Whirlpool Corporation
Oct 23, 2009

Whirlpool Corporation Reports Third-Quarter 2009 Results

Productivity and cost reductions drive operating profit improvement and strong cash flow generation

Benton Harbor, Mich., Oct. 23 /PRNewswire/ -- Whirlpool Corporation (NYSE: WHR) announced today third-quarter 2009 earnings of $1.15 per diluted share compared to $2.15 per diluted share reported in the prior year. The company reported net sales of $4.5 billion, a decrease of 8 percent from the year-ago period. Excluding the impact of foreign exchange translation, the company's third-quarter sales declined approximately 3 percent.

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Third-quarter operating profit increased 8 percent compared to the prior year and was favorably impacted by cost reduction and productivity initiatives. These favorable items were partially offset by lower global sales and production volumes, unfavorable foreign currency impact and lower monetization of certain tax credits. Third-quarter results included a previously announced expense of $43 million, or $0.50 per share net of tax, related to an affiliate settlement agreement with the Brazilian competition commission.

"Our strong operating performance improvement in the quarter highlights our successful cost reduction efforts, the strength of our global operating platform, our commitment to product innovation and strong consumer brands," said Jeff M. Fettig, chairman and chief executive officer of Whirlpool Corporation. "These factors, combined with our continued emphasis on marketplace execution, will remain key focal points as we manage through this challenging macroeconomic environment."

THIRD-Quarter Regional Review

Whirlpool North America

Third-quarter sales of $2.5 billion declined 9 percent from the prior year. Excluding the effects of currency, sales declined approximately 7 percent from the prior year. U.S. industry unit shipments of major appliances (T7)* declined 6 percent during the third quarter.

The North America region reported operating profit of $140 million compared to $74 million in the previous year. The improvement was primarily the result of cost reduction and productivity initiatives. These factors were partially offset by lower unit production volume, unfavorable foreign currency fluctuations and lower product price/mix.

Based on the current economic outlook, the company expects full-year 2009 U.S. industry unit shipments to decline approximately 10 percent compared with its prior expectation of a decline between 10 percent and 12 percent.

Whirlpool Europe

Whirlpool Europe reported third-quarter sales of $899 million, a 17 percent decrease from the prior year. Excluding the effects of currency, sales declined approximately 11 percent. Overall industry unit demand during the quarter declined approximately 10 percent from the prior year.

The region reported an operating profit of $14 million during the third quarter compared with $52 million reported in the previous year. Results were negatively impacted by substantially lower volumes and the non-recurrence of an asset sale and insurance settlement recorded in the previous year. These factors were partially offset by cost reduction and productivity initiatives.

The company continues to expect full-year 2009 industry unit shipments to decline approximately 13 percent from 2008 levels.

Whirlpool Latin America

Third-quarter net sales totaled $992 million compared to $989 million in the prior year. Excluding currency translation, sales increased approximately 12 percent. The sales increase was driven by a strong increase in Brazilian appliance demand. During the quarter, the company's Brazilian appliance sales increased 40 percent in local currency and the company continued to strengthen its leadership position in the marketplace.

Operating profit totaled $93 million in the third quarter compared with $116 million in the prior year. The lower profitability is primarily related to significantly lower monetization levels of certain tax credits and unfavorable foreign currency fluctuations. These items were partially offset by cost reduction and productivity initiatives and an overall increase in unit shipments.

The company currently anticipates full-year 2009 Brazilian appliance shipments will increase more than 15 percent compared to the previous expectation of more than 10 percent.

Whirlpool Asia

Whirlpool Asia reported third-quarter sales of $162 million, increasing 18 percent from the prior year. Excluding the impact of currency, sales increased 26 percent. Operating profit during the quarter totaled $8 million, an increase of $8 million from the prior year. The year-over-year increase in operating profit resulted from higher unit volume, higher productivity and cost reductions, and a $3 million asset sale gain. These favorable items were partially offset by unfavorable product price/mix.

The company anticipates full-year 2009 industry unit shipments in Asia to be up 10 percent compared to the previous expectation of unit shipments of flat-to-up 5 percent from 2008 levels.

Outlook

For the full-year 2009, Whirlpool Corporation expects earnings per diluted share to be approximately $4.25 compared with the prior expectation of $3.50 to $4.00 per diluted share. For the full year, the company expects to generate free cash flow** of approximately $500 million to $600 million compared with the prior expectation of $300 million to $400 million. The company's earnings and free cash flow projections are based upon current economic forecasts and business plans.

