EnerSys
Annual Report 2016

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 10-K ýAnnual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year endedMarch 31, 2016 or¨Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition periodfrom to Commission file number: 001-32253 ENERSYS (Exact name of registrant as specified in its charter) Delaware 23-3058564(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.)2366 Bernville RoadReading, 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 Name of each exchange on which registeredCommon Stock, $0.01 par value per share New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ý YES ¨ NOIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ YES ý NOIndicate 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 1934during 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 filingrequirements for the past 90 days. ý YES ¨ NOIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for suchshorter period that the registrant was required to submit and post such files). YES ý NO ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not containedherein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III ofthis Form 10-K or any amendment to this Form 10-K. ¨Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 1Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨ YES ý NOState the aggregate market value of the voting and non-voting common equity held by non-affiliates at September 27, 2015: $2,273,628,924(1) (based upon its closing transaction price on the New York Stock Exchange on September 25, 2015).(1)For this purpose only, “non-affiliates” excludes directors and executive officers.Common stock outstanding at May 27, 2016: 43,260,603 Shares of Common StockDOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive Proxy Statement for its Annual Meeting of Stockholders to be held on July 28, 2016 are incorporated by referencein Part III of this Annual Report.2CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTSThe Private Securities Litigation Reform Act of 1995 (the “Reform Act”) provides a safe harbor for forward-looking statements made by or on behalf ofEnerSys. EnerSys and its representatives may, from time to time, make written or verbal forward-looking statements, including statements contained inEnerSys' filings with the Securities and Exchange Commission ("SEC") and its reports to stockholders. Generally, the inclusion of the words “anticipates,”“believe,” “expect,” “future,” “intend,” “estimate,” “anticipate,” “will,” “plans,” or the negative of such terms and similar expressions identify statements thatconstitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of1934 and that are intended to come within the safe harbor protection provided by those sections. All statements addressing operating performance, events, ordevelopments that EnerSys expects or anticipates will occur in the future, including statements relating to sales growth, earnings or earnings per sharegrowth, and market share, as well as statements expressing optimism or pessimism about future operating results, are forward-looking statements within themeaning of the Reform Act. The forward-looking statements are and will be based on management’s then-current beliefs and assumptions regarding futureevents 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 areasonable basis for doing so, we cannot guarantee their accuracy. Actual results may differ materially from those expressed in these forward-lookingstatements due to a number of uncertainties and risks, including the risks described in this Annual Report on Form 10-K and other unforeseen risks. Youshould not put undue reliance on any forward-looking statements. These statements speak only as of the date of this Annual Report on Form 10-K, even ifsubsequently made available by us on our website or otherwise, and we undertake no obligation to update or revise these statements to reflect events orcircumstances occurring after the date of this Annual Report on Form 10-K.Our actual results may differ materially from those contemplated by the forward-looking statements for a number of reasons, including the following factors:•general cyclical patterns of the industries in which our customers operate;•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 certain hazardous substances in our products;•risks involved in our operations such as disruption of markets, changes in import and export laws, environmental regulations, currency restrictionsand 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 conditions in the markets in which we operate;•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 productsand 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;•our ability to implement business strategies, including our acquisition strategy, manufacturing expansion and restructuring plans;•our acquisition strategy may not be successful in locating advantageous targets;•our ability to successfully integrate any assets, liabilities, customers, systems and management personnel we acquire into our operations and ourability to realize related revenue synergies and cost savings within expected time frames;•potential goodwill impairment charges, future impairment charges and fluctuations in the fair values of reporting units or of assets in the eventprojected 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 andfinancing costs;•our ability to maintain our existing credit facilities or obtain satisfactory new credit facilities;•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;3•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;•terrorist acts or acts of war, could cause damage or disruption to our operations, our suppliers, channels to market or customers, or could cause coststo increase, or create political or economic instability; 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 beevaluated with the understanding of their inherent uncertainty.4EnerSysAnnual Report on Form 10-KFor the Fiscal Year Ended March 31, 2016Index PagePART I Cautionary Note Regarding Forward-Looking Statements3 Item 1.Business6 Item 1A.Risk Factors10 Item 1B.Unresolved Staff Comments16 Item 2.Properties17 Item 3.Legal Proceedings17 Item 4.Mine Safety Disclosures17 PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities18 Item 6.Selected Financial Data21 Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations22 Item 7A.Quantitative and Qualitative Disclosures About Market Risk44 Item 8.Financial Statements and Supplementary Data47 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure95 Item 9A.Controls and Procedures95 Item 9B.Other Information95 PART III Item 10.Directors, Executive Officers and Corporate Governance96 Item 11.Executive Compensation96 Item 12.Security Ownership of Certain Beneficial Owners and Management Related Stockholder Matters96 Item 13.Certain Relationships and Related Transactions, and Director Independence96 Item 14.Principal Accounting Fees and Services97 PART IV Item 15.Exhibits, Financial Statement Schedules98 Signatures1035Table of ContentsPART I ITEM 1.BUSINESSOverviewEnerSys (the “Company,” “we,” or “us”) is the world’s largest manufacturer, marketer and distributor of industrial batteries. We also manufacture, market anddistribute related products such as chargers, power equipment, outdoor cabinet enclosures and battery accessories, and we provide related after-market andcustomer-support services for industrial batteries. We market and sell our products globally to over 10,000 customers in more than 100 countries through anetwork 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 highlydecentralized with manufacturing locations throughout the world. More than half of our manufacturing capacity is located outside of the United States, andapproximately 50% of our net sales were generated outside of the United States. The Company has three reportable 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 line are as follows:•Reserve power products 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 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 powerproducts 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 handlingapplications as well as mining equipment, diesel locomotive starting and other rail equipment.Additionally, see Note 22 to the Consolidated Financial Statements for information on segment reporting.Fiscal Year ReportingIn this Annual Report on Form 10-K, when we refer to our fiscal years, we state “fiscal” and the year, as in “fiscal 2016”, which refers to our fiscal year endedMarch 31, 2016. The Company reports interim financial information for 13-week periods, except for the first quarter, which always begins on April 1, and thefourth quarter, which always ends on March 31. The four quarters in fiscal 2016 ended on June 28, 2015, September 27, 2015, December 27, 2015, andMarch 31, 2016, respectively. The four quarters in fiscal 2015 ended on June 29, 2014, September 28, 2014, December 28, 2014, and March 31, 2015,respectively.HistoryEnerSys and its predecessor companies have been manufacturers of industrial batteries for over 125 years. Morgan Stanley Capital Partners teamed with themanagement of Yuasa, Inc. in late 2000 to acquire from Yuasa Corporation (Japan) its reserve power and motive power battery businesses in North and SouthAmerica. We were incorporated in October 2000 for the purpose of completing the Yuasa, Inc. acquisition. On January 1, 2001, we changed our name fromYuasa, Inc. to EnerSys to reflect our focus on the energy systems nature of our businesses.In 2004, EnerSys completed its initial public offering (the “IPO”) and the Company’s common stock commenced trading on the New York Stock Exchange,under the trading symbol “ENS”.6Table of ContentsKey DevelopmentsThere have been several key stages in the development of our business, which explain to a significant degree our results of operations over the past severalyears.In March 2002, we acquired the reserve power and motive power business of the Energy Storage Group of Invensys plc. (“ESG”). Our successful integration ofESG provided global scale in both the reserve and motive power markets. The ESG acquisition also provided us with a further opportunity to reduce costsand improve operating efficiency that, among other initiatives, led to closing underutilized manufacturing plants, distribution facilities, sales offices andeliminating other redundant costs, including staff.During fiscal years 2003 through 2015, we made twenty-five acquisitions around the globe. In fiscal 2016, we completed the acquisition of ICS IndustriesPty. Ltd. (ICS), headquartered in Melbourne, Australia. ICS is a leading full line shelter designer and manufacturer with installation and maintenance servicesserving the telecommunications, utilities, datacenter, natural resources and transport industries operating in Australia and serving customers in the AsiaPacific region.Our CustomersWe serve over 10,000 customers in over 100 countries, on a direct basis or through our distributors. We are not overly dependent on any particular endmarket. Our customer base is highly diverse and no single customer accounts for more than 5% of our revenues.Our reserve power customers consist of both global and regional customers. These customers are in diverse markets including telecom, UPS, electric utilities,security systems, emergency lighting, premium starting, lighting and ignition applications and space satellites. In addition, we sell our aerospace and defenseproducts in numerous countries, including the governments of the U.S., Germany and the U.K. and to major defense and aviation original equipmentmanufacturers (“OEMs”).Our motive power products are sold to a large, diversified customer base. These customers include material handling equipment dealers, OEMs and end usersof such equipment. End users include manufacturers, distributors, warehouse operators, retailers, airports, mine operators and railroads.Distribution and ServicesWe distribute, sell and service reserve and motive power products throughout the world, principally through company-owned sales and service facilities, aswell as through independent manufacturers’ representatives. Our company-owned network allows us to offer high-quality service, including preventativemaintenance programs and customer support. Our warehouses and service locations enable us to respond quickly to customers in the markets we serve. Webelieve that the extensive industry experience of our sales organization results in strong long-term customer relationships.Manufacturing and Raw MaterialsWe manufacture and assemble our products at manufacturing facilities located in the Americas, EMEA and Asia. With a view toward projected demand, westrive to optimize and balance capacity at our battery manufacturing facilities globally, while simultaneously minimizing our product cost. By taking aglobal view of our manufacturing requirements and capacity, we believe we are better able to anticipate potential capacity bottlenecks and equipment andcapital funding needs.The primary raw materials used to manufacture our products include lead, plastics, steel and copper. We purchase lead from a number of leading suppliersthroughout the world. Because lead is traded on the world’s commodity markets and its price fluctuates daily, we periodically enter into hedgingarrangements for a portion of our projected requirements to reduce the volatility of our costs.CompetitionThe industrial battery market is highly competitive both among competitors who manufacture and sell industrial batteries and among customers whopurchase industrial batteries. Our competitors range from development stage companies to large domestic and international corporations. Certain of ourcompetitors produce energy storage products utilizing technologies that we do not possess at this time. We compete primarily on the basis of reputation,product quality, reliability of service, delivery and price. We believe that our products and services are competitively priced.7Table of ContentsAmericasWe believe that we have the largest market share in the Americas industrial battery market. We compete principally with East Penn Manufacturing, ExideTechnologies and New Power in both the reserve and motive products markets; and also C&D Technologies Inc., EaglePicher (OM Group), NorthStar Battery,SAFT as well as Chinese producers in the reserve products market.EMEAWe believe that we have the largest market share in the European industrial battery market. Our primary competitors are Exide Technologies, FIAMM,Hoppecke, SAFT as well as Chinese producers in the reserve products market; and Eternity, Exide Technologies, Hoppecke, Midac and TAB in the motiveproducts market.AsiaWe have a small share of the fragmented Asian industrial battery market. We compete principally with GS-Yuasa, Shin-Kobe and Zibo Torch in the motiveproducts market; and Amara Raja, China Shoto, Coslight, Exide Industries, Leoch and Narada, in the reserve products market.WarrantiesWarranties for our products vary geographically and by product type and are competitive with other suppliers of these types of products. Generally, ourreserve power product warranties range from one to twenty years and our motive power product warranties range from one to seven years. The length of ourwarranties is varied to reflect regional characteristics and competitive influences. In some cases, our warranty period may include a pro rata period, which istypically based around the design life of the product and the application served. Our warranties generally cover defects in workmanship and materials and arelimited to specific usage parameters.Intellectual PropertyWe have numerous patents and patent licenses in the United States and other jurisdictions but do not consider any one patent to be material to our business.From time to time, we apply for patents on new inventions and designs, but we believe that the growth of our business will depend primarily upon the qualityof our products and our relationships with our customers, rather than the extent of our patent protection.We believe we are leaders in thin plate pure lead technology ("TPPL"). Some aspects of this technology may be patented in the future. We believe that asignificant capital investment would be required by any party desiring to produce products using TPPL technology for our markets.We own or possess exclusive and non-exclusive licenses and other rights to use a number of trademarks in various jurisdictions. We have obtainedregistrations for many of these trademarks in the United States and other jurisdictions. Our various trademark registrations currently have durations ofapproximately 10 to 20 years, varying by mark and jurisdiction of registration and may be renewable. We endeavor to keep all of our material registrationscurrent. We believe that many such rights and licenses are important to our business by helping to develop strong brand-name recognition in themarketplace.SeasonalityOur business generally does not experience significant quarterly fluctuations in net sales as a result of weather or other trends that can be directly linked toseasonality patterns, but historically our fourth quarter is our best quarter with higher revenues and generally more working days and our second quarter is theweakest due to the summer holiday season in Western Europe and Americas.Product and Process DevelopmentOur product and process development efforts are focused on the creation and optimization of new battery products using existing technologies, which, incertain cases, differentiate our stored energy solutions from that of our competition. We allocate our resources to the following key areas:•the design and development of new products;8Table of Contents•optimizing and expanding our existing product offering;•waste and scrap reduction;•production efficiency and utilization;•capacity expansion without additional facilities; and•quality attribute maximization.EmployeesAt March 31, 2016, we had approximately 9,400 employees. Of these employees, approximately 29% were covered by collective bargaining agreements.Employees covered by collective bargaining agreements that did not exceed twelve months were approximately 7% of the total workforce. The average termof these agreements is two years, with the longest term being three years. We consider our employee relations to be good. We did not experience anysignificant labor unrest or disruption of production during fiscal 2016.Environmental MattersIn the manufacture of our products throughout the world, we process, store, dispose of and otherwise use large amounts of hazardous materials, especially leadand acid. As a result, we are subject to extensive and evolving environmental, health and safety laws and regulations governing, among other things: thegeneration, handling, storage, use, transportation and disposal of hazardous materials; emissions or discharges of hazardous materials into the ground, air orwater; and the health and safety of our employees. In addition, we are required to comply with the regulation issued from the European Union calledRegistration, Evaluation, Authorization and Restriction of Chemicals or “REACH,” that came into force on June 1, 2007. Under the regulation, companieswhich manufacture or import more than one ton of a covered chemical substance per year are required to register it in a central database administered by theEuropean Chemicals Agency. REACH requires a registration over a period of 11 years. Compliance with these laws and regulations results in ongoing costs.Failure to comply with these laws and regulations, or to obtain or comply with required environmental permits, could result in fines, criminal charges or othersanctions by regulators. From time to time, we have had instances of alleged or actual noncompliance that have resulted in the imposition of fines, penaltiesand required corrective actions. Our ongoing compliance with environmental, health and safety laws, regulations and permits could require us to incursignificant expenses, limit our ability to modify or expand our facilities or continue production and require us to install additional pollution controlequipment and make other capital improvements. In addition, private parties, including current or former employees, can bring personal injury or otherclaims against us due to the presence of, or their exposure to, hazardous substances used, stored, transported or disposed of by us or contained in our products.Sumter, South CarolinaWe currently are responsible for certain environmental obligations at our former battery facility in Sumter, South Carolina, that predate our ownership of thisfacility. This battery facility was closed in 2001 and is separate from our current metal fabrication facility in Sumter. We have a reserve for this facility thattotaled $1.1 million as of March 31, 2016. Based on current information, we believe this reserve is adequate to satisfy our environmental liabilities at thisfacility.Environmental and safety certificationsSixteen of our facilities in the Americas, EMEA and Asia are certified to ISO 14001 standards. ISO 14001 is a globally recognized, voluntary program thatfocuses on the implementation, maintenance and continual improvement of an environmental management system and the improvement of environmentalperformance. Seven facilities in Europe and one in Africa are certified to OHSAS 18001 standards. OHSAS 18001 is a globally recognized occupationalhealth and safety management systems standard.Quality SystemsWe utilize a global strategy for quality management systems, policies and procedures, the basis of which is the ISO 9001:2008 standard, which is a worldwiderecognized quality standard. We believe in the principles of this standard and reinforce this by requiring mandatory compliance for all manufacturing, salesand service locations globally that are registered to the ISO 9001 standard. This strategy enables us to provide consistent quality products and services tomeet our customers’ needs.9Table of ContentsAvailable InformationWe file annual, quarterly and current reports, proxy statements and other information with the SEC. These filings are available to the public on the Internet atthe SEC’s website at http://www.sec.gov. You may also read and copy any document we file with the SEC at the SEC’s public reference room, located at 100F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room.Our Internet address is http://www.enersys.com. We make available free of charge on http://www.enersys.com our annual, quarterly and current reports, andamendments to those reports, as soon as reasonably practical after we electronically file such material with, or furnish it to, the SEC.ITEM 1A.RISK FACTORSThe following risks and uncertainties, as well as others described in this Annual Report on Form 10-K, could materially and adversely affect our business, ourresults of operations and financial conditions and could cause actual results to differ materially from our expectations and projections. Stockholders arecautioned that these and other factors, including those beyond our control, may affect future performance and cause actual results to differ from those whichmay, from time to time, be anticipated. There may be additional risks that are not presently material or known. See “Cautionary Note Regarding Forward-Looking Statements.” All forward-looking statements made by us or on our behalf are qualified by the risks described below.We operate in an extremely competitive industry and are subject to pricing pressures.We compete with a number of major international manufacturers and distributors, as well as a large number of smaller, regional competitors. Due to excesscapacity in some sectors of our industry and consolidation among industrial battery purchasers, we have been subjected to significant pricing pressures. Weanticipate continued competitive pricing pressure as foreign producers are able to employ labor at significantly lower costs than producers in the U.S. andWestern Europe, expand their export capacity and increase their marketing presence in our major Americas and European markets. Several of our competitorshave strong technical, marketing, sales, manufacturing, distribution and other resources, as well as significant name recognition, established positions in themarket and long-standing relationships with OEMs and other customers. In addition, certain of our competitors own lead smelting facilities which, duringperiods of lead cost increases or price volatility, may provide a competitive pricing advantage and reduce their exposure to volatile raw material costs. Ourability to maintain and improve our operating margins has depended, and continues to depend, on our ability to control and reduce our costs. We cannotassure you that we will be able to continue to control our operating expenses, to raise or maintain our prices or increase our unit volume, in order to maintainor improve our operating results.The uncertainty in global economic conditions could negatively affect the Company’s operating results.Our operating results are directly affected by the general global economic conditions of the industries in which our major customer groups operate. Ourbusiness segments are highly dependent on the economic and market conditions in each of the geographic areas in which we operate. Our products areheavily dependent on the end markets that we serve and our operating results will vary by geographic segment, depending on the economic environment inthese markets. Sales of our motive power products, for example, depend significantly on demand for new electric industrial forklift trucks, which in turndepends on end-user demand for additional motive capacity in their distribution and manufacturing facilities. The uncertainty in global economic conditionsvaries by geographic segment, and can result in substantial volatility in global credit markets, particularly in the United States, where we service the vastmajority of our debt. These conditions affect our business by reducing prices that our customers may be able or willing to pay for our products or by reducingthe demand for our products, which could in turn negatively impact our sales and earnings generation and result in a material adverse effect on our business,cash flow, results of operations and financial position.10Table of ContentsGovernment reviews, inquiries, investigations, and actions could harm our business or reputation. As we operate in various locations around the world, our operations in certain countries are subject to significant governmental scrutiny and may beadversely impacted by the results of such scrutiny. The regulatory environment with regard to our business is evolving, and officials often exercise broaddiscretion in deciding how to interpret and apply applicable regulations. From time to time, we receive formal and informal inquiries from variousgovernment regulatory authorities, as well as self-regulatory organizations, about our business and compliance with local laws, regulations or standards. Forexample, certain of the Company’s European subsidiaries have received subpoenas and requests for documents and, in some cases, interviews from, and havehad on-site inspections conducted by the competition authorities of Belgium, Germany and the Netherlands relating to conduct and anticompetitivepractices of certain industrial battery participants. The Company is responding to inquiries related to these matters. The Company settled the Belgianregulatory proceeding in February 2016 by acknowledging certain anticompetitive practices and conduct and agreeing to pay a fine of $2.0 million. (SeeNote 18 to the Consolidated Financial Statements for additional details.) Any determination that our operations or activities, or the activities of ouremployees, are not in compliance with existing laws, regulations or standards could result in the imposition of substantial fines, interruptions of business,loss of supplier, vendor or other third-party relationships, termination of necessary licenses and permits, or similar results, all of which could potentially harmour business and/or reputation. Even if an inquiry does not result in these types of determinations, regulatory authorities could cause us to incur substantialcosts or require us to change our business practices in a manner materially adverse to our business, and it potentially could create negative publicity whichcould harm our business and/or reputation.Reliance on third party relationships and derivative agreements could adversely affect the Company’s business.We depend on third parties, including suppliers, distributors, lead toll operators, freight forwarders, insurance brokers, commodity brokers, major financialinstitutions and other third party service providers, for key aspects of our business, including the provision of derivative contracts to manage risks of (a) leadcost volatility, (b) foreign currency exposures and (c) interest rate volatility. Failure of these third parties to meet their contractual, regulatory and otherobligations to the Company, or the development of factors that materially disrupt our relationships with these third parties, could expose us to the risks ofbusiness disruption, higher lead costs, unfavorable foreign currency rates and higher expenses, which could have a material adverse effect on our business.Our operating results could be adversely affected by changes in the cost and availability of raw materials.Lead is our most significant raw material and is used along with significant amounts of plastics, steel, copper and other materials in our manufacturingprocesses. We estimate that raw material costs account for over half of our cost of goods sold. The costs of these raw materials, particularly lead, are volatileand beyond our control. Additionally, availability of the raw materials used to manufacture our products may be limited at times resulting in higher pricesand/or the need to find alternative suppliers. Furthermore, the cost of raw materials may also be influenced by transportation costs. Volatile raw material costscan significantly affect our operating results and make period-to-period comparisons extremely difficult. We cannot assure you that we will be able to eitherhedge the costs or secure the availability of our raw material requirements at a reasonable level or, even with respect to our agreements that adjust pricing to amarket-based index for lead, pass on to our customers the increased costs of our raw materials without affecting demand or that limited availability ofmaterials will not impact our production capabilities. Our inability to raise the price of our products in response to increases in prices of raw materials or tomaintain a proper supply of raw materials could have an adverse effect on our revenue, operating profit and net income.Our operations expose us to litigation, tax, environmental and other legal compliance risks.We are subject to a variety of litigation, tax, environmental, health and safety and other legal compliance risks. These risks include, among other things,possible liability relating to product liability matters, personal injuries, intellectual property rights, contract-related claims, government contracts, taxes,health and safety liabilities, environmental matters and compliance with U.S. and foreign laws, competition laws and laws governing improper businesspractices. We or one of our business units could be charged with wrongdoing as a result of such matters. If convicted or found liable, we could be subject tosignificant fines, penalties, repayments or other damages (in certain cases, treble damages). As a global business, we are subject to complex laws andregulations in the U.S. and other countries in which we operate. Those laws and regulations may be interpreted in different ways. They may also change fromtime to time, as may related interpretations and other guidance. Changes in laws or regulations could result in higher expenses and payments, and uncertaintyrelating to laws or regulations may also affect how we conduct our operations and structure our investments and could limit our ability to enforce our rights.In the area of taxes, changes in tax laws and regulations, as well as changes in related interpretations and other tax guidance could materially impact our taxreceivables and liabilities and our deferred tax assets and tax liabilities. Additionally, in the11Table of Contentsordinary course of business, we are subject to examinations by various authorities, including tax authorities. In addition to ongoing investigations, therecould be additional investigations launched in the future by governmental authorities in various jurisdictions and existing investigations could beexpanded. The global and diverse nature of our operations means that these risks will continue to exist and additional legal proceedings and contingencieswill arise from time to time. Our results may be affected by the outcome of legal proceedings and other contingencies that cannot be predicted with certainty.In the manufacture of our products throughout the world, we process, store, dispose of and otherwise use large amounts of hazardous materials, especially leadand acid. As a result, we are subject to extensive and changing environmental, health and safety laws and regulations governing, among other things: thegeneration, handling, storage, use, transportation and disposal of hazardous materials; remediation of polluted ground or water; emissions or discharges ofhazardous materials into the ground, air or water; and the health and safety of our employees. Compliance with these laws and regulations results in ongoingcosts. Failure to comply with these laws or regulations, or to obtain or comply with required environmental permits, could result in fines, criminal charges orother sanctions by regulators. From time to time we have had instances of alleged or actual noncompliance that have resulted in the imposition of fines,penalties and required corrective actions. Our ongoing compliance with environmental, health and safety laws, regulations and permits could require us toincur significant expenses, limit our ability to modify or expand our facilities or continue production and require us to install additional pollution controlequipment and make other capital improvements. In addition, private parties, including current or former employees, could bring personal injury or otherclaims against us due to the presence of, or exposure to, hazardous substances used, stored or disposed of by us or contained in our products.Certain environmental laws assess liability on owners or operators of real property for the cost of investigation, removal or remediation of hazardoussubstances at their current or former properties or at properties at which they have disposed of hazardous substances. These laws may also assess costs torepair damage to natural resources. We may be responsible for remediating damage to our properties that was caused by former owners. Soil and groundwatercontamination has occurred at some of our current and former properties and may occur or be discovered at other properties in the future. We are currentlyinvestigating and monitoring soil and groundwater contamination at several of our properties, in most cases as required by regulatory permitting processes.We may be required to conduct these operations at other properties in the future. In addition, we have been and in the future may be liable to contribute to thecleanup of locations owned or operated by other persons to which we or our predecessor companies have sent wastes for disposal, pursuant to federal andother environmental laws. Under these laws, the owner or operator of contaminated properties and companies that generated, disposed of or arranged for thedisposal of wastes sent to a contaminated disposal facility can be held jointly and severally liable for the investigation and cleanup of such properties,regardless of fault. Additionally, our products may become subject to fees and taxes in order to fund cleanup of such properties, including those operated orused by other lead-battery industry participants.Changes in environmental and climate laws or regulations, could lead to new or additional investment in production designs and could increaseenvironmental compliance expenditures. Changes in climate change concerns, or in the regulation of such concerns, including greenhouse gas emissions,could subject us to additional costs and restrictions, including increased energy and raw materials costs. Additionally, we cannot assure you that we havebeen or at all times will be in compliance with environmental laws and regulations or that we will not be required to expend significant funds to comply with,or discharge liabilities arising under, environmental laws, regulations and permits, or that we will not be exposed to material environmental, health or safetylitigation.Also, the U.S. Foreign Corrupt Practices Act (“FCPA”) and similar worldwide anti-bribery laws in non-U.S. jurisdictions generally prohibit companies andtheir intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. The FCPA applies to companies,individual directors, officers, employees and agents. Under the FCPA, U.S. companies may be held liable for actions taken by strategic or local partners orrepresentatives. The FCPA also imposes accounting standards and requirements on publicly traded U.S. corporations and their foreign affiliates, which areintended to prevent the diversion of corporate funds to the payment of bribes and other improper payments. Certain of our customer relationships outside ofthe U.S. are with governmental entities and are therefore subject to such anti-bribery laws. Our policies mandate compliance with these anti-bribery laws.Despite meaningful measures that we undertake to facilitate lawful conduct, which include training and internal control policies, these measures may notalways prevent reckless or criminal acts by our employees or agents. As a result, we could be subject to criminal and civil penalties, disgorgement, furtherchanges or enhancements to our procedures, policies and controls, personnel changes or other remedial actions. Violations of these laws, or allegations ofsuch violations, could disrupt our operations, involve significant management distraction and result in a material adverse effect on our competitive position,results of operations, cash flows or financial condition.There is also a regulation to improve the transparency and accountability concerning the supply of minerals coming from the conflict zones in and aroundthe Democratic Republic of Congo. New U.S. legislation includes disclosure requirements regarding the use of conflict minerals mined from the DemocraticRepublic of Congo and adjoining countries and procedures12Table of Contentsregarding a manufacturer’s efforts to prevent the sourcing of such conflict minerals. The implementation of these requirements could affect the sourcing andavailability of minerals used in the manufacture of our products. As a result, there may only be a limited pool of suppliers who provide conflict-free metals,and we cannot assure you that we will be able to obtain products in sufficient quantities or at competitive prices. Future regulations may become morestringent or costly and our compliance costs and potential liabilities could increase, which may harm our business.We are exposed to exchange rate risks, and our net earnings and financial condition may suffer due to currency translations.We invoice our foreign sales and service transactions in local and foreign currencies and translate net sales using actual exchange rates during the period. Wetranslate our non-U.S. assets and liabilities into U.S. dollars using current exchange rates as of the balance sheet dates. Because a significant portion of ourrevenues and expenses are denominated in foreign currencies, changes in exchange rates between the U.S. dollar and foreign currencies, primarily the euro,British pound, Polish zloty, Chinese renminbi, Mexican peso and Swiss franc may adversely affect our revenue, cost of goods sold and operating margins. Forexample, foreign currency depreciation against the U.S. dollar will reduce the value of our foreign revenues and operating earnings as well as reduce our netinvestment in foreign subsidiaries. Approximately 50% of net sales were generated outside of the United States for the last three fiscal years.Most of the risk of fluctuating foreign currencies is in our EMEA segment, which comprised approximately 40% of our net sales during the last three fiscalyears. The euro is the dominant currency in our EMEA operations. In the event that one or more European countries were to replace the euro with anothercurrency, our sales into such countries, or into Europe generally, would likely be adversely affected until stable exchange rates are established.The translation impact from currency fluctuations on net sales and operating earnings in our Americas and Asia segments are not as significant as our EMEAsegment, as a substantial majority of these net sales and operating earnings are in U.S. dollars or foreign currencies that have been closely correlated to theU.S. dollar.If foreign currencies depreciate against the U.S. dollar, it would make it more expensive for our non-U.S. subsidiaries to purchase certain of our raw materialcommodities that are priced globally in U.S. dollars, while the related revenue will decrease when translated to U.S. dollars. Significant movements in foreignexchange rates can have a material impact on our results of operations and financial condition. We periodically engage in hedging of our foreign currencyexposures, but cannot assure you that we can successfully hedge all of our foreign currency exposures or do so at a reasonable cost.We quantify and monitor our global foreign currency exposures. Our largest foreign currency exposure is from the purchase and conversion of U.S. dollarbased lead costs into local currencies in Europe. Additionally, we have currency exposures from intercompany financing and intercompany and third partytrade transactions. On a selective basis, we enter into foreign currency forward contracts and purchase option contracts to reduce the impact from thevolatility of currency movements; however, we cannot be certain that foreign currency fluctuations will not impact our operations in the future.If we are unable to effectively hedge against currency fluctuations, our operating costs and revenues in our non-U.S. operations may be adversely affected,which would have an adverse effect on our operating profit and net income.We may experience difficulties implementing our new global enterprise resource planning system.We are engaged in a multi-year implementation of a new global enterprise resource planning system (“ERP”). The ERP is designed to efficiently maintain ourbooks and records and provide information important to the operation of our business to our management team. The ERP will continue to require significantinvestment of human and financial resources. In implementing the ERP, we may experience significant delays, increased costs and other difficulties. Anysignificant disruption or deficiency in the design and implementation of the ERP could adversely affect our ability to process orders, ship product, sendinvoices and track payments, fulfill contractual obligations or otherwise operate our business. While we have invested significant resources in planning,project management and training, additional and significant implementation issues may arise. In addition, our efforts to centralize various business processesand functions within our organization in connection with our ERP implementation may disrupt our operations and negatively impact our business, results ofoperations and financial condition.13Table of ContentsOur international operations may be adversely affected by actions taken by foreign governments or other forces or events over which we may have nocontrol.We currently have significant manufacturing and/or distribution facilities outside of the United States, in Argentina, Australia, Belgium, Brazil, Bulgaria,Canada, the Czech Republic, France, Germany, India, Italy, Malaysia, Mexico, PRC, Poland, South Africa, Spain, Switzerland, Tunisia and the UnitedKingdom. We may face political instability, economic uncertainty, and/or difficult labor relations in our foreign operations. We also may face barriers in theform of long-standing relationships between potential customers and their existing suppliers, national policies favoring domestic manufacturers andprotective regulations including exchange controls, restrictions on foreign investment or the repatriation of profits or invested capital, changes in export orimport restrictions and changes in the tax system or rate of taxation in countries where we do business. We cannot assure you that we will be able tosuccessfully develop and expand our international operations and sales or that we will be able to overcome the significant obstacles and risks of ourinternational operations. This may impair our ability to compete with battery manufacturers who are based in such foreign countries or who have longestablished manufacturing or distribution facilities or networks in such countries.Our failure to introduce new products and product enhancements and broad market acceptance of new technologies introduced by our competitors couldadversely affect our business.Many new energy storage technologies have been introduced over the past several years. For certain important and growing markets, such as aerospace anddefense, lithium-based battery technologies have a large and growing market share. Our ability to achieve significant and sustained penetration of keydeveloping markets, including aerospace and defense, will depend upon our success in developing or acquiring these and other technologies, eitherindependently, through joint ventures or through acquisitions. If we fail to develop or acquire, and manufacture and sell, products that satisfy our customers’demands, or we fail to respond effectively to new product announcements by our competitors by quickly introducing competitive products, then marketacceptance of our products could be reduced and our business could be adversely affected. We cannot assure you that our lead-acid products will remaincompetitive with products based on new technologies.We may not be able to adequately protect our proprietary intellectual property and technology.We rely on a combination of copyright, trademark, patent and trade secret laws, non-disclosure agreements and other confidentiality procedures andcontractual provisions to establish, protect and maintain our proprietary intellectual property and technology and other confidential information. Certain ofthese technologies, especially TPPL technology, are important to our business and are not protected by patents. Despite our efforts to protect our proprietaryintellectual property and technology and other confidential information, unauthorized parties may attempt to copy or otherwise obtain and use ourintellectual property and proprietary technologies. If we are unable to protect our intellectual property and technology, we may lose any technologicaladvantage we currently enjoy and may be required to take an impairment charge with respect to the carrying value of such intellectual property or goodwillestablished in connection with the acquisition thereof. In either case, our operating results and net income may be adversely affected.Relocation of our customers’ operations could adversely affect our business.The trend by a number of our North American and Western European customers to move manufacturing operations and expand their businesses in fastergrowing and low labor-cost markets may have an adverse impact on our business. As our customers in traditional manufacturing-based industries seek tomove their manufacturing operations to these locations, there is a risk that these customers will source their energy storage products from competitors locatedin those territories and will cease or reduce the purchase of products from our manufacturing plants. We cannot assure you that we will be able to competeeffectively with manufacturing operations of energy storage products in those territories, whether by establishing or expanding our manufacturing operationsin those lower-cost territories or acquiring existing manufacturers.We may fail to implement our cost reduction initiatives successfully and improve our profitability.We must continue to implement cost reduction initiatives to achieve additional cost savings in future periods. We cannot assure you that we will be able toachieve all of the cost savings that we expect to realize from current or future initiatives. In particular, we may be unable to implement one or more of ourinitiatives successfully or we may experience unexpected cost increases that offset the savings that we achieve. Given the continued competitive pricingpressures experienced in our industry, our failure to realize cost savings would adversely affect our results of operations.14Table of ContentsQuality problems with our products could harm our reputation and erode our competitive position.The success of our business will depend upon the quality of our products and our relationships with customers. In the event that our products fail to meet ourcustomers’ standards, our reputation could be harmed, which would adversely affect our marketing and sales efforts. We cannot assure you that our customerswill not experience quality problems with our products.We offer our products under a variety of brand names, the protection of which is important to our reputation for quality in the consumer marketplace.We rely upon a combination of trademark, licensing and contractual covenants to establish and protect the brand names of our products. We have registeredmany of our trademarks in the U.S. Patent and Trademark Office and in other countries. In many market segments, our reputation is closely related to ourbrand names. Monitoring unauthorized use of our brand names is difficult, and we cannot be certain that the steps we have taken will prevent theirunauthorized use, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the U.S. We cannot assure you that ourbrand names will not be misappropriated or utilized without our consent or that such actions will not have a material adverse effect on our reputation and onour results of operations.We may fail to implement our plans to make acquisitions or successfully integrate them into our operations.As part of our business strategy, we have grown, and plan to continue growing, by acquiring other product lines, technologies or facilities that complement orexpand our existing business. There is significant competition for acquisition targets in the industrial battery industry. We may not be able to identifysuitable acquisition candidates or negotiate attractive terms. In addition, we may have difficulty obtaining the financing necessary to complete transactionswe pursue. In that regard, our credit facilities restrict the amount of additional indebtedness that we may incur to finance acquisitions and place otherrestrictions on our ability to make acquisitions. Exceeding any of these restrictions would require the consent of our lenders. We may be unable tosuccessfully integrate any assets, liabilities, customers, systems and management personnel we acquire into our operations and we may not be able to realizerelated revenue synergies and cost savings within expected time frames. Our failure to execute our acquisition strategy could have a material adverse effecton our business. We cannot assure you that our acquisition strategy will be successful or that we will be able to successfully integrate acquisitions we domake.Any acquisitions that we complete may dilute stockholder ownership interests in EnerSys, may have adverse effects on our financial condition and results ofoperations and may cause unanticipated liabilities.Future acquisitions may involve the issuance of our equity securities as payment, in part or in full, for the businesses or assets acquired. Any future issuancesof equity securities would dilute stockholder ownership interests. In addition, future acquisitions might not increase, and may even decrease our earnings orearnings per share and the benefits derived by us from an acquisition might not outweigh or might not exceed the dilutive effect of the acquisition. We alsomay incur additional debt or suffer adverse tax and accounting consequences in connection with any future acquisitions.The failure or security breach of critical computer systems could seriously affect our sales and operations.We operate a number of critical computer systems throughout our business that can fail for a variety of reasons. If such a failure were to occur, we may not beable to sufficiently recover from the failure in time to avoid the loss of data or any adverse impact on certain of our operations that are dependent on suchsystems. This could result in lost sales and the inefficient operation of our facilities for the duration of such a failure.In addition, our computer systems are essential for the exchange of information both within the company and in communicating with third parties. Despiteour efforts to protect the integrity of our systems and network as well as sensitive, confidential or personal data or information, our facilities and systems andthose of our third-party service providers may be vulnerable to security breaches, theft, misplaced or lost data, programming and/or human errors that couldpotentially lead to the compromising of sensitive, confidential or personal data or information, improper use of our systems, software solutions or networks,unauthorized access, use, disclosure, modification or destruction of information, defective products, production downtimes and operational disruptions,which in turn could adversely affect our reputation, competitiveness, and results of operations.Our ability to maintain adequate credit facilities.Our ability to continue our ongoing business operations and fund future growth depends on our ability to maintain adequate credit facilities and to complywith the financial and other covenants in such credit facilities or to secure alternative sources of15Table of Contentsfinancing. However, such credit facilities or alternate financing may not be available or, if available, may not be on terms favorable to us. If we do not haveadequate access to credit, we may be unable to refinance our existing borrowings and credit facilities when they mature and to fund future acquisitions, andthis may reduce our flexibility in responding to changing industry conditions.Our indebtedness could adversely affect our financial condition and results of operations.As of March 31, 2016, we had $628.6 million of total consolidated debt (including capital lease obligations). This level of debt could:•increase our vulnerability to adverse general economic and industry conditions, including interest rate fluctuations, because a portion of ourborrowings bear, and will continue to bear, interest at floating rates;•require us to dedicate a substantial portion of our cash flow from operations to debt service payments, which would reduce the availability of our cashto fund working capital, capital expenditures or other general corporate purposes, including acquisitions;•limit our flexibility in planning for, or reacting to, changes in our business and industry;•restrict our ability to introduce new products or new technologies or exploit business opportunities;•place us at a disadvantage compared with competitors that have proportionately less debt;•limit our ability to borrow additional funds in the future, if we need them, due to financial and restrictive covenants in our debt agreements; and•have a material adverse effect on us if we fail to comply with the financial and restrictive covenants in our debt agreements.There can be no assurance that we will continue to declare cash dividends at all or in any particular amounts.During fiscal 2016, we announced the declaration of a quarterly cash dividend of $0.175 per share of common stock for quarters ended June 28, 2015,September 27, 2015, December 27, 2015 and March 31, 2016. On May 5, 2016, we announced a fiscal 2017 first quarter cash dividend of $0.175 per share ofcommon stock. Future payment of a regular quarterly cash dividend on our common shares will be subject to, among other things, our results of operations,cash balances and future cash requirements, financial condition, statutory requirements of Delaware law, compliance with the terms of existing and futureindebtedness and credit facilities, and other factors that the Board of Directors may deem relevant. Our dividend payments may change from time to time, andwe cannot provide assurance that we will continue to declare dividends at all or in any particular amounts. A reduction in or elimination of our dividendpayments could have a negative effect on our share price.We depend on our senior management team and other key employees, and significant attrition within our management team or unsuccessful successionplanning could adversely affect our business.Our success depends in part on our ability to attract, retain and motivate senior management and other key employees. Achieving this objective may bedifficult due to many factors, including fluctuations in global economic and industry conditions, competitors’ hiring practices, cost reduction activities, andthe effectiveness of our compensation programs. Competition for qualified personnel can be very intense. We must continue to recruit, retain and motivatesenior management and other key employees sufficient to maintain our current business and support our future projects. We are vulnerable to attrition amongour current senior management team and other key employees. A loss of any such personnel, or the inability to recruit and retain qualified personnel in thefuture, could have an adverse effect on our business, financial condition and results of operations. In addition, if we are unsuccessful in our successionplanning efforts, the continuity of our business and results of operations could be adversely affected. ITEM 1B.UNRESOLVED STAFF COMMENTSNone.16Table of ContentsITEM 2.PROPERTIESThe Company’s worldwide headquarters is located in Reading, Pennsylvania. Geographic headquarters for our Americas, EMEA and Asia segments arelocated in Reading, Pennsylvania, Zug, Switzerland and Singapore, respectively. The Company owns approximately 80% of its manufacturing facilities anddistribution centers worldwide. The following sets forth the Company’s principal owned or leased facilities by business segment:Americas: Sylmar, California; Longmont, Colorado; Hays, Kansas; Richmond, Kentucky; Warrensburg, Missouri; Cleveland, Ohio; Horsham,Pennsylvania; Sumter, South Carolina; Ooltewah, Tennessee and Spokane, Washington in the United States; Monterrey and Tijuana in Mexico; BuenosAires, Argentina and Sao Paulo, in Brazil.EMEA: Targovishte, Bulgaria; Hostomice, Czech Republic; Arras, France; Hagen and Zwickau in Germany; Bielsko-Biala, Poland; Newport andCulham in the United Kingdom; Port Elizabeth, South Africa; and Tunis, Tunisia.Asia: Jiangsu, Chongqing and Yangzhou in the PRC and Andhra Pradesh in India.We consider our plants and facilities, whether owned or leased, to be in satisfactory condition and adequate to meet the needs of our current businesses andprojected growth. Information as to material lease commitments is included in Note 9 - Leases to the Consolidated Financial Statements.ITEM 3.LEGAL PROCEEDINGSFrom time to time, we are involved in litigation incidental to the conduct of our business. See Litigation and Other Legal Matters in Note 18 - Commitments,Contingencies and Litigation to the Consolidated Financial Statements, which is incorporated herein by reference.ITEM 4.MINE SAFETY DISCLOSURESNot applicable.17Table of ContentsPART IIITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIESMarket InformationThe Company’s common stock has been listed on the New York Stock Exchange under the symbol “ENS” since it began trading on July 30, 2004. Prior tothat time, there had been no public market for our common stock. The following table sets forth, on a per share basis for the periods presented, the range ofhigh, low and closing prices of the Company’s common stock. Quarter Ended High Price Low Price Closing Price Dividends DeclaredMarch 31, 2016 $58.89 $42.60 $55.72 $0.175December 27, 2015 66.95 51.02 57.18 0.175September 27, 2015 71.85 49.21 51.66 0.175June 28, 2015 73.27 63.63 71.58 0.175 March 31, 2015 $66.89 $57.47 $64.24 $0.175December 28, 2014 63.39 50.63 61.78 0.175September 28, 2014 70.00 57.88 60.07 0.175June 29, 2014 71.94 62.72 68.91 0.175Holders of RecordAs of May 27, 2016, there were approximately 370 record holders of common stock of the Company. Because many of these shares are held by brokers andother institutions on behalf of stockholders, the Company is unable to estimate the total number of stockholders represented by these record holders.Recent Sales of Unregistered SecuritiesDuring the fourth quarter of fiscal 2016, we did not issue any unregistered securities.Purchases of Equity Securities by the Issuer and Affiliated PurchasersThe following table summarizes the number of shares of common stock we purchased from participants in our equity incentive plans as well as repurchases ofcommon stock authorized by the Board of Directors. As provided by the Company’s equity incentive plans, (a) vested options outstanding may be exercisedthrough surrender to the Company of option shares or vested options outstanding under the Company’s equity incentive plans to satisfy the applicableaggregate exercise price (and any withholding tax) required to be paid upon such exercise and (b) the withholding tax requirements related to the vesting andsettlement of restricted stock units and market share units may be satisfied by the surrender of shares of the Company’s common stock.18Table of ContentsPurchases of Equity Securities Period (a)Total numberof shares (orunits)purchased (b)Average pricepaid per share(or unit) (c)Total number ofshares (or units)purchased as part ofpublicly announcedplans or programs (d)Maximum number(or approximatedollar value) of shares(or units) that may bepurchased under theplans or programs(1)(2)December 28, 2015 - January 24, 2016 961,444 $60.63 961,444 $38,600,000January 25, 2016 - February 21, 2016 131,962 44.38 131,962 32,743,463February 22, 2016 - March 31, 2016 113,352 47.27 113,352 27,385,432Total 1,206,758 $57.60 1,206,758 (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 anyequity-based award granted during such fiscal year under the Second Amended and Restated 2010 Equity Incentive Plan and the number of sharesexercised through stock option awards during such fiscal year. This repurchase program was exhausted for fiscal 2016.(2) The Company's Board of Directors has authorized the Company to repurchase up to a $180 million of its common stock. On August 13, 2015, theCompany prepaid $180 million, pursuant to an accelerated share repurchase (“ASR”) with a major financial institution, and received an initial deliveryof 2,000,000 shares. On January 13, 2016, the ASR was settled and the Company received an additional 961,444 shares and $13.6 million in cash for theremaining amount not settled in shares. The Company repurchased a total of 2,961,444 shares under the ASR for a total cash investment of $166.4million at an average price of $56.19. The Company also purchased an additional 245,314 shares during the fourth quarter through open markettransactions for a total cash investment of $11.2 million at an average price of $45.72.19Table of ContentsSTOCK PERFORMANCE GRAPHThe following graph compares the changes in cumulative total returns on EnerSys’ common stock with the changes in cumulative total returns of the New York Stock ExchangeComposite Index, a broad equity market index, and the total return on a selected peer group index. The peer group selected is based on the standard industrial classification codes(“SIC Codes”) established by the U.S. government. The index chosen was “Miscellaneous Electrical Equipment and Suppliers” and comprises all publicly traded companies havingthe same three-digit SIC Code (369) as EnerSys.The graph was prepared assuming that $100 was invested in EnerSys’ common stock, the New York Stock Exchange Composite Index and the peer group(duly updated for changes) on March 31, 2011.