EXECUTIVE OVERVIEW

Whirlpool Corporation is the world's leading manufacturer of major home appliances and a leading producer of major home appliances in North America, Latin America and Europe and has a significant presence in markets throughout India and China. We have received worldwide recognition for accomplishments in a variety of business and social efforts, including leadership, diversity, innovative product design, business ethics, social responsibility and community involvement. We conduct our business through four reportable segments, which we define based on geography. For additional information about our segments, see Note 11 of the Notes to the Consolidated Condensed Financial Statements.

Our global branded consumer products strategy over the past several years has been to introduce innovative new products, increase brand customer loyalty, expand our presence in foreign markets, enhance our trade management platform, improve total cost and quality by expanding and leveraging our global operating platform and where appropriate, make strategic acquisitions and investments.

We monitor country-specific economic factors such as gross domestic product, consumer confidence, retail trends, housing starts and completions, sales of existing homes and mortgage interest rates as key indicators of industry demand. In addition to profitability, we also focus on country, brand, product and channel sales when assessing and forecasting financial results. For the three and six months ended June 30, 2008, we have experienced significant macroeconomic challenges related to continued escalation in material and oil-related costs and lower demand in the United States. See Update: Forward Looking Perspective for revised estimates of our 2008 outlook and other forward looking statements.

RESULTS OF OPERATIONS

Our results reflect strong performance within our international operations. These results were more than offset by declines in North America, caused by the combination of material and oil-related cost increases coupled with lower U.S. demand.

Consolidated Net Sales

Consolidated net sales increased 4.6% for the June quarter and 4.8% year to date compared to the same periods in 2007. These increases are due mainly to increases in the average unit selling price, primarily due to favorable impacts of foreign currency. The number of units sold remained consistent on a quarterly and year to date basis as compared to the same periods in 2007. Excluding the impact of foreign currency, consolidated net sales decreased 1.3% for the quarter and 1.5% year to date compared to the same periods in 2007. We define the average unit selling price as the amount that results from dividing consolidated net sales by units sold.

The table below summarizes consolidated net sales by region:

                                                Three Months Ended June 30,                           Six Months Ended June 30,
Millions of dollars                       2008               2007            Change             2008              2007            Change
North America                         $       2,895      $      3,018            (4.1 )%    $      5,540      $      5,743            (3.5 )%
Europe                                        1,051               900            16.8              1,991             1,729            15.2
Latin America                                 1,005               822            22.3              1,937             1,576            22.9
Asia                                            178               163             9.2                316               279            13.3
Other/eliminations                              (53 )             (49 )          (8.2 )              (94 )             (84 )         (11.9 )

Consolidated                          $       5,076      $      4,854             4.6  %    $      9,690      $      9,243             4.8  %

Significant regional trends were as follows:

• North America net sales decreased 4.1% for the three months ended June 30, 2008 compared to the same period in 2007, primarily due to a 5.3% decrease in units sold. The decline in units sold is due to decreased industry demand resulting from a continued weak U.S. economy in 2008. Partially offsetting the decrease in units sold is a 1.3% increase in the average unit selling price primarily due to better product price/mix, new product introductions and product innovation in 2008 compared to 2007. For the six month period, net sales decreased 3.5% compared to the same period in 2007, primarily due to a 4.8%

• Europe net sales increased 16.8% for the three months ended June 30, 2008 compared to the same period in 2007. The increase in sales is primarily due to a higher average unit selling price in 2008, which increased 14.6% due primarily to the impact of favorable foreign currency as well as better product price/mix and higher volume. For the six month period, net sales increased 15.2% compared to the same period in 2007. Sales increases for the six month period were due primarily to a 14.8% higher average unit selling price resulting from favorable foreign currency and better product price/mix compared to 2007. Excluding the impact of foreign currency, Europe net sales increased 1.9% and 0.1% for the three and six months ended June 30, 2008, respectively, compared to the same periods in 2007.

