EXECUTIVE OVERVIEW

Whirlpool Corporation is the world's leading manufacturer of major home appliances with revenues of $18.9 billion and net earnings of $418 million for the year ended December 31, 2008. We are a leading producer of major home appliances in North America, Latin America and Europe and have a significant presence in 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 12 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.

During 2008 and through the June 2009 quarter, we experienced significant macroeconomic challenges including instability in the financial markets. These challenges have impacted the global economy, the capital markets, our operating costs and global demand for our products. The results of these challenges include continued high global material and oil-related costs, liquidity strain on our suppliers, decreased consumer confidence and reduced consumer discretionary spending. We expect these conditions to continue in the foreseeable future.

FACTORS AFFECTING COMPARABILITY

During the March 2009 quarter, we changed our method of depreciation prospectively for substantially all long lived production machinery and equipment to a modified units of production depreciation method. Under this method, we record depreciation based on units produced, unless units produced drop below a minimum threshold at which point depreciation is then recorded using the straight-line method. Prior to 2009, all machinery and equipment was depreciated using the straight-line method. We believe depreciating machinery and equipment based on units of production is a preferable method as it best matches the usage of assets with the revenues derived from those assets. As a result, our depreciation expense by operating segment decreased for the three months ended June 30, 2009 as follows: North America - $10 million, Europe - $7 million and Latin America - $2 million, for a total of $19 million. Net of amounts capitalized into ending inventories, gross margin increased for the three months ended June 30, 2009 as follows: North America - $12 million, Europe
- $9 million and Latin America - $3 million for a total of $24 million. Our depreciation expense by operating segment decreased for the six months ended June 30, 2009 as follows: North America - $24 million, Europe - $14 million and Latin America - $6 million, for a total of $44 million. Net of amounts capitalized into ending inventories, gross margin increased for the six months ended June 30, 2009 as follows: North America - $18 million, Europe - $9 million and Latin America-$5 million, for a total of $32 million.

RESULTS OF OPERATIONS

For the three months ended June 30, 2009, consolidated net sales were $4.2 billion. Consolidated net earnings available to Whirlpool common stockholders were $78 million, or $1.04 per diluted share, decreasing from $117 million or $1.53 per diluted share for the three months ended June 30, 2008. For the six months ended June 30, 2009, consolidated net sales were $7.7 billion. Consolidated net earnings available to Whirlpool common stockholders were $146 million, or $1.95 per diluted share, decreasing from $211 million or $2.74 per diluted share for the six months ended June 30, 2008. The following discussion highlights significant drivers of our operating performance.

Consolidated Net Sales

Consolidated net sales decreased 17.9% for the three months ended June 30, 2009 and 20.1% for the six months ended June 30, 2009 compared to the same periods in 2008. The decrease for both the June 2009 quarter and year to date are primarily due to a decline in units sold and the impact of unfavorable foreign currency. Excluding the impact of foreign currency, consolidated net sales decreased 9.8% and 11.9% for the three and six months ended June 30, 2009.

The table below summarizes consolidated net sales by region:

                                Three Months Ended June 30,                             Six Months Ended June 30,
Millions of dollars       2009               2008             Change             2009               2008             Change
North America         $       2,403      $       2,895           (17.0 )%    $       4,507      $       5,540           (18.7 )%
Europe                          786              1,051           (25.2 )             1,482              1,991           (25.5 )
Latin America                   844              1,005           (16.1 )             1,533              1,937           (20.9 )
Asia                            184                178             3.4                 304                316            (3.7 )
Other/eliminations              (48 )              (53 )             -                 (88 )              (94 )             -

Consolidated          $       4,169      $       5,076           (17.9 )%    $       7,738      $       9,690           (20.1 )%

Significant regional trends were as follows:

• North America net sales decreased 17.0% for the three months ended June 30, 2009 compared to the same period in 2008, substantially due to a 16.8% decrease in units sold. The decline in units sold is due to decreased industry demand resulting from continued weak economies in the U.S., Mexico and Canada in 2009 and lower market share compared to the prior year. For the six month period, net sales decreased 18.7% compared to the same period in 2008, primarily due to a 19.2% decrease in units sold due to the same factors affecting the three month comparison. Excluding the impact of foreign currency, North America net sales decreased 14.4% and 15.8% for the three and six months ended June 30, 2009, respectively, compared to the same periods in 2008.

• Europe net sales decreased 25.2% for the three months ended June 30, 2009 compared to the same period in 2008. The decrease in net sales is primarily due to a 13.6% decrease in units sold due to lower appliance industry demand and the unfavorable impact of foreign currency. For the six month period, net sales decreased 25.5% compared to the same period in 2008. Sales decreases for the six month period were primarily due to a 13.1% decrease in units sold and the unfavorable impact of foreign currency. Excluding the impact of foreign currency, Europe net sales decreased 12.6% and 12.5% for the three and six months ended June 30, 2009, respectively, compared to the same periods in 2008.

