-----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, FwcX08n3APirVFm4QcedGfUx2kTTg62gpgbAlklaQK5R5t0yw+kLBovWbX6ZdV7D Zt1R+NF8OB6eTn3epjLv4g== 0000808064-03-000142.txt : 20030912 0000808064-03-000142.hdr.sgml : 20030912 20030912151927 ACCESSION NUMBER: 0000808064-03-000142 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20030731 FILED AS OF DATE: 20030912 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: 1934 Act SEC FILE NUMBER: 001-09389 FILM NUMBER: 03893836 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 q204-10q.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 July 31, 2003 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) _________________N/A_________________ (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 ___ Indicate by check mark whether the Registrant is an accelerated filer (as defined in rule 12b-2 of the Securities Exchange Act of 1934). YES X NO ___ Number of shares of the Registrant's Common Stock outstanding on August 29, 2003: 25,494,484 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION Page No. Item 1 - Financial Statements Consolidated Balance Sheets - July 31, 2003 and January 31, 2003................... 3 Consolidated Statements of Income - Three and Six Months Ended July 31, 2003 and 2002.......... 5 Consolidated Statements of Cash Flows - Six Months Ended July 31, 2003 and 2002.............. 6 Consolidated Statements of Comprehensive Income - Three and Six Months Ended July 31, 2003 and 2002.... 7 Notes to Consolidated Financial Statements............ 8 Report of Independent Accountants..................... 16 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations... 17 Item 3 - Quantitative and Qualitative Disclosures About Market Risk............................... 23 Item 4 - Controls and Procedures.......................... 23 PART II. OTHER INFORMATION................................... 24 SIGNATURES................................................... 25 EXHIBIT INDEX................................................ 26 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) July 31, January 31, 2003 2003 ---- ---- ASSETS Current assets: Cash and cash equivalents................... $ 6,769 $ 12,966 Accounts receivable, less allowance for doubtful accounts of $1,635 and $1,906, respectively........................... 48,593 44,890 Inventories................................. 46,144 47,905 Deferred income taxes....................... 8,107 8,234 Other current assets........................ 910 2,304 ------- ------- Total current assets............. 110,523 116,299 Property, plant and equipment, net................ 102,975 112,158 Intangible and other assets, net.................. 36,917 38,724 Goodwill.......................................... 113,904 114,975 ------- ------- Total assets..................... $364,319 $382,156 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt............................. $ 22,500 $ 14,062 Accounts payable............................ 19,079 21,841 Accrued liabilities......................... 19,075 18,961 Income taxes................................ 1,641 - Other current liabilities................... 6,142 7,659 ------- ------- Total current liabilities........ 68,437 62,523 Deferred income taxes ............................ 11,513 10,579 Long-term debt.................................... - 25,857 Other liabilities................................. 15,494 16,613 ------- ------- Total liabilities................ 95,444 115,572 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) July 31, January 31, 2003 2003 ---- ---- Commitments and contingencies Minority interest................................. 8,190 8,310 Stockholders' equity: Common stock, $.01 par value, 75,000,000 shares authorized; 28,547,713 and 28,509,803 shares issued, respectively.. 285 285 Additional paid-in capital.................. 69,635 69,152 Treasury stock, at cost, 3,042,095 and 2,810,280 shares, respectively.......... (41,590) (38,409) Accumulated other comprehensive income...... 292 881 Retained earnings........................... 232,063 226,365 ------- ------- Total stockholders' equity....... 260,685 258,274 ------- ------- Total liabilities and stockholders' equity........... $364,319 $382,156 ======= ======= 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)
Three months ended Six months ended July 31, July 31, 2003 2002 2003 2002 ---- ---- ---- ---- Net sales............................ $ 81,364 $ 84,292 $ 158,732 $ 168,354 Cost of sales........................ 62,286 64,090 122,662 129,506 ------- ------- ------- ------- Gross profit..................... 19,078 20,202 36,070 38,848 Selling, general and administrative expenses.......... 10,524 9,044 19,694 17,853 Research and development expenses......................... 2,335 2,532 4,746 4,894 ------- ------- ------- ------- Operating income................. 6,219 8,626 11,630 16,101 Interest expense, net................ 302 822 748 2,006 Other expense, net................... 312 116 582 110 ------- ------- ------- ------- Income before income taxes and minority interest............. 5,605 7,688 10,300 13,985 Provision for income taxes........... 2,074 2,844 3,811 5,174 ------- ------- ------- ------- Net income before minority interest...................... 3,531 4,844 6,489 8,811 Minority interest.................... (49) 140 87 (17) ------- ------- ------- ------- Net income....................... $ 3,580 $ 4,704 $ 6,402 $ 8,828 ======= ======= ======= ======= Net income per share - basic......... $ .14 $ .18 $ .25 $ .34 ======= ======= ======= ======= Net income per share - diluted....... $ .14 $ .18 $ .25 $ .34 ======= ======= ======= ======= Dividends per share.................. $ .01375 $ .02750 $ .02750 $ .04125 ======= ======= ======= =======
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) Six months ended July 31, 2003 2002* ---- ---- Cash flows provided (used) by operating activities: Net income........................................... $ 6,402 $ 8,828 Adjustments to reconcile net income to net cash provided by operating activities: Minority interest.............................. 87 (17) Depreciation and amortization.................. 11,440 12,250 Deferred income taxes.......................... 1,061 557 Loss on disposal of assets..................... 47 320 Changes in: Accounts receivable...................... (3,539) (393) Inventories.............................. 1,775 8,829 Other current assets..................... 66 38 Accounts payable......................... (2,381) (680) Accrued liabilities...................... 226 (1,914) Income taxes payable..................... 3,030 7,857 Other current liabilities................ (1,519) (13) Other liabilities........................ (1,118) 891 Other assets............................. 870 160 Other, net..................................... 362 (2,796) ------- ------- Net cash provided by operating activities................ 16,809 33,917 ------- ------- Cash flows provided (used) by investing activities: Acquisition of property, plant and equipment......... (1,821) (3,551) Proceeds from disposal of property, plant and equipment..................................... 64 602 ------- ------- Net cash used by investing activities.................... (1,757) (2,949) ------- ------- Cash flows provided (used) by financing activities: Repayment of debt.................................... (18,750) (24,411) Proceeds from new borrowings......................... 1,250 - Financing cost of long-term debt..................... - (118) Proceeds from issuance of common stock, net.......... 255 419 Purchase of treasury stock........................... (3,181) (6,402) Payment of common stock dividends.................... (704) (1,073) Payment of minority interest dividends............... (207) - ------- ------- Net cash used by financing activities............. (21,337) (31,585) ------- ------- Effect of exchange rate changes on cash........... 88 132 ------- ------- Decrease in cash and cash equivalents............. (6,197) (485) Cash and cash equivalents at beginning of period...................................... 12,966 8,781 ------- ------- Cash and cash equivalents at end of period........ $ 6,769 $ 8,296 ======= ======= SCHEDULE OF NON CASH INVESTING AND FINANCIAL ACTIVITIES Decrease in property, plant, and equipment acquisitions in accounts payable............................... $ (396) $ (957) ======= ======= *Reclassified for comparative purposes. The accompanying notes are an integral part of these statements. 6 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Dollars in thousands) (UNAUDITED)
Three months ended Six months ended July 31, July 31, 2003 2002 2003 2002 ---- ---- ---- ---- Net income............................................... $3,580 $4,704 $6,402 $ 8,828 Other comprehensive income (expense), net of tax: Net unrealized gain (loss) on derivative instruments... 150 (286) 121 (67) Foreign currency translation adjustments............... 164 1,981 (710) 2,896 ----- ----- ----- ------ Total comprehensive income............................... $3,894 $6,399 $5,813 $11,657 ===== ===== ===== ======
The accompanying notes are an integral part of these statements. 7 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, 2003. The January 31, 2003 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 July 31, 2003 and the related consolidated statements of income and comprehensive income for the three and six month periods ended July 31, 2003 and 2002 and the related consolidated statements of cash flow for the six-month periods ended July 31, 2003 and 2002. However, interim results of operations may not be indicative of results for the full fiscal year. 2. NEW ACCOUNTING PRONOUNCEMENTS In April 2003, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003, except as stated below and for hedging relationships designated after June 30, 2003. In addition, except as stated below, all provisions of SFAS No. 149 should be applied prospectively. The provisions of SFAS No. 149 relate to SFAS No. 133 implementation issues that have been effective for fiscal quarters that began prior to June 15, 2003 and should continue to be applied in accordance with their respective effective dates. In addition, paragraphs 7(a) and 23(a), which relate to forward purchases or sales of when-issued securities or other securities that do not yet exist, should be applied to both existing contracts and new contracts entered into after June 30, 2003. SFAS No. 149 had no significant impact at the point of adoption on the Company's consolidated statements of income or financial position. 8 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands, except per share data) (UNAUDITED) 3. INVENTORIES Inventories consisted of the following: July 31, January 31, 2003 2003 ---- ---- Raw materials............................ $18,166 $17,833 Work-in-progress......................... 9,346 10,379 Finished goods........................... 18,632 19,693 ------ ------ $46,144 $47,905 ====== ====== 4. INCOME TAXES A reconciliation of the provision for income taxes from the statutory rate to the effective rate is as follows: Six months ended July 31, 2003 2002 ---- ---- U.S. statutory income tax....................... 35.0% 35.0% State tax, net of federal income tax benefit.... 1.0 1.8 Foreign sales corporation....................... - (0.4) Tax effect of foreign operations................ 0.6 (0.1) Research and development credit................. - (0.1) Other........................................... 0.4 0.8 ---- ---- 37.0% 37.0% ==== ==== 5. NET INCOME PER COMMON SHARE Net income per share - basic is based on the weighted average number of shares of Common Stock outstanding. Net income per share - diluted reflects the potential dilution that could occur if stock options were exercised. Weighted average common shares and common shares - diluted were as follows:
Three months ended Six months ended July 31, July 31, 2003 2002 2003 2002 ---- ---- ---- ---- Weighted average shares of common stock outstanding................................... 25,554,863 25,915,083 25,601,418 25,943,416 Assumed exercise of stock options, net of shares assumed reacquired............................ 101,355 225,323 106,077 263,766 ---------- ---------- ---------- ---------- Weighted average common shares - diluted.............................. 25,656,218 26,140,406 25,707,495 26,207,182 ========== ========== ========== ==========
9 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands, except per share data) (UNAUDITED) 6. CONTINGENT LIABILITIES 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 and other hazardous materials found in manufacturing processes and solid wastes; (ii) record keeping and periodic reporting to governmental entities regarding the use and disposal of hazardous materials; (iii) monitoring and permitting of air emissions and water discharge; and (iv) monitoring worker exposure to hazardous substances in the workplace, and protecting workers from impermissible exposure to hazardous substances, including lead, used in our manufacturing process. Notwithstanding the Company's efforts to maintain compliance with applicable environmental requirements, if injury or damage to persons or the environment arises from 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 certain damages and for the costs of investigation and remediation, which could have a material adverse effect on the Company's business, financial condition, or results of operations. However, under the terms of the purchase agreement with Allied Corporation ("Allied") for the acquisition of the Company (the "Acquisition Agreement"), Allied was 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. These obligations have since been assumed by Allied's successor in interest, Honeywell ("Honeywell"). 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 three 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. The Company and four other potentially responsible parties ("PRPs") agreed upon a cost sharing arrangement for the design and remediation phases of a project related to one of the Third Party Facilities, the former NL Industries in Pedricktown, New Jersey, acting pursuant to a Consent Decree. The PRPs identified and sued additional PRPs for contribution. In April 2002, one of the original four PRPs, Exide Technologies ("Exide"), filed for relief under Chapter 11 of Title 11 of the United States Code. In August 2002, Exide notified the PRPs that it would no longer be taking an active role in any further action at the site and discontinued its financial participation. This resulted in a pro rata increase in the liabilities of the other PRPs, including the Company. The Company also 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. In August 2002, the Company was notified of its involvement as a PRP at the NL Atlanta, Northside Drive Superfund site. The Company is currently in negotiations with the other PRPs at this site regarding its share of the allocated liability, which the Company expects to be de minimis. 10 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands, except per share data) (UNAUDITED) The Company is also aware of the existence of contamination at its Huguenot, New York facility, which is expected to require expenditures for further investigation and remediation. The site is listed by the New York State Department of Environmental Conservation ("NYSDEC") on its registry of inactive hazardous waste disposal sites due to the presence of fluoride and other contamination in amounts that exceed state groundwater standards. The prior owner of the site is expected to ultimately bear some, as yet undetermined, share of the costs associated with this matter for contamination in place at the time the Company acquired the property. The NYSDEC has issued a Record of Decision for the soil remediation portion of this site. However, a final remediation plan for the ground water portion has not yet been finalized with or approved by the State of New York. The Company, together with Johnson Controls, Inc. ("JCI"), is conducting an assessment and remediation of contamination at its Dynasty Division facility in Milwaukee, Wisconsin. The majority of this project was completed as of October 2001. Under the purchase agreement with JCI, the Company is responsible for (i) one-half of the cost of the on-site assessment and remediation, with a maximum liability of $1,750, (ii) any environmental liabilities at the facility that are not remediated as part of the current project and (iii) environmental liabilities for claims made after the fifth anniversary of the closing, i.e. March 2004, that arise from migration from a pre-closing condition at the Milwaukee facility to locations other than the Milwaukee facility, but specifically excluding liabilities relating to pre-closing offsite disposal. JCI has retained all other environmental liabilities, including off-site assessment and remediation. 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 in April 2002. The Company engaged in negotiations with both the EPA and Department of Justice through March 2003 regarding a potential resolution of this matter. The government filed suit against the Company in March 2003 for alleged violations of the Clean Water Act. The complaint requests injunctive relief and civil penalties of up to the amounts provided by statute. The Company anticipates that the matter will result in a penalty assessment and compliance obligations. The Company will continue to seek a negotiated or mediated resolution, failing which it intends to vigorously defend the action. 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 in accordance with SFAS No. 5, "Accounting for Contingencies." Based on currently available information, management of the Company believes that appropriate reserves have been established with respect to the foregoing contingent liabilities and that they are not expected to have a material adverse effect on the Company's business, financial condition or results of operations. 11 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands, except per share data) (UNAUDITED) 7. OPERATIONS BY INDUSTRY SEGMENT The Company has 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, telecommunications and cable markets. Major applications of these products include wireless and wireline telephone infrastructure, CATV signal powering, corporate data center powering and computer network back-up for use during a utility power outage. The Power Electronics Division manufactures and markets custom, standard and modified-standard electronic power supply systems, including DC to DC converters, for large original equipment manufacturers ("OEMs") of telecommunications and networking equipment, as well as office and industrial 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, OEMs. Summarized financial information related to the Company's business segments for the three and six months ended July 31, 2003 and 2002 is shown below:
Power Motive Powercom Dynasty Electronics Power Division Division Division Division Consolidated -------- -------- ----------- -------- ------------ Three months ended July 31, 2003: Net sales................................ $33,354 $26,010 $10,042 $11,958 $ 81,364 Operating income (loss).................. $ 4,257 $ 4,002 $ (391) $(1,649) $ 6,219 Three months ended July 31, 2002: Net sales................................ $35,668 $23,054 $12,493 $13,077 $ 84,292 Operating income (loss).................. $ 5,306 $ 4,018 $ 440 $(1,138) $ 8,626 Six months ended July 31, 2003: Net sales................................ $65,214 $49,602 $19,078 $24,838 $158,732 Operating income (loss).................. $ 8,335 $ 7,473 $ (985) $(3,193) $ 11,630 Six months ended July 31, 2002: Net sales................................ $72,156 $44,110 $25,336 $26,752 $168,354 Operating income (loss).................. $11,310 $ 6,410 $ 576 $(2,195) $ 16,101
12 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands, except per share data) (UNAUDITED) 8. DERIVATIVE INSTRUMENTS The following table includes all interest rate swaps as of July 31, 2003 and January 31, 2003. These interest rate swaps are designated as cash flow hedges and, therefore, changes in the fair value, net of tax, are recorded in accumulated other comprehensive income (loss). Fixed Variable Fair Fair Interest Interest Value Value Notional Origination Maturity Rate Rate At At Amount Date Date Paid Received 7/31/03 1/31/03 - -------- ----------- -------- -------- -------- -------- ------- $20,000 02/05/01 03/01/03 5.24% LIBOR $ - $ (66) 20,000 04/11/01 04/11/06 5.56% LIBOR (1,695) (1,832) ------- ------- $(1,695) $(1,898) ======= ======= The Company does not invest in derivative securities for speculative purposes, but does enter into hedging arrangements in order to reduce its exposure to fluctuations in interest rates as well as to fluctuations in exchange rates. The Company applies hedge accounting in accordance with SFAS No. 133, whereby the Company designates each derivative as a hedge of (i) the fair value of a recognized asset or liability or of an unrecognized firm commitment ("fair value" hedge); or (ii) the variability of anticipated cash flows of a forecasted transaction or the cash flows to be received or paid related to a recognized asset or liability ("cash flow" hedge). From time to time, however, the Company may enter into derivatives that economically hedge certain of its risks, even though hedge accounting is not allowed by SFAS No. 133 or is not applied by the Company. In these cases, there generally exists a natural hedging relationship in which changes in fair value of the derivative, which are recognized currently in earnings, act as an economic offset to changes in the fair value of the underlying hedged item(s). The Company did not apply hedge accounting to currency forward contracts with a combined fair value of $970 and $(258) as of July 31, 2003 and January 31, 2003. Changes in the fair value of these currency forward contracts are recorded in other expense (income), net. 13 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands, except per share data) (UNAUDITED) 9. STOCK-BASED COMPENSATION PLANS In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure an amendment of FASB Statement No. 123." SFAS No. 148 provides alternative methods of transition for companies making a voluntary change to fair value-based accounting for stock-based employee compensation. The Company continues to account for its stock option plans under the intrinsic value recognition and measurement principles of Accounting Principle Board's Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations. Effective for interim periods beginning after December 15, 2002, SFAS No. 148 also requires disclosure of pro-forma results on a quarterly basis as if the Company had applied the fair value recognition provisions of SFAS No. 123. As the exercise price of all options granted under the Company's stock option plans was equal to the market price of the underlying common stock on the grant date, no stock-based employee compensation cost is recognized in net income. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, as amended, to options granted under the stock option plans. For purposes of this pro-forma disclosure, the estimated value of the options is amortized ratably to expense over the options' vesting periods. Because the estimated value is determined as of the date of grant, the actual value ultimately realized by the employee may be significantly different.
