10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended April 30, 2011

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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

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, 2011, 15,196,563 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, 2011 and January 31, 2011	3
	Consolidated Statements of Operations – Three Months Ended April 30, 2011 and 2010	5
	Consolidated Statements of Cash Flows – Three Months Ended April 30, 2011 and 2010	6
	Consolidated Statements of Comprehensive Income (Loss) – Three Months Ended April 30, 2011 and 2010	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	28
Item 4	Controls and Procedures	28
Part II	OTHER INFORMATION
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 6	Exhibits	30
SIGNATURES		31
EXHIBIT INDEX		32

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, 2011		January 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	5,456	$	3,708
Restricted cash		120		—
Accounts receivable, less allowance for doubtful accounts of $830 and $981		63,009		61,188
Inventories		79,601		80,772
Deferred taxes		257		251
Other current assets		4,424		4,508
Total current assets		152,867		150,427
Property, plant and equipment, net		86,636		86,891
Deferred income taxes		250		249
Intangible and other assets, net		13,455		13,726
TOTAL ASSETS	$	253,208	$	251,293
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	2,607	$	2,596
Accounts payable		35,366		39,477
Accrued liabilities		12,861		13,847
Deferred income taxes		27		97
Deferred revenue		2,489		3,588
Other current liabilities		6,482		5,955
Total current liabilities		59,832		65,560
Deferred income taxes		99		98
Long-term debt		39,041		32,934
Long-term debt - related party		20,000		20,000
Other liabilities		39,831		39,169
Total liabilities		158,803		157,761

The accompanying notes are an integral part of these statements.

3

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (continued)

(Dollars in thousands, except par value)

(UNAUDITED)

	April 30, 2011			January 31, 2011
Commitments and contingencies (see Note 9)
Equity:
Common stock, $.01 par value, 25,000,000 shares authorized; 15,306,936 and 15,306,915 shares issued and 15,196,563 and 15,196,542 outstanding at April 30, 2011 and January 31, 2011, respectively		153			153
Additional paid-in capital		202,581			202,350
Treasury stock, at cost, 110,373 and 110,373 shares, respectively		(39,200	)		(39,200	)
Accumulated other comprehensive loss		(42,661	)		(43,489	)
Accumulated deficit		(39,105	)		(38,480	)
Total stockholders’ equity attributable to C&D Technologies, Inc.		81,768			81,334
Noncontrolling interest		12,637			12,198
Total equity		94,405			93,532
TOTAL LIABILITIES AND EQUITY	$	253,208		$	251,293

The accompanying notes are an integral part of these statements.

4

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

(UNAUDITED)

	Three months ended April 30,
	2011			2010
NET SALES	$	88,311		$	84,703
COST OF SALES		75,507			74,725
GROSS PROFIT		12,804			9,978
OPERATING EXPENSES:
Selling, general and administrative expenses		10,435			9,222
Research and development expenses		1,595			1,788
OPERATING INCOME (LOSS)		774			(1,032	)
Interest expense, net		1,231			3,348
Other (income) expense, net		(120	)		736
LOSS BEFORE INCOME TAXES		(337	)		(5,116	)
Income tax provision		66			394
NET LOSS		(403	)		(5,510	)
Net income attributable to noncontrolling interests		222			94
NET LOSS ATTRIBUTABLE TO C&D TECHNOLOGIES, INC.	$	(625	)	$	(5,604	)
Loss per share:
Basic and Diluted:
Net loss	$	(0.04	)	$	(5.42	)

The accompanying notes are an integral part of these statements.

5

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(UNAUDITED)

	Three months ended April 30,
	2011			2010
Cash flows from operating activities:
Net loss	$	(403	)	$	(5,510	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation		231			230
Depreciation and amortization		2,556			2,614
Amortization of debt acquisition and discount costs		132			1,274
Deferred income taxes		(72	)		384
Changes in assets and liabilities:
Accounts receivable, net		(1,030	)		(3,798	)
Inventories		1,766			1,871
Other current assets		136			(563	)
Accounts payable		(5,313	)		(1,199	)
Accrued liabilities		(988	)		776
Book overdraft		835			(3,015	)
Income taxes payable		(119	)		39
Other current liabilities		(871	)		557
Other liabilities		1,463			638
Other long-term assets		(21	)		(38	)
Other, net		(1,099	)		(189	)
Net cash used in continuing operating activities		(2,797	)		(5,929	)
Net cash used in discontinued operating activities		—			(7	)
Net cash used in operating activities		(2,797	)		(5,936	)
Cash flows from investing activities:
Acquisition of property, plant and equipment		(1,311	)		(3,871	)
(Increase) decrease in restricted cash		(120	)		47
Net cash used in investing activities		(1,431	)		(3,824	)
Cash flows from financing activities:
Borrowings on line of credit facility		21,052			29,288
Repayments on line of credit facility		(15,092	)		(37,551	)
Repayment of debt		(25	)		(66	)
Proceeds from new borrowings		15			20,083
Financing cost of long term debt		(106	)		(1,771	)
Net cash provided by financing activities		5,844			9,983
Effect of exchange rate changes on cash and cash equivalents		132			6
Increase in cash and cash equivalents		1,748			229
Cash and cash equivalents, beginning of period		3,708			2,700
Cash and cash equivalents, end of period	$	5,456		$	2,929

The accompanying notes are an integral part of these statements.

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,
	2011			2010
NET LOSS	$	(403	)	$	(5,510	)
Other comprehensive income (loss), net of tax:
Net unrealized (loss) gain on derivative instruments		(533	)		265
Pension liability adjustment		803			548
Foreign currency translation adjustments		775			(44	)
Total comprehensive income (loss)		642			(4,741	)
Comprehensive income attributable to noncontrolling interests		(439	)		(95	)
Total comprehensive income (loss) attributable to C&D Technologies, Inc.	$	203		$	(4,836	)

The accompanying notes are an integral part of these statements.

7

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

(UNAUDITED)

1. 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 Fiscal Year Ended January 31, 2011 Annual Report on Form 10-K, filed on May 2, 2011.

On December 21, 2010, the Company filed a previously approved Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s common stock, par value $.01 per share (“Common Stock”) from 75,000,000 to 600,000,000 and to effect a forward stock split, by which each outstanding share of Common Stock were combined and reclassified into 1.37335 shares of Common Stock, such ratio having been determined by the Board of Directors of the Company. As a result of the forward stock split, the issued and outstanding shares of Common Stock were increased on a basis of 1.37335 shares for every one share outstanding.

On January 31, 2011, the holder of a majority of our outstanding Common Stock approved an amendment to the Company’s Amended and Restated Certificate of Incorporation to (i) effect a reverse stock split of the issued and outstanding and treasury Common Stock of the Company, at a reverse stock split ratio of 1-for-35 and (ii) decrease the number of authorized shares of the Company’s Common Stock from 600,000,000 to 25,000,000. The reverse stock split was effective on March 14, 2011. As a result of the reverse stock split, the issued and outstanding shares of Common Stock were decreased on a basis of one share for every thirty-five shares outstanding. All of the stock related information including issued and outstanding Common Stock, stock options, restricted stock, performance stock and loss per share for all periods presented was initially adjusted retrospectively to reflect the forward stock split and has since been adjusted retrospectively to reflect the reverse stock split.

In the fourth quarter of fiscal year 2010, the Company revised the useful lives of certain machinery and equipment assets to more accurately reflect expected useful lives. These assets which were being depreciated over a term of 3 – 10 years are now being depreciated over a term of 3 – 15 years. As a result, for the quarter ended April 30, 2011 and 2010 depreciation expense included as cost of sales was reduced by approximately $300 and $450, respectively. The net impact of this change in estimate for the quarter ended April 30, 2011 and 2010 were a reduction of basic and fully diluted loss per shares of approximately $0.02 and $0.44, respectively.

2. STOCK-BASED COMPENSATION

The Company granted stock option awards of 1,135,500 shares and 0 shares during the three months ended April 30, 2011 and 2010, respectively. The Company recorded $231 and $108 of stock compensation related to stock option awards in its unaudited consolidated statement of operations for the three months ended April 30, 2011 and 2010, respectively. The impact on loss per share for the three months ended April 30, 2011 and 2010 was $0.02 and $0.10, respectively.

The Company did not grant any restricted stock awards or performance shares during the three months ended April 30, 2011 and 2010. Compensation expense associated with restricted stock in the three months ended April 30, 2011 and 2010 was $0 and $122, respectively.

