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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
(X) Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (Fee Required)
For the fiscal year ended December 31, 1994
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
For the transition period from _____________________ to _____________________
Commission file Number 1-655
MAYTAG CORPORATION
403 West Fourth Street North, Newton, Iowa 50208
A Delaware Corporation I.R.S. Employer Identification No. 42-0401785
Registrant's telephone number, including area code: 515-792-8000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
Common Stock, $1.25 per share par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of February 1, 1995:
Common Stock, $1.25 Par Value - $1,613,199,180
The number of shares outstanding of the registrant's Common Stock, as of
February 1, 1995:
Common Stock, $1.25 Par Value -107,546,612
1
1994 FORM 10-K CONTENTS
Item Page
_____________________________________________________________________________
Part I:
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Business - Home Appliances . . . . . . . . . . . . . . . . . . . . 3
Business - Vending Equipment . . . . . . . . . . . . . . . . . . . 5
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 6
4. Submission of Matters to a Vote of Security Holders . . . . . . . 6
Executive Officers of the Registrant . . . . . . . . . . . . . . . 6
Part II:
5. Market for the Registrant's Common Equity and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . 9
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . 10
8. Financial Statements and Supplementary Data . . . . . . . . . . 14
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . 33
Part III:
10. Directors and Executive Officers of the Registrant . . . . . . . 34
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . 34
12. Security Ownership of Certain Beneficial Owners and Management . 34
13. Certain Relationships and Related Transactions . . . . . . . . . 34
Part IV:
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 34
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's definitive proxy statement dated March 22, 1995 (the
"Proxy Statement"), which will be filed with the Securities and Exchange
Commission pursuant to regulation A, are incorporated by reference into Part
III.
Part I
Item 1. Business.
Maytag Corporation (the "Company") was organized as a Delaware corporation in
1925. The Company is engaged in two industry segments: home appliances and
vending equipment. Financial and other information relating to industry segment
and geographic data is included in Part II, Item 7, Pages 10-12; and Item 8,
Pages 31 and 32.
HOME APPLIANCES
The home appliances segment comprises approximately 94 percent of 1994
consolidated net sales.
The Company, through its various business units, manufactures and distributes a
broad line of home appliances including laundry equipment, gas and electric
ranges, refrigerators, freezers, dishwashers, vacuum cleaners and carpet
extractors. Maytag Customer Service provides product service and parts
distribution in the United States and Canada for all of the Company's appliance
brands, except Hoover. Maytag International Inc., the Company's international
marketing subsidiary, handles the sales of appliances and licensing of certain
home appliance brands in markets outside the United States and Canada. In 1992,
the Company sold its microwave oven and dehumidifier manufacturing operations.
However, the Company continues to distribute microwave ovens and dehumidifiers,
as well as compactors. In the fourth quarter of 1994, the Company sold its
laundry, refrigeration and floorcare manufacturing and distribution operations
in Australia and New Zealand. Additional information regarding the divestiture
is included in Part II, Item 7, Page 11; and Item 8, Page 21. Until December
31, 1994, Maytag Financial Services Corporation provided financing programs
primarily to certain customers of the Company in North America. The operations
of Maytag Financial Services will cease in 1995; however, certain financing
programs will continue through the Company's other business units and
subsidiaries.
The Company markets its home appliances to all major United States and many
major international markets, including the replacement market, the commercial
laundry market, the new home and apartment builder market, the manufactured
housing (mobile home) market, the recreational vehicle market, the private label
market and the household/commercial floor care market. Products are primarily
sold directly to dealers but are also sold through independent distributors,
mass merchandisers and large national department stores. Sales of appliances to
manufacturers of mobile homes and recreational vehicles are made directly by
specialized marketing personnel. Most home appliance sales are made within
North America.
A portion of the Company's operations and sales is outside the United States.
The risks involved in foreign operations vary from country to country and
include tariffs, trade restrictions, changes in currency values, economic
conditions and international relations. Geographic information is included in
Part II, Item 8, Page 32.
3
The Company uses basic raw materials such as steel, copper, aluminum, rubber and
plastic in its manufacturing process in addition to purchased motors,
compressors, timers, valves and other components. These materials are supplied
by established sources and the Company anticipates that such sources will, in
general, be able to meets its future requirements.
The Company holds a number of patents which are important in the manufacture of
its products. The licenses it holds on other patents are not considered to be
critical to its business. The Company holds a number of trademark registrations
of which the most important are ADMIRAL, HOOVER, JENN-AIR, MAGIC CHEF, MAYTAG,
NORGE and the associated corporate symbols.
The Company's home appliance business is not seasonal.
The Company is not dependent upon a single home appliance customer or a few
customers. Therefore, the loss of any one customer would not have a material
adverse effect on its business.
The dollar amount of backlog orders of the Company is not considered significant
for home appliances in relation to the total annual dollar volume of sales.
Because it is the Company's practice to maintain a level of inventory sufficient
to cover anticipated shipments and since orders are generally shipped upon
receipt, a large backlog would be unusual.
The home appliance market is highly competitive with the principal competitors
being larger than the Company. Competitive pressures make price increases
difficult to implement. There were no significant increases in the costs of the
Company's raw materials or components in 1994. Information regarding the
Company's improvement in gross margin over 1993 is included in Part II, Item 7,
Page 10. The Company uses product quality, customer service, advertising and
sales promotion, warranty and pricing as its principal methods of competition.
Expenditures for company-sponsored research and development activities relating
to the development of new products and the improvement of existing products are
included in Part II, Item 8, page 33.
Although the Company has many manufacturing sites with environmental concerns,
compliance with laws and regulations regarding the discharge of materials into
the environment or relating to the protection of the environment has not had a
material effect on capital expenditures, earnings or the Company's competitive
position. The government mandated phase-out of chlorofluorocarbon ("CFC")
production, an aerosol propellant and refrigerant, by December 31, 1995 affects
the entire refrigeration industry. The Company continues to review various
alternatives to the use of CFC's. In addition, alternative washing machine
designs to meet anticipated government regulations dealing with energy usage are
being evaluated by the Company and the industry. Because compliance with these
current and anticipated laws and regulations is essentially prospective, it has
not had a significant impact on current operations. Although it is anticipated
that the industry and the Company will meet all final standards, capital
spending is expected to significantly increase over the next several years for
these reasons. Additional information regarding future capital spending for
compliance with environmental laws and regulations is included in Part I, Item
7, page 13.
The Company has been identified as one of a group of potentially responsible
parties by state and federal environmental protection agencies in remedial
activities related to various "Superfund" sites in the United States. The
Company does not presently anticipate any material adverse effect upon the
4
Company's earnings or financial condition arising from resolution of these
matters.
The number of employees of the Company within the home appliances segment as of
December 31, 1994 was 18,343.
VENDING EQUIPMENT
The vending equipment segment comprises approximately 6 percent of 1994
consolidated net sales.
The Company manufactures, through its Dixie-Narco subsidiary, a variety of soft
drink vending machines, glass front merchandisers and money changers. The
products are sold primarily to companies bottling soft drinks such as Coca-Cola,
Dr. Pepper, Pepsi Cola, Royal Crown Cola and Seven-Up. Products are also sold to
vending equipment distributors and manufacturers.
A new beverage vending machine (Flex-Pak)designed to increase flexibility and
capacity of vending machines and to enhance customer's data collection
capabilities is planned for full production in the third quarter of 1995.
The Company uses steel as a basic raw material in its manufacturing processes in
addition to purchased motors, compressors and other components made of copper,
aluminum, rubber, glass and plastic. These materials are supplied by
established sources and the Company anticipates that such sources will, in
general, be able to meet its future requirements.
The Company holds a number of patents which are important in the manufacture of
its products. The Company holds a DIXIE-NARCO trademark registration and its
associated corporate symbol.
Vending equipment sales, though stronger in the first six months of the year,
are considered by the Company to be essentially nonseasonal.
The Company's vending equipment segment is dependent upon a few major soft drink
suppliers. Therefore, the loss of one or more of these customers could have a
material adverse effect on this segment. The Company manufactures and sells its
vending machines and glass front merchandisers in competition with a small
number of other manufacturers and is the major manufacturer of such equipment.
The principal methods of competition utilized by the vending equipment segment
are product quality, customer service, delivery, warranty and price. Positive
factors pertaining to the Company's competitive position include product design,
manufacturing efficiency and superior service, while new product innovations by
competitors and severe price competition negatively impact its position.
The dollar amount of backlog orders of the Company is not considered significant
for vending equipment in relation to the total annual dollar volume of sales.
Because it is the Company's practice to maintain a level of inventory sufficient
to cover shipments and since orders are generally shipped upon receipt, a large
backlog would be unusual.
Although the Company has manufacturing sites with environmental concerns,
compliance with laws and regulations regarding the discharge of materials into
the environment or relating to the protection of the environment has not had a
material effect on capital expenditures, earnings or the Company's competitive
position. The government mandated phase-out of chlorofluorocarbon ("CFC")
production, an aerosol propellant and refrigerant, by December 31, 1995 will
also affect the production technology in the vending equipment industry. This
5
has not had a significant impact on current operations, and it is anticipated
that the industry and the Company will meet all final standards.
The number of employees of the Company within the vending equipment segment as
of December 31, 1994 was 1,261.
Item 2. Properties.
