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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2002
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________to _____________________
Commission file number 1-655
MAYTAG CORPORATION
A Delaware Corporation I.R.S. Employer Identification No. 42-0401785
403 West Fourth Street North, Newton, Iowa 50208
Registrant's telephone number: 641-792-7000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _____
---
The number of shares outstanding of each of the issuer's classes of common
stock, as of September 30, 2002:
Common Stock, $1.25 par value - 78,040,637
------------------------------------------
1
MAYTAG CORPORATION
Quarterly Report on Form 10-Q
Quarter Ended September 30, 2002
INDEX
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Income .......................................................... 3
Consolidated Balance Sheets ................................................................ 4
Consolidated Statements of Cash Flows ...................................................... 6
Notes to Consolidated Financial Statements ................................................. 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ...... 15
Item 3. Quantitative and Qualitative Disclosures about Market Risk ................................. 22
Item 4. Controls and Procedures .................................................................... 22
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ........................................................... 23
Signatures ................................................................................. 24
Certifications ............................................................................. 25
2
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
MAYTAG CORPORATION
Consolidated Statements of Income
Three Months Ended Nine Months Ended
September 30 September 30
---------------------------- ---------------------------
In thousands, except per share data 2002 2001 2002 2001
- ------------------------------------------------------------------------------------------------- ---------------------------
Net sales $1,168,032 $ 1,132,554 $ 3,538,630 $ 3,086,171
Cost of sales 923,607 913,086 2,766,971 2,454,365
---------------------------- ---------------------------
Gross profit 244,425 219,468 771,659 631,806
Selling, general and administrative expenses 135,700 139,807 433,913 411,067
---------------------------- ---------------------------
Operating income 108,725 79,661 337,746 220,739
Interest expense (14,559) (18,159) (47,644) (46,350)
Other - net (1,711) (2,422) (462) (3,857)
---------------------------- ---------------------------
Income from continuing operations before income taxes,
minority interests, extraordinary item and
cumulative effect of accounting change 92,455 59,080 289,640 170,532
Income taxes 31,435 19,716 98,478 14,194
---------------------------- ---------------------------
Income from continuing operations before minority interests,
extraordinary item and cumulative effect of accounting change 61,020 39,364 191,162 156,338
Minority interests - (1,873) (3,732) (12,590)
---------------------------- ---------------------------
Income from continuing operations before extraordinary item
and cumulative effect of accounting change 61,020 37,491 187,430 143,748
---------------------------- ---------------------------
Discontinued operations:
Loss from discontinued operations (231) (1,728) (1,889) (6,096)
Income taxes on discontinued operations - 763 - 840
Loss on sale of Blodgett - 59,500 - 59,500
---------------------------- ---------------------------
Loss from discontinued operations (231) (61,991) (1,889) (66,436)
Income (loss) before extraordinary item and cumulative effect
of accounting change 60,789 (24,500) 185,541 77,312
Extraordinary item - loss on early retirement of debt - (5,171) - (5,171)
Cumulative effect of accounting change - - - (3,727)
---------------------------- ---------------------------
Net income (loss) $ 60,789 $ (29,671) $ 185,541 $ 68,414
============================ ===========================
Basic earnings (loss) per common share:
- ------------------------------------------------------------------------------------------------- ---------------------------
Income from continuing operations before extraordinary item
and cumulative effect of accounting change $ 0.78 $ 0.49 $ 2.42 $ 1.88
Loss from discontinued operations - (0.81) (0.02) (0.87)
Extraordinary item - loss on early retirement of debt - (0.07) - (0.07)
Cumulative effect of accounting change - - - (0.05)
Net income (loss) $ 0.78 $ (0.39) $ 2.39 $ 0.90
Diluted earnings (loss) per common share:
- ------------------------------------------------------------------------------------------------- ---------------------------
Income from continuing operations before extraordinary item
and cumulative effect of accounting change $ 0.78 $ 0.48 $ 2.39 $ 1.83
Loss from discontinued operations - (0.80) (0.02) (0.85)
Extraordinary item - loss on early retirement of debt - (0.07) - (0.07)
Cumulative effect of accounting change - - - 0.76
Net income (loss) $ 0.77 $ (0.38) $ 2.36 $ 1.68
See notes to consolidated financial statements.
3
MAYTAG CORPORATION
Consolidated Balance Sheets
September 30 December 31
In thousands, except share data 2002 2001
- -------------------------------------------------------------------------------------
Assets
Current assets
- -------------------------------------------------------------------------------------
Cash and cash equivalents $ 3,932 $ 109,370
Accounts receivable-net 681,509 618,101
Inventories 505,815 447,866
Deferred income taxes 63,250 63,557
Other current assets 21,623 40,750
Discontinued current assets 78,698 89,900
---------------------------
Total current assets 1,354,827 1,369,544
Noncurrent assets
- -------------------------------------------------------------------------------------
Deferred income taxes 203,707 227,967
Prepaid pension cost 1,691 1,532
Intangible pension asset 101,915 101,915
Goodwill 279,927 259,376
Other intangibles 36,831 37,533
Other noncurrent assets 61,834 62,548
Discontinued noncurrent assets 61,223 60,001
---------------------------
Total noncurrent assets 747,128 750,872
Property, plant and equipment
- -------------------------------------------------------------------------------------
Property, plant and equipment 2,455,902 2,332,082
Less accumulated depreciation 1,382,851 1,296,347
---------------------------
Total property, plant and equipment 1,073,051 1,035,735
---------------------------
Total assets $ 3,175,006 $ 3,156,151
===========================
See notes to consolidated financial statements.
