At the annual shareholder meeting of Oneida Ltd. on 26 May 2004, Chairman and Chief Executive Officer Peter J. Kallet highlighted signs of improvement following the painful cost-cutting measures taken…
At the annual shareholder meeting of Oneida Ltd. on 26 May 2004, Chairman and Chief Executive Officer Peter J. Kallet highlighted signs of improvement following the painful cost-cutting measures taken during the past year. Addressing shareholders, Mr. Kallet said that sales and order income in both the consumer and foodservice business increased during the 1Q 2004 following an extended economic downturn. The improvement indicates that “even through this tremendously difficult time, our sales organizations have been able to weather the storm and are growing market share in our consumer and foodservice business units,” he said. “Indications are that our economy is showing continued, sustainable signs of growth for both consumer and foodservice,” Mr. Kallet added. A major challenge now will be to rebuild adequate product supply levels to satisfy the recent upturn, he said. Mr. Kallet looked back at the worsening conditions since the beginning of 2003 that forced the company to take “actions … that we never would have anticipated, but they were absolutely necessary, as unpleasant and painful as they have been, to restore our company to profitability.” The actions included job cuts, benefit reductions, the closing of five factories and a major reconfiguration of the remaining factory in Sherrill, New York, and halting of dividend payments. Mr. Kallet explained that in early 2003 the effect of the Iraq War and the SARS virus on consumer spending began to hit Oneida“s sales. The lower sales, together with a stronger dollar overseas and increased imports from lower cost producers compounded the underutilization and negative manufacturing variances at Oneida“s factories and led to the decision to close five sites. Oneida attempted to counter the losses and declining volume with an injection of capital from a private investor but was unsuccessful in early 2004, adding to the pressures for further cost reductions that affected benefits. “These were unprecedented actions affecting thousands of jobs and thousands of team members of Oneida: hard working, dedicated professionals that had signed on to devote their careers to the success of Oneida,” Mr. Kallet remarked. “We know full well how our actions have affected our current and past employees. We understand how difficult it has been for our people here in Sherrill and Oneida and in our other locations.” Looking toward the coming year, Mr. Kallet said Oneida continues to work closely with its lenders and to explore potential new financing sources as it strives to restructure its existing indebtedness and provide ongoing liquidity. He said that “our lenders have been very supportive and cooperative throughout this difficult economy and we appreciate their help and support,” and added that Oneida is “pursuing all possible measures and considering all alternatives in order to reduce expenses and maximize sales to sustain us through this period.” Regarding the recent suspension and move to delist Oneida“s stock from the New York Stock Exchange, Mr. Kallet said the company hopes to reapply for the listing at some point in the future, but “this will require improvement in our financial results and market value.” In closing, Mr. Kallet remarked that while Oneida “clearly faces many challenges for 2004 and beyond,” it has “always been a resilient company and will continue to be.” Recent steps taken by the company reflect its longtime capacity to “adapt to changing conditions and draw upon existing strengths to overcome obstacles and continue moving forward,” he concluded. Shareholders also re-elected four members of the Board of Directors to new three-year terms: William F. Allyn, Chairman and Chief Executive Officer of Welch Allyn Ventures, LLC; Allan H. Conseur, Executive Vice President of Oneida Ltd.; Gregory M. Harden, President and Chief Executive Officer of Harden Furniture Co., Inc.; and Catherine H. Suttmeier, Corporate Vice President, Secretary and General Counsel of Oneida Ltd. Oneida Ltd. produces flatware, dinnerware, crystal, glassware and metal serveware for both the consumer and foodservice industries worldwide.