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C&D Technologies Announces Second Quarter Results

BLUE BELL, Pa., Sept. 7 /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 fiscal 2008 second quarter ended July 31, 2007.

Results for the quarter and all comparative financial data included herein reflects the presentation of the Power Electronics Division ("PED") as a discontinued operation and the retrospective application of a change in the Company's accounting for inventories from the Last in First Out ("Lifo") method to the First in First Out ("Fifo") method. With the divestiture of the Power Electronics Division, C&D's remaining business is all battery-related, and as a result the Company believes the FIFO inventory method provides better comparability with industry peers, more accurate matching of the Company's revenues and expenses, a relevant and meaningful balance sheet valuation methodology and a more efficient financial closing process. A reconciliation of the impact of the change in method on the company's financial statements is included in the Company's 10-Q as filed with the SEC today.

For the quarter, the Company reported a consolidated net loss of $3.1 million or $0.12 per diluted share on consolidated revenues of $135.7 million. This compared to a net loss of $3.6 million or $0.14 per diluted share on consolidated revenues of $132.4 million in the prior year's second quarter. Revenues from continuing operations were $94.6 million in the second quarter as compared to $83.4 million in the prior year's second quarter.

Net loss from continuing operations was $1.8 million or $0.07 per diluted share during the quarter, compared to $3.9 million or $0.15 per diluted share in the second quarter of fiscal 2007. The Power Electronics Division was classified as a discontinued operation during the quarter and was divested through a sale to Murata Manufacturing that closed after quarter end. Net loss from discontinued operations was $1.3 million or $0.05 per diluted share, compared to net income of $264,000 or $0.01 per share in the second quarter of fiscal 2007.

Dr. Jeffrey A. Graves, President and CEO said, "We were pleased with our progress in the second quarter despite a further rapid escalation in the price of lead, which touched another all-time high during the period. We are benefiting from sales momentum in the UPS and Cable TV industries, and our plan to deliver current year cost reductions of approximately $15 million is ahead of schedule with the closure of our Conyers facility and other sourcing and design improvements driving good results."

Dr. Graves added, "With the sale of Power Electronics Division, which was completed at the end of August, C&D Technologies is now focused in the growing power storage industry with world-class technology, leading market share in North America, and an improving low-cost manufacturing platform. In addition, the sale proceeds from PED enabled us to recast our balance sheet by repaying all outstanding balances under our revolving line of credit, which provides us with greatly improved flexibility to support our cost reduction and growth initiatives for the foreseeable future. We presently have a cash balance in excess of $40 million as well as a PED adjusted line of credit availability of nearly $45 million"

Standby Power Division:

In the second quarter, Standby Power Division net sales were $81 million, and operating profit was $2.7 million, compared to $69.3 million and $2.7 million, respectively, in the second quarter of fiscal 2007. Revenues were up 17% compared to last year's second quarter, with a little less than half of the increase resulting from price increases and the balance from robust sales volume growth in the UPS and Cable TV industries. On a sequential basis, revenues were up 7% with most of the increase coming from price increases. Results for the second quarter included one-time costs associated with the closure of the Conyers, Georgia facility of $924,000.

Dr. Graves stated, "The Standby Power division delivered a solid quarter in a difficult market. We are holding and in some segments gaining market share, cutting costs, and improving the operational effectiveness at our manufacturing facilities. Our lead management programs and pricing actions are helping to defray the rapid escalation in lead costs, although with time lags as we have previously covered. Importantly over the last three months many of the contracts that historically had fixed prices have been renegotiated to reflect higher lead costs."

Motive Power Division:

The Motive Power Division posted total net sales of $13.6 million, and an operating loss of $2.8 million. Revenues decreased 3.5% compared to last year's second quarter, but increased 6% sequentially. Results for the quarter were impacted by an increase in warranty reserves for the division by approximately $918,000 in light of higher raw material costs for future warranty replacements.

Dr. Graves stated, "When we announced our revitalization plan for the Motive Power Division last year, we had a clear understanding of the issues we needed to tackle to turn the business around, namely to streamline our Motive manufacturing footprint with the closure of our Huguenot, New York facility, to reinvest in product development and design, and to improve execution in our manufacturing processes. While these internal actions have been completed per plan, the rapid escalation in lead costs, combined with continued high warranty costs, have negatively impacted the business performance. In addition, even though the Motive Power Division has a great reputation for manufacturing a rugged and durable high-end product, it is a relatively small player in a large, fragmented market. Given this backdrop we have recently begun reviewing strategic alternatives for the Motive Power Division. We will share more information on these plans when that process is completed."