4
MAYTAG CORPORATION
Consolidated Balance Sheets-Continued
September 30 December 31
In thousands, except share data 2002 2001
- --------------------------------------------------------------------------------------------------
Liabilities and Shareowners' Equity
Current liabilities
- --------------------------------------------------------------------------------------------------
Notes payable $ 272,057 $ 148,247
Accounts payable 304,980 316,050
Compensation to employees 97,393 78,281
Accrued liabilities 269,895 285,627
Current portion of long-term debt 196,751 133,586
Discontinued current liabilities 104,228 112,702
---------------------------------
Total current liabilities 1,245,304 1,074,493
Noncurrent liabilities
- --------------------------------------------------------------------------------------------------
Deferred income taxes 54,930 25,100
Long-term debt, less current portion 741,942 932,065
Postretirement benefit liability 507,816 497,182
Accrued pension cost 255,024 352,861
Other noncurrent liabilities 139,433 128,084
Discontinued noncurrent liabilities 21,817 22,678
---------------------------------
Total noncurrent liabilities 1,720,962 1,957,970
Minority interest -- 100,142
Shareowners' equity
- --------------------------------------------------------------------------------------------------
Preferred stock:
Authorized--24,000,000 shares (par value $1.00)
Issued--none Common stock:
Authorized--200,000,000 shares (par value $1.25)
Issued--117,150,593 shares, including shares in treasury 146,438 146,438
Additional paid-in capital 441,108 450,683
Retained earnings 1,307,640 1,164,021
Cost of common stock in treasury (2002--39,109,956 shares;
2001--40,286,575 shares) (1,482,813) (1,527,777)
Employee stock plans (14,120) (23,522)
Accumulated other comprehensive loss (189,513) (186,297)
---------------------------------
Total shareowners' equity 208,740 23,546
---------------------------------
Total liabilities and shareowners' equity $ 3,175,006 $ 3,156,151
=================================
5
Maytag Corporation
Consolidated Statements of Cash Flows
Nine Months Ended
September 30
---------------------------
In thousands 2002 2001
- -------------------------------------------------------------------------------------------------
Operating activities
- -------------------------------------------------------------------------------------------------
Net income $ 185,541 $ 68,414
Adjustments to reconcile net income to
net cash provided by continuing operating activities:
Net loss from discontinued operations 1,889 66,436
Cumulative effect of accounting change - 3,727
Extraordinary item-loss on early retirement of debt - 5,171
Minority interests 3,732 12,590
Depreciation 120,856 108,222
Amortization 828 7,827
Deferred income taxes 25,019 (20,135)
Special charges, net of cash paid (4,334) (8,894)
Changes in working capital items
exclusive of business acquisitions:
Accounts receivable (59,501) (152,336)
Inventories (59,367) 13,100
Other current assets 19,127 37,169
Other current liabilities 17,886 122,466
Pension assets and liabilities (97,996) (36,457)
Postretirement benefit liability 10,634 10,263
Other - net 12,340 6,113
--------------------------
Net cash provided by continuing operating activities 176,654 243,676
Investing activities
- ------------------------------------------------------------------------------------------------
Capital expenditures (156,912) (101,977)
Investment in acquisition, less cash acquired - (313,489)
--------------------------
Investing activities-continuing operations (156,912) (415,466)
Financing activities
- ------------------------------------------------------------------------------------------------
Net proceeds (repayment) of notes payable 123,810 136,204
Proceeds from issuance of long-term debt 7,181 447,647
Repayment of long-term debt (133,180) (299,300)
Stock repurchases - (27,672)
Debt repurchase premiums - (5,171)
Stock options exercised and other common stock transactions 25,380 (6,467)
Net put option premiums and settlements - (16,697)
Dividends on common stock (41,922) (41,244)
Dividends on minority interests (5,576) (15,563)
Purchase of Anvil LLC member interest (99,884) -
Cash (to) from discontinued operations (1,236) 4,045
--------------------------
Financing activities-continuing operations (125,427) 175,782
Effect of exchange rates on cash 247 (677)
--------------------------
Increase (decrease) in cash and cash equivalents (105,438) 3,315
Cash and cash equivalents at beginning of period 109,370 6,073
--------------------------
Cash and cash equivalents at end of period $ 3,932 $ 9,388
==========================
Cash flows from discontinued operations
- ------------------------------------------------------------------------------------------------
Net cash (used) provided by discontinued operating activities $ (2,695) $ 911
Investing activities-discontinued operations (1,215) (2,732)
Financing activities-discontinued operations 1,241 (10,550)
--------------------------
Decrease in cash-discontinued operations $ (2,669) $ (12,371)
==========================
See notes to consolidated financial statements.
6
MAYTAG CORPORATION
Notes to Consolidated Financial Statements
September 30, 2002
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for the
nine-month period ended September 30, 2002 are not necessarily indicative of the
results that are expected for the year ending December 31, 2002. For further
information, refer to the consolidated financial statements and footnotes
included in the Maytag Corporation annual report on Form 10-K for the year ended
December 31, 2001.
