-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, f71P26CTztIVsxNzqCQMfkm9KlgrwpA7U4gY+jV8QLZEo5kWC30WaBh1/B79vj6d nDu0PC+nMLBSUYaeSr70JQ== 0000950131-95-001096.txt : 19950504 0000950131-95-001096.hdr.sgml : 19950504 ACCESSION NUMBER: 0000950131-95-001096 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950503 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WHIRLPOOL CORP /DE/ CENTRAL INDEX KEY: 0000106640 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD APPLIANCES [3630] IRS NUMBER: 381490038 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03932 FILM NUMBER: 95533968 BUSINESS ADDRESS: STREET 1: WHIRLPOOL CNTR 2000 M 63 STREET 2: C/O CORPORATE SECRETARY CITY: BENTON HARBOR STATE: MI ZIP: 49022 BUSINESS PHONE: 6169265000 MAIL ADDRESS: STREET 1: WHIRLPOOL CTR 2000 M 63 STREET 2: C/O CORPORATE SECRETARY CITY: CENTON HARBOR STATE: MI ZIP: 49022 FORMER COMPANY: FORMER CONFORMED NAME: WHIRLPOOL SEEGER CORP DATE OF NAME CHANGE: 19710824 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 Commission file number 1-3932 WHIRLPOOL CORPORATION (Exact name of registrant as specified in its charter) Delaware 38-1490038 (State of incorporation) (I.R.S. Employer Identification No.) 2000 M-63 Benton Harbor, Michigan 49022-2692 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 616/923-5000 The registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . ----- ----- Number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Class of common stock Shares outstanding at March 31, 1995 --------------------- ------------------------------------ Common stock, par value $1 per share 73,754,505 PAGE 1 OF 20 QUARTERLY REPORT ON FORM 10-Q ----------------------------- WHIRLPOOL CORPORATION --------------------- Quarter Ended March 31, 1995 INDEX OF INFORMATION INCLUDED IN REPORT
Page ---- PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements (Unaudited) Consolidated Condensed Statements of Earnings 3 Consolidated Condensed Balance Sheets 4 Consolidated Condensed Statements of Cash Flows 6 Notes to Consolidated Condensed Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II - OTHER INFORMATION - --------------------------- Item 6. Exhibits and Reports on Form 8-K 16
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PART I. FINANCIAL INFORMATION CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (UNAUDITED) File: IS10Q1Q WHIRLPOOL CORPORATION AND SUBSIDIARIES DLR 4/26/95 THREE MONTHS ENDED March 31 (millions of dollars except share data) Supplemental Consolidating Data ---------------------------------------------------- Whirlpool Corporation Whirlpool with WFC Whirlpool Financial (Consolidated) on an Equity Basis Corporation (WFC) -------------------------- ------------------------- ------------------------- 1995 1994 1995 1994 1995 1994 ----------- ------------ ----------- ----------- ---------- ------------ REVENUES Net sales $1,939 $1,832 $1,939 $1,832 $ - $ - Financial services 46 38 - - 52 44 ------ ------ ------ ------ --- --- 1,985 1,870 1,939 1,832 52 44 EXPENSES Cost of products sold 1,438 1,365 1,438 1,365 - - Selling and administrative 396 347 372 330 30 23 Financial services interest 16 13 - - 18 15 Intangible amortization 6 5 6 5 - - ------ ------ ------ ------ --- --- 1,856 1,730 1,816 1,700 48 38 ------ ------ ------ ------ --- --- OPERATING PROFIT 129 140 123 132 4 6 OTHER INCOME (EXPENSE) Interest and sundry (2) 1 (6) 1 4 - Interest expense (29) (27) (27) (25) - - ------ ------ ------ ------ --- --- EARNINGS BEFORE TAXES AND OTHER ITEMS 98 114 90 108 8 6 Income Taxes 39 46 36 44 3 2 ------ ------ ------ ------ --- --- EARNINGS BEFORE EQUITY EARNINGS AND OTHER ITEMS 59 68 54 64 5 4 Equity in WFC - - 4 3 - - Equity in affiliated companies 18 3 18 3 - - Minority interests (2) (4) (1) (3) (1) (1) ------ ------ ------ ------ --- --- NET EARNINGS $ 75 $ 67 $ 75 $ 67 $ 4 $ 3 ====== ====== ====== ====== === === Per share of Common Stock: Primary earnings $ 1.00 $ 0.90 ====== ====== Fully diluted earnings $ 0.98 $ 0.88 ====== ====== Cash dividends $0.340 $0.305 ====== ======
See notes to consolidated condensed financial statements 3
