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 March 31, 1998
|_| TRANSITION PERIOD PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ___________________
Commission File Number: 1-12624
-------
Syratech Corporation
--------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3354944
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
175 McClellan Highway
---------------------
East Boston, Massachusetts 02128-9114
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code - 617-561-2200
------------
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Sections 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
--- ---------
Number of Shares of Common Stock, Par Value $0.01 per share, outstanding at
March 31, 1998- 3,784,018
<PAGE>
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE NO.
--------
Item 1. Financial Statements:
<S> <C>
Condensed Consolidated Balance Sheets at March 31, 1998
and December 31, 1997 1
Condensed Consolidated Income Statements for the three month
periods ended March 31, 1998 and 1997 2
Condensed Consolidated Statements of Cash Flows for the
three month periods ended March 31, 1998 and 1997 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 16
Signature 17
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
SYRATECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------- ------------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and equivalents ............................................... $ 960 $ 2,981
Accounts receivable, net ........................................... 43,676 63,893
Inventories ........................................................ 93,910 84,295
Deferred income taxes .............................................. 13,959 11,337
Prepaid expenses and other ......................................... 2,848 2,392
Properties held for sale ........................................... 1,836 1,836
--------- ---------
Total current assets ........................................... 157,189 166,734
Property, plant and equipment, net .................................... 85,104 82,404
Purchase price in excess of net assets acquired, net .................. 6,730 6,790
Other assets, net ..................................................... 9,702 10,072
--------- ---------
Total .......................................................... $258,725 $ 266,000
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving loan facilities and notes payable ........................ $ 21,724 $ 18,900
Accounts payable.................................................... 11,497 14,234
Accrued expenses.................................................... 14,428 12,777
Accrued compensation................................................ 2,859 3,390
Accrued advertising................................................. 2,109 3,576
Income taxes payable................................................ -- --
--------- ---------
Total current liabilities ...................................... 52,617 52,877
Long - term debt ...................................................... 165,000 165,000
Deferred income taxes ................................................. 20,083 20,083
Pension liability and other long - term liabilities.................... 3,282 3,136
Committments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 500,000 shares authorized;
(25,000 designated as cumulative redeemable preferred stock, 18,000
shares issued and outstanding, liquidation value of $18,000,
and includes accrued and unpaid dividends of $2,116 in 1998....... 20,116 19,530
Common stock, $.01 par value, 20,000,000 shares
authorized; 3,784,018 shares issued and outstanding .............. 38 38
Retained earnings (deficit) ........................................ (2,842) 4,567
Accumulated other comprehensive income ............................. 431 769
--------- ---------
Total stockholders' equity ..................................... 17,743 24,904
--------- ---------
Total .......................................................... $258,725 $266,000
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
1
<PAGE>
SYRATECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1998 1997
-------- -------
<S> <C> <C>
Net sales ........................................................ 37,758 $44,039
Cost of sales .................................................... 26,743 31,414
-------- --------
Gross profit ................................................ 11,015 12,625
Selling, general and administrative expenses ..................... 15,663 14,596
Other operating income ........................................... 532 1,116
-------- --------
Loss from operations ........................................ (4,116) (855)
Interest expense ................................................. (4,986) (7)
Interest income .................................................. 5 8
Other income ..................................................... -- 1,025
-------- --------
Income (loss) before provision (benefit) for income taxes ... (9,097) 171
Provision (benefit) for income taxes ............................. (2,547) 64
--------- ---------
Net income (loss) ........................................... (6,550) 107
Preferred stock dividends accrued ................................ 586
-------- --------
Net income (loss) applicable to common stockholders ......... $(7,136) $ 107
======== ========
Basic earnings (loss) per share:
Net income (loss) per common share.............................. $ (1.89) $ 0.01
======== ========
Weighted average number of shares outstanding................. 3,784 8,699
======== ========
Diluted earnings (loss) per share:
Net income (loss) per common share.............................. $ (1.89) $ 0.01
======== ========
Shares:
Weighted average number of shares outstanding................ 3,784 8,699
Effect of dilutive stock options ............................ -- 121
-------- --------
Adjusted weighted average number of shares outstanding....... 3,784 8,820
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
SYRATECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1998 1997
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ..................................... $ (6,550) $ 107
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operations:
Depreciation and amortization ...................... 1,734 1,177
Deferred income taxes .............................. (2,622) (88)
Other .............................................. - 130
Increase (decrease):
Accounts receivable ............................ 20,217 10,899
Inventories .................................... (9,615) 528
Prepaid expenses and other ..................... (456) (1,388)
Accounts payable and accrued expenses .......... (2,938) (7,821)
Income taxes payable ........................... (930)
--------- --------
Net cash provided by (used in) operations ............. (230) 2,614
--------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment ............ (4,004) (6,226)
Other ................................................. 121
--------- --------
Net cash used in investing activities ................. (4,004) (6,105)
--------- --------
Cash flows from financing activities:
Change in revolving loan facilities ................... 2,824 1,502
Other ................................................. (611) (337)
--------- --------
Net cash provided by financing activities............. 2,213 1,165
--------- --------
Net decrease in cash and equivalents .................. (2,021) (2,326)
Cash and equivalents, beginning of period ............. 2,981 3,605
--------- --------
Cash and equivalents, end of period.................... $ 960 $ 1,279
========= ========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(in thousands, except share and per share data)
1. FINANCIAL INFORMATION
The accompanying unaudited interim condensed consolidated financial
statements of Syratech Corporation and Subsidiaries (the "Company") have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information normally included in consolidated
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These interim condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes included in the Company's 1997 Annual Report on
Form 10 - K.
