Whirlpool 2001 Annual Report Download - page 45

Application of the non-amortization provisions of SFAS No. 142 is expected to result in an increase in net earnings of approximately
$23 million in 2002. The company will test goodwill for impairment using the two-step process described in SFAS No. 142. The first
step is to screen for potential impairment, while the second step measures the amount of impairment, if any. The company expects
to perform the first of the required impairment tests of goodwill and indefinite lived intangible assets, which will be calculated based
on the December 31, 2001 carrying values, during the first quarter of 2002. Any impairment charge resulting from these transitional
impairment tests will be reflected as a cumulative effect of a change in accounting principle. The company has not yet determined
the financial impact that the impairment provisions of SFAS No. 142 will have on its earnings or its consolidated financial position.
03 BUSINESS ACQUISITIONS
On January 7, 2000, the company completed its tender offer for the outstanding publicly traded shares in Brazil of its subsidiaries
Brasmotor S.A. (Brasmotor) and Multibras S.A. Eletrodomesticos (Multibras). In completing the offer, the company purchased
additional shares of Brasmotor and Multibras for $283 million bringing its equity interest in these companies to approximately 94%.
Including Embraco, the company’s equity interest in its Brazilian subsidiaries increased from approximately 55% to approximately
87%. If this increase in ownership had been made on January 1, 1999, proforma net earnings for 1999 would have been approximately
$311 million.
04 DISCONTINUED OPERATIONS
In 1997, the company discontinued its financing operations, Whirlpool Financial Corporation (WFC), and sold the majority of its
assets. The remaining assets consist primarily of an investment in a portfolio of leveraged leases which are recorded in other
non-current assets in the balance sheets and totaled $123 million and $124 million at December 31, 2001 and 2000, respectively.
During the second quarter of 2001, the company wrote off WFC’s investment in a securitized aircraft lease portfolio. The write-off,
due primarily to the softening aircraft leasing industry, resulted in a pre-tax loss from discontinued operations of $35 million ($21
million after-tax).
05 INVENTORIES
December 31 (millions of dollars) 2001 2000
Finished products $ 949 $ 956
Work in process 58 57
Raw materials 239 257
1,246 1,270
Less excess of FIFO cost over LIFO cost 136 151
Total inventories $ 1,110 $ 1,119
LIFO inventories represent approximately 39% and 33% of total inventories at December 31, 2001 and 2000.
06 FINANCING ARRANGEMENTS
On June 1, 2001, the company entered into an $800 million five-year committed credit agreement and a committed $400 million
364-day credit agreement (collectively the “Credit Agreement”) with a group of banks. The company pays a commitment fee on the
Credit Agreement. The Credit Agreement exists largely to support the issuance of commercial paper and other short-term borrowings,
and is available for general corporate purposes. The interest rate for borrowing under the Credit Agreement is principally based on
the London Interbank Offered Rate plus a spread that reflects the company’s debt rating. The provisions of the Credit Agreement
require that the company maintain certain financial ratios. At December 31, 2001, the company was in compliance with all financial
covenants. At December 31, 2001, there were no borrowings outstanding under the Credit Agreement.
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