The Company's corporate headquarters is located in Newton, Iowa. Major offices
and manufacturing facilities in the United States related to the home appliances
segment are located at: Galesburg, Illinois; Jackson, Tennessee; Indianapolis,
Indiana; Cleveland, Tennessee; Herrin, Illinois; Newton, Iowa; North Canton,
Ohio; and El Paso, Texas. Maytag Customer Service, which is located in
Cleveland, Tennessee, operates an automated national parts distribution center
in Milan, Tennessee which services all of the Company's appliance brands, except
Hoover. In addition to manufacturing facilities in the United States, the
Company has three other North American manufacturing facilities located in
Canada and Mexico. The Company also has two manufacturing facilities in the
United Kingdom and one in Portugal. Two manufacturing facilities in Australia
were sold at the end of 1994. Major facilities related to the vending equipment
segment are: Dixie-Narco, Inc., with offices and manufacturing facilities
located in Williston, South Carolina and Eastlake, Ohio.
The manufacturing facilities are well maintained, suitably equipped and in good
operating condition. A dishwasher manufacturing facility in Jackson, Tennessee
did not have sufficient capacity to meet sales demand in 1994; however, the
situation is expected to improve with a capacity expansion project expected to
be completed early in 1996. The other facilities used in the production of home
appliances and vending equipment had sufficient capacity to meet production
needs in 1994, and the Company expects that such capacity will be adequate for
planned production in 1995. The Company's 1994 capital expenditures and the
planned 1995 capital expenditures include an ongoing program of product
improvements and enhanced manufacturing efficiencies.
The Company also owns or leases sales offices in many large metropolitan areas
throughout the United States, Canada, the United Kingdom and Western Europe.
Lease commitments are included in Part II, Item 8, Page 29.
Item 3. Legal Proceedings.
The Company is involved in contractual disputes, environmental, administrative
and legal proceedings and investigations of various types. Although any
litigation, proceeding or investigation has an element of uncertainty, the
Company believes that the outcome of any proceeding, lawsuit or claim which is
pending or threatened, or all of them combined, will not have a material adverse
effect on its consolidated financial position.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company did not submit any matters to a vote of security holders during the
fourth quarter of 1994 through a solicitation of proxies or otherwise.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth the names of all executive officers of the Company, the
offices held by them, the year they first became an officer of the Company and
their ages:
6
First Became
Name Office Held an Officer Age
Leonard A. Hadley Chairman and
Chief Executive Officer 1979 60
John P. Cunningham, Jr. Executive Vice President
and Chief Financial Officer 1994 57
Joseph F. Fogliano Executive Vice President and
President North American
Appliance Group 1993 55
Jon O. Nicholas Senior Vice President,
Human Resources 1993 55
Carleton F. Zacheis Senior Vice President,
Planning and Business 1988 61
Development
Mark A. Garth Vice President - Controller
and Chief Accounting Officer 1994 35
Edward H. Graham Vice President, General
Counsel and Assistant
Secretary 1990 59
David D. Urbani Vice President and Treasurer 1994 50
The executive officers were elected to serve in the indicated office until the
organizational meeting of the Board of Directors following the annual meeting of
shareholders on April 25, 1995 or until their successors are elected.
Each of the executive officers has served the Company or an acquired company in
various executive or administrative positions for at least five years except
for:
Name Company/Position Period
John P. Cunningham, Jr. IBM Corporation
- Vice President and Assistant
General Manager, Main Frame
Division 1992-1993
- Vice President, Member Europe
Executive Committee, Paris, France 1990-1992
- Vice President, Corporate
Controller 1988-1990
Joseph F. Fogliano Thomson Consumer Electronics, Inc.
- President and CEO 1988-1993
David D. Urbani Air Products and Chemicals, Inc.
- Assistant Treasurer 1984-1994
7
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
MARKET AND DIVIDEND INFORMATION
Dividends
Sales Price of Common Shares Per Share
1994 1993 1994 1993
Quarter High Low High Low
First $20 $16 $15 7/8 $13 3/8 $.125 $.125
Second 19 3/4 16 1/2 15 7/8 13 .125 .125
Third 20 1/8 14 7/8 17 3/4 14 7/8 .125 .125
Fourth 16 5/8 14 18 5/8 14 7/8 .125 .125
The principal U.S. market in which the Company's common stock is traded is the
New York Stock Exchange. As of February 1, 1995, the Company had 32,463
shareowners of record.
8
Item 6. Selected Financial Data.
SELECTED FINANCIAL DATA
Dollars in thousands except per share data
(1) (2) (3)
1994 1993 1992 1991 1990
Net sales $3,372,515 $2,987,054 $3,041,223 $2,970,626 $3,056,833
Cost of sales 2,496,065 2,262,942 2,339,406 2,254,221 2,309,138
Income taxes 90,200 38,600 15,900 44,400 60,500
Income (loss) from
continuing operations 151,137 51,270 (8,354) 79,017 98,905
Percent of income
(loss)from continuing
operations to net sales 4.5% 1.7% (.3)% 2.7% 3.2%
Income (loss) from
continuing operations
per share $ 1.42 $ .48 $ (.08) $ .75 $ .94
Dividends paid per share .50 .50 .50 .50 .95
Average shares
outstanding 106,795 106,252 106,077 105,761 105,617
Working capital $ 595,703 $ 406,181 $ 452,626 $ 509,025 $ 612,802
Depreciation of
property, plant and
equipment 110,044 102,459 94,032 83,352 76,836
Additions to property,
plant and equipment 84,136 99,300 129,891 143,372 141,410
Total assets 2,504,327 2,469,498 2,501,490 2,535,068 2,586,541
Long-term debt 663,205 724,695 789,232 809,480 857,836
Total debt to
capitalization 50.7% 60.6% 58.7% 45.9% 47.7%
Shareowners' equity per
share of Common stock $ 6.82 $ 5.50 $ 5.62 $ 9.50 $ 9.60
(1) Includes a $20 million one-time tax benefit associated with the funding of
reorganization costs in Europe over the past several years and a $16.4
million after-tax loss from the sale of the Company's home appliance
operations in Australia. Excludes the cumulative effect of an accounting
change.
Prior to the quarter ended December 31, 1994, the Company's European
subsidiaries were consolidated as of a date one month earlier than
subsidiaries in the United States. In the fourth quarter of 1994, this one
month reporting lag was eliminated and European results for the quarter
ended December 31, 1994 include activity for four months. The effect of
this change increased net sales by $25.2 million in the fourth quarter and
the impact on income from continuing operations was not significant.
(2) Includes $60.4 million in pretax charges ($50 million in a special charge
and $10.4 million in selling, general and administrative expenses) for
additional costs associated with two Hoover Europe "free flights" promotion
programs.
(3) Includes a $95 million pretax charge relating to the reorganization of the
North American and European business units. Excludes the cumulative effect
of accounting changes.
9
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
- --------------------------------------------------------------------------------
Comparison of 1994 with 1993
The Company operates in two business segments, home appliances and vending
equipment. The operations of the home appliance segment represented 94.3 and
94.8 percent of net sales in 1994 and 1993.
NET SALES
The Company's consolidated net sales increased 12.9 percent in 1994 compared to
1993. Sales in the North American Appliance Group increased 14.2 percent from
1993 due to strong industry growth and market share gains in virtually all
product categories. These market share gains were achieved through new product
introductions and promotion of the premium Maytag and Jenn-Air brands. United
States industry growth in the Company's major product categories is expected to
continue in 1995, but at a lower rate than in 1994. Consolidated results for
1994 include thirteen months of operations for certain subsidiaries in Europe as
a one-month reporting lag was eliminated. Including this additional month in
the fourth quarter of 1994, European sales for the year increased 2.1 percent
from 1993. On a comparable basis, European sales decreased 4.3 percent from
1993 resulting from industry declines and market share losses. The loss of
market share in Europe is partially due to a strategic reduction in certain
unprofitable product lines and sales channels. Vending equipment sales
increased 22.4 percent in 1994 resulting from increased demand for the Company's
core soft drink vending machines from new and existing domestic customers and
sales of a new glass front merchandiser.
GROSS PROFIT
Gross profit as a percent of sales increased 1.8 points resulting from
improvements in both industry segments. Margins in the North American Appliance
Group increased due to the favorable mix of the premium priced brands, higher
margins of new products, coordinated materials purchasing efforts and volume
related factory efficiencies. The improvement in European margins resulted from
the elimination of excess production capacity, reduction of headcount levels and
favorable product mix. Vending equipment margins declined primarily due to
unfavorable mix of electronic venders. The decline in vending equipment margins
was greater in the fourth quarter than in previous quarters of 1994 due to
unfavorable mix of glass front merchandisers sold outside the United States.
The Company is experiencing cost increases in many commodities, particularly
steel, plastics and corrugated materials. A portion of these increases is
expected to be offset with internal cost reduction initiatives, many of which
are currently in progress. Through these initiatives, the overall commodity
cost escalation in 1995 is expected to be contained to the low single-digit
percent range. This will cause pressure on operating margins in 1995.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative (S,G&A) expenses decreased to 16.4
percent of sales in 1994 from 17.2 percent in 1993. The decrease resulted from
higher sales volumes and cost control in both the appliances and vending
equipment segments. Staffing reductions in Europe also contributed to the
improvement from 1993. A reversal of excess reserves relating to the 1992
reorganization of the North American Appliance Group decreased S,G&A by $5
million in the fourth quarter of 1994. Results for Europe in the fourth quarter
of 1994 include $4.7 million of restructuring costs, the majority of which is
10
included in S,G&A.
The special charge in 1993 consisted of a $50 million pretax charge to cover
additional costs associated with two "free flights" promotional programs in
Europe. See further discussion under "Comparison of 1993 with 1992."
OPERATING INCOME
Operating income for 1994 totaled $322.8 million or 9.6 percent of sales
compared to $158.9 million or 5.3 percent of sales in 1993. Before the special
charge, operating income in 1993 was $208.9 million or 7.0 percent of sales.
