<PAGE>
PURSUANT TO RULE 424(b)(5)
REGISTRATION NO. 33-40249
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED JULY 19, 1996
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JULY 19, 1996
$200,000,000
LOGO
% DEBENTURES DUE , 2016
-----------
Interest on the Debentures is payable on and of each
year, commencing , 1997. The Debentures are not redeemable or
repayable prior to maturity and do not provide for any sinking fund. The
Debentures will be represented by a global security registered in the name of a
nominee of The Depository Trust Company. Beneficial interests in the Debentures
will be shown on, and transfers thereof will be effected only through, records
maintained by DTC (with respect to participants' interests) and its
participants. The Debentures will be issued only in denominations of $1,000 and
integral multiples thereof. Except as described herein, Debentures in
definitive form will not be issued. See "Description of Debentures--Book-Entry
Procedures."
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIESCOMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES.ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-----------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)
----------------- ------------ -------------
<S> <C> <C> <C>
Per Debenture...................... % % %
Total.............................. $ $ $
</TABLE>
- -----
(1) Plus accrued interest, if any, from , 1996.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $ payable by the Company.
-----------
The Debentures offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that the
Debentures will be ready for delivery in book-entry form only through the
facilities of DTC in New York, New York, on or about July , 1996, against
payment therefor in immediately available funds.
GOLDMAN, SACHS & CO. SALOMON BROTHERS INC
-----------
The date of this Prospectus Supplement is July , 1996.
<PAGE>
IN CONNECTION WITH ANY DISTRIBUTION OF THE DEBENTURES, THE UNDERWRITERS MAY
EFFECT TRANSACTIONS IN THE DEBENTURES WITH A VIEW TO STABILIZING OR
MAINTAINING THE MARKET PRICES OF THE DEBENTURES AT LEVELS OTHER THAN THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
EFFECTED IN ANY OVER-THE-COUNTER MARKET OR OTHERWISE AND, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
----------------
THE COMPANY
Whirlpool Corporation, the leading worldwide manufacturer and marketer of
major home appliances, was incorporated in 1955 under the laws of Delaware as
the successor to a business that traces its origin to 1898. The Company
manufactures and markets a full line of major home appliances and related
products for home and commercial use and provides certain inventory, consumer,
and other financial services.
The Company manufactures its products in twelve countries and markets its
products under eleven major brand names in approximately 140 countries. Major
home appliances are marketed and distributed in the United States under the
WHIRLPOOL, KITCHENAID, ROPER, ESTATE, CHAMBERS, and COOLERATOR brand names
through Company-owned sales branches primarily to retailers and builders. The
Company has been the principal supplier of home laundry appliances to Sears,
Roebuck and Co. ("Sears") for almost 80 years. Major home appliances are
manufactured and/or distributed in Canada under the INGLIS, ADMIRAL, SPEED
QUEEN, WHIRLPOOL, ESTATE, ROPER, and KITCHENAID brand names. Whirlpool Europe
markets and distributes its major home appliances through regional networks
under a number of brand names. In 1990, Whirlpool Europe began an estimated
$110 million program to introduce the WHIRLPOOL brand name to the European
marketplace. Whirlpool Europe also markets products under the BAUKNECHT,
IGNIS, and LADEN brand names. In Latin America, the Company offers a broad
range of products under well-recognized brand names such as WHIRLPOOL,
BRASTEMP, CONSUL, and SEMER. In Asia, the Company markets and distributes its
major home appliances through four operating regions: the Greater China
region, which includes the Peoples Republic of China and Hong Kong; the South
Asia region, which includes India, Pakistan, and other surrounding markets;
the North Asia region, which includes Japan, Korea, the Philippines, and
Taiwan; and the Southeast Asia--Australia region, which includes Southeast
Asia, Australia, and New Zealand. The Company markets and sells its products
in Asia under the WHIRLPOOL, KITCHENAID, ROPER, IGNIS, BAUKNECHT, SMC,
NARCISSUS, SNOWFLAKE, RAYBO, TVS, and KELVINATOR brand names.
Whirlpool Financial Corporation ("WFC") provides diversified financial
services to businesses and consumers throughout the United States and Canada
and factoring, inventory, and display financing activities in Europe, Mexico,
and Argentina. WFC conducts its business through three divisions: the
Inventory Finance Division, which provides floorplan financing and display
programs to retailers; the Consumer Finance Division, which provides
installment financing and, through Whirlpool Financial National Bank ("WFNB"),
WFC's credit card bank, consumer credit card programs; and the International
Division, operated through Whirlpool Financial Corporation International,
Whirlpool Financial Latin America Inc., and Whirlpool Financial Corporation
Overseas, wholly owned subsidiaries of WFC, which provide factoring,
inventory, and display financing for retailers of products of Whirlpool
Europe, Whirlpool Argentina, and Vitromatic, Whirlpool's joint venture company
in Mexico. Inventory financing represents the largest segment of WFC's
business, providing services for manufacturers, distributors, and retailers in
the appliance, consumer electronics, outdoor power equipment, residential
heating and cooling equipment, and music industries. WFC has been phasing out
its aerospace financing and leasing portfolios since 1993.
S-2
<PAGE>
RECENT DEVELOPMENTS
The Company's net earnings for the three months ended June 30, 1996 were $52
million, or $.70 per share, equal to those for second quarter 1995. Revenues
for the quarter ended June 30, 1996 reached $2.27 billion, 7% higher than the
prior year period. Net earnings for the six months ended June 30, 1996 were
$90 million, or $1.20 per share, versus $127 million, or $1.70 per share,
through June 30, 1995. Revenues for the six month period totaled $4.33
billion, up 6% from the prior year period.
Whirlpool's North American business had its best quarter ever during the
three months ended June 30, 1996. Company product shipments in the region grew
at a rate of 11% in the second quarter, exceeding industry expansion of 9%.
Net sales also rose significantly and quarterly operating profits increased by
nearly 70%. North American industry-wide shipments are currently expected to
be up approximately 3% to 4% for the full year over 1995.
The economic and industry environment in Europe remained difficult
throughout the second quarter of 1996, as total industry volumes and product
mix were less favorable than during the 1995 period. Nevertheless, the
Company's European operations achieved increases in both product shipments and
net sales in the second quarter. Additionally, continued strengthening of the
Italian lira against other European currencies adversely impacted second
quarter regional operating results and is expected to adversely impact full
year regional operating results. European margins were down for both periods
due to customers shifting to lower margin brands and products, currency
fluctuations, delays in introducing new products, and stagnant pricing in the
marketplace. For the remainder of 1996, European industry-wide shipments are
currently expected to be approximately equal to last year's shipments.
Record total quarterly earnings from the Company's operations in Latin
America increased by more than 25% from the same period in 1995 as the
Company's affiliates in Brazil continued to significantly exceed performance
expectations. A sharp year-to-date increase in affiliate and industry
appliance shipments in that country is attributable at least in part to
improved availability of consumer credit and efforts to lower interest rates.
The Company posted a slight operating loss in Latin America outside of Brazil.
Economies in the balance of the region remain depressed and year-over-year
product shipments were off significantly in the second quarter. Some market
recovery is occurring in Argentina, but at a slow pace.
The Company posted substantial gains in appliance shipments and revenues in
Asia during the quarter. The anticipated quarterly and first half operating
losses in the region were comparable to those sustained in the prior periods
as the Company's strategy to establish a manufacturing and marketing presence
in Asia through a number of joint ventures shifted into the execution phase
from the start-up phase. See "Management's Discussion and Analysis of Results
of Operations and Financial Condition."
S-3
<PAGE>
The following table presents selected unaudited financial data for the six
months ended June 30, 1996 and 1995. See "Selected Historical Consolidated
Financial Data."
<TABLE>
<CAPTION>
WHIRLPOOL
CORPORATION
WHIRLPOOL WITH WFC ON
CORPORATION AN EQUITY
(CONSOLIDATED) BASIS WFC
---------------- -------------- ----------
SIX
SIX MONTHS MONTHS
SIX MONTHS ENDED JUNE ENDED
ENDED JUNE 30, 30, JUNE 30,
---------------- -------------- ----------
1996 1995 1996 1995 1996 1995
------- ------- ------ ------ ---- ----
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Net sales...................... $ 4,242 $ 4,008 $4,242 $4,008 $-- $--
Financial services............. 89 92 -- -- 109 108
------- ------- ------ ------ ---- ----
Total........................ 4,331 4,100 4,242 4,008 109 108
Expenses
Cost of products sold.......... 3,300 3,028 3,300 3,028 -- --
Selling and administrative..... 811 800 771 756 60 60
Financial services interest.... 32 33 -- -- 38 38
Intangible amortization........ 18 14 18 14 -- --
------- ------- ------ ------ ---- ----
4,161 3,875 4,089 3,798 98 98
------- ------- ------ ------ ---- ----
Operating Profit............. 170 225 153 210 11 10
Other Income (Expense)
Interest and sundry............ (1) -- (7) (6) 6 6
Interest expense............... (84) (63) (78) (58) -- --
------- ------- ------ ------ ---- ----
Earnings Before Taxes and
Other Items................. 85 162 68 146 17 16
Income taxes..................... 39 66 33 60 6 6
------- ------- ------ ------ ---- ----
Earnings Before Equity
Earnings and Minority
Interests................... 46 96 35 86 11 10
Equity in WFC.................... -- -- 9 8 -- --
Equity in affiliated companies... 41 34 41 34 -- --
Minority interests............... 3 (3) 5 (1) (2) (2)
------- ------- ------ ------ ---- ----
Net Earnings................. $ 90 $ 127 $ 90 $ 127 $ 9 $ 8
======= ======= ====== ====== ==== ====
Net primary earnings per share of
common stock.................... $ 1.20 $ 1.70
======= =======
Cash dividends................... $ 0.68 $ 0.68
======= =======
</TABLE>
S-4
<PAGE>
USE OF PROCEEDS
The Company will use the net proceeds from the Debentures to repay certain
indebtedness incurred for working capital purposes. Such indebtedness is of
varying maturities of up to ninety days and bears interest at rates from 5.25%
to 5.50% per annum. Prior to such use, the net proceeds may be placed in
short-term investments, including commercial paper and certificates of
deposit.
CAPITALIZATION
The following table sets forth the total capitalization of the Company at
March 31, 1996, and as adjusted to give effect to the sale by the Company of
the Debentures offered hereby and the application of the net proceeds
therefrom (as if such sale and application of proceeds occurred on such date).
See "Use of Proceeds."
<TABLE>
<CAPTION>
AT MARCH 31, 1996
-------------------
ACTUAL AS ADJUSTED
------ -----------
(IN MILLIONS)
<S> <C> <C>
Notes Payable and Current Maturities of Long-Term Debt:
Whirlpool Corporation.................................... $ 687 $ 487
Consolidated subsidiaries................................ 1,535 1,535
------ ------
Total Notes Payable and Current Maturities of Long-Term
Debt.................................................. $2,222 $2,022
====== ======
Long-term Debt:
Whirlpool Corporation.................................... $ 753 $ 953
Consolidated subsidiaries................................ 204 204
------ ------
Total Long-term Debt................................... 957 1,157
------ ------
Stockholders' Equity:
Common stock............................................. 81 81
Paid-in capital.......................................... 232 232
Retained earnings........................................ 1,875 1,875
Unearned restricted stock................................ (8) (8)
Cumulative translation adjustments....................... (52) (52)
Treasury stock........................................... (235) (235)
------ ------
Total Stockholders' Equity............................. $1,893 $1,893
------ ------
Total Long-term Debt and Stockholders' Equity........ $2,850 $3,050
====== ======
</TABLE>
S-5
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The table below sets forth selected historical consolidated financial data
for the Company for the three months ended March 31, 1996 and 1995 and for the
years ended December 31, 1995, 1994, and 1993. Such data is principally
derived from, and should be read in conjunction with, the related audited
consolidated financial statements and accompanying notes included in the
Company's Annual Reports on Form 10-K and the unaudited condensed consolidated
financial statements and accompanying notes included in the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996
incorporated by reference herein. The information for the three month periods
is unaudited, but, in the opinion of the Company, reflects all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation
of the Company's results of operations and financial condition for such
periods. Results for interim periods are not necessarily indicative of results
for any other periods or for the year.
