<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
Commission file number 1-3932
WHIRLPOOL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-1490038
(State of incorporation) (I.R.S. Employer
Identification No.)
2000 M-63
Benton Harbor, Michigan 49022-2692
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 616/923-5000
The registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No .
----- -----
Number of shares outstanding of each of the issuer's classes of common stock, as
of the latest practicable date:
Class of common stock Shares outstanding at March 31, 1996
--------------------- ------------------------------------
Common stock, par value $1 per share 74,191,097
PAGE 1 OF 19
<PAGE>
QUARTERLY REPORT ON FORM 10-Q
-----------------------------
WHIRLPOOL CORPORATION
---------------------
Quarter Ended March 31, 1996
INDEX OF INFORMATION INCLUDED IN REPORT
Page
----
PART I - FINANCIAL INFORMATION
- - ------------------------------
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Statements
of Earnings 3
Consolidated Condensed Balance Sheets 4
Consolidated Condensed Statements
of Cash Flows 6
Notes to Consolidated Condensed
Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 10
PART II - OTHER INFORMATION
- - ---------------------------
Item 6. Exhibits and Reports on Form 8-K 16
2
<PAGE>
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (UNAUDITED)
WHIRLPOOL CORPORATION AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31
(millions of dollars except share data)
<TABLE>
<CAPTION>
Supplemental Consolidating Data
-------------------------------------------
Whirlpool Corporation Whirlpool with WFC Whirlpool Financial
(Consolidated) on an Equity Basis Corporation (WFC)
--------------------- ------------------ -------------------
1996 1995 1996 1995 1996 1995
------ ------ ------ ------ ---- ----
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Net sales $2,013 $1,939 $2,013 $1,939 $ -- $ --
Financial services 46 46 -- -- 54 52
------ ------ ------ ------ ---- ----
2,059 1,985 2,013 1,939 54 52
EXPENSES
Cost of products sold 1,563 1,438 1,563 1,438 -- --
Selling and administrative 393 396 369 372 32 30
Financial services interest 16 16 -- -- 19 18
Intangible amortization 9 6 9 6 -- --
------ ------ ------ ------ ---- ----
1,981 1,856 1,941 1,816 51 48
------ ------ ------ ------ ---- ----
OPERATING PROFIT 78 129 72 123 3 4
OTHER INCOME (EXPENSE)
Interest and sundry 3 (2) (2) (6) 5 4
Interest expense (40) (29) (37) (27) -- --
------ ------ ------ ------ ---- ----
EARNINGS BEFORE TAXES AND OTHER ITEMS 41 98 33 90 8 8
Income taxes 18 39 15 36 3 3
------ ------ ------ ------ ---- ----
EARNINGS BEFORE EQUITY EARNINGS AND OTHER ITEMS 23 59 18 54 5 5
Equity in WFC -- -- 4 4 -- --
Equity in affiliated companies 14 18 14 18 -- --
Minority interests 1 (2) 2 (1) (1) (1)
------ ------ ------ ------ ---- ----
NET EARNINGS $ 38 $ 75 $ 38 $ 75 $ 4 $ 4
====== ====== ====== ====== ==== ====
Per share of Common Stock:
Primary earnings $ 0.50 $ 1.00
====== ======
Cash dividends $ 0.34 $ 0.34
====== ======
</TABLE>
See notes to consolidated condensed financial statements
3
<PAGE>
CONSOLIDATED CONDENSED BALANCE SHEETS
WHIRLPOOL CORPORATION AND SUBSIDIARIES
(millions of dollars)
<TABLE>
<CAPTION>
Supplemental Consolidating Data
-------------------------------------------------
Whirlpool Corporation Whirlpool with WFC Whirlpool Financial
(Consolidated) on an Equity Basis Corporation (WFC)
------------------------ ------------------------ -----------------------
March 31 December 31 March 31 December 31 March 31 December 31
1996 1995 1996 1995 1996 1995
(Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited)
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 147 $ 149 $ 118 $ 125 $ 29 $ 24
Trade receivables, less allowances
(1996: $39; 1995: $39) 1,080 1,031 1,080 1,031 -- --
Financing receivables and leases, less allowances
(1996: $11; 1995: $12) 1,114 1,086 -- -- 1,114 1,086
Inventories 1,156 1,029 1,156 1,029 -- --
Other current assets 269 246 266 235 9 11
------- ------- ------- ------- ------ ------
TOTAL CURRENT ASSETS 3,766 3,541 2,620 2,420 1,152 1,121
Investments and other assets 822 777 1,092 1,046 -- --
Financing receivables and leases, less allowances
(1996: $25; 1995: $30) 733 772 -- -- 733 772
Intangibles, net 908 931 908 931 -- --
------- ------- ------- ------- ------ ------
2,463 2,480 2,000 1,977 733 772
Property, plant and equipment 3,702 3,662 3,679 3,638 23 24
Accumulated depreciation (1,941) (1,883) (1,927) (1,867) (14) (16)
------- ------- ------- ------- ------ ------
1,761 1,779 1,752 1,771 9 8
------- ------- ------- ------- ------ ------
TOTAL ASSETS $ 7,990 $ 7,800 $ 6,372 $ 6,168 $1,894 $1,901
