<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
Commission file number 1-3932
WHIRLPOOL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-1490038
(State of incorporation) (I.R.S. Employer
Identification No.)
2000 M-63
Benton Harbor, Michigan 49022-2692
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 616/923-5000
The registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and
(2) has been subject to such filing requirements for the past 90 days.
Yes X . No .
--- ---
Number of shares outstanding of each of the issuer's classes of common stock, as
of the latest practicable date:
Class of common stock Shares outstanding at March 31, 1997
--------------------- ------------------------------------
Common stock, par value $1 per share 74,465,194
PAGE 1 OF 19
<PAGE>
QUARTERLY REPORT ON FORM 10-Q
-----------------------------
WHIRLPOOL CORPORATION
---------------------
Quarter Ended March 31, 1997
INDEX OF INFORMATION INCLUDED IN REPORT
Page
----
PART I - FINANCIAL INFORMATION
- - ------------------------------
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Statements
of Earnings 3
Consolidated Condensed Balance Sheets 4
Consolidated Condensed Statements
of Cash Flows 6
Notes to Consolidated Condensed
Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 10
PART II - OTHER INFORMATION
- - ---------------------------
Item 6. Exhibits and Reports on Form 8-K 15
2
<PAGE>
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (UNAUDITED)
WHIRLPOOL CORPORATION AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31
(millions of dollars except share data)
<TABLE>
<CAPTION>
Supplemental Consolidating Data
------------------------------------------
Whirlpool Corporation Whirlpool with WFC Whirlpool Financial
(Consolidated) on an Equity Basis Corporation (WFC)
--------------------- ------------------ -------------------
1997 1996 1997 1996 1997 1996
--------------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 1,990 $ 2,013 $ 1,990 $ 2,013 $ - $ -
Financial services 48 46 - - 62 54
------- ------- ------- ------- ----- ------
Total Revenues 2,038 2,059 1,990 2,013 62 54
Cost of products sold 1,536 1,563 1,536 1,563 - -
Selling and administrative 392 393 373 369 33 32
Financial services interest 20 16 - - 22 19
Intangible amortization 8 9 8 9 - -
------- ------- ------- ------- ----- ------
Total Expenses 1,956 1,981 1,917 1,941 55 51
------- ------- ------- ------- ----- ------
OPERATING PROFIT 82 78 73 72 7 3
OTHER INCOME (EXPENSE)
Interest and sundry (4) 3 (5) (2) 2 5
Interest expense (36) (40) (35) (37) - -
------- ------- ------- ------- ----- ------
EARNINGS BEFORE TAXES AND
OTHER ITEMS 42 41 33 33 9 8
Income taxes 20 18 16 15 4 3
------- ------- ------- ------- ----- ------
EARNINGS BEFORE EQUITY EARNINGS
AND OTHER ITEMS 22 23 17 18 5 5
Equity in WFC - - 4 4 - -
Equity in affiliated companies 22 14 22 14 - -
Minority interests 2 1 3 2 (1) (1)
------- ------- ------- ------- ----- ------
NET EARNINGS $ 46 $ 38 $ 46 $ 38 $ 4 $ 4
======= ======= ======= ======= ===== ======
Per share of Common Stock:
Primary earnings $ 0.62 $ 0.50
======= =======
Cash dividends $ 0.34 $ 0.34
======= =======
</TABLE>
See notes to consolidated condensed financial statements
3
<PAGE>
CONSOLIDATED CONDENSED BALANCE SHEETS
WHIRLPOOL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
(millions of dollars) Supplemental Consolidating Data
-------------------------------------------------------------
Whirlpool Corporation Whirlpool with WFC Whirlpool Financial
(Consolidated) on an Equity Basis Corporation (WFC)
-------------------------- ------------------------------ --------------------------
March 31 December 31 March 31 December 31 March 31 December 31
1997 1996 1997 1996 1997 1996
(Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited)
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 152 $ 129 $ 106 $ 102 $ 46 $ 27
Trade receivables, less allowances
