UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
FORM 10-Q

(Mark One)
☒
ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2017
2023
☐
¨TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                     
Commission File Number: 001-32253 
 EnerSys
(Exact name of registrant as specified in its charter) 
Delaware23-3058564
Delaware23-3058564
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)

2366 Bernville Road

Reading, Pennsylvania 19605

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: 610-208-1991

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par value per shareENSNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ý  YESYes    ¨  NO.No.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934. 

Large Accelerated FilerýAccelerated filer☐
Large accelerated filerýAccelerated filer¨
Non-accelerated filer☐
¨  (Do not check if a smaller reporting company)
Smaller reporting company¨☐
Emerging growth company¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    ¨☐  YESYes    ý  NO.No.

Common Stock outstanding at February 2, 2018: 41,910,0792024: 40,415,975 shares

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EnerSys
ENERSYS
INDEX – FORM 10-Q
  Page
Item 1.
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4
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8
1
8
2
9
3
9
4
10
5
10
6
12
7
16
8
17
9
17
10
18
11
18
12
21
13
21
14
22
15
28
16
29
17
29
Item 2.
30
Item 3.
44
Item 4.
46
Item 1.
47
Item 1A.
47
Item 2.
48
Item 4.
48
Item 5.
48
Item 6.
49
50
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   Page
PART I – FINANCIAL INFORMATION
 
    
Item 1.
Financial Statements
 
    
 
Consolidated Condensed Balance Sheets (Unaudited) as of December 31, 2017 and March 31, 2017
4
    
 
Consolidated Condensed Statements of Income (Unaudited) for the Quarters Ended December 31, 2017 and January 1, 2017
5
    
 
Consolidated Condensed Statements of Income (Unaudited) for the Nine Months Ended December 31, 2017 and January 1, 2017
 
    
 
Consolidated Condensed Statements of Comprehensive Income (Unaudited) for the Quarters and Nine Months Ended December 31, 2017 and January 1, 2017
7
    
 
Consolidated Condensed Statements of Cash Flows (Unaudited) for the Nine Months Ended December 31, 2017 and January 1, 2017
8
    
 
Notes to Consolidated Condensed Financial Statements (Unaudited)
9
 
1
Basis of Presentation
9
 
2
Inventories
10
 
3
Fair Value of Financial Instruments
10
 
4
Derivative Financial Instruments
11
 
5
Income Taxes
13
 
6
Warranty
14
 
7
Commitments, Contingencies and Litigation
14
 
8
Restructuring Plans
15
 
9
Debt
17
 
10
Retirement Plans
18
 
11
Stock-Based Compensation
18
 
12
Stockholders’ Equity and Noncontrolling Interests
19
 
13
Earnings Per Share
22
 
14
Business Segments
23
 
15
Subsequent Events
23
    
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
24
    
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
34
    
Item 4.
Controls and Procedures
35
  
PART II – OTHER INFORMATION
 
    
Item 1.
Legal Proceedings
36
    
Item 1A.
Risk Factors
36
    
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
36
    
Item 4.
Mine Safety Disclosures
36
    
Item 6.
Exhibits
37
  
SIGNATURES
38


Table of Contents
PART I –FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS

ENERSYSEnerSys
Consolidated Condensed Balance Sheets (Unaudited)
(In Thousands, Except Share and Per Share Data) 
December 31, 2023March 31, 2023
Assets
Current assets:
Cash and cash equivalents$332,714 $346,665 
Accounts receivable, net of allowance for doubtful accounts: December 31, 2023 - $10,312; March 31, 2023 - $8,775498,499 637,817 
Inventories, net755,163 797,798 
Prepaid and other current assets185,901 113,601 
Total current assets1,772,277 1,895,881 
Property, plant, and equipment, net523,558 513,283 
Goodwill691,172 676,715 
Other intangible assets, net334,972 360,412 
Deferred taxes53,406 49,152 
Other assets127,253 121,231 
Total assets$3,502,638 $3,616,674 
Liabilities and Equity
Current liabilities:
Short-term debt$30,937 $30,642 
Accounts payable342,066 378,641 
Accrued expenses289,892 309,037 
Total current liabilities662,895 718,320 
Long-term debt, net of unamortized debt issuance costs880,833 1,041,989 
Deferred taxes60,065 61,118 
Other liabilities168,818 191,366 
Total liabilities1,772,611 2,012,793 
Commitments and contingencies
Equity:
Preferred Stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding at December 31, 2023 and at March 31, 2023— — 
Common Stock, $0.01 par value per share, 135,000,000 shares authorized, 56,347,317 shares issued and 40,399,131 shares outstanding at December 31, 2023; 56,004,613 shares issued and 40,901,059 shares outstanding at March 31, 2023563 560 
Additional paid-in capital620,408 596,464 
Treasury stock at cost, 15,948,186 shares held as of December 31, 2023 and 15,103,554 shares held as of March 31, 2023(822,658)(740,956)
Retained earnings2,112,259 1,930,148 
Contra equity - indemnification receivable(1,988)(2,463)
Accumulated other comprehensive loss(182,050)(183,474)
Total EnerSys stockholders’ equity1,726,534 1,600,279 
Nonredeemable noncontrolling interests3,493 3,602 
Total equity1,730,027 1,603,881 
Total liabilities and equity$3,502,638 $3,616,674 
  December 31, 2017 March 31, 2017
Assets    
Current assets:    
Cash and cash equivalents $571,322
 $500,329
Accounts receivable, net of allowance for doubtful accounts: December 31, 2017 - $13,032; March 31, 2017 - $12,662 494,934
 486,646
Inventories, net 421,970
 360,694
Prepaid and other current assets 73,588
 71,246
Total current assets 1,561,814
 1,418,915
Property, plant, and equipment, net 374,736
 348,549
Goodwill 348,878
 328,657
Other intangible assets, net 149,368
 153,960
Deferred taxes 34,730
 31,587
Other assets 12,476
 11,361
Total assets $2,482,002
 $2,293,029
Liabilities and Equity    
Current liabilities:    
Short-term debt $16,842
 $18,359
Accounts payable 227,294
 222,493
Accrued expenses 206,032
 226,579
Total current liabilities 450,168
 467,431
Long-term debt, net of unamortized debt issuance costs 689,021
 587,609
Deferred taxes 39,670
 45,923
Other liabilities 177,169
 83,697
Total liabilities 1,356,028
 1,184,660
Commitments and contingencies 


 


Equity:    
Preferred Stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding at December 31, 2017 and at March 31, 2017 —
 —
Common Stock, $0.01 par value per share, 135,000,000 shares authorized; 54,590,184 shares issued and 42,126,817 shares outstanding at December 31, 2017; 54,370,810 shares issued and 43,447,536 shares outstanding at March 31, 2017 546
 544
Additional paid-in capital 452,248
 464,092
Treasury stock, at cost, 12,463,367 shares held as of December 31, 2017; 10,923,274 shares held as of March 31, 2017 (540,991) (439,800)
Retained earnings 1,274,038
 1,231,444
Accumulated other comprehensive loss (65,017) (152,824)
Total EnerSys stockholders’ equity 1,120,824
 1,103,456
Nonredeemable noncontrolling interests 5,150
 4,913
Total equity 1,125,974
 1,108,369
Total liabilities and equity $2,482,002
 $2,293,029
See accompanying notes.

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Table of Contents
ENERSYSEnerSys
Consolidated Condensed Statements of Income (Unaudited)
(In Thousands, Except Share and Per Share Data)

Quarter ended
 Quarter ended December 31, 2023January 1, 2023
 December 31, 2017 January 1, 2017
Sales from products
Sales from services
Net sales $658,935
 $563,697
Cost of goods sold 491,970
 408,315
Cost of services
Inventory adjustment relating to exit activities —
 (502)
Gross profit 166,965
 155,884
Operating expenses 96,717
 85,014
Restructuring charges and other exit charges (credits) 1,808
 (1,153)
Legal proceedings charge —
 17,000
Restructuring and other exit charges
Impairment of indefinite-lived intangibles
Operating earnings 68,440
 55,023
Interest expense 6,469
 5,646
Other (income) expense, net (557) (1,247)
Other expense (income), net
Earnings before income taxes 62,528
 50,624
Income tax expense 88,307
 13,529
Net (loss) earnings (25,779) 37,095
Net earnings attributable to noncontrolling interests 68
 860
Net (loss) earnings attributable to EnerSys stockholders $(25,847) $36,235
Net (loss) earnings per common share attributable to EnerSys stockholders:    
Net earnings attributable to EnerSys stockholders
Net earnings attributable to EnerSys stockholders
Net earnings attributable to EnerSys stockholders
Net earnings per common share attributable to EnerSys stockholders:
Basic
Basic
Basic $(0.61) $0.83
Diluted $(0.61) $0.82
Dividends per common share $0.175
 $0.175
Weighted-average number of common shares outstanding:    
Basic 42,125,745
 43,429,525
Basic
Basic
Diluted 42,125,745
 44,049,674
See accompanying notes.



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Table of Contents
ENERSYSEnerSys
Consolidated Condensed Statements of Income (Unaudited)
(In Thousands, Except Share and Per Share Data)

Nine months ended
 Nine months ended December 31, 2023January 1, 2023
 December 31, 2017 January 1, 2017
Sales from products
Sales from services
Net sales $1,898,849
 $1,740,348
Cost of goods sold 1,408,913
 1,254,678
Cost of services
Inventory adjustment relating to exit activities —
 2,157
Gross profit 489,936
 483,513
Operating expenses 283,478
 277,512
Restructuring charges 4,417
 5,037
Legal proceedings charge —
 17,000
Restructuring and other exit charges
Impairment of indefinite-lived intangibles
Operating earnings
Operating earnings
Operating earnings 202,041
 183,964
Interest expense 18,712
 16,820
Other (income) expense, net 4,736
 (496)
Other expense (income), net
Earnings before income taxes 178,593
 167,640
Income tax expense 112,899
 43,133
Net earnings 65,694
 124,507
Net earnings (losses) attributable to noncontrolling interests 118
 (1,937)
Net earnings attributable to EnerSys stockholders
Net earnings attributable to EnerSys stockholders
Net earnings attributable to EnerSys stockholders $65,576
 $126,444
Net earnings per common share attributable to EnerSys stockholders:    
Basic
Basic
Basic $1.53
 $2.92
Diluted $1.51
 $2.88
Dividends per common share $0.525
 $0.525
Weighted-average number of common shares outstanding:    
Basic 42,837,986
 43,375,474
Basic
Basic
Diluted 43,345,926
 43,943,010
See accompanying notes.

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Table of Contents
ENERSYSEnerSys
Consolidated Condensed Statements of Comprehensive Income (Unaudited)
(In Thousands)


  Quarter ended Nine months ended
  December 31, 2017 January 1, 2017 December 31, 2017 January 1, 2017
Net (loss) earnings $(25,779) $37,095
 $65,694
 $124,507
Other comprehensive (loss) income:        
Net unrealized (loss) gain on derivative instruments, net of tax
 (587) (2,017) 29
 411
Pension funded status adjustment, net of tax 331
 198
 996
 747
Foreign currency translation adjustment 14,053
 (52,754) 86,901
 (74,922)
Total other comprehensive gain (loss), net of tax 13,797
 (54,573) 87,926
 (73,764)
Total comprehensive (loss) income (11,982) (17,478) 153,620
 50,743
Comprehensive income (loss) attributable to noncontrolling interests 156
 648
 237
 (2,343)
Comprehensive (loss) income attributable to EnerSys stockholders $(12,138) $(18,126) $153,383
 $53,086

 Quarter endedNine months ended
 December 31, 2023January 1, 2023December 31, 2023January 1, 2023
Net earnings$76,158 $44,410 $208,184 $109,860 
Other comprehensive income (loss):
Net unrealized gain (loss) on derivative instruments, net of tax(6,722)10,806 (2,441)4,688 
Pension funded status adjustment, net of tax21 84 62 254 
Foreign currency translation adjustment33,356 60,565 3,694 (47,830)
Total other comprehensive income (loss), net of tax26,655 71,455 1,315 (42,888)
Total comprehensive income (loss)102,813 115,865 209,499 66,972 
Comprehensive income (loss) attributable to noncontrolling interests98 109 (109)(315)
Comprehensive income (loss) attributable to EnerSys stockholders$102,715 $115,756 $209,608 $67,287 
See accompanying notes.


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ENERSYSEnerSys
Consolidated Condensed Statements of Cash Flows (Unaudited)
(In Thousands)

 Nine months ended Nine months ended
 December 31, 2017 January 1, 2017 December 31, 2023January 1, 2023
Cash flows from operating activities    
Net earnings $65,694
 $124,507
Net earnings
Net earnings
Adjustments to reconcile net earnings to net cash provided by operating activities:    
Depreciation and amortization 40,320
 40,468
Write-off of assets relating to restructuring charges 210
 1,435
Non-cash write-off of property, plant and equipment —
 6,300
Depreciation and amortization
Depreciation and amortization
Write-off of assets relating to exit activities
Impairment of indefinite-lived intangibles
Derivatives not designated in hedging relationships:    
Net (gains) losses (105) 202
Cash settlements (234) (646)
Derivatives not designated in hedging relationships:
Derivatives not designated in hedging relationships:
Net losses (gains)
Net losses (gains)
Net losses (gains)
Cash (settlements) proceeds
Provision for doubtful accounts 775
 1,952
Deferred income taxes (7,228) (683)
Non-cash interest expense 1,289
 1,041
Stock-based compensation 14,773
 14,556
Loss (gain) on disposal of property, plant, and equipment 69
 (10)
Legal proceedings accrual —
 17,000
Changes in assets and liabilities, net of effects of acquisitions:    
(Gain) loss on disposal of property, plant, and equipment
(Gain) loss on disposal of property, plant, and equipment
(Gain) loss on disposal of property, plant, and equipment
Changes in assets and liabilities:
Changes in assets and liabilities:
Changes in assets and liabilities:
Accounts receivable
Accounts receivable
Accounts receivable 12,987
 22,843
Inventories (44,389) (55,888)
Prepaid and other current assets (1,241) (11,545)
Other assets (1,142) 857
Accounts payable (10,619) (14,701)
Accrued expenses (30,485) 13,856
Other liabilities 89,228
 5,163
Net cash provided by operating activities 129,902
 166,707
Net cash provided by (used in) operating activities
    
Cash flows from investing activities    
Cash flows from investing activities
Cash flows from investing activities
Capital expenditures (43,086) (36,008)
Purchase of businesses (2,964) (12,392)
Capital expenditures
Capital expenditures
Purchase of business
Proceeds from termination of net investment hedges
Proceeds from termination of net investment hedges
Proceeds from termination of net investment hedges
Proceeds from disposal of property, plant, and equipment 395
 568
Net cash used in investing activities (45,655) (47,832)
Net cash (used in) provided by investing activities
    
Cash flows from financing activities    
Net (payments) borrowings on short-term debt (1,376) 13,639
Proceeds from 2017 Revolver borrowings 356,750
 —
Proceeds from 2011 Revolver borrowings 147,050
 191,300
Repayments of 2017 Revolver borrowings (111,450) —
Repayments of 2011 Revolver borrowings (312,050) (186,750)
Proceeds from 2017 Term Loan 150,000
 —
Repayments of 2011 Term Loan (127,500) (11,250)
Debt issuance costs (2,677) —
Option proceeds 758
 5
Cash flows from financing activities
Cash flows from financing activities
Net (repayments) borrowings on short-term debt
Net (repayments) borrowings on short-term debt
Net (repayments) borrowings on short-term debt
Proceeds from Second Amended Revolver borrowings
Repayments of Second Amended Revolver borrowings
Repayments of Second Amended Revolver borrowings
Repayments of Second Amended Revolver borrowings
Repayments of Second and Third Amended Term Loans
Repayments of Second and Third Amended Term Loans
Repayments of Second and Third Amended Term Loans
Financing costs for debt modification
Financing costs for debt modification
Financing costs for debt modification
Option proceeds, net
Payment of taxes related to net share settlement of equity awards (7,477) (7,668)
Purchase of treasury stock (121,191) —
Dividends paid to stockholders (22,339) (22,800)
Other (19) (77)
Net cash used in financing activities (51,521) (23,601)
Net cash (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents 38,267
 (25,432)
Net increase in cash and cash equivalents 70,993
 69,842
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period 500,329
 397,307
Cash and cash equivalents at end of period $571,322
 $467,149
See accompanying notes.

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ENERSYS
Table of Contents    
EnerSys
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
(In Thousands, Except Share and Per Share Data)


1. Basis of Presentation

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals)adjustments except those otherwise described herein) considered necessary for a fair presentation have been included, unless otherwise disclosed. Operating results for the three and nine-month periodsnine months ended December 31, 20172023 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2018.2024.

The consolidated condensed balance sheetConsolidated Condensed Balance Sheet at March 31, 20172023 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

The financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company’s 20172023 Annual Report on Form 10-K (SEC File No. 001-32253), which was filed on May 30, 201725, 2023 (the “2017“2023 Annual Report”).

The CompanyEnerSys (the “Company”) reports interim financial information for 13-week periods, except for the first quarter, which always begins on April 1, and the fourth quarter, which always ends on March 31. The four quarters in fiscal 20182024 end on July 2, 2017,2023, October 1, 2017,2023, December 31, 2017,2023, and March 31, 2018,2024, respectively. The four quarters in fiscal 20172023 ended on July 3, 2016,2022, October 2, 2016,2022, January 1, 2017,2023, and March 31, 2017,2023, respectively.

The consolidated condensed financial statements include the accounts of the Company and its wholly-owned subsidiaries and any partially owned subsidiaries that the Company has the ability to control. All intercompany transactions and balances have been eliminated in consolidation.

Recently Issued Accounting Pronouncements

Use of Estimates
In May 2014,The preparation of financial statements in conformity with accounting principles generally accepted in the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, “RevenueUnited States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions take into account historical and forward looking factors that the Company believes are reasonable, and the Company’s estimates and assumptions may evolve as conditions change. Actual results could differ from Contractsthose estimates.

Examples of significant estimates include the allowance for credit losses, the recoverability of property, plant and equipment, the incremental borrowing rate for lease liabilities, the recoverability of intangible assets and other long-lived assets, fair value measurements, including those related to financial instruments, goodwill and intangible assets, valuation allowances on tax assets, pension and postretirement benefit obligations, contingencies and the identification and valuation of assets acquired and liabilities assumed in connection with Customers (Topic 606)” providing guidance on revenue from contractsbusiness combinations.
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2. Revenue Recognition

The Company’s revenues by reportable segments are presented in Note 16 and are consistent with how we organize and manage our operations, as well as product line net sales information.

Service revenues related to the work performed for the Company’s customers by its maintenance technicians generally represent a separate and distinct performance obligation. Control for these services passes to the customer as the services are performed.

A small portion of the Company's customer arrangements oblige the Company to create customized products for its customers that will supersede most current revenue recognition guidance,require combining both products and services into a single performance obligation because the individual products and services that are required to fulfill the customer requirements do not meet the definition for a distinct performance obligation. These customized products generally have no alternative use to the Company and the terms and conditions of these arrangements give the Company the enforceable right to payment for performance completed to date, including industry-specific guidance. The underlying principle isa reasonable profit margin. For these arrangements, control transfers over time and the Company measures progress towards completion by selecting the input or output method that an entity will recognize revenue to depictbest depicts the transfer of control of the underlying goods orand services to customers at an amount that the entity expectscustomer for each respective arrangement. Methods used by the Company to be entitled to in exchange for those goods or services. In July 2015, the FASB voted to delay the effective date for interimmeasure progress toward completion include labor hours, costs incurred and annual reporting periods beginning after December 15, 2017, with early adoption permissible one year earlier. The standard permits the useunits of either modified retrospective or full retrospective transition methods. The Company has substantially completed an impact assessment of the potential changes from adopting ASU 2014-09. The impact assessment included a review of customer arrangements across all of its global business units and an in-depth analysis of its global revenue processes and accounting policies to identify potential areas where change may be needed to comply with this guidance. The Company plans to apply the modified retrospective transition method. The Company assembled an implementation work team to assess and document the accounting conclusionsproduction. Revenues recognized over time for the adoptionthird quarter of ASU 2014-09. Based on this analysis,fiscal 2024 and 2023 amounted to $68,707 and $55,283, respectively. Revenues recognized over time for the nine months of fiscal 2024 and 2023 amounted to $196,173 and $168,489, respectively.

On December 31, 2023, the aggregate transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations was approximately $117,256, of which, the Company does not believe the adoption of the ASUestimates that approximately $59,357 will havebe recognized as revenue in fiscal 2024, $57,042 in fiscal 2025, and $810 in fiscal 2026, $23 in fiscal 2027, and $24 thereafter.

Any payments that are received from a material impactcustomer in advance, prior to the consolidated financial statements. The Company continues to assess the potential impact on accounting policies, internal control processessatisfaction of a related performance obligation and related disclosures required under the new guidance.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which sets out the principles for the recognition, measurement, presentationbillings in excess of revenue recognized, are deferred and disclosure of leases for both parties totreated as a contract (i.e. lesseesliability. Advance payments and lessors). This update requires lessees to apply a dual approach, classifying leasesbillings in excess of revenue recognized are classified as either financecurrent or operating leasesnon-current based on the principletiming of whether or notwhen recognition of revenue is expected. As of December 31, 2023, the lease is effectively a financed purchasecurrent and non-current portion of contract liabilities were $38,828 and $680, respectively. As of March 31, 2023, the leased asset by the lessee. This classification will determine whether the lease expense iscurrent and non-current portion of contract liabilities were $34,594 and $1,437, respectively. Revenues recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. This update is effective for annual periods beginning after December 15, 2018, using a modified retrospective approach, with early adoption permitted. The Company is currently assessing the potential impact that the adoption will have on its consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740)”: Intra-Entity Transfers of Assets Other than Inventory. ASU 2016-16 requires that an entity recognize the income tax consequences of an intra-entity transfer of assets other than inventory when the transfer occurs. This update is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. The Company early adopted the standard on a modified retrospective basis during the firstthird quarter of fiscal 2018 through a cumulative-effect adjustment directly to retained earnings of $137, as of2024 and 2023 that were included in the contract liability at the beginning of the periodquarter, amounted to 10,072 and $7,382, respectively. Revenues recognized during the nine months of adoption.fiscal 2024 and 2023 that were included in the contract liability at the beginning of the year, amounted to $17,600 and $9,167, respectively.

Amounts representing work completed and not billed to customers represent contract assets and were $46,488 and $48,616 as of December 31, 2023 and March 31, 2023, respectively.

The Company uses historic customer product return data as a basis of estimation for customer returns and records the reduction of sales at the time revenue is recognized. At December 31, 2023, the right of return asset related to the value of inventory anticipated to be returned from customers was $4,684 and refund liability representing amounts estimated to be refunded to customers was $7,783.

3. Accounts Receivable

December 31, 2023March 31, 2023
Accounts receivable$508,811 $646,592 
Allowance for doubtful accounts10,312 8,775 
Accounts receivable, net$498,499 $637,817 

During the third quarter of fiscal 2023, the Company entered into a Receivables Purchase Agreement (RPA), under which the Company continuously sells its interest in designated pools of trade accounts receivables, at a discount, to a special purpose entity, which in turn sells certain of the receivables to an unaffiliated financial institution ("unaffiliated financial institution") on a monthly basis.The Company may sell certain US-originated accounts receivable balances up to a maximum amount of $150,000. In March 2017,return for these sales, the FASB issued ASU No. 2017-07, “Compensation—Retirement Benefits (Topic 715)”Company receives a cash payment equal to the face value of the receivables and is charged a fee of Secured Overnight Financing Rate (“SOFR”) plus 85 basis points against the sold receivable balance. The program is conducted through EnerSys Finance LLC ("EnerSys Finance"), which requires an entity to report the service cost component of pension and other postretirement benefit costs in the same line item as other compensation costs. The other components of net (benefit) cost will be requiredstructured to be presentedbankruptcy remote, and
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matures in the income statement separately from the service cost component and outside a subtotal of income from operations. This standard is effective for interim and annual reporting periods beginning after December

15, 2017, with early adoption permitted. 2025. The Company is currently assessingdeemed the potentialprimary beneficiary of EnerSys Finance as the Company has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive the benefits that could potentially be significant to the adoption will have on its consolidated financial statements.

