-- Second quarter sales declined slightly from the same period last year
due to continuing weakness at Hoover.
-- Rising material costs and unabsorbed factory burden impacted operating
income.
-- Charges for legal contingencies, restructuring, goodwill impairment and
a work stoppage at the Newton Laundry Products plant significantly
impacted the quarter.
-- As a result of the items noted above, Maytag reported 52 cents per
share net loss for the quarter.
-- Maytag International and Maytag Services growth trend continues.
-- Galesburg plant closing and recently announced 'One Company'
restructuring are on course for year-end completion and to achieve
expected results going forward.
NEWTON, Iowa, July 23 /PRNewswire-FirstCall/ -- Maytag (NYSE: MYG) today
reported second quarter consolidated sales of $1.15 billion, down 1 percent
from $1.16 billion in the same period of 2003.
(Logo: http://www.newscom.com/cgi-bin/prnh/20000505/MYGLOGO )
Lower Hoover floor care sales as well as higher material costs and lower
burden absorption negatively affected reported results compared with prior
year. Also impacting second quarter results were contingent liabilities
recorded for pending litigation, restructuring charges, and a goodwill
impairment charge. Reported net loss for the second quarter of 2004 was
$41.1 million, or 52 cents per share, as compared with net income of
$25.2 million or 32 cents per share in 2003.
Contingent liabilities for pending litigation recorded in the second
quarter include an increased reserve for early generation front-load washer
litigation and for an adverse judgment involving the termination of a
commercial distributorship for Amana products that occurred prior to Maytag's
acquisition of the Amana business.
The second quarter earnings (loss) per share for 2004 and 2003 included
the following items:
Three Months Ended
July 3 June 28
2004 2003
Diluted Earnings (Loss) Per Share $(0.52) $0.32
Included in diluted earnings (loss) per share
(net of tax) were the following charges:
Restructuring and related charges - Galesburg 0.13 0.10
Restructuring and related charges - reorganization 0.11 0.14
Goodwill impairment-Commercial Products 0.12 -
Front-load washer litigation 0.16 -
Adverse judgment on pre-acquisition distributor
lawsuit 0.09 -
Commenting on the second quarter, Maytag chairman and CEO Ralph Hake
stated, "Our operational performance was disappointing. The Housewares
segment loss had the largest impact because we anticipated a recovery at
Hoover floor care. Within our Major Appliances segment, Maytag Appliances
underperformed because of material costs, under-absorbed burden and the strike
at our Newton, Iowa, facility. However, several major risks have been
addressed, including the Newton work stoppage and costs related to early
generation front-load washer litigation. Our 'One Company' cost savings
plans, which will lower our cost structure dramatically, are on track."
Sales decreased in the Commercial Products segment, primarily due to a
decline in the vending industry. In addition, continued performance issues at
Jade resulted in a goodwill impairment charge.
Maytag Appliances' sales increased in the second quarter but less than
industry unit growth of 9.7 percent. "In the second quarter we gave back our
first quarter branded market share gains, and some OEM share. We expect sales
to improve in the last half of the year as we introduce new products, which
customers are anticipating," Hake commented.
Hake noted that the new contract ratified by union employees of Maytag's
Newton Laundry Products operations, which followed a three-week work stoppage,
provides an improved cost structure and a continuation of supply. The
financial impact of the work stoppage to the second quarter exceeded
$5 million in direct costs. A contract with union employees at Maytag's
Amana, Iowa, Refrigeration Products plant will expire in September. Maytag's
Galesburg, Illinois, Refrigeration Products plant is scheduled to cease
production in September, and the company's new Reynosa, Mexico, refrigeration
plant is operational.
"In refrigeration, there is strong demand for the new Jenn-Air French door
bottom-freezer model, and new Amana and Maytag French door bottom-freezer
models are being launched in the second half. In laundry, Neptune top-load
laundry is selling well; the Neptune Drying Center is seeing a sales lift with
our recent incentives, and we expect the new Maytag under-counter laundry
products, sourced from Samsung, to be well-received when they are launched
this fall. In cooking, new Jenn-Air and Maytag double oven ranges and other
refreshed models are planned to be in the marketplace in the third quarter,"
Hake said.
In addition to the new product launch schedule, Hake said other positive
trends include Maytag International's good performance as it expands its
customer base in key markets, and Maytag Services' continuing growth with its
all-brand service and parts programs.
In June, Maytag announced a comprehensive restructuring expected to yield
$150 million in annual cost savings. The restructuring, which will
consolidate the Hoover floor care business, Maytag Appliances' business and
corporate headquarters organizations, is expected to lower the company's cost
structure and increase marketplace competitiveness. The restructuring is on
track for completion by year-end.
