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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended January 31, 1998
Commission File Number 1-5452
ONEIDA LTD.
163-181 KENWOOD AVENUE
ONEIDA, NEW YORK 13421-2899
(315) 361-3636
NEW YORK 15-0405700
(State of Incorporation) (I.R.S. Employer
Identification No)
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange
Title of Class on which registered
Common Stock, par value New York Stock Exchange
$1.00 per share with
attached Preferred Stock
purchase rights
Securities registered pursuant to Section 12(g) of the Act:
6% Cumulative Preferred Stock, par value $25 per share
(Title Of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant, based on a closing price of $30.25 per share as reported on the New
York Stock Exchange Composite Index on April 17, 1998 was $494,904,943.
The number of shares of Common Stock ($1.00 par value) outstanding as of April
17, 1998 was 16,866,693.
Documents Incorporated by Reference
1. Portions of Oneida Ltd.'s Annual Report to Stockholders for the fiscal year
ended January 31, 1998 (Parts I and II of Form 10-K).
2. Portions of Oneida Ltd.'s Definitive Proxy Statement dated April 24, 1998
(Part III of Form 10-K).
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PART I
ITEM 1. BUSINESS.
a. General.
The Corporation (unless otherwise indicated by the context, the term
"Corporation" means Oneida Ltd. and its consolidated subsidiaries) was
incorporated in New York in 1880 under the name Oneida Community, Limited. In
1935, the Corporation's name was changed to Oneida Ltd. It maintains its
executive offices in Oneida, New York.
Since its inception, the Corporation has manufactured and marketed tableware -
initially sterling and later silverplated and stainless steel products. By
acquiring subsidiaries, entering into strategic distributorship arrangements and
expanding its own tableware lines, the Corporation has diversified into the
manufacture and import of commercial and retail china dinnerware and the
marketing of other tableware and gift items, most notably, crystal stemware,
barware and giftware.
b. Industry Segments.
The Corporation operates in one principal industry, Tableware Products. Until
early 1997, the Corporation operated in two principal industries, Tableware and
Industrial Wire Products, but on February 12, 1997, the Corporation sold its
Camden Wire subsidiary to International Wire Group, Inc. of St. Louis, Missouri.
Information regarding the Corporation's operations by industry segment for the
years ended January 31, 1998, January 25, 1997 and January 27, 1996 is set forth
on page 24 of the Corporation's Annual Report to Shareholders for the year ended
January 31, 1998, parts of which are incorporated herein by reference.
c. Narrative Description of Business.
Principal Products and Markets.
The Corporation is organized to serve three markets: consumer, foodservice and
international. This is accomplished by a corporate organizational structure
designed around three marketing focal points: Consumer Division; Foodservice
Division and International Division.
Consumer: Consumer operations focus on individual consumers, offering a
variety of tabletop and giftware products including stainless steel,
silverplated, sterling and color-handle resin flatware; silverplated and
stainless steel holloware; dinnerware and crystal stemware, barware and
decorative pieces.
Consumer flatware and holloware are manufactured primarily at the Corporation's
facilities in Sherrill, New York. Its operations have been harmonized with the
Corporation's other two North American manufacturing facilities to maximize the
efficiency of producing a comprehensive product line for domestic and
international markets. Production at Oneida Canada, Limited, a wholly-owned
subsidiary located in Niagara Falls, Ontario, has been integrated with
operations at the Sherrill plant, with each facility manufacturing complementary
items in similar product lines. Oneida Mexicana, S.A., located in
Toluca, Mexico, manufactures consumer flatware patterns which are not produced
at the Corporation's other facilities. The Corporation also imports flatware and
holloware products from several international sources.
In late 1997, the Corporation entered the casual dinnerware market, introducing
over 30 patterns of dinnerware grouped into three distinct lines ranging from
elegant to basic restaurant style to mix and match. The Restaurant Classics
line is manufactured by the Corporation's subsidiary Buffalo China, Inc.,
located in Buffalo, New York. The Corporation imports two other lines of
consumer dinnerware from several international sources.
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In September 1997, the Corporation began acting as the exclusive distributor of
Schott Zwiesel crystal products to the consumer markets in the United States,
Mexico and the Caribbean. Schott Zwiesel is a German manufacturer of fine
crystal stemware, barware and decorative pieces. The corporation will market
Schott Zwiesel's crystal products under both the Schott Zwiesel and Oneida
names. In combination with this exclusive distributorship, the Corporation
purchased a 25.1% ownership interest in Schott Zwiesel Glaswerke, AG, the German
corporation responsible for the production of Schott Zwiesel crystal tableware
products. The Corporation's purchase of the interest in Schott Zwiesel
Glaswerke, AG is not material. In addition to the distribution of Schott
crystal, the Corporation has and will continue to import other crystal stemware,
barware and decorative pieces from several international sources for sale under
the Oneida name.
The Corporation's wide-ranging consumer marketing activities include both
Consumer Retail and Consumer Direct operations.
The Corporation's Consumer Retail operations serve retail accounts of all kinds,
including national and regional department store chains, mass merchandise and
discount chains and stores, specialty shops, catalog showrooms and small, local
establishments. Most consumer orders are fulfilled directly by the Corporation
from its primary distribution center located in Sherrill, New York. For some
accounts, however, orders are fulfilled by one of the Corporation's two other
distribution centers which are located in Ontario, California and Nashville,
Tennessee.
The Corporation's Consumer Direct operations include Special Sales, which
focuses on serving business customers in the premium, incentive, mail order and
direct selling markets. Consumer Direct also includes Kenwood Silver Company,
Inc., a wholly-owned subsidiary which plays a significant role in the
marketing of the Corporation's products through its operation of a chain of
factory outlet stores. Kenwood Silver presently operates 62 Oneida Factory
Stores in resort and destination shopping areas across the United States.
The Consumer Division is exploring opportunities to capitalize on the ONEIDA
name in new product categories. The Corporation has a license agreement with
Robinson Knife Manufacturing Co. whereby Robinson Knife will market a line of
specialty kitchen tools and accessories under the ONEIDA name to mass market,
department and specialty stores. Neither the terms nor the effect of the
Robinson Knife License Agreement is material. In May 1997, the Corporation
purchased the assets of its long-time business partner, Encore Promotions, Inc.
Encore Promotions runs supermarket redemption programs featuring the ONEIDA name
on flatware, dinnerware, cutlery, cookware, linens, and other related household
items. The Corporation's purchase of the assets of Encore Promotions, Inc. was
not material.
Foodservice: Foodservice operations focus on all types of dining
establishments, offering a variety of stainless steel and silverplated flatware
and holloware; vitreous, porcelain and bone dinnerware; and crystal stemware and
barware.
Flatware for the foodservice market is sourced primarily from the Corporation's
manufacturing facilities in Sherrill, Niagara Falls and Toluca, while
foodservice holloware is primarily imported. Buffalo China, Inc., a subsidiary
located in Buffalo, New York, is a leading manufacturer of vitreous china for
the foodservice industry. Buffalo China also owns a subsidiary located in
Juarez, Mexico. This subsidiary, Ceramica de Juarez, S.A., produces bisque
china which is finished in Buffalo, as well as finished, undecorated holloware
items.
In November 1996, the Foodservice Division was expanded by the acquisition of
substantially all of the assets of THC Systems, Inc., a leading importer and
marketer of vitreous china and porcelain dinnerware for the foodservice
industry, that does business under the Rego tradename.
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The Foodservice Division is also the exclusive distributor of certain china
dinnerware products manufactured by Schonwald and Noritake Co., Inc. for the
United States foodservice and institutional markets. In September 1997, the
Corporation began acting as the exclusive distributor of Schott Zwiesel crystal
products to the foodservice and institutional markets in the United States and
Mexico. Schott Zwiesel is a German manufacturer of fine crystal stemware and
barware. In combination with this exclusive distributorship, the Corporation
purchased a 25.1% ownership interest in Schott Zwiesel Glaswerke, AG, the German
corporation responsible for the production of Schott Zwiesel crystal tableware
products. The Corporation's purchase of the interest in Schott Zwiesel
Glaswerke, AG is not material.
The Foodservice Division serves foodservice and institutional accounts of all
kinds, including restaurants, hotels, resorts, convention centers, food
distributors, airlines, cruiselines and hospitals. While most foodservice
orders are filled directly by the Corporation from its primary distribution
center in Sherrill, New York, some orders are fulfilled by the Corporation's
Buffalo China subsidiary from its Buffalo, New York facility or one of the
Corporation's other distribution centers which are located in Ontario,
California and Nashville, Tennessee. The Corporation also utilizes third party
warehouses located in Charlotte, North Carolina, Miami, Florida, Fond du Lac,
Wisconsin and Toronto, Canada to service certain foodservice customers.
International: International operations span both the consumer and
foodservice markets described above. The International Division directs the
marketing and sale of the Corporation's domestically manufactured and
internationally sourced flatware, holloware, dinnerware, and crystal products
throughout the world.
The Corporation owns 88% of Oneida International, Inc., a corporation formed
to market tabletop products of Italian design, some of which are manufactured in
Italy, while others are sourced internationally. Oneida International, Inc.
markets these products through its wholly-owned Italian subsidiary, Sant'Andrea
S.r.l., in the international foodservice market. In January 1998, Sant'Andrea
S.r.l. acquired a long-time business partner, Table Top Engineering & Design,
S.r.l. ("TTE&D"). TTE&D has been Sant'Andrea's primary source for product
development and manufacturing since Sant'Andrea's formation approximately ten
years ago. In addition to foodservice products, TTE&D will assist in the
development of high-end giftware lines for various consumer markets. The
acquisition of TTE&D is not material.
The foodservice and consumer markets in Mexico and Central America are served by
the Corporation's subsidiary, Oneida Mexicana, S.A., while the foodservice and
consumer markets in the United Kingdom are served by Oneida U.K., a branch
of the Corporation. In addition, the Corporation also uses a network
of independent distributors to market and sell the Corporation's foodservice and
consumer products in countries where the Corporation does not have offices or
employees of its own.
International orders for both foodservice and consumer products are fulfilled by
the Corporation from a variety of locations, including the Corporation's United
States distribution centers in Sherrill, New York and Nashville, Tennessee, as
well as the Corporation's international facilities in Toluca, Mexico, Bangor,
Northern Ireland and Vercelli, Italy. In addition, many orders are shipped
directly from the suppliers to the Corporation's international customers.
The percentages of consumer and foodservice sales to total consolidated sales
for the fiscal years, which end in January, are as follows:
Consumer: 1998 1997 1996
57% 60% 65%
Foodservice: 1998 1997 1996
43% 40% 35%
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Raw Materials.
The principal raw materials used by the Corporation for metal tableware are
stainless steel, brass, silver and gold. For china, they are various clays,
flint, aluminum oxide and glass frite. These materials are purchased in the
open market to meet current requirements and have historically been available in
adequate supply from multiple sources. The Corporation experienced no
significant or unusual problems in the purchase of raw materials during fiscal
1998. Although the Corporation has successfully met its raw materials
requirements in the past, there may in the future be temporary shortages of
raw materials due to a number of factors such as transportation disruptions or
production or processing delays. While it is impossible to predict the timing
or impact of future shortages, such shortages have not in the past had any
material adverse effects on the Corporation's operations.
Intellectual Property and Licenses.
The Corporation owns and maintains many design patents in the United States and
foreign countries. These patents, along with numerous copyrights, protect the
Corporation's product designs and decorations. In addition, the Corporation has
registered its most significant trademarks in the United States and many foreign
countries. The consumer, foodservice and international operations use a number
of trademarks and tradenames which are advertised and promoted extensively
including ONEIDA, BUFFALO CHINA, COMMUNITY, DJ, HEIRLOOM, LTD, NORTHLAND, REGO,
THC, ROGERS and SANT'ANDREA. Taken as a whole, the Corporation's intellectual
property, especially the goodwill associated with the ONEIDA name, is a
material, although intangible, corporate asset.
Seasonality of Business.
Although consumer operations normally do a greater volume of business during
October, November and December, primarily because of holiday-related orders for
tableware products, the total tableware business is not considered seasonal.
Customer Dependence.
No material part of the Corporation's tableware business is dependent upon a
single customer, the loss of which would have a materially
adverse effect. Sufficient inventories of tableware products are maintained by
the Corporation to respond promptly to orders.
Backlog Orders.
Tableware operations had order backlogs of $15,347,000 as of April 4, 1998 and
$15,892,000 as of April 5, 1997. This backlog is expected to be filled during
the current fiscal year, principally in the first quarter. The amount of
backlog is reasonable for the tableware industry.
Market Conditions and Competition.
The Corporation is the only domestic manufacturer of a complete line of
stainless steel, silverplated and sterling tableware products. The Corporation
believes that it is the largest producer of stainless steel and silverplated
flatware in the world. The recent additions of consumer dinnerware and a full
crystal line make the Corporation a truly complete tableware supplier. The
Corporation faces competition from several smaller domestic companies that
market both imported and domestically manufactured lines and from hundreds of
importers engaged exclusively in marketing foreign-made tableware products. In
recent years there is also competition from department and specialty stores and
foodservice establishments that import foreign-made tableware products under
their own private labels for their sale or use. The Corporation strives to
maintain its market position through product and design innovation and
diversity.
The consumer tableware business is highly competitive. The principal factors
affecting domestic competition in this market are design, price and quality.
Other factors that have an effect on competition are availability of replacement
pieces and product warranties. In the opinion of the Corporation, no one factor
is dominant, and the significance of the different competitive factors varies
from customer to customer.
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The foodservice tableware business is highly competitive. The principal factors
affecting competition in this market are price, service and quality. The Oneida
Foodservice Division's products and service are highly regarded in this
industry, and it is one of the largest sources of commercial china dinnerware
and stainless steel and silverplated tableware in the United States.
The international tableware business is highly competitive. The principal
factor affecting competition in this market is brand recognition. Other factors
affecting the Corporation's participation in the international market include
competition with local suppliers and high import duties, both of which increase
the Corporation's cost relative to local products.
Research and Development.
The Corporation places a considerable emphasis on excellence in development and
design. To achieve this end the Corporation maintains full time in-house design
and engineering departments which continuously develop, test and improve
products and manufacturing methods. Independent designers and collaborative
efforts with other companies contribute to the Corporation's emphasis on
development and design. The Corporation's actual expenditures on research and
development activities during the past three fiscal years, however, have not
been material.
Environmental Compliance.
The Corporation does not anticipate that compliance with federal, state and
local environmental laws and regulations will have any material effect upon the
capital expenditures, earnings or competitive position of the Corporation. The
Corporation does not anticipate any material capital expenditures for
environmental control facilities for the remainder of the current fiscal year or
the succeeding fiscal year.
Employment.
The Corporation and its subsidiaries employed approximately 3,820 employees in
domestic operations and 1,090 employees in foreign operations as of March 1,
1998. The Corporation maintains positive relations with its domestic and
foreign employees. With the exception of its Buffalo China, Inc. subsidiary,
the Corporation's facilities are not unionized. The employees of Buffalo China
Inc.'s manufacturing facility in Buffalo, New York are represented by the Glass,
Molders, Pottery, Plastics & Allied Workers International Union AFL-CIO, CLC and
its local union No. 76A. The current collective bargaining agreement between
Buffalo China, Inc. and the Glass, Molders, Pottery, Plastics & Allied Workers
International Union AFL-CIO, CLC and its local union No.76A expires on July 31,
2003. The Corporation has experienced no work stoppages or strikes in the past
five years.
Year 2000.
Year 2000 issues relate to the ability of computer systems to be able to
distinguish data which contains dates beyond December 31, 1999. The Corporation
has created, and is in the process of implementing, a Year 2000 compliance plan.
As part of this compliance plan, the Corporation is reviewing all of its
software and information processing systems to identify date sensitive
functions. The Corporation will then inventory, test, and if necessary, modify
those systems to ensure that they will meet the necessary requirements prior to
the Year 2000. The Corporation anticipates that its main computer systems will
be Year 2000 compliant by December 1998, and that its more minor computer
systems will be Year 2000 compliant by July 1999.
The Corporation could be adversely affected if its customers, suppliers,
service providers and business partners continue to utilize systems that are not
Year 2000 compliant. The Corporation, therefore, is taking a proactive role in
encouraging its customers, suppliers, service providers and business partners to
plan for and implement their own compliance plans.
The costs incurred to date by the Corporation in addressing its potential Year
2000 problems are not material. However, the inability of the Corporation or
its customers, suppliers, service providers or business partners to resolve Year
2000 issues in a timely manner could constitute a material financial risk. The
Corporation believes it is devoting appropriate resources to resolve its Year
2000 issues in a timely manner and does not currently expect that doing so will
have a material impact.
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d. Risk Factors.
With the exception of historical data, the information contained in this
Form 10-K, as well as those other documents incorporated by reference herein, is
forward-looking. For the purposes of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, the Corporation cautions readers that
changes in certain factors could affect the Corporation's future results and
could cause the Corporation's future consolidated results to differ materially
from those expressed herein. Such factors include, but are not limited to:
general economic conditions in the Corporation's markets; difficulties or delays
in the development, production and marketing of new products; the impact of
competitive products and pricing; certain assumptions related to consumer
purchasing patterns; significant increases in interest rates or the level of the
Corporation's indebtedness; major slowdowns in the retail, travel or
entertainment industries; the loss of several of the Corporation's major
consumer and/or foodservice customers; underutilization of the Corporation's
plants and factories; and the amount and rate of growth of the Corporation's
selling, general and administrative expenses.
ITEM 2. PROPERTIES
The principal properties of the Corporation and its subsidiaries are situated at
the following locations and have the following characteristics:
Approximate Square Feet
Oneida, New York Executive Administrative Offices 95,000
Sherrill, New York Manufacturing Stainless Steel,
Silverplated and Sterling Flatware
and Holloware 1,082,000
Sherrill, New York Manufacturing Knives 135,000
Buffalo, New York Office and Warehouse 82,000
Buffalo, New York Manufacturing China 257,000
Niagara Falls, Ontario Manufacturing Stainless Steel and
Silverplated Flatware 120,000
Bangor, N. Ireland Office and Warehouse 32,000
Vercelli, Italy Office, Warehouse and Manufacturing
Stainless Steel Holloware 84,000
Toluca, Mexico Manufacturing Stainless Steel Flatware 75,000
Juarez, Mexico Manufacturing Bisque China 65,000
All of these buildings are owned by the Corporation with the following two
exceptions:
* The offices and warehouses in Bangor, Northern Ireland are leased.
* The Buffalo, New York manufacturing property is subject to a mortgage in
the principal amount of approximately $846,979 covering both real property and
equipment to secure a like amount of Industrial Revenue Bonds. Pursuant to the
terms of a Lease Agreement dated February 1, 1980, the real property is leased
by Buffalo China from the Erie County Industrial Development Agency for a term
of twenty years, upon the expiration of which the property will be conveyed back
to Buffalo China.
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In addition to the land primarily associated with its manufacturing operations,
the Corporation owns approximately 500 additional acres in the cities of
Sherrill and Oneida and the town of Vernon, New York.
The Corporation leases sales offices and/or showrooms in New York City;
Melville, New York; Los Angeles; Dallas; Atlanta; London, England and Vercelli,
Italy. The Corporation and its subsidiaries lease warehouse space in various
locations throughout the United States. The Corporation also leases retail
outlet space through its wholly-owned subsidiary, Kenwood Silver Company, Inc.,
in various locations throughout the United States.
In January 1983 the Corporation entered into a 25-year lease for an office
facility in Redmond, Washington. The remaining lease commitment for this
facility is $21,533,000. The Corporation has sublet substantially all of the
building through 1999. The sublease income projected through 2003 is
$6,521,000.
In March 1998 the Corporation's Buffalo China subsidiary began construction of
an $11 million, 203,000 square foot expansion adjacent to Buffalo China's
existing manufacturing facility. The expansion includes a 173,000 square foot
warehouse to headquarter the Corporation's dinnerware distribution operations
and a 30,000 square foot decorating center for custom and small-order dinnerware
patterns. It is anticipated that the expansion will be fully operational by the
spring of 1999.
All of the Corporation's buildings are located on sufficient property to
accommodate any further expansion or development planned over the next five
years. The properties are served adequately by transportation facilities, are
well maintained and are adequate for the purposes for which they are intended
and used.
ITEM 3. LEGAL PROCEEDINGS
The Corporation is involved in various routine legal proceedings incidental to
the operation of its business. The Corporation's Management believes there is
no ongoing or pending litigation with a possible material effect on the
financial position of the Corporation.
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF STOCKHOLDERS.
None.
PART II
Information required to be furnished under Items 5 through 9 of this Part is set
forth in, and incorporated by reference to, the Corporation's Annual Report to
Shareholders for the year ended January 31, 1998, at the respective pages
indicated.
ITEM 5. MARKET FOR THE CORPORATION'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS.
Page 29 of the Corporation's Annual Report.
ITEM 6. SELECTED FINANCIAL DATA.
Page 30 of the Corporation's Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Pages 28 through 29 of the Corporation's Annual Report
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Pages 13 through 30 of the Corporation's Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
Some of the information required to be furnished under this Part (Items 10
through 13) is set forth in the Corporation's definitive Proxy Statement dated
April 24, 1998 (File 1-5452) at the respective pages indicated, and incorporated
by reference.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Pages 2 through 4 of the Corporation's definitive Proxy Statement.
Executive Officers of the Registrant
As of March 1, 1998, the persons named below are the executive officers of the
Corporation and all have been elected to serve in the capacities indicated at
the pleasure of the Oneida Ltd. Board of Directors. No family relationships
exist among any of the executive officers named, nor is there any arrangement or
understanding pursuant to which any person was selected as an officer.
