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 June 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 June 30, 2000:
Common Stock, $1.25 par value - 77,548,021
1
MAYTAG CORPORATION
Quarterly Report on Form 10-Q
Quarter Ended June 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 4. Submission of Matters to a Vote of Security
Holders...................................................16
Item 6. Exhibits and Reports on Form 8-K..........................18
Signatures................................................19
2
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
MAYTAG CORPORATION
Consolidated Statements of Income
Three Months Ended Six Months Ended
June 30 June 30
In thousands except
per share data 2000 1999 2000 1999
Net sales $1,104,275 $1,085,389 $2,199,768 $2,191,575
Cost of sales 798,302 762,631 1,579,847 1,541,480
Gross profit 305,973 322,758 619,921 650,095
Selling, general and
administrative
expenses 163,270 166,011 334,183 339,856
Operating income 142,703 156,747 285,738 310,239
Interest expense (18,112) (15,313) (33,202) (30,692)
Other - net 1,856 704 486 1,269
Income before
income taxes and
minority interest 126,447 142,138 253,022 280,816
Income taxes 46,153 52,600 92,353 104,604
Income before
minority interest 80,294 89,538 160,669 176,212
Minority interest (4,629) (1,336) (9,081) (994)
Net income $ 75,665 $ 88,202 $ 151,588 $ 175,218
Basic earnings per common share:
Net income $ 0.97 $ 1.00 $ 1.92 $ 1.98
Diluted earnings per common share:
Net income $ 0.92 $ 0.97 $ 1.81 $ 1.92
Dividends per common
share $ 0.18 $ 0.18 $ 0.36 $ 0.36
See notes to condensed consolidated financial statements.
3
MAYTAG CORPORATION
Consolidated Balance Sheets
June 30 December 31
In thousands except share data 2000 1999
Assets
Current assets
Cash and cash equivalents $ 26,227 $ 28,815
Accounts receivable 609,972 494,747
Inventories 459,819 404,120
Deferred income taxes 35,463 35,484
Other current assets 43,081 58,350
Total current assets 1,174,562 1,021,516
Noncurrent assets
Deferred income taxes 119,600 106,600
Prepaid pension cost 1,469 1,487
Intangible pension asset 48,668 48,668
Other intangibles 422,104 427,212
Other noncurrent assets 58,339 54,896
Total noncurrent assets 650,180 638,863
Property, plant and equipment
Property, plant and equipment 2,139,480 2,065,850
Less allowance for depreciation 1,159,742 1,089,742
Total property, plant and equipment 979,738 976,108
Total assets $ 2,804,480 $ 2,636,487
See notes to consolidated financial statements.
4
MAYTAG CORPORATION
Consolidated Balance Sheets - Continued
June 30 December 31
In thousands except share data 2000 1999
Liabilities and Shareowners' Equity
Current liabilities
Notes payable $ 424,946 $ 133,041
Accounts payable 260,482 277,780
Compensation to employees 61,369 77,655
Accrued liabilities 202,093 194,074
Current portion of long-term debt 24,505 170,473
Total current liabilities 973,395 853,023
Noncurrent liabilities
Deferred income taxes 20,123 22,842
Long-term debt, less current portion 511,586 337,764
Postretirement benefit liability 475,222 467,386
Accrued pension cost 76,353 56,528
Other noncurrent liabilities 99,353 101,776
Total noncurrent liabilities 1,182,637 986,296
Company obligated mandatorily redeemable
preferred capital securities of
subsidiary trust holding solely the
Company's debentures 200,000 200,000
Minority interests 168,802 169,788
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 491,134 503,346
Retained earnings 1,149,587 1,026,288
Cost of Common stock in treasury
(2000 - 39,602,572 shares;
1999 - 34,626,316 shares) (1,451,353) (1,190,894)
Employee stock plans (34,068) (38,836)
Accumulated other comprehensive income (22,092) (18,962)
Total shareowners' equity 279,646 427,380
Total liabilities and shareowners'
equity $ 2,804,480 $ 2,636,487
See notes to consolidated financial statements.