======= ======= ======= ======= ====== ======
</TABLE>
See notes to consolidated condensed financial statements
4
<PAGE>
CONSOLIDATED CONDENSED BALANCE SHEETS
WHIRLPOOL CORPORATION AND SUBSIDIARIES
(millions of dollars)
<TABLE>
<CAPTION>
Supplemental Consolidating Data
-------------------------------------------------
Whirlpool Corporation Whirlpool with WFC Whirlpool Financial
(Consolidated) on an Equity Basis Corporation (WFC)
----------------------- ----------------------- -----------------------
March 31 December 31 March 31 December 31 March 31 December 31
1996 1995 1996 1995 1996 1995
(Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited)
----------- --------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $2,222 $1,998 $ 986 $ 765 $1,236 $1,233
Accounts payable 943 977 848 896 101 81
Other current liabilities 801 854 805 844 (4) 10
------ ------ ------ ------ ------ ------
TOTAL CURRENT LIABILITIES 3,966 3,829 2,639 2,505 1,333 1,324
Long-term debt 957 983 869 870 88 113
Postemployment benefits 555 517 550 517 5 --
Other liabilities 441 415 318 295 123 120
------ ------ ------ ------ ------ ------
1,953 1,915 1,737 1,682 216 233
Minority interests 178 179 103 104 75 75
STOCKHOLDERS' EQUITY
Common stock 81 81 81 81 8 8
Paid-in capital 232 229 232 229 26 26
Retained earnings 1,875 1,863 1,875 1,863 238 234
Unearned restricted stock (8) (8) (8) (8) -- --
Currency translation adjustments (52) (53) (52) (53) (2) 1
Treasury stock--at cost (235) (235) (235) (235) -- --
------ ------ ------ ------ ------ ------
TOTAL STOCKHOLDERS' EQUITY 1,893 1,877 1,893 1,877 270 269
------ ------ ------ ------ ------ ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,990 $7,800 $6,372 $6,168 $1,894 $1,901
====== ====== ====== ====== ====== ======
</TABLE>
See notes to consolidated condensed financial statements
5
<PAGE>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
WHIRLPOOL CORPORATION AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31,
(millions of dollars)
<TABLE>
<CAPTION>
Supplemental Consolidating Data
--------------------------------------------
Whirlpool Corporation Whirlpool with WFC Whirlpool Financial
(Consolidated) on an Equity Basis Corporation (WFC)
--------------------- ------------------- -------------------
1996 1995 1996 1995 1996 1995
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 38 $ 75 $ 38 $ 75 $ 4 $ 4
Equity in net earnings of affiliated
companies, less dividends received (8) (12) (8) (12) -- --
Equity in net earnings of WFC -- -- (4) (4) -- --
Depreciation and amortization 89 84 82 77 7 7
Provision for doubtful accounts 13 9 4 2 9 7
Restructuring spending (21) -- (21) -- -- --
Change in receivables (62) 16 (62) 16 -- --
Change in inventories (135) (228) (135) (228) -- --
Change in payables (46) (29) (46) (21) -- (8)
Other operating activities 13 (49) 4 (35) 9 (14)
------- ------- ------- ------- ------- -------
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (119) (134) (148) (130) 29 (4)
INVESTING ACTIVITIES
Net additions to properties (61) (70) (61) (69) -- (1)
Financing receivables originated and leasing
assets purchased (908) (771) -- -- (908) (771)
Principal payments received on financing --
receivables and leases 910 724 -- -- 910 724
(Acquisition)/disposition of businesses, less
cash acquired -- (89) -- (89) -- --
Other investing activities 7 3 -- -- 7 3
------- ------- ------- ------- ------- -------
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES (52) (203) (61) (158) 9 (45)
FINANCING ACTIVITIES
Proceeds of short-term borrowings 3,379 4,071 1,397 1,742 1,982 2,329
Repayments of short-term borrowings (3,130) (3,691) (1,154) (1,443) (1,976) (2,248)
Proceeds of long-term debt 37 68 37 86 -- --
Repayments of long-term debt (63) (34) (34) (33) (29) (19)
Repayments of non-recourse debt (6) (6) -- -- (6) (6)
Dividends paid (50) (25) (50) (25) -- --
Purchase of treasury stock -- (34) -- (34) -- --
Other financing activities 2 3 6 3 (4) --
------- ------- ------- ------- ------- -------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 169 352 202 296 (33) 56
------- ------- ------- ------- ------- -------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS (2) 15 (7) 8 5 7
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 149 72 125 51 24 21
------- ------- ------- ------- ------- -------
CASH AND EQUIVALENTS AT END OF PERIOD $ 147 $ 87 $ 118 $ 59 $ 29 $ 28
======= ======= ======= ======= ======= =======
</TABLE>
See notes to consolidated condensed financial statements
6
<PAGE>
WHIRLPOOL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A--BASIS OF PRESENTATION AND SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
