SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|X| Definitive Additional Materials
|_| Soliciting Material Under Rule 14a-12
MAYTAG CORPORATION
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------
FORWARD-LOOKING STATEMENTS
This document includes statements that do not directly or exclusively relate to
historical facts. Such statements are "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements include
statements regarding benefits of the proposed transactions, expected cost
savings and anticipated future financial operating performance and results,
including estimates of growth. These statements are based on the current
expectations of management of Maytag. There are a number of risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements included in this document. For example, with respect
to the transaction with a group led by Ripplewood Holdings L.L.C. (1) Maytag may
be unable to obtain shareholder approval required for the transaction; (2)
Maytag may be unable to obtain regulatory approvals required for the
transaction, or required regulatory approvals may delay the transaction or
result in the imposition of conditions that could have a material adverse effect
on Maytag or cause the parties to abandon the transaction; (3) conditions to the
closing of the transaction may not be satisfied or the merger agreement may be
terminated prior to closing; (4) Maytag may be unable to achieve cost-cutting
goals or it may take longer than expected to achieve those goals; (5) the
transaction may involve unexpected costs or unexpected liabilities; (6) the
credit ratings of Maytag or its subsidiaries may be different from what the
parties expect; (7) the businesses of Maytag may suffer as a result of
uncertainty surrounding the transaction; (8) the industry may be subject to
future regulatory or legislative actions that could adversely affect Maytag; and
(9) Maytag may be adversely affected by other economic, business, and/or
competitive factors. Additional factors that may affect the future results of
Maytag are set forth in its filings with the Securities and Exchange Commission
("SEC"), which are available at www.maytagcorp.com. Maytag undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed transaction with an investor group led by
private equity firm Ripplewood Holdings L.L.C., Maytag has filed a definitive
proxy statement and may file other relevant documents concerning the proposed
merger with SEC. WE URGE INVESTORS TO READ THE DEFINITIVE PROXY STATEMENT AND
THE OTHER RELEVANT DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT MAYTAG AND THE PROPOSED TRANSACTION.
Investors can obtain free copies of the definitive proxy statement as well as
other filed documents containing information about Maytag at HTTP://WWW.SEC.GOV,
SEC's Web site. Free copies of Maytag's SEC filings are also available on
Maytag's Web site at www.maytagcorp.com.
PARTICIPANTS IN THE SOLICITATION
Maytag and its executive officers and directors and Ripplewood Holdings L.L.C.,
Triton Acquisition Holding and Triton Acquisition and their respective
affiliates, executive officers and directors may be deemed, under SEC rules, to
be participants in the solicitation of proxies from Maytag's stockholders with
respect to the proposed transaction. Information regarding the officers and
directors of Maytag is included in its definitive proxy statement for its 2005
annual meeting filed with SEC on April 4, 2005. More detailed information
regarding the identity of potential participants, and their direct or indirect
interests, by securities, holdings or otherwise, is set forth
in the proxy statement and other materials filed or to be filed with SEC in
connection with the proposed transaction.
MAYTAG PRESS RELEASE - 2Q 2005 RESULTS
FOR IMMEDIATE RELEASE
Media Contact: John Daggett
Maytag Corporate Communications
(641) 787-7711
john.daggett@maytag.com
MAYTAG ANNOUNCES SECOND QUARTER 2005 RESULTS
NEWTON, IOWA--(July 22, 2005) - Maytag Corporation (NYSE:MYG) today reported
second quarter consolidated sales of $1.23 billion, up 6.7 percent from sales of
$1.15 billion in the same period last year.
Reported net income for the second quarter was $3.5 million or 4 cents per
share, compared with a net loss of $41.1 million, or 52 cents per share, a year
earlier. Diluted earnings per share for the second quarter included the
following:
THREE MONTHS ENDED
---------------------------
JULY 2 JULY 3
2005 2004
---------------------------
DILUTED EARNINGS (LOSS) PER SHARE $0.04 $(0.52)
============ =============
Included in diluted earnings (loss) per share
(net of tax) were the following items:
Restructuring and related charges - Galesburg 0.01 0.13
Restructuring and related charges -
reorganization 0.02 0.11
Goodwill impairment-Commercial Products - 0.12
Front-load washer litigation - 0.16
Adverse judgment on pre-acquisition
distributor lawsuit - 0.09
Second quarter sales were up year-over-year in all major categories of the
home appliances segment -- refrigeration, laundry, cooking, dishwashing and
floor care. Sales of Commercial Products declined versus a year ago, a result of
continued weakness in the vending industry.
Maytag Chairman and CEO Ralph Hake said that sales of major appliances
showed solid improvement during the quarter with refrigeration and cooking
product sales up appreciably.
"Sales of our French-Door bottom-freezers under the Jenn-Air, Maytag and Amana
brand names are strong. In cooking, all Jenn-Air products, including cook tops
and wall ovens generated positive gains for the company. Also, Jenn-Air
stainless steel dishwashers and Maytag's new Neptune front-load washers have
generated encouraging consumer interest this quarter."
Hake noted that all floor care categories sold under the Hoover brand
experienced significant year-over-year growth with market share gains in upright
vacuums as the primary sales driver.
Maytag Services and Maytag International continued to produce strong
revenue growth compared to the second quarter of 2004.
