10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2009

Commission file no: 1-9389

C&D TECHNOLOGIES, INC.

Delaware	13-3314599
(State of incorporation)	(IRS employer identification no.)

1400 Union Meeting Road

Blue Bell, PA 19422

(Address of principal executive offices)

Telephone Number: (215) 619-2700

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer  ¨ Accelerated Filer  x Non-Accelerated Filer  ¨ (Do not check if a smaller reporting company) Smaller Reporting Company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

At April 30, 2009, 26,295,695 shares of common stock, $0.01 par value, of the registrant were outstanding.

C&D TECHNOLOGIES, INC.

AND SUBSIDIARIES

FORM 10-Q

INDEX

Part I	FINANCIAL INFORMATION
Item 1	Financial Statements (Unaudited)
	Consolidated Balance Sheets – April 30, 2009 and January 31, 2009	3
	Consolidated Statements of Operations – Three Months Ended April 30, 2009 and 2008	5
	Consolidated Statements of Cash Flows – Three Months Ended April 30, 2009 and 2008	6
	Consolidated Statements of Comprehensive Income (Loss) – Three Months Ended April 30, 2009 and 2008	7
	Notes to Consolidated Financial Statements	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3	Quantitative and Qualitative Disclosures about Market Risk	29
Item 4	Controls and Procedures	29
Part II	OTHER INFORMATION
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 6	Exhibits	32
SIGNATURES		33
EXHIBIT INDEX		34

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value)

(UNAUDITED)

	April 30, 2009		January 31, 2009¹
ASSETS
Current assets:
Cash and cash equivalents	$	2,304	$	3,121
Restricted cash		134		906
Accounts receivable, less allowance for doubtful accounts of $814 and $775		53,624		55,852
Inventories		59,528		61,128
Prepaid taxes		1,069		927
Other current assets		1,470		1,110
Assets held for sale		500		500
Total current assets		118,629		123,544
Property, plant and equipment, net		86,553		85,055
Deferred income taxes		626		626
Intangible and other assets, net		14,441		14,729
Goodwill		59,966		59,961
TOTAL ASSETS	$	280,215	$	283,915
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	5,897	$	5,881
Accounts payable		32,133		32,396
Accrued liabilities		13,312		13,018
Deferred income taxes		1,492		1,492
Other current liabilities		5,474		8,267
Total current liabilities		58,308		61,054
Deferred income taxes		11,865		10,972
Long-term debt		112,178		107,637
Other liabilities		39,035		39,349
Total liabilities		221,386		219,012

The accompanying notes are an integral part of these statements.

¹ Certain items have been adjusted on these statements to reflect changes as required to present retroactive adoption of accounting standards as discussed in Note 1.

3

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (continued)

(Dollars in thousands, except par value)

(UNAUDITED)

	April 30, 2009			January 31, 2009¹
Commitments and contingencies (see Note 8)
Stockholders’ equity:
Common stock, $.01 par value, 75,000,000 shares authorized; 29,191,041 and 29,162,101 shares issued, respectively		292			292
Additional paid-in capital		96,042			95,724
Treasury stock, at cost, 2,895,346 shares at April 30, 2009 and January 31, 2009		(40,035	)		(40,035	)
Accumulated other comprehensive loss		(42,188	)		(45,733	)
Retained earnings		33,446			43,204
Total stockholders’ equity attributable to C&D Technologies, Inc.		47,557			53,452
Noncontrolling interest		11,272			11,451
Total stockholders’ equity		58,829			64,903
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	280,215		$	283,915

The accompanying notes are an integral part of these statements.

¹ Certain items have been adjusted on these statements to reflect changes as required to present retroactive adoption of accounting standards as discussed in Note 1.

4

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

(UNAUDITED)

	Three months ended April 30,
	2009			2008¹
NET SALES	$	73,665		$	93,776
COST OF SALES		68,320			80,084
GROSS PROFIT		5,345			13,692
OPERATING EXPENSES:
Selling, general and administrative expenses		9,242			9,655
Research and development expenses		1,878			1,691
OPERATING (LOSS) INCOME		(5,775	)		2,346
Interest expense, net		2,924			2,967
Other expense (income), net		174			(373	)
LOSS BEFORE INCOME TAXES		(8,873	)		(248	)
Income tax provision		1,096			134
NET LOSS		(9,969	)		(382	)
Net loss attributable to noncontrolling interests		(211	)		(258	)
NET LOSS ATTRIBUTABLE TO C&D TECHNOLOGIES, INC.	$	(9,758	)	$	(124	)
Loss per share:
Basic and Diluted:
Net loss	$	(0.37	)	$	(0.00	)

The accompanying notes are an integral part of these statements.

¹ Certain items have been adjusted on these statements to reflect changes as required to present retroactive adoption of accounting standards as discussed in Note 1.

5

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(UNAUDITED)

	Three months ended April 30,
	2009			2008¹
Cash flows from operating activities:
Net loss	$	(9,969	)	$	(382	)
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Share-based compensation		323			113
Depreciation and amortization		3,305			3,011
Amortization of debt acquisition and discount costs		1,222			1,125
Deferred income taxes		893			127
Loss on disposal of assets		6			6
Changes in assets and liabilities:
Accounts receivable		2,421			(334	)
Inventories		1,701			6,547
Other current assets		(763	)		(152	)
Accounts payable		(18	)		(9,164	)
Accrued liabilities		54			519
Income taxes payable		93			(10	)
Other current liabilities		(1,342	)		(1,955	)
Other liabilities		287			(701	)
Other long-term assets		(46	)		(15	)
Other, net		1,662			1,879
Net cash (used in) provided by operating activities		(171	)		614
Cash flows from investing activities:
Acquisition of property, plant and equipment		(4,782	)		(3,599	)
Decrease in restricted cash		772			2,643
Net cash used in investing activities		(4,010	)		(956	)
Cash flows from financing activities:
Borrowings on line of credit facility		22,632			23,836
Repayments on line of credit facility		(19,306	)		(23,836	)
Repayment of debt		(7	)		(21	)
Increase in book overdrafts		6			58
Net cash provided by financing activities		3,325			37
Effect of exchange rate changes on cash and cash equivalents		39			43
Decrease in cash and cash equivalents		(817	)		(262	)
Cash and cash equivalents, beginning of period		3,121			6,536
Cash and cash equivalents, end of period	$	2,304		$	6,274

The accompanying notes are an integral part of these statements.

¹ Certain items have been adjusted on these statements to reflect changes as required to present retroactive adoption of accounting standards as discussed in Note 1.

6

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Dollars in thousands, except per share data)

(UNAUDITED)

	Three months ended April 30,
	2009			2008¹
NET LOSS	$	(9,969	)	$	(382	)
Other comprehensive income, net of tax:
Net unrealized gain (loss) on derivative instruments		2,905			2,267
Adjustment to recognize pension liability and net periodic pension cost		535			78
Foreign currency translation adjustments		137			1,034
Total comprehensive (loss) income		(6,392	)		2,997
Comprehensive loss (income) attributable to noncontrolling interests		179			(74	)
Total comprehensive (loss) income attributable to C&D Technologies, Inc.	$	(6,213	)	$	2,923

The accompanying notes are an integral part of these statements.

¹ Certain items have been adjusted on these statements to reflect changes as required to present retroactive adoption of accounting standards as discussed in Note 1.

7

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

(UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying interim unaudited consolidated financial statements of C&D Technologies, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we do not include all the information and notes required for complete financial statements. In the opinion of management, the interim unaudited consolidated financial statements include all adjustments considered necessary for the fair statements of the financial position, results of operations and cash flows for the interim periods presented. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2009 Annual Report on Form 10-K dated April 16, 2009.