(1997: $44 ;1996: $45 ) 1,011 966 1,011 966 - -
Financing receivables and leases,
less allowances
(1997: $13 ;1996: $12 ) 1,387 1,400 - - 1,387 1,400
Inventories 1,044 1,034 1,044 1,034 - -
Other current assets 256 283 268 291 9 6
-------- -------- -------- -------- -------- --------
TOTAL CURRENT ASSETS 3,850 3,812 2,429 2,393 1,442 1,433
Investments and other assets 806 830 1,092 1,113 - -
Financing receivables and leases,
less allowances
(1997: $37 ;1996: $38 ) 694 705 - - 694 705
Intangibles, net 814 870 814 870 - -
-------- -------- -------- -------- -------- --------
2,314 2,405 1,906 1,983 694 705
Property, plant and equipment 3,737 3,839 3,718 3,820 19 19
Accumulated depreciation (2,027) (2,041) (2,016) (2,030) (11) (11)
-------- -------- -------- -------- -------- --------
1,710 1,798 1,702 1,790 8 8
-------- -------- -------- -------- -------- --------
TOTAL ASSETS $ 7,874 $ 8,015 $ 6,037 $ 6,166 $ 2,144 $ 2,146
======== ======== ======== ======== ======== ========
</TABLE>
See notes to consolidated condensed financial statements
4
<PAGE>
CONSOLIDATED CONDENSED BALANCE SHEETS
WHIRLPOOL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
(millions of dollars) Supplemental Consolidating Data
-----------------------------------------------------------------------
Whirlpool Corporation Whirlpool with WFC Whirlpool Financial
(Consolidated) on an Equity Basis Corporation (WFC)
---------------------------- ------------------------------- --------------------------------
March 31 December 31 March 31 December 31 March 31 December 31
1997 1996 1997 1996 1997 1996
(Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited)
------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $2,292 $2,157 $813 $704 $1,479 $1,453
Accounts payable 869 983 811 886 79 111
Other current liabilities 819 882 810 876 9 6
----------- ----------- ----------- ----------- ----------- -----------
TOTAL CURRENT LIABILITIES 3,980 4,022 2,434 2,466 1,567 1,570
Long-term debt 881 955 813 887 68 68
Postemployment benefits 562 563 556 557 6 6
Other liabilities 359 367 242 248 117 119
----------- ----------- ----------- ----------- ----------- -----------
1,802 1,885 1,611 1,692 191 193
Minority interests 180 182 80 82 110 110
STOCKHOLDERS' EQUITY
Common stock 81 81 81 81 8 8
Paid-in capital 248 246 248 246 26 26
Retained earnings 1,939 1,918 1,939 1,918 246 242
Unearned restricted stock (7) (7) (7) (7) - -
Currency translation
adjustments (112) (76) (112) (76) (4) (3)
Treasury stock - at cost (237) (236) (237) (236) - -
----------- ----------- ----------- ----------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY 1,912 1,926 1,912 1,926 276 273
----------- ----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $7,874 $8,015 $6,037 $6,166 $2,144 $2,146
=========== =========== =========== =========== =========== ===========
</TABLE>
See notes to consolidated condensed financial statements
5
<PAGE>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
WHIRLPOOL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
(millions of dollars) Supplemental Consolidating Data
-------------------------------------------
Whirlpool Corporation Whirlpool with WFC Whirlpool Financial
(Consolidated) on an Equity Basis Corporation (WFC)
---------------------- -------------------- ---------------------
1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 46 $ 38 $ 46 $ 38 $ 4 $ 4
Equity in net earnings of affiliated
companies, less dividends received (13) (8) (13) (8) - -
Equity in net earnings of WFC, net of dividend - - (4) (4) - -
Depreciation and amortization 91 89 84 82 7 7
Provision for doubtful accounts 8 13 - 4 8 9
Restructuring spending (6) (21) (6) (21) - -
Change in receivables (75) (62) (75) (62) - -
Change in inventories (33) (135) (33) (135) - -
Change in payables (42) (46) (41) (46) (1) -
Other operating activities (9) 13 (10) 4 1 9
-------- -------- -------- -------- -------- --------
