Whirlpool Corporation
Oct 27, 2010

Whirlpool Corporation Reports Third-Quarter 2010 Results

BENTON HARBOR, Mich., Oct 27, 2010 /PRNewswire via COMTEX/ -- Whirlpool Corporation (NYSE: WHR) announced today third-quarter net earnings of $79 million, or $1.02 per diluted share, compared to $87 million, or $1.15 per diluted share reported during the same period last year. Third-quarter adjusted diluted earnings per share(1) totaled $2.22 compared to $1.67 in the prior year. Sales of $4.5 billion increased 0.5 percent from the third quarter of 2009.

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Third-quarter operating profit totaled $234 million compared with $189 million in the prior year. Results were favorably impacted by cost reduction and productivity initiatives and increased monetization of certain tax credits. These favorable factors were partially offset by higher material costs and lower product price/mix. Third-quarter adjusted operating profit(2) totaled $234 million compared to $193 million in the prior year.

"As expected, we faced a challenging environment during the quarter which resulted in a significant slowing in sales growth compared to the first half of the year," said Jeff M. Fettig, chairman and chief executive officer of Whirlpool Corporation. "Our ongoing focus on cost reductions, productivity and innovative new product launches continues to enable us to adapt to changes in the macroeconomic environment."

During the nine months ended September 30, 2010, the company reported cash flow from operations of $377 million. On a year-to-date basis, Whirlpool Corporation generated free cash flow(3) of $(1) million compared with $373 million in the prior year.

Third-Quarter Regional Review

Whirlpool North America

Third-quarter sales of $2.4 billion decreased 3 percent from the prior year. North America unit shipments increased approximately 1 percent. U.S. industry unit shipments of major appliances (T7)(4) decreased 3 percent during the third quarter.

Third-quarter 2010 adjusted operating profit(2) for the North America region totaled $114 million compared to $147 million in the prior year. Third-quarter results were unfavorably impacted by lower product price/mix and higher material costs. These factors were partially offset by favorable cost reduction and productivity initiatives.

Based on the current economic outlook, the company now expects full-year 2010 U.S. industry unit shipments to increase approximately 3 percent compared to the previous expectation of a 5 percent increase.

Whirlpool Europe

Whirlpool Europe reported third-quarter sales of $827 million, an 8 percent decrease from the prior year. Excluding the effects of currency, sales were approximately equal to the prior year. Overall industry unit demand during the quarter increased approximately 3 to 4 percent compared with the prior year.

The region reported an operating profit of $26 million during the third quarter compared to an operating profit of $14 million in the previous year. The year-over-year improvement was primarily the result of successful cost reduction and productivity initiatives. The improvement was partially offset by lower price/mix and higher material costs.

The company now expects full-year 2010 industry growth in the 1 to 3 percent range compared to the prior expectation of flat demand.

Whirlpool Latin America

Whirlpool Latin America reported third-quarter net sales of $1.1 billion, an increase of 13 percent from the prior year. Excluding currency translation, sales increased approximately 9 percent.

Operating profit totaled $143 million in the third quarter compared with $93 million in the prior year. The improvement in profitability is primarily related to increased monetization of certain tax credits, cost reductions and productivity initiatives. These factors were partially offset by higher material costs and lower price/mix.

The company continues to anticipate full-year 2010 Brazilian appliance shipments will increase approximately 10 percent.

Whirlpool Asia

Whirlpool Asia reported third-quarter sales of $195 million, increasing 21 percent from the prior year. Excluding the impact of currency, sales increased 16 percent. On an adjusted basis(2), third quarter operating profit of $5 million was approximately equal to the prior year level. Favorable unit volume levels were offset by higher material and oil-related costs.

The company now expects full-year 2010 industry unit shipments in Asia to increase 8 to 10 percent compared to the previous expectation of a 5 to 8 percent increase.

Outlook

For the full-year 2010, Whirlpool Corporation expects reported earnings per diluted share between $7.80 and $8.30. On an adjusted basis, the company's outlook is between $9.56 to $10.06 per share. For the full year, the company continues to expect to generate free cash flow(3) of approximately $550 million to $650 million. The company's earnings and free cash flow projections are based upon current economic forecasts and business plans.

