Exide Announces Expectations for Third Quarter FY 2006 and Provides Update on Take Charge! Initiative
ALPHARETTA, Ga.--(BUSINESS WIRE)--Dec. 21, 2005--Exide Technologies (NASDAQ: XIDE)(
www.exide.com), a global leader in stored electrical-energy solutions, today announced its expectations for the third quarter of fiscal year 2006 ending December 31, 2005.
Current indications are that the Company will fall short of meeting the results from the same quarter a year ago primarily due to lower Transportation sales in Europe and the most recent spike in lead prices. The quarter-over-quarter comparison is also negatively impacted by insurance proceeds in the prior-year quarter related to property damage in one of the Company's German facilities as well as the unfavorable impact of foreign exchange in the current quarter of approximately $2 million.
The Company still expects to comply with its bank covenants as calculated through the third quarter of fiscal 2006.
Take Charge! Update
The Company also announced that it provided a progress report on its Take Charge! initiative during a meeting with employees on Monday.
The Company has been working with Proudfoot Consulting since September to implement the Take Charge! initiative, which is designed to empower teams of employees to identify opportunities to eliminate wasteful practices, reduce variability and cut costs in all aspects of the business. This initiative - which to date is being implemented in three North American smelters, four manufacturing plants in North America and Europe, and one corporate administrative function - "is intended to accelerate and build on the momentum of our successful EXCELL lean program," said Exide President and CEO Gordon A. Ulsh.
The Take Charge! initiative was launched following an assessment of the business, which identified a number of quick payback projects that would require minimal capital investment.
"I have told our employees that I can think of no other initiative that has as great an opportunity to deliver rapid improvements to our business and have the potential for a significant impact on our bottom line," Mr. Ulsh said. "As liquidity allows, we will continue to invest in this initiative, which we believe after reviewing a Proudfoot Consulting analysis could ultimately result in a cost savings of as much as $100 million on an annual basis if fully and successfully implemented. While we cannot guarantee such cost savings, we are excited about the potential of Take Charge! and the early progress that we have seen."
During the first few months of the initiative, Exide's manufacturing plants in Bristol, Tennessee, and Salina, Kansas, have experienced improved battery production and reduced scrap and downtime. Similarly, the Company's smelters in Vernon, California, and Frisco, Texas, have increased their weekly lead production and reduced the percentage of impurities that must be removed from lead during the recycling process.
About Exide Technologies
Exide Technologies, with operations in 89 countries, is one of the world's largest producers and recyclers of lead-acid batteries. The Company's four global business groups - Transportation Americas, Transportation Europe and Rest of World, Industrial Energy Americas and Industrial Energy Europe and Rest of World - provide a comprehensive range of stored electrical energy products and services for industrial and transportation applications.
Transportation markets include original-equipment and aftermarket automotive, heavy-duty truck, agricultural and marine applications, and new technologies for hybrid vehicles and 42-volt automotive applications. Industrial markets include network power applications such as telecommunications systems, electric utilities, railroads, photovoltaic (solar-power related) and uninterruptible power supply (UPS), and motive-power applications including lift trucks, mining and other commercial vehicles.
Further information about Exide, including its financial results, are available at
www.exide.com.
Forward-Looking Statements
Except for historical information, this press release may be deemed to contain "forward-looking" statements. The Company desires to avail itself of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the "Act") and is including this cautionary statement for the express purpose of availing itself of the protection afforded by the Act.
Examples of forward-looking statements include, but are not limited to (a) 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, (b) statements of plans of and objectives of the Company or its management or Board of Directors, including the introduction of new products, or estimates or predictions of actions by customers, suppliers, competitors or regulating authorities, (c) statements of future economic performance, (d) statements of assumptions, such as the prevailing weather conditions in the Company's market areas, underlying other statements and statements about the Company or its business and (e) statements regarding the ability to comply with or alternatively obtain amendments under the Company's debt agreements.
Factors that could cause actual results to differ materially from these forward looking statements include, but are not limited to, the following general factors such as: (i) adverse reactions by creditors, vendors, customers, and others to the going-concern modification in the Company's audit report for the fiscal year ended March 31, 2005, (ii) the Company's ability to implement and fund based on current liquidity business strategies and restructuring plans, (iii) unseasonable weather (warm winters and cool summers) which adversely affects demand for automotive and some industrial batteries, (iv) the Company's substantial debt and debt service requirements which may restrict the Company's operational and financial flexibility, as well as imposing significant interest and financing costs (v) the Company's ability to comply with the covenants in its debt agreements or obtain waivers of noncompliance, (vi) the litigation proceedings to which the Company is subject, the results of which could have a material adverse effect on the Company and its business, (vii) the realization of the tax benefits of the Company's net operating loss carry forwards, of which is dependent upon future taxable income, (viii) the fact that lead, a major constituent in most of the Company's products, experiences significant fluctuations in market price and is a hazardous material that may give rise to costly environmental and safety claims, (ix) competitiveness of the battery markets in North America and Europe, (x) the substantial management time and financial and other resources needed for the Company's consolidation and rationalization of acquired entities, (xi) risks involved in foreign operations such as disruption of markets, changes in import and export laws, currency restrictions, currency exchange rate fluctuations and possible terrorist attacks against U.S. interests, (xii) the Company's exposure to fluctuations in interest rates on its variable debt, (xiii) the Company's ability to maintain and generate liquidity to meet its operating needs, (xiv) general economic conditions, (xv) the ability to acquire goods and services and/or fulfill labor needs at budgeted costs, (xvi) the Company's reliance on a single supplier for its polyethylene battery separators, and (xvii) the Company's ability to comply with the provisions of Section 404 of the Sarbanes-Oxley Act of 2002.
Therefore, the Company cautions each reader of this press release carefully to consider those factors set forth above and those factors described in its most recent Form 10-Q filed with the SEC on November 9, 2005 and Amendment No. 1 to the Company's Registration Statement on Form S-3 filed with the SEC on September 14, 2005, because such factors have, in some instances, affected and in the future could affect, the ability of the Company to achieve its projected results and may cause actual results to differ materially from those expressed herein.
CONTACT: Exide Technologies
Media Contact
Alan Chapple, 678-566-9514
[email protected]
or
Investor Contact
Rich Cockrell, 678-566-9415
[email protected]
SOURCE: Exide Technologies
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Exide's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.