Name, Age and Positions Principal Business Affiliations
with Corporation During Past Five Years
Thomas A. Fetzner, 50 Mr. Fetzner has been Vice President
Vice President and and Corporate Controller for more
Corporate Controller than the past five years.
Barry G. Grabow, 54 Mr. Grabow has been Treasurer for
Treasurer more than the past five years.
Peter J. Kallet, 51 Mr. Kallet was elected President
President, Chief and Chief Operating Officer in
Operating Officer January 1996. Mr. Kallet had
and a Director been Senior Vice President and
General Manager of the Oneida
Foodservice Division for more
than the past five years.
William D. Matthews, 63 Mr. Matthews has been Chairman of
Chairman of the Board, the Board and Chief Executive
Chief Executive Officer Officer for more than the past five
and a Director years.
Catherine H. Suttmeier, 41 Ms. Suttmeier has been Vice
Vice President, Secretary President, Secretary and General
and General Counsel Counsel for more than the past five
years.
Edward W. Thoma, 52 Mr. Thoma has been Senior Vice
Senior Vice President, President, Finance for more
Finance than the past five years.
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ITEM 11. EXECUTIVE COMPENSATION.
Pages 6 through 13 of the Corporation's definitive Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Pages 1 and 5 of the Corporation's definitive Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Pages 2 through 5 of the Corporation's definitive Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K.
(a) 1. Financial statements incorporated by reference from the
Corporation's 1998 Annual Report to Shareholders and filed as part
of this Report:
Consolidated Statement of Operations for the fiscal years
ended 1998, 1997 and 1996 (page 13 of the Corporation's
Annual Report).
Consolidated Balance Sheet for the fiscal years ended in 1998
and 1997 (pages 14 and 15 of the Corporation's Annual
Report).
Consolidated Statement of Cash Flows for the fiscal years
ended 1998, 1997 and 1996 (page 16 of the Corporation's
Annual Report).
Notes to Consolidated Financial Statements (pages 17-26 of
the Corporation's Annual Report).
Independent Auditor's Report (page 27 of the Corporation's
Annual Report).
2. Financial Statement Schedule:
Schedule II, Valuation and Qualifying Accounts, for fiscal
years ended 1998, 1997 and 1996 (page 15 of this Report).
Independent Auditor's Report (page 14 of this Report).
All other schedules have been omitted because of the absence of conditions under
which they are required or because the required information is included in the
financial statements submitted.
3. Exhibits:
(3) The Restated Certificate of Incorporation and the By-
Laws, as previously amended, which are incorporated by
reference to the Registrant's Annual Report on Form 10-K
for the year ended January 29, 1994.
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(4)(a) Note Agreement dated January 1, 1992, between Oneida
Ltd., Allstate Life Insurance and Pacific Mutual Life
Insurance Company, which is incorporated by reference to
the Registrant's Annual Report on Form 10-K for the year
ended January 25, 1997.
Revolving Credit Agreement dated January 19, 1996
between Oneida Ltd., The Chase Manhattan Bank, N.A.,
Chemical Bank and NationsBank, N.A., which is
incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended January 27, 1996.
Amendment No. 1 to the January 19, 1996 Revolving Credit
Agreement between Oneida Ltd., The Chase Manhattan Bank,
N.A., Chemical Bank and NationsBank, N.A., which is
incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended January 25, 1997.
Amendment No. 1 is dated September 25, 1996, and was
executed by Oneida Ltd., The Chase Manhattan Bank
(successor to The Chase Manhattan Bank, N.A. and
Chemical Bank), NationsBank, N.A. and Marine Midland
Bank.
Amendment No. 2 to the January 19, 1996 Revolving Credit
Agreement between Oneida Ltd., The Chase Manhattan Bank,
N.A., Chemical Bank and NationsBank, N.A., which is
incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended January 25, 1997.
Amendment No. 2 is dated November 1, 1996, and was
executed by Oneida Ltd., The Chase Manhattan Bank
(successor to The Chase Manhattan Bank, N.A. and
Chemical Bank), NationsBank, N.A. and Marine Midland
Bank.
Note Agreement dated November 15, 1996, between Oneida
Ltd., THC Systems, Inc., Allstate Life Insurance Company
and Pacific Mutual Life Insurance Company, which is
incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended January 25, 1997.
First Amendment to the January 1, 1992 Note Agreement,
between Oneida Ltd., Allstate Life Insurance and
Pacific Mutual Life Insurance Company, which is
incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended January 25, 1997.
The First Amendment to Note Agreement is dated November
26, 1996, and was executed by Oneida Ltd., Allstate Life
Insurance and Pacific Mutual Life Insurance Company.
Consent and Amendment No. 3 to the January 19, 1996
Revolving Credit Agreement between Oneida Ltd., The
Chase Manhattan Bank, N.A., Chemical Bank and
NationsBank, N.A, which is incorporated by reference to
the Registrant's Annual Report on Form 10-K for the year
ended January 25, 1997. The Consent and Amendment No.3
is dated January 24, 1997, and was executed by Oneida
Ltd., The Chase Manhattan Bank (successor to The Chase
Manhattan Bank, N.A. and Chemical Bank), NationsBank,
N.A. and Marine Midland Bank.
(b) Shareholder Rights Agreement dated December 13, 1989,
which is incorporated by reference to the Registrant's
Annual Report on Form 10-K for the year ended January
28, 1995. Assignment and Assumption Agreement dated
November 1, 1991, which is incorporated by reference to
the Registrant's Annual Report on Form 10-K for the year
ended January 28, 1995.
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(10)(a) Employment agreements with one executive employee of the
Corporation dated October 1, 1982, which is incorporated
by reference to the Registrant's Annual Report on Form
10-K for the year ended January 28, 1995. Employment
Agreements with three executive employees of the
Corporation dated July 26, 1989, which are incorporated
by reference to the Registrant's Annual Report on Form
10-K for the year ended January 28, 1995. Employment
Agreement with one executive employee of the Corporation
dated March 29, 1995, which is incorporated by reference
to the Registrant's Annual Report on Form 10-K for the
year ended January 27, 1996. Employment agreements with
two executive employees of the Corporation dated
February 28, 1996, which are incorporated by reference
to the Registrant's Annual Report on Form 10-K for the
year ended January 25, 1997. Employment Agreements with
four executive employees of the Corporation dated
February 25, 1998.
(b) Oneida Ltd. Management Incentive Plan adopted by the
Board of Directors on February 24, 1988, which provides
for the payment of bonus awards to senior management
employees, which is incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year
ended January 28, 1995.
(c) Oneida Ltd. 1987 Stock Option Plan. Amendment, dated
August 1, 1996, to Oneida Ltd. 1987 Stock Option Plan,
which is incorporated by reference to the Registrant's
Annual Report on Form 10-K for the year ended January
25, 1997.
(d) Oneida Ltd. Employee Security Plan adopted by the Board
of Directors on July 26, 1989, which is incorporated by
reference to the Registrant's Annual Report on Form 10-K
for the year ended January 28, 1995.
(e) Oneida Ltd. Restricted Stock Award Plan as adopted by
the Board of Directors on November 29, 1989 and approved
by shareholders on May 30, 1990 for the granting of
common stock to key employees, which is incorporated by
reference to the Registrant's Annual Report on Form 10-K
for the year ended January 27, 1996.
(f) Oneida Ltd. Deferred Compensation Plan for Key Employees
as adopted by the Board of Directors on October 27,
1993, which is incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year
ended January 29, 1994.
(13) Portions of the Oneida Ltd. Annual Report to
Shareholders for the fiscal year ended January 31, 1998,
which have been incorporated by reference in this Form
10-K.
(22) Subsidiaries of the Registrant.
(b) During the quarter ended January 31, 1998 no Reports on Form 8-K were
filed by the Registrant.
<PAGE>
SIGNATURES
Pursuant 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
its behalf by the undersigned, thereunto duly authorized.
ONEIDA LTD.
By: /s/ WILLIAM D. MATTHEWS
William D. Matthews
Chairman of the Board and
Chief Executive Officer
March 24, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signature Title Date
Principal Executive Officer
/s/ WILLIAM D. MATTHEWS Chairman of the Board March 24, 1998
William D. Matthews and Chief Executive Officer
Principal Financial Officer
/S/ EDWARD W. THOMA Senior Vice President - March 24, 1998
Edward W. Thoma Finance
Principal Accounting Officer
/s/ THOMAS A. FETZNER Vice President and March 24, 1998
Thomas A. Fetzner Corporate Controller
The Board of Directors
/s/ WILLIAM F. ALLYN Director March 24, 1998
William F. Allyn
/s/ R. QUINTUS ANDERSON Director March 24, 1998
R. Quintus Anderson
/s/ GEORGIA S. DERRICO Director March 24, 1998
Georgia S. Derrico
/s/ DAVID E. HARDEN Director March 24, 1998
David E. Harden
<PAGE>
/s/ PETER J. KALLET Director March 24, 1998
Peter J. Kallet
/s/ WILLIAM D. MATTHEWS Director March 24, 1998
William D. Matthews
/s/ WHITNEY D. PIDOT Director March 24, 1998
Whitney D. Pidot
/s/ RAYMOND T. SCHULER Director March 24, 1998
Raymond T. Schuler
/s/ WALTER A. STEWART Director March 24, 1998
Walter A. Stewart
/s/ WILLIAM M. TUCK Director March 24, 1998
William M. Tuck
<PAGE>
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Stockholders of Oneida Ltd.
Our report on the consolidated financial statements of Oneida Ltd. has been
incorporated by reference in this Form 10-K from page 27 of the 1998 Annual
Report to Shareholders of Oneida Ltd. In connection with our audits of such
financial statements, we have also audited the related financial statement
schedule listed in the index on page 9 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included herein.
COOPERS & LYBRAND L.L.P.
a professional services firm
/s/ Coopers & Lybrand L.L.P.
Syracuse, New York
February 20, 1998
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
of Oneida Ltd. on Form S-8 (File Nos. 2-84304, 33-49462 and 333-10795) and Form
S-3 (File No. 33-64608) our report dated February 20, 1998 on our audits of the
consolidated financial statements and financial statement schedules of Oneida
Ltd. as of January 31, 1998 and January 25, 1997, and for each of the three
years in the period ended January 31, 1998 which reports are either included or
incorporated by reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
a professional services firm
/s/ Coopers & Lybrand L.L.P.
Syracuse, New York
April 29, 1998
<PAGE>
SCHEDULE II
<TABLE>
ONEIDA LTD.
AND CONSOLIDATED SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JANUARY 1998, 1997 AND 1996
(Thousands)
<CAPTION>
Column A Column B Column C Column D Column E
Balance Additions
at Charged Balance
Beginning to at
of Cost and End of
Description Period Expenses Deductions Period
<S> <C> <C> <C> <C>
YEAR ENDED JANUARY 31, 1998:
Reserves deducted from
assets to which they apply:
Doubtful accounts
receivable $1,797 $1,382 $1,283<F1> $1,896
Other reserves:
Rebate program $ 358 $2,472 $2,465<F2> $ 365
YEAR ENDED JANUARY 25, 1997:
Reserves deducted from
assets to which they apply:
Doubtful accounts
receivable $1,398 $1,087 $ 688<F1> $1,797
Other reserves:
Rebate program $ 434 $1,641 $1,717<F2> $ 358
YEAR ENDED JANUARY 27, 1996:
Reserves deducted from
assets to which they apply:
Doubtful accounts
receivable $1,365 $ 283 $ 250<F1> $1,398
Other reserves:
Rebate program $ 471 $1,430 $1,467<F2> $ 434
<FN>
<F1> Adjustments and doubtful accounts written off.
<F2> Payments under rebate program.
</FN>
</TABLE>
<PAGE>
Index to Exhibits
Exhibits:
(3) The Restated Certificate of Incorporation and the By-
Laws, as previously amended, which are incorporated by
reference to the Registrant's Annual Report on Form 10-K
for the year ended January 29, 1994.
(4)(a) Note Agreement dated January 1, 1992, between Oneida
Ltd., Allstate Life Insurance and Pacific Mutual Life
Insurance Company, which is incorporated by reference to
the Registrant's Annual Report on Form 10-K for the year
ended January 25, 1997.
Revolving Credit Agreement dated January 19, 1996
between Oneida Ltd., The Chase Manhattan Bank, N.A.,
Chemical Bank and NationsBank, N.A., which is
incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended January 27, 1996.
Amendment No. 1 to the January 19, 1996 Revolving Credit
Agreement between Oneida Ltd., The Chase Manhattan Bank,
N.A., Chemical Bank and NationsBank, N.A., which is
incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended January 25, 1997.
Amendment No. 1 is dated September 25, 1996, and was
executed by Oneida Ltd., The Chase Manhattan Bank
(successor to The Chase Manhattan Bank, N.A. and
Chemical Bank), NationsBank, N.A. and Marine Midland
Bank.
Amendment No. 2 to the January 19, 1996 Revolving Credit
Agreement between Oneida Ltd., The Chase Manhattan Bank,
N.A., Chemical Bank and NationsBank, N.A., which is
incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended January 25, 1997.
Amendment No. 2 is dated November 1, 1996, and was
executed by Oneida Ltd., The Chase Manhattan Bank
(successor to The Chase Manhattan Bank, N.A. and
Chemical Bank), NationsBank, N.A. and Marine Midland
Bank.
Note Agreement dated November 15, 1996, between Oneida
Ltd., THC Systems, Inc., Allstate Life Insurance Company
and Pacific Mutual Life Insurance Company, which is
incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended January 25, 1997.
First Amendment to the January 1, 1992 Note Agreement,
between Oneida Ltd., Allstate Life Insurance and
Pacific Mutual Life Insurance Company, which is
incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended January 25, 1997.
The First Amendment to Note Agreement is dated November
26, 1996, and was executed by Oneida Ltd., Allstate Life
Insurance and Pacific Mutual Life Insurance Company.
Consent and Amendment No. 3 to the January 19, 1996
Revolving Credit Agreement between Oneida Ltd., The
Chase Manhattan Bank, N.A., Chemical Bank and
NationsBank, N.A, which is incorporated by reference to
the Registrant's Annual Report on Form 10-K for the year
ended January 25, 1997. The Consent and Amendment No.3
is dated January 24, 1997, and was executed by Oneida
Ltd., The Chase Manhattan Bank (successor to The Chase
Manhattan Bank, N.A. and Chemical Bank), NationsBank,
N.A. and Marine Midland Bank.
<PAGE>
(b) Shareholder Rights Agreement dated December 13, 1989,
which is incorporated by reference to the Registrant's
Annual Report on Form 10-K for the year ended January
28, 1995. Assignment and Assumption Agreement dated
November 1, 1991, which is incorporated by reference to
the Registrant's Annual Report on Form 10-K for the year
ended January 28, 1995.
(10)(a) Employment agreements with one executive employee of the
Corporation dated October 1, 1982, which is incorporated
by reference to the Registrant's Annual Report on Form
10-K for the year ended January 28, 1995. Employment
Agreements with three executive employees of the
Corporation dated July 26, 1989, which are incorporated
by reference to the Registrant's Annual Report on Form
10-K for the year ended January 28, 1995. Employment
Agreement with one executive employee of the Corporation
dated March 29, 1995, which is incorporated by reference
to the Registrant's Annual Report on Form 10-K for the
year ended January 27, 1996. Employment agreements with
two executive employees of the Corporation dated
February 28, 1996, which are incorporated by reference
to the Registrant's Annual Report on Form 10-K for the
year ended January 25, 1997. Employment Agreements with
four executive employees of the Corporation dated
February 25, 1998.
(b) Oneida Ltd. Management Incentive Plan adopted by the
Board of Directors on February 24, 1988, which provides
for the payment of bonus awards to senior management
employees, which is incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year
ended January 28, 1995.
(c) Oneida Ltd. 1987 Stock Option Plan. Amendment, dated
August 1, 1996, to Oneida Ltd. 1987 Stock Option Plan,
which is incorporated by reference to the Registrant's
Annual Report on Form 10-K for the year ended January
25, 1997.
(d) Oneida Ltd. Employee Security Plan adopted by the Board
of Directors on July 26, 1989, which is incorporated by
reference to the Registrant's Annual Report on Form 10-K
for the year ended January 28, 1995.
(e) Oneida Ltd. Restricted Stock Award Plan as adopted by
the Board of Directors on November 29, 1989 and approved
by shareholders on May 30, 1990 for the granting of
common stock to key employees, which is incorporated by
reference to the Registrant's Annual Report on Form 10-K
for the year ended January 27, 1996.
(f) Oneida Ltd. Deferred Compensation Plan for Key Employees
as adopted by the Board of Directors on October 27,
1993, which is incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year
ended January 29, 1994.
(13) Portions of the Oneida Ltd. Annual Report to
Shareholders for the fiscal year ended January 31, 1998,
which have been incorporated by reference in this Form
10-K.
(22) Subsidiaries of the Registrant.
<PAGE>
EXHIBIT 10(a)
February 25, 1998
Mr. Harold J. DeBarr
427 Betsinger Road
Sherrill, New York 13461
Dear Mr. DeBarr:
Oneida Ltd. (the "Company") considers it essential to the best interests of
its stockholders to foster the continuous employment of key management
personnel. In this connection, the Board of Directors of the Company (the
"Board") recognizes that the possibility of a change in control of the Company
may exist and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of members of the Company's
management, including yourself, to their assigned duties without distraction in
the face of potentially disturbing circumstances arising from any possible
change in control of the Company.
In order to induce you to remain in the employ of the Company, the Company
agrees that you shall receive the severance benefits set forth in this letter
agreement (the "Agreement") in the event that your employment with the Company
is terminated subsequent to a Change in Control (as defined in Section 2).
1. Term of Agreement. The term of this Agreement (the "Term") shall commence on
the Operative Date (as hereinafter defined) and end on the fifth anniversary of
the Operative Date, provided that it has not been terminated in accordance with
its terms. In the event, however, that you attain the age of sixty-five (65)
during the Term, then this Agreement shall terminate on the last day of the
month in which you attain the age of sixty-five (65). For purposes of this
Agreement, the term "Operative Date" shall mean the date on which a Change in
Control occurs, provided that (i) you are then in the employ of the Company and
(ii) such Change in Control occurs before you reach age sixty-five (65).
2. Change in Control. No benefits shall be payable hereunder unless there shall
have been a Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if:
<PAGE>
(A) any "Person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any company owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of sock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding securities;
(B) during any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (A), (C) or (D) of this
Section) whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
(C) the stockholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction in which no "person" (as
hereinabove defined) acquires more than 20% of the combined voting power of the
Company's then outstanding securities; or
(D) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or Substantially all of the Company's assets.
3. Termination Following Change in Control. If a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Subsection 4(D) upon
the subsequent termination of your employment during the Term unless such
termination is because of your death or retirement, by the Company for cause or
disability, or by you other than for good reason. In the event your employment
with the Company is terminated for any reason prior to the Operative Date, you
shall not be entitled to any benefits hereunder.
<PAGE>
(A) Disability; Retirement. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for six (6) consecutive months, and
within thirty (30) days after written Notice of Termination (as defined in
Subsection 3(D)) is given you shall not have returned to the full-time
performance of your duties, the Company may terminate your employment for
"Disability." Any question as to the existence of your Disability upon which
you and the Company cannot agree shall be determined by a qualified independent
physician selected by you (or, if you are unable to make such selection, it
shall be made by any adult member of your immediate family), and approved by the
Company. The determination of such physician made in writing to the Company and
to you shall be final and conclusive for all purposes of this Agreement.
Termination of your employment based on "Retirement" shall mean your voluntary
termination of employment on a Retirement Date as defined in the Retirement Plan
for Employees of Oneida Ltd. or any successor plan thereto (the "Pension Plan")
as in effect immediately prior to the occurrence of a Change in Control
(whether or not you are a participant in the Pension Plan) or in accordance with
any retirement arrangement established with your consent with respect to you.
(B) Cause. Termination by the Company of your employment for "Cause"
shall mean termination upon (i) the willful and continued failure by you to
substantially perform your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness or from your
Retirement or any such actual or anticipated failure resulting from termination
by you for Good Reason (as hereinafter defined after a written demand for
substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have
not substantially performed your duties, or (ii) the willful engaging by you in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. For purposes of this Subsection, no act or failure to
act on your part shall be deemed "willful" unless done, or omitted to be done,
by you in other than good faith and without reasonable belief that your action
or omission was in the best interests of the Company. Notwithstanding the
foregoing, you shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to you a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board (after reasonable notice to
you and an opportunity for you, together with your counsel, to be heard before
the Board), finding that in the good faith opinion of the Board you were guilty
of conduct set forth above in clause (i) or (ii) of the first sentence of this
Subsection and specifying the particulars thereof in detail.
(C) Good Reason. You shall be entitled to terminate your employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean,
without your express written consent, the occurrence after a Change in Control
of any of the following circumstances:
<PAGE>
(i) Inconsistent Duties. A meaningful and detrimental
alteration in your position or in the nature or status of your responsibilities
(including those as a director of the Company, if any) from those in effect
immediately prior to the Change in Control;
(ii) Reduced Salary or Failure to Increase Salary. A reduction
by the Company in your annual base salary as in effect on the date hereof or as
the same may be increased from time to time; a failure by the Company to
increase your salary at a rate commensurate with that of other key executives of
the Company; or a failure by the Company to increase your salary on an annual
basis to reflect the percentage increase in the cost of living (as determined in
accordance with such statistics or indices as the Board shall reasonably
consider appropriate for such purposes).