Hoover continues to be challenged by loss of market share. "Our strategy
is to introduce innovative products and reduce cost structure. Hoover has
launched nine of the 15 new products expected this year. We should be better
positioned at the high end of the floor care pricing spectrum with new
products scheduled for early 2005," Hake said.
Six-Month Performance
Maytag's sales in the first six months of 2004 amounted to $2.37 billion,
up 3.1 percent from sales of $2.30 billion in the first six months of 2003.
Operating income was $30.2 million, down 74.8 percent from $119.6 million in
the year-earlier period.
Reported net loss for the first six months of 2004 was $2.4 million, or
3 cents per share. In the first six months of 2003, Maytag's reported net
income was $59.7 million, or 76 cents per share. The earnings (loss) per
share for the first six months of 2004 and 2003 included the following items:
Six Months Ended
July 3 June 28
2004 2003
Diluted Earnings (Loss) Per Share $(0.03) $0.76
Included in diluted earnings (loss) per share
(net of tax) were the following charges:
Restructuring and related charges - Galesburg 0.20 0.18
Restructuring and related charges - reorganization 0.11 0.14
Goodwill impairment-Commercial Products 0.12 -
Front-load washer litigation 0.16 -
Adverse judgment on pre-acquisition distributor
lawsuit 0.09 -
Loss from discontinued operations - 0.01
Full-Year Expectations
Free cash flow (cash flow from operations less capital expenditures) is
expected to be $125 to $150 million for the year. In addition, the company
made a $20 million contribution to the pension plan in the second quarter,
completing the $90 million in voluntary contributions planned for the year.
Commenting on earnings expectations for the full year 2004, Hake said that
additional increases in steel costs beginning in July and actions to reduce
inventory levels will negatively impact second half results.
These items will be partially offset by savings from the company's
restructuring activities and by lower pension and postretirement medical costs
associated with the Newton contract. The restructuring benefits will have
more impact in the fourth quarter than in the third.
As a result, the company now expects full-year reported earnings per share
in the range of 20 to 30 cents. The 2004 full-year guidance includes
restructuring charges of approximately 80 cents per share.
Maytag Corporation is a leading producer of home and commercial
appliances. Its products are sold to customers throughout North America and
in international markets. The corporation's principal brands include
Maytag(R), Hoover(R), Jenn-Air(R), Amana(R), Dixie-Narco(R) and Jade(R).
Quarterly Conference Call
The corporation has scheduled a conference call today to discuss its
performance with members of the financial community. During the call,
Maytag's CEO Ralph F. Hake and CFO George Moore will comment on various
aspects of the results and answer questions.
The conference call will be at 8:30 a.m. CT on Friday, July 23. Persons
wishing to participate in the call should telephone 888-722-1090 at 8:20 a.m.
CT (international participants should dial 303-957-1251.) Connections will be
made as quickly as possible, but a wait of 10 minutes is not uncommon. For
those who are unable to participate in the 8:30 a.m. call, the conference call
will be recorded and available by telephone from 10:30 a.m. CT July 23 until
10:30 a.m. CT July 26. Persons interested in listening to the conference call
tape should call 800-633-8284 (or internationally 402-977-9140) and use access
code number 21200683.
Additionally, Maytag's conference call will be distributed live over
CCBN's Investor Distribution Network to both institutional and individual
investors. Individual investors can listen to the call through CCBN's
individual investor center at http://www.fulldisclosure.com or by visiting any
of the investor sites in CCBN's Individual Investor Network. Institutional
investors can access the call via CCBN's password-protected event management
site, StreetEvents ( http://www.streetevents.com ). The audio webcast can
also be accessed through Maytag's Web site, http://www.maytagcorp.com , by
clicking on the "Corporate News Center" and then "Conference Calls." To listen
to the live call, persons should go to the Web site at least 15 minutes prior
to the start of the call to register, download and install any necessary
computer audio software. For persons unable to listen to the live Internet
broadcast, replays will be available on both the Maytag and CCBN Web sites.
Forward-Looking Statements: Certain statements in this news release,
including any discussion of management expectations for future periods,
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may
cause actual results to differ materially from the future results expressed or
implied by those statements. For a description of such factors, refer to
"Forward-Looking Statements" in the Management's Discussion and Analysis
section of Maytag's Annual Report on Form 10-K for the year ended January 3,
2004, and each quarter's 10-Q.
