<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 9, 2000
ONEIDA LTD.
(Exact name of Registrant as specified in its charter)
NEW YORK 1-5452 15-0405700
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identificaton Number)
incorporation)
163-181 KENWOOD AVENUE, ONEIDA NEW YORK 13421
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (315)361-3000
Former name or former address, if changed since last report N/A
This Form 8-K/A is filed to amend the Form 8-K/A filed by the registrant
on October 23, 2000. In particular, this amendment is intended to correct
various typographical errors contained in Exhibit 23, Consent of Independent
Auditors, that was attached to the Form 8-K/A filed on October 23, 2000.
<PAGE>
Item 2. Acquisition or Disposition of Assets
On August 9, 2000, Oneida Ltd., a New
York corporation (the "Registrant"), purchased all outstanding
shares of stock of Delco International, Ltd., a New York
corporation ("Delco") pursuant to the Stock Purchase Agreement,
dated as of May 30, 2000, among the Registrant, Delco, and
Perry Delman, Robert Delman, Peter Kranes, Michael Sehlmeyer
and Dennis Kanfer (each, a "Stockholder"; collectively, the
"Stockholders") (the "Stock Purchase Agreement"), as amended
on August 9, 2000. Copies of the Stock Purchase Agreement
and the Letter Agreement regarding amendments to the Stock
Purchase Agreement, dated as of August 9, 2000, among the
Registrant, Delco and the Stockholders (the "Amendment to
Stock Purchase Agreement"), are attached hereto as
Exhibits 2.1 and 2.2, respectively, and are
incorporated herein by reference.
The purchase price of approximately $59.4
million in cash paid by the Registrant to the Stockholders
pursuant to the Stock Purchase Agreement was borrowed under
the Registrant's existing Credit Agreement with several
lenders and The Chase Manhattan Bank as Administrative
Agent. The purchase price was arrived at
through arm's length negotiations between the
Registrant, Delco and the Stockholders, and was determined
after consideration of Delco's audited financial statements
and a review of Delco's assets and business. The purchase
price is subject to adjustment pursuant to the Stock
Purchase Agreement based on the net worth of Delco as of
August 9, 2000. $8 million of the purchase price was placed
in escrow with The Chase Manhattan Bank ("Chase") pursuant
to an Escrow Agreement, dated as of May 30, 2000 among the
Registrant, Delco, the Stockholders and Chase (the "Escrow
Agreement"), as amended on August 9, 2000. Copies of the
Escrow Agreement and the Amendment to Escrow Agreement
dated as of August 9, 2000, among the Registrant, Delco,
the Stockholders and Chase are attached hereto as Exhibits 2.3
and 2.4, respectively, and are incorporated herein by
reference.
No prior relationship existed between Delco or
the Stockholders, on the one hand, and the Registrant
and its respective affiliates, directors or officers, on the
other hand.
Item 7. Financial Statements and Exhibits
(a) Pro Forma Financial Information
(b) Financial Statements of Businesses Acquired
(c) Exhibits
2.1 Stock Purchase Agreement, dated as of May
30, 2000, among Oneida Ltd., Delco
International Ltd., Perry Delman, Robert
Delman, Peter Kranes, Michael Sehlmeyer
and Dennis Kanfer
2.2 Amendment to Stock Purchase Agreement,
dated as of August 9, 2000, among
Oneida Ltd., Delco International Ltd.,
Perry Delman, Robert Delman, Peter
Kranes, Michael Sehlmeyer and Dennis
Kanfer
2.3 Escrow Agreement, dated as of May 30,
2000, among Oneida Ltd., Delco
International Ltd.,
Perry Delman, Robert Delman, Peter Kranes,
Michael Sehlmeyer, Dennis Kanfer and
the Chase Manhattan Bank, N.A.
2.4 Amendment to Escrow Agreement, dated as of
August 9, 2000, among Oneida Ltd.,
Delco International Ltd., Perry
Delman, Robert Delman, Peter
Kranes, Michael Sehlmeyer,
Dennis Kanfer and the Chase Manhattan
Bank, N.A.
23.1 Consent of Independent Auditors
99.1 Press Release of the Registrant, dated May 30, 2000.
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 hereunto duly authorized.
ONEIDA LTD.
Dated: November 1, 2000 By: /s/ CATHERINE H. SUTTMEIER
Catherine H. Suttmeier
Corporate Vice President,
Secretary and General
Counsel
<PAGE>
ITEM 7(a)
ONEIDA LTD. AND CONSOLIDATED SUBSIDIARIES
AND DELCO INTERNATIONAL LTD. AND
SUBSIDIARIES
====================================
PRO FORMA FINANCIALS
BALANCE SHEETS AS OF JULY 29, 2000
STATEMENTS OF INCOME FOR THE
FISCAL YEAR ENDED JANUARY 29, 2000
AND SIX MONTH PERIOD ENDED JULY 29, 2000
PREPARED FOR FILING AS PART OF
FORM 8-K/A
TO THE SECURITIES AND EXCHANGE COMMISSION
<PAGE>
ONEIDA LTD. AND CONSOLIDATED SUBSIDIARIES AND
DELCO INTERNATIONAL LTD. AND SUBSIDIARIES
UNAUDITED PRO FORMA BALANCE SHEET AS OF JULY 29, 2000
The following unaudited pro forma balance sheet gives effect to the business
combination between Oneida Ltd. ("Oneida") and Delco International Ltd.