8

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

The following table summarizes information about the stock options outstanding at April 30, 2011:

					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
$	8.00	-	$	8.21		1,135,500		6.9 Years	$	8.20		0		6.9 Years	$	8.20
$	33.13	-	$	38.99		26,089		4.8 Years	$	35.99		26,089		4.8 Years	$	35.99
$	53.52	-	$	53.52		196		6.0 Years	$	53.52		196		6.0 Years	$	53.52
$	108.31	-	$	160.56		17,128		4.5 Years	$	140.02		17,128		4.5 Years	$	140.02
$	173.55	-	$	232.42		11,630		4.7 Years	$	196.80		11,630		4.7 Years	$	196.80
$	249.75	-	$	363.93		2,707		4.1 years	$	256.37		2,707		4.1 Years	$	256.37
$	408.27	-	$	565.26		6,652		1.9 Years	$	471.45		6,652		1.9 Years	$	471.45
$	681.98	-	$	891.98		747		0.2 Years	$	681.99		747		0.2 Years	$	681.99
						1,200,649		6.8 Years	$	16.07		65,149		4.3 Years	$	153.13

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 adjusted historical volatility of the Company’s stock. Historical volatility has been adjusted to more accurately reflect the expected volatility over the vesting terms. The Company uses the shortcut method to determine the expected life assumption.

The fair value of stock options granted during the three months ended April 30, 2011 was estimated on the grant date using the Black-Scholes option pricing model with the following average assumptions.

Three months ended April 30,	2011
Risk-free interest rate		1.76% - 2.32	%
Dividend yield		0	%
Volatility factor		67.7% - 75.2	%
Expected lives		4.5 - 5.25 Years

3. NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Guidance

There were no standards issued that are expected to have any effect on the Company’s financial statements.

9

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

4. INVENTORIES

Inventories consisted of the following:

	April 30, 2011		January 31, 2011
Raw materials	$	21,533	$	20,630
Work-in-process		25,029		22,488
Finished goods		33,039		37,654
Total	$	79,601	$	80,772

5. DEBT

Debt consisted of the following:

	April 30, 2011		January 31, 2011
Credit Facility:
Line of Credit Facility, maximum commitment of $75,000 at April 30, 2011 and January 31, 2011; availability is determined by a borrowing base calculation (includes $20,000 related party loan)	$	50,455	$	44,495
Convertible Senior Notes 2005; due 2025, bears interest at 5.25% net of unamortized discounts of $87 and $95, respectively*		727		719
Convertible Senior Notes 2006; due 2026, bears interest at 5.5%*		1,240		1,240
China Line of Credit; Maximum commitment of 82,000 RMB (approximately $12,636 and $12,415 and with an effective interest rate of 5.18% and 5.18% as of April 30, 2011 and January 31, 2011, respectively)		9,092		8,933
Capital leases		134		143
Total debt		61,648		55,530
Less current portion		2,607		2,596
Total long-term portion	$	59,041	$	52,934

* These notes have been classified as current liabilities since the delisting of the Company’s stock by the New York Stock Exchange constituted a fundamental change under the convertible note agreements and as a result of the Company’s decision to forgo interest payments on the Notes in November 2010. In May 2011, the Company made all outstanding interest payments due on the Notes.

Credit Facility

At April 30, 2011, the Company has a $75,000 principal amount Credit Facility. The Credit Facility consists of (1) an approximately three-year senior revolving line of credit which does not expire until December 22, 2013 (as adjusted by the third amendment to the Credit Agreement described below) with a maximum borrowing capacity of $55,000, determined by a borrowing base calculation and (2) a $20,000 term loan as discussed further below. The availability under the revolving line of credit portion of the Credit Facility is determined by a borrowing base, is collateralized by a first lien on certain assets and bears interest at LIBOR plus 2.50% to 3.00% (as adjusted by the third amendment to the Credit Agreement described below) or Prime plus 1.00% to 1.50% (as adjusted by the third amendment to the Credit Agreement described below) with the rate premium based on the amount outstanding and quarterly average excess availability. As of April 30, 2011, $50,455 was funded under the revolving line of credit portion of the Credit Facility and term loan and $4,667 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.

10

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

In April 2010, the Company completed an Amended and Restated Credit Facility Agreement (the “Credit Agreement”). Also, in April 2010, the Company completed a first amendment (“Amendment 1”) to the Credit Agreement. Amendment 1 provided for the addition of a $20,000 term loan tranche that effectively increased the Credit Facility from $55,000 to $75,000. All obligations under the term loan tranche are secured by a first priority lien on all of the Company’s personal property, as well as that of certain of its subsidiaries, as the guarantor, along with certain of its real estate. Repayment of the indebtedness under the term loan tranche is subordinate to the repayment of indebtedness owed under the revolving credit line portion of the Credit Facility. The term loan tranche is payable on December 22, 2013. The term loan tranche bears interest at the rate of 11.0 percent (as adjusted by the third amendment to the Credit Agreement) plus the greater of (i) LIBOR and (ii) 3 percent. The term loan tranche of the credit facility is subject to the same customary affirmative and negative covenants, as well as financial covenants, as stated in the Credit Agreement. In addition, the Company has a requirement to maintain minimum excess availability under the Credit Agreement of $7,500 for periods prior to August 1, 2011 and $10,000 for periods after August 1, 2011. Proceeds from the term loan tranche will be utilized to pay down the revolving credit line facility tranche and for general corporate purposes.

On December 14, 2010, the original term loan lender, Ableco, L.L.C. assigned all of its rights and obligations under the Loan agreement in respect to this $20,000 term loan tranche to Silver Oak Capital, L.L.C. an affiliate of Angelo Gordon & Co., L.P. (“AG”) a related party of C&D Technologies, Inc. (See Note 16 for additional information).

The Credit Agreement, as amended, continues to require the Company to maintain a minimum fixed charge coverage ratio of 1.1:1.0 on a consolidated basis which becomes applicable only if the availability under the revolving credit line tranche falls below $7,500 prior to August 1, 2011 adjusting to $10,000 thereafter.

In December 2010, the Company completed a second amendment (“Amendment 2”) to the Credit Agreement. This amendment reduced the availability block from $10,000 to $0. In December 2010, the Company completed a third amendment to the Credit Facility. This amendment adjusted the interest rates on the facility adjusting the rate on the Credit Facility and term loan tranches to the rates described above, removing the EBITDA requirements from Amendment 1, revising the availability block to $7,500 for periods prior to August 1, 2011 and $10,000 for periods after August 1, 2011. In addition, the maturity date of the Credit Facility and related term loan tranche were extended to December 22, 2013.

As of April 30, 2011 and January 31, 2011, the Company was in compliance with its financial covenants. The agreement restricts payments including dividends and Treasury Stock purchases to no more than $250 for Treasury Stock purchases in any one calendar year and $1,750 for dividends for any one calendar year subject to adjustments of up to $400 per year in the case of the conversion of debt to stock per the terms of the indenture governing the 2005 Notes. These restricted payments can only occur with prior notice to the lenders and provided that there is a minimum of $30,000 in excess availability for a period of thirty days prior to the dividend.

The Credit Agreement includes a material adverse change clause which defines an event of default as a material adverse change in the business, assets or prospects. Company lenders could claim a breach under the material adverse change covenant or the cross-default provisions under the Credit Agreement under certain circumstances. An interpretation of events as a material adverse change or any breach of the covenants in the Credit Agreement or the indentures governing the 2005 Notes and 2006 Notes could cause a default under the Credit Agreement and other debt (including the 2005 Notes and 2006 Notes), which would restrict the Company’s ability to borrow under the Credit Agreement, thereby significantly impacting liquidity. The Credit Agreement was amended to waive any default due to the change in control and as a result of any defaults that have or continue to occur under the Indentures governing the 2005 Notes and 2006 Notes.

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

In fiscal year 2011, the Company issued approximately 8,398,237 shares of Common Stock in exchange for $74,186 aggregate principal amount of the 2005 Notes plus accrued interest. As a result, $727 of the principal amount remains outstanding as of April 30, 2011, net of $87 of unamortized discounts.

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 seven years based on the date that holders can exercise their first put option.

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 conversion rate is 4.6326 shares per $1 principal amount of 2005 Notes, which is equivalent to a conversion price of approximately $215.86 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 (1) upon the occurrence of a fundamental change as defined in the indenture and (2) also 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 $178.40. 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.

Convertible Senior Notes 2006

In fiscal year 2011, the Company issued approximately 5,743,001 shares of Common Stock in exchange for $50,760 aggregate principal amount of the 2006 Notes plus accrued interest. As a result, $1,240 of the principal amount remains outstanding as of April 30, 2011.

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 $51,700, net of $2,800 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 8.1113 shares per $1 principal amount of 2006 Notes, which is equivalent to an initial conversion price of approximately $123.35 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 (1) upon the occurrence of a fundamental change as defined in the indenture and (2) also 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 $109.59. 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.