SECOND QUARTER SALES AND EARNINGS COMPARISON (UNAUDITED)
NET SALES (in thousands)
2004 2003 % Change
Major Appliances $906,165 $885,138 2.4
Housewares 143,964 166,511 (13.5)
Commercial Products 102,100 111,244 (8.2)
Consolidated $1,152,229 $1,162,893 (0.9)
OPERATING INCOME (LOSS) (in thousands)
2004 2003 % Change
Major Appliances $(4,593) $54,495 (108.4)
Housewares (13,499) (1,266) (966.3)
Commercial Products (5,947) 12,062 (149.3)
General Corporate & Other (9,399) (13,883) 32.3
Reported $(33,438) $51,408 (165.0)
Included in operating income (loss)
Restructuring and related charges-
Major Appliances $23,482 $17,141
Front-load washer litigation-
Major Appliances 18,500 -
Restructuring and related charges-
Housewares 3,423 9,516
Restructuring and related charges-
Commercial Products 69 132
Goodwill impairment-Commercial
Products 9,600 -
Restructuring and related charges-
General Corporate & Other 878 1,139
NET INCOME (LOSS) (in thousands)
2004 2003 % Change
Reported $(41,084) $25,234 (262.8)
Included in net income (loss) (net
of tax)
Restructuring and related charges $18,879 $18,806
Goodwill impairment-Commercial
Products 9,600 -
Front-load washer litigation 12,488 -
Adverse judgment on pre-acquisition
distributor lawsuit 7,091 -
Loss from discontinued operations - 286
BASIC EARNINGS (LOSS) PER SHARE
2004 2003 % Change
Reported $(0.52) $0.32 (261.8)
Included in basic earnings (loss)
per share (net of tax)
Restructuring and related
charges $0.24 $0.24
Goodwill impairment-Commercial
Products 0.12 -
Front-load washer litigation 0.16 -
Adverse judgment on pre-
acquisition distributor lawsuit 0.09 -
Basic weighted-average shares
outstanding (thousands) 79,012 78,467
DILUTED EARNINGS (LOSS) PER SHARE
2004 2003 % Change
Reported $(0.52) $0.32 (262.1)
Included in diluted earnings (loss)
per share (net of tax)
Restructuring and related charges $0.24 $0.24
Goodwill impairment-Commercial
Products 0.12 -
Front-load washer litigation 0.16 -
Adverse judgment on pre-acquisition
distributor lawsuit 0.09 -
Diluted weighted-average shares
outstanding (thousands) 79,012 78,622
FIRST HALF SALES AND EARNINGS COMPARISON (UNAUDITED)
NET SALES (in thousands)
2004 2003 % Change
Major Appliances $1,853,438 $1,716,006 8.0
Housewares 322,744 380,481 (15.2)
Commercial Products 194,991 202,412 (3.7)
Consolidated $2,371,173 $2,298,899 3.1
OPERATING INCOME (LOSS) (in thousands)
2004 2003 % Change
Major Appliances $50,386 $99,631 (49.4)
Housewares 5,496 28,302 (80.6)
Commercial Products (2,044) 17,312 (111.8)
General Corporate & Other (23,644) (25,647) 7.8
Reported $30,194 $119,598 (74.8)
Included in operating income (loss)
Restructuring and related charges-
Major Appliances $31,477 $26,528
Front-load washer litigation-
Major Appliances 18,500 -
Restructuring and related charges-
Housewares 3,423 9,516
Restructuring and related charges-
Commercial Products 69 132
Goodwill impairment-Commercial
Products 9,600 -
Restructuring and related charges-
General Corporate & Other 878 1,139
NET INCOME (LOSS) (in thousands)
2004 2003 % Change
Reported $(2,360) $59,714 (104.0)
Included in net income (loss) (net of
tax)
Restructuring and related charges $24,196 $25,001
Goodwill impairment-Commercial
Products 9,600 -
Front-load washer litigation 12,488 -
Adverse judgment on pre-acquisition
distributor lawsuit 7,091 -
Loss from discontinued operations - 404
BASIC EARNINGS (LOSS) PER SHARE
2004 2003 % Change
Reported $(0.03) $0.76 (103.9)
Included in basic earnings (loss)
per share (net of tax)
Restructuring and related charges $0.31 $0.32
Goodwill impairment-Commercial
Products 0.12 -
Front-load washer litigation 0.16 -
Adverse judgment on pre-acquisition
distributor lawsuit 0.09 -
Loss from discontinued operations - 0.01
Basic weighted-average shares
outstanding (thousands) 78,929 78,416
DILUTED EARNINGS (LOSS) PER SHARE
2004 2003 % Change
Reported $(0.03) $0.76 (104.2)
Included in diluted earnings (loss)
per share (net of tax)
Restructuring and related charges $0.31 $0.32
Goodwill impairment-Commercial
Products 0.12 -
Front-load washer litigation 0.16 -
Adverse judgment on pre-acquisition
distributor lawsuit 0.09 -
Loss from discontinued operations - 0.01
Diluted weighted-average shares
outstanding (thousands) 78,929 78,597
MAYTAG CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (unaudited)
(In thousands, except per share data)
Second Quarter Ended Six Months Ended
July 3 June 28 July 3 June 28
2004 2003 2004 2003