("Delco") which took place on August 9, 2000. This unaudited pro forma
balance sheet combines the unaudited July 29, 2000 balance sheet of Oneida
Ltd. and Consolidated Subsidiaries with the unaudited July 29, 2000 balance
sheet of Delco International Ltd. and Subsidiaries and assumes the business
combination occurred on July 29, 2000 and was accounted for as a purchase.
This unaudited pro forma balance sheet should be read in conjunction with the
unaudited pro forma statements of income for the fiscal year ended January
29, 2000 and six month period ended July 29, 2000 and with the audited
January 31, 2000 and unaudited July 29, 2000 consolidated financial
statements and related notes thereto of Delco International Ltd. included
elsewhere herein.
<TABLE>
(In thousands except per share amounts) Adjustments Pro
Oneida Ltd. Delco Pro Forma Forma
Inc. (Dec.) Combined
<S> <C> <C> <C> <C>
ASSETS
Cash............................... $5,757 $3,333 $ (131)(a) $ 8,959
Receivables........................ 86,506 7,784 94,290
Inventories........................ 208,127 14,408 222,535
Other current assets............... 18,734 2,084 (951)(d)(e) 19,867
--------------------------------------------
Total current assets.............. 319,124 27,609 (1,082) 345,651
Property, plant and equipment-net.. 106,011 6,667 731(e) 113,409
Intangible assets-net of accumulated
amortization ..................... 69,765 50,459(a)(b) 120,224
(c)(e)
Deferred income taxes.............. 23,042 513 23,555
Other assets....................... 12,020 (99)(e) 11,921
-------------------------------------------
Total assets.................... $529,962 $34,789 $50,009 $614,760
===========================================
LIABILITIES
Short-term debt.....................$ 7,664 $ 1,066 $ 8,730
Accounts payable.................... 33,735 1,876 $ 400(b) 36,011
Accrued liabilities................. 44,977 5,409 1,223(a) 51,609
Current installments of long-term debt 9,377 818 10,195
-------------------------------------------
Total current liabilities....... 95,753 9,169 1,623 106,545
Long-term debt...................... 234,046 7,602 61,000(a)(d) 302,648
Accrued postretirement liability.... 57,984 57,984
Accrued pension liability........... 16,282 16,282
Other liabilities ................ 10,353 533 4,871(c) 15,757
-------------------------------------------
Total liabilities.................. 414,418 17,304 67,494 499,216
-------------------------------------------
STOCKHOLDERS' EQUITY:
Cumulative 6% preferred stock:
$25 par value authorized 96,660
shares, issued 86,859 shares;
callable at $30 per share.......... 2,171 2,171
Common stock-$1 par value; authorized
48,000,000 shares,issued 17,663,753 17,664 100 (100)(a) 17,664
Additional paid-in capital.......... 82,639 289 (289)(a) 82,639
Retained earnings................... 51,970 21,667 (21,667)(a) 51,970
Other comprehensive loss............ (12,736) (12,736)
Less cost of common stock held in
treasury; 1,384,060 shares......... (25,447)(4,571) 4,571(a) (25,447)
Less unallocated ESOP shares of common
stock of 33,221.................... (717) (717)
--------------------------------------------
Stockholders' equity............... 115,544 7,485 (17,485) 115,544
--------------------------------------------
Total liabilities and
stockholders' equity..............$529,962 $34,789 $50,009 $614,760
===========================================
</TABLE>
<PAGE>
ONEIDA LTD. AND CONSOLIDATED SUBSIDIARIES
AND DELCO INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO PRO FORMA BALANCE SHEET (Unaudited)
(In Thousands)
(1) The allocation of the acquisition cost is based upon the estimated
fair value of Delco's assets and liabilities as of the date of acquisition.
(2) The pro forma adjustments show the assumption by Oneida of $61,000
under its revolving loan agreement to finance the acquisition and the cash
payment of $61,000 to the stockholders of Delco.