China Line of Credit

In May 2010, the Company obtained a new line of credit loan with a borrowing capacity of up to 82,000 RMB (approximately $12,636 US Dollars at April 30, 2011) from a local Chinese bank (the “Chinese LOC”), of which 59,000 RMB (approximately $9,092 US Dollars at April 30, 2011) was funded as of April 30, 2011. The Chinese LOC replaces the previous China line of credit which matured in May 2010. The outstanding borrowings under the Chinese LOC of 59,000 RMB as of April 30, 2011 have scheduled maturities of various amounts over the term of the loan with the final payment due in May 2015. This loan is secured by our Chinese manufacturing facility located in Shanghai, China.

As of April 30, 2011 approximately $9,092 (in US Dollars at April 30, 2011) and on January 31, 2011 approximately $8,933 (in US Dollars at January 31, 2011) was funded under this facility.

6. STATEMENT OF CHANGES IN EQUITY

					Additional								Other								Total
	Common Stock				Paid-In		Treasury Stock						Comprehensive			Accumulated			Noncontrolling		Stockholders’
	Shares		Amount		Capital		Shares			Amount			Income/(Loss)			Deficit			Interest		Equity
BALANCE AT JANUARY 31, 2011		15,306,915	$	153	$	202,350		(110,373	)	$	(39,200	)	$	(43,489	)	$	(38,480	)	$	12,198	$	93,532
Total comprehensive loss:
Fractional shares issued		21
Net (loss) income																	(625	)		222		(403	)
Foreign currency translation adjustment														558						217		775
Unrealized loss on derivative instruments														(533	)							(533	)
Pension liability adjustment														803								803
Total comprehensive income (loss):														828			(625	)		439		642
Other changes in equity:
Share based compensation expense						231																231
BALANCE AT APRIL 30, 2011		15,306,936	$	153	$	202,581		(110,373	)	$	(39,200	)	$	(42,661	)	$	(39,105	)	$	12,637	$	94,405

13

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

7. INCOME TAXES

	Three months ended April 30,
	2011			2010
Income taxes provision	$	66		$	394
Effective income tax rate		(19.6	%)		(7.7	%)

Effective tax rates were (19.6%) and (7.7%) for the three months ended April 30, 2011 and 2010, respectively. Tax expense for the three months ended April 30, 2011 and 2010 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, tax expense for the three months ended April 30, 2010 included deferred tax expense related to the increase in the deferred tax liability related to certain indefinite lived assets. The Company recorded a Goodwill Impairment charge in the second quarter of fiscal year 2011 which reversed the deferred tax liability. There was no significant impact to the tax expense related to uncertain tax positions or the interest on uncertain tax positions.

Generally, accounting standards require companies to provide for income taxes each quarter based on their estimate of the effective tax rate for the full year. The authoritative guidance for accounting for income taxes allows use of the discrete method when, in certain situations, the actual interim period effective tax rate may be used if it provides a better estimate of income tax expense. Due to the Company’s losses in the US, the full valuation allowance in the US, and the relatively small amount of projected US income, it is the Company’s position that the discrete method provides a more accurate estimate of income tax expense for domestic taxes and therefore domestic income tax expense for the current quarter has been presented using that method. Taxes on international earnings continue to be calculated using an estimate of the effective tax rate for the full year.

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,
	2011			2010
Numerator:
Numerator for basic loss per common share	$	(625	)	$	(5,604	)
Numerator for diluted loss per common share	$	(625	)	$	(5,604	)
Denominator:
Denominator for basic earnings per common share- weighted average common share		15,196,563			1,033,764
Effect of dilutive securities:
Denominator for diluted earnings per common share- adjusted weighted average common shares and assumed conversions		15,196,563			1,033,764
Basic loss per common share	$	(0.04	)	$	(5.42	)
Diluted loss from common share	$	(0.04	)	$	(5.42	)

14

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

The Company has excluded dilutive securities of 13,829 and 769,238 issuable in connection with convertible bonds from the diluted income per share calculation for the three months ended April 30, 2011 and 2010 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 1,200,649 and 87,633 shares for the three months ended April 30, 2011 and 2010 respectively.

9. COMMITMENTS AND CONTINGENCIES

Legal

The Company is involved in ordinary, routine litigation incidental to the conduct of the company’s business. None of this litigation, individually or in the aggregate, is material or is expected to be material to our business, financial condition or results of operations in any year. See Business - Environmental Regulations for a description of certain legal proceedings in which we are involved.

In April and August 2008, pursuant to a Purchase Agreement (the “Murata Purchase Agreement”) dated June 19, 2007 between Murata Manufacturing Co. Ltd. (“Murata Manufacturing”) and C&D, Murata Electronics, North America, Inc. (“Murata Electronics”) as assignee of Murata Manufacturing Co. Ltd. provided to C&D written notices of a claim for indemnification under Article VIII of the Murata Purchase Agreement seeking indemnity and defense relating to patent infringement claims asserted by SynQor Inc. against Murata Electronics, Murata Manufacturing and the former C&D companies now known as Murata Power Solutions, Inc. (“MPS”), and numerous other defendant parties. In these notices Murata Electronics failed to provide any information regarding the claims made against MPS specifically and failed to adequately state a basis for an indemnifiable claim under the Murata Purchase Agreement. In January 2011, Murata Electronics provided a third notice, referencing the prior notices, and now stating that a judgment had been entered against MPS in the amount of approximately $18,000 and that Murata Electronics had incurred legal fees of approximately $2,000, all for which Murata Electronics was seeking indemnification and payment. At this time, the Company is not aware of any information that would indicate its liability for the claimed loss amount, continues to contest the validity of the claim for indemnity and the underlying basis thereof, and is defending such claim accordingly. We do not expect that this claim will have a material adverse effect on our business, financial condition or results of our operations.

Environmental

The Company and certain of its key suppliers are 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 processes.

Notwithstanding the Company’s efforts to maintain compliance with applicable environmental requirements, if we fail to comply with such requirements or if injury or damage to persons or the environment arises from hazardous substances used, generated or disposed of in the conduct of the Company’s business (or that of a predecessor to the extent the Company is not indemnified therefor), the Company may be held liable for certain damages, the costs of investigation and remediation, and fines and penalties, and the Company’s ability to operate or expand its manufacturing facilities could be restricted, which could have a material adverse effect on the Company’s business, financial condition, or results of operations.

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,

15

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

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 other 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 NL’s 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 Company is currently investigating the presence of lead contamination in soils at and adjacent to the facility. Additionally, 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 have conducted 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, Inc. 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 clean-up 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 off-site 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 share with JCI the allocation of costs for assessment and remediation of certain off-site chlorinated volatile organic compounds in groundwater.

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. In 2009, EPA determined that the impact to the two city wells was from sources unrelated to the Company’s property. The EPA also 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 Company has timely complied with all required investigative and remedial actions required by EPA.

The Company has conducted site investigations at its Conyers, Georgia facility, and has detected chlorinated solvents in groundwater and lead in soil both on-site and off-site. The Company has recently initiated further

16

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

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 has completed 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. 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 for liabilities in its consolidated financial statements and periodically reevaluates the amounts for these liabilities in view of the most current information available in accordance with accounting guidance for contingencies. As of April 30, 2011, accrued environmental liabilities totaled $2,511 consisting of $1,887 in other current liabilities and $624 in other liabilities. Based on currently available information, the Company believes that appropriate accruals 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 April 2012. The estimated commitments are approximately $56,000 in the year ended April 30, 2012. The Company has also committed to purchase new machinery at an estimated cost of $614 to be installed within the next year.

10. FINANCIAL INSTRUMENTS

The estimated fair values of the Company’s financial instruments at April 30, 2011and January 31, 2011 were as follows:

	April 30, 2011						January 31, 2011
	Carrying Amount			Fair Value			Carrying Amount		Fair Value
Cash and cash equivalents	$	5,456		$	5,456		$	3,708	$	3,708
Debt		61,514			60,927			55,387		54,808
Commodity hedges		(233	)		(233	)		—		—

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Cash and cash equivalents – the carrying amount approximates fair value because of the short term maturity of these instruments.

The fair value of accounts receivable, accounts payable and accrued liabilities consistently approximate the carrying value due to the short term maturity of these instruments and are excluded from the table above.

Long-term debt – the fair value of the Notes was determined using available market prices at the balance sheet date. The carrying value of the Company’s remaining long-term debt, including the current portion, approximates fair value based on the incremental borrowing rates currently available to the Company for loans with similar terms and maturity.

Commodity hedges – the fair value was determined using available market prices at the balance sheet date of commodity hedge contracts with similar characteristics and maturity dates.

17

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

11. DERIVATIVE INSTRUMENTS

Accounting standards related to derivative instruments require that an entity 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.

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 other current 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 1,414 metric tons of base metals at April 30, 2011 and 0 metric tons at January 31, 2011.