"Compared to last year, operations benefited from sales growth, a positive
mix in major appliances, and savings from our 'One Company' restructuring and
the Galesburg plant closing," said Hake. "However, these improvements were
offset by rising raw material costs including steel and resins, higher fuel and
transportation costs and lower floor care pricing."
Sales were up sequentially from the first quarter of 2005, benefiting from
refrigeration sales beyond normal seasonal increases. Operating income was down
sequentially from the first quarter of 2005, due to planned national advertising
expenditure increases, which more than offset the benefit from increased sales.
During the quarter, the company signed a commitment letter for a $500
million five-year, senior secured revolving credit facility. The new credit
facility would be fully underwritten by J.P. Morgan Chase Bank, N.A. and
Citigroup Global Markets, Inc. and secured by accounts receivable and inventory
of certain Maytag subsidiaries. The company also announced that it has amended
its current $300 million revolving credit facility, due March 2007. The current
$300 million credit facility would be replaced upon the issuance of the $500
million credit facility.
SIX-MONTH PERFORMANCE
Maytag's sales in the first six months of 2005 were $2.40 billion, up one
percent from sales of $2.37 billion in the first six months of 2004. Operating
income was $43.8 million, up from $30.2 million reported in the year-earlier
period.
Reported net income for the first six months of 2005 was $11.2 million, or
14 cents per share. In the first six months of 2004, Maytag reported a net loss
of $2.4 million, or 3 cents per share.
For the first six months of 2005, cash flow used by operations was $47.4
million, approximately the same as the first six months of 2004. The use of cash
flow in both periods is due primarily to seasonal increases in working capital.
Cash flow was also impacted by lower pension contributions in the first half of
2005 compared to the same period in 2004. As of the end of the second quarter,
cash and cash equivalents increased by $61.5 million to $69 million, compared to
the same period in the prior year, and total debt levels declined by $118
million to $977 million.
The earnings (loss) per share for the first six months of 2005 and 2004
included the following items:
SIX MONTHS ENDED
---------------------------
JULY 2 JULY 3
2005 2004
---------------------------
DILUTED EARNINGS (LOSS) PER SHARE $0.14 $(0.03)
============ =============
Included in diluted earnings (loss) per share
(net of tax) were the following items:
Restructuring and related charges - Galesburg 0.02 0.20
Restructuring and related charges - reorganization 0.05 0.11
Goodwill impairment-Commercial Products - 0.12
Front-load washer litigation - 0.16
Adverse judgment on pre-acquisition distributor
lawsuit - 0.09
FULL-YEAR PROJECTIONS
Maytag reaffirmed that its earnings per share estimate for the full year
2005 are expected to be in the range of 45 to 55 cents, including approximately
10 cents in restructuring charges.
ABOUT MAYTAG
Maytag Corporation is a leading producer of home and commercial
appliances. Its products are sold to customers throughout North America and in
international markets. The corporation's principal brands include Maytag(R),
Hoover(R), Jenn-Air(R), Amana(R), Dixie-Narco(R) and Jade(R).
# # #
QUARTERLY CONFERENCE CALL
Maytag will host a conference call for members of the financial community
today at 8:30 a.m. CT (9:30 a.m. ET) to comment on its performance. Chairman &
CEO Ralph Hake and CFO
George Moore will participate in the call. The company will not conduct a
question-and-answer session for this conference call.
Persons wishing to listen should telephone 888-489-9488 AT 8:20 A.M. CT
(INTERNATIONAL PARTICIPANTS SHOULD DIAL 415-537-1945). The conference call will
be recorded and available by telephone from 10:30 a.m. CT July 22 until 10:30
a.m. CT July 26. Persons interested in listening to the conference call tape
should call 800-633-8284 (or internationally 402-977-9140) and use access code
number 21251588.
Additionally, Maytag's conference call will be distributed live over
CCBN's Investor Distribution Network to both institutional and individual
investors. Individual investors can listen to the call through CCBN's individual
investor center at WWW.FULLDISCLOSURE.COM or by visiting any of the investor
sites in CCBN's Individual Investor Network. Institutional investors can access
the call via CCBN's password-protected event management site, StreetEvents
(WWW.STREETEVENTS.COM). The audio webcast can also be accessed through Maytag's
Web site, WWW.MAYTAGCORP.COM, by clicking on the "Corporate News Center" and
then "Conference Calls." Replays will be available on both the Maytag and CCBN
Web sites.
# # #
FORWARD-LOOKING STATEMENTS
This document includes statements that do not directly or exclusively relate to
historical facts. Such statements are "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements include
statements regarding benefits of the proposed transactions, expected cost
savings and anticipated future financial operating performance and results,
including estimates of growth. These statements are based on the current
expectations of management of Maytag. There are a number of risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements included in this document. For example, with respect
to the transaction with a group led by Ripplewood Holdings L.L.C. (1) Maytag may
be unable to obtain shareholder approval required for the transaction; (2)
Maytag may be unable to obtain regulatory approvals required for the
transaction, or required regulatory approvals may delay the transaction or
result in the imposition of conditions that could have a material adverse effect
on Maytag or cause the parties to abandon the transaction; (3) conditions to the
closing of the transaction may not be satisfied or the merger agreement may be
terminated prior to closing; (4) Maytag may be unable to achieve cost-cutting
goals or it may take longer than expected to achieve those goals; (5) the
transaction may involve unexpected costs or unexpected liabilities; (6) the
credit ratings of Maytag or its subsidiaries may be different from what the
parties expect; (7) the businesses of Maytag may suffer as a result of
uncertainty surrounding the transaction; (8) the industry may be subject to
future regulatory or legislative actions that could adversely affect Maytag; and
(9) Maytag may be adversely affected by other economic, business, and/or
competitive factors. Additional factors that may affect the future results of
Maytag are set forth in its filings with the Securities and Exchange Commission
("SEC"), which are available at www.maytagcorp.com. Maytag undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed transaction with an investor group led by
private equity firm Ripplewood Holdings L.L.C., Maytag has filed a definitive
proxy statement and may file other relevant documents concerning the proposed
merger with SEC. WE URGE INVESTORS TO READ THE DEFINITIVE PROXY STATEMENT AND
THE OTHER RELEVANT DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT MAYTAG AND THE PROPOSED TRANSACTION.
