Whirlpool 2003 Summary Annual Report

2003 Summary Annual Report

passionately creating loyal customers for life

every home...everywhere

KitchenAid launches the Pro Line series of major and

portable kitchen appliances with distinctive and

complementary designs, professional performance and

premium customer service. KitchenAid continues to

deliver unique solutions that appeal to cooking enthusiasts

in ways that are creating unmatched levels of loyalty

across generations.

KitchenAid loyalty passes on to a new generation

Ten-year-old Abby Vogt loves to cook. And Abby, who lives

with her parents and two older brothers in an 1887 renovated

Victorian located in a historic neighborhood in Illinois, relies

on the family’s KitchenAid appliances to prepare her culinary

creations.

"I guess my passion for cooking has rubbed off on her,"

says Abby’s mom, Peggy, referring to the family’s tradition of

cooking and baking together at home. "My KitchenAid

kitchen is part of the experience we share – the performance

is outstanding and the professional look and design of all the

appliances visually pulls everything together for me. I love it."

Customer: Peggy & Bob Vogt

Location: Oak Park, Illinois

Occupations: Peggy, billing manager; Bob, attorney

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Nearly five years ago, Whirlpool Corporation set out on a course to reach the

homes and hearts of customers around the globe. By listening intensely to our customers,

understanding their needs and desires, and creating innovative solutions that meet and exceed

those needs, Whirlpool’s organizations worldwide are building unmatched levels of customer

loyalty to our brands.

Today, Whirlpool is leveraging our unique global resources and innovative culture to

extend our industry leadership position, to achieve financial results that excite and reward

investors with superior returns and to create brand experiences that delight our customers.

passionately creating loyal customers for life


Financial Summary p. 23

Consolidated Condensed Financial Statements p.27

Reports of Independent Auditors and Management p.31

Eleven-Year Consolidated Statistical Review p.32

Shareholders’ and Other Information p.34

Directors and Executive Committee p.36

Chairman’s Letter p. 10

Financial Highlights p.13

President’s Message p.14

2003 Regional Brands and Products p.16

North America Operating Review p.18

Europe Operating Review p.20

Latin America Operating Review p.21

Asia Operating Review p.22

Table of Contents

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The Whirlpool Super Easy Wash

front-loading clothes washer gives

consumers in China a variety of

washing options, including a large

load capacity. Every day, the

company’s global manufacturing,

marketing and distribution network

brings Whirlpool’s trusted brands to

the homes of loyal customers

everywhere.

Creating repeat customers everywhere

"This is my second Whirlpool washer," says Liu Xiao Lu, a

recently married systems specialist in Shanghai. Xiao Lu believed

her old Whirlpool washer was the best on the market and

that’s why, when she was choosing a new appliance, she

once again chose Whirlpool.

A careful shopper, Xiao Lu says, "I compared the other

models, and I think this one continues to be the very best,

both for price and functions. I like a washer that can wash a

lot of clothes and wash them clean, and I know this

Whirlpool washer will do that."

Customer: Liu Xiao Lu

Location: Shanghai, China

Occupation: Enterprise Resource Planning

(ERP) Core Team Member

The global resources of Whirlpool Corporation—68,000 employees worldwide, sales

organizations in more than 170 countries and nearly 50 manufacturing and technology

research centers around the globe—provide a competitive advantage that sets us apart from

other appliance manufacturers. We use our global platform to share best practices and

innovations across regions and brands. Our global procurement organization leverages the

volume purchasing power of our worldwide operations to eliminate costs and redundancies

across regions. Cross-regional teams of product development engineers collaborate on

innovation initiatives for regional and global distribution. Our global manufacturing,

distribution and information technology organizations help our brand organizations improve

efficiencies and introduce a continuous stream of relevant innovation to consumers. The

end result of this cross-pollination is a powerful global company that can successfully tailor

our brands to meet the needs of customers everywhere.

our unique global capabilities


4

The Consul Ideale clothes washer

applies innovative technology and

global design to deliver an

affordable automatic washer to

loyal customers in Brazil. Part of

the company’s “Innovation for

Everyone” initiative, the Consul

Ideale also is being exported to

first-time owners in Asia and

other emerging markets.

Innovation helps makes life easier

"Life imposes a fast rhythm, and we can’t waste time with

inconvenience and disappointments," says Claudia Fernandes

Coelho, an attorney in São Paulo, Brazil. "Our home is our

rest, and it’s where we dedicate precious moments to our

family. Because it is so efficient, the company’s Consul Ideale

clothes washer helps create this sense of well-being."

Coelho says her family has used Consul appliances for

generations. "They have amazing designs and are very

creative and modern. All these qualities were essential to me

when I chose them."

Customer: Claudia Fernandes Coelho & Raul Gotti, Jr.

Location: Santos, Brazil

Occupations: Claudia and Raul, attorneys

The constant process of innovation at Whirlpool Corporation is focused directly on our

customers, utilizing extensive customer research and the diversity of our people to gather a

wealth of ideas that could translate into real business opportunities. By developing innovative

ideas into unique products and solutions that customers value and competitors cannot match,

we build customer loyalty and achieve higher sales and profitability. Innovation leads to greater

customer loyalty by helping our brands exceed the expectations of our customers and establish

emotional connections that endure. In many cases, customers are willing to pay a premium for

innovative products that create value. We also use innovation to open up new opportunities in

both mature and emerging markets. Our global organization is providing the resources and

processes that are helping to create innovation that delivers true value and relevancy

to our customers and their families in homes everywhere.

every home...everywherethe appeal of innovation

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The Whirlpool Conquest

side-by-side refrigerator is

uniquely designed and

configured to appeal to

European tastes and needs.

As the world’s No. 1

appliance brand, Whirlpool

understands and meets the

regional needs and expecta-

tions of consumers

throughout Europe, Asia and

North America.

Trusted brand helps keep family traditions alive

Gathering around the dinner table is an important part of

Antonella and Raffaele Lanci’s life. Inside their charming

kitchen in Varese, located in Northern Italy, they serve up and

enjoy dinner with Antonella’s mother. A busy modern couple,

the two still hold to the traditions of good food, family and

friends.

The Lancis’ Whirlpool Conquest side-by-side refrigerator

plays a prominent role in keeping those traditions alive.

Antonella says, "Storing food and preparing meals is easier

when we have a brand we can rely on. That’s why we chose

Whirlpool."

Customer: Antonella & Raffaele Lanci

Location: Varese, Italy

Occupations: Antonella, nurse; Raffaele, taxi driver

Since 1999, we’ve transformed Whirlpool Corporation from a product-focused company to a

customer-focused company by utilizing intensive consumer research to better understand the

lifestyles and needs of our customers. This research helps us enhance all of the factors that

influence customer loyalty, including brand advertising and awareness, product design and

innovations, the retail purchase experience and customer service. Based on this understanding,

Whirlpool has built a vibrant portfolio of global brands that connect with the customers we

serve. Customer loyalty is cemented when customers fully understand and closely identify with

our trusted brands. Our brand organizations in all global markets are continually striving to

improve the brand experience of our customers. All of our employees around the world play a

critical role in building loyalty to our brands by placing the needs of our customers at the

center of every effort, every day.

understanding customers, building brands


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As the largest corporate sponsor for Habitat for

Humanity International, Whirlpool Corporation donates

an ENERGY STAR®-qualified refrigerator and a range to

every Habitat home built in the United States and Canada.

Whirlpool also contributes hearts and hammers to the

effort. Last year, 600 Whirlpool employees joined together

to build a Habitat home in Benton Harbor, Michigan.

Home ownership dream comes true

"I wanted a home of my own," says Cherry Mesa, an

administrative assistant and the mother of five teenagers.

Cherry’s Habitat for Humanity home was the first one

sponsored by Whirlpool Corporation in the Benton Harbor,

Michigan, area. Cherry helped establish a Habitat office in

Benton Harbor and then she, her children and many volunteers,

including Whirlpool employees, helped build her house.

Cherry likes to show off her Whirlpool appliances that

were donated by the company as part of its commitment to

Habitat for Humanity. "I love my house," she says. "I get

excited about doing little things to spruce it up and make it

personal for me and my family."

Customer: Cherry Mesa

Location: Benton Harbor, Michigan

Occupation: Administrative assistant

Whirlpool Corporation is deeply committed to being a responsible and active corporate citizen

in all the communities we operate in around the world. This commitment starts with each of

our employees and the values they represent to our customers, our business partners, our

investors and each other. Our employees know we do business the right way, and that

includes giving back to our communities, taking positive steps to improve the environment and

continuing our long tradition of strong corporate governance. We maximize our efforts and

contributions by partnering with top-notch organizations and individuals—including Habitat

for Humanity International and the Susan G. Komen Breast Cancer Foundation to fight poverty

and disease; the U.S. Department of Energy and U.S. Environmental Protection Agency to

increase energy efficiency; and the independent directors on our board to ensure sound

governing principles. These commitments are no different than those we make to our customers

—we strive to connect with all our stakeholders in ways to make life better and more fulfilling.

our social responsibility


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David R. WhitwamChairman of the Board andChief Executive Officer

Chairman’s Letter

2003 Awards and Achievements■ Global Finance magazine named Whirlpool to the publication’s list of "The

World's Most Socially Responsible Companies," based on a survey of companies worldwide that exemplify the principles of corporate responsibility.

■ Whirlpool was ranked fifth among the most respected internationalconsumer goods companies in the latest "World’s Most RespectedCompanies" survey, conducted annually by the Financial Times andPricewaterhouseCoopers.

To Our Shareholders — Last year, a record number of consumers

turned to the brands of Whirlpool Corporation for unique products

and solutions, and in doing so, strengthened the company’s position

as the world’s leading manufacturer and marketer of major home

appliances.

Whirlpool’s growing appeal with consumers worldwide is the

result of our simple yet powerful path to growth—listen closely to

customers, develop relevant innovation that meets their needs and

apply every available resource to build relationships that last a lifetime.

Our achievements indicate that Whirlpool is on the right course:

■ Consumer demand for all of our brands worldwide helped drive net

revenues in 2003 to a record level of $12.2 billion, an increase of

approximately 10.5 percent from 2002.

■ Strong consumer interest in the Whirlpool brand once again made it

the world’s top-selling, major appliance brand.

■ Full-year earnings of $5.91 per diluted share were in line with

expectations. To deliver these 2003 results, our operations also had

to overcome factors contributing $1.86 per share in unfavorable

comparisons to 2002, such as the negative effects of increased U.S.

pension costs, currency and reduced tax credits in Brazil.

■ Our operations achieved strong levels of total cost productivity,

record improvements in net working capital and return on capital,

and a solid reduction in total debt from 2002 levels.

■ We delivered full-year operating free cash flow of $302 million, a

strong performance for the company that included a voluntary

after-tax cash contribution of $97 million to our U.S. pension fund

last year. The contribution effectively lowers the company’s pension

contribution levels for 2004 and beyond, and flattens pension

expenses year to year.

■ Our board of directors declared a dividend increase of 26 percent

for the first quarter in 2004. The increase reflects the board’s

confidence in the company’s financial position, the ability of our

global operations to generate ongoing free cash flow, and the

positive momentum of Whirlpool’s brands and businesses worldwide.

Building unmatched levels of customer loyalty

In 1999, Whirlpool began implementing worldwide its strategies and

plans in pursuit of our vision: Every Home … Everywhere with Pride,

Passion, and Performance. The quest centered on achieving

unmatched levels of customer loyalty to Whirlpool’s global brands.

Today, customer loyalty creates a clear competitive advantage for

the company. We know that our loyal customers are asking for

Whirlpool’s brands by name on retail floors, continually repurchasing

our products and services, and passionately recommending our brands

to others. Loyalty such as this drives revenue growth, margin

expansion and increased trade support for our brands. To achieve our

customer loyalty goals, we are transforming our global enterprise to

continually deliver innovative products, services and solutions within a

brand experience valued by our customers.

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Operating profit($ in millions)

Free cash flow($ in millions)

Net working capital(% of sales)

Total debt($ in billions)

2002 2003 2002 2003 2002 2003 2002 2003

$692

$830 $291$302

11.2%10.8%

$1.5$1.4

■ DiversityBusiness.com recognized Whirlpool in the organization’s annuallisting of the United States' top 50 organizations for multicultural businessopportunities. Fifteen thousand women- and minority-owned businessesselected the winners.

■ Whirlpool received two "Alexander Hamilton Awards" for excellence inFinancial Risk Management and Technology. Treasury & Risk Managementmagazine sponsors the annual awards, which recognize excellence in corporate management practices.

Connecting with customers through brands

Despite the global scope and scale of our organization, most

customers know Whirlpool through their unique and personal

experiences with one or more of the company’s leading brands. Our

major brands include Whirlpool, the world’s No. 1 selling appliance

brand; KitchenAid in North America; Bauknecht in Europe; and

Brastemp and Consul in the Latin American market. We remain the

major supplier in many product categories for Sears, Roebuck and

Co.’s Kenmore brand appliances.

Our brands are carefully and continually cultivating loyal customer

relationships by first listening closely to their respective customers and

then developing solutions that fit unique lifestyles. To this end, our

brands apply the resources of our global operating platform to create

differentiated experiences for customers and competitive advantages

within each regional market.

Thinking outside the box, inside the home

Innovation is central to Whirlpool’s loyalty efforts because it delivers

unique value to our customers that competitors cannot easily match.

Our rapid development and continuous introduction of Whirlpool

innovation differentiates the company in the marketplace, improves

our top-line revenue growth and drives higher levels of customer

loyalty to our brands.

Over the brief span of five years, we have built an innovation

competency founded on the creativity and diversity of our employees

across Whirlpool’s global enterprise. Today, Whirlpool is recognized as

a leading innovator in the global appliance industry. Increasingly, our

unique application of innovation is gaining prominence within

business management and professional design circles.

Transforming our approach

In 2003, our brands continued to transform and strengthen their

relationships with customers by assessing and integrating findings

from extensive customer loyalty research involving thousands of

consumers. We also expanded the level of employee involvement in

the customer loyalty transformation through special training and

awareness programs. Thousands participated in programs to help

employees better understand the customer and engage in new loyalty efforts.

The company also launched Whirlpool University, an on-line tool

that provides critical customer loyalty information to employees. In

2004, we expect to reach and train over 15,000 employees through

the use of this tool.

Transforming Whirlpool’s enterprise to achieve unmatched levels of

customer loyalty to our brands requires informed and passionate

leaders at all levels of the organization. In 2003, nearly 200 top officers

and directors participated in workshops designed to align leadership

behavior with our transformation effort. This year, the training

continues to cascade throughout Whirlpool’s organizations. These

efforts have not gone unnoticed. Whirlpool’s leadership development

program was ranked 11th among the "Top 20 Companies for Leaders"

recognized by Chief Executive Magazine in a survey of 300 U.S.

companies.

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■ I.D. Magazine recognized Whirlpool in the international design publication’s "Annual Design Review" competition. The Whirlpool Duetwasher and dryer pair, and Whirlpool Europe’s Project F conceptualfabric care products won top honors.

■ Whirlpool co-sponsored the 2003 Jimmy Carter Work Project in theU.S. Employee volunteers helped build 92 homes, and the companydonated nearly 800 appliances. JCWP is a program of Habitat forHumanity International.

Reaching Every Home … Everywhere

Since the late 1980s, when Whirlpool Corporation was primarily U.S.-

based, the company has steadily expanded its operating footprint and

integrated substantial business capabilities across global markets.

Unlike other regional competitors looking to find a toehold in other

parts of the world, Whirlpool already has in place a network of

strategically located manufacturing facilities worldwide.

Whirlpool’s global enterprise also holds other unique competitive

advantages in distribution, technology, procurement and information

technology. These capabilities form the backbone of Whirlpool’s

enviable global operating platform that supports our operations as

they carry out customer loyalty initiatives in all of our markets.

Operating responsibly worldwide

As a company, we hold ourselves accountable for running our

businesses and facilities in a manner that is sensitive to the stakeholders

we serve and to the communities in which we operate around the

world.

Last year, for example, Whirlpool pledged that by 2008, the

company will reduce its global greenhouse gas emissions by 3 percent

from the company’s 1998 emissions level, while also increasing our

appliance production by nearly 40 percent over the same 10-year

period. Whirlpool is the first company in the global appliance industry

to make such a commitment.

Whirlpool also is committing significant time and resources to help

address important social issues worldwide. In addition to the

company’s direct involvement in contributing to the communities in which

we operate, our global operations are at the forefront of initiatives

that provide critical support to women and their families. And as the

leading corporate supporter of Habitat for Humanity International,

Whirlpool helps provide affordable housing to low income families

throughout North America.

Within the company, we are acting on our belief that to fully

understand the unique needs of our customers living in countries and

cultures worldwide, Whirlpool must reflect the diversity of those

customers we serve. The success of our customer loyalty and innovation

efforts depends on our ability to create an inclusive environment

within Whirlpool that embraces each individual's unique strengths

and allows everyone to contribute to the fullest potential.

Outlook

Whirlpool Corporation enters 2004 with good business momentum

and positive economic trends in our key markets worldwide.

For the full year, we expect continued improvement in earnings

based on the competitive advantages of Whirlpool’s unique global

platform, the continued positive response by consumers to our

innovative products and services, and the relentless drive by our

employees to build unmatched levels of customer loyalty for our

brands.

David R. Whitwam

Chairman of the Board and

Chief Executive Officer

Financial Highlights

(Millions of dollars, except per share data) 2003 2002 % Change

Net sales $12,176 $11,016 10.5%Earnings from continuing operations $ 414 $ 262 58.0%

Per share on a diluted basis $ 5.91 $ 3.78 56.3%Net earnings (loss) $ 414 $ (394) NM1

Per share on a diluted basis $ 5.91 $ (5.68) NM1

Stockholders' equity $ 1,301 $ 739 76.0%Total assets $ 7,361 $ 6,631 11.0%Return on equity * 42.9% 14.8%Return on assets * 6.1% 3.4%Book value per share $ 18.56 $ 10.67 73.9%Dividends per share $ 1.36 $ 1.36 –Average dividend yield 2.2% 2.2%Total return to stockholders 41.7% (26.9)%

Share priceHigh $ 73.35 $ 79.80 Low $ 42.80 $ 39.23 Close $ 72.65 $ 52.22 39.1%

Total return to stockholders (five-year annualized) 8.1% 1.4%Shares outstanding (in 000's) 68,931 68,226 1.0 %Number of registered stockholders 8,178 8,556 (4.4)%Number of employees 68,407 68,272 0.2 %

* Refer to Eleven-Year Consolidated Statistical Review (pages 32-33) for more information about return on equity and asset calculations.1 Not a meaningful comparison.

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Jeff FettigPresident and Chief Operating Officer

President’s Message

2003 Awards and Achievements■ Whirlpool formed a global alliance with New Zealand-based Fisher &

Paykel Appliances, which is widely known for its innovative technology.The alliance includes global sourcing of appliances and co-developmentof technology.

■ Whirlpool Europe was recognized as the Euronics "White Goods Supplierof the Year" for 2003. Euronics represents the continent’s largest groupof major appliance retailers, with 6,500 stores in 21 countries.

Whirlpool’s global operations made significant progress deploying our

brand-focused-value-creation strategy in each of our regions last year.

By effectively leveraging and developing Whirlpool’s brands, trade

relationships and unique global platform, our operations turned

in record revenues and a strong improvement in the company’s

productivity performance.

In 2003, our brands continued to apply deep insights about our

customers to the ongoing development and introduction of relevant

consumer innovation. Popular products with unique features and

solutions, like the Whirlpool Duet washer and dryer pair in the United

States, helped improve the average sales price of our products,

despite significant price pressures in each of our global markets. The

growing consumer interest in Whirlpool’s brands and products also

reflects the success of the company’s ongoing efforts to embed

innovation as a core competency.

Today, more than 500 employee innovation mentors have trained

more than 10,000 employees to create and commercialize new

products and solutions for our customers. These employees have

contributed more than 7,500 ideas, with 500 potentially viable concepts

currently in the company’s innovation pipeline at various stages of

evaluation and development. To date, Whirlpool has funded and

conducted more than 360 consumer-based innovation experiments

following a customer-focused, 90-day commercial evaluation process.

Our innovation process also is creating new and important business

opportunities for Whirlpool. For example, the company’s Gladiator

GarageWorks—a complete modular storage and appliance line that

transforms the garage into a functional space—is becoming a

significant revenue opportunity. Whirlpool innovation will continue to

be a vital, strategic source of value creation for the company, and an

important element of building and strengthening the relationships

between our brands and customers.

The company’s strategic trade partner relationships are another

important source of growth and customer loyalty. In each region,

Whirlpool has built strong relationships with winning value-added

trade partners whose strategies complement our own. In the United

States, Whirlpool has the leading position with the top three national

retailers and appliance buying groups, which combined represent 84

percent of the appliance retail market share. Whirlpool also

strengthened its position in the new home building industry last year,

as shipments of Whirlpool and KitchenAid products surpassed

previous records.

Whirlpool’s unique global operating platform of integrated

manufacturing, product development and supply chain resources is the

foundation for competitiveness that drives our brands and our

distribution activities in every region of the world. The company

continually applies these resources in ways that allow us to serve our

regional customers around the world with innovative products,

produced at the best cost for each market.

Whirlpool’s global platform also provides an excellent means to

continually speed new innovations to our customers, while lowering

our ongoing investment costs. Through our global product development

and design resources, innovation and technology are shared and

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■ In a listing of Brazil’s top exporters published by the Brazilian Ministry ofDevelopment, Industry and Trade, Whirlpool’s combined operations wereranked in the top 50 in overall export business.

■ European consumers in France, Slovakia and Hungary named Whirlpoolthe top and most trusted appliance brand in the Reader’s Digest "Trusted Brands Survey."

quickly integrated across our regional operations and functions. These

capabilities allow us to simplify processes, shorten development cycles

and better utilize assets.

We effectively manage Whirlpool’s global manufacturing resources

to optimize the product mix of our brands in each market around the

world. In North America, for example, we leverage the scale and

efficiency of Whirlpool’s Clyde, Ohio, facility—the world’s largest

clothes washer manufacturing operation—to help maintain the

company’s laundry leadership in the North American market.

We also leverage the advantages of Whirlpool’s production

capacity elsewhere in the world to strengthen our cost position in

global markets. Brazil, for example, is one of our key export platforms

for Whirlpool’s global sales and distribution network. Our Brazilian

operation significantly increased the level of exports from the region

last year, which included shipments of new Whirlpool refrigeration

products to customers in North America, Europe and Asia.

Whirlpool Asia also serves as an export base for such products as

microwave ovens and smaller appliances that extend the product

portfolios of Whirlpool’s brands in Europe and North America.

Increasingly, Whirlpool China is filling another important role as a

strategic source for the company’s global procurement network.

Whirlpool’s tradition of driving continual improvements in quality

and productivity remains a key focus of our operations and a vital

competitive lever. In 2003, productivity improvements by our North

American and European operations reached record levels. Operating

Excellence, our Six-Sigma process, is the tool we use to improve and

sustain these cost savings. We also are expanding the company’s lean

manufacturing initiative throughout our global operating platform to

further reduce waste and costs. The combination of all these

productivity measures will help improve our already competitive cost

position and allow Whirlpool operations to generate further increases

in cash flow.

In 2004, we expect economic conditions worldwide to gradually

improve throughout the year. Globally, we will continue to build

strong brands supported by relevant consumer innovation. We will

continue to forge relationships with value-added retailers and builders.

And we will continue to drive record productivity levels by leveraging

our unique global operating platform. These are the drivers that will

continue to fuel Whirlpool’s growth and provide our customers with a

brand experience that is second to none.

Jeff Fettig

President and

Chief Operating Officer

Key Statistics

■ No. 1 position in the industry

■ $7.9 billion in 2003 sales

■ $810 million in 2003 operating profit

■ Approximately 31,000 employees

■ No. 3 position in Western andCentral Europe




■ No. 1 market position in theindustry




■ Leader among Western companies, with No. 1 marketposition in India

■ $416 million in 2003 sales



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North America[United States, Canada and Mexico]

Europe [Europe, Middle East and Africa]

Latin America [Brazil, Argentina, Chile, other markets of the Southern Cone]

Asia[India, China, Asia/Pacific]

2003 Regional Brands and Products

LocationsBrands

Headquarters: Benton Harbor, MI

Manufacturing Locations:United States LaVergne, TN; Findlay, OH; Marion, OH;Greenville, OH; Clyde, OH; Benton Harbor, MI; Evansville, IN; FortSmith, AR; Tulsa, OK; Oxford, MSCanada Montmagny, QCMexico Monterrey, Reynosa, Celaya, Puebla

United States KitchenAid,Whirlpool,Roper by WhirlpoolCorporation, Estate,GladiatorCanada Inglis,Whirlpool,KitchenAidMexico Whirlpool, Acros,Supermatic, Crolls

Operations Center: Comerio, Italy

Manufacturing Locations:France AmiensGermany Neunkirchen, SchorndorfItaly Naples, Siena, Cassinetta, TrentoPoland Wroclaw Slovakia PopradSouth Africa IsithebeSweden Norrköping

Whirlpool, Bauknecht,Ignis, Polar, Laden inFrance, KIC in SouthAfrica

Headquarters::São Paulo,Brazil; Buenos Aires, Argentina;Santiago, Chile

Manufacturing Locations:Brazil Manaus, Rio Claro,Joinville, São Paulo International (Embraco) Rivadi Chieri, Italy; Spisska NovaVes, Slovakia; Beijing, China

Whirlpool, Brastemp,Consul, Embraco. Eslabón de Lujo

Headquarters: Hong Kong, PRC

Manufacturing Locations:India Faridabad, Pune, PondicherryChina Shanghai, Shunde

Whirlpool

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New Products introduced in 2003

Air Purifiers, Automatic Dryers,Automatic Washers, Built-in Ovens,Countertop Appliances,Dehumidifiers, Dishwashers,Freezers, Hot Water Heaters, IceMakers, Microwave Ovens, Ranges,Refrigerators, Room AirConditioners, Trash Compactors

■ Whirlpoolg2microven speedcook appliance, Conquest side-by-side refrigerator with innovativefeatures and styling, new colors for Duet fabric care system: pewter & biscuit, new top-mount refrigerator with contoured door styling, compact refrigeration line with adjustableinner door storage

■ KitchenAidbriva in-sink dishwasher, coffee mill, Ultima Cook oven, true convection wall oven,immersion blenders, outdoor ice maker, sinks, dishwasher pedestals, In-Door-Icerefrigerator, 48" dual fuel range; Pro Line: built-in refrigerator, compactor, dishwasher,espresso maker, coffee grinder, frozen dessert maker, toaster, waffle maker

■ Gladiatorgarage compactor, modular garage refrigerator, and Freezerator convertible refrigerator-freezer

Automatic Dryers, AutomaticWashers, Built-in Hobs, Built-inOvens, Compressors,Dishwashers, Free-standingCookers, Freezers, MicrowaveOvens, Ranges, Refrigerators

■ WhirlpoolMini-BI microwave oven (with new colors and matching finishings), doublebuilt-in dishwashers, newly styled Conquest side-by-side refrigerator

■ BauknechtDouble built-in dishwashers (side-by-side or top mounted), Mini-BI built-inmicrowave oven, new built-in oven with text-assisted cooking instructions and internal memory to store recipes

Automatic Washers, Compressors,Countertop Appliances,Dishwashers, Freezers, MicrowaveOvens, Ranges, Refrigerators, RoomAir Conditioners

■ BrastempLuminata Line, Inox compact refrigerator, Unique VCC refrigerator, waterpurifier, glass door refrigerator

■ ConsulMicrowave oven 18 L, Sec Fácil Spin Dryer, Cargo (8kg) and Ideale (4kg)washers, compact refrigerator (50, 80 e 120 L), new air conditioners:Classe A 15000 and 18000 BTU´s, 21000 BTU´s, Eletronic 10000 BTU´s

Air Conditioners, Compressors,Microwave Ovens, Refrigerators,Washers

■ WhirlpoolMagic Dry 100% dryer, range of Icemagic Direct Cool refrigerators withFast Forward Ice system, Whitemagic Stainwash fully automatic washer,range of MagiCook microwave ovens, including MagiCook 22Gsi with 6th Sense steam function

Principal Products

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North America Operating Review

David L. SwiftExecutive Vice President,North American Region

2003 Awards and Achievements■ Whirlpool Canada was recognized with the 2003 ENERGY STAR®

"Manufacturer of the Year Award" from Natural Resources Canada forsetting new energy efficiency performance standards for appliances.

■ Home Magazine selected the KitchenAid briva in-sink dishwasher as one of the publication's 2003 Kitchen and Bath Awards for ingeniousperformance innovation and artisan-inspired design.

Whirlpool North America operations posted a solid performance in

2003, despite economic uncertainty early in the year and a significant

rise in pension costs compared to 2002. Meeting these challenges with

an array of new product introductions and productivity measures, the

region set new records for sales and productivity, while further

expanding consumer demand for the company’s key North American

brands, Whirlpool and KitchenAid.

The industry as a whole benefited last year from low interest rates in

the United States, which continued to spur new-housing starts, sales

of existing homes and consumer spending in general. Whirlpool North

America revenue reached $7.9 billion in 2003. Operating profit of

$810 million declined 2.4 percent from 2002, due primarily to significant

year-over-year increases in pension costs and the effects of currency.

These results included the full-year contribution of Whirlpool

Mexico, which was integrated into Whirlpool’s regional operations

following the 2002 acquisition of Vitromatic S.A. de C.V. Whirlpool

Mexico is well on its way to becoming a strategically important

component of the company’s unique global operating platform, serving

our product export, manufacturing and supply-chain operations in

North America and beyond.

Whirlpool North America operations made considerable headway

with several ongoing initiatives that put customers front and center of

all our operations. Among the innovative products and home concepts

of note in 2003 was Whirlpool Family Studio. Unveiled at the

International Builders Show, Family Studio is a family work and

gathering environment, incorporating the latest in Whirlpool’s innovative

fabric-care products, housed in distinctive cabinetry, and other items

for everyday chores and entertainment. Family Studio elevates the

traditional laundry room to a distinctive living space for family activity.

The company’s Gladiator GarageWorks does the same for another

traditional home hideaway. With the garage long considered the space

of last resort for household and outdoor items, Gladiator GarageWorks

offers a complete and durable organizing and appliance system for this

area, including modular storage and hanging units, and moveable

appliances and work components. As the newest member of

Whirlpool Corporation’s family of global brands, Gladiator delivers

multiple family solutions for a room too long ignored.

Other customer loyalty initiatives, driven by Whirlpool engineers,

designers and marketers, helped produce a number of outstanding

products that reached their first full year of sales in 2003. Among

them were: the Whirlpool Duet clothes washer and dryer pair—

Whirlpool brand’s most energy- and water-efficient washer and dryer

pair—and the KitchenAid briva, a unique in-sink dishwasher that

supplements the cleaning needs of culinary enthusiasts and meets

the space constraints of small households.

The Whirlpool Polara refrigerated range—which gives customers the

freedom and convenience to time and cook pre-prepared meals using the

range’s innovative cooling and cooking technologies—also was available

nationwide last year. The Whirlpool Polara refrigerated range is ideal for

families with busy daily schedules who still seek the intimacy of sit-down

meals. As a next step, pilot tests are underway to give customers remote

control of the Whirlpool Polara refrigerated range using cell phones.

