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 March 31, 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
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Maytag Corporation
- - --------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 42-0401785
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(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
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(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 March 31, 1994:
Common Stock, $1.25 Par Value - 106,997,434
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Page 1 of 13
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FORM 10-Q
MAYTAG CORPORATION
Quarter Ended March 31, 1994
I N D E X
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Page
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Statements of Consolidated Income(Loss) 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 4. Submission of Matters to a Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 10
Computation of Per Share Earnings 12
Computation of Ratio of Earnings to Fixed Charges 13
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Part I FINANCIAL INFORMATION
Item 1. Financial Statements
MAYTAG CORPORATION
Condensed Statements of Consolidated Income (Loss)
(Unaudited)
Three Months Ended
March 31
1994 1993
---- ----
Net sales $ 790,565 $ 716,853
Cost of sales 586,075 544,120
------- -------
Gross profit 204,490 172,733
Selling, general and administrative expenses 134,464 174,177
------- -------
Operating income(loss) 70,026 (1,444)
Interest expense (18,400) (18,735)
Other - net 1,820 2,603
------- -------
Income(loss) before income taxes and cumulative
effect of accounting change 53,446 (17,576)
Income taxes 22,447 (7,030)
------- -------
Income(loss) before cumulative effect of accounting
change 30,999 (10,546)
Cumulative effect of accounting change (3,190) ________
------- --------
Net income(loss) $ 27,809 $ (10,546)
======= =======
Income(loss) per average share of Common stock:
Income(loss) before cumulative effect of
accounting change
$ .29 $ (.10)
Cumulative effect of accounting change (.03) .
------- -------
Net income(loss) per Common share $ .26 $ (.10)
======= =======
Dividends per Common share $ .125 $ .125
Average shares outstanding 106,642 106,103
See notes to condensed consolidated financial statements.
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MAYTAG CORPORATION
Condensed Statements of Consolidated Financial Condition
March 31 December 31
1994 1993
----------------------
(Unaudited)
(Thousands of dollars)
ASSETS
Current Assets
Cash and cash equivalents $ 22,731 $ 31,730
Accounts receivable 597,088 532,353
Inventories:
Finished products 320,951 282,841
Work in process, raw materials and supplies 148,138 146,313
------- -------
469,089 429,154
------- -------
Deferred income taxes 46,735 46,695
Other current assets 13,255 16,919
------- -------
Total current assets 1,148,898 1,056,851
Noncurrent Assets
Deferred income taxes 69,201 68,559
Pension investments 165,587 168,103
Intangibles 317,330 319,657
Other noncurrent assets 54,551 35,266
------- -------
606,669 591,585
Property, Plant and Equipment 1,460,010 1,447,691
Less allowance for depreciation 648,381 626,629
--------- ---------
Total property, plant and equipment 811,629 821,062
--------- ---------
Total Assets $2,567,196 $2,469,498
========= =========
See notes to condensed consolidated financial statements.
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MAYTAG CORPORATION
Condensed Statements of Consolidated Financial Condition - Continued
March 31 December 31
1994 1993
-------------------------
(Unaudited)
(Thousands of dollars)
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities
Notes payable $ 202,716 $ 157,571
Accounts payable 204,865 195,981
Compensation to employees 70,699 84,405
Accrued liabilities 170,779 178,015
Income taxes payable 28,000 16,193
Current maturities of long-term debt 58,748 18,505
------- -------
735,807 650,670
Total current liabilities
Noncurrent liabilities
Deferred income taxes 54,890 44,882
Long-term debt 683,421 724,695
Postretirement benefits other than
pensions 397,484 391,635
Other noncurrent liabilities 85,981 70,835
--------- ---------
Total noncurrent liabilities 1,221,776 1,232,047
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 476,478 480,067
Retained earnings 340,259 325,823
Cost of Common stock in treasury (1994-
10,153,159 shares; 1993- 10,430,833
shares) (226,312) (232,510)
Employee stock plans (64,361) (62,342)
Foreign currency translation (62,889) (70,695)
-------- --------
Total shareowners' equity 609,613 586,781
-------- --------
Total Liabilities and Shareowners'
Equity $2,567,196 $2,469,498
========= =========
See notes to condensed consolidated financial statements.
