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These excerpts taken from the XIDE 10-K filed Jun 4, 2009. Private
Party Lawsuits and other Legal Proceedings
In 2003, the Company served notices to reject certain executory
contracts with EnerSys, including a 1991 Trademark and Trade
Name License Agreement (the “Trademark License”),
pursuant to which the Company had licensed to EnerSys use of the
“Exide” trademark on certain industrial battery
products in the United States and 80 foreign countries. EnerSys
objected to the rejection of certain of the executory contracts,
including the Trademark License. In 2006, the Court granted the
Company’s request to reject the contracts, and it ordered a
two-year transition period, which has now expired. EnerSys
appealed those rulings, and the appeal remains pending. Because
the Bankruptcy Court authorized rejection of the Trademark
License, as with other executory contracts at issue, EnerSys
will have a pre-petition general unsecured claim relating to the
alleged damages arising therefrom. The Company reserves the
ability to consider payment in cash of some portion of any
settlement or ultimate award on EnerSys’ claim of alleged
rejection damages.
In July 2001, Pacific Dunlop Holdings (US), Inc.
(“PDH”) and several of its foreign affiliates under
the various agreements through which Exide and its affiliates
acquired GNB, filed a complaint in the Circuit Court for Cook
County, Illinois alleging breach of contract, unjust enrichment
and conversion against Exide and three of its foreign
affiliates. The plaintiffs maintain they are entitled to
approximately $17.0 million in cash assets acquired by the
defendants through their acquisition of GNB. In December 2001,
the Court denied the defendants’ motion to dismiss the
complaint, without prejudice. The defendants filed an answer and
counterclaim. In 2002, the Court authorized discovery to proceed
as to all parties except the Company. In August 2002, the case
was moved to the U.S. Bankruptcy Court for the Northern
District of Illinois. In February 2003, the U.S. Bankruptcy
Court for the Northern District of Illinois transferred the case
to the U.S. Bankruptcy Court in Delaware. In November 2003,
the Bankruptcy Court denied PDH’s motion to abstain or
remand the case and issued an opinion holding that the
Bankruptcy Court had jurisdiction over PDH’s claims and
that liability, if any, would lie solely against Exide
Technologies and not against any of its foreign affiliates. The
Bankruptcy Court denied PDH’s motion to reconsider. In an
order dated March 22, 2007, the U.S. District Court
for the District of Delaware denied PDH’s appeal in its
entirety, affirming the Orders of the Bankruptcy Court. PDH then
appealed the matter to the United States Court of Appeals for
the Third Circuit. On September 19, 2008, the Third Circuit
vacated the prior orders of the Bankruptcy Court, remanding the
matter with instructions that the Bankruptcy Court hear evidence
before ruling whether Exide (as opposed to its non-debtor
affiliates) would be solely liable, if any liability is found at
all, under the GNB agreements.
In December 2001, PDH filed a separate action in the Circuit
Court for Cook County, Illinois seeking recovery of
approximately $3.1 million for amounts allegedly owed by
the Company under various agreements between the parties. The
claim arises from letters of credit and other security allegedly
provided by PDH for GNB’s performance of certain of
GNB’s obligations to third parties that PDH claims the
Company was obligated to replace. The Company’s answer
contested the amounts claimed by PDH and the Company filed a
counterclaim. Although this action has been consolidated with
the Cook County suit concerning GNB’s cash assets, the
claims relating to this action have been transferred to the
U.S. Bankruptcy Court for the District of Delaware and are
currently subject to a stay injunction by that court. The
Company plans to vigorously defend itself and pursue its
counterclaims.
As previously reported, in June 2005 two former stockholders,
Aviva Partners LLC and Robert Jarman filed purported class
action lawsuits against the Company and certain of its current
and former officers alleging violations of certain federal
securities laws in the United States District Court for the
District of New
Table of Contents
EXIDE
TECHNOLOGIES AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Jersey (the “Court”). United States District Judge
Mary L. Cooper consolidated the Aviva Partners and Jarman cases
under the Aviva Partners v. Exide Technologies, Inc.
caption.
