INDUSTRY NEWS ARCHIVE; APPLIANCE SERVICE NEWS
August 27, 2007: USA, NARDA and Brand Source Service announce Regional Service Training seminars
USA, NARDA and Brand Source Service announce Regional Service Training seminars Brand Source Service, a division of Brand Source, announced on August 24 their plan to sponsor several business management and technical training seminars in association with the North American Retail
Dealers Association (NARDA) and the United Servicers Association (USA).
The sessions will begin in early October and will run through 2008. Business management training will be provided by members of USA. Technical training will be provided on the Whirlpool family of brands, as well as Fisher & Paykel and Samsung.
Non-Brand Source Service members may attend for a fee, refundable upon joining Brand Source Service, NARDA and USA. Seminar dates, locations and additional sponsors will be announced soon. Brand Source claims to be North America’s largest appliance, electronics, and furniture merchandising group with more than 3,500
membersin the U.S. and Canada. The company’s Web site www.brandsource.com, provides online shopping options with information on local retailers.03/21/07: Maytag and Samsung brand
front-loaders recalled due to fire hazard
Big News From Whirlpool:
Non-authorized service firms
have access to tech assistance03/10/07: USA's Regional Service Meetings in the works
02/28/07: Service & Retail Convention
Attracts More Than 500
NARDA and USA Announce Plans to Merge01/31/07: Maytag Recalls Dishwashers Due to Fire Hazard
12/22/06: Summary of GE settlement
12/23/06: Electrolux third-quarter results
Info and comments by Captain Toolhead10/04/06: Whirlpool will close Maytag’s
all-brand service unit10/04/06: Whirlpool announces changes at
several North American plantsMay 17, 2006: Whirlpool to expand Ohio manufacturing operations
May 17, 2006: Changes announced in Whirlpool field service group
May 12, 2006: Whirlpool announces steps to integrate Maytag operations; laundry manufacturing consolidated to Clyde and Marion, OH; Maytag headquarters consolidated to Benton Harbor, MI
May 8, 2006 Update: USA sets dates for SRC07
March 27, 2006: Extended warranty seller VAC
is purchased by Bankers Warranty
March 28, 2006: Governments eye expanding 'lemon
laws' to pcs, maybe appliancesMarch 29, 2006: Uncle Sam blesses the Whirlpool/Maytag merger
March 14 , 2006: Whirlpool and Maytag merger cleared by Competition Bureau of Canada
February 20, 2006: Whirlpool and Maytag agree to provide the Department of Justice a limited extension of time to complete the review of the proposed merger
February 2, 2006: Maytag announces fourth quarter and full-year 2005 results
01/21/06: More than 700 new refrigerators go to Hurricane Katrina victims
January 12, 2006: Message from Iowa politicians to Attorney General and Maytag's responseJanuary 6, 2006: Whirlpool names Dosch
and Venturelli to new rolesDecember 22, 2005: Maytag stockholders approve Whirlpool merger
December 12, 2005: Whirlpool to strengthen and extend North American manufacturing and global operating platform; new refrigerator factory in Mexico to become operational in 2006
December 7, 2005: Whirlpool enters into $2.7 billion credit agreement
December 7, 2005: GE shortens its warranties on major appliances News and commentary by Captain Toolhead
December 1, 2005: Whirlpool, Maytag certify substantial compliance with second request; enter into timing agreement with Antitrust Division
November 18, 2005: MAYTAG ANNOUNCES
ORGANIZATIONAL CHANGES -- Learmonth to lead Maytag Appliances business unit; McConnaughey to head Maytag Services
November 8, 2005: Warranties slashed on Maytag Services' brand parts
November 8, 2005: Maytag to close Florence laundry facility
October 29, 2005
IS THE WHIRLPOOL/MAYTAG MERGER GETTING SHAKY?
Comments by Captain ToolheadOctober 19, 2005: INSIDE THE WHIRLPOOL/MAYTAG MERGER
News and commentary by Captain ToolheadOctober 9, 2005: A “heads up” from Captain Toolhead
October 7, 2005: U.S. Dept. of Justice requests more information on Whirlpool/Maytag merger
October 5, 2005: Product warranty changes from Electrolux and Whirlpool
September 13, 2005: Whirlpool notifies U.S. DOJ of its intent to acquire Maytag
AUGUST 31, 2005: NEMA WARNS HURRICANE VICTIMS ABOUT HAZARDOUS WATER-DAMAGED ELECTRICAL EQUIPMENT
AUGUST 31, 2005: SERVICEBENCH EXTENDS DISPATCH CONNECTIVITY WITH SWIFTLINK PARTNERSHIP
AUGUST 24, 2005: WHIRLPOOL'S RESPONSE TO
FREQUENTLY ASKED QUESTIONSAUGUST 22: WHIRLPOOL AND MAYTAG SIGN A DEFINITE MERGER AGREEMENT
AUGUST 22: MAYTAG LAUNDRY PLANT EMPLOYMENT LEVELS
REACH 60-YEAR LOWSAUGUST 18: WHIRLPOOL/MAYTAG SUMMARY
AUGUST 17, 2005: (MORE ABOUT MAYTAG)
AUGUST 14, 2005: MAYTAG DECLARES WHIRLPOOL PROPOSAL SUPERIOR; CHANGES RECOMMENDATION AND POSTPONES SPECIAL MEETINGAUGUST 14, 2005: WHIRLPOOL ANNOUNCES PROGRESS TOWARD MAYTAG ACQUISITION
AUGUST 10, 2005: TEXT OF THE LETTER FROM WHIRLPOOL OFFERING $21 PER SHARE FOR MAYTAG STOCK
AUGUST 8, 2005: WHIRLPOOL PUTS PREMIUM ON MAYTAG OFFER
AUGUST 4, 2005: WHIRLPOOL/MAYTAG
JULY 27, 2005: WHIRLPOOL ENTERS INTO CONFIDENTIALITY AGREEMENT WITH MAYTAGJULY 25, 2005: MAYTAG RESPONDS TO REVISED WHIRLPOOL PROPOSAL
JULY 22, 2005: LETTER FROM FETTIG TO MAYTAG
JULY 22, 2005: AND AS OF JULY 22
JULY 22, 2005: VERY LATE MAYTAG EARNINGS AND OTHER NEWS
JULY 21, 2005: MORE LATE-BREAKING NEWS
JULY 21, 2005: AND THEN CAME WHIRLPOOL
JULY 21, 2005: MAYTAG: THE SAGA CONTINUES
Whirlpool announced on Oct. 24 record 2006 third-quarter net sales of $4.8 billion. Sales increased 35 percent from the previous year, reflecting both the acquisition of Maytag and continued strong demand for the company’s products. Excluding the Maytag acquisition, net sales increased approx. 8 percent.
Third-quarter 2006 net earnings from continuing operations, which include the operating results, integration costs, and purchase accounting impact from acquiring Maytag, were $134 million, or $1.68 per diluted share, compared to $114 million, or $1.66 per diluted share reported during the previous year.
The company completed the sale of the Amana commercial microwave business during the third quarter and finalized the sale of Dixie Narco vending systems subsequent to quarter-end. Combined proceeds were approx. $100 million.
As previously announced, the company also intends to sell the Hoover floor-care division and its Jade commercial products appliance business. The third-quarter financial results for Hoover, Dixie Narco and Jade are included in discontinued operations. Total net earnings for the third quarter, including discontinued operations, were $117 million, or $1.47 per diluted share.
Third quarter results, which included asset gains of approx. $40 million and a warranty settlement benefit of $15 million, were partially offset by non-income based tax settlements of $22 million and a pension curtailment charge related to a benefit change of $15 million.
Operating profit, which reflected strong international performance, was negatively impacted by higher material prices, acquisition integration related costs, and purchase accounting expense in the company’s North American business.
New innovation
• The Maytag brand launched the new Epic front-load washer and dryer.
• The Whirlpool brand fully launched:
— The new Cabrio washer and dryer, which provides a 4.5-cubic-foot capacity in a top-load design, handles the equivalent of three laundry baskets in a single load and significantly reduces dry time through a combination of the washer’s ultra-fast spin speed and the dryer’s AccelerCare system. The Cabrio washer saves more than half the energy and water used by conventional top-loaders.
— The Duet Sport HT model, which is a smaller version of the Duet front-load laundry pair, with a six-point suspension to reduce vibration and noise. Like the Duet pair, Duet Sport HT saves more than half the energy and water used by conventional top-load washers.
• The KitchenAid brand launched Architect Series II — a new
generation of its premium, flagship appliance line with features
inspired by cooks, culinary professionals, and design experts.
• The Bauknecht brand introduced two new built-in appliance lines, Pure Line and Design Line, which integrate several different global design trends. The lines also offer scratch-resistant surfaces that make cleaning easier and “Smart Cook,” an intelligent system control with text display that offers perfect cooking results.
• Whirlpool Latin America launched:
— The Brastemp brand 6th Sense microwave in Brazil that automatically delivers the perfect heating time for different types of food.
— A new line of 6th Sense side-by-side refrigerators in Argentina, ranging from 540 to 707 liters, which includes the exclusive Microban antimicrobial product protection technology that helps eliminate bacteria that would normally exist in a refrigerator’s interior. (Microban is a registered trademark of Microban Products Company.)
• Whirlpool Asia launched:
— The Whirlpool Sensation front-loading washing machine in India that offers fine wash performance with 20% less water consumption.
— The Whirlpool Sparkle fully loaded semi-automatic washing machine in India with superior aesthetic and unique features. The Aqua Shower feature enables water and detergent to be poured into the center of the wash load, increasing the concentration and resulting in better washing capability.
— Whirlpool Genius XL direct cool refrigerator models in India, which provide superior cooling and the 6th Sense Door-Open alarm, Utility Drawer and Lemon-N-Onion holder.
Awards
• Whirlpool was named to the 2006-07 Dow Jones Sustainability World Index, an international stock portfolio that evaluates corporate performance using economic, environmental and social criteria.
• Whirlpool Mexico received the “National Award for Ethics & Values” from the Confederación de Cámaras Industriales de los Estados Unidos Mexicanos. The award was presented to the company by President Vicente Fox.
• Whirlpool was elected one of the 150 “Best Companies to Work For” in Brazil for the tenth straight year by Exame/Voce S.A. Guidebook. Whirlpool is one of only four companies included in the list since 1997.
• Whirlpool was recognized as the “Best and Biggest” Household Appliances Company in Brazil by Exame magazine.
• Whirlpool Corporation’s Brazilian Embraco subsidiary was named one of the “100 Top Companies from Rapidly Developing Economies” by Boston Consulting Group.
• Whirlpool was selected as one of the top 500 brands in the UK by the “Superbrands” Council.
• Whirlpool Poland received the prestigious “2005 Benefactor of the Year” award for its support of Habitat for Humanity International. Whirlpool employees have been active in builds in the cities of Gliwice, Poznan and Gdansk. The company also donated appliances for each new home built.
• Whirlpool India received the “HR Excellence Award” at the Global Human Resource Summit organized by Amity International Business School.
Whirlpool announces changes at
several North American plantsWhirlpool announced in early October a series of changes to several of its North American manufacturing facilities. The changes are part of an ongoing effort to optimize the company's plants, supply base, products and resources.
The company also is adjusting its workforce levels at several plants to optimize production levels and take advantage of its expanded manufacturing footprint.
The workforce adjustments include expansion of the company's Ohio-based laundry manufacturing operations to support innovation and capacity requirements for additional brands. As previously announced, the expansion includes the creation of more than 1,100 jobs in Ohio, split evenly between the existing facilities in Clyde and Marion. Whirlpool has nearly completed equipment installation at those facilities and production is scheduled to begin before the end of the year.
The adjustments also include the expansion of capacity for bottom-mount refrigerators at the Amana, IA, plant. As previously announced, the expansion will support innovation and capacity requirements for additional brands, and includes the creation of up to 400 new jobs. Whirlpool also is planning to expand production of side-by-sdes at its Ramos Arizpe, Mexico, plant beginning in 2007. Once that expansion is complete, approx. 700 employees at the facility in Fort Smith, AR, are expected to be laid off the first half of 2008 as additional models currently manufactured in Fort Smith will move to the Mexican plant. Whirlpool recently completed the voluntary layoff of about 940 employees in Fort Smith by transferring production of some models to the Ramos Arizpe facility.
Whirlpool also is planning to adjust production levels at its Evansville, IN, top-freezer refrigerator plant in 2007. Projections of lower consumer demand for top-freezer products will result in a layoff of about 500 employees from the Evansville facility.
10/04/06 - Whirlpool will shut down Maytag All Brand Service in early December.
A former unit of Maytag Corp., ABS repaired all brands of major
appliances.
While an official announcement was forthcoming, Whirlpool is
reported to have contacted employees of ABS that the unit would be closed on December 4, with a complete transition effected by January 31, 2007. Technicians were invited to apply for continuing employment with A&E Service, the all-brae all-brand service operation jointly owned by Whirlpool and Sears Holdings Ltd. They were further advised that job offers would be made promptly, but only if A&E needed additional techs in selected markets. Those not hired by A&E were
promised severance packages.
The new A&E organization will be led by Dale Reeder, currently
acting v-p/g-m of ABS, who has more than 20 years of service experience. The closure of ABS was not unexpected as Whirlpool has a long-term agreement to use A&E as its preferred service operation, getting most in-warranty and post-warranty referrals from consumers who contact Whirlpool’s national service operation.
As of late September, Whirlpool had not officially determined how the Maytag aftermarket service and parts operation will be merged into Whirlpool.
Meanwhile, Whirlpool announced plans to revitalize the Maytag brand, launching a barrage of Maytag products and celebrating its first washing machine a century ago. Among announcements was the retention of the Lonely Repairman as the spokesman in Maytag advertising, and the introduction of the technologically advanced Epic line of Maytag front-load washers and dryers.Epic equipment was initially offered exclusively in Home Depot retail outlets.
07/28/06NewsUpdate
ServiceBench closes $7.3 million, led by Valhalla Partners
Growing market demand for service management fuels company growth
ServiceBench, Inc. has announced a $7.3 Million Series-D investment led by Valhalla Partners with an additional co-investment from JMI Equity, a previous investor. Existing investors also include NextGen, WWC, WomenAngels.net, Washington Dinner Club and others. The round will be used to strategically pursue new market opportunities and drive expansion in the U.S. and abroad.
ServiceBench Service Management has helped some of the world's largest companies make a pivotal shift to post-sales service for profit and competitive advantage. Founded in 2000, the company currently processes 40 million transactions per year between blue-chip customers and 35,000 service chain partners in North America, Latin America and Europe Ñ highlighting the growing need for on-demand service management. In 2005, ServiceBench was recognized by Deloitte as one of the 500 fastest growing technology companies in North America, named in the Washington SmartCEO Future 50 and listed by Manufacturing Business Technology magazine as one of 40 emerging software vendors.
"ServiceBench has built its business through strong industry partnerships that have helped us accurately forecast customer needs and proactively develop solutions that meet these requirements head on," said Michael Dering, president/CEO. "With a track record in vertical market development and proven technology, the company is poised as a leading provider of service management solutions. This capital infusion will accelerate the next phase of our growth into new markets and enable global expansion."
"After appraising the value of ServiceBench's comprehensive product line, notable client roster, and growing market potential, Valhalla was eager to add the company to its portfolio," said Hooks Johnston, General Partner, Valhalla Partners. "This investment underscores our commitment to working with pioneering companies that are shaping an increasingly robust future for the technology industry."
"This round with Valhalla Partners reaffirms the wise choice we made in our previous investment in ServiceBench and demonstrates their growth and market valuation," according to Bob Smith, general partner, JMI Equity Fund. "I look forward to working with Mr. Johnston as part of the ServiceBench board to help this key portfolio company power its momentum and continue building market leadership."07/28/06NewsUpdate2
Whirlpool to increase prices
News and commentary by Captain Toolhead07/28/06NewsUpdate3
Whirlpool to increase prices
News and commentary by Captain Toolhead
07/28/06NewsUpdate2
Whirlpool to increase prices
News and commentary by Captain Toolhead
According to The Wall Street Journal on July 26, the headline reads "Whirlpool Plans To Increase Prices, Profit Falls 5.2%."
Although second-quarter sales increased 33% due in part to the addition of Maytag sales, net income declined 5.2% to $91 million. In order to offset higher materials costs from both oil-based resins and base metals, Whirlpool "plans to enact price increases averaging 6% - 12% for its brands and products."
This is good news for servicers because of the inevitable repair or replace dilemma that every consumer faces given a repair problem with an older appliance. In general, increases in major appliance replacement costs would make a repair decision look more financially reasonable and attractive.
Consumer advocates opposed to the recent Whirlpool acquisition had predicted sharp price increases due to the high market shares resulting from a merger. Regulators in the Justice Department, however, reasoned that formidable domestic and ever-increasing foreign competition would make price increases unlikely.
Fact is that materials costs had increased Whirlpool's production costs by $850 million in the last year and a half prior to 2006. An increase of $150 million for raw materials is expected this year. That's about a billion dollars in higher costs over the recent past. Chairman and CEO Jeff Fettig said, "We're now in our third year of an extraordinarily high cost environment, and it continues to accelerate.
Encourage your customers to carefully examine and evaluate repair versus replace. If the Whirlpool attempt at significant price increases stick, we may see industry competitors also pass along some increased costs and you may find clients deciding that REPAIR is a much more reasonable financial decision and that the days of the "throwaway" major appliance are behind us. Let's hope so.
07/28/06NewsUpdate3
Whirlpool reports record second quarter sales
Whirlpool Corporation announced in late July that second quarter net sales rose 33 percent to a record $4.7 billion, reflecting the acquisition of Maytag Corporation and strong consumer demand for the company’s innovative products around the world. Excluding the company’s recent acquisition, net sales increased approximately 5 percent.
Net earnings from continuing operations for the second quarter of 2006 were $100 million, or $1.26 per diluted share, compared to $96 million, or $1.42 per diluted share in the same period last year. Second quarter net earnings include the results and integration costs of the company’s recent acquisition of Maytag.
During the second quarter, the company announced its intention to sell the Hoover floor-care, Dixie Narco vending systems, Amana commercial microwave and Jade commercial products appliance businesses. The financial results from these businesses are included in discontinued operations. Total net earnings for the second quarter, including discontinued operations, were $91 million or $1.14 per diluted share.
“We are pleased with our second quarter financial results, as well as the rapid progress made in integrating the Maytag business,” said Jeff M. Fettig, Whirlpool’s chairman and chief executive officer. “All of our regional businesses delivered higher unit volume, sales and operating profit performance during the quarter. I am particularly pleased with the trade and consumer response to our new product innovations, which have been exceptional. We expect material and oil-related cost increases to continue to accelerate during the second-half of 2006. Accordingly, the company is implementing cost-based price adjustments, productivity initiatives and cost controls to offset the heightened cost environment. Our Maytag integration activities are progressing at an efficient and disciplined pace and remain on-track with previous expectations.”
Operating profit results, which reflect strong sales growth and productivity improvements, offset purchase accounting charges, acquisition integration related expenses, higher commodity prices, new product introduction costs and increased restructuring costs.