Certain prior year amounts have been adjusted on the interim consolidated financial statements to reflect the Company’s adoption of Statement of Financial Accounting Standards (“SFAS”) No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of Accounting Research Bulletin No. 51,” (“SFAS 160”) at the beginning of its 2010 fiscal year. SFAS 160 requires that noncontrolling interests in partially owned consolidated subsidiaries be classified in the consolidated balance sheet as a separate component of consolidated shareholders’ equity. SFAS 160 also requires that the net earnings attributable to the controlling and noncontrolling interests be included on the face of the consolidated statements of operations. See Note 6 for additional information about SFAS 160. Additionally, the Company adopted FASB Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments That May be Settled in Cash upon Conversion (Including Partial Cash Settlement), (“FSP 14-1”). See Note 5 for additional information about FSP 14-1.

2. STOCK-BASED COMPENSATION

The Company granted stock option awards of 296,076 shares and 5,000 shares during the three months ended April 30, 2009 and 2008, respectively. Under the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123R, the Company recorded $186 and $75 of stock compensation related to stock option awards in its unaudited consolidated statement of operations for the three months ended April 30, 2009 and 2008, respectively. The impact on loss per share for the three months ended April 30, 2009 and 2008 was less than $0.01.

The Company granted 204,758 restricted stock awards and 164,758 performance shares to selected executives and other key employees under the Company’s 2007 Stock Incentive Plan during the three months ended April 30, 2009. No restricted stock awards or performance shares were granted during the three months ended April 30, 2008. The restricted stock awards vest ratably over a period of one to four years and the expense is recognized over the related vesting period. Compensation expense associated with restricted stock in the three months ended April 30, 2009 and 2008 was $137 and $38, respectively. The performance shares vest at the end of the performance period upon the achievement of pre-established financial objectives. No compensation expense has been recorded for the performance related awards since the Company does not believe that the performance criteria established will be met.

The following table summarizes information about the stock options outstanding at April 30, 2009:

	OPTIONS OUTSTANDING				OPTIONS EXERCISABLE
Range of Exercise Prices	Number Outstanding	Weighted- Average Remaining Contractual Life	Weighted- Average Exercise Price		Number Exercisable	Weighted- Average Contractual Life	Weighted- Average Exercise Price
$ 1.30 -$ 1.53	301,076	7.8 Years	$	1.30	0	7.8 Years	$	1.30
$ 4.25 - $ 6.30	634,000	6.6 Years	$	5.55	68,668	7.6 Years	$	6.02
$ 6.81 - $ 9.12	500,053	6.7 Years	$	7.65	421,804	6.6 Years	$	7.57
$ 9.80 - $ 14.28	111,556	5.7 Years	$	11.00	111,556	5.7 Years	$	11.00
$ 14.94 -$ 22.31	403,659	3.0 years	$	18.82	403,659	3.0 Years	$	18.82
$ 26.76 -$ 35.00	99,920	2.0 Years	$	31.70	99,920	2.0 Years	$	31.70
$ 49.44 -$ 55.94	32,600	1.2 Years	$	55.10	32,600	1.2 Years	$	55.10
	2,082,864	5.7 Years	$	10.33	1,138,207	4.7 Years	$	15.28

8

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

The estimated fair value of the options granted was calculated using the Black Scholes Merton option pricing model (“Black Scholes”). The Black Scholes model incorporates assumptions to value stock-based awards. The risk-free rate of interest for periods within the estimated life of the option is based on U.S. Government Securities Treasury Constant Maturities over the contractual term of the equity instrument. Expected volatility is based on the historical volatility of the Company’s stock. The Company uses the shortcut method described in Staff Accounting Bulletin No. 110 to determine the expected life assumption.

The fair value of stock options granted during the three months ended April 30, 2009 and 2008 was estimated on the grant date using the Black-Scholes option pricing model with the following average assumptions.

Three months ended April 30,	2009		2008
Risk-free interest rate	2.02	%	2.58	%
Dividend yield	0	%	0	%
Volatility factor	70.09	%	50.90	%
Expected lives	5.5 Years		5.5 Years

3. NEW ACCOUNTING PRONOUNCEMENTS

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations”, which improves reporting by creating greater consistency in the accounting and financial reporting of business combinations, resulting in more complete, comparable, and relevant information for investors and other users of financial statements. To achieve this goal, the new standard requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose to investors and other users all of the information they need to evaluate and understand the nature and financial effect of the business combination. SFAS No. 141(R) is effective for fiscal years beginning after December 15, 2008. We have adopted SFAS No. 141(R) and determined it has no impact on our consolidated financial statements as no business combinations have occurred during the periods presented, however, in the event the Company were to enter into a future business combination the impact in future periods could be material.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements”, which improves the relevance, comparability, and transparency of financial information provided to investors by requiring all entities to report noncontrolling (minority) interests in subsidiaries in the same way as equity in the consolidated financial statements. In addition, SFAS No. 160 eliminates the diversity that currently exists in accounting for transactions between an entity and noncontrolling interests by requiring they be treated as equity transactions. SFAS No. 160 is effective for fiscal years beginning after December 15, 2008. The Company adopted SFAS No. 160 at the beginning of fiscal year 2010 as discussed in Note 1. The provisions of SFAS No. 160 are to be applied prospectively except for the presentation and disclosure requirements that have been applied retrospectively. The adoption of SFAS No. 160 principally impacted presentation of the Company’s financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities”, which improves financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance and cash flows. SFAS No. 161 is effective for fiscal years and interim periods beginning after November 15, 2008. The Company adopted SFAS No. 161 at the beginning of fiscal year 2010 with the additional disclosures provided in Note 9. The adoption did not have a significant effect on the Company’s financial statements.

In April 2008, the FASB issued Staff Position FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP FAS 142-3”). The FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets”. The intent of the FSP is to improve the consistency between the useful life

9

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under other accounting principles generally accepted in the United States of America. The FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The Company adopted SFAS No. 142 at the beginning of fiscal year 2010. The adoption did not have a significant effect on the Company’s financial statements.

In May 2008, the FASB issued FASB Staff Position (“FSP”) No. APB 14-1 “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlements)” (previously FSP APB 14-a), which will change the accounting treatment for convertible securities which the issuer may settle fully or partially in cash. Under the final FSP, cash settled convertible securities will be separated into their debt and equity components. The value assigned to the debt component will be the estimated fair value, as of the issuance date, of a similar debt instrument without the conversion feature, and the difference between the proceeds for the convertible debt and the amount reflected as a debt liability will be recorded as additional paid-in capital. As a result, the debt will be recorded at a discount reflecting its below market coupon interest rate. The debt will subsequently be accreted to its par value over its expected life, with the rate of interest that reflects the market rate at issuance being reflected on the income statement. This change in methodology will affect the calculations of net income and earnings per share for many issuers of cash settled convertible securities. The FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Company adopted FSP 14-1 at the beginning of fiscal year 2010 with the additional disclosures provided in Note 5. Adoption affects the carrying value and future interest expense on the Company’s $75,000 Convertible Senior Notes 2005, due in 2025, only, as the Company’s Convertible Senior Notes 2006, due in 2026 do not contain a cash conversion feature at the election of the Company.

In June 2008, the FASB issued FSP EITF 03-6-1 “Determining whether Instruments granted in Share-based Payment Transactions are Participating Securities”. This FSP addresses whether instruments granted in share-based transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocations in calculating earnings per share under the two-class method described in FASB Statement No. 128 “Earnings per Share”. The FSP requires companies to treat unvested share-based payment awards that have non-forfeitable rights to dividend or dividend equivalents as a separate class of securities in calculating earnings per share. The FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Company adopted FSP 03-6-1 at the beginning of fiscal year 2010. The adoption did not have a significant effect on the Company’s financial statements.

In December 2008, SFAS No. 132 (Revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits” was amended by FSP SFAS 132 (R)-1, “Employer’s Disclosures about Postretirement Benefit Plan Assets.” This FSP provides guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan and is effective for financial statements issued for fiscal years ending after December 15, 2009. The Company is currently evaluating the impact of the adoption of this FSP on the Company’s consolidated financial statements.

