UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 30, 1999
Commission file number 1-5452
ONEIDA LTD.
(Exact name of Registrant as specified in its charter)
NEW YORK 15-0405700
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification Number
ONEIDA, NEW YORK 13421
(Address of principal executive offices) (Zip code)
(315) 361-3636
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes of
common stock as of December 7, 1999: 16,620,273.
<PAGE>
ONEIDA LTD.
FORM 10-Q
FOR THE THREE MONTHS ENDED October 30, 1999
INDEX
PART I FINANCIAL INFORMATION
Consolidated Statement of Operations / 1
Consolidated Balance Sheet / 2
Consolidated Statement of Changes in Stockholders' Equity / 4
Consolidated Statement of Cash Flows / 6
Notes to Consolidated Financial Statements / 7
Management's Discussion and Analysis of Financial Condition and Results
of Operations / 9
PART II OTHER INFORMATION
No other information required to be filed for this quarter.
SIGNATURES
<PAGE>
<TABLE>
ONEIDA LTD.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FOR THE
THREE MONTHS ENDED NINE MONTHS ENDED
(Thousands except per OCT 30, OCT 31, OCT 30, OCT 31,
share amounts) 1999 1998 1999 1998
<S> <C> <C> <C> <C>
NET SALES..................... $134,515 $128,787 $364,628 $340,058
COST OF SALES................. 82,754 83,104 219,762 213,502
INVENTORY WRITEDOWN (NOTE 3).. 3,000
------- ------- ------- -------
GROSS MARGIN.................. 51,761 45,683 141,866 126,556
OPERATING REVENUES............ 205 106 622 522
------- ------- ------- -------
51,966 45,789 142,488 127,078
------- ------- ------- -------
OPERATING EXPENSES:
Selling, advertising and
distribution............... 24,020 24,232 69,312 67,043
General and administrative.. 8,894 9,650 28,283 27,978
Restructuring and unusual
charges (NOTE 3)........... 8,500 41,300
------- ------- ------- -------
Total..................... 41,414 33,882 138,895 95,021
------- ------- ------- -------
INCOME FROM OPERATIONS........ 10,552 11,907 3,593 32,057
OTHER INCOME (EXPENSE)........ 114 (175) (269) 776
INTEREST EXPENSE.............. (2,904) (2,543) (7,973) (6,410)
------- ------- ------- -------
INCOME (LOSS)
BEFORE INCOME TAXES......... 7,762 9,189 (4,649) 26,423
PROVISION FOR
INCOME TAXES................. 2,969 3,495 1,282 10,087
------- ------- ------- -------
NET INCOME (LOSS)............. $4,793 $5,694 ($5,931) $16,336
====== ====== ========= =======
EARNINGS PER SHARE OF COMMON STOCK:
Net income (loss):
Basic..................... $.29 $.34 $(.36) $.97
Diluted................... .29 .34 (.36) .96
SHARES USED IN PER SHARE DATA:
Basic..................... 16,523 16,659 16,541 16,683
Diluted................... 16,709 16,854 16,699 16,942
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
ONEIDA LTD.
CONSOLIDATED BALANCE SHEET
OCTOBER 30, 1999 AND JANUARY 30, 1999
(Thousands)
OCT 30, JAN 30,
1999 1999
------- -------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash.......................................... $4,264 $1,913
Accounts receivable, net of allowance for doubtful
accounts of $1,868,000 and $1,520,000........ 97,174 72,919
Other accounts and notes receivable........... 1,650 2,777
Inventories:
Finished goods............................... 171,751 160,888
Goods in process............................. 12,083 14,339
Raw materials and supplies................... 13,161 14,885
Other current assets.......................... 11,519 8,217
------- -------
Total current assets....................... 311,602 275,938
------- -------
PROPERTY, PLANT AND EQUIPMENT-At cost:
Land and buildings............................ 59,200 56,378
Machinery and equipment....................... 168,635 161,660
------- -------
Total...................................... 227,835 218,038
Less accumulated depreciation................. 128,613 123,010
------- -------
Property, plant and equipment-net.......... 99,222 95,028
------- -------
OTHER ASSETS:
Intangible assets - net....................... 27,963 39,202
Other assets.................................. 33,436 31,900
------- -------
TOTAL..................................... $472,223 $442,068
======= =======
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
ONEIDA LTD.
