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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 1, 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) 
Delaware 23-3058564
(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 class Trading SymbolName of each exchange on which registered
Common Stock, $0.01 par value per share ENSNew 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  Yes    ¨  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 Filerý  Accelerated filer
Non-accelerated filer
  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).      Yes    ý  No.
Common Stock outstanding at February 3, 2023: 40,850,523 shares
1


EnerSys
INDEX – FORM 10-Q
 
2


  Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 4.
Item 6.
3

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

EnerSys
Consolidated Condensed Balance Sheets (Unaudited)
(In Thousands, Except Share and Per Share Data) 
January 1, 2023March 31, 2022
Assets
Current assets:
Cash and cash equivalents$298,081 $402,488 
Accounts receivable, net of allowance for doubtful accounts: January 1, 2023 - $10,031; March 31, 2022 - $12,219
581,753 719,434 
Inventories, net835,198 715,712 
Prepaid and other current assets155,159 155,559 
Total current assets1,870,191 1,993,193 
Property, plant, and equipment, net495,751 503,264 
Goodwill673,701 700,640 
Other intangible assets, net367,712 396,202 
Deferred taxes57,210 60,479 
Other assets103,302 82,868 
Total assets$3,567,867 $3,736,646 
Liabilities and Equity
Current liabilities:
Short-term debt$32,019 $55,084 
Accounts payable345,255 393,096 
Accrued expenses292,687 289,950 
Total current liabilities669,961 738,130 
Long-term debt, net of unamortized debt issuance costs1,105,124 1,243,002 
Deferred taxes74,526 78,228 
Other liabilities186,910 184,011 
Total liabilities2,036,521 2,243,371 
Commitments and contingencies
Equity:
Preferred Stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding at January 1, 2023 and at March 31, 2022
  
Common Stock, $0.01 par value per share, 135,000,000 shares authorized, 55,952,890 shares issued and 40,844,224 shares outstanding at January 1, 2023; 55,748,924 shares issued and 40,986,658 shares outstanding at March 31, 2022
560 557 
Additional paid-in capital585,407 571,464 
Treasury stock at cost, 15,108,666 shares held as of January 1, 2023 and 14,762,266 shares held as of March 31, 2022
(741,196)(719,119)
Retained earnings1,871,519 1,783,586 
Contra equity - indemnification receivable(2,463)(3,620)
Accumulated other comprehensive loss(186,068)(143,495)
Total EnerSys stockholders’ equity1,527,759 1,489,373 
Nonredeemable noncontrolling interests3,587 3,902 
Total equity1,531,346 1,493,275 
Total liabilities and equity$3,567,867 $3,736,646 
See accompanying notes.
4

Table of Contents
EnerSys
Consolidated Condensed Statements of Income (Unaudited)
(In Thousands, Except Share and Per Share Data)
 Quarter ended
 January 1, 2023January 2, 2022
Net sales$920,227 $844,006 
Cost of goods sold707,442 659,668 
Inventory adjustment relating to exit activities(863) 
Gross profit213,648 184,338 
Operating expenses134,317 130,701 
Restructuring and other exit charges 801 2,472 
Operating earnings78,530 51,165 
Interest expense17,502 9,744 
Other expense (income), net3,180 (1,413)
Earnings before income taxes57,848 42,834 
Income tax expense 13,438 6,570 
Net earnings attributable to EnerSys stockholders$44,410 $36,264 
Net earnings per common share attributable to EnerSys stockholders:
Basic$1.09 $0.87 
Diluted$1.08 $0.85 
Dividends per common share $0.175 $0.175 
Weighted-average number of common shares outstanding:
Basic40,835,636 41,905,815 
Diluted41,281,693 42,497,045 
See accompanying notes.



