Whirlpool 2004 Annual Report Download - page 27

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2002 projects, as well as the timing of promotional payments.
Combined, these negative 2003 cash outflows were essentially
offset by the absence of $239 million in product recall spending,
which occurred during 2002. Cash provided by operating activi-
ties was also negatively impacted in 2002 by a one-time tax pay-
ment of $86 million on a cross-currency interest rate swap gain,
which occurred during 2001.
The principal recurring investing activities are capital expendi-
tures to support the Company's investment in its global operating
platform to deliver innovative solutions for consumers. During
2004 and 2003, Whirlpool entered into separate sale-leaseback
transactions whereby the Company sold and leased back its
owned properties. Proceeds related to the sale-leaseback of six
properties in 2004, net of related fees, were approximately $66
million. In 2003, proceeds related to the sale-leaseback of four
properties, net of related fees, were approximately $65 million.
Total repayments of short-term and long-term debt, net of new
borrowings, were $58 million, $208 million and $236 million in
2004, 2003 and 2002, respectively. Dividend payments to
stockholders totaled $116 million, $94 million and $91 million
in 2004, 2003 and 2002, respectively. The Company repur-
chased approximately 3.7 million shares, 1 million shares and
0.7 million shares of Whirlpool common stock for $251 million,
$65 million and $46 million in 2004, 2003 and 2002, respec-
tively. The stock repurchases were previously authorized by the
Board of Directors.
The Company also redeemed $33 million and $25 million in
2003 and 2002, respectively, in preferred stock of its discontin-
ued finance company, Whirlpool Financial Corporation.
Whirlpool received proceeds of $64 million in 2004, $65 mil-
lion in 2003 and $80 million in 2002 related to the exercise of
Company stock options.
Financial Condition and Liquidity
The Company's objective is to finance its business through the
appropriate mix of long-term and short-term debt. Whirlpool
has varying needs for short-term working capital financing as a
result of the nature of its business. The volume and timing of
refrigeration and air-conditioning production impact the
Company's cash flows with increased production in the first half
of the year to meet increased demand in the summer months.
The Company finances its working capital needs primarily
through the commercial paper markets in the U.S., Europe and
Canada. These commercial paper programs are supported by
committed bank lines. In addition, outside the U.S., short-term
funding is also provided by bank borrowings on uncommitted
lines. The Company has access to long-term funding in the
U.S., European and other public bond markets.
The Company's financial position remains strong. At December
31, 2004, Whirlpool's total assets were $8.2 billion versus $7.4
billion at December 31, 2003. Stockholders' equity increased
from $1.3 billion at the end of 2003 to $1.6 billion at the end
of 2004. The increase in equity is primarily attributed to net
earnings retention and a $174 million increase in equity through
foreign currency translation adjustments offset by share repur-
chases of $251 million.
The Company's overall debt levels have remained relatively
unchanged versus 2003. Cash flows from operations have been
used to repurchase stock, fund higher capital expenditures and
pay increased dividends.
In May 2004, Whirlpool allowed its $400 million committed
364-day credit facility to expire. Simultaneously, the Company
increased the size of its $800 million committed credit facility to
$1.2 billion and extended its maturity from 2006 to 2009. This
committed facility supports commercial paper programs and
other operating needs. There were no borrowings under these
facilities during 2004 or 2003. Whirlpool was in full compli-
ance with its bank covenants throughout both 2004 and 2003.
None of the Company's material debt agreements requires accel-
erated repayment in the event of a decrease in credit ratings.
In 2004, the Company announced that it plans to invest approx-
imately $180 million to strengthen Whirlpool's brand leadership
position in the global appliance industry. The Company plans
to continue its comprehensive worldwide effort to optimize its
regional manufacturing facilities, supply base, product platforms
and technology resources to better support its global brands and
customers. Approximately $100 million of the investment will
fund initiatives at the Company's manufacturing facilities in the
United States, and the remainder will be used to begin work on
the expansion of the Company's washer production facility in
Monterrey, Mexico, and the construction of a new refrigeration
facility in Ramos Arispe, Coahuila, Mexico.