Maytag slashes dividend to fund manufacturing restructuring

Maytag slashes dividend to fund manufacturing restructuring
 
Date May 13, 2005
Section(s) Local News
Brief  
 
By The Associated Press

Daily News Staff

Home and commercial appliance maker Maytag Corp. on Thursday said its board voted to slash the company’s quarterly dividend in half, effective immediately, to finance its restructuring plan and free additional cash to repay debt and fund pensions.

The 9-cent-per-share dividend is payable June 15 to shareholders of record June 1.

The company also said it will invest the additional cash in its business as Maytag steps up advertising and R &D expenses in the second half of 2005 with new product introductions.

“Today’s decision by the board to immediately reduce the dividend by 50 percent should allow the company more financial flexibility to fund our restructuring plan and to have additional cash available for debt reduction and pension funding,” Maytag Chairman and CEO Ralph Hake said. “Also, the additional cash will be invested in our business as we step up our advertising and R &D expenses in the second half of 2005 with the many new product introductions that are planned.

“The decision to reduce the dividend was not taken lightly. The board understands the importance of the dividend to our shareholders; however, it is essential that our dividend payout is more in line with current earnings trends.”

Through 2005, Maytag will finalize its plan to restructure certain manufacturing operations, including the possible closure of the Newton manufacturing facility, and determine the investments necessary to support the initiative. The restructuring may require asset write-offs and accelerated depreciation as well as cash costs and investments.

The company said it is also seeking a new credit agreement that will provide more flexibility and funding stability to meet financing requirements. Maytag said it has received financing commitments from banks for multi-year credit facilities and expects to replace its current agreement during the second quarter.

Earlier Thursday, Hake took harsh criticism from shareholders at the company’s annual meeting, but reaffirmed a plan that may include closing the company’s flagship factory in Newton and moving the jobs. Shareholders complained that exporting jobs is bad for Maytag‘s corporate image.

Hake said that the company has discussed its cost concerns with the leadership of the local union. He said the company is in the process of determining where to build a new line of high-efficient Neptune washers and said he would “like to build them here” (in Newton) but if the Newton membership “chooses to continue its current wages, benefits and work rules, we will not be able to make that investment here.”

He said the plant would remain open at least until the current contract expires in July 2008. The corporation’s headquarters, he said, will remain in Newton as long as he remains CEO.

Maytag shares fell 1 cent to close at $10.48 on the New York Stock Exchange. It was up 59 cents to $11.07 in early trading today.

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