(iii) Relocation. The relocation of the office of the Company
where you are employed at the time of the Change in Control (the "CIC Location")
to a location which in your good faith assessment is an area not generally
considered conducive to maintaining the executive offices of a company such as
the Company because of hazardous or undesirable conditions, including, without
limitation, a high crime rate or inadequate facilities, or to a location which
is more than twenty-five (25) miles away from the CIC Location or the Company's
requiring you to be based more than twenty-five (25) miles away from the CIC
Location (except for required travel on the Company's business to an extent
substantially consistent with your present business travel obligations);
(iv) Compensation Plans. The failure by the Company to continue
in effect any material compensation, benefit or profit sharing plan in which you
were participating immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the Company to
continue your participation therein (or in such substitute or alternative plan)
on at least as favorable a basis, both in terms of the amount of benefits
provided and the level of your participation relative to other participants, as
existed immediately prior to the Change in Control;
(v) Benefits and Perquisites. The failure by the Company to
continue to provide you with benefits at least as favorable as those enjoyed by
you under any of the Company's pension, life insurance, medical, health and
accident, disability or savings plans in which you were participating
immediately prior to the Change in Control; the taking of any action by the
Company which would directly or indirectly materially reduce any of such
benefits or deprive you of any material benefit or perquisite enjoyed by you
immediately prior to the Change in Control; or the failure by the Company to
provide you with the number of paid vacation days to which you are entitled on
the basis of years of service with the Company in accordance with the Company's
normal vacation policy in effect immediately prior to the Change in Control;
<PAGE>
(vi) No Assumption by Successor. The failure of the Company to
obtain a satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 5 hereof or, if the business
of the Company for which your services are principally performed is sold at any
time after a Change in Control, the failure of the purchaser of such business to
agree to provide you with the same or a comparable position, duties,
compensation, benefits and perquisites (as described in clauses (iv) and (v)
above) as provided to you by the Company immediately prior to the Change in
Control; or
(vii) No Notice. Any purported termination of your employment
that is not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (D) below (and, if applicable, the requirements of
Subsection (B) above), which purported termination shall not be effective for
purposes of this Agreement.
(D) Notice of Termination. Any purported termination of your
employment by the Company or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 6. For
purposes of his Agreement, a "Notice of Termination" shall mean a notice that
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so
indicated.
(E) Date of Termination, Etc. For purposes of this Agreement, "Date of
Termination" shall mean (i) if your employment is terminated for Disability,
thirty (30) days after a Notice of Termination is given (provided that you shall
not have returned to the full-time performance of your duties during such thirty
(30) day period), and (ii) if your employment is terminated pursuant to
Subsection (B) or (C) above or for any other reason (other than Disability), the
date specified in the Notice of Termination (which, in the case of a termination
pursuant to Subsection B) above shall not be less than thirty (30) days from the
date such Notice of Termination is given, and in the case of a termination
pursuant to Subsection (C) above shall not be less than thirty (30) nor more
than sixty (60) days from the date such Notice of Termination is given);
provided, however, that if within thirty (30) days after any Notice of
Termination is given, the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award,
or by a final judgment, order or decree of a court of competent jurisdiction
(which is not appealable or the time for appeal therefrom having expired and no
appeal having been perfected); Provided further, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any such
dispute, the Company will continue to pay you your full compensation in effect
when the notice giving rise to the dispute was given and
<PAGE>
continue you as a participant in all compensation, benefit and insurance plans
and perquisites in which you were participating when the notice giving rise to
the dispute was given, until the dispute is finally resolved in accordance with
this Subsection. Amounts paid under this Subsection are in addition to all
other amounts due under this Agreement and shall not be offset against or reduce
any other amount due under this Agreement and shall not be reduced by any
compensation earned by you as the result of employment by another employer.
4. Compensation Upon Termination or During Disability. Following a Change in
Control, you shall be entitled to the following benefits during a period of
Disability, or upon termination of your employment, as the case may be, provided
that such period or termination occurs during the Term:
(A) Disability. During any period that you fail to perform your full-
time duties with the Company as a result of your Disability, you shall continue
to receive your base salary at the rate in effect at the commencement of any
such period, together with compensation payable to you under the Company's
disability insurance coverage or other plan during such period, until your
employment is terminated pursuant to Subsection 3(A). Thereafter, your benefits
shall be determined in accordance with the Company's insurance programs and
other benefit or pension plans then in effect in accordance with the terms of
such programs and plans.
(B) Termination for Other than Good Reason or for Cause. If your
employment shall be terminated by the Company for Cause or by you other than for
Good Reason, death or Retirement, the Company shall pay you your full base
salary through the Date of Termination at the rate in effect at the time the
Notice of Termination is given, plus all other amounts to which you are entitled
pursuant to the Company's benefit and pension plans then in effect, and the
Company shall have no further obligations to you under this Agreement.
(C) Retirement; Death. If your employment shall be terminated for
Retirement, or by reason of your death, your benefits shall be determined in
accordance with the Company's benefit and pension plans then in effect.
(D) Breach by the Company. If your employment by the Company shall be
terminated by the Company other than for Cause, Retirement or Disability or by
you for Good Reason, then you shall be entitled to the benefits provided below:
(i) Base Salary. The Company shall pay you your full base
salary through the Date of Termination at the rate in effect at the time the
Notice of Termination is given;
<PAGE>
(ii) Severance Payment. In lieu of any further salary payments
to you for periods subsequent to the Date of Termination, the Company shall pay
as severance pay to you, not later than the tenth (10th) business day following
the Date of Termination, a lump sum severance payment equal to 2.99 times the
average of the annual compensation which was payable to you by the Company (or
any corporation affiliated with the Company within the meaning of section 1504
of the Internal Revenue Code of 1986, as amended (the "Code"), determined
without regard to section 1504(b) of the Code) and includable in your gross
income for Federal income tax purposes for the five (5) taxable years preceding
your taxable year in which a Change in Control occurred. The amount of your
average annual compensation shall be determined in accordance with the
regulations (including proposed regulations) promulgated under section 280G(d)
of the Code; provided, however, that (a) notwithstanding any provision of such
regulations to the contrary, the amount of your average annual compensation
shall be determined by including as compensation any contribution (a "401(k)
Contribution") pursuant to any cash or deferred arrangement (as described in
section 401(k) of the Code) maintained by the Company which is not includable in
your gross income under section 402(a)(8) of the Code and (b) the amount of any
such 401(k) Contribution shall be treated as includable in your gross income in
the taxable year such contribution is made for purposes of the preceding
sentence.
(iii) Legal Fees and Expenses. The Company shall also pay to you
all legal fees and expenses incurred by you as a result of such termination,
including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement (other than any such fees or expenses
incurred in connection with any such claim which is determined to be frivolous).
(iv) Insurance Benefits for 36 Months. For a thirty-six (36)
month period after such termination, the Company shall arrange to provide you
with life, disability, accident and health insurance benefits substantially
similar to and at no greater cost to you than those which you were receiving
immediately prior to the Notice of Termination. Benefits otherwise receivable by
you pursuant to this Subsection 4(D)(iv) shall be reduced to the extent
comparable benefits are actually received by you during the thirty-six (36)
month period following your termination, and any such benefits actually received
by you shall be reported to the Company.
(v) Supplemental Pension. In addition to the Pension benefits
to which you are entitled under the Pension Plan, the Company shall pay you in
one sum in cash on the tenth (10th) business day following the Date of
Termination, a lump sum equal to the actuarial equivalent of the excess of (1)
the retirement pension (determined as a straight life annuity commencing at age
65) which you would have accrued under the terms of the Pension Plan and any
other pension benefit program (without regard to any amendment to such Pension
Plan or other pension benefit program made subsequent to the
<PAGE>
Change in Control and on or prior to the Date of Termination, which amendment
adversely affects any manner the computation of pension benefits thereunder),
determined as if you were fully vested thereunder and had accumulated (after the
Date of Termination thirty-six (36) additional months of service credit
thereunder at your highest annual rate of compensation (the "Compensation Rate")
during the twelve (12) months immediately preceding the Date of Termination (but
in no event shall you be deemed to have accumulated additional months of service
credit after your sixty-fifth (65th) birthday), over (2) the retirement pension
(determined as a straight life annuity commencing at age sixty-five (65)) which
you had then accrued pursuant to the provisions of the Pension Plan and any
other pension benefit program. For purposes of clause (1) above, the
Compensation Rate shall be deemed to include amounts payable pursuant to
Subsection 4(D)(ii) hereof, and amounts payable pursuant to Subsection 4(D)(ii)
hereof shall be deemed to represent thirty-six (36) months of compensation (or
such lesser number of months of compensation to your sixty-fifth (65th)
birthday) for purposes of determining benefits under the Pension Plan. For
purposes of this Subsection, "actuarial equivalent" shall be determined using
the same methods and assumptions utilized under the Pension Plan immediately
prior to the Change in Control.
(vi) Employee Benefit Plans. You shall be entitled to receive
all benefits payable to you under the Company's benefit and pension plans, not
otherwise specifically provided for in this Subsection 4(D).
(E) No Mitigation. You shall not be required to mitigate the amount of
any payment provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation earned by you as the result of
employment by another employer or by pension benefits after the Date of
Termination, or otherwise except as specifically provided in this Section 4.
(F) Reduction of Payments In Certain Cases. Notwithstanding anything
herein to the contrary, if any amounts due to you under this Agreement and any
other plan or program of the Company constitute a "parachute payment," as such
term is defined in Section 280G(b)(2) of the Code (the "Parachute Payment"), and
the amount of the Parachute Payment, reduced by all federal, state and local
taxes applicable thereto, including the excise tax imposed pursuant to Section
4999 of the Code, is less than the amount you would receive if you were paid
three times your "base amount," as defined in Section 280G(b)(3) of the Code,
less $1.00, reduced by all federal, state and local taxes applicable thereto,
then the aggregate of the amounts constituting the Parachute Payment shall be
reduced to an amount that will equal three times your base amount less $1.00.
The determinations to be made with respect to this Subsection 4(F) shall be made
by an accounting firm (the "Auditor") jointly selected by the Company and you
and paid by the Company. The Auditor shall be a nationally recognized United
States public accounting firm that has not during the two years preceding the
date of its selection acted in any way
<PAGE>
on behalf of the Company or any of its subsidiaries. If you and the Company
cannot agree on the accounting firm to serve as the Auditor, then you and the
Company shall each select one accounting firm, which two firms shall jointly
select the accounting firm to serve as the Auditor. If the Auditor determines
that a reduction in the aggregate of the amounts constituting the Parachute
Payment is required by this Subsection (F), you shall have the right to specify
the portion of such reduction, if any, that will be made under this Agreement
and each applicable plan or program of the Company, respectively. If you do not
so specify within, 60 days following
the date of a determination by the Auditor pursuant to the preceding sentence,
the Company shall determine, in its sole discretion, the portion of such
reduction, if any, to be made under this Agreement and each applicable plan or
program of the Company, respectively.
5. Successors; Binding Agreement. (A) Assumption By Successor. The Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as you
would be entitled hereunder if you had terminated your employment for Good
Reason following a Change in Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "the Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
(B) Enforceability By Beneficiaries. This Agreement shall inure to the
benefit of and be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable to you
hereunder had you continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to
your estate.
6. Notice. For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective parties as follows:
If to the Company: Secretary
Oneida Ltd.
Oneida, New York 13421
<PAGE>
If to you: Harold J. DeBarr
427 Betsinger Road
Sherrill, New York 13461
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other arty shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement, and this Agreement shall
supersede all Prior agreements, negotiations, correspondence, undertakings and
communications of the parties, oral or written, with respect to the subject
matter hereof. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of New York.
8. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration conducted in the
State of New York in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction; provided, however, that you shall be entitled
to seek specific performance of your right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
11. Contract of Employment. Nothing in this Agreement shall be construed as
giving you any right to be retained in the employ of the Company.
12. Headings. The headings contained in this Agreement are intended solely for
convenience and shall not affect the rights of the parties to this Agreement.
<PAGE>
If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter, which will then
constitute our agreement on this subject.
Sincerely,
ONEIDA LTD.
By: /s/ WILLIAM D. MATTHEWS
William D. Matthews
Title: Chairman of the Board
Chief Executive Officer
Agreed to this 25th day of February, 1998
/s/ HAROLD J. DEBARR
Harold J. DeBarr
<PAGE>
February 25, 1998
Mr. Matthew J. Smith
55 Lincklaen Street
Cazenovia, New York 13035
Dear Mr. Smith:
Oneida Ltd. (the "Company") considers it essential to the best interests of
its stockholders to foster the continuous employment of key management
personnel. In this connection, the Board of Directors of the Company (the
"Board") recognizes that the possibility of a change in control of the Company
may exist and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of members of the Company's
management, including yourself, to their assigned duties without distraction in
the face of potentially disturbing circumstances arising from any possible
change in control of the Company.
In order to induce you to remain in the employ of the Company, the Company
agrees that you shall receive the severance benefits set forth in this letter
agreement (the "Agreement") in the event that your employment with the Company
is terminated subsequent to a Change in Control (as defined in Section 2).
1. Term of Agreement. The term of this Agreement (the "Term") shall commence on
the Operative Date (as hereinafter defined) and end on the fifth anniversary of
the Operative Date, provided that it has not been terminated in accordance with
its terms. In the event, however, that you attain the age of sixty-five (65)
during the Term, then this Agreement shall terminate on the last day of the
month in which you attain the age of sixty-five (65). For purposes of this
Agreement, the term "Operative Date" shall mean the date on which a Change in
Control occurs, provided that (i) you are then in the employ of the Company and
(ii) such Change in Control occurs before you reach age sixty-five (65).
2. Change in Control. No benefits shall be payable hereunder unless there shall
have been a Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if:
<PAGE>
(A) any "Person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any company owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of sock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding securities;
(B) during any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (A), (C) or (D) of this
Section) whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
(C) the stockholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction in which no "person" (as
hereinabove defined) acquires more than 20% of the combined voting power of the
Company's then outstanding securities; or
(D) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or Substantially all of the Company's assets.
3. Termination Following Change in Control. If a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Subsection 4(D) upon
the subsequent termination of your employment during the Term unless such
termination is because of your death or retirement, by the Company for cause or
disability, or by you other than for good reason. In the event your employment
with the Company is terminated for any reason prior to the Operative Date, you
shall not be entitled to any benefits hereunder.
<PAGE>
(A) Disability; Retirement. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for six (6) consecutive months, and
within thirty (30) days after written Notice of Termination (as defined in
Subsection 3(D)) is given you shall not have returned to the full-time
performance of your duties, the Company may terminate your employment for
"Disability." Any question as to the existence of your Disability upon which
you and the Company cannot agree shall be determined by a qualified independent
physician selected by you (or, if you are unable to make such selection, it
shall be made by any adult member of your immediate family), and approved by the
Company. The determination of such physician made in writing to the Company and
to you shall be final and conclusive for all purposes of this Agreement.
Termination of your employment based on "Retirement" shall mean your voluntary
termination of employment on a Retirement Date as defined in the Retirement Plan
for Employees of Oneida Ltd. or any successor plan thereto (the "Pension Plan")
as in effect immediately prior to the occurrence of a Change in Control
(whether or not you are a participant in the Pension Plan) or in accordance with
any retirement arrangement established with your consent with respect to you.
(B) Cause. Termination by the Company of your employment for "Cause"
shall mean termination upon (i) the willful and continued failure by you to
substantially perform your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness or from your
Retirement or any such actual or anticipated failure resulting from termination
by you for Good Reason (as hereinafter defined after a written demand for
substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have
not substantially performed your duties, or (ii) the willful engaging by you in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. For purposes of this Subsection, no act or failure to
act on your part shall be deemed "willful" unless done, or omitted to be done,
by you in other than good faith and without reasonable belief that your action
or omission was in the best interests of the Company. Notwithstanding the
foregoing, you shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to you a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board (after reasonable notice to
you and an opportunity for you, together with your counsel, to be heard before
the Board), finding that in the good faith opinion of the Board you were guilty
of conduct set forth above in clause (i) or (ii) of the first sentence of this
Subsection and specifying the particulars thereof in detail.
(C) Good Reason. You shall be entitled to terminate your employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean,
without your express written consent, the occurrence after a Change in Control
of any of the following circumstances:
<PAGE>
(i) Inconsistent Duties. A meaningful and detrimental
alteration in your position or in the nature or status of your responsibilities
(including those as a director of the Company, if any) from those in effect
immediately prior to the Change in Control;
(ii) Reduced Salary or Failure to Increase Salary. A reduction
by the Company in your annual base salary as in effect on the date hereof or as
the same may be increased from time to time; a failure by the Company to
increase your salary at a rate commensurate with that of other key executives of
the Company; or a failure by the Company to increase your salary on an annual
basis to reflect the percentage increase in the cost of living (as determined in
accordance with such statistics or indices as the Board shall reasonably
consider appropriate for such purposes).
(iii) Relocation. The relocation of the office of the Company
where you are employed at the time of the Change in Control (the "CIC Location")
to a location which in your good faith assessment is an area not generally
considered conducive to maintaining the executive offices of a company such as
the Company because of hazardous or undesirable conditions, including, without
limitation, a high crime rate or inadequate facilities, or to a location which
is more than twenty-five (25) miles away from the CIC Location or the Company's
requiring you to be based more than twenty-five (25) miles away from the CIC
Location (except for required travel on the Company's business to an extent
substantially consistent with your present business travel obligations);
(iv) Compensation Plans. The failure by the Company to continue
in effect any material compensation, benefit or profit sharing plan in which you
were participating immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the Company to
continue your participation therein (or in such substitute or alternative plan)
on at least as favorable a basis, both in terms of the amount of benefits
provided and the level of your participation relative to other participants, as
existed immediately prior to the Change in Control;
(v) Benefits and Perquisites. The failure by the Company to
continue to provide you with benefits at least as favorable as those enjoyed by
you under any of the Company's pension, life insurance, medical, health and
accident, disability or savings plans in which you were participating
immediately prior to the Change in Control; the taking of any action by the
Company which would directly or indirectly materially reduce any of such
benefits or deprive you of any material benefit or perquisite enjoyed by you
immediately prior to the Change in Control; or the failure by the Company to
provide you with the number of paid vacation days to which you are entitled on
the basis of years of service with the Company in accordance with the Company's
normal vacation policy in effect immediately prior to the Change in Control;
<PAGE>
(vi) No Assumption by Successor. The failure of the Company to
obtain a satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 5 hereof or, if the business
of the Company for which your services are principally performed is sold at any
time after a Change in Control, the failure of the purchaser of such business to
agree to provide you with the same or a comparable position, duties,
compensation, benefits and perquisites (as described in clauses (iv) and (v)
above) as provided to you by the Company immediately prior to the Change in
Control; or
(vii) No Notice. Any purported termination of your employment
that is not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (D) below (and, if applicable, the requirements of
Subsection (B) above), which purported termination shall not be effective for
purposes of this Agreement.
(D) Notice of Termination. Any purported termination of your
employment by the Company or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 6. For
purposes of his Agreement, a "Notice of Termination" shall mean a notice that
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so
indicated.
(E) Date of Termination, Etc. For purposes of this Agreement, "Date of
Termination" shall mean (i) if your employment is terminated for Disability,
thirty (30) days after a Notice of Termination is given (provided that you shall
not have returned to the full-time performance of your duties during such thirty
(30) day period), and (ii) if your employment is terminated pursuant to
Subsection (B) or (C) above or for any other reason (other than Disability), the
date specified in the Notice of Termination (which, in the case of a termination
pursuant to Subsection B) above shall not be less than thirty (30) days from the
date such Notice of Termination is given, and in the case of a termination
pursuant to Subsection (C) above shall not be less than thirty (30) nor more
than sixty (60) days from the date such Notice of Termination is given);
provided, however, that if within thirty (30) days after any Notice of
Termination is given, the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award,
or by a final judgment, order or decree of a court of competent jurisdiction
(which is not appealable or the time for appeal therefrom having expired and no
appeal having been perfected); Provided further, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any such
dispute, the Company will continue to pay you your full compensation in effect
when the notice giving rise to the dispute was given and
<PAGE>
continue you as a participant in all compensation, benefit and insurance plans
and perquisites in which you were participating when the notice giving rise to
the dispute was given, until the dispute is finally resolved in accordance with
this Subsection. Amounts paid under this Subsection are in addition to all
other amounts due under this Agreement and shall not be offset against or reduce
any other amount due under this Agreement and shall not be reduced by any
compensation earned by you as the result of employment by another employer.
4. Compensation Upon Termination or During Disability. Following a Change in
Control, you shall be entitled to the following benefits during a period of
Disability, or upon termination of your employment, as the case may be, provided
that such period or termination occurs during the Term:
(A) Disability. During any period that you fail to perform your full-
time duties with the Company as a result of your Disability, you shall continue
to receive your base salary at the rate in effect at the commencement of any
such period, together with compensation payable to you under the Company's
disability insurance coverage or other plan during such period, until your
employment is terminated pursuant to Subsection 3(A). Thereafter, your benefits
shall be determined in accordance with the Company's insurance programs and
other benefit or pension plans then in effect in accordance with the terms of
such programs and plans.
(B) Termination for Other than Good Reason or for Cause. If your
employment shall be terminated by the Company for Cause or by you other than for
Good Reason, death or Retirement, the Company shall pay you your full base
salary through the Date of Termination at the rate in effect at the time the
Notice of Termination is given, plus all other amounts to which you are entitled
pursuant to the Company's benefit and pension plans then in effect, and the
Company shall have no further obligations to you under this Agreement.
(C) Retirement; Death. If your employment shall be terminated for
Retirement, or by reason of your death, your benefits shall be determined in
accordance with the Company's benefit and pension plans then in effect.