• Latin America net sales decreased 16.1% for the three months ended June 30, 2009 compared to the same period in 2008, primarily due to the unfavorable impact of foreign currency and lower BEFIEX credits recognized as a result of the Impostosobre Productos Industrializados ("IPI") sales tax holiday. This sales tax holiday was declared by the Brazilian government on certain appliances in our Latin America region for the majority of the June 2009 quarter, and has been extended to October 31, 2009. During this holiday, we expect to monetize reduced amounts of BEFIEX credits because our BEFIEX credits are monetized through the offset of IPI taxes due. Partially offsetting the factors mentioned above is a 6.1% increase in units sold. For the six month period, net sales decreased 20.9% due to the same factors affecting the three month comparison. During the three months ended June 30, 2009 and 2008, we monetized $9 million and $47 million of BEFIEX credits, respectively. During the six months ended June 30, 2009 and 2008, we monetized $44 million and $88 million of BEFIEX credits, respectively. We expect to continue recognizing credits as they are monetized. As of June 30, 2009, $623 million of these export credits remain. Excluding the impact of foreign currency, Latin America net sales increased 1.1% and decreased 3.7% for the three and six months ended June 30, 2009, respectively, compared to the same periods in 2008.

• Asia net sales increased 3.4% for the three months ended June 30, 2009 compared to the same period in 2008, primarily due to a 17.6% increase in units sold offset partially by the impact of unfavorable foreign currency. The increase in volumes is due to successful new product introductions, gains in market share and increases in regional demand. For the six month period, net sales decreased 3.7% compared to the same period in 2008, primarily due to the unfavorable impact of foreign currency offset partially by a 10.2% increase in units sold due to the same factors affecting the three month comparison. Excluding the impact of foreign currency, Asia net sales increased 18.5% and 12.1% from the three and six months ended June 30, 2009, respectively, compared to the same periods in 2008.

Gross Margin

Consolidated gross margin percentages for the three and six months ended June 30, 2009 were lower due primarily to a decrease in productivity in North America and Europe regions due to volume reductions, lower regional tax incentives associated with BEFIEX and unfavorable foreign currency fluctuations, partially offset by improved product price/mix in North America and significant cost reductions. Additionally, for the three months ended June 30, 2009, raw materials and oil-related costs were consistent on a consolidated basis as compared to the prior year. For the six month period, contributing favorably to gross margin were certain one time items in the net amount of $31 million primarily related to a curtailment gain we realized associated with a postretirement benefit plan, offset by charges related to a product recall and a foreign operating tax settlement.

The table below summarizes percentages by region:

                                                Three Months Ended June 30,                                      Six Months Ended June 30,
                                        2009                 2008               Change                  2009                 2008               Change
North America                               12.6 %               12.0 %              0.6  pts               13.8 %               10.9 %              2.9  pts
Europe                                      10.1                 15.2               (5.1 )                  10.4                 14.9               (4.5 )
Latin America                               16.0                 21.3               (5.3 )                  15.6                 21.4               (5.8 )
Asia                                        19.6                 18.6                1.0                    19.5                 18.1                1.4
Consolidated                                13.3                 14.8               (1.5 )                  13.9                 14.1               (0.2 )

Significant regional trends were as follows:

• North America gross margin increased for the three months ended June 30, 2009 compared to 2008 primarily due to improved product price/mix and cost reductions, offset partially by lower productivity driven by volume reductions and foreign currency losses. Additionally, margin was positively impacted by a reduction in the excess of FIFO cost over LIFO cost reserve resulting from cost deflation. For additional information about LIFO, see Note 2 to the Consolidated Condensed Financial Statements. For the six month period ended June 30, 2009, the increase in gross margin was primarily due to improved product price/mix, cost reductions and a curtailment gain associated with the suspension of annual credits to retiree health savings accounts totaling $80 million. These margin improvements were partially offset by lower productivity driven by volume reductions and $26 million in charges associated with a product recall. See Notes 5 and 11 to the Consolidated Condensed Financial Statements for additional information related to product recalls and the curtailment gain, respectively.

• Europe gross margin decreased for both the three and six month periods in 2009 compared to 2008 due primarily to lower productivity driven by volume reductions and unfavorable foreign currency fluctuations. These challenges were partially offset by cost reduction initiatives, lower material and oil-related costs and favorable product price/mix.

• Latin America gross margin decreased for the three month period ended June 30, 2009 due primarily to a reduction in regional tax incentives associated with BEFIEX, higher material and oil-related costs offset primarily by higher productivity and certain credits in the amount of $11 million related to refundable energy surcharges. For the six months ended June 30, 2009, gross margin decreased due to an operating tax settlement and the same factors impacting the three months ended June 30, 2009. See Note 5 to the Consolidated Condensed Financial Statements for additional information related to the foreign operating tax settlement.