CASH PROVIDED BY/(USED FOR) OPERATING ACTIVITIES (33) (119) (52) (148) 19 29
INVESTING ACTIVITIES
Net additions to properties (41) (61) (41) (61) - -
Financing receivables originated and leasing assets purchased (1,039) (908) - - (1,039) (908)
Principal payments received on financing
receivables and leases 1,026 910 - - 1,026 910
Other investing activities (11) 7 - - (11) 7
-------- -------- -------- -------- -------- --------
CASH PROVIDED BY/(USED FOR) INVESTING ACTIVITIES (65) (52) (41) (61) (24) 9
FINANCING ACTIVITIES
Proceeds of short-term borrowings 9,632 3,379 2,993 1,397 6,639 1,982
Repayments of short-term borrowings (9,363) (3,130) (2,778) (1,154) (6,585) (1,976)
Proceeds of long-term debt 28 37 28 37 - -
Repayments of long-term debt (139) (63) (115) (34) (24) (29)
Repayments of non-recourse debt (6) (6) - - (6) (6)
Dividends (25) (25) (25) (25) - -
Other financing activities (6) (23) (6) (19) - (4)
-------- -------- -------- -------- -------- --------
CASH PROVIDED BY/(USED FOR) FINANCING ACTIVITIES 121 169 97 202 24 (33)
-------- -------- -------- -------- -------- --------
INCREASE/(DECREASE) IN CASH AND EQUIVALENTS 23 (2) 4 (7) 19 5
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 129 149 102 125 27 24
-------- -------- -------- -------- -------- --------
CASH AND EQUIVALENTS AT END OF PERIOD $ 152 $ 147 $ 106 $ 118 $ 46 $ 29
======== ======== ======== ======== ======== ========
</TABLE>
See notes to consolidated condensed financial statements
6
<PAGE>
WHIRLPOOL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A--BASIS OF PRESENTATION AND SUMMARY OF PRINCIPAL
ACCOUNTING POLICIES
The accompanying unaudited consolidated condensed financial statements present
information in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q and applicable
rules of Regulation S-X. Accordingly, they do not include all information or
footnotes required by generally accepted accounting principles for complete
financial statements. Management believes the financial statements include all
normal recurring accrual adjustments necessary for a fair presentation.
Operating results for the three months ended March 31, 1997 do not necessarily
indicate the results that may be expected for the full year. For further
information, refer to the consolidated financial statements and notes thereto
included in the company's annual report for the year ended December 31, 1996.
NOTE B--BUSINESS ACQUISITIONS & DISPOSITIONS
In November 1996, the company announced an agreement to sell the compressor
division and related facilities of its majority-owned Indian subsidiary,
contingent upon receiving all necessary government and regulatory approvals and
finalization of definitive agreements. The transaction is expected to be
finalized in 1997 at a sale price near the carrying amount of the related assets
and involves a long-term supplier relationship with the purchaser, initially
involving annual compressor purchases of about $25 million to $30 million.
In October 1996, the company acquired the remaining minority interest in
Whirlpool Tatramat, a.s., a Slovakian washing machine manufacturer and
appliance distributor, for about $4 million.
In September 1996, the company acquired 100% of Gentech Trading (Pty.) Ltd., a
South African company, for about $27 million - $2 million of cash and $25
million of assumed debt. Renamed Whirlpool South Africa, the company
manufactures refrigerators and markets manufactured and imported appliances
under the Whirlpool and local KIC brand names. Gentech annual sales were about
$100 million for its fiscal year 1995.
In May 1996, two of the company's majority-owned subsidiaries in India,
Kelvinator of India (KOI) and Whirlpool Washing Machines Limited (WWML), were
merged and renamed Whirlpool of India (WOI). As part of the merger plan, the
company purchased an additional interest in WWML for $12 million in April 1996,
resulting in a 56% interest in the combined entity, WOI.