The Company and plaintiffs’ Court-appointed representatives
(the “Lead Plaintiffs”) reached an agreement in
principle to settle this litigation (the “Proposed
Settlement”). Any payment under the Proposed Settlement
would be made by the Company’s insurers and would have no
material impact on the Company’s financial statements or
results of operations.
The Proposed Settlement was approved by the Board of Trustees of
co-Lead Plaintiff Alaska Hotel and Restaurant Employees Pension
Trust Fund, and thereafter the Company and Lead Plaintiffs
negotiated a definitive agreement (the “Settlement
Agreement”). The Court issued its Order Preliminarily
Approving Settlement and Providing for Notice on April 13,
2009. Notice has been given to prospective class members. The
Company’s insurer has paid the full $13.7 million
settlement required pursuant to the Proposed Settlement into an
escrow account pending final approval of the Proposed Settlement
by the Court. The Court’s final approval hearing is
currently scheduled for June 23, 2009. Subject to final
approval of the Proposed Settlement by the Court this litigation
will be dismissed in its entirety, with prejudice. Under the
terms of the Proposed Settlement, the Company and the former
officers continue to deny the allegations in Plaintiffs’
complaints.
On July 1, 2005, the Company was informed by the
Enforcement Division of the Securities and Exchange Commission
(the “SEC”) that it commenced a preliminary inquiry
into statements the Company made in fiscal 2005 regarding its
ability to comply with fiscal 2005 loan covenants and the going
concern modification in the audit report in the Company’s
annual report on
Form 10-K
for fiscal 2005. The SEC noted that the inquiry should not be
construed as an indication by the SEC or its staff that any
violations of law have occurred. The Company intends to fully
cooperate with the inquiry and continues to do so.
Private
Party Lawsuits and other Legal Proceedings
In July 2001, Pacific Dunlop Holdings (US), Inc.
(“PDH”) and several of its foreign affiliates under
the various agreements through which Exide and its affiliates
acquired GNB, filed a complaint in the Circuit Court for Cook
County, Illinois alleging breach of contract, unjust enrichment
and conversion against Exide and three of its foreign
affiliates. The plaintiffs maintain they are entitled to
approximately $17.0 million in cash assets acquired by the
defendants through their acquisition of GNB. In December 2001,
the Court denied the defendants’ motion to dismiss the
complaint, without prejudice. The defendants filed an answer and
counterclaim. In 2002, the Court authorized discovery to proceed
as to all parties except the Company. In August 2002, the case
was moved to the U.S. Bankruptcy Court for the Northern
District of Illinois. In February 2003, the U.S. Bankruptcy
Court for the Northern District of Illinois transferred the case
to the U.S. Bankruptcy Court in Delaware. In November 2003,
the Bankruptcy Court denied PDH’s motion to abstain or
remand the case and issued an opinion holding that the
Bankruptcy Court had jurisdiction over PDH’s claims and
that liability, if any, would lie solely against Exide
Technologies and not against any of its foreign affiliates. The
Bankruptcy Court denied PDH’s motion to reconsider. In an
order dated March 22, 2007, the U.S. District Court
for the District of Delaware denied PDH’s appeal in its
entirety, affirming the Orders of the Bankruptcy Court. PDH then
appealed the matter to the United States Court of Appeals for
the Third Circuit. On September 19, 2008, the Third Circuit
vacated the prior orders of the Bankruptcy Court, remanding the
matter with instructions that the Bankruptcy Court hear evidence
before ruling whether Exide (as opposed to its non-debtor
affiliates) would be solely liable, if any liability is found at
all, under the GNB agreements.
In December 2001, PDH filed a separate action in the Circuit
Court for Cook County, Illinois seeking recovery of
approximately $3.1 million for amounts allegedly owed by
the Company under various agreements between the parties. The
claim arises from letters of credit and other security allegedly
provided by PDH for GNB’s performance of certain of
GNB’s obligations to third parties that PDH claims the
Company was obligated to replace. The Company’s answer
contested the amounts claimed by PDH and the Company filed a
counterclaim. Although this action has been consolidated with
the Cook County suit concerning GNB’s cash assets, the
claims relating to this action have been transferred to the
U.S. Bankruptcy Court for the District of Delaware and are
currently subject to a stay injunction by that court. The
Company plans to vigorously defend itself and pursue its
counterclaims.
