EXHIBIT 99.1
ONEIDA
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NEWS RELEASE
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FOR IMMEDIATE RELEASE
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CONTACTS:
Richard Mahony or Montieth Illingworth
Gavin Anderson & Company (212) 515-1900
Oneida Ltd. Reports Improved Operating Income for Third Quarter and Nine
Months Ended October 29, 2005
ONEIDA, N.Y., December 8, 2005 -- 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
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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:
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o 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.
o 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.
o 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.
o 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.
o 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.
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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 it's 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.
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ONEIDA LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars, except per share data)
(Unaudited)
For the Three Months Ended For the Nine Months Ended
Oct 29, Oct 30, Oct 29, Oct 30,
2005 2004 2005 2004
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Revenues:
Net sales ............................... $ 88,577 $ 101,273 $ 257,006 $ 312,938
License fees ............................ 732 951 1,821 1,838
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Total Revenues ............................ 89,309 102,224 258,827 314,776
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Cost of sales ............................. 56,972 75,742 166,901 236,201
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Gross margin .............................. 32,337 26,482 91,926 78,575
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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)
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Total ................................... 29,380 43,248 82,317 141,450
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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
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(Loss) before income taxes ................ (5,494) (24,568) (14,525) (16,940)
Income tax expense (benefit) .............. 525 (719) 1,557 815
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Net (loss) ................................ $ (6,019) $ (23,849) $ (16,082) $ (17,755)
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Preferred stock dividends ................. (32) (32) (97) (97)
Net (loss) available to common
shareholders ........................... $ (6,051) $ (23,881) $ (16,179) $ (17,852)
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(Loss) per share of common stock Net loss:
Basic ..................................... $ (0.13) $ (.57) $ (0.35) $ (.71)
Diluted ................................... $ (0.13) $ (.57) $ (0.35) $ (.71)
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ONEIDA LTD.
CONSOLIDATED BALANCE SHEETS
(Thousand of Dollars)
Unaudited Audited
Oct 29, Jan 29,
2005 2005
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ASSETS
Current assets:
Cash .................................................... $ 814 $ 2,064
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
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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
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Total assets ........................................ $ 314,595 $ 328,812
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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 current..................... 5,220 2,572
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Total current liabilities ............................... 73,634 79,940
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
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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)
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Total stockholders' (deficit): ..................... (20,732) (3,619)
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Total liabilities and stockholders' (deficit) ... $ 314,595 $ 328,812
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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
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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)
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Net cash provided by (used in) operating activities ...................... 976 (40,021)
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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
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Net cash (used in) provided by investing activities .................... (628) 10,184
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CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock .................................. -- 56
Proceeds from short-term debt ........................................... -- 1,850
Proceeds from long-term debt ............................................ 424 20,872
Payment of short-term debt .............................................. (1,819) --
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Net cash (used in) provided by financing activities .................... (1,395) 22,778
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EFFECT OF EXCHANGE RATE CHANGES ON CASH ................................... (203) (47)
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NET (DECREASE) IN CASH .................................................... (1,250) (7,106)
CASH AT BEGINNING OF YEAR ................................................. 2,064 9,886
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CASH AT END OF PERIOD ..................................................... $ 814 $ 2,780
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SUPPLEMENTAL CASH FLOW DISCLOSURES:
Non-cash issuance of common stock ........................................ -- $ 30,000
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Cash paid during the nine months for:
Interest ................................................................. $ 11,194 $ 9,933
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