UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended September 30, 1994
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____________________ to_____________________
Commission File Number: 1-655
Maytag Corporation
(Exact name of registrant as specified in its charter)
Delaware 42-0401785
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
403 West 4th Street North, Newton, Iowa 50208
(Address of principal executive offices) (Zip Code)
515-792-8000
(Registrant's telephone number, including area code)
___________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes x
No___
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of September 30, 1994:
Common Stock, $1.25 Par Value - 107,314,146
Page 1 of 12
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FORM 10-Q
MAYTAG CORPORATION
Quarter Ended September 30, 1994
I N D E X
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Statements of Consolidated Income 3
Condensed Statements of Consolidated Financial Condition 4
Condensed Statements of Consolidated Cash Flows 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
Computation of Per Share Earnings 11
Computation of Ratio of Earnings to Fixed Charges 12
2
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Part I FINANCIAL INFORMATION
Item 1. Financial Statements
MAYTAG CORPORATION
Condensed Statements of Consolidated Income
(Unaudited)
(Thousands of dollars except per share data)
Third Quarter Ended Nine Months Ended
September 30 September 30
1994 1993 1994 1993
Net sales $848,930 $770,222 $2,509,880 $2,240,331
Cost of sales 618,360 581,721 1,845,204 1,695,285
Gross profit 230,570 188,501 664,676 545,046
Selling, general and administrative
expenses 144,307 130,688 417,621 433,683
Operating income 86,263 57,813 247,055 111,363
Interest expense (18,355) (19,072) (55,830) (56,904)
Other - net 2,833 1,682 3,895 4,842
Income before income taxes and
cumulative effect of accounting 70,741 40,423 195,120 59,301
change
Income taxes 9,711 17,383 61,950 25,500
Income before cumulative
effect of accounting change 61,030 23,040 133,170 33,801
Cumulative effect of accounting
change (3,190) _________
Net income $ 61,030 $ 23,040 $ 129,980 $ 33,801
Income per average share of Common
stock:
Income before cumulative effect
of accounting change $ .57 $ .22 $ 1.25 $ .32
Cumulative effect of accounting
change . . (.03) .
Net income per Common share $ .57 $ .22 $ 1.22 $ 0.32
Dividends per Common share $ .125 $ .125 $ .375 $ .375
Average shares outstanding 106,878 106,286 106,772 106,201
See notes to condensed consolidated financial statements.
3
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MAYTAG CORPORATION
Condensed Statements of Consolidated Financial Condition
September 30 December 31
1994 1993
(Unaudited)
(Thousands of dollars)
ASSETS
Current Assets
Cash and cash equivalents $ 13,814 $ 31,730
Accounts receivable 652,963 532,353
Inventories:
Finished products 291,673 282,841
Work in process, raw materials and supplies 145,101 146,313
436,774 429,154
Deferred income taxes 44,444 46,695
Other current assets 18,262 16,919
Total current assets 1,166,257 1,056,851
Noncurrent Assets
Deferred income taxes 77,291 68,559
Pension investments 162,733 168,103
Intangibles 312,671 319,657
Other noncurrent assets 59,328 35,266
612,023 591,585
Property, Plant and Equipment 1,508,641 1,447,691
Less allowance for depreciation 707,993 626,629
Total property, plant and equipment 800,648 821,062
Total Assets $2,578,928 $2,469,498
See notes to condensed consolidated financial statements.
4
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MAYTAG CORPORATION
Condensed Statements of Consolidated Financial Condition - Continued
September 30 December 31
1994 1993
(Unaudited)
(Thousands of dollars)
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities
Notes payable $ 125,713 $ 157,571
Accounts payable 218,522 195,981
Compensation to employees 64,771 84,405
Accrued liabilities 170,906 178,015
Income taxes payable 0 16,193
Current maturities of long-term debt 58,864 18,505
638,776 650,670
Total current liabilities
Noncurrent liabilities
Deferred income taxes 49,735 44,882
Long-term debt 680,166 724,695
Postretirement benefits other than
pensions 407,680 391,635
Other noncurrent liabilities 96,249 70,835
1,233,830 1,232,047
Total noncurrent liabilities
Shareowners' Equity
Common stock
Authorized - 200,000,000 shares (par
value $1.25)
Issued - 117,150,593 shares,
including shares in treasury 146,438 146,438
Additional paid-in capital 477,199 480,067
Retained earnings 415,625 325,823
Cost of Common stock in treasury (1994-
9,836,447 shares; 1993- 10,430,833
shares) (219,242) (232,510)
Employee stock plans (61,512) (62,342)
Foreign currency translation (52,186) (70,695)
Total shareowners' equity 706,322 586,781
Total Liabilities and Shareowners'
Equity $2,578,928 $2,469,498
See notes to condensed consolidated financial statements.