• Latin America net sales increased 22.3% for the three months ended June 30, 2008 compared to the same period in 2007, primarily due to a 11.4% increase in units sold. The increase in volume is due to continued strong growth in the appliance industry, increased market share and strong economic conditions throughout the region. The favorable impact of foreign currency, new product introductions and product innovation also contributed to higher sales compared to 2007. For the six month period, net sales increased 22.9% as a result of an increase in volume of 10.5% and an increase in the average unit selling price of 11.2%, due to the same factors affecting the three month comparison. Contributing to higher sales in both the three and six month period, compared to 2007, is an increase in BEFIEX credits monetized in 2008 as a result of higher volume. During the three months ended June 30, 2008 and 2007, we monetized $47 million and $27 million of BEFIEX credits, respectively. During the six months ended June 30, 2008 and 2007, we monetized $88 million and $57 million of BEFIEX credits, respectively. We expect to continue recognizing credits as they are monetized. As of June 30, 2008, $875 million of export credits remain. Excluding the impact of foreign currency, Latin America net sales increased 6.8% and 7.2% for the three and six months ended June 30, 2008, respectively, compared to the same periods in 2007.

• Asia net sales increased 9.2% for the three months ended June 30, 2008 compared to the same period in 2007, primarily due to a 3.8% increase in the average unit selling price. Factors affecting a higher average unit selling price include the impact of favorable foreign currency, successful new product introductions and improved product price/mix. Also contributing to higher sales is a 5.4% increase in volume. For the six month period, net sales increased 13.3% compared to the same period in 2007, primarily due to a 7.6% increase in the average unit selling price due to the same factors affecting the three month comparison. Also contributing to higher sales is a 5.3% increase in volume. Excluding the impact of foreign currency, Asia net sales increased 7.9% and 8.3% from the three and six months ended June 30, 2008, respectively, compared to the same periods in 2007.

Gross Margin

The consolidated gross margin percentage for the three months and six months ended June 30, 2008 decreased as compared to the same periods in 2007 due primarily to higher material and oil-related costs. The decreases were partially offset by productivity improvements and product price/mix.

The table below summarizes percentages by region:

                                       Three Months Ended June 30                     Six Months Ended June 30
                                  2008            2007           Change         2008            2007           Change
North America                        12.0 %          13.2 %      (1.2)pts          10.9 %          13.1 %      (2.2)pts
Europe                               15.2            15.6        (0.4)             14.9            14.3         0.6
Latin America                        21.3            20.8         0.5              21.4            20.6         0.8
Asia                                 18.6            16.2         2.4              18.1            16.3         1.8
Consolidated                         14.8            15.1        (0.3)             14.1            14.7        (0.6)

Significant regional trends were as follows:

• North America gross margin decreased for the three month period ended June 30, 2008 compared to 2007 primarily due to higher material and oil-related costs and lower industry demand. We expect gross margin to continue to be challenged by a continued slowing U.S. economy and a difficult cost environment. The decreases were partially offset by productivity improvements and improved product price/mix. For the six month period ended June 30, 2008, the decline in gross margin was primarily due to higher material and oil-related costs and lower industry demand. These decreases were partially offset by productivity improvements.

• Latin America gross margin increased for both the three and six month periods in 2008 compared to 2007 due primarily to productivity improvements, improvements in product price/mix and regional tax incentives associated primarily with BEFIEX, which combined to more than offset higher material and oil-related costs.

• Asia gross margin increased for both the three and six month periods in 2008 as compared to 2007 due to improvements in product price/mix and productivity, which more than offset higher material and oil related costs.

Selling, General and Administrative

The table below summarizes selling, general and administrative expenses as a
percentage of sales by region:



                                                Three Months Ended June 30,                                        Six Months Ended June 30,
                                                 As a %                           As a %                           As a %                           As a %
Millions of dollars               2008          of Sales           2007          of Sales           2008          of Sales           2007          of Sales
Selling, general and
administrative expenses
North America                   $     239              8.2 %     $     213              7.1 %     $     444              8.0 %     $     395              6.9 %
Europe                                110             10.5              89              9.9             201             10.1             159              9.2
Latin America                          81              8.1              76              9.2             162              8.4             145              9.2
Asia                                   29             16.0              25             15.1              52             16.5              43             15.3
Corporate/Other                        43                -              60                -              83                -              96                -

Consolidated                    $     502              9.9 %     $     463              9.5 %     $     942              9.7 %     $     838              9.1 %

For the three and six months ended June 30, 2008, consolidated selling, general and administrative expenses, as a percent of consolidated net sales, increased as compared to the prior year period, primarily due to higher brand investment and higher infrastructure costs.

