whirlpool Annual Report1997

Global
Global
Ex p a n s i o n
Integration

Global
Strategy

Table of Contents Financial Summary
Chairman’s Letter . . . . . . . . . . . . . . . . . . . . . . . . . . 1 (dollars in millions, except per share data) 1997 1996 % Change

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Net sales $ 8,617 $ 8,523 1.1%
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Net earnings (loss) from
continuing operations $ (46) $ 141 NA
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Per share on a
Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 diluted basis $ (0.62) $ 1.88
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Net earnings (loss) $ (15) $ 156 NA
Per share on a
Principal Locations . . . . . . . . . . . . . . . . . . . . . . . . 20
diluted basis $ (0.20) $ 2.08
Management’s Discussion and Analysis . . . . . . . . . . 22
Net earnings excluding
non-recurring items $ 238 $ 175 36.0%
Consolidated Statements of Earnings . . . . . . . . . . . 28
Per share on a
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . 29 diluted basis $ 3.15 $ 2.32
Consolidated Statements of Cash Flows . . . . . . . . . 30 Stockholders’ equity $ 1,771 $ 1,926 (8.0)%
Total assets $ 8,270 $ 8,015 3.2%
Notes to Consolidated Financial Statements . . . . . . 31
Return on equity (0.8)% 8.2%
Return on equity excluding
Reports by Independent Auditors, Management . . . . 47
non-recurring items 12.0% 9.1%
Eleven-Year Consolidated Statistical Review . . . . . . 48 Return on assets (0.7)% 1.8%
Return on assets excluding
Directors and Senior Management . . . . . . . . . . . . . 50
non-recurring items 2.7% 2.0%
Stockholders’ and Other Information . . . . . . . . . . . 51
Book value per share $ 23.71 $ 25.93 (8.6)%

Dividends per share $ 1.36 $ 1.36
Average dividend yield 2.5% 2.7%

Share price
About Our Company:
High $ 69 1/2 $ 61 3/8
Whirlpool Corporation is the world’s leading manufacturer
Low $ 45 1/4 $ 44 1/4
and marketer of major home appliances. The company
Close $ 55 $ 46 5/8 18.0%
manufactures in 13 countries and markets products in
approximately 140 countries under major brand names such Total return to shareholders 6.8% 6.3%
as Whirlpool, KitchenAid, Roper, Estate, Bauknecht, Ignis, Laden, (five-year annualized)
Inglis, Brastemp and Consul. Whirlpool is also the principal Shares outstanding (in 000’s) 75,262 74,415
supplier to Sears, Roebuck and Co. of many major home Number of stockholders 10,171 11,033
appliances marketed under the Kenmore brand name. Number of employees 61,370 48,163

1 9 9 7 • C h a i r m a n ’s L e t t e r
Chairman’s Letter deliver solid operating performance improvements.
To Our Stakeholders: More than nine years ago Net sales for the year increased to a record
Whirlpool Corporation embarked on a bold journey $8.6 billion, one percent ahead of the 1996 high of
to create shareholder value by becoming the clear $8.5 billion. Net earnings, exclusive of non-recurring
leader in the emerging global major home- charges, totaled $238 million, or $3.15 per diluted
appliance industry. Today, we do just that – share, up significantly from $175 million, or $2.32 per
we lead the industr y. diluted share, one year ago. These results are notable
Over this period, we developed a given the well-documented and tough economic
groundbreaking strategy, aggressively conditions we faced in several markets, particularly
implemented it around the world, during the second half of the year. Including non-
and are now moving into the next recurring items, 1997 produced a loss of $15 million,
phase – more fully integrating our or 20 cents per diluted share, versus earnings of $156
global operations. I will tell you that million or, $2.08 per diluted share, in 1996.
we have progressed further and In the third and fourth quarters we took
faster than I ever thought possible restructuring charges to fundamentally change the
when we first embarked on this overall structure of our company and to solidly
strategy in the late 1980s, despite improve our value-creation performance going
some bumps along the way. In 1997, forward. These charges touched all of our businesses
we again moved forward by – Europe, Asia, North America and Latin America, and
strengthening our worldwide network totaled $294 million, after-tax.
and by more fully integrating our These steps, when fully implemented, will
enterprise at all levels. It was a year of eliminate about 7,900 positions throughout the
significant changes and challenges at organization by increasing efficiencies and productivity
Whirlpool; however, our people in each business unit. These decisions were not easy
remained focused on the business to for the company nor for the people affected by them.

DAVID R. WHITWAM
Chairman of the Board
and Chief Executive Officer
•1


organization by increasing efficiencies and productivity value while being captive to an appliance
in each business unit. These decisions were not easy manufacturing company. Thus, we made the decision
for the company nor for the people affected by them. to enter into a strategic par tnership with
We believe they are necessar y decisions; they will Transamerica, which will allow us to continue to serve
significantly improve the competitiveness of our Whirlpool customers and enable the company to
company, and improve operating performance in both channel investments into areas that will create greater
the short and long term. The returns will be value in the long term.
substantial; when fully implemented in 2000, we As I stated earlier, 1997 was a year of directed
expect annual cost savings of more than $200 million, change and rapid implementation for Whirlpool, but
though the majority will be realized in 1998 and 1999. our organization is now better positioned to deliver
At the same time, we announced an extension solid and consistently improving operating
of our very important partnership with Brasmotor performance and gain leverage from our global size.
S.A., with whom we’ve had an affiliation for 40 years To create value in 1997, we shifted our focus
in Brazil and throughout Latin America. Our decision from expanding our global presence to solidifying and
to purchase majority-voting control was a natural integrating the Whirlpool network, comprised of
evolution of that relationship and further extends our businesses in North America, Europe, Latin America and
global leadership position. Asia. We remain the market leader in North America,
In addition, we announced in September our generating $5.3 billion in net sales. Whirlpool, through
decision to sell the inventory and consumer finance its enhanced partnership with the Brasmotor Group,
business of Whirlpool Financial Corporation (WFC), now holds the number one market position, which is
our financial ser vices subsidiar y, to Transamerica more than two-times larger than any local competitor,
Corporation. WFC had contributed a great deal to in Latin America, with $2.4 billion in net sales. Our
Whirlpool Corporation over the past 40 years, yet company holds the number three market position in
our studies suggested that it was exceptionally Europe with net sales of $2.3 billion, and we have a
difficult for WFC to grow its business and create major presence in Asia generating $400 million in net