OTHER INCOME AND EXPENSE
In the fourth quarter of 1994, the Company sold its home appliance operations
in Australia and New Zealand ("Australia") for $82.1 million in cash. The net
pretax loss from the sale was $13.1 million and resulted in an after-tax loss of
$16.4 million. The pretax loss resulted primarily from recognition of the
foreign currency translation loss that the Company had accumulated in
Shareowners' Equity since the operations were acquired in 1989. The higher loss
after tax resulted from a lower tax basis in the operations, as compared to the
book investment, in computing the tax liability. The absence of the Australia
business will not have a significant impact on the Company's operating results
in the future.
INCOME TAXES
The decrease in the effective tax rate from 1993 was primarily due to a $20
million tax benefit recorded in the third quarter of 1994 associated with the
funding of operating losses and reorganization costs in Europe over the past
several years. This benefit was partially offset by the tax expense arising
from the divestiture of Australia. The notes to the consolidated financial
statements include a reconciliation between the statutory tax and the actual tax
provided.
ACCOUNTING CHANGE
In the first quarter of 1994, the Company adopted Financial Accounting
Standards Board Statement No. 112 (FAS 112), "Employers' Accounting for
Postemployment Benefits." The new rules required recognition of a liability for
certain disability and severance benefits to former or inactive employees. The
cumulative effect of this accounting change in 1994 was $3.2 million or $.03 per
share. The ongoing expenses associated with adoption of the new statement are
not significant.
NET INCOME
Excluding the $16.4 million after-tax loss on sale of Australia in 1994, the
$3.2 million cumulative effect of accounting change in 1994, the $20 million
special tax benefit in 1994 and the $30 million after-tax special "free flights"
promotion charge in 1993, net income would have been $147.5 million or $1.38 per
share in 1994 compared to $81.3 million or $.76 per share in 1993.
- --------------------------------------------------------------------------------
Comparison of 1993 with 1992
The Company operates in two business segments, home appliances and vending
equipment. The operations of the home appliance segment represented 94.8 and
94.6 percent of net sales in 1993 and 1992.
11
NET SALES
Consolidated net sales decreased 1.8 percent in 1993 compared to 1992.
Although sales volumes in the United States increased due to improved consumer
confidence, the overall decline in sales resulted from a decrease in European
sales, less favorable currency conversions of sales outside the United States,
and the absence of sales from the microwave oven operation that was sold in June
1992. North American home appliance sales increased 3.1 percent in spite of the
absence of sales from the microwave oven operation. European sales decreased
22.1 percent from 1992 due to less favorable currency conversions and lower
sales volumes due to some market share declines. Sales in the Company's vending
equipment segment declined 5.3 percent from 1992 due to slow economic activity
in Europe, cutbacks by domestic bottlers and increased competition.
GROSS PROFIT
Gross profit as a percent of sales increased to 24.2 percent from 23.1 percent
in 1992. The increase in margins resulted principally from improvements in the
North American Appliance Group. The improvement in the North American Appliance
Group was primarily due to production efficiencies, reductions of certain
employee related costs and some selective price increases. In addition, 1992
results for the North American Appliance Group included plant start-up costs.
Gross margins in Hoover Europe declined primarily due to operating
inefficiencies associated with previously announced plans to close a factory in
Dijon, France and higher pension costs. Vending equipment margins improved in
1993 due to reductions in material, distribution and warranty costs from 1992.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative (S,G&A) expenses decreased to 17.2 percent
in 1993 from 17.4 percent in 1992. The decline was principally due to cost
efficiencies resulting from the reorganization of the North American Appliance
Group. Special charges consisted of a $50 million pretax charge in the first
quarter of 1993 to cover additional costs associated with two "free flights"
promotional programs in Europe and a $95 million pretax charge in the third
quarter of 1992 for a reorganization of U.S. and European operations. Total
pretax charges relating to the "free flights" promotion programs in 1993 were
$60.4 million ($50 million in a special charge and $10.4 million in S,G&A) and
in 1992 were $12.2 million. Offsetting a portion of the 1993 European "free
flights" expenses in S,G&A was a $5 million reversal of excess reorganization
reserves in Europe.
OPERATING INCOME
Operating income for 1993 totaled $158.9 million compared to $78.6 million in
1992. Before special charges, operating income would have been $208.9 million
or 7.0 percent of sales in 1993 compared to $173.6 million or 5.7 percent of
sales in 1992.
INCOME TAXES
The decrease in the effective tax rate for 1993 was primarily due to the 1992
tax rate reflecting the impact of non-recoverable losses outside the United
States. The notes to the consolidated financial statements include a
reconciliation between the statutory tax and the actual tax provided.
12
NET INCOME
Excluding special charges in 1993 and 1992 and the cumulative effect of
accounting changes in 1992, net income would have been $81.3 million or $.76 per
share in 1993 compared to net income of $65.4 million or $.62 per share in 1992.
- --------------------------------------------------------------------------------
Liquidity and Capital Resources
During the year, the Company's primary sources of liquidity were cash provided
by operating activities, proceeds from a divestiture and external debt.
Detailed information on the Company's cash flows is presented in the Statements
of Consolidated Cash Flows.
CASH FLOW FROM OPERATING ACTIVITIES
Cash flow generated from operating activities consists of net income adjusted
for certain non-cash income and expenses and changes in working capital. Non-
cash income and expenses include items such as depreciation, amortization and
deferred income taxes. Working capital consists primarily of accounts
receivable, inventory and other current liabilities.
Cash flow from operating activities in 1994 improved significantly over 1993.
This was driven primarily by higher earnings, which included more non-cash
expenses, offset by a decrease in the selected working capital items mentioned
above. Although cash flow in 1993 benefited from a withdrawal from an overfunded
pension plan in Europe, cash outflows related to the 1992 reorganization of the
European operations and the 1993 European "free flights" promotional programs
were lower in 1994 than in 1993. The funding of these events was substantially
completed in 1994.
CASH FLOW FROM INVESTING ACTIVITIES
The company continually invests in its businesses to improve product design and
manufacturing processes and to increase capacity when needed. Capital spending
in 1994 was lower than 1993 resulting from more projects being in a
developmental stage in 1994 compared to projects in an implementation stage in
1993. In 1994 the Company announced several new capital projects that will
increase capital spending over the next several years. This includes $50
million for a new high efficiency clothes washer, $160 million for a complete
redesign of the Company's refrigerator product and manufacturing processes and
$14 million for a dishwasher plant capacity expansion. The new clothes washer
will be designed to comply with anticipated government regulations dealing with
energy usage and will use water more efficiently. The refrigeration project
will incorporate changes expected to be required by 1998 Department of Energy
refrigeration standards and the upcoming ban on chlorofluorocarbons ("CFCs").
Planned capital expenditures for 1995 approximate $175 million and relate to
these new projects as well as other ongoing production improvements and product
enhancements.
Proceeds from the sale of the Company's investment in its home appliance
operations in Australia provided cash of $82.1 million in 1994.
CASH FLOW FROM FINANCING ACTIVITIES
Dividend payments in both 1994 and 1993 amounted to $53.6 million or $.50 per
share.
The Company used cash flow generated from operations in 1994 to reduce
commercial paper borrowings and long term debt by $154.1 million. The Company's
ratio of debt to total capitalization decreased from 60.6 percent at December
13
31, 1993 to 50.7 percent at December 31, 1994. In February 1995, a portion of
the proceeds from the sale of the Australia operations were used to purchase $46
million of the Company's outstanding 8.875 percent notes due in 1997, included
in long-term debt at December 31, 1994. The cost of early extinguishment of the
notes was not significant.
Any funding requirements for future capital expenditures and other cash
requirements in excess of cash generated from operations will be supplemented by
the issuance of commercial paper, debt securities and bank borrowings. The
Company's commercial paper program is supported by a credit agreement with a
consortium of banks which provides revolving credit facilities totaling $300
million. This agreement expires July 13, 1998 and includes covenants for
interest coverage and leverage. Additional funds available at December 31, 1994
under all credit agreements, applying the terms of the most restrictive
covenant, totaled $313 million.
Item 8. Financial Statements and Supplementary Data.
Page
Report of Independent Auditors . . . . . . . . . . . . . . . 15
Statements of Consolidated Income--Years Ended
December 31, 1994, 1993, and 1992 . . . . . . . . . . . . . 16
Statements of Consolidated Financial Condition--
December 31, 1994 and 1993 . . . . . . . . . . . . . . . . 17
Statements of Consolidated Shareowners' Equity--Years Ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . 19
Statements of Consolidated Cash Flows--Years Ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . 20
Notes to Consolidated Financial Statements . . . . . . . . . 21
Quarterly Results of Operations--Years 1994 and 1993 . . . . 33
14
Report of Independent Auditors
Shareowners and Board of Directors
Maytag Corporation
We have audited the accompanying statements of consolidated financial condition
of Maytag Corporation and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of income, shareowners' equity and cash flows
for each of three years in the period ended December 31, 1994. Our audits also
included the financial statement schedule listed in the Index at Item 14(a).
These financial statements and related schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and related schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Maytag Corporation
and subsidiaries at December 31, 1994 and 1993, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1994, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statement taken as a whole,
presents fairly in all material respects the information set forth therein.
As discussed in notes to consolidated financial statements, in 1992 the Company
changed its method of accounting for postretirement benefits other than pensions
and income taxes.
