Exhibit 99.2
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF APRIL 30, 2007
(Dollars in thousands, except par value)
Effect of
Change in Unaudited Unaudited
Unaudited Accounting Pro Forma Pro Forma
Historical Principle Adjustments Balance sheet
- ------------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 13,594 $ -- $ 38,281 (a) $ 51,875
Accounts receivable, less allowance for doubtful
accounts of $1,789 88,947 -- (31,739) (b) 57,208
Inventories 83,169 13,333 (e) (39,159) (b) 57,343
Deferred income taxes 195 -- -- 195
Prepaid taxes 2,527 -- -- 2,527
Other current assets 6,921 -- (1,358) (b) 5,563
- ------------------------------------------------------------------------------------------------------------------------
Total current assets 195,353 13,333 (33,975) 174,711
Property, plant and equipment, net 97,405 -- (16,145) (b) 81,260
Deferred income taxes 638 -- -- 638
Intangible and other assets, net 36,483 -- (19,459) (b) 17,024
Goodwill 68,692 -- (8,944) (b) 59,748
- ------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 398,571 $ 13,333 $(78,523) $ 333,381
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 6,289 $ -- $ (4,991) (b) $ 1,298
Accounts payable 54,124 -- (14,622) (b) 39,502
Book overdrafts 1,828 -- -- 1,828
Accrued liabilities 22,618 -- (7,910) (b) 14,708
Other current liabilities 11,199 -- (2,440) (b) 8,759
- ------------------------------------------------------------------------------------------------------------------------
Total current liabilities 96,058 -- (29,963) 66,095
Deferred income taxes 10,502 -- -- 10,502
Long-term debt 155,595 -- (32,433) (b) 123,162
Other liabilities 36,073 -- (6,257) (b) 29,816
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities 298,228 -- (68,653) 229,575
- ------------------------------------------------------------------------------------------------------------------------
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF APRIL 30, 2007 (CONTINUED)
(Dollars in thousands, except par value)
Effect of
Change in Unaudited Unaudited
Unaudited Accounting Pro Forma Pro Forma
Historical Principle Adjustments Balance sheet
- ----------------------------------------------------------------------------------------------------------------------
Minority interest $ 12,150 $ -- $ -- $ 12,150
Stockholders' equity:
Common stock, $.01 par value, 75,000,000 shares
authorized; 29,042,467 shares issued; 25,650,620
shares outstanding. 290 -- -- 290
Additional paid-in capital 74,306 -- -- 74,306
Treasury stock, at cost, 3,391,847 shares (47,111) -- -- (47,111)
Accumulated other comprehensive loss (13,944) -- (14,870) (g) (28,814)
Retained earnings 74,652 13,333 (e) 5,000 (f) 92,985
- ----------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 88,193 13,333 (9,870) 91,656
- ----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 398,571 $ 13,333 $ (78,523) $ 333,381
======================================================================================================================
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 30, 2007
(Dollars in thousands, except per share data)
Effect of Unaudited
Change in Unaudited Pro Forma
Unaudited Accounting Pro Forma Statement of
Historical Principle Adjustments Operations
- ------------------------------------------------------------------------------------------------------------------------
NET SALES $ 130,809 $ -- $ (42,345) (c) $ 88,464
COST OF SALES 111,252 (1,556) (e) (33,986) (c) 75,710
-----------------------------------------------------------
GROSS PROFIT 19,557 1,556 (8,359) 12,754
OPERATING EXPENSES:
Selling, general and administrative expenses 17,088 -- (5,050) (c) 12,038
Research and development expenses 5,773 -- (4,266) (c) 1,507
Gain on sale of Shanghai, China plant (15,162) -- -- (15,162)
-----------------------------------------------------------
OPERATING INCOME FROM CONTINUING OPERATIONS 11,858 1,556 957 14,371
-----------------------------------------------------------
Interest expense, net 2,708 -- (520) (d) 2,188
Other income, net (161) -- (470) (c) (631)
-----------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND
MINORITY INTEREST 9,311 1,556 1,947 12,814
Provision for income taxes 2,209 -- (2,152) (c) 57
-----------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST 7,102 1,556 4,099 12,757
Minority interest 4,528 -- -- 4,528
-----------------------------------------------------------
NET INCOME FROM CONTINUING OPERATIONS $ 2,574 $ 1,556 $ 4,099 $ 8,229
===========================================================
Earnings per share:
Basic:
Net Income from continuing operations $ 0.10 $ 0.32
------------ ------------
Diluted:
Net Income from continuing operations $ 0.10 $ 0.22
------------ ------------
Weighted average of common stock outstanding- Basic 25,650,623 25,650,623
Weighted average of common stock outstanding- Diluted 45,771,688 45,771,688
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED JANUARY 31, 2007
(Dollars in thousands, except per share data)
Effect of Unaudited