Investors can obtain free copies of the definitive proxy statement as well as
other filed documents containing information about Maytag at HTTP://WWW.SEC.GOV,
SEC's Web site. Free copies of Maytag's SEC filings are also available on
Maytag's Web site at www.maytagcorp.com.
PARTICIPANTS IN THE SOLICITATION
Maytag and its executive officers and directors and Ripplewood Holdings L.L.C.,
Triton Acquisition Holding and Triton Acquisition and their respective
affiliates, executive officers and directors may be deemed, under SEC rules, to
be participants in the solicitation of proxies from Maytag's stockholders with
respect to the proposed transaction. Information regarding the officers and
directors of Maytag is included in its definitive proxy statement for its 2005
annual meeting filed with SEC on April 4, 2005. More detailed information
regarding the identity of potential participants, and their direct or indirect
interests, by securities, holdings or otherwise, is set forth in the proxy
statement and other materials filed or to be filed with SEC in connection with
the proposed transaction.
SECOND QUARTER SALES AND EARNINGS COMPARISON (UNAUDITED)
NET SALES (IN THOUSANDS)
2005 2004 % Change
-------------------- --------------------- --------------
Home Appliances $ 1,163,259 $ 1,077,643 7.9
Commercial Products 66,459 74,586 (10.9)
-------------------- ---------------------
Consolidated $ 1,229,718 $ 1,152,229 6.7
==================== =====================
OPERATING INCOME (LOSS) (IN THOUSANDS)
2005 2004 % Change
-------------------- --------------------- --------------
Home Appliances $ 21,029 $ (23,741) 188.6
Commercial Products (1,354) (9,697) 86.0
-------------------- ---------------------
Reported $ 19,675 $ (33,438) 158.8
==================== =====================
Included in operating income (loss)
Restructuring and related charges-Home Appliances $ 3,156 $ 27,783
Front-load washer litigation-Home Appliances - 18,500
Restructuring and related charges-Commercial Products 224 69
Goodwill impairment-Commercial Products - 9,600
NET INCOME (LOSS) (IN THOUSANDS)
2005 2004 % Change
-------------------- --------------------- --------------
Reported $ 3,481 $ (41,084) 108.5
==================== =====================
Included in net income (loss) (net of tax)
Restructuring and related charges $ 2,092 $ 18,879
Goodwill impairment-Commercial Products - 9,600
Front-load washer litigation - 12,488
Adverse judgment on pre-acquisition distributor lawsuit - 7,091
BASIC EARNINGS (LOSS) PER SHARE
2005 2004 % Change
-------------------- --------------------- --------------
Reported $ 0.04 $ (0.52) 108.4
==================== =====================
Included in basic earnings (loss) per share (net of tax)
Restructuring and related charges $ 0.03 $ 0.24
Goodwill impairment-Commercial Products - 0.12
Front-load washer litigation - 0.16
Adverse judgment on pre-acquisition distributor lawsuit - 0.09
Basic weighted-average shares
outstanding (thousands) 79,818 79,012
DILUTED EARNINGS (LOSS) PER SHARE
2005 2004 % Change
-------------------- --------------------- --------------
Reported $ 0.04 $ (0.52) 108.4
==================== =====================
Included in diluted earnings (loss) per share (net of tax)
Restructuring and related charges $ 0.03 $ 0.24
Goodwill impairment-Commercial Products - 0.12
Front-load washer litigation - 0.16
Adverse judgment on pre-acquisition distributor lawsuit - 0.09
Diluted weighted-average shares
outstanding (thousands) 79,818 79,012
FIRST HALF SALES AND EARNINGS COMPARISON
NET SALES (IN THOUSANDS)
2005 2004 % Change
---------------------- ---------------------- ---------------
Home Appliances $ 2,276,446 $ 2,222,429 2.4
Commercial Products 121,111 148,744 (18.6)
---------------------- ----------------------
Consolidated $ 2,397,557 $ 2,371,173 1.1
====================== ======================
OPERATING INCOME (LOSS) (IN THOUSANDS)
2005 2004 % Change
---------------------- ---------------------- ---------------
Home Appliances $ 47,664 $ 36,604 30.2
Commercial Products (3,903) (6,410) 39.1
---------------------- ----------------------
Reported $ 43,761 $ 30,194 44.9
====================== ======================
Included in operating income (loss)
Restructuring and related charges-Home Appliances $ 7,872 $ 35,778
Front-load washer litigation-Home Appliances - 18,500
Restructuring and related charges-Commercial Products 362 69
Goodwill impairment-Commercial Products - 9,600
NET INCOME (LOSS) (IN THOUSANDS)
2005 2004 % Change
---------------------- ---------------------- ---------------
Reported $ 11,213 $ (2,360) 575.1
====================== ======================
Included in net income (loss) (net of tax)
Restructuring and related charges $ 5,393 $ 24,196
Goodwill impairment-Commercial Products - 9,600
Front-load washer litigation - 12,488
Adverse judgment on pre-acquisition distributor lawsuit - 7,091
BASIC EARNINGS (LOSS) PER SHARE
2005 2004 % Change
---------------------- ---------------------- ---------------
Reported $ 0.14 $ (0.03) 570.6
====================== ======================
Included in basic earnings (loss) per share (net of tax)
Restructuring and related charges $ 0.07 $ 0.31
Goodwill impairment-Commercial Products - 0.12