•2

sales, from which we can participate in the future million. This move was a logical next step for the
growth of that important market. strong partnership that began in 1957 and allows both
In North America, new product introductions Whirlpool and Brasmotor to be better positioned to
under the Whirlpool and KitchenAid brands led our compete, grow and create value in Latin America and
continued strong performance. For example, the rest of the world.
consumers have been demanding our new AccuBake TM Under the leadership of H. Miguel Etchenique,
range by name, leading to a significant increase in our Brasmotor’s chairman, the company and its operating
share of the cooking products market. We maintained subsidiaries performed very well during 1997,
our overall market share lead despite intense pricing, maintaining its focus on consumers, costs and
competitive pressures and weak sales of air productivity despite a market that retreated from the
conditioners during the cooler-than-normal selling record highs of 1996. We anticipate that 1998 will
season. We also completed an extensive study of continue to be a challenging year but expect that
North American consumer perceptions and appliance industry volumes will approximate 1997 levels.
preferences that will lead to new product and brand Whirlpool Corporation’s board of directors
introductions in 1998. These introductions will expanded to 13 members with the election of Mr.
reinforce our market position in the face of a Etchenique to a board seat, effective December 1997.
projected, though slight, downturn in the North Whirlpool will benefit from both his extensive
American market in 1998. experience and vision as we move to integrate our
In Latin America, Whirlpool now owns 66 global operations more fully around the world.
percent of the voting shares of Brasmotor S.A., which Europe proved to be a bright spot for us in
includes Whirlpool Argentina and Multibrás 1997, following two years of turbulent times. Our
Eletrodomésticos S.A., the leading appliance company performance in Europe has consistently improved,
in Latin America with annual sales of $1.6 billion, and quarter after quarter, following cost-reduction and
Embraco S.A., the world’s second largest hermetic productivity improvement efforts begun in 1996. In
compressor manufacturer with annual sales of $790 addition, we aggressively marketed our product line,

•3


which has been extensively redesigned in the last two structure and focus on the remaining majority-owned
years and improved the mix of our products and joint ventures in China, combined with our strong
brands across the many markets that define our market position in India and Asia-Pacific sales
European region. To help continue our momentum, subsidiaries, leave Whirlpool well positioned for
we expect a slight gain in industr y shipments in 1998. future growth and profitability in this region.
Additionally, we continued to expand our Our plans in Asia remain ambitious as we
business in Central Europe and other emerging continue to operate five manufacturing sites and
markets by drawing on our expertise throughout our employ about 8,000 people in that dynamic market.
other European operations. As a result, Whirlpool In 1998, we will introduce new products, widen our
remains the leading brand across the whole region – distribution, and improve our sales and unit volumes.
quite an accomplishment given that it was largely Our growing knowledge of Asia and ability to draw on
unknown in Europe at the beginning of the decade . the other global resources of Whirlpool will lead to
We expect the momentum we built in 1997 to continued improvement in our operating performance
continue into 1998 through further revenue growth, in 1998 and beyond, especially as we manage through
new product introductions, expanded distribution in a difficult market and economic environment.
such places as Russia, and additional cost reductions Our 1998 global plans reflect our shift in focus
from restructuring actions. from building a global enterprise to aligning and
In 1997, we took steps to strategically refocus integrating it. More specifically, we will improve our
our Asian business and improve both our cost customer satisfaction, productivity and speed in the
position and executional capabilities. We refined our marketplace through initiatives to improve quality,
strategy to better concentrate our resources on processes and systems worldwide, as well as work to
investments for short- and long-term performance. reduce costs and working capital. And we will do this
The rapidly changing marketplace conditions of the while continuing to build our brands worldwide,
region, especially in China, made these moves especially in places like China and India where the
absolutely necessar y and appropriate. Our lower cost Whirlpool brand was introduced full scale in 1996.

•4

Starting in 1998, our product development common goal. And while we are starting to see that
work will be accomplished under our new global integrating and exploiting our capabilities more fully
product development organization. Where we once around the world is leading to ever-increasing levels
conducted product design and development work on a of shareholder value, we know there is still much
regional basis, we now work through one globally more to be accomplished. Again, no one else in our
integrated group. We believe this will bring improved industry is positioned as well as Whirlpool to make
capabilities to our product design and development, this happen.
with substantially reduced costs and cycle times. I am proud of our improved performance in
But strategy and market position mean little 1997, and I am particularly proud of the ability of the
without the driving force and commitment of our 61,370 men and women of Whirlpool to meet, head
people. Here, too, we have begun to cultivate a work on, the challenges and oppor tunities the year brought
environment in which we can build stronger us. As we look toward the next millennium, we are
commitment, pride and performance, thus becoming further along our global journey than I ever expected.
one team of Whirlpool people around the world. In Today, we are uniquely positioned in our industr y to
1997, to help create a sense of common beliefs, values realize the speed, cost and productivity benefits of
and behaviors, we introduced a transformation effort global integration. Given the significant progress we
known as the High-Performance Culture (HPC) to all made in 1997, I remain confident that our long-term
Whirlpool employees. HPC is centered on five shared strategy, and our capacity to carry it out, will lead to
values – respect, integrity, teamwork, learning to lead consistent value creation both now and in the future.
and the spirit of winning – which represent the
essence of who we are as a company.
Using these values to align our organization
around a common corporate culture has improved
David R. Whitwam
our ability to view our business globally. After all, a
Chairman of the Board and Chief Executive Officer
company is a group of people working toward a February 10, 1998

•5

1997 • Introduction

Global Integration Introduction consolidated our Latin American investment with the
It all began with a vision and the realization in the purchase of controlling voting interest in Brasmotor.
late 1980s that the home appliance industry would Today our global network is largely complete.
become global in scope over time. From this Yet the biggest challenge of our global strateg y
realization, we developed and began to execute an remains before us – to fully integrate our global
aggressive strategy to remake and expand Whirlpool operations. For Whirlpool, global integration means
Corporation. using our unequaled resources, knowledge, skills,
Working from our strong United States products, brands and technology to develop a
market, we expanded globally. First, in Europe we sustainable competitive advantage. The benefits of
quickly implemented an integration are profound; we are using
innovative strategy that common approaches to our business
sought to make the most of worldwide, moving with greater speed,
the common needs of our at a lower cost, in offering consumers,
customers across the worldwide, the products and
region, while still features that deliver superior
respecting local performance and value.
preferences. Next, in We have only just begun
cooperation with Brasmotor, to realize the power of such
we developed a strategy to global integration. In the pages that
grow the Latin American follow we will illustrate four
home-appliance markets. By examples, one from each region, of
1995 we had built the necessar y global integration. Through these
infrastructure to enter into the efforts and all our others, we plan to
dynamic and fast-growing Asian drive superior long-term value for you,
markets. Then in 1997 we our stakeholders.