Change in Unaudited Pro Forma
Unaudited Accounting Pro Forma Statement of
Historical Principle Adjustments Operations
- --------------------------------------------------------------------------------------------------------------------------
NET SALES $ 524,580 $ -- $ (186,749) (c) $ 337,831
COST OF SALES 443,489 (3,344) (e) (145,919) (c) 294,226
-------------------------------------------------------------
GROSS PROFIT 81,091 3,344 (40,830) 43,605
OPERATING EXPENSES:
Selling, general and administrative expenses 68,413 -- (23,101) (c) 45,312
Research and development expenses 27,302 -- (20,773) (c) 6,529
Goodwill impairment 13,947 -- (13,947) (c) --
-------------------------------------------------------------
OPERATING LOSS FROM CONTINUING OPERATIONS (28,571) 3,344 16,991 (8,236)
-------------------------------------------------------------
Interest expense, net 13,437 -- (2,134) (d) 11,303
Other expense, net 1,245 -- 148 (c) 1,393
-------------------------------------------------------------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND
MINORITY INTEREST (43,253) 3,344 18,977 (20,932)
Provision for income taxes 4,094 -- (2,975) (c) 1,119
-------------------------------------------------------------
LOSS FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST (47,347) 3,344 21,952 (22,051)
Minority interest (1,273) -- -- (1,273)
-------------------------------------------------------------
NET LOSS FROM CONTINUING OPERATIONS $ (46,074) $ 3,344 $ 21,952 $ (20,778)
=============================================================
Loss per share:
Basic:
Net loss from continuing operations $ (1.80) $ (0.81)
------------ ------------
Diluted:
Net loss from continuing operations $ (1.80) $ (0.81)
------------ ------------
Weighted average of common stock outstanding- Basic 25,590,448 25,590,448
Weighted average of common stock outstanding- Diluted 25,590,448 25,590,448
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED JANUARY 31, 2006
(Dollars in thousands, except per share data)
Effect of Unaudited
Change in Unaudited Pro Forma
Unaudited Accounting Pro Forma Statement of
Historical Principle Adjustments Operations
- --------------------------------------------------------------------------------------------------------------------------
NET SALES $ 497,407 $ -- $ (186,305) (c) $ 311,102
COST OF SALES 405,754 (3,442) (e) (141,882) (c) 260,430
-------------------------------------------------------------
GROSS PROFIT 91,653 3,442 (44,423) 50,672
OPERATING EXPENSES:
Selling, general and administrative expenses 70,557 -- (26,366) (c) 44,191
Research and development expenses 25,128 -- (18,967) (c) 6,161
Identifiable intangible asset impairment 20,045 -- (20,045) (c) --
Goodwill impairment 13,674 -- (13,674) (c) --
-------------------------------------------------------------
OPERATING LOSS FROM CONTINUING OPERATIONS (37,751) 3,442 34,629 320
-------------------------------------------------------------
Interest expense, net 10,487 -- (645) (d) 9,842
Other (income) expense, net (21) -- 280 (c) 259
-------------------------------------------------------------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND
MINORITY INTEREST (48,217) 3,442 34,994 (9,781)
Provision for income taxes 12,362 (363) (e) (3,169) (c) 8,830
-------------------------------------------------------------
LOSS FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST (60,579) 3,805 38,163 (18,611)
Minority interest 83 -- -- 83
-------------------------------------------------------------
NET LOSS FROM CONTINUING OPERATIONS $ (60,662) $ 3,805 $ 38,163 $ (18,694)
=============================================================
Loss per share:
Basic:
Net loss from continuing operations $ (2.39) $ (0.74)
------------ ------------
Diluted:
Net loss from continuing operations $ (2.39) $ (0.74)
------------ ------------
Weighted average of common stock outstanding- Basic 25,379,717 25,379,717
Weighted average of common stock outstanding- Diluted 25,379,717 25,379,717
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED JANUARY 31, 2005
(Dollars in thousands, except per share data)
Effect of Unaudited
Change in Unaudited Pro Forma
Unaudited Accounting Pro Forma Statement of
Historical Principle Adjustments Operations
- ------------------------------------------------------------------------------------------------------------------------
NET SALES $ 414,738 $ (111,546) (c) $ 303,192
COST OF SALES 341,969 (951) (e) (81,404) (c) 259,614
-----------------------------------------------------------
GROSS PROFIT 72,769 951 (30,142) 43,578
OPERATING EXPENSES:
Selling, general and administrative expenses 53,591 -- (16,345) (c) 37,246
Research and development expenses 18,641 -- (11,831) (c) 6,810
Identifiable intangible asset impairment 464 -- (464) (c) --
Goodwill impairment 74,233 -- (74,233) (c) --
-----------------------------------------------------------
OPERATING LOSS FROM CONTINUING OPERATIONS (74,160) 951 72,731 (478)
-----------------------------------------------------------
