CONTACT: Whirlpool Corporation
Media: Tom Kline, 616/923-3738
thomas_e_kline@email.whirlpool.com
Financial: Thomas Filstrup, 616/923-3189
thomas_c_filstrup@email.whirlpool.com
WHIRLPOOL CORP. REPORTS SECOND QUARTER EARNINGS
--Core EPS Up 18 Percent From First Quarter 2001--
BENTON HARBOR, Mich., July 17, 2001--Whirlpool Corporation (NYSE:WHR) today
reported second quarter 2001 core earnings of $1.30 per diluted share,
reflecting an 18 percent improvement from first quarter 2001, despite difficult
appliance industry market and economic conditions around the world.
Core earnings were $88 million, or $1.30 per diluted share, compared to
$121 million, or $1.66 per diluted share in second quarter 2000, which was a
record quarter of earnings for the company. Core earnings for the quarter
exclude restructuring and related charges of $14 million after tax and minority
interest, and a one-time loss from discontinued operations of $21 million after
tax. Reported net earnings for the quarter were $53 million, or $0.78 per
diluted share. Net sales of $2.6 billion were level with the prior year
quarter--up 4 percent absent currency translations.
"Given the soft market conditions around the globe, our business in total
turned in a solid performance for the quarter," said David R. Whitwam, chairman
and chief executive officer, Whirlpool Corporation. "Based on our current full-
year forecast of appliance industry shipments for these markets and combined
with our own execution plans, we anticipate sequential improvement in third and
fourth quarter core earnings. We expect to deliver improvement in full-year core
earnings per share of 10 to 15 percent, which will yield record levels of
performance."
Year-to-date core earnings were $162 million, or $2.40 per diluted share,
compared to $233 million, or $3.18 per diluted share in 2000. Year-to-date core
earnings exclude restructuring and related charges of $55 million after tax and
minority interest, a one-time loss from discontinued operations of $21 million
after tax, and a one-time gain relating to the adoption of SFAS No. 133 of $8
million after tax. Year-to-date reported net earnings were $94 million, or $1.39
per diluted share. Year-to-date net sales were $5.1 billion, down 1 percent from
the prior year period--up 2 percent absent currency translations.
Whirlpool North America's second quarter net sales increased 5 percent,
despite a 5 percent decline in U.S. industry unit shipments. Operating profits,
down 10 percent compared to last year's record-second quarter, were driven by
the continuing competitive environment and increased spending for a significant
level of new product introductions.
--more--
PAGE TWO/WHIRLPOOL CORP. REPORTS SECOND QUARTER EARNINGS
For the full year, the company currently anticipates industry unit
shipments to be down 3 percent versus 2000. Despite this downward revision in
industry outlook, the company expects its record number of new product
introductions and productivity gains to drive North America full-year
performance to record levels in 2001.
During the quarter, the Whirlpool brand launched a complete line of
appliances that meet the federal government's energy efficiency standards under
the Energy Star program. The appliances include the Calypso wash motion clothes
washer that uses 50 percent less water and 66 percent less energy; a new
Whirlpool brand dishwasher that saves 700 gallons of water per year; and the
Conquest refrigerator that has less energy usage than a 75-watt light bulb.
KitchenAid brand launched its Pro Line kitchen appliances, which offer designers
and kitchen enthusiasts a full selection of premium quality ranges,
refrigerators and dishwashers.
Whirlpool Europe continued to operate in a challenging market environment,
where industry demand for the quarter was estimated to be flat to slightly down.
In this environment, sales were 8 percent lower, or down 2 percent excluding
currency translation, compared to second quarter 2000. Operating margins--which
were negatively impacted by reduced volumes, advertising and new product launch
investments--were comparable to first quarter 2001 levels.
During the quarter, the company introduced a complete new line of Bauknecht
brand appliances featuring exclusive "Dynamic Sense" controls that enable
outstanding performance and improve energy efficiency. These products are
expected to have a positive impact on both sales and margins in the second half
of 2001. For the full year, industry appliance shipments are now forecasted to
be flat or up 2 percent versus 2000 levels. Second-half operating margins are
expected to improve due to productivity gains and benefits from restructuring
savings.
Whirlpool Latin America's operating performance was in line with the
company's expectations for the quarter despite the emergence in April of the
energy shortage in Brazil and the resulting economic and appliance industry
slowdown. Second quarter net sales were down 6 percent, or up 8 percent
excluding currency translations, compared to the prior year period. During the
quarter, operating profit increased 37 percent due to higher unit shipments, new
product launches, savings from the closure of a refrigerator manufacturing
facility in Brazil, and other productivity improvements in the region.
Appliance industry unit shipments in Latin America declined 1 percent
during the quarter. For the full year, the company now expects industry
shipments to decline approximately 3 percent compared to last year. Despite this
downturn, the company expects that its productivity plans, new product
introductions, restructuring initiatives, and the fundamental strength of its
brands and market position will result in year-over-year improvement in third
and fourth quarter operating earnings.
In response to the energy shortage in Brazil, Whirlpool is selling energy
efficient Brastemp brand and Consul brand refrigerators, air conditioners and
other appliances to Brazilian customers, who are required to trim home energy
usage by 20 percent.
--more--
PAGE THREE/WHIRLPOOL CORP. REPORTS SECOND QUARTER EARNINGS
Together, the Brastemp and Consul brands market the largest number of
certified appliances under Procel Seal, the mark of energy efficient products in
Brazil.
Whirlpool Asia reported an 8 percent decline in sales--or a 2 percent
decline excluding currency translation--and flat operating profits compared to
last year, due to a generally weak appliance industry environment. Whirlpool
India, however, grew its unit shipments by 1 percent in a market that was down 8
to 10 percent, and Whirlpool China reported a 56 percent increase in unit
shipments for the quarter. In the second half, market demand is expected to
improve in China and India. The company expects a full-year improvement in sales
and operating profits, based on its strong position in India and rapid growth in
China.
During the second quarter, the company recorded pre-tax charges of $21
million for restructuring and restructuring related activities, which included
eliminating approximately 250 positions in Europe; outsourcing of the company's
parts distribution operation in LaPorte, Ind.; and transferring its cooking
technology operation from Dayton, Ohio, to Benton Harbor, Mich. Year to date,
the restructuring effort has resulted in a pre-tax charge of $91 million and is
expected to produce savings of about $40 million in 2001, increasing to
approximately $70 million on an annualized basis. In total, the restructuring
effort is expected to result in pre-tax charges of between $300 million to $350
million. Details about subsequent restructuring actions will be announced as the
company finalizes the execution of its plans during the remainder of the year.
Also during the second quarter, the company wrote off its investment in a
securitized aircraft lease portfolio. The investment was acquired by the
company's former finance arm, Whirlpool Financial Corporation (WFC), which was
discontinued in 1997. The write-off, due primarily to the softening aircraft
leasing industry, resulted in a non-cash charge of $21 million after tax.
At 9:30 a.m. (EDT) today, the company will be hosting a conference call,
which can be heard live on the Internet by visiting www.WhirlpoolCorp.com and
clicking on the "Investors" button and then the "Conference Call Audio" menu
item.
Whirlpool Corporation is the world's leading manufacturer and marketer of
major home appliances. Headquartered in Benton Harbor, the company manufactures
in 13 countries and markets products under 11 major brand names in more than 170
countries. Additional information about the company can be found on the Internet
at www.WhirlpoolCorp.com.
This news release contains forward-looking statements, as that term is
defined in the Private Securities Litigation Reform Act of 1995. In addition to
the expected appliance industry results for 2001 noted in this news release,
there are certain factors that could cause results to differ materially from
those anticipated by some of the statements made. These factors are listed in
the company's most recently filed Form 10-Q and/or Form 10-K.