This excerpt taken from the XIDE 10-K filed Jun 9, 2008. Private
Party Lawsuits and other Legal Proceedings
In July 2001, Pacific Dunlop Holdings (US), Inc.
(“PDH”) and several of its foreign affiliates under
the various agreements through which Exide and its affiliates
acquired GNB, filed a complaint in the Circuit Court for
Table of Contents
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Cook County, Illinois alleging breach of contract, unjust
enrichment and conversion against Exide and three of its foreign
affiliates. The plaintiffs maintain they are entitled to
approximately $17.0 million in cash assets acquired by the
defendants through their acquisition of GNB. In December 2001,
the Court denied the defendants’ motion to dismiss the
complaint, without prejudice. The defendants filed an answer and
counterclaim. In 2002 the Court authorized discovery to proceed
as to all parties except Exide. In August 2002, the case was
removed to the U.S. Bankruptcy Court for the Northern
District of Illinois. In February 2003, the U.S. Bankruptcy
Court for the Northern District of Illinois transferred the case
to the U.S. Bankruptcy Court in Delaware. In November 2003,
the Bankruptcy Court denied PDH’s motion to abstain or
remand the case and issued an opinion holding that the
Bankruptcy Court had jurisdiction over PDH’s claims and
that liability, if any, would lie solely against Exide
Technologies and not against any of its foreign affiliates. The
Bankruptcy Court denied PDH’s motion to reconsider, which
PDH then appealed to the United States District Court for the
District of Delaware. In an order dated March 22, 2007, the
U.S. District Court for the District of Delaware denied
PDH’s appeal in its entirety, affirming the Orders of the
Bankruptcy Court. PDH has noticed its appeal of this Order to
the United States Court of Appeals for the Third Circuit.
In December 2001, PDH filed a separate action in the Circuit
Court for Cook County, Illinois seeking recovery of
approximately $3.1 million for amounts allegedly owed by
Exide under various agreements between the parties. The claim
arises from letters of credit and other security allegedly
provided by PDH for GNB’s performance of certain of
GNB’s obligations to third parties that PDH claims Exide
was obligated to replace. Exide’s answer contested the
amounts claimed by PDH and Exide filed a counterclaim. Although
this action has been consolidated with the Cook County suit
concerning GNB’s cash assets, the claims relating to this
action have been transferred to the U.S. Bankruptcy Court
for the District of Delaware and are currently subject to a stay
injunction by that court. The Company plans to vigorously defend
itself and pursue its counterclaims.
From 1957 to 1982, CEAC, the Company’s principal French
subsidiary, operated a plant using crocidolite asbestos fibers
in the formation of battery cases, which, once formed,
encapsulated the fibers. Approximately 1,500 employees
worked in the plant over the period. Since 1982, the French
governmental agency responsible for worker illness claims
received 64 employee claims alleging asbestos-related
illnesses. For some of those claims, CEAC is obligated to and
has indemnified the agency in accordance with French law for
approximately $0.4 million in calendar 2004. In addition,
CEAC has been adjudged liable to indemnify the agency for
approximately $0.1 million during the same period for the
dependents of four such claimants. The Company has not been
required to indemnify or make any payments subsequent to
calendar year 2004. In 2007, CEAC has been adjudged to indemnify
the agency for approximately $0.3 million. No payment has
yet been made to the agency. Although the Company cannot predict
the number or size of any future claims, the Company does not
believe resolution of the current or any future claims,
individually or in the aggregate, will have a material adverse
effect on the Company’s financial condition, cash flows or
results of operations.
The Company is involved in various other claims and litigation
incidental to the conduct of its business. Based on consultation
with legal counsel, the Company does not believe that any such
claims or litigation to which the Company is a party, either
individually or in the aggregate, will have a material adverse
effect on the Company’s financial condition, cash flows or
results of operations.
This excerpt taken from the XIDE 10-K filed Jun 11, 2007. Private
Party Lawsuits and other Legal Proceedings
In July 2001, Pacific Dunlop Holdings (US), Inc.
