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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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 NORTH M-63, BENTON HARBOR, MICHIGAN 49022-2692
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (616) 923-5000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
ON
TITLE OF CLASS WHICH REGISTERED
-------------- ---------------------
<S> <C>
Common stock, par value $1.00 per share Chicago Stock Exchange
New York Stock Exchange
Liquid Yield Option Notes due 2011 New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
Indicate by check mark whether 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 .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K, or any
amendment to this Form 10-K X .
The aggregate market value of the voting stock of the registrant held by
stockholders not including voting stock held by directors and elected officers
of the registrant and certain employee plans of the registrant (the exclusion
of such shares shall not be deemed an admission by the registrant that any
such person is an affiliate of the registrant) on March 4, 1996, was
$4,013,290,893.
On March 4, 1996, the registrant had 74,569,477 shares of common stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated herein by reference
into the Part of the Form 10-K indicated:
<TABLE>
<CAPTION>
PART OF FORM 10-K INTO
DOCUMENT WHICH INCORPORATED
-------- ----------------------
<S> <C>
The Company's annual report to stockholders for the year
ended December 31, 1995 Parts I, II and IV
The Company's proxy statement for the 1996 annual meeting
of stockholders (SEC File No. 1-3932) Part III
</TABLE>
EXHIBIT INDEX ON PAGE: **
TOTAL NUMBER OF PAGES: ***
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PART I
ITEM 1. BUSINESS.
GENERAL
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. As used herein,
and except where the context otherwise requires, the term "Company" includes
Whirlpool Corporation and its consolidated subsidiaries. All currency figures
are in U.S. dollars.
RECENT DEVELOPMENTS
In 1995 the Company began executing the restructuring announced in November
1994. In Europe, the shift from a country focused sales, marketing, and
support functions to a pan-European and trade channel focused organization is
proceeding as planned. In the United States, the streamlining of the
manufacturing and technology organization is also on schedule. It is
anticipated that the restructuring will result in annual cost savings of
approximately $150 million by 1997.
In October, the Company's Asian operation received Chinese government
approval of a joint venture agreement to manufacture and market window and
split air conditioners with Shenzhen Petrochemical Holdings Co. Ltd. The joint
venture fulfills a key element of Whirlpool's strategy in China of focusing on
the top four major domestic-appliance categories in that market:
refrigerators, washing machines, microwave ovens, and air conditioners.
During 1995 the Company's North American operations completed construction
of a new facility for the production of gas and electric cooking ranges in
Tulsa, Oklahoma, and a small appliance manufacturing facility in Greenville,
Ohio. These facilities will begin production in 1996.
FINANCIAL INFORMATION RELATING TO BUSINESS SEGMENTS,
FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
The Company operates predominantly in the business segments classified as
Major Home Appliances and Financial Services.
During 1995, the Company's U.S. operations sold product into Canada, Mexico,
Latin America, Asia, and Europe. However, export sales by the Company's U.S.
operations were less than 10 percent of gross revenues.
For certain other financial information concerning the Company's business
segments and foreign and domestic operations, see Notes 1 and 15 of the Notes
to Consolidated Financial Statements in the Company's Annual Report to
Stockholders (the "Annual Report"), which is incorporated herein by reference.
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.
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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.
Financial Services:
Whirlpool Financial Corporation ("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 Whirlpool Financial National Bank
("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, and food processors and certain other
miscellaneous products from other manufacturers for resale by the Company.
For certain information with respect to each class of similar products which
accounted for 10 percent or more of the Company's consolidated revenue in 1995,
1994, and 1993, see Revenue Information in the Annual Report, which is
incorporated herein by reference.
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
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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 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.
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. As previously
mentioned, WFC is phasing-out its aerospace financing and leasing portfolios.
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.
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
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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.
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.
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.
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.
EMPLOYEES
The Company and its consolidated subsidiaries had approximately 45,435
employees as of December 31, 1995.
OTHER INFORMATION
The Company owns minority equity interests in certain Brazilian manufacturers
of major home appliances and components (Multibras and Embraco) and has a
controlling interest in a sales and marketing joint venture (the South American
Sales Company) with Multibras. The Company also has a majority interest in
joint venture companies in Argentina and Slovakia. Both companies manufacture
home appliances for sale and distribution in their home and surrounding
markets. In China, the Company has majority interests in joint venture
companies that manufacture microwave ovens, refrigeration products, air
conditioners, and automatic washing machines.
4
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The companies manufacture appliances for sale and distribution in their home
countries and for export. In India, the Company has majority interests in
companies that produce refrigeration products and washing machines for the
Indian market. The Company also has minority equity interests in a Mexican
manufacturer of home appliances and components and a Taiwan marketer and
distributor of home appliances. For additional information regarding the
Company's affiliated companies, see the discussion contained in Note 5 of the
Notes to Consolidated Financial Statements in the Annual Report which is
incorporated herein by reference. In addition, the Company furnishes
engineering, manufacturing and marketing assistance to certain foreign
manufacturers of home laundry and refrigeration equipment and other major home
appliances for negotiated fees.
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.
The Company is generally not dependent on any one source for raw materials or
purchased components essential to its business. In those areas where a single
supplier is used, alternative sources are generally available and can be
developed within the normal manufacturing environment. While there are pricing
pressures on some materials and significant demand for certain components, it
is believed that such raw materials and components will be available in
adequate quantities to meet anticipated production schedules.
Patents presently owned by the Company are considered, in the aggregate, to
be important to the conduct of the Company's business. The Company is licensed
under a number of patents, none of which individually is considered material to
its business. The Company is the owner of a number of trademarks and the U.S.
and foreign registrations thereof. The most important for its North American
operations are the trademarks WHIRLPOOL, KITCHENAID, ROPER and INGLIS.
Whirlpool Europe, through its subsidiaries, is also the owner of a number of
trademarks and the foreign registrations thereof. The most important trademarks
owned by Whirlpool Europe are BAUKNECHT, IGNIS and LADEN. The most important
trademark for the Company's European, Asian, and Latin American operations is
WHIRLPOOL. The most important trademark licensed to the Company's subsidiaries
is the trademark PHILIPS and the Philips shield emblem, which can be used
exclusively on major home appliances by such subsidiaries until July 31, 1998.
In the event of a change in control of the Company, Philips has the option to
terminate the use by the Company's subsidiaries of the trademark PHILIPS and
the Philips shield emblem.
The Company believes that its business, in the aggregate, is not seasonal.
Certain of its products, however, sell more heavily in some seasons than in
others. In the United States, room air conditioners and dehumidifiers are
generally produced and sold heavily in the first half of each year. Portable
appliances and microwave ovens tend to sell more heavily in the second half of
each year. In Europe, clothes dryers are sold more heavily in the winter. In
Asia, refrigerators tend to sell more heavily in summer, while demand for
washers is greater in winter. In South America, refrigerators and room air
conditioners sell more heavily in the second half of the year.
Backlogs of the Company's products are filled and renewed relatively
frequently in each year and are not significant in relation to the Company's
annual sales.
Expenditures for Company-sponsored research and engineering activities
relating to the development of new products and the improvement of existing
products are included in Note 1 of the Notes to Consolidated Financial
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Statements in the Annual Report, which is incorporated herein by reference.
Customer-sponsored research activities relating to the development of new
products, services or techniques, or the improvement of existing products,
services, or techniques are not material.
The Company's manufacturing facilities are subject to numerous laws and
regulations designed to protect or enhance the environment, many of which
require federal, state, or other governmental licenses and permits with regard
to wastewater discharges, air emissions, and hazardous waste management. These
laws are continually changing and, as a general matter, are becoming more
restrictive. The Company's policy is to comply with all such laws and
regulations.
The Company believes that it is in compliance in all material respects with
all presently applicable federal, state, local, and other provisions relating
to environmental protection in the countries in which it has manufacturing
operations. Capital expenditures and expenses attributable to compliance with
such provisions worldwide amounted to approximately $57 million in 1993, $78
million in 1994, and $58 million in 1995. The Company anticipates that such
capital expenditures and expenses will aggregate approximately $47 million in
1996. Much of the increase in 1994 and 1995 is attributable to taxes on
chloroflourocarbons ("CFCs") (which were eliminated from the Company's products
in the United States prior to December 31, 1995) and a decision to broaden the
definition of environmental costs to include investments in product development
to meet or exceed anticipated energy and/or water regulations. The Company is
using a global environmental management process to achieve its goals of
producing environmentally compatible products, better integrating environmental
considerations into the Company's product design and employee training,
improving the Company's ability to report and monitor its management of
environmental, health, and safety affairs, and reducing its worldwide emissions
of certain chemicals.
The entire United States appliance industry, including the Company, must
contend with adoption of stricter governmental energy and environmental
standards to be phased in over the next several years. These include the
general phaseout of CFCs used in refrigeration and energy standards rulemakings
for all major appliances produced by the Company. Enactment of Federal energy
standards is uncertain at this time due to funding and rulemaking restrictions
being considered for the Department of Energy by the U.S. Congress. Compliance
with these various standards as they become effective will require some product
redesign although the standard levels were anticipated in current projects.
In Europe, the Company met the December 31, 1994 deadline for the elimination
of CFCs in its products. As in the United States, Whirlpool Europe is also
dealing with anticipated regulations and rules regarding improved efficiency
and energy usage for its products. The Company believes it is well positioned
to field products that comply with these anticipated regulations. In most Asian
countries, the Company has until 2010 to eliminate CFCs from its products.
Whirlpool's Asian operations are also well positioned to meet anticipated
efficiency and energy usage regulations.
The Company has been notified by state and federal environmental protection
agencies of its possible involvement in a number of so-called "Superfund" sites
in the United States. However, the Company does not presently anticipate any
material adverse effect upon the Company's earnings or financial condition
arising out of the resolution of these matters or the resolution of any other
known governmental proceeding regarding environmental protection matters. The
Company is in the process of performing environmental assessments of its
European facilities acquired as a result of the Company's purchase of the Major
Domestic Appliance division of Philips. Remedial plans are being prepared to
address contamination found during the evaluation. The majority of anticipated
remediation costs are covered by an indemnity agreement with Philips and the
Company does not presently anticipate any material adverse effect upon the
Company's earnings or financial condition arising out of the resolution of
these matters. The Company is also in the process of evaluating several
recently acquired facilities in India and China. The Company does not presently
anticipate any material adverse effect upon the Company's earnings or financial
condition from the environmental condition of these facilities.
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The following table sets forth the names of the Company's executive officers
at December 31, 1995, the positions and offices with the Company held by them
at such date, the year they first became officers, and their ages at December
31, 1995:
<TABLE>
<CAPTION>
FIRST BECAME
NAME OFFICE AN OFFICER AGE
---- ------ ------------ ---
<S> <C> <C> <C>
David R. Whitwam Director, Chairman of the Board 1983 53
and Chief Executive Officer
William D. Marohn Director, President and Chief 1984 55
Operating Officer
John P. Cunningham Executive Vice President and 1995 58
Chief Financial Officer
Jeff M. Fettig Executive Vice President 1993 38
Robert I. Frey Executive Vice President 1985 52
Ralph F. Hake Executive Vice President 1988 46
Ronald L. Kerber Executive Vice President 1991 52
P. Daniel Miller Executive Vice President 1991 47
</TABLE>
Each of the executive officers named above was elected to serve in the
office indicated until the first meeting of the Board of Directors following
the annual meeting of stockholders in 1996 and until his successor is chosen
and qualified or until his earlier resignation or removal.
Each of the executive officers of the Company has held the position set
forth in the table above or has served the Company in various executive or
administrative capacities for at least the past five years, except for:
<TABLE>
<CAPTION>
NAME COMPANY/POSITION PERIOD
---- ---------------- ------
<S> <C> <C>
John P.
Cunningham Maytag Corporation 1/94 through 12/95
Chief Financial Officer
IBM 12/66 through 12/93
Vice President and Assistant General Manager--
Main Frame Division (last title held)
</TABLE>
ITEM 2. PROPERTIES.
The principal executive offices of Whirlpool Corporation are located in
Benton Harbor, Michigan. At December 31, 1995, the principal manufacturing and
service operations of the Company were carried on at 34 locations worldwide,
20 of which are located in 10 countries outside the United States. The Company
occupied a total of approximately 35 million square feet devoted to
manufacturing, service, administrative offices, warehouse, distribution, and
sales space. Over 10 million square feet of such space is occupied under
lease. In general, all such facilities are well maintained, suitably equipped,
and in good operating condition. In 1995, construction of new manufacturing
plants in Tulsa, Oklahoma, and Greenville, Ohio, were completed, with full
operations scheduled to begin in 1996.
ITEM 3. LEGAL PROCEEDINGS.
As of, and during the quarter ended, December 31, 1995, there were no
material pending legal proceedings to which the Company or any of its
subsidiaries was a party or to which any of their property was subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security holders in the fourth
quarter of 1995.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's common stock is traded on the New York Stock Exchange, the
Chicago Stock Exchange, and The London Stock Exchange.
At March 4, 1996, the number of holders of record of the Company's common
stock was approximately 11,579.
High and low sales prices (as reported on the New York Stock Exchange
composite tape) and cash dividends declared and paid for the Company's common
stock for each quarter during the years 1994 and 1995 are set forth in Note 16
of the Notes to Consolidated Financial Statements in the Annual Report, which
is herein incorporated by reference.
ITEM 6. SELECTED FINANCIAL DATA.
The selected financial data for the five years ended December 31, 1995 with
respect to the following line items shown under the "Eleven Year Consolidated
Statistical Review" in the Annual Report is incorporated herein by reference
and made a part of this report: Total revenues; earnings from continuing
operations before accounting change; earnings from continuing operations
before accounting change per share of common stock; dividends paid per share
of common stock; total assets; and long-term debt. See the material
incorporated herein by reference in response to Item 7 of this report for a
discussion of the effects on such data of business combinations and other
acquisitions, disposition and restructuring activity, restructuring costs,
accounting changes, and earnings of foreign affiliates.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The Management's Discussion and Analysis of Results of Operations and
Financial Condition in the Annual Report is incorporated herein by reference
and made a part of this report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of the Company in the Annual Report
are incorporated herein by reference and made a part of this report.
Supplementary financial information regarding quarterly results of operations
(unaudited) for the years ended December 31, 1995 and 1994 is set forth in
Note 16 of the Notes to Consolidated Financial Statements. For a list of
financial statements and schedules filed as part of this report, see the
"Index to Financial Statements and Financial Statement Schedule(s)" beginning
on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information with respect to directors of the Company is incorporated herein
by reference to the information under the caption "Directors and Nominees for
Election as Directors" in the Company's proxy statement for the 1996 annual
meeting of stockholders (SEC File No. 1-3932) (the "Proxy Statement").
Information with respect to executive officers of the Company is set forth in
Part I of this report.
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ITEM 11. EXECUTIVE COMPENSATION.
Information with respect to compensation of executive officers and directors
of the Company is incorporated herein by reference to the information under
the captions "Executive Compensation" and "Compensation of Directors" in the
Proxy Statement.
ITEM 12. SECURITY OWNERSHIP.
Information with respect to security ownership by the only person(s) known
to the Company to beneficially own more than 5 percent of the Company's stock
and by each director of the Company and all directors and elected officers of
the Company as a group is incorporated herein by reference to the information
under the caption "Security Ownership" in the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE(S), AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this report:
1. The financial statements listed in the "Index to Financial Statements
and Financial Statement Schedule(s)."
2. The financial statement schedule listed in the "Index to Financial
Statements and Financial Statement Schedule(s)."
3. The exhibits listed in the "Index to Exhibits."
(b) Reports on Form 8-K filed during the fourth quarter of 1995.
1. A Current Report on Form 8-K for December 13, 1995 pursuant to Item
5--"Other Events" announced the election of John P. Cunningham as Executive
Vice President and Chief Financial Officer for the company.
(c) Exhibits.
1. The following exhibits are included herein:
(11) Computation of per share earnings.
(12) Computation of the ratios of earnings to fixed charges.
2. The response to this portion of Item 14 is submitted as a separate
section of this report.
(d) Financial Statement Schedule(s).
The response to this portion of Item 14 is submitted as a separate
section of this report.