Front-load washer litigation - 0.16
Adverse judgment on pre-acquisition distributor lawsuit - 0.09
Basic weighted-average shares
outstanding (thousands) 79,690 78,929
DILUTED EARNINGS (LOSS) PER SHARE
2005 2004 % Change
---------------------- ---------------------- ---------------
Reported $ 0.14 $ (0.03) 570.6
====================== ======================
Included in diluted earnings (loss) per share (net of tax)
Restructuring and related charges 0.07 $ 0.31
Goodwill impairment-Commercial Products - 0.12
Front-load washer litigation - 0.16
Adverse judgment on pre-acquisition distributor lawsuit - 0.09
Diluted weighted-average shares
outstanding (thousands) 79,690 78,929
MAYTAG CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(In thousands, except per share data)
Second Quarter Ended Six Months Ended
July 2 July 3 July 2 July 3
2005 2004 2005 2004
------------ ------------- ----------- ------------
Net sales $ 1,229,718 $ 1,152,229 $2,397,557 $ 2,371,173
Cost of sales 1,093,858 1,003,726 2,132,627 2,011,549
------------ ------------- ----------- ------------
Gross profit 135,860 148,503 264,930 359,624
Selling, general and administrative expenses 112,805 125,989 212,935 265,483
Restructuring and related charges 3,380 27,852 8,234 35,847
Goodwill impairment-Commercial Products - 9,600 - 9,600
Front-load washer litigation - 18,500 - 18,500
------------ ------------- ----------- ------------
Operating income (loss) 19,675 (33,438) 43,761 30,194
Interest expense (16,278) (13,215) (32,053) (26,106)
Adverse judgment on pre-acquisition distributor lawsuit - (10,505) - (10,505)
Other-net 815 55 3,243 2,921
------------ ------------- ----------- ------------
Income (loss) before income taxes 4,212 (57,103) 14,951 (3,496)
Income tax expense (benefit) 731 (16,019) 3,738 (1,136)
------------ ------------- ----------- ------------
Net income (loss) $ 3,481 $ (41,084) $ 11,213 $ (2,360)
============ ============= =========== ============
Basic earnings (loss) per common share:
Net income (loss) $ 0.04 $ (0.52) $ 0.14 $ (0.03)
Basic weighted-average shares outstanding 79,818 79,012 79,690 78,929
Diluted earnings (loss) per common share:
Net income (loss) $ 0.04 $ (0.52) $ 0.14 $ (0.03)
Diluted weighted-average shares outstanding 79,818 79,012 79,690 78,929
MAYTAG CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 2 January 1 July 3
2005 2005 2004
----------------- --------------------
ASSETS (Unaudited) (Unaudited)
----------------- ------------------ --------------------
Current assets
Cash and cash equivalents $ 69,015 $ 164,276 $ 7,492
Accounts receivable - net 724,544 629,901 636,929
Inventories 604,383 515,321 591,588
Deferred income taxes 52,973 55,862 61,335
Other current assets 45,419 80,137 89,329
Discontinued current assets - - 69,941
----------------- ------------------ --------------------
Total current assets 1,496,334 1,445,497 1,456,614
Noncurrent assets 653,626 653,365 574,949
Discontinued noncurrent assets - - 61,069
----------------- ------------------ --------------------
Total noncurrent assets 653,626 653,365 636,018
Property, plant and equipment 869,157 921,162 991,443
----------------- ------------------ --------------------
Total assets $ 3,019,117 $ 3,020,024 $ 3,084,075
================= ================== ====================
LIABILITIES AND SHAREOWNERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable $ 553,169 $ 545,901 $ 423,950
Accrued liabilities 356,623 358,119 334,507
Notes payable and
current portion of long-term debt 188,977 6,043 223,982
Discontinued current liabilities - - 100,962
----------------- ------------------ --------------------
Total current liabilities 1,098,769 910,063 1,083,401
Long-term debt, less current portion 787,839 972,568 870,546
Postretirement benefit liability 528,436 531,995 541,380
Accrued pension cost 504,133 496,480 337,407
Other noncurrent liabilities 177,418 183,942 188,888
Total discontinued noncurrent liabilities - - 18,766
Shareowners' equity (deficit) (77,478) (75,024) 43,687
----------------- ------------------ --------------------
Total liabilities and shareowners' equity (deficit) $ 3,019,117 $ 3,020,024 $ 3,084,075
================= ================== ====================
MAYTAG CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
Six Months Ended
July 2 July 3
2005 2004
Operating activities
- ------------------------------------------------------------------------------------------------------- ----------------
Net income (loss) $ 11,213 $ (2,360)
Depreciation and amortization 82,842 84,066
Deferred income taxes (8,707) 21,903
Restructuring and related charges, net of cash (14,735) 29,032
Goodwill impairment-Commercial Products - 9,600
Front-load washer litigation, net of cash paid (4,292) 18,500
Adverse judgment on pre-acquisition distributor lawsuit (12,250) 10,505
Change in working capital (178,445) (207,738)
Pension expense 35,509 31,866
Pension contributions (27,849) (92,744)
Postretirement benefit liability (3,559) 3,275
Other 72,849 45,133
---------------- ----------------
Net cash used in operating activities (47,424) (48,962)
Investing activities
- ------------------------------------------------------------------------------------------------------- ----------------
