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C&D News
C&D Technologies Announces Fourth Quarter and Full Year Results and Regular Dividend
BLUE BELL, Pa., April 10 /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, industrial
and motive applications, today announced financial results for the fourth
quarter and year ended January 31, 2006.
For the quarter, the Company reported a net loss of $20 thousand,
break-even on a diluted share basis, on revenues of $124.5 million. Excluding
the impact of asset impairments and related environmental accruals from both
periods, operating income was down approximately $1.9 million quarter over
quarter, driven principally by higher lead costs.
For the year, the Company lost $60.7 million, or $2.39 per diluted share,
on revenues of $497.4 million. Excluding the impact of asset impairments and
related environmental accruals from both periods, operating income was down
approximately $16.8 million year over year. Higher lead costs, severance and
costs associated with the Company's RoHS compliance efforts, including
inventory write-downs recorded in the Company's third quarter were the
principal drivers.
The Company also announced that its Board of Directors declared, at its
recent meeting, its regular fourth quarter cash dividend of 1.375 cents per
share, payable on May 12, 2006, to stockholders of record as of the close of
business on April 28, 2006.
In commenting on the financial results for the year, Dr. Jeffrey A.
Graves, President and CEO of the Company, said, "fiscal year 2006 was
challenging for C&D Technologies, but we are grateful that we exited the year
with our competitive position enhanced on a global basis. We took decisive
action to deal with the many issues that faced the company during the year.
We successfully integrated the companies we acquired in 2005 with our legacy
Power Electronics business, and in the fourth quarter our Power Electronics
Division posted record revenues and significantly turned around its
profitability. This growth has been driven by improved execution of our
operations team in Asia and an intense focus on meeting customer expectations.
Exiting the year, our Motive Power Division is beginning to rebound, with two
consecutive quarters of healthy sequential revenue increases. Our Reynosa,
Mexico manufacturing facility ramped up and today is manufacturing all of our
msENDUR(TM) and MSE 2 volt valve regulated sealed batteries and V-LINE(TM) and
EM-LINE(TM) batteries for motive applications. Our confidence in the Reynosa
team is evidenced by our recently announced plan to move the balance of our
Motive Power manufacturing to that facility."
Dr. Graves continued, "Our biggest disappointment was that increasing raw
material costs outstripped our ability to recapture lost margin through price
increases. To address the continued run-up in lead and other commodity costs,
such as copper and plastics, in January we announced a further, across the
board price increase of 8 percent, which was effective for orders placed after
March 1, 2006. The benefits of such pricing actions clearly are not reflected
in our fourth quarter results."
Motive Power Division:
In the fourth quarter, the Motive Power Division posted total net sales of
$14.5 million, and an operating loss of $3.1 million. Excluding asset
impairments and related environmental accruals, operating losses were
approximately $1.0 million lower quarter over quarter as benefits from our
November announced pricing began to come through. While operating results in
Motive Power were pressured by rising commodity raw material costs, the
Division posted its second consecutive quarter of sequential topline growth.
Dr. Graves stated, "Our first priority for the Motive Power Division was
to stabilize revenues and protect market share, and we accomplished this goal
in the latter half of fiscal year 2006. Now, we continue to work hard to make
sure we have the right resources in place from a sales channel, quality,
customer service and manufacturing standpoint. While there is much heavy
lifting still to do, we remain optimistic that the Motive Power Division can
be restored to profitability by fiscal year 2008. The recently-announced
transition of the balance of Motive's manufacturing to our Reynosa facility,
which we believe is the premier, low-cost battery manufacturing facility in
North America, will be a key to achieving this goal."
Standby Power Division:
In the fourth quarter, the Standby Power Division posted total net sales
of $59.1 million, and operating income of approximately $2.0 million.
Excluding asset impairments and related environmental accruals, operating
income was down approximately $3.9 million quarter over quarter. Raw material
prices, principally lead, negatively impacted divisional results during the
fourth quarter.
In commenting on the Standby Power Division results, Dr. Graves stated,
"In the Standby Power Division, some missed opportunities on the top line as
well as higher lead costs put a damper on our short term financial results. In
mid-March we made changes in both operating and sales leadership, an action I
believed was necessary to accelerate the improvements we needed to execute on
our plans. I am personally overseeing the division until we name permanent
replacements. While clearly not satisfied with the recent financial
performance of this division, I am pleased with the progress we are making in
reestablishing our focus on driving our position in the marketplace as a
technology and quality leader and the planned launch of new products later in
the year to support our top line goals."
Power Electronics Division:
In the fourth quarter, the Power Electronics Division posted total net
sales of $51 million and an operating loss of $451 thousand. Double digit
revenue increases on both a year-over-year and sequential basis were offset by
RoHS compliance costs and the unfavorable affect of year-end physical
inventory adjustments.
Dr. Graves commented, "Power Electronics posted strong sales gains and a
record quarter, the first-ever quarter of over $50 million revenues. We
continue to hear good things from customers about how they appreciate our
world-class product design capabilities. Now, the challenge is to get the
right low-cost manufacturing strategy in place and to better manage our supply
chain. One of the key steps in our execution of these improvements was our
announcement last week of our transition away from Celestica. Over the next
nine months, we will be executing a transition plan that will move third-party
manufacturing of our Power Electronics products to three world-class
manufacturers throughout the Asia-Pacific region, which we expect to improve
our competitiveness as well as delivery reliability."
C&D Technologies, Inc. provides solutions and services for the switchgear
and control (utility), motive (material handling), 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 and are subject to uncertainties and changes in circumstances.
Words and expressions reflecting something other than historical fact 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, 2006, or the quarterly and current
reports filed on Form 10-Q and Form 8-K thereafter), could cause the company's
actual results to differ materially from those expressed in any forward-
looking statements made herein.