*$100 invested on March 31, 2011 in stock or index, including reinvestment of dividends.20Table of ContentsITEM 6.SELECTED FINANCIAL DATA Fiscal Year Ended March 31, 2016 2015 2014 2013 2012 (In thousands, except share and per share data)Consolidated Statements of Income: Net sales $2,316,249 $2,505,512 $2,474,433 $2,277,559 $2,283,369Cost of goods sold 1,704,472 1,864,601 1,844,813 1,708,203 1,770,664Gross profit 611,777 640,911 629,620 569,356 512,705Operating expenses 352,767 358,381 344,421 312,324 297,806Restructuring and other exit charges 12,978 11,436 27,326 7,164 4,988Impairment of goodwill, indefinite-lived intangiblesand fixed assets 36,252 23,946 5,179 — —Legal proceedings charge / (reversal of legal accrual,net of fees) 3,201 (16,233) 58,184 — (900)Gain on sale of facility (3,420) — — — —Operating earnings 209,999 263,381 194,510 249,868 210,811Interest expense 22,343 19,644 17,105 18,719 16,484Other (income) expense, net 5,719 (5,602) 13,658 916 3,068Earnings before income taxes 181,937 249,339 163,747 230,233 191,259Income tax expense 50,113 67,814 16,980 65,275 47,292Net earnings 131,824 181,525 146,767 164,958 143,967Net (losses) earnings attributable to noncontrollinginterests (4,326) 337 (3,561) (1,550) (36)Net earnings attributable to EnerSys stockholders $136,150 $181,188 $150,328 $166,508 $144,003Net earnings per common share attributable toEnerSys stockholders: Basic $3.08 $3.97 $3.17 $3.47 $2.95Diluted $2.99 $3.77 $3.02 $3.42 $2.93Weighted-average number of common sharesoutstanding: Basic 44,276,713 45,606,317 47,473,690 48,022,005 48,748,205Diluted 45,474,130 48,052,729 49,788,155 48,635,449 49,216,035 Fiscal Year Ended March 31, 2016 2015 2014 2013 2012 (In thousands)Consolidated cash flow data: Net cash provided by operating activities $307,571 $194,471 $193,621 $244,400 $204,196Net cash used in investing activities (80,923) (59,616) (232,005) (55,092) (72,420)Net cash (used in) provided by financing activities (105,729) (59,313) 21,562 (95,962) (79,382)Other operating data: Capital expenditures 55,880 63,625 61,995 55,286 48,943 As of March 31, 2016 2015 2014 2013 2012 (In thousands)Consolidated balance sheet data: Cash and cash equivalents $397,307 $268,921 $240,103 $249,348 $160,490Working capital 845,068 769,881 719,297 685,403 611,372Total assets (1) 2,214,488 2,136,555 2,318,959 1,984,512 1,920,321Total debt, including capital leases, excludingdiscount on the Convertible Notes (1)(2) 628,631 513,213 319,401 175,134 251,467Total EnerSys stockholders’ equity 1,013,131 1,038,900 1,246,402 1,169,401 1,032,195(1) Net of debt issuance costs(2) Convertible Notes as defined under Liquidity and Capital Resources in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations21Table of ContentsITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following discussion and analysis of our results of operations and financial condition for the fiscal years ended March 31, 2016, 2015 and 2014,should be read in conjunction with our audited consolidated financial statements and the notes to those statements included in Item 8. Financial Statementsand Supplementary Data, of this Annual Report on Form 10-K. Our discussion contains forward-looking statements based upon current expectations thatinvolve risks and uncertainties, such as our plans, objectives, opinions, expectations, anticipations and intentions and beliefs. Actual results and the timingof events could differ materially from those anticipated in those forward-looking statements as a result of a number of factors. See “Cautionary NoteRegarding Forward-Looking Statements,” “Business” and “Risk Factors,” sections elsewhere in this Annual Report on Form 10-K. In the followingdiscussion and analysis of results of operations and financial condition, certain financial measures may be considered “non-GAAP financial measures”under the SEC rules. These rules require supplemental explanation and reconciliation, which is provided in this Annual Report on Form 10-K.EnerSys’ management uses the non-GAAP measures, EBITDA and Adjusted EBITDA, in its computation of compliance with loan covenants. These measures,as used by EnerSys, adjust net earnings determined in accordance with GAAP for interest, taxes, depreciation and amortization, and certain charges orcredits as permitted by our credit agreements, that were recorded during the periods presented.EnerSys’ management uses the non-GAAP measures,"primary working capital" and "primary working capital percentage" (see definition in “Overview”below) along with capital expenditures, in its evaluation of business segment cash flow and financial position performance.These non-GAAP disclosures have limitations as analytical tools, should not be viewed as a substitute for cash flow or operating earnings determined inaccordance 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 arethey necessarily comparable to non-GAAP performance measures that may be presented by other companies. This supplemental presentation should not beconstrued as an inference that the Company’s future results will be unaffected by similar adjustments to operating earnings determined in accordance withGAAP.OverviewEnerSys (the “Company,” “we,” or “us”) is the world’s largest manufacturer, marketer and distributor of industrial batteries. We also manufacture, market anddistribute products such as battery chargers, power equipment, battery accessories, and outdoor equipment enclosure solutions. Additionally, we providerelated aftermarket and customer-support services for our products. We market our products globally to over 10,000 customers in more than 100 countriesthrough 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 highlydecentralized with manufacturing locations throughout the world. More than half of our manufacturing capacity is located outside the United States, andapproximately 50% of our net sales were generated outside the United States. The Company has three reportable business segments based on geographicregions, 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 evaluate business segment performance based primarily upon operating earnings exclusive of highlighted items. Highlighted items are those that theCompany deems are not indicative of ongoing operating results, including those charges that the Company incurs as a result of restructuring activities andthose charges and credits that are not directly related to ongoing business segment performance. All corporate and centrally incurred costs are allocated to thebusiness segments based principally on net sales. We evaluate business segment cash flow and financial position performance based primarily upon capitalexpenditures and primary working capital levels (see definition of primary working capital in “Liquidity and Capital Resources” below). Although wemonitor the three elements of primary working capital (receivables, inventory and payables), our primary focus is on the total amount due to the significantimpact it has on our cash flow.22Table of ContentsOur management structure, financial reporting systems, and associated internal controls and procedures, are all consistent with our three geographic businesssegments. We report on a March 31 fiscal year-end. Our financial results are largely driven by the following factors:•global economic conditions and general cyclical patterns of the industries in which our customers operate;•changes in our selling prices and, in periods when our product costs increase, our ability to raise our selling prices to pass such cost increases throughto our customers;•the extent to which we are able to efficiently utilize our global manufacturing facilities and optimize our capacity;•the extent to which we can control our fixed and variable costs, including those for our raw materials, manufacturing, distribution and operatingactivities;•changes in our level of debt and changes in the variable interest rates under our credit facilities; and•the size and number of acquisitions and our ability to achieve their intended benefits.We have two primary product lines: reserve power products and motive power products. Net sales classifications by product line are as follows:•Reserve power products are used for backup power for the continuous operation of critical applications in telecommunications systems, UPSapplications for computer and computer-controlled systems, and other specialty power applications, including security systems, premium starting,lighting and ignition applications, in switchgear, electrical control systems used in electric utilities, large-scale energy storage, energy pipelines, incommercial aircraft, satellites, military aircraft, submarines, ships and tactical vehicles. Reserve power products also include thermally managedcabinets 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 handlingapplications as well as mining equipment, diesel locomotive starting and other rail equipment.Current Market ConditionsEconomic ClimateRecent indicators continue to suggest a mixed trend in economic activity among the different geographical regions. Economic activity remains good inNorth America while EMEA is experiencing limited growth. Our Asia region continues to experience the fastest growth of any region in which we dobusiness.Volatility of Commodities and Foreign CurrenciesOur most significant commodity and foreign currency exposures are related to lead and the euro, respectively. Historically, volatility of commodity costs andforeign currency exchange rates have caused large swings in our production costs. As the global economic climate changes, we anticipate that ourcommodity costs and foreign currency exposures may continue to fluctuate as they have in the past several years. During the past year, on a consolidatedbasis, we have experienced lower commodity costs. However, our EMEA region’s commodity costs are down only slightly due to unfavorable movements inforeign exchange rates. In addition, these unfavorable movements in foreign exchange rates have led to lower revenues.Customer PricingOur selling prices fluctuated during the last several years to offset the volatile cost of commodities. Approximately 30% of our revenue is currently subject toagreements that adjust pricing to a market-based index for lead. During fiscal 2016, our selling prices remained relatively flat, compared to the comparableprior year period. Liquidity and Capital ResourcesWe believe that our financial position is strong, and we have substantial liquidity with $397 million of available cash and cash equivalents and undrawncommitted and uncommitted credit lines of approximately $472 million at March 31, 2016 to cover short-term liquidity requirements and anticipated growthin the foreseeable future. Our $350 million senior secured revolving credit facility (as amended, the "2011 Credit Facility"), which we entered into in March2011 was expanded in July 2014 by increasing the revolver by an additional $150 million and by adding a $150 million senior secured incremental termloan (the "Term Loan"). The 2011 Credit Facility is committed through September 2018 as long as we continue to comply with its covenants and conditions.23Table of ContentsCurrent market conditions related to our liquidity and capital resources are favorable. We believe current conditions remain favorable for the Company tohave continued positive cash flow from operations that, along with available cash and cash equivalents and our undrawn lines of credit, will be sufficient tofund our capital expenditures, acquisitions and other investments for growth.In April 2015, we issued $300 million of 5.00% Senior Notes due 2023 (the “Notes”), with the net proceeds used primarily to fund the payment of principaland accreted interest outstanding on the senior 3.375% convertible notes due 2038 (the “Convertible Notes”) that were settled in July 2015. See Note 8 to theConsolidated Financial Statements for additional details.Subsequent to the extinguishment of the Convertible Notes, other than the Notes and the 2011 Credit Facility, we have no other significant amount of long-term debt maturing in the near future.In fiscal 2016, we repurchased $178 million of treasury stock through open market purchases and through an ASR with a major financial institution. Sharerepurchases had a modest positive impact on earnings per diluted share.Our leverage increased in fiscal 2016 mainly to fund our share repurchase program. We believe that our strong capital structure and liquidity affords us accessto capital for future acquisitions and additional stock repurchase opportunities and continued dividend payments.A substantial majority of the Company’s cash and investments are held by foreign subsidiaries and are considered to be indefinitely reinvested and expectedto be utilized to fund local operating activities, capital expenditure requirements and acquisitions. The Company believes that it has sufficient sources ofdomestic and foreign liquidity.Cost Savings Initiatives-RestructuringCost savings programs remain a continuous element of our business strategy and are directed primarily at further reductions in plant manufacturing (labor andoverhead), raw material costs and our operating expenses (primarily selling, general and administrative). In order to realize cost savings benefits for a majorityof these initiatives, costs are incurred either in the form of capital expenditures, funding the cash obligations of previously recorded restructuring expenses orcurrent period expenses.During fiscal 2012, we announced restructuring programs related to our operations in EMEA, primarily consisting of the transfer of manufacturing of selectproducts between certain of our manufacturing operations and restructuring of our selling, general and administrative operations. These actions werecompleted during fiscal 2014 and resulted in the reduction of approximately 85 employees with an estimated annual savings of $6.0 million.During fiscal 2013, we announced further restructuring related to improving the efficiency of our manufacturing operations in EMEA, primarily consisting ofcash expenses for employee severance-related payments and non-cash expenses associated with the write-off of certain fixed assets and inventory. Theseactions were substantially completed in fiscal 2015 and resulted in the reduction of approximately 140 employees. Our fiscal 2015 operating results reflectthe full benefit of the estimated $7.0 million of favorable annualized pre-tax earnings impact of the fiscal 2013 programs. There are no further costs to beincurred under these programs.During fiscal 2014, we announced additional restructuring programs to improve the efficiency of our manufacturing, sales and engineering operations inEMEA including the restructuring of its manufacturing operations in Bulgaria. The restructuring of the Bulgaria operations was announced during the thirdquarter of fiscal 2014 and consists of the transfer of motive power and a portion of reserve power battery manufacturing to our facilities in Western Europe.These actions resulted in the reduction of approximately 500 employees upon completion during fiscal 2016. Our fiscal 2015 operating results reflectsubstantially all of the approximately $19.0 million of expected favorable annualized pre-tax earnings impact of the fiscal 2014 programs.During fiscal 2016 we announced restructuring programs related to improving operational efficiencies in EMEA and the Americas. These actions whencompleted in fiscal 2017 are expected to result in the reduction of approximately 240 employees and the closure of our Cleveland, Ohio manufacturingfacility. Approximately $3.0 million pre-tax in savings have been reflected in the fiscal 2016 results.24Table of ContentsCritical Accounting Policies and EstimatesOur significant accounting policies are described in Notes to Consolidated Financial Statements in Item 8. In preparing our financial statements, managementis required to make estimates and assumptions that, among other things, affect the reported amounts in the Consolidated Financial Statements andaccompanying notes. These estimates and assumptions are most significant where they involve levels of subjectivity and judgment necessary to account forhighly uncertain matters or matters susceptible to change, and where they can have a material impact on our financial condition and operating performance.We discuss below the more significant estimates and related assumptions used in the preparation of our consolidated financial statements. If actual resultswere to differ materially from the estimates made, the reported results could be materially affected.Revenue RecognitionWe recognize revenue when the earnings process is complete. This occurs when risk and title transfers, collectibility is reasonably assured and pricing is fixedor determinable. Shipment terms to our battery product customers are either shipping point or destination and do not differ significantly between our businesssegments. Accordingly, revenue is recognized when risk and title is transferred to the customer. Amounts invoiced to customers for shipping and handling areclassified as revenue. Taxes on revenue producing transactions are not included in net sales.We recognize revenue from the service of reserve power and motive power products when the respective services are performed.Management believes that the accounting estimates related to revenue recognition are critical accounting estimates because they require reasonableassurance of collection of revenue proceeds and completion of all performance obligations. Also, revenues are recorded net of provisions for sales discountsand returns, which are established at the time of sale. These estimates are based on our past experience.Asset Impairment DeterminationsWe test for the impairment of our goodwill and indefinite-lived trademarks at least annually and whenever events or circumstances occur indicating that apossible impairment has been incurred.We perform our annual goodwill impairment test on the first day of our fourth quarter for each of our reporting units based on the income approach, alsoknown as the discounted cash flow (“DCF”) method, which utilizes the present value of future cash flows to estimate fair value. We also use the marketapproach, which utilizes market price data of companies engaged in the same or a similar line of business as that of our company, to estimate fair value. Areconciliation of the two methods is performed to assess the reasonableness of fair value of each of the reporting units.The future cash flows used under the DCF method are derived from estimates of future revenues, operating income, working capital requirements and capitalexpenditures, which in turn reflect specific global, industry and market conditions. The discount rate developed for each of the reporting units is based ondata and factors relevant to the economies in which the business operates and other risks associated with those cash flows, including the potential variabilityin the amount and timing of the cash flows. A terminal growth rate is applied to the final year of the projected period and reflects our estimate of stablegrowth to perpetuity. We then calculate the present value of the respective cash flows for each reporting unit to arrive at the fair value using the incomeapproach and then determine the appropriate weighting between the fair value estimated using the income approach and the fair value estimated using themarket approach. Finally, we compare the estimated fair value of each reporting unit to its respective carrying value in order to determine if the goodwillassigned to each reporting unit is potentially impaired. If the carrying amount of a reporting unit exceeds its fair value, we are required to perform a secondstep of the goodwill impairment test to measure the amount of impairment loss, if any. Step two of the goodwill impairment analysis measures the impairmentcharge by allocating the reporting unit's fair value to all of the assets and liabilities of the reporting unit in a hypothetical analysis that calculates the impliedfair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination. This allocation process is performed only forthe purpose of measuring the goodwill impairment, and not to adjust the carrying values of the recognized tangible assets and liabilities. Any excess of thecarrying value of the reporting unit's goodwill over the implied fair value of the reporting unit's goodwill is recorded as an impairment loss.Significant assumptions used include management’s estimates of future growth rates, the amount and timing of future operating cash flows, capitalexpenditures, discount rates as well as market and industry conditions and relevant comparable company multiples for the market approach. Assumptionsutilized are highly judgmental, especially given the role technology plays in driving the demand for products in the telecommunications and aerospacemarkets.25Table of ContentsThe indefinite-lived trademarks are tested for impairment by comparing the carrying value to the fair value based on current revenue projections of therelated operations, under the relief from royalty method. Any excess carrying value over the amount of fair value is recognized as impairment. Anyimpairment would be recognized in full in the reporting period in which it has been identified.With respect to our other long-lived assets other than goodwill and indefinite-lived trademarks, we test for impairment when indicators of impairment arepresent. An asset is considered impaired when the undiscounted estimated net cash flows expected to be generated by the asset are less than its carryingamount. The impairment recognized is the amount by which the carrying amount exceeds the fair value of the impaired asset.Our annual goodwill impairment test, which we performed during the fourth quarter of fiscal 2016, resulted in an impairment charge for goodwill andtrademarks in our Purcell and Quallion/ABSL US reporting units, which are both part of the Americas operating segment, and a charge for goodwill and fixedassets in our South Africa joint venture, which is a part of the EMEA operating segment, as discussed in Note 5 to the Consolidated Financial Statements. Theexcess of fair value over carrying value for each of our other reporting units as of December 28, 2015, the annual testing date, ranged from approximately 8%to approximately 118% of carrying value. The ABSL UK and Asia reporting units have the lowest excess of fair value over carrying value at 8% and 21%,respectively. The aggregate carrying value as of March 31, 2016, of goodwill and indefinite-lived intangibles of ABSL UK and Asia were $9.5 million and$58.3 million, respectively.In order to evaluate the sensitivity of the fair value calculations on the goodwill impairment test, we applied a hypothetical 10% decrease to the fair values ofeach reporting unit. This hypothetical 10% decrease would result in the ABSL UK reporting unit having a fair value below its carrying value of 3%. For theremaining reporting units, such hypothetical decrease would result in excess fair values over carrying values range from approximately 9% to approximately96% of the carrying values. We will continue to evaluate goodwill on an annual basis as of the beginning of our fourth fiscal quarter and whenever events orchanges in circumstances, such as significant adverse changes in business climate or operating results, changes in management's business strategy or loss of amajor customer, indicate that there may be a potential indicator of impairment.Litigation and ClaimsFrom time to time, the Company has been or may be a party to various legal actions and investigations including, among others, employment matters,compliance with government regulations, federal and state employment laws, including wage and hour laws, contractual disputes and other matters,including matters arising in the ordinary course of business. These claims may be brought by, among others, governments, customers, suppliers andemployees. Management considers the measurement of litigation reserves as a critical accounting estimate because of the significant uncertainty in somecases relating to the outcome of potential claims or litigation and the difficulty of predicting the likelihood and range of potential liability involved, coupledwith the material impact on our results of operations that could result from litigation or other claims.In determining legal reserves, management considers, among other inputs:•interpretation of contractual rights and obligations;•the status of government regulatory initiatives, interpretations and investigations;•the status of settlement negotiations;•prior experience with similar types of claims;•whether there is available insurance coverage; and•advice of outside counsel.Environmental Loss ContingenciesAccruals for environmental loss contingencies (i.e., environmental reserves) are recorded when it is probable that a liability has been incurred and the amountcan reasonably be estimated. Management views the measurement of environmental reserves as a critical accounting estimate because of the considerableuncertainty surrounding estimation, including the need to forecast well into the future. From time to time, we may be involved in legal proceedings underfederal, state and local, as well as international environmental laws in connection with our operations and companies that we have acquired. The estimationof environmental reserves is based on the evaluation of currently available information, prior experience in the remediation of contaminated sites andassumptions with respect to government regulations and enforcement activity, changes in remediation technology and practices, and financial obligationsand creditworthiness of other responsible parties and insurers.Warranty26Table of ContentsWe record a warranty reserve for possible claims against our product warranties, which generally run for a period ranging from one to twenty years for ourreserve power batteries and for a period ranging from one to seven years for our motive power batteries. The assessment of the adequacy of the reserveincludes a review of open claims and historical experience.Management believes that the accounting estimate related to the warranty reserve is a critical accounting estimate because the underlying assumptions usedfor the reserve can change from time to time and warranty claims could potentially have a material impact on our results of operations.Allowance for Doubtful AccountsWe encounter risks associated with sales and the collection of the associated accounts receivable. We record a provision for accounts receivable that areconsidered to be uncollectible. In order to calculate the appropriate provision, management analyzes the creditworthiness of specific customers and the agingof customer balances. Management also considers general and specific industry economic conditions, industry concentration and contractual rights andobligations.Management believes that the accounting estimate related to the allowance for doubtful accounts is a critical accounting estimate because the underlyingassumptions used for the allowance can change from time to time and uncollectible accounts could potentially have a material impact on our results ofoperations.Retirement PlansWe use certain economic and demographic assumptions in the calculation of the actuarial valuation of liabilities associated with our defined benefit plans.These assumptions include the discount rate, expected long-term rates of return on assets and rates of increase in compensation levels. Changes in theseassumptions can result in changes to the pension expense and recorded liabilities. Management reviews these assumptions at least annually. We useindependent actuaries to assist us in formulating assumptions and making estimates. These assumptions are updated periodically to reflect the actualexperience and expectations on a plan-specific basis, as appropriate. During fiscal 2016, we revised our mortality assumptions to incorporate the new set ofimprovement tables issued by the Society of Actuaries for purposes of measuring U.S. pension and other post-retirement obligations at year-end.For benefit plans which are funded, we establish strategic asset allocation percentage targets and appropriate benchmarks for significant asset classes with theaim of achieving a prudent balance between return and risk. We set the expected long-term rate of return based on the expected long-term average rates ofreturn to be achieved by the underlying investment portfolios. In establishing this rate, we consider historical and expected returns for the asset classes inwhich the plans are invested, advice from pension consultants and investment advisors, and current economic and capital market conditions. The expectedreturn on plan assets is incorporated into the computation of pension expense. The difference between this expected return and the actual return on planassets is deferred and will affect future net periodic pension costs through subsequent amortization.We believe that the current assumptions used to estimate plan obligations and annual expense are appropriate in the current economic environment.However, if economic conditions change materially, we may change our assumptions, and the resulting change could have a material impact on theconsolidated statements of income and on the consolidated balance sheets.Equity-Based CompensationWe recognize compensation cost relating to equity-based payment transactions by using a fair-value measurement method whereby all equity-basedpayments to employees, including grants of restricted stock units, stock options and market condition-based awards are recognized as compensation expensebased on fair value at grant date over the requisite service period of the awards. We determine the fair value of restricted stock units based on the quotedmarket price of our common stock on the date of grant. The fair value of stock options is determined using the Black-Scholes option-pricing model, whichuses both historical and current market data to estimate the fair value. The fair value of market condition-based awards is estimated at the date of grant using abinomial lattice model or Monte Carlo Simulation. All models incorporate various assumptions such as the risk-free interest rate, expected volatility,expected dividend yield and expected life of the awards. When estimating the requisite service period of the awards, we consider many related factorsincluding types of awards, employee class, and historical experience. Actual results, and future changes in estimates of the requisite service period may differsubstantially from our current estimates.Income Taxes27Table of ContentsOur effective tax rate is based on pretax income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate.We account for income taxes in accordance with applicable guidance on accounting for income taxes, which requires that deferred tax assets and liabilitiesbe recognized using enacted tax rates for the effect of temporary differences between book and tax bases on recorded assets and liabilities. Accountingguidance also requires that deferred tax assets be reduced by a valuation allowance, when it is more likely than not that a tax benefit will not be realized.The recognition and measurement of a tax position is based on management’s best judgment given the facts, circumstances and information available at thereporting date. We evaluate tax positions to determine whether the benefits of tax positions are more likely than not of being sustained upon audit based onthe technical merits of the tax position. For tax positions that are more likely than not of being sustained upon audit, we recognize the largest amount of thebenefit that is greater than 50% likely of being realized upon ultimate settlement in the financial statements. For tax positions that are not more likely thannot of being sustained upon audit, we do not recognize any portion of the benefit in the financial statements. If the more likely than not threshold is not metin the period for which a tax position is taken, we may subsequently recognize the benefit of that tax position if the tax matter is effectively settled, thestatute of limitations expires, or if the more likely than not threshold is met in a subsequent period.We evaluate, on a quarterly basis, our ability to realize deferred tax assets by assessing our valuation allowance and by adjusting the amount of suchallowance, if necessary. The factors used to assess the likelihood of realization are our forecast of future taxable income and available tax planning strategiesthat could be implemented to realize the net deferred tax assets.To the extent we prevail in matters for which reserves have been established, or are required to pay amounts in excess of our reserves, our effective tax rate ina given financial statement period could be materially affected.Results of Operations—Fiscal 2016 Compared to Fiscal 2015The following table presents summary consolidated statement of income data for fiscal year ended March 31, 2016, compared to fiscal year ended March 31,2015: Fiscal 2016 Fiscal 2015 Increase (Decrease) InMillions As %Net Sales InMillions As %Net Sales In Millions %Net sales $2,316.2 100.0 % $2,505.5 100.0 % $(189.3) (7.6)%Cost of goods sold 1,704.5 73.6 1,864.6 74.4 (160.1) (8.6)Gross profit 611.7 26.4 640.9 25.6 (29.2) (4.6)Operating expenses 352.7 15.2 358.4 14.3 (5.7) (1.6)Restructuring and other exit charges 12.9 0.5 11.4 0.5 1.5 13.5Impairment of goodwill, indefinite-livedintangibles and fixed assets 36.3 1.6 23.9 1.0 12.4 51.4Legal proceedings charge / (reversal oflegal accrual, net of fees) 3.2 0.1 (16.2) (0.7) 19.4 NMGain on sale of facility (3.4) (0.1) — — (3.4) NMOperating earnings 210.0 9.1 263.4 10.5 (53.4) (20.3)Interest expense 22.3 1.0 19.7 0.8 2.6 13.7Other (income) expense, net 5.7 0.2 (5.6) (0.2) 11.3 NMEarnings before income taxes 182.0 7.9 249.3 9.9 (67.3) (27.0)Income tax expense 50.1 2.2 67.8 2.7 (17.7) (26.1)Net earnings 131.9 5.7 181.5 7.2 (49.6) (27.4)Net (losses) earnings attributable tononcontrolling interests (4.3) (0.2) 0.3 — (4.6) NMNet earnings attributable to EnerSysstockholders $136.2 5.9 % $181.2 7.2 % $(45.0) (24.9)% NM = not meaningfulOverviewOur sales in fiscal 2016 were $2.3 billion, an 8% decrease from prior year's sales. This was the result of a 7% decrease due to foreign currency translationimpact and a 2% decrease in organic volume, partially offset by a 1% increase from acquisitions.28Table of ContentsGross margin percentage in fiscal 2016 increased by 80 basis points to 26.4% compared to fiscal 2015, mainly due to lower commodity costs and favorableproduct mix combined with the benefits of restructuring programs in EMEA, despite a small decline in organic volume and an increase in warranty costs.A discussion of specific fiscal 2016 versus fiscal 2015 operating results follows, including an analysis and discussion of the results of our reportablesegments.Net SalesNet sales by reportable segment were as follows: Fiscal 2016 Fiscal 2015 Increase (Decrease) InMillions % NetSales InMillions % NetSales InMillions % Americas $1,276.0 55.1% $1,322.4 52.8% $(46.4) (3.5)%EMEA 787.4 34.0 948.8 37.9 (161.4) (17.0)Asia 252.8 10.9 234.3 9.3 18.5 7.9Total net sales $2,316.2 100.0% $2,505.5 100.0% $(189.3) (7.6)%The Americas segment’s revenue decreased by $46.4 million or 3.5% in fiscal 2016, as compared to fiscal 2015, primarily due a decrease in currencytranslation impact and organic volume of approximately 2%, each.The EMEA segment’s revenue decreased by $161.4 million or 17.0% in fiscal 2016, as compared to fiscal 2015, primarily due to a decrease in currencytranslation impact and organic volume of approximately 12% and 6%, respectively, partially offset by a 1% increase in pricing.The Asia segment’s revenue increased by $18.5 million or 7.9% in fiscal 2016, as compared to fiscal 2015, primarily due to an increase from acquisitions andorganic volume of approximately 13% and 6%, respectively, partially offset by a 10% decrease in currency translation impact and a 1% decrease due topricing.Net sales by product line were as follows: Fiscal 2016 Fiscal 2015 Increase (Decrease) InMillions As %Net Sales InMillions As %Net Sales InMillions % Reserve power $1,109.2 47.9% $1,252.7 50.0% $(143.5) (11.5)%Motive power 1,207.0 52.1 1,252.8 50.0 (45.8) (3.7)Total net sales $2,316.2 100.0% $2,505.5 100.0% $(189.3) (7.6)%Sales in our reserve power product line decreased in fiscal 2016 by $143.5 million or 11.5% compared to the prior year primarily due to currency translationimpact and lower organic volume of approximately 7% each, partially offset by a 2% increase from acquisitions.Sales in our motive power product line decreased in fiscal 2016 by $45.8 million or 3.7% compared to the prior year primarily due to currency translationimpact of 7%, partially offset by approximately 2% increase in organic volume and 1% increase in pricing.Gross Profit Fiscal 2016 Fiscal 2015 Increase (Decrease) InMillions As %Net Sales InMillions As %Net Sales InMillions % Gross profit $611.7 26.4% $640.9 25.6% $(29.2) (4.6)%29Table of ContentsGross profit decreased $29.2 million or 4.6% in fiscal 2016 compared to fiscal 2015. Gross profit, excluding the effect of foreign currency translation,decreased $0.9 million or 0.1% in fiscal 2016 compared to fiscal 2015. The 80 basis point improvement in the gross profit margin is primarily due to lowercommodity costs and favorable product mix combined with the benefits of restructuring programs in EMEA, despite a small decline in organic volume andan increase in warranty costs.Operating Items Fiscal 2016 Fiscal 2015 Increase (Decrease) InMillions As %Net Sales InMillions As %Net Sales InMillions % Operating expenses $352.7 15.2 % $358.4 14.3 % $(5.7) (1.6)%Restructuring and other exit charges 12.9 0.5 11.4 0.5 1.5 13.5Impairment of goodwill, indefinite-livedintangibles and fixed assets 36.3 1.6 23.9 1.0 12.4 51.4Legal proceedings charge / (reversal oflegal accrual, net of fees) 3.2 0.1 (16.2) (0.7) 19.4 NMGain on sale of facility (3.4) (0.1) — — (3.4) NMNM = not meaningfulOperating ExpensesOperating expenses decreased $5.7 million or 1.6% in fiscal 2016 from fiscal 2015. Operating expenses, excluding the effect of foreign currency translation,increased $16.1 million or 4.6% in fiscal 2016 compared to fiscal 2015. As a percentage of sales, operating expenses increased from 14.3% in fiscal 2015 to15.2% in fiscal 2016 primarily due to lower sales coupled with higher implementation costs for a new ERP system in the Americas, higher bad debt,professional services, employee incentive and stock compensation and other payroll related expenses.Restructuring and other exit chargesIncluded in fiscal 2016 operating results are restructuring and other exit charges in EMEA of $9.4 million and restructuring charges of $2.1 million and $1.4million in Americas and Asia, respectively.Included in fiscal 2015 operating results are restructuring and other exit charges in EMEA of $7.5 million and restructuring charges of $3.9 million in Asia.Impairment of goodwill, indefinite-lived intangibles and fixed assetsIn the fourth quarter of fiscal 2016, we conducted step one of our annual goodwill impairment test which indicated that the fair values of three of ourreporting units - Purcell and Quallion/ABSL US in the Americas operating segment and our South Africa joint venture in the EMEA operating segment, wereless than their respective carrying value, requiring us to perform step two of the goodwill impairment analysis.Based on our analysis, the implied fair value of goodwill was lower than the carrying value of the goodwill for the Purcell and Quallion/ABSL US reportingunits in the Americas operating segment and our joint venture in South Africa in the EMEA operating segment. We recorded a non-cash charge of $31.5million related to goodwill impairment in the Americas and the EMEA operating segments. In addition, we recorded non-cash charges of $3.4 million relatedto impairment of indefinite-lived trademarks in the Americas and $1.4 million related to fixed assets in the EMEA operating segment. The combined chargesresulted in a tax benefit of $4.2 million, for a net charge of $32.1 million.The key factors contributing to the impairments in both fiscal years were that the reporting units in the Americas were recent acquisitions that have notperformed to management's expectations. In the case of Purcell, the impairment was the result of lower estimated projected revenue and profitability in thenear term caused by reduced level of capital spending by major customers in the telecommunications industry. In the case of Quallion/ABSL US, theimpairment was the result of lower estimated projected revenue and profitability in the near term caused by delays, both in introducing new products and inprograms serving the aerospace and defense markets. In the case of the South Africa joint venture, declining business conditions in South Africa resulted innegative cash flows.Legal proceedings charge / (reversal of legal accrual, net of fees)30Table of ContentsCertain of our European subsidiaries have received subpoenas and requests for documents and, in some cases, interviews from, and have had on-siteinspections conducted by the competition authorities of Belgium, Germany and the Netherlands relating to conduct and anticompetitive practices of certainindustrial battery participants. We are responding to inquiries related to these matters. We settled the Belgian regulatory proceeding in February 2016 byacknowledging certain anticompetitive practices and conduct and agreeing to pay a fine of $2.0 million, which we paid in March 2016 and as of March 31,2016, we had a reserve balance of $2.0 million in connection with these remaining investigations and other related legal charges. For the Dutch and Germanregulatory proceedings, we do not believe that such an estimate can be made at this time given the early stages of these proceedings. The foregoing estimateof losses is based upon currently available information for these proceedings. However, the precise scope, timing and time period at issue, as well as the finaloutcome of the investigations, remains uncertain. Accordingly, our estimate may change from time to time, and actual losses could vary.Included in our fiscal 2016 results is the reversal of a $0.8 million legal accrual in Americas, relating to legal fees, subsequent to the final settlement of theAltergy matter.Operating EarningsOperating earnings by segment were as follows: Fiscal 2016 Fiscal 2015 Increase (Decrease) InMillions As %Net Sales(1) InMillions As %Net Sales(1) InMillions % Americas $182.7 14.3 % $162.8 12.3 % $19.9 12.3 %EMEA 75.6 9.6 109.8 11.6 (34.2) (31.1)Asia 0.7 0.2 9.9 4.2 (9.2) (94.3)Subtotal 259.0 11.2 282.5 11.3 (23.5) (8.3)Restructuring charges - Americas (2.1) (0.2) — — (2.1) NMRestructuring and other exit charges -EMEA (9.4) (1.2) (7.5) (0.8) (1.9) 25.6Restructuring charges - Asia (1.4) (0.6) (3.9) (1.7) 2.5 (63.3)Impairment of goodwill and indefinite-lived intangibles - Americas (33.0) (2.6) (23.1) (1.8) (9.9) 42.3Impairment of goodwill and fixed assets- EMEA (3.3) (0.4) (0.8) (0.1) (2.5) NMReversal of legal accrual, net of fees -Americas 0.8 0.1 16.2 1.2 (15.4) (95.1)Legal proceedings charge - EMEA (4.0) (0.5) — — (4.0) NMGain on sale of facility - Asia 3.4 1.4 — — 3.4 NMTotal $210.0 9.1 % $263.4 10.5 % $(53.4) (20.3)% NM = not meaningful(1)The percentages shown for the segments are computed as a percentage of the applicable segment’s net sales.Fiscal 2016 operating earnings of $210.0 million were $53.4 million lower than in fiscal 2015 and were 9.1% of sales. Fiscal 2016 operating earningsincluded $49.0 million in restructuring, impairment charges and legal proceedings accrual, net of reversals and a gain on sale of facility, compared to $19.1million in fiscal 2015. Without these net charges, operating earnings were $259.0 million or 11.2% of sales in fiscal 2016 compared to $282.5 million or11.3% of sales in fiscal 2015, which reflects a relatively stable environment for revenues, pricing and commodity costs between the two fiscal years.The Americas segment’s operating earnings, excluding the highlighted items discussed above, increased $19.9 million or 12.3% in fiscal 2016 compared tofiscal 2015, with the operating margin increasing 200 basis points to 14.3%. This increase of operating margin in our Americas segment is primarily due toimproved product mix and pricing, lower commodity costs, partially offset by higher implementation costs relating to a new ERP system.31Table of ContentsThe EMEA segment’s operating earnings, excluding the highlighted items discussed above, decreased $34.2 million or 31.1% in fiscal 2016 compared tofiscal 2015, with the operating margin decreasing 200 basis points to 9.6%. This decrease primarily reflects foreign currency headwinds and lower reservepower product sales, particularly in the emerging markets.Operating earnings in Asia, excluding the highlighted items discussed above, decreased $9.2 million or 94.3% in fiscal 2016 compared to fiscal 2015, withthe operating margin decreasing by 400 basis points to 0.2% primarily due to lower operating results of our subsidiary in India, foreign currency headwindsand reduced telecom sales.Interest Expense Fiscal 2016 Fiscal 2015 Increase (Decrease) InMillions As %Net Sales InMillions As %Net Sales InMillions % Interest expense $22.3 1.0% $19.7 0.8% $2.6 13.7%Interest expense of $22.3 million in fiscal 2016 (net of interest income of $1.9 million) was $2.6 million higher than the $19.7 million in fiscal 2015 (net ofinterest income of $1.3 million). The increase in interest expense in fiscal 2016 compared to fiscal 2015 was primarily due to higher average debtoutstanding, partially offset by lower accreted interest on the Convertible Notes in fiscal 2016 compared to fiscal 2015.Our average debt outstanding (including the average amount of the Convertible Notes discount of $0.2 million) was $626.8 million in fiscal 2016, comparedto our average debt outstanding (including the average amount of the Convertible Notes discount of $5.6 million) of $422.5 million in fiscal 2015. Ouraverage cash interest rate incurred in fiscal 2016 was 3.1% compared to 2.3% in fiscal 2015. This higher average debt outstanding is the result of our stockbuy back program under which $178 million of our shares were purchased during fiscal 2016.Included in interest expense was non-cash, accreted interest on the Convertible Notes of $1.3 million in fiscal 2016 and $8.3 million in fiscal 2015. Alsoincluded in interest expense were non-cash charges related to amortization of deferred financing fees of $1.5 million in fiscal 2016 and $1.3 million in fiscal2015.Other (Income) Expense, Net Fiscal 2016 Fiscal 2015 Increase (Decrease) InMillions As %Net Sales InMillions As %Net Sales InMillions % Other (income) expense, net $5.7 0.2% $(5.6) (0.2)% $11.3 NMNM = not meaningfulOther (income) expense, net was expense of $5.7 million in fiscal 2016 compared to income of $5.6 million in fiscal 2015. The unfavorable impact in fiscal2016 is mainly attributable to foreign currency losses of $5.4 million in fiscal 2016 compared to foreign currency gains in fiscal 2015 of $5.0 million.Earnings Before Income Taxes Fiscal 2016 Fiscal 2015 Increase (Decrease) InMillions As %Net Sales InMillions As %Net Sales InMillions % Earnings before income taxes $182.0 7.9% $249.3 9.9% $(67.3) (27.0)%As a result of the factors discussed above, fiscal 2016 earnings before income taxes were $182.0 million, a decrease of $67.3 million or 27.0% compared tofiscal 2015.32Table of ContentsIncome Tax Expense Fiscal 2016 Fiscal 2015 Increase (Decrease) InMillions As %Net Sales InMillions As %Net Sales InMillions % Income tax expense $50.1 2.2% $67.8 2.7% $(17.7) (26.1)%Effective tax rate 27.5% 27.2% 0.3% 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 and theamount of our consolidated income before taxes. The Company’s income tax provisions consist of federal, state and foreign income taxes. The effective income tax rate was 27.5% in fiscal 2016 compared tothe fiscal 2015 effective income tax rate of 27.2%. The rate increase in fiscal 2016 as compared to fiscal 2015 is primarily due to changes in the mix ofearnings among tax jurisdictions. The fiscal 2016 effective income tax rate also includes an increase due to a larger non-deductible goodwill impairmentcharges as compared to fiscal 2015.The fiscal 2016 foreign effective income tax rate on foreign pre-tax income of $117.7 million was 16.9% compared to foreign pre-tax income of $173.0million and effective income tax rate of 14.8% in fiscal 2015. For both fiscal 2016 and fiscal 2015 the difference in the foreign effective tax rate versus theU.S. statutory rate of 35% is primarily attributable to lower tax rates in the foreign countries in which we operate.Income from our Swiss subsidiary comprised a substantial portion of our overall foreign mix of income for both fiscal 2016 and fiscal 2015 and is taxed atapproximately 7%.Results of Operations—Fiscal 2015 Compared to Fiscal 2014The following table presents summary consolidated statement of income data for fiscal year ended March 31, 2015, compared to fiscal year ended March 31,2014: Fiscal 2015 Fiscal 2014 Increase (Decrease) InMillions As %Net Sales InMillions As %Net Sales In Millions %Net sales $2,505.5 100.0 % $2,474.4 100.0 % $31.1 1.3 %Cost of goods sold 1,864.6 74.4 1,844.8 74.6 19.8 1.1Gross profit 640.9 25.6 629.6 25.4 11.3 1.8Operating expenses 358.4 14.3 344.4 13.9 14.0 4.1Restructuring and other exit charges 11.4 0.5 27.4 1.1 (16.0) (58.2)Impairment of goodwill and indefinite-lived intangibles 23.9 1.0 5.2 0.2 18.7 NMLegal proceedings charge (reversal oflegal accrual, net of fees) (16.2) (0.7) 58.2 2.3 (74.4) NMOperating earnings 263.4 10.5 194.4 7.9 69.0 35.4Interest expense 19.7 0.8 17.1 0.7 2.6 14.8Other (income) expense, net (5.6) (0.2) 13.6 0.6 (19.2) NMEarnings before income taxes 249.3 9.9 163.7 6.6 85.6 52.3Income tax expense 67.8 2.7 17.0 0.7 50.8 NMNet earnings 181.5 7.2 146.7 5.9 34.8 23.7Net earnings (losses) attributable tononcontrolling interests 0.3 — (3.6) (0.1) 3.9 NMNet earnings attributable to EnerSysstockholders $181.2 7.2 % $150.3 6.0 % $30.9 20.5 %NM = not meaningful33Table of ContentsOverviewOur sales in fiscal 2015 were $2.5 billion, a 1.3% increase from prior year's sales. This was the result of a 2% increase in organic volume and a 3% increasefrom acquisitions partially offset by a 4% decrease due to foreign currency translation impact.Gross margin percentage in fiscal 2015 increased by 20 basis points to 25.6% compared to fiscal 2014, mainly due to higher organic volume and favorableproduct mix combined with the benefits of restructuring programs in EMEA.A discussion of specific fiscal 2015 versus fiscal 2014 operating results follows, including an analysis and discussion of the results of our reportablesegments.Net SalesNet sales by reportable segment were as follows: Fiscal 2015 Fiscal 2014 Increase (Decrease) InMillions % NetSales InMillions % NetSales InMillions % Americas $1,322.4 52.8% $1,267.6 51.2% $54.8 4.3 %EMEA 948.8 37.9 966.1 39.1 (17.3) (1.8)Asia 234.3 9.3 240.7 9.7 (6.4) (2.6)Total net sales $2,505.5 100.0% $2,474.4 100.0% $31.1 1.3 %The Americas segment’s revenue increased by $54.8 million or 4.3% in fiscal 2015, as compared to fiscal 2014, primarily due to an increase in acquisitionsand organic volume of approximately 4% and 2%, respectively, partially offset by a negative currency translation impact of approximately 2%.The EMEA segment’s revenue decreased by $17.3 million or 1.8% in fiscal 2015, as compared to fiscal 2014, primarily due to an 8% decrease due tocurrency translation impact, partially offset by an increase of 5% in organic volume and a 1% increase in pricing.The Asia segment’s revenue decreased by $6.4 million or 2.6% in fiscal 2015, as compared to fiscal 2014, primarily due to a 14% decrease in organic volumeand a 3% decrease in currency translation impact, partially offset by a 14% increase in acquisitions. The decrease in Asia's organic volume was primarily dueto lower sales to a major Chinese telecommunication company under a new tender program pursuant to which we participated at a lower volume.Net sales by product line were as follows: Fiscal 2015 Fiscal 2014 Increase (Decrease) InMillions As %Net Sales InMillions As %Net Sales InMillions % Reserve power $1,252.7 50.0% $1,234.5 49.9% $18.2 1.5%Motive power 1,252.8 50.0 1,239.9 50.1 12.9 1.1Total net sales $2,505.5 100.0% $2,474.4 100.0% $31.1 1.3%Sales in our reserve power product line increased in fiscal 2015 by $18.2 million or 1.5% compared to the prior year primarily due to acquisitions and higherorganic volume which contributed approximately 5% and 1%, respectively, offset by negative currency translation impact of 4%.Sales in our motive power product line increased in fiscal 2015 by $12.9 million or 1.1% compared to the prior year primarily due to higher organic volumeand acquisitions of 2% each, pricing of approximately 1%, offset partially by negative currency translation impact of 4%.Gross Profit34Table of Contents Fiscal 2015 Fiscal 2014 Increase (Decrease) InMillions As %Net Sales InMillions As %Net Sales InMillions % Gross profit $640.9 25.6% $629.6 25.4% $11.3 1.8%Gross profit increased $11.3 million or 1.8% in fiscal 2015 compared to fiscal 2014. Gross profit, excluding the effect of foreign currency translation,increased $30.0 million or 4.7% in fiscal 2015 compared to fiscal 2014. This increase was primarily attributed to higher organic volume and favorable mixcombined with the benefits of restructuring programs in EMEA.Operating Items Fiscal 2015 Fiscal 2014 Increase (Decrease) InMillions As %Net Sales InMillions As %Net Sales InMillions % Operating expenses $358.4 14.3 % $344.4 13.9% $14.0 4.1 %Restructuring and other exit charges 11.4 0.5 27.4 1.1 (16.0) (58.2)Impairment of goodwill and indefinite-lived intangibles 23.9 1.0 5.2 0.2 18.7 NMLegal proceedings charge / (reversal oflegal accrual, net of fees) (16.2) (0.7) 58.2 2.3 (74.4) NMNM = not meaningfulOperating ExpensesOperating expenses increased $14.0 million or 4.1% in fiscal 2015 from fiscal 2014. Operating expenses, excluding the effect of foreign currency translation,increased $8.0 million or 2.3% in fiscal 2015 compared to fiscal 2014. As a percentage of sales, operating expenses increased from 13.9% in fiscal 2014 to14.3% in fiscal 2015 primarily due to acquisitions, stock-based compensation, implementation costs for a new ERP system in the Americas, and payrollrelated expenses.Restructuring and other exit chargesIncluded in fiscal 2015 operating results were restructuring and other exit charges in EMEA of $7.5 million and restructuring charges of $3.9 million in Asia.In fiscal 2014, we recorded $27.4 million of restructuring charges, primarily for staff reductions and write-off of fixed assets and inventory in EMEAincluding relocating our motive power and a portion of our reserve power manufacturing from Bulgaria to our facilities in Western Europe. Included in thesecharges were exit charges of $5.6 million related to certain operations in Europe.Impairment of goodwill and indefinite-lived intangiblesWe perform our annual goodwill impairment test on the first day of our fourth quarter or whenever an event occurs that would more likely than not reduce thefair value of a reporting unit below its carrying amount. We use the income approach, also known as the discounted cash flow (“DCF”) method, which utilizesthe present value of future cash flows to estimate fair value for each of our reporting units. We also use the market approach, which utilizes market price dataof companies engaged in the same or a similar line of business as that of our company, to estimate fair value. A reconciliation of the two methods is performedto assess the reasonableness of fair value of each of the reporting units. The impairment test for goodwill is a two-step process. Step one consists of acomparison of the fair value of a reporting unit against its carrying amount, including the goodwill allocated to each reporting unit. If the carrying amount ofthe reporting unit is in excess of its fair value, step two requires the comparison of the implied fair value of the reporting unit’s goodwill against the carryingamount of the reporting unit’s goodwill. Any excess of the carrying value of the reporting unit’s goodwill over the implied fair value of the reporting unit’sgoodwill is recorded as an impairment loss.In the fourth quarter of fiscal 2015, we conducted step one of our annual goodwill impairment test which indicated that the fair values of two of our reportingunits - Purcell and Quallion/ABSL US - in the Americas operating segment were less than their respective carrying value, and we proceeded to perform steptwo of the goodwill impairment analysis.35Table of ContentsStep two of the goodwill impairment analysis measures the impairment charge by allocating the reporting unit's fair value to all of the assets and liabilities ofthe reporting unit in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquiredin a business combination. This allocation process was performed only for the purpose of measuring the goodwill impairment, and not to adjust the carryingvalues of the recognized tangible assets and liabilities. Any excess of the carrying value of the reporting unit's goodwill over the implied fair value of thereporting unit's goodwill is recorded as an impairment loss. Based on our analysis, the implied fair value of goodwill was lower than the carrying value of thegoodwill for the Purcell and Quallion/ABSL US reporting units in the Americas operating segment. We recorded a non-cash charge of $20.3 million related togoodwill impairment in the Americas and EMEA operating segments and $3.6 million related to impairment of indefinite-lived trademarks in the Americas.The combined charges resulted in a tax benefit of $3.2 million, for a net charge of $20.7 million.The key factors contributing to the impairments were that both reporting units were recent acquisitions that have not performed to our expectations. In thecase of Purcell, sales were negatively impacted by the slowdown in the enclosure business resulting from lower capital spending by a major customer in thetelecommunications market. In the case of Quallion/ABSL US, the cancellation of certain programs with a major contractor serving the aerospace and defensemarkets resulted in poor performance. The sales levels began to decline in our second quarter of fiscal 2015, and despite our initial expectation that thedeclines were temporary, their downward trend continued through fiscal 2015.Legal proceedings charge / (reversal of legal accrual, net of fees)In the fourth quarter of fiscal 2014, the Company recorded a $58.2 million legal proceedings charge in connection with an adverse arbitration resultinvolving disputes between the Company's wholly-owned subsidiary, EnerSys Delaware Inc. (“EDI”), and Altergy Systems (“Altergy”). EDI and Altergy wereparties to a Supply and Distribution Agreement (the “SDA”) pursuant to which EDI was, among other things, granted the exclusive right to distribute and sellcertain fuel cell products manufactured by Altergy for various applications throughout the United States. Commencing in 2011, various disputes arose and,because of the mandatory arbitration provision in the SDA, the parties moved forward with arbitration in August 2013.After discovery, a hearing and post-hearing submissions by each party, on May 13, 2014, the arbitration panel issued an award in favor of Altergy. As a result,the arbitration panel concluded that Altergy should recover $58.2 million in net money damages from EDI.On August 12, 2014, EDI, on behalf of itself and its affiliates, entered into a binding term sheet with Altergy that resolved the outstanding legal challengesrelated to this award. In accordance with the term sheet, in September 2014, EDI and Altergy entered into (a) a settlement agreement and release of claimspursuant to which EDI paid Altergy $40.0 million in settlement of this award, a separate proceeding related to certain rights of EDI as a shareholder of Altergyand related litigations and the parties granted the other a release and (b) a stock purchase agreement pursuant to which Altergy paid EDI $2.0 million topurchase EDI’s entire equity interest in Altergy. On September 16, 2014, courts in the respective jurisdictions had issued orders ending all of the ongoinglitigation between EDI and Altergy. Since the full amount of the initial award of $58.2 million was recorded in the fourth quarter of fiscal 2014, the Companyreversed approximately $16.2 million, net of professional fees, from this previously recorded legal proceedings charge during the second quarter of fiscal2015. The Company also included the $2.0 million received in exchange for its equity interest in Altergy in the Consolidated Statements of Income in Other(income) expense, net during the second quarter of fiscal 2015. The Company had previously written off the carrying value of the investment of $5.0 millionin the third quarter of fiscal 2014.36Table of ContentsOperating EarningsOperating earnings by segment were as follows: Fiscal 2015 Fiscal 2014 Increase (Decrease) InMillions As %Net Sales(1) InMillions As %Net Sales(1) InMillions % Americas $162.8 12.3 % $179.1 14.1 % $(16.3) (9.1)%EMEA 109.8 11.6 84.9 8.8 24.9 29.4Asia 9.9 4.2 21.2 8.8 (11.3) (53.2)Subtotal 282.5 11.3 285.2 11.5 (2.7) (0.9)Restructuring and other exit charges-EMEA (7.5) (0.8) (27.1) (2.8) 19.6 (72.1)Restructuring charges-Asia (3.9) (1.7) (0.3) (0.1) (3.6) NMImpairment of goodwill and indefinite-lived intangibles-Americas (23.1) (1.8) — — (23.1) NMGoodwill impairment charge-EMEA (0.8) (0.1) — — (0.8) NMGoodwill impairment charge-Asia — — (5.2) (2.2) 5.2 NMLegal proceedings (charge) reversal oflegal accrual, net of fees-Americas 16.2 1.2 (58.2) (4.6) 74.4 NMTotal $263.4 10.5 % $194.4 7.9 % $69.0 35.4 %NM = not meaningful (1)The percentages shown for the segments are computed as a percentage of the applicable segment’s net sales.Fiscal 2015 operating earnings of $263.4 million were $69.0 million higher than in fiscal 2014 and were 10.5% of sales. Fiscal 2015 operating earningsincluded $19.1 million in net restructuring, impairment charges and reversal of legal proceedings accrual compared to $90.8 million in fiscal 2014. Withoutthese charges, operating earnings were $282.5 million or 11.3% of sales in fiscal 2015 compared to $285.2 million or 11.5% of sales in fiscal 2014, whichreflects a relatively stable environment for revenues, pricing and commodity costs between the two fiscal years.The Americas segment’s operating earnings, excluding the highlighted items discussed above, decreased $16.3 million or 9.1% in fiscal 2015 compared tofiscal 2014, with the operating margin decreasing 180 basis points to 12.3%. This decrease of operating margin in our Americas segment was primarily due tolower pricing for a single customer, our recent acquisition of Purcell, which had not delivered the accretion we had expected, due primarily to the delay incapital spending in their enclosure programs by a large telecommunications customer, stock-based compensation and implementation costs relating to anERP system.The EMEA segment’s operating earnings, excluding the highlighted items discussed above, increased $24.9 million or 29.4% in fiscal 2015 compared tofiscal 2014, with the operating margin increasing 280 basis points to 11.6%. Benefits of the restructuring programs on both production and operatingexpenses and better pricing and customer mix drove the improvements. This improvement in EMEA earnings primarily reflected improved market segmentmix across the business, 4G expansion, and strong reserve power demand in emerging markets and shifts to our premium TPPL solutions, further amplified bythe execution of our restructuring programs.Operating earnings in Asia, excluding the highlighted items discussed above, decreased $11.3 million or 53.2% in fiscal 2015 compared to fiscal 2014, withthe operating margin decreasing by 460 basis points to 4.2% primarily due to costs associated37Table of Contentswith a temporary shutdown at one of our plants in the PRC, transition to our new plant in the PRC, reduction in telecom sales in the PRC and adverse impactof currency translation in Australia and Japan.Interest Expense Fiscal 2015 Fiscal 2014 Increase (Decrease) InMillions As %Net Sales InMillions As %Net Sales InMillions % Interest expense $19.7 0.8% $17.1 0.7% $2.6 14.8%Interest expense of $19.7 million in fiscal 2015 (net of interest income of $1.3 million) was $2.6 million higher than the $17.1 million in fiscal 2014 (net ofinterest income of $1.0 million). The increase in interest expense in fiscal 2015 compared to fiscal 2014 was primarily due to higher average debt outstandingand increased accreted interest on the Convertible Notes partially offset by lower average interest rates.Our average debt outstanding (including the average amount of the Convertible Notes discount of $5.6 million) was $422.5 million in fiscal 2015, comparedto our average debt outstanding (including the average amount of the Convertible Notes discount of $13.5 million) of $236.9 million in fiscal 2014. Ouraverage cash interest rate incurred in fiscal 2015 was 2.3% compared to 3.5% in fiscal 2014. This higher average debt outstanding was the result of our stockbuy back program under which over $205 million of our shares were purchased during fiscal 2015.Included in interest expense was non-cash, accreted interest on the Convertible Notes of $8.3 million in fiscal 2015 and $7.6 million in fiscal 2014. Alsoincluded in interest expense were non-cash charges related to amortization of deferred financing fees of $1.3 million in fiscal 2015 and $1.1 million in fiscal2014.Other (Income) Expense, Net Fiscal 2015 Fiscal 2014 Increase (Decrease) InMillions As %Net Sales InMillions As %Net Sales InMillions % Other (income) expense, net $(5.6) (0.2)% $13.6 0.6% $(19.2) NMNM = not meaningfulOther (income) expense, net was income of $5.6 million in fiscal 2015 compared to expense of $13.6 million in fiscal 2014. The favorable impact in fiscal2015 was mainly attributable to foreign currency gains of $5.0 million in fiscal 2015 compared to foreign currency losses in fiscal 2014 of $5.8 million duemainly to the impact of a strong U.S. dollar and a weak euro on our foreign exchange exposures. Also contributing to the favorable impact in fiscal 2015 wasthe receipt of $2.0 million in exchange for our equity interest in Altergy pursuant to the final legal settlement with Altergy compared to the write-off of $5.0million relating to the carrying value of our investment in Altergy and $1.5 million relating to other charges in fiscal 2014.Earnings Before Income Taxes Fiscal 2015 Fiscal 2014 Increase (Decrease) InMillions As %Net Sales InMillions As %Net Sales InMillions % Earnings before income taxes $249.3 9.9% $163.7 6.6% $85.6 52.3%As a result of the factors discussed above, fiscal 2015 earnings before income taxes were $249.3 million, an increase of $85.6 million or 52.3% compared tofiscal 2014.38Table of ContentsIncome Tax Expense Fiscal 2015 Fiscal 2014 Increase (Decrease) InMillions As %Net Sales InMillions As %Net Sales InMillions % Income tax expense $67.8 2.7% $17.0 0.7% $50.8 NMEffective tax rate 27.2% 10.4% 16.8% NM = not meaningfulOur 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 and theamount of our consolidated income before taxes. The Company’s income tax provisions consist of federal, state and foreign income taxes. The effective income tax rate was 27.2% in fiscal 2015 compared tothe fiscal 2014 effective income tax rate of 10.4%. The rate increase in fiscal 2015 as compared to fiscal 2014 was primarily due to the reversal of apreviously recognized deferred tax valuation allowance related to one of our foreign subsidiaries of $24.9 million in fiscal 2014 and changes in the mix ofearnings among tax jurisdictions, which were significantly impacted by a legal proceedings charge recorded in fiscal 2014. The fiscal 2015 effective incometax rate also includes an increase due to non-deductible goodwill impairment charges.The fiscal 2015 foreign effective income tax rate on foreign pre-tax income of $173.0 million was 14.8%. The difference in the foreign effective tax rateversus the U.S. statutory rate of 35% was primarily attributable to lower tax rates in the foreign countries in which we operate. The fiscal 2014 foreigneffective income tax rate on foreign pre-tax income of $116.0 million was a net benefit of 4.0%. The difference in the foreign effective tax rate versus the U.S.statutory rate of 35% was primarily due to a release of a valuation allowance in a European subsidiary combined with lower statutory tax rates in foreigncountries. The foreign effective income tax rate of fiscal 2014 without the valuation allowance release was 17.5%, and was higher than the fiscal 2015 foreigneffective income tax rate of 14.8% due to a change in mix of earnings between foreign jurisdictions.Income from our Swiss subsidiary comprised a substantial portion of our overall foreign mix of income for both fiscal 2015 and fiscal 2014 and was taxed atapproximately 7%.Liquidity and Capital ResourcesCash Flow and Financing ActivitiesCash and cash equivalents at March 31, 2016, 2015 and 2014, were $397.3 million, $268.9 million and $240.1 million, respectively.Cash provided by operating activities for fiscal 2016, 2015 and 2014, was $307.6 million, $194.5 million and $193.6 million, respectively.During fiscal 2016, cash from operating activities was provided primarily from net earnings of $131.8 million, depreciation and amortization of $56.0million, non-cash charges relating to write-off of goodwill and other assets of $36.3 million, stock-based compensation of $19.6 million, provision ofdoubtful accounts of $4.7 million, restructuring of $3.8 million and non-cash interest of $2.8 million and were partially offset by a gain of $4.3 million onsale of our facility in the PRC. Also contributing to our cash provided from operating activities was the decrease in primary working capital of $55.0 million,net of currency translation changes.During fiscal 2015, cash from operating activities was provided primarily from net earnings of $181.5 million, depreciation and amortization of $57.0million, non-cash charges relating to write-off of goodwill and other assets of $23.9 million, deferred taxes of $31.9 million, stock-based compensation of$25.3 million, non-cash interest and restructuring charges of $9.5 million and $3.3 million, respectively, and were partially offset by a non-cash gain of $2.0million on disposition of our equity interest in Altergy and non-cash credits relating to the reversal of the remaining legal accrual of $16.2 million. Alsopartially offsetting our cash provided from operating activities was the increase in Primary Working Capital of $49.9 million, net of currency translationchanges and our payment of $40.0 million towards the Altergy award, pursuant to the final legal settlement of the Altergy matter and accrued income taxexpense of $15.5 million.39Table of ContentsDuring fiscal 2014, cash from operating activities was provided primarily from net earnings of $146.7 million, depreciation and amortization of $54.0million, non-cash charges relating to write-off of goodwill and other assets of $10.2 million, restructuring charges of $11.5 million, a net source of $25.6million from non-cash interest expense and stock compensation, $90.3 million from other accrued, including the legal proceedings charge of $58.2 million,and was partially offset by cash used for the increase in Primary Working Capital of $77.0 million and deferred taxes of $49.7 million, net of currencytranslation changes.