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 April 27, 2002
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 June 7, 2002: 16,541,323
ONEIDA LTD.
FORM 10-Q
FOR THE THREE MONTHS ENDED APRIL 27, 2002
INDEX
PART I FINANCIAL INFORMATION
Consolidated Statements of Operations
Consolidated Balance Sheets
Consolidated Statements of Changes in Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULT UNDER SENIOR SECURITES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
None.
SIGNATURES
2
ONEIDA LTD.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
FOR THE
THREE MONTHS ENDED
(Thousands except per APR 27, APR 28,
share amounts) 2002 2001
-------- --------
NET SALES ..................................... $115,006 $126,806
COST OF SALES ................................. 77,500 85,281
-------- --------
GROSS MARGIN .................................. 37,506 41,525
OPERATING REVENUES ............................ 368 408
-------- --------
37,874 41,933
OPERATING EXPENSES:
Selling, distribution and
administrative expenses .................... 31,442 33,966
-------- --------
INCOME FROM OPERATIONS ........................ 6,432 7,967
OTHER (INCOME)EXPENSE ......................... 366 (138)
INTEREST EXPENSE .............................. 4,086 7,121
-------- --------
INCOME BEFORE INCOME TAXES .................... 2,712 708
PROVISION FOR INCOME TAXES .................... 1,010 267
-------- --------
NET INCOME .................................... $ 1,702 $ 441
======== ========
EARNINGS PER SHARE OF COMMON STOCK:
Net income:
Basic ..................................... $.10 $.02
Diluted (NOTE 4) .......................... .10 .02
SHARES USED IN PER SHARE DATA:
Basic ..................................... 16,530 16,411
Diluted (NOTE 4) .......................... 16,558 16,497
CASH DIVIDENDS DECLARED ....................... $.02 $.05
See notes to consolidated financial statements.
3
ONEIDA LTD.
CONSOLIDATED BALANCE SHEET
APRIL 27, 2002 AND JANUARY 26, 2002
(Unaudited)
(Dollars in Thousands)
APR 27, JAN 26,
2002 2002
------- -------
ASSETS
CURRENT ASSETS:
Cash............................................... $4,556 $11,112
Accounts receivable, net of allowance for doubtful.
accounts of $3,554 and $3,475..................... 79,010 78,420
Other accounts and notes receivable................ 3,197 2,524
Inventories:
Finished goods.................................... 139,431 147,097
Goods in process.................................. 12,556 13,112
Raw materials and supplies........................ 8,698 9,314
Other current assets............................... 17,956 18,540
-------- --------
Total current assets............................ 265,404 280,119
-------- --------
PROPERTY, PLANT AND EQUIPMENT-At cost:
Property, plant and equipment...................... 253,898 252,144
Less accumulated depreciation...................... 147,359 143,772
-------- --------
Property, plant and equipment-net............... 106,539 108,372
-------- --------
OTHER ASSETS:
Goodwill - net..................................... 133,335 133,897
Deferred income taxes.............................. 19,240 19,181
Other assets....................................... 8,783 4,566
-------- --------
TOTAL.......................................... $533,301 $546,135
======== ========
See notes to consolidated financial statements.
4
ONEIDA LTD.
CONSOLIDATED BALANCE SHEET
APRIL 27, 2002 AND JANUARY 26, 2002
(Unaudited)
(Dollars in Thousands)
APR 27, JAN 26,
2002 2002
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt............................... $ 7,206 $11,430
Accounts payable.............................. 24,425 24,848
Accrued liabilities........................... 37,206 37,950
Accrued income taxes.......................... 4,848 3,696
Dividends payable............................. 352 363
Current installments of long-term debt........ 4,907 3,956
-------- --------
Total current liabilities.................. 78,944 82,243
-------- --------
LONG-TERM DEBT................................. 244,223 256,170
-------- --------
OTHER LIABILITIES:
Accrued postretirement liability.............. 57,429 56,410
Accrued pension liability..................... 14,899 15,206
Other liabilities............................. 8,987 8,725
-------- --------
Total...................................... 81,315 80,341
-------- --------
STOCKHOLDERS' EQUITY:
Cumulative 6% preferred stock; $25 par
value; authorized 95,660 shares, issued
86,036 shares, callable at $30 per share..... 2,151 2,151
Common stock $1 par value; authorized
48,000,000 shares, issued 17,820,537
and 17,809,235 shares........................ 17,821 17,809
Additional paid-in capital.................... 84,082 83,965
Retained earnings............................. 65,268 63,918
Accumulated other comprehensive loss.......... (16,368) (16,328)
Less cost of common stock held in
treasury; 1,285,679 shares................... (24,134) (24,134)
--------- --------
Stockholders' Equity........................ 128,819 127,381
--------- --------
TOTAL..................................... $533,301 $546,135
========= ========
See notes to consolidated financial statements.