NOTE B - COMPREHENSIVE INCOME (LOSS)
Total comprehensive income (loss) and its components, net of related tax are as
follows (in thousands):
Three months ended September 30 2002 2001
- ---------------------------------------------------------------------------------------
Net income (loss) $ 60,789 $ (29,671)
Other comprehensive income (loss) items,
net of income taxes
Unrealized losses on securities (1,191) (73)
Unrealized gains on hedges 192 -
Foreign currency translation (1,413) (1,343)
----------------------------
Total other comprehensive loss (2,412) (1,416)
----------------------------
Comprehensive income (loss) $ 58,377 $ (31,087)
============================
Nine months ended September 30 2002 2001
- ---------------------------------------------------------------------------------------
Net income $ 185,541 $ 68,414
Other comprehensive income (loss) items,
net of income taxes
Unrealized gains (losses) on securities (1,874) 325
Unrealized losses on hedges (1,040) -
Foreign currency translation (302) (920)
----------------------------
Total other comprehensive loss (3,216) (595)
----------------------------
Comprehensive income $ 182,325 $ 67,819
============================
7
The components of accumulated other comprehensive loss, net of related tax are
as follows:
September 30 December 31
In thousands 2002 2001
- ---------------------------------------------------------------------------------------
Minimum pension liability adjustment $ (178,082) $ (178,082)
Unrealized gains (losses) on securities (601) 1,273
Unrealized gains (losses) on hedges (96) 944
Foreign currency translation (10,734) (10,432)
--------------------------------
Accumulated other comprehensive loss $ (189,513) $ (186,297)
================================
NOTE C - INVENTORIES
Inventories consisted of the following:
September 30 December 31
In thousands 2002 2001
- ---------------------------------------------------------------------------------------
Raw materials $ 68,778 $ 62,587
Work in process 62,253 76,524
Finished goods 450,239 382,925
Supplies 8,886 9,659
--------------------------------
Total FIFO cost 590,156 531,695
Less excess of FIFO cost over LIFO 84,341 83,829
--------------------------------
Inventories $ 505,815 $ 447,866
================================
8
NOTE D - EARNINGS (LOSS) PER SHARE
The following table sets forth the components for computing basic and diluted
earnings (loss) per share:
Three months ended Nine months ended
September 30 September 30
----------------------- -------------------------
In thousands except per share data 2002 2001 2002 2001
- -----------------------------------------------------------------------------------------------------------------------
Numerator for basic and diluted earnings per share-
income from continuing operations before extraordinary
item and cumulative effect of accounting change $ 61,020 $ 37,491 $ 187,430 $ 143,748
======== ========= ========== ==========
Numerator for basic and diluted loss per share-
discontinued operations $ (231) $ (61,991) $ (1,889) $ (66,436)
======== ========= ========== ==========
Numerator for basic and diluted loss per share-
extraordinary item-loss on early retirement of debt $ - $ (5,171) $ - $ (5,171)
======== ========= ========== ==========
Numerator for basic loss per share-
cumulative effect of accounting change $ - $ - $ - $ (3,727)
Adjustment for put options marked to market - - - 63,092
-------- --------- ---------- ----------
Numerator for diluted earnings per share-
cumulative effect of accounting change $ - $ - $ - $ 59,365
======== ========= ========== ==========
Numerator for basic earnings (loss) per share-
net income (loss) $ 60,789 $ (29,671) $ 185,541 $ 68,414
Adjustment for put options marked to market - - - 63,092
-------- --------- ---------- ----------
Numerator for diluted earnings (loss) per share-
net income (loss) $ 60,789 $ (29,671) $ 185,541 $ 131,506
======== ========= ========== ==========
Denominator for basic earnings
per share-- weighted-average shares 78,014 76,544 77,599 76,297
Effect of dilutive securities:
Stock option plans and restricted stock awards 524 788 944 770
Put options - - - 1,440
-------- --------- ---------- ----------
Potential dilutive common shares 524 788 944 2,210
-------- --------- ---------- ----------
Denominator for diluted earnings per
share-- adjusted weighted-average shares 78,538 77,332 78,543 78,507
======== ========= ========== ==========
NOTE E--CONTINGENCIES
Maytag has contingent liabilities arising in the normal course of business,
including: guarantees, repurchase agreements, pending litigation, environmental
remediation, taxes and other claims which are not considered to be significant
in relation to Maytag's consolidated financial position.
NOTE F - SEGMENT REPORTING
Maytag has two reportable segments: home and commercial appliances. Maytag's
home appliances segment manufactures and sells major appliances (laundry
products, dishwashers, refrigerators, cooking appliances) and floor care
products. These products are sold primarily to major national retailers and
independent retail dealers in North America and targeted international markets.
9
Maytag's commercial appliances segment manufactures and sells commercial cooking
and vending equipment. These products are sold primarily to distributors, soft
drink bottlers, restaurant chains and dealers in North America and targeted
international markets.
Maytag's reportable segments are distinguished by the nature of products
manufactured and sold and types of customers.
Financial information for Maytag's reportable segments consisted of the
following:
Three Months Ended Nine Months Ended
September 30 September 30
--------------------------------- ------------------------------
In thousands 2002 2001 2002 2001
- ------------------------------------------------------------------------------ ------------------------------
Net sales
Home appliances $ 1,101,269 $ 1,072,674 $ 3,336,674 $ 2,893,685
Commercial appliances 66,763 59,880 201,956 192,486
--------------------------------- -------------------------------
Consolidated total $ 1,168,032 $ 1,132,554 $ 3,538,630 $ 3,086,171
================================= ===============================
Operating income
Home appliances $ 112,786 $ 85,249 $ 359,580 $ 240,466
Commercial appliances 5,999 2,946 14,901 10,063
--------------------------------- -------------------------------
Total for reportable segments 118,785 88,195 374,481 250,529
Corporate (10,060) (8,534) (36,735) (29,790)
--------------------------------- -------------------------------
Consolidated total $ 108,725 $ 79,661 $ 337,746 $ 220,739
================================= ===============================
The reconciliation of segment profit to consolidated income from continuing
operations before income taxes, minority interests, extraordinary item and
cumulative effect of accounting change consisted of the following:
Three Months Ended Nine Months Ended
September 30 September 30
---------------------------- --------------------------
In thousands 2002 2001 2002 2001
- ------------------------------------------------------------------------------------------- --------------------------
Total operating income for reportable segments $ 118,785 $ 88,195 $ 374,481 $ 250,529
Corporate (10,060) (8,534) (36,735) (29,790)
Interest expense (14,559) (18,159) (47,644) (46,350)
Other - net (1,711) (2,422) (462) (3,857)
---------------------------- --------------------------
Income from continuing operations before income
taxes, minority interests, extraordinary item and
cumulative effect of accounting change $ 92,455 $ 59,080 $ 289,640 $ 170,532
============================ ==========================
10
Asset information for Maytag's reportable segments consisted of the following:
September 30 December 31
In thousands 2002 2001
- --------------------------------------------------------------------------------
Total assets
Home appliances $ 2,454,166 $ 2,264,575
Commercial appliances 125,236 103,034
----------------------------
Total for reportable segments 2,579,402 2,367,609
Corporate 455,683 638,641
Discontinued operations 139,921 149,901
----------------------------
Consolidated total $ 3,175,006 $ 3,156,151
============================
NOTE G--MINORITY INTEREST
In the second quarter of 2002, Maytag purchased the noncontrolling interest in
Anvil Technologies LLC from an outside investor for $99.9 million. Maytag
financed this purchase with commercial paper classified as notes payable on the
Consolidated Balance Sheet. The loss attributable to the noncontrolling interest
in the Consolidated Statements of Income consisted of the following:
Three Months Ended Nine Months Ended
September 30 September 30
----------------------- -----------------------
In thousands 2002 2001 2002 2001
-------------------------------------------------- -----------------------
Maytag Trusts $ - $ - $ - $ (6,963)
Anvil Technologies LLC - (1,873) (3,732) (5,627)
----------------------- -----------------------
Minority interest $ - $ (1,873) $ (3,732) $ (12,590)
======================= =======================
The outside investor's noncontrolling interest in the Consolidated Balance
Sheets consisted of the following:
September 30 December 31
In thousands 2002 2001
- --------------------------------------------------------------------------------
Anvil Technologies LLC $ - $ 100,142
============================
NOTE H - IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
142, "Goodwill and Other Intangible Assets," effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill and intangible
assets deemed to have indefinite lives are no longer amortized but subject to
annual impairment tests in accordance with the Statement. During the first
quarter of 2002, Maytag performed the first of the required impairment tests of
goodwill as of January 1, 2002 and determined that no adjustment was necessary
to the carrying value of goodwill. Maytag currently has no intangible assets
with indefinite lives.
