-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MlR0tMeTOrTrc3sDSOmDr21aHCW1A94pLr17lTs7b0pGUOAOWSSVdXPeTZf5FUz2 B4QcWVhaYinmVUPOH3cVCA== 0001036050-98-001367.txt : 19980813 0001036050-98-001367.hdr.sgml : 19980813 ACCESSION NUMBER: 0001036050-98-001367 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980628 FILED AS OF DATE: 19980812 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EXIDE CORP CENTRAL INDEX KEY: 0000813781 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 230552730 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11263 FILM NUMBER: 98683952 BUSINESS ADDRESS: STREET 1: 1400 N WOODLAND AVE CITY: BLOOMFIELD HILL STATE: MI ZIP: 48304 BUSINESS PHONE: 8102580080 10-Q 1 EXIDE CORPORATION FORM 10-Q ________________________________________________________________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10 - Q Quarterly Report under Section 13 or 15 (d) of the Securities Exchange Act of 1934 FOR THE FISCAL QUARTER ENDED JUNE 28, 1998 Commission File Number 1 - 11263 EXIDE CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 23-0552730 - -------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1400 N. WOODWARD AVE., BLOOMFIELD HILLS, MICHIGAN 48304 - ------------------------------------------------- ---------------------- (Address of principal executive offices) (Zip Code) (248) 258-0080 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by a 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: AS OF AUGUST 11, 1998, 21,347,575 SHARES OF COMMON STOCK WERE OUTSTANDING. ________________________________________________________________________________ EXIDE CORPORATION AND SUBSIDIARIES TABLE OF CONTENTS PART I. FINANCIAL INFORMATION - ------------------------------------- Item 1. Financial Statements (unaudited except for March 31, 1998 Consolidated Balance Sheet). -- Condensed Consolidated Balance Sheets - - June 28, 1998 and March 31, 1998. -- Consolidated Statements of Operations - - for the three months ended June 28, 1998 and June 29, 1997. -- Consolidated Statements of Cash Flows - - for the three months ended June 28, 1998 and June 29, 1997. -- Notes to Condensed Consolidated Financial Statements - - June 28, 1998. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. PART II. OTHER INFORMATION - --------------------------------- Item 4. None Item 6. Selected Financial Data 6 (a). Exhibits filed with this report. Exhibit 27 - Financial Data Schedule SIGNATURE - --------- 1
EXIDE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per-share data) June 28, March 31, 1998 1998 (Unaudited) ------------ ----------- ASSETS - ------ CURRENT ASSETS: Cash and cash equivalents $ 28,433 $ 35,613 Receivables, net of allowance for doubtful accounts of $40,179 and $37,488 461,200 434,679 Inventories 592,329 572,188 Prepaid expenses and other 34,703 32,455 Deferred income taxes 15,209 14,896 ------------ ----------- Total current assets 1,131,874 1,089,831 ------------ ----------- PROPERTY, PLANT AND EQUIPMENT 806,255 744,165 Less - Accumulated depreciation (245,677) (209,052) ------------ ----------- Total property, plant and equipment, net 560,578 535,113 ------------ ----------- OTHER ASSETS: Goodwill, net 577,665 570,251 Investments in affiliates 24,647 24,620 Deferred financing costs, net 19,771 20,050 Deferred income taxes 61,774 61,461 Other 43,125 47,290 ------------ ----------- 726,982 723,672 ------------ ----------- Total assets $ 2,419,434 $ 2,348,616 ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES: Short-term borrowings $ 25,947 $ 17,953 Current maturities of long-term debt 32,679 35,112 Accounts payable, trade 254,772 255,952 Accrued expenses 237,042 241,898 ------------ ----------- Total current liabilities 550,440 550,915 ------------ ----------- LONG-TERM DEBT 1,266,186 1,195,918 ------------ ----------- OTHER NONCURRENT LIABILITIES 296,766 287,531 ------------ ----------- COMMITMENTS AND CONTINGENCIES MINORITY INTEREST 19,556 19,304 ------------ ----------- STOCKHOLDERS' EQUITY Common stock, $.01 par value 60,000,000 shares authorized; 21,346,827 and 21,328,439 shares issued and outstanding 213 213 Additional paid-in capital 489,939 489,851 Accumulated deficit (39,864) (33,084) Notes receivable - stock award plan (1,478) (1,609) Unearned compensation (274) (322) Minimum pension liability adjustment (2,767) (2,767) Cumulative translation adjustment (159,283) (157,334) ------------ ----------- Total stockholders' equity 286,486 294,948 ------------ ----------- Total liabilities and stockholders' equity $ 2,419,434 $ 2,348,616 ============ ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS. 2 EXIDE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands, except share and per-share data)