9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 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)
/s/ John P. Cunningham
By:__________________________________
John P. Cunningham
(Principal Financial Officer)
Executive Vice President
and Chief Financial Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
David R. Whitwam* Director, Chairman of the
____________________________________ Board and Chief Executive
David R. Whitwam Officer (Principal
Executive Officer)
William D. Marohn* Director, President and
____________________________________ Chief Operating Officer
William D. Marohn
John P. Cunningham* Executive Vice President and
____________________________________ Chief Financial Officer
John P. Cunningham (Principal Financial
Officer)
Robert G. Thompson* Vice President and
____________________________________ Controller (Principal
Robert G. Thompson Accounting Officer)
Victor A. Bonomo* Director
____________________________________
Victor A. Bonomo
Robert A. Burnett* Director
____________________________________
Robert A. Burnett
Herman Cain* Director March 15, 1996
____________________________________
Herman Cain
Allan D. Gilmour* Director
____________________________________
Allan D. Gilmour
Kathleen J. Hempel* Director
____________________________________
Kathleen J. Hempel
Arnold G. Langbo* Director
____________________________________
Arnold G. Langbo
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Miles L. Marsh* Director
____________________________________
Miles L. Marsh
Philip L. Smith* Director
____________________________________
Philip L. Smith
Paul G. Stern* Director
____________________________________
Paul G. Stern
Janice D. Stoney* Director
____________________________________
</TABLE> Janice D. Stoney
/s/ Daniel F. Hopp
*By:___________________________
<TABLE>
<S> <C> <C>
Attorney-in-Fact
</TABLE>
Daniel F. Hopp
11
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEMS 14(A) (1) AND (2) AND 14(D)
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE(S)
YEAR ENDED DECEMBER 31, 1995
WHIRLPOOL CORPORATION AND CONSOLIDATED SUBSIDIARIES
The following consolidated financial statements of the registrant and its
consolidated subsidiaries, set forth in the Annual Report, are incorporated
herein by reference in Item 8:
Consolidated balance sheets--December 31, 1995 and 1994
Consolidated statements of earnings--Three years ended December 31,
1995
Consolidated statements of cash flows--Three years ended December 31,
1995
Notes to consolidated financial statements
The following reports of independent auditors and consolidated financial
statement schedules of the registrant and its consolidated subsidiaries are
submitted herewith in response to Items 14(a) (2) and 14(d):
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Ernst & Young, Independent Auditors......................... F-2
Reports of Price Waterhouse, Independent Auditors..................... F-3
Schedule II--Valuation and qualifying account......................... F-9
The following exhibits are included herein:
Exhibit 11--Statement Re: Computation of Earnings Per Share........... F-10
Exhibit 12--Ratio of Earnings to Fixed Charge......................... F-11
</TABLE>
Individual financial statements of the registrant's affiliated foreign
companies, accounted for by the equity method, have been omitted since no such
company individually constitutes a significant subsidiary. Summarized
financial information relating to the affiliated companies is set forth in
Note 5 of the Notes to Consolidated Financial Statements incorporated by
reference herein.
Certain schedules for which provisions are made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Stockholders and Board of Directors
Whirlpool Corporation
Benton Harbor, Michigan
We have audited the consolidated financial statements of Whirlpool Corporation
and subsidiaries listed in the Index at Item 14(a)(1) of the annual report on
Form 10-K of Whirlpool Corporation for the year ended December 31, 1995. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a)(2). These financial statements and schedule are the responsibility of
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits. We did not audit the
financial statements of the Brazilian affiliates used as the basis for recording
the Company's equity in their net earnings, as presented in Note 5 to the
consolidated financial statements. The financial statements of those affiliates
were audited by other auditors whose reports have been furnished to us, and our
opinion, insofar as it relates to the amount included for the Brazilian
affiliates, is based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Whirlpool Corporation and subsidiaries at
December 31, 1995 and 1994, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
As discussed in the notes to the consolidated financial statements, in 1993 the
Company changed its method of accounting for postretirement benefits other than
pensions.
Chicago, Illinois
January 31, 1996
F-2
<PAGE>
[LETTERHEAD PRICE WATERHOUSE]
Report of Independent Accountants
January 19, 1996
To the Board of Directors and Stockholders
Brasmotor S.A.
1 We have audited the consolidated balance sheets of Brasmotor S.A. and its
subsidiaries as of December 31, 1995 and 1994 and the related consolidated
statements of income, of movement in stockholders' equity and of cash flows
for the years then ended, expressed in U.S. dollars (not presented herein).
Such audits were made in conjunction with our audits of the financial
statements expressed in local currency on which we issued an unqualified
opinion dated January 19, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits. We did not
audit the financial statements of Whirlpool Argentina S.A. used as the basis
for recording the Company's equity in its net earnings, as presented in Note
4 to the consolidated financial statements. The financial statements of that
affiliate were audited by other auditors whose reports have been furnished to
us, and our opinion, insofar as it relates to the amounts included for
Whirlpool Argentina S.A., is based solely on the reports of the other
auditors.
2 We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
3 As stated in Note 1, Whirlpool Corporation has prescribed that accounting
principles generally accepted in the United States of America be applied in
the preparation of the consolidated financial statements of Brasmotor S.A.
and its subsidiaries to be included in Whirlpool's consolidated financial
statements. Brazil has a highly inflationary economy. Accounting principles
generally accepted in the United States of America require that financial
statements of a company denominated in the currency of a country with a
highly inflationary economy be remeasured into a more stable currency unit
for purposes of consolidation. Accordingly, the accounts of Brasmotor S.A.
and its Brazilian subsidiaries, which are maintained in reais, were
remeasured and adjusted into U.S. dollars for the financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America on the bases stated in Note 1.
F-3
<PAGE>
January 19, 1996 [LOGO PRICE WATERHOUSE]
Brasmotor S.A.
Page 2
4 In our opinion, based on our audits and the report of the other auditors, the
consolidated financial statements expressed in U.S. dollars audited by us are
presented fairly, in all material respects, on the bases stated in Note 1 and
discussed in the preceding paragraph.
/s/ Price Waterhouse
F-4
<PAGE>
[LETTERHEAD PRICE WATERHOUSE]
Report of Independent Accountants
January 19, 1996
To the Board of Directors and Stockholders
Empresa Brasileira de Compressores S.A. - EMBRACO
1 We have audited the consolidated balance sheets of Empresa Brasileira de
Compressores S.A. - EMBRACO and its subsidiaries as of December 31, 1995 and
1994 and the related consolidated statements of income, of movement in
stockholders' equity and of cash flows for the years then ended, expressed in
U.S. dollars (not presented herein). Such audits were made in conjunction
with our audits of the financial statements expressed in local currency on
which we issued an unqualified opinion dated January 19, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
2 We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
3 As stated in Note 1, Whirlpool Corporation has prescribed that accounting
principles generally accepted in the United States of America be applied in
the preparation of the consolidated financial statements of Empresa
Brasileira de Compressores S.A. - EMBRACO and its subsidiaries to be included
in Whirlpool's consolidated financial statements. Brazil has a highly
inflationary economy. Accounting principles generally accepted in the United
States of America require that financial statements of a company denominated
in the currency of a country with a highly inflationary economy be remeasured
into a more stable currency unit for purposes of consolidation. Accordingly,
the accounts of Empresa Brasileira de Compressores S.A. - EMBRACO and its
Brazilian subsidiaries, which are maintained in reais, were remeasured and
adjusted into U.S. dollars for the financial statements prepared in
accordance with accounting principles generally accepted in the United States
of America on the bases stated in Note 1.
F-5
<PAGE>
January 19, 1996 [LOGO PRICE WATERHOUSE]
Empresa Brasileira de Compressores S.A. - EMBRACO
Page 2
4 In our opinion, the consolidated financial statements expressed in U.S.
dollars audited by us are presented fairly, in all material respects, on the
bases stated in Note 1 and discussed in the preceding paragraph.
/s/ Price Waterhouse
F-6
<PAGE>
[LETTERHEAD PRICE WATERHOUSE]
Report of Independent Accountants
January 19, 1996
To the Board of Directors and Stockholders
Multibras S.A. Eletrodomesticos
1 We have audited the consolidated balance sheets of Multibras S.A.
Eletrodomesticos and its subsidiaries as of December 31, 1995 and 1994 and
the related consolidated statements of income, of movement in stockholders'
equity and of cash flows for the years then ended, expressed in U.S. dollars
(not presented herein). Such audits were made in conjunction with our audits
of the financial statements expressed in local currency on which we issued an
unqualified opinion dated January 19, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
2 We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
3 As stated in Note 1, Whirlpool Corporation has prescribed that accounting
principles generally accepted in the United States of America be applied in
the preparation of the consolidated financial statements of Multibras S.A.
Eletrodomesticos and its subsidiaries to be included in Whirlpool's
consolidated financial statements. Brazil has a highly inflationary economy.
Accounting principles generally accepted in the United States of America
require that financial statements of a company denominated in the currency of
a country with a highly inflationary economy be remeasured into a more stable
currency unit for purposes of consolidation. Accordingly, the accounts of
Multibras S.A. Eletrodomesticos and its Brazilian subsidiaries, which are
maintained in reais, were remeasured and adjusted into U.S. dollars for the
financial statements prepared in accordance with accounting principles
generally accepted in the United States of America on the bases stated in
Note 1.
F-7
<PAGE>
January 19, 1996 [LOGO PRICE WATERHOUSE]
Multibras S.A. Eletrodomesticos
Page 2
4 In our opinion, the consolidated financial statements expressed in U.S.
dollars audited by us are presented fairly, in all material respects, on the
bases stated in Note 1 and discussed in the preceding paragraph.
/s/ Price Waterhouse
F-8
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
WHIRLPOOL CORPORATION AND SUBSIDIARIES
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
------ --------- ------------------- ------------ -------
ADDITIONS
-------------------
(1) (2)
BALANCE CHARGED CHARGED BALANCE
AT TO COSTS TO OTHER AT END
BEGINNING AND ACCOUNTS-- DEDUCTIONS-- OF
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD
----------- --------- -------- ---------- ------------ -------
<S> <C> <C> <C> <C> <C>
Year Ended December 31,
1995:
Current assets:
Allowance for doubtful
accounts--trade
receivables.............. $ 38 $ 16 $ 15(A) $ 39
==== ==== ==== ====
Allowance for doubtful
accounts--financing
receivables and leases... $ 15 $ 10 $ 13(B) $ 12
==== ==== ==== ====
Long-term receivables:
Allowance for doubtful
accounts--financing
receivables and leases... $ 31 $ 24 $ 25(C) $ 30
==== ==== ==== ====
Accrued expenses:
Restructuring reserves.... $175 $ 0 $105(D) $ 70
==== ==== ==== ====
Year Ended December 31,
1994:
Current assets:
Allowance for doubtful
accounts--trade
receivables.............. $ 36 $ 13 $ 11(A) $ 38
==== ==== ==== ====
Allowance for doubtful
accounts--financing
receivables and leases... $ 14 $ 13 $ 12(B) $ 15
==== ==== ==== ====
Long-term receivables:
Allowance for doubtful
accounts--financing
receivables and leases... $ 35 $ 9 $ 13(C) $ 31
==== ==== ==== ====
Accrued expenses:
Restructuring reserves.... $ 33 $250 $108(D) $175
==== ==== ==== ====
Year Ended December 31,
1993:
Current assets:
Allowance for doubtful
accounts--trade
receivables.............. $ 35 $ 9 $ 8(A) $ 36
==== ==== ==== ====
Allowance for doubtful
accounts--financing
receivables and leases... $ 22 $ 18 $ 26(B) $ 14
==== ==== ==== ====
Long-term receivables:
Allowance for doubtful
accounts--financing
receivables and leases... $ 15 $ 49 $ 29(C) $ 35
==== ==== ==== ====
Accrued expenses:
Restructuring reserves.... $ 22 $ 31 $ 20(D) $ 33
==== ==== ==== ====
</TABLE>
- --------
Note A--The amounts represent accounts charged off, less recoveries of $5 in
1995, $1 in 1994, and $6 in 1993.
Note B--The amounts represent accounts charged off, less recoveries of $2 in
1995, and $1 in 1994 and 1993.
Note C--The amounts represent accounts charged off, less recoveries of $1 in
1995, 1994, and 1993.
Note D--Charges include employee related severance and relocation, disposal of
fixed assets and translation adjustments.
F-9
<PAGE>
EXHIBIT 11--STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
WHIRLPOOL CORPORATION AND SUBSIDIARIES
(MILLIONS OF DOLLARS EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Primary
Average Shares Outstanding............................. 73.9 74.2 71.1
Treasury Method (Average Market Price)
Stock Options........................................ 0.6 1.0 1.2
Restricted Stock (RSVP).............................. 0.3 0.3 --
------ ------ ------
Primary Average Shares Outstanding..................... 74.8 75.5 72.3
====== ====== ======
Net Earnings Before Cumulative Effect of Accounting
Change................................................ $209.4 $158.3 $230.7
RSVP Amortization, net of tax.......................... -- -- --
------ ------ ------
Primary Net Earnings Before Cumulative Effect of
Accounting Change..................................... $209.4 $158.3 $230.7
====== ====== ======
Earnings Per Share Before Cumulative Effect of
Accounting Change..................................... $ 2.80 $ 2.10 $ 3.19
====== ====== ======
Less Cumulative Effect of Accounting Change............ $ -- $ -- $(2.52)
====== ====== ======
Earnings Per Share..................................... $ 2.80 $ 2.10 $ 0.67
====== ====== ======
Fully Diluted
Average Shares Outstanding............................. 73.9 74.2 71.1
Treasury Method (Average Market Price or End of Period,
whichever is greater):
Stock Options........................................ 0.9 1.2 2.0
Restricted Stock..................................... 0.3 0.3 --
Assumed Conversion of Debt (4,885 shares issued May
1991)................................................. 2.2 2.2 3.3
------ ------ ------
Fully Diluted Average Shares Outstanding............... 77.3 77.9 76.4
====== ====== ======
Net Earnings Before Cumulative Effect of Accounting
Change................................................ $209.4 $158.3 $230.7
Interest Expense, net of tax........................... 4.2 4.3 7.3
RSVP Amortization, net of tax.......................... -- -- --
------ ------ ------
Fully Diluted Net Earnings Before Cumulative Effect of
Accounting Change..................................... $213.6 $162.6 $238.0
====== ====== ======
Earnings Per Share Before Cumulative Effect of
Accounting Change..................................... $ 2.76 $ 2.09 $ 3.11
====== ====== ======
Net Earnings........................................... $209.4 $158.3 $ 50.7
Interest Expense, net of tax........................... 4.2 4.3 7.3
RSVP Amortization, net of tax.......................... -- -- --
------ ------ ------
Fully Diluted Net Earnings............................. $213.6 $162.6 $ 58.0
====== ====== ======
Earnings Per Share..................................... $ 2.76 $ 2.09 $ 0.67*
====== ====== ======
</TABLE>
- --------
* Since the fully diluted net earnings per share is anti-dilutive, the primary
net earnings per share is presented.
F-10
<PAGE>
EXHIBIT 12--STATEMENT RE: COMPUTATION OF THE
RATIOS OF EARNINGS TO FIXED CHARGES
WHIRLPOOL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-------------------------------
APPLIANCE FINANCIAL WHIRLPOOL
BUSINESS SERVICES CORPORATION
--------- --------- -----------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C>
Pretax earnings................................ $213.6 $ 28.3 $241.9
Portion of rents representative of the interest
factor........................................ 20.6 0.9 21.5
Interest on indebtedness....................... 128.6 78.1 206.7
Amortization of debt expense and premium....... 0.6 0.2 0.8
WFC preferred stock dividend................... -- 4.5 4.5
------ ------ ------
Adjusted income................................ $363.4 $112.0 $475.4
====== ====== ======
<CAPTION>
FIXED CHARGES
- -------------
<S> <C> <C> <C>
Portion of rents representative of the interest
factor........................................ $ 20.6 $ 0.9 $ 21.5
Interest on indebtedness....................... 128.6 78.1 206.7
Amortization of debt expense and premium....... 0.6 0.2 0.8
WFC preferred stock dividend................... -- 4.5 4.5
------ ------ ------
$149.8 $ 83.7 $233.5
====== ====== ======
Ratio of earnings to fixed charges............. 2.43 1.34 2.04
====== ====== ======
</TABLE>
F-11
<PAGE>
EXHIBIT 12--STATEMENT RE: COMPUTATION OF THE
RATIOS OF EARNINGS TO FIXED CHARGES
WHIRLPOOL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
-------------------------------
APPLIANCE FINANCIAL WHIRLPOOL
BUSINESS SERVICES CORPORATION
--------- --------- -----------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C>
Pretax earnings................................ $268.9 $23.4 $292.3
Portion of rents representative of the interest
factor........................................ 19.6 0.8 20.4
Interest on indebtedness....................... 102.4 61.0 163.4
Amortization of debt expense and premium....... 1.9 0.1 2.0
WFC preferred stock dividend................... -- 4.5 4.5
------ ----- ------
Adjusted income................................ $392.8 $89.8 $482.6
====== ===== ======
<CAPTION>
FIXED CHARGES
- -------------
<S> <C> <C> <C>
Portion of rents representative of the interest
factor........................................ $ 19.6 $ 0.8 $ 20.4
Interest on indebtedness....................... 102.4 61.0 163.4
Amortization of debt expense and premium....... 1.9 0.1 2.0
WFC preferred stock dividend................... -- 4.5 4.5
------ ----- ------
$123.9 $66.4 $190.3
====== ===== ======
Ratio of earnings to fixed charges............. 3.17 1.35 2.54
====== ===== ======
</TABLE>
F-12
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEMS 14(A)(3) AND 14(C)
INDEX TO EXHIBITS
YEAR ENDED DECEMBER 31, 1995
The following exhibits are submitted herewith or incorporated herein by
reference in response to Items 14(a)(3) and 14(c):
<TABLE>
<CAPTION>
NUMBER AND SEQUENTIAL
DESCRIPTION PAGE
OF EXHIBIT NUMBERS*
----------- ----------
<C> <C> <S> <C>
3(i) Restated Certificate of Incorporation of the
Company [Incorporated by reference from Exhibit
3(i) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993]
3(ii) Amended and Restated By-laws of the Company (as
amended January 23, 1995). [Incorporated by
reference from Exhibit 3(ii) to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1994]
The registrant hereby agrees to furnish to the
Securities and Exchange Commission, upon request,
the instruments defining the rights of holders of
each issue of long-term debt of the registrant
and its subsidiaries.