CONSOLIDATED BALANCE SHEET
OCTOBER 30, 1999 AND JANUARY 30, 1999
(Thousands)
OCT 30, JAN 30,
1999 1999
------- -------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt............................... $57,346 $56,060
Accounts payable.............................. 31,258 26,638
Accrued liabilities........................... 51,466 40,295
Accrued income taxes.......................... 8,247 6,388
Dividends payable............................. 1,695 1,701
Current installments of long-term debt........ 6,698 4,790
------- -------
Total current liabilities.................. 156,710 135,872
------- -------
LONG-TERM DEBT................................. 111,410 89,605
------- -------
OTHER LIABILITIES:
Accrued postretirement liability.............. 55,419 54,264
Accrued pension liability..................... 15,927 9,584
Other liabilities............................. 8,650 12,495
------- -------
Total...................................... 79,996 76,343
------- -------
STOCKHOLDERS' EQUITY:
Cumulative 6% preferred stock; $25 par
value; authorized 95,660 shares, issued
87,009 and 87,411 shares,
callable at $30 per share.................... 2,175 2,185
Common stock $1 par value; authorized
48,000,000 shares, issued 17,594,204
and 17,423,478 shares........................ 17,594 17,423
Additional paid-in capital.................... 81,775 79,737
Retained earnings............................. 54,996 65,870
Currency translation adjustment............... (11,481) (11,079)
Less cost of common stock held in
treasury; 1,017,473 and 816,284 shares....... (18,525) (13,888)
Less unallocated ESOP shares of common
stock of 108,526............................. (2,427)
------- -------
Stockholders' Equity....................... 124,107 140,248
-------- --------
TOTAL..................................... $472,223 $422,068
======== ========
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Consolidated Statement of Changes
in Stockholders' Equity
For the quarters ended October 30, 1999 and October 31, 1998
Add'l
Comp. Common Common Pref'd Paid-in Retained
Income Shares Stock Stock Capital Earnings
--------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at Aug 1, 1998... 17,355 $17,355 $2,198 $79,165 $60,159
Stock plan activity, net. 27 27 353
Cancelled stock.......... (11)
Purchase/retirement of
treasury stock, net..... (4) (4)
Cash dividends declared
($.10 per share)...... (1,695)
Net income............... $5,694 5,694
Other comprehensive
income (loss)......... (765)
-------
Comprehensive income..... $4,929
ESOP activity, net....... ======
---------------------------------------------
Balance October 31, 1998. 17,378 $17,378 $2,187 $79,518 $64,158
=============================================
</TABLE>
<TABLE>
Accumulated
Other Comp Treasury Unallocated
Income Stock ESOP
-------------------------------------------------------
<S> <C> <C> <C>
Balance at Aug 1, 1998... $(10,819) $(10,579) $(308)
Stock plan activity, net.
Cancelled stock.......... 71
Purchase/retirement of
Treasury stock, net...... (1,676)
Cash dividends declared
($.10 per share)......
Net income...............
Other comprehensive
income (loss)......... (765)
Comprehensive income.....
ESOP activity, net....... (580)
-------------------------------------------------------
Balance October 31, 1998 $(11,584) $(12,184) $(888)
=======================================================
</TABLE>
<PAGE>
<TABLE>
Consolidated Statement of Changes
in Stockholders' Equity
For the quarters ended October 30, 1999 and October 31, 1998
(Continued)
Add'l
Comp. Common Common Pref'd Paid-in Retained
Income Shares Stock Stock Capital Earnings
-------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at July 31, 1999. 17,577 $17,577 $2,175 $81,445 $51,823
Stock plan activity, net. 18 18 330
Cancelled stock.......... (1) (1)
Purchase/retirement of
Treasury stock, net......
Cash dividends declared
($.10 per share)...... (1,620)
Net income............... $4,793 4,793
Other comprehensive
income ............... 436
------
Comprehensive income..... $5,229
ESOP activity, net....... ======
---------------------------------------------
Balance October 30, 1999. 17,594 $17,594 $2,175 $81,775 $54,996
=============================================
</TABLE>
<TABLE>
Accumulated
Other Comp Treasury Unallocated
Income Stock ESOP
-------------------------------------------------------
<S> <C> <C> <C>
Balance at Jul 31, 1999.. ($11,917) ($14,978) $(2,102)
Stock plan activity, net.
