[Audio Gap] Chai, the hardline retail analyst at Bank of America Merrill Lynch, and it's my great pleasure to introduce the CEO of Whirlpool Corporation, Jeff Fettig.

Thank you, Denise. Good morning, everyone, and thanks for joining us here today. I'd like to have the formal remarks really around 3 things: one, just a snapshot of our company; two, spend a little bit of time and outline our value creation story and strategy, if you will; and then third, give you just a quick update of this year and the guidance we've given and what's behind that. So once I get through these, let me first start on Slide 4, a quick snapshot of the business. Last year was an excellent year of performance improvement for us. Start, though, with the top line, it came in at $18.1 billion. I would note, we had $1 billion of negative currency. So I think our growth actually -- underlying growth started last year, we had about an underlying growth of about 4% x currency. But if you look at our position, really for the most part, well-balanced improvements certainly in North America and Latin America. Europe, which I'll talk about in a moment, still very difficult environment. And in Asia actually was the first down year we've seen in the markets across Asia. But we enjoy a very strong position in India and a growing position in China. I'm going to move now and just outline the basis for why we -- how we're executing our strategy. And it's really built on 3 pillars. The first is our brand portfolio. And I'll show you those in a minute. But we have 6 $1 billion brands around the world. The second is our distribution footprint. Certainly in North America, Latin America and Europe and now in India, very strong. We're still building that footprint in China. And third, our leading scale. We're significantly larger globally than any of our competitors.…

Maybe I'll just ask the first question here. With the market down 28%, down for the last 6 years straight, as demand comes back from housing, replacement, discretionary demand, all of that, how do you see the outlook for price/mix? And is there any chance that you give up some of the gains that you've seen in the last few years?

Well, price/mix is based on a number of things. But fundamentally, I have great confidence in our product innovation pipeline. So we're going to continue to deliver great products, which candidly give you the opportunity to get price/mix. And so from that standpoint, I'm very positive. In terms of demand and pricing environment and so on, I mean, it's a competitive market. People do whatever people do. But I guess our view is a little bit different. There are some who believe promotion activity will heat up and so on and so forth. And our view is -- I mean, there's -- we market, plan, merchandise, launch new products 12 months a year. And of course, there's holiday promotions and -- and by the way, there's always been holiday promotions. And I don't know why they would get -- why that they would radically change if demand is coming back. But conversely, it's been a replacement market, so no promotions brought new consumers to the marketplace. So I think every company has to determine their own economics. Every retailer has to determine theirs. Our view is we can earn profitable growth through great products and that you don't have to price your way to get there. We will always be price-competitive. And by the way, we are today.

Just interested to get your thoughts on the Latin American markets as you lap some of the stimulus that took place. And I think that maybe there's also been some concern about credit quality deteriorating. Just what you're seeing in the market now and your thoughts for 2013.

Yes. Well, I mean, we're still very positive in total about Latin America. We have guided to 3% or 5% growth, which is down from the 10% growth we had last year. The IPI, which is basically the VAT rebate, if you will, that the government did as a stimulus worked. It changed at the end in Brazil. It changed at the end of January to where it was x percent on each and it varied by product. It's being continued on certain products, primarily energy-efficient products, which actually is not a bad thing for us because we sell most of them, and it's actually a mix upgrade. But our view for the year hasn't changed. But I mean, if you just look at -- you always got to deal with year-over-year comps. So we see it being weaker in the first half, and where we're confident it gets really big numbers. And the change took place and actually growing in the second half, where we're confident it gets relatively low numbers. But we think the -- we don't think it's going to be a big disruption. I think you've got some comp issues, the comparison, but we feel pretty good about our 3% to 5%. Not really heard candidly anything about consumer quality credit. The Brazilian market has always been a consumer payment system. And actually, I would say the soundness of the consumer finance market is so much better today than it was 5 years ago or 10 years ago, primarily because then the retailer carried the credit risk. And over the last 10 years, you now have all the global banks and finance companies, who I would say institutionalized consumer finance in Brazil, plus interest rates have gone down considerably, which is one of the big -- that's probably -- that's a bigger determinant in monthly payments than our prices are. So in terms of affordability, the consumer has actually gotten better. And I'm not aware of any consumer credit crisis.

And anything different going on in the pricing dynamic within Latin America?

I mean, we've announced price increases in Latin America because of currency and inflation. I mean, India and Brazil, in particularly, there are others, but where you've had big currency deval and double-digit inflation, we're still taking price increases.

I believe you guided to 50 bps of improvement on the cost productivity side for this year. Can you just give us a little bit of detail about what the opportunities still left in there?