Three months ended Six months ended July 31, July 31, 2003 2002 2003 2002 ---- ---- ---- ---- Net income - as reported................................ $3,580 $4,704 $6,402 $8,828 Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects............ 1,052 1,334 2,070 2,429 ----- ----- ----- ----- Net income - pro forma.................................. $2,528 $3,370 $4,332 $6,399 ===== ===== ===== ===== Net income per common share - basic - as reported....... 0.14 0.18 0.25 0.34 Net income per common share - basic - pro forma......... 0.10 0.13 0.17 0.25 Net income per common share - diluted - as reported..... 0.14 0.18 0.25 0.34 Net income per common share - diluted - pro forma....... 0.10 0.13 0.17 0.24 Weighted average fair value of options granted during the period............................. 6.96 10.19 7.74 9.32
SFAS No. 123 requires the use of option pricing models that were not developed for use in valuing employee stock options. The Black-Scholes option-pricing model was developed for use in estimating the fair value of short-lived exchange traded options that have no vesting restrictions and are fully transferable. In addition, option-pricing models require the input of highly subjective assumptions, including the option's expected life and the price volatility of the underlying stock. Because changes in the subjective input assumptions can materially affect the fair value estimate, in the opinion of management, the existing models do not necessarily provide a reliable single measure of the fair value of employee stock options. The value of options granted was estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted average assumptions:
Three months ended Six months ended July 31, July 31, 2003 2002 2003 2002 ---- ---- ---- ---- Risk free interest rate......................... 2.53% 4.42% 2.80% 4.42% Expected dividend yield......................... 0.38% 0.27% 0.34% 0.27% Expected volatility factor...................... 0.551 0.477 0.533 0.477 Weighted average expected life.................. 5.00 years 5.00 years 5.00 years 5.00 years
14 C&D TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands, except per share data) (UNAUDITED) 10. WARRANTY The Company provides for estimated product warranty expenses when the related products are sold. Because warranty estimates are forecasts that are based on the best available information, primarily historical claims experience, claims costs may differ from amounts provided. An analysis of changes in the liability for product warranties follows: Balance at February 1, 2003 .......................... $10,599 Current year provisions .............................. 2,280 Expenditures ......................................... (4,382) ------ Balance at July 31, 2003 ............................. $ 8,497 ====== 11. SUBSEQUENT EVENT On September 9, 2003, the Company announced that it had signed an agreement to purchase certain assets of Matsushita Battery Industrial Corporation of America and Matsushita Battery Industrial de Mexico, S.A. de C.V. for manufacturing certain industrial lead acid stationary batteries. The transaction is expected to close in late September 2003. In conjunction with the acquisition, the Company entered into a worldwide technology license agreement with Matsushita Battery Industrial Co. Ltd. of Japan for selected patents and know-how. 15 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 its subsidiaries (the "Company") as of July 31, 2003, and the related consolidated statements of income and comprehensive income for each of the three-month and six-month periods ended July 31, 2003 and 2002, and the consolidated statements of cash flows for the six-month periods ended July 31, 2003 and 2002. These interim 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 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 generally accepted in the United States of America. We previously audited in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of January 31, 2003, 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 14, 2003 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of January 31, 2003, 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, PA August 28, 2003 16 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 "six-month period", refer to the second quarter of fiscal 2004 and the six months ended July 31, 2003. All comparisons are with the corresponding periods in the prior year, unless otherwise stated. Net sales for the second quarter of fiscal 2004 decreased $2,928 or 3% to $81,364 from $84,292 in the second quarter of fiscal 2003. This decrease resulted from lower sales in the Power Electronics, Powercom and Motive Power divisions, partially offset by higher sales in the Dynasty Division. Sales by the Power Electronics Division declined $2,451 during the quarter, or 20%, primarily due to a decline in DC to DC converter sales, although second quarter sales were 11% higher than the first quarter of fiscal 2004. Powercom divisional sales decreased $2,314 in the three months ended July 31, 2003, or 6%, primarily due to lower sales to the telecommunications market. Powercom sales continue to be affected by the lower spending levels of the telecommunications industry, especially for major new projects. We are beginning to see a modest increase in sales related to the UPS market. Sales of the Motive Power Division fell $1,119 during the quarter, or 9%, primarily due to lower charger and battery sales. Sales in the Dynasty Division increased $2,956 or 13% in the three months ended July 31, 2003. Contributing to the higher sales was an increased demand for sealed products in the North American UPS market, partially offset by lower sales from our China location as well as sales to the cable market. We have seen an increase in the UPS OEM market, beginning in the first quarter of fiscal 2004, which has continued through the second quarter. In addition, the Dynasty division has benefited from the continued strength of its aftermarket channel partners. Sales for the six-month period decreased $9,622 or 6% to $158,732 from $168,354 in the six months ended July 31, 2002. This decrease resulted from lower sales in the Powercom, Power Electronics and Motive Power divisions, partially offset by higher sales in the Dynasty Division. Sales by the Powercom Division fell $6,942 or 10% during the six-month period, primarily due to lower sales to the telecommunications market. Power Electronics divisional sales declined $6,258 or 25%, primarily due to a decline in DC to DC converter sales. Sales of the Motive Power Division fell $1,914 or 7%, primarily due to lower battery and charger sales. Dynasty Division sales increased by $5,492 or 12%, primarily due to an increase in sales to the UPS market, partially offset by lower sales to the cable market. Gross profit for the second quarter of fiscal 2004 decreased $1,124 or 6% to $19,078 from $20,202 in the second quarter of the prior year, resulting in a decrease in gross margin from 24.0% to 23.4%. Gross profit declined in the Power Electronics, Powercom and Motive Power divisions, primarily as a result of lower sales volumes. Gross profit in the Dynasty Division increased, primarily as a result of higher sales volumes. Gross profit for the six months ended July 31, 2003 declined $2,778 or 7% to $36,070 from 36,848, resulting in a decrease in gross margin from 23.1% to 22.7%. Gross profit declined in the Powercom, Power Electronics, and Motive Power divisions, primarily as a result of lower sales volumes. Gross profit in the Dynasty Division increased, primarily as a result of higher sales volumes. Material prices increased modestly in the quarter, with the price of lead, a primary component of our cost, increasing through the second quarter of fiscal 2004. Selling, general and administrative expenses for the second quarter of fiscal 2004 increased $1,480 or 16%. This increase was primarily due to higher warranty expenses, coupled with higher expenses related to potential acquisitions and business related legal expenses. For the six-month period, selling, general and administrative expenses increased $1,841 or 10%. This increase was the result of higher warranty expenses, payroll-related costs and potential acquisition-related costs, partially offset by lower variable selling costs associated with the decreased sales volumes. Research and development expenses in the second quarter of fiscal 2004 decreased $197 or 8%, primarily due to reduced spending in the Power Electronics and Dynasty divisions, partially offset by higher spending in the Powercom and Motive Power divisions. As a percentage of sales, research and development expenses decreased from 3.0% of sales in the second quarter of fiscal 2003 to 2.9% of sales in the second quarter of fiscal 2004. For the six-month period, research and development expenses decreased $148 or 3%. This decrease was also a result of reduced spending in the Power Electronics and Dynasty divisions, partially offset by higher spending in the Powercom and Motive Power divisions. As a percentage of sales, research and development expenses increased from 2.9% in the first half of fiscal 2003 to 3.0% during the first half of fiscal 2004. 17 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) (Dollars in thousands, except per share data) Operating income for the second quarter of fiscal 2004 decreased $2,407 or 28% to $6,219 from $8,626 in the comparable quarter of the prior fiscal year. This decrease was the result of lower operating income generated by the Powercom and Dynasty Divisions during the quarter, a higher operating loss in the Motive Power Division in the three months ended July 31, 2003 and an operating loss generated by the Power Electronics Division during the quarter compared with operating income in the second quarter of fiscal 2003. Operating income for the six-month period fell $4,471 or 28% to $11,630 from $16,101 in the comparable period of the prior fiscal year. This decrease was the result of lower operating income generated by the Powercom Division during the six months ended July 31, 2003, an operating loss in the Power Electronics Division during the six-month period compared with operating income during the comparable period of the prior year, a higher operating loss in the Motive Power Division in the six months ended July 31, 2003, partially offset by higher operating income in the Dynasty Division. As reported in the first quarter of fiscal 2004, we continue to make significant changes in the divisions that have operating losses. In the Power Electronics Division, the move of certain manufacturing processes to Guangzhou, China continues with approximately 80 positions transferred to date. This transition was delayed for approximately two months due to the SARS outbreak in China, which did not directly affect employees at the Company's facility. The Motive Power Division continues to fall short of expectations, although the previously reported warranty issue appears to be declining. We implemented administrative changes at the beginning of the quarter and have begun to see a trend down in both the number of claims relating to the period four years ago as well as the total costs. The project to move warehousing and finishing from our Huguenot, New York facility to space available in our Leola, Pennsylvania facility has been concluded. In addition, there has been a dramatic improvement in the division's on-time delivery. Interest expense, net, decreased $520 for the quarter and $1,258 for the six-month period, primarily due to lower average debt balances outstanding, coupled with lower effective