(“PDH”) and several of its foreign affiliates under
the various agreements through which the Parent Company and its
affiliates acquired GNB, filed a complaint in the Circuit Court
for Cook County, Illinois alleging breach of contract, unjust
enrichment and conversion against the Parent Company and three
of its foreign affiliates. The plaintiffs maintain they are
entitled to approximately $17 million in cash assets
acquired by the defendants through their acquisition of GNB. In
December 2001, the Court denied the defendants’ motion to
dismiss the complaint, without prejudice to re-filing the same
motion after discovery proceeds. The defendants filed an answer
and counterclaim. On July 8, 2002, the Court authorized
discovery to proceed as to all parties except Exide. In August
2002, the case was removed to the U.S. Bankruptcy Court for
the Northern District of Illinois and in October 2002, the
parties presented oral arguments, in the case of PDH, to remand
the case to Illinois state court and, in the case of Exide, to
transfer the case to the U.S. Bankruptcy Court for the
District of Delaware. In February 2003, the U.S. Bankruptcy
Court for the Northern District of Illinois transferred the case
to the U.S. Bankruptcy Court in Delaware. In November 2003,
the Bankruptcy Court denied PDH’s motion to abstain or
remand the case and issued an opinion holding that the
Bankruptcy Court had jurisdiction over PDH’s claims and
that liability, if any, would lie solely against the Parent
Company and not against any of its foreign affiliates. The
Bankruptcy Court denied PDH’s motion to reconsider. In an
order dated March 22, 2007, the U.S. District Court
for the District of Delaware denied PDH’s appeal in its
entirety, affirming the orders of the Bankruptcy Court. PDH has
noticed the appeal of this order to the United States Court of
Appeals for the Third Circuit.
In December 2001, PDH filed a separate action in the Circuit
Court for Cook County, Illinois seeking recovery of
approximately $3.1 million for amounts allegedly owed by
the Parent Company under various agreements between the parties.
The claim arises from letters of credit and other security
allegedly provided by PDH for GNB’s performance of certain
of GNB’s obligations to third parties that PDH claims the
Parent Company was obligated to replace. The Parent
Company’s answer contested the amounts claimed by PDH and
the Parent Company filed a counterclaim. Although this action
has been consolidated with the Cook County suit concerning
GNB’s cash assets, the claims relating to this action have
been transferred to the U.S. Bankruptcy Court for the
District of Delaware and are currently subject to a stay
injunction by that court. The Parent Company plans to vigorously
defend itself and pursue its counterclaims.
From 1957 to 1982, CEAC, the Company’s principal French
subsidiary, operated a plant using crocidolite asbestos fibers
in the formation of battery cases, which, once formed,
encapsulated the fibers. Approximately 1,500 employees
worked in the plant over the period. Since 1982, the French
governmental agency responsible for worker illness claims
received 64 employee claims alleging asbestos-related
illnesses. For some of those claims, CEAC is obligated to and
has indemnified the agency in accordance with French law for
approximately $0.4 million in calendar 2004. In addition,
CEAC has been adjudged liable to indemnify the agency for
approximately $0.1 million during the same period for the
dependents of four such claimants. The Company was not required
to indemnify or make any payments in calendar years 2005 and
2006. Although the Company cannot predict the number or size of
any future claims, the Company does not believe resolution of
the current or any future claims, individually or in the
aggregate, will have a material adverse effect on the
Company’s financial condition, cash flows or results of
operations.
The Company’s Norwegian subsidiary, Exide Sonnak AS, has
received notice of claims for property damage in the approximate
amount of $5.6 million allegedly as the result of a
warehouse fire occurring on or about July 8, 2005 in
Trondheim, Norway due to an alleged malfunctioning battery
charger allegedly manufactured by the Company. The Company and
its counsel are evaluating those claims. The Company currently
believes that any potential liability would be covered by
applicable insurance, subject to any deductible.
Table of Contents
EXIDE
GLOBAL HOLDING NETHERLANDS C.V. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Company is involved in various other claims and litigation
incidental to the conduct of its business. Based on consultation
with legal counsel, the Company does not believe that any such
claims or litigation to which the Company is a party, either
individually or in the aggregate, will have a material adverse
effect on the Company’s financial condition, cash flows or
results of operations.