Ernst & Young LLP
Chicago, Illinois
January 31, 1995
15
Statements of Consolidated Income (Loss)
In thousands except per share data
Year ended December 31
1994 1993 1992
Net sales $3,372,515 $2,987,054 $3,041,223
Cost of Sales 2,496,065 2,262,942 2,339,406
Gross profit 876,450 724,112 701,817
Selling, general and administrative
expenses 553,682 515,234 528,250
Special charges 50,000 95,000
Operating income 322,768 158,878 78,567
Interest expense (74,077) (75,364) (75,004)
Loss on business disposition (13,088)
Other--net 5,734 6,356 3,983
Income before income taxes
and cumulative effect of
accounting changes 241,337 89,870 7,546
Income taxes 90,200 38,600 15,900
Income (loss) before cumulative
effect of accounting changes 151,137 51,270 (8,354)
Cumulative effect of accounting changes (3,190) (307,000)
Net income (loss) $ 147,947 $ 51,270 $ (315,354)
Income (loss) per average share of
Common stock:
Income (loss) before cumulative
effect of accounting changes $ 1.42 $ .48 $ (.08)
Cumulative effect of accounting
changes $ (.03) $ (2.89)
Net income (loss) per Common share $ 1.39 $ .48 $ (2.97)
See notes to consolidated financial statements.
16
Statements of Consolidated Financial Condition
In thousands except share data
December 31
Assets 1994 1993
Current assets
Cash and cash equivalents $ 110,403 $ 31,730
Accounts receivable, less allowance--
(1994--$20,037; 1993--$15,629) 567,531 532,353
Inventories 387,269 429,154
Deferred income taxes 45,589 46,695
Other current assets 19,345 16,919
Total current assets 1,130,137 1,056,851
Noncurrent assets
Deferred income taxes 72,394 68,559
Pension investments 112,522 163,175
Intangible pension asset 84,653 4,928
Other intangibles, less allowance for amortization--
(1994--$56,250; 1993--$46,936) 310,343 319,657
Other noncurrent assets 44,979 35,266
Total noncurrent assets 624,891 591,585
Property, plant and equipment
Land 32,600 46,149
Buildings and improvements 284,439 288,590
Machinery and equipment 1,109,411 1,068,199
Construction in progress 30,305 44,753
1,456,755 1,447,691
Less allowance for depreciation 707,456 626,629
Total property, plant and equipment 749,299 821,062
Total assets $2,504,327 $2,469,498
17
December 31
Liabilities and Shareowners' Equity 1994 1993
Current liabilities
Notes payable $ 45,148 $ 157,571
Accounts payable 212,441 195,981
Compensation to employees 61,311 84,405
Accrued liabilities 146,086 178,015
Income taxes payable 26,037 16,193
Current maturities of long-term debt 43,411 18,505
Total current liabilities 534,434 650,670
Noncurrent liabilities
Deferred income taxes 38,375 44,882
Long-term debt 663,205 724,695
Postretirement benefits other than pensions 412,832 391,635
Pension liability 59,363 17,383
Other noncurrent liabilities 64,406 53,452
Total noncurrent liabilities 1,238,181 1,232,047
Shareowners' equity
Common stock:
Authorized--200,000,000 shares (par value $1.25)
Issued--117,150,593 shares, including shares in
treasury 146,438 146,438
Additional paid-in capital 477,153 480,067
Retained earnings 420,174 325,823
Cost of Common stock in treasury (1994--9,813,893
shares; 1993--10,430,833 shares) (218,745) (232,510)
Employee stock plans (60,816) (62,342)
Foreign currency translation (32,492) (70,695)
Total shareowners' equity 731,712 586,781
Total liabilities and shareowners' equity $2,504,327 $2,469,498
See notes to consolidated financial statements.
18
Statements of Consolidated Shareowners' Equity
In thousands
Additional Employee Foreign
Common Stock Paid-In Retained Treasury Stock Stock Currency
Shares Amount Capital Earnings Shares Amount Plans Translation
Balance at 12/31/91 117,151 $146,438 $479,833 $ 696,745 (10,808) $(240,848) $ (66,711) $ (4,872)
Net loss (315,354)
Cash dividends (53,269)
Stock issued under
employee stock plans (1,221) 178 3,970
Stock awards:
Granted (204) 41 921 (718)
Earned or canceled 524 (44) (970) 446
ESOP:
Issued (469) 87 1,934
Allocated 1,345
Translation adjustments (48,295)
Balance at 12/31/92 117,151 146,438 478,463 328,122 (10,546) (234,993) (65,638) (53,167)
Net income 51,270
Cash dividends (53,569)
Stock issued under
employee stock plans (911) 92 2,111
Stock awards:
Granted (3,645) 491 10,939 (7,294)
Earned or canceled 6,136 (550) (12,403) 9,102
ESOP:
Issued (651) 82 1,836
Allocated 1,488
Tax benefit of ESOP
dividends and stock
options 675
Translation adjustments (17,528)
Balance at 12/31/93 117,151 146,438 480,067 325,823 (10,431) (232,510) (62,342) (70,695)
Net income 147,947
Cash dividends (53,596)
Stock issued under
employee stock plans (1,760) 207 4,635
Stock awards:
Granted (1,045) 243 5,397 (4,352)
Earned or canceled 413 (65) (1,457) 4,284
Conversion of
subordinated
debentures (985) 137 3,063
ESOP:
Issued (493) 95 2,127
Allocated 1,594
Tax benefit of ESOP
dividends and stock
options 956
Translation adjustments
related to business
disposition 13,089
Translation adjustments 25,114
Balance at 12/31/94 117,151 $146,438 $477,153 $420,174 (9,814) $(218,745) $(60,816) $(32,492)
See notes to consolidated financial statements.
19
Statements of Consolidated Cash Flows
In thousands
Year ended December 31
1994 1993 1992
Operating activities
Net income (loss) $ 147,947 $ 51,270 $(315,354)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Loss on business disposition 13,088
Cumulative effect of accounting changes 3,190 307,000
Depreciation and amortization 119,358 111,781 103,351
Deferred income taxes (10,058) (35,833) (30,210)
Reorganization expenses (5,000) (5,000) 95,000
"Free flights" promotion expenses 700 60,379 12,235
Changes in selected working capital items,
exclusive of business disposed in 1994:
Inventories 24,503 (29,323) 80,731
Receivables (53,074) (59,745) (33,816)
Other current assets (2,537) 11,136 27,765
Other current liabilities 43,387 (17,383) (70,422)
Reorganization reserve (26,686) (39,671) (15,530)
"Free flights" promotion reserve (26,709) (42,981) (1,604)
Net change in pension assets and liabilities 14,089 43,513 (12,149)
Postretirement benefits 21,197 11,259 21,254
Other--net 5,967 11,913 14,814
Net cash provided by operations 269,362 71,315 183,065
Investing activities
Capital expenditures--net (79,024) (95,990) (120,364)
Proceeds from business disposition (net of
cash in business sold of $2,650) 79,428
Total investing activities 404 (95,990) (120,364)
Financing activities
Proceeds from credit agreements and long-term
borrowings 5,500 73,712
(Decrease) increase in notes payable (118,134) 138,951 (2,378)
Reduction in long-term debt (36,001) (94,449) (70,158)
Stock options exercised and other Common stock
transactions 12,377 5,903 5,558
Dividends (53,596) (53,569) (53,269)
Total financing activities (195,354) 2,336 (46,535)
Effect of exchange rates on cash 4,261 (2,963) (7,886)
Increase (decrease) in cash and cash
equivalents 78,673 (25,302) 8,280
Cash and cash equivalents at beginning of year 31,730 57,032 48,752
Cash and cash equivalents
at end of year $ 110,403 $ 31,730 $ 57,032
See notes to consolidated financial statements.
20
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Summary of Significant Accounting Policies:
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts and transactions of the Company and its wholly owned subsidiaries.
Intercompany accounts and transactions are eliminated in consolidation.
Prior to the quarter ended December 31, 1994, the Company's European
subsidiaries were consolidated as of a date one month earlier than subsidiaries
in the United States. In the fourth quarter of 1994, this one month reporting
lag was eliminated and European results for the quarter ended December 31, 1994
included activity for four months. The effect of this change increased net
sales by $25.2 million in the fourth quarter of 1994, and the impact on net
income was not significant.
Exchange rate fluctuations from translating the financial statements of
subsidiaries located outside the United States into U.S. dollars and exchange
gains and losses from designated intercompany foreign currency transactions are
recorded in a separate component of shareowners' equity. All other foreign
exchange gains and losses are included in income.
Certain reclassifications have been made to prior years' financial
statements to conform with the 1994 presentation.
CASH EQUIVALENTS: Highly liquid investments with a maturity of 90 days or less
when purchased are considered by the Company to be cash equivalents.
INVENTORIES: Inventories are stated at the lower of cost or market. Cost is
determined by the last-in, first-out (LIFO) method for approximately 80 percent
and 79 percent of the Company's inventories at December 31, 1994 and 1993. The
remaining inventories, which are primarily outside the United States, are stated
using the first-in, first-out (FIFO) method.
INTANGIBLES: Intangibles principally represent goodwill, which is the cost of
business acquisitions in excess of the fair value of identifiable net tangible
assets of businesses acquired. Goodwill is amortized over 40 years on the
straight-line basis and the carrying value is reviewed annually. If this review
indicates that goodwill will not be recoverable as determined based on the
undiscounted cash flows of the entity acquired over the remaining amortization
period, the Company's carrying value of the goodwill will be reduced by the
estimated shortfall of cash flows.
INCOME TAXES: Certain expenses (principally related to accelerated tax
depreciation, employee benefits and various other accruals) are recognized in
different periods for financial reporting and income tax purposes.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment is stated on the
basis of cost. Depreciation expense is calculated principally on the straight-
line method to amortize the cost of the assets over their estimated useful
lives.
SHORT AND LONG-TERM DEBT: The carrying amounts of the Company's borrowings
under its short-term revolving credit agreements approximate their fair value.
The fair values of the Company's long-term debt are estimated based on quoted
market prices of comparable instruments.