5
MAYTAG CORPORATION
Consolidated Statements of Cash Flows
Six Months Ended
June 30
In thousands 2000 1999
Operating activities
Net income $ 151,588 $ 175,218
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest 9,081 994
Depreciation 72,498 65,920
Amortization 7,211 6,911
Deferred income taxes (15,698) (18,272)
Changes in working capital items exclusive of
business acquisitions:
Accounts receivable (115,225) (94,699)
Inventories (55,699) (64,062)
Other current assets 15,269 237
Other current liabilities (16,462) 21,153
Pension assets and liabilities 19,843 12,673
Postretirement benefit liability 7,836 4,389
Other - net (10,573) (6,458)
Net cash provided by operating activities 69,669 104,004
Investing activities
Capital expenditures (75,703) (75,286)
Business acquisitions, net of cash acquired (3,551)
Total investing activities (75,703) (78,837)
Financing activities
Proceeds from issuance of notes payable 292,751 26,838
Repayment of notes payable (846) (2,175)
Proceeds from issuance of long-term debt 178,164 24,001
Repayment of long-term debt (150,310) (10,104)
Stock repurchases (266,548) (172,877)
Forward stock purchase amendment (9,595)
Stock options exercised and other common stock
transactions (837) 40,581
Dividends on common stock (28,289) (31,900)
Dividends on minority interests (10,094) (3,975)
Issuance of mandatorily redeemable preferred
capital securities 100,000
Total financing activities 4,396 (29,611)
Effect of exchange rates on cash (950) 519
Decrease in cash and cash equivalents (2,588) (3,925)
Cash and cash equivalents at beginning of period 28,815 28,642
Cash and cash equivalents at end of period $ 26,227 $ 24,717
See notes to condensed consolidated financial statements.
6
MAYTAG CORPORATION
Notes to Consolidated Financial Statements
June 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 for
the six month period ended June 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 June 30 2000 1999
Net income $ 75,665 $ 88,202
Unrealized losses on securities (865) (635)
Foreign currency translation (1,288) 530
Comprehensive income $ 73,512 $ 88,097
Six Months Ended June 30 2000 1999
Net income $ 151,588 $ 175,218
Unrealized losses on securities (1,888) (212)
Foreign currency translation (1,242) 1,156
Comprehensive income $ 148,458 $ 176,162
The components of accumulated other comprehensive income, net of related tax are
as follows:
June 30 December 31
In thousands 2000 1999
Minimum pension liability adjustment $ (4,430) $ (4,430)
Unrealized losses on securities (7,421) (5,533)
Foreign currency translation (10,241) (8,999)
Accumulated other comprehensive income $ (22,092) $ (18,962)
7
NOTE C--INVENTORIES
Inventories consisted of the following:
June 30 December 31
In thousands 2000 1999
Raw materials $ 66,270 $ 66,731
Work in process 70,339 72,162
Finished products 397,301 335,844
Supplies 6,635 9,615
Total FIFO cost 540,545 484,352
Less excess of FIFO cost over LIFO 80,726 80,232
Inventories $ 459,819 $ 404,120
NOTE D--EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share:
Three Months Ended Six Months Ended
June 30 June 30
In thousands except
per share data 2000 1999 2000 1999
Numerator for basic
and diluted earnings
per share -- net
income $ 75,665 $ 88,202 $ 151,588 $ 175,218
Denominator for basic
earnings per share --
weighted-average
shares 77,815 87,871 78,983 88,279
Effect of dilutive
securities:
Stock option plans 911 2,000 909 1,911
Restricted stock
awards 66 161 79 151
Put options 3,370 3,818
Forward stock
purchase contract 941 773
Potential dilutive
common shares 4,347 3,102 4,806 2,835
Denominator for
diluted earnings per
share -- adjusted
weighted-average
shares 82,162 90,973 83,789 91,114
Basic earnings per
share $ 0.97 $ 1.00 $ 1.92 $ 1.98
Diluted earnings per
share $ 0.92 $ 0.97 $ 1.81 $ 1.92
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
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 Six Months Ended
June 30 June 30