In April 2009, the FASB issued FSP FAS No. 107-1 and Accounting Principles Board (“APB”) Opinion No. 28-1 (“FSP FAS No. 107-1 and APB No. 28-1”), “Interim Disclosures about Fair Value of Financial Instruments”, which amends SFAS No. 107, “Disclosures about Fair Value of Financial Instruments”, and requires disclosures about the fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. FSP FAS No. 107-1 and APB No. 28-1 also amends APB Opinion No. 28, “Interim Financial Reporting”, to require those disclosures in summarized financial information at interim reporting periods. FSP FAS No. 107-1 and APB No. 28-1 is effective for interim reporting periods ending after June 15, 2009. FSP FAS No. 107-1 and APB No. 28-1 does not require disclosures for earlier periods presented for comparative purposes at initial adoption, and, in periods after initial adoption, comparative disclosures are only required for periods ending after initial adoption. The Company is in the process of evaluating the impact of adoption of FSP FAS No. 107-1 and APB No. 28-1 on the Company’s Consolidated Financial Statements.

In April 2009, the FASB issued FSP FAS No. 115-2 and FAS No. 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments”, which amends the other-than-temporary impairment guidance in U.S. generally accepted accounting pronouncements (“GAAP”) for debt securities to make the guidance more operational and improve the presentation and disclosure of other-than-temporary impairment on debt and equity securities in the

10

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

financial statements. FSP FAS No. 115-2 and FAS No. 124-2 does not amend existing recognition and measurement guidance related to other-than-temporary impairment of equity securities. FSP FAS No. 115-2 and FAS No. 124-2 is effective for interim reporting periods ending after June 15, 2009. FSP FAS No. 115-2 and FAS No. 124-2 does not require disclosures for earlier periods presented for comparative purposes at initial adoption, and, in periods after initial adoption, comparative disclosures are only required for periods ending after initial adoption. The Company is in the process of evaluating the impact of adoption of FSP FAS No. 115-2 and FAS No. 124-2 on the Company’s Consolidated Financial Statements.

In April 2009, the FASB issued FSP FAS No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”, which provides additional guidance for estimating fair value in accordance with SFAS No. 157, “Fair Value Measurements”, when the volume and level of activity for the asset or liability have significantly decreased. FSP FAS No. 157-4 includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP FAS No. 157-4 is effective for interim reporting periods ending after June 15, 2009. FSP FAS No. 157-4 does not require disclosures for earlier periods presented for comparative purposes at initial adoption, and, in periods after initial adoption, comparative disclosures are only required for periods ending after initial adoption. The Company is in the process of evaluating the impact of adoption of this FSP on the Company’s Consolidated Financial Statements.

4. INVENTORIES

Inventories consisted of the following:

	April 30, 2009		January 31, 2009
Raw materials	$	15,881	$	17,545
Work-in-process		18,458		17,721
Finished goods		25,189		25,862
Total	$	59,528	$	61,128

5. DEBT

Debt consisted of the following:

	April 30, 2009		January 31, 2009
Line of Credit Facility, maximum commitment of $75,000 at April 30, 2009 and January 31, 2009; bearing interest at 2.41% at April 30, 2009: availability is determined by a borrowing base calculation	$	3,326	$	—
Convertible Senior Notes 2005; due 2025, bears interest at 5.25% net of unamortized discounts of $15,278 and $16,121, respectively		59,722		58,879
Convertible Senior Notes 2006; due 2026, bears interest at 5.50%.		52,000		52,000
China Line of Credit; Maximum commitment of 40 million RMB (with an effective interest rate of 6.37% as of April 30, 2009 and January 31, 2009)		5,868		5,852
Capital leases		118		125
Total debt		121,034		116,856
Less unamortized debt costs		2,959		3,338
Net debt		118,075		113,518
Less current portion		5,897		5,881
Total long-term portion	$	112,178	$	107,637

11

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

Convertible Senior Notes 2005

On November 21, 2005, the Company completed the private placement of $75,000 aggregate principal amount of 5.25% Convertible Senior Notes Due 2025 (“2005 Notes”) which raised proceeds of approximately $72,300, net of $2,700 in issuance costs. These costs are being amortized to interest expense over five years.

The 2005 Notes mature on November 1, 2025 and require semi-annual interest payments at 5.25% per annum on the principal amount outstanding. Prior to maturity the holders may convert their 2005 Notes into shares of the Company’s common stock under certain circumstances. The initial conversion rate is 118.0638 shares per $1,000 principal amount of 2005 Notes, which is equivalent to an initial conversion price of approximately $8.47 per share. At any time between November 1, 2010 and November 1, 2012, the Company may at its option redeem the 2005 Notes, in whole or in part, for cash, at a redemption price equal to 100% of the principal amount of 2005 Notes to be redeemed, plus any accrued and unpaid interest, including additional interest, if any, if in the previous 30 consecutive trading days ending on the trading day before the date of mailing of the redemption notice the closing sale price of the Common Stock exceeds 130% of the then effective conversion price of the 2005 Notes for at least 20 trading days. In addition, at any time after November 1, 2012, the Company may redeem the 2005 Notes, in whole or in part, for cash, at a redemption price equal to 100% of the principal amount of the 2005 Notes to be redeemed plus any accrued and unpaid interest, including additional interest, if any.

A holder of 2005 Notes may require the Company to repurchase some or all of the holder’s 2005 Notes for cash upon the occurrence of a fundamental change as defined in the indenture and on each of November 1, 2012, 2015 and 2020 at a price equal to 100% of the principal amount of the 2005 Notes being repurchased, plus accrued interest, if any, in each case. If applicable, the Company will pay a make-whole premium on 2005 Notes converted in connection with any fundamental change that occurs prior to November 1, 2012. The amount of the make-whole premium, if any, will be based on the Company’s stock price and the effective date of the fundamental change. The indenture contains a detailed description of how the make-whole premium will be determined and a table showing the make-whole premium that would apply at various stock prices and fundamental change effective dates based on assumed interest and conversion rates. No make-whole premium will be paid if the price of the Common Stock on the effective date of the fundamental change is less than $7.00. Any make-whole premium will be payable in shares of Common Stock (or the consideration into which the Company’s Common Stock has been exchanged in the fundamental change) on the conversion date for the 2005 Notes converted in connection with the fundamental change.

On February 1, 2009, we began accounting for the 2005 Notes in accordance with the guidance provided in FSP 14-1. FSP 14-1 requires an issuer to separately account for the liability and equity components in a manner that reflects the issuer’s nonconvertible borrowing rate resulting in higher non-cash expense which is amortized over the expected life of the instrument due the discount. We determined that the effective rate of the liability component was 12.5%. FSP 14-1 requires retrospective application for all periods presented.

Convertible Senior Notes 2006

On November 22, 2006, the Company completed the private placement of $54,500 aggregate principal amount of 5.50% Convertible Senior Notes Due 2026 (“2006 Notes”) which raised proceeds of approximately $51,900, net of $2,600 in issuance costs. These costs are being amortized to interest expense over five years.

The 2006 Notes mature on November 1, 2026 and require semi-annual payments at 5.50% per annum on the principal outstanding. Prior to maturity the holders may convert their 2006 Notes into shares of the Company’s common stock under certain circumstances. The initial conversion rate is 206.7183 shares per $1,000 principal amount of 2006 Notes, which is equivalent to an initial conversion price of approximately $4.84 per share. At any time on and after November 15, 2011, the Company may at its option redeem the 2006 Notes, in whole or in part, for cash, at a redemption price equal to 100% of the principal amount of 2006 Notes to be redeemed, plus any accrued and unpaid interest, including additional interest.

12

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

A holder of 2006 Notes may require the Company to repurchase some or all of the holder’s 2006 Notes for cash upon the occurrence of a fundamental change as defined in the indenture and on each of November 1, 2011, 2016 and 2021 at a price equal to 100% of the principal amount of the 2006 Notes being repurchased, plus accrued interest, if any, in each case. If applicable, the Company will pay a make-whole premium on 2006 Notes converted in connection with any fundamental change that occurs prior to November 15, 2011. The amount of the make-whole premium, if any, will be based on the Company’s stock price and the effective date of the fundamental change. The indenture contains a detailed description of how the make-whole premium will be determined and a table showing the make-whole premium that would apply at various stock prices and fundamental change effective dates based on assumed interest and conversion rates. No make-whole premium will be paid if the price of the Common Stock on the effective date of the fundamental change is less than $4.30. Any make-whole premium will be payable in shares of Common Stock (or the consideration into which the Company’s Common Stock has been exchanged in the fundamental change) on the conversion date for the 2006 Notes converted in connection with the fundamental change.