(3) The pro forma balance sheet gives effect to the following adjustments:
(a) Payment of cash consideration for Delco's stock,
non-compete agreements, special bonuses and elimination of
Delco's equity section:
Debit (Credit)
Common Stock (Delco).................. $ 100
Additional Paid-In Capital (Delco).... 289
Retained Earnings (Delco)............. 21,667
Treasury Stock (Delco)................ (4,571)
Cash (Oneida)......................... (131)
Accrued Liabilities (Oneida)........... 1,560
Long-Term Debt (Oneida)............... (61,864)
Intangible Assets (Oneida)............ 42,950
(b) Accrual of additional acquisition costs:
Intangible Assets (Oneida)............ 400
Accounts Payable (Oneida)............. (400)
(c) Accrual of non-compete agreements:
Intangible Assets (Oneida)............ 7,654
Accrued Liabilities (Oneida).......... (2,783)
Other Liabilities (Oneida)............ (4,871)
(d) Sale of certain assets back to Delco Stockholders:
Other Current Assets (Oneida)......... (864)
Long-Term Debt (Oneida)............... 864
(e) Adjust acquired assets to fair value:
Other Current Assets (Oneida)......... (87)
Property, Plant and Equipment (Oneida) 731
Other Assets (Oneida)................. (99)
Intangible Assets (Oneida)............ (545)
<PAGE>
ONEIDA LTD. AND CONSOLIDATED SUBSIDIARIES
AND DELCO INTERNATIONAL LTD. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF INCOME
FISCAL YEAR ENDED JANUARY 29, 2000
The following unaudited pro forma statement of income combines the consolidated
statement of income of Oneida LTD. for the fiscal year ended January 29, 2000
with the consolidated statement of income of Delco International Ltd. and
subsidiaries for the fiscal year ended January 31, 2000. This unaudited pro
forma statement of income assumes the business combination described elsewhere
herein was effective at the beginning of the period and that the transaction was
accounted for as a purchase. The statement of income for Delco for the fiscal
year ended January 31, 2000 includes a wholly-owned subsidiary which was not
acquired and which was not material to the pro forma combined income statement
taken as a whole. The unaudited pro forma earnings are not
necessarily indicative of what actual earnings of the combined companies will be
in the future. This statement should be read in conjunction with the unaudited
pro forma balance sheet and the January 31, 2000 consolidated financial
statements and notes thereto of Delco International Ltd. and Subsidiaries
included elsewhere herein. Only the consolidated financial statements and notes
thereto of Delco International Ltd. and subsidiaries as of and for the year
ended January 31, 2000 are included in this report.
<TABLE>
INCOME STATEMENTS
FISCAL YEAR ENDED JANUARY 29, 2000 (Unaudited)
(In thousands except per share data)
Pro Forma
Adjustments Pro Forma
Oneida Ltd. Delco Inc. (dec.) Combined
<S> <C> <C> <C> <C>
Net sales.................... $495,056 $ 75,662 $570,718
Cost of sales................ 302,071 52,132 354,203
------------------------------------------------
Gross margin................. 192,985 23,530 216,515
Operating revenues........... 861 861
------------------------------------------------
193,846 23,530 217,376
------------------------------------------------
Operating expenses
Selling, distribution and
administrative charges.... 128,038 14,790 $2,675(a) 145,503
Restructuring costs and
unusual charges........... 41,300 41,300
------------------------------------------------
Total...................... 169,338 14,790 2,675 186,803
------------------------------------------------
Income (loss) from operations 24,508 8,740 (2,675) 30,573
Other income (expense)....... 202 153 355
Interest expense............. 10,875 875 5,033(b) 16,783
------------------------------------------------
Income (loss) from operations
before income taxes......... 13,835 8,018 (7,708) 14,145
Income tax expense (benefit). 8,324 3,282 (2,116)(c) 9,490
------------------------------------------------
Net income (loss)............ $5,511 $4,736 $(5,592) $4,655
=================================================
EARNINGS PER SHARE OF COMMON STOCK:
Net income:
Basic...................... $.33 $.27
Diluted.................... .32 .27
SHARES USED IN PER SHARE DATA:
Basic...................... 16,524 16,524
Diluted.................... 16,672 16,672
</TABLE>
<PAGE>
ONEIDA LTD. AND CONSOLIDATED SUBSIDIARIES
AND DELCO INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA STATEMENT OF
INCOME FISCAL YEAR ENDED JANUARY 29, 2000
Adjustments resulting from the new basis of accounting for the assets
and liabilities of Delco International Ltd. and subsidiaries:
(In Thousands)
(a) Amortization of intangible assets,
principally excess of acquisition costs
over the net assets acquired................... $ 2,675
(b) Interest expense on long-term debt assumed
specifically for the acquisition of
Delco
$61,000,000 at 8.25%......................... 5,033
(c) Tax effect, at 38.25%, of pro forma
interest adjustment attributable
to (b) above and amortization of
non-compete agreements........................ 2,116
<PAGE>
ONEIDA LTD. AND CONSOLIDATED SUBSIDIARIES
AND DELCO INTERNATIONAL LTD. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF INCOME
SIX MONTH PERIOD ENDED JULY 29, 2000
The following unaudited pro forma statement of income combines the unaudited
consolidated statement of income of Oneida Ltd. for the six month period ended
July 29, 2000 with the unaudited consolidated statement of income of Delco
International Ltd. and subsidiaries for the six month period ended July 29,
2000. This unaudited pro forma statement assumes the business combination
described elsewhere herein was effective at the beginning of the period and
that the transaction was accounted for as a purchase. The statement of income
for Delco for the six months ended July 29, 2000 includes a wholly-owned
subsidiary which was not acquired and which was not material to the pro forma
combined income statement taken as a whole. The unaudited pro forma
earnings are not necessarily indicative of what actual earnings of the
combined companies will be in the future. This statement should be read in
conjunction with the unaudited pro forma balance sheet as of July 29, 2000 and
the consolidated financial statements and notes thereto of Delco International
Ltd. and subsidiaries as of and for the year ended January 31, 2000 included
elsewhere herein.