Fettig added: “Global industry growth for the second quarter was in-line with our expectations and consistent with our prior guidance. As previously communicated, we expect flat-to-moderate industry unit shipment growth during the second half of the year and anticipate global industry growth of 1-to-2 percent in 2007. We continue to successfully introduce a cadence of new product innovation to the marketplace, aggressively invest in our future innovation pipeline, execute plans to drive continuous cost productivity, and implement actions to respond to the current material cost environment. Despite somewhat softer near-term demand, the underlying industry fundamentals remain positive.”
During the quarter, cash provided by continuing operations of $81 million improved $190 million compared to last year, primarily due to improvements in working capital. Results also reflect the Maytag brand operations and include $44 million of cash outflow related to acquisition integration costs.
NEW INNOVATION
- Whirlpool brand launched the Duet Sport washer and dryer, a smaller version of the popular Duet front-load pair, with a suspension system to reduce vibration and noise. Like the Duet pair, it uses less than half the water and energy of conventional top-loaders.?
- KitchenAid brand launched the completely stainless steel Pro Line Fabric Care System featuring the first glass-encased, touch-sensor user interface controls offered in a laundry system.
- KitchenAid brand also launched the industry’s most powerful premium slow cooker and premium blender line.
- Following the successful first quarter launch of the Maytag brand Ice2O, the first French door refrigerator with ice and water on the door, the Amana brand launched the ice and easy French door refrigerator.
- Whirlpool Europe launched a built-in oven in France and Italy with 15 pre-set recipes and a range of accessories, including a pizza tray, silicone pie mold and anti-stick baking tray.
- Whirlpool continued to extend its innovation across the globe with the launch of:
- Duet front-load washer and dryer in Brazil under the Brastemp brand.
- Jet Chef Microwave in India with European styling and the unique “Micro Tawa” option, which offers the ability to crisp, sauté and shallow fry, making it ideally suited for Indian style cooking.
- Whirlpool Latin America’s Brastemp brand introduced two products from the Gourmand line – a refrigerator with a wine rack and compartments for desserts and fine cheeses, and a wine cooler that holds 40 bottles and features shock absorbers to protect the wine. The Gourmand Line is specially created for customers with a classic and refined lifestyle, who value convenience, sophistication and functionality.
- Whirlpool India launched:
- The Delight Frost Free Refrigerator, India’s first and only refrigerator with LED lighting – an evenly distributed white light that allows all contents to be clearly seen even when the refrigerator is full.?
- The Fusion Direct Cool Refrigerator with 6th Sense Frost Control, which provides more than 17 hours of cooling retention during power outages, compared to other refrigerators that offer six hours of cooling retention.
AWARDS
- Whirlpool Corporation was named one of the 100 best corporate citizens by Business Ethics magazine. The company is one of only 16 other companies named to the list each year since its inception seven years ago.
- Whirlpool received the Hardlines Innovation Supplier of the Year award for the launch of the bold new Kenmore Elite HE4t "Colors" front-load laundry pair and the Hardlines Supplier of the Year award from Sears Holding Corporation as part of the Partners in Progress Awards.
- Whirlpool received the Best Buy 2006 Bravo Award in the Home Life category. This award acknowledges the top vendor company that supplied Best Buy with products and services in 2005.
- Whirlpool brand Duet became the first washer and pedestal certified as user-friendly by the Arthritis Foundation.
- Whirlpool Europe was awarded the French Design Institute’s prestigious Janus Design Award for the Genius built-in microwave; This is the third Janus award the company has won since 2002.
- Whirlpool Poland received the prestigious 2005 Benefactor of the Year award for its work with Habitat for Humanity International.
- Whirlpool Brazil (Multibrás) won the Excellence in Client Service Prize 2006 from Modern Consumer magazine in the home appliance category. The award recognizes customer relationship excellence.
- Brastemp and Consul’s web sites were named two of the top three iBest Award winners (Brazil’s Internet Oscars). Brastemp’s site has been listed by iBest as one of the top three sites for the last five years.
- Whirlpool India won a Reader’s Digest Trusted Brands Gold Award in refrigeration.
SECOND QUARTER REGION REVIEW
Whirlpool North America operations reported record second quarter unit shipments and revenue. Revenue of $3.3 billion increased approximately 50 percent compared to last year, reflecting the acquisition of Maytag, continued strong consumer preference for the company’s innovative product offering and increasing demand for new product innovations. Excluding acquisition effect, sales increased approximately 5 percent. For the quarter, the company’s U.S. unit shipments of major appliances (T7)* exceeded industry levels, which were up slightly.
Operating profit of $192 million for the quarter included purchase accounting charges, acquisition integration expenses, planned new product launch costs and higher material prices. The cost increases were mitigated by strong demand and productivity improvements.
Based on current economic conditions, the company expects full-year industry unit shipments in 2006 to increase approximately 1-to-2 percent.
Whirlpool Europe reported record revenue and operating profit during the second quarter. Revenue increased approximately 5 percent from last year’s levels to a record $806 million, driven by strong Whirlpool brand performance. Currency translations did not have a material impact on sales. Company unit shipments, reflecting continued strong demand for the region’s innovative product line, continued their positive trend during the quarter and exceeded estimated industry demand of 1-to-2 percent.
Strong sales performance, continued improvements in productivity and reductions in administrative costs led to a double-digit improvement in operating profit of 21 percent and a record second quarter operating profit of $45 million. Year-over-year operating profit margins increased from 4.8 percent of sales to 5.6 percent during the period.
Based on current economic conditions, the company continues to expect full-year industry unit shipments in 2006 to increase approximately 1-to-2 percent.
Whirlpool Latin America sales increased 17 percent from the prior-year period to $580 million, driven by strong appliance unit volume. Excluding currency translations, sales increased approximately 13 percent. Industry unit shipments of appliances are estimated to have increased approximately 11 percent during the quarter.
Record operating profit of $55 million, which included the impact of currency, improved 76 percent during the quarter and operating profit margins expanded to 9.4 percent. Productivity improvements and regional incentives more than offset higher material prices and increased brand investment.
Based on the current economic environment in Brazil, the company continues to expect industry shipments in 2006 to increase 8-to-10 percent.
Whirlpool Asia delivered operating profit of $1 million for the second quarter compared to a $4 million loss in the prior year. Sales of $133 million were up 8 percent from last year. Excluding currency translations, sales increased approximately 11 percent. The operating profit improvement reflects improved performance in India, the regions largest market, and reflects the success of new product launches, productivity improvements and a favorable product mix.
Based on current economic conditions, the company continues to expect full-year industry unit shipments to increase 5-to-7 percent.
Outlook
“We continue to make excellent progress toward the integration of our Maytag business and remain confident in our ability to realize the value creating opportunities of this combination,” said Fettig.
Fettig continued: “The year is progressing as previously expected and we are pleased with our first half-year performance. We receive positive feedback from consumers and trade customers every day validating the strength of our product innovation portfolio and continue to accelerate the advancement of innovation as a core competency throughout the company. We have been addressing the heightened material and oil-related cost environment by driving total cost productivity, implementing cost-based price adjustments, controlling spending by reducing overhead and infrastructure while increasing investments in consumer activities and managing our overall mix of business. These actions are driving success in the current economic environment.”
“Based on our current assessment, we continue to expect full-year 2006 earnings per diluted share from continuing operations of $6.00 to $6.25 and free cash flow to be in the $200-to-$300 million range. The company also continues to expect 2007 full-year earnings per diluted share to be approximately $9.00,” added Fettig.
Mike Staats alias Captain Toolhead
Toolhead, Inc.
2224 Overhill Rd.
Peoria, IL 61615
1-888-665-4323 Toll Free
Whirlpool updates its expected cost efficiencies from
Maytag acquisition, plans to divest some businesses
Whirlpool announced on May 23 that its merger with Maytag is expected to generate pre-tax annualized cost savings in excess of $400 million. Cost efficiencies are expected from all areas of the value chain, including product manufacturing, infrastructure and support areas, global procurement and logistics. The company expects to gain the majority of efficiencies
during 2007, and anticipates savings to be fully realized in 2008. The company will incur approximately $450 million in pre-tax, one-time costs to realize the annualized savings estimates. Approx. $150 million of these costs are expected to impact earnings over the next three years with the remainder capitalized under purchase accounting. The company's previous estimated cost savings were $300-to-$400 million with one-time costs of $350-to-$500 million.
"Our increased-savings estimates further demonstrate the value creating opportunity of this acquisition. The actions we have recently announced, including the consolidation of laundry production into our Clyde and Marion, OH, facilities, will represent a significant portion of our expected annualized savings," said Jeff M. Fettig, Whirlpool's chairman/CEO. "We have moved quickly to integrate the Maytag business since closing the transaction seven weeks ago and we are pleased with our progress to date."
Following a thorough review, Whirlpool also announced its decision to sell the Hoover floor-care, Dixie-Narco vending systems, Amana commercial microwave, and Jade commercial products appliance businesses. The financial results of these businesses will be classified as discontinued operations in
the company's future financial statements.
"The decision to divest the floor-care and commercial businesses will allow us to focus on our core appliance business," said Fettig. "We have received strong interest from a number of potential buyers and anticipate completing these transactions by the end of this year."
The company also revised its guidance to reflect the integration of Maytag and now expects full-year 2006 earnings per diluted share from continuing operations of $6.00 to $6.25, compared to the pre-acquisition range of $7.00 to $7.25. Free cash flow is estimated to be in the $200-to-$300 million range for 2006. The company also announced that it expects 2007 full-year earnings per diluted share to be approximately $9.00.
Whirlpool to expand Ohio manufacturing operations
In mid-May Whirlpool confirmed the expansion of its Ohio-based laundry manufacturing operations to support innovation and capacity requirements for the newly acquired Maytag brands. The expansion is expected to include the creation of more than 1,100 jobs in Ohio, split evenly between the existing facilities in Clyde and Marion. Whirlpool will begin additional equipment installation and hiring at the Clyde and Marion facilities this summer, with production scheduled to begin before the end of the year.
"The global home appliance industry is highly competitive and requires Whirlpool to be the best cost and best quality producer in each region of the world," said David L. Swift, president of Whirlpool North America. "Our facilities in Clyde and Marion, Ohio are two of the largest, most efficient
factories in the world. The investments will help us drive improved productivity and efficiency across our North American laundry manufacturing platform."
Swift continued: "The improved business climate, including last year's tax reform, has made Ohio a more attractive place to do business. These investments will support the continuing efforts of our brands, including the newly acquired Maytag family of brands, to deliver a constant stream of innovation to consumers in the U.S. domestic market and throughout the
world."
The investment follows the recently communicated plans to consolidate washer and dryer production from former Maytag manufacturing sites in Newton, IA; Herrin, IL; and Searcy, AK with Whirlpool laundry factories in Clyde and Marion.
Changes announced in Whirlpool field service group
The following communication was dispatched in mid-May to all Whirlpool and Maytag authorized service firms:
Matt Dawes, national service manager, has announced a series of changes within the Field Service organization to support the integration of the Maytag brands with after-sales field service support. The Market Managers and Field Service Representatives will have responsibility to support both
the Whirlpool and Maytag authorized networks.
The Market Managers and respective Field Service Representatives are:
Jim Evans ‹ NorthEast
Wes Sirois ‹ New Jersey ‹ NYC/LI
Jeff Thompson ‹ New England
Mark Petrasek ‹ Upper New York State
Bob Godfrey ‹ Mid-Atlantic
Dan Manley ‹ Carolinas
Ken Tyson ‹ Georgia
Joe Bereau ‹ Virginia / Maryland
Jim Weisenbacher ‹ Ohio Valley
Doug Murphy ‹ Michigan
Mark Houghton ‹ Ohio / Indiana
Jay Pantaleano ‹ PA, WV
Skip White ‹ Gulf States
Ralph Holder ‹ KY, TN, AL
Chuck Newton ‹ N. Florida
Tim Musich ‹ AR, MS, LA
Jerry Ackerman ‹ S. Florida
Mike Fawns ‹ AL, MS
Cliff Chewning ‹ Pacific SW
Tim Burdick ‹ AZ, NM
Patrick Leonard ‹ So. Cal, HI
Don Dellario ‹ Mid Cal
Craig Parks ‹ Great Plains
Bill Dillard ‹ ID, MT, ND
Garry Reese ‹ KS, MO
Glen Boswell ‹ SD, NE, IA
Ed Dee ‹ Texas
Larry Jordan ‹ OK, N. TX
Tom Lott ‹ SW TX
Spencer Kneubuehl ‹ SE TX
Shelly Shipley ‹ Great Lakes
Tom LaDuke ‹ MN, WI
Jeff Mackzum ‹ IL
Buck Renteria ‹ NW / Rocky Mtn
Don Dinkel ‹ UT, CO, WY
Tim Steele ‹ OR, WA, AK
Phil Polland ‹ N.Cal, NV (temporary)
Check www.ServiceMatters.com for complete details and contact information.
May 12, 2006: Whirlpool announces steps to integrate Maytag operations; laundry manufacturing consolidated toClyde and Marion, OH; Maytag headquarters consolidated to Benton Harbor, MI
Whirlpool announced on May 10 a series of changes within its North American organization relating to the integration of Maytag operations. Locations affected by the changes include three manufacturing sites, the former Maytag corporate headquarters, and a research and development center in Newton, IA, and administrative offices in Illinois, Canada and Mexico. Approx. 4,500 positions will be eliminated as a result of the changes.
Moving forward, about 1,500 new positions will also be created at other Whirlpool locations, resulting in a net total elimination of 3,000 positions when all changes have been completed. Details on the number and location of new positions created at other Whirlpool locations will be announced in the
near future.
"We are taking these actions to rapidly restore the competitiveness of the Maytag brands," said Jeff M. Fettig, Whirlpool chairman/CEO. "This is an important step in our integration process that will allow us to drive continuing performance improvements and will better align our brands,
products and operations with the markets we serve domestically and globally."
Laundry manufacturing consolidation
The announcement includes plans to consolidate laundry washer and dryer production from Maytag manufacturing sites in Newton, IA, Herrin, IL, and Searcy, AR, with Whirlpool laundry factories in Clyde and Marion, OH. The series of moves will build upon the efficiency of Whirlpool's manufacturing
capabilities and enhance the company's ability to compete within the highly competitive global home appliance industry. The changes follow an extensive review of Maytag operations by Whirlpool, and the company's commitment to quickly communicate any operational decisions to clarify employee status moving forward.
"Our manufacturing sites in Clyde and Marion are two of the most efficient facilities in the world, with capacity to grow," said David L. Swift, president, Whirlpool North America. "This was a difficult but necessary decision that will further improve the cost efficiency of our laundry operations, providing consumers with industry-leading innovation and
competitively produced washers and dryers from U.S.-based manufacturing locations."
The timetables for the affected manufacturing operations include an orderly closure process, with complete closure targeted on the dates included below:
• The factory in Herrin, IL, which manufactures washers and dryers and employs about 1,000, will continue production until the end of 2006.
• The factory in Searcy, AR, which manufactures dryers and employs about 700, will continue production until the end of 2006.
• The factory in Newton, IA, which manufactures washers and dryers and employs about 1,000, will continue production into 2007.
The company currently plans no further manufacturing facility closures related to the Maytag integration process, though it will continue to aggressively pursue ongoing productivity improvements across its global operating platform. At the same time, Whirlpool will continue to evaluate strategic options, including the potential sale of the Hoover floor-care and the Dixie-Narco, Amana commercial microwave and Jade commercial appliance businesses.
Administrative consolidation
Maytag administrative offices will be consolidated in the U.S. from Newton, IA to Benton Harbor, MI and other Whirlpool locations; in Canada from Burlington to Mississauga; and in Monterrey, Mexico where both companies have offices. The Newton-based research and development center, and the administrative office of Maytag International, based in Schaumburg, IL, also will be closed.
Approx. 1,800 salaried positions, included in the 4,500 affected
positions, will be eliminated as a result of these changes. Several hundred salaried employees from the affected administrative offices are expected to be offered jobs in other Whirlpool locations.
Whirlpool's review of Maytag operations will continue, and further
decisions related to office facilities are expected in the future.
Transition support
The company will support employees affected by the changes with a comprehensive assistance package during the transition period, including severance pay, health benefits continuation, job search assistance, and other benefits. Whirlpool plans to open negotiations with labor unions in Newton and Herrin for close-out agreements in the future. Employees in Searcy, a non-union facility, also will receive severance, benefits continuation, and job search assistance.
Community commitment
The company said it would work with local and state officials to assure that all available training resources are made available to affected employees, and to reposition affected locations for future job development opportunities within the community.
Cost estimates
The preliminary estimate of termination and relocation costs resulting from consolidation of Maytag administrative offices is approx. $135 to $145 million. Non-employee exit costs associated with laundry facility closings are approximately $30 million. Whirlpool is unable to estimate, at this time, the termination costs associated with the manufacturing facility closings. Cost associated will be recognized as an assumed liability and
accounted for as part of the purchase price for Maytag in accordance with generally accepted accounting principles.
05/08/06 Update
USA sets dates for SRC07
The United Servicers Association has corrected the previously announced dates for the Service and Retail Convention (SRC07). The dates are Sunday, Feb. 25 through Tuesday, Feb. 27, 2007. The event will be held at the Flamingo Hilton in Las Vegas.
Note: The originally announced dates, which were published in the June issue of Appliance Service News, are incorrect. Please revise your calendar; we regret the error.
March 29, 2006: Uncle Sam blesses the
Whirlpool/Maytag merger
The U.S. Justice Department determined on March 29 that Whirlpool can complete its takeover of Maytag while rejecting concerns that the combination would hurt competition in sales of major appliances.
The Justice Department cited the continuing existence of strong rivals in the industry plus the cost savings generated by the new company "is not
likely to harm consumer welfare."
The merger creates a company that makes half the dishwashers and more than 70 percent of the washers and dryers sold in the U.S. The Justice Department said competitive domestic brands include Sears-Kenmore, General Electric and Frigidaire. Foreign manufacturers, such as LG and Samsung, also have established a strong presence in the market.
The government also concluded that big retailers, such as Sears, Lowe's, Home Depot and Best Buy have alternatives to help them resist any attempt by the new company to raise prices. Cost savings and other efficiencies realized by the merger also should benefit consumers, the department believes.
Whirlpool and Maytag signed a merger agreement last August and the Antitrust Division has been reviewing the proposal since September.
March 28, 2006: Governments eye expanding 'lemon
laws' to pcs, maybe appliances
Lemon laws, originally enacted in many states to protect consumers from getting stuck with unreliable automobiles, could soon be expanded in some jurisdictions to cover other products. Legislation is currently pending in Illinois and Pennsylvania that would expand state lemon laws to cover home and office computers. And politicians in Canada are currently debating if a national law is needed for a whole
list of products, including major appliances.
As enacted, lemon laws are applied to purchases of new automobiles. If the vehicle has a chronic problem, the manufacturer has three tries to correct. If the problem comes back a fourth time, manufacturers must offer purchasers a replacement vehicle or a refund.
According to some consumer market observers, unreliability has become more chronic with pcs and notebook computers. Consumers report frequent failures of motherboards, dvd drives, battery chargers and cooling fans. Manufacturers often provide only the first repair free. Afterwards, the consumer is on his own and must pay for often expensive repairs.