In August 2017,entity from the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815)”: Targeted Improvements to Accounting for Hedging Activities, which amends and simplifies existing guidance in order to allow companies to more accurately presenttransfer of the economic effects of risk management activitiestrade accounts receivables into the special purpose entity.Accordingly, EnerSys Finance is included in the Company’s Consolidated Condensed Financial Statements.

Receivables sold to unaffiliated financial statements.institutions under the program are excluded from “Accounts receivable, net” on the Company’s Consolidated Condensed Balance Sheets, and cash receipts are reflected as cash provided by operating activities on the Consolidated Condensed Statements of Cash Flows. The guidance eliminatespurchase price is received in cash when the requirementreceivables are sold, and fees charged relating to separately measurethis balance are recorded to other (income) expense. Certain unsold receivables held by EnerSys Finance serve as collateral to unaffiliated financial institutions. These unsoldreceivablesareincludedin“Accountsreceivable,net”intheCompany’s Consolidated Condensed Balance Sheets. The Company continues servicing the receivables which were sold and report hedge ineffectivenessin exchange receives a servicing fee from EnerSys Finance under the program.

During the third quarter and generally requires the entire changenine months of fiscal 2024, the Company sold $156,398 and $513,161, respectively, of accounts receivables for approximately $156,398 and $513,161, respectively, in proceeds to an unaffiliated financial institution, of which $180,446 and $542,931, respectively, were collected as of December 31, 2023. During the third quarter and nine months of fiscal 2023, the Company sold $150,000 of accounts receivables for approximately $149,700 in net proceeds to an unaffiliated financial institution, of which $25,623 were collected as of January 1, 2023. Total collateralized accounts receivables of approximately $183,512 were held by EnerSys Finance at December 31, 2023.

Any accounts receivables held by EnerSys Finance would likely not be available to other creditors of the Company in the fair valueevent of bankruptcy or insolvency proceedings relating to the Company until the outstanding balances under the RPA are satisfied. Additionally, the financial obligations of EnerSys Finance to the unaffiliated financial institutions under the program are limited to the assets it owns and there is no recourse to the Company for receivables that are uncollectible as a hedging instrumentresult of the insolvency of EnerSys Finance or its inability to be presented inpay the same income statement line as the hedged item. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. Early adoption is permitted in any interim period or fiscal year before the effective date. The Company is currently assessing the potential impact that the adoption will have on its consolidated financial statements.account debtors.
2. Inventories

Inventories, net consist of:
  December 31, 2017 March 31, 2017
Raw materials $96,666
 $85,604
Work-in-process 138,540
 107,177
Finished goods 186,764
 167,913
Total $421,970
 $360,694



3.
4. Inventories
December 31, 2023March 31, 2023
Raw materials$306,592 $323,418 
Work-in-process111,160 123,401 
Finished goods337,411 350,979 
Total$755,163 $797,798 

5. Fair Value of Financial Instruments

Recurring Fair Value Measurements

The following tables represent the financial assets and (liabilities) measured at fair value on a recurring basis as of December 31, 20172023 and March 31, 2017,2023, and the basis for that measurement:
 Total Fair Value Measurement December 31, 2017 Quoted Price in
Active  Markets
for Identical
Assets
(Level 1)		 Significant
Other
Observable
Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)
Total Fair Value Measurement December 31, 2023Total Fair Value Measurement December 31, 2023Quoted Price in
Active Markets
for Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Lead forward contracts $47
 $—
 $47
 $—
Foreign currency forward contracts (266) —
 (266) —
Interest Rate Swaps
Net investment hedges
Total derivatives $(219) $—
 $(219) $—
 
  
Total Fair Value
Measurement
March 31, 2017

 
Quoted Price in
Active Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Lead forward contracts $1,163
 $—
 $1,163
 $—
Foreign currency forward contracts (313) —
 (313) —
Total derivatives $850
 $—
 $850
 $—
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Total Fair Value
Measurement
March 31, 2023
Quoted Price in
Active Markets
for Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Lead forward contracts$(89)$— $(89)$— 
Foreign currency forward contracts923 — 923 — 
Interest Rate Swaps(1,162)— (1,162)— 
Net investment hedges(15,760)— (15,760)— 
Total derivatives$(16,088)$— $(16,088)$— 


The fair values of lead forward contracts are calculated using observable prices for lead as quoted on the London Metal Exchange (“LME”) and, therefore, were classified as Level 2 within the fair value hierarchy, as described in Note 1, 1- Summary of Significant Accounting Policies to the Company's consolidated financial statementsConsolidated Financial Statements included in its 2017the 2023 Annual Report.

The fair values for foreign currency forward contracts and net investment hedges are based upon current quoted market prices and are classified as Level 2 based on the nature of the underlying market in which these derivatives are traded.

The fair value of interest rate swap agreements are based on observable prices as quoted for receiving the variable one month term SOFR and paying fixed interest rates and, therefore, were classified as Level 2.

Financial Instruments

The fair values of the Company’s cash and cash equivalents approximate carrying value due to their short maturities.

The fair value of the Company’s short-term debt and borrowings under the new 2017Third Amended Credit Facility and the previous 2011 Credit Facility (each as(as defined in Note 9)11), approximate their respective carrying value, as they are variable rate debt and the terms are comparable to market terms as of the balance sheet dates and are classified as Level 2.


The Company's 5.00%In fiscal 2020, the Company issued its 4.375% Senior Notes due 2023December 15, 2027 (the “Notes”“2027 Notes”), with an original face value of $300,000, were issued in April 2015.$300,000. The fair value of thesethe 2027 Notes representrepresents the trading values based upon quoted market prices and are classified as Level 2. The 2027 Notes were trading at approximately 104%95% and 101%92% of face value on December 31, 20172023 and March 31, 2017,2023, respectively.

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The carrying amounts and estimated fair values of the Company’s derivatives and Senior Notes at December 31, 20172023 and March 31, 20172023 were as follows:
 December 31, 2023March 31, 2023
 Carrying
Amount		Fair ValueCarrying
Amount		Fair Value
Financial assets:
Derivatives (1)
$— $— $— $— 
Financial liabilities:
 Senior Notes (2)
$300,000 $285,000 $300,000 $276,000 
Derivatives (1)
$(25,155)$(25,155)$(16,088)$(16,088)
(1)Represents lead, foreign currency forward contracts, interest rate swaps, and net investment hedges (see Note 6 for asset and liability positions of the lead, foreign currency forward contracts, interest rate swaps, and net investment hedges at December 31, 2023 and March 31, 2023).

(2)The fair value amount of the Senior Notes at December 31, 2023 and March 31, 2023 represent the trading value of the instruments.
  December 31, 2017   March 31, 2017  
  Carrying
Amount		   Fair Value   Carrying
Amount		   Fair Value  
Financial assets:                
Derivatives (1)
 $47
    $47
    $1,163
    $1,163
   
Financial liabilities:                
 Notes (2)
 $300,000
   $313,500
 
 $300,000
   $303,000
  
Derivatives (1)
 266
    266
    313
    313
   

(1)Represents lead and foreign currency forward contracts (see Note 4 for asset and liability positions of the lead and foreign currency forward contracts at December 31, 2017 and March 31, 2017).
(2)The fair value amount of the Notes at December 31, 2017 and March 31, 2017 represent the trading value of the instruments.

Non-recurring fair value measurements

4.On June 29, 2022, the Company committed to a plan to close its facility in Ooltewah, Tennessee, which focused on manufacturing flooded motive power batteries for electric forklifts. Management determined that future demand for traditional motive power flooded cells will decrease as customers transition to maintenance free product solutions in lithium and Thin Plate Pure Lead (TPPL). As a result, the Company concluded that the carrying value of the asset group was not recoverable and recorded during the first quarter of fiscal 2023 a write-off of $7,300 of the fixed assets, for which there is expected to be no salvageable value. The valuation technique used to measure the fair value of fixed assets was a combination of the income and market approaches. The inputs used to measure the fair value of these fixed assets under the income approach were largely unobservable and accordingly were classified as Level 3.

On November 8, 2023, the Company's Board of Directors approved a plan to stop production and operations of residential renewable energy products, which include our OutBack and Mojave brands. Management determined that residential renewable energy products no longer fit with the company’s core strategy and resources will be better allocated toward commercial energy solutions for enterprise customers. As a result the Company's indefinite-lived trademark, which were acquired through acquisition, was recorded at fair value on a non-recurring basis at $880 and the remeasurement resulted in an impairment of $6,020 in the third quarter of fiscal 2024. In determining the fair value of these assets, the Company used a royalty rate of 1.5% based on comparable market rates and used discount rate of 24.5%. The inputs used to measure the fair value were largely unobservable and accordingly were classified as Level 3.


6. Derivative Financial Instruments

The Company utilizes derivative instruments to reduce its exposure to fluctuations in commodity prices, and foreign exchange rates and interest, under established procedures and controls. The Company does not enter into derivative contracts for speculative purposes. The Company’s agreements are with creditworthy financial institutions and the Company anticipates performance by counterparties to these contracts and therefore no material loss is expected.

Derivatives in Cash Flow Hedging Relationships

Lead Forward Contracts

The Company enters into lead forward contracts to fix the price for a portion of its lead purchases. Management considers the lead forward contracts to be effective against changes in the cash flows of the underlying lead purchases. The vast majority of such contracts are for a period not extending beyond one year. At December 31, 20172023 and March 31, 2017,2023, the Company has hedged the price to purchase approximately 54.052.5 million pounds and 45.050.0 million pounds of lead, respectively, for a total purchase price of $60,849$50,609 and $46,550,$47,921, respectively.


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Foreign Currency Forward Contracts

The Company uses foreign currency forward contracts and options to hedge a portion of the Company’s foreign currency exposures for lead, as well as other foreign currency exposures so that gains and losses on these contracts offset changes in the underlying foreign currency denominated exposures. The vast majority of such contracts are for a period not extending beyond one year. As of December 31, 20172023 and March 31, 2017,2023, the Company had entered into a total of $52,801$51,146 and $30,751,$45,823, respectively, of such contracts.

Interest Rate Swap Agreements

The Company is exposed to changes in variable interest rates on borrowings under our credit agreement. On a selective basis, from time to time, it enters into interest rate swap agreements to reduce the negative impact that increases in interest rates could have on our outstanding variable rate debt. At December 31, 2023 and March 31, 2023 such agreements effectively convert $200,000 of our variable-rate debt to a fixed-rate basis, utilizing the one-month term SOFR, as a floating rate reference. Fluctuations in SOFR and fixed rates affect both our net financial investment position and the amount of cash to be paid or received by us under these agreements.

Derivatives in Net Investment Hedging Relationships

Net Investment Hedges

The Company uses cross currency fixed interest rate swaps to hedge its net investments in foreign operations against future volatility in the exchange rates between the U.S. Dollar and Euro.

On December 23, 2021, the Company entered into cross currency fixed interest rate swap agreements, with aggregate notional amounts of $300,000, to hedge its net investments in foreign operations against future volatility in the exchange rates between U.S. Dollars and Euros. On September 29, 2022, the Company terminated its $300,000 cross-currency fixed interest rate swap contracts, originally entered into on December 23, 2021, and received a net settlement of $43,384. The cash proceeds have been included in Proceeds from termination of net investment hedges in our Consolidated Condensed Statements of Cash Flows.

On September 29, 2022, the Company entered into cross-currency fixed interest rate swap contracts with an aggregate notional amount of $150,000, maturing on December 15, 2027. The cross-currency fixed interest rate swap contracts qualify for hedge accounting as a net investment hedging instrument, which allows for them to be remeasured to foreign currency translation adjustment within AOCI (“Accumulated Other Comprehensive Income”) to offset the translation risk from those investments. Balances in the foreign currency translation adjustment accounts remain until the sale or substantially complete liquidation of the foreign entity, upon which they are recognized as a component of other income (expense).

Impact of Hedging Instruments on AOCI

In the coming twelve months, the Company anticipates that $3,133$1,229 of pretax gain(gain) relating to lead, and foreign currency forward contracts and net investment hedges will be reclassified from accumulated other comprehensive income (“AOCI”)AOCI as part of cost of goods sold.sold and interest expense. This amount represents the current net unrealized impact of hedging lead, and foreign exchange rates and interest rates, which will change as market rates change in the future, andfuture. This amount will ultimately be realized in the Consolidated Condensed Statements of Income as an offset to the corresponding actual changes in lead, foreign exchange rates and interest costs to be realized in connection with theresulting from variable lead cost, and foreign exchange and interest rates being hedged.

Derivatives not Designated in Hedging Relationships

Foreign Currency Forward Contracts

The Company also enters into foreign currency forward contracts to economically hedge foreign currency fluctuations on intercompany loans and foreign currency denominated receivables and payables. These are not designated as hedging instruments and changes in fair value of these instruments are recorded directly in the Consolidated Condensed Statements of Income. As of December 31, 20172023 and March 31, 2017,2023, the notional amount of these contracts was $24,132$65,699 and $13,560,$102,558, respectively.


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Presented below in tabular form is information on the location and amounts of derivative fair values in the Consolidated Condensed Balance Sheets and derivative gains and losses in the Consolidated Condensed Statements of Income:

Fair Value of Derivative Instruments
December 31, 20172023 and March 31, 20172023
 
 Derivatives and Hedging  Activities Designated as Cash Flow HedgesDerivatives and Hedging Activities Designated as Net Investment HedgesDerivatives and Hedging Activities Not Designated as Hedging Instruments
 December 31, 2023March 31, 2023December 31, 2023March 31, 2023December 31, 2023March 31, 2023
Prepaid and other current assets:
Lead forward contracts$— $— $— $— $— $— 
Foreign currency forward contracts— 723 — — — 200 
Net investment hedges— — — — — — 
Other assets:
Interest rate swaps113 — — — — — 
Net investment hedges— — — — — — 
Total assets$113 $723 $— $— $— $200 
Accrued expenses:
Lead forward contracts$1,532 $89 $— $— $— $— 
Foreign currency forward contracts298 — — — 262 — 
Other liabilities:
Interest rate swaps— 1,162 — — — — 
Net investment hedges— — 23,176 15,760 — — 
Total liabilities$1,830 $1,251 $23,176 $15,760 $262 $— 
  Derivatives and Hedging Activities Designated as Cash Flow Hedges Derivatives and Hedging Activities Not Designated as Hedging Instruments
  December 31, 2017 March 31, 2017 December 31, 2017 March 31, 2017
Prepaid and other current assets        
Lead forward contracts $47
 $1,163
 $—
 $—
Foreign currency forward contracts —
 11
 14
 —
Total assets $47
 $1,174
 $14
 $—
Accrued expenses        
Foreign currency forward contracts $280
 $—
 $—
 $324
Total liabilities $280
 $—
 $—
 $324



The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income
For the quarter ended December 31, 20172023
Derivatives Designated as Cash Flow HedgesPretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)Location of Gain (Loss)  Reclassified from AOCI into Income (Effective Portion)Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Lead forward contracts$(2,403)Cost of goods sold$1,312 
Foreign currency forward contracts(90)Cost of goods sold410 
Interest rate swaps(2,946)Interest expense1,612 
Total$(5,439)$3,334 
Derivatives Designated as Net Investment HedgesPretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)Location of Gain (Loss)  Reclassified from AOCI into Income (Effective Portion)Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Cross currency fixed interest rate swaps$(7,420)Interest expense$796 
Total$(7,420)$796 

Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss) Recognized in Income on DerivativesPretax Gain (Loss)
Foreign currency forward contractsOther (income) expense, net$538 
Total$538 

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Derivatives Designated as Cash Flow Hedges Pretax Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion) Location of Gain (Loss)  Reclassified from AOCI into Income (Effective Portion) Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Lead forward contracts $(396) Cost of goods sold $2,266
Foreign currency forward contracts (87) Cost of goods sold (1,811)
Total $(483)   $455
Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss) Recognized in Income on Derivatives Pretax Gain (Loss)
Foreign currency forward contractsOther (income) expense, net $93
Total  $93


The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income
For the quarter ended January 1, 2017
Derivatives Designated as Cash Flow Hedges Pretax Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion) Location of Gain (Loss)  Reclassified from AOCI into Income (Effective Portion) Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Lead forward contracts $(2,362) Cost of goods sold $1,524
Foreign currency forward contracts 595
 Cost of goods sold (93)
Total $(1,767)   $1,431
2023
Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss) Recognized in Income on Derivatives Pretax Gain (Loss)
Derivatives Designated as Cash Flow HedgesDerivatives Designated as Cash Flow HedgesPretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)Location of Gain (Loss)  Reclassified from AOCI into Income (Effective Portion)Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Lead forward contracts
Foreign currency forward contractsOther (income) expense, net $(25)
Total $(25)
Derivatives Designated as Net Investment Hedges
Derivatives Designated as Net Investment Hedges
Derivatives Designated as Net Investment HedgesPretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)Location of Gain (Loss)  Reclassified from AOCI into Income (Effective Portion)Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Cross currency fixed interest rate swaps
Total
Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss) Recognized in Income on DerivativesPretax Gain (Loss)
Foreign currency forward contractsOther (income) expense, net$1,856 
Total$1,856 


The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income
For the nine months ended December 31, 20172023

Derivatives Designated as Cash Flow HedgesPretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)Location of Gain (Loss)  Reclassified from AOCI into Income (Effective Portion)Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Lead forward contracts$(25)Cost of goods sold$4,860 
Foreign currency forward contracts769 Cost of goods sold346 
Interest rate swaps3,517 Interest expense2,242 
Total$4,261 $7,448 
Derivatives Designated as Net Investment HedgesPretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)Location of Gain (Loss)  Reclassified from AOCI into Income (Effective Portion)Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Cross currency fixed interest rate swaps$(6,509)Interest expense$908 
Total$(6,509)$908 

Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss) Recognized in Income on DerivativePretax Gain (Loss)
Foreign currency forward contractsOther (income) expense, net$(666)
Total$(666)


15
Derivatives Designated as Cash Flow Hedges Pretax Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion) Location of Gain (Loss)  Reclassified from AOCI into Income (Effective Portion) Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Lead forward contracts $2,686
 Cost of goods sold $2,177
Foreign currency forward contracts (3,175) Cost of goods sold (2,714)
Total $(489)   $(537)
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Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss) Recognized in Income on Derivatives Pretax Gain (Loss)
Foreign currency forward contractsOther (income) expense, net $105
Total  $105

The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income
For the nine months ended January 1, 20172023

Derivatives Designated as Cash Flow Hedges Pretax Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion) Location of Gain (Loss)  Reclassified from AOCI into Income (Effective Portion) Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Lead forward contracts $2,258
 Cost of goods sold $2,800
Foreign currency forward contracts 873
 Cost of goods sold (319)
Total $3,131
   $2,481

Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss) Recognized in Income on Derivatives Pretax Gain (Loss)
Foreign currency forward contractsOther (income) expense, net $(202)
Total  $(202)


Derivatives Designated as Cash Flow HedgesPretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)Location of Gain (Loss)  Reclassified from AOCI into Income (Effective Portion)Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Lead forward contracts$1,750 Cost of goods sold$(5,342)
Foreign currency forward contracts1,962 Cost of goods sold2,931 
Total$3,712 $(2,411)
Derivatives Designated as Net Investment HedgesPretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)Location of Gain (Loss)  Reclassified from AOCI into Income (Effective Portion)Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Cross currency fixed interest rate swaps$30,092 Interest expense$3,283 
Total$30,092 $3,283 

Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss) Recognized in Income on DerivativePretax Gain (Loss)
Foreign currency forward contractsOther (income) expense, net$1,383 
Total$1,383 

5.
7. Income Taxes

The Company’s income tax provision consists of federal, state and foreign income taxes. The tax provision for the third quartersquarter of fiscal 20182024 and 20172023 was based on the estimated effective tax rates applicable for the full years ending March 31, 20182024 and March 31, 2017,2023, respectively, after giving effect to items specifically related to the interim periods. The Company’s effective income tax rate with respect to any period may be volatile based on the mix of income in the tax jurisdictions, in which the Company operates, changechanges in tax laws and the amount of the Company's consolidated incomeearnings before taxes.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted. The IRA includes multiple incentives to promote clean energy, and energy storage manufacturing among other provisions with tax credits available from 2023 to 2032, subject to phase down beginning in 2030. In particular the IRA creates a refundable tax credit, pursuant to Section 45X of the Internal Revenue Code (“IRC”), for battery cells and battery modules manufactured or assembled in the United States and sold to third parties. On December 22, 2017,14, 2023, the Tax CutsUnited States Treasury issued proposed regulations which provided further guidance related to the Section 45X Advanced Manufacturing Production Credit. In the third quarter and Jobs Act (“Tax Act”) was enacted into law. Amongnine months of fiscal 2024, the significant changes resulting from the law, the Tax Act reduces the U.S. federalIRA impact resulted in a reduction of our costs of goods sold and income tax rate from 35%payable of $59,119 and $100,353, respectively. The issuance of the aforementioned proposed regulations resulted in a $28,683 retroactive adjustment to 21% effective January 1, 2018, and requires companies to pay a one-time transition tax on unrepatriated cumulative non-U.S. earnings of foreign subsidiaries and creates new taxes on certain foreign sourced earnings. In accordance with ASC 740, “Income Taxes,” the Company is required to record the effects of tax law changes in the period enacted. The rate change is administratively effective at the beginning of the Company's fiscal year, using a blended rate for the annual period. As a result, the Company's blended U.S. statutory tax rate for fiscal 2018 is 31.5%.

As of December 31, 2017, the Company has not completed its accounting for the tax effects of enactmenteffective date of the Tax Act; however,IRA, January 1, 2023, in certain cases, as described below, the Company made a reasonable estimate of the effects on its existing deferred tax balances and the one-time transition tax. The Company's results for the three and nine months ended December 31, 2017, contain estimates of the impact of the Tax Act as permitted by Staff Accounting Bulletin 118 “SAB 118” issued by the Securities and Exchange Commission on December 22, 2017. These amounts are considered provisional and may be affected by future guidance if and when issued.

As a result of the Tax Act, the third quarter of fiscal 2018 financial statements include a provisional net tax expense of $77,347 which is comprised of2024. Amounts recognized in the following:


Foreign tax effects: The one-time transition tax isConsolidated Condensed Financial Statements are based on Management's judgement and best estimate utilizing the Company's total post-1986 earnings and profits (E&P) that was previously deferred from U.S. income taxes.most current guidance. The Company recorded a provisional amount for a one-time transition tax liability for its foreign subsidiaries, resulting in an increase in income tax expensewill continue to evaluate the effects of $94,000. The estimated transition tax of $94,000IRA to the extent more guidance is recorded under current income tax payable and non-current income tax payable, at $7,520 and $86,480, respectively, and is payable over eight years. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when the Company finalizes both the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxationissued and the amounts held in cash or other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings not subjectrelevant implications to the transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations.our Consolidated Condensed Financial Statements. Actual results could differ from management’s current estimate.

Deferred tax assets and liabilities: The Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, the Company is still analyzing certain aspects of the Tax Act and refining its calculations, which could potentially affect the measurement of these balances or give rise to new deferred tax amounts. The provisional amount recorded, related to the remeasurement of the Company's deferred tax balance was a tax benefit of $14,706.

Finally, the Company recorded a provisional tax benefit of $1,947 related to the reduction of the fiscal 2018 federal tax rate to 31.5%.

In all cases, the Company may adjust these provisional amounts which could potentially affect the measurement and impact on tax expense as the Company refines its calculations within a reasonable period not to exceed one year from the enactment date.