In the opinion of management, the interim condensed consolidated financial
statements reflect all adjustments, which consist only of normal and recurring
adjustments, necessary for a fair presentation of the interim periods. The
results of operations for the interim periods are not necessarily indicative of
the results of operations to be expected for the full year.
2. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
---- ----
<S> <C> <C>
Cash paid during the period for:
Interest.............................. $616 $ 280
==== ======
Income taxes.......................... $376 $1,172
==== ======
</TABLE>
3. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
<S> <C> <C>
Raw material............................... $ 9,916 $10,169
Work-in-process............................ 5,947 4,917
Finished goods............................. 78,047 69,209
------- -------
Total................................. $93,910 $84,295
======= =======
</TABLE>
4. INCOME TAXES
The (benefit) provision for income tax expense for the three month periods
ended March 31, 1998 and 1997, respectively, have been computed using the
estimated effective full year tax rates. Realization of the income tax benefit
is dependent upon generating sufficient future taxable income. Although
realization is not assured, management believes it is more likely than not that
the income tax benefit will be realized through future taxable earnings.
5. NOTES PAYABLE
The Company's C.J. Vander Ltd subsidiary entered into an overdraft facility
on March 16, 1998 ("Overdraft Facility") which provides for borrowings of
(pound)500,000 ($835 at the March 31, 1998 exchange rate). Borrowings made under
the Overdraft Facility bear interest at the bank's base rate plus 1%. The
Overdraft Facility contains customary covenants, and borrowings are secured by
substantially all of C.J.Vander Ltd's assets. The Overdraft Facility is due on
demand and expires on September 11, 1998. Availability under the Overdraft
Facility was $655 at March 31, 1998.
4
<PAGE>
SYRATECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income." The
following is presented in accordance with this statement:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
---- ----
<S> <C> <C>
Net income (loss) applicable to common
stockholders ............................... $(7,136) $ 107
Other comprehensive income, net of tax:
Foreign currency translation adjustments ... (338) (394)
------- -----
Comprehensive loss ........................... $(7,474) $(287)
======= =====
</TABLE>
Accumulated other comprehensive income consists only of foreign currency
translation adjustments.
7. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standard No. 131 "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). The Company will be required
to adopt the provisions of this statement in its annual financial statements for
fiscal 1998. SFAS 131 establishes new standards for reporting information about
operating segments. The Company believes the segment information required to be
disclosed under SFAS 131 will be more comprehensive than previously provided,
including expanded disclosure of statement of operations and balance sheet items
for each reportable operating segment. The Company has not yet completed its
analysis of the operating segments on which it will report.
In February 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 132 ("SFAS 132"), "Employers' Disclosures
about Pensions and Other Postretirement Benefits". SFAS 132 standardizes the
disclosure requirement for pensions and other postretirement benefits to the
extent practicable. It does not change the measurement or recognition of those
plans. The Company will be required to adopt the provisions of this statement in
its annual financial statements for fiscal 1998. The adoption of these
provisions will not have a material impact upon the Company's consolidated
financial statements.
8. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
The following supplemental condensed consolidating financial statements as of
March 31, 1998 and 1997 present separate financial information for the Company
("Issuer/Guarantor Parent"), the Guarantor Subsidiaries, and the Non-Guarantor
Subsidiaries. Separate financial statements of each guarantor are not presented
because management believes that such statements would not be materially
different from the information presented herein.
5
<PAGE>
SYRATECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEETS
MARCH 31, 1998
<TABLE>
<CAPTION>
Issuer/ Non
Guarantor Guarantor Guarantor
Parent Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ ------------
ASSETS
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and equivalents .............................. $ 19 $ 242 $ 699 $ $ 960
Accounts receivable, net .......................... 40,042 3,634 43,676
Inventories ....................................... 89,749 4,120 41 93,910
Deferred income taxes ............................. 729 13,230 13,959
Prepaid expenses and other ........................ 113 2,338 397 2,848
Properties held for sale........................... 1,151 685 1,836
--------- --------- -------- ---------- ---------
Total current assets .......................... 861 146,752 9,535 41 157,189
Property, plant and equipment, net ................... 81,184 3,972 (52) 85,104
Purchase price in excess of net assets acquired ...... 6,730 6,730
Other assets ......................................... 188,884 260 (179,442) 9,702
--------- --------- -------- ---------- ---------
Total ......................................... $189,745 $234,926 $13,507 $(179,453) $258,725
========= ========= ======== ========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving loan facilities and notes payable ....... $ $ 21,544 $ 180 $ $ 21,724
Accounts payable................................... 9,426 2,071 11,497
Accrued expenses................................... $ 9,188 4,817 423 14,428
Accrued compensation............................... 2,673 186 2,859
Accrued advertising................................ 2,109 2,109
Income taxes payable............................... 19,949 (19,615) (340) 6
--------- --------- -------- ---------- ---------
Total current liabilities ..................... 29,137 20,954 2,520 6 52,617
Long-term debt ....................................... 165,000 165,000
Deferred income taxes ................................ 2,295 17,788 20,083
Pension liability..................................... 3,282 3,282
Other long - term liabilities ........................
Intercompany (receivable) payable .................... (63,035) 63,035 (8,800) 8,800
Commitments and contingencies ........................