FSP 14-1 does not apply to the 2006 Notes since this note does not provide the Company with the option of settlement upon conversion in cash for all or part of the notes. As a result, this note is carried at face value and interest is recorded based on the stated rate of 5.50%.

The following table summarizes the changes to our financial statements as a result of adopting this new accounting pronouncement:

	Previously Reported			Effect of Change - Increase (Decrease)			As Adjusted
January 31, 2009 Balance Sheet
Debt issuance costs (included in long-term debt)	$	(3,672	)	$	334		$	(3,338	)
Convertible Senior Notes 2005		75,000			(16,121	)		58,879
Additional paid-in capital		71,749			23,975			95,724
Retained earnings		51,392			(8,188	)		43,204
April 30, 2008 Statement of Operations
Interest expense, net		2,266			701			2,967
Net income attributable to C&D Technologies, Inc.		577			(701	)		(124	)
Income (Loss) per share basic and diluted	$	0.02		$	(0.02	)	$	0.00
April 30, 2008 Statement of Cash Flows
Net income¹		319			(701	)		(382	)
Amortization of debt acquisition costs		424			(45	)		379
Amortization of debt discount		0			746			746

¹ Previously reported net income has been adjusted to reflect noncontrolling interest as required by SFAS 160

6. STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

On February 1, 2009, we adopted SFAS 160. The statement recharacterizes the accounting for minority interest as noncontrolling interest and classifies them as a component of stockholders’ equity. Although the adoption of SFAS 160 did not impact our results of operations and financial position, SFAS 160 required us to reclassify noncontrolling interest as stockholders’ equity, include the net loss attributable to the noncontrolling interest as part of our consolidated net loss and provide additional disclosures as part of our financial statements. As required by SFAS 160, we implemented the presentation and disclosure requirements of this new standard retrospectively for all periods presented. Note that the January 31, 2009 balances below reflect changes required by adoption of FSP 14-1. See Note 5 for additional information on the effects of adoption on these balances.

13

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

The following table presents the statement of changes in stockholders’ equity in conformity with the requirements of SFAS 160 for the quarter ended April 30, 2009.

	Common Stock		Additional Paid-In		Treasury Stock				Other Comprehensive		Retained		Noncontrolling		Total Stockholders’
	Shares	Amount	Capital		Shares		Amount		Income /(Loss)		Earnings		Interest		Equity
BALANCE AT JANUARY 31, 2009	29,162,101	292	95,724		(2,895,346	)	(40,035	)	(45,733	)	43,204		11,451		64,903
Total comprehensive income (loss):
Net loss											(9,758	)	(211	)	(9,969	)
Foreign currency translation adjustment									105				32		137
Unrealized loss on derivative instruments									2,905						2,905
Pension liability adjustment									535						535
Total comprehensive income (loss):									3,545		(9,758	)	(179	)	(6,392	)
Other changes in equity:
Share based compensation expense			323												323
Stock awards issued/exercised	28,940		(5	)											(5	)
BALANCE AT APRIL 30, 2009	29,191,041	292	96,042		(2,895,346	)	(40,035	)	(42,188	)	33,446		11,272		58,829

7. INCOME TAXES

	Three months ended April 30,
	2009			2008
Provision for income taxes operations	$	1,096		$	134
Effective income tax rate		(12.4	%)		(54.0	%)

Effective tax rates from continuing operations were (12.4%) and (54.0%) for the three months ended April 30, 2009 and 2008, respectively. Tax expense for the three months ended April 30, 2009 is due to tax expense in certain profitable foreign subsidiaries and no tax benefit recognized in certain jurisdictions where the Company incurred a loss in addition to deferred tax expense related to the increase in the deferred tax liability related to certain indefinite life assets. There was no significant impact to the tax expense related to uncertain tax positions or the interest on uncertain tax positions.

14

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

8. EARNINGS PER SHARE

Basic earnings per common share was computed using net income and the weighted average number of common shares outstanding during the period. Diluted earnings per common share was computed using net income and the weighted average number of common shares outstanding plus potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include the assumed exercise of stock options and assumed vesting of restricted stock awards using the treasury stock method, as well as the assumed conversion of debt using the if-converted method.

The following table sets forth the computation of basic and diluted losses per common share:

	Three months ended April 30,
	2009			2008¹
Numerator:
Numerator for basic losses per common share	$	(9,758	)	$	(124	)
Numerator for diluted losses per common share	$	(9,758	)	$	(124	)
Denominator:
Denominator for basic earnings per common share- weighted average common share		26,281,992			25,666,477
Effect of dilutive securities:
Denominator for diluted earnings per common share- adjusted weighted average common shares and assumed conversions		26,281,992			25,666,477
Basic losses per common share	$	(0.37	)	$	(0.00	)
Diluted losses from common share	$	(0.37	)	$	(0.00	)

The Company has excluded dilutive securities of 19,604,137 and 20,120,932 issuable in connection with convertible bonds from the diluted income per share calculation for the three months ended April 30, 2009 and 2008, respectively, because their effect would be anti-dilutive. The above computation also excludes all anti-dilutive options, restricted stock awards and shares issuable under deferred compensation arrangements, which amounted to, 2,155,485 and 1,584,126 shares for the three months ended April 30, 2009 and 2008 respectively.

9. CONTINGENT LIABILITIES

Legal

There is no material litigation pending to which the Company is a party or of which any of its property is the subject.

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 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.

15

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

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 there for), the Company may be held liable for certain damages, the costs of investigation and remediation, and fines and penalties, 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 (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”).

C&D is participating in the investigation of contamination at several lead smelting facilities (“Third Party Facilities”) to which C&D allegedly made scrap lead shipments for reclamation prior to the date of the acquisition.

Pursuant to a 1996 Site Participation Agreement, as later amended in 2000, the Company and several other potentially responsible parties (“PRP”s) agreed upon a cost sharing allocation for performance of remedial activities required by the United States EPA Administrative Order Consent Decree entered for the design and remediation phases at the former NL Industries, Inc. (“NL”) site in Pedricktown, New Jersey, Third Party Facility. In April 2002, one of the original 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, resulting in a pro rata increase in the cost participation of the other PRPs, including the Company, for which the Company’s allocated share rose from 5.25% to 7.79%.

In August 2002, the Company was notified of its involvement as a PRP at the NL Atlanta, Northside Drive Superfund site. NL and Norfolk Southern Railway Company have been conducting a removal action on the site, preliminary to remediation. The Company, along with other PRPs, continues to negotiate with NL at this site regarding the Company’s share of the allocated liability.

The Company has terminated operations at its Huguenot, New York, facility, and has completed facility decontamination and disposal of chemicals and hazardous wastes remaining at the facility following termination of operations in accordance with applicable regulatory requirements. The Company is also aware of the existence of soil and groundwater contamination at the 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 contaminants in and underlying a lagoon used by the former owner of this site, Avnet, Inc., for disposal of wastewater. Contamination is present at concentrations that exceed state groundwater standards. In 2002, the NYSDEC issued a Record of Decision (“ROD”) for the soil remediation portion of the site. A ROD for the ground water portion has not yet been issued by the NYSDEC. In 2005, the NYSDEC also requested that the parties engage in a Feasibility Study, which the parties are conducting in accordance with a NYSDEC approved work plan. In February 2000, the Company filed suit against Avnet, Inc., and in December 2006, the parties executed a settlement agreement which provides for a cost sharing arrangement with Avnet bearing a majority of the future costs associated with the investigation and remediation of the lagoon-related contamination.