5
ONEIDA LTD.
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED APRIL 27, 2002
(Unaudited)
Add'l
Comp. Common Common Pref'd Paid-in Retained
Income Shares Stock Stock Capital Earnings
-------------------------------------------------------
Balance at Jan 26, 2002.. 17,809 $17,809 $2,151 $83,965 $63,918
Stock plan activity, net. 12 12 117
Purchase/retirement of
Treasury stock, net......
Cash dividends declared
($.02 per share)...... (352)
Net income...............$ 1,702 1,702
Other comprehensive
loss.................. (40)
-------
Comprehensive income.... $ 1,662
=======
--------------------------------------------
Balance at Apr 27, 2002.. 17,821 $17,821 $2,151 $84,082 $65,268
============================================
Other Comp Treasury Unallocated
Income (Loss) Stock ESOP
-------------------------------------------------------
Balance at Jan 26, 2002.. $(16,328) $(24,134)
Stock plan activity, net.
Purchase/retirement of
Treasury stock, net......
Cash dividends declared
($.02 per share)......
Net income...............
Other comprehensive
loss.................. (40)
-------------------------------------------------------
Balance at Apr 27, 2002.. $(16,368) $(24,134)
=======================================================
See notes to consolidated financial statements.
6
ONEIDA LTD.
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED APRIL 28, 2001
(Unaudited)
Add'l
Comp. Common Common Pref'd Paid-in Retained
Income Shares Stock Stock Capital Earnings
-------------------------------------------------------
Balance at Jan 27, 2001.. 17,703 $17,703 $2,167 $82,956 $57,495
Stock plan activity, net. 19 19 147
Purchase/retirement of
Treasury stock, net......
Cash dividends declared
($.05 per share)...... (855)
Net income...............$ 441 441
Other comprehensive
loss.................. (2,595)
-------
Comprehensive loss...... $(2,154)
=======
--------------------------------------------
Balance at Apr 28, 2001.. 17,722 $17,722 $2,167 $83,103 $57,081
============================================
Other Comp Treasury Unallocated
Income (Loss) Stock ESOP
-------------------------------------------------------
Balance at Jan 27, 2001.. $(11,423) $(24,590)
Stock plan activity, net.
Purchase/retirement of
Treasury stock, net...... 235
Cash dividends declared
($.05 per share)......
Net loss.................
Other comprehensive
loss.................. (2,595)
-------------------------------------------------------
Balance at Apr 28, 2001.. $(14,018) $(24,355)
=======================================================
See notes to consolidated financial statements.
7
ONEIDA LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 27, 2002 AND APRIL 28, 2001
(Unaudited)
(In Thousands)
FOR THE
THREE MONTHS ENDED
APR 27, APR 28,
2002 2001
-------- --------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income ......................................... $1,702 $441
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization ..................... 4,146 4,536
Deferred taxes and other non-cash
charges and credits ............................ 705 (4,868)
Decrease (increase) in operating assets:
Receivables .................................. (1,263) (2,672)
Inventories ...................................... 8,696 8,694
Other current assets ............................. (2,522) 1,587
Other assets ..................................... (4,253) (594)
Increase in accounts payable ...................... (423) 480
Decrease in accrued liabilities ................... 896 (9,252)
-------- --------
Net cash provided (used) by operating activities 7,684 (1,648)
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Property, plant and equipment expenditure-net ...... (1,880) (2,648)
Proceeds from sale of marketable securities ........ 3,106
Other, net ......................................... 16 (2)
-------- --------
Net cash used in investing activities .......... 1,242 (2,650)
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock ............. 129 166
Issuance of treasury stock ......................... 235
(Decrease)/Increase in short-term debt-net ......... (4,224) 4,186
Payment of long-term debt .......................... (12,325)
Proceeds from issuance of long-term debt ........... 1,330 6,263
Dividends paid ..................................... (352) (1,670)
-------- --------
Net cash provided by financing activities ...... (15,442) 9,180
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH .............. (40) (2,595)
-------- --------
NET (DECREASE)INCREASE IN CASH ....................... (6,556) 2,287
CASH AT BEGINNING OF YEAR ............................ 11,112 2,163
-------- --------
CASH AT END OF PERIOD ................................ $4,556 $4,450
======== ========
See notes to consolidated financial statements.