Interest expense, net 5,015 -- (280) (d) 4,735
Other expense, net 1,612 -- (647) (c) 965
-----------------------------------------------------------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
AND MINORITY INTEREST (80,787) 951 73,658 (6,178)
Benefit for income taxes (21,289) 377 (e) 17,778 (c) (3,134)
-----------------------------------------------------------
LOSS FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST (59,498) 574 55,880 (3,044)
Minority interest (5) -- -- (5)
-----------------------------------------------------------
NET LOSS FROM CONTINUING OPERATIONS $ (59,493) $ 574 $ 55,880 $ (3,039)
===========================================================
Loss per share:
Basic:
Net loss from continuing operations $ (2.35) $ (0.12)
------------ ------------
Diluted:
Net loss from continuing operations $ (2.35) $ (0.12)
------------ ------------
Weighted average of common stock outstanding- Basic 25,349,488 25,349,488
Weighted average of common stock outstanding- Diluted 25,349,488 25,349,488
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
1. BASIS OF PRESENTATION
The accompanying unaudited pro forma consolidated financial statements
give effect to the pro forma adjustments necessary to reflect the disposition of
the Power Electronics Division as if the disposition was effective for the
periods presented in the pro forma statements of operations and as of April 30,
2007, in the pro forma consolidated balance sheet. The Company's historical
amounts represent our consolidated balance sheet and statements of operations
derived from our Annual report on Form 10-K for the years ended January 31,
2007, 2006 and 2005 and quarterly report on Form 10-Q for the period ended April
30, 2007. While the historical results of operations of the Power Electronics
Division include general corporate allocations for certain functions
historically provided by C&D Technologies, Inc. such as accounting, human
resources, information systems and executive administrative costs, for the
purposes of these pro forma financial statements no amounts for these general
corporate expenses have been allocated in the pro forma adjustments and are
included within the results of our continuing operating segments.
Effective February 1, 2007, the Company has begun classifying certain
costs, which were previously classified as cost of sales, as selling, general
and administrative expenses. For comparative purposes, the years ended January
31, 2007, 2006 and 2005, have been revised to classify $7,506, $8,745 and
$6,111, respectively, of such costs as selling, general and administrative
expenses which were previously classified as cost of sales. The following table
summarizes this revision.
Years Ended
---------------------------------------
January 31, January 31, January 31,
2007 2006 2005
---------------------------------------
Reclassfied amount $ 7,506 $ 8,745 $ 6,111
On of September 7, 2007, the Company changed the method of accounting for
its inventory from the last-in, first-out ("LIFO") to the first-in, first-out
("FIFO") method. In accordance with Statement of Financial Accounting Standards
No. 154, "Accounting Changes and Error Corrections", the Company has
retrospectively applied this change in method of inventory costing to all prior
periods.
2. PRO FORMA ADJUSTMENTS
The unaudited pro forma consolidated statements of operations and balance
sheet reflect the effect of the following pro forma adjustments:
a) The proforma balance sheet has been prepared as if the sale occurred
on April 30, 2007 and reflects the assignment of debt of $4,991 and
the repayment of the Company's line of credit facility of $32,433,
which are required to be repaid as a result of the sale.
b) The elimination of assets and liabilities associated with the Power
Electronics Division included in the Company's historical
consolidated financials statements.
c) Reduction of revenue and expenses are the result of the disposition
of the Power Electronics division. Indirect expenses, such as
corporate overheads, which previously were allocated to our Power
Electronic division, are included within the results of our
continuing operating segments.
d) To reflect the interest expense associated with the Power
Electronics Division. The Company is required to use a portion of
the proceeds from the sale of the Power Electronics Division to
repay a portion of its outstanding debt. In accordance with EITF No.
87-24, "Allocation of Interest to Discontinued Operations", interest
of debt that is required to be repaid as a result of the disposal
transaction has been allocated to the discontinued operations.
e) To reflect the change in method of accounting for the Company's
inventory.
f) To reflect the estimated pro forma gain on the sale. The estimated
pro forma gain is based on management's best estimate and is subject
to change for final working capital adjustments in accordance with
the sale agreement.
g) To reflect the elimination of cumulative translation adjustment.