Stockholders' equity ................................. 56,348 129,867 19,787 (188,259) 17,743
========= ========= ======== ========== =========
Total ......................................... $189,745 $234,926 $13,507 $(179,453) $258,725
========= ========= ======== ========== =========
</TABLE>
6
<PAGE>
SYRATECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Issuer/ Non
Guarantor Guarantor Guarantor
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------ ------------ ------------
ASSETS
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and equivalents .......................... $ 18 $ 91 $ 2,872 $ $ 2,981
Accounts receivable, net ...................... 60,682 3,211 63,893
Inventories ................................... 79,500 4,754 41 84,295
Deferred income taxes ......................... 729 10,608 11,337
Prepaid expenses and other .................... 2,075 317 2,392
Properties held for sale....................... 1,836 1,836
-------- -------- -------- --------- --------
Total current assets ...................... 747 154,792 11,154 41 166,734
Property, plant and equipment, net ............... 78,406 3,947 51 82,404
Purchase price in excess of net assets acquired .. 6,790 6,790
Other assets ..................................... 189,236 278 (179,442) 10,072
-------- -------- -------- --------- --------
Total ..................................... $189,983 $240,266 $15,101 $(179,350) $266,000
======== ======== ======== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving loan facilities and notes payable ... $ $ 18,900 $ $ 18,900
Accounts payable............................... 12,703 1,531 14,234
Accrued expenses............................... 4,515 7,730 532 12,777
Accrued compensation........................... 3,020 370 3,390
Accrued advertising............................ 3,576 3,576
Income taxes payable........................... 19,949 (19,877) (78) 6
-------- -------- -------- --------- --------
Total current liabilities ................. 24,464 26,052 2,355 6 52,877
Long-term debt .................................. 165,000 165,000
Deferred income taxes ............................ 2,295 17,788 20,083
Pension liability................................. 3,136 3,136
Other long - term liabilities ....................
Intercompany (receivable) payable ................ (63,038) 64,997 (7,677) 5,718
Commitments and contingencies ....................
Stockholders' equity ............................. 61,262 128,293 20,423 (185,074) 24,904
======== ======== ======== ========= ========
Total ..................................... $189,983 $240,266 $15,101 $(179,350) $266,000
======== ======== ======== ========= ========
</TABLE>
7
<PAGE>
SYRATECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
Issuer/ Non
Guarantor Guarantor Guarantor
Parent Subsidiaries Subsidiaries Eliminations Consolidated
----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales ...................................... $32,503 $11,107 $(5,852) $37,758
Cost of sales .................................. 24,263 8,332 (5,852) 26,743
-------- ------- -------- --------
Gross profit .............................. 8,240 2,775 11,015
Selling, general and administrative expenses ... $113 12,918 2,658 (26) 15,663
Other operating income ......................... 532 532
----------- -------- ------- -------- --------
Income (loss) from operations ............. (113) (4,146) 117 26 (4,116)
Interest expense ............................... (4,890) (93) (3) (4,986)
Interest income ................................ 5 5
Other income ...................................
----------- -------- ------- -------- --------
Income (loss) before provision
(benefit) for income taxes (5,003) (4,239) 119 26 (9,097)
Provision (benefit) for income taxes ........... (2,600) 53 (2,547)
----------- -------- ------- -------- --------
Net income (loss).......................... (5,003) (1,639) 66 26 (6,550)
Preferred stock dividends accrued .............. 586 586
----------- -------- ------- -------- --------
Net income (loss) applicable to
common stockholders ..................... $(5,589) $(1,639) $ 66 $ 26 $(7,136)
=========== ======== ======= ======== ========
</TABLE>
8
<PAGE>
SYRATECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
Issuer/ Non
Guarantor Guarantor Guarantor
Parent Subsidiaries Subsidiaries Eliminations Consolidated
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales .......................................... $38,059 $11,962 $(5,982) $44,039
Cost of sales ...................................... $ 433 27,396 9,567 (5,982) 31,414
------- ------ ----- ------ ------
Gross profit .................................. (433) 10,663 2,395 12,625
Selling, general and administrative expenses ....... 1,922 10,264 2,480 (70) 14,596
Other operating income ............................. 1,116 1,116
------- ------ ----- ------ ------
Income (loss) from operations ................. (2,355) 1,515 (85) 70 (855)
Interest expense ................................... (4) (3) (7)
Interest income .................................... 2 6 8
Other income ....................................... 1,025 1,025
------- ------ ----- ------ ------
Income (loss) before provision (benefit)
for income taxes ........................... (2,355) 2,538 (82) 70 171
Provision (benefit) for income taxes ............... (89) 153 64
------- ------ ----- ------ ------
Net income (loss).............................. (2,355) 2,627 (235) 70 107
Preferred stock dividends accrued ..................
