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, 1997
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, 1997:
Common Stock, $1.25 par value - 94,975,281
Page 1 of 17
MAYTAG CORPORATION
Quarterly Report on Form 10-Q
Quarter Ended September 30, 1997
I N D E X
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
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........................ 9
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................... 15
Signatures................................................ 16
Financial Data Schedule................................... 17
2
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
MAYTAG CORPORATION
Condensed Statements of Consolidated Income
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
In thousands except per
share data 1997 1996 1997 1996
Net sales $ 855,804 $ 742,850 $2,462,814 $2,228,715
Cost of sales 616,270 537,762 1,789,353 1,613,985
Gross profit 239,534 205,088 673,461 614,730
Selling, general and
administrative expenses 149,714 125,029 418,755 376,151
Restructuring charge 40,000
Operating income 89,820 80,059 254,706 198,579
Interest expense (13,473) (9,674) (42,615) (31,034)
Other - net 661 (837) 1,139 1,118
Income before income
taxes, minority
interest and
extraordinary item 77,008 69,548 213,230 168,663
Income taxes 25,381 27,124 77,253 65,778
Income before
minority interest and
extraordinary item 51,627 42,424 135,977 102,885
Minority interest (2,350) (246) (4,417) (246)
Income before
extraordinary item 49,277 42,178 131,560 102,639
Extraordinary item - loss
on early retirement of
debt (1,548) (1,548)
Net income $ 49,277 $ 40,630 $ 131,560 $ 101,091
Earnings per common
share:
Income before
extraordinary item $ 0.51 $ 0.42 $ 1.35 $ 1.00
Extraordinary item -
loss on early retirement
of debt (0.02) (0.02)
Net income income $ 0.51 $ 0.40 $ 1.35 $ 0.98
Weighted average shares
outstanding 96,600 100,793 97,334 102,709
Dividends per common
share $ 0.16 $ 0.14 $ 0.48 $ 0.42
See notes to condensed consolidated financial statements.
3
MAYTAG CORPORATION
Condensed Statements of Consolidated Financial Condition
September 30 December 31
1997 1996
In thousands except share data (Unaudited)
Assets
Current assets
Cash and cash equivalents $ 37,146 $ 27,543
Accounts receivable 515,672 462,882
Inventories 345,847 327,136
Deferred income taxes 30,266 30,266
Other current assets 34,659 57,132
Total current assets 963,590 904,959
Noncurrent assets
Deferred income taxes 137,159 131,159
Pension investments 1,561 1,441
Intangible pension asset 70,511 70,511
Other intangibles 315,206 322,436
Other noncurrent assets 41,066 47,549
Total noncurrent assets 565,503 573,096
Property, plant and equipment
Property, plant and equipment 1,749,381 1,655,646
Less allowance for depreciation 847,153 803,761
Total property, plant and equipment 902,228 851,885
Total assets $ 2,431,321 $ 2,329,940
See notes to condensed consolidated financial statements.
4
MAYTAG CORPORATION
Condensed Statements of Consolidated Financial Condition - Continued
September 30 December 31
1997 1996
In thousands except share data (Unaudited)
Liabilities and Shareowners' Equity
Current liabilities
Notes payable $ 88,871 $ 55,489
Accounts payable 220,688 206,397
Compensation to employees 74,590 64,104
Accrued liabilities 160,104 180,726
Income taxes payable 4,209
Current maturities of long-term debt 6,587 59,086
Total current liabilities 550,840 570,011
Noncurrent liabilities
Deferred income taxes 27,380 27,012
Long-term debt 479,915 488,537
Postretirement benefits other than
pensions 452,102 447,415
Pension liability 62,585 50,377
Other noncurrent liabilities 95,674 102,621
Total noncurrent liabilities 1,117,656 1,115,962
Minority interest 172,728 69,977
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 491,305 471,158
Retained earnings 508,542 423,552
Cost of Common stock in treasury
(1997--22,175,312 shares;
1996--19,106,012 shares) (497,082) (405,035)
Employee stock plans (52,225) (55,204)
Minimum pension liability adjustment (107) (107)
Foreign currency translation (6,774) (6,812)
Total shareowners' equity 590,097 573,990
Total liabilities and shareowners'
equity $ 2,431,321 $ 2,329,940
See notes to condensed consolidated financial statements.
