Whirlpool 2009 Annual Report Download - page 95

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Restructuring
Restructuring initiatives resulted in charges of $126 million, $149 million and $61 million in 2009, 2008, and
2007, respectively, reflecting ongoing efforts to optimize our global operating platform. These charges are
included in restructuring in our Consolidated Statements of Income and primarily consist of charges
to restructure the cooking platform in Latin America, shift refrigeration and dishwasher capacity
within Europe and North America, shift cooking capacity within North America, restructure the laundry
platforms in North America, Europe and Asia and reorganize the salaried workforce throughout North
America and Europe.
On October 27, 2008, management committed to a workforce reduction plan to reduce our employee
base worldwide between the fourth quarter of 2008 and the beginning of 2010.
On August 28, 2009, we announced changes to our North American manufacturing operations which will
result in the closure of our manufacturing facility in Evansville, Indiana in mid-2010. We currently expect
that approximately 1,100 full-time positions will be eliminated as a result of the closure.
Interest and Sundry Income (Expense)
Interest and sundry expense for 2009 increased by $75 million from $100 million in 2008 to $175 million in
2009. The increase in expense in 2009 was primarily due to charges incurred for legal contingencies and
legal defense, partially offset by the favorable impacts of foreign currency. Interest and sundry expense for
2008 increased by $37 million from $63 million in 2007 to $100 million in 2008. Higher expense in 2008 was
primarily due to the impact of foreign currency and an impairment charge of $9 million in our Europe seg-
ment associated with an available for sale investment, partially offset by higher interest income.
Interest Expense
Interest expense increased for 2009 compared to 2008 primarily due to the combination of higher interest
rates and higher average debt levels, offset partially by a reduction in accrued interest of $18 million as
a result of entering into a special program in Brazil to settle tax liabilities. Interest expense in 2008 was
consistent with 2007 as higher debt levels were offset by lower interest rates.
Income Taxes
The effective income tax rate was a benefit of 20.6% in 2009 and 81.7% in 2008 and an expense of 14.5% in
2007. The reduction in tax benefit from 2008 to 2009 is primarily due to an increase in profitability, changes
in dispersion of global income and the unfavorable impact of audits and settlements. The reduction in tax
expense in 2007 to a benefit in 2008 is primarily due to a decline in profitability, energy tax credits gener-
ated in the U.S. in 2008 from the production of certain eligible energy efficient appliances, as well as a
combination of certain discrete items recognized during the year, dispersion of global income, tax credit
availability, and tax planning activities.
Earnings from Continuing Operations
Earnings from continuing operations were $354 million in 2009 compared to $447 million and $669 million
in 2008 and 2007, respectively, due to the factors described above.
Net Earnings Available to Whirlpool Common Stockholders
Net earnings available to Whirlpool common stockholders were $328 million in 2009 compared to $418
million and $640 million in 2008 and 2007, respectively, due to the factors described above. Earnings were
impacted by $7 million in losses from discontinued operations for 2007.
FO R WARD - L O O K I N G PE R SPE C TI VE
For the year ended December 31, 2010, we currently estimate earnings per diluted share to be in the range
of $6.50 to $7.00, and free cash flow for the year to be in the range of $400 million to $500 million. Within
North America we expect demand to increase 2–4% and within Europe we expect demand to remain flat.
Within Latin America and Asia we expect demand to increase 5–10% and 3–5%, respectively. Material cost
inflation is expected to increase by approximately $200 million to $300 million, largely driven by increases
in component parts, steel and base metals, such as copper, aluminum, zinc and nickel. We expect to offset
these higher costs with productivity improvements, new product introductions, improved product price/
mix and administrative and infrastructure cost reductions. Our innovation product pipeline continues
to grow and drive higher average sales values. In addition, consumer and trade response to our new
product offerings has been positive, and we continue to accelerate our global branded consumer
products strategy of delivering relevant innovation to markets worldwide.
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