In Canada, the Toronto Star reported one consumer had his laptop computer in for repairs seven times without the manufacturer, Toshiba, agreeing that the product was a lemon worthy of replacement.
"Toshiba guaranteed a free replacement if its laptops are found defective, but never agreed that my laptop was, even after seven repairs," said the owner, Rajeev Ahooja.
Now Canadian politicians are crafting legislation that would define when a product is a lemon and thus should be replaced. And other products, including appliances, could be covered if a proposal that all products costing $1,000 or more are to be covered by the law¹s provisions.
The proposed Canadian lemon law could be introduced in Parliament this spring.
March 27, 2006: Extended warranty seller VAC
is purchased by Bankers Warranty
VAC Service Corporation, the nation's largest third-party administrator of extended warranties and service contracts for appliances and other products during the 1990s, has been acquired by Bankers Warranty Group Inc., St. Petersburg, FL.
VAC will continue to be operated as a wholly-owned subsidiary of Bankers from its headquarters in Middletown, NY. Frank Trigo, former executive of Assurant Consumer Services, will assume the reins at VAC, replacing James R. Tucker, who was the sole owner of VAC and served as its president since its
founding in 1980.
Bankers reportedly purchased VAC to move into the consumer electronics warranty business. VAC also offers through retailers nationwide extended warranties on major appliances, office equipment, lawn care equipment, power
tools, cameras, furniture and fitness equipment.
March 14 , 2006: Whirlpool and Maytag merger cleared by Competition Bureau of Canada
Whirlpool and Maytag jointly announced on March 14 that their proposed merger has been cleared by the Competition Bureau of Canada. The Bureau, an independent law enforcement agency, concluded that it has no grounds upon which to challenge the proposed merger under Canada's Competition Act.
In reaching its conclusion, the Bureau determined that the proposed merger will not give rise to a substantial lessening or prevention of competition in relation to any relevant market in Canada. The Bureau's decision follows a thorough review, including extensive industry contacts.
"We are pleased with the decision of the Competition Bureau. We believe the Bureau's decision recognizes that the global home-appliance industry is open and competitive," said Jeff M. Fettig, Whirlpool's chairman/CEO.
"This transaction will result in better products, quality and service, as well as cost efficiencies, which will enhance our ability to succeed in the competitive global home-appliance industry. Consumers will benefit from a combined Whirlpool and Maytag business."
Ralph F. Hake, Maytag's chairman/CEO said, "Maytag is pleased with today's decision by the Canadian Competition Bureau. In our view, this decision reinforces the fact that this merger is pro-competitive and is certainly in the best interest of our company, our brands and our shareholders."
On February 13, 2006, Whirlpool and Maytag agreed with the Antitrust Division of the U.S. Department of Justice to a limited extension of time to complete the review of the proposed acquisition of Maytag by Whirlpool. The companies have agreed not to close the transaction before March 30, 2006 without the Division's concurrence. Whirlpool and Maytag are working closely with the Division and continue to cooperate fully with its investigation and respond promptly to its inquiries.
February 20, 2006:
Whirlpool and Maytag agree to provide the Department of Justice a limited extension of time to complete the review of the proposed merger
Whirlpool and Maytag announced on Feb. 13 they have agreed with the Antitrust Division of the U.S. Department of Justice to a limited extension of time to complete the review of the proposed acquisition of Maytag by Whirlpool. The companies have agreed not to close the transaction before March 30 without the Division¹s concurrence.
On December 1, 2005, the companies announced they had certified substantial compliance with the Division in response to its request for additional information and agreed not to close the merger before February 27 without the Division's concurrence, recognizing that the Division could request additional time for review.
"We appreciate the work of the Department of Justice staff to date and will continue to work with them cooperatively as they complete their review," said Jeff M. Fettig, Whirlpool's chairman/CEO.
"The agreed upon extension is simply a continuation of the review process. This is a complex and rapidly changing industry, and it is not surprising that some additional time is required to fully understand and fairly evaluate it."
Ralph F. Hake, Maytag's chairman/CEO said, "We believe this additional time will be sufficient for the review to be completed, and we are confident rapidly upon completion of the review."
Fettig added: "We strongly believe that the combination will create substantial benefits for consumers, trade customers and our shareholders. This transaction will translate into better products, quality and service, as well as other efficiencies that will allow us to offer a more competitive, wider range of products to a much broader consumer base in the highly competitive global home appliance industry."
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February 2, 2006:
Maytag announces fourth quarter and full-year 2005 results
Maytag announced on Feb. 3 fourth-quarter consolidated sales of $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 93 cents per share, compared with a net loss of $14.1 million, or 18 cents per share, a year ago.
Fourth-quarter 2005 results were impacted by restructuring charges of $42.1 million recorded primarily in connection with the closing of the Florence, SC, plant. 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, net sales were up 6.9 percent in Home Appliances, 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 vs. a year ago, while 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, a disappointing performance in floor care due to continued volume decline and price erosion, as well as higher distribution costs.
During the quarter, the company also entered into a new $600 million, five-year, senior-secured revolving credit agreement. The new credit agreement should provide the company 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.
In the fourth quarter, Maytag certified substantial compliance with the Antitrust Division of the Department of Justice in response to the request for additional information ("second request") regarding the proposed merger with Whirlpool Corporation. On December 22, 2005, Maytag shareholders overwhelmingly approved the proposed merger agreement with Whirlpool with 97.8 percent of the voted shares cast in favor of the merger.
The proposed merger is currently being reviewed by the Antitrust Division of the Department of Justice. In order to facilitate the review, Whirlpool and Maytag have agreed not to close the proposed merger before February 27, 2006, without the Antitrust Division's concurrence, although the Antitrust Division may request additional time for review. Whirlpool and Maytag continue to expect the transaction to close as early as the first quarter of 2006.
February 2, 2006:
Maytag announces fourth quarter and full-year 2005 results
Maytag announced on Feb. 3 fourth-quarter consolidated sales of $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 93 cents per share, compared with a net loss of $14.1 million, or 18 cents per share, a year ago.
Fourth-quarter 2005 results were impacted by restructuring charges of $42.1 million recorded primarily in connection with the closing of the Florence, SC, plant. 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, net sales were up 6.9 percent in Home Appliances, 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 vs. a year ago, while 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, a disappointing performance in floor care due to continued volume decline and price erosion, as well as higher distribution costs.
During the quarter, the company also entered into a new $600 million, five-year, senior-secured revolving credit agreement. The new credit agreement should provide the company 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.
In the fourth quarter, Maytag certified substantial compliance with the Antitrust Division of the Department of Justice in response to the request for additional information ("second request") regarding the proposed merger with Whirlpool Corporation. On December 22, 2005, Maytag shareholders overwhelmingly approved the proposed merger agreement with Whirlpool with 97.8 percent of the voted shares cast in favor of the merger.
The proposed merger is currently being reviewed by the Antitrust Division of the Department of Justice. In order to facilitate the review, Whirlpool and Maytag have agreed not to close the proposed merger before February 27, 2006, without the Antitrust Division's concurrence, although the Antitrust Division may request additional time for review. Whirlpool and Maytag continue to expect the transaction to close as early as the first quarter of 2006.
Whirlpool reports record results: Annual revenues increase to $14.3 billion, earnings improve to $6.19 per share
Whirlpool announced on Feb. 2 record fourth-quarter 2005 net earnings of $126 million, or $1.83 per diluted share, compared to $97 million, or $1.44 per diluted share, in the same period last year. The company also reported record full-year 2005 net earnings of $422 million, or $6.19 per diluted share, compared to $406 million, or $5.90 per diluted share last year.
Fourth-quarter net sales increased 9 percent from the prior-year period to $4 billion. Excluding currency translations, net sales increased by approx. 8 percent. For the full year, net sales increased $1.1 billion, or 8 percent to $14.3 billion. Excluding currency translations, net sales increased approx. 6 percent. Both fourth quarter and annual net sales represented records for the company.
01/21/06: More than 700 new refrigerators go to Hurricane Katrina victims
Maytag and Sears are together donating more than 700 new refrigerators worth nearly $800,000 to Hurricane Katrina victims in an effort to help those affected replace appliances damaged in the storm.
Maytag manufactured the Kenmore brand refrigerators. Sears has agreed to honor the full warranty on the side-by-sides.
The units are being donated through Gifts in Kind International, a tax-exempt organization that partners with businesses and nonprofit groups to provide products and services that help improve communities.
As many Louisiana residents struggle to rebuild their lives and homes, thousands have lived for months without the ability to keep food refrigerated and are faced with replacing some or all of their appliances.
In a recent Harris Interactive survey, 89 percent of the respondents across the U.S. said their refrigerator is one household appliance they couldn't live without.
January 6, 2006: Whirlpool names Dosch
and Venturelli to new roles
Whirlpool announced on Jan. 6 the appointment of Ted Dosch, currently corporate vp/controller, to corporate vp/finance, project management office, which manages the planning and integration of the anticipated Maytag acquisition. Larry Venturelli, currently vp/investor relations, will succeed
Dosch as vp/controller.
In his new role, Dosch will lead the planning and integration of all financial processes and internal controls associated with the anticipated Maytag acquisition. Venturelli will assume the controller responsibilities and continue to provide leadership to the Investor Relations activities on an interim basis. A successor to Venturelli will be named at a later date.
January 12, 2006 Message from Iowa politicians to Attorney General and Maytag's response:
Honorable Thomas O. Barnett
Assistant Attorney General for Antitrust Department of Justice
950 Pennsylvania Avenue, NW Washington, DC 20530
Dear Assistant Attorney General Barnett:We are writing concerning the proposed acquisition of Maytag by Whirlpool. We are very troubled by this proposed arrangement which would greatly increase the market share of the combined company in certain areas. For that reason, we believe that the Department should prevent this acquisition.
According to the 1992 joint FTC-Justice guidelines for horizontal mergers, we believe it is clear that the appliance industry is indeed a highly concentrated one that would become drastically more concentrated, according to the Herfindahl-Hirshman Index, as a result of the Whirlpool acquisition. The increase in concentration is far beyond the level that the guidelines
presume would likely create enhanced market power or facilitate its exercise.
Whirlpool is already the largest producer in the market. With the acquisition of Maytag, the combined company would hold almost 50 percent of the market share. This market concentration becomes even more extreme when
the other two major appliance manufacturers, GE and Electrolux, are considered. If the Whirlpool acquisition is approved, the newly combined company, GE and Electrolux would together control about 90 percent of the market share.
And, this is an industry that has undergone a number of substantial mergers in recent years. Maytag acquired Magic Chef, Jenn-Air and Amana. Whirlpool acquired Kitchen-Aid, and Electrolux acquired Frigidaire. At some point, the concentration becomes too extreme for an orderly competitive market. We
believe the pending acquisition of Maytag by Whirlpool goes beyond that barrier particularly in the area of washers and dryers.
What is most important is the specific market for particular goods that people actually buy. In the laundry segment, a Whirlpool-Maytag Company would control an excessively dominant 70 percent of the market. It is hard to see how that type of dominance does not place excessive market control
into the hands of one company.
Even with the large share of this market that is sold at retail by large chain stores, this concentration is extreme. Clearly, a combined Whirlpool would be in a position to create real difficulties for competitors. The increase in concentration is far beyond the level that the guidelines presume would likely create enhanced market power or facilitate its exercise.
While we are seeing some movement of foreign firms into this area such as LG and Samsung, their market share is very small. The current domestic players are working to sharply lower costs including off-shoring jobs to lower costs. It is not at all clear that the foreign firms will be able to effectively compete and may in fact decide to maximize their efforts in
their home markets.
We recommend that the Justice Department prevent the acquisition of Maytag by Whirlpool. If that is not done, at the very least the Department should require that Whirlpool divest the washer and dryer portions of Maytag to a viable purchaser who will have the financial capability and desire to continue to operate that business.
We appreciate your consideration of our concerns.
Sincerely, Tom Harkin United States Senator
Leonard Boswell, United States Representative
January 13,2006
Maytag Corporation Challenges Legislators' Letter
Maytag announced in a press release that it was disappointed to learn that U.S. Sen. Tom Harkin (D - Iowa) and U.S. Rep. Leonard Boswell (D - Iowa) had sent a letter to the Justice Department expressing concern about the competitive effects of Whirlpool's proposed merger with Maytag.
Maytag said that the letter ignores fundamental competitive realities of the appliance industry. The four largest U.S. retailers now control over 65 percent of U.S. appliance sales, and, as a result, exert tremendous pressure on appliance suppliers to be competitive on price and features. Moreover,
foreign competitors like LG, Samsung, Haier and Bosch-Siemens, with strong consumer brands, are expanding rapidly at these and other retail outlets.
Maytag added that the transaction will result in significant efficiencies that will make the combined firm better able to compete with growing foreign competition, as well as with its traditional rivals — GE, Frigidaire and Sears' Kenmore brand of products. Maytag also noted that the market shares contained in the letter are significantly overstated.
Through their letter, it is obvious that Sen. Harkin and Rep. Boswell are concerned about job loss in Iowa. However, it is important to note that whether or not a transaction occurs, the tough environment in which appliance industry manufacturers operate will continue to impact employment levels at facilities that are not cost competitive.
Whirlpool reports record results: Annual revenues increase to $14.3 billion, earnings improve to $6.19 per share
Whirlpool announced on Feb. 2 record fourth-quarter 2005 net earnings of $126 million, or $1.83 per diluted share, compared to $97 million, or $1.44 per diluted share, in the same period last year. The company also reported record full-year 2005 net earnings of $422 million, or $6.19 per diluted share, compared to $406 million, or $5.90 per diluted share last year.
Fourth-quarter net sales increased 9 percent from the prior-year period to $4 billion. Excluding currency translations, net sales increased by approx. 8 percent. For the full year, net sales increased $1.1 billion, or 8 percent to $14.3 billion. Excluding currency translations, net sales increased approx. 6 percent. Both fourth quarter and annual net sales represented records for the company.
01/21/06: More than 700 new refrigerators go to Hurricane Katrina victims
Maytag and Sears are together donating more than 700 new refrigerators worth nearly $800,000 to Hurricane Katrina victims in an effort to help those affected replace appliances damaged in the storm.
Maytag manufactured the Kenmore brand refrigerators. Sears has agreed to honor the full warranty on the side-by-sides.
The units are being donated through Gifts in Kind International, a tax-exempt organization that partners with businesses and nonprofit groups to provide products and services that help improve communities.
As many Louisiana residents struggle to rebuild their lives and homes, thousands have lived for months without the ability to keep food refrigerated and are faced with replacing some or all of their appliances.
In a recent Harris Interactive survey, 89 percent of the respondents across the U.S. said their refrigerator is one household appliance they couldn't live without.
January 6, 2006: Whirlpool names Dosch
and Venturelli to new roles
Whirlpool announced on Jan. 6 the appointment of Ted Dosch, currently corporate vp/controller, to corporate vp/finance, project management office, which manages the planning and integration of the anticipated Maytag acquisition. Larry Venturelli, currently vp/investor relations, will succeed
Dosch as vp/controller.
In his new role, Dosch will lead the planning and integration of all financial processes and internal controls associated with the anticipated Maytag acquisition. Venturelli will assume the controller responsibilities and continue to provide leadership to the Investor Relations activities on an interim basis. A successor to Venturelli will be named at a later date.
January 12, 2006 Message from Iowa politicians to Attorney General and Maytag's response:
Honorable Thomas O. Barnett
Assistant Attorney General for Antitrust Department of Justice
950 Pennsylvania Avenue, NW Washington, DC 20530
Dear Assistant Attorney General Barnett:We are writing concerning the proposed acquisition of Maytag by Whirlpool. We are very troubled by this proposed arrangement which would greatly increase the market share of the combined company in certain areas. For that reason, we believe that the Department should prevent this acquisition.
According to the 1992 joint FTC-Justice guidelines for horizontal mergers, we believe it is clear that the appliance industry is indeed a highly concentrated one that would become drastically more concentrated, according to the Herfindahl-Hirshman Index, as a result of the Whirlpool acquisition. The increase in concentration is far beyond the level that the guidelines
presume would likely create enhanced market power or facilitate its exercise.
Whirlpool is already the largest producer in the market. With the acquisition of Maytag, the combined company would hold almost 50 percent of the market share. This market concentration becomes even more extreme when
the other two major appliance manufacturers, GE and Electrolux, are considered. If the Whirlpool acquisition is approved, the newly combined company, GE and Electrolux would together control about 90 percent of the market share.
And, this is an industry that has undergone a number of substantial mergers in recent years. Maytag acquired Magic Chef, Jenn-Air and Amana. Whirlpool acquired Kitchen-Aid, and Electrolux acquired Frigidaire. At some point, the concentration becomes too extreme for an orderly competitive market. We
believe the pending acquisition of Maytag by Whirlpool goes beyond that barrier particularly in the area of washers and dryers.
What is most important is the specific market for particular goods that people actually buy. In the laundry segment, a Whirlpool-Maytag Company would control an excessively dominant 70 percent of the market. It is hard to see how that type of dominance does not place excessive market control
into the hands of one company.
Even with the large share of this market that is sold at retail by large chain stores, this concentration is extreme. Clearly, a combined Whirlpool would be in a position to create real difficulties for competitors. The increase in concentration is far beyond the level that the guidelines presume would likely create enhanced market power or facilitate its exercise.
While we are seeing some movement of foreign firms into this area such as LG and Samsung, their market share is very small. The current domestic players are working to sharply lower costs including off-shoring jobs to lower costs. It is not at all clear that the foreign firms will be able to effectively compete and may in fact decide to maximize their efforts in
their home markets.
We recommend that the Justice Department prevent the acquisition of Maytag by Whirlpool. If that is not done, at the very least the Department should require that Whirlpool divest the washer and dryer portions of Maytag to a viable purchaser who will have the financial capability and desire to continue to operate that business.
We appreciate your consideration of our concerns.
Sincerely, Tom Harkin United States Senator
Leonard Boswell, United States Representative
January 13,2006
Maytag Corporation Challenges Legislators' Letter
Maytag announced in a press release that it was disappointed to learn that U.S. Sen. Tom Harkin (D - Iowa) and U.S. Rep. Leonard Boswell (D - Iowa) had sent a letter to the Justice Department expressing concern about the competitive effects of Whirlpool's proposed merger with Maytag.
Maytag said that the letter ignores fundamental competitive realities of the appliance industry. The four largest U.S. retailers now control over 65 percent of U.S. appliance sales, and, as a result, exert tremendous pressure on appliance suppliers to be competitive on price and features. Moreover,
foreign competitors like LG, Samsung, Haier and Bosch-Siemens, with strong consumer brands, are expanding rapidly at these and other retail outlets.
Maytag added that the transaction will result in significant efficiencies that will make the combined firm better able to compete with growing foreign competition, as well as with its traditional rivals — GE, Frigidaire and Sears' Kenmore brand of products. Maytag also noted that the market shares contained in the letter are significantly overstated.
