Exide Technologies (XIDE)

 

Lead is the primary material used in the manufacture of batteries, representing approximately 49% of the Company’s cost of goods sold. Average lead prices quoted on the London Metal Exchange (“LME”) have risen dramatically, increasing from $1,426 per metric ton for fiscal 2007 to $2,856 per metric ton for fiscal 2008. As of June 3, 2008, lead prices quoted on the LME were $2,030 per metric ton. If the Company is unable to increase the prices of its products proportionate to the increase in raw material costs, the Company’s gross margins will decline. The Company cannot provide assurance that it will be able to hedge its lead requirements at reasonable costs or that the Company will be able to pass on these costs to its customers. Increases in the Company’s prices could also cause customer demand for the Company’s products to be reduced and net sales to decline. The rising cost of lead requires the Company to make significant investments in inventory and accounts receivable, which reduces amounts of cash available for other purposes, including making payments on its notes and other indebtedness. The Company also consumes significant amounts of polypropylene, steel and other materials in its manufacturing process and incurs energy costs in connection with manufacturing and shipping of its products. The market prices of these materials are also subject to fluctuation, which could further reduce the Company’s available cash.

 

Fuel costs have also increased significantly in recent months. Our results of operations could be adversely affected if we are unable to pass along price increases to address higher fuel costs related to the distribution of products from our warehouses and distribution centers to our customers.

 

 

Lead is the primary material used in the manufacture of batteries, representing approximately 40% of the Company’s cost of goods sold. Average lead prices quoted on the London Metal Exchange (“LME”) have risen dramatically, increasing from $1,041 per metric ton for fiscal 2006 to $1,426 per metric ton for fiscal 2007. As of June 8, 2007, lead prices quoted on the LME were $2,255 per metric ton. If the Company is