Whirlpool Corporation Reports Fourth-Quarter and Full-Year 2008 Results
Corporation (NYSE: WHR) announced today that full-year 2008 earnings from
continuing operations were
diluted share reported in the same period last year. The company reported
annual net sales of
year.
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Fourth-quarter net earnings decreased 76 percent to
per diluted share, compared to
reported during the previous year. Sales of
decreased 19 percent from the
2007. Excluding the impact of foreign exchange translation, the company’s
fourth-quarter sales declined approximately 13 percent.
Fourth-quarter earnings reflect sharply lower global unit sales and
production volumes, higher material and oil-related costs and unfavorable
foreign currency exchange movements compared to the fourth quarter of 2007.
The company also recorded
million
million
items were partially offset by an income tax benefit, favorable price/mix,
lower incentive compensation and cost reduction initiatives during the
quarter. The company’s results included
compared with
“The severity and scope of the global economic downturn has significantly
increased over the last several months and had a significant impact on
consumer demand in all parts of the world,” said
Corporation chairman and chief executive officer. “We have moved very quickly
to adjust our business to much lower demand levels by significantly reducing
costs and production levels while continuing to focus on providing our trade
customers with an ongoing cadence of innovation which represents great value
to consumers.”
During the fourth quarter, Whirlpool Corporation accessed its existing
covenants. Given the generally negative and highly volatile global economic
climate and the challenges in global credit markets, the company is
proactively taking steps to assure its future financial flexibility. The
company has initiated discussions with banks to seek additional flexibility
within its capital structure.
FOURTH-QUARTER REGIONAL REVIEW
Whirlpool
Fourth-quarter sales of
year. Excluding the effects of currency, sales declined approximately 16
percent from the prior year. U.S. industry unit shipments of major appliances
(T7)* declined approximately 10 percent.
The
compared to an operating profit of
Significantly lower sales and unit production levels, unfavorable foreign
exchange, product recall costs and higher material and oil-related costs were
the primary unfavorable factors affecting the company’s fourth-quarter
operating profit. These factors were partially offset by favorable price/mix,
ongoing cost reduction initiatives and a
of an asset.
Based on current economic conditions, the company expects full-year 2009
U.S. industry unit shipments to decline approximately 10 percent from 2008.
Whirlpool
Whirlpool
percent decrease from the prior year. Excluding the effects of currency,
sales declined approximately 7 percent from the previous year. Overall
industry unit demand during the quarter declined approximately 10 percent from
the prior year.
Operating profit decreased to
previous year. European results were adversely impacted by unfavorable
foreign currency fluctuations, higher material costs and sharply lower
production rates during the fourth quarter.
Based on current economic conditions in the European region, the company
expects full-year 2009 industry unit shipments to decline approximately 8
percent from 2008 levels.
Whirlpool
Fourth-quarter net sales declined 26 percent to
currency translation, sales for appliances and compressors decreased
approximately 14 percent. Sales results reflected sharply lower industry unit
demand throughout the Latin American region and in the global compressor
operation.
Operating profit totaled
by foreign currency exchange, lower revenues, higher material costs and the
non-recurrence of a
These items were partially offset by favorable price/mix and cost reduction
initiatives.
Full-year results represent record net sales and earnings. In addition,
appliance and compressors.
Based on current economic conditions in
full-year 2009 shipments to be flat to down 5 percent.
Whirlpool
Whirlpool
10 percent from the prior year. Excluding the impact of currency, sales
increased approximately 7 percent predominantly due to higher unit volume and
favorable price/mix. Operating profit during the quarter was
compared to an operating loss of
year increase in operating profit resulted from higher volume and favorable
trends in productivity and product price/mix. These favorable items were
partially offset by higher material costs and unfavorable foreign currency
exchange.
The company expects full-year 2009 industry unit shipments to be flat to
down 5 percent from 2008 levels.
Outlook
For the full-year 2009, Whirlpool Corporation expects earnings per diluted
share from continuing operations to be between
year, the company expects to generate free cash flow** between
and $400 million
based upon our current economic forecasts and business plans.