<TABLE>
<CAPTION>
WHIRLPOOL CORPORATION
WITH WFC ON AN EQUITY
WHIRLPOOL CORPORATION (CONSOLIDATED) BASIS WFC
------------------------------------------------ ------------------------- -------------------------
THREE MONTHS THREE MONTHS YEAR ENDED THREE MONTHS THREE MONTHS
ENDED ENDED DECEMBER 31, ENDED YEAR ENDED ENDED YEAR ENDED
MARCH 31, MARCH 31, ---------------------- MARCH 31, DECEMBER 31, MARCH 31, DECEMBER 31,
1996 1995 1995 1994 1993 1996 1995 1996 1995
------------ ------------ ------ ------ ------ ------------ ------------ ------------ ------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Net sales.......... $2,013 $1,939 $8,163 $7,949 $7,368 $2,013 $8,163 $-- $--
Financial
services........... 46 46 184 155 165 -- -- 54 219
------ ------ ------ ------ ------ ------ ------ ---- ----
Total............ 2,059 1,985 8,347 8,104 7,533 2,013 8,163 54 219
Expenses
Cost of products
sold............... 1,563 1,438 6,245 5,952 5,503 1,563 6,245 -- --
Selling and
administrative..... 393 396 1,609 1,490 1,433 369 1,521 32 123
Financial services
interest........... 16 16 66 51 59 -- -- 19 79
Intangible
amortization....... 9 6 31 24 25 9 31 -- --
Gain on
dispositions....... -- -- -- (60) -- -- -- -- --
Restructuring
costs.............. -- -- -- 250 31 -- -- -- --
------ ------ ------ ------ ------ ------ ------ ---- ----
1,981 1,856 7,951 7,707 7,051 1,941 7,797 51 202
------ ------ ------ ------ ------ ------ ------ ---- ----
Operating Profit. 78 129 396 397 482 72 366 3 17
Other Income
(Expense)
Interest and
sundry............. 3 (2) (13) 9 6 (2) (23) 5 11
Interest expense... (40) (29) (141) (114) (113) (37) (129) -- --
------ ------ ------ ------ ------ ------ ------ ---- ----
Earnings Before
Taxes, Other
Items and
Accounting
Change........... 41 98 242 292 375 33 214 8 28
Income taxes........ 18 39 100 176 148 15 90 3 10
------ ------ ------ ------ ------ ------ ------ ---- ----
Earnings Before
Equity Earnings,
Minority Interest
and Accounting
Change........... 23 59 142 116 227 18 124 5 18
Equity in WFC....... -- -- -- -- -- 4 14 -- --
Equity in affiliated
companies........... 14 18 72 59 16 14 72 -- --
Minority interests.. 1 (2) (5) (17) (12) 2 (1) (1) (4)
------ ------ ------ ------ ------ ------ ------ ---- ----
Net Earnings
Before Cumulative
Effect of
Accounting
Change........... 38 75 209 158 231 38 209 4 14
Cumulative effect of
accounting change
for post-retirement
benefits............ -- -- -- -- (180) -- -- -- --
------ ------ ------ ------ ------ ------ ------ ---- ----
Net Earnings..... $ 38 $ 75 $ 209 $ 158 $ 51 $ 38 $ 209 $ 4 $ 14
====== ====== ====== ====== ====== ====== ====== ==== ====
Per share of common
stock:
Primary earnings
before accounting
change............. $ 0.50 $ 1.00 $ 2.80 $ 2.10 $ 3.19
Primary earnings... $ 0.50 $ 1.00 $ 2.80 $ 2.10 $ 0.67
Fully diluted
earnings before
accounting change.. $ 0.50 $ 0.98 $ 2.76 $ 2.09 $ 3.11
Fully diluted
earnings........... $ 0.50 $ 0.98 $ 2.76 $ 2.09 $ 0.67
Cash dividends..... $ 0.34 $ 0.34 $ 1.36 $ 1.22 $ 1.19
Average number of
common shares
outstanding......... 75.0 74.7 74.8 75.5 72.3
</TABLE>
S-6
<PAGE>
The following appliance business data is presented as supplemental
information:
NET SALES BY BUSINESS UNIT:
<TABLE>
<CAPTION>
INCREASE/(DECREASE) INCREASE/(DECREASE)
1995 OVER 1994 1994 OVER 1993 1993
------ -------------------- ------ --------------------- ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
North America........... $5,093 $ 45 1% $5,048 $489 11% $4,559
Europe.................. 2,428 55 2 2,373 148 7 2,225
Asia.................... 376 171 83 205 54 36 151
Latin America........... 271 (58) (18) 329 26 9 303
Other................... (5) 1 -- (6) (136) -- 130
------ --------- --------- ------ ---------- -------- ------
Total Appliance
Business........... $8,163 $ 214 3% $7,949 $ 581 8% $7,368
====== ========= ========= ====== ========== ======== ======
OPERATING PROFIT BY BUSINESS UNIT:
<CAPTION>
INCREASE/(DECREASE) INCREASE/(DECREASE)
1995 OVER 1994 1994 OVER 1993 1993
------ -------------------- ------ --------------------- ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
North America........... $ 445 $ (77) (15)% $ 522 $ 48 10% $ 474
Europe.................. 92 (71) (44) 163 24 17 139
Asia.................... (50) (28) (127) (22) (17) -- (5)
Latin America........... 26 (23) (47) 49 6 16 43
Restructuring........... -- 248 -- (248) (225) -- (23)
Business Disposition.... -- (60) -- 60 68 -- (8)
Other................... (147) 7 5 (154) (38) (33) (116)
------ --------- --------- ------ ---------- -------- ------
Total Appliance
Business........... $ 366 $ (4) (1)% $ 370 $ (134) (27)% $ 504
====== ========= ========= ====== ========== ======== ======
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
Revenues
Revenues for the first quarter of 1996 increased 4% over the first quarter of
1995 driven by increases in volumes and pricing, partially offset by
unfavorable brand and product mix. Currency fluctuations did not materially
affect the revenue comparison to 1995. North American sales increased 6% due
primarily to increased volumes and pricing in an industry market that grew only
slightly during the period. European sales decreased 4% for the quarter and
were down 5% excluding the effects of currency fluctuations. The decrease
occurred in spite of increased volumes which were more than offset by
unfavorable brand and product mix. European unit volumes were up 2% while the
industry dropped by 3% to 4%. Price increases of 3% were announced in North
America at the beginning of the year and price increases have been announced or
implemented in several European markets. Financial services revenues were up 5%
as WFC continued to expand its core inventory and consumer finance businesses.
Expenses
The gross margin percentage deteriorated by 3.5 percentage points in the
first quarter of 1996 compared to the first quarter of 1995 reflecting the
cumulative effect of significant material cost
S-7
<PAGE>
increases, competitive pressures and lower than expected industry growth
particularly in Europe and North America, which adversely affected industry
and Whirlpool profitability since the second quarter of 1995. North American
gross margins were down slightly in 1996 due to the higher material costs
mentioned earlier partially offset by price increases and operating
efficiencies. European gross margins fell sharply in 1996 because of higher
material costs, competitive pressures and a consumer shift to lower-priced
products. The combined effect of those issues in the first quarter of 1996
eased somewhat from the fourth quarter of 1995, but made for an unfavorable
comparison to the first quarter of 1995.
Appliance selling and administrative expenses as a percent of net sales
decreased from 19.1% in the first quarter of 1995 to 18.3% in the first
quarter of 1996. Both North American and European expenses as a percent of net
sales were down compared to the prior period due primarily to tight control on
advertising and other spending. Europe also benefited from cost reductions
stemming from its restructuring efforts executed during 1995. Finally, a
portion of the appliance decrease reflects the impact of a 67% increase in
Asian sales relative to its fixed infrastructure costs put in place during
1994 and 1995.
Financial services expenses as a percent of the related revenue were up
primarily due to higher losses on certain consumer financing investments. WFC
has taken steps to mitigate further losses.
Other Income and (Expense)
The improvement in appliance business interest and sundry compared to the
prior year period is due primarily to lower foreign currency losses.
The increase in interest expense compared to the prior period is due
primarily to higher borrowing levels to fund acquisitions and higher working
capital levels, partially offset by lower interest rates.
Income Taxes
The consolidated provision for income taxes as a percent of earnings before
income taxes and other items was at 44% in the first quarter of 1996 compared
to 39% in the first quarter of 1995. The higher effective tax rate is
primarily due to the impact of nondeductible goodwill on a lower level of
pretax earnings and lower tax benefits recognized on Asian losses.
Equity in Affiliated Companies
Equity earnings in affiliated companies were $14 million in the first
quarter of 1996 compared to $18 million in the first quarter of 1995.
The Company's Brazilian affiliates generated equity earnings of $17 million
in the first quarters of both 1996 and 1995. Affiliate companies in Brazil
continued to benefit from a robust national appliance market and long-term
cost-reduction efforts. Results for the first quarter of 1995 were favorably
affected by certain tax credit benefits.
The Company's Mexican affiliate generated an equity loss of $4 million for
the first quarter of 1996 compared to break-even results in the first quarter
of 1994. This performance resulted from lower shipment volumes reflecting
industry declines in Mexico as well as high financing costs and foreign
exchange losses as compared with gains in the first quarter of 1995.
Economic volatility and government economic policy changes (including those
affecting exchange rates and tariffs) continue to affect consumer purchasing
power and the appliance industry as a whole in Mexico, Brazil and the entire
Latin American region. The outlook in these regions remains uncertain.
S-8
<PAGE>
YEARS ENDED DECEMBER 31, 1995 AND 1994
Revenues
Revenues were $8.3 billion in 1995, an increase of 3% over 1994. Excluding
the effects of currency fluctuations, revenues were flat from year to year with
the impact of increased volume offset by unfavorable brand and product mix.
North America sales were up 1% due primarily to selective price increases
partially offset by unfavorable brand and product mix. North American unit
volumes were virtually identical to those from 1994, although the regional
home-appliance industry slipped by more than 1%. European revenues were up 2%
compared to 1994. Excluding the effects of currency fluctuations, revenues were
off 8% due primarily to a 2% decline in unit volumes and unfavorable brand and
product mix. Volumes were hurt by weak demand across the region, particularly
toward the end of the year and more pronounced in Germany and France, which
together account for about 40% of European sales. In addition, Europe saw a
slight erosion of its market share following a major sales-force
reorganization. Despite continuing sluggishness in Europe, ongoing large-scale
introduction of redesigned products are expected to generate increased volumes
beginning in the second quarter of 1996. Financial services revenues were up
19% in 1995 as WFC continued to expand its core inventory and consumer finance
businesses.
Revenues were $8.1 billion in 1994, an increase of 8% over 1993 due primarily
to unit volume increases and North American price increases. The overall impact
of currency fluctuations was not significant. North American revenues increased
11% due primarily to increased volumes and pricing partially offset by product
mix. North American unit volumes increased 9% for the year which was slightly
below the overall increase for the industry. Shipments of appliances bearing
the KITCHENAID, WHIRLPOOL, and ROPER brand names were up strongly for the year.
Shipments to Sears under its KENMORE brand were down slightly as Sears closed
its catalog business and a number of retail stores in 1993. European revenues
were up 7% due primarily to increased volumes which grew at more than twice the
rate of the industry average of 3%. Financial services revenues were down 5%
due primarily to the continued liquidation of WFC's commercial lending
portfolio.
Expenses
The relationship of cost of products sold to net sales deteriorated almost 2%
in 1995 compared to 1994. North American margins declined about 2% in 1995 due
to higher material and component costs, start-up costs associated with the
production of redesigned midsize refrigerators and the difficult economic
climate in Mexico, partially offset by price increases. European margins were
down 1% in 1995 due to lower volumes and reduced production levels, combined
with sharply higher material and component costs and an industry shift to
lower-priced products partially offset by productivity improvements, continued
expense control, benefits of restructuring, and currency translation.
The relationship of cost of products sold to net sales deteriorated slightly
in 1994 compared to 1993. North American margins were up slightly in 1994 due
to improved productively, increased volumes, and pricing offset somewhat by
chlorofluorocarbon (CFC) taxes, compliance costs associated with energy
regulatory requirements, and product mix. European margins were down in 1994
due to the competitive pressures of a consolidating industry and to brand and
product mix as consumer demand shifted somewhat to lower margin, value-brand
appliances.
The ratio of consolidated selling and administrative expenses as a percent of
net sales was higher by nearly 1% in 1995 compared to 1994 reflecting a similar
deterioration for the appliance business expense ratio. North American expenses
as a percent of net sales were down slightly in 1995 due to cost reduction
initiatives and lower compensation costs. After excluding the impact of
currency translation, European expenses were down compared to last year
reflecting expense control efforts and benefits of restructuring. However,
European expenses as a percent of net sales were up almost 2% in 1995 primarily
due to decreased sales after excluding currency translation effects. Both 1995
S-9
<PAGE>
and 1994 were affected by increased strategic spending to expand the Company's
presence in Asia. WFC selling and administrative expenses as a percent of
financial services revenue were down nearly 1% as WFC successfully
transitioned to its strategy of supporting the inventory and consumer finance
business.