4 (a) Whirlpool Retirement Benefits Restoration Plan
(as amended January 1, 1992) [Incorporated by
reference from Exhibit 10(iii)(a) to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993]
10(iii) (b) 1979 Stock Option Plan (as amended April 28,
1987) [Incorporated by reference from Exhibit
10(iii)(b) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993]
10(iii) (c) Whirlpool Supplemental Executive Retirement Plan
(as amended and restated effective December 31,
1993) [Incorporated by reference from Exhibit
10(iii)(c) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993]
10(iii) (d) Resolution adopted on December 12, 1989 by the
Board of Directors of the Company adopting a
compensation schedule, life insurance program,
and retirement benefit program for eligible
Directors. [Incorporated by reference from
Exhibit 10(iii)(d) to the Company's Annual Report
on Form 10-K for the fiscal year ended December
31, 1993]
10(iii) (e) Resolution adopted on December 8, 1992 by the
Board of Directors of the Company adopting a
Flexible Compensation Program for the
Corporation's nonemployee directors.
[Incorporated by reference from Exhibit
10(iii)(e) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993]
10(iii) (f) Whirlpool Corporation Deferred Compensation Plan
for Directors (as amended effective January 1,
1992 and April 20, 1993) [Incorporated by
reference from Exhibit 10(iii)(f) to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993]
10(iii) (g) Form of Agreement providing for severance
benefits for certain executive officers
[Incorporated by reference from Exhibit
10(iii)(g) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993]
10(iii) (h) Whirlpool Corporation 1989 Omnibus Stock and
Incentive Plan (as amended July 1, 1991)
[Incorporated by reference from Exhibit
10(iii)(h) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993]
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
NUMBER AND SEQUENTIAL
DESCRIPTION PAGE
OF EXHIBIT NUMBERS*
----------- ----------
<C> <C> <S> <C>
10(iii) (i) Whirlpool Corporation Restricted Stock Value
Program (Pursuant to the 1989 Whirlpool
Corporation Omnibus Stock and Incentive Plan)
[Incorporated by reference from Exhibit
10(iii)(i) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993]
10(iii) (j) Whirlpool Executive Stock Appreciation and
Performance Program (Pursuant to the 1989
Whirlpool Corporation Omnibus Stock and Incentive
Plan) [Incorporated by reference from Exhibit
10(iii)(j) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993]
10(iii) (k) Whirlpool Corporation Nonemployee Director Stock
Ownership Plan (as amended April 20, 1993)
[Incorporated by reference from Exhibit
10(iii)(k) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993]
10(iii) (l) Whirlpool 401(k) Plan (as amended and restated
April 1, 1993) [Incorporated by reference from
Exhibit 10(iii)(l) to the Company's Annual Report
on Form 10-K for the fiscal year ended December
31, 1993]
10(iii) (m) Whirlpool Performance Excellence Plan (as amended
January 1, 1992 and February 15, 1994)
[Incorporated by reference from Exhibit
10(iii)(m) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993]
10(iii) (n) Whirlpool Corporation Executive Deferred Savings
Plan (as amended effective January 1, 1992)
[Incorporated by reference from Exhibit
10(iii)(n) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993]
10(iii) (o) Whirlpool Corporation Executive Officer Bonus
Plan (Effective as of January 1, 1994)
[Incorporated by reference from Exhibit
10(iii)(o) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1994]
10(iii) (p) Whirlpool Corporation Charitable Award
Contribution and Additional Life Insurance Plan
for Directors (Effective April 20, 1993)
[Incorporated by reference from Exhibit
10(iii)(p) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1994]
10(iii) (q) Whirlpool Corporation Career Stock Grant Program
(Pursuant to the 1989 Whirlpool Corporation
Omnibus Stock and Incentive Plan).
10(iii) (r) Whirlpool Corporation 1989 Omnibus Stock and
Incentive Plan Amendment (Effective as of June
20, 1995).
11 Statement Re: Computation of Earnings per share.
12 Statement Re: Computation of the Ratios of
Earnings to Fixed Charges
13 Management's Discussion and Analysis and
Consolidated Financial Statements contained in
Annual Report to Stockholders for the year ended
December 31, 1995
21 List of Subsidiaries
23(ii) (a) Consent of Ernst & Young
23(ii) (b) Consent of Price Waterhouse
24 Powers of Attorney
27 Financial Data Schedule
</TABLE>
- --------
*This information appears only in the manually signed originals of the Form
10-K and conformed copies with exhibits.
E-2
<PAGE>
Whirlpool Corporation
Career Stock Grant
This Award Agreement sets forth the terms and provisions of the grant to you of
Career Stock, subject to restrictions. Career Stock is phantom stock of
Whirlpool Corporation. As such, the shares are not an equity interest in the
Company, and no voting rights are attached to the shares. The value of a share
of Career Stock on any given date is equal to the Fair Market Value of a share
of Whirlpool Corporation common stock on that date.
The Career Stock is being awarded under the Whirlpool Corporation 1989 Omnibus
Stock and Incentive Plan (the "Plan"), the terms of which shall govern this
grant, and are incorporated herein by reference.
Participant:
Date of Grant:
Shares of Career Stock Granted:
Vesting Schedule
==========================================
Percent of Total
Date/Event Shares of Career Stock
- ------------------------------------------
- ------------------------------------------
THIS AGREEMENT, effective as of the Date of Grant set forth above, between
Whirlpool Corporation, a Delaware corporation (the "Company"), and the
Participant named above, is made pursuant to the provisions of the Plan. The
capitalized terms appearing in this Agreement shall have the definitions
ascribed to them in the Plan, unless defined otherwise in this Agreement. In the
event there is any inconsistency between the terms of this Agreement and the
terms of the Plan, the terms of the Plan shall completely supersede and replace
the terms of this Agreement. The parties hereto agree as follows:
1. Employment by the Company. The Participant's right to receive
and/or retain the shares of Career Stock is specifically contingent upon the
Participant's compliance with the noncompetition restrictions set forth in
Section 8 herein. The award of Career Stock, however, shall not impose upon the
Company any obligation to retain the Participant in its employ for any given
period or upon any specific terms of employment.
<PAGE>
2. Vesting. Subject to the remaining terms of this Agreement, partial
vesting in shares of Career Stock occurs periodically, as identified in the
Vesting Schedule. Subject to the remaining terms of this Agreement, for purposes
of this Section 2, the Vesting Schedule also applies to additional shares of
Career Stock which are credited to the participant pursuant to Section 4 herein.
3. Redemption of Shares of Career Stock. Subject to the remaining
terms of this Agreement, shares of Career Stock will be redeemed for shares of
Company common stock, on a one-for-one basis, upon termination of employment;
provided, however, that such redemption occurs only with respect to shares of
Career Stock which the Participant has vested in prior to or as a result of
employment termination (as defined in Sections 5 and 7 of this Agreement).
Delivery of shares of common stock will be made as soon as is
practicable following such redemption. Redemption for shares of Company common
stock is contingent upon compliance with the noncompetition restrictions set
forth in Section 8 herein. In addition, in the event of a breach of the terms of
Section 8 herein, any shares of Company common stock previously distributed to
the Participant pursuant to this Agreement (or, at the discretion of the
Committee, the full cash value of such shares determined as of the date of the
breach of this Agreement) must be returned to the Company by the Participant
within sixty (60) days after the determination (pursuant to Section 8 herein)
that a breach of the terms of Section 8 herein has occurred.
4. Dividends. The Participant will be credited with all dividends and
other distributions authorized by the Human Resources Committee of the Board of
Directors of the Company (hereinafter referred to as "the Committee") with
respect to the shares of Career Stock held. Such dividends or distributions will
be credited in additional shares of Career Stock. The additionally credited
shares of Career Stock shall be subject to the same restrictions as the shares
of Career Stock with respect to which they were paid.
The Committee will have the ability to credit dividends up to an
amount equal to those that would have been received if the shares of Career
Stock were shares of the Company's common stock. Any dividends so credited will
be invested in additional shares of Career Stock, at the Fair Market Value of
the Company's common stock on the date that dividends are distributed to common
shareholders.
5. Termination of Employment by Reason of Death or Disability. In the
event the Participant's employment is terminated by reason of death or
disability, the Participant will become one hundred percent (100%) vested in all
shares of Career Stock then outstanding. Redemption of shares will occur on
January 1 first following the Participant's death or disability.
6. Termination of Employment for Cause. Notwithstanding any other
provisions of this Agreement, in the event of Termination of Employment for
Cause, all shares of Career Stock granted hereunder shall immediately be
<PAGE>
forfeited (regardless of their vested status). As used in this Agreement,
"Termination of Employment for Cause" shall mean termination of Participant's
employment due to the Participant's (i) commission of an act or series of
actions which, in the reasonable judgment of the Committee, could constitute a
felony under applicable law; or (ii) willful refusal without proper legal cause
to perform Participant's duties and responsibilities; or (iii) willfully
engaging in conduct which Participant has or should have reason to know may be
materially injurious to Company.
7. Termination of Employment for Other Reasons. In the event the
Participant's employment is terminated for reasons other than those described in
Sections 5 and 6 herein prior to full vesting of the shares of Career Stock, all
unvested shares of Career Stock granted hereunder shall immediately be forfeited
by the Participant.
8. Noncompetition. Notwithstanding any other provision of this
Agreement, the Participant's rights under this Agreement are contingent upon
compliance with the provisions of this Section 8.
(a) Prohibition on Competition. Without the prior written consent
of the Company, during the period in which the Participant is employed by the
Company and for a term of twenty-four (24) months thereafter, the Participant
shall not, as an employee, an officer, or a consultant, engage directly or
indirectly in any business or enterprise which is "in competition" with the
Company or its successors or assigns. For purposes of this Agreement, a business
or enterprise will be deemed to be "in competition if it is engaged in any
business activity of the Company or its subsidiaries.
However, the Participant shall be allowed to purchase and hold for
investment less than three percent (3%) of the shares of any corporation
whose shares are regularly traded on a national securities exchange or in the
over-the-counter market.
(b) Disclosure of Information. The Participant recognizes that
the Participant has access to, and knowledge of, certain confidential and
proprietary information of the Company which is essential to the performance of
the Participant's duties under this Agreement. The Participant will not, during
or after the term of employment by the Company, in whole or in part, disclose
such information to any person, firm, corporation, association, or other entity
for any reason or purpose whatsoever, nor shall the Participant make use of any
such information for the Participant's own purposes.
(c) Covenants Regarding Other Employees. During the term of this
Agreement, and for a period of twenty-four (24) months following the expiration
of this Agreement, the Participant agrees not to attempt to induce any employee
of the Company to terminate his or her employment with the Company, accept
employment with any competitor of the Company, or to interfere in a similar
manner with the business of the Company.
<PAGE>
(d) Legal Damages in Breach. The award of Career Stock set forth
in this Agreement is expressly contingent upon full compliance with the terms
and provisions of this Section 8. In the event of a breach of this Section 8,
the Participant shall forfeit any and all rights to Career Stock granted
hereunder, regardless of the vested status of the Career Stock and regardless of
whether some or all shares of Career Stock have been redeemed for shares of
Company common stock pursuant to Section 3 herein. For purposes of this Section
8, the date of determination of the existence of a breach shall be the date that
the Committee determines that such a breach has occurred.
Immediately upon determination of a breach of this Section 8, all
vested and unvested shares of Career Stock which have not yet been redeemed for
shares of Company common stock shall be forfeited by the Participant with no
value paid by the Company therefor. In addition, within sixty (60) days
following the determination of a breach, the Participant shall be required to
surrender to the Company all shares of Company common stock delivered in
exchange for shares of Career Stock under this Agreement (or, at the sole
discretion of the Committee, an amount of cash equal to the Fair Market Value of
such shares of Company common stock as of the date of such breach).
In addition to the surrender of Career Stock and Company common stock
described above, and in addition to the ability to obtain specific performance
as set forth in Section 8(e) herein, the Company shall have the right to seek
and obtain monetary damages associated with any breach by the Participant of the
terms and provisions of this Agreement.
(e) Specific Performance. Despite any and all legal remedies
which may be available to the Company, the parties recognize that the Company
will have no adequate remedy at law for breach by the Participant of the
requirements of this Article and, in the event of such breach, the Company and
the Participant hereby agree that, in addition to the right to seek monetary
damages, the Company will be entitled to a decree of specific performance to
comply with the terms of this Agreement (including, but not limited to, a
temporary or permanent injunction or restraining order), mandamus, or other
appropriate remedy to enforce performance of such requirements.
9. Change in Control. In the event of a Change in Control (as defined
in the Whirlpool Corporation Salaried Employees Retirement Plan), any vesting
periods and restrictions imposed on Career Stock shares subject to this
Agreement shall lapse, and the Career Stock shares shall be redeemed for an
equal number of shares of common stock of the Company. Within ten (10) business
days after the effective date of a Change in Control, the stock certificates
representing the shares of common stock, without any restrictions or legend
thereon, shall be delivered to the Participant.
10. Transferability. These shares of Career Stock are not transferable
by the Participant, whether voluntarily or involuntarily, by operation of law or
otherwise. If any assignment, pledge, transfer, or other disposition, voluntary
or
<PAGE>
involuntary, of the Career Stock shares shall be made, or if any attachment,
execution, garnishment, or lien shall be issued against or placed upon the
Career Stock shares, then the Participant's right to the Career Stock shares
shall immediately cease and terminate and the Participant shall promptly forfeit
to the Company all shares of Career Stock awarded (including shares of Career
Stock credited pursuant to Section 4) under this Agreement.
11. Recapitalization. In the event of any merger, reorganization,
consolidation, recapitalization, separation, liquidation, stock dividend, split
up, share combination, or other change in the corporate structure of the Company
affecting the common shares of Company stock, the number of shares of Career
Stock subject to this Agreement may be equitably adjusted by the Committee, if
such an adjustment is necessary, to prevent dilution or enlargement of the
Participant's rights.
12. Administration. This Agreement and the rights of the Participant
hereunder are subject to all the terms and conditions of the Plan, as the same
may be amended from time to time, as well as to such rules and regulations as
the Committee may adopt for administration of the Plan. It is expressly
understood that the Committee is authorized to administer, construe, and make
all determinations necessary or appropriate to the administration of the Plan
and this Agreement, all of which shall be binding upon the Participant.
13. Miscellaneous.
(a) The shares of Career Stock are not an equity interest in the
Company. As such, any liability of the Company for such rights is unfunded.
(b) This Agreement shall not confer upon the Participant any
right to continuation of employment by the Company nor shall this Agreement
interfere in any way with the Company's right to terminate the Participant's
employment at any time.
(c) With the approval of the Board, the Committee may terminate,
amend, or modify the Plan and/or this Agreement provided, however, that no such
termination, amendment, or modification of the Plan and/or this Agreement may,
in any material way, adversely affect the Participant's rights under this
Agreement.
(d) The Company shall have the authority to deduct or withhold,
or require the Participant to remit to the Company, an amount sufficient to
satisfy Federal, state, and local taxes (including the Participant's FICA
obligation) required by law to be withheld with respect to any provision of this
Agreement.
(e) This Agreement shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
<PAGE>
(f) To the extent not preempted by Federal law, this Agreement
shall be governed by and construed in accordance with the laws of the State of
Michigan.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the Date of Grant.
<PAGE>
AMENDMENT
(Effective as of June 20, 1995)
of the
WHIRLPOOL CORPORATION 1989 OMNIBUS STOCK AND INCENTIVE PLAN
The Whirlpool Corporation 1989 Omnibus Stock and Incentive Plan (the "Plan") is
hereby amended by the Board of Directors pursuant to Section 6.5(a) of the Plan,
effective as of June 20, 1995, as follows:
1. By substituting the following provision in lieu of the current Section 1.4
of the Plan:
"Awards under the Plan may be in the form of any one or more of the following:
(a) Statutory Stock Options ("ISOs," which term shall be deemed to include
Incentive Stock Options as defined in Section 2.5 and any future type of tax-
qualified option which may subsequently be authorized), Non-statutory Stock
Options ("NSOs" and, collectively with ISOs, "Options"), and Stock Appreciation
Rights ("SARs") as described in Article II, (b) Performance Units and
Performance Shares ("Performance Units" and "Performance Shares") as described
in Article III, and (c) Restricted Stock and Restricted Stock Equivalents
("Restricted Stock" and "Restricted Stock Equivalents") as described in Article
IV (collectively, "Awards")."
2. By substituting the following provision in lieu of the current Section 1.5
of the Plan:
"Shares of stock covered by Awards under the Plan may be in whole or in part
from authorized and unissued or treasury shares of the Corporation's common
stock, $1.00 par value per share, or such other shares as may be substituted
pursuant to Section 6.2 ("Common Stock"). The maximum number of shares of Common
Stock which may be issued for all purposes under the Plan shall be 5,400,000
(subject to adjustment pursuant to Section 6.2). Any shares of Common Stock
subject to an Option which for any reason is canceled (excluding shares subject
to an Option canceled upon the exercise of a related SAR to the extent shares
are issued upon exercise of such SAR) or terminated without having been
exercised, or any shares of Restricted Stock or Performance Shares which are
forfeited, shall again be available for Awards under the Plan. No fractional
shares shall be issued, and the Committee shall determine the manner in which
fractional share value shall be treated."
