-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JyHh77aF2h3srrPrkQlUpdamWv+a9DvQQV25krp0YPAiu8BmXWHuaI626j3rARXb ZzOrGX9e+Hq4XR46OZq+JA== 0000950131-00-001841.txt : 20000321 0000950131-00-001841.hdr.sgml : 20000321 ACCESSION NUMBER: 0000950131-00-001841 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000320 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-K405 SEC ACT: SEC FILE NUMBER: 001-03932 FILM NUMBER: 573444 BUSINESS ADDRESS: STREET 1: WHIRLPOOL CNTR 2000 M 63 STREET 2: C/O CORPORATE SECRETARY CITY: BENTON HARBOR STATE: MI ZIP: 49022-2692 BUSINESS PHONE: 6169235000 MAIL ADDRESS: STREET 1: WHIRLPOOL CTR 2000 M 63 STREET 2: C/O CORPORATE SECRETARY CITY: BENTON HARBOR STATE: MI ZIP: 49022-2692 FORMER COMPANY: FORMER CONFORMED NAME: WHIRLPOOL SEEGER CORP DATE OF NAME CHANGE: 19710824 10-K405 1 FORM 10-K - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K.--ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended ended December 31, 1999 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the Transition period from to Commission File No. 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 North M-63, Benton Harbor, 49022-2692 Michigan (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code (616) 923-5000 Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange Title of each class on which registered ------------------- --------------------- Common stock, par value $1.00 per share Chicago Stock Exchange New York Stock Exchange 7 3/4% Debentures due 2016 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether 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 No X Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ((S)229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X The aggregate market value of the voting stock of the registrant held by stockholders not including voting stock held by directors and elected officers of the registrant and certain employee plans of the registrant (the exclusion of such shares shall not be deemed an admission by the registrant that any such person is an affiliate of the registrant) on March 1, 2000, was $3,866,139,250. On March 1, 2000, the registrant had 73,243,737 shares of common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the following documents are incorporated herein by reference into the Part of the Form 10-K indicated:
Part of Form 10-K into Document which incorporated -------- ---------------------- The Company's Annual Report to Stockholders for the year ended December 31, 1999 (the "Annual Report") Parts I, II and IV The Company's proxy statement for the 2000 annual meeting of stockholders (SEC File No. 1-3932) (the "Proxy Statement") Part III
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PART I ITEM 1. Business. General Whirlpool Corporation, the leading worldwide manufacturer and marketer of major home appliances, was incorporated in 1955 under the laws of Delaware as the successor to a business that traces its origin to 1898. As used herein, and except where the context otherwise requires, the terms "Company" and "Whirlpool" include Whirlpool Corporation and its consolidated subsidiaries. All currency figures are in U.S. dollars. Financial Information Relating to Operating Segments, Foreign and Domestic Operations and Export Sales The Company operates predominantly in the business segment classified as Major Home Appliances. During 1999 the Company's U.S. operations sold product into Canada, Mexico, Latin America, the Caribbean, Asia, Europe, Africa, and the Middle East. However, export sales by the Company's U.S. operations were less than 10% of gross revenues. For certain other financial information concerning the Company's business segments and foreign and domestic operations, see Notes 1 and 15 of the Notes to Consolidated Financial Statements in the Annual Report. Products and Services The Company manufactures and markets a full line of major home appliances and related products, primarily for home use. The Company's principal products are: home laundry appliances, home refrigeration and room air conditioning equipment, home cooking appliances, home dishwashers, and mixers and other small household appliances. Less than 10% of the Company's unit sales volume is purchased from other manufacturers for resale by the Company. The Company also produces hermetic compressors and plastic components, primarily for the home appliance and electronics industries. The following table sets forth information regarding the total revenue contributed by each class of similar products which accounted for 10% or more of the Company's consolidated revenue in 1999, 1998, and 1997:
Year ended December 31 (millions of dollars) Percent 1999 1998 1997 - -------------------------------------------- ------- ------- ------- ------ Home Laundry Appliances......................... 29% $ 3,091 $ 2,932 $2,704 Home Refrigeration and Room Air Conditioning Equipment...................................... 34% $ 3,563 $ 3,622 $2,913 Home Cooking Appliances......................... 16% $ 1,642 $ 1,625 $1,434 Other........................................... 21% $ 2,215 $ 2,144 $1,566 ---- ------- ------- ------ Net Sales..................................... 100% $10,511 $10,323 $8,617 ==== ======= ======= ======
The Company has been the principal supplier of home laundry appliances to Sears, Roebuck and Co. ("Sears") for over 80 years. The Company is also the principal supplier to Sears of residential trash compactors and microwave hood combinations and a major supplier to Sears of dishwashers, free-standing ranges, and home refrigeration equipment. The Company also supplies Sears with certain other products for which the Company is not currently a major supplier. Sales of such other products to Sears are not significant to the Company's business. The Company supplies products to Sears for sale under Sears' Kenmore and Sears brand names. Sears 1 has also been a major outlet for the Company's Whirlpool and KitchenAid brand products since 1989. In 1999 approximately 18% of the Company's net sales were attributable to sales to Sears. Major home appliances are marketed and distributed in the United States under the Whirlpool, KitchenAid, Roper, and Estate brand names primarily to retailers, buying groups, and builders. KitchenAid portable appliances are sold to retailers either directly or through an independent representative organization. The Company sells product to the builder trade both directly and through contract distributors. Major home appliances are manufactured and/or distributed in Canada under the Inglis, Admiral, Speed Queen, Whirlpool, Estate, Roper, and KitchenAid brand names. In Mexico the Company's affiliate, Vitromatic S.A., manufactures and markets major home appliances for sale under the Whirlpool, Acros, and Supermatic brand names. Refrigerator-freezers, laundry products, room air conditioners, residential trash compactors, residential and component ice makers, cooking products, dishwashers, and other products are sold in limited quantities by the Company to other manufacturers and retailers for resale in North America under their respective brand names. In Europe Whirlpool markets and distributes, through wholly owned sales entities, its major home appliances under the Whirlpool, Bauknecht, Ignis, Algor, and Laden brand names and its portable appliances under the KitchenAid brand name. In addition to its extensive operations in Western Europe, the Company has sales subsidiaries in Hungary, Poland, the Czech Republic, Slovakia, Greece, Romania, Bulgaria, Latvia, Estonia, Lithuania, and Morocco and a representative office in Russia. In certain Eastern European countries and ex-Soviet states, products bearing the Whirlpool and Ignis brand names are sold through independent distributors. The Company owns a subsidiary in South Africa which manufactures refrigerators and freezers and through which it markets a full line of products under the Whirlpool and KIC brand names. Whirlpool's European operations also sell products carrying the Whirlpool, Bauknecht, Ignis, Algor, and Fides brand names to the Company's wholly-owned sales companies in Asia and majority-owned sales companies in Latin America and to independent distributors and dealers in Africa and the Middle East. In Asia the Company markets and distributes its major home appliances through three operating regions: the South Asia Sales region based in New Delhi, which includes India and surrounding markets; the Asia Pacific Sales region, which includes the ASEAN countries, Korea, Japan, Australia, New Zealand, Hong Kong, and Taiwan; and the China Sales region through Whirlpool Narcissus and Whirlpool Shunde. With the exception of the Narcissus and Taiwan joint ventures, all of these entities are wholly-owned by Whirlpool. The Company markets and sells its products in Asia under the Whirlpool, KitchenAid, Bauknecht, and Ignis brand names. In Latin America the Company markets and distributes its major home appliances through regional networks under the Whirlpool, Brastemp, Consul, and Eslabon de Lujo brand names. Appliance sales and distribution in Brazil, Argentina, Bolivia, and Chile are managed through subsidiaries owned by Multibras S.A. Eletrodomesticos ("Multibras"), the Company's Brazilian subsidiary, and in Bolivia, Peru, Paraguay, and Uruguay through independent distributors. Appliance sales and distribution in Central American countries, the Caribbean, Venezuela, and Ecuador are managed through Whirlpool sales subsidiaries which are part of Whirlpool's North America Region and through independent distributors. In Colombia the Company operates a sales branch which sells and distributes products for the Colombian market. Competition The major home appliance business is highly competitive. The Company believes that, in terms of units sold annually, it is the largest United States manufacturer of home laundry appliances and one of the largest United States manufacturers of home refrigeration and room air conditioning equipment, dishwashers, and cooking products. The Company estimates that during 1999 with respect to U.S. manufacturers, there were approximately five manufacturers of home laundry appliances, ten manufacturers of room air conditioning equipment, five manufacturers of home refrigeration equipment, five manufacturers of dishwashers, and five manufacturers of cooking products. Competition in the North American major home appliance business is based 2 on a wide variety of factors, including principally product features, price, product quality and performance, service, warranty, advertising, and promotion. The Company believes that in Europe it is, in terms of units sold annually, one of the three largest manufacturers and marketers of major home appliance products. The Company estimates that during 1999 there were approximately 35 European manufacturers of major home appliances, the majority of which manufacture a limited range of products for a specific geographic region. In recent years there has been significant merger and acquisition activity as manufacturers seek to broaden product lines and expand geographic markets, and the Company believes this trend will continue. The Company believes it is in a favorable position in Europe relative to its competitors because it has an experienced European sales network, balanced sales throughout the European market under well-recognized brand names, manufacturing facilities located in different countries, and the ability to customize its products to meet the specific needs of diverse consumer groups. Competition in the European major home appliance business is based on a wide variety of factors, including principally product features, price, product quality and performance, service, warranty, advertising, and promotion. With respect to microwave ovens, Western European manufacturers face competition from manufacturers in Asia, primarily China, South Korea, and Japan. In Asia the major domestic appliance market is characterized by rapid growth and is dominated primarily by Asian diversified industrial manufacturers whose significant size and scope of operations enable them to achieve economies of scale. The Company estimates that during 1999 there were approximately 50 manufacturers of major home appliances competing in the Asian market. Competition in the Asian home appliance business is based on a wide variety of factors including principally local production capabilities, product features, price, product quality and performance. The Company believes that it is well-positioned in the Latin American appliance market due to its ability to offer a broad range of products under well-recognized brand names such as Whirlpool, Brastemp, Consul, and Eslabon de Lujo to meet the specific requirements of consumers in the region. The Company estimates that during 1999 there were approximately 20 manufacturers of home appliances in the region. Competition in the Latin American home appliance business is based on a wide variety of factors, including principally product features, price, product quality and performance, service, warranty, advertising, and promotion. In Latin America there are trends toward privatization of government-owned businesses and a liberalization of investment and trade restrictions. As a result of its global expansion, the Company believes it has a competitive advantage by reason of its ability to leverage engineering capabilities across regions, transfer best practices, and economically purchase raw materials and component parts in large volumes. Employees The Company and its consolidated subsidiaries had approximately 61,000 employees as of December 31, 1999. Other Information The Company has a controlling equity interest in Brasmotor S.A., the Company's long-time partner in Latin America and the parent company of certain Latin American manufacturers of major home appliances and components (Empressa Brasileira de Compressores S.A. (Embraco) and Multibras). The Company has a minority equity interest in Vitromatic, S.A., a Mexican manufacturer of home appliances and components. In China the Company has a majority interest in Whirlpool Narcissus (Shanghai) Company Limited, a joint venture company that manufactures automatic washing machines for sale and distribution in China and for export, and a 3 minority interest in Shenzhen Electra Air-Conditioner Co. Limited, a joint venture company that manufactures air conditioners. In India the Company has a majority interest in a company that produces refrigeration products and washing machines for the Indian market and for export to the rest of Asia. The Company also has a minority equity interest in a Taiwanese marketer and distributor of home appliances. The Company has a significant minority equity interest in a major manufacturer of kitchen furniture in Germany that is also a major trade customer of the Company. In addition, the Company furnishes engineering, manufacturing, and marketing assistance to certain foreign manufacturers of home laundry and refrigeration equipment and other major home appliances for negotiated fees. The Company's interests outside the United States and Western Europe are subject to risks which may be greater than or in addition to those risks which are currently present in the United States and Western Europe. Such risks may include: currency exchange rate fluctuations; high inflation; the need for governmental approval of and restrictions on certain financial and other corporate transactions and new or continued business operations; the convertibility of local currencies; government price controls; restrictions on the remittance of dividends, interest, royalties, and other payments; restrictions on imports and exports; duties; political and economic developments and instability; the possibility of expropriation; uncertainty as to the enforceability of commercial rights and trademarks; and various types of local participation in ownership. Since the real devaluation in January 1999, the Brazilian economy has been gradually improving throughout the year. The white goods industry in Brazil declined in 1999 as a consequence of high interest rates, limited credit availability, and a high unemployment level. However, the Company's performance has been superior to market performance, resulting in the Company's gain in market share. In the foreseeable future, it is expected that Brazil will experience moderate but steady GDP growth, a trend that began in the fourth quarter of 1999. The gradual easing of interest rates by the Brazilian Central Bank is likely to improve demand. Despite an inflation spike toward the end of 1999, inflation is likely to remain under control given current economic conditions. The reduction of country risk due to improved payment balance, reduction in fiscal deficit, and a calm political environment should result in greater exchange rate stability in the future. The Company is generally not dependent upon any one source for raw materials or purchased components essential to its business. In those areas where a single supplier is used, alternative sources are generally available and can be developed within the normal manufacturing environment, although some unanticipated costs may be incurred in transitioning to a new supplier where a prior single supplier is abruptly terminated. While there are pricing pressures on some materials and significant demand for certain components, the Company believes such raw materials and components will be available in adequate quantities to meet anticipated production schedules. Patents presently owned by the Company are considered, in the aggregate, to be important to the conduct of the Company's business. The Company is licensed under a number of patents, none of which individually is considered material to its business. The Company is the owner of a number of trademarks and the U.S. and foreign registrations thereof. The most important for its North American operations are the trademarks Whirlpool, KitchenAid, the KitchenAid Mixer Shape, Roper, and Inglis. In Europe Whirlpool, through its subsidiaries, is also the owner of a number of trademarks and the foreign registrations thereof. The most important trademarks owned by the Company in Europe are Bauknecht, Ignis, and Laden. In Latin America the most important trademarks owned by the Company are Brastemp, Consul and Eslabon de Lujo. The most important trademark for the Company's European, Asian, and Latin American operations is Whirlpool. The Company believes that its business, in the aggregate, is not seasonal. Certain of its products, however, sell more heavily in some seasons than in others. For example, air conditioners typically sell more heavily during summer months. Where appropriate, the Company manages its regional manufacturing operations and product inventories to address seasonal variations in demand. 4 Backlogs of the Company's products are filled and renewed relatively frequently in each year and are not significant in relation to the Company's annual sales. However, with respect to Asia, marked seasonality of certain product sales, combined with less efficient modes of distribution in that region, can result in significant inventory backlogs. Expenditures for Company-sponsored research and engineering activities relating to the development of new products and the improvement of existing products are included in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report. The Company's manufacturing facilities are subject to numerous laws and regulations designed to protect or enhance the environment, many of which require federal, state, or other governmental licenses and permits with regard to wastewater discharges, air emissions, and hazardous waste management. These laws are continually changing and, as a general matter, are becoming more restrictive. The Company's policy is to seek to comply with all such laws and regulations. When laws and regulations are inadequate, the Company has established and is following its own standards consistent with its commitment to environmental responsibility. The Company believes that it is in compliance in all material respects with all presently applicable federal, state, local, and other governmental provisions relating to environmental protection in the countries in which it has manufacturing operations. Capital expenditures and expenses for manufacturing operations directly attributable to compliance with such provisions worldwide amounted to approximately $30 million in 1997, $30 million in 1998, and $19 million in 1999. The decrease from 1998 to 1999 is attributable to the completion of air and water pollution control capital improvement projects in 1998, as well as benefits from previous pollution prevention projects. It is estimated that in 2000 environmental capital expenditures and expenses for manufacturing operations will be approximately $22 million. Capital expenditures and expenses for product related environmental activities were not material in any of the past three years and are not expected to be material in 2000. The entire United States home appliance industry, including the Company, must contend with the adoption of stricter governmental energy and environmental standards to be phased in over the next several years. These include the general phase-out of HCFCs used in refrigeration and energy standards rulemakings for other selected major appliances produced by the Company. Compliance with these various standards as they become effective will require some product redesign. As in the United States, Whirlpool's European and Latin American operations are also dealing with anticipated regulations and rules regarding improved efficiency and energy usage for its products. The Company believes it is well positioned to field products that comply with these anticipated regulations. In most Asian countries the Company has until 2010 to eliminate CFCs from its products. Whirlpool's Asian operations are also well positioned to meet anticipated efficiency and energy usage regulations. The Company has been notified by state and federal environmental protection agencies of its possible involvement in a number of so-called "Superfund" sites in the United States. However, the Company does not presently anticipate any material adverse effect upon the Company's earnings or financial condition arising out of the resolution of these matters or the resolution of any other known governmental proceeding regarding environmental protection matters. In 1999 the Company evaluated its facilities in Brazil and does not anticipate any material adverse effect upon the Company's earnings or financial condition from the environmental condition of these facilities. In an effort to enhance productivity and business systems performance, the Company is implementing an integrated business software package to replace and consolidate many of its existing stand-alone systems. The new system was implemented in Austria, Brazil, Canada, Germany, and Switzerland in 1998, and in the United States and the Netherlands in 1999. The project is expected to be completed within the next two years. 5 The following table sets forth the names of the Company's executive officers at December 31, 1999, the positions and offices with the Company held by them at such date, the year they first became officers, and their ages at December 31, 1999:
First Became Name Office an Officer Age - ---- ------ ------------ --- David R. Director, Chairman of the Board and 1983 57 Whitwam Chief Executive Officer Jeff M. 1993 42 Fettig Director, President and Chief Operating Officer Mark E. 1999 48 Brown Executive Vice President and Chief Financial Officer Bengt G. 1999 46 Engstrom Executive Vice President and President, Whirlpool Europe Daniel F. 1989 52 Hopp Senior Vice President, Corporate Affairs and General Counsel Ronald L. 1991 56 Kerber Executive Vice President and Chief Technology Officer Greg A. 1998 50 Lee Senior Vice President, Human Resources Paulo 1997 53 F.M. Periquito Executive Vice President and President, Latin America Michael 1997 51 D. Thieneman Executive Vice President, North American Region
Each of the executive officers named above was elected to serve in the office indicated until the first meeting of the Board of Directors following the annual meeting of stockholders in 2000 and until his successor is chosen and qualified or until his earlier resignation or removal. Each of the executive officers of the Company has held the position set forth in the table above or has served the Company in various executive or administrative capacities for at least the past five years, except for:
Name Company/Position Period ---- ---------------- ------ Greg A. Lee St. Paul Companies December 1992 through May 1998 Senior Vice President, Human Resources Paulo F.M. Periquito Multibras S.A. Chief Executive Officer March 1996 through present ALCOA Latin America 1981 through March 1996 Executive Vice President and Chief Operating Officer (last title held)
ITEM 2. Properties. The principal executive offices of Whirlpool Corporation are located in Benton Harbor, Michigan. At December 31, 1999, the principal manufacturing and service operations of the Company were carried on at 44 locations worldwide, 34 of which are located in 12 countries outside the United States. The Company occupied a total of approximately 41.7 million square feet devoted to manufacturing, service, administrative offices, warehouse, distribution, and sales space. Over 12.4 million square feet of such space is occupied under lease. In general, all facilities are well maintained, suitably equipped, and in good operating condition. ITEM 3. Legal Proceedings. As of, and during the quarter ended, December 31, 1999, there were no material pending legal proceedings to which the Company or any of its subsidiaries was a party or to which any of their property was subject. ITEM 4. Submission of Matters to a Vote of Security Holders. There were no matters submitted to a vote of security holders in the fourth quarter of 1999. 6 PART II ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters. The Company's common stock is traded on the New York Stock Exchange and the Chicago Stock Exchange. As of March 1, 2000, the number of holders of record of the Company's common stock was approximately 12,364. High and low sales prices (as reported on the New York Stock Exchange composite tape) and cash dividends declared and paid for the Company's common stock for each quarter during the years 1998 and 1999 are set forth in Note 16 of the Notes to Consolidated Financial Statements in the Annual Report and incorporated herein by reference. ITEM 6. Selected Financial Data. The selected financial data for the five years ended December 31, 1999 with respect to the following line items are shown under the "Eleven Year Consolidated Statistical Review" in the Annual Report and incorporated herein by reference: Total revenues, earnings from continuing operations before accounting change, earnings from continuing operations before accounting change per share of common stock, dividends paid per share of common stock, total assets, and long-term debt. See the material incorporated herein by reference in response to Item 7 of this report for a discussion of the effects on such data of business combinations and other acquisitions, disposition and restructuring activity, restructuring costs, accounting changes, and earnings of foreign affiliates. ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. See the Management's Discussion and Analysis section of the Annual Report which is incorporated herein by reference. ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk. Information with respect to market risk can be found under the caption "Market Risk" in the Management's Discussion and Analysis section of the Annual Report which is incorporated herein by reference. ITEM 8. Financial Statements and Supplementary Data. The consolidated financial statements of the Company are contained in the Annual Report and incorporated herein by reference. Supplementary financial information regarding quarterly results of operations (unaudited) for the years ended December 31, 1999 and 1998 is set forth in Note 16 of the Notes to Consolidated Financial Statements. For a list of financial statements and schedules filed as part of this report, see the "Index to Financial Statements and Financial Statement Schedule(s)" beginning on page F-1. ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. PART III ITEM 10. Directors and Executive Officers of the Registrant. Information with respect to directors of the Company can be found under the caption "Directors and Nominees for Election as Directors" in the Company's Proxy Statement and is incorporated herein by reference. Information with respect to executive officers of the Company is set forth in Part I of this report. 7 ITEM 11. Executive Compensation. Information with respect to compensation of executive officers and directors of the Company can be found under the captions "Executive Compensation" and "Compensation of Directors" in the Proxy Statement and is incorporated herein by reference. ITEM 12. Security Ownership of Certain Beneficial Owners and Management. Information with respect to security ownership by the only person(s) known to the Company to beneficially own more than 5% of the Company's stock and by each director of the Company and all directors and elected officers of the Company as a group can be found under the caption "Security Ownership" in the Proxy Statement and is incorporated herein by reference. ITEM 13. Certain Relationships and Related Transactions. Information with respect to certain transactions with executive officers and directors of the Company and others can be found under the caption "Certain Transactions" in the Proxy Statement and is incorporated herein by reference. PART IV ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a) The following documents are filed as a part of this report: 1. The financial statements listed in the "Index to Financial Statements and Financial Statement Schedules." 2. The financial statement schedule listed in the "Index to Financial Statements and Financial Statement Schedules." 3. The exhibits listed in the "Exhibit Index." (b) Reports on Form 8-K filed during the fourth quarter of 1999. A current report on Form 8-K for November 4, 1999 pursuant to item 5-- "Other Events" announced that the Company was making a tender offer for the outstanding publicly traded shares in Brazil of its subsidiaries Multibras and Brasmotor S.A. (c) Exhibits. See attached "Exhibit Index." (d) Financial Statement Schedules. The response to this portion of Item 14 is submitted as a separate section of this report. 8 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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) Mark E. Brown By___________________________________ Mark E. Brown (Principal Financial Officer) Executive Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
Signature Title Date --------- ----- ---- David R. Whitwam* Director, Chairman of the ____________________________________ Board and Chief Executive David R. Whitwam Officer (Principal Executive Officer) Jeff M. Fettig* Director, President and ____________________________________ Chief Operating Officer Jeff M. Fettig (Principal Operating Officer) Mark E. Brown* Executive Vice President and ____________________________________ Chief Financial Officer Mark E. Brown (Principal Financial Officer) Betty A. Beaty* Vice President and ____________________________________ Controller (Principal Betty A. Beaty Accounting Officer) Herman Cain* Director March 20, 2000 ____________________________________ Herman Cain Gary T. DiCamillo* Director ____________________________________ Gary T. DiCamillo Allan D. Gilmour* Director ____________________________________ Allan D. Gilmour Kathleen J. Hempel* Director ____________________________________ Kathleen J. Hempel James M. Kilts* Director ____________________________________ James M. Kilts
9
Signature Title Date --------- ----- ---- Arnold G. Langbo* Director ____________________________________ Arnold G. Langbo Miles L. Marsh* Director ____________________________________ Miles L. Marsh Philip L. Smith* Director March 20, 2000 ____________________________________ Philip L. Smith Paul G. Stern* Director ____________________________________ Paul G. Stern Janice D. Stoney* Director ____________________________________ Janice D. Stoney
/s/ Daniel F. Hopp *By____________________________ Daniel F. Hopp Attorney-in-Fact 10 ANNUAL REPORT ON FORM 10-K ITEMS 14(a) (1) AND (2) AND 14(d) INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES YEAR ENDED DECEMBER 31, 1999 WHIRLPOOL CORPORATION AND CONSOLIDATED SUBSIDIARIES The following consolidated financial statements of the registrant and its consolidated subsidiaries, set forth in the Annual Report, are incorporated herein by reference in Item 8: Consolidated balance sheets--December 31, 1999 and 1998 Consolidated statements of earnings--Three years ended December 31, 1999 Consolidated statements of changes in stockholders' equity--Three years ended December 31, 1999 Consolidated statements of cash flows--Three years ended December 31, 1999 Notes to consolidated financial statements The following reports of independent auditors and consolidated financial statement schedules of the registrant and its consolidated subsidiaries are submitted herewith in response to Items 14(a) (2) and 14(d):
Page ---- Report of Ernst & Young LLP, Independent Auditors...................... F-2 Reports of PricewaterhouseCoopers, Independent Auditors................ F-3 Schedule II--Valuation and qualifying account.......................... F-9 The following exhibits are included herein: Exhibit 11--Statement Re: Computation of Earnings Per Share............ F-10 Exhibit 12--Ratio of Earnings to Fixed Charge.......................... F-11