The consolidated effective income tax rates for the third quartersquarter of fiscal 20182024 and 20172023 were 141.2%3.2% and 26.7%, respectively,23.2% and for the nine months of fiscal 20182024 and 20172023 were 63.2%7.7% and 25.7%18.5%, respectively. The rate increasedecrease in the third quarter and nine months of fiscal 20182024 compared to the comparable prior year periods of fiscal 2017 isare primarily due to the impact of the Tax Act in the third quarter of fiscal 2018, offset by the German regulatory proceedings charge of $17,000 (with no associated tax benefit) recorded in the third quarter of fiscal 2017IRA and changes in the mix of earnings among tax jurisdictions.

Foreign income as a percentage of worldwide income is estimated to be 64%52% for fiscal 20182024 compared to 60%83% for fiscal 2017. 2023. This reduction is primarily due to the IRA Impact on domestic and total earnings. The foreign effective income tax rates for the nine months of fiscal 20182024 and 20172023 were 11.4%11% and 15.9%15%, respectively. The rate decrease compared to the prior year period is primarily due to the German regulatory proceedings charge of $17,000 (with no associated tax benefit) recorded in the third quarter of fiscal 2017 and changes in the mix of earnings among tax jurisdictions. Income from the Company's Swiss subsidiary comprised a substantial portion of the Company's overall foreign mix of income for both fiscal 2024 and isfiscal 2023 and were taxed at an effective income tax rate of approximately 6%.9% in both periods.

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8. Warranty

The Company provides for estimated product warranty expenses when the related products are sold, with related liabilities included within accrued expenses and other liabilities. As warranty estimates are forecasts that are based on the best available information, primarily historical claims experience, costs of claims costs may ultimately differ from amounts provided. An analysis of changes in the liability for product warranties is as follows:

  Quarter ended Nine months ended
  December 31, 2017 January 1, 2017 December 31, 2017 January 1, 2017
Balance at beginning of period $47,113
 $48,112
 $46,116
 $48,422
Current period provisions 6,204
 4,085
 13,012
 14,932
Costs incurred (3,843) (4,250) (10,880) (12,492)
Foreign currency translation adjustment 23
 (1,720) 1,249
 (4,635)
Balance at end of period $49,497
 $46,227
 $49,497
 $46,227


 Quarter endedNine months ended
 December 31, 2023January 1, 2023December 31, 2023January 1, 2023
Balance at beginning of period$58,836 $52,394 $56,630 $54,978 
Current period provisions6,072 7,557 22,541 18,958 
Costs incurred(6,953)(5,948)(21,373)(17,005)
Foreign currency translation adjustment610 1,197 767 (1,731)
Balance at end of period$58,565 $55,200 $58,565 $55,200 

7.9. Commitments, Contingencies and Litigation

Litigation and Other Legal Matters

In the ordinary course of business, the Company and its subsidiaries are routinely defendants in or parties to pending and threatened legal actions and proceedings, including actions brought on behalf of various classes of claimants. These actions and proceedings are generally based on alleged violations of environmental, anticompetition, employment, contract and other laws. In some of these actions and proceedings, claims for substantial monetary damages are asserted against the Company and its subsidiaries. In the ordinary course of business, the Company and its subsidiaries are also subject to regulatory and governmental examinations, information gathering requests, inquiries, investigations, and threatened legal actions and proceedings. In connection with formal and informal inquiries by federal, state, local and foreign agencies, the Company and its subsidiaries receive numerous requests, subpoenas and orders for documents, testimony and

information in connection with various aspects of their activities.

European Competition Investigations

Certain of the Company’s European subsidiaries had received subpoenas and requests for documents and, in some cases, interviews from, and have had on-site inspections conducted by, the competition authorities of Belgium, Germany and the Netherlands relating to conduct and anticompetitive practices of certain industrial battery participants.

For additional information regarding these matters, see Note 19 - The Company settledCommitments, Contingencies and Litigation to the Belgian regulatory proceedingConsolidated Financial Statements contained in February 2016 by acknowledging certain anticompetitive practices and conduct and agreeing to pay a fine of $1,962, which was paid in March 2016.the 2023 Annual Report. As of December 31, 20172023 and March 31, 2017,2023, the Company haddid not have a reserve balance of $2,058 and $1,830, respectively, relating to certain ancillary matters associated with the Belgian regulatory proceeding. The change in the reserve balance between December 31, 2017 and March 31, 2017 was solely due to foreign currency translation impact.

In June 2017, the Company settled a portion of its previously disclosed proceeding involving the German competition authority relating to conduct involving the Company's motive power battery business and agreed to pay a fine of $14,811, which was paid in July 2017. As of December 31, 2017 and March 31, 2017, the Company had a reserve balance of $0 and $13,463, respectively, relating to this matter. Also in June 2017, the German competition authority issued a fining decision related to the Company's reserve power battery business, which constitutes the remaining portion of the previously disclosed German proceeding. The Company is appealing this decision, including payment of the proposed fine of $11,415, and believes that the reserve power matter does not, based on current facts and circumstances known to management, require an accrual. The Company is not required to escrow any portion of this fine during the appeal process.these matters.

In July 2017, the Company settled the Dutch regulatory proceeding and agreed to pay a fine of $11,229, which was paid in August 2017. As of December 31, 2017 and March 31, 2017, the Company had a reserve balance of $0 and $10,258, respectively, relating to the Dutch regulatory proceeding.

As of December 31, 2017 and March 31, 2017, the Company had a total reserve balance of $2,058 and $25,551, respectively, in connection with these investigations and other related legal matters, included in accrued expenses on the Consolidated Condensed Balance Sheets. The foregoing estimate of losses is based upon currently available information for these proceedings. However, the precise scope, timing and time period at issue, as well as the final outcome of the investigations or customer claims, remain uncertain. Accordingly, the Company’s estimate may change from time to time, and actual losses could vary.


Environmental Issues

As a result of its operations, the Company is subject to various federal, state, and local, as well as international environmental laws and regulations and is exposed to the costs and risks of registering, handling, processing, storing, transporting, and disposing of hazardous substances, especially lead and acid. The Company’s operations are also subject to federal, state, local and international occupational safety and health regulations, including laws and regulations relating to exposure to lead in the workplace.

The Company is responsible for certain cleanup obligations at the former Yuasa battery facility in Sumter, South Carolina,believes that predates its ownership of this facility. This manufacturing facility was closed in 2001 and the Company established a reserve for this facility, which was $1,117 and $1,123 as of December 31, 2017 and March 31, 2017. Based on current information, the Company’s management believes this reserve isit has adequate reserves to satisfy the Company’sits environmental liabilities at this facility. This facility is separate from the Company’s current metal fabrication facility in Sumter.liabilities.


Lead, and Foreign Currency Forward Contracts and Swaps

To stabilize its lead costs and reduce volatility from currency and interest rate movements, the Company entersentered into contracts with financial institutions. The vast majority of suchlead and foreign currency contracts are for a period not extending beyond one year. The Company also entered into a cross currency fixed interest rate swap agreement, maturing on December 15, 2027, to hedge its net investments in foreign operations against future volatility in the exchange rates between the U.S. Dollar and Euro. The Company also entered into floating to fixed interest rate swap agreements maturing on September 30, 2026, to hedge its exposure to variable interest rates. Please refer to Note 46 - Derivative Financial Instruments for more details.

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10. Restructuring Plansand Other Exit Charges

During fiscal 2016,Restructuring Programs

As disclosed in the 2023 Annual Report, the Company announced restructuringscommitted to improverestructuring plans aimed at improving operational efficiencies primarilyacross its lines of business. A substantial portion of these plans are complete with an estimated $344 remaining to be incurred by the end of fiscal 2024, mainly related to its motive power assemblynew plans started in fiscal 2024. Restructuring and distribution center in Italy and its sales and administration organizations in EMEA. In addition, the Company announced a further restructuring related to its manufacturing operations in Europe. The program was completed duringexit charges for the third quarter of fiscal 2018. Total2024 by reportable segments are as follows:
Quarter ended December 31, 2023
Energy SystemsMotive PowerSpecialtyTotal
Restructuring charges$(7)$925 $— $918 
Exit charges2,364 1,985 803 5,152 
Restructuring and other exit charges$2,357 $2,910 $803 $6,070 

Nine months ended December 31, 2023
Energy SystemsMotive PowerSpecialtyTotal
Restructuring charges$2,707 $1,772 $34 $4,513 
Exit charges2,364 6,176 6,560 15,100 
Restructuring and other exit charges$5,071 $7,948 $6,594 $19,613 


A roll-forward of the restructuring reserve, excluding exit charges, is as follows:
Balance as of March 31, 2023$445 
Accrued4,513 
Costs incurred(2,071)
Foreign currency impact124 
Balance as of December 31, 2023$3,011 

Exit Charges

Fiscal 2024 Program

Renewables

On November 8, 2023, the Company's Board of Directors approved a plan to stop production and operations of residential renewable energy products, which include our OutBack and Mojave brands. Management determined that residential renewable energy products no longer fit with the company’s core strategy and resources will be better allocated toward commercial energy solutions for this program were $6,568 primarily for cash expenses of $6,161 for employee severance-related payments of approximately 130 employees and other charges of $407. In fiscal 2016, the Company recorded restructuring charges of $5,232 and recorded an additional $1,251 during fiscal 2017.enterprise customers. The Company incurred $2,993 in costs against the accrual in fiscal 2016 and incurred an additional $3,037 against the accrual during fiscal 2017. During the nine months of fiscal 2018, the Company recorded restructuring charges of $85 and incurred $499 against the accrual.

During fiscal 2017, the Company announced restructuring programs to improve efficiencies primarily related to its motive power production in EMEA. The Companycurrently estimates that the total charges for these actions will amount to approximately $4,700, primarily from$23,500. Non-cash charges for inventory and fixed assets write offs, and impairment of an indefinite-lived intangible asset are estimated to be $22,600, and cash charges for employee severance-relatedseverance and retention payments and other charges. The Company estimates that these actions will result in the reduction of approximately 45 employees upon completion. During fiscal 2017, the Company recorded restructuring charges of $3,104 and incurred $749

in costs against the accrual. During the nine months of fiscal 2018, the Company recorded restructuring charges of $1,610 and incurred $1,725 against the accrual. As of December 31, 2017, the reserve balance associated with these actions is $2,406. The Company does not expectare estimated to be committed to additional restructuring charges related to this action, which$900. The plan is expected to be completed in fiscal 2019.2024.

During the first quarter of fiscal 2017, the Company announced a restructuring primarily to complete the transfer of equipment and clean-up of its manufacturing facility located in Jiangdu, the People’s Republic of China, which stopped production during fiscal 2016. This program was completed during the first quarter of fiscal 2018. The total cash charges for these actions amounted to $779. During fiscal 2017, the Company recorded charges of $779 and incurred $648 in costs against the accrual. During the nine months of fiscal 2018,2024, the Company recorded non-cash charges of $0 and incurred $129 in costs against the accrual.

During fiscal 2018, the Company announced restructuring programs to improve efficienciestotaling $6,572 primarily related to supply chainindefinite-lived intangible asset write-off and general operationscash charges of $438 related to severance costs. The Company also recorded a non-cash write off relating to inventories of $16,067, which was reported in EMEA.cost of goods sold.

Spokane

On November 8, 2023, the Company committed to a plan to close its facility in Spokane, Washington, which primarily manufactures enclosure systems for telecommunications and related end markets. Management determined that existing manufacturing locations have the capacity to satisfy demand for these products and will execute more efficient distribution to customers. The Company currently estimates that the total charges for these actions will amount to approximately $3,400, primarily from$3,600 relating to $700 in cash charges for employee severance-related paymentsseverance, and other charges.non-cash charges of $2,900 relating to fixed assets, facility lease, and inventory. The Company estimates that these actions will resultplan is expected to be completed in the reduction of approximately 50 employees upon completion. fiscal 2024.

During the nine months of fiscal 2018,2024, the Company recorded restructuringcash charges of $1,477$585 primarily related to severance costs and incurred $1,069non-cash charges totaling $481 related to fixed asset write offs.

Fiscal 2023 Programs

Sylmar

In November 2022, the Company committed to a plan to close its facility in costs againstSylmar, California, which manufactures specialty lithium batteries for aerospace and medical applications. Management determined to close the accrual. Assite upon the expiration of December 31, 2017,its lease on the reserve balance associated with these actions is $406.property and to redirect production through consolidation into existing locations. The Company expectscurrently estimates total charges in the exit to amount to $11,758. Cash charges are estimated to total $7,865 primarily relating to severance and other costs to leave the site. Non-cash charges are estimated to be committed$3,893 relating to an additional $1,900fixed assets, inventory, and contract assets. The plan is expected to be completed in restructuringfiscal 2024.

During fiscal 2023, the Company recorded cash charges of $1,682 related primarily related to this action, which it expectsseverance costs and non-cash charges totaling $417 primarily relating to complete in fiscal 2019.contract assets.

During the second quarternine months of fiscal 2018,2024, the Company completed the salerecorded cash charges of its Cleveland, Ohio facility$6,183 primarily related to severance costs, relocation expenses, and manufacturing variances and non-cash charges totaling $377. The Company also recorded a non-cash loss on the salewrite off relating to inventories of the building$3,098, which was reported in cost of $210 and other cash charges of $75. The Cleveland facility ceased charger production in fiscal 2017.goods sold.

During fiscal 2018,Ooltewah

On June 29, 2022, the Company announcedcommitted to a restructuring programplan to improve efficiencies ofclose its general operationsfacility in the Americas.Ooltewah, Tennessee, which produced flooded motive power batteries for electric forklifts. Management determined that future demand for traditional motive power flooded cells will decrease as customers transition to maintenance free product solutions in lithium and TPPL. The Company currently estimates that the total charges for these actions will amount to approximately $1,000, from cash$18,500. Cash charges for employee severance-relatedseverance related payments, cleanup related to the facility, contractual releases and legal expenses are estimated to be $9,200 and non-cash charges from inventory and fixed asset write-offs are estimated to be $9,300. These actions will result in the reduction of approximately 60 salaried165 employees. The majority of these charges are expected to be recorded by the end of calendar 2023.

During fiscal 2023, the Company recorded cash charges relating to severance and manufacturing variances of $2,735 and non-cash charges of $7,261 relating to fixed asset write-offs. The Company also recorded a non-cash write off relating to inventories of $1,613, which was reported in cost of goods sold.

During the nine months of fiscal 2018,2024, the Company recorded restructuringcash charges relating to site cleanup and decommissioning equipment of $3,505.

Fiscal 2021 Program

Hagen, Germany

In fiscal 2021, the Company's Board of Directors approved a plan to close substantially all of its facility in Hagen, Germany, which produced flooded motive power batteries for electric forklifts. Management determined that future demand for the motive power batteries produced at this facility was not sufficient, given the conversion from flooded to maintenance free batteries by customers, the existing number of competitors in the market, as well as the near term decline in demand and increased uncertainty from the pandemic. The Company plans to retain the facility with limited sales, service and administrative functions along with related personnel for the foreseeable future.

The Company currently estimates that the total charges for these actions will amount to approximately $60,000, of which cash charges for employee severance related payments, cleanup related to the facility, contractual releases and legal expenses were estimated to be $40,000 and non-cash charges from inventory and equipment write-offs were estimated to be $20,000. The majority of these charges were recorded as of January 1, 2023. These actions resulted in the reduction of approximately 200 employees.

During fiscal 2021, the Company recorded cash charges relating to severance of $23,331 and non-cash charges of $960$7,946 primarily relating to fixed asset write-offs.

During fiscal 2022, the Company recorded cash charges primarily relating to severance of $8,069 and incurred $386 in costs against the accrual. Asnon-cash charges of December 31, 2017, the reserve balance associated with this action is $574.$3,522 primarily relating to fixed asset write-offs. The Company expectsalso recorded a non-cash write off relating to complete this actioninventories of $960, which was reported in fiscal 2019.cost of goods sold.

A roll-forward of the restructuring reserve is as follows:
  
Employee
Severance
 Other Total
Balance as of March 31, 2017 $2,668
 $144
 $2,812
Accrued 3,890
 317
 4,207
Costs incurred (3,421) (462) (3,883)
Foreign currency impact 249
 1
 250
Balance as of December 31, 2017 $3,386
 $—
 $3,386


During fiscal 2023, the Company recorded cash charges of $2,207 relating to primarily to site cleanup and $562 of non-cash charges relating to accelerated depreciation of fixed assets.
9.
During the nine months of fiscal 2024, the Company recorded cash charges of $1,690 relating primarily to site cleanup and $407 of non-cash charges relating to accelerated depreciation of fixed assets.

11. Debt

The following summarizes the Company’s long-term debt as of December 31, 20172023 and March 31, 2017:2023:
 
December 31, 2023March 31, 2023
PrincipalUnamortized Issuance CostsPrincipalUnamortized Issuance Costs
Senior Notes$300,000 $2,272 $300,000 $2,705 
Fourth Amended Credit Facility, due 2026586,027 2,922 748,413 3,719 
$886,027 $5,194 $1,048,413 $6,424 
Less: Unamortized issuance costs5,194 6,424 
Long-term debt, net of unamortized issuance costs$880,833 $1,041,989 
  December 31, 2017 March 31, 2017
  Principal Unamortized Issuance Costs Principal Unamortized Issuance Costs
5.00% Senior Notes due 2023 $300,000
 $3,278
 $300,000
 $3,746
2017 Credit Facility, due 2022 395,300
 3,001
 —
 —
2011 Credit Facility, due 2018 —
 —
 292,500
 1,145
  $695,300
 $6,279
 $592,500
 $4,891
Less: Unamortized issuance costs 6,279
   4,891
  
Long-term debt, net of unamortized issuance costs $689,021
   $587,609
  


5.00% Senior Notes

The Company's Senior Notes comprise the following:

4.375% Senior Notes due 2027

On December 11, 2019, the Company issued $300,000 in aggregate principal amount of its 4.375% Senior Notes due December 15, 2027 (the “2027 Notes”). Proceeds from this offering, net of debt issuance costs were $296,250 and were utilized to pay down the Amended 2017 Revolver (defined below). The 2027 Notes bear interest at a rate of 5.00%4.375% per annum.annum accruing from December 11, 2019. Interest is payable semiannually in arrears on April 30June 15 and October 30December 15 of each year, commencing on October 30, 2015.June 15, 2020. The 2027 Notes will mature on April 30, 2023,December 15, 2027, unless earlier redeemed or repurchased in full. The Notesfull and are unsecured and unsubordinated obligations of the Company. The NotesThey are fully and unconditionally guaranteed, (the “Guarantees”), jointly and severally, by certain of its subsidiaries that are guarantors (the “Guarantors”) under the 2011Fourth Amended Credit Facility (defined below). These guarantees are unsecured and unsubordinated obligations of such guarantors.

The Company may redeem, prior to September 15, 2027, all or a portion of the 2027 Notes at a price equal to 100% of the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest and a “make whole” premium to, but excluding, the redemption date. The Company may redeem, on or after September 15, 2027, all or a portion of the 2027 Notes at a price equal to 100% of the principal amount of the 2027 Notes, plus accrued and unpaid interest to, but excluding, the redemption date. If a change of control triggering event occurs, the Company will be required to offer to repurchase the 2027 Notes at a price in cash equal to 101% of the aggregate principal amount of the 2027 Notes, plus accrued and unpaid interest to, but excluding, the date of repurchase.

6.625% Senior Notes due 2032

On January 11, 2024, the Company issued $300,000 in aggregate principal amount of its successor,6.625% Senior Notes due January 15, 2032 (the “2032 Notes”). Proceeds from this offering, net of debt issuance costs were $297,000 and were utilized to pay down the 2017Fourth Amended Credit Facility. The Guarantees2032 Notes bear interest at a rate of 6.625% per annum accruing from January 11, 2024. Interest is payable semiannually in arrears on January 15 and July 15 of each year, commencing on July 15, 2024. The 2032 Notes mature on January 15, 2032, unless earlier redeemed or repurchased in full and are unsecured and unsubordinated obligations of the Guarantors.Company. They are fully and unconditionally guaranteed, jointly and severally, by certain of its subsidiaries that are guarantors under the Fourth Amended Credit Facility (defined below). These guarantees are unsecured and unsubordinated obligations of such guarantors.

The Company may redeem, prior to January 15, 2027, all or a portion of the 2032 Notes at a price equal to 100% of the aggregate principal amount of the 2032 Notes to be redeemed, plus accrued and unpaid interest and a “make whole” premium to, but excluding, the redemption date. The Company may redeem, on or after January 15, 2027, all or a portion of the 2032
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Notes at a price equal to 100% of the principal amount of the 2032 Notes, plus accrued and unpaid interest and a redemption premium to, but excluding, the redemption date. The Company may, in compliance with certain conditions, on any one or more occasions redeem up to 40% of the original aggregate principal amount of the 2032 Notes, with the net cash proceeds of one or more equity offerings at a price equal to 106.625% of the aggregate principal amount of the 2032 Notes, plus accrued and unpaid interest to, but excluding, the redemption date. If a change of control triggering event occurs, the Company will be required to offer to repurchase the 2032 Notes at a price in cash equal to 101% of the aggregate principal amount of the 2032 Notes, plus accrued and unpaid interest to, but excluding, the date of repurchase.

2017 Credit Facility and Subsequent Amendments

On August 4, 2017,In fiscal 2018, the Company entered into a new credit facility (“2017(the “2017 Credit Facility”). The 2017 Credit Facility matureswas scheduled to mature on September 30, 2022, and comprisesinitially comprised a $600,000 senior secured revolving credit facility (“2017 Revolver”) and a $150,000 senior secured term loan (“2017 Term Loan”). The Company's previousCompany utilized the borrowings from the 2017 Credit Facility to repay its pre-existing credit facility (“2011facility.

In fiscal 2019, the Company amended the 2017 Credit Facility (as amended, the “Amended Credit Facility”) comprisedto fund the Alpha acquisition. The Amended Credit Facility consisted of $449,105 senior secured term loans (the “Amended Term Loan”), including a $500,000CAD 133,050 ($99,105) senior secured term loan and a $700,000 senior secured revolving credit facility (“2011(the “Amended Revolver”). The amendment resulted in an increase of the 2017 Term Loan and the 2017 Revolver by $299,105 and $100,000, respectively.

During the second quarter of fiscal 2022, the Company entered into a $150,000second amendment to the 2017 Credit Facility (as amended, the “Second Amended Credit Facility”). The Second Amended Credit Facility, scheduled to mature on September 30, 2026, consists of a $130,000 senior secured incremental term loan (the “2011“Second Amended Term Loan”) with, a maturity dateCAD 106,440 ($84,229) senior secured term loan and an $850,000 senior secured revolving credit facility (the “Second Amended Revolver”). The second amendment resulted in a decrease of the Amended Term Loan by $150,000 and an increase of the Amended Revolver by $150,000.

During the second quarter of fiscal 2023, the Company entered into a third amendment to the 2017 Credit Facility (as amended, the “Third Amended Credit Facility”). The Third Amended Credit Facility provides a new incremental delayed-draw senior secured term loan up to $300,000 (the “Third Amended Term Loan”), which shall be available to draw at any time until March 15, 2023. Once drawn, the funds will mature on September 30, 2018. On August 4,2026, the same as the Company's Second Amended Term Loan and Second Amended Revolver. In connection with the agreement, the Company incurred $1,161 in third party administrative and legal fees recognized in interest expense and capitalized $1,096 in charges from existing lenders as a deferred asset. During the fourth quarter of fiscal 2023, the Company drew $300,000 in the form of the Third Amended Term Loan. Additionally, the Company derecognized the capitalized deferred asset and recognized the $1,096 as deferred financing costs.

During the fourth quarter of fiscal 2023, the Company entered into a fourth amendment to the 2017 Credit Facility (as amended, the outstanding balance on“Fourth Amended Credit Facility”). The Fourth Amended Credit Facility replaces the 2011London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”) in the calculation of interest for both the Second Amended Revolver and the 2011Second Amended Term Loan of $240,000 and $123,750, respectively, was repaid utilizing borrowings fromLoan.