11
Maytag applied the new rules on accounting for goodwill and other intangible
assets beginning in the first quarter of 2002. The following table discloses pro
forma results for net income and earnings per share as if SFAS 142 were adopted
at the beginning of the periods presented:
Three Months Ended Nine Months Ended
September 30 September 30
------------------------ ---------------------------
In thousands except per share data 2002 2001 2002 2001
- -------------------------------------------------------------------------- ---------------------------
Reported net income (loss) $ 60,789 $ (29,671) $ 185,541 $ 68,414
Add back: Goodwill amortization - 2,485 - 7,455
----------------------- --------------------------
Adjusted net income (loss)-basic 60,789 (27,186) 185,541 75,869
Adjustment for put options marked to market - - - 63,092
----------------------- --------------------------
Adjusted net income (loss)-diluted $ 60,789 $ (27,186) $ 185,541 $ 138,961
======================= ==========================
Basic earnings per share:
Reported net income (loss) $ 0.78 $ (0.39) $ 2.39 $ 0.90
Goodwill amortization - 0.03 - 0.10
----------------------- --------------------------
Adjusted net income (loss) $ 0.78 $ (0.36) $ 2.39 $ 0.99
======================= ==========================
Diluted earnings per share:
Reported net income (loss) $ 0.77 $ (0.38) $ 2.36 $ 1.68
Goodwill amortization - 0.03 - 0.09
------------------------ --------------------------
Adjusted net income (loss) $ 0.77 $ (0.35) $ 2.36 $ 1.77
======================= ==========================
12
Goodwill and other intangibles consist of the following:
September 30 December 31
In thousands 2002 2001
- -----------------------------------------------------------------------------------
Gross goodwill $ 400,480 $ 379,929
Accumulated amortization (120,553) (120,553)
-----------------------------
Net goodwill $ 279,927 $ 259,376
=============================
Gross other intangibles--amortized
Trademarks $ 35,000 $ 35,000
Other 5,431 5,305
Accumulated amortization (3,600) (2,772)
-----------------------------
Net other intangibles $ 36,831 $ 37,533
=============================
As of September 30, 2002, Maytag had net goodwill of $265.8 million and $14.1
million reflected in its home and commercial appliances reportable segments,
respectively. Estimated amortization expense for other intangibles will be
approximately $1.2 million for each of the next five years. During the third
quarter of 2002, Maytag finalized the valuation of Amana Appliance's net assets
that were purchased August 1, 2001. As a result, $20.6 million of goodwill was
recorded in the third quarter of 2002. The purchase contract contains a price
adjustment mechanism, that when ultimately settled, could result in a change in
this goodwill amount.
The FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," effective for fiscal years beginning after December 15,
2001. It establishes a single accounting method for long-lived assets to be
disposed of, including those that are part of discontinued operations, and
broadens the presentation requirements for discontinued operations to include
components of an entity disposed of rather than a segment of a business. Maytag
early adopted SFAS No. 144 and, as a result, classified its 50.5 percent owned
joint venture in China ("Rongshida-Maytag") and the Blodgett foodservice
operations, sold in December 2001, as discontinued operations. Previously,
Blodgett was included in the commercial appliances segment and the international
segment consisted solely of Rongshida-Maytag. All prior periods presented have
been reclassified to reflect these results.
In November 2001, the FASB's Emerging Issues Task Force (EITF) reached consensus
on Issue No. 01-9, "Accounting for Consideration Given by a Vendor to a Customer
or a Reseller of the Vendor's Products." This guidance was effective for periods
beginning after December 15, 2001. EITF 01-9 requires companies to classify
certain sales incentive costs as a reduction of sales. These costs were
previously classified in selling, general and administrative expense. Maytag
applied the new rules beginning in the first quarter of 2002, and all prior
periods presented have been restated, as required. There was no impact on
Maytag's operating income or net income as a result of the new accounting
policy.
13
NOTE I - RESTRUCTURING CHARGES
Maytag's reserve activity for the nine months ended September 30, 2002 related
to restructuring charges consisted of the following:
Description of Balance Balance
reserve December 31 Cash Non-Cash September 30
(in thousands) 2001 Utilization Utilization 2002
- ---------------------------------------------------------------------------------------
Severance and
related expense $ 6,904 $ (4,334) $ (2,275) $ 295
------------------------------------------------------
Total $ 6,904 $ (4,334) $ (2,275) $ 295
------------------------------------------------------
In October 2002, Maytag announced its intention to close a refrigeration
manufacturing facility in Galesburg, Illinois by the end of 2004. In the fourth
quarter of 2002, Maytag will recognize pre-tax restructuring charges of $70 to
$80 million in connection with the planned closing. The total pre-tax
restructuring charges are estimated to be in the range of $140 to $160 million,
with the remaining expense to be recognized in 2003 and 2004. These charges
include asset impairment, severance costs and moving expenses. Approximately $50
million of the total restructuring charges will be cash items, most of which
will be incurred in 2004 and 2005.
14
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Comparison of 2002 with 2001
Maytag Corporation ("Maytag") has two reportable segments: home and commercial
appliances. (See discussion and financial information about Maytag's reportable
segments in "Note F - Segment Reporting" section of the Notes to Consolidated
Financial Statements.)
