ONEIDA, N.Y., Dec. 9, 2005 (PRIMEZONE) -- Oneida Ltd. (OTCBB:ONEI) today announced operating and financial results for the third quarter and nine month period ended October 29, 2005. Operating income for the third quarter was $3.0 million, compared to an operating loss of $(16.8) million during the corresponding period last year. The operating results included goodwill impairment losses attributed to the Company's United Kingdom operation of $4.2 million and $15.5 million for the three month periods ending October 29, 2005 and October 30, 2004, respectively. The operating income improvement also reflects the favorable impact of the Company's comprehensive operational restructuring program. Oneida's operational restructuring efforts are focused on reducing the Company's cost structure and transitioning from fixed-cost manufacturing to variable-cost sourcing throughout its product line portfolio, thereby maximizing the Company's competitiveness in today's global marketplace. Net loss for the third quarter ended October 29, 2005 was $(6.0) million, equal to $(0.13) per share, compared to year-ago net loss of $(23.8) million, or $(0.57) per share.
Commenting on the Company's results, Terry G. Westbrook, President and Chief Executive Officer of Oneida, said, "Our results demonstrate that the operational restructuring initiatives we've undertaken have taken hold and are contributing strongly to continuing improvements in our performance. We have strong brands that connect with the consumer, the right business model for the demands of the market, and we are now focused on growing our revenue base, building our brands and strengthening our balance sheet for future growth."
Total revenues for the third quarter were $89.3 million, compared to $102.2 million in the third quarter of the previous fiscal year. Approximately $7.9 million of the revenue decline was attributed to the Company's foodservice division, where sales to equipment & supply distributors, chain restaurants and airlines were down from prior year levels. Other factors were the discontinuance of certain marginally profitable product lines, several large customers opting to dual source a portion of their tabletop product requirements, and the direct import strategy of certain large volume customers in the Company's commodity flatware and dinnerware market segment. The Consumer division's revenues were down approximately $3.2 million from the prior year, attributed to the August 2004 sale of Encore Promotions, Inc. and the closure of 23 unprofitable Oneida outlet stores during the previous twelve months, partially offset by an increase in the sale of dinnerware products to the retail sector. International division revenues were down approximately $1.6 million from the prior year, primarily in the United Kingdom.
Gross margins improved from $26.5 million (25.9% of revenues) during the three month period ended October 30, 2004, to $32.3 million (36.2% of revenues) during the quarter ended October 29, 2005. The Company's continued gross margin improvement was achieved as a result of the March 22, 2005 sale of the Sherrill, N.Y. manufacturing facility resulting in the complete outsourcing of the Company's manufacturing operations. Other positive activities were product line rationalization, reduction of LIFO valued inventory levels, and a reduction in the write-down of obsolete inventory.
Operating income was favorably impacted by the closure of unprofitable Oneida outlet stores; reductions in personnel, employee benefits, general & administrative expenses, and logistics costs. During the quarter the Company refined its calculation of the Allowance for Doubtful Accounts, and reviewed its accrual for incentive compensation based on current projections, resulting in a favorable earnings adjustment of $1.2 million.
For the first nine months of the fiscal year ending January 2006, Oneida's operating income was $9.6 million, on total revenues of $258.8 million, compared to an operating loss of $(62.9) million on total revenues of $314.8 million during the first three quarters of the prior fiscal year. Net loss was $(16.1) million for the nine month period ended October 29, 2005, versus net loss of $(17.8) million during the corresponding period last year. The prior year's net loss included non-recurring income items, totaling $62.1 million, attributed to the net effect of eliminating the Company's post-retirement medical liabilities, termination of the Company's long-term disability plan and freezing two of the Company's domestic defined benefit pension plans. Additionally, non-recurring expense items, totaling $52.2 were recorded for impairment losses on goodwill and closure of the Sherrill, NY factory. Interest expense increased by $9.3 million to $24.2 million for the nine month period ended October 29, 2005 due to the higher effective interest rate and amortization of deferred financing costs associated with its restructured debt.
Net cash flow provided by operating activities was $1.0 million during the nine month period ended October 29, 2005, versus net cash used by operating activities of $(40.0) million during the corresponding period last year. Liquidity under the Company's U.S. revolving credit agreement and available cash balances was $20.0 million at October 29, 2005, which decreased from $22.2 million at January 29, 2005 and increased from $12.2 million at October 30, 2004, respectively.
Ongoing Restructuring Initiatives and Executive Appointments
The following actions were taken during the third quarter ended October 29, 2005:
-- Appointed Robert Hack as Vice President -- Information Technology
and Chief Information Officer. Mr. Hack will be responsible for
Oneida's worldwide information technology strategy and
implementation. His prior experience includes a variety of
senior level IT positions with the Eastman Kodak Company and
Carrier Corporation, and most recently he was CIO at Marietta
Corporation.