In 2003, KitchenAid introduced the KitchenAid Pro Line series of

major and countertop appliances to consumers who are passionate

about cooking. The KitchenAid Pro Line series products feature

distinctive design and professional-level performance, plus personalized

premium services that include dedicated customer service, online

recipes and culinary tips.

19

■ Woolmark Company, the world’s leading wool textile organization,certified the Whirlpool Duet washer for the safe cleaning of washablewool. The certification is the first for a North American appliance.

■ The Cause Marketing Forum presented KitchenAid with a prestigiousHalo Award honoring Cook for the Cure®, the brand’s initiative benefitingthe Susan G. Komen Breast Cancer Foundation.

The Whirlpool Duet clothes washerand dryer is the company’s highestcapacity, and most energy- andwater-efficient fabric care pair.

Sales of the pink KitchenAid standmixer support Cook for the Cure®

and the Susan G. Komen BreastCancer Foundation.

The Whirlpool g2microven speed-cook appliance and the WhirlpoolPolara refrigerated range delivertrue cooking innovation.

Gladiator GarageWorks providesan organizing, workplace andappliance system for the home’slong-neglected space.

The Whirlpool g2microven speedcook Appliance is a microwave

cooking innovation that combines light and microwave technologies to

provide fast, energy-efficient cooking, while delivering all the tastes,

textures and appearances consumers want from traditional cooking.

These and other innovative product solutions require even deeper

sales and training collaboration with the company’s trade partners, as

well as with its fast-growing relationships with regional and national

contract homebuilders. Open and attractive sales formats on retail

floors, staffed by knowledgeable sales people, continued to catch on

last year as the smart way to sell appliances and the best way to treat

customers. From initial design process to final occupancy, leading

homebuilders are partnering with Whirlpool for a full range of

Whirlpool and KitchenAid branded products and services.

Another sign of Whirlpool’s partnering efforts was its participation

last year in the Internet Home Alliance’s Mealtime project. The

company’s special Internet-enabled Whirlpool Polara refrigerated

ranges and remote Web tablets are in 20 Boston-area homes as part of

a consumer study of wired homes and appliances for the future.

Last year, the company was awarded a gold award in the 2003

Industrial Design Excellence Awards competition for the Whirlpool Duet

fabric care system and for its European counterpart, Whirlpool

Dreamspace. Presented by the Industrial Designers Society of America

and sponsored by BusinessWeek, the IDEA is widely regarded as the

premier award for industrial design in the United States.

Whirlpool also received recognition for the company’s commitment

to the environment. This year, the Environmental Protection Agency

(EPA) and Department of Energy (DOE) named Whirlpool Corporation

as an ENERGY STAR®

"Partner of the Year" for its 2003 commitment to

reducing greenhouse gas emissions and for making and promoting

energy-efficient products.

Whirlpool also stepped up its national partnership with Habitat for

Humanity by co-sponsoring the 2003 Jimmy Carter Work Project. This

annual project will be held in the company’s headquarters community

of Benton Harbor, Michigan, in 2005. Whirlpool donates an ENERGY-

STAR®

qualified refrigerator and freestanding range for every Habitat

home built in North America.

Likewise, the KitchenAid brand fundraising partnership with the

Susan G. Komen Breast Cancer Foundation raised about $750,000 in

2003 for the fight against breast cancer. Each sale of a pink KitchenAid

stand mixer and other selected KitchenAid products generates a

donation to the foundation. Since 2001, KitchenAid has raised more

than $1.5 million for the cause.

Outlook

The company expects industry unit shipments in the United States to

grow moderately in 2004. Whirlpool North America expects to expand

and grow customer loyalty for the company’s industry-leading brands

throughout the region, primarily through the continuous introduction

of relevant branded innovations. The operation also plans to extend its

industry leading position with all value-added distribution channels and

trade partners, and to deliver another record year of productivity.

20

Whirlpool Europe operations turned in strong performance

improvement in 2003, despite challenging economic conditions and

weak consumer demand that resulted in the most significant industry

price declines in several years. Revenue of $2.7 billion was up 22 percent.

Operating profit of $124 million improved significantly from a year

earlier. Strong growth in the company’s built-in appliance business

across the region contributed to the results. A record level of

productivity in 2003 helped offset the price erosion.

The Whirlpool brand further established itself as the No. 1 appliance

brand across the region. The company also improved its already strong

market positions in France, Italy and the Nordics, as well as in Poland

and other countries throughout Central Europe.

Customer-focused initiatives and products in key European markets

have put Whirlpool Europe in a strong position to continue growing its

business on the continent. For example, growing consumer demand for

the company’s regional portfolio of refrigeration products was reflected

in the strong sales of the Whirlpool Conquest side-by-side refrigerator.

The operation extended its line of popular refrigeration products with

the introduction of the new Whirlpool Symphony frost-free refrigerator,

manufactured at the company’s facilities in Brazil and customized to fit

the unique lifestyles and expectations of customers in Europe.

The Whirlpool Dreamspace and Bauknecht big clothes washing

systems appealed to customers as well, because of their ease of use,

energy efficiency and innovative features. And the Whirlpool Mini-BI

microwave oven received strong consumer interest for its built-in

convenience and style.

The region’s efforts to enhance its trade-partner relationships also

made significant headway in 2003. Whirlpool Europe further cemented

its strategic partnership with the IKEA group, a global retailer of home

furniture and furnishings. Whirlpool will provide exclusively a full range

of appliances—including built-in appliances—to IKEA regionally and

worldwide. The agreement helps extend the company’s European

distribution capability and expand its built-in business, particularly for

cooking products.

Also last year, Whirlpool Europe signed a long-term supply

agreement with Alno, the No. 1 built-in appliance purchaser in Germany

and across the region. The built-in appliance business represents an

important growth opportunity for the region.

Whirlpool Europe continued the ongoing expansion of its

region-wide manufacturing capabilities, which included the integration

of the company’s 2002 acquisition of Polar S.A. of Poland. The operation

continued to leverage its region-wide production and distribution

network to deliver unique products at a competitive cost. The addition

of Polar has allowed the company to balance production between its

facilities in Western Europe and Eastern Europe, providing ”best cost”

manufacturing and a strong competitive position throughout the

region.

Outlook

For 2004—Whirlpool’s 15th year of operating in Europe—the company

anticipates continued sales growth based on improving economic

trends across the region. The operation also will introduce a number

of innovative products, such as a new premium cooking range under

the Whirlpool and Bauknecht brands, and achieve significant cost savings

through continued improvements in productivity and asset utilization.

Europe Operating Review

Michael A. TodmanExecutive Vice President and President,Whirlpool Europe

The uniquely designed WhirlpoolMini-BI microwave oven is a cinchto install and frees up neededcounter space.

The Bauknecht double-drawer,built-in dishwashers give, with aflair, multiple cleaning andkitchen-design solutions.

2003 Awards and Achievements■ Whirlpool Slovakia was recognized as a "Family Friendly Employer" by the

Slovak Republic for the company’s efforts to foster equal opportunities forwomen and men, and to create family-support solutions.

■ The Whirlpool Dreamspace washer was recognized as the "Best WhiteGoods Product of the Year" by ERT, a leading British trade magazine, and "Appliance Innovation of the Year" by Your Home, a British consumer magazine.

21

The effects of Brazil’s economy in 2003 challenged Whirlpool Latin

America operations for much of the year, and the company responded

well within the difficult environment. Despite depressed consumer

spending and industry demand, revenue of $1.4 billion improved 6.7

percent. However, the economic impact on pricing, materials and

currency significantly reduced operating profit.

Whirlpool Latin America accelerated steps in 2003 to consolidate its

Brazilian operations as an export base for the parent company’s global

operating platform, while continuing to build on its leading market

position in the region’s largest countries, particularly Brazil. More than

one-and-a-half million Brazilian-made products were exported to other

markets and regions last year, nearly triple the previous record high in

2002. These achievements have placed the company among Brazil’s 50

largest exporters. This role as a source for company exports will remain

a key performance factor for years to come.

The Brazil-based compressor business, Embraco, already holds a

leading export position and continued last year to build on its

advanced technology. Embraco also oversees manufacturing operations

in Italy, Slovakia and China.

Whirlpool’s Brazilian operations also became an even more integral

part of the company’s overall global operating platform in 2003 with

the engineering, design and production of the Consul Ideale clothes

washer, an entry product that is affordable for first-time users of

automatic washers. A version of the washer was subsequently produced

in China and is heading for other emerging markets in 2004 and beyond.

The company’s Brastemp brand also introduced Luminata, a complete

line of premium kitchen appliances for Brazilian consumers. The line

emerged after months of customer-focused studies during which

another consumer need and business opportunity was discovered.

The need to purify household water—a daily chore for Brazilians—led

to last year’s introduction of the Brastemp water purifier system for use

in the homes of consumers. Likewise, the Consul brand continued to

update its entire line of home appliance products.

These innovative products and other customer-focused services

continued to earn the Brastemp and Consul brands top honors among

consumers. For instance, Brastemp and Consul placed fourth and ninth,

respectively, in the annual "Top of Mind" national brand survey by

Folha de São Paulo, a leading national news publication. This survey

considers every brand in every consumer product segment.

Multibras and Embraco, Whirlpool’s two subsidiaries in Brazil, again

were selected in 2003 by Exame, the country’s most prestigious

business magazine, as among the "100 Best Companies to Work For"

in Brazil. Multibras was recognized as the top home appliance

manufacturer in the annual “The Most Admired in Brazil” ranking by

the business magazine Carta Capital and the Interscience Technology

and Information Research Institute.

Multibras remained the home appliance industry’s energy-efficient

leader last year by having retained the highest number of Procel Labels,

the Brazilian Government’s product certification of energy efficiency.

Outlook

The company expects increased levels of revenues and profits based on

moderate improvements in the external environment in Brazil. Industry

unit shipments are expected to increase as well.

Latin America Operating Review

Paulo F. M. PeriquitoExecutive Vice President and President,Latin America

The Brastemp Luminata line of pre-mium kitchen appliances, includingthe sleek and stylish range, offerstechnological advances that makecooking a pleasure.

The champagne-toned BrastempDuplex Frost-Free 440 is amongthe most complete and technologi-cally advanced refrigerators on the market.

■ Forbes magazine recognized Multibras, Whirlpool’s Brazilian subsidiary, asone of "50 Most Admired Companies in Brazil." The award recognizesexcellence in talent retention, workplace environments and socialresponsibility.

■ Woman CONSULate has provided assistance to thousands of disadvantaged Brazilian women trying to improve their lives. Originallya Consul brand initiative, the company made CONSULate the most important social assistance project last year.

Whirlpool Asia faced a number of regional challenges in 2003, from

SARS to political and economic uncertainty in several markets. The

region operation reported sales of $416 million, a 6.6 percent increase

from 2002. Operating profit declined for the year, reflecting the

economic conditions and market price pressures.

The company’s operations in China and India, Whirlpool’s largest

regional markets, continued to make deeper distribution inroads in

2003 into the countryside from each country’s urban hubs, thanks to

enhanced partnerships with key retailers. The company also retained its

No. 1 position in India for refrigeration products.

Whirlpool’s customer-driven strategy was reinforced with an array of

new product launches, which helped to spur sales. More than 50 new

Asian-styled refrigerators, clothes washers and microwave ovens were

introduced across the region, some of which were highlighted in an

advertising campaign that won a prestigious Emvie Award in India for

Excellence in Brand Advertising.

One of the most outstanding product success stories for the

company in 2003 was the launch of the Whirlpool Symphony frost-free

refrigerator. Manufactured in Brazil, Whirlpool Symphony was cus-

tomized for the Asian market.

Another success was the Whirlpool Whitemagic Stainwash, the only

clothes washer on the Indian market that can completely remove

common household stains without hand scrubbing. Another unique

Whitemagic Stainwash washer benefit for this Asian market is that it is

internationally certified by Woolmark, the global authority on wool, as

safe for the most delicate of fabrics.

Also first to India is the Whirlpool MagiCook 22Gsi with 6th Sense

steam function, the market’s only microwave oven with the capability

to steam cook. The oven’s 6thSense fuzzy logic features take guesswork

out of cooking by sensing the temperature and humidity of food items

to establish precise cooking times. These features also permit steaming

to prepare many Indian delicacies and crisping for pizzas and pastries.

Last year, region operations in India and China became increasingly

important to the company’s overall global operating platform. India, for

example, increased its year-over-year exports by 20 percent and

expanded the number of markets to which it exports. Whirlpool China

continues to manufacture the bulk of the company’s microwave ovens

for world markets. China also is fast becoming an integral supply

source for the company’s global procurement activities.

Whirlpool Asia expanded its product development capabilities with

the opening of three new technology centers that support regional and

global products involving refrigeration, air conditioning and fabric care.

The new centers extend the company’s worldwide network of

integrated technology resources.

Outlook

For 2004, the company expects to drive both revenue growth and

operating margin expansion in the region. The improvement is

expected to be driven by exports to the company’s global sales networks,

and increased consumer demand for Whirlpool brand products in

China and India.

Asia Operating Review

Mark HuExecutive Vice President, Whirlpool Asia

The Whirlpool WhitemagicStainwash stands out as India’sonly automatic washer that completely removes stains without hand scrubbing.

The innovative style and function of the WhirlpoolSymphony frost-free refrigeratorcaptures consumer enthusiasm inAsian markets.

■ In partnership with Shanghai’s Jiaotong University, Whirlpool Chinaestablished a Whirlpool Scholarship Fund to support talented studentswho are interested in pursuing scientific studies at the university.

■ The Whirlpool Whitemagic Stainwash washer was internationally certifiedby Woolmark Company for the safe cleaning of the most delicate fabrics.Woolmark is the world’s leading wool textile organization.

22

Financial Summary

23

The following is a summary of the Company's financial condition and results of operations for 2003. For a morecomplete understanding of the Company’s financial condition and results, this summary should be read togetherwith the Company’s Consolidated Financial Statements and related notes, and the “Management’s Discussion andAnalysis.” This information appears in the Financial Supplement to the Company’s Proxy Statement and in theFinancial Supplement to the 2003 Annual Report on Form 10-K, both of which are available through the Internetat www.whirlpoolcorp.com.

Executive level overview

Whirlpool Corporation is the largest global manufacturer of major appliances worldwide with 2003 revenues of $12.2 billionand net earnings of $414 million. The Company’s four reportable segments are based on geography and consist of NorthAmerica (64% of revenue), Europe (22% of revenue), Latin America (11% of revenue) and Asia (3% of revenue). TheCompany is the market share leader in North America and Latin America and has significant market presence in Europe, Indiaand China.

The Company’s growth strategy over the past several years has been to introduce innovative new products, continue toexpand its global footprint, add or enhance distribution channels and evaluate potential acquisitions that enhance theCompany’s innovative global product offering.

The Company monitors country economic factors such as gross domestic product, consumer interest rates, consumer confidence, housing starts, existing home sales and mortgage refinancing as key indicators of industry demand. Managementalso focuses on country, brand, product and channel market share, average sales values and profitability when assessing andforecasting financial results. The Company also focuses on total cost productivity, which includes material and conversion costs, as it continues to reduce its total global costs to operate the business and fund future growth.

Overall results of operations

Net SalesThe total number of units sold in 2003 increased 5.6% over 2002. Consolidated net sales increased 10.5% over 2002, whichincludes a positive impact from currency fluctuations. Excluding currency impact, net sales increased approximately 7%.Excluding currency fluctuations and the acquisitions of Vitromatic (Whirlpool Mexico) and Polar, the total number of unitsand dollars sold increased approximately 4% and 5%, respectively.

Significant regional trends were as follows: ■ In 2003, North American unit volumes increased 7.5% versus 2002. Volume increases were driven by the full-year acquisitionimpact of Whirlpool Mexico, strong performance in Canada and volume gains in Whirlpool and KitchenAid brands, partiallyoffset by weaker shipments of products manufactured under the Kenmore brand for Sears, Roebuck & Co.■ European unit volumes increased 5.1% versus 2002. Net sales increased 22.4% due primarily to positive currency impact.Excluding currency impact and the Polar acquisition, net sales increased approximately 3%, lagging unit growth due to marketplace pricing pressures. The region experienced improvement in industry volumes as overall economic indicators andconsumer confidence edged up in several key markets within the region. ■ Appliance unit volumes in Latin America declined 2.7% versus 2002, due primarily to the weak economic environment inthe region. The region’s sales increased 6.7% when compared to 2002, mainly the result of price increases necessitated byhigher material costs. ■ Asia’s unit volumes increased 2.9% over 2002, while net sales increased by 6.6%. The region experienced a number ofchallenges, which negatively impacted its performance, including significant pricing pressures in China and India.

Gross MarginThe consolidated gross margin percentage in 2003 decreased 60 basis points versus 2002 due primarily to higher U.S. pension and medical expenses coupled with reduced Befiex credits, an increase in expense due to the decline of the U.S. dollarand higher material costs in Latin America. The higher expense was partially offset by productivity improvements in NorthAmerica and Europe and lower restructuring and related expenses.

24

Selling, General and AdministrativeConsolidated selling, general and administrative expenses in 2003, as a percent of consolidated net sales, remained relativelyunchanged versus 2002. Higher pension and freight costs in North America were partially offset by cost controls on discretionary spending. The European increase in 2003 was a result of expense reclassification into selling, general andadministrative expenses, while Latin America’s improvement was primarily driven by lower bad debt expense in 2003. Asia’shigher selling, general and administrative expenses, as a percent of sales, were due to increased operating reserves.

Product RecallsDuring 2003, the Company recognized pre-tax charges of $16 million primarily for final expenses related to the 2001 recallof microwave-hood combinations. Beyond this, the Company expects that no further liability will be incurred related to theproduct recall.

Restructuring and Related ChargesThe Company recognized pre-tax restructuring charges of $3 million in 2003 related to restructuring initiatives originallyannounced in December of 2000. These amounts have been identified as a separate component of operating profit. In connection with the Company’s restructuring activity, it also recognized $11 million of pre-tax restructuring-related chargesduring 2003 that were recorded primarily within cost of products sold.

At December 31, 2003, a liability of $45 million remains for actions yet to be completed under the plan, which includedthe elimination of over 7,500 positions worldwide. As of December 31, 2003, approximately 6,900 positions had been eliminated.

Other Income and ExpenseInterest income and sundry expense improved approximately 24% when compared to 2002. The improvement was largelyattributable to lower foreign currency losses, as well as lower losses in asset dispositions and the absence of a 2002 fire losswithin a Mexican facility.

Interest expense decreased $6 million versus 2002. The decrease was attributable to a lower overall interest rate environ-ment, a decrease in overall borrowings and the maturity of the $200 million 9% Debentures in March 2003, partially offsetby new borrowing in 2003.

Earnings from Continuing OperationsEarnings from continuing operations were $414 million in 2003 versus $262 million in 2002. The significant increase in2003 relates primarily to approximately $147 million of higher restructuring and related charges in 2002, the full-yearimpact of acquisitions, strong volume growth, productivity improvements and absence of an equity investment write-off,partially offset by an increase in expense due to the decline of the U.S. dollar.

Discontinued OperationsThe Company wrote off its investment in leveraged aircraft leases during the fourth quarter of 2002 as a result of theUnited Airlines bankruptcy filing in December 2002. The write-off resulted in a non-cash charge to discontinued operationsof approximately $68 million, or $43 million after tax. These leveraged lease assets were part of the Company’s previouslydiscontinued finance company, Whirlpool Financial Corporation. Although most of its assets have been divested, WhirlpoolFinancial Corporation remains a legal entity with assets consisting primarily of a leveraged lease portfolio. The portfolioincludes an investment in an aircraft leveraged lease and is affected by the economic conditions of the aviation industry. Asof December 31, 2003 and 2002, the portfolio totaled $42 million and $43 million, respectively, net of related reserves. TheCompany continues to monitor its arrangements with the lessees and the value of the underlying assets.

Cumulative Effect of Changes in Accounting PrincipleThe Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other IntangibleAssets," on January 1, 2002. As a result of this adoption, the Company recorded a non-cash after-tax charge of $613 million in 2002.

Forward-Looking PerspectiveWhirlpool enters 2004 with positive industry and economic momentum in North America and Europe, the Company’s twolargest segments. The Company expects gradually improving economic conditions in these regions throughout the year, and

25

2004. Despite projected increases in steel prices and raw materials, the Company’s efforts to improve total cost productivityare expected to offset the negative swings in the total manufacturing cost of its products.

Weak economic conditions in Latin America, higher material costs and unfavorable currency resulted in lower overalloperating profit for its third largest segment during 2003. The Company expects gradual improvement in the economicenvironment during 2004. Higher material costs are expected to continue, and as a result, the Company will continue toraise prices on selected products. The Company expects a gradual devaluation of the Brazilian real during 2004.

The Company expects to drive both growth and operating profit margin expansion in Asia, its smallest segment, during2004. The Company will continue to expand its China procurement and technology base, which is a growing and importantpart of Whirlpool’s global operating platform. In addition, the Company expects to expand its China domestic sales and toincrease finished goods exported to its global sales networks. The Company is revising its trade management strategy inIndia, a key market within the Asia region, which will allow the Company to improve the speed, flexibility and overall efficiency within its sales and distribution processes. This change in strategy will enable the Company to launch new productintroductions more frequently and faster to the market as trade terms are reduced from local industry standards of 60 to 90days, to 20 to 30 days. This initiative will be launched in the first quarter of 2004 and will be completed sometime in thesecond quarter of 2004. The ongoing benefits of this program, including improved gross margins and cash flow, will berealized late in the second quarter onward.

Cash flows

Whirlpool’s main source of cash flow is from operating activities. During 2003, cash flow benefited from higher earningsand was negatively impacted by a voluntary after-tax pension contribution of $97 million to the Company’s U.S. pensionplans. The 2003 results were also negatively impacted by restructuring spending, primarily related to 2002 projects, as wellas the timing of promotional payments. Combined, these negative 2003 cash outflows were essentially offset by $239 million in product recall spending that occurred during 2002. Cash provided by operating activities was also negativelyimpacted in 2002 by a one-time tax payment on a cross-currency interest rate swap gain, which occurred during 2001.

The principal recurring investing activities are capital expenditures to support the Company’s investment in its globaloperating platform to deliver innovative solutions for consumers. Proceeds from fixed asset sales were $75 million, of whichapproximately $65 million related to the sale-leaseback of four of its owned properties. During 2002, the Companyacquired Vitromatic S.A. de C.V. (Whirlpool Mexico), Polar (S.A.) and Whirlpool Narcissus Shanghai Company Limited(renamed Whirlpool Shanghai) at a combined purchase price of approximately $187 million, plus outstanding debt at thetime of acquisition of $162 million.

Total repayments of short-term and long-term debt, net of new borrowings, were $208 million in 2003. The company alsoredeemed its $200 million 9% Debentures with short-term notes payable. Dividend payments to stockholders totaled $94million in 2003. The Company repurchased approximately one million shares of Whirlpool common stock during 2003 for $65 million under a stock repurchase program previously authorized by the Board of Directors. The Company also redeemed $33 million in preferred stock of its discontinued financecompany, Whirlpool Financial Corporation. In connection with its stock-based compensation programs, the Companyreceived proceeds of $65 million in 2003.

Financial condition and liquidity

The Company’s objective is to finance its business through the appropriate mix of long-term and short-term debt. Whirlpoolhas varying needs for short-term working capital financing as a result of the nature of its business. The volume and timingof refrigeration and air conditioning production impact the Company’s cash flows and consists of increased production inthe first half of the year to meet increased demand in the summer months. The Company finances its working capital fluctuations primarily through the commercial paper markets in the U.S., Europe and Canada, which are supported by committed bank lines. In addition, outside the U.S., short-term funding is also provided by bank borrowings on uncommit-ted lines. The Company has access to long-term funding in the U.S., European and other public bond markets.

The Company’s financial position remains strong. At December 31, 2003, Whirlpool’s total assets were $7.4 billion andstockholders' equity increased to $1.3 billion. The increase in equity is primarily attributed to net earnings retention, a $118million increase in equity to reduce the U.S. defined benefit pension plans’ minimum liability and a $129 million increase inequity through foreign currency translation adjustments.

The Company’s overall debt levels have declined approximately $110 million. Cash flows from operations have been used

26

to reduce the Company’s indebtedness.The Company believes that its capital resources and liquidity position at December 31, 2003, coupled with its planned

cash flow generated from operations in 2004, are adequate to support higher capital spending, a higher dividend paymentand to meet anticipated business needs to fund future growth opportunities.

Other matters

Pursuant to the Company’s stock repurchase program previously authorized by the Board of Directors, the Company repurchased a combined total one million shares of Whirlpool common stock in the open market subsequent to December31, 2003, at an aggregate purchase price of $75 million.

In December 2003, Whirlpool Corporation’s Board of Directors announced a first quarter 2004 dividend of 43 cents pershare, a 26% increase from the fourth quarter 2003 dividend of 34 cents per share. The dividend is payable on March 15,2004, to holders of record at the close of business on February 27, 2004. If continued, the dividend will increase theCompany’s annual dividend payments by approximately $24 million to $118 million.

While lower discount rates increased Whirlpool’s pension obligations during 2003, improvement in equity market performance during the year significantly increased the value of pension fund assets. Whirlpool also contributed approximately$103 million after tax to the pension plans during 2003, of which $97 million was voluntary. As a result of these actions,the unfunded obligation declined and the Company reduced its minimum pension liability equity charge by $118 million,after tax, to $38 million during 2003. At December 31, 2003, the Company’s defined benefit pension plans still remainunderfunded on a combined basis.

The Company recognized consolidated pre-tax pension cost (credits) of $78 million, $(37) million and $(70) million in2003, 2002 and 2001, respectively. The assumptions used in determining its obligation under its U.S. pension plans at theend of 2003 included an expected return on assets of 8.75%, the same as at the end of 2002, and a discount rate of6.00%, versus 6.75% at the end of 2002. The Company’s expected return on assets of 8.75% is based on historical market returns between 1926 and 2003 applied to its target allocation of plan assets. The annualized discount rate approximates Moody’s Aa corporate bond rate at the measurement date. The Company uses a measurement date ofDecember 31. The Company currently expects that U.S. pension expense for 2004 will be approximately $60 million basedupon an asset return rate of 8.75% and a lower discount rate of 6.00% compared to pension cost of $63 million in 2003.Consolidated pension cost in 2004 is anticipated to be approximately $72 million compared to $78 million in 2003.

Market risk

The Company is exposed to market risk from changes in foreign currency exchange rates, domestic and foreign interestrates, and commodity prices, which can affect the Company’s operating results and overall financial condition. Whirlpoolmanages its exposure to these market risks through its operating and financing activities and, when deemed appropriate,through the use of derivative financial instruments. Derivative financial instruments are viewed as risk management toolsand are not used for speculation or for trading purposes. Derivative financial instruments are entered into with a diversifiedgroup of investment grade counterparties to reduce the Company’s exposure to nonperformance on such instruments. TheCompany’s sensitivity analysis reflects the effects of changes in market risk but does not factor in potential business risks ofthe counterparties or appropriate use of instruments.

Whirlpool uses foreign currency forward contracts and currency swaps to hedge the price risk associated with firmlycommitted and forecasted cross-border payments and receipts related to its ongoing business and operational financingactivities. Foreign currency contracts are sensitive to changes in foreign currency exchange rates.

27

Consolidated Condensed Statements of Operations

Year Ended December 31 (Millions of dollars except per share data) 2003 2002 2001

Net sales $12,176 $11,016 $10,343

ExpensesCost of products sold 9,407 8,464 7,925 Selling, general and administrative 1,916 1,736 1,639 Intangible amortization 4 14 28 Product recall costs 16 9 295 Restructuring costs 3 101 150

Operating Profit 830 692 306

Other Income (Expense)Interest and sundry income (expense) (41) (54) (51)Interest expense (137) (143) (162)

Earnings from continuing operations before income taxes and other items 652 495 93 Income taxes 228 193 43

Earnings from continuing operations before equity earnings and minority interests 424 302 50Equity in loss of affiliated companies – (27) (4)Minority interests (10) (13) (12)

Earnings from continuing operations 414 262 34Discontinued operations, net of tax – (43) (21)Cumulative effect of change in accounting principle, net of tax – (613) 8

Net earnings (loss) $ 414 $ (394) $ 21

Per share of common stock:Basic earnings from continuing operations $ 6.03 $ 3.86 $ 0.51 Discontinued operations, net of tax – (0.62) (0.32)Cumulative effect of change in accounting principle, net of tax – (9.03) 0.12

Basic net earnings (loss) $ 6.03 $ (5.79) $ 0.31

Diluted earnings from continuing operations $ 5.91 $ 3.78 $ 0.50 Discontinued operations, net of tax – (0.62) (0.31)Cumulative effect of change in accounting principle, net of tax – (8.84) 0.12

Diluted net earnings (loss) $ 5.91 $ (5.68) $ 0.31

Dividends $ 1.36 $ 1.36 $ 1.36

Weighted-average shares outstanding: (millions)Basic 68.7 67.9 66.7Diluted 70.1 69.3 68.0

28

Consolidated Condensed Balance Sheets

December 31 (Millions of dollars) 2003 2002

ASSETSCurrent assetsCash and equivalents $ 249 $ 192Trade receivables, less allowances (2003: $113; 2002: $94) 1,913 1,781Inventories 1,340 1,089Prepaid expenses 62 64Deferred income taxes 129 83Other current assets 172 118

Total Current Assets 3,865 3,327

Other assetsInvestment in affiliated companies 11 7Goodwill, net 165 161Other intangibles, net 85 187Deferred income taxes 268 437Prepaid pension costs 357 43Other assets 154 131

1,040 966

Property, plant and equipmentLand 84 87Buildings 1,004 954Machinery and equipment 5,391 4,793Accumulated depreciation (4,023) (3,496)

2,456 2,338

Total Assets $ 7,361 $ 6,631

29

December 31 (Millions of dollars) 2003 2002

LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilitiesNotes payable $ 260 $ 221Accounts payable 1,944 1,631Employee compensation 303 273Deferred income taxes 48 100Accrued expenses 701 664Restructuring costs 45 122Other current liabilities 269 283Current maturities of long-term debt 19 211

Total Current Liabilities 3,589 3,505

Other liabilitiesDeferred income taxes 236 117Pension benefits 298 358Postemployment benefits 489 487Product warranty 53 57Other liabilities 198 198Long-term debt 1,134 1,092

2,408 2,309

Minority interests 63 78

Stockholders’ equityCommon stock, $1 par value: 88 87

Shares authorized – 250 millionShares issued – 89 million (2003); 87 million (2002)Shares outstanding – 69 million (2003); 68 million (2002)

Paid-in capital 659 582Retained earnings 2,276 1,985Accumulated other comprehensive income (loss) (757) (999)Treasury stock – 20 million shares (2003); 19 million shares (2002) (965) (916)

Total Stockholders’ Equity 1,301 739

Total Liabilities and Stockholders’ Equity $ 7,361 $ 6,631

30

Consolidated Condensed Statements of Cash Flows

Year ended December 31 (Millions of dollars) 2003 2002 2001

Operating activitiesNet earnings (loss) $ 414 $(394) $ 21 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:Cumulative effect of a change in accounting principle – 613 (8)Equity in losses of affiliated companies, less dividends received – 27 4Loss on disposition of assets 6 5 2Loss on discontinued operations – 43 21Depreciation and amortization 427 405 396Changes in assets and liabilities, net of business acquisitions:

Trade receivables 4 (67) 116Inventories (127) 101 (26)Accounts payable 163 63 230Product recalls 6 (239) 239Restructuring charges, net of cash paid (89) 33 74Taxes deferred and payable, net 55 157 (129)Tax paid on cross-currency interest rate swap gain – (86) –Accrued pension (109) (37) (84)Other – net (6) 161 137

Cash Provided By Operating Activities $ 744 $ 785 $ 993

Investing activitiesCapital expenditures $ (423) $ (430) $(378)Proceeds from sale of assets 75 27 31 Proceeds of cross-currency interest rate swaps – – 209 Acquisitions of businesses, less cash acquired (4) (179) –

Cash Used for Investing Activities $ (352) $ (582) $(138)

Financing activitiesNet proceeds of short-term borrowings $ 7 $ (165) $(790)Proceeds of long-term debt 6 6 301 Repayments of long-term debt (221) (77) (90)Dividends paid (94) (91) (113)Purchase of treasury stock (65) (46) (43)Redemption of WFC preferred stock (33) (25) –Common stock issued under stock plans 65 80 81 Other (10) (5) 1

Cash Used for Financing Activities $ (345) $ (323) $(653)

Effect of Exchange Rate Changes on Cash and Equivalents $ 10 $ (4) $ –

Increase (Decrease) in Cash and Equivalents $ 57 $(124) $ 202 Cash and Equivalents at Beginning of Year 192 316 114

Cash and Equivalents at End of Year $ 249 $ 192 $ 316

31

Report of Ernst & Young LLP, Independent Auditors on Condensed Financial Information

Management Letter of Responsibility

The Stockholders and Board of Directors

Whirlpool Corporation

Benton Harbor, Michigan

We have audited, in accordance with auditing standards generally accepted in the United States, the Consolidated Balance

Sheets of Whirlpool Corporation as of December 31, 2003 and 2002, and the related Consolidated Statements of Operations,

Stockholders’ Equity and Cash Flows for each of the three years in the period ended December 31, 2003 (not presented

separately herein); and in our report dated February 3, 2004, we expressed an unqualified opinion on those Consolidated

Financial Statements that included an explanatory paragraph that discussed changes in accounting principles related to

goodwill and derivatives.