The ratio of consolidated selling and administrative expenses as a percent
of revenues, excluding the effect of the 1993 WFC first quarter charge (see
"Net Earnings"), was flat in 1994 compared to 1993. The appliance business
expense ratio was up slightly. North American expenses as a percent of net
sales were up slightly due primarily to costs associated with the new
distribution arrangement (see Note 10 to the Company's consolidated financial
statements) and due to costs related to a refrigerator conversion project.
European expenses as a percent of net sales were down due to ongoing cost
reduction initiatives and benefits from restructuring. The year was also
affected by a planned increase in costs related to the Company's strategy to
expand its presence in Asia. Financial services expenses excluding
nonrecurring charges, as a percent of the related revenue, were up slightly
due to accelerated depreciation of aircraft on lease and increased operating
expenses to support the inventory and consumer finance businesses.
WFC's financial services interest expense as a percent of the related
revenue was up in 1995 compared to 1994 due to higher interest rates in 1995
but was down in 1994 compared to 1993 largely due to lower interest rates
resulting from the transition of medium term debt to commercial paper.
In the third quarter of 1994, the Company sold its minority interest in
Matsushita Floor Care Company ("MFCC"), a vacuum cleaner manufacturer,
resulting in a $26 million pre-tax gain. The Company also sold its European
compressor operation in the second quarter of 1994 resulting in a $34 million
pre-tax gain. See "Cash Flows--Investing Activities."
Restructuring costs of $250 million for 1994 consists of charges to
consolidate and reorganize the Company's European sales, marketing and support
functions to better serve dealers by trade channel rather than by country,
rationalization of European customer services and manufacturing operations,
the closure of two North American manufacturing facilities and the further
consolidation and rationalization of North American operations. The
restructuring is expected to result in annual cost savings of $150 million by
1997. See Note 10 to the Company's consolidated financial statements.
Restructuring costs for 1993 consist of charges to end independent
distributor agreements in North America in order to streamline the
distribution process, facility consolidation and employee related charges in
Canada, the pre-tax loss on the sale of a refrigerator plant in Barcelona,
Spain and employee related costs associated with efforts to increase cost
effectiveness in Europe.
Interest and Sundry
The change in interest and sundry for 1995 compared to the prior year is due
primarily to foreign currency losses. However, the overall impact of currency
fluctuations in 1995 was not significant due to offsetting foreign currency
gains.
Interest Expense
Appliance business interest expense increased significantly in 1995 due to
higher borrowing levels (see "Cash Flows--Financing Activities") and higher
interests rates. Appliance business interest expense was flat in 1994 due to
lower borrowing levels offset by higher interest rates.
Income Taxes
The consolidated provision for income taxes as a percent of earnings before
taxes and other items was 41% in 1995 compared to 60% in 1994 (40% excluding
the effect of restructuring and business
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dispositions) and 40% in 1993. The increase in the provision in 1995 compared
to 1994, excluding the effect of restructuring and business dispositions, is
primarily due to the relatively larger impact permanent items have on the
effective tax rate due to lower net earnings nearly offset by favorable
settlements of prior year tax returns. The higher effective rate in 1994 is
due primarily to the impact of the 1994 restructuring charge and a 1994 tax
charge associated with the sale of the European compressor operation partially
offset by a 1994 tax benefit associated with the sale of MFCC. Excluding the
effects of restructuring and business dispositions, the 1994 effective tax
rate is essentially flat with 1993.
Earnings before Equity Earnings and Other Items
Earnings before equity earnings and other items were $142 million in 1995,
$116 million in 1994 and $227 million in 1993. Excluding the impact of
restructuring, business dispositions, and the 1993 WFC charge, earnings before
equity earnings and other items were $142 million in 1995, $290 million in
1994 and $281 million in 1993.
Equity in Affiliated Companies
Equity earnings were $72 million in 1995 compared to $59 million in 1994 and
$16 million in 1993.
The Company's Brazilian affiliates generated equity earnings of $70 million
in 1995 compared to $39 million in 1994 and $21 million in 1993 reflecting
primarily the increased consumer demand stimulated by the Brazilian
government's economic plan implemented in mid-1994. Results were also
favorably affected by certain non-recurring tax benefits, including $17
million of excise tax credits and the consequences of the May 1994 merger of
two of the Brazilian affiliates, Brastemp S.A. and Consul S.A., into a new
entity, Multibras S.A. The merger resulted in operating efficiencies as an
outcome of consolidating selling and administrative functions, improved
utilization of prior year tax losses and more flexibility in management of
brands and products.
The Company's Mexican affiliate equity earnings were break-even in 1995 as
compared to equity earnings of $16 million in 1994 and an equity loss of $6
million in 1993. Reduced shipments and higher financing costs resulting from
difficult economic conditions in Mexico were partially offset by cost
reductions and net translation gains from the peso devaluation of $25 million.
The increase in 1994 performance is due to increased shipments, improved cost
control, and a $12 million gain resulting from the devaluation of the Mexican
peso. Results in 1993 include a $3 million charge for taxes related to prior
years.
Economic volatility and exchange rate changes continue to affect consumer
purchasing power and the appliance industry as a whole in Brazil and Mexico.
Net Earnings
In 1994, the Company recorded an after-tax restructuring charge of $192
million or $2.54 per share. Business dispositions in 1994 resulted in an
after-tax gain of $18 million or $.24 per share.
The Company adopted SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," in the first quarter of 1993 resulting in a one
time after-tax charge to earnings of $180 million or $2.52 per share. The
Company also recorded a first quarter after-tax charge of $40 million or $.56
per share primarily to adjust the value of specific aerospace and commercial
accounts in WFC's financing portfolio.
Absent all restructuring, business dispositions, SFAS No. 106 and WFC
charges mentioned above, net earnings were $209 million in 1995, $332 million
in 1994, and $285 million in 1993. Corresponding earnings per share were $2.80
in 1995, $4.40 in 1994, and $3.94 in 1993.
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CASH FLOWS
Operating Activities
The Company's main source of liquidity is cash from operating activities
consisting of net earnings from operations adjusted for non-cash operating
items such as depreciation and changes in operating assets and liabilities
such as receivables, inventories, and payables.
Cash used for operating activities was $119 million in the first quarter of
1996 and $134 million in the first quarter of 1995, largely reflecting
seasonal working capital needs of the appliance business to build inventories.
Cash provided by operating activities was $377 million in 1995, $449 million
in 1994, and $629 million in 1993. The decrease in 1995 from the prior year is
due primarily to lower earnings excluding the 1994 effects of restructuring
and business dispositions and 1995 restructuring spending partially offset by
favorable accounts receivable performance. The decrease in 1994 is due
primarily to changes in receivables, inventories, other operating accounts,
and restructuring spending. Other operating accounts primarily include accrued
expenses related to employee compensation, income taxes, product warranty, and
advertising.
Investing Activities
The principal recurring investing activities are property additions and
investments in and collection of financing receivables and leases.
Net property additions in the first quarter of 1996 were $61 million
compared to $70 million in the first quarter of 1995. Net property additions
were $483 million in 1995, $418 million in 1994 and $309 million in 1993.
These expenditures were primarily for equipment and tooling related to product
improvements, more efficient production methods, replacement for normal wear
and tear, and more stringent governmental energy and environmental
regulations. Investment in the financial services business resulted in a net
$2 million source of cash in first quarter of 1996 compared to a net $47
million use of cash in the first quarter of 1995 reflecting the expansion of
WFC's inventory finance business offset by a drop in the consumer finance
business due to repayments outpacing originations, as well as the continued
liquidation of WFC's discontinued investment portfolios. Investment in the
financial services business resulted in $289 million of net WFC financing
receivables originated in 1995 compared to $17 million in 1994 and $285
million in 1993 of net cash receipts from WFC financing receivables.
Other investing activities during the past three years included business
dispositions and acquisitions.
During 1995, the Company expanded its presence in Asia by acquiring
controlling interests in three existing manufacturing companies and completing
three new joint ventures.
In November 1995, the Company acquired a majority interest in Raybo Air
Conditioner Manufacturing Company ("Raybo"), a Chinese manufacturer and
marketer of air conditioners, for about $22 million in cash. Raybo annual
sales were about $20 million for its fiscal year 1994.
In May 1995, the Company acquired a majority interest in Shunde SMC
Microwave Products Co., Ltd. ("SMC"), a Chinese manufacturer and marketer of
microwave ovens, for about $90 million in cash. SMC annual sales were about
$100 million for its fiscal year 1994.
In February 1995, the Company acquired a majority interest in Kelvinator of
India, Ltd. ("KOI"), a manufacturer and marketer of refrigerators, for about
$116 million in cash funded principally in 1995. As the transaction involved
an issue of new KOI shares, most of the purchase price was invested as equity
in KOI in support of planned plant and product line expansion. KOI annual
sales were about
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$120 million for its fiscal year 1994. The Company intends to construct a new
global no-frost refrigerator facility in India with production expected to
begin in 1997.
The Company's new Chinese joint ventures include a $17 million majority
interest in Beijing Whirlpool Snowflake Electric Appliance Co., Ltd. to
produce refrigerators; a $16 million majority interest in Whirlpool Narcissus
(Shanghai) Co., Ltd. to produce washing machines; and a $5 million minority
interest in Beijing Embraco Snowflake Compressor Co. Ltd. to produce
compressors for refrigerators and air conditioners. The cash investments above
include $9 million and $4 million to be paid in 1996 for the refrigerator and
compressor joint ventures. Also, the Company plans to invest an additional $11
million in the washing machine joint venture in 1996 and 1997.
In September 1994, the Company sold its minority interest in MFCC, a joint
venture which manufactures and markets vacuum cleaners in the North American
market. The sale resulted in cash proceeds of $44 million and a pre-tax gain
of $26 million or $.24 per share. The after-tax gain on the sale was $18
million.
In April 1994, the Company sold its European compressor operation to one of
the Company's Brazilian affiliates for $106 million. The Company received 75%
of the selling price in cash at the closing date with the remainder paid in
1995. The sale resulted in a pre-tax gain of $34 million but no significant
gain or loss after taxes. The European compressor operation contributed gross
sales of $213 million, including third party sales of $127 million and pre-tax
earnings of $10 million in 1993.
In April 1994, the Company made an additional $3 million investment in TVS
Whirlpool Limited to become the majority partner in this Indian joint venture.
The Company plans to invest an additional $14 million in 1996 to increase its
interest in the joint venture, renamed Whirlpool Washing Machines Limited in
1995. In February 1994, the Company made an additional $3 million investment
in Whirlpool Tatramat to become the majority partner in this Slovakian joint
venture and contributed $3 million for a minority interest in a joint venture
with Teco Electric and Machinery Co., Ltd., to market and distribute
appliances in Taiwan.
In 1994, the Company began construction of a new $100 million cooking
products facility in Tulsa, Oklahoma, to manufacture freestanding gas and
electric ranges for the North American appliance market beginning in April
1996.
In October 1993, the Company made an additional $26 million investment in
Brastemp (now Multibras S.A.). In April 1993, as part of the Company's Latin
America strategy, the Company's Argentine subsidiary sold additional voting
stock, representing a 40% interest, to one of the Company's Brazilian
affiliates for $7 million. In July 1993, the Company sold its refrigerator
plant in Barcelona, Spain for $4 million, resulting in an $8 million pre-tax
loss but no significant gain or loss after taxes.
Financing Activities
Dividends paid to shareholders totaled $50 million in the first quarter of
1996 compared to $25 million in the first quarter of 1995. The 1996 dividends
paid includes payment of both the first quarter 1996 dividend and the fourth
quarter 1995 dividend. Dividends to shareholders totaled $100 million in 1995,
$90 million in 1994 and $85 million in 1993.
The Company's borrowings increased by $217 million during the first quarter
of 1996, excluding the effect of currency fluctuations, primarily to fund
property additions and seasonal working capital needs. The Company's
borrowings increased by $747 million in 1995, excluding the effect of currency
translation and $50 million of borrowings assumed in acquisitions, primarily
to fund property additions, origination of financing receivables and Asian
acquisitions.
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In December 1994, the Company announced plans to repurchase up to five
percent of the outstanding shares of common stock. The treasury shares will be
used in employee stock-option, retirement, and other compensation programs and
for general corporate purposes. Through the end of March 1996, the Company had
repurchased approximately 966,000 shares for $51 million.
The Company reduced borrowings by $33 million in 1994 primarily due to the
continued liquidation of WFC's commercial lending portfolio. The Company
reduced borrowings by $583 million in 1993 due to strong operating cash flow
and the liquidation of WFC's commercial lending portfolio.
In 1993, WFC completed a $75 million sale of preferred stock in a move
consistent with plans to broaden the subsidiary's equity base and position it
as a more financially independent business entity. The proceeds were used to
repay intercompany debt to the Company. See Note 6 to the Company's
consolidated financial statements.
