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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 December 31, 2001
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 1-3932
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WHIRLPOOL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-1490038
(State of Incorporation) (I.R.S.
EmployerIdentification
No.)
2000 North M-63, Benton 49022-2692
Harbor, Michigan
(Address of principal (Zip Code)
executive offices)
(616) 923-5000
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ----------------
Common stock, par value Chicago Stock Exchange
$1.00 per share and New York Stock
Exchange
Preferred Stock Purchase Chicago Stock Exchange
Rights and New York Stock
Exchange
73/4% Debentures due 2016 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
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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 [X] No [_]
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 executive
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 February 25, 2002,
was $4,372,341,382.
On February 25, 2002, the registrant had 66,654,106 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 which
Document incorporated
-------- ------------------
The Company's Annual Report to Stockholders for the year ended December 31, 2001 (the "Annual
Report") Parts I, II and IV
The Company's proxy statement for the 2002 annual meeting of stockholders (SEC File No. 1-3932) (the
"Proxy Statement") Part III
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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. The Company
manufactures in 13 countries under 11 major brand names and markets products to
distributors and retailers in more than 170 countries. As of December 31, 2001,
the Company had approximately 59,000 employees. As used herein, and except
where the context otherwise requires, the terms "Company" and "Whirlpool"
include Whirlpool Corporation and its consolidated subsidiaries.
Products and Markets
The Company manufactures and markets a full line of major appliances and
related products, primarily for home use. The Company's principal products are
home laundry appliances, home refrigerators and freezers, home cooking
appliances, home dishwashers, room air-conditioning equipment, 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 2001, 2000, and 1999:
Percent in
Year ended December 31 (millions of dollars) 2001 2001 2000 1999
-------------------------------------------- ---------- ------- ------- -------
Home Refrigerators and Freezers....... 30% $ 3,106 $ 3,165 $ 3,175
Home Laundry Appliances............... 30% $ 3,096 $ 3,094 $ 3,091
Home Cooking Appliances............... 16% $ 1,603 $ 1,636 $ 1,642
Other................................. 24% $ 2,538 $ 2,430 $ 2,603
--- ------- ------- -------
Net Sales.......................... 100% $10,343 $10,325 $10,511
=== ======= ======= =======
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, freestanding ranges,
and home refrigerators and freezers. The Company supplies products to Sears for
sale under Sears' Kenmore brand name. Sears has also been a major outlet for
the Company's Whirlpool and KitchenAid brand products since 1989. In 2001,
approximately 21% of the Company's net sales were attributable to sales to
Sears.
In addition to the above, 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, such as mixers, are sold directly to retailers. The Company sells
products to the builder trade both directly and through distributors.
Additionally, the Company sells to Crosley Corporation under the Crosley
private label brand, and to Costco Wholesale Corporation under the Kirkland
Signature brand. Major home appliances are manufactured and/or distributed in
Canada under the Inglis, Admiral, Speed Queen, Whirlpool, Roper, and KitchenAid
brand names. In Mexico, the Company's affiliate, Vitromatic S.A., manufactures
and markets major home appliances under the Whirlpool, Acros, KitchenAid,
Estate, Roper, and Supermatic brand names. Some products are sold in limited
quantities by the Company to other manufacturers and retailers for resale in
North America under their respective brand names.
2
In Europe, Whirlpool markets and distributes its major home appliances under
the Whirlpool, Bauknecht, Ignis, Laden, Algor, and other local 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, Croatia, and Morocco and representative offices in
Russia, Ukraine, Yugoslavia, and Slovenia. In certain Eastern European
countries, products bearing the Whirlpool and Ignis brand names are sold
through distributors. The Company manufactures refrigerators and freezers and
markets a full line of products under the Whirlpool, KIC, and Ignis brand names
in South Africa. Whirlpool's European operations also sell products carrying
the Whirlpool, Bauknecht, Ignis, Algor, and Fides brand names directly in Asia
and to distributors and dealers in Africa and the Middle East.