In our opinion, the information set forth in the accompanying Consolidated Condensed Financial Statements is fairly stated,

in all material respects, in relation to the Consolidated Financial Statements from which it has been derived.

Chicago, Illinois

February 3, 2004

The Consolidated Condensed Financial Statements in this Summary Annual Report were derived from the Consolidated Financial

Statements that appear in the Financial Supplement to the 2003 Summary Annual Report and to the 2004 Proxy Statement.

Management of Whirlpool Corporation is responsible for the accuracy and completeness of the information in this Summary

Annual Report. The financial and operating information was prepared from the Company’s accounting records, books and

accounts which, in reasonable detail, accurately and fairly reflect all material transactions. The Company maintains a system of

internal controls designed to provide reasonable assurance that the Company’s accounting records, books and accounts are

accurate and that transactions are properly recorded in the Company’s books and records, and the Company’s assets are

maintained and accounted for, in accordance with management’s authorizations. The Company’s accounting records, policies

and internal controls are regularly reviewed by an internal audit staff.

The Audit Committee of the Board of Directors appointed Ernst & Young LLP, independent auditors, to audit the

Consolidated Financial Statements included in the Financial Supplement to the 2003 Summary Annual Report and to the 2004

Proxy Statement. Their report on the Consolidated Financial Statements is included in the Financial Supplement. Their report on

the Consolidated Condensed Financial Statements appears above.

R. Stephen Barrett, Jr.

Executive Vice President and Chief Financial Officer

February 26, 2004

32

Eleven-Year Consolidated Statistical Review

(Millions of dollars except share and employee data) 2003 2002 2001

Consolidated operationsNet sales $12,176 $11,016 $10,343 Operating profit (1) 830 692 306 Earnings (loss) from continuing operations before income taxes and other items 652 495 93 Earnings (loss) from continuing operations 414 262 34 Earnings (loss) from discontinued operations (2) – (43) (21)Net earnings (loss) (3) 414 (394) 21 Net capital expenditures 423 430 378 Depreciation 423 391 368 Dividends 94 91 113

Consolidated financial positionCurrent assets 3,865 3,327 3,311 Current liabilities 3,589 3,505 3,102 Working capital 276 (178) 209 Property, plant and equipment – net 2,456 2,338 2,052 Total assets 7,361 6,631 6,967 Long-term debt 1,134 1,092 1,295 Stockholders’ equity 1,301 739 1,458

Per share dataBasic earnings (loss) from continuing operations before accounting change 6.03 3.86 0.51 Diluted earnings (loss) from continuing operations before accounting change 5.91 3.78 0.50 Diluted net earnings (loss) (3) 5.91 (5.68) 0.31 Dividends 1.36 1.36 1.36 Book value 18.56 10.67 21.44 Closing Stock Price – NYSE 72.65 52.22 73.33

Key ratios (4)

Operating profit margin 6.8% 6.3% 3.0%Pre-tax margin (5) 5.4% 4.5% 0.9%Net margin (6) 3.4% 2.4% 0.3%Return on average stockholders’ equity (7) 42.9% 14.8% 1.3%Return on average total assets (8) 6.1% 3.4% 0.4%Current assets to current liabilities 1.1 x 0.9 x 1.1 xTotal debt – appliance business as a percent of invested capital (9) 50.9% 65.1% 48.0%Price earnings ratio 12.3 x (9.2)x 236.5 xInterest coverage (10) 5.8 x 4.5 x 1.6 x

Other dataNumber of common shares outstanding (in thousands):

Average – on a diluted basis 70,082 69,267 68,036 Year-end 68,931 68,226 67,215

Number of stockholders (year-end) 8,178 8,556 8,840 Number of employees (year-end) 68,407 68,272 61,923 Total return to stockholders (five-year annualized) (11) 8.1% 1.4% 12.2%

1 Restructuring and special operating charges were $14 million in 2003, $161 million in 2002, $212 million in 2001, $405 million in 1997, $30 million in 1996 and $250 million in 1994.2 The company’s financial services business was discontinued in 1997.3 Includes cumulative effect of accounting changes: 2002 – Accounting for goodwill of ($613) million or ($8.84) per diluted share; 2001 – Accounting for derivative instruments and hedging activities of

$8 million or $0.12 per diluted share; 1993 – Accounting for postretirement benefits other than pensions of ($180) million or ($2.42) per diluted share.4 Excluding one-time charges for restructuring and related charges, a minority investment write-off in a European business, goodwill write-off of an Asian entity, product recalls, discontinued operations

and accounting changes in 2002, selected key ratios would be as follows: a) Operating profit margin – 7.9%, b) Pre-tax margin – 6.1%, c) Net margin – 3.8%, d) Return on average stockholders’equity – 27%, e) Return on average total assets – 6.1%, and f) Interest coverage – 6x. Excluding one-time charges for restructuring and related charges, product recalls, discontinued operations and accounting changes in 2001, selected key ratios would be as follows: a) Operating profit margin – 7.9%, b) Pre-tax margin – 5.8%, c) Net margin – 3.6%, d) Return on average stockholders’ equity – 22%, e) Return on average total assets – 5.6%, and f) Interest coverage – 5x. Excluding the first quarter impact of the Brazilian currency devaluation in 1999 and the gain from discontinued operations

2000 1999 1998 1997 1996 1995 1994 1993

$10,325 $10,511 $10,323 $8,617 $8,523 $8,163 $7,949 $7,368 807 875 688 11 278 366 370 504 577 514 564 (171) 100 214 269 418 367 347 310 (46) 141 195 147 257

– – 15 31 15 14 11 (28)367 347 325 (15) 156 209 158 51 375 437 542 378 336 483 418 309 371 386 399 322 318 282 246 241 70 103 102 102 101 100 90 85

3,237 3,177 3,882 4,281 3,812 3,541 3,078 2,708 3,303 2,892 3,267 3,676 4,022 3,829 2,988 2,763

(66) 285 615 605 (210) (288) 90 (55)2,134 2,178 2,418 2,375 1,798 1,779 1,440 1,319 6,902 6,826 7,935 8,270 8,015 7,800 6,655 6,047

795 714 1,087 1,074 955 983 885 840 1,684 1,867 2,001 1,771 1,926 1,877 1,723 1,648

5.24 4.61 4.09 (0.62) 1.90 2.64 1.98 3.60 5.20 4.56 4.06 (0.62) 1.88 2.60 1.95 3.47 5.20 4.56 4.25 (0.20) 2.08 2.78 2.10 0.71 1.36 1.36 1.36 1.36 1.36 1.36 1.22 1.19

23.84 24.55 26.16 23.71 25.93 25.40 23.21 23.17 47.69 65.06 55.38 55.00 46.63 53.25 50.25 66.50

7.8% 8.3% 6.7% 0.1% 3.3% 4.5% 4.7% 6.8%5.6% 4.9% 5.5% (2.0)% 1.2% 2.6% 3.4% 5.7%3.6% 3.3% 3.0% (0.5)% 1.7% 2.4% 1.8% 3.5%

20.7% 17.9% 17.2% (0.8)% 8.2% 11.6% 9.4% 14.2%5.5% 4.2% 4.6% (0.7)% 1.8% 3.0% 2.8% 4.0%1.0 x 1.1 x 1.2 x 1.2 x 0.9 x 0.9 x 1.0 x 1.0 x

49.4% 37.7% 43.5% 46.1% 44.2% 45.2% 35.6% 33.8%9.2 x 14.3 x 13.0 x – 22.4 x 19.2 x 23.9 x 21.2 x4.2 x 4.1 x 3.2 x – 1.6 x 2.7 x 3.6 x 5.0 x

70,637 76,044 76,507 74,697 77,178 76,812 77,588 76,013 66,265 74,463 76,089 75,262 74,415 74,081 73,845 73,068 11,780 12,531 13,584 10,171 11,033 11,686 11,821 11,438 62,527 62,706 59,885 62,419 49,254 46,546 39,671 40,071

0.3% 7.9% (1.2)% 6.8% 6.3% 20.8% 12.0% 25.8%

in 1998, returns on average stockholders’ equity were 19.9% and 16.5%, and returns on average total assets were 5.7% and 4.3%. Excluding non-recurring items, selected 1997 key ratios wouldbe as follows: a) Operating profit margin - 4.7%, b) Pre-tax margin – 2.7%, c) Net margin – 2.6%, d) Return on average stockholders’ equity – 12%, e) Return on average total assets – 2.7%,f) Interest coverage – 3x.

5 Earnings from continuing operations before income taxes and other items, as a percent of sales.6 Earnings from continuing operations, as a percent of sales.7 Net earnings (loss) before accounting change, divided by average stockholders’ equity.8 Net earnings (loss) before accounting change, plus minority interest divided by average total assets.9 Debt divided by debt, stockholders’ equity and minority interests.

10 Ratio of earnings from continuing operations (before income taxes, accounting change and interest expense) to interest expense.11 Stock appreciation plus reinvested dividends.

33

34

Shareholders’ and Other Information

Financial Information

Whirlpool Corporation’s annual report on

Form 10-K, a cassette-tape recording of

the annual report to shareholders and other

financial information is available free of

charge to stockholders of record.

The Financial Summary contained in this

Summary Annual Report should be read

together with the Company’s Consolidated

Financial Statements and related notes, and

the “Management’s Discussion and Analysis.”

This information appears in the Financial

Supplement to the Company’s Proxy

Statement and in the Financial Supplement to

the 2003 Annual Report on Form 10-K, both

of which are available through the Internet at

www.whirlpoolcorp.com.

Company earnings releases for each quarter –

typically issued in April, July, October and

February – can be obtained by contacting

Whirlpool’s Director, Investor Relations:

Tom Filstrup

Whirlpool Corporation, 2000 N. M-63,

Mail Drop 2800

Benton Harbor, MI 49022-2692

Telephone: 269.923.3189

Fax: 269.923.3525

Email: [email protected]

Transfer Agent, Shareholder Records, Dividend Disbursements and Corporate Secretary

For information about or assistance with

individual stock records, transactions,

dividend checks or stock certificates, contact:

EquiServe Trust Company, N.A.

Shareholder Services

P.O. Box 43069

Providence, RI 02940-3069

Telephone: 800.446.2617

Outside the United States: 781.575.2723

TDD/TTY for hearing impaired: 201.222.4955

www.equiserve.com

Internet account access:

http://gateway.equiserve.com

For additional information about the

company contact:

Robert T. Kenagy

Corporate Secretary

Whirlpool Corporation, 2000 N. M-63,

Mail Drop 2200


Telephone: 269.923.3910

Fax: 269.923.3722

email: [email protected]

Direct Stock Purchase Plan

As a participant in the DirectSERVICE

Investment and Stock Purchase PROGRAM,

you can be the direct owner of your shares of

Whirlpool Common Stock. Non-shareholders

may purchase their initial shares through the

plan for a minimum investment of $250, or

through automatic bank account debits of

$50 for five months. Participants may make

cash contributions of up to $250,000 annual-

ly, invested daily, with or without reinvesting

their dividends, and can sell part of the shares

held in the program without exiting the plan.

There are modest transaction processing fees

and brokerage commissions for purchases,

sales and dividend reinvestment.

For details, contact EquiServe or visit their

Direct Stock Purchase Plan Web site to enroll.

Annual Meeting

Whirlpool Corporation’s next annual meeting

is scheduled for April 20, 2004, at 1:30 p.m.

(Central Time), at 181 West Madison Street,

7th Floor, Chicago, IL.

Stock Exchanges

Common stock of Whirlpool Corporation

(exchange symbol: WHR) is listed on the New

York and Chicago stock exchanges.

35

Stock-Split Exchange and Dividend History

March 1952, 2-for-1 stock exchange

December 1954, 100% stock dividend

May 1965, 2-for-1

May 1972, 3-for-1

December 1986, 2-for-1

Example: 100 shares of Whirlpool

common stock purchased in

February 1952 equaled 4,800

shares in January 2004.

Common Stock

Market Price High Low Close

4Q 2003 $73.35 $65.52 $72.65

3Q 2003 71.95 62.25 67.77

2Q 2003 65.66 48.41 63.70

1Q 2003 57.92 42.80 49.03

4Q 2002 $55.99 $39.23 $52.22

3Q 2002 66.36 44.79 45.86

2Q 2002 78.20 63.45 65.36

1Q 2002 79.80 61.85 75.55

Trademarks

Acros, Bauknecht, big, Brastemp, briva,

Cargo, Conquest, Consul, Crolls, Dreamspace,

Duet, Embraco, Eslabón de Lujo, Estate, Fast

Forward Ice, Freezerator, g2microven,

Gladiator, Icemagic, Ideale, Ignis, In-Door-Ice,

Inglis, Inox, KIC, KitchenAid, Laden, Luminata,

MagiCook, Magic Dry, Mini-BI, Polar, Polara,

Pro Line, Roper by Whirlpool Corporation, Sec

Fácil, Stainwash, Super Easy Wash,

Supermatic, Symphony, Ultima Cook,

Whirlpool, Whitemagic and 6th Sense are

trademarks of Whirlpool Corporation or its

wholly or majority-owned affiliates.

Kenmore is a trademark of Sears,

Roebuck and Co.

ENERGY STAR is a U.S. registered mark.

© 2004 Whirlpool Corporation.

All rights reserved.

Whirlpool Corporation General Offices

World Headquarters and

North America Region

2000 N. M-63


Telephone: 269.923.5000

Europe Region

Viale G. Borghi 27

21025 Comerio (VA), Italy

Telephone: 39.0332.759.111

Fax: 39.0332.759.347

Latin America Region

Av. das Nações Unidas N. 12995

São Paulo – S.P. CEP 04578-000, Brazil

Telephone: 55.11.5586.6100

Fax: 55.11.5586.6040

Asia Region

16th Floor, Paliburg Plaza

68 Yee Wo St.

Causeway Bay, Hong Kong

Telephone: 852.2881.0882

Fax: 852.2881.1018

Product and Service Information

(North America)

KitchenAid brand: 800.422.1230

Whirlpool brand: 800.253.1301

Internet Address

Whirlpool financial information and more are

available at Whirlpool’s site on the Internet:

www.whirlpoolcorp.com.

36

Directors & Executive Committee

Directors

Gary T. DiCamillo 1,2

President and

Chief Executive Officer,

TAC Worldwide Co.

Jeff M. Fettig

President and Chief Operating

Officer of the Company

Allan D. Gilmour 1,3

Vice Chairman,

Ford Motor Company

Kathleen J. Hempel 2,3

Former Vice Chairman and

Chief Financial Officer,

Fort Howard Corporation

Michael F. Johnston 2,3

President and

Chief Operating Officer,

Visteon Corporation

James M. Kilts 1,4


Chief Executive Officer,

The Gillette Company

Arnold G. Langbo 1,4

Former Chairman of the Board

and Chief Executive Officer,

Kellogg Company

Miles L. Marsh 2,4

Former Chairman of the Board

and Chief Executive Officer,

Fort James Corporation

Paul G. Stern 3,4

Partner, Thayer Capital Partners,

LLP and Arlington Capital

Partners, LLP

Janice D. Stoney 1,4

Former Executive Vice President,

US WEST Communications

Group, Inc.

David R. Whitwam



of the Company

Committees1. Audit2. Corporate Governance and Nominating3. Finance4. Human Resources

Executive Committee

David R. Whitwam



Jeff M. Fettig

President and

Chief Operating Officer


Executive Vice President and

Chief Financial Officer

David A. Binkley

Senior Vice President,

Global Human Resources

Mark E. Brown


Global Strategic Sourcing

Daniel F. Hopp


Corporate Affairs and

General Counsel

Mark Hu

Executive Vice President,

Whirlpool Asia

Paulo F. M. Periquito


President, Latin America

David L. Swift

Executive Vice President,

North American Region

Michael D. Thieneman


Chief Technology Officer

Michael A. Todman


President, Whirlpool Europe

SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

(Mark One)È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2003

OR

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-3932

WHIRLPOOL CORPORATION(Exact name of registrant as specified in its charter)

Delaware 38-1490038(State of Incorporation) (I.R.S. Employer Identification No.)

2000 North M-63, Benton Harbor, Michigan 49022-2692(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (269) 923-5000

Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registered

Common stock, par value $1.00 per share Chicago Stock Exchange and New York Stock ExchangePreferred Stock Purchase Rights Chicago Stock Exchange and New York Stock Exchange73⁄4% Debentures due 2016 New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

NONE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) ofthe Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirementsfor the past 90 days. YesÈ No‘

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of thischapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.È

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).YesÈ No‘

The aggregate market value of the voting stock of the registrant held by stockholders not including voting stock heldby directors and executive officers of the registrant and certain employee plans of the registrant (the exclusion of suchshares shall not be deemed an admission by the registrant that any such person is an affiliate of the registrant) at the closeof business on June 30, 2003 (the last business day of the registrant’s most recently completed second fiscal quarter) was$4,186,853,343.

On February 23, 2004, the registrant had 68,588,956 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated herein by reference into the Part of the Form 10-K indicated:

DocumentPart of Form 10-K intowhich incorporated

The registrant’s proxy statement for the 2004 annualmeeting of stockholders (the “Proxy Statement”) Part III

PART I

ITEM 1. Business.

General

Whirlpool Corporation, the leading worldwide manufacturer and marketer of major home appliances, wasincorporated in 1955 under the laws of Delaware as the successor to a business that traces its origin to 1898. TheCompany manufactures in 13 countries under nine major brand names and markets products to distributors andretailers in more than 170 countries. As of December 31, 2003, the Company had approximately 68,000employees. As used herein, and except where the context otherwise requires, the terms “Company” and“Whirlpool” include Whirlpool Corporation and its consolidated subsidiaries.

Products and Markets

The Company manufactures and markets a full line of major appliances and related products, primarily forhome use. The Company’s principal products are home laundry appliances, home refrigerators and freezers,home cooking appliances, home dishwashers, room air-conditioning equipment, and mixers and other smallhousehold appliances. Approximately 10% of the Company’s unit sales volume is purchased from othermanufacturers for resale by the Company. The Company also produces hermetic compressors and plasticcomponents, primarily for the home appliance and electronics industries.

The following table sets forth information regarding the total net sales contributed by each class of similarproducts which accounted for 10% or more of the Company’s consolidated net sales in 2003, 2002, and 2001.

Percent in2003

Year ended December 31 (millions of dollars)

Class of Similar Products 2003 2002 2001

Home Laundry Appliances . . . . . . . . . . . . . . . . . . . . . . . . . . 32% $ 3,856 $ 3,381 $ 3,096Home Refrigerators and Freezers . . . . . . . . . . . . . . . . . . . . . 29% $ 3,465 $ 3,272 $ 3,106Home Cooking Appliances . . . . . . . . . . . . . . . . . . . . . . . . . 16% $ 1,903 $ 1,672 $ 1,603Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23% $ 2,952 $ 2,691 $ 2,538

Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% $12,176 $11,016 $10,343

The Company markets and distributes major home appliances in the United States under the Whirlpool,KitchenAid, Roper, and Estate brand names primarily to retailers, buying groups, and builders. KitchenAidportable appliances, such as mixers, are sold directly to retailers. The Company sells products to the builder tradeboth directly and through distributors. Additionally, the Company sells to Crosley Corporation under the Crosleyprivate label brand, and to Costco Wholesale Corporation under the Kirkland Signature brand. Major homeappliances are manufactured and/or distributed in Canada under the Inglis, Admiral, Speed Queen, Whirlpool,Roper, and KitchenAid brand names. In Mexico, major home appliances are manufactured and marketed underthe Whirlpool, Acros, KitchenAid, Estate, Roper, and Supermatic brand names. Some products are sold in limitedquantities by the Company to other manufacturers and retailers for resale in North America under their respectivebrand names.

The Company has been the principal supplier of home laundry appliances to Sears, Roebuck and Co.(“Sears”) for over 80 years. The Company is also the principal supplier to Sears of residential trash compactorsand a major supplier to Sears of dishwashers, freestanding ranges, home refrigerators and freezers, andmicrowave-hood combinations. The Company supplies products to Sears for sale under Sears’ Kenmore brandname. Sears has also been a major outlet for the Company’s Whirlpool and KitchenAid brand products since1989. In 2003, approximately 18% of the Company’s net sales were attributable to sales to Sears.

2

In Europe, Whirlpool markets and distributes its major home appliances under the Whirlpool, Bauknecht,Ignis, Laden, and Polar brand names and its portable appliances under the KitchenAid brand name. In addition toits extensive operations in Western Europe, the Company has sales subsidiaries in Hungary, Poland, the CzechRepublic, Slovakia, Greece, Romania, Bulgaria, Latvia, Estonia, Lithuania, Croatia, and Morocco andrepresentative offices in Russia, Ukraine, Kazakhstan, Yugoslavia, and Slovenia. In certain Eastern Europeancountries, products bearing the Whirlpool, Polar, and Ignis brand names are sold through distributors. TheCompany manufactures refrigerators and freezers and markets a full line of products under the Whirlpool, KIC,and Ignis brand names in South Africa. Whirlpool’s European operations also sell products carrying theWhirlpool, Bauknecht, and Ignis brand names to distributors and dealers in Africa and the Middle East.

In Latin America, the Company markets and distributes its major home appliances through regionalnetworks under the Whirlpool, Brastemp, Consul, and Eslabon de Lujo brand names. Appliance sales anddistribution in Brazil, Argentina, and Chile are managed by the Company’s Brazilian subsidiary, and in Bolivia,Peru, Paraguay, and Uruguay through distributors. Appliance sales and distribution in Central Americancountries, the Caribbean, Venezuela, Colombia, and Ecuador are managed by Whirlpool’s North America Regionand through distributors.

In Asia, the Company has organized the manufacture, marketing, and distribution of its major homeappliances into five operating groups: (1) mainland China; (2) South Asia, which includes India, Bangladesh, SriLanka, and Nepal; (3) Oceania, which includes Australia, New Zealand, and Pacific Islands; (4) North Asia,which includes Hong Kong, Taiwan, Korea, and Japan; and (5) Southeast Asia, which includes Thailand,Singapore, Malaysia, Indonesia, and the Philippines. The Company markets and sells its products in Asia underthe brand names Whirlpool, KitchenAid, Bauknecht, and Ignis by a combination of direct sales to high-volumeretailers and chain stores, and through full-service distributors to a large network of electronics stores.

Competition

The major home appliance business is highly competitive. In most major markets throughout the world,2003 was a challenging year in the industry with rising material costs (particularly steel) and intense pricecompetition. In North America, there has been continued polarization in retail distribution channels with mostretailers either (1) offering little or no customer service and competing solely on the basis of price, or (2)providing value added services coupled with a brand building strategy. The Company firmly believes that it canbest compete in the current environment by providing value added products and services under its strong brandnames.

The Company believes that, in terms of units sold, it is the largest North American manufacturer of homelaundry appliances and one of the largest North American manufacturers of home refrigerators and freezers,room air conditioning equipment, dishwashers, and cooking products. The Company believes that in NorthAmerica there are approximately 20 manufacturers or marketers of major home appliances.

The Company believes that in Europe it is, in terms of units sold, one of the largest manufacturers andmarketers of major home appliance products, out of approximately 35 European manufacturers, the majority ofwhich manufacture a limited range of products for a specific geographic region. There continues to be significantmerger and acquisition activity as manufacturers seek to broaden product lines and expand geographic markets,and the Company believes that some merger and acquisition activity will continue. The Company believes thatits Pan European organizational structure and strategy of marketing brand names that are recognized throughoutthe region are competitive advantages in the European market.

The Company believes that it is well-positioned in the Latin American appliance market due to its ability tooffer a broad range of products under well-recognized brand names to meet the specific requirements ofconsumers in the region. The Company believes that it is about twice the size of its nearest competitor and thatthere are approximately 25 manufacturers or marketers of major home appliances in the region.

3

In Asia, the major home appliance market is characterized by low saturation and, as a result, rapid growth(except in Japan and South Korea). The Asian market is served by approximately 50 manufacturers or marketersof varying size and position on a country-by-country basis. The Company believes that it is one of the industryleaders in the Indian market and it continues to establish itself throughout the remainder of the region.

Competition in most of the Company’s markets is based upon a wide variety of factors, including,principally, product features, price, product quality and performance, service, warranty, advertising, andpromotion. As a result of its global position, the Company believes it has a competitive advantage by reason ofits ability to leverage engineering capabilities across regions, transfer best practices, purchase raw materials andcomponent parts in large volumes, and economically produce a finished product.

Other Information

The Company’s interests outside the United States are subject to risks which may be greater than or inaddition to those risks which are currently present in the United States. Such risks may include currencyexchange rate fluctuations; high inflation; the need for governmental approval of and restrictions on certainfinancial and other corporate transactions and new or continued business operations; the convertibility of localcurrencies; government price controls; restrictions on the remittance of dividends, interest, royalties, and otherpayments; restrictions on imports and exports; duties; political and economic developments and instability; thepossibility of expropriation; uncertainty as to the enforceability of commercial rights and trademarks; and varioustypes of local participation in ownership.

The Company is generally not dependent upon any one source for raw materials or purchased componentsessential to its business. In those areas where a single supplier is used, alternative sources are generally availableand can be developed within the normal manufacturing environment, although some unanticipated costs may beincurred in transitioning to a new supplier where a prior single supplier is abruptly terminated. While there arepricing pressures on some materials and significant demand for certain components, the Company believes suchraw materials and components will be available in adequate quantities to meet anticipated production schedules.

Patents presently owned by the Company are considered, in the aggregate, to be important to the conduct ofthe Company’s business. The Company is licensed under a number of patents, none of which individually isconsidered material to its business. The Company is the owner of a number of trademarks and registrationstherefor in the U.S. and foreign countries. The most important for its North American operations are thetrademarks Whirlpool, KitchenAid, Estate, Roper, and Acros. The most important trademarks owned by theCompany in Europe are Whirlpool, Bauknecht, and Ignis. In Latin America, the most important trademarksowned by the Company are Whirlpool, Brastemp, and Consul. The most important trademark owned by theCompany in Asia is Whirlpool.

Expenditures for Company-sponsored research and engineering activities relating to the development ofnew products and the improvement of existing products are included in Note 1 to the Consolidated FinancialStatements contained in the Financial Supplement to this report.

The Company’s manufacturing facilities are subject to numerous laws and regulations designed to protect orenhance the environment, many of which require federal, state, or other governmental licenses and permits withregard to wastewater discharges, air emissions, and hazardous waste management. The Company’s policy is tocomply with all such laws and regulations. Where laws and regulations are less restrictive, the Company hasestablished and is following its own standards consistent with its commitment to environmental responsibility.

The Company believes that it is in compliance in all material respects with all presently applicable federal,state, local, and other governmental provisions relating to environmental protection in the countries in which ithas manufacturing operations. Capital expenditures and expenses for manufacturing operations directly

4

attributable to compliance with such provisions worldwide amounted to approximately $26 million in 2003,$32.5 million in 2002, and $23 million in 2001. It is estimated that in 2004 environmental capital expendituresand expenses for manufacturing operations will be approximately $25 million. Capital expenditures and expensesfor product related environmental activities were not material in any of the past three years and are not expectedto be material in 2004.

Globally, the entire major home appliance industry, including the Company, must contend with the adoptionof stricter governmental energy and environmental standards to be phased in over the next several years. Theseinclude the general phase-out of ozone depleting chemicals used in refrigeration and energy standardsrulemakings for other selected major appliances produced by the Company. Compliance with these variousstandards as they become effective will require some product redesign. However, the Company believes, basedon its understanding of the current state of proposed regulations, that it should be able to develop, manufacture,and market products that comply with these regulations.

The Company has been notified by state and federal environmental protection agencies of its possibleinvolvement in a number of “Superfund” sites in the United States. However, based upon evaluation of the factsand circumstances relating to these sites by the Company and its technical consultants, the Company does notpresently anticipate any material adverse effect upon the Company’s earnings, financial condition, or competitiveposition arising out of the resolution of these matters or the resolution of any other known governmentalproceeding regarding environmental protection matters.

For information on product recalls, see Note 14 to the Consolidated Financial Statements contained in theFinancial Supplement to this report.

For an update of the global restructuring plan announced by the Company in December 2000, see Note 13 tothe Consolidated Financial Statements contained in the Financial Supplement to this report.

For information on the Company’s acquisitions in Poland, Mexico, and China, see Note 4 to theConsolidated Financial Statements contained in the Financial Supplement to this report.

For certain other financial information concerning the Company’s business segments and foreign anddomestic operations, see Notes 1 and 17 to the Consolidated Financial Statements contained in the FinancialSupplement to this report.