Individual financial statements of the registrant's affiliated foreign companies, accounted for by the equity method, have been omitted since no such company individually constitutes a significant subsidiary. Summarized financial information relating to the affiliated companies is set forth in Note 6 of the Notes to Consolidated Financial Statements incorporated by reference herein. Certain schedules for which provisions are made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. F-1 REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS THE STOCKHOLDERS AND BOARD OF DIRECTORS WHIRLPOOL CORPORATION--BENTON HARBOR, MICHIGAN We have audited the accompanying consolidated balance sheets of Whirlpool Corporation as of December 31, 1999 and 1998, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1999. Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We did not audit the 1998 and 1997 financial statements of Brasmotor S.A. and its consolidated subsidiaries, which statements reflect total assets of $2,500 million as of December 31, 1998 and net earnings of $58 million and $41 million for the years ended December 31, 1998 and 1997, respectively. Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to data included for Brasmotor S.A. and its consolidated subsidiaries, is based on the reports of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and, for 1998 and 1997, the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Whirlpool Corporation at December 31, 1999 and 1998, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. [SIGNATURE] Chicago, Illinois January 20, 2000 F-2 [PRICEWATERHOUSECOOPERS LETTERHEAD] REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders Brasmotor S.A. We have audited the accompanying consolidated balance sheets of Brasmotor S.A. and its subsidiaries as of December 31, 1998 and 1997 and the related consolidated statements of earnings, of movement in stockholders' equity and of cash flows for the years then ended, expressed in U.S. dollars (not presented herein). Such audits were made in conjunction with our audits of the financial statements expressed in local currency on which we issued an unqualified opinion dated January 18, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Whirlpool Argentina S.A. and Sociedade Financeira de Grandes Aparatos Domesticos S.A., which statements reflect total assets of US$149,457 thousand and US$119,549 thousand as of December 31, 1998 and 1997, respectively, and net earnings of US$6,037 thousand and US$9,487 thousand for the years ended December 31, 1998 and 1997, respectively. Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to data included for Whirlpool Argentina S.A. and Sociedade Financeira de Grandes Aparatos Domesticos S.A., is based solely on the reports of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion. As stated in Note 1, Whirlpool Corporation has prescribed that accounting principles generally accepted in the United States of America be applied in the preparation of the consolidated financial statements of Brasmotor S.A. and its subsidiaries to be included in Whirlpool's consolidated financial statements. Up to December 31, 1997, Brazil had a highly inflationary economy. Accounting principles generally accepted in the United States of America require that financial statements of a company denominated in the currency of a country with a highly inflationary economy be remeasured into a more stable currency unit for purposes of consolidation. Accordingly, the accounts of Brasmotor S.A. and its Brazilian subsidiaries as of December 31, 1997, which are maintained in reais, were remeasured and adjusted into U.S. dollars for the financial statements prepared in accordance with accounting principles generally accepted in the United States of America, on the bases stated in Note 1. As from January 1, 1998, the functional currency, for the purpose of the translation of the financial statements into U.S. dollars, has been changed from the U.S. dollar to the local currency (reais). F-3 [PRICEWATERHOUSECOOPERS LETTERHEAD] Brasmotor S.A. Page 2 In our opinion, based on our audits and the reports of the other auditors, the consolidated financial statements expressed in U.S. dollars audited by us are presented fairly, in all material respects, on the bases stated in Note 1 and discussed in the preceding paragraph. [PRICEWATERHOUSECOOPERS SIGNATURE] PricewaterhouseCoopers Auditores Independentes Sao Paulo, Brazil January 18, 1999 F-4 [PRICEWATERHOUSECOOPERS LETTERHEAD] REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders Empresa Brasileira de Compressores S.A.--EMBRACO We have audited the accompanying consolidated balance sheets of Empresa Brasileira de Compressores S.A.--EMBRACO and its subsidiaries as of December 31, 1998 and 1997 and the related consolidated statements of earnings, of movement in stockholders' equity and of cash flows for the years then ended, expressed in U.S. dollars (not presented herein). Such audits were made in conjunction with our audits of the financial statements expressed in local currency on which we issued an unqualified opinion dated January 18, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As stated in Note 1, Whirlpool Corporation has prescribed that accounting principles generally accepted in the United States of America be applied in the preparation of the consolidated financial statements of Empresa Brasileira de Compressores S.A.--EMBRACO and its subsidiaries to be included in Whirlpool's consolidated financial statements. Up to December 31, 1997, Brazil had a highly inflationary economy. Accounting principles generally accepted in the United States of America require that financial statements of a company denominated in the currency of a country with a highly inflationary economy be remeasured into a more stable currency unit for purposes of consolidation. Accordingly, the accounts of Empresa Brasileira de Compressores S.A.--EMBRACO and its Brazilian subsidiaries as of December 31, 1997, which are maintained in reais, were remeasured and adjusted into U.S. dollars for the financial statements prepared in accordance with accounting principles generally accepted in the United States of America, on the bases stated in Note 1. As from January 1, 1998, the functional currency, for the purpose of the translation of the financial statements into U.S. dollars, has been changed from U.S. dollar to the local currency (reais). F-5 [PRICEWATERHOUSECOOPERS LETTERHEAD] Empresa Brasileira de Compressores S.A.--EMBRACO Page 2 In our opinion, the consolidated financial statements expressed in U.S. dollars audited by us are presented fairly, in all material respects, on the bases stated in Note 1 and discussed in the preceding paragraph. [PRICEWATERHOUSECOOPERS SIGNATURE] PricewaterhouseCoopers Auditores Independentes Sao Paulo, Brazil January 18, 1999 F-6 [PRICEWATERHOUSECOOPERS LETTERHEAD] REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders Multibras S.A. Eletrodomesticos We have audited the accompanying consolidated balance sheets of Multibras S.A. Eletrodomesticos and its subsidiaries as of December 31, 1998 and 1997 and the related consolidated statements of earnings, of movement in stockholders' equity and of cash flows for the years then ended, expressed in U.S. dollars (not presented herein). Such audits were made in conjunction with our audits of the financial statements expressed in local currency on which we issued an unqualified opinion dated January 18, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Whirlpool Argentina S.A. and Sociedade Financeira de Grandes Aparatos Domesticos S.A., which statements reflect total assets of US$ 149,457 thousand and US$ 119,549 thousand as of December 31, 1998 and 1997, respectively, and net earnings of US$ 6,037 thousand and US$ 9,487 thousand for the years ended December 31, 1998 and 1997, respectively. Those statements were audited by other auditors whose reports hves been furnished to us, and our opinion, insofar as it relates to data included for Whirlpool Argentina S.A. and Sociedade Financeira de Grandes Aparatos Domesticos S.A., is based solely on the report of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion. As stated in Note 1, Whirlpool Corporation has prescribed that accounting principles generally accepted in the United States of America be applied in the preparation of the consolidated financial statements of Multibras S.A. Eletrodomesticos and its subsidiaries to be included in Whirlpool's consolidated financial statements. Up to December 31, 1997, Brazil had a highly inflationary economy. Accounting principles generally accepted in the United States of America require that financial statements of a company denominated in the currency of a country with a highly inflationary economy be remeasured into a more stable currency unit for purposes of consolidation. Accordingly, the accounts of Multibras S.A. Eletrodomesticos and its Brazilian subsidiaries as of December 31, 1997, which are maintained in reais, were remeasured and adjusted into U.S. dollars for the financial statements prepared in accordance with accounting principles generally accepted in the United States of America, on the bases stated in Note 1. As from January 1, 1998, the functional currency, for the purpose of the translation of the financial statements into U.S. dollars, has been changed from the U.S. dollar to the local currency (reais). F-7 [PRICEWATERHOUSECOOPERS LETTERHEAD] Multibras S.A. Eletrodomesticos Page 2 In our opinion, based on our audits and the reports of the other auditors, the consolidated financial statements expressed in U.S. dollars audited by us are presented fairly, in all material respects, on the bases stated in Note 1 and discussed in the preceding paragraph. [PRICEWATERHOUSECOOPERS SIGNATURE] PricewaterhouseCoopers Auditores Independentes Sao Paulo, Brazil January 18, 1999 F-8 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS WHIRLPOOL CORPORATION AND SUBSIDIARIES Years Ended December 31, 1999, 1998, and 1997 (millions of dollars)
Col. A Col. B Col. C Col. D Col. E ------ -------------------- --------------------------------- ------------ -------------- Additions --------------------------------- (1) (2) Balance at Beginning Charged to Costs Charged to Other Deductions-- Balance at End Description of Period and Expenses Accounts/Other Describe of Period ----------- -------------------- ---------------- ---------------- ------------ -------------- Year Ended December 31, 1999: Allowances for doubtful accounts-- trade receivables..... $116 $ 30 $ 22(B) $124 ==== ==== ==== ==== Allowances for doubtful accounts-- financing receivables and leases............ $ 71 $ 0 $ 59(C) $ 12 ==== ==== ==== ==== Accrued expenses-- restructuring costs... $117 $-- $ 78(E) $ 39 ==== ==== ==== ==== Year Ended December 31, 1998: Allowances for doubtful accounts-- trade receivables..... $134 $ 45 $ 63(B) $116 ==== ==== ==== ==== Allowances for doubtful accounts-- financing receivables and leases............ $ 90 $ 0 $ 19(C) $ 71 ==== ==== ==== ==== Accrued expenses-- restructuring costs... $212 $-- $ 95(E) $117 ==== ==== ==== ==== Year Ended December 31, 1997: Allowances for doubtful accounts-- trade receivables..... $ 45 $ 34 $55(A) $ 0(B) $134 ==== ==== === ==== ==== Allowances for doubtful accounts-- financing receivables and leases............ $ 50 $125 $ 0 $ 85(C) $ 90 ==== ==== === ==== ==== Accrued expenses-- restructuring costs... $ 32 $343 $ 5(D) $168E) $212 ==== ==== === ==== ====
- ---- Note A--The amount represents the allowance for doubtful accounts balance on the balance sheet of Brasmotor S.A. at the time of consolidation in 1997. Note B--The amounts represent accounts charged off, less recoveries of $2 in 1999, $5 in 1998 and $15 in 1997, translation adjustments and transfers. Note C--The amount for 1998 represents a transfer to the trade receivable allowance while the amount for 1997 and 1996 represent accounts charged off, less recoveries of $4 and $3, respectively. Note D--The amount represents the restructructuring provision on the balance sheet of Brasmotor S.A. at the time of consolidation in 1997. Note E--Includes cash payments for employee severance and related costs, lease terminations, facility dispositions and other cash costs; write-down of facilities, equipment and other assets; and translation adjustments. F-9 ANNUAL REPORT ON FORM 10-K ITEMS 14(a)(3) and 14(c) EXHIBIT INDEX YEAR ENDED DECEMBER 31, 1999 The following exhibits are submitted herewith or incorporated herein by reference in response to Items 14(a)(3) and 14(c):
Number and Sequential Description Page of Exhibit Numbers* ----------- ---------- 3(i) Restated Certificate of Incorporation of the Company [Incorporated by reference from Exhibit 3(i) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File No. 1-3932] 3(ii) Amended and Restated By-laws of the Company as amended August 17, 1999. 4(i) The registrant hereby agrees to furnish to the Securities and Exchange Commission, upon request, the instruments defining the rights of holders of each issue of long-term debt of the registrant and its subsidiaries. 4(ii) Rights Agreement, dated April 21, 1998, between Whirlpool Corporation and First Chicago Trust Company of New York, with exhibits [Incorporated by reference from Exhibit 4 to the Company's Form 8-K, dated April 22, 1998] [File No. 1-3932] 10(iii) (a) Whirlpool Retirement Benefits Restoration Plan (as amended January 1, 1992) [Incorporated by reference from Exhibit 10(iii)(a) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File No. 1- 3932] 10(iii) (b) 1979 Stock Option Plan (as amended April 28, 1987) [Incorporated by reference from Exhibit 10(iii)(b) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File No. 1-3932] 10(iii) (c) Whirlpool Supplemental Executive Retirement Plan (as amended and restated effective December 31, 1993) [Incorporated by reference from Exhibit 10(iii)(c) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File No. 1-3932] 10(iii) (d) Resolution adopted on December 12, 1989 by the Board of Directors of the Company adopting a compensation schedule, life insurance program and retirement benefit program for eligible Directors. [Incorporated by reference from Exhibit 10(iii)(d) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File No.1-3932] 10(iii) (e) Resolution adopted on December 8, 1992 by the Board of Directors of the Company adopting a Flexible Compensation Program for the Corporation's nonemployee directors. [Incorporated by reference from Exhibit 10(iii)(e) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File No. 1-3932] 10(iii) (f) Whirlpool Corporation Deferred Compensation Plan for Directors (as amended effective January 1, 1992 and April 20, 1993) [Incorporated by reference from Exhibit 10(iii)(f) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File No. 1- 3932]
E-1
Number and Sequential Description Page of Exhibit Numbers* ----------- ---------- 10(iii) (g) Form of Agreement providing for severance benefits for certain executive officers [Incorporated by reference from Exhibit 10(iii)(g) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File No. 1-3932] 10(iii) (h) Whirlpool Corporation 1989 Omnibus Stock and Incentive Plan (as amended June 20, 1995) [Incorporated by reference from Exhibit 10(iii)(r) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995] [File No. 1-3932] 10(iii) (i) Whirlpool Corporation Restricted Stock Value Program (Pursuant to the 1989 Whirlpool Corporation Omnibus Stock and Incentive Plan) [Incorporated by reference from Exhibit 10(iii)(i) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File 1-3932] 10(iii) (j) Whirlpool Executive Stock Appreciation and Performance Program (Pursuant to the 1989 Whirlpool Corporation Omnibus Stock and Incentive Plan) [Incorporated by reference from Exhibit 10(iii)(j) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File No. 1-3932] 10(iii) (k) Whirlpool Corporation Nonemployee Director Stock Ownership Plan (as amended February 16, 1999, effective April 20, 1999 [Incorporated by reference from Exhibit A to the Company's proxy statement for the 1999 annual meeting of stockholders] [File No. 1-3932] 10(iii) (l) Whirlpool 401(k) Plan (as amended and restated April 1, 1993) [Incorporated by reference from Exhibit 10(iii)(l) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File No. 1-3932] 10(iii) (m) Whirlpool Performance Excellence Plan (as amended January 1, 1992, February 15, 1994 and April 20, 1999) [Incorporated by reference from Exhibit B to the Company's proxy statement for the 1999 annual meeting of stockholders] [File No. 1-3932] 10(iii) (n) Whirlpool Corporation Executive Deferred Savings Plan (as amended effective January 1, 1992) [Incorporated by reference from Exhibit 10(iii)(n) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File No. 1-3932] 10(iii) (o) Whirlpool Corporation Executive Officer Bonus Plan (Effective as of January 1, 1994) [Incorporated by reference from Exhibit 10(iii)(o) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994] [File No. 1-3932] 10(iii) (p) Whirlpool Corporation Charitable Award Contribution and Additional Life Insurance Plan for Directors (Effective April 20, 1993) [Incorporated by reference from Exhibit 10(iii)(p) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994] [File No. 1-3932] 10(iii) (q) Whirlpool Corporation Career Stock Grant Program (Pursuant to the 1989 Whirlpool Corporation Omnibus Stock and Incentive Plan) [Incorporated by reference from Exhibit 10(iii)(q) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995] [File No. 1- 3932] 10(iii) (r) Whirlpool Corporation 1996 Omnibus Stock and Incentive Plan (as amended, effective February 16, 1999).
E-2
Number and Sequential Description Page of Exhibit Numbers* ----------- ---------- 10(iii) (s) Whirlpool Corporation 1998 Omnibus Stock and Incentive Plan (as amended, effective February 16, 1999 11 Statement Re: Computation of Earnings per share 12 Statement Re: Computation of the Ratios of Earnings to Fixed Charges 13 Management's Discussion and Analysis and Consolidated Financial Statements contained in Annual Report to Stockholders for the year ended December 31, 1999 21 List of Subsidiaries 23ii(a) Consent of Ernst & Young LLP 23ii(b) Consent of PricewaterhouseCoopers 24 Powers of Attorney 27 Financial Data Schedules
- -------- *This information appears only in the manually signed originals of the Form 10-K and conformed copies with exhibits. E-3 EX-3.II 2 AMENDED AND RESTATED BY-LAWS OF THE COMPANY Exhibit 3(ii) B Y - L A W S O F W H I R L P O O L C O R P O R A T I O N (As Amended August 17, 1999) ARTICLE I --------- OFFICES SECTION 1. Registered Office. The registered office of Whirlpool Corporation (the "Corporation") shall be in the City of Wilmington, County of New Castle, State of Delaware, and the name of the registered agent in charge thereof is The Corporation Trust Company. SECTION 2. Additional Offices. The Corporation may also have offices at such other places within or without the State of Delaware as the board of directors may from time to time determine or the business of the Corporation may require. ARTICLE II ---------- MEETINGS OF STOCKHOLDERS SECTION 1. Place of Holding Meetings. The annual meeting of stockholders for the election of directors shall be held at such place, within or without the State of Delaware, as may from time to time be fixed by the board of directors. Subject to the provisions of Section 4 of this Article II, each meeting of stockholders for any other purpose may be held at such place, within or without the State of Delaware, as shall be fixed by the board of directors. SECTION 2. Annual Meetings; Election of Directors. The annual meeting of stockholders for the election of directors shall be held on the third Tuesday in April, or such other date and time as may be determined by the board of directors. Any other proper business may also be transacted at the annual meeting. SECTION 3. Stockholders' List. At least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder, shall be prepared by or for the Secretary. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, at the place where the meeting is to be held, and -1- shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. SECTION 4. Special Meetings. Special meetings of the stockholders for any purpose or purposes, except as otherwise prescribed by statute or by the certificate of incorporation, may be called by the Chairman of the Board, any Vice Chairman, or the President and shall be called by the Chairman of the Board, any Vice Chairman, or the President or the Secretary at the request in writing of a majority of the directors in office or pursuant to a resolution adopted by the board of directors. Such request or resolution shall state the place, date and hour and the purpose or purposes of the proposed meeting. No business shall be transacted at any special meeting except that referred to in the notice thereof. SECTION 5. Notice of Meetings. A written or printed notice stating the place, date and hour of the meeting and, in case of a special meeting or whenever required by statute, by the certificate of incorporation, or by these by-laws, further stating the purpose or purposes for which the meeting is called, shall be given by the Secretary to each stockholder entitled to vote thereat by delivering such notice to him personally or by mailing it, postage prepaid, addressed to him at his address as it appears on statute, such notice shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting. An affidavit of the Secretary or an Assistant Secretary or of a transfer agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. SECTION 6. Quorum. The holders of at least fifty percent (50%) of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, then the holders of a majority of the shares of capital stock present in person or represented by proxy and entitled to vote thereat shall have power to adjourn the meeting from time to time, without notice or call other than by announcement at the meeting of the time and place of the holding of the adjourned meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally called. SECTION 7. Voting. When a quorum is present at any meeting, any question properly brought before such meeting shall be decided by the vote of the holders of a majority of the voting power of the stock present in person or represented by proxy and entitled to vote thereon, unless the question is one upon which a different vote is required by provision of statute, the certificate of incorporation or these by-laws, in which case such provision shall govern and control the decision of such question. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may, by an instrument in writing subscribed by such stockholder, authorize another person or persons to act for such stockholder by proxy, but no such -2- proxy instrument shall be voted or acted upon after three years from its date unless such instrument provides for a longer period. SECTION 8. Inspectors of Election. At any election of directors, the chairman of the meeting may, and upon request of the holders of ten percent (10%) or more of the stock present and entitled to vote at such election shall, appoint two inspectors of election who shall subscribe an oath or affirmation to execute faithfully the duties of inspectors at such election with strict impartiality and according to the best of their ability and who shall canvass the votes and make and sign a certificate of the result thereof. No candidate for the office of director shall be appointed as such inspector. SECTION 9. Conduct of Stockholders' Meetings. The meetings of the stockholders shall be presided over by the Chairman of the Board, or if he is not present, by a Vice Chairman or the President, or if none of such officers is present, by a Vice President designated by the board of directors, or if none of such officers is present, by a chairman to be elected at the meeting. The Secretary of the Corporation, if present, shall act as secretary of such meetings or, if he is not present, an Assistant Secretary designated by the chairman of the meeting shall so act; if neither the Secretary nor an Assistant Secretary is present, then a secretary shall be appointed by the chairman of the meeting. The order of business shall be as determined by the chairman of the meeting. SECTION 10. Validity of Proxies; Ballots, etc. At every meeting of the stockholders, all proxies shall be received and taken charge of and all ballots shall be received and canvassed by the secretary of the meeting, who shall decide all questions touching the qualification of voters, the validity of the proxies, and the acceptance or rejection of votes, unless inspectors of election shall have been appointed by the chairman of the meeting, in which event such inspectors of election shall decide all such questions. SECTION 11. Nominations and Qualifications of Directors. Subject to the rights of holders of Preferred Stock, nominations for the election of directors may be made by the board of directors or a stockholder entitled to vote generally in the election of directors. For a nomination or nominations to be properly made by any stockholder entitled to vote generally in the election of directors, written notice of such stockholder's intent to make such nomination or nominations must be given, either by personal delivery or by registered or certified United States mail, postage prepaid, to the Secretary of the Corporation (and must be received by the Secretary) not later than (i) with respect to an election to be had at an annual meeting of stockholders to be held on the third Tuesday in April, ninety (90) days in advance of such meeting, and (ii) with respect to an election to be had at an annual meeting to be held on a day other than the third Tuesday in April or to be held at a special meeting of stockholders for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to stockholders. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholders; (d) such other information regarding each nominee -3- proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the then current proxy rules of the Securities and Exchange Commission, if the nominee were to be nominated by the Board; and (e) the consent of each nominee to serve as a director of the Corporation if so elected. The chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure. Section 12. Advance Notice of Stockholder Proposals. Subject to the rights of holders of Preferred Stock, at an annual meeting of stockholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been brought before the annual meeting by the board of directors or by any stockholder of the Corporation entitled to vote generally in the election of directors who complies with the requirements of this Section 12 and as shall otherwise be proper subjects for stockholder action and shall be properly introduced at the meeting. For a proposal or proposals to be properly brought before an annual meeting by any stockholder entitled to vote generally in the election of directors, written notice of such stockholder's intent to make such proposal or proposals must be given, either by personal delivery or by registered or certified United States mail, postage prepaid, to the Secretary of the Corporation (and must be received by the Secretary) not later than (i) with respect to an annual meeting of stockholders to be held on the third Tuesday in April, ninety (90) days in advance of such meeting, and (ii) with respect to an annual meeting to be held on a day other than the third Tuesday in April, the close of business on the seventh day following the date on which notice of such meeting is first given to stockholders. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (a) a description of the proposal desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (b) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business and any other stockholders known by such stockholder to be supporting such proposal; (c) the class and number of shares of the Corporation's stock which are beneficially owned by the stockholder on the date of such notice; and (d) any financial interest of the stockholder in such proposal. The chairman of the meeting shall determine whether the requirements of this Section 12 have been met with respect to any stockholder proposal. If the chairman of the meeting determines that a stockholder proposal was not made in accordance with the terms of this Section 12, he or she shall so declare at the meeting and any such proposal shall not be acted upon at the meeting. At a special meeting of stockholders, only such business shall be acted upon as shall have been set forth in the notice relating to the meeting or as shall constitute matters incident to the conduct of the meeting as the chairman of the meeting shall determine to be appropriate. ARTICLE III ----------- DIRECTORS SECTION 1. General Powers. The property and business of the Corporation shall be managed by its board of directors, which shall possess all the powers of the Corporation except as may be otherwise provided by statute or by the certificate of incorporation or by these by-laws. -4- The board of directors may hold its meetings, establish corporate offices and agencies, and keep the books and records of the Corporation at such places either within or without the State of Delaware as it may from time to time determine. SECTION 2. Election of Directors; Terms of Office. At all meetings of the stockholders for the election of directors at which a quorum is present, the persons who were nominated in accordance with Section 11 of Article II of these by-laws and receive the greatest number of votes shall be elected as directors. Commencing at the annual meeting of stockholders held in 1986, the board of directors shall be divided into three classes, and shall have terms of office, as provided in Article FIFTH of the Certificate. SECTION 3. Regular Meetings. An annual meeting of the board of directors may be held immediately after and at the same place as the annual meeting of stockholders and no notice of such meetings shall be necessary if a quorum be present, or the time and place of such meeting may instead be fixed by action of the board of directors and notice of the meeting given pursuant to Section 5 of this Article III. Such annual meeting shall constitute a regular meeting of the board of directors. Other regular meetings of the board of directors (so designated in the resolution fixing the dates thereof) may be held either within or without the State of Delaware on such dates as may be fixed from time to time by resolution of the board. SECTION 4. Special Meetings. Special meetings of the board of directors may be called by the Chairman of the Board, any Vice Chairman, or the President and shall be called by the Chairman of the Board, any Vice Chairman, or the President or Secretary at the request in writing of a majority of the directors in office, and the person or persons so calling or requesting the calling of any special meeting of the board of directors shall in such call or request fix the date, hour and place, within or without the State of Delaware, for holding any such special meeting. SECTION 5. Notice of Meetings. Notice of any meeting of the board of directors (except where no notice is required under Section 3 of this Article III) shall be given to each director by mail on or before the second day (excluding Sundays and legal holidays) next preceding the day of the meeting or by telegraph, cable, telecopier or telex, or personally in writing, on or before the first day next preceding the day of the meeting. SECTION 6. Number of Directors. The number of directors which shall constitute the whole board of directors of the Corporation shall be not less than seven nor more than fifteen; provided that at all times a majority of the directors shall be persons who are not employed by the Corporation or any of its subsidiaries unless a proviso is waived by a majority of directors who are not so employed present at a meeting at which it is determined that such waiver is in the best interest of the Corporation. Within such limits the number of directors shall be as fixed at any meeting of the board of directors by resolution adopted by a majority of the directors then in office; provided, however, that no decrease in the number of directors constituting the whole board shall shorten the term of any incumbent director. Vacancies created by an increase in the number of directors may be filled as provided in Section 10 of this Article III. -5- SECTION 7. Quorum. The presence at any meeting of the board of directors of a majority of the number of directors then in office shall constitute a quorum for the transaction of business except as otherwise provided in Section 10 of this Article III. SECTION 8. Voting. The vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors unless by provision of statute, the certificate of incorporation or these by- laws the vote of a different number of directors is required, in which case such provision shall govern. SECTION 9. Resignation. Any director or member of a committee of directors may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the Chairman of the Board, any Vice Chairman, President or Secretary. Except as hereinafter provided, the acceptance of a resignation shall not be necessary to make it effective. When there is a change in the principal occupation of a director from that in which he or she was engaged when elected to the board, such director shall promptly give notice of the change and submit a resignation from the board and all committees for consideration by the Chairman. The Chairman, with the approval of the full board, may elect to accept or reject such resignation. Directors who are full-time employees of the Corporation or one of its subsidiaries must promptly resign from the board and all committees whenever their term of employment ends for any reason, including but not limited to retirement; the effective date of such resignation to be not later than the last day of employment. The requirement that a director submit a resignation due to a change in occupation or due to the termination of employment with the Corporation or one of its subsidiaries may be waived by a majority of all other directors present at a meeting of directors at which it is determined that such waiver is in the best interest of the Corporation. SECTION 10. Filling of Vacancies. Subject to the rights of holders of Preferred Stock, in the event of a vacancy in the board of directors or any newly created directorship resulting from any increase in the number of directors or any vacancy in any committee of directors, a majority of the directors, excluding any directors who shall theretofore have resigned effective as of a future date, may, although less than a quorum, appoint any person to fill such vacancy upon the occurrence thereof (such person to hold office for the unexpired term of such office), or to fill such newly created directorship (such person to serve for the term for the class of directors of which such director is a member), and until such director's successor shall have been elected or qualified or until such director's earlier death, resignation, or removal from office. SECTION 11. Ratification by Stockholders. Any contract, transaction or act of the Corporation or of the board of directors or of any committee thereof or of any officer of the Corporation which shall be ratified at any annual meeting of stockholders or at any special meeting thereof called for such purpose by the holders of a majority of the voting power of the then outstanding stock of the Corporation shall be as valid and binding upon the Corporation and all of its stockholders as though ratified by every stockholder of the Corporation. SECTION 12. Compensation of Directors. Directors and members of any committee of directors, other than those who shall be officers or employees of the Corporation or of a subsidiary thereof, -6- shall be entitled to receive for their services as such directors or members either an annual fee or a fixed fee, or both, for attendance at meetings of the board or such committee, in such amounts as may be provided from time to time by resolution of the board, in addition to which directors and committee members shall be entitled to receive reimbursement for their expenses of attendance at meetings of the board or such committee; provided that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving com-pensation therefor. ARTICLE IV ---------- COMMITTEES SECTION 1. Appointment; Powers. The board of directors by resolution adopted by a majority of the whole board, may, (by provision of these by-laws or otherwise) designate one or more commit- tees of the board, each committee to consist of such number of directors, in no event less than two, and to have such powers of affairs of the Corporation as the board may determine and specify in such a resolution. The board of directors may at any time, by resolution similarly adopted, change the number, members or powers of any such committee, fill vacancies, or discharge any such committee. SECTION 2. Procedures; Meetings; Quorum. To the extent any such action is not taken by the board of directors, each committee may choose its own chairman and secretary, fix its own rules of procedure, and meet at such times and at such place or places as may be provided by such rules. At every meeting of each committee, the presence of a majority of all the members thereof shall be necessary to constitute a quorum and the affirmative vote of a majority of the members present shall be necessary to decide any question before the committee. SECTION 3. Human Resources Committee. The Human Resources Committee shall consist of such directors of the Corporation who are not officers or employees of the Corporation or of any subsidiary as shall be appointed from time to time by the board of directors. The Human Resources Committee shall make determinations and awards pursuant to any bonus or incentive plans of the Corporation, determine salaries to be paid to officers of the Corporation, the terms and conditions of their employment, the allotment of shares to officers and other employees under any stock option plan of the Corporation, and shall also make such other determinations as the Committee deems proper relating to remuneration or benefits to be paid to officers of the Corporation. At each meeting of the board of directors a report shall be made to the board respecting such determinations made by the Committee subsequent to the next preceding meeting of the board, and each such determination so made and reported shall be final unless, at said meeting, the same shall be revoked or modified by action of the board. In addition, the Chairman of the Board shall review with the Committee from time to time plans for the development, training and utilization of the management resources of the Corporation. On such occasions, the Human Resources Committee shall act in an advisory capacity to the Chief Executive Officer in respect of the foregoing. The Human Resources Committee shall have and perform such other and additional duties as from time to time may be prescribed by the board of directors. -7- SECTION 4. Finance Committee. The Finance Committee shall consist of such directors of the Corporation, a majority of whom are not officers or employees of the Corporation or of any subsidiary, as shall be appointed from time to time by the board of directors. The Finance Committee shall consider and make recommendations to the board of directors as to such financial matters concerning the Corporation as shall be referred to it by the board of directors, or the Chairman of the Board, or which the Committee may consider on its own initiative, and perform such additional duties as from time to time may be prescribed by the board of directors. SECTION 5. Audit Committee. The Audit Committee shall consist of at least three (3) but not more than five (5) directors of the Corporation, who are not officers or employees of the Corporation or of any subsidiary, as shall be appointed from time to time by the board of directors. The Audit Committee shall (i) consider and make recommendations to the board of directors as to such auditing matters concerning the Corporation as shall be referred to it by the board of directors, or the Chairman of the Board, or which the Committee may consider on its own initiative; (ii) each year recommend to the board of directors, for appointment by the board, independent auditors of the Corporation and its wholly-owned subsidiaries, respectively, for such year, to audit the financial statements of the Corporation and such subsidiaries, and to perform such other duties as the board may prescribe; (iii) have authority, to the extent considered desirable by the Committee, to examine into and make recommendations to the board of directors in respect of (a) the general scope and results of the audit conducted by the independent auditors; (b) the internal controls, systems and processes maintained by the Corporation to protect assets and manage risks; (c) legal, regulatory, compliance or similar matters that may have a material impact on the Corporation's financial position, and (d) the appointment, replacement, reassignment or dismissal of the director of internal audit; and (iv) perform such additional duties as from time to time may be prescribed by the board of directors. The Audit Committee shall have the power to conduct or authorize investigations into any matters within the Committee's scope of responsibilities and, in connection therewith, may retain independent counsel, accountants or others to assist it. SECTION 6. Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee shall consist of at least three (3) but not more than five (5) directors of the Corporation who are not officers or employees of the Corporation or of any subsidiary, as shall be appointed from time to time by the board of directors. The Corporate Governance and Nominating Committee shall (i) in consultation with the Chairman of the Board, consider and make recommendations to the full board of directors concerning the number and accountability of board committees, committee assignments and committee membership rotation practices, (ii) establish qualifications, desired backgrounds and selection criteria for nominees to the board of directors, (iii) recommend to the full board of directors nominees for board membership, (iv) on an annual basis, conduct an evaluation of the effectiveness of the full board of directors (but not of individual members) and the effectiveness of overall governance practices and guidelines, based on input from all board members, and (v) perform such additional duties as from time to time may be prescribed by the board of directors. -8- ARTICLE V --------- OFFICERS SECTION 1. Officers. The officers of the Corporation shall be a Chairman of the Board, one or more Vice Chairmen, a President, one or more Vice Presidents, a Treasurer, a Controller, and a Secretary, all of whom shall be elected by the board of directors. Any two or more offices, except those of President and Secretary, may be held by the same person. In addition, the Chairman of the Board may designate as Vice Presidents any number of individuals responsible for major operations or functions of the Corporation. Each such Vice President designated as a Senior Officer or member of the Chairman's Council, as evidenced by a listing maintained by the Corporate Secretary, shall have all the authority with respect to such individual's area of responsibility as is conferred upon a Vice President elected by the board of directors. The board of directors may appoint one or more Assistant Treasurers, one or more Assistant Controllers, one or more Assistant Secretaries, and such other assistant officers as the board may deem necessary, who shall have such authority and shall perform such duties as from time to time may be prescribed by the board of directors. Subject to Section 9 of this Article V, each officer and assistant officer elected or appointed by the board of directors or designated by the Chairman shall hold office until the next annual meeting of the board of directors and until his successor shall be chosen. SECTION 2. The Chairman of the Board. The Chairman of the Board shall be a director. If so designated by the board of directors, he shall be the chief executive officer of the Corporation and shall have general direction over the affairs of the Corporation, subject to the control and direction of the board of directors. He shall, when present, preside as chairman at all meetings of the stockholders and of the board of directors. He may call meetings of the board of directors whenever he deems it advisable. In the absence or incapacity of the President to act, he shall perform all duties and functions and exercise all the powers of the President. Unless otherwise provided by the board of directors, he may execute and deliver bonds, notes, contracts, agreements or other obligations or instruments in the name of the Corporation, and with the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, may execute and deliver all certificates for shares of the capital stock or other securities of the Corporation and any warrants evidencing the right to subscribe to shares of the capital stock of the Corporation. The Chairman of the Board shall have such other powers and perform such other duties as from time to time may be assigned to him by the board of directors. SECTION 3. Vice Chairman. Each Vice Chairman shall be a director. He shall have such powers and shall perform such duties as may be assigned to him by the board of directors or by the Chair- man of the Board, or elsewhere in these by-laws. -9- SECTION 4. The President. The President shall be a director. If so designated by the board of directors, he shall be the chief executive officer of the Corporation and shall have general direction over the affairs of the Corporation, subject to the control and direction of the Chairman of the Board and the board of directors. He shall have general charge, control and supervision over the administration and operations of the Corporation, subject to the control and direction of the board of directors and the Chairman of the Board. He shall keep the Chairman of the Board fully informed concerning the business of the Corporation under his supervision. In the absence or incapacity of the Chairman of the Board, a Vice Chairman or the President shall preside at meetings of the stockholders and of the board of directors and shall perform all duties and functions and exercise all the powers of the Chairman of the Board. Unless otherwise provided by the board of directors, the President may execute and deliver bonds, notes, contracts, agreements or other obligations or instruments in the name of the Corporation, and with the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, may execute and deliver all certificates for shares of the capital stock or other securities of the Corporation and any warrants evidencing the right to subscribe to shares of the capital stock of the Corporation. In general, the President shall have and perform all powers and duties incident to the office of a president of a corporation and such other powers and duties as from time to time may be assigned to him by the board of directors or the Chairman of the Board. SECTION 5. Vice President. In the absence or incapacity of the Chairman of the Board, any Vice Chairman, or the President, a Vice President designated by the Chairman of the Board or by the board of directors shall have and perform all the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Each Vice President shall have such other powers and shall perform such other duties as may be assigned to him by the board of directors or by the Chairman of the Board, any Vice Chairman, or the President. SECTION 6. Treasurer. The Treasurer shall have responsibility for the custody and safekeeping of all funds and securities of the Corporation; he shall obtain and maintain appropriate insurance for the benefit of the Corporation; he shall be responsible for determining credit policies of the Corporation, for administration of such policies, and collection of monies due the Corporation in accordance therewith; he may sign with the Chairman of the Board, any Vice Chairman, or the President any or all certificates for shares of the capital stock or other securities of the Corporation and any warrants evidencing the right to subscribe to shares of the capital stock of the Corporation; and in general he shall have and perform all of the other powers and duties incident to the office of treasurer and such other powers and duties as may be assigned to him by the board of directors or the Chairman of the Board, any Vice Chairman, or the President. SECTION 7. The Controller. The Controller shall be the chief accounting officer of the Corporation, shall maintain adequate records of its assets, liabilities and transactions, shall see that adequate audits thereof are currently and regularly made, and shall be in charge of its books of account and its accounting and financial statements and records, operating reports, budgets, statistics, and estimates and projections. He shall be responsible for the development and maintenance of inventory control records and the taking and costing of physical inventories; for the initiation, preparation and issuance of standard practices relating to all accounting matters and procedures, and the coordination of accounting systems throughout the Corporation and its -10- subsidiaries; and for the analysis and interpretation of significant data to develop trends and cost comparisons, which shall be made available to the Corporation's management together with his conclusions therefrom. He shall maintain adequate records of authorized appropriations and determine that all sums expended pursuant thereto are accounted for, and shall be responsible for the preparation and filing of tax returns and all matters relating to taxes. The Controller shall have such other powers and perform such other duties as may from time to time be assigned to him by the board of directors or the Chairman of the Board, any Vice Chairman, or the President. SECTION 8. The Secretary. The Secretary shall keep or cause to be kept the minutes of all meetings of the stockholders and of the board of directors; shall see that all notices are duly given in accordance with the provisions of these by-laws and as required by law; shall be custodian of the minute books, stock ledger, and similar corporate records and of the seal of the Corporation and see that the seal is affixed to all documents the execution and delivery of which on behalf of the Corporation under its seal are duly authorized in accordance with the provisions of these by-laws; shall keep or cause to be kept a stock ledger of the Corporation containing a complete list of stockholders, the post office address of each stockholder, and the number of shares registered in the name of each stockholder; may sign with the Chairman of the Board, any Vice Chairman, or the President any and all certificates for shares of the capital stock or other securities of the Corporation and any warrants evidencing the right to subscribe to shares of the capital stock of the Corporation; and in general the Secretary shall have and perform all powers and duties incident to the office of the secretary and such other powers and duties as may, from time to time, be assigned to him by the board of directors or the Chairman of the Board, any Vice Chairman, or the President. SECTION 9. Removal of Officers. Any officer elected or appointed by the board of directors may be removed, either with or without cause, by the vote of a majority of the directors then in office at any meeting of the board of directors. Any Vice President designated by the Chairman of the Board may be removed, either with or without cause, by written designation from the Chairman delivered to the Corporate Secretary. SECTION 10. Filling of Vacancies. If a vacancy shall exist in the office of any officer or assistant officer of the Corporation, the board of directors may elect or appoint any person to fill such vacancy, such person to hold office (subject to Section 9 of this Article V) until the next annual meeting of the board of directors and until his successor shall be chosen and qualified. ARTICLE VI ---------- CAPITAL STOCK SECTION 1. Transfer of Shares. The shares of stock of the Corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives or pursuant to the unclaimed property laws of the various states and upon such transfer the old certificates shall be surrendered to the Corporation by the delivery thereof to the Secretary or the transfer agent for said shares of stock, or to such other person as the board of -11- directors may designate, by whom such old certificates shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer. SECTION 2. Lost or Destroyed Certificates. The board of directors may determine the conditions upon which a new certificate of stock may be issued in place of a certificate which is alleged to have been lost, stolen or destroyed; and may, in the board's discretion, require the owner of such certificate or his legal representative to give bond, with such surety, if any, as the board shall deem appropriate, sufficient to indemnify the Corporation and each transfer agent and registrar, against any claim which may arise by reason of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. SECTION 3. Unclaimed Property Laws. The officers of the Corporation who are authorized to issue or cause the issuance of duplicate stock certificates pursuant to Section 2 of this Article VI are hereby authorized to issue or cause the issuance of duplicate stock certificates, without cancellation of the original certificates, as may be required in respect of compliance with the un- claimed property laws of any state. ARTICLE VII ----------- CORPORATE SEAL The board of directors shall authorize and establish a corporate seal containing the name of the Corporation, the words "Corporate Seal" and "Delaware", and otherwise in such form as shall be approved by the board of directors. ARTICLE VIII ------------ MISCELLANEOUS PROVISIONS SECTION 1. Fiscal Year. The fiscal year of the Corporation shall be the calendar year. SECTION 2. Notice. Any notice required, (i) if given by mail, shall be deemed to have been given upon the deposit thereof in a post office box, postage prepaid, or (ii) if given by telegraph or cable, shall be deemed to have been given upon delivery thereof to the telegraph or cable company for transmission, or (iii) if the person entitled to notice has facilities for the receipt of telecopies or telex, shall be deemed to have been given upon transmission of the notice by such means; and in any instance the notice shall be addressed to the person entitled thereto at such person's last known address according to the records of the Corporation. SECTION 3. Voting Upon Stocks. Unless otherwise ordered by the board of directors, the Chairman of the Board, any Vice Chairman, or the President shall have full power and authority in behalf of the Corporation to attend and to act and to vote at any meeting of stockholders of any corporation in which the Corporation may hold stock, and also to execute and deliver for and on -12- behalf of the Corporation proxies in respect of such meetings, and at any such meeting the Chairman of the Board, any Vice Chairman, or the President or the individual or individuals named in the proxy executed by the Chairman of the Board, any Vice Chairman, or the President in respect of such meeting shall possess and may exercise any and all the rights and powers incident to the ownership of such stock and which, as the owner thereof, the Corporation might have possessed and exercised if present. The board of directors, by resolution, from time to time may confer like powers upon any other person or persons, which powers may be general or confined to specific instances. SECTION 4. Action Without Meeting. Any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting if all members of the board or such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceeding of the board or committee. ARTICLE IX ---------- AMENDMENTS The board of directors shall have full power to alter, amend or repeal these by- laws or any provision thereof, or to adopt new by-laws, at any regular meeting as part of the general business of such meeting, or at a special meeting called for the purpose. By-laws adopted, altered or amended by the board of directors may be altered, amended or repealed by the stockholders. Notwithstanding the preceding sentence, and subject to the rights of holders of Preferred Stock, any action of the stockholders to adopt, amend, alter or repeal the by-laws shall require the affirmative vote of at least eighty percent (80%) of the holders of common stock of the Corporation. * * * * * * * * * -13- EX-10.III(R) 3 WHIRLPOOL STOCK AND INCENTIVE PLAN Exhibit 10(iii)r WHIRLPOOL CORPORATION 1996 OMNIBUS STOCK AND INCENTIVE PLAN (As amended February 16, 1999) ARTICLE 1 GENERAL 1.1 PURPOSE Whirlpool Corporation, a Delaware corporation (the "Corporation"), hereby adopts, subject to stockholder approval, this plan which shall be known as the WHIRLPOOL CORPORATION 1996 OMNIBUS STOCK AND INCENTIVE PLAN (the "Plan"). The Corporation and its Subsidiaries are severally and collectively referred to hereinafter as the "Company." The purpose of the Plan is to foster and promote the long-term financial success of the Company and materially increase stockholder value by: (a) strengthening the Company's capability to develop, maintain, and direct an outstanding management team; (b) motivating superior performance by means of long-term performance related incentives; (c) encouraging and providing for obtaining an ownership interest in the Company; (d) attracting and retaining outstanding executive talent by providing incentive compensation opportunities competitive with other major companies; and (e) enabling executives to participate in the long-term growth and financial success of the Company. 1.2 ADMINISTRATION (a) The Plan shall be administered by the Human Resources Committee of the Board of Directors of the Corporation or such other committee of directors as is designated by the Board of Directors of the Corporation (the "Committee"), which shall consist of two or more members. Each member shall be a "disinterested person," as that term is defined by Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") or any similar rule which may subsequently be in effect ("Rule 16b-3") and shall be an "outside director" within the meaning of Section 162(m)(4)(C)(i) of the Internal Revenue Code of 1986, as it may be amended from time to time (the "Code"). The members shall be appointed by the Board of Directors, and any vacancy on the Committee shall be filled by the Board of Directors. (b) Subject to the limitations of the Plan, the Committee shall have the sole and complete authority to: (i) select from the regular, full-time employees of the Company, those who shall participate in the Plan (a "Participant" or "Participants"); (ii) make awards in such forms and amounts as it shall determine; (iii) impose such limitations, restrictions and conditions upon such awards as it shall deem appropriate; (iv) interpret the Plan and adopt, amend, and rescind administrative guidelines and other rules and regulations relating to the Plan; (v) correct any defect or omission or reconcile any inconsistency in this Plan or in any award granted hereunder; and (vi) make all other determinations and take all other actions deemed necessary or advisable for the implementation and administration of the Plan. The Committee's determinations on matters within its authority shall be conclusive and binding upon the Company and all other persons. (c) All expenses associated with the Plan shall be borne by the Corporation subject to such allocation to its Subsidiaries and operating units as it deems appropriate. (d) The Committee may, to the extent that any such action will not prevent the Plan from complying with Rule 16b-3 or the outside director requirement of Code Section 162(m), delegate any of its authority hereunder to such persons as it deems appropriate. (e) The provisions of this Plan are intended to qualify awards made to certain Participants (hereinafter identified as "Covered Participants") under the Plan under the "performance-based" exception to the Code (S)162(m) deduction limitation. 1.3 SELECTION FOR PARTICIPATION Participants shall be selected by the Committee from the employees who occupy responsible managerial or professional positions and who have the capacity to contribute to the success of the Company. In making this selection and in determining the form and amount of awards, the Committee may give consideration to the functions and responsibilities of the employee; the employee's past, present, and potential contributions to the Company's profitability and sound growth; the value of the employee's services to the Company; and other factors deemed relevant by the Committee. Grants may be made to the same individual on more than one occasion. 1.4 TYPES OF AWARDS UNDER PLAN Awards under the Plan may be in the form of any one or more of the following: (a) Statutory stock options ("ISOs", which term shall be deemed to include Incentive Stock Options as defined in Section 2.5 and any future type of tax- qualified option which may subsequently be authorized), Non-statutory Stock Options ("NSOs" and, collectively with ISOs, "Options"), and Stock Appreciation Rights ("SARs") as described in Article II; (b) Performance Units and Performance Shares ("Performance Units" and "Performance Shares") as described in Article III; and (c) Restricted Stock and Restricted Stock Equivalents ("Restricted Stock" and "Restricted Stock Equivalents") as described in Article IV (collectively, "Awards"). 1.5 SHARES SUBJECT TO THE PLAN Shares of stock covered by Awards under the Plan may be in whole or in part authorized and unissued or treasury shares of the Corporation's common stock, $1.00 par value per share, or such other shares as may be substituted pursuant to Section 6.2 ("Common Stock"). The maximum number of shares of Common Stock which may be issued for all purposes under the Plan shall be 4 million shares (subject to adjustment pursuant to Section 6.2). The maximum number of shares of Common Stock which may be issued pursuant to the exercise of Options awarded under the Plan shall be 3,750,000 shares (subject to adjustment pursuant to Section 6.2). Any shares of Common 2 Stock subject to an Option which for any reason is canceled (excluding shares subject to an Option canceled upon the exercise of a related SAR to the extent shares are issued upon exercise of such SAR) or terminated without having been exercised, or any shares of Restricted Stock or Performance Shares which are forfeited, shall again be available for Awards under the Plan. The maximum number of shares of Common Stock which may be issued pursuant to Restricted Stock or the cash paid with respect to Restricted Stock Equivalent awards under the Plan shall be 1,000,000 shares (subject to adjustment pursuant to Section 6.2) or the cash equivalent thereof. No fractional shares shall be issued, and the Committee shall determine the manner in which fractional share value shall be treated. 1.6 MAXIMUM AWARDS PER PARTICIPANT (a) The aggregate number of shares of Common Stock (including any cash equivalents thereof) that a Covered Participant may receive upon exercise of all of the Options and SARs awarded to such Covered Participant under the Plan (including those already exercised by the Covered Participant) shall not exceed 600,000 shares or the cash equivalent thereof. (b) The aggregate number of (i) all Performance Units and Performance Shares and (ii) all Restricted Stock and Restricted Stock Equivalents awarded to a Covered Participant in any calendar year shall not exceed the equivalent of 300,000 shares or the cash equivalent thereof. 1.7 GENDER AND NUMBER Except when otherwise indicated by the context, words in the masculine gender when used in the Plan shall include the feminine gender, the singular shall include the plural, and the plural shall include the singular. ARTICLE II STOCK OPTIONS AND STOCK APPRECIATION RIGHTS 2.1 AWARD OF STOCK OPTIONS The Committee may, from time to time, subject to the provisions of the Plan and such other terms and conditions as the Committee may prescribe, award to any Participant ISOs and NSOs to purchase Common Stock. 2.2 STOCK OPTION AGREEMENTS At the discretion of the Committee, an Option awarded under the Plan may be evidenced by a signed written agreement containing such terms and conditions as the Committee may from time to time determine. 3 2.3 OPTION PRICE The purchase price of Common Stock under each Option (the "Option Price") shall be the Fair Market Value of the Common Stock on the date the Option is awarded. 2.4 EXERCISE AND TERM OF OPTIONS (a) Options awarded under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall approve, either at the time of grant of such Options or pursuant to a general determination, and which need not be the same for all Participants, provided that no such Option shall be exercisable within the first twelve months of its term. Each Option which is intended to qualify as an ISO pursuant to Section 422 of the Code, and each Option which is intended to qualify as another type of ISO which may subsequently be authorized by law, shall comply with the applicable provisions of the Code pertaining to such Options. (b) The Committee shall establish procedures governing the exercise of Options and shall require that written notice of exercise be given and that the Option Price be paid in full in cash (including check, bank draft or money order) at the time of exercise; provided, however, that such Option Price may be paid within six business days of the time of exercise, if the Participant instructs the Corporation to sell shares delivered on exercise as the Participant's agent pursuant to a "cashless exercise" program or other similar program established by the Committee. The Committee may permit a Participant, in lieu of part or all of the cash payment, to make payment in Common Stock already owned by that Participant, valued at Fair Market Value on the date of exercise, as partial or full payment of the Option Price; provided, however, that the Committee may, in any instance, in order to prevent any possible violation of law, require the Option Price to be paid in cash. As soon as practicable after receipt of each notice and full payment, the Company shall deliver to the Participant a certificate or certificates representing the acquired shares of Common Stock. The exercise of an Option shall cancel any related SAR to the extent of the number of shares as to which the Option is exercised. 2.5 LIMITATIONS ON ISOs Notwithstanding anything in the Plan to the contrary, to the extent required from time to time by the Code, the following additional provisions shall apply to the grant of Options which are intended to qualify as ISOs (as such term is defined in Section 422 of the Code): (a) The aggregate Fair Market Value (determined as of the date the Option is granted) of the shares of Common Stock with respect to which ISOs are exercisable for the first time by any Participant during any calendar year (under all plans of the Company) shall not exceed $100,000 or such other amount as may subsequently be specified by the Code; provided that, to the extent that such limitation is exceeded, any excess Options (as determined under the Code) shall be deemed to be NSOs. 4 (b) Any ISO authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain or be deemed to contain all provisions required in order to qualify the Options as ISOs. (c) All ISOs must be granted within ten years from the earlier of the date on which this Plan was adopted by the Board of Directors or the date this Plan was approved by the stockholders. (d) Unless sooner exercised, terminated, or canceled, all ISOs shall expire no later than ten years after the date of grant. 2.6 TERMINATION OF EMPLOYMENT In the event the Participant ceases to be an employee with the consent of the Committee or upon the Participant's death, retirement or disability, each of the Participant's outstanding Options shall be exercisable by the Participant (or the Participant's legal representative or designated beneficiary), to the extent that such Option was then exercisable, at any time prior to an expiration date established by the Committee at the time of award (which may be the original expiration date of such Option or such earlier time as the Committee may establish), but in no event after its respective expiration date; provided that NSOs may be exercised up to one year after the death of a Participant even if this is beyond their expiration date. If the Participant ceases to be an employee for any other reason, all of the Participant's then outstanding Options shall terminate immediately. 2.7 AWARD OF STOCK APPRECIATION RIGHTS (a) General. A SAR is a right to receive, without payment (except for applicable withholding taxes) to the Company, a number of shares of Common Stock, cash, or a combination thereof, the amount of which is determined pursuant to the formula set forth in Section 2.7(e). A SAR may be granted (i) with respect to any Option granted under this Plan, either concurrently with the grant of such Option, or at such later time as determined by the Committee (as to all or any portion of the shares of Common Stock subject to the Option); (ii) with respect to any stock option currently outstanding under other incentive plans of the Corporation (as to all or any portion of the shares subject to the stock option), on terms established by the Committee; or (iii) alone, without reference to any related stock option. Each SAR granted by the Committee under this Plan shall be subject to the terms and conditions of this Section. (b) Number. Each SAR granted to any Participant shall relate to such number of shares of Common Stock as shall be determined by the Committee, subject to adjustment as provided in Section 6.2. In the case of a SAR granted with respect to a stock option, the number of shares of Common Stock to which the SAR pertains shall be reduced in the same proportion that the holder of the option exercises the related stock option. (c) Duration. The term of each SAR shall be determined by the Committee but in no event shall a SAR be exercisable during the first year of its term. Subject to the foregoing, unless otherwise 5 provided by the Committee, each SAR shall become exercisable at such time or times, to such extent and upon such conditions as the stock option, if any, to which it relates is exercisable. (d) Exercise. A SAR may be exercised, in whole or in part, by giving written notice to the Company, specifying the number of SARs which the holder wishes to exercise. Upon receipt of such written notice, the Company shall, within 90 days thereafter, deliver to the exercising holder a certificate for the shares of Common Stock or cash or both, as determined by the Committee, to which the holder is entitled. No SAR granted to an Officer may be exercised in whole or in part for cash except during the period described in Section 6.3(c)(ii)(1) hereof. (e) Payment. Subject to the right of the Committee to deliver cash in lieu of shares of Common Stock, the number of shares of Common Stock which shall be issuable upon the exercise of a SAR shall be determined by dividing: (i) the number of shares of Common Stock as to which the SAR is exercised multiplied by the amount of the appreciation in such shares (for this purpose, the "appreciation" shall be the amount by which the Fair Market Value of a share of Common Stock subject to the SAR on the exercise date exceeds (A) in the case of a SAR related to a stock option, the purchase price of a share of Common Stock under the stock option or (B) in the case of a SAR granted alone, without reference to a related stock option, an amount which shall be determined by the Committee at the time of grant, provided, however, such amount is at least equal to the Fair Market Value of the Common Stock on the date the SAR is awarded, (subject to adjustment under Section 6.2); by (ii) the Fair Market Value of a share of Common Stock on the exercise date. In lieu of issuing shares of Common Stock upon the exercise of a SAR, the Committee may elect to pay the holder of the SAR cash equal to the Fair Market Value on the exercise date of any or all of the shares which would otherwise be issuable. No fractional shares of Common Stock shall be issued upon the exercise of a SAR; instead, the holder of the SAR shall be entitled to receive a cash adjustment equal to the same fraction of the Fair Market Value of a share of Common Stock on the exercise date or to purchase the portion necessary to make a whole share at its Fair Market Value on the date of exercise. (f) Agreement. Each SAR awarded by the Committee shall be subject to the provisions of the Plan and such other terms and conditions as the Committee may prescribe. At the discretion of the Committee, SARs awarded under the Plan may be evidenced by a signed written agreement containing such terms and conditions as the Committee may from time to time determine. 