“We expect 2009 economic conditions to be among the most challenging that
we have faced,” said
executive officer. “Significant demand declines, volatile cost and currency
levels are expected throughout the year. To succeed in this environment we
are aggressively taking additional steps, beyond actions previously announced,
to further reduce all areas of cost, production capacity, working capital and
capital expenditures. We will continue to have focused investments in new
product innovation to further strengthen our branded market position with our
consumers.”
* T7 refers to the following household appliance categories: washers,
dryers, refrigerators, freezers, dishwashers, ranges and compactors.
** A reconciliation of free cash flow, a non-GAAP financial measure, to
cash provided by continuing operations appears below under the heading “Cash
Flow Reconciliation.”
2008 INNOVATIONS
-- The Whirlpool brand launched:
- The Cabrio steam dryer that uses a combination of mist and heat to
naturally steam away tough odors and relax wrinkles.
- A new French door refrigerator with an external ice and water
dispenser with new features, including a caddy for tall bottles
and the ability to store a case of beverages.
- The Whirlpool brand Resource Saver dishwasher system designed to
increase tough soil cleaning performance.
-- The Maytag brand in North America launched:
- The new Maytag Bravos, the first top-load washer to qualify for a
CEE Tier III energy rating, the highest efficiency level in the
industry.
- The front-load "Performance Series" laundry pairs available in
Crimson, Evergreen, Oxide and White. The series feature faster
and more efficient drying; a stainless steel wash basket that
remains smooth to protect fabrics; and a water heater with a new
NSF Certified Sanitary Cycle to remove at least 99.9 percent of
household bacteria.
-- The KitchenAid brand launched:
- A 72" French door, counter-depth refrigerator, the first in the
industry. The refrigerator provides more space while maintaining
a built-in look.
- The industry's first 30-inch, five-burner gas cooktop. Part of
the new KitchenAid Architect Series II appliance collection, the
new cooktops include both 30- and 36-inch widths, each with five
burners.
- "EQ" dishwashers that provide optimal cleaning performance,
enhanced drying performance and noise reduction while also saving
water and energy. These exceptionally quiet dishwashers are 56
percent more efficient than federal minimum energy standards.
-- The Jenn-Air brand launched:
- A new French door refrigerator with an ice and water dispenser in
the door.
- An expanded SteamClean dishwasher line. The SteamClean option
provides enhanced soil and spot cleaning when using the normal
cycle.
- A new line of built-in refrigerators featuring an integrated
through-the-door ice and water dispenser option, a PUR(R) water
filter, storage bins with Advanced Climate Control technology and
an enhanced temperature management system.
-- The Amana brand in North America launched:
- "Clever Combo" cooking centers. This new line of freestanding
ranges and over-the-range microwaves combine updated styling with
practical features to suit any cooking style and add extra flair
to the kitchen.
- A new traditional top-load laundry pair. The top-load washing
machine features antimicrobial component protection and an updated
console for a stylish look. The super capacity dryers feature
wide-opening, side-swing, reversible doors.
-- The Gladiator GarageWorks brand in North America launched:
- The "Smart Solutions" series including a golf caddy, ball caddy,
project caddy and clean-up caddy. The series is designed to
address specific organizational needs of Gladiator brand
consumers.
- A ready-to-assemble Extra Large GearBox to provide ample storage
for large, bulky, hard-to-store items. The GearBox is 48" x 72"
and is designed to hang from Gladiator Wall Systems or sit on the
floor on leveler legs.
- The Gladiator Claw Advanced Bike Storage device, a first-of-its-
kind, easy-to-use wall- or ceiling-mounted bike storage solution.
-- Whirlpool Europe launched:
- Whirlpool brand AquaSteam dishwashers, which create steam during
the wash cycle to offer the best cleaning performance, even on
delicate items. The steam feature softens dried-on soil and helps
to eliminate bacteria.
- Bauknecht brand Aqua refrigerator-freezer combinations with
in-the-door water dispensing that connects to the main water
supply. These refrigerators comply with the European A+ energy
efficiency class and are ideal for small kitchens.
- The KitchenAid bottom mount refrigerator with optional wine
cellar. The refrigerator features large, practical shelves and
eliminates humidity before it can turn into frost. The wine cellar
can hold up to 188 bottles and offers three different temperature
settings.
- A Whirlpool brand Carisma washing machine featuring 6TH SENSE
technology to reduce water and energy consumption by 50 percent.