The accompanying unaudited consolidated condensed financial statements present
information in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q and applicable
rules of Regulation S-X. Accordingly, they do not include all information or
footnotes required by generally accepted accounting principles for complete
financial statements. Management believes the financial statements include all
normal recurring accrual adjustments necessary for a fair presentation.
Operating results for the three months ended March 31, 1996 do not necessarily
indicate the results that may be expected for the full year. For further
information, refer to the consolidated financial statements and notes thereto
included in the Company's annual report for the year ended December 31, 1995.
NOTE B--BUSINESS ACQUISITIONS AND DISPOSITIONS
During 1995, the Company expanded its presence in Asia by acquiring controlling
interests in three existing manufacturing companies and establishing 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
$120 million for its fiscal year 1994.
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.
7
<PAGE>
WHIRLPOOL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Pro forma consolidated operating results reflecting these acquisitions would not
have been materially different from reported amounts. The acquisitions have
been accounted for as purchases and their operating results have been
consolidated with the Company's results since the dates of acquisition.
NOTE C--INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-------- -----------
(millions of dollars)
<S> <C> <C>
Finished products $1,139 $ 984
Raw materials and work in process 269 278
------ ------
Total FIFO cost 1,408 1,262
Less excess of FIFO cost over LIFO cost 252 233
------ ------
$1,156 $1,029
====== ======
</TABLE>
NOTE D--AFFILIATED COMPANIES
Equity in the net earnings of affiliated companies is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
--------- ----------
(millions of dollars)
<S> <C> <C>
Brazilian affiliates $ 17 $ 17
Mexican affiliates (4) --
Other 1 1
---- ----
$ 14 $ 18
==== ====
</TABLE>
8
<PAGE>
WHIRLPOOL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE E--GEOGRAPHIC SEGMENTS
Major
Three Months North Other and Home
Ended March 31 America Europe Asia (Eliminations) Appliances
- - -----------------------------------------------------------------------------
(millions of dollars)
Sales
1996 $1,293 $613 $117 $(10) $2,013
1995 $1,195 $633 $ 53 $ 58 $1,939
Operating Profit
1996 $ 86 $ (4) $(12) $ 2 $ 72
1995 $ 83 $ 44 $(11) $ 7 $ 123
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The statements of earnings summarize operating results for the three months
ended March 31, 1996 and 1995. This section of Management's Discussion
highlights the main factors affecting the changes in operating results.
The accompanying financial statements include supplemental consolidating data
reflecting the Company's investment in Whirlpool Financial Corporation ("WFC")
on an equity basis rather than as a consolidated subsidiary. Management
believes this presentation provides more meaningful information about the major
home appliance and financial services businesses.
Revenues
- - --------
Revenues for the first quarter increased 4% over 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. North American
industry-wide shipments are currently expected to be up about 2% for the full
year. 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 three to
four percent. European industry-wide shipments are currently expected to be
down about 3% for the full year. 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 1995 reflecting the cumulative effect of significant
material cost 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 most recent period 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 1995 to 18.3% in 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.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
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 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 1995.
The Company's Brazilian affiliates generated equity earnings of $17 million in
the first quarter 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 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 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 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.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
CASH FLOWS
The statements of cash flows reflect the changes in cash and equivalents for the
three months ended March 31, 1996 and 1995 by classifying transactions into
three major categories: operating, investing and financing activities.
