BLUE BELL, Pa., April 19 /PRNewswire-FirstCall/ --
Highlights
- Continued growth in Asian profitability and revenues as new
products enter production
- Improving North American backlog
- Existing Revolving Credit Facility renewed - further amendments
anticipated
- Form 10-K filing delayed pending anticipated completion of
additional $20 million financing
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
("UPS") systems, energy generation and transmission infrastructure,
and other high reliability applications, today announced
preliminary financial results for its fiscal 2010 fourth quarter
and year ended January 31, 2010.
For the fourth quarter on a preliminary basis, C&D
Technologies, Inc. (the "Company" or "C&D") reported net sales
of $88.4 million compared to
$85.4 million reported in the fourth
quarter of 2009, with the increase largely attributable to (1) the
impact of rising commodity costs on pricing in North America, and (2) a tripling of volumes
in Asia. On a sequential
basis, net sales were down slightly from $91.2 million in the third quarter due to
sequentially weaker volumes in North
America, reflecting continued softness in demand for UPS
flooded product, as well as some impact from the implementation of
pricing actions required to enhance margins. The weaker
volumes in North America were
partially offset by a fourth quarter increase in sequential Asian
revenues of approximately 6%, reflecting the continued
strengthening of the Asian markets and new product sales.
The Company reported a preliminary fourth quarter net loss of
$6.7 million, or ($0.26) per diluted share, compared to a net loss
of $15.2 million, or ($0.58) per diluted share, in the year ago
quarter. In the third quarter of the current fiscal year, the
net loss was $3.4 million or
($0.13) per diluted share. The
increase in the sequential net loss is primarily a result of the
effect of higher lead costs impacting the income statement during
the fourth quarter and the related lag in pricing recovery as
contracts with major customers adjusted through the period.
New prices were largely in effect as the quarter ended and
the new fiscal year began. Fourth quarter results were also
impacted by geographic and product mix changes.
Preliminary reported net sales for fiscal year 2010 were
$335.7 million in comparison to
$365.5 million in fiscal year 2009.
The reduction in revenues was largely attributable to the impact of
lead costs on pricing, with lower North American volumes from the
economic downturn being partially offset by volume growth through
expansion in Asian markets.
The Company reported a preliminary net loss of $25.5 million or ($0.97) per diluted share for fiscal year 2010 in
comparison to $16.9 million or
($0.66) per diluted share in fiscal
year 2009.
Dr. Jeffrey A. Graves, President
and CEO, said, "The fourth quarter was an important transitional
period for C&D as we managed through what we now believe was
the conclusion of a sustained period of end market contraction,
combined with simultaneous increases in input commodity raw
material costs. As the market leader, in North America, we drove significant price
increases in Q4 which, while painful to our customers, were
necessary to address our rising material and other costs. The
result was a lower bookings and shipment rate during this quarter.
Our new product introductions and Asian expansion strategies were
essentially unaffected by these actions, but economic challenges
and our pricing strategies, at least in the short term, trimmed
North American volumes as our customers' weakened capital budgets
were exhausted. The steady increase in input commodity
prices, the lag in our cost recovery programs and some deleveraging
from lower North American volumes, temporarily stalled the progress
recently achieved in expanding margins from their low point in the
first quarter. Productivity enhancements and efficiency
improvements achieved through cost reductions and other actions
remain on track."
"Over the past few months as we entered our new fiscal year, we
have seen improving strength in all of our end markets, with the
exception of the largest UPS systems that utilize our 'flooded'
battery products. These systems are used in large data center
environments which have been the hardest hit in the recession and a
rebound is yet to occur. All other markets, including
telecommunications, energy and infrastructure and smaller UPS
systems, are showing meaningful increases in the new fiscal year as
the economy rebounds and new, more robust capital budgets are
released by our customers. This momentum has reflected itself
in a strong rebound in our order intake in recent months, with our
current backlog up substantially since the end of the fiscal year.
Most importantly, the backlog we have been building in the
new fiscal year 2011 reflects significant margin improvement over
actual performance in Q4 of fiscal year 2010, reflecting our
recovery of higher lead costs, the benefits from other pricing
actions, and continued optimization of product, customer and
channel mix. These improving margins will be seen as our
bookings flow through into shipments in the months and quarters
ahead. With this momentum building, we are excited about the new
year."
