-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SuJdkgbSQPkTpyTlc1v1nAjUZy5spjs6U7sB8f/sBJnQvX3LEBDcDs+mnRdSKHgc lwjfJ0tWC4Bl2PiprKG6AA== 0000808064-00-500012.txt : 20001215 0000808064-00-500012.hdr.sgml : 20001215 ACCESSION NUMBER: 0000808064-00-500012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20001031 FILED AS OF DATE: 20001214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: C&D TECHNOLOGIES INC CENTRAL INDEX KEY: 0000808064 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 133314599 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09389 FILM NUMBER: 789239 BUSINESS ADDRESS: STREET 1: 1400 UNION MEETING ROAD STREET 2: PO BOX 3053 CITY: BLUE BELL STATE: PA ZIP: 19422 BUSINESS PHONE: 2156192700 MAIL ADDRESS: STREET 1: 1400 UNION MEETING ROAD STREET 2: PO BOX 3053 CITY: BLUE BELL STATE: PA ZIP: 19422 10-Q 1 q310q.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ____________________ Commission File No. 1-9389 C&D TECHNOLOGIES, INC. (Exact name of Registrant as specified in its charter) Delaware 13-3314599 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1400 Union Meeting Road Blue Bell, Pennsylvania 19422 (Address of principal executive office) (Zip Code) (215) 619-2700 (Registrant's telephone number, including area code) _____________________________________ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO_____ Number of shares of the Registrant's Common Stock outstanding on December 7, 2000: 26,286,612 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION Page No. Item 1 - Financial Statements Consolidated Balance Sheets - October 31, 2000 and January 31, 2000.................. 3 Consolidated Statements of Income - Three and Nine Months Ended October 31, 2000 and 1999............ 5 Consolidated Statements of Cash Flows - Nine Months Ended October 31, 2000 and 1999............ 6 Consolidated Statements of Comprehensive Income - Three and Nine Months Ended October 31, 2000 and 1999.. 8 Notes to Consolidated Financial Statements.............. 9 Report of Independent Accountants....................... 18 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations....... 19 PART II. OTHER INFORMATION..................................... 26 SIGNATURES..................................................... 27 2 PART I. FINANCIAL INFORMATION Item 1 - Financial Statements C&D TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data) (Unaudited) October 31, January 31, 2000 2000 ---- ---- ASSETS Current assets: Cash and cash equivalents................. $ 5,696 $ 7,121 Accounts receivable, less allowance for doubtful accounts of $3,791 and $3,080, respectively................. 89,037 76,161 Inventories............................... 68,394 60,965 Deferred income taxes..................... 10,158 10,158 Other current assets...................... 1,539 1,256 ------- ------- Total current assets........... 174,824 155,661 Property, plant and equipment, net.............. 114,629 100,813 Deferred income taxes........................... 1,079 803 Intangible and other assets, net................ 21,251 22,692 Goodwill, net................................... 71,169 74,146 ------- ------- Total assets................... $382,952 $354,115 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt........................... $ 16,782 $ 20,393 Accounts payable.......................... 36,149 36,680 Accrued liabilities....................... 36,010 26,996 Income taxes.............................. - 2,018 Other current liabilities................. 5,136 4,495 ------- ------- Total current liabilities...... 94,077 90,582 Long-term debt.................................. 59,168 76,459 Other liabilities............................... 20,227 20,663 ------- ------- Total liabilities.............. 173,472 187,704 ------- ------- The accompanying notes are an integral part of these statements. 3 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) (Dollars in thousands, except per share data) (Unaudited) October 31, January 31, 2000 2000 ---- ---- Commitments and contingencies Minority interest................................. 6,043 4,345 Stockholders' equity: Common stock, $.01 par value, 75,000,000 shares authorized; 28,235,683 and 27,867,480 shares issued, respectively*........................... 282 279 Additional paid-in capital*................. 62,086 53,829 Treasury stock, at cost, 1,911,990 and 1,810,204 shares, respectively*......... (14,609) (10,819) Accumulated other comprehensive loss........ (1,822) (617) Retained earnings........................... 157,500 119,394 ------- ------- Total stockholders' equity....... 203,437 162,066 ------- ------- Total liabilities and stockholders' equity........... $382,952 $354,115 ======= ======= * Adjusted to reflect the Company's June 16, 2000 two-for-one stock split, effected in the form of a 100% stock dividend. The accompanying notes are an integral part of these statements. 4 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share data)
(Unaudited) (Unaudited) Three months ended Nine months ended October 31, October 31, 2000 1999 2000 1999 ---- ---- ---- ---- Net sales............................ $155,409 $126,843 $435,453 $338,273 Cost of sales........................ 109,998 93,571 307,792 248,769 ------- ------- ------- ------- Gross profit..................... 45,411 33,272 127,661 89,504 Selling, general and administrative expenses.......... 16,353 15,156 49,605 43,975 Research and development expenses......................... 2,514 2,232 7,522 6,718 ------- ------- ------- ------- Operating income................. 26,544 15,884 70,534 38,811 Interest expense, net................ 1,215 2,411 4,679 5,786 Other (income) expense, net.......... (29) (208) 121 - ------- ------- ------- ------- Income before income taxes and minority interest............. 25,358 13,681 65,734 33,025 Provision for income taxes........... 9,746 5,189 24,847 12,153 ------- ------- ------- ------- Net income before minority interest...................... 15,612 8,492 40,887 20,872 Minority interest.................... 867 286 1,698 286 ------- ------- ------- ------- Net income....................... $ 14,745 $ 8,206 $ 39,189 $ 20,586 ======= ======= ======= ======= Net income per common share*......... $ 0.56 $ 0.32 $ 1.50 $ 0.81 ======= ======= ======= ======= Net income per common share - assuming dilution*............... $ 0.54 $ 0.31 $ 1.44 $ 0.79 ======= ======= ======= ======= Dividends per share*................. $ .01375 $ .01375 $ .04125 $ .04125 ======= ======= ======= =======
* Per share amounts have been adjusted to reflect the Company's June 16, 2000 two-for-one stock split, effected in the form of a 100% stock dividend. The accompanying notes are an integral part of these statements. 5 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) Nine months ended October 31, 2000 1999 ---- ---- Cash flows provided (used) by operating activities: Net income...................................... $ 39,189 $ 20,586 Adjustments to reconcile net income to net cash provided by operating activities: Minority interest......................... 1,698 286 Depreciation and amortization............. 19,488 16,207 Deferred income taxes..................... (276) 690 Loss on disposal of assets................ 593 646 Changes in: Accounts receivable................. (14,103) (16,994) Inventories......................... (8,142) 1,388 Other current assets................ 263 429 Accounts payable.................... (352) 5,226 Accrued liabilities................. 9,576 6,312 Income taxes payable................ 1,557 1,848 Other current liabilities........... 641 886 Other liabilities................... (434) 3,052 Other, net................................ 1,054 305 -------- -------- Net cash provided by operating activities........... 50,752 40,867 -------- -------- Cash flows provided (used) by investing activities: Acquisition of businesses, net.................. - (134,829) Acquisition of property, plant and equipment.... (29,406) (10,762) Proceeds from disposal of property, plant and equipment................................ 154 25 -------- -------- Net cash used by investing activities............... (29,252) (145,566) -------- -------- Cash flows provided (used) by financing activities: Repayment of debt............................... (22,364) (7,913) Proceeds from new borrowings.................... 1,200 113,499 Financing costs of long-term debt............... (244) (2,749) Proceeds from issuance of common stock, net..... 3,935 4,586 Purchase of treasury stock...................... (3,790) - Payment of common stock dividends............... (1,443) (1,396) -------- -------- The accompanying notes are an integral part of these statements. 6 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Dollars in thousands) (Unaudited) Nine months ended October 31, 2000 1999 ---- ---- Net cash (used) provided by financing activities........................... (22,706) 106,027 -------- -------- Effect of exchange rate changes on cash........... (219) 59 -------- -------- (Decrease) increase in cash and cash equivalents.. (1,425) 1,387 Cash and cash equivalents at beginning of period...................................... 7,121 5,003 -------- -------- Cash and cash equivalents at end of period........ $ 5,696 $ 6,390 ======== ======== SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES Acquired businesses Estimated fair value of assets acquired ...... $ - $ 79,404 Goodwill...................................... - 66,142 Identifiable intangible assets................ - 17,840 Cash paid, net of cash acquired............... - (134,829) -------- -------- Liabilities assumed........................... $ - $ 28,557 ======== ======== The accompanying notes are an integral part of these statements. 7 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Dollars in thousands) (Unaudited) (Unaudited) Three months ended Nine months ended October 31, October 31, 2000 1999 2000 1999 ---- ---- ---- ---- Net income....................... $14,745 $8,206 $39,189 $20,586 Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments... (562) 208 (1,205) (19) ------ ----- ------ ------ Total comprehensive income....... $14,183 $8,414 $37,984 $20,567 ====== ===== ====== ====== The accompanying notes are an integral part of these statements. 8 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data) (UNAUDITED) 1. INTERIM STATEMENTS The accompanying interim consolidated financial statements of C&D Technologies, Inc. (together with its operating subsidiaries, the "Company") should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report to Stockholders for the fiscal year ended January 31, 2000. The January 31, 2000 amounts were derived from the Company's audited financial statements. The consolidated financial statements presented herein are unaudited but, in the opinion of management, include all necessary adjustments (which comprise only normal recurring items) required for a fair presentation of the consolidated financial position as of October 31, 2000 and the related consolidated statements of income and comprehensive income for each of the three and nine month periods ended October 31, 2000 and 1999 and the related consolidated statement of cash flows for the nine month periods ended October 31, 2000 and 1999. However, interim results of operations may not be indicative of results for the full fiscal year. 2. STOCK SPLIT On June 16, 2000 the Company completed a two-for-one stock split, effected in the form of a 100% stock dividend to stockholders of record on June 2, 2000. This transaction resulted in a transfer on the Company's balance sheet of $140 to common stock from additional paid-in capital. The accompanying financial statements and related footnotes, including all share and per share amounts, have been adjusted to reflect this transaction. 3. ACQUISITION Effective March 1, 1999, the Company acquired substantially all of the assets of the Specialty Battery Division of Johnson Controls, Inc. ("JCI"), including, without limitation, certain assets of Johnson Controls Technology Company, a wholly owned subsidiary of JCI, and 100 percent of the ordinary shares of Johnson Controls Battery (U.K.) Limited, an indirect wholly owned subsidiary of JCI. In consideration of the assets acquired, the Company paid approximately $120,000, plus additional acquisition related costs, subject to certain adjustments as set forth in the purchase agreement. In addition, the Company assumed certain liabilities of the seller. The Specialty Battery Division was engaged in the business of designing, manufacturing, marketing and distributing industrial batteries. The Company continues to use the assets acquired in such business. The source of the funds for the acquisition was advances under a credit agreement consisting of a term loan in the amount of $100,000 and a revolving loan not to exceed $120,000 which includes a letter of credit facility not to exceed $30,000 and swingline loans not to exceed $10,000. On August 2, 1999 the Company completed the acquisition of JCI's 67 percent ownership interest in a joint venture battery business in Shanghai, China for $15,000 in cash. The joint venture manufactures, markets and distributes industrial batteries. The Company has continued the joint venture operations in such business. The cash portion of the acquisition was financed by the Company's revolving credit facility. For reporting purposes, the acquisition of the Specialty Battery Division and JCI's 67 percent ownership interest in the joint venture battery business in Shanghai, China have collectively been re-named the Dynasty Division. The Dynasty acquisition was accounted for using the purchase method of accounting. The results of the joint venture have been consolidated in the financial statements and related notes. 9 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands, except per share data) (UNAUDITED) 3. ACQUISITION (continued) The following unaudited pro forma financial information combines the consolidated results of operations as if the acquisition of the Specialty Battery Division (including the interest in the joint venture in Shanghai, China which was completed on August 2, 1999) had occurred as of the beginning of the period presented. Pro forma adjustments include only the effects of events directly attributed to transactions that are factually supportable and expected to have a continuing impact. The pro forma adjustments contained in the table below include amortization of intangibles and goodwill, depreciation adjustments due to the write-up of property, plant and equipment to estimated fair market value, amortization of deferred debt costs and interest expense on the acquisition debt and working capital management fees, which will not continue, and the related income tax effects. Nine months ended October 31, 1999: Net sales.......................... $353,369 Net income......................... $ 20,453 Net income per common share*....... $ 0.81 Net income per common share - assuming dilution*............ $ 0.79 * Per share amounts have been adjusted to reflect the Company's June 16, 2000 two-for-one stock split, effected in the form of a 100% stock dividend. The pro forma financial information does not necessarily reflect the operating results that would have occurred had the acquisitions been consummated as of the above dates, nor is such information indicative of future operating results. In addition, the pro forma financial results contain estimates since the acquired businesses did not maintain information on a period comparable with the Company's fiscal year-end. 4. INVENTORIES Inventories consisted of the following: October 31, January 31, 2000 2000 ---- ---- Raw materials............................ $29,940 $28,522 Work-in-progress......................... 19,156 14,602 Finished goods........................... 19,298 17,841 ------ ------ $68,394 $60,965 ====== ====== 10 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands, except per share data) (UNAUDITED) 5. INCOME TAXES A reconciliation of the provision for income taxes from the statutory rate to the effective rate is as follows: Nine months ended October 31, 2000 1999 ---- ---- U.S. statutory income tax....................... 35.0% 35.0% State tax, net of federal income tax benefit.... 3.3 2.9 Foreign sales corporation....................... (0.3) (0.4) Tax effect of foreign operations................ - (0.4) Research and development credit................. (0.4) (0.6) Other........................................... 