UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
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
A Delaware Corporation I.R.S. Employer Identification No. 42-0401785
403 West Fourth Street North, Newton, Iowa 50208
Registrant's telephone number: 515-792-7000
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
The number of shares outstanding of each of the issuer's classes of common
stock, as of September 30, 2000:
Common Stock, $1.25 par value - 76,920,317
1<PAGE>
MAYTAG CORPORATION
Quarterly Report on Form 10-Q
Quarter Ended September 30, 2000
I N D E X
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Income............................3
Consolidated Balance Sheets..................................4
Consolidated Statements of Cash Flows........................6
Notes to Consolidated Financial Statements...................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................11
Item 3. Quantitative and Qualitative Disclosures about Market
Risk...................................................15
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.......................16
Signatures..................................................17
2<PAGE>
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
MAYTAG CORPORATION
Consolidated Statements of Income
Three Months Ended Nine Months Ended
September 30 September 30
In thousands except
per share data 2000 1999 2000 1999
Net sales $1,056,429 $1,069,132 $3,256,197 $3,260,707
Cost of sales 780,142 771,761 2,359,989 2,313,241
Gross profit 276,287 297,371 896,208 947,466
Selling, general and
administrative
expenses 164,713 157,192 498,896 497,048
Operating income 111,574 140,179 397,312 450,418
Interest expense (19,006) (13,986) (52,208) (44,678)
Other - net 28 7,691 514 8,960
Income before
income taxes and
minority interest 92,596 133,884 345,618 414,700
Income taxes 30,797 48,835 123,150 153,439
Income before
minority interest 61,799 85,049 222,468 261,261
Minority interest (2,266) (3,275) (11,347) (4,269)
Net income $ 59,533 $ 81,774 $ 211,121 $ 256,992
Basic earnings per common share:
Net income $ 0.77 $ 0.95 $ 2.70 $ 2.93
Diluted earnings per common share:
Net income $ 0.74 $ 0.92 $ 2.55 $ 2.84
Dividends per common
share $ 0.18 $ 0.18 $ 0.54 $ 0.54
See notes to condensed consolidated financial statements.
3<PAGE>
MAYTAG CORPORATION
Consolidated Balance Sheets
September 30 December 31
In thousands except share data 2000 1999
Assets
Current assets
Cash and cash equivalents $ 23,085 $ 28,815
Accounts receivable 628,705 494,747
Inventories 421,493 404,120
Deferred income taxes 46,341 35,484
Other current assets 37,037 58,350
Total current assets 1,156,661 1,021,516
Noncurrent assets
Deferred income taxes 103,600 106,600
Prepaid pension cost 1,430 1,487
Intangible pension asset 48,668 48,668
Other intangibles 418,497 427,212
Other noncurrent assets 61,574 54,896
Total noncurrent assets 633,769 638,863
Property, plant and equipment
Property, plant and equipment 2,172,905 2,065,850
Less allowance for depreciation 1,192,268 1,089,742
Total property, plant and equipment 980,637 976,108
Total assets $ 2,771,067 $ 2,636,487
See notes to consolidated financial statements.
4<PAGE>
MAYTAG CORPORATION
Consolidated Balance Sheets - Continued
September 30 December 31
In thousands except share data 2000 1999
Liabilities and Shareowners' Equity
Current liabilities
Notes payable $ 430,395 $ 133,041
Accounts payable 268,903 277,780
Compensation to employees 67,765 77,655
Accrued liabilities 193,905 194,074
Current portion of long-term debt 62,507 170,473
Total current liabilities 1,023,475 853,023
Noncurrent liabilities
Deferred income taxes 21,423 22,842
Long-term debt, less current portion 453,934 337,764
Postretirement benefit liability 478,203 467,386
Accrued pension cost 44,552 56,528
Other noncurrent liabilities 100,405 101,776
Total noncurrent liabilities 1,098,517 986,296
Company obligated mandatorily redeemable
preferred capital securities of
subsidiary trust holding solely the
Company's debentures 200,000 200,000
Minority interests 165,844 169,788
Shareowners' equity
Preferred stock:
Authorized - 24,000,000 shares
(par value $1.00)
Issued - none
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 488,403 503,346
Retained earnings 1,195,257 1,026,288
Cost of Common stock in treasury
(2000 - 40,230,276 shares;
1999 - 34,626,316 shares) (1,493,866) (1,190,894)
Employee stock plans (29,891) (38,836)
Accumulated other comprehensive income (23,110) (18,962)
Total shareowners' equity 283,231 427,380
Total liabilities and shareowners'
equity $ 2,771,067 $ 2,636,487
See notes to consolidated financial statements.
