[LETTERHEAD OF WHIRLPOOL CORPORATION]
Whirlpool Corporation's Third-Quarter Core EPS Increase 49 Percent;
Company Expects Record Full-Year Core EPS;
Records Charge For Product Recall
BENTON HARBOR, Mich., Oct. 16, 2001--Whirlpool Corporation (NYSE:WHR) today
announced third quarter core earnings per share of $1.46 per diluted share, a 49
percent increase from third quarter 2000.
"Our business delivered solid results as we faced challenging economic and
industry environments in every market around the world," said David R. Whitwam,
chairman and chief executive officer, Whirlpool Corporation. "These results are
due to the success of Whirlpool's brands and innovative products, as well as
cost savings from productivity improvements and restructuring activities."
Core earnings per share increased to $1.46 from $.98 in third quarter 2000,
and core earnings grew to $101 million from $67 million. Core earnings exclude
restructuring and related charges of $11 million after tax and minority
interest, and a charge of $184 million after tax for a recall of microwave-hood
combination units in North America.
After the restructuring and charges for the recall, the company reported a
net loss of $94 million, or $1.40 per share. Net sales of $ 2.6 billion
increased slightly from the prior year quarter--but were up 4 percent absent
currency translations.
The company generated $360 million of cash flow through September. Full-
year cash flow--including cash outflow for restructuring activities and the 2001
product recall charges--is expected to exceed $450 million.
"Following the recent rise of global economic uncertainties and the decline
in industry projections, we have revised our previous full-year guidance of a
10-to-15 percent increase in core earnings-per-share, and now expect a 5-to-10
percent increase in 2001," said Whitwam. "Based on the fundamental strength of
our businesses, we remain confident that Whirlpool Corporation will continue to
outperform the industry and deliver record core earnings per share for the full
year."
Whirlpool North America posted record third-quarter sales and operating
profits. Operating profits were up 37 percent on strong brand demand and new
products sold through the company's value-added distribution channels, which led
to record third quarter volumes and higher average selling prices.
--more--
Page Two/Whirlpool Corporation's Third-Quarter Core EPS Increase 49 Percent
Based on current U.S. economic conditions and projections, the company now
anticipates industry unit shipments will be down 3 percent for the full year. In
this environment, the company continues to expect improved second half and full-
year performances for Whirlpool North America compared to last year.
During the quarter, the company's new range of energy efficient appliances
received outstanding consumer acceptance. The company began shipping the highly
anticipated Whirlpool brand Duet(TM) clothes washer and dryer pair, and Sears
launched the Kenmore Elite(R) HE3t(TM) washer and dryer. The Duet and HE3t
represent the best performing and most energy efficient front loading washer
technologies on the market today. Consumers who want energy efficiency with top-
load design are choosing the innovative Whirlpool brand and Sears Kenmore
Elite(R) washer with Calypso(TM) Wash Motion. In refrigeration, the Whirlpool
brand Conquest(TM) side-by-side is popular with consumers because of its stylish
contoured doors and its energy efficient performance that exceeds U.S.
Department of Energy standards by 10 percent.
Whirlpool Europe's performance was influenced by continuing economic
challenges and an appliance industry market that was down 3 to 5 percent
compared to third quarter 2000. In this environment, sales were down 6 percent,
or 4 percent excluding currency translations. Operating margins improved 2
points over second quarter 2001 as a result of productivity gains, reduced
spending and benefits from restructuring efforts.
For the full year, the company now expects industry appliance shipments to
be down 1 to 2 percent. Whirlpool Europe continues to expect sequential margin
improvement in the fourth quarter.
Whirlpool Latin America's operating profit improved 26 percent in an
environment of unfavorable currency translations and slowing industry unit
shipments. Sales were down 19 percent, or down 1 percent excluding currency
translations, while appliance industry unit shipments declined 13 percent
compared to last year. Strong operating profits resulted from increased exports,
productivity and cost improvements, and the continued gains from restructuring
activities. For the full year, the company continues to expect industry unit
shipments will decline approximately 3 percent. Despite uncertainty and
volatility in the region, the company continues to believe it will deliver
substantial improvement in full-year operating earnings. Demand for energy
efficient Brastemp brand and Consul brand refrigerators was strong throughout
the quarter due to the leading positions of both brands in the market, as well
as the energy conservation requirements in Brazil.
