Whirlpool 2005 Annual Report Download - page 29

Whirlpool Corporation 25
Financing Activities Total repayments of short-term and long-term
debt, net of new borrowings, were $131 million, $58 million and
$208 million in 2005, 2004 and 2003, respectively.
During March 2003, the Company redeemed its $200 million 9%
Debentures using short-term notes payable.
Dividends paid to stockholders totaled $116 million, $116
million and $94 million in 2005, 2004 and 2003, respectively.
Under its stock repurchase programs, Whirlpool used $34
million, $251 million and $65 million to purchase approximately 0.5
million, 3.7 million and 1 million shares of common stock in 2005,
2004 and 2003, respectively.
The Company also redeemed $33 million in preferred stock of
its discontinued finance company, Whirlpool Financial Corporation,
in 2003.
Whirlpool received proceeds of $102 million in 2005, $64 million
in 2004 and $65 million in 2003 related to the exercise of Company
stock options.
Financial Condition and Liquidity
The Company’s objective is to finance its business through an
appropriate mix of long-term and short-term debt. By diversifying
its maturity structure, the Company avoids concentrations of
debt, reducing liquidity risk. 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, 2005 and 2004, the Company’s total assets were $8.2 billion.
Stockholders’ equity increased from $1.6 billion at the end of 2004
to $1.7 billion at the end of 2005. The increase in equity is primarily
attributed to net earnings retention and proceeds received from the
exercise of stock options. These increases were offset by decreases
in equity due to minimum pension liability adjustments and share
repurchases.
The Company’s overall debt levels have decreased since 2004.
Cash flows from operations and proceeds from sales of assets/
businesses have been used to repay debt, fund capital expenditures
and pay dividends.
On December 2, 2005, the Company entered into an Amended
and Restated Long Term Five-Year Credit Agreement (the “Amended
and Restated Credit Agreement”) by and among the Company,
certain other borrowers, the lenders referred to therein, Citibank
N.A., as administrative agent and fronting agent, J.P. Morgan Chase
Bank, N.A., as syndication agent, and ABN Amro Bank N.V., Royal
Bank of Scotland and Bank of America, as documentation agents,
which amends and restates the Amended and Restated Long Term
Credit Agreement dated as of May 28, 2004. On December 2, 2005,
the parties to the Amended and Restated Credit Agreement also
entered into a 364-Day Credit Agreement (the “364-Day Credit
Agreement” and together with the Amended and Restated Credit
Agreement, the “Credit Facilities”). Additional information can
be obtained in the Financial Supplement to the Company’s Proxy
Statement and in the Financial Supplement to the 2005 Annual
Report on Form 10-K for the year ended December 31, 2005.
On February 7, 2006, the Company filed a shelf registration
statement with the U.S. Securities and Exchange Commission
(“SEC”) relating to an indeterminate amount of Debt Securities.
In August 2005, in connection with its proposed acquisition
of Maytag, Whirlpool was placed on credit watch with negative
implications by Standard & Poor’s, Moody’s Investors Service
and Fitch Ratings. No action has been taken by any of the rating
agencies concerning the Company’s rating, and action, if any, would
be taken after the acquisition of Maytag. The Company does not
anticipate that any future adjustments to these ratings would have
a material impact on its liquidity. The Company’s short-term credit
rating has been confirmed, and, accordingly, availability of the
commercial paper markets remains unchanged.
The Company’s Eurobonds of EUR 300 million principal amount
will mature in June 2006. The Eurobonds U.S. dollar value at
December 31, 2005 was $357 million. The Company anticipates
replacing the Eurobonds with a domestic bond offering and
commercial paper.
On December 12, 2005, the Company announced that it invested
$250 million in its North American manufacturing base during
2005. In the last 12 months, the Company has made improvements
to its washer and dryer facilities in Ohio, began production of
formed door refrigerators in Fort Smith, Arkansas, and began
production of a new clothes washer plant in Monterrey, Mexico.
In addition, the Company has completed the construction of
a refrigerator plant in Ramos Arizpe, Mexico, that will begin
producing refrigerators later in 2006. These investments continue
the Company’s ongoing effort to expand its innovation capability
and optimize its global operating platform.
Pending Maytag Acquisition
On August 22 , 2005 , Whirlpool entered into a definitive merger
agreement with Maytag to acquire all outstanding shares of Maytag
common stock. The aggregate transaction value, including the
payment to Maytag stockholders of approximately
$850 million
in cash, and between
9.2 million and 11.3 million shares of
Whirlpool common stock, and assumption of approximately
$972
million of Maytag debt (based on Maytag stock, exercisable stock
options and debt reported outstanding as of December
31 , 2005 ),
is approximately
$2.7 billion. The number of shares of Whirlpool