BLUE BELL, Pa., Sept. 14 /PRNewswire-FirstCall/ -- C&D
Technologies, Inc. (NYSE: CHP), a leading North American producer
and marketer of electrical power storage and conversion systems
used in telecommunications, uninterrupted power supply (or "UPS")
systems, utility and other high reliability applications, today
announced financial results for the fiscal 2011 second quarter
ended July 31, 2010.
Dr. Jeffrey A. Graves, President
and CEO, said, "In the second quarter, we achieved positive
improvements in our operational performance, excluding the impact
of the non-cash goodwill impairment of $60
million, or approximately $46
million net of tax, and took steps to address our financial
capital structure, which needs to be restructured."
"New product introductions, increased Asian market penetration,
a focused pricing strategy and ongoing efficiency initiatives drove
gross margins to 13.2% in the second quarter, up from 12.1% in the
second quarter of fiscal year 2010 and 11.8% in the first quarter
of fiscal 2011. The progress in margin improvement was dampened by
the impact of a temporary labor disruption in our Asian operations
during the second half of the quarter, which negatively impacted
second quarter operating income by slightly more than an estimated
$1 million, and was resolved by
quarter end."
Dr. Graves continued, "We also believe our top line performance
and operating results for the second quarter were negatively
influenced by market uncertainties regarding our capital structure.
We are taking steps to put in place an appropriate capital
structure for our business, and today we separately announced a
proposed financial restructuring plan. As we work to receive the
necessary approvals and execute this proposed plan, we will remain
focused on our day–to–day operations, continuing to deliver
superior customer service and providing the industry leading
product quality and innovation that has been the hallmark of
C&D for over 100 years."
Dr. Graves enumerated the following highlights from the
Company's second quarter 2011 financial results, additional details
of which are available in the Company's Quarterly Report on Form
10-Q that was filed with the Securities and Exchange Commission
today:
- Revenues for the second quarter of fiscal 2011 were
$83.8 million, compared to
$82.4 million in the prior year's
second quarter.
- Second quarter 2011 gross profits were $11.0 million, compared to $10.0 million in the prior year's second quarter.
- Gross margins in the second quarter of 2011 were 13.2%,
compared to 12.1% in the second quarter of fiscal 2010 and compared
to 11.8% in the first quarter of fiscal 2011.
- For the second quarter of fiscal 2011, the Company reported a
net loss of $50.7 million or
($1.92) per diluted share, primarily
attributable to a pre-tax $60.0
million, or approximately $46
million net of tax, goodwill impairment charge recorded in
the quarter. Principally due to the Company's declining market
capitalization and continuing losses, the Company tested for
goodwill impairment as of July 31,
2010, in accordance with accounting rules, and as a result
recorded a $60.0 million non-cash
pre-tax goodwill impairment charge. An offsetting and related
non-cash deferred tax benefit of $14.2
million was also recorded for the second quarter of fiscal
2011 in connection therewith.
- Excluding the goodwill impairment charge, the net loss for the
quarter would have been $4.9 million
or ($0.19) per diluted share, which
compares to a net loss of $5.6
million or ($0.21) per diluted
share in the prior year's second quarter and a net loss of
$5.6 million or ($0.21) in the first quarter of fiscal 2011.
- For the second quarter of fiscal 2011, excluding the goodwill
impairment charge, the Company reported $200,000 of positive operating income.
- For the second quarter of fiscal 2011, cash used in operations
was $1.1 million, compared to
$1.9 million of cash generated by
operations in the second quarter of last year.
- Reflecting significant improvement to recent quarters, cash
used in operations in the second quarter of 2011 was $1.1 million, compared to $5.9 million used in operations in the first
quarter of fiscal 2011 and $9.0
million used in operations in the fourth quarter of fiscal
2010.
Additional Information
The increase in revenues in the second quarter, as compared to
the prior year comparable period, was primarily due to the impact
of increased commodity input costs (primarily lead), product
pricing, success of the Company's new products and growth in
Asia, offset by lower volumes in
North America, where UPS flooded
battery product sales remain particularly weak relative to
historical norms. Revenues in the telecommunications and
utility markets in North America
however, continued to show stability with accelerating momentum.
