Printer Friendly

MAYTAG ANNOUNCES THIRD QUARTER EARNINGS PROJECTIONS AND REORGANIZATION

MAYTAG ANNOUNCES THIRD QUARTER EARNINGS PROJECTIONS AND REORGANIZATION
 NEWTON, Iowa, Aug. 24 /PRNewswire/ -- Maytag Corporation (NYSE: MYG) said today that third quarter earnings are expected to be about one- third less than they were a year ago. The corporation also announced significant reorganizations in North American and European operations designed to address economic conditions and competitive pressures.
 Leonard A. Hadley, Maytag's president and chief executive officer, said, "We are taking positive steps to further strengthen our brands in the marketplace, improve operating efficiencies and enhance margins in the years ahead."
 Hadley explained that, "Third quarter earnings this year, before reorganization charges, may be about two-thirds of the 23 cents per share earned in the third quarter of 1991 because of continued losses in Europe, extra start up costs associated with the new dishwasher facility and the new Magic Chef ranges, the stalled U.S. economic recovery and fierce competition in the appliance and floor care industries both here and abroad."
 In response to these situations, Hadley explained that the corporation's appliance operations in the United States, as well as its European operations, will be reorganized.
 He added, "The long-term marketing and manufacturing benefits the reorganization will bring to the corporation far outweigh the one-time pretax restructuring charge of $95 million (approximately 57 cents a share after tax) we will take in the current quarter. We view this as an investment in our future, and we expect to recover the charge in approximately three years through improved earnings."
 Hadley also announced that Maytag is joining dozens of other companies who have adopted new accounting rules required by the Financial Accounting Standards Board (FASB). Most large companies must adopt the new rules by the first quarter of 1993.
 Discussing reorganization of Maytag's North American appliance operations, Hadley outlined several changes. By the first of next year, the sales, marketing, and most financial and information systems functions of the Magic Chef division, based in Cleveland, Tenn., plus Magic Chef's field sales organization, will be consolidated into the corporation's Jenn-Air division, headquartered in Indianapolis, Ind.
 Magic Chef manufacturing operations in Cleveland, where over $50 million has been invested in facilities upgrading and product redesign over the past several years, will not be affected by the reorganization.
 Jenn-Air will discontinue its two-step method of selling through distributors, and the reorganized field sales representatives will sell Jenn-Air, Magic Chef and Norge products directly to retail dealers and builder suppliers.
 In connection with this reorganization, approximately 120 people will be added to Jenn-Air's office staff in Indianapolis. A number of those are expected to be transfers from Magic Chef.
 Also on January 1, 1993, marketing of the corporation's Admiral brand appliances, currently handled by Magic Chef, will be assumed by Maytag Company's existing direct-to-dealer sales organization.
 Effective Oct. 1 of this year, Magic Chef's washer and dryer plant in Herrin, Ill., will be realigned under Maytag Company to combine expertise in laundry equipment manufacturing. Operational efficiencies will result through such things as shared research, engineering and product development, and many other areas.
 In explaining the reorganization, Hadley said, "One of the principal benefits is that we will be taking our major appliances to the marketplace in a more effective and a more economical manner. Our two sales organizations will each be offering a higher priced line as well as a middle priced line, and this can enhance the position of all our brands on dealers' floors.
 "Additionally, we will grow the Jenn-Air brand by selling direct to dealers, which we believe in today's market is the best way to serve the needs of large as well as small dealers, national accounts and consumers.
 "Another benefit of the reorganization is that it unites Jenn-Air and Magic Chef marketing expertise in cooking appliances and their strengths in accessing the builder market."
 Hadley also explained that Maytag's Hoover North America division will participate in the reorganization. "The floor care industry in North America is experiencing heavy pressures from emerging competition. Hoover will continue to respond aggressively to protect its strong leadership position.
 "To enhance its competitive strengths, Hoover's field sales organization is being restructured and other parts of the business re- engineered."
 The North American appliance reorganization also includes a redesign of information services, which will result in a significantly enhanced common order management and distribution system for goods produced by the manufacturing locations.
 Hadley said that Maytag's Hoover appliance and floor care operations in Europe continue to experience losses, primarily because of excess capacity and the unexpected further deterioration of economic conditions in the United Kingdom and other European countries.
 "In the past two years, we have implemented significant cost reduction activities throughout our Hoover Europe operations, but further reorganization is necessary. Over capacity is prevalent in manufacturing throughout Europe, and Hoover is no exception. This is a serious problem that must eventually be addressed in all industries.
 "Consequently, our reorganization thrust in the months ahead will be aimed at downsizing production capacity and streamlining sales, marketing, administrative and distribution operations in Europe."
 The new accounting rules being adopted are Statements of Financial Accounting Standards Numbers 106 and 109, which were mentioned in the financial section of Maytag's 1991 Annual Report to Shareowners.
 Hadley said, "These accounting changes will be retroactive to Jan. 1, 1992, and they will result in an additional on-going after-tax quarterly charge of approximately $4.5 million. The one-time after-tax charge from adopting FAS 106 is approximately $222 million and the one- time charge from implementing FAS 109 is approximately $85 million for a total one-time after-tax charge of $307 million. However, these charges will not have an impact on cash flow."
 FAS 106 requires companies to record a liability for its employees' accumulated post-retirement benefit costs and then recognize on-going expenses on an accrual basis. Essentially this means that an employee's post-retirement benefit costs will now be recognized while that employee is working. Previously, these costs were not recognized until they were paid.
 FAS 109 outlines the methodology that companies must follow in accounting for income taxes.
 Maytag Corporation, headquartered in Newton, Iowa, consists of 12 business units with 21 manufacturing operations in seven countries and approximately 22,000 employees. Its appliance brands include Maytag, Magic Chef, Hoover, Jenn-Air, Admiral, Hardwick and Norge. Dixie-Narco is the corporation's vending equipment manufacturer.
 -0- 8/24/92
 /CONTACT: James G. Powell of Maytag, 515-791-8392/
 (MYG) CO: ST: Iowa IN: HOU SU: ERP


PS -- NY036 -- 2548 08/24/92 11:23 EDT
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Aug 24, 1992
Words:1074
Previous Article:EVERGREEN HEALTHCARE LTD. TO ACQUIRE CONTROLLING INTEREST IN NATIONAL HERITAGE, INC.
Next Article:THOROUGHBRED (R) SOFTWARE JOINS INFORMIX (R) INSYNC PROGRAM
Topics:


Related Articles
MAYTAG CORPORATION REPORTS RESULTS
MAYTAG REPORTS RESULTS
MAYTAG REPORTS THIRD QUARTER OPERATING INCOME
MAYTAG REPORTS THIRD QUARTER NET INCOME UP 78 PERCENT OVER 1993 THIRD QUARTER
MAYTAG ANNOUNCES YEAR END RESULTS
Maytag Reports Strong Sales; Double-Digit Increase in Earnings for Fourth Quarter and Full Year
Maytag Reports Strong Increases In Third Quarter Results; Home Appliance Segment Sets All-Time Quarterly Sales Record
Maytag Corporation Eyes Strong Third Quarter; Expects to Exceed Current Earnings Estimates
Maytag Says Its First Quarter Results Will Likely Exceed Current Analysts' Estimates.
Maytag Expects to Report Lower Fourth Quarter Results in midst of Major Appliance Industry Weakness.

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters