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FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _________________
Commission file number: 1-12754
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 43-1659062
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1900 Gulf Street, Lamar, Missouri 64759-1899
(Address of principal executive offices) (ZIP Code)
(417) 682-3322
(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
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As of September 8, 1999, 16,085,329 shares of Common Stock of
O'Sullivan Industries Holdings, Inc., par value $1.00 per share, and associated
preferred stock purchase rights were outstanding.
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PART I
O'Sullivan Industries Holdings, Inc. (the "Company" or the
"registrant") hereby amends its Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999 by deleting the portion of Item 2 of Part I of the report
appearing under the heading "YEAR 2000 COMPLIANCE" and replacing such portion
with the following:
YEAR 2000 COMPLIANCE
Almost all companies must address whether their computer
systems and applications will recognize and process dates after
December 31, 1999. In prior years, many computer programs were written
using two digits rather than four to define the applicable year. These
programs were written without considering the impact of the upcoming
change of the century and may experience problems handling dates beyond
the year 1999. This could cause computer applications to fail,
manufacturing operations to be disrupted, a temporary inability to
process transactions and create other erroneous results unless
corrective measures are taken.
O'Sullivan has established and developed a multi-step Year
2000 readiness plan for its internal systems including computer
hardware (mainframe and personal computers), computer software,
application programs, manufacturing equipment and office equipment
(phone and fax systems). The plan includes development of corporate
awareness, assessment of internal systems, assessment of customer and
vendor readiness, project planning, project implementation (including
remediation, upgrading and replacement), validation testing and
contingency planning. The readiness plan is reviewed approximately
every two to three weeks to determine progress and completion of
various milestones.
In fiscal 1998, O'Sullivan completed the final rollout of an
enterprise software package to support its expanded sales and multiple
plant, multiple warehouse locations and replace an older non-compliant
year 2000 system. The vendor of the software package states that the
software is Year 2000 compliant except for minor issues for which
remedial programming has been provided. We are testing and implementing
the remedial programming. We are continuing our testing efforts to
verify the vendor's statement of compliance and expect to complete this
testing on or about October 31, 1999. O'Sullivan is utilizing internal
resources to complete testing of the systems.
We have implemented electronic communications capabilities to
ensure that order, shipping and invoicing data for dates after December
31, 1999 can be processed. This testing and verification is complete.
We have successfully tested Year 2000 data with the National Retail
Federation and have received its Year 2000 compliance certification. We
are also processing Year 2000 compliant order, shipping and invoicing
data with certain of our EDI customers. We will continue to test and
implement Year 2000 compliant electronic communications with other
customers as they update their systems to Year 2000 capabilities.
O'Sullivan has completed its review of remaining critical
business systems in our computerized machinery and equipment for Year
2000 compliance issues. We have completed the review of over 1,898
pieces of equipment and have installed modifications in the few pieces
of equipment requiring a year 2000 update.
In addition, O'Sullivan's ability to produce its products
is dependent upon timely receipt of raw materials. Accordingly, we
have requested our suppliers to provide information regarding their
efforts to address Year 2000 compliance issues. Every major supplier
responded that it has evaluated and addressed its Year 2000
compliance issues or is in the process of doing so. If a major
supplier does not resolve its Year 2000 compliance issues and is
unable to provide us with timely deliveries of quality materials
after December 31, 1999, we expect to locate and use alternative
suppliers, although it is possible that we may be unable to do so,
or may be able to do so only at increased cost. For example, if it
is apparent that certain material vendors or transportation
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companies may not achieve Year 2000 compliance, we intend to
increase our raw material inventory for strategic materials
necessary to continue production of product for our customers.
Based upon current information, O'Sullivan estimates that
aggregate amounts expended to resolve Year 2000 issues should not
exceed $500,000. These costs are made up of approximately $225,000
for modification of information systems software, which represents
approximately 5% of the total information services budget for fiscal
1999, and approximately $275,000 represents costs of upgrading
electronics for manufacturing and communication equipment.
O'Sullivan expects to fund these expenditures through available cash
from operations or the use of the bank revolver. All of these
amounts will be deducted from income at the time the liability is
incurred. As of June 30, 1999, O'Sullivan had spent approximately
$93,000 in connection with its Year 2000 compliance plan.
O'Sullivan has developed the basics of a contingency plan
to address situations that may result if O'Sullivan or its vendors
or customers are unable to achieve Year 2000 readiness of critical
operations. We are vulnerable to external forces that might
generally affect industry and commerce, such as utility or
transportation company Year 2000 compliance failures and related
service interruptions. This is most likely the worst case scenario
for O'Sullivan involving Year 2000 compliance issues. For example,
if the electrical grid failed for any of our manufacturing
facilities, we would not be able to manufacture product for our
customers. If natural gas for winter heating failed or was severely
restricted, we would not be able to heat our buildings for our
employees and could affect the functioning of certain laminating
equipment. Anticipating the possibility of such failure or
restriction, we plan to increase our finished goods inventory for
our customers. If some automated processes fail in spite of our
remediation efforts, we will resort to manual processes using
regular and, if necessary, temporary staffing in order to perform
the additional workload resulting from Year 2000-related
malfunctions.
The costs of the project and the dates on which O'Sullivan
believes it will complete the Year 2000 modifications are based on
management's best estimates, which were derived utilizing numerous
assumptions of future events, including the continued availability
of certain resources. However, these expectations are subject to
uncertainties. If we do not identify and fix all Year 2000 problems
in critical operations, our results of operation and financial
condition could be materially impacted. There can be no assurance
that these estimates will be achieved and actual results could
differ materially from those anticipated.
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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.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
Date: September 9, 1999 By: /s/ Richard D. Davidson
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Richard D. Davidson
President and
Chief Operating Officer
Date: September 9, 1999 /s/ Phillip J. Pacey
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Phillip J. Pacey
Vice President-Finance
and Treasurer
(Principal Financial and Accounting Officer)
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