Subsequent to the 2017 Credit Facility.

As of December 31, 2017,fourth amendment, the Company had $245,300 outstanding on the 2017 Revolver and $150,000 under the 2017 Term Loan.

The quarterly installments payable on the 2017Second Amended Term Loan are $1,875$2,630 beginning December 31, 2018, $2,8132022, $3,946 beginning December 31, 20192024 and $3,750$5,261 beginning December 31, 20202025 with a final payment of $105,000$157,821 on September 30, 2022.2026. The 2017Fourth Amended Credit Facility may be increased by an aggregate amount of $325,000$350,000 in revolving commitments and/orand /or one or more new tranches of term loans, under certain conditions. Both the 2017Second Amended Revolver and the 2017Second Amended Term Loan bear interest, at the Company's option, at a rate per annum equal to either (i) the London Interbank Offered Rate (“LIBOR”)SOFR plus 10 basis points plus (i) between 1.25%1.125% and 2.00%2.25% (currently 1.25%1.250% and based on the Company's consolidated net leverage ratio) or (ii) the U.S. Dollar Base Rate (whichor Canadian Prime Rate plus between 0.125% and 1.25%, which equals, for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Effective Rate plus 0.50%, (b) Bank of America “Prime Rate” and (c) the Eurocurrency Base Rate plus 1%; provided that, if the Base Rate shall be less than zero, such rate shall be deemed zero) (iii) the CDOR Base Rate equal to the higher of (a) Bank of America “Prime Rate” and (b) average 30-day CDOR rate plus 0.50%.

The quarterly installments payable on the Third Amended Term Loan were $3,750 beginning June 30, 2023, $5,625 beginning December 31, 2024 and $7,500 beginning December 31, 2025 with a final payment of $232,500 on September 30, 2026. The Third Amended Term Loan bears interest, at the Company's option, at a rate per annum equal to either (i) SOFR plus 10 basis points plus (i) between 1.375% and 2.50% (currently 1.500% and based on the Company's consolidated net leverage ratio) or (ii) the U.S. Dollar Base Rate plus between 0.375% and 1.50%, which equals, for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Effective Rate plus 0.50%, (b) Bank of America “Prime Rate” and (c) the Term SOFR plus
19
Table of Contents    
1%; provided that, if the Base Rate shall be less than zero, such rate shall be deemed zero). Until the funds were drawn on March 13, 2023, the Company paid a commitment fee of 0.175% to 0.35% at a rate per annum on the unused portion.

Obligations under the 2017Fourth Amended Credit Facility are secured by substantially all of the Company’s existing and future acquired assets, including substantially all of the capital stock of the Company’s United States subsidiaries that are guarantors under the 2017Fourth Amended Credit Facility and up to 65% of the capital stock of certain of the Company’s foreign subsidiaries that are owned by the Company’s United States subsidiaries.

The current portionFourth Amended Credit Facility allows for up to two temporary increases in the maximum leverage ratio to 4.50x from 4.00x to 4.25x for a four quarter period following an acquisition larger than $250,000. Effective with the Fourth Amended Credit Facility, the maximum leverage ratio increased from 3.50x to 4.25x effective to the last day of the 2017second quarter of fiscal year 2024 and decreasing subsequently to 4.00x.

As of December 31, 2023, the Company had $100,000 outstanding under the Second Amended Revolver, $197,277 under the Second Amended Term Loan, and $288,750 outstanding under the Third Amended Term Loan.

Current Portion of $1,875Debt

The scheduled repayments within the next twelve months, relating to the Second and Third Amended Term Loans, are $11,837 and $16,875, respectively, and is classified as long-term debt, as the Company expects to refinance the future quarterly payments with revolver borrowings under its 2017the Second Amended Credit Facility.

Short-Term Debt

As of December 31, 20172023 and March 31, 2017,2023, the Company had $16,842$30,937 and $18,359,$30,642, respectively, of short-term borrowings. The weighted-averageweighted average interest rate on these borrowings was approximately 8%approximately 6.7% and 7% 7.0%, respectively, at December 31, 20172023 and March 31, 2017, respectively.2023.

Letters of Credit

As of December 31, 20172023 and March 31, 2017,2023, the Company had $3,074$2,605 and $2,189, respectively,$3,565 of standby letters of credit.credit, respectively.


Debt Issuance Costs

In connection with the refinancing,Second Amended Credit Facility, the Company incurred $2,677capitalized $2,952 in debt issuance costs and wrote off $301 relating to the 2011 Credit Facility.$128 of unamortized debt issuance costs. Amortization expense, relating to debt issuance costs, included in interest expense was $314$410 and $347,$487, respectively, for the quartersthird quarter ended December 31, 20172023 and January 1, 20172023, respectively and $988$1,230 and $1,041, respectively,$1,461 for the nine months ended December 31, 2017of fiscal 2024 and January 1, 2017.2023. Debt issuance costs, net of accumulated amortization, totaled $6,279$5,194 and $4,891,$6,424, respectively, at December 31, 20172023 and March 31, 2017.2023.

Available Lines of Credit

As of December 31, 20172023 and March 31, 2017,2023, the Company had available and undrawn, under all its lines of credit, $503,807$839,632 and $475,947,$693,444, respectively, including $150,832$92,163 and $142,872,$90,839, respectively, of uncommitted lines of credit ascredit.

20
Table of December 31, 2017 and March 31, 2017.Contents    

10.12. Retirement Plans

The following tables present the components of the Company’s net periodic benefit cost related to its defined benefit pension plans: 

 United States PlansInternational Plans
Quarter endedQuarter ended
December 31, 2023January 1, 2023December 31, 2023January 1, 2023
Service cost$— $— $222 $228 
Interest cost161 146 521 425 
Expected return on plan assets(166)(104)(213)(495)
Amortization and deferral— — 167 118 
Net periodic benefit cost$(5)$42 $697 $276 
  United States Plans International Plans
Quarter ended Quarter ended
December 31, 2017 January 1, 2017 December 31, 2017 January 1, 2017
Service cost $—
 $96
 $257
 $212
Interest cost 159
 158
 449
 441
Expected return on plan assets (132) (204) (565) (442)
Amortization and deferral 69
 76
 365
 238
Net periodic benefit cost $96
 $126
 $506
 $449

 United States PlansInternational Plans
Nine months endedNine months ended
December 31, 2023January 1, 2023December 31, 2023January 1, 2023
Service cost$— $— $660 $681 
Interest cost493 436 1,690 1,278 
Expected return on plan assets(318)(341)(1,025)(1,497)
Amortization and deferral— — 223 356 
Net periodic benefit cost$175 $95 $1,548 $818 
  United States Plans International Plans
Nine months ended Nine months ended
December 31, 2017 January 1, 2017 December 31, 2017 January 1, 2017
Service cost $—
 $278
 $756
 $658
Interest cost 493
 498
 1,325
 1,402
Expected return on plan assets (372) (612) (1,670) (1,424)
Amortization and deferral 228
 340
 1,076
 756
Net periodic benefit cost $349
 $504
 $1,487
 $1,392


11.
13. Stock-Based Compensation

As of December 31, 2017,2023, the Company maintains the 20172023 Equity Incentive Plan (“20172023 EIP”). The 20172023 EIP reserved 3,177,4773,614,500 shares of common stock for the grant of various classes of nonqualified stock options, restricted stock units, market condition-based on total shareholder return (“TSR”) and performance condition-based share units (“PSU”) and other forms of equity-based compensation.


The Company recognized stock-based compensation expense associated with its equity incentive plans of $5,250 for the third quarter of fiscal 2018 and $4,699$9,817 for the third quarter of fiscal 2017.2024 and $6,906 for the third quarter of fiscal 2023. Stock-based compensation expense was $14,773$22,894 and $18,770 for the nine months of fiscal 20182024 and $14,556 for the nine months of fiscal 2017.2023, respectively. The Company recognizes compensation expense using the straight-line method over the vesting period of the awards.

During the nine months of fiscal 2018,2024, the Company granted to non-employee directors 32,55127,371 restricted stock units, pursuant tounder the 2017 EIP.

deferred compensation plan for non-employee directors. The awards vest immediately upon the date of grant and are settled in shares of common stock.

During the nine months of fiscal 2018,2024, the Company granted to management and other key employees 169,703200,314 non-qualified stock options and 60,008 market condition-based share units that vest ratably over three years from the date of the grant and 160,313269,751 restricted stock units that vest 25% each yearratably over four years from the date of grant.

Common stock activity during the nine months of fiscal 20182024 included the exercise of 178,835 stock options and the vesting of 149,458260,967 restricted stock units and 142,426 market condition-based share units and the exercise of 58,595 stock options.

30,597 TSRs.

As of December 31, 2017,2023, there were 549,1921,215,424 non-qualified stock options, 635,7121,040,960 restricted stock units including non-employee director restricted stock units and 349,078 market condition-based share units1,129 TSRs outstanding.


21

Table of Contents    
12.
14. Stockholders’ Equity and Noncontrolling Interests

Common Stock

The following demonstrates the change in the number of shares of common stock outstanding during the nine months ended December 31, 2017:2023:
 
Shares outstanding as of March 31, 2017202340,901,059 43,447,536
Purchase of treasury stock(855,034)(1,540,093)
Shares issued towardsunder equity-based compensation plans, net of equity awards surrendered for option price and taxes353,106 219,374
Shares outstanding as of December 31, 2017202340,399,131 42,126,817


Accelerated Share Repurchase

During the second quarter of fiscal 2018, the Company entered into an accelerated share repurchase agreement (“ASR”) with a major financial institution to repurchase up to $100,000 of its common stock. The Company prepaid $100,000 and received an initial delivery of 1,278,976 shares with a fair market value of approximately $80,000. The ASR is accounted for as a treasury stock repurchase, reducing the weighted average number of basic and diluted shares outstanding by the 1,278,976 shares initially received, and as a forward contract indexed to the Company's own common shares to reflect the future settlement provisions. Because the maximum repurchase will be $100,000, as of December 31, 2017, $20,000 representing the difference between the fair value of shares delivered and the maximum notional amount of $100,000, is accounted for as an equity instrument and is included in additional paid-in capital. The ASR is not accounted for as a derivative instrument.

No shares were received pursuant to the ASR during the current quarter.

On January 9, 2018, the ASR was settled, and the Company received an additional 216,738 shares. See Note 15 - Subsequent Events, for more information.

Treasury Stock

During the nine months ended December 31, 2017,2023, the Company also acquired 261,117purchased 855,034 shares for $21,191 through open market purchases.

$82,331 and purchased 358,365 shares for $22,907 during the nine months ended January 1, 2023. At December 31, 20172023 and March 31, 2017,2023, the Company held 12,463,36715,948,186 and 10,923,27415,103,554 shares as treasury stock, respectively. During the nine months ended December 31, 2023, the Company also issued 10,402 shares out of its treasury stock, valued at $62.55 per share to participants under the Company's Employee Stock Purchase Plan.

Accumulated Other Comprehensive Income (“AOCI ”)

The components of AOCI, net of tax, as of December 31, 20172023 and March 31, 2017,2023, are as follows:
March 31, 2023Before ReclassificationsAmounts Reclassified from AOCIDecember 31, 2023
Pension funded status adjustment$(4,423)$— $62 $(4,361)
Net unrealized gain (loss) on derivative instruments1,411 3,266 (5,707)(1,030)
Foreign currency translation adjustment (1)
(180,462)3,803 — (176,659)
Accumulated other comprehensive (loss) income$(183,474)$7,069 $(5,645)$(182,050)
(1)Foreign currency translation adjustment for the nine months ended December 31, 2023 includes a $5,687 loss (net of taxes of $1,734) related to the Company's $150,000 cross-currency fixed interest rate swap contract.

  March 31, 2017 Before Reclassifications Amounts Reclassified from AOCI December 31, 2017
Pension funded status adjustment $(25,555) $—
 $996
 $(24,559)
Net unrealized gain (loss) on derivative instruments 1,975
 (309) 338
 2,004
Foreign currency translation adjustment (129,244) 86,782
 —
 (42,462)
Accumulated other comprehensive (loss) income $(152,824) $86,473
 $1,334
 $(65,017)





















22
Table of Contents    
The following table presents reclassifications from AOCI during the third quarter ended December 31, 20172023:
:
Components of AOCIAmounts Reclassified from AOCILocation of (Gain) Loss Recognized on Income Statement
Derivatives in cash flow hedging relationships:
Net unrealized gain on derivative instruments$(3,334)Cost of goods sold
Tax expense779 
Net unrealized gain on derivative instruments, net of tax$(2,555)
Derivatives in net investment hedging relationships:
Net unrealized gain on derivative instruments$(796)Interest expense
Tax expense186 
Net unrealized gain on derivative instruments, net of tax$(610)
Defined benefit pension costs:
Prior service costs and deferrals$167 Net periodic benefit cost, included in other (income) expense, net - See Note 12
Tax benefit(146)
Net periodic benefit cost, net of tax$21 



The following table presents reclassifications from AOCI during the nine months ended December 31, 2023:

Components of AOCIAmounts Reclassified from AOCILocation of (Gain) Loss Recognized on Income Statement
Derivatives in cash flow hedging relationships:
Net unrealized gain on derivative instruments$(7,448)Cost of goods sold
Tax expense1,741 
Net unrealized gain on derivative instruments, net of tax$(5,707)
Derivatives in net investment hedging relationships:
Net unrealized gain on derivative instruments$(908)Interest expense
Tax expense212 
Net unrealized gain on derivative instruments, net of tax$(696)
Defined benefit pension costs:
Prior service costs and deferrals$223 Net periodic benefit cost, included in other (income) expense, net - See Note 12
Tax benefit(161)
Net periodic benefit cost, net of tax$62 










23
Components of AOCI Amounts Reclassified from AOCI Location of (Gain) Loss Recognized on Income Statement
Derivatives in cash flow hedging relationships:    
Net gain on cash flow hedging derivative instruments $(455) Cost of goods sold
Tax expense 168
  
Net gain on derivative instruments, net of tax $(287)  
     
Defined benefit pension costs:    
Prior service costs and deferrals $434
 Net periodic benefit cost, included in cost of goods sold and operating expenses - See Note 10
Tax benefit (103)  
Net periodic benefit cost, net of tax $331
  
Table of Contents    


The following table presents reclassifications from AOCI during the third quarter ended January 1, 2017:

Components of AOCI Amounts Reclassified from AOCI Location of (Gain) Loss Recognized on Income Statement
Derivatives in cash flow hedging relationships:    
Net gain on cash flow hedging derivative instruments $(1,431) Cost of goods sold
Tax expense 528
  
Net gain on derivative instruments, net of tax $(903)  
     
Defined benefit pension costs:    
Prior service costs and deferrals $314
 Net periodic benefit cost, included in cost of goods sold and operating expenses - See Note 10
Tax benefit (116)  
Net periodic benefit cost, net of tax $198
  


2023:
The following table presents reclassifications from AOCI during the nine months ended December 31, 2017:

Components of AOCIAmounts Reclassified from AOCILocation of (Gain) Loss Recognized on Income Statement
Derivatives in cash flow hedging relationships:
Net unrealized loss on derivative instruments$2,484 Cost of goods sold
Tax benefit(581)
Net unrealized loss on derivative instruments, net of tax$1,903 
Derivatives in net investment hedging relationships:
Net unrealized gain on derivative instruments$(360)Interest expense
Tax expense84 
Net unrealized gain on derivative instruments, net of tax$(276)
Defined benefit pension costs:
Prior service costs and deferrals$118 Net periodic benefit cost, included in other (income) expense, net - See Note 12
Tax benefit(34)
Net periodic benefit cost, net of tax$84 

Components of AOCI Amounts Reclassified from AOCI Location of (Gain) Loss Recognized on Income Statement
Derivatives in cash flow hedging relationships:    
Net loss on cash flow hedging derivative instruments $537
 Cost of goods sold
Tax benefit (199)  
Net loss on derivative instruments, net of tax $338
  
     
Defined benefit pension costs:    
Prior service costs and deferrals $1,304
 Net periodic benefit cost, included in cost of goods sold and operating expenses - See Note 10
Tax benefit (308)  
Net periodic benefit cost, net of tax $996
  



The following table presents reclassifications from AOCI during the nine months ended January 1, 2017:2023:


Components of AOCIAmounts Reclassified from AOCILocation of (Gain) Loss Recognized on Income Statement
Derivatives in cash flow hedging relationships:
Net unrealized loss on derivative instruments$2,411 Cost of goods sold
Tax benefit(564)
Net unrealized gain on derivative instruments, net of tax$1,847 
Derivatives in net investment hedging relationships:
Net unrealized gain on derivative instruments$(3,283)Interest expense
Tax expense767 
Net unrealized gain on derivative instruments, net of tax$(2,516)
Defined benefit pension costs:
Prior service costs and deferrals$356 Net periodic benefit cost, included in other (income) expense, net - See Note 12
Tax benefit(102)
Net periodic benefit cost, net of tax$254 
24
Components of AOCI Amounts Reclassified from AOCI Location of (Gain) Loss Recognized on Income Statement
Derivatives in cash flow hedging relationships:    
Net gain on cash flow hedging derivative instruments $(2,481) Cost of goods sold
Tax expense 915
  
Net gain on derivative instruments, net of tax $(1,566)  
     
Defined benefit pension costs:    
Prior service costs and deferrals $1,096
 Net periodic benefit cost, included in cost of goods sold and operating expenses - See Note 10
Tax benefit (349)  
Net periodic benefit cost, net of tax $747
  

Table of Contents    
The following demonstrates the change in equity attributable to EnerSys stockholders and nonredeemable noncontrolling interests during the third quarter and nine months ended December 31, 20172023::

(In Thousands, Except Per Share Data)

Preferred
Stock		Common
Stock		Additional Paid-in
Capital		Treasury
Stock		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Contra-EquityTotal
EnerSys
Stockholders’
Equity		Non-
redeemable
Non-
Controlling
Interests		Total
Equity
Balance at March 31, 2023$— $560 $596,464 $(740,956)$1,930,148 $(183,474)$(2,463)$1,600,279 $3,602 $1,603,881 
Stock-based compensation— — 7,933 — — — — 7,933 — 7,933 
Exercise of stock options— 5 7,649 — — — — 7,654 — 7,654 
Shares issued under equity awards (taxes paid related to net share settlement of equity awards), net— — — — — — — — — — 
Purchase of common stock— — — — — — — — — — 
Other— — 65 214 — — — 279 — 279 
Net earnings— — — — 66,797 — — 66,797 — 66,797 
Dividends ($0.175 per common share)— — 184 — (7,357)— — (7,173)— (7,173)
Dissolution of joint venture— — — — — — — — — — 
Other comprehensive income:
Pension funded status adjustment (net of tax benefit of $9)— — — — — 20 — 20 — 20 
Net unrealized gain (loss) on derivative instruments (net of tax expense of $544)— — — — — 1,786 — 1,786 — 1,786 
Foreign currency translation adjustment— — — — — 2,192 — 2,192 (190)2,002 
Balance at July 2, 2023$— $565 $612,295 $(740,742)$1,989,588 $(179,476)$(2,463)$1,679,767 $3,412 $1,683,179 
Stock-based compensation— — 5,144 — — — — 5,144 — 5,144 
Exercise of stock options— (1)2,015 — — — — 2,014 — 2,014 
Shares issued under equity awards (taxes paid related to net share settlement of equity awards), net— — (7,348)— — — — (7,348)— (7,348)
Contra equity - adjustment to indemnification receivable for acquisition related tax liability— — — — — — 475 475 — 475 
Purchase of common stock— — — (47,340)— — — (47,340)— (47,340)
Other— (1)151 194 — — — 344 — 344 
Net earnings— — — — 65,229 — — 65,229 — 65,229 
Dividends ($0.225 per common share)— — 233 — (9,401)— — (9,168)— (9,168)
Other comprehensive income:
Pension funded status adjustment (net of tax benefit of $6)— — — — — 21 — 21 — 21 
Net unrealized gain (loss) on derivative instruments (net of tax of $762)— — — — — 2,495 — 2,495 — 2,495 
Foreign currency translation adjustment— — — — — (31,647)— (31,647)(17)(31,664)
Balance at October 1, 2023$— $563 $612,490 $(787,888)$2,045,416 $(208,607)$(1,988)$1,659,986 $3,395 $1,663,381 
  Equity Attributable to EnerSys Stockholders Nonredeemable Noncontrolling Interests Total Equity
Balance as of March 31, 2017 $1,103,456
 $4,913
 $1,108,369
Total comprehensive income:      
Net earnings 65,576
 118
 65,694
Net unrealized gain on derivative instruments, net of tax 29
 —
 29
Pension funded status adjustment, net of tax 996
 —
 996
Foreign currency translation adjustment 86,782
 119
 86,901
     Total other comprehensive gain, net of tax 87,807
 119
 87,926
Total comprehensive income 153,383
 237
 153,620
Other changes in equity:      
Purchase of treasury stock including ASR (121,191) —
 (121,191)
Cash dividends - common stock ($0.525 per share) (22,339) —
 (22,339)
Other, including activity related to equity awards 7,515
 —
 7,515
Balance as of December 31, 2017 $1,120,824
 $5,150
 $1,125,974
25
Table of Contents    
Stock-based compensation— — 9,817 — — — — 9,817 — 9,817 
Exercise of stock options— — — — — — — — — — 
Shares issued under equity awards (taxes paid related to net share settlement of equity awards), net— — (2,144)— — — — (2,144)— (2,144)
Contra equity - adjustment to indemnification receivable for acquisition related tax liability— — — — — — — — — — 
Purchase of common stock— — — (34,991)— — — (34,991)— (34,991)
Other— — 11 221 — — — 232 — 232 
Net earnings— — — — 76,158 — — 76,158 — 76,158 
Dividends ($0.225 per common share)— — 234 — (9,315)— — (9,081)— (9,081)
Other comprehensive income:— — 
Pension funded status adjustment (net of tax benefit of $146)— — — — — 21 — 21 — 21 
Net unrealized gain (loss) on derivative instruments (net of tax of $2,051)— — — — — (6,722)— (6,722)— (6,722)
Foreign currency translation adjustment— — — — — 33,258 — 33,258 98 33,356 
Balance at December 31, 2023$— $563 $620,408 $(822,658)$2,112,259 $(182,050)$(1,988)$1,726,534 $3,493 $1,730,027 


The following demonstrates the change in equity attributable to EnerSys stockholders and nonredeemable noncontrolling interests during the third quarter and nine months ended January 1, 2023:

(In Thousands, Except Per Share Data)

Preferred
Stock		Common
Stock		Additional Paid-in
Capital		Treasury
Stock		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Contra-EquityTotal
EnerSys
Stockholders’
Equity		Non-
redeemable
Non-
Controlling
Interests		Total
Equity
Balance at March 31, 2022$— $557 $571,464 $(719,119)$1,783,586 $(143,495)$(3,620)$1,489,373 $3,902 $1,493,275 
Stock-based compensation— — 5,330 — — — — 5,330 — 5,330 
Exercise of stock options— 1 — — — — — 1 — 1 
Shares issued under equity awards (taxes paid related to net share settlement of equity awards), net— — (633)— — — — (633)— (633)
Purchase of common stock— — — (22,907)— — — (22,907)— (22,907)
Other— — (41)240 — — — 199 — 199 
Net earnings— — — — 30,978 — — 30,978 — 30,978 
Dividends ($0.175 per common share)— — 174 — (7,282)— — (7,108)— (7,108)
Dissolution of joint venture— — — — — — — — — — 
Other comprehensive income:
Pension funded status adjustment (net of tax benefit of $34)— — — — — 89 — 89 — 89 
Net unrealized gain (loss) on derivative instruments (net of tax benefit of $2,514)— — — — — (8,234)— (8,234)— (8,234)
Foreign currency translation adjustment— — — — — (52,010)— (52,010)(210)(52,220)
Balance at July 3, 2022$— $558 $576,294 $(741,786)$1,807,282 $(203,650)$(3,620)$1,435,078 $3,692 $1,438,770 
Stock-based compensation— — 6,534 — — — — 6,534 — 6,534 
Exercise of stock options— 1 114 — — — — 115 — 115 
Shares issued under equity awards (taxes paid related to net share settlement of equity awards), net— — (5,624)— — — — (5,624)— (5,624)
Contra equity - adjustment to indemnification receivable for acquisition related tax liability— — — — — — 963 963 — 963 
Purchase of common stock— — — — — — — — — — 
Other— — 28 276 — — — 304 — 304 
Net earnings— — — — 34,472 — — 34,472 — 34,472 
13.
26
Table of Contents    
Dividends ($0.175 per common share)— — 174 — (7,312)— — (7,138)— (7,138)
Other comprehensive income:
Pension funded status adjustment (net of tax benefit of $34)— — — — — 81 — 81 — 81 
Net unrealized gain (loss) on derivative instruments (net of tax benefit of $647)— — — — — 2,116 — 2,116 — 2,116 
Foreign currency translation adjustment— — — — — (55,961)— (55,961)(214)(56,175)
Balance at October 2, 2022$— $559 $577,520 $(741,510)$1,834,442 $(257,414)$(2,657)$1,410,940 $3,478 $1,414,418 
Stock-based compensation— — 6,906 — — — — 6,906 — 6,906 
Exercise of stock options— 1 946 — — — — 947 — 947 
Shares issued under equity awards (taxes paid related to net share settlement of equity awards), net— — (128)— — — — (128)— (128)
Contra equity - adjustment to indemnification receivable for acquisition related tax liability— — — — — — 194 194 — 194 
Purchase of common stock— — — — — — — — — — 
Other— — (30)314 — — — 284 — 284 
Net earnings— — — — 44,410 — — 44,410 — 44,410 
Dividends ($0.225 per common share)— — 193 — (7,333)— — (7,140)— (7,140)
Other comprehensive income:— — 
Pension funded status adjustment (net of tax benefit of $34)— — — — — 84 — 84 — 84 
Net unrealized gain (loss) on derivative instruments (net of tax benefit of $3,298)— — — — — 10,806 — 10,806 — 10,806 
Foreign currency translation adjustment— — — — — 60,456 — 60,456 109 60,565 
Balance at January 1, 2023$— $560 $585,407 $(741,196)$1,871,519 $(186,068)$(2,463)$1,527,759 $3,587 $1,531,346 







27
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15. Earnings Per Share

The following table sets forth the reconciliation from basic to diluted weighted-average number of common shares outstanding and the calculations of net earnings per common share attributable to EnerSys stockholders.
 