5

Table of Contents
EnerSys
Consolidated Condensed Statements of Income (Unaudited)
(In Thousands, Except Share and Per Share Data)
 Nine months ended
 January 1, 2023January 2, 2022
Net sales$2,718,635 $2,450,294 
Cost of goods sold2,123,880 1,893,917 
Inventory adjustment relating to exit activities681 960 
Gross profit594,074 555,417 
Operating expenses398,752 380,497 
Restructuring charges and other exit charges12,394 13,161 
Operating earnings182,928 161,759 
Interest expense44,560 28,424 
Other expense (income), net3,507 (1,711)
Earnings before income taxes134,861 135,046 
Income tax expense25,001 19,227 
Net earnings attributable to EnerSys stockholders$109,860 $115,819 
Net earnings per common share attributable to EnerSys stockholders:
Basic$2.69 $2.73 
Diluted$2.66 $2.69 
Dividends per common share $0.525 $0.525 
Weighted-average number of common shares outstanding:
Basic40,787,654 42,393,907 
Diluted41,267,320 43,096,740 
See accompanying notes.
6

Table of Contents
EnerSys
Consolidated Condensed Statements of Comprehensive Income (Unaudited)
(In Thousands)
 Quarter endedNine months ended
 January 1, 2023January 2, 2022January 1, 2023January 2, 2022
Net earnings$44,410 $36,264 $109,860 $115,819 
Other comprehensive income (loss):
Net unrealized gain (loss) on derivative instruments, net of tax10,806 (786)4,688 878 
Pension funded status adjustment, net of tax84 216 254 689 
Foreign currency translation adjustment 60,565 (18,214)(47,830)(26,551)
Total other comprehensive income (loss), net of tax71,455 (18,784)(42,888)(24,984)
Total comprehensive income (loss)115,865 17,480 66,972 90,835 
Comprehensive income (loss) attributable to noncontrolling interests109 56 (315)120 
Comprehensive income (loss) attributable to EnerSys stockholders$115,756 $17,424 $67,287 $90,715 
See accompanying notes.

7

Table of Contents
EnerSys
Consolidated Condensed Statements of Cash Flows (Unaudited)
(In Thousands)
 Nine months ended
 January 1, 2023January 2, 2022
Cash flows from operating activities
Net earnings$109,860 $115,819 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization68,998 72,322 
Write-off of assets relating to exit activities 8,360 3,922 
Derivatives not designated in hedging relationships:
Net (losses) gains(1,383)(421)
Cash (settlements) proceeds40 342 
Provision for doubtful accounts(720)1,933 
Deferred income taxes(716)(24)
Non-cash interest expense1,461 1,620 
Stock-based compensation18,770 15,817 
(Gain) loss on disposal of property, plant, and equipment(193)(528)
Changes in assets and liabilities:
Accounts receivable123,398 (40,264)
Inventories(135,905)(163,747)
Prepaid and other current assets(8,323)(18,344)
Other assets(899)1,322 
Accounts payable(31,614)(9,086)
Accrued expenses(17,149)(58,233)
Other liabilities1,858 (480)
Net cash provided by (used in) operating activities135,843 (78,030)
Cash flows from investing activities
Capital expenditures(57,512)(52,351)
Proceeds from disposal of facility 3,268 
Proceeds from termination of net investment hedges43,384  
Proceeds from disposal of property, plant, and equipment452 1,433 
Net cash (used in) investing activities(13,676)(47,650)
Cash flows from financing activities
Net (repayments) borrowings on short-term debt(20,317)(297)
Proceeds from Second Amended Revolver borrowings291,100 424,800 
Repayments of Second Amended Revolver borrowings(422,082)(39,800)
Repayments of Second Amended Term Loan(1,625)(161,447)
Debt Issuance Costs (2,952)
Financing costs for debt modification (1,096) 
Option proceeds, net 1,060 1,273 
Payment of taxes related to net share settlement of equity awards(6,385)(9,120)
Purchase of treasury stock(22,907)(114,534)
Dividends paid to stockholders(21,386)(22,187)
Other842 607 
Net cash (used in) provided by financing activities(202,796)76,343 
Effect of exchange rate changes on cash and cash equivalents(23,778)(5,411)
Net decrease in cash and cash equivalents(104,407)(54,748)
Cash and cash equivalents at beginning of period402,488 451,808 
Cash and cash equivalents at end of period$298,081 $397,060 
See accompanying notes.
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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 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 months ended January 1, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2023.

The Consolidated Condensed Balance Sheet at March 31, 2022 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 2022 Annual Report on Form 10-K (SEC File No. 001-32253), which was filed on May 25, 2022 (the “2022 Annual Report”).