6 ARTICLE III PERFORMANCE SHARES AND UNITS 3.1 AWARD OF PERFORMANCE UNITS AND PERFORMANCE SHARES The Committee may award to any Participant Performance Shares and Performance Units ("Performance Awards"). Each Performance Share shall represent one share of Common Stock. Each Performance Unit shall represent the right of a Participant to receive an amount equal to the value determined in the manner established by the Committee at the time of award, which value may, without limitation, be equal to the Fair Market Value of one share of Common Stock. 3.2 PERFORMANCE UNIT AND PERFORMANCE SHARE AGREEMENTS Each Performance Award shall be subject to the provisions of the Plan and such other terms and conditions as the Committee may prescribe. At the discretion of the Committee, a Performance Award may be evidenced by a signed written agreement containing such terms and conditions as the Committee may from time to time determine. 3.3 ESTABLISHMENT OF PERFORMANCE ACCOUNTS At the time of award, the Company shall establish an account (a "Performance Account") for each Participant. Performance Units and Performance Shares awarded to a Participant shall be credited to the Participant's Performance Account. 3.4 PERFORMANCE PERIOD AND TARGETS (a) The performance period for each award of Performance Shares and Performance Units shall be of such duration as the Committee shall establish at the time of award; provided, however, that in no event will the performance period be less than one year (the "Performance Period"). There may be more than one award in existence at any one time and Performance Periods may differ. (b) The Committee shall set performance targets relating to Performance Units and Performance Shares which shall be based on one or more of the following performance measures: stock price, market share, increase in sales, earnings per share, return on equity, cost reductions, economic value added, or any similar performance measure established by the Committee. Such performance targets shall be established in writing by the Committee no later than the earlier of (i) 90 days after the commencement of the Performance Period with respect to which the award of Performance Units or Performance Shares is made and (ii) the date as of which twenty-five percent (25%) of such Performance Period has elapsed. At the time of setting performance targets, the Committee shall establish superior and satisfactory performance targets to be achieved within the Performance Period. Failure to meet the satisfactory performance target will earn no Performance Award. 7 Performance Awards will be earned as determined by the Committee in respect of a Performance Period in relation to the degree of attainment of performance between the superior and satisfactory performance targets. 3.5 PAYMENT RESPECTING PERFORMANCE AWARDS (a) Performance Awards shall be earned to the extent that their terms and conditions are met. Notwithstanding the foregoing, Performance Awards and any other amounts credited to the Participant's Performance Account shall be payable to the Participant in accordance with the relevant award documents or otherwise when, if, and to the extent that the Committee determines to make such payment. All payment determinations shall be made by the Committee during the first four months following the end of the Performance Period. (b) The Participant may elect to defer any payment respecting a Performance Award pursuant to Article V hereof. (c) Payment for Performance Awards may be made in a lump sum or in installments, in cash, Common Stock or in a combination thereof as the Committee may determine. 3.6 TERMINATION OF EMPLOYMENT In the event the Participant ceases to be an employee before the end of any Performance Period with the consent of the Committee, or upon the Participant's death, retirement or disability before the end of any Performance Period, the Committee, taking into consideration the performance of such Participant and the performance of the Company over the Performance Period, may authorize the payment to such Participant (or the Participant's legal representative or designated beneficiary) of all or a portion of the amount which would have been paid to the Participant had the Participant continued as an employee to the end of the Performance Period. In the event a Participant ceases to be an employee for any other reason, any unpaid amounts for outstanding Performance Periods shall be forfeited. ARTICLE IV RESTRICTED STOCK AND RESTRICTED STOCK EQUIVALENTS 4.1 AWARD OF RESTRICTED STOCK The Committee may award to any Participant shares of Common Stock, subject to this Article IV and such other terms and conditions as the Committee may prescribe (such shares being herein called "Restricted Stock"). Each certificate for Restricted Stock shall be registered in the name of the Participant and deposited by the Participant, together with a stock power endorsed in blank, with the Corporation. 8 4.2 RESTRICTED STOCK AGREEMENT At the discretion of the Committee, Restricted Stock awarded under the Plan may be evidenced by a signed written agreement containing such terms and conditions as the Committee may from time to time determine. 4.3 RESTRICTION PERIOD At the time of award there shall be established for each Participant, subject to Paragraph 4.6, a restriction period (the "Restriction Period") which shall lapse (a) upon the completion of a period of time ("Time Goal") as shall be determined by the Committee, or (b) upon the achievement of stock price goals within certain time limitations ("Price/Time Goal") as shall be determined by the Committee, provided that such Time Goal shall last at least until the third year anniversary of the date of the award or Price/Time Goal shall last at least until the first year anniversary of the date of the award. Shares of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered, except as hereinafter provided, during the Restriction Period. Except for such restrictions on transfer, the Participant as owner of such shares of Restricted Stock shall have all the rights of a holder of Common Stock. With respect to shares of Restricted Stock which are issued subject to a Time Goal, the Corporation shall redeliver to the Participant (or the Participant's legal representative or designated beneficiary) the certificates deposited pursuant to Section 4.1 at the expiration of the Restriction Period. With respect to shares of Restricted Stock which are issued subject to a Price/Time Goal, the Corporation shall redeliver to the Participant (or the Participant's legal representative or designated beneficiary) the certificates deposited pursuant to Section 4.1 upon the achievement of the goal on or before the close of the Restriction Period. With respect to shares of Restricted Stock which are issued subject to a Price/Time Goal which fail to meet the goal before the end of the restriction period, all such shares shall be forfeited, and the Corporation shall have the right to complete a blank stock power in order to return such shares to the Corporation. 4.4 TERMINATION OF EMPLOYMENT (a) In the event the Participant ceases to be an employee with the consent of the Committee or upon the Participant's death, retirement or disability before the end of the Restriction Period and the Participant has received an award subject to a Time Goal, the restrictions imposed under this Article IV shall lapse with respect to such number of those shares subject to a Time Goal as shall be determined by the Committee, but, in no event less than a number equal to the product of (a) a fraction, the numerator of which is the number of completed months elapsed after the date of award of the Restricted Stock subject to a Time Goal to the Participant to the date of termination and the denominator of which is the number of months in the Restriction Period multiplied by (b) the number of shares of Restricted Stock subject to a Time Goal; provided, however, that notwithstanding the foregoing, no restrictions shall lapse if the Participant ceases to be an employee prior to the three year anniversary of the date upon which the award was granted. 9 (b) In the event the Participant ceases to be an employee with the consent of the Committee or upon the Participant's death, retirement or disability before the end of the Restriction Period and the Participant has received an award subject to a Price/Time Goal, the restrictions imposed under this Article IV shall lapse upon the achievement of the Price/Time Goal within two years of the Participant's termination of employment with respect to such number of those shares subject to a Price/Time Goal as shall be determined by the Committee, but, in no event, less than a number equal to the product of (a) a fraction, the numerator of which is the number of completed months elapsed after the date of award of the Restricted Stock subject to a Price/Time Goal to the Participant to the date of termination and the denominator of which is the number of months elapsed after the date award of the Restricted Stock subject to a Price/Time Goal to the Participant to the date of achievement of the Price/Time Goal multiplied by (b) the number of shares of Restricted Stock subject to a Price/Time Goal; provided, however, that notwithstanding the foregoing, no restrictions shall lapse if the Participant ceases to be an employee prior to the first year anniversary of the date upon with the award was granted. (c) In the event the Participant ceases to be an employee for any other reason, all shares of Restricted Stock theretofore awarded to that Participant which are still subject to restrictions shall be forfeited and the Corporation shall have the right to complete the blank stock power. 4.5 AWARD OF RESTRICTED STOCK EQUIVALENTS In lieu of or in addition to the foregoing Restricted Stock Awards, the Committee may award to any Participant restricted stock equivalents, subject to the terms and conditions of Paragraphs 4.2, 4.3, and 4.4 of this Article IV being applied to such awards as if those awards were for Restricted Stock and subject to such other terms and conditions as the Committee may prescribe ("Restricted Stock Equivalents"). Each Restricted Stock Equivalent shall represent the right of the Participant to receive an amount determined in the manner established by the Committee at the time of award, which value may, without limitation, be equal to the Fair Market Value of one share of Common Stock. Payment for Restricted Stock Equivalents may be made in a lump sum or in installments, in cash, Common Stock, or in a combination thereof as the Committee may determine. 4.6 CERTAIN RESTRICTED STOCK AND RESTRICTED STOCK EQUIVALENTS AWARDED TO COVERED PARTICIPANTS Any Restricted Stock or Restricted Stock Equivalent awarded to a Covered Participant which the Committee intends to qualify for the performance-based exception under Code Section 162(m) shall be subject to a Price/Time Goal. With respect to any such award, the stock price goals upon which the restrictions imposed will lapse shall consist of one or more of the following performance goals: stock price, market share, sales increases, earnings per share, return on equity, cost reductions, economic value added, or any similar performance measure established by the Committee. Such measures shall be established in writing by the Committee no later than the earlier of (a) 90 days after the commencement of the performance period with respect to which the award of Restricted 10 Stock or restricted stock equivalent is made and (b) the date as of which twenty-five percent (25%) of such performance period has elapsed. ARTICLE V DEFERRAL OF PAYMENTS 5.1 ELECTION TO DEFER A Participant may elect, with the consent of the Committee, no later than December 31 of the last full calendar year of the Performance Period, to defer all or a portion of the Participant's Performance Award within deferral limits established by the Committee (the "Deferred Amount"). The Committee may permit amounts now or hereafter deferred or available for deferral under any present or future incentive compensation program or deferral arrangement of the Company to be deemed Deferred Amounts and to become subject to the provisions of this Article. All Deferred Amounts will be subject to such terms and conditions, and shall accrue such yield thereon (which may be measured by the Fair Market Value of the Common Stock and dividends thereon) as the Committee may from time to time establish. 5.2 DEFERRAL PERIOD The Participant may, with the consent of the Committee, elect to receive payment of Deferred Amounts and any yield thereon either before or after retirement in a lump sum or in installments. Upon the death of a Participant, payments of any amounts hereunder shall be made to the Participant's designated beneficiary (pursuant to Section 6.13) or estate (in the absence of a designated beneficiary) in the manner elected by the Participant or (in the event the Participant made no election) in the manner determined by the Committee. The period between the date the Participant's Deferred Amount becomes payable and the final payment of such Deferred Amount hereunder shall be known as the "Deferral Period." 5.3 PARTICIPANT REPORTS Annually, each Participant who has a Deferred Amount will receive a report setting forth all then Deferred Amounts and the yield thereon to date. 5.4 PAYMENT OF DEFERRED AMOUNTS Unless otherwise agreed by the Corporation and the Participant, payment of Deferred Amounts may be in cash, Common Stock, or partly in cash and partly in Common Stock, as the Committee shall determine. 11 5.5 ESTABLISHMENT OF TRUST The Committee, in its sole discretion, may establish a trust to hold Deferred Amounts or any portion thereof for the benefit of Participants. ARTICLE VI MISCELLANEOUS PROVISIONS 6.1 NON-TRANSFERABILITY Except as provided below, no Award under the Plan (including any Deferred Amount), and no interest therein, shall be transferable by the Participant otherwise than by will or, if the Participant dies intestate, by the laws of descent and distribution. All Awards shall be exercisable or received during the Participant's lifetime only by the Participant or his legal representative. Notwithstanding the foregoing, the Committee may from time to time permit awards to be transferable subject to such terms and conditions as the Committee may impose. Any transfer contrary to this Section 6.1 will nullify the Award. 6.2 ADJUSTMENTS UPON CERTAIN CHANGES: In the event of a stock dividend or stock split, or combination or other increase or reduction in the number of issued shares of Common Stock, the Board of Directors or the Committee may, in order to prevent the dilution or enlargement of rights under Awards (including Deferred Amounts), make such adjustments in the number and type of shares authorized by this Plan, the number and type of shares covered by, or with respect to which payments are measured under, outstanding Awards and the exercise prices specified therein as may be determined to be appropriate and equitable. The Committee may, notwithstanding any other provision of the Plan to the contrary, provide in the documents evidencing any Award (including Deferred Amounts) for adjustments to such Award in order to prevent the dilution or enlargement of rights thereunder or to provide for acceleration of benefits thereunder in the event of a change in control, merger, consolidation, reorganization, recapitalization, sale or exchange of substantially all assets or dissolution of or spin-off or similar transaction by the Corporation; provided, however, that no such provision shall require such acceleration of benefits in connection with a change in control as to any Award (including Deferred Amounts) held by either (a) a Participant who is an elected officer of the Corporation immediately prior to the transaction or series of transactions in which the change in control (the "Transaction") is to occur or (b) any other Participant who is designated by the Committee at the time the Award is made or subsequently thereto and, in either such case, who will hold an "Excess Equity Interest" in the Corporation, its successor or any of its affiliates after such change in control, unless a majority of the disinterested members of the Board of Directors approves such acceleration prior to the change in control. An "Excess Equity Interest" means that (i) the percentage interest in the Common Stock and similar securities of the Corporation, its successor, or any of its affiliates to be 12 beneficially owned by the Participant after the change in control ("Post-Change Securities") will exceed (A) one-half of one percent (0.5%) and (B) the percentage interest in the Common Stock of the Corporation beneficially owned by the Participant immediately prior to the Transaction, such percentages to be determined on a fully-diluted basis, or (ii) the Participant will receive in connection with the change in control (in exchange for his Common Stock, as compensation and otherwise) a greater amount of Post-Change Securities, per share of Common Stock of the Corporation beneficially owned by him (including shares which may be acquired under stock options) immediately prior to the Transaction than stockholders of the Corporation who are not employed by the Company will have the right to receive, per share of Common Stock of the Corporation held by such stockholders. 6.3 TAX WITHHOLDING (a) The Company shall have the power to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any withholding or other tax due from the Corporation with respect to any amount payable and/or shares issuable under the Plan, and the Corporation may defer such payment or issuance unless indemnified to its satisfaction. (b) Subject to the consent of the Committee, due to (i) the exercise of a NSO, (ii) lapse of restrictions on a Restricted Stock Award, or (iii) the issuance of any other stock award under the Plan, a Participant may make an irrevocable election (an "Election") to (A) have shares of Common Stock otherwise issuable under (i) withheld, or (B) tender back to the Corporation shares of Common Stock received pursuant to (i), (ii), or (iii), or (C) deliver back to the Corporation pursuant to (i), (ii), or (iii) previously-acquired shares of Common Stock of the Corporation having a Fair Market Value sufficient to satisfy all or part of the Participant's estimated tax obligations associated with the transaction. Such Election must be made by a Participant prior to the date on which the relevant tax obligation arises (the "Tax Date"). The Committee may disapprove of any Election, may suspend or terminate the right to make Elections, or may provide with respect to any Award under this Plan that the right to make Elections shall not apply to such Awards. (c) If a Participant is an officer, as that term is used in Rule 16a-1 promulgated under the Exchange Act or any similar rule which may subsequently be in effect (an "Officer"), then an Election must be made and must be effective either (1) during a period beginning on the third business day following the date of release for publication of the Company's quarterly or annual summary statements of sales and earnings and ending on the twelfth business day following such date or (2) at least six months prior to the Tax Date. 6.4 CONDITIONS ON AWARDS In the event that the employment of a Participant holding any unexercised Option or SAR, any unearned Performance Award, any unearned shares of Restricted Stock, or any unearned Restricted Stock Equivalents shall terminate with the consent of the Committee or by reason of retirement or disability, the rights of such Participant to any such Award shall be subject to the conditions that 13 until any such Option or SAR is exercised, or any such Performance Award, share of Restricted Stock or Restricted Stock Equivalent is earned, the Participant shall (a) not engage, either directly or indirectly, in any manner or capacity as advisor, principal, agent, partner, officer, director, employee, member of any association or otherwise, in any business or activity which is at the time competitive with any business or activity conducted by the Company and (b) be available, unless the Participant shall have died, at reasonable times for consultations (which shall not require substantial time or effort) at the request of the Company's management with respect to phases of the business with which the Participant was actively connected during the Participant's employment, but such consultations shall not (except in the case of a Participant whose active service was outside of the United States) be required to be performed at any place or places outside of the United States of America or during usual vacation periods or periods of illness or other incapacity. In the event that either of the above conditions is not fulfilled, the Participant shall forfeit all rights to any unexercised Option or SAR, Performance Award, shares of Restricted Stock or Restricted Stock Equivalents held as on the date of the breach of condition. Any determination by the Board of Directors of the Corporation, which shall act upon the recommendation of the Chairman, that the Participant is, or has, engaged in a competitive business or activity as aforesaid or has not been available for consultations as aforesaid shall be conclusive. 6.5 AMENDMENT, SUSPENSION AND TERMINATION OF PLAN The Board of Directors may suspend or terminate the Plan or any portion thereof at any time and may amend it from time to time in such respects as the Board of Directors may deem advisable in order that any Awards thereunder shall conform to or otherwise reflect any change in applicable laws or regulations, or to permit the Company or its employees to enjoy the benefits of any change in applicable laws or regulations, or in any other respect the Board of Directors may deem to be in the best interests of the Company; provided, however, that no such amendment shall, without stock-holder approval to the extent required by law, agreement, or the rules of any exchange upon which the Common Stock is listed, (i) except as provided in Section 6.2, materially increase the number of shares of Common Stock which may be issued under the Plan, (ii) materially modify the requirements as to eligibility for participation in the Plan, (iii) materially increase the benefits accruing to Participants under the Plan, or (iv) extend the termination date of the Plan. No such amendment, suspension or termination shall (A) impair the rights of Participants under outstanding Options, SARs, Performance Awards, awards of Restricted Stock or Restricted Stock Equivalents, Performance Accounts or Deferred Amounts without the consent of the Participants affected thereby or (B) make any change that would disqualify the Plan, or any other plan of the Corporation intended to be so qualified, from the exemption provided by Rule 16b-3. 6.6 FOREIGN ALTERNATIVES Notwithstanding the other provisions of the Plan, in the case of any Award (including any Deferred Amount) to any Participant who is an employee of a foreign Subsidiary or foreign branch of the Company or held by a Participant who is in any other category specified by the Committee, the Committee may specify that such Award shall not be represented by shares of Common Stock or 14 other securities but shall be represented by rights approximately equivalent (as determined by the Committee) to the rights that such Participant would have received if shares of Common Stock or other securities had been issued in the name of such Participant other-wise in accordance with the Plan (such rights being hereinafter called "Stock Equivalents"). The Stock Equivalents representing any such Award may subsequently, at the option of the Committee, be converted into cash or an equivalent number of shares of Common Stock or other securities under such circumstances and in such manner as the Committee may determine. 6.7 DEFINITIONS AND OTHER GENERAL PROVISIONS (a) The terms "retirement" and "disability" as used under the Plan shall be construed by reference to the provisions of the pension plan or other similar plan or program of the Company applicable to a Participant. (b) The term "Fair Market Value" as it relates to Common Stock on any given date means (i) the mean of the high and low sales prices of the Corporation's Common Stock as reported by the Composite Tape of the New York Stock Exchange (or, if not so reported, on any domestic stock exchanges on which the Common Stock is then listed); or (ii) if the Common Stock is not listed on any domestic stock exchange, the mean of the high and low sales prices of the Corporation's Common Stock as reported by the Nasdaq Stock Market on such date or the last previous date reported (or, if not so reported, by the system then regarded as the most reliable source of such quotations) or, if there are no reported sales on such date, the mean of the closing bid and asked prices as so reported; or (iii) if the Common Stock is listed on a domestic exchange or quoted in the domestic over-the-counter market, but there are not reported sales or quotations, as the case may be, on the given date, the value determined pursuant to (i) or (ii) above using the reported sale prices or quotations on the last previous date on which so reported; or (iv) if none of the foregoing clauses apply, the fair value as determined in good faith by the Corporation's Board of Directors or the Committee. (c) The term "Subsidiary" shall mean, unless the context otherwise requires, any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation if each of the corporations other than the last corporation in such chain owns stock possessing at least 20% of the voting power in one of the other corporations in such chain. (d) The adoption of the Plan shall not preclude the adoption by appropriate means of any other stock option or other incentive plan for employees. 6.8 NON-UNIFORM DETERMINATIONS The Committee's determinations under the Plan, including without limitation, (a) the determination of the Participants to receive Awards, (b) the form, amount and timing of such Awards, (c) the terms and provisions of such Awards and (d) the agreements, if any, evidencing the same, need not be 15 uniform and may be made by it selectively among Participants who receive, or who are eligible to receive, Awards under the Plan, whether or not such Participants are similarly situated. 6.9 SUSPENSIONS, LEAVES OF ABSENCE, AND TRANSFERS The Committee shall be entitled to make such rules, regulations and determinations as it deems appropriate under the Plan in respect of any suspension of employment or leave of absence from the Company granted to a Participant. Without limiting the generality of the foregoing, the Committee shall be entitled to determine (a) whether or not any such suspension or leave of absence shall be treated as if the Participant ceased to be an employee and (b) the impact, if any, of any such suspension or leave of absence on Awards under the Plan. In the event a Participant transfers within the Company, such Participant shall not be deemed to have ceased to be an employee for purposes of the Plan. 6.10 LISTING, REGISTRATION, AND LEGAL COMPLIANCE Each Award (including Deferred Amounts) shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration, or qualification of such Award, or any shares of Common Stock or other property subject thereto, upon any securities exchange or under any foreign, federal, or state securities or other law or regulation, or the consent or approval of any governmental body or the taking of any other action to comply with or otherwise with respect to any such law or regulation, is necessary or desirable as a condition to or in connection with the granting of such Award or the issue, delivery or purchase of shares of Common Stock or other property thereunder, no such Award may be exercised or paid in Common Stock or other property unless such listing, registration, qualification, consent, approval, or other action shall have been effected or obtained free of any conditions not acceptable to the Committee and the holder of the Award will supply the Corporation with such certificates, representations and information as the Corporation shall request and shall otherwise cooperate with the Corporation in effecting or obtaining such listing, registration, qualification, consent, approval or other action. In the case of Officers and other persons subject to Section 16(b) of the Exchange Act, the Committee may at any time impose any limitations upon the exercise, delivery, or payment of any Award (including Deferred Amounts) which, in the discretion of the Committee, are necessary or desirable in order to comply with Section 16(b) and the rules and regulations thereunder. If the Corporation, as part of an offering of securities or otherwise, finds it desirable because of foreign, federal, or state legal or regulatory requirements to reduce the period during which Options or SARs may be exercised, the Committee may, in its discretion and without the holders' consent, so reduce such period on not less than 15 days' written notice to the holders thereof. 6.11 LOANS The Committee may provide for the Corporation or any Subsidiary to make loans to finance the exercise of any Option as well as the estimated or actual amount of any taxes payable by the holder 16 as a result of the exercise or payment of any Option and may prescribe, or may empower the Corporation or such Subsidiary to prescribe, the other terms and conditions (including but not limited to the interest rate, maturity date and whether the loan will be secured or unsecured) of any such loan; provided, however, that notwithstanding the foregoing, all loans made pursuant to this provision shall include an interest rate on the outstanding balance of the loan at a rate of at least the then prevailing rate the Corporation would be charged by an unaffiliated lender for a loan of a similar nature and maturity. 6.12 INDEMNIFICATION Each person who is or shall have been a member of the Committee shall be indemnified and held harmless by the Corporation against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by that person in connection with or resulting from any claim, action, suit, or proceeding to which that person may be a party or in which that person may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by that person in settlement thereof, with the Corporation's approval, or paid by that person in satisfaction of any judgment in any such action, suit, or proceeding against that person, provided that person shall give the Corporation an opportunity, at its own expense, to handle and defend the same before that person undertakes to handle and defend it on that person's own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Corporation's Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Corporation may have to indemnify them or hold them harmless. 6.13 BENEFICIARY DESIGNATION Each Participant under the Plan may name, from time to time, any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of the Participant's death before the Participant receives any or all of such benefit. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Committee during the Participant's lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate. 6.14 RIGHTS OF PARTICIPANTS Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ of the Company for any period of time or to continue the Participant's present or any other rate of compensation. No employee shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant. 17 6.15 COMPLIANCE WITH PROVISIONS OF TAX AND SECURITIES LAW It is the intent of the Corporation that the Plan comply in all respects with Rule 16b-3 under the Exchange Act and Section 162(m) of the Code, that any ambiguities or inconsistencies in construction of the Plan be interpreted to give effect to such intention and that if any provision of the Plan is found not to be in compliance with Rule 16b-3 or Section 162(m), such provision shall be deemed null and void to the extent required to permit the Plan to comply with Rule 16b-3 or Section 162(m), as the case may be. 6.16 REQUIREMENTS OF LAW, GOVERNING LAW The granting of Awards and the issuance of shares of Common Stock shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. The Plan, and all related award documents, shall be construed in accordance with and governed by the laws of the State of Delaware. . The provisions of the Plan shall be interpreted so as to comply with the conditions or requirements of Rule 16b-3 under the Exchange Act, unless a contrary interpretation of any such provisions is otherwise required by applicable law. 6.17 EFFECTIVE DATE The Plan shall, subject to the approval of the holders of a majority of the shares of Common Stock present at the 1996 annual meeting of the Corporation's stockholders, be deemed effective as of January 1, 1996. No awards of Options, SARs, Performance Units, Performance Shares or shares of Restricted Stock or Restricted Stock Equivalents shall be made hereunder after December 31, 2005. (Rev. 02/16/99) 18 EX-10.III(S) 4 WHIRLPOOL CORPORATION 1998 STOCK & INCENTIVE PLAN Exhibit 10(iii)S WHIRLPOOL CORPORATION 1998 OMNIBUS STOCK AND INCENTIVE PLAN (As amended February 16, 1999) ARTICLE 1 GENERAL 1.1 PURPOSE Whirlpool Corporation, a Delaware corporation (the "Corporation"), hereby adopts, subject to stockholder approval, this plan which shall be known as the WHIRLPOOL CORPORATION 1998 OMNIBUS STOCK AND INCENTIVE PLAN (the "Plan"). The Corporation and its Subsidiaries are severally and collectively referred to hereinafter as the "Company." The purpose of the Plan is to foster and promote the long-term financial success of the Company and materially increase stockholder value by: (a) strengthening the Company's capability to develop, maintain, and direct an outstanding management team; (b) motivating superior performance by means of long-term performance related incentives; (c) encouraging and providing for obtaining an ownership interest in the Company; (d) attracting and retaining outstanding executive talent by providing incentive compensation opportunities competitive with other major companies; and (e) enabling executives to participate in the long-term growth and financial success of the Company. 