Yes. I mean, first of all, in our numbers, we talk about 2 things. We talk about the restructuring. But that's separate from productivity. I mean, we measure it separately. So that's pure -- just think about that as actions we paid for shutting down facilities, whatever was involved. That's still in place and will be completed this year. That will deliver $175 million of P&L benefit. Related but separate to that is our net cost productivity program, program meaning that it's always on everywhere in the world, every part of the business. And there, our goal is to always try to absorb 100% of inflation and through -- and again, it's products, it's designs, it's components, it's logistics processes, it's shipping processes, it's systems integration and on and on and on. And with raw materials, which by the way, are still inflated, I mean, they're still increasing but at a lower rate, we expect to deliver, absorb all of that and through other productivity activities, reduce our total cost of level that will contribute roughly 0.5 point, which is roughly $100 million to our P&L. Now it could be 0, it could be 1. But the point is we have thousands of actions we track every day, every month, every week, and we do this every where in the world. So we think net productivity will be a contributor to our margins this year and it has not been in the last 2 years because of the such elevated levels of raw materials. Yes?

As the volumes begin to turn positive and accelerate, do you expect it to start with the higher-end SKUs or the lower-end SKUs? And the underlying drivers, do you expect them to be more driven by new housing and existing home sales or the replacement market ticking back up?

Okay. You're talking U.S.?

Yes.

Okay. There's quite a little bit of mixed data out there because there -- what we look at primarily is sell-through, meaning retailers or builders or whatever, the sales to the end consumer. And it appears it's beginning to tick up. I don't have any percentage numbers. There have been some early on reported fairly good level of shipments, and I think Jan., Feb., I don't have the exact numbers in front of me, but just be careful -- I don't want to -- be careful. There's a lot of inventory movements. In channel, there's a lot of companies are adding different retailers and so on. And so there's a lot of stuff like that going on. But when it shakes out, I think we will -- I mean, I still feel good about our 2% to 3% guidance for the year. And I think when shipments and consumer sell-throughs, which they always do eventually converge, yes, I think we're seeing that uptick now. And it's -- and I -- replacement is steady. I don't think you're seeing -- like I said, I think we're at the very beginning of what over the next 5 years ought to be an acceleration of the replacement rate because of the installed base. That's still in front of us. What is truly happening is housing is -- I mean, we had double-digit growth in our contract housing business all of last year, okay? You didn't see it because it was offset by all the negative discretionary. But yes, and that's ramping up at an increasing pace. And then if you look at a lot of the big builders, they'll tell you it's good now. But based on their order book, second half of the year is going to be really good. And so…

Jeff, could you talk a bit about your relationships with builders, where currently you may have some exclusive relationships and maybe the potential of that market going forward?

Well, I mean, we have a good -- in the new construction market, we have a good position. It's really ourselves and another company have the large majority of the market. And I mean, serving the builder market is different than the retail market. It's about supply chain capabilities, it's about services, it's about -- it's a different business model, if you will. And our strength is we've been able to scale up that business model. We believe we've significantly increased our position in the new construction markets in part because of our brand portfolio offering of Whirlpool, KitchenAid and Jenn-Air, which part of that success in that market's ability to mix up, which consumers usually do when given the choice. And we have the supply chain capabilities now that very few people have. So our share of the total market has grown a lot, which is going to help our growth. So we've got demand and share, which we think are going to help grow. Specific customers, I really don't want to get into, or we don't get into. But we're well represented from the very big customers to the distributors and so on. In this business, distributors' service across the country, it's more of a local for local market, and they sell to people who make 10 houses to 100 houses. Home Depot or Lowe's and others, they sell to this really, really -- the small builders who sell, they may build 2 or 10 houses a year. I mean, it's just bifurcated by not even region, by local market.

Jeff, you cited the North American business for trough industry volumes. So as demand returns, how quickly can you flex that capacity?

Yes. First of all, I'm looking forward to that problem, and -- but we talked about resizing our business to these demand levels. That does not mean that we can't handle a significant increase in volume. In 2005 and '06 in North America, we ran more than 1/2 of our facilities 24/7. Today, we basically run 1 shift or a maximum of 2 shifts 5 days a week. So we have -- when we think about asset utilization, it's 24/7. So we have significant opportunity to increase capacity without big capital expansion. I think, in a 4- or 5- or 6-month period, I see no issues ramping up. I think if the market took off 10%, 15%, 20% next month, it takes you a month or so to adjust. There's probably the bigger challenges in our supply chain just making sure, which we do, that our supplies can ramp up that fast. But we look forward to that challenge. And I just can't tell you when it's going to start. But I think we will see -- as I said, I mean, just to get on a 30-year growth rate, the market has to increase 15% to 20% just to get on a 30-year. That's how much under we are, which is way below where we ever were over that growth rate. Yes?

How does the margins on contract housing sales compare to the average [ph]?

It's just like in mix, but with our weighted mix, it's -- with scale and our weighted mix, it's actually better than or probably better than our line average. Yes?

I've got a couple of questions. Can you tell us back to what you're just discussing what the total capacity utilization is now within your company and...