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, 2011		January 31, 2011		Balance Sheet Location
Derivatives designated as hedging instruments:
Commodity Hedges	$	233	$	—	Other current liabilities
Total fair value	$	233	$	—

The Company estimates that $233 of net derivative losses in AOCI as of April 30, 2011 will be reclassified into earnings in the next twelve months.

3 months ended April 30,	Amount of Gain  (Loss) Recognized in OCI						Amount of Gain  (Loss) Reclassified from AOCI into Income				Location of Gain (Loss) Reclassified from AOCI into Income
	2011			2010			2011		2010
Derivatives in Cash Flow Hedging Relationships:
Commodity Hedges	$	(233	)	$	(165	)	$	318	$	430	Cost of Sales

12. 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,
	2011			2010
Balance at beginning of period	$	7,576		$	6,481
Current year provisions		1,538			1,173
Expenditures		(1,354	)		(1,013	)
Effect of foreign currency translation		10			—
Balance at end of period	$	7,770		$	6,641

As of April 30, 2011, accrued warranty obligations of $7,770 include $3,049 in current liabilities and $4,721 in other liabilities. As of January 31, 2011 accrued warranty obligations of $7,576 include $3,168 in current liabilities and $4,408 in other liabilities.

19

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

13. 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,
	2011			2010			2011			2010
Components of net periodic benefit cost:
Service cost	$	343		$	317		$	18		$	18
Interest cost		1,144			1,141			25			30
Expected return on plan assets		(1,171	)		(1,017	)		—			—
Amortization of prior service costs		—			—			(3	)		(198	)
Recognized actuarial loss/(gain)		810			751			(4	)		2
Net periodic benefit cost	$	1,126		$	1,192		$	36		$	(148	)

The Company made $0 of contributions to the plan in the first quarter of fiscal year 2012. The Company expects to make contributions of approximately $5,000 to its plan during fiscal year 2012. The Company also expects to make contributions totaling approximately $177 to the Company sponsored postretirement benefit plan during fiscal year 2012.

14. RESTRUCTURING

On September 14, 2010, the Company announced plans to close its Leola, Pennsylvania manufacturing facility and transfer production to other existing facilities. When complete, the closure plan will result in the elimination of approximately 85 positions. Closure costs incurred through April 30, 2011 include $487 in severance costs, $1,523 in fixed asset impairment charges and $371 in other costs. Additional closure costs of approximately $200 related to move costs and additional severance are expected to be recorded over the next nine to twelve months.

A reconciliation of the liability and related activity during the three months ended April 30, 2011 is shown below.

	Balance at January 31, 2011		Provision Additions		Expenditures		Balance at April 30, 2011
Severance	$	406	$	53	$	98	$	361
Other		232		45		262		15
Total	$	638	$	98	$	360	$	376

15. FAIR VALUE MEASUREMENT

Assets and liabilities subject to fair value measurements primarily consist of 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. The accounting guidance 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.

There were no assets or liabilities held as of January 31, 2011 measured at fair value on a recurring basis. The following table represents our assets and liabilities measured at fair value on a recurring basis as of April 30, 2011 and the basis for those measurements:

	Total		Level 1		Level 2		Level 3
2011
Commodity hedge liability	$	233	$	—	$	233	$	—

16. RELATED PARTY TRANSACTIONS

The Company has a $20,000 term loan with Silver Oak Capital, L.L.C. an affiliate of Angelo Gordon & Co., L.P., a related party of the Company, outstanding as of April 30, 2011 and January 31, 2011. During the first quarter ended April 30, 2011, the Company incurred fees of $47 and interest of $692 related to this term loan.

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, 2011, compared to Three Months Ended April 30, 2010

Within the following discussion, unless otherwise stated, “quarter” and “three-month” period” refer to the first quarter of fiscal year 2012. All comparisons are with the corresponding period in the prior fiscal year, unless otherwise stated.

Net sales in the first quarter of fiscal year 2012 increased $3,608 or 4% to $88,311 from $84,703 in the first quarter of fiscal year 2011. This increase was primarily due to strong demand in Asia and contractual price increases resulting from the significant increases in the price of lead. Average London Metal Exchange (“LME”) lead prices increased from an average of $0.99 per pound in the first quarter of fiscal year 2011 to $1.20 per pound in the first quarter of fiscal year 2012. The increase was partially offset by continued pressures on volumes as a result of the general economic environment, principally in the Company’s North American Original Equipment Manufacturer (“OEM”) Uninterruptible Power Supply (“UPS”) sales channel.

Gross profit in the first quarter of fiscal year 2012 increased $2,826 or 28% to $12,804 from $9,978. Gross margins as a percent of sales increased from 12% in the first quarter of fiscal year 2011 to 15% in the first quarter of fiscal year 2012. Gross margin has improved over the prior year’s comparable quarter primarily due to higher volumes in Asia, favorable product mix shifts, contractual lead price recovery and other specific pricing actions.

Selling, general and administrative expenses in the first quarter of fiscal year 2012 increased $1,213 or 13.2% to $10,435 from $9,222. As a percentage of sales, selling, general and administrative expenses increased to 11.8% in the first quarter of fiscal year 2012 compared to 10.9% in the first quarter of fiscal year 2011. Increased warranty expenses of $367, restructuring costs of $98 associated with the closure of our Leola facility, severance of $582 and other cost increases of approximately $166 accounted for the increase in these expenses in the current fiscal year.

Research and development expenses in the first quarter of fiscal year 2012 decreased $193 or 11% to $1,595 from $1,788. As a percentage of sales, research and development expenses decreased from 2.1% in the first quarter of fiscal year 2011 compared to 1.8% in the first quarter of fiscal year 2012. We receive cost reimbursements under a federal government contract related to lithium battery research and development. We recognized $1,561 of federal government contract cost reimbursements as a reduction in research and development expenses in our consolidated statement of operations for the first quarter of fiscal year 2012, as compared to $180 in the first quarter of fiscal 2011. Government contract cost reimbursements increased in fiscal year 2012 compared to fiscal year 2011 due to large purchases specifically related to the contract and, therefore, fully reimbursable by the government.

The Company had operating income in the first quarter of fiscal year 2012 of $774 compared to an operating loss of $1,032 in the first quarter of fiscal year 2011. The change is mainly due to the increase in gross profit compared to the first quarter of fiscal year 2011 partially offset by the increase in selling, general and administrative expenses in the first quarter of fiscal year 2012.

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 (loss) for the first quarter of fiscal year 2012 vs. fiscal year 2011.

Fiscal Year 2012 vs. 2011
Operating Loss 1Q’11	$	(1,032	)
Lead, net		(2,121	)
Price / Volume / Mix		4,826
Warranty		(367	)
Research and Development		193
Severance and other restructuring		(680	)
Pension		66
Other		(111	)
Operating Income 1Q’12	$	774

Interest expense, net in the first quarter of fiscal year 2012 decreased $2,117 or 63.2% to $1,231 from $3,348 in the first quarter of fiscal year 2011, primarily due to the debt for equity exchange completed in the fourth quarter of fiscal year 2011. This reduced the outstanding balances on the convertible notes by approximately $125,000 which was partially offset by higher average debt balances on the credit facility in the first quarter of fiscal 2012 compared to the first quarter for fiscal 2011.

Other income was $120 in the first quarter of fiscal year 2012 compared to other expense of $736 in the first quarter of fiscal year 2011. The increase was primarily due to recording a $670 charge in fiscal year 2011 to increase our environmental reserves related to a facility which we disposed of during fiscal year 2007, however, have retained responsibility for certain environmental costs and an increase in foreign exchange gains of approximately $290.

Income tax expense of $66 was recorded in the first quarter of fiscal year 2012, compared to $394 in the first quarter of fiscal year 2011. Tax expense in the first quarter of fiscal year 2012, is primarily related to foreign taxes on profits and domestic losses for which no tax benefit was recorded. Tax expense in the first quarter of fiscal year 2011 is primarily due to non-cash deferred tax expenses 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.

Generally, accounting standards require companies to provide for income taxes each quarter based on their estimate of the effective tax rate for the full year. The authoritative guidance for accounting for income taxes allows the use of the discrete method when, in certain situations, the actual interim period effective tax rate may be used if it provides a better estimate of income tax expense. Due to our losses in the US, the full valuation allowance in the US, and the relatively small amount of projected US income, it is our position that the discrete method provides a more accurate estimate of income tax expense for domestic taxes and therefore domestic income tax expense for the current quarter has been presented using that method. Taxes on international earnings continue to be calculated using an estimate of the effective tax rate for the full year.

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 income was $222 in the first quarter of fiscal year 2012 compared to $94 in the first quarter of fiscal year 2011, primarily due to increasing sales volumes in Asia which have favorably impacted the joint venture’s profitability.