7
<PAGE>
WHIRLPOOL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Pro forma consolidated operating results reflecting these acquisitions would not
have been materially different from reported amounts. The acquisitions have
been accounted for as purchases and their operating results have been
consolidated with the company's results since the dates of acquisition.
NOTE C--INVENTORIES
Inventories consist of the following:
March 31 December 31
1997 1996
--------- ------------
(millions of dollars)
Finished products $1,010 $ 991
Raw materials and work in process 261 272
------ ------
Total FIFO cost 1,271 1,263
Less excess of FIFO cost
over LIFO cost 227 229
------ -----
$1,044 $1,034
====== ======
NOTE D--AFFILIATED COMPANIES
Equity in the net earnings (loss) of affiliated companies is as follows:
Three Months Ended
March 31
1997 1996
---------------------
(millions of dollars)
Brazilian affiliates $23 $17
Mexican affiliate (1) (4)
Other - 1
---- ----
$22 $14
==== ====
8
<PAGE>
WHIRLPOOL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE E--GEOGRAPHIC SEGMENTS
(millions of dollars)
<TABLE>
<CAPTION>
Major
Three Months North Other and Home
Ended March 31 America Europe Asia (Eliminations) Appliances
- - ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales
1997 $ 1,289 $ 582 $ 121 $ (2) $ 1,990
1996 $ 1,293 $ 613 $ 117 $ (10) $ 2,013
Operating Profit (Loss)
1997 $ 86 $ 2 $ (14) $ (1) $ 73
1996 $ 86 $ (4) $ (12) $ 2 $ 72
</TABLE>
NOTE F--EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share," which requires a new methodology for calculating
basic and diluted earnings per share. The company's primary earnings per share
as issued in the consolidated condensed statement of earnings are not materially
different from basic and diluted earnings per share calculated under the new
methodology. The new rules are required to be adopted in the fourth quarter of
1997.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The statements of earnings summarize operating results for the three months
ended March 31, 1997 and 1996. This section of Management's Discussion
highlights the main factors affecting the changes in operating results.
The accompanying financial statements include supplemental consolidating data
reflecting the company's investment in Whirlpool Financial Corporation ("WFC")
on an equity basis rather than as a consolidated subsidiary. Management
believes this presentation provides more meaningful information about the major
home appliance and financial services businesses.
Revenues
- - --------
Revenues were $2.0 billion for the first quarter of 1997, a decrease of 1%
compared to the prior year. Excluding currency fluctuations, revenues were up
1% year over year due to improved product and brand mix which is driving higher
average sales value, partially offset by decreased unit volumes. North American
unit volumes were down slightly in the first quarter compared to the prior year,
in an industry that was down 2%, while sales were essentially flat with the
prior year. North American industry shipments are expected to be down about 3%
for the full year. European volumes were up 1% over the prior year while
industry shipments were down 2% for the quarter. European sales were down 5%
compared to the prior year but were up 3% excluding currency fluctuations, due
to higher volumes and improved product and brand mix which is driving higher
average sales value. European industry shipments are expected to be down 2% for
the full year. WFC financial services revenues increased 13% for the first
quarter compared to the prior year primarily due to a similar increase in
outstanding financing receivables.
Expenses
- - --------
Gross margin percentage on products sold to net sales improved by 0.5 percentage
points for the first quarter compared to 1996, stemming from improved product
mix, manufacturing efficiencies and reduced material costs in both North America
and Europe partially offset by pricing deterioration in North America.
Appliance selling and administrative expenses as a percent of net sales
increased by 0.4 percentage points for the first quarter compared to 1996 due
largely to higher promotional spending and strategic infrastructure spending in
Asia. North American expenses as a percent of net sales deteriorated slightly
due to increased promotional and advertising costs, partially offset by
competitive cost structure initiatives. European expenses as a percent of net
sales improved slightly due to reduced administrative and advertising spending.