1.2 ADMINISTRATION (a) The Plan shall be administered by the Human Resources Committee of the Board of Directors of the Corporation or such other committee of directors as is designated by the Board of Directors of the Corporation (the "Committee"), which shall consist of two or more members. Each member shall be a "Non-employee Director " as that term is defined by Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") or any similar rule which may subsequently be in effect ("Rule 16b-3") and shall be an "outside director" within the meaning of Section 162(m)(4)(C)(i) of the Internal Revenue Code of 1986, as it may be amended from time to time (the "Code"). The members shall be appointed by the Board of Directors, and any vacancy on the Committee shall be filled by the Board of Directors. (b) Subject to the limitations of the Plan, the Committee shall have the sole and complete authority to: (i) select from the regular full-time employees of the Company those who shall participate in the Plan (a "Participant" or "Participants"); (ii) make awards in such forms and amounts as it shall determine; (iii) impose such limitations, restrictions and conditions upon such awards as it shall deem appropriate; (iv) interpret the Plan and adopt, amend and rescind administrative guidelines and other rules and regulations relating to the Plan; (v) correct any defect or omission or reconcile any inconsistency in this Plan or in any award granted hereunder; and (vi) make all other determinations and take all other actions deemed necessary or advisable for the implementation and administration of the Plan. The Committee's determinations on matters within its authority shall be conclusive and binding upon the Company and all other persons. (c) All expenses associated with the Plan shall be borne by the Corporation subject to such allocation to its Subsidiaries and operating units as it deems appropriate. (d) The Committee may delegate any of its authority hereunder to such persons as it deems appropriate. 1.3 SELECTION FOR PARTICIPATION Participants shall be selected by the Committee from the employees who occupy responsible managerial or professional positions and who have the capacity to contribute to the success of the Company. In making this selection and in determining the form and amount of awards, the Committee may give consideration to the functions and responsibilities of the employee; the employee's past, present and potential contributions to the Company's profitability and sound growth; the value of the employee's services to the Company; and other factors deemed relevant by the Committee. Grants may be made to the same individual on more than one occasion. 1.4 TYPES OF AWARDS UNDER PLAN Awards under the Plan may be in the form of any one or more of the following: (a) Statutory Stock Options ("ISOs", which term shall be deemed to include Incentive Stock Options as defined in Section 2.5 and any future type of tax- qualified option which may subsequently be authorized), Non-statutory Stock Options ("NSOs" and, collectively with ISOs, "Options") and Stock Appreciation Rights ("SARs") as described in Article II; (b) Performance Units and Performance Shares ("Performance Units" and "Performance Shares") as described in Article III; and (c) Restricted Stock and Restricted Stock Equivalents ("Restricted Stock" and "Restricted Stock Equivalents") as described in Article IV (collectively, "Awards"). 1.5 SHARES SUBJECT TO THE PLAN Shares of stock covered by Awards under the Plan may be in whole or in part authorized and unissued or treasury shares of the Corporation's common stock, $1.00 par value per share, or such other shares as may be substituted pursuant to Section 6.2 ("Common Stock"). The maximum number of shares of Common Stock which may be issued for all purposes under the Plan shall be 4 million shares (subject to adjustment pursuant to Section 6.2). The maximum number of shares of Common Stock which may be issued pursuant to the exercise of Options awarded under the Plan shall be 3,750,000 shares (subject to adjustment pursuant to Section 6.2). Any shares of Common Stock subject to an Option which for any reason is canceled (excluding shares subject to an Option canceled upon the exercise of a related SAR to the extent shares are issued upon exercise of such SAR) or terminated without having been exercised, or any shares of Restricted Stock or Performance Shares which are forfeited, shall again be available for Awards under the Plan. The maximum number of shares of Common Stock which may be issued pursuant to Restricted Stock and Restricted Stock Equivalent awards shall be 1,000,000 shares, and the maximum number of shares of Common Stock which may be issued pursuant to Performance Share and Performance Unit awards shall be 1,000,000 (subject to adjustment pursuant to Section 6.2) or the cash equivalent thereof. No fractional shares shall be issued, and the Committee shall determine the manner in which fractional share value shall be treated. 1.6 MAXIMUM AWARDS PER PARTICIPANT (a) The aggregate number of shares of Common Stock that a Participant may receive upon exercise of all of the Options and SARs awarded to such Participant under the Plan (including those already exercised by the Participant) shall not exceed 600,000 shares or the cash equivalent thereof. (b) The aggregate number of (i) all Performance Units and Performance Shares and (ii) all shares of Restricted Stock and Restricted Stock Equivalents awarded to a Participant in any calendar year shall not exceed the equivalent of 300,000 shares or the cash equivalent thereof. ARTICLE II STOCK OPTIONS AND STOCK APPRECIATION RIGHTS 2.1 AWARD OF STOCK OPTIONS The Committee may, from time to time, subject to the provisions of the Plan and such other terms and conditions as the Committee may prescribe, award to any Participant ISOs and NSOs to purchase Common Stock. 2.2 STOCK OPTION AGREEMENTS At the discretion of the Committee, an Option awarded under the Plan may be evidenced by a signed written agreement containing such terms and conditions as the Committee may from time to time determine. 2.3 OPTION PRICE The purchase price of Common Stock under each Option (the "Option Price") shall be the Fair Market Value of the Common Stock on the date the Option is awarded. 2.4 EXERCISE AND TERM OF OPTIONS (a) Options awarded under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall approve, either at the time of grant of such Options or pursuant to a general determination, and which need not be the same for all Participants, provided that no such Option shall be exercisable within the first twelve months of its term. Each Option that is intended to qualify as an ISO pursuant to Section 422 of the Code, and each Option that is intended to qualify as another type of ISO that may subsequently be authorized by law, shall comply with the applicable provisions of the Code pertaining to such Options. (b) The Committee shall establish procedures governing the exercise of Options and shall require that written notice of exercise be given and that the Option Price be paid in full in cash (including check, bank draft or money order) at the time of exercise; provided, however, that such Option Price may be paid within six business days of the time of exercise, if the Participant instructs the Corporation to sell shares delivered on exercise as the Participant's agent pursuant to a "cashless exercise" program or other similar program established by the Committee. The Committee may permit a Participant, in lieu of part or all of the cash payment, to make payment in Common Stock already owned by that Participant, valued at Fair Market Value on the date of exercise, as partial or full payment of the Option Price; provided, however, that the Committee may, in any instance, in order to prevent any possible violation of law, require the Option Price to be paid in cash. As soon as practicable after receipt of each notice and full payment, the Company shall deliver to the Participant a certificate or certificates representing the acquired shares of Common Stock. The exercise of an Option shall cancel any related SAR to the extent of the number of shares as to which the Option is exercised. 2.5 LIMITATIONS ON ISOs Notwithstanding anything in the Plan to the contrary, to the extent required from time to time by the Code, the following additional provisions shall apply to the grant of Options which are intended to qualify as ISOs (as such term is defined in Section 422 of the Code): (a) The aggregate Fair Market Value (determined as of the date the Option is granted) of the shares of Common Stock with respect to which ISOs are exercisable for the first time by any Participant during any calendar year (under all plans of the Company) shall not exceed $100,000 or such other amount as may subsequently be specified by the Code; provided that, to the extent that such limitation is exceeded, any excess Options (as determined under the Code) shall be deemed to be NSOs. (b) Any ISO authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain or be deemed to contain all provisions required in order to qualify the Options as ISOs. (c) All ISOs must be granted within ten years from the earlier of the date on which this Plan was adopted by the Board of Directors or the date this Plan was approved by the stockholders. (d) Unless sooner exercised, terminated or canceled, all ISOs shall expire no later than ten years after the date of grant. 2.6 TERMINATION OF EMPLOYMENT In the event the Participant ceases to be an employee with the consent of the Committee or upon the Participant's death, retirement or disability, each of the Participant's outstanding Options shall be exercisable by the Participant (or the Participant's legal representative or designated beneficiary), to the extent that such Option was then exercisable, at any time prior to an expiration date established by the Committee at the time of award (which may be the original expiration date of such Option or such earlier time as the Committee may establish), but in no event after its respective expiration date; provided that NSOs may be exercised up to one year after the death of a Participant even if this is beyond their expiration date. If the Participant ceases to be an employee for any other reason, all of the Participant's then outstanding Options shall terminate immediately. 2.7 AWARD OF STOCK APPRECIATION RIGHTS (a) General. An SAR is a right to receive, without payment (except for applicable withholding taxes) to the Company, a number of shares of Common Stock, cash or a combination thereof, the amount of which is determined pursuant to the formula set forth in Section 2.7(e). An SAR may be granted (i) with respect to any Option granted under this Plan, either concurrently with the grant of such Option, or at such later time as determined by the Committee (as to all or any portion of the shares of Common Stock subject to the Option); (ii) with respect to any stock option currently outstanding under other incentive plans of the Corporation (as to all or any portion of the shares subject to the stock option), on terms established by the Committee; or (iii) alone, without reference to any related stock option. Each SAR granted by the Committee under this Plan shall be subject to the terms and conditions of this Section. (b) Number. Each SAR granted to any Participant shall relate to such number of shares of Common Stock as shall be determined by the Committee, subject to adjustment as provided in Section 6.2. In the case of an SAR granted with respect to a stock option, the number of shares of Common Stock to which the SAR pertains shall be reduced in the same proportion that the holder of the option exercises the related stock option. (c) Duration. The term of each SAR shall be determined by the Committee but in no event shall an SAR be exercisable during the first year of its term. Subject to the foregoing, unless otherwise provided by the Committee, each SAR shall become exercisable at such time or times, to such extent and upon such conditions as the stock option, if any, to which it relates is exercisable. (d) Exercise. An SAR may be exercised, in whole or in part, by giving written notice to the Company, specifying the number of SARs which the holder wishes to exercise. Upon receipt of such written notice, the Company shall, within 90 days thereafter, deliver to the exercising holder a certificate for the shares of Common Stock or cash or both, as determined by the Committee, to which the holder is entitled. (e) Payment. Subject to the right of the Committee to deliver cash in lieu of shares of Common Stock, the number of shares of Common Stock which shall be issuable upon the exercise of an SAR shall be determined by dividing: (i) the number of shares of Common Stock as to which the SAR is exercised multiplied by the amount of the appreciation in such shares (for this purpose, the "appreciation" shall be the amount by which the Fair Market Value of a share of Common Stock subject to the SAR on the exercise date exceeds (A) in the case of an SAR related to a stock option, the purchase price of a share of Common Stock under the stock option or (B) in the case of an SAR granted alone, without reference to a related stock option, an amount which shall be determined by the Committee at the time of grant, provided, however, such amount is at least equal to the Fair Market Value of the Common Stock on the date the SAR is awarded, (subject to adjustment under Section 6.2)); by (ii) the Fair Market Value of a share of Common Stock on the exercise date. In lieu of issuing shares of Common Stock upon the exercise of an SAR, the Committee may elect to pay the holder of the SAR cash equal to the Fair Market Value on the exercise date of any or all of the shares which would otherwise be issuable. No fractional shares of Common Stock shall be issued upon the exercise of an SAR; instead, the holder of the SAR shall be entitled to receive a cash adjustment equal to the same fraction of the Fair Market Value of a share of Common Stock on the exercise date or to purchase the portion necessary to make a whole share at its Fair Market Value on the date of exercise. (f) Agreement. Each SAR awarded by the Committee shall be subject to the provisions of the Plan and such other terms and conditions as the Committee may prescribe. At the discretion of the Committee, SARs awarded under the Plan may be evidenced by a signed written agreement containing such terms and conditions as the Committee may from time to time determine. ARTICLE III PERFORMANCE SHARES AND UNITS 3.1 AWARD OF PERFORMANCE UNITS AND PERFORMANCE SHARES The Committee may award to any Participant Performance Shares and Performance Units ("Performance Awards"). Each Performance Share shall represent one share of Common Stock. Each Performance Unit shall represent the right of a Participant to receive an amount equal to the value determined in the manner established by the Committee at the time of award, which value may, without limitation, be equal to the Fair Market Value of one share of Common Stock. 3.2 PERFORMANCE UNIT AND PERFORMANCE SHARE AGREEMENTS Each Performance Award shall be subject to the provisions of the Plan and such other terms and conditions as the Committee may prescribe. At the discretion of the Committee, a Performance Award may be evidenced by a signed written agreement containing such terms and conditions as the Committee may from time to time determine. 3.3 ESTABLISHMENT OF PERFORMANCE ACCOUNTS At the time of award, the Company shall establish an account (a "Performance Account") for each Participant. Performance Units and Performance Shares awarded to a Participant shall be credited to the Participant's Performance Account. 3.4 PERFORMANCE PERIOD AND TARGETS (a) The performance period for each award of Performance Shares and Performance Units shall be of such duration as the Committee shall establish at the time of award; provided, however, that in no event will the performance period be less than one year (the "Performance Period"). There may be more than one award in existence at any one time and Performance Periods may differ. (b) The Committee shall set performance targets relating to Performance Units and Performance Shares which shall be based on one or more of the following performance measures: stock price, market share, increase in sales, earnings per share, return on equity, cost reductions, economic value added, or any other performance measure the Committee deems appropriate. With respect to any awards the Committee intends to qualify for the performance based exception under Code Section 162(m), performance targets shall be established in writing by the Committee no later than the earlier of (i) 90 days after the commencement of the Performance Period with respect to which the award of Performance Units or Performance Shares is made and (ii) the date as of which twenty-five percent (25%) of such Performance Period has elapsed. At the time of setting performance targets, the Committee shall establish superior and satisfactory performance targets to be achieved within the Performance Period. Failure to meet the satisfactory performance target will earn no Performance Award. Performance Awards will be earned as determined by the Committee in respect of a Performance Period in relation to the degree of attainment of performance between the superior and satisfactory performance targets. 3.5 PAYMENT RESPECTING PERFORMANCE AWARDS (a) Performance Awards shall be earned to the extent that their terms and conditions are met. Notwithstanding the foregoing, Performance Awards and any other amounts credited to the Participant's Performance Account shall be payable to the Participant in accordance with the relevant award documents or otherwise when, if, and to the extent that the Committee determines to make such payment. All payment determinations shall be made by the Committee during the first four months following the end of the Performance Period. (b) The Participant may elect to defer any payment respecting a Performance Award pursuant to Article V hereof. (c) Payment for Performance Awards may be made in a lump sum or in installments, in cash, Common Stock or in a combination thereof as the Committee may determine. 3.6 TERMINATION OF EMPLOYMENT If the Participant ceases to be an employee before the end of any Performance Period with the consent of the Committee or upon the Participant's death, retirement or disability before the end of any Performance Period, the Committee, taking into consideration the performance of such Participant and the performance of the Company over the Performance Period, may authorize the payment to such Participant (or the Participant's legal representative or designated beneficiary) of all or a portion of the amount which would have been paid to the Participant had the Participant continued as an employee to the end of the Performance Period. If a Participant ceases to be an employee for any other reason, any unpaid amounts for outstanding Performance Periods shall be forfeited. ARTICLE IV RESTRICTED STOCK AND RESTRICTED STOCK EQUIVALENTS 4.1 AWARD OF RESTRICTED STOCK The Committee may award to any Participant shares of Common Stock, subject to this Article IV and such other terms and conditions as the Committee may prescribe (such shares being herein called "Restricted Stock"). Each certificate for Restricted Stock shall be registered in the name of the Participant and deposited by the Participant, together with a stock power endorsed in blank, with the Company. 4.2 RESTRICTED STOCK AGREEMENT At the discretion of the Committee, Restricted Stock awarded under the Plan may be evidenced by a signed written agreement containing such terms and conditions as the Committee may from time to time determine. 4.3 RESTRICTION PERIOD At the time of award there shall be established for each Participant, a restriction period (the "Restriction Period") which shall lapse (a) upon the completion of a period of time ("Time Goal") as shall be determined by the Committee, or (b) upon the achievement of performance goals within certain time limitations ("Performance/Time Goal") as shall be determined by the Committee; provided that such Time Goal shall last at least until the third year anniversary of the date of the award or the Performance/Time Goal shall last at least until the first year anniversary of the date of the award. Shares of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered, except as hereinafter provided, during the Restriction Period. Except for such restrictions on transfer, the Participant as owner of such shares of Restricted Stock shall have all the rights of a holder of Common Stock. With respect to shares of Restricted Stock which are issued subject to a Time Goal, the Company shall redeliver to the Participant (or the Participant's legal representative or designated beneficiary) the certificates deposited pursuant to Section 4.1 at the expiration of the Restriction Period. With respect to shares of Restricted Stock which are issued subject to a Performance /Time Goal, the Company shall redeliver to the Participant (or the Participant's legal representative or designated beneficiary) the certificates deposited pursuant to Section 4.1 upon the achievement of the performance goal on or before the close of the Restriction Period. With respect to shares of Restricted Stock which are issued subject to a Performance/Time Goal which fail to meet the goal before the end of the restriction period, all such shares shall be forfeited, and the Company shall have the right to complete a blank stock power in order to return such shares to the Company. 4.4 TERMINATION OF EMPLOYMENT (a) In the event the Participant ceases to be an employee with the consent of the Committee or upon the Participant's death, retirement or disability before the end of the Restriction Period and the Participant has received an award subject to a Time Goal, the restrictions imposed under this Article IV shall lapse with respect to such number of those shares subject to a Time Goal as shall be determined by the Committee, but, in no event less than a number equal to the product of (a) a fraction, the numerator of which is the number of completed months elapsed after the date of award of the Restricted Stock subject to a Time Goal to the Participant to the date of termination and the denominator of which is the number of months in the Restriction Period, multiplied by (b) the number of shares of Restricted Stock subject to a Time Goal; provided, however, that notwithstanding the foregoing, no restrictions shall lapse if the Participant ceases to be an employee prior to the three year anniversary of the date upon which the award was granted. (b) In the event the Participant ceases to be an employee with the consent of the Committee or upon the Participant's death, retirement or disability before the end of the Restriction Period and the Participant has received an award subject to a Performance/Time Goal, the restrictions imposed under this Article IV shall lapse upon the achievement of the Performance/Time Goal within two years of the Participant's termination of employment with respect to such number of those shares subject to a Performance/Time Goal as shall be determined by the Committee, but, in no event, less than a number equal to the product of (a) a fraction, the numerator of which is the number of completed months elapsed after the date of award of the Restricted Stock subject to a Performance/Time Goal to the Participant to the date of termination of the Participant and the denominator of which is the number of months elapsed after the date award of the Restricted Stock subject to a Performance/Time Goal to the Participant to the date of achievement of the Performance/Time Goal, multiplied by (b) the number of shares of Restricted Stock subject to a Performance/Time Goal; provided, however, that notwithstanding the foregoing, no restrictions shall lapse if the Participant ceases to be an employee prior to the first year anniversary of the date upon which the award was granted. (c) In the event the Participant ceases to be an employee for any other reason, all shares of Restricted Stock theretofore awarded to that Participant which are still subject to restrictions shall be forfeited and the Company shall have the right to complete the blank stock power. 4.5 AWARD OF RESTRICTED STOCK EQUIVALENTS In lieu of or in addition to the foregoing Restricted Stock Awards, the Committee may award to any Participant restricted stock equivalents, subject to the terms and conditions of Paragraphs 4.2, 4.3, and 4.4 of this Article IV being applied to such awards as if those awards were for Restricted Stock and subject to such other terms and conditions as the Committee may prescribe ("Restricted Stock Equivalents"). Each Restricted Stock Equivalent shall represent the right of the Participant to receive an amount determined in the manner established by the Committee at the time of award, which value may, without limitation, be equal to the Fair Market Value of one share of Common Stock. Payment for Restricted Stock Equivalents may be made in a lump sum or installments, in cash, Common Stock or in a combination thereof as the Committee may determine. ARTICLE V DEFERRAL OF PAYMENTS 5.1 ELECTION TO DEFER A Participant may elect, with the consent of the Committee, no later than December 31 of the last full calendar year of the Performance Period, to defer all or a portion of the Participant's Performance Award within deferral limits established by the Committee, and the Committee may permit or require the deferral of any other Award payment, subject to such rules and procedures as it may establish (the "Deferred Amount"). The Committee may permit amounts now or hereafter deferred or available for deferral under any present or future incentive compensation program or deferral arrangement of the Company to be deemed Deferred Amounts and to become subject to the provisions of this Article. All Deferred Amounts will be subject to such terms and conditions and shall accrue such yield thereon (which may be measured by the Fair Market Value of the Common Stock and dividends thereon) as the Committee may from time to time establish. 5.2 DEFERRAL PERIOD The Participant may, with the consent of the Committee, elect to receive payment of Deferred Amounts and any yield thereon either before or after retirement in a lump sum or in installments. Upon the death of a Participant, payments of any amounts hereunder shall be made to the Participant's designated beneficiary (pursuant to Section 6.13) or estate (in the absence of a designated beneficiary) in the manner elected by the Participant or (in the event the Participant made no election) in the manner determined by the Committee. The period between the date the Participant's Deferred Amount becomes payable and the final payment of such Deferred Amount hereunder shall be known as the "Deferral Period." 5.3 PARTICIPANT REPORTS Annually, each Participant who has a Deferred Amount will receive a report setting forth all then Deferred Amounts and the yield thereon to date. 5.4 PAYMENT OF DEFERRED AMOUNTS Unless otherwise agreed by the Company and the Participant, payment of Deferred Amounts may be in cash, Common Stock or partly in cash and partly in Common Stock, as the Committee shall determine. 5.5 ESTABLISHMENT OF TRUST The Committee, in its sole discretion, may establish a trust to hold Deferred Amounts or any portion thereof for the benefit of Participants. ARTICLE VI MISCELLANEOUS PROVISIONS 6.1 NON-TRANSFERABILITY Except as provided below, no Award under the Plan (including any Deferred Amount), and no interest therein, shall be transferable by the Participant otherwise than by will or, if the Participant dies intestate, by the laws of descent and distribution. All Awards shall be exercisable or received during the Participant's lifetime only by the Participant or his legal representative. Notwithstanding the foregoing, the Committee may from time to time permit Awards to be transferable subject to such terms and conditions as the Committee may impose. Any transfer contrary to this Section 6.1 will nullify the Award. 6.2 ADJUSTMENTS UPON CERTAIN CHANGES: In the event of a stock dividend or stock split, or combination or other increase or reduction in the number of issued shares of Common Stock, the Board of Directors or the Committee may, in order to prevent the dilution or enlargement of rights under Awards (including any Deferred Amounts), make such adjustments in the number and type of shares authorized by this Plan, the number and type of shares covered by, or with respect to which payments are measured under, outstanding Awards and the exercise prices specified therein as may be determined to be appropriate and equitable. The Committee may, notwithstanding any other provision of the Plan to the contrary, provide in the documents evidencing any Award (including Deferred Amounts) or, prior to any change in control as defined in the Whirlpool Corporation Salaried Employees Retirement Plan ("Change in Control"), provide through unilateral action of the Committee for adjustments to such Award in order to prevent the dilution or enlargement of rights thereunder, to provide for substitute consideration thereunder or to provide for acceleration of benefits thereunder in the event of a Change in Control, merger, consolidation, reorganization, recapitalization, sale or exchange of substantially all assets or dissolution of or spin-off or similar transaction by the Company; provided, however, that no such provision shall require such acceleration of benefits in connection with a Change in Control as to any Award (including Deferred Amounts) held by either (a) a Participant who is an elected officer of the Company immediately prior to the transaction or series of transactions in which the Change in Control (the "Transaction") is to occur or (b) any other Participant who is designated by the Committee at the time the Award is made or subsequently thereto and, in either such case, who will hold an "Excess Equity Interest" in the Company, its successor or any of its affiliates after such Change in Control, unless a majority of the disinterested members of the Board of Directors approves such acceleration prior to the Change in Control. An "Excess Equity Interest" means that (i) the percentage interest in the Common Stock and similar securities of the Company, its successor, or any of its affiliates to be beneficially owned by the Participant after the Change in Control ("Post-Change Securities") will exceed the sum of (A) one-half of one percent (0.5%) and (B) the percentage interest in the Common Stock of the Company beneficially owned by the Participant immediately prior to the Transaction, such percentages to be determined on a fully-diluted basis, or (ii) the Participant will receive in connection with the Change in Control (in exchange for his Common Stock, as compensation and otherwise) a greater amount of Post-Change Securities, per share of Common Stock of the Company beneficially owned by him (including shares which may be acquired under stock options) immediately prior to the Transaction than stockholders of the Company who are not employed by the Company will have the right to receive, per share of Common Stock held by such stockholders. 6.3 TAX WITHHOLDING (a) The Company shall have the power to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any withholding or other tax due from the Corporation with respect to any amount payable and/or shares issuable under the Plan, and the Corporation may defer such payment or issuance unless indemnified to its satisfaction. (b) Subject to the consent of the Committee, due to (i) the exercise of a NSO, (ii) lapse of restrictions on a Restricted Stock Award or (iii) the issuance of any other stock award under the Plan, a Participant may make an irrevocable election (an "Election") to (A) have shares of Common Stock otherwise issuable under (i) withheld , or (B) tender back to the Company shares of Common Stock received pursuant to (i), (ii) or (iii), or (C) deliver back to the Company pursuant to (i), (ii) or (iii) previously-acquired shares of Common Stock having a Fair Market Value sufficient to satisfy all or part of the Participant's estimated tax obligations associated with the transaction. Such Election must be made by a Participant prior to the date on which the relevant tax obligation arises (the "Tax Date"). The Committee may disapprove of any Election, may suspend or terminate the right to make Elections, or may provide with respect to any Award under this Plan that the right to make Elections shall not apply to such Awards. 6.4 CONDITIONS ON AWARDS In the event that the employment of a Participant holding any unexercised Option or SAR, any unearned Performance Award, any unearned shares of Restricted Stock or any unearned Restricted Stock Equivalents shall terminate with the consent of the Committee or by reason of retirement or disability, the rights of such Participant to any such Award shall be subject to the conditions that until any such Option or SAR is exercised, or any such Performance Award, share of Restricted Stock or Restricted Stock Equivalent is earned, the Participant shall (a) not engage, either directly or indirectly, in any manner or capacity as advisor, principal, agent, partner, officer, director, employee, member of any association or otherwise, in any business or activity which is at the time competitive with any business or activity conducted by the Company and (b) be available, unless the Participant shall have died, at reasonable times for consultations (which shall not require substantial time or effort) at the request of the Company's management with respect to phases of the business with which the Participant was actively connected during the Participant's employment, but such consultations shall not (except in the case of a Participant whose active service was outside of the United States) be required to be performed at any place or places outside of the United States of America or during usual vacation periods or periods of illness or other incapacity. In the event that either of the above conditions is not fulfilled, the Participant shall forfeit all rights to any unexercised Option or SAR, Performance Award, shares of Restricted Stock or Restricted Stock Equivalents held as on the date of the breach of condition. Any determination by the Board of Directors of the Corporation, which shall act upon the recommendation of the Chairman, that the Participant is, or has, engaged in a competitive business or activity as aforesaid or has not been available for consultations as aforesaid shall be conclusive. 6.5 AMENDMENT, SUSPENSION AND TERMINATION OF PLAN The Board of Directors may suspend or terminate the Plan or any portion thereof at any time and may amend it from time to time in such respects as the Board of Directors may deem advisable in order that any Awards thereunder shall conform to or otherwise reflect any change in applicable laws or regulations, or to permit the Company or its employees to enjoy the benefits of any change in applicable laws or regulations, or in any other respect the Board of Directors may deem to be in the best interests of the Company; provided, however, that no such amendment shall, without stockholder approval to the extent required by law, agreement or the rules of any exchange upon which the Common Stock is listed, (i) except as provided in Section 6.2, materially increase the number of shares of Common Stock which may be issued under the Plan, (ii) materially modify the requirements as to eligibility for participation in the Plan, (iii) materially increase the benefits accruing to Participants under the Plan or (iv) extend the termination date of the Plan. No such amendment, suspension or termination shall impair the rights of Participants under outstanding Options, SARs, Performance Awards, awards of Restricted Stock or Restricted Stock Equivalents, Performance Accounts or Deferred Amounts without the consent of the Participants affected thereby. 