Executive Officers
Front Row: PAULO PERIQUITO, RALPH HAKE, JEFF FETTIG
Back Row: MIKE THIENEMAN, RON KERBER, BILL MAROHN, BOB HALL
•6

1997 • North America
l North America

AccuBake TM

Electric and Gas Ranges

The latest Whirlpool gas and

electric ranges, produced in Tulsa,

Oklahoma, offer more oven space

than any other range in the

industry – 4.65 cubic feet –

making even the largest meals

easy to prepare in record time.

Even with huge ovens, these

ranges cook foods evenly every

Global Processes
time thanks to their exclusive

In 1997 we made significant progress toward applying full use of Whirlpool
AccuBake TM cooking system. The

Corporation’s global resources to create a clear and sustainable competitive
secret is precise, computer-driven

advantage within our industry. One example is our new supply-chain task force,
electronic controls that keep the

led by J.C. Anderson, vice president, North American manufacturing and
oven in the desired temperature

technology, and staffed with people from both North America and Europe. They
range and EZ-Touch TM settings that

are reviewing all aspects of our North American and European supply-chain
operate the most often used

operations, from raw materials to finished-products delivery, with an eye toward
functions.

reducing our costs and incorporating Whirlpool Corporation’s best practices and
processes in procurement, manufacturing and logistics on a truly global basis.

•7


While still under way, the results hold promise. North American Operations
Not only have both North America and Europe already Our continued consistent performance in the
benefited from the simple and regular exchange of the important North American market was driven by our
best practices, skills and processes, but the task force ability to focus on understanding the needs of
is targeting a significant savings in the use of working consumers and using that knowledge to deliver
capital, better technology applications and reduced products that exceed their expectations. At the same
process-development spending. time, we continued to improve productivity and
For instance, we are examining the use of similar accelerated our cost reductions in the face of a very
components in appliances produced in all regions. competitive marketplace.
Although great strides have been made through our Several significant product advances were made
global procurement initiatives, we are still sourcing in North America, including the successful first full
similar components from different suppliers and have year of distribution of the popular new stainless-steel
not fully engineered commonality into all of our KitchenAid brand dishwasher, built in Findlay, Ohio, and
product platforms. By looking at our needs globally, we incorporating design features first introduced in
can maximize our economy-of-scale savings and still Europe. Consumer acceptance of our free-standing
deliver products that exceed consumers’ expectations. electric and gas ranges, featuring our exclusive
Our global technology organization is now charged with AccuBake TM technology, led to full-capacity production
accelerating these benefits. at our newest facility in Tulsa, Oklahoma. These
We are confident that the advantage of our cooking products have been so well received that
global enterprise lies in such efforts where we can Sears, Roebuck and Co. will be adding select
combine the many talents, skills and experiences of Whirlpool-built models to its Kenmore brand name
our people to approach our business from common across the U.S. in the fourth quarter of 1998.
product and process platforms worldwide, yet In addition, Sears will purchase over-the-range
maintain the uniqueness required to do business in the microwave ovens, newly designed at our microwave
various regions. oven technology center in Norrköping, Sweden.

•8

Again, product features reflect the results of extensive work in North America is based on our market-driven
consumer research in North America that confirmed approach to uncover consumer needs, which will
consumer acceptance for key features, such as the result in tailoring products and ser vices to meet
largest usable capacity in the industr y. The new them. This approach was used extensively in
microwave ovens are built at our microwave oven developing our new Whirlpool-brand positioning that
joint-venture factory in Shunde, China, for export to pinpoints what people really want from their
Sears stores all over North America. appliances, as well as life – “A Job Well Done.” This
More technology sharing has occurred in other new theme touches on the superior performance of
product categories as well. For example, our our products and the satisfaction that comes from
AccuBake TM technology for free-standing ranges has doing a task well.
also been incorporated in the latest built-in ovens, Another example of our global integration is
produced in Oxford, Mississippi. In addition, a new our plan to expand the use of products from one
Whirlpool brand automatic washer, built in Clyde, geographic region to another. This practice is already
Ohio, features a rinse setting that requires 40 percent being explored at Inglis Ltd., Whirlpool Corporation’s
less water than conventional models for those wholly owned Canadian subsidiar y, and Vitromatic
consumers who demand energ y and water savings. S.A., our Mexican affiliate . Such innovation and
Following in-depth research of consumer aggressive management has led to two straight years
behaviors and preferences, we are launching two new of record sales and profits in Canada.
brand extensions – Whirlpool Gold for the busy These efforts show the degree to which our
consumer who always buys the best and KitchenAid North American people are leading the industr y with
Classics for the buyer seeking ultimate luxur y in home the understanding that we must win every day in the
appliances. Both will offer highly featured products marketplace with our consumers and trade par tners.
and clear benefits that ser ve consumers effectively. Only then, will we win with our stakeholders and
All of our product and brand-development accomplish “A Job Well Done.”

•9

l Europe
1997 • Europe

Electronic

Microwave Oven

The Talent TM microwave oven, built

in Norrköping, Sweden, and

introduced throughout Europe in

1997 under the Whirlpool brand,

combines all the customer-

pleasing features of its

predecessors (including one-

touch, fuzzy logic control) with a

number of improvements. Its 3D

system of microwave distribution

increases the usable oven space

by 50%, compared to similarly

sized models, because the

turntable is no longer necessary.

The drop-down door also serves

Global Market Expansion as a convenient shelf capable of

Creating a global presence offers little competitive advantage unless a supporting nearly 45 lbs.

company can quickly apply lessons learned in one region to challenges or (20 kilos) of weight. The new

opportunities it finds in another. Whirlpool Europe has been applying its oven continues Whirlpool’s

trendsetting tradition in

microwave ovens.