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 and the resulting net amount is dividedby the trailing three-month net sales (annualized) to derive a primary working capital percentage. Primary Working Capital was $593.4 million (yielding aPrimary Working Capital percentage of 24.3%) at March 31, 2016 and $636.6 million (yielding a Primary Working Capital percentage of 25.3%) atMarch 31, 2015.Primary Working Capital and Primary Working Capital percentages at March 31, 2016, 2015 and 2014 are computed as follows:At March 31, TradeReceivables Inventory AccountsPayable PrimaryWorkingCapital QuarterRevenueAnnualized PrimaryWorkingCapital(%) (in millions) 2016 $490.8 $331.0 $(228.4) $593.4 $2,445.9 24.3%2015 518.2 337.0 (218.6) 636.6 2,519.6 25.32014 564.6 361.8 (259.5) 666.9 2,661.0 25.1Cash used in investing activities for fiscal 2016, 2015 and 2014 was $80.9 million, $59.6 million and $232.0 million, respectively. Capital expenditureswere $55.9 million, $63.6 million and $62.0 million in fiscal 2016, 2015 and 2014, respectively. Our current year’s capital spending focused primarily oncontinuous improvement to our equipment and facilities world-wide, the continuation of a new ERP system implementation for our Americas and Asiabusinesses and an office building expansion to our Reading, Pennsylvania offices.During fiscal 2016, we acquired ICS Industries Pty. Ltd. (ICS), headquartered in Melbourne Australia for $34.5 million. There were no acquisitions in fiscal2015. In fiscal 2014, our purchases of and investments in businesses were $171.5 million with three significant acquisitions comprising Purcell Systems Inc.,a designer, manufacturer and marketer of thermally managed electronic equipment and battery cabinet enclosures, Quallion, LLC, a manufacturer of lithiumion cells and batteries for medical devices, defense, aviation and space, and UTS Holdings Sdn. Bhd. and its subsidiaries, a distributor of motive and reservepower battery products and services.During fiscal 2016 financing activities used cash of $105.7 million primarily due to revolver repayments of $360.8 million, purchase of treasury stock for$178.2 million, principal payment of $172.3 million to the Convertible Notes holders, payment of cash dividends to our stockholders of $30.9 million,repayment on Term Loan of $7.5 million and debt issuance costs of $5.0 million relating to the Notes. This was partially offset by revolver borrowings of$355.8 million and the issuance of $300.0 million of the Notes. Taxes paid related to net share settlement of equity awards, net of option proceeds and relatedtax benefits also resulted in a net outflow of $10.9 million. Net borrowings on short-term debt were $4.2 million.During fiscal 2015, financing activities used cash of $59.3 million primarily due to revolver borrowings and repayments of $372.7 million and $322.7million, respectively, and $150.0 million incremental term loan borrowing under the 2011 Credit Facility, purchase of treasury stock for $205.4 million andpayment of cash dividends to our stockholders of $31.7 million. Taxes paid related to net share settlement of equity awards, net of option proceeds andrelated tax benefits resulted in a net outflow of $8.6 million. Net repayments on short-term debt were $11.9 million.During fiscal 2014, we borrowed $251.9 million on our revolver and repaid $126.9 million. Borrowings on short-term debt were $8.5 million. During fiscal2014, we repurchased $69.9 million of our common stock and paid cash dividends to our stockholders of $23.7 million. We also acquired the share ofnoncontrolling interests in one of our foreign subsidiaries for $6.0 million and paid deferred consideration of $4.8 million in connection with an acquisitionmade in fiscal 2012. Taxes paid related to net share settlement of equity awards, net of option proceeds and related tax benefits resulted in a net outflow of$6.3 million in fiscal 2014.40Table of ContentsAs a result of the above, cash and cash equivalents increased $128.4 million from $268.9 million at March 31, 2015 to $397.3 million at March 31, 2016.We currently are in compliance with all covenants and conditions under our credit agreements.In addition to cash flows from operating activities, we had available committed and uncommitted credit lines of approximately $472 million at March 31,2016 to cover short-term liquidity requirements. Our 2011 Credit Facility is committed through September 2018, as long as we continue to comply with thecovenants and conditions of the credit facility agreement. Included in our available credit lines at March 31, 2016 is $328 million under our 2011 CreditFacility.We believe that our cash flow from operations, available cash and cash equivalents and available borrowing capacity under our credit facilities will besufficient to meet our liquidity needs, including normal levels of capital expenditures, for the foreseeable future; however, there can be no assurance that thiswill be the case.Off-Balance Sheet ArrangementsThe Company did not have any off-balance sheet arrangements during any of the periods covered by this report.Contractual Obligations and Commercial CommitmentsAt March 31, 2016, we had certain cash obligations, which are due as follows: Total Less than1 year 2 to 3years 4 to 5years After5 years (in millions)Debt obligations $612.5 $15.0 $297.5 $— $300.0Short-term debt 22.1 22.1 — — —Interest on debt 121.4 21.5 38.6 30.0 31.3Operating leases 69.0 20.3 27.2 15.1 6.4Pension benefit payments and profit sharing 35.7 2.7 5.2 6.7 21.1Restructuring 3.0 3.0 — — —Lead and foreign currency forward contracts 1.5 1.5 — — —Purchase commitments 15.2 15.2 — — —Capital lease obligations, including interest 0.2 0.1 0.1 — —Total $880.6 $101.4 $368.6 $51.8 $358.8Due to the uncertainty of future cash outflows, uncertain tax positions have been excluded from the above table.Under our 2011 Credit Facility and other credit arrangements, we had outstanding standby letters of credit of $2.7 million as of March 31, 2016.Credit Facilities and LeverageOur focus on working capital management and cash flow from operations is measured by our ability to reduce debt and reduce our leverage ratios. Shownbelow are the leverage ratios at March 31, 2016 and 2015, in connection with our 2011 Credit Facility.The total net debt as defined under our 2011 Credit Facility is $491.9 million for fiscal 2016 and is 1.5 times adjusted EBITDA (non-GAAP) as describedbelow.41Table of ContentsThe following table provides a reconciliation of net earnings to EBITDA (non-GAAP) and adjusted EBITDA (non-GAAP) as per our 2011 Credit Facility: Fiscal 2016 Fiscal 2015 (in millions, except ratios)Net earnings as reported $131.9 $181.5Add back: Depreciation and amortization 56.0 57.0Interest expense 22.3 19.7Income tax expense 50.1 67.8EBITDA (non GAAP)(1) $260.3 $326.0Adjustments per credit agreement definitions(2) 60.5 52.6Adjusted EBITDA (non-GAAP) per credit agreement $320.8 $378.6Total net debt(3) $491.9 $392.3Leverage ratios: Total net debt/adjusted EBITDA ratio(4) 1.5 X 1.0 X Maximum ratio permitted 3.25 X 3.25 XConsolidated interest coverage ratio(5) 16.4 X 37.5 X Minimum ratio required 4.5 X 4.5 X (1)We have included EBITDA (non-GAAP) and adjusted EBITDA (non-GAAP) because our lenders use it as a key measure of our performance. EBITDAis defined as earnings before interest expense, income tax expense, depreciation and amortization. EBITDA is not a measure of financial performanceunder GAAP and should not be considered an alternative to net earnings or any other measure of performance under GAAP or to cash flows fromoperating, investing or financing activities as an indicator of cash flows or as a measure of liquidity. Our calculation of EBITDA may be different fromthe calculations used by other companies, and therefore comparability may be limited. Certain financial covenants in our 2011 Credit Facility arebased on EBITDA, subject to adjustments, which are shown above. Continued availability of credit under our 2011 Credit Facility is critical to ourability to meet our business plans. We believe that an understanding of the key terms of our credit agreement is important to an investor’sunderstanding of our financial condition and liquidity risks. Failure to comply with our financial covenants, unless waived by our lenders, wouldmean we could not borrow any further amounts under our revolving credit facility and would give our lenders the right to demand immediaterepayment of all outstanding revolving credit loans. We would be unable to continue our operations at current levels if we lost the liquidity providedunder our credit agreements. Depreciation and amortization in this table excludes the amortization of deferred financing fees, which is included ininterest expense.(2)The $60.5 million adjustment to EBITDA in fiscal 2016 primarily related to $19.6 million of non-cash stock compensation, $3.8 million of non-cashrestructuring and other exit charges and $36.3 million of impairment of goodwill, indefinite-lived intangibles and fixed assets and $0.7 million ofacquisition expenses. The $52.6 million adjustment to EBITDA in fiscal 2015 primarily related to $25.3 million of non-cash stock compensation,$3.3 million of non-cash restructuring and other exit charges and $23.9 million of impairment of goodwill and indefinite-lived intangibles.(3)Debt includes capital lease obligations and letters of credit and is net of U.S. cash and cash equivalents and a portion of European cash investments, asdefined in the 2011 Credit Facility. In fiscal 2016, the amounts deducted in the calculation of net debt were U.S. cash and cash equivalents andforeign cash investments of $148 million, respectively, and in fiscal 2015, $128 million, respectively.(4)These ratios are included to show compliance with the leverage ratios set forth in our credit facilities. We show both our current ratios and themaximum ratio permitted or minimum ratio required under our 2011 Credit Facility.(5)As defined in the 2011 Credit Facility, for fiscal 2016 interest expense used in the consolidated interest coverage ratio excludes non-cash interest of$2.8 million. For fiscal 2015, interest expense used in the consolidated interest coverage ratio excludes non-cash interest of $9.5 million.RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTSSee Note 1 to the Consolidated Financial Statements - Summary of Significant Accounting Policies for a description of certain recently issued accountingstandards that were adopted or are pending adoption that could have a significant impact on our Consolidated Financial Statements or the Notes to theConsolidated Financial Statements.42Table of ContentsRelated Party TransactionsNone.Sequential Quarterly InformationFiscal 2016 and 2015 quarterly operating results, and the associated quarterly trends within each of those two fiscal years, are affected by the same economicand business conditions as described in the fiscal 2016 versus fiscal 2015 analysis previously discussed. Fiscal 2016 Fiscal 2015 June 28,20151st Qtr. Sep. 27,20152nd Qtr. Dec. 27,20153rd Qtr. March 31,20164th Qtr. June 29,20141st Qtr. Sep. 28,20142nd Qtr. Dec. 28,20143rd Qtr. March 31,20154th Qtr. (in millions, except share and per share amounts)Net sales $562.1 $569.1 $573.6 $611.4 $634.1 $629.9 $611.6 $629.9Cost of goods sold 411.7 414.1 427.8 450.9 471.5 467.4 454.3 471.4Gross profit 150.4 155.0 145.8 160.5 162.6 162.5 157.3 158.5Operating expenses 84.5 89.6 87.1 91.5 89.1 96.9 86.2 86.2Restructuring and otherexit charges 1.2 2.6 3.2 5.9 1.8 1.8 2.4 5.4Impairment of goodwill,indefinite-lived intangiblesand fixed assets — — — 36.3 — — — 23.9Legal proceedings charge/ (reversal of legal accrual,net of fees) — 3.2 — — — (16.2) — —(Gain) loss on sale offacility (4.3) — — 0.9 — — — —Operating earnings 69.0 59.6 55.5 25.9 71.7 80.0 68.7 43.0Interest expense 6.3 5.1 5.3 5.6 4.9 4.3 5.0 5.5Other (income) expense,net 0.7 0.7 1.2 3.1 1.0 (3.4) (0.9) (2.3)Earnings before incometaxes 62.0 53.8 49.0 17.2 65.8 79.1 64.6 39.8Income tax expense 14.1 14.0 10.8 11.2 16.7 22.5 15.3 13.3Net earnings 47.9 39.8 38.2 6.0 49.1 56.6 49.3 26.5Net (losses) earningsattributable tononcontrolling interests (0.5) (0.2) (0.3) (3.3) (0.1) 0.3 0.1 —Net earnings attributableto EnerSys stockholders $48.4 $40.0 $38.5 $9.3 $49.2 $56.3 $49.2 $26.5Net earnings per commonshare attributable toEnerSys stockholders: Basic $1.09 $0.89 $0.87 $0.21 $1.05 $1.22 $1.09 $0.60Diluted $1.03 $0.87 $0.86 $0.21 $0.99 $1.16 $1.04 $0.57Weighted-average numberof common sharesoutstanding: Basic 44,233,915 44,944,027 44,394,925 43,533,985 46,899,303 46,133,637 45,188,942 44,203,385Diluted 46,756,376 46,005,399 44,976,204 44,158,541 49,726,238 48,537,276 47,368,173 46,579,23043Table of ContentsNet SalesQuarterly net sales by segment were as follows: Fiscal 2016 Fiscal 2015 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. (in millions)Net sales by segment: Americas $317.0 $322.5 $306.3 $330.2 $330.9 $333.2 $314.3 $344.0EMEA 196.7 189.4 196.8 204.5 242.0 233.3 242.3 231.2Asia 48.4 57.2 70.5 76.7 61.2 63.4 55.0 54.7Total $562.1 $569.1 $573.6 $611.4 $634.1 $629.9 $611.6 $629.9Segment net sales as % oftotal: Americas 56.4% 56.7% 53.4% 54.0% 52.2% 52.9% 51.4% 54.6%EMEA 35.0 33.3 34.3 33.4 38.1 37.0 39.6 36.7Asia 8.6 10.0 12.3 12.6 9.7 10.1 9.0 8.7Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%Quarterly net sales by product line were as follows: Fiscal 2016 Fiscal 2015 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. (in millions)Net sales by product line: Reserve power $264.3 $274.2 $272.0 $298.7 $311.4 $315.5 $307.0 $318.8Motive power 297.8 294.9 301.6 312.7 322.7 314.4 304.6 311.1Total $562.1 $569.1 $573.6 $611.4 $634.1 $629.9 $611.6 $629.9Product line net sales as %of total: Reserve power 47.0% 48.2% 47.4% 48.9% 49.1% 50.1% 50.2% 50.6%Motive power 53.0 51.8 52.6 51.1 50.9 49.9 49.8 49.4Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKMarket RisksOur cash flows and earnings are subject to fluctuations resulting from changes in interest rates, foreign currency exchange rates and raw material costs. Wemanage our exposure to these market risks through internally established policies and procedures and, when deemed appropriate, through the use ofderivative financial instruments. Our policy does not allow speculation in derivative instruments for profit or execution of derivative instrument contracts forwhich there are no underlying exposures. We do not use financial instruments for trading purposes and are not a party to any leveraged derivatives. Wemonitor our underlying market risk exposures on an ongoing basis and believe that we can modify or adapt our hedging strategies as needed.Counterparty RisksWe have entered into lead forward purchase contracts and foreign exchange forward and purchased option contracts to manage the risk associated with ourexposures to fluctuations resulting from changes in raw material costs and foreign currency44Table of Contentsexchange rates. The Company’s agreements are with creditworthy financial institutions. Those contracts that result in a liability position at March 31,2016 are $1.8 million (pre-tax). Those contracts that result in an asset position at March 31, 2016 are $0.3 million (pre-tax) and the vast majority of these willsettle within one year. The impact on the Company due to nonperformance by the counterparties has been evaluated and not deemed material.Interest Rate RisksWe are exposed to changes in variable U.S. interest rates on borrowings under our credit agreements as well as short term borrowings in our foreignsubsidiaries.A 100 basis point increase in interest rates would have increased annual interest expense by approximately $3.3 million on the variable rate portions of ourdebt.Commodity Cost Risks—Lead ContractsWe 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 orderto 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 suchcontracts are for a period not extending beyond one year. We had the following contracts outstanding at the dates shown below:Date $’s Under Contract # Pounds Purchased AverageCost/Pound Approximate % of Lead Requirements (1) (in millions) (in millions) March 31, 2016 $21.6 27.4 $0.79 6%March 31, 2015 76.1 91.6 0.83 19March 31, 2014 86.5 89.9 0.96 19 (1)Based on the fiscal year lead requirements for the period then ended.We estimate that a 10% increase in our cost of lead would have increased our annual cost of goods sold by approximately $54 million for the fiscal yearended March 31, 2016.Foreign Currency Exchange Rate RisksWe manufacture and assemble our products globally in the Americas, EMEA and Asia. Approximately 50% of our sales and expenses are transacted inforeign currencies. Our sales revenue, production costs, profit margins and competitive position are affected by the strength of the currencies in countrieswhere we manufacture or purchase goods relative to the strength of the currencies in countries where our products are sold. Additionally, as we report ourfinancial statements in U.S. dollars, our financial results are affected by the strength of the currencies in countries where we have operations relative to thestrength of the U.S. dollar. The principal foreign currencies in which we conduct business are the Euro, Swiss franc, British pound, Polish zloty, Chineserenminbi 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. dollarbased lead costs into local currencies in Europe. Additionally, we have currency exposures from intercompany financing and intercompany and third partytrade transactions. On a selective basis, we enter into foreign currency forward contracts and purchase option contracts to reduce the impact from thevolatility of currency movements; however, we cannot be certain that foreign currency fluctuations will not impact our operations in the future.45Table of ContentsTo hedge these exposures, we have entered into forward contracts and options with financial institutions to fix the value at which we will buy or sell certaincurrencies. The vast majority of such contracts are for a period not extending beyond one year. Forward contracts outstanding as of March 31, 2016 were$29.4 million. The details of contracts outstanding as of March 31, 2016 were as follows: Transactions Hedged $USEquivalent(in millions) AverageRateHedged Approximate% of AnnualRequirements (1)Sell Euros for U.S. dollars $11.4 $/€ 1.11 5%Sell Euros for Polish zloty 5.7 PLN/€ 4.30 8Sell Euros for British pounds 5.2 £/€ 0.76 13Sell Malaysian Ringgit for Euros 2.8 MYR/€ 4.17 92Sell Australian dollars for U.S. dollars 1.7 $/AUD 0.72 19Sell Japanese Yen for U.S. dollars 1.7 ¥/$ 120.45 69Sell Australian dollars for British Pounds 0.9 AUD/£ 1.94 10Total $29.4 (1)Based on the fiscal year currency requirements for the year ended March 31, 2016.Foreign exchange translation adjustments are recorded as a separate component of accumulated other comprehensive income in EnerSys’ stockholders’equity and noncontrolling interests.Based on changes in the timing and amount of interest rate and foreign currency exchange rate movements and our actual exposures and hedges, actual gainsand losses in the future may differ from our historical results.46Table of ContentsITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAContentsEnerSysINDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageReport of Independent Registered Public Accounting Firm (on Consolidated Financial Statements and Schedule)48Report of Independent Registered Public Accounting Firm (on Internal Control Over Financial Reporting)49Audited Consolidated Financial Statements Consolidated Balance Sheets as of March 31, 2016 and 201550Consolidated Statements of Income for the Fiscal Years Ended March 31, 2016, 2015 and 201451Consolidated Statements of Comprehensive Income for the Fiscal Years Ended March 31, 2016, 2015 and 201452Consolidated Statements of Changes in Equity for the Fiscal Years Ended March 31, 2016, 2015 and 201453Consolidated Statements of Cash Flows for the Fiscal Years Ended March 31, 2016, 2015 and 201454Notes to Consolidated Financial Statements551. Summary of Significant Accounting Policies552. Acquisitions623. Inventories634. Property, Plant, and Equipment635. Goodwill and Other Intangible Assets636. Prepaid and Other Current Assets657. Accrued Expenses668. Debt669. Leases6810. Other Liabilities6911. Fair Value Measurements6912. Derivative Financial Instruments7113. Income Taxes7314. Retirement Plans7615. Stockholders’ Equity and Noncontrolling Interests8116. Stock-Based Compensation8317. Earnings Per Share8618. Commitments, Contingencies and Litigation8619. Restructuring and Other Exit Charges8820. Warranty9021. Other (Income) Expense, Net9022. Business Segments9123. Quarterly Financial Data (Unaudited)9224. Subsequent Events9347Table of ContentsReport of Independent Registered Public Accounting FirmThe Board of Directors and Stockholders of EnerSysWe have audited the accompanying consolidated balance sheets of EnerSys as of March 31, 2016 and 2015, and the related consolidated statements ofincome, comprehensive income, changes in equity and cash flows for each of the three years in the period ended March 31, 2016. Our audits also includedthe financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company'smanagement. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of EnerSys at March 31,2016 and 2015, and the consolidated results of its operations and its cash flows for each of the three years in the period ended March 31, 2016, in conformitywith U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basicfinancial statements taken as a whole, presents fairly in all material respects the information set forth therein.As discussed in Note 1 to the consolidated financial statements, EnerSys changed the classification of deferred tax assets and liabilities as a result of theadoption of the amendments to the FASB Accounting Standards Codification resulting from Accounting Standards Update 2015-17, Income Taxes: BalanceSheet Classification of Deferred Taxes, effective March 31, 2016.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), EnerSys’ internal control overfinancial reporting as of March 31, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission (2013 framework) and our report dated May 31, 2016 expressed an unqualified opinion thereon./s/ Ernst & Young LLPPhiladelphia, PennsylvaniaMay 31, 201648Table of ContentsReport of Independent Registered Public Accounting FirmThe Board of Directors and Stockholders of EnerSysWe have audited EnerSys’ internal control over financial reporting as of March 31, 2016, based on criteria established in Internal Control-IntegratedFramework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). EnerSys’ managementis responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financialreporting included in the accompanying Management Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion onthe company’s internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testingand evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.In our opinion, EnerSys maintained, in all material respects, effective internal control over financial reporting as of March 31, 2016, based on the COSOcriteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheetsof EnerSys as of March 31, 2016 and 2015, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows foreach of the three years in the period ended March 31, 2016 of EnerSys and our report dated May 31, 2016 expressed an unqualified opinion thereon./s/ Ernst & Young LLPPhiladelphia, PennsylvaniaMay 31, 201649Table of ContentsEnerSysConsolidated Balance Sheets(In Thousands, Except Share and Per Share Data) March 31, 2016 2015Assets Current assets: Cash and cash equivalents $397,307 $268,921Accounts receivable, net of allowance for doubtful accounts (2016–11,393; 2015–$7,562) 490,799 518,165Inventories, net 331,081 337,011Prepaid and other current assets 77,052 77,572Total current assets 1,296,239 1,201,669Property, plant, and equipment, net 357,409 356,854Goodwill 353,547 369,730Other intangible assets, net 159,658 158,160Deferred taxes 33,530 36,516Other assets 14,105 13,626Total assets $2,214,488 $2,136,555Liabilities and Equity Current liabilities: Short-term debt $22,144 $19,715Current portion of capital lease obligations 89 237Accounts payable 228,442 218,574Accrued expenses 200,496 193,262Total current liabilities 451,171 431,788Long-term debt 606,221 493,224Capital lease obligations 177 37Deferred taxes 46,008 77,201Other liabilities 86,479 81,579Total liabilities 1,190,056 1,083,829Commitments and contingencies Redeemable noncontrolling interests 5,997 6,956Redeemable equity component of Convertible Notes — 1,330Equity: Preferred Stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding at March31, 2016 and at March 31, 2015 — —Common Stock, $0.01 par value, 135,000,000 shares authorized, 54,112,776 shares issued and43,189,502 shares outstanding at March 31, 2016; 53,664,639 shares issued and 44,068,588 sharesoutstanding at March 31, 2015 541 537Additional paid-in capital 452,097 525,967Treasury stock at cost, 10,923,274 shares held as of March 31, 2016 and 9,596,051 shares held as ofMarch 31, 2015 (439,800) (376,005)Retained earnings 1,097,642 997,376Accumulated other comprehensive loss (97,349) (108,975)Total EnerSys stockholders’ equity 1,013,131 1,038,900Nonredeemable noncontrolling interests 5,304 5,540Total equity 1,018,435 1,044,440Total liabilities and equity $2,214,488 $2,136,555See accompanying notes.50Table of ContentsEnerSysConsolidated Statements of Income(In Thousands, Except Share and Per Share Data) Fiscal year ended March 31, 2016 2015 2014Net sales $2,316,249 $2,505,512 $2,474,433Cost of goods sold 1,704,472 1,864,601 1,844,813Gross profit 611,777 640,911 629,620Operating expenses 352,767 358,381 344,421Restructuring and other exit charges 12,978 11,436 27,326Impairment of goodwill, indefinite-lived intangibles and fixed assets 36,252 23,946 5,179Legal proceedings charge / (reversal of legal accrual, net of fees) 3,201 (16,233) 58,184Gain on sale of facility (3,420) — —Operating earnings 209,999 263,381 194,510Interest expense 22,343 19,644 17,105Other (income) expense, net 5,719 (5,602) 13,658Earnings before income taxes 181,937 249,339 163,747Income tax expense 50,113 67,814 16,980Net earnings 131,824 181,525 146,767Net (losses) earnings attributable to noncontrolling interests (4,326) 337 (3,561)Net earnings attributable to EnerSys stockholders $136,150 $181,188 $150,328Net earnings per common share attributable to EnerSys stockholders: Basic $3.08 $3.97 $3.17Diluted $2.99 $3.77 $3.02Dividends per common share $0.70 $0.70 $0.50Weighted-average number of common shares outstanding: Basic 44,276,713 45,606,317 47,473,690Diluted 45,474,130 48,052,729 49,788,155See accompanying notes.51Table of ContentsEnerSysConsolidated Statements of Comprehensive Income(In Thousands) Fiscal year ended March 31, 2016 2015 2014Net earnings $131,824 $181,525 $146,767Other comprehensive income (loss): Net unrealized gain (loss) on derivative instruments, net of tax 483 2,158 (1,421)Pension funded status adjustment, net of tax 1,858 (8,512) (2,038)Foreign currency translation adjustment 8,035 (171,830) 29,339Total other comprehensive income (loss), net of tax 10,376 (178,184) 25,880Total comprehensive income 142,200 3,341 172,647Comprehensive loss attributable to noncontrolling interests (5,576) (1,027) (4,871)Comprehensive income attributable to EnerSys stockholders $147,776 $4,368 $177,518 See accompanying notes.52Table of ContentsEnerSysConsolidated Statements of Changes in Equity(In Thousands) PreferredStock CommonStock Paid-inCapital TreasuryStock RetainedEarnings AccumulatedOtherComprehensiveIncome (Loss) TotalEnerSysStockholders’Equity Non-redeemableNon-ControllingInterests TotalEquityBalance at March 31, 2013 $— $529 $501,646 $(100,776) $727,347 $40,655 $1,169,401 $5,882 $1,175,283Stock-based compensation — — 16,742 — — — 16,742 — 16,742Exercise of stock options (taxes paid related to net share settlement ofequity awards), net — 3 (7,873) — — — (7,870) — (7,870)Tax benefit from stock options — — 1,612 — — — 1,612 — 1,612Purchase of common stock — — — (69,867) — — (69,867) — (69,867)Purchase of noncontrolling interests — — (2,866) — — — (2,866) — (2,866)Debt conversion feature — — (9,613) — — — (9,613) — (9,613)Net earnings (excluding $3,536 of losses attributable to redeemablenoncontrolling interests) — — — — 150,328 — 150,328 (25) 150,303Dividends ($0.50 per common share) — — 606 — (24,287) — (23,681) — (23,681)Redemption value adjustment attributable to redeemablenoncontrolling interests — — — — (4,974) — (4,974) — (4,974)Other comprehensive income: Pension funded status adjustment (net of tax benefit of $26) — — — — — (2,038) (2,038) — (2,038)Net unrealized gain (loss) on derivative instruments (net of tax benefitof $834) — — — — — (1,421) (1,421) — (1,421)Foreign currency translation adjustment (excludes ($1,340) related toredeemable noncontrolling interests) — — — — — 30,649 30,649 30 30,679Balance at March 31, 2014 $— $532 $500,254 $(170,643) $848,414 $67,845 $1,246,402 $5,887 $1,252,289Stock-based compensation — — 25,259 — — — 25,259 — 25,259Exercise of stock options (taxes paid related to net share settlement ofequity awards), net — 5 (12,676) — — — (12,671) — (12,671)Tax benefit from stock options — — 4,071 — — — 4,071 — 4,071Purchase of common stock — — — (205,362) — — (205,362) — (205,362)Purchase of noncontrolling interests — — — — — — — (119) (119)Debt conversion feature — — 8,283 — — — 8,283 — 8,283Other — — (3) — — — (3) — (3)Net earnings (excluding $191 of earnings attributable to redeemablenoncontrolling interests) — — — — 181,188 — 181,188 146 181,334Dividends ($0.70 per common share) — — 779 — (32,518) — (31,739) — (31,739)Redemption value adjustment attributable to redeemablenoncontrolling interests — — — — 292 — 292 — 292Other comprehensive income: Pension funded status adjustment (net of tax benefit of $3,250) — — — — — (8,512) (8,512) — (8,512)Net unrealized gain (loss) on derivative instruments (net of tax expenseof $1,266) — — — — — 2,158 2,158 — 2,158Foreign currency translation adjustment (excludes ($990) related toredeemable noncontrolling interests) — — — — — (170,466) (170,466) (374) (170,840)Balance at March 31, 2015 $— $537 $525,967 $(376,005) $997,376 $(108,975) $1,038,900 $5,540 $1,044,440Stock-based compensation — — 19,603 — — — 19,603 — 19,603Exercise of stock options (taxes paid related to net share settlement ofequity awards), net — 4 (15,209) — — — (15,205) — (15,205)Tax benefit from stock options — — 4,291 — — — 4,291 — 4,291Purchase of common stock — — — (178,244) — — (178,244) — (178,244)Reissuance of treasury stock to Convertible Notes holders — — — 114,449 — — 114,449 — 114,449Adjustment to equity on debt extinguishment — — (84,140) — — — (84,140) — (84,140)Debt conversion feature — — 1,330 — — — 1,330 — 1,330Other — — (477) — — — (477) — (477)Net earnings (excluding $4,272 of losses attributable to redeemablenoncontrolling interests) — — — — 136,150 — 136,150 (54) 136,096Dividends ($0.70 per common share) — — 732 — (31,612) — (30,880) — (30,880)Redemption value adjustment attributable to redeemablenoncontrolling interests — — — — (4,272) — (4,272) — (4,272)Other comprehensive income: Pension funded status adjustment (net of tax expense of $587) — — — — — 1,858 1,858 — 1,858Net unrealized gain (loss) on derivative instruments (net of tax expenseof $277) — — — — — 483 483 — 483Foreign currency translation adjustment (excludes ($1,068) related toredeemable noncontrolling interests) — — — — — 9,285 9,285 (182) 9,103Balance at March 31, 2016 $— $541 $452,097 $(439,800) $1,097,642 $(97,349) $1,013,131 $5,304 $1,018,435See accompanying notes.53Table of ContentsEnerSysConsolidated Statements of Cash Flows(In Thousands) Fiscal year ended March 31, 2016 2015 2014Cash flows from operating activities Net earnings $131,824 $181,525 $146,767Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 55,994 57,040 53,972Non-cash restructuring charges 3,800 3,349 11,497(Gain) on disposition of equity interest in Altergy/ write - off of investment in Altergy — (2,000) 5,000Impairment of goodwill, indefinite-lived intangibles and fixed assets 36,252 23,946 5,179Derivatives not designated in hedging relationships: Net losses (gains) 409 (972) 188Cash proceeds (settlements) 648 654 (703)Provision for doubtful accounts 4,749 1,125 907Deferred income taxes (753) 31,886 (49,748)Reversal of legal accrual, net of fees - See Note 18 (799) (16,233) —Non-cash interest expense 2,794 9,546 8,826Stock-based compensation 19,603 25,259 16,742Gain on sale of facility (4,348) — —(Gain) loss on disposal of fixed assets (114) 8 (100)Changes in assets and liabilities, net of effects of acquisitions: Accounts receivable 31,142 (13,250) (70,134)Inventory 11,667 (10,153) 8,144Prepaid and other current assets 4,751 (18,998) (7,669)Other assets (331) 701 (1,347)Accounts payable 12,178 (26,500) (14,979)Accrued expenses (4,739) (64,147) 90,339Other liabilities 2,844 11,685 (9,260)Net cash provided by operating activities 307,571 194,471 193,621Cash flows from investing activities Capital expenditures (55,880) (63,625) (61,995)Purchase of businesses, net of cash acquired (35,439) — (171,528)Proceeds from sale of facility 9,179 — —Proceeds from disposition of equity interest in Altergy — 2,000 —Proceeds from disposal of property, plant, and equipment and other assets 1,217 2,009 1,518Net cash used in investing activities (80,923) (59,616) (232,005)Cash flows from financing activities Net increase (decrease) in short-term debt 4,233 (11,923) 8,458Proceeds from revolving credit borrowings 355,800 372,700 251,900Repayments of revolving credit borrowings (360,800) (322,700) (126,900)Proceeds from long-term debt 300,000 150,000 —Payments of long-term debt (7,500) — —Repurchase of Convertible Notes (172,266) (234) —Deferred financing fees (5,031) (1,076) (853)Capital lease obligations and other (127) (260) (404)Option proceeds (taxes paid related to net share settlement of equity awards), net (15,205) (12,671) (7,871)Excess tax benefits from exercise of stock options and vesting of equity awards 4,291 4,071 1,612Purchase of treasury stock (178,244) (205,362) (69,867)Dividends paid to stockholders (30,880) (31,739) (23,681)Payment of deferred purchase consideration — — (4,820)Purchase of noncontrolling interests — (119) (6,012)Net cash (used in) provided by financing activities (105,729) (59,313) 21,562Effect of exchange rate changes on cash and cash equivalents 7,467 (46,724) 7,577Net increase (decrease) in cash and cash equivalents 128,386 28,818 (9,245)Cash and cash equivalents at beginning of year 268,921 240,103 249,348Cash and cash equivalents at end of year $397,307 $268,921 $240,103See accompanying notes.54Table of ContentsNotes to Consolidated Financial StatementsMarch 31, 2016(In Thousands, Except Share and Per Share Data)1. Summary of Significant Accounting PoliciesDescription of BusinessEnerSys (the “Company”) and its predecessor companies have been manufacturers of industrial batteries for over 125 years. EnerSys is a global leader instored energy solutions for industrial applications. The Company manufactures, markets and distributes industrial batteries and related products such aschargers, outdoor cabinet enclosures, power equipment and battery accessories, and provides related after-market and customer-support services for industrialbatteries.Principles of ConsolidationThe consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and any partially owned subsidiaries that theCompany has the ability to control. Control generally equates to ownership percentage, whereby investments that are more than 50% owned are generallyconsolidated, investments in affiliates of 50% or less but greater than 20% are generally accounted for using the equity method, and investments in affiliatesof 20% or less are accounted for using the cost method. All intercompany transactions and balances have been eliminated in consolidation.The Company also consolidates certain subsidiaries in which the noncontrolling interest party has within its control the right to require the Company toredeem all or a portion of its interest in the subsidiary. The redeemable noncontrolling interests are reported at their estimated redemption value, and theamount presented in temporary equity is not less than the initial amount reported in temporary equity. Any adjustment to the redemption value impactsretained earnings but does not impact net income or comprehensive income. Noncontrolling interests which are redeemable only upon future events, theoccurrence of which is not currently probable, are recorded at carrying value.Foreign Currency TranslationResults of foreign operations of subsidiaries, whose functional currency is the local currency, are translated into U.S. dollars using average exchange ratesduring the periods. The assets and liabilities are translated into U.S. dollars using exchange rates as of the balance sheet dates. Gains or losses resulting fromtranslating the foreign currency financial statements are accumulated as a separate component of accumulated other comprehensive income (“AOCI”) inEnerSys’ stockholders’ equity and noncontrolling interests.Transaction gains and losses resulting from exchange rate changes on transactions denominated in currencies other than the functional currency of theapplicable subsidiary are included in the Consolidated Statements of Income, within “Other (income) expense, net”, in the year in which the change occurs.Revenue RecognitionThe Company recognizes revenue when the earnings process is complete. This occurs when risk and title transfers, collectibility is reasonably assured andpricing is fixed or determinable. Shipment terms are either shipping point or destination and do not differ significantly between the Company’s businesssegments. Accordingly, revenue is recognized when risk and title are transferred to the customer. Amounts invoiced to customers for shipping and handlingare classified as revenue. Taxes on revenue producing transactions are not included in net sales.The Company recognizes revenue from the service of its products when the respective services are performed.Accruals are made at the time of sale for sales returns and other allowances based on the Company’s historical experience.Freight ExpenseAmounts billed to customers for outbound freight costs are classified as sales in the Consolidated Statements of Income. Costs incurred by the Company foroutbound freight costs to customers, inbound and transfer freight are classified in cost of goodssold.55Table of ContentsWarrantiesThe Company’s products are warranted for a period ranging from one to twenty years for reserve power batteries and for a period ranging from one to sevenyears for motive power batteries. The Company provides for estimated product warranty expenses when the related products are sold. The assessment of theadequacy of the reserve includes a review of open claims and historical experience.Cash and Cash EquivalentsCash and cash equivalents include all highly liquid investments with an original maturity of three months or less when purchased.Concentration of Credit RiskFinancial instruments that subject the Company to potential concentration of credit risk consist principally of short-term cash investments and trade accountsreceivable. The Company invests its cash with various financial institutions and in various investment instruments limiting the amount of credit exposure toany one financial institution or entity. The Company has bank deposits that exceed federally insured limits. In addition, certain cash investments may bemade in U.S. and foreign government bonds, or other highly rated investments guaranteed by the U.S. or foreign governments. Concentration of credit riskwith respect to trade receivables is limited by a large, diversified customer base and its geographic dispersion. The Company performs ongoing creditevaluations of its customers’ financial condition and requires collateral, such as letters of credit, in certain circumstances.Accounts ReceivableThe Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of customers to make required payments. Theallowance is based on management’s estimate of uncollectible accounts, analysis of historical data and trends, as well as reviews of all relevant factorsconcerning the financial capability of its customers. Accounts receivable are considered to be past due based on how payments are received compared to thecustomer’s credit terms. Accounts are written off when management determines the account is uncollectible.InventoriesInventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. The cost of inventory consists of material,labor, and associated overhead.Property, Plant, and EquipmentProperty, plant, and equipment are recorded at cost and include expenditures that substantially increase the useful lives of the assets. Depreciation isprovided using the straight-line method over the estimated useful lives of the assets as follows: 10 to 33 years for buildings and improvements and 3 to 15years for machinery and equipment.Maintenance and repairs are expensed as incurred. Interest on capital projects is capitalized during the construction period.Business CombinationsThe purchase price of an acquired company is allocated between tangible and intangible assets acquired and liabilities assumed from the acquired businessbased on their estimated fair values, with the residual of the purchase price recorded as goodwill. The results of operations of the acquired business areincluded in the Company’s operating results from the date of acquisition.Goodwill and Other Intangible AssetsGoodwill and indefinite-lived trademarks are tested for impairment at least annually and whenever events or circumstances occur indicating that a possibleimpairment may have been incurred. Goodwill is tested for impairment by determining the fair value of the Company’s reporting units. These estimated fairvalues are based on financial projections, certain cash flow measures, and market capitalization.The goodwill impairment test involves a two-step process. In the first step, the Company compares the fair value of each reporting unit to its carrying value. Ifthe fair value of the reporting unit exceeds its carrying value, goodwill is not impaired56Table of Contentsand no further testing is required. If the fair value of the reporting unit is less than the carrying value, the Company must perform the second step of theimpairment test to measure the amount of impairment loss, if any. In the second step, the reporting unit's fair value is allocated to all of the assets andliabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill inthe same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of the reporting unit's goodwill is less than thecarrying value, the difference is recorded as an impairment loss.The indefinite-lived trademarks are tested for impairment by comparing the carrying value to the fair value based on current revenue projections of therelated operations, under the relief from royalty method. Any excess carrying value over the amount of fair value is recognized as impairment. Anyimpairment would be recognized in full in the reporting period in which it has been identified.The Company estimates the fair value of its reporting units using a weighting of fair values derived from both the income approach and the market approach.Under the income approach, the Company calculates the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flowprojections are based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions.The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and theuncertainty related to the business's ability to execute on the projected cash flows. The market approach estimates fair value based on market multiples ofrevenue and earnings derived from comparable publicly-traded companies with similar operating and investment characteristics as the reporting unit. Theweighting of the fair value derived from the market approach ranges from 0% to 50% depending on the level of comparability of these publicly-tradedcompanies to the reporting unit.In order to assess the reasonableness of the calculated fair values of its reporting units, the Company also compares the sum of the reporting units' fair valuesto its market capitalization and calculates an implied control premium (the excess of the sum of the reporting units' fair values over the market capitalization).The Company evaluates the control premium by comparing it to control premiums of recent comparable market transactions.Finite-lived assets such as customer relationships, patents, and non-compete agreements are amortized over their estimated useful lives, generally overperiods ranging from 3 to 20 years. The Company reviews the carrying values of these assets for possible impairment whenever events or changes incircumstances indicate that the carrying value of an asset may not be recoverable based on undiscounted estimated cash flows expected to result from its useand eventual disposition. The Company continually evaluates the reasonableness of the useful lives of these assets.Impairment of Long-Lived AssetsThe Company reviews the carrying values of its long-lived assets to be held and used for possible impairment whenever events or changes in circumstancesindicate that the carrying value may not be recoverable, based on undiscounted estimated cash flows expected to result from its use and eventual disposition.The factors considered by the Company in performing this assessment include current operating results, trends and other economic factors. In assessing therecoverability of the carrying value of a long-lived asset, the Company must make assumptions regarding future cash flows and other factors. If theseestimates or the related assumptions change in the future, the Company may be required to record an impairment loss for these assets.Environmental ExpendituresThe Company records a loss and establishes a reserve for environmental remediation liabilities when it is probable that an asset has been impaired or aliability exists and the amount of the liability can be reasonably estimated. Reasonable estimates involve judgments made by management after consideringa broad range of information including notifications, demands or settlements that have been received from a regulatory authority or private party, estimatesperformed by independent engineering companies and outside counsel, available facts existing and proposed technology, the identification of otherpotentially responsible parties, their ability to contribute and prior experience. These judgments are reviewed quarterly as more information is received andthe amounts reserved are updated as necessary. However, the reserves may materially differ from ultimate actual liabilities if the loss contingency is difficultto estimate or if management’s judgments turn out to be inaccurate. If management believes no best estimate exists, the minimum probable loss is accrued.Derivative Financial InstrumentsThe Company utilizes derivative instruments to mitigate volatility related to interest rates, lead prices and foreign currency exposures. The Company doesnot hold or issue derivative financial instruments for trading or speculative purposes. The57Table of ContentsCompany recognizes derivatives as either assets or liabilities in the accompanying Consolidated Balance Sheets and measures those instruments at fair value.Changes in the fair value of those instruments are reported in AOCI if they qualify for hedge accounting or in earnings if they do not qualify for hedgeaccounting. Derivatives qualify for hedge accounting if they are designated as hedge instruments and if the hedge is highly effective in achieving offsettingchanges in the fair value or cash flows of the asset or liability hedged. Effectiveness is measured on a regular basis using statistical analysis and by comparingthe overall changes in the expected cash flows on the lead and foreign currency forward contracts with the changes in the expected all-in cash outflowrequired for the lead and foreign currency purchases. This analysis is performed on the initial purchases quarterly that cover the quantities hedged.Accordingly, gains and losses from changes in derivative fair value of effective hedges are deferred and reported in AOCI until the underlying transactionaffects earnings.The Company has commodity, foreign exchange and interest rate hedging authorization from the Board of Directors and has established a hedging and riskmanagement program that includes the management of market and counterparty risk. Key risk control activities designed to ensure compliance with the riskmanagement program include, but are not limited to, credit review and approval, validation of transactions and market prices, verification of risk andtransaction limits, portfolio stress tests, sensitivity analyses and frequent portfolio reporting, including open positions, determinations of fair value and otherrisk management metrics.Market risk is the potential loss the Company and its subsidiaries may incur as a result of price changes associated with a particular financial or commodityinstrument. The Company utilizes forward contracts, options, and swaps as part of its risk management strategies, to minimize unanticipated fluctuations inearnings caused by changes in commodity prices, interest rates and/or foreign currency exchange rates. All derivatives are recognized on the balance sheet attheir fair value, unless they qualify for the Normal Purchase Normal Sale exemption.Credit risk is the potential loss the Company may incur due to the counterparty’s non-performance. The Company is exposed to credit risk from interest rate,foreign currency and commodity derivatives with financial institutions. The Company has credit policies to manage their credit risk, including the use of anestablished credit approval process, monitoring of the counterparty positions and the use of master netting agreements.The Company has elected to offset net derivative positions under master netting arrangements. The Company does not have any positions involving cashcollateral (payables or receivables) under a master netting arrangement as of March 31, 2016 and 2015.The Company does not have any credit-related contingent features associated with its derivative instruments.Fair Value of Financial InstrumentsThe Company uses the following valuation techniques to measure fair value for its financial assets and financial liabilities:Level 1 Inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in marketsthat are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from orcorroborated by observable market data. Level 3 Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at themeasurement date (an exit price). The Company and its subsidiaries use, as appropriate, a market approach (generally, data from market transactions), anincome approach (generally, present value techniques and option-pricing models), and/or a cost approach (generally, replacement cost) to measure the fairvalue of an asset or liability. These valuation approaches incorporate inputs such as observable, independent market data and/or unobservable data thatmanagement believes are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, asapplicable, certain risks such as nonperformance risk, which includes credit risk.Lead contracts, foreign currency contracts and interest rate contracts generally use an income approach to measure the fair value of these contracts, utilizingreadily observable inputs, such as forward interest rates (e.g., London Interbank Offered Rate58Table of Contents—“LIBOR”) and forward foreign currency exchange rates (e.g., GBP and euro) and commodity prices (e.g., London Metals Exchange), as well as inputs thatmay not be observable, such as credit valuation adjustments. When observable inputs are used to measure all or most of the value of a contract, the contract isclassified as Level 2. Over-the-counter (OTC) contracts are valued using quotes obtained from an exchange, binding and non-binding broker quotes.Furthermore, the Company obtains independent quotes from the market to validate the forward price curves. OTC contracts include forwards, swaps andoptions. To the extent possible, fair value measurements utilize various inputs that include quoted prices for similar contracts or market-corroborated inputs.When unobservable inputs are significant to the fair value measurement, the asset or liability is classified as Level 3. Additionally, Level 2 fair valuemeasurements include adjustments for credit risk based on the Company’s own creditworthiness (for net liabilities) and its counterparties’ creditworthiness(for net assets). The Company assumes that observable market prices include sufficient adjustments for liquidity and modeling risks. The Company did nothave any contracts that transferred between Level 2 and Level 3 as well as Level 1 and Level 2.Income TaxesThe Company accounts for income taxes using the asset and liability approach, which requires deferred tax assets and liabilities be recognized using enactedtax rates to measure the effect of temporary differences between book and tax bases on recorded assets and liabilities. Valuation allowances are recorded toreduce deferred tax assets, if it is more likely than not some portion or all of the deferred tax assets will not be recognized. The need to establish valuationallowances against deferred tax assets is assessed quarterly. The primary factors used to assess the likelihood of realization are forecasts of future taxableincome and available tax planning strategies that could be implemented to realize the net deferred tax assets.The Company has not recorded United States income or foreign withholding taxes related to undistributed earnings of foreign subsidiaries because theCompany currently plans to keep these amounts indefinitely invested overseas. The Company recognizes tax related interest and penalties in income tax expense in its Consolidated Statement of Income.With respect to accounting for uncertainty in income taxes, the Company evaluates tax positions to determine whether the benefits of tax positions are morelikely than not of being sustained upon audit based on the technical merits of the tax position. For tax positions that are more likely than not of beingsustained upon audit, the Company recognizes the largest amount of the benefit that is greater than 50% likely of being realized upon ultimate settlement.For tax positions that are not more likely than not of being sustained upon audit, the Company does not recognize any portion of the benefit. If the morelikely than not threshold is not met in the period for which a tax position is taken, the Company may subsequently recognize the benefit of that tax positionif the tax matter is effectively settled, the statute of limitations expires, or if the more likely than not threshold is met in a subsequent period.Deferred Financing FeesDebt issuance costs that are incurred by the Company in connection with the issuance of debt are deferred and amortized to interest expense over the life ofthe underlying indebtedness, adjusted to reflect any early repayments.Stock-Based Compensation PlansThe Company measures the cost of employee services received in exchange for the award of an equity instrument based on the grant-date fair value of theaward, with such cost recognized over the applicable vesting period.Market condition-based awardsThe Company grants two types of market condition-based awards - market share units and performance market share units.The fair value of the market share units is estimated at the date of grant using a binomial lattice model with the following assumptions: a risk-free interestrate, dividend yield, time to maturity and expected volatility. These units vest and are settled in common stock on the third anniversary of the date of grant.Market share units are converted into between zero and two shares of common stock for each unit granted at the end of a three-year performance cycle. Theconversion ratio is calculated by dividing the average closing share price of the Company’s common stock during the ninety calendar days immediatelypreceding the vesting date by the average closing share price of the Company’s common stock during the ninety calendar days immediately preceding thegrant date, with the resulting quotient capped at two. This quotient is then multiplied by the number of market share units granted to yield the number ofshares of common stock to be delivered on the vesting date.59Table of ContentsThe fair value of the performance market share units is estimated at the date of grant using a Monte Carlo Simulation. A participant may earn based on thetotal shareholder return (the "TSR") of the Company's common stock over a three-year period ranging from 0% to 200% of the number of performance marketshare units granted. The awards will cliff vest on the third anniversary of the grant date. The TSR is calculated by dividing the sixty or ninety calendar dayaverage price at end of the period (as applicable) and the reinvested dividends thereon by such sixty or ninety calendar day average price at start of theperiod. The maximum number of awards earned is capped at 200% of the target award. Additionally, no payout will be awarded in the event that the TSR atthe vesting date reflects less than a 25% return from the average price at the grant date. Performance market share units are similar to the market share unitsexcept that the targets are more difficult to achieve and may be tied to TSR as compared to a peer group.The Company recognizes compensation expense using the straight-line method over the life of the market share units and performance market share unitsexcept for those issued to certain retirement-eligible participants, which are expensed on an accelerated basis.Restricted Stock UnitsThe fair value of restricted stock units is based on the closing market price of the Company’s common stock on the date of grant. These awards generally vest,and are settled in common stock, at 25% per year, over a four-year period from the date of grant. The Company recognizes compensation expense using thestraight-line method over the life of the restricted stock units.Stock OptionsThe fair value of the options granted is estimated at the date of grant using the Black-Scholes option-pricing model utilizing assumptions based on historicaldata and current market data. The assumptions include expected term of the options, risk-free interest rate, expected volatility, and dividend yield. Theexpected term represents the expected amount of time that options granted are expected to be outstanding, based on historical and forecasted exercisebehavior. The risk-free rate is based on the rate at the grant date of zero-coupon U.S. Treasury Notes with a term equal to the expected term of the option.Expected volatility is estimated using historical volatility rates based on historical weekly price changes over a term equal to the expected term of theoptions. The Company’s dividend yield is based on historical data. The Company recognizes compensation expense using the straight-line method over thevesting period of the options except for those issued to certain retirement-eligible participants, which are expensed on an accelerated basis.Earnings Per ShareBasic earnings per common share (“EPS”) are computed by dividing net earnings attributable to EnerSys stockholders by the weighted-average number ofcommon shares outstanding for the period. Diluted EPS reflects the potential dilution that would occur if securities or other contracts to issue common stockwere exercised or converted into common stock. At March 31, 2016, 2015 and 2014, the Company had outstanding stock options, restricted stock units,market share units and performance market share units, which could potentially dilute basic earnings per share in the future. The Convertible Notes, prior totheir extinguishment on July 17, 2015, had a dilutive impact on the EPS for the fiscal years of 2016, 2015 and 2014.Segment ReportingA segment for reporting purposes is based on the financial performance measures that are regularly reviewed by the chief operating decision maker to assesssegment performance and to make decisions about a public entity’s allocation of resources. Based on this guidance, the Company reports its segment resultsbased upon the three geographical regions of operations.•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.New Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”providing guidance on revenue from contracts with customers that will supersede most current revenue recognition guidance, including industry-specificguidance. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that theentity expects to be entitled to in exchange for those goods or services. In July 2015, the FASB voted to delay the effective date for interim and annualreporting periods beginning after December 15, 2017, with early adoption permissible one year earlier. The standard permits the use of either the60Table of Contentsretrospective or cumulative effect transition method upon adoption. The Company has not yet selected a transition method and is currently evaluating theimpact, if any, of the adoption of this newly issued guidance on its consolidated financial statements.In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” Theupdate simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a direct deduction from thecarrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are notaffected by the amendments in this update and amortization of the costs will continue to be reported as interest expense. For public companies, this update iseffective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, and is to be applied retrospectively. Early adoptionof this revised guidance is permitted for financial statements that have not been previously issued. The Company has elected to early adopt the revisedguidance and as such debt issuance costs are now presented as a direct reduction of long-term debt on the Company’s Consolidated Balance Sheets, as furtherreflected in Note 8. In July 2015, the FASB issued ASU 2015-011, “Simplifying the Measurement of Inventory (Topic 330).” This update requires inventory to be measured atthe lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictablecosts of completion, disposal and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method.This update will be effective for the Company for all annual and interim periods beginning after December 15, 2016. The amendments in this update shouldbe applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. This update will not have a materialimpact on the Company's consolidated financial statements.In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments (Topic 805).” The amendments in thisupdate require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period inwhich the adjustment amounts are determined. The amendments in this update require that the acquirer record, in the same period’s financial statements, theeffect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated asif the accounting had been completed at the acquisition date. The amendments in this update are effective for fiscal years beginning after December 15, 2015,and interim periods within those fiscal years. The Company is currently evaluating the impact, if any, of the adoption of this newly issued guidance on itsconsolidated financial statements.In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes (Topic 740).”This update simplifies the presentation of deferred income taxes, by requiring that deferred tax liabilities and assets be classified as non-current in a classifiedstatement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presentedas a single amount is not affected by the amendments in this update. The amendments in this update are effective for fiscal years beginning after December15, 2016, and interim periods within those fiscal years. The amendments may be applied prospectively or retrospectively. The Company early adopted ASU2015-17 on a retrospective basis, and deferred taxes previously classified as components of current assets and current liabilities were reclassified to non-current assets and non-current liabilities, respectively, as of March 31, 2015 (see Note 13).In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, which sets out the principles for the recognition, measurement, presentation anddisclosure of leases for both parties to a contract (i.e. lessees and lessors). This update requires lessees to apply a dual approach, classifying leases as eitherfinance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. Thisclassification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of thelease. 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 theirclassification. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-typeleases, direct financing leases and operating leases. This update is effective for reporting periods beginning after December 15, 2018, using a modifiedretrospective approach, with early adoption permitted. The Company is currently assessing the potential impact that the adoption will have on itsconsolidated financial statements.In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting(Topic 718)”. This update simplifies severalaspects related to how share-based payments are accounted for and presented in the financial statements, including the accounting for forfeitures and tax-effects related to share-based payments at settlement, and the classification of excess tax benefits and shares surrendered for tax withholdings in the statementof cash flows. This update is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early adoptionpermitted. The Company is currently assessing the potential impact that the adoption will have on its consolidated financial statements.61Table of ContentsUse of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to makeestimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from thoseestimates.2. AcquisitionsOn July 23, 2015, the Company completed the acquisition of ICS Industries Pty. Ltd. (ICS), headquartered in Melbourne, Australia, for $34,496, net of cashacquired. ICS is a leading full line shelter designer and manufacturer with installation and maintenance services serving the telecommunications, utilities,datacenter, natural resources and transport industries operating in Australia and serving customers in the Asia Pacific region. The Company acquired tangibleand intangible assets, in connection with the acquisition, including trademarks, technology, customer relationships, non-competition agreements andgoodwill. Based on the final valuation, trademarks were valued at $1,322, technology at $1,399, customer relationships at $10,211, non-competitionagreements at $142 and goodwill was recorded at $13,898. The useful lives of technology were estimated at 10 years, customer relationships were estimatedat 11 years and non-competition agreements ranged from 2-5 years. Trademarks were considered to be indefinite-lived assets.There was no tax deductible goodwill associated with this acquisition.There were no acquisitions in fiscal 2015.On January 27, 2014, the Company completed the acquisition of UTS Holdings Sdn. Bhd. and its subsidiaries, a distributor of motive and reserve powerbattery products and services, headquartered in Kuala Lumpur, Malaysia, for $25,332, net of cash acquired. The Company acquired tangible and intangibleassets, including trademarks, customer relationships and goodwill. Based on the final valuation, trademarks were valued at $1,410, non-compete at $160,customer relationships at $3,200 and goodwill was recorded at $10,796. The useful life of customer relationships was estimated at 8 years and trademarkswere considered to be indefinite-lived assets.On October 8, 2013, the Company completed the acquisition of Purcell Systems, Inc., a designer, manufacturer and marketer of thermally managed electronicequipment and battery cabinet enclosures, headquartered in Spokane, Washington, for $119,540, net of cash acquired. The Company acquired tangible andintangible assets, including trademarks, technology, customer relationships and goodwill. Based on the final valuation, trademarks were valued at $16,800,technology at $7,900, customer relationships at $35,700, and goodwill was recorded at $50,889. The useful lives of technology and customer lists wereestimated at 10 and 9 years, respectively. Trademarks were considered to be indefinite-lived assets.On October 28, 2013, the Company completed the acquisition of Quallion, LLC, a manufacturer of lithium ion cells and batteries for medical devices,defense, aviation and space, headquartered in Sylmar, California, for $25,800, net of cash acquired. The Company acquired tangible and intangible assets, inconnection with the acquisition, including trademarks, technology, customer relationships and goodwill. Based on the final valuation, trademarks werevalued at $500, technology at $4,400, customer relationships at $3,400, and goodwill was recorded at $13,502. The useful lives of technology and customerrelationships were estimated at 20 and 14 years, respectively. Trademarks were considered to be indefinite-lived assets.The results of these acquisitions have been included in the Company’s results of operations from the dates of their respective acquisitions. Pro forma earningsand earnings per share computations have not been presented as these acquisitions are not considered material. Net sales and Net earnings attributable toEnerSys stockholders, related to the fiscal 2014 acquisitions were $68,231 and $2,126, respectively, during fiscal 2014.62Table of Contents3. InventoriesInventories, net consist of: March 31, 2016 2015Raw materials $84,198 $82,954Work-in-process 104,085 106,196Finished goods 142,798 147,861Total $331,081 $337,011Inventory reserves for obsolescence and other estimated losses, mainly relating to finished goods, were $23,570 and $20,242 at March 31, 2016 and 2015,respectively, and have been included in the net amounts shown above.4. Property, Plant, and EquipmentProperty, plant, and equipment consist of: March 31, 2016 2015Land, buildings, and improvements $249,112 $224,617Machinery and equipment 570,394 546,513Construction in progress 35,450 48,889 854,956 820,019Less accumulated depreciation (497,547) (463,165)Total $357,409 $356,854Depreciation expense for the fiscal years ended March 31, 2016, 2015 and 2014 totaled $47,686, $49,261, and $49,463, respectively. Interest capitalized inconnection with major capital expenditures amounted to $1,526, $1,989, and $1,046 for the fiscal years ended March 31, 2016, 2015 and 2014, respectively.5. Goodwill and Other Intangible AssetsOther Intangible AssetsInformation regarding the Company’s other intangible assets are as follows: March 31, 2016 2015 GrossAmount AccumulatedAmortization NetAmount GrossAmount AccumulatedAmortization NetAmountIndefinite-lived intangible assets: Trademarks $98,245 $(953) $97,292 $100,546 $(953) $99,593Finite-lived intangible assets: Customer relationships 65,963 (18,485) 47,478 55,482 (12,377) 43,105Non-compete 2,856 (2,457) 399 2,680 (2,155) 525Technology 18,494 (5,423) 13,071 17,049 (3,642) 13,407Trademarks 2,004 (983) 1,021 2,004 (898) 1,106Licenses 1,487 (1,090) 397 1,482 (1,058) 424Total $189,049 $(29,391) $159,658 $179,243 $(21,083) $158,16063Table of ContentsThe Company’s amortization expense related to finite-lived intangible assets was $8,308, $7,779, and $4,279, for the years ended March 31, 2016, 2015 and2014, respectively. The expected amortization expense based on the finite-lived intangible assets as of March 31, 2016, is $8,253 in 2017, $8,000 in 2018,$7,953 in 2019, $7,803 in 2020 and $7,563 in 2021.GoodwillThe changes in the carrying amount of goodwill by reportable segment are as follows: Fiscal year ended March 31, 2016 Americas EMEA Asia TotalBalance at beginning of year $190,321 $146,962 $32,447 $369,730Goodwill acquired during the year 497 — 13,898 14,395Goodwill impairment charge (29,578) (1,833) — (31,411)Reclassification of reporting unit 6,712 (6,712) — —Foreign currency translation adjustment (1,755) 2,975 (387) 833Balance at end of year $166,197 $141,392 $45,958 $353,547 Fiscal year ended March 31, 2015 Americas EMEA Asia TotalBalance at beginning of year $215,630 $177,586 $32,840 $426,056Adjustments related to the finalization of purchase accounting forfiscal 2014 acquisitions (3,256) — 1,542 (1,714)Goodwill impairment charge (19,621) (750) — (20,371)Foreign currency translation adjustment (2,432) (29,874) (1,935) (34,241)Balance at end of year $190,321 $146,962 $32,447 $369,730A reconciliation of goodwill and accumulated goodwill impairment losses, by reportable segment, is as follows: March 31, 2016 Americas EMEA Asia TotalGross carrying value $215,396 $143,975 $51,137 $410,508Accumulated goodwill impairment charges (49,199) (2,583) (5,179) (56,961)Net book value $166,197 $141,392 $45,958 $353,547 March 31, 2015 Americas EMEA Asia TotalGross carrying value $209,942 $147,712 $37,626 $395,280Accumulated goodwill impairment charges (19,621) (750) (5,179) (25,550)Net book value $190,321 $146,962 $32,447 $369,730Impairment of goodwill, indefinite-lived intangibles and fixed assetsGoodwill is tested annually for impairment during the fourth quarter or earlier upon the occurrence of certain events or substantive changes in circumstancesthat indicate goodwill is more likely than not impaired.In the fourth quarter of fiscal 2016, the Company conducted step one of the annual goodwill impairment test which indicated that the fair values of three ofits reporting units - Purcell and Quallion/ABSL US in the Americas and it's South Africa joint venture in the EMEA operating segment - were less than theirrespective carrying values, requiring the Company to perform step two of the goodwill impairment analysis.64Table of ContentsBased on the aforementioned analysis, the implied fair value of goodwill was lower than the carrying value of the goodwill for the Purcell andQuallion/ABSL US reporting units in the Americas operating segment and the South Africa joint venture in the EMEA operating segment.The Company recorded a non-cash charge of $31,411 related to goodwill impairment in the Americas and EMEA operating segment, $3,420 related toimpairment of indefinite-lived trademarks in the Americas and $1,421 related to impairment of fixed assets in the EMEA operating segment for an aggregatecharge of $36,252 under the caption "Impairment of goodwill, indefinite-lived intangibles and fixed assets" in the Consolidated Statements of Income.The key factors contributing to the impairments in both fiscal years were that the reporting units in the Americas were recent acquisitions that have notperformed to management's expectations. In the case of Purcell, the impairment was the result of lower estimated projected revenue and profitability in thenear term caused by reduced levels of capital spending by major customers in the telecommunications industry. In the case of Quallion/ABSL US, theimpairment was the result of lower estimated projected revenue and profitability in the near term caused by delays, both in introducing new products and inprograms serving the aerospace and defense markets. In the case of the South Africa joint venture, declining business conditions in South Africa resulted innegative cash flows.In fiscal 2015, as a result of failing step one of the annual goodwill impairment test, the Company performed step two of the goodwill impairment analysisand thereby recorded a non-cash charge of $20,371 related to goodwill impairment in the Americas and EMEA operating segments and $3,575 related toimpairment of indefinite-lived trademarks in the Americas.In fiscal 2014, the Company determined that the fair value of its subsidiary in India, which was acquired in fiscal 2012, was less than its carrying amountbased on the Company's analysis of the estimated future expected cash flows the Company anticipated from the operations of this subsidiary. Accordingly,the Company recorded a non-cash charge of $5,179 for goodwill impairment relating to this subsidiary.The Company estimated tax-deductible goodwill to be approximately $20,766 and $24,446 as of March 31, 2016 and 2015, respectively.6. Prepaid and Other Current AssetsPrepaid and other current assets consist of the following: March 31, 2016 2015Prepaid non-income taxes $19,289 $19,231Prepaid income taxes 35,294 30,577Non-trade receivables 2,876 4,050Other 19,593 23,714Total $77,052 $77,57265Table of Contents7. Accrued ExpensesAccrued expenses consist of the following: March 31, 2016 2015Payroll and benefits $48,470 $47,323Accrued selling expenses 32,759 31,269Income taxes payable 17,345 17,721Warranty 20,198 18,285Freight 13,791 14,315VAT and other non-income taxes 4,302 8,657Deferred income 9,840 12,188Restructuring 2,989 3,820Interest 6,297 1,970Pension 1,321 1,226Other 43,184 36,488Total $200,496 $193,2628. DebtSummary of Long-Term DebtThe following summarizes the Company’s long-term debt: As of March 31, 2016 2015 Principal Unamortized IssuanceCosts Principal Unamortized IssuanceCosts5.00% Senior Notes due 2023 $300,000 $4,370 $— $—2011 Credit Facility, due 2018 312,500 1,909 325,000 2,6153.375% Convertible Notes, net of discount, due 2038 — — 170,936 97 $612,500 $6,279 $495,936 $2,712Less: Unamortized issuance costs 6,279 2,712 Less: Current portion — — Long-term debt, net of unamortized issuance costs $606,221 $493,224 As discussed in Note 1, the Company elected to early adopt accounting guidance issued in April 2015 to simplify the presentation of debt issuancecosts. This change in accounting principle was implemented retrospectively as of March 31, 2015. Debt issuance costs that are incurred by the Company inconnection with the issuance of debt are deferred and amortized to interest expense using the effective interest method over the contractual term of theunderlying indebtedness. The Company has reclassified debt issuance costs as a direct reduction to the related debt obligation on the balance sheet as ofMarch 31, 2015.5.00% Senior NotesOn April 23, 2015, the Company issued $300,000 in aggregate principal amount of 5.00% Senior Notes due 2023 (the “Notes”). The Notes bear interest at arate of 5.00% per annum accruing from April 23, 2015. Interest is payable semiannually in arrears on April 30 and October 30 of each year, commencing onOctober 30, 2015. The Notes will mature on April 30, 2023, unless earlier redeemed or repurchased in full. The Notes are unsecured and unsubordinatedobligations of the Company. The Notes are fully and unconditionally guaranteed (the “Guarantees”), jointly and severally, by each of its subsidiaries that areguarantors under the 2011 Credit Facility (the "Guarantors"). The Guarantees are unsecured and unsubordinated obligations of the Guarantors. The netproceeds from the sale of the Notes were used primarily to repay and retire in full the principal amount66Table of Contentsof the Company’s senior 3.375% convertible notes (the “Convertible Notes”), as discussed below, as well as, fund the accelerated share repurchase programdiscussed in Note 15.2011 Senior Secured Credit FacilityThe Company is party to a $350,000 senior secured revolving credit facility (as amended, the "2011 Credit Facility"), as well as, an Incremental CommitmentAgreement pursuant to which certain banks agreed to provide incremental term loan commitments of $150,000 and incremental revolving commitments of$150,000. Pursuant to these changes, the 2011 Credit Facility is now comprised of a $500,000 senior secured revolving credit facility and a $150,000 seniorsecured incremental term loan (the "Term Loan") that matures on September 30, 2018. The Term Loan is payable in quarterly installments of $1,875beginning June 30, 2015 and $3,750 beginning June 30, 2016 with a final payment of $108,750 on September 30, 2018. The 2011 Credit Facility may beincreased by an aggregate amount of $300,000 in revolving commitments and/or one or more new tranches of term loans, under certain conditions. Bothrevolving loans and the Term Loan under the 2011 Credit Facility will bear interest, at the Company's option, at a rate per annum equal to either (i) theLondon Interbank Offered Rate (“LIBOR”) plus between 1.25% and 1.75% (currently 1.25% and based on the Company's consolidated net leverage ratio) or(ii) the Base Rate (which is the highest of (a) the Bank of America prime rate, and (b) the Federal Funds Effective Rate) plus between 0.25% and 0.75% (basedon the Company’s consolidated net leverage ratio). Obligations under the 2011 Credit Facility are secured by substantially all of the Company’s existing andfuture acquired assets, including substantially all of the capital stock of the Company’s United States subsidiaries that are guarantors under the credit facility,and 65% of the capital stock of certain of the Company’s foreign subsidiaries that are owned by the Company’s United States companies.There are no prepayment penalties on loans under the 2011 Credit Facility. The Company had $170,000 revolver borrowings and $142,500 Term Loanborrowings outstanding under its 2011 Credit Facility as of March 31, 2016.The current portion of the Term Loan of $15,000 is classified as long-term debt as the Company expects to refinance the quarterly payments with revolverborrowings under its 2011 Credit Facility.Senior Unsecured 3.375% Convertible NotesThe Company's 3.375% Convertible Notes, with an original face value of $172,500, were issued when the Company’s stock price was trading at $30.19 pershare. On March 31, 2015, the Company’s stock price closed at $64.24 per share. On May 7, 2015, the Company filed a notice of redemption for all of theConvertible Notes with a redemption date of June 8, 2015 at a price equal to $1,000.66 per $1,000 original principal amount of Convertible Notes, which isequal to 100% of the accreted principal amount of the Convertible Notes being repurchased plus accrued and unpaid interest. Holders were permitted toconvert their Convertible Notes at their option on or before June 5, 2015.Ninety-nine percent of the Convertible Notes holders exercised their conversion rights on or before June 5, 2015, pursuant to which, on July 17, 2015, theCompany paid $172,388, in aggregate, towards the principal balance including accreted interest, cash equivalent of fractional shares issued towardsconversion premium and settled the conversion premium by issuing, in the aggregate, 1,889,431 shares of the Company's common stock from its treasuryshares, thereby resulting in the extinguishment of all of the Convertible Notes as of that date. There was no impact to the income statement from theextinguishment as the fair value of the total settlement consideration transferred and allocated to the liability component approximated the carrying value ofthe Convertible Notes. The remaining consideration allocated to the equity component resulted in an adjustment to equity of $84,140. The following represents the principal amount of the liability component, the unamortized discount, and the net carrying amount of our Convertible Notes asof March 31, 2016 and 2015, respectively: March 31, 2016 2015Principal $— $172,266Unamortized discount — (1,330)Net carrying amount $— $170,936The amount of interest cost recognized for the amortization of the discount on the liability component of the Convertible Notes was $1,330, $8,283 and$7,614, respectively, for the fiscal years ended March 31, 2016, 2015 and 2014.67Table of ContentsThe Company paid $15,176, $10,088 and $8,490, net of interest received, for interest during the fiscal years ended March 31, 2016, 2015 and 2014,respectively.The Company’s financing agreements contain various covenants, which, absent prepayment in full of the indebtedness and other obligations, or the receiptof waivers, would limit the Company’s ability to conduct certain specified business transactions including incurring debt, mergers, consolidations or similartransactions, buying or selling assets out of the ordinary course of business, engaging in sale and leaseback transactions, paying dividends and certain otheractions. The Company is in compliance with all such covenants.Short-Term DebtAs of March 31, 2016 and 2015, the Company had $22,144 and $19,715, respectively, of short-term borrowings from banks. The weighted-average interestrates on these borrowings were approximately 8% and 10% for fiscal years ended March 31, 2016 and 2015, respectively.Letters of CreditAs of March 31, 2016 and 2015, the Company had $2,693 and $3,862, respectively, of standby letters of credit.Deferred Financing FeesIn connection with the issuance of the Notes, the Company incurred $5,031 in debt issuance costs. Amortization expense, relating to debt issuance costs,included in interest expense was $1,464, $1,263, and $1,141 for the fiscal years ended March 31, 2016, 2015 and 2014, respectively. Debt issuance costs, netof accumulated amortization, totaled $6,279 and $2,712 as of March 31, 2016 and 2015, respectively.Available Lines of CreditAs of March 31, 2016 and 2015, the Company had available and undrawn, under all its lines of credit, $472,187 and $464,733, respectively, including$144,112 and $141,533, respectively, of uncommitted lines of credit as of March 31, 2016 and March 31, 2015.9. LeasesThe Company’s future minimum lease payments under operating leases that have noncancelable terms in excess of one year as of March 31, 2016 are asfollows: OperatingLeases2017 $20,2912018 16,0142019 11,1602020 8,7502021 6,387Thereafter 6,447Total minimum lease payments $69,049Rental expense was $34,590, $35,974, and $34,923 for the fiscal years ended March 31, 2016, 2015 and 2014, respectively. Certain operating leaseagreements contain renewal or purchase options and/or escalation clauses.68Table of Contents10. Other LiabilitiesOther liabilities consist of the following: March 31, 2016 2015Pension $41,309 $42,144Warranty 28,224 21,525Deferred income 6,007 6,564Liability for uncertain tax benefits 2,176 3,796Other 8,763 7,550Total $86,479 $81,57911. Fair Value of Financial InstrumentsRecurring Fair Value MeasurementsThe following tables represent the financial assets and (liabilities) measured at fair value on a recurring basis as of March 31, 2016 and March 31, 2015 andthe basis for that measurement: Total Fair ValueMeasurementMarch 31, 2016 Quoted Price inActive Marketsfor IdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3)Lead forward contracts $(499) $— $(499) $—Foreign currency forward contracts (988) — (988) —Total derivatives $(1,487) $— $(1,487) $— Total Fair ValueMeasurementMarch 31, 2015 Quoted Price inActive Marketsfor IdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3)Lead forward contracts $(341) $— $(341) $—Foreign currency forward contracts 4,155 — 4,155 —Total derivatives $3,814 $— $3,814 $—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 as described in Note 1, Summary of Significant Accounting Policies.The fair values for foreign currency forward contracts are based upon current quoted market prices and are classified as Level 2 based on the nature of theunderlying market in which these derivatives are traded.Financial InstrumentsThe fair values of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate carrying value due to their shortmaturities.The fair value of the Company’s short-term debt and borrowings under the 2011 Credit Facility (as defined in Note 8), approximate their respective carryingvalue, 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% Senior Notes due 2023, with an original face value of $300,000, were issued in April 2015. The fair values of these Notes represent thetrading values based upon quoted market prices and are classified as Level 2. The Notes were trading at approximately 96% of face value on March 31, 2016.69Table of ContentsThe Company's 3.375% Convertible Notes, with an original face value of $172,500, were issued when the Company’s stock price was trading at $30.19 pershare. On March 31, 2015, the Company’s stock price closed at $64.24 per share. On July 17, 2015, the Company paid $172,388, in aggregate, towards theprincipal balance including accreted interest, cash equivalent of fractional shares issued towards conversion premium and settled the conversion premium byissuing, in the aggregate, 1,889,431 shares of the Company's common stock from its treasury shares, thereby resulting in the extinguishment of all of theConvertible Notes as of that date. The fair value of the Convertible Notes as of March 31, 2015, which were trading at 161% as of that date, represented thetrading values based upon quoted market prices at and were classified as Level 2.The carrying amounts and estimated fair values of the Company’s derivatives, the Notes and Convertible Notes (as defined in Note 8) at March 31, 2016 and2015 were as follows: March 31, 2016 March 31, 2015 CarryingAmount Fair Value CarryingAmount Fair Value Financial assets: Derivatives(1) $— $— $4,155 $4,155 Financial liabilities: Notes (2) 300,000 288,000 — — Convertible Notes (2) (3) — — 170,936 277,348 Derivatives(1) $1,487 $1,487 $341 $341 (1)Represents lead and foreign currency forward contracts (see Note 12 for asset and liability positions of the lead and foreign currency forward contractsat March 31, 2016 and March 31, 2015).(2)The fair value amount of the Notes at March 31, 2016 and the Convertible Notes at March 31, 2015 represents the trading value of the instruments.(3)The carrying amount of the Convertible Notes at March 31, 2015 represents the $172,266 principal balance, less the unamortized debt discount (seeNote 8 for further details).Non-recurring fair value measurementsThe valuation of goodwill and other intangible assets is based on information and assumptions available to the Company at the time of acquisition, usingincome and market approaches to determine fair value. The Company tests goodwill and other intangible assets annually for impairment, or when indicationsof potential impairment exist (see Note 1).Goodwill is tested for impairment by determining the fair value of the Company’s reporting units. The unobservable inputs used to measure the fair value ofthe reporting units include projected growth rates, profitability, and the risk factor premium added to the discount rate. The remeasurement of goodwill isclassified as a Level 3 fair value assessment due to the significance of unobservable inputs developed using company-specific information.The inputs used to measure the fair value of other intangible assets were largely unobservable and accordingly were also classified as Level 3. The fair valueof trademarks, is based on the royalties saved that would have been paid to a third party had the Company not owned the trademark. For fiscal 2016, theCompany used royalty rates ranging between 0.5%-2.5% based on comparable market rates, and used discount rates ranging between 16.0%-24.0%. For fiscal2015, the Company used royalty rates ranging between 1.0%-2.5% based on comparable market rates, and used discount rates ranging between19.0%-23.5%.The fair value of other indefinite-lived intangibles was estimated using the income approach, based on cash flow projections of revenue growth rates, takinginto consideration industry and market conditions.In connection with the annual impairment testing conducted as of December 28, 2015 for fiscal 2016, indefinite-lived trademarks associated with Purcell andQuallion/ABSL US were recorded at fair value on a nonrecurring basis at $10,000 and $990, respectively, and the remeasurement resulted in an aggregateimpairment charge of $3,420.In connection with the annual impairment testing conducted as of December 29, 2014 for fiscal 2015, indefinite-lived trademarks associated with Purcell andQuallion/ABSL US were recorded at fair value on a nonrecurring basis at $13,300 and $1,070, respectively, and the remeasurement resulted in an aggregateimpairment charge of $3,575.These charges are included under the caption "Impairment of goodwill, indefinite-lived intangibles and fixed assets" in the Consolidated Statements ofIncome.70Table of Contents12. Derivative Financial InstrumentsThe Company utilizes derivative instruments to reduce its exposure to fluctuations in commodity prices and foreign exchange rates, under establishedprocedures and controls. The Company does not enter into derivative contracts for speculative purposes. The Company’s agreements are with creditworthyfinancial institutions and the Company anticipates performance by counterparties to these contracts and therefore no material loss is expected.Derivatives in Cash Flow Hedging RelationshipsLead Forward ContractsThe Company enters into lead forward contracts to fix the price for a portion of its lead purchases. Management considers the lead forward contracts to beeffective against changes in the cash flows of the underlying lead purchases. The vast majority of such contracts are for a period not extending beyond oneyear and the notional amounts at March 31, 2016 and 2015 were 27.4 million pounds and 91.6 million pounds, respectively.Foreign Currency Forward ContractsThe Company uses foreign currency forward contracts and options to hedge a portion of the Company’s foreign currency exposures for lead as well as otherforeign currency exposures so that gains and losses on these contracts offset changes in the underlying foreign currency denominated exposures. The vastmajority of such contracts are for a period not extending beyond one year. As of March 31, 2016 and 2015, the Company had entered into a total of $18,206and $75,878, respectively, of such contracts.In the coming twelve months, the Company anticipates that $601 of net pretax gain relating to lead and foreign currency forward contracts will bereclassified from AOCI as part of cost of goods sold. This amount represents the current net unrealized impact of hedging lead and foreign exchange rates,which will change as market rates change in the future, and will ultimately be realized in the Consolidated Statement of Income as an offset to thecorresponding actual changes in lead costs to be realized in connection with the variable lead cost and foreign exchange rates being hedged.Derivatives not Designated in Hedging RelationshipsForeign Currency Forward ContractsThe Company also enters into foreign currency forward contracts to economically hedge foreign currency fluctuations on intercompany loans and foreigncurrency denominated receivables and payables. These are not designated as hedging instruments and changes in fair value of these instruments are recordeddirectly in the Consolidated Statements of Income. As of March 31, 2016 and 2015, the notional amount of these contracts was $11,156 and $26,246,respectively.71Table of ContentsPresented below in tabular form is information on the location and amounts of derivative fair values in the Consolidated Balance Sheets and derivative gainsand losses in the Consolidated Statements of Income:Fair Value of Derivative InstrumentsMarch 31, 2016 and 2015 Derivatives and Hedging ActivitiesDesignated as Cash Flow Hedges Derivatives and Hedging ActivitiesNot Designated as Hedging Instruments March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015Prepaid and other current assets Foreign currency forward contracts $— $3,735 $— $420Total assets $— $3,735 $— $420Accrued expenses Lead hedge forward contracts $499 $341 $— $—Foreign currency forward contracts 350 — 638 —Total liabilities $849 $341 $638 $—The Effect of Derivative Instruments on the Consolidated Statements of IncomeFor the fiscal year ended March 31, 2016 Derivatives Designated as Cash Flow Hedges Pretax Gain (Loss)Recognized in AOCI onDerivative (EffectivePortion) Location of Gain(Loss) ReclassifiedfromAOCI into Income(Effective Portion) Pretax Gain (Loss)Reclassified from AOCI intoIncome (Effective Portion)Lead hedge forward contracts $(3,361) Cost of goods sold $(11,085)Foreign currency forward contracts (3,023) Cost of goods sold 3,941Total $(6,384) $(7,144) Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss)Recognized in Incomeon DerivativePretax Gain (Loss)Foreign currency forward contractsOther (income) expense, net$(409)Total $(409) The Effect of Derivative Instruments on the Consolidated Statements of IncomeFor the fiscal year ended March 31, 2015 Derivatives Designated as Cash Flow Hedges Pretax Gain (Loss)Recognized in AOCI onDerivative (EffectivePortion) Location of Gain(Loss) ReclassifiedfromAOCI into Income(Effective Portion) Pretax Gain (Loss)Reclassified from AOCI intoIncome (Effective Portion)Lead hedge forward contracts $(7,743) Cost of goods sold $(4,347)Foreign currency forward contracts 8,206 Cost of goods sold 1,386Total $463 $(2,961) Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss)Recognized in Incomeon DerivativePretax Gain (Loss)Foreign currency forward contractsOther (income) expense, net$972Total $972 72Table of ContentsThe Effect of Derivative Instruments on the Consolidated Statements of IncomeFor the fiscal year ended March 31, 2014 Derivatives Designated as Cash Flow Hedges Pretax Gain (Loss)Recognized in AOCI onDerivative (EffectivePortion) Location of Gain(Loss) ReclassifiedfromAOCI into Income(Effective Portion) Pretax Gain (Loss)Reclassified from AOCI intoIncome (Effective Portion)Lead hedge forward contracts $(1,562) Cost of goods sold $718Foreign currency forward contracts (682) Cost of goods sold (707)Total $(2,244) $11 Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss)Recognized in Incomeon DerivativePretax Gain (Loss)Foreign currency forward contractsOther (income) expense, net$(188)Total $(188)13. Income TaxesIncome tax expense is composed of the following: Fiscal year ended March 31, 2016 2015 2014Current: Federal $29,082 $12,299 $41,256State 4,750 3,044 2,845Foreign 17,034 20,585 22,627Total current 50,866 35,928 66,728Deferred: Federal (3,706) 25,113 (18,410)State 124 1,771 (4,088)Foreign 2,829 5,002 (27,250)Total deferred (753) 31,886 (49,748)Income tax expense $50,113 $67,814 $16,980Earnings before income taxes consists of the following: Fiscal year ended March 31, 2016 2015 2014United States $64,235 $76,327 $47,753Foreign 117,702 173,012 115,994Earnings before income taxes $181,937 $249,339 $163,747Income taxes paid by the Company for the fiscal years ended March 31, 2016, 2015 and 2014 were $44,625, $42,404 and $76,644, respectively.73Table of ContentsThe following table sets forth the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities: March 31, 2016 2015Deferred tax assets: Accounts receivable $1,450 $907Inventories 6,596 5,855Net operating loss carryforwards 50,094 46,069Accrued expenses 25,436 28,830Other assets 22,551 21,279Gross deferred tax assets 106,127 102,940Less valuation allowance (25,416) (20,063)Total deferred tax assets 80,711 82,877Deferred tax liabilities: Property, plant and equipment 25,302 23,851Other intangible assets 65,879 65,432Convertible Notes — 30,012Other liabilities 2,008 4,267Total deferred tax liabilities 93,189 123,562Net deferred tax liabilities $(12,478) $(40,685)As described in Note 1, the Company early adopted ASU 2015-17 on a retrospective basis effective March 31, 2016. As a result, the Company reclassified$31,749 and $1,583 of deferred tax assets and liabilities, respectively, from current deferred taxes resulting in non-current net deferred tax assets andliabilities of $36,516 and $77,201, respectively in the Consolidated Balance Sheet as of March 31, 2015.The Company has approximately $1,977 in United States federal net operating loss carryforwards, all of which are limited by Section 382 of the InternalRevenue Code, with expirations between 2023 and 2027. The Company has approximately $159,088 of foreign net operating loss carryforwards, of which$120,353 may be carried forward indefinitely and $38,735 expire between 2019 and 2024. In addition, the Company also had approximately $38,142 ofstate net operating loss carryforwards with expirations between 2017 and 2036.As of March 31, 2016 and 2015, the federal valuation allowance was $1,050. As of March 31, 2016 and 2015, the valuation allowance associated with thestate tax jurisdictions was $656 and $608, respectively. As of March 31, 2016 and 2015, the valuation allowance associated with certain foreign taxjurisdictions was $23,710 and $18,404, respectively. The change includes an increase of $6,262 to tax expense primarily related to net operating losscarryforwards generated in the current year that the Company believes are not more likely than not to be realized, and a decrease of $956 primarily related tocurrency fluctuations.74Table of ContentsA reconciliation of income taxes at the statutory rate to the income tax provision is as follows: Fiscal year ended March 31, 2016 2015 2014United States statutory income tax expense (at 35%) $63,678 $87,269 $57,311Increase (decrease) resulting from: State income taxes, net of federal effect 3,282 3,206 (647)Nondeductible expenses, domestic manufacturing deduction and other (3,796) 8,666 5,124Goodwill impairment 6,475 5,194 1,760Effect of foreign operations (25,788) (38,313) (26,037)Valuation allowance 6,262 1,792 (20,531)Income tax expense $50,113 $67,814 $16,980The effective income tax rates for the fiscal years ended March 31, 2016, 2015 and 2014 were 27.5%, 27.2% and 10.4%, respectively. The effective incometax rate with respect to any period may be volatile based on the mix of income in the tax jurisdictions in which we operate and the amount of ourconsolidated income before taxes.The fiscal 2016 foreign effective income tax rate on foreign pre-tax income of $117,702 was 16.9%. The fiscal 2015 foreign effective income tax rate onforeign pre-tax income of $173,012 was 14.8%. The fiscal 2014 foreign effective income tax rate on foreign pre-tax income of $115,994 was (4.0)%.Income from the Company's Swiss subsidiary comprised a substantial portion of our overall foreign mix of income for the fiscal years ended March 31, 2016,2015 and 2014 and is taxed at approximately 7%.At March 31, 2016, the Company has not recorded United States income or foreign withholding taxes on approximately $878,225 of undistributed earningsof foreign subsidiaries that could be subject to taxation if remitted to the United States because the Company currently plans to keep these amountsindefinitely invested overseas. It is not practical to calculate the income tax expense that would result upon repatriation of these earnings.A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: March 31, 2013$16,485Increases related to current year tax positions207Increases related to prior year tax positions2,877Decreases related to prior tax positions due to foreign currency translation(68)Decreases related to prior year tax positions(14,835)Lapse of statute of limitations(923)March 31, 20143,743Increases related to current year tax positions3,241Increases related to prior year tax positions9Decreases related to prior tax positions due to foreign currency translation(85)Decreases related to prior year tax positions settled(2,695)Lapse of statute of limitations(101)March 31, 20154,112Increases related to current year tax positions422Increases related to prior year tax positions470Decreases related to prior tax positions due to foreign currency translation—Decreases related to prior year tax positions(2,315)Lapse of statute of limitations(314)March 31, 2016$2,37575Table of ContentsAll of the balance of unrecognized tax benefits at March 31, 2016, if recognized, would be included in the Company’s Consolidated Statements of Incomeand have a favorable impact on both the Company’s net earnings and effective tax rate.The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, theCompany is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2013.While the net effect on total unrecognized tax benefits cannot be reasonably estimated, approximately $178 is expected to reverse in fiscal 2017 due toexpiration of various statute of limitations.The Company recognizes tax related interest and penalties in income tax expense in its Consolidated Statements of Income. As of March 31, 2016 and 2015,the Company had an accrual of $310 and $170, respectively, for interest and penalties.14. Retirement PlansDefined Benefit PlansThe Company provides retirement benefits to substantially all eligible salaried and hourly employees. The Company uses a measurement date of March 31for its pension plans.Net periodic pension cost for fiscal 2016, 2015 and 2014, includes the following components: United States Plans International Plans Fiscal year ended March 31, Fiscal year ended March 31, 2016 2015 2014 2016 2015 2014Service cost $482 $400 $348 $820 $767 $829Interest cost 682 673 619 1,904 2,546 2,412Expected return on plan assets (855) (889) (796) (2,247) (2,248) (2,134)Amortization and deferral 481 319 479 1,249 688 56Curtailment loss 313 — — — — —Net periodic benefit cost $1,103 $503 $650 $1,726 $1,753 $1,16376Table of ContentsThe following table sets forth a reconciliation of the related benefit obligation, plan assets, and accrued benefit costs related to the pension benefits providedby the Company for those employees covered by defined benefit plans: United States Plans International Plans March 31, March 31, 2016 2015 2016 2015Change in projected benefit obligation Benefit obligation at the beginning of the period $18,059 $15,290 $72,091 $69,227Service cost 482 400 820 767Interest cost 682 673 1,904 2,546Plan amendments — — — —Benefits paid, inclusive of plan expenses (912) (770) (1,944) (1,904)Plan curtailments and settlements (120) — — (54)Actuarial (gains) losses (542) 2,466 (4,144) 14,198Foreign currency translation adjustment — — 407 (12,689)Benefit obligation at the end of the period $17,649 $18,059 $69,134 $72,091Change in plan assets Fair value of plan assets at the beginning of the period $12,379 $11,309 $34,401 $33,706Actual return on plan assets (124) 1,051 (591) 4,918Employer contributions 496 789 1,504 1,890Benefits paid, inclusive of plan expenses (912) (770) (1,944) (1,904)Plan curtailments and settlements — — — (54)Foreign currency translation adjustment — — (1,056) (4,155)Fair value of plan assets at the end of the period $11,839 $12,379 $32,314 $34,401Funded status deficit $(5,810) $(5,680) $(36,820) $(37,690) March 31, 2016 2015Amounts recognized in the Consolidated Balance Sheets consist of: Accrued expenses $(1,321) $(1,226)Other liabilities (41,309) (42,144) $(42,630) $(43,370)77Table of ContentsThe following table represents pension components (before tax) and related changes (before tax) recognized in AOCI for the Company’s pension plans for theyears ended March 31, 2016, 2015 and 2014: Fiscal year ended March 31, 2016 2015 2014Amounts recorded in AOCI before taxes: Prior service cost $(445) $(800) $(1,036)Net loss (26,628) (28,734) (19,239)Net amount recognized $(27,073) $(29,534) $(20,275) Fiscal year ended March 31, 2016 2015 2014Changes in plan assets and benefit obligations: New prior service cost $— $— $255Net loss arising during the year (988) 13,831 2,262Effect of exchange rates on amounts included in AOCI 142 (3,565) 920Amounts recognized as a component of net periodic benefit costs: Amortization of prior service cost (382) (101) (81)Amortization or settlement recognition of net loss (1,661) (906) (694)Total recognized in other comprehensive income $(2,889) $9,259 $2,662The amounts included in AOCI as of March 31, 2016 that are expected to be recognized as components of net periodic pension cost during the next twelvemonths are as follows: Prior service cost$(44)Net loss(1,560)Net amount expected to be recognized$(1,604) The accumulated benefit obligation related to all defined benefit pension plans and information related to unfunded and underfunded defined benefitpension plans at the end of each year are as follows: United States Plans International Plans March 31, March 31, 2016 2015 2016 2015All defined benefit plans: Accumulated benefit obligation $17,649 $18,059 $65,732 $68,272Unfunded defined benefit plans: Projected benefit obligation $— $— $30,272 $28,984Accumulated benefit obligation — — 28,875 27,768Defined benefit plans with a projected benefit obligation in excessof the fair value of plan assets: Projected benefit obligation $17,649 $18,059 $69,134 $72,091Fair value of plan assets 11,839 12,379 32,314 34,401Defined benefit plans with an accumulated benefit obligation inexcess of the fair value of plan assets: Projected benefit obligation $17,649 $18,059 $69,134 $72,091Accumulated benefit obligation 17,649 18,059 65,732 68,272Fair value of plan assets 11,839 12,379 32,314 34,40178Table of ContentsAssumptionsSignificant assumptions used to determine the net periodic benefit cost for the U.S. and International plans were as follows: United States Plans International Plans Fiscal year ended March 31, Fiscal year ended March 31, 2016 2015 2014 2016 2015 2014Discount rate 3.8% 4.5% 4.0% 1.25-3.4% 3.0-4.6% 2.5-4.4%Expected return on plan assets 7.0 7.8 7.8 3.2-6.5 4.4-7.0 4.0-7.0Rate of compensation increase N/A N/A N/A 1.5-3.75 2.0-4.0 2.0-4.0Significant assumptions used to determine the projected benefit obligations for the U.S. and International plans were as follows: United States Plans International Plans March 31, March 31, 2016 2015 2016 2015Discount rate 3.9% 3.8% 1.8-3.7% 1.25-3.4%Expected return on plan assets 7.0 7.0 3.3-6.5 3.2-6.5Rate of compensation increase N/A N/A 1.5-4.0 1.5-3.75 N/A = not applicableThe United States plans do not include compensation in the formula for determining the pension benefit as it is based solely on years of service.The expected long-term rate of return for the Company’s pension plan assets is based upon the target asset allocation and is determined using forwardlooking assumptions in the context of historical returns and volatilities for each asset class, as well as, correlations among asset classes. The Companyevaluates the rate of return assumptions for each of its plans on an annual basis.Pension Plan Investment StrategyThe Company’s investment policy emphasizes a balanced approach to investing in securities of high quality and ready marketability. Investment flexibilityis encouraged so as not to exclude opportunities available through a diversified investment strategy.Equity investments are maintained within a target range of 40%-75% of the total portfolio market value for the U.S. plans and with a target of approximately65% for international plans. Investments in debt securities include issues of various maturities, and the average quality rating of bonds should be investmentgrade with a minimum quality rating of “B” at the time of purchase.The Company periodically reviews the asset allocation of its portfolio. The proportion committed to equities, debt securities and cash and cash equivalents isa function of the values available in each category and risk considerations. The plan’s overall return will be compared to and expected to meet or exceedestablished benchmark funds and returns over a three to five year period.The objectives of the Company’s investment strategies are: (a) the achievement of a reasonable long-term rate of total return consistent with an emphasis onpreservation of capital and purchasing power, (b) stability of annual returns through a portfolio risk level, which is appropriate to conservative accounts, and(c) reflective of the Company’s willingness to forgo significantly above-average rewards in order to minimize above-average risks. These objectives may notbe met each year but should be attained over a reasonable period of time.79Table of ContentsThe following table represents our pension plan investments measured at fair value as of March 31, 2016 and 2015 and the basis for that measurement: March 31, 2016 United States Plans International Plans Total FairValueMeasurement Quoted PriceIn ActiveMarketsfor IdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Total FairValueMeasurement Quoted PriceIn ActiveMarketsfor IdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3)Asset category: Cash and cashequivalents $928 $928 $— $— $— $— $— $—Equity securities US(a) 7,324 7,324 — — — — — —International(b) 1,015 1,015 — — 21,439 — 21,439 —Fixed income(c) 2,572 2,572 — — 10,875 — 10,875 —Total $11,839 $11,839 $— $— $32,314 $— $32,314 $— March 31, 2015 United States Plans International Plans Total FairValueMeasurement Quoted PriceIn ActiveMarketsfor IdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) TotalFair ValueMeasurement Quoted PriceIn ActiveMarketsfor IdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3)Asset category: Cash and cashequivalents $1,248 $1,248 $— $— $— $— $— $—Equity securities US(a) 7,282 7,282 — — 3,431 3,431 — —International(b) 1,075 1,075 — — 18,646 18,646 — —Fixed income(c) 2,774 2,774 — — 12,324 12,324 — —Total $12,379 $12,379 $— $— $34,401 $34,401 $— $—The fair values presented above were determined based on valuation techniques to measure fair value as discussed in Note 1. (a)US equities include companies that are well diversified by industry sector and equity style (i.e., growth and value strategies). Active and passivemanagement strategies are employed. Investments are primarily in large capitalization stocks and, to a lesser extent, mid- and small-cap stocks.(b)International equities are invested in companies that are traded on exchanges outside the U.S. and are well diversified by industry sector, country andequity style. Active and passive strategies are employed. The vast majority of the investments are made in companies in developed markets with asmall percentage in emerging markets.(c)Fixed income consists primarily of investment grade bonds from diversified industries.The Company expects to make cash contributions of approximately $2,145 to its pension plans in fiscal 2017.80Table of ContentsEstimated future benefit payments under the Company’s pension plans are as follows: PensionBenefits2017$2,70320182,48120192,75120203,15720213,526Years 2022-202621,036Defined Contribution PlanThe Company maintains defined contribution plans primarily in the U.S. and U.K. Eligible employees can contribute a portion of their pre-tax and/or after-tax income in accordance with plan guidelines and the Company will make contributions based on the employees’ eligible pay and/or will match apercentage of the employee contributions up to certain limits. Matching contributions charged to expense for the fiscal years ended March 31, 2016, 2015and 2014 were $6,730, $7,174 and $6,311, respectively.15. Stockholders’ Equity and Noncontrolling InterestsPreferred Stock and Common StockThe Company’s certificate of incorporation authorizes the issuance of up to 1,000,000 shares of preferred stock, par value $0.01 per share (“Preferred Stock”).At March 31, 2016 and 2015, no shares of Preferred Stock were issued or outstanding. The Board of Directors of the Company has the authority to specify theterms of any Preferred Stock at the time of issuance.The following demonstrates the change in the number of shares of common stock outstanding during fiscal years ended March 31, 2014, 2015 and 2016,respectively: Shares outstanding as of March 31, 201347,840,204Purchase of treasury stock(1,191,145)Shares issued as part of equity-based compensation plans, net of equity awards surrendered for option price and taxes293,067Shares outstanding as of March 31, 201446,942,126Purchase of treasury stock(3,274,829)Shares issued as part of equity-based compensation plans, net of equity awards surrendered for option price and taxes401,291Shares outstanding as of March 31, 201544,068,588Purchase of treasury stock(3,216,654)Shares issued from treasury stock to settle conversion premium on Convertible Notes1,889,431Shares issued as part of equity-based compensation plans, net of equity awards surrendered for option price and taxes448,137Shares outstanding as of March 31, 201643,189,502Treasury StockIn fiscal 2016 and 2015, the Company purchased 3,216,654 shares of its common stock for $178,244 and 3,274,829 shares for $205,362, respectively. Of theshares purchased in fiscal 2016, 2,961,444 were acquired through an accelerated share repurchase program ("ASR") for a total cash investment of $166,392 atan average price of $56.19. At March 31, 2016 and 2015, the Company held 10,923,274 and 9,596,051 shares as treasury stock, respectively.81Table of ContentsTreasury Stock ReissuanceOn July 17, 2015, the Company settled the conversion premium on the Convertible Notes by issuing 1,889,431 shares from its treasury stock. The reissuancewas recorded on a last-in, first-out method, and the difference between the repurchase cost and the fair value at reissuance was recorded as an adjustment tostockholders' equity.Accumulated Other Comprehensive Income ("AOCI")The components of AOCI, net of tax, are as follows: BeginningBalance BeforeReclassifications Amount Reclassifiedfrom AOCI EndingBalanceMarch 31, 2016 Pension funded status adjustment $(23,719) $298 $1,560 $(21,861)Net unrealized gain (loss) on derivative instruments (95) (4,027) 4,510 388Foreign currency translation adjustment (85,161) 9,285 — (75,876)Accumulated other comprehensive loss $(108,975) $5,556 $6,070 $(97,349)March 31, 2015 Pension funded status adjustment $(15,207) $(9,259) $747 $(23,719)Net unrealized gain (loss) on derivative instruments (2,253) 289 1,869 (95)Foreign currency translation adjustment 85,305 (170,466) — (85,161)Accumulated other comprehensive loss $67,845 $(179,436) $2,616 $(108,975)March 31, 2014 Pension funded status adjustment $(13,169) $(2,662) $624 $(15,207)Net unrealized (loss) on derivative instruments (832) (1,414) (7) (2,253)Foreign currency translation adjustment 54,656 30,649 — 85,305Accumulated other comprehensive income $40,655 $26,573 $617 $67,845The following table presents reclassifications from AOCI during the twelve months ended March 31, 2016:Components of AOCI Amounts Reclassified from AOCI Location of (Gain) Loss Recognized on Income StatementDerivatives in Cash Flow Hedging Relationships: Net unrealized loss on derivative instruments $7,144 Cost of goods soldTax benefit (2,634) Net unrealized loss on derivative instruments, net of tax $4,510 Defined benefit pension costs: Prior service costs and deferrals $2,043 Net periodic benefit cost, included in cost of goods sold,operating expenses - See Note 14Tax benefit (483) Net periodic benefit cost, net of tax $1,560 82Table of ContentsThe following table presents reclassifications from AOCI during the twelve months ended March 31, 2015:Components of AOCI Amounts Reclassified from AOCI Location of (Gain) Loss Recognized on Income StatementDerivatives in Cash Flow Hedging Relationships: Net unrealized loss on derivative instruments $2,961 Cost of goods soldTax benefit (1,092) Net unrealized loss on derivative instruments, net of tax $1,869 Defined benefit pension costs: Prior service costs and deferrals $1,007 Net periodic benefit cost, included in cost of goods sold,operating expenses - See Note 14Tax benefit (260) Net periodic benefit cost, net of tax $747 The following demonstrates the change in redeemable noncontrolling interests during the fiscal years ended March 31, 2014, 2015 and 2016, respectively: Balance as of March 31, 2013$11,095Net losses attributable to redeemable noncontrolling interests(3,536)Redemption value adjustment4,974Purchase of subsidiary shares from redeemable noncontrolling interests(3,146)Foreign currency translation adjustment(1,340)Balance as of March 31, 2014$8,047Net earnings attributable to redeemable noncontrolling interests191Redemption value adjustment(292)Foreign currency translation adjustment(990)Balance as of March 31, 2015$6,956Net losses attributable to redeemable noncontrolling interests(4,272)Redemption value adjustment4,272Other109Foreign currency translation adjustment(1,068)Balance as of March 31, 2016$5,99716. Stock-Based CompensationAs of March 31, 2016, the Company maintains the Second Amended and Restated EnerSys 2010 Equity Incentive Plan (“2010 EIP”). The 2010 EIP reserved3,177,477 shares of common stock for the grant of various classes of nonqualified stock options, restricted stock units, market share units and other forms ofequity-based compensation. Shares subject to any awards that expire without being exercised or that are forfeited or settled in cash shall again be availablefor future grants of awards under the 2010 EIP. Shares subject to awards that have been retained by the Company in payment or satisfaction of the exerciseprice and any applicable tax withholding obligation of an award shall not count against the limit described above.As of March 31, 2016, 1,327,427 shares are available for future grants. The Company’s management equity incentive plans are intended to provide anincentive to employees and non-employee directors of the Company to remain in the service of the Company and to increase their interest in the success ofthe Company in order to promote the long-term interests of the Company. The plans seek to promote the highest level of performance by providing aneconomic interest in the long-term performance of the Company. The Company settles employee share-based compensation awards with newly issued shares.83Table of ContentsStock OptionsDuring fiscal 2016, the Company granted to management and other key employees 127,966 non-qualified options that vest three years from the date of grant.Options granted prior to fiscal 2016 as well as the options granted in fiscal 2016 expire 10 years from the date of grant.For fiscal 2016, 2015 and 2014, the Company recognized $1,419 with a related tax benefit of $477, $1,470 with a related tax benefit of $502 and $0,respectively, of stock-based compensation expense associated with stock option grants.For purposes of determining the fair value of stock options granted in fiscal 2016 and fiscal 2015, the Company used a Black-Scholes Model with thefollowing assumptions: 2016 2015Risk-free interest rate 1.79% 1.94%Dividend yield 1.02% 1.00%Expected life (years) 6 6Volatility 32.75% 40.48%The following table summarizes the Company’s stock option activity in the years indicated: Number ofOptions Weighted-AverageRemainingContractTerm (Years) Weighted-AverageExercisePrice AggregateIntrinsicValueOptions outstanding as of March 31, 2013 77,986 2.5 $14.76 $2,404Exercised (11,813) 14.72 537Options outstanding as of March 31, 2014 66,173 1.4 $14.77 $3,608Granted 76,512 69.85 —Exercised (39,868) 14.50 1,819Options outstanding as of March 31, 2015 102,817 7 $55.86 $1,291Granted 127,966 68.40 —Exercised (11,986) 14.64 639Expired (8,500) Options outstanding as of March 31, 2016 210,297 8.5 $67.54 $218Options exercisable as of March 31, 2016 31,322 6.8 $60.28 $218Options vested and expected to vest as of March 31, 2016 207,673 8.5 $67.53 $218The following table summarizes information regarding stock options outstanding as of March 31, 2016: Options OutstandingRange of Exercise Prices Number ofOptions Weighted-AverageRemainingContractual Life Weighted-AverageExercise Price$15.01-$20.00 5,819 1.1 $18.33$20.01-$69.85 204,478 8.7 $68.94 210,297 8.5 $67.54 Restricted Stock Units and Market Share UnitsIn fiscal 2016, the Company granted to non-employee directors 28,970 deferred restricted stock units at the fair value of $55.32 per restricted stock unit at thedate of grant. In fiscal 2015, such grants amounted to 14,781 restricted stock units at the fair value of $61.16 per restricted stock unit at the date of grant andin fiscal 2014, amounted to 17,064 restricted stock units at the84Table of Contentsfair value of $53.92 per restricted stock unit at the date of grant. The awards vest immediately upon the date of grant and the payment of shares of commonstock under this grant are payable upon such director’s termination of service as a director.In fiscal 2016, 2015 and 2014, the Company granted 565, 3,434 and 5,232 restricted stock units, respectively, at various fair values, under deferredcompensation plans.In fiscal 2016, the Company granted to management and other key employees 120,287 restricted stock units at the fair value of $68.40 per restricted stockunit and 212,635 performance market share units at a weighted average fair value of $59.94 per unit at the date of grant.In fiscal 2015, the Company granted to management and other key employees 118,312 restricted stock units at the fair value of $69.83 per restricted stockunit and 152,300 performance market share units at a weighted average fair value of $70.42 per market share unit at the date of grant.In fiscal 2014, the Company granted to management and other key employees 161,629 restricted stock units at the fair value of $50.70 per restricted stockunit and 189,438 market share units at a weighted average fair value of $65.03 per market share unit at the date of grant.For purposes of determining the fair value of performance market share units granted in fiscal 2016 and fiscal 2015, the Company used a Monte CarloSimulation with the following assumptions: 2016 2015Risk-free interest rate 1.00% 0.87%Dividend yield —% —%Expected life (years) 3 3Volatility 25.52% 30.83%For purposes of determining the fair value of market share units granted in fiscal 2014, the Company used a binomial lattice model with the followingassumptions: 2014Risk-free interest rate0.52%Dividend yield1.00%Expected life (years)3Volatility33.89%A summary of the changes in restricted stock units and market share units awarded to employees and directors that were outstanding under the Company’sequity compensation plans during fiscal 2016 is presented below: Restricted Stock Units (RSU) Performance Market Share Units and Market ShareUnits (MSU) Number ofRSU Weighted-AverageGrant DateFair Value Number ofMSU Weighted-AverageGrant DateFair ValueNon-vested awards as of March 31, 2015 502,223 $45.30 616,188 $55.75Granted 149,822 66.66 212,635 59.94Stock dividend 5,984 51.72 6,603 64.45Performance factor — — 255,534 41.28Vested (137,636) 46.15 (536,490) 41.55Canceled (17,953) 63.28 (5,524) 63.33Non-vested awards as of March 31, 2016 502,440 $51.26 548,946 $64.4685Table of ContentsThe Company recognized stock-based compensation expense relating to restricted stock units and market share units of approximately $18,184, with arelated tax benefit of $4,446 for fiscal 2016, $23,789, with a related tax benefit of $4,790 for fiscal 2015 and $16,742, with a related tax benefit of $2,843 forfiscal 2014.All Award PlansAs of March 31, 2016, unrecognized compensation expense associated with the non-vested incentive awards outstanding was $24,219 and is expected to berecognized over a weighted-average period of 15 months.17. Earnings Per ShareThe following table sets forth the reconciliation from basic to diluted weighted-average number of common shares outstanding and the calculations of netearnings per common share attributable to EnerSys stockholders. Fiscal year ended March 31, 2016 2015 2014Net earnings attributable to EnerSys stockholders $136,150 $181,188 $150,328Weighted-average number of common shares outstanding: Basic 44,276,713 45,606,317 47,473,690Dilutive effect of: Common shares from exercise and lapse of equity awards, net of shares assumedreacquired 644,036 879,406 1,034,505Convertible Notes 553,381 1,567,006 1,279,960Diluted weighted-average number of common shares outstanding 45,474,130 48,052,729 49,788,155Basic earnings per common share attributable to EnerSys stockholders $3.08 $3.97 $3.17Diluted earnings per common share attributable to EnerSys stockholders $2.99 $3.77 $3.02Anti-dilutive equity awards not included in diluted weighted-average commonshares — — —On July 17, 2015, the Company paid $172,388, in aggregate, towards the principal balance of the Convertible Notes, including accreted interest, cashequivalent of fractional shares issued towards conversion premium and settled the conversion premium by issuing, in the aggregate, 1,889,431 shares of itscommon stock, which were included in the diluted weighted average shares outstanding for the period prior to the extinguishment.During the second quarter of fiscal 2016, the Company entered into an ASR with a major financial institution to repurchase $120,000 to $180,000 of itscommon stock. The Company prepaid $180,000 and received an initial delivery of 2,000,000 shares with a fair market value of approximately $108,100. TheASR was accounted for as a treasury stock repurchase, reducing the weighted average number of basic and diluted shares outstanding by the 2,000,000 sharesinitially repurchased, and as a forward contract indexed to the Company's own common shares to reflect the future settlement provisions.On January 19, 2016, the ASR was settled and the Company received an additional 961,444 shares. See Note 15 for more information.18. Commitments, Contingencies and LitigationLitigation and Other Legal MattersIn the ordinary course of business, the Company and its subsidiaries are routinely defendants in or parties to many pending and threatened legal actions andproceedings, including actions brought on behalf of various classes of claimants. These actions and proceedings are generally based on alleged violations ofenvironmental, anti-competition, employment, contract and other laws. In some of these actions and proceedings, claims for substantial monetary damagesare asserted against the Company and its subsidiaries. In the ordinary course of business, the Company and its subsidiaries are also subject to regulatory andgovernmental examinations, information gathering requests, inquiries, investigations, and threatened legal actions and proceedings. In connection withformal and informal inquiries by federal, state, local and foreign agencies, such subsidiaries86Table of Contentsreceive numerous requests, subpoenas and orders for documents, testimony and information in connection with various aspects of their activities.European Competition InvestigationsCertain of the Company’s European subsidiaries have 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 ofcertain industrial battery participants. The Company is responding to inquiries related to these matters. The Company settled the Belgian regulatoryproceeding in February 2016 by acknowledging certain anticompetitive practices and conduct and agreeing to pay a fine of $1,962, which was paid in March2016 and as of March 31, 2016, the Company had a reserve balance of $2,038 in connection with these remaining investigations and other related legalcharges. For the Dutch and German regulatory proceedings, the Company does not believe that such an estimate can be made at this time given the earlystages of these proceedings. 