In Asia, the Company has organized the manufacture, marketing, and
distribution of its major home appliances into five operating groups: (1)
mainland China; (2) Southeast Asia, which includes India, Bangladesh, Sri
Lanka, and Nepal; (3) Oceania, which includes Australia, New Zealand, and
Pacific Islands; (4) North Asia, which includes Hong Kong, Taiwan, Korea, and
Japan; and (5) Southeast Asia, which includes Thailand, Singapore, Malaysia,
Indonesia, and the Philippines. The Company markets and sells its products in
Asia under the brand names Whirlpool, KitchenAid, Bauknecht, and Ignis by a
combination of direct sales to high-volume retailers and chain stores, and
through full-service distributors to a large network of electronics stores.
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, and Chile are managed by the Company's Brazilian subsidiary, and in
Bolivia, Peru, Paraguay, and Uruguay through distributors. Appliance sales and
distribution in Central American countries, the Caribbean, Venezuela, Colombia,
and Ecuador are managed by Whirlpool's North America Region and through
distributors.
Competition
The major home appliance business is highly competitive. In most major
markets throughout the world, 2001 was a challenging year in the industry with
rising material costs, decreased consumer demand, and intense price
competition. In North America, there has been continued polarization in retail
distribution channels with most retailers either (1) offering little or no
customer service and competing solely on the basis of price, or (2) providing
value added services coupled with a brand building strategy. The Company firmly
believes that it can best compete in this environment by providing value added
products and services under its strong brand names.
The Company believes that, in terms of units sold, it is the largest North
American manufacturer of home laundry appliances and one of the largest North
American manufacturers of home refrigerators and freezers, room air
conditioning equipment, dishwashers, and cooking products. The Company believes
that in North America there are approximately eight manufacturers of major home
appliances.
The Company believes that in Europe it is, in terms of units sold, one of
the three largest manufacturers and marketers of major home appliance products,
out of approximately 35 European manufacturers, the majority of which
manufacture a limited range of products for a specific geographic region. There
continues to be significant merger and acquisition activity as manufacturers
seek to broaden product lines and expand geographic markets, and the Company
believes that some merger and acquisition activity will continue. The Company
believes that its Pan European organizational structure and strategy of
marketing brand names that are recognized throughout the region are competitive
advantages in the European market.
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 to meet the specific requirements of consumers in
the region. The Company believes that it is about twice the size of its nearest
competitor and that there are approximately 20 manufacturers of major home
appliances in the region.
3
In Asia, the major home appliance market is characterized by low saturation
and, as a result, rapid growth (except in Japan and South Korea). The Asian
market is served by approximately 50 manufacturers of varying size and position
on a country-by-country basis. The Company believes that it is the industry
leader in the Indian market and it continues to establish itself throughout the
remainder of the region.
Competition in most of the Company's markets is based upon a wide variety of
factors, including principally product features, price, product quality and
performance, service, warranty, advertising and promotion. As a result of its
global position, 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.
Other Information
The Company's interests outside the United States are subject to risks which
may be greater than or in addition to those risks which are currently present
in the United States. 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.
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
registrations therefor in the U.S. and foreign countries. The most important
for its North American operations are the trademarks Whirlpool, KitchenAid, the
KitchenAid Mixer Shape, Estate, Roper, Cielo, and Inglis. The most important
trademarks owned by the Company in Europe are Whirlpool, Bauknecht, Ignis, and
Laden. In Latin America, the most important trademarks owned by the Company are
Whirlpool, Brastemp, Consul, and Eslabon de Lujo. The most important trademark
owned by the Company in Asia is Whirlpool.
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 and are incorporated herein by reference.
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. The
Company's policy is to comply with all such laws and regulations. Where laws
and regulations are less restrictive, 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
4
attributable to compliance with such provisions worldwide amounted to
approximately $19 million in 1999, $22 million in 2000, and $23 million in
2001. It is estimated that in 2002 environmental capital expenditures and
expenses for manufacturing operations will be approximately $24 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 2002.
The entire major 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 ozone depleting chemicals 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. However, the Company believes, based on its
understanding of the current state of proposed regulations, that it should be
able to develop, manufacture, and market products that comply with these
regulations.
The Company has been notified by state and federal environmental protection
agencies of its possible involvement in a number of "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.
For information on product recalls during the past year, see Note 11 of the
Notes to Consolidated Financial Statements in the Annual Report which is
incorporated herein by reference.
For an update of the global restructuring plan announced by the Company in
December 2000, see Note 10 of the Notes to Consolidated Financial Statements in
the Annual Report which is incorporated herein by reference.
