unrecognized prior service cost 7,589
Unrecognized net transition obligation 657
----------
Net accrued pension obligation $ (6,721)
==========
Net periodic pension expense included the following components:
June 30,
2000
----
Service cost $ 4,012
Interest cost 9,337
Expected return on plan assets (13,313)
Net amortization and deferral 1,391
----------
Net periodic pension expense $ 1,427
==========
(7) Postretirement Benefits Other Than Pensions
The significant assumptions used to calculate the accumulated
postretirement benefit obligation were as follows:
June 30,
2000
----
Discount rate 7.75%
Health care cost trend:
Participants less than
65 years old 6.5% per year increase
decreasing to 5.0%
per year by 2003.
Participants 65 years
and older 5.5% per year increase
decreasing to 5.0%
per year by 2002.
====================
16 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousand)
The effect of a one percentage point increase in the assumed health care cost
trend would increase the service and interest cost components and the
accumulated postretirement benefit obligation by $116 and $1,024, respectively.
The effect of a one percentage point decrease in the assumed health care cost
trend would decrease the service and interest cost components and the
accumulated postretirement benefit obligation by $117 and $1,061, respectively.
The following table sets forth the Group's North American postretirement benefit
obligation:
June 30,
2000
--------
Change in benefit obligation:
Benefit obligation, beginning of year $ 15,232
Service cost 352
Interest cost 1,056
Participant contributions 50
Actuarial gain (1,334)
Benefits paid (803)
--------
Benefit obligation, end of year $ 14,553
========
Change in plan assets:
Fair value of plan assets, beginning of year --
Company contributions $ 753
Participant contributions 50
Benefits paid (803)
--------
Fair value of plan assets, end of year $ --
========
Reconciliation of funded status:
Funded status $ 14,553
Unrecognized actuarial gain 4,031
--------
Net accrued pension obligation 18,584
Less current portion included in salaries, wages
and other compensation 1,983
--------
Net long-term portion of
postretirement benefit obligation $ 16,601
========
17 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousands)
The net periodic postretirement benefit cost included the following
components:
June 30,
2000
--------
Service cost $ 352
Interest cost 1,056
Net amortization and deferral (80)
--------
Net periodic postretirement benefit cost $ 1,328
========
(8) Leases
The Group leases various buildings and equipment under long-term leases.
The leases require payment of fixed and variable rentals and, in certain
instances, insurance, taxes and maintenance costs. Property, plant and
equipment included the following, with respect to leases that have been
capitalized:
June 30,
2000
----------
Land and buildings $ 2,504
Machinery and equipment 50
----------
2,554
Less accumulated amortization (2,091)
----------
$ 463
==========
18 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousands)
Future minimum rental commitments for all capital leases and noncancelable
operating leases are as follows:
Capital Operating
leases leases
------ ------
For the year ending June 30:
2001 $ 908 $ 7,486
2002 506 6,076
2003 -- 5,032
2004 -- 3,642
2005 -- 2,751
Thereafter -- 11,791
------- -------
Total minimum lease payments 1,414 $36,778
=======
Less amount representing interest at 4%
to 9% 49
-------
Present value of net minimum lease
payments 1,365
Less current portion 868
-------
$ 497
=======
Total operating lease expense for the fiscal year ended June 30, 2000 was
$12,771.
(9) Environmental Remediation
The Group provides reserves for estimated possible obligations associated
with environmental remediation obligations at its operational and non-
operational locations when it is probable that such costs will be incurred
and they are reasonably estimable. The Group's accrued liability for
environmental remediation obligations was $62,983 as of June 30, 2000.
19 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousands)
The following amounts relating to environmental remediation costs were
charged to selling, general and administrative expenses in the accompanying
combined statements of operations:
June 30,
2000
---------
Environmental remediation payments $ 4,492
Recoveries relating to Gould litigation --
Changes in environmental remediation
reserves 14,508
---------
Environmental remediation expense $ 19,000
=========
The Group is currently engaged in clean up operations of its closed and
operational sites. In addition, some of the companies within the Group have
been named as Potentially Responsible Parties for several Superfund sites
in North America under the Comprehensive Environmental Response
Compensation and Liability Act or its state equivalent. The ultimate costs
of resolving these and other environmental matters are not quantifiable
because many such matters are in preliminary stages and the timing and
extent of actions that governmental authorities may ultimately require are
unknown. It is possible that the costs of such resolution may be greater
than the liabilities which, in the opinion of management, are probable and
reasonably estimable at June 30, 2000. In the opinion of management,
estimation of any additional costs is not possible based on current
information.
(10) Commitments and Contingencies
As of June 30, 2000, the Group has approximately $7,718 in outstanding
commitments for the purchase of equipment and facilities.
The Group has obtained letters of credit for $68,540 at June 30, 2000 as
required by various state environmental agencies within the United States
to demonstrate, in conjunction with a prescribed financial test, financial
responsibility for potential liability for sudden and nonsudden accidental
occurrences at several facilities owned by the Group.
In addition to the letters of credit to regulatory agencies, the Group was
contingently liable under various letters of credit related to ongoing
business activities for $4,527 at June 30, 2000.
The Group is also involved in various litigation and other legal
proceedings, which are in the normal course of business. The range of
possible loss or losses, if any, cannot be reasonably estimated; however,
management does not believe that unfavorable outcomes, in any or all of
these cases, will be material to the financial position of the Group.
20 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousands)
(11) Disclosures About Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value
of each class of financial instrument for which it is practical to
estimate that value:
(a) Cash and Cash Equivalents
The carrying amount approximates fair value because of the liquid
nature and short maturity of those instruments.
(b) Trade Accounts Receivable and Accounts Payable
The carrying amount approximates fair value because of the short
maturity of those instruments.
(c) Amounts Due from and Due to Related Parties
The carrying amounts of the due to and due from the parent and its
subsidiaries approximates fair value because of the liquid nature and
short maturity of those instruments. The carrying amount of the notes
payable approximates fair value as the Group"s internal borrowing rate
approximates market rates.
(12) Unusual charges
Included in selling, general and administration expenses for the fiscal
year ended June 30, 2000 are the following unusual charges:
June 30,
2000
----------
Asset impairment (note 13) $ 1,085
Increase in environmental remediation
reserve (note 9) 19,000
----------
Total unusual charges $ 20,085
==========
21 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousands)
(13) Facility Closures and Asset Impairment Charges
During fiscal 2000, the Group recorded an additional expense of $7,175
relating to the closure of its smelter in Columbus, Georgia in October
1999. The charge consisted of operating losses of $5,229 which arose
during the closing period from July 1999 to October 1999, severance
payments of $979 and a charge of $967 to reserve for Columbus spare part
inventory considered non-recoverable.
During fiscal 2000, the Group announced plans to move certain
administrative and technical functions, including the Groups Head Office
to a new site in Alpharetta, Georgia. The Group recorded a charge of
$5,865 relating to this move, including severance, relocation and other
costs associated with the closure of offices in Mendota, Minnesota and the
transfer of personnel and operations from Atlanta, Georgia to Alpharetta.
Additionally as a result of the decision to move the technical function
from Mendota, Minnesota, the Group identified certain property and
equipment as being impaired. Consequently the Group has written off
predominantly all the laboratory equipment previously held at that
location determined as impaired according to the Guidelines set out under
FAS 121. The resulting charge to the statement of operations was $1,085 in
fiscal 2000.
During fiscal 2000, the Group relocated its Dallas, Texas distribution
center to Oklahoma City, Oklahoma. The group recorded charges of $1,750
relating to closure and relocation costs of the Dallas facility as well as
set-up costs of the new operations in Oklahoma City, Oklahoma.
22 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousands)
(14) Segment Reporting
(a) Geographic Segments
The following tables present revenues and other financial information
by geographic region:
June 30,
2000
----------
Net sales:
United States $ 852,765
Foreign operations 167,899
Intersegment eliminations (52,865)
----------
Net sales $ 967,799
==========
Operating income (loss):
United States $ (10,654)
Foreign operations 3,020
----------
Operating loss (7,634)
Interest expense, net of interest income (27,919)
Other expense, net (673)
----------
Loss from continuing
operations before taxes $ (36,226)
==========
June 30,
2000
----------
Identifiable assets:
United States $ 564,359
Foreign operations 102,355
----------
Total $ 666,714
==========
Operating income includes all costs and expenses directly related to
the segment or geographic area. Identifiable assets are those used in
each segment"s operation.
23 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousands)
(b) Operational segments
The Group operates in two business segments: Automotive Battery
Products and Industrial Battery Products. Corporate assets included in
corporate and other assets principally consist of assets relating to
closed sites.
June 30,
2000
----------
Net sales:
Automotive battery products $ 583,290
Industrial battery products 391,047
Intersegment eliminations (6,538)
----------
Net sales $ 967,799
==========
Operating income (loss):
Automotive battery products $ (36,635)
Industrial battery products 48,211
Corporate and other (19,210)
----------
Operating loss (7,634)
Interest expense, net of interest income (27,919)
Other expense, net (673)
----------
Loss from continuing
operations before taxes $ (36,226)
==========
Depreciation and amortization:
Automotive battery products $ 25,260
Industrial battery products 10,327
Corporate and other --
----------
Depreciation and amortization $ 35,587
==========
24 (Continued)
<PAGE>
GNB TECHNOLOGIES GROUP
Notes to Combined Financial Statements
Fiscal year ended June 30, 2000
(in thousands)
June 30,
2000
----------
Capital expenditures:
Automotive battery products $ 30,752
Industrial battery products 14,601
Corporate and other 186
----------
Capital expenditures $ 45,539
==========
Identifiable assets:
Automotive battery products $ 399,474
Industrial battery products 251,468
Corporate and other 15,772
----------
Identifiable assets $ 666,714
==========
25
<PAGE>
ITEM 7(b). PRO FORMA FINANCIAL INFORMATION:
Unaudited Pro Forma Combined Condensed Statements of Operations
The Company's unaudited pro forma combined condensed statements of operations
for the fiscal year ended March 31, 2000 and for the six months ended October 1,
2000 are presented to reflect the estimated impact of the Acquisition on the
historical consolidated financial statements of the Company assuming that the
Acquisition had been consummated as of April 1, 1999.
The Acquisition has been accounted for using the purchase method. The purchase
price allocation is preliminary and will likely change upon resolution of open
matters including the completion of appraisals, the final assessment of
certain contingencies, the final identification and notification of
additional restructuring activities, the impact of any deferred taxes and the
determination of purchase price adjustments in accordance with the purchase
agreement, if any.
These pro forma statements of operations do not reflect any cost savings or
other synergies anticipated by the Company's management as a result of the
Acquisition and are not necessarily indicative of the results of operations
which would have occurred had the Acquisition actually been consummated as of
April 1, 1999. Moreover, such statements are not necessarily indicative of the
Company's future results of operations.
GNB's historical results of operations for the fiscal year ended June 30, 2000,
included herein, are included in the pro forma combined condensed statement of
operations for the fiscal year ended March 31, 2000. GNB's historical results of
operations for the six months ended September 30, 2000 are included in the pro
forma combined condensed statement of operations for the six months ended
October 1, 2000.
These pro forma statements of operations should be read in conjunction with the
historical consolidated financial statements of Exide, including the notes
thereto, incorporated by reference herein and the historical combined financial
statements of GNB, including the notes thereto, included herein.