5<PAGE>
MAYTAG CORPORATION
Consolidated Statements of Cash Flows
Nine Months Ended
September 30
In thousands 2000 1999
Operating activities
Net income $ 211,121 $ 256,992
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest 11,347 4,269
Depreciation 108,806 99,435
Amortization 10,754 10,405
Deferred income taxes (9,276) 601
Changes in working capital items exclusive
of business acquisitions:
Accounts receivable (133,958) (103,510)
Inventories (17,373) (28,842)
Other current assets 21,313 14,461
Other current liabilities (5,360) (3,779)
Pension assets and liabilities (11,919) (13,499)
Postretirement benefit liability 10,817 5,524
Other - net (10,419) (10,191)
Net cash provided by operating activities 185,853 231,866
Investing activities
Investment in securities (19,430)
Capital expenditures (116,010) (103,902)
Business acquisitions, net of cash acquired (3,551)
Total investing activities (116,010) (126,883)
Financing activities
Proceeds from issuance of notes payable 298,200 193,907
Repayment of notes payable (846) (3,778)
Proceeds from issuance of long-term debt 178,198 66,174
Repayment of long-term debt (169,994) (126,970)
Stock repurchases (311,788) (314,077)
Forward stock purchase amendment (9,595) (21,298)
Stock options exercised and other common stock
transactions (1,136) 53,807
Dividends on common stock (42,152) (47,479)
Dividends on minority interests (15,319) (7,444)
Issuance of mandatorily redeemable preferred
capital securities 100,000
Total financing activities (74,432) (107,158)
Effect of exchange rates on cash (1,141) 670
Decrease in cash and cash equivalents (5,730) (1,505)
Cash and cash equivalents at beginning of period 28,815 28,642
Cash and cash equivalents at end of period $ 23,085 $ 27,137
See notes to condensed consolidated financial statements.
6<PAGE>
MAYTAG CORPORATION
Notes to Consolidated Financial Statements
September 30, 2000
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited 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, 2000 are not necessarily indicative of the
results that are expected for the year ending December 31, 2000. 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, 1999.
NOTE B--COMPREHENSIVE INCOME
Total comprehensive income and its components, net of related tax, are as
follows (in thousands):
Three Months Ended September 30 2000 1999
Net income $ 59,533 $ 81,774
Unrealized losses on securities (900) (2,117)
Foreign currency translation (118) (108)
Comprehensive income $ 58,515 $ 79,549
Nine Months Ended September 30 2000 1999
Net income $ 211,121 $ 256,992
Unrealized losses on securities (2,788) (2,329)
Foreign currency translation (1,360) 1,048
Comprehensive income $ 206,973 $ 255,711
The components of accumulated other comprehensive income, net of related tax are
as follows:
September 30 December 31
In thousands 2000 1999
Minimum pension liability adjustment $ (4,430) $ (4,430)
Unrealized losses on securities (8,321) (5,533)
Foreign currency translation (10,359) (8,999)
Accumulated other comprehensive income $ (23,110) $ (18,962)
7<PAGE>
NOTE C--INVENTORIES
Inventories consisted of the following:
September 30 December 31
In thousands 2000 1999
Raw materials $ 67,260 $ 66,731
Work in process 67,122 72,162
Finished products 361,886 335,844
Supplies 6,869 9,615
Total FIFO cost 503,137 484,352
Less excess of FIFO cost over LIFO 81,644 80,232
Inventories $ 421,493 $ 404,120
NOTE D--EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share:
Three Months Ended Nine Months Ended
September 30 September 30
In thousands except
per share data 2000 1999 2000 1999
Numerator for basic
and diluted earnings
per share -- net
income $ 59,533 $ 81,774 $ 211,121 $ 256,992
Denominator for basic
earnings per share --
weighted-average
shares 77,027 86,247 78,331 87,602
Effect of dilutive
securities:
Stock option plans 905 1,743 907 1,839
Restricted stock
awards 109 170 89 157
Put options 2,609 740 3,415 262
Forward stock
purchase contract 289 612
Potential dilutive