In 1993, the Company called $125 million of 9 1/8% Sinking Fund Debentures
and terminated $100 million of related interest rate swap agreements resulting
in an immaterial gain on extinguishment. The Company also terminated $400
million of interest rate swap agreements designated as hedges of long-term
debt resulting in a deferred gain of $51 million which is being amortized as a
reduction in interest expense over the life of the related debt.
In 1993, WFC initiated a commercial paper program which currently authorizes
the issuance of up to $1.7 billion. The 1993 net proceeds of $790 million were
used to repay intercompany debt to the Company.
FINANCIAL CONDITION AND OTHER MATTERS
The financial position of the Company remains strong as evidenced by the
March 31, 1996 balance sheet. As of such date, the Company's total assets were
$8.0 billion and stockholders' equity was $1.9 billion.
The overall debt to invested capital ratio at March 31, 1996 increased
compared to December 31, 1995 and the overall debt to invested capital ratio
at December 31, 1995 increased compared to December 31, 1994. The appliance
business debt to invested capital ratio net of cash ("debt ratio") increased
from 43% at December 31, 1995 to 47% at March 31, 1996 due primarily to
seasonal working capital requirements and Asian acquisitions partially offset
by the effect of European currency movements on the Company's hedging
strategy. The appliance business debt ratio at December 31, 1995 was 39%. The
increase during 1995 was due primarily to increased borrowings. See "Cash
Flows--Financing Activities." As of December 31, 1995, convertible notes with
principal amounts of $371 million had been converted into 2.7 million shares
of the Company's common stock. The debt ratio was also affected by European
currency movements due to a combination of foreign borrowings and the
Company's hedging strategy related to European net assets. The financial
services debt ratio at March 31, 1996 was down slightly compared to December
31, 1995. The 1995 financial services debt to invested capital ratio increased
from December 31, 1994 due to higher investment levels compared to the prior
year. The Company's debt continues to be rated investment grade by Moody's
Investors Service, Inc., Standard and Poors and Duff & Phelps.
Various European currency swaps and forward contracts serve as a hedge of
net foreign currency cash flows and also hedge a portion of the Company's
European net assets. Changes in the value of the swaps and forward contracts
due to movements in exchange rates are included in the currency translation
component of stockholders' equity if they relate to the European net asset
hedge or otherwise in other income (expense).
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WFC's financing portfolio by business segment is as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER DECEMBER
1996 31, 1995 31, 1994
---------- ---------- ---------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Inventory......................... $ 877 47% $ 857 46% $ 652 41%
Consumer.......................... 495 27 531 29 386 24
Aerospace......................... 408 22 411 22 465 29
Other............................. 67 4 59 3 80 6
------ --- ------ --- ------ ---
$1,847 100% $1,858 100% $1,583 100%
====== === ====== === ====== ===
</TABLE>
The aerospace portfolio is generally secured by newer (Stage III) aircraft on
lease to various international airlines. Although the commercial airline
industry seems to be stabilizing, the near-term outlook remains uncertain.
Management believes the aerospace portfolio carrying value is appropriate. The
Company is continuing to phase out of aerospace and highly leveraged commercial
lending activities.
The financial services industry is very competitive and various leasing
companies, financial institutions and finance companies operate in the same
markets as WFC. See Notes 1 and 3 of the Company's consolidated financial
statements for a further description of WFC's business.
WFC adopted Financial Accounting Standards Board Statement No. 114,
"Accounting by Creditors for Impairment of a Loan," effective January 1, 1995.
The new rules require WFC to measure impaired loans based on the present value
of expected future cash flows discounted at the loan's effective interest rate.
Adoption of the new rules did not have a material effect on the Company's net
earnings or financial position.
The Company has external sources of capital available and believes it has
adequate financial resources and liquidity to meet anticipated business needs
and to fund future growth opportunities such as new products, acquisitions and
joint ventures.
BUSINESS
PRODUCTS AND SERVICES
The Company manufactures and markets a full line of major home appliances and
related products for home and commercial use and provides certain inventory,
consumer, and other financial services. The Company's principal products and
financial services are as follows:
MAJOR HOME APPLIANCES
Home laundry appliances: automatic and semi-automatic washers; automatic
dryers; coin-operated laundry machines; and combination washer-dryer units.
Home refrigeration and room air conditioning equipment: refrigerator-
freezers; upright and chest freezers; room air conditioners; dehumidifiers; and
residential, commercial, and component ice makers.
Home cooking appliances: free-standing and set-in ranges; built-in ovens and
surface cooking units; microwave ovens; countertop cooking units; and range
hoods.
Other home appliances, products, and services: dishwashers; residential trash
compactors; food waste disposers; portable appliances; hot water dispensers;
water filtration products; oil radiators; water heaters; component parts,
replacement parts, repair services and warranty contracts; and product kits.
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FINANCIAL SERVICES
WFC provides inventory financing and factoring services, including stocking
and display programs for retailers and distributors that market products
manufactured by the Company plus other manufacturers. It also provides consumer
financing services for retail sales, principally through WFNB, which offers
consumer credit card programs. WFC also continues to manage down its aerospace
financing and leasing portfolios.
The Company purchases a portion of its product requirements from other
manufacturers for resale by the Company. The Company purchases all of its
requirements of range hoods, food waste disposers, upright and chest freezers
(North America), hand mixers, food processors, and certain other miscellaneous
products from other manufacturers for resale by the Company.
Major home appliances are marketed and distributed in the United States under
the WHIRLPOOL, KITCHENAID, ROPER, ESTATE, CHAMBERS, and COOLERATOR brand names
through Company-owned sales branches primarily to retailers and builders.
KITCHENAID portable appliances are sold to retailers either directly or through
an independent representative organization. The Company sells product to the
builder trade both directly and through contract distributors. Major home
appliances are manufactured and/or distributed in Canada under the INGLIS,
ADMIRAL, SPEED QUEEN, WHIRLPOOL, ESTATE, ROPER, and KITCHENAID brand names.
Refrigerator-freezers, laundry products, room air conditioners, residential
trash compactors, residential and component ice makers, cooking products,
dishwashers, and other products are sold in limited quantities by the Company
to other manufacturers and retailers for resale in North America under their
respective brand names.
The Company has been the principal supplier of home laundry appliances to
Sears for almost 80 years. The Company is also the principal supplier to Sears
of residential trash compactors and dehumidifiers and a major supplier to Sears
of dishwashers, room air conditioners, and home refrigeration equipment. The
Company also supplies Sears with certain other products for which the Company
is not currently a major supplier. Sales of such other products to Sears are
not significant to the Company's business. The Company supplies products to
Sears for sale under Sears' KENMORE and SEARS brand names. Sears has also been
a major outlet for the Company's WHIRLPOOL and KITCHENAID brand names since
1989. Sales to Sears are made without underlying merchandise agreements.
In Europe, Whirlpool Europe markets and distributes its major home appliances
through regional networks under a number of brand names. In 1990, Whirlpool
Europe began an estimated $110 million program to introduce the WHIRLPOOL brand
name to the European marketplace. Whirlpool Europe also markets products under
the BAUKNECHT, IGNIS, and LADEN brand names. In certain Eastern European
countries, products bearing the WHIRLPOOL and IGNIS brand names are presently
sold through independent distributors. Whirlpool Europe also has company-owned
sales subsidiaries in Hungary, Poland, the Czech Republic, Slovakia, and Greece
and a representative office in Russia. Pursuant to the Company's joint venture
agreement with Philips N.V. ("Philips"), except for certain limited exceptions
and subject to certain phase-out provisions, neither Philips nor any subsidiary
of Philips may engage directly or indirectly in the major domestic appliance
business anywhere in the world until January 2, 1999.
Whirlpool Europe also sells products carrying the WHIRLPOOL, BAUKNECHT,
IGNIS, ALGOR, and FIDES brand names to the Company's wholly-owned sales
companies in Asia and/or Latin America (Whirlpool Asia Appliance Group and the
Latin America Appliance Group) and to independent distributors and retailers in
Africa and the Middle East.
In Latin America, the Company offers a broad range of products under well-
recognized brand names such as WHIRLPOOL, BRASTEMP, CONSUL, and SEMER.
S-16
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In Asia, the Company markets and distributes its major home appliances
through four operating regions: the Greater China region, based in Hong Kong,
which includes the Peoples Republic of China and Hong Kong; the South Asia
region, based in Delhi, which includes India, Pakistan, and other surrounding
markets; the North Asia region, which includes Japan, Korea, the Philippines,
and Taiwan; and the Southeast Asia--Australia region, which includes Southeast
Asia, Australia, and New Zealand. The North Asia and Southeast Asia--Australia
regions are based in Singapore. The Company markets and sells its products in
Asia under the WHIRLPOOL, KITCHENAID, ROPER, IGNIS, BAUKNECHT, SMC, NARCISSUS,
SNOWFLAKE, RAYBO, TVS, and KELVINATOR brand names. The Company's Asian
strategy is to establish a manufacturing and marketing presence in Asia
through a number of joint ventures. See "Management's Discussion and Analysis
of Results of Operations and Financial Condition."
The Company's interests outside the United States and Western Europe are
subject to risks which may be greater than or in addition to those risks
currently present in the United States and Western Europe. Such risks may
include high inflation, the need for governmental approval of and restrictions
on certain financial and other corporate transactions and new or continued
business operations, government price controls, restrictions on the remittance
of dividends, interest, royalties, and other payments, and the convertibility
of local currencies, restrictions on imports and exports, duties, political
and economic developments and instability, the possibility of expropriation,
uncertainty as to the enforceability of commercial rights and trademarks, and
various types of local participation in ownership. In Brazil, the Company's
minority equity interests earned profits in 1994 and 1995 due to cost control,
productivity improvements, and an increase in consumer demand. However, issues
such as economic volatility and exchange rate changes continue to affect
consumer purchasing power and the appliance industry as a whole.
WHIRLPOOL FINANCIAL CORPORATION
Whirlpool Financial provides diversified financial services to businesses
and consumers throughout the United States and Canada and factoring,
inventory, and display financing activities in Europe, Mexico, and Argentina.
WFC conducts its business through three divisions: the Inventory Finance
Division, which provides floorplan financing and display programs to
retailers; the Consumer Finance Division, which provides installment financing
and, through WFNB, WFC's credit card bank, consumer credit card programs; and
the International Division, operated through Whirlpool Financial Corporation
International, Whirlpool Financial Latin America Inc., and Whirlpool Financial
Corporation Overseas, wholly owned subsidiaries of WFC, which provide
factoring, inventory, and display financing for retailers of products of
Whirlpool Europe, Whirlpool Argentina, and Vitromatic, Whirlpool's joint
venture company in Mexico. Inventory financing represents the largest segment
of WFC's business, providing services for manufacturers, distributors, and
retailers in the appliance, consumer electronics, outdoor power equipment,
residential heating and cooling equipment, and music industries. WFC has been
phasing out its aerospace financing and leasing portfolios since 1993.
COMPETITION
The major home appliance business is a highly competitive industry. The
Company believes that, in terms of units sold annually, it is the largest
United States manufacturer of home laundry appliances and one of the largest
United States manufacturers of home refrigeration and room air conditioning
equipment and dishwashers. The Company estimates that during 1995 there were
approximately five United States manufacturers of home laundry appliances, 15
United States manufacturers of home refrigeration and room air conditioning
equipment, and four United States manufacturers of dishwashers. Competition in
the North American major home appliance business is based on a wide variety of
factors, including principally product features, price, product quality and
performance, service, warranty, advertising, and promotion.
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<PAGE>
The Company believes that Whirlpool Europe, in terms of units sold annually,
is one of the three largest manufacturers and marketers of major home appliance
products in Europe. The Company estimates that during 1995 there were
approximately 35 Western European manufacturers of major home appliances, the
majority of which manufacture a limited range of products for a specific
geographic region. In recent years, there has been significant merger and
acquisition activity as manufacturers seek to broaden product lines and expand
geographic markets, and the Company believes that this trend will continue. The
Company believes that, with Whirlpool Europe, it is in a favorable position
relative to its competitors because it has an experienced Western European
sales network, balanced sales throughout the Western European market under
well-recognized brand names, manufacturing facilities located in different
countries, and the ability to customize its products to meet the specific needs
of diverse consumer groups. Competition in the European major home appliance
business is based on a wide variety of factors, including principally product
features, price, product quality and performance, service, warranty,
advertising, and promotion. With respect to microwave ovens, Western European
manufacturers face competition from manufacturers in Asia, primarily Japan and
South Korea.
