Exide Technologies (XIDE)

Consolidated financial statements and financial statement schedule

In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, shareholders’ equity and cash flows present fairly, in all material respects, the financial position of Exide Technologies and its subsidiaries (Successor Company) at March 31, 2005, and the results of their operations and cash flows for the period from May 6, 2004 to March 31, 2005 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule, at March 31, 2005 and for the period May 6, 2004 to March 31, 2005 listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As more fully discussed in Note 1, for each of the last three quarters in fiscal 2005, the Company was not in compliance with one or more of its debt covenants of its Senior Secured Credit Facility (Credit Agreement). In each case, the Company was either able to obtain a waiver or negotiate an amendment to the Credit Agreement to achieve compliance. The Company’s financial forecasts and plan for fiscal 2006 anticipate the Company being in compliance with its debt covenants throughout fiscal 2006. However, given the Company’s past financial performance in comparison to its budgets and forecasts, there is no assurance the Company will be able to meet its plan and be in compliance with the Credit Agreement through March 31, 2006. Should the Company be unable to comply with any of its debt covenants during fiscal 2006, it would request a waiver and/or amendment from the lenders to be in compliance with its Credit Agreement. If the lenders were unwilling or unable to provide the Company with either a waiver or an amendment, the entire debt obligation could become due and payable immediately and the Company would be forced to refinance or repay its debt obligations or seek other alternatives. The uncertainty with respect to the Company’s ability to maintain compliance with its financial covenants throughout fiscal 2006 raises substantial doubt about the Company’s ability to continue as a going concern. Furthermore, under the terms of the Credit Agreement, this going concern modification to our opinion on the financial statements is an event of default. Accordingly, certain debt obligations have been reflected in the accompanying balance sheet as current liabilities. The Company has fifteen days from formal notification to cure the default before the lenders could vote to accelerate the debt. The Company is attempting to obtain a waiver of this default with the lending institutions. The financial statements do not include any adjustments that might result from the outcome of this uncertainty, except that certain debt obligations have been reflected as current liabilities as of March 31, 2005.

As discussed in Note 1 to the consolidated financial statements, on April 15, 2002, Exide Technologies, together with certain of its U.S. subsidiaries (Debtors), filed voluntary petitions for reorganization under Chapter

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11 of the federal bankruptcy laws in the United States Court for the District of Delaware. The Debtor’s Joint Plan of Reorganization was confirmed by the Bankruptcy Court on April 21, 2004 and the Debtors declared May 5, 2004 as the effective date of the Plan as it had substantially consummated the transactions provided for in the Plan on such date. Confirmation of the plan resulted in the discharge of substantially all claims against the Company that arose before April 15, 2002 and substantially terminates all rights and interests of equity security holders as provided for in the plan. For accounting purposes the Company also recognized its emergence from bankruptcy as of May 5, 2004. In connection with its emergence from bankruptcy, the Company adopted fresh start accounting as of May 5, 2004.