EnerSys (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 2023 end on July 3, 2022, October 2, 2022, January 1, 2023, and March 31, 2023, respectively. The four quarters in fiscal 2022 ended on July 4, 2021, October 3, 2021, January 2, 2022, and March 31, 2022, 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.


Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United 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, including, but not limited to, the potential impacts arising from the coronavirus pandemic including its variants (“COVID-19”) and public and private sector policies and initiatives aimed at reducing its transmission. As the extent and duration of the impacts of COVID-19 remain unclear, the Company’s estimates and assumptions may evolve as conditions change. Actual results could differ significantly from those 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 business combinations.
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2. Revenue Recognition

The Company’s revenues by reportable segments are presented in Note 18 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. Service revenues for the third quarter of fiscal 2023 and 2022 amounted to $100,770 and $87,958, respectively. Service revenues for the nine months of fiscal 2023 and 2022 amounted to $301,584 and $260,588, respectively.

A small portion of the Company's customer arrangements oblige the Company to create customized products for its customers that 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 a 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 best depicts the transfer of control of the underlying goods and services to the customer for each respective arrangement. Methods used by the Company to measure progress toward completion include labor hours, costs incurred and units of production. Revenues recognized over time for the third quarter of fiscal 2023 and 2022 amounted to $55,283 and $49,058, respectively. Revenues recognized over time for the nine months of fiscal 2023 and 2022 amounted to $168,489 and $133,569, respectively.

On January 1, 2023, the aggregate transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations was approximately $159,245, of which, the Company estimates that approximately $76,200 will be recognized as revenue in fiscal 2023, $67,002 in fiscal 2024, and $16,043 in fiscal 2025.

Any payments that are received from a customer in advance, prior to the satisfaction of a related performance obligation and billings in excess of revenue recognized, are deferred and treated as a contract liability. Advance payments and billings in excess of revenue recognized are classified as current or non-current based on the timing of when recognition of revenue is expected. As of January 1, 2023, the current and non-current portion of contract liabilities were $30,859 and $1,482, respectively. As of March 31, 2022, the current and non-current portion of contract liabilities were $27,870 and $1,387, respectively. Revenues recognized during the third quarter of fiscal 2023 and 2022 that were included in the contract liability at the beginning of the quarter, amounted to $7,382 and $4,890, respectively. Revenues recognized during the nine months of fiscal 2023 and 2022 that were included in the contract liability at the beginning of the year, amounted to $9,167 and $6,722, respectively.

Amounts representing work completed and not billed to customers represent contract assets and were $54,006 and $59,924 as of January 1, 2023 and March 31, 2022, 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 January 1, 2023, the right of return asset related to the value of inventory anticipated to be returned from customers was $4,608 and refund liability representing amounts estimated to be refunded to customers was $9,484.

3. Leases

The Company leases manufacturing facilities, distribution centers, office space, vehicles and other equipment under non-cancellable leases with initial terms typically ranging from 1 to 17 years.

Short term leases with an initial term of 12 months or less are not presented on the balance sheet and expense is recognized on a straight-line basis over the lease term.
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The following table presents lease assets and liabilities and their balance sheet classification:
Classification
As of
January 1, 2023
As of
March 31, 2022
Operating Leases:
Right-of-use assetsOther assets$79,081 $71,085 
Operating lease current liabilitiesAccrued expenses21,219 20,086 
Operating lease non-current liabilitiesOther liabilities60,587 52,904 
Finance Leases:
Right-of-use assetsProperty, plant, and equipment, net$233 $344 
Finance lease current liabilitiesAccrued expenses74 185 
Finance lease non-current liabilitiesOther liabilities191 231 

The components of lease expense for the third quarter and nine months ended January 1, 2023 and January 2, 2022 were as follows:
Quarter endedNine months ended
ClassificationJanuary 1, 2023January 2, 2022January 1, 2023January 2, 2022
Operating Leases:
Operating lease costOperating expenses$6,980 $6,649 $20,232 $19,787 
Variable lease costOperating expenses3,189 2,288 9,817 7,215 
Short term lease costOperating expenses1,461 1,497 4,310 5,067 
Finance Leases:
DepreciationOperating expenses$23 $58 $94 $177 
Interest expenseInterest expense3 6 9 21 
Total$11,656 $10,498 $34,462 $32,267 