8
ONEIDA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Thousands)
1. The statements for the three months ended April 27, 2002 and April 28, 2001
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 three months ended April 27, 2002 are not necessarily indicative of the
results of operations to be expected for the year ending January 25, 2003. The
consolidated financial statements and notes thereto should be read in
conjunction with the financial statements and notes for the years ended in
January 2002 and 2001 included in the Company's January 26, 2002 Annual Report
to the Securities and Exchange Commission on Form 10-K.
2. The provision for income taxes is based on pre-tax income for financial
statement purposes with an appropriate deferred tax provision to give effect to
changes in temporary differences between the financial statements and tax bases
of assets and liabilities. The temporary differences arise principally from
restructuring charges, postretirement benefits, depreciation and other employee
benefits.
3. 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 April 27, 2002 and April 28, 2001:
Net Preferred Adjusted Earnings
Income Stock Net Income Average Per
(Loss) Dividends (Loss) Shares Share
--------------------------------------------------------------------------------
2002:
Basic earnings
per share.............. $1,702 $(32) $1,670 16,530 $.10
Effect of stock options. 28
Diluted earnings
per share.............. 1,702 (32) 1,670 16,558 .10
--------------------------------------------------------------------------------
2001:
Basic earnings
per share.............. $441 $(32) $409 16,411 $.02
Effect of stock options. 86
Diluted earnings
per share.............. 441 (32) 409 16,497 .02
--------------------------------------------------------------------------------
9
ONEIDA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Thousands)
4. Included in the long-term debt caption on the balance sheet are various
senior notes. The note agreements relating thereto contain provisions which,
among other things, require maintenance of certain financial ratios related to
levels of indebtedness, minimum net worth and interest coverage levels. The
covenants limit certain types of payments including dividends, capital
expenditures, intercompany indebtedness and letters of credit. Under the
provisions of the amended note agreements, at April 27, 2002, the Company was
able to declare dividends of up to $375 per quarter.
5. The Company's operations and assets are in one principal industry; tableware
products. The Company's reportable segments are grouped around the manufacture
and distribution of three major product categories: metal tableware, china
dinnerware and glass tabletop products. The Company also distributes a variety
of other tabletop accessories. These products are sold directly to a broad base
of retail outlets including department stores, mass merchandisers, Oneida Home
stores and chain stores. Additionally, these products are sold to special sales
markets, which include customers who use them as premiums, incentives and
business gifts. The Company also sells directly or through distributors to
foodservice operations worldwide, including hotels, restaurants, airlines,
cruise lines, schools and healthcare facilities. The Company's operations are
located in the United States, Canada, Mexico, Italy, Australia, The United
Kingdom, Hong Kong and China.
Sales by reportable segment for the first quarter of 2002 and 2001 were as
follows:
(000)
-----
Metal Dinnerware Glass Other Total
------------------------------------------
2002 Net Sales $69,600 $36,200 $7,100 $2,106 $115,006
2001 Net Sales $83,500 $33,900 $7,900 $1,506 $126,806
6. In June 2001, the Financial Accounting Standards Board approved Statement of
Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets"
("SFAS 142"). We adopted SFAS 142 effective January 27, 2002. Under this
standard, amortization of goodwill and certain intangible assets, including
certain intangibles recorded as a result of past business combinations, is to be
discontinued upon adoption of SFAS 142. The new standard requires that goodwill
and intangible assets be tested for impairment on an annual basis. The Company
will be performing the impairment tests of goodwill in the second fiscal quarter
of 2002. No material impact on the earnings or financial position of the Company
is expected as a result of the impairment tests.