(D) Breach by the Company. If your employment by the Company shall be
terminated by the Company other than for Cause, Retirement or Disability or by
you for Good Reason, then you shall be entitled to the benefits provided below:
(i) Base Salary. The Company shall pay you your full base
salary through the Date of Termination at the rate in effect at the time the
Notice of Termination is given;
<PAGE>
(ii) Severance Payment. In lieu of any further salary payments
to you for periods subsequent to the Date of Termination, the Company shall pay
as severance pay to you, not later than the tenth (10th) business day following
the Date of Termination, a lump sum severance payment equal to 2.99 times the
average of the annual compensation which was payable to you by the Company (or
any corporation affiliated with the Company within the meaning of section 1504
of the Internal Revenue Code of 1986, as amended (the "Code"), determined
without regard to section 1504(b) of the Code) and includable in your gross
income for Federal income tax purposes for the five (5) taxable years preceding
your taxable year in which a Change in Control occurred. The amount of your
average annual compensation shall be determined in accordance with the
regulations (including proposed regulations) promulgated under section 280G(d)
of the Code; provided, however, that (a) notwithstanding any provision of such
regulations to the contrary, the amount of your average annual compensation
shall be determined by including as compensation any contribution (a "401(k)
Contribution") pursuant to any cash or deferred arrangement (as described in
section 401(k) of the Code) maintained by the Company which is not includable in
your gross income under section 402(a)(8) of the Code and (b) the amount of any
such 401(k) Contribution shall be treated as includable in your gross income in
the taxable year such contribution is made for purposes of the preceding
sentence.
(iii) Legal Fees and Expenses. The Company shall also pay to you
all legal fees and expenses incurred by you as a result of such termination,
including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement (other than any such fees or expenses
incurred in connection with any such claim which is determined to be frivolous).
(iv) Insurance Benefits for 36 Months. For a thirty-six (36)
month period after such termination, the Company shall arrange to provide you
with life, disability, accident and health insurance benefits substantially
similar to and at no greater cost to you than those which you were receiving
immediately prior to the Notice of Termination. Benefits otherwise receivable by
you pursuant to this Subsection 4(D)(iv) shall be reduced to the extent
comparable benefits are actually received by you during the thirty-six (36)
month period following your termination, and any such benefits actually received
by you shall be reported to the Company.
(v) Supplemental Pension. In addition to the Pension benefits
to which you are entitled under the Pension Plan, the Company shall pay you in
one sum in cash on the tenth (10th) business day following the Date of
Termination, a lump sum equal to the actuarial equivalent of the excess of (1)
the retirement pension (determined as a straight life annuity commencing at age
65) which you would have accrued under the terms of the Pension Plan and any
other pension benefit program (without regard to any amendment to such Pension
Plan or other pension benefit program made subsequent to the
<PAGE>
Change in Control and on or prior to the Date of Termination, which amendment
adversely affects any manner the computation of pension benefits thereunder),
determined as if you were fully vested thereunder and had accumulated (after the
Date of Termination thirty-six (36) additional months of service credit
thereunder at your highest annual rate of compensation (the "Compensation Rate")
during the twelve (12) months immediately preceding the Date of Termination (but
in no event shall you be deemed to have accumulated additional months of service
credit after your sixty-fifth (65th) birthday), over (2) the retirement pension
(determined as a straight life annuity commencing at age sixty-five (65)) which
you had then accrued pursuant to the provisions of the Pension Plan and any
other pension benefit program. For purposes of clause (1) above, the
Compensation Rate shall be deemed to include amounts payable pursuant to
Subsection 4(D)(ii) hereof, and amounts payable pursuant to Subsection 4(D)(ii)
hereof shall be deemed to represent thirty-six (36) months of compensation (or
such lesser number of months of compensation to your sixty-fifth (65th)
birthday) for purposes of determining benefits under the Pension Plan. For
purposes of this Subsection, "actuarial equivalent" shall be determined using
the same methods and assumptions utilized under the Pension Plan immediately
prior to the Change in Control.
(vi) Employee Benefit Plans. You shall be entitled to receive
all benefits payable to you under the Company's benefit and pension plans, not
otherwise specifically provided for in this Subsection 4(D).
(E) No Mitigation. You shall not be required to mitigate the amount of
any payment provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation earned by you as the result of
employment by another employer or by pension benefits after the Date of
Termination, or otherwise except as specifically provided in this Section 4.
(F) Reduction of Payments In Certain Cases. Notwithstanding anything
herein to the contrary, if any amounts due to you under this Agreement and any
other plan or program of the Company constitute a "parachute payment," as such
term is defined in Section 280G(b)(2) of the Code (the "Parachute Payment"), and
the amount of the Parachute Payment, reduced by all federal, state and local
taxes applicable thereto, including the excise tax imposed pursuant to Section
4999 of the Code, is less than the amount you would receive if you were paid
three times your "base amount," as defined in Section 280G(b)(3) of the Code,
less $1.00, reduced by all federal, state and local taxes applicable thereto,
then the aggregate of the amounts constituting the Parachute Payment shall be
reduced to an amount that will equal three times your base amount less $1.00.
The determinations to be made with respect to this Subsection 4(F) shall be made
by an accounting firm (the "Auditor") jointly selected by the Company and you
and paid by the Company. The Auditor shall be a nationally recognized United
States public accounting firm that has not during the two years preceding the
date of its selection acted in any way
<PAGE>
on behalf of the Company or any of its subsidiaries. If you and the Company
cannot agree on the accounting firm to serve as the Auditor, then you and the
Company shall each select one accounting firm, which two firms shall jointly
select the accounting firm to serve as the Auditor. If the Auditor determines
that a reduction in the aggregate of the amounts constituting the Parachute
Payment is required by this Subsection (F), you shall have the right to specify
the portion of such reduction, if any, that will be made under this Agreement
and each applicable plan or program of the Company, respectively. If you do not
so specify within, 60 days following
the date of a determination by the Auditor pursuant to the preceding sentence,
the Company shall determine, in its sole discretion, the portion of such
reduction, if any, to be made under this Agreement and each applicable plan or
program of the Company, respectively.
5. Successors; Binding Agreement. (A) Assumption By Successor. The Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as you
would be entitled hereunder if you had terminated your employment for Good
Reason following a Change in Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "the Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
(B) Enforceability By Beneficiaries. This Agreement shall inure to the
benefit of and be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable to you
hereunder had you continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to
your estate.
6. Notice. For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective parties as follows:
If to the Company: Secretary
Oneida Ltd.
Oneida, New York 13421
<PAGE>
If to you: Matthew J. Smith
55 Lincklaen Street
Cazenovia, New York 13035
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other arty shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement, and this Agreement shall
supersede all Prior agreements, negotiations, correspondence, undertakings and
communications of the parties, oral or written, with respect to the subject
matter hereof. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of New York.
8. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration conducted in the
State of New York in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction; provided, however, that you shall be entitled
to seek specific performance of your right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
11. Contract of Employment. Nothing in this Agreement shall be construed as
giving you any right to be retained in the employ of the Company.
12. Headings. The headings contained in this Agreement are intended solely for
convenience and shall not affect the rights of the parties to this Agreement.
<PAGE>
If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter, which will then
constitute our agreement on this subject.
Sincerely,
ONEIDA LTD.
By: /s/ WILLIAM D. MATTHEWS
William D. Matthews
Title: Chairman of the Board
Chief Executive Officer
Agreed to this 25th day of February, 1998
/s/ MATTHEW J. SMITH
Matthew J. Smith
<PAGE>
February 25, 1998
Mr. W. Arnold Kimmons
7817 Cheviot Court
Fayetteville, New York 13060
Dear Mr. Kimmons:
Oneida Ltd. (the "Company") considers it essential to the best interests of
its stockholders to foster the continuous employment of key management
personnel. In this connection, the Board of Directors of the Company (the
"Board") recognizes that the possibility of a change in control of the Company
may exist and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of members of the Company's
management, including yourself, to their assigned duties without distraction in
the face of potentially disturbing circumstances arising from any possible
change in control of the Company.
In order to induce you to remain in the employ of the Company, the Company
agrees that you shall receive the severance benefits set forth in this letter
agreement (the "Agreement") in the event that your employment with the Company
is terminated subsequent to a Change in Control (as defined in Section 2).
1. Term of Agreement. The term of this Agreement (the "Term") shall commence on
the Operative Date (as hereinafter defined) and end on the fifth anniversary of
the Operative Date, provided that it has not been terminated in accordance with
its terms. In the event, however, that you attain the age of sixty-five (65)
during the Term, then this Agreement shall terminate on the last day of the
month in which you attain the age of sixty-five (65). For purposes of this
Agreement, the term "Operative Date" shall mean the date on which a Change in
Control occurs, provided that (i) you are then in the employ of the Company and
(ii) such Change in Control occurs before you reach age sixty-five (65).
2. Change in Control. No benefits shall be payable hereunder unless there shall
have been a Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if:
<PAGE>
(A) any "Person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any company owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of sock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding securities;
(B) during any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (A), (C) or (D) of this
Section) whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
(C) the stockholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction in which no "person" (as
hereinabove defined) acquires more than 20% of the combined voting power of the
Company's then outstanding securities; or
(D) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or Substantially all of the Company's assets.
3. Termination Following Change in Control. If a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Subsection 4(D) upon
the subsequent termination of your employment during the Term unless such
termination is because of your death or retirement, by the Company for cause or
disability, or by you other than for good reason. In the event your employment
with the Company is terminated for any reason prior to the Operative Date, you
shall not be entitled to any benefits hereunder.
<PAGE>
(A) Disability; Retirement. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for six (6) consecutive months, and
within thirty (30) days after written Notice of Termination (as defined in
Subsection 3(D)) is given you shall not have returned to the full-time
performance of your duties, the Company may terminate your employment for
"Disability." Any question as to the existence of your Disability upon which
you and the Company cannot agree shall be determined by a qualified independent
physician selected by you (or, if you are unable to make such selection, it
shall be made by any adult member of your immediate family), and approved by the
Company. The determination of such physician made in writing to the Company and
to you shall be final and conclusive for all purposes of this Agreement.
Termination of your employment based on "Retirement" shall mean your voluntary
termination of employment on a Retirement Date as defined in the Retirement Plan
for Employees of Oneida Ltd. or any successor plan thereto (the "Pension Plan")
as in effect immediately prior to the occurrence of a Change in Control
(whether or not you are a participant in the Pension Plan) or in accordance with
any retirement arrangement established with your consent with respect to you.
(B) Cause. Termination by the Company of your employment for "Cause"
shall mean termination upon (i) the willful and continued failure by you to
substantially perform your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness or from your
Retirement or any such actual or anticipated failure resulting from termination
by you for Good Reason (as hereinafter defined after a written demand for
substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have
not substantially performed your duties, or (ii) the willful engaging by you in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. For purposes of this Subsection, no act or failure to
act on your part shall be deemed "willful" unless done, or omitted to be done,
by you in other than good faith and without reasonable belief that your action
or omission was in the best interests of the Company. Notwithstanding the
foregoing, you shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to you a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board (after reasonable notice to
you and an opportunity for you, together with your counsel, to be heard before
the Board), finding that in the good faith opinion of the Board you were guilty
of conduct set forth above in clause (i) or (ii) of the first sentence of this
Subsection and specifying the particulars thereof in detail.
(C) Good Reason. You shall be entitled to terminate your employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean,
without your express written consent, the occurrence after a Change in Control
of any of the following circumstances:
<PAGE>
(i) Inconsistent Duties. A meaningful and detrimental
alteration in your position or in the nature or status of your responsibilities
(including those as a director of the Company, if any) from those in effect
immediately prior to the Change in Control;
(ii) Reduced Salary or Failure to Increase Salary. A reduction
by the Company in your annual base salary as in effect on the date hereof or as
the same may be increased from time to time; a failure by the Company to
increase your salary at a rate commensurate with that of other key executives of
the Company; or a failure by the Company to increase your salary on an annual
basis to reflect the percentage increase in the cost of living (as determined in
accordance with such statistics or indices as the Board shall reasonably
consider appropriate for such purposes).
(iii) Relocation. The relocation of the office of the Company
where you are employed at the time of the Change in Control (the "CIC Location")
to a location which in your good faith assessment is an area not generally
considered conducive to maintaining the executive offices of a company such as
the Company because of hazardous or undesirable conditions, including, without
limitation, a high crime rate or inadequate facilities, or to a location which
is more than twenty-five (25) miles away from the CIC Location or the Company's
requiring you to be based more than twenty-five (25) miles away from the CIC
Location (except for required travel on the Company's business to an extent
substantially consistent with your present business travel obligations);
(iv) Compensation Plans. The failure by the Company to continue
in effect any material compensation, benefit or profit sharing plan in which you
were participating immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the Company to
continue your participation therein (or in such substitute or alternative plan)
on at least as favorable a basis, both in terms of the amount of benefits
provided and the level of your participation relative to other participants, as
existed immediately prior to the Change in Control;
(v) Benefits and Perquisites. The failure by the Company to
continue to provide you with benefits at least as favorable as those enjoyed by
you under any of the Company's pension, life insurance, medical, health and
accident, disability or savings plans in which you were participating
immediately prior to the Change in Control; the taking of any action by the
Company which would directly or indirectly materially reduce any of such
benefits or deprive you of any material benefit or perquisite enjoyed by you
immediately prior to the Change in Control; or the failure by the Company to
provide you with the number of paid vacation days to which you are entitled on
the basis of years of service with the Company in accordance with the Company's
normal vacation policy in effect immediately prior to the Change in Control;
<PAGE>
(vi) No Assumption by Successor. The failure of the Company to
obtain a satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 5 hereof or, if the business
of the Company for which your services are principally performed is sold at any
time after a Change in Control, the failure of the purchaser of such business to
agree to provide you with the same or a comparable position, duties,
compensation, benefits and perquisites (as described in clauses (iv) and (v)
above) as provided to you by the Company immediately prior to the Change in
Control; or
(vii) No Notice. Any purported termination of your employment
that is not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (D) below (and, if applicable, the requirements of
Subsection (B) above), which purported termination shall not be effective for
purposes of this Agreement.
(D) Notice of Termination. Any purported termination of your
employment by the Company or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 6. For
purposes of his Agreement, a "Notice of Termination" shall mean a notice that
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so
indicated.
(E) Date of Termination, Etc. For purposes of this Agreement, "Date of
Termination" shall mean (i) if your employment is terminated for Disability,
thirty (30) days after a Notice of Termination is given (provided that you shall
not have returned to the full-time performance of your duties during such thirty
(30) day period), and (ii) if your employment is terminated pursuant to
Subsection (B) or (C) above or for any other reason (other than Disability), the
date specified in the Notice of Termination (which, in the case of a termination
pursuant to Subsection B) above shall not be less than thirty (30) days from the
date such Notice of Termination is given, and in the case of a termination
pursuant to Subsection (C) above shall not be less than thirty (30) nor more
than sixty (60) days from the date such Notice of Termination is given);
provided, however, that if within thirty (30) days after any Notice of
Termination is given, the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award,
or by a final judgment, order or decree of a court of competent jurisdiction
(which is not appealable or the time for appeal therefrom having expired and no
appeal having been perfected); Provided further, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any such
dispute, the Company will continue to pay you your full compensation in effect
when the notice giving rise to the dispute was given and
<PAGE>
continue you as a participant in all compensation, benefit and insurance plans
and perquisites in which you were participating when the notice giving rise to
the dispute was given, until the dispute is finally resolved in accordance with
this Subsection. Amounts paid under this Subsection are in addition to all
other amounts due under this Agreement and shall not be offset against or reduce
any other amount due under this Agreement and shall not be reduced by any
compensation earned by you as the result of employment by another employer.
4. Compensation Upon Termination or During Disability. Following a Change in
Control, you shall be entitled to the following benefits during a period of
Disability, or upon termination of your employment, as the case may be, provided
that such period or termination occurs during the Term:
(A) Disability. During any period that you fail to perform your full-
time duties with the Company as a result of your Disability, you shall continue
to receive your base salary at the rate in effect at the commencement of any
such period, together with compensation payable to you under the Company's
disability insurance coverage or other plan during such period, until your
employment is terminated pursuant to Subsection 3(A). Thereafter, your benefits
shall be determined in accordance with the Company's insurance programs and
other benefit or pension plans then in effect in accordance with the terms of
such programs and plans.
(B) Termination for Other than Good Reason or for Cause. If your
employment shall be terminated by the Company for Cause or by you other than for
Good Reason, death or Retirement, the Company shall pay you your full base
salary through the Date of Termination at the rate in effect at the time the
Notice of Termination is given, plus all other amounts to which you are entitled
pursuant to the Company's benefit and pension plans then in effect, and the
Company shall have no further obligations to you under this Agreement.
(C) Retirement; Death. If your employment shall be terminated for
Retirement, or by reason of your death, your benefits shall be determined in
accordance with the Company's benefit and pension plans then in effect.
(D) Breach by the Company. If your employment by the Company shall be
terminated by the Company other than for Cause, Retirement or Disability or by
you for Good Reason, then you shall be entitled to the benefits provided below:
(i) Base Salary. The Company shall pay you your full base
salary through the Date of Termination at the rate in effect at the time the
Notice of Termination is given;
<PAGE>
(ii) Severance Payment. In lieu of any further salary payments
to you for periods subsequent to the Date of Termination, the Company shall pay
as severance pay to you, not later than the tenth (10th) business day following
the Date of Termination, a lump sum severance payment equal to 2.99 times the
average of the annual compensation which was payable to you by the Company (or
any corporation affiliated with the Company within the meaning of section 1504
of the Internal Revenue Code of 1986, as amended (the "Code"), determined
without regard to section 1504(b) of the Code) and includable in your gross
income for Federal income tax purposes for the five (5) taxable years preceding
your taxable year in which a Change in Control occurred. The amount of your
average annual compensation shall be determined in accordance with the
regulations (including proposed regulations) promulgated under section 280G(d)
of the Code; provided, however, that (a) notwithstanding any provision of such
regulations to the contrary, the amount of your average annual compensation
shall be determined by including as compensation any contribution (a "401(k)
Contribution") pursuant to any cash or deferred arrangement (as described in
section 401(k) of the Code) maintained by the Company which is not includable in
your gross income under section 402(a)(8) of the Code and (b) the amount of any
such 401(k) Contribution shall be treated as includable in your gross income in
the taxable year such contribution is made for purposes of the preceding
sentence.
(iii) Legal Fees and Expenses. The Company shall also pay to you
all legal fees and expenses incurred by you as a result of such termination,
including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement (other than any such fees or expenses
incurred in connection with any such claim which is determined to be frivolous).
(iv) Insurance Benefits for 36 Months. For a thirty-six (36)
month period after such termination, the Company shall arrange to provide you
with life, disability, accident and health insurance benefits substantially
similar to and at no greater cost to you than those which you were receiving
immediately prior to the Notice of Termination. Benefits otherwise receivable by
you pursuant to this Subsection 4(D)(iv) shall be reduced to the extent
comparable benefits are actually received by you during the thirty-six (36)
month period following your termination, and any such benefits actually received
by you shall be reported to the Company.
(v) Supplemental Pension. In addition to the Pension benefits
to which you are entitled under the Pension Plan, the Company shall pay you in
one sum in cash on the tenth (10th) business day following the Date of
Termination, a lump sum equal to the actuarial equivalent of the excess of (1)
the retirement pension (determined as a straight life annuity commencing at age
65) which you would have accrued under the terms of the Pension Plan and any
other pension benefit program (without regard to any amendment to such Pension
Plan or other pension benefit program made subsequent to the
<PAGE>
Change in Control and on or prior to the Date of Termination, which amendment
adversely affects any manner the computation of pension benefits thereunder),
determined as if you were fully vested thereunder and had accumulated (after the
Date of Termination thirty-six (36) additional months of service credit
thereunder at your highest annual rate of compensation (the "Compensation Rate")
during the twelve (12) months immediately preceding the Date of Termination (but
in no event shall you be deemed to have accumulated additional months of service
credit after your sixty-fifth (65th) birthday), over (2) the retirement pension
(determined as a straight life annuity commencing at age sixty-five (65)) which
you had then accrued pursuant to the provisions of the Pension Plan and any
other pension benefit program. For purposes of clause (1) above, the
Compensation Rate shall be deemed to include amounts payable pursuant to
Subsection 4(D)(ii) hereof, and amounts payable pursuant to Subsection 4(D)(ii)
hereof shall be deemed to represent thirty-six (36) months of compensation (or
such lesser number of months of compensation to your sixty-fifth (65th)
birthday) for purposes of determining benefits under the Pension Plan. For
purposes of this Subsection, "actuarial equivalent" shall be determined using
the same methods and assumptions utilized under the Pension Plan immediately
prior to the Change in Control.
(vi) Employee Benefit Plans. You shall be entitled to receive
all benefits payable to you under the Company's benefit and pension plans, not
otherwise specifically provided for in this Subsection 4(D).
(E) No Mitigation. You shall not be required to mitigate the amount of
any payment provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation earned by you as the result of
employment by another employer or by pension benefits after the Date of
Termination, or otherwise except as specifically provided in this Section 4.
(F) Reduction of Payments In Certain Cases. Notwithstanding anything
herein to the contrary, if any amounts due to you under this Agreement and any
other plan or program of the Company constitute a "parachute payment," as such
term is defined in Section 280G(b)(2) of the Code (the "Parachute Payment"), and
the amount of the Parachute Payment, reduced by all federal, state and local
taxes applicable thereto, including the excise tax imposed pursuant to Section
4999 of the Code, is less than the amount you would receive if you were paid
three times your "base amount," as defined in Section 280G(b)(3) of the Code,
less $1.00, reduced by all federal, state and local taxes applicable thereto,
then the aggregate of the amounts constituting the Parachute Payment shall be
reduced to an amount that will equal three times your base amount less $1.00.