"Our improved outlook reflects our success in restructuring our business to aggressively align our capacity and resources to lower demand levels," said Fettig. "While we continue to see uncertain and volatile demand levels in many markets, we are well-positioned to deliver higher 2009 earnings and free cash flow compared with our previous expectations."

* 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 operations appears below under the heading "Cash Flow Reconciliation."




THIRD-QUARTER 2009 AWARDS AND ACCOMPLISHMENTS

Cash Flow Reconciliation

The table below reconciles actual 2009 and 2008 and projected 2009 cash provided by operations determined in accordance with generally accepted accounting principles (GAAP) in the United States to free cash flow, 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 operations after capital expenditures and proceeds from the sale of assets/businesses.

                                 Nine Months Ended
                                   September 30
                                   ------------

    (millions of dollars)         2009       2008         2009 Outlook
                                  ----       ----         ------------
    Cash provided
     by (used in) operations      $652        $(6)       $900  - $1,025

    Capital expenditures          (348)      (378)       (475) -   (525)

    Proceeds from sale of assets    69         35          75  -    100
                                   ---        ---         ---       ---
    Free cash flow                $373      $(349)       $500      $600
                                   ===        ===         ===       ===

About Whirlpool Corporation

Whirlpool Corporation is the world's leading manufacturer and marketer of major home appliances, with annual sales of approximately $19 billion in 2008, 70,000 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, including Sears Holding Corporation in North America (accounting for approximately 11% of Whirlpool's 2008 consolidated net sales of $18.9 billion) 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) 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 other postretirement 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 effects of governmental investigations or related actions by third parties; (14) the impact of labor relations; (15) our ability to attract, develop and retain executives and other qualified employees; (16) 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 CONDENSED STATEMENTS OF INCOME (UNAUDITED)
                      FOR THE PERIOD ENDED SEPTEMBER 30
                (Millions of dollars, except per share data)

                                          Three Months     Nine Months
                                              Ended           Ended
                                          ------------     -----------
                                          2009    2008     2009     2008
                                          ----    ----     ----     ----
    Net sales                           $4,497  $4,902  $12,235  $14,592
    Expenses
    Cost of products sold                3,877   4,217   10,537   12,541
    Selling, general and
     administrative (exclusive of
     intangible amortization)              400     477    1,117    1,419
    Intangible amortization                  7       7       21       21
    Restructuring costs                     24      24       71       72
                                           ---     ---      ---      ---

    Operating profit                       189     177      489      539

    Other income (expense)
    Interest and
     sundry income
     (expense)                             (51)     (3)    (110)     (34)
    Interest expense                       (58)    (52)    (178)    (150)
                                           ---     ---     ----     ----

              Earnings before
               income taxes and
               other items                  80     122      201      355
    Income tax benefit                     (13)    (46)     (51)     (41)
                                           ---     ---      ---      ---

    Net earnings                            93     168      252      396
              Less: Net earnings
               available to
               noncontrolling interests     (6)     (5)     (19)     (22)
                                           ---     ---      ---      ---

    Net earnings available to
     Whirlpool common
     stockholders                          $87    $163     $233     $374
                                           ===    ====     ====     ====

    Per share of common stock
    Basic net earnings
     available to Whirlpool
     common stockholders                 $1.17   $2.18    $3.13    $4.96
                                         =====   =====    =====    =====

    Diluted net earnings
     available to Whirlpool
     common stockholders                 $1.15   $2.15    $3.10    $4.89
                                         =====   =====    =====    =====

    Dividends                            $0.43   $0.43    $1.29    $1.29
                                         =====   =====    =====    =====

    Weighted-average
     shares outstanding
     (in millions)
    Basic                                 74.7    74.6     74.4     75.4
    Diluted                               75.7    75.5     75.2     76.4



                             WHIRLPOOL CORPORATION
                     CONSOLIDATED CONDENSED BALANCE SHEETS
                   (Millions of dollars, except share data)

                                                    (Unaudited)
                                                   September 30, December 31,
                                                        2009        2008
                                                   ------------  ------------
    Assets

    Current assets
          Cash and equivalents                             $725       $146
          Accounts receivable, net of
           allowance for uncollectible
           accounts of $74 and $66 at
           September 30, 2009 and
           December 31, 2008, respectively                2,742      2,103
          Inventories                                     2,418      2,591
          Deferred income taxes                             388        580
          Other current assets                              649        624
                                                            ---        ---
                Total current assets                      6,922      6,044
                                                          -----      -----