"As we have previously noted, we continue to see a volatile and rapidly changing global economy, which we expect to continue in the near term," said Fettig. "The actions we have put in place have allowed us to offset negative environmental factors and maintain our full-year adjusted earnings outlook."

(1) A reconciliation of adjusted diluted earnings per share, a non-GAAP financial measure, to reported diluted earnings per share and other important information, appears below.

(2) A reconciliation of adjusted operating profit, a non-GAAP financial measure, to reported operating profit and other important information, appears below.

(3) A reconciliation of free cash flow, a non-GAAP financial measure, to cash provided by operating activities and other important information, appears below.

(4) T7 refers to the following household appliance categories: washers, dryers, refrigerators, freezers, dishwashers, ranges and compactors.

THIRD-QUARTER 2010 PRODUCT LAUNCHES

THIRD-QUARTER 2010 AWARDS AND ACCOMPLISHMENTS

About Whirlpool Corporation

Whirlpool Corporation is the world's leading manufacturer and marketer of major home appliances, with annual sales of approximately $17 billion in 2009, 67,000 employees, and 67 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 about Whirlpool Corporation and its consolidated subsidiaries ("Whirlpool") that speak only as of this date. Whirlpool disclaims any obligation to update these statements. Forward-looking statements in this document may include, but are not limited to, 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's forward-looking statements. Among these factors are: (1)changes in economic conditions which affect demand for our products, including the strength of the building industry and the level of interest rates; (2)the effects of the global economic crisis on our customers, suppliers and the availability of credit; (3)Whirlpool's ability to continue its relationship with significant trade customers, and the ability of these trade customers to maintain or increase market share; (4)intense competition in the home appliance industry reflecting the impact of both new and established global competitors, including Asian and European manufacturers; (5)the ability of Whirlpool to manage foreign currency fluctuations; (6)product liability and product recall costs; (7)litigation and legal compliance risks; (8)the ability of Whirlpool to achieve its business plans, productivity improvements, cost control, leveraging of its global operating platform, and acceleration of the rate of innovation; (9)inventory and other asset risk; (10)fluctuations in the cost of key materials (including steel, oil, plastic, resins, copper and aluminum) and components and the ability of Whirlpool to offset cost increases; (11)the ability of suppliers of critical parts, components and manufacturing equipment to deliver sufficient quantities to Whirlpool in a timely and cost-effective manner; (12)health care cost trends, regulatory changes and variations between results and estimates that could increase future funding obligations for pension and other postretirement benefit plans; (13)Whirlpool's ability to obtain and protect intellectual property rights; (14)information technology system failures and data security breaches (15)global, political and/or economic uncertainty and disruptions, especially in Whirlpool's significant geographic regions, including uncertainty and disruptions arising from natural disasters or terrorist attacks; (16)the effects of governmental investigations or related actions by third parties; (17)the impact of labor relations; (18)our ability to attract, develop and retain executives and other qualified employees; (19)changes in the legal and regulatory environment, including environmental and health and safety regulations. Additional information concerning these and other factors can be found in Whirlpool Corporation's filings with the Securities and Exchange Commission, including the most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K.

WHIRLPOOL CORPORATION

 

CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)

 

FOR THE PERIOD ENDED SEPTEMBER 30

 

(Millions of dollars, except per share data)

 
                         
 

ThreeMonthsEnded

 

Nine Months Ended

 
 

2010

 

2009

 

2010

 

2009

 

Net sales

$

4,519

 

$

4,497

 

$

13,325

 

$

12,235

 

Expenses

                       

Cost of products sold

 

3,871

   

3,877

   

11,277

   

10,537

 

Selling, general and administrative

 

391

   

400

   

1,163

   

1,117

 

Intangible amortization

 

7

   

7

   

21

   

21

 

Restructuring costs

 

16

   

24

   

58

   

71

 

Operating profit

 

234

   

189

   

806

   

489

 
                         

Other income (expense)

                       

Interest and sundry income (expense)

 

(104)

   

(51)

   

(185)

   

(110)

 

Interest expense

 

(54)

   

(58)

   

(167)

   

(178)

 
                         

Earnings before income taxes and other items

 

76

   

80

   

454

   

201

 

Income tax benefit

 

(7)

   

(13)

   

(18)

   

(51)

 
                         

Net earnings

 

83

   