This excerpt taken from the XIDE 10-K filed Jun 29, 2005. Private Party Lawsuits and other Legal Proceedings
On March 14, 2003, the Company served notices to reject certain executory contracts with EnerSys, including a 1991 Trademark and Trade Name License Agreement (the “Trademark License”), pursuant to which the Company had licensed to EnerSys use of the “Exide” trademark on certain industrial battery products in the United States and 37 foreign countries. EnerSys objected to the rejection of certain of the executory contracts, including the Trademark License, and the Bankruptcy Court conducted a hearing on the Company’s rejection request. No ruling has yet been issued. If the Bankruptcy Court permits the Company to reject the Trademark License, in the absence of a successful appeal, EnerSys will likely lose all rights to use the “Exide” trademark over time and the Company will have greater flexibility in its ability to use that mark for industrial battery products. In the event the Bankruptcy Court authorizes rejection of the Trademark License, as with other executory contracts at issue, EnerSys will have a pre-petition general unsecured claim relating to the damages arising therefrom.
In July 2001, Pacific Dunlop Holdings (US), Inc. (“PDH”) and several of its foreign affiliates under the various agreements through which Exide and its affiliates acquired GNB, filed a complaint in the Circuit Court for Cook County, Illinois alleging breach of contract, unjust enrichment and conversion against Exide and three of its foreign affiliates. The plaintiffs maintain they are entitled to approximately $17 million in cash assets acquired by the defendants through their acquisition of GNB. In December 2001, the Court denied the defendants’ motion to dismiss the complaint, without prejudice to re-filing the same motion after discovery proceeds. The defendants filed an answer and counterclaim. On July 8, 2002, the Court authorized discovery to proceed as to all parties except Exide. In August 2002, the case was removed to the U.S. Bankruptcy Court for the Northern District of Illinois and in October 2002, the parties presented oral arguments, in the case of PDH, to remand the case to Illinois state court and, in the case of Exide, to transfer the case to the U.S. Bankruptcy Court for the District of Delaware. On February 4, 2003, the U.S. Bankruptcy Court for the Northern District of Illinois transferred the case to the U.S. Bankruptcy Court in Delaware. On November 19, 2003, the Bankruptcy Court
F-42
Table of ContentsEXIDE TECHNOLOGIES AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
denied PDH’s motion to abstain or remand the case and issued an opinion holding that the Bankruptcy Court had jurisdiction over PDH’s claims and that liability, if any, would lie solely against Exide Technologies and not against any of its foreign affiliates. PDH subsequently filed a motion to reconsider, and on June 16, 2005, the Bankruptcy Court denied PDH’s motion to reconsider. In December 2001, PDH filed a separate action in the Circuit Court for Cook County, Illinois seeking recovery of approximately $3.1 million for amounts allegedly owed by Exide under various agreements between the parties. The claim arises from letters of credit and other security allegedly provided by PDH for GNB’s performance of certain of GNB’s obligations to third parties that PDH claims Exide was obligated to replace. Exide’s answer contested the amounts claimed by PDH and Exide filed a counterclaim. Although this action has been consolidated with the Cook County suit concerning GNB’s cash assets, the claims relating to this action have been transferred to the U.S. Bankruptcy Court for the District of Delaware and are currently subject to a stay injunction by that court. The Company plans to vigorously defend itself and pursue its counterclaims.
From 1957 to 1982, CEAC, the Company’s principal French subsidiary, operated a plant using crocidolite asbestos fibers in the formation of battery cases, which, once formed, encapsulated the fibers. Approximately 1,500 employees worked in the plant over the period. Since 1982, the French governmental agency responsible for worker illness claims received 45 employee claims alleging asbestos-related illnesses. For some of those claims, CEAC is obligated to and has indemnified the agency in accordance with French law for approximately $260,000 and $378,000 in calendar 2003 and 2004, respectively. In addition, CEAC has been adjudged liable to indemnify the agency for approximately $200,000 and $107,000 during the same periods to date for the dependents of four such claimants. The Company has not yet been required to indemnify or make any payments in 2005. Although the Company cannot predict the number or size of any future claims, the Company does not believe resolution of the current or any future claims, individually or in the aggregate, will have a material adverse effect on the Company’s financial condition, cash flows or results of operations.