Not really because my experience, anybody gives you capacity utilization is wrong. Because I can give you on what it is in our facilities at today's shifts, and I'd say we're 80%, 80%, 85%. But if I had shifts, which I would, if we had the demand, I have a slight increase in variable cost, no increase in fixed cost. So that would -- then I'd say I'm making these numbers up, at 60%, something like that. But the point is because of shift flexibility that we have and days, there's no number I can give you that's going to be accurate. Here's the best way to look at capacity utilization. Are you making -- what kind of money are you making at today's volume levels? And which means we're at a pretty good operating rate with the upside to really leverage new volume, is the way you ought to look at it.

And just separately, I'm wondering, how do you see the retail environment here in the United States for your -- for the appliance category relative to the really flush years in the past? I mean, there's been consolidation on your end, there's been some consolidation on the retail end. Could it get less rational? Is it more rational now? Just can you talk a little bit about that?

I mean, if you look at the number, it really hasn't changed that much in terms of -- I mean, today, you've got 3 competitors with over 60% of the market, 5 competitors with 66% of the market. If you go back 10 years ago, you had 4 competitors with 65% of the market. So now some of the players have changed, and that sort of thing, but it's continuing to evolve. I mean, actually net-net, the big 3 in this recession are not gaining share at all, probably net-net of a loss year, not any individual one, but in total. The retail, which is kind of a little bit counterintuitive probably had some of the best growth. And certainly, profitability of retail is coming from small, medium regional retailers, who've benefited from their local market focus, added value services and so on. Now there's no doubt with the housing market improving, I would expect the Lowe's, Home Depot, people like that to do well because when more people are coming in for the home, shopping there, they're more apt to buy appliances. So it's a little bit different, but the raw numbers is what I'm trying to get at. The raw numbers of consolidation have not really changed. And rational, irrational, I mean, look, I don't know anybody in business who doesn't want to grow and make money. And so how you get there may be different and so on and so forth, but all the customers I know, that's what they're in business to do and that's what we're in business to do.

I guess, following on the competitive environment in terms of pricing in the U.S., can you just talk about how you think that would cause pricing to change overall? And can you talk about how specifically Korean players are acting in other international markets?

Give me your first question again.

Import tariffs on Korean players in the U.S.?

Yes. Well, as you know, we initiated late last -- or early last year 2 fair trade claims against -- it's actually against Mexico and South Korea for dumping in the U.S. And in both of them, the Department of Commerce confirmed there, in fact, was illegal dumping, averaged roughly 15%. In the last step of the case, it goes to ITC to determine if it damaged the complaint -- or us. And in refrigeration, the small refrigerator case, they said no, which we didn't understand and we're appealing and we expect to resolve that. And in the laundry case, it was unanimous, yes. So in theory, I mean, they have tariffs if they don't adjust their pricing. And they're paying cash deposits on those tariffs. And a year from now, we'll have a review and they'd be either changed or not. And the other alternative is move production to a different country, which there has been some of that. And my only comment on all of it is there are laws and there are fair trade laws. And we abide by those laws and we would expect others to do the same. And as the market leader certainly in North America, we're going to do what we need to do to make sure that happens. To date, I can't tell you I've seen any change. In other market, it varies, I mean -- but this is the only big market in the world, where we -- I mean, that isn't true actually. We, several years ago, brought dumping claims in Europe from some of these same countries -- well, South Korea anyway.

So you would normally follow the price. You would have to follow the price of those imported products. And so I expect over the next year or 2 that their prices are up 15% and your prices should be up 15% as well. Is that fair?

I can't talk about future pricing and I won't and I just can't.

Question on currency. And are most of your manufacturing [indiscernible], if you're producing -- if you're selling in India, are you producing in India? If you're selling in Japan, et cetera, are you producing there? And so is your main currency translation...

Yes, for the most part, yes. In the case of Brazil, it's purely translation. But Brazil is big, we make a lot of money in Brazil, so we're translating back less. In the case of India, it's a little bit different. In India, it's still imports, a lot of components. And so when the currency devalues, the cost of the components come up, go up, so it actually hurts our margins. In Brazil, it doesn't hurt our margins. In India, it did. But those 2, a combination of those 2 was -- what was the $50 million or $60 million P&L hit on us last year. Yes, I think time for one more.

You mentioned about discretionary buying, and that has collapsed. And so what is it now? And where can it go in normal...

Yes. Well, I mean, it collapsed in 2008 and '09, it just hasn't come back. But in a normal market -- I mean, in a market that delivered 47 million appliances with today's 36 million. So part of that -- replacement is the same. So the collapse was in new construction, existing home sales and discretionary. And so I mean, it's like 50 -- almost 50% collapsed. So we see new construction coming back but a long way to go. We see existing home sales coming back but a long way to go. It's less transparent that the discretionary is coming back, although there, I mean, if you talk to the home improvement people and things like that, they're starting to see some improvement in remodeling and that sort of thing. But I just think that's going to be more economic, consumer confidence, unemployment-driven. And that piece of the market is 15% to 20%. Thank you very much, everyone.

Thank you.