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 which are
incorporated herein by reference.
ITEM 2. Properties.
The principal executive offices of Whirlpool Corporation are located in
Benton Harbor, Michigan. At December 31, 2001, the principal manufacturing
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 41.6 million square feet devoted to
manufacturing, service, administrative offices, warehouse, distribution, and
sales space. Over 12.9 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, 2001, 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 2001.
5
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 February 25, 2002, the number of holders of
record of the Company's common stock was approximately 8,720.
High and low sales prices (as reported on the New York Stock Exchange
composite tape) for the Company's common stock for each quarter during the
years 2000 and 2001 are set forth under the heading "Stockholders' and Other
Information" on the last page of the Annual Report and are incorporated herein
by reference. Cash dividends declared for the Company's common stock for each
quarter during the years 2000 and 2001 are set forth in Note 16 of the Notes to
Consolidated Financial Statements in the Annual Report and are incorporated
herein by reference.
ITEM 6. Selected Financial Data.
The selected financial data for the five years ended December 31, 2001 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, earnings
from continuing operations per share of common stock, dividends declared 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, earnings of foreign affiliates, and other significant
activity impacting or affecting the comparability of reported amounts.
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 and 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 are incorporated herein by reference. Supplementary financial
information regarding quarterly results of operations (unaudited) for the years
ended December 31, 2000 and 2001 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.
6
PART III
ITEM 10. Directors and Executive Officers of the Registrant.
The following table sets forth the names of the Company's executive officers
at December 31, 2001, the positions and offices with the Company held by them
at such date, the year they first became executive officers, and their ages at
December 31, 2001:
First Became
an Executive
Name Office Officer Age
---- ------ ------- ---
David R. Whitwam Director, Chairman of the Board and Chief Executive Officer 1985 59
Jeff M. Fettig Director, President and Chief Operating Officer 1994 44
Mark E. Brown Executive Vice President and Chief Financial Officer 1999 50
Paulo F. M. Periquito Executive Vice President and President, Latin America 1997 55
David L. Swift Executive Vice President, North American Region 2001 43
Michael D. Thieneman Executive Vice President and Chief Technology Officer 1997 53
Michael A. Todman Executive Vice President and President, Whirlpool Europe 2001 44
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 2002 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 Mr. Swift who, prior to
joining the Company in October 2001, for the previous 20 years held various
executive or administrative positions with the Eastman Kodak Company, the most
recent being President, Kodak Professional Group.
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.
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.
None.
7
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 Schedule."
2. The financial statement schedule listed in the "Index to Financial
Statements and Financial Statement Schedule."
3. The exhibits listed in the "Exhibit Index."
(b) Reports on Form 8-K filed during the fourth quarter of 2001.
1. A Current Report on Form 8-K for October 16, 2001 pursuant to Item
5--"Other Events" announced the Company's third quarter 2001 earnings, and
also a voluntary recall of approximately 1.8 million microwave-hood
combinations.
2. A Current Report on Form 8-K for October 19, 2001 pursuant to Item
5--"Other Events" announced the mailing of a summary of the 2000 annual
report for the Whirlpool 401(k) Plan to members of the Plan.
3. A Current Report on Form 8-K for November 26, 2001 pursuant to Item
5--"Other Events" announced the hiring of David L. Swift as Executive Vice
President, and a change of positions of Executive Vice President Michael A.
Todman.
(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)
By: /s/ MARK E. BROWN
-----------------------------
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 Accounting )
Betty A. Beaty Officer) )
)
HERMAN CAIN* Director ) March 1, 2002
----------------------------- )
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 )
)
ARNOLD G. LANGBO* Director )
----------------------------- )
Arnold G. Langbo )
)
PHILIP L. SMITH* Director )
----------------------------- )
Philip L. Smith )
)
JANICE D. STONEY* Director )
----------------------------- )
Janice D. Stoney
/s/ DANIEL F. HOPP Attorney-in-Fact
*By: ______________________
Daniel F. Hopp
9
ANNUAL REPORT ON FORM 10-K
ITEMS 14(a) (1) AND (2) AND 14(d)
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
YEAR ENDED DECEMBER 31, 2001
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, 2001 and 2000
Consolidated statements of earnings--Three years ended December 31, 2001
Consolidated statements of changes in stockholders' equity--Three years ended
December 31, 2001
Consolidated statements of cash flows--Three years ended December 31, 2001
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
Schedule II--Valuation and qualifying accounts... F-3
The following exhibits are included herein:
Exhibit 12--Ratio of Earnings to Fixed Charges. F-4
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.