•10

expertise to speed its entry into new markets. This bear on our new business in South Africa,
involves building a strong brand position, establishing reengineering manufacturing processes, introducing a

1997 • Europe
reliable logistics and distribution networks and new quality system and launching a full line of
recruiting capable, local managerial talent. As a result, products under the Whirlpool and KIC brands,
we have established a leadership position for most of supported with customer-appealing imports from
the emerging markets of Central Europe, as well as around the world.
parts of the Middle East and Africa. Overall, our emerging markets team has now
During 1997 our emerging markets team, built a strong foundation for supplying knowledge and
drawing on global resources in manufacturing and highly skilled people to the rest of our business as we
marketing and its own, growing knowledge base for exploit the potential of new markets.
creating successful operations in developing nations,
established new sales offices in Lithuania, Estonia and European Operations
Latvia. At the same time, the team posted double Whirlpool’s European business reported substantial
digit growth in countries it entered the previous year operating improvements in 1997 and performance
– Romania, Bulgaria, Turkey, Morocco and South Africa. records in a number of categories. Sales in local
We also strengthened our position in Russia and the currency grew by more than 8 percent – the best ever
Commonwealth of Independent States. Given this for the business. Other records were realized in net
success, the company expanded the team’s sphere of cost productivity, unit shipments, customer satisfaction
responsibility to include a number of Asian markets. levels with our service, product quality improvement
While these markets may at first appear to be and market share for the Whirlpool brand.
dissimilar, they actually share a number of traits and These achievements outpaced the industr y as a
consumer purchasing preferences with their emerging whole, which grew by 3-4 percent, despite a
market counterparts elsewhere. All told, we now continued, slow economic environment. Our
serve more than 100 emerging markets worldwide. operating performance improved through a
The team brought considerable resources to combination of actions, including a better mix of

•11

higher-margin products and better defined brand exclusive “crisp” technology, this microwave oven
positioning for our principal brands of Whirlpool, delivers superior performance.
1997 • Europe

Bauknecht, Ignis and Laden. Finally, in 1997 our European marketing and
On the product side, our redesigned dr yers sales team forged important new relationships with
from Amiens, France, gained strong customer several major trade customers who helped drive our
acceptance. We also successfully introduced a new revenue growth and who have the capability to boost
line of built-in and free-standing refrigerators and our performance further in 1998.
cooktops. Consumers like the refrigerators’ new We expect to continue this momentum in 1998
aesthetics and their flexible interior design features as we implement an aggressive strategy to create
with “intelligent space management.” Carefully economic value in this business. We will do so
controlled temperature zones offer best-in-class food through a combination of revenue-growth actions and
preservation. Our new cooktops also claim best-in- continued attention on improved asset utilization and
class performance with a stylish, easy-to-clean design. cost reductions. New products under development in
Among our most successful product launches washing and refrigeration will complement the major
of the year was our new Talent TM microwave oven development work we began several years ago. For
from Norrköping, Sweden. It has further consolidated example, our factory in Poprad, Slovakia, just started
our European leadership position in the premium production of a low-cost, front-loading washer that
microwave-oven market segment. Where its will be marketed throughout Europe.
predecessor featured dual sources of microwaves, Such are the opportunities we will continue to
Talent offers a “3D” system. Its door opens from the seek as we apply our growing expertise to expand our
top downward, improving accessibility. Whether business in existing and emerging markets and
you’re cooking a turkey or baking a pizza with our establish clear industry leadership.

•12

1997 • Latin America
l Latin America

Electronic

Air Conditioner

The new Brastemp electronic air

conditioner, built in Manaus,

Brazil, a free-trade zone in

northern Brazil, features an

intelligent fuzzy logic system

which provides three operating

modes for maximum comfort. In

addition, a remote control with

liquid crystal display provides

operation information such as a

temperature read-out. With its

low noise and energy

consumption, this product is

designed to provide hours and

Global Integration
hours of comfort.

We’ve long recognized the strength, scale, knowledge and management
expertise of Brasmotor S.A., Whirlpool’s partner in Latin America. When
our partnership began in Brazil in 1957, Brasmotor found in Whirlpool the
support it needed to develop and consolidate its own production of major

•13


home appliances. Similarly, Whirlpool found in more than two times the market share of the nearest
Brasmotor a partner to help it grow internationally in competitor. Together, through Multibrás and other
a rapidly emerging market. Early in the relationship, sales organizations, we also lead the Latin American
Whirlpool provided not just capital, but equipment, markets outside of Brazil.
product designs and administrative control systems, Consequently, the Whirlpool decision to
while Brasmotor returned local market knowledge purchase majority-voting control in Brasmotor was a
and marketing expertise. logical next step in our long histor y of partnership,
Whirlpool supported Brasmotor’s expansion in and we look forward to working with other impor tant
the 1960s, ’70s and ’80s, particularly in the acquisition Brazilian shareholders in growing this business.
of Consul, a competing appliance company, and Today we are focused on gaining the many
Embraco, a leading producer of hermetic refrigeration advantages our combined size and scale can offer
compressors. The Brasmotor-Whirlpool ties Latin American consumers – especially given the
strengthened over time, as the Brasmotor group of global appliance companies moving into that region.
companies, under the leadership of H. Miguel We have already made progress by including the Latin
Etchenique, grew into the leading consumer goods American organization in the Whirlpool global
enterprise in Brazil and throughout Latin America. procurement and global product development efforts,
In the 1990s Whirlpool assisted Brasmotor in and, based on our histor y of collaboration, we’ve
the formation of Multibrás, a new appliance company already fostered the quick and open exchange of
resulting from the merging of three well-known and information, ideas and manufacturing processes.
highly respected companies, Brastemp, Consul and Whirlpool and Brasmotor share common strategies,
Semer, and more recently the marriage with Whirlpool ranging from investment planning and decisions to the
Argentina. Today, following a regionally integrated choice of markets for the introduction of new
business approach, the Brasmotor group of companies products. Implementation of such joint strategies has
commands the Brazilian home appliance market with led to productivity gains and reduced cycle times.

•14

Latin American Operations America to include Whirlpool-designed microwave
After a strong first six months, the national market of ovens. The microwave oven design and technology
Brazil slowed during the second half of the year, come from the company’s global microwave oven
especially following implementation of a new federal business unit based in Norrköping, Sweden, and is
economic plan to suppor t the Brazilian currency and based on a product platform that we currently build in
economy. While we believe that the steps announced China. We’ve also introduced a new high-efficiency air
by the Brazilian government were correct and conditioner based on consumer preferences for better
appropriate, in the short term they adversely affected cooling controls. We will produce both new products
the economy and demand for durables, including home in the second quarter of 1998 at a new factory in
appliances. Manaus, a free-trade zone in northern Brazil.
The Brazilian home-appliance market doubled In addition, a major product renewal effort will
in size between 1993 and 1996. We knew that such result in most of our product line being redesigned
dramatic growth levels were unsustainable. In 1997 and updated in the next two years. The first
the Brazilian home-appliance market declined about redesigned products will be washers, freezers and
10 percent from 1996 levels, returning to more refrigerators. Importantly, all new products are
normal levels of demand. Though the Argentine developed under our global product-business teams.
economic growth also slowed somewhat in the We are confident that the leadership
second half of 1997, our Argentine business capabilities in Brazil, combined with our plan to more
performed well and maintained its operating margins. fully integrate the Brasmotor business into
We expect Brazilian appliance industr y shipments in Whirlpool’s global network, will allow us to continue
1998 to approximate 1997 levels. to perform solidly in Latin America. And, based on
Based on our long-term efforts to attract and our combined knowledge, experience and leadership
keep customers for life, and in response to consumer we remain optimistic about our ability to realize
research, we’ve upgraded our product line in Latin substantial stakeholder value from the region.

