Whirlpool 2001 Annual Report Download

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Thinking...
Whirlpool Corporation 2001 Annual Report

Table of contents

  • Page 1
    Thinking... Whirlpool Corporation 2001 Annual Report

  • Page 2
    outside the box,

  • Page 3
    Save Energy. Whirlpool brand Conquest refrigerator and 900 Series dishwasher are two examples from Whirlpool's full line of energy efficient, elegantly designed appliances that quietly reduce home utility costs for active families. The Conquest features In-Door-Ice and UltraEase water filtration,...

  • Page 4
    ... Dialogue technology reduces the time and guesswork of clothes washing. The washer's LCD display takes the user easily and conveniently through programs that deliver superb cleanliness and fabric care. Intelligent Dialogue's Dynamic Sense technology minimizes water, time and electricity usage...

  • Page 5
    ...dinner cleaning capacity in a small package, a perfect combination for Brazilian consumers who prefer home appliances to fit the scale of living spaces. The Solution holds eight place settings and delivers the same clean wash as a conventional dishwasher, with excellent energy and water efficiency.

  • Page 6
    Make pure. Whirlpool of India's leading Whirlpool brand Whitemagic Aquashower automatic washers deliver more than cleanliness to Indian consumers who believe whiteness of clothing expresses purity. Whitemagic's gentle hand-scrub movement and unique "hot wash technology" get the most effectiveness ...

  • Page 7
    Stir passion. KitchenAid brand Pro Line gas cooktop and dual-fuel ranges, with a stylish stainless steel finish, expand the brand's Architect series of professional quality appliances that inspire culinary passion and excellence in the home. The KitchenAid heritage of styling, endurance and ...

  • Page 8
    ... Whirlpool brand clothes vitalizing system, frees consumers from the ironing board and makes clothes made of most fabrics ready-to-wear in about 30 minutes by gently refreshing them with a heat-activated mist. Personal Valet is a breakthrough appliance that establishes a whole new product category...

  • Page 9
    ... Extractor for health conscious home enthusiasts is designed to capture valuable nutrients by spinning at only 1,800 rotations per minute, compared with the 4,000 rpm of most extractors. The slower speed of the easy-to-clean and durable juicer reduces foaming and the mixing with air that reduces...

  • Page 10
    ... and dryer offer North American consumers unparalleled benefits. With the largest capacity of any residential washer, the front-loading Duet can wash up to 22 bath towels in a single wash. Yet it is ENERGY STAR® qualified - using 68 percent less water and 67 percent less electricity than standard...

  • Page 11
    Think, listen, create. Every day, consumers around the world are discovering the power of Whirlpool innovation. In 2001, we introduced a record number of thoughtful solutions that make time at home a little easier and more enjoyable.

  • Page 12
    Whirlpool Corporation is the world's leading manufacturer and marketer of major home appliances. The company manufactures in 13 countries and markets products in more than 170 countries under major brand names such as Whirlpool, KitchenAid, Roper, Estate, Bauknecht, Ignis, Laden, Inglis, Brastemp ...

  • Page 13
    Chairman's Letter To Our Shareholders Last year, our company celebrated its 90th anniversary by introducing a record number of innovative, branded products and solutions to our customers worldwide, which enabled us to deliver a record year of operating performance. 2001 IN REVIEW a mild economic ...

  • Page 14
    ... levels of customer loyalty. By leveraging Whirlpool's global structure, by differentiating the company's global brands from competitors, and by connecting Whirlpool people and processes worldwide, we were able to strengthen our position as the world's leading manufacturer of major home appliances...

  • Page 15
    ... number of these products were introduced in 2001, and they are paying dividends in terms of growth and market share, as well as higher prices and margins across the business. As Whirlpool continues on this course, we ultimately want to create unmatched loyalty for our brands by building a lifetime...

  • Page 16
    ... the world's No. 1 selling appliance brand. Brastemp and Consul remain the top two brands in the Latin American market. Our upscale brands include KitchenAid in the U.S. and Bauknecht in Europe. And we remain the major supplier in many product categories for Sears, Roebuck and Co.'s Kenmore brand...

  • Page 17
    ... (five year annualized) Shares outstanding (in 000's) Number of shareholders Number of employees $ 74.20 45.88 73.33 12.2% 67,215 8,840 59,408 $ 68.31 31.50 47.69 0.3% 66,265 11,780 60,695 53.8% * Non-recurring items for 2001 include restructuring and related charges, product recall charges...

  • Page 18
    ... sales, core operating profit, cash flow and market share were record levels, and the best overall results in the company's 90-year history. New products sold through the company's value-added distribution network created exceptional demand from consumers and trade partners, which led to increased...

  • Page 19
    ... in generating free cash flow. We also extended our market share by introducing a series of new products and services under the Brastemp, Consul and In total, our regional businesses contributed to Whirlpool's solid operating performance in 2001 by effectively carrying out our global strategy of...