In thousands 2000 1999 2000 1999
Net sales
Home appliances $ 948,838 $ 916,662 $ 1,902,264 $ 1,843,110
Commercia
appliances 125,272 140,499 236,407 277,245
International
appliances 30,165 28,228 61,097 71,220
Consolidated total $1,104,275 $ 1,085,389 $ 2,199,768 $ 2,191,575
Operating income
Home appliances $ 143,262 $ 147,817 $ 289,271 $ 296,183
Commercial
appliances 14,100 18,281 21,510 36,314
International
appliances (403) 360 (573) (2,723)
Total for
reportable segments 156,959 166,458 310,208 329,774
Corporate (14,256) (9,711) (24,470) (19,535)
Consolidated total $ 142,703 $ 156,747 $ 285,738 $ 310,239
9
The reconciliation of segment profit to consolidated income before
income taxes and minority interest consisted of the following:
Three Months Ended Six Months Ended
June 30 June 30
In thousands 2000 1999 2000 1999
Total operating
income for reportable
segments $ 156,959 $ 166,458 $ 310,208 $ 329,774
Corporate (14,256) (9,711) (24,470) (19,535)
Interest expense (18,112) (15,313) (33,202) (30,692)
Other - net 1,856 704 486 1,269
Consolidated income
before income taxes
and minority
interest $ 126,447 $ 142,138 $ 253,022 $ 280,816
Asset information for Maytag's reportable segments consisted of the
following:
June 30 December 31
In thousands 2000 1999
Total assets
Home appliances $ 1,927,090 $ 1,792,185
Commercial appliances 287,301 272,506
International appliances 243,074 249,581
Total for reportable segments 2,457,465 2,314,272
Corporate 347,015 322,215
Consolidated total $ 2,804,480 $ 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 Six Months Ended
June 30 June 30
In thousands 2000 1999 2000 1999
Rongshida-Maytag $ 614 $ 529 $ 1,009 $ 2,728
Maytag Trusts (3,368) (6,342)
Anvil Technologies (1,875) (1,865) (3,748) (3,722)
Minority interest $ (4,629) $ (1,336) $ (9,081) $ (994)
The outside investors' noncontrolling interest reflected in Minority interest in
the Consolidated Balance Sheets consisted of the following:
In thousands June 30 December 31
2000 1999
Rongshida-Maytag $ 68,733 $ 69,742
Anvil Technologies 100,069 100,046
Minority interest $ 168,802 $ 169,788
10
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 $1.104 billion in the second quarter of
2000, an increase of 2 percent compared to the same period in 2000. For the
first half of 2000, consolidated net sales were essentially flat compared to the
first half of 1999.
Home appliances net sales, which include major appliances and floor care
products, increased 4 percent in the second quarter of 2000 compared to 1999.
For the first half of 2000, net sales for home appliances increased 3 percent
compared to the same period in 1999. The net sales increase was due primarily
to increased sales of floor care products with a more modest increase in major
appliances sales. For the remainder of the year, Maytag expects a challenging
competitive environment and a slowing of growth in home appliance industry unit
shipments. Maytag expects the introduction of new products and the expansion
into new distribution channels to provide opportunities for revenue growth in
the second half of 2000.
Commercial appliances net sales, which include vending and foodservice
equipment, decreased 11 percent from the second quarter of 1999. For the first
half of 2000, net sales of commercial appliances decreased 15 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 industry demand is
expected to continue through most of 2000. Maytag expects to introduce new
commercial appliances products during the second half of the year.
Net sales of international appliances, which consists of Maytag's 50.5
percent owned joint venture in China, increased 7 percent in the second quarter
of 2000 from the same period in 1999. For the first half of 2000, net sales for
international appliances were down 14 percent compared to the prior year. The
net sales decrease was attributable to lower unit sales and lower selling prices
of home laundry products.