5
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MAYTAG CORPORATION
Condensed Statements of Consolidated Cash Flows
(Unaudited)
Nine Months Ended
September 30
1994 1993
(Thousands of Dollars)
Operating Activities
Net income $ 129,980 $ 33,801
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Depreciation and amortization 88,614 82,402
Deferred income taxes (1,265) (32,290)
Free flights promotion expenses 700 52,420
Changes in selected working capital items:
Inventories (1,639) (33,058)
Receivables and other current assets (114,661) (91,650)
Free flights reserve (26,322) (15,478)
Reorganization reserve (23,489) (26,921)
Other current liabilities 24,665 6,538
Net change in pension investments 10,652 (2,012)
Change in postretirement medical liability 16,045 9,204
Other - net (4,632) 5,221
Net cash provided by (used in) operating 98,648 (11,823)
activities
Investing Activities
Capital expenditures - net (50,753) (66,214)
Net cash used in investing activities (50,753) (66,214)
Financing Activities
Proceeds from long-term debt 5,500
Decrease in long-term debt (4,480) (54,784)
Increase (decrease) in notes payable (39,001) 152,059
Stock options exercised and other stock
transactions 10,941 1,808
Dividends (40,178) (40,169)
Net cash provided by (used in) financing (72,718) 64,414
activities
Effect of exchange rates on cash 6,907 (2,890)
Decrease in cash and cash equivalents (17,916) (16,513)
Cash and cash equivalents at beginning of year 31,730 57,032
Cash and cash equivalents at end of period $ 13,814 $ 40,519
See notes to condensed consolidated financial statements.
6
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MAYTAG CORPORATION
Notes to Condensed Consolidated Financial Statements
September 30, 1994
(Unaudited)
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included. Operating results for the nine month
period ended September 30, 1994 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1994. For
further information, refer to the consolidated financial statements and
footnotes included in the Maytag Corporation annual report on Form 10-K
for the year ended December 31, 1993.
Commencing with the first quarter of 1994, the Company changed its method
of allocating certain components of income and expense to its industry
segments and in compiling its geographic information. The Company is now
allocating to its business units certain income and expenses that
previously were allocated to "Corporate". Certain industry segment and
geographic information for the third quarter and first nine months of 1993
identified below has been restated to reflect this change. The effect of
this change is not material.
Currently, certain subsidiaries located outside the United States are
consolidated as of a date one month earlier than subsidiaries in the
United States. Effective December 31, 1994, this one month difference
will be eliminated for the subsidiaries located in Europe. The effect of
this change is not expected to be material to either the Company's
consolidated or European earnings, but it will increase the sales in the
fourth quarter and full year of 1994 as compared to the fourth quarter and
full year of 1993.
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
COMPARISON OF 1994 WITH 1993
Net sales in the third quarter of 1994 increased over the third quarter of
1993 primarily as a result of the increase in sales of the North American
Appliance Group, as well as higher sales by Dixie-Narco, the Company's
vending equipment operation. The North American Appliance Group had sales
of $678.3 million, up 11.0 percent from sales of $611.2 million in the
third quarter of 1993. The increase in sales of this group is primarily
due to industry growth, volume increases from market share gains in
virtually all product categories and the introduction of new products.
Year-over-year growth in sales of this group is expected for the remainder
of the year, but at a lower level than was experienced in the first three
quarters. Dixie-Narco's sales in the third quarter were up 20.4 percent,
from $39.8 million in 1993 to $48 million in 1994 due to increased demand
7
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for its core soft drink vending machines and the sales of its new glass
door merchandiser. Sales by the Hoover European Appliance Group ("Hoover
Europe") were $82.9 million in the third quarter of 1994, compared to
$85.4 million in the third quarter of 1993.