As a result of the above, net loss attributable to C&D Technologies, Inc was $625 in the first quarter of fiscal year 2012 compared to $5,604 in the comparable quarter of the prior year. Basic and diluted losses per share were $0.04 in the first quarter of fiscal year 2012 compared to $5.42 in the first quarter of fiscal year 2011.

Other comprehensive income attributable to C&D Technologies, Inc. increased by $5,039 in the first quarter of fiscal year 2012 to $203 from a loss of $4,836 in the first quarter of fiscal year 2011. This decrease was due primarily to the decrease in net loss attributable to C&D from $5,604 in the first quarter of fiscal 2011 to $625 in the first quarter of fiscal year 2012, an increase in foreign currency translation adjustments of $819 and an increase in the adjustment for pension costs of $255 partially offset by an unrealized loss on derivative instruments of $533 in

23

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

the first quarter of fiscal year 2012 compared to an unrealized gain of $265 in first quarter of fiscal year 2011 and income attributable to noncontrolling interests of $439 in the first quarter of fiscal year 2012 compared to $95 in the first quarter of fiscal year 2011.

Liquidity and Capital Resources

Net cash used in operating activities was $2,797 for the three months ended April 30, 2011 compared to $5,936 in the comparable period of the prior fiscal year. This change is primarily a result of improved operating performance in the first quarter of fiscal 2012 compared to the first quarter of fiscal year 2011. Additionally, accounts receivable improved by approximately $2,768 compared to the first quarter of fiscal year 2011 driven primarily by timing of sales and collections partially offset by a decrease in accounts payable and book overdrafts of $264 resulting from constricted payment terms compared to the prior year.

Net cash used in investing activities was $1,431 in the first quarter of fiscal year 2012 as compared to $3,824 in the first quarter of fiscal year 2011. During the first three months of fiscal year 2012, restricted cash, associated with commodity hedging activity, increased by $120 compared to a decrease of restricted cash of $47 in fiscal year 2011. In addition, we had purchases of property, plant and equipment of $1,311 compared with purchases of $3,871 in the prior year.

Net cash provided by financing activities decreased $4,139 to $5,844 for the three months ended April 30, 2011, compared to $9,983 in the comparable period of the prior fiscal year. The Company’s borrowings under our credit facility were $5,960 in the three months ended April 30, 2011 and $11,737 in the three months ended April 30, 2010. Additionally in the three months ended April 30, 2010, the Company paid debt acquisition fees of $1,771.

Our liquidity is primarily determined by our availability under the Credit Facility, our unrestricted cash balances and cash flows from operations. If our cash requirements exceed the cash provided by our operating activities, then we would look to our unrestricted cash balances and the availability under our Credit Facility to satisfy those needs. Important factors and assumptions made by us when considering future liquidity include, but are not limited to, the stabilization of lead prices, future demand from customers, continued sufficient availability of credit from our trade vendors and the ability to re-finance or obtain debt in the future. To the extent unforeseen events occur or operating results are below forecast, we believe we can take certain actions to conserve cash, such as delay major capital investments, other discretionary spending reductions or pursue financing from other sources to preserve liquidity, if necessary. Despite these potential actions, if we are not able to satisfy our cash requirements in the near term from cash provided by operating activities, or through access to our Credit Facility, we may not have the minimum levels of cash necessary to operate the business on an ongoing basis.

Our liquidity derived from the Credit Facility, as amended, is based on availability determined by a borrowing base. In addition, the Credit Facility requires the Company to meet a minimum fixed charge coverage ratio if the excess availability falls below $7,500 through August 31, 2011, adjusted to $10,000 thereafter. The fixed charge coverage ratio for the last twelve consecutive fiscal month period shall be not less than 1.10:1.00. We would not have met the fixed charge coverage ratio. This failure is not an event of default under the Credit Facility, but restricts availability otherwise determined. The Credit Facility also previously included minimum EBITDA requirements beginning with our quarter ending April 30, 2011. Pursuant to an amendment to the Credit Facility in December 2010 these minimum EBITDA requirements were eliminated for the duration of the term of the Credit Facility.

As a result of favorable Credit Facility amendments and improving operating performance, we believe that, for the next twelve months, cash generated from operations together with availability under its Existing Credit Facility will be sufficient to allow us to fund its operations and to increase working capital as necessary to support our strategy.

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. Our current credit facility does not expire until December, 2013. As of April 30, 2011, the maximum availability calculated under the borrowing base was approximately $71,993, of which $50,455 was funded (including $20,000 from the term loan tranche), and $4,667 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.

24

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

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 2012 to be approximately $12,000 related primarily to growth in Asia and routine maintenance activities.

Contractual Obligations and Commercial Commitments

The following tables summarize our contractual obligations and commercial commitments as of April 30, 2011:

	Payments Due by Period
	Total		Less than 1 year		1 - 3 years		4 - 5 years		After 5 years
Contractual Obligations
Debt*	$	61,601	$	2,629	$	56,591	$	2,381	$	—
Interest payable on debt*		12,834		4,620		7,693		521		—
Operating leases		7,110		1,400		2,530		1,954		1,226
Projected – lead purchases**		56,000		56,000		—		—		—
Equipment		614		614		—		—		—
Capital Leases		134		65		53		16		—
Total contractual cash obligations	$	138,293	$	65,328	$	66,867	$	4,872	$	1,226

* These amounts assume that the convertible notes are current liabilities, show the Credit Facility as paid in fiscal year 2014 and include interest on the Credit Facility through fiscal year 2014 calculated at the same rate and outstanding balance at April 30, 2011 and the China debt up through fiscal year 2015.

** Amounts are based on the cash price of lead at April 28, 2011 which was $1.15.

	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	$	4,667	$	898	$	312	$	3,457	$	—
Total commercial commitments	$	4,667	$	898	$	312	$	3,457	$	—

Recent Developments

During May 2011, we were notified by our majority lead supplier in China that it was likely to be shut-down by the Chinese government authorities. We do not expect that this action will negatively impact our operations as we expect to secure lead requirements to meet customer demand through other existing lead suppliers and new sources of supply.

There can be no assurance, however, that we will obtain alternative lead supply on terms commensurate with our existing majority supplier. Based upon current negotiations, we expect this change will negatively impact our current trade credit terms in China, however, we expect to maintain adequate liquidity to meet our ongoing cash needs through cash generated from operations, delay of capital investments and discretionary spending and pursuit of financing from other sources.

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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 (the “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 of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (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 or to obtain additional funding in the future.

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 Supplementary Data, included in the Company’s Form 10-K annual report for the year ended January 31, 2011 and the following general factors:

• our ability to maintain and generate liquidity to meet our operating needs, as well as our ability to fund and implement business strategies, acquisitions and restructuring plans;

• 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 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 proceedings to which we are subject or may in the future become subject to, 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 and which are subject to limitation as a result of changes in ownership of the Company;

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

• failure of our customers to renew agreements with us;

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

• loss of a single source or other key supplier;

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

26

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

• successful collective bargaining with our unionized workforce;

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

• 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;

• uncertainty in financial markets;

• our success or timing of new product development;

• impact of any changes in our management;

• 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 impact on our operations; and

• our ability to protect our proprietary intellectual property and technology and ensure that we are not infringing the intellectual property of others.

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, 2011.

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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 are set forth in Part I, Item 1A – “Risk Factors” of the Company’s Fiscal Year 2011 Annual Report on Form 10-K, filed with the SEC on May 2, 2011, which should be read in conjunction with this report on Form 10-Q.

Item 4. 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. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s controls and procedures are effective in 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.

Internal Control over Financial Reporting:

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.

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PART II. OTHER INFORMATION

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

Issuer Purchases of Equity Securities:

NONE

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.

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Item 6. Exhibits.

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Date	Exhibit Number	Filed Herewith
10.1	Employment Agreement dated April 29, 2011, between David J. Anderson and C&D Technologies, Inc.				X
12.1	Computation of Ratio of Earnings to Fixed Charges				X
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 Senior 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 Senior 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

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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 8, 2011	By:	/s/ Jeffrey A. Graves
		Jeffrey A. Graves
		President, Chief Executive
		Officer and Director
		(Principal Executive Officer)
June 8, 2011	By:	/s/ Ian J. Harvie
		Ian J. Harvie
		Senior Vice President Finance
		and Chief Financial Officer
		(Principal Financial Officer)

31

EXHIBIT INDEX

10.1	Employment Agreement dated April 29, 2011, between David J. Anderson and C&D Technologies, Inc.
12.1	Computation of Ratio of Earnings to Fixed Charges
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 Senior 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 Senior 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

32

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is dated as of the 29th day of April 2011 (the “Effective Date”) by and between David J. Anderson (the “Employee”) and C&D Technologies, Inc., a Delaware corporation with a place of business located at 1400 Union Meeting Road, Blue Bell, Pennsylvania 19422-0858 (the “Company” or “C&D”).