  • Page 20
    ..., Automatic Dryers, Automatic Washers, Built-in Ovens, Countertop Appliances, Dehumidifiers, Dishwashers, Freezers, Hot Water Heaters, Ice Makers, Jetted and Soaking Tubs, Microwave Ovens, Ranges, Refrigerators, Room Air Conditioners, Trash Compactors H E A D Q U A RT E R S Benton Harbor, MI...

  • Page 21
    ..., which cover a wide range of electric-powered devices. Other Whirlpool brand ENERGY STAR qualified products include the 900 Series dishwasher, the 2001 Conquest refrigerator, and air conditioners and dehumidifiers. At www.whirlpool.com, we also provide consumers with an online utility cost-savings...

  • Page 22
    ... - ENERGY STAR qualified dishwashers and refrigerators, and the Pro Line series of ranges and cooktops for consumers interested in the finestquality cooking experience for the home. The KitchenAid brand also launched Inspired Chef, a unique new business that emerged from Whirlpool's corporatewide...

  • Page 23
    ... in conducting routine business transactions with Whirlpool. For example, equipped with a simple Internet Web browser, Whirlpool's trade partners can order products, download promotional materials, or quickly obtain details about their account and delivery status any time of the day. We intend to...

  • Page 24
    ... System dishwasher; Built-in cooking range; DD 430 liter refrigerator Bauknecht brand Intelligent Dialogue, a full line of free-standing appliances including refrigeration, dishwashers, and clothes washers and dryers Maximo compact microwave oven in 2001. The Maximo microwave takes up a small space...

  • Page 25
    ... par with 2001 levels. Dialogue dishwashers, clothes washers, dryers, refrigerators and freezers that carry the highly sophisticated look derived from the company's unique global appliance design process - called visual brand language (VBL) - as well as sensor-driven technology for peak performance...

  • Page 26
    ...NEW PRODUCTS INTRODUCED IN 2001 Brastemp brand All Refrigerator and Frost Free Freezer; Electronic Frost Free Freezers; Intelligent stain removing washing machine; Solution dishwasher; Mosaic built-in appliances; Intelligent dryer; Professional Quality Countertop Appliances (blender, food processor...

  • Page 27
    ... room air conditioners meets the Brazilian government's "Procel" standards for excellence in energy efficiency. Among the products introduced by the Brastemp brand were the new frost-free Duplex refrigerator, the Solution dishwasher, the Intelligent stain remover clothes washer and companion dryer...

  • Page 28
    ..., Pune, Pondicherry China Shanghai, Shunde NEW PRODUCTS INTRODUCED IN 2001 Whirlpool brand Water Genie; Fire Genie microwave; Whitemagic Hotwash clothes washer; Ice Magic refrigerator; QuickChill frost-free refrigerator; MagiCook microwave ovens and gas cooking ranges 26 Asia Operations Review

  • Page 29
    ...in India by offering new full lines of air conditioning and microwave oven products. Whirlpool Asia expects growth in consumer demand from India and China in 2002, while for the entire region, industry demand is expected to match 2001 levels. Whitemagic washers. Both models - which contain built-in...

  • Page 30
    ... Statements of Changes in Stockholders' Equity 40 Notes to Consolidated Financial Statements 41 Reports of Independent Auditors and Management 59 Eleven-Year Consolidated Statistical Review 60 Directors and Senior Management 62 Stockholders' and Other Information 63 00 Section Title Here

  • Page 31
    ...-tax. In particular, the company currently expects its European operating margins to improve in 2002, based on continued focus on productivity and restructuring initiatives. NET SALES The total number of units sold in 2001 increased 2% over 2000. Consolidated net sales increased slightly over 2000...

  • Page 32
    ... in 2000 versus 1999 due to global pricing pressures and higher material costs offsetting productivity improvements and pension credits. The table below outlines the gross margin percentages by region, excluding the impact of the 2001 restructuring related charges. 30 Management's Discussion...

  • Page 33
    ... sales decreased versus 2000 as cost controls implemented in North America and global restructuring benefits more than offset increased bad debt expense, increased stock compensation costs, new product introduction costs, restructuring related charges and lower pension credits. Consolidated selling...

  • Page 34
    ... significant factor in estimating the total cost of each recall. The customer contact rate used to measure the company's product recall liability as of December 31, 2001 was 65% for the microwave hood combination units recall and 50% for the dehumidifier recall. These rates are impacted by several...

  • Page 35
    ... prepaid pension costs, partially offset by an increase in accounts payable. INVESTING ACTIVITIES The principal recurring investing activities are property additions. Net property additions were $378 million, $375 million and $437 million in 2001, 2000 and 1999. On October 5, 2001, the company sold...