common shares 3,623 2,942 4,411 2,870
Denominator for
diluted earnings per
share -- adjusted
weighted-average
shares 80,650 89,189 82,742 90,472
Basic earnings per
share $ 0.77 $ 0.95 $ 2.70 $ 2.93
Diluted earnings per
share $ 0.74 $ 0.92 $ 2.55 $ 2.84
NOTE E--CONTINGENCIES
Maytag has contingent liabilities arising in the normal course of business,
including: guarantees, repurchase agreements, pending litigation, environmental
remediation, taxes and other claims which are not considered to be significant
in relation to Maytag's consolidated financial position.
8<PAGE>
NOTE F--SEGMENT REPORTING
Maytag has three reportable segments: home appliances, commercial appliances and
international appliances. Maytag's home appliances segment manufactures major
appliances (laundry products, dishwashers, refrigerators, cooking appliances)
and floor care products. These products are sold primarily to major national
retailers and independent retail dealers in North America and targeted
international markets.
Maytag's commercial appliances segment manufactures vending and foodservice
equipment. These products are sold primarily to distributors, soft drink
bottlers, restaurant chains and dealers in North America and targeted
international markets.
The international appliances segment consists of Maytag's 50.5 percent
owned joint venture in China, Rongshida-Maytag, which manufactures laundry
products and refrigerators. These products are sold primarily to department
stores and distributors in China.
Maytag's reportable segments are distinguished by the nature of products
manufactured and sold and types of customers. Maytag's home appliances segment
has been further defined based on distinct geographical locations.
Financial information for Maytag's reportable segments consisted of the
following:
Three Months Ended Nine Months Ended
September 30 September 30
In thousands 2000 1999 2000 1999
Net sales
Home appliances $ 931,283 $ 923,726 $ 2,833,547 $ 2,766,836
Commercial
appliances 105,282 120,589 341,689 397,834
International
appliances 19,864 24,817 80,961 96,037
Consolidated total $1,056,429 $ 1,069,132 $ 3,256,197 $ 3,260,707
Operating income
Home appliances $ 120,303 $ 132,081 $ 409,574 $ 428,264
Commercial
appliances 5,563 15,986 27,073 52,300
International
appliances (5,117) 573 (5,690) (2,150)
Total for
reportable segments 120,749 148,640 430,957 478,414
Corporate (9,175) (8,461) (33,645) (27,996)
Consolidated total $ 111,574 $ 140,179 $ 397,312 $ 450,418
9<PAGE>
The reconciliation of segment profit to consolidated income before
income taxes and minority interest consisted of the following:
Three Months Ended Nine Months Ended
September 30 September 30
In thousands 2000 1999 2000 1999
Total operating
income for reportable
segments $ 120,749 $ 148,640 430,957 $ 478,414
Corporate (9,175) (8,461) (33,645) (27,996)
Interest expense (19,006) (13,986) (52,208) (44,678)
Other - net 28 7,691 514 8,960
Consolidated income
before income taxes
and minority
interest $ 92,596 $ 133,884 345,618 $ 414,700
Asset information for Maytag's reportable segments consisted of
the following:
Sept 30 December 31
In thousands 2000 1999
Total assets
Home appliances $ 1,905,687 $ 1,792,185
Commercial appliances 278,429 272,506
International appliances 246,331 249,581
Total for reportable segments 2,430,447 2,314,272
Corporate 340,620 322,215
Consolidated total $ 2,771,067 $ 2,636,487
NOTE G--MINORITY INTEREST
The (income)/loss attributable to the noncontrolling interest reflected in
Minority interest in the Consolidated Statements of Income consisted of the
following:
Three Months Ended Nine Months Ended
September 30 September 30
In thousands 2000 1999 2000 1999
Rongshida-Maytag $ 2,972 $ 203 $ 3,981 $ 2,932
Maytag Trusts (3,361) (1,610) (9,703) (1,610)
Anvil Technologies (1,877) (1,868) (5,625) (5,591)
Minority interest $ (2,266) $ (3,275) $ (11,347) $ (4,269)
The outside investors' noncontrolling interest reflected in Minority interest