5
MAYTAG CORPORATION
Condensed Statements of Consolidated Cash Flows
(Unaudited)
Nine Months Ended
September 30
In thousands 1997 1996
Operating activities
Net income $ 131,560 $ 101,091
Adjustments to reconcile net income to net cash
provided by operating activities:
Extraordinary item - early retirement of debt 1,548
Minority interest 4,417 246
Depreciation and amortization 100,694 81,773
Deferred income taxes (5,632) 98
Restructuring charge 40,000
Changes in working capital items:
Accounts receivable (52,790) (84,831)
Inventories (18,711) (58,569)
Other current assets 3,498 26,164
Other current liabilities 16,357 25,080
Restructuring reserves (7,728) (11,171)
Pension assets and liabilities 12,087 (17,880)
Postretirement benefits 4,687 15,292
Other--net 6,796 (5,529)
Net cash provided by operating activities 195,235 113,312
Investing activities
Investment in joint venture (net of cash acquired
of $5,174) (29,625)
Capital expenditures (161,161) (146,343)
Total investing activities (161,161) (175,968)
Financing activities
Proceeds from issuance of notes payable 36,524 50,867
Repayment of notes payable (3,142)
Proceeds from issuance of long-term debt 8,688 26,500
Repayment of long-term debt (69,810) (20,356)
Debt repurchase premiums (1,548)
Stock repurchases (123,529) (112,905)
Stock options exercised and other Common stock
transactions 54,609 14,846
Dividends (46,816) (43,253)
Investment by joint venture partner 18,975
Proceeds from sale of LLC member interest 100,000
Proceeds from interest rate swaps 18,820
Total financing activities (24,501) (67,029)
Effect of exchange rates on cash 30 850
Increase (decrease) in cash and cash
equivalents 9,603 (128,835)
Cash and cash equivalents at beginning of year 27,543 141,214
Cash and cash equivalents at end of period $ 37,146 $ 12,379
See notes to condensed consolidated financial statements.
6
MAYTAG CORPORATION
Notes to Condensed Consolidated Financial Statements
September 30, 1997
(Unaudited)
NOTE A--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, 1997 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1997. 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, 1996.
NOTE B--INVENTORIES
Inventories consist of the following (in thousands):
September 30 December 31
1997 1996
Raw materials $ 51,370 $ 53,319
Work in process 52,726 45,406
Finished products 235,925 222,954
Supplies 5,826 5,457
$ 345,847 $ 327,136
NOTE C--RESTRUCTURING CHARGE
During the first quarter of 1996 the Company announced the restructuring of its
major appliance operations in an effort to strengthen its position in the
industry and to deliver improved performance to both customers and shareowners.
This included the consolidation of two separate organizational units into a
single operation responsible for all activities associated with the manufacture
and distribution of the Company's brands of major appliances and the closing of
a cooking products plant in Indianapolis, Indiana, with transfer of that
production to an existing plant in Cleveland, Tennessee.
As a result of these actions the Company recorded a one-time restructuring
charge of $40 million, or $24.4 million after-tax, in the first quarter of 1996.
This charge is primarily related to the costs associated with the consolidation
of cooking products manufacturing activities and consolidation of activities of
the two separate organizational units.
Of this $40 million restructuring charge the Company estimates that cash
expenditures of approximately $20 million, primarily related to severance, and
non-cash charges of approximately $20 million, primarily related to write-offs
of property, plant and equipment, will be incurred. During 1996 the Company
incurred approximately $18 million of costs, of which approximately $12 million
were cash expenditures, that were charged to the $40 million reserve established
for this restructuring. During the first nine months of 1997, the Company
incurred approximately $18 million of costs, of which approximately $5 million
were cash expenditures.
7
NOTE D--CONTINGENCIES
On July 7, 1997, a major customer of the Company, Montgomery Ward Holding Co.
("Montgomery Ward"), filed for reorganization under Chapter 11 of the U.S.
Bankruptcy Code. At the time of the filing, after adjustments which should be
available in bankruptcy, the Company had accounts receivable due from Montgomery
Ward of approximately $39 million. While the Company is currently unable to
project the ultimate recovery on the accounts receivable, the Company has
approximately $10 million of reserves for an estimated potential loss on the
carrying value of the accounts receivable.
In connection with the 1994 sale of its home appliance operations in
Australia and New Zealand, the Company made various warranties to the buyer.
The buyer asserted several claims against the Company alleging breaches of
certain of those warranties. Except for one continuing claim for product
warranty costs associated with certain products manufactured prior to the date
the operations were sold, all claims have been settled for an insignificant
amount. Based on the information currently available for the remaining claim,
no estimate of the potential loss can be made at this time. However, the
resolution of this claim is not expected to have a significant adverse effect on
the Company's consolidated financial position.
In connection with the 1995 sale of its home appliance operations in Europe,
the Company agreed to indemnify the buyer for liabilities resulting from
customer claims under the 1992 and 1993 "free flights" promotions in excess of
the reserve balance at the time of sale. The resolution of these customer
claims is not expected to have a significant adverse effect on the Company's
consolidated financial position.
Other contingent liabilities arising in the normal course of business,
including guarantees, repurchase agreements, pending litigation, environmental
issues, taxes and other claims are not considered to be significant in relation
to the Company's consolidated financial position.
NOTE E--INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION
Principal financial data by industry segment and different geographic locations
is as follows (in thousands):
Quarter Ended September 30
Net sales 1997 1996
Home appliances
North America $ 777,257 $ 694,611
Asia 27,654 10,044
Vending equipment 50,893 38,195
Consolidated $ 855,804 $ 742,850
Operating income 1997 1996
Home appliances
North America $ 87,217 $ 80,577
Asia 2,340 957
Vending equipment 4,303 1,769
General corporate (4,040) (3,244)
Consolidated $ 89,820 $ 80,059
8
Nine Months Ended September 30
Net sales 1997 1996
Home appliances
North America $ 2,202,986 $ 2,086,772
Asia 89,362 10,044
Vending equipment 170,466 131,899
Consolidated $ 2,462,814 $ 2,228,715
Operating income 1997 1996
Home appliances
North America $ 245,320 $ 204,478
Asia 8,489 957
Vending equipment 18,603 10,709
General corporate (17,706) (17,565)
Consolidated $ 254,706 $ 198,579
NOTE F--NEW ACCOUNTING STANDARD
In February 1997, the Financial Accounting Standards Board issued FASB Statement
No. 128, "Earnings Per Share," ("SFAS No. 128"). SFAS No. 128 requires dual
presentation of basic and diluted earnings per share ("EPS") on the face of the
income statement. Basic EPS is computed by dividing net income by the weighted
average number of common shares outstanding during the period. Diluted EPS
reflects the potential dilution from the exercise or conversion of securities
into common stock, such as stock options. SFAS No. 128 is effective for periods
beginning after December 15, 1997 and will require restatement of prior periods.
Earlier application in not permitted. The impact of the adoption of SFAS No.
128 is not material.
NOTE G--SUBSEQUENT EVENT
On October 1, 1997 the Company acquired all of the outstanding shares of G.S.
Blodgett Corporation ("Blodgett"), a manufacturer of commercial ovens, fryers
and charbroilers for the food service industry, for approximately $96 million,
subject to adjustment, plus transaction costs, and retired outstanding debt of
Blodgett of approximately $53 million. Blodgett, which has annual sales
of approximately $135 million, produces commercial cooking equipment under
the Blodgett, Pitco Frialator, MagiKitch'n and Blodgett-Combi brands. The
acquisition will be accounted for under the purchase method and the results
of the operations of Blodgett will be included in the consolidated financial
statements from the date of acquisition.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
COMPARISON OF 1997 WITH 1996
NET SALES: The Company's consolidated net sales increased 15.2 percent in the
third quarter of 1997 compared to the same period in 1996. Net sales in the
third quarter of 1997 include third quarter sales totaling $27.7 million of the
Company's China joint venture ("Rongshida Maytag") compared to one month of
sales totaling $10 million included in the third quarter of 1996 reflecting when
the Company entered into the joint venture. (See discussion of this investment
in "Liquidity and Capital Resources" section of this Management's Discussion and
Analysis.) Excluding sales of Rongshida Maytag, the Company's net sales
increased 13 percent in the third quarter of 1997 compared to 1996.