0.2 0.3 ---- ---- 37.8% 36.8% ==== ==== 6. NET INCOME PER COMMON SHARE Net income per common share for the three and nine months ended October 31, 2000 and 1999 is based on the weighted average number of shares of Common Stock outstanding. Net income per common share - assuming dilution reflects the potential dilution that could occur if stock options were exercised. Weighted average common shares and common shares - assuming dilution were as follows: Three months ended Nine months ended October 31, October 31, 2000 1999 2000 1999 ---- ---- ---- ---- Weighted average shares of common stock outstanding*.............. 26,227,774 25,717,576 26,199,028 25,386,806 Assumed exercise of stock options, net of shares assumed reacquired*....... 1,196,027 511,314 1,040,937 579,750 ---------- ---------- ---------- ---------- Weighted average common shares - assuming dilution*................. 27,423,801 26,228,890 27,239,965 25,966,556 ========== ========== ========== ========== * Share amounts have been adjusted to reflect the Company's June 16, 2000 two-for-one stock split, effected in the form of a 100% stock dividend, where appropriate. 11 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands, except per share data) (UNAUDITED) 7. CONTINGENT LIABILITIES With regard to the following contingent liabilities, there have been no material changes since January 31, 2000. Legal: In January 2000, the Company was sued in an action captioned PUERTO RICO ELECTRIC POWER AUTHORITY V. C&D TECHNOLOGIES, INC., Case No. 00-1104 in the United States District Court for the District of Puerto Rico for an alleged breach of contract in connection with the sale of certain batteries dating back to the mid-1990's. In August 2000 the Company entered into a settlement agreement with respect to this claim, which was consumated in November 2000. Environmental: The Company is subject to extensive and evolving environmental laws and regulations regarding the clean-up and protection of the environment, worker health and safety and the protection of third parties. These laws and regulations include, but are not limited to: (i) requirements relating to the handling, storage, use and disposal of lead, other hazardous materials used in manufacturing processes and solid wastes; (ii) record keeping and periodic reporting to governmental entities regarding the use of hazardous substances and disposal of hazardous wastes; (iii) monitoring and permitting of air and water emissions; and (iv) monitoring and protecting workers from unpermitted exposure to hazardous substances, including lead used in our manufacturing processes. Notwithstanding such compliance, if injury or damage to persons or the environment has been or is caused by hazardous substances used, generated or disposed of in the conduct of the Company's business (or that of a predecessor to the extent the Company is not indemnified therefor), the Company may be held liable for the damage and be required to pay the cost of investigating and remedying the same, and the amount of any such liability could be material to the results of operations or financial condition. However, under the terms of the purchase agreement with Allied Corporation ("Allied") for the acquisition of the Company (the "Acquisition Agreement"), Allied is obligated to indemnify the Company for any liabilities of this type resulting from conditions existing at January 28, 1986 that were not disclosed by Allied to the Company in the schedules to the Acquisition Agreement. The Company, along with numerous other parties, has been requested to provide information to the United States Environmental Protection Agency (the "EPA") in connection with investigations of the source and extent of contamination at several lead smelting facilities (the "Third Party Facilities") to which the Company had made scrap lead shipments for reclamation prior to the date of the acquisition. In fiscal 1993 in accordance with an EPA order, a group comprised of the Company and 30 other parties commenced work on the clean-up of a portion of one of the Third Party Facilities, the former NL Industries facility in Pedricktown, New Jersey (the "NL Site"), based on a specified remedial approach which was completed during fiscal 1999. The Company did not incur costs in excess of the amount previously reserved. 12 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands, except per share data) (UNAUDITED) 7. CONTINGENT LIABILITIES (continued) With regard to the remainder of the NL Site, the Company and four other potentially responsible parties ("PRPs") have agreed upon a cost sharing arrangement for the design phase of the project. A reliable range of the potential cost to the Company for the ultimate remediation of the site cannot currently be determined, nor have all PRPs been identified. Accordingly, the Company has not established a reserve for this potential exposure. The remedial investigation and feasibility study at a second Third Party Facility, the former Tonolli Incorporated facility, at Nesquehoning, Pennsylvania (the "Tonolli Site"), was completed in fiscal 1993. The Company and the other PRPs initiated and completed remedial action at the site in fiscal 1999. The Company believes its only remaining liability relates to long-term monitoring at the site, the cost of which is estimated to be an immaterial amount for which the Company has established an adequate reserve. The Company responded to requests for information from the EPA and the state environmental agency with regard to another Third Party Facility, the "Chicago Site", in October 1991. Based on currently available information, the Company believes that the potential cost of the remediation at the Chicago Site is likely to range between $8,000 and $10,500 (based on the preliminary estimated cost of the remediation approach negotiated with the EPA). Sufficient information is not available to determine the Company's allocable share of this cost. Based on currently available information, however, the Company believes that its most likely exposure with respect to the Chicago Site will be the approximately $283 previously reserved, the majority of which is expected to be paid over the next two to five years. Allied has accepted responsibility under the Acquisition Agreement for potential liabilities relating to all Third Party Facilities other than the aforementioned Sites. The Company is also aware of the existence of potential contamination at two of its properties which may require expenditures for further investigation and remediation. At the Company's Huguenot, New York facility, fluoride contamination in an inactive lagoon, exceeding the state's groundwater standards, which existed prior to the Company's acquisition of the site, has resulted in the site being listed on the registry of inactive hazardous waste disposal sites maintained by the New York State Department of Environmental Conservation. The prior owner of the site ultimately may bear some, as yet undetermined, share of the costs associated therewith. The Company has established what it believes to be an adequate reserve for all but the remediation costs, the extent of which are not known, as a remediation plan has not yet been approved by the State of New York. The Company's Conyers, Georgia facility is listed on the Georgia State Hazardous Sites Inventory. Soil at the site, which was likely contaminated from a leaking underground acid neutralization tank and possibly storm water runoff, has been excavated and disposed. A hydrogeologic study was undertaken to assess the impact to groundwater. That study did not reveal any groundwater impact, and 13 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands, except per share data) (UNAUDITED) 7. CONTINGENT LIABILITIES (continued) assessment and remediation of off-site contamination has been completed. The full remediation report was submitted to the state on February 22, 1999, and the Company has responded to subsequent inquiries from the state environmental agency. The state environmental agency may request further information and additional investigation or remediation may be necessary before the site is removed from its Hazardous Sites Inventory. The Company, together with JCI, is conducting an assessment and remediation of contamination at our Dynasty Division facility site in Milwaukee, Wisconsin. The majority of this project is expected to be completed in fiscal 2002. Under the purchase agreement with JCI, the Company is responsible for (i) one-half of the cost of the assessment and remediation, with a cap of $1,750, (ii) any environmental liabilities at the facility which are not remediated as part of the current project and (iii) environmental liabilities for claims made after the fifth anniversary of the closing that arise from migration from a pre-closing condition at the facility to locations other than the facility, but specifically excluding liabilities relating to pre-closing offsite disposal. JCI has retained all other environmental liabilities. In January 1999, the Company received notification from the EPA of alleged violations of permit effluent and pretreatment discharge limits at its plant in Attica, Indiana. The Company submitted a compliance plan to the EPA. A penalty assessment could be made, however, the amount of such assessment, if any, has not been communicated to the Company by the EPA. The Company accrues reserves for liabilities in the Company's consolidated financial statements and periodically reevaluates the reserved amounts for these liabilities in view of the most current information available. Based on currently available information, management of the Company believes that the foregoing contingent liabilities will not have a material adverse effect on the Company's business, financial condition or results of operations. 8. NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." In June 2000, SFAS No. 138 was issued which includes several amendments to SFAS No. 133. The new standard is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. The Company will adopt SFAS No. 133, including the amendments in SFAS No. 138, on February 1, 2001. The new standard requires that all derivative instruments be reported on the balance sheet at their fair values. For derivative instruments designated as fair value hedges, changes in the fair value of the derivative instrument will generally be offset on the income statement by changes in the fair value of the hedged item. For derivative instruments designated as cash flow hedges, the effective portion of any hedge is reported in other comprehensive income until it is cleared to earnings during 14 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands, except per share data) (UNAUDITED) 8. NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED (continued) the same period in which the hedged item affects earnings. The ineffective portion of all hedges will be recognized in current earnings each period. Changes in the fair value of derivative instruments that are not designated as a hedge will be recorded each period in current earnings. Using market valuations for derivatives held as of October 31, 2000, as a guide, the Company estimates that on February 1, 2001, the net of tax cumulative-effect adjustment to net income and accumulated other comprehensive loss will not be material. Any changes in the composition of the Company's derivative instrument portfolio or changes in the market values of these instruments between now and the end of fiscal 2001 could have an impact on the cumulative-effect adjustment to net income and accumulated other comprehensive loss. At this time, the Company plans no significant change in its risk management strategies due to the adoption of SFAS No. 133. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements." This SAB summarizes certain of the staff's views in applying generally accepted accounting principles to selected revenue recognition issues. Accordingly, guidance is provided with respect to the recognition, presentation, and disclosure of revenue in the financial statements. Adoption of SAB No. 101, as amended by SAB No. 101A, "Amendment: Revenue Recognition in Financial Statements" and SAB No. 101B, "Second Amendment: Revenue Recognition in Financial Statements" is no later than the fourth quarter of fiscal years beginning after December 15, 1999. The Company has evaluated the impact of the implementation of these SABs and believes that the impact will not be material. Recently, the FASB's Emerging Issue Task Force ("EITF") released Issue 00-10, "Accounting for Shipping and Handling Revenues and Costs," which requires amounts charged to customers for shipping and handling be classified as revenue. This EITF is applicable no later than the fourth quarter of fiscal years beginning after December 15, 1999. Since this EITF only relates to financial statement classification, the adoption of this EITF will not affect the Company's financial position or results of operations. 9. RESTRUCTURING CHARGE During the first quarter of fiscal 2000, the Company recorded a pre-tax charge of $1,627, or $.04 per share after tax (as adjusted for the Company's June 16, 2000 two-for-one stock split, effected in the form of a 100% stock dividend), primarily relating to the restructuring of the Power Electronics Division. Of this pre-tax charge, $1,251 is included in selling, general and administrative expenses with the remaining $376 included in cost of sales in the 15 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands, except per share data) (UNAUDITED) 9. RESTRUCTURING CHARGE (continued) accompanying consolidated statement of income for the nine months ended October 31, 1999. The restructuring charge consisted of estimated costs to close the Company's Costa Mesa, California power supply production facility as well as contractual severance liabilities associated with the non-renewal of the employment contracts of two of the Company's former officers. With respect to the closing of the Costa Mesa, California production facility, the Company implemented a restructuring plan that consisted of transferring production primarily to its existing facility in Nogales, Mexico. Major actions of the restructuring plan consisted of: (i) disposition of inventory; (ii) write-off of impaired property, plant and equipment that was not transferred to other facilities; and (iii) termination of Power Electronics' Costa Mesa, California work force. Restructuring activity for the nine months ended October 31, 2000 and 1999 was as follows: Balance at Balance at January 31, Cash Provision October 31, 2000 Reductions Reduction 2000 ---- ---------- --------- ---- Employee severance....... $256 $(195) $(61) - --- ---- --- --- Total.................... $256 $(195) $(61) - === ==== === === April Balance at 1999 Cash Non-Cash October 31, Provision Reductions Activity 1999 --------- ---------- -------- ---- Write-off of inventory... $ 376 - $(376) - Write-down of property, plant and equipment.... 355 - (355) - Employee severance....... 741 $(384) - $357 Other.................... 155 (136) - 19 ----- --- --- ---- Total.................... $1,627 $(520) $(731) $376 ===== ==== ==== ==== The $376 inventory write-off was determined based upon identification of inventory associated with discontinued products. This inventory was disposed of during the second quarter of fiscal 2000. The $355 write-down of impaired property, plant and equipment was determined based upon the estimated cost to completely write-down the net book value of assets not transferred to other facilities. The Company completed the disposition of the impaired property, plant and equipment during the third quarter of fiscal 2000. Employee severance of $741 was charged to selling, general and administrative expenses and provided for a reduction of approximately 50 employees, consisting of production and administrative employees of the Power Electronics' Costa Mesa, California facility, and two former officers of the Company. All Power Electronics employee terminations were completed by the end of the third quarter of fiscal 2000, with payments being made in accordance with contractual agreements through the second quarter of fiscal 2001. 16 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands, except per share data) (UNAUDITED) 10. OPERATIONS BY INDUSTRY SEGMENT The Company has identified the following four reportable business segments: The Powercom Division manufactures and markets integrated reserve power systems and components for the standby power market which includes telecommunications, uninterruptible power supplies and utilities. Integrated reserve power systems monitor and regulate electric power flow and provide backup power in the event of a primary power loss or interruption. The Powercom Division also produces the individual components of these systems, including reserve batteries, power rectifiers, system monitors, power boards and chargers. The Dynasty Division manufactures and markets industrial batteries primarily for the uninterruptible power supply, broadband cable and telecommunications markets. Major applications of these products include corporate data center powering and computer network back up for use during power utility outages, CATV signal powering and wireless and wireline telephone infrastructure. The Power Electronics Division manufactures and markets DC to DC converters for large original equipment manufacturers ("OEMs") of telecommunications equipment used in telecommunications and internet infrastructure applications. The division also manufactures and markets standard and custom power supplies used in office equipment. The Motive Power Division manufactures complete systems and individual components (including power electronics and batteries) to power, monitor, charge and test the batteries used in electric industrial vehicles, including fork-lift trucks, automated guided vehicles and airline ground support equipment. These products are marketed to end users in a broad array of industries, dealers of fork-lift trucks and other material handling vehicles, and, to a lesser extent, OEM's. Summarized financial information related to the Company's business segments for the three and nine months ended October 31, 2000 and 1999 is shown below:
Power Motive Powercom Dynasty Electronics Power Division Division Division Division Consolidated -------- -------- ----------- -------- ------------ Three months ended October 31, 2000: Net sales................................. $65,590 $40,620 $30,832 $18,367 $155,409 Operating income (loss)................... $12,921 $10,538 $4,507 $(1,422) $26,544 Three months ended October 31, 1999: Net sales.................................. $58,118 $32,739 $16,251 $19,735 $126,843 Operating income (loss).................... $10,461 $5,500 $(589) $512 $15,884 Nine months ended October 31, 2000: Net sales................................. $190,865 $113,551 $75,029 $56,008 $435,453 Operating income (loss)................... $37,591 $26,759 $6,748 $(564) $70,534 Nine months ended October 31, 1999: Net sales.................................. $161,846 $75,933 $44,270 $56,224 $338,273 Operating income (loss).................... $28,248 $12,336 $(3,317) $1,544 $38,811
17 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of C&D Technologies, Inc. We have reviewed the accompanying consolidated balance sheet of C&D Technologies, Inc. and Subsidiaries ("the Company") as of October 31, 2000 and the related consolidated statements of income and comprehensive income for each of the three and nine month periods ended October 31, 2000 and 1999, and the related consolidated statement of cash flows for the nine month periods ended October 31, 2000 and 1999. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial statements for them to be in conformity with accounting principles genrally accepted in the United States of America. We previously audited in accordance with generally accepted auditing standards, the consolidated balance sheet as of January 31, 2000 and the related consolidated statements of income, stockholders' equity, cash flows, and comprehensive income for the year then ended (not presented herein), and in our report dated March 10, 2000 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of January 31, 2000, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. /s/ PricewaterhouseCoopers LLP - ------------------------------ PRICEWATERHOUSECOOPERS LLP Philadelphia, Pennsylvania November 21, 2000 18 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands, except per share data) Within the following discussion, unless otherwise stated, "quarter" and "nine-month period" refer to the third quarter of fiscal 2001 and the nine months ended October 31, 2000. All comparisons are with the corresponding periods in the previous year, unless otherwise stated. Effective March 1, 1999, C&D Technologies, Inc. (together with its operating subsidiaries, "we", "our" or "C&D") purchased substantially all of the assets of the Specialty Battery Division of Johnson Controls, Inc. ("JCI"), a designer, manufacturer, marketer and distributor of industrial batteries based in Milwaukee, Wisconsin. These assets included certain assets of Johnson Controls Technology Company, a wholly owned subsidiary of JCI and all of the ordinary shares of Johnson Controls Battery (U.K.) Limited, an indirect wholly owned subsidiary of JCI. In addition, on August 2, 1999 we completed the acquisition of JCI's 67 percent ownership interest of a joint venture battery business in Shanghai, China. The joint venture manufactures, markets and distributes industrial batteries. For reporting purposes, the acquisition of the Specialty Battery Division and JCI's 67 percent ownership interest in the joint venture battery business in Shanghai, China have collectively been re-named the Dynasty Division by C&D. As a result of the timing of the above acquisitions, the nine-month period ending October 31, 1999 does not include revenue or expenses for one month of the nine-month period with respect to our acquisition of the Special Battery Division of JCI and does not include revenue or expenses for six months of the nine-month period with respect to our acquisition of JCI's 67 percent ownership interest in a joint venture battery business in Shanghai, China. Net sales increased $28,566 or 23 percent for the quarter and $97,180 or 29 percent for the nine-month period. The increase in sales during the quarter was the result of higher sales by all divisions except for the Motive Power Division, which had a seven percent decrease in sales. The Power Electronics Division sales increased $14,581 or 90 percent during the quarter primarily as a result of higher DC to DC converter sales partially offset by lower sales of custom power supplies. Sales of the Dynasty Division increased $7,881 or 24 percent during the quarter primarily as a result of higher sales to the telecommunications and UPS markets. Powercom divisional sales increased $7,472 or 13 percent during the quarter, primarily due to higher sales to the telecommunications and UPS markets. The increase in sales during the nine-month period was also the result of higher sales by all divisions except for the Motive Power Division, which had a less than one percent decrease in sales. Sales of the Dynasty Division increased $37,618 or 50 percent during the nine-month period primarily as a result of higher sales to the UPS, telecommunications and CATV markets. A portion of this increase was due to the recording of a full nine months of sales by the Specialty Battery component of the Dynasty Division during the nine-month period ended October 31, 2000, compared to only eight months of sales in the first nine months of the 19 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) (Dollars in thousands, except per share data) comparable period of the prior year. Also contributing to the increase in Dynasty Division sales during the nine-month period was the recording of nine months of sales related to our 67 percent ownership interest in the joint venture battery business, compared to only three months in the same period of the prior year. Sales of the Power Electronics Division increased $30,759 or 69 percent during the nine-month period due to higher sales of DC to DC converters and standard power supplies, partially offset by lower sales of custom power supplies. Powercom Divisional sales increased $29,019 or 18 percent during the nine-month period, primarily due to higher sales to the telecommunications and UPS markets. Gross profit for the quarter increased $12,139 or 36 percent to $45,411 from $33,272 in the third quarter of the prior year, resulting in an increase in gross margin from 26.2 percent in the third quarter of the prior year to 29.2 percent in the third quarter of the current year. Gross profit for the nine-month period increased $38,157 or 43 percent to $127,661 from $89,504 in the comparable period of the prior year, resulting in an increase in gross margin from 26.5 percent in the first nine months of fiscal 2000 to 29.3 percent in the first nine months of the current year. Gross profit during the quarter and nine-month period was higher in the Power Electronics, Dynasty and Powercom divisions primarily due to the increased sales volumes. Gross profit of the Motive Power Division during the quarter and nine-month period decreased primarily as a result of manufacturing inefficiencies. Selling, general and administrative expenses for the quarter increased $1,197 or eight percent over the comparable quarter of the prior year. This increase was primarily due to higher variable selling costs associated with the increased sales volumes and higher bonus accruals. For the nine-month period, selling, general and administrative expenses increased $5,630 or 13 percent. The increase during the nine-month period was primarily due to: (i) higher variable selling costs associated with increased sales volumes; (ii) higher litigation settlement costs and bonus accruals; (iii) the recording of a full nine months of selling, general and administrative expenses during the nine-month period ended October 31, 2000 by the Specialty Battery component of the Dynasty Division, compared to only eight months in the prior year's nine-month period ended October 31, 1999; (iv) selling, general and administrative expenses recorded during the nine-month period of the current year related to our 67 percent ownership interest in the joint venture battery business which was acquired in the third quarter of the prior year; and (v) the absence in the current nine-month period of a restructuring charge, primarily related to the Power Electronics Division, which was recorded in the first nine months of the prior year. Research and development expenses for the quarter and nine-month period remained proportional to sales as a relative percentage compared to the same periods of the prior year at approximately two percent of sales. 20 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) (Dollars in thousands, except per share data) Operating income for the quarter increased $10,660 or 67 percent to $26,544 as a result of higher operating income generated by all divisions except the Motive Power Division, which generated an operating loss during the quarter, compared to operating income in the third quarter of the prior year. For the nine-month period, operating income increased $31,723 or 82 percent to $70,534. This increase was due to higher operating income generated by the Dynasty, Power Electronics and Powercom divisions, partially offset by an operating loss generated by the Motive Power Division. The Power Electronics Division generated operating income during the current nine-month period, compared to an operating loss in the first nine months of the prior year. Interest expense, net, decreased $1,196 in the quarter and $1,107 for the nine-month period primarily due to lower debt balances outstanding, coupled with higher capitalized interest resulting from our increased level of capital spending. Income tax expense increased $4,557 for the quarter and $12,694 for the nine-month period primarily as a result of higher income before income taxes and a higher effective tax rate. The effective tax rate consists of statutory rates adjusted for the tax impacts of our foreign sales corporation, research and development credits and foreign operations. The effective tax rate for the first nine months of fiscal 2001 increased to 37.8 percent from 36.8 percent in the comparable period of the prior year, primarily as a result of a higher effective state tax rate coupled with less tax benefit associated with foreign operations. Minority interest of $867 for the quarter and $1,698 for the first nine months of fiscal 2001 reflects the 33 percent ownership of the joint venture battery business located in Shanghai, China that is not owned by C&D. As a result of the above, net income increased $6,539 for the quarter to $14,745 or 56 cents per common share - basic and 54 cents per common share - assuming dilution. For the nine-month period, net income increased $18,603 to $39,189 or $1.50 per common share - basic and $1.44 per common share - assuming dilution. The above per share amounts reflect our June 16, 2000 two-for-one stock split, effected in the form of a 100 percent stock dividend. 21 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) (Dollars in thousands, except per share data) RESTRUCTURING CHARGE During the first quarter of fiscal 2000, we recorded a pre-tax charge of $1,627, or $.04 per share after tax (as adjusted for our June 16, 2000 two-for-one stock split, effected in the form of a 100% stock dividend), primarily relating to the restructuring of the Power Electronics Division. Of this pre-tax charge, $1,251 is included in selling, general and administrative expenses with the remaining $376 included in cost of sales in the accompanying consolidated statement of income for the nine months ended October 31, 1999. The restructuring charge consisted of estimated costs to close our Costa Mesa, California power supply production facility as well as contractual severance liabilities associated with the non-renewal of the employment contracts of two of our former officers. With respect to the closing of the Costa Mesa, California production facility, we implemented a restructuring plan that consisted of transferring production primarily to our existing facility in Nogales, Mexico. Major actions of the restructuring plan consisted of: (i) disposition of inventory; (ii) write-off of impaired property, plant and equipment that was not transferred to other facilities; and (iii) termination of Power Electronics' Costa Mesa, California work force. Restructuring activity for the nine months ended October 31, 2000 and 1999 was as follows: Balance at Balance at January 31, Cash Provision October 31, 2000 Reductions Reduction 2000 ---- ---------- --------- ---- Employee severance....... $256 $(195) $(61) - --- ---- --- --- Total.................... $256 $(195) $(61) - === ==== === === April Balance at 1999 Cash Non-Cash October 31, Provision Reductions Activity 1999 --------- ---------- -------- ---- Write-off of inventory... $ 376 - $(376) - Write-down of property, plant and equipment.... 355 - (355) - Employee severance....... 741 $(384) - $357 Other.................... 155 (136) - 19 ----- ---- ---- --- Total.................... $1,627 $(520) $(731) $376 ===== ==== ==== === The $376 inventory write-off was determined based upon identification of inventory associated with discontinued products. This inventory was disposed of during the second quarter of fiscal 2000. The $355 write-down of impaired property, plant and equipment was determined based upon the estimated cost to completely write-down the net book value of assets not transferred to other facilities. We completed the disposition of the impaired property, plant and equipment during the third quarter of fiscal 2000. Employee severance of $741 was charged to selling, general and administrative expenses and provided for a 22 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) (Dollars in thousands, except per share data) reduction of approximately 50 employees, consisting of production and administrative employees of the Power Electronics' Costa Mesa, California facility, and two former officers of the Company. All Power Electronics employee terminations were completed by the end of the third quarter of fiscal 2000, with payments being made in accordance with contractual agreements through the second quarter of fiscal 2001. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities increased $9,885 or 24 percent to $50,752 for the nine-month period ended October 31, 2000 compared to $40,867 for the comparable period of the prior year. This increase in net cash provided by operating activities was primarily due to: (i) an increase in net income and depreciation during the nine-month period; (ii) a smaller increase in accounts receivable in the first nine months of the current year compared to the same period of the prior year; and (iii) a larger increase in accrued liabilities in the current nine-month period than the prior year. These changes resulting in higher net cash provided by operating activities were partially offset by an increase in inventories during the nine-month period ended October 31, 2000 versus a decrease in the comparable period of the prior year coupled with a decrease in accounts payable and other liabilities during the first nine months of the current year versus an increase in the comparable period of the prior year. Net cash used by investing activities totaled $29,252 in the first nine months of fiscal 2001, resulting in a decrease of $116,314 versus the same period of the prior year which included the acquisition of the Specialty Battery Division of JCI. Acquisition of property, plant and equipment during the nine-month period ended October 31, 2000 increased $18,644 or 173 percent over the comparable period of the prior year. Net cash used by financing activities was $22,706 for the first nine months of fiscal 2001 compared to net cash provided by financing activities of $106,027 in the comparable period of the prior year. The proceeds from new borrowings in the prior year's first nine months were used primarily for the funding the acquisition of the Specialty Battery Division of JCI. Net cash used for financing activities during the first nine months of fiscal 2001 includes the purchase of $3,790 of treasury stock. The availability under our current loan agreement is expected to be sufficient to meet our ongoing cash needs for working capital requirements, debt service, capital expenditures and possible strategic acquisitions. Capital expenditures during the first nine months of fiscal 2001 were incurred primarily to fund capacity expansion, new product development, a continuing series of cost reduction programs, normal maintenance capital, and regulatory compliance. Fiscal 2001 capital expenditures are expected to be approximately $45,000 for similar purposes. 23 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) (Dollars in thousands, except per share data) NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." In June 2000, SFAS No. 138 was issued which includes several amendments to SFAS No. 133. The new standard is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. C&D will adopt SFAS No. 133, including the amendments in SFAS No. 138, on February 1, 2001. The new standard requires that all derivative instruments be reported on the balance sheet at their fair values. For derivative instruments designated as fair value hedges, changes in the fair value of the derivative instrument will generally be offset on the income statement by changes in the fair value of the hedged item. For derivative instruments designated as cash flow hedges, the effective portion of any hedge is reported in other comprehensive income until it is cleared to earnings during the same period in which the hedged item affects earnings. The ineffective portion of all hedges will be recognized in current earnings each period. Changes in the fair value of derivative instruments that are not designated as a hedge will be recorded each period in current earnings. Using market valuations for derivatives held as of October 31, 2000, as a guide, we estimate that on February 1, 2001, the cumulative-effect adjustment to net income and accumulated other comprehensive loss will not be material. Any changes in the composition of our derivative instrument portfolio or changes in the market values of these instruments between now and the end of fiscal 2001 could have an impact on the cumulative-effect adjustment to net income and accumulated other comprehensive loss. At this time, we plan no significant change in our risk management strategies due to the adoption of SFAS No. 133. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements." This SAB summarizes certain of the staff's views in applying generally accepted accounting principles to selected revenue recognition issues. Accordingly, guidance is provided with respect to the recognition, presentation, and disclosure of revenue in the financial statements. Adoption of SAB No. 101, as amended by SAB No. 101A, "Amendment: Revenue Recognition in Financial Statements" and SAB No. 101B, "Second Amendment: Revenue Recognition in Financial Statements" is no later than the fourth fiscal quarter of fiscal years beginning after December 15, 1999. We have evaluated the impact of the implementation of these SABs and believe that the impact will not be material. Recently, the FASB's Emerging Issue Task Force ("EITF") released Issue 00-10, "Accounting for Shipping and Handling Revenues and Costs," which requires amounts charged to customers for shipping and handling be classified as revenue. This EITF is applicable no later than the fourth quarter of fiscal years beginning after December 15, 1999. Since this EITF only relates to financial statement classification, the adoption of this EITF will not affect our financial position or results of operations. 24 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) (Dollars in thousands, except per share data) FORWARD-LOOKING STATEMENTS Certain information contained in this Quarterly Report on Form 10-Q, including, without limitation, information appearing under Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," are forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, also known as the Private Securities Litigation Reform Act of 1995). Words and expressions reflecting something other than historical fact are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. These statements are made on the basis of management's views and assumptions, as of the time the statements are made, regarding future events and business performance. There can be no assurance, however, that management's expectations will necessarily come to pass. A number of factors could materially affect future developments and performance. Factors that appear with the forward-looking statements, or in the Company's other Securities and Exchange Commission filings, could cause our actual results to differ materially from those expressed in any forward-looking statements made by C&D in this Quarterly Report on Form 10-Q. 25 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 10.1 Fourth Amendment dated October 13, 2000 to our Credit Agreement dated as of March 1, 1999 among C&D as borrower, certain subsidiaries and affiliates of C&D as guarantor, the lenders therein and Bank of America as administrative agent (filed herewith). 10.2 Fifth Amendment dated October 13, 2000 to our Credit Agreement dated as of March 1, 1999 among C&D as borrower, certain subsidiaries and affiliates of C&D as guarantor, the lenders therein and Bank of America as administrative agent (filed herewith). 10.3 Employment Agreement dated November 28, 2000 between Wade H. Roberts, Jr. and C&D (filed herewith). 10.4 Third Amendment dated November 28, 2000 to our Savings Plan (filed herwith). 10.5 Seventh Amendment dated November 29, 2000 to our Pension Plan for Salaried Employees (filed herewith). 15. Letter from PricewaterhouseCoopers LLP, independent accountants for C&D, regarding unaudited interim financial information (filed herewith). 27. Financial Data Schedule (filed herewith). 26 SIGNATURES - ------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. C&D TECHNOLOGIES, INC. December 14, 2000 BY: /s/ Wade H. Roberts, Jr. --------------------------------- Wade H. Roberts, Jr. President, Chief Executive Officer and Director (Principal Executive Officer) December 14, 2000 BY: /s/ Stephen E. Markert, Jr. ---------------------------------- Stephen E. Markert, Jr. Vice President Finance (Principal Financial and Accounting Officer) 27 EXHIBIT INDEX 10.1 Fourth Amendment dated October 13, 2000 to our Credit Agreement dated as of March 1, 1999 among C&D as borrower, certain subsidiaries and affiliates of C&D as guarantor, the lenders therein and Bank of America as administrative agent. 10.2 Fifth Amendment dated October 13, 2000 to our Credit Agreement dated as of March 1, 1999 among C&D as borrower, certain subsidiaries and affiliates of C&D as guarantor, the lenders therein and Bank of America as administrative agent. 10.3 Employment Agreement dated November 28, 2000 between Wade H. Roberts, Jr. and C&D. 10.4 Third Amendment dated November 28, 2000 to our Savings Plan. 10.5 Seventh Amendment dated November 29, 2000 to our Pension Plan for Salaried Employees. 15. Letter from PricewaterhouseCoopers LLP, independent accountants for C&D, regarding unaudited interim financial information. 27. Financial Data Schedule. 28 EX-10 2 exb10-1.txt Exhibit 10.1 October 23, 2000 Mr. Wade H. Roberts, Jr. 1385 Eaves Spring Road Malvern, Pennsylvania 19355 Dear Mr. Roberts: You are presently employed by C&D Technologies, Inc., a Delaware corporation (the "Company"), in an executive capacity and the Company desires to encourage such continued employment by providing certain protections for you by entering into this Agreement with you, in return for which you agree to continue to be employed by the Company on the terms set forth herein, to refrain from certain competitive activity and to provide the Company with certain assurances upon your departure. In consideration of same, the Company agrees to employ you, and you agree to accept such employment, under the following terms and conditions: 1. TERM OF EMPLOYMENT. Except for earlier termination as provided in Section 8(a), (b) or (c) or upon a Change of Control in accordance with Exhibit A, your employment under this Agreement shall continue in effect until either party shall give to the other party at least 30 days' prior written notice of the termination of this Agreement (a "Termination Notice"). If a Termination Notice is given by either party (a) the Company shall, without any liability to you, have the right, exercisable at any time after such notice is sent to elect any other person to the office or offices in which you are then serving and to remove you from such office or offices, but (b) except for the obligations set forth in Sections 3 and 4, all other obligations each of you and the Company have to the other, including the Company's obligation to pay your compensation and make available the benefits to which you are entitled hereunder, shall continue until the date your employment terminates as specified in the Termination Notice or thereafter, to the extent such obligations survive pursuant to the terms of this Agreement. 2. COMPENSATION AND BENEFITS. (a) From and after November 1, 2000 (the "Effective Date"), you shall be compensated for performance of your obligations under this Agreement at a rate of not less than $440,000 per annum through March 31, 2001, and at a rate of not less than $485,000 from and after April 1, 2001 (such salary, as adjusted from time to time, is hereinafter referred to as the "Base Salary"), payable in such manner as is consistent with the Company's payroll practices for executive employees. The Board of Directors may from time to time thereafter consider future increases in Base Salary in its sole discretion. (b) You shall have the benefit of and be entitled to participate in such employee benefit plans and programs, including life, disability and medical insurance, pension, savings, retirement and other similar plans, as the Company now has or hereafter may establish from time to time, and in which you would be entitled to participate pursuant to the terms thereof, including without limitation the Company's existing Supplemental Executive Retirement Plan ("SERP"). The foregoing, however, shall not be construed to require the Company to establish any such plans or to prevent the Company from modifying or terminating any such plans, and no such action or failure thereof shall affect this Agreement. (c) You shall be entitled (i) to participate in the Company's Incentive Compensation Plan each year in accordance with criteria and for amounts approved by the Compensation Committee, and (ii) to be granted options, to the extent (if any) approved by the Compensation Committee or the relevant Option Committee, under the Company's stock option plans in effect from time to time, in addition to those granted to you prior to the date of this Agreement (the "Original Grant"). Without limiting the foregoing, you shall have a targeted bonus for the fiscal year ending January 31, 2001 of 50% of your Base Salary and a targeted bonus for the fiscal year ending January 31, 2002 and each fiscal year thereafter of 55% of your Base Salary (with the actual payment of any bonus being dependent on your achievement of targeted objectives except as otherwise set forth in this Agreement). (d) In the event of a Change of Control Termination (as defined in Exhibit A hereto), you shall be entitled to certain payments and benefits as provided in Exhibit A hereto, which payments and benefits shall be in substitution for, not in addition to, the payments and benefits otherwise payable under this Agreement in the event of termination. (e) You shall be entitled to four weeks of vacation each year. (f) The Company shall reimburse you annually for up to $7,500 of fees and expenses incurred by you for personal tax and financial planning advice, upon presentation by you of appropriate substantiation of such fees and expenses. (g) The Company shall provide you with a leased automobile of reasonable size and quality suitable to your position and shall pay or reimburse you for insurance, repairs, and maintenance and fuel expenses with regard to such automobile. You acknowledge that some or all of the benefits provided under this Section 2(g) may constitute taxable income for which you are responsible for payment of income taxes. 3. DUTIES. (a) During the term of your employment hereunder, you shall serve and the Company shall employ you as the President and Chief Executive Officer of the Company, with such executive duties and responsibilities consistent with such positions and stature as the Board of Directors from time to time may determine. You shall report to, and act under the general direction of, the Board of Directors. You shall use your best efforts to carry out the instructions of the Board of Directors. You shall be nominated, on an annual basis as long as you continue to be employed under this Agreement, for election by the stockholders as a director of the Company and, if elected, you shall serve as a director, without additional compensation. In addition, at the request of the -2- Board of Directors, you shall serve as an officer and/or director of any of the Company's subsidiaries, in all cases in conformity with the organizational documents and the policies of the Board of Directors of each such subsidiary, without additional compensation. (b) You shall devote your entire business time and energies during normal business hours to the business and affairs of the Company and its subsidiaries. Nothing in this Section 3 shall be construed as prohibiting you from investing your personal assets in businesses in which your participation is solely that of a passive investor in such form or manner as will not violate Section 5 hereof or require any services on your part in the operation or affairs of those businesses. You may also participate in philanthropic or civic activities as long as they do not materially interfere with your performance of your duties hereunder. (c) You shall be subject to the Company's rules, practices and policies applicable to the Company's senior executive employees. 4. EXPENSES. The Company shall reimburse you for all reasonable expenses incurred by you in connection with your employment upon presentation of appropriate documentation therefor in accordance with the Company's expense reimbursement practices. In the event the Company's principal executive offices are located to a location more than 50 miles from their current location, the Company shall reimburse your moving expenses (including reasonable costs relating to interim living accommodations). 