Gross Profit: Consolidated gross profit as a percent of sales decreased to 27.7
percent of sales in the second quarter of 2000 from 29.7 percent of sales in the
second quarter of 1999. For the first half of 2000, consolidated gross profit
as a percent of sales decreased to 28.2 percent compared to 29.7 percent in
1999. The decrease in gross margin was due primarily to a competitive pricing
environment and unfavorable product mix as well as higher warranty, research and
development and raw material costs. Maytag expects the trend in research and
development costs to continue as it invests in new product development. Maytag
expects raw material prices in the second half of 2000 to be slightly higher
than 1999 levels.
Selling, General and Administrative Expenses: Consolidated selling, general and
administrative expenses were 14.8 percent of sales in the second quarter of 2000
compared to 15.3 percent of sales in the second quarter of 1999. The decrease
in selling, general and administrative expenses during the second quarter was
due primarily to savings recognized from cost containment initiatives and lower
advertising expenses as a percent of sales partially offset by spending related
to new business initiatives. For the first half of 2000, consolidated selling,
general and administrative expenses were 15.2 percent of sales compared to 15.5
percent in 1999. The decrease in selling, general and administrative expenses
11
during the first half was due primarily to savings recognized from cost
containment initiatives.
Operating Income: Consolidated operating income for the second quarter of 2000
decreased 9 percent to $143 million, or 12.9 percent of sales, compared to $157
million, or 14.4 percent of sales, in the same period in 1999. Consolidated
operating income for the first half of 2000 decreased 8 percent to $286 million,
or 13 percent of sales, compared to $310 million, or 14.2 percent of sales, in
the same period in 1999.
Home appliances operating income decreased 3 percent in the second quarter
of 2000 compared to 1999. Operating margin for the second quarter of 2000 was
15.1 percent of sales compared to 16.1 percent of sales in 1999. Home
appliances operating income decreased 2 percent in the first half of 2000
compared to the same period in 1999. Operating margin for the first half of
2000 was 15.2 percent of sales compared to 16.1 percent of sales in 1999. The
decrease in operating margin was due primarily to the decrease in gross profit
margins partially offset by the decrease in selling, general and administrative
expenses as a percent of sales discussed above.
Commercial appliances operating income decreased 23 percent in the second
quarter of 2000 compared to 1999. Operating margin for the second quarter of
2000 was 11.3 percent of sales compared to 13 percent of sales in 1999.
Operating income decreased 41 percent in the first half of 2000 compared to
1999. Operating margin for the first half of 2000 was 9.1 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 related to rapid cook product development and
startup costs. The decrease in operating margin was partially offset by
productivity improvements.
International appliances reported a $403 thousand operating loss in the
second quarter of 2000 down from $360 thousand operating income reported in the
second quarter of 1999. International appliances reported an operating loss of
$573 thousand in the first half of 2000 an improvement from the $3 million
operating loss in the first half of 1999. The decrease in operating income in
the second quarter was due to a competitive pricing environment. The decrease
in the operating loss in the first half was primarily due to the fact that 1999
included special provisions primarily related to uncollectible accounts
receivable. The economic environment in China and the Asian region continued to
adversely impact the operations of Rongshida-Maytag. Inventory levels of
Rongshida-Maytag continue at higher than planned levels.
Interest Expense: Interest expense for 2000 was 18 percent and 8 percent higher
over the second quarter and first half of 1999, respectively, due to higher
average borrowings partially offset by lower interest rates.
Income Taxes: The effective tax rate for the second quarter and first half of
2000 was 36.5 percent, a slight improvement from the same periods in 1999.