Maytag adopted a new accounting standard in the first quarter of 2002 that
requires certain sales incentives previously recognized in selling, general and
administrative expenses to be classified as a reduction of sales. EITF 01-9
states that any cash consideration provided to customers that has no
identifiable benefit to Maytag other than to increase sales is required to be
classified as a reduction of sales. This reclassification does not change
previously reported operating income or net income from continuing operations;
however, the reduction does impact the gross profit and operating income
margins. The amount considered as an additional reduction of sales in accordance
with this accounting standard was $135.5 million for the first nine months of
2002 compared to $103.5 million for the first nine months of 2001. Prior periods
have been restated to reflect this change.
Net Sales: Consolidated net sales were $1.168 billion in the third quarter of
2002, an increase of 3 percent compared to the same period in 2001. For the
first nine months of 2002, consolidated net sales were $3.539 billion, an
increase of 15 percent from the same period in 2001.
Home appliances net sales, which include major appliances, floor care
products and international export sales, were 3 percent higher in the third
quarter of 2002 compared to the same period in 2001. While the sales of major
appliances were flat, floor care sales were higher due to the introduction of a
new product category in the first quarter of 2002. The third quarter of 2001
included only two months of the Amana appliance business that was purchased on
August 1, 2001. For the first nine months of 2002, net sales increased 15%
reflecting the impact of the Amana acquisition and sales of the new floor care
product.
U.S. industry unit shipments of major appliances were flat in the third
quarter of 2002. Maytag's unit shipments declined with the largest decreases in
refrigeration and laundry. The decrease in laundry shipments was due to a
delayed product launch that resulted in shipments not being made until the
fourth quarter. Dishwasher unit shipments increased in the last month of the
quarter due to the introduction of a new dishwasher product. In floor care,
industry-wide shipments of uprights were down 4.5 percent in the third quarter
of 2002. Maytag's unit shipments of uprights increased in the quarter. Maytag
expects the major appliance industry to be flat for the fourth quarter compared
to the prior year. As a result, Maytag expects full year industry growth of
about 5 percent in 2002 compared to 2001. Maytag expects floor care industry
unit growth to be up about 3 percent for the fourth quarter of 2002 compared to
the same period last year. For the full year 2002, the floor care industry is
expected to be down marginally.
Commercial appliances net sales, which include vending and food service
equipment, increased 11 percent in the third quarter of 2002 compared to the
same period in 2001. The increase in sales is due to increased vending equipment
sales. Increases in sales of glass-front venders were partially offset by
decreases in traditional vender sales. For the first nine months of 2002, net
sales of commercial appliances were up 5 percent primarily due to the increased
glass-front vender sales. For the full year 2002, Maytag expects the vending
equipment industry to be flat to slightly lower relative to 2001, but expects
increased average selling prices of its vending equipment due to product mix.
Gross Profit: Consolidated gross profit as a percent of sales, excluding an $8.3
million gain on a distribution center sale recorded in cost of sales, increased
to 20.2 percent in the third quarter of 2002 from 19.4 percent of sales in the
same period in 2001. Consolidated gross profit as a percent of sales, excluding
the gain on sale, increased to 21.6 percent for the first nine months of 2002
from 20.5 percent of sales in the same period in 2001. The increases in gross
margin in the third quarter and first nine months of 2002 were due to improved
product mix, lower material costs and favorable warranty performance. These
increases were partially offset by higher research and development costs.
Maytag's gross profit has not been directly affected by tariffs on
15
foreign steel imports in 2002 because it purchases domestically produced steel.
Gross profit as a percent of sales was lower in the third quarter compared to
the second quarter of 2002 because of the impact of lower factory production
levels. Gross profit as a percent of sales for the fourth quarter of 2002 is
anticipated to be similar to the third quarter as Maytag continues to reduce
inventory levels.
Selling, General and Administrative Expenses: Consolidated selling, general and
administrative expenses were 11.6 percent of sales in the third quarter of 2002
compared to 12.3 percent of sales in the same period in 2001. Consolidated
selling, general and administrative expenses were 12.3 percent of sales in the
first nine months of 2002 compared to 13.3 percent of sales in the same period
in 2001. These decreases as a percentage of sales were due to an increase in
sales, synergies resulting from the Amana acquisition, a corporate-wide cost
reduction initiative and a change in accounting standards, effective January 1,
2002, whereby goodwill and intangible assets deemed to have indefinite lives are
no longer being amortized. While these assets will be subject to impairment
tests to assess their valuation, there were no charges related to impairment
during the third quarter or nine months ended September 30, 2002. Amortization
of goodwill included in the third quarter and first nine months of 2001 was $2.5
million and $7.5 million, respectively. This reduction in selling, general and
administrative expenses as a percent of sales was achieved despite incurring 13
percent more in national advertising expense in the third quarter and first nine
months, respectively, as compared to last year. Selling, general and
administrative expenses decreased for the third quarter of 2002 compared to the
second quarter of 2002 due partially to a reversal of an accrual made for
incentive compensation in the first two quarters.
Operating Income: Consolidated operating income as a percent of sales for the
third quarter of 2002, excluding the gain on a distribution center sale,
increased to 8.6 percent of sales compared to 7.0 percent of sales in the same
period in 2001. Consolidated operating income as a percent of sales for the
first nine months of 2002, excluding the gain on sale, increased to 9.3 percent
of sales compared to 7.2 percent of sales in the same period in 2001. The
increases in operating margin were due to an increase in gross margin as a
percent of sales and decreased selling, general and administrative expenses as a
percent of sales, as discussed above. For the third quarter and first nine
months of 2002 compared to the same periods in 2001, excluding the gain on sale,
operating income was 26 percent and 49 percent higher, respectively, primarily
due to cost synergies resulting from the Amana acquisition and cost reduction
initiatives.
Home appliances operating margin for the third quarter of 2002, excluding
the gain on sale, was 9.5 percent of sales compared to 7.9 percent of sales in
the same period in 2001. Operating margin for the first nine months of 2002 was
10.5 percent of sales compared to 8.3 percent of sales in the same period in
2001. The increases in operating margin were due to an increase in gross margin
as a percent of sales and decreased selling, general and administrative expenses
as a percent of sales discussed above. Home appliances operating income,
excluding the gain on sale, increased 23 percent in the third quarter of 2002
compared to 2001. Operating income, excluding the gain on sale, increased 46
percent in the first nine months of 2002 compared to 2001. The increases in
operating income for the third quarter and first nine months of 2002 were due to
cost synergies resulting from the Amana acquisition and cost reduction
initiatives.
