"We are taking the right actions to improve Maytag's performance going forward. Our 'One Company' restructuring, which consolidates Hoover floor care, Maytag Appliances and corporate organizations..."
Ralph Hake, Maytag chairman and CEO

Maytag Corporation today reported third quarter consolidated sales of $1.19 billion, down 3 percent from sales of $1.22 billion in the same period last year. Net income for the third quarter of 2004 was $7.5 million or 9 cents per share, compared with $36.6 million or 46 cents per share a year ago.

While year-over-year comparisons are unfavorable, the company pointed out that progress has been made with sequential improvements from the second quarter to the third quarter of this year. Consolidated sales are up 3 percent from $1.15 billion in the second quarter. Third quarter net income of $7.5 million or 9 cents per share was an improvement over the second quarter's net loss of $41.1 million or 52 cents per share. Included in the third quarter are restructuring and related charges of 16 cents per share for the Galesburg closure and "One Company" reorganization, as well as a gain of 10 cents per share from the sale of a Canadian warehouse.

The sequential improvements in the third quarter resulted primarily from higher sales in major appliances and savings from cost-reduction efforts. The improvement was achieved despite significantly higher steel and energy-related costs.

Unfavorable year-over-year comparisons were caused primarily by lower Hoover floor care sales volumes and pricing, as well as higher steel costs. The third quarter diluted earnings per share for 2004 and 2003 included the following items:

Commenting on the third quarter, Maytag chairman and CEO Ralph Hake stated, "We accomplished a great deal in the third quarter with the sequential improvement in sales and operating income. We are taking the right actions to improve Maytag's performance going forward. Our 'One Company' restructuring, which consolidates Hoover floor care, Maytag Appliances and corporate organizations, is on track for $150 million in annual savings and lowered our costs in the third quarter. We successfully completed the systems conversion required for the 'One Company' consolidation. Also in the third quarter, we made significant progress in cash flow and lowered inventories from the previous quarter, reached a new labor agreement at our Amana plant, and completed the sale of our joint venture in China."

Operating results for the third quarter were impacted by a charge of $7.2 million recorded in connection with the "One Company" restructuring. Restructuring charges of $11.9 million were recorded in connection with closing the Galesburg plant. Annual savings of $30 million from the closing of the plant are anticipated to start in the fourth quarter of 2004.

Cash flow in the third quarter was favorably impacted by improvements in working capital levels gained from lower inventories, lower capital expenditures and higher accounts payable, by the sale of Maytag's warehouse in Burlington, Ontario, and by the completion of the sale of Maytag's interest in a joint venture in China. The positive cash flow performance enabled the company to reduce total debt levels by approximately $100 million and increase cash and cash equivalents by $50 million from the second quarter.

Commenting on earnings expectations for the fourth quarter, Hake said that the company expects reported earnings per share in the range of 5 to 10 cents. This guidance includes restructuring and related charges of approximately 10 cents per share.

Nine-Month Performance

Maytag's sales increased 1.1 percent to $3.56 billion in the first nine months of 2004 compared with $3.52 billion the prior year. Operating income was $46.6 million, down from $181.0 million reported for the first nine months of 2003.

Net income for the first nine months of 2004 was $5.1 million or 6 cents per share, compared with $96.3 million or $1.22 per share reported for the first nine months of 2003.