Whirlpool Asia reported a 3 percent increase in sales, or a 7 percent
improvement excluding currency translations. Third quarter operating profits
improved in India and China compared to last year. Slowing industry unit
shipments and the negative impact of currency led to lower operating profits in
other areas of the region. During the fourth quarter, the company expects market
growth in China to continue, and industry unit demand in India and other markets
to remain essentially even with third quarter 2001. The company anticipates
full-year performance in the region to approximate last year's levels.
--more--
Page Three/Whirlpool Corporation's Third-Quarter Core EPS Increase 49 Percent
Charge For Product Recall
During the third quarter, the company recorded a charge of $300 million,
pre tax, for costs associated with its announced recall of microwave-hood
combination units. The voluntary recall is based on a safety issue that involves
about 1.8 million Whirlpool, KitchenAid and Sears Kenmore brand "over the range"
microwave-hood combinations. The projected $184 million after-tax cash cost of
the recall will occur over the next several quarters.
"The most important focus of our company has been, and always will be, the
safety of our customers and the trust we have built with those customers around
our brands, our products and our services," said Whitwam. "The recall actions we
announced today are based on that focus and trust. In cooperation with the
Consumer Products Safety Commission, we are moving quickly and effectively to
correct the situation for consumers."
Also during the quarter, the company recorded pre-tax charges of $14
million ($11 million after tax) for restructuring and restructuring related
activities, which included outsourcing parts distribution in the United States,
and consolidating warehouse operations in Brazil. Year to date, restructuring
activities have resulted in a pre-tax charge of $105 million and are expected to
produce savings of about $43 million in 2001, increasing to approximately $84
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 and produce
annualized savings of between $225 million and $250 million. Specific details
about additional restructuring items will be announced in the fourth quarter
2001 and in the first half of 2002.
At 9:00 a.m. (EDT) Wednesday, Oct. 17, the company will be hosting a
conference call, which can be heard by visiting www.WhirlpoolCorp.com and
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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 SEPTEMBER 30
(millions of dollars except share and dividend data)
Three Months Ended
------------------------
2001 Pro-forma 2001 2000
-------------- ----------- ----------
Net sales $ 2,594 $ 2,594 $ 2,570
EXPENSES:
Cost of products sold 1,979 1,988 1,973
Selling and administrative 392 392 417
Intangible amortization 7 7 7
Product recall costs - 300 -
Restructuring costs - 5 -
-------------- ----------- ----------
2,378 2,692 2,397
-------------- ----------- ----------
OPERATING PROFIT 216 (98) 173
OTHER INCOME (EXPENSE):
Interest and sundry income (expense) (15) (15) (11)
Interest expense (41) (41) (49)
-------------- ----------- ----------
EARNINGS BEFORE INCOME TAXES
AND OTHER ITEMS 160 (154) 113
Income taxes 55 (64) 41
-------------- ----------- ----------
EARNINGS BEFORE EQUITY EARNINGS
AND MINORITY INTERESTS 105 (90) 72
Equity in earnings of affiliated companies (1) (1) (3)
Minority interests (3) (3) (2)
-------------- ----------- ----------
EARNINGS FROM CONTINUING OPERATIONS BEFORE CUMULATIVE 101 (94) 67
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
Loss from discontinued operations, net of tax - - -
Cumulative effect of change in accounting principle, net of tax - - -
-------------- ----------- ----------
NET EARNINGS $ 101 $ (94) $ 67
============== =========== ==========
Per share of common stock:
Basic earnings from continuing operations $ 1.50 $ (1.40) $ .98
Loss from discontinued operations, net of tax - - -
Cumulative effect of change in accounting principle, net of tax - - -
-------------- ----------- ----------
Basic net earnings $ 1.50 $ (1.40) $ .98
============== =========== ==========
Diluted earnings from continuing operations $ 1.46 $ (1.40) $ .98
