PROCEEDINGS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

Reorganization under Chapter 11 of the U.S. Bankruptcy Code

The Consolidated Financial Statements include the accounts of Exide Technologies (referred to together with its subsidiaries, unless the context requires otherwise, as "Exide" or the "Company") and all of its majority-owned subsidiaries. Unless otherwise indicated or unless the context otherwise requires, references to "fiscal year" refer to the period ended March 31 of that year (e.g. "fiscal 2015" refers to the period beginning April 1, 2014 and ending March 31, 2015).

On June 10, 2013 (“Petition Date”), Exide Technologies ("Debtor") filed a voluntary petition for relief (“Chapter 11 Case”) under Chapter 11 of the United States Bankruptcy Code (“Bankruptcy Code” or “Chapter 11”), in the United States Bankruptcy Court for the District of Delaware (“Bankruptcy Court”) under the caption In re Exide Technologies, case number 13-11482. The Company's subsidiaries, foreign and domestic, have been excluded from the Chapter 11 Case, continue to operate their businesses without supervision from the Bankruptcy Court, and are not subject to the requirements of the Bankruptcy Code.

The Company filed for reorganization under Chapter 11 as it offered the most efficient alternative to restructure the Company's balance sheet and access new working capital while continuing to operate in the ordinary course. Factors leading to the reorganization included the Company's significant debt burden, the adverse impact of economic conditions on the Company's markets, particularly the U.S. and European markets, ongoing competitive pressures, loss of key customers over several years, the unplanned production shut down of one of the Company's facilities, and higher commodity costs including lead and purchased spent batteries. These factors contributed to higher costs and lower revenues and have resulted in significant operating losses and material adverse reductions in cash flows, severely affecting the Company's financial condition and its ability to make debt payments coming due. Downgrades of the Company's credit rating and loss of credit insurance used by certain suppliers adversely affected supplier trade credit terms, further impacting the Company's liquidity.

Exide is currently operating as a Debtor-in-Possession ("DIP") under the jurisdiction of the Bankruptcy Court and the applicable provisions of the Bankruptcy Code. In general, as a DIP, Exide is authorized to continue to operate as an ongoing business, but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court. The Bankruptcy Code enables the Company to continue to operate its business without interruption and the Bankruptcy Court has granted a number of first day motions allowing Exide to pay pre-petition obligations to, among other parties, (i) employees, (ii) taxing authorities, (iii) insurance providers, (iv) independent contractors, (v) foreign vendors, and (vi) certain vendors deemed critical to the Company's operations.

While operating as a DIP under Chapter 11, the Debtor may sell, otherwise dispose of, or liquidate assets, or settle liabilities, subject to the approval of the Bankruptcy Court or otherwise as permitted in the ordinary course of business, in amounts other than those reflected in the Consolidated Financial Statements. Moreover, a plan of reorganization could materially change the amounts and classifications of assets and liabilities in the Consolidated Financial Statements.

Exide received Bankruptcy Court approval for, among other things, access to a DIP financing facility ("DIP Credit Facility") on the terms set forth in the Amended and Restated Superpriority Debtor-in-Possession Credit Agreement (as amended, ("DIP Credit Agreement"), the ability to pay pre-petition and post-petition employee wages, salaries and benefits, and to honor customer warranty, sales returns and rebate obligations. Subsequent to the Petition Date, the Company received approval from the Bankruptcy Court to pay or otherwise honor certain pre-petition obligations generally designed to stabilize the Company's operations including employee obligations, taxes, and from limited available funds, pre-petition claims of certain critical vendors, certain customer programs, limited foreign supplier obligations, adequate protection payments, and certain other pre-petition claims. Additionally, the Company has been paying and intends to continue to pay undisputed post-petition obligations in the ordinary course of business.

The DIP Credit Facility is used to supplement cash flows from operations during the reorganization process including the payment of post-petition ordinary course trade and other payables, the payment of certain permitted pre-petition claims, working capital needs, letter of credit requirements, and other general corporate purposes. The DIP Credit Facility contains certain financial covenants. Failure to maintain compliance with these covenants would result in an event of default which would restrict the availability of funds necessary to maintain the Company's operations and assist in funding the Company's reorganization plans.

