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 28, 2000
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 5, 2000: 16,400,361
<PAGE>
ONEIDA LTD.
FORM 10-Q
FOR THE THREE AND NINE MONTHS ENDED OCTOBER 28, 2000
INDEX
PART I FINANCIAL INFORMATION
Consolidated Statement of Operations
Consolidated Balance Sheet
Consolidated Statement of Changes in Stockholders' Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II OTHER INFORMATION
No other information required to be filed for this quarter.
Item 6 (b)
A Form 8-K was filed on August 24, 2000 and two Forms 8-K/A were filed
on October 23, 2000 and November 1, 2000 all relating to the Delco
acquisition.
SIGNATURES
<PAGE>
<TABLE>
ONEIDA LTD.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
FOR THE FOR THE
THREE MONTHS ENDED NINE MONTHS ENDED
(Thousands except per OCT 28, OCT 30, OCT 28, OCT 30,
share amounts) 2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES....................... $151,951 $134,515 $374,162 $364,628
COST OF SALES-Recurring......... 98,267 82,754 236,803 219,762
COST OF SALES-Restructuring(Note 3) 24,000 3,000
------- ------- ------- -------
GROSS MARGIN.................... 53,684 51,761 113,359 141,866
OPERATING REVENUES.............. 4,819 205 6,351 622
------- ------- ------- -------
58,503 51,966 119,710 142,488
------- ------- ------- -------
OPERATING EXPENSES:
Selling, distribution and
administrative charges....... 37,587 32,914 98,613 97,595
Restructuring and unusual
charges (NOTE 3)............. 7,007 8,500 15,007 41,300
------- ------- ------- -------
Total....................... 44,594 41,414 113,620 138,895
------- ------- ------- -------
INCOME (LOSS) FROM OPERATIONS. 13,909 10,552 6,090 3,593
OTHER EXPENSE (INCOME).......... 265 (114) 399 269
INTEREST EXPENSE................ 7,101 2,904 14,048 7,973
------- ------- ------- -------
INCOME (LOSS)
BEFORE INCOME TAXES........... 6,543 7,762 (8,357) (4,649)
PROVISION (CREDIT) FOR
INCOME TAXES................... 2,437 2,969 (3,113) 1,282
-------- ------- ------- --------
NET INCOME (LOSS)............... $ 4,106 $4,793 $(5,244) $(5,931)
======== ====== ======== ========
EARNINGS PER SHARE OF COMMON STOCK:
Net income (loss):
Basic....................... $.25 $.29 $(.33) $(.36)
Diluted (NOTE 4)............ .25 .29 (.33) (.36)
SHARES USED IN PER SHARE DATA:
Basic....................... 16,273 16,523 16,281 16,541
Diluted (NOTE 4)............ 16,337 16,709 16,281 16,541
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
ONEIDA LTD.
CONSOLIDATED BALANCE SHEET
OCTOBER 28, 2000 AND JANUARY 29, 2000
(Unaudited)
(Dollars in Thousands)
OCT 28, JAN 29,
2000 2000
------- -------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash............................................... $3,471 $3,899
Accounts receivable, net of allowance for doubtful.
accounts of $2,761 and $1,409..................... 104,549 82,587
Other accounts and notes receivable................ 3,741 1,799
Inventories:
Finished goods.................................... 206,822 158,260
Goods in process.................................. 11,953 10,885
Raw materials and supplies........................ 13,452 14,367
Other current assets............................... 11,651 9,946
-------- --------
Total current assets............................ 355,639 281,743
-------- --------
PROPERTY, PLANT AND EQUIPMENT-At cost:
Property, plant and equipment...................... 250,267 232,425
Less accumulated depreciation...................... 137,781 126,148
-------- --------
Property, plant and equipment-net............... 112,486 106,277
-------- --------
OTHER ASSETS:
Intangible assets - net............................ 128,136 28,197
Deferred income taxes.............................. 23,042 23,042
Other assets....................................... 22,678 9,979
-------- --------
TOTAL.......................................... $641,981 $449,238
======== ========
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
ONEIDA LTD.