Commercial appliances operating margin for the third quarter of 2002 was
9.0 percent of sales compared to 4.9 percent of sales in the same period in
2001. Operating margin for the first nine months of 2002 was 7.4 percent of
sales compared to 5.2 percent of sales in the same period in 2001. The increase
in operating margin for the third quarter and first nine months was primarily
due to increased sales and improved gross margin and reduced selling, general
and administrative expenses as a percent of sales. Commercial appliances
operating income increased 104 percent in the third quarter of 2002 compared to
the same period in 2001. Operating income increased 48 percent in the first nine
months of 2002 compared to the same period in 2001. The increases in operating
income for the third quarter and first nine months of 2002 were due to the
factors discussed above.
Corporate operating expenses for the third quarter and first nine months of
2002 compared to the same periods in 2001 were 18 percent and 23 percent higher,
respectively. The third quarter increase was primarily due to higher charitable
contribution expense. The increase for the first nine months was primarily due
to increases in incentive compensation resulting from higher earnings and
charitable contribution expense.
16
Interest Expense: Interest expense for the third quarter of 2002 was 20 percent
lower than for the same period in the prior year. The decrease was due to the
on-going reduction of debt as well as lower average interest rates. Interest
expense for the first nine months of 2002 was 3 percent higher than for the same
period in the prior year. The increase was primarily due to the additional debt
issued in 2001 for the acquisition of Amana, partially offset by lower average
interest rates.
Income Taxes: The effective tax rate for the third quarter of 2002 was 34
percent compared to an effective tax rate for the same period in 2001 of 33.4
percent. The effective tax rate for the first nine months of 2002 was 34 percent
compared to an effective tax rate for the same period in 2001 of 33 percent,
excluding a one-time tax benefit of $42 million. The effective tax rate has
increased for the third quarter and first nine months of 2002 due to the
retirement of the Maytag Capital Trusts in 2001 and the second quarter 2002
purchase of the noncontrolling interest in Anvil Technologies LLC from an
outside investor (For further discussion of both, see "Minority Interest" in
this Management's Discussion and Analysis below). The financing costs associated
with the Maytag Capital Trusts and the noncontrolling interest in Anvil
Technologies LLC were reflected as minority interests with the tax benefit
recognized as a component of tax expense. These minority interests have been
retired and refinanced with borrowings for which interest expense has reduced
income before tax and minority interests. Therefore, tax expense is unaffected
by the retirement of these instruments and this increases the effective tax
rate.
The increased rate also was due to increased income in 2002 that caused tax
credits to have less of an impact on lowering the effective tax rate. The effect
of these items on the effective tax rate was partially offset by the elimination
of goodwill amortization in 2002 that is nondeductible for income taxes.
Minority Interest: Minority interest was down $1.9 million and $8.9 million from
the third quarter and first nine months of 2001, respectively. The third quarter
decrease was due to Maytag purchasing the noncontrolling interest in Anvil
Technologies LLC from an outside investor in June 2002. The nine month decrease
was due to the retirement of the Maytag Trusts during the third quarter of 2001
and the purchase of the noncontrolling interest in Anvil.
Discontinued Operations: Maytag completed the sale of its Blodgett foodservice
operations in December 2001 and continues efforts to dispose of its interest in
the 50.5 percent owned joint venture in China ("Rongshida-Maytag"). The
operations of Rongshida-Maytag have been reflected as discontinued operations,
and prior year financial statements have been restated to reflect Blodgett and
Rongshida-Maytag as discontinued operations.
Net Income: The following tables summarize the impact of special items that
includes the one-time tax benefit, gain on sale of a distribution center,
cumulative effect of accounting change, extraordinary item and discontinued
operations on reported net income and diluted earnings per share. Net income
excluding special items for the third quarter of 2002 increased 48 percent to
$55.6 million from $37.5 million in the third quarter of 2001. Net income
excluding special items for the first nine months of 2002 increased 79 percent
to $182 million from $101.7 million in the first nine months of 2001. The
increases were primarily due to the increase in operating income described
above. The increases in diluted earnings per share excluding special charges in
the third quarter and first nine months of 2002 compared to the same periods in
2001 were due primarily to the increase in net income as average diluted shares
outstanding remain comparable.
17
Three months ended Nine months ended
September 30, September 30,
---------------------- ---------------------
Net income (in millions) 2002 2001 2002 2001
- ------------------------------------------------------------------------------------- ---------------------
Net income excluding discontinued operations, tax
benefit, gain on sale of distribution center,
extraordinary item and cumulative effect of
accounting change $ 55.6 $ 37.5 $ 182.0 $ 101.7
Discontinued operations (0.2) (62.0) (1.9) (66.4)
Tax benefit - - - 42.0
Gain on sale of distribution center, net of tax 5.4 - 5.4 -
Extraordinary item (5.2) (5.2)
Cumulative effect of accounting change - - - (3.7)
-------- -------- -------- --------
Reported $ 60.8 $ (29.7) $ 185.5 $ 68.4
======== ======== ======== ========
Three months ended Nine months ended
September 30, September 30,
---------------------- ---------------------
Diluted earnings per common share 2002 2001 2002 2001
- ------------------------------------------------------------------------------------- ---------------------
Net income excluding discontinued operations, tax
benefit, gain on sale of distribution center,
extraordinary item and cumulative effect of
accounting change $ 0.71 $ 0.48 $ 2.32 $ 1.30
Discontinued operations - (0.80) (0.02) (0.85)
Tax benefit - - - 0.53
Gain on sale of distribution center, net of tax 0.07 - 0.07 -
Extraordinary item - - (0.07)
Cumulative effect of accounting change - (0.07) - 0.76
-------- -------- -------- --------
Reported $ 0.77 $ (0.38) $ 2.36 $ 1.68
======== ======== ======== ========
Pension and Postretirement
For full year 2002, combined pension and postretirement medical expenses are
expected to be approximately $105 million. While Maytag is finalizing its
actuarial assumptions for 2003, it expects combined pension and postretirement
medical expenses to increase to approximately $152 million in 2003. This
increase is driven primarily by actuarial assumptions, including lower discount
rates, lower expected rate of return assumptions and higher health care
inflation rate assumptions. In addition, lower than expected returns on pension
fund assets due to a smaller invested asset base as well as increases in service
costs are contributing to the increased expense. Maytag expects to contribute
approximately $160 million to the pension plan in 2003, compared to $135 million
in 2002, and expects its benefit payments for postretirement medical expenses to
remain at the same level or be slightly higher than the full year 2002 estimate
of $40 million. Maytag is in the process of finalizing its pension plan
actuarial valuation but expects a decline in the market value of the pension
fund assets as well as higher obligations associated with a lower discount rate
to result in an additional liability of approximately $250 million with an
amount charged to equity of approximately $180 million, net of tax
18
(approximately $272 million before tax) in the fourth quarter of 2002. The
accumulated balance within equity related to the underfunded status of the plan
is expected to be approximately $357 million, net of tax (approximately $550
million before tax) as of December 31, 2002.