in the Consolidated Balance Sheets consisted of the following:
In thousands Sept 30 December 31
2000 1999
Rongshida-Maytag $ 65,761 $ 69,742
Anvil Technologies 100,082 100,046
Minority interest $ 165,843 $ 169,788
NOTE H--IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activites." The Company expects to adopt the new
statement effective January 1, 2001. Statement 133 will require the Company to
recognize all derivatives on the consolidated balance sheet at fair value. The
Company does not anticipate that the adoption of Statement 133 will have a
10<PAGE>
significant effect on its results of operations or financial position.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Comparison of 2000 with 1999
Maytag Corporation ("Maytag") has three reportable segments: home appliances,
commercial appliances and international appliances. (See discussion and
financial information about Maytag's reportable segments in "SEGMENT REPORTING"
section of the Notes to Consolidated Financial Statements.)
Net Sales: Consolidated net sales were $1.056 billion in the third quarter of
2000, a decrease of 1 percent compared to the same period in 2000. For the
first nine months of 2000, consolidated net sales were $3.3 billion and
approximately the sames as the first nine months of 1999.
Home appliances net sales, which include major appliances and floor care
products, increased 1 percent in the third quarter of 2000 compared to 1999 due
to increased sales of floor care products partially offset by a decrease in
major appliances sales as a result of intense price competition and a softening
in major appliance industry sales. The disruption in the marketplace as a
result of Circuit City's exit from the major appliance and floor care businesses
and the closing of numerous Heilig-Meyers stores contributed significantly to
the major appliances sales decline. For the first nine months of 2000, net
sales for home appliances increased 2 percent compared to the same period in
1999. The net sales increase was due primarily to increased sales of floor care
products and export sales as domestic major appliances were slightly down. For
the remainder of the year, Maytag expects a challenging competitive environment
and a continued softening in major appliance industry unit shipments.
Commercial appliances net sales, which include vending and foodservice
equipment, decreased 13 percent from the third quarter of 1999. For the first
nine months of 2000, net sales of commercial appliances decreased 14 percent
from the same period in 1999. The net sales decrease was due primarily to a
softening of industry demand for vending equipment. The decline in vending
industry demand is expected to continue through the remainder of 2000 and into
next year.
Net sales of international appliances, which consists of Maytag's 50.5
percent owned joint venture in China, decreased 20 percent in the third quarter
of 2000 from the same period in 1999. For the first nine months of 2000, net
sales for international appliances were down 16 percent compared to the prior
year. The net sales decrease was attributable to lower unit sales and lower
selling prices as a result of competitive conditions.
Gross Profit: Consolidated gross profit as a percent of sales decreased to 26.2
percent of sales in the third quarter of 2000 from 27.8 percent of sales in the
third quarter of 1999. The decrease in gross margin was due primarily to the
competitive pricing environment, lower sales and production volume and higher
research and development and raw material costs. For the first nine months of
2000, consolidated gross profit as a percent of sales decreased to 27.5 percent
compared to 29.1 percent in 1999. The decrease in gross margin was due
primarily to the competitive pricing environment, lower sales volume and higher
warranty, research and development and raw material costs. Maytag expects raw
material prices to be slightly higher than 1999 levels for the remainder of the
year.
Selling, General and Administrative Expenses: Consolidated selling, general and
administrative expenses were 15.6 percent of sales in the third quarter of 2000
compared to 14.7 percent of sales in the third quarter of 1999. The increase in
11<PAGE>
selling, general and administrative expenses during the third quarter was due
primarily to increased advertising and sales promotion expenses and third
quarter 1999 reflected lower stock-based compensation. For the first nine
months of 2000, consolidated selling, general and administrative expenses were
15.3 percent, which was relatively flat compared to 15.2 percent in 1999.
Operating Income: Consolidated operating income for the third quarter of 2000
decreased 20 percent to $112 million, or 10.6 percent of sales, compared to $140
million, or 13.1 percent of sales, in the same period in 1999. Consolidated
operating income for the first nine months of 2000 decreased 12 percent to $397
million, or 12.2 percent of sales, compared to $450 million, or 13.8 percent of
sales, in the same period in 1999. The decrease in operating margin was
primarily due to the decrease in gross profit margin discussed above.
Home appliances operating income decreased 9 percent in the third quarter
of 2000 compared to 1999. Operating margin for the third quarter of 2000 was
12.9 percent of sales compared to 14.3 percent of sales in 1999. The decrease
in operating margin was due primarily to the decrease in gross profit margins
and increase in selling, general and administrative expenses as a percent of
sales discussed above. Home appliances operating income decreased 4 percent in
the first nine months of 2000 compared to the same period in 1999. Operating
margin for the first nine months of 2000 was 14.5 percent of sales compared to
15.5 percent of sales in 1999. The decrease in operating margin was due to the
decrease in gross profit margins discussed above.
Commercial appliances operating income decreased 65 percent in the third
quarter of 2000 compared to 1999. Operating margin for the third quarter of
2000 was 5.3 percent of sales compared to 13.3 percent of sales in 1999.
Operating income decreased 48 percent in the first nine months of 2000 compared
to 1999. Operating margin for the first nine months of 2000 was 7.9 percent of
sales compared to 13.1 percent of sales in 1999. The decrease in operating
margin was due primarily to the decrease in sales discussed above as well as
increased research and development expense and startup costs related to rapid
cook product development.
International appliances reported a $5.1 million operating loss in the
third quarter of 2000 down from $573 thousand operating income reported in the
third quarter of 1999. International appliances reported an operating loss of
$5.7 million in the first nine months of 2000 compared to a $2.2 million
operating loss in 1999. The first nine months of 1999 included provisions
primarily related to uncollectible accounts receivables and losses on inventory.
The unfavorable comparison to 1999 was primarily due to the competitive pricing
environment. The economic environment in China and the Asian region continued
to adversely impact the operations of Rongshida-Maytag.
Interest Expense: Interest expense for 2000 was 36 percent and 17 percent
higher over the third quarter and first nine months of 1999, respectively, due
to higher average borrowings primarily associated with share repurchases
partially offset by lower interest rates.
Income Taxes: The effective tax rate for the third quarter of 2000 was 33.3
percent, a decrease from 36.5 percent for 1999. The effective tax rate for the
first nine months of 2000 was 35.6 percent, a decrease from 37.0 percent for
1999. The decrease in the effective tax rate was due to a benefit associated
with additional research and development tax credits as well as the benefit from
a capital loss carry-forward both recognized in the third quarter of 2000. The
Company expects the fourth quarter tax rate to be at approximately the same rate
as the third quarter of 2000.
Minority Interest: Minority interest decreased by $1 million from the third
quarter of 1999 primarily because of the increased loss for Rongshida-Maytag,
12<PAGE>
partially offset by the financing transactions that established the Maytag
Capital Trusts in the second half of 1999. Minority interest increased by $7
million in the first nine months of 2000 compared to 1999 primarily because of
the financing transactions that established the Maytag Capital Trusts in the
second half of 1999.
Net Income: Net income for the third quarter of 2000 was $60 million, or $0.74
diluted earnings per share, compared to net income of $82 million, or $0.92
diluted earnings per share in 1999. The decrease in net income was due
primarily to the decrease in operating income and higher interest expense
partially offset by the favorable tax rate discussed above. Net income for the
first nine months of 2000 was $211 million, or $2.55 diluted earnings per share,
compared to net income of $257 million, or $2.84 diluted earnings per share in
1999. The decrease in net income was due to the decrease in operating income
and higher interest and minority interest expense partially offset by the
favorable tax rate. The decrease in diluted earnings per share was due to the
decrease in net income partially offset by the positive effect of Maytag's share
repurchase program. Maytag expects an increase in potential dilutive common
shares included in the computation of diluted weighted-average shares
outstanding for the fourth quarter of 2000 compared to the third quarter of 2000
due to the potential dilution from the Company's outstanding put options as a
result of the decrease in the market price of Maytag stock. (See discussion of
the share repurchase program in "Liquidity and Capital Resources" section of
this Management's Discussion and Analysis.)
Liquidity and Capital Resources
Maytag's primary sources of liquidity are cash provided by operating activities
and borrowings. Detailed information on Maytag's cash flows is presented in the
Condensed Consolidated Statements of Cash Flows.
Net Cash Provided by Operating Activities: Cash flow provided by operating
activities consists primarily of net income adjusted for certain non-cash items,
changes in working capital items, and changes in pension assets and liabilities
and postretirement benefits. Non-cash items include depreciation and
amortization and deferred income taxes. Working capital items consist primarily
of accounts receivable, inventories, other current assets and other current
liabilities.
Net cash provided by operating activities decreased due primarily to the
decrease in net income and an increase in cash used for working capital in the
first nine months of 2000 compared to 1999.
A portion of Maytag's accounts receivable is concentrated among major
national retailers. A significant loss of business with any of these retailers
could have an adverse impact on Maytag's ongoing operations.
Total Investing Activities: Maytag continually invests in its businesses for
new product designs, cost reduction programs, replacement of equipment, capacity
expansion and government mandated product requirements.
Capital expenditures in the first nine months of 2000 were $116 million
compared to $104 million in the first nine months of 1999. Maytag plans to
invest approximately $165 million in capital expenditures in 2000.
Total Financing Activities: Dividend payments on Maytag's common stock in the
first nine months of 2000 were $42 million, or $0.54 per share, compared to $47
million, or $0.54 per share in the first nine months of 1999.
During the first nine months of 2000, Maytag repurchased 5.8 million shares
at a cost of $312 million. As of September 30, 2000, there were approximately
15.3 million shares which may be repurchased under existing board authorizations
13<PAGE>
of which 6.4 million shares are committed to be repurchased under put options
contracts, if such options are exercised. (See discussion of these put option
contracts below.)
During the first quarter of 2000, Maytag settled a forward stock purchase
contract associated with four million shares before its maturity date for $9.6
million. Maytag originally entered into the forward stock purchase contract
during 1997.
In connection with the share repurchase program, Maytag sold put options
which give the purchaser the right to sell shares of Maytag's common stock to
Maytag at specified prices upon exercise of the options. The put option
contracts allow Maytag to determine the method of settlement. As of September
30, 2000, there were 6.4 million put options outstanding with strike prices
ranging from $37.00 to $73.06; the weighted-average strike price was $49.67. Of
the 6.4 million put options outstanding, 0.7 million expire in 2000, 1.3 million
expire in 2001 and 4.4 million expire in 2002.
Any funding requirements for future investing and financing activities in
excess of cash on hand and generated from operations will be supplemented by
borrowings. Maytag's commercial paper program is supported by a credit
agreement with a consortium of banks which provides revolving credit facilities
totaling $400 million. This agreement expires June 29, 2001 and includes
covenants with respect to interest coverage and leverage which Maytag was in
compliance with at September 30, 2000. Maytag had $375 million of commercial
paper outstanding as of September 30, 2000. In 1999 Maytag filed a shelf
registration statement with the Securities and Exchange Commission providing the
ability to issue an aggregate of $400 million of debt securities of which $185
million was available as of September 30, 2000. Maytag expects to issue these
securities over a non-specified period of time and expects to use the net
proceeds from the sale of the securities for general corporate purposes,
including the funding of share repurchases (including obligations under forward
contracts and put options as discussed above), capital expenditures, working
capital, repayment or reduction of long-term and short-term debt and the
financing of acquisitions.
