Oneida: improved income for 2Q 2005

Oneida Ltd., a provider of flatware, dinnerware, crystal and metal serveware for consumer and food service industries, announced 7 September 2005 operating and financial results for the 2Q and 1H ende…

Oneida Ltd., a provider of flatware, dinnerware, crystal and metal serveware for consumer and food service industries, announced 7 September 2005 operating and financial results for the 2Q and 1H ended 30 July 2005. Operating income for the 2Q was USD 1.2 million, compared to an operating loss of USD 44.2 million during the corresponding period of 2004. The prior year operating loss included impairment losses on depreciable and other assets of USD 36.7 million, and a USD 4.8 million gain on the sale of fixed assets. The operating income improvement also reflects the favorable impact of the company“s comprehensive restructuring program. Oneida says its restructuring efforts are focused on returning to profitability by reducing the company“s cost structure and moving from fixed-cost manufacturing to variable-cost sourcing throughout its product line portfolio. Revenues for the 2Q 2005 were USD 79.3 million, compared to USD 101.3 million in the 2Q 2004. The decline in revenues is partly attributed to the August 2004 sale of Encore Promotions, Inc.; the closure of 22 unprofitable Oneida Home Stores during the previous twelve months; the company“s decision to discontinue certain marginally profitable product lines, including the distribution of common glassware products; and the impact of several large customers opting to dual source a portion of their tabletop product requirements. Gross margins improved from USD 21.1 million (20.8% of revenues) during the quarter ended 31 July 2004, to USD 27.9 million (35.2% of revenues) during the quarter ended 30 July 2005. The improvement was achieved as a result of the 22 March 2005 sale of the Sherrill, New York manufacturing facility; complete outsourcing of the company“s manufacturing operations; product line rationalization; reduction of LIFO valued inventory levels; and a reduction of excess and obsolete inventory write-downs. Operating income was also favorably impacted by the closure of unprofitable Oneida Home Stores; cuts in personnel, employee benefits, general and administrative expenses, and logistics costs. The net loss for the 2Q ended 30 July 2005 was USD 6.8 million, equal to USD 0.15 per share, compared to a year-ago net loss of USD 48.3 million, or USD 2.88 per share. For the 1H of the fiscal year ending January 2006, Oneida“s operating income was USD 6.7 million, on revenues of USD 169.5 million, compared to an operating loss of USD 46.1 million on revenues of USD 212.6 million during the 1H of the prior fiscal year. Net loss was USD 10.1 million for the six month period ended 30 July 2005, versus net income of USD 6.1 million during the corresponding period in 2004. The prior year“s net income included non-recurring income items, totaling USD 60.7 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 the company“s defined benefit pension plans. Net cash flow provided by operating activities was USD 4.2 million during the six month period ended 30 July 2005, versus net cash used by operating activities of USD (28.7) million during the corresponding period last year. Liquidity under the company“s US revolving credit agreement and available cash balances was USD 24.0 million at 30 July 2005, increased from USD 22.2 million and USD 12.2 million at 29 January 2005 and 30 October 2004, respectively. Since the 1Q ended 30 April 2005, Oneida has appointed Foster Sullivan as Senior Vice President and General Manager of Oneida“s Foodservice division, and David Sank as Senior Vice President of Marketing, responsible for establishing Oneida“s global marketing vision, and developing strategic marketing plans for the company“s Foodservice, Consumer and International divisions. In the same period, the company says it has substantially completed the closure of its foodservice distribution facility located in Buffalo, New York, and consolidated its east coast distribution operations into Oneida, New York, which is expected to generate additional supply chain savings and service level improvements. “Oneida has successfully established an international network of world-class suppliers and a streamlined distribution system for bringing our products to market,” said Terry Westbrook, President and Chief Executive Officer. “With these important milestones behind us, we are focused on delivering innovative new products and packaging concepts to the marketplace to drive growth in the Company“s consumer and food service franchises,” he said.