The following table presents the weighted average lease term and discount rates for leases as of January 1, 2023 and March 31, 2022:
January 1, 2023
March 31, 2022
Operating Leases:
Weighted average remaining lease term (years)6.0 years6.1 years
Weighted average discount rate4.61%4.43%
Finance Leases:
Weighted average remaining lease term (years)3.5 years2.3 years
Weighted average discount rate5.39%4.79%
The following table presents future payments due under leases reconciled to lease liabilities as of January 1, 2023:

Finance LeasesOperating Leases
Three months ended March 31, 2023$27 $6,926 
Year ended March 31,
202492 22,321 
202572 17,263 
202651 13,517 
202727 10,993 
Thereafter14 23,092 
Total undiscounted lease payments283 94,112 
Present value discount18 12,306 
Lease liability$265 $81,806 

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The following table presents supplemental disclosures of cash flow information related to leases for the third quarter and nine months ended January 1, 2023 and January 2, 2022:
Quarter endedNine months ended
January 1, 2023January 2, 2022January 1, 2023January 2, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases$3 $6 $9 $21 
Operating cash flows from operating leases6,778 6,775 19,688 20,024 
Financing cash flows from finance leases22 59 94 179 
Supplemental non-cash information on lease liabilities arising from right-of-use assets:
Right-of-use assets obtained in exchange for new finance lease liabilities$121 $ $121 $ 
Right-of-use assets obtained in exchange for new operating lease liabilities6,424 13,987 11,961 19,577 

4. Accounts Receivable

January 1, 2023March 31, 2022
Accounts receivable$591,784 $731,653 
Allowance for doubtful accounts 10,031 12,219 
Accounts receivable, net$581,753 $719,434 

During the third quarter of 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 return for these sales, the 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"), an entity structured to be bankruptcy remote, and matures in December 2025. The Company is deemed the primary 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 entity from the transfer of the trade 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 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 purchase price is received in cash when the receivables are sold, and fees charged relating to this balance are recorded to other (income) expense. Certain unsold receivables held by EnerSys Finance serve as collateral to unaffiliated financial institutions. These unsold receivables are included in “Accounts receivable, net” in the Company’s consolidated balance sheets. The Company continues servicing the receivables which were sold and in exchange receives a servicing fee from EnerSys Finance under the program.

During the third quarter and nine months of 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 $252,664, were held by EnerSys Finance at January 1, 2023.

Any accounts receivables held by EnerSys Finance would likely not be available to other creditors of the Company in the event 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 result of the insolvency of EnerSys Finance or its inability to pay the account debtors.




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5. Goodwill and Other Intangible Assets

Other Intangible Assets

Information regarding the Company’s other intangible assets are as follows:

Balance as of
January 1, 2023March 31, 2022
Gross AmountAccumulated AmortizationNet AmountGross AmountAccumulated AmortizationNet Amount
Indefinite-lived intangible assets:
Trademarks$145,158 $(953)$144,205 $145,808 $(953)$144,855 
Finite-lived intangible assets:
Customer relationships295,280 (125,958)169,322 298,577 (109,820)188,757 
Non-compete2,825 (2,825) 2,825 (2,825) 
Technology96,706 (45,380)51,326 97,367 (38,712)58,655 
Trademarks8,944 (6,085)2,859 8,947 (5,012)3,935 
Licenses1,196 (1,196) 1,196 (1,196) 
Total$550,109 $(182,397)$367,712 $554,720 $(158,518)$396,202 

The Company’s amortization expense related to finite-lived intangible assets was $7,785 and $23,879 for the third quarter and nine months of fiscal 2023, compared to $8,318 and $25,066 for the third quarter and nine months of fiscal 2022. The expected amortization expense based on the finite-lived intangible assets as of January 1, 2023, is $6,846 for the remainder of fiscal 2023, $27,691 in fiscal 2024, $26,550 in fiscal 2025, $25,616 in fiscal 2026 and $24,822 in fiscal 2027.