The increase in net sales for the first nine months of 1994 is primarily
due to the increase in year-to-date net sales in the North American
Appliance Group of 15.7 percent to $1,995.7 million, partially offset by
the decrease in net sales of Hoover Europe of 10.5 percent to $259.3
million in 1994 from $289.8 million in the same period in 1993. Dixie-
Narco's sales also contributed to the year-over-year sales improvement by
increasing 19.3 percent to $149.3 million in the nine month period.
The improvement in gross margin in both the third quarter and nine months
is primarily the result of improved volume-related production
efficiencies, reduced material costs from a coordinated purchasing
program, favorable product mix, and new products in the North American
Appliance Group. In addition, margins in Hoover Europe improved due to
lower operating costs from completion of the floorcare plant
consolidation, lower levels of employment and reduced material costs.
Third quarter and first nine months selling, general and administrative
expenses (SG&A) increased over 1993 (excluding the special charge
described below) primarily to support the higher sales volumes. In the
first quarter of 1993, the Company recognized a one-time $50 million
pretax charge ($30 million aftertax or $0.28 per share) for two Hoover
Europe free flights promotion programs ("free flights promotion").
Excluding the free flights promotion, SG&A expenses were $383.7 million or
17.1 percent of sales for the first nine months of 1993.
The improvement in consolidated operating income in the third quarter of
1994 over the same period in the prior year was primarily due to the North
American Appliance Group, which increased to $86.8 million, up 32.6
percent from $65.5 million a year ago. The operating loss for Hoover
Europe was $0.9 million in the third quarter of 1994 compared to a loss of
$8 million during the comparable period in 1993. Cost containment
programs have contributed to the improvement year-over-year. Dixie-Narco
had third quarter operating income of $5.5 million compared to $4.5
million a year ago. Excluding the charge for the free flights promotion,
consolidated 1993 nine month operating income would have been $161.4
million, or 7.2 percent of sales.
In the third quarter of 1994, the Company recorded a tax benefit in the
United States associated with the funding of operating losses and
reorganization costs in Europe over the past several years. This benefit
reduced the Company's tax expense in the third quarter by $20 million or
$0.19 per share. Excluding the effects of this transaction, the effective
tax rate was 42% in the nine months ending September 30, 1994, compared to
43% in the comparable period in 1993.
The $.03 per share charge to record the cumulative effect of an accounting
change in the first nine months of 1994 reflects the mandatory adoption of
an accounting pronouncement, Statement of Financial Accounting Standards
No. 112 "Employers' Accounting for Postemployment Benefits," which the
Company adopted effective January 1, 1994.
8
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LIQUIDITY AND CAPITAL RESOURCES
The increase in accounts receivable since December 31, 1993 is primarily
due to higher sales volumes and an increase in days outstanding in the
North American Appliance Group. Other noncurrent assets increased from
December 31, 1993 primarily due to the recording of receivables for
certain income tax carrybacks and an increase in long-term financing notes
to appliance and vending equipment customers.
The liability for compensation to employees decreased since year-end due
to payments made in the first nine months in connection with the European
reorganization announced in 1992. Other noncurrent liabilities increased
from year-end principally due to ongoing charges for pensions and ongoing
postretirement medical expenses.
The increase in net cash provided by operations in the first nine months
of 1994 compared to 1993 was a result of increased earnings which included
higher non-cash charges relating to depreciation, amortization,
postretirement medical and pensions. The decrease in net deferred income
tax assets results primarily from the first nine months of 1993 reflecting
the deferred tax benefit for the free flights promotion and certain
reclassifications made in both periods. Offsetting this improvement was a
use of cash for increases in inventory and receivables, and payments for
the free flights promotion and the Company's North American and European
reorganizations. Current liabilities increased mainly to support the
additional inventory and due to a change in the timing of health care
payments.
The lower capital expenditures for the first nine months of 1994 compared
to 1993 resulted from more projects being in a developmental stage in
1994, compared to projects in an implementation stage in 1993. Full year
capital expenditures for 1994 are expected to be less than depreciation.