<PAGE>
3. By adding the following as a new Paragraph 4.5 of Article IV of the Plan:
"4.5 AWARD OF RESTRICTED STOCK EQUIVALENTS:
In lieu of or in addition to the foregoing Restricted Stock Awards, the
Committee may award to any Participant restricted stock equivalents, subject to
the terms and conditions of Paragraphs 4.2, 4.3, and 4.4 of this Article IV
being applied to such awards as if those awards were for Restricted Stock and
subject to such other terms and conditions as the Committee may prescribe
("Restricted Stock Equivalents"). Each Restricted Stock Equivalent shall
represent the right of the Participant to receive an amount determined in the
manner established by the Committee at the time of award, which value may,
without limitation, be equal to the Fair Market Value of one share of Common
Stock. Payment for Restricted Stock Equivalents may be made in a lump sum or in
installments, in cash, Common Stock or in a combination thereof as the Committee
may determine."
IN WITNESS WHEREOF, the Company has caused this Amendment to be signed and its
corporate seal to be hereunto affixed by its duly authorized officers effective
as of June 20, 1995 on this 1st day of August, 1995.
WHIRLPOOL CORPORATION
ATTEST:
By ____________________
David R. Whitwam,
By ___________________ Chairman of the Board and
Daniel F. Hopp Chief Executive Officer
Vice President, General Counsel
and Secretary
<PAGE>
EXHIBIT 11--STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
WHIRLPOOL CORPORATION AND SUBSIDIARIES
(MILLIONS OF DOLLARS EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Primary
Average Shares Outstanding............................. 73.9 74.2 71.1
Treasury Method (Average Market Price)
Stock Options........................................ 0.6 1.0 1.2
Restricted Stock (RSVP).............................. 0.3 0.3 --
------ ------ ------
Primary Average Shares Outstanding..................... 74.8 75.5 72.3
====== ====== ======
Net Earnings Before Cumulative Effect of Accounting
Change................................................ $209.4 $158.3 $230.7
RSVP Amortization, net of tax.......................... -- -- --
------ ------ ------
Primary Net Earnings Before Cumulative Effect of
Accounting Change..................................... $209.4 $158.3 $230.7
====== ====== ======
Earnings Per Share Before Cumulative Effect of
Accounting Change..................................... $ 2.80 $ 2.10 $ 3.19
====== ====== ======
Less Cumulative Effect of Accounting Change............ $ -- $ -- $(2.52)
====== ====== ======
Earnings Per Share..................................... $ 2.80 $ 2.10 $ 0.67
====== ====== ======
Fully Diluted
Average Shares Outstanding............................. 73.9 74.2 71.1
Treasury Method (Average Market Price or End of Period,
whichever is greater):
Stock Options........................................ 0.9 1.2 2.0
Restricted Stock..................................... 0.3 0.3 --
Assumed Conversion of Debt (4,885 shares issued May
1991)................................................. 2.2 2.2 3.3
------ ------ ------
Fully Diluted Average Shares Outstanding............... 77.3 77.9 76.4
====== ====== ======
Net Earnings Before Cumulative Effect of Accounting
Change................................................ $209.4 $158.3 $230.7
Interest Expense, net of tax........................... 4.2 4.3 7.3
RSVP Amortization, net of tax.......................... -- -- --
------ ------ ------
Fully Diluted Net Earnings Before Cumulative Effect of
Accounting Change..................................... $213.6 $162.6 $238.0
====== ====== ======
Earnings Per Share Before Cumulative Effect of
Accounting Change..................................... $ 2.76 $ 2.09 $ 3.11
====== ====== ======
Net Earnings........................................... $209.4 $158.3 $ 50.7
Interest Expense, net of tax........................... 4.2 4.3 7.3
RSVP Amortization, net of tax.......................... -- -- --
------ ------ ------
Fully Diluted Net Earnings............................. $213.6 $162.6 $ 58.0
====== ====== ======
Earnings Per Share..................................... $ 2.76 $ 2.09 $ 0.67*
====== ====== ======
</TABLE>
- --------
* Since the fully diluted net earnings per share is anti-dilutive, the primary
net earnings per share is presented.
F-10
<PAGE>
EXHIBIT 12--STATEMENT RE: COMPUTATION OF THE
RATIOS OF EARNINGS TO FIXED CHARGES
WHIRLPOOL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-------------------------------
APPLIANCE FINANCIAL WHIRLPOOL
BUSINESS SERVICES CORPORATION
--------- --------- -----------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C>
Pretax earnings................................ $213.6 $ 28.3 $241.9
Portion of rents representative of the interest
factor........................................ 20.6 0.9 21.5
Interest on indebtedness....................... 128.6 78.1 206.7
Amortization of debt expense and premium....... 0.6 0.2 0.8
WFC preferred stock dividend................... -- 4.5 4.5
------ ------ ------
Adjusted income................................ $363.4 $112.0 $475.4
====== ====== ======
<CAPTION>
FIXED CHARGES
- -------------
<S> <C> <C> <C>
Portion of rents representative of the interest
factor........................................ $ 20.6 $ 0.9 $ 21.5
Interest on indebtedness....................... 128.6 78.1 206.7
Amortization of debt expense and premium....... 0.6 0.2 0.8
WFC preferred stock dividend................... -- 4.5 4.5
------ ------ ------
$149.8 $ 83.7 $233.5
====== ====== ======
Ratio of earnings to fixed charges............. 2.43 1.34 2.04
====== ====== ======
</TABLE>
F-11
<PAGE>
EXHIBIT 12--STATEMENT RE: COMPUTATION OF THE
RATIOS OF EARNINGS TO FIXED CHARGES
WHIRLPOOL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
-------------------------------
APPLIANCE FINANCIAL WHIRLPOOL
BUSINESS SERVICES CORPORATION
--------- --------- -----------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C>
Pretax earnings................................ $268.9 $23.4 $292.3
Portion of rents representative of the interest
factor........................................ 19.6 0.8 20.4
Interest on indebtedness....................... 102.4 61.0 163.4
Amortization of debt expense and premium....... 1.9 0.1 2.0
WFC preferred stock dividend................... -- 4.5 4.5
------ ----- ------
Adjusted income................................ $392.8 $89.8 $482.6
====== ===== ======
<CAPTION>
FIXED CHARGES
- -------------
<S> <C> <C> <C>
Portion of rents representative of the interest
factor........................................ $ 19.6 $ 0.8 $ 20.4
Interest on indebtedness....................... 102.4 61.0 163.4
Amortization of debt expense and premium....... 1.9 0.1 2.0
WFC preferred stock dividend................... -- 4.5 4.5
------ ----- ------
$123.9 $66.4 $190.3
====== ===== ======
Ratio of earnings to fixed charges............. 3.17 1.35 2.54
====== ===== ======
</TABLE>
F-12
<PAGE>
1995 MANAGEMENT'S DISCUSSION & ANALYSIS
-- Results of Operations --
The consolidated statements of earnings summarize operating results for the last
three years. This section of Management's Discussion highlights the main
factors affecting the changes in operating results during the three-year period.
The accompanying consolidated 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 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 American 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%. North American industry shipments
are expected to be up about 1% in 1996. 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 productivity, increased volumes and pricing offset somewhat by
chlorofluorocarbon (CFC) taxes, compliance costs associated with energy
regulatory requirements and product mix.
-- page 30 --
<PAGE>
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
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 (refer to
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 (refer to Note 10 to the accompanying 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 benefit 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.
Refer to Cash Flow -- Investing Activities.
Restructuring costs of $250 million for 1994 consist 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. Refer to Note 10 to the accompanying 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 reported elsewhere in the statement of earnings.
-- page 31 --
<PAGE>
-- Management's Discussion & Analysis --
Interest Expense
- ----------------
Appliance business interest expense increased significantly in 1995 due to
higher borrowing levels (refer to Financing Activities) and higher interest
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
income taxes and other items was 41% in 1995 compared to 60% in 1994 (40%
excluding the effect of restructuring and business 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 an
$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.
-- page 32 --
<PAGE>
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.
-- Cash Flows --
The statements of cash flows reflect the changes in cash and equivalents for the
last three years 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 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 were $483 million in 1995, $418 million in 1994 and $309 million in
1993. These expenditures are 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 $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, 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 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.
-- page 33 --
<PAGE>
-- Management's Discussion & Analysis --
In September 1994, the Company sold its minority interest in Matsushita
Floor Care Company (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. The after-tax gain was $18
million or $.24 per share.
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 to shareholders totaled $100 million in 1995, $90 million in 1994
and $85 million in 1993.
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.
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 December 1995, 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. Refer to Note 6 to the accompanying
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.
-- page 34 --
<PAGE>
-- Financial Condition and Other Matters --
The financial position of the Company remains strong as evidenced by the
December 31, 1995 balance sheet. The Company's total assets are $7.8 billion
and stockholders' equity is $1.9 billion.
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 34% to 43% due primarily to
increased borrowing as discussed in 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 is 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 1995 financial services debt to invested capital ratio increased
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).
WFC's financing portfolio by business segment is as follows:
<TABLE>
<CAPTION>
December 31 (millions of dollars) -- 1995 -- -- 1994 --
===============================================================
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Inventory $ 857 46% $ 652 41%
Aerospace 411 22 465 29
Consumer 531 29 386 24
Commercial 7 -- 25 2
Other 52 3 55 4
===============================================================
$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. Refer to Notes 1 and 3 of the accompanying 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.
-- page 35 --
<PAGE>
-- Management's Discussion & Analysis --
-- Business Unit Revenues and Operating Profit --
The following appliance business (WFC on an equity basis) data is presented as
supplemental information:
Net Sales by Business Unit were as follows:
<TABLE>
<CAPTION>
(millions of dollars) -- 1995 -- -- 1994 -- Increase/(Decrease)
<S> <C> <C> <C> <C>
=====================================================================
- ---------------------------------------------------------------------
North America $5,093 $5,048 $ 45 1%
Europe 2,428 2,373 55 2
Asia 376 205 171 83
Latin America 271 329 (58) (18)
Other (5) (6) 1 --
=====================================================================
Total Appliance Business $8,163 $7,949 $214 3%
</TABLE>
Operating Profit by Business Unit was as follows:
<TABLE>
<CAPTION>
(millions of dollars) -- 1995 -- -- 1994 -- Increase/(Decrease)
<S> <C> <C> <C> <C>
=====================================================================
- ---------------------------------------------------------------------
North America $ 445 $ 522 $(77) (15)%
Europe 92 163 (71) (44)
Asia (50) (22) (28) (127)
Latin America 26 49 (23) (47)
Restructuring -- (248) 248 --
Business Dispositions -- 60 (60) --
Other (147) (154) 7 5
=====================================================================
Total Appliance Business $ 366 $ 370 $ (4) (1)%
</TABLE>
The 1994 restructuring relates to North America and Europe (refer to Note 10
to the accompanying consolidated financial statements). Other primarily
includes corporate costs and intercompany eliminations.
For commentary regarding performance in North America and Europe, refer to
Results of Operations. Asia had significant shipment and sales growth compared
to the prior year but increased its operating loss in 1995 due primarily to
planned costs related to the Company's strategy to expand its presence in Asia.
In addition, Asia experienced down turns in Hong Kong and other specific markets
and incurred additional spending in India to improve future operating
efficiencies. Latin America includes Whirlpool Argentina and the South American
Sales Company (SASCO). Whirlpool Argentina results were adversely affected by a
sharp decline in appliance industry volumes, driven primarily by a faltering
economy and very tight credit. SASCO's results were also down due to
deteriorating economic conditions and distribution issues in several key
markets.
-- page 36 --
<PAGE>
1995 CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Whirlpool Corporation (Consolidated)
Year ended December 31 ______________________________________
(millions of dollars except per share data) -- 1995 -- -- 1994 -- -- 1993 --
=========================================================================================
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues
- --------
Net sales $8,163 $7,949 $7,368
Financial services 184 155 165
- -----------------------------------------------------------------------------------------
8,347 8,104 7,533
Expenses
- --------
Cost of products sold 6,245 5,952 5,503
Selling and administrative 1,609 1,490 1,433
Financial services interest 66 51 59
Intangible amortization 31 24 25
Gain on dispositions -- (60) --
Restructuring costs -- 250 31
- -----------------------------------------------------------------------------------------
7,951 7,707 7,051
Operating Profit (Loss) 396 397 482
-----------------------
Other Income (Expense)
- ----------------------
Interest and sundry (13) 9 6
Interest expense (141) (114) (113)
- -----------------------------------------------------------------------------------------
Earnings (Loss) Before Income Taxes, Other
Items and Accounting Change 242 292 375
Income taxes 100 176 148
- -----------------------------------------------------------------------------------------
Earnings (Loss) Before Equity Earnings,
Minority Interests and Accounting Change 142 116 227
Equity in WFC -- -- --
Equity in affiliated companies 72 59 16
Minority interests (5) (17) (12)
- -----------------------------------------------------------------------------------------
Net Earnings (Loss) Before Cumulative Effect
of Accounting Change 209 158 231
Cumulative effect of accounting change for
postretirement benefits -- -- (180)
=========================================================================================
Net Earnings (Loss) $ 209 $ 158 $ 51
- -----------------------------------------------------------------------------------------
Per share of common stock:
Primary earnings before accounting change $ 2.80 $ 2.10 $ 3.19
Primary earnings $ 2.80 $ 2.10 $ 0.67
Fully diluted earnings before accounting change $ 2.76 $ 2.09 $ 3.11
Fully diluted earnings $ 2.76 $ 2.09 $ 0.67
Cash dividends $ 1.36 $ 1.22 $ 1.19
Average number of common shares outstanding
(millions) 74.8 75.5 72.3
</TABLE>
<TABLE>
<CAPTION>
Supplemental Consolidating Data
Whirlpool with WFC on an Equity Basis Whirlpool Financial Corporation (WFC)
Year ended December 31 ______________________________________ ______________________________________
(millions of dollars except per share data) -- 1995 -- -- 1994 -- -- 1993 -- -- 1995 -- -- 1994 -- -- 1993 --
===================================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
- --------
Net sales $8,163 $7,949 $7,368 $ -- $ -- $ --
Financial services -- -- -- 219 184 193
- -----------------------------------------------------------------------------------------------------------------------------------
8,163 7,949 7,368 219 184 193
Expenses
- --------
Cost of products sold 6,245 5,952 5,503 -- -- --
Selling and administrative 1,521 1,415 1,305 123 104 155
Financial services interest -- -- -- 79 63 72
Intangible amortization 31 24 25 -- -- --
Gain on dispositions -- (60) -- -- -- --
Restructuring costs -- 248 31 -- 2 --
- -----------------------------------------------------------------------------------------------------------------------------------
7,797 7,579 6,864 202 169 227
Operating Profit (Loss) 366 370 504 17 15 (34)
-----------------------
Other Income (Expense)
- ----------------------
Interest and sundry (23) 3 19 11 8 (9)
Interest expense (129) (104) (105) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings (Loss) Before Income Taxes, Other
Items and Accounting Change 214 269 418 28 23 (43)
Income taxes 90 169 167 10 7 (19)
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings (Loss) Before Equity Earnings,
Minority Interests and Accounting Change 124 100 251 18 16 (24)
Equity in WFC 14 11 (28) -- -- --
Equity in affiliated companies 72 59 16 -- -- --
Minority interests (1) (12) (10) (4) (5) (2)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Earnings (Loss) Before Cumulative Effect
of Accounting Change 209 158 229 14 11 (26)
Cumulative effect of accounting change for
postretirement benefits -- -- (178) -- -- (2)
===================================================================================================================================
Net Earnings (Loss) $ 209 $ 158 $ 51 $ 14 $ 11 $ (28)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements
-- page 37 --
<PAGE>
1995 CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Supplemental Consolidating Data
Whirlpool Corporation Whirlpool with WFC Whirlpool Financial
(Consolidated) on an Equity Basis Corporation (WFC)
---------------------------------------------------------------------------
December 31 (millions of dollars) -- 1995 -- -- 1994 -- -- 1995 -- -- 1994 -- -- 1995 -- -- 1994 --
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and equivalents $ 149 $ 72 $ 125 $ 51 $ 24 $ 21
Trade receivables, less
allowances of $39 in 1995 and
$38 in 1994 1,031 1,001 1,031 1,001 -- --
Financing receivables and
leases, less allowances 1,086 866 -- -- 1,086 866
Inventories 1,029 838 1,029 838 -- --
Prepaid expenses and other 152 197 141 183 11 14
Deferred income taxes 94 104 94 104 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Current Assets 3,541 3,078 2,420 2,177 1,121 901
Other Assets
Investment in affiliated companies 425 370 425 370 --
Investment in WFC -- -- 269 253 -- --
Financing receivables and
leases, less allowances 772 717 -- -- 772 717
Intangibles, net 931 730 931 730 -- --
Deferred income taxes 153 171 153 171 -- --
Other 199 149 199 149 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
2,480 2,137 1,977 1,673 772 717
Property, Plant and Equipment
Land 97 73 97 73 -- --
Buildings 710 610 710 610 -- --
Machinery and equipment 2,855 2,418 2,831 2,392 24 26
Accumulated depreciation (1,883) (1,661) (1,867) (1,645) (16) (16)
- ------------------------------------------------------------------------------------------------------------------------------------
