Whirlpool 2006 Annual Report Download - page 30

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Investing Activities of Continuing Operations The
principal recurring investing activities are property additions,
which were $576 million, $494 million and $511 million in
2006, 2005 and 2004, respectively. These expenditures
are primarily for equipment and tooling, driven by product
innovation initiatives, more efficient production methods
and replacement for normal wear and tear. Expenditures
were also made to support Whirlpool’s global operating
platform footprint initiatives to lower-cost locations as well as
replacement, regulatory and infrastructure changes. During
2006, Whirlpool also increased capital spending to support
the integration of Maytag’s laundry production into our
existing Whirlpool manufacturing facilities.
In each of 2006, 2005 and 2004, Whirlpool entered into
separate sale-leaseback transactions whereby we sold
and leased back certain of our owned properties. In 2006,
proceeds related to the sale-leaseback of four properties,
net of related fees, were approximately $43 million.
Proceeds related to the sale-leaseback of four properties in
2005, net of related fees, were approximately $67 million. In
2004, proceeds related to sale-leasebacks of six properties,
net of related fees, were approximately $66 million.
Cash proceeds from sale of businesses of $36 million
during 2006 resulted from the sale of an equity investment
and non-core business in Brazil. Cash proceeds from sale of
businesses of $48 million in 2005 resulted from the sale of
a non-core business in Latin America.
During 2006, Whirlpool repurchased $53 million of minority
shares related to our operations in Latin America.
In 2006, Whirlpool also received cash proceeds, in total, of
$110 million related to the sale of the Amana commercial
microwave, Dixie-Narco vending systems and Hoover floor-
care businesses. Proceeds related to the sale of the Hoover
floor-care business do not reflect the full proceeds to be
received, as the sale was completed on January 31, 2007.
Cash disbursed in 2006 for the Maytag acquisition, net of
cash acquired, amounted to $797 million. Cash paid in
2005 associated with the Maytag acquisition totaled $77
million, primarily consisting of $40 million to reimburse
Maytag for its payment of a fee to terminate its prior merger
agreement with Triton Acquisition Holding Co. and $37
million of professional fees incurred in connection with
the proposed acquisition. These costs were capitalized
and recognized in the other asset line within Whirlpool’s
Consolidated Condensed Balance Sheet as of December
31, 2005.
Financing Activities of Continuing Operations Total
borrowings (repayments) of short-term and long-term debt,
net of new borrowings, were $92 million, $(131) million and
$(58) million in 2006, 2005 and 2004, respectively.
During 2006, Whirlpool used available cash and issued
commercial paper to repay the Maytag 6.875% $200 million
principal notes, the 7.875% public interest notes with a
principal amount of $250 million and our Euro-denominated
Eurobonds with a principal amount of 300 million.
On June 19, 2006, Whirlpool received proceeds of $750
million aggregate principal amount of senior notes to
replace commercial paper borrowings used to initially
finance the Maytag acquisition.
Dividends paid to stockholders totaled $130 million,
$116 million and $116 million in 2006, 2005 and 2004,
respectively.
Under its stock repurchase programs in 2005 and 2004,
Whirlpool used $34 million and $251 million to purchase
approximately 0.5 million and 3.7 million shares of
common stock, respectively. No such purchases were
made during 2006.
Whirlpool received proceeds of $54 million in 2006, $102
million in 2005 and $64 million in 2004 related to the
exercise of company stock options.
FINANCIAL CONDITION AND LIQUIDITY
Whirlpool’s objective is to finance its business through
the appropriate mix of long-term and short-term debt. By
diversifying its maturity structure, we avoid 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 impacts our
cash flows and consists of increased production in the first
half of the year to meet increased demand in the summer
months. Whirlpool finances its working capital fluctuations
primarily through the commercial paper markets in the U.S.,
Europe and Canada, which are supported by committed
bank lines. In addition, outside the U.S., short-term funding
is also provided by bank borrowings on uncommitted lines.
Whirlpool has access to long-term funding in the U.S.,
Europe and other public bond markets.