The Company believes that, together with its Brazilian affiliates, it is
well-positioned in the Latin American appliance market due to its ability to
offer a broad range of products under well-recognized brand names such as
WHIRLPOOL, BRASTEMP, CONSUL, and SEMER to meet the specific requirements of
consumers in the region. The Company estimates that during 1995 there were
approximately 65 manufacturers of home appliances in the region. Competition in
the Latin American home appliance business is based on a wide variety of
factors, including principally product features, price, product quality and
performance, service, warranty, advertising, and promotion. In Latin America
there are trends toward privatization of government-owned businesses and a
liberalization of investment and trade restrictions.
In Asia, the major domestic appliance market is characterized by rapid growth
and is dominated primarily by Asian diversified industrial manufacturers whose
significant size and scope of operations enable them to achieve economies of
scale. The Company estimates that during 1995 there were approximately 50 Asian
manufacturers of major home appliances. Competition in the Asian home appliance
business is based on a wide variety of factors, including principally local
production capabilities, product features, price, product quality, and
performance.
As a result of its global expansion, the Company believes it may have a
competitive advantage by reason of its ability to share engineering
breakthroughs across regions, transfer best practices, and economically
purchase raw materials and component parts in large volumes.
The financial services industry is an intensely competitive business. Factors
affecting competition include new entrants into a market experiencing only
moderate growth and the continuing pressure to improve investment returns in
the financial services industry. With respect to inventory financing, there has
been a trend toward consolidation resulting in five dominant companies in the
United States market. In terms of total assets, WFC is the smallest of these
companies. WFC believes it has a competitive advantage due to its strong
relationship with the Company and other distribution networks. In the inventory
finance business, WFC's strategy is to exploit niches within the consumer
durables retail market. In consumer finance, WFC utilizes the same retailer
relationships to address the needs of their consumers through private label
credit card programs. The consumer finance market is highly fragmented with
numerous competitors, none of which has a dominant market share.
S-18
<PAGE>
DESCRIPTION OF DEBENTURES
The following description of the particular terms of the debentures (the
"Debentures") offered hereby (referred to in the Prospectus as "Offered Debt
Securities") supplements, and to the extent inconsistent therewith replaces,
the description of the general terms and provisions of Debt Securities set
forth in the accompanying Prospectus, to which description reference is hereby
made. The statements herein concerning the Debentures and the Indenture dated
April 15, 1990 (as amended by the Trust Indenture Reform Act of 1990, the
"Indenture") between the Company and Citibank, N.A., under which the
Debentures will be issued do not purport to be complete. All such statements
are qualified in their entirety by reference to the accompanying Prospectus
and the provisions of the Indenture, which has been filed with the Securities
and Exchange Commission. As of June 30, 1996, the Company had $443.5 million
outstanding under the Indenture.
GENERAL
The Debentures will be limited to $200,000,000 aggregate principal amount
and will mature on , 2016. The Debentures will bear interest from
, 1996, or from the most recent interest payment date to which interest
has been paid or provided for, payable semiannually on and
of each year, commencing , 1997, to the person in whose name
the Debentures (or any predecessor Debentures) is registered at the close of
business on and , as the case may be, next preceding
such interest payment date. The Debentures are not redeemable or repayable
prior to maturity and do not provide for any sinking fund. Principal and
interest will be payable at the office or offices or agency maintained by the
Company for such purposes as contemplated by the Indenture, including, with
respect to payments of interest, by mailing of checks to the registered
holders (provided that so long as the Depositary is the registered holder,
payments of interest will be made to the Depositary by wire transfers).
DEFEASANCE AND COVENANT DEFEASANCE
The provisions of Sections 10.1(B)(ii) and 10.1(B)(iii) of the Indenture
relating to defeasance and covenant defeasance described under the caption
"Description of Debt Securities--Defeasance and Covenant Defeasance" in the
Prospectus shall apply to the Debentures.
BOOK-ENTRY SYSTEM
The Debentures will be issued in the form of one or more fully registered
global securities (the "Global Securities"), which will be deposited with, or
on behalf of, The Depository Trust Company, New York, New York (the
"Depositary") and registered in the name of the Depositary's nominee. Except
as set forth below, the Global Securities may be transferred, in whole or in
part, only to another nominee of the Depositary or to a successor of the
Depositary or its nominee.
The Depositary has advised the Company and the Underwriters as follows: The
Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (the "Participants") and to
facilitate the clearance and settlement of securities transactions between
Participants in such securities through electronic book-entry changes in
accounts of its Participants. Participants include securities brokers and
dealers (including the Underwriters), banks (including the Trustee) and trust
companies, clearing corporations and certain other organizations. Access to
the Depositary's system is also available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("indirect
participants"). Persons who are not Participants may beneficially own
securities held by the Depositary only through Participants or indirect
participants.
S-19
<PAGE>
The Depositary advises that pursuant to procedures established by it (i) upon
issuance of the Debentures, the Depositary will credit the accounts of
Participants designated by the Underwriters with the principal amounts of the
Debentures purchased by the Underwriters and (ii) ownership of beneficial
interests in the Global Securities will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the Depositary
(with respect to the Participants' interests), the Participants and the
indirect participants. The laws of some states require that certain persons
take physical delivery in definitive form of securities that they own.
Consequently, the ability to transfer beneficial interests in the Global
Securities is limited to such extent.
So long as a nominee of the Depositary is the registered owner of the Global
Securities, such nominee for all purposes will be considered the sole owner or
holder of such Debentures under the Indenture. Except as provided below, owners
of beneficial interests in the Global Securities will not be entitled to have
Debentures registered in their names, will not receive or be entitled to
receive physical delivery of Debentures in definitive form, and will not be
considered the owners or holders thereof under the Indenture.
The Trustee, any Paying Agent and the Security Registrar will not have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Securities, or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
Principal and interest payments on the Debentures registered in the name of
the Depositary's nominee will be made by the Trustee to the Depositary's
nominee as the registered owner of the Global Securities. Under the terms of
the Indenture, the Company and the Trustee will treat the persons in whose
names the Debentures are registered as the owners of such Debentures for the
purpose of receiving payment of principal and interest on the Debentures and
for all other purposes whatsoever. Therefore, neither the Company, the Trustee
nor any Paying Agent has any direct responsibility or liability for the payment
of principal or interest on the Debentures to owners of beneficial interests in
the Global Securities. The Depositary has advised the Company and the Trustee
that its present practice is, upon receipt of any payment of principal or
interest, to immediately credit the accounts of the Participants with such
payment in amounts proportionate to their respective holdings in principal
amount of beneficial interests in the Global Securities as shown on the records
of the Depositary. The Depositary's current practice is to credit such
accounts, as to interest, in next-day funds and, as to principal, in same-day
funds. Payments by Participants and indirect participants to owners of
beneficial interests in the Global Securities will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name,"
and will be the responsibility of the Participants or indirect participants.
If the Depositary is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue Debentures in definitive form in exchange for the
Global Securities. In addition, the Company may at any time determine not to
have the Debentures represented by Global Securities and, in such event, will
issue Debentures in definitive form in exchange for the Global Securities. In
either instance, an owner of a beneficial interest in the Global Securities
will be entitled to have Debentures equal in principal amount to such
beneficial interest registered in its name and will be entitled to physical
delivery of such Debentures in definitive form. Debentures so issued in the
definitive form will be issued in denominations of $1,000 and integral
multiples thereof and will be issued in registered form only, without coupons.
S-20
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
and the Pricing Agreement, the Company has agreed to sell to each of the
Underwriters named below (the "Underwriters"), and each of the Underwriters has
severally agreed to purchase, the principal amount of Debentures set forth
opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITER OF DEBENTURES
----------- -------------
<S> <C>
Goldman, Sachs & Co............................................ $
Salomon Brothers Inc...........................................
------------
Total...................................................... $200,000,000
============
</TABLE>
Under the terms and conditions of the Underwriting Agreement and the Pricing
Agreement, the Underwriters have committed to take and pay for all of the
Debentures, if any are taken.
The Company has been advised by the Underwriters that they propose to offer
the Debentures in part directly to the public at the initial public offering
price set forth on the cover page of this Prospectus Supplement and in part to
certain securities dealers at such price less a concession of % of the
principal amount of the Debentures. The Underwriters may allow, and such
dealers may reallow, a concession not to exceed % of the principal amount of
the Debentures to certain other brokers and dealers. After the Debentures are
released for sale to the public, the offering price and other selling terms may
from time to time be varied by the Underwriters.
The Debentures are a new issue of securities with no established trading
market. The Company has been advised by the Underwriters that the Underwriters
intend to make a market in the Debentures, but are not obligated to do so and
may discontinue market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Debentures.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
S-21
<PAGE>
PROSPECTUS
$500,000,000
WHIRLPOOL CORPORATION
DEBT SECURITIES AND WARRANTS TO PURCHASE DEBT SECURITIES
----------------
Whirlpool Corporation ("Whirlpool" or the "Company") from time to time may
offer its debt securities consisting of debentures, notes and/or other
unsecured evidences of indebtedness (the "Debt Securities") (which Debt
Securities may include warrants (the "Warrants") in respect thereof) in an
aggregate principal amount of up to $500,000,000 (including the principal
amounts of Debt Securities deliverable upon exercise of Warrants). The Debt
Securities may be offered as separate series, in amounts, at prices and on
terms to be determined at the time of sale and to be set forth in a supplement
to this Prospectus (a "Prospectus Supplement"). The Company may sell Debt
Securities to or through underwriters, and also may sell Debt Securities
directly to other purchasers or through agents or dealers. See "Plan of
Distribution."
The terms of the Debt Securities, including, where applicable, the specific
designation, aggregate principal amount, denominations, maturity, rate of
interest (which may be fixed or variable), time of payment of interest, the
currency or currency units in which payments in respect of Debt Securities may
be made, terms for redemption, the public offering price, the names of any
underwriters or agents, the principal amounts to be purchased by underwriters
and the compensation of such underwriters or agents, terms of the Warrants (if
applicable) and the other terms in connection with the offering and sale of
the Debt Securities in respect of which this Prospectus is being delivered are
to be set forth in the Prospectus Supplement with respect to such Debt
Securities accompanying this Prospectus.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACYOF THIS
PROSPECTUS. ANY REPRESENTATION TOTHE CONTRARY IS A CRIMINAL
OFFENSE.
----------------
GOLDMAN, SACHS & CO.
----------------
The date of this Prospectus is July 19, 1996.
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. NEITHER THIS PROSPECTUS NOR ANY
PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT
NOR ANY SALE MADE THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE OF SUCH PROSPECTUS OR PROSPECTUS SUPPLEMENT OR THAT THE INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF SUCH PROSPECTUS OR PROSPECTUS SUPPLEMENT.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected and copied at the offices of the
Commission, 450 Fifth Street, N.W., Washington, D.C.; 500 West Madison Street,
Chicago, Illinois; 7 World Trade Center, New York, New York; and at the
Commission's World Wide Web site at http://www.sec.gov; and copies of such
material can be obtained from the Public Reference Section of the Commission
at Washington, D.C. 20549 at prescribed rates. Reports, proxy statements and
other information concerning the Company can also be inspected at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York
10005, and the Midwest Stock Exchange, Incorporated, 440 South LaSalle Street,
Chicago, Illinois 60605. The Company has securities listed on each such
exchange.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933 (the
"Act") with respect to the Debt Securities offered hereby. This Prospectus
does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. The Registration Statement and the exhibits
thereto may be inspected without charge at the office of the Commission and
copies thereof may be obtained from the Commission upon payment of prescribed
fees. Statements contained herein concerning any document filed as an exhibit
to the Registration Statement do not purport to be complete and, in such
instance, are qualified in their entireties by reference to the copy of such
document as filed.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company (SEC File No. 1-3932) with the
Commission are incorporated in and made a part of this Prospectus by
reference, except to the extent that any statement or information contained
therein is modified, superseded or replaced by a statement or information
contained herein or in any other subsequently filed document incorporated
herein by reference: (1) the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995; (2) the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1996; (3) the Company's Current
Reports on Form 8-K dated March 20, 1996, April 23, 1996, June 5, 1996, and
July 16, 1996; and (4) from the date of filing such documents, all documents
filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Debt Securities.
A copy of any or all of the documents incorporated herein by reference
(other than exhibits unless such exhibits are specifically incorporated by
reference in any such document) will be provided, without charge, to any
person to whom a copy of this Prospectus is delivered, upon written or oral
request. Requests for such copies should be directed to the Corporate
Secretary of the Company, Benton Harbor, Michigan 49022-2692 (telephone
616/923-3223).
2
<PAGE>
THE COMPANY
Whirlpool Corporation, the leading worldwide manufacturer and marketer of
major home appliances, was incorporated in 1955 under the laws of Delaware as
the successor to a business that traces its origin to 1898. The Company
manufactures and markets a full line of major home appliances and related
products for home and commercial use and provides certain inventory, consumer,
and other financial services.