-- Appointed John Ross as Corporate Controller and Chief Accounting
Officer. Prior to joining Oneida, Mr. Ross served in a variety
of accounting and financial positions, including VP and
Controller Accounting Operations of Pacer International, VP
Finance of PIC International Group, Director of Accounting and
Corporate Controller of Hubbell Inc. Mr. Ross started his career
at Deloitte-Touche and is a Certified Public Accountant.
-- Signed a 5-year lease agreement for a 244,000 square foot
warehouse and distribution facility with Tejon Ranch Company in
order to relocate Oneida's west coast distribution center to
Lebec, California. The new facility, located approximately 90
miles northwest of the port of Long Beach, CA, is expected to be
operational during the first quarter of the next fiscal year, and
will employ as many as 100 workers. The conversion from Oneida's
current third party logistics platform on the west coast to this
Oneida-managed facility is expected to generate additional supply
chain savings and service level improvements.
-- Continued the rationalization and operational integration of
Oneida's various product lines in order to leverage the Company's
strengths in brand, design and global procurement. Toward that
end, during the third quarter, certain functions of the New York
City-based dinnerware operation were integrated into the
Company's headquarters located in Oneida, NY. The Company also
opened a new showroom at 41 Madison Avenue, New York City,
featuring a combination of flatware, dinnerware and food service
product lines including the launch of a new Buffalo China
consumer dinnerware brand offered in a variety of shapes,
patterns and colors.
-- Engaged the New England Consulting Group, a leading marketing and
branding consulting firm, to assist the Company in developing a
strategic market positioning, growth and branding plan.
Oneida is a leading source of flatware, dinnerware, crystal and metal serveware for both the consumer and food service industries worldwide.
Forward Looking Information
With the exception of historical data, the information contained in this Press Release, as well as those other documents incorporated by reference herein, may constitute forward-looking statements, within the meaning of the Federal securities laws, including but not limited to the Private Securities Litigation Reform Act of 1995. As such, 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 or implied herein. Such factors include, but are not limited to: changes in national or international political conditions; civil unrest, war or terrorist attacks; general economic conditions in the Company's own markets and related markets; availability or shortage of raw materials; difficulties or delays in the development, production and marketing of new products; financial stability of the Company's contract manufacturers, and their ability to produce and deliver acceptable quality product on schedule; 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; inability of the Company to maintain sufficient levels of liquidity; failure of the company of obtain needed waivers and/or amendments relative to its finance agreements; foreign currency fluctuations; major slowdowns in the retail, travel or entertainment industries; the loss of several of the Company's key executives, major customers or suppliers; underutilization of, or negative variances at, some or all of the Company's distribution facilities; the Company's failure to achieve the savings and profit goals of any planned restructuring or reorganization programs; future product shortages resulting from the Company's transition to an outsourced manufacturing platform; international health epidemics such as the SARS outbreak; impact of changes in accounting standards; potential legal proceedings; changes in pension and medical benefit costs; and the amount and rate of growth of the Company's selling, general and administrative expenses.
ONEIDA LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars, except per share data)
(Unaudited)
For the For the
Three Months Ended Nine Months Ended
Oct. 29, Oct. 30, Oct. 29, Oct. 30,
2005 2004 2005 2004
------------------- -------------------
Revenues:
Net sales $88,577 $101,273 $257,006 $312,938
License fees 732 951 1,821 1,838
-------- -------- -------- --------
Total Revenues 89,309 102,224 258,827 314,776
-------- -------- -------- --------
Cost of sales 56,972 75,742 166,901 236,201
-------- -------- -------- --------
Gross margin 32,337 26,482 91,926 78,575
-------- -------- -------- --------
Operating expenses:
Selling, distribution
and administrative
expense 23,957 27,591 75,921 94,051
Restructuring expense 1,194 27 2,370 (110)
Impairment loss on
depreciable assets -- -- -- 34,016
Impairment loss on
other assets 4,233 15,473 4,475 18,173
(Gain) loss on the
sale of fixed assets (4) 157 (449) (4,680)
-------- -------- -------- --------