interest rates. Income tax expense decreased $770 for the quarter and $1,363 for the six-month period as the result of lower income before income taxes. The effective tax rate consists of statutory rates adjusted for the tax impact of foreign operations. The effective tax rate was 37% for both the quarter and the six-month period as well as the comparable periods of the prior fiscal year. Minority interest reflects the 33% ownership interest in the joint venture battery business located in Shanghai, China that is not owned by C&D. During the quarter, the Shanghai joint venture generated a net loss as opposed to net income in the comparable period of the prior fiscal year. For the six-month period, the joint venture had net income as compared to a net loss in the prior fiscal year. As a result of the above, for the second quarter of fiscal 2004, net income decreased $1,124 or 24% to $3,580 or $0.14 per share - basic and $0.14 per share - - diluted. For the six-month period, net income decreased $2,426 or 27% to $6,402 or $0.25 per share - basic and $0.25 per share - diluted. The recent power problem in the United States and Canada has increased awareness of our nation's power grid vulnerabilities and complexities which may result in more companies investing in back-up power. We believe that the response to this awareness, combined with the aforementioned increase in our UPS business and the increased level of quotation activity in the telecommunications sector, could enable C&D to generate earnings per share during the third quarter of fiscal 2004 which exceeds that of the second quarter of fiscal 2004 by a double digit percentage. On September 9, 2003, we announced that we had signed an agreement to purchase certain assets of Matsushita Battery Industrial Corporation of America and Matsushita Battery Industrial de Mexico, S.A. de C.V. for manufacturing certain industrial lead acid stationary batteries. The transaction is expected to close in late September 2003. In conjunction with the acquisition, we entered into a worldwide technology license agreement with Matsushita Battery Industrial Co. Ltd. of Japan for selected patents and know-how. 18 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) (Dollars in thousands, except per share data) Liquidity and Capital Resources Net cash provided by operating activities decreased $17,108 or 50% to $16,809 for the six-month period ended July 31, 2003 compared to $33,917 in the same period of the prior year. This decrease in net cash provided by operating activities was primarily due to: (i) a smaller decrease in inventory in the six months ended July 31, 2003 versus the six months ended July 31, 2002; (ii) a smaller increase in income taxes payable in the first half of fiscal 2004 versus the first half of fiscal 2003; (iii) a larger decrease in accounts payable and other current liabilities in the six-month period ended July 31, 2003 versus the comparable period of the prior fiscal year; (iv) a larger increase in accounts receivable in the six months ended July 31, 2003 versus the six months ended July 31, 2002; (v) lower net income in the first half of fiscal 2004 versus the first half of fiscal 2003; and (vi) a decrease in other liabilities in the six-month period ended July 31, 2003 versus an increase during the comparable period of the prior fiscal year. These changes, resulting in lower net cash provided by operating activities, were partially offset by an increase in accrued liabilities in the six-month period of the current fiscal year versus a decrease during the comparable period of the prior fiscal year. Net cash used by investing activities decreased $1,192 or 40% to $1,757 in the first six months of fiscal 2004 compared to $2,949 in the first six months of fiscal 2003 due to lower capital spending, partially offset by lower proceeds from the disposal of property, plant and equipment. Net cash used by financing activities decreased $10,248 or 32% to $21,337 in the six-month period ended July 31, 2003 compared to $31,585 in the same period of the prior year. This decrease was primarily due to a smaller decrease in long-term debt, lower purchases of treasury stock and higher proceeds from new borrowings. 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. This loan agreement contains restrictive covenants that require us to maintain minimum ratios such as fixed charge coverage and leverage ratios, as well as minimum consolidated net worth. We were in compliance with our loan agreement covenants at July 31, 2003. Our current loan agreement expires on March 1, 2004. Therefore, as of July 31, 2003, all of our debt is classified as current. We expect to enter into a new loan agreement prior to March 1, 2004. Capital expenditures during fiscal 2003 were incurred to fund a continuing series of cost reduction programs, normal maintenance and regulatory compliance. Fiscal 2004 capital expenditures are expected to be less than $7,000 for similar purposes. We intend to continue making prudent purchases of our Company stock, paying down debt and selectively pursuing complementary accretive acquisitions. Strategic acquisition opportunities will be expected to enhance C&D's long-term competitive position and growth prospects and may require external financing. We cannot assure, however, that we will close on any such acquisitions. Our bank loan agreement permits dividends to be paid on our Common Stock as long as there is no default under that agreement. Subject to that restriction and the provisions of Delaware law, our Board of Directors currently intends to continue paying dividends. We cannot assure that we will continue to do so since future dividends will depend on our earnings, financial condition and other factors. The local Chinese government has notified our Shanghai C&D Battery Co. Ltd, that it will be required to relocate its Shanghai plant during fiscal 2005 to permit the Pudong authorities to develop the region into a cultural center. Negotiations are in the final stages regarding the details surrounding the specific location, timing and cost responsibilities related to the relocation of the Shanghai plant. A location in the vicinity of our existing plant has been selected for the relocation of the plant. This relocation is not expected to have a material adverse effect on our financial condition or results of operations. 19 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) (Dollars in thousands, except per share data) NEW ACCOUNTING PRONOUNCEMENTS See footnote number 2. FORWARD-LOOKING STATEMENTS Statements and information contained in this Quarterly Report on Form 10-Q that are not historical facts are "forward-looking" statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Act of 1995. Forward-looking statements may be identified by their use of words like "plans," "expects," "will," "anticipates," "intends," "projects," "estimates," "believes" or other words of similar meaning. All statements that address expectations or projections about the future, including, but not limited to, statements about our strategy for growth, goals, trends, product development, market position, market conditions, expenditures, sales and financial results, are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events and involve a number of risks and uncertainties. We cannot guarantee that these assumptions and expectations are accurate or will occur. We caution readers not to place undue reliance on these forward-looking statements. These statements speak only as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q. The factors that could cause actual results to differ materially from anticipated results expressed or implied in any forward-looking statement include those referenced in our other filings with the Securities and Exchange Commission, those referenced with the forward-looking statement, including factors discussed in this Quarterly Report on Form 10-Q, as well as the following factors: o We operate worldwide and derive a portion of our revenue from sales outside the United States. Changes in the laws or policies of governmental and quasi-governmental agencies, as well as social and economic conditions, in the countries in which we operate could affect our business in these countries and our results of operations. In addition, economic factors (including inflation and fluctuations in interest rates and foreign currency exchange rates) and competitive factors (such as price competition or business combinations of competitors) or a decline in industry sales or cancelled or delayed orders due to economic weakness or changes in economic conditions, either in the United States and other countries in which we conduct business could affect our results of operations. o Terrorist acts or acts of war, whether in the United States or abroad, could cause damage or disruption to our operations, our suppliers, channels to market or customers, or could cause costs to increase, or create political or economic instability, any of which could have a material adverse effect on our business. o Our results of operations could be adversely affected by conditions in the domestic and global economies or the markets in which we conduct business, such as telecommunications, UPS, CATV, switchgear and control and material handling. 20 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) (Dollars in thousands, except per share data) o Our ability to grow earnings could be affected by increases in the cost of raw materials, particularly lead. We may not be able to fully offset the effects of higher raw material costs through price increases or productivity improvements. o Our ability to meet customer demand depends, in part, on our ability to obtain timely and adequate delivery of parts and components from our suppliers and internal manufacturing capacity. Although we work closely with our suppliers to avoid shortages, there can be no assurance that we will not encounter shortages in the future. A reduction or interruption in component supply or a significant increase in the price of one or more components could have a material adverse effect on our operations. o Our growth objectives are largely dependent on our ability to renew our pipeline of new products and to bring these products to market. This ability may be adversely affected by difficulties or delays in product development, such as the inability to: identify viable new products; successfully complete research and development projects; obtain adequate intellectual property protection; or gain market acceptance of the new products. Our growth could also be affected by new competitive products and technologies. o As part of our strategy for growth, we have made and may continue to make acquisitions, and in the future, may make divestitures and form strategic alliances. There can be no assurance that these will be completed or beneficial to us. o We have undertaken and may continue to undertake productivity initiatives, including re-organizations to improve performance or generate cost savings. In addition, we may from time to time relocate or consolidate one or more of C&D's operations. There can be no assurance that any planned performance improvements or cost savings from such activities will be realized or that delays or other interruptions in production or delivery of products will not occur as the result of any relocation or consolidation. Further, there can be no assurance that any of these initiatives will be completed or beneficial to C&D. o Our facilities are subject to a broad array of environmental laws and regulations. The costs of complying with complex environmental laws and regulations, as well as participation in voluntary programs, are significant and will continue to be so for the foreseeable future. We are also subject to potentially significant fines and penalties for non-compliance with applicable laws and regulations. Our accruals for such costs and liabilities may not be adequate since the estimates on which the accruals are based depend on a number of factors including, but not limited to, the nature of the problem, the complexity of the issues, the nature of the remedy, the outcome of discussions with regulatory agencies and/or the government and, as applicable, other PRPs at multiparty sites, the number and financial viability of other PRPs and risks associated with litigation. 