Executive Officers of the Registrant

The following table sets forth the names of the Company’s executive officers at December 31, 2003, thepositions and offices with the Company held by them at such date, the year they first became executive officers,and their ages at December 31, 2003:

Name Office

First Becamean Executive

Officer Age

David R. Whitwam Director, Chairman of the Board and Chief Executive Officer 1985 61

Jeff M. Fettig Director, President and Chief Operating Officer 1994 46

R. Stephen Barrett, Jr. Executive Vice President and Chief Financial Officer 2002 50

Paulo F. M. Periquito Executive Vice President and President, Latin America 1997 57

David L. Swift Executive Vice President, North American Region 2001 45

Michael D. Thieneman Executive Vice President and Chief Technology Officer 1997 55

Michael A. Todman Executive Vice President and President, Whirlpool Europe 2001 46

5

Each of the executive officers named above was elected to serve in the office indicated until the firstmeeting of the Board of Directors following the annual meeting of stockholders in 2004 and until his successor ischosen and qualified or until his earlier resignation or removal. Each of the executive officers of the Companyhas held the position set forth in the table above or has served the Company in various executive oradministrative capacities for at least the past five years, except for (a) Mr. Swift who, prior to joining theCompany in October 2001, for the previous 20 years held various executive or administrative positions with theEastman Kodak Company, the most recent being President, Kodak Professional Group, and (b) Mr. Barrett who,prior to joining the Company in September 2002, for the previous 24 years held various financial and executivepositions with Procter & Gamble Co., the most recent being Vice President, Finance for P&G’s European-basedglobal Fabric and Home Care business.

Available Information

Financial results and investor information can be accessed through Whirlpool’s website atwww.whirlpoolcorp.com; click on the “Investors” tab, and then “SEC Filings.” Copies of Whirlpool’sForm 10-K, 10-Q, and 8-K reports, as well as amendments to them, are available free of charge throughWhirlpool’s website on the same day they are filed with the Securities and Exchange Commission.

ITEM 2. Properties.

The principal executive offices of Whirlpool Corporation are located in Benton Harbor, Michigan. AtDecember 31, 2003, the principal manufacturing operations of the Company were carried on at 41 locationsworldwide, 31 of which are located in 12 countries outside the United States. The Company occupied a total ofapproximately 48.7 million square feet devoted to manufacturing, service, administrative offices, warehouse,distribution, and sales space. Over 14.3 million square feet of such space is occupied under lease. In general, allfacilities are well maintained, suitably equipped, and in good operating condition.

ITEM 3. Legal Proceedings.

Information with respect to legal proceedings can be found under the heading “Contingencies” in Note 9 tothe Consolidated Financial Statements contained in the Financial Supplement to this report.

ITEM 4. Submission of Matters to a Vote of Security Holders.

There were no matters submitted to a vote of security holders in the fourth quarter of 2003.

6

PART II

ITEM 5. Market for Registrant’s Common Equity and Related Stockholder Matters.

The Company’s common stock is traded on the New York Stock Exchange and the Chicago StockExchange. As of February 23, 2004, the number of holders of record of the Company’s common stock wasapproximately 8,078.

High and low sales prices (as reported on the New York Stock Exchange composite tape) for the Company’scommon stock for each quarter during the years 2003 and 2002 are set forth below:

Market Price High Low Close

4Q 2003 . . . . . . . . . . . . . . . . . . . . . . . $73.35 $65.52 $72.653Q 2003 . . . . . . . . . . . . . . . . . . . . . . . $71.95 $62.25 $67.772Q 2003 . . . . . . . . . . . . . . . . . . . . . . . $65.66 $48.41 $63.701Q 2003 . . . . . . . . . . . . . . . . . . . . . . . $57.92 $42.80 $49.03

4Q 2002 . . . . . . . . . . . . . . . . . . . . . . . $55.99 $39.23 $52.223Q 2002 . . . . . . . . . . . . . . . . . . . . . . . $66.36 $44.79 $45.862Q 2002 . . . . . . . . . . . . . . . . . . . . . . . $78.20 $63.45 $65.361Q 2002 . . . . . . . . . . . . . . . . . . . . . . . $79.80 $61.85 $75.55

Cash dividends declared on the Company’s common stock for each quarter during the years 2003 and 2002are set forth in Note 18 to the Consolidated Financial Statements contained in the Financial Supplement to thisreport.

ITEM 6. Selected Financial Data.

The selected financial data for the five years ended December 31, 2003 with respect to the following lineitems are shown under the “Eleven Year Consolidated Statistical Review” contained in the Financial Supplementto this report: Total net sales, earnings from continuing operations, earnings from continuing operations per shareof common stock, dividends declared per share of common stock, total assets, and long-term debt. See thematerial incorporated herein by reference in response to Item 7 of this report for a discussion of the effects onsuch data of business combinations and other acquisitions, disposition and restructuring activity, restructuringcosts, accounting changes, earnings of foreign affiliates, and other significant activity impacting or affecting thecomparability of reported amounts.

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

See “Management’s Discussion and Analysis” contained in the Financial Supplement to this report.

ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk.

Information with respect to market risk can be found under the caption “Market Risk” in “Management’sDiscussion and Analysis” contained in the Financial Supplement to this report.

ITEM 8. Financial Statements and Supplementary Data.

The Consolidated Financial Statements of the Company are contained in the Financial Supplement to thisreport. Supplementary financial information regarding quarterly results of operations (unaudited) for the yearsended December 31, 2003 and 2002 is set forth in Note 18 to the Consolidated Financial Statements. For a list offinancial statements and schedules filed as part of this report, see the Table of Contents to the FinancialSupplement to this report on page F-1.

7

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

ITEM 9A. Controls and Procedures.

Evaluation of disclosure controls and procedures. The Company’s Chief Executive Officer and ChiefFinancial Officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (asdefined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of December 31, 2003, haveconcluded that the Company’s disclosure controls and procedures were adequate and designed to ensure thatmaterial information relating to the Company and its consolidated subsidiaries would be made known to them byothers within those entities.

Changes in internal controls over financial reporting. There were no changes in the Company’s internalcontrols over financial reporting that occurred during the most recent fiscal quarter that have materially affected,or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

8

PART III

ITEM 10. Directors and Executive Officers of the Registrant.

Information regarding the Company’s executive officers is included in Item 1 of Part I of this report.

Information regarding the background of the directors, matters related to the Audit Committee, and Section16(a) compliance appears under the captions “Directors and Nominees for Re-Election as Directors,” “Board ofDirectors and Corporate Governance—Audit Committee,” and “Section 16(a) Beneficial Ownership ReportingCompliance” in the Proxy Statement which is incorporated herein by reference.

The Company has adopted a code of ethics that applies to all of its employees, officers, and directors,including its principal executive officer, principal financial officer, and principal accounting officer (controller).The text of the Company’s code of ethics is posted on its website at www.whirlpoolcorp.com; click on the“Governance” tab, and then “Code of Ethics.” The Company intends to disclose future amendments to, orwaivers from, certain provisions of the code of ethics for executive officers and directors on the Company’swebsite within five business days following the date of such amendment or waiver. Stockholders may request afree copy of the code of ethics from:

Tom FilstrupInvestor Relations

Whirlpool Corporation2000 North M-63Mail Drop 2800

Benton Harbor, MI 49022-2692Telephone: (269) 923-3189

Whirlpool has also adopted written charters for its Audit, Finance, Human Resources, and CorporateGovernance and Nominating Committees, and Corporate Governance Guidelines, all of which are posted on theCompany’s website at www.whirlpoolcorp.com; click on the “Governance” tab, and then “Board of Directors.”Stockholders may request a free copy of the charters and guidelines from the address or telephone number setforth above.

ITEM 11. Executive Compensation.

Information with respect to compensation of executive officers and directors of the Company can be foundunder the captions “Executive Compensation,” “Stock Option Grants and Related Information,” “Stock OptionExercises and Holdings,” “Long-Term Incentive Awards,” “Agreements with Executive Officers,” “RetirementBenefits,” “Human Resources Committee Interlocks and Insider Participation,” and “Compensation of Directors”in the Proxy Statement which is incorporated herein by reference.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters.

Information with respect to security ownership by any person(s) known to the Company to beneficially ownmore than 5% of the Company’s stock and by each director of the Company, each named executive officer of theCompany, and all directors and executive officers of the Company as a group can be found under the captions“Security Ownership” and “Beneficial Ownership” in the Proxy Statement which is incorporated herein byreference.

Information relating to securities authorized under equity compensation plans can be found under thecaption “Equity Compensation Plan Information” in the Proxy Statement which is incorporated herein byreference.

9

ITEM 13. Certain Relationships and Related Transactions.

None.

ITEM 14. Principal Accounting Fees and Services.

Information relating to the Company’s auditors and the Audit Committee’s pre-approval policies can befound under the caption “Matters Relating to Auditors” in the Proxy Statement which is incorporated herein byreference. The “Audit Committee Report” is not incorporated herein by reference.

10

PART IV

ITEM 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a) The following documents are filed as a part of this report:

1. The financial statements and related notes, and reports of independent auditors and management,listed in the Table of Contents to the Financial Supplement to this report. Individual financial statements ofthe registrant’s affiliated foreign companies, accounted for by the equity method, have been omitted sinceno such company individually constitutes a significant subsidiary.

2. “Schedule II—Valuation and Qualifying Accounts” contained in the Financial Supplement to thisreport. Certain schedules for which provisions are made in the applicable accounting regulations of theSecurities and Exchange Commission are not required under the related instructions or are inapplicable, andtherefore have been omitted.

3. The exhibits listed in the “Exhibit Index” attached to this report.

(b) Reports on Form 8-K filed during the fourth quarter of 2003:

1. A Current Report on Form 8-K for October 14, 2003 pursuant to Item 5—“Other Events” announcedthe mailing of a summary of the 2002 annual report for the Whirlpool 401(k) Plan to members of the Plan.

2. A Current Report on Form 8-K for October 21, 2003 pursuant to Item 5—“Other Events” announcedthe appointment of Michael F. Johnston to Whirlpool’s Board of Directors. This 8-K also announced,pursuant to Item 12—“Results of Operations and Financial Condition,” the Company’s third quarter 2003earnings.

3. A Current Report on Form 8-K for December 16, 2003 pursuant to Item 5—“Other Events”announced an increase in the Company’s first quarter 2004 dividend. This 8-K also reaffirmed theCompany’s previously announced 2003 full-year earnings guidance.

11

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registranthas duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

WHIRLPOOL CORPORATION

(Registrant)

By: /s/ R. STEPHEN BARRETT, JR.

R. Stephen Barrett, Jr.(Principal Financial Officer)Executive Vice Presidentand Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below bythe following persons on behalf of the registrant and in the capacities and on the date indicated.

Signature Title Date

DAVID R. WHITWAM*

David R. Whitwam

Director, Chairman of theBoard and Chief ExecutiveOfficer (PrincipalExecutive Officer)

⎫⎪⎪⎪⎪⎪⎪⎪⎪⎪⎪⎪⎪⎪⎪⎪⎪⎪⎪⎪⎬⎪⎪⎪⎪⎪⎪⎪⎪⎪⎪⎪⎭

JEFF M. FETTIG*

Jeff M. Fettig

Director, President and ChiefOperating Officer(Principal Operating Officer)

R. STEPHEN BARRETT, JR.*


Executive Vice President andChief Financial Officer(Principal Financial Officer)

ROY W. TEMPLIN*

Roy W. Templin

Vice President and Controller(Principal AccountingOfficer)

GARY T. DICAMILLO*

Gary T. DiCamillo

Director

ALLAN D. GILMOUR*

Allan D. Gilmour

Director

KATHLEEN J. HEMPEL*

Kathleen J. Hempel

Director March 12, 2004

MICHAEL F. JOHNSTON*

Michael F. Johnston

Director

JAMES M. KILTS*

James M. Kilts

Director

ARNOLD G. LANGBO*

Arnold G. Langbo

Director

PAUL G. STERN*

Paul G. Stern

Director

JANICE D. STONEY*

Janice D. Stoney

Director

*By: /s/ DANIEL F. HOPP

Daniel F. Hopp

Attorney-in-Fact

12


FINANCIAL SUPPLEMENTTO 2003 ANNUAL REPORT ON FORM 10-K, AND

TO 2004 PROXY STATEMENT

TABLE OF CONTENTS

Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . F-2

Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-18

Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-19

Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-20

Consolidated Statements of Changes in Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-21

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-22

Eleven-Year Consolidated Statistical Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-48

Reports of Independent Auditors and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-50

Schedule II—Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-52

F-1

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS

EXECUTIVE LEVEL OVERVIEW

Whirlpool Corporation is the largest global manufacturer of major appliances worldwide with 2003revenues of $12.2 billion and net earnings of $414 million. The Company’s four reportable segmentsare based on geography and consist of North America (64% of revenue), Europe (22% of revenue),Latin America (11% of revenue), and Asia (3% of revenue). The Company is the market share leaderin North America and Latin America and has significant market presence in Europe, India and China.Whirlpool’s brands and operations worldwide have received well-deserved recognition foraccomplishments in a variety of business and social efforts, including energy efficiency leadership,community involvement, support of women’s issues, and excellence in design, to name a few.

The Company’s growth strategy over the past several years has been to introduce innovative newproducts, continue to expand its global footprint, add or enhance distribution channels and evaluatepotential acquisitions which enhance the Company’s innovative global product offering.

The Company monitors country economic factors such as gross domestic product, consumer interestrates, consumer confidence, housing starts, existing home sales and mortgage refinancing as keyindicators of industry demand. Management also focuses on country, brand, product and channelmarket share, average sales values, and profitability when assessing and forecasting financial results.The Company also focuses on total cost productivity, which includes material and conversion costs, asit continues to reduce its total global costs to operate the business and fund future growth.

The Company has, and will continue to evaluate its global operating platform to strengthen Whirlpool’sbrand leadership position in the global appliance industry. The Company plans to continue itscomprehensive worldwide effort to optimize its regional manufacturing facilities, supply base, productplatforms and technology resources to better support its global brands and customers.

Management’s Discussion and Analysis discusses the results of operations, cash flow, financialcondition and liquidity, contractual obligations and cash requirements, other matters, critical accountingpolicies and estimates, new accounting pronouncements, market risk and forward-looking statements.

Included within the results of operations and financial condition and liquidity section is management’sforward-looking perspective. In addition, the Company has included comments regarding regionalbusiness unit performance, where appropriate.

RESULTS OF OPERATIONS

The consolidated statements of operations summarize operating results for the last three years. Thissection of Management’s Discussion and Analysis highlights the main factors affecting changes in theCompany’s financial condition and results of operations and should be read along with theConsolidated Financial Statements.

NET SALES

The total number of units sold in 2003 increased 5.6% over 2002. Consolidated net sales increased10.5% over 2002, which includes a positive impact from currency fluctuations. Excluding currencyimpact, net sales increased approximately 7%. Excluding currency fluctuations and the acquisitions ofVitromatic (Whirlpool Mexico) and Polar, as described in Note 4 to the Consolidated FinancialStatements, the total number of units and dollars sold increased approximately 4% and 5%,

F-2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS—(Continued)

respectively. Consolidated net sales in 2002 were up approximately 7% over 2001 after excluding thenegative currency impact. The tables below provide the breakdown of units and sales by region.

In thousands 2003 Change 2002 Change 2001

Units Sold:North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,146 7.5% 24,324 13.6% 21,404Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,591 5.1 11,024 2.0 10,803Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,269 (2.7) 4,386 (7.4) 4,738Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,346 2.9 2,279 11.2 2,050Other/eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (37) — (31) — (36)

Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,315 5.6% 41,982 7.8% 38,959

Millions of dollars 2003 Change 2002 Change 2001

Net Sales:North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,875 7.8% $ 7,306 11.0% $ 6,581Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,691 22.4 2,199 6.9 2,058Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,350 6.7 1,266 (14.9) 1,487Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416 6.6 391 4.8 373Other/eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (156) — (146) — (156)

Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,176 10.5% $11,016 6.5% $10,343

Significant regional trends were as follows:

• In 2003, North American unit volumes increased 7.5% versus 2002. Volume increases weredriven by the full year acquisition impact of Whirlpool Mexico, strong performance in Canada,and volume gains in Whirlpool and KitchenAid brands, partially offset by weaker Kenmoreshipments. Excluding the acquisition of Whirlpool Mexico, North American unit volumesincreased 5%. The North American net sales increase adjusted for acquisitions and currencyimpact was slightly greater than growth in unit volumes due to favorable brand mix as well asthe introduction of higher sales value innovative products. The Company’s market share in theregion was essentially flat, with gains in Whirlpool brands offset by lower Kenmore performance.In 2002, net sales increased slightly less than unit volumes when compared to 2001 due, in part,to the acquisition of Whirlpool Mexico combined with competitive pricing pressures and reducedaverage sales values.

• European unit volumes increased 5.1% versus 2002. Excluding the acquisition of Polar, unitvolumes increased 4%. Net sales increased 22.4% due primarily to positive currency impact.Excluding currency impact and the Polar acquisition, net sales increased approximately 3%,lagging unit growth due to marketplace pricing pressures. The region experienced improvementin industry volumes as overall economic indicators and consumer confidence edged up inseveral key markets within the region. European unit volumes increased 2% in 2002 whencompared to 2001 and net sales increased by a larger percentage due to the Polar acquisitionand currency impact.

• Appliance unit volumes in Latin America declined 2.7% versus 2002 due primarily to the weakeconomic environment in the region. Overall demand in Brazil declined by 11% for the year. Theregion’s sales increased 6.7% and increased approximately 9% excluding currency impact whencompared to 2002, mainly the result of price increases necessitated by higher material costs.

F-3


Unit shipments and net sales were 7.4% and 14.9% lower, respectively, in 2002 versus 2001due in part to a volatile political and economic environment in the region. The significantcurrency devaluation in Brazil negatively impacted 2002 demand and net sales.

• Asia’s unit volumes increased 2.9% over 2002, while net sales increased by 6.6%. Excludingcurrency impact, net sales increased approximately 1%. The region experienced a number ofchallenges which negatively impacted its performance, including significant pricing pressures inChina and India. In 2002, unit sales and net sales increased 11.2% and 4.8% versus 2001,respectively. Product mix and pricing pressures combined to reduce the benefit of highervolumes.

GROSS MARGIN

The consolidated gross margin percentage in 2003 decreased 60 basis points versus 2002 dueprimarily to higher U.S. pension and medical expenses coupled with reduced Befiex credits, anincrease in expense due to the decline of the U.S. dollar and higher material costs in Latin America.The higher expense was partially offset by productivity improvements in North America and Europeand lower restructuring and related expense. The consolidated gross margin percentage declinedslightly in 2002 versus 2001 with continued global pricing pressures and lower pension and Befiexcredits offsetting productivity improvements. The table below outlines the gross margin percentages byregion, excluding the impact of the 2003, 2002 and 2001 restructuring related charges of $7 million,$43 million and $53 million, respectively, from the regional percentages. The Company believes thiscomparison of gross margin percentages excluding restructuring related charges providesmanagement and shareholders a better understanding of the ongoing performance of the regions. TheCompany evaluates segment performance based upon each segment’s operating income, whichexclude, among others, one-time charges (See Note 17). The restructuring related charges areincluded in the consolidated percentages in each of the three years presented.

2003 Change 2002 Change 2001

Gross MarginNorth America . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.6% (1.0) pts 23.6% 0.1 pts 23.5%Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.6 1.4 22.2 0.9 21.3Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.6 (3.8) 23.4 (2.6) 26.0Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.7 (3.0) 23.7 (2.5) 26.2

Consolidated(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.6% (0.6) pts 23.2% (0.2) pts 23.4%

(1) Restructuring charges included in consolidated, excluded in regions.

Significant regional trends were as follows:

• North American gross margin decreased 100 basis points compared to 2002 primarily due toincreased pension and medical expense partially offset by productivity improvements. Theimprovement in 2002 versus 2001 was due to productivity improvements partially offset by lowerpension credits and increased warranty costs.

• The European gross margin increased versus 2002 due to an improvement in the product andbrand mix and productivity improvements partially offset by pricing pressures. Europeanoperations continue to realize savings from ongoing restructuring efforts in Europe. In 2002, thegross margin increased from 2001 levels due to productivity improvements and the benefitsfrom the restructuring efforts.

• Latin American gross margin declined versus 2002 due to significantly higher material costs,and reduced Befiex credits. The decline was partially offset by higher appliance pricing. Price

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increases throughout the year helped mitigate the margin erosion but were not enough to offsetthe increase in materials costs. The 2002 gross margin declined over 2001 due to lower saleslevels and higher materials costs.

• The Asian gross margin declined versus 2002 due to significant pricing pressure across theregion and unfavorable product mix. Asian gross margin decreased in 2002 versus 2001 due tounfavorable product mix and pricing pressures.

SELLING, GENERAL AND ADMINISTRATIVE

Consolidated selling, general and administrative expenses in 2003, as a percent of consolidated netsales, remained relatively unchanged versus 2002 and 2001. Higher pension and freight costs in NorthAmerica were partially offset by cost controls on discretionary spending. The European increase in2003 was a result of expense reclassification into selling, general and administrative expenses, whileLatin America’s improvement was primarily driven by lower bad debt expense in 2003. Asia’s higherselling, general and administrative expenses, as a percent of sales, were due to increased operatingreserves. The table below outlines the selling, general and administrative expenses as a percentage ofsales by region, excluding the impact of 2003, 2002 and 2001 restructuring related charges of $4million, $17 million and $9 million, respectively, from the regional amounts. The Company believes thiscomparison of selling, general and administrative expenses excluding restructuring related chargesprovides management and shareholders a better understanding of the ongoing performance of theregions. The Company evaluates segment performance based upon each segment’s operatingincome, which exclude, among others, one-time charges (See Note 17). The restructuring relatedcharges are included in the “Corporate/Other” line.

Millions of dollars 2003As a %of Sales 2002

As a %of Sales 2001

As a %of Sales

Selling, general & administrative expensesNorth America . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 970 12.3% $ 894 12.2% $ 788 12.0%Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510 19.0 407 18.5 386 18.8Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 13.0 189 15.0 250 16.8Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 19.0 70 17.8 74 19.9Corporate/Other . . . . . . . . . . . . . . . . . . . . . . . . . . 182 — 176 — 141 —

Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,916 15.7% $1,736 15.8% $1,639 15.8%

PRODUCT RECALLS

During 2001, the Company recognized a total of $295 million of pre-tax charges ($181 million after-tax)related to two separate product recalls. These charges were recorded as a separate component ofoperating profit. During 2002, Whirlpool recognized additional recall related pre-tax charges ofapproximately $9 million for one of these recalls. Additionally, in 2003, the Company recognized pre-tax charges of $16 million primarily for final expenses related to the 2001 recall of microwave ovenhood units. Beyond this, the Company expects that no further liability will be incurred related to thesetwo product recalls. See Note 14 to the Consolidated Financial Statements for a more detaileddescription of these charges.

RESTRUCTURING AND RELATED CHARGES

Restructuring initiatives resulted in pre-tax restructuring charges of $3 million, $101 million and $150million in 2003, 2002 and 2001, respectively. These amounts have been identified as a separate

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component of operating profit. As a result of the Company’s restructuring activity, it also recognized$11 million, $60 million and $62 million, respectively, in pre-tax restructuring related charges during2003, 2002 and 2001, respectively, which were recorded primarily within cost of products sold. SeeNote 13 to the Consolidated Financial Statements for a more detailed description of these charges andthe Company’s restructuring program.

During the fourth quarter of 2002, the Company recognized the vast majority of remaining chargesfor the global restructuring plan that was originally announced in December of 2000. The plan, whichhad a total restructuring and related pre-tax cost of $387 million, is expected to result in more than$200 million in annualized savings once fully implemented. At December 31, 2003, a liability of$45 million remains for actions yet to be completed under the plan. Actions under the plan include theelimination of over 7,500 positions worldwide, of which approximately 6,900 had been eliminated asof December 31, 2003.

OTHER INCOME AND EXPENSE

Interest income and sundry expense, which includes foreign currency gains and losses, improvedapproximately 24% as compared to 2002. The improvement is largely attributable to lower foreigncurrency losses as well as lower losses in asset dispositions and a 2002 fire loss within a Mexicanfacility. Interest income and sundry expense increased slightly in 2002 when compared to 2001, dueprimarily to lower interest income.

Interest expense decreased $6 million versus 2002, which was $19 million lower than 2001. Thedecrease was attributable to a lower overall interest rate environment and a decrease in overallborrowings.

INCOME TAXES

The effective income tax rate from continuing operations was 35% in 2003, 39% in 2002, and 46% in2001. The impact of restructuring and related charges, the write-off of the equity interest and advancesto Wellmann, the goodwill impairment and the product recall related charges impacted the effective taxrates in 2002 and 2001. See the income tax rate reconciliation included in Note 15 to the ConsolidatedFinancial Statements for a description of the significant items impacting the consolidated effectiveincome tax rate.

EQUITY IN EARNINGS (LOSS) OF AFFILIATED COMPANIES AND MINORITY INTERESTS

The 2003 results improved $30 million versus 2002. The 2002 results were reduced by a $22 millionafter-tax impairment charge related to the Company’s minority investments in and advances toWellmann, a German kitchen cabinet manufacturer. During 2003, the Company’s investment in theequity of Wellmann was sold to Alno, a prominent German kitchen cabinet manufacturer. The sale didnot have a material impact to the Company’s financial position or results of operations. The 2002results were also impacted by a $4 million charge incurred related to a minority interest in an Asianentity.

EARNINGS FROM CONTINUING OPERATIONS

Earnings from continuing operations were $414 million in 2003 versus $262 million and $34 million in2002 and 2001, respectively. The significant increase in 2003 relates primarily to approximately$147 million of higher restructuring and related charges in 2002, the full year impact of acquisitions,

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strong volume growth, productivity improvements and an equity investment write-off, partially offset byan increase in expense due to the decline of the U.S. dollar. The significant increase in 2002 versus2001 is due primarily to the product recall and restructuring expenses recognized in 2001.

Millions of dollars, except per share data 2003 2002 2001

Earnings from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 414 $ 262 $ 34Diluted earnings per share from continuing operations . . . . . . . . . . . . . . . . . . . . 5.91 3.78 0.50Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414 (394) 21Diluted net earnings (loss) per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5.91 $(5.68) $0.31

DISCONTINUED OPERATIONS

As a result of the United Airlines bankruptcy filing in December 2002, the Company wrote off its relatedinvestment in leveraged aircraft leases during the fourth quarter of 2002. The write-off resulted in anon-cash charge to discontinued operations of approximately $68 million, or $43 million after-tax.These leveraged lease assets were part of the Company’s previously discontinued finance company,Whirlpool Financial Corporation.

During the second quarter of 2001, the Company wrote off an investment in a securitized aircraftportfolio that was also owned by Whirlpool Financial Corporation. The write-off, due primarily to thesoftening aircraft leasing industry, resulted in a loss from discontinued operations of $35 million, or $21million after-tax.

Although most of its assets have been divested, Whirlpool Financial Corporation remains a legal entitywith assets consisting primarily of a leveraged lease portfolio. The portfolio includes an investment inaircraft leveraged leases and is affected by the economic conditions of the aviation industry. As ofDecember 31, 2003 and 2002, the portfolio totaled $42 million and $43 million, respectively, net ofrelated reserves. See Note 5 to the Consolidated Financial Statements. The Company continues tomonitor its arrangements with the lessees and the value of the underlying assets.

CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLE

The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill andOther Intangible Assets,” on January 1, 2002. As a result of this adoption, the Company recorded anon-cash after-tax charge of $613 million in 2002.

The Company adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,”as amended, on January 1, 2001. The adoption of Statement No. 133 resulted in $8 million of income,net of tax, in the Company’s statement of operations and a $11 million decrease, net of tax, instockholders’ equity in 2001.

See Notes 1 and 3 to the Consolidated Financial Statements for a more detailed description of thesechanges in accounting principles.

FORWARD-LOOKING PERSPECTIVE

Whirlpool enters 2004 with positive industry and economic momentum in North America and Europe,the Company’s two largest segments. The Company expects gradually improving economic conditionsin these regions throughout the year. The Company anticipates that the North America and Europeregions will drive the majority of Whirlpool’s net earnings increase during 2004. Despite projected

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increases in steel prices and raw materials, the Company’s efforts to improve total cost productivity areexpected to offset the negative swings in the total manufacturing cost of its products. The Company isforecasting a 2% increase in industry demand in North America during 2004 and 3% in Europe.

Weak economic conditions in Latin America, higher material costs and unfavorable currency resulted inlower overall operating profit for its third largest segment during 2003. The Company expects gradualimprovement in the economic environment during 2004 and is forecasting a 5% to 10% increase inoverall demand. Higher material costs are expected to continue and will not be completely offset byproductivity improvements. As a result, the Company will continue to raise prices on selected products.Finally, Whirlpool expects a gradual devaluation of the Brazilian real during the course of the year.

The Company expects to drive both growth and operating profit margin expansion in Asia, its smallestsegment, during 2004. First, the Company will continue to expand its China procurement andtechnology base. This is a growing and important part of Whirlpool’s global operating platform. TheCompany will continue to expand its China domestic sales and increase finished goods exported to itsglobal sales networks. The Company is revising its trade management strategy in India, a key marketwithin the Asia region, which will allow the Company to improve the speed, flexibility and overallefficiency within its sales and distribution processes. This change in strategy will enable the Companyto launch new product introductions more frequently and faster to the market as trade terms arereduced from 60 to 90 days, to 20 to 30 days. This initiative will be launched in the first quarter of 2004and will be completed sometime in the second quarter of 2004. The Company expects this initiative willresult in reduced volumes over the first half of 2004. The ongoing benefits of this program, includingimproved gross margins and cash flow, are expected to be realized starting in the latter part of thesecond quarter.

In December 1996, Multibras and Empresa Brasileira de Compressores S.A. (Embraco), Braziliansubsidiaries, were granted additional export incentives in connection with the Brazilian government’sexport incentive program (Befiex). These incentives allowed the use of credits as an offset againstcurrent Brazilian federal excise tax on domestic sales. The Company recognized credits of $5 million in2003, $42 million in 2002 and $53 million in 2001 as a reduction of current excise taxes payable andtherefore, an increase in net sales. The Company’s remaining credits are approximately $200 million atDecember 31, 2003. However, we do not expect to recognize additional Befiex credits until thecalculation of the credit, which is currently under review, is confirmed by the Brazilian courts.

CASH FLOWS

The statements of cash flows reflect the changes in cash and equivalents for the last three years byclassifying transactions into three major categories: operating, investing and financing activities.

OPERATING ACTIVITIES

Whirlpool’s main source of cash flow is from operating activities consisting of net earnings adjusted forchanges in operating assets and liabilities such as receivables, inventories and payables and for non-cash operating items, such as depreciation.

The Company’s 2003 cash provided by operating activities benefited from higher earnings, primarilywithin our European and North American business segments as well as continued improvement inworking capital management. Cash flow was negatively impacted by a voluntary after-tax pensioncontribution of $97 million to the Company’s U.S. pension plans. In comparison, after-tax U.S. pensioncontributions made during 2002 and 2001 were $5 million and $7 million, respectively. The 2003

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results were also negatively impacted by restructuring spending, primarily related to 2002 projects, aswell as the timing of promotional payments. Combined, these negative 2003 cash outflows wereessentially offset by the absence of $239 million in product recall spending which occurred during2002. Cash provided by operating activities was also negatively impacted in 2002 by a one-time taxpayment of $86 million on a cross-currency interest rate swap gain, which occurred during 2001. Thedecrease in 2002 versus 2001 relates primarily to the $239 million in product recall payments madeduring the year and to changes in deferred and current taxes.

INVESTING ACTIVITIES

The principal recurring investing activities are capital expenditures, which were $423 million, $430million and $378 million in 2003, 2002 and 2001, respectively. Capital expenditures are incurred tosupport distinctive and innovative solutions for consumers which lead to new revenue growth.Expenditures are also made to support the Company’s global operating platform footprint moves tolower cost locations as well as replacement, regulatory and infrastructure changes.