The determinations to be made with respect to this Subsection 4(F) shall be made
by an accounting firm (the "Auditor") jointly selected by the Company and you
and paid by the Company. The Auditor shall be a nationally recognized United
States public accounting firm that has not during the two years preceding the
date of its selection acted in any way
<PAGE>
on behalf of the Company or any of its subsidiaries. If you and the Company
cannot agree on the accounting firm to serve as the Auditor, then you and the
Company shall each select one accounting firm, which two firms shall jointly
select the accounting firm to serve as the Auditor. If the Auditor determines
that a reduction in the aggregate of the amounts constituting the Parachute
Payment is required by this Subsection (F), you shall have the right to specify
the portion of such reduction, if any, that will be made under this Agreement
and each applicable plan or program of the Company, respectively. If you do not
so specify within, 60 days following
the date of a determination by the Auditor pursuant to the preceding sentence,
the Company shall determine, in its sole discretion, the portion of such
reduction, if any, to be made under this Agreement and each applicable plan or
program of the Company, respectively.
5. Successors; Binding Agreement. (A) Assumption By Successor. The Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as you
would be entitled hereunder if you had terminated your employment for Good
Reason following a Change in Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "the Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
(B) Enforceability By Beneficiaries. This Agreement shall inure to the
benefit of and be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable to you
hereunder had you continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to
your estate.
6. Notice. For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective parties as follows:
If to the Company: Secretary
Oneida Ltd.
Oneida, New York 13421
<PAGE>
If to you: W. Arnold Kimmons
7817 Cheviot Court
Fayettville, New York 13060
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other arty shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement, and this Agreement shall
supersede all Prior agreements, negotiations, correspondence, undertakings and
communications of the parties, oral or written, with respect to the subject
matter hereof. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of New York.
8. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration conducted in the
State of New York in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction; provided, however, that you shall be entitled
to seek specific performance of your right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
11. Contract of Employment. Nothing in this Agreement shall be construed as
giving you any right to be retained in the employ of the Company.
12. Headings. The headings contained in this Agreement are intended solely for
convenience and shall not affect the rights of the parties to this Agreement.
<PAGE>
If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter, which will then
constitute our agreement on this subject.
Sincerely,
ONEIDA LTD.
By: /s/ WILLIAM D. MATTHEWS
William D. Matthews
Title: Chairman of the Board
Chief Executive Officer
Agreed to this 25th day of February, 1998
/s/ W. ARNOLD KIMMONS
W. Arnold Kimmons
<PAGE>
February 25, 1998
Mr. Robert J. Houle
R.R. 4, Box 210
Canastota, New York 13032
Dear Mr. Houle:
Oneida Ltd. (the "Company") considers it essential to the best interests of
its stockholders to foster the continuous employment of key management
personnel. In this connection, the Board of Directors of the Company (the
"Board") recognizes that the possibility of a change in control of the Company
may exist and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of members of the Company's
management, including yourself, to their assigned duties without distraction in
the face of potentially disturbing circumstances arising from any possible
change in control of the Company.
In order to induce you to remain in the employ of the Company, the Company
agrees that you shall receive the severance benefits set forth in this letter
agreement (the "Agreement") in the event that your employment with the Company
is terminated subsequent to a Change in Control (as defined in Section 2).
1. Term of Agreement. The term of this Agreement (the "Term") shall commence on
the Operative Date (as hereinafter defined) and end on the fifth anniversary of
the Operative Date, provided that it has not been terminated in accordance with
its terms. In the event, however, that you attain the age of sixty-five (65)
during the Term, then this Agreement shall terminate on the last day of the
month in which you attain the age of sixty-five (65). For purposes of this
Agreement, the term "Operative Date" shall mean the date on which a Change in
Control occurs, provided that (i) you are then in the employ of the Company and
(ii) such Change in Control occurs before you reach age sixty-five (65).
2. Change in Control. No benefits shall be payable hereunder unless there shall
have been a Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if:
<PAGE>
(A) any "Person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any company owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of sock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding securities;
(B) during any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (A), (C) or (D) of this
Section) whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
(C) the stockholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction in which no "person" (as
hereinabove defined) acquires more than 20% of the combined voting power of the
Company's then outstanding securities; or
(D) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or Substantially all of the Company's assets.
3. Termination Following Change in Control. If a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Subsection 4(D) upon
the subsequent termination of your employment during the Term unless such
termination is because of your death or retirement, by the Company for cause or
disability, or by you other than for good reason. In the event your employment
with the Company is terminated for any reason prior to the Operative Date, you
shall not be entitled to any benefits hereunder.
<PAGE>
(A) Disability; Retirement. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for six (6) consecutive months, and
within thirty (30) days after written Notice of Termination (as defined in
Subsection 3(D)) is given you shall not have returned to the full-time
performance of your duties, the Company may terminate your employment for
"Disability." Any question as to the existence of your Disability upon which
you and the Company cannot agree shall be determined by a qualified independent
physician selected by you (or, if you are unable to make such selection, it
shall be made by any adult member of your immediate family), and approved by the
Company. The determination of such physician made in writing to the Company and
to you shall be final and conclusive for all purposes of this Agreement.
Termination of your employment based on "Retirement" shall mean your voluntary
termination of employment on a Retirement Date as defined in the Retirement Plan
for Employees of Oneida Ltd. or any successor plan thereto (the "Pension Plan")
as in effect immediately prior to the occurrence of a Change in Control
(whether or not you are a participant in the Pension Plan) or in accordance with
any retirement arrangement established with your consent with respect to you.
(B) Cause. Termination by the Company of your employment for "Cause"
shall mean termination upon (i) the willful and continued failure by you to
substantially perform your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness or from your
Retirement or any such actual or anticipated failure resulting from termination
by you for Good Reason (as hereinafter defined after a written demand for
substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have
not substantially performed your duties, or (ii) the willful engaging by you in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. For purposes of this Subsection, no act or failure to
act on your part shall be deemed "willful" unless done, or omitted to be done,
by you in other than good faith and without reasonable belief that your action
or omission was in the best interests of the Company. Notwithstanding the
foregoing, you shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to you a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board (after reasonable notice to
you and an opportunity for you, together with your counsel, to be heard before
the Board), finding that in the good faith opinion of the Board you were guilty
of conduct set forth above in clause (i) or (ii) of the first sentence of this
Subsection and specifying the particulars thereof in detail.
(C) Good Reason. You shall be entitled to terminate your employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean,
without your express written consent, the occurrence after a Change in Control
of any of the following circumstances:
<PAGE>
(i) Inconsistent Duties. A meaningful and detrimental
alteration in your position or in the nature or status of your responsibilities
(including those as a director of the Company, if any) from those in effect
immediately prior to the Change in Control;
(ii) Reduced Salary or Failure to Increase Salary. A reduction
by the Company in your annual base salary as in effect on the date hereof or as
the same may be increased from time to time; a failure by the Company to
increase your salary at a rate commensurate with that of other key executives of
the Company; or a failure by the Company to increase your salary on an annual
basis to reflect the percentage increase in the cost of living (as determined in
accordance with such statistics or indices as the Board shall reasonably
consider appropriate for such purposes).
(iii) Relocation. The relocation of the office of the Company
where you are employed at the time of the Change in Control (the "CIC Location")
to a location which in your good faith assessment is an area not generally
considered conducive to maintaining the executive offices of a company such as
the Company because of hazardous or undesirable conditions, including, without
limitation, a high crime rate or inadequate facilities, or to a location which
is more than twenty-five (25) miles away from the CIC Location or the Company's
requiring you to be based more than twenty-five (25) miles away from the CIC
Location (except for required travel on the Company's business to an extent
substantially consistent with your present business travel obligations);
(iv) Compensation Plans. The failure by the Company to continue
in effect any material compensation, benefit or profit sharing plan in which you
were participating immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the Company to
continue your participation therein (or in such substitute or alternative plan)
on at least as favorable a basis, both in terms of the amount of benefits
provided and the level of your participation relative to other participants, as
existed immediately prior to the Change in Control;
(v) Benefits and Perquisites. The failure by the Company to
continue to provide you with benefits at least as favorable as those enjoyed by
you under any of the Company's pension, life insurance, medical, health and
accident, disability or savings plans in which you were participating
immediately prior to the Change in Control; the taking of any action by the
Company which would directly or indirectly materially reduce any of such
benefits or deprive you of any material benefit or perquisite enjoyed by you
immediately prior to the Change in Control; or the failure by the Company to
provide you with the number of paid vacation days to which you are entitled on
the basis of years of service with the Company in accordance with the Company's
normal vacation policy in effect immediately prior to the Change in Control;
<PAGE>
(vi) No Assumption by Successor. The failure of the Company to
obtain a satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 5 hereof or, if the business
of the Company for which your services are principally performed is sold at any
time after a Change in Control, the failure of the purchaser of such business to
agree to provide you with the same or a comparable position, duties,
compensation, benefits and perquisites (as described in clauses (iv) and (v)
above) as provided to you by the Company immediately prior to the Change in
Control; or
(vii) No Notice. Any purported termination of your employment
that is not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (D) below (and, if applicable, the requirements of
Subsection (B) above), which purported termination shall not be effective for
purposes of this Agreement.
(D) Notice of Termination. Any purported termination of your
employment by the Company or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 6. For
purposes of his Agreement, a "Notice of Termination" shall mean a notice that
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so
indicated.
(E) Date of Termination, Etc. For purposes of this Agreement, "Date of
Termination" shall mean (i) if your employment is terminated for Disability,
thirty (30) days after a Notice of Termination is given (provided that you shall
not have returned to the full-time performance of your duties during such thirty
(30) day period), and (ii) if your employment is terminated pursuant to
Subsection (B) or (C) above or for any other reason (other than Disability), the
date specified in the Notice of Termination (which, in the case of a termination
pursuant to Subsection B) above shall not be less than thirty (30) days from the
date such Notice of Termination is given, and in the case of a termination
pursuant to Subsection (C) above shall not be less than thirty (30) nor more
than sixty (60) days from the date such Notice of Termination is given);
provided, however, that if within thirty (30) days after any Notice of
Termination is given, the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award,
or by a final judgment, order or decree of a court of competent jurisdiction
(which is not appealable or the time for appeal therefrom having expired and no
appeal having been perfected); Provided further, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any such
dispute, the Company will continue to pay you your full compensation in effect
when the notice giving rise to the dispute was given and
<PAGE>
continue you as a participant in all compensation, benefit and insurance plans
and perquisites in which you were participating when the notice giving rise to
the dispute was given, until the dispute is finally resolved in accordance with
this Subsection. Amounts paid under this Subsection are in addition to all
other amounts due under this Agreement and shall not be offset against or reduce
any other amount due under this Agreement and shall not be reduced by any
compensation earned by you as the result of employment by another employer.
4. Compensation Upon Termination or During Disability. Following a Change in
Control, you shall be entitled to the following benefits during a period of
Disability, or upon termination of your employment, as the case may be, provided
that such period or termination occurs during the Term:
(A) Disability. During any period that you fail to perform your full-
time duties with the Company as a result of your Disability, you shall continue
to receive your base salary at the rate in effect at the commencement of any
such period, together with compensation payable to you under the Company's
disability insurance coverage or other plan during such period, until your
employment is terminated pursuant to Subsection 3(A). Thereafter, your benefits
shall be determined in accordance with the Company's insurance programs and
other benefit or pension plans then in effect in accordance with the terms of
such programs and plans.
(B) Termination for Other than Good Reason or for Cause. If your
employment shall be terminated by the Company for Cause or by you other than for
Good Reason, death or Retirement, the Company shall pay you your full base
salary through the Date of Termination at the rate in effect at the time the
Notice of Termination is given, plus all other amounts to which you are entitled
pursuant to the Company's benefit and pension plans then in effect, and the
Company shall have no further obligations to you under this Agreement.
(C) Retirement; Death. If your employment shall be terminated for
Retirement, or by reason of your death, your benefits shall be determined in
accordance with the Company's benefit and pension plans then in effect.
(D) Breach by the Company. If your employment by the Company shall be
terminated by the Company other than for Cause, Retirement or Disability or by
you for Good Reason, then you shall be entitled to the benefits provided below:
(i) Base Salary. The Company shall pay you your full base
salary through the Date of Termination at the rate in effect at the time the
Notice of Termination is given;
<PAGE>
(ii) Severance Payment. In lieu of any further salary payments
to you for periods subsequent to the Date of Termination, the Company shall pay
as severance pay to you, not later than the tenth (10th) business day following
the Date of Termination, a lump sum severance payment equal to 2.99 times the
average of the annual compensation which was payable to you by the Company (or
any corporation affiliated with the Company within the meaning of section 1504
of the Internal Revenue Code of 1986, as amended (the "Code"), determined
without regard to section 1504(b) of the Code) and includable in your gross
income for Federal income tax purposes for the five (5) taxable years preceding
your taxable year in which a Change in Control occurred. The amount of your
average annual compensation shall be determined in accordance with the
regulations (including proposed regulations) promulgated under section 280G(d)
of the Code; provided, however, that (a) notwithstanding any provision of such
regulations to the contrary, the amount of your average annual compensation
shall be determined by including as compensation any contribution (a "401(k)
Contribution") pursuant to any cash or deferred arrangement (as described in
section 401(k) of the Code) maintained by the Company which is not includable in
your gross income under section 402(a)(8) of the Code and (b) the amount of any
such 401(k) Contribution shall be treated as includable in your gross income in
the taxable year such contribution is made for purposes of the preceding
sentence.
(iii) Legal Fees and Expenses. The Company shall also pay to you
all legal fees and expenses incurred by you as a result of such termination,
including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement (other than any such fees or expenses
incurred in connection with any such claim which is determined to be frivolous).
(iv) Insurance Benefits for 36 Months. For a thirty-six (36)
month period after such termination, the Company shall arrange to provide you
with life, disability, accident and health insurance benefits substantially
similar to and at no greater cost to you than those which you were receiving
immediately prior to the Notice of Termination. Benefits otherwise receivable by
you pursuant to this Subsection 4(D)(iv) shall be reduced to the extent
comparable benefits are actually received by you during the thirty-six (36)
month period following your termination, and any such benefits actually received
by you shall be reported to the Company.
(v) Supplemental Pension. In addition to the Pension benefits
to which you are entitled under the Pension Plan, the Company shall pay you in
one sum in cash on the tenth (10th) business day following the Date of
Termination, a lump sum equal to the actuarial equivalent of the excess of (1)
the retirement pension (determined as a straight life annuity commencing at age
65) which you would have accrued under the terms of the Pension Plan and any
other pension benefit program (without regard to any amendment to such Pension
Plan or other pension benefit program made subsequent to the
<PAGE>
Change in Control and on or prior to the Date of Termination, which amendment
adversely affects any manner the computation of pension benefits thereunder),
determined as if you were fully vested thereunder and had accumulated (after the
Date of Termination thirty-six (36) additional months of service credit
thereunder at your highest annual rate of compensation (the "Compensation Rate")
during the twelve (12) months immediately preceding the Date of Termination (but
in no event shall you be deemed to have accumulated additional months of service
credit after your sixty-fifth (65th) birthday), over (2) the retirement pension
(determined as a straight life annuity commencing at age sixty-five (65)) which
you had then accrued pursuant to the provisions of the Pension Plan and any
other pension benefit program. For purposes of clause (1) above, the
Compensation Rate shall be deemed to include amounts payable pursuant to
Subsection 4(D)(ii) hereof, and amounts payable pursuant to Subsection 4(D)(ii)
hereof shall be deemed to represent thirty-six (36) months of compensation (or
such lesser number of months of compensation to your sixty-fifth (65th)
birthday) for purposes of determining benefits under the Pension Plan. For
purposes of this Subsection, "actuarial equivalent" shall be determined using
the same methods and assumptions utilized under the Pension Plan immediately
prior to the Change in Control.
(vi) Employee Benefit Plans. You shall be entitled to receive
all benefits payable to you under the Company's benefit and pension plans, not
otherwise specifically provided for in this Subsection 4(D).
(E) No Mitigation. You shall not be required to mitigate the amount of
any payment provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation earned by you as the result of
employment by another employer or by pension benefits after the Date of
Termination, or otherwise except as specifically provided in this Section 4.
(F) Reduction of Payments In Certain Cases. Notwithstanding anything
herein to the contrary, if any amounts due to you under this Agreement and any
other plan or program of the Company constitute a "parachute payment," as such
term is defined in Section 280G(b)(2) of the Code (the "Parachute Payment"), and
the amount of the Parachute Payment, reduced by all federal, state and local
taxes applicable thereto, including the excise tax imposed pursuant to Section
4999 of the Code, is less than the amount you would receive if you were paid
three times your "base amount," as defined in Section 280G(b)(3) of the Code,
less $1.00, reduced by all federal, state and local taxes applicable thereto,
then the aggregate of the amounts constituting the Parachute Payment shall be
reduced to an amount that will equal three times your base amount less $1.00.
The determinations to be made with respect to this Subsection 4(F) shall be made
by an accounting firm (the "Auditor") jointly selected by the Company and you
and paid by the Company. The Auditor shall be a nationally recognized United
States public accounting firm that has not during the two years preceding the
date of its selection acted in any way
<PAGE>
on behalf of the Company or any of its subsidiaries. If you and the Company
cannot agree on the accounting firm to serve as the Auditor, then you and the
Company shall each select one accounting firm, which two firms shall jointly
select the accounting firm to serve as the Auditor. If the Auditor determines
that a reduction in the aggregate of the amounts constituting the Parachute
Payment is required by this Subsection (F), you shall have the right to specify
the portion of such reduction, if any, that will be made under this Agreement
and each applicable plan or program of the Company, respectively. If you do not
so specify within, 60 days following
the date of a determination by the Auditor pursuant to the preceding sentence,
the Company shall determine, in its sole discretion, the portion of such
reduction, if any, to be made under this Agreement and each applicable plan or
program of the Company, respectively.
5. Successors; Binding Agreement. (A) Assumption By Successor. The Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as you
would be entitled hereunder if you had terminated your employment for Good
Reason following a Change in Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "the Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
(B) Enforceability By Beneficiaries. This Agreement shall inure to the
benefit of and be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable to you
hereunder had you continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to
your estate.
6. Notice. For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective parties as follows:
If to the Company: Secretary
Oneida Ltd.
Oneida, New York 13421
<PAGE>
If to you: Robert J. Houle
R.R. 4, Box 210
Canastota, New York 13032
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other arty shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement, and this Agreement shall
supersede all Prior agreements, negotiations, correspondence, undertakings and
communications of the parties, oral or written, with respect to the subject
matter hereof. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of New York.
8. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration conducted in the
State of New York in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction; provided, however, that you shall be entitled
to seek specific performance of your right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
11. Contract of Employment. Nothing in this Agreement shall be construed as
giving you any right to be retained in the employ of the Company.
12. Headings. The headings contained in this Agreement are intended solely for
convenience and shall not affect the rights of the parties to this Agreement.
<PAGE>
If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter, which will then
constitute our agreement on this subject.
Sincerely,
ONEIDA LTD.
By: /s/ WILLIAM D. MATTHEWS
William D. Matthews
Title: Chairman of the Board
Chief Executive Officer
Agreed to this 25th day of February, 1998
/s/ ROBERT J. HOULE
Robert J. Houle
<PAGE>
EXHIBIT 10(c)
ONEIDA LTD.
1987 STOCK OPTION PLAN
1. PURPOSE
The purpose of the Oneida Ltd. 1987 Stock Option Plan (the "Plan") is to aid
Oneida Ltd. (the "Company") and its Subsidiaries, as defined below, in
attracting and retaining employees of outstanding competence and to enable
selected key employees of the Company and any Subsidiary to acquire or
increase ownership interests in the Company on a basis that will encourage them
to perform at increasing levels of effectiveness and use their best efforts to
promote the growth and profitability of the Company or any Subsidiary.
Consistent with these objectives, the Plan authorizes the granting to
selected key employees of Incentive Stock Options and Nonqualified Stock
Options, as defined herein, to acquire shares of Company stock pursuant to the
terms and conditions hereinafter set forth. As used herein, the term
"Subsidiary" means any domestic or foreign corporation, at least 50% of the
outstanding voting stock or voting power of which is beneficially owned,
directly or indirectly, by the Company. The term "Incentive Stock Options"
refers to options granted hereunder which are "incentive stock options" within
the meaning of Section 422A(b) of the Internal Revenue Code of 1986, as amended
(the "Code"), and the term "Nonqualified Stock Options" refers to options
granted hereunder other than Incentive Stock Options. The term "Options" refers
to Incentive Stock Options and Nonqualified Stock Options granted under the Plan
unless reference is specifically made to Incentive Stock Options or Nonqualified
Stock Options.
2. EFFECTIVE DATE
The Plan shall become effective May 27, 1987, subject to approval by the
affirmative votes of the holders of a majority of the outstanding shares of
Common Stock of the Company present, or represented, and entitled to vote at the
May 27, 1987 Annual Meeting of the Stockholders of the Company. In the event
that such stockholder approval of the Plan is not obtained at such time, the
Plan shall not become effective.