Cancelled stock..........
Purchase/retirement of
Treasury stock, net...... (3,547)
Cash dividends declared
($.10 per share)......
Net income...............
Other comprehensive
income ............... 436
Comprehensive income.....
ESOP activity, net....... (325)
-------------------------------------------------------
Balance October 30, 1999. $(11,481) $(18,525) $(2,427)
=======================================================
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Consolidated Statement of Changes
in Stockholders' Equity
For the nine months ended October 30, 1999 and October 31, 1998
Add'l
Comp. Common Common Pref'd Paid-in Retained
Income Shares Stock Stock Capital Earnings
------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 31, 1998 17,091 $17,091 $2,200 $76,007 $54,620
Stock plan activity, net... 319 319 3,511
Cancelled stock............ (20) (20) (13)
Purchase/retirement of
Treasury stock, net...... (12) (12)
Cash dividends declared
($.40 per share)...... (6,798)
Net income............... $16,336 16,336
Other comprehensive
income (loss)......... (2,915)
-------
Comprehensive income..... $13,421
ESOP activity, net....... ======
----------------------------------------------
Balance October 31, 1998. 17,378 $17,378 $2,187 $79,518 $64,158
==============================================
</TABLE>
<TABLE>
Accumulated
Other Comp Treasury Unallocated
Income Stock ESOP
-------------------------------------------------------
<S> <C> <C> <C>
Balance at January 31, 1998 $(8,669) $(5,632) $(360)
Stock plan activity, net...
Cancelled stock............ 168
Purchase/retirement of
Treasury stock, net........ (6,720)
Cash dividends declared
(.40 per share)...........
Net income.................
Other comprehensive
income (loss)........... (2,915)
Comprehensive income.......
ESOP activity, net......... (528)
----------------------------------------------
Balance October 31, 1998 $(11,584) $(12,184) $(888)
===============================================
</TABLE>
<PAGE>
<TABLE>
Consolidated Statement of Changes
in Stockholders' Equity
For the nine months ended October 30, 1999 and October 31, 1998
(Continued)
Add'l
Comp. Common Common Pref'd Paid-in Retained
Income Shares Stock Stock Capital Earnings
-------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 30, 1999. 17,423 $17,423 $2,185 $79,737 $65,870
Stock plan activity, net.. 177 177 2,033
Cancelled stock........... (6) (6) 1
Purchase/retirement of
Treasury stock, net....... (10) 4
Cash dividends declared
($.30 per share)....... (4,943)
Net income (loss)......... $(5,931) (5,931)
Other comprehensive
income (loss).......... (402)
-------
Comprehensive income (loss)$(6,333)
ESOP activity, net........ ======
---------------------------------------------
Balance October 30, 1999.. 17,594 $17,594 $2,175 $81,775 $54,996
=============================================
</TABLE>
<TABLE>
Accumulated
Other Comp Treasury Unallocated
Income Stock ESOP
-------------------------------------------------
<S> <C> <C> <C>
Balance at January 30, 1999 ($11,079) ($13,888) $ -
Stock plan activity, net...
Cancelled stock............
Purchase/retirement of
Treasury stock, net........ (4,899)
Cash dividends declared
($.30 per share)........
Net income.................
Other comprehensive
income (loss)........... (402)
Comprehensive income.......
ESOP activity, net......... 262 (2,427)
--------------------------------------------------
Balance October 30, 1999... $(11,481) $(18,525) $(2,427)
==================================================
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
ONEIDA LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED OCTOBER 30, 1999 AND OCTOBER 31, 1998
(In Thousands)
FOR THE
NINE MONTHS ENDED
OCT 30, OCT 31,
1999 1998
------- -------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss)............................... $(5,931) $16,336
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation................................... 8,333 9,919
Impairment of long-term assets
and inventory writedowns.................... 15,000
Amortization of intangibles.................... 2,048 2,349
Deferred taxes and other non-cash
charges and credits......................... 6,096 (340)
Decrease (increase) in operating assets:
Receivables.................................... (23,128) (27,568)
Inventories.................................... (9,883) (55,020)
Other current assets........................... (3,302) (775)
Other assets................................ (162) (202)
Increase in accounts payable................... 4,620 12,950
Increase (decrease) in accrued liabilities..... 13,024 (769)
Net cash provided by (used in) ------- -------
operating activities....................... 6,715 (43,120)
------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
Property, plant and equipment expenditures...... (17,921) (16,090)
Minority interest............................... (1,251) (284)
Retirement of property, plant and equipment..... 1,494 262
Other, net...................................... (1,474) (1,196)
------- -------
Net cash used in investing activities....... (19,152) (17,308)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock.......... 2,199 3,797
Issuance of restricted stock plan shares........