9
Consolidated net sales increased 10.5 percent in the first nine months of
1997 compared to the same period in 1996. Net sales in the first nine months of
1997 include nine months sales totaling $89.4 million of Rongshida Maytag
compared to one month of sales totaling $10 million included in the first nine
months of 1996. Excluding sales of Rongshida Maytag, the Company's net sales
increased 7 percent in the first nine months of 1997 compared to 1996.
Net sales of the North American home appliances segment, which includes major
appliances and floor care products, increased 11.9 percent in the third quarter
of 1997 from the same period in 1996. For the first nine months of 1997, net
sales for the North American home appliances segment increased 5.6 percent from
the same period in 1996. The Company's net sales of major appliances were up
from the previous year primarily due to an increase in sales of Maytag and
Performa by Maytag brand laundry and dishwashing products, premium brand
refrigeration products and exports of major appliances partially offset by a
decrease in sales of cooking products and private label sales of major
appliances. The Company's net sales of floor care products continued at record
levels despite a decrease in industry shipments in the first nine months of 1997
compared to 1996. A primary contributor to the record sales of floor care
products is the continued success of the Hoover brand upright extractor which
was previously the only product of this unique design in the market. A major
competitor entered the upright extractor market in the latter part of 1996 and
one other competitor entered the market in 1997. The Company believes the
potential negative impact of this competition may be mitigated by the expansion
of the market for products of this type which currently has low saturation
levels and by the introduction of new models of Hoover brand extractors with new
features in the third quarter of 1997.
Vending equipment net sales were up 33.2 percent from the third quarter of
1996. Year-to-date, vending equipment net sales increased 29.2 percent from the
same period in 1996. The increase in sales was driven by a significant increase
in domestic vender sales partially offset by decreases in export vender sales
and glass front merchandiser sales. The increase in domestic vender sales is
due to an increase in sales from the introduction of a new extended depth vender
in addition to depressed sales volume in 1996 resulting from Dixie-Narco's
inability to produce sufficient volume of flexible style venders.
GROSS PROFIT: The Company's consolidated gross profit as a percent of sales
increased to 28.0 percent of sales in the third quarter of 1997 from 27.6
percent of sales in the third quarter of 1996. The increase in gross margin is
primarily due to favorable brand and product sales mix. For the first nine
months of 1997, consolidated gross profit as a percent of sales decreased to
27.3 percent from 27.6 percent in the first nine months of 1996. The decrease
in gross margin in the first half of 1997 compared to 1996 was primarily due to
the factors within the North American home appliances segment described below.
In the first nine months of 1997, gross margins decreased in the North
American home appliances segment primarily due to production start-up costs
associated with the Company's redesigned line of top-mount refrigerators and an
increase in distribution costs related to the continuing transition to regional
distribution centers. These costs more than offset the increased gross profit
from improved brand and product sales mix and the manufacturing cost savings
from the 1996 restructuring of the Company's major appliance operations. (See
further discussion of this restructuring under the heading "Restructuring
Charge" in this Management's Discussion and Analysis.)
Vending equipment gross margins increased in the first nine months of 1997
compared to 1996 due to the increase in production volume from the increase in
net sales and the first nine months of 1996 included additional manufacturing
costs associated with flexible style venders.
10
The Company expects raw material prices in 1997 to be approximately the same
to down slightly from 1996 levels.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and
administrative expenses were 17.5 percent of sales in the third quarter of 1997
compared to 16.8 percent of sales in the third quarter of 1996. The increase
was driven by additional advertising and sales promotion expenses to support new
product introductions and to respond to competitive pricing conditions and from
an increase in the provision for doubtful accounts. Year-to-date, selling,
general and administrative expenses were approximately the same compared to the
prior year as a percent of sales.
RESTRUCTURING CHARGE: During the first quarter of 1996 the Company recorded a
one-time restructuring charge of $40 million, or $24.4 million after-tax,
primarily related to the costs associated with the consolidation of activities
and facilities related to the manufacture of cooking products and consolidation
of activities of the two separate major appliance organizational units. (See
further discussion of the restructuring in "NOTE C--RESTRUCTURING CHARGE" of the
Notes to Condensed Consolidated Financial Statements.)
The Company incurred $10.5 million of additional restructuring costs during
1996, not included in the one-time restructuring charge, which were charged to
operations as incurred. Of these additional restructuring costs, $5.8 million
were incurred during the first nine months of 1996.