<TABLE>
INCOME STATEMENTS
6 MONTHS PRO FORMA COMBINED
(In thousands except per share data)
Pro Forma
Adjustments Pro Forma
JULY 29, 2000 (Unaudited) Oneida Ltd. Delco Inc. (Dec.) Combined
<S> <C> <C> <C> <C>
Net sales.................... $222,211 $38,308 $260,519
Cost of sales-Recurring....... 138,536 26,801 165,337
Cost of sales-Restructuring... 24,000 24,000
------------------------------------------------
Gross margin................. 59,675 11,507 71,182
Operating revenues........... 1,532 1,532
------------------------------------------------
61,207 11,507 72,714
------------------------------------------------
OPERATING EXPENSES:
Selling, distribution and
administrative charges.... 61,026 10,277 $(1,630)(a)(b) 69,673
Restructuring costs and
unusual charges............ 8,000 8,000
------------------------------------------------
Total...................... 69,026 10,277 (1,630) 77,673
------------------------------------------------
Income (loss) from operations (7,819) 1,230 1,630 (4,959)
Other income (expense)....... (133) 29 (104)
Interest expense............. 6,948 545 2,715(c) 10,208
------------------------------------------------
Income (loss) from operations
before income taxes......... (14,900) 714 (1,085) (15,271)
Income tax expense (benefit). (5,551) 297 (1)(d) (5,255)
------------------------------------------------
Net income (loss)............ $(9,349) $417 $(1,084) $(10,016)
==================================================
EARNINGS PER SHARE OF COMMON
STOCK:
Net income (loss):
Basic...................... $(.58) $(.62)
Diluted.................... (.58) (.62)
SHARES USED IN PER SHARE DATA:
Basic...................... 16,286 16,286
Diluted.................... 16,286 16,286
</TABLE>
<PAGE>
ONEIDA LTD. AND CONSOLIDATED SUBSIDIARIES
AND DELCO INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA STATEMENT OF
INCOME SIX MONTH PERIOD ENDED JULY 29, 2000
(In Thousands)
Adjustments resulting from the new basis of accounting for the assets
and liabilities of Delco International Ltd. and subsidiaries:
Debit (Credit)
(a) Amortization of intangible assets,
principally excess of acquisition costs
over the net assets acquired.................. $ 1,338
(b) Adjustment to reflect non-operating payments
made in connection with the transaction....... (2,968)
(c) Interest expense on long-term debt assumed
specifically for the acquisition of
Delco.
$61,000,000 at 8.9%............................ 2,715
(d) Tax effect, at 38.25%, of pro forma
interest adjustment attributable
to (c) above and amortization of
non-compete agreements......................... (1)
<PAGE>
ITEM 7(b)
Independent Auditors' Report
The Board of Directors
Delco International Ltd.
and Subsidiaries:
We have audited the accompanying consolidated balance sheet of Delco
International Ltd. and subsidiaries as of January 31, 2000, and the
related consolidated statements of earnings, stockholders' equity and
cash flows for the year then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit 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 audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of
Delco International Ltd. and subsidiaries as of January 31, 2000 and the results
of their operations and their cash flows for the year then ended
in conformity with generally accepted accounting principles.
/s/ KPMG LLP
Melville, New York
April 7, 2000
<PAGE>
<TABLE>
DELCO INTERNATIONAL LTD.
AND SUBSIDIARIES
Consolidated Balance Sheet
January 31, 2000
Assets
<S> <C>
Current assets:
Cash and cash equivalents $ 3,226,688
Marketable securities 114,812
Accounts receivable (net of allowance for
doubtful accounts of $73,000) 8,708,122
Inventory 16,355,577
Prepaid expenses and other current assets 527,641
Deferred income taxes 431,830
----------
Total current assets 29,364,670
Property, plant and equipment, net 3,041,024
Investment securities 227,268
Deferred income taxes 114,000
Other assets 725,632
---------
Total assets $33,472,594
===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,342,027
Bank acceptances payable 1,970,037
Current installments of long-term debt 847,903
Accrued expenses and other current liabilities 4,985,985
Due to shareholder 461,500
Income taxes payable 473,617
----------
Total current liabilities 11,081,069
Long-term debt, less current installments 4,547,074
Deferred income taxes 492,671
Deferred compensation 285,000
----------
Total liabilities 16,405,814
----------
Stockholders' equity:
Common stock; $.01 par value; 10,000,000
shares authorized and issued 100,000
Additional paid-in capital 289,396
Retained earnings 21,248,674
Treasury stock; 4,500,000 shares (4,571,290)
----------
Total stockholders' equity 17,066,780
----------
Commitments and contingencies
Total liabilities and stockholders' equity $33,472,594
===========
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
DELCO INTERNATIONAL LTD.
AND SUBSIDIARIES
Consolidated Statement of Earnings
Year ended January 31, 2000
<S> <C>
Net sales $75,662,298
Costs and expenses:
Cost of sales 52,132,435
Selling, general and administrative expenses 14,789,747
----------
Income from operations 8,740,116
Other income (expense):
Interest and other income 153,441
Interest expense and other financing charges (875,476)
----------
Income before provision for income taxes 8,018,081
----------
Income tax expense (benefit):
Current 3,307,451
Deferred (25,652)
---------
Total income tax expense 3,281,799
----------
Net income $ 4,736,282
===========
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
DELCO INTERNATIONAL LTD.
AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
Year ended January 31, 2000
Additional Treasury
paid-in Retained Stock
Shares Par value capital earnings at cost Total
<S> <C> <C> <C> <C> <C> <C>
Balance at
January 31,
1999 10,000,000 $100,000 $289,396 $16,512,392 $ (815,478) $16,086,310
Purchase of
treasury stock (3,755,812) (3,755,812)
Net income 4,736,282 4,736,282
---------- -------- -------- ----------- ----------- ----------
Balance at
January 31,
2000 10,000,000 $100,000 $289,396 $21,248,674 $(4,571,290) $17,066,780
========== ======== ======== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
DELCO INTERNATIONAL LTD.
AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Year ended January 31, 2000
<S> <C>
Cash flows from operating activities:
Net income $4,736,282
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 210,137
Deferred income taxes (25,652)
Deferred compensation 100,000
Changes in assets and liabilities:
Decrease in accounts receivable, net 970,955
Increase in inventory (2,055,817)
Increase in prepaid expenses and other assets (248,782)
Decrease income taxes receivable 403,048
Decrease in accounts payable (417,059)
Increase in accrued expenses and other
liabilities 486,381
Increase in income taxes payable 473,617
---------
Net cash provided by operating
activities 4,633,110
---------
Cash flows from investing activities:
Capital expenditures (497,350)
Purchase of marketable securities (114,812)
Purchase of investment securities (102,051)
Proceeds from sale of maturity of investment
securities 100,220
---------
Net cash used in investing activities (613,993)
---------
Cash flows from financing activities:
Proceeds from financing arrangement 3,750,000
Purchase of treasury stock (3,755,812)
Capital lease payments (31,599)
Payments of mortgage and notes payable (651,701)
Repayments of banker's acceptances, net (858,444)
---------
Net cash used in by financing activities (1,547,556)
---------
Net increase in cash and cash equivalents 2,471,561
Cash and cash equivalents at beginning of year 755,127
---------
Cash and cash equivalents at end of year $3,226,688
==========
Supplemental disclosure of cash flow
information:
Cash paid during the year for:
Interest and other finance charges $ 875,476
===========
Taxes $ 2,611,200
===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
DELCO INTERNATIONAL LTD.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000
(1) Summary of Significant Accounting Policies
(a) Description of Business
Delco International Ltd. (the Company), a New York Corporation,
maintains its headquarters in Port Washington, Long Island.
The Company was founded in 1939 and is an importer of a full
range of food service products including dinnerware, flatware,
holloware and serving utensils. The Company's products are
utilized across many industries including the airline,
cruiseline, railway, restaurant chains and hotel industries.
(b) Principles of Consolidation
The consolidated financial statements include the financial statements
of Delco International Ltd. and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been
eliminated in consolidation.
(c) Cash Equivalents
For purposes of the statement of cash flows, the Company
considers all highly liquid investments with an original
maturity of three months or less at date of purchase to be cash
equivalents. Cash equivalents were $1,999,122 at January 31,
2000.
(d) Marketable Securities
Marketable securities include investments in term deposits and
debt securities with maturities greater than 90 days but less
than one year. The Company's debt securities and term deposits
are held to maturity. Debt securities are carried at amortized
cost.
(e) Inventory
Inventory is stated at the lower of cost (determined on a first
in, first-out basis) or market.
(f) Other Assets
Other assets include a non-interest bearing, unsecured loan due
from a supplier for $57,500 at January 31, 2000. The supplier
is to repay the loan through specified reductions from each of
its invoices to the Company for shipments of a particular
product.
The remaining balance of other assets consists primarily of the
cash surrender value of officer's life insurance policies,
whereby the Company is the beneficiary, and security deposits relating
to trade shows.
(g) Property, Plant and Equipment
Property, plant and equipment are stated at cost.
Depreciation is computed principally on the straight-line
method for assets over their estimated useful lives as
follows:
Furniture, fixtures and equipment 7 years
Buildings 40 years
Depreciation expense on property, plant and equipment amounted
to $203,247 in fiscal 2000.
The Company reviews long-lived assets to be held and used or disposed
of for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may
not be recoverable measured by comparing the carrying amount of
an asset to the future net cash flows expected to be generated
by the asset.
(h) Income Taxes
Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those
temporary differences are expected to be realized or settled.
The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that
includes the enactment date.
(i) Use of Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities
and the disclosure of contingent assets and liabilities to
prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ
from those estimates.
(j) Comprehensive Income (Loss)
On February 1, 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income," which establishes standards
for the reporting and presentation of comprehensive income
(loss) and its components in the consolidated financial
statements. The Company does not have any components of
comprehensive income (loss) and therefore, comprehensive income
equaled net income each year.
(2) Investment Securities
Investment securities are debt securities which are expected to be
held-to-maturity, consisting primarily of state and municipal
government obligations. These securities are carried at amortized
cost. Substantially all of the Company's portfolio of investment
securities matures within six years.