C&D, together with Johnson Controls, Inc. (“JCI”), is conducting an assessment and remediation of contamination at and near its facility in Milwaukee, Wisconsin. The majority of the on-site soil remediation portion of this project was completed as of October 2001. Under the purchase agreement with JCI, C&D 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 ongoing cleanup project and (iii) environmental liabilities for any new 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 retained the environmental liability for the off-site assessment and remediation of lead. In March 2004, the Company entered into an agreement with JCI to continue to share responsibility as set forth in the original purchase agreement. The Company continues to negotiate with JCI regarding the allocation of costs for assessment and remediation of certain off-site chlorinated volatile organic compounds (“CVOC”s) in groundwater.

16

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

In February 2005, the Company received a request from the EPA to conduct exploratory testing to determine if the historical municipal landfill located on the Company’s Attica, Indiana, property is the source of elevated levels of trichloroethylene detected in two city wells downgradient of the Company’s property. The EPA advised that it believes the former landfill is subject to remediation under the RCRA corrective action program. The Company conducted testing in accordance with an investigation work plan and submitted the test results to the EPA. The EPA thereafter notified the Company that they also wanted the Company to embark upon a more comprehensive RCRA investigation to determine whether there have been any releases of other hazardous waste constituents from its Attica facility and, if so, to determine what corrective measure may be appropriate. In January 2007, the Company agreed to an Administrative Order on Consent with EPA to investigate, and remediate if necessary, site conditions at the facility. The scope of any potential exposure is not defined at this time.

The Company has conducted site investigations at its Conyers, Georgia facility, and has detected chlorinated solvents in groundwater and lead in soil both onsite and offsite. The Company has recently initiated further assessment of groundwater conditions, temporarily suspending remediation of the chlorinated solvents which had been initiated in accordance with a Corrective Action Plan approved by the Georgia Department of Natural Resources in January 2007. A modified Corrective Action Plan will be submitted upon completion of the assessment. Additionally, the Company is conducting remediation of lead impacted soils identified in the site investigations. In September 2005, an adjoining landowner filed suit against the Company alleging, among other things, that it was allowing lead contaminated stormwater runoff to leave its property and contaminate the adjoining property. The parties entered into an initial agreement to settle the litigation in March 2007. In July 2007, the plaintiff provided notice that it was withdrawing from the initial settlement agreement alleging that additional unknown contamination had been discovered. In November 2008, the parties entered into a final settlement agreement, pursuant to which the Company agreed to assess and remediate any contamination on the adjoining property due the Company’s operations as required by Georgia Department of Natural Resources and with the concurrence of the adjoining landowner.

The Company accrues reserves for liabilities in its 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.” As of April 30, 2009, accrued environmental reserves totaled $1,426 consisting of $796 in other current liabilities and $630 in other liabilities. Based on currently available information, 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 its business, financial condition or results of operations.

Purchase Commitments

Periodically the Company enters into purchase commitments pertaining to the purchase of certain raw materials with various suppliers. The Company has entered into various lead commitments contracts some expiring within a few months while others continue into December 2012. The estimated commitments are approximately $33,000 in the year ended April 30, 2010, $3,500 during the year ended April 30, 2011 and 2012 and approximately $2,000 during the year ended April 30, 2013. The Company has purchased new machinery with an estimated remaining cost of $473 to be recorded and placed in service during the current fiscal year.

10. DERIVATIVE INSTRUMENTS

The Company follows Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended. SFAS No. 133 establishes accounting and reporting standards for derivative instruments. Specifically, SFAS No. 133 requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and to measure those instruments at fair value. Additionally, the fair value adjustments will affect either stockholders’ equity as accumulated other comprehensive (loss) income or net (loss) income depending on whether the derivative instrument qualifies as a hedge for accounting purposes and, if so, the nature of the hedging activity.

17

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

To qualify for hedge accounting, the instruments must be effective in reducing the risk exposure that they are designed to hedge. For instruments that are associated with the hedge of an anticipated transaction, hedge effectiveness criteria also require that it be probable that the underlying transaction will occur. Instruments that meet established accounting criteria are formally designated as hedges at the inception of the contract. These criteria demonstrate that the derivative is expected to be highly effective at offsetting changes in fair value of the underlying exposure both at inception of the hedging relationship and on an ongoing basis. The assessment for effectiveness is documented at hedge inception and reviewed throughout the designated hedge period.

In the ordinary course of business, the Company may enter into a variety of contractual agreements, such as derivative financial instruments, primarily to manage and to hedge its exposure to currency exchange rate and interest rate risk. All derivatives are recognized on the balance sheet at fair value and are reported in either other current assets or accrued liabilities. For derivative instruments that are designated and qualify as cash flow hedges, the gain on the derivative is reported as a component of other comprehensive income (“OCI”) and reclassified from accumulated other comprehensive income (“AOCI”) into earnings when the hedged transaction affects earnings. If any derivatives are not designated as hedges, the gain or loss on the derivative would be recognized in current earnings.

The Company has entered into lead hedge contracts to manage risk of the cost of lead. The agreements are with major financial institutions with maturities generally less than one year. These market instruments are designated as cash flow hedges. The mark-to-market gain or loss on qualifying commodity hedges is included in other comprehensive income to the extent effective, and reclassified into cost of goods sold in the period during which the hedge transaction affects earnings.

Hedge accounting is discontinued when it is determined that a derivative instrument is not highly effective as a hedge. Hedge accounting is also discontinued when: (1) the derivative instrument expires, is sold, terminated or exercised; or is no longer designated as a hedge instrument because it is unlikely that a forecasted transaction will occur; (2) a hedged firm commitment no longer meets the definition of a firm commitment; or (3) management determines that designation of the derivative as a hedging instrument is no longer appropriate.

When hedge accounting is discontinued, the derivative instrument will be either terminated, continue to be carried on the balance sheet at fair value, or redesignated as the hedging instrument, if the relationship meets all applicable hedging criteria. Any asset or liability that was previously recorded as a result of recognizing the value of a firm commitment will be removed from the balance sheet and recognized as a gain or loss in current period earnings. Any gains or losses that were accumulated in other comprehensive loss from hedging a forecasted transaction will be recognized immediately in current period earnings, if it is probable that the forecasted transaction will not occur.

The Company had raw material commodity arrangements for 2,461 metric tons of base metals at April 30, 2009 and 5,056 metric tons at January 31, 2009.

18

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

The following table provides the fair value of the Company’s derivative contracts which include raw material commodity contracts.

	April 30, 2009		January 31, 2009¹			Balance Sheet Location
Derivatives designated as hedging instruments:
Commodity Hedges	$	48	$	0		Other current assets
Commodity Hedges		—		(992	)	Other current liabilities
Total fair value	$	48		($992	)

	Amount of Gain (Loss) Recognized in OCI						Amount of Gain (Loss) Reclassified from AOCI into Income						Location of Gain (Loss) Reclassified from
	2009			2008			2009			2008			AOCI into Income
Derivatives in Cash Flow Hedging
Commodity Hedges	$	(107	)	$	(1,397	)	$	(1,971	)	$	(3,464	)	Cost of Sales

11. 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:

	Three months ended April 30,
	2009			2008
Balance at beginning of period	$	8,069		$	11,276
Current year provisions		736			819
Expenditures		(2,161	)		(2,106	)
Effect of foreign currency translation		—			4
Balance at end of period	$	6,644		$	9,993

As of April 30, 2009, accrued warranty obligations of $6,644 include $2,929 in current liabilities and $3,715 in other liabilities. As of January 31, 2009 accrued warranty obligations of $8,069 include $3,528 in current liabilities and $4,541 in other liabilities.

Certain warranty costs associated with the discontinued operations were not assumed by the buyer and are included in the table above. Expenditures include $1,208 and $1,359 related to discontinued operations in the first fiscal quarters 2010 and 2009, respectively.

19

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

12. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

The components of net periodic benefit cost consisted of the following for the interim periods:

	Pension Benefits						Postretirement Benefits
	Three months ended April 30,						Three months ended April 30,
	2009			2008			2009			2008
Components of net periodic benefit cost:
Service cost	$	284		$	261		$	18		$	18
Interest cost		1,159			1,083			31			30
Expected return on plan assets		(866	)		(1,261	)		—			—
Amortization of prior service costs		—			—			(201	)		(201	)
Recognized actuarial loss/(gain)		745			289			—			(2	)
Net periodic benefit cost	$	1,322		$	372		$	(152	)	$	(155	)

The Company made no contributions to the plan in the first quarter of fiscal year 2010. The Company expects to make contributions of approximately $4,160 to its plan during fiscal year 2010. The Company also expects to make contributions totaling approximately $160 to the Company sponsored postretirement benefit plan during fiscal year 2010.