Total 29,380 43,248 82,317 141,450
-------- -------- -------- --------
Operating income (loss) 2,957 (16,766) 9,609 (62,875)
Other income (467) -- (2,068) (66,123)
Other expense 712 612 2,014 5,265
Interest expense
including
amortization of
deferred financing
costs 8,206 7,190 24,188 14,923
-------- -------- -------- --------
(Loss) before income
taxes (5,494) (24,568) (14,525) (16,940)
Income tax expense
(benefit) 525 (719) 1,557 815
-------- -------- -------- --------
Net (loss) $(6,019) $(23,849) $(16,082) $(17,755)
======== ======== ======== ========
Preferred stock
dividends (32) (32) (97) (97)
Net (loss) available
to common
shareholders $(6,051) $(23,881) $(16,179) $(17,852)
======== ======== ======== ========
(Loss) per share
of common stock
Net loss:
Basic $(0.13) $(.57) $(0.35) $(.71)
Diluted $(0.13) $(.57) $(0.35) $(.71)
ONEIDA LTD
CONSOLIDATED BALANCE SHEETS
(Thousand of Dollars)
Unaudited Audited
Oct. 29, Jan. 29,
2005 2005
-------- --------
ASSETS
Current assets: $ 814 $ 2,064
Cash
Trade accounts receivables,
less allowance for doubtful
accounts of $2,069 and $3,483,
respectively 55,428 53,226
Other accounts and notes receivable 2,665 1,398
Inventories, net of reserves of
$8,307 and $22,405, respectively 102,127 106,951
Other current assets 5,391 3,789
Total current assets 166,425 167,428
Property, plant and equipment, net 18,292 23,149
Assets held for sale 5,605 1,263
Goodwill 116,228 121,103
Other assets 8,045 15,869
-------- --------
Total assets $314,595 $328,812
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Short-term debt $ 7,758 $ 9,577
Accounts payable 13,049 14,735
Accrued liabilities 27,066 33,651
Accrued restructuring 1,311 524
Accrued pension liabilities 18,076 17,667
Deferred income taxes 1,214 1,214
Long term debt classified as 5,220 2,572
current
Total current 73,634 79,940
liabilities
Long term debt 212,992 204,344
Accrued postretirement liability 2,654 2,633
Accrued pension liability 23,778 24,254
Deferred income taxes 10,298 9,087
Other liabilities 11,971 12,173
-------- --------
Total liabilities 335,327 332,431
Commitments and contingencies
Stockholders' (deficit):
Cumulative 6% preferred stock --
$25 par value; authorized
10,000,000 shares, issued 86,036
shares, callable at $30 per share
respectively 2,151 2,151
Common stock -- $l.00 par value;
authorized 100,000,000 shares,
issued 47,781,288 shares for
both periods 47,781 47,781
Additional paid-in capital 84,719 84,719
Retained deficit (100,144) (84,062)
Accumulated other comprehensive loss (33,670) (32,639)
Less cost of common stock held in
treasury; 1,149,364 shares for
both periods (21,569) (21,569)
-------- --------
Total stockholders' (deficit): (20,732) (3,619)
-------- --------
Total liabilities and
stockholders' (deficit) $314,595 $328,812
======== ========
ONEIDA LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED OCTOBER 29, 2005 AND OCTOBER 30, 2004
(Unaudited)
(In Thousands)
Nine months ended
Oct. 29, Oct. 30,
2005 2004
---- ----
CASH FLOW PROVIDED BY (USED) FROM OPERATING ACTIVITIES:
Net (loss) $(16,082) $(17,755)
Adjustments to reconcile net
(loss) income to net cash
provided by (used in) operating
activities:
Non-cash interest (Payment in
Kind) 10,872 2,651
(Gain) on disposal of fixed assets (449) (4,680)
Depreciation and amortization 1,779 6,994
Deferred income taxes (35) 143
Impairment of long lived assets 242 34,016
Impairment of other assets 4,233 18,173
Accrued restructuring -- (6,477)
Inventory write-downs -- 9,607
Pension plan amendment -- 2,577
Post retirement health care
plan amendment -- (61,973)
(Increase) decrease in working capital:
Receivables (3,792) (2,708)
Inventories 3,676 5,566
Other current assets (1,664) 1,382
Other assets 7,903 (10,229)
Decrease in accounts payable (1,252) (3,181)
Decrease in accrued liabilities (1,560) (4,165)
Pension plan contributions (2,918) (4,324)
Increase (decrease) in other
liabilities 23 (5,638)
------- -------
Net cash provided by (used in)
operating activities 976 (40,021)
------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of properties and
equipment (2,036) (3,381)
Proceeds from dispositions of
properties and equipment 1,408 13,565
------- -------
Net cash (used in) provided by
investing activities (628) 10,184
------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common -- 56
stock
Proceeds from short-term debt -- 1,850
Proceeds from long-term debt 424 20,872
Payment of short-term debt (1,819) --
------- -------
Net cash (used in) provided by
financing activities (1,395) 22,778
------- -------
EFFECT OF EXCHANGE RATE CHANGES
ON CASH (203) (47)
------- -------
NET (DECREASE) IN CASH (1,250) (7,106)
CASH AT BEGINNING OF YEAR 2,064 9,886
------- -------
CASH AT END OF PERIOD $ 814 $ 2,780
======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Non-cash issuance of common stock -- $30,000
======= =======
Cash paid during the nine months for:
Interest $11,194 $ 9,933
======= =======