File: BSQ1395.XLS CONSOLIDATED CONDENSED BALANCE SHEETS JLA 4/26/95 WHIRLPOOL CORPORATION AND SUBSIDIARIES (millions of dollars) Supplemental Consolidating Data -------------------------------------------------------- Whirlpool Corporation Whirlpool with WFC Whirlpool Financial (Consolidated) on an Equity Basis Corporation (WFC) -------------------------- -------------------------------------------------------- March 31 December 31 March 31 December 31 March 31 December 31 1995 1994 1995 1994 1995 1994 (Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited) ------------ ------------- ------------- ------------- ------------- ------------- ASSETS CURRENT ASSETS Cash and equivalents $ 87 $ 72 $ 59 $ 51 $ 28 $ 21 Trade receivables, less allowances (1995--$40; 1994--$38) 1,014 1,001 1,014 1,001 - - Financing receivables and leases, less allowances (1995--$16; 1994--$15) 938 866 - - 938 866 Inventories 1,079 838 1,079 838 - - Other current assets 281 301 270 287 11 14 ------- ------- ------- ------- ------ ------ TOTAL CURRENT ASSETS 3,399 3,078 2,422 2,177 977 901 Investments and other assets 826 690 1,084 943 1 - Financing receivables and leases, less allowances (1995--$33; 1994--$31) 692 717 - - 692 717 Intangibles, net 794 730 794 730 - - ------- ------- ------- ------- ------ ------ 2,312 2,137 1,878 1,673 693 717 Property, plant and equipment 3,190 3,101 3,164 3,075 26 26 Accumulated depreciation (1,736) (1,661) (1,719) (1,645) (17) (16) ------- ------- ------- ------- ------ ------ 1,454 1,440 1,445 1,430 9 10 ------- ------- ------- ------- ------ ------ TOTAL ASSETS $ 7,165 $ 6,655 $ 5,745 $ 5,280 $1,679 $1,628 ======= ======= ======= ======= ====== ======
See notes to consolidated condensed financial statements 4
CONSOLIDATED CONDENSED BALANCE SHEETS File: BSQ1395.XLS WHIRLPOOL CORPORATION AND SUBSIDIARIES JLA 4/26/95 (millions of dollars) Supplemental Consolidating Data -------------------------------------------------------- Whirlpool Corporation Whirlpool with WFC Whirlpool Financial (Consolidated) on an Equity Basis Corporation (WFC) ------------------------- -------------------------------------------------------- March 31 December 31 March 31 December 31 March 31 December 31 1995 1994 1995 1994 1995 1994 (Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited) ------------ ------------ ------------- ------------- ------------- ------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $1,588 $1,201 $ 564 $ 262 $1,024 $ 939 Accounts payable 830 843 783 795 47 48 Other current liabilities 899 944 886 924 13 20 ------ ------ ------ ------ ------ ------ TOTAL CURRENT LIABILITIES 3,317 2,988 2,233 1,981 1,084 1,007 Long-term debt 1,024 885 871 703 153 182 Other liabilities 953 964 845 853 108 111 ------ ------ ------ ------ ------ ------ 1,977 1,849 1,716 1,556 261 293 Minority interests 96 95 21 20 75 75 STOCKHOLDERS' EQUITY Common Stock 80 80 80 80 8 8 Paid-in capital 217 214 217 214 26 26 Retained earnings 1,804 1,754 1,804 1,754 224 220 Unearned restricted stock (7) (8) (7) (8) - - Currency translation adjustments (84) (93) (84) (93) 1 (1) Treasury stock-at cost (235) (224) (235) (224) - - ------ ------ ------ ------ ------ ------ TOTAL STOCKHOLDERS' EQUITY 1,775 1,723 1,775 1,723 259 253 ------ ------ ------ ------ ------ ------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,165 $6,655 $5,745 $5,280 $1,679 $1,628 ====== ====== ====== ====== ====== ======
See notes to consolidated condensed financial statements 5 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) WHIRLPOOL CORPORATION AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31 (Millions of Dollars) Supplemental Consolidating Data ------------------------------------------ Whirlpool Corporation Whirlpool with WFC Whirlpool Financial (Consolidated) on an Equity Basis Corporation (WFC) --------------------- ------------------- ------------------- 1995 1994 1995 1994 1995 1994 -------- -------- ------- ------- -------- ------- OPERATING ACTIVITIES Net earnings $ 75 $ 67 $ 75 $ 67 $ 4 $ 3 Equity in net earnings of affiliated companies, less dividends received (12) - (12) - - - Equity in net earnings of WFC - - (4) (3) - - Depreciation and amortization 84 73 77 66 7 7 Provision for doubtful accounts 9 7 2 3 7 4 Change in receivables 16 (152) 16 (152) - - Change in inventories (228) (109) (228) (109) - - Change in payables (29) (2) (21) (2) (8) - Other operating activities (49) (35) (35) (28) (14) (6) -------- -------- -------- ------- -------- ------- CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (134) (151) (130) (158) (4) 8 INVESTING ACTIVITIES Net additions to properties (70) (61) (69) (60) (1) (1) Financing receivables originated (771) (641) - - (771) (641) Principal payments received on