Through their letter, it is obvious that Sen. Harkin and Rep. Boswell are concerned about job loss in Iowa. However, it is important to note that whether or not a transaction occurs, the tough environment in which appliance industry manufacturers operate will continue to impact employment levels at facilities that are not cost competitive.Maytag stockholders approve Whirlpool merge
Maytag announced on Dec. 22 that its stockholders approved the proposed merger with Whirlpool at a special meeting in Newton, IA. Based on the preliminary vote total announced at the meeting, the merger was approved by 68.5 percent of the shares outstanding and 97.8 percent of those shares
voting. The proposal required an approval of only more than 50 percent of the shares outstanding.
Under the merger, Maytag stockholders will be entitled to receive for each share of Maytag common stock, approximately $21 in value, comprised of $10.50 in cash and between 0.1144 and 0.1398 of a share of Whirlpool common stock, depending on the volume-weighted average trading prices of Whirlpool
common stock during a 20-day trading period ending shortly prior to completion of the merger.
The proposed merger is currently being reviewed by the Antitrust Division of the Department of Justice. In order to facilitate the review, Whirlpool and Maytag have agreed not to close the proposed merger before February 27, without the Antitrust Division's concurrence, although the Antitrust Division may request additional time for review. Whirlpool and
Maytag continue to expect the transaction to close as early as the first quarter of 2006.
Meanwhile, Whirlpool responded to the announcement by Maytag that its shareholders had voted to approve the merger agreement.
"We are very pleased that Maytag's shareholders have fully endorsed the merger," said Jeff M. Fettig, Whirlpool's chairman/CEO. "The combination of Whirlpool and Maytag will create very substantial benefits for consumers, trade customers and our shareholders. We believe this transaction will
result in better products, quality and service, as well as efficiencies, which will enhance our ability to succeed in the increasingly competitive global home-appliance industry."
GE settles class-action refrigerator lawsuitOn December 14, Ryan Hiraki of The News-Press, a Southwest Florida newspaper, reported "that a nationwide lawsuit against General Electric that started in Southwest Florida has ended with GE agreeing to replace thousands of faulty refrigerators or reimburse its customers. William Turner, 77, a retired Naples resident who filed the class-action lawsuit in April, said he got what he wanted in the proposed settlement. 'It was about principle,' said Turner, who worked in television news for
50 years.
" People had refrigerators that were not functioning properly and if no one stepped to the plate, I felt it was important that somebody file' a lawsuit. Residents throughout Southwest Florida had complained that GE and Hotpoint 20-, 22- and 25-cu.-ft. refrigerators had excessive moisture problems. The moisture, they said, caused rust, puddles on the floor and the formation of metal shavings and shards of plastic.
Turner's lawsuit, filed in U.S. District Court in Fort Myers, alleged that the problems caused by the buildup of moisture can pose safety hazards to consumers who may ingest dangerous materials from ice created in the freezer sections. The lawsuit was amended three times since it was filed, and it now includes more than 300 refrigerator models.
"Consumers screamed and GE heard them," said Scott Weinstein, who represented Turner in the class-action suit. Kim Freeman, a spokeswoman at GE, did not provide an estimate on how much Turner's lawsuit will cost GE.
"That information is proprietary," she said, "but we'll spend whatever it costs to take care of our customers.
"Under the terms of the settlement, GE must:
• Reimburse owners for moisture-related service calls
• Give owners an additional year of warranty protection from the time the court gives the settlement a preliminary approval, possibly in January
• Or replace refrigerators that have required three unsuccessful repair attempts.
"For residents who got tired of problems with their refrigerators, even after three service calls, and decided to buy a new one, GE has agreed to refund the cost of the faulty refrigerator. GE had tried to fix the problem after hearing about it this spring, creating a hot line to expedite service calls."
Years of manufacture begin with 2001. The refrigerators involved include those with model numbers beginning with GSS, GSH, HSS, ESS, GST, or HST. Other model prefixes that exhibit similar problems begin with PSS, PCS, PSI. The TFX, TBX and TPX models have another set of problems, including the complaint that the auger inside the ice bucket rusted, thereby producing rust covered ice cubes.
Complete details of the (Turner vs General Electric) lawsuit including a complete listing of the models involved and the full settlement documents can be found at <www.BringGoodThingsToLife.org>
December 12, 2005: Whirlpool to strengthen and extend North American manufacturing and global operating platform; new refrigerator factory in Mexico to become operational in 2006
Whirlpool announced on Dec. 12 that it invested approx. $250 million in its North American manufacturing base in 2005.
"We continue to strengthen and extend our manufacturing base in North America, specifically in the U.S. and Mexico, to better improve our operating platform and to continue to remain competitive," said David L. Swift, executive v-p, North American Region.
In the last 12 months, Whirlpool has:
• Equipped and primed its Clyde, OH, manufacturing facility for the production of new, top-loading washer models.
• Similarly prepared its Marion, OH, plant to manufacture new dryer models.
• Begun production of new models and the Fast Fill water dispenser for refrigerators/freezers in its Fort Smith, AR, plant.
• Begun production of a new front-loading washer in its Monterrey, Mexico, facility.
• Completed construction of a new refrigerator plant in Ramos Arizpe, Mexico, to produce side-by-sides, beginning in 2006 and employing 1,000 workers.
Once the Ramos Arizpe facility is operational, approx. 730 employees at Whirlpool's Fort Smith plant will be part of a layoff, currently planned for October 2006, as some models currently made in Fort Smith will be shifted to the new plant in Mexico. Whirlpool currently anticipates that the vast
majority of the layoffs will be voluntary and many of those employees will be recalled within 18 months, as part of the normal attrition rate at the Fort Smith facility. Since 2003, the Fort Smith facility has hired nearly 800 new employees.
The Fort Smith plant currently employs about 4,600 workers, producing side-by-sides, counter-depth refrigerators and trash compactors, as well as icemaker components.
December 7, 2005:Whirlpool enters into $2.7 billion credit agreementWhirlpool announced on Dec. 6 that it has entered into an amended and restated $2.2 billion, five-year revolving credit agreement, with $1.2 billion immediately available and $1.0 billion available upon final clearance of the Maytag acquisition by the Antitrust Division of the Department of Justice.
Whirlpool also has entered into a new $500 million, 364-day revolving credit agreement with a one-year term-out option, which will be available upon final clearance of the Maytag acquisition by the Antitrust Division. The credit facilities replace the existing $1.2 billion revolving credit agreement. The credit facilities were co-arranged by J.P. Morgan Securities Inc. and Citigroup Global Markets Inc.
These agreements put into place the financing arrangements necessary for Whirlpool to complete the acquisition of Maytag, according to Roy Templin, executive v-p and CFO.
December 7, 2005: GE shortens its warranties on major appliances News and commentary by Captain Toolhead
In a letter to selling dealers in October, General Electric announced shortened warranties similar to those announced by Electrolux Home Products and Whirlpool.
At this time, it's uncertain if changes are being made to the warranty on replacement parts that currently stands at one-year.
The text of the letter:
Dear GE Appliances Customer:
Effective with appliances manufactured on or after January 1, 2006, General Electric will implement a new standard warranty on all GE, Hotpoint and Americana major appliances.
GE, Hotpoint and Americana appliances will be manufactured with a Limited, one-year parts and labor warranty. All extended warranties (i.e. sealed systems, electric elements, water distribution systems) will be eliminated. While only implementing minor changes, GE Profile and GE Monogram appliances will be reclassified from "Full" to "Limited" warranties. This re-classification is focused on driving simplicity and consistency for our consumers and customers.The above actions will reduce the variation in our warranty across product lines and improve our ability to effectively communicate coverage to our customers. These changes will not alter our focus on delivering high quality appliances. GE is committed to quality and will continue to work diligently to extend product life and improve customer service.
Thank you for your continued support of GE Appliances.
Sincerely,
Michael McDermott GM - Merchandising
Captain Toolhead's bottom line: GE's attempt at a "positive spin" on a "negative" issue. The shortened warranty is a significant "take-away" from the buyer. However, most consumers — at the time of purchase — do not consider long-term warranties in their purchase decision. In fact, many GE major appliance dealers actually attempt to use the above letter as a selling tool (for the consumer to get a valuable longer warranty by purchasing now!) without effective results.
Consumers don't seem to really care. What remains to be seen is if they care when they encounter a product that needs repairs that is perhaps 15 months old. That's where the rubber will meet the road and we shall see what happens! Maybe GE intends to spend the money they will save via the shortened warranty by raising the warranty reimbursement rates to authorized GE servicers? What do you think will happen?
December 1, 2005: Whirlpool, Maytag certify substantial compliance with second request; enter into timing agreement with Antitrust Division
Whirlpool and Maytag announced on December 1 that both companies have certified substantial compliance with the Antitrust Division of the Department of Justice in response to the request for additional information ('second request') regarding their proposed merger. In order to facilitate the Antitrust Division's review, Whirlpool and Maytag agreed not to close the proposed merger before February 27, 2006, without the Antitrust Division's concurrence, although the Antitrust Division may request additional time for review.
Whirlpool and Maytag continue to expect the transaction to close as early as the first quarter of 2006, following approval from Maytag stockholders and regulatory clearance. As previously announced, Maytag's special stockholder meeting to consider the merger is scheduled for Dec. 22, at 10:30 a.m. CST in Newton, IA.
The Securities and Exchange Commission has declared effective Whirlpool's registration statement on Form S-4 covering the share portion of the consideration to be issued to Maytag's stockholders upon completion of the proposed merger. Maytag has mailed to its stockholders the definitive proxy statement/prospectus contained in the registration statement for use at its special stockholders meeting.November 21, 2005: SEC clears Whirlpool share registration;
Maytag shareholder meeting now set for Dec. 22
Whirlpool and Maytag announced on Nov. 21 that the Securities and Exchange Commission has declared effective Whirlpool's registration statement on Form S-4 covering the share portion of the consideration to be issued to Maytag's stockholders upon completion of the proposed merger. Maytag will begin mailing to its stockholders the definitive proxy statement/prospectus
contained in the registration statement for use at its special stockholder meeting.
Maytag is also moving its special stockholder meeting from Dec.16, to Dec. 22 at 10.30 a.m. in Newton, IA, in order to allow for sufficient notification to stockholders following the SEC clearance process. Maytag stockholders of record as of Nov. 2 are eligible to vote on the transaction.
If the merger is completed, Maytag stockholders will be entitled to receive for each share of Maytag common stock, approx. $21 in value, comprised of $10.50 in cash and between 0.1144 and 0.1398 of a share of Whirlpool common stock, depending on the volume-weighted average trading prices of Whirlpool common stock during a 20-day trading period ending
shortly before completion of the merger.
November 18, 2005: Maytag Announces Organizational Changes
Learmonth to lead Maytag Appliances business unit; McConnaughey to head Maytag Services
Arthur B. Learmonth, president of Maytag Services business unit, is promoted to the position of acting president of Maytag Appliances business unit. Learmonth, 59, will lead Maytag's largest business unit, which manufactures and markets major appliances and floor care products sold in North America.
David R. McConnaughey, 49, v-p, Maytag All-Brand Service in Maytag Services, is promoted to the position of acting president, Maytag Services, replacing Learmonth. Maytag Services provides repair and maintenance to Maytag brand appliances as well as other major appliance brands.
Both Learmonth and McConnaughey will report directly to Ralph F. Hake, Maytag chairman and CEO.
November 8, 2005: Maytag to close Florence laundry facility
Maytag has announced it expects to close its Florence, South Carolina, laundry plant, early in the first quarter of 2006. The shutdown will impact approx. 60 employees.
"Closing a plant is never an easy decision," said Steve Ingham, Maytag senior v-p — supply chain. "Unfortunately, we have too much laundry manufacturing capacity and we need to reduce it."
Ingham said that the Florence plant closure had nothing to do with employee performance. "Our Florence employees are a hard working and dedicated group, but in today's highly competitive global marketplace, we can no longer afford to keep underutilized plants open."
The company has stated that its excess manufacturing capacity and related costs are concentrated in the laundry and floor care product categories. Besides Florence, Maytag has three other laundry manufacturing facilities located in Arkansas, Illinois, and Iowa. Earlier this year, Maytag concentrated its production of vertical-axis washers at its plant in Herrin, IL, and dryers in Searcy, AR.
Affected employees would be eligible to receive severance packages as well as career counseling services. In addition, Maytag will be working with state and local workforce development agencies to help Florence employees make the transition to new employment. Restructuring charges associated with the plant closing are expected to
be in the range of $40-$50 million, primarily for asset write-down and accelerated depreciation. The cash portion of these charges is expected to be approx. $10 million related to severance and fulfilling purchase commitments.
November 8, 2005; Warranties slashed on Maytag Services' brand parts
Following is the text of a letter dated October 25, 2005 to "trade partners" from John Thalacker, director of parts operations for Maytag Services LLC.
"Effective November 14, 2005, the Replacement Parts Warranty on all Maytag Services' brands of replacement parts will change from a 1 (one) year limited warranty, to a 90 day limited warranty, from date of replacement
part installation.
"This warranty change is specific to Maytag Services' brands of replacement parts, and does not relate to, or change any manufacturer's product warranty coverage. Maytag Services' brands of replacement parts installed in conjunction with an in-warranty product repair will be warranted under the terms of the remaining product warranty. Replacement parts installed in conjunction with a repair not covered under the product
warranty will be covered by the 90 day limited Replacement Parts Warranty.
" Please communicate this change with your organizations immediately to ensure a seamless transition to the new policy."
Comments from Captain Toolhead:
Maytag has moved to the 90-day replacement parts warranty similar to that which Electrolux previously announced. While I believe we can look for other manufacturers to follow this reduced warranty on parts, especially Whirlpool, I believe we will also see Maytag and perhaps General Electric
reduce their product warranties too (similar to the simple one-year deal announced by Whirlpool and Electrolux for their standard, non-premium brands).—Mike Staats alias Captain Toolhead (return to top)
October 29, 2005
IS THE WHIRLPOOL/MAYTAG MERGER GETTING SHAKY?
Comments by Captain Toolhead
At the end of October, the spread between Whirlpool’s offering price of $21 per share and the trading level of Maytag shares ($17) is about $4 per share.
If stock traders felt that the deal is a sure thing, that spread might be only a few cents. Higher activity in the options market also indicate how nervous investors feel about the merger.
So, from taking a look at how the market thinks, the deal is questionable. That might mean some divestiture of brands is required for final antitrust approval. Maybe the deal will go down for less than $21 per share that Whirlpool has offered. Maybe the deal will be nixed entirely and we’ll start all over again with a different set of suitors and different pricing and differnet antitrust results.The Maytag Game
Let’s see how well servicers are at predicting the outcome of the Whirlpool/Maytag merger. Let’s call it The Maytag Game. E-mail or call your vote to ASN - Yes or No - on whether the current deal will close. ASN will tally the results and we’ll see if our predictions are accurate.
When voting, comments and reasons would be helpful but not required. Just a simple Yes or No will do.
NEWS UPDATE: October 9, 2005: A “heads up" from Captain Toolhead
Buried amidst the Whirlpool Q&A filings on October 3, and documents required by the Securities and Exchange Commission for Whirlpool’s ongoing merger plans with Maytag was the following interesting question and answer:
“Current Business
“Q. What is the supplier-related and potential product safety problem that Whirlpool is investigating that may affect up to 3.5 million appliances and may cost up to $235 million?“A. Whirlpool is currently investigating a supplier-related quality and potential product safety problem that may affect up to 3.5 million appliances manufactured between 2000 and 2002. Whirlpool currently estimates that its potential cost from this matter ranges from $0 to $235 million, depending upon whether it is determined that some or all of the appliances must be repaired or replaced, whether the cost of any such corrective action is borne initially by Whirlpool or the supplier, and, if initially borne by Whirlpool, whether Whirlpool will be successful in recovering its costs from the supplier. In addition, Whirlpool could incur other costs arising out of this matter, which cannot currently be estimated but could be material. The company is not in a position to provide additional information at this time.’”
At the publishing deadline for ASN, sources were unable or unwilling to advise exactly what the issues were in this safety concern that might relate to the name of the supplier or the type of appliance. Therefore we’ve decided to play a game of “multiple choice” with this. Since Whirlpool is “playing games” with us, we’ll call this the Whirlpool Game. Please answer the following multiple choice question:
Which major appliance/safety issue is Whirlpool referring to in the above Q&A:
a. Dishwasher door switch
b. Refrigerator PTC relays
c. (More) MHC microwave oven issues
d. None of the above but likely a ______________You’ll need to do some research for an educated answer. Don’t pick a product where the Whirlpool’s share of the annual sales volume would not generate 3.5 million appliances manufactured between 2000 and 2002. Also, don’t pick something that’s not a ‘potential product safety problem’ as it clearly states in the news item above.
Provide your answers promptly. You must respond before Whirlpool and the CPSC (Consumer Product Safety Commission) publicly and jointly indentify the problem. The first correct answer will win a prize guaranteed to be worth at least $50.
Captain Toolhead is going out on a limb here by choosing “c’ from the multiple choice above. Here’s why: Considering the high number of affected appliances, the issue would need to relate to high-volume products, such as microwave ovens. The last major safety rework from Whirlpool (aside from the dehumidifier bucket switch recall) was over-the-range microwave hood combination (MHC models) ovens in late 2001 and early 2002. These 1.8 million units were mostly sold sometime between January, 1998 and September,
2001 under the Whirlpool, KitchenAid and Kenmore brands.Those units mentioned in the SEC’s Q&A were manufactured between 2000 and 2002, which means they would have been sold from sometime in 2000 until sometime in 2003. If all these assumptions (and they are big ones since we don’t really know anything yet) are correct, that would mean that even as the 1.8 million MHC models were being reworked in the field, others were being produced and sold with some sort of safety issue.
In an article published in the January 2002 ASN, it was stated that “the recall of 1.8 million Whirlpool, KitchenAid and Sears Kenmore over-the-range microwave ovens must certainly represent one of the largest major appliance recalls in history ’ while most servicers anticipated circuit board problems or suspected high-voltage transformers to be the reason for this large recall, the real problem announced by Whirlpool was Œsteam and oil vapor passing through the disc mounted in the ceiling of the oven cavity and deposited on the edge of the wave guide. The accumulation of steam and oil vapors in and around the wave guide opening can lead to overheating and fire’—’’
The figures given of 3.5 million products and a maximum estimated dollar exposure of $235 million calculate (when divided) to approx. $67 per unit. From my experience, that number is probably somewhere close to the nationwide average for a Whirlpool single-call warranty reimbursement rate — hmmm? We will be carefully watching for developments here and report meaningful information on this News Update page on the ASN Web site, as well as reporting to you in the magazine itself.
Justice Department requests more information on the Whirlpool-Maytag merger
Whirlpool and Maytag announced on Friday, October 7, that the Antitrust Division of the Department of Justice has requested additional information and documentary material regarding their proposed merger. Such a request is typical in such transactions.
Whirlpool and Maytag are working closely with the Department of Justice and plan to cooperate fully with its investigation and to respond promptly to its request. Both parties continue to expect the transaction to close as early as the first quarter of 2006, following approval from Maytag shareholders and regulatory clearance.