------- ------ ----- ------ ------
Net income (loss) applicable to
common stockholders ........................ $(2,355) $ 2,627 $ (235) $ 70 $ 107
======= ======= ======= ======= ========
</TABLE>
9
<PAGE>
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
QUARTER ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
Issue Non
Guarantor Guarantor Guarantor
Parent Subsidiaries Subsidiaries Eliminations Consolidated
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) ......................................... $(5,003) $(1,639) $ 66 $ 26 $ (6,550)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operations:
Depreciation and amortization .......................... 352 1,276 106 1,734
Deferred income taxes .................................. (2,622) (2,622)
Increase (decrease) in assets and liabilities,
net of effect of businesses acquired:
Accounts receivable ................................ 21,325 (1,108) 20,217
Inventories ........................................ (10,249) 634 (9,615)
Prepaid expenses and other assets................... (113) (263) (80) (456)
Accounts payable and accrued expenses .............. 4,673 (7,858) 247 (2,938)
Income taxes payable ............................... 262 (262)
Intercompany account ............................... 365 1,148 (1,487) (26)
------- ------- ------- ----- --------
Net cash (used in) provided by operations ................. 274 1,380 (1,884) - (230)
------- ------- ------- ----- --------
Cash flows from investing activities:
Purchases of property, plant and equipment .............. (3,873) (131) (4,004)
------- ------- ------- ----- --------
Net cash (used in) investing activities ................... (3,873) (131) - (4,004)
------- ------- ------- ----- --------
Cash flows from financing activities:
Change in revolving loan facilities ..................... 2,644 180 2,824
Other ................................................... (273) (338) (611)
------- ------- ------- ----- --------
Net cash provided by (used in) financing activities........ (273) 2,644 (158) - 2,213
------- ------- ------- ----- --------
Net increase (decrease) in cash and equivalents ........... 1 151 (2,173) (2,021)
Cash and equivalents, beginning of period ................. 18 91 2,872 2,981
------- ------- ------- ----- --------
Cash and equivalents, end of period........................ $ 19 $ 242 $ 699 $ - $ 960
======== ======== ======== ===== ========
</TABLE>
10
<PAGE>
SYRATECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
QUARTER ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
Issuer/ Non
Guarantor Guarantor Guarantor
Parent Subsidiaries Subsidiaries Eliminations Consolidated
----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) ......................................... $(2,355) $ 2,627 $ (235) $ 70 $ 107
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operations:
Depreciation and amortization .......................... 1,089 88 1,177
Deferred income taxes .................................. (88) (88)
Other .................................................. 20 110 130
Increase (decrease) in assets and liabilities,
net of effect of businesses acquired:
Accounts receivable ................................ 11,137 (238) 10,899
Inventories ........................................ (224) 752 528
Prepaid expenses and other assets .................. 71 (1,459) (1,388)
Accounts payable and accrued expenses .............. (16) (7,713) (92) (7,821)
Income taxes payable ............................... (1) (844) (85) (930)
Intercompany account ............................... 2,309 (2,817) 578 (70)
-------- -------- ------- ------ --------
Net cash (used in) provided by operations ................. (43) 3,348 (691) - 2,614
-------- -------- ------- ------ --------
Cash flows from investing activities:
Purchases of property, plant and equipment .............. (5,049) (1,177) (6,226)
Other ................................................... 121 121
-------- -------- ------- ------ --------
Net cash (used in) investing activities ................... (4,928) (1,177) - (6,105)
-------- -------- ------- ------ --------
Cash flows from financing activities:
Change in revolving loan facilities ..................... 1,534 (32) 1,502
Deferred financing costs and other ...................... 43 (380) (337)
-------- -------- ------- ------ --------
Net cash provided by (used in) financing activities........ 43 1,534 (412) - 1,165
-------- -------- ------- ------ --------
Net increase (decrease) in cash and equivalents ........... (46) (2,280) (2,326)
Cash and equivalents, beginning of period ................. 18 146 3,441 3,605
-------- -------- ------- ------ --------
Cash and equivalents, end of period........................ $ 18 $ 100 $ 1,161 $ - $ 1,279
======== ======== ======= ====== ========
</TABLE>
11
<PAGE>
SYRATECH CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Except for the historical information contained
in this Quarterly Report on Form 10-Q, the matters discussed are forward-looking
statements. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, general
economic and business conditions; industry capacity; industry trends; overseas
expansion; the loss of major customers; changes in demand for the Company's
products; the timing of orders received from customers; cost and availability of
raw materials; dependence on foreign sources of supply; changes in business
strategy or development plans; availability and quality of management;
availability, terms and deployment of capital; and the seasonal nature of the
business. SPECIAL ATTENTION SHOULD BE PAID TO SUCH FORWARD - LOOKING STATEMENTS
INCLUDING BUT NOT LIMITED TO, (i) STATEMENTS RELATING TO THE COMPANY'S ABILITY
TO EXECUTE ITS GROWTH STRATEGIES AND TO REALIZE ITS GROWTH OBJECTIVES, (ii) THE
COMPANY'S PLANNED EXPANSION OF ITS PRODUCT OFFERINGS, (iii) THE COMPANY'S
ABILITY TO GEREATE SUFFICIENT RESOURCES TO FINANCE ITS WORKING CAPITAL AND
CAPITAL EXPENDITURE NEEDS AND PROVIDE FOR ITS KNOWN OBLIGATIONS, AND (iv) THE
CONTINUATION OF AND THE COMPANY'S ABILITY TO BENEFIT FROM, THE VENDOR
CONSOLIDATION TREND IN THE RETAIL INDUSTRY.
For additional information concerning these and other important factors that
may cause the Company's actual results to differ materially from expectations
and underlying assumptions, please refer to the reports filed by the Company
with the Securities and Exchange Commission.
Results of Operations
Three months ended March 31, 1998 compared to three months ended March 31, 1997
Net sales decreased 14.3% to $37.8 million for the three months ended March
31, 1998 from $44.0 million for the three months ended March 31, 1997. This
change is primarily due to decreased sales of discontinued giftware items and
lower Silvestri Christmas liquidation sales which were unusually high in the
first quarter of 1997 as the Company closed out inventory acquired in the 1996
acquisition of the Silvestri productline. The changes in normal product prices
did not materially impact net sales.
Gross profit decreased 12.8% to $11.0 million for the three months ended
March 31, 1998 from $12.6 million for the three months ended March 31, 1997.
Gross profit as a percentage of sales was 29.2% for the 1998 first quarter
compared to 28.7% for the comparable 1997 period. The 0.5 percentage point
increase in gross profit percentage was primarily a result of a decrease in
liquidation sales volume. The increase in gross profit as a percentage of sales
was not materially impacted by change in normal product pricing.
Selling, general and administrative expenses ("S, G & A expenses") increased
to 41.5% as a percentage of net sales or $15.7 million for the three months
ended March 31, 1998 from 33.1% or $14.6 million for the three months ended
March 31, 1997. The increase in S, G & A expenses was due primarily to higher
personnel and related costs, higher M.I.S. spending as a result of integrating
the operations of the 1996 acquisitions and increased advertising, legal fees
and provisions for bad debt expense. In addition, the first quarter of 1997
included a one - time favorable legal settlement.