Projections for 2003
Maytag expects U.S. industry shipments of major appliances for the full year
2003 to be up 2 percent over 2002 and expects floor care industry unit growth of
approximately 3 percent in 2003. Maytag expects the vending equipment industry
to be down 5 to 6 percent in 2003 compared to 2002. Maytag projects an increase
in combined pension and postretirement medical expense for 2003 as discussed
above and expects the cost of purchasing steel will increase in 2003 because of
a supply and demand imbalance and tariffs. Maytag has plans in place to generate
targeted cost savings in various areas that are expected to fully offset these
increased expenses. As a result, Maytag estimates income from continuing
operations, excluding restructuring charges, will be between $3.10 and $3.20 per
share.
Liquidity and Capital Resources
Maytag's primary sources of liquidity are cash provided by operating activities
and borrowings. Detailed information on Maytag's cash flows is presented in the
Consolidated Statements of Cash Flows.
Net Cash Provided by Operating Activities: Cash flow provided by operating
activities consists primarily of net income adjusted for certain non-cash items,
changes in working capital items, changes in pension assets and liabilities and
postretirement medical benefits. Non-cash items include depreciation and
amortization and deferred income taxes. Working capital items consist primarily
of accounts receivable, inventories, other current assets and other current
liabilities.
Net cash provided by continuing operations for the first nine months of
2002 was $177 million, a decrease of $67 million from the prior year. This was
primarily due to $135 million of voluntary pension contributions in 2002
compared with $65 million in contributions in the first nine months of the prior
year. The accounts receivable balance at September 30, 2002 was higher than the
balance at June 30, 2002 due to strong sales in September. Maytag's inventory
levels are expected to continue decreasing in the fourth quarter. Therefore,
Maytag expects changes in working capital to positively impact cash from
continuing operations in the fourth quarter.
A portion of Maytag's accounts receivable is concentrated among major
national retailers. A significant loss of business with any of these retailers
could have an adverse impact on Maytag's ongoing operations. Maytag continues to
sell products to a major retailer that has filed for reorganization under
bankruptcy laws. The accounts receivable balance with this retailer is less than
4% of Maytag's net accounts receivable at September 30, 2002.
Total Investing Activities: Maytag's capital expenditures represent continual
investments in its businesses for new product designs, cost reduction programs,
replacement of equipment, capacity expansion and government mandated product
requirements and similar items.
Capital expenditures in the first nine months of 2002 were $157 million
compared to $102 million in 2001. Maytag plans to invest approximately $225
million in capital expenditures in 2002.
Total Financing Activities: Dividend payments on Maytag's common stock in the
first nine months of 2002 and 2001 were $42 million and $41 million,
respectively, or $0.54 per share for both periods.
Funding requirements for investing and financing activities in excess of
cash on hand and cash flow from operations are supplemented by borrowings.
Maytag's commercial paper program is supported by two credit agreements with a
consortium of lenders that provide revolving credit facilities of $200 million
each, totaling $400 million. These agreements expire May 1, 2003 and May 3,
2004. Maytag had $272 million of commercial paper outstanding as of September
30, 2002 that is classified in notes payable on the balance sheet. The credit
19
agreements include financial covenants with respect to interest coverage and
leverage that Maytag was in compliance with as of September 30, 2002. Maytag
expects to be in compliance with these financial covenants throughout 2002. The
existence of an event of default under the credit agreement would adversely
impact Maytag's ability to borrow through the sale of commercial paper. Maytag
has a shelf registration statement with the Securities and Exchange Commission
providing the ability to issue publicly a remaining aggregate of $300 million of
medium-term notes as of September 30, 2002.
In the second quarter of 2002, Maytag purchased the noncontrolling interest
in Anvil Technologies LLC from an outside investor for $99.9 million. Maytag
financed this purchase with commercial paper.
Including the purchase of the minority interest in Anvil, Maytag has
reduced financing obligations by $102 million in the first nine months of 2002.
For the full year 2002, Maytag expects to reduce financing obligations by $200
million.
Shareowners' Equity
Maytag shareowner's equity has decreased over the last several years due to the
share repurchase program that increased the cost of treasury stock held from
$219 thousand at December 31, 1994 to $1.5 billion at December 31, 2001. Maytag
has also made a pension adjustment that reduced equity in 2001 and expects a
further pension adjustment to decrease equity in the fourth quarter of 2002 (for
further discussion see "Pension and Postretirement" in this Management's
Discussion & Analysis above). Fourth quarter restructuring charges associated
with Maytag's announcement of a closing of a refrigeration manufacturing
facility (for further discussion see "Fourth Quarter Restructuring Charges" in
this Management's Discussion & Analysis below) will decrease equity as well.
Management does not believe that the level of equity poses a risk to Maytag
because it is not subject to any debt covenants in its debt instruments that
relate to equity or any debt-to-asset ratios. Maytag has consistently generated
positive net income and significant cash flows from operations over the last
several years.