1
<PAGE>
Pro Forma Combined Condensed Statement of Operations
For the Fiscal Year Ended March 31, 2000 (unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Exide GNB Pro Forma Continued
Historical (1)(2) Historical (1)(2) Adjustments (1)(3) Reclassifications (4) Pro Forma
----------------- ----------------- ------------------ --------------------- -----------
<S> <C> <C> <C> <C> <C>
NET SALES $ 2,194,447 $ 967,799 $ - $ (37,026) $ 3,125,220
COST OF SALES 1,661,955 732,983 - 47,120 2,442,058
----------- --------- -------- --------- ---------
Gross profit 532,492 234,816 - (84,146 683,162
OPERATING EXPENSES 536,009 242,450 2,000 a) (84,146) 696,313
----------- --------- -------- --------- ---------
Operating loss (3,517) (7,634) (2,000) - (13,151)
INTEREST EXPENSE, net 103,988 27,919 10,522 b) - 142,429
OTHER EXPENSE, net 16,043 673 6,827 c) - 23,543
----------- --------- -------- --------- ---------
Loss before income taxes
and minority interest (123,548) (36,226) (19,349) - (179,123)
INCOME TAX PROVISION (BENEFIT) 10,769 3,328 (10,880) d) - 3,217
----------- --------- -------- --------- ---------
Loss before minority interest (134,317) (39,554) (8,469) - (182,340)
MINORITY INTEREST 1,725 - - - 1,725
----------- --------- -------- --------- ---------
Net loss $ (136,042) $ (39,554) $ (8,469) $ - $(184,065)
=========== ========= ======== ========= =========
LOSS PER SHARE
Basic $ (6.40) $ (7.29)
=========== =========
Diluted $ (6.40) $ (7.29)
=========== =========
WEIGHTED AVERAGE SHARES:
Basic 21,263 25,263
=========== =========
Diluted 21,263 25,263
=========== =========
</TABLE>
The accompanying notes are an integral part of this statement.
2
<PAGE>
Pro Forma Combined Condensed Statement of Operations
For the Six Months Ended October 1, 2000 (unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Exide GNB Pro Forma Combined
Historical (1) (2) Historical (1) (2) Adjustments (1) (3) Reclassifications (4) Pro Forma
----------------- ------------------- -------------------- --------------------- -----------
<S> <C> <C> <C> <C> <C>
NET SALES $ 959,974 $ 505,512 $ - $ (20,397) $ 1,445,089
COST OF SALES 701,133 370,752 - 25,208 1,097,093
----------------- ------------------- -------------------- --------------------- -----------
Gross profit 258,841 134,760 - (45,605) 347,996
OPERATING EXPENSES 237,656 137,288 1,000 a) (45,605) 330,339
----------------- ------------------- -------------------- --------------------- -----------
Operating income (loss) 21,185 (2,528) (1,000) - 17,657
INTEREST EXPENSE net 50,557 13,430 5,148 b) - 69,135
OTHER EXPENSE, net 3,831 174 3,576 c) - 7,581
----------------- ------------------- -------------------- --------------------- -----------
Loss before income taxes (33,203) (16,132) (9,724) - (59,059)
and minority interest
INCOME TAX PROVISION (BENEFIT) (10,009) 2,468 (12,032) d) - (19,573)
----------------- ------------------- -------------------- --------------------- -----------
Income (loss) before minority
interest (23,194) (18,600) 2,308 - (39,486)
MINORITY INTEREST 695 - - - 695
----------------- ------------------- -------------------- --------------------- -----------
Net income (loss) $ (23,889) $ (18,600) $ 2,308 $ - $ (40,181)
================= =================== ==================== ===================== ===========
LOSS PER SHARE
Basic $ (1.12) $ (1.58)
================= ===========
Diluted $ (1.12) $ (1.58)
================= ===========
WEIGHTED AVERAGE SHARES:
Basic 21,404 25,404
================= ===========
Diluted 21,404 25,404
================= ===========
</TABLE>
The accompanying notes are an integral part of this statement.
3
<PAGE>
Notes to Unaudited Pro Forma Combined Condensed Statements of Operations
(dollars in thousands, except per share data)
(1) GNB ACQUISITION
--------------------
On September 29, 2000, the Company acquired the global battery business of GNB
for consideration of approximately $368,000 (including $333,000 in cash and four
million of the Company's common shares) plus assumed liabilities. GNB is a
leading U.S. and Pacific Rim manufacturer of both industrial and automotive
batteries. Pacific Dunlop now holds an approximate 16 percent interest in the
outstanding shares of common stock of the Company.
The Company financed the cash portion of the purchase price, including
associated fees and expenses, through an additional $250,000 term loan under its
existing senior secured credit facility, and a $100,000 securitization of GNB
accounts receivables. The Company also issued warrants for 1,286,000 shares with
an exercise price of $8.99 per share in conjunction with such financing.