6.6 FOREIGN ALTERNATIVES Notwithstanding the other provisions of the Plan, in the case of any Award (including any Deferred Amount) to any Participant who is an employee of a foreign Subsidiary or foreign branch of the Company or held by a Participant who is in any other category specified by the Committee, the Committee may specify that such Award shall not be represented by shares of Common Stock or other securities but shall be represented by rights approximately equivalent (as determined by the Committee) to the rights that such Participant would have received if shares of Common Stock or other securities had been issued in the name of such Participant otherwise in accordance with the Plan (such rights being hereinafter called "Stock Equivalents"). The Stock Equivalents representing any such Award may subsequently, at the option of the Committee, be converted into cash or an equivalent number of shares of Common Stock or other securities under such circumstances and in such manner as the Committee may determine. 6.7 DEFINITIONS AND OTHER GENERAL PROVISIONS (a) The terms "retirement" and "disability" as used under the Plan shall be construed by reference to the provisions of the pension plan or other similar plan or program of the Company applicable to a Participant. (b) The term "Fair Market Value" as it relates to Common Stock on any given date means (i) the mean of the high and low sales prices of the Common Stock as reported by the Composite Tape of the New York Stock Exchange (or, if not so reported, on any domestic stock exchanges on which the Common Stock is then listed); or (ii) if the Common Stock is not listed on any domestic stock exchange, the mean of the high and low sales prices of the Common Stock as reported by the Nasdaq Stock Market on such date or the last previous date reported (or, if not so reported, by the system then regarded as the most reliable source of such quotations) or, if there are no reported sales on such date, the mean of the closing bid and asked prices as so reported; of (iii) if the Common Stock is listed on a domestic exchange or quoted in the domestic over-the-counter market, but there are not reported sales or quotations, as the case may be, on the given date, the value determined pursuant to (i) or (ii) above using the reported sale prices or quotations on the last previous date on which so reported; or (iv) if none of the foregoing clauses apply, the fair value as determined in good faith by the Corporation's Board of Directors or the Committee. (c) The term "Subsidiary" shall mean, unless the context otherwise requires, any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation if each of the corporations other than the last corporation in such chain owns stock possessing at least 20% of the voting power in one of the other corporations in such chain. (d) The adoption of the Plan shall not preclude the adoption by appropriate means of any other stock option or other incentive plan for employees. 6.8 NON-UNIFORM DETERMINATIONS The Committee's determinations under the Plan, including without limitation, (a) the determination of the Participants to receive Awards, (b) the form, amount and timing of such Awards, (c) the terms and provisions of such Awards and (d) the agreements, if any, evidencing the same, need not be uniform and may be made by it selectively among Participants who receive, or who are eligible to receive, Awards under the Plan, whether or not such Participants are similarly situated. 6.9 SUSPENSIONS, LEAVES OF ABSENCE, AND TRANSFERS The Committee shall be entitled to make such rules, regulations and determinations as it deems appropriate under the Plan with respect to any suspension of employment or leave of absence from the Company granted to a Participant. Without limiting the generality of the foregoing, the Committee shall be entitled to determine (a) whether or not any such suspension or leave of absence shall be treated as if the Participant ceased to be an employee and (b) the impact, if any, of any such suspension or leave of absence on Awards under the Plan. In the event a Participant transfers within the Company, such Participant shall not be deemed to have ceased to be an employee for purposes of the Plan. 6.10 LISTING, REGISTRATION, AND LEGAL COMPLIANCE Each Award (including Deferred Amounts) shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration, or qualification of such Award, or any shares of Common Stock or other property subject thereto, upon any securities exchange or under any foreign, federal or state securities or other law or regulation, or the consent or approval of any governmental body or the taking of any other action to comply with or otherwise with respect to any such law or regulation, is necessary or desirable as a condition to or in connection with the granting of such Award or the issue, delivery or purchase of shares of Common Stock or other property thereunder, no such Award may be exercised or paid in Common Stock or other property unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained free of any conditions not acceptable to the Committee. The holder of the Award will supply the Company with such certificates, representations and information as the Company shall request and shall otherwise cooperate with the Company in effecting or obtaining such listing, registration, qualification, consent, approval or other action. In the case of Officers and other persons subject to Section 16 of the Exchange Act, the Committee may at any time impose any limitations upon the exercise, delivery or payment of any Award (including Deferred Amounts) which, in the discretion of the Committee, are necessary or desirable in order to comply with Section 16 and the rules and regulations thereunder. If the Company, as part of an offering of securities or otherwise, finds it desirable because of foreign, federal or state legal or regulatory requirements to reduce the period during which Options or SARs may be exercised, the Committee may, in its discretion and without the holders' consent, so reduce such period on not less than 15 days prior written notice to the holders thereof. 6.11 LOANS The Committee may provide for the Company to make loans to finance the exercise of any Option as well as the estimated or actual amount of any taxes payable by the holder as a result of the exercise or payment of any Option and may prescribe, or may empower the Company to prescribe, the other terms and conditions (including but not limited to the interest rate, maturity date and whether the loan will be secured or unsecured) of any such loan; provided, however, that notwithstanding the foregoing, all loans made pursuant to this provision shall include an interest rate on the outstanding balance of the loan at a rate of at least the then prevailing rate the Company would be charged by an unaffiliated lender for a loan of a similar nature and maturity. 6.12 INDEMNIFICATION Each person who is or shall have been a member of the Committee shall be indemnified and held harmless by the Corporation against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by that person in connection with or resulting from any claim, action, suit or proceeding to which that person may be a party or in which that person may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by that person in settlement thereof, with the Company's approval, or paid by that person in satisfaction of any judgment in any such action, suit or proceeding against that person, provided that person shall give the Company an opportunity, at its own expense, to handle and defend the same before that person undertakes to handle and defend it on that person's own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Corporation's Certificate of Incorporation or By-laws, as a matter of law, or otherwise, or any power that the Corporation may have to indemnify them or hold them harmless. 6.13 BENEFICIARY DESIGNATION Each Participant under the Plan may name, from time to time, any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of the Participant's death before the Participant receives any or all of such benefit. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Committee during the Participant's lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate. 6.14 RIGHTS OF PARTICIPANTS Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ of the Company for any period of time or to continue the Participant's present or any other rate of compensation. No employee shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant. 6.15 REQUIREMENTS OF LAW, GOVERNING LAW The granting of Awards and the issuance of shares of Common Stock shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. The Plan, and all related award documents, shall be construed in accordance with and governed by the laws of the State of Delaware. The provisions of the Plan shall be interpreted so as to comply with the conditions or requirements of Rule 16b-3 under the Exchange Act, unless a contrary interpretation of any such provisions is otherwise required by applicable law. 6.16 EFFECTIVE DATE The Plan shall, subject to the approval of the holders of a majority of the shares of Common Stock present at the 1998 annual meeting of the Corporation's stockholders, be deemed effective as of January 1, 1998. No awards of Options, SARs, Performance Units, Performance Shares or shares of Restricted Stock or Restricted Stock Equivalents shall be made hereunder after December 31, 2007. /// (Rev. 02/16/99) EX-11 5 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11--COMPUTATION OF EARNINGS PER SHARE WHIRLPOOL CORPORATION AND SUBSIDIARIES (all amounts in millions except earnings per share)
1999 1998 1997 ------ ------ ------- Basic: Average Shares Outstanding............................ 75.2 75.8 74.7 Earnings (Loss): Continuing Operations............................... $347.1 $310.3 $ (46.4) Discontinued Operations............................. 0.0 14.8 31.6 ------ ------ ------- Net Earnings (Loss)................................... $347.1 $325.1 $ (14.8) ====== ====== ======= Earnings (Loss) Per Share from Continuing Operations.. $ 4.61 $ 4.09 $ (0.62) Net Earnings (Loss) Per Share......................... $ 4.61 $ 4.29 $ (0.20) ====== ====== ======= Diluted: Average Shares Outstanding............................ 75.2 75.8 74.7 Treasury Stock Method (a): Stock Options....................................... 0.8 0.7 -- ------ ------ ------- Average Shares Outstanding.............................. 76.0 76.5 74.7 ====== ====== ======= Diluted Earnings (Loss) from Continuing Operations.... $347.1 $310.3 $ (46.4) ====== ====== ======= Diluted Earnings (Loss) Per Share from Continuing Operations........................................... $ 4.56 $ 4.06 $ (0.62) ====== ====== ======= Diluted Net Earnings (Loss) Per Share................. $ 4.56 $ 4.25 $ (0.20) ====== ====== =======
- -------- (a) Using the average market price per share of stock for the period; effect of stock options precipitates an anti-dilutive calculation in 1997, and therefore not included; convertible debt retired in 1997. F-10 EX-12 6 STATEMENT RE: COMPUTATION OF THE RATIOS OF EARNING EXHIBIT 12--RATIO OF EARNINGS TO FIXED CHARGES WHIRLPOOL CORPORATION AND SUBSIDIARIES
December 31, ------------- 1999 1998 ------ ------ Pretax earnings.................................................. $ 514 $ 564 Portion of rents representative of the interest factor........... 22 20 Interest on indebtedness......................................... 166 260 Amortization of debt expense and premium......................... 1 1 WFC preferred stock dividend..................................... 4 5 ------ ------ Adjusted income.............................................. $ 707 $ 851 ====== ====== Fixed charges - ------------- Portion of rents representative of the interest factor......... $ 22 $ 20 Interest on indebtedness....................................... 166 260 Amortization of debt expense and premium....................... 1 1 WFC preferred stock dividend................................... 4 5 ------ ------ $ 193 $ 287 ====== ====== Ratio of earnings to fixed charges............................... 3.7 3.0 ====== ======
F-11 EX-13 7 MDA AND CONSOLIDATED FINANCIAL STATEMENTS Exhibit 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS The consolidated statements of earnings summarize operating results for the last three years. This section of Management's Discussion and Analysis highlights the main factors affecting changes in operating results during the three-year period. The company's investment in its Brazilian subsidiary, Brasmotor S.A. (Brasmotor), is accounted for on a consolidated basis for the full year 1999 and 1998 and the last two months of 1997. Prior to the consolidation, the Brazilian operations were accounted for on an equity basis. EARNINGS Core earnings increased 31% in 1999 while 1998 core earnings increased 37% over 1997. The term "core earnings" refers to earnings from continuing operations excluding the effects of the first quarter 1999 Brazilian currency devaluation and restructuring and special operating charges recorded in 1997. Earnings and earnings per share for 1999, 1998 and 1997 were as follows:
----------------------------- (dollars in millions, except per share data) 1999 1998 1997 Core earnings $ 407 $ 310 $ 226 - ------------------------------------------------------------------------------- Diluted core earnings per share $5.35 $4.06 $ 2.99 - ------------------------------------------------------------------------------- Earnings (loss) from continuing operations $ 347 $ 310 $ (46) - ------------------------------------------------------------------------------- Diluted earnings (loss) per share from continuing operations $4.56 $4.06 $(0.62) - ------------------------------------------------------------------------------- Net earnings (loss) $ 347 $ 325 $ (15) - ------------------------------------------------------------------------------- Diluted net earnings (loss) per share $4.56 $4.25 $(0.20) - -------------------------------------------------------------------------------
Earnings from continuing operations and net earnings for 1999 were reduced $60 million after-taxes and minority interests, or $0.79 per diluted share, by the first quarter's Brazilian currency devaluation. During 1998, the company recorded an after-tax gain from discontinued operations of $15 million or $0.19 per diluted share related to the sale of consumer financing and European inventory financing assets to Transamerica Distribution Finance Corporation (TDF), concluding a series of transactions to dispose of its financing business initiated in the fourth quarter of 1997. Over 1998 and 1997, the company recorded total after-tax gains from discontinued operations of $57 million, or $0.74 per diluted share related to these transactions. In 1997, an after-tax and minority interests restructuring charge of $232 million, or $3.07 per diluted share and an after-tax and minority interests special operating charge of $40 million, or $0.54 per diluted share were incurred to better align the company's cost structure within the global home- appliance marketplace. Discontinued operating results for 1997 were $31 million, or $42 1 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION per diluted share, including an after-tax special operating charge of $22 million, or $0.29 per diluted share, an after-tax gain on business dispositions of $42 million or $0.55 per diluted share and discontinued earnings (before special charges) of $11 million or $0.16 per diluted share. Refer to Notes 4 and 11 to the accompanying consolidated financial statements. Equity earnings(loss) were $(4) million, $1 million and $67 million in 1999, 1998 and 1997. The decrease from 1998 was due primarily to the consolidation of Brasmotor starting in the last two months of 1997. NET SALES Net sales were $10.5 billion in 1999, a 2% increase over $10.3 billion in 1998. Net sales were $8.6 billion in 1997. The increase in 1999 results was primarily from a 9% increase in unit volumes, partially offset by the impact of currency fluctuations around the world. Excluding currency fluctuations, sales would have increased 11% over 1998. The regional trends were as follows: - - North American overall unit volumes were up 12%, with major appliances up 13% in an industry which was up 11%. This volume increase translated into a 10% increase in net sales. Unit volumes and net sales were up 10% and 6%, respectively, in the 1998 versus 1997 comparison. - - European unit sales increased 7% in an industry which increased 3%, while net sales were up 1% over a year ago reflecting the impact of currency fluctuations. Excluding the impact of currency fluctuations, net sales would have increased 6% over 1998. Unit volumes and net sales increased 7% and 4%, respectively, in the 1998 versus 1997 comparison due to higher volume and improved product mix. - - A weak Brazilian economy in the first half of 1999 and the Brazilian currency devaluation, which occurred primarily in the first quarter, contributed to flat unit sales and a 20% decrease in net sales in Latin America for the year versus 1998. Net sales adjusted for currency fluctuations increased 16% over 1998. The increase in 1998 consolidated net sales over 1997 was due primarily to the full year consolidation of Brasmotor. Excluding the impact of consolidating Brasmotor and currency fluctuations, net sales were up 4% in 1998 over 1997. GROSS MARGIN The gross margin percentage increased nearly one percentage point over 1998 to 25.3%, due primarily to benefits resulting from the restructuring started in 1997 and ongoing productivity improvements from the company's Operational Excellence program. These benefits combined to more than offset a change in the classification of certain North American sales allowances in 1999 from selling, general and administrative expenses into net sales. The reclassification reduced the full year gross margin by 0.3 percentage points. The regions all generated strong improvements during 1999 as North America's gross margin as a percentage of sales, excluding the sales 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION allowance reclassification, increased 0.9 percentage points and Europe, Brazil and Asia improved 1.2, 1.1 and 4.3 percentage points, respectively. The gross margin percentage improved by nearly one percentage point in 1998 versus 1997. The North American gross margin percentage improved due to increased volume, productivity improvements and reduced material costs, partially offset by price deterioration. The European gross margin improved due to the benefits of restructuring plus manufacturing efficiencies and reduced material costs. Selling, General and Administrative Expenses - -------------------------------------------- Selling, general and administrative expenses as a percent of net sales decreased from 1998 due to improvements related to restructuring and a 0.3 percentage points improvement due to the North American sales allowance reclassification. These improvements were partially offset by $36 million in pre-tax provisions in Brazil related to credit risk. The regional trends were as follows: - - North American expenses as a percentage of net sales increased 0.6 percentage points, excluding the sales allowance reclassification mentioned above, due to a temporary increase in logistics costs and expenses related to the implementation of a new Enterprise Resource Planning system. - - European expenses as a percent of net sales improved by one full percentage point due to reduced costs mainly from restructuring and further efficiency savings. - - Brazil's expenses as a percent of net sales improved slightly due to cost reduction efforts. - - Asia's expenses as a percentage of net sales improved 4.5 points due to increased sales and continued cost reductions efforts. The improvement of over one percentage point in 1998 versus 1997 was due to restructuring savings and other cost reduction initiatives, partially offset by pre-tax provisions totaling $28 million in Brazil related to increased credit risk. Other Income and Expense - ------------------------ Other income (expense) was $237 million unfavorable in 1999 versus 1998 primarily due to the impact from the Brazilian currency devaluation. The Brazilian real declined from 1.21 to 1.82 per US Dollar from mid-January 1999, when the Brazilian government changed its foreign exchange policy to a floating exchange rate, to December 31, 1999. The main impact from the devaluation occurred in the first quarter and resulted in a $146 million pre-tax charge to earnings (Whirlpool's share after-tax and minority interest was $53 million). Also included in this category was a $12 million pre-tax mark-to-market charge ($7 million after-tax) related to short term forward contracts purchased to hedge movement in Brazil's currency. For the full year, foreign exchange losses within the Brazilian operations totalled $169 million pre-tax (Whirlpool's share after-tax and minority interest was $62 million) and charges related to short term forward contracts totaled $23 million pre-tax ($14 million after-tax). Interest expense decreased $94 million over 1998, but this improvement was offset by lower interest income. Both of these changes were due to the 3 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION restructuring of the Brazilian balance sheet in order to reduce the company's exposure to exchange rate fluctuations. Other income (expense) for 1998 was favorable compared to 1997 primarily due to the inclusion of the Brazilian operations in the consolidated results for the full year 1998 versus two months in 1997. Income Taxes - ------------ The effective tax rate for continuing operations was 37% in 1999 (adjusted for the effect of the Brazilian currency devaluation), the same as 1998, and 44% in 1997 (adjusted for restructuring and other special operating charges). Including the Brazilian currency devaluation, the effective tax rate for 1999 was 38%. The decrease from 1997 to 1998 was due to the impact of consolidating Brasmotor, the recognition of certain tax benefits in Europe and Brazil, and the lower impact of permanent tax differences resulting from higher earnings. Including restructuring and other special operating charges, the effective tax benefit rate for 1997 was 5%. CASH FLOWS The statements of cash flows from continuing operations reflect the changes in cash and equivalents for the last three years 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 currency translation adjustments and changes in operating assets and liabilities such as receivables, inventories and payables. Cash provided by operating activities totaled $801 million versus $763 million in 1998. Cash provided by operations was $593 million in 1997. The increase in 1998 from 1997 was primarily due to higher earnings, partially offset by spending for restructuring. Investing Activities - -------------------- The principal recurring investing activities are property additions. Net property additions for continuing operations were $437 million, $523 million and $378 million in 1999, 1998 and 1997. The increased spending in 1998 over the 1999 and 1997 levels, was primarily due to significant expenditures in Brazil for product renewals, more efficient production methods and equipment replacement for normal wear and tear. Refer to Note 3 to the accompanying consolidated financial statements for discussion of business dispositions and acquisitions during the last three years. 4 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financing Activities - -------------------- Dividends to stockholders totaled $103 million, $102 million and $102 million in 1999, 1998 and 1997. The company's net borrowings decreased by $324 million in 1999, excluding the effect of currency fluctuations. All of the reduction was in shorter term notes payable and funded through cash generated from operations and existing cash balances in Brazil. The company's net borrowings decreased by $423 million in 1998, excluding the effect of currency fluctuations, resulting primarily from proceeds related to the Whirlpool Financial Corporation (WFC) asset sales. Also during 1998, the company redeemed $40 million of WFC preferred stock. FINANCIAL CONDITION AND OTHER MATTERS The financial position of the company remains strong as evidenced by the December 31, 1999 balance sheet. The company's total assets were $6.8 billion and stockholders' equity is $1.9 billion at the end of 1999 versus $7.9 billion and $2.0 billion respectively at the end of 1998. The decreases from 1998 were due primarily to the impact of the Brazilian currency devaluation and the weakening of the euro. The overall debt to invested capital ratio (debt ratio) of 37.7% was down from 43.5% in 1998 due primarily to lower borrowings which were reduced by cash generated from operations and existing cash balances in Brazil. The company's debt continues to be rated investment grade by Moody's Investors Service Inc. (Baal), Standard and Poor's (BBB+) and Duff & Phelps (A-). 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. On January 7, 2000, the company completed its tender offer for the outstanding publicly traded shares in Brazil of its subsidiaries Brasmotor and Multibras S.A. Eletrodomesticos (Multibras). In completing the offer, the company purchased additional shares of Brasmotor and Multibras for $283 million. With this additional investment, the company's equity interest in its Brazilian subsidiaries increased from approximately 55% to approximately 87%. On March 1, 1999, the company announced that its Board of Directors approved the repurchase of up to $250 million of the company's outstanding shares of common stock. The shares are to be purchased on the open market and through privately negotiated sales as the company deems appropriate. Through December 31, 1999, the company had repurchased 2,662,100 shares at a cost of $167 million. 5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The company recorded $58 million pre-tax of recovered Brazilian sales taxes paid in prior years during 1999. This recovery of taxes paid under a Brazilian law, which was successfully challenged in the courts, is substantially complete. The company received $42 million of pre-tax benefits from a Brazilian government export incentive (Befiex) recorded in 1998. In 1997, the company recorded $34 million in Befiex and other tax benefits. The Befiex program ended in mid-July 1998. In December 1996, a favorable decision was obtained by Multibras and Embraco with respect to additional export incentives in connection with the Befiex program. In April 1997, Multibras and Embraco submitted tax-credit claims for about 447 million reais (equivalent to US$440 million as of December 1996) relating to the favorable decision for exports from July 1988 through December 1996. This amount is impacted by exchange rate fluctuations, offset by accrued interest. The Brazilian court must render a final decision on the amount, timing and payment method of any final award. The company has not recognized any income relating to the claims involving sales prior to 1997 because the timing and payment amount of such claims is uncertain. Market Risk - ----------- The company is exposed to market risk from changes in foreign currency exchange rates, domestic and foreign interest rates, and commodity prices, which can impact its operating results and overall financial condition. The company manages its exposure to these market risks through its operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Derivative financial instruments are viewed as risk management tools and are not used for speculation or for trading purposes. Derivative financial instruments are entered into with a diversified group of investment grade counterparties to reduce the company's exposure to nonperformance on such instruments. The company manages a portfolio of domestic and cross currency interest rate swaps that serve to effectively convert U.S. Dollar (USD) denominated debt into that of various European currencies. Such local currency denominated debt serves as an effective hedge against the European cash flows and net assets that exist today and that are expected to be generated by the European business over time. (Refer to Notes 1 and 8 for the accounting treatment for, and a detailed description of, these instruments.) Domestic and cross currency interest rate swaps in this portfolio are sensitive to changes in foreign currency exchange rates and interest rates. As of December 31, 1999, a ten percent appreciation of the USD versus the European currencies alone would have resulted in an incremental unrealized gain on these contracts of $41 million. The converse event would have resulted in an incremental unrealized loss on these contracts of $47 million. As of December 31, 1999, a ten percent favorable shift in interest rates alone to each swap would have resulted in an incremental unrealized gain of $10 million. The converse events would have resulted in an incremental unrealized loss of $10 million. The company uses foreign currency forward contracts and options from time to time to hedge the price risk associated with firmly committed and forecasted cross-border payments and receipts related to its ongoing business and operational financing activities. In addition, in 1999 the company began hedging the U.S. dollar debt of its subsidiaries in Brazil by entering into forward 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION contracts to reduce the company's exposure to exchange rate fluctuations. The value of these contracts moves in a direction opposite to that of the transaction being hedged, thus eliminating the price risk associated with changes in market prices. Foreign currency contracts are sensitive to changes in foreign currency exchange rates. At December 31, 1999, a ten percent unfavorable exchange rate movement in the company's portfolio of foreign currency forward contracts would have resulted in an incremental unrealized loss of $69 million while a ten percent favorable shift would have resulted in an incremental unrealized gain of $68 million. Consistent with the use of these contracts, such unrealized losses or gains would be offset by corresponding gains or losses, respectively, in the remeasurement of the underlying transactions. The company had an outstanding option to buy Brazilian reais for USD at December 31, 1999. A ten percent increase in the exchange rate would have resulted in an incremental unrealized gain of $10 million while a ten percent decrease would have no financial impact. The company manages a portfolio of domestic interest rate swap contracts that serve to effectively convert long-term, fixed rate USD-denominated debt into floating rate LIBOR-based debt. The company also uses commodity swap contracts to hedge the price risk associated with firmly committed and forecasted commodities purchases which are not hedged by contractual means directly with suppliers. As of December 31, 1999, a ten percent increase or decrease in interest rates would not have resulted in a material gain or loss. A ten percent shift in copper and aluminum prices would have resulted in an incremental $2 million gain or loss. Brasmotor's long-term debt carries a floating interest rate that periodically reprices resulting in the carrying value approximating fair value. As of December 31, 1999, a ten percent increase or decrease in interest rates would not have resulted in a material gain or loss. The company's sensitivity analysis reflects the effects of changes in market risk but does not factor in potential business risks. EURO CURRENCY CONVERSION On January 1, 1999, eleven member nations of the European Union began the conversion to a common currency, the "euro." The company has significant manufacturing operations and sales in these countries. The introduction of the euro has eliminated transaction gains and losses within participating countries and there currently has not been any significant impact on operating results from the change over to the euro. Prices to customers may converge throughout the affected countries, although the company believes that in recent years competitive pressures have to some extent eliminated price differences solely caused by the lack of price transparency. Internal computer system and business processes will need to be changed to accommodate the new currency. The company has established a cross-functional team, guided by an executive-level steering committee, to address these issues. It currently plans to make changes in two phases. In the first phase, from 1999 to 2001, the company will have the capability to bill customers and pay 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION suppliers in euro, but will continue to maintain its accounts in the national currencies. In 2002, all remaining operational and financial systems will be converted to the euro. The cost of the first phase is not material; the cost of the second phase has not been estimated at this time. Operating efficiencies should ultimately result from reduction of the complexity of doing business in multiple currencies. No estimate of these efficiencies has been made. YEAR 2000 The company completed its Year 2000 readiness initiatives and did not experience any significant problems at the beginning of 2000. The company does not anticipate any adverse business effects related to this issue. The company incurred approximately $21 million in cumulative costs of projects dedicated solely to Year 2000 remediation. FORWARD-LOOKING STATEMENTS The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. Management's Discussion and Analysis and other sections of this report may contain forward- looking statements that reflect our current views with respect to future events and financial performance. Certain statements contained in this annual report and other written and oral statements made from time to time by the company do not relate strictly to historical or current facts. As such, they are considered "forward-looking statements" which provide current expectations or forecasts of future events. Such statements can be identified by the use of terminology such as "anticipate," "believe," "estimate," "expect," "intend," "may," "could," "possible," "plan," "project," "will," "forecast," and similar words or expressions. The company's forward-looking statements generally relate to its growth strategies, financial results, product development, and sales efforts. These forward-looking statements should be considered with the understanding that such statements involve a variety of risks and uncertainties, known and unknown, and may be affected by inaccurate assumptions. Consequently, no forward-looking statement can be guaranteed and actual results may vary materially. Many factors could cause actual results to differ materially from the Company's forward-looking statements. Among these factors are: (1) competitive pressure to reduce prices; (2) the ability to gain or maintain market share in an intensely competitive global market; (3) the success of our global strategy to develop brand differentiation and brand loyalty; (4) our ability to control operating and selling costs and to maintain profit margins during industry downturns; (5) the success of our Brazilian businesses operating in a challenging and volatile environment; (6) continuation of our strong relationship with Sears, Roebuck and Co. in North America which accounted for approximately 18% of our consolidated net sales of $10.5 billion in 1999; (7) currency exchange rate fluctuations in Latin America, Europe, and Asia that could affect our 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION consolidated balance sheet and income statement; and (8) social, economic, and political volatility in developing markets. The company undertakes no obligation to update every forward-looking statement, and investors are advised to review disclosures by the company in our filings with the Securities and Exchange Commission. It is not possible to foresee or identify all factors that could cause actual results to differ from expected or historic results. Therefore, investors should not consider the foregoing factors to be an exhaustive statement of all risks, uncertainties, or factors that could potentially cause actual results to differ. 9 CONSOLIDATED STATEMENTS OF EARNINGS