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, 2001 and 2000, and the related consolidated
statements of earnings, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 2001. 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 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 provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Whirlpool Corporation as of December 31, 2001 and 2000, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2001, 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.
As discussed in Note 1 to the consolidated financial statements, in 2001 the
Company changed its method of accounting for derivative instruments and hedging
activities.
Chicago, Illinois
February 4, 2002
F-2
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
WHIRLPOOL CORPORATION AND SUBSIDIARIES
Years Ended December 31, 2001, 2000, and 1999
(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 Balance at End
Description of Period and Expenses Accounts /Other Deductions--Describe of Period
----------- -------------------- ---------------- ---------------- -------------------- --------------
Year Ended December 31, 2001:
Allowances for doubtful
accounts--trade receivables......... $103 $ 32 $42--A $ 93
==== ==== === ====
Allowances for doubtful
accounts--financing
receivables and leases.............. $ 5 $ 0 $ 5--B $ 0
==== ==== === ====
Accrued expenses--
restructuring costs................. $ 5 $150 $78--C $ 77
==== ==== === ====
Accrued expenses--
product recall costs................ $ 0 $295 $56--D $239
==== ==== === ====
Year Ended December 31, 2000:
Allowances for doubtful accounts--
trade receivables................... $124 $ 13 $34--A $103
==== ==== === ====
Allowances for doubtful accounts--
financing receivables and leases.... $ 5 $ 0 $ 0 $ 5
==== ==== === ====
Accrued expenses--restructuring
costs............................... $ 39 $ -- $34--C $ 5
==== ==== === ====
Year Ended December 31, 1999:
Allowances for doubtful accounts--
trade receivables................... $116 $ 30 $22--A $124
==== ==== === ====
Allowances for doubtful accounts--
financing receivables and leases.... $ 71 $ 0 $66--E $ 5
==== ==== === ====
Accrued expenses--restructuring
costs............................... $117 $ -- $78--C $ 39
==== ==== === ====
--------
Note A--The amounts represent accounts charged off, less recoveries of $2 in
2001, $4 in 2000 and $2 in 1999, translation adjustments and transfers.
Note B--The amount represents accounts charged off.
Note C--Includes cash payments for employee termination costs and non-employee
exit costs such as lease terminations.
Note D--Represents cash costs paid associated with the development and
implementation of the microwave-hood combination product recall.
Note E--The amount for 1999 represents accounts charged off, less recoveries of
$1.
F-3
EXHIBIT 12
RATIO OF EARNINGS TO FIXED CHARGES
WHIRLPOOL CORPORATION AND SUBSIDIARIES
December 31,
------------
2001 2000
---- ----
Pretax earnings........................................... $ 93 $577
Portion of rents representative of the interest factor.... 25 23
Interest on indebtedness.................................. 162 181
Amortization of debt expense and premium.................. 1 1
WFC preferred stock dividend.............................. 4 4
---- ----
Adjusted income...........................................
$285 $786
==== ====
Fixed charges
Portion of rents representative of the interest factor. $ 25 $ 23
Interest on indebtedness............................... 162 181
Amortization of debt expense and premium............... 1 1
WFC preferred stock dividend........................... 4 4
---- ----
$192 $209
==== ====
Ratio of earnings to fixed charges........................ 1.5 3.8
==== ====
F-4
ANNUAL REPORT ON FORM 10-K
ITEMS 14(a)(3) and 14(c)
EXHIBIT INDEX
YEAR ENDED DECEMBER 31, 2001
The following exhibits are submitted herewith or incorporated herein by
reference in response to Items 14(a)(3) and 14(c). Each exhibit that is
considered a management contract or compensatory plan or arrangement required
to be filed pursuant to Item 14(a)(3) of Form 10-K is identified by a "(Z)."