    Other assets
          Goodwill, net                                   1,728      1,728
          Other intangibles, net of accumulated
           amortization of $123 and $96 at
           September 30, 2009 and December 31,
           2008, respectively                             1,802      1,821
          Other assets                                    1,339        954
                                                          -----        ---
                Total other assets                        4,869      4,503
                                                          -----      -----

    Property, plant and equipment
          Land                                               74         74
          Buildings                                       1,221      1,186
          Machinery and equipment                         8,107      7,549
          Accumulated depreciation                       (6,336)    (5,824)
                                                         ------     ------
                Total property, plant and
                 equipment                                3,066      2,985
                                                          -----      -----
    Total assets                                        $14,857    $13,532
                                                        =======    =======

    Liabilities and stockholders' equity

    Current liabilities
          Accounts payable                               $3,067     $2,805
          Accrued expenses                                  686        530
          Accrued advertising and promotions                476        440
          Employee compensation                             463        306
          Notes payable                                      45        393
          Current maturities of long-term debt              371        202
          Other current liabilities                         649        887
                                                            ---        ---
                Total current liabilities                 5,757      5,563
                                                          -----      -----

    Noncurrent liabilities
          Long-term debt                                  2,503      2,002
          Pension benefits                                1,495      1,505
          Postretirement benefits                           774        822
          Other liabilities                                 636        567
                                                            ---        ---
                Total noncurrent liabilities              5,408      4,896
                                                          -----      -----

    Commitments and contingencies

    Stockholders' equity
          Common stock, $1 par value, 250 million
           shares authorized, 104 million shares
           issued at September 30, 2009 and
           December 31, 2008, respectively,
           74 million and 73 million shares
           outstanding at September 30, 2009

           and December 31, 2008, respectively              104        104
          Additional paid-in capital                      2,040      2,033
          Retained earnings                               4,130      3,993
          Accumulated other comprehensive income
           (loss)                                          (845)    (1,259)
          Treasury stock, 30 million shares and
           31 million shares at September 30, 2009
           and December 31, 2008, respectively           (1,839)    (1,865)
                                                         ------     ------
                Total Whirlpool stockholders'
                 equity                                   3,590      3,006
                                                          -----      -----
          Noncontrolling interests                          102         67
                                                            ---         --
                Total equity                              3,692      3,073
                                                          -----      -----
    Total liabilities and stockholders' equity          $14,857    $13,532
                                                        =======    =======



                              WHIRLPOOL CORPORATION
           CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
                          NINE MONTHS ENDED SEPTEMBER 30
                              (Millions of dollars)

                                                                2009    2008
                                                                ----    ----
    Operating activities
    Net earnings                                                $252    $396
    Adjustments to reconcile earnings to cash
     provided by (used in) operating activities:
    Depreciation and amortization                                388     467
    Curtailment gain                                             (92)      -
    Decrease in LIFO inventory reserve                           (23)      -
    Gain on disposition of assets                                (10)    (16)
    Changes in assets and liabilities:
      Accounts receivable                                       (524)    (67)
      Inventories                                                332    (459)
      Accounts payable                                            94      68
      Restructuring charges, net of cash paid                    (40)      -
      Taxes deferred and payable, net                            (92)   (116)
      Accrued pension                                            (16)    (96)
      Employee compensation                                      165       1
      Other                                                      218    (184)
                                                                 ---    ----
            Cash provided by (used in) operating activities      652      (6)
                                                                 ---     ---

    Investing activities
    Capital expenditures                                        (348)   (378)
    Proceeds from sale of assets                                  69      35
    Other                                                        (15)      -
                                                                 ---     ---
            Cash used in investing activities                   (294)   (343)
                                                                ----    ----

    Financing activities
    Proceeds from borrowings of long-term debt                   863     502
    Net (repayments)/proceeds from short-term borrowings        (340)    561
    Repayments of long-term debt                                (206)   (131)
    Dividends paid                                               (96)    (98)
    Purchase of treasury stock                                     -    (247)
    Common stock issued                                            -      21
    Other                                                        (37)     (1)
                                                                 ---     ---
            Cash provided by financing activities                184     607
                                                                 ---     ---

    Effect of exchange rate changes on cash and equivalents       37     (34)
                                                                  --     ---
    Increase in cash and equivalents                             579     224
    Cash and equivalents at beginning of period                  146     201
                                                                 ---     ---
    Cash and equivalents at end of period                       $725    $425
                                                                ====    ====

SOURCE Whirlpool Corporation

Whirlpool Corporation, Media:
Whirlpool Corporation Press Office
+1-269-923-7405
Media@Whirlpool.com
or
Financial:
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