Restructuring

Restructuring initiatives resulted in charges of $40 million for the three months ended June 30, 2008 and $48 million for the six months ended June 30, 2008, reflecting ongoing efforts to optimize our global operating platform. This amount has been identified as a separate component of operating profit and primarily relates to anticipated charges to shift refrigeration capacity within North America, reorganize certain portions of the salaried workforce in Europe, and restructure portions of our global operating platform. We expect to incur additional costs of up to $52 million during the last six months of 2008 related to restructuring initiatives. For additional information about restructuring, see Note 8 of the Notes to the Consolidated Condensed Financial Statements.

Interest and Sundry Income (Expense)

Interest and sundry income (expense) decreased $26 million and $28 million for the three and six month periods ended June 30, 2008 when compared to the same periods one year ago, primarily due to the impact of foreign currency and legal settlement costs.

Interest Expense

Interest expense was consistent for the three and six months ended June 30, 2008 when compared to the same periods one year ago as higher debt levels were offset by lower interest rates.

Income Taxes

The effective income tax rate for the three and six months ended June 30, 2008 was 1.5% and 2.1% compared to 14.5% and 18.9% for the three and six months ended June 30, 2007. The decrease from prior periods is primarily due to the impact of discrete items recorded as a result of an agreement with foreign tax authorities and strategic tax planning, a shift in earnings dispersion to our international locations and lower overall profitability. For additional information about income taxes, see Note 9 of the Notes to the Consolidated Condensed Financial Statements.

Earnings from Continuing Operations

Earnings from continuing operations for the current quarter were $117 million or $1.53 per diluted share, versus $161 million, or $2.00 per diluted share in the comparable prior period, respectively, due to the factors described above. Earnings from continuing operations for the six months ended June 30, 2008 were $211 million or $2.74 per diluted share, versus $285 million, or $3.55 per diluted share in the comparable prior period, respectively, due to the factors described above.

Net Earnings

Net earnings for the current quarter were $117 million or $1.53 per diluted share, versus $161 million, or $2.00 per diluted share in the comparable prior period, respectively due to the factors described above. Net earnings for the six months ended June 30, 2008 were $211 million or $2.74 per diluted share, versus $278 million, or $3.46 per diluted share in the comparable prior period, respectively, due to the factors described above.

UPDATE: FORWARD-LOOKING PERSPECTIVE

Due to intensified macroeconomic challenges in North America and Europe, primarily related to higher than expected material and oil-related costs and decreased demand, we reduced our full year outlook for diluted earnings per share and free cash flow during the first quarter of 2008. While we continue to estimate that our earnings per diluted share will be in the range of $7.00 to $7.50 and our free cash flow will be in the range of $500 to $550 million for the year ended December 31, 2008, we are updating our outlook for demand within North America and materials and oil-related costs. We now expect demand to decline approximately 6% to 7% in the U.S., and material and oil-related costs to increase approximately $600 to $650 million in 2008. We have continued to pursue actions to mitigate the impact of these challenges including implementing previously announced cost-based price increases, accelerating productivity and cost control initiatives and continuing to invest in our brands to bring new innovative products to consumers around the world. We currently expect these additional actions to fully offset the additional demand decline expected in North America and the additional raw materials and oil-related costs noted above, and, as a result our outlook for earnings per share and free cash flow for 2008 remains unchanged from the outlook included in our Form 10-Q for the quarter ended March 31, 2008.

The table below reconciles projected 2008 cash provided by continuing operations determined in accordance with generally accepted accounting principles (GAAP) in the United States to free cash flow, a non-GAAP measure. Management believes that free cash flow provides shareholders with a relevant measure of liquidity and a useful basis for assessing Whirlpool's ability to fund its activities and obligations. There are limitations to using non-GAAP financial measures, including the difficulty associated with comparing companies that use similarly named non-GAAP measures whose calculations may differ from our calculations. We define free cash flow as cash provided by continuing operations after capital expenditures and proceeds from the sale of assets/businesses. The projections shown here are based upon many estimates and are inherently subject to change based on future decisions made by management and the board of directors of Whirlpool, and significant economic, competitive and other uncertainties and contingencies.

Millions of dollars
Cash provided by continuing operating activities $ 1,000 - $ 1,025 Capital expenditures (550) - (575 ) Proceeds from sale of assets/businesses 50 - 100

Free cash flow $ 500 - $ 550

Agreements with Trade Customers

We enter into agreements with our trade customers from time to time in the ordinary course of business. Most of our products are not sold through long-term agreements. Most trade customers have the ability to change volume among suppliers.