WFC selling and administrative expenses as a percent of financial services
revenue decreased by over six percentage points due to higher revenues in 1997
and higher losses in 1996 on certain consumer financing investments.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Other Income and Expense
- - ------------------------
Consolidated interest and sundry expense was up for the first quarter compared
to the prior year, primarily due to a one-time gain on the sale of an investment
by WFC in 1996 and several minor one-time noncash adjustments.
Appliance interest expense was down slightly in the first quarter compared to
the prior year, primarily due to lower borrowing levels during 1997 (refer to
"Cash Flow-Operating Activities") and favorable currency fluctuations, partially
offset by higher interest rates.
Income Taxes
- - ------------
The consolidated effective income tax rate was 47% for the first quarter
compared to 44% for the comparable period in 1996 and a 62% annual 1996 rate.
The reduction from the prior year's annual rate reflects the diminished impact
of permanent items due to higher projected annual earnings in 1997 relative to
1996 as well as the use of certain foreign tax losses.
Equity in Affiliated Companies
- - ------------------------------
Equity earnings in affiliated companies were $22 million in the first quarter of
1997 compared to $14 million in 1996.
The company's Brazilian affiliates generated equity earnings of $23 million for
the quarter, an increase of $6 million over 1996. The increase reflects
continuing strength in the Brazilian appliance industry, as well as $3 million
of additional benefits from a government export incentive program that expires
in mid 1998.
In December 1996, a favorable decision was obtained by Multibras S.A.
Electrodomesticos (Multibras) and Empresa Brasileira de Compressores S.A.
(Embraco) with respect to additional export incentives in connection with a
Brazilian government export incentive program. In April 1997, these affiliates
submitted tax-credit claims for 447 million reais, or approximately $440 million
(U.S.) at the current exchange rate, relating to the favorable decision for
exports from July 1988 through December 1996. The Brazilian court must render a
final decision on the amount, timing and the payment method of any final award.
Whirlpool has not recognized any income relating to the claims involving sales
prior to 1997 because the timing and payment amount of such claims are
uncertain. On an equity basis, Whirlpool owns about 37 percent of Multibras and
50 percent of Embraco.
The company's Mexican equity results improved $3 million over prior year's $4
million first quarter equity loss due to higher shipment volumes as well as
lower financing costs triggered by a refinancing at the end of the second
quarter in 1996.
Economic volatility and changes in government economic policy (including those
affecting exchange rates and tariffs) continue to affect consumer purchasing
power and the appliance industry as a whole in Mexico, Brazil and the entire
Latin American region.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Net Earnings
- - ------------
First quarter net earnings were $46 million or $.62 per share compared to net
earnings of $38 million or $.50 per share in 1996.
CASH FLOWS
The statements of cash flows reflect the changes in cash and equivalents for the
three months ended March 31, 1997 and 1996 by classifying transactions into
three major categories: operating, investing and financing activities.
Operating Activities
- - --------------------
The company's main source of liquidity is cash from operating activities
consisting of net earnings from operations adjusted for non-cash operating items
such as depreciation and changes in operating assets and liabilities such as
receivables, inventories and payables.
Cash used by operating activities in the first three months of 1997 was $33
million compared to $119 million used in 1996, largely reflecting lower seasonal
working capital needs of the appliance business.
Investing Activities
- - --------------------
The principal recurring investing activities are property additions and
investments in and collection of financing receivables and leases. Net property
additions for the first three months were $41 million in 1997 compared to $61
million in 1996. These expenditures are primarily for equipment and tooling
related to product improvements, more efficient production methods and
replacement for normal wear and tear. Investment in the financial services
business resulted in a net $13 million use of cash in 1997 compared to a net $2
million source of cash in 1996.
Refer to Note B to the accompanying consolidated financial statements for a
discussion of business dispositions and acquisitions.
Financing Activities
- - --------------------
Dividends to shareholders totaled $25 million for the first quarter of 1997 and
1996.