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, remains uncertain. Accordingly, the Company’s estimate may change fromtime to time, and actual losses could vary.AltergyIn the fourth quarter of fiscal 2014, the Company recorded a $58,184 legal proceedings charge in connection with an adverse arbitration result involvingdisputes between the Company's wholly-owned subsidiary, EnerSys Delaware Inc. (“EDI”), and Altergy Systems (“Altergy”). In accordance with the final termsheet, EDI paid Altergy $40,000 in settlement of this award. Altergy paid $2,000 to purchase EDI’s entire equity interest in Altergy. Since the full amount ofthe initial award of $58,184 was recorded in fiscal 2014, the Company reversed approximately $16,233, net of professional fees, from this previouslyrecorded legal proceedings charge in fiscal 2015 and $799 in fiscal 2016. The Company also included the $2,000 received in exchange for its equity interestin Altergy in the Consolidated Statements of Income in Other (income) expense, net in fiscal 2015. The Company had previously written off the carryingvalue of the investment of $5,000 in fiscal 2014.Environmental IssuesAs a result of its operations, the Company is subject to various federal, state and local, as well as international environmental laws and regulations and isexposed to the costs and risks of registering, handling, processing, storing, transporting, and disposing of hazardous substances, especially lead and acid. TheCompany’s operations are also subject to federal, state, local and international occupational safety and health regulations, including laws and regulationsrelating 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 that predates its ownership of thisfacility. This manufacturing facility was closed in 2001 and is separate from the Company’s current metal fabrication facility in Sumter. The Company hasestablished a reserve for this facility. As of March 31, 2016 and 2015, the reserves related to this facility were $1,123 and $2,902, respectively. Based oncurrent information, the Company’s management believes these reserves are adequate to satisfy the Company’s environmental liabilities at this facility.Collective BargainingAt March 31, 2015, the Company had approximately 9,400 employees. Of these employees, approximately 29% were covered by collective bargainingagreements. Employees covered by collective bargaining agreements that did not exceed twelve months were approximately 7% of the total workforce. Theaverage term of these agreements is two years, with the longest term being three years. The Company considers its employee relations to be good and did notexperience any significant labor unrest or disruption of production during fiscal 2016.Lead ContractsTo stabilize its costs, the Company has entered into contracts with financial institutions to fix the price of lead. The vast majority of such contracts are for aperiod not extending beyond one year. Under these contracts, at March 31, 2016 and 2015, the Company has hedged the price to purchase approximately27.4 million pounds and 91.6 million pounds of lead, respectively, for a total purchase price of $21,628 and $76,143, respectively.87Table of ContentsForeign Currency Forward ContractsThe Company quantifies and monitors its global foreign currency exposures. On a selective basis, the Company will enter into foreign currency forward andoption contracts to reduce the volatility from currency movements that affect the Company. The vast majority of such contracts are for a period not extendingbeyond one year. The Company’s largest exposure is from the purchase and conversion of U.S. dollar based lead costs into local currencies in EMEA.Additionally, the Company has currency exposures from intercompany financing and intercompany and third-party trade transactions. To hedge theseexposures, the Company has entered into a total of $29,362 and $102,124, respectively, of foreign currency forward contracts with financial institutions as ofMarch 31, 2016 and 2015, respectively.OtherThe Company has various purchase and capital commitments incident to the ordinary conduct of business. In the aggregate, such commitments are not atprices in excess of current market.19. Restructuring and Other Exit ChargesRestructuring PlansDuring fiscal 2012, the Company announced restructuring plans related to its operations in EMEA, primarily consisting of the transfer of manufacturing ofselect products between certain of its manufacturing operations and restructuring of its selling, general and administrative operations, which resulted in thereduction of approximately 85 employees upon completion at the end of the second quarter of fiscal 2014. The total charges for these actions amounted to$3,545, primarily from cash expenses for employee severance-related payments. The Company recorded restructuring charges of $3,070 in fiscal 2012 and$475 of charges in fiscal 2013 with no additional charges in fiscal 2014. The Company incurred $2,433 of costs against the accrual during fiscal 2012, and$913 of costs incurred in fiscal 2013 with $185 of additional incurred against the accrual during fiscal 2014. This plan was completed as of September 29,2013.During fiscal 2013, the Company announced a restructuring related to improving the efficiency of its manufacturing operations in EMEA. This program wascompleted during the third quarter of fiscal 2016. Total charges for this program were $6,895, primarily for cash expenses of $5,496 for employee severance-related payments of approximately 140 employees and non-cash expenses of $1,399 associated with the write-off of certain fixed assets and inventory. TheCompany incurred $5,207 of costs against the accrual through fiscal 2015, and incurred $271 in costs against the accrual during fiscal 2016.During fiscal 2014, the Company announced further restructuring programs to improve the efficiency of its manufacturing, sales and engineering operationsin EMEA including the restructuring of its manufacturing operations in Bulgaria. The restructuring of the Bulgaria operations was announced during thethird quarter of fiscal 2014 and consisted of the transfer of motive power and a portion of reserve power battery manufacturing to the Company's facilities inWestern Europe. This program was completed during the fourth quarter of fiscal 2016. Total charges for this program were $22,930 primarily for cashexpenses of $11,996 for employee severance-related payments of approximately 500 employees and other charges and non-cash expenses of $10,934associated with the write-off of certain fixed assets and inventory. The Company recorded restructuring charges of $22,115 through fiscal 2015, consisting ofnon-cash charges of $10,934 and cash charges of $11,181 and recorded an additional $1,229 in cash charges and a favorable accrual adjustment of $414during fiscal 2016. The Company incurred $9,737 of costs against the accrual through fiscal 2015, and incurred $2,068 in costs against the accrual duringfiscal 2016.During the third quarter of fiscal 2015, the Company announced a restructuring related to its manufacturing facility located in Jiangdu, the People’s Republicof China ("PRC"), pursuant to which the Company completed the transfer of the manufacturing at that location to its other facilities in PRC, as part of theclosure of the Jiangdu facility in the first quarter of fiscal 2016. This program was completed during the fourth quarter of fiscal 2016. Total charges for thisprogram were $5,291 primarily for cash expenses of $4,893 for employee severance-related payments of approximately 300 employees and other charges andnon-cash expenses of $398. The Company recorded cash restructuring charges of $3,870 during fiscal 2015 and recorded an additional $1,023 in cashcharges and $398 in non-cash charges during fiscal 2016. The Company incurred $1,874 of costs against the accrual through fiscal 2015, and incurred$2,970 in costs against the accrual during fiscal 2016.During fiscal 2015, the Company announced a restructuring primarily related to a portion of its sales and engineering organizations in Europe to improveefficiencies. This program was completed during the fourth quarter of fiscal 2016. Total charges for this program were $804 for cash expenses for employeeseverance-related payments of approximately 15 employees. The Company recorded cash restructuring charges of $450 during fiscal 2015 and recorded anadditional $35488Table of Contentsduring fiscal 2016. The Company incurred $193 of costs against the accrual through fiscal 2015, and incurred $698 in costs against the accrual during fiscal2016.During the first quarter of fiscal 2016, the Company completed a restructuring related to a reduction of two executives associated with one of Americas’recent acquisitions to improve efficiencies. The Company recorded total severance-related charges of $570, all of which was paid during the first quarter offiscal 2016, primarily per the terms of a pre-existing employee agreement.During the second quarter of fiscal 2016, the Company announced a restructuring to improve efficiencies primarily related to its motive power assembly anddistribution center in Italy and its sales and administration organizations in EMEA. In addition, during the third quarter of fiscal 2016, the Companyannounced a further restructuring related to its manufacturing operations in Europe. The Company estimates that the total charges for these actions willamount to approximately $6,800, primarily from cash charges for employee severance-related payments and other charges. The Company estimates that theseactions will result in the reduction of approximately 120 employees upon completion. During 2016, the Company recorded restructuring charges of $5,232and incurred $2,993 in costs against the accrual. As of March 31, 2016, the reserve balance associated with these actions is $2,238. The Company expects tobe committed to an additional $1,600 of restructuring charges related to these actions during fiscal 2016, and expects to complete the program during fiscal2017.During the second quarter of fiscal 2016, the Company announced a restructuring related to improving the efficiency of its manufacturing operations in theAmericas. The program consists of the announced closing of its Cleveland, Ohio charger manufacturing facility which is expected to be completed during thesecond quarter of fiscal 2017, with the transfer of production to other Americas manufacturing facilities. The Company estimates that the total charges for allactions associated with this program will amount to approximately $2,100, primarily from cash charges for employee severance-related payments and othercharges of $1,500, along with a pension curtailment charge of $313 and non-cash charges related to the accelerated depreciation of fixed assets of $300. TheCompany estimates that these actions will result in the reduction of approximately 100 employees at its Cleveland facility. During fiscal 2016, the Companyrecorded restructuring charges of $1,488 including a pension curtailment charge of $313 and non-cash charges of $305 related to accelerated depreciation offixed assets and incurred $119 of cost against the accrual. As of March 31, 2016, the reserve balance associated with these actions is $751. The Companyexpects to be committed to an additional $600 of restructuring charges related to these actions during fiscal 2017 when it expects to complete this program.A roll-forward of the restructuring reserve is as follows: EmployeeSeverance Other TotalBalance at March 31, 2013 $1,738 $221 $1,959Accrued 10,285 1,378 11,663Costs incurred (4,966) (525) (5,491)Foreign currency impact and other 255 28 283Balance at March 31, 2014 $7,312 $1,102 $8,414Accrued 6,140 843 6,983Costs incurred (10,378) (803) (11,181)Foreign currency impact and other (108) (288) (396)Balance at March 31, 2015 $2,966 $854 $3,820Accrued 8,859 419 9,278Accrual adjustments — (414) (414)Costs incurred (8,817) (872) (9,689)Foreign currency impact and other (44) 38 (6)Balance at March 31, 2016 $2,964 $25 $2,989Other Exit ChargesDuring fiscal 2016, the Company recorded exit charges of $3,098 related to certain operations in Europe.89Table of Contents20. WarrantyThe Company provides for estimated product warranty expenses when the related products are sold, with related liabilities included within accrued expensesand other liabilities. Because warranty estimates are forecasts that are based on the best available information, primarily historical claims experience, claimscosts may differ from amounts provided. An analysis of changes in the liability for product warranties is as follows: Balance at March 31, 2013$42,591Current year provisions16,098Costs incurred(22,862)Fair value of warranty reserves of acquired businesses2,817Foreign currency translation adjustment1,782 Balance at March 31, 201440,426Current year provisions18,413Costs incurred(16,015)Foreign currency translation adjustment(3,014) Balance at March 31, 201539,810Current year provisions19,735Costs incurred(13,998)Foreign currency translation adjustment2,875 Balance at March 31, 2016$48,42221. Other (Income) Expense, NetOther (income) expense, net consists of the following: Fiscal year ended March 31, 2016 2015 2014Foreign exchange transaction (gains) losses $5,425 $(5,011) $5,845(Gain) on disposition of equity interest in Altergy / write-off of investment inAltergy — (2,000) 5,000Other 294 1,409 2,813Total $5,719 $(5,602) $13,65890Table of Contents22. Business SegmentsSummarized financial information related to the Company’s reportable segments at March 31, 2016, 2015 and 2014 and for each of the fiscal years thenended is shown below. Fiscal year ended March 31, 2016 2015 2014Net sales by segment to unaffiliated customers Americas $1,276,027 $1,322,337 $1,267,598EMEA 787,402 948,845 966,152Asia 252,820 234,330 240,683Total net sales $2,316,249 $2,505,512 $2,474,433Net sales by product line Reserve power $1,109,154 $1,252,637 $1,234,538Motive power 1,207,095 1,252,875 1,239,895Total net sales $2,316,249 $2,505,512 $2,474,433Intersegment sales Americas $32,984 $29,987 $33,951EMEA 78,812 69,396 77,549Asia 23,590 33,786 29,428Total intersegment sales(1) $135,386 $133,169 $140,928Operating earnings Americas $182,774 $162,741 $179,080EMEA 75,666 109,861 84,902Asia 570 9,928 21,217Restructuring charges—Americas (2,058) — —Restructuring and other exit charges—EMEA (9,501) (7,567) (27,078)Restructuring charges—Asia (1,419) (3,869) (248)Impairment of goodwill and indefinite-lived intangibles—Americas (32,999) (23,196) —Impairment of goodwill and fixed assets—EMEA (3,253) (750) —Goodwill impairment charge—Asia — — (5,179)Legal proceedings (charge) / reversal of legal accrual, net of fees—Americas 799 16,233 (58,184)Legal proceedings charge—EMEA (4,000) — —Gain on sale of facility—Asia 3,420 — —Total operating earnings(2) $209,999 $263,381 $194,510Property, plant and equipment, net Americas $177,720 $168,274 $155,988EMEA 112,839 114,681 145,308Asia 66,850 73,899 68,870Total $357,409 $356,854 $370,166Capital Expenditures Americas $39,127 $34,768 $24,641EMEA 12,625 16,215 14,871Asia 4,128 12,642 22,483Total $55,880 $63,625 $61,995Depreciation and Amortization Americas $31,070 $30,724 $26,596EMEA 16,337 19,664 22,708Asia 8,587 6,652 4,668Total $55,994 $57,040 $53,972 (1)Intersegment sales are presented on a cost-plus basis which takes into consideration the effect of transfer prices between legal entities.(2)The Company does not allocate interest expense or other (income) expense, net to the reportable segments.91Table of ContentsThe Company markets its products and services in over 100 countries. Sales are attributed to countries based on the location of sales order approval andacceptance. Sales to customers in the United States were 51.0%, 46.0% and 44.0% for fiscal years ended March 31, 2016, 2015 and 2014, respectively.Property, plant and equipment, net, attributable to the United States as of March 31, 2016 and 2015, were $149,348 and $140,514, respectively. No singlecountry, outside the United States, accounted for more than 10% of the consolidated net sales or net property, plant and equipment and, therefore, wasdeemed not material for separate disclosure.23. Quarterly Financial Data (Unaudited)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 2016 ended on June 28, 2015, September 27, 2015, December 27, 2015, and March 31, 2016,respectively. The four quarters in fiscal 2015 ended on June 29, 2014, September 28, 2014, December 28, 2014, and March 31, 2015, respectively. 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Fiscal YearFiscal year ended March 31, 2016 Net sales $562,068 $569,134 $573,573 $611,474 $2,316,249Gross profit 150,415 154,939 145,882 160,541 611,777Operating earnings(1)(3)(5)(6) 69,037 59,548 55,461 25,953 209,999Net earnings 47,934 39,768 38,214 5,908 131,824Net earnings attributable to EnerSysstockholders 48,387 40,025 38,478 9,260 136,150Net earnings per common share attributable toEnerSys stockholders—basic $1.09 $0.89 $0.87 $0.21 $3.08Net earnings per common share attributable toEnerSys stockholders—diluted $1.03 $0.87 $0.86 $0.21 $2.99Fiscal year ended March 31, 2015 Net sales $634,110 $629,927 $611,578 $629,897 $2,505,512Gross profit 162,577 162,540 157,265 158,529 640,911Operating earnings(2)(4)(6) 71,689 80,053 68,683 42,956 263,381Net earnings 49,115 56,550 49,331 26,529 181,525Net earnings attributable to EnerSysstockholders 49,169 56,316 49,252 26,451 181,188Net earnings per common share attributable toEnerSys stockholders—basic $1.05 $1.22 $1.09 $0.60 $3.97Net earnings per common share attributable toEnerSys stockholders—diluted $0.99 $1.16 $1.04 $0.57 $3.77 (1)Included in Operating earnings were restructuring and other exit charges of $1,218, $2,629, $3,204 and $5,927 for the first, second, third and fourthquarters of fiscal 2016, respectively.(2)Included in Operating earnings were restructuring and other exit charges of $1,829, $1,810, $2,437 and $5,360 for the first, second, third and fourthquarters of fiscal 2015, respectively.(3)Included in Operating earnings for the fourth quarter of fiscal 2016 was a charge relating to the impairment of goodwill, indefinite-lived intangiblesand fixed assets for $36,252.(4)Included in Operating earnings for the fourth quarter of fiscal 2015 was a charge relating to the impairment of goodwill and other indefinite-livedintangibles for $23,946.(5)Included in Operating earnings for the first quarter of fiscal 2016 was a gain on sale of facility of $4,348 and in the fourth quarter of fiscal 2016,charges relating to the same of $928.(6)Included in Operating earnings for the second quarter of fiscal 2016 was a legal proceedings charge of $3,201. During the second quarter of fiscal2015, the Company reversed $16,233, net of professional fees upon final settlement of a legal matter. 92Table of Contents24. Subsequent EventsOn May 5, 2016, the Company announced the payment of a quarterly cash dividend of $0.175 per share of common stock to be paid on June 24, 2016, tostockholders of record as of June 10, 2016.On May 16, 2016, under the 2010 EIP, the Company granted 242,068 stock options, which vest over three years, 229,638 restricted stock units, which vest25% each year over four-years from the date of grant, and 83,720 market condition-based share units, which vest three years from the date of grant.On April 16, 2016, the Company announced that it had completed the acquisition of certain assets of Enser Corporation, headquartered in Pinellas Park,Florida. Enser is a leading manufacturer of molten salt “thermal” batteries used in powering a multitude of electronics, guidance and other electrical loads onadvanced weapon systems.93Table of ContentsSCHEDULE IIEnerSysValuation and Qualifying Accounts(In Thousands) Balance at Beginning of Period Additions Charged to Expense Charge-Offs Purchase Accounting Adjustments Other(1) Balance at End of PeriodAllowance for doubtful accounts: Fiscal year ended March 31, 2014 $9,292 $907 $(963) $— $210 $9,446Fiscal year ended March 31, 2015 9,446 1,125 (2,315) — (694) 7,562Fiscal year ended March 31, 2016 7,562 4,749 (649) — (269) 11,393 Allowance for inventory valuation: Fiscal year ended March 31, 2014 $17,372 $5,944 $(3,283) $— $283 $20,316Fiscal year ended March 31, 2015 20,316 9,306 (7,707) — (1,673) 20,242Fiscal year ended March 31, 2016 20,242 10,052 (6,534) — (190) 23,570 Deferred tax asset—valuation allowance: (2) Fiscal year ended March 31, 2014 $54,542 $6,951 $(27,269) $327 $(10,968) $23,583Fiscal year ended March 31, 2015 23,583 4,222 (3,796) (327) (3,619) 20,063Fiscal year ended March 31, 2016 20,063 6,670 (361) — (956) 25,416(1)Primarily the impact of currency changes.(2)In fiscal 2016, "other" was primarily the impact of currency changes. In fiscal 2015 and 2014, "Other" also included the reversal of deferred taxaccounts and related valuation allowance upon the sale of certain foreign subsidiaries of the Company. In fiscal 2014, there was also an adjustmentrelating to the net operating losses of a foreign subsidiary of the Company and the related valuation allowance.94Table of ContentsITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone.ITEM 9A.CONTROLS AND PROCEDURES(a) Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief FinancialOfficer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) underthe 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, theCompany’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls andprocedures are effective.(b) Internal Control Over Financial Reporting. There have not been any changes in the Company’s internal control over financial reporting (as such term isdefined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of the fiscal year to which this report relates that have materiallyaffected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.The report called for by Item 308(a) of Regulation S-K is included herein as “Management Report on Internal Control Over Financial Reporting.”Management Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting. With the participation of the ChiefExecutive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reportingbased on the framework and criteria established in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of theTreadway Commission (2013 framework).Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of March 31, 2016.The attestation report called for by Item 308(b) of Registration S-K is included herein as “Report of Independent Registered Public Accounting Firm,” whichappears in Item 8 in this Annual Report on Form 10-K. /s/ David M. Shaffer /s/ Michael J. SchmidtleinDavid M. ShafferChief Executive Officer Michael J. SchmidtleinChief Financial OfficerITEM 9B.OTHER INFORMATIONNot applicable.95Table of ContentsPART IIIITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information required by this item is incorporated by reference from the sections entitled “Board of Directors,” “Executive Officers,” “Section 16(a)Beneficial Ownership Reporting Compliance,” “Corporate Governance—Independence of Directors,” “Corporate Governance—Process for Selection ofDirector Nominee Candidates,” “Audit Committee Report,” and “Certain Relationships and Related Transactions—Employment of Related Parties” of theCompany’s definitive proxy statement for its 2014 Annual Meeting of Stockholders (the “Proxy Statement”) to be filed no later than 120 days after the fiscalyear end.We have adopted a Code of Business Conduct and Ethics that applies to all of our officers, directors and employees (including our Chief Executive Officer,Chief Financial Officer, and Corporate Controller) and have posted the Code on our website at www.enersys.com, and a copy is available in print to anystockholder who requires a copy. If we waive any provision of the Code applicable to any director, our Chief Executive Officer, Chief Financial Officer, andCorporate Controller, such waiver will be promptly disclosed to the Company’s stockholders through the Company’s website.ITEM 11.EXECUTIVE COMPENSATIONThe information required by this item is incorporated by reference from the sections entitled “Corporate Governance—Compensation Committee” and“Executive Compensation” of the Proxy Statement”) to be filed no later than 120 days after the fiscal year end.ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT RELATED STOCKHOLDER MATTERSThe information required by this item is incorporated by reference from the section entitled “Security Ownership of Certain Beneficial Owners andManagement” of the Proxy Statement to be filed no later than 120 days after the fiscal year end. Equity Compensation Plan InformationPlan Category Number ofsecurities to beissued uponexercise ofoutstandingoptions,warrantsand rights(a) Weighted-averageexercise price ofoutstanding options,warrants and rights(b) Number ofsecuritiesremaining availablefor future issuanceunder equitycompensation plans(excludingsecurities reflectedin column (a))(c)Equity compensation plans approved by security holders 1,517,217 (1) $67.53 (2) 1,327,427Equity compensation plans not approved by securityholders — — —Total 1,517,217 $67.53 1,327,427 (1)Assumes a 200% payout of market share units and performance market share units.(2)Awards of restricted stock units, market share units, performance market share units and deferred stock units and stock units held in both the EnerSysVoluntary Deferred Compensation Plan for Non-Employee Directors and the EnerSys Voluntary Deferred Compensation Plan for Executives were notincluded in calculating the weighted-average exercise price as they will be settled in shares of common stock for no consideration.ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe information required by this item is incorporated by reference from the sections entitled “Corporate Governance,” and “Certain Relationships andRelated Transactions” of the Proxy Statement to be filed no later than 120 days after the fiscal year end.96Table of ContentsITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICESThe information required by this item is incorporated by reference from the section entitled “Audit Committee Report” of the Proxy Statement to be filed nolater than 120 days after the fiscal year end.97Table of ContentsPART IVITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES(a) The following documents are filed as part of this Report:(1) Consolidated Financial StatementsSee Index to Consolidated Financial Statements.(2) Financial Statement ScheduleThe following consolidated financial statement schedule should be read in conjunction with the consolidated financial statements (see Item 8. “FinancialStatements and Supplementary Data:”): Schedule II—Valuation and Qualifying Accounts.All other schedules are omitted because they are not applicable or the required information is contained in the consolidated financial statements or notesthereto.(b) The following documents are filed herewith as exhibits: Exhibit Number Description of Exhibit3.1 Fifth Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No. 3 to EnerSys’ RegistrationStatement on Form S-1 (File No. 001-32253) filed on February 6, 2013). 3.2 Second Amended and Restated Bylaws (incorporated by reference to Exhibits 3.3 to EnerSys’ Quarterly Report on Form 10-Q for theperiod ended September 30, 2014 (File No. 001-32253) filed on November 5, 2014). 4.1 Indenture, dated as of May 28, 2008, between EnerSys and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1to EnerSys’ Current Report on Form 8-K (File No. 001-32253) filed on May 28, 2008). 4.2 Indenture, dated as of April 23, 2015, among EnerSys, the Guarantors party thereto and MUFG Union Bank, N.A., as Trustee(incorporated by reference to Exhibit 4.1 to EnerSys’ Current Report on Form 8-K (File No. 00-32253) filed on April 23, 2015). 4.3 First Supplemental Indenture, dated as of April 23, 2015, among EnerSys, the Guarantors party thereto and MUFG Union Bank, N.A., asTrustee (incorporated by reference to Exhibit 4.2 to EnerSys’ Current Report on Form 8-K (File No. 00-32253) filed on April 23, 2015). 4.4 Form of 5.00% Senior Note due 2023 (incorporated by reference to Exhibit 4.2 to EnerSys’ Current Report on Form 8-K (File No. 00-32253) filed on April 23, 2015). 10.1 Amended and Restated Credit Agreement, dated as of July 8, 2014, among EnerSys, Bank of America, N.A., as Administrative Agent,Wells Fargo Bank, National Association, as Syndication Agent, RB International Finance (USA) LLC and PNC Bank, NationalAssociation, as Co-Documentation Agents and Co-Managers and the various lending institutions party thereto (incorporated byreference to Annex A to Exhibit 10.1 to EnerSys’ Current Report on Form 8-K (File No. 001-32253) filed on July 8, 2014). 10.2 Incremental Commitment Agreement, dated July 8, 2014, among EnerSys and certain financial institutions (incorporated by reference toExhibit 10.2 to EnerSys’ Current Report on Form 8-K (File No. 001-32253) filed on July 8, 2014). 10.3 Stock Subscription Agreement, dated March 22, 2002, among EnerSys Holdings Inc., Morgan Stanley Dean Witter Capital Partners IV,L.P., Morgan Stanley Dean Witter Capital Investors IV, L.P., MSDW IV 892 Investors, L.P., Morgan Stanley Global Emerging MarketsPrivate Investment Fund, L.P. and Morgan Stanley Global Emerging Markets Private Investors, L.P. (incorporated by reference toExhibit 10.27 to Amendment No. 3 to EnerSys’ Registration Statement on Form S-1 (File No. 333-115553) filed on July 13, 2004). 98Table of ContentsExhibit Number Description of Exhibit10.4 Employment Agreement, dated November 9, 2000, between Yuasa, Inc. and John D. Craig and letter of amendment thereto (incorporatedby reference to Exhibit 10.2 to EnerSys’ Registration Statement on Form S-1 (File No. 333-115553) filed on May 17, 2004). 10.5 Side Letter to Employment Agreement, dated October 30, 2014, between EnerSys and John D. Craig (incorporated by reference toExhibit 10.4 to EnerSys' Quarterly Report on Form 10-Q for the period ended September 28, 2014 (File No. 001-32253) filed onNovember 5, 2014). 10.6 Consulting Agreement with Richard W. Zuidema (incorporated by reference to Exhibit 10.3 to EnerSys Quarterly Report on Form 10-Qfor the period ended September 27, 2015 (File No. 001-32253) filed on November 2, 2015). 10.7 Form of Severance Agreement, (incorporated by reference to Exhibit 10.37 to EnerSys’ Annual Report on Form 10-K (File No. 001-32253) filed on May 28, 2013). 10.8 Employment Offer Letter, dated October 20, 2014, of EnerSys Delaware Inc. to David M. Shaffer (incorporated by reference to Exhibit10.5 to EnerSys' Quarterly Report on Form 10-Q for the period ended September 28, 2014 (File No. 001-32253) filed on November 5,2014). 10.9 EnerSys 2013 Management Incentive Plan (incorporated by reference to Appendix A to EnerSys’ Definitive Proxy Statement onSchedule 14A (File No. 001-32253) filed on June 27, 2013). 10.10 Form of Stock Option Agreement (six-month vesting) (incorporated by reference to Exhibit 10.31 to EnerSys’ Annual Report onForm 10-K for the year ended March 31, 2008 (File No. 001-32253) filed on June 1, 2009). 10.11 Form of 2004 Equity Incentive Plan (incorporated by reference to Exhibit 10.24 to Amendment No. 3 to EnerSys’ RegistrationStatement on Form S-1 (File No. 333-115553) filed on July 13, 2004). 10.12 EnerSys Amended and Restated 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.27 to EnerSys Annual Report onForm 10-K (File No. 001-32253) filed on June 11, 2008). 10.13 EnerSys Management Incentive Plan for fiscal year 2008 (incorporated by reference to Exhibit 10.1 to EnerSys’ Current Report on Form8-K (File No. 001-32253) filed on April 2, 2007). 10.14 Second Amended and Restated EnerSys 2010 Equity Incentive Plan (filed herewith). 10.15 EnerSys Voluntary Deferred Compensation Plan for Executives as amended August 5, 2010, and May 26, 2011 (incorporated byreference to Exhibit 10.23 to EnerSys’ Annual Report on Form 10-K (File No. 001-32253) filed on May 31, 2011). 10.16 Form of Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.26 to Amendment No. 3 to EnerSys’ RegistrationStatement on Form S-1 (File No. 333-115553) filed on July 13, 2004). 10.17 Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.1 to EnerSys’ Current Report on Form 8-K (File No. 001-32253) filed on December 9, 2005). 10.18 Form of Stock Option Agreement (four-year vesting) (incorporated by reference to Exhibit 10.1 to EnerSys’ Current Report on Form 8-K(File No. 001-32253) filed on May 23, 2007). 10.19 Form of Stock Option Agreement (three-year vesting) (incorporated by reference to Exhibit 10.2 to EnerSys’ Current Report on Form 8-K (File No. 001-32253) filed on May 6, 2008). 10.20 Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.1 to EnerSys’ Current Report on Form 8-K (FileNo. 001-32253) filed on May 23, 2007). 10.21 Form of Restricted Stock Unit Agreement – Non-Employee Directors (incorporated by reference to Exhibit 10.29 to EnerSys’ AnnualReport on Form 10-K (File No. 001-32253) filed on June 1, 2009). 99Table of ContentsExhibit Number Description of Exhibit10.22 Form of Restricted Stock Unit Agreement – Employees – 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.30 toEnerSys’ Annual Report on Form 10-K (File No. 001-32253) filed on June 1, 2010). 10.23 Form of Market Share Restricted Stock Unit Agreement – Employees (incorporated by reference to Exhibit 10.31 to EnerSys’ AnnualReport on Form 10-K (File No. 001-32253) filed on June 1, 2010). 10.24 Form of Market Share Restricted Stock Unit Agreement – Employees – 2010 Equity Incentive Plan (incorporated by reference toExhibit 10.32 to EnerSys’ Annual Report on Form 10-K (File No. 001-32253) filed on May 31, 2011). 10.25 Form of Restricted Stock Unit Agreement – Employees and Senior Executives – 2010 Equity Incentive Plan (incorporated by referenceto Exhibit 10.33 to EnerSys’ Annual Report on Form 10-K (File No. 001-32253) filed on May 31, 2011). 10.26 Form of Restricted Stock Unit Agreement – Employees – 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.31 toEnerSys’ Annual Report on Form 10-K (File No. 001-32253) filed on May 31, 2011). 10.27 Form of Deferred Stock Unit Agreement – Non-Employee Directors – 2010 Equity Incentive Plan (incorporated by reference to Exhibit10.35 to EnerSys’ Annual Report on Form 10-K (File No. 001-32253) filed on May 31, 2011). 10.28 Form of Restricted Stock Unit Agreement – Employees – 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.39 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2013 (File No. 001-32253) filed on May 28, 2013). 10.29 Form of Market Share Restricted Stock Unit Agreement – Employees – 2010 Equity Incentive Plan (incorporated by reference toExhibit 10.39 to EnerSys’ Annual Report on Form 10-K for the year ended March 31, 2013 (File No. 001-32253) filed on May 28,2013). 10.30 Form of Stock Option Agreement - Employees - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.32 to EnerSys’Annual Report on Form 10-K for the year ended March 31, 2014 (File No. 001-32253) filed on May 28, 2014). 10.31 Form of Stock Option Agreement - Senior Executives - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.33 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2014 (File No. 001-32253) filed on May 28, 2014). 10.32 Form of Restricted Stock Unit Agreement - Employees - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.34 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2014 (File No. 001-32253) filed on May 28, 2014). 10.33 Form of Market Share Unit Agreement - Employees - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.35 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2014 (File No. 001-32253) filed on May 28, 2014). 10.34 Form of Market Share Unit Agreement - Senior Executives - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.37 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2014 (File No. 001-32253) filed on May 28, 2014). 10.35 Form of Indemnification Agreement - Directors and Officers (incorporated by reference to Exhibit 10.36 to EnerSys’ Annual Report onForm 10-K for the year ended March 31, 2014 (File No. 001-32253) filed on May 28, 2014). 10.36 Form of Stock Option Agreement - Employees - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.42 to EnerSys’Annual Report on Form 10-K for the year ended March 31, 2015 (File No. 001-32253) filed on May 27, 2015). 100Table of ContentsExhibit Number Description of Exhibit10.37 Form of Stock Option Agreement - Executives - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.43 to EnerSys’Annual Report on Form 10-K for the year ended March 31, 2015 (File No. 001-32253) filed on May 27, 2015). 10.38 Form of Stock Option Agreement - Senior Executives - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.44 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2015 (File No. 001-32253) filed on May 27, 2015). 10.39 Form of Restricted Stock Unit Agreement - Employees - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.45 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2015 (File No. 001-32253) filed on May 27, 2015). 10.40 Form of Market Share Unit Agreement - Employees - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.46 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2015 (File No. 001-32253) filed on May 27, 2015). 10.41 Form of Market Share Unit Agreement - Executives - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.47 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2015 (File No. 001-32253) filed on May 27, 2015). 10.42 Form of Market Share Unit Agreement - Senior Executives - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.48 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2015 (File No. 001-32253) filed on May 27, 2015). 10.43 Form of Fifth Amendment to Credit Agreement, dated as of November 23, 2015, among EnerSys, various lenders and Bank of America,N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to EnerSys Quarterly Report on Form 10-Q for the period endedDecember 27, 2015 (File No. 001-32253) filed on January 28, 2016). 10.44 Form of Market Share Unit Agreement - Senior Executives - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 toEnerSys Quarterly Report on Form 10-Q for the period ended September 27, 2015 (File No. 001-32253) filed on November 2, 2016). 10.45 Form of Stock Option Agreement - Senior Executives - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 toEnerSys Quarterly Report on Form 10-Q for the period ended September 27, 2015 (File No. 001-32253) filed on November 2, 2016). 10.46 Form of Stock Option Agreement - Employees - 2010 Equity Incentive Plan (filed herewith). 10.47 Form of Restricted Stock Unit Agreement - Employees - 2010 Equity Incentive Plan (filed herewith). 10.48 Form of Performance Share Unit Agreement - Employees - 2010 Equity Incentive Plan (filed herewith). 10.49 Employment Agreement, dated December 21, 2015, between EH Europe GmbH and Holger P. Aschke (filed herewith). 11.1 Statement regarding Computation of Per Share Earnings.* 12.1 Computation of Ratio of Earnings to Fixed Charges (filed herewith). 21.1 Subsidiaries of the Registrant (filed herewith). 23.1 Consent of Ernst & Young LLP (filed herewith). 31.1 Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) Under the Securities Exchange Act of 1934 (filedherewith). 31.2 Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) Under the Securities Exchange Act of 1934 (filedherewith).101Table of ContentsExhibit Number Description of Exhibit 32.1 Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Document 101.LAB XBRL Taxonomy Extension Label Document 101.PRE XBRL Taxonomy Extension Presentation Document *Information required to be presented in Exhibit 11 is provided in Note 17 of Notes to Consolidated Financial Statements under Part II, Item 8 of thisAnnual Report on Form 10-K.102Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. ENERSYS By David M. ShafferMay 31, 2016 David M. ShafferChief Executive OfficerPOWER OF ATTORNEYKNOW ALL PERSONS BY THESE PRESENTS, that each person whose name appears below hereby appoints David M. Shaffer and Michael J. Schmidtleinand each of them, as his true and lawful agent, with full power of substitution and resubstitution, for him and in his, place or stead, in any and all capacities,to execute any and all amendments to the within annual report, and to file the same, together with all exhibits thereto, with the Securities and ExchangeCommission, granting unto each said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite andnecessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all thateach said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this annual report has been signed below by the following persons in thecapacities and on the dates indicated:Name Title Date /s/ DAVID M. SHAFFER Chief Executive Officer May 31, 2016David M. Shaffer /s/ MICHAEL J. SCHMIDTLEIN Chief Financial Officer May 31, 2016Michael J. Schmidtlein /s/ KERRY M. KANE Vice President and Corporate Controller(Principal Accounting Officer) May 31, 2016Kerry M. Kane /s/ HWAN-YOON F. CHUNG Director May 31, 2016Hwan-yoon F. Chung /s/ HOWARD I. HOFFEN Director May 31, 2016Howard I. Hoffen /s/ ARTHUR T. KATSAROS Director May 31, 2016Arthur T. Katsaros /s/ JOHN F. LEHMAN Director May 31, 2016John F. Lehman /s/ GENERAL ROBERT MAGNUS, USMC (RETIRED) Director May 31, 2016General Robert Magnus, USMC (Retired) /s/ DENNIS S. MARLO Director May 31, 2016Dennis S. Marlo /s/ JOSEPH C. MUSCARI Director May 31, 2016Joseph C. Muscari /s/ PAUL J. TUFANO Director May 31, 2016Paul J. Tufano 103Table of ContentsExhibit Index Exhibit Number Description of Exhibit3.1 Fifth Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No. 3 to EnerSys’ RegistrationStatement on Form S-1 (File No. 001-32253) filed on February 6, 2013). 3.2 Second Amended and Restated Bylaws (incorporated by reference to Exhibits 3.3 to EnerSys’ Quarterly Report on Form 10-Q for theperiod ended September 30, 2014 (File No. 001-32253) filed on November 5, 2014). 4.1 Indenture, dated as of May 28, 2008, between EnerSys and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1to EnerSys’ Current Report on Form 8-K (File No. 001-32253) filed on May 28, 2008). 4.2 Indenture, dated as of April 23, 2015, among EnerSys, the Guarantors party thereto and MUFG Union Bank, N.A., as Trustee(incorporated by reference to Exhibit 4.1 to EnerSys’ Current Report on Form 8-K (File No. 00-32253) filed on April 23, 2015). 4.3 First Supplemental Indenture, dated as of April 23, 2015, among EnerSys, the Guarantors party thereto and MUFG Union Bank, N.A., asTrustee (incorporated by reference to Exhibit 4.2 to EnerSys’ Current Report on Form 8-K (File No. 00-32253) filed on April 23, 2015). 4.4 Form of 5.00% Senior Note due 2023 (incorporated by reference to Exhibit 4.2 to EnerSys’ Current Report on Form 8-K (File No. 00-32253) filed on April 23, 2015). 10.1 Amended and Restated Credit Agreement, dated as of July 8, 2014, among EnerSys, Bank of America, N.A., as Administrative Agent,Wells Fargo Bank, National Association, as Syndication Agent, RB International Finance (USA) LLC and PNC Bank, NationalAssociation, as Co-Documentation Agents and Co-Managers and the various lending institutions party thereto (incorporated byreference to Annex A to Exhibit 10.1 to EnerSys’ Current Report on Form 8-K (File No. 001-32253) filed on July 8, 2014). 10.2 Incremental Commitment Agreement, dated July 8, 2014, among EnerSys and certain financial institutions (incorporated by reference toExhibit 10.2 to EnerSys’ Current Report on Form 8-K (File No. 001-32253) filed on July 8, 2014). 10.3 Stock Subscription Agreement, dated March 22, 2002, among EnerSys Holdings Inc., Morgan Stanley Dean Witter Capital Partners IV,L.P., Morgan Stanley Dean Witter Capital Investors IV, L.P., MSDW IV 892 Investors, L.P., Morgan Stanley Global Emerging MarketsPrivate Investment Fund, L.P. and Morgan Stanley Global Emerging Markets Private Investors, L.P. (incorporated by reference toExhibit 10.27 to Amendment No. 3 to EnerSys’ Registration Statement on Form S-1 (File No. 333-115553) filed on July 13, 2004). 10.4 Employment Agreement, dated November 9, 2000, between Yuasa, Inc. and John D. Craig and letter of amendment thereto (incorporatedby reference to Exhibit 10.2 to EnerSys’ Registration Statement on Form S-1 (File No. 333-115553) filed on May 17, 2004). 10.5 Side Letter to Employment Agreement, dated October 30, 2014, between EnerSys and John D. Craig (incorporated by reference toExhibit 10.4 to EnerSys' Quarterly Report on Form 10-Q for the period ended September 28, 2014 (File No. 001-32253) filed onNovember 5, 2014). 10.6 Consulting Agreement with Richard W. Zuidema (incorporated by reference to Exhibit 10.3 to EnerSys Quarterly Report on Form 10-Qfor the period ended September 27, 2015 (File No. 001-32253) filed on November 2, 2015). 10.7 Form of Severance Agreement, (incorporated by reference to Exhibit 10.37 to EnerSys’ Annual Report on Form 10-K (File No. 001-32253) filed on May 28, 2013). 10.8 Employment Offer Letter, dated October 20, 2014, of EnerSys Delaware Inc. to David M. Shaffer (incorporated by reference to Exhibit10.5 to EnerSys' Quarterly Report on Form 10-Q for the period ended September 28, 2014 (File No. 001-32253) filed on November 5,2014). 104Table of ContentsExhibit Number Description of Exhibit10.9 EnerSys 2013 Management Incentive Plan (incorporated by reference to Appendix A to EnerSys’ Definitive Proxy Statement onSchedule 14A (File No. 001-32253) filed on June 27, 2013). 10.10 Form of Stock Option Agreement (six-month vesting) (incorporated by reference to Exhibit 10.31 to EnerSys’ Annual Report onForm 10-K for the year ended March 31, 2008 (File No. 001-32253) filed on June 1, 2009). 10.11 Form of 2004 Equity Incentive Plan (incorporated by reference to Exhibit 10.24 to Amendment No. 3 to EnerSys’ RegistrationStatement on Form S-1 (File No. 333-115553) filed on July 13, 2004). 10.12 EnerSys Amended and Restated 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.27 to EnerSys Annual Report onForm 10-K (File No. 001-32253) filed on June 11, 2008). 10.13 EnerSys Management Incentive Plan for fiscal year 2008 (incorporated by reference to Exhibit 10.1 to EnerSys’ Current Report on Form8-K (File No. 001-32253) filed on April 2, 2007). 10.14 Second Amended and Restated EnerSys 2010 Equity Incentive Plan (filed herewith). 10.15 EnerSys Voluntary Deferred Compensation Plan for Executives as amended August 5, 2010, and May 26, 2011 (incorporated byreference to Exhibit 10.23 to EnerSys’ Annual Report on Form 10-K (File No. 001-32253) filed on May 31, 2011). 10.16 Form of Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.26 to Amendment No. 3 to EnerSys’ RegistrationStatement on Form S-1 (File No. 333-115553) filed on July 13, 2004). 10.17 Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.1 to EnerSys’ Current Report on Form 8-K (File No. 001-32253) filed on December 9, 2005). 10.18 Form of Stock Option Agreement (four-year vesting) (incorporated by reference to Exhibit 10.1 to EnerSys’ Current Report on Form 8-K(File No. 001-32253) filed on May 23, 2007). 10.19 Form of Stock Option Agreement (three-year vesting) (incorporated by reference to Exhibit 10.2 to EnerSys’ Current Report on Form 8-K (File No. 001-32253) filed on May 6, 2008). 10.20 Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.1 to EnerSys’ Current Report on Form 8-K (FileNo. 001-32253) filed on May 23, 2007). 10.21 Form of Restricted Stock Unit Agreement – Non-Employee Directors (incorporated by reference to Exhibit 10.29 to EnerSys’ AnnualReport on Form 10-K (File No. 001-32253) filed on June 1, 2009). 10.22 Form of Restricted Stock Unit Agreement – Employees – 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.30 toEnerSys’ Annual Report on Form 10-K (File No. 001-32253) filed on June 1, 2010). 10.23 Form of Market Share Restricted Stock Unit Agreement – Employees (incorporated by reference to Exhibit 10.31 to EnerSys’ AnnualReport on Form 10-K (File No. 001-32253) filed on June 1, 2010). 10.24 Form of Market Share Restricted Stock Unit Agreement – Employees – 2010 Equity Incentive Plan (incorporated by reference toExhibit 10.32 to EnerSys’ Annual Report on Form 10-K (File No. 001-32253) filed on May 31, 2011). 10.25 Form of Restricted Stock Unit Agreement – Employees and Senior Executives – 2010 Equity Incentive Plan (incorporated by referenceto Exhibit 10.33 to EnerSys’ Annual Report on Form 10-K (File No. 001-32253) filed on May 31, 2011). 10.26 Form of Restricted Stock Unit Agreement – Employees – 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.31 toEnerSys’ Annual Report on Form 10-K (File No. 001-32253) filed on May 31, 2011). 105Table of ContentsExhibit Number Description of Exhibit10.27 Form of Deferred Stock Unit Agreement – Non-Employee Directors – 2010 Equity Incentive Plan (incorporated by reference to Exhibit10.35 to EnerSys’ Annual Report on Form 10-K (File No. 001-32253) filed on May 31, 2011). 10.28 Form of Restricted Stock Unit Agreement – Employees – 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.39 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2013 (File No. 001-32253) filed on May 28, 2013). 10.29 Form of Market Share Restricted Stock Unit Agreement – Employees – 2010 Equity Incentive Plan (incorporated by reference toExhibit 10.39 to EnerSys’ Annual Report on Form 10-K for the year ended March 31, 2013 (File No. 001-32253) filed on May 28,2013). 10.30 Form of Stock Option Agreement - Employees - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.32 to EnerSys’Annual Report on Form 10-K for the year ended March 31, 2014 (File No. 001-32253) filed on May 28, 2014). 10.31 Form of Stock Option Agreement - Senior Executives - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.33 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2014 (File No. 001-32253) filed on May 28, 2014). 10.32 Form of Restricted Stock Unit Agreement - Employees - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.34 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2014 (File No. 001-32253) filed on May 28, 2014). 10.33 Form of Market Share Unit Agreement - Employees - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.35 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2014 (File No. 001-32253) filed on May 28, 2014). 10.34 Form of Market Share Unit Agreement - Senior Executives - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.37 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2014 (File No. 001-32253) filed on May 28, 2014). 10.35 Form of Indemnification Agreement - Directors and Officers (incorporated by reference to Exhibit 10.36 to EnerSys’ Annual Report onForm 10-K for the year ended March 31, 2014 (File No. 001-32253) filed on May 28, 2014). 10.36 Form of Stock Option Agreement - Employees - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.42 to EnerSys’Annual Report on Form 10-K for the year ended March 31, 2015 (File No. 001-32253) filed on May 27, 2015). 10.37 Form of Stock Option Agreement - Executives - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.43 to EnerSys’Annual Report on Form 10-K for the year ended March 31, 2015 (File No. 001-32253) filed on May 27, 2015). 10.38 Form of Stock Option Agreement - Senior Executives - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.44 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2015 (File No. 001-32253) filed on May 27, 2015). 10.39 Form of Restricted Stock Unit Agreement - Employees - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.45 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2015 (File No. 001-32253) filed on May 27, 2015). 10.40 Form of Market Share Unit Agreement - Employees - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.46 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2015 (File No. 001-32253) filed on May 27, 2015). 10.41 Form of Market Share Unit Agreement - Executives - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.47 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2015 (File No. 001-32253) filed on May 27, 2015). 106Table of ContentsExhibit Number Description of Exhibit10.42 Form of Market Share Unit Agreement - Senior Executives - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.48 toEnerSys’ Annual Report on Form 10-K for the year ended March 31, 2015 (File No. 001-32253) filed on May 27, 2015). 10.43 Form of Fifth Amendment to Credit Agreement, dated as of November 23, 2015, among EnerSys, various lenders and Bank of America,N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to EnerSys Quarterly Report on Form 10-Q for the period endedDecember 27, 2015 (File No. 001-32253) filed on January 28, 2016). 10.44 Form of Market Share Unit Agreement - Senior Executives - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 toEnerSys Quarterly Report on Form 10-Q for the period ended September 27, 2015 (File No. 001-32253) filed on November 2, 2016). 10.45 Form of Stock Option Agreement - Senior Executives - 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 toEnerSys Quarterly Report on Form 10-Q for the period ended September 27, 2015 (File No. 001-32253) filed on November 2, 2016). 10.46 Form of Stock Option Agreement - Employees - 2010 Equity Incentive Plan (filed herewith). 10.47 Form of Restricted Stock Unit Agreement - Employees - 2010 Equity Incentive Plan (filed herewith). 10.48 Form of Performance Share Unit Agreement - Employees - 2010 Equity Incentive Plan (filed herewith). 10.49 Employment Agreement, dated December 21, 2015, between EH Europe GmbH and Holger P. Aschke (filed herewith). 11.1 Statement regarding Computation of Per Share Earnings.* 12.1 Computation of Ratio of Earnings to Fixed Charges (filed herewith). 21.1 Subsidiaries of the Registrant (filed herewith). 23.1 Consent of Ernst & Young LLP (filed herewith). 31.1 Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) Under the Securities Exchange Act of 1934 (filedherewith). 31.2 Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) Under the Securities Exchange Act of 1934 (filedherewith). 32.1 Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Document 101.LAB XBRL Taxonomy Extension Label Document 101.PRE XBRL Taxonomy Extension Presentation Document *Information required to be presented in Exhibit 11 is provided in Note 17 of Notes to Consolidated Financial Statements under Part II, Item 8 of thisAnnual Report on Form 10-K.107EMPLOYEE STOCK OPTION AGREEMENT(3 Year Vesting Schedule)SECOND AMENDED AND RESTATED 2010 EQUITY INCENTIVE PLANTHIS EMPLOYEE STOCK OPTION AGREEMENT (this “Agreement”), dated as of May 16, 2016, is betweenENERSYS, a Delaware corporation (the “Company”), and the individual identified on the signature page hereof (the “Participant”).BACKGROUNDA. The Participant is currently an employee of the Company or one of its Subsidiaries.B. The Company desires to (i) provide the Participant with an incentive to remain in the employ of the Company orone of its Subsidiaries, and (ii) increase the Participant’s interest in the success of the Company by granting to the Participantnonqualified stock options (the “Options”) to purchase shares of the Company’s common stock, par value $0.01 per share (the“Common Stock”).C. The grant of the Options is (i) made pursuant to the Second Amended and Restated EnerSys 2010 EquityIncentive Plan (the “Plan”); (ii) made subject to the terms and conditions of this Agreement and Appendix A; and (iii) not employmentcompensation nor an employment right and is made in the sole discretion of the Company’s Compensation Committee.AGREEMENTNOW, THEREFORE, in consideration of the covenants and agreements contained in this Agreement, the partieshereto, intending to be legally bound, agree as follows:1.Definitions; Incorporation of Plan Terms. Capitalized terms used in this Agreement without definition shall havethe meanings assigned to them in the Plan. This Agreement and the Options shall be subject to the Plan. The terms of the Plan and theBackground provisions of this Agreement are hereby incorporated into this Agreement by reference. and made a part hereof as if setforth in their entirety in this Section 1. If there is a conflict or an inconsistency between the Plan and this Agreement, the Plan shallgovern.2. Restrictions on Transfer. Except as otherwise expressly provided in the Plan, none of the Options may be sold,transferred, assigned, pledged, or otherwise encumbered or disposed of (or made the subject of a derivative transaction) to or with anythird party otherwise than by will or the laws of descent and distribution and the Options shall be exercisable during the Participant’slifetime only by the Participant.Page 1 of 24 3. Grant of Options. The Participant is awarded the number of Options specified on the signature page hereof, at theOption Price indicated thereon. The Options are not intended to qualify as incentive stock options under Section 422 of the Code. EachOption shall entitle the Participant to purchase, upon payment of the applicable Option Price in any manner provided by the Plan, oneshare of Common Stock. The shares of Common Stock issuable upon exercise of the Options are from time to time referred to hereinas the “Option Shares.” For purposes of the Plan and this Agreement, the Date of Grant shall be as indicated on the signature pagehereof. The Options shall be exercisable as provided in this Agreement.4. Terms and Conditions of Options. The Options evidenced by this Agreement are subject to the following terms andconditions:(a) Vesting. The Options shall vest and become exercisable as follows: one-third (1/3) of the Options shall vestand become exercisable on each of the first three anniversaries of the Date of Grant (each such one-third (1/3) of the Optionswhich vest on each such anniversary shall be referred to herein as a “Tranche” and each such anniversary a Vesting Date)unless previously vested or forfeited in accordance with the Plan or this Agreement; provided, however, that to the extent thenunvested, the Options shall immediately become vested and exercisable if:(i) the Participant’s employment terminates due to death or Permanent Disability, or(ii) the Participant’s employment terminates within two years after a Change in Control withoutCause or for Good Reason.Further, provided, in the event of the Participant’s Retirement, a separate pro-rata portion of the Tranche of Options (to theextent then unvested) during which the Retirement occurs shall immediately become vested. The number of unvested Optionsthat shall vest pro-rata upon Retirement shall be calculated by multiplying (A) the quotient obtained by dividing the number ofcompleted months that the Participant was employed by the Company or one of its Subsidiaries since the most recent VestingDate by 36, by (B) the number of Options subject to this Agreement (rounding up to the nearest whole number), providedhowever, that, the pro-rata portion that vests shall only become exercisable on the date the applicable portion of each suchTranche would have otherwise become vested under the schedule described above in this Section 4(a) absent such Retirement.Notwithstanding the foregoing sentences, upon a Participant’s termination of employment for any reason, the CompensationCommittee may, in its sole discretion, waive any requirement for vesting then remaining and permit, for a specified period oftime consistent with the first sentence of Section 4(b) hereofPage 2 of 24 the exercise of the Options prior to the satisfaction of such requirement. Any fractional Options that would result fromapplication of this Section 4(a) shall be aggregated and shall vest on the first anniversary of the Date of Grant.(a) Option Period. The Options shall expire (to the extent not previously exercised or forfeited) on, and shall notbe exercisable, following the tenth (10th) anniversary of the Date of Grant. In addition, all Options shall be subject to earlierexpiration as provided herein or in the Plan, as follows:(iii) if the Participant’s employment terminates due to death or, Permanent Disability or on or after aChange in Control without Cause or for Good Reason, the Participant may exercise the Options, to the extent then vested, atany time until the earlier of (A) one year following termination of employment and (B) the expiration date of the Optionsspecified in this Section 4(b);(iv) if the Participant’s employment is terminated due to Retirement, the Participant may exercise theOptions, to the extent then vested and exercisable, at any time until the expiration date of the Options specified in this Section4(b);(v) if the Participant’s employment is terminated by the Company without Cause prior to a Change inControl, the Participant may exercise the Options, to the extent then vested, at any time until the earlier of (A) ninety (90) daysfollowing termination of employment and (B) the expiration date of the Options specified in this Section 4(b);(vi) if the Participant voluntarily terminates employment with the Company, the Participant mayexercise the Options, to the extent then vested, at any time until the earlier of (A) sixty (60) days following termination ofemployment and (B) the expiration date of the Options specified in this Section 4(b); or(vii) in the event of any other termination of the Participant’s employment (including a termination bythe Company for Cause), all of the Options (whether or not vested at the time of termination) shall, without any action on thepart of any Person, immediately expire and be canceled without payment therefor.Except as provided in Section 4(a) hereof or in the case of automatic vesting in connection with such termination event, upontermination of the Participant’s employment with the Company or a Subsidiary for any reason, all Options which have nottheretofore vested shall, without any action on the part of any Person, immediately expire and be canceled without any paymenttherefor.Page 3 of 24 (b) Exercise. Subject to the Company’s Policy on Insider Trading, and Sections 4(d), 4(f), and 8 hereof, theParticipant may exercise any or all of the Options, to the extent vested and not forfeited. The date of exercise of an Option shallbe the date on which the conditions provided in Sections 4(d), 4(f), and 8 hereof are satisfied.(c) Payment. At the time of any exercise, the Participant shall pay to the Company the Option Price of the sharesas to which this Option is being exercised by delivery of consideration equal to the product of the Option Price and the numberof shares purchased, together with any amounts required to be withheld for tax purposes under Section 17(c) of the Plan. Suchconsideration must be paid before the Company will issue the shares being purchased and must be in a form or a combinationof forms acceptable to the Compensation Committee for that purchase, which forms may (but are not required to) include (i)cash; (ii) check or wire transfer; (iii) tendering (either actually or by attestation) shares of Common Stock already owned by theParticipant, provided that the shares have been held for the minimum period required by applicable accounting rules to avoid acharge to the Company’s earnings for financial reporting purposes or were not acquired from the Company as compensation;(iv) to the extent permitted by applicable law, Cashless Exercise; or (v) such other consideration as the CompensationCommittee may permit in its sole discretion; provided, however, that any Participant may, at any time, exercise any VestedOption (or portion thereof) owned by him pursuant to a Cashless Exercise.(d) Stockholder Rights. The Participant shall have no rights as a stockholder with respect to any shares ofCommon Stock issuable upon exercise of the Options until the Participant has made payment pursuant to Section 4(d) and acertificate or certificates evidencing such shares shall have been issued to the Participant, and no adjustment shall be made fordividends or distributions or other rights in respect of any share for which the record date is prior to the date upon which theParticipant shall become the holder of record thereof.(e) Limitation of Exercise. The Options shall not be exercisable unless the offer and sale of the shares ofCommon Stock subject thereto have been registered under the 1933 Act and qualified under applicable state “blue sky” laws,or the Company has determined that an exemption from registration under the 1933 Act and from qualification under such state“blue sky” laws is available.(f) Delivery of Shares. As soon as practicable following the exercise of any Options, the appropriate number ofshares of Common Stock issued in connection with such exercise shall be issued by the Company’s transfer agent, in the nameof the Participant by (a) paper certificate delivered to the Participant, or (b) electronic delivery to the Company’s representativebroker.(g) Dividends and Distributions. Any shares of Common Stock or other securities of the Company received bythe Participant as a result of a stockPage 4 of 24 dividend or other distribution in respect of Option Shares shall be subject to the same restrictions as such Option Shares, and allreferences to Option Shares hereunder shall be deemed to include such shares of Common Stock or other securities.(h) Special Exercise Provisions. Notwithstanding anything to the contrary in the Plan or in this Agreement, if theParticipant is employed or resides in China or Italy, then the Participant shall only exercise the Options granted hereunder usingthe “Cashless Exercise” method as defined in the Plan and shall not have the right to use any other method otherwise permittedunder this Agreement.5. Noncompetition. The Participant agrees with the Company that, for so long as the Participant is employed by theCompany or any of its Subsidiaries and continuing for twelve (12) months (or such longer period as may be provided in anemployment or similar agreement between the Participant and the Company or one of its Subsidiaries or as provided in the lastsentence of this Section 5) following a termination of such employment that occurs after any of the Options have vested (whether ornot such Options have been exercised), the Participant shall not, without the prior written consent of the Company, directly orindirectly, and whether as principal or investor or as an employee, officer, director, manager, partner, consultant, agent, or otherwise,alone or in association with any other person, firm, corporation, or other business organization, engage or otherwise become involvedin a Competing Business in the Americas, Europe, Middle East or Asia or in any other geographic area throughout the world (a) inwhich the Company or any of its Subsidiaries has engaged in any of the activities that comprise a Competing Business during theParticipant’s employment, or (b) in which the Participant has knowledge of the Company’s plans to engage in any of the activities thatcomprise a Competing Business (including, without limitation, in any area in which any customer of the Company or any of itsSubsidiaries may be located); provided, however, that the provisions of this Section 5 shall apply solely to those activities of aCompeting Business, with which the Participant was personally involved or for which the Participant was responsible while employedby the Company or its Subsidiaries during the twelve (12) month period preceding termination of the Participant’s employment. ThisSection 5 will not be violated, however, by the Participant’s investment of up to US$100,000 in the aggregate in one or more publicly-traded companies that engage in a Competing Business. The restrictions of this Section 5 shall also apply during the period afterRetirement until vested Options become exercisable described in Section 4(a).6. Wrongful Solicitation. As a separate and independent covenant, the Participant agrees with the Company that, for aslong as the Participant is employed by the Company or any of its Subsidiaries and continuing for twelve (12) months (or such longerperiod as may be provided in an employment or similar agreement between the Participant and the Company or one of its Subsidiariesor as provided in the last sentence of this Section 6) following a termination of such employment that occurs after any of the Optionshave vested (whether or not such Options have been exercised), the ParticipantPage 5 of 24 shall not engage in any Wrongful Solicitation. The restrictions of this Section 6 shall also apply during the period after Retirement untilvested Options become exercisable described in Section 4(a).7. Confidentiality; Specific Performance.