5. RESTRICTIVE COVENANTS. (a) During such time as you shall be employed by the Company, and for the applicable Restricted Period (as defined below) thereafter, you shall not, without the written consent of the Board of Directors, directly or indirectly, become associated with, render services to, invest in, represent, advise or otherwise participate as an officer, employee, director, stockholder, partner or agent of, or as a consultant for, any business anywhere in the world that, at the time your employment with the Company ceases, is competitive with the business in which the Company is engaged or in which the Company has taken affirmative steps to engage (a "Competitive Business"); provided, however, that (i) nothing herein shall prevent you from investing in up to 5% of the securities of any company listed on a national securities exchange or quoted on the NASDAQ quotation system, as long as your involvement with any such company is solely that of a stockholder, and (ii) nothing herein is intended to prevent you from being employed following the termination of your employment with the Company by any business other than a Competitive Business. With respect to any termination of your employment other than upon a Change of Control pursuant to Exhibit A, the applicable Restricted Period shall be the two-year period following the date your employment terminates, and with respect to a termination of your employment upon a Change of Control pursuant to Exhibit A, the applicable Restricted Period shall be the three-year period following the date your employment terminates. You acknowledge that the provisions of this Section 5 are reasonable in light of the Company's worldwide business operations and the position in which you will serve at the Company and that they will not prevent you from obtaining employment after the termination of this Agreement. -3- (b) The parties hereto intend that the covenant contained in this Section 5 shall be deemed a series of separate covenants for each appropriate jurisdiction. If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants deemed included in this Section 5 on grounds that, taken together, they cover too extensive a geographic area, the parties intend that those covenants (taken in order of the least populous jurisdictions) which, if eliminated, would permit the remaining separate covenants to be enforced in that proceeding, shall, for the purpose of such proceeding, be deemed eliminated from the provisions of this Section 5. 6. CONFIDENTIALITY, NONINTERFERENCE AND PROPRIETARY INFORMATION. (a) In the course of (i) your employment by the Company hereunder, and (ii) any prior employment with the Company, you will have access to Confidential or Proprietary Data or Information of the Company. You shall not at any time divulge or communicate to any person, nor shall you direct any Company employee to divulge or communicate to any person (other than to a person bound by confidentiality obligations similar to those contained herein and other than as necessary in performing your duties hereunder) or use to the detriment of the Company or for the benefit of any other person, any of such Confidential or Proprietary Data or Information, except to the extent the same (i) becomes publicly known other than through a breach of this Agreement by you, (ii) was known to you prior to the disclosure thereof by the Company to you from a source that was entitled to disclose it or (iii) is subsequently disclosed to you by a third party who shall not have received it under any obligation of confidentiality to the Company. For purposes of this Agreement, the term "Confidential or Proprietary Data or Information" shall mean data or information not generally available to the public, including personnel information, financial information, customer lists, supplier lists, product and tooling specifications, trade secrets, information concerning product composition and formulas, tools and dies, drawings and schematics, manufacturing processes, information regarding operations, systems and services, know-how, computer and any other electronic, processed or collated data, computer programs, and pricing, marketing, sales and advertising data. (b) You shall not, during the term of this Agreement and for the applicable Restricted Period after the termination of your employment by the Company, for your own account or for the account of any other person, (i) solicit or divert to any Competitive Business any individual or entity who is a customer of the Company or any subsidiary or affiliate of the Company or who was a customer of the Company or any subsidiary or affiliate during the preceding twelve-month period, (ii) employ, retain as a consultant, attempt to employ or retain as a consultant, solicit or assist any Competitive Business in employing or retaining as a consultant any current employee of the Company or any subsidiary or affiliate or any person who was employed by the Company or any subsidiary or affiliate during the preceding twelve-month period or (iii) otherwise interfere in any material respect with the Company's relationship with any of its suppliers, customers, employees or consultants; provided, however, that you shall not be prohibited from contacting suppliers or customers after termination of your employment with regard to matters that do not violate your non-competition or confidentiality obligations contained in 5(a) and 6(a) or interfere in any material respect with the Company's relationship with such parties. -4- (c) You shall at all times promptly disclose to the Company, in such form and manner as the Company reasonably may require, any inventions, improvements or procedural or methodological innovations, programs, methods, forms, systems, services, designs, marketing ideas, products or processes (whether or not capable of being trademarked, copyrighted or patented) conceived or developed or created by you during and in connection with your employment hereunder and which relate to the business of the Company ("Intellectual Property"). All such Intellectual Property shall be the sole property of the Company. You shall execute such instruments and perform such acts as reasonably may be requested by the Company to transfer to and perfect in the Company all legally protectable rights in such Intellectual Property. If the Company is unable for any reason to secure your signature on such instruments, you hereby irrevocably appoint the Company and its officers and agents as your agents and attorneys-in-fact to execute such instruments and to do such things with the same legal force and effect as if executed or done by you. (d) All written, electronic and other tangible materials, records and documents made by you or coming into your possession during your employment concerning any products, processes or equipment, manufactured, used, developed, investigated or considered by the Company or otherwise concerning the business or affairs of the Company, shall be the sole property of the Company, and upon termination of your employment, or upon the request of the Company during your employment, you shall deliver the same to the Company. In addition, upon termination of your employment, or upon request of the Company during your employment, you shall deliver to the Company all other Company property in your possession or under your control, including confidential or proprietary data or information and all Company credit cards and computer and telephone equipment. 7. EQUITABLE RELIEF. With respect to the covenants contained in Sections 5 and 6 of this Agreement, you acknowledge that any remedy at law for any breach of said covenants may be inadequate and that the Company, in addition to its rights at law, shall be entitled to specific performance or any other mode of injunctive or other equitable relief to enforce its rights hereunder. 8. TERMINATION; ADDITIONAL COMPENSATION. This Agreement, and your employment hereunder, shall terminate upon the following terms and conditions: (a) This Agreement shall terminate automatically on the date of your death. Notwithstanding the foregoing, if you die during the term of this Agreement, the Company shall (i) continue to make payments to your estate of your Base Salary as then in effect pursuant to this Agreement for 180 days after the date of your death, and (ii) pay your estate any reimbursable expenses which otherwise would have been paid to you to the date of your death. (b) This Agreement shall be terminated, at the option of the Company, if you are unable to perform a substantial portion of your duties hereunder for any 180 days (whether or not consecutive) during any period of 365 consecutive days by reason of physical or mental disability. Notwithstanding the foregoing, the Company shall continue to pay to you, until 180 days after termination of your employment due to such disability, your Base Salary at the rate in effect on the date of termination. After such 180-day period, you shall be entitled to receive any amounts due and owing pursuant to any disability policy sponsored by or made available through the Company to the extent you qualify therefor under the terms of such disability policy. For purposes of this -5- Agreement, "physical or mental disability" shall mean your inability, due to health reasons, to discharge properly your duties of employment, supported by the opinion of a physician reasonably satisfactory to both you and the Company. If the parties do not agree on a mutually satisfactory physician within ten days after written demand by one or the other, a physician shall be selected by the president of the Pennsylvania Medical Association, and the physician shall, within 30 days thereafter, make a determination as to whether disability exists and certify the same in writing. The services of the physician shall be paid for by the Company. You shall fully cooperate with the examining physician, including submitting yourself to such examinations as may be requested by the physician for the purpose of determining whether you are disabled. (c) This Agreement shall terminate immediately if your employment is terminated hereunder for Cause. For purposes of this Agreement, "Cause" shall exist upon a finding by the Board of Directors of any of the following: (i) an act or acts of willful material misrepresentation, fraud or dishonesty by you that results in the personal enrichment of you or another person or entity at the expense of the Company; (ii) your admission, confession or conviction of any felony or any other crime or offense involving misuse or misappropriation of money or other property; (iii) any act involving gross moral turpitude by you that adversely affects the Company; (iv) your continued material breach of any obligations under this Agreement 30 days after the Company has given you notice thereof in reasonable detail, if such breach has not been cured by you during such period; or (v) your gross negligence or willful misconduct with respect to your duties or gross misfeasance of office. Notwithstanding the foregoing and Section 1(d)(ii) of the SERP, the definition of "Cause" solely for purposes of the SERP shall be the definition of "Cause" contained in Section l(d)(i) of the SERP. (d) Upon termination of this Agreement for any reason other than pursuant to a Change of Control, in addition to any other rights or benefits to which you may be entitled under this Agreement, you shall be paid all Accrued Obligations through the date of termination. The term "Accrued Obligations" shall mean (i) your Base Salary through the date of termination; (ii) any bonus earned pursuant to the terms of any applicable incentive compensation or bonus plan of the Company but not yet paid with respect to any fiscal year completed prior to termination; (iii) a prorated bonus for the fiscal year in which termination occurs equal to the product of (x) any bonus paid to you for the prior fiscal year of the Company multiplied by (y) a fraction, the numerator of which is the number of days in the current fiscal year during which you were employed by the Company, and the denominator of which is 365; and (iv) any accrued vacation pay not yet paid by the Company; provided, that if termination is by the Company for Cause or by you voluntarily, the "Accrued Obligations" will not include the amounts referred to in clause (iii) above. Upon termination of this Agreement (other than by the Company for Cause or pursuant to a Change of Control or by you in violation of this Agreement), (A) you shall also be entitled to all rights and benefits under benefit and incentive plans and perquisites in accordance with respective terms of those plans and perquisite programs; (B) you shall be reimbursed for all your business expenses incurred prior to termination in accordance with Section 4 above; (C) the Company shall, at your request within 15 days after termination and at your expense, assign to you the lease and any related purchase option for the automobile provided to you pursuant to Section 2 (g), provided such lease and purchase option is assignable; and (D) to the extent the Company's life insurance plan has a conversion option available upon termination of employment, the Company shall make such option -6- available to you. Upon termination by the Company for Cause, you shall be reimbursed for all your business expenses incurred prior to termination in accordance with Section 4. (e) Except upon the occurrence of a Change of Control Termination (as defined in Exhibit A), if your employment hereunder shall be terminated by the Company (i) without Cause, other than pursuant to Section 8(a) or (b), or (ii) pursuant to a Termination Notice given by the Company under Section l, then in addition to any other rights or benefits to which you may be entitled, the Company shall, for a period of two years after termination, (w) continue to pay you your Base Salary at the rate in effect on the date of termination; (x) pay you as soon as administratively practicable following the close of the fiscal year in which the termination occurs and the fiscal year thereafter a sum equal to your targeted bonus pursuant to Section 2(c) for each such fiscal year; (y) continue to provide you with a leased automobile pursuant to 2(g) and perquisites pursuant to Section 2 (f); and (z) continue all other benefits provided to you prior to termination; provided, however, that to the extent the Company's benefit plans do not permit such continued participation or such participation would have an adverse tax impact on such plans or on the other participants in such plans or is otherwise prohibited by applicable law, the Company may instead provide materially equivalent benefits to you outside such plans (which, in the case of medical insurance benefits, may be provided by the Company paying any premiums for continuation of your medical benefits pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act ("COBRA"), COBRA coverage in any event to be measured from the date of termination of employment). For purposes of this Section 8(e) the term "targeted bonus" shall mean the incentive bonus that would have been payable pursuant to Section 2(c) for the fiscal year that includes the date on which your employment terminates and the fiscal year thereafter assuming that under the bonus plan in effect on the date of your termination, you had been entitled to receive an amount in respect of such bonus based solely upon your Base Salary and the applicable target percentage as of the date of termination and for the fiscal year thereafter, respectively, and without regard to actual performance. Further, a bonus shall be deemed to be earned upon completion of the fiscal year to which it relates regardless of whether the Board of Directors or its Compensation Committee has approved incentive bonuses for such year as of the date of termination. (f) In the event of a Change of Control Termination, this Agreement shall terminate in accordance with the terms of Exhibit A, and the payments and benefits to which you shall be entitled shall be governed solely by Exhibit A. (g) In the event this Agreement is terminated for any reason by the Company (other than due to death, disability, for Cause or upon a Change of Control), or the Company provides a Termination Notice as forth in Section 1, upon termination of your employment under this Agreement, any unvested options that you may own that would otherwise have vested within one year from the date of termination shall be deemed to vest effective upon the date of termination and become exercisable for a period of 90 days following the date of termination. All other unvested options shall terminate. (h) The payment by the Company of any compensation or benefits pursuant to this Section 8 other than the Accrued Obligations shall be conditioned on your execution of a Release (a "Release") in a form provided by and acceptable to the Company. Such Release shall be -7- substantially in the form of Exhibit B hereto but may be modified by the Company in its sole discretion as it deems appropriate to reflect changes in law or circumstances arising after the date of this Agreement; provided, however, that no such modification shall increase any of your obligations to the Company over those contemplated in this Agreement, including the Exhibits hereto. 9. REPRESENTATIONS. You hereby represent and warrant that you are not subject to any employment agreement, non-competition or confidentiality agreement or other commitment that either would be violated by your entering into or performing your obligations under this Agreement or that would restrict in any manner or interfere with the performance of your obligation under this Agreement. You hereby further represent and warrant that you have not revealed to the Company or any employee of the Company any confidential information of any former employer, and you agree that you will not do so in the future. 10. ENTIRE AGREEMENT; MODIFICATION; CONSTRUCTION. This Agreement, together with the Exhibits hereto and all of your rights under the SERP and all other employee benefit plans in which you participate, constitutes the full and complete understanding of the parties, and supersedes all prior agreements and understandings, oral or written, between the parties, with respect to the subject matter hereof, except for the Agreement Relating to Intellectual Property and Confidential Information dated October 23, 1998 between you and the Company ("Confidentiality Agreement"); provided, however, that if the terms of any such employee benefit plan or such Confidentiality Agreement shall be inconsistent with the provisions to this Agreement, the provisions of this Agreement shall prevail. Exhibit A and Exhibit B are hereby incorporated by reference and made a part of this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, oral or otherwise, have been made by either party, or anyone acting on behalf of either party, that are not set forth or referred to herein. This Agreement may not be modified or amended except by an instrument in writing signed by the party against which enforcement thereof may be sought. 11. SEVERABILITY. Any term or provision of this Agreement that is held to be invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent that invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. 12. WAIVER OF BREACH. The waiver by either party of a breach of any provision of this Agreement, which waiver must be in writing to be effective, shall not operate as or be construed as a waiver of any subsequent breach. 13. NOTICES. All notices hereunder shall be in writing and shall be sent by messenger or by certified or registered mail, postage prepaid, return receipt requested, if to you, to your residence set forth above, and if to the Company, to the Vice President-Human Resources, at the Company's address set forth above, or to such other address as either party to this Agreement shall specify to the other. -8- 14. ASSIGNABILITY; Binding Effect. This Agreement shall not be assignable by either party, except that it may be assigned by the Company to an acquiror of all or substantially all of the assets of the Company or other successor to the Company, subject to your rights arising from a Change of Control as provided in Exhibit A. This Agreement shall be binding upon and inure to the benefit of you, your legal representatives, heirs and distributees, and shall be binding upon and inure to the benefit of the Company, its successors and assigns. 15. NO MITIGATION REQUIRED. Upon a termination of your employment by the Company without Cause pursuant to Section 8(g) or upon a Change of Control pursuant to Exhibit A, you shall have no obligation to seek other employment but shall not be prohibited from doing so, and no compensation paid to you as the result of any other employment shall reduce any payment required to be made by the Company hereunder. 16. GOVERNING LAW. All questions pertaining to the validity, con- struction, execution and performance of this Agreement shall be construed and governed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the conflicts or choice of law provisions thereof. 17. NONDISPARAGEMENT. You agree not to publicly or privately disparage the Company, its personnel, products or services either during or upon termination of your employment by the Company. 18. SURVIVAL. All of the provisions of this Agreement that by their terms are to be performed or that otherwise are to endure after the termination of your employment by the Company shall survive the termination of your employment and shall continue in effect for the respective periods therein provided or contemplated. 19. HEADINGS. The headings in this Agreement are intended solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement. 20. COUNTERPARTS. This Agreement may be executed in several counter- parts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. -9- If you are in agreement with the foregoing, please sign the duplicate original in the space provided below and return it to the Company. C&D TECHNOLOGIES, INC. By: /s/ William Harrel -------------------------------------- Title: Chairman -------------------------------------- Agreed as of the date above written: /s/ Wade H. Roberts, Jr. - ---------------------------------- Wade H. Roberts, Jr. -10- EXHIBIT A TO EMPLOYMENT AGREEMENT (THE "AGREEMENT") OF WADE H. ROBERTS, JR. ("EXECUTIVE") (Capitalized terms used herein and not otherwise defined have the meanings given to them in the Agreement.) I. SPECIAL TERMINATION PROVISIONS. In the event a Change of Control (as defined below) occurs, and within 24 months after such Change of Control: (a) the Executive's employment with the Company is terminated by the Executive pursuant to a Termination for Good Reason (as defined below); or (b) the Executive's employment with the Company is terminated by the Company for any reason other than death, disability or for Cause pursuant to Sections 8(a), (b) or (c) of the Agreement; or (c) the Agreement is not renewed due to a Termination Notice given by the Company, as provided in Section 1 of the Agreement (the events under clauses (a), (b) and (c) herein collectively called a "Change of Control Termination"), the Executive shall be entitled to receive the payments and benefits set forth in Section III below in consideration of the Executive's agreements under the Agreement, including but not limited to the Executive's agreement not to compete with the Company for a period of three years after a Change of Control pursuant to Section 5(a) of the Agreement and the Executive's execution of the Release contemplated by Section 8(h) of the Agreement. II. DEFINITIONS. (a) CHANGE OF CONTROL. For purposes of the Agreement, a "Change of Control" shall be deemed to have occurred if: (i) any person (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and as used in Sections 13(d) and 14(d) thereof)), excluding the Company, any "Subsidiary" and any employee benefit plan sponsored or maintained by the Company or any Subsidiary (including any trustee of any such plan acting in his capacity as trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange Act, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of shares of the Company having at least 30% of the total number of votes that may be cast for the election of directors of the Company; (ii) the stockholders of the Company shall approve any merger or other business combination of the Company, sale of all or substantially all of the Company's assets or combination of the foregoing transactions (a "Transaction"), other than a Transaction involving only the Company and one or more of its Subsidiaries, or a Transaction immediately following which the stockholders of the Company immediately prior to the Transaction continue to have a majority of the voting power in the resulting entity (excluding for this purpose any stockholder of the Company owning directly or indirectly more than 10% of the shares of the other company involved in the Transaction) and no person is the beneficial owner of at least 30% of the shares of the resulting entity as contemplated by Section II(a)(i) above; or (iii) within any 24-month period beginning on or after the date hereof, the persons who were directors of the Company immediately before the beginning of such period (the "Incumbent Directors") shall cease (for any reason other than death) to constitute at least a majority of the Board of Directors of the Company or the board of directors of any successor to the Company, provided that any director who was not a director as of the date hereof shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation A-1 of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors either actually or by prior operation of this Section II(a)(iii), unless such election, recommendation or approval was the result of an actual or threatened election contest of the type contemplated by Regulation 14a-11 promulgated under the Exchange Act or any successor provision. Notwithstanding the foregoing, no Change of Control of the Company shall be deemed to have occurred for purposes of this Agreement by reason of any actions or events in which the Executive participates in a capacity other than in his capacity as an executive or director of the Company. (b) TERMINATION FOR GOOD REASON. For purposes of the Agreement, a "Termination for Good Reason" means a termination by the Executive by written notice given within 90 days after the occurrence of the Good Reason event. A notice of Termination for Good Reason shall indicate the specific termination provision in Section II(c) relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for Termination for Good Reason. The failure by the Executive to set forth in such notice any facts or circumstances which contribute to the showing of Good Reason shall not waive any right of Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing his rights hereunder. The notice of Termination for Good Reason shall provide for a date of termination not less than 10 nor more than 60 days after the date such Notice of Termination for Good Reason is given. (c) GOOD REASON. For purposes of the Agreement, "Good Reason" shall mean the occurrence, without the Executive's express written consent, of any of the following circumstances, unless such circumstances are fully corrected prior to the date of termination specified in the notice of Termination for Good Reason as contemplated in Section II(b) above: (i) any material diminution of the Executive's positions, duties or responsibilities hereunder (except in each case in connection with the termination of the Executive's employment for Cause pursuant to Section 8(c) of the Agreement or due to disability or death pursuant to Sections 8(a) or 8(b) of the Agreement, or temporarily as a result of Executive's illness or other absence), or the assignment to the Executive of duties or responsibilities that are inconsistent with the Executive's position under the Agreement at the time of a Change of Control; (ii) removal of the Executive from, or the nonreelection of the Executive to, the officer positions with the Company specified in the Agreement; (iii) relocation of the Company's principal executive offices to a location more than 25 miles from its location at the time of the Change of Control; (iv) failure by the Company, after a Change of Control, (A) to continue any bonus plan, program or arrangement in which the Executive is entitled to participate immediately prior to the Change of Control (the "Bonus Plans"), provided that any such Bonus Plans may be modified at the Company's discretion from time to time but shall be deemed terminated if (x) any such plan does not remain substantially in the form in effect prior to such modification and (y) if plans providing the Executive with substantially similar benefits are not substituted therefor ("Substitute Plans"), or (B) to continue the Executive as a participant in the Bonus Plans and Substitute Plans on at least the same basis as to potential amount of the bonus and substantially the same level of criteria for achievability thereof as the Executive participated in immediately prior to any change in such plans or awards, in accordance with the Bonus Plans and the Substitute Plans; (v) any material breach by the Company of any provisions of the Agreement; (vi) if the Executive is on the Board of Directors at the time of a Change of Control, the Executive's removal from or failure to be reelected to the Board of Directors thereafter; or (vii) failure of any successor to the Company to promptly acknowledge in writing the obligations of the Company hereunder. A-2 III. PAYMENTS AND BENEFITS. Upon a Change of Control Termination, as provided in Section I above, the Company shall pay or provide the Executive the following payments and benefits: (a) The Company shall pay to the Executive all Accrued Obligations in a lump sum within five business days after the date of termination. (b) The Company shall pay to the Executive as severance pay, not later than the tenth day following the date of the Executive's execution and delivery of the Release required pursuant to Section 8(h) of this Agreement: (i) a lump sum in an amount equal to three years of the Executive's Base Salary; and (ii) a lump sum payment in an amount equal to three of the Executive's annual incentive bonuses, such payment to be equal to the greater of (i) the amount of all incentive bonuses paid to the Executive with respect to each of the three most recently completed fiscal years of the Company for which a bonus has been paid or (ii) the incentive bonus paid to the Executive with respect to the two most recently completed fiscal years of the Company for which a bonus has been paid plus an amount equal to the Executive's Target Bonus (as hereinafter defined); provided, however, that if the Executive has been employed by the Company for less than three years, such payment shall be equal to the greater of (x) the amount of the incentive bonuses paid to the Executive with respect to the two most recently completed fiscal years of the Company for which a bonus has been paid plus the Executive's Target Bonus or (y) the amount of the Executive's Target Bonus multiplied by three. For purposes of this Exhibit A, the term "Target Bonus" shall mean the incentive bonus that would have been payable for the fiscal year that includes the date on which the Executive's employment terminates under the incentive bonus program in effect as of the date of the Change of Control, assuming that the Executive had been entitled to receive an amount in respect of such bonus based solely upon his Base Salary and the applicable target percentage as of the date of termination (or if greater, the Executive's Base Salary as of the date on which occurred an event giving rise to a Change of Control Termination), and without regard to actual performance. (c) The Company shall continue the participation of the Executive and the Executive's dependents for a period of three years after the date of termination in all health, medical and accident, life and other welfare plans (as defined in Section 3(l) of ERISA), in which the Executive was participating immediately prior to the date of termination, except for any disability plans, and shall provide the Executive with a leased automobile pursuant to Section 2(g) of the Agreement for such period; provided, however, that to the extent the Company's plans do not permit such continued participation or such participation would have an adverse tax impact on such plans or on the other participants in such plans, the Company may instead provide materially equivalent benefits to the Executive outside of such plans; provided, further, that under such circumstances, (i) medical insurance benefits may be provided by the Company paying any COBRA premiums (COBRA coverage, in any event, to be measured from the date of termination of employment) and (ii) if the Company is unable to continue the Executive's life insurance coverage, it shall pay the Executive an amount equal to three times the premium paid during the year prior to termination or if the Executive A-3 converts