<PAGE>
3. ADMINISTRATION
(a) The Plan shall be administered by the Executive Compensation Committee
(the "Committee") of the board of Directors of the Company (the "Board of
Directors"); provided that the Committee shall consist of at least three members
and each member shall not have been eligible, during the one year period prior
to the later of the effective date of the Plan or such member's appointment to
the Committee, to receive an Option under this Plan or to receive stock or an
option to purchase stock of the Company or a Subsidiary under any other plan
maintained by the Company or a Subsidiary. Any member of the Committee who does
not satisfy the foregoing requirement shall not serve in his or her capacity as
a Committee member for purposes of administration of the Plan, until one year
has elapsed from the date he or she was last eligible to receive such stock or
such an option under the Plan or such other plan. If, at any time, there are
less than three members of the Committee eligible to serve in such capacity for
purposes of administration of the Plan as a result of the preceding sentence or
otherwise, the Board of Directors shall appoint one or more members of the Board
of Directors, who shall qualify hereunder, to serve as members of the Committee
solely for purposes of administration of the Plan. Such additional Committee
members shall serve, and may be removed, at the pleasure of the Board of
Directors.
(b) For purposes of administration of the Plan, a majority of the members
of the Committee eligible to serve as such shall constitute a quorum, and any
action taken by a majority of such members of the Committee present at any
meeting at which a quorum is present, or acts approved in writing by a majority
of such members of the Committee, shall be the acts of the Committee.
(c) Subject to the express provisions of the Plan, the Committee shall have
full and final authority to decide when Options to acquire Company stock will be
granted under the Plan, to select the key employees to whom the Options will be
granted, and to determine the number of Shares (as defined in paragraph 5
hereof) to be covered by each Option, the price at which such shares may be
purchased and other terms and conditions of such purchase. In making these
determinations, the Committee shall solicit the recommendations of the Chief
Executive Officer of the Company and may take into account the key employee's
present and potential contributions to the Company's or a Subsidiary's success
and any other factors which the Committee may deem relevant. Subject again to
the express provisions of the
<PAGE>
Plan, the Committee shall also have full authority to interpret the Plan and any
stock option agreements evidencing Options granted hereunder, to issue rules for
administering the Plan, to change, alter, amend or rescind such rules, and to
make all other determinations necessary or appropriate for the administration of
the Plan. All determinations, interpretations and constructions made by the
Committee pursuant to this paragraph 3 shall be final and conclusive, except to
the extent that authority for making such determinations is expressly reserved
under the Plan to the
Board of Directors, in which case the determinations of the Board of Directors
shall be final and conclusive. No member of the Committee or the Board of
Directors shall be liable for any action, determination or omission taken or
made in good faith with respect to the Plan or any Option granted hereunder.
4. ELIGIBILITY
Grants of Options under the Plan shall be confined to key employees of the
Company or a Subsidiary (including officers and directors who are also employees
of the Company or a Subsidiary) who devote substantially their full time to the
Company or Subsidiary and whose performance can have a major impact on the
Company's or Subsidiary's success; provided, however, that no Option shall be
granted to any member of the Committee.
5. OPTION SHARES
(a) The stock subject to the Options granted under the Plan shall be shares
of Common Stock, $6.25 par value, of the Company ("Shares") and except as
otherwise required or permitted by subparagraph (b) of this paragraph 5, the
aggregate number of Shares with respect to which Options may be granted under
the Plan shall not exceed 400,000 Shares. If an Option expires, terminates, or
is otherwise surrendered, in whole or in part, the Shares allocable to the
unexercised portion of such Option shall again become available for grants of
Options under the Plan. As determined from time to time by the Board of
Directors, the Shares available under the Plan for grants of Options may consist
either in whole or in part of authorized by unissued Shares or Shares which have
been reacquired by the Company following original issuance.
<PAGE>
(b) The aggregate number of Shares purchasable under Options granted
pursuant to the provisions of the Plan and the number of Shares and the Option
price for Shares covered by each outstanding Option shall be proportionately
adjusted for any increase or decrease in the number of issued shares resulting
from a subdivision or consolidation of the issued Shares and may, in the
absolute discretion of the Board of Directors, be similarly adjusted for any
other capital adjustment, the payment of a stock dividend, or other increase or
decrease in such Shares effected without receipt of consideration by the
Company.
6. TERMS AND CONDITIONS OF OPTIONS
Each Option granted pursuant to the Plan shall be evidenced by a stock
option agreement ("Option Agreement") between the Company and the key employee
to whom the Option is granted (the "Optionee") effective as of the Date of
Grant, as defined herein, in such form or forms as the Committee, from time to
time, shall prescribe, which Option Agreements need not be identical to each
other but shall comply with and be subject to the following terms and
conditions:
(a) Option Price. The price at which each Share may be purchased pursuant
to an Option granted under the Plan shall be at least equal to 100% of the Fair
Market Value, as defined herein, for each Share on the date the Committee
approves the granting of such Option (the "Date of Grant"), but in no event
shall such price be less than the par value of such Shares. The Fair Market
Value of the Shares on any date shall be the closing price of the Shares on such
date on the New York Stock Exchange (the "Exchange") (or the principal market in
which the Shares were traded, if the Shares are not listed on the Exchange on
such date), or if the Shares were not traded on such date, the closing price of
the Shares on the next preceding trading day during which the Shares are traded.
Anything contained in this subparagraph (a) of paragraph 6 to the contrary
notwithstanding, in the event that the number of Shares subject to any Option is
adjusted pursuant to paragraph 5(b) hereof, a corresponding adjustment shall be
made in the price at which the Shares subject to such Option may thereafter be
purchased.
(b) Annual Limit on Exercisability. The aggregate Fair Market Value of
Shares with respect to which an Incentive Stock Option may be exercisable for
the
<PAGE>
first time in any calendar year under the terms of the Plan and all other
incentive stock option plans of the Company, its parent or Subsidiaries adopted
after December 31, 1986 shall not exceed $100,000. for purposes of this
subparagraph (b), the aggregate Fair Market Value, as defined in paragraph 6(a),
shall be determined as of the date the Incentive Stock Option is granted.
(c) Duration of Options. Each Option shall be effective for such term as
shall be determined by the Committee on the Date of Grant and shall terminate on
the date specified in the Option Agreement ("Termination Date"); provided,
however, that the term of any Incentive Stock Option shall not exceed ten years
from the Date of Grant of such Incentive Stock Option; and provided, further,
the term of any Nonqualified Stock Option shall be at least ten years and one
month from the Date of Grant of such Nonqualified Stock Option.
(d) Restriction on Exercise of Options. In its sole discretion, the
Committee may provide in the Option Agreement that Options granted pursuant to
the terms thereof shall vest in accordance with a schedule of vesting as set
forth therein, and Options granted pursuant to such Option Agreement may
thereafter be exercised only to the extent that the Optionee is vested in such
Options; provided, however, that the maximum period under which an Optionee
shall become 100% vested in Options granted under this Plan shall not exceed
five years from the Date of Grant of such Options. Anything contained in this
subparagraph (d) of paragraph 6 or in any Option Agreement to the contrary
notwithstanding, an Optionee shall become fully (100%) vested in each Option in
the event of his or her termination of employment with the Company or a
Subsidiary for reason of death, disability, or Retirement (as defined in
subparagraph (h)(V) of this paragraph 6).
(e) Incentive Stock Options Granted to Certain Stockholders. No Incentive
Stock Option may be issued pursuant to the terms of the Plan to any individual
who in the aggregate controls more than 10% of the total combined voting power
of all classes of stock of the Company or its Subsidiaries unless (A) the Option
Price determined as of the Date of Grant is at least 110% of the Fair Market
Value of the Shares subject to the Incentive Stock Option and (B) the Incentive
Stock Option is not exercisable more than five years from the Date of Grant.
<PAGE>
(f) Exercise of Options. Subject to the provisions of subparagraph (d)
herein and of the Option Agreement pursuant to which the Option is granted, a
person entitled to exercise an Option may exercise it in whole at any time, or
in part from time to time, by delivering to the Secretary of the Company written
notice specifying the number of Shares with respect to which the Option is being
exercised, together with payment in full of the purchase price of such Shares
plus any federal, state of local income taxes for which the Company has a
withholding obligation in connection with such exercise. Such payment shall be
made in cash or by certified check or bank draft to the order of the Company;
provided, however, that the Committee may, in its sole discretion, authorize
such payment, in whole or in part, in any other form, including payment by
personal check or by the exchange of Common Stock of the Company previously
acquired by the person entitled to exercise the Option.
(g) Nontransferability. Options shall not be transferable other than by
will or the laws of descent and distribution and no Option may be exercised by
anyone other than the Optionee, except that, should the Optionee die or become
incapacitated, the Option may be exercised by his estate, legal representative
or beneficiary, as the case may be, subject to all other terms and conditions
contained in the Plan.
(h) Termination of Employment. The following rules shall apply to an Option
in the event of an Optionee's termination of employment with the Company or a
Subsidiary:
(I) In the event that (A) the Optionee's employment is terminated by
the Company for Cause as defined in subparagraph (VIII) herein, or (B) the
Optionee resigns voluntarily from the Company (other than for reason of a
disability or Retirement, as defined herein) without the written consent of the
Company or other than for Good Reason as defined in subparagraph (IX) herein,
such Option shall immediately terminate.
(II) In the event that the Optionee resigns for Good Reason as
defined in subparagraph (IX) herein, or is terminated by the Company other than
for Cause as defined in subparagraph (VIII) herein, such Option shall terminate
on the date which is 90 days from the date of such termination or resignation of
employment or on the Expiration Date of such Option, whichever shall first
occur.
<PAGE>
(III) In the event of the death of an Optionee prior to the Expiration
Date of his or her Option and either while he or she is employed by the Company
or a Subsidiary or, if subparagraph (h)(II), (h)(IV) or (h)(V) hereof is
applicable, during a period of time following his or her termination or
resignation of employment when such Option is exercisable, such Option shall
terminate on the first anniversary of the Optionee's death or on the Expiration
Date of such Option, whichever shall first occur.
(IV) In the event of the Optionee's termination of employment with
the Company or a Subsidiary, prior to the Expiration Date of his or her Option
for reasons of disability within the meaning of Section 22(e)(3) of the Code,
such Option shall terminate on the date which is one year after the date of such
termination of employment or on the Expiration Date of such Option, whichever
shall first occur.
(V) In the event of the Optionee's Retirement from the Company, such
Option shall terminate on the date which is six months after the date of such
Retirement, or on the Expiration Date of such Option, whichever shall first
occur. As used herein, "Retirement" shall mean resignation or termination of
employment after attainment of an age required for payment of an immediate
pension pursuant to the terms of any qualified retirement plan maintained by
the Company or a Subsidiary in which the Optionee participates.
(VI) Anything contained in this subparagraph (h) of paragraph 6 to
the contrary notwithstanding, an Option may only be exercised following the
Optionee's termination or resignation of employment with the Company or a
Subsidiary for reasons other than death, disability or Retirement if, and to the
extent that, such Option would have been exercisable immediately prior to such
termination or resignation of employment.
(VII) An Optionee's transfer of employment between the Company and a
Subsidiary or between Subsidiaries shall not constitute a termination of
employment and the Committee shall determine in each case whether an authorized
leave of absence for military service or otherwise shall constitute a
termination of employment.
<PAGE>
(VIII) Termination for "Cause" shall mean a termination of employment
with the Company or any Subsidiary which is by reason of (A) the willful failure
of the Optionee to satisfactorily perform duties consistent with his title and
position reasonably required of the Optionee by the Board of Directors of the
Company or of any Subsidiary of the Company of which he is an employee (or any
officer of the Company or such Subsidiary duly authorized by such Board of
Directors for such purpose) and refusal of such Optionee to correct such failure
(other than by reason of the incapacity of the Optionee due to physical or
mental illness) within ten business days after notification by the Board of
Directors of the Company or of any Subsidiary of which such Optionee is an
employee (or any officer of the Company or such Subsidiary duly authorized by
such Board of Directors for such purpose) and refusal of such Optionee to
correct such failure (other than by reason of the incapacity of the Optionee due
to physical or mental illness) within ten business days after notification by
the Board of Directors of the Company or of any Subsidiary of which such
Optionee is an employee (or any officer of the Company or such Subsidiary duly
authorized by such Board of Directors for such purpose), or (B) the commission
by the Optionee of a felony, or the perpetration by the Optionee of a dishonest
act or common law fraud against the Company or any Subsidiary, or (C) any other
act or omission which is materially injurious to the financial condition or
business reputation of the Company or any Subsidiary and failure of such
Optionee to correct such act or omission within ten business days after notice
by the Board of Directors of the Company or such Subsidiary of such act or
omission (or any officer or director of the Company or such Subsidiary
authorized by such Board of Directors for such purpose).
(IX) For the purpose of this subparagraph (h), a resignation for
"Good Reason" shall mean the resignation of the Optionee occurring by reason of
(A) failure to elect or reelect or to appoint or reappoint such Optionee to, or
removal from, the position such Optionee held with the Company or a Subsidiary
at the time any Option is granted to him hereunder, or (B) relocation of the
office of the Company or the Subsidiary where such Optionee is employed at the
time any Option is granted hereunder to a new location more than 50 miles
from such location, or (C) a material change by the Company in the Optionee's
functions, duties, or responsibilities which change would cause such Optionee's
position with the Company (or a Subsidiary) to become of less dignity,
responsibility or scope from the position held by such Optionee at the time any
Option is granted to
<PAGE>
him hereunder, or (D) a material reduction by the Company in the Optionee's
total annual cash compensation.
(i) No Rights as Stockholder or to Continued Employment. No Optionee shall
have any rights as a Stockholder of the Company with respect to any Shares prior
to the date of issuance to him or her of the certificate or certificates for
such Shares and neither the Plan nor any Option granted under the Plan shall
confer upon an Optionee any right to continuance of employment by the Company or
any Subsidiary or interfere in any way with the right of the Company or
Subsidiary to terminate the employment of such Optionee.
7. ISSUANCE OF SHARES; RESTRICTIONS
(a) Subject to the conditions and restrictions provided in this paragraph
7, the Company shall, within twenty business days after an Option has been duly
exercised in whole or in part, deliver to the person who exercised the Option a
certificate, registered in the name of such person, for the number of Shares
with respect to which the Option has been exercised. The Company may legend any
stock certificate issued hereunder to reflect any restrictions provided for in
this paragraph 7.
(b) Unless the Shares subject to Options granted under the Plan have been
registered under the Securities Act of 1933, as amended, or the Company has
determined that an exemption from registration is available, the Company may
require prior to and as a condition of the issuance of any Shares that the
person exercising an Option hereunder furnish the Company with a written
representation in a form prescribed by the Committee to the effect that such
person is acquiring said Shares solely with a view to investment for his or her
own account and not with a view to the resale or distribution of all or any part
thereof, and that such person will not dispose of any of such Shares unless and
until either the Shares are registered under the Securities Act of 1933, as
amended or the Company is satisfied that an exemption from such registration is
available.
(c) anything contained herein to the contrary notwithstanding, the Company
shall not be obligated to sell or issue any Shares under the Plan unless and
until the Company is satisfied that such sale or issuance complies with (i) all
applicable requirements of the New York Stock
<PAGE>
Exchange (or the governing body of the principal market in which such Shares are
traded, if such Shares are not ten listed on that Exchange), (ii) all applicable
provisions of the Securities Act of 1933, as amended, and (iii) all other laws
or regulations by which the Company is bound or to which the Company is subject.
8. AMENDMENT AND TERMINATION OF PLAN
The Board of Directors at any time may terminate the Plan or amend it from
time to time in such respects as it deems desirable and, with the consent of the
Optionee who is a party thereto, and with the approval of the Board of
Directors, any Option may be modified or amended; provided that without the
further approval of the Stockholders of the Company in the manner required under
paragraph 2 hereof, no amendment shall (i) increase the maximum aggregate
number of Shares with respect to which Options may be granted under the Plan,
(ii) materially increase the benefits accruing to participants under the Plan,
within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, (iii)
change the minimum option price provided for in paragraph 6(a) hereof, or (iv)
change the eligibility provisions hereof, and provided further that, subject to
the provisions of paragraph 7 hereof, no termination of or amendment to the Plan
shall adversely affect the rights of an Optionee or other person holding an
Option hereunder without the consent of such Optionee or other person, as the
case may be.
9. TERM OF THE PLAN
Unless the Plan shall have been terminated earlier pursuant to paragraph 8
hereof, the Plan shall terminate on May 26, 1997, and no Options may be granted
thereafter.
<PAGE>
EXHIBIT 13
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
ONEIDA LTD.
For the years ended January 1998, 1997 and 1996
<CAPTION>
(Thousands except per share amounts)
Year ended in January 1998 1997 1996
<S> <C> <C> <C>
NET SALES $442,866 $376,923 $363,811
COST OF SALES 274,808 243,934 236,560
GROSS MARGIN 168,058 132,989 127,251
OPERATING EXPENSES:
Selling, advertising
and distribution 78,467 67,868 66,693
General and
administrative 38,890 29,231 27,350
Total 117,357 97,099 94,043
INCOME FROM OPERATIONS 50,701 35,890 33,208
OTHER EXPENSE 1,554 832 762
INTEREST EXPENSE 6,823 6,503 6,877
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 42,324 28,555 25,569
PROVISION FOR INCOME TAXES 16,189 11,279 10,144
INCOME FROM CONTINUING OPERATIONS 26,135 17,276 15,425
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS (304) 2,663
GAIN ON DISPOSAL OF DISCONTINUED
OPERATIONS 2,566
NET INCOME $ 28,701 $16,972 $18,088
EARNINGS PER SHARE OF
COMMON STOCK
Continuing operations
Basic $1.57 $1.04 $.94
Diluted 1.55 1.02 .93
Net Income
Basic 1.73 1.02 1.10
Diluted 1.71 1.00 1.09
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET
<CAPTION>
(Thousands)
ASSETS January 31, 1998 January 25, 1997
<S> <C> <C>
CURRENT ASSETS:
Cash $ 3,095 $ 3,183
Receivables 63,922 48,709
Inventories 133,419 124,293
Other current assets 9,408 9,544
Net assets of discontinued operations 33,762
Total current assets 209,844 219,491
PROPERTY, PLANT AND EQUIPMENT:
Land and buildings 49,505 45,502
Machinery and equipment 156,767 149,927
Total 206,272 195,429
Less accumulated depreciation 121,460 116,283
Property, plant and equipment-net 84,812 79,146
OTHER ASSETS:
Intangible assets-net of
accumulated amortization of
$3,051,000 and $561,000 38,885 32,375
Deferred income taxes 18,820 16,565
Other 11,225 2,651
TOTAL $363,586 $350,228
<PAGE>
(Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY January 31, 1998 January 25, 1997
CURRENT LIABILITIES:
Short-term debt $12,717 $15,593
Accounts payable 21,735 14,176
Accrued liabilities 51,347 37,082
Current installments of long-term debt 4,711 29,703
Total current liabilities 90,510 96,554
LONG-TERM DEBT 69,415 68,126
OTHER LIABILITIES:
Accrued postretirement liability 53,114 52,273
Accrued pension liability 6,303 5,666
Other liabilities 8,987 9,291
Total 68,404 67,230
STOCKHOLDERS' EQUITY:
Cumulative 6% preferred stock-$25
par value; authorized 95,660 shares,
issued 88,001 and 88,624 shares,
respectively; callable at $30
per share 2,200 2,216
Common stock-$l.00 par value;
authorized 24,000,000 shares,
issued 17,091,509 and 11,867,806
shares, respectively 17,091 11,868
Additional paid-in capital 76,007 83,103
Retained earnings 54,620 39,893
Equity adjustment from translation (8,669) (8,468)
Less cost of common stock held in
treasury; 468,568 and 766,241
shares, respectively (5,632) (10,156)
Less unallocated ESOP shares of
common stock of 13,866 and 8,531,
respectively (360) (138)
Stockholders' equity 135,257 118,318
TOTAL $363,586 $350,228
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
ONEIDA LTD.
for the years ended January 1998, 1997 and 1996
<CAPTION>
(Thousands)
Year ended in January 1998 1997 1996
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $28,701 $16,972 $18,088
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 11,275 11,455 10,615
Amortization of intangibles 2,490 561
Deferred taxes and other
non-cash charges (8,959) 1,460 (1,274)
Decrease (increase) in
operating assets:
Receivables (13,910) (909) (1,110)
Inventories (7,863) 11,276 (13,055)
Other current assets 5,424 (2,452) (12)
Other assets 414 582 216
Increase (decrease) in
accounts payable 6,362 (1,383) 1,558
Increase in accrued
liabilities 14,032 7,452 5,118
Discontinued operations 3,228 13,309
Net cash provided by
operating activities 37,966 48,242 33,453
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of subsidiaries and
minority interest (19,433) (48,100)
Property, plant and equipment
expenditures-net (13,612) (10,895) (12,604)
Other, net (105) (528) 67
Proceeds from sale of
discontinued operations 33,762
Discontinued operations (11,319) (6,753)
Net cash provided by
(used in) investing
activities 612 (70,842) (19,290)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of
common stock 10,206 2,553 1,809
Purchase of treasury stock (13,780) (2,041) (268)
Purchase/allocation of ESOP
Shares-net (222) 402 (540)
Payments of short-term debt-net (3,182) (8,474) (3,488)
Proceeds from issuance of long-
term debt 6,000 35,388 5,000
Payment of long-term debt (29,704) (5,436) (10,423)
Dividends paid (7,765) (6,015) (5,407)
Borrowings by discontinued
operations 6,500
Net cash provided by
(used in) financing
activities (38,447) 22,877 (13,317)
EFFECT OF EXCHANGE RATE CHANGES
ON CASH (219) 59 (206)
NET INCREASE (DECREASE) IN CASH (88) 336 640
CASH AT BEGINNING OF YEAR 3,183 2,847 2,207
CASH AT END OF YEAR $3,095 $3,183 $2,847
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $7,184 $6,575 $8,825
Income taxes paid 15,516 11,285 10,982
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries. The Company uses a 52-53 week fiscal year ending on the last
Saturday in January. Results of operations include 53 weeks in 1998. The
financial statements of certain foreign subsidiaries are consolidated with those
of the parent on the basis of years ending in December. The financial statements
reflect the acquisition of THC Systems, Inc. as of November 4, 1996. The
financial statements also reflect the operations of Camden Wire Co., Inc. which
have been shown as discontinued operations as of October 26, 1996. Camden was
sold on February 12, 1997. The notes to the financial statements contain
information pertaining to the continuing operations of the Company. See Note 2
for information pertaining to the acquisition and disposition of these
subsidiaries. Prior periods have been restated to reflect the tableware
businesses as continuing operations. In addition, certain reclassifications have
been made to the financial statements for prior years to conform to the
presentation for 1998.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the dates of the
financial statements and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.