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MAYTAG CORPORATION
Condensed Statements of Consolidated Cash Flows
(Unaudited)
Three Months Ended
March 31
1994 1993
---- ----
(Thousands of Dollars)
Operating Activities
Net income(loss) $ 27,809 $ (10,546)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 29,624 26,400
Deferred income taxes 9,662 (33,315)
"Free flights" promotion expenses 700 48,780
Changes in selected working capital items:
Inventories (37,408) (33,881)
Receivables and other current assets (58,802) (33,753)
"Free flights" reserve (19,865) (846)
Reorganization reserve (12,220) (10,747)
Other current liabilities 32,210 4,341
Net change in pension investments 3,966 427
Other - net (3,165) 3,329
------- -------
Net cash used in operating activities (27,489) (39,811)
Investing Activities
Capital expenditures - net (12,988) (18,185)
------- -------
Net cash used in investing activities (12,988) (18,185)
Financing Activities
Proceeds from long-term borrowings 0 5,500
Decrease in long-term debt (1,072) (51,495)
Increase in notes payable 43,789 94,554
Stock options exercised and other stock
transactions 576 (524)
Dividends (13,373) (13,381)
------- -------
Net cash provided by financing activities 29,920 34,654
Effect of exchange rates on cash 1,558 (1,182)
------- -------
Decrease in cash and cash equivalents (8,999) (24,524)
Cash and cash equivalents at beginning of year 31,730 57,032
------- -------
Cash and cash equivalents at end of period $ 22,731 $ 32,508
======= =======
See notes to condensed consolidated financial statements.
6
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MAYTAG CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 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 three month
period ended March 31, 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 the manner
in which it allocates certain items 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. Although the effect of such
change was not material, certain industry segment and geographic
information for the first quarter of 1993 referred to below has been
restated to reflect this change.
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
COMPARISON OF 1994 WITH 1993
Net sales in the first quarter of 1994 were $790.6 million or 10.3 percent
higher than the comparable 1993 period. The increase is primarily due to
volume increases from market share gains and new products in the North
American Appliance Group, and new business from the vending equipment
operation. The North American Appliance Group had sales of $630.8
million, up 15.6 percent from sales of $545.7 million in the first quarter
of 1993. Vending equipment sales were up 9 percent, from $37.7 million in
1993 to $41.1 million in 1994. Sales of Hoover Europe were $89.4 million
in the first quarter of 1994, compared to $103.1 million in the first
quarter of 1993. This decrease is primarily due to sales in 1993 having
been positively affected by sales generated by the two "free flights"
promotion programs discussed below. Foreign currency fluctuations also
contributed to this decrease.
Gross profit as a percent of sales increased to 25.9 percent in the first
quarter of 1994 compared to 24.1 percent in 1993. The improvement in
gross margin is primarily the result of improved volume-related production
efficiencies and favorable product mix in the North American Appliance
Group. In addition, margins in Europe improved due to completion of a
floorcare plant consolidation included as part of a reorganization
announced in 1992.
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The first quarter of 1993 included a one-time pretax charge of
approximately $50 million to cover additional costs associated with two
Hoover Europe "free flights" promotion programs. Excluding this special
charge for comparative purposes, selling, general and administrative
expenses (S,G&A) totaled $134.5 million or 17.0 percent of sales in the
first quarter of 1994 compared to $124.2 million or 17.3 percent in the
same period of 1993. S,G&A expenses increased over 1993 primarily to
support the higher sales volumes. Including the 1993 "free flights"
special charge above, S,G&A expenses totaled $174.2 million in 1993.
Excluding the special charge in 1993 mentioned above, operating income in
the first quarter of 1994 rose 44.2 percent to $70 million compared to
$48.6 million a year ago, and as a percent of sales increased to 8.9
percent compared to 6.8 percent in 1993. The reported operating loss in
1993, including the special charge, was $1.4 million. Operating income in
the first quarter of 1994 for the North American Appliance Group was $74.6
million, up 41.6 percent from $52.7 million a year ago. Excluding the
special charge in 1993, the operating loss for Europe was $3.8 million in
the first quarter of 1994 compared to a loss of $4.4 million during the
comparable period in 1993. Poor economic conditions in parts of Europe
continue to impact Europe's results, however, cost containment programs
have reduced the loss year-over-year. Dixie-Narco, the Company's vending
segment, had first quarter operating income of $4.9 million compared to
$3.8 million a year ago.