WHEREAS, the Company desires to employ the Employee and the Employee desires to be so employed, on the terms and conditions herein set forth.

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Employment. Subject to the provisions of this Agreement, the Company hereby employs Employee and Employee accepts such employment upon the terms and conditions hereinafter set forth.

2. Term of Employment. Subject to the provisions of Section 6, the term of Employee’s employment pursuant to this Agreement shall commence on and as of the date first set forth above (the “Effective Date”) and shall continue until such employment is terminated by the Company or by the Employee in accordance with Section 6 below. Any such termination shall also automatically constitute the resignation by the Employee, and the termination of the Employee’s status and capacity, as an officer, employee and/or agent of the Company, and as an officer, employee, and/or agent of any of the Company’s subsidiaries or affiliates.

3. Duties: Extent of Service. During Employee’s employment under this Agreement, Employee shall serve as an employee of the Company with the title and position of Vice President, General Counsel and Corporate Secretary, having responsibilities as designated by the Chief Executive Officer (“CEO”) of the Company, and shall assume such new or additional titles, positions and responsibilities as the CEO of the Company shall from time to time designate at the CEO’s sole discretion, provided that in all cases Employee shall be subject to the oversight and supervision of the CEO or his designee in the performance of Employee’s duties, and shall render all services reasonably incident to the foregoing. Employee hereby accepts such employment, agrees to serve the Company in the capacities indicated, and agrees to use Employee’s best efforts in, and shall devote Employee’s full working time, attention, skill and energies to, the advancement of the interests of the Company and its subsidiaries and the performance of Employee’s duties and responsibilities hereunder. The foregoing, however, shall not be construed as preventing Employee from engaging in religious, charitable or other community or non-profit activities that do not impair or interfere with Employee’s ability to fulfill Employee’s duties and responsibilities under this Agreement.

4. Salary and Bonus.

(a) During Employee’s employment under this Agreement, the Company shall pay Employee a salary at the annual rate of Two Hundred and Seventy Five Thousand Dollars ($275,000) per annum (the “Base Salary”). Such Base Salary shall be subject to withholding under applicable law, shall be pro rated for partial years of employment, shall be subject to adjustment at Company’s discretion and shall be payable in accordance with the Company’s usual payroll practice for employees of the Company as in effect from time to time.

(b) For each calendar year or portion thereof during Employee’s employment under this Agreement, Employee shall be eligible to participate in an incentive bonus or other performance plan as designated by the CEO from time to time.

5. Benefits.

(a) During Employee’s employment under this Agreement, Employee shall be entitled to participate in any medical and dental plans, 401(k), and other employment benefits as in effect from time to time for employees of the Company generally. Such participation shall be subject to (i) the terms of the applicable plan documents (including, as applicable, provisions granting discretion to the Board of Directors of the Company or any administrative or other committee provided for therein or contemplated thereby) and (ii) generally applicable policies of the Company.

(b) During Employee’s employment under this Agreement, Employee shall receive paid vacation annually in accordance with the Company’s practices and policies for employees, as in effect from time to time, but in any event not less than three (3) weeks per calendar year.

(c) The Company shall reimburse Employee for all reasonable business expenses incurred by Employee, including reasonable travel expenses incurred for promoting the business of the Company and its subsidiaries, during Employee’s employment hereunder in accordance with the Company’s policies and procedures for employees of the Company, as in effect from time to time.

(d) Compliance with the provisions of this Section 5 shall in no way create or be deemed to create any obligation, express or implied, on the part of the Company or any of its affiliates with respect to the continuation of any particular benefit or other plan or arrangement maintained by them or their subsidiaries as of or prior to the date hereof or the creation and maintenance of any particular benefit or other plan or arrangement at any time after the date hereof, except as contemplated by Section 5(b) and 5(c).

2

6. Termination and Termination Benefits. Notwithstanding the provisions of Sections 1 and 2 above, Employee’s employment under this Agreement shall terminate under the following circumstances set forth in this Section 6:

(a) Termination by the Company for Cause. Employee’s employment under this Agreement may be terminated for Cause (as defined below), effective immediately, without advance notice and without further liability on the part of the Company. The following shall constitute “Cause” for such termination:

(i) dishonest statements or acts of Employee with respect to the Company or any affiliate of the Company;

(ii) the commission by Employee of, or indictment of Employee for, (A) a felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud (“indictment,” for these purposes, meaning an indictment, probable cause hearing or any other procedure pursuant to which an initial determination of probable or reasonable cause with respect to such offense is made);

(iii) the commission, in the reasonable judgment of the CEO, of an act involving a violation of procedures or policies of the Company;

(iv) failure to perform to the reasonable satisfaction of the CEO a substantial portion of Employee’s duties and responsibilities assigned or delegated under this Agreement, which failure continues, in the reasonable judgment of the CEO, after written notice given to employee by the CEO;

(v) gross negligence, willful misconduct or insubordination of Employee with respect to the Company or any officer of the Company;

(vi) fraud, misappropriation, or embezzlement with respect to the Company or assets of the Company;

(vii) breach by Employee of the Company’s Code of Business Conduct; or

(viii) breach by Employee of the terms or any of Employee’s obligations under this Agreement.

(b) Termination by Employee. Employee’s employment under this Agreement may be terminated by Employee by written notice to the CEO at least thirty (30) days prior to such termination.

(c) Termination by the Company Without Cause. Employee’s employment under this Agreement may be terminated by the Company without cause upon written notice to Employee. Such termination without cause may be either effective

3

immediately or effective upon the stated date of termination set forth in the written notice. It is expressly agreed and understood that if this Agreement is terminated by the Company without cause as provided in this Section 6 (c), it shall not impair or otherwise affect Employee’s restrictive covenants or other obligations as provided herein. Upon termination without cause, the Company shall provide certain Termination Benefits to Employee pursuant to Section 6(d) below.

(d) Certain Termination Benefits. Unless otherwise specifically provided in this Agreement or otherwise required by law, all compensation and benefits payable to Employee under this Agreement shall terminate on the date of termination of Employee’s employment under this Agreement. Notwithstanding the foregoing, in the event of termination without cause of Employee’s employment with the Company pursuant to Section 6(c) above, the Company shall provide to Employee the following termination benefits (“Termination Benefits”):

(i) continuation of Employee’s Base Salary at the rate then in effect pursuant to Section 4(a) for a period of twelve (12) months from the effective date of termination (the “Termination Benefits Period”) in accordance with the Company’s normal payroll practices and subject to the requirement below that Employee execute a general release of all claims; and

(ii) continuation of group health plan benefits for a period of twelve (12) months from the effective date of Employee’s Separation from Service (the “Twelve Month Period”) to the extent authorized by and consistent with 29 U.S.C. § 1161 et seq. (commonly known as “COBRA”), with the cost of the regular premium for such benefits shared in the same relative proportion by the Company and Employee as in effect on the date of termination; provided that the continuation of group health plan benefits for the Twelve Month Period is contingent upon the Employee’s affirmative election of benefits under COBRA.

(iii) the Company shall pay Employee an amount equal to Employee’s Targeted Bonus Amount (as defined below). This bonus shall be paid when bonuses are paid to other senior executives of the Company for the year in which Employee’s termination of employment occurs but, notwithstanding the foregoing, it shall be paid no later than the 15^th day of the third month following the earlier of (A) the calendar year in which Employee’s termination of employment occurs or (B) the taxable year of the Company in which Employee’s termination of employment occurs. As used in this Section 6(d)(iii), Employee’s “Targeted Bonus Amount” shall mean (x) the higher of 50% and the percentage of Employee’s targeted bonus in effect before the date of Employee’s termination for purposes of determining Employee’s Annual Bonus for the year in which Employee’s termination occurs, times (y) the amount of Employee’s Base Salary as in effect for the year in which Employee’s termination occurs.

4

(e) Change of Control Termination. In the event that Employee’s employment under this Agreement is terminated by the Company without cause within six (6) months before or within twenty four (24) months after a Change of Control (as defined below), in addition to the Termination Benefits provided in Section 6(d) hereof, the Company, at its expense, shall provide Employee with outplacement services at a level appropriate for the most senior level of executive employees through an outplacement firm of the Employee’s choice for a period of up to one year after the date of the Change of Control Termination. For the purposes of this Section 6 (e) Change of Control shall mean the first to occur of:

(i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section 6(e), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any majority-owned subsidiary of the Company, or (iv) any acquisition by any corporation pursuant to a transaction that complies with Subsections (A), (B) and (C) of Section 6(e)(iii) below.

(ii) individuals who, as of the date hereof, constitute the Board of Directors (the “Incumbent Board”) cease, for any reason, to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the date of the Agreement whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors.