93

   

472

   

252

 

Less: Net earnings available to noncontrolling interests

 

(4)

   

(6)

   

(24)

   

(19)

 
                         

Net earnings available to Whirlpool common stockholders

$

79

 

$

87

 

$

448

 

$

233

 
                         

Per share of common stock

                       

Basic net earnings available to Whirlpool common stockholders

$

1.04


$

1.17


$

5.90


$

3.13

 
                         

Diluted net earnings available to Whirlpool common stockholders

$

1.02

 

$

1.15

 

$

5.79

 

$

3.10

 
                         

Dividends

$

0.43

 

$

0.43

 

$

1.29

 

$

1.29

 
                         

Weighted-average shares outstanding (in millions)

                       

Basic

 

76.5

   

74.7

   

76.1

   

74.4

 

Diluted

 

77.7

   

75.7

   

77.4

   

75.2

 
                       


WHIRLPOOL CORPORATION

 

CONSOLIDATED CONDENSED BALANCE SHEETS

 

(Millions of dollars, except share data)

 
             
 

(Unaudited)

       
 

September30,

 

December31,

 
 

2010

 

2009

 

Assets

           

Current assets

           

Cash and equivalents

$

901

 

$

1,380

 

Accounts receivable, net of allowance for uncollectible accounts of $64 and $76 at September 30, 2010 and December31, 2009, respectively

 

2,552

   

2,500

 

Inventories

 

3,084

   

2,197

 

Deferred income taxes

 

224

   

295

 

Other current assets

 

697

   

653

 

Total current assets

 

7,458

   

7,025

 

Other assets

           

Goodwill

 

1,730

   

1,729

 

Other intangibles, net of accumulated amortization of $153 and $132 at September 30,

2010 and December31, 2009, respectively

 

1,803

   

1,796

 

Other assets

 

1,531

   

1,427

 

Total other assets

 

5,064

   

4,952

 

Property, plant and equipment

           

Land

 

75

   

77

 

Buildings

 

1,218

   

1,207

 

Machinery and equipment

 

8,393

   

8,193

 

Accumulated depreciation

 

(6,609)

   

(6,360)

 

Total property, plant and equipment, net

 

3,077

   

3,117

 

Total assets

$

15,599

 

$

15,094

 
             

Liabilities and stockholders' equity

           

Current liabilities

           

Accounts payable

$

3,700

 

$

3,308

 

Accrued expenses

 

719

   

632

 

Accrued advertising and promotions

 

399

   

475

 

Employee compensation

 

487

   

501

 

Notes payable

 

14

   

23

 

Current maturities of long-term debt

 

311

   

378

 

Other current liabilities

 

691

   

624

 

Total current liabilities

 

6,321

   

5,941

 

Noncurrent liabilities

           

Long-term debt

 

2,197

   

2,502

 

Pension benefits

 

1,513

   

1,557

 

Postretirement benefits

 

695

   

693

 

Other liabilities

 

744

   

641

 

Total noncurrent liabilities

 

5,149

   

5,393

 

Commitments and contingencies (see Note 5)






 

Stockholders' equity

           

Common stock, $1 par value, 250 million shares authorized, 106 million and 105 million

shares issued at September 30, 2010 and December 31, 2009, respectively, 76 million

and 75 million shares outstanding at September 30, 2010 and December 31, 2009,

respectively

 

106

   

105

 

Additional paid-in capital

 

2,147

   

2,067

 

Retained earnings

 

4,542

   

4,193

 

Accumulated other comprehensive loss

 

(944)

   

(868)

 

Treasury stock, 30million shares at September 30, 2010 and December31, 2009

 

(1,823)

   

(1,833)

 

Total Whirlpool stockholders' equity


4,028



3,664

 

Noncontrolling interests


101



96

 

Total stockholders' equity


4,129



3,760

 

Total liabilities and stockholders' equity

$

15,599


$

15,094

 
             


WHIRLPOOL CORPORATION

 

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

NINE MONTHS ENDED SEPTEMBER 30

 

(Millions of dollars)

 
 




 

2010


2009

 

Operating activities






 

Net earnings

$

472


$

252

 

Adjustments to reconcile net earnings to cash provided by operating activities:






 

Depreciation and amortization


414



388

 

Curtailment gain


(62)