CONSOLIDATED BALANCE SHEET
OCTOBER 28, 2000 AND JANUARY 29, 2000
(Unaudited)
(Dollars in Thousands)
OCT 28, JAN 29,
2000 2000
------- -------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt............................... $ 9,302 $31,652
Accounts payable.............................. 43,219 31,585
Accrued liabilities........................... 69,548 45,145
Accrued income taxes.......................... 1,087 10,529
Dividends payable............................. 1,670 1,685
Current installments of long-term debt........ 9,290 16,010
-------- --------
Total current liabilities.................. 134,116 136,606
-------- --------
LONG-TERM DEBT................................. 303,651 98,495
-------- --------
OTHER LIABILITIES:
Accrued postretirement liability.............. 58,460 57,000
Accrued pension liability..................... 16,315 16,032
Other liabilities............................. 11,288 7,798
-------- --------
Total...................................... 86,063 80,830
-------- --------
STOCKHOLDERS' EQUITY:
Cumulative 6% preferred stock; $25 par
value; authorized 95,660 shares, issued
86,797 and 87,009 shares,
callable at $30 per share.................... 2,170 2,175
Common stock $1 par value; authorized
48,000,000 shares, issued 17,690,090
and 17,602,808 shares........................ 17,690 17,603
Additional paid-in capital.................... 82,938 81,887
Retained earnings............................. 54,404 64,630
Accumulated other comprehensive loss.......... (13,691) (11,790)
Less cost of common stock held in
treasury; 1,317,684 and 1,068,949 shares..... (24,643) (19,712)
Less unallocated ESOP shares of common
stock of 33,221 and 68,877 .................. (717) (1,486)
-------- --------
Stockholders' Equity........................ 118,151 133,307
-------- --------
TOTAL..................................... $641,981 $449,238
======== ========
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED OCTOBER 28, 2000
(Unaudited)
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 Jan 29, 2000.. 17,603 $17,603 $2,175 $81,887 $64,630
Stock plan activity, net. 87 87 1,051
Purchase/retirement of
Treasury stock, net...... (5)
Cash dividends declared
($.30 per share)...... (4,982)
Net loss.................$(5,244) (5,244)
Other comprehensive
loss.................. (1,901)
-------
Comprehensive loss...... $(7,145)
=======
--------------------------------------------
Balance at Oct 28, 2000.. 17,690 $17,690 $2,170 $82,938 $54,404
============================================
</TABLE>
<TABLE>
Other Comp Treasury Unallocated
Income (Loss) Stock ESOP
-------------------------------------------------------
<S> <C> <C> <C>
Balance at Jan 29, 2000.. $(11,790) $(19,712) $(1,486)
Stock plan activity, net.
Purchase/retirement of
Treasury stock, net...... (4,931)
Cash dividends declared
($.30 per share)......
Net loss.................
Other comprehensive
loss.................. (1,901)
Allocation of ESOP shares 769
-------------------------------------------------------
Balance at Oct 28, 2000.. $(13,691) $(24,643) $ (717)
=======================================================
<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
(Unaudited)
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 Jan 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 loss.................$(5,931) (5,931)
Other comprehensive
loss.................. (402)
-------
Comprehensive loss.......$(6,333)
=======
--------------------------------------------
Balance at Oct 30, 1999.. 17,594 $17,594 $2,175 $81,775 $54,996
============================================
</TABLE>
<TABLE>
Other Comp Treasury Unallocated
Income (Loss) Stock ESOP
-------------------------------------------------------
<S> <C> <C> <C>
Balance at Jan 30, 1999.. $(11,079) $(13,888) $ -
Stock plan activity, net.
Purchase/retirement of
Treasury stock, net...... (4,899)
Cash dividends declared
($.30 per share)......