The technology allows consumers to simply select the fabric type,
and the 6TH SENSE feature recognizes the exact size of the load
and adapts resources accordingly.
- KitchenAid brand major appliances in Belgium, the Netherlands,
Luxembourg, Norway, Finland and Germany as part of the brand's
continued European expansion.
-- Whirlpool Latin America launched:
- Brastemp brand You dishwashers and ranges that consumers can
customize via the Internet. The appliances can be configured
according to the consumers' style and lifestyle preferences. The
range is available in nine colors and more than 1,700 option
combinations, while the dishwasher is available in eight color
choices with more than 800 combination options.
- Brastemp brand Duet laundry pair. The Duet dryer is the only gas-
powered dryer in the Brazilian market, allowing consumers to
reduce their power consumption spending.
- Brastemp brand PLA BABY mini-refrigerators designed specifically
for home nurseries. The refrigerators offer convenient, quick-
access to milk, juice and fruit. The refrigerators are also very
stylish, featuring five distinct and decorative removable face
plates featuring animal figures.
- A line of Consul brand stainless steel appliances designed to
provide consumers with stylish appliances at affordable prices.
The new stainless steel offering includes two frost-free
refrigerators, two ranges and a microwave oven.
- A Consul brand vacuum cleaner. The product features a retractable
telescopic hose, retractable energy cable, an on/off pedal switch,
ergonomic handle, and indicator light for bag changes.
- KitchenAid brand continued its Latin America introduction.
KitchenAid brand major and countertop appliances are now offered
throughout Brazil.
- The Whirlpool brand stainless steel no-frost, side-by-side
refrigerator in Argentina. The refrigerator is equipped with LCD
controls, water dispenser, ice maker and anti-bacteria filter.
-- Whirlpool Asia launched:
- A Whirlpool brand compact washing machine to fit in small kitchens
and bathrooms. The product features 6th SENSE technology which
senses the wash load and automatically adjusts water levels and
cycle times.
- Whirlpool brand Genius refrigerators in India featuring an ice
maker capable of making ice 30 percent faster and a vegetable
drawer designed to keep vegetables fresh for a longer period. The
refrigerator also comes equipped with a jumbo bottle rack,
antibacterial protection and an extra utility drawer for storing
items that do not need to be refrigerated.
- Whirlpool brand Fusion refrigerators in India featuring an
emergency light to provide light equivalent to a 40 watt bulb for
two hours during a power outage, and the ability to retain
interior temperatures for up to 17 hours during the prevalent
power outages in the region.
- Whirlpool brand Onyx frost-free, top-mount refrigerator in
Australia. The large-capacity, energy-efficient refrigerator
features a rapid chill freezer compartment, a humidity-controlled
crisper drawer to keep foods fresher longer and a Satina finish.
- Whirlpool brand refrigerators to the Chinese market for the first
time.
2008 AWARDS AND ACCOMPLISHMENTS
- Whirlpool Corporation was named one of the Top 50 Most Respected U.S.
Companies by the Reputation Institute.
- Whirlpool Corporation was named one of the World's Most Ethical
Companies by Ethisphere magazine.
- Whirlpool Corporation was named one of the Best Places to Launch a
Career by BusinessWeek magazine.
- For the fourth consecutive year Whirlpool Corporation was named to the
2008/2009 Dow Jones Sustainability Index (DJSI), an international stock
portfolio that evaluates corporate performance using economic,
environmental, and social criteria.
- Whirlpool Corporation received a score of 100 percent on the Human
Rights Campaign's Corporate Equality Index for the sixth consecutive
year.
- Whirlpool brand was named one of the 10 top greenest brands by U.S.
consumers, according to a recent BrandWeek magazine survey.
- Whirlpool Corporation was recognized with its third consecutive ENERGY
STAR(R) Sustained Excellence award from the Environmental Protection
Agency and the Department of Energy in honor of its outstanding
contribution to providing innovative products that help consumers reduce
their utility bills and contribute to a reduction in greenhouse gas
emissions.
- Whirlpool Corporation teamed up with Habitat for Humanity(R) to help
build nine homes in five days in Dallas as part of the third annual
Building Blocks program.