• Asia gross margin increased for the three and six month period ended June 30, 2009 due primarily to improvements in productivity, cost reduction initiatives and lower material and oil-related costs, which were partially offset by lower product price/mix.

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                      2009          of Sales            2008          of Sales            2009          of Sales            2008          of Sales
Selling, general and
administrative expenses
North America                          $     175              7.3 %      $     239              8.2 %      $     322              7.1 %      $     444              8.0 %
Europe                                        92             11.6              110             10.5              166             11.2              201             10.1
Latin America                                 60              7.1               81              8.1              107              7.0              162              8.4
Asia                                          25             13.7               29             16.0               44             14.5               52             16.5
Corporate/Other                               38                -               43                -               78                -               83                -

Consolidated                           $     390              9.3 %      $     502              9.9 %      $     717              9.3 %      $     942              9.7 %

For the three and six months ended June 30, 2009, consolidated selling, general and administrative expenses, as a percent of consolidated net sales, decreased as compared to the prior year periods, primarily as a result of infrastructure cost reductions and lower brand investment.

Restructuring

Restructuring initiatives resulted in charges of $23 million and $47 million for the three and six months ended June 30, 2009, reflecting ongoing efforts to optimize our global operating platform. These amounts have been identified as a separate component of operating profit and primarily consist of charges to shift cooking and dishwasher capacity within North America, dishwasher capacity in Europe and fabric care capacity within Asia. For additional information about restructuring activities see Note 8 to the Consolidated Condensed Financial Statements.

Interest and Sundry Income (Expense)

Interest and sundry income (expense) decreased $12 million for the three month period ended June 30, 2009 when compared to the same period one year ago due to a variety of factors including legal settlement costs recorded in 2008, that are not included in the current comparable period, and certain asset sale gains, which more than offset current period charges incurred for legal defense related to an antitrust investigation of the global compressor industry. Interest and sundry income (expense) increased $28 million for the six month period ended June 30, 2009 when compared to the same period one year ago, primarily due to charges incurred for legal defense and legal contingencies related to an antitrust investigation of the global compressor industry, the impact of foreign currency, higher mark to market losses on derivative instruments and lower interest income, partially offset by legal settlement costs recorded in 2008, that are not included in the current comparable period, and certain asset sale gains. Higher legal expense associated with the antitrust investigation of the global compressor industry and related lawsuits is expected to continue through at least the remainder of the year.

Interest Expense

Interest expense increased for the three months ended June 30, 2009 when compared to the same period one year ago due to the combination of higher debt levels and higher interest rates. For the six months ended June 30, 2009 interest expense increased due to the same factors affecting the three month comparison and $13 million in interest charges on an operating tax settlement incurred during the three months ended March 31, 2009.

Income Taxes

The effective income tax rate for the three and six months ended June 30, 2009 was a benefit of 35.4% and 31.5% compared to tax expense of 1.5% and 2.1% for the three and six months ended June 30, 2008. The decrease from the prior period is primarily due to the favorable current period impact of general business credits and a year over year decline in expected global profitability. For additional information about income taxes see Note 10 to the Consolidated Condensed Financial Statements.

Net Earnings Available to Whirlpool Common Stockholders

Net earnings available to Whirlpool common stockholders for the current quarter were $78 million or $1.04 per diluted share, versus $117 million, or $1.53 per diluted share in the comparable prior period, respectively due to the factors described above. Net earnings available to Whirlpool common stockholders for the six months ended June 30, 2009 were $146 million or $1.95 per diluted share, versus $211 million, or $2.74 per diluted share in the comparable prior period, respectively, due to the factors described above.

UPDATE: FORWARD-LOOKING PERSPECTIVE

For the full year 2009, we expect earnings per diluted share between $3.50 and $4.00 compared with the prior expectation of $3.00 to $4.00 per diluted share. We are also updating our outlook for demand. Within Europe, we expect industry demand to decline from 2008 levels by approximately 13% compared with our previous expectation of a 10% decline. We expect Brazilian appliance shipments to increase more than 10% compared with our previous expectation of flat to down 5%. We anticipate full-year 2009 industry demand in Asia to be flat to up 5% compared with our previous expectation of flat to down 5% from 2008 levels.

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 generally consists of increased production in the first half of the year to meet increased demand in the summer months.

The funding markets have been volatile in recent quarters and we have experienced negative global economic trends. To succeed in this environment we continue to aggressively take steps to further reduce all areas of cost, production capacity, working capital and capital expenditures. Outside the U.S., short-term funding is provided by bank borrowings on uncommitted lines of credit.