financing receivables and leases 724 722 - - 724 722 Acquisitions of businesses, less cash acquired (89) - (89) - - - Other investing activities 3 (10) - (6) 3 (5) -------- -------- -------- ------- -------- ------- CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES (203) 10 (158) (66) (45) 75 FINANCING ACTIVITIES Proceeds of short-term borrowings 4,071 3,347 1,742 1,209 2,329 2,138 Repayments of short-term borrowings (3,691) (3,146) (1,443) (950) (2,248) (2,196) Proceeds of long-term debt 68 5 86 25 - - Repayments of long-term debt (34) (105) (33) (104) (19) (21) Repayments of non-recourse debt (6) (6) - - (6) (6) Dividends paid (25) (23) (25) (23) - - Purchase of treasury stock (34) - (34) - - - Other financing activities 3 10 3 9 - 1 -------- -------- -------- ------- -------- ------- CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 352 82 296 166 56 (84) -------- -------- -------- ------- -------- ------- INCREASE (DECREASE) IN CASH AND EQUIVALENTS 15 (59) 8 (58) 7 (1) CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 72 88 51 81 21 7 -------- -------- -------- ------- -------- ------- CASH AND EQUIVALENTS AT END OF PERIOD $ 87 $ 29 $ 59 $ 23 $ 28 $ 6 ======== ======== ======== ======= ======== =======
See notes to consolidated condensed financial statements 6 NOTE A--BASIS OF PRESENTATION AND SUMMARY OF PRINCIPAL ACCOUNTING POLICIES The accompanying unaudited consolidated condensed financial statements present information in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and applicable rules of Regulation S-X. Accordingly, they do not include all information or footnotes required by generally accepted accounting principles for complete financial statements. Management believes the financial statements include all normal recurring accrual adjustments necessary for a fair presentation. Operating results for the three months ended March 31, 1995 do not necessarily indicate the results that may be expected for the full year. For further information, refer to the consolidated financial statements and notes thereto included in the Company's annual report for the year ended December 31, 1994. WFC adopted Financial Accounting Standards Board Statement No. 114, "Accounting by Creditors for Impairment of a Loan," effective January 1, 1995. The new rules require WFC to measure impaired loans based on the present value of expected future cash flows discounted at the loan's effective interest rate. Adoption of the new rules had no material effect on the Company's net earnings or financial position. NOTE B-BUSINESS ACQUISITIONS AND DISPOSITIONS In February 1995, the Company expanded its presence in Asia by acquiring a controlling interest in Kelvinator of India, Ltd. (KOI), a manufacturer and marketer of refrigerators, for about $116 million in cash funded principally in the first quarter. As the transaction involved an issue of new KOI shares, most of the purchase price was invested as equity in KOI in support of planned plant and product line expansion. Consolidation of KOI results will begin in the second quarter. KOI annual sales were about $120 million for its fiscal year ended June 30, 1994. In December 1994, the Company announced plans to begin manufacturing and distributing major home appliances in China. The Company has entered into two agreements to acquire for about $90 million a majority interest in SMC Microwave Products Co., Inc., a microwave oven manufacturer with current annual revenues of about $100 million and to invest about $17 million for the majority interest in Beijing Whirlpool Snowflake Electric Appliance Company, Limited, a new joint venture to produce refrigerators. The Snowflake joint venture closed in the first quarter of 1995 and will be funded over the course of the year. The SMC joint venture and another joint venture arrangement with Shanghai Narcissus Electric Appliance Corp., Ltd. to produce washing machines are expected to receive government approval in the second quarter of 1995. The Company is currently negotiating a fourth joint venture to produce air conditioners. 