Purchase of treasury stock...................... (4,637) (6,564)
Purchase (allocation) of ESOP shares - net...... (2,427) (528)
Issuance (payments) of short-term debt - net... 1,286 54,426
Payment of long-term debt....................... (839) (418)
Proceeds from issuance of long-term debt........ 24,551 19,681
Dividends paid.................................. (4,943) (6,798)
------- -------
Net cash provided by financing activities... 15,190 63,596
------- -------
EFFECTS OF EXCHANGE RATE CHANGES ON CASH.......... (402) (2,915)
------- -------
NET INCREASE IN CASH.............................. 2,351 253
CASH AT BEGINNING OF YEAR......................... 1,913 3,095
------- -------
CASH AT END OF PERIOD............................. $4,264 $3,348
======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid ................................... $7,768 $6,547
Income taxes paid................................ 2,386 6,388
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
ONEIDA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands)
1. The statements for the three and nine months ended October 30, 1999 and
October 31, 1998 are unaudited; in the opinion of the Company such unaudited
statements include all adjustments (which comprise only normal recurring
accruals) necessary for a fair presentation of the results of such periods. The
results of operations for the nine months ended October 30, 1999 are not
necessarily indicative of the results of operations to be expected for the year
ending January 29, 2000. The consolidated financial statements and notes
thereto should be read in conjunction with the financial statements and notes
for the years ended in January 1999 and 1998 included in the Company's January
30, 1999 Annual Report to the Securities and Exchange Commission on Form 10-K.
2. The provision for income taxes is based on pre-tax income for financial
statement purposes with an appropriate deferred tax provision to give effect to
changes in temporary differences between the financial statements and tax bases
of assets and liabilities. The temporary differences arise principally from
restructuring charges, postretirement benefits, depreciation and other employee
benefits.
3. In the quarter ended May 1, 1999, the Company recorded a $35,800 charge for
restructuring and other unusual items, as it broadened the restructuring program
initiated in 1998. This total includes $3,000 of inventory writedowns due to
discontinuing certain product lines, $11,000 of charges related to operations
restructuring, $12,000 of long-term asset impairments and $9,800 of other
unusual charges. In the quarter ended October 30, 1999, the Company expensed
additional unusual charges of $8,500.
Key components of the restructuring are the closure of the Company's flatware
manufacturing facility in Niagara Falls, Canada; consolidation of the Company's
international operations; and further elimination of positions and
underperforming product lines. The majority of the $11,000 restructuring charge
related to operations made in the first quarter related to early retirement
benefits, severance and associated employee benefit costs. The closure of the
Canadian manufacturing facility, which was substantially completed in the first
quarter, resulted in the reduction of approximately 150 jobs. The intent of the
total strategic restructuring plan is to reduce the Company's worldwide
employment of 4,800 jobs by approximately 12%. This is being accomplished by
means of the above mentioned plant closure and further international and
domestic job consolidations, as well as through normal attrition and the
extension of early retirement and termination packages. In the third quarter
and the first nine months, the Company actually paid $500 and $8,200 of these
restructuring costs, respectively.
The asset writedowns are related to goodwill associated with the purchase of a
subsidiary and the writedown of manufacturing fixed assets that will no longer
be utilized due to the closing of the Oneida Canada plant and the exiting of
certain product lines. The full $12,000 of non-cash charges were recorded
against the respective assets to reduce them to net realizable value in the
first quarter. The Company recorded a $3,000 non-cash inventory reserve charge
as a component of cost of sales during the first quarter to reduce discontinued
product lines to net realizable value. $1,130 and $2,600 was written off against
the reserve during the third quarter and first nine months of the year,
respectively.