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C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
January 31,
(Dollars in thousands, except par value)
2006 2005 *
ASSETS
Current assets:
Cash and cash equivalents $25,693 $26,855
Accounts receivable, less allowance
for doubtful accounts of $2,889
in 2006 and $2,018 in 2005 78,420 73,136
Inventories 83,803 77,272
Deferred income taxes 3,430 14,481
Prepaid taxes 6,838 1,644
Other current assets 8,892 2,008
Total current assets 207,076 195,396
Property, plant and equipment, net 91,041 104,130
Deferred income taxes 401 287
Intangible and other assets, net 38,450 83,863
Goodwill 81,451 97,247
TOTAL ASSETS $418,419 $480,923
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $1,038 $ 1,389
Accounts payable 50,199 34,808
Book overdrafts 71 8,674
Accrued liabilities 23,440 24,254
Other current liabilities 35,578 10,374
Total current liabilities 110,326 79,499
Deferred income taxes 11,660 12,216
Long-term debt 133,067 135,004
Other liabilities 24,051 36,705
Total liabilities 279,104 263,424
Commitments and contingencies
Minority interest 8,498 8,171
Stockholders' equity:
Common stock, $.01 par value,
75,000,000 shares authorized;
28,828,428 and 28,714,973 shares issued
in 2006 and 2005, respectively 288 287
Additional paid-in capital 72,599 71,956
Treasury stock, at cost, 3,380,102 and (47,094) (47,151)
3,368,676 shares in 2006 and 2005,
respectively
Accumulated other comprehensive
(loss) income (11,876) 5,275
Retained earnings 116,900 178,961
Total stockholders' equity 130,817 209,328
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $418,419 $480,923
* Reclassified for comparative purposes.
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
Three months ended Year ended January 31,
January 31, (unaudited)
2006 2005* 2006 2005*
NET SALES $124,544 $122,574 $497,407 $414,738
COST OF SALES 104,623 100,886 414,499 348,080
GROSS PROFIT 19,921 21,688 82,908 66,658
OPERATING EXPENSES:
Selling, general and
administrative
expenses 15,206 14,935 61,812 47,480
Research and
development expenses 6,275 7,322 25,128 18,641
Identifiable intangible
asset impairment - 464 20,045 464
Goodwill impairment - 74,233 13,674 74,233
OPERATING (LOSS)
INCOME (1,560) (75,266) (37,751) (74,160)
Interest expense, net 3,606 2,027 10,487 5,015
Other (income)
expense, net (54) 351 (21) 1,612
(LOSS) INCOME BEFORE
INCOME TAXES AND
MINORITY INTEREST (5,112) (77,644) (48,217) (80,787)
(Benefit) provision
for income taxes (5,344) (20,402) 12,362 (21,289)
INCOME (LOSS) BEFORE
MINORITY INTEREST 232 (57,242) (60,579) (59,498)
Minority interest 252 108 83 (5)
NET (LOSS) INCOME $(20) $(57,350) $(60,662) $(59,493)
Net (loss) income per
common share - basic $- $(2.26) $(2.39) $(2.35)
Net (loss) income
per common share
- diluted $- $(2.26) $(2.39) $(2.35)
Dividends per share $0.01375 $0.01375 $0.055 $0.055
*Reclassified for comparative purposes.
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended January 31,
(Dollars in thousands)
2006 2005*
Cash flows from operating activities:
Net (loss) income $(60,662) $(59,493)
Adjustments to reconcile net
(loss) income to net cash provided by
operating activities:
Minority interest 83 (5)
Depreciation and amortization 23,622 24,875
Impairment of fixed assets 4,802 9,602
Impairment of goodwill 13,674 74,233
Impairment of identifiable
intangible assets 20,045 464
Purchased in-process research
and development - 780
Deferred income taxes 10,649 (19,416)
Loss on disposal of assets 234 215
Annual retainer to Board of Directors
paid by the issuance of common stock 198 156
Changes in assets and liabilities,
net of effects from businesses acquired:
Accounts receivable (5,092) 3,994
Inventories (6,765) (1,288)
Other current assets 290 (2)
Accounts payable 15,467 2,797
Accrued liabilities (39) (623)
Income taxes payable (958) (5,449)
Other current liabilities 4,848 (4,475)
Other liabilities (2,721) 6,450
Other long-term assets 1,624 (2,667)
Other, net 1,519 43
Net cash provided by
operating activities 20,818 30,191
Cash flows from investing activities:
Acquisition of businesses,
net of cash acquired - (128,429)
Acquisition of property,
plant and equipment (8,773) (11,865)
Proceeds from disposal of
property, plant and equipment 73 15,685
Net cash used in
investing activities (8,700) (124,609)
Cash flows from financing activities:
Repayment of debt (131,079) (775)
Proceeds from new borrowings 133,142 110,176
(Decrease) increase in book overdrafts (8,603) 3,753
Financing cost of long term debt (6,130) (768)
Proceeds from issuance
of common stock, net 584 932
Purchase of treasury stock (163) (3,023)
Common stock dividends paid (1,399) (1,396)
Payment of minority interest dividends - (10)
Net cash (used in) provided
by financing activities (13,648) 108,889
Effect of exchange rate changes
on cash and cash equivalents 368 78
(Decrease) increase in cash
and cash equivalents (1,162) 14,549
Cash and cash equivalents,
beginning of fiscal year 26,855 12,306
Cash and cash equivalents,
end of fiscal year $25,693 $26,855
* Reclassified for comparative purposes.
SOURCE C&D Technologies, Inc.
04/10/2006
CONTACT: Ian Harvie of C&D, +1-215-619-7835, or Joseph Crivelli ofGregory FCA, +1-610-642-8253, for C&D |
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