Whirlpool 2002 Annual Report Download - page 10

2002 Annual Report 17
millions of dollars, except per share data 2002 2001 % change
Net sales $ 11,016 $ 10,343 6.5%
Core earnings, which excludes non-recurring items 420 371 13.2%
Per share on a diluted basis 6.07 5.45
Earnings from continuing operations 262 34 670.6%
Per share on a diluted basis 3.78 0.50
Net earnings (loss) (394) 21
Per share on a diluted basis (5.68) 0.31
Stockholders’ equity 739 1,458 (49.3)%
Total assets 6,631 6,967 (4.8)%
Return on equity * 14.8% 1.3%
Return on equity excluding non-recurring items 27.4% 22.2%
Return on assets * 3.4% 0.4%
Return on assets excluding non-recurring items 6.1% 5.6%
Book value per share $ 10.67 $ 21.44 $ (50.2)%
Dividends per share 1.36 1.36
Average dividend yield 2.2% 2.4%
Share Price
High $ 79.80 74.20
Low 39.23 45.88
Close 52.22 73.33 (28.8)%
Total return to shareholders (five year annualized) 1.4% 12.2%
Shares outstanding (in 000’s) 68,226 67,215
Number of stockholders 8,556 8,840
Number of employees 68,272 61,923
Non-recurring items include cumulative effects of changes in accounting principle, discontinued operations, restructuring and related charges and
product recall charges in 2002 and 2001 as well the write-off of asset impairments in 2002.
* Refer to Eleven-Year Consolidated Statistical Review (pages 72-73) for more information about return on equity and asset calculations.
Financial Highlights
Chairman’s Letter
16
BUILDING CUSTOMER LOYALTY
Whirlpool’s growth strategy – “Building unmatched
customer loyalty”– is unlike any other within the appliance
industry. The strategy focuses on winning the hearts
and minds of our customers. We know that loyal customers
are recommending our brands to others; that they are
requesting and repurchasing our brands over those of
competitors; and that they are beginning to upgrade their
appliances because they trust the innovation and value that
our brands deliver. Initiatives that lead to higher levels of
customer loyalty, such as our innovation process, result in
improved revenue growth, margin expansion and trade
support for our brands.
Because innovation is such an important driver of
customer loyalty, we are expanding our efforts to transfer
innovation capabilities and skills to employees everywhere.
Approximately 600 innovation mentors and consultants
assisted and trained employees involved in development
projects last year, and the number will grow as our
innovation efforts continue in 2003.
Another key aspect of customer loyalty involves the
experiences that touch customers before, during and long
after the initial purchase. Each of our brands is putting
in place a complete set of experiences – including brand
advertising, the in-store purchase, call center interactions
and ongoing customer communications – that will help
forge lifelong relationships with our customers.
Within our operations, every person and function has a
role to play in building customer loyalty. For example,
each operation is taking the company’s Six-Sigma
quality improvement process to a higher level by first
placing the needs of the customer at the center of every
function – such as manufacturing, technology, marketing
and administrative support – and then driving down all
unnecessary costs. Resources that become available
through this enterprise-wide effort are reinvested in new
initiatives that are focused squarely on improving the
brand experiences of our customers.
Ultimately, the success of the customer loyalty strategy
depends on the leadership capabilities of our global
management team, as well as the skills and involvement
of our employees. We have instituted a process to
assess and develop our leaders around a simple global
leadership model that will help prepare them to lead in
today’s complex and challenging environments.
DIVERSE CUSTOMERS, EMPLOYEES AND IDEAS
Much of our customer loyalty strategy is built upon the
same foundation that supports the company’s approach
to diversity and inclusion. For example, understanding
and embracing differences and ideas of customers and
coworkers are essential first steps in our innovation
process. Diversity within Whirlpool creates the originality
and relevancy of ideas needed to solve unique problems.
And because diverse employees reflect our global
customer base, Whirlpool gains a keen understanding of
our customers’ needs.
CORPORATE GOVERNANCE
Embedded in our company, as well as our Board of Directors,
is the deeply held value that continues to guide us: “There
is no right way to do a wrong thing.” This basic code of
conduct underlies the company’s long tradition of strong
and independent corporate governance. For example, of
Whirlpool’s 12-member board, ten are independent
directors who are highly regarded business professionals
with significant and relevant management experience.
The Whirlpool board’s principles and processes – which
include internal annual reviews of board practices,
the board selection process and the company’s code of
ethics – have been in place for many years.
Whirlpool fully supports the steps that have been taken by
business and government to make sure that companies
have the necessary values and governing principles that
will assure trust from all stakeholders.
OUTLOOK
We enter 2003 with continuing economic uncertainty in
most of the global markets we serve. We have taken the
appropriate cost and productivity actions to deal with that
uncertainty. We believe that Whirlpool’s global leadership
position, the company’s unique global platform, and
innovation activities focused on building customer loyalty
will drive continued performance improvement in 2003
and beyond.
David R. Whitwam
Chairman of the Board and
Chief Executive Officer
February 27, 2003