Presentation for 10 j E j L j B j C Athens, Greece September 26-29, 2006 26

-

Global Market for Industrial Lead Acid Batteries
Current Status and Trends for the Future Hollingsworth & Vose Company
Bob Cullen Vice President, Sales & Marketing

List of Participants - Major Manufacturers
‡ C&D Technologies, Inc. ‡ Douglas Battery Mfg. Company ‡ East Penn Mfg. Co., Inc. ‡ EnerSys, Inc. ‡ CSB ‡ Fiamm ‡ B.B. Battery ‡ Kung Long Battery ‡ Leoch ‡ Eurobat ‡ Exide Technologies ‡ GNB Industrial Power ‡ Exide India ‡ Panasonic (Worldwide) ‡ Power Sonic Corporation ‡ Power Battery Company, Inc. ‡ C&D China ‡ Yuasa/U.S., U.K., China, Taiwan ‡ Amara Raja ‡ Battery Council International ‡ Crown Battery

Special Thanks to Key Industry Contacts
³Special thanks for their contribution´ Key Industry Contacts ‡ Mark Wilson - Ericsson, Inc. ‡ Larry Lang - Cisco ‡ Karen Sansone - Nortel ‡ Steve McCluer - American Power Conversion ‡ Michael Keith - AT&T, Wireless ‡ Alan Katz - MGE ‡ Robert Parker - IBM/Internet ‡ John Wirtz - Wirtz Manufacturing ‡ Tucker Roe - Daramic, Inc. ‡ Robert Wittemann- C&D WittemannBattery Manufacturers ‡ Evan Wescoe - East Penn ‡ Ray Kubis - EnerSys, Inc. ‡ Mr. J.C. Lee - KLB ‡ Keith Schmid- Exide Schmid‡ Steve Vechy - EnerSys, Inc. ‡ Tom Lynn - C&D Technologies ‡ Tom Minner- East Penn Minner‡ Jerry Hoffman- NorthStar Hoffman‡ Guy Clum - Power Sonic ‡ Hal Hawk ± Crown Battery Company ‡ Alison Huang - CSB

Presentation Notes (Methodology & Conditions)

‡ Market projection covers period of 2006-2010 2006‡ All figures reflect production within a given geographic area ‡ U.S. dollars are used for consistency. Euro value of $1.20 was used to convert to $; 8. RMB = $. ‡ Recent market price increases are not reflected . ‡ Known export figures are identified. ‡ Recent Chinese Government change in VAT refund policy not factored in.

Overview of Global Industrial Market
‡ 2000 market size - $3.79 billion ‡ Overall market lost - $605 million in 2001 & 2002 ‡ Stationary market decreased by almost 30% driven by Telecom/UPS implosion ‡ Motive Power lost 7% due to a global recession ‡ Market began recovery in 2003 - 5% ‡ Strong Global Economies driving growth in 2004 & 2005.

2005 Global Industrial Battery Sales
By Market Class ($ billions)

63%

37%

$1.592

Motive

$2.712

Stationary
Total: $4.304 Billion

Total Worldwide Industrial Battery Production 2004 vs. 2006 ($ billions)

4.8 4.6 4.4 4.2 4 3.8 3.6 3.4 3.2 3 2.8

$4.77

$3.81

2004

2006

l wi

B tt

P

ti

, 2005 ($ milli

)

$1,511
1600

$1,306
1400 1200 625 1000 72 800 600 850 400 200 147 0 168 159 681 707

t ti
804

ti

$922

$180
33

$199
31

$186
27

i

i

i

i

m

f

I

.

t

N

t

f

l

Growth for Motive Power and Stationary Batteries, 20042004-2006

Stationary 53% Motive Power 47%

$957 Million Total

Motive Growth Rates by Region (%), 2006 - 2010

S. America Australia India Rest of Asia Taiwan China Europe N. America

4 4 8 6 1 11 3 5

0

2

4

6

8

10

12

Stationary Growth Rates by Region (%), 2006 - 2010

S. America Australia India Rest of Asia

8 4 12 7

-5

Taiwan China

12

-11

Japan Europe N. America

3 7

-15

-10

-5

0

5

10

15

Euro vs. Dollar
1.40 1.30 1.20 1.10 1.00 0.90 0.80
1999 2000 2001 2002 2003 2004 2005
2004 Forecast $1.18 May 2005 2006 Forecast $1.28 May 2006