The Chapter 11 petition triggered defaults on substantially all debt obligations of the Company and, as a result, the Company's senior secured notes and convertible notes have been accelerated and are due and payable. However, under Section 362 of the Bankruptcy Code, the commencement of a Chapter 11 Case automatically stays most creditor actions, including the actions of the holders of the Company's senior secured notes and convertible notes, against the Company's estate. Absent an order of the Bankruptcy Court, substantially all pre-petition liabilities are subject to settlement under a plan of reorganization approved by the Bankruptcy Court. There can be no assurance that a plan will be proposed by the Company or confirmed by the Bankruptcy Court or that any such plan will be successfully implemented.

On November 4, 2014, the Company entered into a plan support agreement (as amended, supplemented, or otherwise modified from time to time, the "PSA") with certain members (the "Consenting Unofficial Committee of Senior Secured Noteholders' Members" or "Consenting UNC Members") of the UNC, pursuant to which the Consenting UNC Members have agreed to support the terms of a plan of reorganization ("POR Term Sheet"), pursuant to which the Company would emerge from Chapter 11. The PSA and POR Term Sheet contemplate a dual-track plan and sale process, which affirmatively requires the Company to run a sale process concurrently with the plan process. The PSA requires Consenting UNC Members, subject to the terms and conditions thereof, to vote in favor of and affirmatively support a plan of reorganization on the terms set forth in the POR Term Sheet in their capacity as both senior secured noteholders and term loan lenders under the DIP Credit Agreement.

On November 17, 2014, the Company filed its proposed plan of reorganization as amended prior to the hearing on the disclosure statement (the "POR") and a disclosure statement with the Bankruptcy Court. The POR and disclosure statement were consistent with the terms of the PSA and related POR Term Sheet. On December 17, 2014, the Company filed a motion to approve the disclosure statement and solicitation procedures for voting on the POR.

On January 7, 2015, the parties executed a backstop commitment agreement (the “Backstop Commitment Agreement”). The POR also includes a rights offering of second lien convertible notes to certain holders of senior secured notes (together with oversubscription rights) of $175.0 million which is backstopped by Consenting UNC Members for $160.0 million pursuant to the Backstop Commitment Agreement. Contemporaneously with the execution of the Backstop Commitment Agreement, the Company and certain of the Consenting UNC Members entered into an amendment of the PSA to reflect the commitments of the Backstop Commitment Agreement. Concurrently, the Company filed motions seeking approval of both the PSA and the Backstop Commitment Agreement, as well as for procedures to conduct the rights offering in accordance with the POR and the Backstop Commitment Agreement.

On January 28, 2015, the Company entered into an agreement (the “GUC Trust Settlement Agreement”) with the Official Committee of Unsecured Creditors (the “Creditors’ Committee”) and certain members of the UNC that, among other things, provided for the transfer of certain assets to a trust for the benefit of the Company’s general unsecured creditors upon the effective date of the POR and that resolved certain other disputes among the parties. In addition, the Creditors’ Committee and its members agreed to support and vote to accept the POR. Concurrently, the Company filed a motion seeking Bankruptcy Court approval of the GUC Trust Settlement Agreement.

On February 4, 2015, the Bankruptcy Court entered orders approving the disclosure statement, solicitation procedures, the GUC Trust Settlement Agreement, the PSA, the Backstop Commitment Agreement, and the rights offering procedures. The Bankruptcy Court has scheduled a hearing to consider confirmation of the POR for March 27, 2015. The transactions contemplated by the POR, the GUC Trust Settlement Agreement, the PSA and the Backstop Commitment Agreement represent a heavily-negotiated business deal through which the Company has secured from a majority of the holders of the Company’s senior secured notes and the Creditors' Committee and members thereof (i) support regarding a plan of reorganization and (ii) a commitment to invest in the new business post-emergence from Chapter 11.

No assurance can be given as to the value, if any, that may be distributable to holders of the Company's various pre-petition liabilities and other securities. The Company expects that the ultimate value of any distribution to holders of its securities will be determined in connection with a plan of reorganization. At this time it is not possible to predict the ultimate effect of the Chapter 11 reorganization on our business, various creditors and security holders, or when it may be possible to emerge from Chapter 11. The Company’s common stock has been delisted from trading on the Nasdaq Stock Market (“NASDAQ”) and the POR, if approved by the Bankruptcy Court, would result in the cancellation of the Company’s outstanding equity. Accordingly, the Company urges that caution be exercised with respect to existing and future investments in any of these securities or other Company claims. Further, it is also expected that the Company's senior secured notes and convertible notes will suffer substantial impairment.

The Consolidated Financial Statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and satisfaction of liabilities in the ordinary course of business. The ability of the Company to continue as a going concern is predicated upon, among other things, the confirmation of a reorganization plan, compliance with the provisions of the DIP Credit Agreement, the ability of the Company to generate cash flows from operations, and where necessary, obtaining financing sources sufficient to satisfy future obligations. As a result of the Chapter 11 filing, and consideration of various strategic alternatives, including possible assets sales, the Company expects that any reorganization plan will likely result in material changes to the carrying amount of assets and liabilities in the Consolidated Financial Statements. Given this uncertainty there is substantial doubt about our ability to continue as a going concern.

The Consolidated Financial Statements do not include adjustments, if any, to reflect the possible future effects on the recoverability and classification of recorded assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties.

Reorganization Costs:

Reorganization items included in the Consolidated Financial Statements included costs directly related to the Chapter 11 proceedings, as follows:



	Three Months Ended				Nine Months Ended
	December 31, 2014		December 31, 2013		December 31, 2014		December 31, 2013
	(In thousands)				(In thousands)
Professional fees	$	18,391	$	16,998	$	55,765	$	60,243
Write off debt financing costs/other	—		—		—		12,301
Other direct costs	—		—		—		3,399
Total	$	18,391	$	16,998	$	55,765	$	75,943

Liabilities Subject To Compromise:

The amounts of the various liabilities that are subject to compromise are set forth below. These amounts represent the Company's estimate of known or potential pre-petition claims to be resolved in connection with the Chapter 11 proceedings. Such claims remain subject to future adjustments which may result from: (i) negotiations; (ii) actions of the Bankruptcy Court; (iii) disputed claims; (iv) rejection of executory contracts and unexpired leases; (v) the determination as to the value of any collateral securing claims; (vi) proofs of claim; or (vii) other events. Such future adjustments will likely be material. Liabilities subject to compromise included the following:



	December 31, 2014		March 31, 2014
	(In thousands)
Debt	$	817,968	$	788,376
Accrued interest	27,532		10,515
Accounts payable	75,714		72,275
Retirement obligations	52,861		52,864
Restructuring reserve	5,594		7,274
Other accrued liabilities	18,648		19,339
Total	$	998,317	$	950,643

Basis of Presentation

The Consolidated Financial Statements are presented in accordance with the requirements of Form 10-Q and, consequently, do not include all of the disclosures normally required by U.S. generally accepted accounting principles (“GAAP”) or those disclosures normally made in the Company’s annual report on Form 10-K. Accordingly, the reader of this Form 10-Q should refer to the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2014 for further information.

The financial information has been prepared in accordance with the Company’s customary accounting practices. In the Company’s opinion the accompanying Consolidated Financial Statements include all adjustments of a normal recurring nature necessary for a fair statement of the results of operations, comprehensive loss, financial position, and cash flows for the periods presented. This includes accounting and disclosures related to any subsequent events occurring from the balance sheet date through the date the Consolidated Financial Statements were issued.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This update represents a new comprehensive revenue recognition model to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The guidance will be applied with a full retrospective or modified retrospective approach. The Company will adopt this standard in the first quarter ending June 30, 2017. The Company will evaluate the impact, but does not expect the standard to have a material impact on the Company's consolidated financial position or results of operations.