The company's borrowings increased by $152 million during the first quarter of
1997, excluding the effect of currency fluctuations, primarily to fund seasonal
working capital needs and property additions. The 1997 borrowing activities
included the repayment of $113 million of outstanding subordinated zero-coupon
convertible notes, financed through the issuance of additional commercial paper.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
FINANCIAL CONDITION AND OTHER MATTERS
The financial position of the company remains strong as evidenced by the March
31, 1997 balance sheet. The company's total assets are $7.9 billion and
stockholders' equity is $1.9 billion.
The overall debt to invested capital ratio at March 31, 1997 was flat compared
to December 31, 1996. The appliance business debt to invested capital ratio net
of cash ("debt ratio") was flat at 43% with the ratio at the end of 1996. The
financial services debt to invested capital ratio of 80% was also flat compared
to December 31, 1996. The company's debt continues to be rated investment grade
by Moody's Investors Service Inc., Standard and Poor's 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 hedge or otherwise in
other income (expense).
WFC's financing portfolio by business segment is as follows (in millions):
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C> <C> <C>
Inventory $1,201 58% $1,215 58%
Consumer 484 23 474 23
Aerospace 353 17 361 17
Other 42 2 55 2
------ --- ------ ---
$2,080 100% $2,105 100%
====== === ====== ===
</TABLE>
The aerospace portfolio is generally secured by newer (Stage III) aircraft on
lease to various international airlines. Although the commercial airline
industry seems to be stabilizing, the near-term outlook remains uncertain.
Management believes the aerospace portfolio carrying value is appropriate. The
company is continuing to phase out of aerospace lending activities.
The financial services industry is very competitive and various leasing
companies, financial institutions and finance companies operate in the same
markets as WFC.
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.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
BUSINESS UNIT NET SALES AND OPERATING PROFIT
The following appliance business (WFC on an equity basis) data is presented as
supplemental information (in millions):
Net Sales by Business Unit were as follows:
First Quarter Better/(Worse)
-------------- -------------
1997 1996 $ %
------ ------ ---- --
North America $1,260 $1,262 $ (2) -%
Europe 560 592 (32) (5)
Asia 113 104 9 9
Latin America 60 58 2 3
Other (3) (3) - -
------ ----- ---- --
Total Appliance Business $1,990 $2,013 $(23) (1)%
====== ====== ==== ==
Operating Profit by Business Unit was as follows:
First Quarter Better/(Worse)
------------- ------ -------
1997 1996 $ %
---- ---- --- ---
North America $128 $120 $ 8 7%
Europe 4 (2) 6 300
Asia (15) (11) (4) (36)
Latin America 1 3 (2) (67)
Other (45) (38) (7) (18)
---- ---- --- ---
Total Appliance Business $ 73 $ 72 $ 1 1%
==== ==== === ===
For commentary regarding performance in North America and Europe, refer to
"Results of Operations." Latin American sales and operating profit do not
include the activities of Brazilian affiliates, which are included in equity in
affiliated companies and discussed in "Results from Operations." Other consists
of corporate expenses and eliminations.
Asia had year-over-year unit volume and sales growth as compared to the prior
year. The planned first quarter operating loss in the region was higher than
that sustained in the prior period as the region increased investment in sales
and marketing infrastructure, primarily in China.
Latin America sales increased slightly from 1996 due to improving economic and
industry environments. The Latin American appliance industry outside of Brazil
is expected to increase 10% year over year versus a decline of about the same
magnitude last year. The decline in operating profit in Latin America reflects
the impact of one-time noncash adjustments including costs to transition
distribution arrangements in certain markets.
14
<PAGE>
PART II. OTHER INFORMATION
---------------------------
WHIRLPOOL CORPORATION AND SUBSIDIARIES
Quarter Ended March 31, 1997
Item 6. Exhibits and Reports on Form 8-K
- - ----------------------------------------
a. The following are included herein:
(11) Computation of earnings per share
(27) Financial Data Schedule
(99) Computation of the ratios of earnings to fixed charges
b. The registrant filed the following Current Report on Form 8-K for the
quarterly period ended March 31, 1997:
A Current Report on Form 8-K dated February 18, 1997 pursuant to Item 5,
"Other Events", concerning the Company's announcement of the election of
William D. Marohn to Vice Chairman of the Board and Ralph F. Hake to
Senior Executive Vice President of Operations.