13. RESTRUCTURING

On February 4, 2009, the Company announced plans to reduce labor costs by reducing its workforce by approximately 90 employees. The Company recorded severance accruals in the fourth quarter of fiscal year 2009 of $1,334 in its consolidated statement of operations as Selling, general and administrative expenses as a result of these reductions. The Company expects to pay most of these costs in fiscal year 2010 with a small portion carrying over to fiscal year 2011.

A reconciliation of the beginning and ending liability and related activity is shown below.

	Balance at January 31, 2009		Provision Additions		Expenditures		Balance at April 30, 2009
Severance	$	1,253	$	—	$	511	$	742
Total	$	1,253	$	—	$	511	$	742

14. FAIR VALUE MEASUREMENT

Our adoption of SFAS 157 was limited to financial assets and liabilities, which primarily relates to our derivative contracts and investments related to the deferred compensation plan. We utilize the market approach to measure fair value for our financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. SFAS 157 includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels:

Level 1 Inputs are quoted prices in active markets for identical assets or liabilities.

20

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

Level 2	Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.
Level 3	Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The following table represents our assets and liabilities measured at fair value on a recurring basis as of April 30, 2009 and the basis for those measurements:

	Total Fair Value Measurement April 30, 2009		Quoted Priced in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	2,304	$	2,304	$	—	$	—
Investments held for deferred compensation plan		314		314		—		—
Commodity hedge liabilities		48		—		48		—

15. SUBSEQUENT EVENTS

On May 18, 2009, the Company obtained an increase in borrowing capacity and borrowed an additional 20 million RMB (approximately $2,930 US dollars) from a local Chinese bank. This loan matures on May 17, 2010 and bears interest at a rate of 5.73%. This loan is secured by the plant located in Shanghai, China. The borrowings are to be used to support capital investments in China.

21

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share data)

Item 2.

Three Months Ended April 30, 2009, compared to Three Months Ended April 30, 2008

Within the following discussion, unless otherwise stated, “quarter” and “three-month” period” refer to the first quarter of fiscal year 2010. All comparisons are with the corresponding period in the prior fiscal year, unless otherwise stated.

Net sales in the first quarter of fiscal year 2010 decreased $20,111 or 21% to $73,665 from $93,776 in the first quarter of fiscal year 2009. This decrease was partially due to contractual price decreases resulting from the significant decline in the price of lead. Average London Metal Exchange (“LME”) lead prices decreased from an average of $1.35 per pound in the first quarter of fiscal year 2009 to $0.56 per pound in the first quarter of fiscal year 2010. Additionally, sales were negatively impacted by lower volumes as a result of the general economic environment, principally in the Company’s North American telecommunications and UPS markets, as well as international markets.

Gross profit in the first quarter of fiscal year 2010 decreased $8,347 or 61% to $5,345 from $13,692. Margins as a percent of sales decreased from 15% in the first quarter of fiscal year 2009 to 7% in the first quarter of fiscal year 2010. Margins increased sequentially to 7% in the first quarter of fiscal 2010 compared to 4% in the fourth quarter of fiscal 2009. Contractual price decreases tied to the price of lead have reduced sales which are partially offset by lower lead costs. Lead prices traded on the LME have continued to be volatile, having traded as high as $0.69 per pound on April 16, 2009 and as low as $0.45 per pound on February 24, 2009. As a result of the decrease in lead prices, margins contracted as revenue decreased because of lower sales prices to customers with LME based lead clauses. The lower revenue was not fully offset by a decrease in cost savings associated with our tolled lead purchases which were not realized because the cost of tolled lead exceeded LME purchased lead during the first quarter of fiscal 2010. Margins were also negatively impacted by changes in product mix and market pricing pressure, as well as continuation of new product start-up costs in the first quarter of fiscal 2010 due to customer qualification requirements and the transition of our advanced designs into full-scale manufacturing. Higher pension and other fringe benefit costs also impacted margin performance. These negative impacts on gross margin were partially offset by the impact of cost reduction actions announced in February 2009.

Selling, general and administrative expenses in the first quarter of fiscal year 2010 decreased $413 or 4.3% to $9,242 from $9,655. The decrease is primarily due to lower compensation and fringe benefits of approximately $850 driven primarily by lower bonus expense in fiscal year 2010 offset by higher selling costs of approximately $300 associated primarily with new product introductions. As a percentage of sales, selling, general and administrative expenses increased to 12.5% in fiscal 2010 compared to 10.3% in the first quarter of fiscal 2009.

Research and development expenses in the first quarter of fiscal year 2010 increased $187 or 11% to $1,878 from $1,691. As a percentage of sales, research and development expenses increased from 1.8% in the first quarter of fiscal year 2009 to 2.6% in the first quarter of fiscal year 2010 due to higher costs supporting investment in new technologies and China growth initiatives.

The Company had an operating loss in the first quarter of fiscal year 2010 of $5,775 compared to operating income of $2,346 in the first quarter of fiscal year 2009. The change is mainly due to the decrease in gross profit compared to the first quarter of fiscal 2009.

22

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

Analysis of Change in Operating Income from continuing operations for the 1^st quarter of fiscal year 2010 vs. fiscal year 2009.

Fiscal Year 2010 vs. 2009
Operating Income 1Q’09	$	2,346
Lead, net		13,284
Price / Volume / Mix		(19,113	)
Pension		(950	)
Other	$	(1,342	)
Operating (Loss) 1Q’10	$	(5,775	)

Interest expense, net in the first quarter of fiscal year 2010 decreased $43 or 1.4% to $2,924 from $2,967 in the first quarter of fiscal year 2009, primarily due to lower interest rates in the first quarter of fiscal 2010 compared to the first quarter for fiscal 2009. Interest expense includes $798 and $701 in fiscal years 2010 and 2009, respectively, for non-cash amortization of debt discount on the 2005 Notes (see Note 5).

Other expense was $174 in the first quarter of fiscal year 2010 compared to other income of $373 in the first quarter of fiscal year 2009. The decrease was primarily due to a reduction in royalty income related to our divested Motive Power Division received in fiscal year 2009 of $400 and foreign currency income of $300 partially offset by lower financing and other costs of $200.

Income tax expense of $1,096 was recorded in the first quarter of fiscal year 2010, compared to $134 in the first quarter of fiscal year 2009. Tax expense in the first quarter of both fiscal years 2010 and 2009, is primarily due to non-cash SFAS No. 109 expense related to the amortization of intangible assets and foreign taxes on profits which were not offset by losses for which no tax benefit is recognized under SFAS No. 109.

Noncontrolling interest reflects the 33% ownership interest in the joint venture battery business located in Shanghai, China, that is not owned by the Company. Noncontrolling interest was $211 in fiscal year 2010 compared to $258 in fiscal year 2009.

As a result of the above, net loss attributable to C&D Technologies, Inc of $9,758 was recorded in the first quarter of fiscal year 2010 compared to $124 in the prior year. Basic and diluted losses per share were $0.37 and $0.00 in the first quarter of fiscal year 2010 and 2009, respectively.

Other Comprehensive Income (Loss)

Other comprehensive loss attributable to C&D Technologies, Inc. increased by $9,136 in the first quarter of fiscal year 2010 to $6,213 from income of $2,923 in the first quarter of fiscal year 2009. This decrease was due primarily to the increase in net loss attributable to C&D from $124 in the first quarter of fiscal 2009 to $9,758 in the first quarter of fiscal year 2010 coupled with an unrealized gain on derivative instruments of $2,905 in the first quarter of fiscal year 2010 compared to $2,267 in first quarter of fiscal year 2009 and foreign currency translation adjustments decreased to $105 in fiscal year 2010 from $702 in fiscal year 2009. In addition, in fiscal year 2009 there was an adjustment to pension liabilities of $78 compared to $535 in 2010.