Maytag explores and may periodically implement arrangements to adjust its
obligations under various stock repurchase arrangements, including the
arrangements described above.
Market Risks
Maytag is exposed to foreign currency exchange risk related to its transactions,
assets and liabilities denominated in foreign currencies. To manage certain
foreign exchange exposures, Maytag enters into foreign currency forward and
option contracts. Maytag's policy is to hedge a portion of its anticipated
foreign currency denominated export sales transactions, which are denominated
primarily in Canadian dollars, for periods not exceeding twelve months.
Maytag also is exposed to commodity price risk related to Maytag's purchase
of selected commodities used in the manufacture of its products. To reduce the
effect of changing raw material prices for select commodities, Maytag has
entered into long-term contracts and commodity swap agreements with terms not
exceeding two years, to hedge a portion of its anticipated raw material
purchases on selected commodities.
Maytag also is exposed to interest rate risk in the portfolio of Maytag s
debt. The Company uses interest rate swap contracts to adjust the proportion of
total debt that is subject to variable and fixed interest rates. The swaps
involve the exchange of fixed and variable rate payments without exchanging the
notional principal amount.
There have been no material changes in the reported market risks of Maytag
since December 31, 1999. See further discussion of these market risks and
related financial instruments in the Maytag Corporation annual report on Form
14<PAGE>
10-K for the year ended December 31, 1999.
Contingencies
Maytag has contingent liabilities arising in the normal course of business or
from operations which have been discontinued or divested. (See discussion of
these contingent liabilities in "CONTINGENCIES" section of the Notes to
Consolidated Financial Statements.)
Forward-Looking Statements
This Management's Discussion and Analysis contains statements which are not
historical facts and are considered "forward-looking" within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are identified by their use of the terms: "expects," "intends," "may
impact," "plans," "should" or similar terms. These forward-looking statements
involve a number of risks and uncertainties that may cause actual results to
differ materially from expected results. These risks and uncertainties include,
but are not limited to, the following: business conditions and growth of
industries in which Maytag competes, including changes in economic conditions in
the geographic areas where Maytag's operations exist or products are sold;
timing, start-up and customer acceptance of newly designed products; shortages
of manufacturing capacity; competitive factors, such as price competition and
new product introductions; significant loss of business from a major national
retailer; the cost and availability of raw materials and purchased components;
union labor negotiations; progress on capital projects; the impact of business
acquisitions or dispositions; the costs of complying with governmental
regulations; level of share repurchases; litigation and other risk factors.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
See discussion of quantitative and qualitative disclosures about market risk in
"Market Risks" section of Management's Discussion and Analysis.
15<PAGE>
MAYTAG CORPORATION
Exhibits and Reports on Form 8-K
September 30, 2000
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule - Quarter Ended September 30, 2000
(b) Reports on Form 8-K
Maytag filed a Form 8-K dated September 15, 2000 under Item 5, Other
Events, stating it announced it expects second half results to be lower
than previously anticipated primarily due to major disruptions in the
retail marketplace for home appliances.
Maytag filed a Form 8-K dated November 13, 2000 under Item 5, Other Events,
stating it announced that Lloyd D. Ward has resigned as its Chairman, Chief
Executive Officer and as a director.
16<PAGE>
MAYTAG CORPORATION
Signatures
September 30, 2000
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 14, 2000
F. G. Wohlschlaeger
Senior Vice President, General
Counsel and Secretary and
Chief Financial Officer
Steven H. Wood
Vice President, Financial
Reporting and Audit and Chief
Accounting Officer
17<PAGE>