Foreign Currency Translation
Assets and liabilities of certain non-U.S. subsidiaries, operating under normal
economic conditions, are translated at current exchange rates, and related
revenues and expenses are translated at average exchange rates in effect during
the period. Resulting translation adjustments are recorded as a currency
component in shareholders' equity. Financial results of non-U.S. subsidiaries
in highly inflationary economies are translated using a combination of current
and historical exchange rates and any translation adjustments are included in
net earnings, along with all transaction gains and losses for the period.
Earnings Per Share
The Company adopted SFAS No. 128, "Earnings Per Share", as of January 31, 1998.
Under the new standard, basic and diluted earnings per share are presented for
each period in which a statement of operations is presented. Basic earnings per
share is computed by dividing income less preferred stock dividends by the
weighted average shares actually outstanding for the period. Diluted earnings
per share includes the potentially dilutive effect of shares issuable under the
employee stock purchase and incentive stock option plans. Per share information
for all years presented has been adjusted to reflect a three-for-two stock split
effective on December 30, 1997.
Inventories
Inventories are valued at the lower of cost or market. Approximately 50% of
inventories are valued under the last-in, first-out (LIFO) method, with the
remainder valued under the first-in, first-out (FIFO) method.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is provided over
the estimated useful lives of the related assets, generally using the straight-
line method.
Interest relating to the cost of acquiring certain fixed assets is capitalized
and amortized over the asset's estimated useful life.
Intangible Assets
Intangible assets resulted from the allocation of the purchase price of the
acquisition of certain businesses. These assets are amortized using the
straight-line method over 15 years. The Company assesses the recoverability of
its intangible assets by determining whether the amortization over the remaining
life of its intangible assets can be recovered through undiscounted future
operating cash flows and reviews for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be fully
recoverable.
Fair Value of Financial Instruments
The estimated fair market values of the Company's financial instruments,
principally long-term debt, approximate their recorded values.
<PAGE>
Revenue Recognition
For financial accounting purposes, sales are recorded when goods are shipped.
The Company's general policy is not to allow customer returns unless they are
specifically preauthorized.
Treasury Stock
Treasury stock purchases are recorded at cost. During 1998, 1997, and 1996 the
Company purchased, on a pre-split basis, 560,400, 112,671 and 16,158 shares of
treasury stock at an average cost of $24.52, $16.34 and $16.44, respectively.
The Company purchases treasury stock primarily in order to have shares available
for issuance under the employee stock purchase, incentive stock option, and
dividend reinvestment plans. During January 1998, 1,500,000 shares of treasury
stock were retired at an average cost of $12.03.
Stock Split
A three-for-two stock split was distributed in the form of a 50% stock dividend
on December 30, 1997.
All references in the financial statements and other notes to the average number
of shares of common stock and related prices, dividends and per share amounts
have been restated to give effect to this stock split.
Advertising Costs
Advertising costs are expensed as incurred. Advertising expenses amounted to
$3,754,000, $3,577,000 and $4,300,000 during 1998, 1997 and 1996, respectively.
2. ACQUISITION AND DISPOSITION
Acquisition of THC Systems, Inc.
On November 4, 1996, the Company purchased the net assets of THC Systems, Inc.
(Rego China) a leading importer of institutional china for the foodservice
industry.
The acquisition has been accounted for as a purchase and, accordingly, the
purchase price was allocated to the net assets acquired based upon their fair
values at the date of acquisition.
Allocation of the cost to acquire Rego China is summarized as follows:
<TABLE>
<CAPTION>
(Thousands)
<S> <C>
Working Capital $12,800
Cost in excess of net assets acquired 35,300
Total costs to acquire Rego China $48,100
</TABLE>
The financial statements included the results of operations of Rego from the
date of acquisition. On a pro forma basis, assuming the acquisition had
occurred at the beginning of each year presented and based on unaudited amounts
for Rego for the periods involved, the consolidated results of operations of the
Company for the last two years would have been as follows:
<TABLE>
<CAPTION>
(Thousands except per share amounts)
1997 1996
<S> <C> <C>
Net sales $402,867 $395,979
Net income 16,194 16,730
Earnings per share of common stock:
Basic .97 1.02
Diluted .96 1.00
</TABLE>
The pro forma information given above does not purport to be indicative of the
results that actually would have been obtained if the operations were combined
during the periods presented, and is not intended to be a projection of future
results or trends.
Other Acquisitions and Investments
On January 8, 1998, the Company, through its Italian subsidiary, Sant'Andrea,
S.r.l., acquired Table Top Engineering and Design, S.r.l., (TTE&D) of Vercelli,
Italy for $13,000,000. TTE&D has been the primary product development and
manufacturing source used by Sant'Andrea since its formation approximately 10
years ago.
On September 30, 1997, the Company acquired a 25.1% interest in Schott Zwiesel
Glaswerke AG, a subsidiary of Schott Glaswerke, for a total cost of $9,000,000.
Schott Zwiesel, a German Corporation, is a manufacturer of tabletop glassware.
Prior to this transaction, Oneida had become the North American distributor of
Schott Zwiesel Products. This investment is accounted for under the equity
method.
Disposition of Camden Wire Co., Inc.
In October 1996, the Company adopted a plan of disposal of its Camden Wire Co.,
Inc. subsidiary (Camden). Accordingly, the Company reflected the operating
results of Camden prior to the adoption of the plan as a discontinued operation.
On February 12, 1997, Camden was sold to an unrelated third party for
$43,500,000 in cash. The sale resulted in an after tax gain of $2,566,000 (net
of applicable income taxes of $3,716,000), or $.16 per share. Operating losses
of Camden for the fourth quarter of fiscal 1997 and first quarter of 1998
(subsequent to the plan of disposal) totaling $1,200,000 were deferred and
deducted from the gain for financial statement purposes.
<PAGE>
The components of net assets of discontinued operations included in the balance
sheet are as follows:
<TABLE>
<CAPTION>
(Thousands) 1997
<S> <C>
Working Capital $18,517
Property, plant & equipment-net 41,738
Debt (15,500)
Other liabilities (10,829)
Deferred losses and expenses (164)
Total $33,762
</TABLE>
Revenues from Camden for 1997 and 1996 were $137,960,000 and $149,988,000,
respectively. Both basic and diluted earnings per share for discontinued
operations were $.16, $(.02) and $.16 in 1998, 1997 and 1996, respectively.
3. INCOME TAXES
The Company accounts for taxes in accordance with Statement of Financial
Accounting Standards (FAS) No. 109, Accounting for Income Taxes, which requires
the use of the liability method of computing deferred income taxes. Under the
liability method, deferred income taxes are based on the tax effect of temporary
differences between the financial statement and tax bases of assets and
liabilities and are adjusted for tax rate changes as they occur.
The components of the deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
(Thousands)
1998 1997
<S> <C> <C>
Deferred Income Taxes:
Postretirement Benefits $20,392 $20,081
Employee Benefits 8,432 8,060
Other 1,420 578
Total Deferred Tax Assets 30,244 28,719
Depreciation (10,136) (9,746)
Total 20,108 18,973
Current Deferred 1,288 2,408
Non-Current Deferred $18,820 $16,565
</TABLE>
The provision for income taxes, in continuing operations, consists of the
following:
<TABLE>
<CAPTION>
(Thousands)
1998 1997 1996
<S> <C> <C> <C>
Current tax expense:
U.S. Federal $13,718 $10,097 $11,005
Foreign 2,584 2,621 2,079
State 1,022 641 610
17,324 13,359 13,694
Deferred tax benefit (1,135) (2,080) (3,550)
Total $16,189 $11,279 $10,144
</TABLE>
The income tax provision from continuing operations differed from the total
income tax expense as computed by applying the statutory U.S. Federal income tax
rate to income before income taxes. The reasons for the differences are as
follows:
<TABLE>
<CAPTION>
(Thousands)
1998 1997 1996
<S> <C> <C> <C>
Statutory U.S. Federal taxes $14,813 $ 9,994 $8,949
Difference due to:
Foreign taxes 216 153
State taxes 287 354 393
Other 873 778 802
Provision for taxes $16,189 $11,279 $10,144
</TABLE>
The following presents the U.S. and non-U.S. components of income before income
taxes.
<TABLE>
<CAPTION>
(Thousands)
1998 1997 1996
<S> <C> <C> <C>
U.S. income $34,128 $21,682 $19,685
Non-U.S. income 8,196 6,873 5,884
Income from continuing operations $42,324 $28,555 $25,569
</TABLE>
Discontinued operations are shown net of income tax (benefit) expense of
$3,716,000, $(280,000) and $1,538,000 for 1998, 1997 and 1996, respectively.
4. RECEIVABLES
Receivables by major classification are as follows:
<TABLE>
<CAPTION>
(Thousands)
1998 1997
<S> <C> <C>
Accounts receivable $61,788 $47,384
Other accounts and notes receivable 4,030 3,122
Less allowance for doubtful accounts (1,896) (1,797)
Receivables $63,922 $48,709
</TABLE>
5. INVENTORIES
Inventories by major classification are as follows:
<TABLE>
<CAPTION>
(Thousands)
1998 1997
<S> <C> <C>
Finished goods $101,293 $ 93,339
Goods in process 15,797 14,798
Raw materials and supplies 16,329 16,156
Total $133,419 $124,293
Excess of replacement cost over
LIFO value of inventories $ 24,000 $ 25,000
</TABLE>
6. LEASES
The Company leases numerous factory stores, warehouses and office facilities.
Lease expense charged to operations was $5,806,000, $5,973,000 and $6,314,000
for 1998, 1997 and 1996, respectively.
<PAGE>
Future minimum lease payments and related sublease income for all non-cancelable
operating leases having a remaining term in excess of one year at January 1998
are as follows:
<TABLE>
<CAPTION>
(Thousands)
Lease Sublease
Commitment Income
<S> <C> <C>
1999 $ 6,243 $ 1,618
2000 5,396 1,544
2001 3,904 1,335
2002 3,310 1,179
2003 2,880 845
Remainder through 2008 11,372
Total $33,105 $ 6,521
</TABLE>
Under the provisions of some leases, the Company pays taxes, maintenance,
insurance and other operating expenses related to leased premises. Sublease
income relates to an office facility for which the Company has currently sublet
all of the facility.
7. SHORT-TERM DEBT AND COMPENSATING BALANCES
The Company has been granted lines of credit to borrow at interest rates up to
the prime rate from various banks. Certain credit lines call for the maintenance
of compensating balances of up to 1.14% of the credit line or fees in lieu
thereof. At January 1998, the Company had lines of credit of $77,500,000 of
which $64,783,000 was available.
The average outstanding balances of short-term debt for the fiscal years ending
January 1998 and January 1997 were $10,295,000 and $35,793,000, respectively,
computed by using daily balances and the weighted interest rates of 6.0% in 1998
and 5.9% in 1997.
8. ACCRUED LIABILITIES
Accrued liabilities by major classification are as follows:
<TABLE>
<CAPTION>
(Thousands)
1998 1997
<S> <C> <C>
Accrued vacation pay $ 6,453 $ 6,205
Accrued wage incentive 9,609 7,440
Accrued wages and commissions 6,736 5,408
Accrued income taxes 7,966 4,847
Accrued workers' compensation 9,953 8,158
Dividends payable 1,695 1,476
Other accruals 8,935 3,548
Total $51,347 $37,082
</TABLE>
9. LONG-TERM DEBT
Long-term debt at January 1998 and 1997 consisted of the following:
<TABLE>
<CAPTION>
(Thousands)
1998 1997
<S> <C> <C>
Senior notes, 8.52% due January 15,
2002, payable $4,285,710 annually $17,143 $21,428
Senior notes, 7.49% due November 1,
2008, payable $3,890,000 annually
beginning November 1, 2000 35,000 $35,000
Notes payable, 6.26% due
February 20, 2001 21,000 40,000
Other debt at various interest rates
(5.44%-9.25%), due through 2000 983 1,401
Total 74,126 97,829
Less current portion 4,711 29,703
Long-term debt $69,415 $68,126
</TABLE>
Certain note agreements restrict borrowings, business investments, acquisition
of the Company's stock and payment of cash dividends.
The aggregate amounts of long-term maturities due each year are as follows:
<TABLE>
<CAPTION>
(Thousands)
<S> <C>
1999 $ 4,711
2000 4,632
2001 8,361
2002 29,175
2003 3,890
After 23,357
Total $74,126
</TABLE>
Total interest costs incurred by the Company are presented net of capitalized
interest of $412,000, $276,000 and $413,000 for 1998, 1997 and 1996,
respectively.
10. RETIREMENT BENEFIT AND EMPLOYEE SECURITY PLANS
Pension Plans
The Company maintains defined benefit plans covering the majority of employees
in the United States and Canada. Employees of the Silversmiths Division are
covered by both an Employee Stock Ownership Plan (ESOP), and a defined benefit
floor plan. Dividends on all ESOP shares are added to participant accounts.
Future contributions to the ESOP will be primarily in the form of cash. The
Company also maintains salary deferral 401(k) plans covering substantially all
employees.
<PAGE>
The net periodic pension cost for the Company's various defined benefit plans
for 1998, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
(Thousands)
1998 1997 1996
<S> <C> <C> <C>
Service cost-benefits earned during the year $1,892 $1,913 $1,509
Interest cost on projected benefit obligation 2,680 2,537 2,243
Actual return on plan assets (4,190) (2,715) (3,090)
Net amortization and deferral 1,943 901 1,627
Net periodic pension cost $2,325 $2,636 $2,289
</TABLE>
Plan assets consist primarily of stocks, bonds, and cash equivalents. The
following table presents a reconciliation of the funded status of the plans and
assumptions used at January 1998 and 1997.
<TABLE>
<CAPTION>
(Thousands)
U.S. PLANS FOREIGN PLAN
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Plan assets at fair value $23,462 $18,653 $6,347 $6,280
Actuarial present value of
benefit obligations:
Vested benefits 15,228 16,431 4,871 4,362
Nonvested 12,170 13,324 159 234
Accumulated benefit obligation 27,398 29,755 5,030 4,596
Projected future salary increases 1,007 805 1,494 1,132
Projected benefit obligation 28,405 30,560 6,524 5,728
Plan assets more (less) than
projected benefit obligation (4,943) (11,907) (177) 552
Unrecognized net gains (losses) (1,149) 6,677 1,364 830
Unrecognized prior service cost 888 832 3 9
Unrecognized net asset (1,099) (1,268) (173) (282)
Accrued pension asset (liability) $(6,303) $(5,666) $1,017 $1,109
Discount rate 7.5% 7.5% 6.5% 7.5%
Expected long-term rate of
return on assets 8.5% 8.5% 8.5% 8.5%
Rate of increase in
compensation levels 4.0% 4.0% 5.0% 5.0%
</TABLE>
The net pension cost associated with the Company's defined contribution plans
was $1,445,000, $1,537,000 and $1,504,000, for 1998, 1997 and 1996,
respectively.
Postretirement Health Care and Life Insurance Benefits
The Company reimburses a portion of the health care and life insurance benefits
for the majority of its retired employees who have attained specified age and
service requirements.
Net periodic postretirement benefit cost for 1998, 1997 and 1996 included the
following components:
<TABLE>
<CAPTION>
(Thousands)
1998 1997 1996
<S> <C> <C> <C>
Service cost of benefits earned $1,103 $1,124 $ 791
Interest cost on accumulated post-
retirement benefit obligation 3,214 3,048 2,991
Net amortization and deferral (704) (681) (848)
Net periodic postretirement
benefit cost $3,613 $3,491 $2,934
</TABLE>
The following table sets forth the status of the Company's postretirement plans,
which are unfunded, at January 1998 and January 1997:
<TABLE>
<CAPTION>
(Thousands)
1998 1997
<S> <C> <C>
Accumulated postretirement benefit
obligation:
Retirees $22,259 $21,546
Fully eligible active plan
participants 6,406 5,268
Other active plan participants 19,988 16,535
Accrued postretirement benefit cost 48,653 43,349
Unrecognized prior service cost 6,394 7,084
Unrecognized net gain 67 3,840
Accrued postretirement benefit 55,114 54,273
Less current portion 2,000 2,000
Accrued postretirement benefit $53,114 $52,273
Discount rate 7.1% 7.6%
Health care inflation rate 8.0% 8.5%
</TABLE>
The 1998 health care inflation rate was assumed to decrease gradually to 5% by
the year 2003 and remain at that level thereafter. An increase in the assumed
health care inflation rate by 1% per year would increase the accumulated
postretirement benefit obligation at January 1998 by $4,717,000 and the net
periodic postretirement benefit cost for 1998 by $530,000.
Employee Security Plan
The Company maintains an employee security plan which provides severance
benefits for all eligible employees of the Company and its subsidiaries who lose
their jobs in the event of a change in control as defined by the plan.
Employees are eligible if they have one year or more of service and are not
covered by a collective bargaining agreement. The plan provides two and one
half months of pay for each year of service, up to twenty-four months maximum,
and a continuation of health care and life insurance benefits on the same basis.
11. STOCK PLANS
Stock Purchase Plan
At January 1998, under the terms of a stock purchase plan, the Company has
reserved 837,359 shares of
<PAGE>
common stock for issuance to its employees. The purchase price of the stock is
the lower of 90% of the market price at the time of grant or at the time of
exercise. The option price for the shares outstanding at January 1998 is
$16.01.
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Outstanding at beginning of year 465,571 449,413 453,010
Exercised during the year (392,912) (123,353) (45,701)
Expired during the year (269,588) (355,039) (440,839)
Granted during the year 405,565 494,550 482,943
Adjustment for stock split 118,276
Outstanding at end of year 326,912 465,571 449,413
Average per share price of
rights exercised $19.99 $13.50 $13.83
</TABLE>
Rights to purchase are exercisable on date of grant. Unexercised rights expire
on June 30 of each year and become available for future grants. Employees are
entitled to purchase one share of common stock for each $250 of their earnings
for the calendar year preceding July 1.
The consolidated statement of operations does not contain any charges as a
result of accounting for this plan.
Stock Option Plan
At January 1998, under the terms of its incentive stock option plans, the
Company has reserved shares of common stock for issuance to selected key
employees.
Options were granted at prices equal to the fair market value on the date of
the grant and may be paid for in cash or by tendering previously held common
stock of the Company at the time the option is exercised.
Stock options are non-transferable other than on death, vest over five years
from date of grant expire ten years from date of grant.
<TABLE>
<CAPTION>
Option Price
No. of Per (Thousands)
Shares Share Total
<S> <C> <C> <C>
Outstanding at
January 1995 737,879 $9.00-15.00 $9,592
Exercised (106,086) 9.00-15.00 (1,266)
Outstanding at
January 1996 631,793 9.00-15.00 8,326
Exercised (56,531) 9.00-15.00 (709)
Expired (29,987) 9.00-15.00 (378)
Outstanding at
January 1997 545,275 9.00-15.00 7,239
Granted 120,000 18.63 2,236
Exercised (187,604) 9.00-15.00 (2,404)
Expired (126,951) (1,765)
Adjustment for stock split 175,910
Outstanding at
January 1998 526,630 6.00-12.42 $5,306
</TABLE>
Options exercisable under the plan at January, 1998, 1997 and 1996 amounted to
286,490, 615,142 and 580,120, respectively. The weighted average exercise price
of options exercisable at January 1998, 1997 and 1996 were $8.88, $8.97 and
$8.96, respectively.
<TABLE>
<CAPTION>
Options Outstanding
Weighted
Average Weighted
Range of Options Remaining Life Average
Exercise Prices Outstanding In Years Exercise Price
<C> <C> <C> <C>
$6.00- 7.58 79,184 4.96 $ 7.39
9.08-12.42 447,446 6.29 10.55
526,630
</TABLE>
<TABLE>
<CAPTION>
Options Exercisable
Weighted
Average Weighted
Range of Number Average
Exercise Prices Exercisable Exercise Price
<C> <C> <C>
$6.00- 7.58 65,268 $7.35
9.08-12.42 221,222 9.34
286,490
</TABLE>
At the time options are exercised the proceeds of the shares issued are credited
to the related stockholders' equity accounts. There are no charges to income in
connection with these options.
<PAGE>
Restricted Stock Award Plan
The Company has a restricted stock award plan for key employees who are expected
to have a significant impact on the performance of the Company. The stock is
restricted from being sold, transferred or assigned and is forfeitable until it
vests, generally over a three year period. Amounts of awards are determined by
the Management Development and Executive Compensation Committee of the Company's
Board of Directors. Compensation expense relating to awards of restricted stock
are recognized over the vesting period.
Shareholder Rights Plan
The Company maintains a shareholder rights plan. The rights were distributed to
shareholders at the rate of one right per share. The rights entitle the holder
to purchase one additional share of voting common stock at a substantial
discount and are exercisable only in the event of the acquisition of 20% or more
of the Company's voting common stock, or the commencement of a tender or
exchange offer under which the offeror would own 30% or more of the Company's
voting common stock. The rights will expire on December 13, 1999.