1,779 1,440 1,771 1,430 8 10
====================================================================================================================================
Total Assets $ 7,800 $ 6,655 $ 6,168 $ 5,280 $1,901 $1,628
</TABLE>
-- page 38 --
<PAGE>
<TABLE>
<CAPTION>
Supplemental Consolidating Data
Whirlpool Corporation Whirlpool with WFC Whirlpool Financial
(Consolidated) on an Equity Basis Corporation (WFC)
---------------------------------------------------------------------------
December 31 (millions of dollars) -- 1995 -- -- 1994 -- -- 1995 -- -- 1994 -- -- 1995 -- -- 1994 --
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable $1,939 $1,162 $ 709 $ 226 $1,230 $ 936
Accounts payable 977 843 896 795 81 48
Employee compensation 232 201 222 192 10 9
Accrued expenses 552 629 552 620 -- 9
Restructuring costs 70 114 70 112 -- 2
Current maturities of long-term debt 59 39 56 36 3 3
- ------------------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 3,829 2,988 2,505 1,981 1,324 1,007
Other Liabilities
Deferred income taxes 234 221 114 110 120 111
Postemployment benefits 517 481 517 481 -- --
Other liabilities 181 262 181 262 -- --
Long-term debt 983 885 870 703 113 182
- ------------------------------------------------------------------------------------------------------------------------------------
1,915 1,849 1,682 1,556 233 293
Minority Interests 179 95 104 20 75 75
Stockholders' Equity
Common stock, $1 par value: 250 million shares
authorized, 81 million and 80 million shares
issued in 1995 and 1994 81 80 81 80 8 8
Paid-in capital 229 214 229 214 26 26
Retained earnings 1,863 1,754 1,863 1,754 234 220
Unearned restricted stock (8) (8) (8) (8) -- --
Cumulative translation adjustments (53) (93) (53) (93) 1 (1)
Treasury stock -- 6 million
shares at cost in 1995 and 1994 (235) (224) (235) (224) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
1,877 1,723 1,877 1,723 269 253
====================================================================================================================================
Total Liabilities and Stockholders' Equity $7,800 $6,655 $6,168 $5,280 $1,901 $1,628
</TABLE>
See notes to consolidated financial statements
-- page 39 --
<PAGE>
1995 CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Supplemental Consolidating Data
Whirlpool Corporation Whirlpool with WFC Whirlpool Financial
(Consolidated) on an Equity Basis Corporation (WFC)
----------------------------------------------------------------------------------------------------
Year ended December 31
(millions of dollars) -- 1995 -- -- 1994 -- -- 1993 -- -- 1995 -- -- 1994 -- -- 1993 -- 1995 -- 1994 --1993 --
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Activities
- --------------------
Net earnings (loss) before
cumulative effect of
accounting change $ 209 $ 158 $ 231 $ 209 $ 158 $ 229 $ 14 $ 11 $ (26)
Depreciation 282 272 263 253 243 239 29 29 24
Deferred income taxes 44 (28) (31) 35 (39) (27) 9 11 (4)
Equity in net earnings of
affiliated companies, less
dividends received (58) (57) (14) (58) (57) (14) -- -- --
Equity in net loss
(earnings) of WFC -- -- -- (14) (11) 28 -- -- --
(Gain) loss on business
dispositions -- (60) 8 -- (60) 8 -- -- --
Provision for doubtful
accounts 43 28 75 9 6 8 34 22 67
Amortization of goodwill 30 20 28 30 20 28 -- -- --
Restructuring charges, net
of cash paid (119) 197 10 (117) 195 19 (2) 2 (9)
Minority interests 1 12 10 1 12 10 -- -- --
Other (19) (1) 21 (19) 7 23 -- (8) (2)
Changes in assets and
liabilities, net of
effects of business
acquisitions and dispositions:
Trade receivables 23 (125) (76) 23 (125) (75) -- -- --
Inventories (111) (72) (145) (111) (72) (145) -- -- --
Accounts payable 70 107 101 65 105 89 5 2 12
Other -- net (18) (2) 148 -- (2) 146 (18) -- 9
=================================================================================================================================
Cash Provided by
Operating Activities $ 377 $ 449 $ 629 $ 306 $ 380 $ 566 $ 71 $ 69 $ 71
</TABLE>
-- page 40 --
<PAGE>
<TABLE>
<CAPTION>
Supplemental Consolidating Data
Year ended December 31 Whirlpool Corporation Whirlpool with WFC on
(millions of dollars) (Consolidated) an Equity Basis Whirlpool Financial Corporation (WFC)
---------------------------------------------------------------------------------------------------
--1995-- --1994-- --1993-- --1995-- --1994 --1993-- --1995-- --1994-- --1993--
=================================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investing Activities
- ---------------------------
Net additions to properties $ (483) $ (418) $ (309) $ (477) $ (416) $ (307) $ (6) $ (2) $ (2)
Financing receivables
originated and leasing
assets purchased (3,646) (3,051) (2,603) -- -- -- (3,646) (3,051) (2,603)
Principal payments
received on financing
receivables and leases 3,357 3,068 2,888 -- -- -- 3,357 3,068 2,888
Acquisitions of
businesses, less cash
acquired (157) (28) -- (157) (28) -- -- -- --
Net increase in investment
in and advances
to affiliated companies (40) -- (19) (40) -- (19) -- -- --
Business dispositions 26 124 4 26 124 4 -- -- --
Other 8 (34) (57) -- (9) -- 8 (25) (63)
- ------------------------------------------------------------------------------------------------------------------------------
Cash Provided by (Used
for) Investing Activities (935) (339) (96) (648) (329) (322) (287) (10) 220
- ---------------------------
Financing Activities
- ---------------------------
Proceeds of short-term
borrowings 16,493 12,727 12,049 7,237 4,344 9,586 9,256 8,383 3,424
Repayments of short-term
borrowings (15,744) (12,585) (12,465) (6,768) (4,255) (9,785) (8,976) (8,330) (3,641)
Proceeds of long-term debt 130 42 32 130 129 145 -- -- --
Repayments of long-term
debt (121) (206) (173) (72) (206) (159) (49) (87) (127)
Repayments of non-recourse
debt (10) (11) (26) -- -- -- (10) (11) (26)
Dividends (100) (90) (85) (100) (90) (85) -- -- --
Purchase of treasury stock (35) (16) -- (35) (16) -- -- -- --
Proceeds from the sale of
preferred stock -- -- 75 -- -- -- -- -- 75
Swap terminations -- -- 56 -- -- 56 -- -- --
Other 22 13 26 24 13 27 (2) -- (3)
- ------------------------------------------------------------------------------------------------------------------------------
Cash Provided by (Used
for) Financing Activities 635 (126) (511) 416 (81) (215) 219 (45) (298)
- ---------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in
Cash and Equivalents 77 (16) 22 74 (30) 29 3 14 (7)
- ---------------------------
Cash and equivalents at
beginning of year 72 88 66 51 81 52 21 7 14
==============================================================================================================================
Cash and Equivalents at
End of Year $ 149 $ 72 $ 88 $ 125 $ 51 $ 81 $ 24 $ 21 $ 7
</TABLE>
See notes to consolidated financial statements
-- page 41 --
<PAGE>
1995 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
Nature of Operations: Whirlpool is the world's leading manufacturer and
marketer of major home appliances. The Company manufactures in 12 countries on
four continents and markets products to distributors and retailers in 140
countries. Whirlpool Financial Corporation (WFC), a consolidated subsidiary,
provides diversified financial services to businesses and consumers in the
Americas and Europe. Financial products include inventory financing services for
retailers and distributors that market products manufactured by the Company and
various other manufacturers and consumer financing services for retail sales by
retailers.
Principles of Consolidation: The consolidated financial statements include
all majority-owned subsidiaries. Investments in affiliated companies are
accounted for by the equity method. Intercompany transactions and amounts
between Whirlpool Corporation and WFC included in the supplemental consolidating
data have been eliminated in the consolidated financial statements. The
eliminations relate primarily to intercompany financing, interest and leasing
transactions.
Use of Estimates: Management is required to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
Revenue Recognition: Sales are recorded when product is shipped to
distributors or directly to retailers. Refer also to Financing Receivables and
Leases.
Cash and Equivalents: All highly liquid debt instruments purchased with a
maturity of three months or less are considered cash equivalents.
Inventories: Inventories are stated at first-in, first-out (FIFO) cost,
except U.S. production inventories which are stated at last-in, first-out (LIFO)
cost. Costs do not exceed realizable values.
Property, Plant and Equipment: Property, plant and equipment are stated at
cost. Depreciation of plant and equipment is computed using the straight-line
method based on the estimated useful lives of the assets.
Intangibles: The cost of business acquisitions in excess of net tangible
assets acquired is amortized on a straight-line basis principally over 40 years.
Non-compete agreements are amortized on a straight-line basis over the terms of
the agreements. Accumulated amortization aggregated $162 million at December 31,
1995 and $124 million at December 31, 1994. On an annual basis, the Company
evaluates recorded goodwill for potential impairment against the current and
estimated undiscounted future operating income before goodwill amortization of
the businesses to which the goodwill relates.
Research and Development Costs: Research and development costs are charged to
expense as incurred. Such costs were approximately $180 million in 1995, $152
million in 1994 and $128 million in 1993.
Advertising Costs: Advertising costs are charged to expense as incurred.
Such costs were approximately $126 million in 1995, $140 million in 1994 and
$128 million in 1993.
Financing Receivables and Leases: Interest and discount charges are
recognized in revenues using the effective yield method. Lease income is
recorded in decreasing amounts over the term of the lease contract, resulting in
a level rate of return on the net investment in the lease. Origination fees and
related costs are deferred and amortized as yield adjustments over the life of
the related receivable or lease.
The allowance for losses is maintained at estimated amounts necessary to cover
losses on all finance and leasing receivables based on management's assessment
of various factors including loss experience and review of problem accounts.
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 loans' effective interest rate.
Evaluation for impairment is performed as part of the portfolio management
review process. Income is recognized in the same manner as it is on accruing
receivables. These standards do not apply to leasing transactions or large
groups of smaller homogeneous finance receivables. Adoption of the new rules
did not have a material effect on the Company's net earnings or financial
position.
The Company adopted Financial Accounting Standards Board Statement No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," effective
January 1, 1994. The new rules require that certain investments in marketable
equity securities and many debt securities be presented at fair value. Adoption
of the new rules had no material effect on the Company's net earnings or
financial position.
-- page 42 --
<PAGE>
(1) SUMMARY OF PRINCIPAL ACCOUNTING POLICIES CONTINUED
Derivative Financial Instruments: The Company uses derivative financial
instruments to diminish the economic impact of market risks from fluctuations in
interest rates, foreign currency exchange rates and commodity prices. To
achieve this, the Company enters into interest rate and cross currency interest
rate swaps, foreign currency forward contracts and option collars, and commodity
swaps.
The Company's hedging strategy for the foreign currency exchange risk
associated with its investment in Europe is based on projected foreign currency
cash flows over periods up to ten years. The Company uses foreign currency
forward contracts and interest rate and cross currency interest rate swaps to
effectively convert a portion of the Company's U.S. dollar denominated debt into
various European currencies. The Company's investment in Europe and the foreign
currency portion of these contracts and swaps are revalued in dollar terms each
period to reflect current foreign currency exchange rates with gains and losses
recorded in the equity section of the balance sheet. To the extent that the
notional amounts of these contracts exceed the Company's investment in Europe,
the related mark-to-market gains and losses are reflected currently in earnings.
The net translation gain (loss) recognized in other income, including the gains
and losses from those contracts not qualifying as hedges, was $(16) million,
$(3) million and $5 million in 1995, 1994 and 1993. The amounts receivable from
or payable to counterparties to the swaps, offsetting the gains and losses
recorded in equity or earnings, are recorded in long-term debt. The interest
component of the swaps, which overlay a portion of the Company's interest
payments on outstanding debt, are not carried at fair value in the financial
statements. The interest differential paid or received is recognized as an
adjustment to interest expense. Gains and losses on the interest component of
terminated swaps are deferred in noncurrent liabilities and amortized as an
adjustment to interest expense over the remaining term of the original swap. In
the event of early extinguishment of debt, any realized or unrealized gains or
losses from related swaps would be recognized in income concurrent with the
extinguishment. Any swap or portion of a swap not overlaying debt is recorded at
fair value with periodic changes in fair value recorded in income.
The Company also uses foreign currency forward contracts to hedge payments due
on cross currency interest rate swaps and intercompany loans and, along with
foreign currency option collars, to hedge material purchases, intercompany
shipments and other commitments. In addition, the Company hedges a portion of
its contractual requirements of certain commodities with commodity swaps. These
contracts are not carried at fair value in the financial statements as the
related gains and losses are recognized in the same period and classified in the
same manner as the underlying transactions. Any gains and losses on terminated
contracts are deferred in current liabilities until the underlying transactions
occur.
WFC enters into interest rate swaps to match certain assets and liabilities in
terms of duration and pricing frequency to manage margins on its financing
transactions. The WFC swaps are accounted for the same as those related to the
interest component of European investment hedge swaps with the interest
differential paid or received recognized as an adjustment to interest expense.
The Company deals only with investment grade counterparties to these contracts
and monitors its overall credit risk and exposure to individual counterparties.
The Company does not anticipate nonperformance by any counterparties. The amount
of the exposure is generally the unrealized gains in such contracts. The Company
does not require, nor does it post, collateral or security on such contracts.
Net Earnings Per Common Share: Net earnings per common share are based on the
average number of shares of common stock and common stock equivalents
outstanding during each year. Primary per share amounts assume, if dilutive, the
exercise of stock options and vesting of restricted stock using the treasury
stock method. Fully dilutive per share amounts also assume the conversion of the
7% subordinated convertible notes.
(2) 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, 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.
-- page 43 --
<PAGE>
-- Notes to Consolidated Financial Statements --
(2) BUSINESS ACQUISITIONS AND DISPOSITIONS CONTINUED
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.
In September 1994, the Company sold its minority interest in Matsushita Floor
Care Company (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. The after-tax gain was $18 million or
$.24 per share.
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 received 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,
renamed Whirlpool Washing Machines Limited in 1995. The Company plans to invest
an additional $14 million in 1996 to increase its interest in the joint venture.
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 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.
Pro forma consolidated operating results reflecting these acquisitions and
dispositions 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 date of acquisition.
(3) FINANCING RECEIVABLES AND LEASES
<TABLE>
<CAPTION>
December 31 (millions of dollars) -- 1995 -- -- 1994 --
=========================================================================
<S> <C> <C>
Financing receivables $1,569 $1,251
Leveraged leases 103 107
Direct financing leases 3 11
Other operating leases and investments 197 227
- --------------------------------------------------------------------------
1,872 1,596
Unearned income (52) (53)
Estimated residual value 80 86
Allowances for doubtful accounts (42) (46)
- --------------------------------------------------------------------------
Total financing receivables and leases 1,858 1,583
Less current portion 1,086 866
==========================================================================
Long-term portion $ 772 $ 717
</TABLE>
-- page 44 --
<PAGE>
(3) FINANCING RECEIVABLES AND LEASES CONTINUED
Deferred income tax liabilities relating to leveraged and direct financing
leases were $118 million at December 31, 1995 and $113 million at December 31,
1994.
Financing receivables and leases at December 31, 1995 include $750 million due
from household appliance and electronics dealers and $411 million resulting from
aerospace financing transactions. These amounts are generally secured by the
assets financed. Non-earning finance receivables and operating leases totaled
$41 million at December 31, 1995 and $50 million at December 31, 1994.
Net losses on financing receivables and leases were $39 million in 1995, $25
million in 1994 and $56 million in 1993. Financing receivables of $112 million
are considered impaired under Financial Accounting Standards Board Statement No.
114, "Accounting by Creditors for Impairment of a Loan" at December 31, 1995 and
during 1995. Specific allowances for losses on these receivables total $19
million at December 31, 1995. WFC recognized $12 million of interest income in
1995 on these receivables.
Financing receivables and minimum lease payments receivable at December 31,
1995 mature contractually as follows:
<TABLE>
<CAPTION>
Leveraged
and Direct
Financing Financing
(millions of dollars) Receivables Leases
======================================================================
- ----------------------------------------------------------------------
<S> <C> <C>
1996 $1,105 $ 3
1997 291 3
1998 134 3
1999 13 2
2000 2 2
Thereafter 24 93
======================================================================
$1,569 $106
</TABLE>
(4) INVENTORIES
<TABLE>
<CAPTION>
December 31 (millions of dollars) -- 1995 -- -- 1994 --
======================================================================
- ----------------------------------------------------------------------
<S> <C> <C>
Finished products $ 984 $ 832
Work in process 84 66
Raw materials 194 156
- ----------------------------------------------------------------------
Total FIFO cost 1,262 1,054
Less excess of FIFO cost over LIFO cost 233 216
======================================================================
$1,029 $ 838
</TABLE>
LIFO inventories represent approximately 41% and 52% of total inventories at
December 31, 1995 and 1994.
(5) AFFILIATED COMPANIES
The Company has direct voting interests, ranging from 30% to 49%, in two
Brazilian companies (Multibras S.A., and Embraco S.A.), a Mexican company
(Vitromatic, S.A. de C.V.) and several other international companies principally
engaged in the manufacture and sale of major home appliances or related
component parts.