 Quarter endedNine months ended
December 31, 2023January 1, 2023December 31, 2023January 1, 2023
Net earnings attributable to EnerSys stockholders$76,158 $44,410 $208,184 $109,860 
Weighted-average number of common shares outstanding:
Basic40,451,279 40,835,636 40,770,524 40,787,654 
Dilutive effect of:
Common shares from exercise and lapse of equity awards, net of shares assumed reacquired596,614 446,057 706,426 479,666 
Diluted weighted-average number of common shares outstanding41,047,893 41,281,693 41,476,950 41,267,320 
Basic earnings per common share attributable to EnerSys stockholders$1.88 $1.09 $5.11 $2.69 
Diluted earnings per common share attributable to EnerSys stockholders$1.86 $1.08 $5.02 $2.66 
Anti-dilutive equity awards not included in diluted weighted-average common shares427,148 1,200,525 423,955 1,181,550 
  Quarter ended Nine months ended
  December 31, 2017 January 1, 2017 December 31, 2017 January 1, 2017
Net (loss) earnings attributable to EnerSys stockholders $(25,847) $36,235
 $65,576
 $126,444
Weighted-average number of common shares outstanding:        
Basic 42,125,745
 43,429,525
 42,837,986
 43,375,474
Dilutive effect of:        
Common shares from exercise and lapse of equity awards, net of shares assumed reacquired —
 620,149
 507,940
 567,536
Diluted weighted-average number of common shares outstanding 42,125,745
 44,049,674
 43,345,926
 43,943,010
Basic (loss) earnings per common share attributable to EnerSys stockholders $(0.61) $0.83
 $1.53
 $2.92
Diluted (loss) earnings per common share attributable to EnerSys stockholders $(0.61) $0.82
 $1.51
 $2.88
Anti-dilutive equity awards not included in diluted weighted-average common shares 279,066
 62,470
 264,517
 232,542



28
14.
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16. Business Segments

Effective April 1, 2023, the Company created a new line of business and operating segment named New Ventures in addition to the existing lines of businesses: Energy Systems, Motive Power, and Specialty. The Company has three reportable business segments based on geographic regions, defined as follows:results of New Ventures include start-up operating expenses captured within the "Corporate and other" category of operating earnings. New Ventures provides energy storage and management systems for demand charge reduction, utility back-up power, and dynamic fast charging for electric vehicles.

•
Americas, which includes North and South America, with segment headquarters in Reading, Pennsylvania, USA;
•
EMEA, which includes Europe, the Middle East and Africa, with segment headquarters in Zug, Switzerland; and
•
Asia, which includes Asia, Australia and Oceania, with segment headquarters in Singapore.

Summarized financial information related to the Company's reportable segments for the third quarter and nine months ended December 31, 20172023 and January 1, 20172023, is shown below:
  Quarter ended Nine months ended
  December 31, 2017 January 1, 2017 December 31, 2017 January 1, 2017
Net sales by segment to unaffiliated customers        
Americas $353,237
 $313,972
 $1,049,344
 $968,516
EMEA 224,931
 186,069
 621,864
 563,765
Asia 80,767
 63,656
 227,641
 208,067
Total net sales $658,935
 $563,697
 $1,898,849
 $1,740,348
Net sales by product line        
Reserve power $326,989
 $271,291
 $924,404
 $844,781
Motive power 331,946
 292,406
 974,445
 895,567
Total net sales $658,935
 $563,697
 $1,898,849
 $1,740,348
Intersegment sales        
Americas $7,144
 $6,319
 $23,360
 $19,304
EMEA 29,989
 22,086
 97,369
 66,186
Asia 6,213
 6,285
 16,524
 18,070
Total intersegment sales (1)
 $43,346
 $34,690
 $137,253
 $103,560
Operating earnings by segment        
Americas $43,137
 $45,949
 $140,827
 $139,149
EMEA 23,794
 20,435
 54,888
 57,268
Asia 3,318
 3,984
 10,744
 11,741
Restructuring charges - Americas (961) —
 (1,246) (892)
Inventory adjustment relating to exit activities - EMEA —
 502
 —
 (2,157)
Restructuring charges - EMEA (848) 1,153
 (3,172) (3,663)
Restructuring charges - Asia —
 —
 —
 (482)
Legal proceedings charge - EMEA —
 (17,000) —
 (17,000)
Total operating earnings (2)
 $68,440
 $55,023
 $202,041
 $183,964

 Quarter endedNine months ended
December 31, 2023January 1, 2023December 31, 2023January 1, 2023
Net sales by segment to unaffiliated customers (1)
Energy Systems$373,573 $434,310 $1,220,587 $1,279,913 
Motive Power355,396 361,788 1,061,383 1,067,632 
Specialty132,579 124,129 389,180 371,090 
Total net sales$861,548 $920,227 $2,671,150 $2,718,635 
Operating earnings by segment
Energy Systems$14,309 $27,654 $69,521 $60,435 
Motive Power52,715 47,214 156,531 129,501 
Specialty7,496 11,609 22,900 30,431 
Corporate and other (3)
55,758 — 92,055 — 
Inventory adjustment relating to exit activities - Energy Systems(16,067)211 (16,067)211 
Inventory adjustment relating to exit activities - Motive Power— 652 — (892)
Inventory adjustment relating to exit activities - Specialty— — (3,098)— 
Restructuring and other exit charges - Energy Systems(2,358)(158)(5,073)(1,097)
Restructuring and other exit charges - Motive Power(2,909)(650)(7,947)(11,304)
Restructuring and other exit charges - Specialty(803)7 (6,593)7 
Amortization - Energy Systems(6,047)(6,941)(18,483)(21,348)
Amortization - Motive Power(170)(110)(512)(330)
Amortization - Specialty(702)(733)(2,106)(2,200)
Intangibles Impairment - Energy Systems(6,020)— (6,020)— 
Other - Energy Systems(2,449)(90)(3,508)(251)
Other - Motive Power(122)(135)(712)(235)
Other - Specialty(34)— (232)— 
Total operating earnings (2)
$92,597 $78,530 $270,656 $182,928 
(1
) Intersegment sales
(1) Reportable segments do not record inter-segment revenues and accordingly there are presented on a cost-plus basis, which takes into consideration the effect of transfer prices between legal entities.none to report.
(2)(2) The Company does not allocate interest expense or other (income) expense, net, to the reportable segments.
(3) Corporate and other includes amounts managed on a company-wide basis and not directly allocated to any reportable segments, primarily relating to IRA production tax credits. Also, included are start-up costs for exploration of a new lithium plant as well as start-up operating expenses from the New Ventures operating segment.

15.17. Subsequent Events

On January 9, 2018, the ASR was settled, and the Company received an additional 216,738 shares. The Company repurchased a total of 1,495,714 shares under the ASR for a total cash investment of $100,000 at an average price of $66.86.

On February 7, 2018,2024, the Board of Directors approved a quarterly cash dividend of $0.175$0.225 per share of common stock to be paid on
March 30, 2018,29, 2024 to stockholders of record as of March 16, 2018.15, 2024.








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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 (the “Reform Act”) provides a safe harbor for forward-looking statements made by or on behalf of EnerSys. EnerSys and its representatives may, from time to time, make written or verbal forward-looking statements, including statements contained in EnerSys’ filings with the Securities and Exchange Commission (“SEC”) and its reports to stockholders. Generally, the inclusion of the words “anticipate,” “believe,” “expect,” “future,” “intend,” “estimate,” “will,” “plans,” or the negative of such terms and similar expressions identify statements that constitute “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 and that are intended to come within the safe harbor protection provided by those sections. All statements addressing operating performance, events, or developments that EnerSys expects or anticipates will occur in the future, including statements relating to sales growth, earnings or earnings per share growth, and market share, as well as statements expressing optimism or pessimism about future operating results, are forward-looking statements within the meaning of the Reform Act. The forward-looking statements are and will be based on management’s then-current beliefs and assumptions regarding future events and operating performance and on information currently available to management, and are applicable only as of the dates of such statements.

Forward-looking statements involve risks, uncertainties and assumptions. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Actual results may differ materially from those expressed in these forward-looking statements due to a number of uncertainties and risks, including the risks described in the Company’s 2017 Annual Report on Form 10-K (the "2017for the fiscal year ended March 31, 2023 (our “2023 Annual Report"Report”) and other unforeseen risks. You should not put undue reliance on any forward-looking statements. These statements speak only as of the date of this Quarterly Report on Form 10-Q, even if subsequently made available by us on our website or otherwise, and we undertake no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.

Our actual results may differ materially from those contemplated by the forward-looking statements for a number of reasons, including the following factors:

•economic, financial and other impacts of the pandemic, including global supply chain disruptions;
•general cyclical patterns of the industries in which our customers operate;
•global economic trends, competition and geopolitical risks, including impacts from the ongoing conflict between Russia and Ukraine and the related sanctions and other measures, changes in the rates of investment or economic growth in key markets we serve, or an escalation of sanctions, tariffs or other trade tensions between the U.S. and China or other countries, and related impacts on our global supply chains and strategies;
•the extent to which we cannot control our fixed and variable costs;
•the raw materials in our products may experience significant fluctuations in market price and availability;
•certain raw materials constitute hazardous materials that may give rise to costly environmental and safety claims;
•legislation regarding the restriction of the use of energy or certain hazardous substances in our products;
•risks involved in our operations such as supply chain issues, disruption of markets, changes in import and export laws, environmental regulations, currency restrictions and local currency exchange rate fluctuations;
•our ability to raise our selling prices to our customers when our product costs increase;
•the extent to which we are able to efficiently utilize our global manufacturing facilities and optimize our capacity;
general economic•changes in macroeconomic and market conditions inand market volatility, including inflation, interest rates, the markets in which we operate;value of securities and other financial assets, transportation costs, costs and availability of electronic components, lead, plastic resins, steel, copper and other commodities used by us, and the impact of such changes and volatility on our financial position and business;
•competitiveness of the battery markets and other energy solutions for industrial applications throughout the world;
•our timely development of competitive new products and product enhancements in a changing environment and the acceptance of such products and product enhancements by customers;
•our ability to adequately protect our proprietary intellectual property, technology and brand names;
•litigation and regulatory proceedings to which we might be subject;
•our expectations concerning indemnification obligations;
•changes in our market share in the geographic business segments where we operate;
•our ability to implement our cost reduction initiatives successfully and improve our profitability;
•quality problems associated with our products;
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•our ability to implement business strategies, including our acquisition strategy, manufacturing expansion and restructuring plans;
•our acquisition strategy may not be successful in locatingidentifying advantageous targets;
•our ability to successfully integrate any assets, liabilities, customers, systems and management personnel we acquire into our operations and our ability to realize related revenue synergies, strategic gains, and cost savings within expected time frames;may be significantly harder to achieve, if at all, or may take longer to achieve;
•our effective income tax rate with respect to any period may fluctuate based on the mix of income in the tax jurisdictions, in which we operate, changes in tax laws and the amount of our consolidated earnings before taxes;
•potential goodwill impairment charges, future impairment charges and fluctuations in the fair values of reporting units or of assets in the event projected financial results are not achieved within expected time frames;
•our debt and debt service requirements which may restrict our operational and financial flexibility, as well as imposing unfavorable interest and financing costs;
•our ability to maintain our existing credit facilities or obtain satisfactory new credit facilities;facilities or other borrowings;
•adverse changes in our short and long-term debt levels under our credit facilities;
•our exposure to fluctuations in interest rates on our variable-rate debt;
•our ability to attract and retain qualified management and personnel;
•our ability to maintain good relations with labor unions;
•credit risk associated with our customers, including risk of insolvency and bankruptcy;
•our ability to successfully recover in the event of a disaster affecting our infrastructure;infrastructure, supply chain, or our facilities;
•delays or cancellations in shipments;
•occurrence of natural or man-made disasters or calamities, including health emergencies, the spread of infectious diseases, pandemics, vaccine mandates, outbreaks of hostilities or terrorist acts, or actsthe effects of war, could cause damageclimate change, and our ability to deal effectively with damages or disruption to our operations, our suppliers, channels to market or customers, or could cause costs to increase, or create political or economic instability;disruptions caused by the foregoing; and
•the operation, capacity and security of our information systems and infrastructure.


This list of factors that may affect future performance is illustrative, but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

In the following discussion and analysis
31
Table of results of operations and financial condition, certain financial measures may be considered “non-GAAP financial measures” under Securities and Exchange Commission rules. These rules require supplemental explanation and reconciliation, which is provided in this Quarterly Report on Form 10-Q. EnerSys’ management uses the non-GAAP measures “primary working capital” and “primary working capital percentage” in its evaluation of business segment cash flow and financial position performance. These disclosures have limitations as an analytical tool, should not be viewed as a substitute for cash flow determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Management believes that this non-GAAP supplemental information is helpful in understanding the Company’s ongoing operating results.Contents    

Overview

EnerSys (the “Company,” “we,” or “us”) is the world’s largest manufacturer, marketer and distributor ofa world leader in stored energy solutions for industrial batteries.applications. We alsodesign, manufacture, market and distribute products such asenergy systems solutions and motive power batteries, specialty batteries, battery chargers, power equipment, battery accessories and outdoor cabinet enclosures. Additionally, weequipment enclosure solutions to customers worldwide. Energy Systems, which combine power conversion, power distribution, energy storage, and enclosures, are used in the telecommunication, broadband, data center and utility industries, uninterruptible power supplies, and numerous applications requiring stored energy solutions. Motive Power batteries and chargers are utilized in electric forklift trucks, automated guided vehicles (AGVs), and other industrial electric powered vehicles. Specialty batteries are used in aerospace and defense applications, large over the road trucks, premium automotive and medical products. New Ventures provides energy storage and management systems for demand charge reduction, utility back-up power, and dynamic fast charging for electric vehicles. We also provide related aftermarket and customer-supportcustomer support services for our products. We market our products globally to over 10,000 customers in more than 100 countries through a network of distributors, independent representatives and our internal sales force.

We operate and manage our business in three geographic regions of the world—Americas, EMEA and Asia, as described below. Our business is highly decentralized with manufacturing locations throughoutforce around the world. More than half of our manufacturing capacity is located outside the United States, and approximately 50% of our net sales were generated outside the United States.

The Company has three reportable businessCompany's four operating segments, based on geographic regions, defined as follows:

•
Americas, which includes North and South America, with our segment headquarters in Reading, Pennsylvania, USA;

•
EMEA, which includes Europe, the Middle East and Africa, with our segment headquarters in Zug, Switzerland; and

•
Asia, which includes Asia, Australia and Oceania, with our segment headquarters in Singapore.

We have two primary product lines: reserve power and motive power products. Net sales classifications by product linelines of business, are as follows:

•
Reserve power products
•Energy Systems - uninterruptible power systems, or “UPS” applications for computer and computer-controlled systems, as well as telecommunications systems, switchgear and electrical control systems used in industrial facilities and electric utilities, large-scale energy storage and energy pipelines. Energy Systems also includes highly integrated power solutions and services to broadband, telecom, data center, and renewable and industrial customers, as well as thermally managed cabinets and enclosures for electronic equipment and batteries.
•Motive Power - power for electric industrial forklifts used in manufacturing, warehousing and other material handling applications, AGVs, as well as mining equipment, diesel locomotive starting and other rail equipment.
•Specialty - premium starting, lighting and ignition applications in transportation, energy solutions for satellites, spacecraft, commercial aircraft, military aircraft, submarines, ships and other tactical vehicles as well as medical devices and equipment.
•New Ventures - energy storage and management systems for demand charge reduction, utility back-up power, and dynamic fast charging for electric vehicles.

 are used for backup power for the continuous operation of critical applications in telecommunications systems, uninterruptible power systems, or “UPS” applications for computer and computer-controlled systems, and other specialty power applications, including medical and security systems, premium starting, lighting and ignition applications, in switchgear, electrical control systems used in electric utilities, large-scale energy storage, energy pipelines, in commercial aircraft, satellites, military aircraft, submarines, ships and tactical vehicles. Reserve power products also include thermally managed cabinets and enclosures for electronic equipment and batteries.

•
Motive power products are used to provide power for electric industrial forklifts used in manufacturing, warehousing and other material handling applications as well as mining equipment, diesel locomotive starting and other rail equipment.

Economic Climate

Recent indicatorsThe economic climate in North America, China and EMEA slowed in calendar 2022 after experiencing strong growth during calendar 2021. All regions experienced a rise in inflation in calendar 2023 and were negatively impacted by the war in Ukraine. We expect interest rates to continue to suggeststay elevated and potentially decrease in the second half of calendar year 2024 in the U.S. and the Euro zone. China’s slowing economy is facing further headwinds caused by pressure on the renminbi and the impact from its zero COVID polices that were relaxed in August of 2023.

Supply chain disruptions and cost spikes in certain materials that impacted EnerSys during calendar year 2022 and the beginning of calendar year 2023 started to stabilize during the second quarter of calendar year 2023. While there are still pockets of supply chain challenges and some elevated materials costs such as plastic resins, electronic components and utilities, other costs such as transportation have returned to pre-COVID levels. However, recent geopolitical tensions between Hamas and Israel have begun to disrupt shipments in the Red Sea. As a mixed trendresult, some ocean freight costs and transit times may temporarily increase until shipping in economic activity among the different geographical regions. North Americaregion returns to normal. In addition, we have broadly achieved our hiring and EMEA are experiencing moderate economic growth. Our Asia region continues to grow faster than any other regionlabor retention goals in which we do business.certain locations that were facing challenges at the beginning of the year. Generally, our mitigation efforts and ongoing lean initiatives have tempered the impact of the pandemic-related challenges. The market demand in our Motive Power and Specialty segments remains robust, but cyclical capex pauses in the communication networks market has decreased demand in the Energy Systems segment since our fiscal second quarter.

Volatility of Commodities and Foreign Currencies

Our most significant commodity and foreign currency exposures are related to lead and the Euro, respectively. Historically, volatility of commodity costs and foreign currency exchange rates have caused large swings in our production costs. AsIn the global economic climate changes, we anticipate that our commodity costs and foreign currency exposures may continue to fluctuate as they have in the past several years. Over the pastfiscal year on a consolidated basis,2024, we have experienced rising commoditya range in lead prices from approximately $1.05 per pound to $0.90 per pound. We experienced elevated costs in some of our other raw materials such as plastic resins, steel, copper, acid, separator paper and electronics and elevated freight and increased energy costs. However, these increased costs have moderated during fiscal year 2024.

Customer Pricing

Our selling prices fluctuated during the last several years to offset the volatile cost of commodities. Approximately 30%25% of our revenue is currentlynow subject to agreements that adjust pricing to a market-based index for lead. DuringCustomer pricing changes generally
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lag movements in lead prices and other costs by approximately six to nine months. In fiscal 2023 and 2024, customer pricing has increased due to certain commodity prices and other costs having increased throughout the nine months ofyear.

Based on current commodity markets, it is difficult to predict with certainty whether commodity prices will be higher or lower in fiscal 2018, we increased2024 versus fiscal 2023. However, given the lag related to increasing our selling prices for inflationary cost increase, on average our selling prices should be higher in responsefiscal 2024 versus fiscal 2023. As we concentrate more on energy systems and non-lead chemistries, the emphasis on lead is expected to increased commodity costs.continue to decline.


Primary Operating Capital

As part of managing the performance of our business, we monitor the level of primary operating capital, and its ratio to net sales. We define primary operating capital as accounts receivable, plus inventories, minus accounts payable. The resulting net amount is divided by the trailing three month net sales (annualized) to derive a primary operating capital percentage. We believe these three elements included in primary operating capital are most operationally driven, and this performance measure provides us with information about the asset intensity and operating efficiency of the business on a company-wide basis that management can monitor and analyze trends over time. Primary operating capital was $911.6 million (yielding a primary operating capital percentage of 26.5%) at December 31, 2023, $1,057.0 million (yielding a primary operating capital percentage of 26.7%) at March 31, 2023 and $1,071.7 million at January 1, 2023 (yielding a primary operating capital percentage of 29.1%). The primary operating capital percentage of 26.5% at December 31, 2023 improved by 20 basis points compared to March 31, 2023 and improved 260 basis points compared to January 1, 2023. The decrease in primary operating capital percentage at December 31, 2023 compared to March 31, 2023 was primarily due to a reduction in accounts receivable inventory as a result of lower sales and a seasonal reduction in accounts payable compared to the fourth fiscal quarter of the prior fiscal year. The decrease in primary operating capital percentage at December 31, 2023 compared to January 1, 2023 was primarily from a reduction in accounts receivable and inventory as a result of lower sales compared to the third quarter of fiscal 2023.

Primary operating capital and primary operating capital percentages at December 31, 2023, March 31, 2023 and January 1, 2023 are computed as follows:

($ in Millions)December 31, 2023March 31, 2023January 1, 2023
Accounts receivable, net$498.5 $637.8 $581.8 
Inventory, net755.2 797.8 835.2 
Accounts payable(342.1)(378.6)(345.3)
Total primary operating capital$911.6 $1,057.0 $1,071.7 
Trailing 3 months net sales$861.6 $989.9 $920.2 
Trailing 3 months net sales annualized$3,446.4 $3,959.6 $3,680.8 
Primary operating capital as a % of annualized net sales26.5 %26.7 %29.1 %

Liquidity and Capital Resources

We believe that our financial position is strong, and we have substantial liquidity to cover short-term liquidity requirements and anticipated growth in the foreseeable future, with $571$333 million of available cash and cash equivalents and available and undrawn committed credit lines of approximately $504$747 million at December 31, 20172023, availability subject to cover short-term liquidity requirements and anticipated growth in the foreseeable future.credit agreement financial covenants.