- Whirlpool Corporation is among the partners of the LEAF House (Life
Energy And Future), the first Italian house to be entirely carbon
neutral and energy self-sufficient. The LEAF House received
Legambiente's (Italy's most authoritative watchdog group on
environmental issues) national Innovation Friendly to the Environment
award.
- Whirlpool Europe's Shared Services Center in Ireland was named, for the
fifth time, as one of the Top Best 50 Companies to work for in Ireland.
This Best Companies study, conducted by Great Place to Work Institute,
sets out to identify and recognize the finest employers.
- In Europe, Whirlpool was named 2008 Manufacturer of the Year, white
goods category, by Sirius, one of the largest buying groups in the
United Kingdom.
- Whirlpool Latin America was named the most admired home appliance
company, for the 11th consecutive time, by Carta Capital magazine.
- The Consul brand was selected as the Top of Mind brand in home
appliances and home electronics in a survey conducted by Amanha
magazine. Previously, the survey recognized the most named refrigerator
brand category, in which Consul brand was the title holder for six
consecutive years.
- In Brazil, both Whirlpool and Embraco, Whirlpool Corporation's
compressor and cooling solutions business, were named to the Best
Company to work for in Brazil list for the 12th consecutive year by Guia
Voce S.A/Exame 2008.
- Embraco was named to the 2008 Stars of Energy Efficiency list by the
Alliance to Save Energy (ASE). The award recognizes individuals,
companies and government entities working to advance energy efficiency
in noteworthy and creative ways.
- Embraco was elected for the second consecutive year as the Most
Innovative Company in the South of Brazil by the Ranking Champions of
Innovation 2008.
- In Brazil, Whirlpool was named the Most Innovative Company by the
Ranking Champions of Innovation, promoted by Amanha Magazine and Edusys
consulting.
- In Argentina, the Whirlpool brand was named Top of Mind by Clarin, the
newspaper with the largest Spanish circulation in the world.
- Whirlpool Latin America was granted the ANPEI seal of Innovation by the
National Association of Research, Development and Engineering of
Innovative Companies. The certification is intended to recognize and
identify the companies investing and standing out in the fields of
Research, Development and Innovation in Brazil.
- Whirlpool of India was named one of the Best Companies to Work for in
India, according to Business Today magazine.
Cash Flow Reconciliation
The table below reconciles actual 2008 and 2007 and projected 2009 cash
provided by continuing operations determined in accordance with generally
accepted accounting principles (GAAP) in
a non-GAAP measure. Management believes that free cash flow provides
shareholders with a relevant measure of liquidity and a useful basis for
assessing the company’s ability to fund its activities and obligations. There
are limitations to using non-GAAP financial measures, including the difficulty
associated with comparing companies that use similarly named non-GAAP measures
whose calculations may differ from the company’s calculations. As defined by
the company, free cash flow is cash provided by continuing operations after
capital expenditures and proceeds from the sale of assets/businesses.
Twelve Months Ended
December 31
(millions of dollars) 2008 2007 2009 Outlook
Cash provided by continuing
operations $327 $927 $700 - $800
Capital expenditures (547) (536) (450) - (500)
Proceeds from sale of
assets/non-Maytag
businesses 119 130 50 - 100
Free Cash Flow $(101) $521 $300 - $400
About Whirlpool Corporation
Whirlpool Corporation is the world’s leading manufacturer and marketer of
major home appliances, with annual sales of approximately
employees, and 69 manufacturing and technology research centers around the
world. The company markets Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana,
Brastemp, Consul, Bauknecht and other major brand names to consumers in nearly
every country around the world. Additional information about the company can
be found at http://www.whirlpoolcorp.com.
Whirlpool Additional Information:
This document contains forward-looking statements that speak only as of
this date. Whirlpool disclaims any obligation to update these statements.