23

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 used in operating activities was $171 for three months ended April 30, 2009, compared to cash provided of $614 in the comparable period of the prior fiscal year. This is a result of the increased loss which is offset by a reduction in inventory due to decreased lead prices and inventory management and a decrease in accounts receivable resulting from lower sales. These improvements were offset by a decrease in accounts payable associated with the decrease in inventory and lower lead prices.

Net cash used in investing activities was $4,010 in the first quarter of fiscal year 2010 as compared to $956 in the first quarter of fiscal year 2009. During the first three months of fiscal year 2010, we had purchases of property, plant and equipment of $4,782 compared with purchases of $3,599 in the prior year. The increase in capital is principally in support of our cost reduction activities and new product development. This was offset by a reduction of restricted cash of $772 related to lead hedging activities in the first quarter of fiscal 2010 compared to a reduction of $2,643 in the prior fiscal year.

Net cash provided by financing activities increased $3,288 to $3,325 for the three months ended April 30, 2009, compared to $37 in the comparable period of the prior fiscal year. Proceeds from borrowings under the Company’s revolving credit facility were the primary source of cash provided by financing activities in fiscal year 2010. The primary purpose of the new borrowings in the current fiscal year was to fund operations.

The Credit Facility includes a material adverse change clause which defines an event of default as a material adverse change in our business, assets or prospects. Our lenders could claim a breach under the material adverse change covenant or the cross-default provisions under our Credit Facility under certain circumstances, including, for example, if holders of our 2005 Notes and 2006 Notes were to obtain the right to put their notes to us in the event that our common stock was no longer listed on any national securities exchange. An interpretation of events as a material adverse change or any breach of the covenants in our Credit Facility or the indentures governing our 2005 Notes and 2006 Notes could cause a default under our Credit Facility and other debt (including the 2005 and 2006 Notes), which would restrict our ability to borrow under our Credit Facility, thereby significantly impacting our liquidity.

We have also assessed the impact of the severe liquidity crises at major financial institutions on our ability to access capital markets on reasonable terms. Although our credit facility syndicate bank is currently meeting all of their lending obligations, there can be no assurance that these banks will be able to meet their obligations in the future if the liquidity crisis intensifies or is protracted. Our current credit facility does not expire until December 7, 2010. As of April 30, 2009, the maximum availability calculated under the borrowing base was approximately $37,546, of which $3,326 was funded, and $5,575 was utilized for letters of credit. As provided under the Credit Facility, excess borrowing capacity will be available for future working capital needs and general corporate purposes.

Additionally, our $52,000 and $75,000 convertible notes do not have initial maturities (put provisions) until November 2011 and November 2012 respectively. Only upon the occurrence of a fundamental change as defined in the indenture agreements, holders of the notes may require the Company to repurchase some or all of the notes prior to these dates.

C&D was previously notified by letter dated April 22, 2009 from the NYSE that the Company had fallen below the NYSE continued listing criterion that requires 30 day average market capitalization of not less than $75 million and total stockholders’ equity of not less than $75 million. The NYSE received approval from the Securities and Exchange Commission (the “SEC”) for a pilot program, effective retroactively to May 12, 2009, that would lower the numeric thresholds for this requirement to $50 million. The pilot program would be effective through October 31, 2009, with a subsequent rule filing anticipated prior to this date to make this a permanent continued listing standard change.

As a result of the aforementioned pilot program, C&D is deemed to be in compliance with the NYSE continued listing requirement that pertains to market capitalization and stockholders’ equity, which has now effectively been reset to a $50 million threshold level.

If at some future time we are notified by the NYSE that we have fallen below the NYSE’s continued listing standard relating to minimum average global market capitalization, we could face suspension and delisting proceedings. In that case, we may have 45 days to submit a plan to NYSE that demonstrates our ability to regain compliance within 18 months. If we are permitted to submit a plan, upon receipt of this plan, the NYSE would have 45 calendar days to review and determine whether we have made a reasonable demonstration of our ability to come into conformity with the relevant standards within the 18-month period. The NYSE would either accept the plan, at which time we would be subject to ongoing monitoring for compliance with this plan, or the NYSE would not accept the plan and we would be subject to suspension and delisting proceedings.

A delisting of our common stock and our inability to list the stock on another national securities exchange could negatively impact us by: (i) reducing the liquidity and market price of our common stock; (ii) reducing the number of investors willing to hold or acquire our common stock, which could negatively impact our ability to raise equity financing; (iii) limiting our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing us from accessing the public capital markets; (iv) impairing our ability to provide equity

24

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

incentives to our employees and (v) causing holders of our 2005 Notes and our 2006 Notes to have the right to require us to repurchase their notes for an amount equal to the principal amount outstanding plus accrued but unpaid interest and the make-whole premium set forth in the respective indentures as applicable. While a delisting of our common stock would not constitute a specific event of default under the documents governing our senior credit facilities, our lenders could claim that a delisting would trigger a default under the material adverse change covenant or the cross-default provisions under such documents.

At this time, we do not believe recent market disruptions will impact our long-term ability to obtain financing. We expect to have access to liquidity in the capital markets on favorable terms before the maturity dates of our current credit facilities and we do not expect a significant number of our lenders to default on their commitments thereunder. In addition, we can delay major capital investments or pursue financing from other sources to preserve liquidity, if necessary. Cash from operations and availability under the amended Credit Facility is expected to be sufficient to meet our ongoing cash needs for working capital requirements, restructuring, capital expenditures and debt service for at least the next twelve months. We estimate capital spending for fiscal year 2010 to be in the range of $15,000 to $18,000, including funding for new product modifications and cost reduction opportunities.

On May 18, 2009, the Company obtained an increase in borrowing capacity and borrowed an additional 20 million RMB (approximately $2,930 US dollars) from a local Chinese bank. This loan matures on May 17, 2010 and bears interest at a rate of 5.73%. This loan is secured by the plant located in Shanghai, China. The borrowings are to be used to support capital investments in China.

25

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

Contractual Obligations and Commercial Commitments

The following tables summarize our contractual obligations and commercial commitments as of April 30, 2009:

	Payments Due by Period
	Total		Less than 1 year		1 - 3 years		4 - 5 years		After 5 years
Contractual Obligations Debt	$	136,194	$	5,868	$	3,326	$	—	$	127,000
Interest payable on notes		116,719		6,798		13,595		13,595		82,731
Operating leases		6,060		1,798		2,047		737		1,478
Projected – lead purchases*		42,000		33,000		7,000		2,000		—
Equipment		473		473		—		—		—
Capital Leases		118		29		71		18		—
Total contractual cash obligations	$	301,564	$	47,966	$	26,039	$	16,350	$	211,209

* Amounts are based on the cash price of lead at April 30, 2009 which was $0.61.

	Amount of Commitment Expiration per Period
	Total Amount Committed		Less than 1 year		1 - 3 years		4 - 5 years		After 5 years
Other Commercial Commitments Standby letters of credit	$	5,575	$	5,017	$	558	$	—	$	—
Total commercial commitments	$	5,575	$	5,017	$	558	$	—	$	—

26

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements we make. We may, from time to time, make written or verbal forward-looking statements. Generally, the inclusion of the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “guidance,” “forecast,” “plan,” “outlook” and similar expressions in filings with the Securities and Exchange Commission (“SEC”), in our press releases and in oral statements made by our representatives, identify statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) and are intended to come within the safe harbor protection provided by those sections. The forward-looking statements are based upon management’s current views and assumptions regarding future events and operating performance, and are applicable only as of the dates of such statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

By their nature, forward-looking statements involve risk and uncertainties that could cause our actual results to differ materially from anticipated results. Examples of forward-looking statements include, but are not limited to:

• projections of revenues, cost of raw materials, income or loss, earnings or loss per share, capital expenditures, growth prospects, dividends, the effect of currency translations, capital structure and other financial items;

• statements of plans, strategies and objectives made by our management or board of directors, including the introduction of new products, cost savings initiatives or estimates or predictions of actions by customers, suppliers, competitors or regulating authorities;

• statements of future economic performance; and

• statements regarding the ability to obtain amendments under our debt agreements.