15
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WHIRLPOOL CORPORATION
(Registrant)
By John P. Cunningham
----------------------------
John P. Cunningham
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
May 5, 1997
16
<PAGE>
EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE
WHIRLPOOL CORPORATION AND SUBSIDIARIES
(millions of dollars except earnings per share)
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------------------
1997 1996
----- -----
<S> <C> <C>
Primary
Average Shares Outstanding 74.4 74.1
Treasury Method (Average Market Price)
Stock Options 0.4 0.6
Restricted Stock (RSVP) 0.3 0.3
----- -----
Primary Average Shares Outstanding 75.2 75.0
===== =====
Primary Net Earnings $46.4 $37.5
===== =====
Earnings Per Share $0.62 $0.50
===== =====
Fully Diluted
Average Shares Outstanding 74.4 74.1
Treasury Method (Average Market Price
or End of Period, whichever is greater):
Stock Options 0.5 0.7
Restricted Stock (RSVP) 0.3 0.3
Assumed Conversion of Debt - 2.2
----- -----
Fully Diluted Average Shares Outstanding 75.2 77.3
===== =====
Net Earnings $46.4 $37.5
Interest Expense, net of tax - 1.1
----- -----
Fully Diluted Net Earnings $46.4 $38.6
===== =====
Earnings Per Share $0.62 $0.50
===== =====
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
First Quarter 10-Q for Whirlpool Corporation and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 152
<SECURITIES> 0
<RECEIVABLES> 2,398
<ALLOWANCES> 57
<INVENTORY> 1,044
<CURRENT-ASSETS> 3,850
<PP&E> 3,737
<DEPRECIATION> 2,027
<TOTAL-ASSETS> 7,874
<CURRENT-LIABILITIES> 3,980
<BONDS> 881
0
0
<COMMON> 81
<OTHER-SE> 1,831
<TOTAL-LIABILITY-AND-EQUITY> 7,874
<SALES> 1,990
<TOTAL-REVENUES> 2,038
<CGS> 1,536
<TOTAL-COSTS> 1,948
<OTHER-EXPENSES> 8
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36
<INCOME-PRETAX> 42
<INCOME-TAX> 20
<INCOME-CONTINUING> 46
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 46
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
</TABLE>
<PAGE>
EXHIBIT 99
RATIOS OF EARNINGS TO FIXED CHARGES
WHIRLPOOL CORPORATION AND SUBSIDIARIES
(dollars in millions)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1997
----------------------------------------------
Appliance Financial Whirlpool
Business Services Corporation
---------- ---------- -----------
<S> <C> <C> <C>
Pretax earnings $ 33.3 $ 9.1 $ 42.4
Portion of rents representative
of the interest factor 3.7 0.2 3.9
Interest on indebtedness 34.3 22.1 56.4
Amortization of debt expense
and premium 0.2 - 0.2
WFC preferred stock dividend - 1.5 1.5
---------- ---------- -----------
Adjusted income $ 71.5 $ 32.9 $ 104.4
========== ========== ===========
Fixed charges
Portion of rents representative
of the interest factor $ 3.7 $ 0.2 $ 3.9
Interest on indebtedness 34.3 22.1 56.4
Amortization of debt expense
and premium 0.2 - 0.2
WFC preferred stock dividend - 1.5 1.5
---------- ---------- -----------
$ 38.2 $ 23.8 $ 62.0
========== ========== ===========
Ratio of earnings to
fixed charges 1.87 1.38 1.68
========== ========== ===========
Ratio of earnings to
fixed charges at
March 31, 1996 1.82 1.37 1.67
========== ========== ===========
</TABLE>