Other comprehensive
loss.................. (402)
Allocation of ESOP shares 262 (2,427)
-------------------------------------------------------
Balance at Oct 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 28, 2000 AND OCTOBER 30, 1999
(Unaudited)
(In Thousands)
FOR THE
NINE MONTHS ENDED
OCT 28, OCT 30,
2000 1999
------- -------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss............................................ $(5,244) $(5,931)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation....................................... 9,041 8,333
Impairment of inventory and long-term assets....... 29,000 15,000
Amortization of intangibles........................ 2,870 2,048
Deferred taxes and other non-cash
charges and credits............................. (11,990) 6,096
Decrease (increase) in operating assets:
Receivables....................................... (10,373) (23,128)
Inventories....................................... (46,540) (9,883)
Other current assets.............................. 2,507 (3,302)
Other assets...................................... (9,735) (162)
Increase in accounts payable....................... 8,696 4,620
Increase in accrued liabilities.................... 5,095 13,024
-------- -------
Net cash provided (used) by operating activities (26,673) 6,715
-------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
Property, plant and equipment expenditure-net....... (8,990) (16,427)
Purchase of subsidiaries............................ (117,976)
Minority interest................................... (1,251)
Other, net.......................................... 737 (1,474)
-------- -------
Net cash used in investing activities........... (126,229) (19,152)
-------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock.............. 1,138 2,199
Purchase of treasury stock.......................... (4,937) (4,637)
Purchase (allocation) of ESOP shares - net.......... 769 (2,427)
Decrease in short-term debt and bankers acceptances-net (27,629) 1,286
Payment of long-term debt........................... (197,020) (839)
Proceeds from issuance of long-term debt............ 387,036 24,551
Dividends paid...................................... (4,982) (4,943)
-------- -------
Net cash provided by financing activities....... 154,375 15,190
-------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH............... (1,901) (402)
-------- -------
NET INCREASE (DECREASE) IN CASH....................... (428) 2,351
CASH AT BEGINNING OF YEAR............................. 3,899 1,913
-------- -------
CASH AT END OF PERIOD................................. $3,471 $4,264
======== =======
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
ONEIDA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Thousands)
1. The statements for the nine months ended October 28, 2000 and October 30,
1999 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 28, 2000 are not necessarily
indicative of the results of operations to be expected for the year ending
January 27, 2001. The consolidated financial statements and notes thereto
should be read in conjunction with the financial statements and notes for the
years ended in January 2000 and 1999 included in the Company's January 29, 2000
Annual Report to the Securities and Exchange Commission on Form 10-K and the
Company's Form 8-K that was filed with the Securities and Exchange Commission on
August 9, 2000.
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 October 28, 2000, the Company recorded a previously
announced restructuring/unusual charge of $7,000, related primarily to the
consolidation of sales, marketing, logistics and administrative functions, along
with the realignment of product lines, warehouses and "make versus buy"
decisions. The earnings for the nine months ended October 28, 2000 also
included the impact of the following special charges; an inventory writedown of
$24,000 related to product rationalization as a result of recent acquisitions as
well as significant other stock keeping unit reductions, and restructuring costs
of $8,000 (principally impairment of assets related to manufacturing tools and
other product procurement assets). A $24,000 inventory reserve was established
in the second quarter of the current year; to date, $5,100 was written off
against this reserve. All assets identified as impaired were written down to
their net realizable value in the second quarter. Other restructuring payments
made to date were $1,100.
In the nine month period ended October 30, 1999, the Company's financial
statements included the impact of the following special charges: $3,000
inventory writedown related to costs associated with exiting certain product
lines, restructuring costs of $11,000 (principally termination benefits), asset
impairments of $12,000 (principally due to an investment in Italy and exit costs
associated with discontinued product lines), unusual charges of $18,300
(relating to expansion into glassware and an unsolicited takeover proposal).
The charge for unusual expenses was increased by $8,500 in the third quarter of
1999. The restructuring and unusual charges were substantially paid out in
1999; approximately $1,500 was paid in the current year. No significant
adjustments were required to the original accruals for restructuring and unusual
charges.
<PAGE>
ONEIDA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Thousands)
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 28, 2000 and October 30,
1999:
Net Preferred Adjusted Earnings
Income Stock Net Income Average Per
(Loss) Dividends (Loss) Shares Share
--------------------------------------------------------------------------------
[S] [C] [C] [C] [C] [C]
2000:
Basic earnings
per share.............. $4,106 $(33) $4,073 16,273 $.25
Effect of stock options. 64
Diluted earnings
per share.............. 4,106 (33) 4,073 16,337 .25
--------------------------------------------------------------------------------
1999:
Basic earnings
per share.............. 4,793 (33) 4,760 16,523 .29
Effect of stock options. 186
Diluted earnings
per share.............. 4,793 (33) 4,760 16,709 .29
--------------------------------------------------------------------------------
The following is a reconciliation of basic earnings per share to diluted
earnings per share for the nine months ended October 28, 2000 and October 30,
1999:
Net Preferred Adjusted Earnings
Income Stock Net Income Average Per
(Loss) Dividends (Loss) Shares Share
--------------------------------------------------------------------------------
[S] [C] [C] [C] [C] [C]
2000:
Basic earnings
per share.............. $(5,244) $(98) $(5,342) 16,281 $(.33)
Effect of stock options. 0
Diluted earnings
per share.............. (5,244) (98) (5,342) 16,281 (.33)
--------------------------------------------------------------------------------
1999:
Basic earnings
per share.............. (5,931) (98) (6,029) 16,541 (.36)
Effect of stock options. 0
Diluted earnings
per share.............. (5,931) (98) (6,029) 16,541 (.36)
--------------------------------------------------------------------------------
In periods where a net loss is presented, the diluted earnings per share have
been replaced by the basic calculation as the inclusion of stock options and
dividends in the calculation would have an anti-dilutive effect on EPS.
<PAGE>
ONEIDA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(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. At October 28, 2000, the maximum amount
available for payment of dividends was $8,150.
6. Acquisitions
On May 23, 2000, the Company signed a definitive agreement to purchase
substantially all of the net assets of Sakura, Inc. for approximately $40,000 in
cash. Sakura, Inc., a privately held company based in New York City, is a
leading marketer of consumer dinnerware. The closing took place on June 30,
2000, hence the balance sheet reflects this acquisition and four months of their
operations and cash flows are included in the Consolidated Statement of
Operations and Consolidated Statement of Cash Flows for Oneida's nine month
period ended October 28, 2000.
Oneida also completed its acquisition of Viners of Sheffield Limited during the
second quarter of 2000. On May 23, 2000 the Company announced that its
subsidiary, Oneida U.K. Limited, had signed a definitive agreement to purchase
all of the stock of Viners of Sheffield Limited, a privately held company, for
approximately $25,000 in cash. London based Viners is a long established
marketer of flatware and cookware in the United Kingdom. This closing took
place on June 13, 2000, hence the balance sheet reflects this acquisition and
three and one half months of their operations and cash flows are included in the
Consolidated Statement of Operations and Consolidated Statement of Cash Flows
for Oneida's nine month period ended October 28, 2000.
Oneida completed its acquisition of Delco International Ltd. (including its
wholly owned subsidiary, Delco Tableware International, Inc. and its ABCO
International division) on August 9, 2000 for approximately $60,000 in cash.
Delco International, headquartered in Long Island, N.Y., is a leading marketer
of tableware products for the foodservice industry. The balance sheet reflects
this acquisition and approximately three months of their operations and cash
flows are included in the consolidated Statement of operations and Consolidated
Statement of Cash Flows for our nine month period ended October 28, 2000.
On June 2, 2000, the Company entered into a new three year $275,000 bank
revolving credit agreement. This facility is being utilized to fund the
acquisitions described herein as well as to refinance the majority of the
Company's outstanding credit facilities and term loans. This debt carries a
floating interest rate indexed to the LIBOR. Interest is payable either at the
earlier of quarterly or note maturity.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Quarter ended October 28, 2000 compared with
the quarter ended October 30, 1999
(In Thousands)
Operations
Net Sales by Product Line:
--- Three Months Ended-- ----Nine Months Ended----
2000 1999 %Change 2000 1999 %Change
------- ------- ----- -------- -------- -------
[S] [C] [C] [C] [C] [C] [C]
Metal products....... $ 99,200 $93,200 6.4 $243,600 $247,400 (1.5)
Dinnerware Products.. 41,700 28,100 48.4 99,700 78,900 26.4
Glass products....... 9,300 9,600 (3.1) 25,600 25,600 -
Other Products....... 1,751 3,615 (51.6) 5,262 12,728 (58.7)
-------- -------- ---- -------- -------- ----
Total............... $151,951 $134,515 13.0 $374,162 $364,628 2.6
======== ======== ==== ======== ======== ====
Operating Expenses-
Recurring............ $ 37,587 $ 32,914 14.2 $ 98,613 $ 97,595 1.0
======== ======== ==== ======== ======== ====
Quarterly Review
Consolidated net sales for the quarter ended October 28, 2000 increased $17,436
over the same period a year ago. The increase in metal products is attributable
to the acquisition of the Viners and Delco flatware lines in 2000. This was
partially offset by continued softness in consumer metal tableware sales.
Dinnerware sales continued to increase over prior year levels due to foodservice
growth and the addition of the Sakura line late in the previous quarter, while
glass sales were flat.
Gross margin as a percentage of net sales was 35.3% in the third quarter of 2000
as compared to 38.5% for the same period of 1999. The decrease in ongoing gross
margin this quarter is related to product mix, primarily as a result of lower
consumer sales.
Total recurring operating expenses increased by $4,673 from the same quarter
last year. Exclusive of the operations of the three newly acquired
subsidiaries, operating expenses actually decreased slightly from 1999 levels.
During the current quarter, the Company recorded restructuring and unusual
charges totalling $7,007. The majority of these charges were non-cash in nature
and were accrued as part of the Company's ongoing efforts to streamline
functions and reduce costs. As part of this process, the Company plans to
reduce worldwide employment levels by 8-10% by the end of fiscal 2001. 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 $7,395 for the quarter
ended October 28, 2000, an increase of $4,240 from the third quarter of 1999.
