All dollar amounts in this Item 7 are in thousands, except per share amounts and per pound lead amounts.

The following discussion and analysis of our results of operations and financial condition for the fiscal years ended January 31, 2009 and 2008 should be read in conjunction with Selected Consolidated Financial Data and our audited consolidated financial statements and the notes to those statements. Our discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, opinions, expectations, anticipations and intentions and beliefs. Actual results and the timing of events could differ materially from those anticipated in those forward-looking statements as a result of a number of factors. See "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" elsewhere in this Report on Form 10-K.

Impact of Economy and Shift in Customer Demand and results

During fiscal year 2009, we experienced increased demand for products sold, both domestically and internationally. Over the last three fiscal years, the costs of our raw materials, of which lead is our primary material, have changed significantly from an annual average of $0.60 per pound in 2007 to $1.21 per pound in 2008 to $0.89 per pound in 2009. We have implemented a series of selling price increases/decreases and a surcharge mechanism for some of our customers based upon lead prices at certain periods. Based upon our contractual pricing mechanisms and business practices, we currently estimate that there is a lag of up to six months before we fully recover pricing / lower direct material costs from these activities. Accordingly, in a period of rising lead costs we would expect our gross margins and results to be adversely impacted.

Raw Material Pricing and Productivity

Lead, steel, copper, plastics and electronic components are the major raw
materials used in the manufacture of our industrial batteries and electronics
products and, accordingly, represent a significant portion of our materials
costs. During fiscal years 2009, 2008 and 2007, the average London Metals
Exchange ("LME") price per pound of lead was as follows:



     Fiscal Year                                            2009     2008     2007
     Average annual LME price per pound of lead            $ 0.89   $ 1.21   $ 0.60
     Lowest average monthly LME price per pound of lead    $ 0.44   $ 0.81   $ 0.44
     Highest average monthly LME price per pound of lead   $ 1.36   $ 1.69   $ 0.78

Lead represented approximately 40% of our cost of good sold for both fiscal year 2009 and fiscal year 2008. Lead traded as high as $1.54 per pound on February 27, 2008. The changes in lead market price have negatively impacted our financial results in recent periods. We historically have not been able to fully offset the effects of higher costs of raw materials through price increases to customers or by way of productivity improvements. Based upon our current revenue stream we estimate that a variation of $0.01 per pound of lead changes materials costs by approximately $1,000,000.

Inflation

The cost to us of manufacturing materials and labor and most other operating costs are affected by inflationary pressures. Most of our raw materials prices, steel, copper and resins, as well as fuel costs, continued to rise in fiscal year 2009 although some reductions were reflected later in the year. We generally have not been able to fully offset these higher prices through our pricing actions.

We believe that, over recent years, we have been able to offset inflationary cost increases on most items by:

• effective raw materials purchasing programs;

• increases in labor productivity;

• improvements in overall manufacturing efficiencies; and

• selective price increases of our products.

Results of Operations

The following table sets forth selected items in our consolidated statements of operations as a percentage of sales for the periods indicated.

Fiscal                                                   2009         2008         2007
NET SALES                                                100.0 %      100.0 %      100.0 %

COST OF SALES                                             87.3 %       89.6 %       86.8 %

GROSS PROFIT                                              12.7 %       10.4 %       13.2 %

OPERATING EXPENSES:
Selling, general and administrative expenses              11.4 %       10.3 %       11.6 %
Research and development expenses                          1.9 %        1.9 %        2.2 %
Gain on sale of Shanghai, China plant                      0.0 %       (4.4 )%       0.0 %

OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS        (0.6 )%       2.6 %       (0.6 )%

Interest expense, net                                      2.4 %        2.4 %        3.9 %
Other (income) expense, net                                0.5 %       (0.3 )%       0.5 %

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES AND MINORITY INTEREST                        (3.4 )%       0.5 %       (5.0 )%
Provision for income taxes from continuing
operations                                                 0.5 %        0.3 %        0.3 %