FORWARD FOREIGN EXCHANGE CONTRACTS: The Company enters into forward foreign
exchange contracts to hedge exposures related to foreign currency transactions.
Gains and losses are recognized in the same period in which the underlying
transaction is recorded.
- --------------------------------------------------------------------------------
Business Disposition
In December 1994, the Company sold the stock of its home appliance operations in
Australia and New Zealand for $82.1 million in cash. The sale resulted in a
pretax loss of $13.1 million and an after-tax loss of $16.4 million. Sales and
related operating income(loss) for this business totaled $142 million and $12.6
21
million in 1994, $127.9 million and $3.4 million in 1993 and $131.8 million and
$(.1) million in 1992.
- --------------------------------------------------------------------------------
Inventories December 31
In thousands 1994 1993
Finished products $254,345 $282,841
Work in process, raw materials and supplies 132,924 146,313
$387,269 $429,154
If the FIFO method of inventory accounting, which approximates current cost,
had been used for all inventories, they would have been $77.1 million and
$76.3 million higher than reported at December 31, 1994 and 1993.
- ------------------------------------------------------------------------------
Pension Benefits
The Company and its subsidiaries have noncontributory defined benefit pension
plans covering most employees. Plans covering salaried and management
employees generally provide pension benefits that are based on an average of
the employee's earnings and credited service. Plans covering hourly employees
generally provide benefits of stated amounts for each year of service. The
Company's funding policy is to contribute amounts to the plans sufficient to
meet minimum funding requirements.
A summary of the components of net periodic pension expense (income) for the
defined benefit plans is as follows:
Year ended December 31
In thousands 1994 1993 1992
Service cost--benefits earned during the
period $ 28,550 $ 24,067 $ 21,469
Interest cost on projected benefit
obligation 94,148 90,322 87,654
Return on plan assets:
Actual return 559 (167,540) (87,263)
Expected return higher (lower) than actual (117,553) 54,399 (32,089)
Expected return on plan assets (116,994) (113,141) (119,352)
Other net amortization and deferral 9,474 4,917 6,850
Net pension expense (income) $ 15,178 $ 6,165 $ (3,379)
Assumptions used in determining net periodic pension expense (income) for the
defined benefit plans in the United States were:
1994 1993 1992
Discount rates 7.5% 8.5% 9.0%
Rates of compensation increase 5.0 6.0 6.0
Expected long-term rates of return on assets 9.5 9.5 9.5
For the valuation of pension obligations at the end of 1994 and for
determining pension expense in 1995, the discount rate and rate of
compensation increase have been increased to 8.5 percent and 6.0 percent
respectively. Assumptions for defined benefit plans outside the United States
are comparable to the above in all periods.
22
As of December 31, 1994, approximately 89 percent of the plan assets are
invested in listed stocks and bonds. The balance is invested in real estate and
short term investments.
Certain pension plans in the United States provide that in the event of a
change of Company control and plan termination, any excess funding may be used
only to provide pension benefits or to fund retirees' health care benefits.
The use of all pension assets for anything other than providing employee
benefits is either limited by legal restrictions or subject to severe taxation.
The following table sets forth the funded status and amounts recognized in
the statements of consolidated financial condition for the Company's defined
benefit pension plans:
December 31, 1994 December 31, 1993
Plans in Which Plans in Which Plans in Which Plans in Which
Assets Exceed Accumulated Assets Exceed Accumulated
Accumulated Benefits Exceed Accumulated Benefits Exceed
Benefits Assets Benefits Assets
In thousands
Actuarial present value of
benefit obligation:
Vested benefit obligation $ (399,971) $ (617,011) $(1,004,740) $ (15,474)
Accumulated benefit
obligation $ (399,975) $ (683,551) $(1,084,352) $ (16,380)
Projected benefit
obligation $ (426,485) $ (745,273) $(1,163,073) $ (18,989)
Plan assets at fair value 523,104 625,648 1,213,315 569
Projected benefit obligation
less than (in excess of)
plan assets 96,619 (119,625) 50,242 (18,420)
Unrecognized net (gain) loss (22,002) 91,078 41,037 1,046
Prior service cost not yet
recognized in net periodic
pension cost 38,159 85,191 110,024 3,272
Unrecognized net (asset)
obligation at adoption of
FAS 87, net of amortization (254) (31,354) (38,128) 1,647
Net pension asset (liability) $ 112,522 $ 25,290 $ 163,175 $ (12,455)
Recognized in the statements
of consolidated financial
condition
Pension investment
(liability) $ 112,522 $ (59,363) $ 163,175 $ (17,383)
Intangible pension asset 84,653 4,928
$ 112,522 $ 25,290 $ 163,175 $ (12,455)
Pension investments above of approximately $112 million and $104 million at
December 31, 1994 and 1993, and pension income of $1.6 million, $5.5 million and
$10.9 million in 1994, 1993 and 1992 relate to pension plans covering employees
in Europe.
In 1994 and 1993, the Company recorded $84.7 million and $4.9 million,
respectively, to recognize the minimum pension liability required by the
provisions of Financial Accounting Standards Board Statement No. 87 (FAS 87),
"Employers' Accounting for Pensions." The transaction, which had no effect
on income, was offset by recording an intangible asset of an equivalent
amount. The intangible asset represents a future economic benefit arising
from the granting of retroactive pension benefits over many years and will
be amortized to expense over the remaining average working lifetime of the
affected employees. The intangible asset is required to be recognized in
1994 in accordance with FAS 87 due to a decline in the market value of the
pension assets.
23
- -------------------------------------------------------------------------------
Postretirement Benefits Other Than Pensions
In addition to providing pension benefits, the Company provides postretirement
health care and life insurance benefits for its employees in the United States.
Most of the postretirement plans are contributory and contain certain other
cost sharing features such as deductibles and coinsurance. The plans are
unfunded. Employees do not vest, and these benefits are subject to change.
Death benefits for certain retired employees are funded as part of, and paid
out of pension plans.
In 1992, the Company adopted Statement of Financial Accounting Standards
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," which requires employers to accrue the cost of such retirement
benefits during the employee's service with the Company. The transition
obligation of $355 million as of January 1, 1992 was recorded as a one-time
charge in the first quarter of 1992 and reduced net income by $222 million or
$2.09 per share.
A summary of the components of net periodic postretirement benefit cost is as
follows:
Year ended December 31
In thousands 1994 1993 1992
Service cost $15,440 $10,225 $ 8,258
Interest cost 29,448 26,939 30,421
Net amortization and deferral (5,957) (8,228) 2,106
Net periodic postretirement benefit cost $38,931 $28,936 $40,785
Assumptions used in determining net periodic postretirement benefit cost were:
1994 1993 1992
Health care cost trend rates (1):
Current year 13.0% 14.0% 15.0%
Decreasing gradually to 6.0% 6.0% 6.0%
Until the year 2001 2009 2009
Each year thereafter 6.0% 6.0% 6.0%
Discount rates 7.5% 8.5% 9.0%
(1)Weighted-average annual assumed rate of increase in the per capita cost
of covered benefits.
For the valuation of the accumulated benefit obligation at December 31, 1994 and
for determining postretirement benefit costs in 1995, the health care cost trend
rates were decreased. This results in a health care cost trend rate of 9
percent in 1995, decreasing gradually to 6 percent until 2001 and remaining at
that level thereafter. In addition, the discount rate was increased to 8.5
percent.
The health care cost trend rate assumption has a significant impact on the
amounts reported. For example, increasing the assumed health care cost trend
rates by one percentage point in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1994 by $40.2 million and
the aggregate of the service and interest cost components of net periodic
postretirement benefit cost for 1994 by $6.2 million.
The following table presents the status of the plans reconciled with amounts
recognized in the statements of consolidated financial condition for the
Company's postretirement benefits.
24
December 31
1994 1993
In thousands
Accumulated postretirement benefit obligation:
Retirees $239,593 $284,524
Fully eligible active plan participants 37,569 58,709
Other active plan participants 79,524 56,465
356,686 399,698
Unamortized plan amendment 45,598 54,248
Unrecognized net gain(loss) 10,548 (62,311)
Postretirement benefit liability recognized in the
statements of consolidated financial condition $412,832 $391,635
- --------------------------------------------------------------------------------
Employee Stock Ownership Plan and Other Employee Benefits
The Company has established a trust to administer a leveraged employee stock
ownership plan (ESOP) within an existing employee savings plan. The Company has
guaranteed the debt of the trust and will service the repayment of the debt,
including interest, through the Company's employee savings plan contribution and
from the quarterly dividends paid on stock held by the ESOP. Dividends paid by
the Company on stock held by the ESOP totaled $1.4 million in 1994, 1993 and
1992. The ESOP notes are collateralized by the Common stock owned by the ESOP
trust. The Company makes annual contributions to the ESOP to the extent the
dividends earned on the shares held are less than the debt service
requirements. The Company made contributions to the plan of $5.9 million,
$5.5 million and $5.2 million for loan payments in 1994, 1993 and 1992. As
the debt is repaid, shares are released from collateral and allocated to
active employees based on the proportion of debt service paid in the year.
Accordingly, the loan outstanding is recorded as debt and the cost of shares
pledged as collateral are reported as a reduction of Shareowners' Equity
(employee stock plans). As the shares are released from collateral, the
Company reports compensation expense based on the historical cost of the
shares. The Company also expenses any additional contributions required if
the shares released from collateral are less than the shares earned by the
employees. All shares held by the ESOP are considered outstanding for
earnings per share computations and dividends earnedon the shares are recorded
as a reduction of retained earnings. Expenses of the ESOP, the majority of
which represents interest on the ESOP debt, totaled $7.4 million, $7.5 million
and $7.2 million in 1994, 1993 and 1992. The ESOP shares as of December 31 were
as follows:
1994 1993
Released and allocated shares 884,373 723,396
Unreleased shares 1,972,770 2,133,747
2,857,143 2,857,143
In the first quarter of 1994, the Company adopted Financial Accounting
Standards Board Statement No. 112 (FAS 112), "Employers' Accounting for
Postemployment Benefits." The new rules require recognition of a liability for
certain disability and severance benefits to former or inactive employees. The
cumulative effect of the accounting change was $3.2 million or $.03 per share.