Asian markets continued their rapid growth across all major
sectors, including telecommunications, UPS and the energy
generation and transmission markets, driven by continued
infrastructure investment and economic strength in the developing
countries.
The improvement in second quarter 2011 gross margin is primarily
due to more disciplined pricing and less lead price volatility.
Offsetting these improvements was an employee disruption at the
Shanghai, China facility for
approximately three weeks, negatively impacting both the Company's
consolidated revenues and gross profits in the second quarter of
2011. This disruption was similar to those experienced by several
other companies that operate in similar regions of China, as widely reported in the media, and
was resolved within the quarter.
Net cash used in operating activities was $7.0 million for the six months ended
July 31, 2010, as compared to net
cash provided of $1.7 million for the
six months ended July 31, 2009.
This is primarily the result of a significant increase in
cash used to pay down accounts payable of $13.4 million compared to an increase in accounts
payable of $5.0 million in the prior
fiscal year. The reduction in accounts payable for the six
months ended July 31, 2010 was
attributable to both trade credit tightening the Company
experienced, as well as lower lead costs.
The Company also announced today the planned closure of its
Leola manufacturing facility and transfer of production to other
facilities or the exiting of low margin business from this
facility. When complete, the closure plan will result in the
elimination of approximately 85 positions. Estimated closure costs,
including severance, accelerated depreciation, and related move
costs are currently estimated to range between $1.6 million and $2.0 million, and are expected
to be recorded in future periods.
Also, today, the Company issued a press release entitled
"C&D Technologies Reaches Agreement In Principle With Group Of
Major Note holders On Financial Restructuring Plan," which
describes the Company's plans to launch an out-of-court exchange
offer for a debt-to-equity swap and to simultaneously seek support
for a voluntary prepackaged plan of reorganization as a back-up
alternative. The agreement with the Company's major note
holders is also discussed in the Company's Quarterly Report on Form
10-Q for the quarterly period ended July 31,
2010, filed with the Securities and Exchange Commission
today.
In light of the pending exchange offer, the Company will not be
hosting an investor call this quarter.
About C&D Technologies:
C&D Technologies, Inc. provides solutions and services for
the switchgear and control (utility), telecommunications, and
uninterruptible power supply (UPS), as well as emerging markets
such as solar power. C&D Technologies' engineers, manufactures,
sells and services fully integrated reserve power systems for
regulating and monitoring power flow and providing backup power in
the event of primary power loss until the primary source can be
restored. C&D Technologies' unique ability to offer complete
systems, designed and produced to high technical standards, sets it
apart from its competition. C&D Technologies is headquartered
in Blue Bell, PA. For more
information about C&D Technologies, visit
http://www.cdtechno.com.
Forward-looking Statements:
This press release may contain forward-looking statements
(within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934), which are
based on management's current expectations, forecasts and
assumptions and are subject to uncertainties and changes in
circumstances. Words and expressions reflecting something other
than historical fact, including, but not limited to, our ability to
remain a going concern, for which substantial doubt exists,
statements regarding the ability to obtain additional funding in
the future, our ability to implement and fund business strategies
based on current liquidity, our substantial debt and debt service
requirements, litigation proceedings to which we are subject, our
exposure to fluctuations in interest rates on our variable debt,
the realization of the tax benefits of our net operating loss carry
forwards, the fact that lead experiences significant fluctuations
in market price, our ability to successfully pass along increased
material costs to our customers, failure of our customers to renew
supply agreements, competitiveness of the battery markets,
political, economic and social changes, or acts of terrorism or
war, successful collective bargaining with our unionized workforce,
risks involved in our foreign operations, continued growth in our
foreign markets, our ability to maintain and generate liquidity to
meet our operating needs, our ability to achieve and maintain
profitability, the possibility of 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, changes in our product mix, success of
productivity initiatives, costs of our compliance with
environmental laws and regulations and resulting liabilities, and
our ability to protect our proprietary intellectual property and
technology, are intended to identify forward-looking statements,
but are not the exclusive means of identifying such statements.
Factors that appear with the forward-looking statements, or in the
Company's Securities and Exchange Commission filings (including
without limitation the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 2010,
or the Quarterly Reports on Form 10-Q and Current Reports on Form
8-K filed thereafter), could cause the Company's actual results to
differ materially from those expressed in any forward-looking
statements made herein. Further factors that could cause
actual results to differ materially from forward-looking statements
include, but are not limited to, the following: the Company's
inability to consummate the exchange offer or voluntary prepackaged
plan of reorganization necessary to address its financial capital
structure.