7 WHIRLPOOL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) NOTE C--INVENTORIES Inventories consist of the following: March 31 December 31 1995 1994 -------- ----------- (millions of dollars) Finished products $1,066 $ 832 Raw materials and work in process 232 222 ------ ------ Total FIFO cost 1,298 1,054 Less excess of FIFO cost over LIFO cost 219 216 ------ ------ $1,079 $ 838 ====== ====== NOTE D--AFFILIATED COMPANIES Equity in the net earnings of affiliated companies is as follows: Three Months Ended 1995 1994 -------- -------- (millions of dollars) Brazilian affiliates $17 $3 Mexican affiliate - - Other 1 - --- -- $18 $3 === == 8 WHIRLPOOL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) NOTE E--GEOGRAPHIC SEGMENTS Whirlpool Three Months North Other and with WFC on Ended March 31 America Europe (Eliminations) an Equity Basis - ------------------------------------------------------------------------------- (million of dollars) Revenues 1995 $1,195 $633 $111 $1,939 1994 $1,173 $562 $ 97 $1,832 Operating Profit 1995 $ 83 $ 44 $ (4) $ 123 1994 $ 91 $ 31 $ 10 $ 132 WFC operations are primarily in North America. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS The statements of earnings summarize operating results for the three months ended March 31, 1995 and 1994. This section of Management's Discussion highlights the main factors affecting the changes in operating results. The accompanying financial statements include supplemental consolidating data reflecting the Company's investment in Whirlpool Financial Corporation ("WFC") on an equity basis rather than as a consolidated subsidiary. Management believes this presentation provides more meaningful information about the major home appliance and financial services businesses. Revenues - -------- Revenues for the first quarter increased 6% over 1994. Excluding the effects of currency fluctuations, revenues increased 2% due primarily to unit volume increases. North American revenues increased 2% due primarily to increased volumes and pricing partially offset by product mix. North American major product shipments were up about double the overall industry rise of one percent despite the negative impact of significant downward inventory adjustments by a major trade partner. North American industry-wide shipments are currently expected to be up about 1% for the full year. European revenues increased 14% but were essentially flat excluding the effects of currency fluctuations with increased volumes and pricing offset by product mix. European unit volumes were slightly ahead of an industry increase of about three percent. European industry-wide shipments are currently expected to be up about 2% for the full year. Price increases of approximately 1 to 3% were implemented in North America and Europe effective January 1, 1995 in response to rising raw material and component prices. Financial services revenues were up 18% as WFC continued to expand its core inventory and consumer finance businesses. Expenses - -------- The relationship of cost of products sold to net sales improved slightly in the first quarter of 1995 compared to 1994. North American margins were down slightly in 1995 due to the impact of the trade partner inventory-adjustment mentioned earlier, the difficult economic situation in Mexico, start-up costs associated with the production of redesigned midsize refrigerators and higher raw material and component costs partially offset by price increases. European margins were up in 1995 due to productivity improvements, continued expense control, benefits from restructuring, price increases and currency translation partially offset by higher raw material and component costs. The ratio of consolidated selling and administrative expenses as a percent of revenues was up in the first quarter of 1995 compared to 1994. The appliance business expense ratio increased from 18.0% in 1994 to 19.1% in 1995 due primarily to a planned increase in costs related to the Company's strategy to expand its presence in Asia. North American and European expenses as a percent of revenue were up only slightly as compared to the prior period. Financial services expenses as a percent of the related revenue were up primarily due to increased operating expenses to support the expanding inventory and consumer finance businesses. 