Here’s some astonishing (good news for servicers!) changes in product warranty from Electrolux and Whirlpool:
(see your December issue of ASN for complete details)
In what is seen as an extraordinary, historical change by Whirlpool and Electrolux, both manufacturers have announced a shortened and complete simplification of consumer product warranties. The basic news is that the initial consumer warranty on products will be one-year parts and labor — period! No extended manufacturer warranty on sealed systems, washer tubs, EOC’s, ceramic stovetops, etc. Extended warranty plans will be available for purchase by consumers.
For manufacturers and retailers, this will probably mean an enhanced and invigorated attempt to sell extended service plans ‹ maybe something similar to the “full-court press” by salespeople at Sears to sell such contracts.For servicers (even manufacturer-owned branches), this means added opportunities for parts sales and an earlier opportunity for cash labor services. It also means that previously non-warranty, independent servicers are going to need to get “boned-up” on product training, because they are going to be seeing and attempting repairs on new products as soon as 12 months after purchase.
It also means that warranty servicers will need to be diligent and relentless in all internal followup and marketing efforts in order to preserve a relationship with their warranty customers lest they be seized by well-managed, well-trained competitive, independent, non-warranty servicers. The effective dates for these changes vary by manufacturer: EHP’s warranty changes are effective January 1, 2006 and exclude their premium ICON brand. In addition, replacement parts will be guaranteed for 90 days instead of the current one-year.
Whirlpool’s effective date is for all products manufactured on or after November 1, 2005. Like EHP’s ICON brand, the premium KitchenAid brand warranty will remain essentially the same.
Sources at GE and Maytag were unaware of any changes to their product warranty periods at this time.
Stay tuned for a complete and thorough analysis of this dramatic news as well as the “spin” from each manufacturer in the December, 2005 issue of ASN. Contact Captain Toolhead if you have feedback or comments on these changes and how they may affect your business
On September 13, Whirlpool reportedly notified the U.S. Department of Justice and the U.S. Federal Trade Commission of its intent to acquire Maytag. This apparently opens the door to the government to plan its investigation of antitrust concerns.
(return to top)
Justice Department requests more information on the Whirlpool-Maytag merger
Whirlpool and Maytag announced on Friday, October 7, that the Antitrust Division of the Department of Justice has requested additional information and documentary material regarding their proposed merger. Such a request is typical in such transactions.
Whirlpool and Maytag are working closely with the Department of Justice and plan to cooperate fully with its investigation and to respond promptly to its request. Both parties continue to expect the transaction to close as early as the first quarter of 2006, following approval from Maytag shareholders and regulatory clearance.
Here’s some astonishing (good news for servicers!) changes in product warranty from Electrolux and Whirlpool:
(see your December issue of ASN for complete details)
In what is seen as an extraordinary, historical change by Whirlpool and Electrolux, both manufacturers have announced a shortened and complete simplification of consumer product warranties. The basic news is that the initial consumer warranty on products will be one-year parts and labor — period! No extended manufacturer warranty on sealed systems, washer tubs, EOC’s, ceramic stovetops, etc. Extended warranty plans will be available for purchase by consumers.
For manufacturers and retailers, this will probably mean an enhanced and invigorated attempt to sell extended service plans ‹ maybe something similar to the “full-court press” by salespeople at Sears to sell such contracts.For servicers (even manufacturer-owned branches), this means added opportunities for parts sales and an earlier opportunity for cash labor services. It also means that previously non-warranty, independent servicers are going to need to get “boned-up” on product training, because they are going to be seeing and attempting repairs on new products as soon as 12 months after purchase.
It also means that warranty servicers will need to be diligent and relentless in all internal followup and marketing efforts in order to preserve a relationship with their warranty customers lest they be seized by well-managed, well-trained competitive, independent, non-warranty servicers. The effective dates for these changes vary by manufacturer: EHP’s warranty changes are effective January 1, 2006 and exclude their premium ICON brand. In addition, replacement parts will be guaranteed for 90 days instead of the current one-year.
Whirlpool’s effective date is for all products manufactured on or after November 1, 2005. Like EHP’s ICON brand, the premium KitchenAid brand warranty will remain essentially the same.
Sources at GE and Maytag were unaware of any changes to their product warranty periods at this time.
Stay tuned for a complete and thorough analysis of this dramatic news as well as the “spin” from each manufacturer in the December, 2005 issue of ASN. Contact Captain Toolhead if you have feedback or comments on these changes and how they may affect your business
On September 13, Whirlpool reportedly notified the U.S. Department of Justice and the U.S. Federal Trade Commission of its intent to acquire Maytag. This apparently opens the door to the government to plan its investigation of antitrust concerns.
(return to top)
MAYTAG: THE SAGA CONTINUES News and commentary by Captain Toolhead
On June 30, Maytag announced that it had received a preliminary non-binding proposal from Bain Capital Partners LLC, Blackstone Capital Partners IV LP and Haier America Trading, LLC to acquire all outstanding shares of Maytag for $16-per-share cash.
That proposal came after Maytag had agreed in mid-May to be acquired by an investor group led by Ripplewood Holdings LLC for $14-per-share cash.
According to the Haier proposal, completion of details was expected to take 6-8 weeks, and be conditioned, among other things, on negotiating an agreement and approvals.
Triton Acquisition Holding Co. (an entity organized by an investor group led by Ripplewood) subsequently advised that Maytag’s continued furnishing of information to and discussions with Haier gave Triton the right to terminate their merger agreement and receive a $40 million termination fee.
Even if this was merely posturing on the part of the Ripplewood group, what else could go wrong for Maytag? Triton also advised Maytag that the process of engaging in discussions with Haier was resulting in disruption and uncertainty that is damaging to Triton and is likely to be damaging to Maytag. However, Maytag indicated the merger agreement gives them the right to furnish information to Haier, and that doing so does not give Triton a right to termination.
After a special meeting of its board, Maytag said that, while it intends to proceed with further discussions with Haier, there is no assurance that the preliminary non-binding proposal would result in a definitive agreement.
So, where does this whole thing now stand? Maytag seems to be in a bit of a bind. Their shareholders are scheduled to vote on the Ripplewood proposal soon. In the meantime, there is an offer that could possibly get shareholders two bucks more per share than Ripplewood is offering. What would you do as a stockholder?
Some shareholders are institutional investors holding thousands of shares. Two bucks per share is not “chump change” to them, but Maytag announced on July 13 that it had scheduled a special meeting of stockholders for August 19 to consider and vote on adopting the merger agreement with Ripplewood. Maytag stockholders of record at July 20 are entitled to vote on the transaction. Definitive proxy material was to be mailed on or about July 20.
Industry analyst and writer Daniel Gross sees a clear differentiation between the Ripplewood $14 offer and the $16 offer by Haier. “Ripplewood”, he says, “like other private equity firms that have snapped up faded industrial companies, is a classic financial buyer. It strives to gain assets on the cheap, slash costs, get the balance sheet in shape, and move on. It almost doesn’t matter what industry the company operates in, so long as the numbers come out right. Financial buyers are willing to pay some premium to gain control of a company, but not a huge one.”
Gross thinks that Haier, by contrast, is a strategic buyer. “Strategic buyers,” Gross says, “look beyond cash flow and hard assets. Rather, they consider how all the target’s assets ’ everything from its cash on hand to its brand name ’ can further its core strategy. Maytag’s intangible assets ’ its brand, its management, its century of washing-machine-making experience, and distribution relationships ’ are what Haier finds most appealing. Potential American strategic buyers, such as, say, Whirlpool might view Maytag’s assets as irredeemably damaged and wasting. But for a Chinese firm like Haier, even Maytag’s tarnished good name is a vast improvement over what it has. It can take decades and tons of money to build name recognition among U.S. consumers. Now Haier can buy it in a matter of weeks.” (return to top)No sooner had we speculated, “What if a third potential buyer surfaces?” than a press release arrived from Whirlpool announcing its proposal to acquire Maytag for $17 per share.
This creates all sorts of new questions, issues and considerations. These issues will test Maytag’s directors’ ability to sort it all out and make intelligent decisions that will most benefit the company and its shareholders without undue delay and a continuing sense that Maytag is “confused” about which direction to proceed. Indeed, there are tough decisions to be made.
Here’s how The Wall Street Journal describes Maytag and the reason for Whirlpool’s interest: “… investors have viewed Maytag as a broken company, weighed down by high labor costs, slack innovation and new competition from mainly Asian-based competitors. But Whirlpool’s interest shows the commercial potency of Maytag’s brand names …” The Whirlpool deal seems closer to a “strategic sale” as opposed to a financial one. It does, however, create more antitrust issues than either of the other offers.
According to a Journal analysis of this “three-way scrum” for Maytag, many analysts thought that Whirlpool’s size would “disqualify it from bidding for its Iowa rival.” The Whirlpool offer values Maytag at almost 35 times expected 2005 earnings of 49 cents a share. That’s almost three times Whirlpool’s forward P:E of 12.
Although the antitrust implications are obvious on the surface, the WSJ analysis suggests that “the ($16) bid by Haier threw a wild card into the mix that may have benefited Whirlpool.
The Chinese-backed offer for a Midwestern business icon contributed to the consternation in Washington in recent weeks over investment ambitions by the Asian nation for U.S. businesses. Now, Whirlpool and Maytag could argue that the market for appliances isn’t merely a domestic one, but a global one. And the two firms, even combined, wouldn’t hold nearly the sway over an international marketplace.” Whirlpool’s chairman/president/CEO Jeff M. Fettig said “We are confident that the (antitrust) regulatory approvals will be obtained.” That would indicate that Whirlpool seems certain of leaping the antitrust hurdle or at least being able to do it without having to dismantle Maytag in any significant way.
It would seem that there is no way that the scheduled August 19 shareholder meeting to vote on the Ripplewood offer can take place while discussions are going on for the Haier bid as well as additional possible discussions on the Whirlpool bid
. The total value of Whirlpool’s proposal represents a 21-percent premium over the price offered by Triton and the transaction is valued at $2.3 billion in cash and stock (based on assumed debt of $969 million).
“This transaction will provide Maytag shareholders with superior value compared to the current offer,” said Fettig. “Equally important, the combination fits Whirlpool’s strategy and capabilities, will create strong value for our shareholders and provide direct benefits to consumers and trade customers.”
Printed in full here is the text of the letter sent to Maytag by Whirlpool. Note the superficial and subtle mention of the Haier consortium in the text of the letter and the emphasis that their offer would give Maytag shareholders considerably more value than the other offers.July 17, 2005
Mr. Ralph F. Hake
Chairman & CEO
Mr. Howard L. Clark, Jr.
Chairman, Special Committee of the Board of Directors
Maytag Corporation
403 West Fourth Street
Newton, IA 50208Dear Messrs. Hake and Clark:
We are pleased to submit a proposal to acquire Maytag in a transaction that will provide your shareholders substantially greater value than your pending sale to the private equity consortium known as Triton. As you will appreciate, our proposal is based solely on our review of publicly available information about Maytag.
We are proposing to acquire all of Maytag’s outstanding shares by means of a merger providing Maytag shareholders consideration valued at $17 per Maytag share, of which at least 50% would be paid in cash and the balance in shares of Whirlpool common stock.
Our proposal is demonstrably superior to Triton’s, both financially and strategically. It will provide the immediate opportunity for your shareholders to realize substantially greater value for their shares ’a 21% premium over the Triton price. Moreover, your shareholders will have the opportunity to realize greater long-term value through the truly unique attributes of a Whirlpool-Maytag combination.
As you know, we operate in a highly competitive marketplace where trade customers and consumers have a large and growing choice of brands, products and suppliers, including a growing number of foreign appliance companies. Together we can achieve substantial efficiencies that will deliver cost savings, increased innovation and better asset utilization. With these efficiencies, and Whirlpool’s track record of ’ and commitment to ’ investing in innovation, quality and customer service, our combined company will be well positioned to offer great value to consumers and to trade customers. And as part of Whirlpool, we can ensure that Maytag remains a trusted brand for years to come.
Our proposal represents a “Company Takeover Proposal” that clearly meets the standards set forth in Section 5.02(c) of the existing merger agreement.
First, it is more favorable to Maytag shareholders from a financial point of view than the pending sale. Second, it is reasonably capable of being completed, taking into account all financial, regulatory, legal and other aspects of the proposal. Accordingly, it allows Maytag to provide us with due diligence and to participate in negotiations and discussions with us.
Our proposal is subject to our satisfactory completion of due diligence and negotiation of a mutually acceptable definitive agreement. The August 19, 2005 date you just set for your shareholders meeting compels both of us to work to achieve a definitive agreement prior to that date.
In this regard, we are prepared to execute a confidentiality agreement on the terms required by Section 5.02(c). We and our legal advisor, Weil Gotshal & Manges, our financial advisor, Greenhill & Co., and our business consultant, The Boston Consulting Group, are ready to immediately review the due diligence information you have provided to Triton and are currently providing to the Haier America consortium. We and our advisors also are ready to immediately negotiate a definitive merger agreement with you. We anticipate that our agreement will be based substantially on your existing merger agreement with Triton.
Our understanding is that, because of the notice provisions of your agreement with Triton, we must be in a position to submit our firm offer no later than August 9, 2005 so that you will be in a position to terminate the agreement with Triton and enter into the superior merger agreement with Whirlpool prior to your shareholders meeting. We are prepared to meet this deadline. However, as each day forward is critically important to our doing so, your board must take action to permit us to begin our due diligence immediately.
We trust you and Maytag’s other directors will respond immediately and positively to our proposal. We look forward to working with you to achieve what will be a compelling transaction for the shareholders and customers of our two companies.
Very truly yours,
Jeff M. Fettig Chairman,
President & CEO
Whirlpool Corporation
cc: The Board of Directors Maytag CorporationSo, with these latest developments, here are some additional questions that arise:
Who will prevail in this takeover battle? What else could happen? A fourth bidder perhaps? An (early-on) negative antitrust ruling on the Whirlpool takeover bid? Congressional legislation to nix the Haier deal? A decision by Maytag to “gut-it-out” by themselves with the benefit of their new $500 million financing deal and the use of an experienced “turnaround guru”? Will the previous bidders for Maytag up their offering price, almost like an auction? (Who remembers the old song?, “The Auctioneer” …will ya gimme thirty now ’thirty, thirty, thirty ’will ya gimme thirty ’who’ll gimme thirty ’who’ll gimme a thirty dollar bid …! Do you think Ralph Hake can sing? Things must really be on edge in downtown Newton these days.
With the Hoover vacuum cleaner market share dropping from 40% to 15% in five years and the average price of a vacuum falling to “throw-away” levels, why not jettison the Hoover “loser” and attempt to recover doing what made Maytag in the first place ’focusing on reliable major appliances that people desire.
What will happen if Ripplewood follows through on their threat to terminate their agreement with Maytag and demand the $40 million termination fee because of their claim that Maytag has defaulted on their agreement by talking to either the Haier group or Whirlpool?
What if this issue gets wrapped up in the courts? How can Maytag and their employees retain their focus when all this takeover business must be detracting from their concentration levels? Of course, Maytag must still attempt to perform their day-to-day operations, pursue increased sales and strive to become more efficient. Still, many good company initiatives must be just idling around a bit while the smoke clears on who is going to own the company. (return to top)Maytag executives must feel “busier than a one-armed paper hanger”!
The late news is that the Haier group in a letter to Maytag said that they are no longer interested in being a contender.
Qingdao Haier is China’s largest appliance manufacturer. The company produces refrigerators, laundry products, dishwashers and small appliances.
Haier has expanded internationally with factories in Algeria, Mexico, Iran and Southeast Asia. Its first U.S. factory in Camden, S.C. opened in 2000. Remember amid all this turmoil that in May, Maytag’s board accepted and signed off on a $14-a-share proposal from an investment group, Triton Acquisition Holding, led by Ripplewood Holdings.
As of this date, Ripplewood is pressuring Maytag that they will nix that deal and demand a $40 million termination fee that is provided for in that May agreement.
If you ever wondered why Electrolux has not gotten involved in the bidding, EHP has already announced that they had taken a look at doing just that, but had decided that the “fit” wasn’t just right and they would not pursue a proposal for the company. That was some time ago. Now that Haier has pulled out as a bidder, who knows what EHP may do? (return to top)VERY LATE MAYTAG EARNINGS AND OTHER NEWS
Maytag reported second-quarter consolidated sales of $1.23 billion, up 6.7 percent from sales of $1.15 billion in the same period last year. Reported net income for the second quarter was $3.5 million or 4 cents per share, compared with a net loss of $41.1 million, or 52 cents per share. Second-quarter sales were up year-over-year in all major categories ’ refrigeration, laundry, cooking, dishwashing and floor care. Sales of commercial products declined versus a year ago, a result of continued weakness in the vending industry.
Maytag chairman/CEO Ralph Hake said that sales of major appliances showed solid improvement during the quarter with refrigeration and cooking product sales up appreciably.
“Sales of our French-Door bottom-freezers under the Jenn-Air, Maytag and Amana brand names are strong. In cooking, all Jenn-Air products, including cooktops and wall ovens generated positive gains for the company. Also, Jenn-Air stainless steel dishwashers and Maytag’s new Neptune front-load washers have generated encouraging consumer interest this quarter.”
Maytag Services and Maytag International continued to produce strong revenue growth compared to the second quarter of 2004.
“Compared to last year, operations benefited from sales growth, a positive mix in major appliances, and savings from our ‘One Company’ restructuring and the Galesburg plant closing,” said Hake. “However, these improvements were offset by rising raw material costs including steel and resins, higher fuel and transportation costs, and lower floor care pricing.”
Maytag reported sales were up from the first quarter of 2005 due to refrigeration sales beyond normal seasonal increases. Operating income was down from the first quarter of 2005, due to planned national advertising expenditure increases, which more than offset any benefit from increased sales.
Maytag’s sales in the first six months of 2005 were $2.4 billion, up one percent from sales of $2.37 billion in the first six months of 2004. Operating income was $43.8 million, up from $30.2 million reported in the year-earlier period. Reported net income for the first six months of 2005 was $11.2 million, or 14 cents per share. In the first six months of 2004, Maytag reported a net loss of $2.4 million, or 3 cents per share. Maytag reaffirmed that its earnings per share estimate for the full year 2005 are expected to be in the range of 45 to 55 cents.
Maytag also reported that its board of directors was unable to determine that the Whirlpool proposal announced on July 17 may reasonably be expected to lead to a financially superior transaction that is reasonably capable of being completed.
Maytag further stated that such a determination is a prerequisite under Maytag’s existing merger agreement with the Ripplewood-led group for Maytag to furnish information to and have discussions and negotiations with Whirlpool.
Maytag will continue to evaluate the Whirlpool proposal and that (as of the deadline for ASN) Maytag said that its board has not changed its recommendation concerning the existing Ripplewood-led transaction.