12
<PAGE>
Loss from operations was $4.1 million and $0.9 million for the first quarter
of 1998 and 1997, respectively and included other operating income of $0.5
million in 1998 primarily from Farberware license revenue and $1.1 million in
1997 primarily from the disposal of Farberware inventory.
Interest expense was $5.0 million for the three months ended March 31, 1998
compared to seven thousand dollars in the same three months of 1997. This change
results from interest expense related to debt incurred in connection with the
April 16, 1997 merger of the Company with THL Transaction I Corp., a
corporation, controlled by affiliates of Thomas H. Lee Company (the "Merger").
Other non operating income of $1.0 million for the three months ended March
31, 1997 relates to the sale of certain tools and equipment in conjunction with
the February 3, 1997 settlement reached with U. S. Industries, Inc. and Bruckner
Manufacturing Corp.
The benefit from income taxes was $2.5 million for the first quarter of 1998,
compared to a provision for income taxes of sixty four thousand dollars for the
first quarter of 1997. Realization of the income tax benefit is dependent upon
generating sufficient future taxable income. Although realization is not
assured, management believes it is more likely than not that the income tax
benefit will be realized through future taxable earnings.
Net loss applicable to common stockholders for the first quarter of 1998 was
$(7.1) million or ($1.89) diluted per share, on adjusted weighted average shares
of 3,784,018, compared to net income applicable to common stockholders for the
first quarter of 1997 of one hundred and seven thousand dollars or $0.01 diluted
per share, on adjusted weighted average shares of 8,820,000.
Liquidity and Capital Resources
Net cash used in by operating activities for the three months ended March 31,
1998 was 0.2 million. The major uses of cash were for interest expense as a
result of debt incurred in connection with the Merger, and the customary first
quarter increase in manufactured Christmas ornament inventory in preparation for
the fall selling season. Partially offsetting these was the seasonal collection
of accounts receivable.
The Company's working capital requirements are seasonal and tend to be
highest in the period from September through December due to the Christmas
selling season. Accounts receivable tend to decline during the first quarter as
receivables generated during the third and fourth quarters are collected and
remain lower until the next peak season beginning in September.
Capital expenditures were approximately $4.0 million for the three months
ended March 31, 1998. These expenditures were primarily for construction of the
warehouse and distribution facility in Mira Loma, CA, and machinery, equipment
and tools and dies for the Company's manufacturing facilities and distribution
facilities.
The Company's Revolving Credit Facility as amended on July 31,1997, December
31, 1997 and March 30,1998 provides for $130.0 million of borrowings including a
$30.0 million sublimit for the issuance of standby and commercial letters of
credit. Borrowings made under the Revolving Credit Facility bear interest at a
rate equal to, at the Company's option, the Eurodollar Rate plus 225 basis
points or the Prime Rate plus 50 basis points. The Revolving Credit Facility
expires on April 16, 2002. Pursuant to the terms of the Revolving Credit
Facility, the Company was required during February and March of 1998 to maintain
excess availability of at least $30.0 million, and is required to maintain
excess availability of at least $45.0 million during February and March of
subsequent years. The obligations of the Company under the Revolving Facility
are secured by inventory and accounts receivable of the Company and its domestic
subsidiaries and by a pledge of 100% of the domestic subsidiaries' and at least
65% of the foreign subsidiaries' outstanding capital stock. The Revolving Credit
Facility contains customary covenants for the Company and the subsidiary
borrowers, including but not limited to funded debt to earnings before income
taxes, depreciation, amortization, and certain adjustments ("EBITDA") as defined
in the Revolving Credit Facility, fixed charge ratios, capital expenditure
covenants, and minimum consolidated net worth on or after December 31, 1997 of
at least $1.00 (not in thousands). The Company is in compliance with the
covenants, as amended, as of March 31, 1998 and for the quarter then ended. The
Company expects to be in compliance with all covenants, as amended, during
fiscal 1998. Availability under the Revolving Credit Facility, net of
outstanding letters of credit, was $45.0 million at March 31, 1998.
One of the Company's Wallace Puerto Rican subsidiaries has a $1.0 million
facility (the "Facility"), expiring on May 31,
13
<PAGE>
1998. The Facility bears interest at a rate equal to, at the Company's option,
the Eurodollar Rate plus 175 basis points or the bank's Prime Rate less 25 basis
points. Availability under the Facility was $0.3 million at March 31, 1998.
See Note 5 to the Condensed Consolidated Financial Statements.
The Notes due April 15, 2007, issued in connection with the Merger, require
interest payments to be made semi-annually on April 15 and October 15. The Notes
are general unsecured obligations of the Company and rank pari passu in right of
payment with all current and future unsubordinated Indebtedness of the Company,
including borrowings under the Revolving Credit Facility. However, all
borrowings under the Revolving Credit Facility are secured by a first priority
Lien on the accounts receivable and inventory of the Company and its domestic
subsidiaries. Consequently, the obligations of the Company under the Notes are
effectively subordinated to its obligations under the Revolving Credit Facility
to the extent of such assets. The Notes are redeemable in whole or in part, at
the Company's option, after April 15, 2002.
The Company's ability to pay dividends is restricted by terms of the
Revolving Credit Facility and the Note Indenture.
