Maytag Corporation said today that its fourth quarter consolidated sales were U.S. $1.24 billion, up 6.6 percent from sales of $1.16 billion in the same period last year. Net loss for the fourth quarter of 2005 was $75 million, or $0.93 per share, compared with a net loss of $14.1 million, or $0.18 per share, a year ago.
Maytag (Newton, Iowa, U.S.) said fourth quarter 2005 results were impacted by restructuring charges of $42.1 million recorded primarily in connection with the closing of the Florence, South Carolina, U.S. plant, as announced in the fourth quarter. A $13.8 million non-cash asset impairment charge related to a laundry product line and a goodwill impairment charge of $4.5 million involving a commercial cooking business were recorded in the quarter. In addition, $10.2 million of merger-related expenses associated with the pending sale of the company to Whirlpool impacted the quarter. Last year's quarterly results included restructuring and related charges of $14.8 million and a $15 million charge for front-load washer litigation.
In the fourth quarter of 2005, home appliances net sales were up 6.9 percent, which Maytag says was driven by solid sales in all major appliance categories, especially refrigeration. Compared with the prior year period, sales of floor care products were down significantly for the quarter.
Maytag Services continued its strong performance with double-digit revenue growth versus a year ago. Maytag International revenues were down slightly. In the fourth quarter, Commercial Products net sales were down 1.1 percent from the same period a year ago.
Operating results were negatively impacted by lower utilization of manufacturing capacity, higher distribution costs and a disappointing performance in floor care due to continued volume decline and price erosion.
Maytag Chairman and CEO Ralph Hake said, "We showed solid top-line sales growth during the quarter with increases in all our major appliance product categories. However, I am extremely disappointed that our positive sales gains in major appliances were more than offset by our overall high cost structure and poor floor care performance."
Floor Care, Commercial Businesses For Sale?
Hake added, "Improving our financial results is the top priority for Maytag. We will address our profitability over the next several quarters by continuing to pursue business improvement initiatives. We also expect to evaluate alternative strategies for our floor care product line and commercial businesses, including their possible sale."
During the quarter, the company also entered into a new $600 million, 5-year, senior-secured revolving credit agreement. Maytag says the new credit agreement should provide it with substantially more financial flexibility, including the capacity to refinance all 2006 debt maturities, as well as providing working capital needed to operate the business. Maytag has the ability to increase the new credit facility by $150 million to $750 million.
Whirlpool Merger Overwhelmingly Approved
In the fourth quarter, Maytag certified substantial compliance with the Antitrust Division of the U.S. Department of Justice in response to the request for additional information regarding the proposed merger with Whirlpool Corporation (Benton Harbor, Michigan, U.S.).
On December 22, 2005, Maytag shareholders overwhelmingly approved the proposed merger agreement, with 97.8 percent of the voted shares cast in favor of the merger.
The proposed merger is being reviewed by the Antitrust Division of the Department of Justice. To facilitate the review, Whirlpool and Maytag agreed not to close the deal before February 27, 2006 without the consent of the Antitrust Division. The Antitrust Division may also request additional time for review. Whirlpool and Maytag continue to expect the transaction to close as early as the first quarter of 2006.
Whirlpool reported its own 2005 results yesterday, showing record net-earnings for the fourth quarter of 2005.
Maytag's Full-Year Performance
Maytag's net sales for the full fiscal year 2005 were $4.9 billion, up 3.8 percent from the $4.72 billion reported for fiscal 2004. Net loss for fiscal 2005 was $81.9 million or $1.02 per share, compared to a net loss of $9 million or $0.11 per share a year ago.
Full-year 2005 results included restructuring and related charges of $52.8 million, a non-cash asset impairment charge related to a laundry product line of $13.8 million and a goodwill impairment charge of $4.5 million involving a commercial cooking business. In addition to these expenses, $19.7 million of net merger-related expenses impacted results in 2005. Prior year results included restructuring and related charges of $69.8 million, a $33.5 million charge for front-load washer litigation, a $9.6 million goodwill impairment charge related to the previously mentioned commercial cooking business and a $9.7 million gain on the sale of a warehouse.
Home Appliances sales for 2005 were $4.66 billion, up 4.6 percent from fiscal 2004. This growth was spurred by increases in major appliances in domestic and international markets.
Maytag Services' revenues showed double-digit increases for the full year. Commercial Products' sales were down 10.1 percent, impacted by declining sales in the vending industry.
Operating loss for fiscal 2005 was $37.1 million, compared with operating income of $40.3 million in the prior 12-month period. Maytag said that factors negatively impacting full-year results, in addition to restructuring and impairments, included:
higher raw material and distribution costs
lower utilization of manufacturing capacity, primarily in laundry and floor care
declines in sales and margins for floor care products and vending equipment
For the full fiscal year 2005, cash flow provided by operations was $20.8 million compared with $261.7 million provided by operations in the same 12-month period in 2004. Cash flow was impacted by a larger net loss and an increase in working capital in 2005 as well as cash payments for restructuring and litigation-related charges paid in 2005, but recorded in the prior year.
Click here to read Whirlpool Corporation year-end results: Whirlpool Reports Record Results, Record Product Rollout
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