The ongoing expenses associated with the adoption of this standard are not
significant.
25
- --------------------------------------------------------------------------------
Accrued Liabilities December 31
In thousands 1994 1993
Warranties $ 42,977 $ 46,281
Advertising/sales promotion 27,315 51,946
Other 75,794 79,788
$146,086 $178,015
- --------------------------------------------------------------------------------
Income Taxes
Effective January 1, 1992, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." The cumulative effect of
adopting Statement 109 was to decrease net income by $85 million or $.80 per
share as of January 1, 1992.
Deferred income taxes reflect the net tax effects of temporary differences
between the amount of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. Significant components of the
Company's deferred tax assets and liabilities are as follows:
December 31
In thousands 1994 1993
Deferred tax assets (liabilities):
Tax over book depreciation $(107,662) $(118,973)
Postretirement benefit obligation 160,291 151,424
Product warranty accruals 18,887 20,021
Pensions and other employee benefits (37,284) (44,159)
Net operating loss carryforwards 67,562 48,817
Reorganization accrual 816 8,856
Foreign tax credit carryforward 6,277 13,300
Other (7,480) 7,043
101,407 86,329
Less valuation allowance for deferred tax assets (21,799) (15,957)
Net deferred tax assets $ 79,608 $ 70,372
Recognized in statements of consolidated financial
condition:
Deferred tax assets--current $ 45,589 $ 46,695
Deferred tax assets--noncurrent 72,394 68,559
Deferred tax liabilities (38,375) (44,882)
Net deferred tax assets $ 79,608 $ 70,372
At December 31, 1994, the Company has available for tax purposes approximately
$236 million of net operating loss carryforwards outside the United States, of
which $59 million expire in various years through 2004 and $177 million is
available indefinitely. Of this amount, $32 million relates to pre-acquisition
net operating losses which will be used to reduce intangibles when utilized.
Income (loss) before income taxes and cumulative effect of accounting changes
consists of the following:
26
Year ended December 31
In thousands 1994 1993 1992
United States $230,320 $162,554 $ 80,013
Non-United States 11,017 (72,684) (72,467)
$241,337 $ 89,870 $ 7,546
Significant components of the provision for income taxes are as follows:
Year ended December 31
In thousands 1994 1993 1992
Current provision:
Federal $ 78,200 $ 51,700 $ 37,000
State 16,400 9,100 7,100
Non-United States 12,900 20,000 2,000
107,500 80,800 46,100
Deferred provision:
Federal (9,400) 400 (13,800)
State (2,500) 700 (3,100)
Non-United States (5,400) (43,300) (13,300)
(17,300) (42,200) (30,200)
Provision for income taxes $ 90,200 $ 38,600 $ 15,900
Significant items impacting the effective income tax rate follow:
Year ended December 31
In thousands 1994 1993 1992
Income before cumulative effect of
accounting changes computed at the
statutory United States income tax rate $84,500 $31,500 $ 2,600
Increase (reduction) resulting from:
Tax benefit associated with European
operating losses and reorganization costs (20,000)
Non-United States losses with no tax
benefit 5,800 10,700
Goodwill amortization 3,200 3,200 3,100
Effect of business disposition 7,800
The effect of statutory rate differences
outside the United States 100 2,500 2,600
State income taxes, net of federal tax
benefit 9,000 6,400 2,700
Tax credits arising outside the United
States (600) (800) (5,400)
Effect of tax rate changes on deferred
taxes (2,500)
Other-net 400 (1,700) (400)
Provision for income taxes $90,200 $38,600 $15,900
Since the Company plans to continue to finance expansion and operating
requirements of subsidiaries outside the United States through reinvestment of
27
the undistributed earnings of these subsidiaries (approximately $23 million at
December 31, 1994), taxes which would result from distribution have not been
provided on such earnings. If such earnings were distributed, additional taxes
payable would be significantly reduced by available tax credits arising from
taxes paid outside the United States.
Income taxes paid, net of refunds received, during 1994, 1993 and 1992 were
$103 million, $68.3 million, and $28.5 million, respectively.
- --------------------------------------------------------------------------------
Notes Payable
Notes payable consisted of notes payable to banks, in addition to $16 and $112
million in commercial paper borrowings at December 31, 1994 and 1993. The
Company's commercial paper program is supported by a credit agreement totaling
$300 million, which became effective on July 14, 1994 and expires on July 13,
1998. Subject to certain exceptions, the credit agreement requires the Company
to maintain certain quarterly levels of maximum leverage and minimum interest
coverage. At December 31, 1994, the Company was in compliance with all
covenants. Additional funds available at December 31, 1994 under all credit
agreements, applying the terms of the most restrictive covenant, totaled $313
million. The weighted average interest rate on all notes payable and commercial
paper borrowings was 6.5 percent and 4.0 percent at December 31, 1994 and 1993.
- --------------------------------------------------------------------------------
Long-Term Debt
Long-term debt consisted of the following:
December 31
In thousands 1994 1993
Long-term notes with interest payable semiannually:
Due May 15, 2002 at 9.75% $200,000 $200,000
Due July 15, 1999 at 8.875% 175,000 175,000
Due July 1, 1997 at 8.875% 100,000 100,000
Medium-term notes, maturing from 1995 to 2010, from
7.69% to 9.03% with interest payable semiannually 162,750 177,750
Employee stock ownership plan notes payable
semiannually through July 2, 2004 at 9.35% 57,504 59,129
Other 11,362 31,321
706,616 743,200
Less current maturities of long-term debt 43,411 18,505
Long-term debt $663,205 $724,695
The 9.75 percent notes, the 8.875 percent notes due in 1999 and the medium-term
notes grant the holders the right to require the Company to repurchase all or
any portion of their notes at 100 percent of the principal amount thereof,
together with accrued interest, following the occurrence of both a change in
Company control and a credit rating decline.
The fair value of the Company's long-term debt, based on public quotes if
available, exceeded the amount recorded in the statements of consolidated
financial condition at December 31, 1994 and 1993 by $17.3 million and $83.7
million, respectively.
Interest paid during 1994, 1993 and 1992 was $75.2 million, $76.2 million,
and $77.4 million. The aggregate maturities of long-term debt in each of the
next five years is as follows (in thousands): 1995-$43,411; 1996-$3,495; 1997-
$104,018; 1998-$4,733; 1999-$180,503.
28
- --------------------------------------------------------------------------------
Forward Foreign Exchange Contracts
The Company enters into forward foreign exchange contracts to hedge the actual
and anticipated exposures that are created by the export and import of products
and supplies along with foreign currency intercompany loans. The purpose of the
Company's foreign currency hedging activities is to protect the Company from the
risk that the eventual cash flows resulting from these transactions could be
adversely affected by changes in exchange rates.
At December 31, 1994 the Company had forward foreign exchange contracts, all
having maturities of less than twelve months, of $24.0 million. The majority of
the contracts are between currencies not involving the exchange of U.S. dollars.
The table below summarizes by currency, the U.S. dollar equivalent of the
contractual amounts of the Company's forward foreign exchange contracts at
December 31, 1994.
In thousands
Currency:
Italian Lira $11,054
British Pound 8,747
Other 4,167
$23,968
The gross unrecognized gains and losses from the contracts at December 31, 1994
and 1993 were not significant.
- --------------------------------------------------------------------------------
Leases
The Company leases buildings, machinery, equipment and automobiles under
operating leases. Rental expense for operating leases amounted to $24.4
million, $22.8 million, and $26.7 million for 1994, 1993 and 1992.
Minimum lease payments under leases expiring subsequent to December 31, 1994
are:
In thousands
Year Ended
1995 $15,988
1996 12,277
1997 6,671
1998 4,599
1999 3,765
Thereafter 7,580
Total minimum lease payments $50,880
- --------------------------------------------------------------------------------
Stock Options
In 1992, the shareowners approved the 1992 stock option plan for executives and
key employees. The plan provides that options could be granted to key employees
for not more than 3.6 million shares of the Common stock of the Company. The
option price under the plan is the fair market value at the date of the grant.
Options may not be exercised until one year after the date granted.
Under the Company's 1986 plan which expired in 1991, options to purchase 1.6
million shares of Common stock were granted at the market value at the date of
grant. Some options were also granted under this plan with stock appreciation
rights (SAR) which entitle the employee to surrender the right to receive up to
one-half of the shares covered by the option and to receive a cash payment equal
to the difference between the option price and the market value of the shares
29
being surrendered. Under a plan which expired in 1986, options to purchase
800,000 shares of Common stock were granted at the market value at date of
grant. Option shares outstanding under all of the plans described above total
2.7 million at December 31, 1994.
In April 1990, the Company's shareowners approved the Maytag Corporation
1989 Stock Option Plan for Non-Employee Directors which authorizes the issuance
of up to 250,000 shares of Common stock to the Company's non-employee directors.
Options under this plan are immediately exercisable upon grant.