Additional “fallout” from Maytag’s intention to seek a buyer comes from documents filed with the SEC that include the following three legal proceedings noted from a 10Q report filed on July 22. These are reprinted in full here from the 10Q report because they are interesting and allege a violation of the fiduciary duties of certain Maytag executives and the board of directors:Sheet Metal Workers Local #218(S) Pension Fund v. Maytag Corporation. On May 26, 2005, Sheet Metal Workers Local #218(S) Pension Fund filed a complaint on its own behalf and on behalf of an alleged class of the Company’s stockholders against the Company and its directors Barbara Allen, Howard Clark, Jr., Lester Crown, William Kerr, Ralph Hake, Wayland Hicks, James McCaslin, Bernard Rethore, W. Ann Reynolds, Neele Stearns, Jr., and Fred Steingraber in Iowa District Court, Jasper County. The complaint alleges, among other things, that the directors violated their fiduciary duties to the Company’s stockholders by, among other things, agreeing to sell the Company at an “artificially depressed” price before the impact of the Company’s recent restructuring efforts was reflected in its stock price, by causing the Company to enter into agreements that provide severance benefits to the Company’s officers in the event that they are terminated following a change of control, and failing to disclose non-pubic information concerning the value of the Company to stockholders.
The complaint seeks, among other relief, certification of the alleged class, an injunction preventing completion of the merger (or rescinding the merger if it is completed prior to the receipt of such relief), the imposition of a constructive trust in plaintiff’s favor upon any benefits improperly received by defendants, and an award of attorneys’ fees and expenses. The Company believes this action is without merit and intends to defend it vigorously.
In re Maytag Corp. Shareholder Litigation. Between May 20 and 31, 2005, seven purported class action complaints were filed in the Delaware Court of Chancery for New Castle County by plaintiffs Market Street Securities, Inc., Herbert Resnik, David Roitman, Hindie Silver, Louis Rubinstein, David Birnbaum and Morris Gurt, on their own behalves and on behalf of an alleged class of the Company’s stockholders, against the Company and its directors Barbara Allen, Howard Clark, Jr., Lester Crown, William Kerr, Ralph Hake, Wayland Hicks, James McCaslin, Bernard Rethore, W. Ann Reynolds, Neele Stearns, Jr., and Fred Steingraber. These actions were thereafter consolidated into one action, and a consolidated and amended class action complaint was filed on July 15, 2005.
The amended complaint alleges, among other things, that the merger consideration to be paid to the Company’s stockholders in the Ripplewood merger is inadequate and unfair. The amended complaint further alleges that the Company’s directors violated their fiduciary duties to the Company’s stockholders by, among other things, failing to maximize stockholder value, by failing to complete a “meaningful market-check” of the Company’s value before entering into the merger agreement with Ripplewood, and by agreeing to a merger agreement that contained a $40 million termination fee “designed to deter more competitive offers for the Company.”
The amended complaint seeks, among other relief, certification of the alleged class, preliminary and permanent injunctive relief against consummation of the merger (or rescinding the merger if it is completed prior to the receipt of such relief), an order directing the disclosure of all material information, compensatory and/or rescissory damages to the class, and an award of attorneys’ fees and expenses. The Company believes this consolidated action is without merit and intends to defend it vigorously.
Yellen v. Hake. On July 5, 2005, Barry Yellen filed a complaint against the Company, Chief Executive Officer Ralph Hake, and Chief Financial Officer George C. Moore, in the United States District Court for the Southern District of Iowa for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The complaint, brought on behalf of a purported class of purchasers of the Company’s common stock between March 7, 2005 and April 21, 2005, alleges, among other things, that the defendants knowingly or recklessly made materially false statements in a press release and at an investor conference on March 7, 2005 regarding the Company’s expected earnings range in 2005, and that defendants made such statements seeking to inflate the price of the Company’s shares in conjunction with ongoing negotiations to sell the Company to Ripplewood. The complaint seeks, among other relief, certification of the alleged class, unspecified compensatory damages, and an award of attorneys’ fees and expenses. The Company believes this lawsuit is without merit and intends to defend it vigorously.
In terms of the third lawsuit, printed here is the press release of March 7, 2005 that these shareholders represent as being “misleading”:
Maytag Corporation (NYSE: MYG) today reaffirmed its business strategies and guidance during the 26th annual Raymond James Institutional Investors Conference in Orlando, Fla., saying that Maytag is a much different company than it was a year ago. Chairman and CEO Ralph F. Hake commented, “We are realizing the cost savings from our restructuring. We remain focused on developing preferred brands, creating innovative products and achieving best-in-class cost and quality.”
Hake said that the One Company initiative executed in 2004 has transformed the organization into a faster, leaner and more unified Maytag.
“We’re customer-focused and more responsive,” he explained. “We are a flatter organization with fewer layers. We’re shortening the decision-making process and are reducing our time to market.”
The company demonstrated its commitment to product innovation by citing the numerous launches in the first quarter of 2005, including:
• New Maytag Neptune front-loading washers and dryers,
• Jenn-Air floating glass appliance suite,
• Hoover FloorMate hard surface floor cleaner, and
• Hoover SteamVac Duo cleaner.
Maytag continues to look beyond North America as the company expands global sourcing opportunities.
“Our design center in China will supplement existing R&D resources, while we further develop our product supply partnerships with Asian companies,” Hake said.
At the conference, Maytag executives reaffirmed plans to achieve improved earnings in 2005, expected by the company to be in the range of $1.10 to $1.30 per share, including about 5 cents of restructuring charges.
Hake told analysts that Maytag has already realized $30 million in cost savings and is on track to achieve $150 million in annual savings from restructuring. “In addition to reducing the size of our salaried workforce, we have successfully completed the conversion of our computer systems and integrated our sales and marketing teams,” he added.
Two Maytag businesses continue to grow at double-digit rates. Maytag International grew 13 percent in 2004 and is expanding its product line up, entering new markets and adding Maytag Stores in Canada and Mexico. Another bright spot is Maytag Services with 27 percent growth in 2004.
George Moore, Maytag’s executive vice president and chief financial officer, said aggressive cost-saving initiatives and appliance pricing increases are expected to offset steel and fuel cost increases, which continue to pressure profitability. He expects material costs to be an on-going challenge in 2005.
As you might imagine, every day brings new developments to this ongoing story. Stay tuned and we’ll keep you informed as things develop. Feedback on this industry situation would be helpful and interesting and informative.
Think about what is happening here and tell us what you are thinking. (return to top)AND AS OF July 22:
Whirlpool announced on July 22 that it had increased the value of its proposal to acquire Maytag to $18 per Maytag share from $17 per share.
“By delaying a prompt response and failing to recognize the clearly superior value of our July 17 proposal, the Maytag Board of Directors has jeopardized this important opportunity for consumers, trade customers and shareholders of both Maytag and Whirlpool,” said Jeff M. Fettig, Whirlpool’s chairman, president and CEO. “This amended proposal includes additional
terms that we believe should fully address any concerns of the Maytag Directors.”
The amended proposal is a 29-percent premium to Maytag shareholders compared to the Triton offer. The details of the amended proposal are contained in a letter (shown here) that has been delivered to the Maytag Board. The letter reinforces the Company’s continuing strong belief that the proposed transaction will receive antitrust clearance and has over-whelming support from trade customers.
Fettig added: “This proposal is the best solution with clearly superior value compared to the Triton offer. I expect the Maytag Board of Directors to do what’s best for Maytag shareholders and immediately and fully support this proposal.”
(return to top)
LETTER FROM FETTIG TO MAYTAG:
July 22, 2005
Mr. Ralph F. Hake
Chairman & CEO
Mr. Howard L. Clark, Jr.
Chairman, Special Committee of the Board of Directors
Maytag Corporation
403 West Fourth Street
Newton, IA 50208
Dear Messrs. Hake and Clark:
I am writing to respond to the announcement Maytag issued yesterday evening.
First, I would like to express Whirlpool’s disappointment that the Maytag Board of Directors was “unable to determine” that Whirlpool’s July 17 proposal “may reasonably be expected to lead to a financially superior transaction that is reasonably capable of being completed.” We believe, there can be no question our July 17 proposal met this standard and, thus, we should have had immediate access to due diligence and an immediate ability to enter into discussions and negotiations with you.
As we said on July 17, our proposal is a great opportunity to create value for the shareholders, trade customers and consumers of both companies. By your indecision, you have jeopardized this opportunity.
The transaction that we have proposed derives its value from important efficiencies and the opportunity for Maytag brand revitalization. These benefits are uniquely available in a Maytag acquisition by Whirlpool. This transaction certainly is neither motivated by, nor could it produce, anticompetitive effects. In order to facilitate your prompt review of
antitrust questions, we asked our antitrust counsel immediately to summarize the basic analysis that underlies our confidence in the likelihood of antitrust clearance. We provided that information to you on Tuesday. An initial positive reaction by trade customers to the proposed transaction, which is the ultimate market litmus test, reinforced the numerous reasons why anticompetitive harm is so implausible.
Support by large and sophisticated trade customers, as well as small and
medium size trade customers, the very groups that would be purported victims
of any anticompetitive harm, should provide Maytag with confidence that the
proposed transaction poses no risk to competition and will receive prompt
antitrust clearance. Whirlpool has received overwhelming positive support from trade customers. We contacted the top 20 trade customers and buying groups, including the top four retailers and top three buying groups that represent 90% of retail appliance sales. To date, we have received 17 letters of support and we expect another on Monday. Two trade customers of the 20 are neutral or supportive, but as a matter of policy are unable to so state in a letter. The proposed transaction is also supported by small and medium sized retailers, as evidenced by the support of NARDA, which
represents over 3000 retail storefronts. We are prepared, on condition of
confidentiality, to share with you the trade customer letters we have received. A redacted representative sample letter from a major retailer is attached.
We are making one final request that your Board make the determination that is clearly correct and clearly in the best interests of your shareholders. To address any residual concerns your Board may have, we are supplementing and amending our July 17 proposal in the following respects:
• First, we are increasing the total value of the consideration we would
provide your shareholders to $18 per Maytag share. This increases to nearly
29% the premium Maytag shareholders would receive compared to the existing
transaction.
• Secondly, while the enhancement of our already superior proposal is
designed to take into account your antitrust concerns, we are also willing
to discuss reasonable mechanisms to address these concerns, including a
reverse break-up fee and payment of the contractual break-up fee to Triton
upon Maytag’s termination of the existing agreement to enter into a
definitive agreement with Whirlpool, all as a part of the overall value of
our proposal.
As we emphasized in our proposal five days ago, we have a very short
timeframe in which to conduct due diligence and negotiate a definitive
agreement given the schedule established by the Maytag Board. We have now
lost a week. Every day forward is even more critical than before
.
Accordingly, we expect to hear from you by 6:00 p.m. (Eastern time)
Sunday so that we can enter into a confidentiality agreement, have our due
diligence team on site and working at your data room and commence
discussions and negotiations with you on Monday.
Very truly yours,
Jeff M. Fettig
Chairman, President & CEO
Whirlpool Corporation
cc: The Board of Directors
Maytag Corporation
(return to top)MAYTAG RESPONDS TO REVISED WHIRLPOOL PROPOSAL
Maytag announced on July 24 that its board of directors had determined that Whirlpool’s revised proposal, announced on July 22, may reasonably be expected to lead to a transaction that is financially superior to Maytag’s pending transaction with the Ripplewood-led Triton Acquisition group and that is reasonably capable of being completed. Under Maytag’s existing merger agreement with Triton, this determination was a prerequisite for Maytag to furnish information to, and have discussions and negotiations with, Whirlpool.
Maytag stated that, in reaching its determination, the board took into account Whirlpool’s representation as to a complete lack of opposition to the transaction from the top 20 trade customers and buying groups, including the top four retailers and top three buying groups that represent 90 percent of retail appliance sales.
Maytag said that it expects that the terms of a definitive agreement, if any, with Whirlpool will take into account the risks to Maytag of non-consummation, Whirlpool’s assertion that the antitrust clearance process can be completed by the end of 2005, and Whirlpool’s overwhelming confidence that there is no antitrust problem in a Maytag/Whirlpool combination. For example, Whirlpool has publicly stated that the transaction poses “no risk to competition,” that it is “not motivated by, nor could it produce, anticompetitive effects,” and that “there is no plausible concern that competition would diminish in any product category.”
Maytag also reported that following the making by Whirlpool of its earlier proposal, Triton informed Maytag that, in Triton’s view, the transaction proposed by Whirlpool did not satisfy the prerequisites for Maytag’s board making the determination required under the merger agreement in order to furnish information to, and have discussions with, Whirlpool,
including that such transaction “is reasonably capable of being completed, taking into account all financial, regulatory, legal and other aspects.” Triton also advised Maytag that discussions and negotiations by Maytag with Whirlpool would give Triton the right to terminate the existing merger agreement. Maytag believes that its actions are in accord with the merger
agreement and do not give Triton any termination rights. Maytag also said that its board has not changed its recommendation of the existing Maytag/Triton Acquisition transaction. Notwithstanding the determination that the Whirlpool proposal may reasonably be expected to lead
to a financially superior transaction that is reasonably capable of being completed, Maytag noted that the Whirlpool proposal is, among other things, uncertain as to the timing of completion, the form of consideration and the valuation of any stock consideration, Whirlpool’s due diligence process, and
the mechanisms referred to by Whirlpool to address regulatory and other closing risks. Maytag noted that before it would be willing to share competitively sensitive information it would require greater certainty with respect to these and other issues. In contrast, the Triton transaction is expected to close within a month and, subject to shareholder approval and
completion of financing, has already satisfied the major conditions to closing. (return to top)
WHIRLPOOL ENTERS INTO CONFIDENTIALITY AGREEMENT WITH MAYTAG
Whirlpool announced on July 27 that it had entered into a mutual confidentiality agreement with Maytag, which allows the companies to immediately begin incisive discussions about its proposed acquisition.
We now await Maytag’s version of this same agreement. It is unlikely that much information will be flowing from either company until this phase of negotiations is completed.
Of particular interest is the timing of a mid-August meeting of Maytag shareholders to vote on the earlier Ripplewood proposal. Will it occur as scheduled or be delayed?
Stay tuned …
(return to top)Re: Whirlpool/Maytag
More information and commentary by Captain Toolhead
The following has been excerpted from Security and Exchange Commission filings that are required by law of corporations engaging in acquisition discussions. They are interesting not only as they relate to the major appliance industry, but also in terms of the unbelievable amount of legal work that must be done by both corporations to protect themselves from lawsuits by shareholders or possible violation of federal rules and regulations. Here are:
1. An informational SEC filing by Whirlpool
2. Detailed explanation of a confidentiality agreement signed on July 26
3. Maytag stockholder letter and revised proxy statement dated August 2
4. Maytag’s “Forward-Looking Statements” designed to protect the corporation in case they were to somehow mislead investors.
5. Whirlpool’s “Forward-Looking Statements”
1. INFORMATIONAL SEC FILING Filed by: Whirlpool Corporation Pursuant to Rule 425 under the Securities Act of 1933 Subject Company: Maytag Corporation Commission File No: 1-655 On August 1, 2005, Whirlpool Corporation (“Whirlpool”) advised Maytag Corporation (“Maytag”) that, as of July 31, 2005, of Whirlpool’s top 20 trade customers (determined on the basis of revenue from all channels and all products), Whirlpool’s top five retail buying groups and NARDA, 22 of the 26 have written letters supporting Whirlpool’s proposed acquisition of Maytag and the balance have not indicated opposition. On August 1, 2005, Whirlpool further advised Maytag that, as of July 31, 2005, of the top four major appliance retailers, one has written a letter of support, two have indicated they are not opposed but as a matter of corporate policy do not write such letters and the fourth has by policy declined to comment.
2. CONFIDENTALITY AGREEMENT INFORMATION On July 26, 2005, the company and Whirlpool entered into a confidentiality agreement containing provisions with respect to confidentiality of information that one party may determine to furnish to the other party, as well as provisions with respect to solicitation and hiring of each other’s employees. In addition, the parties also agreed in the confidentiality agreement to certain standstill provisions, including that, for a period of three years, without the permission of the other party, neither party would take certain actions with respect to the other party, including acquiring or offering to acquire the securities, assets or indebtedness of the other party, participating in any merger, other business combination, recapitalization, restructuring, liquidation or other extraordinary transaction with respect to the other party, participating in any solicitation of proxies or consents to vote any voting securities of the other party, or otherwise influencing the voting of any securities of the other party, forming or participating in any “group” with respect to the other party, acting to seek representation on or to control or influence the management, board of directors or policies of the other party, taking any action that would reasonably be expected to force the other party to make a public announcement regarding any of the matters described above, entering into any discussions or arrangements with any third party with respect to the foregoing, or requesting permission to do any of the foregoing. The parties further agreed that, notwithstanding the foregoing restrictions, in the event that the company’s merger agreement with Triton Acquisition Holding is not adopted by the company’s stockholders after a vote by the company’s stockholders at a meeting duly held, or is terminated, then Whirlpool may make proposals to the Maytag Board and communicate to the company’s stockholders regarding such proposals. The parties also agreed that Whirlpool may submit to the Maytag Board a proposal to acquire the company no later than noon on August 9, 2005, but that following such submission, the standstill provisions will continue to apply, except that if the Maytag Board determines that the proposal so submitted by Whirlpool is a superior company proposal (as defined in the section of the proxy statement entitled “THE MERGER AGREEMENT–Permitted Solicitation of Takeover Proposals”), then nothing in the standstill paragraph will preclude Whirlpool from modifying the terms of such proposal on one or more occasions to increase the value of the per share consideration to be received by the company’s stockholders under such proposal or to change any other term, provision or condition of such proposal in a manner more favorable to the company or its stockholders, provided, however, that (a) there will be no other change in any term, provision or condition of such proposal and (b) such proposal as so modified must remain open and capable of acceptance by the company for a period 96 hours plus five business days from the time it is received by the company. The standstill provisions do not prevent Whirlpool or Maytag from making any disclosure required by the federal securities laws.
3. STOCKHOLDER LETTER, REVISED PROXY INFO
Dear Fellow Stockholder: We have previously sent to you proxy material for the important Special Meeting of Stockholders of Maytag Corporation to be held on August 19, 2005. Your Board of Directors has recommended that stockholders vote FOR the merger providing for the acquisition of Maytag by Triton Acquisition Holding Co. Since approval of the merger requires the affirmative vote of a majority of the outstanding shares, your vote is important. Whether or not you have already done so please vote TODAY–by telephone, via the Internet, or by signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. We encourage you to read the accompanying document carefully because it contains important supplemental information concerning important recent developments relating to the proposed acquisition of Maytag by Triton Acquisition Holding Co. These developments include the withdrawal of the proposal from Bain Capital Partners LLC, Blackstone Capital Partners IV L.P., and Haier America Trading, L.L.C. to acquire Maytag and developments regarding the proposal from Whirlpool Corporation to acquire Maytag. These developments occurred following the mailing to you on or about July 20, 2005 of the notice of Special Meeting of Stockholders of Maytag and the proxy statement. If you have already voted on the Triton Acquisition Holding merger agreement and wish to change your vote, you may do so by using the enclosed new proxy card or by voting via the Internet or by telephone as described in the proxy statement mailed to you on or about July 20, 2005. If you have already voted on the Triton Acquisition Holding merger agreement and do not wish to change your vote, your original vote will be counted. We cannot complete the Triton Acquisition Holding merger agreement unless holders of a majority of the outstanding shares of Maytag common stock vote to approve it. You may revoke your vote at any time before the vote is taken at the special meeting, except as otherwise described in the proxy statement mailed to you on or about July 20, 2005, by filing written notice of revocation with our Secretary, which is dated a later date than the proxy, submitting a duly executed proxy bearing a later date, voting via the Internet or by telephone as described in the proxy statement mailed to you on or about July 20, 2005 or voting in person at the special meeting. Sincerely, Ralph F. Hake Chairman and Chief Executive Officer This proxy statement supplement is dated August 2, 2005 and is first being mailed to stockholders on or about August 2, 2005. This proxy statement supplement is being furnished by the board of directors of Maytag Corporation in connection with the solicitation of proxies for use at the Special Meeting of the Stockholders of Maytag to be held on August 19, 2005 in respect of the vote relating to the proposed adoption of the Triton Acquisition Holding merger agreement, to be convened and held at
10:30 a.m., local time, on Friday, August 19, 2005, at the Sodexho Marriott Conference Center auditorium, 600 North Second Avenue West, Newton, Iowa, and at any adjournments or postponements thereof. It amends and supplements the proxy statement of Maytag dated July 18, 2005, which was first mailed to stockholders on or about July 20, 2005. This supplement, which you should read in conjunction with the July 18, 2005 proxy statement, is first being mailed to stockholders on or about August 2, 2005. Capitalized terms used but not otherwise defined herein shall have the respective meanings assigned to them in the July 18, 2005 proxy statement.