the insurance to an individual policy, the Company shall pay the premium for such insurance for three years. The Executive shall complete such forms and take such physical examinations as reasonably requested by the Company. To the extent the Executive incurs any tax obligation as a result of the provisions of this paragraph (c) that the Executive would not have incurred if the Executive remained an employee of the Company and had continued to participate in the benefit plans as an employee, the Company shall pay to the Executive, at the time the tax is due, an amount to cover such taxes and the taxes on the amount paid to cover such taxes. (d) All outstanding stock options and restricted stock awards that have been granted to the Executive by the Company at any time but have not yet vested and upon which vesting depends solely upon the passage of time, shall immediately vest or become nonforfeitable, as the case may be. In the event the foregoing sentence becomes applicable, the Company agrees to cause the Board of Directors to take all steps necessary to implement the foregoing sentence. (e) All amounts payable to the Executive upon a Change of Control under the SERP and the Company's Deferred Compensation Plan shall be paid to the Executive in accordance with the terms of those plans. (f) The Company, at its expense, shall provide the Executive with outplacement services at a level appropriate for the most senior level of executive employees through an outplacement firm of the Executive's choice for a period of up to one year after the date of the Change of Control Termination. (g) (i) In the event that any payment, coverage or benefit (collectively, the "Covered Benefits") provided to you by the Company or an Affiliate (as defined below) is or becomes subject to the excise tax imposed under Section 4999 or any successor provision of the Internal Revenue Code of 1986, as amended (the "Code"), or you incur interest or penalties with respect to that excise tax (that excise tax, together with any interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), the Company shall pay you an additional amount (a "Gross-Up Bonus") at the time or times specified in Section III(g)(iii)(z) below. The amount of the Gross-Up Bonus shall equal the quotient determined by dividing (x) the Excise Tax attributable to the Covered Benefits by (y) one minus the highest marginal income tax rate, where the term "highest marginal income tax rate" means the sum of the highest combined local, state and federal personal income tax rates (including any state unemployment compensation tax rate, any surtax rate as well as the Medicare hospital insurance tax rate imposed on employees under the Federal Insurance Contributions Act) as in effect for the calendar year to which the Excise Tax attributable to the Covered Benefits relates, provided that in determining the highest tax rate for federal purposes both the deductibility of state and local income tax payments and the reduction in the deductibility of itemized deductions shall be taken into account; it being the intention of the parties hereto that your net after tax position (after taking into account any interest or penalties imposed with respect to such taxes) upon receipt of the Covered Benefits is no less advantageous to you than the net after tax position you would have had if Section 4999 of the Code had not been applicable to any portion of the Covered Benefits. (ii) All determinations to be made under this Section III(g), including the determination of whether an Excise Tax is payable and the amount thereof, shall be made by a law A-4 firm practicing in the Philadelphia, Pennsylvania metropolitan area that is knowledgeable in tax law matters, which firm shall be selected and paid for by the Company and acceptable to the Executive. If tax counsel's determinations are not finally accepted by the Internal Revenue Service upon audit, then appropriate adjustments shall be computed (with a Gross Up Bonus, if applicable) by that tax counsel based upon the final amount of the Excise Tax so determined. (iii) For purposes of this Section III(g): (x) An "Affiliate" shall mean any successor to the Company, any member of an affiliated group including the Company (determining using the definition in Section 1504 of the Code) or any entity that becomes a member of such an affiliated group as a result of the transaction causing the Change of Control. (y) When determining the amount of the Gross-Up Bonus, you will be deemed to have otherwise allowable deductions for federal, state and local tax purposes at least equal to those disallowed because of the inclusion of the Gross-Up Bonus in your adjusted gross income. (z) The portion of the Gross-Up Bonus attributable to a Covered Benefit shall be paid to you within 10 business days following the provision to you of the Covered Benefit. In the event that the amount of Excise Tax due exceeds the amount of Excise Tax determined by tax counsel, the Company shall pay you an additional Gross-Up Bonus in respect of that excess at the time that the amount of the excess is determined under Section III(g)(ii). In the event the amount of Excise Tax due is less than the amount of Excise Tax determined by tax counsel, you shall repay the Company the portion of the Gross-Up Bonus attributable thereto at the time that the amount of the reduction in Excise Tax is determined under Section III(g)(ii); provided, however, that if any portion of the amount you must repay to the Company has been paid to any federal, state or local tax authority, your repayment of that portion shall be postponed until the tax authority has actually refunded or credited that amount to you. (h) Upon the occurrence of a Change of Control, if the Company fails to perform any of its obligations under this Agreement or the Company or any other person asserts the invalidity of any provision of this Agreement and the Executive incurs any costs in successfully enforcing or defending any of the provisions of this Agreement, including legal fees and expenses and court costs, the Company shall reimburse the Executive for all such costs incurred by him. A-5 EXHIBIT B RELEASE This Release is made this ______ day of _______________, ____ by and between C&D Technologies, Inc. ("Employer") and _______________________ ("Employee"). RECITALS: WHEREAS, the parties are parties to an Employment Agreement (the "Employment Agreement") dated __________, pursuant to which Employee was employed by Employer; and WHEREAS, the Employment Agreement has terminated; and WHEREAS, your execution and delivery of this Release is a condition to the Employer's obligations to pay certain compensation and benefits to you under the Employment Agreement; NOW THEREFORE, the parties hereto, intending to be legally bound, in consideration of the mutual promises and undertakings set forth herein, do hereby agree as follows: 1. As of _____________________, ____, Employee's employment with Employer shall terminate, and Employee shall have no further job responsibilities to perform for Employer; provided, however, that Employee shall cooperate with Employer in transitioning Employee's job responsibilities as Employer shall reasonably request, provided that Employee shall be entitled to receive reasonable compensation for any services rendered prior to such date and shall not be obligated to take any action that would interfere with any subsequent employment of Employee or otherwise result in economic hardship to Employee. 2. Employer shall pay to the Employee the amounts contemplated pursuant to Section __ of the Employment Agreement, less applicable deductions; provided however, the first payment shall not be due and payable until ten days after the execution by Employee and delivery to Employer of this Release. 3. For and in consideration of the monies and benefits paid to Employee by Employer, as more fully described in Section 2 above, and for other good and valuable consideration, Employee hereby waives, releases and forever discharges Employer, its assigns, predecessors, successors, and affiliated entities, and its current or former stockholders, officers, directors, administrators, agents, servants and employees, individually and as representatives of the corporate entity (hereinafter collectively referred to as "Releasees"), from any and all claims, suits, debts, dues, accounts, reckonings, bonds, bills, specialties, covenants, contracts, bonuses, controversies, agreements, promises, charges, complaints, damages, sums of money, interest, attorney's fees and costs, or causes of action of any kind or nature whatsoever whether in law or equity, including, but not limited to, all claims arising out of his/her employment or termination of employment with Employer, such as all claims for wrongful discharge, breach of contract, either express or implied, interference with B-1 contract, emotional distress, fraud, misrepresentation, defamation, claims arising under the Civil Rights Acts of 1964 and 1991 as amended, the Americans With Disabilities Act, the Age Discrimination in Employment Act (ADEA), the National Labor Relations Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974 (ERISA), the Family and Medical Leave Act, the Pennsylvania Human Relations Act, the Pennsylvania Wage Payment & Collection Law, the Pennsylvania Minimum Wage Act of 1968, the Pennsylvania Equal Pay Law, and any and all other claims arising under federal, state or local law, rule, regulation, constitution, ordinance or public policy whether known or unknown, arising up to and including the date of execution of this Release; provided, however that the parties do not release each other from any claim of breach of the terms of this Release. This release of rights does not extend to claims that may arise after the date of this Release. Employee agrees that Employee will not initiate any charge or complaint or institute any claim or lawsuit against Releasees or any of them based on any fact or circumstance occurring up to and including the date of the execution by Employee of this Release. 4 Employee agrees that the payments made and other consideration received pursuant to this Release are not to be construed as an admission of legal liability by Releasees or any of them and that no person or entity shall utilize this Release or the consideration received pursuant to this Release as evidence of any admission of liability since Releasees expressly deny liability. 5 Employee affirms that the only consideration for the signing of this Release are the terms stated herein and in the Employment Agreement and that no other promise or agreement of any kind has been made to Employee by any person or entity whatsoever to cause Employee to sign this Release. 6 Employee and Employer affirm that the Employment Agreement and this Release set forth the entire agreement between the parties with respect to the subject matter contained herein and supersede all prior or contemporaneous agreements or understandings between the parties with respect to the subject matter contained herein. Further, there are no representations, arrangements or understandings, either oral or written, between the parties, which are not fully expressed herein. Finally, no alteration or other modification of this Release shall be effective unless made in writing and signed by both parties. 7 Employee acknowledges that Employee has been given a period of at least 21 days within which to consider this Release. 8 Following the execution of this Release, the Employee has a period of 7 days from the date of execution to revoke this Release, and this Release shall not become effective or enforceable until the revocation period has expired. 9 Employee certifies that Employee has returned to Employer all keys, identification cards, credit cards, computer and telephone equipment and other property or information of Employer in Employee's possession, custody, or control including, but not limited to, any information contained in any computer files maintained by Employee during Employee's employment with Employer. Employee certifies that Employee has not kept the originals or copies of any B-2 documents, files, or other property of Employer which Employee obtained or received during Employee's employment with Employer. 10 Employee acknowledges that Employer advised Employee to consult with an attorney prior to executing this Release. 11 Employee affirms that Employee has carefully read this Release, that Employee fully understands the meaning and intent of this document, that Employee has signed this Release voluntarily and knowingly, and that Employee intends to be bound by the promises contained in this Release for the aforesaid consideration. IN WITNESS WHEREOF, Employee and the authorized representative of Employer have executed this Release on the dates indicated below: C&D TECHNOLOGIES, INC. Dated:_____________________ By:______________________________ Title:___________________________ Dated:_____________________ _________________________________ (Name of Employee) B-3 ENDORSEMENT I, ___________________________________, hereby acknowledge that I was given 21 days to consider the foregoing Release and voluntarily chose to sign the Release prior to the expiration of the 21-day period. I declare under penalty of perjury under the laws of the Commonwealth of Pennsylvania that the foregoing is true and correct. EXECUTED this ________ day of __________________, ____, at ____________ ___________________________, Pennsylvania. --------------------------------- (Name of Employee) B-4 EX-10 3 exb10-2.txt Exhibit 10.2 THIRD AMENDMENT TO C&D TECHNOLOGIES SAVINGS PLAN WHEREAS, C&D Technologies, Inc. (the "Sponsor") adopted the C&D Technologies Savings Plan (the "Plan"), most recently amended and restated effective October 1, 1997, and WHEREAS, the Sponsor desires to amend the Plan; NOW, THEREFORE, the Sponsor amends the Plan as follows, effective January 1, 2001: 1. The Preamble of the Plan is hereby amended by adding the following paragraph to the end thereof: Effective January 1, 2001, the C&D Technologies Savings Plan for Hourly Employees is merged into and made a part of the Plan. 2. The second paragraph of the definition of "Compensation" in Section 1.1 of the Plan is amended to read as follows: Notwithstanding the foregoing, Compensation shall not include (i) severance pay, or (ii) the value of any qualified or non-qualified stock option granted to the Participant by his Employer to the extent such value is includible in the Participant's taxable income 3. The definition of "Employee" in Section 1.1 of the Plan is amended and restated to read, in its entirety, as follows: An "Employee" means any employee of an Employer other than a leased employee or an employee who is covered by a collective bargaining agreement to the extent that benefits were the subject of good faith bargaining unless the collective bargaining agreement provides otherwise. 