In 1999, the Company has expensed $18,300 of unusual items. These were costs
related to an unsolicited takeover attempt, litigation costs and costs incurred
to overcome unique market barriers in the foodservice glassware market.
Approximately $6,600 and $11,600 of these unusual expense payments were made in
the third quarter and first nine months of 1999, respectively.
<PAGE>
ONEIDA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands)
In the year ended January 1999, the Company initiated restructuring efforts by
means of a workforce reduction that was accomplished through job consolidations
and early retirements. The Company previously accrued $5,000 to account for the
severance and related employee benefits for this phase. As of the end of the
third quarter, approximately $300 of benefits remain unpaid.
The majority of the restructuring and unusual expense payments will be completed
by year-end. There are no anticipated adjustments needed for any of the
restructuring or unusual expense accruals.
4. 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.
The following is a reconciliation of basic earnings per share to diluted
earnings per share for the three months ended October 30, 1999 and October 31,
1998:
Net Preferred Adjusted Earnings
Income Stock Net Income Average Per
(Loss) Dividends (Loss) Shares Share
- --------------------------------------------------------------------------------
[S] [C] [C] [C] [C] [C]
1999:
Basic earnings
per share.............. $ 4,793 $(32) 4,761 16,523 $.29
Effect of stock options. 186
Diluted earnings
per share.............. 4,793 (32) 4,761 16,709 .29
- --------------------------------------------------------------------------------
1998:
Basic earnings
per share.............. 5,694 (33) 5,661 16,659 .34
Effect of stock options. 195
Diluted earnings
per share.............. 5,694 (33) 5,661 16,854 .34
- --------------------------------------------------------------------------------
The following is a reconciliation of basic earnings per share to diluted
earnings per share for the nine months ended October 30, 1999 and October 31,
1998:
Net Preferred Adjusted Earnings
Income Stock Net Income Average Per
(Loss) Dividends (Loss) Shares Share
- --------------------------------------------------------------------------------
[S] [C] [C] [C] [C] [C]
1999:
Basic earnings
per share.............. $ (5,931) $(97) $(6,028) 16,541 $(.36)
Effect of stock options. 158
Diluted earnings
per share.............. (5,931) (97) (6,028) 16,699 (.36)
- --------------------------------------------------------------------------------
1998:
Basic earnings
per share.............. 16,336 (99) 16,237 16,683 .97
Effect of stock options. 259
Diluted earnings
per share.............. 16,336 (99) 16,237 16,942 .96
- --------------------------------------------------------------------------------
<PAGE>
ONEIDA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands)
5.Included in the long-term debt caption on the balance sheet are various senior
notes. The note agreements relating thereto contain provisions which restrict
borrowings, business investments, acquisition of the Company's stock and payment
of cash dividends. Included in the debt covenants is a restriction that the
Company's ratio of total debt to tangible net worth not exceed 1.75. The ratio
was 1.89 at October 30, 1999 and accordingly, the Company has received a waiver
from its lenders. At October 30, 1999, the maximum amount available for payment
of dividends was $9,240.
6. Within the Statement of Changes in Stockholders' Equity, the Company reports
comprehensive income in accordance with the Statements of Financial Accounting
Standard No. 130, "Reporting Comprehensive Income." This pronouncement
requires the Company to report the effects of foreign currency translation
adjustments on comprehensive income.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Quarter ended October 30, 1999 compared with
the quarter ended October 31, 1998
(In Thousands)
Operations
Net Sales by Product Line:
1999 1998 % Change
------- ------- -----
[S] [C] [C] [C]
Metal Products............... $84,600 $89,400 (5.4)%
Dinnerware Products.......... 26,400 24,200 9.1%
Glass/Crystal Products....... 11,200 6,200 80.7%
Other Products............... 12,315 8,987 37.0%
------- ------- -----
Total...................... $134,515 $128,787 4.5%
======= ======= =====
Consolidated net sales, for the quarter ended October 30, 1999 increased $5,728,
over the same period a year ago. Sales increases over 1998 third quarter levels
were achieved in both the foodservice and international markets. Sales of metal
tableware were soft across all markets this quarter while growth in dinnerware
sales includes both domestic and imported products. The Company added glass
products and expanded its crystal offering in late 1998, hence the growth in
that product line. The majority of the growth in sales of other products is
attributable to sales made to the grocery store market.
Gross margin, as a percentage of net sales, was 38.5% in the third quarter of
1999 as compared to 35.5% for the same period of 1998. The increase reflects
improved manufacturing efficiencies and restructuring program benefits in 1999.
Operating Expenses (excluding
unusual charges) 1999 1998 % Change
------- ------- ------
[S] [C] [C] [C]
Selling, advertising and
distribution................. $24,020 $24,232 (.9)%
General and administrative..... 8,894 9,650 (7.8)%
------- ------- -----
Total........................ $32,914 $33,882 (2.9)%
======= ======= =====
Total recurring operating expenses as a percentage of sales decreased to 24.5%
in the third quarter of 1999 from 26.3% last year due to the Company's
restructuring plan that was implemented in early 1999.
In the quarter ended October 30, 1999, the Company recorded an additional charge
of $8,500 for unusual expenses. These costs are related to litigation expenses
and other costs incurred to overcome market barriers in the foodservice
glassware market.
Interest expense, prior to capitalized interest, was $3,154 for the quarter
ended October 30, 1999, an increase of $313 from the third quarter of 1998.
This increase is due to higher average borrowings in the third quarter of 1999.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine month period ended October 30, 1999 compared with
the nine month period ended October 31, 1998
(In Thousands)
Operations
Net Sales by Product Line:
1999 1998 % Change
------- ------- -----
[S] [C] [C] [C]
Metal Products............... $232,400 $237,400 (2.1)%
Dinnerware Products.......... 76,200 69,200 10.1%
Glass/Crystal Products....... 28,100 15,200 84.9%
Other Products............... 27,928 18,258 53.0%
------- ------- -----
Total...................... $364,628 $340,058 7.2%
======= ======= =====
Consolidated net sales, for the nine months ended October 30, 1999 increased
$24,570, over the same period a year ago. Significant year to date sales
increases over 1998 levels were made in the foodservice and international
markets. Sales of metal tableware fell slightly behind 1998 levels in the third
quarter of 1999. 1999 is the first full year that the Company expanded it's
crystal product category to include glassware and new consumer crystal lines,
hence the growth in that product line. The majority of the growth in sales of
other products is attributable to continued growth in the grocery store market.
Gross margin, (excluding the special inventory restructuring charge of $3,000),
as a percentage of net sales, was 39.7% in the first nine months of 1999 as
compared to 37.2% for the same period of 1998. The increase reflects improved
manufacturing efficiencies and restructuring program benefits in 1999.
Operating Expenses (exclusive of restructuring
and unusual charges)
1999 1998 % Change
------- ------- -----
[S] [C] [C] [C]
Selling, advertising
and distribution............. $69,312 $67,043 3.4%
General and administrative..... 28,283 27,978 1.1%
------- ------- -----
Total........................ $97,595 $95,021 2.7%
======= ======= =====
Total recurring operating expenses increased by $2,574 from the same period last
year, but actually decreased as a percentage of sales from 27.9% to 26.8% in
1999 due to continued strict expense control and the 1999 restructuring program.
The increase in selling and distribution costs is attributable to higher sales
levels in the current year.
Included in other income for the nine months ended October 30, 1998 were net
settlements of three long-term contracts resulting from termination of a major
energy supply contract, the Company's lease of an office facility in Redmond
Washington and a long-term distribution relationship.
Interest expense, prior to capitalized interest, was $8,950 for the nine months
ended October 30, 1999, an increase of $1,800 from the same period in 1998.
This increase is due to higher average borrowings in 1999. These borrowings
were for working capital needs as well as the construction of two major
distribution facilities.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine month period ended October 30, 1999 compared with
the nine month period ended October 31, 1998
(In Thousands)
For the first nine months of 1999, the Company recorded a $44,300 charge for
restructuring costs and other unusual items. This total includes $3,000 of
inventory writedowns due to discontinuing certain product lines (reported in
cost of sales), $11,000 of charges related to operations restructuring, $12,000
of long-term asset impairments and $18,300 of other unusual charges. Key
components of the restructuring are the closure of the Company's flatware
manufacturing facility in Niagara Falls, Canada; consolidation of the
Company's international operations; and further elimination of positions and
underperforming product lines.