4. MAYTAG ‘FORWARD-LOOKING’ STATEMENTS This proxy statement supplement may contain 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,” “believe(s),” “anticipate(s),” “on track,” or similar terms. We or our representatives may also make similar forward-looking statements from time to time orally or in writing. The reader is cautioned 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:
• Maytag may be unable to obtain the Maytag stockholder approval required for the merger;
• Maytag may be unable to obtain regulatory approvals required for the merger, or required regulatory approvals may delay the merger or result in the imposition of conditions that could have a material adverse effect on Maytag or cause the parties to abandon the merger;
• Triton Acquisition Holding and Triton Acquisition may be unable to obtain the requisite financing required to close the merger;
• Uncertainty as to the timing of obtaining regulatory approvals;
• Conditions to the closing of the merger may not be satisfied or the merger agreement may be terminated prior to closing;
• Maytag may be unable to achieve cost-cutting goals or it may take longer than expected to achieve those goals;
• The merger may involve unexpected costs or unexpected liabilities;
• The credit ratings of Maytag or its subsidiaries may be different from what the parties expect;
• The businesses of Maytag may suffer as a result of uncertainty surrounding the merger;
• The industry may be subject to future regulatory or legislative actions that could adversely affect Maytag; and
• Maytag may be adversely affected by other economic, business, and/or competitive factors. These factors may not constitute all factors that could cause actual results to differ materially from those discussed in any forward-looking statement. Our company operates in a continually changing business environment and new factors emerge from time to time. We cannot predict such factors nor can we assess the impact, if any, of such factors on our financial position or our results of operations. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results. Additional factors that may affect the future results of Maytag are set forth in its filings with the Securities and Exchange Commission, which are available at www.maytagcorp.com. Maytag undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
6. WHIRLPOOL ‘FORWARD-LOOKING’ STATEMENTS
This news release contains forward-looking statements that speak only as of this date. The company disclaims any obligation to update such information. Forward-looking statements include, but are not limited to, statements regarding expected earnings per share, cash flow, and material costs for the full year 2005, as well as the expected consequences of enacted price increases. Although the company believes that the expectations reflected in the forward-looking statements are reasonable, it can give no assurance that those expectations will prove to have been correct. Many factors could cause actual results to differ materially from the Company’s forward-looking statements. Among these factors are: (1) the cost of raw materials and components, especially steel and the impact of rising oil prices; (2) the financial impact of the Company’s announced price increases will be dependent upon such factors as the strength of the Company’s brands in the market place, the strength of consumer demand for the Company’s products, and other factors outside of the Company’s control such as the general economic conditions prevailing at the time the new pricing goes into effect; (3) rising worldwide transportation costs due to historically high and volatile oil prices, capacity constraints, and other factors; (4) the ability to gain or maintain market share in an intensely competitive global market; (5) the success of the Company’s global strategy to develop brand differentiation and brand loyalty; (6) the Company’s global operating platform initiatives; (7) the success of the Latin American businesses operating in challenging and volatile environments; (8) continuation of the Company’s strong relationship with Sears Holdings Corporation in North America, which accounted for approximately 17% of consolidated net sales of $13 billion in 2004; (9) currency exchange rate fluctuations; (10) social, economic and political volatility in developing markets; (11) continuing uncertainty in the North American, Latin American, Asian and European economies; (12) the effectiveness of the series of restructuring actions the Company has announced and/or completed through 2004; (13) U.S. interest rates; (14) new Asian competitors; (15) changes to the obligations as presented in the contractual obligations table; (16) changes in the funded position of the U.S. pension plans; (17) continued strength of the U.S. builder industry; (18) the threat of terrorist activities or the impact of war; (19) the Company’s estimate of its annual effective tax rate of approximately 31.7%; and (20) the success of the Company’s proposal to acquire Maytag Corporation and, if the acquisition is completed, the Company’s ability to realize expected benefits. This material is not a substitute for the prospectus/proxy statement Whirlpool and Maytag would file with the Securities and Exchange Commission if a definitive agreement with Maytag is reached. Investors are urged to read any such prospectus/proxy statement, when available, which would contain important information. The prospectus/proxy statement would be, and other documents filed by Whirlpool and Maytag with the Securities and Exchange Commission are, available free of charge at the SEC’s website (www.sec.gov) or from Whirlpool by directing a request to Whirlpool Corporation, 2000 North M-63, Mail Drop 2800, Benton Harbor, MI 49022-2692, Attention: Larry Venturelli, Vice President Investor Relations. Whirlpool is not currently engaged in a solicitation of proxies from the stockholders of Maytag in connection with Whirlpool’s proposed acquisition of Maytag. If a proxy solicitation commences, Whirlpool, Maytag and their respective directors, executive officers, and other employees may be deemed to be participants in such solicitation. Information about Whirlpool’s directors and executive officers is available in Whirlpool’s proxy statement, dated March 18, 2005, for its 2005 annual meeting of stockholders. Additional information about the interests of potential participants will be included in the prospectus/proxy statement Whirlpool and Maytag would file if a definitive agreement with Maytag is reached.WHIRLPOOL PUTS PREMIUMON MAYTAG OFFER
On August 8, Whirlpool announced that it had submitted a binding offer to acquire Maytag for $20 per Maytag share. The total value of the offer represents a 43-percent premium over the price offered by Triton Acquisition Holding in their current agreement with Maytag. This transaction is valued at $2.6 billion in cash and stock (based on assumed debt of $977 million). Whirlpool’s offer is subject to customary conditions including receipt of regulatory approval. Whirlpool’s offer expires at 5 p.m. on August 20, the day after the current date for a meeting of Maytag’s shareholders to vote on the Triton Acquisition merger proposal.Whirlpool’s offer includes a commitment to pay a “reverse break-up fee” of $120 million if the transaction does not close because regulatory approval is not obtained.
Jeff M. Fettig, Whirlpool’s chairman, president and ceo said, “Our binding offer reflects both the value we see in the combination of Whirlpool and Maytag and the confidence we have in the ultimate receipt of regulatory approval for the transaction.”
The text of the proposal letter delivered to the ceo and chairman of the special committee of Maytag:
August 8, 2005
Mr. Ralph F. Hake, Chairman and CEO
Mr. Howard L. Clark, Jr., Chairman, Special Committee of the Board of Directors
Dear Messrs. Hake and Clark:
We are pleased to submit the following binding offer to acquire Maytag in a transaction that will provide your shareholders substantially greater value than your pending sale to the private equity consortium known as Triton.
We are offering to acquire all of Maytag’s outstanding shares by means of a merger that would provide Maytag shareholders $20.00 of total consideration per Maytag share in a taxable transaction. Of the total consideration, 50% would be paid in cash and the balance in shares of Whirlpool common stock. Our proposal represents a 43% premium to Triton’s $14 price.
Based on our understanding that your Board prefers certainty of value on the portion of the consideration that will be based on Whirlpool stock, we will provide your shareholders the benefit of a floating exchange ratio to determine the number of shares at closing. Such floating exchange ratio will be subject to a collar range equal to ± 10% of the volume weighted average price of our common stock on the New York Stock Exchange on the day you declare our offer a “Superior Company Proposal” (as defined in the Triton Merger Agreement referred to herein) and, if such day is not a business day, on the trading day immediately preceding such day.As we have progressed in our diligence process and have further analyzed the transaction, we continue to have confidence that we will be able to achieve the appropriate regulatory approvals to close a transaction within a relatively short time period. Nonetheless, we have addressed your Board’s desire for an appropriate level of protection in the unlikely scenario that we do not receive necessary regulatory approvals, with a package having a value of $175,000,000. First, assuming execution by Maytag of the Merger Agreement (as hereinafter defined), we will pay to Triton, on your behalf, the $40 million payable to them upon termination of the Merger Agreement dated May 19, 2005 among Triton Acquisition Holding (“Triton”), Triton Acquisition Co. and Maytag (the “Triton Merger Agreement”). Second, we will pay to Maytag a “reverse break-up fee” of $120 million if the transaction cannot be closed due to an inability to obtain regulatory approval. Finally, as a further measure of protection to Maytag, we have agreed to provide up to $15 million for retention of Maytag employees.
Please find attached hereto an Agreement and Plan of Merger (the “Merger Agreement”) among Whirlpool Corporation (“Whirlpool”), Whirlpool Acquisition Co. (“Merger Sub”) and Maytag Corporation (“Maytag”) executed by Whirlpool and Merger Sub. The execution and delivery of the Merger Agreement by Whirlpool and Merger Sub constitutes a binding irrevocable offer by Whirlpool and Merger Sub to Maytag to enter into the transactions contemplated by the Merger Agreement on the terms specified therein (the “Offer”).
Unless previously accepted by Maytag, the Offer will expire at 5:00 pm. Eastern Standard Time on August 20, 2005. Whirlpool represents to Maytag that Whirlpool’s execution, delivery and performance of the Merger Agreement, and the consummation of the transactions contemplated thereby, are within Whirlpool’s corporate powers, and have been duly authorized by all necessary corporate action. In addition, Whirlpool represents to Maytag that the Merger Agreement constitutes a valid and binding agreement of Whirlpool and will, upon execution by Maytag, be enforceable against Whirlpool in accordance with its terms.
As referred to above, in order to induce Maytag to deliver the 48 hour notice to Triton contemplated by the provisions of Section 5.02(g) of the Triton Merger Agreement, Whirlpool hereby agrees to pay to Maytag (or at Maytag’s request, Triton) the sum of $40,000,000 by wire transfer of immediately available funds concurrently with the effectiveness of the termination of the Triton Merger Agreement and Maytag’s execution and delivery of the Merger Agreement (which delivery shall constitute notice of Whirlpool’s obligation to make the payments described in this paragraph).
This offer and our other agreements set forth in this letter shall be governed by and construed in accordance with the laws of the State of Delaware without regard to the conflicts of laws principles thereof.
We believe we have addressed in every manner the concerns we understood the Maytag Board to have had with a potential combination with Whirlpool. Most importantly, we are providing a tremendous economic package of benefits to Maytag and its shareholders, and one that we believe would be strongly welcomed and supported by your shareholders. We look forward to hearing from you with regard to your determination.
Very truly yours,
Whirlpool Corporation
Jeff M. Fettig, Chairman, ceo and President
TEXT OF THE LETTER FROM WHIRLPOOL OFFERING $21 PER SHARE FOR MAYTAG STOCK
August 10, 2005
Mr. Ralph F. Hake Chairman and CEO
Mr. Howard L. Clark, Jr. Chairman, Special Committee of the Board of Directors
Maytag Corporation
403 West Fourth Street,
North Newton, Iowa 50208
Dear Messrs. Hake and Clark: We are pleased to increase our offer to acquire Maytag. We are now offering to acquire all of Maytag’s outstanding shares by means of a merger that would provide Maytag shareholders $21.00 of total consideration per Maytag share in a taxable transaction. Of the total consideration, 50% would be paid in cash and the balance in shares of Whirlpool common stock. All other material terms of this offer, including the “reverse break-up fee” of $120 million, remain unchanged from those contained in my August 8, 2005 letter to you.Based on our understanding that your Board prefers certainty of value on the portion of the consideration that will be based on Whirlpool stock, we will provide your shareholders the benefit of a floating exchange ratio to determine the number of shares at closing. Such floating exchange ratio will be subject to a collar range equal to ±10% of the volume weighted average price of our common stock on the New York Stock Exchange on the day you first declare our offer a “Superior Company Proposal” (as defined in the Agreement and Plan of Merger, dated as of May 19, 2005, among Triton Acquisition Holding, Triton Acquisition Co. and Maytag) and, if such day is not a business day, on the trading day immediately preceding such day.
Please find attached hereto a new Agreement and Plan of Merger (the “MERGER AGREEMENT”), dated as of August 10, 2005, among Whirlpool Corporation (“WHIRLPOOL”), Whirlpool Acquisition Co. (“MERGER SUB”) and Maytag Corporation (“MAYTAG”) executed by Whirlpool and Merger Sub. The execution and delivery of the Merger Agreement by Whirlpool and Merger Sub constitutes a binding irrevocable offer by Whirlpool and Merger Sub to Maytag to enter into the transactions contemplated by the Merger Agreement on the terms specified therein (the “Offer”). Unless previously accepted by Maytag, the Offer will expire at 5:00 pm. Eastern Standard Time on August
21, 2005.Whirlpool represents to Maytag that Whirlpool’s execution, delivery and performance of the Merger Agreement, and the consummation of the transactions contemplated thereby, are within Whirlpool’s corporate powers, and have been duly authorized by all necessary corporate action. In addition, Whirlpool represents to Maytag that the Merger Agreement constitutes a valid and binding agreement of Whirlpool and will, upon execution by Maytag, be enforceable against Whirlpool in accordance with its terms.
This offer and our other agreements set forth in this letter shall be governed by and construed in accordance with the laws of the State of Delaware without regard to the conflicts of laws principles thereof.
We look forward to hearing from you with regard to your determination.
Very truly yours,
WHIRLPOOL CORPORATION
By: /s/ Jeff M. Fettig
Jeff M. Fettig Chairman, CEO and PresidentMAYTAG DECLARES WHIRLPOOL PROPOSAL SUPERIOR; CHANGES RECOMMENDATION AND POSTPONES SPECIAL MEETING
On Friday, August 12, Maytag announced that its Board of Directors had withdrawn its recommendation of the pending $14 cash merger deal with Triton Acquisition Holding, the acquisition vehicle formed by the Ripplewood Holdings led investor group.
Maytag said that its Board had determined that in light of the $21 Whirlpool binding, irrevocable proposal, which was announced on August 10, it would be inconsistent with the Maytag Board’s exercise of its fiduciary duty for the Board to fail to withdraw its recommendation of the Triton $14 deal.
The Maytag Board now recommends a vote against the Triton deal. Maytag also stated that its Board had made the determinations required under the Triton merger agreement to constitute the Whirlpool $21 proposal a “Superior Company Proposal,” meaning in general terms, that it is more favorable from a financial point of view to Maytag shareholders and is reasonably capable of being completed.
Maytag is giving notice to Triton of the Maytag Board’s determinations. As a result, Maytag will be entitled to terminate the existing Triton merger agreement if the Maytag Board makes similar determinations (taking into account any revised proposal Triton may make) at least five business days following Triton’s receipt of such notice.
In addition to Maytag’s termination right, as a result of the change in recommendation by the Maytag Board, Triton has the right to terminate the Triton merger agreement immediately. In the event of such a termination by Maytag or by Triton, Triton will be entitled to a $40 million fee from Maytag, which Whirlpool has agreed to pay.The Whirlpool proposal calls for each Maytag share to be converted in a taxable transaction into $21 of total consideration. One half of the per share consideration would be paid in cash and the balance in shares of Whirlpool common stock. The number of shares of Whirlpool common stock to be paid per Maytag share will be based on a floating exchange ratio. The floating exchange ratio will be subject to a collar equal to ±10% of the volume weighted average price of Whirlpool common stock on the New York Stock Exchange today.
As previously reported, in addition to its agreement to pay the $40 million break-up fee payable to Triton, Whirlpool has also agreed to provide Maytag with up to $15 million for retention of Maytag employees and has agreed to pay a “reverse break-up fee” of $120 million if the transaction cannot be closed due to an inability to obtain regulatory approval.
Maytag also announced that as a result of Whirlpool’s August 10, proposal and related developments, Maytag is postponing the special meeting of stockholders scheduled for Friday, August 19, to August 30, in order to permit Maytag to file and distribute updated proxy materials and to allow time for adequate dissemination and absorption of information concerning these important developments. If the merger agreement between Maytag and Triton is terminated, the postponed special meeting will be cancelled.
WHIRLPOOL ANNOUNCES PROGRESS TOWARD MAYTAG ACQUISITIONWhirlpool issued the following statement in response to Maytag’s announcement that it has deemed Whirlpool’s offer to acquire Maytag for $21 per share in cash and stock a “superior company proposal” and has withdrawn its recommendation of Maytag’s existing agreement with Triton Acquisition Holding Company.
“We welcome the determination by the Maytag board of directors that ours is a superior proposal and look forward to the signing of a definitive agreement with Maytag,” said Jeff M. Fettig, Whirlpool’s chairman, president and CEO.
“We have amended our offer to provide that it will remain open until 12 noon (Eastern time) on August 23, in light of the various actions and time requirements Maytag must observe prior to terminating its agreement with Triton.”
On August 17, Maytag announced that it is postponing the special meeting of stockholders scheduled for August 30 to September 9, in order to provide additional time to file and distribute updated proxy materials and to allow time for adequate dissemination and absorption of such materials. Maytag had previously announced on August 12, that its Board of Directors has withdrawn its recommendation of the pending $14 cash merger deal with Triton Acquisition Holding. Later on August 12, Whirlpool extended the expiration date of its August 10 $21 cash and stock binding offer to 12 Noon, EST, on Tuesday, August 23, in light of the various actions and time requirements Maytag must observe prior to terminating the existing Triton merger agreement.
On August 14, Maytag’s Board of Directors reconfirmed its determinations announced on August 12, required under the Triton merger agreement, including its determination that the Whirlpool $21 binding offer, as extended, constitutes a “Superior Company Proposal,” and gave Triton notice of such determinations on August 15. Maytag will be entitled to terminate the existing Triton merger agreement if the Maytag Board makes similar determinations (taking into account any revised proposal Triton may make) on or after August 22.
As announced on August 12, because of the Maytag Board’s withdrawal of its recommendation, Triton has the right to terminate the Triton merger agreement immediately. In the event of such a termination by Maytag or Triton, Triton will be entitled to a $40 million fee from Maytag, which Whirlpool has agreed to reimburse Maytag for paying in the event Maytag enters into the Whirlpool merger agreement. If the merger agreement between Maytag and Triton is terminated, the postponed special meeting will be cancelled.
WHIRLPOOL/MAYTAG SUMMARY ON AUGUST 18
Will the Ripplewood group make a counter offer prior to the upcoming deadline?