In the second quarter of fiscal 2018, we entered into a new credit facility (“2017 Credit Facility”) that comprises a $600 million senior secured revolving credit facility (“2017 Revolver”) and a $150 million senior secured term loan (“2017 Term Loan”) with a maturity date of September 30, 2022. We repaid the existing facility (“2011 Credit Facility”), which comprised a $500 million senior secured revolving credit facility (“2011 Revolver”) and a $150 million senior secured incremental term loan (the “2011 Term Loan”) with the proceeds of the new facility. We believe that the 2017 Credit Facility provides us with sufficient liquidity to fund acquisitions and stock repurchase programs.

In the nine months of fiscal 2018, we repurchased $121 million of treasury stock through an accelerated share repurchase (“ASR”) agreement with a major financial institution and through open market purchases. Share repurchases and a decline in our share price helped offset the dilutive impact of stock awards in the nine months of fiscal 2018.

A substantial majority of the Company’s cash and investments are held by foreign subsidiaries and are considered to be indefinitely reinvested and expected to be utilized to fund local operating activities, capital expenditure requirements and acquisitions. The Company believes that it has sufficient sources of domestic and foreign liquidity.
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During the second quarter of fiscal 2022, we entered into a second amendment to the Amended Credit Facility (as amended, the “Second Amended Credit Facility”). As a result, the Second Amended Credit Facility, now scheduled to mature on September 30, 2026, consists of a $130.0 million senior secured term loan and a CAD 106.4 million ($84.2 million) term loan (the “Second Amended Term Loan”) and an $850.0 million senior secured revolving credit facility (the “Second Amended Revolver”). This amendment resulted in a decrease of the Amended Term Loan by $150.0 million and an increase of the Amended Revolver by $150.0 million.

During the second quarter of fiscal 2023, the Company entered into a third amendment to the 2017 Credit Facility (as amended, the “Third Amended Credit Facility”). The Third Amended Credit Facility provided new incremental delayed-draw senior secured term loan up to $300 million (the “Third Amended Term Loan”), which was available to draw until March 15, 2023. During the fourth quarter of fiscal 2023, the Company drew $300 million in the form of the Third Amended Term Loan. The funds will mature on September 30, 2026, the same as the Company's Second Amended Term Loan and Second Amended Revolver. In connection with the agreement, the Company incurred $1.2 million in third party administrative and legal fees recognized in interest expense and capitalized $1.1 million in charges from existing lenders as a deferred asset. Additionally, the Company derecognized the capitalized deferred asset and recognized the $1.1 million as deferred financing costs.

During the fourth quarter of fiscal 2023, the Company entered into a fourth amendment to the 2017 Credit Facility (as amended, the “Fourth Amended Credit Facility”). The Fourth Amended Credit Facility replaces the London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”) in the calculation of interest for both the Second Amended Revolver and the Second Amended Term Loan.

On January 11, 2024, we issued $300 million in aggregate principal amount of our 6.625% Senior Notes due 2032 (the “2032 Notes”). Proceeds from this offering, net of debt issuance costs were $297.0 million and were utilized to pay down the Fourth Amended Credit Facility. We plan to use the remaining net proceeds for general corporate purposes, including to repay a portion of the outstanding borrowings under the revolving portion of its existing credit facility (without a reduction in commitment).

During the nine months of fiscal 2024, we purchased 855,034 shares for $82.3 million.

We believe that our strong capital structure and liquidity affords us access to capital for future acquisition andacquisitions, stock repurchase opportunities and continued dividend payments.

Results of Operations

Net Sales

Segment sales
  Quarter ended  
 December 31, 2017		 Quarter ended  
 January 1, 2017		 Increase (Decrease)
  In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 %
Americas $353.2
 53.6% $314.0
 55.7% $39.2
 12.5%
EMEA 224.9
 34.1
 186.1
 33.0
 38.8
 20.9
Asia 80.8
 12.3
 63.6
 11.3
 17.2
 26.9
Total net sales $658.9
 100.0% $563.7
 100.0% $95.2
 16.9%
  Nine months ended 
 December 31, 2017		 Nine months ended 
 January 1, 2017		 Increase (Decrease)
  In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 %
Americas $1,049.3
 55.3% $968.5
 55.6% $80.8
 8.3%
EMEA 621.9
 32.7
 563.8
 32.4
 58.1
 10.3
Asia 227.6
 12.0
 208.0
 12.0
 19.6
 9.4
Total net sales $1,898.8
 100.0% $1,740.3
 100.0% $158.5
 9.1%

Net sales increased $95.2decreased $58.7 million or 16.9%6.4% in the third quarter of fiscal 20182024 as compared to the third quarter of fiscal 2017.2023. This increasedecrease was the result of an 8% increase7% decrease in organic volume, partially offset by a 5% increase in foreign currency translation impact and a 4%1% increase in pricing.

Net sales increased $158.5decreased $47.5 million or 9.1%1.7% in the nine months of fiscal 2018 from the comparable period in fiscal 2017. This increase was the result of a 4% increase in pricing, a 3% increase in organic volume and a 2% increase in foreign currency translation impact.

The Americas segment’s net sales increased $39.2 million or 12.5% in the third quarter of fiscal 2018 as compared to the third quarter of fiscal 2017, primarily due to a 9% increase in organic volume and a 3% increase in pricing. Net sales increased $80.8 million or 8.3% in the nine months of fiscal 2018,2024 as compared to the nine months of fiscal 2017, primarily2023. This decrease was due to an 8% decrease in organic volume, partially offset by a 5% increase in organic volumepricing and a 3%1% increase in pricing.foreign currency translation.

The EMEA segment’s netSegment sales increased $38.8 million or 20.9%
 Quarter ended
December 31, 2023		Quarter ended
January 1, 2023		Increase (Decrease)
 In
Millions		Percentage
of Total
Net Sales		In
Millions		Percentage
of Total
Net Sales		In
Millions		%
Energy Systems$373.5 43.4 %434.347.2 %$(60.8)(14.0)%
Motive Power355.4 41.3 361.839.3 (6.4)(1.8)
Specialty132.6 15.4 124.113.5 8.5 6.8 
Total net sales$861.5 100.0 %$920.2 100.0 %$(58.7)(6.4)%

34
Table of Contents    
 Nine months ended
December 31, 2023		Nine months ended
January 1, 2023		Increase (Decrease)
 In
Millions		Percentage
of Total
Net Sales		In
Millions		Percentage
of Total
Net Sales		In
Millions		%
Energy Systems$1,220.6 45.7 %$1,279.9 47.1 %$(59.3)(4.6)%
Motive Power1,061.4 39.7 1,067.7 39.3 (6.3)(0.6)
Specialty389.1 14.6 371.0 13.7 18.1 4.9 
Total net sales$2,671.1 100.0 %$2,718.6 100.0 %$(47.5)(1.7)%


Net sales of our Energy Systems segment in the third quarter of fiscal 2018 as2024 decreased $60.8 million or 14.0% compared to the third quarter of fiscal 2017, primarily2023. This decrease was due to a 13% increase due to foreign currency translation impact,15% decrease in organic volume, partially offset by a 5%1% increase in pricingprice/mix. This decrease in sales was driven by capital spending pauses of our telecommunication and a 3% increase in organic volume.broadband customers. Net sales increased $58.1 million or 10.3%of our Energy Systems segment in the nine months of fiscal 2018, as2024 decreased $59.3 million or 4.6% compared to the nine months of fiscal 2017, primarily2023. This decrease was due to a 5%12% decrease in organic volume, offset by a 7% increase each in pricingprice/mix. This decrease in sales was driven by a decrease in demand from telecommunication and foreign currency translation impact.broadband customers as a result in a pause in the capital spending, offset by stronger demand within the data centers markets.

The Asia segment’s netNet sales increased $17.2 million or 26.9%of our Motive Power segment in the third quarter of fiscal 2018 as2024 decreased by $6.4 million or 1.8% compared to the third quarter of fiscal 2017,2023. This decrease was primarily due to a 17% increase3% decrease in organic volume, andoffset by a 5%1% increase each infrom acquisitions. We continue to benefit from improved pricing and foreign currency translation impact.favorable sales mix, offset by a return to normal sales patterns. Net sales increased $19.6 million or 9.4%of our Motive Power segment in the nine months of fiscal 2018, as2024 decreased by $6.3 million or 0.6% compared to the nine months of fiscal 2017,2023. This decrease was primarily due to a 4%7% decrease in organic volume, offset by a 5% increase each in pricing and organic volumeprice/mix and a 1% increase due toin foreign currency translation impact.

Product linetranslation. We continue to benefit from continued improved pricing and favorable sales
  Quarter ended  
 December 31, 2017		 Quarter ended  
 January 1, 2017		 Increase (Decrease)
  In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 %
Reserve power $327.0
 49.6% $271.3
 48.1% $55.7
 20.5%
Motive power 331.9
 50.4
 292.4
 51.9
 39.5
 13.5
Total net sales $658.9
 100.0% $563.7
 100.0% $95.2
 16.9%
  Nine months ended 
 December 31, 2017		 Nine months ended 
 January 1, 2017		 Increase (Decrease)
  In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 %
Reserve power $924.4
 48.7% $844.7
 48.5% $79.7
 9.4%
Motive power 974.4
 51.3
 895.6
 51.5
 78.8
 8.8
Total net sales $1,898.8
 100.0% $1,740.3
 100.0% $158.5
 9.1%

 mix.

Net sales of our reserve power productsSpecialty segment in the third quarter of fiscal 20182024 increased $55.7by $8.5 million or 20.5%6.8% compared to the third quarter of fiscal 2017.2023. The increase was primarily due to a 11%6% increase in organic volume and a 5%1% increase each in pricing and foreign currency translation impact.translation. This increase in sales was primarily driven by strong demand in the transportation sector. Net sales of our reserve power productsSpecialty segment in the nine months of fiscal 20182024 increased $79.7by $18.1 million or 9.4%4.9% compared to the nine months of fiscal 2017, primarily due to a 4% increase each in organic volume and pricing and a 1% increase due to foreign currency translation impact.

Net sales of our motive power products in the third quarter of fiscal 2018 increased by $39.5 million or 13.5% compared to the third quarter of fiscal 2017.2023. The increase was primarily due to a 5%3% increase eachin pricing, a 1% increase in organic volume and a 1% increase in foreign currency translation impact and a 4%translation. This increase in pricing. Netnet sales of our motive power products in the nine months of fiscal 2018 increased $78.8 million or 8.8% compared to the nine months of fiscal 2017. The increase was primarily due to a 4% increasedriven by improved pricing and strong demand in pricing, a 3% increase due to organic volumeprimarily the transportation and a 2% increase due to foreign currency translation impact.space sectors, which is restrained by our capacity growth in our Missouri plants.



Gross Profit 
 Quarter ended
December 31, 2023		Quarter ended
January 1, 2023		Increase (Decrease)
 In
Millions		Percentage
of Total
Net Sales		In
Millions		Percentage
of Total
Net Sales		In
Millions		%
Gross Profit$248.6 28.9 %$213.7 23.2 %$34.9 16.4 %
  Quarter ended  
 December 31, 2017		 Quarter ended  
 January 1, 2017		 Increase (Decrease)
  In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 %
Gross Profit $166.9
 25.3% $155.9
 27.7% $11.0
 7.1%
Nine months ended
December 31, 2023		Nine months ended
January 1, 2023		Increase (Decrease)
In
Millions		Percentage
of Total
Net Sales		In
Millions		Percentage
of Total
Net Sales		In
Millions		%
Gross Profit$728.5 27.3 %$594.1 21.9 %$134.4 22.6 %
  Nine months ended 
 December 31, 2017		 Nine months ended 
 January 1, 2017		 Increase (Decrease)
  In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 %
Gross Profit $489.9
 25.8% $483.5
 27.8% $6.4
 1.3%

Gross profit increased $11.0$34.9 million or 7.1%16.4% in the third quarter and $6.4increased $134.4 million or 1.3%22.6% in the nine months of fiscal 20182024 compared to the comparable prior year periods of fiscal 2017.2023. Gross profit, as a percentage of net sales, decreased 240increased 570 basis points and 200increased 540 basis points in the third quarter and nine months of fiscal 2018 as2024, respectively, compared to the third quarter and nine months of fiscal 2017, respectively.2023. The decreaseincrease in the gross profit margin in boththe current quarter reflects the impact of IRA benefits in fiscal year 2024 and a strong performance in our price/mix, which offset year on year cost increases.

35
Table of Contents    
Operating Items
 Quarter ended
December 31, 2023		Quarter ended
January 1, 2023		Increase (Decrease)
 In
Millions		Percentage
of Total
Net Sales		In
Millions		Percentage
of Total
Net Sales		In
Millions		%
Operating expenses$143.9 16.7 %$134.4 14.6 %$9.5 7.2 %
Restructuring and other exit charges$6.1 0.7 %$0.8 0.1 %$5.3 NM
Nine months ended
December 31, 2023		Nine months ended
January 1, 2023		Increase (Decrease)
In
Millions		Percentage
of Total
Net Sales		In
Millions		Percentage
of Total
Net Sales		In
Millions		%
Operating expenses$432.3 16.2 %$398.8 14.7 %$33.5 8.4 %
Restructuring and other exit charges$19.6 0.7 %$12.4 0.5 %$7.2 58.3 %

Operating expenses, as a percentage of sales, increased 210 basis points and increased 150 basis points in the third quarter and nine months is primarily due to an increase in commodity costs of approximately $34 million and $102 million, respectively, partially offset by an increase in organic volume and pricing.


Operating Items
  Quarter ended  
 December 31, 2017		 Quarter ended  
 January 1, 2017		 Increase (Decrease)
  In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 %
Operating expenses $96.7
 14.7% $85.0
 15.1 % $11.7
 13.8%
Restructuring charges $1.8
 0.2% $(1.2) (0.2)% $3.0
 NM
Legal proceedings charge $—
 —% $17.0
 3.0 % $(17.0) NM
  Nine months ended 
 December 31, 2017		 Nine months ended 
 January 1, 2017		 Increase (Decrease)
  In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 %
Operating expenses $283.5
 14.9% $277.5
 15.9% $6.0
 2.1 %
Restructuring charges $4.4
 0.2% $5.0
 0.3% $(0.6) (12.3)%
Legal proceedings charge $—
 —% $17.0
 1.0% $(17.0) NM
NM = not meaningful

Operating expenses for the third quarter of fiscal 2018, increased $11.7 million but decreased as a percentage of net sales by 40 basis points. The impact of foreign currency translation resulted in an increase of $2.4 million. Excluding this impact of the foreign currency translation, the increase in dollars was primarily due to payroll related expenses and our investment relating2024, compared to the development of our digital core and new products, which were partially offset by our cost saving initiatives.

Operating expenses for the nine monthscomparable periods of fiscal 2018 increased $6.0 million but decreased as a percentage of net sales by 100 basis points. The impact of foreign currency translation resulted in an increase of $2.8 million. Excluding this impact of the foreign currency translation, the increase in dollars was primarily due to the aforementioned investment in our digital core and new products, partially offset by cost saving initiatives.2023.

Selling expenses, our main component of operating expenses, were 51.9%decreased $2.1 million or 3.6% in the third quarter of fiscal 2024 compared to the third quarter of fiscal 2023, and 52.4%decreased 19 basis points as a percentage of total operatingnet sales. In the nine months of fiscal 2024, selling expenses increased by $4.8 million or 2.9% compared to the nine months of fiscal 2023 and increased 29 basis points as a percentage of net sales. The decrease in selling expenses as a percentage of sales in the current quarter is a result of our cost reduction initiatives partially offsetting labor increases earlier this fiscal year.

Restructuring and Other Exit Charges

Restructuring Programs

Included in our third quarter and nine months of fiscal 2018, respectively, compared to 56.9%2024 operating results of Energy Systems were restructuring charges of $0.0 million and 54.5% of total operating expenses$2.7 million respectively. Included in theour third quarter and nine months of fiscal 2017, respectively.

Restructuring Charges

Included in our third quarter of fiscal 20182024 operating results are restructuring charges of $1.0 million in the Americas and $0.8 million in EMEA. The charges in the Americas relate to improving efficiencies of our general operations, while charges in EMEA relate to restructuring programs to improve efficiencies in our motive power production, supply chain and general operations.

Included in our third quarter of fiscal 2017 operating results is a credit of $1.2 million relating to restructuring and other exit charges in EMEA consisting of cash charges of $0.5 million primarily relating to severance and a credit of $1.7 million relating to South Africa joint venture exit activities. In addition, cost of goods sold also includes a $0.5 million credit of inventory adjustment relating to the South Africa joint venture. Included in our nine months of fiscal 2017 operating results is a $5.0 million charge consisting of restructuring and other exit charges in EMEA of $3.7 million,Motive Power were restructuring charges of $0.9 million and $1.8 million, respectively.

Included in the Americas and $0.4 million in Asia. Of the restructuring and exit charges in EMEA of $3.7 million, $2.5 million of restructuring charges related to European manufacturing operations and $1.2 million of exit charges related to our joint venture in South Africa. In addition, cost of goods sold also includes a $2.1 million inventory adjustment charge relating to the South Africa joint venture.

Fiscal 2017 - Legal Proceedings Charge

In connection with previously disclosed matters involving European anticompetition authorities, included in the operating results for the third quarter and nine months of fiscal 20172023 operating results of Energy Systems were $17.0restructuring charges of $0.3 million and $1.2 million, respectively. Included in our third quarter and nine months of fiscal 2023 operating results of Motive Power were restructuring charges involvingof $0.1 million and $0.3 million, respectively.

Exit Charges

Fiscal 2024 Programs

On November 8, 2023, the German competition authority. In July 2017, we paidCompany's Board of Directors approved a fineplan to stop production and operations of $14.8residential renewable energy products, which include our OutBack and Mojave brands. Management determined that residential renewable energy products no longer fit with the company’s core strategy and resources will be better allocated toward commercial energy solutions for enterprise customers. The Company currently estimates that the total charges for these actions will amount to $23.5 million relating primarily to $22.6 million in non-cash charges primarily including inventory and an indefinite-lived intangible asset write-offs and $0.9 million in cash charges including employee severance and retention payments. The plan is expected to be completed in fiscal 2024.

During the nine months of fiscal 2024, the Company recorded non-cash charges totaling $6.6 million primarily related to indefinite-lived intangible asset write-off and cash charges of $0.4 million related to severance costs. The Company also recorded a non-cash write off relating to inventories of $16.1 million, which was reported in cost of goods sold.

Spokane

On November 8, 2023, the Company committed to a plan to close its facility in Spokane, Washington, which primarily manufactures enclosure systems for telecommunications and related end markets. Management determined that existing
36
Table of Contents    
manufacturing locations have the capacity to satisfy demand for these products and will execute more efficient distribution to customers. The Company currently estimates that the total charges for these actions will amount to approximately $3.6 million relating to conduct involving our$0.7 million in cash charges for employee severance, and non-cash charges of $2.9 million fixed assets, facility lease, and inventory. The plan is expected to be completed in fiscal 2024.

During the nine months of fiscal 2024, the Company recorded cash charges of $0.6 million primarily related to severance costs and non-cash charges totaling $0.5 million related to fixed asset write offs.


Fiscal 2023 Programs

Sylmar

In November 2022, the Company committed to a plan to close its facility in Sylmar, California, which manufactures specialty lithium batteries for aerospace and medical applications. Management determined to close the site upon the expiration of its lease on the property and to redirect production through consolidation into existing locations. The Company currently estimates total charges in the exit to amount to $11.8 million. Cash charges are estimated to total $7.9 million primarily relating to severance and other costs to leave the site. Non-cash charges are estimated to be $3.9 million relating to fixed assets, inventory, and contract assets. The plan is expected to be completed in fiscal 2024.

During fiscal 2023, the Company recorded $1.7 million primarily related to severance costs and non-cash charges totaling $0.4 million primarily relating to contract assets.

During the nine months of fiscal 2024, the Company recorded cash charges of $6.2 million primarily related to severance costs, relocation expenses, and manufacturing variances and non-cash charges totaling $0.4 million. The Company also recorded a non-cash write off relating to inventories of $3.1 million, which was reported in cost of goods sold.

Ooltewah

On June 29, 2022, the Company committed to a plan to close its facility in Ooltewah, Tennessee, which produced flooded motive power business. We arebatteries for electric forklifts. Management determined that future demand for traditional motive power flooded cells will decrease as customers transition to maintenance free product solutions in lithium and TPPL. The Company currently appealingestimates that the German competition authority’s fining decisiontotal charges for these actions will amount to approximately $18.5 million.Cash charges for employee severance related payments, cleanup related to the facility, contractual releases and legal expenses are estimated to be $9.2 million and non-cash charges from inventory and fixed asset write-offs are estimated to be $9.3 million. These actions will result in the reduction of approximately 165 employees. The majority of these charges are expected to be recorded by the end of calendar 2023.

During fiscal 2023, the Company recorded cash charges relating primarily to severance and manufacturing variances of $2.8 million and non-cash charges of $7.3 million relating to fixed asset write-offs. The Company also recorded a non-cash write-off relating to inventories of $1.6 million, which was reported in cost of goods sold.

During the nine months of fiscal 2024, the Company recorded cash charges relating to site cleanup and decommissioning equipment of $3.5 million.

Fiscal 2021 Programs

Hagen, Germany

In fiscal 2021, we committed to a plan to close substantially all of our reservefacility in Hagen, Germany, which produced flooded motive power battery business. For more detailed information, see Note 7batteries for electric forklifts. Management determined that future demand for the motive power batteries produced at this facility was not sufficient, given the conversion from flooded to maintenance free batteries by customers, the existing number of competitors in the market, as well as the near term decline in demand and increased uncertainty from the pandemic. We plan to retain the facility with limited sales, service and administrative functions along with related personnel for the foreseeable future.

We currently estimate that the total charges for these actions will amount to approximately $60.0 million of which cash charges for employee severance related payments, cleanup related to the Consolidated Condensed Financial Statements.facility, contractual releases and legal expenses were estimated to be $40.0 million and non-cash charges from inventory and equipment write-offs were estimated to be $20.0 million. The

37
Table of Contents    

majority of these charges have been recorded as of October 2, 2022. These actions resulted in the reduction of approximately 200 employees.


During fiscal 2021, the Company recorded cash charges relating to severance of $23.3 million and non-cash charges of $7.9 million primarily relating to fixed asset write-offs.


During fiscal 2022, the Company recorded cash charges, primarily relating to severance of $8.1 million and non-cash charges of $3.5 million primarily relating to fixed asset write-offs. The Company also recorded a non-cash write off relating to inventories of $1.0 million, which was reported in cost of goods sold.

During fiscal 2023, the Company recorded cash charges of $2.2 million relating primarily to site cleanup and $0.6 million of non-cash charges relating to accelerated depreciation of fixed assets.

During the nine months of fiscal 2024, the Company recorded cash charges of $1.7 million relating primarily to site cleanup and $0.4 million of non-cash charges relating to accelerated depreciation of fixed assets.