The 1994 annual effective tax rate was 42 percent for the first quarter
compared to 40 percent in the first quarter of 1993. The increase in the
rate from 1993 is primarily due to the increase in the U.S. Federal
Corporate statutory income tax rate from 34 percent to 35 percent and a
reduction in tax benefits for a 1994 anticipated net operating loss in the
United Kingdom.
Income before cumulative effect of accounting change of $31 million
increased $41.5 million or $.39 per share in this year's quarter compared
to the first quarter of 1993. Excluding the charge for the $30 million
after-tax "free flights" promotions in the first quarter of 1993, income
before cumulative effect of accounting change would have increased $.11
per share or 59.3 percent from $19.5 million or $.18 per share in 1993.
The $.03 per share cumulative effect of accounting change in the first
quarter of 1994 related to the mandatory adoption of an accounting
pronouncement, Statement of Financial Accounting Standards No. 112
"Employers' Accounting for Postemployment Benefits"(FAS 112), which the
Company adopted effective January 1, 1994. The ongoing application of the
statement will not have a material impact on results of operations or
financial condition.
LIQUIDITY AND CAPITAL RESOURCES
The Company's current ratio was 1.6 at March 31, 1994 and December 31,
1993.
Accounts receivable increased $64.7 million since December 31, 1993
primarily due to higher sales volumes in the North American Appliance
Group. Inventory levels increased $39.9 million since year-end primarily
due to higher production volumes in the North American Appliance Group in
anticipation of increased demand in the upcoming months.
8
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Other noncurrent assets increased $19.3 million 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 vending
equipment customers.
The reserve for compensation to employees decreased $13.7 million since
year-end due to payments made in the first quarter in connection with the
European reorganization announced in 1992.
Other noncurrent liabilities increased $15.1 million from year-end
principally due to ongoing charges for pensions and the recording of the
liability for adoption of FAS 112.
Net cash used by operations in the first three months of 1994 totaled
$27.5 million compared to $39.8 million in the first three months of 1993.
The decrease in cash used was a result of higher net earnings which
included more non-cash charges relating to depreciation and amortization
($3.2 million increase) and pensions ($3.5 million increase). The $43
million decrease in net deferred income tax assets results primarily from
the first quarter of 1993 reflecting the deferred tax benefit for the
"free flights" promotions and certain reclassifications made in both
periods between current taxes payable. Offsetting this improvement was a
greater increase in inventory and receivables and payments for the
European reorganization and "free flights" promotions. Current
liabilities increased primarily to support the additional inventory and
receivables.
Net capital expenditures were $13 million in the first three months of
1994 compared to $18.2 million in the first quarter of 1993. The lower
capital expenditures in 1994 resulted from a change in the timing of
spending between quarters. Full year planned capital expenditures for
1994 approximate $110 million. Compliance with current and anticipated
laws and regulations governing product performance related to the
protection of the environment is expected to significantly increase
capital expenditures over the next five years. Although the amounts are
not known at this time, the annual capital spending is expected to exceed
depreciation in these years.
The net cash used for operations, capital expenditures, dividends, and the
reduction in debt (long term and current maturities) in the first three
months of 1994 was funded through an increase in notes payable (primarily
commercial paper borrowings) of $43.8 million.
At December 31, 1993 the Company was contingently liable for guarantees of
secured indebtedness owed by a third party of $21.3 million relating to
the 1992 sale of one of the Company's manufacturing facilities. The
borrower was out of compliance with certain financial covenants at
December 31, 1993 but has since received a waiver from the lender
involved.
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MAYTAG CORPORATION
Exhibits and Reports on Form 8-K
March 31, 1994
PART II OTHER INFORMATION
Item 4.
Submission of Matters to a Vote of Security Holders.
(a) The Company held its Annual Meeting of Shareholders on April 27,
1994.