For the Three Months Ended ----------------------------- June 28, June 29, 1998 1997 ------------- ------------ NET SALES $ 544,532 $ 490,365 COST OF SALES 405,402 366,057 ------------- ------------ Gross profit 139,130 124,308 ------------- ------------ OPERATING EXPENSES: Selling, marketing and advertising 78,531 68,813 General and administrative 36,981 31,157 Goodwill amortization 4,176 4,118 ------------- ------------ 119,688 104,088 ------------- ------------ Operating income 19,442 20,220 INTEREST EXPENSE, net 26,543 29,264 OTHER EXPENSE (INCOME), net 1,390 2,251 ------------- ------------ Loss before income taxes, minority interest and extraordinary loss (8,491) (11,295) INCOME TAX BENEFIT (2,338) (3,559) ------------- ------------ Loss before minority interest and extraordinary loss (6,153) (7,736) MINORITY INTEREST (100) (291) ------------- ------------ Loss before extraordinary loss (6,053) (7,445) EXTRAORDINARY LOSS RELATED TO EARLY RETIREMENT OF DEBT, net of income tax benefit of $0 and $0 (301) (7,313) ------------- ------------ Net loss $ (6,354) $ (14,758) ============= ============ BASIC EARNINGS PER SHARE: Loss before extraordinary loss $ (0.29) $ (0.36) Extraordinary loss (0.01) (0.36) ------------- ------------ Net loss $ (0.30) $ (0.72) ============= ============ DILUTED EARNINGS PER SHARE: Loss before extraordinary loss $ (0.29) $ (0.36) Extraordinary loss (0.01) (0.36) ------------- ------------ Net loss $ (0.30) $ (0.72) ============= ============ WEIGHTED AVERAGE SHARES: Basic 21,152,596 20,573,209 ============= ============ Diluted 21,152,596 20,573,209 ============= ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS. 3 EXIDE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in thousands)
For the Three Months Ended ----------------------------- June 28, June 29, 1998 1997 ------------ ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (6,354) $ (14,758) Adjustments to reconcile net loss to net cash used in operating activities - Depreciation and amortization 30,756 27,751 Extraordinary loss 301 7,313 Deferred income taxes (4,811) 1,657 Original issue discount on notes 2,212 3,308 Provision for losses on accounts receivable 2,294 1,701 Minority interest (100) (291) Changes in assets and liabilities excluding effects of acquisitions - Receivables (30,576) 12,482 Inventories (17,765) (41,533) Prepaid expenses and other (650) 1,094 Payables and accrued expenses (14,692) (37,337) Other, net 488 (1,662) ------------ ----------- Net cash used in operating activities (38,897) (40,275) ------------ ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions of certain businesses (2,133) - - Capital expenditures (24,979) (17,176) Equipment purchased held for sale (783) - - Proceeds from sale of assets 1,885 556 Insurance proceeds from fire damage 5,154 - - Costs incurred this period related to fire damage (707) - - ------------ ----------- Net cash used in investing activities (21,563) (16,620) ------------ ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase in short-term borrowings 8,164 4,080 Borrowings under Global Credit Facilities Agreement 201,556 - - Repayments under Global Credit Facilities Agreement (149,721) - - Borrowings under U.S. Credit Agreement - - 122,500 Repayment of European Facilities Agreement - - (73,218) Issuance of 9.125% Senior Notes - - 102,130 Retirement of 12.25% Senior Subordinated Notes - - (104,096) Decrease in other debt (6,087) (3,619) Dividends paid (426) (419) Debt issuance costs (527) (4,167) ------------ ----------- Net cash provided by financing activities 52,959 43,191 ------------ ----------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 321 (1,222) ------------ ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (7,180) (14,926) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 35,613 42,706 ------------ ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 28,433 $ 27,780 ============ =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for - Interest (net of amount capitalized) $ 38,360 $ 36,583 Income taxes $ 463 $ 1,514
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS. 4 EXIDE CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 28, 1998 (Amounts in thousands, except share and per-share data) (Unaudited) (1) BASIS OF PRESENTATION, ETC. - -------------------------------- The condensed consolidated financial statements include the accounts of Exide Corporation (the "Company") and all of its majority-owned subsidiaries. The accompanying 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 generally accepted accounting principles or those normally made in the Company's annual Form 10-K filing. Accordingly, the reader of this Form 10-Q may wish to refer to the Company's Form 10-K for the year ended March 31, 1998 for further information. The financial information has been prepared in accordance with the Company's customary accounting practices and has not been audited (except for Balance Sheet information presented at March 31, 1998). In the opinion of management, the accompanying condensed consolidated financial information reflects all adjustments necessary to present fairly the results of operations and financial position for the periods presented. The Company adopted Statement of Financial Accounting Standards No. 128 "Earnings per Share" ("SFAS No. 128") in the third quarter of fiscal 1998 and earlier periods presented have been restated. Included below is a reconciliation of shares for the basic and diluted earnings per share ("EPS") computations.