C&D TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Dollars in thousands, except
per share data)
(UNAUDITED)
|
|
|
|
|
|
|
|
|
Three months
ended
July 31,
|
Six months ended
July 31,
|
|
|
2010
|
2009
|
2010
|
2009
|
|
NET SALES
|
$ 83,835
|
$ 82,434
|
$ 168,538
|
$ 156,099
|
|
COST OF SALES
|
72,802
|
72,431
|
147,527
|
140,751
|
|
|
|
|
|
|
|
GROSS PROFIT
|
11,033
|
10,003
|
21,011
|
15,348
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
Selling, general and
administrative expenses
|
9,209
|
10,111
|
18,431
|
19,353
|
|
Research and development
expenses
|
1,589
|
1,799
|
3,377
|
3,677
|
|
Goodwill impairment
|
59,978
|
—
|
59,978
|
—
|
|
|
|
|
|
|
|
OPERATING LOSS
|
(59,743)
|
(1,907)
|
(60,775)
|
(7,682)
|
|
|
|
|
|
|
|
Interest expense, net
|
4,199
|
2,916
|
7,547
|
5,840
|
|
Other (income) expense,
net
|
674
|
(208)
|
1,410
|
(34)
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME
TAXES
|
(64,616)
|
(4,615)
|
(69,732)
|
(13,488)
|
|
Income tax provision
(benefit)
|
(13,794)
|
1,076
|
(13,400)
|
2,172
|
|
|
|
|
|
|
|
NET LOSS
|
(50,822)
|
(5,691)
|
(56,332)
|
(15,660)
|
|
Net loss attributable to
noncontrolling interests
|
(142)
|
(75)
|
(48)
|
(286)
|
|
|
|
|
|
|
|
NET LOSS ATTRIBUTABLE TO C&D
TECHNOLOGIES, INC.
|
$ (50,680)
|
$ (5,616)
|
$ (56,284)
|
$ (15,374)
|
|
|
|
|
|
|
|
Loss per share:
|
|
|
|
|
|
Basic and
Diluted:
|
$ (1.92)
|
$ (0.21)
|
$ (2.13)
|
$ (0.58)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C&D TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(Dollars in thousands, except
par value)
(UNAUDITED)
|
|
|
|
|
|
|
July 31,
2010
|
January 31,
2010
|
|
ASSETS
|
|
|
|
Current assets:
|
|
|
|
Cash and cash equivalents
|
$ 3,650
|
$ 2,700
|
|
Restricted cash
|
49
|
57
|
|
Accounts receivable, less
allowance for doubtful accounts of $850 and $1,114
|
55,003
|
55,183
|
|
Inventories
|
71,143
|
76,041
|
|
Prepaid taxes
|
524
|
425
|
|
Deferred taxes
|
51
|
50
|
|
Other current
assets
|
1,599
|
1,092
|
|
Assets held for sale
|
500
|
500
|
|
|
|
|
|
Total current assets
|
132,519
|
136,048
|
|
|
|
|
|
Property, plant and equipment,
net
|
90,402
|
90,001
|
|
Deferred income taxes
|
225
|
26
|
|
Intangible and other assets,
net
|
16,257
|
15,435
|
|
Goodwill
|
—
|
59,964
|
|
|
|
|
|
TOTAL ASSETS
|
$ 239,403
|
$ 301,474
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current liabilities:
|
|
|
|
Current portion of long-term
debt
|
$ 644
|
$ 8,777
|
|
Accounts payable
|
32,250
|
46,380
|
|
Accrued liabilities
|
13,101
|
12,309
|
|
Deferred income taxes
|
—
|
750
|
|
Other current
liabilities
|
6,460
|
4,565
|
|
|
|
|
|
Total current liabilities
|
52,455
|
72,781
|
|
|
|
|
|
Deferred income taxes
|
—
|
12,529
|
|
Long-term debt
|
158,602
|
133,106
|
|
Other liabilities
|
40,012
|
40,588
|
|
|
|
|
|
Total liabilities
|
251,069
|
259,004
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
Common stock, $.01 par value,
75,000,000 shares authorized; 29,444,313 and 29,228,213 shares
issued and 26,462,957 and 26,302,775 outstanding at July 31, 2010
and January 31, 2010, respectively
|
294
|
292
|
|
Additional paid-in
capital
|
97,488
|
97,033
|
|
|
|
|
|
Treasury stock, at cost,
2,981,356 and 2,925,438 shares at July 31, 2010 and
January 31, 2010, respectively
|
(40,071)
|
(40,091)
|
|
Accumulated other comprehensive
loss
|
(42,027)
|
(43,656)
|
|
Retained earnings
|
(38,618)
|
17,666
|
|
|
|
|
|
Total stockholders' equity
attributable to C&D Technologies, Inc.