(92)

 

Decrease in LIFO inventory reserve


(5)



(23)

 

Loss (gain) on disposition of assets


2



(10)

 

Changes in assets and liabilities:






 

Accounts receivable


(76)



(524)

 

Inventories


(878)



332

 

Accounts payable


386



94

 

Restructuring charges, net of cash paid


(26)



(40)

 

Taxes deferred and payable, net


19



(92)

 

Accrued pension


(24)



(16)

 

Employee compensation


7



165

 

Other


148



218

 

Cash provided by operating activities


377



652

 






 

Investing activities






 

Capital expenditures


(387)



(348)

 

Acquisition of brand


(27)



--

 

Investment in related businesses


(18)



(15)

 

Proceeds from sale of assets


9



69

 

Cash used in investing activities


(423)



(294)

 






 

Financing activities






 

Repayments of long-term debt


(373)



(206)

 

Common stock issued


72



--

 

Dividends paid


(99)



(96)

 

Purchase of noncontrolling interest shares


(12)



--

 

Net repayments of short-term borrowings


(7)



(340)

 

Proceeds from borrowings of long-term debt


--



863

 

Other


(12)



(37)

 

Cash (used in) provided by financing activities


(431)



184

 






 

Effect of exchange rate changes on cash and equivalents


(2)



37

 






 

(Decrease) increase in cash and equivalents


(479)



579

 

Cash and equivalents at beginning of period


1,380



146

 

Cash and equivalents at end of period

$

901


$

725

 
           

SUPPLEMENTAL INFORMATION - CONSOLIDATED CONDENSED STATEMENTS OF INCOME RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Millions of dollars except per share data)
(Unaudited)

We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial measures, including adjusted operating profit, adjusted earnings before income taxes and other items (hereafter referred to as "adjusted earnings before tax"), adjusted diluted earnings per share available to Whirlpool common stockholders (hereafter referred to as "adjusted diluted earnings per share"), adjusted operating profit by segment (hereafter referred to as "adjusted segment operating profit"), and free cash flow. We believe that these non-GAAP measures provide meaningful information to assist stockholders in understanding our financial results and assessing our prospects for future performance. Management believes adjusted operating profit, adjusted earnings before tax, adjusted diluted earnings per share and adjusted segment operating profit are important indicators of our operations because they exclude items that may not be indicative of or are unrelated to our core operating results, and provide a better baseline for analyzing trends in our underlying businesses. Management believes that free cash flow provides stockholders with a relevant measure of liquidity and a useful basis for assessing the company's ability to fund its activities and obligations. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported operating profit, earnings before income taxes and other items, diluted net earnings per share available to Whirlpool common stockholders and cash provided by operating activities, the most directly comparable GAAP financial measures. These non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the below reconciliations to corresponding GAAP financial measures, provide a more complete understanding of our business. We strongly encourage investors and stockholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

Adjusted Operating Profit, Adjusted Earnings Before Tax, Adjusted Diluted Earnings Per Share

The reconciliation provided below reconciles the non-GAAP financial measures adjusted operating profit, adjusted earnings before tax and adjusted diluted earnings per share, with the most directly comparable GAAP financial measures, reported operating profit, earnings before income taxes and other items, and diluted earnings per share available to Whirlpool common stockholders, for the three-months ended September 30, 2010.

 

Three-Months Ended

 
 

September 30, 2010

 
 

Operating Profit

 

Earnings Before Tax

 

Diluted Earnings
Per Share

 
   
 
             

Reported GAAP Measure

$ 234

 

$ 76

 

$ 1.02

 

Compressor Plea Agreements (a)

-

 

93

 

1.20

 

Adjusted Non-GAAP measure

$ 234

 

$ 169

 

$ 2.22

 






 

The reconciliation provided below reconciles the non-GAAP financial measures adjusted operating profit, adjusted earnings before tax and adjusted diluted earnings per share, with the most directly comparable GAAP financial measures, reported operating profit, earnings before income taxes and other items, and diluted earnings per share available to Whirlpool common stockholders, for the three-months ended September 30, 2009.