For the Three Months Ended -------------------------- June 28, June 29, 1998 1997 ------------- ----------- Basic EPS Shares 21,152,596 20,573,209 Effect of Dilutive Securities -- -- ------------- ----------- Diluted EPS Shares 21,152,596 20,573,209 ============= ===========
There is no difference between basic and diluted shares in each period presented because the effects of outstanding stock options, grants and convertible securities are antidilutive. Options to purchase 496,000 shares ranging from $25-7/8 to $50 were outstanding during the first quarter of fiscal 1999 but were not included in the computation of diluted EPS because the option's exercise price was greater than the average market price of the common shares. These options expire in the years 2000 to 2006. 5 In the first quarter of fiscal 1999, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). Under SFAS No. 130, comprehensive income is defined as the total of net income and all other non-owner changes in equity. The adoption of SFAS No. 130 involves new disclosure requirements only and did not impact the reported financial position or results of operations. Total comprehensive loss and its components are as follows:
For the Three Months Ended -------------------------- June 28, June 29, 1998 1997 ------------ ---------- Net loss $ (6,354) (14,758) Cumulative translation adjustment (1,949) (24,367) ------------ --------- Total comprehensive loss $ (8,303) $ (39,125) ============ =========
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities", which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. It requires that all entities recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The Company is evaluating the impact of the statement and will be required to adopt it in the second quarter of fiscal 2000. (2) INVENTORIES - ----------------
June 28, March 31, 1998 1998 ---------- ----------- Raw materials $ 141,065 $ 143,652 Work-in-process 89,054 78,004 Finished goods 362,210 350,532 ---------- ----------- $ 592,329 $ 572,188 ========== ===========
At June 28, 1998 and March 31, 1998, inventories valued by the LIFO method were approximately 28% and 30% of consolidated inventories, respectively. If all inventories had been determined using the first-in, first-out method, such inventories would have been $575,262 and $555,121 at June 28, 1998 and March 31, 1998, respectively. 6 (3) LONG-TERM DEBT - ------------------- On May 11, 1998, the Company entered into a bond swap agreement for $4,430 (principal amount) of its 10% Senior Notes. Under the agreement, the Company pays LIBOR plus 1.75% to a counterparty and receives from the counterparty the fixed coupon rate payments made by the Company. At the end of the agreement, the counterparty is guaranteed repayment of its open market purchase price of the Notes which exceeded face value by $233. This debt modification was accounted for as an extinguishment of debt, and the related write-off of unamortized deferred financing costs along with the premium paid by the counterparty resulted in an extraordinary loss of $301. No income tax benefit on the extraordinary loss was recognized. (4) ENVIRONMENTAL MATTERS - -------------------------- The Company, particularly as a result of its manufacturing and secondary lead smelting operations, is subject to numerous environmental laws and regulations and is exposed to liabilities and compliance costs arising from its past and current handling, processing, recycling, storing and disposing of hazardous substances and hazardous wastes. The Company's operations are also subject to occupational safety and health laws and regulations, particularly relating to the monitoring of employee health in North America and, to a lesser extent, in Europe. Except as disclosed in Note 12 of Notes to Consolidated Financial Statements included in the Company's March 31, 1998 Form 10-K or herein, the Company believes that it is in substantial compliance with all material environmental, health and safety requirements. North America - ------------- The Company has been advised by the U.S. Environmental Protection Agency ("EPA") that it is a "Potentially Responsible Party" ("PRP") under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") or similar state laws at 62 federally defined Superfund or state equivalent sites. At 36 of these sites, the Company has either paid or is in the process of paying its share of liability. In most instances, the Company's obligations are not expected to be significant because its portion of any potential liability appears to be minor to insignificant in relation to the total liability of all