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
MINORITY INTEREST                                         (4.0 )%       0.2 %       (5.3 )%
Minority interest                                         (0.2 )%       0.8 %       (0.4 )%

NET (LOSS) INCOME FROM CONTINUING OPERATIONS              (3.8 )%      (0.6 )%      (4.9 )%

NET (LOSS) FROM DISCONTINUED OPERATIONS BEFORE
INCOME TAXES                                               0.0 %       (4.3 )%      (8.9 )%

INCOME TAX PROVISION (BENEFIT) FROM DISCONTINUED
OPERATIONS                                                 0.0 %        0.4 %        1.1 %

LOSS FROM DISCONTINUED OPERATIONS                          0.0 %       (4.7 )%     (10.0 )%

NET (LOSS) INCOME                                         (3.8 )%      (5.3 )%     (14.9 )%

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon the our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies and estimates affect the preparation of our Consolidated Financial Statements.

Revenue Recognition

We recognize revenue when the earnings process is complete. This occurs when products are shipped to the customer in accordance with terms of the agreement, title and risk of loss have been transferred, collectibility is reasonably assured and pricing is fixed or determinable. Accruals are made for sales returns and other allowances

based on our experience. While returns have historically been minimal and within the provisions established, we cannot guarantee that we will continue to experience the same return rates that we have in the past. Periodically, we enter into prepayment contracts with various customers and receive advance payments for product to be delivered in future periods. These advance payments are recorded as deferred revenue and are included in other current liabilities and other liabilities on the Consolidated Balance Sheet. Revenue associated with advance payments is recognized as shipments are made and title, ownership and risk of loss pass to the customer. Amounts billed to customers for shipping and handling fees are included in Net Sales and costs incurred by us for the delivery of goods are classified as Cost of Sales in the Consolidated Statements of Operations. Taxes on revenue producing transactions are excluded from Net Sales.

Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine the allowance based on historical write-off experience by industry and regional economic data. We review our allowance for doubtful accounts quarterly. Past due balances over 90 days and over a specified amount are reviewed individually for collectibility. All other balances are reviewed on a pooled basis by age and type of receivable. Account balances are charged off against the allowance when we believe it is probable the receivable will not be recovered. We do not have any off-balance-sheet credit exposure related to its customers.

Inventory Reserves

Inventories are stated at the lower of cost or market. During fiscal year 2008 we changed the method of accounting for Inventories from the last-in, first-out (LIFO) method to the first-in, first out (FIFO) method. As a result cost is determined by the FIFO method for all inventories. We adjust the value of our obsolete and unmarketable inventory to the estimated market value based upon assumptions of future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Market value for raw materials is based on replacement cost and for work-in-process and finished goods on net realizable value.

Valuation of Long-lived Assets

We perform periodic evaluations of the recoverability of the carrying amount of long-lived assets (including property, plant and equipment, and intangible assets with determinable lives) whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. Events or changes in circumstances are evaluated based on a number of factors including operating results, business plans and forecasts, general and industry trends and, economic projections and anticipated cash flows. Impairment is assessed when the undiscounted expected future cash flows derived from an asset are less than its carrying amount. Impairment losses are measured as the amount by which the carrying value of an asset exceeds its fair value and are recognized in earnings. We periodically evaluate the estimated useful lives of all long-lived assets and periodically revise such estimates based on current events.

Impairment of Goodwill

Goodwill represents the excess of the cost over the fair value of net assets acquired in business combinations. Goodwill is not amortized and is subject to impairment tests. Goodwill is tested for impairment on an annual basis or upon the occurrence of certain circumstances or events. We determine the fair value of our reporting units using a discounted cash flow technique adjusted for risk characteristics, also giving consideration to our overall market capitalization. The fair value of the reporting units is compared to their carrying value to determine if an impairment loss should be calculated. If the book value of a reporting unit exceeds the fair value, an impairment loss is indicated. The loss is calculated by comparing the implied fair value of the goodwill to the book value of the goodwill. If the book value of the goodwill exceeds the fair value of the goodwill, an impairment loss is recorded.