Fourth Quarter Restructuring Charges
In October 2002, Maytag announced its intention to close a refrigeration
manufacturing facility in Galesburg, Illinois by the end of 2004. In the fourth
quarter of 2002, the Company will recognize pre-tax restructuring charges of $70
to $80 million in connection with the planned closing. The total pre-tax
restructuring charges are estimated to be in the range of $140 to $160 million,
with the remaining expense to be recognized in 2003 and 2004. These charges
include asset impairment, severance costs and moving expenses. Annual cost
savings of approximately $35 to $40 million are expected when the plan is fully
implemented. Approximately $50 million of the total restructuring charges will
be cash items, most of which will be incurred in 2004 and 2005.
Market Risks
Maytag is exposed to foreign currency exchange risk related to its transactions,
assets and liabilities denominated in foreign currencies. To manage certain
foreign exchange exposures, foreign currency forward contracts are utilized.
Portions of the anticipated foreign currency denominated export sales
transactions, which are denominated primarily in Canadian dollars, are hedged.
There is also an exposure to commodity price risk related to the purchase
of selected commodities used in the manufacture of products. To reduce the
effect of changing raw material prices for selected commodities, commodity swap
agreements are used to hedge a portion of anticipated raw material purchases on
selected commodities.
Maytag also is exposed to interest rate risk in its debt portfolio and thus
uses interest rate swap contracts to adjust the proportion of total debt that is
subject to variable and fixed interest rates. The swaps involve the exchange of
fixed and variable rate payments without exchanging the notional principal
amount.
20
There have been no material changes in the reported market risks of the
Company's since December 31, 2001. See further discussion of these market risks
and related financial instruments in the Maytag Corporation annual report on
Form 10-K for the year ended December 31, 2001.
Contingencies
Maytag has contingent liabilities arising in the normal course of business,
including pending litigation, environmental remediation, taxes and other claims.
The Company's legal department estimates the costs to settle pending litigation,
including legal expenses, based on its experience involving similar cases,
specific facts known, and, if applicable based on judgments of outside counsel.
Maytag believes the outcome of these matters will not have a materially adverse
effect on its consolidated financial position, results of operations or cash
flows.
Forward-Looking Statements
This Management's Discussion and Analysis contains statements that are not
historical facts and are considered "forward-looking" within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are identified by their use of the terms: "expect(s)," "intend(s),"
"may impact," "plan(s)," "should" or similar terms. Maytag or its
representatives may also make similar forward-looking statements from time to
time orally or in writing. Maytag cautions the reader that these forward-looking
statements are subject to a number of risks, uncertainties, or other factors
that may cause (and in some cases have caused) actual results to differ
materially from those described in the forward-looking statements. These risks
and uncertainties include, but are not limited to, the following: business
conditions and growth of industries in which Maytag competes, including changes
in economic conditions in the geographic areas where Maytag's operations exist
or products are sold; timing, start-up and customer acceptance of newly designed
products; shortages of manufacturing capacity; competitive factors, such as
price competition and new product introductions; significant loss of business or
inability to collect accounts receivable from a major national retailer; the
cost and availability of raw materials and purchased components, including the
impact of tariffs, the timing and progress with which Maytag can continue to
achieve further cost reductions and savings from its SG&A and restructuring
initiatives; union labor relationships; progress on capital projects; the impact
of business acquisitions or dispositions; the ability of Maytag to integrate the
operations from acquisitions into its operations; the costs of complying with
governmental regulations; litigation, product warranty claims, energy supply,
pricing, or supplier disruptions, currency fluctuations or the material
worsening of economic and political situations around the world.
These factors may not constitute all factors that could cause actual results to
differ materially from those discussed in any forward-looking statement. Maytag
operates in a continually changing business environment and new facts emerge
from time to time. Maytag cannot predict such factors nor can it assess the
impact, if any, of such factors on Maytag's financial position or its results of
operations. Accordingly, forward-looking statements should not be relied upon as
a predictor of actual results. Maytag disclaims any responsibility to update any
forward-looking statement provided in this document.
21
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
See discussion of quantitative and qualitative disclosures about market risk in
"Market Risks" section of Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Item 4. Controls and Procedures
Within the 90 days prior to the date of the filing of this report, Maytag
carried out an evaluation, under the supervision and with the participation of
Maytag's management, including Maytag's Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of Maytag's
disclosure controls and procedures pursuant to Rule 13a-14 under the Exchange
Act of 1934. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that Maytag's disclosure controls and procedures are
effective in timely alerting them to material information required to be
included in the Maytag's periodic SEC filings relating to Maytag (including its
consolidated subsidiaries).
There were no significant changes in Maytag's internal controls or in other
factors that could significantly affect these internal controls subsequent to
the date of our most recent evaluation.
22
MAYTAG CORPORATION
Exhibits and Reports on Form 8-K
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit Description
99.1 Certification by Ralph F. Hake, Chief Executive Officer
99.2 Certification by Steve H. Wood, Chief Financial Officer
(b) Reports on Form 8-K
On August 9, 2002, a Form 8-K was filed related to the filing of a
"Statement Under Oath Of Principal Executive Officer/Principal Financial
Officer Of Maytag Corporation Regarding Facts And Circumstances Relating To
Exchange Act Filings" with the Securities and Exchange Commission ("SEC")
as required by Order 4-460 issued by the SEC on June 27, 2002. Copies of
these statements were filed as exhibits to the filing.
MAYTAG CORPORATION
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAYTAG CORPORATION
Date: November 13, 2002 /s/ Steven H. Wood
----------------- -------------------
Steven H. Wood
Executive Vice President and
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
-24-
CERTIFICATION REQUIRED BY RULE 13a-14 OR RULE 15d-14 OF THE SECURITIES
EXCHANGE ACT OF 1934
I, Ralph F. Hake, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Maytag Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 13, 2002
/s/Ralph F. Hake
- ----------------
Ralph F. Hake
Chairman and Chief Executive Officer
-25-
CERTIFICATION REQUIRED BY RULE 13a-14 OR RULE 15d-14 OF THE SECURITIES
EXCHANGE ACT OF 1934
I, Steven H.Wood, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Maytag Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 13, 2002
/s/Steven H. Wood
- -----------------
Steven H. Wood
Executive Vice President and Chief Financial Officer
-26-