•15

Global Technology dishwashers. These product categories are in addition
Whirlpool Corporation’s global size offers an obvious to microwave ovens and air treatment products, which
advantage in activities such as procurement, where we already manage as global business units and where
1997 • Asia

today nearly one-third of our manufacturing we have tested and refined our global management
components are purchased globally. An even greater concept. Where we once conducted product
advantage exists in using the Whirlpool global development work regionally, we now do so with a
network for product-development activities, including global perspective. This approach offers the
research, design and technology development. opportunity to use common components and
One recent example of our global product- appliance sub-systems around the world. We expect
development capability is the new no-frost and CFC- this to lead to improved capabilities, fewer product
free refrigerator, developed for our newly constructed platforms and reduced capital spending globally.
factory in Pune, India. This adds a vital product Furthermore, we expect our product development
offering to our Indian product line-up and helps to cycle times to decrease significantly, while the
maintain our leading marketing position. What are the exchange of world-class products, processes and
benefits of this approach? A global team, including technology will dramatically increase. We are
Whirlpool people from Asia, North America and confident that global integration of our product-
Europe, using the company’s best design, technology development activities will lead to new products that
and engineering capabilities, developed the new no- are markedly different from those of our competitors.
frost refrigerator. Without the global bench strength,
our Indian operations would not have had the Asian Operations
resources to develop this important product and Although our operating performance in Asia resulted
would have been disadvantaged in the marketplace. in a loss for 1997, there were significant
Global product teams now support improvements given the economic uncer tainties in the
development for each of our major product region. The numerous actions we took in the region
categories – laundr y, cooking, refrigeration and leave us positioned for short-term improvements and

•16

l Asia

1997 • Asia
No-frost, CFC-free

Refrigerator

Whirlpool’s new global no-frost

refrigerator is being built

specifically for the Indian market

at the company’s new facility in

Pune, India. The new refrigerator

is available in three popular sizes

and offers consumers no-frost

cooling and freezing with low

sound and energy-use levels. In

1998, Whirlpool Asia plans to

export shipments of the new

model to the Middle East and

parts of Africa.

•17

long-term participation in the world’s largest home North America and Europe for sale under our various
appliance market. We exited our Beijing Snowflake brand names. We also moved responsibility for Asia-
joint venture to produce refrigerators and are in the Pacific sales into our emerging market group based in
1997 • Asia

process of reducing our investment in Whirlpool Europe. Given Asia’s size and growth potential, we
Raybo, the air conditioner joint venture. We also remain unquestionably committed to this impor tant
took steps to significantly reduce our costs by folding region, as evidenced by our five manufacturing sites
many Asia-support functions into the broader across China and India, solid product portfolio,
Whirlpool global network. presence in the region’s major markets and 8,000
Why did we take these difficult, but necessar y, employees.
steps? The business analysis we completed in making Even though we made significant changes in
these decisions showed significant over capacity in Asia, we made significant strides too. Our sales
these two product categories, not just for today, but companies in markets such as Australia and Hong
for the foreseeable future. For example, refrigeration Kong continued to grow their unit volumes, market
manufacturing capacity doubled in 30 months in share and profitability. In India, we expanded the
China, far outstripping consumer demand and introduction of the Whirlpool brand by transferring
depressing prices. As we looked at our capability in our refrigerator line from the Kelvinator brand to the
this environment, it became clear that we needed to Whirlpool brand, which was challenging given the flat
refocus our resources to allow us to grow from our market performance there in 1997. And in China, we
strengths, while reducing costs and simplifying our further brought the Whirlpool brand name to
structure throughout the region. consumers with a new line of microwave ovens and
Accordingly, in China we made the decision to washers, both designed and built specifically for
focus on two of our joint ventures – Whirlpool Chinese consumers.
Narcissus, which manufactures automatic washers, and In 1998 we expect to increase both our unit
Whirlpool Shunde SMC , which manufactures volumes and revenues as we introduce the no-frost
microwave ovens – one million of which we export to and CFC-free refrigerator and update our washer

•18

products in India. In addition, we have aggressive series of retail trade shows we conducted in 1997 to
plans to build the Whirlpool brand and improve fully launch the brand as we built our presence there.
customer satisfaction in India using newly created As we’ve said before, Asia is already the

1997 • Asia
indices to measure both quality and ser vice levels. world’s largest appliance market, with forecasted
We also plan to launch a new vertical-axis growth levels much stronger than other more mature
washer in China and produce a new line of over-the- markets. Asia represents a very important piece of
range microwave ovens in China for export to Sears, our long-term global strateg y. We intend to win in
Roebuck and Co. in the United States. Our sales Asia, but to do so we must position ourselves for the
force in China will move aggressively to build the long term, while driving significant shor t-term
Whirlpool brand name throughout China following the performance improvements.