Forward-looking statements in this document may include, but are not limited
to, statements regarding expected earnings per share, cash flow, productivity
and material and oil-related prices. Many risks, contingencies and
uncertainties could cause actual results to differ materially from Whirlpool
Corporation’s forward-looking statements. Among these factors are: (1)
changes in economic conditions which affect demand for our products, including
the strength of the building industry and the level of interest rates; (2) the
effects of the global economic crisis on our customers, suppliers and the
availability of credit; (3) Whirlpool’s ability to continue its relationship
with significant trade customers, including Sears Holding Corporation in
America
sales of
or increase market share; (4) intense competition in the home appliance
industry reflecting the impact of both new and established global competitors,
including Asian and European manufacturers; (5) the ability of Whirlpool to
manage foreign currency fluctuations; (6) litigation including product
liability and product defect claims; (7) the ability of Whirlpool to achieve
its business plans, productivity improvements, cost control, leveraging of its
global operating platform, and acceleration of the rate of innovation; (8)
fluctuations in the cost of key materials (including steel, oil, plastic,
resins, copper and aluminum) and components and the ability of Whirlpool to
offset cost increases; (9) the ability of suppliers of critical parts,
components and manufacturing equipment to deliver sufficient quantities to
Whirlpool in a timely and cost-effective manner; (10) health care cost trends
and regulatory changes that could increase future funding obligations for
pension and post retirement benefit plans; (11) Whirlpool’s ability to obtain
and protect intellectual property rights; (12) global, political and/or
economic uncertainty and disruptions, especially in Whirlpool’s significant
geographic regions, including uncertainty and disruptions arising from natural
disasters or terrorist attacks; (13) the impact of labor relations; (14) our
ability to attract, develop and retain executives and other qualified
employees; (15) the cost of compliance with environmental and health and
safety regulations. Additional information concerning these and other factors
can be found in Whirlpool Corporation’s filings with the Securities and
Exchange Commission, including the most recent annual report on Form 10-K,
quarterly reports on Form 10-Q, and current reports on Form 8-K.
WHIRLPOOL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Periods Ended December 31
(Millions of dollars, except per share data)
Three Months Twelve Months
Ended Ended
-------------------- ------------------
(Unaudited)(Unaudited)(Unaudited)
2008 2007 2008 2007
--------- --------- --------- --------
Net sales $4,315 $5,325 $18,907 $19,408
Expenses
Cost of products sold 3,842 4,487 16,383 16,517
Selling, general and administrative
(exclusive of intangible
amortization) 379 484 1,798 1,736
Intangible amortization 7 7 28 31
Restructuring costs 77 15 149 61
--------- --------- --------- --------
Operating profit 10 332 549 1,063
Other income (expense)
Interest and sundry income (expense) (66) (43) (100) (63)
Interest expense (53) (52) (203) (203)
Gain on sale of investment - - - 7
--------- --------- --------- --------
Earnings from continuing
operations before income
taxes and other items (109) 237 246 804
Income taxes (160) 39 (201) 117
--------- --------- --------- --------
Earnings from continuing
operations before equity
earnings and minority
interests 51 198 447 687
Equity in income (loss) of affiliated
companies - (8) - (18)
Minority interests (7) (3) (29) (22)
--------- --------- --------- --------
Earnings from continuing
operations 44 187 418 647
Loss from discontinued operations,
net of tax - - - (7)
--------- --------- --------- --------
Net earnings available to common
stockholders $44 $187 $418 $640
========= ========= ========= ========
Per share of common stock
Basic earnings from continuing
operations $0.60 $2.42 $5.57 $8.24
Discontinued operations, net of tax - - - (0.09)
--------- --------- --------- --------
Basic net earnings $0.60 $2.42 $5.57 $8.15
========= ========= ========= ========
Diluted earnings from continuing
operations $0.60 $2.38 $5.50 $8.10
Discontinued operations, net of tax - - - (0.09)
--------- --------- --------- --------
Diluted net earnings $0.60 $2.38 $5.50 $8.01
========= ========= ========= ========
Dividends $.43 $.43 $1.72 $1.72
========= ========= ========= ========
Weighted-average shares outstanding
(in millions)
Basic 74.1 77.3 75.1 78.5
Diluted 74.7 78.4 76.0 79.9
WHIRLPOOL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Millions of dollars, except per share data)