21 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) (Dollars in thousands, except per share data) o We are exposed to the credit risk of our customers including risk of insolvency and bankruptcy. Although we have programs in place to monitor and mitigate the associated risk, there can be no assurance that such programs will be effective in reducing our credit risks or risks associated with potential bankruptcy of our customers. o Our business, results of operations and financial condition could be affected by significant pending and future litigation or claims adverse to us. These could potentially include, but are not limited to the following: products liability, contract, employment-related, labor relations, personal or property damage or stockholder claims and claims arising from any injury or damage to persons, property or the environment from hazardous substances used, generated or disposed of in the conduct of our business (or that of a predecessor, to the extent we are not indemnified for those liabilities). o Our performance depends on our ability to attract and retain qualified personnel. We cannot assure that we will be able to continue to attract or retain qualified personnel. o Our current loan agreement expires on March 1, 2004. We expect to enter into a new loan agreement prior to this date. We cannot assure, however, that we will be successful in securing a new loan agreement. o Our bank loan agreement permits dividends to be paid on our Common Stock so long as there is no default under that agreement. Subject to that restriction and the provisions of Delaware law, our Board of Directors currently intends to continue paying dividends. We cannot assure that we will continue to do so since future dividends will depend on our earnings, financial condition and other factors. o Our overall profitability may not meet expectations if our product, customer and geographic mix is substantially different than anticipated. Our profit margins vary among products, customers and geographic markets. Consequently, if our mix of any of these is substantially different from what is anticipated in any particular period, our earnings could be lower than expected. o In spite of having a disaster recovery plan in place, infrastructure failures could have a material adverse effect on our business. We are highly dependent on our infrastructure in order to achieve our business objectives. If we experience a problem that impairs our infrastructure, such as a power outage, computer virus, intentional disruption of IT systems by a third party, manufacturing failure or telephone system failure, the resulting disruptions could impede C&D's ability to book or process orders, manufacture and ship in a timely manner or otherwise carry on its business in the ordinary course. Any such events could cause us to lose significant customers or revenue and could require C&D to incur significant expense to eliminate these problems and address related security concerns. The foregoing list of important factors is not all-inclusive, or necessarily in order of importance. 22 Item 3. Quantitative and Qualitative Disclosure About Market Risk We are exposed to various market risks. The primary financial risks include fluctuations in interest rates and changes in currency exchange rates. We manage these risks by using derivative instruments. We do not invest in derivative securities for speculative purposes, but do enter into hedging arrangements in order to reduce our exposure to fluctuations in interest rates as well as to fluctuations in exchange rates. Our financial instruments subject to interest rate risk consist of debt instruments and interest rate swap contracts. The debt instruments are subject to variable rate interest, and therefore the market value is not sensitive to interest rate movements. Interest rate swap contracts are used to manage our exposure to fluctuations in interest rates on our underlying variable rate debt instruments (see footnote number 8). Additional disclosure regarding our various market risks are set forth in our fiscal 2003 Form 10-K filed with the Securities and Exchange Commission. Item 4. Controls and Procedures Disclosure Controls and Procedures: C&D's management, with the participation of C&D's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of C&D's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, C&D's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, C&D's disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by C&D in the reports that it files or submits under the Exchange Act. Internal Control over Financial Reporting: There have not been any changes in C&D's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, C&D's internal control over financial reporting. 23 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. This item 4 is incorporated by reference to C&D's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2003. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 10.1 Third Amendment dated June 18, 2003 to our Savings Plan (filed herewith). 10.2 Employment Agreement dated July 28, 2003 between Stan Wreford and C&D (filed herewith). 15. Letter from PricewaterhouseCoopers LLP, independent accountants for C&D, regarding unaudited interim financial information (filed herewith). 31.1 Certification of the President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). 31.2 Certification of the Vice President Finance pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). 32.1 Certification of the President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith). 32.2 Certification of the Vice President Finance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith). (b) Reports on Form 8-K 1. On May 20, 2003, C&D furnished a report on Form 8-K relating to its May 14, 2003 Press Release and its May 15, 2003 Conference Call Script discussing the May 14, 2003 Press Release. 2. On May 27, 2003, C&D furnished a report on Form 8-K relating to its May 27, 2003 Press Release. 24 SIGNATURES - ------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. C&D TECHNOLOGIES, INC. September 12, 2003 BY: /s/ Wade H. Roberts, Jr. --------------------------------- Wade H. Roberts, Jr. President, Chief Executive Officer and Director (Principal Executive Officer) September 12, 2003 BY: /s/ Stephen E. Markert, Jr. ---------------------------------- Stephen E. Markert, Jr. Vice President Finance (Principal Financial and Accounting Officer) 25 EXHIBIT INDEX 10.1 Third Amendment dated June 18, 2003 to our Savings Plan. 10.2 Employment Agreement dated July 28, 2003 between Stan Wreford and C&D. 15. Letter from PricewaterhouseCoopers LLP, independent accountants for C&D, regarding unaudited interim financial information. 31.1 Certification of the President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of the Vice President Finance pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of the President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of the Vice President Finance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 26 EX-10 3 q204-exhibit101.txt EXHIBIT 10.1 Exhibit 10.1 THIRD AMENDMENT TO THE C&D TECHNOLOGIES SAVINGS PLAN THIS THIRD AMENDMENT is made on June 18, 2003, by C&D TECHNOLOGIES, INC., a corporation duly organized and existing under the laws of the State of Delaware (the "Company"). W I T N E S S E T H: WHEREAS, the Company maintains the C&D Technologies Savings Plan (the "Plan"), which was originally established by indenture dated February 1, 1986, and was last amended and restated by indenture dated February 13, 2002; WHEREAS, the Company desires to amend the Plan to clarify certain provisions of the Plan; WHEREAS, the Board of Directors, in adopting the amended and restated Plan effective January 1, 1997, delegated to the officers of the Company the authority to execute other amendments to the Plan as may be necessary for the qualification of the Plan. The officers of the Company feel that this amendment of the Plan is necessary for such purpose. WHEREAS, this shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this amendment. NOW, THEREFORE, effective as of January 1, 1997, the Plan is hereby amended as follows: 1. By deleting Section 1.6 in its entirety and substituting therefor the following: "1.6 `Beneficiary' means the person or trust that a Participant designated most recently in writing to the Plan Administrator; provided, however, that if the Participant has failed to make a designation, no person designated is alive at the date of the Participant's death, no trust has been established, or no successor Beneficiary has been designated who is alive, the term "Beneficiary" means the participant's estate. Notwithstanding the preceding sentence, the spouse of a married Participant shall be his Beneficiary unless that spouse has consented in writing to the designation by the Participant of some other person or trust and the spouse's consent acknowledges the effect of the designation and is witnessed by a notary public or a Plan representative. A Participant may change his designation at any time. However, a Participant may not change his designation without further consent of his spouse under the terms of the preceding sentence unless the spouse's consent permits designation of another person or trust without further spousal consent and acknowledges that the spouse has the right to limit consent to a specific beneficiary and that the spouse voluntarily relinquishes this right. Notwithstanding the above, the spouse's consent shall not be required if the Participant 1 establishes to the satisfaction of the Plan Administrator that the spouse cannot be located, if the Participant has a court order indicating that he is legally separated or has been abandoned (within the meaning of local law) unless a `qualified domestic relations order' (as defined in Code Section 414(p)) provides otherwise, or if there are other circumstances as the Secretary of the Treasury prescribes. If the spouse is legally incompetent to give consent, consent by the spouse's legal guardian shall be deemed to be consent by the spouse. If, subsequent to the death of a Participant, the Participant's Beneficiary dies while entitled to receive benefits under the Plan, the successor Beneficiary, if any, shall be the Beneficiary." 2. By deleting the existing Section 4.1(b) and substituting therefor the following: "(b) Plan Sponsor contributions made under Plan Section 3.3(a) and forfeitures used to reduce Plan Sponsor contributions under Plan Section 3.3(a)(ii) or 3.3(a)(iii), as applicable, shall be allocated to the Salaried Profit Sharing Account of each Participant who (i) is compensated by a Plan Sponsor on a salaried basis during the Plan Year, (ii) is not entitled to accrue any benefit under the Pension Plan for reasons other than reaching the maximum benefits permissible under Code Section 415, and (iii) either (A) is employed by a Plan Sponsor on the last day of the Plan Year, and has completed at least 1000 Hours of Service during the Plan Year or (B) whose death or Retirement Date occurred during the Plan Year, in the proportion that the Participant's Annual Compensation, as may be adjusted pursuant to Plan Section 3.11, bears to the Annual Compensation of all such Participants, as so adjusted." 