|
(22,934)
|
31,244
|
|
Non-controlling interest
|
11,268
|
11,226
|
|
|
|
|
|
Total equity
|
(11,666)
|
42,470
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY
|
$ 239,403
|
$ 301,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C&D TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Dollars in
thousands)
(UNAUDITED)
|
|
|
|
|
|
|
Six months ended
July 31,
|
|
|
2009
|
2009
|
|
Cash flows from operating
activities:
|
|
|
|
Net loss
|
$ (56,332)
|
$ (15,660)
|
|
Adjustments to reconcile net
loss to net cash provided by operating activities:
|
|
|
|
Share-based
compensation
|
533
|
618
|
|
Depreciation and
amortization
|
5,176
|
6,309
|
|
Amortization of debt acquisition
and discount costs
|
2,685
|
2,373
|
|
Annual retainer to Board of
Directors paid by the issuance of common stock
|
—
|
24
|
|
Impairment of
goodwill
|
59,978
|
—
|
|
Deferred income taxes
|
(13,479)
|
1,536
|
|
Changes in assets and
liabilities:
|
|
|
|
Accounts receivable
|
231
|
3,520
|
|
Inventories
|
4,925
|
162
|
|
Other current assets
|
(21)
|
(469)
|
|
Accounts payable
|
(13,405)
|
4,974
|
|
Accrued liabilities
|
631
|
(447)
|
|
Book overdraft
|
(401)
|
17
|
|
Income taxes payable
|
30
|
166
|
|
Other current
liabilities
|
2,518
|
(2,298)
|
|
Other liabilities
|
604
|
1,711
|
|
Other long-term
assets
|
19
|
(86)
|
|
Other, net
|
(717)
|
821
|
|
|
|
|
|
Net cash (used in) provided by continuing operating
activities
|
(7,025)
|
3,271
|
|
Net cash used in discontinued operating activities
|
(7)
|
(1,534)
|
|
|
|
|
|
Net cash (used in) provided by
operating activities
|
(7,032)
|
1,737
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
Acquisition of property, plant
and equipment
|
(5,083)
|
(7,763)
|
|
Proceeds from disposal of
property, plant and equipment
|
—
|
15
|
|
Decrease in restricted
cash
|
8
|
848
|
|
|
|
|
|
Net cash used in investing
activities
|
(5,075)
|
(6,900)
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
Borrowings on line of credit
facility
|
51,232
|
55,851
|
|
Repayments on line of credit
facility
|
(55,831)
|
(53,981)
|
|
Repayment of debt
|
(97)
|
(14)
|
|
Proceeds from new
borrowings
|
20,022
|
3,021
|
|
Proceeds from the issuance of
treasury stock
|
14
|
—
|
|
Financing cost of long term
debt
|
(2,245)
|
—
|
|
Purchase of treasury
stock
|
(71)
|
(56 )
|
|
|
|
|
|
Net cash provided by financing
activities
|
13,024
|
4,821
|
|
|
|
|
|
Effect of exchange rate changes
on cash and cash equivalents
|
33
|
104
|
|
|
|
|
|
Increase (decrease) in cash and
cash equivalents
|
950
|
(238)
|
|
Cash and cash equivalents,
beginning of period
|
2,700
|
3,121
|
|
|
|
|
|
Cash and cash equivalents, end
of period
|
$ 3,650
|
$ 2,883
|
|
|
|
|
|
|
|
|
|
|
SOURCE C&D Technologies, Inc.
Copyright . 14 PR Newswire