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Other Income and Expense - ------------------------ The decrease in appliance business other income (expense) compared to the prior year period is due primarily to foreign currency losses. However, the overall impact of currency fluctuations in the first quarter was not significant due to offsetting foreign currency gains reported elsewhere in the statement of earnings. The increase in other income at WFC is due primarily to gains on the termination of leases and the sale of other financial investments. Income Taxes - ------------ The consolidated provision for income taxes as a percent of earnings before income taxes and other items was essentially flat at 39% in the first quarter of 1995 compared to 40% in 1994. Equity in Affiliated Companies - ------------------------------ Equity earnings were $18 million in the first quarter of 1995 compared to $3 million in 1994. Refer to Note D to the consolidated condensed financial statements. The Company's Brazilian affiliates generated equity earnings of $17 million in the first quarter of 1995 compared to $3 million in 1994 reflecting the increased consumer demand stimulated by the Brazilian government's new economic plan implemented in mid-1994. Results were also favorably affected by certain tax credit benefits, which will be realized through the third quarter, and the consequences of the May 1994 merger of two of the Brazilian affiliates, Brastemp S.A. and Consul S.A., into a new entity, Multibras S.A. The merger resulted in operating efficiencies as an outcome of consolidating selling and administrative functions, improved utilization of prior year tax losses and more flexibility in management of brands and products. The Company's Mexican affiliate reported break-even results in both the first quarter of 1995 and 1994. Reduced shipments of 4% were offset by aggressive cost reductions and a net translation gain from the Peso devaluation. Economic volatility and government economic policy changes (including those affecting exchange rates and tariffs) continue to affect consumer purchasing power and the appliance industry as a whole in Mexico, Brazil and the entire Latin American region. The outlook in these regions remains uncertain. Net Earnings - ------------ First quarter net earnings were $75 million or $1.00 per share compared to net earnings of $67 million or $.90 per share in 1994. 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION CASH FLOWS The statements of cash flows reflect the changes in cash and equivalents for the three months ended March 31, 1995 and 1994 by classifying transactions into three major categories: operating, investing and financing activities. Operating Activities - -------------------- The Company's main source of liquidity is cash from operating activities consisting of net earnings from operations adjusted for non-cash operating items such as depreciation and changes in operating assets and liabilities such as receivables, inventories and payables. Cash used for operating activities was $134 million in the first quarter of 1995 and $151 million in 1994 largely reflecting seasonal working capital needs of the appliance business to build inventories. Investing Activities - -------------------- The principal recurring investing activities are property additions and investments in and collection of financing receivables and leases. Net property additions in the first quarter were $70 million in 1995 compared to $61 million in 1994. These expenditures are primarily for equipment and tooling related to product improvements, more efficient production methods, replacement for normal wear and tear and more stringent governmental energy and environmental regulations. Investment in the financial services business resulted in a net $47 million use of cash in 1995 compared to a net $81 million source of cash in 1994 reflecting the expansion of WFC's inventory and consumer finance businesses, as well as the 1994 liquidation of WFC's discontinued commercial loan portfolio. In February 1995, the Company expanded its presence in Asia by acquiring a controlling interest in Kelvinator of India, Ltd. (KOI), a manufacturer and marketer of refrigerators, for about $116 million in cash funded principally in the first quarter. As the transaction involved an issue of new KOI shares, most of the purchase price was invested as equity in KOI in support of planned plant and product line expansion. Consolidation of KOI results will begin in the second quarter. KOI annual sales were about $120 million for its fiscal year ended June 30, 1994. In December 1994, the Company announced plans to begin manufacturing and distributing major home appliances in China. The Company has entered into two agreements to acquire for about $90 million a majority interest in SMC Microwave Products Co., Inc., a microwave oven manufacturer with current annual revenues of about $100 million and to invest about $17 million for the majority interest in Beijing Whirlpool Snowflake Electric Appliance Company, Limited, a new joint venture to produce refrigerators. The Snowflake joint venture closed in the first quarter of 1995 and will be funded over the course of the year. The SMC joint venture and another joint venture arrangement with Shanghai Narcissus Electric Appliance Corp., Ltd. to produce washing machines are expected to receive government approval in the second quarter of 1995. The Company is currently negotiating a fourth joint venture to produce air conditioners. 