The Company’s Shanghai, China subsidiary, Exide Technologies (Shanghai) Company Limited (“Exide Shanghai”), has been the subject of an investigation by the Anti-Smuggling Bureau of the Shanghai Customs Administration (“Anti-Smuggling Bureau”). A report was submitted by the Anti-Smuggling Bureau to the Shanghai Municipal People’s Public Prosecutor’s Office, First Division (“Prosecutor’s Office”). The Prosecutor’s Office rejected the report and requested further investigation by the Anti-Smuggling Bureau. The company has been advised recently that the supplemental investigation has been completed and new prosecution opinions have been submitted to the Public Prosecutor’s Office, which contains the same findings, but also includes the names of additional dealers of the Company’s products as witnesses.
In April 2003, the Company sold its Torrejon, Spain nickel-cadmium plant. The Torrejon courts are conducting an investigation of two petitions submitted to determine whether criminal charges should be filed for alleged endangerment of workers’ health at the former Torrejon plant. The petitions contain criminal allegations against former employees but only allegations of civil liability against the Company. The investigations have been consolidated into one court. The Company has retained counsel in the event that any charges ultimately are filed.
Between 1996 and 2002, one of the Company’s Spanish subsidiaries negotiated dual-scale salaries under collective bargaining agreements for workers at numerous facilities. Several claims challenging the dual-scale salary system have been brought in various Spanish courts covering multiple jurisdictions. To date, the Company has lost its challenges in only one jurisdiction, and prevailed in other jurisdictions. The Company continues to litigate these matters and does not currently anticipate any material adverse affect on the Company’s financial condition, cash flows or results of operations.
On June 15, 2005, Aviva Partners LLC filed a purported class action lawsuit against the Company, Gordon Ulsh, J. Timothy Gargaro and Craig Mulhauser alleging violations of certain federal securities laws. The case was
F-43
Table of ContentsEXIDE TECHNOLOGIES AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
filed in the United States District Court for the District of New Jersey purportedly on behalf of purchasers of the Company’s stock between November 16, 2004 and May 17, 2005. The complaint alleges that certain public statements made during this period by the Company and its officers constituted material misstatements in violation of Rule 10b-5 under the Securities Exchange Act. The complaint does not specify an amount of damages sought. The Company denies the allegations in the complaint and intends to vigorously pursue its defense.
The Company is involved in various other claims and litigation incidental to the conduct of its business. Based on consultation with legal counsel, the Company does not believe that any such claims or litigation to which the Company is a party, either individually or in the aggregate, will have a material adverse effect on the Company’s financial condition, cash flows or results of operations.
This excerpt taken from the XIDE 10-K filed Mar 1, 2005. Private Party Lawsuits and other Legal Proceedings
On March 14, 2003, the Company served notices to reject certain executory contracts with EnerSys, including a 1991 Trademark and Trade Name License Agreement (the “Trademark License”), pursuant to which the Company had licensed to EnerSys use of the “Exide” trademark on certain industrial battery products in the United States and 37 foreign countries. EnerSys objected to the rejection of certain of the executory contracts, including the Trademark License, and the Bankruptcy Court conducted a hearing on the Company’s rejection request. No ruling has been issued yet. If the Bankruptcy Court permits the Company to reject the Trademark License, EnerSys will likely lose all rights to use the “Exide” trademark and the Company will have greater flexibility in its ability to use that mark for industrial battery products. In the event the Bankruptcy Court authorizes rejection of the Trademark License, as with other executory contracts at issue, EnerSys will have a pre-petition general unsecured claim relating to the damages arising therefrom.