Euro

Source: Merrill Lynch Research

2005 China Industrial Battery Market- Exports MarketMillions of $

71%

29%

$260

Domestic

$662

Export
Total: $ 922 million

Worldwide Motive Battery Production by Region, 2004 vs. 2006

2004 $1.46 billion
5% 1%1% 8%
3%

2006 $1.74 billion
2% 36%
5% 37% 2% 7% 2% 0% 2%

2%

N. America Europe Europe

N. America

45%

43%

N. America Rest of Asia

Europe India

Japan Australia

China S. America

Taiwan

W v

t t

y B tt y P

t

by

g

,

$
% %

b
% %
% %

$
7%

b
%

% %

India N. America

Taiwan China
%

India Rest of Asia China

ROW N. America

Japan

Europe
%

Europe
%

%

%

t f

t

C P
1200

t

f t t b R g

t M t v B tt , 2006 (%)
92%

54%
1000

53% 47%
800

46%

t t

M tv

($ millions)
600

400

88% 84% 8% 16% 12%

200

0

A

A

N

C

R

t

f

Stat onary vs. Mot v Pow r, 2006 vs. 2010 ($ b ll ons)

4 3.5 3 2.5 2 1.5 1 0.5 0

$3.60 $3.05

$2.05 $1.74

2006 Mot v t t onary

2010

Stationary and M otive Trends, 2001 - 2010

Motive 4000
($ millions)

Stationary

3000 2000 1000 0

20 00

20 02

19 99

20 01

20 05

20 10

20 03

20 04

20 06

Global GDP¶s

a a a a

o a ol

a o sa

GDP: % change 2001 vs. 2005 (est)

‡ ‡ ‡ ‡ ‡ ‡ ‡

United States Euro area Japan Emerging East Asia China Latin America Emerging Europe

2001 0.5 1.5 0.4 -0.4 7.3 2.0 4.3 2.7

2005 3.8 0.7 2.7 6.3 9.5 3.8 4.5 4.6

‡ World

Source: CIA Factbook; Various Economic Websites

2005 Worldwide Sales of Motive Power
Batteries by Application ($ millions)
Industrial Truck $1,512 95%

Mining Vehicles $26 1.2%

Railroad/Locomotives $54 3.8%

Total: $1.592 Billion

Global Motive Power Drivers
‡ Forklift Trucks account for 95% of total ‡ Very healthy worldwide economies reflect strong motive power production ‡ Lead Price increases have driven some of this growth. ‡ Europe ± largest producer of motive power batteries ± has higher percentage of electric vs. gas trucks than in N. America

Global Stationary Power Market Segments
2003 ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Telecommunications UPS Misc. Standby Security Control & Switchgear Emergency Lighting Electronics Medical Total 41% 36% 4% 5% 6% 3% 2% 1% 100% 2004 40% 37% 4% 4% 7% 4% 3% 2% 100% 2005 41% 36% 4% 5% 7% 5% 3% 2% 100% 2006 42% 36% 4% 4% 6% 4% 2% 2% 100%

Worldwide Production of >25 Ah Batteries by Region, 2006
3% 4% 3% 1% 41% 5%

S. America

N. America China
18%

Japan Europe

6% 19%

$1.817 Billion

Worldwide Production of <25 Ah Batteries by Region, 2006

1% 7% 6%

4%

3%

1% 8%

11%

Taiwan

China

58%

$895 Million

St ti y B tt y S l 2006 ($ illi )
1200

by Siz by

gi

,

$1,035

1000

25
$767 $769
22 787 14

25

800

600

753 747

400

$220
36

$220
31

200

$68
0

248 184

189

68
0

i

i

i

I

.