# # #
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (UNAUDITED)
WHIRLPOOL CORPORATION
FOR THE PERIOD ENDED JUNE 30
(millions of dollars except share and dividend data)
Three Months Ended Year-to-Date
------------------ -----------------
2001 Pro-forma 2001 2001 2001 Pro-forma 2001 2000
-------------- -------- -------- -------------- -------- --------
Net sales $ 2,585 $ 2,585 $ 2,586 $ 5,101 $ 5,101 $ 5,176
EXPENSES:
Cost of products sold 1,983 1,989 1,958 3,922 3,948 3,900
Selling and administrative 405 405 389 808 810 794
Intangible amortization 7 7 7 14 14 15
Restructuring costs - 14 - - 62 -
------- ------- ------- ------- ------- -------
2,395 2,415 2,354 4,744 4,834 4,709
------- ------- ------- ------- ------- -------
OPERATING PROFIT 190 170 232 357 267 467
OTHER INCOME (EXPENSE):
Interest and sundry income (expense) (6) (7) (4) (10) (11) (14)
Interest expense (43) (43) (46) (87) (87) (83)
------- ------- ------- ------- ------- -------
EARNINGS BEFORE INCOME TAXES
AND OTHER ITEMS 141 120 182 260 169 370
Income taxes 50 43 63 94 61 135
------- ------- ------- ------- ------- -------
EARNINGS BEFORE EQUITY EARNINGS
AND MINORITY INTERESTS 91 77 119 166 108 235
Equity in earnings of affiliated companies 2 2 7 3 3 6
Minority interests (5) (5) (5) (7) (4) (8)
------- ------- ------- ------- ------- -------
EARNINGS FROM CONTINUING OPERATIONS BEFORE CUMULATIVE 88 74 121 162 107 233
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
Loss from discontinued operations, net of tax - (21) - - (21) -
Cumulative effect of change in accounting principle,
net of tax - - - - 8 -
------- ------- ------- ------- ------- -------
NET EARNINGS $ 88 $ 53 $ 121 $ 162 $ 94 $ 233
======= ======= ======= ======= ======= =======
Per share of common stock:
Basic earnings from continuing operations $ 1.33 $ 1.12 $ 1.68 $ 2.44 $ 1.61 $ 3.20
Loss from discontinued operations, net of tax $ - $ (.32) $ - $ - $ (.32) $ -
Cumulative effect of change in accounting principle,
net of tax $ - $ - $ - $ - $ .12 $ -
------- ------- ------- ------- ------- -------
Basic net earnings $ 1.33 $ .80 $ 1.68 $ 2.44 $ 1.41 $ 3.20
======= ======= ======= ======= ======= =======
Diluted earnings from continuing operations $ 1.30 $ 1.10 $ 1.66 $ 2.40 $ 1.59 $ 3.18
Loss from discontinued operations, net of tax $ - $ (.32) $ - $ - $ (.32) $ -
Cumulative effect of change in accounting principle,
net of tax $ - $ - $ - $ - $ .12 $ -
------- ------- ------- ------- ------- -------
Diluted net earnings $ 1.30 $ .78 $ 1.66 $ 2.40 $ 1.39 $ 3.18
======= ======= ======= ======= ======= =======
Dividends declared $ .34 $ .34 $ .34 $ .68 $ .68 $ .68
======= ======= ======= ======= ======= =======
Note: 2001 Pro-forma excludes a loss from discontinued operations, a change in
accounting principle, restructuring, and one-time charges related to
restructuring within COGS and SG&A.
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
WHIRLPOOL CORPORATION
(millions of dollars)
June 30 December 31
2001 2000
----------------- -----------------
ASSETS
CURRENT ASSETS
- --------------
Cash and equivalents $ 153 $ 114
Trade receivables, less allowances of
(2001: $91; 2000: $103) 1,648 1,748
Inventories 1,099 1,119
Prepaid expenses and other 225 206
Deferred income taxes 31 50
---------------- -----------------
TOTAL CURRENT ASSETS 3,156 3,237
OTHER ASSETS
- ------------
Investment in affiliated companies 114 113
Intangibles, net 710 762
Deferred income taxes 219 253
Other 622 403
---------------- -----------------
1,665 1,531
PROPERTY, PLANT AND EQUIPMENT
- -----------------------------
Land 58 64
Buildings 789 838
Machinery and equipment 4,221 4,374
Accumulated depreciation (3,128) (3,142)
---------------- -----------------
1,940 2,134
---------------- -----------------
TOTAL ASSETS $ 6,761 $ 6,902
================ =================
June 30 December 31
2001 2000
----------------- -----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
- -------------------
Notes payable $ 828 $ 961
Accounts payable 1,174 1,257
Employee compensation 239 256
Accrued expenses 841 795
Restructuring costs 26 5
Current maturities of long-term debt 17 29
---------------- -----------------
TOTAL CURRENT LIABILITIES 3,125 3,303
Other Liabilities
- -----------------
Deferred income taxes 156 175
Postemployment benefits 631 630
Other liabilities 146 168
Long-term debt 1,000 795
---------------- -----------------
1,933 1,768
Minority Interests 135 147
STOCKHOLDERS' EQUITY
- --------------------
Common stock 84 84
Paid-in capital 414 393
Retained earnings 2,588 2,539
Unearned restricted stock (6) (11)
Accumulated other comprehensive income (684) (495)
Treasury stock - at cost (828) (826)
--------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 1,568 1,684
--------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,761 $ 6,902
=============== =================