Dr. Graves continued, "We would like to emphasize, however, that there can be no assurance that any action or transaction involving our Motive Power Division will occur or, if one is undertaken, of its potential terms or timing. We may not update its progress or disclose developments with respect to potential strategic alternatives unless our Board of Directors has approved a definitive course of action or transaction."

Conference call:

C&D management will host a conference call to discuss these financial results on September 10, 2007 at 10 a.m. Eastern Daylight Time. Those parties interested in participating in the conference call via telephone should dial 706-679-4521 and enter conference ID number 15761313. A telephone replay of the conference call will begin immediately following the call and will be available through September 24, 2007 at midnight Eastern Daylight Time. To access the rebroadcast, please dial 800-642-1687 (706-645-9291 for international callers) and enter code 15761313. A webcast of the conference call will also be available at http://www.cdtechno.com .

About C&D Technologies:

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, 2007, 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.


                   C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                   (Dollars in thousands, except par value)
                                 (UNAUDITED)

                                          Three months ended Six months ended
                                                July 31,          July 31,
                                             2007     2006     2007     2006
    NET SALES                              $94,590  $83,411 $183,055 $164,890
    COST OF SALES                           80,636   70,566  156,346  138,828
    GROSS PROFIT                            13,954   12,845   26,709   26,062

    OPERATING EXPENSES:
    Selling, general and administrative
     expenses                               12,267   11,638   24,304   22,927
    Research and development expenses        1,801    1,736    3,308    3,572
    Gain on sale of Shanghai, China plant        -        -  (15,162)       -
    OPERATING (LOSS) INCOME FROM CONTINUING
     OPERATIONS                               (114)    (529)  14,259     (437)
    Interest expense, net                    2,133    2,834    4,322    5,502
    Other (income) expense, net               (308)     445     (940)     717
    LOSS (INCOME) FROM CONTINUING OPERATIONS
     BEFORE INCOME TAXES AND MINORITY
     INTEREST                               (1,939)  (3,808)  10,877   (6,656)
    Income tax provision (benefit) from
     continuing operations                     346      155      403     (282)
    (LOSS) INCOME FROM CONTINUING OPERATIONS
     BEFORE MINORITY INTEREST               (2,285)  (3,963)  10,474   (6,374)
    Minority interest                         (526)    (102)   4,002     (315)
    (LOSS) INCOME FROM CONTINUING OPERATIONS(1,759)  (3,861)   6,472   (6,059)
    (LOSS) INCOME FROM DISCONTINUED
     OPERATIONS BEFORE INCOME TAXES         (1,219)     963   (3,167)  (1,858)
    INCOME TAX PROVISION FROM DISCONTINUED
     OPERATIONS                                104      699    2,257    2,706
    (LOSS) INCOME FROM DISCONTINUED
     OPERATIONS                             (1,323)     264   (5,424)  (4,564)
    NET (LOSS) INCOME                      $(3,082) $(3,597)  $1,048 $(10,623)
    Income (loss) per share:
    Basic:
    Net (loss) income from continuing
     operations                             $(0.07)  $(0.15)   $0.25   $(0.24)
    Net (loss) income from discontinued
     operations                             $(0.05)   $0.01   $(0.21)  $(0.18)
    Net (loss) Income                       $(0.12)  $(0.14)   $0.04   $(0.42)
    Diluted:
    Net (loss) income from continuing
     operations                             $(0.07)  $(0.15)   $0.22   $(0.24)
    Net (loss) income from discontinued
     operations                             $(0.05)   $0.01   $(0.12)  $(0.18)
    Net (loss) income                       $(0.12)  $(0.14)  $ 0.10   $(0.42)
    Dividends per share                         $-        $-      $- $0.01375

Certain classifications to these statements have been reflected for the presentation of the Power Electronics Division as discontinued operations as well as the change in method of accounting for inventories.


                   C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                   (Dollars in thousands, except par value)
                                 (UNAUDITED)

                                                         July 31,   January 31,
                                                           2007        2007
    ASSETS
    Current assets:
     Cash and cash equivalents                            $5,046      $5,384
     Accounts receivable, less allowance for doubtful
      accounts of $1,064 and $1,203                       57,142      55,397
     Inventories                                          67,859      57,041
     Deferred income taxes                                   197         134
     Prepaid taxes                                         2,561       2,634
     Other current assets                                  4,186       6,121
     Assets held for sale                                122,925     125,485
       Total current assets                              259,916     252,196

    Property, plant and equipment, net                    81,316      83,984
    Deferred income taxes                                    642         531
    Intangible and other assets, net                      16,593      15,543
    Goodwill                                              59,778      59,733