N

t

f

l

Stationary Power Trends ‡ Telecommunications Market
‡ Recovery from a steep decline began in 2003 ‡ Consolidation is the trend in North America ‡ Expanding beyond traditional markets in order to ward off new competitors. ‡ Wireless continue spending to build out networks

Stationary Power Trends
Has the Telecom Market returned?

‡ 2003 recovery began - 5% ‡ Long term outlook improves . ‡ Teleco¶s have more choices: Lithium, Fuel Cells & Chinese Battery Manufacturers.

Global Infrastructure Expenditures

300

$288 $260 $269 $244 $209 $214 $185 $195 $182 $155 $136

250 200
(in billions)

150 100 50 0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Tech Spending Slips
Worldwide Hardware Sales
2000 2001 2002 20031 2004 2005 2006
$0 $200 $400 $600
$679 $655 $684 $720 $760 $805 $771

$800

$1,000

Sale s (in Billions )

Source: Gartner

Stationary Power Trends

Telecom Market will be driven by
‡ Wireless ‡ Internet ‡ Traditional Telecoms offering broadband and digital TV to stay competitive.

Stationary Power Trends Wireless Market
‡ Killer Application? Data and Entertainment - Games
‡ ‡ 50% of voice minutes worldwide - wireless $1 trillion by 2005 & Growing

25% of Internet access will be via wireless.

Internet
‡ Online purchases amount to over $500 billion in 2003 ‡ Projected to reach $864 million by 2006 ‡ Projected to grow at over 15% per year until 2010.

Internet Innovations

Web Computing
Growth of software rental market, including software licenses and services 70 60 50
$ Billions

40 30 20 10 0 1999 2000 2001 2002 2003 2005 2007

3G is Growing! 4G is next

3G Applications
‡ Internet mobile game users expected to explode over the next 5 years from 32 million today, to 220 million users by 2009 ‡ 3G will create $8 billion market that did not exist 18 months ago ‡ VC¶s are flocking to mobile game startups

Global Stationary Power Trends

‡ Telecommunications
‡ Recovering from spending binge of the 90¶s
Getting back to basics - reducing debt p profitability

‡ 3G beginning to fulfill initial promises ‡ Telco¶s being forced to compete with Cable ‡ Global partnerships/acquisitions will continue
‡ Opportunities will be on global scale

Global Stationary Power Trends

‡ Telecommunications
‡ Infrastructure

‡ Network holes in wireless infrastructure must be filled ‡ Asia/Pac Rim continues to be growth area

UPS Market

‡ Data Storage Centers
US Industry has insatiable need for instant data. ± Move away from complete centralization of data to having multiple back up.
±

‡ Spending on Data Centers increasing - Global equipment spending to hit $10.1 Billion by 2009, and continue at a 6.8% growth ‡ Projected growth of 5-7% in US 5±

small and mid size batteries being manufactured in Asia(12Asia(12-15% growth rate).

Leading UPS Suppliers to North America

‡ Annual Battery Purchases
± ± ± ± ± ± ± ±

APC Powerware MGE Lieberts Phoenixtec Mitsubishi Elec Toshiba Triplight

$255 million $ 153 million $ 90 million $ 40 million $ 42 million $ 12 million $ 17 million $ 27 million

Summary
‡ Global Stationary Market began to recover in 20032003- becoming Robust in 04 & 05.
Telecom consolidations/joint ventures on 3G/4G will be in fashion over next several years ‡ Wireless infrastructure far from complete
‡

‡ Global Motive Power Market:
‡ ‡

Will show steady growth of 5% + annually Europe will continue as largest producer

‡ Overall Industrial Lead Battery Market will grow to a $5.6 billion market by 2010.

Presentation for 10 j E j L j B j C Athens, Greece September 26-29, 2006 26-

Global Market for Industrial Lead Acid Batteries
Current Status and Trends for the Future Hollingsworth & Vose Company
Bob Cullen Vice President, Sales & Marketing