Will the federal regulators consider Kenmore to be a Whirlpool “brand” thus boosting Whirlpool’s already significant market share in laundry equipment ’ and raising the chance that the deal will be shot down or require other accomodations to be made by Whirlpool?
Will Whirlpool encounter antitrust problems that will require divestiture of some of the Maytag holdings in order to satisfy federal market-share reductions?
This is an exciting time in our industry with new twists and turns virtually on a daily basis.
Stay tuned here and we’ll keep you informed day by day as significant events occur.
MAYTAG LAUNDRY PLANT EMPLOYMENT LEVELS
REACH 60-YEAR LOWS
News and commentary by Captain Toolhead
Maytag has announced that it will lay off 200 workers effective September 6 at the main laundry manufacturing plant in Newton, Iowa. This will bring the employment level there to about 1,000 workers. Until three years ago, employment was about 2,500 workers. The plant has seen several rounds of layoffs, but the 1,000-employee level has not been seen since 1948 when when Maytag expanded into automatic washer production.This news is not welcome to the local area that includes Maytag’s corporate headquarters. Many fear that a successful purchase of Maytag by Whirlpool will result in the closing of Maytag manufacturing plants and the possibility of shuttering the headquarters as well.
It looks as though the deadline for an additional, higher offer from the Ripplewood Group has passed and the current deal on the table (a Whirlpool bid of $21 per share for Maytag stock) will be voted up or down at the special shareholder meeting now scheduled for early September.
Whirlpool continues to insist that antitrust regulators will have no problem approving the sale even though some lofty market-share percentages will be attained (especially for laundry products) by combining the #1 and #3 major appliance producers
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WHIRLPOOL AND MAYTAG SIGN A DEFINITE MERGER AGREEMENT
On August 22, Whirlpool and Maytag signed a definitive merger agreement in which Whirlpool will acquire all outstanding shares of Maytag in a cash and stock merger valued at $21 per share. One-half of the per-share consideration will be paid in cash and the balance in a fraction of a share of Whirlpool common stock. The Board of Directors of Maytag has approved the merger agreement and intends to recommend to shareholders that they adopt the agreement.
Prior to signing, Maytag paid a $40 million termination fee to Triton Acquisition Holding and, thereafter, terminated the agreement with Triton. In accordance with Whirlpool’s offer, Whirlpool has reimbursed the $40 million to Maytag. In addition, Maytag said that the special meeting of stockholders scheduled for Friday, September 9, has been cancelled as a result of the termination of the Triton merger agreement.
The aggregate transaction value, including assumption of approximately $977 million of debt, is approximately $2.7 billion. The transaction is subject to customary conditions, including regulatory approvals and Maytag shareholder approval. The transaction will be taxable to Maytag shareholders.
Maytag shareholders will receive, for each share held, $10.50 in cash and between 0.1144 and 0.1398 of a share of Whirlpool stock. The amount of Whirlpool stock to be issued in exchange for each Maytag share will depend upon the volume-weighted average trading price of Whirlpool’s stock during a
20 trading-day period ending shortly before the merger. Maytag shareholders will receive 0.1144 of a share of Whirlpool stock if the average Whirlpool stock price is $91.79 or greater and 0.1398 if it is $75.10 or less; between the two prices, the exchange ratio will vary proportionately.Howard Clark, Maytag board member since 1986 and lead director, said, “After careful consideration in conjunction with our financial and legal advisors and an independent committee of Maytag’s board consisting of all non-management directors, we re-evaluated the transaction with Triton and concluded that the Whirlpool agreement is superior and is in the best interest of our shareholders.
Jeff Fettig, Whirlpool chairman, president and CEO, said, “The combination of Whirlpool and Maytag will create very substantial benefits for consumers, trade customers and our shareholders. This transaction will enable us to achieve significant efficiencies and better asset utilization. It will also allow us to offer a wider range of products to a much broader consumer base.
“Overall, this transaction will translate into better products, quality and service, as well as efficiencies, which will enhance our ability to succeed in the increasingly competitive global home-appliance industry,“ added Fettig. “We remain highly confident that we will receive regulatory clearance for this transaction in a timely manner.”
Ralph Hake, Maytag chairman and CEO, said, “This combination brings together two leading organizations with strong traditions in quality and customer satisfaction. Together, Whirlpool and Maytag will bring substantial benefits to consumers around the world, as well as to shareholders and customers.
”Whirlpool has sufficient resources to finance the acquisition and has received strong support from the banking sector. The company currently has a $1.2 billion, five-year committed credit facility, scheduled to mature in 2009.
There have been no borrowings under this agreement. The acquisition and upcoming debt maturities of the combined company are expected to be financed through current bank agreements and with new committed bank facilities.
In addition to reimbursing the $40 million termination fee paid by Maytag to Triton, Whirlpool has agreed to pay up to $15 million to assist Maytag in retaining key employees. Whirlpool also has agreed to pay Maytag a “reverse break-up fee” of $120 million under certain circumstances in the unlikely event of failure to obtain regulatory clearance.
Maytag’s shareholders are expected to vote on the transaction before the end of the year. Whirlpool expects the transaction to close as early as the first quarter of 2006, following approval from Maytag shareholders and regulatory clearance.
Following is a communication from Maytag CEO Ralph Hake to company employees:
August 22, 2005Dear Fellow Employees,
Today, Maytag formally entered into a definitive merger agreement with Whirlpool through which Whirlpool will pay $21 per share in cash and stock, subject to adjustment, in exchange for our company’s stock – 50 percent more value for the shareholders than the offer made by the Ripplewood Holdings LLC-led Triton group. With this announcement, Maytag is now moving forward to begin the process of obtaining necessary regulatory approval.
As part of this detailed process, both Whirlpool and Maytag will be required to submit documentation to the regulatory agencies as they examine antitrust issues. As they review this information, it would not be uncommon for additional information requests to be made along the way by the government.
Though the length of this approval process can vary considerably, we believe the transaction can be completed as early as the first quarter of 2006.
As with all transactions, it is important to remember that there is never absolute assurance that the merger will be consummated, although we certainly expect it to be. While the merger agreement is pending, we need to remain focused on our business – anything short of our best efforts can weaken our overall position in the marketplace, which would severely impact our business should this deal fail to be completed for any reason.
I want to remind you that Maytag is a great company, and we’re still in business to take care of our customers by producing consumer-driven products. That goal does not change, even as we look at an upcoming merger. We need to continue to do our jobs – selling, distributing, manufacturing and developing our products. Each of us should continue to come to work every day with a strong commitment to do our jobs to the best of our abilities with pride in our accomplishments.
Understandably, I realize that many of you want to know how a possible merger with Whirlpool may impact your job; however, it’s far too early to talk about how any given department or individual job may be affected. I do recognize that in any combination like this, where duplicate positions may exist, it is reasonable to expect that some jobs will be eliminated. Whirlpool assures me that the best talent and contributors available – regardless of whether they’re currently Maytag or Whirlpool employees – are likely to be considered for assignments in the new company. Many of you may know this because of your experiences with the integration processes when Maytag acquired Amana, Jenn-Air and Magic Chef.
In recent conversations that I have had with Jeff Fettig, Whirlpool chairman & CEO, he has assured me that Whirlpool’s goal is to create a combined company with the world-class talent and resources required to successfully compete in this global business — a goal that should not be foreign to anyone at Maytag. Our basic cultures and values are more similar than you might imagine, which will enable a smooth transition as we move forward.
Furthermore, Jeff Fettig believes that great talent will be required to manage the integration process and effectively operate the business going forward. He said that together, Whirlpool and Maytag will develop a process to identify specific positions and job opportunities, with a fair and open evaluation for selecting the best candidates for each available position. Above all, Jeff has made the commitment that all employees will be treated with the deserved respect and dignity throughout the transition period of the integration.
During the coming months, it is my personal hope that we all pull together to move our Maytag business forward and in the strongest possible position. I know this is a very stressful time for you and your families, and we will do everything we can to see that this process reaches a conclusion sooner than later. While we have a long way to go in the overall process, it’s important to remember that there are many people depending on us – most of all our shareholders and our customers. I am confident we won’t let them down.
Sincerely,
Ralph Hake Chairman & CEOWHIRLPOOL'S RESPONSE TO
FREQUENTLY ASKED QUESTIONSWhy was Whirlpool’s offer price $7 higher than Triton’s?
Our offer provides a reasonable premium to reward the Maytag shareholders for the potentially longer and more substantive regulatory review process than Triton (a private equity consortium) underwent.Why did Whirlpool increase its offer price for Maytag?
We made two formal offers for Maytag after first giving notice of our intent to bid. Our ultimate price of $21 per share provides fair value for Maytag shareholders, while also addressing conditions established by the Maytag board of directors. The price appropriately provides an opportunity for Whirlpool shareholders, including Maytag shareholders who retain the Whirlpool stock they receive in the merger, to realize the value we expect to be created by the efficiencies and innovation from the combined company.Why did Whirlpool structure the deal 50% equity and 50% stock?
We believe the mix of stock and cash provides financial flexibility for the combined company and allows existing Maytag shareholders the opportunity to participate in the value-creating opportunities from the combined company.
What will Maytag shareholders receive in exchange for their shares?
In the merger, each share of Maytag common stock will be exchanged for (a) $10.50 in cash and (b) between 0.1144 and 0.1398 of a share of Whirlpool common stock. We refer to the fraction of a share of Whirlpool common stock to be issued for each share of Maytag common stock as the "Exchange Ratio." The Exchange Ratio will be determined by reference to the volume weighted average trading price per share of Whirlpool common stock on the New York Stock Exchange for the 20 consecutive full trading days ending on the second trading day prior to the effective time of the merger, which we refer to as the "Reference Price." The Exchange Ratio will adjust to ensure that the fractional share of Whirlpool common stock received will be equal to $10.50 divided by the Reference Price, so long as the reference price is between $75.10 and $91.79. If the Reference Price is less than $75.10, the exchange ratio will no longer adjust, and Maytag shareholders will receive 0.1398 of a share of Whirlpool common stock. If the Reference Price is greater than $91.79, the Exchange Ratio will no longer adjust, and Maytag shareholders will receive 0.1144 of a share of Whirlpool common stock. This type of adjustment mechanism is referred to as a floating exchange ratio with a "collar" of ±10% around $83.45, the volume weighted average price of Whirlpool common stock on the NYSE on August 12, 2005, the date the Maytag board of directors first declared that Whirlpool's offer was a "superior company proposal" compared to the existing Triton merger agreement. Maytag shareholders will not receive any fractional shares of Whirlpool common stock in the merger. Instead, they will be entitled to receive cash, without interest, for any fractional share of Whirlpool common stock they might otherwise have been entitled to receive, based on a portion of the proceeds from the sale of all fractional shares in the market.
How did Whirlpool arrive at the $120 million reverse beakup fee?
Transactions of this nature are often structured with some type of reverse breakup fee. In our case, we negotiated the terms in a manner that was deemed mutually satisfactory with Maytag. We also agreed to provide up to $15 million to assist Maytag in retaining key employees.
How will Whirlpool finance the acquisition?
The company has sufficient resources to finance the acquisition and has received strong support from the banking sector. The company currently has a $1.2 billion, five-year committed credit facility, scheduled to mature in 2009. There have been no borrowings under this facility. The acquisition and upcoming debt maturities of the combined company are expected to be financed through current bank facilities and with new committed bank facilities.
What is the expected impact on Whirlpool’s debt rating once it acquires Maytag?
We expect that the acquisition will generate significant efficiencies that are expected to be realized in the near term. We expect to retain an investment grade credit rating.
What are Whirlpool’s expected financial benefits from the acquisition?
We anticipate that significant efficiencies can be gained in every part of the value chain, for example: Product Manufacturing Global Procurement Infrastructure and Support Areas Product Development and Research Asset Utilization These efficiencies will benefit our trade customers and consumers. Achieving these efficiencies will require some level of investment and one-time costs, but we believe they can be realized in the near term.
Given the significant synergies Whirlpool is expecting, should layoffs be anticipated?
Where else would the synergies come from? Synergies will come from all areas across the value chain, including procurement, distribution, and research and development. Until the merger is completed, Maytag will continue to operate its businesses independently, and we are not currently in a position to discuss the specifics of how these efficiencies will be derived.
Why is Whirlpool confident that it will gain regulatory clearance?
Our internal and external experts reviewed the appliance industry dynamics and have confirmed our conviction that there is no plausible concern that competition would diminish in any product category in which the companies currently compete. Competition in the appliance industry is intense and nothing about an acquisition of Maytag by Whirlpool can change that. Consumers will benefit from this transaction through the efficiencies that are unique to this combination. There will be cost savings, increased innovation and quality.
How might a Whirlpool-Maytag combination impact the marketplace?
An acquisition of Maytag by Whirlpool will further enhance an already dynamic competitive environment, and increase efficiency of production in the appliance industry. The analysis we have conducted on this confirms this point for all product categories in which both Whirlpool and Maytag compete. Therefore, we are highly confident that we will receive regulatory clearance.
What is the timetable for the antitrust process? We expect both parties to file the Hart-Scott-Rodino* notification and report forms promptly. We anticipate working cooperatively with the government and plan to promptly provide information to help the government make a decision. There are many variables within this review process, and while it is simply too early to make definitive predictions on timing, we do believe that the transaction could close as early as the first quarter of 2006.
* An antitrust law requiring notification to the federal government of certain transactions. The filing marks the beginning of the regulatory review period.
In light of the pending transaction, what does this mean for Whirlpool’s current internal strategies?
We have a focused group of internal and external resources dedicated to working on the Maytag project. The vast majority of our employees continue to focus on executing the Whirlpool business plans every day. They continue to do an excellent job of creating products and services that enhance our customers' lives. We will continue to fund and execute on our strategies.
Whirlpool Additional information: This news release contains forward-looking statements that speak only as of this date. Whirlpool disclaims any obligation to update such information. Forward-looking statements include, but are not limited to, statements regarding expected earnings per share, cash flow, and material costs for the full year 2005, as well as the expected consequences of enacted price increases. Although Whirlpool believes that the expectations reflected in the forward-looking statements are reasonable, it can give no assurance that those expectations will prove to have been correct. Many factors could cause actual results to differ materially from Whirlpool's forward-looking statements. Among these factors are: (1) the cost of raw materials and components, especially steel and the impact of rising oil prices; (2) the financial impact of Whirlpool's announced price changes will be dependent upon such factors as market conditions, the strength of consumer demand for Whirlpool's products, and other factors outside of Whirlpool's control such as the general economic conditions prevailing at the time the new pricing goes into effect; (3) rising worldwide transportation costs due to historically high and volatile oil prices, capacity constraints, and other factors; (4) the ability to gain or maintain market share in an intensely competitive global market; (5) the strength of new and established Asian competitors in the United States and abroad; (6) the success of Whirlpool's global business strategy; (7) Whirlpool's global operating platform initiatives; (8) the success of the Latin American businesses operating in challenging and volatile environments; (9) continuation of Whirlpool's strong relationship with Sears Holdings Corporation in North America, which accounted for approximately 17% of consolidated net sales of $13 billion in
2004; (10) currency exchange rate fluctuations; (11) social, economic and political volatility in developing markets; (12) continuing uncertainty in the North American, Latin American, Asian and European economies; (13) the effectiveness of the series of restructuring actions Whirlpool has announced and/or completed through 2004; (14) U.S. interest rates; (15) changes to the obligations as presented in the contractual obligations table; (16) changes in the funded position of the U.S. pension plans; (17) continued strength of the U.S. builder industry; (18) the threat of terrorist activities or the impact of war; (19) Whirlpool's estimate of its annual effective tax rate of approximately 31.7%; and (20) the ability of Whirlpool and Maytag to satisfy the conditions to consummation of the merger agreement between them, including Maytag shareholder approval and regulatory clearances, the timing of such satisfaction and in the event the merger is completed, Whirlpool's ability to realize expected benefits and the timing of such realization.
SERVICEBENCH EXTENDS DISPATCH CONNECTIVITY WITH SWIFTLINK PARTNERSHIP
ServiceBench announced on August 31 that it has extended dispatch connectivity to generate service requests directly into SwiftLink, Ltd's integrated business software package for the retail and service industry. This interface, along with the existing warranty claims processing connection, enables joint ServiceBench and SwiftLink customers to maximize service productivity.
With the new dispatch interface to SwiftLink, users no longer have to re-key information from one system to the other, and service calls will be automatically routed from the manufacturer to the service provider. The new dispatch link, compatible with SwiftLink version 9.2, will help streamline repair scheduling, expedite service calls and improve service levels. The existing warranty claims interface from ServiceBench also speeds up claims processing and payments while assuring information accuracy. These interfaces tie together key service activities via one access point, eliminating redundancies and improving efficiencies.
NEMA WARNS HURRICANE VICTIMS ABOUT HAZARDOUS WATER-DAMAGED ELECTRICAL EQUIPMENT
In the aftermath of Hurricane Katrina, the National Electrical Manufacturers Association (NEMA) is warning battered citizens of the Gulf Coast region about the dangers present when water comes into contact with electricity.
“As families and communities begin to clean up following this devastating event, there may be hidden electrical hazards,” says NEMA Field Representative John Minick. “Families should take the time to find and fix all electrical dangers caused by flooding or water damage.”
NEMA has some important safety advice:
• Take care when stepping into a flooded basement, and be aware that submerged outlets or electrical cords may be energizing the water, a potential lethal trap.
• Do not use electrical appliances that have been wet. Water can damage the motors in electrical appliances, such as furnaces, freezers, refrigerators, washing machines, and dryers. • If electrical appliances have been under water, have them dried out and reconditioned by a qualified service repairman. Do not turn on damaged electrical appliances because the electrical parts can become grounded and pose an electric shock hazard or overheat and cause a fire.
• Before flipping a switch or plugging in an appliance, have an electrician check the house wiring and appliance to make sure it is safe to use.
• Use a ground-fault circuit interrupter (GFCI) to help prevent electrocutions and electrical shock injuries. Portable GFCIs require no tools to install and are available at prices ranging from $12 to $30.
• Electrical devices, such as circuit breakers, fuses, GFCIs, receptacles, plugs, and switches, can malfunction when water and silt get inside. Discard them when they have been submerged.
• When using a wet-dry vacuum cleaner or a pressure washer, be sure to follow the manufacturer¹s instructions to avoid electric shock.
• Do not allow the power cord connections to become wet. Do not remove or bypass the ground pin on the three-prong plug.NEMA has published Guidelines for Handling Water Damaged Electrical Equipment, a brochure designed for use by suppliers, installers, inspectors, and users of electrical products. The document provides advice on the safe handling of electrical equipment that has been exposed to water. It outlines which items will require complete replacement or can be reconditioned by a trained professional.
Equipment covered includes electrical distribution equipment, motor circuits, power equipment, transformers, wire, cable and flexible cords, wiring devices, GFCIs and surge protectors, lighting fixtures and ballasts, motors, electronic products including signaling, protection, communication systems, and industrial controls, and cable trays. The brochure may be downloaded free of charge at http://www.nema.org/prod/be/enclosures/upload/Guidelines--water_damaged.pdf.
Minick has worked closely with the electrical inspection community to publicize the availability of the NEMA brochure. He can be reached at (972) 642-8113 or johndminick@comcast.net.
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