PRPs that have been identified and are viable. The Company's share of the anticipated remediation costs associated with all of the Superfund sites where it has been named a PRP, based on the Company's estimated volumetric contribution to each site, is included in the environmental remediation reserves discussed below. Because the Company's liability under such statutes may, as a technical matter, be imposed on a joint and several basis, the Company's liability may not necessarily be based on volumetric allocations and could be greater than the Company's estimates. Management believes, however, that its PRP status at these Superfund sites will not have a material adverse affect on the Company's business or financial condition because, based on the Company's experience, it is reasonable to expect that the liability will be roughly proportionate to its volumetric contribution of waste to the sites. While the ultimate outcome of the various environmental matters is uncertain, after consultation with legal counsel, management does not believe the resolution of these matters will have a material adverse effect on the Company's business, cash flows, financial condition or results of operations. The Company's policy is to accrue for 7 environmental costs when it is probable that a liability has been incurred and the amount of such liability is reasonably estimable. While the Company believes its current estimates of future remediation costs are reasonable, future findings or changes in estimates could have a material effect on the recorded reserves. The Company has reserves for on-site and off-site environmental remediation costs and believes that such reserves are adequate. As of June 28, 1998, the amount of such reserves on the Company's balance sheet was $29,930. Of this amount, $20,505 was included in other noncurrent liabilities. Because environmental liabilities are not recorded until the liability is determined to be probable and reasonably estimable, not all potential future environmental liabilities have been included in the Company's environmental reserves and future adjustments to the reserves are possible. Europe - ------ The Company is subject to numerous environmental, health and safety requirements and is exposed to differing degrees of liabilities and compliance costs arising from its past and current manufacturing and recycling activities in various European countries. The laws and regulations applicable to such activities differ from country to country and also substantially differ from U.S. laws and regulations. Certain facilities in France, Germany and Spain are not in compliance with certain limits contained in air and wastewater treatment discharge permits. In every case, the Company is working cooperatively with appropriate authorities to come into compliance. It is possible that the Company could be subject to fines or penalties with regard to these violations, although management believes any such fines/penalties will not be material. The cost to upgrade the facilities to attain compliance is not expected to be material. The violations are not expected to interfere with continued operations at the subject facilities. The Company expects that its European operations will continue to incur capital and operating expenses in order to maintain compliance with evolving environmental, health and safety requirements or more stringent enforcement of existing requirements in each country. (5) COMMITMENTS AND CONTINGENCIES - ---------------------------------- There have been no significant changes from the March 31, 1998 audited financial statements. (6) SUBSEQUENT EVENT - --------------------- On July 30, 1998, the Company and Schumacher Electric Corporation, Inc. ("Schumacher Electric"), a company headquartered in Mount Prospect, Illinois, signed an agreement to form a joint venture to be named Schumacher Corporation. Schumacher Electric will contribute its battery charger and related products business and Exide will contribute its battery charger business and its Speed Clip division to the new company. Exide will own over 50% of the joint venture and accordingly, Exide will account for this transaction as an acquisition of the Schumacher Electric business and will apply purchase accounting, Schumacher Electric's business had annual revenues of $59,700 in its most recent fiscal year. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ------------------------------------------------- GENERAL - ------- The Company through its European operations is exposed to foreign currency risk in most Western European countries, principally France, Spain, Germany, Italy and the U.K. The Company does not have material operations in countries whose economies can be classified as hyper-inflationary. Movements of exchange rates vis-a-vis the U.S. dollar can result in both unrealized and realized exchange gains or losses. In some instances gains in one currency may be offset by losses in another as all currencies may not move in unison vis-a-vis the U.S. dollar. It is the policy of the Company to reduce foreign currency risk by balancing net foreign currency positions where possible. In addition, the Company enters into foreign exchange contracts, including forward and purchased option contracts . The Company enters into forward exchange contracts to reduce the exposure to foreign currency fluctuations associated with certain monetary assets and liabilities, as well as certain firm commitments and highly anticipated cash flows. The Company also enters into purchased option contracts which, if exercised, involve the sale or purchase of foreign currency at a fixed exchange rate for a specified time. As of June 28, 1998, the net fair value of open foreign exchange contracts and the related gains and losses were not material. During the first quarter of fiscal 1999, $1.9 million of the decrease in stockholders' equity was due to foreign currency translation adjustments associated with the continued weakening of most European currencies relative to the U.S. dollar. RESULTS OF OPERATIONS - --------------------- Three months ended June 28, 1998 compared with the three months ended June 29, - ------------------------------------------------------------------------------ 1997. - ----- Net sales increased 11.0 % ($54.2 million) to $544.5 million in the first quarter of fiscal 1999 from $490.4 million in the first quarter of fiscal 1998. The increase was principally attributable to the inclusion of DETA which was acquired effective September, 1997 ($49.9 million) and higher automotive sales, offset by the impact of foreign exchange rates ($7.4 million). Industrial battery sales (included above) for the first quarter of fiscal 1999 were $181.9 million versus $152.8 million for the first quarter of fiscal 1998. This increase is due to the DETA acquisition. Gross profit increased $14.8 million in the first quarter of fiscal 1999 compared to the same period in the prior year. The gross profit margin was 25.6% in the first quarter of fiscal 1999 versus 25.4% in the first quarter of fiscal 1998. The increase in gross profit is largely the result of the DETA acquisition ($12.9 million at a margin of 25.9%) and manufacturing cost reductions relating to the continuing European rationalization / consolidation process. The effects of weaker European currencies reduced gross profit $2.5 million. 9 Selling, marketing and advertising expenses increased $9.7 million or 14.1% largely due to the acquisition of DETA ($7.1 million) and higher provisions ($0.9 million) for accounts receivable losses primarily as a result of the bankruptcy filings by certain major U.S. retailers. Offsetting these increases was the effect of weaker European currencies ($1.2 million). General and administrative expenses increased $5.8 million or 18.7% largely due to the acquisition of DETA ($4.8 million) and the write off of expenses associated with the financing commitments made for a potential acquisition; a bid that was subsequently awarded to another entity. Offsetting these increases was the effect of weaker European currencies ($0.8 million). Operating income decreased $ 0.8 million, or 3.8%, as result of the matters discussed above. Interest expense decreased $2.7 million, or 9.3%, primarily due to the lower rates related to the refinancing of debt in the third and fourth quarters of fiscal 1998. Offsetting the decrease was increased expense for borrowing related to the acquisition of DETA. Other expense, net was $1.4 million in the first quarter of fiscal 1999 versus $2.3 million in the first quarter of fiscal 1998. The $0.9 million decrease principally relates to net currency transaction gains recorded in the first quarter of fiscal 1999 versus net currency transaction losses recorded in the first quarter of fiscal 1998 ($1.2 million) and the ratable recognition of the deferred gain on the sales/leaseback transaction entered into in December 1997 ($1.0 million). Offsetting these decreases were increased losses on the sales of accounts receivable and associated fees in Europe under the agreement initiated in July, 1997 ($1.8 million). Net loss decreased $8.4 million, primarily as a result of the matters discussed above and due to the recording of a $7.3 million extraordinary loss in the first quarter of fiscal 1998 related to the early retirement of debt. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Company's liquidity requirements arise primarily from the funding of seasonal working capital needs, obligations on its indebtedness and capital expenditures. Historically, the Company has met these liquidity requirements through operating cash flows, with borrowed funds and the proceeds of sales of accounts receivable. The Company is party to a U.S. receivables purchase agreement and a European receivables purchase agreement under which the other parties have committed (subject to certain exceptions) to purchase selected accounts receivable of the Company, up to a maximum commitment of $75.0 million and $175.0 million, respectively. The Company's greatest cash demands from operations occur during the months of June through October. During fiscal 1999 and beyond, the Company also expects to meet its liquidity requirements in the same manner. Cash used in operating activities were $38.9 million and $40.3 million in the first quarters of fiscal 1999 and 1998, respectively. Because of the seasonality of the Company's business, more funds are typically generated in its third and fourth fiscal quarters. In the next several years, the Company will continue to complete the closure of various European plants which will necessitate cash payments for severance and other closure 10 costs. While the Company believes that a large portion of its cash requirements for its European consolidation activities will be generated from operations, it has substantial liquidity and capital resources through its Senior Secured Global Credit Facilities Agreement, as discussed below. The Company's capital expenditures were $25.0 million and $17.2 million in the first quarters of fiscal 1999 and 1998, respectively. The Senior Secured Global Credit Facilities Agreement restricts the amount of capital expenditures which may be made by the Company and its subsidiaries. However, the Company believes that it has sufficient resources for its capital expenditure programs from operating cash flows and borrowing availability under its existing credit agreements. As of June 28, 1998, the Company had $551.9 million outstanding on its Senior Secured Global Credit Facilities Agreement, including letters of credit. Obligations under the Senior Secured Global Credit Facilities Agreement bear interest at fluctuating rates. Increases in interest rates on such obligations could adversely affect the Company's results of operations and financial condition. The Senior Secured Global Credit Facilities Agreement is fully secured by guarantees of the European subsidiaries and certain fixed assets, inventory and receivables. The Company has an interest rate collar agreement which reduces the impact of changes in interest rates on a portion of the Company's floating rate debt. The collar agreement effectively limits the PIBOR base interest rate on 593.1 million French francs (U.S. $100 million) of borrowings to no more than 6.6% and no less than 3.5% through December 23, 2000. The Company has two currency and interest rate swap agreements which effectively converts $175 million of borrowings under the Senior Secured Global Credit Facilities Agreement into 778.8 million French francs (U.S. $133 million) and 25.2 million British pound sterling (U.S. $42 million). The Company receives LIBOR and pays PIBOR and pound sterling LIBOR. Additionally, the Company entered into a series of bond swaps agreements which effectively converted $45.1 million (principal amount) of the 10% Senior Notes into a variable LIBOR interest rate through April 15, 2000. The Company has the right to terminate the $45.1 million bond swap agreements at any time before maturity. As of June 28, 1998, the Company had $92.9 million available under its Senior Secured Global Credit Facilities Agreement after consideration of $23.1 million of outstanding letters of credit. As of June 28, 1998, the Company has significant NOL carryforwards in Europe and in the United States which are available, subject to certain restrictions, to offset future U.S. and European taxable income. YEAR 2000 ISSUE - --------------- The Year 2000 issue results from the fact that some computer systems and applications utilizing two-digit date fields to designate years may not correctly interpret the year 2000. As a result, some date-sensitive systems may recognize the year 2000 as 1900, or not at all, which may cause systems to process financial and operational information incorrectly. The Company has assessed the impact of the Year 2000 issue, including cost estimates to complete required changes. Plans to address the Year 2000 issue have been developed and are being implemented. Currently, the Company does not expect that the costs to be incurred will be material to results of operations or financial condition, and expects all systems and applications to be modified in advance of the year 2000. 11 SIGNATURE --------- 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 hereunto duly authorized. EXIDE CORPORATION Date: August 12, 1998 By: /s/ Leland E. Coulter ------------------------ ---------------------------- Leland E. Coulter Chief Financial Officer (Authorized Signatory) 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS MAR-31-1999 JUN-28-1998 28,433 0 501,379 40,179 592,329 1,131,874 806,255 245,677 2,419,434 550,440 1,266,186 0 0 213 286,273 2,419,434 544,532 544,532 405,402 405,402 0 2,294 26,543 (8,491) (2,338) (6,053) 0 301 0 (6,354) 0.30 0.30
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