(Unaudited)
December 31, December 31,
2008 2007
------------ ------------
Assets
Current assets
Cash and equivalents $146 $201
Accounts receivable, net of allowance
for uncollectible accounts of $66
and $83 at December 31, 2008 and
December 31, 2007, respectively 2,103 2,604
Inventories 2,591 2,665
Prepaid Expenses 110 89
Deferred income taxes 580 324
Other current assets 514 672
------------ ------------
Total current assets 6,044 6,555
------------ ------------
Other assets
Goodwill, net 1,728 1,760
Other intangibles, net of accumulated
amortization of $96 and $68 at
December 31, 2008 and December 31,
2007, respectively 1,821 1,854
Other assets 954 628
------------ ------------
Total other assets 4,503 4,242
------------ ------------
Property, plant and equipment
Land 74 84
Buildings 1,186 1,226
Machinery and equipment 7,549 7,861
Accumulated depreciation (5,824) (5,959)
------------ ------------
Total property, plant and equipment 2,985 3,212
------------ ------------
Total assets $13,532 $14,009
============ ============
Liabilities and stockholders' equity
Current liabilities
Accounts payable $2,805 $3,260
Accrued expenses 530 633
Accrued advertising and promotions 440 497
Employee compensation 306 444
Notes payable 393 298
Current maturities of long-term debt 202 127
Other current liabilities 887 634
------------ ------------
Total current liabilities 5,563 5,893
------------ ------------
Noncurrent liabilities
Long-term debt 2,002 1,668
Postretirement benefits 822 1,061
Pension benefits 1,505 725
Other liabilities 567 682
------------ ------------
Total noncurrent liabilities 4,896 4,136
------------ ------------
Commitments and contingencies
Minority interests 67 69
------------ ------------
Stockholders' equity
Common stock, $1 par value, 250
million shares authorized, 104
million and 103 million shares
issued at December 31, 2008 and
December 31, 2007, respectively, 73
million and 76 million shares
outstanding at December 31, 2008
and December 31, 2007, respectively 104 103
Additional paid-in capital 2,033 1,993
Retained earnings 3,993 3,703
Accumulated other comprehensive
income (loss) (1,259) (270)
Treasury stock, 31 million shares and
27 million shares at December 31,
2008 and December 31, 2007,
respectively (1,865) (1,618)
------------ ------------
Total stockholders' equity 3,006 3,911
------------ ------------
Total liabilities and stockholders'
equity $13,532 $14,009
============ ============
WHIRLPOOL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31
(Millions of dollars)
(Unaudited)
2008 2007
------------ ------------
Operating activities of continuing
operations
Net earnings $418 $640
Loss from discontinued operations - 7
------------ ------------
Earnings from continuing operations 418 647
Adjustments to reconcile earnings
from continuing operations to cash
provided by operating activities
from continuing operations:
Depreciation and amortization 597 593
Gain on disposition of assets (60) (65)
Gain on sale of investment - (7)
Increase in LIFO inventory reserve 42 9
Equity in losses of affiliated
companies, less dividends received - 18
Changes in assets and liabilities,
net of business acquisitions:
Accounts receivable 300 181
Inventories (174) (194)
Accounts payable (250) 105
Restructuring charges, net of cash
paid 33 (82)
Taxes deferred and payable, net (256) 10
Accrued pension (123) (70)
Employee compensation (84) (24)
Other (116) (194)
------------ ------------
Cash provided by continuing operating
activities 327 927
------------ ------------
Investing activities of continuing
operations
Capital expenditures (547) (536)
Proceeds from sale of assets 119 130
Proceeds from sale of Maytag adjacent
businesses - 100
Other (5) (25)
------------ ------------
Cash used in investing activities of
continuing operations (433) (331)
------------ ------------
Financing activities of continuing
operations
Proceeds from borrowings of long-term
debt 545 3
Purchase of treasury stock (247) (368)
Repayments of long-term debt (131) (17)
Dividends paid (128) (134)
Net proceeds (repayments) from short-
term borrowings 101 (243)
Common stock issued 21 68
Other (20) (5)
------------ ------------
Cash provided by (used in) financing
activities of continuing operations 141 (696)
------------ ------------
Cash provided by discontinued operations
Operating activities - 6
------------ ------------
Cash provided by discontinued operations - 6
------------ ------------
Effect of exchange rate changes on
cash and equivalents (90) 33
------------ ------------
Decrease in cash and equivalents (55) (61)
Cash and equivalents at beginning of
year 201 262
------------ ------------
Cash and equivalents at end of year $146 $201
============ ============
SOURCE Whirlpool Corporation