Proceeds from business disposition, net of transaction costs 11,123 -
Capital expenditures (35,601) (48,872)
---------------- ----------------
Investing activities (24,478) (48,872)
Financing activities
- ------------------------------------------------------------------------------------------------------- ----------------
Net proceeds of notes payable - 129,484
Dividends on common stock (21,490) (28,395)
Repayment of long-term debt (2,518) (4,020)
Stock options and employee stock 1,722 1,975
Other (1,025) (276)
---------------- ----------------
Financing activities (23,311) 98,768
Effect of exchange rates (48) (198)
---------------- ----------------
Increase (decrease) in cash and cash equivalents (95,261) 736
Cash and cash equivalents at beginning of period 164,276 6,756
---------------- ----------------
Cash and cash equivalents at end of period $ 69,015 $ 7,492
================ ================
RALPH HAKE CONFERENCE CALL REMARKS - 2Q 2005 EARNINGS
JULY 22, 2005
Good Morning. Thank you for joining us today.
Let me begin my comments this morning by providing you with an overview of our
business highlights. Then I'll ask George Moore, our CFO, to provide more
in-depth financial insight, including the new financing plan that we have in
place. Following his comments, I will provide a brief summary and conclusion.
As we indicated on our conference call announcement, we will not be taking
questions today, due to the pending transaction.
To get started, let's first look at our earnings. We reported earnings of 4
cents per share in the quarter, which included:
o Restructuring and related charges of 2 cents per share, for our "One
Company" restructuring.
o Restructuring and related charges of 1 cent per share, for our Galesburg
plant closing.
As you may recall, during the second quarter of 2004, we reported a net loss of
$41 million, or 52 cents per share; including 61 cents of charges as noted in
today's financial statements.
We experienced higher sales volume and a positive mix in major appliance sales,
as well as savings from our restructuring activities. However, these benefits
were offset by:
o Rising raw materials costs, including steel and resins;
o Higher distribution and fuel costs; and
o Lower floor care pricing.
Prior to explaining our sales levels, let me provide you with a view of the
industry in which we operate.
o Core 5 industry shipments were up 2.6 percent from the second quarter
2004, with shipments at just over 11 million units; and
o The floor care industry - which is primarily uprights and extractors -
was up 16.5 percent.
o In commercial, vending industry sales were down dramatically - double
digits - during the quarter.
For Maytag overall, consolidated sales were up 6.7 percent year over year - the
third quarter in which we have seen improvement sequentially. In our Home
Appliance segment, sales increased 7.9 percent compared to 2004, with
year-over-year sales improvement in all product categories. The most notable
drivers of this positive sales growth included:
o Significant improvement in refrigeration sales; specifically, our
French-door, bottom-freezer models sold under the Maytag, Jenn-Air and
Amana brands, as well as newly introduced top-freezer refrigerator
models;
o Positive gains in our cooking business, led by our premium Jenn-Air
product line-up, including cooktops, wall ovens and microwaves;
o New 27-inch Maytag Neptune(R) washers and dryers;
o Stainless-steel Jenn-Air dishwashers;
o Growth in our Hoover floor care business, specifically upright vacuum
models; and
o Continued strong sales growth for our Maytag Services business - up 19
percent; as well as our Maytag International business - up 13 percent.
Unit sales in full-size floor care increased 31 percent in the second quarter,
compared to the prior year. However, volume increases were partially offset by
lower average selling prices for these products. Gross sales were up 13 percent
in this category, and our market share increased.
From a market share perspective, Maytag's overall second-quarter Core 5
appliance market share was flat; however, our sales benefited from industry
growth, increases in average selling prices for major appliances and our ability
to grow outside of the Core 5 and in Maytag Services, Maytag International and
our floor care business.
As I mentioned earlier, we realized strong refrigeration sales during the second
quarter. Last year at this time, we were still working through some of the
transition for refrigeration. However, with this now behind us, we are clearly
seeing the benefits of our strategy with new models being produced at our plants
in Amana, Iowa, and Reynosa, Mexico; and those sourced through our third-party
partnership.
In our Commercial Products segment, sales during the quarter declined 11 percent
year over year, primarily due to the ongoing weakness in the vending equipment
industry in which our Dixie-Narco business competes.
I will now ask George Moore to provide a detailed look at our financial
performance, and our new financing plan, and then I will offer some additional
insights about our business going forward.
GEORGE. . . FINANCIAL REVIEW
RALPH CONTINUES. . .
Thank you, George.