The liquidation preference of the Company's Cumulative Redeemable Preferred
Stock is $1,000 per share plus accrued but unpaid dividends. Holders of the
Cumulative Redeemable Preferred Stock are entitled, subject to the rights of
creditors, in the event of any voluntary or involuntary liquidation of the
Company, to an amount in cash equal to $1,000 for each share outstanding plus
all accrued and unpaid dividends. The rights of holders of the Cumulative
Redeemable Preferred Stock upon liquidation of the Company rank prior to those
of the holders of Syratech Common Stock.
Dividends on shares of Cumulative Redeemable Preferred Stock are cumulative
from the date of issue and are payable when and as may be declared from time to
time by the Board of Directors of the Company. Such dividends accrue on a daily
basis (whether or not declared) from the original date of issue at an annual
rate per share equal to 12% of the original purchase price per share, with such
amount to be compounded annually on each December 31 so that if the dividend is
not paid for any year the unpaid amount will be added to the original purchase
price of the Cumulative Redeemable Preferred stock for the purpose of
calculating succeeding years' dividends.
The Cumulative Redeemable Preferred Stock is redeemable at any time at the
option of the Company, in whole or in part, at $1,000 per share plus all
accumulated and unpaid dividends, if any, to the date of redemption. Subject to
the Company's existing debt agreements, the Company must redeem all outstanding
Cumulative Redeemable Preferred Stock in the event of a public offering of
equity, a change of control or certain sales of assets.
The Company's level of indebtedness will have several important effects on
its future operations, including (i) a substantial portion of the Company's cash
flow from operations must be dedicated to the payment of interest on its
indebtedness and will not be available for other purposes, (ii) covenants
contained in the Revolving Credit Facility and the indenture governing the Note
will require the Company to meet certain financial tests, and other restrictions
may limit its ability to borrow funds or to dispose of assets and may affect the
Company's flexibility in planning for, and reacting to, changes in its business
including possible acquisition activities, and (iii) the Company's ability to
obtain additional financing in the future for working capital, capital
expenditures, acquisitions, general corporate purposes or other purposes may be
impaired.
The Company believes that funds generated from operations and borrowings
available under the Revolving Credit Facility will be sufficient to finance the
Company's working capital requirements, provide for all known obligations of the
Company (including the obligations of the Company under the $165.0 million Notes
issued in connection with the Merger and under its operating leases) and fund
planned capital expenditures through December 31, 1998.
Year 2000 Conversion
The Company has modified certain key systems to comply with Year 2000
requirements and initiated a program to evaluate and modify the systems that are
not Year 2000 compliant. The Company will continue to evaluate the remaining
systems, and where appropriate, make the necessary modifications. The Company
currently believes that the expenditures necessary to be Year 2000 compliant
will not be material to its financial condition or results of operations in any
given year.
Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standard No. 131 "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). The Company will be required
to adopt
14
<PAGE>
the provisions of this statement in its annual financial statements for fiscal
1998. SFAS 131 establishes new standards for reporting information about
operating segments. The Company believes the segment information required to be
disclosed under SFAS 131 will be more comprehensive than previously provided,
including expanded disclosure of statement of operations and balance sheet items
for each reportable operating segment. The Company has not yet completed its
analysis of the operating segments on which it will report.
In February 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 132 ("SFAS 132"), "Employers' Disclosures
about Pensions and Other Postretirement Benefits" SFAS 132 standardizes the
disclosure requirement for pensions and other postretirement benefits to the
extent practicable. It does not change the measurement or recognition of those
plans. The Company will be required to adopt the provisions of this statement in
its annual financial statements for fiscal 1998. The adoption of these
provisions will not have a material impact upon the Company's consolidated
financial statements.
15
<PAGE>
PART II-OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits:
EX-10 Advice of Borrowing Terms between C.J. Vander Ltd and NatWest
Bank P.L.C., dated March 16, 1998
EX-11 Computation of Net Income per Common Share.
EX-12 Computation of Ratio Of Earnings before Fixed Charges To
Fixed Charges
EX-27 Financial Data Schedule
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the three months ended
March 31, 1998.
16
<PAGE>
SYRATECH CORPORATION AND SUBSIDIARIES
SIGNATURE
---------
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.
Syratech Corporation
Dated: May 15, 1998
/s/ Ami A. Trauber
--------------------------------------------------
Ami A. Trauber
Executive Vice President, Chief Financial Officer,
Treasurer, and Director (Principal Financial and
Accounting Officer)
17
<PAGE>
INDEX TO EXHIBITS
-----------------
Filed with Syratech Corporation
Report on Form 10-Q for the Quarter Ended
March 31, 1998
Exhibit No
----------
EX-10 Advice of Borrowing Terms between C.J. Vander Ltd and NatWest
Bank P.L.C., dated March 16, 1998
EX-11 Computation of Net Income per Common Share.
EX-12 Computation of Ratio Of Earnings before Fixed Charges To Fixed
Charges
EX-27 Financial Data Schedule
EX-10
ADVICE OF BORROWING TERMS
BRANCH/UNIT South Yorkshire Corporate Business Centre
PO Box 897, 38 Carver Street, Sheffield, S1 4YY
DATE 16th March 1998
BORROWERS NAME CJ Vander Ltd of Vander House, Starnhill Close,
Ecclesfield, Sheffield S35 9TG
(This letter replaces the `Advice of Borrowing Terms' letter dated 10th October
1997).
Subject to the Bank's rights below and subject to the Bank's rights under the
`General terms upon which the Bank makes facilities available', it is the Bank's
current intention that the facilities specified in this `Offer of Borrowing
Terms' (except for those facilities which are subject to their own separate
facility documentation covered below under `Facilities subject to separate
documentation') should remain available until 11th September 1998.