Number and Description of Exhibit
---------------------------------
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. [Incorporated by
reference from Exhibit 3(ii) to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999] [File No. 1-3932]
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).(Z) [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) Whirlpool Supplemental Executive Retirement Plan (as amended and restated effective
December 31, 1993).(Z) [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)(c) 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.(Z) [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)(d) 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.(Z) [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)(e) Whirlpool Corporation Deferred Compensation Plan for Directors (as amended effective January 1,
1992 and April 20, 1993).(Z) [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]
10(iii)(f) Form of Agreement providing for severance benefits for certain executive officers.(Z) [Incorporated
by reference from Item 5--Other Events to the Company's Form 8-K dated April 26, 2000] [File
No. 1-3932]
10(iii)(g) Whirlpool Corporation 1989 Omnibus Stock and Incentive Plan (as amended June 20, 1995).(Z)
[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)(h) Administrative Guidelines for the Whirlpool Corporation Restricted Stock Value Program (pursuant
to one or more of Whirlpool's Omnibus Stock and Incentive Plans).(Z) [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]
E-1
Number and Description of Exhibit
---------------------------------
10(iii)(i) Administrative Guidelines for the Whirlpool Corporation Executive Stock Appreciation and
Performance Program (pursuant to one or more of Whirlpool's Omnibus Stock and Incentive
Plans).(Z) [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)(j) Whirlpool Corporation Nonemployee Director Stock Ownership Plan (as amended February 16,
1999, effective April 20, 1999). (Z) [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)(k) Whirlpool Performance Excellence Plan (as amended January 1, 1992, February 15, 1994 and
April 20, 1999).(Z) [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)(l) Whirlpool Corporation Executive Deferred Savings Plan (as amended effective January 1, 1992).(Z)
[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)(m) Whirlpool Corporation Executive Officer Bonus Plan (effective as of January 1, 1994).(Z)
[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)(n) Whirlpool Corporation Charitable Award Contribution and Additional Life Insurance Plan for
Directors (effective April 20, 1993).(Z) [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)(o) Form of agreement for the Whirlpool Corporation Career Stock Grant Program (pursuant to one or
more of Whirlpool's Omnibus Stock and Incentive Plans).(Z) [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)(p) Whirlpool Corporation 1996 Omnibus Stock and Incentive Plan (as amended, effective February 16,
1999).(Z) [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, 1999] [File No. 1-3932]
10(iii)(q) Whirlpool Corporation 1998 Omnibus Stock and Incentive Plan (as amended, effective February 16,
1999).(Z) [Incorporated by reference from Exhibit 10(iii)(s) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999] [File No. 1-3932]
10(iii)(r) Employment Agreement with Paulo F.M.O. Periquito.(Z) [Incorporated by reference from Part II
Other Information, Item 6 to the Company's Form 10-Q for the period ended March 31, 1998]
[File No. 1-3932]
10(iii)(s) Whirlpool Corporation 2000 Omnibus Stock and Incentive Plan.(Z) [Incorporated by reference from
Exhibit A to the Company's proxy statement for the 2000 annual meeting of stockholders] [File
No. 1-3932]
10(iii)(t) Form of Stock Option Grant Document for the Whirlpool Corporation Stock Option Program
(pursuant to one or more of Whirlpool's Omnibus Stock and Incentive Plans).(Z) [Incorporated by
reference from Exhibit 10(iii)(t) to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000] [File No. 1-3932]
10(iii)(u) Whirlpool Corporation Key Employee Treasury Stock Ownership Plan (effective October 16,
2001).(Z)
10(iii)(v) Whirlpool Corporation Nonemployee Director Treasury Stock Ownership Plan (effective
October 16, 2001).(Z) [Incorporated by reference from Exhibit 4(d) to the Company's
Registration Statement on Form S-8 filed on November 20, 2001] [File No. 333-73726]
E-2
Number and Description of Exhibit
---------------------------------
10(iii)(w) Administrative Guidelines for the Whirlpool Corporation Special Retention Program (pursuant to
one or more of Whirlpool's Omnibus Stock and Incentive Plans).(Z)
12 Statement Re: Computation of the Ratios of Earnings to Fixed Charges
13 Annual Report to Stockholders for the year ended December 31, 2001
21 List of Subsidiaries
23 Consent of Ernst & Young LLP
24 Power of Attorney
E-3