Revolving Credit Facility Renewed; Additional Financing
Efforts Anticipated
Dr. Graves further commented, "We are pleased to report that on
April 9, 2010, we completed the
closure of a new revolving credit facility with our primary lender
in the principal amount of $55
million. We are working diligently toward completing a
further amendment to this credit facility that would provide us
with additional liquidity in the form of a $20 million term loan tranche. The
incremental term loan tranche would also be secured by our assets
with the right of repayment being fully subordinated to the
repayment of the indebtedness owed under the revolving credit
facility tranche. We have received a commitment letter from
the proposed term loan lender, which contains certain conditions to
be satisfied prior to closing, including the approval from our
revolving credit facility lender."
"As a result of the focus on these refinancing efforts, we
expect to file our annual report on Form 10-K for the year ended
January 31, 2010 on or before
April 30, 2010 to allow us time to
complete negotiations with respect to the new term loan tranche of
our credit facility with our lenders."
In that regard, C&D filed a Notification of Late Filing on
Form 12b-25 with the Securities and Exchange Commission today,
delaying the filing of its Annual Report on Form 10-K for the Year
ended January 31, 2010 for up to an
additional 15 days. C&D cannot be certain that the
supplemental term loan discussed herein will be completed on
acceptable terms, on a timely basis, as an amendment to the
existing credit facility or as a stand-alone financing, or at all.
If the term loan is not obtained prior to the time C&D
ultimately files its fiscal 2010 Form 10-K, management anticipates
that C&D's independent registered public accounting firm would
include an explanatory paragraph in their report on our financial
statements for the fiscal year ended January
31, 2010, as there would be substantial doubt about
C&D's ability to continue as a going concern. Such an
explanatory paragraph, unless waived by C&D's lenders, would
constitute a covenant default under C&D's credit facility. As a
result, absent any waiver, forbearance or similar agreement, the
lenders under C&D's credit facility would have the right to
cause all amounts borrowed to become due and payable immediately
and cease further borrowings by C&D under the credit facility,
thereby significantly impacting C&D's liquidity.
Conference call:
C&D management will host a conference call to discuss these
preliminary financial results on April 20,
2010 at 9:00 a.m. Eastern Standard
Time. Those parties interested in participating in the
conference call via telephone should dial (706) 679-4521 and enter
conference ID number 69864418. A telephone replay of the conference
call will begin immediately following the call and will be
available through May 4, 2010 at
midnight Eastern Standard Time. To
access the rebroadcast, please dial (800) 642-1687 (706-645-9291
for international callers) and enter code 69864418. A webcast of
the conference call will also be available at
http://www.cdtechno.com.
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, Inc. is headquartered in
Blue Bell, PA. For more
information about C&D Technologies, visit
http://www.cdtechno.com.
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 ("SEC"), in this notification,
identify statements that constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934 (the "Exchange Act") and
are intended to come within the safe harbor protection provided by
those sections, including, but not limited to, statements regarding
the ability to obtain amendments under our debt agreements or 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; our ability to stay listed on a national securities
exchange; our success or timing of new product development; impact
of any changes in our management; 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. 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 caution you not to place undue reliance on
these forward-looking statements. We undertake no obligation
to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
|
|
C&D TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(Dollars in thousands, except
per share data)
|
|
|
|
|
|
|
Three months
ended
January 31,
|
Year ended
January 31,
|
|
|
2010
|
20091
|
2010
|
20091
|
|
NET SALES
|
$
88,400
|
$
85,457
|
$
335,709
|
$
365,540
|
|
COST OF SALES
|
79,224
|
82,271
|
298,175
|
319,038
|
|
|
|
|
|
|
|
GROSS PROFIT
|
9,176
|
3,186
|
37,534
|
46,502
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
Selling, general and administrative
expenses
|
10,235
|
11,417
|
41,045
|
41,615
|
|
Research and development
expenses
|
1,770
|
1,889
|
7,555
|
6,940
|
|
|
|
|
|
|
|
OPERATING LOSS
|
(2,829)
|
(10,120)
|
(11,066)
|
(2,053)
|
|
|
|
|
|
|
|
Interest expense, net
|
3,298
|
2,886
|
12,207
|
11,729
|
|
Other expense, net
|
341
|
765
|
284
|
1,675
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME
TAXES
|
(6,468)
|
(13,771)
|
(23,557)
|
(15,457)
|
|
Provision for income taxes
|
171
|
1,491
|
2,223
|
1,993
|
|
|
|
|
|
|
|
NET LOSS
|
(6,639)
|
(15,262)
|
(25,780)
|
(17,450)
|
|
Income (loss) attributable to
noncontrolling interest
|
85
|
(81)
|
(242)
|
(565)
|
|
|
|
|
|
|
|
NET LOSS ATTRIBUTABLE TO C&D
TECHNOLOGIES, INC.