  • Page 36
    ... critical accounting policies involve a higher degree of judgement and complexity: recognition of Brazilian export incentive credits (Befiex) - see below; product recalls - see Note 11 of the notes to consolidated financial statements; and pension and postretirement medical benefit plans - see...

  • Page 37
    ...profit margins during industry downturns; (5) continuation of our strong relationship with Sears, Roebuck and Co. in North America, which accounted for approximately 21% of our consolidated net sales of $10.3 billion in 2001; (6) currency exchange rate fluctuations in Latin America, Europe, and Asia...

  • Page 38
    ... 31 (millions of dollars, except per share data) 2001 2000 1999 Net Sales Expenses $ 10,343 $ 10,325 $ 10,511 Cost of products sold Selling, general and administrative Intangible amortization Product recall costs Restructuring costs Operating profit Other income (expense) 7,925 1,639 28...

  • Page 39
    ... pension costs Other assets 117 703 354 208 222 1,604 113 762 253 141 262 1,531 Property, plant and equipment Land Buildings Machinery and equipment Accumulated depreciation Total Assets $ 56 886 4,372 (3,262) 2,052 6,967 $ 64 838 4,374 (3,142) 2,134 6,902 Whirlpool Corporation 2001 Annual...

  • Page 40
    ...) December 31 (millions of dollars) 2001 2000 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Notes payable Accounts payable Employee compensation Deferred income taxes Accrued expenses Restructuring costs Accrued product recalls Other current liabilities Current maturities of long...

  • Page 41
    ... 31 (millions of dollars) 2001 2000 1999 Operating activities Net earnings Product recall (provision $295; cash paid $56) Restructuring charges, net of cash paid Loss on disposition of assets Loss on discontinued operations Taxes deferred and payable, net Depreciation and amortization Changes...

  • Page 42
    ... change in accounting principle, net of tax of $7 Unrealized gain on derivative instruments, net of tax of $2 Other, principally foreign currency items, net of tax of $3 Comprehensive loss Common stock repurchased Common stock issued Dividends declared on common stock Balances, December 31, 2001 See...

  • Page 43
    ... voting interest in a Mexican company (Vitromatic, S.A. de C.V.) and direct voting interests ranging from 20% to 40% in several other international companies, principally engaged in the manufacture and sale of major home appliances or related component parts, are accounted for by the equity method...

  • Page 44
    ... stock and put options and stock based compensation plans. 02 N E W A C C O U N T I N G S TA N D A R D S In June 2001, the Financial Accounting Standards Board issued SFAS No. 141, "Business Combinations" and No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that the purchase...

  • Page 45
    ... from discontinued operations of $35 million ($21 million after-tax). 05 INVENTORIES December 31 (millions of dollars) 2001 2000 Finished products Work in process Raw materials Less excess of FIFO cost over LIFO cost Total inventories $ 949 58 239 1,246 136 $ 956 57 257 1,270 151 $ 1,110...

  • Page 46
    ... to vote together on a share-for-share basis with WFC's common stockholder, Whirlpool Corporation. Preferred stock dividends are payable quarterly. At its option, WFC may redeem the Series B at any time on or after September 1, 2003. The redemption price is $100 per share plus any accrued unpaid...

  • Page 47
    ... contracts and commodities futures contracts were not significant as of December 31, 2001 and December 31, 2000, respectively. The company has designated a portion of its euro-denominated fixed-rate debt as a hedge of its investments in its European subsidiaries. Translation adjustments related to...

  • Page 48
    ... market value of two times the exercise price of the Right. In addition, if an Acquiring Person does not have beneficial ownership of 50% or more of the common stock, the company's Board of Directors has the option of exchanging all or part of the Rights for an equal number of shares of common stock...

  • Page 49
    ... exercise prices equal to the market value of the underlying shares of stock at the date of grant. Stock options generally have 10 year terms, and vest and become fully exercisable over a two year period after date of grant. Compensation expense related to the company's stock and incentive plans is...

  • Page 50
    ... non-employee exit costs related primarily to the closing of a refrigeration plant in the company's Latin American region, a parts packing facility in the North American region, a plastic components facility in the Asian region and a restructuring of the company's microwave business in its European...

  • Page 51
    ...the company announced a voluntary recall of 1.8 million microwave hood combination units sold under the Whirlpool, KitchenAid, and Sears Kenmore brands. During the third quarter, the company identified and investigated a potential safety issue relating to the units and on September 24, 2001 notified...

  • Page 52
    ...2001 2000 1999 U.S. federal statutory rate State and local taxes, net of federal tax benefit Nondeductible goodwill amortization Foreign tax rate differential Recognition of benefits for foreign net operating losses Foreign dividends and subpart F income Foreign government tax incentive Foreign tax...