12 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financing Activities - -------------------- In December 1994, the Company announced plans to repurchase up to five percent of the outstanding shares of common stock. The treasury shares will be used in employee stock-option, retirement and other compensation programs and for general corporate purposes. Through the end of March 1995, the Company had repurchased approximately 966,000 shares for $50 million. FINANCIAL CONDITION AND OTHER MATTERS The financial position of the Company remains strong as evidenced by the March 31, 1995 balance sheet. The Company's total assets are $7.2 billion and stockholders' equity is $1.8 billion. The overall debt to invested capital ratio at March 31, 1995 was up compared to December 31, 1994. The appliance business debt to invested capital ratio net of cash ("debt ratio") increased from 34% to 43% due primarily to seasonal working capital requirements, the acquisition of KOI and the effect of European currency movements on the Company's hedging strategy. The financial services debt to invested capital ratio was essentially flat compared to December 31, 1994. The Company's debt continues to be rated investment grade by Moody's Investors Service Inc., Standard and Poors and Duff & Phelps. Various European currency swaps and forward contracts serve as a hedge of net European currency cash flows and also hedge a portion of the Company's investment in Whirlpool Europe. Changes in the value of the swaps and forward contracts due to movements in exchange rates are included in the currency translation component of stockholders' equity or other income (expense) depending on whether or not they relate to the investment hedge. WFC's financing portfolio by business segment is as follows (in millions):
March 31, 1995 December 31, 1994 -------------- ----------------- Inventory $ 722 44% $ 652 41% Aerospace 452 28 465 29 Consumer 392 24 386 24 Commercial 18 1 25 2 Other 46 3 55 4 ------ --- ------ --- $1,630 100% $1,583 100% ====== ==== ====== ====
The aerospace portfolio is generally secured by newer (Stage III) aircraft on lease to various international airlines. Although the commercial airline industry seems to be stabilizing, the near-term outlook remains uncertain. Management believes the aerospace portfolio carrying value is appropriate. The Company is continuing to phase out of aerospace and highly leveraged commercial lending activities. 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION WFC adopted Financial Accounting Standards Board Statement No. 114, "Accounting by Creditors for Impairment of a Loan," effective January 1, 1995. The new rules require WFC to measure impaired loans based on the present value of expected future cash flows discounted at the loan's effective interest rate. Adoption of the new rules had no material effect on the Company's net earnings or financial position. The Company has external sources of capital available and believes it has adequate financial resources and liquidity to meet anticipated business needs and to fund future growth opportunities such as new products, acquisitions and joint ventures. 14 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION BUSINESS UNIT NET SALES AND OPERATING PROFIT The following appliance business (WFC on an equity basis) data is presented as supplemental information (in millions): Net Sales by Business Unit were as follows:
First Quarter ------------------ 1995 1994 Increase/(Decrease) ------ ------ ------------------- North America $1,196 $1,173 $ 23 2% Europe 615 541 74 14 Latin America 67 75 (8) (10) Asia 62 45 17 36 Other (1) (2) 1 50 ------ ------ ---- -- Total Appliance Business $1,939 $1,832 $107 6% ====== ====== ==== == Operating Profit by Business Unit was as follows: First Quarter ------------------ 1995 1994 Increase/(Decrease) ------ ------ ------------------- North America $116 $119 $ (3) (2)% Europe 44 31 13 42 Latin America 9 12 (3) (29) Asia (11) (3) (8) - Other (35) (27) (8) (30) ---- ---- ---- --- Total Appliance Business $123 $132 $ (9) (7)% ==== ==== ==== ===