The Company manufactures its products in twelve countries and markets its
products under eleven major brand names in approximately 140 countries. Major
home appliances are marketed and distributed in the United States under the
WHIRLPOOL, KITCHENAID, ROPER, ESTATE, CHAMBERS, and COOLERATOR brand names
through Company-owned sales branches primarily to retailers and builders.
KITCHENAID portable appliances are sold to retailers either directly or through
an independent representative organization. The Company sells product to the
builder trade both directly and through contract distributors. Major home
appliances are manufactured and/or distributed in Canada under the INGLIS,
ADMIRAL, SPEED QUEEN, WHIRLPOOL, ESTATE, ROPER, and KITCHENAID brand names.
Refrigerator-freezers, laundry products, room air conditioners, residential
trash compactors, residential and component ice makers, cooking products,
dishwashers, and other products are sold in limited quantities by the Company
to other manufacturers and retailers for resale in North America under their
respective brand names.
The Company has been the principal supplier of home laundry appliances to
Sears, Roebuck and Co. ("Sears") for almost 80 years. The Company is also the
principal supplier to Sears of residential trash compactors and dehumidifiers
and a major supplier to Sears of dishwashers, room air conditioners, and home
refrigeration equipment. The Company also supplies Sears with certain other
products for which the Company is not currently a major supplier. Sales of such
other products to Sears are not significant to the Company's business. The
Company supplies products to Sears for sale under Sears' KENMORE and SEARS
brand names. Sears has also been a major outlet for the Company's WHIRLPOOL and
KITCHENAID brand names since 1989. Sales to Sears are made without underlying
merchandise agreements.
In Europe, Whirlpool Europe markets and distributes its major home appliances
through regional networks under a number of brand names. In 1990, Whirlpool
Europe began an estimated $110 million program to introduce the WHIRLPOOL brand
name to the European marketplace. Whirlpool Europe also markets products under
the BAUKNECHT, IGNIS, and LADEN brand names. In certain Eastern European
countries, products bearing the WHIRLPOOL and IGNIS brand names are presently
sold through independent distributors. Whirlpool Europe also has company-owned
sales subsidiaries in Hungary, Poland, the Czech Republic, Slovakia, and Greece
and a representative office in Russia. Pursuant to the Company's joint venture
agreement with Philips N.V. ("Philips"), except for certain limited exceptions
and subject to certain phase-out provisions, neither Philips nor any subsidiary
of Philips may engage directly or indirectly in the major domestic appliance
business anywhere in the world until January 2, 1999.
Whirlpool Europe also sells products carrying the WHIRLPOOL, BAUKNECHT,
IGNIS, ALGOR, and FIDES brand names to the Company's wholly-owned sales
companies in Asia and/or Latin America (Whirlpool Asia Appliance Group and the
Latin America Appliance Group) and to independent distributors and retailers in
Africa and the Middle East.
In Latin America, the Company offers a broad range of products under well-
recognized brand names such as WHIRLPOOL, BRASTEMP, CONSUL, and SEMER.
In Asia, the Company markets and distributes its major home appliances
through four operating regions: the Greater China region, based in Hong Kong,
which includes the Peoples Republic of China
3
<PAGE>
and Hong Kong; the South Asia region, based in Delhi, which includes India,
Pakistan, and other surrounding markets; the North Asia region, which includes
Japan, Korea, the Philippines, and Taiwan; and the Southeast Asia--Australia
region, which includes Southeast Asia, Australia, and New Zealand. The North
Asia and Southeast Asia--Australia regions are based in Singapore. The Company
markets and sells its products in Asia under the WHIRLPOOL, KITCHENAID, ROPER,
IGNIS, BAUKNECHT, SMC, NARCISSUS, SNOWFLAKE, RAYBO, TVS, and KELVINATOR brand
names.
Whirlpool Financial Corporation ("WFC") provides diversified financial
services to businesses and consumers throughout the United States and Canada
and factoring, inventory, and display financing activities in Europe, Mexico,
and Argentina. WFC conducts its business through three divisions: the
Inventory Finance Division, which provides floorplan financing and display
programs to retailers; the Consumer Finance Division, which provides
installment financing and, through Whirlpool Financial National Bank ("WFNB"),
WFC's credit card bank, consumer credit card programs; and the International
Division, operated through Whirlpool Financial Corporation International,
Whirlpool Financial Latin America Inc., and Whirlpool Financial Corporation
Overseas, wholly owned subsidiaries of WFC, which provide factoring,
inventory, and display financing for retailers of products of Whirlpool
Europe, Whirlpool Argentina, and Vitromatic, Whirlpool's joint venture company
in Mexico. Inventory financing represents the largest segment of WFC's
business, providing services for manufacturers, distributors, and retailers in
the appliance, consumer electronics, outdoor power equipment, residential
heating and cooling equipment, and music industries. WFC has been phasing out
its aerospace financing and leasing portfolios since 1993.
The Company was incorporated in 1955 under the laws of Delaware and is the
successor to a business that began in 1898. The Company's principal executive
offices are located at Benton Harbor, Michigan 49022-2692 (telephone 616/923-
5000).
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios (unaudited) of earnings to fixed
charges for Whirlpool and its consolidated subsidiaries for the three months
ended March 31, 1996 and for each of the years ended December 31, 1995, 1994,
1993, 1992, and 1991.
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, ------------------------
1996 1995 1994 1993 1992 1991
--------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(1).... 1.67 2.04 2.54 2.97 2.53 2.25
</TABLE>
- --------
(1) Earnings consist of pre-tax earnings from continuing operations before
fixed charges, minority interest and the Company's equity in undistributed
net earnings of less than 50% owned affiliated companies, the investment
in which is accounted for by the equity method. Fixed charges consist of
interest on indebtedness, amortization of debt expense and premium, and
that portion of rentals representative of interest.
USE OF PROCEEDS
Except as otherwise provided in the Prospectus Supplement, the net proceeds
received by the Company from the sale of the Debt Securities will be utilized
by the Company as required from time to time for working capital and expansion
of the businesses of the Company and its subsidiaries, including Whirlpool
Financial, for the repayment of existing indebtedness and for other general
corporate purposes. Net proceeds to be used by a subsidiary of the Company
will, in general, be loaned to such subsidiary by the Company. To the extent
not theretofore utilized, the net proceeds
4
<PAGE>
received by the Company may be placed in short-term investments, including
commercial paper and certificates of deposit, or utilized to reduce other
short-term borrowings. Except as may be indicated in the Prospectus Supplement,
no specific determination has been made as to the use of the proceeds of the
Debt Securities in respect of which the Prospectus is being delivered. The
precise amount and timing of sales of Debt Securities will depend on, among
other things, the funding requirements of the Company and its subsidiaries,
market conditions and the availability and cost of other funds to the Company
from time to time.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement (the "Offered Debt Securities") and the
extent, if any, to which such general provisions may not apply thereto will be
described in the Prospectus Supplement relating to such Offered Debt
Securities.
The Debt Securities are to be issued in one or more series (each such series
a "Series") under an Indenture dated as of April 15, 1990 (as amended by the
Trust Indenture Reform Act of 1990, the "Indenture") between the Company and
Citibank, N.A., as Trustee (the "Trustee"), a copy of which is filed as an
exhibit to the Registration Statement. The following summaries of certain
provisions of the Debt Securities and the Indenture do not purport to be
complete and are subject to, and are qualified in their entireties by reference
to, all of the provisions of the Indenture, including the definitions therein
of certain terms. Whenever particular provisions or defined terms in the
Indenture are referred to herein, such provisions or defined terms are
incorporated by reference herein. Section references used herein are references
to the Indenture.
GENERAL
The Indenture does not limit the amount of debt securities which can be
issued thereunder and provides that debt securities of any series may be issued
thereunder up to the aggregate principal amount which may be authorized from
time to time by the Company. The Indenture does not limit the amount of other
indebtedness or securities, other than certain secured indebtedness as
described below, which may be issued by the Company. All Debt Securities will
be unsecured and will rank pari passu with all other unsecured and
unsubordinated indebtedness of the Company. The Trustee will authenticate and
deliver Debt Securities executed and delivered to it by the Company as set
forth in the Indenture.
Reference is made to the Prospectus Supplement for the following and other
possible terms of each Series of the Offered Debt Securities in respect of
which this Prospectus is being delivered: (i) the title of the Offered Debt
Securities; (ii) any limit upon the aggregate principal amount of the Offered
Debt Securities; (iii) if other than 100% of the principal amount, the
percentage of their principal amount at which the Offered Debt Securities will
be offered; (iv) the date or dates on which the principal of the Offered Debt
Securities will be payable; (v) the rate or rates (or method of determination
thereof), if any, at which the Offered Debt Securities will bear interest, the
date or dates from which any such interest will accrue and on which such
interest will be payable, and, with respect to Offered Debt Securities in
registered form, the record dates for the determination of the holders to who
interest is payable; (vi) if other than as set forth herein, the place or
places where the principal of and interest, if any, on the Offered Debt
Securities will be payable; (vii) the price or prices at which, the period or
periods within which and the terms and conditions upon which Offered Debt
Securities may be redeemed, in whole or in part, at the option of the Company,
pursuant to any sinking fund or otherwise; (viii) if other than the principal
amount thereof, the portion of the principal amount of the Offered Debt
Securities which will be payable upon declaration of acceleration of the
maturity thereof;
5
<PAGE>
(ix) the obligation, if any, of the Company to redeem, purchase or repay
Offered Debt Securities, whether pursuant to any sinking fund or analogous
provisions or pursuant to other provisions set forth therein or at the option
of a holder thereof; (x) whether the Offered Debt Securities will be issuable
in registered or bearer form or both, and the rights of the holders to exchange
Offered Debt Securities in bearer form for Offered Debt Securities in
registered form and vice versa and the circumstances under which any such
exchanges, if permitted, may be made; (xi) whether and under what circumstances
the Company will pay additional amounts on the Offered Debt Securities held by
a person who is not a U.S. Person in respect of taxes or similar charges
withheld or deducted and, if so, whether the Company will have the option to
redeem such Offered Debt Securities rather than pay such additional amounts;
(xii) whether and under what circumstances the Offered Debt Securities are
convertible into Debt Securities of a different Series; (xiii) information with
respect to Warrants, if any; (xiv) the currency or currency unit in which the
Offered Debt Securities are issued or payable; (xv) whether the Offered Debt
Securities will be represented in whole or in part by one or more global notes
registered in the name of a depository or its nominee; and (xvi) any other
terms or conditions not inconsistent with the provisions of the Indenture upon
which the Offered Debt Securities will be offered. (Section 2.3) "Principal"
when used herein includes, when appropriate, the premium, if any, on the Debt
Securities.
One or more Series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. Federal income tax
consequences and special considerations applicable thereto will be described in
the Prospectus Supplement or Prospectus Supplements relating to any such Series
of Debt Securities. In general, federal income tax consequences applicable to a
Series of Debt Securities will be described in the Prospectus Supplement
relating thereto, to the extent applicable.
Unless otherwise provided in the Prospectus Supplement relating to any
Offered Debt Securities, principal and interest, if any, will be payable, and
the Debt Securities will be transferable or exchangeable, at the office or
offices or agency maintained by the Company for such purposes, provided that
payment of interest on any registered Debt Securities will be paid at such
place of payment by check mailed to the persons entitled thereto at the
addresses of such persons appearing on the Security register. Interest on
registered Debt Securities will be payable on any interest payment date to the
persons in whose name the Debt Securities are registered at the close of
business on the record date with respect to such interest payment date.
The Debt Securities may be issued in registered form or bearer form or both
as specified in the terms of the Series. Additionally, the Debt Securities may
be represented in whole or in part by one or more global notes registered in
the name of a depository or its nominee and, if so represented, beneficial
interests in such global note will be shown on, and transfers thereof will be
effected only through, records maintained by the designated depository and its
participants.
Debt Securities in bearer form will be transferable by delivery. (Section
2.8) To the extent set forth in the Prospectus Supplement relating to such Debt
Securities, interest on Debt Securities in bearer form will be payable only
against presentation and surrender of the coupons for the interest installments
evidenced thereby as they mature at a paying agency of the Company located
outside of the United States and its possessions. (Section 3.1) The Company
will maintain such an agency for a period of two years (or any period
thereafter for which it is necessary to conform to United States tax laws or
regulations) after the principal of such Debt Securities has become due and
payable. (Section 3.2)
The Debt Securities offered hereby will be issued in denominations of $1,000
or any whole multiple of $1,000 or the equivalent thereof in foreign
denominated currency or currency units, unless otherwise specified in the
Prospectus Supplement relating to any Offered Debt Securities. (Section 2.7)
The Indenture requires the annual filing by the Company with the Trustee of a
certificate as to compliance with certain covenants contained in the Indenture.