On May 4, 2009, we completed a debt offering comprised of (1) $350,000,000 aggregate principal amount of 8.000% Notes due 2012 (the "2012 Notes") and
(2) $500,000,000 aggregate principal amount of 8.600% Notes due 2014 (the "2014 Notes" and together

with the 2012 Notes, the "Notes"). The proceeds from the Notes were primarily used for general corporate purposes. For additional information about this debt offering, see Note 4 to the Consolidated Condensed Financial Statements.

On February 27, 2009, we entered into Amendment No. 1 (the "Amendment") to our $2.2 billion Credit Agreement (the "Credit Agreement") to assure flexibility in future credit availability. This revolving credit facility matures in December 2010. The Amendment increases the spread over LIBOR to 3%, the spread over prime to 2% and the utilization fee to be paid, if amounts borrowed exceed $1.1 billion, to 1% of the outstanding loans and replaces the facility fee with an unused commitment fee of 0.50%. For additional information about the Amendment, see Note 4 to the Consolidated Condensed Financial Statements. As of June 30, 2009, there was no balance outstanding under our Credit Agreement.

We believe that our operating cash flow, together with access to sufficient sources of liquidity, will be adequate to meet our ongoing funding requirements. We are in compliance with financial covenants of debt agreements with lenders for all periods presented.

Pension and Postretirement Benefit Plans

Defined Benefit Plans

On June 16, 2009, the Board of Directors authorized the option for the company to use up to $100 million of company stock to fund the U.S. pension plans. If we elect to partially fund the U.S. pension plans in company stock, contributions may be made on a periodic basis from treasury stock, or, with the prior approval of the Finance Committee of the Board of Directors, from authorized, but unissued shares.

During the June 2009 quarter we modified benefits for certain retirees which resulted in a remeasurement of our post retirement benefit obligation. The remeasurement decreased the postretirement benefit obligation $36 million with a corresponding offset to other comprehensive income, net of tax.

On February 9, 2009, we announced the indefinite suspension of the annual credit to retirement health savings accounts for the majority of active participants. The result of the suspension was a curtailment gain of $89 million.

401(k) Defined Contribution Plan

During the March 2009 quarter we announced an indefinite suspension of company matching contributions to our 401(k) defined contribution plan covering substantially all U.S. employees. We also announced that our automatic company contributions equal to 3% of employees' eligible pay will be contributed in company stock.

For additional information about pension and postretirement benefit plans see Note 11 to the Consolidated Condensed Financial Statements.

Sources and Uses of Cash

We expect to meet our cash needs for 2009 from cash flows from operations, cash and equivalents and financing arrangements. Our cash and equivalents were $247 million at June 30, 2009, as compared to $461 million at June 30, 2008.

Cash Flows from Operating Activities

Cash used in operating activities in 2009 was $4 million as compared to $35 million provided for the six months ended June 30, 2008. Cash used in operations reflects lower earnings, lower collections of accounts receivable and higher cash payments for accounts payable, offset partially by lower payments for inventory, lower employee compensation payments and lower payments for promotional and other operating accruals.

Cash Flows from Investing Activities

Cash used in investing activities was an outflow of $205 million in 2009 compared to an outflow of $217 million for the same period last year. The decrease in cash used in investing activities was primarily due to higher proceeds from the sale of assets in 2009.

Cash Flows from Financing Activities

Cash provided by financing activities was $291 million in the six months ended June 30, 2009 compared to $421 million for the comparable period in the prior year. The current period reflects proceeds received related to a debt offering totaling $850 million while the prior year reflects proceeds received related to the issuance of $500 million of 5.5% notes due March 1, 2013. For additional information about our $850 million debt offering, see Note 4 to the Consolidated Condensed Financial Statements. The current year also reflects net repayments of short-term borrowings and long-term debt totaling $496 million compared to net proceeds of $127 million in the comparable period in the prior year. During 2009, we paid dividends to common stockholders totaling $63 million. 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.

OTHER MATTERS

Government authorities in various jurisdictions are conducting antitrust investigations of the global compressor industry, including our compressor business headquartered in Brazil. In 2008, sales of compressors represented approximately 6% of our global net sales.

In February 2009, competition authorities in Brazil, the U.S. and Europe began to seek documents from us in connection with their investigations. We received a grand jury subpoena from the U.S. Department of Justice requesting documents for the time period 2003 through the present. Competition authorities in other jurisdictions have sought similar information. On July 9, 2009, the Brazilian competition investigating authority publicly announced a formal administrative investigation into alleged violations of Brazilian antitrust law, which is a customary step following its preliminary investigation. The public announcement named several members of the Brazilian compressor industry, including certain Whirlpool affiliates and executives located in Brazil. We are cooperating fully with the government investigations and have taken actions, and will continue to take actions, to minimize our potential exposure.

Since the government investigations became public, we have been named as a defendant in numerous related antitrust lawsuits in various jurisdictions . . .