We regularly negotiate with major trade customers and manufacturers regarding supply arrangements for future periods beyond the current year. Sears is a major trade customer for both our OEM and Whirlpool branded products, which accounted for approximately 12%, 14% and 16% of our consolidated net sales for 2007, 2006 and 2005, respectively. The products and volumes we supply and the revenues we obtain may be significantly different in the future than those which currently exist and there is the potential for such sales to be less than 10% of our consolidated net sales for the full year 2008 and beyond. In the past, when faced with a potential volume reduction from any one particular segment of our trade distribution network, we generally have been able to offset such decline through increased sales to other parts of our distribution network. We are continuing our efforts to grow our distribution channels by strengthening our brands though innovation and execution of our brand-focused value creation strategy.

FINANCIAL CONDITION AND LIQUIDITY

Our objective is to finance our business through operating cash flow and the appropriate mix of long-term and short-term debt. By diversifying the maturity structure, we avoid concentrations of debt, reducing liquidity risk. We have varying needs for short-term working capital financing as a result of the nature of our business. The volume and timing of refrigeration and air conditioning production impacts our cash flows and consists of increased production in the first half of the year to meet increased demand in the summer months. We finance working capital fluctuations primarily through the commercial paper markets in the U.S. and Europe, which are supported by committed bank lines, and we anticipate that access to these markets will continue to remain available. In addition, outside the U.S., short-term funding is also provided by bank borrowings on uncommitted lines. We have access to long-term funding in the U.S., Europe and other public bond markets. We are in compliance with the financial covenants for all periods presented. For a description of financing arrangements that had an effect on our liquidity, see Note 4 of the Notes to the Consolidated Condensed Financial Statements.

In June 2004, our Board of Directors authorized a share repurchase program of up to $500 million. During 2007, we repurchased 3.8 million shares at an aggregate purchase price of $368 million and during the three months ended March 31, 2008, we repurchased 1.1 million shares at an aggregate purchase price of $97 million under this program. At March 31, 2008, there were no remaining funds authorized under this program.

On April 23, 2008, our Board of Directors authorized a new share repurchase program of up to $500 million. Share repurchases are made from time to time on the open market as conditions warrant. During the six months ended June 30, 2008, we repurchased 0.7 million shares at an aggregate purchase price of $54 million under this program. At June 30, 2008, there were $446 million remaining funds authorized under this program.

Sources and Uses of Cash

We expect to meet our cash needs for 2008 from cash flows from continuing operations, cash and equivalents and financing arrangements. Our cash and equivalents were $461 million at June 30, 2008, as compared to $343 million at June 30, 2007.

Cash Flows from Operating Activities of Continuing Operations

Cash provided by continuing operating activities in 2008 was $35 million, an increase of $41 million compared to the six months ended June 30, 2007. The increase in cash from continuing operations is due primarily to lower inventories as a result of better inventory management practices, a reduction in accounts receivable and lower spending associated with Maytag restructuring activities as compared to the prior six month period. These increases in cash from continuing operations were partially offset by lower earnings in the six months ended June 30, 2008, primarily from our North American segment, additional uses of cash associated with the payment of accounts payable, and an increase in cash used for the payment of taxes and employee compensation.

Cash Flows from Investing Activities of Continuing Operations

Cash used in investing activities from continuing operations was an outflow of $217 million in 2008 compared to an outflow of $82 million for the same period last year. The increase in cash used in investing activities was primarily due to the prior year receipt of proceeds from the sale of certain Maytag discontinued businesses of $100 million and higher capital spending in 2008.

Cash Flows from Financing Activities of Continuing Operations

Cash provided by financing activities from continuing operations was $421 million in the six months ended June 30, 2008 compared to $148 million for the comparable period in the prior year. Net proceeds of short-term borrowings were $255 million for the six months ended June 30, 2008 compared to $261 million for the comparable period in the prior year. The current year period also reflects proceeds received related to the issuance of $500 million of 5.5% notes due March 1, 2013 and the repayment of $125 million of 9.1% debentures. During 2008, we repurchased stock totaling $151 million, paid dividends to common stockholders totaling $65 million and received proceeds from the issuance of common stock related to option exercises of $7 million. During 2007, we repurchased stock totaling $101 million, paid dividends to common stockholders totaling $68 million and received proceeds from the issuance of common stock related to option exercises of $51 million.