Our implied fair value is dependent upon our estimate of future discounted cash flows and other factors. Our estimates of future cash flows include assumptions concerning future operating performance and economic conditions and may differ from actual future cash flows. Estimated future cash flows are adjusted by an appropriate discount rate at the date of evaluation. The financial and credit market volatility directly impacts our fair value measurement through our weighted average cost of capital that we use to determine our discount rate and through our stock price that we use to determine our market capitalization. Therefore, changes in the stock price may also affect the amount of impairment recorded. Market capitalization is determined by multiplying the shares outstanding on the assessment date by the average market price of our common stock over a 30-day period before assessment date. We use this 30-day duration to consider inherent market fluctuations that may affect any individual closing price. We believe that our market capitalization alone does not fully capture the fair value of our business as a whole, or the substantial value that an acquirer would obtain from its ability to obtain control of our business. As such, in determining fair value, we add a control premium to our market capitalization. To estimate the control premium, we considered our competitive advantages that would likely provide synergies to a market participant. In addition, we considered external market factors which we believe contributed to the decline and volatility in our stock price that did not reflect our underlying fair value.

Employee Benefit Plans

Our pension plans and postretirement benefit plans are accounted for using actuarial valuations required by Statement of Financial Accounting Standards ("SFAS") No. 87, "Employers' Accounting for Pensions", SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" as amended by SFAS No. 158 "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans an amendment of FASB Statements No. 87, 88, 106 and
132(R)". We consider accounting for employee benefit plans critical because management is required to make significant subjective judgments about a number of actuarial assumptions, including discount rates, compensation growth, long-term return on plan assets, retirement, turnover, health care cost trend rates and mortality rates. Depending on the assumptions and estimates used, the pension and postretirement benefit expense could vary within a range of outcomes and have a material effect on reported results. In addition, the assumptions can materially affect accumulated benefit obligations and future cash funding.

Deferred Tax Valuation Allowance

We record a valuation allowance to reduce deferred tax assets to amounts that are more likely than not to be realized. While we have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowances, if we were to determine that we would be able to realize the deferred tax assets in the future in excess of our net recorded amount, an adjustment to the deferred tax asset would increase income in the period that such determination was made. Likewise, should we determine that we would not be able to realize all or part of the net deferred tax assets in the future, an adjustment to the deferred tax asset would decrease income in the period such determination was made. We regularly evaluate the need for valuation allowances against our deferred tax assets.

Warranty Reserves

We provide for the estimated cost of product warranties at the time revenue is recognized. While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of our suppliers' products and processes, our warranty obligation is affected by product failure rates, warranty replacement costs and service delivery costs incurred in correcting a product failure. Should actual product failure rates, warranty replacement costs or service delivery costs differ from our estimates, revisions to the estimated warranty liability would be made.

Litigation and Environmental Reserves

We are involved in litigation in the ordinary course of business, including personal injury, property damage and environmental litigation. We also expend funds for environmental remediation of both company-owned and

third-party locations. In accordance with SFAS No. 5, "Accounting for Contingencies" and Statement of Position 96-1, "Environmental Remediation Liabilities," we record a loss and establish a reserve for litigation or remediation when it is probable that an asset has been impaired or a liability exists and the amount of the liability can be reasonably estimated. Reasonable estimates involve judgments made by management after considering a broad range of information including: notifications, demands or settlements that have been received from a regulatory authority or private party, estimates performed by independent engineering companies and outside counsel, available facts, existing and proposed technology, the identification of other PRPs, their ability to contribute and prior experience. These judgments are reviewed quarterly as more information is received and the amounts reserved are updated as necessary. However, the reserves may materially differ from ultimate actual liabilities if the loss contingency is difficult to estimate or if management's judgments turn out to be inaccurate. If management believes no best estimate exists, the minimum loss is accrued.