We caution you not to place undue reliance on these forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, those factors discussed under Item 1A - Risk Factors, Item 7 – Management’s Discussion and Analysis of Financial Conditions and Results of Operations and Item 8 – Financial Statements and Supplementing Data, and the following general factors:

• our ability to implement and fund based on current liquidity, business strategies and restructuring plans;

• our substantial debt and debt service requirements, which may restrict our operational and financial flexibility, as well as impose significant interest and financing costs;

• restrictive loan covenants may impact our ability to operate our business and pursue business strategies;

• the litigation and regulatory proceedings to which we are subject, the results of which could have a material adverse effect on us and our business;

• our exposure to fluctuations in interest rates on our variable debt;

• the realization of the tax benefits of our net operating loss carry forwards, which is dependent upon future taxable income;

• the fact that lead, a major constituent in most of our products, experiences significant fluctuations in market price and is a hazardous material that may give rise to costly environmental and safety claims;

• our ability to successfully pass along increased material costs to our customers;

• unanticipated warranty and quality problems associated with our products;

• failure of our customers to renew supply agreements;

• competitiveness of the battery markets in North America and Europe;

• the substantial management time and financial and other resources needed for our consolidation and rationalization of acquired entities;

• political, economic and social changes, or acts of terrorism or war;

• successful collective bargaining with our unionized workforce;

• risks involved in our foreign operations such as disruption of markets, changes in import and export laws, currency restrictions, currency exchange rate fluctuations and possible terrorist attacks against the United States interests;

• our ability to maintain and generate liquidity to meet our operating needs;

27

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

• economic conditions or market changes in certain market sectors in which we conduct business;

• uncertainty in financial markets;

• our ability to stay listed on a national securities exchange;

• our success or timing of new product development;

• impact of any changes in our management;

• we may have additional impairment charges;

• our ability to acquire goods and services and/or fulfill labor needs at budgeted costs;

• economic conditions or market changes in certain market sectors in which we conduct business;

• our success or timing of new product development;

• changes in our product mix;

• success of productivity initiatives, including rationalizations, relocations or consolidations;

• costs of our compliance with environmental laws and regulations and resulting liabilities; and

• our ability to protect our proprietary intellectual property and technology;

The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in “Risk Factors” included in the Company’s Form 10-K annual report for the year ended January 31, 2009.

28

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

Item 3. Quantitative and Qualitative Disclosure about Market Risk

The Company is exposed to various market risks. The primary financial risks include fluctuations in interest rates, certain raw material commodity prices, and changes in currency exchange rates. The Company manages these risks through normal operating and financing activities and when appropriate through the use of derivative instruments. It does not invest in derivative instruments for speculative purposes, but enters into hedging arrangements in order to reduce its exposure to fluctuations in interest rates, the price of lead, as well as to fluctuations in exchange rates.

On occasion, the Company has entered into non-deliverable forward contracts with certain financial counterparties to hedge our exposure to the fluctuations in the price of lead, the primary raw material component used by the Company. The Company employs hedge accounting in the treatment of these contracts. Changes in the value of the contracts are marked to market each month and the gains and losses are recorded in other comprehensive loss until they are released to the income statement through cost of goods sold in the same period as is the hedged item (lead).

Additional disclosure regarding various market risks were set forth in the Company’s fiscal year 2009 Annual Report on Form 10-K filed with the SEC.

Item 4. Controls and Procedures:

Evaluation of Disclosure Controls and Procedures

Management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s 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. The Company maintains controls and procedures to provide effective recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by it in the reports that it files or submits under the Exchange Act and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding timely disclosures.

As of April 30, 2009, our previously identified material weakness in our internal control over financial reporting relating to effective controls over the period end reconciliation of inventory liability clearing accounts remains. Specifically, our account reconciliations, analyses and review procedures were ineffective as it related to the following: (1) timely completion of the account reconciliation (2) independent and timely review of the reconciliation and (3) review and approval of journal entries related to these accounts.

Such deficiency could result in misstatements of the aforementioned accounts and disclosures that would result in a material misstatement of the consolidated financial statements that would not be prevented and detected. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

As a result of this material weakness, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of April 30, 2009. Nevertheless, management has concluded that the consolidated financial statements in this Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods, presented, in conformity with generally accepted accounting principles in the United States of America.

29

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

Plan for Remediation of Material Weakness

We believe that we have taken the appropriate actions to remediate the material weakness described above by (1) conducting training on controls over maintenance of inventory liability clearing accounts and preparation of reconciliations of related balances (2) made certain personnel changes and reallocated duties as deemed appropriate, and (3) designing and implementing new policies, procedures and controls for monthly account reconciliations. We believe this material weakness will remain until we have had sufficient experience with the sustainability of the controls.

Changes in Internal Control over Financial Reporting:

Other than the above, there have not been any changes in the Company’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, its internal control over financial reporting.

30

PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities:

NONE

On September 30, 2004, the Board of Directors authorized a new stock repurchase program. Under the program, the Company is permitted to repurchase up to 1 million shares of C&D Technologies common stock having a total purchase price of no greater than $25 million. This program entirely replaces and supersedes all previously authorized stock repurchase programs. No shares were purchased during the first quarter of fiscal year 2009 under this program.

Restrictions on Dividends and Treasury Stock Purchases:

Our Credit Facility limits restricted payments including dividends and Treasury Stock purchases to no more than $250,000 for Treasury Stock in any one calendar year and $1,750,000 for dividends for any one calendar year subject to adjustments of up to $400,000 per year in the case of the conversion of debt to stock per the terms of our convertible offerings. These restricted payments can only occur with prior notice to the lenders and provided that there is a minimum of $30,000,000 in excess availability for a period of thirty days prior to the dividend. The Company may declare and pay a dividend provided these conditions are met and there does not exist an event of default.

31

Item 6. Exhibits.

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Date	Exhibit Number	Filed Herewith
31.1	Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
31.2	Certification of the Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
32.1	Certification of the President and Chief Executive Officer and Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				X

32

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.
June 4, 2009	By:	/s/ Jeffrey A. Graves
		Jeffrey A. Graves
		President, Chief Executive
		Officer and Director
		(Principal Executive Officer)

June 4, 2009	By:	/s/ Ian J. Harvie
		Ian J. Harvie
		Vice President Finance
		and Chief Financial Officer
		(Principal Financial Officer)

June 4, 2009	By:	/s/ Neil E. Daniels
		Neil E. Daniels
		Vice President & Corporate
		Controller
		(Principal Accounting Officer)

33

EXHIBIT INDEX

31.1	Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the President and Chief Executive Officer and Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

34

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Jeffrey A. Graves, certify that:

1. I have reviewed this quarterly report on Form 10-Q of C&D Technologies, Inc.;

2. Based on my knowledge, this 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 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)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) 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

(d) 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 (or persons performing the equivalent functions):

(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: June 4, 2009	/s/ Jeffrey A. Graves
	Jeffrey A. Graves
	President and Chief Executive Officer

A signed original of this written statement required by Section 302 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Ian J. Harvie, certify that:

1. I have reviewed this quarterly report on Form 10-Q of C&D Technologies, Inc.;

2. Based on my knowledge, this 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 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)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) 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

(d) 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 (or persons performing the equivalent functions):

(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: June 4, 2009	/s/ Ian J. Harvie
	Ian J. Harvie
	Vice President and Chief Financial Officer

A signed original of this written statement required by Section 302 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of C&D Technologies, Inc. (the “Company”) for the fiscal quarter ended April 30, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey A. Graves, President and Chief Executive Officer of the Company, and I, Ian J. Harvie, Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Jeffrey A. Graves

Jeffrey A. Graves

President and Chief Executive Officer

/s/ Ian J. Harvie

Ian J. Harvie

Vice President and Chief Financial Officer

Dated: June 4, 2009

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed to be filed by the Company for purpose of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.