For commentary regarding performance in North America and Europe, refer to Results of Operations. Latin America includes Whirlpool Argentina and the South American Sales Company (SASCO). Whirlpool Argentina results were adversely affected by a sharp decline in appliance industry volumes, driven primarily by a faltering economy and very tight credit. SASCO results were up, despite being affected by pockets of economic instability. Asia had significant shipment and revenue growth as compared to the prior year period but the increased operating loss was due primarily to planned costs related to the Company's strategy to expand its presence in Asia. The quarterly losses in Asia are expected to diminish during the year as it begins to include results from additional joint venture companies. 15 PART II. OTHER INFORMATION --------------------------- WHIRLPOOL CORPORATION AND SUBSIDIARIES Quarter Ended March 31, 1995 Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- a. The following are included herein: (11) Computation of earnings per share (27) Financial Data Schedule (99) Computation of the ratios of earnings and fixed charges b. Reports on Form 8-K: The registrant filed a Current Report on Form 8-K dated February 20, 1995 concerning the following events: (i) the resignation of Harry W. Bowman, Executive Vice President of the Company; (ii) an increase in the Company's quarterly per share dividend to 34 cents and (iii) the resignation of Didier Pineau-Valencienne from the Company's board of directors. 16 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WHIRLPOOL CORPORATION (Registrant) By Bradley J. Bell ----------------------------- Bradley J. Bell Vice President and Treasurer (Principal Financial Officer) May 3, 1995 20 EX-11 2 COMPUTATION OF EARNINGS EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE WHIRLPOOL CORPORATION AND SUBSIDIARIES (millions of dollars except earnings per share)
Three Months Ended March 31 ------------------ 1995 1994 ------ ------ Primary Average Shares Outstanding 73.7 73.6 Treasury Method (Average Market Price) Stock Options 0.7 1.3 Restricted Stock (RSVP) 0.3 - ----- ----- Primary Average Shares Outstanding 74.7 74.9 ===== ===== Primary Net Earnings $74.7 $67.3 ===== ===== Earnings Per Share $1.00 $0.90 ===== ===== Fully Diluted Average Shares Outstanding 73.7 73.6 Treasury Method (Average Market Price or End of Period, whichever is greater): Stock Options 0.9 1.4 Restricted Stock (RSVP) 0.3 - Assumed Conversion of Debt 2.2 2.4 ----- ----- Fully Diluted Average Shares Outstanding 77.1 77.4 ===== ===== Net Earnings $74.7 $67.3 Interest Expense, net of tax 1.0 1.2 ----- ----- Fully Diluted Net Earnings $75.7 $68.5 ===== ===== Earnings Per Share $0.98 $0.88 ===== =====
17 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FIRST QUARTER 10-Q FOR WHIRLPOOL CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 87 0 1,952 56 1,079 3,399 3,190 1,736 7,165 3,317 1,024 80 0 0 1,695 7,165 1,939 1,985 1,438 1,454 6 0 29 98 39 75 0 0 0 75 1.00 .98
EX-99 4 COMPUTATION OF RATIOS EXHIBIT 99 - COMPUTATION OF THE RATIOS OF EARNINGS TO FIXED CHARGES WHIRLPOOL CORPORATION AND SUBSIDIARIES (dollars in millions)
Three Months Ended March 31, 1995 ----------------------------------- Appliance Financial Whirlpool Business Services Corporation --------- --------- ----------- Pretax earnings $ 89.5 $ 8.1 $ 97.6 Portion of rents representative of the interest factor 4.3 0.2 4.5 Interest on indebtedness 26.8 18.1 44.9 Amortization of debt expense and premium 0.1 - 0.1 WFC preferred stock dividend - 1.1 1.1 ------ ----- ------ Adjusted income $120.7 $27.5 $148.2 ====== ===== ====== Fixed charges - ------------- Portion of rents representative of the interest factor $ 4.3 $ 0.2 $ 4.5 Interest on indebtedness 26.8 18.1 44.9 Amortization of debt expense and premium 0.1 - 0.1 WFC preferred stock dividend - 1.1 1.1 ------ ----- ------ $ 31.2 $19.4 $ 50.6 ====== ===== ====== Ratio of earnings to fixed charges 3.87 1.42 2.93 ====== ===== ====== Ratio of earnings to fixed charges at March 31, 1994 4.67 1.45 3.60 ====== ===== ======
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