OPERATING INCOME: Operating income for the third quarter of 1997 was 10.5
percent of sales compared to 10.8 percent of sales in the third quarter of 1996.
For the first nine months of 1997, operating income was 10.3 percent of sales
compared to 8.9 percent of sales in the first nine months of 1996. However,
excluding the $40 million restructuring charge, operating income in the first
nine months of 1996 was 10.7 percent of sales.
Operating income for the North American home appliances segment for the third
quarter of 1997 was 8.2 percent higher than the same quarter of last year.
Operating income as a percent of sales was 11.2 percent in the third quarter
compared to 11.6 percent in the third quarter of 1996. The decrease in
operating margin was a result of the increase in selling, general and
administrative expenses in the third quarter of 1997 discussed previously.
Excluding the $40 million restructuring charge, operating income for the North
American home appliances segment was 0.3 percent higher in the first nine months
of 1997 than the same period in 1996. Operating income for the first nine
months of 1997 was 11.1 percent of sales compared to 11.7 percent of sales in
1996. The decrease in operating margin is primarily due to the decrease in the
first nine months gross profit margins discussed previously.
Vending equipment operating income increased 143.2 percent in the third
quarter of 1997 to 8.5 percent of sales compared to 4.6 percent in the same
period of 1996. For the first nine months of 1997, vending equipment operating
income increased 73.7 percent to 10.9 percent of sales compared to 8.1 percent
of sales in the first nine months of 1996. For the third quarter and nine
months of 1997, operating income increased from the prior year respective period
primarily due to the increase in gross profit discussed previously.
INTEREST EXPENSE: Interest expense increased 39.3 percent and 37.3 percent from
the third quarter and first nine months of 1996, respectively due to an increase
in short-term borrowings, interest expense related to Rongshida Maytag, lower
capitalized interest and interest expense associated with the Company's interest
rate swap program. The interest rate swap interest expense is partially offset
by mark to market unrealized gains which are reflected in Other-net in the
Condensed Statement of Consolidated Income.
11
INCOME TAXES: The effective tax rate for the first nine months of 1997 was 36.2
percent compared to 39 percent in the first nine months of 1996. The decrease
is due to savings from the Company's state and local tax initiatives, a lower
effective tax rate for Rongshida Maytag as a result of its qualification for a
tax holiday in China for the next several years, and a $2 million benefit
resulting from the favorable resolution of certain issues with the Internal
Revenue Service.
NET INCOME: Net income for the third quarter of 1997 was $49.3 million, or $.51
per share, compared to net income of $40.6 million, or $.40 per share in the
third quarter of 1996 which reflected a $1.5 million after-tax charge for the
early retirement of debt. Net income for the first nine months of 1997 was
$131.6 million, or $1.35 per share, compared to net income of $101.1 million, or
$.98 per share in the first nine months of 1996. Excluding the $24.4 million
after-tax restructuring charge and the $1.5 extraordinary item for the early
retirement of debt, income for the first nine months of 1996 would have been
$127 million, or $1.24 per share. The increase in normalized earnings per share
in the first nine months of 1997 compared to the same period in 1996 is due to
the increase in net income and the effect of the Company'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
The Company's primary sources of liquidity are cash provided by operating
activities and borrowings. Detailed information on the Company's cash flows is
presented in the Condensed Statements of Consolidated Cash Flows.
NET CASH PROVIDED BY OPERATING ACTIVITIES: Cash flow generated from operating
activities consists of net income adjusted for certain non-cash items, changes
in working capital, and changes in pension assets and liabilities and
postretirement benefits. Non-cash items include depreciation and amortization,
the restructuring charge and deferred income taxes. Working capital consists
primarily of accounts receivable, inventories, other current assets and other
current liabilities.
Net cash provided by operating activities in the first nine months of 1997
increased from the first nine months of 1996 as a result of lower working
capital requirements and from a $40 million pension fund contribution made in
the first quarter of 1996.
A portion of the Company's accounts receivable is concentrated among major
national retailers, including Montgomery Ward. (See discussion of Montgomery
Ward in "NOTE D--CONTINGENCIES" of the Notes to Condensed Consolidated Financial
Statements.) The Company believes the loss of business with any of these
national retailers and the impact on the Company's ongoing operations would be
mitigated by increased sales to other customers.