4. Section 3.1 of the Plan is amended by adding the following to the end thereof: Notwithstanding the foregoing, an Employee hired on or after January 1, 2001 who is classified as a salaried employee shall become an Eligible Employee for purposes of participating in the "fixed salaried Profit-Sharing Contribution" portion of the Plan as of the Enrollment Date next following his date of hire. 5. Section 4.1 of the Plan is amended by adding the following to the end thereof: If at the time he becomes an Eligible Employee an Employee has not affirmatively elected to have Tax-Deferred Contributions made to the Plan on his behalf in accordance with the provisions of Sections 4.1 and 4.2, his Employer shall make Tax-Deferred Contributions on his behalf in an amount equal to three percent of the Eligible Employee's Compensation. The Compensation otherwise payable to an Eligible Employee on whose behalf Tax-Deferred Contributions are made in accordance with the provisions of this Section shall be reduced by the amount of such Tax-Deferred Contributions. As of the date he becomes an Eligible Employee, an Eligible Employee to whom this Section would otherwise apply may affirmatively elect, in accordance with rules prescribed by the Administrator, not to have Tax-Deferred Contributions made on his behalf in accordance with the provisions of this Section. Such affirmative election must be recorded with the Administrator either prior to the date the Employee becomes an Eligible Employee or within a reasonable period of time following such date, but not later than the first date Compensation subject to reduction hereunder becomes available to the Eligible Employee. An Eligible Employee shall have a reasonable period following his receipt of the automatic reduction notice described in Section 4.9 and before the first date Compensation subject to the automatic reduction becomes available to him in which to make an affirmative election hereunder. If an Eligible Employee does not make the affirmative election described herein within the prescribed time period, Tax-Deferred Contributions shall continue to be made on his behalf in accordance with the provisions of this Section until the Eligible Employee elects either to change the amount of his Compensation that his Employer contributes as Tax-Deferred Contributions or to have Tax-Deferred Contributions suspended, as provided in this Article. At the time an Employee becomes an Eligible Employee, the Administrator shall provide the Eligible Employee with a notice explaining the automatic reduction in his Compensation for purposes of making Tax-Deferred Contributions in accordance with the preceding Section and the Employee's right to affirmatively elect either a different reduction amount or no reduction. The notice shall describe the procedures for making such an election and the period in which such an election may be made. In addition, the Administrator shall provide annual notice to Eligible Employees of the amount by which their Compensation is being reduced for purposes of making Tax-Deferred Contributions, if any, and their right to change, and the procedure for changing, such amount as provided in the Plan. 6. Section 6.1 of the Plan is amended and restated to read, in its entirety, as follows: 6.1 CONTRIBUTION PERIOD The Contribution Period for Matching Contributions under the Plan shall be each payroll period. The Contribution Period for Profit-Sharing Contributions under the Plan shall be each Plan Year. 7. Section 6.2 of the Plan is amended and restated to read, in its entirety, as follows: 6.2 PROFIT-SHARING CONTRIBUTIONS Each Employer may, in its discretion, make a "discretionary salaried Profit-Sharing Contribution" to the Plan for the Contribution Period in an amount determined by the Sponsor. Each Employer shall make a "fixed salaried Profit-Sharing Contribution" to the Plan for the Contribution Period on behalf of each "eligible salaried Employee" equal to 4% of such "eligible salaried Employee's" Compensation for the Contribution Period. For purposes of this Article, the term "eligible salaried Employee" means any Eligible Employee classified as a salaried employee by his Employer who is eligible to share in the allocation of Profit-Sharing Contributions pursuant to the provisions of this Article and who either (i) is hired by an Employer on or after January 1, 2001, or (ii) is hired by an Employer on or after January 1, 2000 and, prior to January 1, 2001, opts out of participation in the C&D Technologies, Inc. Pension Plan for Salaried Employees, effective January 1, 2001. Notwithstanding any other provision of the Plan to the contrary, Compensation with respect to any period ending prior to the date on which an Employee first became eligible to participate in the allocation of Profit-Sharing Contributions shall be disregarded in determining the amount of the "eligible salaried Employee's" allocable share of any "fixed salaried Profit-Sharing Contribution." Each Employer may, in its discretion, make a "discretionary hourly Profit-Sharing Contribution" to the Plan for the Contribution Period in an amount determined by the Sponsor. Each Employer shall make a "mandatory hourly Profit-Sharing Contribution" to the Plan for the Contribution Period on behalf of each Eligible Employee who is classified as an hourly employee by his Employer and who is eligible to participate in the allocation of Profit-Sharing Contributions as determined under this Article equal to the appropriate percentage of his Compensation for the Contribution Period which varies based upon his years of Vesting Service as of the end of the Contribution Period, as follows: Years of Vesting Service % of Compensation ------------------------ ----------------- 0-5 2.5% 6-10 3.0% 11-20 3.5% 21 and greater 4.5% Notwithstanding any other provision of the Plan to the contrary, Compensation with respect to any period ending prior to the date on which an Employee first became eligible to participate in the allocation of Profit-Sharing Contributions shall be disregarded in determining the amount of the hourly Employee's allocable share of any "mandatory hourly Profit-Sharing Contribution." 8. Section 6.3 of the Plan is amended and restated to read, in its entirety, as follows: 6.3 ALLOCATION OF PROFIT-SHARING CONTRIBUTIONS Any "discretionary salaried Profit-Sharing Contribution" made for a Contribution Period shall be allocated among the Employees who are (i) eligible to participate in the allocation of Profit-Sharing Contributions for the Contribution Period, as determined under this Article, and (ii) classified as salaried employees. The allocable share of each such salaried Employee shall be in the ratio which his Compensation from the Employers for the Contribution Period bears to the aggregate of such Compensation for all such salaried Employees. Notwithstanding any other provision of the Plan to the contrary, Compensation with respect to any period ending prior to the date on which a salaried Employee first became eligible to participate in the allocation of Profit-Sharing Contributions shall be disregarded in determining the amount of the salaried Employee's allocable share in any "discretionary salaried Profit-Sharing Contribution. Any "fixed salaried Profit-Sharing Contribution" made for a Contribution Period shall be allocated among "eligible salaried Employees." The allocable share of each such "eligible salaried Employee" in any "fixed salaried Profit-Sharing Contribution" shall be determined in accordance with Section 6.2. Any "discretionary hourly Profit-Sharing Contribution" made for a Contribution Period shall be allocated among the Employees who are (i) eligible to participate in the allocation of Profit-Sharing Contributions for the Contribution Period, as determined under this Article, and (ii) classified as hourly employees. The allocable share of each such hourly Employee shall be in the ratio which his Compensation from the Employers for the Contribution Period bears to the aggregate of such Compensation for all such hourly Employees. Notwithstanding any other provision of the Plan to the contrary, Compensation with respect to any period ending prior to the date on which an hourly Employee first became eligible to participate in the allocation of Profit-Sharing Contributions shall be disregarded in determining the amount of the hourly Employee's allocable share in any "discretionary hourly Profit-Sharing Contribution". Any "mandatory hourly Profit-Sharing Contribution" made for a Contribution Period shall be allocated among the Employees who are (i) eligible to participate in the allocation of Profit-Sharing Contributions for the Contribution Period, as determined under this Article, and (ii) classified as hourly Employees. The allocable share of each such hourly Employee in any "mandatory hourly Profit-Sharing Contribution" shall be determined in accordance with Section 6.2. 9. Section 6.6 of the Plan is amended and restated to read, in its entirety, as follows: 6.6 MATCHING CONTRIBUTIONS (a) Each Employer may make a Matching Contribution to the Plan for each payroll period in an amount equal to the percentage, determined by the Sponsor, in its discretion, for the Contribution Period, of the Tax-Deferred Contributions for the payroll period made on behalf of its Employees during the payroll period who are eligible to participate in the allocation of Matching Contributions for the payroll period, other than hourly employees, as determined under this Article. (b) The Sponsor shall make a Matching Contribution to the Plan for the period beginning March 1, 1999 and ending December 31, 1999 in an amount equal to 50 percent of the aggregate "eligible Tax-Deferred Contributions" made on behalf of Employees who immediately prior to March 1, 1999 were employed by the Dynasty Division of Johnson Controls, Inc. For purposes of this Article, "eligible Tax-Deferred Contributions" with respect to an Employee means the deferral contributions made on his behalf for the period March 1, 1999 through December 31, 1999 to the Johnson Controls Savings and Investment (401K) Plan in an amount up to, but not exceeding, the "match level". For purposes of this paragraph, the "match level" means 8 percent of an Employee's Compensation for the period beginning March 1, 1999 and ending December 31, 1999. 10. Effective March 1, 1999, Section 6.7 of the Plan is amended and restated to read, in its entirety, as follows: 6.7 ALLOCATION OF MATCHING CONTRIBUTIONS Any Matching Contribution made by an Employer for the payroll period pursuant to Section 6.6(a) shall be allocated among its Employees during the payroll period who are eligible to participate in the allocation of Matching Contributions for the payroll period, other than hourly employees, as determined under this Article. The allocable share of each such Employee shall be an amount equal to the percentage determined by the Sponsor of the Tax-Deferred Contributions made on his behalf for the payroll period. The Matching Contribution made by the Sponsor pursuant to Section 6.6(b) shall be allocated among the employees during the period beginning March 1, 1999 and ending December 31, 1999 who are eligible to participate in the allocation of such Matching Contributions as determined under Section 3.1 and 6.6(b). The allocable share of each such Employee shall be an amount equal to 50 percent of the "eligible Tax-Deferred Contributions" made on his behalf. 11. Section 6.10 of the Plan is amended and restated to read, in its entirety, as follows: 6.10 ELIGIBILITY TO PARTICIPATE IN ALLOCATION Each Employee shall be eligible to participate in the allocation of Employer Contributions beginning on the date he becomes, or again becomes, an Eligible Employee in accordance with the provisions of Article III. Notwithstanding the foregoing, no person shall be eligible to participate in the allocation of Profit-Sharing Contributions for a Contribution Period unless (i) he is employed by an Employer or a Related Company on the last day of the Contribution Period and (ii) he has completed at least 1,000 Hours of Service during the Contribution Period; provided, however, that the foregoing provisions shall not apply to a person who terminates employment during the Contribution Period on or after his Normal Retirement Date or because of death or physical or mental disability as defined in Section 6.11. 12. Article X of the Plan is amended by adding the following Section 10.4 to the end thereof: Section 10.4 INVESTMENT OF "FIXED SALARIED AND MANDATORY HOURLY PROFIT-SHARING CONTRIBUTIONS" Notwithstanding any provision herein to the contrary, (i) 50 percent of the amount credited to a Participant's Profit-Sharing Contributions Sub-Account that is attributable to "fixed salaried Profit-Sharing Contributions", as defined in Article VI, and (ii) one-half of one percent (0.05) of the amount credited to a Participant's Profit-Sharing Contributions Sub-Account that is attributable to "mandatory hourly Profit-Sharing Contributions", as defined in Article VI, shall be invested in the Company Stock Fund; provided, however, that upon attaining age 50, a Participant is permitted to transfer such amounts out of the Company Stock Fund and into any other Investment Funds offered under the Plan in accordance with the rules prescribed by the Administrator. 13. Section 13.3 of the Plan is amended by adding the following paragraph to the end thereof: Notwithstanding the foregoing, no Participant shall be permitted to make a hardship withdrawal of amounts held in his Profit-Sharing Contributions Sub-Account on or after January 1, 2001. 14. The last indented paragraph of Section 13.5 of the Plan relating to restrictions on withdrawals of After-Tax Contributions is amended to read as follows: A Participant who makes a withdrawal from his After-Tax Contributions Sub-Account prior to attaining age 59 1/2 may not make a further withdrawal of After-Tax Contributions under this Article during the remainder of the calendar quarter in which the withdrawal is effective. 15. Section 16.2 of the Plan is amended and restated to read, in its entirety, as follows: 16.2 NORMAL FORM OF PAYMENT Except as otherwise provided in Section 16.6, unless a Participant, or his Beneficiary, if the Participant has died, elects one of the optional forms of payment, distribution shall be made to the Participant, or his Beneficiary, as the case may be, in a single sum payment. Distribution of the Fair Market Value of the Participant's Separate Account shall be made in cash or in kind, as elected by the Participant. 16. Section 16.3 of the Plan is amended by adding the following paragraph to the end thereof: Notwithstanding the foregoing, the installment payment and annuity contract methods of payment will cease to be available after December 31, 2000 or, if later, the earliest date after December 31, 2000 on which such forms of payment are legally permitted to be eliminated. IN WITNESS WHEREOF, the Sponsor has executed this instrument this 28th day of November, 2000. C&D Technologies, Inc. By: /s/ Mark Z. Sappir ----------------------------- Title: VP, Human Resources EX-10 4 exb10-3.txt Exhibit 10.3 AMENDMENT NUMBER 7 TO THE C&D TECHNOLOGIES, INC. PENSION PLAN FOR SALARIED EMPLOYEES Article II is amended by the addition of the following Section 2.6. "2.6 No New Members After December 31, 2000 Effective on and after January 1, 2001, no Employee shall be permitted entry in the Plan under the provisions of this Article II or any other provision of this Plan. Any Member of the Plan who is an active Employee on December 31, 2000 shall continue to earn Credited Service and Eligibility Service under the terms of the Plan subject to the terms of Section 2.7." Article II is amended by the addition of the following Section 2.7. "2.7 Irrevocable Election to Cease Participation Any Employee who is hired by the Company and becomes a Member of the Plan on and after January 1, 2000 and on and before December 31, 2000, may, at the time and in the manner as published to such Employees by the Committee, irrevocably elect to cease participation in the Plan. If an Employee makes an irrevocable election to cease participation, all Credited Service shall cease, but such Employee will continue to earn Eligibility Service for purposes of vesting under the Plan. Such Employee's Accrued Benefit shall be based on Credited Service and Average Final Creditable Compensation on the date such cessation of participation becomes effective." C&D Technologies, Inc. By /s/ Mark Z. Sappir -------------------------- Title VP, Human Resources -------------------------- Date: 11/29/2000 EX-15 5 exb15.txt EXHIBIT 15 December 14, 2000 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, DC 20549 Commissioners: We are aware that our report dated November 21, 2000 on our review of interim financial information of C&D Technologies, Inc. and Subsidiaries (the "Company") as of and for the period ended October 31, 2000 and included in the Company's quarterly report on Form 10-Q for the quarter then ended is incorporated by reference in the Company's Forms S-8 (Registration Nos. 33-31978, 33-71390, 33-86672, 333-17979, 333-38891 and 333-59177, 333-42054) and Form S-3 (Registration No. 333-38893). Very truly yours, /s/ PRICEWATERHOUSECOOPERS LLP - ------------------------------ PricewaterhouseCoopers LLP EX-27 6 ex-27.frm
5 This schedule contains summary financial information extracted from the consolidated balance sheet as of 10/31/00 and statement of income for the period ended 10/31/00 and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS Feb-01-2000 Jan-31-2001 Oct-31-2000 5,696 0 92,828 3,791 68,394 174,824 114,629 0 382,952 94,077 58,168 0 0 282 203,155 382,952 435,453 435,453 307,792 307,792 7,522 0 4,679 65,734 24,847 39,189 0 0 0 39,189 1.5 1.44 1. Income - Pretax represents income before taxes and minority interest. Minority interest for the nine months ended 10/31/00 was $1,698.
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