Last quarter, I shared with you plans to concentrate our vertical axis, that is,
traditional top-load washer production in our Herrin, Illinois, facility and our
dryer production in Searcy, Arkansas. With successful labor negotiations in
Herrin in June, I am pleased to report that new top-load washer models went into
production in Herrin earlier this week, and accompanying dryer models are now
being made in Searcy. As we have stated previously, this laundry transformation
project is expected to provide us with substantial and immediate cost, quality,
line logic and new consumer benefits.
We are continuing to review our overall manufacturing footprint to address our
noncompetitive supply chain costs and burden absorption issues. Our discussions
are ongoing with the labor unions in both our Newton and North Canton facilities
to identify cost improvement. Over the next few months, we expect to finalize
our operational plans to migrate viable product lines to low-cost manufacturing
locations.
Some of our critics have suggested a lack of new products from Maytag this year.
To set the record straight, let me provide you with the facts regarding our
pipeline of innovation. We planned a roll-out of more than 30 new, innovative
products in 2005, focusing heavily in the laundry and
floor care categories. To date, 23 of these new products are in production,
including new laundry products and offerings in every other major category. Many
of these products have contributed to our top-line sales growth during the
second quarter. In addition, we anticipate 11 more new products over the balance
of the year, including the launch of our exciting, new high-end vacuum, which we
believe will have a significant impact in the floor care market. By the time we
get to the fourth quarter of this year, we expect that about one-third of our
sales will be directly related to the products that we have launched in 2005.
Today, we also reaffirmed that our estimated full year 2005 earnings are
expected to be in the range of 45 to 55 cents, including approximately 10 cents
in restructuring charges.
Yesterday, our Board of Directors announced that they were unable to determine
that the Whirlpool Corporation proposal announced on July 17 may reasonably be
expected to lead to a financially superior transaction that is reasonably
capable of being completed. Such a determination is a prerequisite under
Maytag's existing merger agreement with the Ripplewood-led group for Maytag to
furnish information to, and have discussions and negotiations with, Whirlpool.
We stated that Maytag will continue to evaluate the Whirlpool proposal. In our
release, we also said that the Board of Directors has not changed its
recommendation of the existing Ripplewood-led transaction.
In closing ... while there is uncertainty of future ownership - we remain
focused on running a better business. We continue to implement our plans -
launching new, innovative products; making progress in the areas of quality and
cost reduction; and building our consumer connectivity with preferred brands.
The progress that we are making in these key areas of our business does not
happen without tremendous efforts of our employees. The thousands of Maytag men
and women located throughout the world have demonstrated their unwavering
support for our organization in performing well through this period of
disruption and uncertainty. I am very proud of the resilience that they
have shown, and I thank them for their many contributions and dedication, which
are a testament to the virtues that have made Maytag an industry leader for 112
years.
Thank you for your attention today.
GEORGE MOORE REMARKS - 2Q EARNINGS ANNOUNCEMENT
Friday, July 22, 2005
Thank you, Ralph.
OPERATING PERFORMANCE
Given the overview provided by Ralph, I will provide additional perspective on
our second quarter operating performance, both year-over-year, and sequentially
on a comparative basis.
YEAR-OVER-YEAR COMPARISON
Compared to the prior year, our consolidated second quarter sales were up 6.7
percent.
As Ralph stated, Home Appliances sales were up 7.9 percent, driven by
improvement in all major appliances categories, as well as double-digit growth
in International and our Maytag Services operations. In major appliances,
pricing from our previously announced price increases contributed approximately
4 percent to major appliance sales, which was partially offset by price
repositioning and mix within product categories. Floor care pricing was down
about 14 percent from the prior year, but only down 1 percent from the previous
quarter.
As noted in Commercial Products, our sales were down 11 percent due to the
continued weakness in the vending equipment industry.
In terms of operating performance, our year-over-year operating income,
excluding restructuring and other previously listed items, was flat despite
higher revenues. Operations benefited from
restructuring activities in previous years, including closure of the Galesburg
refrigeration facility and the consolidation of our floorcare, appliances and
corporate headquarters organizations. This initiative resulted in a significant
reduction of our salaried workforce and lower advertising expense.
These improvements were offset by lower pricing in floorcare, higher material
costs, primarily steel and resins, and fuel related distribution costs. In spite
of our recent actions to lower pension and postretirement expenses, these items
were still dilutive year-over-year.
Comparing the first 6 months of 2005 to the same period in 2004, our sales were
up 1.1 percent with Home Appliances increasing 2.4 percent on Core Five industry
growth of six-tenths of a percent. International and Services both continued
their double-digit growth over last year. Commercial sales were down 19 percent
year-over-year, primarily due to a downturn of purchases in the vending
equipment industry. On a reported basis, operating income was up approximately
$14 million or 45 percent for the six-month period compared to last year.
Year-over-year operating income benefited from charges taken in the prior year
for restructuring, goodwill impairment, and front-load washer litigation.
Excluding these restructuring and related charges, operating income declined 42
million dollars in the first half, compared to the prior year. The decrease
resulted from higher material and logistics costs of approximately $100 million
as well as lower burden absorption of $25 million due to a higher mix of sourced
versus manufactured products. Partially offsetting these were the benefit from
higher volume, price and mix of $10 million as well as savings from
restructuring initiatives. Within volume, price and mix, our improvements in
major appliances along with growth in International and Services were offset by
lower pricing in floorcare. Productivity gains from restructuring initiatives,
including headcount reductions, lower national advertising, and savings from the
refrigeration transition from Galesburg to Reynosa, benefited us by $70 million
dollars.