(Section 3.5)
6
<PAGE>
The Company will comply with Section 14(e) under the Exchange Act, and any
other tender offer rules under the Exchange Act which may then be applicable,
in connection with any obligation of the Company to purchase Offered Debt
Securities at the option of the holders thereof. Any such obligation applicable
to a Series of Debt Securities will be described in the Prospectus Supplement
or Prospectus Supplements relating thereto.
The Company may at any time purchase Debt Securities at any price in the open
market or otherwise. Debt Securities so purchased by the Company may, at its
sole option, be held, resold or surrendered to the Trustee for cancellation.
Unless otherwise described in a Prospectus Supplement relating to any Offered
Debt Securities, there are no covenants or provisions contained in the
Indenture which may afford the holders of Offered Debt Securities direct
protection in the event of a highly leveraged transaction involving the
Company.
EXCHANGE OF SECURITIES
Registered Debt Securities may be exchanged for an equal aggregate principal
amount of registered Debt Securities of the same Series and date of maturity in
such authorized denominations as may be requested upon surrender of the
registered Debt Securities at an agency of the Company maintained for such
purpose and upon fulfillment of all other requirements of such agent. (Section
2.8) No service charge will be made for any transfer or exchange of the Debt
Securities, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. (Section
2.8)
To the extent and under the circumstances specified by the terms of a Series
of Debt Securities authorized to be issued in registered form and bearer form,
bearer Debt Securities may be exchanged for an equal aggregate principal amount
of registered Debt Securities of the same Series and date of maturity in such
authorized denominations as may be requested upon surrender of the bearer Debt
Securities with all unpaid coupons relating thereto at an agency of the Company
maintained for such purposes and upon fulfillment of all other requirements of
such agent. (Section 2.8) The terms of a Series of Debt Securities will
normally not permit registered Debt Securities to be exchanged for bearer Debt
Securities.
LIMITATIONS ON LIENS
Unless otherwise indicated in the Prospectus Supplement, the Company will
covenant that, so long as any of the Debt Securities of a Series remain
outstanding, the Company will not, nor will it permit any Restricted Subsidiary
to, secure indebtedness for money borrowed (hereinafter referred to as "Debt")
by placing a Lien on any Principal Property now or hereafter owned or leased by
the Company or any Restricted Subsidiary or on any shares of stock or Debt of
any Restricted Subsidiary without equally and ratably securing the Debt
Securities of such Series, unless (i) the aggregate principal amount of such
secured Debt then outstanding plus (ii) all Attributable Debt of the Company
and its Restricted Subsidiaries in respect of sale and leaseback transactions
described below covering Principal Properties (other than sale and leaseback
transactions under (b) of the following paragraph) does not exceed an amount
equal to 10% of Consolidated Net Tangible Assets. This restriction will not
apply to, and there shall be excluded in computing secured Debt for purposes of
this restriction, certain permitted Liens, including (a) Liens existing as of
the date of the Indenture, (b) Liens on property or assets of, or on any shares
of stock or Debt of, any corporation existing at the time such corporation
becomes a Restricted Subsidiary, (c) Liens on property or assets or shares of
stock or Debt existing at the time of acquisition and certain purchase money or
similar Liens, (d) Liens to secure certain development, operation,
construction, alteration, repair or improvement costs, (e) Liens in favor of,
or which secure Debt owing to, the Company or a Restricted Subsidiary, (f)
Liens in connection with
7
<PAGE>
government contracts, including the assignment of moneys due or to come due
thereon, (g) certain Liens in connection with legal proceedings or arising in
the ordinary course of business and not in connection with the borrowing of
money, (h) Liens on property securing tax-exempt obligations issued by a
domestic governmental issuer to finance the cost of acquisition or construction
of such property, and (i) extensions, substitutions, replacements or renewals
of the foregoing. (Section 3.9)
RESTRICTIONS ON SALE AND LEASEBACKS
Unless otherwise indicated in the Prospectus Supplement, the Company will
covenant that, so long as any of the Debt Securities of a Series remain
outstanding, the Company will not, nor will it permit any Restricted Subsidiary
to, enter into any sale and leaseback transaction (except a lease for a period
not exceeding three years) after the date of the Indenture covering any
Principal Property which was or is owned or leased by the Company or a
Restricted Subsidiary and which has been or is to be sold or transferred more
than 120 days after such property has been owned by the Company or such
Restricted Subsidiary and completion of construction and commencement of full
operation thereof, unless (a) the Attributable Debt in respect thereto and all
other sale and leaseback transactions entered into after the date of the
Indenture (other than those the proceeds of which are applied to reduce
indebtedness under (b) following), plus the aggregate principal amount of then
outstanding secured Debt not otherwise permitted or excepted without equally
and ratably securing the Debt Securities, does not exceed 10% of Consolidated
Net Tangible Assets, or (b) an amount equal to the greater of the net proceeds
of the sale or the fair market value of the Principal Property leased is
applied within 120 days after the sale or transfer to the voluntary retirement
of indebtedness (including Debt Securities) maturing more than one year
thereafter. (Section 3.10)
CERTAIN DEFINITIONS
The term "Subsidiary" is defined to mean a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency. The term "Restricted Subsidiary" is defined to
mean any Subsidiary (a) substantially all the property of which is located, or
substantially all the business of which is carried on, within the United
States, or (b) which owns or leases any Principal Property; provided, however,
that the term "Restricted Subsidiary" shall not include any Subsidiary (i) more
than 80% of whose revenues during the four preceding calendar quarters, if any,
were derived from, and more than 80% of whose assets are related to, the
financing of foreign Subsidiaries, or the financing of sales or leasing to
Persons other than the Company or any other Restricted Subsidiary, (ii) which
is primarily engaged in holding or developing real estate or constructing
buildings or designing, constructing or otherwise manufacturing structures,
equipment, systems, machines, devices or facilities for the control or
abatement of atmospheric pollutants or contaminants, water pollution, noise,
odor or other pollution or waste disposal, (iii) which is a bank, insurance
company or finance company, (iv) which is or was a "DISC" (Domestic
International Sales Corporation) or a "FSC" (Foreign Sales Corporation), as
defined in Sections 992 or 922, respectively, of the Internal Revenue Code of
1986, as amended (the "Code"), or which receives similar tax treatment under
any subsequent amendments thereto or successor laws thereof, or (v) which is
any other financial entity whose accounts as of the date of determination are
not required to be consolidated with the accounts of the Company in its audited
consolidated financial statements (but such Subsidiary shall be excluded
pursuant to any of clauses (i) through (v) of this proviso only so long as it
shall not own any Principal Property). The term "Principal Property" is defined
to mean any building, structure or other facility, together with the land upon
which it is erected and fixtures comprising a part thereof, owned or leased by
the Company or any Restricted Subsidiary, used primarily for manufacturing and
located in the United States, the gross book value on the books
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<PAGE>
of the Company or such Restricted Subsidiary (without deduction of any
depreciation reserve) of which on the date as of which the determination is
being made exceeds 1% of Consolidated Net Tangible Assets, other than any such
building, structure or other facility or any portion thereof or any such
fixture (together with the land upon which it is erected and fixtures
comprising a part thereof) (i) which is financed by industrial development
bonds which are tax exempt pursuant to Section 103 of the Code (or which
receive similar tax treatment under any subsequent amendments thereto or
successor laws thereof), or (ii) which, in the opinion of the Board of
Directors of the Company, is not of material importance to the total business
conducted by the Company and its Restricted Subsidiaries taken as a whole. The
term "Attributable Debt," in respect of the sale and leaseback transactions
described above, is defined to mean the amount determined by multiplying the
greater, at the time such transaction is entered into, of (i) the fair value of
the real property subject to such arrangement (as determined by the Company) or
(ii) the net proceeds of the sale of such real property to the lender or
investor, by a fraction of which the numerator is the unexpired initial term of
the lease of such real property as of the date of determination and of which
the denominator is the full initial term of such lease. Sale and leasebacks
with respect to facilities financed with certain tax exempt securities are
excepted from the definition. The term "Consolidated Net Tangible Assets" is
defined to mean the aggregate amount of assets (less applicable reserves and
other properly deductible items) after deducting therefrom (a) all current
liabilities (excluding any thereof constituting Funded Debt by reason of being
extendible or renewable), and (b) all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other like intangibles, all
as set forth on the most recent balance sheet of the Company and its
consolidated subsidiaries and computed in accordance with generally accepted
accounting principles. The term "Funded Debt" is defined to mean all
indebtedness for money borrowed, or evidenced by a bond, debenture, note or
similar instrument or agreement whether or not for money borrowed, having a
maturity of more than 12 months from the date as of which the amount thereof is
to be determined or having a maturity of less than 12 months but by its terms
being renewable or extendible beyond 12 months from such date at the option of
the borrower. (Section 1.1) The term "Lien" is defined to mean any pledge,
mortgage or other lien (including lease purchase, installment purchase and
other title retention financing arrangements) on or in respect of any Principal
Property owned or leased by the Company or any Restricted Subsidiary, or on any
shares of stock or Debt of any Restricted Subsidiary. (Section 3.9)
EVENTS OF DEFAULT
An Event of Default with respect to the Debt Securities of any Series is
defined in the Indenture as: (i) a failure to pay any interest on any Debt
Security of that Series when due and payable, and continuance of such failure
for a period of 30 days; (ii) failure to pay the principal on any Debt Security
of that Series as and when the same shall become due and payable either at
maturity, upon redemption (other than with respect to a sinking fund payment),
by declaration or otherwise; (iii) failure to deposit any sinking fund payment
when due in respect of that Series, and continuance of such failure for a
period of 30 days; (iv) default in the performance, or breach, of any other
covenant or warranty of the Company set forth in the Indenture not otherwise
dealt with in Section 5.1 (other than a covenant or warranty included in the
Indenture solely for the benefit of a Series of Securities other than that
Series) and continuance of such default or breach for a period of 90 days after
due notice by the Trustee or by the Holders of at least 25% in principal amount
of the Outstanding Securities of that Series; (v) failure to pay any portion of
the principal of any indebtedness for money borrowed by the Company (including
Debt Securities of another Series), which indebtedness is in excess of
$10,000,000 outstanding principal amount, when due and payable after the
expiration of any applicable grace period with respect thereto or the
acceleration of such indebtedness, if such acceleration is not annulled within
10 days after written notice as provided in the Indenture; and (vi) certain
events of bankruptcy, insolvency or reorganization of the Company. (Section
5.1) Additional Events of Default may be prescribed for the benefit of holders
of certain Series of Debt Securities which, if prescribed, will be described in
the Prospectus Supplement relating to such Debt Securities. The Indenture
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provides that the Trustee shall notify the holders of Debt Securities of each
Series of all defaults known to it and affecting that Series within 90 days
after the occurrence thereof unless such defaults shall have been cured before
the giving of such notice (the term "default" or "defaults" for the purposes of
this section of the Indenture is defined to mean any event or condition which
is, or with notice or lapse of time or both would become, an Event of Default).