The amortized cost, gross unrealized holding gains, gross
unrealized holding losses and fair value for held-to-maturity
securities at January 31, 2000 were as follows:
<TABLE>
Gross
unrealized
Amortized holding Fair
January 31, 2000 cost gain (loss) value
<S> <C> <C> <C>
Held-to-maturity:
Governmental obligations $227,268 $(3,847) $223,421
</TABLE>
(3) Property, Plant and Equipment
Property plant and equipment consists of the following at January
31, 2000:
<TABLE>
<S> <C>
Land $ 670,556
Building and leasehold improvements 3,104,539
Furniture, fixtures and equipment 679,073
---------
4,454,168
Accumulated depreciation and amortization 1,413,144
----------
Property, plant and equipment-net $3,041,024
==========
</TABLE>
During November 1999, the Company entered into an agreement to
purchase land for approximately $3,456,000 on which the Company plans to
build a new office and distribution center. The Company has
placed a deposit on the land for approximately $174,000 at contract signing
which is reflected in property, plant and equipment.
(4) Financing Arrangements
Financing arrangements consist of the following:
<TABLE>
<S> <C>
Line of credit facility-banker's acceptances(i) $1,970,037
==========
Due to shareholder (v) $ 461,500
==========
Mortgage payable(ii) $1,927,397
Term loans (i) (iii) 3,375,000
Capital leases (iv) 92,580
---------
5,394,977
Less: current installments 847,903
--------
Long-term debt $4,547,074
==========
</TABLE>
<PAGE>
(i) At January 31, 2000, the Company has line of credit agreements
with two financial institutions, which are renewable on an
annual basis. One agreement provides for a $5,000,000 facility which
expires on June 30, 2000. Under the terms of the
agreement, the Company has a sub-limit of $500,000 for stand-by
letters of credit. Interest is due monthly and is calculated
based on the prime rate of interest, which was 8.5% at January
31, 2000. At January 31, 2000, the Company's direct borrowings
were $991,768, which is reflected as bank acceptances payable.
At January 1, 2000, the Company has outstanding letters of credit of
approximately $1,585,900 under this facility.
The second agreement provides for a $10,000,000 line of credit
which expires on July 31, 2000. Under this facility, the
Company has a sub-limit of $7,500,000 for direct borrowing. Interest
is payable monthly at the prime rate, which was 8.5%
at January 31, 2000. At January 31, 2000 direct borrowings
outstanding were $978,269, which is reflected as bank
acceptances payable in the accompanying consolidated balance sheet.
At January 31, 2000, the Company has outstanding letters of credit of
approximately $2,375,500 under this facility.
The line of credit agreements contain several covenants,
requiring, among other things, minimum levels of consolidated tangible
net worth, as well as specified interest coverage,
tangible net worth and current ratios. The line of credit agreements
are collateralized by specified assets and are
personally guaranteed by one shareholder of the Company.
(ii) At January 31, 2000, the mortgage payable outstanding on its
Port Washington facility was $1,927,397. The mortgage bears interest
at 8.79%, payable monthly, with a balloon payment of $1,559,262 due
August 2004. The mortgage agreement contains
several covenants, requiring, among other things, minimum
levels of consolidated tangible net worth, as well as specified
debt service and funded debt ratios. The mortgage is
collateralized by the land and building and is personally
guaranteed by one shareholder of the Company.
(iii) In August 1999, the Company obtained funding from two financial
institutions to provide five year secured term loans
aggregating $3,750,000 to fund liabilities associated with the
acquisition of treasury stock (Note 6). At January 31, 2000,
the remaining balance was $3,375,000. Principal payments in
the amount of $187,500 and related interest are due quarterly
and are calculated using LIBOR plus 2% which was 8.19% at
January 31, 2000.
The term loan agreements contain several covenants, requiring,
among other things, minimum levels of consolidated tangible net
worth, as well as specified interest coverage, tangible net
worth and current ratios. The term loan agreements are
collateralized by specified assets and are personally
guaranteed by one shareholder of the Company.
(iv) Leases are classified as capital leases or operating leases in
accordance with the terms of the underlying lease agreements.
At January 31, 2000, scheduled payments on capital lease obligations,
which significantly apply to equipment used in the warehouse, are as
follows:
<TABLE>
<S> <C>
Years ending
January 31,
2001 $ 35,770
2002 33,689
2003 23,289
2004 11,085
2005 830
--------
104,663
Less amount representing
interest 12,083
--------
$ 92,580
========
</TABLE>
(v) Due to shareholder represents an obligation bearing interest
at 2.5% above the prime rate. The obligation is payable within
30 days of written notice. Interest expense related to this
obligation for fiscal 2000 was $46,000. The interest rate as
of January 31, 2000 was 10.5%.
(5) Employee Benefit Plans
(a) 401(k) Plan
The Company maintains an employee 401(k) retirement plan.
Employees are eligible to participate in the plan after they
have reached the age of 21 and have completed one year of
service. The plan is a defined contribution plan, with eligible
employee pre-tax deferrals of 1% to 10%, up to the maximum legal limit
per employee. The plan provides for employer matching at
the discretion of the employer. The Company did not contribute
to the plan during fiscal 2000.
(b) Profit Sharing Retirement Plan
The Company maintains a defined contribution profit sharing
retirement plan whereby annual contributions are made at the
discretion of the Board of Directors. Employees may not
contribute to the plan and must be employed by the Company on
the last day of the year and have completed 1,000 hours of
service in order to be included in the allocation of such
contributions. A participant's account shall fully vest upon
the attainment of their normal retirement date, while employed
by the Company or an ERISA affiliate. Included in accrued
expenses at January 31, 2000 are approved contributions of
$375,000.