3. By deleting the existing Section 4.1(c) and substituting therefor the following: "(c) (i) Plan Sponsor contributions made under Plan Section 3.3(b)(i) shall be allocated to the Hourly Profit Sharing Account of each Participant who (A) is compensated by a Plan Sponsor on an hourly basis during the Plan Year (other than Participants who are employed in the Primary Sponsor's Power Electronic Division) and (B) either (I) is employed by a Plan Sponsor on the last day of the Plan Year, and has completed at least 1000 Hours of Service during the Plan Year or (II) whose death or Retirement Date occurred during the Plan Year, in the proportion that the Participant's Annual Compensation, as may be adjusted pursuant to Plan Section 3.11, bears to the Annual Compensation of all such Participants, as so adjusted. (ii) Plan Sponsor contributions made under Plan Section 3.3(b)(ii) or 3.3(b)(iii), as applicable, and forfeitures used to reduce Plan Sponsor contributions under Plan Section 3.3(b)(ii) or 3.3(a)(iii), as applicable, shall be allocated to the Hourly Profit Sharing Account of each Participant who (i) is compensated by a Plan Sponsor on an hourly basis during the Plan Year (other than Participants who are employed in the Primary Sponsor's Power Electronic Division), and (ii) either (A) is employed by a Plan Sponsor on the last day of the Plan Year, and has completed at least 1000 Hours of Service during the Plan Year or (B) whose death or Retirement Date occurred during the Plan Year, in the amount determined under Plan Section 3.3(b)(ii) or 3.3(b)(iii), as applicable." 2 Except as specifically amended hereby, the Plan shall remain in full force and effect as prior to this Third Amendment. IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be executed as of the day and year first above written. C & D TECHNOLOGIES, INC. By: /s/ Kevin D Burgess ------------------------------------------------- Title: VP Human Resources ---------------------------------------------- 3 EX-10 4 q204-exhibit102.txt EXHIBIT 10.2 July 28, 2003 Exhibit 10.2 Dr. Stan Wreford [Home address inserted] Dear Dr. Wreford: We are pleased that you have accepted employment with C&D Technologies, Inc., a Delaware corporation (the "Company"), in an executive position. The Company grants 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. (a) Except for earlier termination as is provided in Section 9 or 10 below, your employment under this Agreement shall be automatically renewed for successive terms of one month each, unless either party shall have given to the other party at least 30 days' prior written notice of the termination of this Agreement (a "Termination Notice"). If such 30 days' prior written notice is given by either party, (i) the Company shall, without any liability to you, have the right, exercisable at any time after such notice is sent, to elect any other person to the office or offices in which you are then serving and to remove you from such office or offices, but (ii) all other obligations each of you and the Company have to the other, including the Company's obligation to pay your compensation and make available the medical and dental insurance to which you are entitled hereunder, shall continue until the date your employment terminates as specified in such notice. 2. Compensation. (a) You shall be compensated for all services rendered by you under this Agreement at the rate of $160,000 per annum (such salary, as it is from time to time adjusted, is herein referred to as the ("Base Salary"). Such Base Salary shall be payable in periodic installments twice monthly in accordance with the Company's payroll practices for salaried employees. The Compensation Committee of the Board of Directors shall review such Base Salary prior to April 1, 2004 and each year thereafter during the term of this Agreement, including any renewal term, and shall make such adjustments, if any, as the Compensation Committee shall determine; provided, however, that no adjustment shall reduce the Base Salary. 1 (b) If your employment hereunder shall be terminated (i) by the Company without notice of Cause (as defined in Section 9(c)) therefor having been given to you (other than pursuant to Section 9(a) or 9(b), or (ii) as a result of the non-renewal of this Agreement pursuant to a Termination Notice given by the Company under Section 1(a), then, in addition to paying you the Accrued Obligations (as hereinafter defined), for a 180 day period after the effective date of such termination, the Company shall pay you at the rate of your Base Salary in effect at the time of such termination in periodic payments in accordance with the Company's payroll practices for salaried employees; provided, however, that your right to receive such payments, other than the Accrued Obligations, shall be conditioned upon your execution of a Release (the "Release"). Such Release shall be substantially in the form of Exhibit A 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 by this Agreement, including Exhibit A hereto. The term "Accrued Obligations" shall mean (i) your Base Salary through the date of termination and (ii) all benefits that have accrued to you under the terms of all employee benefits plans of the Company in which you are entitled to participate. 3. Duties. (a) During the term of your employment hereunder, including any renewal thereof, you agree to serve as the Vice President, Technology or in such other capacity with duties and responsibilities of a similar nature as those initially undertaken by you hereunder as the President of the Company may from time to time determine. Your duties may be changed at any time and from time to time hereafter, upon mutual agreement, consistent with office or offices in which you serve as deemed necessary by the President of the Company. You also agree to perform such other services and duties consistent with the office or offices in which you are serving and its responsibilities as may from time to time be prescribed by the Board of Directors, and you also agree to serve, if elected, as an officer and/or director of the Company and/or any of the Company's other direct or indirect subsidiaries without additional compensation, in all cases in conformity to the by-laws of each such corporation. Unless you otherwise agree, you shall not be required to relocate your place of business to a location that would increase your commuting distance by greater than 25 miles. (b) You shall devote your full employment energies, interest, abilities, time and attention during normal business hours (excluding the vacation periods provided in Section 4(b) below) exclusively to the business and affairs of the Company, its parent corporation and subsidiaries, if any, and shall not engage in any activity that conflicts or interferes with the performance of duties hereunder. (c) You agree to cooperate with the Company, including taking such reasonable medical examinations as may be necessary, in the event the Company shall desire or be required (such as pursuant to the terms of any bank loan or any other agreement) to obtain life insurance insuring your life. 2 (d) You shall, except as otherwise provided herein, be subject to the Company's rules, practices and policies applicable to the Company's senior executive employees. Without limiting the generality of the foregoing, you shall, with respect to the Company and its parents, subsidiaries, assets and stockholders, act in a manner consistent with your fiduciary responsibilities as an executive of the Company. 4. Benefits. (a) You shall have the benefit of such life and medical insurance, bonus, stock option and other similar plans as the Company may have or may establish from time to time, and in which you would be entitled to participate by reason of your position with the Company, pursuant to the terms thereof. Also, to the extent you have met the qualifications required, you may participate in the Company's savings and retirement plans. The foregoing, however, shall not be construed to require the Company to establish any such plans or to prevent the Company from modifying or terminating any such plans, and no such action or failure thereof shall affect this Agreement. (b) You shall be entitled to a vacation of four weeks each year. (c) The Company will provide you with an annual physical examination. 5. Expenses. The Company will reimburse you for reasonable expenses (consistent with Company policy), including traveling expenses, incurred by you in connection with the business of the Company, upon the presentation by you of appropriate substantiation for such expenses. 6. 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, agent of or consultant for, any business 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 nothing herein (i) shall prevent you from investing without limit in the securities of any company listed on a national securities exchange, provided that your involvement with any such company is solely that of a stockholder, and (ii) is intended to prevent you from being employed during the applicable Restricted Period 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 Section 10, the applicable Restricted Period shall be the period following the date your employment terminates during which you are receiving the payments described in Section 2(b) hereof, and with respect to a termination of your employment upon a Change of Control pursuant to Section 10, the applicable Restricted Period shall be the two-year period following the date your employment terminates. (b) The parties hereto intend that the covenant contained in this Section 6 shall be deemed a series of separate covenants for each state, county and city. If, in any judicial proceeding, a court shall refuse to enforce all the separate covenants deemed included in this Section 6, because, taken together, they cover too extensive a geographic area, the parties intend that those of such covenants (taken in order of the states, counties and cities therein which are least populous), which, if eliminated, would permit the remaining separate covenants to be enforced in such proceeding, shall, for the purpose of such proceeding, be deemed eliminated from the provisions of this Section 6. 