However, compliance with current and anticipated laws and regulations
governing product performance related to the protection of the environment
and various cost improvement projects are expected to significantly
increase capital expenditures over the next five years. Although the
amounts are not known at this time, the total annual capital spending is
expected to exceed depreciation in these years.
In the fourth quarter, a customer of the North American Appliance Group
filed for protection from creditors under the bankruptcy code. A portion
of the amount owed to the Company may not be collectible, however the loss
is not expected to be material.
9
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MAYTAG CORPORATION
Exhibits and Reports on Form 8-K
September 30, 1994
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(11) Computation of Per Share Earnings
(12) Computation of Ratio of Earnings to Fixed Charges
(b) Reports on Form 8-K
Under Item 5, the Company filed a Current Report on Form 8-K dated
September 30, 1994 announcing that it would not proceed with a planned
initial public stock offering of its Hoover operations in Australia and New
Zealand, as was previously announced on May 23, 1994.
MAYTAG CORPORATION
Signatures
September 30, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAYTAG CORPORATION
Date November 11, 1994 By M. A. Garth
M. A. Garth
Vice President and Controller
10
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MAYTAG CORPORATION
Exhibit 11
Computation of Per Share Earnings
(Amounts in thousands except per share data)
Third Quarter Nine Months
Ended September 30 Ended September 30
1994 1993 1994 1993
PRIMARY
Average shares outstanding 106,522 106,143 106,385 106,108
Net effect of dilutive stock
options--based on the treasury
stock method using average
market price 283 130 300 80
Employee stock ownership plans 73 13 87 13
TOTAL 106,878 106,286 106,772 106,201
Income before cumulative
effect of accounting changes $ 61,030 $ 23,040 $ 133,170 $ 33,801
Cumulative effect of accounting
changes (3,190)
Net income $ 61,030 $ 23,040$ 129,980 $ 33,801
Per share amounts:
Income before cumulative
effect of accounting changes $ .57 $ .22 $ 1.25 $ .32
Cumulative effect of accounting
changes . . (.03) .
Net income $ 0.57 $ 0.22 $ 1.22 $ 0.32
FULLY DILUTED
Average shares outstanding 106,522 106,143 106,385 106,108
Net effect of dilutive stock
options--based on the treasury
stock method using average
market price 283 130 328 80
Employee stock ownership plans 73 13 87 12
Assumed conversion of 6.5%
convertible debentures 273 411 273 411
TOTAL 107,151 106,697 107,073 106,611
Income before cumulative
effect of accounting changes $ 61,030 $ 23,040 $ 133,170 $ 33,801
Add 6.5% convertible debenture
interest net of income tax effect 20 58 138 174
effect
Cumulative effect of accounting
changes (3,190)
Net income $ 61,050 $ 23,098 $ 130,118 $ 33,975
Per share amounts:
Income before cumulative
effect of accounting changes $ .57 $ .22 $ 1.25 $ .32
Cumulative effect of accounting
changes . . (.03) .
Net income $ 0.57 $ 0.22 $ 1.22 $ 0.32
11
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MAYTAG CORPORATION
Exhibit 12
Computation of Ratio of Earnings to Fixed Charges
(Amounts in thousands of dollars except ratios)
Nine
Months
Ended Year Ended December 31
9-30-94 1993 1992 1991 1990 1989
Consolidated pre-tax
income from
continuing operations
before cumulative
effect of accounting
changes $195,120 $ 89,870 $ 7,546 $123,417 $159,405 $206,972
Interest expense 55,830 75,364 75,004 75,159 81,966 83,398
Depreciation of
capitalized interest 1,267 1,546 933 348 57
Interest portion of
rental expense 7,622 10,480 11,264 11,177 9,183 7,107
Earnings $259,839 $177,260 $ 94,747 $210,101 $250,611 $297,477
Interest expense $ 55,830 $ 75,364 $ 75,004 $ 75,159 $ 81,966 $ 83,398
Interest capitalized 421 1,484 3,886 6,329 5,348
Interest portion of
rental expense 7,622 10,480 11,264 11,177 9,183 7,107
Fixed Charges $ 63,873 $ 87,328 $ 90,154 $ 92,665 $ 96,497 $ 90,505
Ratio of earnings
to fixed charges 4.07 2.03 1.05 2.27 2.60 3.29
12
<PAGE>
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<OTHER-SE> 559884
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