SEQUENTIAL COMPARISON
Sequentially, our consolidated sales were up 5 percent. In our Home Appliances
segment, which was up 4.5 percent, strong gains in the refrigeration business,
beyond normal seasonal increases, contributed to increased revenues and
increased market share in this category. Although we had increased sales, this
benefit was more than offset by planned increased national advertising spending
of $8 million dollars coinciding with key laundry launches.
In the Commercial Products segment, our sales were up sequentially, however, the
commercial vending business continued to struggle to convert the increased sales
to operating income. This was due to continued pricing and cost pressures as
well as unfavorable product mix during the quarter.
OTHER INCOME STATEMENT LINE ITEMS
For items below operating income, let me cover the significant elements.
Interest expense in the second quarter of 2005 increased to $16 million compared
to $13 million in the prior year quarter, as a result of higher interest rates
partially offset by lower average borrowing levels.
We recorded tax expense of $700 thousand in the second quarter of 2005 on income
before income taxes of $4.2 million. This was compared to a tax benefit of $16
million on a loss before income taxes of $57.1 million in the second quarter of
2004. The year-to-date and full-year tax rate are expected to be approximately
25 percent.
KEY BALANCE SHEET ITEMS
Let's now discuss the following key balance sheet items.
Our overall working capital levels improved from the prior year, both in dollars
and as a percent of sales, from 16.5 percent last year to 16.3 percent in the
most recent quarter. Improvement in accounts payable, primarily from terms
management and additional sourced product purchases,
more than offset increased receivables and inventories. Accounts receivable are
up due to strong June sales versus the prior year, and customer mix. Inventories
are up over prior year due to our vertical axis laundry transition and increased
purchases of new, high-efficiency Neptune front-load laundry during the roll-out
period.
In terms of our cash on hand and debt outstanding, our overall debt levels are
down $118 million from the prior year. In addition, we increased our cash and
cash equivalents by $62 million to $69 million. Therefore, our total net debt
levels of $908 million were down $179 million, or 16 percent from the prior
year.
During the 2nd quarter of 2005, we amended the existing $300 million revolving
credit facility. The amendment eases covenant requirements and the facility is
now secured by certain accounts receivable and inventory. In addition, we signed
a commitment letter for a new $500 million, five-year, senior secured revolving
credit facility that would be fully underwritten. The new agreement will also be
secured by certain accounts receivable and inventory. The current $300 million
credit facility would be replaced upon issuance of the $500 million facility.
CASH FLOW PERFORMANCE
Our free cash flow, defined as cash flow from operations less capital
expenditures, was a use of cash of $72 million in the first half 2005 compared
to a use of $98 million in the prior year. As is typical, free cash flow is a
use of cash in the first half due to our seasonal increases in working capital.
The first half use was slightly lower than the prior year due to lower working
capital increases, as described earlier, along with lower pension contributions.
These items were partially offset by the higher cash requirements for
restructuring, as well as the payment of $12.3 million for the final resolution
of a distributor lawsuit.
Our first half working capital increase was $178 million compared to an increase
or use of cash of about $208 million in the prior year. Regarding pension
contributions, we made $28 million in voluntary qualified pension contributions
in the first half 2005 compared to $93 million in the prior year.
Capital expenditures were $36 million in the first half 2005, down from $49
million in 2004.
CASH FLOW OUTLOOK
For 2005, we continue to expect free cash flow in the range of $75 to $100
million. Included in this estimate are the following assumptions:
o We plan to make $100 million in qualified pension contributions for the
full year of 2005. However, pursuant to the merger agreement, we are
restricted in making additional contributions prior to September 1,
2005.
o We expect capital expenditures of $80 to $100 million.
o We expect the cash requirements for restructuring and related charges,
comprised of the Galesburg plant closure and organizational
restructuring, to be approximately $25 million.
o In addition, we expect cash outflows associated with front-load washer
litigation costs, as well as the distributor lawsuit settlement to be
approximately $30 million during 2005.
CLOSING
With that financial overview, I will turn it back over to Ralph to discuss our
outlook.
Ralph...
LETTER TO EMPLOYEES - 2Q 2005 EARNINGS
A MESSAGE FROM RALPH HAKE, CHAIRMAN & CEO
Fellow Maytag Employees:
Our sales and earnings results for the second quarter can be summarized as a
"good news-bad news" story.
The good news is that our consolidated sales were up 6.7 percent year over year
- -- the third quarter in which we have seen improvement sequentially. In our Home
Appliances segment, sales increased 7.9 percent compared to 2004, with
year-over-year sales improvement in all product categories.
Our Home Appliances segment sales gains were led chiefly by:
o Significant improvement in refrigeration sales; specifically, our
French-door, bottom-freezer models sold under the Maytag, Jenn-Air and
Amana brands, as well as newly introduced top-freezer refrigerator
models;
o Positive gains in our cooking business, led by our premium Jenn-Air
product line-up, including cooktops, wall ovens and microwaves;
o New 27-inch Maytag Neptune(R) washers and dryers;
o Stainless-steel Jenn-Air dishwashers;
o Growth in our Hoover floor care business, specifically upright vacuum
models; and
o Continued strong sales growth for our Maytag Services business -- up 19
percent, as well as our Maytag International business -- up 13 percent.