       TOTAL ASSETS                                     $418,245    $411,987

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
     Short-term debt                                     $39,501      $1,286
     Accounts payable                                     42,614      40,282
     Book overdrafts                                       3,495       2,310
     Accrued liabilities                                  13,473      13,708
     Other current liabilities                             8,836      28,983
     Liabilities held for sale                            36,212      36,532
       Total current liabilities                         144,131     123,101

    Deferred income taxes                                  9,346       9,155
    Long-term debt                                       123,421     147,925
    Other liabilities                                     31,193      28,591
       Total liabilities                                 308,091     308,772

       Minority interest                                  11,846       7,548

      Stockholders' equity:
      Common stock, $.01 par value, 75,000,000 shares
       authorized; 29,081,110 and 29,040,960 shares
       issued; 25,667,267 and 25,649,424 shares
       outstanding, respectively                             291         290
      Additional paid-in capital                          74,776      74,188
      Treasury stock, at cost, 3,413,843 and 3,391,536
       shares, respectively                              (47,239)    (47,110)
      Accumulated other comprehensive loss               (14,423)    (13,952)
      Retained earnings                                   84,903      82,251
      Total stockholders' equity                          98,308      95,667

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $418,245    $411,987

Certain classifications to these statements have been reflected for the presentation of the Power Electronics Division as discontinued operations as well as the change in method of accounting for inventories.


                   C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                   (Dollars in thousands, except par value)
                                 (UNAUDITED)

                                                          Six months ended
                                                               July 31,
                                                           2007         2006
    Cash flows from operating activities:
        Net income (loss)                                $1,048     $(10,623)
        Net loss from discontinued operations            (5,424)      (4,564)
        Net income (loss) from continuing operations      6,472       (6,059)
      Adjustments to reconcile net (loss) to continuing
       operations net cash used in continuing operating
       activities:
      Minority interest                                   4,002         (315)
      Share-based compensation                              315          174
      Depreciation and amortization                       6,341        6,557
      Amortization of debt acquisition costs                791          583
      Annual retainer to Board of Directors paid by the
       issuance of common stock                             273          224
      Deferred income taxes                                (267)         918
      Gain on disposal of assets                        (15,174)         (24)
      Changes in assets and liabilities:
        Accounts receivable                              (4,148)      (9,081)
        Inventories                                     (10,526)        (137)
        Other current assets                             (2,138)         224
        Accounts payable                                    435       (8,685)
        Accrued liabilities                                (294)       1,480
        Income taxes payable                                355         (267)
        Other current liabilities                          (365)        (578)
        Funds provided to discontinued operations        (3,844)     (11,451)
        Other long-term assets                              270           32
        Other long-term liabilities                       3,451        2,133
        Other, net                                        1,306          403
        Net cash used in continuing operating
         activities                                     (12,745)     (23,869)
        Net cash provided by discontinued operating
         activities                                         713        5,358
          Net cash used in operating activities         (12,032)     (18,511)
    Cash flows from investing activities:
      Acquisition of property, plant and equipment       (4,316)      (8,816)
      Proceeds from disposal of property, plant and
       equipment                                          1,893           30
        Net cash used in continuing investing activities (2,423)      (8,786)
        Net cash used in discontinued investing
         activities                                        (236)      (1,431)
        Net cash used in investing activities            (2,659)     (10,217)
    Cash flows from financing activities:
      Proceeds from new borrowings                       14,107       24,924
      Increase  in book overdrafts                        1,185        4,159
      Financing cost of long term debt                     (459)        (700)
      Proceeds from exercise of stock options                 -          975
      Purchase of treasury stock                           (130)        (122)
      Common stock dividends paid                             -         (352)
        Net cash provided by continuing financing
         activities                                      14,703       28,884
        Net cash used in discontinued financing
         activities                                        (405)        (524)
        Net cash provided by financing activities        14,298       28,360
    Effect of exchange rate changes on cash and cash
     equivalents                                            127          225
    Decrease in cash and cash equivalents from
     continuing operations                                 (338)      (3,546)
    Cash and cash equivalents, beginning of period        5,384       17,439
    Cash and cash equivalents, end of period             $5,046      $13,893

Certain classifications to these statements have been reflected for the presentation of the Power Electronics Division as discontinued operations as well as the change in method of accounting for inventories.

SOURCE  C&D Technologies, Inc.
    -0-                             09/07/2007
    /CONTACT:  Ian J. Harvie of C&D, +1-215-619-7835; or Joseph Crivelli of
Gregory FCA, for C&D, +1-610-642-8253 /
    /Web site:  http://www.cdtechno.com /
    (CHP)

CO:  C&D Technologies, Inc.
ST:  Pennsylvania
IN:  CPR TLS ECP
SU:  ERN CCA

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