The majority of the $11,000 restructuring charge made in the first quarter of
1999 relates to early retirement benefits, severance and associated employee
benefit costs. The closure of the Canadian manufacturing facility, which was
substantially completed in the first quarter, resulted in the reduction of
approximately 150 jobs. The intent of the total strategic restructuring plan is
to reduce the Company's worldwide employment of 4,800 jobs by approximately 12%.
This is being accomplished by means of the above mentioned plant closure and
further international and domestic job consolidations, as well as through normal
attrition and the extension of early retirement and termination packages.
Through the first nine months, the Company paid $8,200 of these restructuring
costs.
The asset writedowns are related to goodwill associated with the purchase of a
subsidiary and the writedown of manufacturing fixed assets that will no longer
be utilized due to the closing of the Oneida Canada plant and the exiting of
certain product lines. The full $12,000 of non-cash charges were recorded
against the respective assets to reduce them to net realizable value in the
first quarter of 1999. The Company recorded a $3,000 non-cash inventory reserve
charge as a component of cost of sales during the first quarter to reduce
discontinued product lines to net realizable value. $2,600 has been written off
against the reserve to date.
In 1999, the Company expensed $18,300 of unusual items. These were costs
related to an unsolicited takeover attempt, litigation costs and expenses
incurred to overcome unique market barriers in the foodservice glassware market.
Through the first nine months, approximately $11,600 of these unusual expense
payments were made.
In January 1999, the Company initiated restructuring efforts by means of a
workforce reduction that was accomplished through job consolidations and early
retirements. The Company accrued $5,000 to account for the severance and
related employee benefits for this phase. As of the end of the third quarter,
approximately $300 of benefits remain unpaid. The majority of the restructuring
and unusual expense payments will be completed by year-end. The Company expects
to reduce expenses by $12,000 in 1999 and by $20,000 per year thereafter as a
result of the restructuring plan.
Liquidity & Financial Resources
During the nine months of this year, the Company spent approximately $18,000 on
capital projects focused primarily on its distribution and manufacturing
facilities. The Company expects to invest another $5,000 on similar projects
during the remainder of the current fiscal year. The Company is currently
constructing a 206,000 square foot warehouse at its main facility in Sherrill,
NY. This project, which should be completed in early 2000, will cost
approximately $10,000. By consolidating Northeast distribution in this one
facility, the Company expects to both lower costs and improve customer service.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine month period ended October 30, 1999 compared with
the nine month period ended October 31, 1998
(In Thousands)
Year to date, $8,000 was spent on purchasing common shares either as treasury
stock or as contributions to its ESOP plan. Management believes there is
sufficient liquidity to support the Company's ongoing funding requirements from
future operations as well as the availability of bank lines of credit. At
October 30, 1999, the Company had unused short-term credit lines equal to
$40,500. Working capital as of October 30, 1999 totaled $154,892.
Year 2000 Compliance
Year 2000 issues relate to the ability of computer systems to distinguish data
which contains dates beyond December 31, 1999. The Company has created and
implemented a comprehensive Year 2000 compliance plan. The Company holds regular
compliance meetings to receive information and input from all of the Company's
main operating areas.
As part of its compliance plan, the Company has reviewed all of its software and
information processing systems and identified date sensitive functions. The
Company began testing those systems in the first quarter of 1999. Testing is
substantially complete. Any systems found to be noncompliant have been
modified to ensure that they operate properly. The Company believes that all of
its remaining systems are now Year 2000 compliant.
The Company has identified and contacted its major customers, suppliers, service
providers and business partners. Each of these entities received a letter
informing them of the Company's plans and state of readiness and asking that
they in turn share their own Year 2000 plans by returning a questionnaire to the
Company. In addition to its compliance plan, the Company has developed
contingency plans based upon the outcomes of the systems tests that were
conducted.
The Company believes it is devoting appropriate resources to resolve its Year
2000 issues in a timely manner and believes that its compliance program will
result in all internal systems being prepared for Year 2000 processing. The
compliance plan is proceeding on schedule and to date no unforeseen
significant difficulties have arisen. Based upon the work performed to date,
the Company presently believes that the likelihood of the Year 2000 having a
material result on its operations, liquidity or financial position is remote.