Year ended December 31 (millions of dollars, except 1999 1998 1997 per share data) ------- ------- ------ Net sales............................................ $10,511 $10,323 $8,617 EXPENSES Cost of products sold................................ 7,852 7,805 6,604 Selling and administrative........................... 1,753 1,791 1,625 Intangible amortization.............................. 31 39 34 Restructuring costs.................................. -- -- 343 ------- ------- ------ 9,636 9,635 8,606 ------- ------- ------ OPERATING PROFIT................................... 875 688 11 OTHER INCOME (EXPENSE) Interest and sundry.................................. (195) 136 (14) Interest expense..................................... (166) (260) (168) ------- ------- ------ EARNINGS (LOSS) BEFORE INCOME TAXES AND OTHER ITEMS............................................. 514 564 (171) Income taxes (benefit)............................... 197 209 (9) ------- ------- ------ EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE EQUITY EARNINGS AND MINORITY INTERESTS............ 317 355 (162) Equity in affiliated companies....................... (4) 1 67 Minority interests................................... 34 (46) 49 ------- ------- ------ EARNINGS (LOSS) FROM CONTINUING OPERATIONS......... 347 310 (46) Earnings (loss) from discontinued operations (less applicable taxes)................................... -- -- (11) Gain on disposal of discontinued operations (less applicable taxes)................................... -- 15 42 ------- ------- ------ NET EARNINGS (LOSS)................................ $ 347 $ 325 $ (15) ======= ======= ====== Per share of common stock: Basic Earnings (loss) from continuing operations... $ 4.61 $ 4.09 $(0.62) Basic Net earnings (loss).......................... $ 4.61 $ 4.29 $(0.20) ======= ======= ====== Diluted Earnings (loss) from continuing operations. $ 4.56 $ 4.06 $(0.62) Diluted Net earnings (loss)........................ $ 4.56 $ 4.25 $(0.20) ======= ======= ====== Cash dividends..................................... $ 1.36 $ 1.36 $ 1.36 ======= ======= ======
See notes to consolidated financial statements. 10 CONSOLIDATED BALANCE SHEETS
December 31 (millions of dollars) 1999 1998 ---- ---- ASSETS ------ CURRENT ASSETS Cash and equivalents............................................ $ 261 $ 636 Trade receivables, less allowances of (1999: $124; 1998: $116).. 1,477 1,711 Inventories..................................................... 1,065 1,100 Prepaid expenses and other...................................... 286 268 Deferred income taxes........................................... 88 167 ------- ------- Total Current Assets........................................ 3,177 3,882 OTHER ASSETS Investment in affiliated companies.............................. 112 108 Intangibles, net................................................ 795 936 Deferred income taxes........................................... 247 262 Other........................................................... 317 329 ------- ------- 1,471 1,635 PROPERTY, PLANT AND EQUIPMENT Land............................................................ 70 77 Buildings....................................................... 863 900 Machinery and equipment......................................... 4,249 4,534 Allowance for Depreciation...................................... (3,004) (3,093) ------- ------- 2,178 2,418 ------- ------- Total Assets................................................ $ 6,826 $ 7,935 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES Notes payable................................................... $ 444 $ 905 Accounts payable................................................ 1,081 1,079 Employee compensation........................................... 300 271 Accrued expenses................................................ 803 870 Restructuring costs............................................. 39 117 Current maturities of long-term debt............................ 225 25 ------- ------- Total Current Liabilities................................... 2,892 3,267 OTHER LIABILITIES Deferred income taxes........................................... 157 152 Postemployment benefits......................................... 612 622 Other liabilities............................................... 168 192 Long-term debt.................................................. 714 1,087 ------- ------- 1,651 2,053 MINORITY INTERESTS 416 614 STOCKHOLDERS' EQUITY Common stock, $1 par value: 250 million shares authorized....... 84 83 Paid-in capital................................................. 374 321 Retained earnings............................................... 2,268 2,024 Unearned restricted stock....................................... (6) (3) Cumulative translation adjustments.............................. (443) (183) Treasury stock--9 and 6 million shares at cost in 1999 and 1.... (410) (241) ------- ------- Total Stockholders' Equity.................................. 1,867 2,001 ------- ------- Total Liabilities and Stockholders' Equity.................. $ 6,826 $ 7,935 ======= =======
See notes to consolidated financial statements. 11 CONSOLIDATED STATEMENTS OF CASH FLOWS
1999 1998 1997 Year ended December 31 (millions of dollars) -------- -------- -------- OPERATING ACTIVITIES Net earnings (loss)............................. $ 347 $ 325 $ (15) Depreciation.................................... 386 399 322 Deferred income taxes........................... 29 26 (208) Equity in net earnings (loss) of affiliated companies, less dividends received............. 4 (1) (51) Gain on business dispositions................... -- (25) (70) Provision for doubtful accounts................. 37 29 89 Amortization of goodwill........................ 31 39 34 Restructuring charges, net of cash paid......... (73) (99) 267 Minority interests.............................. (34) 46 (49) Changes in assets and liabilities, net of effects of business acquisitions and dispositions: Trade receivables............................. (41) (184) (145) Inventories................................... (52) 73 177 Accounts payable.............................. 106 89 20 Other--net.................................... 61 46 222 -------- -------- -------- Cash Provided by Operating Activities........... $ 801 $ 763 $ 593 ======== ======== ======== INVESTING ACTIVITIES Net additions to properties..................... $ (437) $ (523) $ (378) Net change in financing receivables and leases.. -- -- 706 Net assets of discontinued operations........... -- -- (562) Acquisitions of businesses, less cash acquired.. -- (121) 179 Net increase (decrease) in investment in and advances to affiliated companies............... -- -- 13 Business dispositions........................... -- 587 1,038 Other........................................... -- -- (8) -------- -------- -------- Cash Provided by (Used for) Investing Activities..................................... $ (437) (57) 988 ======== ======== ======== FINANCING ACTIVITIES Proceeds of short-term borrowings............... $ 15,479 19,141 31,487 Repayments of short-term borrowings............. (15,841) (19,519) (32,439) Proceeds of long-term debt...................... 152 290 102 Repayments of long-term debt.................... (175) (306) (211) Repayments of non-recourse debt................. -- -- (8) Dividends....................................... (103) (102) (102) Purchase of treasury stock...................... (167) -- -- Redemption of preferred stock................... -- (40) -- Other........................................... 59 (83) 47 -------- -------- -------- Cash (Used for) Financing Activities............ $ (596) (619) (1,124) ======== ======== ======== Effect of Exchange Rate Changes on Cash and Equivalents.................................... $ (143) (29) (8) ======== ======== ======== Increase (Decrease) in Cash and Equivalents..... $ (375) 58 449 Cash and Equivalents at Beginning of Year....... 636 578 129 ======== ======== ======== Cash and Equivalents at End of Year............. $ 261 $ 636 $ 578 ======== ======== ========
See notes to consolidated financial statements. 12 Consolidated Statements of Changes in Stockholders' Equity
Treasury Accumulated Stock / Other Common Paid-in- Comprehensive Retained Stock Capital Income Earnings Total (millions of dollars) ------ -------- ------------- -------- ------- Balances, January 1, 1997...... $ 81 $ 3 $ (76) $1,918 $ 1,926 Comprehensive income Net Income................... (15) (15) Foreign currency items, net of tax of $36............... (73) (73) ------- Comprehensive income........... (88) ------- Common stock issued............ 1 34 35 Dividends declared on common stock......................... (102) (102) ---- ---- ----- ------ ------- Balances, December 31, 1997.... $ 82 $ 37 $(149) $1,801 $ 1,771 Comprehensive income (loss) Net income (loss)............ 325 325 Foreign currency items, net of tax (benefit) of ($18)... (34) (34) ------- Comprehensive income (loss).... 291 ------- Common stock issued............ 1 40 41 Dividends declared on common stock......................... (102) (102) ---- ---- ----- ------ ------- Balances, December 31, 1998.... $ 83 $ 77 $(183) $2,024 $ 2,001 Comprehensive income Net income................... 347 347 Foreign currency items, net of tax (benefit) of ($41)... (260) (260) ------- Comprehensive income........... 87 ------- Common stock repurchased....... (167) (167) Common stock issued............ 1 48 49 Dividends declared on common stock......................... (103) (103) ---- ---- ----- ------ ------- Balances, December 31, 1999.... $ 84 $(42) $(443) $2,268 $ 1,867 ==== ==== ===== ====== =======
See notes to consolidated financial statements. 13 WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) SUMMARY OF PRINCIPAL ACCOUNTING POLICIES Nature of Operations: Whirlpool Corporation is the world's leading manufacturer and marketer of major home appliances. The company manufactures in 13 countries under 11 major brand names and markets products to distributors and retailers in more than 170 countries. Principles of Consolidation: The consolidated financial statements include all majority-owned subsidiaries. Investments in affiliated companies are accounted for by the equity method. All intercompany transactions have been eliminated upon consolidation. In 1997, the company increased its voting ownership to a majority interest in its Brazilian affiliate, Brasmotor S.A. As a result, the Brazilian operations are consolidated as of November 1, 1997. Prior to that date, the Brazilian operations were accounted for on an equity basis. Discontinued Operations: In 1997, the company discontinued its financial services business; as a result, the statement of earnings, balance sheet and cash flow reflect this business as a discontinued operation. Use of Estimates: Management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Revenue Recognition: Sales are recorded when product is shipped to distributors or directly to retailers. Cash and Equivalents: All highly liquid debt instruments purchased with a maturity of three months or less are considered cash equivalents. Inventories: Inventories are stated at first-in, first-out (FIFO) cost, except U.S. production inventories which are stated at last-in, first-out (LIFO) cost and Brazilian inventories which are stated at average cost. Costs do not exceed realizable values. Property, Plant and Equipment: Property, plant and equipment are stated at cost. Depreciation of plant and equipment is computed using the straight-line method based on the estimated useful lives of the assets. Intangibles: The cost of business acquisitions in excess of net tangible assets acquired is amortized on a straight-line basis principally over 40 years. Non- compete agreements are amortized on a straight-line basis over the terms of the agreements. Accumulated amortization totaled $266 million and $258 million at December 31, 1999 and 1998. Should circumstances indicate the potential impairment of goodwill, the company would compare the carrying amount against related estimated undiscounted future cash flows to determine if a write-down to market value or discounted cash flow value is required. Research and Development Costs: Research and development costs are charged to expense as incurred. Such costs were $210 million, $209 million and $181 million in 1999, 1998 and 1997. Advertising Costs: Advertising costs are charged to expense as incurred. Such costs from continuing operations were $164 million, $179 million and $155 million in 1999, 1998 and 1997. Foreign Currency Translation: The functional currency for the company's international subsidiaries and affiliates is the local currency. Prior to January 1, 1998, Brazil was considered hyperinflationary and its results were remeasured into U.S. dollars. -7- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) SUMMARY OF PRINCIPAL ACCOUNTING POLICIES--CONTINUED The following table provides the computation of basic and diluted earnings (loss) per share:
December 31 (millions of dollars, except per share data) 1999 1998 1997 -------------------------- Earnings (loss): Numerator for earnings (loss) per share from continuing operations $ 347 $ 310 $ (46) Numerator for net earnings (loss) per share 347 325 (15) Weighted-average shares outstanding: Denominator for basic earnings (loss) per share 75.2 75.8 74.7 Effect of dilutive employee stock options 0.8 0.7 - ----- ----- ------ Denominator for diluted earnings (loss) per share 76.0 76.5 74.7 Basic earnings (loss) per share from continuing operations $4.61 $4.09 $(0.62) Basic net earnings (loss) per share $4.61 $4.29 $(0.20) Diluted earnings (loss) per share from continuing operations $4.56 $4.06 $(0.62) Diluted net earnings (loss) per share $4.56 $4.25 $(0.20)
(2) SUBSEQUENT EVENT 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. With this additional investment, the company's equity interest in its Brazilian subsidiaries increased from approximately 55% to approximately 87%. -9- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (3) BUSINESS ACQUISITIONS AND DISPOSITIONS During 1998, the company purchased a 36% ownership stake in brandwise, LLC, a newly established e-commerce shopping/comparison business. The joint venture will provide consumers with the ability to purchase home accessories on their internet site, brandwise.com. During 1999, the company contributed an additional $6 million thereby maintaining its 36% ownership. In September 1998, the company completed a transaction to sell 75% of its majority-owned air conditioning joint venture in Shenzhen, China, for $13 million, to Electra Consumer Products Ltd., a leading European manufacturer of air conditioners. Shenzhen Whirlpool Raybo Air-Conditioner Industrial Co. Ltd. was a joint venture formed in 1995. After completion of the sale, the company will continue to hold 20% of the joint venture. The joint venture will continue to sell products under the Whirlpool brand in China for a period of three years while it introduces the Electra brand. No significant gain or loss was recognized from this transaction. During 1998, the company increased its ownership stake in its Brazilian subsidiaries by purchasing $43 million of additional shares. In July 1998, the company purchased the remaining 35% ownership in Shunde SMC Microwave Products Co., Ltd. (SMC), a Chinese manufacturer and marketer of microwave ovens, for about $60 million in cash. The company now owns 100% of SMC. In March 1998, the company increased its majority ownership interest to 80% in Whirlpool Narcissus Co., its Chinese joint venture that manufactures washing machines, for approximately $12 million in cash. In November 1997, the company completed the purchase of approximately 33% of the voting shares, as well as preferred, or non-voting shares of the company's Brazilian affiliate, Brasmotor S.A., for $217 million. The shares, combined with the existing holdings, gave the company a controlling interest of approximately 66% of the voting shares of Brasmotor. Brasmotor is the parent company of Multibras, which has the leading market share position in Latin America, and Empresa Brasileira de Compressores S.A. (Embraco), the world's second largest hermetic compressor manufacturer. In September 1997, the company reached a definitive agreement to sell the inventory, consumer, and international financing businesses of Whirlpool Financial Corporation (WFC) (refer to Note 4). The above acquisitions have been accounted for as purchases and their operating results have been consolidated with the company's results since the dates of acquisition. The proforma consolidated operating results reflecting these acquisitions for the full year would not have been materially different from reported amounts. (4) DISCONTINUED OPERATIONS In 1997, the company discontinued its financing operations and reached an agreement to sell the majority of WFC's assets in a series of transactions. The company completed the following sales in 1997: certain inventory floor planning financing assets, international factoring assets and certain consumer financing receivables. The company recorded a discontinued pretax gain of $70 million -10- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($42 million after-tax) related to these transactions. A $36 million pretax operating charge ($22 million after-tax) was also recorded in 1997 to provide an additional reserve for certain retained WFC aerospace assets. During 1998, the company also sold the following assets which were previously held by WFC: international factoring assets, consumer financing receivable assets, certain aerospace financing assets and the European inventory financing assets. These transactions resulted in the company recording a discontinued pretax gain of $25 million ($15 million after-tax), and concluded the series of sales transactions. Over the two years 1997 and 1998, the company recorded total after-tax gains of $57 million or $.74 per diluted share related to these sale transactions. -11- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (5) INVENTORIES
December 31 (millions of dollars) 1999 1998 -------------- Finished products $ 932 $ 960 Work in process 48 54 Raw materials 253 279 ------ ------ 1,233 1,293 Less excess of FIFO cost over LIFO cost 168 193 ------ ------ Total inventories $1,065 $1,100 ====== ======
LIFO inventories represent approximately 28% and 23% of total inventories at December 31, 1999 and 1998. -12- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (6) AFFILIATED COMPANIES The company has a 49% direct voting interest in a Mexican company (Vitromatic, S.A. de C.V.) and direct voting interests ranging from 20% to 40% in several other international companies principally engaged in the manufacture and sale of major home appliances or related component parts. Prior to consolidation of the company's Brazilian subsidiary for the last two months of 1997 (refer to Note 1), its results were reflected as equity earnings of affiliated companies. Equity in the net earnings (loss) of affiliated companies, net of related taxes, is as follows: (millions of dollars) 1999 1998 1997 ----------------------------- Brazilian affiliates $ - $(1) $60 Mexican affiliate 3 1 5 Other (7) 1 2 --- --- --- Total equity earnings (loss) $(4) $ 1 $67 === === === -13- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (7) FINANCING ARRANGEMENTS The company enters into and utilizes numerous uncommitted credit lines from banks and other financial institutions in the normal course of funding of its operations. To ensure that the company has access to adequate and competitive financing under unusual market conditions, the company also enters into committed credit lines backed by formal agreements with counterparties deemed to be reliable. At December 31, 1999, the company had committed credit lines of approximately $919 million, of which $670 million was available, in place with maturities ranging from one month to four years. Generally, the banks are compensated for their credit lines by a fee and do not require formal compensating balances. Notes payable consist of the following: December 31 (millions of dollars) 1999 1998 ------------ Payable to banks $353 $732 Commercial paper 80 153 Other 11 20 ---- ---- Total notes payable $444 $905 ==== ==== The weighted average interest rate on notes payable was 6.86% and 7.60% at December 31, 1999 and 1998. Although its operating assets have been divested, WFC remains a legal entity with preferred stock arrangements, included within minority interests in the consolidated balance sheet, as follows: Mandatory Number Face Annual Redemption Date of of Shares Value Dividend Date Issuance --------- ----- -------- ---------- ---------- Series B 350,000 $100 $6.55 9/1/2008 8/31/1993 Series C 250,000 $100 $6.09 2/1/2002 12/27/1996 -14- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The preferred stockholders are entitled to vote together on a share-for-share basis with WFC's common stockholder. Preferred stock dividends are payable quarterly. At its option, WFC may redeem the Series B at any time on or after September 1, 2003 or at any earlier date for Series C. The redemption price for each series is $100 per share plus any accrued unpaid dividends and the applicable redemption premium if redeemed early. Commencing September 1, 2003, WFC must pay $1,750,000 per year to a sinking fund for the benefit of the Series B preferred stockholders, with a final payment of $26,250,000 due on or before September 1, 2008. There is no sinking fund requirement for the Series C preferred stock. -15- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (7) FINANCING ARRANGEMENTS--CONTINUED The company and WFC are parties to a support agreement. Pursuant to the agreement, if at the close of any quarter WFC's net earnings available for fixed charges (as defined) for the preceding twelve months is less than a stipulated amount, the company is required to make a cash payment to WFC equal to the insufficiency within 60 days of the end of the quarter. The support agreement may be terminated by either WFC or the company upon 30 days notice provided that certain conditions are met. The company has also agreed to maintain ownership of at least 70% of WFC's voting stock.
Long-term debt consists of the following: December 31 (millions of Dollars) Maturity Rate 1999 1998 ---------- ------------ ------------------------ Debentures 2008 and 2016 7.8 and 9.1% $ 368 $ 368 Senior notes 2000 and 2003 9.0 and 9.5 400 400 Medium term notes 2000 to 2006 8.9 to 9.1 21 25 Mortgage notes 2000 to 2012 6.3 to 6.6 62 64 Brazilian bank note 2000 to 2004 12.1 92 131 Other 137 164 ----------- ----------- 1,080 1,152 Less cross currency interest rate swap adjustments 141 40 Less current maturities 225 25 ----------- ----------- Total long-term debt, net $ 714 $ 1,087 =========== ===========
Annual maturities of long-term debt in the next five years, are $225 million, $108 million, $52 million, $248 million and $48 million. The company paid interest, including a portion recorded as discontinued operations, on short-term and long-term debt totaling $151 million, $290 million and $242 million in 1999, 1998 and 1997. -16- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (8) FAIR VALUE OF FINANCIAL INSTRUMENTS The following methods and assumptions were used in estimating fair values of financial instruments: Cash and Equivalents and Notes Payable: The carrying amounts approximate fair values. Long-term Debt and WFC Preferred Stock: The fair values are estimated using discounted cash flow analyses based on incremental borrowing or dividend yield rates for similar types of borrowing or equity arrangements. The WFC preferred stock carrying amount approximates fair value. Derivative Financial Instruments: The fair values of interest rate swaps, cross currency interest rate swaps, foreign currency forward contracts and option collars and commodity swaps are based on quoted market prices. The carrying amounts and fair values of financial instruments for which the fair value does not approximate the liability carrying amount are as follow:
1999 1998 --------------------- ---------------------- Carrying Fair Carrying Fair December 31 (millions of dollars) Amount Value Amount Value ---------------------------------------------------- Long-term debt (including current portion) $ 1,080 $ 1,098 $ 1,152 $ 1,257 Derivative financial instruments (notional amounts indicated): Hedges of net investment in Europe including converted debt: Interest rate and cross currency interest rate swaps ($1,026 million in 1999; $1,182 million in 1998) (141) (101) (40) (7) Foreign currency forward contracts ($52 million in 1999; $19 million in 1998) - - - (1) Domestic interest rate swap ($120 million in 1999: $120 million in 1998) - (1) - (2) Transaction hedges: Foreign currency forward and option contracts ($751 million in 1999; $424 million in 1998) - 12 - (9) Hedges with commodity swaps ($14 million in 1999; $23 million in 1998) - (2) - (2) ---------------------------------------------------- Total long-term debt $ 939 $ 1,006 $ 1,112 $ 1,236 ----------------------------------------------------
-17- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (8) FAIR VALUE OF FINANCIAL INSTRUMENTS--CONTINUED At December 31, 1999, interest rate and cross currency interest rate swaps effectively converted $626 million of U.S. dollar denominated debt into European currency denominations ($285 million - German marks, $261 million - French francs, $28 million - Swiss francs, and $52 million - British pound sterling). About 26% of this converted debt had floating rates and 74% had fixed rates. Floating rates received ranged from LIBOR less .08% to LIBOR, and floating rates paid ranged from local currency LIBOR to local currency LIBOR plus 3.09%. Fixed rates received ranged from 5.93% to 7.20%, and fixed rates paid ranged from 5.13% to 7.98%. The swaps mature within seven years. At December 31, 1999, one domestic interest rate swap effectively converts $120 million of fixed rate debt into floating rate debt. Fixed rates received were 6.99%. Floating rates paid were LIBOR. The domestic interest rate swap matures within two years. Foreign currency forward contracts mature within one day to two years and involve principally European, Brazilian and North American currencies. Copper and aluminum commodity swaps mature within two years. -18- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (9) SHAREHOLDERS' EQUITY On March 1, 1999, the company announced that its Board of Directors approved the repurchase of up to $250 million of the company's outstanding shares of common stock. The shares are to be purchased on the open market and through privately negotiated sales as the company deems appropriate. Through December 31, 1999, the company had repurchased 2,662,100 shares at a cost of $167 million. In addition to its common stock, the company has 10 million authorized shares of preferred stock (par value $1 per share), none of which is outstanding. Consolidated retained earnings at December 31, 1999 included $17 million of equity in undistributed net earnings of affiliated companies. The cumulative translation component of stockholders' equity represents the effect of translating net assets of the company's international subsidiaries offset by related hedging activity net of tax. Stock option transactions and restricted stock grants account for the changes in paid-in capital. One Preferred Stock Purchase Right (Rights) is outstanding for each share of common stock. The Rights, which expire May 22, 2008, will become exercisable 10 days after a person or group (an Acquiring Person) has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding common stock (the Trigger Date) or 10 business days after the commencement, or public disclosure of an intention to commence, of a tender offer or exchange offer by a person that could result in beneficial ownership of 15% or more of the outstanding common stock. Each Right entitles the holder to purchase from the company one one-thousandth of a share of a Junior Participating Preferred Stock, Series B, par value $1.00 per share, of the company at a price of $300 per one one-thousandth of a Preferred Share subject to adjustment. If a person becomes an Acquiring Person, proper provision shall be made so that each holder of a Right, other than Rights that are or were beneficially owned by the Acquiring Person (which will thereafter be void), shall thereafter have the right to receive upon exercise of such Right that number of shares of common stock (or other securities) having at the time of such transaction a market value of two times the exercise price of the Right. If a person becomes an Acquiring Person and the company is involved in a merger or other business combination transaction where the company is not the surviving corporation or where common stock is changed or exchange or in a transaction or transactions in which 50% or more of its consolidated assets or earning power are sold, proper provision shall be made so that each holder of a Right (other than such Acquiring Person) shall thereafter have the right to receive, upon the exercise thereof tat the then current exercise price of the Right, that number of shares of common stock of the acquiring company which at the time of such transaction would have a market value of two times the exercise price of the Right. In addition, if an Acquiring Person, does not have beneficial ownership of 50% or more of the common stock, the company's Board of Directors has the option of exchanging all or part of the Rights for an equal number of shares of common stock in the manner described in the Rights Agreement. Prior to the Trigger Date, the Board of Directors of the company may redeem the Rights in whole, but not in part, at a price of $.01 per Right, payable in cash, shares of common stock or any other consideration deemed appropriate by the Board of Directors. Immediately upon action of the Board of Directors ordering redemption of the Rights, the ability of holders to exercise the Rights will terminate and such holders will only be able to receive the redemption price. -19- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Until such time as the Rights become exercisable, the Rights have no voting or dividend privileges and are attached to, and do not trade separately from, the common stock. The company covenants and agrees that it will cause to be reserved and kept available at all times a sufficient number of shares of Preferred Stock (and following the occurrence of a Triggering Event, shares of common stock and/or other securities) to permit the exercise in full of all Rights from time to time outstanding. -20- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (10) STOCK OPTION AND INCENTIVE PLANS The company's stock option and incentive plans permit the grant of stock options and other stock awards covering up to 10.5 million shares to key employees of the company and its subsidiaries, of which 3.2 million shares are available for grant at December 31, 1999. The plans authorize the grant of both incentive and nonqualified stock options and, further, authorize the grant of stock appreciation rights and related supplemental cash payments independently of or with respect to options granted or outstanding. Stock options generally have 10 year terms, and vest and become fully exercisable over a two to three year period after date of grant. An Executive Stock Appreciation and Performance Program (ESAP), a Restricted Stock Value Program (RSVP), a Career Stock Program (CSP) and a Key Employee Retention Program (KERP) have been established under the plans. Performance awards under ESAP, RSVP and KERP are generally earned over multiyear time periods upon the achievement of certain performance objectives or upon a change in control of the company. CSP awards are earned at specified dates during a participant's career with the company or upon change in control of the company. ESAP awards are payable in cash, common stock, or a combination thereof when earned. RSVP and KERP grant restricted shares, which may not be sold, transferred or encumbered until the restrictions lapse. CSP grants phantom stock awards which are redeemable for shares of the company's common stock upon the recipient's retirement after attaining age 60 and are subject to certain noncompetition provisions. Outstanding restricted and phantom shares totaled 847,000 with a weighted-average grant-date fair value of $51.12 per share at December 31, 1999 and 731,000 with a weighted-average grant-date fair value of $48.06 per share at December 31, 1998. Expenses under the plan were $8 million, $17 million and $21 million in 1999, 1998 and 1997. Under the Nonemployee Director Stock Ownership Plan, each nonemployee director is automatically granted 400 shares of common stock annually and is eligible for a stock option grant of 600 shares if the company's earnings meet a prescribed earnings formula. In addition, each nonemployee director is awarded annually deferred compensation in the form of 400 shares of phantom stock, which is converted into common stock on a one-for-one basis and paid when the director leaves the Board. This plan provides for the grant of up to 300,000 shares as either stock or stock options, of which 189,000 shares are available for grant at December 31, 1999. The stock options vest and become exercisable six months after date of grant. There were no significant expenses under this plan for 1999, 1998 or 1997. The company maintains an employee stock option plan (PartnerShare) that may grant substantially all full-time U.S. employees a fixed number of stock options that vest over a three year period and may be exercised over a 10 year period. PartnerShare authorizes the grant of up to 2.5 million shares of which 500,000 shares are available for grant at December 31, 1999. Stock option and incentive plans are accounted for in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and related Interpretations. Generally, no compensation expense is recognized for stock options with exercise prices equal to the market value of the underlying shares of stock at the date of grant. Compensation expense is recognized for ESAP, RSVP and CSP awards based on the market value of the underlying shares of stock when the number of shares is determinable. -21- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (10) STOCK OPTION AND INCENTIVE PLANS--CONTINUED Had the company elected to adopt recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," under which stock options are accounted for at estimated fair value, proforma net earnings (loss) and diluted net earnings (loss) per share would be as follows: December 31 (millions of dollars) 1999 1998 1997 --------------------- Net earnings (loss) As reported $ 347 $ 325 $ (15) Proforma 338 318 (21) Diluted net earnings (loss) per share As reported $4.56 $4.25 $(.20) Proforma 4.45 4.16 (.28) The fair value of stock options used to compute proforma net earnings (loss) and earnings (loss) per share disclosures is the estimated present value at grant date using the Black-Scholes option-pricing model with the following assumptions for 1999, 1998 and 1997: expected volatility factor of .255, .216 and .183; dividend yield of 2.2%, 2.4% and 2.4%; risk-free interest rate of 6.4%, 4.5% and 5.5% and a weighted-average expected option life of 5 years for all three years. -22- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (10) STOCK OPTION AND INCENTIVE PLANS--CONTINUED A summary of stock option information follows:
1999 1998 1997 ------------------------------------------------------------------------ Weighted- Weighted- Weighted- December 31 Average Average Average (thousands of shares, Number Exercise Number Exercise Number Exercise except per share data) of Shares Price of Shares Price of Shares Price --------- --------- --------- --------- --------- --------- Outstanding at January 1 4,120 $50.59 4,230 $47.06 4,127 $46.31 Granted 1,629 53.19 919 61.83 1,360 45.78 Exercised (960) 46.35 (770) 44.88 (842) 39.83 Canceled or expired (184) 55.30 (259) 49.81 (415) 50.12 --------- --------- --------- Outstanding at December 31 4,605 $52.21 4,120 $50.59 4,230 $47.06 ========= ========= ========= ========= ========= ========= Exercisable at December 31 2,611 $50.14 2,534 $47.65 2,308 $46.43 ========= ========= ========= ========= ========= ========= Fair value of options granted during the year $14.59 $12.67 $ 9.26 ========= ========= =========
The outstanding options at December 31, 1999, had exercise prices ranging from $24.75 to $72.34 and a weighted-average remaining contractual life of 7.3 years. -23- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (11) RESTRUCTURING AND OTHER SPECIAL CHARGES During 1997, the company incurred restructuring costs of $343 million ($244 million cash costs and $99 million noncash costs) to better align the company's cost structure within the global home-appliance marketplace. Pretax restructuring charges of $172 million, $101 million, $35 million, $25 million and $10 million relate to the company's European, Asian, Latin American, corporate and North American operations, respectively. More than 87% of the cash costs have been paid to date, with the remainder to be paid in 2000. The restructuring charge includes the elimination of 7,900 global positions of which more than 7,300 positions have eliminated to date. The impact of 1997 restructuring costs after-tax and minority interest was $232 million or $3.07 per diluted share. In 1997, the company also recognized special charges of $62 million ($53 million of which affected operating profit), principally due to the adjustment of the carrying value of receivables and inventory, primarily in Europe and Asia. The impact of 1997 special operating charges on continuing operations after-tax and minority interest was $40 million or $0.54 per diluted share. In addition, discontinued operations results included a pretax charge of $36 million, after- tax charge of $22 million or $0.29 per diluted share to provide a reserve for certain WFC aerospace assets. -24- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (12) INCOME TAXES Income tax provisions from continuing operations are as follows: Year ended December 31 (millions of dollars) 1999 1998 1997 -------------------- Current: Federal $148 $132 $ 78 State and local 25 22 20 Foreign 52 40 26 ---- ---- ---- 225 194 124 Deferred: Federal (2) 10 (27) State and local - 6 (3) Foreign (26) (1) (103) ---- ---- ---- (28) 15 (133) ---- ---- ---- Total income tax provision (benefit) $197 $209 $ (9) ==== ==== ==== Domestic and foreign earnings (loss) before income taxes and other items from continuing operations are as follows: Year ended December 31 (millions of dollars) 1999 1998 1997 -------------------- Domestic $524 $407 $ 288 Foreign (10) 157 (459) ---- ---- ----- Total earnings (loss) before taxes and other items $514 $564 $(171) ==== ==== ===== Earnings (loss) before income taxes and other items, including discontinued operations (refer to Note 4), were $514 million, $589 million and $(178) million for 1999, 1998 and 1997, respectively. -25- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (12) INCOME TAXES--CONTINUED Reconciliations between the U.S. federal statutory income tax rate and the consolidated effective income tax (benefit) rate for earnings before income taxes and other items for continuing operations are as follows: Year ended December 31 1999 1998 1997 ---------------------- U.S. federal statutory rate 35.0% 35.0% (35.0)% Impact of restructuring charge - - 18.2 State and local taxes, net of federal tax benefit 5.5 5.3 8.8 Nondeductible goodwill amortization 1.6 1.5 2.3 Excess foreign taxes (benefits) (1.1) (1.0) (4.0) Unrecognized prior year foreign deferred tax assets and carryforwards (1.7) (1.9) (5.1) Foreign dividends and subpart F income 2.8 2.2 (5.9) Foreign government tax incentive (0.2) (4.0) - Unbenefited operating losses 2.1 3.3 10.9 Permanent differences (6.3) 0.8 (4.5) Other items 0.5 (4.1) 9.3 ---- ---- ---- Effective income tax (benefit) rate 38.2% 37.1% (5.0)% ==== ==== ==== Inclusive of discontinued operations, the effective income tax (benefit) rate was 38.2%, 37.3% and (6.9)% for 1999, 1998 and 1997, respectively. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes. -26- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (12) INCOME TAXES--CONTINUED Significant components of the company's deferred tax liabilities and assets are as follows: December 31 (millions of dollars) 1999 1998 ---- ---- Deferred tax liabilities: Property, plant and equipment $109 $158 Financial services leveraged leases 124 125 Software costs 28 15 Contested liabilities 34 - Other 128 37 ---- ---- Total deferred tax liabilities 423 335 Deferred tax assets Postretirement obligation 176 170 Restructuring costs 24 58 Product warranty accrual 26 33 Receivable and inventory allowances 81 33 Loss carryforwards 152 148 Employee compensation 45 39 Other 55 82 ---- ---- Total deferred tax assets 559 563 Valuation allowances for deferred tax assets (18) (19) ---- ---- Deferred tax assets, net of valuation allowances 541 544 ---- ---- Net deferred tax assets $118 $209 ==== ==== The company has recorded valuation allowances to reflect the estimated amount of net operating loss carryforwards, restructuring costs and other deferred tax assets which may not be realized. The company provides deferred taxes on the undistributed earnings of foreign subsidiaries and affiliates to the extent such earnings are expected to be remitted. Generally, earnings have been remitted only when no significant net tax liability would have been incurred. No provision has been made for U.S. or foreign taxes that may result from future remittances of the undistributed earnings ($482 million at December 31, 1999) of foreign subsidiaries and affiliates expected to be reinvested indefinitely. Determination of the deferred income tax liability on these unremitted earnings is not practicable as such liability, if any, is dependent on circumstances existing when remittance occurs. The company paid income taxes of $235 million in 1999, $239 million in 1998 and $23 million in 1997. The increase in 1998 is due to increased earnings as 1997 included $343 million in pretax restructuring charges. -27- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS At December 31, 1999, the company has foreign net operating loss carryforwards of $362 million, which are primarily nonexpiring. (13) PENSION AND POSTRETIREMENT MEDICAL BENEFITS PLANS The company maintains both contributory and noncontributory defined benefit pension plans covering substantially all North American and Brazilian employees and certain European employees. Benefits are based primarily on compensation during a specified period before retirement or specified amounts for each year of service. The company's present funding policy is to generally make the minimum annual contribution required by applicable regulations. Assets held by the plans consist primarily of listed common stocks and bonds, government securities, investments in trust funds, bank deposits and other investments The company also currently sponsors a defined benefit health-care plan that provides postretirement medical benefits to full time U.S. employees who have worked 10 years and attained age 55 while in service with the company. The Plan is currently noncontributory and contains cost-sharing features such as deductibles, coinsurance and a lifetime maximum. The company does not fund the plan. No significant postretirement medical benefits are provided by the company to non-U.S. employees. -28- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Pension Benefits ------------------------ (millions of dollars) 1999 1998 1997 ------------------------ Change in benefit obligations: Benefit obligation as of January 1 $1,344 1,255 1,057 Service cost 50 49 41 Interest cost 98 91 84 Plan participants' contributions 1 1 1 Amendments 7 30 35 Business combinations 0 0 160 Actuarial (gain) loss (114) 28 36 Benefits paid (93) (86) (152) Curtailments 0 (14) (14) Special termination benefits (2) (2) 17 Foreign currency exchange rate changes (49) (8) (10) ------------------------ Benefit obligation as of December 31 $1,242 1,344 1,255 ------------------------ Change in plan assets: Fair value of plan assets as of January 1 $1,672 1,452 1,322 Actual return on plan assets 644 292 207 Business combinations 0 0 72 Employer contributions 12 17 7 Plan participants' contributions 1 1 1 Benefits paid (93) (86) (152) Foreign currency exchange rate changes (35) (4) (5) ------------------------ Fair value of plan assets as of December 31 $2,201 1,672 1,452 ------------------------ -29- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Pension Benefits ----------------------------------------- (millions of dollars) 1999 1998 1997 ----------------------------------------- Reconciliation of prepaid (accrued) cost and total amount to be recognized: Funded status as of December 31 $ 959 328 197 Unrecognized actuarial (gain) (1,087) (471) (365) Unrecognized prior service cost 73 71 83 Unrecognized transition asset 11 22 33 ----------------------------------------- Prepaid (accrued) cost as of December 31 $ (44) (50) (52) ----------------------------------------- Prepaid cost at December 31 85 114 98 Accrued benefit liability at December 31 (138) (173) (159) Intangible asset 2 2 3 Other 7 7 6 ----------------------------------------- Total recognized as of December 31 $ (44) (50) (52) ----------------------------------------- Weighted average assumption as of December 31: Discount rate 5.0 to 11.3% 5.5 to 9.0% 6.0 to 9.0% Expected return on assets 6.0 to 11.3% 6.0 to 9.5% 4.5 to 9.5% Rate of compensation increase 2.5 to 8.0% 2.0 to 8.0% 2.5 to 9.0% Components of net periodic benefit cost: Service cost $ 50 49 41 Interest cost 98 91 84 Expected return on plan assets (127) (112) (103) Recognized actuarial (gain) (7) (8) (7) Amortization of prior service cost 9 9 8 Amortization of transition assets (1) 0 (3) ----------------------------------------- Net periodic benefit cost 22 29 20 ----------------------------------------- Curtailments 0 (7) (13) Special termination benefits (1) 2 17 Settlements 0 (3) (29) ----------------------------------------- Total cost $ 21 21 (5) -----------------------------------------
-30- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Postretirement Medical Benefits ------------------------------- 1999 1998 1997 (millions of dollars) ------------------------------- Change in benefit obligation: Benefit obligation as of January 1 $ 428 388 382 Service cost 10 10 10 Interest cost 30 29 29 Actuarial (gain) loss (34) 22 (15) Benefits paid (20) (21) (18) ------------------------------- Benefit obligation as of December 31 $ 414 428 388 ------------------------------- Change in plan assets: Fair value of plan assets as of January 1 0 0 0 Employer contributions 20 21 18 Benefits paid (20) (21) (18) ------------------------------- Fair value of plan assets as of December 31 $ 0 0 0 ------------------------------- Reconciliation of prepaid (accrued) cost and total amount recognized: Funded status as of December 31 $(414) (428) (388) Unrecognized actuarial (gain) loss (27) 8 (14) ------------------------------- Prepaid (accrued) cost as of December 31 $(441) (420) (402) ------------------------------- Prepaid cost at December 31 0 0 0 Accrued benefit liability at December 31 (441) (420) (402) ------------------------------- Total recognized as of December 31 $(441) (420) (402) ------------------------------- Weighted average assumption as of December 31: Discount rate 8.00% 7.25% 7.75% Medical costs trend rate: For year ending December 31 7.00% 7.00% 8.00% Ultimate (year 2000) 6.00% 6.00% 6.00% Components of net periodic benefit cost: Service cost $ 10 10 10 Interest cost 30 29 29 ------------------------------- Net periodic benefit cost 40 39 39 ------------------------------- Total cost $ 40 39 39 -------------------------------
31 WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The medical cost trend rate significantly affects the reported postretirement benefit cost and benefit obligations. A one-percentage-point change in the assumed health care trend rate would have the following effects:
One- One- (millions of dollars) percentage- percentage- point increase point decrease -------------- -------------- Effect on total service cost and interest cost components $ 3 (3) Effect on postretirement benefit obligation $29 (28)
The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets were $80 million, $71 million and $5 million, respectively, as of December 31, 1999, $86 million, $67 million and $6 million, respectively, as of December 31, 1998, and $312 million, $221 million and $140 million, respectively, as of December 31, 1997. The U.S. pension plans provide that in the event of a plan termination within five years following a change in control of the company, any assets held by the plans in excess of the amounts needed to fund accrued benefits would be used to provide additional benefits to plan participants. A change in control generally means one not approved by the incumbent board of directors, including an acquisition of 25% or more of the voting power of the company's outstanding stock or a change in a majority of the incumbent board. The company maintains a 401(k) defined contribution plan covering substantially all U.S. employees. Company matching contributions for domestic hourly and certain other employees under the plan, based on the company's annual operating results and the level of individual participant's contributions, amounted to $9 million, $7 million and $6 million in 1999, 1998 and 1997. -32- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (14) CONTINGENCIES The company is involved in various legal actions arising in the normal course of business. Management, after taking into consideration legal counsel's evaluation of such actions, is of the opinion that the outcome of these matters will not have a material adverse effect on the company's financial position. The company is a party to certain financial instruments with off-balance-sheet risk, which are entered into in the normal course of business. These instruments consist of financial guarantees, repurchase agreements and letters of credit. The company's exposure to credit loss in the event of nonperformance by the debtors is the contractual amount of the financial instruments. The company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. Collateral or other security is generally required to support financial instruments with off-balance-sheet credit risk. At December 31, 1999 the company had $277 million in receivables subject to recourse provisions and $169 million in guarantees of customer lines of credit at commercial banks. At December 31, 1999, the company had noncancelable operating lease commitments totaling $234 million. The annual future minimum lease payments are detailed in the table below. Annual (dollars in millions) Expense - --------------------- ------- 2000 $ 62 2001 43 2002 35 2003 29 2004 27 Thereafter 38 ---- $234 ==== The company's rent expense was $87 million, $81 million and $82 million for the years 1999, 1998 and 1997, respectively. -33- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (15) BUSINESS SEGMENT INFORMATION Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance of the segment. The company identifies such segments based upon geographical regions of operations because each operating segment manufactures home appliances and related components, but serves strategically different markets. The chief operating decision maker evaluates performance based upon each segment's operating income, which is defined as income before interest income or interest expense, taxes and minority interests. Intersegment sales and transfers are generally at current market prices, as if the sales or transfers were to third parties. The "Other" segment primarily includes corporate expenses and eliminations. The company generally evaluates business segments based on net sales, not including intersegment appliance sales. Intersegment sales are included in Other/Eliminations. Total assets are those assets directly associated with the respective operating activities. Other assets consist principally of assets related to corporate activities, including the assets of discontinued operations held for sale in 1997. Substantially all of the company's trade receivables are from distributors and retailers. Sales activity with Sears, Roebuck and Co., a North American major home appliance retailer, represented 18%, 17% and 20% of consolidated net sales in 1999, 1998 and 1997. Related receivables were 22%, 16% and 17% of consolidated trade receivables for December 31, 1999, 1998 and 1997. The company conducts business in two countries which individually comprised over ten percent of consolidated net sales and total assets within the last three years. The United States represented 54%, 50% and 57% of net sales for 1999, 1998 and 1997, respectively, while Brazil totalled 15% and 19% for 1999 and 1998. As a percentage of total assets, the United States accounted for 65%, 57% and 53% at the end of 1999, 1998 and 1997. Brazil accounted for 24%, 31% and 31% of total assets at the end of 1999, 1998 and 1997, respectively. The company's Brazilian affiliates were consolidated in November of 1997 and therefore only in the total asset calculation for 1997. -34- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (15) BUSINESS SEGMENT INFORMATION-CONTINUED
North Latin Other/ Total America Europe America Asia Eliminations Whirlpool ------- ------ ------- ---- ------------ --------- Net sales: 1999 6,159 2,452 1,668 375 (143) 10,511 1998 5,599 2,439 2,090 313 (118) 10,323 1997 5,263 2,343 447 400 164 8,617 Intangible amortization: 1999 3 16 2 5 5 31 1998 3 16 6 4 10 39 1997 3 16 1 4 10 34 Depreciation: 1999 151 88 95 21 31 386 1998 143 94 126 15 21 399 1997 145 110 3 13 51 322 Restucturing costs and operating charges: 1999 - - - - - - 1998 - - - - - - 1997 - - - - 396 396 Operating profit (loss): 1999 725 177 120 13 (160) 875 1998 630 122 120 (17) (167) 688 1997 546 54 22 (62) (549) 11 Total assets: 1999 2,254 1,921 1,653 719 279 6,826 1998 2,091 2,298 2,499 722 325 7,935 1997 2,046 1,999 2,403 672 1,150 8,270 Capital expenditures: 1999 227 77 110 9 14 437 1998 188 78 239 25 12 542 1997 128 84 49 100 17 378
-35- WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (16) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
Three Months Ended -------------------------------------------------- (millions of dollars, except per share data) December 31 September 30 June 30 March 31 ----------- ------------ ------- -------- 1999 Net sales $ 2,689 $ 2,719 $ 2,617 $ 2,486 Cost of products sold $ 1,983 $ 2,036 $ 1,967 $ 1,866 Earnings from continuing operations $ 113 $ 107 $ 99 $ 28 Net earnings $ 113 $ 107 $ 99 $ 28 Per share of common stock: Basic earnings from continuing operations $ 1.52 $ 1.42 $ 1.32 $ .37 Basic net earnings $ 1.52 $ 1.42 $ 1.32 $ .37 Diluted earnings from continuing operations $ 1.51 $ 1.40 $ 1.30 $ .36 Diluted net earnings $ 1.51 $ 1.40 $ 1.30 $ .36 Dividends paid $ .34 $ .34 $ .34 $ .34 Stock price: High 73.56 78.25 74.00 57.00 Low 56.75 61.25 50.50 40.94 Close 65.06 65.31 74.00 54.38
The first quarter earnings and earnings per share were reduced $60 million after-taxes and minority interest, or $0.79 per share, by the first quarter's Brazilian currency devaluation. 36 WHIRLPOOL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (15) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)*--CONTINUED
Three Months Ended -------------------------------------------------- December 31 September 30 June 30 March 31 ------------ ------------ --------- ---------- (millions of dollars, except per share data) 1998 Net sales $ 2,735 $ 2,539 $ 2,585 $ 2,464 Cost of products sold $ 2,045 $ 1,929 $ 1,962 $ 1,869 Eamings (loss) from continuing operations $ 83 $ 78 $ 81 $ 68 Net earnings (loss) $ 83 $ 78 $ 84 $ 80 Per share of common stock: Basic earnings (loss) from continuing operations $ 1.10 $ 1.03 $ 1.07 $ .91 Basic net earnings (loss) $ 1.10 $ 1.03 $ 1.11 $ 1.06 Diluted earnings (loss) from continuing operations $ 1.09 $ 1.02 $ 1.05 $ .90 Diluted net earnings (loss) $ 1.09 $ 1.02 $ 1.10 $ 1.05 Dividends paid $ .34 $ .34 $ .34 $ .34 Stock price High 59.50 69.94 75.25 70.00 Low 43.69 45.00 62.44 50.38 Close 55.38 47.00 68.75 68.69
37 Report of Ernst & Young LLP Independent Auditors The Stockholders and Board of Directors Whirlpool Corporation Benton Harbor, Michigan We have audited the accompanying consolidated balance sheets of Whirlpool Corporation as of December 31, 1999 and 1998, and the related consolidated statements of earnings, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the 1998 and 1997 financial statements of Brasmotor S.A. and its consolidated subsidiaries, whose statements reflect total assets of $2,500 million as of December 31, 1998 and net earnings of $58 million and $41 million for the years ended December 31, 1998 and 1997, respectively. Those statements were audited by other auditors which reports have been furnished to us, and our opinion, insofar as it relates to data included for Brasmotor S.A. and its consolidated subsidiaries, is based on the reports of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audits and the reports of the other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and, for 1998 and 1997, the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Whirlpool Corporation at December 31, 1999 and 1998, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Chicago, Illinois January 20, 2000 -38- Report by Management on the Consolidated Financial Statements The management of Whirlpool Corporation has prepared the accompanying financial statements. The financial statements have been audited by Ernst & Young LLP, independent auditors, whose report, based upon their audits, expresses the opinion that these financial statements present fairly the consolidated financial position, results of operations and cash flows of Whirlpool and its subsidiaries in accordance with accounting principles generally accepted in the United States. Their audits are conducted in conformity with auditing standards generally accepted in the United States. The financial statements were prepared from the company's accounting records, books and accounts which, in reasonable detail, accurately and fairly reflect all material transactions. The company maintains a system of internal controls designed to provide reasonable assurance that the company's accounting records, books and accounts are accurate and that transactions are properly recorded in the company's books and records, and the company's assets are maintained and accounted for, in accordance with management's authorizations. The company's accounting records, policies and internal controls are regularly reviewed by an internal audit staff. The audit committee of the board of directors of the company, which is composed of five directors who are not employed by the company, considers and makes recommendations to the board of directors as to accounting and auditing matters concerning the company, including recommending for appointment by the board the firm of independent auditors engaged on an annual basis to audit the financial statements of Whirlpool and its majority-owned subsidiaries. The audit committee meets with the independent auditors at least three times each year to review the scope of the audit, the results of the audit and such recommendations as may be made by said auditors with respect to the company's accounting methods and system of internal controls. Mark E. Brown Executive Vice President and Chief Financial Officer February 12, 2000 -39- 11 YEAR CONSOLIDATED STATISTICAL REVIEW
(millions of dollars except share and employee data) 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 - ------------------------- ------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------ CONSOLIDATED OPERATIONS Net sales.............. $10,511 $10,323 $ 8,617 $8,523 $8,163 $7,949 $7,368 $7,097 $6,550 $6,424 $6,138 ------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------ Operating profit(1).... $ 875 $ 688 $ 11 $ 278 $ 366 $ 370 $ 504 $ 447 $ 353 $ 300 $ 377 Earnings (loss) from continuing operations before income taxes and other items....... $ 514 $ 564 $ (171) $ 100 $ 214 $ 269 $ 418 $ 334 $ 256 $ 177 $ 281 Earnings (loss) from continuing operations. $ 347 $ 310 $ (46) $ 141 $ 195 $ 147 $ 257 $ 179 $ 139 $ 45 $ 169 Earnings (loss) from discontinued operations(2)......... $ -- $ 15 $ 31 $ 15 $ 14 $ 11 $ (28) $ 26 $ 31 $ 27 $ 18 Net earnings (loss)(3). $ 347 $ 325 $ (15) $ 156 $ 209 $ 158 $ 51 $ 205 $ 170 $ 72 $ 187 ------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------ Net capital expenditures.......... $ 437 $ 523 $ 378 $ 336 $ 483 $ 418 $ 309 $ 288 $ 287 $ 265 $ 208 Depreciation........... $ 386 $ 399 $ 322 $ 318 $ 282 $ 246 $ 241 $ 275 $ 233 $ 247 $ 222 Dividends.............. $ 103 $ 102 $ 102 $ 101 $ 100 $ 90 $ 85 $ 77 $ 76 $ 76 $ 76 ------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------ CONSOLIDATED FINANCIAL POSITION Current assets......... $ 3,177 $ 3,882 $ 4,281 $3,812 $3,541 $3,078 $2,708 $2,740 $2,920 $2,900 $2,889 Current liabilities.... $ 2,892 $ 3,267 $ 3,676 $4,022 $3,829 $2,988 $2,763 $2,887 $2,931 $2,651 $2,251 Working capital........ $ 285 $ 615 $ 605 $ (210) $ (288) $ 90 $ (55) $ (147) $ (11) $ 249 $ 638 Property, plant and equipment-net......... $ 2,178 $ 2,418 $ 2,375 $1,798 $1,779 $1,440 $1,319 $1,325 $1,400 $1,349 $1,288 Total assets........... $ 6,826 $ 7,935 $ 8,270 $8,015 $7,800 $6,655 $6,047 $6,118 $6,445 $5,614 $5,354 Long-term debt......... $ 714 $ 1,087 $ 1,074 $ 955 $ 983 $ 885 $ 840 $1,215 $1,528 $ 874 $ 982 Stockholders' equity... $ 1,867 $ 2,001 $ 1,771 $1,926 $1,877 $1,723 $1,648 $1,600 $1,515 $1,424 $1,421 ------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------ PER SHARE DATA Basic earnings (loss) from continuing operations before accounting change..... $ 4.61 $ 4.09 $ (0.62) $ 1.90 $ 2.64 $ 1.98 $ 3.60 $ 2.55 $ 2.00 $ 0.65 $ 2.44 Diluted earnings (loss) from continuing operations before accounting change..... $ 4.56 $ 4.06 $ (0.62) $ 1.88 $ 2.60 $ 1.95 $ 3.47 $ 2.46 $ 1.98 $ 0.65 $ 2.44 Diluted net earnings (loss)(3)............. $ 4.56 $ 4.25 $ (0.20) $ 2.08 $ 2.78 $ 2.10 $ 0.71 $ 2.81 $ 2.41 $ 1.04 $ 2.70 Dividends.............. $ 1.36 $ 1.36 $ 1.36 $ 1.36 $ 1.36 $ 1.22 $ 1.19 $ 1.10 $ 1.10 $ 1.10 $ 1.10 Book value............. $ 24.55 $ 26.16 $ 23.71 $25.93 $25.40 $23.21 $23.17 $22.91 $21.78 $20.51 $20.49 Closing Stock Price-- NYSE.................. $ 65.06 $ 55.38 $ 55.00 $46.63 $53.25 $50.25 $66.50 $44.63 $38.88 $23.50 $33.00 ------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------ KEY RATIOS(4) Operating profit margin................ 8.3% 6.7% 0.1% 3.3% 4.5% 4.7% 6.8% 6.3% 5.4% 4.7% 6.1% Pre-tax margin(5)...... 4.9% 5.5% (2.0)% 1.2% 2.6% 3.4% 5.7% 4.7% 3.9% 2.8% 4.6% Net margin(6).......... 3.3% 3.0% (0.5)% 1.7% 2.4% 1.8% 3.5% 2.5% 2.1% 0.7% 2.8% Return on average stockholders' equity(7)............. 17.9% 17.2% (0.8)% 8.2% 11.6% 9.4% 14.2% 13.1% 11.6% 5.1% 13.7% Return on average total assets(8)............. 4.2% 4.6% (0.7)% 1.8% 3.0% 2.8% 4.0% 3.3% 2.9% 1.4% 4.9% Current assets to current liabilities... 1.1 1.2 1.2 0.9 0.9 1.0 1.0 0.9 1.0 1.1 1.3 Total debt-appliance business as a percent of invested capital(9)............ 37.7% 43.5% 46.1% 44.2% 45.2% 35.6% 33.8% 42.8% 46.7% 39.1% 39.2% Price earnings ratio... 14.3 13.0 -- 22.4 19.2 23.9 21.2 15.9 16.1 22.6 12.2 Interest coverage(10).. 4.1 3.2 0.0 1.6 2.7 3.6 5.0 3.5 3.0 2.3 3.5 ------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------
40
(millions of dollars except share and employee data) 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 - ------------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- OTHER DATA Number of common shares outstanding (in thousands): Average--on a diluted basis.................. 76,044 76,507 74,697 77,178 76,812 77,588 76,013 75,661 72,581 69,595 69,461 Year-end............... 74,463 76,089 75,262 74,415 74,081 73,845 73,068 70,027 69,640 69,465 69,382 Number of stockholders (year-end)............. 12,531 13,584 10,171 11,033 11,686 11,821 11,438 11,724 12,032 12,542 12,454 Number of employees (year-end)............. 61,066 58,630 61,370 48,163 45,435 39,016 39,590 38,520 37,886 36,157 39,411 Total return to shareholders (five year annualized)(11)........ 7.9% -1.2% 6.8% 6.3% 20.8% 12.0% 25.8% 17.0% 6.7% 2.8% 11.3%
- -------- (1) Restructuring and special operating charges were $405 million in 1997 (refer to note 11), $30 million in 1996, and $250 million in 1994. (2) The Company's financial services business was discontinued in 1997. (3) Includes cumulative effect of accounting changes: 1993-Accounting for postretirement benefits other than pensions of ($180) million or ($2.42) per diluted share. (4) Excluding the first quarter impact of the Brazilian currency devaluation in 1999 and the gain from discontinued operations in 1998, returns on average stockholders' equity were 19.9% and 16.5%, and returns on average total assets were 5.7% and 4.3%. Excluding non-recurring items, selected 1997 Key Ratios would be as follows: a) Operating profit margin 4.7%, b) Pre-tax margin 2.7%, c) Net margin 2.6%, d) Return on average stockholders' equity 12.0%, e) Return on average total assets 2.7%, and f) Interest coverage 3.0%. (5) Earnings from continuing operations before income taxes and other items, as a percent of sales. (6) Earnings from continuing operations, as a percent of sales. (7) Net earnings (loss) before accounting change, divided by average stockholders' equity. (8) Net earnings (loss) before accounting change, plus minority interest divided by average total assets. (9) Debt divided by debt, stockholders' equity and minority interests. (10) Ratio of earnings from continuing operations (before income taxes, accounting change and interest expense) to interest expense. (11) Stock appreciation plus reinvested dividends. 41 EX-21 8 LIST OF SUBSIDIARIES Exhibit 21 Subsidiaries ------------ Subsidiary and Name Jurisdiction In Under Which It Does Business Which Organized - ---------------------------- --------------- Whirlpool Europe B.V. The Netherlands Whirlpool Properties, Inc. Michigan Whirlpool Financial Corporation Delaware Brasmotor S.A. Brazil Multibras S.A. Eletrodomesticos Brazil The names of the Company's other subsidiaries are omitted because, considered in the aggregate as a single subsidiary, such subsidiaries would not constitute a significant subsidiary as of December 31, 1999. EX-23.II(A) 9 CONSENT OF ERNST & YOUNG Exhibit 23ii(a) CONSENT OF ERNST & YOUNG LLP We consent to the incorporation by reference in Registration Statement Nos. 33-34490, 33-34037, 33-21360, 33-00201, 2-64261, 33-05904, 33-40249, 33-43823, 333-02827, 333-02825, 333-66211 and 333-77167 of Whirlpool Corporation and Registration Statement Nos. 33-26680 and 33-53196 of Whirlpool Corporation pertaining to the Whirlpool Savings Plan and Registration Statement No. 333-66163 of Whirlpool Corporation pertaining to the Whirlpool 401(K) Plan of our report dated January 20, 2000, with respect to the consolidated financial statements and schedule of Whirlpool Corporation, included in this Annual Report (Form 10-K) for the year ended December 31, 1999. Chicago, Illinois March 15, 2000 EX-23.II(B) 10 CONSENT OF PRICEWATERHOUSECOOPERS Consent of Independent Accounts We hereby consent to the Incorporation by reference in the Registration Statement nos. 33-34490, 33-34037, 33-21360, 33-00201, 2-64261, 33-05904, 33-40249, 33-43823, 333-02827, 333-02825, 333-66211, and 333-77167 of Whirlpool Corporation and Registration Statement nos. 33-26680 and 33-53196 of Whirlpool Corporation pertaining to the Whirlpool Savings Plan and Registration Statement no. 333-66163 of Whirlpool Corporation pertaining to the Whirlpool 401(K) Plan of our reports dated January 18, 1999 with respect to the consolidated financial statements of Brasmotor S.A. and its subsidiaries, Multibras S.A. Elecrodomesticos and its susidiaries and Empresa Brasileira de Compressores S.A.-EMBRACO and its subsidiaries, included in this Annual Report on Form 10-K. /s/ PricewaterhouseCoopers PricewaterhouseCoopers Auditores Independentes Sao Paulo, Brazil March 17, 2000 EX-27.1 11 FINANCIAL DATA SCHEDULE (1999)
5 1,000,000 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 261 0 1,477 124 1,065 3,177 5,182 3,004 6,826 2,892 714 0 0 84 1,783 6,826 10,511 10,511 7,852 9,605 31 30 166 514 197 347 0 0 0 347 4.61 4.56
EX-27.2 12 FINANCIAL DATA SCHEDULE (1998)
5 1,000,000 YEAR DEC-31-1998 JAN-01-1998 DEC-31-1998 636 0 1,711 116 1,100 3,882 5,511 3,093 7,935 3,267 1,087 0 0 83 1,918 7,935 10,323 10,323 7,805 9,596 39 45 260 564 209 310 15 0 0 325 4.09 4.06
EX-27.3 13 FINANCIAL DATA SCHEDULE (1997)
5 1,000,000 YEAR Dec-31-1997 Jan-01-1997 Dec-31-1997 578 0 1,565 156 1,170 4,281 5,262 2,887 8,270 3,676 1,074 0 0 82 1,689 8,270 8,617 8,617 6,604 8,229 377 160 168 (171) (9) (46) 31 0 0 (15) (0.20) (0.20)
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