Operating Earnings
 Quarter ended
December 31, 2023		Quarter ended
January 1, 2023		Increase (Decrease)
In
Millions
Percentage
of Total
Net Sales (1)
In
Millions
Percentage
of Total
Net Sales (1)
In
Millions		%
Energy Systems$14.3 3.8 %$27.7 6.4 %$(13.4)(48.3)%
Motive Power52.8 14.8 47.2 13.1 5.6 11.7 
Specialty7.5 5.7 11.6 9.4 (4.1)(35.4)
Corporate and other (2)
55.7 6.5 — — 55.7 NM
Subtotal130.3 15.1 86.5 9.4 43.8 50.7 
Inventory adjustment relating to exit activities - Energy Systems(16.1)(4.3)0.2 — (16.3)     NM
Inventory adjustment relating to exit activities - Motive Power— — 0.7 0.2 (0.7)NM
Restructuring and other exit charges - Energy Systems(2.4)(0.6)(0.2)— (2.2)NM
Restructuring and other exit charges - Motive Power(2.9)(0.8)(0.6)(0.2)(2.3)NM
Restructuring and other exit charges - Specialty(0.8)(0.6)— — (0.8)NM
Amortization of intangible assets - Energy Systems(6.0)(1.6)(7.0)(1.6)1.0 (12.9)
Amortization of intangible assets - Motive Power(0.2)— (0.1)— (0.1)54.5 
Amortization of intangible assets - Specialty(0.7)(0.5)(0.7)(0.6)— (4.2)
Intangibles Impairment - Energy Systems(6.0)(1.6)— — (6.0)NM
Other - Energy Systems(2.4)(0.7)(0.2)— (2.2)NM
Other - Motive Power(0.2)— (0.1)— (0.1)NM
Total operating earnings$92.6 10.7 %$78.5 8.5 %$14.1 17.9 %
  Quarter ended  
 December 31, 2017		 Quarter ended  
 January 1, 2017		 Increase (Decrease)
  In
Millions		 
Percentage
of Total
Net Sales (1)
 In
Millions		 
Percentage
of Total
Net Sales (1)
 In
Millions		 %
Americas $43.1
 12.2 % $46.0
 14.6 % $(2.9) (6.1)%
EMEA 23.8
 10.6
 20.4
 11.0
 3.4
 16.4
Asia 3.3
 4.1
 4.0
 6.3
 (0.7) (16.7)
Subtotal 70.2
 10.7
 70.4
 12.5
 (0.2) (0.2)
Restructuring charges - Americas (1.0) (0.3) —

—
 (1.0) NM
Inventory adjustment relating to exit activities - EMEA —
 —
 0.5
 0.3
 (0.5) NM
Restructuring charges - EMEA (0.8) (0.4) 1.2
 0.6
 (2.0) NM
Legal proceedings charge - EMEA —
 —
 (17.0) (9.1) 17.0
 NM
Total operating earnings $68.4
 10.4 % $55.1
 9.8 % $13.3
 24.4 %

NM = not meaningful
(1(1) )The percentages shown for the segments are computed as a percentage of the applicable segment’s net sales.sales; Corporate and other is computed based on total consolidated net sales
(2) Corporate and other includes amounts managed on a company-wide basis and not directly allocated to any reportable segments, primarily relating to IRA production tax credits. Also, included are start-up costs for exploration of a new lithium plant as well as start-up operating expenses from the New Ventures operating segment.
38
Table of Contents    

 Nine months ended
December 31, 2023		Nine months ended
January 1, 2023		Increase (Decrease)
In
Millions
Percentage
of Total
Net Sales (1)
In
Millions
Percentage
of Total
Net Sales (1)
In
Millions		%
Energy Systems$69.6 5.7 %$60.4 4.7 %$9.2 15.0 %
Motive Power156.5 14.7 129.5 12.1 27.0 20.9 
Specialty22.9 5.9 30.4 8.2 (7.5)(24.7)
Corporate and other (2)
92.0 3.4 — — 92.0 NM
Subtotal341.0 12.8 220.38.1 120.7 54.7 
Inventory adjustment relating to exit activities - Energy Systems(16.1)(1.3)0.2 — (16.3)NM
Inventory adjustment relating to exit activities - Motive Power— — (0.8)(0.1)0.8 NM
Inventory adjustment relating to exit activities - Specialty(3.1)(0.8)— — (3.1)NM
Restructuring and other exit charges - Energy Systems(5.1)(0.4)(1.2)(0.1)(3.9)NM
Restructuring and other exit charges - Motive Power(7.9)(0.7)(11.2)(1.1)3.3 (29.7)
Restructuring and other exit charges - Specialty(6.6)(1.7)— — (6.6)NM
Amortization of intangible assets - Energy Systems(18.5)(1.5)(21.6)(1.7)3.1 (13.4)%
Amortization of intangible assets - Motive Power(0.5)— (0.3)— (0.2)55.2 %
Amortization of intangible assets - Specialty(2.1)(0.5)(2.1)(0.6)— (4.3)%
Intangibles Impairment - Energy Systems(6.0)(0.5)— — (6.0)NM
Other - Energy Systems(3.5)(0.3)(0.2)— (3.3)NM
Other - Motive Power(0.8)(0.1)(0.2)— (0.6)NM
Other - Specialty(0.2)(0.1)%— — (0.2)NM
Total operating earnings$270.6 10.1 %$182.9 6.7 %$87.7 48.0 %
NM = not meaningful


  Nine months ended 
 December 31, 2017		 Nine months ended 
 January 1, 2017		 Increase (Decrease)
  In
Millions		 
Percentage
of Total
Net Sales (1)
 In
Millions		 
Percentage
of Total
Net Sales (1)
 In
Millions		 %
Americas $140.8
 13.4 % $139.2
 14.4 % $1.6
 1.2 %
EMEA 54.9
 8.8
 57.1
 10.2
 (2.2) (4.2)
Asia 10.7
 4.7
 11.8
 5.6
 (1.1) (8.5)
Subtotal 206.4
 10.9
 208.1
 12.0
 (1.7) (0.8)
Restructuring charges - Americas (1.3) (0.1) (0.9) (0.1) (0.4) 39.7
Inventory adjustment relating to exit activities - EMEA —
 —
 (2.1) (0.4) 2.1
 NM
Restructuring charges - EMEA (3.1) (0.5) (3.7) (0.6) 0.6
 (13.4)
Restructuring charges - Asia —
 —
 (0.4) (0.2) 0.4
 NM
Legal proceedings charge - EMEA —
 —
 (17.0) (3.0) 17.0
 NM
Total operating earnings $202.0
 10.7 % $184.0
 10.6 % $18.0
 9.8 %

(1(1) )The percentages shown for the segments are computed as a percentage of the applicable segment’s net sales.sales; Corporate and other is computed based on total consolidated net sales

(2) Corporate and other includes amounts managed on a company-wide basis and not directly allocated to any reportable segments, primarily relating to IRA production tax credits. Also, included are start-up costs for exploration of a new lithium plant as well as start-up operating expenses from the New Ventures operating segment.
NM = not meaningful

Operating earnings increased $13.3$14.1 million or 24.4%17.9% and increased $18.0$87.7 million or 9.8%48.0% in the third quarter and nine months of fiscal 2018,2024, respectively, compared to the third quarter and nine months of fiscal 2017.2023. Operating earnings, as a percentage of net sales, increased 60220 basis points and 10340 basis points in the third quarter and nine months of fiscal 2018,2024, respectively, compared to the third quarter and nine months of fiscal 2017. Excluding the impact of the $6.3 million write-off of previously capitalized costs relating to the ERP system implementation in our Americas region during the first quarter of fiscal 2017,2023.

The Energy Systems operating earnings, in the current nine monthsas a percentage of sales, decreased 30260 basis points due to an increase in lead cost, partially offset by price recoveries and cost saving initiatives.

The Americas segment's operating earnings, excluding restructuring charges, decreased 240 basis points andincreased 100 basis points in the third quarter and nine months of fiscal 2018,2024, respectively, when compared to the third quarter and nine months of fiscal 2017,2023. This decrease for the quarter was primarily due to higher commodity costsas a result of lower volumes that were partially offset by price recoverieslower lead and cost saving initiatives. Excludingfreight costs; and the impactincrease for the year was a result of the $6.3 million write-offcontinued price/mix gains that offset higher inflationary costs and lower volumes.

39
Table of previously capitalized costs relating to the ERP system implementation during the nine months of fiscal 2017,Contents    
The Motive Power operating earnings, in the nine monthsas a percentage of fiscal 2018 decreased by 160sales, increased 170 basis points compared to the prior year period.

The EMEA segment's operating earnings, excluding restructuring charges and legal proceedings charge discussed above, decreased 40 and 140260 basis points in the third quarter and nine months of fiscal 2018,2024, respectively, compared to the third quarter and nine months of fiscal 2017, primarily due to an increase in lead cost,2023. These increases were driven by significant pricing/mix gains partially offset by price recoverieslower volumes and cost saving initiatives.higher operating expenses.


OperatingThe Specialty operating earnings, as a percentage of sales, decreased 220370 basis points and 90230 basis points in the Asia segment in the third quarter and nine months of fiscal 2018,2024, respectively, compared to the third quarter and nine months of fiscal 20172023. These decreases were primarily due toa result of higher commoditymanufacturing and operating costs partially offset by price recoveries and a slow down in telecom spending during the first half of fiscal 2018 in the People's Republic of China.that produced an adverse impact on operating earnings.


Interest Expense
Quarter ended
December 31, 2023		Quarter ended
January 1, 2023		Increase (Decrease)
 In
Millions		Percentage
of Total
Net Sales		In
Millions		Percentage
of Total
Net Sales		In
Millions		%
Interest expense$11.7 1.4 %$17.5 1.9 %$(5.8)(33.1)%
  Quarter ended  
 December 31, 2017		 Quarter ended  
 January 1, 2017		 Increase (Decrease)
  In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 %
Interest expense $6.5
 1.0% $5.6
 1.0% $0.9
 14.6%
Nine months ended
December 31, 2023		Nine months ended
January 1, 2023		Increase (Decrease)
In
Millions		Percentage
of Total
Net Sales		In
Millions		Percentage
of Total
Net Sales		In
Millions		%
Interest expense$39.1 1.5 %$44.5 1.6 %$(5.4)(12.1)%
  Nine months ended 
 December 31, 2017		 Nine months ended 
 January 1, 2017		 Increase (Decrease)
  In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 %
Interest expense $18.7
 1.0% $16.8
 1.0% $1.9
 11.2%

Interest expense of $6.5$11.7 million in the third quarter of fiscal 20182024 (net of interest income of $0.8 million) was $0.9$5.8 million higherlower than the interest expense of $5.6$17.5 million in the third quarter of fiscal 20172023 (net of interest income of $0.5$0.4 million).

Interest expense of $18.7$39.1 million in the nine months of fiscal 20182024 (net of interest income of $2.2$2.0 million) was $1.9$5.4 million higherlower than the interest expense of $16.8$44.5 million in the nine months of fiscal 20172023 (net of interest income of $1.3$1.1 million).

The increasedecrease in interest expense in both the third quarter of fiscal 2024 and in the nine months of fiscal 20182024 is primarily due to lower borrowing levels and impact from interest rate swaps partially offset by higher average debt outstanding.interest rates. Our average debt outstanding was $727.1$970.5 million and $674.2$1,008.4 million in the third quarter and nine months of fiscal 2018, respectively,2024, compared to $626.4$1,300.2 million and $629.2$1,361.6 million in the third quarter and nine months of fiscal 2017, respectively. The increase in our average debt was primarily to fund treasury repurchase activity as discussed in Note 12 to the Consolidated Condensed Financial Statements.2023.

Included in interest expense are non-cash charges for deferred financing fees of $0.3 $0.4 million and $1.3$1.2 million for the third quarter and nine months of fiscal 2024 and $0.5 million and $1.5 million in the third quarter and nine monthsof fiscal 2023.




40
Table of Contents    
Other (Income) Expense, Net
Quarter ended
December 31, 2023		Quarter ended
January 1, 2023		Increase (Decrease)
 In
Millions		Percentage
of Total
Net Sales		In
Millions		Percentage
of Total
Net Sales		In
Millions		%
Other (income) expense, net$2.2 0.3 %$3.2 0.3 %$(1.0)(30.2)%
NM = not meaningful
Nine months ended
December 31, 2023		Nine months ended
January 1, 2023		Increase (Decrease)
In
Millions		Percentage
of Total
Net Sales		In
Millions		Percentage
of Total
Net Sales		In
Millions		%
Other (income) expense, net$5.9 0.2 %$3.5 0.1 %$2.4 67.3 %
NM = not meaningful

Other (income) expense, net in the third quarter of fiscal 2024 was expense of $2.2 million compared to expense of $3.2 million in the third quarter of fiscal 2023. Other (income) expense, net in the nine months of fiscal 2024 was expense of $5.9 million compared to expense of $3.5 million in the nine months of fiscal 2023. Foreign currency impact resulted in a gain of $0.4 million and a gain of $3.2 million in the third quarter and nine months of fiscal 2018,2024, respectively, and $0.3compared to a foreign currency loss of $1.3 million and $1.0a gain of $1.2 million in the third quarter and nine months of fiscal 2017,2023, respectively.

Other (Income) Expense, Net
  Quarter ended  
 December 31, 2017		 Quarter ended  
 January 1, 2017		 Increase (Decrease)
  In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 %
Other (income) expense, net $(0.6) (0.1)% $(1.1) (0.2)% $0.5
 (55.3)%
  Nine months ended 
 December 31, 2017		 Nine months ended 
 January 1, 2017		 Increase (Decrease)
  In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 %
Other (income) expense, net $4.7
 0.3% $(0.4) —% $5.1
 NM
NM = not meaningful

Other (income) expense, net Included in the third quarter and nine months of fiscal 2018 was income2023 foreign currency impact is a gain of $0.6 million compared to income of $1.1 million in the third quarter of fiscal 2017. Other (income) expense, net in the nine months of fiscal 2018 was expense of $4.7 million compared to income of $0.4 million in the nine months of fiscal 2017. Foreign currency impact resulted in a gain of $0.7 million in the third quarter of fiscal 2018, and a loss of $4.4$4.5 million in nine monthsrelating to the remeasurement of fiscal 2018, compared to foreign currency gainmonetary assets from the exit of $1.6 million and $1.2 million, respectively, in the comparable prior year periods.our Russia operations.




Earnings Before Income Taxes
 Quarter ended
December 31, 2023		Quarter ended
January 1, 2023		Increase (Decrease)
 In
Millions		Percentage
of Total
Net Sales		In
Millions		Percentage
of Total
Net Sales		In
Millions		%
Earnings before income taxes$78.7 9.1 %$57.8 6.3 %$20.9 36.0 %
  Quarter ended  
 December 31, 2017		 Quarter ended  
 January 1, 2017		 Increase (Decrease)
  In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 %
Earnings before income taxes $62.5
 9.5% $50.6
 9.0% $11.9
 23.5%
  Nine months ended 
 December 31, 2017		 Nine months ended 
 January 1, 2017		 Increase (Decrease)
  In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 %
Earnings before income taxes $178.6
 9.4% $167.6
 9.6% $11.0
 6.5%

Nine months ended
December 31, 2023		Nine months ended
January 1, 2023		Increase (Decrease)
In
Millions		Percentage
of Total
Net Sales		In
Millions		Percentage
of Total
Net Sales		In
Millions		%
Earnings before income taxes$225.6 8.4 %$134.9 5.0 %$90.7 67.3 %

As a result of the above, earnings before income taxes in the third quarter of fiscal 20182024 increased $11.9$20.9 million, or 23.5%36.0%, compared to the third quarter of fiscal 20172023 and increased $11.0$90.7 million, or 6.5%,67.3% in the nine months of fiscal 20182024 compared to the nine months of fiscal 2017.2023.
Income Tax Expense
 Quarter ended
December 31, 2023		Quarter ended
January 1, 2023		Increase (Decrease)
 In
Millions		Percentage
of Total
Net Sales		In
Millions		Percentage
of Total
Net Sales		In
Millions		%
Income tax expense$2.5 0.3 %$13.4 1.5 %$(10.9)(81.4)%
Effective tax rate3.2%23.2%(20.0)%
41
Table of Contents    

Nine months ended
December 31, 2023		Nine months ended
January 1, 2023		Increase (Decrease)
In
Millions		Percentage
of Total
Net Sales		In
Millions		Percentage
of Total
Net Sales		In
Millions		%
Income tax expense$17.4 0.7 %$25.0 0.9 %$(7.6)(30.3)%
Effective tax rate7.7%18.5%(10.8)%
  Quarter ended  
 December 31, 2017		 Quarter ended  
 January 1, 2017		 Increase (Decrease)
  In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 %
Income tax expense $88.3
 13.4% $13.5
 2.4% $74.8
 NM
Effective tax rate 141.2% 26.7% 114.5%
  Nine months ended 
 December 31, 2017		 Nine months ended 
 January 1, 2017		 Increase (Decrease)
  In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 Percentage
of Total
Net Sales		 In
Millions		 %
Income tax expense $112.9
 6.0% $43.1
 2.4% $69.8
 NM
Effective tax rate 63.2% 25.7% 37.5%
NM = not meaningful

The Company’s income tax provision consists of federal, state and foreign income taxes. The tax provision for the third quartersquarter of fiscal 20182024 and 20172023 was based on the estimated effective tax rates applicable for the full years ending March 31, 20182024 and March 31, 2017,2023, respectively, after giving effect to items specifically related to the interim periods. Our effective income tax rate with respect to any period may be volatile based on the mix of income in the tax jurisdictions, in which we operate, changechanges in tax laws and the amount of our consolidated incomeearnings before taxes.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted. The IRA includes multiple incentives to promote clean energy, and energy storage manufacturing among other provisions with tax credits available from 2023 to 2032, subject to phase down beginning in 2030. In particular the IRA creates a refundable tax credit, pursuant to Section 45X of the Internal Revenue Code (“IRC”), for battery cells and battery modules manufactured or assembled in the United States and sold to third parties. On December 22, 2017,14, 2023, the Tax CutsUnited States Treasury issued proposed regulations which provided further guidance related to the Section 45X Advanced Manufacturing Production Credit. In the third quarter and Jobs Act (“Tax Act”) was enacted into law. Amongnine months of fiscal 2024, the significant changes resulting from the law, the Tax Act reduces the U.S. federalIRA impact resulted in a reduction of our costs of goods sold and income tax rate from 35%payable of $59.1 million and $100.4 million, respectively. The issuance of the aforementioned proposed regulations resulted in a $28.7 million retroactive adjustment to 21%the beginning of the effective date of the IRA, January 1, 2018,2023, in the third quarter of fiscal 2024. There is a possibility that additional clarification guidance is issued with respect to the Section 45X credit qualifications. Amounts recognized in the Consolidated Condensed Financial Statements are based on Management's judgement and requires companiesbest estimate utilizing the most current guidance. The Company will continue to pay a one-time transition tax on unrepatriated cumulative non-U.S. earnings of foreign subsidiaries and creates new taxes on certain foreign sourced earnings. In accordance with ASC 740, “Income Taxes,” we are required to recordevaluate the effects of tax law changes in the period enacted. The rate changeIRA as more guidance is administratively effective at the beginning of our fiscal year, using a blended rate for the annual period. As a result, our blended U.S. statutory tax rate for fiscal 2018 is 31.5%.

As of December 31, 2017, we have not completed our accounting for the tax effects of enactment of the Tax Act; however, in certain cases, as described below, we have made a reasonable estimate of the effects on our existing deferred tax balancesissued and the one-time transition tax. Ourrelevant implications to our Consolidated Condensed Financial Statements. Actual results for the three and nine months ended December 31, 2017, contain estimates of the impact of the Tax Act as permitted by Staff Accounting Bulletin 118 “SAB 118” issued by the Securities and Exchange Commission on December 22, 2017. These amounts are considered provisional and may be affected by future guidance if and when issued.could differ from management’s current estimate.

As a result of the Tax Act, the third quarter fiscal 2018 financial statements include a provisional net tax expense of $77.3 million which is comprised of the following:

Foreign tax effects: The one-time transition tax is based on our total post-1986 earnings and profits (E&P) that we previously deferred from U.S. income taxes. We recorded a provisional amount for our one-time transition tax liability for our foreign subsidiaries, resulting in an increase in income tax expense of $94.0 million. The estimated transition tax of $94.0 million is recorded under current income tax payable and non-current income tax payable, at $7.5 million and $86.5 million, respectively, and is payable over eight years. Further, the transition tax is based in part on the amount of those earnings held in cash and other

specified assets. This amount may change when we finalize both the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and the amounts held in cash or other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations.

Deferred tax assets and liabilities: We remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, we are still analyzing certain aspects of the Tax Act and refining our calculations, which could potentially affect the measurement of these balances or give rise to new deferred tax amounts. The provisional amount recorded related to the remeasurement of our deferred tax balance was a tax benefit of $14.7 million.

Finally, we recorded a provisional tax benefit of $2.0 million related to the reduction of the fiscal 2018 federal tax rate to 31.5%.

In all cases, we may adjust these provisional amounts which could potentially affect the measurement and impact on tax expense as we refine our calculations within a reasonable period not to exceed one year from the enactment date.

The consolidated effective income tax rates were 141.2% and 26.7%, respectively, for the third quartersquarter of fiscal 20182024 and 20172023 were 3.2% and 63.2%23.2% and 25.7%, respectively, for the nine months of fiscal 20182024 and 2017.2023 were 7.7% and 18.5%, respectively. The rate increasedecrease in the third quarter and nine months of fiscal 20182024 compared to the comparable prior year periods of fiscal 2017 isare primarily due to the impact of the Tax Act in the third quarter of fiscal 2018, offset by the German regulatory proceedings charge of $17.0 million (with no associated tax benefit) recorded in the third quarter of fiscal 2017IRA and changes in the mix of earnings among tax jurisdictions.

Foreign income as a percentage of worldwide income is estimated to be 64%52% for fiscal 20182024 compared to 60%83% for fiscal 2017.2023. This reduction is primarily due to the IRA impact on domestic earnings. The foreign effective income tax rates for the nine months of fiscal 20182024 and 20172023 were 11.4%11.0% and 15.9%15.0%, respectively. The rate decrease compared to the prior year period is primarily due to the German regulatory proceedings charge of $17.0 million (with no associated tax benefit) recorded in the third quarter of fiscal 2017 and changes in the mix of earnings among tax jurisdictions. Income from ourthe Company's Swiss subsidiary comprised a substantial portion of ourthe Company's overall foreign mix of income for both fiscal 2024 and isfiscal 2023 and were taxed at an effective income tax rate of approximately 6%.9% in both periods.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies from those discussed under the caption “Critical Accounting Policies and Estimates” in “ItemItem 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”Operations in our 20172023 Annual Report.

42
Table of Contents    
Liquidity and Capital Resources

Cash Flow and Financing Activities

Operating activities provided cash of $129.9 million in the nine months of fiscal 2018 compared to $166.7 million in the comparable period of fiscal 2017. In the nine months of fiscal 2018, cash provided by operating activities was primarily from net earnings of $65.7 million, depreciation and amortization of $40.3 million, stock-based compensation of $14.8 million, deferred taxes benefit of $7.2 million, non-cash interest of $1.3 million and provision for doubtful accounts of $0.8 million. Cash provided by earnings as adjusted for non-cash items was improved by an increase of $89.2 million in long term liabilities primarily due to the one-time transition tax liability the Tax Act and was partially offset by the increase in primary working capital of $42.0 million, net of currency translation changes, and a decrease in accrued expenses of $30.5 million, comprising primarily of legal proceedings related payments, payroll related expenses and income taxes.

In the nine months of fiscal 2017, cash provided by operating activities was primarily from net earnings of $124.5 million, depreciation and amortization of $40.5 million, non-cash charges consisting of write-offs relating to restructuring and other exit charges and ERP implementation of $7.7 million, stock-based compensation of $14.6 million, provision of doubtful accounts of $2.0 million and non-cash interest of $1.0 million. Cash provided by operating activities were partially offset by the increase in primary working capital of $47.7 million, net of currency translation changes. Cash provided by operating activities were positively impacted by legal proceedings accrual of $17.0 million and accrued expenses of $13.9 million, comprising primarily of income and other taxes, while prepaid and other current assets, comprising primarily of prepaid taxes, resulted in an outflow of $11.5 million.