(c) Deferred Compensation
The Company has established a deferred compensation plan for
the benefit of certain key executive employees. The plan
provides for capital accumulation opportunities through the
issuance of phantom shares to the employees. The shares vest annually
over a ten year period and become fully vested upon a change in
control, as defined. For financial reporting
purposes, the shares are valued at the proportional underlying
interest of the book value of the Company at each measurement
date, which is the basis for redemption. Amounts payable
under the phantom stock agreements commence upon the earlier of
the termination of employment, retirement or death of the
employee. As of January 31, 2000, 165,278 phantom shares have
been granted and compensation expense for 2000 relating to
these agreements amounted to $100,000.
(d) Health Care and Life Insurance
The company provides medical and dental coverage to employees through
a premium based insurer. Non-union employees pay a
portion of the cost of such premiums through payroll deductions
and the Company funds the remainder. Premiums related to union
employees are paid entirely by the Company. The Company
incurred approximately $353,000 in expense during fiscal 2000
in connection with employee medical and dental coverage. In addition,
the Company provides each employee with life insurance coverage.
All premiums are paid by the Company and benefits
range from $10,000 to $75,000 depending on the employee's position.
Premiums related to life insurance amounted to approximately $9,000
in 2000.
(6) Stock Agreements
The Company has entered into agreements with its stockholders which provide
for the redemption of shares. The agreements provide that a stockholder
wishing to redeem his shares must notify the Company
which has the right of first refusal. The Company is not required
to repurchase any shares. If any of the stockholder's shares are
not repurchased by the Company, the remaining stockholders
have an option to purchase such shares. If all of the stock of a
stockholder desiring to make a disposition is not repurchased by the
Company or the remaining stockholders, then the Company will be liquidated
and dissolved. The redemption price per share is equal to the book value
of the Company divided by the number of shares outstanding.
On January 14, 1999, the Company signed a stock purchase agreement to
redeem all of the shares of a principal shareholder, representing
31.25% of the outstanding shares of common stock of the Company. The
payment of approximately $3.8 million was made in a single discounted
payment in May 1999, funded by a five year term loan provided by two
financial institutions (Note 4).
(7) Business Concentration
In fiscal 2000, four of the Company's customers accounted for an
aggregate of 23% of net sales.
At January 31, 2000, the Company had four customer balances in excess
of 5% of trade accounts receivable. The customer balances
represented approximately 20% of trade accounts receivable.
(8) Lease Agreements
The Company leases three warehouses under operating lease
arrangements (Note 9).
On January 24, 2000, the Company entered in to a five-year lease agreement
to rent warehouse space in Los Angeles, California from an unrelated party.
Annual rent payments are approximately $144,000.
Future minimum rental payments required under operating leases are
as follows:
<TABLE>
<S> <C>
Years ending
January 31,
2001 $ 273,036
2002 285,048
2003 285,048
2004 285,048
2005 285,048
Thereafter 306,262
--------
$1,719,490
==========
</TABLE>
(9) Related Party Transactions
The Company utilizes a public warehouse in Los Angeles, California,
which is owned and operated by Seneca Associates. One of the
principal shareholders of Seneca Associates is also a shareholder of
the Company. The Company pays all administrative and warehouse
expenses associated with this operation. The Company incurred
approximately $302,000 in expenses related to this operation in
fiscal 2000. The lease for the Los Angeles warehouse expires June
30, 2000.
The Company leases warehouse space, on a year to year renewal basis,
in the Bowery section of Manhattan. The facility is owned by an
entity controlled by a Company shareholder. Lease payments related
to the Bowery warehouse amounted to approximately $141,000 in fiscal 2000.
This lease expires on December 31, 2008.
(10) Income Taxes
The components of the provision (benefit) for Federal and state
income taxes for the year ended January 31, 2000 are as follows:
<TABLE>
<S> <C>
Federal:
Current $2,712,110
Deferred (19,880)
----------
2,692,230
----------
State:
Current 595,341
Deferred (5,772)
----------
589,569
----------
Total $3,281,799
==========
</TABLE>
The Company's provision for income taxes differed from the
amount computed by applying the statutory U.S. Federal income
tax rate to income due to the following:
<TABLE>
<S> <C> <C>
Tax at statutory rate $2,726,000 34.0%
State and local income
taxes, net of Federal
income tax benefit 401,000 5.0
Other 154,799 1.9
---------- ---
$3,281,799 40.9%
========== ====
</TABLE>
The tax effects of temporary differences that give rise to
significant portions of deferred tax asset and liabilities are
presented below:
<TABLE>
<S> <C>
Deferred tax asset:
Allowance for doubtful accounts $ 29,200
Deferred compensation 114,000
Capitalized costs in inventory 381,346
Other inventory 21,284
-------
545,830
Deferred tax liabilities:
Depreciation of property, plant
and equipment 492,671
--------
Net deferred tax asset $ 53,159
========
</TABLE
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or
all of the deferred tax assets will be realized. The ultimate realization
of deferred tax assets is dependent on the generation of future taxable
income during the period in which those temporary differences become
deductible. Management considers the scheduled
timing of the reversals of deferred tax assets and liabilities and
tax planning strategies in making this assessment. Management
believes that its deferred tax assets are fully recoverable.