Equity in the net earnings (losses) of affiliated companies, net of related
taxes, is as follows:
<TABLE>
<CAPTION>
(millions of dollars) -- 1995 -- -- 1994 -- -- 1993 --
==========================================================================
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Brazilian affiliates $70 $39 $21
Mexican affiliate -- 16 (6)
Other 2 4 1
==========================================================================
Total equity earnings $72 $59 $16
</TABLE>
-- page 45 --
<PAGE>
-- Notes to Consolidated Financial Statements --
(5) AFFLIATED COMPANIES CONTINUED
Combined condensed financial information for all affiliated operating
companies follows:
<TABLE>
<CAPTION>
December 31 (millions of dollars) -- 1995 -- -- 1994 --
- -----------------------------------------------------------------------
<S> <C> <C>
Current assets $1,044 $ 672
Other assets 991 954
- -----------------------------------------------------------------------
$2,035 $1,626
Current liabilities $ 673 $ 524
Other liabilities 321 213
Stockholders' equity 1,041 889
- -----------------------------------------------------------------------
$ 2,035 $1,626
</TABLE>
<TABLE>
<CAPTION>
(millions of dollars) -- 1995 -- -- 1994 -- -- 1993 --
- ----------------------------------------------------------------
<S> <C> <C> <C>
Net sales $2,772 $2,051 $2,062
Cost of products sold $2,122 $1,441 $1,446
Net earnings $ 192 $ 173 $ 90
Dividends and fees paid to
Whirlpool by affiliates $ 20 $ 16 $ 9
</TABLE>
(6) FINANCING ARRANGEMENTS
After finalization of new credit arrangements in January 1996, the Company has
unused credit lines of about $4.2 billion, including a $1.2 billion multiple
option facility expiring in 2001 and about $3.0 billion in various other lines
expiring in 1997. There are no formal compensating balances required with the
credit line banks. Generally, the banks are compensated for their credit lines
by a fee.
Notes payable consist of the following:
<TABLE>
<CAPTION>
December 31 (millions of dollars) -- 1995 -- -- 1994 --
- -----------------------------------------------------------------------
<S> <C> <C>
Payable to banks $ 103 $ 64
Commercial paper 1,778 1,094
Other 58 4
- ---------------------------------------------------------------------
$1,939 $1,162
</TABLE>
The weighted average interest rate on notes payable was 6.17% and 5.98% at
December 31, 1995 and 1994.
During 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.
During 1993, WFC issued 750,000 shares (400,000 shares Series A and 350,000
shares Series B) of preferred stock at a face value of $100 per share.
Dividends on the Series A and Series B Redeemable Cumulative Preferred Stock are
payable quarterly in an amount equal to $5.55 and $6.55, respectively, per share
per year. The Series A Preferred Stock is subject to mandatory redemption on
September 1, 1998. The Series B Preferred Stock is not redeemable prior to
September 1, 2003 at which time it is redeemable at the option of WFC with all
remaining outstanding shares redeemed on September 1, 2008. The redemption
price for each series is $100 per share plus any accrued and unpaid dividends.
Commencing September 1, 2003, WFC will be obligated to pay $1,750,000 per year
to a sinking fund for the benefit of holders of the Series B Preferred Stock,
with a final payment of $26,250,000 due on or before September 1, 2008.
The Company and WFC are parties to a support agreement. Pursuant to the
agreement, if at the close of any fiscal quarter WFC's net earnings available
for fixed charges (as defined) for the preceding twelve months is less than a
stipulated amount, the Company will make a cash payment to WFC equal to the
insufficiency within 60 days of the end of the quarter. The support agreement
may be terminated by either WFC or the Company upon 30 days notice provided that
certain conditions are met. The Company has also agreed to maintain ownership
of at least 70% of WFC's voting stock.
-- page 46 --
<PAGE>
(6) FINANCING ARRANGEMENTS CONTINUED
During 1991, the Company sold $675 million in face amount of subordinated zero
coupon convertible notes and received $170 million in gross proceeds. The notes
were priced to yield 7% interest to maturity. Holders may convert each $1,000
face amount of the notes into 7.237 shares of common stock. Holders may also
redeem the notes for the issuance price plus accrued original issue discount at
the end of five, ten and fifteen years or upon a change in control of the
Company as defined. The Company may, at its option, elect to pay the redemption
price in any combination of cash and common stock, except upon a change in
control, in which case the redemption price is payable in cash. The Company also
has the right to call the notes at a price equal to their issuance price plus
accrued original issue discount. At December 31, 1995, principal amounts of $371
million have been converted into 2.7 million shares of the Company's common
stock.
Long-term debt consists of the following:
<TABLE>
<CAPTION>
Interest
December 31 (millions of dollars) Maturity Rate -- 1995 -- -- 1994 --
================================================================================
<S> <C> <C> <C> <C>
Debentures 2008 9.1% $ 125 $ 125
Senior notes 1996 to 2003 7.5 to 9.5 424 428
Medium term notes 1996 to 2004 7.5 to 9.1 72 100
Subordinated
convertible notes 2011 7.0 105 99
Other 316 172
- --------------------------------------------------------------------------------
1,042 924
Less current maturities 59 39
================================================================================
$ 983 $ 885
</TABLE>
Annual maturities of long-term debt are $59 million in 1996, $43 million in
1997, $49 million in 1998, $25 million in 1999 and $16 million in 2000.
The Company paid interest on short-term and long-term debt totaling $232
million in 1995, $168 million in 1994 and $176 million in 1993.
(7) FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used in estimating fair values of
financial instruments:
Cash and Equivalents and Notes Payable: The carrying amounts approximate fair
values.
Financing Receivables: The fair value is estimated using discounted cash flow
analyses based on current interest rates being offered to borrowers of similar
credit quality. In 1995 and 1994, the carrying amounts approximate fair values.
Long-term Debt and WFC Preferred Stock: The fair values are estimated using
discounted cash flow analyses based on incremental borrowing or dividend yield
rates for similar types of borrowing or equity arrangements. The WFC preferred
stock carrying amount approximates fair value.
Derivative Financial Instruments: The fair values of interest rate swaps,
cross currency interest rate swaps, foreign currency forward contracts and
option collars and commodity swaps are based on quoted market prices.
-- page 47 --
<PAGE>
-- Notes to Consolidated Financial Statements --
(7) FAIR VALUE OF FINANCIAL INSTRUMENTS CONTINUED
The carrying and fair values of financial instruments for which the fair value
does not approximate the liability carrying value are as follow:
<TABLE>
<CAPTION>
Carrying Fair Carrying Fair
Value Value Value Value
----------------------------------
(millions of dollars) -- 1995 -- -- 1994 --
======================================================================
<S> <C> <C> <C> <C>
Long-term debt (including
current portion) $ 919 $1,021 $ 846 $ 874
Derivative financial
instruments:
Hedges of net investment in
Europe including converted
debt:
Interest rate and cross
currency interest rate swaps
(notional amounts of $1,624
million and $1,118 million
in 1995 and 1994) 123 210 75 171
Foreign currency forward
contracts (notional amounts
of $9 million and $377
million in 1995 and 1994) -- -- 3 3
Transaction hedges: Foreign
currency forward contracts
(notional amounts of $514
million and $447 million in
1995 and 1994) -- 3 -- 6
Foreign currency options
(notional amounts of $149
million in 1995.) -- (4) -- --
Hedges with commodity swaps
(notional amounts of $25
million and $5 million in
1995 and 1994) -- 1 -- (1)
WFC interest rate and cross
currency swaps (notional
amounts of $33 million and $465
million in 1995 and 1994) -- 2 -- 1
======================================================================
Total long-term debt $1,042 $1,233 $ 924 $1,054
</TABLE>
At December 31, 1995, interest rate and cross currency interest rate swaps
effectively convert $892 million of U.S. dollar denominated debt into European
currency denominations ($501 million - German marks, $312 million - French
francs, $29 million - Swiss francs and $50 million - British pounds). The swaps
also effectively convert $529 million of fixed to floating rate debt and $518
million of floating to fixed rate debt. Floating rates received range from
LIBOR less 0.9% to LIBOR, and floating rates paid range from local currency
LIBOR to local currency LIBOR plus 4.15%. Fixed rates received range from
5.925% to 8.480%, and fixed rates paid range from 5.130% to 9.730%. The swaps
mature within 1 to 11 years.
At December 31, 1995, WFC interest rate swaps effectively convert $28 million
of floating rate debt into fixed rate debt as well as converting $5 million of
U.S. dollar denominated debt into Canadian currency denomination. Floating
rates received are based on LIBOR or commercial paper rates, and fixed rates
paid range from 8.565% to 9.310%. The WFC swaps mature within 1 to 5 years.
Foreign currency forward contracts and option collars mature within one month
to two years and involve principally European and North American currencies.
Commodity swaps mature within 1 year and involve principally copper and other
metal commodities.
(8) STOCKHOLDERS' EQUITY
In addition to its common stock, the Company has 10 million authorized shares of
preferred stock (par value $1 per share), none of which is outstanding.
Consolidated retained earnings at December 31, 1995 included $228 million of
equity in undistributed net earnings of affiliated companies.
The cumulative translation component of stockholders' equity represents the
effect of translating net assets of the Company's international subsidiaries
offset by related hedging activity net of tax. Conversion of notes, stock
option transactions and restricted stock grants account for the changes in paid-
in capital.
One Preferred Stock Purchase Right ("Rights") is outstanding for each share of
common stock. The Rights, which expire May 23, 1998, will become exercisable
ten days after a person or group either becomes
-- page 48 --
<PAGE>
(8) STOCKHOLDERS' EQUITY CONTINUED
the beneficial owner of 20% or more of the common stock or commences a tender
or exchange offer that would result in such person or group beneficially owning
25% or more of the outstanding common stock. Each Right entitles the holder to
purchase from the Company one newly-issued unit consisting of one one-hundredth
of a share of Series A Participating Cumulative Preferred Stock at an exercise
price of $100, subject to adjustment.
If (i) any person or group becomes the beneficial owner of 25% or more of
Whirlpool common stock, or (ii) the Company is the surviving corporation in a
merger with a 20% or more stockholder and its common stock is not changed or
converted, or (iii) a 20% or more stockholder engages in certain self-dealing
transactions with the Company, then each Right not owned by such person will
entitle the holder to purchase, at the Rights' then current exercise price,
shares of the Company's common stock having a value of twice the Rights' then
current exercise price. In addition, if the Company is involved in a merger in
which its common stock is converted or sells 50% or more of its assets, each
Right will entitle its holder to purchase for the exercise price shares of
common stock of the acquiring successor company having a value of twice the
Rights' then current exercise price.
The Company will be entitled to redeem the Rights in whole, but not in part,
at $.05 per Right at any time prior to the expiration of a ten-day period
(subject to extension) following public announcement of the existence of a 20%
holder or of a 25% or more tender offer. Until such time as the Rights become
exercisable, the Rights have no voting or dividend privileges and are attached
to, and do not trade separately from, the common stock.
At December 31, 1995, one million preferred shares were reserved for future
exercise of Stock Purchase Rights.
(9) STOCK OPTION AND INCENTIVE PLANS
The Company's stock option and incentive plan permits the grant of stock options
and other stock awards covering up to 5.4 million shares to key employees of the
Company and its subsidiaries. The plan authorizes the grant of both incentive
and non-qualified stock options and, further, authorizes the grant of stock
appreciation rights and related supplemental cash payments independently of or
with respect to options granted or outstanding. An Executive Stock Appreciation
and Performance Program ("ESAP"), a Restricted Stock Value Program ("RSVP") and
a Career Stock Program ("CSP") have been established under the plan. Performance
awards under ESAP and RSVP are earned over multi-year time periods upon the
achievement of certain performance objectives or upon a change in control of the
Company. CSP awards are earned at specified dates during a participant's career
with the Company or upon change in control of the Company. ESAP awards are
payable in cash, common stock, or a combination thereof when earned. RSVP grants
restricted shares which may not be sold, transferred or encumbered until the
restrictions lapse. CSP grants phantom stock awards which are redeemable for
shares of the Company's common stock upon the recipient's retirement after
attaining age 60 and subject to certain non-competition provisions. There were
1,010,600 and 453,000 restricted shares outstanding at December 31, 1995 and
1994. Expenses under the plan were $4 million in 1995, $5 million in 1994 and
$17 million in 1993.
In 1996, the Company plans to seek shareholder approval for a follow-on to the
existing stock option and incentive plan that will permit the grant of stock
options and other awards covering up to an additional 4 million shares to key
employees of the Company, its subsidiaries and certain affiliates.
Under the Nonemployee Director Stock Ownership Plan, each nonemployee director
is automatically granted 400 shares of common stock annually and is eligible for
a stock option grant of 600 shares if the Company's earnings meet a prescribed
earnings formula. This plan provides for the grant of up to 200,000 shares as
either stock or stock options. There were no significant expenses under this
plan for 1995, 1994 or 1993.
The Company maintains an employee stock option plan ("Partner Share") that
grants substantially all full-time U.S. employees a fixed number of stock
options that vest over a three year period and may be exercised over a ten year
period. Partner Share authorizes the grant of up to 2.5 million shares. The
initial grant of 2,304,000 shares during 1991 was at an exercise price of
$37.50. There have been no additional grants.
-- page 49 --
<PAGE>
-- Notes to Consolidated Financial Statements --
(9) STOCK OPTION AND INCENTIVE PLANS CONTINUED
Stock option and incentive plans are accounted for in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and related Interpretations. Generally, no compensation expense is
recognized for stock options with exercise prices equal to the market value of
the underlying shares of stock at the date of grant. Compensation expense is
recognized for ESAP, RSVP and CSP awards based on the market value of the
underlying shares of stock when the number of shares is determinable in the
vesting periods.
A summary of stock option information follows:
<TABLE>
<CAPTION>
Number Average Number Average
of Shares Option Price of Shares Option Price
------------------------------------------------
(thousands of shares) -- 1995 -- -- 1994 --
===============================================================================
<S> <C> <C> <C> <C>
Outstanding at January 1 3,214 $39.96 3,196 $36.61
Granted 723 55.75 553 55.32
Exercised (427) 32.65 (432) 33.28
Canceled or expired (113) 47.62 (103) 46.34
----- -----
Outstanding at December 31 3,397 $43.99 3,214 $39.96
Exercisable at December 31 2,307 $38.60 2,323 $35.18
Available for future grant at
December 31 820 1,647
</TABLE>
(10) RESTRUCTURING COSTS
Restructuring costs consist of the following:
<TABLE>
<CAPTION>
December 31 (millions of dollars) -- 1994 -- -- 1993 --
===============================================================================
<S> <C> <C>
Cash costs:
Employee severance and related payments $176 $ 10
Payments to terminated independent
distributors -- 13
Lease termination, facility disposition and
other costs 34 --
- -------------------------------------------------------------------------------
Total cash costs 210 23
Non-cash costs:
Loss on disposal of facilities and equipment 20 8
Other asset write-downs 20 --
- -------------------------------------------------------------------------------
Total non-cash costs 40 8
===============================================================================
$250 $ 31
</TABLE>
In 1994, restructuring costs relate to the consolidation and reorganization
of the Company's European sales, marketing and support functions to better serve
dealers by trade channel rather than by country, the closure of two North
American manufacturing facilities and the further consolidation and
rationalization of North American operations. The Company made payments of $137
million in 1995 and 1994 related to severance of about 2,800 employees and other
costs. The remaining cash costs of the restructuring will be paid primarily in
1996 and include the elimination of an additional 600 employee positions. Pre-
tax charges of $173 million, $72 million and $5 million relate to the Company's
European, North American and WFC/Corporate operations. Total 1994 after-tax
charges were $192 million or $2.54 per share.
In 1993, restructuring costs relate to the consolidation of operations in
Europe and Canada and the termination of independent distributor agreements in
North America. Total 1993 after-tax charges were $14 million or $.19 per share.
-- page 50 --
<PAGE>
(11) INCOME TAXES
The provisions for income taxes are as follows:
<TABLE>
<CAPTION>
(millions of dollars) -- 1995 -- -- 1994 -- -- 1993 --
========================================================================
<S> <C> <C> <C>
Current:
Federal $ 40 $143 $118
State and local 2 29 26
Foreign 24 44 27
- ------------------------------------------------------------------------
66 216 171
Deferred (credit):
Federal 32 2 (36)
State and local 10 (10) (8)
Foreign (8) (32) 21
- ------------------------------------------------------------------------
34 (40) (23)
$100 $176 $148
</TABLE>
Domestic and foreign earnings before income taxes, other items and accounting
change are as follows:
<TABLE>
<CAPTION>
(millions of dollars) -- 1995 -- -- 1994 -- -- 1993 --
========================================================================
<S> <C> <C> <C>
Domestic $227 $315 $236
Foreign 15 (23) 139
========================================================================
$242 $292 $375
</TABLE>
Reconciliations between the U.S. federal statutory income tax rate and the
consolidated effective income tax rate for earnings before income taxes and
other items are as follows:
<TABLE>
<CAPTION>
-- 1995 -- -- 1994 -- -- 1993 --
========================================================================
<S> <C> <C> <C>
U.S. federal statutory rate 35.0% 35.0% 35.0%
Impact of restructuring charge -- 13.2 --
Impact of business dispositions -- 7.2 (1.2)
State and local taxes, net of
federal tax benefit 4.0 4.3 3.1
Nondeductible goodwill amortization 4.4 2.8 1.9
Settlement of prior year taxes (4.5) -- --
Excess foreign taxes 3.9 -- 1.3
Net benefits from unrecognized
prior year deferred tax assets and
carryforwards (4.0) (1.7) (1.5)
Nondeductible interest 1.7 -- --
Other items .8 (.4) .9
========================================================================
Effective income tax rate 41.3% 60.4% 39.5%
</TABLE>
A full tax benefit was not recognized on the 1994 restructuring charge in
Europe and North America due to the net operating loss positions in certain tax
jurisdictions.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities used for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax liabilities and assets are as follows:
-- page 51 --
<PAGE>
-- Notes to Consolidated Financial Statements --
(11) INCOME TAXES CONTINUED
<TABLE>
<CAPTION>
(millions of dollars) -- 1995 -- -- 1994 --
==========================================================================
<S> <C> <C>
Deferred tax liabilities:
Property, plant and equipment $178 $174
Financial services leveraged leases 117 110
Prepaid expenses 17 16
Other 28 14
- --------------------------------------------------------------------------
Total deferred tax liabilities 340 314
Deferred tax assets:
Postretirement obligation 142 134
Accrued expenses 22 18
Other reserve accruals 17 16
Restructuring costs 52 73
Product warranty accrual 18 18
Nondeductible insurance 15 13
Loss carryforwards 53 25
Employee compensation 28 28
Receivable and inventory allowances 1 21
Other 45 56
- --------------------------------------------------------------------------
Total deferred tax assets 393 402
Valuation allowance for deferred tax assets (40) (34)
- --------------------------------------------------------------------------
Deferred tax assets, net of valuation allowance 353 368
==========================================================================
Net deferred tax assets $ 13 $ 54
</TABLE>
The Company has recorded a valuation allowance to reflect the estimated amount
of net operating loss carryforwards, restructuring costs and other deferred tax
assets which may not be realized.