Results of Operations

On August 31, 2007, we completed the sale of its Power Electronics Division for $85,000 and recognized a gain of approximately $3,900. As a result of this decision and in accordance with SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets", we present the results of operation of the Power Electronics Division for the years ended January 31, 2008, and 2007, respectively, as discontinued operations.

On September 7, 2007, we announced the change of method of accounting for its inventory from the last-in, first-out ("LIFO") to the first-in, first-out ("FIFO") method. In accordance with Statement of Financial Accounting Standards No. 154, "Accounting Changes and Error Corrections", we have retrospectively applied this change in method of inventory costing to all prior periods. See Note 1, Summary of Significant Accounting Policies, and Note 3, Inventories, in the notes to the consolidated financial statements for further discussion.

On October 24, 2007, we announced the sale of certain assets of its Motive Power Division. As a result of this decision and in accordance with SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets", we present the results of operation of the Motive Power Division for the years ended January 31, 2008 and 2007, respectively, as discontinued operations. We recorded severance of approximately $1,000, fixed asset impairments of approximately $2,500 and approximately $1,700 in inventory obsolescence in discontinued operations as a result of the sale.

On April 16, 2009 the Company determined it was necessary to restate its financial statements for previously reported quarterly financial results for fiscal 2009. The restatement corrected an accounting error related to unreconciled differences in certain inventory clearing accounts which were identified by management during the Company's year-end closing process.

Amounts previously reported for the second and third quarters of fiscal 2009 only have been restated. The restatement adjustments affected the previously reported balances of accounts payable, and cost of sales, which components affect reported gross profit, income tax provisions/(benefit) operating income from continuing operations, net income (loss) and basic and diluted earnings per share. The impact of the adjustments was to increase cost of sales and reduce income from continuing operations before income taxes and minority interest by $2,197 and $423 in the second and third quarters of fiscal 2009, respectively. As a result of these changes income tax calculations were also impacted resulting in a reduction of income tax expense by $283 and $61 in the second and third quarters of fiscal 2009, respectively. As a consequence basic earnings per share ("EPS") were reduced by 8 cents per share and 2 cents per share and diluted EPS were reduced by 8 cents per share and 1 cent per share in the second and third quarters of fiscal 2009, respectively. As a result of these adjustments cost of sales was cumulatively adjusted by $2,620 for the 9 months ended October 31, 2008, income tax expense was cumulatively adjusted by $344 and net income for the 9 months ended October 31,2008 were cumulatively adjusted by $2,276 and EPS for the corresponding 9 month period ended October 31,2008 was reduced by 9 cents per share. The restatement did not impact previously reported cash flows.

Fiscal 2009 Compared to Fiscal 2008

Continuing operations

Net sales for fiscal year 2009 increased $19,467 or 5.6% to $365,540 from $346,073 in fiscal year 2008 This increase resulted due a combination of pricing and higher sales volumes. Unit volumes were strong in our uninterrupted power supply ("UPS") market and international operations, while telecommunications and cable television were weaker.

Gross profit for fiscal 2009 increased $10,518 or 29.2% to $46,502 from $35,984. Margins increased to 12.7% from 10.4% in fiscal year 2008. This improvement is primarily due to increased sales volume, lower costs for raw materials partially offset by losses on certain lead hedges, benefits from the Company's cost reduction programs offset by fixed asset impairment and other environmental charges related to our Conyers, Georgia facility of $2,043, as well as the elimination of fiscal 2008 one time costs including severance and other costs related to the closure of the Company's Conyers, Georgia facility of approximately $2,991. Average LME prices decreased from an average of $1.21 cents per pound in fiscal year 2008 to $0.89 cents per pound in fiscal 2009.

Selling, general and administrative expenses for fiscal year 2009 increased $6,039 or 17.0% to $41,615 from $35,576. This increase was primarily due to recording restructuring charges of $1,334, higher warranty expenses of $2,310, and higher selling costs of approximately $900 related to increased sales as well as new product introduction expenses.

