Whirlpool 2002 Annual Report Download - page 27

2002 Annual Report 51 Notes to Consolidated Financial Statements
50
Other Intangible Assets
Other intangibles are comprised of the following:
December 31 – Millions of dollars 2002 2001
Trademarks (indefinite-lived) $ 49 $ 13
Patents and non-compete agreements 5 10
Pension related 128 –
Total other intangible assets, net $ 182 $ 23
The balance at December 31, 2002, includes trademarks acquired as part of the Whirlpool Mexico and Polar acquisitions
(see Note 4), and intangible assets related to minimum pension liabilities (see Note 16). Accumulated amortization
totaled $21 million and $16 million at December 31, 2002 and 2001.
>04 BUSINESS ACQUISITIONS
Whirlpool Mexico
On July 3, 2002, the company acquired the remaining 51% ownership in Vitromatic S.A. de C.V. (now called Whirlpool
Mexico), an appliance manufacturer and distributor in Mexico. Prior to that date, the company’s 49% ownership in
Whirlpool Mexico was accounted for as an equity investment. Whirlpool Mexico has been included in the consolidated
financial statements within the North American operating segment since the acquisition date. The aggregate
purchase price was $151 million in cash plus outstanding debt at the time of acquisition, which totaled $143 million.
The transaction resulted in goodwill of $89 million, and is expected to result in additional synergies and operational
benefits. The transaction also generated approximately $15 million in indefinite-lived intangible assets related to
trademarks owned by Whirlpool Mexico.
The Whirlpool Mexico opening balance sheet is summarized (in millions of dollars) as follows:
ASSETS
Current assets
Trade receivables, net $ 130
Inventories 60
Other current assets 15
Total Current Assets 205
Other assets
Property, plant and equipment 245
Goodwill 89
Other intangibles 15
Total Assets $ 554
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities
Accounts payable $ 112
Notes payable 132
Total Current Liabilities 244
Other liabilities
Other liabilities 80
Total Other Liabilities 80
Total Stockholder’s Equity 230
Total Liabilities and Stockholder’s Equity $ 554
Polar
On June 5, 2002, the company acquired 95% of the shares of Polar S.A. (Polar), a leading major home appliance
manufacturer in Poland. The results of Polar’s operations have been included in the consolidated financial statements
since that date. The aggregate purchase price was $27 million in cash plus outstanding debt at the time of acquisition,
which totaled $19 million. The transaction also generated $17 million in indefinite-lived intangible assets related to
trademarks owned by Polar. The operations of Polar have been included in the company’s European operating segment.
Other
On November 18, 2002, the company acquired the remaining 20% interest in Whirlpool Narcissus Shanghai Company
Limited (“Narcissus”) for $9 million. Narcissus is a home appliance manufacturing company located in Shanghai, China.
The transaction was largely necessitated by the exercise of a put option by the minority partner arising out of an
amendment to the joint venture contract agreed to in February 1998. The purchase resulted in $9 million of goodwill,
which was subsequently written off as impaired goodwill under the requirements of SFAS No. 142, “Goodwill and Other
Intangible Assets.” The entity is now a wholly owned subsidiary of the company.
On January 7, 2000, the company completed its tender offer for the outstanding publicly traded shares in Brazil of its
subsidiaries Brasmotor S.A. (Brasmotor) and Multibras S.A. Eletrodomesticos (Multibras). In completing the offer, the
company purchased additional shares of Brasmotor and Multibras for $283 million, bringing its equity interest in these
companies to approximately 94%. Including Embraco, the company’s equity interest in its Brazilian subsidiaries
increased from approximately 55% to approximately 87%.
>05 DISCONTINUED OPERATIONS
In 1997, the company discontinued its financing operations, Whirlpool Financial Corporation (WFC), and sold the
majority of its assets. The remaining assets consist primarily of an investment in a portfolio of leveraged leases, which
are recorded in other non-current assets in the balance sheets and totaled $44 million and $123 million, net of related
reserves, at December 31, 2002 and 2001, respectively.
During the fourth quarter of 2002, the company wrote off WFC’s investment in leveraged aircraft leases relating to
United Airlines (UAL) as a result of UAL’s filing for bankruptcy protection. The write-off resulted in a non-cash charge of
$68 million, or $43 million after tax. The company also reclassified $49 million in related long-term deferred tax liabilities
to current taxes payable, which is included in other current liabilities on the company’s Consolidated Balance Sheet.