During 2003, Whirlpool entered into separate sale-leaseback transactions whereby the Company soldand leased back four of its owned properties. Proceeds related to the sale-leaseback transactions, netof related fees, were approximately $65 million.

On November 18, 2002, the Company acquired the remaining 20% interest in Whirlpool NarcissusShanghai Company Limited (“Narcissus”) for $9 million. Subsequent to the purchase, Narcissus wasrenamed Whirlpool Home Appliance (Shanghai) Co. Ltd. In accordance with the purchase agreement,40% of the purchase price was paid during 2002, 40% was paid during 2003 and the remaining 20%will be paid in 2004.

On July 3, 2002, Whirlpool acquired the remaining 51% ownership in Vitromatic S.A. de C.V.(Whirlpool Mexico), an appliance manufacturer and distributor in Mexico. The aggregate purchaseprice was $151 million in cash plus assumption of outstanding debt at the time of acquisition, whichtotaled $143 million.

On June 5, 2002, the Company acquired 95% of the shares of Polar S.A. (Polar), a leading majorhome appliance manufacturer in Poland. The aggregate purchase price was $27 million in cash plusoutstanding debt at the time of acquisition, which totaled $19 million. During 2003, Whirlpool acquiredthe remaining 5% of the shares of Polar.

On October 5, 2001, the Company closed its position in a portfolio of cross currency interest rateswaps resulting in the receipt of $209 million.

FINANCING ACTIVITIES

Total repayments of short-term and long-term debt, net of new borrowings, were $208 million, $236million and $579 million in 2003, 2002 and 2001, respectively.

During March 2003, the Company redeemed its $200 million 9% Debentures using short-term notespayable.

In July 2001, Whirlpool issued 300 million Euro denominated 5.875% Notes, due 2006. The proceedswere used for general corporate purposes.

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Dividends paid to stockholders totaled $94 million, $91 million and $113 million in 2003, 2002 and2001. The large payment in 2001 was affected by the timing of funding for the fourth quarter 2000dividend, which was paid on January 2, 2001.

Under its stock repurchase program, Whirlpool purchased approximately 1 million shares ($65 million)in 2003, 0.7 million shares ($46 million) in 2002 and 0.7 million shares ($43 million) in 2001. See OtherMatters for stock repurchases subsequent to December 31, 2003 and Note 11 to the ConsolidatedFinancial Statements for additional detail on the Company’s stock repurchase program.

The Company also redeemed $33 million and $25 million in 2003 and 2002, respectively, in preferredstock of its discontinued finance company, Whirlpool Financial Corporation. See Note 8 to theConsolidated Financial Statements for additional detail on the Whirlpool Financial Corporationpreferred stock.

Whirlpool received proceeds of $65 million in 2003, $80 million in 2002 and $81 million in 2001 relatedto the exercise of Company stock options. The Company’s stock option program is discussed in Notes1 and 12 to the Consolidated Financial Statements.

FINANCIAL CONDITION AND LIQUIDITY

The Company’s objective is to finance its business through the appropriate mix of long-term and short-term debt. By diversifying its maturity structure, the Company avoids concentrations of debt, reducingliquidity risk. Whirlpool has varying needs for short-term working capital financing as a result of thenature of its business. The volume and timing of refrigeration and air conditioning production impactthe Company’s cash flows and consists of increased production in the first half of the year to meetincreased demand in the summer months. The Company finances its working capital fluctuationsprimarily through the commercial paper markets in the U.S., Europe and Canada, which are supportedby committed bank lines. In addition, outside the U.S., short-term funding is also provided by bankborrowings on uncommitted lines. The Company has access to long-term funding in the U.S.,European and other public bond markets.

The Company’s financial position remains strong. At December 31, 2003, Whirlpool’s total assets were$7.4 billion versus $6.6 billion at December 31, 2002. Stockholders’ equity increased from $0.7 billionat the end of 2002 to $1.3 billion at the end of 2003. The increase in equity is primarily attributed to netearnings retention, a $118 million increase in equity to reduce the U.S. defined benefit pension plans’minimum liability and $129 million increase in equity through foreign currency translation adjustments.

The Company’s overall debt levels have declined approximately $110 million. Cash flows fromoperations have been used to reduce the Company’s indebtedness.

In May 2003, Whirlpool renewed its existing $400 million committed 364 day credit facility for another364 days. The Company also has a $800 million committed credit facility that was entered into on June1, 2001 and matures in 2006. These committed facilities support commercial paper programs andother operating needs. There were no borrowings under these facilities during 2003 or 2002. Whirlpoolwas in full compliance with its bank covenants throughout both 2003 and 2002. None of the Company’smaterial debt agreements requires accelerated repayment in the event of a decrease in credit ratings.

OFF-BALANCE SHEET ARRANGEMENTS

The Company guarantees the indebtedness of Wellmann, a former European affiliate, and certaintrade related obligations of customers of Wellmann and a Brazilian subsidiary as discussed in Note 9

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to the Consolidated Financial Statements. As of December 31, 2003 and December 31, 2002, theCompany had approximately $18 million and $30 million, respectively, of guarantees outstanding forthe bills of exchange related to Wellmann, which expired in January and February 2004. The Companywill continue to provide guarantees of certain trade related obligations of customers of Wellmann,however, the amounts are expected to be de minimus. Whirlpool does not expect these guarantees tohave a material effect on its financial condition or liquidity.

CONTRACTUAL OBLIGATIONS AND FORWARD-LOOKING CASH REQUIREMENTS

The following table summarizes the Company’s expected cash outflows resulting from financialcontracts and commitments.

Payments due by period

Millions of dollars Total 20042005 &2006

2007 &2008 Thereafter

Debt obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,153 $ 19 $386 $136 $612Operating lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 266 68 108 65 25Purchase obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 34 84 61 8Long-term liabilities(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 71 — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,677 $192 $578 $262 $645

(1) The amounts in long-term liabilities include the Company’s expected 2004 minimum pensionfunding requirements and expected benefits payments to the unfunded pension andpostretirement health care benefit plans. Required contributions for future years depend on certainfactors that cannot be determined at this time.

The goal of the Company’s global operating platform is to strengthen Whirlpool’s brand leadershipposition in the global appliance industry. The Company plans to continue its comprehensive worldwideeffort to optimize its regional manufacturing facilities, supply base, product platforms and technologyresources to better support its global brands and customers. The Company intends to make additionalinvestments to strengthen its competitiveness and brand leadership position in fiscal 2004. Capitalspending is expected to increase to approximately $500 million in 2004 in support of the Company’sinvestment in innovative product technologies and its global operating platform initiatives.

In December 2003, Whirlpool Corporation’s Board of Directors announced a first quarter 2004 dividendof 43 cents per share, a 26% increase from the fourth quarter 2003 dividend of 34 cents per share. Thedividend is payable on March 15, 2004, to holders of record at the close of business on February 27,2004. If continued, the dividend will increase the Company’s annual dividend payments byapproximately $24 million to $118 million.

The Company believes that its capital resources and liquidity position at December 31, 2003 coupledwith its planned cash flow generated from operations in 2004 are adequate to support higher capitalspending, a higher dividend payment and meet anticipated business needs to fund future growthopportunities. Currently, the Company has access to capital markets in the U.S. and internationally.

The Company expects to generate approximately $300 million of free cash flow during 2004 (definedas cash provided by operating activities plus proceeds from asset disposals less capital spending anddividends). Management intends to use these funds to reduce debt, repurchase stock and fundadditional business opportunities as they become available.

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OTHER MATTERS

Pursuant to the Company’s stock repurchase program authorized by the Board of Directors, theCompany repurchased a combined total 1 million shares of Whirlpool common stock in the openmarket subsequent to December 31, 2003, at an aggregate purchase price of $75 million.

While lower discount rates increased Whirlpool’s pension obligations during 2003, improvement inequity market performance during the year significantly increased the value of pension fund assets.Whirlpool also contributed approximately $103 million after-tax to the pension plans during 2003, ofwhich $97 million was voluntary. As a result of these actions, the unfunded obligation declined, and theCompany reduced its minimum pension liability equity charge by $118 million, after-tax, to $38 millionduring 2003. At December 31, 2003, the Company’s defined benefit pension plans still remainunderfunded on a combined basis.

The Company recognized consolidated pre-tax pension cost (credits) of $78 million, $(37) million and$(70) million in 2003, 2002 and 2001, respectively. The Company currently expects that U.S. pensioncost for 2004 will be approximately $60 million based upon an expected return on assets assumption of8.75% and a lower discount rate of 6.00%. The $60 million compares to pension cost of $63 million in2003. Consolidated pension cost in 2004 is anticipated to be approximately $72 million compared to$78 million in 2003.

The discount rate and expected return on asset assumptions used in determining the Company’s U.S.pension benefit obligations and costs are as follows:

Discount rate Expected return on assets

Benefit obligation—December 312003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.00% N/A2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.75% N/A

Pension cost2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.00% 8.75%2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.75% 8.75%2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.50% 10.00%

The Company’s expected return on assets assumption of 8.75% is based on historical market returnsbetween 1926 and 2003 applied to its target allocation of plan assets. The annualized discount rateapproximates Moody’s Aa corporate bond rate at the measurement date. The Company uses ameasurement date of December 31.

In addition, the Company sponsors plans to provide postretirement health care benefits for eligibleretired U.S. employees. Eligible retirees are those who were full-time employees with 10 years ofservice who attained age 55 while in service with the Company. The postretirement health care plansare generally contributory with participants’ contributions adjusted annually and include cost-sharingprovisions that limit the Company’s exposure for recent and future retirees. The plans are unfunded.

In June 2003, the Company announced a modification to its U.S. retiree health care plans that affectsfuture retirees The new plan is based on a Retiree Healthcare Savings Account (RHSA), wherenotional accounts will be established for most active U.S. paid employees. The notional accountreflects each year of service beginning at age 40 and is designed to provide employees who retire afterDecember 31, 2003 from Whirlpool with notional funds to apply towards health care premiums. In

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June 2003, the Company recorded a one-time curtailment gain of $13.5 million, net of tax, related tothe modification of its retiree health care plan. The Company provides no significant postretirementmedical benefits to non-U.S. employees.

On December 8, 2003, President Bush signed the Medicare Prescription Drug, Improvement andModernization Act (the Act) into law. This law introduced a prescription drug benefit program underMedicare (Medicare Part D) as well as a federal subsidy to sponsors of retiree health care benefitplans that provide a benefit that is at least actuarially equivalent to Medicare Part D. In general,accounting rules require that the changes in relevant laws and government benefit programs beconsidered in measuring postretirement benefit costs and the Accumulated Postretirement BenefitObligation (APBO). However, certain accounting issues raised by the Act—in particular, how toaccount for the federal subsidy—are not explicitly addressed by FASB Statement 106. In addition,significant uncertainties exist for a plan sponsor both as to the direct effects of the Act and its ancillaryeffects on plan participants’ behavior and health care costs. The FASB issued FASB Staff Position(FSP) No. 106-1, “Accounting and Disclosure Requirements Related to the Medicare PrescriptionDrug, Improvement and Modernization Act of 2003”, (FSP 106-1) that allows sponsors to elect to deferrecognition of the effects of the Act until guidance is issued by the FASB. In accordance withFSP 106-1, the Company has elected to defer recognition of the effects of the Act. Accordingly, anymeasures of the APBO or net periodic postretirement benefit cost in the financial statements or theaccompanying footnotes do not reflect the effects of the Act on the plan. Specific authoritativeguidance on the accounting for the federal subsidy is pending and that guidance, when issued, couldrequire the Company to change previously reported information.

In September 2003, the Company completed the sale of Wellmann to Alno, a prominent Germankitchen cabinet manufacturer. Previously, the Company held a 49.5% ownership interest in Wellmann,and in connection with the sale, the Company obtained a 10% interest in Alno. The sale did not have amaterial impact to the Company’s financial position or results of operations. The Company analyzedthe provisions of FIN 46, “Consolidation of Variable Interest Entities”, with respect to its 10% interest inAlno and determined that Alno did not meet the definition of a variable interest entity under FIN 46.

In 1989, a Brazilian affiliate (now a subsidiary) of the Company brought an action against a financialinstitution in Brazil seeking a “Declaration of Non-Enforceability of Obligations” relating to loandocumentation entered into without authority by a senior officer of the affiliate. The original amount indispute was approximately $25 million. In September 2000, a decision in the declaratory actionadverse to the Company became final. In 2001, the financial institution began a collection action, andthe Company responded with a counterclaim. The lower court has dismissed the counterclaim and adiscretionary appeal of this dismissal has been requested. A final decision in the collection action is notexpected for several years. The Company plans to continue to aggressively defend this matter, and atthis point cannot reasonably estimate a possible range of loss.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management has evaluated the accounting policies used in the preparation of the accompanyingConsolidated Financial Statements and related notes and believes those policies to be reasonable andappropriate. The Company’s accounting policies are described in Note 1 to the Consolidated FinancialStatements. Certain of these accounting policies require the application of significant judgment bymanagement in selecting the appropriate assumptions for calculating financial estimates. By theirnature, these judgments are subject to an inherent degree of uncertainty. The Company’s criticalaccounting policies include the following:

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Pension and Other Postretirement Benefits

Accounting for pensions and other postretirement benefits involves estimating the costs of futurebenefits and attributing the cost over the employee’s expected period of employment with theCompany. The determination of the Company’s obligation and expense for these costs requires theuse of certain assumptions. Those assumptions are included in Note 16 to the Consolidated FinancialStatements and include, among others, the discount rate, expected long-term rate of return on planassets and health care cost trend rates. These assumptions are subject to change based on stock andbond market returns, interest rates on high quality bonds and medical cost inflation, respectively. Aspermitted by generally accepted accounting principles, actual results that differ from the Company’sassumptions are accumulated and amortized over future periods and therefore, generally affect itsrecognized expense and accrued liability in such future periods. While the Company believes that itsassumptions are appropriate given current economic conditions and its actual experience, significantdifferences in results or significant changes in the Company’s assumptions may materially affect itspension and other postretirement obligations and related future expense. As required by FAS 87, FAS132 and FAS 106, Whirlpool’s pension and other postretirement benefit obligations as of December 31,2003 and preliminary retirement benefit costs for the 2004 fiscal year were prepared using theassumptions that are determined as of December 31, 2003. The following table highlights thesensitivity of Whirlpool’s December 31, 2003 retirement obligations and 2004 retirement benefit costsof its U.S. plans to changes in the key assumptions used to determine those results:

Change in assumption

Estimatedincrease

(decrease) in2004

Pension Cost

Estimatedincrease(decrease)in Projected

Benefit Obligationfor the year endedDecember 31, 2003

Estimatedincrease(decrease)in 2004Other

PostretirementBenefits cost

Estimatedincrease(decrease)

in AccumulatedPostretirement

Benefit Obligationfor the year endedDecember 31, 2003

Millions of dollars25 bps increase in discount rate . . . . . . . . . . . . . . . . . $(2.1) $ (48.4) $(1.5) $(19.1)

25 bps decrease in discount rate . . . . . . . . . . . . . . . . $ 2.0 $ 49.9 $ 1.5 $ 19.7

25 bps increase in long-term return on assets . . . . . $(4.5) N/A N/A N/A

25 bps decrease in long-term return on assets . . . . . $ 4.5 N/A N/A N/A

50 bps increase in discount rate . . . . . . . . . . . . . . . . . $(4.7) $ (95.5) $(2.9) $(37.7)

50 bps decrease in discount rate . . . . . . . . . . . . . . . . $ 7.4 $101.1 $ 2.9 $ 40.0

50 bps increase in long-term return on assets . . . . . $(9.0) N/A N/A N/A

50 bps decrease in long-term return on assets . . . . . $ 9.0 N/A N/A N/A

The analysis is an estimate only. These sensitivities may not be appropriate to use for other years’financial results. Furthermore, the impact of assumption changes outside of the ranges shown abovemay not be approximated by using the above results.

Income Taxes

As part of the process of preparing its Consolidated Financial Statements, the Company estimates itsincome taxes in each of the taxing jurisdictions in which its operates. This process involves estimatingactual current tax expense together with assessing any temporary differences resulting from thedifferent treatment of certain items, such as the timing for recognizing expenses, for tax and accountingpurposes in accordance with Statement of Financial Accounting Standards No. 109, “Accounting forIncome Taxes.” These differences may result in deferred tax assets and liabilities, which are included

F-14


in the Company’s consolidated balance sheets. The Company is required to assess the likelihood thatits deferred tax assets, which include net operating loss carryforwards and temporary differences thatare expected to be deductible in future years, will be recoverable. If recovery is not likely, the Companyprovides a valuation allowance based on its estimates of future taxable income in the various taxingjurisdictions, and the amount of deferred taxes that are ultimately realizable. If future taxable incomewas lower than expected or if tax-planning strategies were not available as anticipated, the Companymay record additional valuation allowances through income tax expense in the period suchdetermination is made. Likewise, if the Company determines that it would be able to realize its deferredtax assets in the future in excess of their net recorded amounts, an adjustment to the deferred taxasset would increase income in the period such determination is made. As of December 31, 2003, theCompany had total deferred tax assets of $703 million, net of valuation allowances of $51 million (seeNote 15 to the Consolidated Financial Statements). The Company’s effective tax rate has ranged from35% to 46% over the past five years and has been influenced by restructuring and recall activity, taxplanning strategies, and enacted legislation. A 1% increase in the Company’s effective tax rate woulddecrease earnings by approximately $6.5 million based on 2003 earnings. Future change in theeffective tax rate is subject to several factors including enacted laws, tax planning strategies, andbusiness profitability.

In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in thesejurisdictions. These audits can involve complex issues, which may require an extended period of timeto resolve. In the opinion of management, adequate provisions for income taxes have been made forall years.

Product Recall

The establishment of a liability for product recall expenses is occasionally required and is impacted byseveral factors such as customer response rate, consumer options, field repair costs, inventory repaircosts, extended warranty costs, communication structure and other miscellaneous costs such as legal,logistics and consulting. The customer response rate, which represents an estimate of the total numberof units to be serviced as a percentage of the total number of units impacted by the recall, is the mostsignificant factor in estimating the total cost of each recall. This rate is impacted by several factors,including the type of product, the year manufactured, age of the product sold and current and pastexperience factors. Significant differences between the Company’s assumptions and its actualexperience or significant changes in its assumptions could have a material impact on the Company’sproduct recall reserves.

Befiex Credits

As discussed above, the Company’s Brazilian subsidiaries have been recognizing benefits under theBrazilian government’s export incentive program (Befiex) as an offset against current Brazilian federalexcise tax on domestic sales. Since the initial granting of these credits in 1996, it has been theCompany’s policy to recognize these credits as they have been monetized. There have, however, beenongoing legal proceedings relating to this program and it is presently under review within the Braziliancourt system. The Company has chosen not to recognize any of the remaining credits of $200 millionunder the program until the Brazilian courts have confirmed the method used to calculate thoseremaining credits.

Warranty Obligations

The estimation of warranty obligations is determined in the same period that revenue from the sale ofthe related products is recognized. The warranty obligation is based on historical experience andreflect management’s best estimate of expected costs at the time products are sold. Warranty accrualsare adjusted for known or anticipated warranty claims as new information becomes available. Future

F-15


events and circumstances could materially change the Company’s estimates and require adjustmentsto the warranty obligation. New product launches require a greater use of judgment in developingestimates until historical experience becomes available. See Note 9 to the Consolidated FinancialStatements for a summary of the activity in the Company’s product warranty accounts for 2003 and2002.

NEW ACCOUNTING PRONOUNCEMENTS

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46,“Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51”(Interpretation or FIN 46) as amended, December 2003. The Interpretation requires consolidation,beginning December 31, 2003, of entities in which the Company absorbs a majority of the entity’sexpected losses, receives a majority of the entity’s expected residual returns, or both, as a result ofownership, contractual or other financial interests in the entity. Currently, entities are consolidatedwhen the Company has a controlling financial interest, typically through ownership of a majority votinginterest in an entity. The adoption of FIN 46 did not materially impact the Company’s financial positionor results of operations.

In December 2003, the FASB issued revised Statement No. 132 (SFAS 132), “Employers’ Disclosuresabout Pensions and Other Postretirement Benefits.” The revised SFAS 132 requires additionaldisclosures about the types of plan assets, investment strategy, measurement date(s), planobligations, cash flows, and components of net periodic benefit cost recognized during interim periods(see Note 16 to the Consolidated Financial Statements). This Statement is effective for financialstatements with fiscal years ending after December 15, 2003. The adoption of the revised SFAS 132did not impact the Company’s financial position or results of operations.

MARKET RISK

The Company is exposed to market risk from changes in foreign currency exchange rates, domesticand foreign interest rates, and commodity prices, which can affect the Company’s operating resultsand overall financial condition. Whirlpool manages its exposure to these market risks through itsoperating and financing activities and, when deemed appropriate, through the use of derivativefinancial instruments. Derivative financial instruments are viewed as risk management tools and arenot used for speculation or for trading purposes. Derivative financial instruments are entered into with adiversified group of investment grade counterparties to reduce its exposure to nonperformance on suchinstruments. The Company’s sensitivity analysis reflects the effects of changes in market risk but doesnot factor in potential business risks of the counterparties or appropriate use of instruments.

Whirlpool uses foreign currency forward contracts and currency swaps to hedge the price riskassociated with firmly committed and forecasted cross-border payments and receipts related to itsongoing business and operational financing activities. Foreign currency contracts are sensitive tochanges in foreign currency exchange rates. At December 31, 2003, a 10% unfavorable exchange ratemovement in each currency in the Company’s portfolio of foreign currency forward contracts wouldhave resulted in an incremental unrealized loss of approximately $121 million, while a 10% favorableshift would have resulted in an incremental unrealized gain of approximately $111 million. Consistentwith the use of these contracts to neutralize the effect of exchange rate fluctuations, such unrealizedlosses or gains would be offset by corresponding gains or losses, respectively, in the remeasurementof the underlying exposures.

F-16


The Company enters into commodity swap contracts to hedge the price risk associated with firmlycommitted and forecasted commodities purchases that are not fixed directly through supply contracts.As of December 31, 2003, a 10% unfavorable shift in commodity prices would have resulted inan incremental loss of approximately $4 million, while a 10% favorable shift would have resulted in anincremental gain of approximately $4 million.

Whirlpool utilizes interest rate swaps to hedge the Company’s interest rate risk. As of December 31,2003, 10% shift in interest rates would have resulted in approximately an incremental $0.5 million gainor loss related to these contracts.

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-lookingstatements made by or on behalf of the Company. Management’s Discussion and Analysis and othersections of this report may contain forward-looking statements that reflect the Company’s current viewswith respect to future events and financial performance.

Certain statements contained in this Financial Supplement, including those within the forward-lookingperspective section within this Management’s Discussion and Analysis, and other written and oralstatements made from time to time by the Company do not relate strictly to historical or current facts.As such, they are considered “forward-looking statements” which provide current expectations orforecasts of future events. Such statements can be identified by the use of terminology such as“anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “could,” “possible,” “plan,” “project,” “will,”“forecast,” and similar words or expressions. The Company’s forward-looking statements generallyrelate to its growth strategies, financial results, product development, and sales efforts. These forward-looking statements should be considered with the understanding that such statements involve a varietyof risks and uncertainties, known and unknown, and may be affected by inaccurate assumptions.Consequently, no forward-looking statement can be guaranteed and actual results may vary materially.

Many factors could cause actual results to differ materially from the Company’s forward-lookingstatements. Among these factors are: (1) competitive pressure to reduce prices; (2) the ability to gainor maintain market share in intensely competitive global markets; (3) the success of the Company’sglobal strategy to develop brand differentiation and brand loyalty; (4) the ability to control operating andselling costs and to maintain profit margins during industry downturns; (5) the success of the LatinAmerican business operating in challenging and volatile environments; (6) continuation of theCompany’s strong relationship with Sears, Roebuck and Co. in North America, which accounted forapproximately 18% of consolidated net sales of $12 billion in 2003; (7) currency exchange ratefluctuations; (8) social, economic, and political volatility in developing markets; (9) continuinguncertainty in the North American, Latin American, Asian and European economies; (10) changes inNorth America’s consumer preferences regarding how appliances are purchased; (11) theeffectiveness of the series of restructuring actions the Company has announced and/or completedthrough 2003; (12) the threat of terrorist activities or the impact of war; (13) U.S. interest rates;(14) new Asian competitors; and (15) changes to the obligations as presented in the contractualobligations table.

The Company undertakes no obligation to update every forward-looking statement, and investors areadvised to review disclosures in the Company’s filings with the Securities and Exchange Commission.It is not possible to foresee or identify all factors that could cause actual results to differ from expectedor historic results. Therefore, investors should not consider the foregoing factors to be an exhaustivestatement of all risks, uncertainties, or factors that could potentially cause actual results to differ.

F-17


CONSOLIDATED STATEMENTS OF OPERATIONSYear ended December 31

(Millions of dollars, except per share data)

2003 2002 2001

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,176 $11,016 $10,343ExpensesCost of products sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,407 8,464 7,925Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,916 1,736 1,639Intangible amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 14 28Product recall costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 9 295Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 101 150

Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 830 692 306Other income (expense)Interest and sundry income (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . (41) (54) (51)Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (137) (143) (162)

Earnings From Continuing Operations Before Income Taxesand Other Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 652 495 93

Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228 193 43

Earnings From Continuing Operations Before Equity Earningsand Minority Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424 302 50

Equity in loss of affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (27) (4)Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10) (13) (12)

Earnings From Continuing Operations . . . . . . . . . . . . . . . . . . . . . . . . 414 262 34Discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (43) (21)Cumulative effect of change in accounting principle, net of tax . . . . . . . . — (613) 8

Net Earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 414 $ (394) $ 21

Per share of common stockBasic earnings from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . $ 6.03 $ 3.86 $ 0.51Discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (0.62) (0.32)Cumulative effect of change in accounting principle, net of tax . . . . . . . . — (9.03) 0.12

Basic net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6.03 $ (5.79) $ 0.31

Diluted earnings from continuing operations . . . . . . . . . . . . . . . . . . . . . . . $ 5.91 $ 3.78 $ 0.50Discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (0.62) (0.31)Cumulative effect of change in accounting principle, net of tax . . . . . . . . — (8.84) 0.12

Diluted net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.91 $ (5.68) $ 0.31

Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.36 $ 1.36 $ 1.36Weighted-average shares outstanding: (millions)Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68.7 67.9 66.7Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.1 69.3 68.0

See Notes to Consolidated Financial Statements

F-18


CONSOLIDATED BALANCE SHEETS(Millions of dollars)

December 312003 2002

ASSETSCurrent AssetsCash and equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 249 $ 192Trade receivables, less allowances (2003: $113; 2002: $94) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,913 1,781Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,340 1,089Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 64Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 83Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 118

Total Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,865 3,327

Other AssetsInvestment in affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 7Goodwill, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 161Other intangibles, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 187Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268 437Prepaid pension costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357 43Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154 131

1,040 966Property, Plant and EquipmentLand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 87Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,004 954Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,391 4,793Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,023) (3,496)

2,456 2,338

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,361 $ 6,631

LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent LiabilitiesNotes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 260 $ 221Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,944 1,631Employee compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303 273Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 100Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701 664Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 122Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269 283Current maturities of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 211

Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,589 3,505

Other LiabilitiesDeferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236 117Pension benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298 358Postemployment benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489 487Product warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 57Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198 198Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,134 1,092

2,408 2,309

Minority Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 78

Stockholders’ EquityCommon stock, $1 par value: 88 87Authorized—250 million shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Issued—89 million shares (2003); 87 million shares (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Outstanding—69 million shares (2003); 68 million shares (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 659 582Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,276 1,985Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (757) (999)Treasury stock—20 million shares (2003); 19 million shares (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (965) (916)

Total Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,301 739

Total Liabilities and Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,361 $ 6,631


F-19


CONSOLIDATED STATEMENTS OF CASH FLOWSYear ended December 31

(Millions of dollars)

2003 2002 2001

Operating ActivitiesNet earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 414 $(394) $ 21Adjustments to reconcile net earnings (loss) to net cash provided by operatingactivities:

Cumulative effect of a change in accounting principle . . . . . . . . . . . . . . . . . . . . . — 613 (8)Equity in losses of affiliated companies, less dividends received . . . . . . . . . . . . — 27 4Loss on disposition of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 5 2Loss on discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 43 21Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427 405 396Changes in assets and liabilities, net of business acquisitions:

Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 (67) 116Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (127) 101 (26)Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 63 230Product recalls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 (239) 239Restructuring charges, net of cash paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (89) 33 74Taxes deferred and payable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 157 (129)Tax paid on cross currency interest rate swap gain . . . . . . . . . . . . . . . . . . . — (86) —Accrued pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (109) (37) (84)Other—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) 161 137

Cash Provided By Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 744 $ 785 $ 993

Investing ActivitiesCapital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(423) $(430) $(378)Proceeds from sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 27 31Proceeds of cross-currency interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . — — 209Acquisitions of businesses, less cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) (179) —

Cash Used for Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(352) $(582) $(138)

Financing ActivitiesNet proceeds of short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7 $(165) $(790)Proceeds of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 6 301Repayments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (221) (77) (90)Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (94) (91) (113)Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (65) (46) (43)Redemption of WFC preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33) (25) —Common stock issued under stock plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 80 81Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10) (5) 1

Cash Used for Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(345) $(323) $(653)

Effect of Exchange Rate Changes on Cash and Equivalents . . . . . . . . . . . . . . . . $ 10 $ (4) $ —

Increase (Decrease) in Cash and Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 57 $(124) $ 202Cash and Equivalents at Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192 316 114

Cash and Equivalents at End of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 249 $ 192 $ 316


F-20


CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITYYear ended December 31

(Millions of dollars)

Common StockTreasury Stock/Paid-in Capital

AccumulatedOther

ComprehensiveIncome (Loss)

RetainedEarnings Total

Balances, December 31, 2000 . . . . . . . . . . . . . . $ 84 $(444) $(495) $2,539 $1,684Comprehensive loss

Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 21 21Cumulative effect of change in accountingprinciple, net of tax of $9 . . . . . . . . . . . . . . — — (11) — (11)

Unrealized loss on derivativeinstruments . . . . . . . . . . . . . . . . . . . . . . . . . — — (6) — (6)

Minimum pension liability adjustment, net oftax of $4 . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (7) — (7)

Foreign currency items, net of tax of $3 . . . — — (178) — (178)

Comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . (181)

Common stock repurchased . . . . . . . . . . . . . . . . — (43) — — (43)Common stock issued . . . . . . . . . . . . . . . . . . . . . 2 86 — — 88Dividends declared on common stock . . . . . . . . . — — — (90) (90)

Balances, December 31, 2001 . . . . . . . . . . . . . . $ 86 $(401) $(697) $2,470 $1,458

Comprehensive lossNet loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — (394) (394)Unrealized loss on derivativeinstruments . . . . . . . . . . . . . . . . . . . . . . . . . — — (3) — (3)

Minimum pension liability adjustment, net oftax of $100 . . . . . . . . . . . . . . . . . . . . . . . . . — — (151) — (151)

Foreign currency items, net of tax of $0 . . . — — (148) — (148)

Comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . (696)

Common stock repurchased, net ofreissuances . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (35) — — (35)

Common stock issued . . . . . . . . . . . . . . . . . . . . . 1 102 — — 103Dividends declared on common stock . . . . . . . . . — — — (91) (91)

Balances, December 31, 2002 . . . . . . . . . . . . . . $ 87 $(334) $(999) $1,985 $ 739

Comprehensive incomeNet earnings . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 414 414Unrealized loss on derivativeinstruments . . . . . . . . . . . . . . . . . . . . . . . . . — — (5) — (5)

Minimum pension liability adjustment, net oftax of $75 . . . . . . . . . . . . . . . . . . . . . . . . . . — — 118 — 118

Foreign currency items, net of tax of $5 . . . — — 129 — 129

Comprehensive income . . . . . . . . . . . . . . . . . . . . 656

Common stock repurchased, net ofreissuances . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (49) — — (49)

Common stock issued . . . . . . . . . . . . . . . . . . . . . 1 77 — — 78Dividends declared on common stock . . . . . . . . . — — — (123) (123)

Balances, December 31, 2003 . . . . . . . . . . . . . . $ 88 $(306) $(757) $2,276 $1,301


F-21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

Nature of Operations

Whirlpool Corporation is the world’s leading manufacturer and marketer of major home appliances.The Company manufactures in 13 countries under 9 major brand names and markets products todistributors and retailers in more than 170 countries.