(a) The Participant agrees with the Company that the Participant shall not at any time, except in performance ofthe Participant’s obligations to the Company hereunder or with the prior written consent of the Company, directly or indirectly,reveal to any person, entity, or other organization (other than the Company, or its employees, officers, directors, stockholders,or agents) or use for the Participant’s own benefit any information deemed to be confidential by the Company or any of itsAffiliates (“Confidential Information”) relating to the assets, liabilities, employees, goodwill, business, or affairs of theCompany or any of its Affiliates, including, without limitation, any information concerning past, present, or prospectivecustomers, manufacturing processes, marketing, operating, or financial data, or other confidential information used by, or usefulto, the Company or any of its Affiliates and known (whether or not known with the knowledge and permission of theCompany or any of its Affiliates and whether or not at any time prior to the Date of Grant developed, devised, or otherwisecreated in whole or in part by the efforts of the Participant) to the Participant by reason of the Participant’s employment with,equity holdings in, or other association with the Company or any of its Affiliates. The Participant further agrees that theParticipant will retain all copies and extracts of any written Confidential Information acquired or developed by the Participantduring any such employment, equity holding, or association in trust for the sole benefit of the Company, its Affiliates, and theirsuccessors and assigns. The Participant further agrees that the Participant will not, without the prior written consent of theCompany, remove or take from the Company’s or any of its Affiliate’s premises (or if previously removed or taken, theParticipant will promptly return) any written Confidential Information or any copies or extracts thereof. Upon the request and atthe expense of the Company, the Participant shall promptly make all disclosures, execute all instruments and papers, andperform all acts reasonably necessary to vest and confirm in the Company and its Affiliates, fully and completely, all rightscreated or contemplated by this Section 7. The term “Confidential Information” shall not include information that is or becomesgenerally available to the public other than as a result of a disclosure by, or at the direction of, the Participant.(b) The Participant agrees that upon termination of the Participant’s employment with the Company or anySubsidiary for any reason, the Participant will return to the Company immediately all memoranda, books, papers, plans,information, letters and other data, and all copies thereof or therefrom, in any way evidencing (in whole or in part) ConfidentialInformation relating to the business of the Company and its Subsidiaries and Affiliates. ThePage 6 of 24 Participant further agrees that the Participant will not retain or use for the Participant’s account at any time any trade names,trademark, or other proprietary business designation used or owned in connection with the business of the Company or itsSubsidiaries or Affiliates.(c) The Participant acknowledges and agrees that the Company’s remedies at law for a breach or threatenedbreach of any of the provisions of this Section 7, or Section 5 or 6 above, would be inadequate and, in recognition of this fact,the Participant agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company,without posting any bond (or other security other than any mandatory minimum or nominal bond or security), shall be entitledto obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction,or any other equitable remedy which may then be available.1. Taxes. This Section 8 applies only to (a) those Participants who are U.S. employees, and (b) those Participants whoare employed by a Subsidiary of the Company that is obligated under applicable local law to withhold taxes with respect to the vestingor exercise of the Options. The Company or a designated Subsidiary of the Company shall have the right, prior to the delivery of anycertificates evidencing shares of Common Stock to be issued pursuant to this Agreement, to require the Participant to remit to theCompany or such Subsidiary any amount sufficient to satisfy any applicable (federal, foreign, state, or local) tax withholdingrequirements. Prior to the Company’s or the designated Subsidiary’s determination of such withholding liability, the Participant maymake an irrevocable election to satisfy, in whole or in part, such obligation to remit taxes by directing the Company or such Subsidiaryto withhold shares of Common Stock that would otherwise be received by the Participant (up to the maximum amount of tax permittedto be withheld that will not result in adverse financial accounting consequences to the Company). Such election may be denied by theCompensation Committee in its discretion, or may be made subject to certain conditions specified by the Compensation Committee.The Company or its designated Subsidiary shall also have the right to deduct from all cash payments made pursuant to or in connectionwith any Award any applicable federal, foreign, state, or local taxes required to be withheld with respect to such payments.2. No Obligation to Register. The Company shall be under no obligation to register any Option Shares as a result ofthe exercise of the Options pursuant to the Securities Act or any other federal or state securities laws.3. Market Stand-Off. In connection with any underwritten public offering by the Company of its equity securitiespursuant to an effective registration statement filed under the Securities Act for such period as the Company or its underwriters mayrequest (such period not to exceed 180 days following the date of the applicable offering), the Participant shall not, directly orindirectly, sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for thePage 7 of 24 purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of theforegoing transactions with respect to, any of the Options granted under this Agreement or any Option Shares resulting the exercisethereof without the prior written consent of the Company or its underwriters.4. Protections Against Violations of Agreement. No purported sale, assignment, mortgage, hypothecation, transfer,pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any ofthe Options by any holder thereof in violation of the provisions of this Agreement or the Certificate of Incorporation or the Bylaws ofthe Company, will be valid, and the Company will not transfer any Option Shares resulting from the exercise of Options on its booksnor will any of such shares be entitled to vote, nor will any dividends be paid thereon, unless and until there has been full compliancewith such provisions to the satisfaction of the Company. The foregoing restrictions are in addition to and not in lieu of any otherremedies, legal or equitable, available to enforce such provisions.5. Survival. This Agreement shall apply to and bind the Participant and the Company and their respective permittedassignees and transferees, heirs, legatees, executors, administrators and legal successors. All agreements, representations, andwarranties made herein and in the certificates delivered pursuant hereto shall survive the issuance to the Participant of the Options andany Option Shares and shall continue in full force and effect. The terms of Section 5-8, 12, 13, 15, 17-20, and 22 shall expresslysurvive the forfeiture of any Options and the termination of this Agreement.6. Notices. All notices and other communications provided for herein shall be in writing and shall be delivered byhand or sent by certified or registered mail, return receipt requested, postage prepaid, addressed, if to the Participant, to the Participant’sattention at the mailing address set forth on the signature page of this Agreement (or to such other address as the Participant shall havespecified to the Company in writing) and, if to the Company, to the Company’s office at 2366 Bernville Road, Reading Pennsylvania,19605, Attention: General Counsel (or to such other address as the Company shall have specified to the Participant in writing). Allsuch notices shall be conclusively deemed to be received and shall be effective, if sent by hand delivery, upon receipt, or if sent byregistered or certified mail, on the fifth day after the day on which such notice is mailed.7. Waiver. The waiver by either party of compliance with any provision of this Agreement by the other party shall notoperate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provisionof this Agreement.8. Authority of the Administrator. The Compensation Committee shall have the full authority to interpret and construethe terms of the Plan and this Agreement including, but not limited to, making all determinations regarding eligibility, vesting, forfeitureand the calculation of the number of Options or Option Shares awarded or credited under this Agreement. The determination of theCompensation Committee as toPage 8 of 24 any such matter of interpretation, construction or calculation shall be final, binding and conclusive.9. Representations. The Participant has reviewed with his or her own tax advisors the applicable tax (U.S., foreign,state, and local) consequences of the transactions contemplated by this Agreement. The Participant is relying solely on such advisorsand not on any statements or representations of the Company or any of its agents. The Participant understands that the Participant (andnot the Company) shall be responsible for any tax liability that may arise as a result of the transactions contemplated by thisAgreement.10. Investment Representation. The Participant hereby represents and warrants to the Company that the Participant, byreason of the Participant’s business or financial experience (or the business or financial experience of the Participant’s professionaladvisors who are unaffiliated with and who are not compensated by the Company or any affiliate or selling agent of the Company,directly or indirectly), has the capacity to protect the Participant’s own interests in connection with the transactions contemplated underthis Agreement.11. Entire Agreement; Language; Governing Law. This Agreement and the Plan and the other related agreementsexpressly referred to herein set forth the entire agreement and understanding between the parties hereto and supersedes all prioragreements and understandings relating to the subject matter hereof. This Agreement may be executed in one or more counterparts,each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same agreement. Theheadings of sections and subsections herein are included solely for convenience of reference and shall not affect the meaning of any ofthe provisions of this Agreement. This Agreement has been prepared in English and may be translated into one or more otherlanguages. If there is a discrepancy between or among any of these versions, the English version shall prevail. Unless otherwiserestricted by applicable law, this Agreement may be executed electronically. This Agreement shall be governed by, and construed inaccordance with, the laws of the Commonwealth of Pennsylvania, USA.12. Severability; Judicial Reformation. Should any provision of this Agreement be held by a court of competentjurisdiction to be unenforceable, or enforceable only if modified, such holding shall not affect the validity of the remainder of thisAgreement, the balance of which shall continue to be binding upon the parties hereto with any such modification (if any) to become apart hereof and treated as though contained in this original Agreement. Moreover, if one or more of the provisions contained in thisAgreement shall for any reason be held to be excessively broad as to scope, activity, subject or otherwise so as to be unenforceable, inlieu of severing such unenforceable provision, such provision or provisions shall be construed by the appropriate judicial body bylimiting or reducing it or them, so as to be enforceable to the maximum extent compatible with the applicable law as it shall thenappear, and suchPage 9 of 24 determination by such judicial body shall not affect the enforceability of such provisions or provisions in any other jurisdiction.13. Amendments; Construction. The Compensation Committee may amend the terms of this Agreement prospectivelyor retroactively at any time, but (unless otherwise provided under Section 18 of the Plan) no such amendment shall impair the rights ofthe Participant hereunder without his or her consent. To the extent the terms of Section 5 conflict with any prior agreement between theparties related to such subject matter, the terms of Section 5, to the extent more restrictive, shall supersede such conflicting terms andcontrol. Headings to Sections of this Agreement are intended for convenience of reference only, are not part of this Agreement andshall have no effect on the interpretation hereof.14. Acceptance. The Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. TheParticipant has read and understand the terms and provision thereof, and accepts the Options subject to all the terms and conditions ofthe Plan and this Agreement. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations ofthe Compensation Committee upon any questions arising under this Agreement.15. Miscellaneous.(a) No Rights to Grants or Continued Employment. The Participant acknowledges that the award granted underthis Agreement is not employment compensation nor is it an employment right, and is being granted at the sole discretion of theCompensation Committee. The Participant shall not have any claim or right to receive grants of Awards under the Plan. Neitherthe Plan nor this Agreement, or any action taken or omitted to be taken hereunder or thereunder, shall be deemed to create orconfer on the Participant any right to be retained as an employee of the Company or any Subsidiary or other Affiliate thereof,or to interfere with or to limit in any way the right of the Company or any Affiliate or Subsidiary thereof to terminate theemployment of the Participant at any time.(b) No Restriction on Right of Company to Effect Corporate Changes. Neither the Plan nor this Agreement shallaffect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments,recapitalizations, reorganizations, or other changes in the Company’s capital structure or its business, or any merger orconsolidation of the Company, or any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures,preferred, or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which areconvertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer ofall or any part of the assets or business of the Company, or any other corporate act or proceeding, whether of a similar characteror otherwise.Page 10 of 24 (c) Assignment. The Company shall have the right to assign any or all of its rights and to delegate any or all ofits duties under this Agreement to any of its Affiliates. The terms and conditions of this Agreement shall be binding upon andshall inure to the benefit of the permitted successors and assigns of the Company (including any person or entity which acquiresall or substantially all of the assets of the Company).(d) Adjustments. The Options shall be adjusted or terminated as contemplated by Section 16(a) of the Plan.(a) Clawback Policy. The Options and any Option Shares shall be subject to the terms of the clawback policyadopted by the Board of Directors (as such policy may be amended from time-to-time).[REST OF PAGE LEFT INTENTIONALLY BLANK]Page 11 of 24 THIS AGREEMENT SHALL BE NULL AND VOID AND UNENFORCEABLE BY THE PARTICIPANTUNLESS SIGNED AND DELIVERED TO THE COMPANY NOT LATER THAN THIRTY (30) DAYS SUBSEQUENTTO THE DATE OF GRANT SET FORTH BELOW.BY SIGNING THIS AGREEMENT, THE PARTICIPANT IS HEREBY CONSENTING TO THE USEAND TRANSFER OF THE PARTICIPANT’S PERSONAL DATA BY THE COMPANY TO THE EXTENTNECESSARY TO ADMINISTER AND PROCESS THE AWARDS GRANTED UNDER THIS AGREEMENT.IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officerand the Participant has executed this Agreement, both as of the day and year first above written.ENERSYSBy: Name: David M. ShafferTitle: President & Chief Executive OfficerPARTICIPANT____________________________________Name:Address:Date Of Grant: May 16, 2016Number of Options:_______ Option Price: $ _____ Page 12 of 24 Appendix AtoEmployee Stock Option AgreementUnder the Second Amended and Restated 2010 Equity Incentive PlanThis Appendix A contains supplemental terms and conditions for awards of nonqualified stock options (“Options”) granted asof the Date of Grant set forth in the Agreement under the Second Amended and Restated 2010 Equity Incentive Plan (the “Plan”) toParticipants who reside outside the United States or who are otherwise subject to the laws of a country other than the United States.You have also received the Agreement applicable to the Award set forth therein. The Agreement, together with this AppendixA and the Plan are the terms and conditions of the grant of Options set forth in the Agreement. To the extent that this Appendix Aamends, deletes or supplements any terms of the Agreement, this Appendix A shall control. Capitalized terms used but not definedherein shall have the same meanings ascribed to them in the Agreement.Section I of this Appendix A contains special terms and conditions that govern the Options outside of the United States.Section II of this Appendix A includes special terms and conditions in the specific countries listed therein.This Appendix A may also include information regarding exchange controls, taxation of awards and certain other issues ofwhich you should be aware with respect to participation in the Plan. The information is based on the securities, exchange control, taxand other laws concerning Options in effect as of May __, 2016. Such laws are often complex and change frequently; the informationmay be out of date at the time you vest in or exercise the Options or sell shares acquired under the Plan. As a result, the Companystrongly recommends that you not rely on the information noted herein as the only source of information relating to the consequencesof your participation in the Plan.In addition, this Appendix A is general in nature, does not discuss all of the various laws, rules and regulations which mayapply to your particular situation and the Company does not assure you of any particular result. Accordingly, you are stronglyadvised to seek appropriate professional advice as to how the relevant laws in your country apply to your specific situation.Finally, if you are a citizen or resident of a country other than the one in which you are currently working, transferredemployment after the Award was granted or is considered a resident of another country for local law purposes, the informationcontained herein may not be applicable to you in the same manner. In addition, the Company shall, in its sole discretion, determine towhat extent the terms and conditions contained herein will apply under these circumstances.Page 13 of 24 Section I. All Countries Outside the United States1. Nature of Grant. In accepting the Award, you acknowledge that:1.1the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended,suspended or terminated by the Company at any time, to the extent permitted by the Plan;1.2the grant of the Options is voluntary and occasional and does not create any contractual or other right to receive futuregrants of Options, or benefits in lieu of Options, even if Options have been granted repeatedly in the past;1.3all decisions with respect to future grants, if any, will be at the sole discretion of Company;1.4you are voluntarily participating in the Plan;1.5the Options and the shares subject to the Options are extraordinary items that do not constitute compensation of anykind for services of any kind rendered to the Company or any Subsidiary, and which is outside the scope of youremployment contract, if any;1.6the Options and the shares subject to the Options are not intended to replace any pension rights, if any, orcompensation;1.7the Options and the shares subject to the Options, and the income and value of same, are not part of normal orexpected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation,termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement orwelfare benefits or similar payments and in no event should be considered as compensation for, or relating in any wayto, past services for the Company or any Subsidiary;1.8the grant of the Options and your participation in the Plan will not be interpreted to form an employment contract orrelationship with the Company or any Subsidiary;1.9the future value of the underlying shares is unknown and cannot be predicted with certainty;1.10if you obtain shares, the value of those shares acquired may increase or decrease in value;Page 14 of 24 1.11in consideration of the grant of the Options, no claim or entitlement to compensation or damages shall arise fromforfeiture of the Options resulting from termination of your employment with the Company or any Subsidiary (for anyreason whatsoever and whether or not in breach of local labor laws) and you irrevocably release the Company and theSubsidiaries from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a courtof competent jurisdiction to have arisen, you will be deemed irrevocably to have waived his or her entitlement topursue such claim;1.12in the event of termination of your employment (whether or not in breach of local labor laws), your right to vest in theOptions under the Plan, if any, will terminate effective as of the date that you are no longer actively employed and willnot be extended by any notice period mandated under local law (e.g., active employment would not include a period of“garden leave” or similar period pursuant to local law); the Compensation Committee shall have the exclusivediscretion to determine when you are no longer actively employed for purposes of your Award;1.13the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendationsregarding your participation in the Plan, or your acquisition or sale of Common Stock;1.14you are hereby advised to consult with your personal tax, legal and financial advisors regarding participation in thePlan before taking any action related to the Plan;1.15unless otherwise provided in the Plan or by the Company in its discretion, the Options and the benefits evidenced bythis Agreement do not create any entitlement to have the Options or any such benefits transferred to, or assumed by,another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transactionaffecting the shares of the Company; and1.16neither the Company, any Subsidiary nor any Affiliate of the Company shall be liable for any foreign exchange ratefluctuation between your local currency and the United States Dollar that may affect the value of the Options or of anyamounts due to you pursuant to the exercise of the Options or the subsequent sale of any shares acquired uponexercise.2. Data Privacy. I hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, ofmy personal data as described in this Agreement and any other Award grant materials by and among, as applicable, the employer,the Company and its subsidiaries and affiliates for the exclusive purpose of implementing, administering and managing myparticipation in the Plan (“Data”).Page 15 of 24 I understand that the Company and the employer may hold certain personal information about me, including, but notlimited to, my name, home address and telephone number, date of birth, social insurance number or other identification number,salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Awards or any other entitlementto shares of stock awarded, canceled, exercised, vested, unvested or outstanding in my favor, for the exclusive purpose ofimplementing, administering and managing the Plan.I understand that Data will be transferred to a third party plan administrator, or such other stock plan service provider asmay be selected by the Company in the future, which is assisting the Company with the implementation, administration andmanagement of the Plan. I understand that the recipients of the Data may be located in the United States or elsewhere, and thatthe recipients’ country (e.g., the United States) may have different data privacy laws and protections than my country. Iunderstand that if I reside outside the United States, I may request a list with the names and addresses of any potential recipientsof the Data by contacting my local human resources representative. I authorize the Company, the third party administrator andany other possible recipients which may assist the Company (presently or in the future) with implementing, administering andmanaging the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose ofimplementing, administering and managing my participation in the Plan. I understand that Data will be held only as long as isnecessary to implement, administer and manage my participation in the Plan. I understand that if I reside outside the UnitedStates, I may, at any time, view Data, request additional information about the storage and processing of Data, require anynecessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing mylocal human resources representative. Further, I understand that I am providing the consents herein on a purely voluntary basis.If I do not consent, or if I later seek to revoke my consent, my employment status or service and career with the employer will notbe adversely affected; the only adverse consequence of refusing or withdrawing my consent is that the Company would not beable to grant me the Award or other awards or administer or maintain such awards. Therefore, I understand that refusing orwithdrawing my consent may affect my ability to participate in the Plan. For more information on the consequences of my refusalto consent or withdrawal of consent, I understand that I may contact my local human resources representative.3. Payment of Taxes. The following provisions supplement Section 8 of the Agreement entitled “Taxes.”3.1Regardless of any action the Company or your employer (the “Employer”) takes with respect to any or all income tax, yourportion of social insurance, payroll tax, payment on account or other tax-related items related to your participation inthe Plan and legally applicable to you (“Tax-Related Items”), you acknowledge that the ultimate liability for allTax-Related ItemsPage 16 of 24 is and remains your responsibility and may exceed the amount actually withheld by the Company or the Employer.3.2 You further acknowledge that the Company and/or the Employer (1) make no representations orundertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including,but not limited to, the grant of the Award, the issuance of shares upon vesting/exercise of the Award, the subsequentsale of shares acquired pursuant to such issuance and the receipt of any dividends or dividend equivalents; and (2) donot commit to, and are under no obligation to, structure the terms of the grant or any aspect of the Award to reduce oreliminate your liability for Tax-Related Items or achieve any particular tax result.3.3 Further, if you have become subject to tax in more than one jurisdiction between the date of grant and thedate of any relevant taxable event, you acknowledge that the Company and/or the Employer (or former employer, asapplicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.3.4You authorize the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligationswith regard to all Tax-Related Items by one or a combination of the following: (1) withholding in shares to be issued orcash distributed upon vesting/exercise of the Award; (2) withholding from your wages or other cash compensation paidto you by the Company and/or you; (3) withholding from the proceeds of the sale of shares acquired uponvesting/exercise of the Award either through a voluntary sale or through a mandatory sale arranged by the Company(on your behalf pursuant to this authorization).3.5To avoid negative accounting treatment, the Company may withhold or account for Tax-Related Items by consideringapplicable minimum statutory withholding amounts or other applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in shares, for tax purposes, you are deemed to have been issued the fullnumber of shares subject to the vested Award, notwithstanding that a number of the shares are held back solely for thepurpose of paying the Tax-Related Items due as a result of any aspect of your participation in the Plan.3.6You shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employermay be required to withhold or account for as a result of your participation in the Plan that cannot be satisfied by themeans previously described. The Company may refuse to issue or deliver the shares or the proceeds of the sale ofshares, if you fail to comply with this obligation.Page 17 of 24 Section II. Country-Specific ProvisionsCanadaSecurities Law Notification. You are permitted to sell shares acquired under the Plan through the designated broker appointedunder the Plan, if any, provided that the resale of such shares takes place outside of Canada through the facilities of a national securitiesexchange on which the shares are listed (i.e., The New York Stock Exchange).Language Consent. The parties acknowledge that it is their express wish that the Plan, the Agreement and this Appendix A,as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectlyhereto, be drawn up in English.Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention (« Plan, Agreement and Appendix A » ), ainsique de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ouindirectement à, la présente convention.Data Privacy. The following provision supplements Section I.2 of this Appendix A.You hereby authorize the Company or the Company’s representatives to discuss with and obtain all relevant information fromall personnel, professional or not, involved in the administration and operation of the Plan. You further authorize the Company and anyAffiliate of the Company and the Compensation Committee to disclose and discuss the Plan with their advisors. You further authorizethe Company and any affiliate to record such information and to keep such information in your file.Foreign Asset Reporting Information. You are responsible for reporting foreign property (including shares acquired underthe Plan) on form T1135 (Foreign Income Verification Statement) if the total cost of your foreign property exceeds C$100,000 at anytime in the applicable tax year. For the 2013 tax year, the filing deadline is July 31, 2014. For the 2014 tax year and later, the formmust be filed by April 30th of the following year.ChinaPayment of Options. Notwithstanding any discretion in Section 11 of the Plan or in Section 3 of the Agreement and AppendixA, the grant of Options does not provide any right for you to receive shares and the Options are payable in cash only.Page 18 of 24 Foreign Asset/Account Reporting Information. Effective from January 1, 2014, PRC residents are required to report toSAFE details of their foreign financial assets and liabilities, as well as details of any economic transactions conducted with non-PRCresidents, either directly or through financial institutions. Under these new rules, you may be subject to reporting obligations forAwards acquired under the Plan and Plan-related transactions. It is your responsibility to comply with this reporting obligation and youshould consult your personal tax advisor in this regard.FinlandThere are no country-specific provisions.IndiaPayment of Options. Notwithstanding any discretion in Section 11 of the Plan and Section 3 of the Agreement, the grant ofOptions does not provide any right for you to receive shares and the Options are payable in cash only.Exchange Control Information. You must repatriate to India the proceeds from the sale of shares acquired at exercise andany dividends received in relation to the shares within 90 days after receipt. You must obtain evidence of the repatriation of funds inthe form of a foreign inward remittance certificate (the “FIRC”) from the bank where you deposited the foreign currency. You mustretain the FIRC in your records to present to the Reserve Bank of India or your Employer in the event that proof of repatriation isrequested.Foreign Assets Reporting Information. You are required to declare your foreign bank accounts and any foreign financialassets (including shares held outside India) in your annual tax return. It is your responsibility to comply with this reporting obligationand you should consult your personal advisor in this regard.MalaysiaDirector Notification Obligation. If you are a director of a Malaysian affiliate, you are subject to certain notificationrequirements under the Malaysian Companies Act. Among these requirements is an obligation to notify the Malaysian affiliate inwriting when you receive or dispose of an interest (e.g., an award under the Plan or shares) in the Company or any related company.Such notifications must be made within 14 days of receiving or disposing of any interest in the Company or any related company.Insider-Trading Information. You should be aware of the Malaysian insider-trading rules, which may impact youracquisition or disposal of shares or rights to shares under the Plan. Under the Malaysian insider-trading rules, you are prohibited fromacquiring or selling shares or rights to shares (e.g., an award under the Plan) when you are in possession of information which is notgenerally available and which you know or should know will have a material effect on the price of shares once such information isgenerally available.Page 19 of 24 Data Privacy. The following provision replaces Section I.2 of this Appendix A.I hereby explicitly, voluntarily and unambiguously consentto the collection, use and transfer, in electronic or otherform, of my personal data as described in this Agreementand Appendix and any other Plan grant materials by andamong, as applicable, the Employer, the Company and anyof its other Subsidiaries or Affiliates or any third partiesauthorized by the same in assisting in the implementation,administration and management of my participation in thePlan.I may have previously provided the Company and theEmployer with, and the Company and the Employer mayhold, certain personal information about me, including, butnot limited to, my name, home address and telephonenumber, date of birth, social insurance number or otheridentification number, salary, nationality, job title, anyshares of stock or directorships held in the Company, thefact and conditions of my participation in the Plan, details ofall Options or any other entitlement to Shares awarded,cancelled, exercised, vested, unvested or outstanding in myfavor (“Data”), for the exclusive purpose of implementing,administering and managing the Plan.I also authorize any transfer of Data, as may be required, toany external stock plan service provider as may be selectedby the Company in the future, which is assisting theCompany with the implementation, administration andmanagement of the Plan and/or with whom any sharesacquired upon vesting of Options are deposited. Iacknowledge that these recipients may be located in mycountry or elsewhere, and that the recipient’s countrySaya dengan ini secara eksplicit, secara sukarela dan tanpa sebarangkeraguan mengizinkan pengumpulan, penggunaan dan pemindahan,dalam bentuk elektronik atau lain-lain, data peribadi saya seperti yangdinyatakan dalam Perjanjian dan Lampiran ini dan apa-apa bahangeran Pelan oleh dan di antara, seperti mana yang terpakai, Majikan,Syarikat dan mana-mana Anak Syarikat yang lain atau SyarikatSekutu kami atau mana-mana pihak ketiga yang diberi kuasa olehyang sama untuk membantu dalam pelaksanaan, pentadbiran danpengurusan penyertaan saya dalam Pelan.Sebelum ini, saya mungkin telah membekalkan Syarikat dan Majikandengan, dan Syarikat dan Majikan mungkin memegang, maklumatperibadi tertentu tentang saya, termasuk, tetapi tidak terhad kepada,nama saya, alamat rumah dan nombor telefon, tarikh lahir, nomborinsurans sosial atau nombor pengenalan lain, gaji, kewarganegaraan,jawatan, apa-apa saham atau jawatan pengarah yang dipegang dalamSyarikat, fakta dan syarat-syarat penyertaan saya dalam Pelan, butir-butir semua Option atau apa-apa hak lain untuk Saham yangdianugerahkan, dibatalkan, dilaksanakan, terletak hak, tidak diletakhak ataupun yang belum dijelaskan bagi faedah saya ("Data"), untuktujuan yang eksklusif bagi melaksanakan, mentadbir danmenguruskan Pelan.Saya juga memberi kuasa untuk membuat apa-apa pemindahan Data,sebagaimana yang diperlukan, kepada pembekal perkhidmatan pelansaham luar yang lain sebagaimana yang mungkin dipilih oleh Syarikatpada masa depan, yang membantu Syarikat dalam pelaksanaan,pentadbiran dan pengurusan Pelan dan/atau dengan sesiapa yangmendepositkan apa-apa saham yang diperolehi apabila Option terletakhak. . Saya mengakui bahawa penerima-penerima ini mungkin beradadi negara saya atau di tempat lain, danPage 20 of 24 (e.g., the United States) may have different data privacy lawsand protections to my country, which may not give the samelevel of protection to Data. I understand that I may request alist with the names and addresses of any potential recipientsof Data by contacting my local human resourcesrepresentative. I authorize the Company, the external stockplan service provider and any other possible recipientswhich may assist the Company (presently or in the future)with implementing, administering and managing myparticipation in the Plan to receive, possess, use, retain andtransfer Data, in electronic or other form, for the solepurpose of implementing, administering and managing myparticipation in the Plan. I understand that Data will be heldonly as long as is necessary to implement, administer andmanage my participation in the Plan. I understand that Imay, at any time, view Data, request additional informationabout the storage and processing of Data, require anynecessary amendments to Data or refuse or withdraw theconsents herein, in any case, without cost, by contacting inwriting my local human resources representative, whosecontact details are Cheng Liang Heng,cl.heng@enersys.com.sg, Further, I understand that I amproviding the consents herein on a purely voluntary basis. IfI do not consent, or if I later seek to revoke my consent, myemployment status or service and career with the Employerwill not be adversely affected; the only adverse consequenceof refusing or withdrawing my consent is that the Companywould not be able to grant future Options or other equityawards to me or administer or maintain such awards.Therefore, I understand that refusing or withdrawing myconsent may affect my ability to participate in the Plan. Formore information on the consequences of my refusal bahawa negara penerima (contohnya, Amerika Syarikat) mungkinmempunyai undang-undang privasi data dan perlindungan yangberbeza daripada negara saya, yang mungkin tidak boleh memberitahap perlindungan yang sama kepada Data. Saya faham bahawasaya boleh meminta senarai nama dan alamat mana-mana penerimaData yang berpotensi dengan menghubungi wakil sumber manusiatempatan saya. Saya memberi kuasa kepada Syarikat, pembekalperkhidmatan pelan saham luar dan mana-mana penerima lain yangmungkin membantu Syarikat (masa sekarang atau pada masa depan)untuk melaksanakan, mentadbir dan menguruskan penyertaan sayadalam Pelan untuk menerima, memiliki, menggunakan, mengekalkandan memindahkan Data, dalam bentuk elektronik atau lain-lain,semata-mata dengan tujuan untuk melaksanakan, mentadbir danmenguruskan penyertaan saya dalam Pelan. Saya faham bahawa Dataakan dipegang hanya untuk tempoh yang diperlukan untukmelaksanakan, mentadbir dan menguruskan penyertaan saya dalamPelan. Saya faham bahawa saya boleh, pada bila-bila masa, melihatData, meminta maklumat tambahan mengenai penyimpanan danpemprosesan Data, meminta bahawa pindaan-pindaan dilaksanakanke atas Data atau menolak atau menarik balik persetujuan dalam ini,dalam mana-mana kes, tanpa kos, dengan menghubungi secarabertulis wakil sumber manusia tempatan saya, di mana butir-butirhubungannya adalah Cheng Liang Heng, cl.heng@enersys.com.sg.Selanjutnya, saya memahami bahawa saya memberikan persetujuan disini secara sukarela. Jika saya tidak bersetuju, atau jika sayakemudian membatalkan persetujuan saya, status pekerjaan atauperkhidmatan dan kerjaya saya dengan Majikan tidak akan terjejas;satunya akibat buruk jika saya tidak bersetuju atau menarik balikpersetujuan saya adalah bahawa Syarikat tidak akan dapatmemberikan Option pada masa depan atau anugerah ekuiti lainkepada saya atau mentadbir atau mengekalkan anugerah tersebut.Oleh itu, saya faham bahawa keengganan atau penarikan balikpersetujuan saya boleh menjejaskan keupayaanPage 21 of 24 to consent or withdrawal of consent, I understand that I maycontact my local human resources representative.saya untuk mengambil bahagian dalam Pelan. Untuk maklumat lanjutmengenai akibat keengganan saya untuk memberikan keizinan ataupenarikan balik keizinan, saya fahami bahawa saya bolehmenghubungi wakil sumber manusia tempatan saya.MexicoNature of Grant. The following provisions supplement Section I.1 (Nature of Grant) of this Appendix A:Acknowledgment of the Grant. In accepting the Award, you acknowledge that you have received a copy of the Plan and theAgreement, including this Appendix A, and that you have reviewed the Plan and the Agreement, including this Appendix A, in itsentirety and fully understand and accept all provisions of the Plan and the Agreement, including this Appendix A. You furtheracknowledge that you have read and specifically and expressly approve the terms and conditions of Section I.1 (Nature of Grant) ofthis Appendix A, in which the following is clearly described and established:(1) Your participation in the Plan does not constitute an acquired right.(2) The Plan and your participation in the Plan are offered by the Company on a wholly discretionary basis.(3) Your participation in the Plan is voluntary.(4) Neither the Company nor any Affiliate is responsible for any decrease in the value of the Options granted and/or sharesissued under the Plan.Labor Law Acknowledgment and Policy Statement. In accepting the Options, you expressly recognize that the Company, withregistered offices at 2366 Bernville Road, Reading, Pennsylvania 19605, United States of America, is solely responsible for theadministration of the Plan and that your participation in the Plan and acquisition of shares does not constitute an employmentrelationship between you and the Company since you are participating in the Plan on a wholly commercial basis and your soleemployer is EnerSys de Mexico, S.A. de CV, Powersonic, S.A. de CV or Yecoltd, S. de R.L. de CV (each, a “Mexican Subsidiary”).Based on the foregoing, you expressly recognize that the Plan and the benefits that you may derive from participation in the Plan donot establish any rights between you and your employer, a Mexican Subsidiary, and do not form part of the conditions of youremployment and/or benefits provided by such Mexican Subsidiary, and any modification of the Plan or its termination shall notconstitute a change or impairment of the terms and conditions of your employment.Page 22 of 24 You further understand that your participation in the Plan is a result of a unilateral and discretionary decision of the Company;therefore, the Company reserves the absolute right to amend and/or discontinue your participation in the Plan at any time, without anyliability to you.Finally, you hereby declare that you do not reserve to yourself any action or right to bring any claim against the Company for anycompensation or damages regarding any provision of the Plan or any benefits derived from the Plan; therefore, you grant a full andbroad release to the Company, its shareholders, officers, agents, legal representatives, and subsidiaries with respect to any claim thatmay arise.Spanish Translation.Reconocimiento de la Subvención. Al aceptar las Unidades de Acciones Restringidas (“Option” por sus siglas en inglés), Ud.reconoce que ha recibido y revisado una copia del Términos y Condiciones, y reconoce, además, que acepta todas las disposiciones delTérminos y Condiciones. Ud. también reconoce que Ud. ha leído y aprobado de forma expresa los términos y condiciones establecidosen la Sección I.1 (“Nature of Grant”) en este Appendix A, que claramente dispone lo siguiente:(1) Su participación en el Plan no constituye un derecho adquirido;(2) El Plan y su participación en el Plan es ofrecido por la Compañía de manera completamente discrecional;(3) Su participación en el Plan es voluntaria; y(4) Ni la Compañía ni cualquiera subsidiaria es responsable de cualquier disminución del valor de las Unidades de AccionesRestringidas y/o las acciones emitidas bajo el Plan.Declaración y Reconocimiento de Derecho y Política Laboral. Al aceptar las Unidades de Acciones Restringidas, Ud.reconoce que la Compañía, con domicilio social en 2366 Bernville Road, Reading, Pennsylvania 19605, United States of America,EE.UU., es el único responsable de la administración del Plan y su participación en el Plan y cualquier adquisición de las acciones bajoel Plan no constituyen una relación laboral entre Ud. y la Compañía, porque Ud. está participando en el Plan en su totalidad sobre unabase comercial y su único empleador es EnerSys de Mexico, S.A. de CV, Powersonic, S.A. de CV or Yecoltd, S. de R.L. de CV.Basado en lo anterior, Ud. expresamente reconoce que el Plan y los beneficios que pueden derivarse de la participación en el Plan noestablecen algún derecho entre Ud. y el Empleador, EnerSys de Mexico, S.A. de CV, Powersonic, S.A. de CV or Yecoltd, S. de R.L.de CV, y que no forman parte de las condiciones de empleo y/o beneficios provenidos por EnerSys de Mexico, S.A. de CV,Powersonic, S.A. de CV or Yecoltd, S. de R.L. de CV, y cualquier modificación del Plan o la terminación de su contrato noconstituirá un cambio o deterioro de los términos y condiciones de su empleo.Page 23 of 24 Además, Ud. comprende que su participación en el Plan es causado por una decisión discrecional y unilateral de la Compañía,por lo que la Compañía se reserva el derecho absoluto de modificar y/o suspender su participación en el Plan en cualquier momento,sin responsabilidad alguna a Ud.Finalmente, Ud. manifiesta que no se reserva ninguna acción o derecho que origine una demanda en contra de la Compañía,por cualquier compensación o daño en relación con cualquier disposición del Plan o de los beneficios derivados del mismo, y enconsecuencia usted otorga un amplio y total descargo de responsabilidad a la Compañía, sucursales, oficinas de representación, susaccionistas, directores, agentes y representantes legales, y Subsidiarias, con respecto a cualquier demanda que pudiera surgir.PolandExchange Control Notice. Polish residents holding foreign securities (including shares) and maintaining accounts abroad mustreport information to the National Bank of Poland on transactions and balances of the securities and cash deposited in such accounts ifthe value of such securities and cash (when combined with all other assets held abroad) exceeds PLN 7,000,000. If required, thereports must be filed on a quarterly basis on special forms available on the website of the National Bank of Poland.If you transfer funds in excess of €15,000 into Poland in connection with the sale of shares under the Plan, the funds must betransferred via a bank account. You are required to retain the documents connected with a foreign exchange transaction for a period offive years, as measured from the end of the year in which such transaction occurred. If you hold shares acquired under the Plan and/ormaintain a bank account abroad, you will have reporting duties to the National Bank of Poland.SwitzerlandSecurities Law Notice. The grant of the Options is considered a private offering in Switzerland and is therefore not subject tosecurities registration in SwitzerlandPage 24 of 24 ENERSYSAWARD AGREEMENT FOR EMPLOYEES – RESTRICTED STOCK UNITSUNDER THE SECOND AMENDED AND RESTATED 2010 EQUITY INCENTIVE PLANTHIS AWARD AGREEMENT FOR EMPLOYEES – RESTRICTED STOCK UNITS (this “Agreement”), dated as of May16, 2016, is between ENERSYS, a Delaware corporation (the “Company”), and the individual identified on the signature page hereof(the “Participant”).BACKGROUNDA.The Participant is currently an employee of the Company or one of its Subsidiaries.B.The Company desires to (i) provide the Participant with an incentive to remain in the employ of the Company or oneof its Subsidiaries, and (ii) increase the Participant’s interest in the success of the Company by granting restricted stock units (the“Restricted Stock Units”) to the Participant.C.This grant of the Restricted Stock Units is (i) made pursuant to the Second Amended and Restated EnerSys 2010Equity Incentive Plan (the “Plan”); (ii) made subject to the terms and conditions of this Agreement and Appendix A; and (iii) notemployment compensation nor an employment right and is made in the sole discretion of the Company’s Compensation Committee.AGREEMENTNOW, THEREFORE, in consideration of the covenants and agreements contained in this Agreement, the parties hereto,intending to be legally bound, agree as follows:1.Definitions; Incorporation of Plan Terms. Capitalized terms used in this Agreement without definition shall have themeanings assigned to them in the Plan. This Agreement and the Restricted Stock Units shall be subject to the Plan. The terms of thePlan and the Background provisions of this Agreement are hereby incorporated into this Agreement by reference and made a parthereof as if set forth in their entirety in this Section 1. If there is a conflict or an inconsistency between the Plan and this Agreement, thePlan shall govern.2.Grant of Restricted Stock Units.(a)Subject to the provisions of this Agreement and pursuant to the provisions of the Plan, the Company herebygrants to the Participant the number of Restricted Stock Units specified on the signature page of this Agreement. The Company shallcredit to a bookkeeping account maintained by the Company, or a third party onPage 1 of 24behalf of the Company, for the Participant’s benefit, the number of Restricted Stock Units granted hereunder, each of which shall bedeemed to be the equivalent of one share of the Company’s Common Stock.(b)If the Company declares and pays a dividend or a distribution on Common Stock in the form of cash, then anumber of additional Restricted Stock Units shall be credited to the Participant as of the payment date for such dividend or distributionequal to the result of dividing (i) the product of the total number of Restricted Stock Units credited to the Participant as of the recorddate for such dividend or distribution (other than previously settled or forfeited Restricted Stock Units) times the per share amount ofsuch dividend or distribution, by (ii) the Fair Market Value of one share of Common Stock as of the record date for such dividend ordistribution. Any Restricted Stock Units credited to the Participant under this subsection shall be or become vested or forfeited (asappropriate) to the same extent as the underlying Restricted Stock Units.(c)If the Company declares and pays a dividend or distribution on the Common Stock in the form of additionalshares, or there occurs a forward split of Common Stock, then a number of additional Restricted Stock Units shall be credited to theParticipant as of the payment date for such dividend or distribution or forward split equal to (i) the number of Restricted Stock Unitscredited to the Participant as of the record date for such dividend or distribution or split (other than previously settled or forfeitedRestricted Stock Units), multiplied by (ii) the number of additional shares actually paid as a dividend or distribution or issued in suchsplit in respect of each outstanding share of Common Stock. Any Restricted Stock Units credited to the Participant under thissubsection shall be or become vested or forfeited (as appropriate) to the same extent as the underlying Restricted Stock Unit.3.Terms and Conditions.(a) Vesting. All of the Restricted Stock Units shall initially be unvested. Twenty-five percent (25%) of the RestrictedStock Units (rounded up to the nearest whole number) shall vest on the first anniversary of the date of this Agreement and on each ofthe next three (3) successive anniversaries thereof (each such anniversary, a “Vesting Date”) unless previously vested or forfeited inaccordance with the Plan or this Agreement (the “Normal Vesting Schedule”).(i)Any Restricted Stock Units that fail to vest because the employment condition is not satisfied shall beforfeited, subject to the special provisions set forth in Subsections 3(a)(ii) through 3(a)(iv).(ii)If the Participant’s employment terminates due to death or Permanent Disability or in the event of aChange in Control where the holders of the Company’s Common Stock receive cash consideration for their Common Stock inconsummation of the Change in Control, Restricted Stock Units not previously vested shall immediately become vested. With respectto any of the Restricted Stock Units thatPage 2 of 24constitute “deferred compensation” as defined under Code Section 409A, for purposes of this Section 3(a)(ii) and any acceleration ofthe Restricted Stock Units upon a Change in Control, a Change in Control shall be deemed to occur only if, in addition to therequirements set forth in the Plan, the Change in Control also meets the requirements of IRS Reg. §1.409A-3(i)(5), to the extentnecessary to avoid the imposition of taxes thereunder.(iii)If on or within two years after a Change in Control (other than a Change in Control described inSection 3(a)(ii) above), the Participant terminates employment for Good Reason, or is terminated by the Company without Cause,Restricted Stock Units not previously vested shall immediately become vested.(iv)In the event of the Participant’s Retirement, the Compensation Committee may determine, in its solediscretion, whether and the manner in which Restricted Stock Units not previously vested (or any portion thereof) shall be vested andbe settled pursuant to Section 3(d). In the absence of Compensation Committee action, upon such Retirement, the Restricted StockUnits which have not vested as of the date of such termination shall vest pro-rata as of the date of the Participant’s Retirement. All suchRestricted Stock Units which shall have not vested as a result of such Retirement shall be immediately and automatically forfeitedwithout consideration of any kind and to the extent that the date the Participant first becomes eligible for Retirement and the vestingdate under this Section 3(a)(iv) are in different tax years, any amount payable under this subsection shall constitute the payment ofnonqualified deferred compensation, subject to the requirements of Code Section 409A unless an exemption under the treasuryregulations is available.The number of unvested Restricted Stock Units that shall vest pro-rata upon Retirement (absent action tothe contrary by the Compensation Committee) described in the penultimate sentence of the foregoing paragraph of this Section 3(a)(iv)shall be calculated by multiplying (A) the quotient obtained by dividing the number of completed months that the Participant wasemployed by the Company or one of its Subsidiaries since the most recent Vesting Date by 48, by (B) the number of Restricted StockUnits subject to this Agreement.(b) Restrictions on Transfer. Until the earlier of the applicable vesting date under the Normal Vesting Schedule, thedate of a termination of employment due to death or Permanent Disability, the date of a Change in Control described in Section 3(a)(ii),or the date of a termination of employment on or within two years after a Change in Control described in Section 3(a)(iii), or asotherwise provided in the Plan, no transfer of the Restricted Stock Units or any of the Participant’s rights with respect to the RestrictedStock Units, whether voluntary or involuntary, by operation of law or otherwise, shall be permitted. Unless the CompensationCommittee determines otherwise, upon any attempt to transfer any Restricted Stock Units or any rights in respect of the RestrictedStock Units before the earlier of the applicable vesting date under the Normal Vesting Schedule, the date of a termination ofemployment due to death or Permanent Disability, the date of a Change in Control described in Section 3(a)(ii), or the date of atermination ofPage 3 of 24employment on or within two years after a Change in Control described in Section 3(a)(iii), such unit, and all of the rights related tosuch unit, shall be immediately and automatically forfeited by the Participant without consideration of any kind.(c) Forfeiture. Upon termination of the Participant’s employment with the Company or a Subsidiary for any reasonother than death, Permanent Disability or one of the reasons set forth in Sections 3(a)(iii) and (iv), the Participant shall forfeit any andall Restricted Stock Units which have not vested as of the date of such termination and such units shall revert to the Company withoutconsideration of any kind.(d) Settlement. Restricted Stock Units not previously forfeited shall be settled on the earlier of the applicable VestingDate under the Normal Vesting Schedule, the date of a termination of employment due to death or Permanent Disability, the date of aChange in Control described in Section 3(a)(ii), the date of a termination of employment on or within two years after a Change inControl described in Section 3(a)(iii), or, unless otherwise provided by the Compensation Committee, the date of a termination ofemployment due to Retirement described in Section 3(a)(iv), by delivery of one share of Common Stock for each Restricted Stock Unitbeing settled or, if determined by the Compensation Committee in its sole discretion, by a payment of cash equal to the Fair MarketValue of one share of Common Stock.4.Noncompetition. The Participant agrees with the Company that, for as long as the Participant is employed by theCompany or any of its Subsidiaries and continuing for twelve (12) months (or such longer period as may be provided in anemployment or similar agreement between the Participant and the Company or one of its Subsidiaries) following a termination of suchemployment due to Permanent Disability or under Sections 3(a)(iii) or (iv) of this Agreement or that occurs after any of the RestrictedStock Units have vested, the Participant shall not, without the prior written consent of the Company, directly or indirectly, and whetheras principal or investor or as an employee, officer, director, manager, partner, consultant, agent, or otherwise, alone or in associationwith any other person, firm, corporation, or other business organization, engage or otherwise become involved in a CompetingBusiness in the Americas, Europe, Middle East or Asia, or in any other geographic area throughout the world (a) in which theCompany or any of its Subsidiaries has engaged in any of the activities that comprise a Competing Business during the Participant’semployment, or (b) in which the Participant has knowledge of the Company’s plans to engage in any of the activities that comprise aCompeting Business (including, without limitation, in any area in which any customer of the Company or any of its Subsidiaries maybe located); provided, however, that the provisions of this Section 4 shall apply solely to those activities of a Competing Business, withwhich the Participant was personally involved or for which the Participant was responsible while employed by the Company or itsSubsidiaries during the twelve (12) month period preceding termination of the Participant’s employment. This Section 4 will not beviolated, however, by the Participant’s investment of up to US$100,000 in the aggregate in one or more publicly-traded companies thatengage in a Competing Business.Page 4 of 245.Wrongful Solicitation. As a separate and independent covenant, the Participant agrees with the Company that, for aslong as the Participant is employed by the Company or any of its Subsidiaries and continuing for twelve (12) months (or such longerperiod as may be provided in an employment or similar agreement between the Participant and the Company or one of its Subsidiaries)following a termination of such employment due to Permanent Disability or under Sections 3(a)(iii) or (iv) of this Agreement or thatoccurs after any of the Restricted Stock Units have vested, the Participant shall not engage in any Wrongful Solicitation.6.Confidentiality; Specific Performance.(a) The Participant agrees with the Company that the Participant shall not at any time, except in performance of theParticipant’s obligations to the Company hereunder or with the prior written consent of the Company, directly or indirectly, reveal toany person, entity, or other organization (other than the Company, or its employees, officers, directors, stockholders, or agents) or usefor the Participant’s own benefit any information deemed to be confidential by the Company or any of its Affiliates (“ConfidentialInformation”) relating to the assets, liabilities, employees, goodwill, business, or affairs of the Company or any of its Affiliates,including, without limitation, any information concerning past, present, or prospective customers, manufacturing processes, marketing,operating, or financial data, or other confidential information used by, or useful to, the Company or any of its Affiliates and known(whether or not known with the knowledge and permission of the Company or any of its Affiliates and whether or not at any time priorto the Date of Grant developed, devised, or otherwise created in whole or in part by the efforts of the Participant) to the Participant byreason of the Participant’s employment with, equity holdings in, or other association with the Company or any of its Affiliates. TheParticipant further agrees that the Participant will retain all copies and extracts of any written Confidential Information acquired ordeveloped by the Participant during any such employment, equity holding, or association in trust for the sole benefit of the Company,its Affiliates, and their successors and assigns. The Participant further agrees that the Participant will not, without the prior writtenconsent of the Company, remove or take from the Company’s or any of its Affiliate’s premises (or if previously removed or taken, theParticipant will promptly return) any written Confidential Information or any copies or extracts thereof. Upon the request and at theexpense of the Company, the Participant shall promptly make all disclosures, execute all instruments and papers, and perform all actsreasonably necessary to vest and confirm in the Company and its Affiliates, fully and completely, all rights created or contemplated bythis Section 6. The term “Confidential Information” shall not include information that is or becomes generally available to the publicother than as a result of a disclosure by, or at the direction of, the Participant.(b) The Participant agrees that upon termination of the Participant’s employment with the Company or any Subsidiaryfor any reason, the Participant will return to the Company immediately all memoranda, books, papers, plans, information, letters andother data, and all copies thereof or therefrom, in any way evidencing (inPage 5 of 24whole or in part) Confidential Information relating to the business of the Company and its Subsidiaries and Affiliates. The Participantfurther agrees that the Participant will not retain or use for the Participant’s account at any time any trade names, trademark, or otherproprietary business designation used or owned in connection with the business of the Company or its Subsidiaries or Affiliates.(c) The Participant acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach ofany of the provisions of this Section 6, or Section 4 or 5 above, would be inadequate and, in recognition of this fact, the Participantagrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting anybond (or other security other than any mandatory minimum or nominal bond or security), shall be entitled to obtain equitable relief inthe form of specific performance, temporary restraining order, temporary or permanent injunction, or any other equitable remedy whichmay then be available.7.Taxes.(a) This Section 7(a) applies only to (a) all Participants who are U.S. employees, and (b) to those Participants who areemployed by a Subsidiary of the Company that is obligated under applicable local law to withhold taxes with respect to the settlementof the Restricted Stock Units. Such Participant shall pay to the Company or a designated Subsidiary, promptly upon request, and inany event at the time the Participant recognizes taxable income, or withholding of employment taxes is required, with respect to theRestricted Stock Units, an amount equal to the taxes the Company determines it is required to withhold under applicable tax laws withrespect to the Restricted Stock Units. The Participant may satisfy the foregoing requirement by making a payment to the Company incash or, in accordance with rules and regulations promulgated by the Compensation Committee, by delivering already ownedunrestricted shares of Common Stock or by having the Company withhold a number of shares of Common Stock in which theParticipant would otherwise become vested under this Agreement, in each case, having a value equal to the maximum amount of taxpermitted to be withheld that will not result in adverse financial accounting consequences to the Company. Such shares shall be valuedat their fair market value on the date as of which the amount of tax to be withheld is determined.