 

Three-Months Ended

 
 

September 30, 2009

 
 

Operating Profit

 

Earnings Before Tax


Diluted Earnings
Per Share

 

Reported GAAP Measure

$ 189

 

$ 80

 

$ 1.15

 

Compressor Settlement Agreement (b)

-


43


0.50

 

Pension Curtailment Loss ©

7


7


0.06

 

Asset Monetization (d)

(3)


(3)


(0.04)

 

Adjusted Non-GAAP measure

$ 193


$ 127


$ 1.67

 






 

Adjusted Segment Operating Profit

The reconciliation provided below reconciles the non-GAAP financial measure adjusted segment operating profit with the most directly comparable GAAP financial measure, reported segment operating profit, for the three-months ended September 30, 2009.

 

Three Months Ended

 
 

September 30, 2009

 
 

Segment
Operating Profit

 

Pension
Curtailment Loss ©

 

Asset
Monetization (d)

 

Adjusted
Segment
Operating Profit

 
         
         

North America

$ 140


$ 7


$ -


$ 147

 

Europe

14


-


-


14

 

Latin America

93


-


-


93

 

Asia

8


-


(3)


5

 

Other/Eliminations

(66)


-


-


(66)

 

Total Whirlpool

$ 189


$ 7


$ (3)


$ 193

 








 
               

Adjusted Diluted Earnings Per Share (2010 Outlook)

The reconciliation provided below reconciles projected 2010 adjusted diluted earnings per share with projected 2010 diluted earnings per share available to Whirlpool common stockholders, the most directly comparable GAAP financial measure:

 

2010

 
 

Outlook

 

Diluted earnings per share

$ 7.80 - 8.30

 

Compressor Plea Agreements (a)

1.20

 

Brazilian Collection Dispute Accrual (e)

0.45

 

Product Recall (f)

0.61

 

OPEB Curtailment Gain (g)

(0.50)

 

Adjusted Non-GAAP measure

$ 9.56 - 10.06

 

 

(a) During the September 2010 quarter, we recorded an accrual of $93 million related to antitrust plea agreements entered into by a compressor subsidiary with the U.S. government and with the Canadian government. The diluted earnings per share impact is calculated based on an associated income tax impact of $0 due to the non-deductibility of the expense for income tax purposes.

(b) During the September 2009 quarter, we had an expense of $43 million, or $0.50 per share net of tax, related to an antitrust settlement agreement entered into by a subsidiary with the Brazilian government concerning an investigation of the compressor industry. The diluted earnings per share impact is calculated based on an income tax impact of approximately $5 million.

© During the September 2009 quarter, we recognized a curtailment loss of $7 million related to a pension plan. The diluted earnings per share impact is calculated based on an income tax impact of approximately $3 million.

(d) During the September 2009 quarter, we had a gain of $3 million or $0.04 per share net of tax, related to an asset sale. The diluted earnings per share impact is calculated based on an associated income tax impact of $0.

(e) During the June 2010 quarter, we recognized an expense of $53 million related to a previously disclosed legal action pertaining to a Brazilian collection dispute. The diluted earnings per share impact is calculated based on an income tax impact of approximately $18 million.

(f) During the March 2010 quarter, we accrued $75 million to cover the estimated product recall costs of the action to address a supplier-related quality issue. The diluted earnings per share impact is calculated based on an income tax impact of approximately $28 million.

(g) During the March 2010 quarter and June 2010 quarter we recognized curtailment gains of $62 million related to a retiree healthcare plan. The diluted earnings per share impact is calculated based on an income tax impact of approximately $23 million.

Free Cash Flow (Actual and 2010 Outlook)

As defined by the company, free cash flow is cash provided by operating activities after capital expenditures and proceeds from the sale of assets/businesses. The reconciliation provided below reconciles actual 2010 and 2009 and projected 2010 free cash flow with actual and projected cash (used in)/provided by operating activities, the most directly comparable GAAP financial measure.

   

Nine Months Ended

         
   

September 30, 2010

     

(millions of dollars)

 

2010

 

2009

 

2010 Outlook

 

Cash provided by / (used in) operating activities

 

$ 377


$ 652


$ 1,115

-

1,225

 

Capital expenditures


(387)


(348)


(575)

-

(625)

 

Proceeds from sale of assets


9


69


10

-

50

 

Free Cash Flow


$ (1)


$ 373


$ 550

-

650

 









 

SOURCE Whirlpool Corporation