This increase is due to higher average borrowings and interest rates incurred in
the third quarter of 2000. The increase in debt levels was used to fund the
Company's recent acquisitions and for working capital needs.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine Months ended October 28, 2000 compared with
the Nine Months ended October 30, 1999
(In Thousands)
Nine-Month Review
Operations
Consolidated net sales for the nine months ended October 28, 2000 increased
$9,534 over the same period a year ago due to the contributions of the companies
acquired in the second and third quarters. Sales of metal products have
declined due to lagging consumer tableware sales throughout 2000. Sales of
dinnerware products (both manufactured and procured) grew over 1999 levels due
to the addition of the Sakura china consumer product line in the second quarter
and continued growth in sales of foodservice dinnerware. The decrease in sales
of other products is primarily due to the discontinuance of a product line in
1999.
Gross margin, prior to restructuring, as a percentage of net sales, was 36.7% in
the first nine months of 2000 as compared to 39.7% for the same period of 1999.
The decrease in ongoing gross margin this year is related to changes in product
mix. The Company recorded restructuring charges related to discontinued
inventory items in both the current and prior years. In the current year, a
$24,000 inventory writedown was expensed. This relates to inventory reductions
that will be necessitated by the Company's recent acquisitions, as well as an
initiative undertaken to reduce stock keeping units. To date, $5,100 has been
charged off against this reserve. In 1999, the Company recorded a $3,000
inventory charge related to the disposal of inventory of discontinued product
lines. This disposal was completed in 1999.
Total recurring operating expenses increased by $1,018, or 1.0% from the same
period last year. As a percentage of sales, these expenses were 26.5% in the
current period versus 26.8% in the same period of 1999. During the current
year, the Company recorded restructuring and unusual charges of $15,000 related
to its recent acquisitions and a program to reduce stock keeping units. The
majority of these charges were non-cash in nature and reduced certain impaired
assets (principally manufacturing tools and product procurement assets) to net
realizable value and provided for anticipated costs related to reducing
worldwide employment by 8-10% over the next year. In the nine month period
ended October 30, 1999, the Company's financial statements also included the
impact of the following special charges: restructuring costs of $11,000
(principally termination benefits), asset impairments of $12,000 (principally
due to an investment in Italy and exit costs associated with discontinued
product lines), and unusual charges of $18,300 (relating to expansion into
glassware and an unsolicited takeover proposal). The restructuring and unusual
charges were substantially paid out in 1999. No adjustments were required to
the original accruals for restructuring and unusual charges.
Interest expense, prior to capitalized interest, was $14,820 for the nine months
ended October 28, 2000, an increase of $5,870 from the same period of 1999.
This increase is due to higher average borrowings and interest rates incurred in
the first nine months of 2000. Debt levels have increased to fund the Company's
recent acquisitions, as well as for working capital needs.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine Months Ended October 28, 2000 compared with
the Nine Months ended October 30, 1999
(In Thousands)
Liquidity & Financial Resources
During the nine months ended October 28, 2000, the Company completed its
purchases of Delco International, Ltd., Sakura, Inc. and Viners of Sheffield,
Limited. (See Note 6 of Notes to Consolidated Financial Statements). These
transactions resulted in net cash outlays of approximately $118,000 during the
nine months ended October 28, 2000.
During the first nine months of this year, the Company spent approximately
$9,900 on capital projects focused primarily on its distribution and
manufacturing facilities. The Company completed construction of a new 206,000
square foot warehouse at its main facility in Sherrill, NY. This project cost
approximately $10,000. By consolidating Northeast distribution in this one
facility, the Company expects to both lower costs and strengthen customer
service. Capital spending for the remainder of 2000 is anticipated to be
approximately $2,000.
On June 2, 2000, the Company entered into a new three year $275,000 bank
revolving credit agreement. This facility is being utilized to fund the
acquisitions described herein as well as to refinance the majority of the
Company's outstanding credit facilities and term loans. This debt carries a
floating interest rate indexed to the LIBOR. Interest is payable either at the
earlier of quarterly or note maturity.
Year to date, $4,900 was spent on purchasing common stock as treasury stock.
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. Working capital was $221,523 as of October 28, 2000.
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.
<PAGE>
ONEIDA LTD
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
OCTOBER 28, 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 thereunto duly authorized.
ONEIDA LTD
(Registrant)
Date: December 12, 2000
Gregg R. Denny
Chief Financial Officer