(11) Subsequent Events
In March 2000, the Company entered into an agreement with a
construction company to construct the Company's new facility as
indicated in Note 3. This commitment is for approximately
$6,200,000. Company management is in the process of finalizing
financing arrangements to fund the construction.
(12) Year 2000
Management has assessed the impact of Year 2000 issues on the
Company's computer systems and applications and has developed a remediation
plan. As of the date of this report, the Company has
not experienced any significant disruptions to the financial or
operating activities caused by failure of computerized systems
resulting from Year 2000 issues. Management does not expect Year
2000 issues to have a material adverse effect on the Company's operations
or financial results in 2000.
</TABLE>
<TABLE>
DELCO INTERNATIONAL LTD.
AND SUBSIDIARIES
Consolidated Balance Sheet
July 29, 2000
(Unaudited)
<S> <C>
Assets
Current assets:
Cash and cash equivalents $ 3,332,653
Accounts receivable 7,784,207
Inventory 14,408,287
Prepaid expenses and other current assets 2,083,774
----------
Total current assets 27,608,921
Property, plant and equipment, net 6,667,361
Other assets 513,083
---------
Total assets $34,789,365
===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,876,127
Banker's acceptances payable 1,065,521
Current installments of long-term debt 818,400
Accrued expenses and other current liabilities 5,409,894
----------
Total current liabilities 9,169,942
Long-term debt, less current installments 7,601,604
Deferred income taxes 532,671
----------
Total liabilities 17,304,217
----------
Stockholders' equity:
Common stock; $.01 par value; 10,000,000
shares authorized and issued 100,000
Additional paid-in capital 289,396
Retained earnings 21,667,042
Treasury stock; 4,500,000 shares (4,571,290)
----------
Total stockholders' equity 17,485,148
----------
Commitments and contingencies
Total liabilities and stockholders' equity $34,789,365
===========
</TABLE>
See accompanying notes to unaudited consolidated financial
statements.
<TABLE>
DELCO INTERNATIONAL LTD.
AND SUBSIDIARIES
Consolidated Statement of Earnings
Six Months Ended July 29, 2000
(Unaudited)
<S> <C>
Net Sales $38,308,060
Costs and expenses:
Cost of sales 26,801,278
Selling, general and administrative expenses 10,275,903
---------
Income from operations 1,230,879
Other income (expense):
Interest and other income 29,061
Interest expense and other financing charges 544,645
---------
Income before provision for income taxes 715,295
Provision for income taxes 296,927
---------
Net income $ 418,368
===========
</TABLE>
See accompanying notes to unaudited consolidated financial
statements.
<TABLE>
DELCO INTERNATIONAL LTD.
AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
Six Months Ended July 29, 2000
(Unaudited)
Additional Treasury
paid-in Retained stock
Shares Par value capital earnings at cost Total
<S> <C> <C> <C> <C> <C> <C>
Balance at
January 31,
2000 10,000,000 $100,000 $289,396 $21,248,674 $(4,571,290) $17,066,780
Net income 418,368 418,368
---------------------------------------------------------------------------------
Balance at
July 29,
2000 10,000,000 $100,000 $289,396 $21,667,042 $(4,571,290) $17,485,148
===============================================================================
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<TABLE>
DELCO INTERNATIONAL LTD.
AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Six Months Ended July 29, 2000
(Unaudited)
<S> <C>
Net cash provided by operating activities $1,269,211
---------
Cash flows from investing activities:
Capital expenditures (3,164,337)
Proceeds from sale of investment securities 342,080
---------
Net cash used in investing activities (2,822,257)
---------
Cash flows from financing activities:
Repayments of long-term debt (430,973)
Repayments of related party loan (461,500)
Proceeds from issuance of long-term debt 3,456,000
Repayment of banker's acceptances, net (904,516)
---------
Net cash used in by financing activities 1,659,011
---------
Net increase in cash and cash equivalents 105,965
Cash and cash equivalents at beginning of year 3,226,688
---------
Cash and cash equivalents at end of period $3,332,653
==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE>
DELCO INTERNATIONAL LTD.
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (In thousands)
1. The statements for the six months ended July 29, 2000 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
period. The results of operations for the six months ended July 29,
2000 are not necessarily indicative of the results of operations to be expected
for the year ending January 27, 2001.
2. Subsequent Event
Effective August 9, 2000, the Company's stockholders sold all of the
common stock of Delco International Ltd. to Oneida Ltd. Oneida Ltd.
assumed substantially all of the assets and liabilities of the Company
in the transaction. The accompanying unaudited financial statements
as of and for the period ended July 29, 2000 reflect the assets,
liabilities and stockholders' equity of the Company without giving
effect to the transaction.
3. 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 depreciation and other
employee benefits.
4. Financing Arrangements
During the period ended July 29, 2000, the Company obtained bank financing of
$3,456,000 for the purchase of land. On August 11, 2000, Oneida Ltd. repaid all
borrowings of the Company.