The Acquisition has been accounted for using the purchase method. The purchase
price allocation is preliminary and will likely change upon resolution of open
matters including the completion of appraisals, the final assessment of certain
contingencies, the final identification and notification of additional
restructuring activities, the impact of any deferred taxes and the determination
of purchase price adjustments in accordance with the purchase agreement, if any.
(2) HISTORICAL STATEMENTS OF OPERATIONS
-----------------------------------------
The Company's historical results of operations for the fiscal year ended March
31, 2000 include certain unusual or non-recurring charges aggregating $142,600.
These charges consisted of:
. $13,400 provision to cover resolution of "used as new" claims litigation.
. $39,300 of restructuring charges, related primarily to the Company's
realignment to a customer-focused global business unit strategy, including
severance charges of $20,000 and $19,300 in asset write-downs and closure
costs related to planned closures of manufacturing operations and other
facilities including the Reading, Pennsylvania battery plant, certain U.S.
branch locations and the Company's ongoing consolidation of European
operations.
. $18,400 of write-downs to net realizable value related to the ongoing
divestiture of non-core businesses.
. $3,000 increase to the Company's environmental reserves.
4
<PAGE>
. $51,000 of non-cash charges related to asset write-downs and adjustments
of balance sheet reserves, including $23,900 in warranty reserves.
. $17,500 of unusual items including a charge for in-process research and
development of $14,300 for the acquisition of Lion Compact Energy and
additional divestiture related charges of $3,200.
GNB's historical results of operations for the fiscal year ended June 30, 2000,
included herein, are included in the pro forma combined condensed statement of
operations for the fiscal year ended March 31, 2000. GNB's historical results of
operations for the six months ended September 30, 2000 are included in the pro
forma combined condensed statement of operations for the six months ended
October 1, 2000. As a result, GNB's historical results of operations for the
three month period from April 1, 2000 through June 30, 2000, which include net
sales of $232,400 and a net loss of $20,900 are included in both pro forma
statements of operations herein.
GNB's historical results of operations for the fiscal year ended June 30, 2000
include certain environmental, asset impairment and facility closure charges
aggregating $34,900.
The Company's historical results of operations for the six months ended October
1, 2000 include a charge of $30,000 for restructuring and other related
activities, including actions related to the Acquisition.
GNB's historical results of operations for the six months ended September 30,
2000 include certain restructuring and environmental charges of $21,700.
(3) PRO FORMA ADJUSTMENTS
-------------------------
The unaudited pro forma adjustments in the pro forma combined condensed
statements of operations include:
a) the impact of goodwill amortization.
b) the impact of the Acquisition financing for fiscal 2000 and for the six
months ended October 1, 2000 including $27,790 and $13,895, respectively, of
interest expense on the incremental debt pius $7,111 and $2,932,
respectively, of additional interest expense in excess of Exide's historical
interest expense due to increased borrowing rates on Exide's historical debt
facilities and an additional $3,540 and $1,770 in amortization of deferred
financing fees from the Acquisition over the life of the Company's existing
senior secured credit facility. These amounts are reduced by the elimination
of GNB'S historical interest expense.
An increase of 1/8% on the Acquisition financing would cause an increase in
the pro forma interest expense of $312 and $156 in fiscal 2000 and for the
six months ended October 1,2000, respectively.
5
<PAGE>
c) losses on receivables sold related to the $100,000 securitization of GNB
accounts receivables less the elimination of GNB's historical amortization
expense on goodwill.
d) income tax effects on the above pro forma adjustments, excluding goodwill
amortization, as well as on GNB's applicable historical losses using an
estimated statutory tax rate of 39%.
These pro forma adjustments assume the Acquisition had occurred on April 1,
1999.
The pro forma earnings per share calculations also include the impact of the
four million shares issued as part of the Acquisition consideration.
This pro forma information does not purport to represent what the Company's
results of operations would have actually been had the Acquisition occurred as
of an earlier date or project the results of any future period.
(4) RECLASSIFICATIONS
----------------------
The reclassification of certain GNB historical charges are reflected in these
pro forma statements of operations for certain selling related costs,
reclassified from cost of sales to net sales, and certain distribution costs,
reclassified from operating expenses to cost of sales, to conform to the
Company's presentation.
6