Net sales $1,152,229 $1,162,893 $2,371,173 $2,298,899
Cost of sales 1,003,726 948,880 2,011,549 1,884,766
Gross profit 148,503 214,013 359,624 414,133
Selling, general and
administrative expenses 125,989 134,677 265,483 257,220
Restructuring and related
charges 27,852 27,928 35,847 37,315
Goodwill impairment-
Commercial Products 9,600 - 9,600 -
Front-load washer litigation 18,500 - 18,500 -
Operating income (loss) (33,438) 51,408 30,194 119,598
Interest expense (13,215) (14,279) (26,106) (28,058)
Adverse judgment on pre-
acquisition distributor
lawsuit (10,505) - (10,505) -
Other income (loss) 55 177 2,921 (1,813)
Income (loss) from
continuing operations
before income taxes (57,103) 37,306 (3,496) 89,727
Income taxes (16,019) 11,786 (1,136) 29,609
Income (loss) from
continuing operations (41,084) 25,520 (2,360) 60,118
Loss from discontinued
operations, net of tax - (286) - (404)
Net income (loss) $(41,084) $25,234 $(2,360) $59,714
Basic earnings (loss) per
common share:
Income (loss) from
continuing operations $(0.52) $0.33 $(0.03) $0.77
Discontinued operations - - - (0.01)
Net income (loss) $(0.52) $0.32 $(0.03) $0.76
Basic weighted-average shares
outstanding 79,012 78,467 78,929 78,416
Diluted earnings (loss) per
common share:
Income (loss) from
continuing operations $(0.52) $0.32 $(0.03) $0.76
Discontinued operations - - - (0.01)
Net income (loss) $(0.52) $0.32 $(0.03) $0.76
Diluted weighted-average
shares outstanding 79,012 78,622 78,929 78,597
Earnings per share totals may not be additive due to rounding
MAYTAG CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 3 January 3 June 28
2004 2004 2003
(Unaudited) (Unaudited)
ASSETS
Current assets
Cash and cash equivalents $7,492 $6,756 $5,581
Accounts receivable - net 636,929 596,832 665,123
Inventories 591,588 468,345 521,977
Deferred income taxes 61,335 63,185 69,307
Other current assets 89,329 94,030 48,819
Discontinued current assets 69,941 75,175 76,177
Total current assets 1,456,614 1,304,323 1,386,984
Noncurrent assets 574,949 612,546 629,413
Discontinued noncurrent assets 61,069 60,336 61,907
Total noncurrent assets 636,018 672,882 691,320
Property, plant and equipment 991,443 1,046,935 1,056,845
Total assets $3,084,075 $3,024,140 $3,135,149
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities
Accounts payable $423,950 $466,734 $355,929
Accrued liabilities 334,507 315,323 335,800
Notes payable and current portion of
long-term debt 223,982 95,994 209,785
Discontinued current liabilities 100,962 105,739 101,939
Total current liabilities 1,083,401 983,790 1,003,453
Long-term debt, less current portion 870,546 874,832 908,957
Postretirement benefit liability 541,380 538,105 530,545
Accrued pension cost 337,407 398,495 458,765
Other noncurrent liabilities 188,888 144,341 122,531
Total discontinued noncurrent
liabilities 18,766 18,766 21,817
Shareowners' equity 43,687 65,811 89,081
Total liabilities and
shareowners' equity $3,084,075 $3,024,140 $3,135,149
MAYTAG CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
Six Months Ended
July 3 June 28
2004 2003
Operating activities
Net income (loss) $(2,360) $59,714
Net loss from discontinued operations - 404
Depreciation and amortization 84,066 81,006
Deferred income taxes 21,903 22,103
Restructuring and related charges, net of cash 29,032 29,801
Goodwill impairment-Commercial Products 9,600 -
Front-load washer litigation 18,500 -
Adverse judgment on pre-acquisition
distributor lawsuit 10,505 -
Change in working capital (207,738) (127,956)
Pension expense 31,866 33,300
Pension contributions (92,744) (66,757)
Postretirement benefit liability 3,275 13,035
Other 45,133 60,801
Net cash (used in) provided by continuing
operating activities (48,962) 105,451
Investing activities
Capital expenditures-continuing operations (48,872) (85,626)
Financing activities
Net proceeds in financing obligations 125,464 7,239
Dividends (28,395) (28,213)
Stock repurchase - (1,021)
Other 1,699 (441)
Financing activities-continuing operations 98,768 (22,436)
Effect of exchange rates (198) 86
Increase (decrease) in cash and cash
equivalents 736 (2,525)
Cash and cash equivalents at beginning of
period 6,756 8,106
Cash and cash equivalents at end of period $7,492 $5,581
Media Contact: Lynne Dragomier
Maytag Corporate Communications
(641) 787-7711
ldragomier@maytag.com
SOURCE Maytag Corporation
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CONTACT:
Lynne Dragomier of Maytag Corporate
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