Minority Interest: Minority interest increased by $3.3 million from the second
quarter of 1999 primarily because of the financing transactions that established
the Maytag Capital Trusts in the second half of 1999. Minority interest
increased by $8.1 million from the first half of 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 second quarter of 2000 was $76 million, or $0.92
diluted earnings per share, compared to net income of $88 million, or $0.97
diluted earnings per share in 1999. Net income for the first half of 2000 was
$152 million, or $1.81 diluted earnings per share, compared to net income of
12
$175 million, or $1.92 diluted earnings per share in 1999. The decrease in net
income was due primarily to the decrease in operating income as well as higher
interest expense and minority interest. 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. (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 half 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 half of 2000 were flat compared to 1999
at approximately $75 million. 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 half of 2000 were $28 million, or $0.36 per share, compared to $32
million, or $0.36 per share in the first half of 1999.
During the first half of 2000, Maytag repurchased 5.1 million shares at a
cost of $267 million. As of June 30, 2000, there were approximately 16 million
shares which may be repurchased under existing board authorizations of which 7
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 sells 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. Maytag's
objective in selling put options is to reduce the average price of repurchased
shares. As of June 30, 2000, there were 7.1 million put options outstanding
with strike prices ranging from $37.00 to $73.06; the weighted-average strike
price was $51.14. Of the 7.1 million put options outstanding, 1.4 expire in
2000, 1.3 expire in 2001 and 4.4 million expire in 2002.
Any funding requirements for future investing and financing activities in
13
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 June 30, 2000. Maytag had $370 million of commercial paper
outstanding as of June 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 June 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
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
14
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
MAYTAG CORPORATION
Submission of Matters to a Vote of Security Holders
June 30, 2000
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 May 11, 2000.
(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 in different years was voted on by the
shareholders. The nominees with term to expire at the 2003 Annual
Meeting, all of whom were elected, were Bernard G. Rethore, Neele E.
Stearns, Jr., Carole J. Uhrich and Lloyd D. Ward. Lester Crown was
nominated and elected with a term to expire in 2002. The Inspectors
of Election certified the following vote tabulations.
FOR WITHHELD NON-VOTES
Bernard G. Rethore 66,341,423 2,007,506 0
Neele E. Stearns, Jr. 66,258,765 2,090,164 0
Carole J. Uhrich 65,752,648 2,596,281 0
Lloyd D. Ward 65,826,384 2,522,545 0
Lester Crown 66,131,558 2,217,371 0
2. A proposal to select Ernst & Young LLP as independent auditors to
audit the financial statements to be included in the Annual Report to
Shareholders for 1999 was approved by the shareholders. The
Inspectors of Election certified the following vote tabulations.
FOR AGAINST ABSTAIN NON-VOTES
67,499,248 500,771 348,910 0
3. A proposal to adopt the Maytag Corporation 2000 Employee Stock
Incentive Plan.
FOR AGAINST ABSTAIN NON-VOTES
62,871,718 4,796,958 627,970 52,283
4. A shareholder proposal to recommend to the Board of Directors that it
act to provide for the election of the entire Board of Directors each
year. The Inspectors of Election certified the following vote
tabulations.
FOR AGAINST ABSTAIN NON-VOTES
26,664,470 25,740,622 1,137,443 14,806,394
5. A shareholder proposal to eliminate super-majority voting provision in
the Certificate of Incorporation. The Inspectors of Election
certified the following vote tabulations.
16
FOR AGAINST ABSTAIN NON-VOTES
27,288,979 25,052,487 1,214,507 14,792,956
6. A shareholder proposal to seek shareholder approval for all present
and future executive officer serverance pay agreements.
FOR AGAINST ABSTAIN NON-VOTES
12,796,009 38,915,361 1,811,789 14,825,770
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MAYTAG CORPORATION
Exhibits and Reports on Form 8-K
June 30, 2000
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule - Quarter Ended June 30, 2000
(b) Reports on Form 8-K
Maytag filed a Form 8-K dated April 10, 2000 under Item 5, Other Events,
announcing its expansion of distribution of Maytag and Jenn-Air brand
products to The Home Depot starting in early May in selected markets.
18
MAYTAG CORPORATION
Signatures
June 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: August 9, 2000
Gerald J. Pribanic
Executive Vice President and
Chief Financial Officer
Steven H. Wood
Vice President, Financial
Reporting and Audit and Chief
Accounting Officer
19