Goodwill
The following table presents the amount of goodwill, as well as any changes in the carrying amount of goodwill by segment during the nine months of fiscal 2023:
Energy SystemsMotive PowerSpecialtyTotal
Balance at March 31, 2022
$279,461 $323,303 $97,876 $700,640 
Foreign currency translation adjustment(22,155)(3,597)(1,187)(26,939)
Balance as of January 1, 2023
$257,306 $319,706 $96,689 $673,701 

6. Inventories
January 1, 2023March 31, 2022
Raw materials$336,827 $260,604 
Work-in-process123,120 109,441 
Finished goods375,251 345,667 
Total$835,198 $715,712 

7. 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 January 1, 2023 and March 31, 2022, and the basis for that measurement:
 
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Total Fair Value Measurement January 1, 2023Quoted Price in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Lead forward contracts$8,085 $ $8,085 $ 
Foreign currency forward contracts464  464  
Net investment hedges(14,384) (14,384) 
Total derivatives$(5,835)$ $(5,835)$ 
 
Total Fair Value
Measurement
March 31, 2022
Quoted Price in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Lead forward contracts$2,520 $ $2,520 $ 
Foreign currency forward contracts(256) (256) 
Net investment hedges298  298  
Total derivatives$2,562 $ $2,562 $ 

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- Summary of Significant Accounting Policies to the Company's Consolidated Financial Statements included in the 2022 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.

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 Third Amended Credit Facility (as defined in Note 13), 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.

In fiscal 2020, the Company issued its 4.375% Senior Notes due December 15, 2027 (the “2027 Notes”), with an original face value of $300,000. The Company's 5.00% Senior Notes due April 30, 2023 (the “2023 Notes”), with an original face value of $300,000, were issued in fiscal 2016. The fair value of the 2027 Notes and 2023 Notes (collectively, the “Senior Notes”) represent the trading values based upon quoted market prices and are classified as Level 2. The 2027 Notes were trading at approximately 90% and 95% of face value on January 1, 2023 and March 31, 2022, respectively. The 2023 Notes were trading at approximately 99% and 101% of face value on January 1, 2023 and March 31, 2022, respectively.

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The carrying amounts and estimated fair values of the Company’s derivatives and Senior Notes at January 1, 2023 and March 31, 2022 were as follows:
 January 1, 2023March 31, 2022
 Carrying
Amount
Fair ValueCarrying
Amount
Fair Value
Financial assets:
Derivatives (1)
$(5,835)$(5,835)$2,562 $2,562 
Financial liabilities:
 Senior Notes (2)
$600,000 $567,450 $600,000 $585,750 
(1)Represents lead, foreign currency forward contracts and net investment hedges (see Note 7 for asset and liability positions of the lead, foreign currency forward contracts and net investment hedges at January 1, 2023 and March 31, 2022).
(2)The fair value amount of the Senior Notes at January 1, 2023 and March 31, 2022 represent the trading value of the instruments.

Non-recurring fair value measurements

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.


8. Derivative Financial Instruments

The Company utilizes derivative instruments to reduce its exposure to fluctuations in commodity prices, 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 January 1, 2023 and March 31, 2022, the Company has hedged the price to purchase approximately 65.0 million pounds and 54.0 million pounds of lead, respectively, for a total purchase price of $60,025 and $56,768, respectively.

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 January 1, 2023 and March 31, 2022, the Company had entered into a total of $48,769 and $29,676, respectively, of such contracts.

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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 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 income (expense).

Impact of Hedging Instruments on AOCI

In the coming twelve months, the Company anticipates that $11,280 of pretax (gain) relating to lead, foreign currency forward contracts and net investment hedges will be reclassified from AOCI as part of cost of goods sold and interest expense. This amount represents the current net unrealized impact of hedging lead, foreign exchange rates and interest rates, which will change as market rates change in the future. 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 resulting from variable lead cost, foreign exchange and interest rates 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 January 1, 2023 and March 31, 2022, the notional amount of these contracts was $67,252 and $22,990, 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
January 1, 2023 and March 31, 2022
 
 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
 January 1, 2023March 31, 2022January 1, 2023March 31, 2022January 1, 2023March 31, 2022
Prepaid and other current assets:
Lead forward contracts$