Research and development expenses for fiscal 2009 increased $507 or 7.9% to $6,940 from $6,433 as we invested in new product designs. As a percentage of sales, research and development expenses was 1.9% in both fiscal year 2008 and fiscal year 2009.

During fiscal 2008 the Company recognized a gain of $15,162 from the sale of it's old joint venture manufacturing facility in Shanghai, China.

We had an operating loss from continuing operations in fiscal year 2009 of $2,053 as compared to income of $9,137 in fiscal year 2008. This change was due to a number of factors summarized in the accompanying table including a one time gain on the sale of a plant located in Shanghai, China for $15,162.

Analysis of Change in Operating Income (Loss) from continuing operations for fiscal year 2009 vs. fiscal year 2008.

Fiscal Year 2009 vs. 2008
Operating income - fiscal 2008                                                $   9,137
Lead - increased costs, net                                                      (9,021 )
Fiscal 2008 - severance                                                             425
Fiscal 2008 - Gain on sale of plant in Shanghai, China                          (15,162 )
Fiscal 2008 - Conyers, Georgia closure costs                                      2,991
Pricing/Volume/Mix                                                               15,662
Restructuring costs 2009                                                         (1,334 )
Increase in warranty expense                                                     (2,310 )
Other selling general and administrative expenses                                (2,395 )
Impairment and other charges related to Conyers, Georgia facility 2009           (2,043 )
Other, including cost reduction programs                                          1,997

Operating loss - fiscal 2009                                                  $  (2,053 )

Interest expense net for fiscal year 2009 increased $541 or 6.6% to $8,787 from $8,246 in fiscal year 2008, as the Company periodically borrowed on its revolving credit facility in fiscal 2009 related to continuing operations whereas in fiscal 2008 the majority of such borrowings were to support discontinued operations.

Other expense was $1,675 in fiscal year 2009 compared to other income of $921 in fiscal year 2008. The increase in expense was primarily due to a foreign currency losses in fiscal year 2009 of $1,128 compared to gains of $1,428 in fiscal year 2008. These exchange gains and losses are principally related to movements in the Canadian dollar, Mexican peso and British pound.

Income tax expense of $1,993 was recorded in fiscal year 2009, compared to $1,063 in fiscal year 2008. Tax expense in fiscal year 2009, is primarily due to a combination of tax expense in certain profitable foreign subsidiaries principally in the United Kingdom, non-cash SFAS No. 109 expense related to the amortization of intangible assets and the impact of losses for which no tax benefit is recognized under SFAS No. 109.

Minority interest reflects the 33% ownership interest in the joint venture battery business located in Shanghai, China, that is not owned by the Company. In fiscal year 2009, the joint venture had a minority interest loss of $565 compared to $2,931 in fiscal year 2008 reflecting improved operating performance of the Company's China operations.

As a result of the above, a net loss from continuing operations of $13,943 was recorded compared to $2,182 in the prior year. On a per share basis, the net loss was $0.54 basic and $0.55 diluted in fiscal year 2009 compared to $0.09 basic and diluted in fiscal year 2008.

Other Comprehensive Loss

Other comprehensive loss increased from $28,853 in fiscal year 2008 to $35,406 in fiscal year 2009. This decrease was due to a significant increase in the minimum pension liability adjustment, which decreased by $12,430 in fiscal year 2008 as compared to an increase of $23,095 in fiscal year 2009. This was partially offset by a decrease in the net loss from $18,535 in fiscal year 2008 to $13,943, in fiscal year 2009, an unrealized loss on derivative instruments of $10,268 in fiscal year 2008 as compared to an unrealized gain of $1,451 in fiscal year 2009 and a change in the currency translation adjustments from a loss of $12,480 in fiscal 2008 to a gain of $181 in fiscal 2009. The change in the minimum pension liability adjustment was due to the decrease in our pension plan assets due to the significant losses in the overall stock market during our fiscal year.

. . .