|
$
(6,724)
|
$
(15,181)
|
$
(25,538)
|
$
(16,885)
|
|
|
|
|
|
|
|
Loss per share:
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
Net loss attributable to C&D
Technologies, Inc.
|
$
(0.26)
|
$
(0.58)
|
$
(0.97)
|
$
(0.65)
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
Net loss attributable to C&D
Technologies, Inc.
|
$
(0.26)
|
$
(0.58)
|
$
(0.97)
|
$
(0.66)
|
|
|
|
|
|
|
|
|
|
¹ Certain prior period items have
been adjusted on these statements to reflect changes as required to
present retroactive adoption of new accounting standards, regarding
accounting for non-controlling interests and accounting for
convertible debt instruments that may be settled in cash upon
conversion.
|
|
|
|
|
|
|
|
|
C&D TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
January 31,
(Unaudited)
(Dollars in thousands, except
share and par value)
|
|
|
2010
|
20091
|
|
ASSETS
|
|
|
|
Current assets:
|
|
|
|
Cash
and cash equivalents
|
$
2,700
|
$
3,121
|
|
Restricted cash
|
57
|
906
|
|
Accounts receivable, less allowance
for doubtful accounts of $1,114 and $775
|
55,183
|
55,852
|
|
Inventories
|
76,041
|
61,128
|
|
Prepaid taxes
|
425
|
927
|
|
Deferred taxes
|
50
|
--
|
|
Other
current assets
|
1,092
|
1,110
|
|
Assets
held for sale
|
500
|
500
|
|
|
|
|
|
Total
current assets
|
136,048
|
123,544
|
|
Property, plant and equipment,
net
|
90,001
|
85,055
|
|
Deferred income taxes
|
26
|
626
|
|
Intangible and other assets,
net
|
13,420
|
14,729
|
|
Goodwill
|
59,964
|
59,961
|
|
|
|
|
|
TOTAL ASSETS
|
$
299,459
|
$
283,915
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
Current liabilities:
|
|
|
|
Short-term debt
|
$
8,777
|
$
5,881
|
|
Accounts payable
|
46,380
|
32,396
|
|
Deferred income taxes
|
750
|
1,492
|
|
Accrued liabilities
|
12,309
|
13,018
|
|
Other
current liabilities
|
4,565
|
8,267
|
|
|
|
|
|
Total
current liabilities
|
72,781
|
61,054
|
|
Deferred income taxes
|
12,529
|
10,972
|
|
Long-term debt
|
131,091
|
107,637
|
|
Other
liabilities
|
40,588
|
39,349
|
|
|
|
|
|
Total
liabilities
|
256,989
|
219,012
|
|
|
|
|
Equity:
|
|
|
|
Common
stock, $.01 par value, 75,000,000 shares authorized; 29,228,213 and
29,162,101 shares issued, and 26,302,775 and 26,266,755 outstanding
at January 31, 2010 and 2009, respectively
|
292
|
292
|
|
Additional paid-in capital
|
97,033
|
95,724
|
|
Treasury stock, at cost, 2,925,438 and
2,895,346 shares, respectively
|
(40,091)
|
(40,035)
|
|
Accumulated other comprehensive
income
|
(43,656)
|
(45,733)
|
|
Retained earnings
|
17,666
|
43,204
|
|
|
|
|
|
Total stockholders' equity attributable to C&D
Technologies, Inc.