The Company provides deferred taxes on the undistributed earnings of foreign
subsidiaries and affiliates to the extent such earnings are expected to be
remitted. Generally, earnings have been remitted only when no significant net
tax liability would have been incurred. No provision has been made for U.S. or
foreign taxes that may result from future remittances of the undistributed
earnings ($259 million at December 31, 1995) of foreign subsidiaries and
affiliates expected to be reinvested indefinitely. Determination of the deferred
income tax liability on these unremitted earnings is not practicable as such
liability, if any, is dependent on circumstances existing when remittance
occurs.
The Company paid income taxes of $102 million in 1995, $190 million in 1994
and $140 million in 1993.
At December 31, 1995, the Company has foreign net operating loss carryforwards
of $165 million which are primarily non-expiring.
(12) PENSION PLANS
The Company maintains both contributory and non-contributory defined benefit
pension plans covering substantially all North American employees and certain
European employees. The plans provide pension benefits that are based primarily
on compensation during a specified period before retirement or specified amounts
for each year of service. The Company's present funding policy for these plans
is to generally make the minimum annual contribution required by applicable
regulations. Assets held by the plans consist primarily of listed common stocks
and bonds, government securities, investments in trust funds, bank deposits and
other investments.
Pension cost includes the following components:
<TABLE>
<CAPTION>
(millions of dollars) -- 1995 -- -- 1994 -- -- 1993 --
==========================================================================
<S> <C> <C> <C>
Service cost - benefits earned
during the year $ 36 $ 36 $ 31
Interest cost on projected benefit
obligation 77 75 71
Actual return on plan assets (267) (3) (128)
Net deferral/amortization 164 (97) 33
==========================================================================
$ 10 $ 11 $ 7
</TABLE>
-- page 52 --
<PAGE>
(12) PENSION PLANS CONTINUED
Assumptions used in accounting for defined benefit pension plans are as
follows:
<TABLE>
<CAPTION>
-- 1995 -- -- 1994 -- -- 1993 --
===========================================================================
<S> <C> <C> <C>
Discount rate 7.0-8.5% 7.0-10.0% 7.0-8.5%
Rate of compensation level increase 4.0-6.5% 4.0-6.5% 4.0-6.5%
Expected long-term rate of return
on plan assets 6.0-9.5% 6.5-9.5% 6.5-9.5%
</TABLE>
The funded status of the pension plans is as follows:
<TABLE>
<CAPTION>
Plans Whose Assets Plans Whose
Exceed Accumulated Accumulated Benefits
Benefits Exceed Plan Assets
----------------------------------------------
(millions of dollars) -- 1995 -- -- 1994 -- -- 1995 -- -- 1994 --
===========================================================================
<S> <C> <C> <C> <C>
Projected benefit obligation $ (862) $(751) $(229) $(158)
Plan assets at fair value 1,101 965 145 90
Plan assets in excess of
(less than) projected
benefit obligation 239 214 (84) (68)
Unrecognized prior service
cost 25 28 24 18
Unrecognized net experience
gain (215) (190) (5) (4)
Unrecognized net of
amortization (19) (26) (6) (5)
Additional minimum liability -- -- (9) (5)
===========================================================================
Pension asset (liability)
included in other assets
(postemployment benefits) $ 30 $ 26 $ (80) $ (64)
</TABLE>
The accumulated benefit obligation, which is included in the projected benefit
obligation, represents the actuarial present value of benefits attributed to
employee service and compensation levels to date. At December 31, 1995 and
1994, the accumulated benefit obligation was $933 million and $785 million. The
vested portion was $825 million in 1995 and $690 million in 1994.
The U.S. pension plans provide that in the event of a plan termination within
five years following a change in control of the Company, any assets held by the
plans in excess of the amounts needed to fund accrued benefits would be used to
provide additional benefits to plan participants. A change in control generally
means one not approved by the incumbent Board of Directors, including an
acquisition of 25% or more of the voting power of the Company's outstanding
stock or a change in a majority of the incumbent Board.
Certain European subsidiaries maintain termination indemnity and special
severance plans. The cost of these plans, determined in accordance with local
government specifications, was $12 million in 1995, $16 million in 1994 and $16
million in 1993.
The Company maintains a 401(k) defined contribution plan covering
substantially all U.S. employees. Company matching contributions for domestic
hourly and certain other employees under the plan, based on the Company's annual
operating results and the level of individual participant's contributions,
amounted to $3 million in 1995, $5 million in 1994 and $8 million in 1993.
(13) POSTRETIREMENT BENEFIT PLANS
The Company currently sponsors a defined benefit health care plan that provides
postretirement medical benefits to full time U.S. employees who have worked 5
years and attained age 55 while in service with the Company. The plan is
currently noncontributory and contains cost-sharing features such as
deductibles, coinsurance and a lifetime maximum. The Company does not fund the
plan. No significant postretirement benefits are provided by the Company to
non-U.S. employees.
-- page 53 --
<PAGE>
-- Notes to Consolidated Financial Statements --
(13) POSTRETIREMENT PLANS CONTINUED
Effective January 1, 1993, the Company adopted Financial Accounting Standards
Board Statement No. 106, "Employers' Accounting for Postretirement Benefits
Other than Pensions." The Company recorded the $300 million pre-tax transition
obligation as a cumulative effect accounting change, resulting in an after-tax
charge of $180 million.
The components of the annual postretirement benefit costs are as follows:
<TABLE>
<CAPTION>
(millions of dollars) -- 1995 -- -- 1994 -- -- 1993 --
==========================================================================
<S> <C> <C> <C>
Service cost $10 $ 9 $ 8
Interest cost 26 26 24
Recognition of transition obligation -- -- 300
==========================================================================
$36 $35 $332
</TABLE>
The components of the postretirement obligation are as follows:
<TABLE>
<CAPTION>
(millions of dollars) -- 1995 -- -- 1994 --
==========================================================================
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $173 $148
Fully eligible active participants 85 75
Other active plan participants 120 99
- --------------------------------------------------------------------------
Total 378 322
Unrecognized gain (loss) (21) 12
==========================================================================
Postretirement obligation $357 $334
</TABLE>
The assumed health care trend rate decreases gradually from 10% in 1994 and
1995 to 8% in 1996 and 1997 to 7% in 1998 and 1999 and finally to 6% in 2000 and
future years. Increasing the health care trend rate by one percentage point
would increase the accumulated postretirement benefit obligation as of December
31, 1995 by $26 million and increase the annual postretirement benefit cost for
1995 by $2 million. Discount rates of 7.5% and 8.5% were used to determine the
accumulated postretirement benefit obligation at December 31, 1995 and 1994.
(14) CONTINGENCIES
The Company is involved in various legal actions arising in the normal course of
business. Management, after taking into consideration legal counsel's
evaluation of such actions, is of the opinion that the outcome of these matters
will not have a material adverse effect on the Company's financial position.
The Company is a party to certain financial instruments with off-balance-sheet
risk which are entered into in the normal course of business. These instruments
consist of financial guarantees, repurchase agreements and letters of credit.
The Company's exposure to credit loss in the event of nonperformance by the
debtors is the contractual amount of the financial instruments. The Company uses
the same credit policies in making commitments and conditional obligations as it
does for on-balance-sheet instruments. Collateral or other security is
generally required to support financial instruments with off-balance-sheet
credit risk.
At December 31, 1995, financial guarantees, repurchase agreements and letters
of credit totaled $91 million.
-- page 54 --
<PAGE>
(15) BUSINESS SEGMENT INFORMATION
Geographic Segments - Major Home Appliances
<TABLE>
<CAPTION>
North Other and Major Home
(millions of dollars) America Europe (Eliminations) Appliances
==========================================================================
<S> <C> <C> <C> <C>
Net sales
1995 $5,093 $2,502 $ 568 $8,163
1994 $5,048 $2,451 $ 450 $7,949
1993 $4,547 $2,410 $ 411 $7,368
Operating profit
1995 $ 314 $ 90 $ (38) $ 366
1994 $ 311 $ 43 $ 16 $ 370
1993 $ 341 $ 129 $ 34 $ 504
Identifiable assets
1995 $2,031 $2,104 $2,033 $6,168
1994 $2,046 $1,824 $1,410 $5,280
1993 $1,742 $1,758 $1,154 $4,654
Depreciation expense
1995 $ 140 $ 105 $ 8 $ 253
1994 $ 141 $ 98 $ 4 $ 243
1993 $ 137 $ 101 $ 1 $ 239
Net capital expenditures
1995 $ 262 $ 186 $ 29 $ 477
1994 $ 269 $ 135 $ 12 $ 416
1993 $ 188 $ 116 $ 3 $ 307
</TABLE>
Identifiable assets are those assets directly associated with the respective
operating activities. Substantially all of the Company's trade receivables are
from wholesale distributors and retailers. Corporate assets which consist
principally of cash, investments, prepaid expenses, intangibles, deferred income
taxes and property and equipment related to corporate activities are included as
other.
Sales activity with Sears, Roebuck and Co., a North American major home
appliance retailer, represented 20% of consolidated net sales in 1995 and 19% in
1994 and 1993. Related receivables were 14% and 16% of consolidated trade
receivables at December 31, 1995 and 1994.
Financial Services
WFC financial information is included in the supplemental consolidating data
column of the consolidated financial statements.
During 1993, the Company announced a strategic restructuring of WFC. The
subsidiary is phasing out of aerospace and has substantially liquidated its
highly leveraged commercial lending portfolio in favor of a strategy to better
complement the Company's home appliance business. Financial services 1993
operating profit includes a $48 million charge to adjust the value of specific
aerospace and commercial accounts in its financing portfolio. The total charge
was $65 million or $40 million after-tax.
-- page 55 --
<PAGE>
-- Notes to Consolidated Financial Statements --
(16) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
(millions of dollars --------------------------------------------
except share data) December 31 September 30 June 30 March 31
=============================================================================
<S> <C> <C> <C> <C>
1995:
Net sales $2,046 $2,109 $2,069 $1,939
Cost of products sold $1,591 $1,626 $1,590 $1,438
Financial services revenue,
less related interest expense $ 30 $ 29 $ 29 $ 30
Net earnings $ 18 $ 64 $ 52 $ 75
Per share of common stock:
Primary earnings $ .25 $ .85 $ .70 $ 1.00
Fully diluted earnings $ .25 $ .83 $ .70 $ .98
Dividends paid $ .340 $ .340 $ .340 $ .340
Stock price:
High $58 $60 7/8 $58 1/4 $55 1/2
Low $50 3/4 $54 3/8 $49 7/8 $49 1/4
Close $53 1/4 $57 3/4 $55 $54 3/4
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
(millions of dollars --------------------------------------------
except share data) December 31 September 30 June 30 March 31
=============================================================================
<S> <C> <C> <C> <C>
1994:
Net sales $2,058 $2,046 $2,013 $1,832
Cost of products sold $1,534 $1,538 $1,515 $1,365
Financial services revenue,
less related interest expense $ 27 $ 27 $ 25 $ 25
Net earnings (loss) $ (91) $ 98 $ 84 $ 67
Per share of common stock:
Primary earnings (loss) $(1.20) $ 1.30 $ 1.10 $ .90
Fully diluted earnings (loss) $(1.15) $ 1.27 $ 1.09 $ .88
Dividends paid $ .305 $ .305 $ .305 $ .305
Stock price:
High $55 1/2 $55 3/8 $62 $73 1/2
Low $44 5/8 $48 1/2 $52 3/8 $59 3/8
Close $50 1/4 $51 3/8 $52 1/2 $60 7/8
</TABLE>
Restructuring initiatives described in Note 10 and business dispositions
described in Note 2 reduced fourth quarter net earnings by $187 million or $2.47
per share, increased third quarter net earnings by $15 million or $.20 per share
and reduced second quarter net earnings by $2 million or $.03 per share.
-- page 56 --
<PAGE>
-- Report of --
Ernst & Young LLP, Independent Auditors
The Stockholders and Board of Directors
Whirlpool Corporation
Benton Harbor, Michigan
We have audited the accompanying consolidated balance sheets of Whirlpool
Corporation and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of earnings and cash flows for each of the three years
in the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
financial statements of the Brazilian affiliates used as the basis for recording
the Company's equity in their net earnings, as presented in Note 5 to the
consolidated financial statements. The financial statements of those affiliates
were audited by other auditors whose reports have been furnished to us, and our
opinion, insofar as it relates to the amounts included for the Brazilian
affiliates, is based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Whirlpool Corporation and subsidiaries at
December 31, 1995 and 1994, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles.
As discussed in the notes to the consolidated financial statements, in 1993
the Company changed its method of accounting for postretirement benefits other
than pensions.
/s/ Ernst & Young LLP
Chicago, Illinois
January 31, 1996
-- page 57 --
<PAGE>
-- Report by --
Management on the Consolidated
Financial Statements
The management of Whirlpool Corporation has prepared the accompanying financial
statements. The financial statements have been audited by Ernst & Young,
independent auditors, whose report, based upon their audits and the reports of
other independent auditors, expresses the opinion that these financial
statements present fairly the consolidated financial position, results of
operations and cash flows of Whirlpool Corporation and subsidiaries ("the
Company") in accordance with generally accepted accounting principles. Their
audits are conducted in conformity with generally accepted auditing standards.
The financial statements were prepared from the Company's accounting records,
books and accounts which, in reasonable detail, accurately and fairly reflect
all material transactions. The Company maintains a system of internal controls
designed to provide reasonable assurance that the Company's accounting records,
books and accounts are accurate and that transactions are properly recorded in
the Company's books and records, and the Company's assets are maintained and
accounted for, in accordance with management's authorizations. The Company's
accounting records, policies and internal controls are regularly reviewed by the
Company's internal audit staff.
The Audit Committee of the Board of Directors of the Company, which is
composed of four directors who are not employed by the Company, considers and
makes recommendations to the Board of Directors as to accounting and auditing
matters concerning the Company, including recommending for appointment by the
Board of Directors the firm of independent auditors engaged on an annual basis
to audit the financial statements of Whirlpool Corporation and its majority
owned subsidiaries. The Audit Committee meets with the independent auditors at
least three times each year to review the scope of the audit, the results of the
audit and such recommendations as may be made by said auditors with respect to
the Company's accounting methods and system of internal controls.