The following is a summary of certain information relating to these plans:
Average Option
Price Shares SAR
Outstanding December 31, 1991 $14.76 1,826,795 692,383
Granted 14.54 411,910
Exercised 9.86 (179,736) (11,192)
Exchanged for SAR 11.16 (11,192)
Canceled or expired 12.63 (34,640) (93,242)
Outstanding December 31, 1992 15.09 2,013,137 587,949
Granted 15.92 599,060
Exercised 12.89 (101,156) (5,360)
Exchanged for SAR 12.53 (5,360)
Canceled or expired 16.26 (147,080) (85,728)
Outstanding December 31, 1993 15.33 2,358,601 496,861
Granted 15.78 650,216
Exercised 13.66 (211,689) (6,610)
Exchanged for SAR 12.40 (6,610)
Canceled or expired 15.40 (78,765) (77,828)
Outstanding December 31, 1994 15.53 2,711,753 412,423
Options for 2,082,747 shares, 1,777,361 shares and 1,623,227 shares were
exercisable at December 31, 1994, 1993 and 1992. There were 2,136,214 shares
available for future grants at December 31, 1994. In the event of a change in
Company control, all stock options granted become immediately exercisable.
- --------------------------------------------------------------------------------
Stock Awards
In 1991, the shareowners approved the 1991 Stock Incentive Award Plan For Key
Executives. This plan authorizes the issuance of up to 2.5 million shares of
Common stock to certain key employees of the Company, of which 1,803,631 shares
are available for future grants as of December 31, 1994. Under the terms of the
plan, the granted stock vests three years after the award date and is contingent
upon pre-established performance objectives. In the event of a change in
Company control, all incentive stock awards become fully vested. No incentive
stock awards may be granted under this plan on or after May 1, 1996.
Incentive stock awards outstanding at December 31, 1994 and amounts charged to
expense for the anticipated payout are:
30
In thousands except share data
Grant Shares Charged to Expense
Year of Grant Outstanding 1994 1993
1994 203,658 $2,005
1993 433,006 4,122 $3,651
636,664 $6,127 $3,651
- --------------------------------------------------------------------------------
Shareowners' Equity
The Company has 24 million authorized shares of Preferred stock, par value $1
per share, none of which is issued.
Pursuant to a Shareholder Rights Plan approved by the Company in 1988, each
share of Common stock carries with it one Right. Until exercisable, the Rights
will not be transferable apart from the Company's Common stock. When
exercisable, each Right will entitle its holder to purchase one one-hundredth of
a share of Preferred stock of the Company at a price of $75. The Rights will
only become exercisable if a person or group acquires 20 percent or more of the
Company's Common stock which may be reduced to not less than 10 percent at the
discretion of the Board of Directors. In the event the Company is acquired in a
merger or 50 percent or more of its consolidated assets or earnings power are
sold, each Right entitles the holder to purchase Common stock of either the
surviving or acquired company at one-half its market price. The Rights may be
redeemed in whole by the Company at a purchase price of $.01 per Right. The
Preferred shares will be entitled to 100 times the aggregate per share dividend
payable on the Company's Common stock and to 100 votes on all matters submitted
to a vote of shareowners. The Rights expire May 2, 1998.
- --------------------------------------------------------------------------------
Industry Segment and Geographic Information
Principal financial data by industry segment is as follows:
In thousands 1994 1993 1992
Net sales
Home appliances $3,180,766 $2,830,457 $2,875,902
Vending equipment 191,749 156,597 165,321
Total $3,372,515 $2,987,054 $3,041,223
Income (loss) before income taxes and
cumulative effect of accounting changes
Home appliances $ 334,027 $ 163,177 $ 78,448
Vending equipment 21,866 17,944 17,242
Corporate (including interest expense) (114,556) (91,251) (88,144)
Total $ 241,337 $ 89,870 $ 7,546
Capital expenditures-net
Home appliances $ 74,747 $ 92,194 $ 115,676
Vending equipment 1,902 1,028 771
Corporate 2,105 2,768 3,917
Total $ 78,754 $ 95,990 $ 120,364
Depreciation and amortization
Home appliances $ 113,160 $ 105,916 $ 98,116
Vending equipment 4,434 4,377 4,236
Corporate 1,764 1,488 999
Total $ 119,358 $ 111,781 $ 103,351
Identifiable assets
Home appliances $2,053,175 $2,147,174 $2,135,961
Vending equipment 98,109 103,765 104,119
Corporate 353,043 218,559 261,410
Total $2,504,327 $2,469,498 $2,501,490
31
Information about the Company's operations in different geographic
locations is as follows:
In thousands 1994 1993 1992
Net sales
North America $2,831,583 $2,468,374 $2,407,591
Europe 398,966 390,761 501,857
Other 141,966 127,919 131,775
Total $3,372,515 $2,987,054 $3,041,223
Income (loss) before income taxes and
cumulative effect of accounting changes
North America $ 342,887 $ 251,328 $ 159,184
Europe 420 (73,581) (63,443)
Other 12,586 3,374 (51)
Corporate (including interest expense) (114,556) (91,251) (88,144)
Total $ 241,337 $ 89,870 $ 7,546
Identifiable assets
North America $1,768,629 $1,794,271 $1,677,131
Europe 382,655 359,323 452,995
Other 97,345 109,954
Corporate 353,043 218,559 261,410
Total $2,504,327 $2,469,498 $2,501,490
Sales between affiliates of different geographic regions are not
significant. The amount of exchange gain or loss included in operations in any
of the years presented was not significant.
During 1994, the Company changed the manner in which it allocates certain
items of income and expense to its industry segments and in compiling its
geographic information. This resulted in the allocation to its business units
of certain income and expenses that were previously allocated to "Corporate."
Certain industry segment and geographic information referred to above has been
restated to reflect this change.
The Corporate category in 1994 includes a $13.1 million pretax loss and
identifiable assets of $82.1 million in cash from the sale of the Company's
home appliance operations in Australia.
Prior to the quarter ended December 31, 1994, the Company's European
subsidiaries were consolidated as of a date one month earlier than subsidiaries
in the United States. In the fourth quarter of 1994, this one month reporting
lag was eliminated and European results for the quarter ended December 31, 1994
include activity for four months. The effect of this change increased net
sales by $25.2 million in the fourth quarter and the impact on income before
income taxes and cumulative effect of accounting changes was not significant.
In 1993 the Company incurred $60.4 million in pretax charges for two "free
flights" promotion programs in Europe ($50 million in a special charge and
$10.4 million in selling, general and administrative expenses). In 1992 the
Company incurred $95 million of reorganization expenses for marketing and
distribution changes in North America and plant closings and other
organizational changes in Europe. Of the $95 million allocated to Home
Appliances, $40 million was allocated to North America and $55 million to
Europe.
32
- -------------------------------------------------------------------------------
Supplementary Expense Information
Year ended December 31
In thousands 1994 1993 1992
Advertising costs $153,233 $136,452 $119,391
Research and development expenses 45,926 42,717 44,012
- -------------------------------------------------------------------------------
Contingent Liabilities
At December 31, 1994, the Company is contingently liable for guarantees of
indebtedness owed by a third party ("the borrower") of $24 million relating to
the sale of one of its manufacturing facilities in 1992. The borrower is
performing under the payment terms of the loan agreement; however, it was out
of compliance with certain financial covenants at December 31, 1994 for which
it has requested a waiver from the lender involved. The indebtedness is
collateralized by the assets of the borrower.
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.
Quarterly Results of Operations (Unaudited)
- --------------------------------------------------------------------------
The following is a summary of unaudited quarterly results of operations
for the years ended December 31, 1994 and 1993.
December 31 September 30 June 30 March 31
In thousands except per share data
1994
Net sales $862,635 $848,930 $870,385 $790,565
Gross profit 211,774 230,570 229,616 204,490
Income before cumulative effect of
accounting change 17,967 61,030 41,141 30,999
Per average share .17 .57 .39 .29
Net income 17,967 61,030 41,141 27,809
Per average share $ .17 $ .57 $ .39 $ .26
1993
Net sales $746,723 $770,222 $753,256 $716,853
Gross profit 179,066 188,501 183,812 172,733
Net income (loss) 17,469 23,040 21,307 (10,546)
Per average share $ .16 $ .22 $ .20 $ (.10)
The quarter ended September 30, 1994 includes a $20 million one-time tax
benefit associated with the funding of reorganization costs in Europe over the
past several years. The quarter ended December 31, 1994 includes a $16.4
million after-tax loss from the sale of the Company's home appliance operations
in Australia.
Prior to the quarter ended December 31, 1994, the Company's European
subsidiaries were consolidated as of a date one month earlier than subsidiaries
in the United States. In the fourth quarter of 1994, this one month reporting
lag was eliminated and European results for the quarter ended December 31, 1994
include activity for four months. The effect of this change increased net
sales by $25.2 million in the fourth quarter and the impact on gross profit and
33
net income was not significant.
The quarter ended March 31, 1993 includes $60.4 million in pretax charges
($50 million in a special charge and $10.4 million in selling, general and
administrative expenses) for additional costs associated with two Hoover Europe
"free flights" promotion programs.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None
Part III
Item 10. Directors and Executive Officers of the Registrant.
Information concerning directors and officers on pages 1 through 6 of the Proxy
Statement of the Company is incorporated herein by reference. Additional
information concerning executive officers of the Company is included under
"Executive Officers of the Registrant" included in Part I, Item 4.
Item 11. Executive Compensation.
Information concerning executive compensation on pages 7 through 14 of the
Proxy Statement, is incorporated herein by reference; provided that the
information contained in the Proxy Statement under the heading "Compensation
Committee Report on Executive Compensation" is specifically not incorporated
herein by reference. Information concerning director compensation on pages 15
and 16 of the Proxy Statement is incorporated herein by reference, provided
that the information contained in the Proxy Statement under the headings
"Shareholder Return Performance" and "Other Matters" is specifically not
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The security ownership of certain beneficial owners and management is
incorporated herein by reference from pages 4 through 6 of the Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
Information concerning certain relationships and related transactions is
incorporated herein by reference from pages 2 through 4 of the Proxy Statement.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)(1) and (2) The response to this portion of Item 14 is submitted as a
separate section of this report in the "List of Financial
Statements and Financial Statement Schedules" on page 37.
