Whirlpool 2009 Annual Report Download - page 99

as risk management tools and are not used for speculation or for trading purposes. Derivative financial
instruments are contracted with a diversified group of investment grade counterparties to reduce expo-
sure to nonperformance on such instruments.
We use foreign currency forward contracts, currency options and currency swaps to hedge the price risk
associated with firmly committed and forecasted cross-border payments and receipts related to ongoing
business and operational financing activities. Foreign currency contracts are sensitive to changes in
foreign currency exchange rates. At December 31, 2009, a 10% unfavorable exchange rate movement in
each currency in our portfolio of foreign currency contracts would have resulted in an incremental unreal-
ized loss of approximately $168 million, while a 10% favorable shift would have resulted in an incremental
unrealized gain of approximately $168 million. Consistent with the use of these contracts to neutralize the
effect of exchange rate fluctuations, such unrealized losses or gains would be offset by corresponding
gains or losses, respectively, in the re-measurement of the underlying exposures.
We enter into commodity swap contracts to hedge the price risk associated with firmly committed and
forecasted commodities purchases that are not fixed directly through supply contracts. As of December
31, 2009, a 10% favorable or unfavorable shift in commodity prices would have resulted in an incremental
$50 million gain or a $50 million loss related to these contracts.
In January 2009, Standard & Poor’s and Fitch Ratings lowered our senior unsecured debt rating from “BBB”
to “BBB-” and our short-term corporate credit and commercial paper ratings from “A-2” to “A-3” and
“F-2” to “F-3”, respectively, based on weakened operating performance and the pullback in discretionary
consumer spending. Also in January 2009, Moody’s Investor Services lowered our senior unsecured rating
from “Baa2” to “Baa3” and our commercial paper ratings from “Prime-2” to “Prime-3” based on weaken-
ing appliance industry demand. These rating adjustments may result in higher interest costs if we were to
seek additional financing in the capital markets.
FO R WARD - L O O K I N G S TATE M EN T S
This document contains forward-looking statements about Whirlpool Corporation and its consolidated
subsidiaries (“Whirlpool”) that speak only as of this date. Whirlpool disclaims any obligation to update
these statements. Forward-looking statements in this document may include, but are not limited to, state-
ments regarding expected earnings per share, cash flow, productivity and material and oil-related prices.
Many risks, contingencies and uncertainties could cause actual results to differ materially from Whirlpool’s
forward-looking statements. Among these factors are: (1) changes in economic conditions which affect
demand for our products, including the strength of the building industry and the level of interest rates;
(2) the effects of the global economic crisis on our customers, suppliers and the availability of credit;
(3) Whirlpool’s ability to continue its relationship with significant trade customers and the ability of these
trade customers to maintain or increase market share; (4) intense competition in the home appliance
industry reflecting the impact of both new and established global competitors, including Asian and
European manufacturers; (5) the ability of Whirlpool to manage foreign currency fluctuations; (6) product
liability and product recall costs; (7) litigation and legal compliance risk; (8) the ability of Whirlpool to
achieve its business plans, productivity improvements, cost control, leveraging of its global operating
platform, and acceleration of the rate of innovation; (9) inventory and other asset risk; (10) fluctuations in
the cost of key materials (including steel, oil, plastic, resins, copper and aluminum) and components and
the ability of Whirlpool to offset cost increases; (11) the ability of suppliers of critical parts, components
and manufacturing equipment to deliver sufficient quantities to Whirlpool in a timely and cost-effective
manner; (12) health care cost trends, regulatory changes and variations between results and estimates that
could increase future funding obligations for pension and post retirement benefit plans; (13) Whirlpool’s
ability to obtain and protect intellectual property rights; (14) information technology system failures and
data security breaches; (15) global, political and/or economic uncertainty and disruptions, especially in
Whirlpool’s significant geographic regions, including uncertainty and disruptions arising from natural
disasters or terrorist attacks; (16) the effects of governmental investigations or related actions by third
parties; (17) the impact of labor relations; (18) our ability to attract, develop and retain executives and other
qualified employees; (19) changes in the legal and regulatory environment including environmental and
health and safety regulations. Additional information concerning these and other factors can be found in
Whirlpool Corporation’s filings with the Securities and Exchange Commission, including the most recent
annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
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