Principles of Consolidation

The Consolidated Financial Statements include all majority-owned subsidiaries. An investmentconsisting of a direct voting interest of 40% in an affiliated Company, principally engaged in the sale ofmajor home appliances, is accounted for by the equity method. All intercompany transactions havebeen eliminated upon consolidation.

Use of Estimates

Management is required to make estimates and assumptions that affect the amounts reported in thefinancial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

Sales are recorded when title passes to the customer. The point at which title passes is determined bythe shipping terms, which generally designate a transfer of title to the customer as soon as the productis shipped. Allowances for estimated returns are made on sales of certain products based on historicalreturn rates for the products involved.

Accounts Receivable and Allowance for Doubtful Accounts

The Company carries its accounts receivable at their face amounts less an allowance for doubtfulaccounts. On a periodic basis, the Company evaluates its accounts receivable and establishes theallowance for doubtful accounts based on a combination of specific customer circumstances and creditconditions and based on a history of write-offs and collections. The Company’s policy is generally tonot charge interest on trade receivables after the invoice becomes past due. A receivable is consideredpast due if payments have not been received within agreed upon invoice terms.

Freight and Warehousing Costs

Freight-out and warehousing costs included in selling, general and administrative expenses in thestatements of operations were $576 million, $520 million and $497 million in 2003, 2002 and 2001,respectively.

Cash and Equivalents

All highly liquid debt instruments purchased with an initial maturity of three months or less areconsidered cash equivalents.

Inventories

Inventories are stated at first-in, first-out (FIFO) cost, except U.S. production inventories, which arestated at last-in, first-out (LIFO) cost and Brazilian inventories, which are stated at average cost. Costsdo not exceed realizable values.

F-22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation of plant and equipment is computedusing the straight-line method based on the estimated useful lives of the assets. Useful lives forbuildings range from 25 to 40 years and machinery and equipment range from 3 to 10 years. Assetsrecorded under capital leases are included in property, plant and equipment.

Research and Development Costs

Research and development costs are charged to expense as incurred. Such costs were $325 million,$282 million and $231 million in 2003, 2002 and 2001, respectively.

Advertising Costs

Advertising costs are charged to expense as incurred. Such costs were $170 million, $176 million and$177 million in 2003, 2002 and 2001, respectively.

Foreign Currency Translation

The functional currency for the Company’s international subsidiaries and affiliates is typically the localcurrency. Certain international subsidiaries utilize the U.S. dollar as the functional currency.

Derivative Financial Instruments

The Company recognizes all of its derivative instruments in accordance with Statement of FinancialAccounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and HedgingActivities,” as amended. Changes in the fair value of hedge assets or liabilities (i.e., gains or losses)are recognized depending upon the type of hedging relationship and whether a hedge has beendesignated. For those derivative instruments that are designated and qualify as hedging instruments,the Company must further designate the hedging instrument, based upon the exposure being hedged,as a cash flow hedge, fair value hedge, or a hedge of a net investment in a foreign operation.

Cash flow hedges are hedges that use derivatives to offset the variability of expected future cash flows.The effective portion of the unrealized gain or loss on a derivative instrument designated as a cashflow hedge is reported as a component of accumulated other comprehensive income and reclassifiedinto earnings in the same line item associated with the hedged transaction in the same period orperiods during which the hedged transaction affects earnings. The ineffective portion of the unrealizedgain or loss on the derivative instrument, if any, is recognized in other income (expense) in currentearnings during the period of change.

Fair value hedges are hedges that eliminate the risk of changes in the fair values of assets, liabilitiesand certain types of firm commitments. The gain or loss on a derivative instrument designated as a fairvalue hedge and the offsetting loss or gain on the hedged item are recognized in the same line itemassociated with the hedged item in current earnings during the period of the change in fair values.

Net investment hedge designation refers to the use of derivative contracts or cash instruments tohedge the foreign currency exposure of a net investment in a foreign operation. For those derivativesthat qualify as net investment hedges, the effective portion of any unrealized gain or loss is reported inaccumulated other comprehensive income as part of the cumulative translation adjustment. Anyineffective portion of net investment hedges is recognized in other income (expense) in currentearnings during the period of change.

F-23


For derivative instruments not designated as hedging instruments, the unrealized gain or loss isrecognized in other income (expense) in current earnings during the period of change.

Stock-Based Employee Compensation

Stock option and incentive plans are accounted for under the intrinsic value method in accordance withAccounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and relatedInterpretations. The Company has adopted the disclosure provisions of SFAS No. 148, “Accounting forStock-Based Compensation—Transition and Disclosure” but has not adopted the fair value recognitionprovisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended. Had theCompany elected to adopt the recognition provisions of SFAS No. 123, pro-forma net earnings (loss)and diluted net earnings (loss) per share would be as follows:

Year ended December 31—Millions of dollars, except per share data 2003 2002 2001

Compensation cost included in earnings as reported(net of tax benefits) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13 $ 12 $ 16

Pro-forma total fair value compensation cost (net of tax benefits) . . . . . . . . $ 25 $ 25 $ 29

Net earnings (loss)As reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 414 $ (394) $ 21Pro-forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402 (407) 8

Basic net earnings (loss) per shareAs reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6.03 $(5.79) $0.31Pro-forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.86 (5.99) 0.12

Diluted net earnings (loss) per shareAs reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5.91 $(5.68) $0.31Pro-forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.74 (5.87) 0.12

Net Earnings Per Common Share (in thousands)

Diluted net earnings per share of common stock includes the dilutive effect of stock options and stockbased compensation plans. For the years ended December 31, 2003, 2002 and 2001, a total of 1,803options, 1,885 options, and 619 options, respectively, were excluded from the calculation of dilutedearnings per share because their exercise prices would render them anti-dilutive.

Reclassifications

Certain reclassifications have been made to prior year data to conform to the current year presentationwhich had no effect on net income reported for any period.

(2) NEW ACCOUNTING STANDARDS

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46,“Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51”(Interpretation or FIN 46). The Interpretation requires consolidation, beginning December 31, 2003, ofentities in which the Company absorbs a majority of the entity’s expected losses, receives a majority ofthe entity’s expected residual returns, or both, as a result of ownership, contractual or other financialinterests in the entity. Previously, entities were consolidated when the Company had a controllingfinancial interest, typically through ownership of a majority voting interest in an entity. The adoption ofFIN 46 did not materially impact the Company’s financial position or results of operations.

F-24


In December 2003, the FASB issued revised Statement No. 132 (SFAS 132), “Employers’ Disclosuresabout Pensions and Other Postretirement Benefits.” The revised SFAS 132 requires additionaldisclosures about the types of plan assets, investment strategy, measurement date(s), planobligations, cash flows, and components of net periodic benefit cost recognized during interim periods.This Statement is effective for financial statements with fiscal years ending after December 15, 2003.The adoption of the revised SFAS 132 did not impact the Company’s financial position or results ofoperations.

(3) GOODWILL AND OTHER INTANGIBLES

Goodwill

On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142(SFAS 142), “Goodwill and Other Intangible Assets,” and recorded a non-cash after-tax charge of $613million, or $8.84 per diluted share, as a cumulative effect of a change in accounting principle. Anadditional impairment of $9 million, after-tax, was recognized as a charge to operations during thefourth quarter of 2002 relating to goodwill associated with an acquisition in Asia (see Note 4).

Under SFAS 142, goodwill is no longer amortized but is subject to an annual impairment analysis.The following table provides comparative net earnings (loss) and net earnings (loss) per share had thenon-amortization provisions of SFAS No. 142 been adopted for all periods presented:

Millions of dollars, except per share data 2003 2002 2001

Reported net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 414 $ (394) $ 21Goodwill amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 27

Adjusted net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 414 $ (394) $ 48

Basic earnings per shareReported net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6.03 $(5.79) $.31Goodwill amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — .40

Adjusted net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6.03 $(5.79) $.71

Diluted earnings per shareReported net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5.91 $(5.68) $.31Goodwill amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — .40

Adjusted net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5.91 $(5.68) $.71

The following table summarizes the changes in the carrying amount of goodwill for the year endedDecember 31, 2003:

Reporting Unit—Millions of dollarsBeginningof Year Other

Endof Year

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $157 $ 4 $161Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 — 4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $161 $ 4 $165

The $4 million increase in the carrying value of North America goodwill is related to the effects ofcurrency translation for its Canadian subsidiary.

F-25


Other Intangible Assets

Other intangibles are comprised of the following:

December 31—Millions of dollars 2003 2002

Trademarks (indefinite-lived) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $51 $ 49Patents and non-compete agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5Pension related . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 133

Total other intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $85 $187

The balances include trademarks acquired as part of the Whirlpool Mexico and Polar acquisitions(See Note 4) and intangible assets related to minimum pension liabilities (See Note 16). Accumulatedamortization totaled $25 million and $21 million at December 31, 2003 and 2002.

(4) BUSINESS ACQUISITIONS / DISPOSITIONS

Whirlpool Mexico

On July 3, 2002, the Company acquired the remaining 51% ownership in Vitromatic S.A. de C.V.(Whirlpool Mexico), an appliance manufacturer and distributor in Mexico. Prior to that date, theCompany’s 49% ownership in Whirlpool Mexico was accounted for as an equity investment. WhirlpoolMexico has been included in the Consolidated Financial Statements within the North Americanoperating segment since the acquisition date. The aggregate purchase price was $151 million in cashplus outstanding debt at the time of acquisition, which totaled $143 million. The transaction is expectedto result in synergies and operational benefits, and generated goodwill of $89 million. The transactionalso generated approximately $15 million in indefinite-lived intangible assets related to trademarksowned by Whirlpool Mexico.

The Whirlpool Mexico opening balance sheet is summarized (in millions) as follows:

ASSETS LIABILITIES AND STOCKHOLDER’SEQUITY

Current assets Current liabilitiesTrade receivables, net . . . . . . . . . . . . . . . . $130 Accounts payable . . . . . . . . . . . . . . . . . . $112Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 60 Notes payable . . . . . . . . . . . . . . . . . . . . . 132Other current assets . . . . . . . . . . . . . . . . . 15

Total Current Assets . . . . . . . . . . . . . . . . . 205 Total Current Liabilities . . . . . . . . . . . . . 244

Other assets Other liabilitiesProperty, plant and equipment . . . . . . . . . 245 Other liabilities . . . . . . . . . . . . . . . . . . . . 80

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Total Other Liabilities . . . . . . . . . . . . . . . 80

Other intangibles . . . . . . . . . . . . . . . . . . . . 15Total Stockholder’s Equity . . . . . . . . . . . 230

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . $554Total Liabilities andStockholder’s Equity . . . . . . . . . . . . . . . . $554

F-26


Polar

On June 5, 2002, the Company acquired 95% of the shares of Polar S.A. (Polar), a leading majorhome appliance manufacturer in Poland. The results of Polar’s operations have been included in theConsolidated Financial Statements within the European operating segment since that date. Theaggregate purchase price was $27 million in cash plus outstanding debt at the time of acquisition,which totaled $19 million. The transaction also generated $17 million in indefinite-lived intangibleassets related to trademarks owned by Polar. The operations of Polar have been included in theCompany’s European operating segment. During 2003, Whirlpool acquired the remaining 5% of theshares of Polar.

Other

On September 30, 2003, the Company completed the sale of its interest in Wellmann to Alno, aprominent German kitchen cabinet manufacturer. Previously, the Company held a 49.5% ownershipinterest in Wellmann, and in connection with the sale, the Company obtained a 10% interest in Alno.The sale did not have a material impact to the Company’s financial position or results of operations.The Company analyzed the provisions of FIN 46, with respect to its 10% interest in Alno anddetermined that Alno did not meet the definition of a variable interest entity under FIN 46.

On November 18, 2002, the Company acquired the remaining 20% interest in Whirlpool NarcissusShanghai Company Limited (“Narcissus”) for $9 million. Subsequent to the purchase, the Companywas renamed Whirlpool Home Appliance (Shanghai) Co. Ltd. (“Whirlpool Shanghai”). WhirlpoolShanghai is a home appliance manufacturing Company located in Shanghai, China. The transactionwas largely necessitated by the exercise of a put option by the minority partner arising out of anamendment to the joint venture contract agreed to in February 1998. The purchase resulted in $9million of goodwill which was subsequently written off as impaired goodwill under the requirements ofSFAS No. 142, “Goodwill and Other Intangible Assets.” The entity is now a wholly owned subsidiary ofthe Company.

(5) DISCONTINUED OPERATIONS

In 1997, the Company discontinued its financing operations, Whirlpool Financial Corporation (WFC),and sold the majority of its assets. The remaining assets consist primarily of an investment in aportfolio of leveraged leases which are recorded in other non-current assets in the balance sheets andtotaled $42 million and $44 million, net of related reserves, at December 31, 2003 and 2002,respectively.

During the fourth quarter of 2002, the Company wrote off WFC’s investment in leveraged aircraftleases relating to United Airlines (UAL) as a result of UAL’s filing for bankruptcy protection. The write-off resulted in a non-cash charge of $68 million, or $43 million after-tax.

During the second quarter of 2001, the Company wrote off a portion of WFC’s investment in securitizedaircraft leases. The write-off, due primarily to the softening aircraft leasing industry, resulted in a lossfrom discontinued operations of $35 million, or $21 million after-tax.

F-27


(6) INVENTORIES


Finished products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,118 $ 928Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 71Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284 226

1,466 1,225Less excess of FIFO cost over LIFO cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . (126) (136)

Total inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,340 $1,089

LIFO inventories represent approximately 31% and 33% of total inventories at December 31, 2003 and2002, respectively.

(7) ASSET IMPAIRMENTS

During the fourth quarter of 2003, the Company determined a production line would no longer beutilized in its Mexican operations. Accordingly, an impairment analysis was performed, and the totalnon-discounted future cash flows of the equipment was less than its carrying value. As a result, theCompany recorded a $5 million after-tax impairment charge for the year ended December 31, 2003.The impairment charge is reflected in the cost of products sold line item in the consolidated statementsof operations.

The Company recorded a $22 million after-tax impairment charge in the second quarter of 2002 relatedto its minority investments in and advances to Wellmann. The Company acquired its initial investmentin this entity with its purchase of the appliance operations of Philips Electronics N.V. in 1989.Continued deterioration in the marketplace led to overcapacity in the wood cabinet industry, whichresulted in the business revising its estimated future cash flows. These circumstances prompted theCompany to conduct an impairment review, resulting in the above charge, which is reflected in equityearnings (loss) in the consolidated statements of operations. See Note 4 regarding the sale of theCompany’s interest in Wellmann.

(8) FINANCING ARRANGEMENTS

Notes Payable and Debt

At December 31, 2003, the Company had committed unsecured revolving lines of credit available frombanks totaling $1.2 billion. The lines of credit are comprised of a committed $800 million creditagreement which expires in June 2006, and a committed $400 million 364-day credit agreementmaturing in May 2004. These committed lines support the Company’s commercial paper programs andother liquidity needs. The interest rate for borrowing under the credit agreements is generally based onthe London Interbank Offered Rate plus a spread that reflects the Company’s debt rating. The creditagreements require that the Company maintain a maximum debt to EBITDA ratio and a minimuminterest coverage ratio. At December 31, 2003, the Company was in compliance with its financialcovenants. The credit agreements provide the Company with access to adequate and competitivefunding under usual or unusual market conditions. During 2003, there were no borrowings outstandingunder these credit agreements.

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Notes payable consist of the following:


Payable to banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $170 $208Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 13

Total notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $260 $221

The fair value of the Company’s notes payable approximates the carrying amount due to the shortmaturity of these obligations. The weighted average interest rate on notes payable was 3.8% and 5.7%at December 31, 2003 and 2002, respectively.

Long-term debt consists of the following:


Debentures—9% due 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 200Eurobonds (EUR 300 million)—5.875% due 2006 . . . . . . . . . . . . . . . . . . . . . . 374 310Debentures—9.1% due 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 125Notes—8.6% due 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325 325Debentures—7.75% due 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243 243Other (various interest rates with maturities of 2003-2012) . . . . . . . . . . . . . . 86 100

$1,153 $1,303Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 211

Total long-term debt, net of current maturities . . . . . . . . . . . . . . . . . . . . . . . . . $1,134 $1,092

Annual maturities of long-term debt in the next five years are $19 million, $5 million, $381 million,$9 million and $127 million.

The Company paid interest on short-term and long-term debt totaling $137 million, $141 million and$151 million in 2003, 2002 and 2001, respectively.

The fair value of long-term debt (including current maturities) was $1,323 million and $1,457 million asof December 31, 2003 and 2002, respectively, and was estimated using discounted cash flow analysesbased on incremental borrowing rates for similar types of borrowing arrangements.

Preferred Stock

Although most of its assets have been divested, WFC remains a legal entity with assets consistingprimarily of leveraged leases (see Note 5). WFC also has 17,500 shares of Series B preferred stockoutstanding as of December 31, 2003 with a face value of $100 per share, an annual dividend of $6.55per share and a mandatory redemption date of September 1, 2008. As of December 31, 2002, WFChad 349,300 shares of Series B preferred stock outstanding. On February 1, 2002, the Series Cpreferred stock was redeemed on the mandatory redemption date. The preferred stock amounts areincluded within minority interests in the consolidated balance sheets and the carrying amountsapproximate fair value.

The preferred stockholders are entitled to vote together on a share-for-share basis with WFC’scommon stockholder, Whirlpool Corporation. Preferred stock dividends are payable quarterly. At its

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option, WFC may redeem the Series B at any time on or after September 1, 2003. WFC redeemed331,800 shares of the series B preferred stock on September 1, 2003 at a price of $100 per share (atpar). The redemption terms require the payment of any accrued unpaid dividends in addition to theapplicable redemption premium if redeemed early. A total of $0.6 million was paid on September 1,2003 related to dividends. The terms of the preferred stockholders agreement provided for an annualcontribution, beginning September 1, 2003, of $1,750,000 to a sinking fund with a final payment of$26,250,000 due on the mandatory redemption date. The sinking fund contributions are not requireddue to the redemption of 95% of the outstanding Series B preferred stock on September 1, 2003.

The Company and WFC are parties to a support agreement. Pursuant to the agreement, if at the closeof any quarter WFC’s net earnings available for fixed charges (as defined) for the preceding twelvemonths is less than a stipulated amount, the Company is required to make a cash payment to WFCequal to the insufficiency within 60 days of the end of the quarter. The Company was not required tomake any payments under this agreement during 2003, 2002 or 2001. The support agreement may beterminated by either WFC or the Company upon 30 days notice provided that certain conditions aremet. The Company has also agreed to maintain ownership of at least 70% of WFC’s voting stock.

(9) GUARANTEES, COMMITMENTS AND CONTINGENCIES

Guarantees

The Company guarantees bills of exchange related to Wellmann, a German kitchen cabinetmanufacturer, in which the Company previously held a 49.5% interest. The Company sold its interest inWellmann to Alno, a prominent German kitchen cabinet manufacturer, during the quarter endedSeptember 30, 2003 (See Note 4). These bills of exchange are short-term agreements, usually for 90days, which allow the (issuer) receiver to convert its receivables into cash, less a minor fee paid to thebank. The bills of exchange are issued both by the Company for loans made to Wellmann and byWellmann for its trade accounts receivable. In the event Wellmann defaults on its obligations under anyof the bills of exchange, the Company would be liable for the related amounts. The Company haslimited recourse against the assets of Wellmann in the event of its insolvency. As of December 31,2003 and December 31, 2002, the Company had approximately $18 million and $30 million,respectively, of guarantees outstanding for the bills of exchange related to Wellmann, which expired inJanuary and February 2004. The Company will continue to provide guarantees of certain trade-relatedobligations of customers of Wellmann, however, the amounts are expected to be de minimus.

The Company also has guarantee arrangements in place in a Brazilian subsidiary. As a standardbusiness practice in Brazil, the subsidiary guarantees customer lines of credit, supporting purchasesfrom the Company, at commercial banks following its normal credit policies. In the event that acustomer was to default on its line of credit with the bank, the subsidiary would be required to satisfythe obligation with the bank, and the receivable would revert back to the subsidiary. As of December 31,2003 and December 31, 2002, these amounts totaled $109 million and $66 million, respectively. Theonly recourse the Company has related to these agreements would be legal or administrative collectionefforts directed against the customer.

The Company provides guarantees of indebtedness and lines of credit for various consolidatedsubsidiaries. The maximum amount of credit facilities under guarantee for consolidated subsidiariestotaled $1.7 billion and $1.4 billion at December 31, 2003 and December 31, 2002, respectively. TheCompany’s total outstanding bank indebtedness, including credit facility amounts under guarantee,totaled $225 million and $212 million at December 31, 2003 and December 31, 2002, respectively.

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Product warranty reserves are established in the same period that revenue from the sale of the relatedproducts is recognized. The amounts of those reserves are based on established terms and theCompany’s best estimate of the amounts necessary to settle future and existing claims on productssold as of the balance sheet date. The product warranty reserves increased in 2003 when compared to2002 due to increased sales volume and final costs recognized in 2003 primarily related to final costsin connection with the 2001 recall (See Note 14).

The following represents a reconciliation of the changes in product warranty reserves for the periodspresented:


Balance at January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 128 $ 108Warranties issued during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262 228Warranties acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 7Settlements made during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (248) (214)Other changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 (1)

Balance at December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 148 $ 128

Current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 95 $ 71Non-current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 57

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 148 $ 128

Commitments and Contingencies

Commitments

At December 31, 2003, the Company had noncancelable operating lease commitments totaling$266 million. The annual future minimum lease payments are detailed in the table below.

Millions of dollars

2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 682005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 472007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 372008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Total noncancelable operating lease commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $266

The Company’s rent expense was $84 million, $72 million and $98 million for the years 2003, 2002 and2001, respectively.

Contingencies

In 1989, a Brazilian affiliate (now a subsidiary) of the Company brought an action against a financialinstitution in Brazil seeking a “Declaration of Non-Enforceability of Obligations” relating to loandocumentation entered into without authority by a senior officer of the affiliate. The original amount indispute was approximately $25 million. In September 2000, a decision in the declaratory actionadverse to the Company became final. In 2001, the financial institution began a collection action, andthe Company responded with a counterclaim. The lower court has dismissed the counterclaim and a

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discretionary appeal of this dismissal has been requested. A final decision in the collection action is notexpected for several years. The Company plans to continue to aggressively defend this matter, and atthis point cannot reasonably estimate a possible range of loss.

The Company is party to other claims and litigation proceedings arising in the normal course ofbusiness. Management, after taking into consideration legal counsel’s evaluation of such actions, is ofthe opinion that the outcome of these matters will not have a material adverse effect on the Company’sfinancial position.

(10) HEDGES AND DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to market risk from changes in foreign currency exchange rates, domesticand foreign interest rates, and commodity prices. Fluctuations in these rates and prices can affect theCompany’s operating results and financial condition. The Company manages its exposure to thesemarket risks through its operating and financing activities and through the use of derivative financialinstruments. The Company does not enter into derivative financial instruments for speculative ortrading purposes.

Using derivative markets means assuming counterparty credit risk. Counterparty risk relates to the lossthe Company could incur if a counterparty defaulted on a derivative contract. The Company deals onlywith investment-grade counterparties and monitors its overall credit risk and exposure to individualcounterparties. The Company does not anticipate nonperformance by any counterparties. The amountof counterparty credit exposure is generally the unrealized gains on such derivative contracts. TheCompany does not require, nor does it post, collateral or security on such contracts.

The following summarizes the outstanding derivative contracts at December 31, 2003 and 2002 andthe exposures to which they relate:

Notional Amount inMillions of dollars

Exposure Derivative 2003 2002 Hedge Type Term

Forecasted cross currencycash flows Foreign exchange forwards $652 $345

Cash flow or fairvalue hedge

Various, up to36 months

Non-functionalcurrency asset/liability Foreign exchange forwards $683 $533 Undesignated

Various, up to12 months

Raw Material Purchases Commodity swaps $ 17 $ 29 Cash flow hedgeVarious, up to18 months

Floating Rate Debt Interest rate swaps $100 $100 Cash flow hedge 2006

Fixed Rate Debt Interest rate swaps $— $200 Fair value hedge 2003

Forecasted cross currency cash flows relate primarily to foreign currency denominated expendituresand intercompany financing agreements, royalty agreements and dividends. Non-functional currencyasset and liability hedges are undesignated but relate primarily to short term payables and receivablesand intercompany loans. Commodity swaps relate to raw material purchases (for example, copper andaluminum) used in the manufacturing process. Unrealized gains and losses on the above foreigncurrency exchange contracts and commodities swaps were not significant as of December 31, 2003and 2002, respectively.

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The Company’s $100 million interest rate swap maturing in 2006 is designated and is effective as ahedge of future cash payments and is treated as a cash flow hedge for accounting purposes. The fairvalue of this contract was a loss of $10 million as of December 31, 2003 and a loss of $12 million as ofDecember 31, 2002.

The Company’s $200 million interest rate swap which matured in 2003 was designated and waseffective as a hedge of the fair value of the fixed rate debt and was treated as a fair value hedge foraccounting purposes. The fair value of this contract was a gain of $1 million as of December 31, 2002.

The Company has designated a portion of its euro-denominated fixed-rate debt as a hedge to protectthe value of its net investments in its European subsidiaries. Translation adjustments related to thisdebt are not included in the income statement, but are shown in the cumulative translation adjustmentaccount included in accumulated other comprehensive income. During the year ended December 31,2003, the Company recognized $16 million of net losses included in the cumulative translationadjustment related to this net investment hedge.

During the years ended December 31, 2003 and 2002, the Company’s gains and losses related to theineffective portion of its hedging instruments were immaterial. The Company did not recognize anygains or losses during the years ended December 31, 2003 and 2002 for cash flow hedges that werediscontinued because the forecasted transaction was not probable to occur.

The amount of unrealized gains and losses on derivative instruments included in other comprehensiveincome at December 31, 2003 that will be reclassified into earnings during 2004 is not material.

(11) STOCKHOLDERS’ EQUITY

On February 15, 2000, the Company announced that its Board of Directors approved an extension ofthe Company’s stock repurchase program to $1 billion. The additional $750 million share repurchaseauthorization extends the previously authorized $250 million repurchase program that was announcedMarch 1, 1999. The shares are to be purchased in the open market and through privately negotiatedsales as the Company deems appropriate. The Company has purchased 13.7 million shares at a costof $749 million through December 31, 2003 under this stock repurchase program, of which 0.7 millionshares ($43 million) were purchased in 2001, 0.7 million shares ($46 million) were purchased in 2002and 1.0 million shares ($65 million) were purchased in 2003. The 2003 shares were purchased fromone of the Company’s U.S. pension plans at an average cost of $67.24 per share, which was basedupon an average of the high and low market prices on the date of purchase. The 2002 shares werepurchased from one of the Company’s U.S. pension plans at an average cost of $66.32 per share,which was based upon an average of the high and low market prices on the date of purchase.

Pursuant to the Company’s stock repurchase program authorized by the Board of Directors, theCompany repurchased a combined total 1 million shares of Whirlpool common stock in the openmarket subsequent to December 31, 2003, at an aggregate purchase price of $75 million.

In addition to its common stock, the Company has 10 million authorized shares of preferred stock(par value $1 per share), none of which is outstanding.

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Accumulated other comprehensive loss, net of tax, consists of:

Millions of dollars 2003 2002

Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(694) $(823)Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25) (20)Minimum pension liability adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (38) (156)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(757) $(999)

Preferred Stock Purchase Rights

One Preferred Stock Purchase Right (Rights) is outstanding for each share of common stock. TheRights, which expire May 22, 2008, will become exercisable 10 days after a person or group (anAcquiring Person) has acquired, or obtained the right to acquire, beneficial ownership of 15% or moreof the outstanding common stock (the Trigger Date) or 10 business days after the commencement, orpublic disclosure of an intention to commence, a tender offer or exchange offer by a person that couldresult in beneficial ownership of 15% or more of the outstanding common stock. Each Right entitles theholder to purchase from the Company one one-thousandth of a share of a Junior ParticipatingPreferred Stock, Series B, par value $1.00 per share, of the Company at a price of $300 per oneone-thousandth of a Preferred Share subject to adjustment.

If a person becomes an Acquiring Person, proper provision shall be made so that each holder of aRight, other than Rights that are or were beneficially owned by the Acquiring Person (which willthereafter be void), shall thereafter have the right to receive upon exercise of such Right that number ofshares of common stock (or other securities) having at the time of such transaction a market value oftwo times the exercise price of the Right. If a person becomes an Acquiring Person and the Companyis involved in a merger or other business combination transaction where the Company is not thesurviving corporation or where common stock is changed or exchanged or in a transaction ortransactions in which 50% or more of its consolidated assets or earning power are sold, properprovision shall be made so that each holder of a Right (other than such Acquiring Person) shallthereafter have the right to receive, upon the exercise thereof at the then current exercise price of theRight, that number of shares of common stock of the acquiring company which at the time of suchtransaction would have a market value of two times the exercise price of the Right. In addition, if anAcquiring Person, does not have beneficial ownership of 50% or more of the common stock, theCompany’s Board of Directors has the option of exchanging all or part of the Rights for an equalnumber of shares of common stock in the manner described in the Rights Agreement.

Prior to the Trigger Date, the Board of Directors of the Company may redeem the Rights in whole, butnot in part, at a price of $.01 per Right, payable in cash, shares of common stock or any otherconsideration deemed appropriate by the Board of Directors. Immediately upon action of the Board ofDirectors ordering redemption of the Rights, the ability of holders to exercise the Rights will terminateand such holders will only be able to receive the redemption price.

Until such time as the Rights become exercisable, the Rights have no voting or dividend privileges andare attached to, and do not trade separately from, the common stock.

The Company covenants and agrees that it will cause to be reserved and kept available at all times asufficient number of shares of Preferred Stock (and following the occurrence of a Triggering Event,shares of common stock and/or other securities) to permit the exercise in full of all Rights from time totime outstanding.