The Company estimates that its direct Year 2000 compliance costs will not
exceed $500, of which to date is approximately what has been incurred and
expensed.
Notwithstanding the foregoing, the Company could be adversely affected if its
customers, suppliers, service providers, business partners and/or governmental
agencies continue to utilize systems that are not Year 2000 compliant. This
failure could affect the Company's ability to purchase raw materials, receive
orders and transact business with its financial institutions among other things,
any of which could constitute a material and immeasurable financial risk to the
Company.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine month period ended October 30, 1999 compared with
the six month period ended October 31, 1998
(In Thousands)
Contingencies-Legal Proceedings
On December 8, 1998, the Oneida Indian Nation of New York, the Oneida Tribe of
Indians of Wisconsin and the Oneida of Thames, as Plaintiffs, along with the
United States of America, as Intervenor, moved to amend their Complaint filed on
May 3, 1974 in the United States District Court for the Northern District
of New York against the counties of Oneida and Madison, New York. The amended
Complaint seeks to add the State of New York, New York State Thruway Authority,
Utica-Rome Motorsports, Inc., Niagara Mohawk Power Corporation and the Oneida
Valley National Bank, individually and as representatives of the class of
similarly situated private landowners in Madison and Oneida counties. The
Complaint alleges that during the nineteenth century the Oneidas' lands were
improperly transferred. The Oneidas seek title to the property as well as
monetary damages. The Corporation's headquarters and main manufacturing
and distribution facilities are located within this land claim area. The
Corporation filed a motion to intervene with the United States District Court
for the Northern District of New York on February 26, 1999. The Judge's
decision on whether private landowners will be added as Defendants is pending.
Forward Looking Information
With the exception of historical data, the information contained in this Form
10-Q, 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 Company cautions readers that
changes in certain factors could affect the Company's future results and could
cause the Company's future consolidated results to differ materially from those
expressed herein. Such factors include, but are not limited to: general
economic conditions in the Company'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 Company's
indebtedness; major slowdowns in the retail, travel or entertainment industries;
the loss of several of the Company's major customers; underutilization of the
Company's plants and factories; the amount and rate of growth of the Company's
selling, general and administrative expenses; and the inability of the Company
or its customers, suppliers, service providers or business partners, as well as
governmental agencies, to resolve Year 2000 issues in a timely manner.
<PAGE>
ONEIDA LTD
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
October 30, 1999
SIGNATURES
Pursuant to the requirements 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
(Registrant)
Date: December 14, 1999
Edward W. Thoma
Senior Vice President,
Finance
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ONEIDA LTD. FOR THE NINE MONTHS ENDED OCTOBER 30, 1999
AND IS QUALIFIED IN IT'S ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CAPTION>
2000
<S> <C>
<FISCAL-YEAR-END> JAN-30-2000
<PERIOD-START> JAN-31-1999
<PERIOD-END> OCT-30-1999
<PERIOD-TYPE> 3-MOS
<CASH> 4,264
<SECURITIES> 0
<RECEIVABLES> 99,042
<ALLOWANCES> 1,868
<INVENTORY> 196,995
<CURRENT-ASSETS> 311,602
<PP&E> 227,835
<DEPRECIATION> 128,613
<TOTAL-ASSETS> 472,223
<CURRENT-LIABILITIES> 156,710
<BONDS> 111,410
0
2,175
<COMMON> 17,594
<OTHER-SE> 104,338
<TOTAL-LIABILITY-AND-EQUITY> 472,223
<SALES> 364,628
<TOTAL-REVENUES> 365,250
<CGS> 219,762
<TOTAL-COSTS> 222,762
<OTHER-EXPENSES> 139,164
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,973
<INCOME-PRETAX> (4,649)
<INCOME-TAX> 1,282
<INCOME-CONTINUING> (5,931)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,931)
<EPS-BASIC> (.36)<F1>
<EPS-DILUTED> (.36)
<FN>
<F1> The amount reported as EPS-PRIMARY is actually Earnings Per Share-Basic,
as the Company adopted SFAS 128 "Earnings Per Share" as of January 31, 1998.
</TABLE>