•19

1997 • Principal Locations

n

nn
n
n
n
l n
n
ln
n
n
l
n sn
n
nnn
nn
n
n
n
n
l
s
n
s
sn
n
n
n n sn
n l
n

n

n

nl
n
l
n n
l
n

s Joint Venture n Manufacturing l Headquarters

•20

Nor th America Europe Latin America Asia

1997 • Principal Locations
Major Whirlpool Brands
Major Whirlpool Brands Major Whirlpool Brands Major Whirlpool Brands
Narcissus*
Acros* Bauknecht Brastemp
Raybo
Admiral (Canada) Ignis Consul
SMC*
Chambers Laden Eslabon de Lujo
TVS*
Crolls* Whirlpool Semer
Whirlpool
Coolerator Whirlpool
Company, Affiliate Operations
Estate
Company, Affiliate Operations
Inglis Company, Affiliate Operations
q Headquarters
KitchenAid q Headquarters q Headquarters
Comerio, Italy
Roper Brasmotor S.A., Multibrás S.A. Asian Headquarters
Speed Queen (Canada) v Joint Ventures São Paulo, Brazil Hong Kong, China
Supermatic* Riva di Chieri, Italy
Embraco S.A.
Whirlpool New Delhi, India
Joinville, Brazil
s Manufacturing
Company, Affiliate Operations Amiens, France v Joint Ventures
Whirlpool Argentina
Calw, Germany Whirlpool Narcissus (Shanghai)
q Headquarters
Buenos Aires, Argentina
Cassinetta, Italy Co. Ltd.
Global and North American
Comerio, Italy Shanghai, China
Headquarters
Isithebe, South Africa
Benton Harbor, Michigan s Manufacturing
Naples, Italy Whirlpool Shunde SMC Microwave
Cabo de Santo, Agostinho
Neunkirchen, Germany Products Co. Ltd.
Inglis Ltd. Joinville, Brazil
Norrköping, Sweden Shunde, China
Mississauga, Canada Manaus, Brazil
Poprad, Slovakia
San Luis, Argentina
Schorndorf, Germany
v Joint Ventures Shenzhen Whirlpool Raybo Air
Santa Catarina, Brazil
Siena, Italy
Vitromatic S.A. Conditioner Industrial Co. Ltd.
São Paulo, Brazil
Riva di Chieri, Italy
Monterrey, Mexico Shenzhen, China
Trento, Italy
Principal Products
s Manufacturing
s Manufacturing
Celaya, Mexico Principal Products Automatic Dryers Faridabad, India
Clyde, Ohio Automatic Washers Pondicherry, India
Automatic Dryers
Evansville, Indiana Dishwashers Pune, India
Automatic Washers
Findlay, Ohio Freezers Shanghai, China
Dishwashers
Fort Smith, Arkansas Microwave Ovens Shenzhen, China
Freezers
Greenville, Ohio Ranges Shunde, China
Microwave Ovens
LaPorte, Indiana Refrigerators
Ranges
LaVergne, Tennessee Room Air Conditioners Principal Products
Refrigerators
Marion, Ohio
Automatic Washers
Monterrey, Mexico
Microwave Ovens
Montmagny, Quebec
Refrigerators
Oxford, Mississippi
Room Air Conditioners
Puebla, Mexico
Reynosa, Mexico
Tulsa, Oklahoma

Principal Products
Automatic Dryers
Automatic Washers
Built-in Ovens
Dehumidifiers
Dishwashers
Freezers
Ice Makers
Microwave Ovens
Ranges
Refrigerators
Room Air Conditioners
Trash Compactors

*Used with permission

•21

• Manag ement’ s Discussion and Anal ysis •

Results of Opera t i o n s due to the impact of increased volume, p a rt i a l ly offset by unfavorable
brand and product mix. North American unit volumes were up 2%
over 1995 in an industry that was up nearly 5%. North American sales
The consolidated statements of earnings summarize operating results were up 4% due to a combination of higher pricing and volume and
for the last three years. This section of Management’s Discussion and improved product mix. European unit volumes were up 11% over 1995
Analysis highlights the main factors affecting changes in operating while the industry was down nearly 2%. European sales were up 3%
results during the three-year period. The accompanying financial compared to 1995 and were up 5% excluding currency fluctuations.
statements include the company’s investment in Whirlpool Financial P a rt i a l ly offsetting the impact of volume increases on sales growth
Corporation (WFC) on a discontinued basis and the company’s were unfavorable brand and product mix, as consumer pre fe re n c e
i nvestment in its Brazilian subsidiar y, Brasmotor S.A., on a c o n t i nued the trend tow a rd lowe r-priced brands and pro d u c t s ,
consolidated basis for the last two months of 1997. Prior to the without any substantial price increases during the year.
consolidation, the Brazilian operations were accounted for on an
equity basis. Expenses
Prior to the fourth quarter of 1997, the company’s Brazilian
Gross margin percentage improved by 1% in 1997 compared to 1996.
operations were reported on a one month lag. In the fourth quarter,
North American gross margin percentage improved principally due to
this one month reporting lag was eliminated and the Brazilian results
manufacturing efficiencies, e f fe c t i ve cost control management and
for the year ended December 31, 1997 included activity for 13
reduced material costs, p a rt i a l ly offset by price deterioration. Price
months. The effect of eliminating the one month lag increased net
realization combined with improved product mix, e f fe c t i ve cost
earnings $5 million, excluding non-recurring items.
control management and reduced material costs have improved the
European gross margin percentage 2% compared to the prior year.
Net Sales
Gross margin percentage on product sales deteriorated 1% in
Net sales were $8.6 billion in 1997 including two months of sales 1996 compared to 1995 as the North American margin improvement
related to consolidating Brasmotor, an increase of 1% over 1996. of 1%, stemming from improved product mix and higher pricing, was
Excluding currency fluctuations and the consolidation of Brasmotor, more than offset by a 5% European margin deterioration. European
net sales were down 1% year-over-year. North American unit volumes margins reflect customers shifting to lower margin brands and
were up 1% over 1996, in an industry that was up less than 1%. N o rt h p ro d u c t s , unfavorable currency fluctuations, delays in achieving cost
American sales were down 1% compared to 1996, due to competitive targets on new products and stagnant pricing in the marketplace.
pricing partially offset by increased volume and favorable product mix. Selling and administrative expenses, excluding non-re c u rr i n g
North American industry shipments are expected to be down slightly items, as a percent of net sales were flat in 1997 compared to 1996.
in 1998. European unit volumes were up 4% over 1996 while the The North American and European percentages were both essentially
industry was up nearly 4%. European sales were down 6% compared flat with the prior year.
to 1996; however, excluding the effect of currency fluctuations, sales Selling and administrative expenses as a percent of net sales
were up more than 8% year-over-year. Sales growth in Europe, in local decreased slightly in 1996 compared to 1995. The expense percentage
c u rre n c y, reflects stabilization of the trend of declining price in North America decreased slightly, while the European expense
realization that affected the industry for the last three ye a r s . percentage declined 1% in 1996 primarily due to reduced selling costs
European industry shipment growth is expected to be up 2% in 1998. and tight control over other spending. Europe also benefited from cost
Net sales were $8.5 billion in 1996, an increase of 4% over 1995. reductions stemming from restructuring efforts executed during 1995.
Excluding currency fluctuations, net sales were up 5% year-over-year Restructuring costs of $343 million in 1997 were incurred to