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(12) STOCK OPTION AND INCENTIVE PLANS

Stock option and incentive plans are accounted for in accordance with Accounting Principles BoardOpinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. Generally, nocompensation expense is recognized for stock options with exercise prices equal to the market valueof the underlying shares of stock at the date of grant. Stock options generally have 10 year terms, andvest and become fully exercisable over a two year period after date of grant. Compensation expenserelated to the Company’s stock based incentive plans is recognized ratably over each plan’s definedvesting period. Pre-tax expenses under the Company’s stock based incentive plans were $21 million,$20 million and $26 million in 2003, 2002 and 2001.

The Company’s stock option and incentive plans permit the grant of stock options and other stockawards covering up to 14.5 million shares to key employees of the Company and its subsidiaries, ofwhich 3.9 million shares are available for grant at December 31, 2003. Outstanding restricted andphantom shares totaled 1,322,917 with a weighted-average grant-date fair value of $56.28 per share atDecember 31, 2003 and 1,557,123 with a weighted-average grant-date fair value of $56.01 per shareat December 31, 2002.

Under the Nonemployee Director Stock Ownership Plan, each nonemployee director is automaticallygranted 400 shares of common stock annually and is eligible for a stock option grant of 600 shares ifthe Company’s earnings meet a prescribed earnings formula. In addition, each nonemployee director isawarded annually deferred compensation in the form of 400 shares of phantom stock, which isconverted into common stock on a one-for-one basis and paid when the director leaves the Board. Thisplan provides for the grant of up to 300,000 shares as either stock or stock options, of which 132,140shares are available for grant at December 31, 2003. The stock options vest and become exercisablesix months after date of grant. There were no significant expenses under this plan for 2003, 2002 or2001.

The fair value of stock options used to compute pro forma net earnings and diluted net earnings pershare disclosures, as presented in Note 1, is the estimated present value at grant date using the Black-Scholes option-pricing model with the following assumptions for 2003, 2002 and 2001: expectedvolatility of 31.7%, 33.8% and 32.6%; dividend yield of 2.2%, 2.2% and 2.3%; risk-free interest rate of3.2%, 2.7% and 4.3%, and a weighted-average expected option life of 5 years for all three years.

A summary of stock option information follows:

2003 2002 2001

Thousands of shares, except per share data

Numberof

Shares

Weighted-AverageExercisePrice

Numberof

Shares


Numberof

Shares


Outstanding at January 1 . . . . . . . . . . . . . . 5,965 $55.63 6,066 $51.83 6,437 $50.86Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,315 50.06 1,466 67.07 1,401 54.30Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,251) 48.60 (1,395) 51.48 (1,508) 50.19Canceled or expired . . . . . . . . . . . . . . . . . . (137) 58.37 (172) 52.72 (264) 50.49

Outstanding at December 31 . . . . . . . . . . . 5,892 $55.82 5,965 $55.63 6,066 $51.83

Exercisable at December 31 . . . . . . . . . . . . 3,937 $55.78 3,639 $52.59 3,574 $52.68

Fair value of options grantedduring the year . . . . . . . . . . . . . . . . . . . . . $12.67 $18.28 $15.59

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Of the outstanding options at December 31, 2003, 3.8 million options, of which 2.5 million areexercisable at a weighted-average price of $51.25, have exercise prices ranging from $38.38 to $54.44and a weighted-average remaining life of 6.9 years. The remaining 2.1 million outstanding options, ofwhich 1.4 million are exercisable at a weighted-average price of $64.11, have exercise prices rangingfrom $55.38 to $77.85 and a weighted-average remaining life of 6.6 years.

(13) RESTRUCTURING AND RELATED CHARGES

Restructuring Charges

Through December 31, 2003, the Company had approved all phases of a restructuring program thatbegan in the fourth quarter of 2000 and resulted in cumulative pre-tax restructuring charges of $254million, of which $3 million was recognized during 2003, $101 million was recognized during 2002 and$150 million was recognized during 2001. These charges have been identified as a separatecomponent of operating profit. The restructuring plan and related charges relate primarily to the closingof a refrigeration plant in the Company’s Latin American region, a parts packing facility and a cookingplant in the North American region, a plastic components facility in the Asian region, the relocation ofseveral laundry manufacturing facilities in Europe and a restructuring of the Company’s microwavebusiness in its European region. Employees terminated to date under the plan include both hourly andsalaried employees, however, the majority are hourly personnel at the facilities listed above. For theinitiatives announced through December 31, 2003, the Company expects to eliminate over 7,500employees of which approximately 6,900 had left the Company through December 31, 2003.

Other Related Charges

As a result of the Company’s restructuring activity, $133 million of pre-tax restructuring relatedcharges, of which $11 million was recognized during 2003, $60 million was recognized during 2002and $62 million was recognized during 2001, have also been recorded primarily within cost of productssold. The 2003 charges include net asset write-downs of $2 million as well as $9 million of variouscash costs. The 2002 charges include $4 million and $1 million write-downs of buildings in the NorthAmerican and Latin American regions, inventory write-offs of $1 million in Europe and $16 million ofmiscellaneous equipment in North America, Europe and Latin America as well as $38 million in cashcosts incurred during the year for various restructuring related activities such as relocating employeesand equipment and concurrent operating costs. The 2001 charges included $12 million in write-downsof various fixed assets, primarily buildings that are no longer used in the company’s business activitiesin its Latin American region, $7 million of excess inventory due to the parts distribution consolidation inNorth America, $25 million in various assets in its North American, European and Asian regions, whichwere primarily made up of equipment no longer used in its business, and $18 million in cash costsincurred during 2001 for various restructuring related activities.

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Details of the restructuring liability balance and full year restructuring and related activity for 2003 and2002 are as follows:

Millions of dollarsBeginningBalance

Chargeto Earnings

CashPaid Non-cash Translation Acquisitions

EndingBalance

2003RestructuringTermination costs . . . . . . . . . . $116 $ 3 $ (89) $— $ 11 $— $ 41Non-employee exit costs . . . . . 6 — (5) — 3 — 4Related ChargesMiscellaneous buildings . . . . . — (1) — 1 — — —Inventory . . . . . . . . . . . . . . . . . . — 1 — (1) — — —Miscellaneous equipment . . . . — 2 — (2) — — —

Various cash costs . . . . . . — 9 (9) — — — —

Total . . . . . . . . . . . . . . . . . . . . . $122 $ 14 $(103) $ (2) $ 14 $— $ 45

2002RestructuringTermination costs . . . . . . . . . . $ 73 $ 92 $ (60) $— $ 4 $ 7 $116Non-employee exit costs . . . . . 4 9 (7) — — — 6Related ChargesMiscellaneous buildings . . . . . — 5 — (5) — — —Inventory . . . . . . . . . . . . . . . . . . — 1 — (1) — — —Miscellaneous equipment . . . . — 16 — (16) — — —


Total . . . . . . . . . . . . . . . . . . . . . $ 77 $161 $(105) $(22) $ 4 $ 7 $122

2001RestructuringTermination costs . . . . . . . . . . $ 5 $134 $ (64) $— $ (2) $— $ 73Non-employee exit costs . . . . . — 16 (12) — — — 4Related ChargesMiscellaneous buildings . . . . . — 12 — (12) — — —Inventory . . . . . . . . . . . . . . . . . . — 7 — (7) — — —Miscellaneous equipment . . . . — 25 — (25) — — —


Total . . . . . . . . . . . . . . . . . . . . . $ 5 $212 $ (94) $(44) $ (2) $— $ 77

(14) PRODUCT RECALLS

In 2001, the Company announced a voluntary recall of 1.8 million microwave hood combination unitssold under the Whirlpool, KitchenAid, and Sears Kenmore brands. The Company recognized productrecall pre-tax charges of $221 million ($136 million after-tax) during 2001 and recorded these chargesas separate components of operating profit. During 2002, the Company incurred additional charges ofapproximately $9 million ($6 million after-tax) for costs related to this recall. During 2003, the Companyincurred an additional $16 million ($10 million after-tax) primarily related to final expenses inconnection with the 2001 recall. Approximately $6 million of accrued product recall costs is reflected inother current liabilities in the balance sheet at December 31, 2003.

In 2002, the Company announced a voluntary recall of approximately 1.4 million dehumidifier units soldunder the Whirlpool, ComfortAire, and Sears Kenmore brands. The Company recognized a product

F-37


recall pre-tax charge of $74 million ($45 million after-tax) during the fourth quarter of 2001 andrecorded this charge as a separate component of operating profit.

The Company does not expect further liabilities related to these two product recalls.

(15) INCOME TAXESIncome tax expense from continuing operations are as follows:Year ended December 31—Millions of dollars 2003 2002 2001

Current:Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75 $101 $ 201State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 (6) 14Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 109 34

170 204 249Deferred:Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 47 (121)State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) 3 (21)Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 (61) (64)

58 (11) (206)

Total income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $228 $193 $ 43

Domestic and foreign earnings (loss) from continuing operations before income taxes and other itemsare as follows:Year ended December 31—Millions of dollars 2003 2002 2001

Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $473 $485 $ 204Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 10 (111)

Total earnings from continuing operations before taxes and other items . . . . $652 $495 $ 93

Earnings before income taxes and other items, including discontinued operations (See Note 5), were$652 million, $427 million, and $58 million for 2003, 2002, and 2001, respectively.

Reconciliations between tax expense at the U.S. federal statutory income tax rate of 35% and theconsolidated effective income tax rate for earnings from continuing operations before income taxes andother items are as follows:Year ended December 31—Millions of dollars 2003 2002 2001

Income tax expense computed at U.S. federal statutory rate . . . . . . . . $229 $173 $ 33State and local taxes, net of federal tax benefit . . . . . . . . . . . . . . . . . . . 3 3 (4)Tax effect of permanent differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 12 9Nondeductible goodwill amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 6Foreign tax rate differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 7 13Foreign dividends and subpart F income . . . . . . . . . . . . . . . . . . . . . . . . . 20 7 13Foreign tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (41) (19) (9)Foreign withholding taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 13 6Foreign government tax incentive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) (15) (22)Expired foreign loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 — 3Deductible interest on capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 (8) (18)U.S. government tax incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) (3) (3)Valuation allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14) 36 13Other items, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15) (13) 3

Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $228 $193 $ 43

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Deferred income taxes reflect the net tax effects of temporary differences between the carryingamounts of assets and liabilities used for financial reporting purposes and the amounts used forincome tax purposes.

Significant components of the Company’s deferred tax liabilities and assets are as follows:


Deferred tax liabilitiesProperty, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $214 $150Financial services leveraged leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 69Pensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 11Software costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 16Contested liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 24LIFO Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 17Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 108

Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590 395Deferred tax assetsPostretirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200 205Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 29Product warranty accrual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 21Receivable and inventory allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 47Loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252 260Employee payroll and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 71Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 130

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 754 763Valuation allowances for deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . (51) (65)

Deferred tax assets, net of valuation allowances . . . . . . . . . . . . . . . . . . . . . . 703 698

Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $113 $303

The Company has recorded valuation allowances to reflect the estimated amount of net operating losscarryforwards that may not be realized. At December 31, 2003, the Company has foreign net operatingloss carryforwards of $839 million, $591 million of which do not expire with substantially all of theremaining $248 million expiring in various years through 2007.

The Company provides deferred taxes on the undistributed earnings of foreign subsidiaries andaffiliates to the extent such earnings are expected to be remitted. Generally, earnings have beenremitted only when no significant net tax liability would have been incurred. No provision has beenmade for U.S. or foreign taxes that may result from future remittances of the undistributed earnings($509 million at December 31, 2003) of foreign subsidiaries and affiliates expected to be reinvestedindefinitely. Determination of the deferred income tax liability on these unremitted earnings is notpracticable as such liability, if any, is dependent on circumstances existing when remittance occurs.

The Company paid income taxes of $261 million in 2003, $126 million in 2002 and $148 million in2001.

Income taxes payable of $95 million and $186 million are included in other current liabilities atDecember 31, 2003 and 2002.

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(16) PENSION AND POSTRETIREMENT MEDICAL BENEFITS PLANS

The Company has both funded and unfunded noncontributory defined benefit pension plans that coversubstantially all of its North American employees and certain Brazilian and European employees. Thesalaried employees receive defined benefits based on years of service and final average salary, whilehourly employees receive benefits based on specific dollar amounts for each year of service.

The U.S. qualified defined benefit pension plans provide that in the event of a plan termination withinfive years following a change in control of the Company, any assets held by the plans in excess of theamounts needed to fund accrued benefits would be used to provide additional benefits to planparticipants. A change in control generally means either a change in the majority of the incumbentBoard of Directors or an acquisition of 25% or more of the voting power of the Company’s outstandingstock, without the approval of a majority of the incumbent board.

The Company also has a postretirement health care benefit program for eligible retired U.S.employees. Eligible retirees are those who were full-time employees with 10 years of service whoattained age 55 while in service with the Company. The health care plans are generally contributorywith participants’ contributions adjusted annually. The postretirement health care plans include cost-sharing provisions that limit the Company’s exposure for recent and future retirees. The plans areunfunded. The Company has reserved the right to modify the benefits. In June 2003, the Companyannounced a modification to its U.S. retiree health care plans affecting future retirees. The new plan isbased on a Retiree Healthcare Savings Account (RHSA), where notional accounts will be establishedfor eligible active U.S. paid employees. The notional account reflects each year of service beginning atage 40 and is designed to provide employees who retire from the Company after December 31, 2003with notional funds to apply towards health care premiums. In June 2003, the Company recorded aone-time curtailment gain of $13.5 million, net of tax, related to the modification of its retiree healthcare plan. No significant postretirement medical benefits are provided by the Company to non-U.S.employees.

On December 8, 2003, President Bush signed the Medicare Prescription Drug, Improvement andModernization Act (the Act) into law. This law introduced a prescription drug benefit program underMedicare (Medicare Part D) as well as a federal subsidy to sponsors of retiree health care benefitplans that provide a benefit that is at least actuarially equivalent to Medicare Part D. In general,accounting rules require that the changes in relevant laws and government benefit programs beconsidered in measuring postretirement benefit costs and the Accumulated Postretirement BenefitObligation (APBO). However, certain accounting issues raised by the Act – in particular, how toaccount for the federal subsidy – are not explicitly addressed by FASB Statement 106. In addition,significant uncertainties exist for a plan sponsor both as to the direct effects of the Act and its ancillaryeffects on plan participants’ behavior and health care costs. The FASB issued FASB Staff Position(FSP) No. 106-1, “Accounting and Disclosure Requirements Related to the Medicare PrescriptionDrug, Improvement and Modernization Act of 2003”, (FSP 106-1) that allows sponsors to elect to deferrecognition of the effects of the Act until guidance is issued by the FASB. In accordance withFSP 106-1, the Company has elected to defer recognition of the effects of the Act. Accordingly, anymeasures of the APBO or net periodic postretirement benefit cost in the financial statements or theaccompanying footnotes do not reflect the effects of the Act on the plan. Specific authoritativeguidance on the accounting for the federal subsidy is pending and that guidance, when issued, couldrequire the Company to change previously reported information.

The Company maintains a 401(k) defined contribution plan covering substantially all U.S. employees.Company matching contributions for domestic hourly and certain other employees under the plan,based on the Company’s annual operating results and the level of individual participants’ contributions,amounted to $15 million, $16 million and $12 million in 2003, 2002 and 2001, respectively.

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The Company uses a December 31 measurement date for the majority of its pension and otherpostretirement benefit plans.

Obligations and Funded Status U.S. Pension Foreign Pension Other Benefits

December 31—Millions of dollars 2003 2002 2003 2002 2003 2002

Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . $1,550 $1,190 $ 99 $ 81 $ — $ —Benefit obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 1,771 1,503 206 172 741 655

Funded status (plan assets less than benefitobligations) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (221) (313) (107) (91) (741) (655)

Amounts not recognized:Unrecognized transition obligation . . . . . . . . . . . . . — — — 1 — —Unrecognized net loss . . . . . . . . . . . . . . . . . . . . . . . 412 407 20 17 297 215Unrecognized prior service cost (benefit) . . . . . . . . 134 129 6 5 (45) (47)

Prepaid (accrued) cost . . . . . . . . . . . . . . . . . . . . . . . $ 325 $ 223 $ (81) $ (68) $(489) $(487)

U.S. Pension Foreign Pension Other Benefits

2003 2002 2003 2002 2003 2002

Prepaid benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . $ 357 $ 43 $ — $ — $ — $ —Accrued benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . (110) (188) (103) (92) (489) (487)Intangible asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 128 6 5 — —Accumulated other comprehensive income . . . . . . 51 240 16 19 — —

Prepaid (accrued) cost . . . . . . . . . . . . . . . . . . . . . . . $ 325 $ 223 $ (81) $ (68) $(489) $(487)

The accumulated benefit obligation for all U.S. defined benefit pension plans was $1,611 million and$1,348 million at December 31, 2003, and 2002, respectively. The accumulated benefit obligation forall foreign pension plans was $196 million and $170 million at December 31, 2003 and 2002,respectively.

At the end of 2003 and 2002, the projected benefit obligation (PBO), accumulated benefit obligation(ABO), and fair value of plan assets (FV) for pension plans with a projected benefit obligation in excessof plan assets, and pension plans with an accumulated benefit obligation in excess of plan assets,were as follows:

PBO Exceeds FVU.S. Pension

PBO ExceedsFV ForeignPension

ABO Exceeds FVU.S. Pension

ABO ExceedsFV

ForeignPension

December 31—Millions of dollars 2003 2002 2003 2002 2003 2002 2003 2002

PBO . . . . . . . . . . . . . . . . . . . . . $1,517 $1,463 $185 $171 $237 $1,463 $151 $169ABO . . . . . . . . . . . . . . . . . . . . . 1,356 1,307 170 169 225 1,307 142 168FV . . . . . . . . . . . . . . . . . . . . . . 1,292 1,119 69 76 115 1,119 41 75

F-41


U.S. Pension Benefits Foreign Pension Other Benefits

Change in Benefit Obligation—Millions of dollars 2003 2002 2003 2002 2003 2002

Benefit obligation as of January 1 . . . . . . . . . . . . $1,503 $1,269 $172 $145 $655 $525Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 56 5 6 13 14Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 95 12 11 42 41Plan amendments . . . . . . . . . . . . . . . . . . . . . . . . . 21 29 1 (11) (25) (9)Business combinations . . . . . . . . . . . . . . . . . . . . . — — — 25 — —Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 124 4 12 92 123Curtailments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — (13) (3) —Special termination benefits . . . . . . . . . . . . . . . . . 3 — (2) — — —Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (92) (70) (9) (8) (44) (39)Foreign currency exchange rate . . . . . . . . . . . . . . — — 23 5 1 —Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — 10 —

Benefit obligation as of December 31 . . . . . . . . . $1,771 $1,503 $206 $172 $741 $655

U.S. Pension Benefits Foreign Pension Other Benefits

Change in Plan Assets—Millions of dollars 2003 2002 2003 2002 2003 2002

Fair value of plan assets as of January 1 . . . . . . . $1,190 $1,460 $ 81 $ 97 $— $—Actual return on plan assets . . . . . . . . . . . . . . . . . 285 (203) 9 1 — —Company contributions . . . . . . . . . . . . . . . . . . . . . 167 3 6 2 44 39Plan participant contributions . . . . . . . . . . . . . . . . — — 1 1 — —Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — (11) — —Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (92) (70) (9) (8) (44) (39)Foreign currency exchange rates . . . . . . . . . . . . . — — 11 (1) — —

Fair value of plan assets as of December 31 . . . . $1,550 $1,190 $ 99 $ 81 $— $—

Components of Net Periodic Benefit CostU.S. Pension Benefits Foreign Pension Other Benefits

Millions of dollars 2003 2002 2001 2003 2002 2001 2003 2002 2001

Service cost . . . . . . . . . . . . . . . $ 66 $ 56 $ 53 $ 5 $ 6 $ 8 $ 13 $ 14 $ 11Interest cost . . . . . . . . . . . . . . . 101 95 89 12 11 12 42 41 34Expected return on plan assets (125) (175) (177) (7) (7) (12) — — —Amortization of transitionobligation (asset) . . . . . . . . . — (1) (2) 1 2 2 — — —

Amortization of prior servicecost . . . . . . . . . . . . . . . . . . . . 16 14 11 — — — (4) (4) —

Amortization of net (gain) loss . 5 (22) (35) 1 (1) (1) 11 5 —

Net periodic cost . . . . . . . . . . . . $ 63 $ (33) $ (61) $ 12 $ 11 $ 9 $ 62 $ 56 $ 45

Curtailments . . . . . . . . . . . . . . . — — — — (10) (1) (23) — —Special termination benefits . . 3 — — — (2) 3 — — —Settlements . . . . . . . . . . . . . . . . — — — — (3) (20) (1) — —

Total pension cost (credit) . . . . $ 66 $ (33) $ (61) $ 12 $ (4) $ (9) $ 38 $ 56 $ 45

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Additional Information

Weighted-average assumptionsused to determine benefitobligations at December 31

U.S. Pension Foreign Pension Other Benefits

2003 2002 2003 2002 2003 2002

Discount rate . . . . . . . . . . . . . . . . . . 6.00% 6.75% 4.0%–11.3% 5.5%–11.3% 6.00% 6.75%Rate of compensation increase . . . 4.50% 4.50% 2.5%– 7.1% 2.5%– 8.0% N/A N/AHealth care cost trend rateassumed for next year . . . . . . . . . N/A N/A N/A N/A 11.00% 9.5%–10.5%

Rate that the cost trend rategradually declines to . . . . . . . . . . N/A N/A N/A N/A 5.00% 5.50%

Year that ultimate rate isreached . . . . . . . . . . . . . . . . . . . . . N/A N/A N/A N/A 2008 2007

Weighted-average assumptionsused to determine net cost foryear ended December 31

U.S. Pension Foreign Pension

2003 2002 2001 2003 2002 2001

Discount Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.75% 7.50% 8.00% 5.5%–11.3% 5.5%–11.3% 5.0%–11.3%Expected return on plan assets . . . . . . . . . . . . . . . 8.75% 10.00% 10.50% 5.5%–11.3% 5.5%–11.3% 6.0%–11.3%Rate of compensation increase . . . . . . . . . . . . . . . 4.50% 5.00% 5.00% 2.5%– 8.0% 2.5%– 8.0% 1.0%– 8.0%Health care cost trend rateassumed for next year . . . . . . . . . . . . . . . . . . . . N/A N/A N/A N/A N/A N/A

Rate that the cost trend rategradually declines to . . . . . . . . . . . . . . . . . . . . . . N/A N/A N/A N/A N/A N/A

Year that ultimate rate is reached . . . . . . . . . . . . . N/A N/A N/A N/A N/A N/A

Weighted-average assumptions used todetermine net cost for year ended December 31

Other Benefits

2003 2002 2001

Discount Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.75% at 1/1/20035.75% at 6/1/20036.50% at 8/1/2003 7.50% 8.00%

Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A N/A N/ARate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A N/A N/AHealth care cost trend rate assumed for next year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.50%/10.50% 8.50%/10.50% 6.00%Rate that the cost trend rate gradually declines to . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.50% 6.00% N/AYear that ultimate rate is reached . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2007 2007 N/A

In the U.S., the expected rate of return on plan assets was determined by using the historical assetreturns for publicly traded equity and fixed income securities tracked from 1926 through 2003 and thehistorical returns for private equity. The historical equity returns were adjusted downward to reflectfuture expectations. This adjustment was based on published academic research. The historicalreturns and adjusted historical returns are weighted by the targeted asset allocations. The resultingweighted average return was rounded up to the nearest quarter of one percent.

Assumed health care cost trend rates have a significant effect on the amounts reported for the healthcare plans. A one-percentage-point change in assumed health care cost trend rates would have thefollowing effects:

Millions of dollars

OnePercentage

PointIncrease

OnePercentage

PointDecrease

Effect on total of service and interest cost . . . . . . . . . . . . . . . . . . . . . . . $ 3 $ (3)Effect on postretirement benefit obligation . . . . . . . . . . . . . . . . . . . . . . . 37 (39)

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Plan Assets

The Company’s investment philosophy is to diversify the pension assets subject to a specified assetallocation policy. The Company rebalances the asset classes to stay within an acceptable rangearound the targeted allocation. The asset allocation is based on the belief that, over the long term,equities will outperform fixed income investments. The long-term nature of the pension fund allows it tobear the added variability of return in exchange for the greater long-term expected return. The assetsare invested in both indexed funds and actively managed funds, depending on the asset class.

Whirlpool’s pension plan asset allocation at December 31, 2002, and 2003, and target allocation for2004, by asset category are as follows:

U.S. Pension Foreign Pension

TargetAllocation

2004

Percentage ofPlan Assets atDecember 31 Target

Allocation2004

Percentage ofPlan Assets atDecember 31

Asset Category 2003 2002 2003 2002

Equity securities . . . . . . . . . . . . . . 70% 72% 74% 41% 43% 42%Debt securities . . . . . . . . . . . . . . . 30 28 26 55 52 56Other . . . . . . . . . . . . . . . . . . . . . . . — — — 4 5 2

Total . . . . . . . . . . . . . . . . . . . . . . . . 100% 100% 100% 100% 100% 100%

Equity securities include Whirlpool common stock in the amounts of $59.5 million (5% of total planassets) at December 31, 2002. The Company repurchased the equity securities from the pension planin October 2003 at an approximate cost of $66 million. The stock repurchase program is discussedfurther in Note 11.

Cash Flows

The Company’s funding policy is to contribute to its U.S. pension plans amounts sufficient to meet theminimum funding requirement as defined by employee benefit and tax laws, plus additional amountswhich the Company may determine to be appropriate. In certain countries other than the U.S., thefunding of pension plans is not common practice. The Company has several unfunded non-U.S.pension plans. The Company pays for retiree medical benefits as they are incurred.Employer Contributions—Millions of dollars U.S. Pension Foreign Pension Other Benefits

2004 (expected) . . . . . . . . . . . . . . . . . . . . $19 $7 $45

The $19 million expected to be contributed to the U.S. pension plans during 2004 represents the sumof $4 million of expected benefit payments from corporate cash for the unfunded pension plans and$15 million of expected minimum required contributions to its funded pension plans. The $15 millionestimated contribution to its U.S. funded pension plans may change based upon several factorsincluding issues related to legislation providing interest rate relief for the 2002–2003 plan years. Thelegislation expired at the end of 2003, and the U.S. Congress has not yet passed an extension of the2002–2003 relief legislation or a different form of relief legislation. The unfunded U.S. pension plan isnot subject to the legislative interest rate relief being discussed by the U.S. Congress.

The $45 million expected to be contributed to fund the other postretirement benefit plans during 2004represents expected benefit payments from corporate cash.

Contributions by participants to the other post retirement benefit plans were $4 million for the yearending December 31, 2003.

F-44


(17) BUSINESS SEGMENT INFORMATION

Operating segments are defined as components of an enterprise about which separate financialinformation is available that is evaluated on a regular basis by the chief operating decision maker, ordecision making group, in deciding how to allocate resources to an individual segment and inassessing performance of the segment.

The Company identifies such segments based upon geographical regions of operations because eachoperating segment manufactures home appliances and related components, but serves strategicallydifferent markets. The chief operating decision maker evaluates performance based upon eachsegment’s operating income, which is defined as income before interest income and sundry, interestexpense, taxes, minority interests and before one-time charges. Total assets by segment are thoseassets directly associated with the respective operating activities. The “Other/Elimination” columnprimarily includes corporate expenses, assets and eliminations as well as all other one-time charges.Intersegment sales are eliminated within each region with the exception of compressor sales out ofLatin America which are included in Other/Eliminations.

Sales activity with Sears, Roebuck and Co., a North American major home appliance retailer,represented 18%, 21% and 21% of consolidated net sales in 2003, 2002 and 2001, respectively.Related receivables were 22%, 23% and 25% of consolidated trade receivables as of December 31,2003, 2002 and 2001, respectively.

The Company conducts business in two countries that individually comprised over 10% of consolidatednet sales and total assets within the last three years. The United States represented 57%, 59% and59%, of net sales for 2003, 2002 and 2001, respectively, while Brazil totaled 6%, 8% and 9% for 2003,2002 and 2001. As a percentage of total assets, the United States accounted for 41%, 40% and 44%at the end of 2003, 2002 and 2001, respectively. Brazil accounted for 11%, 11% and 14% of totalassets at the end of 2003, 2002 and 2001, respectively.

As described above, the Company’s chief operating decision maker reviews each operating segment’sperformance based upon operating income excluding one-time charges. In 2003, these one-timecharges consisted of primarily restructuring and other related charges. These charges are included inoperating profit on a consolidated basis and included in the Other/Eliminations column in the tablesbelow. For 2003 year-to-date amounts, the operating segments recorded total restructuring and relatedcharges (See Note 13) as follows: North America—$7 million, Europe—$6 million, Latin America—$0million, Asia—$1 million and Corporate—$0 million, for a total of $14 million. In 2002, the operatingsegments recorded total restructuring and related charges as follows: North America—$43 million,Europe—$79 million, Latin America—$24 million, Asia—$11 million and Corporate—$4 million, for atotal of $161 million. Also included in Other/Eliminations during 2002 is $9 million of product recallrelated charges (See Note 14) recorded in the fourth quarter and $9 million in goodwill impairmentcharges (See Note 4). In 2001, the operating segments recorded total restructuring and relatedcharges as follows: North America—$35 million, Europe—$92 million, Latin America—$68 million,Asia—$13 million and Corporate—$4 million for a total of $212 million. Also included in the Other/Eliminations column during 2001 is $295 million of product recall charges related to the NorthAmerican region.

F-45


GEOGRAPHIC SEGMENTS

Millions of dollarsNorth

America EuropeLatin

America AsiaOther/

EliminationsTotal

Whirlpool

Net sales2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,875 $2,691 $1,350 $416 $(156) $12,1762002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,306 $2,199 $1,266 $391 $(146) $11,0162001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,581 $2,058 $1,487 $373 $(156) $10,343

Depreciation and amortization2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 217 $ 92 $ 83 $ 15 $ 20 $ 4272002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 197 $ 83 $ 80 $ 16 $ 29 $ 4052001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 176 $ 91 $ 94 $ 20 $ 15 $ 396

Operating profit (loss)2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 810 $ 124 $ 89 $ 7 $(200) $ 8302002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 830 $ 81 $ 107 $ 14 $(340) $ 6922001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 758 $ 39 $ 134 $ 19 $(644) $ 306

Total assets2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,290 $2,405 $1,395 $523 $(252) $ 7,3612002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,913 $2,015 $1,054 $516 $ 133 $ 6,6312001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,591 $2,067 $1,339 $653 $ 317 $ 6,967

Capital expenditures2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 185 $ 111 $ 96 $ 16 $ 15 $ 4232002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 165 $ 103 $ 112 $ 15 $ 35 $ 4302001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 191 $ 87 $ 80 $ 10 $ 10 $ 378

(18) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

Three Months Ended

Millions of dollars, except per share data Dec. 31 Sept. 30 Jun. 30 Mar. 31

2003Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,359 $3,113 $2,988 $2,716Cost of products sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,579 2,418 2,318 2,092Earnings from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . 124 105 94 91Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 105 94 91Per share of common stockBasic earnings from continuing operations . . . . . . . . . . . . . . . . . . . . $ 1.82 $ 1.51 $ 1.37 $ 1.33Basic net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.82 1.51 1.37 1.33

Diluted earnings from continuing operations . . . . . . . . . . . . . . . . . . . $ 1.76 $ 1.48 $ 1.35 $ 1.32Diluted net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.76 1.48 1.35 1.32Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.34 $ 0.34 $ 0.34 $ 0.34

F-46


The net loss (and related per share amounts) for the restated first quarter as shown below differ fromthe originally filed amounts due to the adoption of SFAS No. 142, as discussed in Note 3.