Accounting for Stock Plans
The Company has elected to continue following APB No. 25 in accounting for its
stock-based compensation plans.
Application of the fair-value-based accounting provision of Statement No. 123
results in the following pro forma amounts of net income and earnings per share:
<TABLE>
<CAPTION>
(Thousands Except Per Share Amounts)
1998 1997 1996
<S> <C> <C> <C>
Net Income from Continuing Operations:
As reported $26,135 $17,276 $15,425
Pro forma 24,585 16,005 14,466
Net Income:
As reported 28,701 16,972 18,088
Pro forma 27,151 15,701 17,129
Earnings Per Share from Continuing
Operations:
As reported: Basic 1.57 1.04 .94
Diluted 1.55 1.02 .93
Pro forma: Basic 1.46 .96 .88
Diluted 1.44 .95 .87
Earnings Per Share:
As reported: Basic 1.73 1.02 1.10
Diluted 1.71 1.00 1.09
Pro forma: Basic 1.62 .94 1.04
Diluted 1.59 .93 1.03
</TABLE>
The fair value for both the Stock Purchase Plan and Stock Option Plan was
estimated at the date of grant using a Black-Scholes options pricing model.
The valuation of the Stock Purchase Plan used the following weighted average
assumptions for 1998 and 1997: risk-free interest rates of 6.03% and 5.63%;
dividend yields of 2.51% and 2.77%; volatility factors of the expected market
price of the Company's common stock of 29.7% and 23.7% and a weighted average
expected life of the option of 9 months. The fair value per share for the
options granted during 1998 and 1997 was $4.40 and $2.87 respectively. The
estimated fair value of the option is expensed in the year of issue.
The valuation of the Stock Option Plan used the following weighted average
assumptions for 1998: risk free interest rate of 6.42%, dividend yield of 3.33%,
volatility factor if the expected price of the Company's common stock of 26.2%
and a 6.5 year expected life. The fair value per share for the options granted
during 1998 was $5.30. The estimated fair value of the options is expensed over
the five-year vesting period.
<PAGE>
12. EARNINGS PER SHARE
The following is a reconciliation of basic earnings per share to diluted
earnings per share for 1998, 1997 and 1996.
<TABLE>
<CAPTION>
Preferred
Net Stock Adjusted Average Earnings
Income Dividends Net Income Shares Per Share
<S> <C> <C> <C> <C> <C>
1998:Basic earnings per share $28,701 ($132) $28,569 16,507 $1.73
Effect of stock options 233
Diluted earnings per share 28,701 (132) 28,569 16,740 1.71
1997:Basic earnings per share 16,972 (133) 16,839 16,557 1.02
Effect of stock options 218
Diluted earnings per share 16,972 (133) 16,839 16,775 1.00
1996:Basic earnings per share 18,088 (134) 17,954 16,331 1.10
Effect of stock options 198
Diluted earnings per share 18,088 (134) 17,954 16,529 1.09
</TABLE>
13. OPERATIONS BY INDUSTRY SEGMENT
The Company's operations and assets are in one principal industry: tableware
products. The Company's tableware operations, which are located in the United
States, Canada, Mexico, Italy and the United Kingdom, involve the manufacture
and distribution of stainless, plated and sterling flatware, food service
china, silverplated and stainless holloware, cutlery, crystal and consumer
china. These products are sold directly to a broad base of retail outlets
including department stores, mass merchandisers, Oneida factory stores and chain
stores. Additionally, these products are sold to special sales markets, which
include customers who use them as premiums, incentives and business gifts. The
Company also sells flatware, holloware and commercial chinaware directly or
through distributors to foodservice operations worldwide, including hotels,
restaurants, airlines, schools and health care facilities. The Company does
not derive more than 10% of its total revenues from any individual customer,
government agency or export sales. Operating profit by geographic segment is
revenue less operating costs, excluding interest and income taxes.
Segment information by geographic area for the three years ended January 1998,
1997 and 1996 were as follows:
<TABLE>
<CAPTION>
(Thousands)
1998 1997 1996
<S> <C> <C> <C>
NET SALES:
Domestic $389,598 $329,068 $324,989
Foreign operations 53,268 47,855 38,822
Total $442,866 $376,923 $363,811
OPERATING PROFIT:
Domestic $48,157 $35,142 $37,133
Foreign operations 6,964 5,830 922
Operating profit 55,121 40,972 38,055
Corporate expense 5,974 5,914 5,609
Interest expense 6,823 6,503 6,877
Income before income taxes $42,324 $28,555 $25,569
IDENTIFIABLE ASSETS:
Domestic $300,232 $305,136 $264,486
Foreign operations 60,259 41,909 39,235
Total 360,491 347,045 303,721
Corporate assets-cash 3,095 3,183 2,847
Total $363,586 $350,228 $306,568
DEPRECIATION EXPENSE:
Domestic $10,298 $10,106 $9,929
Foreign operations 977 1,349 686
Total $11,275 $11,455 $10,615
PROPERTY, PLANT AND EQUIPMENT ADDITIONS:
Domestic $11,272 $9,487 $10,286
Foreign operations 2,305 2,079 2,148
Total $13,577 $11,566 $12,434
</TABLE>
<PAGE>
14. CHANGES IN STOCKHOLDERS' EQUITY
Following is a summary of the changes in Stockholders' Equity for the three
years ended January 1998.
<TABLE>
<CAPTION>
(Thousands)
Equity
Additional Adjustment
Common Common Preferred Paid-in Retained from Treasury Unallocated
Shares Stock Stock Capital Earnings Translation Stock ESOP Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance January 1995 11,579,964 $11,580 $2,230 $79,740 $16,255 $(6,035) $(8,574)
Stock purchase plan 45,701 46 586
Dividend reinvestment
plan 56 276
Restricted stock plan 4,348 4 67
Stock option plan, net 76,211 76 699
Purchase/retirement
of stock (5) 2 (265)
Cash dividends
declared ($.32
per share)<F1> (5,407)
Net Income 18,088
Purchase of ESOP shares (2,004)
ESOP shares allocated
to participants 1,464
Equity adjustment from
translation (2,579)
Balance January 1996 11,706,224 11,706 2,225 81,150 28,936 (8,614) (8,563) (540)
Stock purchase plan 123,353 124 1,542 248
Dividend reinvestment
plan 305
Restricted stock plan 5,054 5 (16)
Stock option plan, net 33,175 33 313
Purchase/retirement
of stock (9) (191) (1,841)
Cash dividends
declared ($.35
per share)<F1> (6,015)
Net Income 16,972
Purchase of ESOP shares (1,102)
ESOP shares allocated
to participants 1,504
Equity adjustment from
translation 146
Balance January 1997 11,867,806 11,868 2,216 83,103 39,893 (8,468) (10,156) (138)
Stock purchase plan 392,912 393 7,463
Dividend reinvestment
plan 15,325 15 352 221
Restricted stock plan 9,248 9 171
Stock option plan, net 118,895 119 864
Purchase/retirement
of stock (939,600) (940) (16) (16,545) 4,303
Cash dividends
declared ($.45
per share)<F1> (7,765)
Net Income 28,701
Tax benefit of employee
stock option disposals 599
Effect of three-for-two
stock split 5,626,923 5,627 (6,209)
Purchase of ESOP shares (222)
Equity adjustment from
translation (201)
Balance January 1998 17,091,509 $17,091 $2,200 $76,007 $54,620 $(8,669) $(5,632) $(360)
<FN>
<F1> Cash dividends declared per share have been adjusted to reflect a three-
for-two stock split effective December 30, 1997.
</FN>
</TABLE>
<PAGE>
15. SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
(Thousands except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended
April 26, July 26, October 25, January 31,
1998 1997 1997 1997 1998
<S> <C> <C> <C> <C>
Net sales $96,977 $102,581 $116,559 $126,749
Gross margin 35,396 39,047 44,507 49,108
Income from continuing
operations 4,412 5,519 7,657 8,547
Net income 6,978 5,519 7,657 8,547
Earnings per share
Continuing operations:
Basic .26 .34 .46 .51
Diluted .26 .34 .45 .50
Net income:
Basic .42 .34 .46 .51
Diluted .42 .34 .45 .50
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
April 27, July 27, October 26, January 25,
1997 1996 1996 1996 1997
<S> <C> <C> <C> <C>
Net sales $ 82,890 $86,307 $101,280 $106,446
Gross margin 27,791 30,265 35,233 39,700
Income from continuing
operations 2,522 3,101 5,306 6,347
Net income 2,669 2,755 5,201 6,347
Earnings per share
Continuing operations:
Basic .15 .19 .32 .38
Diluted .15 .18 .32 .37
Net income:
Basic .16 .17 .31 .38
Diluted .16 .16 .31 .37
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Oneida Ltd.
We have audited the accompanying consolidated balance sheet of Oneida Ltd. as of
January 31, 1998 and January 25, 1997, and the related consolidated statement of
operations and cash flows for each of the three years in the period ended
January 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide 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 Oneida Ltd. as of
January 31, 1998 and January 25, 1997, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
January 31, 1998 in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
a professional services firm
/s/ Coopers & Lybrand L.L.P.
Syracuse, New York
February 20, 1998
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Thousands)
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Net Sales:
Consumer Products Markets $251,327 $227,777 $236,069
Foodservice Markets 191,539 149,146 127,742
Total 442,866 376,923 363,811
Gross Margin 168,058 132,989 127,251
% Net Sales 38.0% 35.3% 35.0%
Operating Expenses 117,357 97,099 94,043
% Net Sales 26.5% 25.8% 25.9%
</TABLE>
Fiscal year ended January 1998 compared with fiscal year ended January 1997
Operations
1998 consolidated net sales were $65,943 or 17.5% higher than in the previous
year. Two-thirds of the sales increase was attributable to growth in the
foodservice markets. Foodservice product sales increased 28.4% over the prior
year levels, primarily due to the acquisition of Rego China in the last quarter
of 1997 and strong growth in demand for Buffalo China products. Sales of
consumer products increased 10.3% from 1997 reflecting growth in department
store, mass-merchandise and direct to consumer markets. International sales of
the above products were up 11.3% from the prior year, due to growth in all major
foreign markets, including Latin America, Asia and Europe.
Gross margin as a percent of net sales increased to 38.0% from 35.3% in 1997.
The increase is attributable to increased sales of the Company's higher margin
products and continuing improvement in manufacturing efficiencies and volumes.
Operating expenses increased by $20,258 or 20.9% over 1997. Due to growing
sales volume and the start-up of new product lines, selling, distribution and
advertising expenses increased by $10,599. As a percentage of net sales, these
costs decreased to 17.7% from 18.0% in 1997. General and administrative
expenses were up $9,659 over 1997 levels. Nearly one-half of this increase is
attributable to costs incurred as a result of the November 1996 acquisition of
Rego China. The remaining increase is principally made up of higher employee
profit sharing resulting from increased operating income.
1998 interest expense (prior to capitalized interest) increased by $456 or 6.7%.
This was principally due to higher average interest rates on the Company's
borrowings.
Year 2000
Year 2000 issues relate to the ability of computer systems to be able to
distinguish data which contains dates beyond December 31, 1999. The Company has
created, and is in the process of implementing, a Year 2000 compliance plan. As
part of this compliance plan, the Company is reviewing all of its software and
information processing systems to identify date sensitive functions. The
Company will then inventory, test, and if necessary, modify those systems to
ensure that they will meet the necessary requirements prior to the Year 2000.
The Company anticipates that its main computer systems will be Year 2000
compliant by December 1998, and that its more minor computer systems will be
Year 2000 compliant by July 1999.
The Company could also be adversely affected if its customers, suppliers,
service providers and business partners continue to utilize systems that are not
Year 2000 compliant. The Company, therefore, is taking a proactive role in
encouraging its customers, suppliers, service providers and business partners to
plan for and implement their own compliance plans.
The costs incurred to date by the Company in addressing its potential Year 2000
problems are not material. However, the inability of the Company or its
customers, suppliers, service providers or business partners to resolve Year
2000 issues in a timely manner could constitute a material financial risk. The
Company believes it is devoting appropriate resources to resolve its Year 2000
issues in a timely manner and does not currently expect that doing so will have
a material impact.
Liquidity and Financial Resources
During the current year, the Company has invested approximately $14,000 in
capital additions, primarily in its manufacturing facilities. In 1998, Buffalo
China announced the construction of a 203,000 square foot warehouse and china
decorating facility at its Buffalo, New York facility. The total cost for this
expansion will be $11,000, the majority of which will be spent in 1999. Overall,
the Company plans to spend $25,000 on capital projects in the upcoming year.
In the first quarter of 1998, the Company sold its Camden Wire subsidiary for
$43,500 in cash (see Note 2 of Notes to the Financial Statements.)
<PAGE>
The majority of these proceeds were used to pay down the outstanding debt. As
also described in Note 2, the Company purchased the stock of Table Top
Engineering and Design for $13,000 and also acquired a minority interest in
Schott Zwiesel in a transaction valued at $9,000. During the year, the Company
continued its buyback program of common stock by purchasing 560,400 shares at a
cost of $13,743. Proceeds from the issuance of stock in 1998 totaled $10,206.
Cash from 1999 operations and available lines of credit are expected to provide
sufficient liquidity for all of the Company's capital needs.
The Company has foreign exchange exposure related to its foreign operations in
Mexico, Canada, Italy and the United Kingdom (see Note 13 for details on the
Company's foreign operations). Due to cumulative inflation over the prior three
years, Mexico's economy was deemed hyper-inflationary for accounting purposes.
In the current year, the Company accounted for its Mexican operations as hyper-
inflationary using the methodology of Financial Accounting Standard (FAS) No.
52. Translation adjustments recorded in the income statement were not of a
material nature. The Company has evaluated its exposure in the Asian market. As
sales to Asian customers are less than 2% of total net sales, the current
economic conditions in the Asian market should not have a material effect on the
Company's operations in the upcoming year.
Management's Discussion
Fiscal year ended January 1997 compared with fiscal year ended January 1996
Operations
1997 consolidated net sales were $13,112, or 3.6% higher than in the previous
year. Sales of foodservice products increased 16.8% over the prior year levels,
partially due to the acquisition of Rego China in the last quarter of 1997.
Sales of consumer products decreased by 3.5% from 1996, due to market softness
in the first half of the year. This trend was reversed in the latter half of
1997. International sales of the above products were up 23.3% from the prior
year, reflecting growth in all major foreign markets.
Gross margin as a percent of net sales increased to 35.3% from 35.0% in 1996.
Operating expenses increased by $3,056 or 3.2% over 1997. Of this increase,
$2,078 is attributable to the acquisition of Rego China. Exclusive of the Rego
operations, selling and distribution costs remain constant with 1996 levels.
When the Rego administrative costs are factored out, general and administrative
costs increased by 3.8%, principally due to higher employee profit sharing
accruals resulting from higher operating income.
1997 interest expense (prior to capitalized interest) decreased by $511 or 7.0%.
The decline in interest expense was principally due to lower average interest
rates on the Company's borrowings.
Dividends and Price Range of the Company's Common Stock
The Company's Common Stock is listed on the New York Stock Exchange and trades
under the symbol OCQ. The total number of stockholders of record at January
1998 was 4,437. The following table sets forth the high and low sale prices per
share of the Company's Common Stock for the periods indicated on the Composite
Tape, and cash dividends declared for the quarters in the Company's 1998 and
1997 fiscal years, as adjusted for the three-for-two stock split effective
December 30, 1997.
<TABLE>
<CAPTION>
JANUARY 1998 JANUARY 1997
Fiscal Dividends Fiscal Dividends
Quarter High Low Per Share Quarter High Low Per Share
<S> <C> <C> <C> <S> <C> <C> <C>
First $13.42 $11.58 $.087 First $11.67 $ 9.92 $.087
Second 20.17 12.33 .173 Second 12.50 10.33 .087
Third 24.25 18.75 .087 Third 10.59 9.67 .087
Fourth 27.63 21.96 .100 Fourth 12.17 9.50 .087
</TABLE>
<PAGE>
FIVE YEAR SUMMARY
ONEIDA LTD. (Thousands except per share amounts)
<TABLE>
<CAPTION>
Year ended in January 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net sales $442,866 $376,923 $363,811 $335,831 $322,511
Gross margin 168,058 132,989 127,251 113,192 110,487
Interest expense 6,823 6,503 6,877 5,922 6,271
Income before income taxes 42,324 28,555 25,569 17,393 14,492
Income taxes 16,189 11,279 10,144 7,306 6,042
Income from continuing
operations 26,135 17,276 15,425 10,087 8,450
Income (loss) from
discontinued operations 2,566 (304) 2,663 3,406 2,212
Net income (loss) 28,701 16,972 18,088 13,493 10,662
Cash dividends declared-
Preferred stock 132 133 134 134 135
Common stock 7,633 5,882 5,273 5,233 5,129
PER SHARE OF COMMON STOCK<F1>
Continuing operations 1.55 1.02 .93 .62 .56
Discontinued operations .16 (.02) .16 .21 .11
Net income 1.71 1.00 1.09 .83 .67
Dividends declared .45 .35 .32 .32 .32
Book value 8.01 6.98 6.31 5.69 5.31
FINANCIAL DATA
Current assets 209,844 219,491 211,930 205,168 189,171
Working capital 119,344 122,937 140,106 134,386 123,263
Total assets 363,586 350,228 306,568 297,486 280,527
Long-term debt 69,415 68,126 63,129 68,277 66,301
Other long-term
liabilities 68,404 67,230 65,315 63,231 62,405
Stockholders' equity 135,257 118,318 106,300 95,196 85,913
Additions to property,
plant and equipment 13,577 11,566 12,434 12,785 10,813
Property, plant and
equipment-at cost 206,272 195,429 185,637 177,166 166,529
Accumulated depreciation 121,460 116,283 105,957 97,474 88,182
SHARES OF CAPITAL STOCK<F1>
Outstanding at end of
year Preferred 88 89 89 89 89
Common 16,609 16,640 16,499 16,353 15,747
Weighted average number
of common shares
outstanding during
the year 16,740 16,775 16,529 16,176 15,590
SALES OF MAJOR PRODUCTS BY
PERCENT OF TOTAL SALES
Consumer 57% 60% 65% 62% 62%
Foodservice 43% 40% 35% 38% 38%
AVERAGE NUMBER OF EMPLOYEES 4,637 4,525 4,690 4,534 4,672
<FN>
<F1> Shares of common stock and per share amounts are adjusted to reflect the
effect of a three-for-two stock split and per share information is presented on
a diluted basis.
</FN>
</TABLE>
<PAGE>
EXHIBIT 22
PARENTS AND SUBSIDIARIES
There are no parents of the Corporation. There is no subsidiary for which
separate financial statements are filed. The following list includes the
Corporation and its subsidiaries, all of which are included, in the consolidated
financial statements.
<TABLE>
<CAPTION>
State or Percentage of
Country of Voting Securities
Name Incorporation Owned by the Company
<S> <C> <C>
Oneida Ltd. New York -
Buffalo China, Inc. New York 93
Encore Promotions, Inc. New York 100
Kenwood Silver Company, Inc.
d/b/a Oneida Factory Stores New York 100
Oneida Canada, Limited Canada 100
Oneida Distribution Services, Inc. New York 100
Oneida International, Inc. Delaware 88
Oneida Mexicana, S.A. de C.V. Mexico 100
THC Systems, Inc.
d/b/a Rego China New York 100
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS RESTATED SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ONEIDA
LTD.'S ANNUAL REPORTS FOR THE FISCAL YEARS ENDED JANUARY 31, 1998, JANUARY 25,
1997 AND JANUARY 27, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> JAN-31-1998 JAN-25-1997 JAN-27-1996
<PERIOD-START> JAN-26-1997 JAN-28-1996 JAN-29-1995
<PERIOD-END> JAN-31-1998 JAN-25-1997 JAN-27-1996
<CASH> 3,095 3,183 2,847
<SECURITIES> 0 0 0
<RECEIVABLES> 65,818 50,506 43,731
<ALLOWANCES> 1,896 1,797 1,665
<INVENTORY> 133,419 124,293 126,043
<CURRENT-ASSETS> 209,844 219,491 211,930
<PP&E> 206,272 195,429 185,637
<DEPRECIATION> 121,460 116,283 105,957
<TOTAL-ASSETS> 363,586 350,228 306,568
<CURRENT-LIABILITIES> 90,510 96,554 71,824
<BONDS> 69,415 68,126 63,129
0 0 0
2,200 2,216 2,225
<COMMON> 17,091 11,868 11,706
<OTHER-SE> 115,966 104,234 92,369
<TOTAL-LIABILITY-AND-EQUITY> 363,586 350,228 306,568
<SALES> 442,866 376,923 363,811
<TOTAL-REVENUES> 442,866 376,923 363,811
<CGS> 274,808 243,934 236,560
<TOTAL-COSTS> 274,808 243,934 236,560
<OTHER-EXPENSES> 118,911 97,931 94,805
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 6,823 6,503 6,877
<INCOME-PRETAX> 42,324 28,555 25,569
<INCOME-TAX> 16,189 11,279 10,144
<INCOME-CONTINUING> 26,135 17,276 15,425
<DISCONTINUED> 2,566 (304) 2,663
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 28,701 16,972 18,088
<EPS-PRIMARY> 1.73<F1> 1.02<F1>
1.10<F1>
<EPS-DILUTED> 1.71 1.00 1.09
<FN>
<F1> The amount reported as EPS-PRIMARY is actually Earnings Per Share -
Basic, as the Corporation adopted SFAS 128 "Earnings Per Share" as of January
31, 1998.
</FN>
</TABLE>