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 1995, largely reflecting seasonal working capital needs of
the appliance business to build inventories.
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 were $61 million in 1996 compared to $70 million
in 1995. These expenditures are primarily for equipment and tooling related to
product improvements, more efficient production methods and replacement for
normal wear and tear. Investment in the financial services business resulted in
a net $2 million source of cash in 1996 compared to a net $47 million use of
cash in 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 continuing liquidation of WFC's discontinued
investment portfolios.
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 $120 million for its fiscal year 1994.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
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.
Financing Activities
- - --------------------
Dividends paid to shareholders totaled $50 million in the first quarter of 1996
compared to $25 million in 1995. The 1996 dividends paid includes payment of
both the first quarter 1996 dividend and the fourth quarter 1995 dividend.
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.
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.
FINANCIAL CONDITION AND OTHER MATTERS
The financial position of the Company remains strong as evidenced by the March
31, 1996 balance sheet. The Company's total assets are $8.0 billion and
stockholders' equity is $1.9 billion.
The overall debt to invested capital ratio at March 31, 1996 was up compared to
December 31, 1995. The appliance business debt to invested capital ratio net of
cash ("debt ratio") increased from 43% to 47% 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 financial
services debt to invested capital ratio was down slightly compared to December
31, 1995. 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
European currency cash flows and also hedge a portion of the Company's
investment in Whirlpool Europe. 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 serve as a hedge of the
European investment, otherwise they are included in the statement of earnings.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
WFC's financing portfolio by business segment is as follows (in millions):
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C> <C> <C>
Inventory $ 877 47% $ 857 46%
Consumer 495 27 531 29
Aerospace 408 22 411 22
Other 67 4 59 3
------ --- ------ ---
$1,847 100% $1,858 100%
====== === ====== ===
</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 lending activities.
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.
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
BUSINESS UNIT NET SALES AND OPERATING PROFIT
The following appliance business data (WFC on an equity basis) is presented as
supplemental information (in millions):
Net Sales by Business Unit were as follows:
<TABLE>
<CAPTION>
First Quarter
-------------------
1996 1995 Increase/(Decrease)
-------- -------- ------------------
<S> <C> <C> <C> <C>
North America $ 1,262 $ 1,196 $ 66 6%
Europe 592 615 (23) (4)
Asia 104 62 42 68
Latin America 58 67 (9) (13)
Other (3) (1) (2) (200)
-------- -------- ------- --------
Total Appliance Business $ 2,013 $ 1,939 $ 74 4%
======== ======== ======= ========
Operating Profit by Business Unit was as follows:
First Quarter
-------------------
1996 1995 Increase/(Decrease)
-------- -------- ------------------
North America $ 120 $ 116 $ 4 3%
Europe (2) 44 (46) (105)
Asia (11) (11) - -
Latin America 3 9 (6) (67)
Other (38) (35) (3) (9)
-------- -------- ------- --------
Total Appliance Business $ 72 $ 123 $ (51) (41)%
======== ======== ======= ========
</TABLE>
For commentary regarding performance in North America and Europe, refer to
Results of Operations. Asia had significant shipment and sales growth as
compared to the prior year period, and the planned quarterly operating loss in
the region was comparable to one sustained a year ago as our Asian strategy
shifts into the execution phase from the start-up phase. During the quarter,
new company operations in Shanghai (washers) and Beijing (refrigerators), China,
started to manufacture products. With those locations on-line, all six of
Whirlpool's Asian joint ventures, four in China and two in India, are in
production. Sales company and distributor businesses in the region continued to
grow during the first quarter of 1996. Latin America includes Whirlpool
Argentina and the South American Sales Company (SASCO). Whirlpool Argentina
results continued to be adversely affected by a depressed appliance industry,
driven primarily by impact of the 1995 banking crisis and by the subsequent
economic measures undertaken by the Argentine government. Some lessening of the
previously tight credit situation was observed in the first quarter but
generally customer and retailer financing resources remain limited. SASCO
results were down significantly due primarily to economic deterioration in key
markets and the termination of certain distributors. Meaningful recovery in
industry activity and performance is not likely until the second half of this
year.