better align the company’s cost structure within the global home- Earnings/(Loss) from Continuing Operations bef o r e Equity
appliance marketplace. The restructurings are expected to result in Earnings and Other Items
annual savings of about $200 million when fully implemented by the
Earnings/(loss) from continuing operations before equity earnings and
year 2000. Refer to Note 10 to the accompanying consolidated
minority interests were $(162) million, $30 million and $124 million in
financial statements.
1997, 1996 and 1995. Excluding the impact of non-recurring items,
Restructuring costs of $30 million in 1996 improved the
earnings before equity earnings and minority interests were $129
c o m p a ny ’s long-term cost competitiveness and profitability in the
million, $49 million and $124 million in 1997, 1996 and 1995.
North American refrigeration market and in Asia, with annual cost
savings of $37 million when fully implemented. Refer to Note 10 to
Equity in Affiliated Companies
the accompanying consolidated financial statements.
Equity earnings were $67 million, $93 million and $72 million in 1997,
1996 and 1995.
Other Income and Expense
The company’s Brazilian affiliates contributed 1997 earnings of
Interest and sundry expense for 1997, including the Brasmotor
$78 million (excluding non-recurring items), $92 million and $70
consolidation, was down compared to 1996. Excluding the impact of
million in 1996 and 1995. The 1997 decline reflects a slowdown in the
consolidating Brasmotor, interest and sundry expense was flat with
previously robust growth in the Brazilian appliance industry partially
1996 and 1995.
offset by $34 million of Befiex and other tax benefits for 1997. The
Interest expense for 1997 was up compared to 1996 due to the
Befiex benefit, which is a government export incentive, is scheduled to
Brasmotor consolidation. Excluding the impact of consolidating
expire mid 1998. Results in 1996 and 1995 reflected significant growth
Brasmotor, interest expense was flat in 1997. Interest expense for
in the Brazilian appliance industry. Results in 1995 were also favorably
1996 increased significantly from the prior year due to higher
affected by certain non-recurring tax benefits, including $17 million of
borrowing levels (Refer to Cash Flows-Financing Activities) and higher
excise tax credits and the consequences of the May 1994 merger of
interest rates.
two of the Brazilian affiliates, Brastemp S.A. and Consul S.A., into a
new entity, Multibrás S.A. The merger resulted in operating efficiencies
Income T a xe s
as an outcome of consolidating selling and administrative functions,
The effective tax rate for continuing operations, excluding non- improving utilization of prior year tax losses and more flexibly
recurring items, was 44% in 1997 compared to 62% in 1996 and 42% managing brands and products.
in 1995. The lower effective tax rate in 1997 compared to 1996 is due The company’s Mexican affiliate equity earnings were $5 million in
to the diminished impact of permanent items resulting from higher 1997 compared to equity losses of $3 million in 1996 and break-even
pretax earnings, the impact of consolidating Brasmotor, as well as equity earnings in 1995. This 1997 performance resulted from higher
certain tax loss benefits. The increase in the provision in 1996 shipment volumes as the appliance industry was up over 30% and
compared to 1995 is primarily due to higher unbenefited losses in lower financing costs triggered by a refinancing at the end of the
Asia, the relatively larger impact permanent items had on the effective second quarter in 1996. 1996 was down compared to 1995 due
tax rate due to lower net earnings, and an unfavorable mix of pretax primarily to lower foreign currency exchange gains.
earnings and losses by country, p a rt i a l ly offset by tax credits relating Economic volatility and changes in government economic policy
to prior years. (including those affecting exchange rates and tariffs) continue to affect

• Manag ement’ s Discussion and Anal ysis •

Cash provided by operating activities was $593 million, $545
consumer purchasing power and the appliance industry as a whole in
million and $377 million in 1997, 1996 and 1995. The increase in 1997
Mexico, Brazil and the entire Latin American region.
from the prior year is primarily due to favorable performance in
inventory, accounts payable and other operating accounts, excluding
D i s c o n t i n ued Operations
the impact of the Brasmotor consolidation. The increase in 1996 from
The discontinued operations results include a pretax charge in 1997 of
the prior year is primarily due to favorable changes in working capital
$36 million (after-tax $22 million) to reduce the carrying value of
and other operating accounts and lower restructuring spending,
certain retained WFC aerospace assets.
p a rt i a l ly offset by lower earnings.
N o n - R e c u r ring Items and Net Earnings
I n vesting A c t i v i t i e s
In 1997, the company recorded the following non-recurring items; an
The principal recurring investing activities are property additions. Net
after-tax restructuring charge of $232 million or $3.07 per diluted
p ro p e rty additions for continuing operations were $378 million, $336
share, special operating charges of $62 million or $.83 per diluted
million and $483 million in 1997, 1996 and 1995. These expenditures
share and gain on business dispositions of $42 million or $.55 per
we re primarily for equipment and tooling related to pro d u c t
diluted share.
improvements, more efficient production methods and equipment
In 1996, the company recorded an after-tax restructuring charge
replacement for normal wear and tear.
of $19 million or $.25 per diluted share.
In 1997, the company began construction of a new $86 million
Absent non-re c u rring re s t r u c t u r i n g , operating charges and
facility in Pune, India to manufacture no-frost refrigerators for the
business dispositions, net earnings were $238 million, $175 million and
South Asia appliance market. The facility is expected to begin
$209 million in 1997, 1996 and 1995. Corresponding diluted earnings
commercial production in the first quarter of 1998.
per share were $3.15, $2.32 and $2.78 in 1997, 1996 and 1995.
Refer to Note 2 to the accompanying consolidated financial
Corresponding basic earnings per share were $3.18, $2.35 and $2.83
statements for discussion of business dispositions and acquisitions
in 1997, 1996 and 1995.
during the last three years.

Financing Activities
Dividends to shareholders totaled $102 million, $101 million and $100
Cash Flow s million in 1997, 1996 and 1995.
The company’s net borrowings decreased by $1,069 million in
1997, excluding currency translation and $132 million of borrowings
The statements of cash flows from continuing operations reflect the
net of cash assumed in acquisitions, resulting primarily from proceeds
changes in cash and equivalents for the last three years by classifying
related to the WFC asset sales. The 1997 borrowing activities for
transactions into three major categories: operating, investing and
continuing operations included the first quarter repayment of $113
financing activities.
million of outstanding subordinated zero-coupon convertible notes,
financed through the issuance of additional commercial paper.
Operating Activities
The company’s net borrowings increased by $171 million in 1996,
The company’s main source of liquidity is cash from operating excluding currency translation and $25 million of borrowings assumed
activities consisting of net earnings from operations adjusted for non- in acquisitions, primarily to fund property additions and origination of
cash operating items such as depreciation and changes in operating financing receivables. The increase included a $244 million issuance of
assets and liabilities such as receivables, inventories and payables. 7 3/4% debentures maturing in 2016.