(b) The Participant acknowledges that the tax laws and regulations and financial accounting principles and guidanceapplicable to the Restricted Stock Units and the disposition of the shares following the settlement of Restricted Stock Units arecomplex and subject to change.8.Securities Laws Requirements. The Company shall not be obligated to transfer any shares following the settlement ofRestricted Stock Units to the Participant free of a restrictive legend if such transfer, in the opinion of counsel for the Company, wouldviolate the Securities Act of 1933, as amended (the “Securities Act”) (or any other federal or state statutes having similar requirementsas may be in effect at that time).Page 6 of 249.No Obligation to Register. The Company shall be under no obligation to register any shares as a result of thesettlement of the Restricted Stock Units pursuant to the Securities Act or any other federal or state securities laws.10.Market Stand-Off. In connection with any underwritten public offering by the Company of its equity securitiespursuant to an effective registration statement filed under the Securities Act for such period as the Company or its underwriters mayrequest (such period not to exceed 180 days following the date of the applicable offering), the Participant shall not, directly orindirectly, sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of,purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoingtransactions with respect to, any of the Restricted Stock Units granted under this Agreement or any shares resulting the settlementthereof without the prior written consent of the Company or its underwriters.11.Protections Against Violations of Agreement. No purported sale, assignment, mortgage, hypothecation, transfer,pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any ofthe Restricted Stock Units by any holder thereof in violation of the provisions of this Agreement or the Certificate of Incorporation orthe Bylaws of the Company, will be valid, and the Company will not transfer any shares resulting from the settlement of RestrictedStock Units on its books nor will any of such shares be entitled to vote, nor will any dividends be paid thereon, unless and until therehas been full compliance with such provisions to the satisfaction of the Company. The foregoing restrictions are in addition to and notin lieu of any other remedies, legal or equitable, available to enforce such provisions.12.Rights as a Stockholder. The Participant shall not possess the right to vote the shares underlying the Restricted StockUnits until the Restricted Stock Units have been settled in accordance with the provisions of this Agreement and the Plan.13.Survival of Terms. This Agreement shall apply to and bind the Participant and the Company and their respectivepermitted assignees and transferees, heirs, legatees, executors, administrators and legal successors. The terms of Sections 4-7,13, 14,16, 18-21 and 23 shall expressly survive the forfeiture of the Restricted Stock Units and the termination of this Agreement.14.Notices. All notices and other communications provided for herein shall be in writing and shall be delivered by handor sent by certified or registered mail, return receipt requested, postage prepaid, addressed, if to the Participant, to the Participant’sattention at the mailing address set forth on the signature page of this Agreement (or to such other address as the Participant shall havespecified to the Company in writing) and, if to the Company, to the Company’s office at 2366 Bernville Road, Reading, Pennsylvania19605, Attention: General Counsel (or to such other address as the Company shall have specified to the Participant in writing). Allsuch notices shall be conclusively deemed to be received and shall be effective, if sent by hand delivery, uponPage 7 of 24receipt, or if sent by registered or certified mail, on the fifth day after the day on which such notice is mailed.15.Waiver. The waiver by either party of compliance with any provision of this Agreement by the other party shall notoperate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provisionof this Agreement.16.Authority of the Administrator. The Compensation Committee shall have full authority to interpret and construe theterms of the Plan and this Agreement, including but not limited to making all determinations regarding eligibility, vesting, forfeiture andthe calculation of the number of Restricted Stock Units awarded or credited under this Agreement. The determination of theCompensation Committee as to any such matter of interpretation, construction or calculation shall be final, binding and conclusive.17.Representations. The Participant has reviewed with his or her own tax advisors the applicable tax (U.S., foreign,state, and local) consequences of the transactions contemplated by this Agreement. The Participant is relying solely on such advisorsand not on any statements or representations of the Company or any of its agents. The Participant understands that the Participant (andnot the Company) shall be responsible for any tax liability that may arise as a result of the transactions contemplated by thisAgreement.18.Investment Representation. The Participant hereby represents and warrants to the Company that the Participant, byreason of the Participant’s business or financial experience (or the business or financial experience of the Participant’s professionaladvisors who are unaffiliated with and who are not compensated by the Company or any affiliate or selling agent of the Company,directly or indirectly), has the capacity to protect the Participant’s own interests in connection with the transactions contemplated underthis Agreement.19.Entire Agreement; Language; Governing Law. This Agreement and the Plan and the other related agreementsexpressly referred to herein set forth the entire agreement and understanding between the parties hereto and supersedes all prioragreements and understandings relating to the subject matter hereof. This Agreement may be executed in one or more counterparts,each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same agreement. Theheadings of sections and subsections herein are included solely for convenience of reference and shall not affect the meaning of any ofthe provisions of this Agreement. This Agreement has been prepared in English and may be translated into one or more otherlanguages. If there is a discrepancy between or among any of these versions, the English version shall prevail. Unless otherwiserestricted by applicable law, this Agreement may be executed electronically. This Agreement shall be governed by, and construed inaccordance with, the laws of the Commonwealth of Pennsylvania, USA.Page 8 of 2420.Severability; Judicial Reformation. Should any provision of this Agreement be held by a court of competentjurisdiction to be unenforceable, or enforceable only if modified, such holding shall not affect the validity of the remainder of thisAgreement, the balance of which shall continue to be binding upon the parties hereto with any such modification (if any) to become apart hereof and treated as though contained in this original Agreement. Moreover, if one or more of the provisions contained in thisAgreement shall for any reason be held to be excessively broad as to scope, activity, subject or otherwise so as to be unenforceable, inlieu of severing such unenforceable provision, such provision or provisions shall be construed by the appropriate judicial body bylimiting or reducing it or them, so as to be enforceable to the maximum extent compatible with the applicable law as it shall thenappear, and such determination by such judicial body shall not affect the enforceability of such provisions or provisions in any otherjurisdiction.21.Amendments; Construction. The Compensation Committee may amend the terms of this Agreement prospectively orretroactively at any time, but (unless otherwise provided under Section 18 of the Plan) no such amendment shall impair the rights of theParticipant hereunder without his or her consent. To the extent the terms of Section 4 conflict with any prior agreement between theparties related to such subject matter, the terms of Section 4, to the extent more restrictive, shall supersede such conflicting terms andcontrol. Headings to Sections of this Agreement are intended for convenience of reference only, are not part of this Agreement andshall have no effect on the interpretation hereof.22.Acceptance. The Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. The Participanthas read and understand the terms and provision thereof, and accepts the shares of Restricted Stock Units subject to all the terms andconditions of the Plan and this Agreement. The Participant hereby agrees to accept as binding, conclusive and final all decisions orinterpretations of the Compensation Committee upon any questions arising under this Agreement.23.Miscellaneous.(a) No Rights to Grants or Continued Employment. The Participant acknowledges that the award granted under thisAgreement is not employment compensation nor is it an employment right, and is being granted at the sole discretion of theCompensation Committee. The Participant shall not have any claim or right to receive grants of Awards under the Plan. Neither thePlan nor this Agreement, or any action taken or omitted to be taken hereunder or thereunder, shall be deemed to create or confer on theParticipant any right to be retained as an employee of the Company or any Subsidiary or other Affiliate thereof, or to interfere with orto limit in any way the right of the Company or any Affiliate or Subsidiary thereof to terminate the employment of the Participant atany time.(b) No Restriction on Right of Company to Effect Corporate Changes. Neither the Plan nor this Agreement shallaffect in any way the right or power of thePage 9 of 24Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, or other changes in theCompany’s capital structure or its business, or any merger or consolidation of the Company, or any issue of stock or of options,warrants or rights to purchase stock or of bonds, debentures, preferred, or prior preference stocks whose rights are superior to or affectthe Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution orliquidation of the Company, or any sale or transfer of all or any part of the assets or business of the Company, or any other corporateact or proceeding, whether of a similar character or otherwise.(c) Assignment. The Company shall have the right to assign any of its rights and to delegate any of its duties under thisAgreement to any of its Affiliates. The terms and conditions of this Agreement shall be binding upon and shall inure to the benefit ofthe permitted successors and assigns of the Company (including any person or entity which acquires all or substantially all of the assetsof the Company).(d) Adjustments. The Restricted Stock Units shall be adjusted or terminated as contemplated by Section 16(a) of thePlan, including, in the discretion of the Compensation Committee, rounding to the nearest whole number of Restricted Stock Units orshares of Common Stock, as applicable.(a) Clawback Policy. The Restricted Stock Units, and any cash or shares of Common Stock delivered upon settlementof the Restricted Stock Units shall be subject to the terms of the clawback policy adopted by the Board of Directors (as such policymay be amended from time-to-time).24. Code Section 409A. Notwithstanding anything in this Agreement to the contrary, the receipt of any benefits under thisAgreement as a result of a termination of employment shall be subject to satisfaction of the condition precedent that the Participantundergo a “separation from service” within the meaning of Treas. Reg. § 1.409A-1(h) or any successor thereto. In addition, if aParticipant is deemed to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then withregard to any payment or the provisions of any benefit that is required to be delayed pursuant to Code Section 409A(a)(2)(B), suchpayment or benefit shall not be made or provided prior to the earlier of (i) the expiration of the six (6) month period measured from thedate of the Participant's “separation from service” (as such term is defined in Treas. Reg. § 1.409A-1(h)), or (ii) the date of theParticipant's death (the “Delay Period”). Within ten (10) days following the expiration of the Delay Period, all payments and benefitsdelayed pursuant to this Section (whether they would have otherwise been payable in a single sum or in installments in the absence ofsuch delay) shall be paid or reimbursed to the Participant in a lump sum, and any remaining payments and benefits due under thisAgreement shall be paid or provided in accordance with the normal payment dates specified for them herein.Page 10 of 24[REST OF PAGE LEFT INTENTIONALLY BLANK]Page 11 of 24THIS AGREEMENT SHALL BE NULL AND VOID AND UNENFORCEABLE BY THE PARTICIPANT UNLESSSIGNED AND DELIVERED TO THE COMPANY NOT LATER THAN THIRTY (30) DAYS SUBSEQUENT TO THEDATE OF GRANT SET FORTH BELOW.BY SIGNING THIS AGREEMENT, THE PARTICIPANT IS HEREBY CONSENTING TO THE USE ANDTRANSFER OF THE PARTICIPANT’S PERSONAL DATA BY THE COMPANY TO THE EXTENT NECESSARY TOADMINISTER AND PROCESS THE AWARDS GRANTED UNDER THIS AGREEMENT.IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and theParticipant has executed this Agreement, both as of the day and year first above written. ENERSYS By: Name: David M. ShafferTitle: President & Chief Executive Officer PARTICIPANT Name: Address: Date of Grant: May 16, 2016Number of Restricted Stock Units: ________Page 12 of 24Appendix AtoRestricted Stock Unit Agreement – for EmployeesUnder the Second Amended and Restated 2010 Equity Incentive PlanThis Appendix A contains supplemental terms and conditions for awards of Restricted Stock Units (“RSUs”) granted as of theDate of Grant set forth in the Agreement under the Second Amended and Restated 2010 Equity Incentive Plan (the “Plan”) toParticipants who reside outside the United States or who are otherwise subject to the laws of a country other than the United States.You have also received the Agreement applicable to the Award set forth therein. The Agreement, together with this AppendixA and the Plan are the terms and conditions of the grant of RSUs set forth in the Agreement. To the extent that this Appendix Aamends, deletes or supplements any terms of the Agreement, this Appendix A shall control. Capitalized terms used but not definedherein shall have the same meanings ascribed to them in the Agreement.Section I of this Appendix A contains special terms and conditions that govern the RSUs outside of the United States. SectionII of this Appendix A includes special terms and conditions in the specific countries listed therein.This Appendix A may also include information regarding exchange controls, taxation of awards and certain other issues ofwhich you should be aware with respect to participation in the Plan. The information is based on the securities, exchange control, taxand other laws concerning RSUs in effect as of May __, 2016. Such laws are often complex and change frequently; the informationmay be out of date at the time you vest in the RSUs or sell shares acquired under the Plan. As a result, the Company stronglyrecommends that you not rely on the information noted herein as the only source of information relating to the consequences of yourparticipation in the Plan.In addition, this Appendix A is general in nature, does not discuss all of the various laws, rules and regulations which mayapply to your particular situation and the Company does not assure you of any particular result. Accordingly, you are stronglyadvised to seek appropriate professional advice as to how the relevant laws in your country apply to your specific situation.Finally, if you are a citizen or resident of a country other than the one in which you are currently working, transferredemployment after the Award was granted or is considered a resident of another country for local law purposes, the informationcontained herein may not be applicable to you in the same manner. In addition, the Company shall, in its sole discretion, determine towhat extent the terms and conditions contained herein will apply under these circumstances.Page 13 of 24Section I. All Countries Outside the United States1. Nature of Grant. In accepting the Award, you acknowledge that:1.1the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended,suspended or terminated by the Company at any time, to the extent permitted by the Plan;1.2the grant of the RSUs is voluntary and occasional and does not create any contractual or other right to receive futuregrants of RSUs, or benefits in lieu of RSUs, even if RSUs have been granted repeatedly in the past;1.3all decisions with respect to future grants, if any, will be at the sole discretion of Company;1.4you are voluntarily participating in the Plan;1.5the RSUs and the shares subject to the RSUs are extraordinary items that do not constitute compensation of any kindfor services of any kind rendered to the Company or any Subsidiary, and which is outside the scope of youremployment contract, if any;1.6the RSUs and the shares subject to the RSUs are not intended to replace any pension rights, if any, or compensation;1.7the RSUs and the shares subject to the RSUs, and the income and value of same, are not part of normal or expectedcompensation or salary for any purposes, including, but not limited to, calculating any severance, resignation,termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement orwelfare benefits or similar payments and in no event should be considered as compensation for, or relating in any wayto, past services for the Company or any Subsidiary;1.8the grant of the RSUs and your participation in the Plan will not be interpreted to form an employment contract orrelationship with the Company or any Subsidiary;1.9the future value of the underlying shares is unknown and cannot be predicted with certainty;1.10if you obtain shares, the value of those shares acquired may increase or decrease in value;Page 14 of 241.11in consideration of the grant of the RSUs, no claim or entitlement to compensation or damages shall arise fromforfeiture of the RSUs resulting from termination of your employment with the Company or any Subsidiary (for anyreason whatsoever and whether or not in breach of local labor laws) and you irrevocably release the Company and theSubsidiaries from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a courtof competent jurisdiction to have arisen, you will be deemed irrevocably to have waived his or her entitlement topursue such claim;1.12in the event of termination of your employment (whether or not in breach of local labor laws), your right to vest in theRSUs under the Plan, if any, will terminate effective as of the date that you are no longer actively employed and willnot be extended by any notice period mandated under local law (e.g., active employment would not include a period of“garden leave” or similar period pursuant to local law); the Compensation Committee shall have the exclusivediscretion to determine when you are no longer actively employed for purposes of your Award;1.13the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendationsregarding your participation in the Plan, or your acquisition or sale of Common Stock;1.14you are hereby advised to consult with your personal tax, legal and financial advisors regarding participation in thePlan before taking any action related to the Plan;1.15unless otherwise provided in the Plan or by the Company in its discretion, the RSUs and the benefits evidenced by thisAgreement do not create any entitlement to have the RSUs or any such benefits transferred to, or assumed by, anothercompany nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting theshares of the Company; and1.16neither the Company, any Subsidiary nor any Affiliate of the Company shall be liable for any foreign exchange ratefluctuation between your local currency and the United States Dollar that may affect the value of the RSUs or of anyamounts due to you pursuant to the settlement of the RSUs or the subsequent sale of any shares acquired uponsettlement.2. Data Privacy. I hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, ofmy personal data as described in this Agreement and any other Award grant materials by and among, as applicable, the employer,the Company and its subsidiaries and affiliates for the exclusive purpose of implementing, administering and managing myparticipation in the Plan (“Data”).Page 15 of 24I understand that the Company and the employer may hold certain personal information about me, including, but notlimited to, my name, home address and telephone number, date of birth, social insurance number or other identification number,salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Awards or any other entitlementto shares of stock awarded, canceled, exercised, vested, unvested or outstanding in my favor, for the exclusive purpose ofimplementing, administering and managing the Plan.I understand that Data will be transferred to a third party plan administrator, or such other stock plan service provider asmay be selected by the Company in the future, which is assisting the Company with the implementation, administration andmanagement of the Plan. I understand that the recipients of the Data may be located in the United States or elsewhere, and thatthe recipients’ country (e.g., the United States) may have different data privacy laws and protections than my country. Iunderstand that if I reside outside the United States, I may request a list with the names and addresses of any potential recipientsof the Data by contacting my local human resources representative. I authorize the Company, the third party administrator andany other possible recipients which may assist the Company (presently or in the future) with implementing, administering andmanaging the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose ofimplementing, administering and managing my participation in the Plan. I understand that Data will be held only as long as isnecessary to implement, administer and manage my participation in the Plan. I understand that if I reside outside the UnitedStates, I may, at any time, view Data, request additional information about the storage and processing of Data, require anynecessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing mylocal human resources representative. Further, I understand that I am providing the consents herein on a purely voluntary basis.If I do not consent, or if I later seek to revoke my consent, my employment status or service and career with the employer will notbe adversely affected; the only adverse consequence of refusing or withdrawing my consent is that the Company would not beable to grant me the Award or other awards or administer or maintain such awards. Therefore, I understand that refusing orwithdrawing my consent may affect my ability to participate in the Plan. For more information on the consequences of my refusalto consent or withdrawal of consent, I understand that I may contact my local human resources representative.3. Payment of Taxes. The following provisions supplement Section 7 of the Agreement entitled “Taxes.”3.1Regardless of any action the Company or your employer (the “Employer”) takes with respect to any or all income tax, yourportion of social insurance, payroll tax, payment on account or other tax-related items related to your participation inthe Plan and legally applicable to you (“Tax-Related Items”), you acknowledge that the ultimate liability for allTax-Related ItemsPage 16 of 24is and remains your responsibility and may exceed the amount actually withheld by the Company or the Employer.3.2 You further acknowledge that the Company and/or the Employer (1) make no representations orundertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including,but not limited to, the grant of the Award, the issuance of shares upon vesting/settlement of the Award, the subsequentsale of shares acquired pursuant to such issuance and the receipt of any dividends or dividend equivalents; and (2) donot commit to, and are under no obligation to, structure the terms of the grant or any aspect of the Award to reduce oreliminate your liability for Tax-Related Items or achieve any particular tax result.3.3 Further, if you have become subject to tax in more than one jurisdiction between the date of grant and thedate of any relevant taxable event, you acknowledge that the Company and/or the Employer (or former employer, asapplicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.3.4You authorize the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligationswith regard to all Tax-Related Items by one or a combination of the following: (1) withholding in shares to be issued orcash distributed upon vesting/settlement of the Award; (2) withholding from your wages or other cash compensationpaid to you by the Company and/or you; (3) withholding from the proceeds of the sale of shares acquired uponvesting/settlement of the Award either through a voluntary sale or through a mandatory sale arranged by the Company(on your behalf pursuant to this authorization).3.5To avoid negative accounting treatment, the Company may withhold or account for Tax-Related Items by consideringapplicable minimum statutory withholding amounts or other applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in shares, for tax purposes, you are deemed to have been issued the fullnumber of shares subject to the vested Award, notwithstanding that a number of the shares are held back solely for thepurpose of paying the Tax-Related Items due as a result of any aspect of your participation in the Plan.3.6You shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employermay be required to withhold or account for as a result of your participation in the Plan that cannot be satisfied by themeans previously described. The Company may refuse to issue or deliver the shares or the proceeds of the sale ofshares, if you fail to comply with this obligation.Page 17 of 24Section II. Country-Specific ProvisionsCanadaSecurities Law Notification. You are permitted to sell shares acquired under the Plan through the designated broker appointedunder the Plan, if any, provided that the resale of such shares takes place outside of Canada through the facilities of a national securitiesexchange on which the shares are listed (i.e., The New York Stock Exchange).Language Consent. The parties acknowledge that it is their express wish that the Plan, the Agreement and this Appendix A,as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectlyhereto, be drawn up in English.Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention (« Plan, Agreement and Appendix A » ), ainsique de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ouindirectement à, la présente convention.Data Privacy. The following provision supplements Section I.2 of this Appendix A.You hereby authorize the Company or the Company’s representatives to discuss with and obtain all relevant information fromall personnel, professional or not, involved in the administration and operation of the Plan. You further authorize the Company and anyAffiliate of the Company and the Compensation Committee to disclose and discuss the Plan with their advisors. You further authorizethe Company and any affiliate to record such information and to keep such information in your file.Foreign Asset Reporting Information. You are responsible for reporting foreign property (including shares acquired underthe Plan) on form T1135 (Foreign Income Verification Statement) if the total cost of your foreign property exceeds C$100,000 at anytime in the applicable tax year. For the 2013 tax year, the filing deadline is July 31, 2014. For the 2014 tax year and later, the formmust be filed by April 30th of the following year.ChinaPayment of RSUs. Notwithstanding any discretion in Section 11 of the Plan or in Section 2 of the Agreement and AppendixA, the grant of RSUs does not provide any right for you to receive shares and the RSUs are payable in cash only.Page 18 of 24Foreign Asset/Account Reporting Information. Effective from January 1, 2014, PRC residents are required to report toSAFE details of their foreign financial assets and liabilities, as well as details of any economic transactions conducted with non-PRCresidents, either directly or through financial institutions. Under these new rules, you may be subject to reporting obligations forAwards acquired under the Plan and Plan-related transactions. It is your responsibility to comply with this reporting obligation and youshould consult your personal tax advisor in this regard.FinlandThere are no country-specific provisions.IndiaPayment of RSUs. Notwithstanding any discretion in Section 11 of the Plan and Section 2 of the Agreement, the grant ofRSUs does not provide any right for you to receive shares and the RSUs are payable in cash only.Exchange Control Information. You must repatriate to India the proceeds from the sale of shares acquired at vesting and anydividends received in relation to the shares within 90 days after receipt. You must obtain evidence of the repatriation of funds in theform of a foreign inward remittance certificate (the “FIRC”) from the bank where you deposited the foreign currency. You must retainthe FIRC in your records to present to the Reserve Bank of India or your Employer in the event that proof of repatriation is requested.Foreign Assets Reporting Information. You are required to declare your foreign bank accounts and any foreign financialassets (including shares held outside India) in your annual tax return. It is your responsibility to comply with this reporting obligationand you should consult your personal advisor in this regard.MalaysiaDirector Notification Obligation. If you are a director of a Malaysian affiliate, you are subject to certain notificationrequirements under the Malaysian Companies Act. Among these requirements is an obligation to notify the Malaysian affiliate inwriting when you receive or dispose of an interest (e.g., an award under the Plan or shares) in the Company or any related company.Such notifications must be made within 14 days of receiving or disposing of any interest in the Company or any related company.Insider-Trading Information. You should be aware of the Malaysian insider-trading rules, which may impact youracquisition or disposal of shares or rights to shares under the Plan. Under the Malaysian insider-trading rules, you are prohibited fromacquiring or selling shares or rights to shares (e.g., an award under the Plan) when you are in possession of information which is notgenerally available and which you know or should know will have a material effect on the price of shares once such information isgenerally available.Page 19 of 24Data Privacy. The following provision replaces Section I.2 of this Appendix A.I hereby explicitly, voluntarily and unambiguously consentto the collection, use and transfer, in electronic or otherform, of my personal data as described in this Agreementand Appendix and any other Plan grant materials by andamong, as applicable, the Employer, the Company and anyof its other Subsidiaries or Affiliates or any third partiesauthorized by the same in assisting in the implementation,administration and management of my participation in thePlan.I may have previously provided the Company and theEmployer with, and the Company and the Employer mayhold, certain personal information about me, including, butnot limited to, my name, home address and telephonenumber, date of birth, social insurance number or otheridentification number, salary, nationality, job title, anyshares of stock or directorships held in the Company, thefact and conditions of my participation in the Plan, details ofall RSUs or any other entitlement to Shares awarded,cancelled, exercised, vested, unvested or outstanding in myfavor (“Data”), for the exclusive purpose of implementing,administering and managing the Plan.I also authorize any transfer of Data, as may be required, toany external stock plan service provider as may be selectedby the Company in the future, which is assisting theCompany with the implementation, administration andmanagement of the Plan and/or with whom any sharesacquired upon vesting of RSUs are deposited. I acknowledgethat these recipients may be located in my country orelsewhere, and that the recipient’s country (e.g., the UnitedStates) may have different data privacySaya dengan ini secara eksplicit, secara sukarela dan tanpa sebarangkeraguan mengizinkan pengumpulan, penggunaan dan pemindahan,dalam bentuk elektronik atau lain-lain, data peribadi saya seperti yangdinyatakan dalam Perjanjian dan Lampiran ini dan apa-apa bahangeran Pelan oleh dan di antara, seperti mana yang terpakai, Majikan,Syarikat dan mana-mana Anak Syarikat yang lain atau SyarikatSekutu kami atau mana-mana pihak ketiga yang diberi kuasa olehyang sama untuk membantu dalam pelaksanaan, pentadbiran danpengurusan penyertaan saya dalam Pelan.Sebelum ini, saya mungkin telah membekalkan Syarikat dan Majikandengan, dan Syarikat dan Majikan mungkin memegang, maklumatperibadi tertentu tentang saya, termasuk, tetapi tidak terhad kepada,nama saya, alamat rumah dan nombor telefon, tarikh lahir, nomborinsurans sosial atau nombor pengenalan lain, gaji, kewarganegaraan,jawatan, apa-apa saham atau jawatan pengarah yang dipegang dalamSyarikat, fakta dan syarat-syarat penyertaan saya dalam Pelan, butir-butir semua RSU atau apa-apa hak lain untuk Saham yangdianugerahkan, dibatalkan, dilaksanakan, terletak hak, tidak diletakhak ataupun yang belum dijelaskan bagi faedah saya ("Data"), untuktujuan yang eksklusif bagi melaksanakan, mentadbir danmenguruskan Pelan.Saya juga memberi kuasa untuk membuat apa-apa pemindahan Data,sebagaimana yang diperlukan, kepada pembekal perkhidmatan pelansaham luar yang lain sebagaimana yang mungkin dipilih oleh Syarikatpada masa depan, yang membantu Syarikat dalam pelaksanaan,pentadbiran dan pengurusan Pelan dan/atau dengan sesiapa yangmendepositkan apa-apa saham yang diperolehi apabila RSU terletakhak. . Saya mengakui bahawa penerima-penerima ini mungkin beradadi negara saya atau di tempat lain, dan bahawa negara penerima(contohnya, Amerika Syarikat)Page 20 of 24laws and protections to my country, which may not give thesame level of protection to Data. I understand that I mayrequest a list with the names and addresses of any potentialrecipients of Data by contacting my local human resourcesrepresentative. I authorize the Company, the external stockplan service provider and any other possible recipientswhich may assist the Company (presently or in the future)with implementing, administering and managing myparticipation in the Plan to receive, possess, use, retain andtransfer Data, in electronic or other form, for the solepurpose of implementing, administering and managing myparticipation in the Plan. I understand that Data will be heldonly as long as is necessary to implement, administer andmanage my participation in the Plan. I understand that Imay, at any time, view Data, request additional informationabout the storage and processing of Data, require anynecessary amendments to Data or refuse or withdraw theconsents herein, in any case, without cost, by contacting inwriting my local human resources representative, whosecontact details are Cheng Liang Heng,cl.heng@enersys.com.sg, Further, I understand that I amproviding the consents herein on a purely voluntary basis. IfI do not consent, or if I later seek to revoke my consent, myemployment status or service and career with the Employerwill not be adversely affected; the only adverse consequenceof refusing or withdrawing my consent is that the Companywould not be able to grant future RSUs or other equityawards to me or administer or maintain such awards.Therefore, I understand that refusing or withdrawing myconsent may affect my ability to participate in the Plan. Formore information on the consequences of my refusal toconsent or withdrawal of consent, Imungkin mempunyai undang-undang privasi data dan perlindunganyang berbeza daripada negara saya, yang mungkin tidak bolehmemberi tahap perlindungan yang sama kepada Data. Saya fahambahawa saya boleh meminta senarai nama dan alamat mana-manapenerima Data yang berpotensi dengan menghubungi wakil sumbermanusia tempatan saya. Saya memberi kuasa kepada Syarikat,pembekal perkhidmatan pelan saham luar dan mana-mana penerimalain yang mungkin membantu Syarikat (masa sekarang atau padamasa depan) untuk melaksanakan, mentadbir dan menguruskanpenyertaan saya dalam Pelan untuk menerima, memiliki,menggunakan, mengekalkan dan memindahkan Data, dalam bentukelektronik atau lain-lain, semata-mata dengan tujuan untukmelaksanakan, mentadbir dan menguruskan penyertaan saya dalamPelan. Saya faham bahawa Data akan dipegang hanya untuk tempohyang diperlukan untuk melaksanakan, mentadbir dan menguruskanpenyertaan saya dalam Pelan. Saya faham bahawa saya boleh, padabila-bila masa, melihat Data, meminta maklumat tambahan mengenaipenyimpanan dan pemprosesan Data, meminta bahawa pindaan-pindaan dilaksanakan ke atas Data atau menolak atau menarik balikpersetujuan dalam ini, dalam mana-mana kes, tanpa kos, denganmenghubungi secara bertulis wakil sumber manusia tempatan saya, dimana butir-butir hubungannya adalah Cheng Liang Heng,cl.heng@enersys.com.sg. Selanjutnya, saya memahami bahawa sayamemberikan persetujuan di sini secara sukarela. Jika saya tidakbersetuju, atau jika saya kemudian membatalkan persetujuan saya,status pekerjaan atau perkhidmatan dan kerjaya saya dengan Majikantidak akan terjejas; satunya akibat buruk jika saya tidak bersetuju ataumenarik balik persetujuan saya adalah bahawa Syarikat tidak akandapat memberikan RSU pada masa depan atau anugerah ekuiti lainkepada saya atau mentadbir atau mengekalkan anugerah tersebut.Oleh itu, saya faham bahawa keengganan atau penarikan balikpersetujuan saya boleh menjejaskan keupayaan saya untuk mengambilbahagian dalam Pelan. Untuk maklumat lanjut mengenai akibatkeengganan sayaPage 21 of 24understand that I may contact my local human resourcesrepresentative.untuk memberikan keizinan atau penarikan balik keizinan, sayafahami bahawa saya boleh menghubungi wakil sumber manusiatempatan saya.MexicoNature of Grant. The following provisions supplement Section I.1 (Nature of Grant) of this Appendix A:Acknowledgment of the Grant. In accepting the Award, you acknowledge that you have received a copy of the Plan and theAgreement, including this Appendix A, and that you have reviewed the Plan and the Agreement, including this Appendix A, in itsentirety and fully understand and accept all provisions of the Plan and the Agreement, including this Appendix A. You furtheracknowledge that you have read and specifically and expressly approve the terms and conditions of Section I.1 (Nature of Grant) ofthis Appendix A, in which the following is clearly described and established:(1) Your participation in the Plan does not constitute an acquired right.(2) The Plan and your participation in the Plan are offered by the Company on a wholly discretionary basis.(3) Your participation in the Plan is voluntary.(4) Neither the Company nor any Affiliate is responsible for any decrease in the value of the RSUs granted and/or sharesissued under the Plan.Labor Law Acknowledgment and Policy Statement. In accepting the RSUs, you expressly recognize that the Company, withregistered offices at 2366 Bernville Road, Reading, Pennsylvania 19605, United States of America, is solely responsible for theadministration of the Plan and that your participation in the Plan and acquisition of shares does not constitute an employmentrelationship between you and the Company since you are participating in the Plan on a wholly commercial basis and your soleemployer is EnerSys de Mexico, S.A. de CV, Powersonic, S.A. de CV or Yecoltd, S. de R.L. de CV (each, a “Mexican Subsidiary”).Based on the foregoing, you expressly recognize that the Plan and the benefits that you may derive from participation in the Plan donot establish any rights between you and your employer, a Mexican Subsidiary, and do not form part of the conditions of youremployment and/or benefits provided by such Mexican Subsidiary, and any modification of the Plan or its termination shall notconstitute a change or impairment of the terms and conditions of your employment.You further understand that your participation in the Plan is a result of a unilateral and discretionary decision of the Company;therefore, the Company reserves the absolute rightPage 22 of 24to amend and/or discontinue your participation in the Plan at any time, without any liability to you.Finally, you hereby declare that you do not reserve to yourself any action or right to bring any claim against the Company for anycompensation or damages regarding any provision of the Plan or any benefits derived from the Plan; therefore, you grant a full andbroad release to the Company, its shareholders, officers, agents, legal representatives, and subsidiaries with respect to any claim thatmay arise.Spanish Translation.Reconocimiento de la Subvención. Al aceptar las Unidades de Acciones Restringidas (“RSU” por sus siglas en inglés), Ud.reconoce que ha recibido y revisado una copia del Términos y Condiciones, y reconoce, además, que acepta todas las disposiciones delTérminos y Condiciones. Ud. también reconoce que Ud. ha leído y aprobado de forma expresa los términos y condiciones establecidosen la Sección I.1 (“Nature of Grant”) en este Appendix A, que claramente dispone lo siguiente:(1) Su participación en el Plan no constituye un derecho adquirido;(2) El Plan y su participación en el Plan es ofrecido por la Compañía de manera completamente discrecional;(3) Su participación en el Plan es voluntaria; y(4) Ni la Compañía ni cualquiera subsidiaria es responsable de cualquier disminución del valor de las Unidades de AccionesRestringidas y/o las acciones emitidas bajo el Plan.Declaración y Reconocimiento de Derecho y Política Laboral. Al aceptar las Unidades de Acciones Restringidas, Ud.reconoce que la Compañía, con domicilio social en 2366 Bernville Road, Reading, Pennsylvania 19605, United States of America,EE.UU., es el único responsable de la administración del Plan y su participación en el Plan y cualquier adquisición de las acciones bajoel Plan no constituyen una relación laboral entre Ud. y la Compañía, porque Ud. está participando en el Plan en su totalidad sobre unabase comercial y su único empleador es EnerSys de Mexico, S.A. de CV, Powersonic, S.A. de CV or Yecoltd, S. de R.L. de CV.Basado en lo anterior, Ud. expresamente reconoce que el Plan y los beneficios que pueden derivarse de la participación en el Plan noestablecen algún derecho entre Ud. y el Empleador, EnerSys de Mexico, S.A. de CV, Powersonic, S.A. de CV or Yecoltd, S. de R.L.de CV, y que no forman parte de las condiciones de empleo y/o beneficios provenidos por EnerSys de Mexico, S.A. de CV,Powersonic, S.A. de CV or Yecoltd, S. de R.L. de CV, y cualquier modificación del Plan o la terminación de su contrato noconstituirá un cambio o deterioro de los términos y condiciones de su empleo.Además, Ud. comprende que su participación en el Plan es causado por una decisión discrecional y unilateral de la Compañía,por lo que la Compañía se reserva el derechoPage 23 of 24absoluto de modificar y/o suspender su participación en el Plan en cualquier momento, sin responsabilidad alguna a Ud.Finalmente, Ud. manifiesta que no se reserva ninguna acción o derecho que origine una demanda en contra de la Compañía,por cualquier compensación o daño en relación con cualquier disposición del Plan o de los beneficios derivados del mismo, y enconsecuencia usted otorga un amplio y total descargo de responsabilidad a la Compañía, sucursales, oficinas de representación, susaccionistas, directores, agentes y representantes legales, y Subsidiarias, con respecto a cualquier demanda que pudiera surgir.PolandExchange Control Notice. Polish residents holding foreign securities (including shares) and maintaining accounts abroad mustreport information to the National Bank of Poland on transactions and balances of the securities and cash deposited in such accounts ifthe value of such securities and cash (when combined with all other assets held abroad) exceeds PLN 7,000,000. If required, thereports must be filed on a quarterly basis on special forms available on the website of the National Bank of Poland.If you transfer funds in excess of €15,000 into Poland in connection with the sale of shares under the Plan, the funds must betransferred via a bank account. You are required to retain the documents connected with a foreign exchange transaction for a period offive years, as measured from the end of the year in which such transaction occurred. If you hold shares acquired under the Plan and/ormaintain a bank account abroad, you will have reporting duties to the National Bank of Poland.SwitzerlandSecurities Law Notice. The grant of the RSUs is considered a private offering in Switzerland and is therefore not subject tosecurities registration in Switzerland.Page 24 of 24ENERSYSAWARD AGREEMENT FOR EMPLOYEES – PERFORMANCE SHARE UNITSUNDER THE SECOND AMENDED AND RESTATED 2010 EQUITY INCENTIVE PLANTHIS AWARD AGREEMENT FOR EMPLOYEES – PERFORMANCE SHARE UNITS (this “Agreement”), dated as ofMay 16, 2016, is between ENERSYS, a Delaware corporation (the “Company”), and the individual identified on the signature pagehereof (the “Participant”).BACKGROUNDA. The Participant is currently an employee of the Company or one of its Subsidiaries.B. The Company desires to (i) provide the Participant with an incentive to remain in the employ of the Company or one of itsSubsidiaries, and (ii) increase the Participant’s interest in the success of the Company by granting Performance Share Units, a form of aRestricted Stock Unit under the Plan (the “Performance Share Units”), to the Participant.C. This grant of Performance Share Units is (i) made pursuant to the Second Amended and Restated EnerSys 2010 EquityIncentive Plan (the “Plan”); (ii) made subject to the terms and conditions of this Agreement; and (iii) not employment compensation noran employment right and is made in the sole discretion of the Company’s Compensation Committee.AGREEMENTNOW, THEREFORE, in consideration of the covenants and agreements contained in this Agreement, the parties hereto,intending to be legally bound, agree as follows:1. Definitions; Incorporation of Plan Terms. Capitalized terms used in this Agreement without definition shall have themeanings assigned to them in the Plan. This Agreement and the Performance Share Units shall be subject to the Plan. The terms of thePlan, the Background provisions of this Agreement and Appendix A are hereby incorporated into this Agreement by reference andmade a part hereof as if set forth in their entirety in this Section 1. If there is a conflict or an inconsistency between the Plan and thisAgreement, the Plan shall govern.2. Grant of Performance Share Units.(a) Subject to the provisions of this Agreement and pursuant to the provisions of the Plan, the Company hereby grants tothe Participant the number of Performance Share Units specified on the signature page of this Agreement. The Company shall credit toa bookkeeping account maintained by the Company, or a third party on behalf of the Company, for the Participant’s benefit, thenumber of Performance Share Units granted hereunder, each of which shall be deemed to be the equivalent of one share of theCompany’s Common Stock.1 (b) If the Company declares and pays a dividend or distribution on Common Stock in the form of cash, then a number ofadditional Performance Share Units shall be credited to the Participant as of the payment date for such dividend or distribution equal tothe result of dividing (i) the product of the total number of Performance Share Units credited to the Participant as of the record date forsuch dividend or distribution (other than previously settled or forfeited Performance Share Units) times the per share amount of suchdividend or distribution, by (ii) the Fair Market Value of one share of Common Stock as of the record date for such dividend ordistribution. Any Performance Share Units credited to the Participant under this subsection shall: (A) be or become vested or forfeited(as appropriate) to the same extent as the underlying Performance Share Unit, (B) be settled as provided under Section 3(d) for suchunderlying Performance Share Unit, and (C) be subject to the TSR Performance Multiplier (as hereinafter defined) that applies to suchunderlying Performance Share Unit.(c) If the Company declares and pays a dividend or distribution on Common Stock in the form of additional shares, orthere occurs a forward split of Common Stock, then a number of additional Performance Share Units shall be credited to the Participantas of the payment date for such dividend or distribution or forward split equal to (i) the number of Performance Share Units credited tothe Participant as of the record date for such dividend or distribution or split (other than previously settled or forfeited PerformanceShare Units), multiplied by (ii) the number of additional shares actually paid as a dividend or distribution or issued in such split inrespect of each outstanding share of Common Stock. Any Performance Share Units credited to the Participant under this subsectionshall: (A) be or become vested or forfeited (as appropriate) to the same extent as the underlying Performance Share Unit, (B) be settledas provided under Section 3(d) for such underlying Performance Share Unit, and (C) be subject to the TSR Performance Multiplier thatapplies to such underlying Performance Share Unit.3. Terms and Conditions.(a) Vesting and Number Earned. All of the Performance Share Units shall initially be unvested. The Performance ShareUnits shall be subject to the restrictions and conditions set forth herein. Except as otherwise provided in this Section 3, the vesting ofthe Performance Share Units is conditioned upon the Participant remaining continuously employed by the Company or a Subsidiaryfollowing the Date of Grant (as specified on the signature page of this Agreement) until the third (3rd) anniversary of the Date of Grant(the “Vesting Date”).(i) Subject to Sections 3(a)(iii), 3(a)(iv), 3(a)(v), 3(a)(vi), 3(b) and 3(c), the number of Performance Share Units thatshall vest and become non‑forfeitable (the “Earned Performance Share Units”) shall equal the product of (A) the number ofPerformance Share Units granted to the Participant pursuant to this Agreement (as such number of Performance Share Units may beadjusted from time-to-time as provided in this Agreement or in the Plan) and (B) the TSR Performance Multiplier set forth in the chartbelow based on the Company’s Actual TSR Percentile for the Performance Period (as each such term is defined below); provided,however, that in no event shall the TSR Performance Multiplier exceed two hundred percent (200%):2 Actual TSR PercentileTSR Performance Multiplier75th or higher200%50th100%25th50%Below 25th0%(ii) The TSR Performance Multiplier will be interpolated on a linear basis between the levels stated in the chartabove. For example, if the Actual TSR Percentile for the Performance Period were the 60th percentile, then the TSR PerformanceMultiplier would be 140%. Any Performance Share Units that do not vest based on the performance requirements set forth in thisSection 3(a) (and which have not previously terminated pursuant to the terms of this Agreement) will automatically terminate as of theVesting Date. The number of Earned Performance Share Units that vest based on performance will be determined by theCompensation Committee following the end of the Performance Period and payment of vested Earned Performance Share Units willbe made in the period provided for in Section 3(d). Any such determination by the Compensation Committee shall be final andbinding.For purposes of the Award, the following definitions shall apply:“Actual TSR Percentile” means the percentile ranking of the Company’s TSR among the TSRs for the companiescomprising the Comparator Peer Group on the last day of the Performance Period. For purposes of clarity, theCompany’s TSR shall be ranked against the TSRs for such companies regardless of whether the Company is a memberof the Comparator Peer Group at such time.“Beginning Price” means, with respect to the Company and any other company in the Comparator Peer Group, theaverage of the closing market prices of such company’s common stock on the principal exchange on which such stockis traded for the sixty (60) consecutive calendar days ending with the first day of the Performance Period or, in the caseof a company that is not traded on a stock exchange on the first day of the Performance Period, the average of theclosing market prices of such company’s common stock on the principal exchange on which such stock is thereafterfirst admitted to trading for the sixty (60) consecutive calendar days commencing with the first day in the PerformancePeriod on which such company’s common stock is so traded. In either case, as to a stock which goes ex‑dividendduring such 60‑day period, the closing market prices as to such stock for the portion of the 60‑day period preceding theex‑dividend date shall be equitably adjusted to exclude the amount of the related dividend.“Comparator Peer Group” means the companies that comprise the S&P SmallCap® 600 Industrials Index as of the dateof the beginning of the3 Performance Period as published by Standard & Poor’s Financial Services LLC (or its successor), or if such indexceases to be published or is otherwise unavailable, an alternate index deemed comparable by the CompensationCommittee.“Ending Price” means, with respect to the Company and any other company in the Comparator Peer Group, theaverage of the closing market prices of such company’s common stock on the principal exchange on which such stockis traded for the sixty (60) consecutive calendar days ending with the last day of the Performance Period. As to a stockwhich goes ex‑dividend during such 60‑day period, the closing market prices as to such stock for the portion of the60‑day period preceding the ex‑dividend date shall be equitably adjusted to exclude the amount of the related dividend.“Performance Period” means the period commencing on the Date of Grant and ending on the Vesting Date.“TSR” means total shareholder return and shall be determined with respect to the Company and any other company inthe Comparator Peer Group by dividing: (A) the sum of (1) the difference obtained by subtracting the Beginning Pricefrom the Ending Price plus (2) all amounts resulting from dividends and other distributions for which the ex‑dividenddate (or similar date in the case of a distribution other than a dividend) related to such dividend or other distributionoccurs during the Performance Period (assuming same day reinvestment of the dividends in Common Stock at theclosing price on the ex-dividend date) by (B) the Beginning Price. Any non‑cash distributions shall be ascribed suchdollar value as may be determined by or at the direction of the Compensation Committee.“TSR Performance Multiplier” means the applicable percentage specified in the chart set forth in Section 3(a)(i) basedon the Company’s Actual TSR Percentile.(iii) Any Performance Share Units that fail to vest because the employment condition is not satisfied shall beforfeited, subject to the special provisions set forth in Sections 3(a)(iv) through 3(a)(vi).(iv) In the event of a Change in Control prior to the Vesting Date where the holders of the Company’s CommonStock receive cash consideration for their Common Stock in consummation of the Change in Control, the Performance Share Unitsshall immediately become vested. Any Performance Share Unit that vests as a result of a Change in Control under this subsection shallvest based on the TSR Performance Multiplier determined by substituting the date of such Change in Control for the Vesting Date. Forpurposes of this Section 3(a)(iv) and any acceleration of the Performance Share Units upon a Change in Control, a Change in Controlshall be deemed to occur only if, in addition to the requirements set forth in the Plan, the Change4 in Control also meets the requirements of IRS Reg. §1.409A-3(i)(5), to the extent necessary to avoid the imposition of taxesthereunder.(v) If the Participant’s employment terminates due to death or Permanent Disability, or if, on or within two years aftera Change in Control (other than a Change in Control described in Section 3(a)(iv)), the Participant terminates employment for GoodReason, or is terminated by the Company without Cause, Performance Share Units not previously vested shall immediately becomevested based on the TSR Performance Multiplier determined by substituting the date of such termination of employment for theVesting Date (provided, however, that in the event of a Change in Control under this subsection, the TSR Performance Multiplier shallbe determined as of the Change in Control.).(vi) In the event of the Participant’s Retirement, the Compensation Committee may determine, in its sole discretion,whether and the manner in which Performance Share Units not previously vested (or any portion thereof) shall be vested and be settledpursuant to Section 3(d) subject to actual performance results and in accordance with the requirements of Code Section 162(m). In theabsence of Compensation Committee action, upon such Retirement, the Performance Share Units which have not vested as of the dateof such termination shall vest pro-rata as of the date of the Participant’s Retirement; provided, however, that such Performance ShareUnits shall be subject to the restrictions on transfer contained in Section 3(b). All such Performance Share Units which shall not havevested as a result of such Retirement shall be immediately and automatically forfeited without consideration of any kind and to theextent that the date the Participant first becomes eligible for Retirement and the Settlement Date (as hereinafter defined) are in differenttax years, any amount payable under this subsection shall constitute the payment of nonqualified deferred compensation, subject to therequirements of Code Section 409A unless an exemption under the treasury regulations is available.The number of Performance Share Units vesting pro-rata upon Retirement (absent action to the contrary by theCompensation Committee) described in the penultimate sentence of the foregoing paragraph of this Section 3(a)(vi) shall be calculatedby multiplying (A) the quotient obtained by dividing the number of completed months that the Participant was employed by theCompany or one of its Subsidiaries during the Performance Period by the number of months during the Performance Period, by (B) thetotal number of Performance Share Units awarded (rounding up to the nearest whole number). The number of Earned PerformanceShare Units upon Retirement shall be determined as of the end of the Performance Period and be based on the TSR Multiplier for thePerformance Period.(b) Restrictions on Transfer. Until the earlier of (i) the Settlement Date (as hereinafter defined), (ii) the date of a Changein Control described in Section 3(a)(iv), and (iii) the date of a termination of employment described in Section 3(a)(v), or as otherwiseprovided in the Plan, no transfer of the Performance Share Units or any of the Participant’s rights with respect to the PerformanceShare Units, whether voluntary or involuntary, by operation of law or otherwise, shall be permitted. Unless the CompensationCommittee determines otherwise, upon any attempt to transfer any Performance Share Unit or any rights in respect of any PerformanceShare Units before the earlier of the Settlement Date, the date of a Change in5 Control described in Section 3(a)(iv), and the date of a termination of employment described in Section 3(a)(v), or as otherwiseprovided in the Plan, such Performance Share Unit, and all of the rights related to such Performance Share Unit, shall be immediatelyand automatically forfeited by the Participant without consideration of any kind.(c) Forfeiture. Upon termination of the Participant’s employment with the Company or a Subsidiary for any reason otherthan one of the reasons set forth in subsections (v) and (vi) of Section 3(a), the Participant shall forfeit any and all Performance ShareUnits which have not vested as of the date of such termination and such units shall revert to the Company without consideration of anykind.(d) Settlement. Earned Performance Share Units not previously forfeited shall be settled on the earlier of (i) the SettlementDate, (ii) the date of a Change in Control described in Section 3(a)(iv), (iii) the date of a termination of employment due to death orPermanent Disability, and (iv) the date of a termination of employment on or within two years after a Change in Control described inSection 3(a)(v), by delivery of one share of Common Stock for each Earned Performance Share Unit being settled or, if determined bythe Compensation Committee in its sole discretion, by a payment of cash equal to the Fair Market Value of one share of CommonStock for each Earned Performance Share Unit being settled. If the Participant dies following a Retirement described in Section 3(a)(vi) prior to the Vesting Date, in such case, the Company shall deliver one share of Common Stock for each Earned PerformanceShare Unit not previously forfeited and being settled or, if determined by the Compensation Committee in its sole discretion, by apayment of cash equal to the Fair Market Value of one share of Common Stock for each Earned Performance Share Unit being settledto the Participant’s estate (or beneficiary) upon his or her death. The “Settlement Date” shall be the first anniversary of the VestingDate.(e) Payout Limit. In no event shall the total dollar value of the Earned Performance Share Units as of earlier of (i) theVesting Date, (ii) the date of a Change in Control described in Section 3(a)(iv), (iii) the date of a termination of employment due todeath or Permanent Disability, and (iv) the date of a termination of employment on or within two years after a Change in Controldescribed in Section 3(a)(v) exceed the Payout Limit (as set forth on the signature page of this Agreement). Any Earned PerformanceShare Units resulting from dividends or distributions do not count toward the Payout Limit.4. Noncompetition. The Participant agrees with the Company that, for as long as the Participant is employed by the Companyor any of its Subsidiaries and continuing for twelve (12) months (or such longer period as may be provided in an employment orsimilar agreement between the Participant and the Company or one of its Subsidiaries or as provided in the last sentence of thisSection 4) following a termination of such employment under Sections 3(a)(v) or (vi) of this Agreement or that occurs after any of thePerformance Share Units have vested, the Participant shall not, without the prior written consent of the Company, directly or indirectly,and whether as principal or investor or as an employee, officer, director, manager, partner, consultant, agent, or otherwise, alone or inassociation with any other person, firm, corporation, or other business organization, engage or otherwise become involved in aCompeting Business in the6 Americas, Europe, Middle East or Asia, or in any other geographic area throughout the world (a) in which the Company or any of itsSubsidiaries has engaged in any of the activities that comprise a Competing Business during the Participant’s employment, or (b) inwhich the Participant has knowledge of the Company’s plans to engage in any of the activities that comprise a Competing Business(including, without limitation, in any area in which any customer of the Company or any of its Subsidiaries may be located); provided,however, that the provisions of this Section 4 shall apply solely to those activities of a Competing Business, with which the Participantwas personally involved or for which the Participant was responsible while employed by the Company or its Subsidiaries during thetwelve (12) month period preceding termination of the Participant’s employment. This Section 4 will not be violated, however, by theParticipant’s investment of up to US$100,000 in the aggregate in one or more publicly-traded companies that engage in a CompetingBusiness. The restrictions of this Section 4 shall also apply during any continued settlement period after Retirement described inSection 3(a)(vi).5. Wrongful Solicitation. As a separate and independent covenant, the Participant agrees with the Company that, for so longas the Participant is employed by the Company or any of its Subsidiaries and continuing for twelve (12) months (or such longer periodas may be provided in an employment or similar agreement between the Participant and the Company or one of its Subsidiaries or asprovided in the last sentence of this Section 5) following a termination of such employment under Sections 3(a)(v) or (vi) of thisAgreement or that occurs after any of the Performance Share Units have vested, the Participant shall not engage in any WrongfulSolicitation. The restrictions of this Section 5 shall also apply during any continued settlement period after Retirement described inSection 3(a)(vi).6. Confidentiality; Specific Performance.(a) The Participant agrees with the Company that the Participant shall not at any time, except in performance of theParticipant’s obligations to the Company hereunder or with the prior written consent of the Company, directly or indirectly, reveal toany person, entity, or other organization (other than the Company, or its employees, officers, directors, stockholders, or agents) or usefor the Participant’s own benefit any information deemed to be confidential by the Company or any of its Affiliates (“ConfidentialInformation”) relating to the assets, liabilities, employees, goodwill, business, or affairs of the Company or any of its Affiliates,including, without limitation, any information concerning past, present, or prospective customers, manufacturing processes, marketing,operating, or financial data, or other confidential information used by, or useful to, the Company or any of its Affiliates and known(whether or not known with the knowledge and permission of the Company or any of its Affiliates and whether or not at any time priorto the Date of Grant developed, devised, or otherwise created in whole or in part by the efforts of the Participant) to the Participant byreason of the Participant’s employment with, equity holdings in, or other association with the Company or any of its Affiliates. TheParticipant further agrees that the Participant will retain all copies and extracts of any written Confidential Information acquired ordeveloped by the Participant during any such employment, equity holding, or association in trust for the sole benefit of the Company,its Affiliates, and their successors and assigns. The Participant further agrees that the Participant will not, without the prior writtenconsent of the Company, remove or take from the Company’s7 or any of its Affiliate’s premises (or if previously removed or taken, the Participant will promptly return) any written ConfidentialInformation or any copies or extracts thereof. Upon the request and at the expense of the Company, the Participant shall promptlymake all disclosures, execute all instruments and papers, and perform all acts reasonably necessary to vest and confirm in the Companyand its Affiliates, fully and completely, all rights created or contemplated by this Section 6. The term “Confidential Information” shallnot include information that is or becomes generally available to the public other than as a result of a disclosure by, or at the directionof, the Participant.(b) The Participant agrees that upon termination of the Participant’s employment with the Company or any Subsidiary forany reason, the Participant will return to the Company immediately all memoranda, books, papers, plans, information, letters and otherdata, and all copies thereof or therefrom, in any way evidencing (in whole or in part) Confidential Information relating to the businessof the Company and its Subsidiaries and Affiliates. The Participant further agrees that the Participant will not retain or use for theParticipant’s account at any time any trade names, trademark, or other proprietary business designation used or owned in connectionwith the business of the Company or its Subsidiaries or Affiliates.(c) The Participant acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach ofany of the provisions of this Section 6, or Section 4 or 5 above, would be inadequate and, in recognition of this fact, the Participantagrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting anybond (or other security other than any mandatory minimum or nominal bond or security), shall be entitled to obtain equitable relief inthe form of specific performance, temporary restraining order, temporary or permanent injunction, or any other equitable remedy whichmay then be available.7. Taxes.