(c) The following matters were voted upon at the Annual Meeting of
Shareholders:
1. The election of the nominees for the Board of Directors who will
serve for a term to expire at the 1997 Annual Meeting of Shareholders was
voted on by the shareholders. The nominees, all of whom were elected,
were Edward C. Cazier, Lester Crown and Neele E. Stearns, Jr. The
Inspectors of Election certified the following vote tabulations:
FOR AGAINST NON-VOTES
Edward C. Cazier....... 90,485,321 1,980,837 0
Lester Crown........... 90,351,289 2,114,869 0
Neele E. Stearns, Jr... 90,521,707 1,944,451 0
2. A proposal to select Ernst & Young as independent auditors to audit
the financial statements to be included in the Annual Report to
Shareowners for 1994 was approved by the shareholders. The Inspectors of
Election certified the following vote tabulations:
FOR AGAINST ABSTAIN NON-VOTES
91,256,820 855,228 344,110 10,000
3. A shareholder proposal concerning chief executive officer
compensation was not approved by the shareholders. The Inspectors of
Election certified the following vote tabulations:
FOR AGAINST ABSTAIN NON-VOTES
6,054,423 72,324,795 2,251,224 11,835,716
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
No current report on Form 8-K was filed during the quarter ended March 31,
1994.
10
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MAYTAG CORPORATION
Signatures
March 31, 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 May 16, 1994 By J. P. Cunningham
-------------------------
J. P. Cunningham
Executive Vice President and
Chief Financial Officer
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MAYTAG CORPORATION
Exhibit 11
Computation of Per Share Earnings
(Amounts in thousands except per share data)
Three Months
Ended March 31
1994 1993
---- ----
PRIMARY
Average shares outstanding 106,252 106,055
Net effect of dilutive stock options--based on
the treasury stock method using average market
price 303 48
Employee stock ownership plans 87
------- -------
TOTAL 106,642 106,103
======= =======
Income(loss) before cumulative effect of
accounting changes $ 30,999 $ (10,546)
Cumulative effect of accounting changes (3,190)
------- -------
Net income(loss) $ 27,809 $ (10,546)
======= =======
Per share amounts:
Income(loss) before cumulative effect of
accounting changes $ .29 $ (.10)
Cumulative effect of accounting changes (.03) .
-------- --------
Net income(loss) $ .26 $ (.10)
======== ========
FULLY DILUTED
Average shares outstanding 106,252 106,055
Net effect of dilutive stock options--based on
the treasury stock method using average market
price 352 48
Employee stock ownership plans 87
Assumed conversion of 6.5% convertible
debentures 411
------- -------
TOTAL 107,102 106,103
======= =======
Income(loss) before cumulative effect of
accounting changes $ 30,999 $ (10,546)
Add 6.5% convertible debenture interest net of
income tax effect 59
Cumulative effect of accounting changes (3,190)
------ -------
Net income(loss) $ 27,868 $ (10,546)
======== =======
Per share amounts:
Income(loss) before cumulative effect of
accounting changes $ .29 $ (.10)
Cumulative effect of accounting changes (.03) .
------- -------
Net income(loss) $ .26 $ (.10)
======= =======
12
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MAYTAG CORPORATION
Exhibit 12
Computation of Ratio of Earnings to Fixed Charges
(Amounts in thousands of dollars except ratios)
Three
Months
Ended Year Ended December 31
3-31-94 1993 1992 1991 1990 1989
------- ---- ---- ---- ---- ----
Consolidated pre-tax
income from
continuing operations
before cumulative
effect of accounting
changes $ 53,446 $ 89,870 $ 7,546 $123,417 $159,405 $206,972
Interest expense 18,400 75,364 75,004 75,159 81,966 83,398
Depreciation of
capitalized interest 413 1,546 933 348 57
Interest portion of
rental expense 2,413 10,480 11,264 11,177 9,183 7,107
------- ------- ------- ------- ------- -------
Earnings $ 74,672 $177,260 $ 94,747 $210,101 $250,611 $297,477
======= ======= ======= ======= ======= =======
Interest expense $ 18,400 $ 75,364 $ 75,004 $ 75,159 $ 81,966 $ 83,398
Interest capitalized 101 1,484 3,886 6,329 5,348
Interest portion of
rental expense 2,413 10,480 11,264 11,177 9,183 7,107
------- ------- ------- ------- ------- -------
Fixed Charges $ 20,914 $ 87,328 $ 90,154 $ 92,665 $ 96,497 $ 90,505
======= ======= ======= ======= ======= =======
Ratio of earnings
to fixed charges 3.57 2.03 1.05 2.27 2.60 3.29
===== ===== ===== ===== ===== =====
13
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