Three Months Ended

Restated

Millions of dollars, except per share data Dec. 31 Sept. 30 Jun. 30 Mar. 31

2002Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,947 $2,759 $2,737 $2,574Cost of products sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,266 2,114 2,103 1,982Earnings from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . 14 101 63 84Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29) 101 63 (529)Per share of common stockBasic earnings from continuing operations . . . . . . . . . . . . . . . . . . . $ 0.20 $ 1.48 $ 0.93 $ 1.25Basic net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.43) 1.48 0.93 (7.86)

Diluted earnings from continuing operations . . . . . . . . . . . . . . . . . . $ 0.20 $ 1.46 $ 0.91 $ 1.21Diluted net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.42) 1.46 0.91 (7.63)Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.34 $ 0.34 $ 0.34 $ 0.34

F-47

Eleven-Year Consolidated Statistical ReviewMillions of dollars, except share and employee data

Consolidated Operations 2003 2002 2001

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,176 $11,016 $10,343Operating profit(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 830 $ 692 $ 306Earnings (loss) from continuing operations before income taxes and other items . . $ 652 $ 495 $ 93Earnings (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 414 $ 262 $ 34Earnings (loss) from discontinued operations(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — $ (43) $ (21)Net earnings (loss)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 414 $ (394) $ 21Net capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 423 $ 430 $ 378Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 423 $ 391 $ 368Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 94 $ 91 $ 113

Consolidated Financial PositionCurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,865 $ 3,327 $ 3,311Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,589 $ 3,505 $ 3,102Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 276 $ (178) $ 209Property, plant and equipment-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,456 $ 2,338 $ 2,052Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,361 $ 6,631 $ 6,967Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,134 $ 1,092 $ 1,295Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,301 $ 739 $ 1,458

Per share dataBasic earnings (loss) from continuing operations before accounting change . . . . . . $ 6.03 $ 3.86 $ 0.51Diluted earnings (loss) from continuing operations before accounting change . . . . . $ 5.91 $ 3.78 $ 0.50Diluted net earnings (loss)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.91 $ (5.68) $ 0.31Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.36 $ 1.36 $ 1.36Book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18.56 $ 10.67 $ 21.44Closing Stock Price—NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 72.65 $ 52.22 $ 73.33

Key Ratios(4)

Operating profit margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8% 6.3% 3.0%Pre-tax margin(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4% 4.5% 0.9%Net margin(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4% 2.4% 0.3%Return on average stockholders’ equity(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.9% 14.8% 1.3%Return on average total assets(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1% 3.4% 0.4%Current assets to current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1x 0.9x 1.1xTotal debt-appliance business as a percent of invested capital(9) . . . . . . . . . . . . . . . 50.9% 65.1% 48.0%Price earnings ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3x (9.2)x 236.5xInterest coverage(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8x 4.5x 1.6xOther DataNumber of common shares outstanding (in thousands):Average—on a diluted basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,082 69,267 68,036Year-end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,931 68,226 67,215Number of stockholders (year-end) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,178 8,556 8,840Number of employees (year-end) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,407 68,272 61,923Total return to stockholders (five year annualized)(11) . . . . . . . . . . . . . . . . . . . . . . . . . 8.1% 1.4% 12.2%

(1) Restructuring and special operating charges were $14 million in 2003, $161 million in 2002, $212 million in 2001, $405million in 1997, $30 million in 1996, and $250 million in 1994.

(2) The company's financial services business was discontinued in 1997.(3) Includes cumulative effect of accounting changes: 2002—Accounting for goodwill under statements and impairments of

($613) million or ($8.84) per diluted share; 2001—Accounting for derivative instruments and hedging activities of $8 millionor $0.12 per diluted share; 1993—Accounting for postretirement benefits other than pensions of ($180) million or ($2.42) perdiluted share.

(4) Excluding one-time charges for restructuring and related charges, a minority investment write-off in a European business,goodwill write-off of an Asian entity, product recalls, discontinued operations and accounting changes in 2002, selected keyratios would be as follows: a) Operating profit margin—7.9%, b) Pre-tax margin—6.1%, c) Net margin—3.8%, d) Return onaverage stockholders' equity—27%, e) Return on average total assets—6.1%, and f) Interest coverage—6x. Excluding one-time charges for restructuring and related charges, product recalls, discontinued operations and accounting changes in2001, selected key ratios would be as follows: a) Operating profit margin—7.9%, b) Pre-tax margin—5.8%, c) Net margin—

F-48

2000 1999 1998 1997 1996 1995 1994 1993

$10,325 $10,511 $10,323 $8,617 $8,523 $8,163 $7,949 $7,368$ 807 $ 875 $ 688 $ 11 $ 278 $ 366 $ 370 $ 504$ 577 $ 514 $ 564 $ (171) $ 100 $ 214 $ 269 $ 418$ 367 $ 347 $ 310 $ (46) $ 141 $ 195 $ 147 $ 257

— $ — $ 15 $ 31 $ 15 $ 14 $ 11 $ (28)$ 367 $ 347 $ 325 $ (15) $ 156 $ 209 $ 158 $ 51$ 375 $ 437 $ 542 $ 378 $ 336 $ 483 $ 418 $ 309$ 371 $ 386 $ 399 $ 322 $ 318 $ 282 $ 246 $ 241$ 70 $ 103 $ 102 $ 102 $ 101 $ 100 $ 90 $ 85

$ 3,237 $ 3,177 $ 3,882 $4,281 $3,812 $3,541 $3,078 $2,708$ 3,303 $ 2,892 $ 3,267 $3,676 $4,022 $3,829 $2,988 $2,763$ (66) $ 285 $ 615 $ 605 $ (210) $ (288) $ 90 $ (55)$ 2,134 $ 2,178 $ 2,418 $2,375 $1,798 $1,779 $1,440 $1,319$ 6,902 $ 6,826 $ 7,935 $8,270 $8,015 $7,800 $6,655 $6,047$ 795 $ 714 $ 1,087 $1,074 $ 955 $ 983 $ 885 $ 840$ 1,684 $ 1,867 $ 2,001 $1,771 $1,926 $1,877 $1,723 $1,648

$ 5.24 $ 4.61 $ 4.09 $ (0.62) $ 1.90 $ 2.64 $ 1.98 $ 3.60$ 5.20 $ 4.56 $ 4.06 $ (0.62) $ 1.88 $ 2.60 $ 1.95 $ 3.47$ 5.20 $ 4.56 $ 4.25 $ (0.20) $ 2.08 $ 2.78 $ 2.10 $ 0.71$ 1.36 $ 1.36 $ 1.36 $ 1.36 $ 1.36 $ 1.36 $ 1.22 $ 1.19$ 23.84 $ 24.55 $ 26.16 $23.71 $25.93 $25.40 $23.21 $23.17$ 47.69 $ 65.06 $ 55.38 $55.00 $46.63 $53.25 $50.25 $66.50

7.8% 8.3% 6.7% 0.1% 3.3% 4.5% 4.7% 6.8%5.6% 4.9% 5.5% (2.0)% 1.2% 2.6% 3.4% 5.7%3.6% 3.3% 3.0% (0.5)% 1.7% 2.4% 1.8% 3.5%

20.7% 17.9% 17.2% (0.8)% 8.2% 11.6% 9.4% 14.2%5.5% 4.2% 4.6% (0.7)% 1.8% 3.0% 2.8% 4.0%1.0x 1.1x 1.2x 1.2x 0.9x 0.9x 1.0x 1.0x

49.4% 37.7% 43.5% 46.1% 44.2% 45.2% 35.6% 33.8%9.2x 14.3x 13.0x — 22.4x 19.2x 23.9x 21.2x4.2x 4.1x 3.2x — 1.6x 2.7x 3.6x 5.0x

70,637 76,044 76,507 74,697 77,178 76,812 77,588 76,01366,265 74,463 76,089 75,262 74,415 74,081 73,845 73,06811,780 12,531 13,584 10,171 11,033 11,686 11,821 11,43862,527 62,706 59,885 62,419 49,254 46,546 39,671 40,071

0.3% 7.9% (1.2)% 6.8% 6.3% 20.8% 12.0% 25.8%

3.6%, d) Return on average stockholders' equity—22%, e) Return on average total assets—5.6%, and f) Interest coverage—5x. Excluding the first quarter impact of the Brazilian currency devaluation in 1999 and the gain from discontinued operationsin 1998, returns on average stockholders' equity were 19.9% and 16.5%, and returns on average total assets were 5.7% and4.3%. Excluding non-recurring items, selected 1997 Key Ratios would be as follows: a) Operating profit margin—4.7%, b)Pre-tax margin—2.7%, c) Net margin—2.6%, d) Return on average stockholders' equity—12%, e) Return on average totalassets—2.7%, f) Interest coverage—3x.

(5) Earnings from continuing operations before income taxes and other items, as a percent of sales.(6) Earnings from continuing operations, as a percent of sales.(7) Net earnings (loss) before accounting change, divided by average stockholders' equity.(8) Net earnings (loss) before accounting change, plus minority interest divided by average total assets.(9) Debt divided by debt, stockholders' equity and minority interests.(10) Ratio of earnings from continuing operations (before income taxes, accounting change and interest expense) to interest

expense.(11) Stock appreciation plus reinvested dividends.

F-49

Report of Ernst & Young, LLP, Independent Auditors

The Stockholders and Board of DirectorsWhirlpool CorporationBenton Harbor, Michigan

We have audited the accompanying consolidated balance sheets of Whirlpool Corporation as ofDecember 31, 2003 and 2002, and the related consolidated statements of operations, stockholders’equity, and cash flows for each of the three years in the period ended December 31, 2003. Our auditsalso included the financial statement schedule listed in the index at Item 15(a). These financialstatements and schedule are the responsibility of the Company’s management. Our responsibility is toexpress an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the UnitedStates. Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement. An audit includes examining,on a test basis, evidence supporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation. We believe our auditsprovide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all materialrespects, the consolidated financial position of Whirlpool Corporation as of December 31, 2003 and2002, and the consolidated results of its operations and its cash flows for each of the three years in theperiod ended December 31, 2003 in conformity with accounting principles generally accepted in theUnited States. Also, in our opinion, the related financial statement schedule, when considered inrelation to the basic financial statements taken as a whole, presents fairly in all material respects theinformation set forth therein.

As discussed in Note 3 to the consolidated financial statements, in 2002 the Company changed itsmethod of accounting for goodwill and other intangible assets. Also, in 2001 the Company changed itsmethod of accounting for derivative instruments and hedging activities.

/S/ ERNST & YOUNG, LLP

Chicago, IllinoisFebruary 3, 2004

F-50

Report by Management on the Consolidated Financial Statements

The management of Whirlpool Corporation has prepared the accompanying financial statements. Thefinancial statements have been audited by Ernst & Young LLP, independent auditors, whose report,based upon their audits, expresses the opinion that these financial statements present fairly theconsolidated financial position, results of operations and cash flows of Whirlpool and its subsidiaries inaccordance with accounting principles generally accepted in the United States. Their audits areconducted in conformity with auditing standards generally accepted in the United States.

The financial statements were prepared from the Company’s accounting records, books and accountswhich, in reasonable detail, accurately and fairly reflect all material transactions. The Companymaintains a system of internal controls designed to provide reasonable assurance that the Company’sbooks and records, and the Company’s assets are maintained and accounted for, in accordance withmanagement’s authorizations. The Company’s accounting records, policies and internal controls areregularly reviewed by an internal audit staff.

The audit committee of the Board of Directors of the Company is composed of five independentdirectors who, in the opinion of the board, meet the relevant financial experience, literacy, andexpertise requirements. The audit committee provides independent and objective oversight of theCompany’s accounting functions and internal controls and monitors the objectivity of the Company’sfinancial statements, (2) the Company’s compliance with legal and regulatory requirements, (3) theindependent auditor’s qualifications and independence, and (4) the performance of the Company’sinternal audit function and independent auditors. In performing these functions, the committee has theresponsibility to review and discuss the annual audited financial statements and quarterly financialstatements and related reports with management and independent auditors, include the Company’sdisclosures under “Management’s Discussion and Analysis of Financial Condition and Results ofOperations;” to monitor the adequacy of financial disclosure; and to retain and terminate theCompany’s independent auditors and exercise the committee’s sole authority to review and approve allaudit engagement fees and terms and preapprove the nature, extent, and cost of all non-audit servicesprovided by independent auditors.

/S/ R. STEPHEN BARRETT, JR.

R. Stephen Barrett, Jr.Executive Vice President and Chief Financial OfficerFebruary 26, 2004

F-51

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

WHIRLPOOL CORPORATION AND SUBSIDIARIES

Years Ended December 31, 2003, 2002, and 2001(Millions of dollars)

COL. A COL. B COL. C COL. D COL. E

ADDITIONS

Description

Balance atBeginningof Period

(1)Chargedto Costs

andExpenses

(2)Chargedto OtherAccounts/ Other

Deductions—Describe

Balanceat

End of Period

Year Ended December 31, 2003:Allowances for doubtful accounts—trade receivables . . . . . . . . . . . . . . . . . . . . . . . . $ 94 $34 $15—A $113

Year Ended December 31, 2002:Allowances for doubtful accounts—trade receivables . . . . . . . . . . . . . . . . . . . . . . . . $ 93 $27 $26—A $ 94

Year Ended December 31, 2001:Allowances for doubtful accounts—trade receivables . . . . . . . . . . . . . . . . . . . . . . . . $103 $32 $42—A $ 93

Note A—The amounts represent accounts charged off, less recoveries of $1 million in 2003, $1 millionin 2002 and $2 million in 2001, translation adjustments and transfers.

F-52

ANNUAL REPORT ON FORM 10-KITEMS 15(a)(3) and 15(c)

EXHIBIT INDEXYEAR ENDED DECEMBER 31, 2003

The following exhibits are submitted herewith or incorporated herein by reference in response to Items15(a)(3) and 15(c). Each exhibit that is considered a management contract or compensatory plan or arrangementrequired to be filed pursuant to Item 15(a)(3) of Form 10-K is identified by a “(Z).”

Number and Description of Exhibit

3(i) Restated Certificate of Incorporation of the Company. [Incorporated by reference from Exhibit 3(i)to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993][File No. 1-3932]

3(ii) Amended and Restated By-laws of the Company as amended August 17, 1999. [Incorporated byreference from Exhibit 3(ii) to the Company’s Annual Report on Form 10-K for the fiscal yearended December 31, 1999] [File No. 1-3932]

4(i) The registrant hereby agrees to furnish to the Securities and Exchange Commission, upon request,the instruments defining the rights of holders of each issue of long-term debt of the registrantand its subsidiaries.

4(ii) Rights Agreement, dated April 21, 1998, between Whirlpool Corporation and First Chicago TrustCompany of New York, with exhibits. [Incorporated by reference from Exhibit 4 to theCompany’s Form 8-K, dated April 22, 1998] [File No. 1-3932]

10(iii)(a) Whirlpool Retirement Benefits Restoration Plan (as amended and restated effective January 1,2002).(Z) [Incorporated by reference from Exhibit 10(iii)(a) to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2002] [File No. 1-3932]

10(iii)(b) Whirlpool Supplemental Executive Retirement Plan (as amended and restated effective December31, 1993).(Z) [Incorporated by reference from Exhibit 10(iii)(c) to the Company’s AnnualReport on Form 10-K for the fiscal year ended December 31, 1993] [File No. 1-3932]

10(iii)(c) Resolution adopted on December 12, 1989 by the Board of Directors of the Company adopting acompensation schedule, life insurance program and retirement benefit program for eligibleDirectors.(Z) [Incorporated by reference from Exhibit 10(iii)(d) to the Company’s AnnualReport on Form 10-K for the fiscal year ended December 31, 1993] [File No.1-3932]

10(iii)(d) Resolution adopted on December 8, 1992 by the Board of Directors of the Company adopting aFlexible Compensation Program for the Corporation’s nonemployee directors.(Z) [Incorporatedby reference from Exhibit 10(iii)(e) to the Company’s Annual Report on Form 10-K for thefiscal year ended December 31, 1993] [File No. 1-3932]

10(iii)(e) Whirlpool Corporation Deferred Compensation Plan for Directors (as amended effective January 1,1992 and April 20, 1993).(Z) [Incorporated by reference from Exhibit 10(iii)(f) to theCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [FileNo. 1-3932]

10(iii)(f) Form of Agreement providing for severance benefits for certain executive officers.(Z)[Incorporated by reference from Item 5 – Other Events to the Company’s Form 8-K dated April26, 2000] [File No. 1-3932]

10(iii)(g) Whirlpool Corporation 1989 Omnibus Stock and Incentive Plan (as amended June 20, 1995).(Z)[Incorporated by reference from Exhibit 10(iii)(r) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1995] [File No. 1-3932]

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10(iii)(h) Administrative Guidelines for the Whirlpool Corporation Restricted Stock Value Program(pursuant to one or more of Whirlpool’s Omnibus Stock and Incentive Plans).(Z) [Incorporatedby reference from Exhibit 10(iii)(i) to the Company’s Annual Report on Form 10-K for thefiscal year ended December 31, 1993] [File 1-3932]

10(iii)(i) Administrative Guidelines for the Whirlpool Corporation Executive Stock Appreciation andPerformance Program (pursuant to one or more of Whirlpool’s Omnibus Stock and IncentivePlans).(Z) [Incorporated by reference from Exhibit 10(iii)(j) to the Company’s Annual Reporton Form 10-K for the fiscal year ended December 31, 1993] [File No. 1-3932]

10(iii)(j) Whirlpool Corporation Nonemployee Director Stock Ownership Plan (as amended February 16,1999, effective April 20, 1999).(Z) [Incorporated by reference from Exhibit A to theCompany’s proxy statement for the 1999 annual meeting of stockholders] [File No. 1-3932]

10(iii)(k) Whirlpool Performance Excellence Plan (as amended January 1, 1992, February 15, 1994 andApril 20, 1999).(Z) [Incorporated by reference from Exhibit B to the Company’s proxystatement for the 1999 annual meeting of stockholders] [File No. 1-3932]

10(iii)(l) Whirlpool Corporation Executive Deferred Savings Plan (as amended effective January 1,1992).(Z) [Incorporated by reference from Exhibit10(iii)(n) to the Company’s Annual Reporton Form 10-K for the fiscal year ended December 31, 1993] [File No. 1-3932]

10(iii)(m) Whirlpool Corporation Executive Officer Bonus Plan (effective as of January 1, 1994).(Z)[Incorporated by reference from Exhibit 10(iii)(o) to the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 1994] [File No. 1-3932]

10(iii)(n) Whirlpool Corporation Charitable Award Contribution and Additional Life Insurance Plan forDirectors (effective April 20, 1993).(Z) [Incorporated by reference from Exhibit 10(iii)(p) to theCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 1994] [FileNo. 1-3932]

10(iii)(o) Form of agreement for the Whirlpool Corporation Career Stock Grant Program (pursuant to one ormore of Whirlpool’s Omnibus Stock and Incentive Plans).(Z) [Incorporated by reference fromExhibit 10(iii)(q) to the Company’s Annual Report on Form 10-K for the fiscal year endedDecember 31, 1995] [File No. 1-3932]

10(iii)(p) Whirlpool Corporation 1996 Omnibus Stock and Incentive Plan (as amended, effective February16, 1999).(Z) [Incorporated by reference from Exhibit 10(iii)(r) to the Company’s AnnualReport on Form 10-K for the fiscal year ended December 31, 1999] [File No. 1-3932]

10(iii)(q) Whirlpool Corporation 1998 Omnibus Stock and Incentive Plan (as amended, effective February16, 1999).(Z) [Incorporated by reference from Exhibit 10(iii)(s) to the Company’s AnnualReport on Form 10-K for the fiscal year ended December 31, 1999] [File No. 1-3932]

10(iii)(r) Employment Agreement with Paulo F.M.O. Periquito.(Z) [Incorporated by reference from Part IIOther Information, Item 6 to the Company’s Form 10-Q for the period ended March 31, 1998][File No. 1-3932]

10(iii)(s) Whirlpool Corporation 2000 Omnibus Stock and Incentive Plan.(Z) [Incorporated by referencefrom Exhibit A to the Company’s proxy statement for the 2000 annual meeting of stockholders][File No. 1-3932]

10(iii)(t) Form of Stock Option Grant Document for the Whirlpool Corporation Stock Option Program(pursuant to one or more of Whirlpool’s Omnibus Stock and Incentive Plans).(Z) [Incorporatedby reference from Exhibit 10(iii)(t) to the Company’s Annual Report on Form 10-K for thefiscal year ended December 31, 2000] [File No. 1-3932]

10(iii)(u) Whirlpool Corporation Key Employee Treasury Stock Ownership Plan (effective October 16,2001).(Z) [Incorporated by reference from the Company’s Annual Report on Form 10-K for thefiscal year ended December 31, 2001] [File No. 1-3932]

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10(iii)(v) Whirlpool Corporation Nonemployee Director Treasury Stock Ownership Plan (effective October16, 2001).(Z) [Incorporated by reference from Exhibit 4(d) to the Company’s RegistrationStatement on Form S-8 filed on November 20, 2001] [File No. 333-73726]

10(iii)(w) Administrative Guidelines for the Whirlpool Corporation Special Retention Program (pursuant toone or more of Whirlpool’s Omnibus Stock and Incentive Plans).(Z) [Incorporated by referencefrom Exhibit 10(iii)(w) to the Company’s Annual Report on Form 10-K for the fiscal yearended December 31, 2001] [File No. 1-3932]

10(iii)(x) Whirlpool Corporation 2002 Omnibus Stock and Incentive Plan. (Z) [Incorporated by referencefrom Exhibit A to the Company’s proxy statement for the 2002 annual meeting of stockholders][File No. 1-3932]

10(iii)(y) Long-Term Credit Agreement dated as of June 1, 2001 among Whirlpool Corporation, WhirlpoolEurope B.V., Certain Financial Institutions and Bank of Amercia, N.A. as Administrative Agentand Citibank, N.A. as Syndication Agent, ABN AMRO Bank, N.V., Fleet National Bank andThe Chase Manhattan Bank, as Documentation Agents, Banc of America Securities LLC andSalomon Smith Barney Inc., Co-Lead Arrangers and Joint Book Managers. [Incorporated byreference from Part II – Other Information, Item 6 to the Company’s Quarterly Report on Form10-Q for the period ended June 30, 2002] [File No. 1-3932]

11 Statement Re: Computation of Per Share Earnings

12 Statement Re: Computation of the Ratios of Earnings to Fixed Charges

21 List of Subsidiaries

23 Consent of Ernst & Young LLP

24 Power of Attorney

31(a) Section 302 Certification of Chief Executive Officer

31(b) Section 302 Certification of Chief Financial Officer

32 Section 906 Certification of Chief Executive Officer and Chief Financial Officer

E-3

EXHIBIT 11—COMPUTATION OF EARNINGS PER SHARE


(all amounts in millions except earnings per share)

2003 2002 2001

Basic:Average Shares Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68.7 67.9 66.7Earnings (Loss):

Continuing Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $414.5 $ 262.1 $ 34.2Discontinued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (42.6) (21.5)Change in Accounting Principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (613.0) 8.3

Net Earnings (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $414.5 $(393.5) $ 21.0

Earnings (Loss) Per Share from Continuing Operations . . . . . . . . . . . . . . . . . . . . $ 6.03 $ 3.86 $ 0.51Net Earnings (Loss) Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6.03 $ (5.79) $ 0.31

Diluted: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Average Shares Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68.7 67.9 66.7Treasury Stock Method:

Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8 0.9 0.9Stock Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6 0.5 0.4

Average Shares Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.1 69.3 68.0

Earnings (Loss) from Continuing Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $414.5 $ 262.1 $ 34.2Interest Expense, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

Diluted Earnings (Loss) from Continuing Operations . . . . . . . . . . . . . . . . . . . . . . . . . $414.5 $ 262.1 $ 34.2

Diluted Earnings (Loss) Per Share from Continuing Operations . . . . . . . . . . . . . . . . . $ 5.91 $ 3.78 $ 0.50

Net Earnings (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $414.5 $(393.5) $ 21.0Interest Expense, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

Diluted Net Earnings (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $414.5 $(393.5) $ 21.0

Diluted Net Earnings (Loss) Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.91 $ (5.68) $ 0.31

EXHIBIT 12—RATIO OF EARNINGS TO FIXED CHARGES


Year EndedDecember 31,

2003 2002

EarningsEarnings from continuing operations before income taxes and other items . . . . . . . . . . . . . . . . . . $652 $495Portion of rents representative of the interest factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 18Interest on indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 143Amortization of debt expense and premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1WFC preferred stock dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2

$813 $659

Fixed chargesPortion of rents representative of the interest factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21 $ 18Interest on indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 143Amortization of debt expense and premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1WFC preferred stock dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2

$161 $164

Ratio of earnings to fixed charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 4.0

Exhibit 21

Subsidiaries

Subsidiary and Name Under Which It Does BusinessJurisdiction InWhich Organized

Empreso Brasileira de Compressores S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . BrazilMultibras S.A. Eletrodomesticos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BrazilWhirlpool Canada Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CanadaWhirlpool do Brasil Ltda. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BrazilWhirlpool Europe B.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The NetherlandsWhirlpool Financial Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DelawareWhirlpool Mexico, S.A. de C.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MexicoWhirlpool Patents Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MichiganWhirlpool Properties, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michigan

The names of the Company’s other subsidiaries are omitted because, considered in the aggregate as a singlesubsidiary, such subsidiaries would not constitute a significant subsidiary as of December 31, 2003.

Exhibit 23

CONSENT OF ERNST & YOUNG LLP

We consent to the incorporation by reference in Registration Statements No. 33-34490, 33-34037, 33-21360, 33-00201, 2-64261, 33-5904, 33-40249, 333-02827, 333-02825, 333-66211, 333-77167, 333-32886, 333-42322, 333-72698, 333-73726 and 333-90602 ofWhirlpool Corporation, Registration Statements No. 33-26680 and 33-53196 of Whirlpool Corporation pertaining to the WhirlpoolSavings Plan, and Registration Statement No. 333-66163 of Whirlpool Corporation pertaining to the Whirlpool 401(k) Plan, of ourreport dated February 3, 2004, with respect to the consolidated financial statements and schedule of Whirlpool Corporation, includedin this Annual Report (Form 10-K) for the year ended December 31, 2003.

/s/ Ernst & Young LLP

Chicago, IllinoisMarch 10, 2004

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a director or officer, orboth, of WHIRLPOOL CORPORATION, a Delaware corporation (hereinafter called the “Corporation”), doeshereby constitute and appoint DAVID R. WHITWAM, JEFF M. FETTIG, and DANIEL F. HOPP, with fullpower to each of them to act alone, as the true and lawful attorneys and agents of the undersigned, with fullpower of substitution and resubstitution to each of said attorneys, to execute, file or deliver any and allinstruments and to do all acts and things which said attorneys and agents, or any of them, deem advisable toenable the Corporation to comply with the Securities Act of 1933, as amended, the Securities Exchange Act of1934, as amended, and any requirements of the Securities and Exchange Commission in respect thereof, inconnection with the filing under said Securities Exchange Act of the Corporation’s Annual Report on Form 10-Kfor the year ended December 31, 2003, including specifically, but without limitation of the general authorityhereby granted, the power and authority to sign his or her name as a director or officer, or both, of theCorporation, as indicated below opposite his or her signature, to the Annual Report on Form 10-K, or anyamendment, post-effective amendment, or papers supplemental thereto to be filed in respect of said AnnualReport on Form 10-K; and each of the undersigned does hereby fully ratify and confirm all that said attorneysand agents, or any of them, or the substitute of any of them, shall do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has subscribed these presents, as of the 17th day ofFebruary, 2004.

Name Title

/s/ DAVID R. WHITWAM

David R. Whitwam

Director, Chairman of the Board andChief Executive Officer(Principal Executive Officer)

/s/ JEFF M. FETTIG

Jeff M. Fettig

Director, President andChief Operating Officer(Principal Operating Officer)

/s/ R. STEPHEN BARRETT, JR.

R. Stephen Barrett, JR.

Executive Vice President andChief Financial Officer(Principal Financial Officer)

/s/ ROY W. TEMPLIN

Roy W. TemplinVice President and Controller(Principal Accounting Officer)

/s/ GARY T. DICAMILLO

Gary T. DiCamillo

Director

/s/ ALLAN D. GILMOUR

Allan D. Gilmour

Director

/s/ KATHLEEN J. HEMPEL

Kathleen J. Hempel

Director

/s/ MICHAEL F. JOHNSTON

Michael F. Johnston

Director

/s/ JAMES M. KILTS

James M. Kilts

Director

Name Title

/s/ ARNOLD G. LANGBO

Arnold G. Langbo

Director

Miles L. MarshDirector

/s/ PAUL G. STERN

Paul G. Stern

Director

/s/ JANICE D. STONEY

Janice D. Stoney

Director

Exhibit 31(a)

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David R. Whitwam, certify that:

1. I have reviewed this annual report of Form 10-K of Whirlpool Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to statea material fact necessary to make the statements made, in light of the circumstance under which suchstatements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report,fairly represent in all material respects the financial condition, results of operations and cash flows of theregistrant, as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant andhave:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures tobe designed under our supervision, to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the endof the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting thatoccurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in thecase of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s boardof directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record,process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal control over financial reporting.

Date: March 12, 2004


Name: David R. WhitwamTitle: Chairman of the Board

and Chief Executive Officer

Exhibit 31(b)

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, R. Stephen Barrett, Jr. certify that:

1. I have reviewed this annual report of Form 10-K of Whirlpool Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to statea material fact necessary to make the statements made, in light of the circumstance under which suchstatements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report,fairly represent in all material respects the financial condition, results of operations and cash flows of theregistrant, as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant andhave:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures tobe designed under our supervision, to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the endof the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting thatoccurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in thecase of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s boardof directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record,process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal control over financial reporting.

Date: March 12, 2004


Name: R. Stephen Barrett, Jr.Title: Executive Vice President

and Chief Financial Officer

Exhibit 32

Certifications Pursuant to18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of theSarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10-K of Whirlpool Corporation (the “Company”) for the yearended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the“Report”), David R. Whitwam, as Chief Executive of the Company, and R. Stephen Barrett, as Chief FinancialOfficer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of1934; and

2. The information contained in the Report fairly represents, in all material respects, the financial conditionand results of operations of the Company.


Name: David R. WhitwamTitle: Chairman of the Board

and Chief Executive OfficerDate: March 12, 2004


Name: R. Stephen Barrett, Jr.Title: Executive Vice President

and Chief Financial OfficerDate: March 12, 2004

our vision

every home...everywhere with pride, passion and performance

our mission

everyone...passionately creating loyal customers for life

Design: RWI (rwidesign.com)Major photography: Michael L. Abramson and Whirlpool Photo Services

World Headquarters and

North America Region

2000 N. M-63


Telephone: 269.923.5000

www.whirlpoolcorp.com

Documents

Whirlpool 2003 Summary Annual Report