Loss from discontinued operations, net of tax - - -
Cumulative effect of change in accounting principle, net of tax - - -
-------------- ----------- ----------
Diluted net earnings $ 1.46 $ (1.40) $ .98
============== =========== ==========
Dividends declared $ .34 $ .34 $ .34
============== =========== ==========
Year-to-Date
------------------------
2001 Pro-forma 2001 2000
-------------- ----------- ----------
Net sales $ 7,695 $ 7,695 $ 7,746
EXPENSES:
Cost of products sold 5,901 5,936 5,873
Selling and administrative 1,200 1,203 1,211
Intangible amortization 20 20 22
Product recall costs - 300 -
Restructuring costs - 67 -
-------------- ----------- ----------
7,121 7,526 7,106
-------------- ----------- ----------
OPERATING PROFIT 574 169 640
OTHER INCOME (EXPENSE):
Interest and sundry income (expense) (26) (26) (24)
Interest expense (128) (128) (132)
-------------- ----------- ----------
EARNINGS BEFORE INCOME TAXES
AND OTHER ITEMS 420 15 484
Income taxes 149 (3) 177
-------------- ----------- ----------
EARNINGS BEFORE EQUITY EARNINGS
AND MINORITY INTERESTS 271 18 307
Equity in earnings of affiliated companies 2 2 3
Minority interests (11) (7) (9)
-------------- ----------- ----------
EARNINGS FROM CONTINUING OPERATIONS BEFORE CUMULATIVE 262 13 301
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
Loss from discontinued operations, net of tax - (21) -
Cumulative effect of change in accounting principle, net of tax - 8 -
-------------- ----------- ----------
NET EARNINGS $ 262 $ - $ 301
============== =========== ==========
Per share of common stock:
Basic earnings from continuing operations $ 3.94 $ .20 $ 4.21
Loss from discontinued operations, net of tax - (0.32) -
Cumulative effect of change in accounting principle, net of tax - 0.12 -
-------------- ----------- ----------
Basic net earnings $ 3.94 $ - $ 4.21
============== =========== ==========
Diluted earnings from continuing operations $ 3.87 $ .20 $ 4.18
Loss from discontinued operations, net of tax - (0.32) -
Cumulative effect of change in accounting principle, net of tax - 0.12 -
-------------- ----------- ----------
Diluted net earnings $ 3.87 $ - $ 4.18
============== =========== ==========
Dividends declared $ 1.02 $ 1.02 $ 1.02
============== =========== ==========
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; and costs associated with the
company's announced product recall.
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
WHIRLPOOL CORPORATION
(millions of dollars)
September 30 December 31
2001 2000
------------ -----------
ASSETS
CURRENT ASSETS
--------------
Cash and equivalents $ 157 $ 114
Trade receivables, less allowances of
(2001: $93 ;2000: $103 ) 1,700 1,748
Inventories 1,081 1,119
Prepaid expenses and other 236 206
Deferred income taxes 144 50
------------ -----------
TOTAL CURRENT ASSETS 3,318 3,237
OTHER ASSETS
------------
Investment in affiliated companies 125 113
Intangibles, net 729 762
Deferred income taxes 226 253
Other 613 403
------------ -----------
1,693 1,531
PROPERTY, PLANT AND EQUIPMENT
-----------------------------
Land 58 64
Buildings 798 838
Machinery and equipment 4,253 4,374
Accumulated depreciation (3,199) (3,142)
------------ -----------
1,910 2,134
------------ -----------
TOTAL ASSETS $ 6,921 $ 6,902
============ ===========
September 30 December 31
2001 2000
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
-------------------
Notes payable $ 378 $ 961
Accounts payable 1,276 1,257
Employee compensation 256 256
Accrued expenses 915 795
Product recall liability 300 -
Restructuring costs 15 5
Current maturities of long-term debt 17 29
---------- ---------
TOTAL CURRENT LIABILITIES 3,157 3,303
Other Liabilities
-----------------
Deferred income taxes 157 175
Postemployment benefits 641 630
Other liabilities 123 168
Long-term debt 1,270 795
---------- ---------
2,191 1,768
Minority Interests 130 147
STOCKHOLDERS' EQUITY
--------------------
Common stock 85 84
Paid-in capital 467 393
Retained earnings 2,471 2,539
Unearned restricted stock - (11)
Accumulated other comprehensive income (698) (495)
Treasury stock - at cost (882) (826)
---------- ---------
TOTAL STOCKHOLDERS' EQUITY 1,443 1,684
---------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,921 $ 6,902
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