FACILITY 1
<TABLE>
<CAPTION>
<S> <C>
Facility Type Overdraft
Amount [pound]250,000 plus additional
[pound]250,000 excess for Sterling
Silver purchases upon prior notification
Purpose To finance working capital requirements
Repayment Fully fluctuating/repayment on demand
1st Debit Interest Rate 1% above the Bank's Base Rate from time to time
2nd Debit Interest Rate 4% above the Bank's Base Rate from time to time
(Applicable Above [pound]500,000)
Payable: Quarterly
</TABLE>
REPAYMENT
It is the Bank's current intention that the facilities should be reviewed by the
dates indicated herein. However, all amounts outstanding under the facilities
are repayable on demand, which may be made by the Bank at its sole discretion at
any time. The facilities may also, by notice, be withdrawn, reduced or made
subject to further conditions or otherwise varied.
INTEREST
Interest on any indebtedness from time to time in excess of agreed facilities
will be charged at the interest rate detailed above. An excess fee will be
charged at the Bank's published rate from time to time (currently (pound)3.50
per day) for each day that your agreed overdraft limit is exceeded. The Bank is
not obliged to allow (or to continue to allow) any excess borrowing.
All rates specified above are variable. If the interest rate specified above is
not linked to the Bank's Base Rate, interest will be charged initially at the
rate per annum specified above, which may vary from time to time at the Bank's
absolute discretion.
<PAGE>
Details of the current rates are available from the branch or office where the
facility is provided.
The Bank may alter the basis upon which interest is calculated (including the
size of the margin charged over the Bank's Base Rate or other published rate) on
facilities and/or the amount of any regular repayments of facilities which are
repayable on demand (or by notice), but it will give the customer one month's
notice before doing so.
OTHER FACILITIES
Settlement Risk - [pound]100,000 in respect to BACS in the event the
Company's payroll processing is routed through `Payaway".
Negotiation facility - [pound]10,000 in respect to the negotiation of foreign
cheques.
FEES
<TABLE>
<CAPTION>
Type Amount Date to be Debited
<S> <C> <C>
Arrangement Fee Not due until 6th October N/A
1998
</TABLE>
SECURITY
The Bank continues to rely upon its existing security (and the additional
security where specified) detailed below for the discharge on demand of all
present and future liabilities (both actual and contingent) of the Borrower(s)
to the Bank. The liabilities secured will include without limitation, all
liabilities, of the Borrower to the Bank under the facility or facilities
specified in this Advice of Borrowing Terms including those which are listed
below under the heading `Facilities subject to separate documentation'.
From time to time the Bank may wish to revalue the security and the cost of any
valuations required by the Bank will be met by the Borrower. Further information
is included in the `General terms upon which the Bank makes facilities
available'.
<TABLE>
<CAPTION>
Date
Executed/New Title of Security Asset
<S> <C> <C>
27/09/89 Cross Guarantee between CJ Vander Ltd, Roberts & Belk
Structure Ltd, John Biggin Ltd, Modern Silverware
Products Ltd, Vander Properties Ltd & CJ
Vander (Antiques) Ltd.
13/01/74 - to be Mortgage Debenture fixed & floating charge over all company
retaken assets given by CJ Vander Ltd
11/11/85 Supplemental Charge specific charge over book debts of the
company
30/01/74 Mortgage Debenture fixed & floating charge over all company
assets given by Roberts & Belk Ltd
incorporates an equitable charge over
property at 92A Arundel Street, Sheffield
<PAGE>
04/09/1991 Supplemental Charge specific charge over book debts of the
company
26/04/78 Mortgage Debenture fixed & floating charge over all company
assets given by John Biggin Ltd.
12/03/92 Mortgage Debenture fixed & floating charge over all
company assets given by Modern
Silverware Products Ltd
27/09/89 Mortgage Debenture fixed & floating charge over all
company assets given by CJ Vander
(Antiques) Ltd.
</TABLE>
OTHER CONDITIONS
1. Monthly Management accounts (including Profit & loss statement, Balance
Sheet & aged debtor and creditor listings) to be provided on a monthly
basis within 21 days of the month end to which they relate.
2. Provision of "Metal Exchange Account" statement and outstanding balance on
a monthly basis, albeit we fully acknowledge that any such `balances' will
in all likelihood be transitory in their nature.
3. The Mortgage Debenture given by CJ Vander Ltd to be retaken in the
interests of clarity and to ensure the Bank retains its recourse to debtors
and stock values.
4. In the absence of any demonstrable working capital need within the
company's forecasts, the agreed excess of (pound)250,000 is made subject to
your prior request and for the specific purpose of sterling silver
purchases, which you indicated may be necessary from time to time either to
fulfill short-lead orders or to advantage from commodity price movements. A
copy of the purchase agreement in such instances would be welcomed.
5. Lombard Natwest Commercial Services to revisit the company with a view to
upgrading its appraisal of the Group's credit management processes, in
recognition of the significant work which has clearly been undertaken since
we last met.
6. We will continue to monitor the level of debtors and stock to utilised
overdraft facilities. At present this formula is calculated on the basis of
{Debtors [greather than]3 months + Stock} x 40%, in a ratio greater than
or equal to 2:1 to utilised overdraft. Depending upon the outcome of the
revised debtor assessment, we will seek to increase the flexibility in
this respect in recognition of your significant efforts in this direction
since take-over.
ENVIRONMENTAL RISK
The Borrower hereby agrees that the Bank may at any time during the term of the
facilities require the Borrower to obtain environmental audits by environmental
consultants approved by the Bank and each such environmental audit shall be in a
form and substance acceptable to the
<PAGE>
Bank and addressed to the Bank to the effect that at the date of such
environmental audit neither the assets of the Borrower nor the use thereof has
caused or is likely to cause any violation of any Environmental Law. The
Borrower hereby undertakes to provide the same to the Bank within 30 days of a
written request from the Bank and to meet all associated costs and expenses
including the costs of any such environmental audit.