The Indenture provides that notwithstanding the foregoing, except in the case
of a default in the payment of the principal of or interest on any of the Debt
Securities of such Series or any default in the payment of any sinking fund
installment or analogous obligation in respect of any of the Debt Securities of
such Series, the Trustee shall be protected in withholding such notice if the
Trustee in good faith determines that the withholding of such notice is in the
interests of the holders of Debt Securities of such Series. (Section 5.11)
The Indenture provides that if an Event of Default with respect to any Series
of Debt Securities shall have occurred and be continuing, either the Trustee or
the holders of not less than 25% in aggregate principal amount of Debt
Securities of that Series then outstanding may declare the principal amount
(or, if the Debt Securities of that Series are Original Issue Discount
Securities (as defined), such portion of the principal amount as may be
specified in the term of that Series) of all the Debt Securities of that Series
to be due and payable immediately, but upon certain conditions such declaration
may be annulled. (Section 5.1) Any past defaults and the consequences thereof
(except a default in the payment of principal of or interest on Debt Securities
of that Series) may be waived by the holders of a majority in principal amount
of the Debt Securities of that Series then outstanding. (Sections 5.1 and 5.10)
The Indenture also permits the Company to omit compliance with certain
covenants in the Indenture with respect to Debt Security of any Series upon
waiver by the holders of a majority in principal amount of the Debt Securities
of such Series then outstanding. (Section 3.11)
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default with respect to any Series of Debt
Securities shall occur and be continuing, the Trustee shall be under no
obligation to exercise any of the trusts or powers vested in it by the
Indenture at the request or direction of any of the holders of that Series,
unless such holders shall have offered to the Trustee reasonable security or
indemnity. (Sections 6.1 and 6.2) Subject to such provisions for security or
indemnification and certain limitations contained in the Indenture, the holders
of a majority in aggregate principal amount of the Debt Securities of each
Series affected by an Event of Default and then outstanding shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee under the Indenture or exercising any trust or
power conferred on the Trustee with respect to the Debt Securities of that
Series. (Section 5.9)
No holder of any Debt Security of any Series will have any right by virtue or
by availing of any provision of the Indenture to institute any proceeding at
law or in equity or in bankruptcy or otherwise upon or under or with respect to
the Indenture or for any remedy thereunder, unless such holder shall have
previously given the Trustee written notice of an Event of Default with respect
to Debt Securities of that Series and unless also the holders of at least 25%
in aggregate principal amount of the outstanding Debt Securities of that Series
shall have made written request, and offered reasonable indemnity, to the
Trustee to institute such proceeding as trustee and the Trustee shall have
failed to institute such proceeding within 60 days after its receipt of such
request, and the Trustee shall not have received from the holders of a majority
in aggregate principal amount of the outstanding Debt Securities of that Series
a direction inconsistent with such request. (Section 5.6) However, the right of
a holder of any Debt Security to receive payment of the principal of and any
interest on such Debt Security on or after the due dates expressed in such Debt
Security, or to institute suit for the enforcement of any such payment on or
after such dates, shall not be impaired or affected without the consent of such
holder. (Section 5.7)
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture with respect to any Series (except for certain specified
surviving obligations including, among other things, the Company's obligation
to pay the principal of and interest on the Debt
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<PAGE>
Securities of such Series) will be discharged and cancelled upon the
satisfaction of certain conditions, including the payment of all the Debt
Securities of such Series or the deposit with the Trustee of cash or
appropriate Government Obligations (as defined) or a combination thereof
sufficient for such payment or redemption in accordance with the Indenture and
the terms of the Debt Securities of such Series. (Section 10.1)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Debt Securities of each Series at the time outstanding,
to execute supplemental indentures adding any provisions to, or changing in any
manner or eliminating any of the provisions of, the Indenture or any
supplemental indenture with respect to the Debt Securities of such Series or
modifying in any manner the rights of the holders of the Debt Securities of
such Series; provided that no such supplemental indenture may (i) extend the
final maturity of any Debt Security, or reduce the principal amount thereof or
any premium thereon, or reduce the rate or extend the time of payment of any
interest thereon, or reduce any amount payable on redemption thereof, or impair
or affect the right of any holder of Debt Securities to institute suit for
payment thereof or, if the Debt Securities provide therefor, any right of
repayment at the option of the holders of the Debt Securities, without the
consent of the holder of each Debt Security so affected, or (ii) reduce the
aforesaid percentage of Debt Securities of such Series, the consent of the
holders of which is required for any such supplemental indenture, without the
consent of the holders of all Debt Securities of such Series so affected.
(Section 8.2) Additionally, in certain prescribed instances, the Company and
the Trustee may execute supplemental indentures without the consent of the
holders of Debt Securities. (Section 8.1)
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that, if such provision is made applicable to the Debt
Securities of any Series pursuant to Section 2.3 of the Indenture, then the
Company may elect either (a) to terminate (and be deemed to have satisfied) all
its obligations with respect to such Debt Securities (except for the
obligations to register the transfer or exchange of such Debt Securities, to
replace temporary or mutilated, destroyed, lost or stolen Debt Securities, to
maintain an office or agency in respect of the Debt Securities, to compensate
and indemnify the Trustee and to punctually, pay or cause to be paid the
principal of, and interest on, all Debt Securities of such Series when due)
("defeasance") or (b) to be released from its obligations with respect to such
Debt Securities under Sections 3.7, 3.8, 3.9 and 3.10 of the Indenture (being
the restrictions described above under "Limitations on Liens" and "Restrictions
on Sale and Leasebacks" and certain requirements as to maintenance of Principal
Properties and payment of taxes and other claims) ("covenant defeasance"), upon
the deposit with the Trustee, in trust for such purpose, of money and/or
Government Obligations which through the payment of principal and interest in
accordance with their terms (without consideration of any reinvestment) will
provide money, in an amount sufficient (in the opinion of a nationally
recognized firm of independent public accountants) to pay the principal of and
interest, if any, on the Outstanding Debt Securities of such Series, and any
mandatory sinking fund or analogous payments thereon, on the scheduled due
dates therefor. Such a trust may be established only if, among other things,
the Company has delivered to the Trustee an opinion of counsel (as specified in
the Indenture) with regard to certain matters, including an opinion to the
effect that the Holders of such Debt Securities will not recognize income, gain
or loss for Federal income tax purposes as a result of such deposit and
discharge and will be subject to Federal income tax on the same amounts and in
the same manner and at the same times as would have been the case if such
deposit and defeasance or covenant defeasance, as the case may be, had not
occurred. The Prospectus Supplement may further describe the provisions, if
any, permitting defeasance or covenant defeasance with respect to the Debt
Securities of any Series. (Section 10.1)
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CONCERNING THE TRUSTEE
The Company presently does, and may from time to time in the future, maintain
lines of credit and have customary banking relationships with Citibank, N.A.,
the Trustee under the Indenture. The Company has several series of debt
securities outstanding under the Indenture for which the Trustee is serving as
trustee and the Trustee may serve as trustee for other debt securities issued
by the Company from time to time.
DESCRIPTION OF WARRANTS
The Company may issue, together with other Debt Securities or separately,
Warrants for the purchase of Debt Securities. The Warrants will be issued under
Warrant Agreements (each a "Warrant Agreement") to be entered into between the
Company and a bank or trust company, as Warrant Agent (the "Warrant Agent"),
all as shall be set forth in the Prospectus Supplement or Prospectus
Supplements relating to Warrants being offered thereby. A copy of the form of
Warrant Agreement, including the form of Warrant Certificate representing the
Warrants (the "Warrant Certificates"), is filed as an exhibit to the
Registration Statement. The following summaries of certain provisions of the
Warrant Agreement and the Warrant Certificates do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all
the provisions of the Warrant Agreement and the Warrant Certificates,
respectively, including the definitions therein of certain terms.
GENERAL
The Prospectus Supplement or Prospectus Supplements relating to any Warrants
will describe the terms of the Warrants offered thereby, the Warrant Agreement
relating to such Warrants and the Warrant Certificates representing such
Warrants, including the following: (i) the designation, aggregate principal
amount and terms of the Debt Securities purchasable upon exercise of such
Warrants and the procedures and conditions relating to the exercise of such
Warrants; (ii) the designation and terms of any related Debt Securities with
which such Warrants are issued and the number of such Warrants issued with each
such Debt Security; (iii) the date, if any, on and after which such Warrants
and the related Debt Securities will be separately transferable; (iv) the
principal amount of Debt Securities purchasable upon exercise of Warrants and
the price at which such principal amount of Debt Securities may be purchased
upon such exercise; (v) the date on which the right to exercise such Warrants
shall commence and the date on which such right shall expire (the "Expiration
Date"); (vi) if the Debt Securities purchasable upon exercise of such Warrants
are Original Issue Discount Securities, a discussion of federal income tax
considerations applicable thereto; and (vii) whether the Warrants represented
by the Warrant Certificates will be issued in registered or bearer form, and,
if registered, where they may be transferred and registered.
Warrant Certificates will be exchangeable for new Warrant Certificates of
different denominations and Warrants may be exercised at the corporate trust
office of the Warrant Agent or any other office indicated in the applicable
Prospectus Supplement. Prior to the exercise of their Warrants, holders of
Warrants will not have any of the rights of holders of the Debt Securities
purchasable upon such exercise (except to the extent that consent of holders of
Warrants may be required for certain modifications of the terms of the
Indenture and a Series of Debt Securities issuable upon exercise of the
Warrants) and will not be entitled to payments of principal of or interest, if
any, on the Debt Securities purchasable upon such exercise.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder thereof to purchase for cash such
principal amount of Debt Securities at such exercise price as shall in each
case be set forth in, or be determinable as set forth
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<PAGE>
in, the Prospectus Supplement relating to the Warrants offered thereby.
Warrants may be exercised at any time up to the close of business on the
Expiration Date set forth in the Prospectus Supplement relating to the Warrants
offered thereby. After the close of business on the Expiration Date,
unexercised Warrants will become void.
Warrants may be exercised as set forth in the Prospectus Supplement relating
to the Warrants offered thereby. As soon as practicable after the proper
exercise of a Warrant, the Company shall issue, pursuant to the Indenture, the
Debt Securities purchased upon such exercise. If less than all of the Warrants
represented by such Warrant Certificate are exercised, a new Warrant
Certificate will be issued for the remaining amount of Warrants.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to or through underwriters and also may
sell Debt Securities directly to other purchasers or through agents or dealers,
or the Company may sell Debt Securities through a combination of any such
methods.
The distribution of the Debt Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Underwriters may sell Debt
Securities to or through dealers.
In connection with sales of Debt Securities, underwriters may receive
compensation from the Company or from purchasers of Debt Securities for whom
they may act as agents, in the form of discounts, concessions or commissions.
Underwriters, dealers and agents that participate in the distribution of Debt
Securities may be deemed to be underwriters, and any discounts or commissions
received by them and any profit on the resale of Debt Securities by them may be
deemed to be underwriting discounts and commissions, under the Act. Any such
underwriter or agent will be identified, and any such compensation will be
described, in the Prospectus Supplement.
Pursuant to agreements which the Company may enter into, underwriters,
dealers and agents who participate in the distribution of Debt Securities may
be entitled to indemnification by the Company against certain liabilities,
including liabilities under the Act.
If so indicated in the Prospectus Supplement, the Company will authorize
dealers or other persons acting as the Company's agents to solicit offers by
certain institutions to purchase Debt Securities from the Company pursuant to
contracts providing for payment and delivery on a future date. Institutions
with which such contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and others, but in all cases such institutions must be
approved by the Company. The obligations of any purchaser under any such
contract will be subject to the condition that the purchase of Offered Debt
Securities shall not at the time of delivery be prohibited under the laws of
the jurisdiction to which such purchaser is subject. The dealers and such other
agents will not have any responsibilities in respect of the validity or
performance of such contracts.
Unless otherwise indicated in the Prospectus Supplement, the Company does not
intend to list any of the Debt Securities on a national securities exchange. In
the event the Debt Securities are not listed on a national securities exchange,
certain broker-dealers may make a market in the Debt Securities, but will not
be obligated to do so and may discontinue any market making at any time without
notice. No assurance can be given that any broker-dealer will make a market in
the Debt Securities or as to the liquidity of the trading market for the Debt
Securities, whether or not the Debt Securities are listed on a national
securities exchange. The Prospectus Supplement with respect to the
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<PAGE>
Debt Securities will state, if known, whether or not any broker-dealer intends
to make a market in the Debt Securities. If no such determination has been
made, the Prospectus Supplement will so state.
The place and time of delivery for the Debt Securities in respect of which
this Prospectus is delivered are set forth in the Prospectus Supplement.
LEGAL OPINIONS
Unless otherwise indicated in the Prospectus Supplement, certain legal
matters regarding the Offered Debt Securities will be passed upon for the
Company by Kirkland & Ellis and for the underwriters by Mayer, Brown & Platt.
From time to time, Mayer, Brown & Platt represents the Company in certain
matters.
EXPERTS
The financial statements and schedules incorporated by reference in the
Registration Statement have been audited by Ernst & Young LLP and Price
Waterhouse LLP, independent auditors, to the extent and for the periods
indicated in their reports thereon which are included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995. The financial
statements and schedule audited by Ernst & Young LLP and Price Waterhouse
Auditores Independetes, Brazil have been incorporated herein by reference in
reliance on their reports given on their authority as experts in accounting
and auditing.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PRO-
SPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS
NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CRE-
ATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COM-
PANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company............................................................... S-2
Recent Developments....................................................... S-3
Use of Proceeds........................................................... S-5
Capitalization............................................................ S-5
Selected Historical Consolidated Financial Data........................... S-6
Management's Discussion and Analysis of Results of Operations and
Financial Condition...................................................... S-7
Business.................................................................. S-15
Description of Debentures................................................. S-19
Underwriting.............................................................. S-21
PROSPECTUS
Available Information..................................................... 2
Documents Incorporated by Reference....................................... 2
The Company............................................................... 3
Ratios of Earnings to Fixed Charges....................................... 4
Use of Proceeds........................................................... 4
Description of Debt Securities............................................ 5
Description of Warrants................................................... 12
Plan of Distribution...................................................... 13
Legal Opinions............................................................ 14
Experts................................................................... 14
</TABLE>
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$200,000,000
WHIRLPOOL CORPORATION
% DEBENTURES
DUE , 2016
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LOGO
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GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC
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