TOTAL INVESTING ACTIVITIES: The Company 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 1997 were $161.2 million
compared to $146.3 million in the same period in 1996. The higher capital
spending is due to several major capital projects that the Company continues to
implement. These projects include a new high efficiency clothes washer for both
commercial and household use, a complete redesign of the Company's refrigerator
product line, a newly designed line of upright floor care products and a
refrigeration products facility at Rongshida Maytag. Planned capital
expenditures for 1997 including those for Rongshida Maytag are approximately
12
$245 million and primarily relate to the continuation of the projects described
above. As a result of these major projects, approximately $4 million of
capitalized interest is included in 1997 planned capital spending.
TOTAL FINANCING ACTIVITIES: Dividend payments for the first nine months of 1997
amounted to $46.8 million, or $.48 per share, compared to $43.3 million, or $.42
per share in the first nine months of 1996.
In the second quarter of 1997, the Company's board of directors authorized an
additional repurchase of the Company's common stock. This board action
authorizes the repurchase of up to 15 million additional shares over a non-
specified period of time beyond the previous share repurchase authorizations of
5 million shares and 10.8 million shares. Under these authorizations which
commenced in the fourth quarter of 1995, the Company has repurchased
approximately 15.4 million shares at a cost of $343 million.
Four million of the shares repurchased during the third quarter of 1997 are
subject to a future contingent purchase price adjustment to be settled in the
future based on the difference in the market price of the Company's common stock
and other market conditions at the time of settlement compared to the market
price of the Company's common stock and other market conditions as of August 20,
1997. The Company's objective in this transaction is to reduce the average
price of repurchased shares.
In connection with share repurchase program, the Company sold put options
which gave the purchaser the right to sell shares of the Company's common stock
to the Company at specified prices upon exercise of the options. The Company's
objective in selling put options is to reduce the average price of repurchased
shares. For the first nine months of 1997, the Company received $8.4 million in
net proceeds from the sale of put options. As of September 30, 1997 there were
2.5 million put options outstanding with strike prices ranging from $28.75 to
$33.65.
In the third quarter of 1996, the Company invested approximately $35 million
and committed additional investments of approximately $35 million for a 50.5
percent ownership in Rongshida Maytag, a manufacturer of appliances in China.
The Company's joint venture partner also committed additional investments of
approximately $35 million of which $19 million was contributed in the first nine
months of 1997 and $8.6 million was contributed in the fourth quarter of 1996.
In the third quarter of 1997, the Company and a wholly owned subsidiary of
the Company contributed intellectual property and know-how with an appraised
value of $100 million and other assets with a market value of $54 million to
Anvil Technologies LLC ("LLC"), a newly formed Delaware limited liability
company. An outside investor purchased from the Company a non-controlling,
member interest in the LLC for $100 million. The Company's objective of this
transaction was to raise low-cost, equity funds. For financial reporting
purposes, the assets, liabilities, results of operations and cash flows of the
LLC (other than those which are eliminated in consolidation) are included in the
Company's consolidated financial results and the outside investors' member
interest is reflected as minority interest in the Company's Condensed Statements
of Consolidated Financial Condition.
Any funding requirements for future investing and financing activities in
excess of cash on hand and generated from future operations will be supplemented
by borrowings. The Company'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 for interest coverage and leverage which the Company was in compliance
with at September 30, 1997. The Company also maintains the ability to issue an
aggregate of $125 million in medium term note securities under an effective
shelf registration statement filed with the Securities and Exchange Commission.
13
CONTINGENCIES
The Company 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 "NOTE D--CONTINGENCIES" of the Notes to
Condensed Consolidated Financial Statements.)
14
MAYTAG CORPORATION
Exhibits and Reports on Form 8-K
September 30, 1997
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a Form 8-K dated August 25, 1997 indicating, under
Item 5, that it had agreed to acquire G.S. Blodgett Corporation, a
commercial cooking products manufacturer headquartered in Burlington,
Vermont.
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MAYTAG CORPORATION
Signatures
September 30, 1997
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
s/s G. J. Pribanic
Date: November 12, 1997
Gerald J. Pribanic
Executive Vice President and
Chief Financial Officer
s/s Steven H. Wood
Steven H. Wood
Vice President, Financial
Reporting and Audit and Chief
Accounting Officer
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