(a) This Section 7(a) applies only to (a) all Participants who are U.S. employees, and (b) to those Participants who areemployed by a Subsidiary of the Company that is obligated under applicable local law to withhold taxes with respect to the settlementof the Performance Share Units. Such Participant shall pay to the Company or a designated Subsidiary, promptly upon request, and inany event at the time the Participant recognizes taxable income, or withholding of employment taxes is required, with respect to thePerformance Share Units, an amount equal to the taxes the Company determines it is required to withhold under applicable tax lawswith respect to the Performance Share Units. The Participant may satisfy the foregoing requirement by making a payment to theCompany in cash or, in accordance with rules and regulations promulgated by the Compensation Committee, by delivering alreadyowned unrestricted shares of Common Stock or by having the Company withhold a number of shares of Common Stock in which theParticipant would otherwise become vested under this Agreement, in each case, having a value equal to the maximum amount of taxpermitted to be withheld that will not result in adverse financial accounting consequences to the Company. Such shares shall be valuedat their fair market value on the date as of which the amount of tax to be withheld is determined.8 (b) The Participant acknowledges that the tax laws and regulations and financial accounting principles and guidanceapplicable to the Performance Share Units and the disposition of the shares following the settlement of Performance Share Units arecomplex and subject to change.8. Securities Laws Requirements. The Company shall not be obligated to transfer any shares following the settlement ofPerformance Share Units to the Participant free of a restrictive legend if such transfer, in the opinion of counsel for the Company,would violate the Securities Act of 1933, as amended (the “Securities Act”) (or any other federal or state statutes having similarrequirements as may be in effect at that time).9. No Obligation to Register. The Company shall be under no obligation to register any shares as a result of the settlement ofthe Performance Share Units pursuant to the Securities Act or any other federal or state securities laws.10. Market Stand-Off. In connection with any underwritten public offering by the Company of its equity securities pursuant toan effective registration statement filed under the Securities Act for such period as the Company or its underwriters may request (suchperiod not to exceed 180 days following the date of the applicable offering), the Participant shall not, directly or indirectly, sell, makeany short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option orother contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to,any of the Performance Share Units granted under this Agreement or any shares resulting the settlement thereof without the priorwritten consent of the Company or its underwriters.11. Protections Against Violations of Agreement. No purported sale, assignment, mortgage, hypothecation, transfer, pledge,encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any of thePerformance Share Units by any holder thereof in violation of the provisions of this Agreement or the Certificate of Incorporation orthe Bylaws of the Company, will be valid, and the Company will not transfer any shares resulting from the settlement of PerformanceShare Units on its books nor will any of such shares be entitled to vote, nor will any dividends be paid thereon, unless and until therehas been full compliance with such provisions to the satisfaction of the Company. The foregoing restrictions are in addition to and notin lieu of any other remedies, legal or equitable, available to enforce such provisions.12. Rights as a Stockholder. The Participant shall not possess the right to vote the shares underlying the Performance ShareUnits until the Performance Share Units have been settled in accordance with the provisions of this Agreement and the Plan.13. Survival of Terms. This Agreement shall apply to and bind the Participant and the Company and their respective permittedassignees and transferees, heirs, legatees, executors, administrators and legal successors. The terms of Sections 4-7, 13, 14, 16, 18-21and 23 shall expressly survive the forfeiture of the Performance Share Units and the termination of this Agreement.9 14. Notices. All notices and other communications provided for herein shall be in writing and shall be delivered by hand orsent by certified or registered mail, return receipt requested, postage prepaid, addressed, if to the Participant, to the Participant’sattention at the mailing address set forth on the signature page of this Agreement (or to such other address as the Participant shall havespecified to the Company in writing) and, if to the Company, to the Company’s office at 2366 Bernville Road, Reading, Pennsylvania19605, Attention: General Counsel (or to such other address as the Company shall have specified to the Participant in writing). Allsuch notices shall be conclusively deemed to be received and shall be effective, if sent by hand delivery, upon receipt, or if sent byregistered or certified mail, on the fifth day after the day on which such notice is mailed.15. Waiver. The waiver by either party of compliance with any provision of this Agreement by the other party shall notoperate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provisionof this Agreement.16. Authority of the Administrator. The Compensation Committee shall have full authority to interpret and construe the termsof the Plan and this Agreement, including, but not limited to, making all determinations regarding eligibility, vesting, forfeiture and thecalculation of the number of Performance Share Units awarded or credited under this Agreement. The determination of theCompensation Committee as to any such matter of interpretation, construction or calculation shall be final, binding and conclusive.17. Representations. The Participant has reviewed with his or her own tax advisors the applicable tax (U.S., foreign, state, andlocal) consequences of the transactions contemplated by this Agreement. The Participant is relying solely on such advisors and not onany statements or representations of the Company or any of its agents. The Participant understands that the Participant (and not theCompany) shall be responsible for any tax liability that may arise as a result of the transactions contemplated by this Agreement.18. Investment Representation. The Participant hereby represents and warrants to the Company that the Participant, by reasonof the Participant’s business or financial experience (or the business or financial experience of the Participant’s professional advisorswho are unaffiliated with and who are not compensated by the Company or any affiliate or selling agent of the Company, directly orindirectly), has the capacity to protect the Participant’s own interests in connection with the transactions contemplated under thisAgreement.19. Entire Agreement; Language; Governing Law. This Agreement and the Plan and the other related agreements expresslyreferred to herein set forth the entire agreement and understanding between the parties hereto and supersedes all prior agreements andunderstandings relating to the subject matter hereof. This Agreement may be executed in one or more counterparts, each of which shallbe deemed to be an original, but all such counterparts shall together constitute one and the same agreement. The headings of sectionsand subsections herein are included solely for convenience of reference and shall not affect the meaning of any of the provisions of thisAgreement. This Agreement has been prepared in English and may be translated into one or more other languages. If there is adiscrepancy between or among any of these versions, the English version shall prevail. Unless otherwise restricted by applicable law,10 this Agreement may be executed electronically. This Agreement shall be governed by, and construed in accordance with, the laws ofthe Commonwealth of Pennsylvania, USA.20. Severability; Judicial Reformation. Should any provision of this Agreement be held by a court of competent jurisdiction tobe unenforceable, or enforceable only if modified, such holding shall not affect the validity of the remainder of this Agreement, thebalance of which shall continue to be binding upon the parties hereto with any such modification (if any) to become a part hereof andtreated as though contained in this original Agreement. Moreover, if one or more of the provisions contained in this Agreement shallfor any reason be held to be excessively broad as to scope, activity, subject or otherwise so as to be unenforceable, in lieu of severingsuch unenforceable provision, such provision or provisions shall be construed by the appropriate judicial body by limiting or reducingit or them, so as to be enforceable to the maximum extent compatible with the applicable law as it shall then appear, and suchdetermination by such judicial body shall not affect the enforceability of such provisions or provisions in any other jurisdiction.21. Amendments; Construction. The Compensation Committee may amend the terms of this Agreement prospectively orretroactively at any time, but (unless otherwise provided under Section 18 of the Plan) no such amendment shall impair the rights of theParticipant hereunder without his or her consent. To the extent the terms of Section 4 conflict with any prior agreement between theparties related to such subject matter, the terms of Section 4, to the extent more restrictive, shall supersede such conflicting terms andcontrol. Headings to Sections of this Agreement are intended for convenience of reference only, are not part of this Agreement andshall have no effect on the interpretation hereof.22. Acceptance. The Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. The Participant hasread and understand the terms and provision thereof, and accepts the Performance Share Units subject to all the terms and conditions ofthe Plan and this Agreement. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations ofthe Compensation Committee upon any questions arising under this Agreement.23. Miscellaneous.(a) No Rights to Grants or Continued Employment. The Participant acknowledges that the award granted under thisAgreement is not employment compensation nor is it an employment right, and is being granted at the sole discretion of theCompensation Committee. The Participant shall not have any claim or right to receive grants of Awards under the Plan. Neither thePlan nor this Agreement, or any action taken or omitted to be taken hereunder or thereunder, shall be deemed to create or confer on theParticipant any right to be retained as an employee of the Company or any Subsidiary or other Affiliate thereof, or to interfere with orto limit in any way the right of the Company or any Affiliate or Subsidiary thereof to terminate the employment of the Participant atany time.(b) No Restriction on Right of Company to Effect Corporate Changes. Neither the Plan nor this Agreement shall affect inany way the right or power of the Company or its11 stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, or other changes in the Company’s capitalstructure or its business, or any merger or consolidation of the Company, or any issue of stock or of options, warrants or rights topurchase stock or of bonds, debentures, preferred, or prior preference stocks whose rights are superior to or affect the Common Stockor the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of theCompany, or any sale or transfer of all or any part of the assets or business of the Company, or any other corporate act or proceeding,whether of a similar character or otherwise.(c) Assignment. The Company shall have the right to assign any of its rights and to delegate any of its duties under thisAgreement to any of its Affiliates. The terms and conditions of this Agreement shall be binding upon and shall inure to the benefit ofthe permitted successors and assigns of the Company (including any person or entity which acquires all or substantially all of the assetsof the Company).(d) Adjustments. The Performance Share Units shall be adjusted or terminated as contemplated by Section 16(a) of thePlan, including, in the discretion of the Compensation Committee, rounding to the nearest whole number of Performance Share Unitsor shares of Common Stock, as applicable.(e) Clawback Policy. The Performance Share Units and any cash or shares of Common Stock delivered in settlement ofthe Performance Share Units shall be subject to the terms of the clawback policy adopted by the Board of Directors (as such policymay be amended from time-to-time).24. Code Section 409A. Notwithstanding anything in this Agreement to the contrary, the receipt of any benefits under thisAgreement as a result of a termination of employment shall be subject to satisfaction of the condition precedent that the Participantundergo a “separation from service” within the meaning of Treas. Reg. § 1.409A‑1(h) or any successor thereto. In addition, if aParticipant is deemed to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then withregard to any payment or the provisions of any benefit that is required to be delayed pursuant to Code Section 409A(a)(2)(B), suchpayment or benefit shall not be made or provided prior to the earlier of (i) the expiration of the six (6) month period measured from thedate of the Participant's “separation from service” (as such term is defined in Treas. Reg. § 1.409A-1(h)), or (ii) the date of theParticipant's death (the “Delay Period”). Within ten (10) days following the expiration of the Delay Period, all payments and benefitsdelayed pursuant to this Section (whether they would have otherwise been payable in a single sum or in installments in the absence ofsuch delay) shall be paid or reimbursed to the Participant in a lump sum, and any remaining payments and benefits due under thisAgreement shall be paid or provided in accordance with the normal payment dates specified for them herein.[REST OF PAGE LEFT INTENTIONALLY BLANK]12 THIS AGREEMENT SHALL BE NULL AND VOID AND UNENFORCEABLE BY THE PARTICIPANT UNLESSSIGNED AND DELIVERED TO THE COMPANY NOT LATER THAN THIRTY (30) DAYS SUBSEQUENT TO THEDATE OF GRANT SET FORTH BELOW.BY SIGNING THIS AGREEMENT, THE PARTICIPANT IS HEREBY CONSENTING TO THE USE ANDTRANSFER OF THE PARTICIPANT’S PERSONAL DATA BY THE COMPANY TO THE EXTENT NECESSARY TOADMINISTER AND PROCESS THE AWARDS GRANTED UNDER THIS AGREEMENT.IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and theParticipant has executed this Agreement, both as of the day and year first above written.ENERSYSBy: Name: David M. ShafferTitle: President and Chief Executive OfficerPARTICIPANTBy: Name: Address: Date of Grant: __________Number of Performance Share Units: _______________Payout Limit: $______________________13 Appendix AtoAward Agreement for Employees – Performance Share UnitsUnder the Second Amended and Restated 2010 Equity Incentive PlanThis Appendix A contains supplemental terms and conditions for awards of Performance Share Units (“PSUs”) granted as ofthe Date of Grant set forth in the Agreement under the Second Amended and Restated 2010 Equity Incentive Plan (the “Plan”) toParticipants who reside outside the United States or who are otherwise subject to the laws of a country other than the United States.You have also received the Agreement applicable to the Award set forth therein. The Agreement, together with thisAppendix A and the Plan are the terms and conditions of the grant of PSUs set forth in the Agreement. To the extent that thisAppendix A amends, deletes or supplements any terms of the Agreement, this Appendix A shall control. Capitalized terms used butnot defined herein shall have the same meanings ascribed to them in the Agreement.Section I of this Appendix A contains special terms and conditions that govern the PSUs outside of the United States.Section II of this Appendix A includes special terms and conditions in the specific countries listed therein.This Appendix A may also include information regarding exchange controls, taxation of awards and certain other issues ofwhich you should be aware with respect to participation in the Plan. The information is based on the securities, exchange control, taxand other laws concerning PSUs in effect as of May __, 2016. Such laws are often complex and change frequently; the informationmay be out of date at the time you vest in the PSUs or sell shares acquired under the Plan. As a result, the Company stronglyrecommends that you not rely on the information noted herein as the only source of information relating to the consequences of yourparticipation in the Plan.In addition, this Appendix A is general in nature, does not discuss all of the various laws, rules and regulations which mayapply to your particular situation and the Company does not assure you of any particular result. Accordingly, you are stronglyadvised to seek appropriate professional advice as to how the relevant laws in your country apply to your specific situation.Finally, if you are a citizen or resident of a country other than the one in which you are currently working, transferredemployment after the Award was granted or is considered a resident of another country for local law purposes, the informationcontained herein may not be applicable to you in the same manner. In addition, the Company shall, in its sole discretion, determine towhat extent the terms and conditions contained herein will apply under these circumstances.Section I. All Countries Outside the United States14 1.Nature of Grant. In accepting the Award, you acknowledge that:1.the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended,suspended or terminated by the Company at any time, to the extent permitted by the Plan;2.the grant of the PSUs is voluntary and occasional and does not create any contractual or other right to receive futuregrants of PSUs, or benefits in lieu of PSUs, even if PSUs have been granted repeatedly in the past;3.all decisions with respect to future grants, if any, will be at the sole discretion of Company;4.you are voluntarily participating in the Plan;5.the PSUs and the shares subject to the PSUs are extraordinary items that do not constitute compensation of any kind forservices of any kind rendered to the Company or any Subsidiary, and which is outside the scope of your employmentcontract, if any;6.the PSUs and the shares subject to the PSUs are not intended to replace any pension rights, if any, or compensation;7.the PSUs and the shares subject to the PSUs, and the income and value of same, are not part of normal or expectedcompensation or salary for any purposes, including, but not limited to, calculating any severance, resignation,termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement orwelfare benefits or similar payments and in no event should be considered as compensation for, or relating in any wayto, past services for the Company or any Subsidiary;8.the grant of the PSUs and your participation in the Plan will not be interpreted to form an employment contract orrelationship with the Company or any Subsidiary;9.the future value of the underlying shares is unknown and cannot be predicted with certainty;10.if you obtain shares, the value of those shares acquired may increase or decrease in value;11.in consideration of the grant of the PSUs, no claim or entitlement to compensation or damages shall arise from forfeitureof the PSUs resulting from termination of your employment with the Company or any Subsidiary (for any reasonwhatsoever and whether or not in breach of local labor laws) and you irrevocably release the Company and theSubsidiaries from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court ofcompetent15 jurisdiction to have arisen, you will be deemed irrevocably to have waived his or her entitlement to pursue such claim;12.in the event of termination of your employment (whether or not in breach of local labor laws), your right to vest in thePSUs under the Plan, if any, will terminate effective as of the date that you are no longer actively employed and will notbe extended by any notice period mandated under local law (e.g., active employment would not include a period of“garden leave” or similar period pursuant to local law); the Compensation Committee shall have the exclusive discretionto determine when you are no longer actively employed for purposes of your Award;13.the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendationsregarding your participation in the Plan, or your acquisition or sale of Common Stock;14.you are hereby advised to consult with your personal tax, legal and financial advisors regarding participation in the Planbefore taking any action related to the Plan;15.unless otherwise provided in the Plan or by the Company in its discretion, the PSUs and the benefits evidenced by thisAgreement do not create any entitlement to have the PSUs or any such benefits transferred to, or assumed by, anothercompany nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting theshares of the Company; and16.neither the Company, any Subsidiary nor any Affiliate of the Company shall be liable for any foreign exchange ratefluctuation between your local currency and the United States Dollar that may affect the value of the PSUs or of anyamounts due to you pursuant to the settlement of the PSUs or the subsequent sale of any shares acquired uponsettlement.2.Data Privacy. I hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form,of my personal data as described in this Agreement and any other Award grant materials by and among, as applicable, theemployer, the Company and its subsidiaries and affiliates for the exclusive purpose of implementing, administering andmanaging my participation in the Plan (“Data”).I understand that the Company and the employer may hold certain personal information about me, including, but notlimited to, my name, home address and telephone number, date of birth, social insurance number or other identification number,salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Awards or any other entitlementto shares of stock awarded, canceled, exercised, vested, unvested or outstanding in my favor, for the exclusive purpose ofimplementing, administering and managing the Plan.16 I understand that Data will be transferred to a third party plan administrator, or such other stock plan service provider asmay be selected by the Company in the future, which is assisting the Company with the implementation, administration andmanagement of the Plan. I understand that the recipients of the Data may be located in the United States or elsewhere, and thatthe recipients’ country (e.g., the United States) may have different data privacy laws and protections than my country. I understandthat if I reside outside the United States, I may request a list with the names and addresses of any potential recipients of the Data bycontacting my local human resources representative. I authorize the Company, the third party administrator and any other possiblerecipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan toreceive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administeringand managing my participation in the Plan. I understand that Data will be held only as long as is necessary to implement,administer and manage my participation in the Plan. I understand that if I reside outside the United States, I may, at any time, viewData, request additional information about the storage and processing of Data, require any necessary amendments to Data orrefuse or withdraw the consents herein, in any case without cost, by contacting in writing my local human resourcesrepresentative. Further, I understand that I am providing the consents herein on a purely voluntary basis. If I do not consent, or ifI later seek to revoke my consent, my employment status or service and career with the employer will not be adversely affected; theonly adverse consequence of refusing or withdrawing my consent is that the Company would not be able to grant me the Award orother awards or administer or maintain such awards. Therefore, I understand that refusing or withdrawing my consent may affectmy ability to participate in the Plan. For more information on the consequences of my refusal to consent or withdrawal of consent,I understand that I may contact my local human resources representative.3.Payment of Taxes. The following provisions supplement Section 7 of the Agreement entitled “Taxes.”3.1Regardless of any action the Company or your employer (the “Employer”) takes with respect to any or all income tax,your portion of social insurance, payroll tax, payment on account or other tax-related items related to your participationin the Plan and legally applicable to you (“Tax-Related Items”), you acknowledge that the ultimate liability for allTax-Related Items is and remains your responsibility and may exceed the amount actually withheld by the Company orthe Employer.3.2You further acknowledge that the Company and/or the Employer (1) make no representations or undertakingsregarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including, but not limitedto, the grant of the Award, the issuance of shares upon vesting/settlement of the Award, the subsequent sale of sharesacquired pursuant to such issuance and the receipt of any dividends or dividend equivalents; and (2) do not commit to,and are under no obligation to, structure the terms of the grant or any aspect of the Award to reduce or eliminate yourliability for Tax-Related Items or achieve any particular tax result.17 3.3Further, if you have become subject to tax in more than one jurisdiction between the date of grant and the date of anyrelevant taxable event, you acknowledge that the Company and/or the Employer (or former employer, as applicable)may be required to withhold or account for Tax-Related Items in more than one jurisdiction.3.4You authorize the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligationswith regard to all Tax-Related Items by one or a combination of the following: (1) withholding in shares to be issued orcash distributed upon vesting/settlement of the Award; (2) withholding from your wages or other cash compensationpaid to you by the Company and/or you; (3) withholding from the proceeds of the sale of shares acquired uponvesting/settlement of the Award either through a voluntary sale or through a mandatory sale arranged by the Company(on your behalf pursuant to this authorization).3.5To avoid negative accounting treatment, the Company may withhold or account for Tax-Related Items by consideringapplicable minimum statutory withholding amounts or other applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in shares, for tax purposes, you are deemed to have been issued the fullnumber of shares subject to the vested Award, notwithstanding that a number of the shares are held back solely for thepurpose of paying the Tax-Related Items due as a result of any aspect of your participation in the Plan.3.6You shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employermay be required to withhold or account for as a result of your participation in the Plan that cannot be satisfied by themeans previously described. The Company may refuse to issue or deliver the shares or the proceeds of the sale ofshares, if you fail to comply with this obligation.Section II. Country-Specific ProvisionsCanadaSecurities Law Notification. You are permitted to sell shares acquired under the Plan through the designated broker appointedunder the Plan, if any, provided that the resale of such shares takes place outside of Canada through the facilities of a national securitiesexchange on which the shares are listed (i.e., The New York Stock Exchange).Language Consent. The parties acknowledge that it is their express wish that the Plan, the Agreement and this Appendix A,as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectlyhereto, be drawn up in English.Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention («Plan, Agreement and Appendix A»), ainsique de tous documents, avis et18 procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présenteconvention.Data Privacy. The following provision supplements Section I.2 of this Appendix A.You hereby authorize the Company or the Company’s representatives to discuss with and obtain all relevant information fromall personnel, professional or not, involved in the administration and operation of the Plan. You further authorize the Company and anyAffiliate of the Company and the Compensation Committee to disclose and discuss the Plan with their advisors. You further authorizethe Company and any affiliate to record such information and to keep such information in your file.Foreign Asset Reporting Information. You are responsible for reporting foreign property (including shares acquired underthe Plan) on form T1135 (Foreign Income Verification Statement) if the total cost of your foreign property exceeds C$100,000 at anytime in the applicable tax year. For the 2013 tax year, the filing deadline is July 31, 2014. For the 2014 tax year and later, the formmust be filed by April 30th of the following year.ChinaPayment of PSUs. Notwithstanding any discretion in Section 11 of the Plan or in Section 2 of the Agreement andAppendix A, the grant of PSUs does not provide any right for you to receive shares and the PSUs are payable in cash only.Foreign Asset/Account Reporting Information. Effective from January 1, 2014, PRC residents are required to report toSAFE details of their foreign financial assets and liabilities, as well as details of any economic transactions conducted with non‑PRCresidents, either directly or through financial institutions. Under these new rules, you may be subject to reporting obligations forAwards acquired under the Plan and Plan-related transactions. It is your responsibility to comply with this reporting obligation and youshould consult your personal tax advisor in this regard.FinlandThere are no country-specific provisions.IndiaPayment of PSUs. Notwithstanding any discretion in Section 11 of the Plan and Section 2 of the Agreement, the grant ofPSUs does not provide any right for you to receive shares and the PSUs are payable in cash only.Exchange Control Information. You must repatriate to India the proceeds from the sale of shares acquired at vesting and anydividends received in relation to the shares within 90 days after receipt. You must obtain evidence of the repatriation of funds in theform of a foreign inward remittance certificate (the “FIRC”) from the bank where you deposited the foreign19 currency. You must retain the FIRC in your records to present to the Reserve Bank of India or your Employer in the event that proofof repatriation is requested.Foreign Assets Reporting Information. You are required to declare your foreign bank accounts and any foreign financialassets (including shares held outside India) in your annual tax return. It is your responsibility to comply with this reporting obligationand you should consult your personal advisor in this regard.MalaysiaDirector Notification Obligation. If you are a director of a Malaysian affiliate, you are subject to certain notificationrequirements under the Malaysian Companies Act. Among these requirements is an obligation to notify the Malaysian affiliate inwriting when you receive or dispose of an interest (e.g., an award under the Plan or shares) in the Company or any related company.Such notifications must be made within 14 days of receiving or disposing of any interest in the Company or any related company.Insider-Trading Information. You should be aware of the Malaysian insider-trading rules, which may impact youracquisition or disposal of shares or rights to shares under the Plan. Under the Malaysian insider-trading rules, you are prohibited fromacquiring or selling shares or rights to shares (e.g., an award under the Plan) when you are in possession of information which is notgenerally available and which you know or should know will have a material effect on the price of shares once such information isgenerally available.Data Privacy. The following provision replaces Section I.2 of this Appendix A.I hereby explicitly, voluntarily and unambiguously consentto the collection, use and transfer, in electronic or otherform, of my personal data as described in this Agreementand Appendix and any other Plan grant materials by andamong, as applicable, the Employer, the Company and anyof its other Subsidiaries or Affiliates or any third partiesauthorized by the same in assisting in the implementation,administration and management of my participation in thePlan.I may have previously provided the Company and theEmployer with, and the Company and the Employer mayhold, certain personal information about me, including, butnot limited to, my name, home address and telephonenumber, date of birth, socialSaya dengan ini secara eksplicit, secara sukarela dan tanpa sebarangkeraguan mengizinkan pengumpulan, penggunaan dan pemindahan,dalam bentuk elektronik atau lain-lain, data peribadi saya seperti yangdinyatakan dalam Perjanjian dan Lampiran ini dan apa-apa bahangeran Pelan oleh dan di antara, seperti mana yang terpakai, Majikan,Syarikat dan mana-mana Anak Syarikat yang lain atau SyarikatSekutu kami atau mana-mana pihak ketiga yang diberi kuasa olehyang sama untuk membantu dalam pelaksanaan, pentadbiran danpengurusan penyertaan saya dalam Pelan.Sebelum ini, saya mungkin telah membekalkan Syarikat dan Majikandengan, dan Syarikat dan Majikan mungkin memegang, maklumatperibadi tertentu tentang saya, termasuk, tetapi tidak terhad kepada,nama saya, alamat rumah dan nombor telefon,20  insurance number or other identification number, salary,nationality, job title, any shares of stock or directorshipsheld in the Company, the fact and conditions of myparticipation in the Plan, details of all RSUs or any otherentitlement to Shares awarded, cancelled, exercised, vested,unvested or outstanding in my favor (“Data”), for theexclusive purpose of implementing, administering andmanaging the Plan.I also authorize any transfer of Data, as may be required, toany external stock plan service provider as may be selectedby the Company in the future, which is assisting theCompany with the implementation, administration andmanagement of the Plan and/or with whom any sharesacquired upon vesting of RSUs are deposited. I acknowledgethat these recipients may be located in my country orelsewhere, and that the recipient’s country (e.g., the UnitedStates) may have different data privacy laws and protectionsto my country, which may not give the same level ofprotection to Data. I understand that I may request a listwith the names and addresses of any potential recipients ofData by contacting my local human resourcesrepresentative. I authorize the Company, the external stockplan service provider and any other possible recipientswhich may assist the Company (presently or in the future)with implementing, administering and managing myparticipation in the Plan to receive, possess, use, retain andtransfer Data, in electronic or other form, for the solepurpose of implementing, administering and managing myparticipation in the Plan. I understand that Data will be heldonly as long as is necessary to implement, administer andmanage my participation in the Plan. I understand that Imay, at any time, view Data, request additional informationabout the tarikh lahir, nombor insurans sosial atau nombor pengenalan lain,gaji, kewarganegaraan, jawatan, apa-apa saham atau jawatanpengarah yang dipegang dalam Syarikat, fakta dan syarat-syaratpenyertaan saya dalam Pelan, butir-butir semua RSU atau apa-apahak lain untuk Saham yang dianugerahkan, dibatalkan, dilaksanakan,terletak hak, tidak diletak hak ataupun yang belum dijelaskan bagifaedah saya ("Data"), untuk tujuan yang eksklusif bagi melaksanakan,mentadbir dan menguruskan Pelan.Saya juga memberi kuasa untuk membuat apa-apa pemindahan Data,sebagaimana yang diperlukan, kepada pembekal perkhidmatan pelansaham luar yang lain sebagaimana yang mungkin dipilih oleh Syarikatpada masa depan, yang membantu Syarikat dalam pelaksanaan,pentadbiran dan pengurusan Pelan dan/atau dengan sesiapa yangmendepositkan apa-apa saham yang diperolehi apabila RSU terletakhak. . Saya mengakui bahawa penerima-penerima ini mungkin beradadi negara saya atau di tempat lain, dan bahawa negara penerima(contohnya, Amerika Syarikat) mungkin mempunyai undang-undangprivasi data dan perlindungan yang berbeza daripada negara saya,yang mungkin tidak boleh memberi tahap perlindungan yang samakepada Data. Saya faham bahawa saya boleh meminta senarai namadan alamat mana-mana penerima Data yang berpotensi denganmenghubungi wakil sumber manusia tempatan saya. Saya memberikuasa kepada Syarikat, pembekal perkhidmatan pelan saham luar danmana-mana penerima lain yang mungkin membantu Syarikat (masasekarang atau pada masa depan) untuk melaksanakan, mentadbir danmenguruskan penyertaan saya dalam Pelan untuk menerima, memiliki,menggunakan, mengekalkan dan memindahkan Data, dalam bentukelektronik atau lain-lain, semata-mata dengan tujuan untukmelaksanakan, mentadbir dan menguruskan penyertaan saya dalamPelan. Saya faham bahawa Data akan dipegang hanya untuk tempohyang diperlukan untuk melaksanakan, mentadbir dan menguruskanpenyertaan saya dalam Pelan. Saya faham bahawa saya boleh, padabila-bila21 storage and processing of Data, require any necessaryamendments to Data or refuse or withdraw the consentsherein, in any case, without cost, by contacting in writing mylocal human resources representative, whose contact detailsare Cheng Liang Heng, cl.heng@enersys.com.sg, Further, Iunderstand that I am providing the consents herein on apurely voluntary basis. If I do not consent, or if I later seekto revoke my consent, my employment status or service andcareer with the Employer will not be adversely affected; theonly adverse consequence of refusing or withdrawing myconsent is that the Company would not be able to grantfuture RSUs or other equity awards to me or administer ormaintain such awards. Therefore, I understand that refusingor withdrawing my consent may affect my ability toparticipate in the Plan. For more information on theconsequences of my refusal to consent or withdrawal ofconsent, I understand that I may contact my local humanresources representative.masa, melihat Data, meminta maklumat tambahan mengenaipenyimpanan dan pemprosesan Data, meminta bahawa pindaan-pindaan dilaksanakan ke atas Data atau menolak atau menarik balikpersetujuan dalam ini, dalam mana-mana kes, tanpa kos, denganmenghubungi secara bertulis wakil sumber manusia tempatan saya, dimana butir-butir hubungannya adalah Cheng Liang Heng,cl.heng@enersys.com.sg. Selanjutnya, saya memahami bahawa sayamemberikan persetujuan di sini secara sukarela. Jika saya tidakbersetuju, atau jika saya kemudian membatalkan persetujuan saya,status pekerjaan atau perkhidmatan dan kerjaya saya dengan Majikantidak akan terjejas; satunya akibat buruk jika saya tidak bersetuju ataumenarik balik persetujuan saya adalah bahawa Syarikat tidak akandapat memberikan RSU pada masa depan atau anugerah ekuiti lainkepada saya atau mentadbir atau mengekalkan anugerah tersebut.Oleh itu, saya faham bahawa keengganan atau penarikan balikpersetujuan saya boleh menjejaskan keupayaan saya untuk mengambilbahagian dalam Pelan. Untuk maklumat lanjut mengenai akibatkeengganan saya untuk memberikan keizinan atau penarikan balikkeizinan, saya fahami bahawa saya boleh menghubungi wakil sumbermanusia tempatan saya.MexicoNature of Grant. The following provisions supplement Section I.1 (Nature of Grant) of this Appendix A:Acknowledgment of the Grant. In accepting the Award, you acknowledge that you have received a copy of the Plan and theAgreement, including this Appendix A, and that you have reviewed the Plan and the Agreement, including this Appendix A, in itsentirety and fully understand and accept all provisions of the Plan and the Agreement, including this Appendix A. You furtheracknowledge that you have read and specifically and expressly approve the terms and conditions of Section I.1 (Nature of Grant) ofthis Appendix A, in which the following is clearly described and established:(1) Your participation in the Plan does not constitute an acquired right.(2) The Plan and your participation in the Plan are offered by the Company on a wholly discretionary basis.22 (3) Your participation in the Plan is voluntary.(4) Neither the Company nor any Affiliate is responsible for any decrease in the value of the PSUs granted and/or sharesissued under the Plan.Labor Law Acknowledgment and Policy Statement. In accepting the PSUs, you expressly recognize that the Company,with registered offices at 2366 Bernville Road, Reading, Pennsylvania 19605, United States of America, is solely responsible for theadministration of the Plan and that your participation in the Plan and acquisition of shares does not constitute an employmentrelationship between you and the Company since you are participating in the Plan on a wholly commercial basis and your soleemployer is EnerSys de Mexico, S.A. de CV, Powersonic, S.A. de CV or Yecoltd, S de R.L. de CV (each, a “Mexican Subsidiary”).Based on the foregoing, you expressly recognize that the Plan and the benefits that you may derive from participation in the Plan donot establish any rights between you and your employer, a Mexican Subsidiary, and do not form part of the conditions of youremployment and/or benefits provided by such Mexican Subsidiary, and any modification of the Plan or its termination shall notconstitute a change or impairment of the terms and conditions of your employment.You further understand that your participation in the Plan is a result of a unilateral and discretionary decision of the Company;therefore, the Company reserves the absolute right to amend and/or discontinue your participation in the Plan at any time, without anyliability to you.Finally, you hereby declare that you do not reserve to yourself any action or right to bring any claim against the Company forany compensation or damages regarding any provision of the Plan or any benefits derived from the Plan; therefore, you grant a full andbroad release to the Company, its shareholders, officers, agents, legal representatives, and subsidiaries with respect to any claim thatmay arise.Spanish Translation.Reconocimiento de la Subvención. Al aceptar las Unidades de Acciones Restringidas (“PSU” por sus siglas en inglés), Ud.reconoce que ha recibido y revisado una copia del Términos y Condiciones, y reconoce, además, que acepta todas las disposiciones delTérminos y Condiciones. Ud. también reconoce que Ud. ha leído y aprobado de forma expresa los términos y condiciones establecidosen la Sección I.1 (“Nature of Grant”) en este Appendix A, que claramente dispone lo siguiente:(1) Su participación en el Plan no constituye un derecho adquirido;(2) El Plan y su participación en el Plan es ofrecido por la Compañía de manera completamente discrecional;(3) Su participación en el Plan es voluntaria; y(4) Ni la Compañía ni cualquiera subsidiaria es responsable de cualquier disminución del valor de las Unidades de AccionesRestringidas y/o las acciones emitidas bajo el Plan.23 Declaración y Reconocimiento de Derecho y Política Laboral. Al aceptar las Unidades de Acciones Restringidas, Ud.reconoce que la Compañía, con domicilio social en 2366 Bernville Road, Reading, Pennsylvania 19605, United States of America,EE.UU., es el único responsable de la administración del Plan y su participación en el Plan y cualquier adquisición de las acciones bajoel Plan no constituyen una relación laboral entre Ud. y la Compañía, porque Ud. está participando en el Plan en su totalidad sobre unabase comercial y su único empleador es EnerSys de Mexico, S.A. de CV, Powersonic, S.A. de CV or Yecoltd, S. de R.L. de CV.Basado en lo anterior, Ud. expresamente reconoce que el Plan y los beneficios que pueden derivarse de la participación en el Plan noestablecen algún derecho entre Ud. y el Empleador, EnerSys de Mexico, S.A. de CV, Powersonic, S.A. de CV or Yecoltd, S. de R.L.de CV, y que no forman parte de las condiciones de empleo y/o beneficios provenidos por EnerSys de Mexico, S.A. de CV,Powersonic, S.A. de CV or Yecoltd, S. de R.L. de CV, y cualquier modificación del Plan o la terminación de su contrato noconstituirá un cambio o deterioro de los términos y condiciones de su empleo.Además, Ud. comprende que su participación en el Plan es causado por una decisión discrecional y unilateral de la Compañía,por lo que la Compañía se reserva el derecho absoluto de modificar y/o suspender su participación en el Plan en cualquier momento,sin responsabilidad alguna a Ud.Finalmente, Ud. manifiesta que no se reserva ninguna acción o derecho que origine una demanda en contra de la Compañía,por cualquier compensación o daño en relación con cualquier disposición del Plan o de los beneficios derivados del mismo, y enconsecuencia usted otorga un amplio y total descargo de responsabilidad a la Compañía, sucursales, oficinas de representación, susaccionistas, directores, agentes y representantes legales, y Subsidiarias, con respecto a cualquier demanda que pudiera surgir.PolandExchange Control Notice. Polish residents holding foreign securities (including shares) and maintaining accounts abroad mustreport information to the National Bank of Poland on transactions and balances of the securities and cash deposited in such accounts ifthe value of such securities and cash (when combined with all other assets held abroad) exceeds PLN 7,000,000. If required, thereports must be filed on a quarterly basis on special forms available on the website of the National Bank of Poland.If you transfer funds in excess of €15,000 into Poland in connection with the sale of shares under the Plan, the funds must betransferred via a bank account. You are required to retain the documents connected with a foreign exchange transaction for a period offive years, as measured from the end of the year in which such transaction occurred. If you hold shares acquired under the Plan and/ormaintain a bank account abroad, you will have reporting duties to the National Bank of Poland.24 SwitzerlandSecurities Law Notice. The grant of the PSUs is considered a private offering in Switzerland and is therefore not subject tosecurities registration in Switzerland.25 EH Europe GmbH - Head OfficeLöwenstrasse 328001 ZürichSchweizTelefon +41 (0)44 215 74 10Fax +41 (0)44 215 74 11www.enersys.com Employment Agreement dated 21/12/2015 between EH Europe GmbH Baarerstrasse 18 CH-6300 Zug hereinafter: "Employer" and Holger Paul Aschke Rainstrasse 14 CH-6314 Unterägeri hereinafter: "Executive" concerning the position of President EnerSys EMEA1Gerichtsstand: Zürich Bankverbindung: UBS AG, ZürichSitz der Gesellschaft: Zürich Kontonummer: 0230 4364 8801 PGeschäftsführer: Todd Sechrist, Richard W. Zuidema, Holger Paul Aschke SWIFT: UBSCHZH80AHandelsregister: Kanton Zürich CH-020.4.034.470-1 CHF IBAN: CH31 0023 0230 4364 8801 PVAT Nummer: 656 904 2Function, Scope of Employment and Duties1.1 Executive takes on the positions and functions of the Managing Director of EH Europe GmbH and President EnerSys EMEA. In such capacity,Executive shall be subordinated to Chief Operating Officer (“COO”) of EnerSys Primary place of work is Zug, but Executive will be required to travel asneeded for business reasons.1.2 The duties and responsibilities of Executive will include overall and daily management and direction of Employer's and EnerSys' operations inEurope, the Middle East and Africa. Executive shall take on all other duties and obligations that are usually involved with his functions, all inaccordance with the terms and conditions of this Agreement, with the articles of association of Employer, with the law and with the instructions anddirectives of the COO of EnerSys.1.3 Unless otherwise provided, Executive shall directly report to the COO of EnerSys.1.4 Executive shall carefully perform the work within his responsibility and devote all of his efforts for work and working time to Employer andEnerSys respectively. He shall spend the time which is required for the careful performance of his duties and obligations without being restricted bybusiness working hours.2 Exclusivity2.1 Any existing or new engagement in any other or secondary employment, occupation or consulting activity, including but not limited to activitiesas advisor, employee, member of a board of directors as well as the exercise of a public office or a function in a professional association, is subject to theprior approval of the COO of EnerSys.2.2 During the term of his employment Executive shall not directly or indirectly participate in any company which competes with EnerSys. Executivemay however, buy and hold participations in listed companies, as long as these investments are less than $100,000 US and do not provide Executivewith the opportunity to influence the management of such a listed company competing with Employer.3 Start of Work, Employment Term3.1 This Agreement is made with effect as of 1 January 2016. It replaces the existing employment agreement between Employer and Executive dated 1May 2007 which will terminate as per 31 December 2015.3.2 This Agreement continues for an indefinite period of time. It may be terminated by either Party with 12 months' notice as per the end of eachcalendar month.3.3 There is no probation period.3.4 For the calculation of age of service, Executive's activities for Hawker GmbH from 31 October 1992 until 30 April 2007 and his activities in otherfunctions for Employer from 1 May 2007 until 31 December 2015 will be fully taken into account.34 Salary4.1 Executive shall be entitled to a fixed gross salary of CHF 330,000 per year (the "Base Remuneration"), payable after deduction of Executive'scontributions to the social insurances and pensions scheme under applicable laws and regulations, in twelve identical installments at the end of eachcalendar month.4.2 The Base Remuneration compensates for the entire working time necessary for carrying out and performing the duties and obligations ofExecutive's position and function.4.3 During his employment hereunder, Executive will be entitled to a bonus of up to 70 per cent of the Base Remuneration as provided in EnerSys'Management Incentive Plan, as may be amended from time to time. Such amount shall be payable in accordance to such plan in Swiss francs, less anycontributions or deductions required under applicable social contributions laws on pension schemes.4.4 Executive will be able to participate in EnerSys Equity Plan (EIP) on the same basis as other senior Managers of the EnerSys Group. Executiveacknowledges that all awards granted under the EIP, if any, are at the sole discretion of the Board of Directors of EnerSys and are subject to the terms ofthe EIP and any grant agreement.4.5 In addition to his base remuneration and the bonus, Executive shall receive an annual fixed allowance, as Cost of living and Housing allowance, inthe amount of CHF 105.000 paid in twelve (12) equal instalments.5 Car AllowanceEmployer shall provide Executive with, or bear the cost of, one company car in accordance with Employer's policies as in effect from time to time. Suchcompany car can also be used for private purposes. Employer shall bear all reasonable costs for service, maintenance and petrol for the vehicle. Alternatively,Executive may opt for a non-pensionable car cash allowance in accordance with and subject to the terms in place in Switzerland.6 ExpensesEmployer shall compensate Executive for all reasonable expenses arising out of the performance of his duties under this Agreement, which are adequatelysupported by documentation and in compliance with the current company expense reimbursement policy. The settlement shall be made as per the end of eachmonth.7 VacationExecutive shall be entitled to 30 days vacation per calendar year. Executive shall determine the time of vacation in accordance with his duties and incompliance with the company’s than existing vacation policy.8 Intellectual Property Rights8.1 All inventions, designs, creations, data, findings, works, computer-programs, marks, methods, documents and the like which Executive solely orjointly with others, makes, conceives or contributes to while performing his tasks and activities hereunder belong exclusively to Employer regardless ofwhether or not they are protected under applicable laws and4regulations. To the extent Employer is not entitled to the rights in such work results on basis of Art. 332 para. 1 CO Executive assigns and transfers anyrights to and in connection with such work results to Employer. Employer is free to exploit, modify and use such work results at its own discretion.Subject only to Art. 332 para. 4 CO, Executive is not entitled to any additional remuneration for the work results he has made, conceived or contributedto.8.2 During and after the term of his employment, if reasonably required, Employee will support Employer in the process of patenting inventions orregistering other intellectual property rights he made or contributed to during his employment hereunder.9 Disability to Work9.1 Executive shall immediately inform Employer if he is unable to work and let Employer know the estimated duration of and the reasons for hisinability to work.9.2 In the event of illness, Executive shall upon request, but in any event after the third calendar day of the beginning of any inability to work, provideEmployer with a medical certificate on his inability to work and the estimated duration of it. If the inability to work lasts longer than indicated in themedical certificate Executive shall submit a new medical certificate.9.3 Employer shall be entitled at any time to request that Executive undertake a medical examination with a medical examiner named by Employerand at Employer's cost and Executive shall undertake such medical examination.9.4 If Executive is unable to perform his work due to illness, accident or any other cause through no fault of his own, Employer shall continue to paythe agreed salary, allowance included, for a maximum period of 6 months. Any salary payments by third parties for the said period, particularly underaccident or health or medical insurance policies taken out by Employer, shall be on account of Employer's salary payment obligation.10 Social Security Insurances10.1 Employer will insure Executive with Swiss social security insurances (such as AHV/IV, ALV, EO etc.) and pension fund schemes in line withSwiss legal requirements. Executive's contributions to the social insurances and pensions scheme under applicable laws and regulations shall bededucted from the salary according to Section 4.1 and bonus according to Section 4.3 or other payments subject to social security contributions andremitted by Employer directly to the competent social insurance institution or pension fund.10.2 Employer will insure Executive against occupational and non-occupational accidents in line with Swiss legal requirements. All costs of suchinsurance will be borne by the Employer.11 Director’s liability InsuranceExecutive will be have coverage as may be provided for by Employer’s directors and officers liability insurance policy as may be in place from time to time.512 Confidentiality12.1 Executive shall treat as confidential and not disclose to others, or use for Executive's own purposes or for the purposes of others, any businessmatters of Employer or EnerSys-Group.12.2 Business matters as referred to above include manufacturing secrets, business secrets and all other facts that are relevant for the business and notknown to the public and either of a confidential nature (such as addresses of employees, suppliers and customers, agreements and their terms andconditions, accounting figures and balance sheet figures, etc.) or have been indicated to Executive as being confidential.12.3 This confidentiality obligation will remain effective after the termination of this Agreement without limitation and irrespective of the cause oftermination.12.4 Executive must keep in safe custody any documentation on business matters of Employer or EnerSys-Group and shall surrender it to Employerupon first request, at the latest at the end of this Agreement, and without keeping any copies. Wherever copies cannot be surrendered to Employer (e.g.digital copies, data carriers or the like) such copies must be destroyed at the time of request to surrender even if destruction of copies has not beenspecifically requested by Employer.13 Non-Compete / Non-Solicitation13.1 Due to the fact that in his function Executive has access to the clientele and to the manufacturing and business secrets of Employer EnerSys, heundertakes, during the term of this Agreement and for 12 months after its termination, to refrain from any activity in any part of the world that competeswith the business of Employer or EnerSys-Group, in particular in the field of batteries and chargers and related accessories and services, and not tosolicit employees from Employer or EnerSys-Group for his own business or the business of any third parties.13.2 In particular, Executive undertakes:-not to participate, directly or indirectly, financially or otherwise, in any enterprise which develops, manufactures, offers, or distributes products, orprovides services similar to those of Employer or EnerSys-Group or which otherwise competes with the business of Employer or EnerSys-Group;-not to be active, fully or partially, for such an enterprise, be it as an employee, representative, adviser or otherwise; and-not to directly or indirectly establish such an enterprise.13.3 Executive violates the obligation not to compete, Employer has the right to forbid Executive to start or continue activities which are contrary tohis non-competition obligation, and may, in particular, force Executive to abandon the new occupation (specific performance, "Realexekution"). Thenon-compete period according to this section shall be extended by the period of non-compliance.614 Data ProtectionExecutive acknowledges and agrees that Employer may store, transfer, change and destroy all of his personal data in connection with this Agreement. Heparticularly acknowledges and agrees that Employer has the right to transfer any of his data to EnerSys or companies of EnerSys-Group in Switzerland orabroad.15 Existing Employment Agreements between Executive and EnerSys Group CompaniesThis Agreement fully replaces with effect as of 1 January 2016 the (1) existing employment agreement between Employer and Executive dated 1 May 2007(see Section 3.1), (2) employment agreement with Hawker GmbH dated 9 April 2002 and the related suspension agreement dated 7 April 2007, as well as (3)the pension agreement dated 4 April 2003, which are all deemed terminated with effect as of 31 December 2015. Executive confirms that except for his(running) entitlements under the existing employment agreement with Employer dated 1 May 2007, there are no outstanding claims or demands under suchemployment agreement against Hawker GmbH, Employer or any other company, affiliate or subsidiary of of EnerSys16 Amendments to Agreement, Applicable Law, Jurisdiction16.1 No oral agreements exist in addition to this Agreement. Any amendments or additions to this Agreement must be in writing.16.2 Should any one or more provisions of this Termination Agreement be or become invalid, the other provisions shall not be affected. Invalidprovisions shall be substituted with provisions which are most closely in line with the intended purpose.16.3 This Agreement shall be governed by the laws of Switzerland.16.4 Any disputes arising out of this Agreement shall be submitted to the courts at the domicile or seat of the defendant or at the place whereExecutive usually carries out his work.Attachment: German Pension statement.7Signatures EmployerEH Europe GmbH ______________________________________________________________________________Name: Title:Date:Name: Silvia Minafra Title: HR Director EMEADate: Executive _______________________________________ Name: Holger Paul Aschke Title: President EnerSys EMEADate: Exhibit 12.1RATIO OF EARNINGS TO FIXED CHARGESEnerSysComputation of Ratio of Earnings to Fixed ChargesThe following table sets forth the ratio of earnings to fixed charges of the Company for the five fiscal years ended March 31, 2016: Fiscal year ended March 31, 2016 2015 2014 2013 2012 (dollars in thousands)Earnings: Income before provision for income taxes $181,937 $249,339 $163,747 $230,233 $191,259Plus: fixed charges 35,399 33,624 29,792 29,977 27,821 Total $217,336 $282,963 $193,539 $260,210 $219,080 Fixed charges: Interest expense including capitalized interest $23,869 $21,633 $18,151 $18,947 $17,281Interest within rental expense 11,530 11,991 11,641 11,030 10,540 Total $35,399 $33,624 $29,792 $29,977 $27,821 Ratio of earnings to fixed charges 6.14 8.42 6.50 8.68 7.87NOTE: These ratios include EnerSys and its consolidated subsidiaries. The ratio of earnings to fixed charges was computed by dividing earnings by fixedcharges for the periods indicated, where “earnings” consist of (1) earnings from operations before income taxes plus (2) fixed charges, and “fixed charges”consist of (a) interest, whether expensed or capitalized, on all indebtedness, including non-cash interest accreted on Convertible Notes of $1,330, $8,283,$7,614, $7,001 and $6,436, respectively, for fiscal 2016 through fiscal 2012, (b) amortization of premiums, discounts and capitalized expenses related toindebtedness, and (c) portion of operating lease rental expense considered to be representative of the interest factor. Interest related to uncertain tax positionsis included in the tax provision in the Company’s Consolidated Statements of Income and is excluded from the computation of fixed charges.Exhibit 21.1ENERSYSSubsidiariesEnerSystem Argentina S.A. ArgentinaEnerSys Australia Pty Ltd. AustraliaICS Industries Pty Ltd AustraliaICS Sheet Metal Pty Ltd. AustraliaInternational Communication Shelters Australasia Pty Ltd. AustraliaLancord Pty Ltd. AustraliaLenmic Pty Ltd. AustraliaNational Infrastructure Pty Ltd. AustraliaNational Infrastructure Services Pty Ltd. AustraliaPowercom (NSW) Pty Ltd. AustraliaEnerSys GmbH AustriaEnerSys SPRL BelgiumEnerSystem do Brazil Ltda. BrazilEnerSys Participacoes Ltda. BrazilIndustrial Battery Holding Ltda. BrazilEnerSys AD (99.69%) * BulgariaEnerSys Canada Inc. CanadaEnerSys Cayman Euro L.P. Cayman IslandsEnerSys Cayman Holdings L.P. Cayman IslandsEnerSys Cayman Inc. Cayman IslandsEnerSys Cayman L.P. Cayman IslandsYCI, Inc. Cayman IslandsEnerSystem Chile Ltda. ChileEnerSys (Chaozhou) Huada Batteries Company Limited ChinaEnerSys (China) Huada Batteries Company Limited ChinaEnerSys (Chongqing) Huada Batteries Company Limited ChinaEnerSys (Jiangsu) Huada Batteries Company Limited (94.7%) * ChinaEnerSys (Yangzhou) Huada Batteries Co. Ltd. ChinaShenzhen Huada Power Supply Mechanical & Electrical Co. Ltd. ChinaEnerSys, s.r.o. Czech RepublicEnerSys A/S DenmarkEnerSys Europe Oy FinlandEnerSys SARL FranceGAZ GmbH GermanyHawker GmbH GermanyEnerSys AE GreeceEnerSys Asia Limited Hong KongEnerSys Hungária Kft. HungaryEnerSys Battery Private Limited IndiaEnerSys India Batteries Private Ltd. IndiaEnerSys S.r.l. ItalyEnerSys Holdings (Luxembourg) Sarl LuxembourgEnerSys Luxembourg Finance Sarl LuxembourgDCPM Engineering Sdn Bhd MalaysiaEnerSys Malaysia Sdn Bhd MalaysiaMIB Energy Sdn Bhd MalaysiaUTS Holdings Sdn Bhd MalaysiaUTS Technology (JB) Sdn Bhd MalaysiaUTS Technology (PG) Sdn Bhd MalaysiaEnerSys de Mexico, S de R.L. de CV MexicoEnerSys de Mexico II, S de R.L. de CV MexicoPowersonic, S de R.L. de CV MexicoYecoltd, S. de R.L. de CV MexicoENAS Industrial Batteries Morocco Sarl MoroccoEnerSys AS NorwayEnerSys sp. z o.o. PolandPowersafe Acumuladores Industrialis Unipessoal, Lda. PortugalEnerSys CJSC RussiaBattery Power International Pte Ltd. SingaporeEnerSys Reserve Power Pte. Ltd. SingaporeIE Technologies Pte Ltd. SingaporeEnerSys, s.r.o. Slovak RepublicBattech (Pty) Ltd. (50.1%) * South AfricaBattery Technologies (Pty) Ltd. South AfricaAcumuladores Industriales EnerSys SA SpainEnerSys AB SwedenPurcell Systems International AB SwedenEH Batterien AG SwitzerlandEH Europe GmbH SwitzerlandEnerSys BV The NetherlandsEnerSys Assad Sarl (51%) * TunisiaEnersys Akü Sanaya Dis Ticaret Limited Sirketi TurkeyEnerSys LLC UkraineABSL Power Solutions Ltd. United KingdomEnerSys Holdings UK Ltd. United KingdomEnerSys Ltd. United KingdomABSL Power Solutions Inc. DelawareEnerSys Advanced Systems Inc. DelawareEnerSys Capital Inc. DelawareEnerSys Delaware Inc. DelawareEnerSys Delaware LLC I DelawareEnerSys Delaware LLC II DelawareEnerSys Delaware LLC III DelawareEnerSys Delaware LLC IV DelawareEnerSys Energy Products Inc. DelawareEnerSys European Holding Co. DelawareEnerSys Mexico Holdings LLC DelawareEnerSys Mexico Management LLC DelawareEsfinco, Inc. DelawareEsrmco, Inc. DelawareHawker Powersource, Inc. DelawareHawker Power Systems, Inc. DelawarePurcell Systems, Inc. DelawareQuallion LLC DelawareNew Pacifico Realty, Inc. Nevada*These entities are majority-owned by EnerSys with the remaining interests held by third parties.Exhibit 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements:(1)Registration Statement (Form S-8 No. 333-168717) pertaining to the EnerSys 2010 Equity Incentive Plan,(2)Registration Statement (Form S-3 No. 333-151000) of EnerSys,(3)Registration Statement (Form S-8 No. 333-143209) pertaining to the EnerSys 2006 Equity Incentive Plan, and(4)Registration Statement (Form S-8 No. 333-120660) pertaining to the EnerSys Employee Stock Purchase Plan and EnerSys 2004 Equity IncentivePlan;of our reports dated May 31, 2016, with respect to the consolidated financial statements and schedule of EnerSys and the effectiveness of internal controlover financial reporting of EnerSys included in this Annual Report (Form 10-K) of EnerSys for the year ended March 31, 2016./s/ Ernst & Young LLPPhiladelphia, PennsylvaniaMay 31, 2016EXHIBIT 31.1CERTIFICATION OF THE CHIEF EXECUTIVE OFFICERPURSUANT TO RULE 13A-14(A)/15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934I, David M. Shaffer, certify that:1.I have reviewed this Annual Report on Form 10-K of EnerSys;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures and internalcontrols over financial reporting for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financialreporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. ENERSYS By /s/ David M. Shaffer David M. Shaffer Chief Executive OfficerDate: May 31, 2016EXHIBIT 31.2CERTIFICATION OF THE CHIEF FINANCIAL OFFICERPURSUANT TO RULE 13A-14(A)/15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934I, Michael J. Schmidtlein, certify that:1.I have reviewed this Annual Report on Form 10-K of EnerSys;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures and internalcontrols over financial reporting for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financialreporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. ENERSYS By /s/ Michael J. Schmidtlein Michael J. Schmidtlein Chief Financial OfficerDate: May 31, 2016EXHIBIT 32.1CERTIFICATION OF THE CHIEF EXECUTIVE OFFICERAND CHIEF FINANCIAL OFFICERPURSUANT TO18. U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002I certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of EnerSys onForm 10-K for the fiscal year ended March 31, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934and that information contained in such Form 10-K fairly presents, in all material respects, the financial condition and results of operations of EnerSys. ENERSYS By /s/ David M. Shaffer David M. Shaffer Chief Executive Officer By /s/ Michael J. Schmidtlein Michael J. Schmidtlein Chief Financial OfficerDate: May 31, 2016

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