(3) The response to this portion of Item 14 is submitted as a
separate section of this report in the "List of Exhibits" on
pages 38 through 41.
(b) A report on Form 8-K was filed during the fourth quarter of 1994 disclosing
the Company's plans to spend $160 million over the next several years to
upgrade processes in the Company's refrigeration plant in Galesburg,
Illinois.
34
(c) Exhibits--The response to this portion of Item 14 is submitted as a
separate section of this report in the "List of Exhibits" on pages 38
through 41.
(d) Financial Statement Schedules--The response to this portion of Item 14 is
submitted as a separate section of this report in the "List of Financial
Statements and Financial Statement Schedules" on page 37.
35
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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
(Registrant)
Leonard A. Hadley
Leonard A. Hadley
Chairman and Chief Executive Officer
Director
Pursuant to the requirement of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
John P. Cunningham, Jr. Edward C. Cazier, Jr.
John P. Cunningham, Jr. Edward C. Cazier, Jr.
Executive Vice President and Director
Chief Financial Officer
Mark A. Garth Howard L. Clark, Jr.
Mark A. Garth Howard L. Clark, Jr.
Vice President-Controller and Director
Chief Accounting Officer
Fred G. Steingraber John A. Sivright
Fred G. Steingraber John A. Sivright
Director Director
Neele E. Stearns, Jr. Wayland R. Hicks
Neele E. Stearns, Jr. Wayland R. Hicks
Director Director
Date: March 1, 1995
36
ANNUAL REPORT ON FORM 10-K
Item 14(a)(1), (2) and (3), (c) and (d)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
LIST OF EXHIBITS
FINANCIAL STATEMENT SCHEDULES
Year Ended December 31, 1994
MAYTAG CORPORATION
NEWTON, IOWA
37
FORM 10-K--ITEM 14(a)(1) AND ITEM 14(d)
MAYTAG CORPORATION
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements and supplementary data of
Maytag Corporation and subsidiaries are included in Part II, Item 8:
Page
Statements of Consolidated Income--Years Ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . . 16
Statements of Consolidated Financial Condition--
December 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . 17
Statements of Consolidated Shareowners' Equity--Years Ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . . 19
Statements of Consolidated Cash Flows--Years Ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . . 20
Notes to Consolidated Financial Statements . . . . . . . . . . . . . 21
Quarterly Results of Operations--Years 1994 and 1993 . . . . . . . . 33
The following consolidated financial statement schedule of Maytag Corporation
and subsidiaries is included in Item 14(d):
Schedule II Valuation and Qualifying Accounts . . . . . . . . . . . 43
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.
38
FORM 10-K--ITEM 14(a) (3) AND ITEM 14(c)
MAYTAG CORPORATION
LIST OF EXHIBITS
The following exhibits are filed herewith or incorporated by reference. Items
indicated by (1) are considered a compensatory plan or arrangement required to
be filed pursuant to Item 14 of Form 10-K.
Incorporated Filed with
Exhibit Herein by Electronic
Number Description of Document Reference to Submission
3(a) Restated Certificate of Incorporation of 1993 Annual
Registrant. Report on
Form 10-K
3(b) Certificate of Designations of Series A 1988 Annual
Junior Participating Preferred Stock of Report on
Registrant. Form 10-K.
3(c) Certificate of Increase of Authorized Number 1988 Annual
of Shares of Series A Junior Participating Report on
Preferred Stock of Registrant. Form 10-K.
3(d) By-Laws of Registrant, as amended through 1993 Annual
February 7, 1991. Report on
Form 10-K
4(a) Rights Agreement dated as of May 2, 1988 Current
between Registrant and The First National Report on
Bank of Boston. Form 8-K
dated May 5,
1988, Exhibit
1.
4(b) Amendment, dated as of September 24, 1990 Current
to the Rights Agreement, dated as of May 2, Report on
1988 between the Registrant and The First Form 8-K
National Bank of Boston. dated October
3, 1990,
Exhibit 1.
4(c) Indenture dated as of June 15, 1987 between Quarterly
Registrant and The First National Bank of Report on
Chicago. Form 10-Q for
the quarter
ended June
30, 1987.
39
Incorporated Filed with
Exhibit Herein by Electronic
Number Description of Document Reference to Submission
4(d) First Supplemental Indenture dated as of Current
September 1, 1989 between Registrant and The Report on
First National Bank of Chicago. Form 8-K
dated
September 28,
1989, Exhibit
4.3.
4(e) Second Supplemental Indenture dated as of Current
November 15, 1990 between Registrant and Report on
The First National Bank of Chicago. Form 8-K
dated
November 29,
1990.
4(f) U.S. $100,000,000 Credit Agreement Dated as 1993 Annual
of June 25, 1993 Among Registrant, the Banks Report on
Party Hereto and Bank of Montreal, Chicago Form 10-K
Branch as Agent and Royal Bank of Canada.
(Superseded by $300,000,000 Agreement of
July 14, 1994.)
4(g) U.S. $200,000,000 Credit Agreement Dated as 1993 Annual
of June 25, 1993 Among Registrant, the Banks Report on
Party Hereto and Bank of Montreal, Chicago Form 10-K
Branch as Agent and Royal Bank of Canada.
(Superseded by $300,000,000 Agreement of
July 14, 1994.)
4(h) First Amendment, Dated as of March 4, 1994 1993 Annual
to the U.S. $100,000,000 Credit Agreement, Report on
Dated as of June 25, 1993 among Registrant, Form 10-K
the Banks party Hereto and Bank of Montreal,
Chicago Branch as Agent and Royal Bank of
Canada as Co-Agent. (Superseded by
$300,000,000 Agreement of July 14, 1994.)
4(i) First Amendment, Dated as of March 4, 1994 1993 Annual
to the U.S. $200,000,000 Credit Agreement, Report on
dated as of June 25, 1993 among Registrant, Form 10-K
the banks Party Hereto and Bank of Montreal,
Chicago Branch as Agent and Royal Bank of
Canada as Co-Agent. (Superseded by
$300,000,000 Agreement of July 14, 1994.)
4(j) U.S. $300,000,000 Credit Agreement Dated as X
of July 14, 1994 among Registrant, the banks
Party Hereto and Bank of Montreal, Chicago
Branch as Agent and Royal Bank of Canada as
Co-Agent.
40
Incorporated Filed with
Exhibit Herein by Electronic
Number Description of Document Reference to Submission
4(k) Copies of instruments defining the rights of
holders of long-term debt not required to be
filed herewith or incorporated herein by
reference will be furnished to the
Commission upon request.
10(a) Annual Management Incentive Plan, as amended 1990 Annual
through December 21, 1990 (1). Report on
Form 10-K
10(b) Executive Severance Agreements (1). X
10(c) Corporate Severance Agreements (1). 1989 Annual
Report on
Form 10-K.
10(d) Severance Agreement with Jerry Schiller, 1993 Annual
former Chief Financial Officer of Maytag Report on
Corporation (1). Form 10-K
10(e) 1989 Non-Employee Directors Stock Option Exhibit A to
Plan (1). Registrant's
Proxy
Statement
dated March
18, 1990.
10(f) 1981 Stock Option Plan for Executives and 1992 Annual
Key Employees (1). Report on
Form 10-K.
10(g) 1986 Stock Option Plan for Executives and Exhibit A to
Key Employees (1). Registrant's
Proxy
Statement
dated March
14, 1986.
10(h) 1992 Stock Option Plan for Executives and Exhibit A to
Key Employees (1). Registrant's
Proxy
Statement
dated March
16, 1992.
10(i) 1991 Stock Incentive Award Plan for Key Exhibit A to
Executives (1). Registrant's
Proxy
Statement
dated March
15, 1991.
41
Incorporated Filed with
Exhibit Herein by Electronic
Number Description of Document Reference to Submission
10(j) Directors Deferred Compensation Plan (1). Amendment No.
1 on Form 8
dated April
5, 1990 to
1989 Annual
Report on
Form 10-K.
10(k) 1988 Capital Accumulation Plan for Key Amendment No.
Employees (1). 1 on Form 8
dated April
5, 1990 to
1989 Annual
Report on
Form 10-K.
10(l) Directors Retirement Plan (1). Amendment No.
1 on Form 8
dated April
5, 1990 to
1989 Annual
Report on
Form 10-K.
11 Computation of Per Share Earnings. X
12 Ratio of Earnings to Fixed Charges. X
21 List of Subsidiaries of the Registrant. X
23 Consent of Ernst & Young LLP. X
27 Financial Data Schedule X
42
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
Thousands of Dollars
COL. A COL. B COL. C COL. D COL. E
ADDITIONS
DESCRIPTION Balance at Charged to Costs Charged to Other Deductions--Describe Balance at End
Beginning and Expenses Accounts-- of Period
of Period Describe
Year ended December 31, 1994:
Allowance for doubtful $15,629 $ 9,709 $ 5,852 $20,037
accounts receivable (551)
$15,629 $ 9,709 $ 5,301 $20,037
Year ended December 31, 1993:
Allowance for doubtful $16,380 $ 6,678 $ 7,054 15,629
accounts receivable 375
$16,380 $ 6,678 $ 7,429 $15,629
Year ended December 31, 1992:
Allowance for doubtful $14,119 $10,974 $ 7,969 16,380
accounts receivable 744
$14,119 $10,974 $ 8,713 $16,380
Note 1 - Uncollectible accounts written off
Note 2 - Effect of foreign currency translation
43