10
ONEIDA LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Thousands)
The following is a reconciliation assuming goodwill and other intangible assets
had been accounted for in accordance with the provisions of SFAS 142 in the
quarter ended April 28, 2001:
Three months ended
April
2002 2001
---- ----
Reported net income $1,702 $441
Adjustments (net of income taxes):
Goodwill amortization 576
------
Adjusted net income $1,702 $1,017
====== ======
Earnings per share:
Basic:
Reported net income $.10 $.02
Adjusted net income .10 .05
Diluted:
Reported net income $.10 $.02
Adjusted net income .10 .05
11
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Quarter ended April 27, 2002 compared with the quarter ended
April 28, 2001
(In Thousands)
Operations
Net Sales by Product Line:
--- Three Months Ended--
2002 2001 %Change
-------- -------- ------
Metal products ................. $ 69,600 $ 83,500 (16.6)
Dinnerware Products ............ 36,200 33,900 6.8
Glass products ................. 7,100 7,900 (10.1)
Other Products ................. 2,106 1,506 39.8
-------- -------- ----
Total ........................ $115,006 $126,806 (9.3)
======== ======== ====
Quarterly Review
Consolidated net sales for the quarter ended April 27, 2002 were $11,800 lower
than in the first quarter of the prior year, reflecting continuing softness in
the overall economy. In spite of slowdowns in consumer and foodservice sales
levels, sales of dinnerware products increased in both markets.
Gross margin as a percentage of net sales was 32.6% in the first quarter of
2002, comparable to the 32.7% realized for the same period of 2001. As was done
through most of 2001, the Company ran its manufacturing facilities at lower
volumes to better match incoming order levels. This resulted in overhead
variances and plant utilization inefficiencies. As order levels increased at the
end of the current quarter, manufacturing levels were raised accordingly.
Total operating expenses decreased by $2,524, or 7.4%, from the same quarter
last year. This decrease is attributable to the reduction of goodwill
amortization of $918, in accordance with the adoption of FAS # 142 and continued
efforts to reduce operating costs and integrate the operations of the three
companies acquired in mid 2000.
Interest expense, prior to capitalized interest, was $4,112 for the quarter
ended April 27, 2002, a decrease of $3,100 from the first quarter of 2001.
This decrease is due to significantly lower average borrowings and lower
prevailing interest rates incurred throughout the current quarter.
12
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Quarter ended April 27, 2002 compared with the quarter ended
April 28, 2001
(In Thousands)
Liquidity & Financial Resources
A prime objective of the Company since mid-2000 has been to strengthen its
balance sheet and reduce debt. During the first quarter of 2002, continued
significant progress was made toward these goals. Inventories were decreased by
an additional $9,000 during the quarter and debt was reduced by approximately
$15,000 in the same period. Cash flow generated from operations for the first
quarter was $7,684, as compared to a net operating usage of cash of $1,648 in
the prior year's first quarter. During the first quarter of 2002, the Company
received approximately $3,100 from the sale of marketable equity securities.
These proceeds were directly applied to pay down debt. The Company spent
approximately $1,900 in the first quarter on capital projects focused primarily
on its manufacturing facilities. Capital spending for the remainder of 2002 is
anticipated to be approximately $8,100.
Included in the long-term debt caption on the balance sheet are various
senior notes. The note agreements relating thereto contain provisions which,
among other things require maintenance of certain financial ratios related to
levels of indebtedness, minimum net worth and interest coverage levels. The
covenants limit certain types of payments including dividends, capital
expenditures, intercompany indebtedness and letters of credit. Under the
provisions of the amended note agreements, at April 27, 2002, the Company was
able to declare dividends of $375 per quarter.
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 of $40 million. Working capital was $186,460 as of April
27, 2002.
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; under utilization of the
Company's plants and factories; the amount and rate of growth of the Company's
selling, general and administrative expenses.
13
ONEIDA LTD
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
APRIL 27, 2002
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: June 10, 2002
/s/ Gregg R. Denny
-----------------------
Gregg R. Denny
Chief Financial Officer
14