(iii) consummation of a reorganization, merger, statutory share exchange, recapitalization or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of

5

its subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board of Directors providing for such Business Combination; or

(iv) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

The Termination Benefits set forth in 6(d) and (e) above shall continue for so long as Employee is in compliance with Employee’s continuing obligations under this Agreement, including the restrictive covenants and confidentiality provisions set forth herein; provided that in the event Employee breaches any provision of this Agreement, including the restrictive covenants and confidentiality provisions set forth herein, the Company may immediately terminate all Termination Benefits set forth in Section 6(d) and (e) upon written notice to Employee, and in the event Employee commences any employment or self-employment during the Termination Benefits Period and Employee is entitled to receive group health plan benefits, the Company may immediately terminate the group health plan benefits set forth in Section 6(d)(ii) upon written notice to Employee. Notwithstanding the foregoing, nothing in this Section 6(d) shall be construed to affect Employee’s right to receive COBRA continuation entirely at Employee’s own cost to the extent that Employee may continue to be entitled to COBRA continuation after Employee’s right to cost sharing under Section 6(d)(ii) ceases. Employee shall be

6

obligated to give prompt notice of the date of commencement of any employment or self-employment during the Termination Benefits Period and shall respond promptly to any reasonable inquiries concerning any employment or self-employment in which Employee engages and any group health plan benefits to which Employee may be eligible during the Termination Benefits Period.

The Company and Employee agree that the Termination Benefits paid by the Company to Employee under this Section 6(d) shall be in full satisfaction, compromise and release of any claims arising out of any termination of Employee’s employment pursuant to Section 6(c), and that the payment of the Termination Benefits shall be contingent upon Employee executing, and failing to revoke during any applicable revocation period, a general release of any and all claims (other than those arising under this Agreement) upon termination of employment in a form reasonably satisfactory to the Company within the time period specified in the release agreement but in no event later than forty-five (45) days after Employee’s termination of employment, it being understood that no Termination Benefits shall be provided unless and until Employee executes and delivers such release. Payment of the salary continuation provided in Section 6(d)(i) shall commence on the first regular payroll pay-date after the later of the expiration of any revocation period provided by the release required by the previous sentence or the date of Employee’s “Separation from Service,” within the meaning of Code Section 409A, on or after the date of Employee’s termination of employment (the “Commencement Date”).

(e) Disability. Employee’s employment under this Agreement may be terminated by the Company upon Employee’s Disability. For purposes of this Agreement, “Disability” shall mean Employee’s inability, due to reasons of physical or mental health, to discharge properly a substantial portion of Employee’s duties hereunder for any 180 days (whether or not consecutive) during any period of 365 consecutive days, as determined in the opinion of a physician reasonably satisfactory to the Company. The services of the physician shall be paid for by the Company. Employee shall fully cooperate with the examining physician, including submitting to such examinations as may be requested by the physician for the purpose of determining whether Employee is disabled. If such question shall arise and Employee shall fail to submit to such examination, the Company’s determination of such issue shall be binding on Employee. Nothing in this Section 6(e) shall be construed to waive Employee’s rights, if any, under existing law including, without limitation, the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq. and the Americans with Disabilities Act, 42 U.S.C. §12101 et seq.

(f) Death. Employee’s employment and all obligations of the Company hereunder shall terminate in the event of the death of Employee other than any obligation to pay earned but unpaid base salary.

(g) Notwithstanding termination of this Agreement as provided in this Section 6 or any other termination of Employee’s employment with the Company, Employee’s obligations under Section 7 and Section 8 hereof shall survive any termination of Employee’s employment with the Company at any time and for any reason.

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(h) Notwithstanding any provision to the contrary in this Agreement, if, on the date of Employee’s Separation from Service, Employee is deemed to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i) and if any amounts otherwise payable pursuant to this Agreement within the first six (6) months following the date of Employee’s Separation from Service would exceed the “Excluded Amount” (as defined below), then payment of such portion in excess of the Excluded Amount shall be suspended and shall be paid in a lump sum to the Employee on the first business day following the expiration of six (6) months from the date of the Employee’s Separation from Service. For purposes of this Section 6(h), “Excluded Amount” means two (2) times the lesser of (i) Employee’s annualized compensation based on Employee’s annual rate of pay for the year preceding the year in which Employee’s Separation from Service occurs (and adjusted for any increase in such year expected to continue indefinitely had the Employee’s employment not been terminated), or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Code Section 401(a)(17) for the year in which Employee’s Separation from Service occurs.

7. Confidentiality; Proprietary Rights.

(a) In the course of performing services hereunder, on behalf of the Company (for purposes of this Section 7 including all predecessors and successors of the Company) and its affiliates, Employee has had and from time to time will have access to Confidential Information (as defined below). Employee agrees (a) to hold the Confidential Information in strict confidence, (b) not to disclose the Confidential Information to any person (other than in the regular business of the Company or its affiliates), and (c) not to use, directly or indirectly, any of the Confidential Information for any purpose other than on behalf of the Company and its affiliates. All documents, records, data, apparatus, equipment and other physical property, whether or not pertaining to Confidential Information, that are furnished to Employee by the Company or are produced by Employee in connection with Employee’s employment will be and remain the sole property of the Company. Upon the termination of Employee’s employment with the Company for any reason and as and when otherwise requested by the Company, all Confidential Information (including, without limitation, all inventions, data, memoranda, customer and supplier lists, price lists, reports, processes, designs, drawings, specifications, notes, software programs and other papers and items, and reproductions and electronic versions thereof relating to the foregoing matters) in Employee’s possession or control, shall be immediately returned to the Company.

(b) Employee hereby confirms that Employee is not bound by the terms of any agreement with any previous employer or other party that restricts in any way Employee’s use or disclosure of information or Employee’s engagement in any business of the Company. Employee represents to the Company that Employee’s execution of this Agreement, Employee’s employment with the Company and the performance of Employee’s proposed duties for the Company will not violate any obligations Employee may have to any such previous employer or other party. In Employee’s work for the Company, Employee will not disclose or make use of any

8

information in violation of any agreements with or rights of any such previous employer or other party, and Employee will not bring to the premises of the Company any copies or other tangible embodiments of non-public information belonging to or obtained from any such previous employment or other party.

(c) During and after Employee’s employment, Employee shall cooperate fully with the Company in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company that relate to events or occurrences that transpired while Employee was employed by the Company. Employee’s full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times. During and after Employee’s employment, Employee also shall cooperate fully with the Company in connection with any investigation or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while Employee was employed by the Company. The Company shall reimburse Employee for any reasonable out-of-pocket expenses incurred in connection with Employee’s performance of obligations pursuant to this Section 7(c).

(d) Employee recognizes that the Company and its affiliates possess a proprietary interest in all of the information described in Section 7(a) and have the exclusive right and privilege to use, protect by copyright, patent or trademark, or otherwise exploit the processes, ideas and concepts described therein to the exclusion of Employee, except as otherwise agreed between the Company and Employee in writing. Employee expressly agrees that any products, inventions, discoveries or improvements made by Employee or Employee’s agents or affiliates in the course of Employee’s employment, including any of the foregoing which is based on or arises out of the information described in Section 7(a), shall be the property of and inure to the exclusive benefit of the Company. Employee further agrees that any and all products, inventions, discoveries or improvements developed by Employee (whether or not able to be protected by copyright, patent or trademark) during the course of his employment, or involving the use of the time, materials or other resources of the Company or any of its affiliates, shall be promptly disclosed to the Company and shall become the exclusive property of the Company, and Employee shall execute and deliver any and all documents necessary or appropriate to implement the foregoing.

(e) Employee agrees, while he is employed by the Company, to offer or otherwise make known or available to it, as directed by the CEO of the Company and without additional compensation or consideration, any business prospects, contracts or other business opportunities that Employee may discover, find, develop or otherwise have available to Employee in the Company’s general industry and further agrees that any such prospects, contacts or other business opportunities shall be the property of the Company.

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(f) Employee agrees that it would be difficult to measure any damages caused to the Company that might result from any breach by Employee of the promises set forth in this Section 7 and Section 8 below, and that, in any event, money damages would be an inadequate remedy for any such breach. Accordingly, Employee agrees that if Employee breaches, or proposes to breach, any portion of this Agreement, the Company shall be entitled, in addition to all other remedies that it may have, to an injunction or other appropriate equitable relief to restrain any such breach without showing or proving any actual damage to the Company.

(g) Employee acknowledges that the provisions of this Section 7 and Section 8 below are an integral part of Employee’s employment arrangements with the Company.