|
31,244
|
53,452
|
|
Noncontrolling interest
|
11,226
|
11,451
|
|
|
|
|
|
Total
equity
|
42,470
|
64,903
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY
|
$
299,459
|
$
283,915
|
|
|
|
|
|
|
|
¹ Certain prior period items have
been adjusted on these statements to reflect changes as required to
present retroactive adoption of new accounting standards, regarding
accounting for non-controlling interests and accounting for
convertible debt instruments that may be settled in cash upon
conversion.
|
|
|
|
|
C&D TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
(Dollars in
thousands)
|
|
|
|
|
|
|
Year ended January
31,
|
|
|
2010
|
20091
|
|
Cash
flows from operating activities:
|
|
|
|
Net
loss
|
$
(25,780)
|
$
(17,450)
|
|
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
|
|
|
|
Share-based compensation
|
1,285
|
1,086
|
|
Depreciation and
amortization
|
10,710
|
11,065
|
|
Amortization of debt acquisition
and discount costs
|
4,853
|
4,638
|
|
Impairment of fixed assets
|
--
|
1,222
|
|
Annual
retainer to Board of Directors paid by the issuance of common
stock
|
24
|
121
|
|
Deferred income taxes
|
1,410
|
1,387
|
|
Loss
on disposal of assets
|
12
|
43
|
|
Changes in assets and
liabilities:
|
|
|
|
Accounts receivable, net
|
514
|
4,988
|
|
Inventories
|
(14,600)
|
23,835
|
|
Other
current assets
|
(225)
|
(362)
|
|
Accounts payable
|
10,519
|
(17,165)
|
|
Accrued liabilities
|
(946)
|
(2,713)
|
|
Book
overdraft
|
4,590
|
--
|
|
Income
taxes payable
|
531
|
(581)
|
|
Other
current liabilities
|
(2,346)
|
1,644
|
|
Funds
provided to discontinued operations
|
(1,664)
|
(4,800)
|
|
Other
long-term assets
|
(52)
|
257
|
|
Other
liabilities
|
3,171
|
(1,169)
|
|
Other,
net
|
(74)
|
3,210
|
|
|
|
|
|
Net
cash (used in) provided by continuing operating
activities
|
(8,068)
|
9,256
|
|
Net
cash used in discontinued operating activities
|
(1,664)
|
(4,800)
|
|
|
|
|
|
Net
cash (used in) provided by operating activities
|
(9,732)
|
4,456
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
Acquisition of property, plant and
equipment
|
(14,760)
|
(16,613)
|
|
Proceeds from disposal of property,
plant and equipment
|
18
|
484
|
|
Decrease in restricted cash
|
849
|
3,477
|
|
|
|
|
|
Net
cash used in continuing investing activities
|
(13,893)
|
(12,652)
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
Borrowings on line of credit
facility
|
119,357
|
88,860
|
|
Repayments on line of credit
facility
|
(100,752)
|
(88,860)
|
|
Proceeds from new
borrowings
|
3,072
|
--
|
|
Repayment of debt
|
(189)
|
--
|
|
Proceeds from exercise of stock
options
|
--
|
246
|
|
Purchase of treasury stock
|
(56)
|
(115)
|
|
|
|
|
|
Net
cash provided by continuing financing activities
|
21,432
|
131
|
|
|
|
|
|
Effect
of exchange rate changes on cash and cash equivalents
|
108
|
(150)
|
|
|
|
|
|
Decrease in cash and cash equivalents
from continuing operations
|
(421)
|
(3,415)
|
|
Cash
and cash equivalents, beginning of period
|
3,121
|
6,536
|
|
|
|
|
|
Cash
and cash equivalents, end of period
|
$
2,700
|
$
3,121
|
|
|
|
|
|
¹ Certain prior period items have
been adjusted on these statements to reflect changes as required to
present retroactive adoption of new accounting standards, regarding
accounting for non-controlling interests and accounting for
convertible debt instruments that may be settled in cash upon
conversion.
|
|
|
|
|
|
SOURCE C&D Technologies, Inc.