3 7. Confidentiality, Non-Interference, Inventions and Proprietary Information. (a) In the course of (i) your employment with the Company hereunder, and (ii) any prior employment with the Company, you will have and have had 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 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. The term "Confidential or Proprietary Data or Information" as used in this Agreement, 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, knowhow, 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 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 noncompetition or confidentiality obligations contained in Sections 6(a) and 7(a) or interfere with the Company's relationship with such parties. (c) It is understood that you may, during your employment, conceive or develop certain inventions, innovations or discoveries related to any business in which the Company may be engaged, either solely or jointly with others. In connection with the conception or development thereof, you agree to disclose promptly to the Company all such inventions, innovations and discoveries, to assign, and hereby do assign, to the Company all of your right, title and interest in and to said inventions, innovations and discoveries, and to do all 4 things and sign all documents deemed by the Company to be necessary or appropriate to vest in the Company, its successors and assigns, all of your right, title and interest in and to such inventions, innovations or discoveries, and to procure for the Company, at the Company's expense, patents, copyrights and/or trademarks covering such inventions, innovations or discoveries in the United States and its possessions and in foreign countries, at the discretion and under the direction of the Company. In the event the Company is unable for any reason to assure your signature on such documents, you irrevocably appoint the Company and its duly authorized officers and agents as your agents and attorneys-in-fact to execute such documents and to do such things with the same legal force and effect as if executed or done by you. (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 request of the Company during your employment, you shall promptly deliver the same to the Company. In addition, upon termination of your employment, or upon request of the Company during your employment, you will deliver to the Company all other Company property in your possession or under your control, including, but not limited to, financial statements, marketing and sales data, patent applications, drawings and other documents, and all Company keys, credit cards, computer and telephone equipment and automobiles. 8. Equitable Relief. With respect to the covenants contained in Sections 6 and 7 of this Agreement, you agree that any remedy at law for any breach of said covenants may be inadequate and that the Company shall be entitled to specific performance or any other mode of injunctive and/or other equitable relief to enforce its rights hereunder or any other relief a court might award. 9. Earlier Termination. Your employment hereunder shall terminate prior to the Initial Term (or any renewal term, in the event of renewal) on the following terms and conditions: (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 if you are unable to perform your duties hereunder for a period of any 180 days in any 365 consecutive day period by reason of physical or mental disability. Notwithstanding the foregoing, if this Agreement is terminated pursuant to this Section 9(b), the Company shall pay any accrued but unpaid Base Salary through the date of termination and any reimbursable expenses due to you hereunder. For purposes of this Agreement "physical or mental disability" shall mean your inability, due to health reasons, to discharge properly your duties of employment, supported by the opinion of a physician satisfactory to both you and the Company. If the parties do not agree on a physician mutually satisfactory to both of you and the Company within ten days of written demand by one or the other, a physician shall be selected by the president of the Pennsylvania Medical Association, and the physician shall, within 30 days thereafter, make a determination as to whether 5 disability exists and certify the same in writing. Services of the physician shall be paid for by the Company. You shall fully cooperate with the examining physician including submitting yourself to such examinations as may be requested by the physician for the purpose of determining whether you are disabled. (c) This Agreement shall terminate immediately upon the Company's sending you written notice terminating your employment hereunder for Cause. The Company may terminate this Agreement for Cause, but only after written notice specifying the Cause of such action shall have been rendered to you by the President of the Company. "Cause" shall mean any of the following: (i) Breach of this Agreement. (ii) Refusal or inability (other than pursuant to Section 9(a) or 9(b)) to perform duties assigned to you in accordance with the terms of this Agreement or overt and willful disobedience of orders or directives issued to you by the Company and within the scope of your duties to the Company. (iii) Willful misconduct in the performance of your duties, functions and responsibilities. (iv) Commission of acts that are illegal in connection with the performance of your duties, functions and responsibilities under this Agreement. (v) Commission of acts that would constitute a felony offense during the term of this Agreement. (vi) Violation of Company rules and regulations concerning conflict of interest. (vii) Gross mismanagement of the assets of the Company. (viii) Gross incompetence, gross insubordination or gross neglect in the performance of your duties hereunder or being under the habitual influence of alcohol while on duty or possession, use, manufacture, distribution, dispensation or sale of illegal drugs while on or off duty. (ix) Any act or omission, whether or not included in the foregoing, that a court of competent jurisdiction would determine to constitute cause for termination. Existence of Cause shall be conclusively determined for all purposes hereunder by the President of the Company. Such advice and consultation shall be utilized as such officer regards as appropriate, and no obligation or duty with respect to any procedure or formality is created by this Agreement. If the Company terminates this Agreement for Cause under this Section 9(c), the Company shall not be obligated to make any further payments under this Agreement except for the Accrued Obligations. (d) Except as set forth in Section 10, your coverage under the benefits program provided by the Company will cease effective on your termination date. You will be entitled to elect continuation of your medical and dental benefits at the same cost the Company pays, pursuant to the provisions of the 6 Consolidated Omnibus Budget Reconciliation Act ("COBRA"). Details with regard to COBRA continuation coverage will be provided to you shortly after your termination date. (e) Except as set forth in Section 10, life insurance coverage will cease upon your termination date. You may, however, apply to General American Life Insurance Company (or such other insurance company as may provide group life insurance to the Company's employees at the time) for an individual converted life policy, with such application and payment of the first premium required to be accomplished within 31 days after your termination date. Details regarding this conversion option will be provided to you shortly after your termination date. (f) Accidental death and dismemberment and long term disability coverages cease with your termination date and may not be extended or converted. 10. Termination upon a Change of Control. (a) In the event a Change of Control (as defined below) occurs, and within 24 months after such Change of Control: (i) your employment with the Company is terminated by you pursuant to a Termination for Good Reason (as defined below); or (ii) your employment with the Company is terminated by the Company for any reason other than death, disability or for Cause pursuant to Sections 9(a), (b) or (c); or (iii) this Agreement is not renewed due to a Termination Notice given by the Company, as provided in Section 1(a), (the events under clauses (i), (ii) and (iii) herein collectively called a "Change of Control Termination"), you shall be entitled to receive the payments and benefits set forth in Section 10(e) and (f) below, which payments and benefits shall be in substitution for, and not in addition to, the payments and benefits otherwise payable under Section 2(a) or 2(b) of this Agreement in the event of termination. Your right to receive such payments and benefits, other than the Accrued Obligations, shall be in consideration of your agreements under this Agreement, including but not limited to your agreement not to compete with the Company for two years after a Change of Control pursuant to Section 6, and shall be conditioned upon your execution of a Release. Such Release shall be substantially in the form of Exhibit A but may be modified by the Company as it deems appropriate to reflect changes in law or circumstances arising after the date of this Agreement; provided that no such modification shall increase any of your obligations to the Company over those contemplated by this Agreement, including Exhibit A hereto. (b) 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 shareholders 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 shareholders 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 7 shareholder 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 10(b)(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 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 10(b)(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 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 you participate in a capacity other than in your capacity as an executive or director of the Company. (c) For purposes of the Agreement, a "Termination for Good Reason" means a termination by you 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 10(d) relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for Termination for Good Reason. Your failure to set forth in such notice any facts or circumstances that contribute to the showing of Good Reason shall not waive any of your rights hereunder or preclude you from asserting such fact or circumstance in enforcing your 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. (d) For purposes of the Agreement, "Good Reason" shall mean the occurrence, without your 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 10(c) above: (i) any material diminution of your positions, duties or responsibilities hereunder (except in each case in connection with the termination of your employment for Cause pursuant to Section 9(c) or due to disability or death pursuant to Section 9(a) or 9(b) or temporarily as a result of your illness or other absence), or the assignment to you of duties or responsibilities that are inconsistent with your position under the Agreement at the time of a Change of Control; (ii) your removal from, or your nonreelection to, the officer positions with the Company specified in this 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 you are 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 you with substantially similar benefits are not substituted therefor ("Substitute Plans"), or (B) to continue you as a participant in the Bonus Plans and 8 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 you 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 this Agreement; or (vi) failure of any successor to the Company to promptly acknowledge in writing the obligations of the Company hereunder. (e) Upon a Change of Control Termination, as provided in Section 10(a), the Company shall pay or provide you the following payments and benefits: (i) The Company shall pay to you the Accrued Obligations in a lump sum within five business days after the date of termination. (ii) The Company shall pay to you as severance pay, not later than the tenth day following the date of your execution and delivery of the Release required pursuant to Section 10(a) of this Agreement: (A) a lump sum payment in an amount equal to two years of your Base Salary; and (B) a lump sum payment in an amount equal to two of your annual incentive bonuses, such payment to be equal to the greater of (i) the amount of all incentive bonuses paid to you with respect to each of the two most recently completed fiscal years of the Company for which a bonus has