In July 2001, Pacific Dunlop Holdings (US), Inc. (“PDH”) and several of its foreign affiliates under the various agreements through which Exide and its affiliates acquired GNB, filed a complaint in the Circuit Court for Cook County, Illinois alleging breach of contract, unjust enrichment and conversion against Exide and three of its foreign affiliates. The plaintiffs maintain they are entitled to approximately $17,000 in cash assets acquired by the defendants through their acquisition of GNB. In December 2001, the Court denied the defendants’ motion to dismiss the complaint, without prejudice to re-filing the same motion after discovery proceeds. The defendants have filed an answer and counterclaim. On July 8, 2002, the Court authorized discovery to proceed as to all parties except Exide. In August 2002, the case was removed to the U.S. Bankruptcy Court for the Northern District of Illinois and in October 2002, the parties presented oral arguments, in the case of PDH, to remand the
F-37
Table of ContentsEXIDE TECHNOLOGIES AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
case to Illinois state court and, in the case of Exide, to transfer the case to the U.S. Bankruptcy Court for the District of Delaware. On February 4, 2003, the U.S. Bankruptcy Court for the Northern District of Illinois transferred the case to the U.S. Bankruptcy Court in Delaware. On November 19, 2003, the Bankruptcy Court denied PDH’s motion to abstain or remand the case and issued an opinion holding that the Bankruptcy Court had jurisdiction over PDH’s claims and, moreover, holding that liability, if any, would lie solely against Exide Technologies and not against any of its foreign affiliates. PDH subsequently filed a motion to reconsider, and the Bankruptcy Court has taken the motion under advisement. In December 2001, PDH filed a separate action in the Circuit Court for Cook County, Illinois seeking recovery of approximately $3,100 for amounts allegedly owed by Exide under various agreements between the parties. The claim arises from letters of credit and other security allegedly provided by PDH for GNB’s performance of certain of GNB’s obligations to third parties that PDH claims Exide was obligated to replace. Exide’s answer contested the amounts claimed by PDH and Exide filed a counterclaim. Although this action has been consolidated with the Cook County suit concerning GNB’s cash assets, the claims relating to this action have been transferred to the U.S. Bankruptcy Court for the District of Delaware and are currently subject to a stay injunction entered by that court. The Company plans to vigorously defend itself and pursue its counterclaims.
From 1957 to 1982, CEAC, the Company’s principal French subsidiary, operated a plant using crocidolite asbestos fibers in the formation of battery cases, which, once formed, encapsulated the fibers. Approximately 1,500 employees worked in the plant over the period. Since 1982, the French governmental agency responsible for worker illness claims has received 34 employee claims alleging asbestos-related illnesses, and no such claims have been filed since August 2001. For some of those claims, CEAC is obligated to and has indemnified the agency in accordance with French law for approximately $169, $260 and $378 in calendar years 2002, 2003 and 2004, respectively. In addition, CEAC has been adjudged liable to indemnify the agency for approximately $78, $200 and $107 during the same periods to date for the dependents of four such claimants. Although the Company cannot predict the number or size of any future claims, the Company does not believe resolution of the current or any future claims, individually or in the aggregate, will have a material adverse effect on the Company’s financial condition, cash flows or results of operations.
The Company’s Shanghai, China subsidiary, Exide Technologies (Shanghai) Company Limited (“Exide Shanghai”), has been informed by the Shanghai Customs Administration that it is the subject of an investigation. An Exide Shanghai employee was detained and subsequently released by the authorities pending completion of the investigation. Based on Peoples Republic of China law, as well as Shanghai provincial law, the Shanghai Customs Administration has not disclosed the nature of the investigation or the charges which may result. The Company is awaiting the conclusion of the investigation. Exide Shanghai had total assets of approximately $7,800 at March 31, 2004 and revenues of $10,600 for fiscal year ended 2004.
In April 2003, the Company sold its Torrejon, Spain nickel-cadmium plant. A Torrejon court is conducting an investigation of two petitions submitted to it to determine whether criminal charges should be filed for alleged endangerment of workers’ health at the former Torrejon plant. The Company has retained counsel in the event that any charges ultimately are filed.
Between 1996 and 2002, one of the Company’s Spanish subsidiaries negotiated dual-scale salaries under collective bargaining agreements for workers at numerous facilities. Several claims challenging the dual-scale salary system have been brought in various Spanish courts covering multiple jurisdictions. To date, the Company has lost its challenges in only one jurisdiction, and prevailed in other jurisdictions. The Company continues to litigate these matters and does not currently anticipate any material adverse affect on the Company’s financial condition, cash flows or results of operations.
The Company is involved in various other claims and litigation incidental to the conduct of its business. Based on consultation with legal counsel, the Company does not believe that any such claims or litigation to
F-38
Table of ContentsEXIDE TECHNOLOGIES AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
which the Company is a party, either individually or in the aggregate, will have a material adverse effect on the Company’s financial condition, cash flows or results of operations.
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