15
<PAGE>
PART II. OTHER INFORMATION
--------------------------
WHIRLPOOL CORPORATION AND SUBSIDIARIES
Quarter Ended March 31, 1996
Item 6. Exhibits and Reports on Form 8-K
- - -----------------------------------------
a. The following are included herein:
(11) Computation of earnings per share
(27) Financial Data Schedule
(99) Computation of the ratios of earnings to fixed charges
b. Reports on Form 8-K:
The registrant filed a Form 8-K dated March 20, 1996, under Item 5 Other
Events, announcing the resignation of Robert I. Frey as executive vice
president of Whirlpool Corporation, and chief executive officer of
Whirlpool Asia, a wholly-owned subsidiary of Whirlpool Corporation. Mr.
Frey's resignation is effective April 15, 1996. The registrant further
announced the appointment of Robert D. Hall as executive vice president of
Whirlpool Corporation, and president of Whirlpool Asia effective April 16,
1996.
16
<PAGE>
EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE
WHIRLPOOL CORPORATION AND SUBSIDIARIES
(millions of dollars except earnings per share)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1996 1995
-------- --------
<S> <C> <C>
Primary
Average Shares Outstanding 74.1 73.7
Treasury Method (Average Market Price)
Stock Options 0.6 0.7
Restricted Stock (RSVP) 0.3 0.3
-------- --------
Primary Average Shares Outstanding 75.0 74.7
======== ========
Primary Net Earnings $ 37.5 $ 74.7
======== ========
Earnings Per Share $ 0.50 $ 1.00
======== ========
Fully Diluted
Average Shares Outstanding 74.1 73.7
Treasury Method (Average Market Price
or End of Period, whichever is greater):
Stock Options 0.7 0.9
Restricted Stock (RSVP) 0.3 0.3
Assumed Conversion of Debt 2.2 2.2
-------- --------
Fully Diluted Average Shares Outstanding 77.3 77.1
======== ========
Net Earnings $ 37.5 $ 74.7
Interest Expense, net of tax 1.1 1.0
-------- --------
Fully Diluted Net Earnings $ 38.6 $ 75.7
======== ========
Earnings Per Share $ 0.50 $ 0.98
======== ========
</TABLE>
17
<PAGE>
EXHIBIT 99 - COMPUTATION OF THE
RATIOS OF EARNINGS TO FIXED CHARGES
WHIRLPOOL CORPORATION AND SUBSIDIARIES
(dollars in millions)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1996
-----------------------------------------
Appliance Financial Whirlpool
Business Services Corporation
--------- --------- -----------
<S> <C> <C> <C>
Pretax earnings $ 33.4 $ 7.5 $ 40.9
Portion of rents representative
of the interest factor 3.9 0.2 4.1
Interest on indebtedness 36.6 19.1 55.7
Amortization of debt expense
and premium 0.1 - 0.1
WFC preferred stock dividend - 1.1 1.1
--------- --------- -----------
Adjusted income $ 74.0 $ 27.9 $ 101.9
========= ========= ===========
Fixed charges
- - -------------
Portion of rents representative
of the interest factor $ 3.9 $ 0.2 $ 4.1
Interest on indebtedness 36.6 19.1 55.7
Amortization of debt expense
and premium 0.1 - 0.1
WFC preferred stock dividend - 1.1 1.1
--------- --------- -----------
$ 40.6 $ 20.4 $ 61.0
========= ========= ===========
Ratio of earnings to
fixed charges 1.82 1.37 1.67
========= ========= ===========
Ratio of earnings to
fixed charges at
March 31, 1995 3.87 1.42 2.93
========= ========= ===========
</TABLE>
18
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WHIRLPOOL CORPORATION
(Registrant)
By John P. Cunningham
----------------------------
John P. Cunningham
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
April 25, 1996
19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
First Quarter 10-Q for Whirlpool Corporation and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 147
<SECURITIES> 0
<RECEIVABLES> 2,194
<ALLOWANCES> 50
<INVENTORY> 1,156
<CURRENT-ASSETS> 3,766
<PP&E> 3,702
<DEPRECIATION> 1,941
<TOTAL-ASSETS> 7,990
<CURRENT-LIABILITIES> 3,966
<BONDS> 957
<COMMON> 81
0
0
<OTHER-SE> 1,812
<TOTAL-LIABILITY-AND-EQUITY> 7,990
<SALES> 2,013
<TOTAL-REVENUES> 2,059
<CGS> 1,563
<TOTAL-COSTS> 1,579
<OTHER-EXPENSES> 9
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40
<INCOME-PRETAX> 41
<INCOME-TAX> 18
<INCOME-CONTINUING> 38
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38
<EPS-PRIMARY> .50
<EPS-DILUTED> 0
</TABLE>