been paid or (ii) the incentive bonus paid to you with respect to the most recently completed fiscal year of the Company for which a bonus has been paid plus an amount equal to your Target Bonus (as hereinafter defined); provided, however, that if you have been employed by the Company for less than two years, such payment shall be equal to the greater of (x) the amount of the incentive bonus paid to you with respect to the most recently completed fiscal year of the Company for which a bonus has been paid plus your Target Bonus or (y) the amount of your Target Bonus multiplied by two. The term "Target Bonus" shall mean the incentive bonus that would have been payable for the fiscal year that includes the date on which your employment terminates under the incentive bonus program in effect as of the date of the Change of Control, assuming that you had been entitled to receive an amount in respect of such bonus based solely upon the target percentage applicable to employees in the same employment grade as you and your Base Salary as of the date of termination (or if greater, your 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. (iii) The Company shall continue the participation of you and your dependents for a period of two 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 you were participating immediately prior to the date of termination, except for any disability plans; 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 you 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 your life insurance coverage, the Company shall pay you an amount equal to twice the premium paid during the year prior to termination or if you 9 convert the insurance to an individual policy, the Company shall pay the premium for such insurance for two years. You shall complete such forms and take such physical examinations as reasonably requested by the Company. To the extent you incur any tax obligation as a result of the provisions of this Section 10(e) that you would not have incurred if you remained an employee of the Company and had continued to participate in the benefit plans as an employee, the Company shall pay to you, at the time the tax is due, an amount to cover such taxes and the taxes on the amount paid to cover such taxes. (iv) All outstanding stock options and restricted stock awards that have been granted to you 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. (v) All amounts payable to you upon a Change of Control under the Company's Supplemental Executive Retirement Plan and Deferred Compensation Plan shall be paid to you in accordance with the respective terms of those plans. (vi) The Company, at its expense, shall provide you with outplacement services at a level appropriate for the most senior executive employees through an outplacement firm of your choice for a period of up to one year after the date of the Change of Control Termination. (f) (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 10(f)(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 10(f), including the determination of whether an Excise Tax is payable and the amount thereof, shall be made by a law 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 you. 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. 10 (iii) For purposes of this Section 10(f): (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 10(f)(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 10(f)(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. (g) 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 you incur 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 you for all such costs incurred by you. 11. Entire Agreement; Modification. This Agreement, together with Exhibit A hereto and all rights to which you are entitled under all employee benefit plans in which you participate, constitutes the full and complete understanding of the parties, and will, on the Effective Date, supersede all prior agreements and understandings, oral or written, between the parties, except for the Agreement Relating to Intellectual Property and Confidential Information dated July 28, 2003 ("Confidentiality Agreement") between you and the Company; provided, however, that if the terms of any of such employee benefit plan or the Confidentiality Agreement shall be inconsistent with the provisions of this Agreement, the provisions of this Agreement shall prevail, and if the terms of the Severance Agreement shall be inconsistent with the provisions of this Agreement, the terms of the Severance Agreement shall prevail. 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. Each party to this Agreement, acknowledges that no representations, inducements, promises or agreements, oral or written, have been made by either party or anyone acting on behalf of either party, which are not embodied herein and that no other agreement, statement or promise not set forth or referred to in this Agreement shall be valid or binding. 11 12. Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. 13. Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement shall not operate as or be construed as a waiver of any subsequent breach. 14. No Mitigation Required. Upon a termination of your employment by the Company without Cause pursuant to Section 2(b) or upon a Change of Control pursuant to Section 10, 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. 15. Notices. All notices hereunder shall be in writing and shall be sent by express mail or by certified or registered mail, postage prepaid, return receipt requested: if to you, to your residence as listed in the Company's records; and if to the Company, to the address set forth above with copies to the President. 16. Assignability; Binding Effect. This Agreement shall not be assigned by either party, except that it may be assigned by the Company to an acquirer 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 Section 10. 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. 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 with 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. Governing Law. All questions pertaining to the validity, construction, execution and performance of this Agreement shall be construed and governed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the conflicts or choice of law provisions thereof. 12 20. Headings. The headings of this Agreement are intended solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement. 21. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. If this Agreement correctly sets forth our understanding, please sign the duplicate original in the space provided below and return it to the Company, whereupon this shall constitute the employment agreement between you and the Company effective and for the term as stated herein. C&D TECHNOLOGIES, INC. By:/s/ Wade Roberts ------------------------------------------- Title: President ------------------------------------------- Agreed as of the date first above written: /s/ Stan Wreford 7/29/03 - -------------------------------- Stan Wreford 13 EXHIBIT A RELEASE This Release is made this _____ day of _______________, ____ by and between C&D Technologies, Inc. ("Employer") and Stan Wreford ("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 after 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 contract, emotional distress, fraud, misrepresentation, defamation, claims arising under the Civil Rights Acts of 1964 and 1991 as amended, the Americans 14 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 provisions of Employment Agreement that survive its termination 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 documents, files, or other property of Employer which Employee obtained or received during Employee's employment with Employer. 15 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 consideration described in Section 2 above. 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:_____________________ ______________________________ Stan Wreford 16 ENDORSEMENT I, Stan Wreford, 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. ------------------------------- Stan Wreford 17 EX-15 5 q204-exhibit15.txt EXHIBIT 15 EXHIBIT 15 September 12, 2003 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, DC 20549 Commissioners: We are aware that our report dated August 28, 2003 on our review of interim financial information of C&D Technologies, Inc. and Subsidiaries (the "Company") as of and for the period ended July 31, 2003 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, 333-59177, 333-42054, 333-56736, 333-69264, 333-69266, 333-101835, and 333-106051) and Form S-3 (Registration No. 333-38893). Very truly yours, /s/ PricewaterhouseCoopers LLP - ------------------------------ PricewaterhouseCoopers LLP Philadelphia, Pennsylvania September 12, 2003 EX-31 6 q204-exhibit311.txt EXHIBIT 31.1 EXHIBIT 31.1 CERTIFICATION I, Wade H. Roberts, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of C&D Technologies, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors: (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 12, 2003 /s/ Wade H. Roberts, Jr. ------------------ --------------------------------- Wade H. Roberts, Jr. President and Chief Executive Officer (Principal Executive Officer) A signed original of this certification required by Section 302 has been provided to C&D Technologies, Inc. and will be retained by C&D Technologies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. EX-31 7 q204-exhibit312.txt EXHIBIT 31.2 EXHIBIT 31.2 CERTIFICATION I, Stephen E. Markert, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of C&D Technologies, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors: (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 12, 2003 /s/ Stephen E. Markert, Jr. ------------------ --------------------------------- Stephen E. Markert, Jr. Vice President Finance (Principal Financial and Accounting Officer) A signed original of this certification required by Section 302 has been provided to C&D Technologies, Inc. and will be retained by C&D Technologies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. EX-32 8 q204-exhibit321.txt EXHIBIT 32.1 Exhibit 32.1 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned hereby certifies, in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of C&D Technologies, Inc. ("C&D"), that, to his knowledge, the Quarterly Report of C&D on Form 10-Q for the period ended July 31, 2003, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of C&D. Date: September 12, 2003 /S/ Wade H. Roberts, Jr. ------------------ ----------------------------------- Wade H. Roberts, Jr. President and Chief Executive Officer (Principal Executive Officer) A signed original of this certification required by Section 906 has been provided to C&D Technologies, Inc. and will be retained by C&D Technologies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. EX-32 9 q204-exhibit322.txt EXHIBIT 32.2 Exhibit 32.2 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned hereby certifies, in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of C&D Technologies, Inc. ("C&D"), that, to his knowledge, the Quarterly Report of C&D on Form 10-Q for the period ended July 31, 2003, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of C&D. Date: September 12, 2003 /S/ Stephen E. Markert, Jr. ------------------ ----------------------------------- Stephen E. Markert, Jr. Vice President Finance (Principal Financial and Accounting Officer) A signed original of this certification required by Section 906 has been provided to C&D Technologies, Inc. and will be retained by C&D Technologies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----