/s/ John P. Cunningham
John P. Cunningham
Executive Vice President and Chief Financial Officer
January 31, 1996
-- Revenue Information --
<TABLE>
<CAPTION>
December 31 (millions of dollars) Percent -- 1995 -- -- 1994 -- -- 1993 --
================================================================================
<S> <C> <C> <C> <C>
Major Home Appliances
Home Laundry Appliances 31.1% $2,593 $2,610 $2,481
Home Refrigeration and
Room Air Conditioning
Equipment 36.1 3,017 2,900 2,588
Home Cooking Appliances 15.8 1,321 1,258 1,094
Other Home Appliances 14.8 1,232 1,181 1,205
- --------------------------------------------------------------------------------
97.8 8,163 7,949 7,368
Financial Services 2.2 184 155 165
================================================================================
100.0% $8,347 $8,104 $7,533
</TABLE>
-- page 58 --
<PAGE>
-- Directors --
<TABLE>
<S> <C>
Victor A. Bonomo Miles L. Marsh
Former Executive Vice President, Chairman and Chief Executive
PepsiCo, Inc. Officer, James River Corporation
Committees: Finance Audit, Finance
Robert A. Burnett Philip L. Smith
Former Chairman of the Board, Former Chairman of the Board,
Meredith Corporation President and Chief Executive
Corporate Governance, Officer, Pillsbury Company
Human Resources Corporate Governance, Finance
Herman Cain Paul G. Stern
Chairman and Chief Executive Partner, Thayer Capital Partners,
Officer, Godfather's Pizza, Inc. and Former Chairman, President
Corporate Governance and Chief Executive Officer,
Northern Telecom Limited
Allan D. Gilmour Audit, Human Resources
Former Vice Chairman,
Ford Motor Company Janice D. Stoney
Finance, Human Resources Former Executive Vice
President, Total Quality System,
Kathleen J. Hempel US WEST Communications
Vice Chairman Group, Incorporated
and Chief Financial Officer, Audit
Fort Howard Corporation
Audit, Finance David R. Whitwam
Chairman of the Board and
Arnold G. Langbo Chief Executive Officer of the
Chairman of the Board Company
and Chief Executive Officer,
Kellogg Company
Corporate Governance,
Human Resources
William D. Marohn
President and Chief Operating
Officer of the Company
Pension Fund
</TABLE>
-- Senior Management --
<TABLE>
<S> <C>
Executive Officers Bruce K. Berger
- ------------------ Corporate Affairs
David R. Whitwam
Chairman of the Board E.R. (Ed) Dunn
and Chief Executive Officer Human Resources
and Assistant Secretary
William D. Marohn
President and Chief Operating Robert D. Hall
Officer President and Chief Operating
Officer, Whirlpool Asia
Executive Vice Presidents
- ------------------------- Edward J. F. Herrelko
John P. Cunningham Group Sales and Distribution, NAAG
Chief Financial Officer
Stephen F. Holmes
Jeff M. Fettig Group Manufacturing and
President, Whirlpool Europe, B.V. Technology Development, CTO
Robert Frey Daniel F. Hopp
Chairman of the Board General Counsel and Secretary
and Chief Executive Officer,
Whirlpool Asia Halvar Johansson
Group Manufacturing and
Ralph F. Hake Technology, WEBV
North American Appliance Group
Kenneth W. Kaminski
Ronald L. Kerber Small Appliance Business Unit
Chief Technology Officer
James E. LeBlanc
P. Daniel Miller Chairman of the Board, President
Latin American Appliance Group and Chief Executive Officer,
Whirlpool Financial Corporation
Senior Officers
- --------------- Ivan Menezes
Vice Presidents Group Marketing, WEBV
J. C. Anderson Rudy Provoost
Group Manufacturing and Group Sales, WEBV
Technology, NAAG
Michael D. Thieneman
Roy V. Armes Global Procurement Operations, CTO
Group Manufacturing and
Technology, WAAG Robert G. Thompson
Controller
Bradley J. Bell
Treasurer David W. Williams
Group Marketing, NAAG
</TABLE>
-- page 59 --
<PAGE>
1995 ELEVEN-YEAR CONSOLIDATED STATISTICAL REVIEW
<TABLE>
<CAPTION>
(millions of dollars except share and employee data)
- 1995 - - 1994 - - 1993 - - 1992 - - 1991 - - 1990 - - 1989 - - 1988 -
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Consolidated Operations
- -----------------------
Net sales $ 8,163 $ 7,949 $ 7,368 $ 7,097 $ 6,550 $ 6,424 $6,138 $ 4,306
Financial services 184 155 165 204 207 181 136 107
Total revenues $ 8,347 $ 8,104 $ 7,533 $ 7,301 $ 6,757 $ 6,605 $6,274 $ 4,413
- ----------------------------------------------------------------------------------------------------------------------
Operating profit $ 396 $ 397 $ 482 $ 479 $ 393 $ 349 $ 411 $ 261
Earnings from continuing
operations before income
taxes and other items $ 242 $ 292 $ 375 $ 372 $ 304 $ 220 $ 308 $ 233
Earnings from continuing
operations before
accounting change (1) $ 209 $ 158 $ 231 $ 205 $ 170 $ 72 $ 187 $ 161
Net earnings (2) $ 209 $ 158 $ 51 $ 205 $ 170 $ 72 $ 187 $ 94
Net capital expenditures $ 480 $ 418 $ 309 $ 288 $ 287 $ 265 $ 208 $ 166
Depreciation $ 282 $ 246 $ 241 $ 275 $ 233 $ 247 $ 222 $ 143
Dividends $ 100 $ 90 $ 85 $ 77 $ 76 $ 76 $ 76 $ 76
- ----------------------------------------------------------------------------------------------------------------------
Consolidated Financial
Position
- ----------------------
Current assets $ 3,541 $ 3,078 $ 2,708 $ 2,740 $ 2,920 $ 2,900 $2,889 $ 1,827
Current liabilities $ 3,829 $ 2,988 $ 2,763 $ 2,887 $ 2,931 $ 2,651 $2,251 $ 1,374
Working capital $ (288) $ 90 $ (55) $ (147) $ (11) $ 249 $ 638 $ 453
Property, plant and
equipment--net $ 1,779 $ 1,440 $ 1,319 $ 1,325 $ 1,400 $ 1,349 $1,288 $ 820
Total assets $ 7,800 $ 6,655 $ 6,047 $ 6,118 $ 6,445 $ 5,614 $5,354 $ 3,410
Long-term debt $ 983 $ 885 $ 840 $ 1,215 $ 1,528 $ 874 $ 982 $ 474
Total debt-appliance
business $ 1,635 $ 965 $ 850 $ 1,198 $ 1,330 $ 1,026 $1,125 $ 441
Stockholders' equity $ 1,877 $ 1,723 $ 1,648 $ 1,600 $ 1,515 $ 1,424 $1,421 $ 1,321
- ----------------------------------------------------------------------------------------------------------------------
Per Share Data
- --------------
Earnings from continuing
operations
before accounting change $ 2.80 $ 2.10 $ 3.19 $ 2.90 $ 2.45 $ 1.04 $ 2.70 $ 2.33
Net earnings $ 2.80 $ 2.10 $ 0.67 $ 2.90 $ 2.45 $ 1.04 $ 2.70 $ 1.36
Dividends $ 1.36 $ 1.22 $ 1.19 $ 1.10 $ 1.10 $ 1.10 $ 1.10 $ 1.10
Book value $ 25.08 $ 22.83 $ 22.80 $ 22.67 $ 21.78 $ 20.51 $ 20.49 $ 19.06
Closing Stock Price -- NYSE $53 1/4 $50 1/4 $66 1/2 $44 5/8 $38 7/8 $ 23 1/2 $ 33 $24 3/4
</TABLE>
<TABLE>
<CAPTION>
Consolidated Operations
- -----------------------
- 1987 - - 1986 - - 1985 -
================================
<S> <C> <C>
Net sales $4,104 $3,928 $ 3,465
Financial services 94 76 67
Total revenues $4,198 $4,004 $ 3,532
Operating profit $ 296 $ 326 $ 295
Earnings from continuing
operations before income
taxes and other items $ 280 $ 329 $ 321
Earnings from continuing
operations before
accounting change (1) $ 187 $ 202 $ 182
Net earnings (2) $ 192 $ 200 $ 182
Net capital expenditures $ 223 $ 217 $ 178
Depreciation $ 133 $ 120 $ 89
Dividends $ 79 $ 76 $ 73
- ----------------------------------------------------------------
Consolidated Financial
Position
- ----------------------
Current assets $ 1,690 $ 1,654 $ 1,410
Current liabilities $ 1,246 $ 1,006 $ 781
Working capital $ 444 $ 648 $ 629
Property, plant and
equipment--net $ 779 $ 677 $ 514
Total assets $ 3,137 $ 2,856 $ 2,207
Long-term debt $ 367 $ 298 $ 125
Total debt-appliance
business $ 383 $ 194 $ 64
Stockholders' equity $ 1,304 $ 1,350 $ 1,207
- ----------------------------------------------------------------
Per Share Data
- --------------
Earnings from continuing
operations
before accounting change $ 2.61 $ 2.72 $ 2.49
Net earnings $ 2.68 $ 2.70 $ 2.49
Dividends $ 1.10 $ 1.03 $ 1.00
Book value $ 18.83 $ 18.21 $ 16.46
Closing Stock Price -- NYSE $24 3/8 $33 7/8 $24 11/16
</TABLE>
- page 60 -
<PAGE>
<TABLE>
<CAPTION>
(millions of dollars except share
and employee data) - 1995 - - 1994 - - 1993 - - 1992 - - 1991 - - 1990 - - 1989 - - 1988 -
===================================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Key Ratios
- ----------
Operating profit margin 4.7% 4.9% 6.4% 6.6% 5.8% 5.3% 6.6% 5.9%
Pre-tax margin (3) 2.9% 3.6% 5.0% 5.1% 4.5% 3.3% 4.9% 5.3%
Net margin (4) 2.5% 2.0% 3.1% 2.8% 2.5% 1.1% 3.0% 3.6%
Return on average stockholders' equity (5) 11.6% 9.4% 14.2% 13.1% 11.6% 5.1% 13.7% 12.3%
Return on average total assets (6) 3.0% 2.8% 4.0% 3.3% 2.9% 1.4% 4.9% 4.9%
Current assets to current liabilities 0.9 1.0 1.0 0.9 1.0 1.1 1.3 1.3
Total debt-appliance business
as a percent of invested capital (7) 43.3% 34.4% 31.6% 41.7% 46.1% 37.6% 39.2% 20.5%
Price earnings ratio 19.0 23.9 20.8 15.4 15.9 22.6 12.2 18.2
Fixed charge coverage (8) 2.5 3.0 3.2 2.6 2.3 1.8 2.7 3.5
- -----------------------------------------------------------------------------------------------------------------------------------
Other Data
- ----------
Number of common shares
outstanding (in thousands):
Average 74,827 75,490 72,272 70,558 69,528 69,443 69,338 69,262
Year-end 74,081 73,845 73,068 70,027 69,640 69,465 69,382 69,289
Number of stockholders (year-end) 11,686 11,821 11,438 11,724 12,032 12,542 12,454 12,521
Number of employees (year-end) 45,435 39,016 39,590 38,520 37,886 36,157 39,411 29,110
Total return to shareholders
(five year annualized) (9) 20.8% 12.0% 25.8% 17.0% 6.7% 2.8% 11.3% 4.4%
- 1987 - - 1986 - - 1985 -
===========================================================================
- ---------------------------------------------------------------------------
Key Ratios
- ----------
Operating profit margin 7.1% 8.1% 8.4%
Pre-tax margin (3) 6.6% 8.2% 9.1%
Net margin (4) 4.4% 5.0% 5.1%
Return on average stockholders' equity (5) 14.1% 15.8% 15.8%
Return on average total assets (6) 6.2% 8.0% 9.1%
Current assets to current liabilities 1.4 1.6 1.8
Total debt-appliance business
as a percent of invested capital (7) 19.3% -- 2.8%
Price earnings ratio 9.1 12.5 9.9
Fixed charge coverage (8) 5.4 7.7 10.7
- --------------------------------------------------------------------------
Other Data
- ----------
Number of common shares
outstanding (in thousands):
Average 71,732 73,831 73,285
Year-end 69,232 74,128 73,325
Number of stockholders (year-end) 12,128 11,297 11,668
Number of employees (year-end) 30,301 30,520 25,573
Total return to shareholders
(five year annualized) (9) 6.2% 26.8% 26.6%
</TABLE>
(1) Accounting changes: 1993 -- Accounting for postretirement benefits other
than pensions, 1987 -- Accounting for income taxes and 1986 -- Accounting
for pensions.
(2) The Company's kitchen cabinet business was discontinued in 1988.
(3) Earnings from continuing operations before income taxes and other items, as
a percent of revenue.
(4) Earnings from continuing operations before accounting change, as a percent
of revenue.
(5) Earnings from continuing operations before accounting change divided by
average stockholders' equity.
(6) Earnings from continuing operations before accounting change, plus minority
interest, divided by average total assets.
(7) Debt less cash and equivalents divided by debt, stockholders' equity and
minority interests less cash and equivalents.
(8) Ratio of earnings from continuing operations (before income taxes,
accounting change and interest expense) to interest expense.
(9) Stock appreciation plus reinvested dividends.
- page 61 -
<PAGE>
Subsidiaries
------------
Subsidiary and Name Jurisdiction In
Under Which It Does Business Which Organized
- ---------------------------- ---------------
Whirlpool Europe B.V. /1/ The Netherlands
Whirlpool Properties, Inc. /1/ Michigan
Whirlpool Financial Corporation Delaware
Whirlpool Financial National Bank /2/ A National Banking Association
The names of the Company's other subsidiaries are omitted because, considered in
the aggregate as a single subsidiary, such subsidiaries would not constitute a
significant subsidiary as of December 31, 1995.
- ---------------------------------
/1/ Wholly-owned by Registrant
/2/ Wholly-owned by Whirlpool Financial Corporation
<PAGE>
CONSENT OF ERNST & YOUNG LLP
The Board of Directors
Whirlpool Corporation
Benton Harbor, Michigan
We consent to the incorporation by reference in Registration Statement Nos.
33-34490, 33-34037, 33-21360, 33-00201, 2-64261, 33-05904, 33-40249, 33-40010
and 33-43823 of Whirlpool Corporation and Registration Statement Nos. 33-26680
and 33-53196 of Whirlpool Corporation and Whirlpool Savings Plan of our report
dated January 31, 1996, with respect to the consolidated financial statements
and schedule of Whirlpool Corporation and subsidiaries, included in this Annual
Report (Form 10-K) for the year ended December 31, 1995.
Chicago, Illinois
March 12, 1996
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in Registration Statement
nos. 33-34490, 33-34037, 33-21360, 33-00201, 2-64261, 33-05904, 33-40249 and
33-43823 of Whirlpool Corporation and Registration Statement nos. 33-26680 and
33-53196 of Whirlpool Corporation and Whirlpool Savings Plan of our reports with
respect to the financial statements of Empresa Brasileira de Compressores
S.A. - EMBRACO and its subsidiaries, Multibras S.A. Eletrodomesticos and its
subsidiaries and Brasmotor S.A. and its subsidiaries dated January 19, 1996
included in this Annual Report (Form 10-K) for the year ended December 31, 1995.
/s/ Price Waterhouse
Price Waterhouse
Sao Paulo, Brazil
March 11, 1996
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a
director or officer, or both, of WHIRLPOOL CORPORATION, a Delaware corporation
(hereinafter called the "Corporation"), does hereby constitute and appoint DAVID
R. WHITWAM, WILLIAM D. MAROHN, JOHN P. CUNNINGHAM and DANIEL F. HOPP, with full
power to each of them to act alone, as the true and lawful attorneys and agents
of the undersigned, with full power of substitution and resubstitution to each
of said attorneys, to execute, file or deliver any and all instruments and to do
all acts and things which said attorneys and agents, or any of them, deem
advisable to enable the Corporation to comply with the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, and any
requirements of the Securities and Exchange Commission in respect thereof, in
connection with (i) the filing under said Securities Exchange Act of the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1995,
and (ii) the filing under said Securities Exchange Act of the Annual Report on
Form 11-K for the year ended December 31, 1995 for the Whirlpool 401(k) Plan,
including specifically, but without limitation of the general authority hereby
granted, the power and authority to sign his or her name as a director or
officer, or both, of the Corporation, as indicated below opposite his or her
signature, to the Annual Report on Form 10-K and the Annual Report on Form 11-K,
or any amendment, post-effective amendment, or papers supplemental thereto to be
filed in respect of said Annual Reports; and each of the undersigned does hereby
fully ratify and confirm all that said attorneys and agents, or any of them, or
the substitute of any of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has subscribed these presents,
as of the 20th day of February, 1996.
Name Title
/s/ David R. Whitwam Director, Chairman of the Board and
- ------------------------------ Chief Executive Officer
David R. Whitwam (Principal Executive Officer)
/s/ William D. Marohn Director, President and
- ------------------------------ Chief Operating Officer
William D. Marohn
/s/ John P. Cunningham Executive Vice President and
- ------------------------------ Chief Financial Officer
John P. Cunningham (Principal Financial Officer)
/s/ Robert G. Thompson Vice President and Controller
- ------------------------------ (Principal Accounting Officer)
Robert G. Thompson
<PAGE>
/s/ Victor A. Bonomo Director
- ------------------------------
Victor A. Bonomo
/s/ Robert A. Burnett Director
- ------------------------------
Robert A. Burnett
/s/ Herman Cain Director
- ------------------------------
Herman Cain
/s/ Allan D. Gilmour Director
- ------------------------------
Allan D. Gilmour
/s/ Kathleen J. Hempel Director
- ------------------------------
Kathleen J. Hempel
/s/ Arnold G. Langbo Director
- ------------------------------
Arnold G. Langbo
/s/ Miles L. Marsh Director
- ------------------------------
Miles L. Marsh
/s/ Philip L. Smith Director
- ------------------------------
Philip L. Smith
/s/ Paul G. Stern Director
- ------------------------------
Paul G. Stern
/s/ Janice D. Stoney Director
- ------------------------------
Janice D. Stoney
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
1995 10-K for Whirlpool Corporation and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 149
<SECURITIES> 0
<RECEIVABLES> 2,117
<ALLOWANCES> 81
<INVENTORY> 1,029
<CURRENT-ASSETS> 3,541
<PP&E> 3,662
<DEPRECIATION> 1,883
<TOTAL-ASSETS> 7,800
<CURRENT-LIABILITIES> 3,829
<BONDS> 983
<COMMON> 81
0
0
<OTHER-SE> 1,796
<TOTAL-LIABILITY-AND-EQUITY> 7,800
<SALES> 8,163
<TOTAL-REVENUES> 8,347
<CGS> 6,245
<TOTAL-COSTS> 6,311
<OTHER-EXPENSES> 31
<LOSS-PROVISION> 50
<INTEREST-EXPENSE> 141
<INCOME-PRETAX> 242
<INCOME-TAX> 100
<INCOME-CONTINUING> 209
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 209
<EPS-PRIMARY> 2.80
<EPS-DILUTED> 2.76
</TABLE>