The company’s net borrowings increased by $758 million in 1995, interest rate swaps in this portfolio are sensitive to changes in fo re i g n
excluding currency translation and $50 million of borrowings assumed currency exchange rates and interest rates. As of December 31, 1997,
in acquisitions, primarily to fund property additions, origination of a ten percent appreciation of the USD versus the European currencies
financing receivables and Asian acquisitions. alone would have resulted in an incremental unrealized gain on these
contracts of $73 million. The converse event would have resulted in
an incremental unrealized loss on these contracts of $86 million. As
of December 31, 1997, ten percent favorable shifts in interest rates
Financial Condition and Other Matters
alone to each swap would have resulted in an incremental unrealized
gain of $23 million. The converse events would have resulted in an
incremental unrealized loss of $27 million.
The financial position of the company remains strong as evidenced by
The company uses foreign currency forward contracts and
the December 31, 1997 balance sheet. The company’s total assets are
options from time to time to hedge the price risk associated with
$8.3 billion and stockholders’ equity is $1.8 billion.
firmly committed and forecasted cross-border payments and receipts
The overall debt to invested capital ratio net of cash (debt ratio)
related to its ongoing business and operational financing activities. The
of 42.1% was down from 58.6% in 1996 due to the sale of the WFC
value of these contracts moves in a direction opposite to that of the
financing business and the consolidation of Brasmotor. The appliance
transaction being hedged, thus eliminating the price risk associated
business debt to invested capital ratio of 38.5% was down from 42.6%
with changes in market prices. Foreign currency contracts are
in 1996 due to the consolidation of Brasmotor. The company’s debt
sensitive to changes in foreign currency exchange rates. At December
continues to be rated investment grade by Moody’s Investors Service
31, 1997, ten percent unfavorable exchange rate movements in the
I n c. , Standard and Poor’s and Duff & Phelps.
c o m p a ny ’s portfolio of foreign currency forward contracts would have
The company is exposed to market risk from changes in fo re i g n
resulted in an incremental unrealized loss of $68 million while ten
currency exchange rates, domestic and foreign interest rates, and
p e rcent favorable shifts would have resulted in an incre m e n t a l
commodity prices, which can impact its operating results and overall
unrealized gain of $64 million. Consistent with the use of these
financial condition. The company manages its exposure to these
c o n t r a c t s , such unrealized losses or gains would be offset by
market risks through its operating and financing activities and, when
corresponding gains or losses, respectively, in the remeasurement of
deemed ap p ro p r i a t e, t h rough the use of derivative financial
the underlying transactions. The company had no foreign currency
instruments. Derivative financial instruments are viewed as risk
options outstanding at December 31, 1997.
management tools and are not used for speculation or for trading
The company manages a portfolio of domestic interest rate swap
purposes. Derivative financial instruments are entered into with a
contracts which serve to effe c t i ve ly convert long-term, fixed rate
diversified group of investment grade counterparties to reduce the
USD-denominated debt into floating rate LIBOR-based debt. The
company’s exposure to nonperformance on such instruments.
company also uses commodity swap contracts to hedge the price risk
The company manages a portfolio of domestic and cross currency
associated with firmly committed and fo recasted commodities
interest rate swaps which serve to effe c t i ve ly convert U.S. Dollar
purchases which are not hedged by contractual means directly with
(USD) denominated debt into that of various European currencies.
suppliers. As of December 31, 1997, a ten percent increase or
Such local currency denominated debt serves as an effective hedge
decrease in interest rates or copper and zinc prices would not have
against the European cash flows and net assets that exist today and
resulted in a material gain or loss.
which are generated by the European business over time. (Refer to
Brasmotor’s long-term debt carries a floating interest rate which
Notes 1 and 7 for the accounting treatment for, and a detailed
periodically reprices driving the carrying value to approximate the fair
description of, these instruments.) Domestic and cross currency

• Manag ement’ s D iscussion and Anal ysis •

Business Unit Sales and Operating Pro f i t
value. As of December 31, 1997, a ten percent increase or decrease in
interest rates would not have resulted in a material gain or loss.
The company’s sensitivity analysis reflects the effects of changes in
The following data is presented as supplemental information:
market risk but does not factor in potential business risks.
The company has external sources of capital available and believes
Net Sales by Business Unit were as fo l l ow s :
it has adequate financial resources and liquidity to meet anticipated
business needs and to fund future growth opportunities such as new
products, acquisitions and joint ventures. Year ended December 31 (millions of dollars) 1997 1996 Increase/(Decrease)
The company has taken actions to understand the nature and
North America $ 5,263 $ 5,310 $ (47) (1) %
extent of the work required to make its global infrastructure Year
Europe 2,343 2,494 (151) (6)
2000 compliant. The company began work a few years ago to prepare
Asia 400 461 (61) (13)
its financial, information and other computer-based systems for the
Latin America 624 268 356 133
Year 2000. The company continues to evaluate the estimated costs
Other (13) (10) (3) (30)
associated with these effo rt s . While these effo rts will invo l ve
additional costs, the company believes it will be able to manage its To t a l $ 8,617 $ 8,523 $ 94 1%
total Year 2000 transition without any material adverse effect on its
business operations.
Additionally, in an effort to enhance productivity and business Operating Profit by Business Unit was as fo l l ow s :
systems performance, the company has begun the process of investing
in the development of improved global business processes through Year ended December 31 (millions of dollars) 1997 1996 Increase/(Decrease)
Enterprise Resource Planning (ERP). ERP involves the implementation
of a commerc i a l ly - av a i l a b l e, enterprise-wide business software North America $ 546 $ 537 $ 9 2%
package. The company expects ERP to drive benefits through E u ro p e 54 (13) 67 N/M
improved communications to better integrate manufacturing, finance, Asia (62) (70) 8 11
customer management and distribution applications. Latin America 28 12 16 133
Restructuring charge (343) (30) (313) N/M
Special operating charge (53) - (53) N/M
Other (159) (158) (1) (1)
To t a l $ 11 $ 278 $ (267) (96) %

whirlpool Annual Report1997

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