The Borrower hereby represents and warrants to the Bank that the Borrower has
obtained all requisite environmental licences and has at all times complied in
all material aspects with:
i) the terms and conditions of all Environmental Licences applicable to it;
and
ii) all other applicable Environmental Law.
The representation and warranty set out above shall survive the Borrower's
acceptance of the terms of the facilities and the drawing of the facilities and
shall be deemed to be repeated on each day throughout the subsistence of the
facilities with reference to the facts and circumstances for the time being then
obtaining.
For the purpose of this clause:
i) Environmental Law' shall mean any law, regulation, code of practice,
circular, guidance, notice or the like (whether in the United Kingdom or
elsewhere and whether now existing or hereinafter enacted or promulgated)
or any judicial or administrative interpretation thereof concerning the
protection of human health or the environment or the conditions of the
workplace or the generation, transportation, storage, treatment and
disposal of hazardous materials,
ii) `hazardous materials' shall mean any radioactive emissions and any natural
or artificial substance (whether in solid or liquid form or in the form of
a gas or vapour and whether alone or in combination with any other
substances) which are defined, determined, identified, prohibited, limited
or regulated by Environmental Law or any other chemical, material,
substance or element, existing now or in the future which is capable of
causing harm to man or any other living organism or damaging the
environment or public health or welfare, including any controlled, special
or dangerous toxic radioactive or hazardous waste.
iii) `Environmental Licence' shall mean any permit, licence, authorisation or
consent or other approval required by any Environmental Law.
GENERAL TERMS
Please note that all facilities specified in this `Advice of Borrowing Terms'
are made available to subject to the `General terms upon which the Bank makes
facilities available', except for those subject to separate facility
letters/agreement forms which do not expressly incorporate the General Terms.
Please note that all facilities are also subject to any terms which may be
implied by English Law.
/s/ J. Sparling
Corporate Manager
<PAGE>
The Borrower confirms acceptance of the above terms and conditions pursuant to a
Resolution of the Board of Directions of C J Vander Ltd
Signed /s/ Rafael Calderon Date March 26th, 1998
------------------- ----------------
For and on behalf of
C J Vander Ltd and GroupCompanies.
SYRATECH CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE (unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1998 1997
---- ----
<S> <C> <C>
BASIC EARNINGS (LOSS) PER SHARE:
Net income (loss) per common share........................... $ (1.89) $ 0.01
======= =======
Weighted average number of shares outstanding............. 3,784 8,699
======= =======
DILUTED EARNINGS (LOSS) PER SHARE:
Net income (loss) per common share........................ $ (1.89) $ 0.01
======= =======
Weighted average number of shares outstanding............. 3,784 8,699
Effect of dilutive stock options ......................... - 121
------- -------
Adjusted weighted average number of shares outstanding.... 3,784 8,820
======= =======
</TABLE>
SYRATECH CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS
BEFORE FIXED CHARGES TO FIXED CHARGES
(in thousands, except ratios)
<TABLE>
<CAPTION>
Quarter
Ended
Year Ended December 31, March 31
--------------------------------------------- --------------
1995 1996 1997 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Excess (deficiency) of earnings
available to cover fixed charges (1)
Earnings:
Income (loss) before income taxes $20,039 $ 32,623 $ (6,464) $ (9,097)
Add: Fixed charges 894 4,886 18,112 5,483
------ ------ ------ ------
Earnings, as adjusted 20,933 37,509 11,648 (3,614)
------ ------ ------ ------
Fixed charges:
Interest on indebtness 287 3,150 15,019 4,633
Amortization of debt issuance costs - - 1,008 353
Portion of rents representative of the
interest factor 607 1,736 2,085 497
------ ------ ------ ------
Fixed charges 894 4,886 18,112 5,483
------ ------ ------ ------
Excess (deficiency) of earnings to fixed Charges $20,039 $ 32,623 $ (6,464) $ (9,097)
======= ======== ======== =======
Ratio of earnings to fixed charges 23.4 7.7 - -
</TABLE>
(1) For purposes of these computations, earnings consist of income (loss)
before income taxes plus fixed charges. Fixed charges consist of
interest on indebtedness and amortization of debt issuance costs, plus
that portion of operating lease rental expense representative of the
interest factor. The ratio of earnings to fixed charges is not shown for
the year ended December 31, 1997 and for the quarter ended March 31st,
1998 due to a deficiency of earnings to fixed charges.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY INFORMATION EXTRACTED FROM THE SYRATECH
CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AS FILED AS PART OF THE
QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH QUARTERLY REPORT ON FORM 10-Q
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> MAR-31-1998
<CASH> 960
<SECURITIES> 0
<RECEIVABLES> 43,676
<ALLOWANCES> 6,313
<INVENTORY> 93,910
<CURRENT-ASSETS> 157,189
<PP&E> 85,104
<DEPRECIATION> 38,677
<TOTAL-ASSETS> 258,725
<CURRENT-LIABILITIES> 52,617
<BONDS> 165,000
0
20,116
<COMMON> 38
<OTHER-SE> (2,411)
<TOTAL-LIABILITY-AND-EQUITY> 258,725
<SALES> 37,758
<TOTAL-REVENUES> 37,758
<CGS> 26,743
<TOTAL-COSTS> 26,743
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,986
<INCOME-PRETAX> (9,097)
<INCOME-TAX> (2,547)
<INCOME-CONTINUING> (6,550)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,550)
<EPS-PRIMARY> (1.89)
<EPS-DILUTED> (1.89)
</TABLE>