  • Page 53
    ... million in 2000 and $235 million in 1999. 13 PENSION AND POSTRETIREMENT MEDICAL BENEFITS PLANS The company maintains both contributory and noncontributory defined benefit pension plans covering substantially all North American and Brazilian employees and certain European employees. Benefits are...

  • Page 54
    ...million, $71 million and $5 million, respectively, as of December 31, 1999. Pension Benefits (millions of dollars) 2001 2000 1999 Change in benefit obligation Benefit obligation as of January 1 Service cost Interest cost Plan participants' contributions Amendments Actuarial (gain) loss Settlements...

  • Page 55
    ...millions of dollars) 2001 2000 1999 Assumptions as of December 31 U.S. pension plans: Discount rate Expected return on assets Rate of compensation increase Foreign pension plans: Discount rate Expected return on assets Rate of compensation increase Components of net periodic benefit cost 7.50% 10...

  • Page 56
    ... 31, 2001, the company's assumed health care cost trend rate for 2002 was 8.5% to 10.5% depending on the employees age, or an increase of 2.5% to 4.5% over the prior year. This increase was primarily due to the recent increases in the price of medical services provided by the plan. The ultimate long...

  • Page 57
    ...of the incumbent board of directors or an acquisition of 25% or more of the voting power of the company's outstanding stock, without the approval of a majority of the incumbent board. The company maintains a 401(k) defined contribution plan covering substantially all U.S. employees. Company matching...

  • Page 58
    ..., 2000 and 1999, respectively. As described above, the company's chief operating decision maker reviews each operating segment's performance based upon operating profit excluding one-time charges. In 2001, these one-time charges were comprised of restructuring and related charges and product recall...

  • Page 59
    ... North America Latin America Other / Eliminations Total Whirlpool (millions of dollars) Europe Asia Net sales 2001 2000 1999 Intangible amortization $ 6,581 6,223 6,159 $ 2,058 2,156 2,452 $ 1,487 1,706 1,668 $ 373 390 375 $ (156) (150) (143) $ 10,343 10,325 10,511 2001 2000 1999...

  • Page 60
    ...(14) - (21) - $ (40) - - 8 Three Months Ended (millions of dollars, except per share data) Dec 31 Sep 30 Jun 30 Mar 31 2000 Net sales Cost of products sold Earnings from continuing operations Net earnings Per share of common stock $ 2,579 1,965 67 67 $ 2,570 1,973 67 67 $ 2,586 1,958 121...

  • Page 61
    Report of Ernst & Young LLP - Independent Auditors THE STOCKHOLDERS AND BOARD OF DIRECTORS W H I R L P O O L C O R P O R AT I O N BENTON HARBOR, MICHIGAN We have audited the accompanying consolidated balance sheets of Whirlpool Corporation as of December 31, 2001 and 2000, and the related ...

  • Page 62
    ...) per diluted share. 4. Excluding one-time charges for restructuring and related charges, product recalls, discontinued operations and accounting changes in 2001, selected key ratios would be as follows: a) Operating profit margin - 7.9%, b) Pre-tax margin - 5.8%, c) Net margin - 3.6%, d) Return on...

  • Page 63
    .... 9. Debt divided by debt, stockholders' equity and minority interests. 10. Ratio of earnings from continuing operations (before income taxes, accounting change and interest expense) to interest expense. 11. Stock appreciation plus reinvested dividends. Whirlpool Corporation 2001 Annual Report 61

  • Page 64
    ..., Fort James Corporation Philip L. Smith 2,3 Senior Vice President, North American Region Operations Roy V. Armes Global Procurement Operations Betty A. Beaty Former Chairman of the Board and Chief Executive Officer, The Pillsbury Company Paul G. Stern 1,3 Controller Partner, Thayer Capital...

  • Page 65
    ...and can sell part of the shares held in the program without exiting the plan. There are modest transaction processing fees and brokerage commissions for purchases, sales and dividend reinvestment. For details, contact EquiServe or visit their Direct Stock Purchase Plan web site to enroll. Whirlpool...

  • Page 66
    ... Line, QuickChill, Refrigerator Inside Freezer, Roper, Servis, 6th Sense, Solution, Talent, Tall Tub, Ultima Cook, Ultra Ease, Water Genie, Whisper Quiet, Whitemagic, Whitemagic Hotwash and Whirlpool are trademarks of Whirlpool Corporation or its wholly or majority-owned affiliates. Kenmore, Kenmore...

  • Page 67
    .... We create the world's best home appliances, which make life a little easier and more enjoyable for all people. Our goal is a Whirlpool product in every home, everywhere. We will achieve this by creating: Pride...in our work and each other Passion...for creating unmatched customer loyalty for our...

  • Page 68
    Tell us what you think. Every day, everywhere. www.whirlpoolcorp.com 00 Section Title Here Whirlpool Corporation 2001 Annual Report 00