As explained in the discussion of our use of “non-GAAP financial measures,” we monitor the level and percentage of primary working capital to sales. Primary working capital for this purpose is trade accounts receivable, plus inventories, minus trade accounts payable. The resulting net amount is divided by the trailing three month net sales (annualized) to derive a primary working capital percentage. Primary working capital was $689.6 million (yielding a primary working capital percentage of 26.2%) at December 31, 2017, $624.8 million (yielding a primary working capital percentage of 24.9%) at March 31, 2017 and $611.6 million at January 1, 2017 (yielding a primary working capital percentage of 27.1%). The primary working capital percentage of 26.2% at December 31, 2017 is 130 basis points higher than that for March 31, 2017, and is 90 basis points lower than that for the prior year period. Primary working capital percentage increased during the nine months of fiscal 2018 largely due to higher inventory levels. The reason for the increase in inventory is due to rising lead costs, a longer supply chain on selective products and to meet rising fourth quarter demand.


Primary working capital and primary working capital percentages at December 31, 2017, March 31, 2017 and January 1, 2017 are computed as follows:
($ in Millions)
Balance At 
Trade
Receivables
 Inventory 
Accounts
Payable
 Total 
Quarter
Revenue
Annualized
 
Primary
Working
Capital %
December 31, 2017 $494.9
 $422.0
 $(227.3) $689.6
 $2,635.7
 26.2%
March 31, 2017 486.6
 360.7
 (222.5) 624.8
 2,507.2
 24.9
January 1, 2017 444.3
 370.2
 (202.9) 611.6
 2,254.8
 27.1

Investing activities used cash of $45.7 million in the nine months of fiscal 2018 and primarily consisted of capital expenditures of $43.1 million, and a $3.0 million acquisition.

Investing activities used cash of $47.8$320.2 million in the nine months of fiscal 20172024 compared to $135.8 million of cash provided in the nine months of fiscal 2023, with the increase in operating cash resulting mainly due to net earnings and activity in accounts receivable, inventory, and accounts payable. Accounts receivable decreased or provided cash of $139.5 million, and inventory decreased or provided cash of $27.4 million. Additionally, accounts payable decreased or used cash of $45.7 million. These results were due to lower sales in the period compared to the fourth quarter of fiscal 2023. In the nine months of fiscal 2024, net earnings were $208.2 million, depreciation and amortization $68.3 million, stock-based compensation $22.9 million, non-cash charges relating to exit charges $21.5 million, impairment of trademarks $6.0 million, allowance for doubtful debts of $1.9 million, derivative losses of $0.7 million, derivatives cash settlements of $0.2 million, and non-cash interest of $1.2 million. Prepaid and other current assets were a use of funds of $3.6 million, primarily from an increase of $6.9 million in prepaid taxes, $4.0 million in other prepaids, and $1.4 million in prepaid insurance partially offset by a decrease of $8.7 million in other prepaid expenses, such as non-trade receivables and other advances. Accrued expenses were a use of funds of $126.9 million primarily from decrease in tax accruals of $101.3 million, other miscellaneous accruals of $3.1 million, payroll related payments of $16.0 million net of accruals, decrease to sales related accruals of $3.0 million, and interest payments net of accruals of $5.9 million, partially offset by $2.4 million in restructuring and warranty accruals of $1.8 million.
In the nine monthsof fiscal 2023, operating activities provided cash of $135.8 million, with the increase in operating cash resulting mainly due to net earnings. Accounts receivable decreased or provided cash of $123.4 million due to sale of $150.0 million accounts receivable under the RPA entered into December 21, 2022. Inventory increased or used cash of $135.9 million. All components of inventory increased due to strategic investment, supply chain delays, new products and higher inventory costs from higher raw material costs, manufacturing and freight costs and to address the high backlog of customer orders. Accounts payable decreased or used cash of $31.6 million due to seasonal reduction. In the nine months of fiscal 2023, net earnings were $109.9 million, depreciation and amortization $69.0 million, stock-based compensation $18.8 million, non-cash charges relating to exit charges $8.4 million, primarily relating to the Ooltewah, Tennessee plant closure, derivative gains of $1.4 million, non-cash interest of $1.5 million, and allowance for doubtful debts of $0.7 million. Prepaid and other current assets were a use of funds of $8.3 million, primarily from an increase of $13.6 million in other prepaid expenses, such as taxes, insurance and other advances, partially offset by a $5.3 million decrease in contract assets. Accrued expenses were a use of funds of $17.1 million primarily from payroll related payments of $10.4 million net of accruals, tax payments net of accruals of $10.4 million, interest payments net of accruals of $6.2 million, partially offset by deferred income and contract liabilities of $3.9 million, freight charges of $3.5 million, warranty accruals of $1.2 million, other miscellaneous accruals of $1.3 million.

Investing activities used cash of $65.2 million in the nine months of fiscal 2024, which primarily consisted of capital expenditures of $36.0$59.0 million relating to plant improvements and acquisitions$8.3 million relating to the purchase of $12.4 million.

a business partially offset by $2.0 million in proceeds from sale of disposed property, plant, and equipment.

Investing activities used cash of $13.7 million in the nine monthsof fiscal 2023 which primarily consisted of capital expenditures of $57.5 million relating to plant improvements, partially offset by proceeds from termination of a net investment hedge of $43.4 million.

Financing activities used cash of $51.5$271.2 million in the nine months of fiscal 2018. During the second quarter of fiscal 2018, we entered into a 2017 Credit Facility.2024. During the nine months of fiscal 2018,2024, we borrowed $356.8$182.5 million under the 2017Second Amended Revolver and $150.0repaid $327.5 million underof the 2018Second Amended Revolver. We repaid $19.1 million of the Second and Third Amended Term loan. RepaymentsLoan, and net repayments on the 2017 Revolver duringshort-term debt were $0.4 million. We purchased treasury stock totaling $82.3 million, paid cash dividends to our stockholders totaling $25.4 million, paid taxes related to settlement of equity awards totaling $9.5 million and received proceeds from stock options of $9.7 million.

Financing activities used cash of $202.8 million in the nine months of fiscal 2018 were $111.5 million. Borrowings and repayments on the 2011 Revolver during2023. During the nine months of fiscal 2018 were $147.1 million and $312.1 million, respectively, and repayment of the 2011 Term loan was $127.5 million. On August 4, 2017, the outstanding balance on the 2011 Revolver and the 2011 Term Loan of $240.0 million and $123.0 million, respectively, was repaid utilizing the proceeds from the 2017 Credit Facility. We also paid $100.02023, we borrowed $291.1 million under the ASR agreement, which was settledSecond Amended Revolver and repaid $422.1 million of the Second Amended Revolver and $1.6 million of the Second Amended Term Loan. Net repayments on January 9, 2018.short-term debt were $20.3 million. Treasury stock open market purchases were $21.2$22.9 million, payment of cash dividends to our stockholders were $22.3 million, payment of taxes related to net share settlement of equity awards were $7.5 million and debt issuance costs were $2.7 million. Net repayments on short-term debt were $1.4 million and proceeds from stock options were $0.8 million.

Financing activities used cash of $23.6 million in the nine months of fiscal 2017 primarily due to revolver borrowings of $191.3 million and repayments of $186.8 million, repayment of our Term Loan of $11.3 million, payment of cash dividends to our stockholders of $22.8$21.4 million and payment of taxes related to net share settlement of equity awards of $7.7were $6.4 million. Net borrowings on short-termPayments for financing costs for debt modification were $13.6$1.1 million. Proceeds from stock options were $1.1 million.

Currency translation had a positive impact of $38.3$2.3 million on our cash balance in the nine months of fiscal 20182024 compared to athe negative impact of $25.4$23.8 million in the nine months of fiscal 2017. During2023. In the nine months of fiscal 2018,2024, principal currencies in which we do business such as the Euro, Polish zloty, Swiss franc,Franc and British pound Polish zloty, Chinese renminbi and Mexican pesogenerally strengthened versus the U.S. dollar.

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As a result of the above, total cash and cash equivalents increaseddecreased by $71.0$14.0 million to $571.3$332.7 million, in the nine months of fiscal 20182024 compared to an increase by $69.8a decrease of $104.4 million to $467.1$298.1 million, in the comparable periodnine months of fiscal 2017.2023.

Compliance with Debt Covenants

During the second quarter of fiscal 2022, we entered into a second amendment to the Amended Credit Facility (as amended, the “Second Amended Credit Facility”). As a result, the Second Amended Credit Facility, now scheduled to mature on September 30, 2026, consists of a $130.0 million senior secured term loan (the “Second Amended Term Loan”), a CAD 106.4 million ($84.2 million) term loan and an $850.0 million senior secured revolving credit facility (the “Second Amended Revolver”). This amendment resulted in a decrease of the Amended Term Loan by $150.0 million and an increase of the Amended Revolver by $150.0 million.

During the second quarter of fiscal 2023, the Company entered into a third amendment to the 2017 Credit Facility (as amended, the “Third Amended Credit Facility”). The Third Amended Credit Facility provided new incremental delayed-draw senior secured term loan up to $300 million (the “Third Amended Term Loan”), which was available to draw until March 15, 2023. During the fourth quarter, the Company drew $300 million in the form of the Third Amended Term Loan. The funds will mature on September 30, 2026, the same as the Company's Second Amended Term Loan and Second Amended Revolver. In connection with the agreement, the Company incurred $1.2 million in third party administrative and legal fees recognized in interest expense and capitalized $1.1 million in charges from existing lenders as a deferred asset. Additionally, the Company derecognized the capitalized deferred asset and recognized the $1.1 million as deferred financing costs.

During the fourth quarter of fiscal 2023, the Company entered into a fourth amendment to the 2017 Credit Facility (as amended, the “Fourth Amended Credit Facility”). The Fourth Amended Credit Facility replaces the London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”) in the calculation of interest for both the Second Amended Revolver and the Second Amended Term Loan.

All obligations under our 2017Fourth Amended Credit Facility are secured by, among other things, substantially all of our U.S. assets. The 2017Fourth Amended Credit Facility contains various covenants which, absent prepayment in full of the indebtedness and other obligations, or the receipt of waivers, limit our ability to conduct certain specified business transactions, buy or sell assets out of the ordinary course of business, engage in sale and leaseback transactions, pay dividends and take certain other actions. There are no prepayment penalties on loans under this credit facility.

We are in compliance with all covenants and conditions under our credit agreementFourth Amended Credit Facility and our 5.00% Senior Notes due 2023.Notes. We believe that we will continue to comply with these covenants and conditions, and that we have the financial resources and the capital available to fund the foreseeable organic growth in our business and to remain active in pursuing further acquisition opportunities. See Note 810 to the Consolidated Financial Statements included in our 20172023 Annual Report and Note 911 to the Consolidated Condensed Financial Statements included in this Quarterly Report on Form 10-Q for a detailed description of our debt.

Contractual Obligations and Commercial Commitments

A table of our obligations is contained in Part II, Item 7,7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations of our 20172023 Annual Report for the year ended March 31, 2017.Report. As of December 31, 2017,2023, we entered into the new 2017 Credit Facility, comprising a $600 million senior secured revolving credit facility (“2017 Revolver”) and a $150 million senior secured term loan (“2017 Term Loan”) with a maturity date of September 30, 2022. We repaid all outstanding balances onhad no significant changes to our 2011 Credit Facility as of August 4, 2017.contractual obligations table contained in our 2023 Annual Report.

As of December 31, 2017, principal and interest payments due under the 2017 Credit Facility are as follows: $5.4 million in fiscal 2018, $14.6 million in fiscal 2019, $20.1 million in fiscal 2020, $23.5 million in fiscal 2021, $25.1 million in fiscal 2022 and $398.9 million in fiscal 2023.

As of December 31, 2017, the estimated transition tax of $94.0 million which is recorded under current income tax payable and non-current income tax payable, at $7.5 million and $86.5 million, respectively, is payable over eight years. The payment schedule is as follows:

$7.5 million payable in the first five years, beginning fiscal 2019 through fiscal 2024, $14.1 million in fiscal 2025, $18.9 in fiscal 2026 and the final payment of $23.5 million in fiscal 2027.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risks

Our cash flows and earnings are subject to fluctuations resulting from changes in raw material costs, foreign currency exchange rates and interest rates. We manage our exposure to these market risks through internally established policies and procedures and, when deemed appropriate, through the use of derivative financial instruments. Our policy does not allow speculation in derivative instruments for profit or execution of derivative instrument contracts for which there are no underlying exposures. We do not use financial instruments for trading purposes and are not a party to any leveraged derivatives. We monitor our underlying market risk exposures on an ongoing basis and believe that we can modify or adapt our hedging strategies as needed.

Counterparty Risks
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We have entered into lead forward purchase contracts, and foreign exchange forward and purchased option contracts, interest rate swaps, and cross currency fixed interest rate swaps to manage the risk associated with our exposures to fluctuations resulting from changes in raw material costs, and foreign currency exchange rates and interest rates. The Company’s agreements are with creditworthy financial institutions. Those contracts that result in a liability position at December 31, 20172023 are $1.1$26.2 million (pre-tax). Those contracts that result in an asset position at December 31, 20172023 are $0.9$1.0 million (pre-tax) and the vast majority of these will settle within one year.. The impact on the Company due to nonperformance by the counterparties has been evaluated and not deemed material.

We hedge our net investments in foreign operations against future volatility in the exchange rates between the U.S. dollar and Euro. On September 29, 2022, we terminated our cross-currency fixed interest rate swap contracts with an aggregate notional amount of $300 million and executed cross-currency fixed interest rate swap contracts with an aggregate notional amount of $150 million, maturing on December 15, 2027. Depending on the movement in the exchange rates between the U.S. dollar and Euro at maturity, the Company may owe the counterparties an amount that is different from the notional amount of $150 million.

Excluding our cross currency fixed interest rate swap agreements, the vast majority of these contracts will settle within one year.

Interest Rate Risks

We are exposed to changes in variable U.S. interest rates on borrowings under our credit agreements, as well as short-term borrowings in our foreign subsidiaries. On a selective basis, from time to time, we enter into interest rate swap agreements to reduce the negative impact that increases in interest rates could have on our outstanding variable rate debt. At December 31, 2023 and March 31, 2023 such agreements effectively convert $200.0 million of our variable-rate debt to a fixed-rate basis, utilizing the one-month Term SOFR, as a floating rate reference.

A 100 basis point increase in interest rates would have increased annual interest expense, on an annualized basis, by approximately $4.1$4.2 million on the variable rate portions of our debt.

Commodity Cost Risks – Lead Contracts

We have a significant risk in our exposure to certain raw materials. Our largest single raw material cost is for lead, for which the cost remains volatile. In order to hedge against increases in our lead cost, we have entered into forward contracts with financial institutions to fix the price of lead. A vast majority of such contracts are for a period not extending beyond one year. We had the following contracts outstanding at the dates shown below:
 
Date 
$’s  Under
Contract
(in millions)
 
# Pounds
Purchased
(in millions)
 
Average
Cost/Pound
 
Approximate %
of Lead
Requirements (1)
December 31, 2017 $60.8
 54.0
 $1.13
 9%
March 31, 2017 46.6
 45.0
 1.03
 8
January 1, 2017 34.4
 34.5
 1.00
 8
Date$’s Under
Contract
(in millions)		# Pounds
Purchased
(in millions)		Average
Cost/Pound
Approximate %
of Lead
Requirements (1)
December 31, 2023$50.6 52.5 $0.96 8 %
March 31, 202347.9 50.0 0.96 8 
January 1, 202360.0 65.0 0.92 10 
(1(1) )Based on approximate annualthe fiscal year lead requirements for the periods then ended.

For the remaining quarter of this fiscal year, we believe approximately 100% of the cost of our lead requirements is known. This takes into account the hedge contracts in place at December 31, 2017,2023, lead purchased by December 31, 20172023 that will be reflected in future costs under our FIFO accounting policy, and the benefit from our lead tolling program.


We estimate that a 10% increase in our cost of lead would have increased our cost of goods sold by approximately $18 million and $52 million, respectively, in the third quarter and $54 million in the nine months of fiscal 2018.2024.

Foreign Currency Exchange Rate Risks

We manufacture and assemble our products globally in the Americas, EMEA and Asia. Approximately 50%40% of our sales and related expenses are transacted in foreign currencies. Our sales revenue, production costs, profit margins and competitive position are affected by the strength of the currencies in countries where we manufacture or purchase goods relative to the strength of the currencies in countries where our products are sold. Additionally, as we report our financial statements in U.S. dollars, our financial results are affected by the strength of the currencies in countries where we have operations relative to the
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strength of the U.S. dollar. The principal foreign currencies in which we conduct business are the Euro, Swiss franc, British pound, Polish zloty, Chinese renminbi, Canadian dollar, Brazilian real and Mexican peso.

We quantify and monitor our global foreign currency exposures. Our largest foreign currency exposure is from the purchase and conversion of U.S. dollar based lead costs into local currencies in Europe. Additionally, we have currency exposures from intercompany financing and

intercompany and third party trade transactions. On a selective basis, we enter into foreign currency forward contracts and purchase option contracts to reduce the impact from the volatility of currency movements; however, we cannot be certain that foreign currency fluctuations will not impact our operations in the future.

WeAt a point in time, we hedge approximately 10%5% - 15%10% of the nominal amount of our known annual foreign exchange transactional exposures. We primarily enter into foreign currency exchange contracts to reduce the earnings and cash flow impact of the variation of non-functional currency denominated receivables and payables. The vast majority of such contracts are for a period not extending beyond one year.

Gains and losses resulting from hedging instruments offset the foreign exchange gains or losses on the underlying assets and liabilities being hedged. The maturities of the forward exchange contracts generally coincide with the settlement dates of the related transactions. Realized and unrealized gains and losses on these contracts are recognized in the same period as gains and losses on the hedged items. We also selectively hedge anticipated transactions that are subject to foreign exchange exposure, primarily with foreign currency exchange contracts, which are designated as cash flow hedges in accordance with Topic 815 - Derivatives and Hedging. During the third quarter of fiscal year 2022, we also entered into cross-currency fixed interest rate swap agreements, to hedge our net investments in foreign operations against future volatility in the exchange rates between the U.S. dollar and Euro.

At December 31, 20172023 and January 1, 2017,2023, we estimate that an unfavorable 10% movement in the exchange rates would have adversely changed our hedge valuations by approximately $2.8$28.9 million and $3.6$11.0 million, respectively.
ITEM 4.CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.

(b) Internal Control Over Financial Reporting. There have not beenThe Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, evaluated any changeschange in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) and determined that there was no change in our internal control over financial reporting during the quarter to which this report relates that havehas materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting.

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PART IIOTHER INFORMATION
Item 1.Legal Proceedings
From time to time, we are involved in litigation incidental to the conduct of our business. See Litigation and Other Legal Matters in Note 711 - Commitments, Contingencies and Litigation to the Consolidated Condensed Financial Statements, which is incorporated herein by reference.

Item 1A.Risk Factors
In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our 20172023 Annual Report, for the year ended March 31, 2017 which could materially affect our business, financial condition or future results, and the following:

Future changes in U.S. tax law could adversely affect us or our affiliates.
On December 22, 2017, the U.S. President signed into law a sweeping tax reform bill known as the “Tax Cuts and Jobs Act” (“Tax Act”). The effects of the Tax Act are not yet entirely clear and will depend on, among other things, additional regulatory and administrative guidance, as well as any statutory technical corrections that are subsequently enacted. While the Tax Act reduces the statutory U.S. federal income tax rate generally applicable to U.S. corporations, the Tax Act could nevertheless have a significant adverse effect on the U.S. federal income taxation of our and our subsidiaries’ operations, including by limiting or eliminating various deductions or credits (including interest expense deductions and deductions relating to employee compensation), imposing taxes with respect to certain accumulated earnings of non-U.S. entities on a current basis, changing the timing of the recognition of income or its character and imposing additional corporate taxes under certain circumstances to combat perceived base erosion issues, among other changes.
The Tax Act, or any related, similar or amended legislation or other changes in U.S. federal income tax laws, could adversely affect the U.S. federal income taxation of our and our affiliates’ ongoing operations and may also adversely affect the integration efforts relating to, and potential synergies from, past strategic transactions. Any such changes and related consequences could have a material adverse impact on our financial results.


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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table summarizes the number of shares of common stock we purchased from participants in our equity incentive plans, as well as repurchases of common stock authorized by the Board of Directors. As provided by the Company’s equity incentive plans, (a) vested options outstanding may be exercised through surrender to the Company of option shares or vested options outstanding under the Company’s equity incentive plans to satisfy the applicable aggregate exercise price (and any withholding tax) required to be paid upon such exercise and (b) the withholding tax requirements related to the vesting and settlement of restricted stock units and market and performance condition-based share units may be satisfied by the surrender of shares of the Company’s common stock.


Purchases of Equity Securities
Period(a)
Total number of shares (or units) purchased		(b)
Average price paid per share (or unit)		(c)
Total number of shares (or units) purchased as part of publicly announced plans or programs
(d)
Maximum number (or approximate dollar value) of shares (or units) that may be purchased under the plans or
programs (1) (2) (3)
October 2 - October 31, 2023374,974 $93.32 374,974 $112,213,965 
November 1 - November 30, 2023— — — 112,213,965 
December 1 - December 31, 2023— — — 112,213,965 
Total374,974 $93.32 374,974 
Period 
(a)
Total number of shares (or units) purchased
 
(b)
Average price paid  per share (or unit)
 
(c)
Total number of shares (or units) purchased as part of publicly announced plans or programs
 
(d)
Maximum number (or approximate dollar value) of shares (or units) that may be purchased under the plans or
programs (1) (2) (3)
October 2 – October 29, 2017 179
 $68.41
 —
 $24,738,883
October 30 – November 26, 2017 1,851
 67.14
 —
 24,738,883
November 27 – December 31, 2017 —
 —
 —
 24,738,883
Total 2,030
 $67.25
 —
  

(1) The Company's Board of Directors has authorized the Company to repurchase up to such number of shares as shall equal the dilutive effects of any equity based awards issued during such fiscal year under the 2017 Equity Incentive Plan and the 2023 Equity Incentive Plan and the number of shares exercised through stock option awards during such fiscal year, approximately $34.0 million.

(1)The Company's Board of Directors has authorized the Company to repurchase up to such number of shares as shall equal the dilutive effects of any equity based award granted during such fiscal year under the 2010 Equity Incentive Plan and the number of shares exercised through stock option awards during such fiscal year. These amounted to 2,030 shares, repurchased at an average price of $67.25.
(2)On August 24, 2017, the Company prepaid $100 million, pursuant to an ASR agreement with a major financial institution, and received on August 29, 2017, an initial delivery of 1,278,976 shares. No shares were received pursuant to the ASR during the current quarter. On January 9, 2018, the ASR was settled, and the Company received an additional 216,738 shares.
(3)On November 8, 2017, the Company announced the establishment of a $100 million stock repurchase authorization, with no expiration date. The authorization is in addition to the existing stock repurchase programs.

(2)On March 9, 2022, the Company announced the establishment of a $150.0 million stock repurchase authorization, with no
expiration date.
Item 4.Mine Safety Disclosures
Not applicable.


Item 5.Other Information
During the quarter ended December 31, 2023, none of our directors or officers (as defined in Section 16 of the Securities Exchange Act of 1934, as amended) adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (each as defined in Item 408(a) and (c) of Regulation S-K).


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ITEM 6.EXHIBITS
 
Exhibit
Number		Description of Exhibit
3.1
3.2
31.1
31.2
32.1
101.INSXBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
ENERSYS (Registrant)
By/s/ Andrea J. Funk
Andrea J. Funk
ENERSYS (Registrant)
By/s/ Michael J. Schmidtlein
Michael J. Schmidtlein
Chief Financial Officer

Date: February 7, 20182024



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