I am very encouraged by our top-line sales growth and remain optimistic about
our strategy going forward with the innovative products that we have in the
marketplace and those that we will be introducing during the balance of the
year. The bad news of the quarter is the lack of conversion of our top-line
growth into bottom-line profitability, and this continues to concern me. Many of
the same issues that have impacted our business over the past several quarters,
continued to be obstacles to our second-quarter earnings performance. These
included:
o Rising raw materials costs, including steel and resins;
o Higher distribution and fuel costs; and
o Lower floor care pricing.
With regard to our manufacturing issues, we are making progress. We are
transforming our Herrin and Searcy plants to top-load washer and dryer
production, respectively. In fact, I am pleased to report that new laundry
models went into production in Herrin earlier this week, and new dryer models
are now being made in Searcy. This laundry transformation project is expected to
provide us with substantial and immediate cost, quality, line logic and new
consumer benefits.
In closing, I want to thank each of you for your outstanding dedication to our
business. I realize that it is very difficult and disruptive for you to continue
working within this current environment. Please keep doing everything that you
can to stay focused on our business and to continue supporting our
customer-focused initiatives -- cost, quality and innovation.
Sincerely,
/s/ Ralph Hake
Ralph Hake
Chairman and CEO
July 22, 2005
Maytag Corporation
MAYTAG WEBSITE SLIDES - 2Q 2005 EARNINGS
The following slide and the slides contained on Exhibit 99.1 attached hereto and
incorporated herein by reference represent slides which have been made available
on Maytag's website, www.maytagcorp.com.
MAYTAG CORPORATION
KEY FINANCIAL STATISTICS FOR SECOND QUARTER AND YEAR TO DATE 2005 (UNAUDITED)
(in thousands except per share data)
SECOND QUARTER YEAR TO DATE
----------------------------------- ------------------------------------
2005 2004 % Change 2005 2004 % Change
--------- --------- -------- --------- --------- --------
SALES AND EARNINGS
Net Sales 1,229,718 1,152,229 6.7% 2,397,557 2,371,173 1.1%
Operating Income (Loss) 19,675 (33,438) 158.8% 43,761 30,194 44.9%
Interest Expense (16,278) (13,215) 23.2% (32,053) (26,106) 22.8%
Adverse Judgment on Pre-acquisition
Distributor Lawsuit - (10,505) -100.0% - (10,505) -100.0%
Other Income 815 55 1381.8% 3,243 2,921 11.0%
Income Tax Expense (Benefit) 731 (16,019) 104.6% 3,738 (1,136) 429.0%
Net Income (Loss) 3,481 (41,084) 108.5% 11,213 (2,360) 575.1%
REPORTED DILUTED EARNINGS (LOSS)
PER SHARE $0.04 $(0.52) 108.4% $0.14 $(0.03) 570.6%
OPERATING EXPENSES
Cost of Sales 1,093,858 1,003,726 9.0% 2,132,627 2,011,549 6.0%
GROSS PROFIT % 11.0% 12.9% (1.9) pts 11.0% 15.2% (4.2) pts
Selling, General and Administrative 112,805 125,989 -10.5% 212,935 265,483 -19.8%
% OF SALES 9.2% 10.9% (1.7) pts 8.9% 11.2% (2.3) pts
Restructuring and Related Charges 3,380 27,852 -87.9% 8,234 35,847 -77.0%
Goodwill Impairment - 9,600 -100.0% - 9,600 -100.0%
Front-load Washer Litigation - 18,500 -100.0% - 18,500 -100.0%
BUSINESS SEGMENT INFORMATION
HOME APPLIANCES
Net Sales 1,163,259 1,077,643 7.9% 2,276,446 2,222,429 2.4%
Operating Income (Loss) 21,029 (23,741) 188.6% 47,664 36,604 30.2%
% OF SALES 1.8% -2.2% 4.0 pts 2.1% 1.6% 0.5 pts
COMMERCIAL PRODUCTS
Net Sales 66,459 74,586 -10.9% 121,111 148,744 -18.6%
Operating Income (Loss) (1,354) (9,697) 86.0% (3,903) (6,410) 39.1%
% OF SALES -2.0% -13.0% 11.0 pts -3.2% -4.3% 1.1 pts
TOTAL
Net Sales 1,229,718 1,152,229 6.7% 2,397,557 2,371,173 1.1%
Operating Income (Loss) 19,675 (33,438) 158.8% 43,761 30,194 44.9%
Operating Income (Loss) % 1.6% -2.9% 4.5 pts 1.8% 1.3% 0.5 pts
MISCELLANEOUS
Average Shares - Basic 79,818 79,012 1.0% 79,690 78,929 1.0%
Average Shares - Diluted 79,818 79,012 1.0% 79,690 78,929 1.0%
GAAP Effective Tax Rate 17.4% 28.1% (10.7) pts 25.0% 32.5% (7.5) pts
WORKING CAPITAL
Inventories 604,383 591,588 2.2%
Receivables 724,544 636,929 13.8%
Payables 553,169 423,950 30.5%
Net Working Capital 775,758 804,567 -3.6%
Working Capital % of Rolling
12 Months Sales 16.3% 16.5% (0.2) pts