(h) For purposes of this Agreement, the term “Confidential Information” shall mean: information belonging to the Company which is of value to the Company or with respect to which Company has right in the course of conducting its business and the disclosure of which could result in a competitive or other disadvantage to the Company. Confidential Information includes information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including, by way of example and without limitation, trade secrets, ideas, concepts, designs, configurations, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts processes, techniques, formulas, software, improvements, inventions, data, know-how, discoveries, copyrightable materials, marketing plans and strategies, sales and financial reports, strategies and forecasts, customer lists, studies, reports, records, books, contracts, instruments, surveys, computer disks, diskettes, tapes, computer programs and business plans, prospects and opportunities (such as possible acquisitions or dispositions of businesses or facilities) which have been discussed or considered by the management of the Company. Confidential Information includes information developed by Employee in the course of Employee’s employment by the Company, as well as other information to which Employee may have access in connection with Employee’s employment. Confidential Information also includes the confidential information of others with which the Company has a business relationship. Notwithstanding the foregoing, Confidential Information does not include information in the public domain, unless due to breach of Employee’s duties under Section 7(a).

(i) Employee shall keep the terms, conditions, amount, and fact of the existence of this Agreement strictly confidential, provided, however, that Employee may disclose its terms to Employee’s immediate family, accountant, attorney, investment advisor, tax advisor, and taxing authorities as may be necessary for Employee’s financial or legal affairs provided that they agree to keep this information confidential, or as may be required by law.

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8. Restrictive Covenants.

(a) During Employee’s employment hereunder, and for the applicable Restricted Period (as defined below) thereafter, Employee shall not, without the written consent of the CEO of the Company:

(i) Either directly or indirectly, solicit or divert to any Competing Business (as defined below) any individual or entity that is a customer or prospective customer of the Company or its subsidiaries or affiliates, or was such a customer or prospective customer at any time during the preceding 18 months from the date of Employee’s employment termination with the Company;

(ii) Either directly or indirectly own, manage, operate, finance, join, control or participate in the ownership, management, operation, financing or control of, or be connected as an officer, director, employee, partner, principal, agent, representative, consultant or otherwise with, or have any financial interest in, or aid or assist anyone else in the conduct of, or use or permit Employee’s name to be used in connection with any Competing Business (as defined below) or by any entity which would require by necessity use of Confidential Information (as defined above); provided, however, that nothing herein shall prevent you from investing in up to 5% of the securities outstanding of any company listed on a national securities exchange, provided that your involvement with any such company is solely that of a stockholder; and

(iii) Induce, offer, assist, encourage or suggest (A) that another business or enterprise offer employment to or enter into a business affiliation with any Company employee, agent or representative, or any individual who acted as an employee, agent or representative of the Company in the previous six months; (B) that any Company employee, agent or representative (or individual who acted as an employee, agent or representative of the Company in the previous six months) terminate his or her employment or business affiliation with the Company; or (C) hire or, directly or indirectly, participate in the hiring of any Company employee or any person who was an employee of the Company in the previous six months, by any business, enterprise or employer.

For purposes of this Agreement, the term “Competing Business” shall mean any business or enterprise in the United States that is engaged in or has taken affirmative steps to engage in a business which is competitive with the business in which the Company is engaged in or which the Company has taken affirmative steps to engage in the marketplace.

(b) The term “Restricted Period” shall mean the twelve (12) month period following the date Employee’s employment terminates, provided that, if Employee’s Separation from Service occurs after Employee’s employment terminates, the Restricted Period shall be extended beyond the original twelve (12) month period for a period equal to the period commencing on the date of Employee’s termination and ending on the date of Employee’s Separation from Service.

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(c) The parties hereto intend that the covenant contained in this Section 8 shall be deemed a series of separate covenants for each appropriate jurisdiction. If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants deemed included in this Section 8 on grounds that, taken together, they cover too extensive a geographic area, the parties intend that those covenants (taken in order of the least populous jurisdictions) which, if eliminated, would permit the remaining separate covenants to be enforced in that proceeding, shall, for the purpose of such proceeding, be deemed eliminated from the provisions of this Section 8.

(d) Employee acknowledges that the provisions of this Section 8 are reasonable in light of the Company’s worldwide business operations and the position in which Employee will serve at the Company and that the provisions will not prevent Employee from obtaining employment after the termination of this Agreement.

9. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if faxed (with transmission acknowledgment received), delivered personally or mailed by certified or registered mail (return receipt requested) as follows:

To the Company:

Attention: General Counsel

C&D Technologies, Inc.

1400 Union Meeting Road

Blue Bell, Pennsylvania 19422-0858

To Employee:

or to such other address or fax number of which any party may notify the other parties as provided above. Notices shall be effective as of the date of such delivery, mailing or fax.

10. Miscellaneous. This Agreement shall be governed by and construed under the laws of the Commonwealth of Pennsylvania, without consideration of its choice of law provisions, and shall not be amended, modified or discharged in whole or in part except by an agreement in writing signed by both of the parties hereto. The failure of either of the parties to require the performance of a term or obligation or to exercise any right under this Agreement or the waiver of any breach hereunder shall not prevent subsequent enforcement of such term or obligation or exercise of such right or the enforcement at any time of any other right hereunder or be deemed a waiver of any

12

subsequent breach of the provision so breached, or of any other breach hereunder. This Agreement shall inure to the benefit of, and be binding upon and assignable to, successors of the Company by way of merger, consolidation or sale and may not be assigned by Employee. This Agreement supersedes and terminates all prior understandings and agreements between the parties (or their predecessors) relating to the subject matter hereof. For purposes of this Agreement, the term “person” means an individual, corporation, partnership, association, trust or any unincorporated organization; a “subsidiary” of a person means any corporation more than 50 percent of whose outstanding voting securities, or any partnership, joint venture or other entity more than 50 percent of whose total equity interest, is directly or indirectly owned by such person; and an “affiliate” of a person shall mean, with respect to a person or entity, any person or entity which directly or indirectly controls, is controlled by, or is under common control with such person or entity.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.

COMPANY:
By:	/s/ Jeffrey A. Graves
Name:	Jeffrey A. Graves
Title:	President & Chief Executive Officer
EMPLOYEE:
By:	/s/ David J. Anderson
	David J. Anderson

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EX-12.1

Exhibit 12.1

C&D TECHNOLOGIES, INC.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(In thousands except ratio data)

	Year Ended January 31,															Three Months Ended April  30,
	2011			2010			2009			2008			2007			2011
Earnings
Loss before income taxes, noncontrolling interest and discontinued operations	$	(68,764	)	$	(23,557	)	$	(15,457	)	$	(770	)	$	(16,522	)	$	(337	)
Interest expense and amortization of debt costs		14,795			12,486			12,032			10,960			14,266			1,233
Interest portion of rent*		625			820			782			678			699			176
	$	(53,344	)	$	(10,251	)	$	(2,644	)	$	10,868		$	(1,557	)	$	1,072
Fixed Charges
Interest expense and amortization of debt costs		14,795			12,486			12,032			10,960			14,266			1,233
Interest portion of rent		625			820			782			678			699			176
	$	15,420		$	13,306		$	12,814		$	11,638		$	14,965		$	1,409
Ratio of earnings to fixed charges		x(1	)		x(1	)		x(1	)		x(1	)		x(1	)		x(1	)

* The Company has determined the interest component of rent expense to be 0.30.

(1) The ratio of earnings to fixed charges was less than 1:1 for the three months ended April 30, 2011. In order to achieve a ratio of earnings to fixed charges of 1:1, we would have had to generate an additional $337 thousand of earnings in the quarter. The ratio of earnings to fixed charges was less than 1:1 for fiscal year 2011. In order to achieve a ratio of earnings to fixed charges of 1:1, we would have had to generate an additional $68.8 million of earnings in fiscal 2011. The ratio of earnings to fixed charges was less than 1:1 for fiscal year 2010. In order to achieve a ratio of earnings to fixed charges of 1:1, we would have had to generate an additional $23.6 million of earnings in fiscal 2010. The ratio of earnings to fixed charges was less than l:1 for fiscal year 2009. In order to achieve a ratio of earnings to fixed charges of 1:1 we would have had to generate an additional $15.5 million of earnings in fiscal 2009. The ratio to fixed charges was less than 1:1 for fiscal year 2008. In order to achieve a ratio of earnings to fixed charges of 1:1 we would have had to generate an additional $0.8 million of earnings in fiscal year 2008. The ratio to fixed charges was less than 1:1 in fiscal year 2007. In order to achieve a ratio of earnings to fixed charges of 1:1 we would have had to generate an additional $16.5 million of earnings in fiscal 2007.

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 8, 2011	/s/ Jeffrey A. Graves
	Jeffrey A. Graves
	President & 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 8, 2011	/s/ Ian J. Harvie
	Ian J. Harvie
	Senior Vice President & 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, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey A. Graves, President & Chief Executive Officer of the Company, and I, Ian J. Harvie, Senior Vice President & 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 & Chief Executive Officer

/s/ Ian J. Harvie

Ian J. Harvie

Senior Vice President & Chief Financial Officer

Dated: June 8, 2011

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.